Cheetahs don’t push the buck!

Honourable Folks, while strikes appear to be everybody’s easy answer to the runaway inflation rocking Malawi’s economy, we should bear in mind the fact that by downing tools, we are not generating wealth and this may translate into more serious economic problems tomorrow.

It was already depressing news when Minister of Finance said at the presentation of this year’s budget that the economy was projected to grow by 4.3 percent. Since 2006, the economy has been growing by 7.5 percent on average and we were right on course to migrate out of abject poverty. For us to reduce poverty, we need to register at least a six percent economic growth rate.

At the projected 4.3 percent growth rate, we were already acknowledging a reversal of our fortunes back into the poverty web. The prudent thing could have been doing all we could to put our economy back on course again.

Devaluation did not come by accident. It was not even an imposition by the Joyce Banda administration. Rather, it was what the majority of us, Malawians, believed was a better alternative to the infamous zero-deficit budget of the Mutharika administration, meant to wean us from donor dependence, which turned out to be a disaster.

Within months after introducing the zero-deficit budget, there was no forex, no fuel, no drugs in hospitals and companies were scaling down operations if not shutting down altogether as they could not import raw materials and spare parts, let alone machinery.

Unemployment, crime and even inflation were on the rise. So weak was the economy that government was failing to meet its targets on domestic revenue. To save face, it doctored figures with money borrowed from commercial banks so it could lie in Parliament that we had surpassed domestic revenue targets and the zero-deficit budget was on course.

The case for devaluation wasn’t just for the sake of restoring donor confidence into the economy—extremely important though this factor was since aid makes up over 30 percent of our national budget and is the second source of foreign exchange.

We had to devalue to make the kwacha attractive to folks with hard currency. Hitherto, even diplomats could be tempted to change their money at the black market where a dollar fetched K250 when the official rate was half that amount. No wonder, virtually all commercials banks shut down their foreign exchange counters!

Devaluation was also imperative to save the tobacco industry—which is still the number one foreign exchange earner—from total collapse as farmers were being discouraged by the raw deal they got when the dollars, in which their tobacco sales were quoted, were converted into kwacha using the official rate.

There is no denying that for once MPs served our best interests when, shortly after JB assumed power, they went back to Parliament and unanimously ditched the zero-deficit budget, opting for devaluation instead.

What doesn’t make much sense today is that even university lecturers, who should know better, are passing on to their employer the whole burden of devaluation and more. The strike by Polytechnic lecturers is now going into its fourth week. They are demanding a 113 percent pay rise. Blantyre City workers demanded a 150 percent pay rise. More and more workers from both the public and private sectors are resorting to strikes, demanding a wage increase that by far surpasses the inflation rate. Aren’t we pushing the buck, a typical hippo mentality?

Industry, government and all of us are in this quagmire together. In hard times, the market shrivels and industry generally does not make the kind of profit that can allow a pay rise of 50 percent, let alone 113 percent or 150 percent! As for government, it spends money it doesn’t make and if industry does not generate wealth, its revenue base dwindles.

Trade union leaders should first check company reports before they encourage actions which may end up killing the goose that lay the egg.

Devaluation was inevitably going to cause pain. It is like pressing a boil to remove puss. It hurts like hell! Yet you bite the lower lip and let it happen so the wound can begin to heal. What cheetahs ought to do is to take this for what it is—we are paying the price for the mistakes that our elected leaders—the late Mutharika, his Cabinet and the opportunistic MPs who endorsed bad laws and policies—made while in power.

What we shouldn’t do is to allow the JB or any other future administration to take us for a ride again. We should do all we can to ensure transparency, accountability and separation of powers. Zero-tolerance for corruption should not be government’s policy but voters’ mantrap. Let those in government know if they treat corruption, extravagance and inefficiency with kid gloves, thereby allowing 30 percent of government revenue go down the drain, we will protest and kick them out at the next opportune time.

As for mitigating the pangs of inflation, let’s bite the lower lip, demand what is do-able and temporarily adjust our lifestyles by discarding some luxuries. What we should avoid as much as possible is to down tools and bask in the sun.

Going on strike may be our right but, unless we work and generate wealth, we shall face worse economic problems in future.