Economist questions Development plans
An economist has faulted Malawi’s development planning process, which has been foiled by change of governments and lack of clear agenda and priorities.
University of Malawi’s Chancellor College associate professor of economics Winford Masanjala told Business Review last week that despite implementing successive development plans since 1962, there is nothing to show for them as the country is still one of the poorest in the world with a gross domestic product (GDP) per capita of about $226.5 (about K165 345).
He said: “We have been talking of national development planning from 1962, but why is it that we remain the poorest country in the world? Our development policies made an argument to grow [the economy] at the rate of six percent annually, but if we look at the performance, we find that we have not been able to achieve that and now we are talking of 2.6 percent GDP growth for 2016.”
Masanjala gave an example of the just ended Malawi Growth and Development Strategy (MGDS II), saying Malawi has only managed to succeed in political stability while it has completely failing to accelerate economic growth for poverty reduction, conducive macro-economic environment, increased diversification and value addition of exports, effective foreign aid management and control of domestic debt.
Since 1962, Malawi has had 11 development plans whose main goal was to grow the economy at an average of six percent and these plans include Nyasaland Development Plan (1962-65), Malawi Development Plan (1965-1969), Statement of Development Policies (Devpol I, 1971-1980), Devpol II (1987-1996), Poverty Alleviation Programme/Policy Framework Papers (1995-2000), Vision 2020 (1998-2020), Malawi Poverty Reduction Strategy Paper (2002-2005), Malawi Economic Growth Strategy (2006-2011), Economic Recovery Plan (2012-2014) and MGDS II.
Giving a breakdown, Masanjala said under MGDS II, actual growth has been volatile and below target.
For instance in 2011, economic growth was projected at 6.9 percent while the actual growth was 4.3 percent, in 2012, the target was set at 7.1 percent but the actual growth was at a paltry 1.9 percent.
In 2013, growth was projected at 7.4 percent while in reality, the economy expanded by 5.2 percent, in 2014, the envisaged growth was at 7.3 percent, but the economy grew at 5.7 percent while in 2015, growth was projected at 7.4 percent but only managed three percent.
Under MGDS II, the fiscal balance was targeted to grow positively from 0.2 percent to 2.2 percent of GDP by 2015. In real terms, it deteriorated to negative 5.3 percent by 2014 while budget deficit widened in absolute and relative terms and grants fell to under five percent of GDP.
In a separate interview, World Bank senior country economist responsible for macroeconomics and fiscal management global practice Richard Record said despite having powerful development strategies, lack of implementation has hindered Malawi’s development and growth.
“Malawi needs to maintain consistency in its policies if the national development plans are to be fully implemented and yield positive results. Otherwise, we will continue seeing more development plans being developed without bearing fruits,” he said.
Ministry of Economic Planning and Development acting chief director Peter Simbani said government is consulting key stakeholders to solicit views on the development priorities for the medium-term National Development Strategy to succeed MGDS II. n
funny I thought his same professor was once in Treasury, EPD and Natural resources. What did he help with or is there anything he can show for all his theoretical expertise in the subject areas! My problem is inability to relate the theory and rhetoric in Economics to what is obtaining on the ground! Come on be real
There are good development plans and bad development plans. These Malawi plans have been downright wrong plans in that they have all lacked the right solution for this country to develop. Results speak for themselves these plans, all of them, are not worth the papers they are written on. Not only are they lacking in the truth value to address the core issue of lack of development in this country but they waffle on about nothing.
Malawi is not unique. Africa is not unique. Development comes from manufacturing wealth and services which have unlimited scalability. That will give Malawi high value items to trade with the rest of the world to increase its wealth. Agriculture is a diminishing return activity . Politicians emphasise that all you need to do is agriculture in other words they are saying “I don’t know what to advise the country to develop so carry on doing what you have been doing ever since. That is wrong!
This country must industrialise! The country is on the wrong development path people. The only medicine known to man to cure lack of development is industrialisation…. England used to be poverty stricken with people languishing in agriculture production to no avail. Then it industrialised and the rest is history. The US used to languish in poverty focusing solely on agriculture then it industrialised and the rest if history. Japan, Europe everyone is industrialised and yet this country development plans are glued to sorely agriculture. How does agriculture fix the balance of payment with the rest of the world (row) when you sell them beans, tea, leaf tobacco while they sell you cars, mobile phones at a thousand times more price. How can your infant industries compete when your interest rates are over 40% whiles theirs are 3%, how can you compete when your headline inflation is over 20% whiles theirs is 2%, how can you compete when they produce a thousands times more tobacco while you are limited to 400 million tonnes? There is no winning strategies in these development plans. That is why these are taking this country economy into dust bin. In 1980 £1 was equal to K2 to day £1 =k1000 (this year and every ensuing year that record is being broken). Currency devaluation is a sign that the economy has tanked. Development is about capital formation and yet none of these plans focus on capital formation. Fiscal policy and monetary policy don’t see eye to eye in this country in any case both don’t make sense at all. At the rate this country is going another 100 years ahead will be wasted! No one, not politicians, economists e.t.c has put forward a sound development solution for this country since independence that I can endorse. The country needs new RBM governor to fix inflation and cut interest rates and conduct monetary policy the right way. RBM cannot continue operating the main bank rate of 27% the highest in the world and hope to stimulate economic development in this country. I support the reform commission initiative as a worthwhile exercise.
The country cannot continue external borrowing for consumption instead of investment. The country needs new blood, fresh ideas on the scene to fix this economy – fast!