TOWARDS THE ECONOMIC BRINK...
By Joseph Kayira | 13 October 2023
A few days ago, in a mini-Cabinet reshuffle, President Lazarus Chakwera appointed his former minister of trade and industry, Simplex Chithyola, to head treasury. It is a move that has surprised many. However, the appointment of Chithyola as finance minister should be the least of our problems. To a larger extent, Malawi’s problems go beyond cabinet appointments. The good thing is that Chithyola will not be working in isolation. There is a whole lot of technocrats at treasury who will be guiding him on implementation of financial and monetary policy. We can only wish him well in this daunting task.
What Malawians should be wary of is the state of our economy and the failure to decisively deal with problems that stand in the way of economic growth and development. For some time now, Malawi has had issues with the Bretton Woods institutions – the International Monetary Fund (IMF) and the World Bank – especially on the IMF’s Extended Credit Facility (ECF). The World Bank has expressed concerns over prolonged macro-fiscal crisis and a slow debt restructuring process, which in the long run, it says, subdue economic growth.
Over the years, Malawi’s donors have not been happy with the way we chew their money. They have told us how dismayed they have always been with the levels of corruption in this country. They have suspended aid at some point because of bad politics coupled with financial mismanagement. Most importantly, both bilateral and multilateral donors have stressed the point that no country ever develops by depending on aid. By now, measures should have been in place to catapult us on a path to self-economic reliance.
In his article ‘Malawi Donors on Malawi Aid’, Sam Mpasu says “donor behaviour is standardized and predictable. They refuse to give aid, unless and until, the donee country has an agreement with the IMF. The reason is simple. They do not want to throw good money after bad money. They do not write blank cheques.”
“The IMF is the doctor for sick economies, large or small, developed or developing. Like a medical, the IMF deals with the economic disease, not with the causes of the economic disease. The IMF gives a bitter dose of the economic quinine for the economic malaria it has diagnosed. It is up to the patient to deal with the economic mosquitoes back at home.
He argues further that the IMF’s prescription for foreign exchange shortages is deceptively simple – common sense. The IMF, Mpasu says, does not throw good money after bad money, either. It orders you to apply the law of supply and demand to your dwindling foreign exchange reserves. Only those who can afford it should be able to access it.
He adds, “The IMF rationale is simple and straight forward. The IMF wants to make your exports cheaper in the export market. You can then use your price reduction as an advantage to export more. By exporting more, you earn more foreign exchange. And by earning more foreign exchange you accumulate more foreign exchange reserves. Voila! Your foreign exchange shortages are over!”
Ours is a sad story. Leaders have failed to wean off Malawi from donor aid. Every administration – especially from 1994 – has tried to convince Malawians that it would deliver; that it would transform the economy. We have remained beggars. Our economy has been in the doldrums for so many years. It is still taking the bitter economic quinine that Mpasu has talked about.
WALK THE TALK
For decades, we have remained hopeful that someday, a messiah would come to fix our economic problems. Like an ostrich, we keep burying our heads in the sand, refusing to face reality or accept the fact that we spend more than we earn. Our leaders believe that when they get elected it is their time to ‘eat’. They globe trot and we all know how external travel eats up a good chunk of our forex. They employ their tribesmen; they get involved in dirty deals. Simply put, they are unstoppable when it comes to enriching themselves. They become allergic to criticism and will do anything to make sure that their critics are put in their place and silenced.
The fight against corruption is not a concern of the untouchables. The system only pins down junior officers or those who don’t have names while the fat cats and the politically-connected are left scot free to eat more and more. Officers that have tried to pursue these fat cats and the politically-connected, are threatened and get frustrated along the way.
There is a system that tends to allow thieves and the corrupt to keep doing injustice to tax-payers’ money. Somehow, the war against corruption in this country spares these sacred cows. For patriots, who want to see change and root out the vice, fighting corruption is like taking a dangerous path through a game park full of marauding lions that have not tasted meat for weeks. It’s a sacrifice.
The civil service remains in disarray. Professional public officers are disgruntled. Each administration comes with its own people who intimidate and frustrate deserving professionals. So, these professionals have told themselves not to ask awkward questions, especially when some perceived incompetent politically-connected individual is planted in a ministry, department or agency in a position that is questionable.
It is not surprising that politics is the dark spot that has ruined our civil service. When you start calling professionals names and start aligning them to the opposition, you are not only infringing upon their freedom of association, you are also causing damage to the civil service. Let civil servants be civil servants. The president, cabinet ministers and others, should only provide political leadership on the economy and on how to build a vibrant civil service.
Sadly, every administration produces some zealots who target certain people for no proper reason – other than jealousy. Their targets could be in the opposition, civil service, private sector, civil society or in the media. These overzealous chaps are also the reason why Malawi has not done very well on human rights in recent times despite the fact that we claim to be a multiparty democracy that upholds constitutionalism.
So, the wishful thinking must stop in this moment. Change must begin with those in power and permeate down to every sector of Malawi’s economy. Mindset change must begin with those who preach change. We find ourselves in this sorry state because we have left everything in the hands of the political leadership. And the political leadership is too happy to be surrounded by lackeys who are too loyal to offer any meaning advice.
There is always a political cabal in every political establishment, especially for those governing, that will try to paint a rosy picture about the current economic situation. It will not save the situation; propaganda will not solve our problems. Just one question: if we are not going towards the economic brink, where are we heading?
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