With the approach of the 50th anniversary of Malawi’s independence, a number of people expressed opinions on whether Malawi had under-achieved in economic development. One correspondent of a foreign magazine stated that Malawi has stagnated during the half century. This was an exaggeration.
Those who were not here when Malawi gained independence on July 6 1964 and have no personal recollections of the state of the economy and living standard are advised to get hold of the ‘History of Malawi Volume 2’ and read about the projects the Kamuzu/MCP regime introduced and accomplished. It is not true that what we see, economically and socially, in Malawi today is what existed in Malawi 50 years ago. When Kamuzu Banda boasted that he had transformed Malawi out of recognition he was making an exaggeration that had an element of truth in it.
Still, we must analyse the component of economic growth to try and see why Malawi ranks as one of the poorest countries in the world. Having been a poor country once does not mean a country must always head the league of the poor.
In 1870 or round about that time, Germany was poorer than Argentine. Now it is many times better off. There is no reason why Malawi’s per capita income should at the end of the next 50 years be higher than the per capita incomes of those countries which are now wealthier. But to achieve this would require more than wishful thinking. We must understand what elements bring about economic growth and try to make them available.
There are three basic components of economic growth. The first is capital accumulation. This means savings out of incomes, which are invested in land, physical equipment, health, education and job skills. The second is growth in population, which is the source of the labour force and market. The third is technological progress. This means new ways of performing tasks.
We must analyse each of these in turn and in greater detail.
Capital accumulation When people refrain from spending all their earnings and save some of their money which businesspeople and entrepreneurs borrow and spend on new factories, machinery equipment and other materials, the physical stock increases. It is the physical stock that economists call capital, not the money in the bank which can be used to start a business.
Countries which have achieved higher levels of growth than us have a higher level of propensity to save than we have. In the Far East, individuals regularly save at least 20 percent of their incomes. In Singapore as we read in the autobiography of Lee Kuan Yew, government introduced compulsory savings and people cooperated. In 1964 or 1965, the then Prime Minister Dr Banda hinted that he was prepared to raise salaries of higher grade civil servants provided the extra incomes were used to buy Treasury bills. In other words, civil servants were to spend their extra pay later. There was a good deal of murmuring among civil servants. Kamuzu Banda gave up the idea in case the dissident ministers enlisted the disgruntled civil servants against him.
Direct productive investments are supplemented by investments in the social and economic infrastructure composed of roads, electricity, water and sanitation as well as communication. These facilitate direct economic activities such as the production and exportation of agricultural products.
The installation of irrigation systems improved the quantity and quality of a nation’s agriculture. We must congratulate President Peter Mutharika for sending the Vice-President Saulos Chilima and technocrats to Israel to study the irrigation system there and also for sending out officials to study civil service systems of other countries to see if we can learn valuable lessons from them. This is in keeping with the idea that if we are to do things better during the next half century; we must adopt different and better methods of working. First, imitate what others are doing then invent, innovate and originate.
Human capital is a country’s most important resource. Formal schooling should be extended to everyone, followed by vocational and on-the-job training. The advanced training of teachers and the equipping of libraries with books relevant to economic growth and development is a must. A healthy population with up-to-date agricultural and industrial skills is what constitute human capital.