Brevities on economic forecasts
In the Weekend Nation of January 27 2018, timely warnings were given by spokesperson of the International Monetary Fund (IMF) and the African Development Bank (AfDB) about the higher inflation rate ahead of 2019 general elections.
The warning is by no means misplaced. Election induced inflations of the astronomical type occurred in 1994, the last year the Malawi Congress Party (MCP) was in power.
Hitherto, elections did not cost much because the MCP was not competing against another party during the one-party era. Besides, the party used to raise funds by compulsory means; people were forced to buy MCP membership cards. Those who could not produce them were not allowed to enter markets, obtain services at clinics or board the only existing bus services operating in the country. Swarms of the youth league agents converged on houses demanding gifts of money for the president. Because of this, MCP did not have to worry about expenses for election campaigns.
By 1994, Dr Hastings Kamuzu Banda had directed party activists not to demand money on his behalf or the party; new parties had been founded. The government had to borrow from the Reserve Bank of Malawi (RBM) funds for the referendum on multiparty politics and for the elections. Following the referendum, borrowing from the central bank simply meant ordering it to print additional notes. These notes flooded the economy and sent up prices in accordance with the demand-pull theory of inflation, that is too much money chasing too few goods. I cannot remember the exact inflation figure but it was over 50 percent.
The governments that followed the MCP also succumbed to the same temptation of excesses, borrowing funds from the monetary systems to win elections. But this was not the only source of galloping inflations.
There has been a tendency in the public service for sectors to go on strike as elections approach. To count the votes, government had readily conceded to the demands. Non- professional members of the two departments have been particularly prone to resorting to blackmails. What is puzzling on the part of the government is that those who have gone on strikes for weeks or months have been paid their salaries in full, thereby encouraging the strikers to be uncompromising in negotiations. This is rare in developed countries where trade unions started. Their trade unions accumulate funds from members’ subscription to be used during strikes. The manner the public service is run shows not only dishonesty of the Cashgate type but inefficiency. In the very department that is charged with husbanding public funds, what do you make of the admission by an officials that he cannot tell how K500 million was spent?
There will be less need to increase public borrowing if spending can be drastically curtailed. This requires strong will-power, such as the one Maggie, the magnificent iron lady had when she was prime minister of Britain. She brought in an outsider, an executive of Marks and Spenser to monitor departmental spending and achieved a lot of savings. Mere circulars from the Accountant General’s office to controlling officers not to overspend have had unimpressive results.
According to The Nation of Tuesday January 30 2018, the Famine Early Warning Systems Network (FewsNet), due to mixed seasonal rainfall some parts of the country will experience low crop yields. This means those parts will require public assistance to escape starvation.
By hindsight, we can now see that President Peter Mutharika was prudent in hesitating to permit the export of maize during the last year’s bumper harvest. It is high time we kept accurate records about the rhythm of rains, droughts and famines.
It seems that recurrent good rainy seasons have become rare. One year’s good harvest should not give us a sense of equanimity that the famine has gone forever.
Some of the people who do not seem to worry about the imminent food deficits are within the Blantyre City Council bureaucracy. I live in Nyambadwe Housing Estate. Every morning as I leave my house to board a minibus at the stage near the Blantyre Water Board (BWB), I paused briefly to look at the plot of maize crops that have been slashed down just when they were beginning to tassel. The owners of the field are humble people but hard working. Every year, they raise a healthy crop. I asked the women selling green things nearby who had cut down the crops. I was told officials of the city, meaning the Blantyre City Council.
Is this the way to contribute to the conquest of famine? Depriving a humble family of its crop? We are likely to be told that this was done in compliance with the city’s by-laws. But was it impossible to tolerate this just for a period of two months to let the family harvest its crops?
Laws must be carried out with a sense of fairness and humanity. This is what we must understand when we hear Cicero, the Roman philosopher and lawyer say salus populi suprema lex or the welfare of the people is the greatest law.
