Hon. Folks, Finance Minister Joseph Mwanamvekha sounds optimistic that the kwacha will not roll on its back because of foreign reserves which, he claims, have accumulated to $1 billion.
Malawi being an importing economy, this also means for a while at least, we’re able to import fuel, drugs, fertiliser and, thanks to the insanity of liberalised economy, toothpicks and bottled water as well.
But unless the economy produces significantly for export and import substitution, the much touted stability, which is pretty much at the mercy of external shocks, can disappear in a flash into the cloud like a kite.
We’ve been in that situation before when Bingu wa Mutharika, emboldened by a 66.17 percent landslide he garnered in the 2009 presidential election, threw caution to the wind, antagonised donors and experimented with the so-called zero-deficit budget. The economy which was growing at an average of 7.5 percent during his first term (2004-2009) tumbled in an instant!
By the time Bingu died of cardiac arrest in April 2012, Malawians had no fuel, no forex, no drugs in hospitals and no hope. The economy overheated and so too tempers. All that happened when Mwanamvekha was Principal Secretary in the Finance ministry.
Now Mwanamvekha is back in the Ministry as its political head. Does that give him more leverage? At the first pre-budget consultation meeting on Tuesday, Mwanamvekha aptly spelt out what needs to be done to spur economic growth and improve living standards. He talked about the need to attract domestic and foreign investment to create wealth and jobs. He also talked about strengthening prudent fiscal management.
You are spot on, Mr. Finance Minister but how can that be achieved? Mwanamvekha may already have Malawians on his side if only because they are tired of a life of poverty and deprivation. The uphill battle is for him to persuade the President, his colleagues in Cabinet and others positions of power in government to be on his side.
These folks are comfortable in their comfort zones. They don’t believe Malawi is the fourth poorest country in the world. They are convinced Malawi has developed so much in the past five years that soon we shall be like Germany!
Since 1994 when the first multiparty government was ushered in, politicians have chanted that “industry is the engine of economic growth” so many times that it now sounds boring like a grooved record. Those in government have also pledged to practice good political and economic governance so many times over.
Yet by the end each presidential term of office, all we hear as proof of success are infrastructural projects—roads, school blocks, bridges and technical colleges—initiated or completed during the tenure of the outgoing President.
Our politicians don’t even brag about quality (since most of the projects are of substandard quality anyway) nor do they brag about finishing a project on time (since virtually all projects take twice as much time, if not more, to complete at twice the initial cost, if not more.
They don’t talk about prudent fiscal management because it doesn’t happen. It’s estimated that at least 30 percent of public revenue goes down the drain every year due to rampant high and low level corruption. Yet, instead of fighting corruption, different governments have since 1994 worked tirelessly to put on short leash ACB, the office of the Auditor General and other graft-busting bodies.
Transparency International’s latest rating puts Malawi at 32 on a scale of 0 (most corrupt) to 100 (least corrupt). Shouldn’t we have been at 50 or above by now considering that we started talking about waging war against corruption 25 years ago?
Any wonder that donors stopped giving us direct budgetary support and started using off-budget channels for much of their development aid? I bet even us, citizens, would’ve frozen paying tax if we had a choice. Which sane person would watch indifferently when those entrusted with the public purse allow a third of it to leak out like water in a leaking bucket?
At 32 Malawi’s corruption level is coincidentally at par with Africa’s average but there are also many factors militating against our interest to attract foreign investors including poor infrastructure, being landlocked and having no oil, gold, silver or diamond.
As for local investors, it’s obvious they are already weighed down by a dwindling domestic market (the effect of growing poverty), heavy taxation and high cost of borrowing despite the much-touted macro-economic stability.
Domestic debt, which by IMF’s benchmark is supposed to be within 20 percent of GDP, is already at over 32 percent! Foreign debt, which donors almost wiped off the slate in 2006, is now at 2.1 billion USD and growing.
Unless government manages change in a business unusual fashion, my take is that, as has been the case in the past, Mwanavekha’s nice-sounding rhetoric on spurring investment and prudent fiscal management will remain what it is—mere talk.