Finance, Economic Planning and Development Minister Goodall Gondwe may not achieve his dream of growing the economy by at least seven percent as he chalked in his first tenure during the Bingu wa Mutharika administration.
But the man must be respected for the stability he has brought to the Malawi economy during his second stint as Treasury’s political head even as his first term as finance minister was the epitome of a stellar performance.
He inherited an economy ravaged by Cashgate that dug a massive hole in the country’s finances.
That fiscal scandal also resulted in donors suspending budgetary support through which development partners used to inject resources directly into the Consolidate Fund for Capitol Hill to allocate to sectors as it pleased.
Yet, Gondwe has presided over the lowest interest rates in decades, sustained single digit inflation rates for years, relaxed atop the largest stockpile of foreign currency in history and sunbathed under a non-volatile Malawi kwacha for half a decade.
Although Malawi’s economic growth rate remains moderate, Gondwe has done one better, managing to boost the country’s gross domestic product (GDP) growth pace to hover around four percent from near recession levels prior to his time.
According to the International Monetary Fund (IMF), GDP growth could even hit five percent this year although devastating floods that have washed away crops on large swathes of land in the majority of Agricultural Development Divisions, could put spanners in the works.
And if it were not for the floods and drought-induced weak agricultural harvest and massive electricity shortages, he might just have pulled off growth rates above his favoured seven percent mark (he keeps telling me, “we can do this, Ephraim.”
His calm competence, ability to work across party lines and consultative approach to budgeting and fiscal management in general as well as his pragmatic maverick personality, has helped to bring back on track the country’s economic programme with the IMF.
These attributes also helped him to successfully complete the previous Extended Credit Facility (ECF) programme that had stalled under the Joyce Banda administration.
The ECF’s successful completion allowed him to negotiate a new one that the fund itself says is on the right path.
During the November 2018 IMF review, government met most quantitative performance criteria.
Capitol Hill even over-performed on international reserves and on the reduction in Reserve Bank of Malawi holdings of government securities.
Sure, Gondwe has presided over rising debt levels. But one also has to look at what else could have been done given the donor aid freeze, poor performance in domestic revenue collection climatic calamities and, yes, Cashgate.
Gondwe was thus forced to finance fiscal deficits domestically—an expensive way of borrowing to fund the budget—because development partners refused to unclench their fists owing to governance concerns that are a head-splitting hangover from the 2013 Cashgate scandal and which the Peter Mutharika administration and Gondwe appear not to have dealt with as aggressively as the crisis demanded.
There is also the irony of a man who achieved debt relief for Malawi under the Heavily Indebted Poor Countries’ (Hipc) Initiative who now watches helplessly as foreign debt roars back to the unsustainable levels he saved the country from. Knowing the man as I do, that will be one of his biggest regrets.
Yet, just as he brought back the country into IMF’s good books by first asking for a staff monitored programme around 2004-2005, which he passed with flying colours while securing a new programme that he saw through, Gondwe has done the same this time around as, I suspect, he prepares to leave the stage after the May 21 Tripartite Elections even if Mutharika wins.
The IMF team led by Pritha Mitra, Mission Chief for Malawi that visited Lilongwe from March 5-15, 2019 to conduct discussions on the second review of the three-year ECF issued an upbeat report that should see to it that Gondwe has his legacy guaranteed.
“Malawi’s economic outlook is favourable. Economic growth is projected to reach about five percent in 2019 supported by a rebound in agriculture and some improvement in electricity generation. Over the medium-term, growth could rise further to 6-7 percent, driven by infrastructure projects—including electricity generation—crop diversification, greater access to finance, and an improved business climate. Inflation is expected to ease to around eight percent at end-2019 and gradually converge to five percent over the medium term,” said the fund’s statement.
It is a statement that aptly summarises what Gondwe has done, including laying the
foundation for this new wave of optimism.
And as he heads for his well-deserved rest after devoting all his adult life to public service, Goodall Gondwe will remain a colossal giant—and a Statesman—that other leaders will do well to keep on their speed dial.