Proud of the reforms progress, but more needed

So, the World Bank has ranked Malawi the third topmost reformer in Africa on the ease of doing business.

I guess congratulations are in order for the government, particularly the Ministry of Industry, Trade and Tourism, which is the policy driver for the sector.

In the report released on Monday, the World Bank also places Malawi as the 10th top reformer globally on the ease of doing business index, moving 23 steps up the ladder to 110 from 133 last year out of 190 economies.

This represents a 17 percent jump over the period, an improvement that dramatically improves its chances of attracting investment at a time developing countries are in cut-throat competition to attract foreign direct investment crucial for rapid economic growth and development, job creation and poverty reduction.

Among the major reforms that have propelled the country are the enforcement of the Credit Reference Bureau Amendment Act, which made it mandatory for financial institutions to provide information to the bureaus for consumer and commercial loans, the enactment of the Insolvency Act of 2016 that established priority rules inside and outside bankruptcy procedures and the reforms in dealing with construction permits.

According to Minister of Agriculture, Irrigation and Water Development Joseph Mwanavenkha, who was Industry, Trade and Tourism Minister during the latest doing business review period, regulation that government is executing, including the Control of Goods Act and the National Agricultural Policy that will make it much easier for investors to invest in Malawi, have also helped to improve the country’s standing.

This is all good, but as Mwanavenkha himself notes, there is more that needs to be done.

These reforms may have been great in terms of giving us a high ranking, but will they be executed in a way that benefits the ultimate target—the private sector?

And how ready is the local business community to take advantage of these reforms to also improve their business processes, boost output and quality of their goods and services—and ultimately contribute to higher gross domestic product for the country?

Furthermore, these reforms cannot be done in isolation—they have to be part of a broader, better coordinated and harmonised approach to how we support entrepreneurship in the country.

Granted, the rating is great, but will it mean anything if businesses produce goods and services that they struggle to take to the market—whether locally or to the global arena if transportation costs add 30 percent to their operating expenses? Can they be competitive? How can they survive and thrive if interest rates remain one of the highest in the region, adding more to their operating costs?

I know there have been efforts to cut rates, but the slashes are not deep enough to make a difference.

Even if government removes administrative bottlenecks for businesses, what difference would that make if they can only have two hours of power all day and water supply is painfully unreliable? How can they ever produce anything?

Will they need a full staff complement just to work for two hours? Folks, if this country is looking for the biggest job killer of the moment, it should look no further than the Energy Generation Company and Electricity Corporation of Malawi.

And if businesses have to depend on expensive diesel-powered generators to produce anything thereby worsening their operating expenses, what good would a few touted paper reforms do them?

I do not want to take away anything from the hard work and achievements that Capital Hill have demonstrated in the area of reforms, but there is just so much that is frustrating businesses that gains elsewhere are almost immediately being ruthlessly cancelled out even before celebratory champagnes pop off.

But to be fair, it is also not possible that government can improve everything at once.

These changes are unlikely to be radical and wholesale—it would be reckless. They are likely to be incremental and so far, it looks like the direction being taken is the right one.

But the private sector too has a responsibility to closely study government policy and the direction it is pointing and adjust accordingly so that we all pull in one direction.

Like I always say, there are a lot of micro issues in companies, which only the firms can correct—government can only set the tone.

The rest is up to businesses and citizens to take up the challenge.

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