At the dawn of the current millennium, economists Craig Burnside and David Dollar of the World Bank wrote an influential paper that linked aid efficacy to sound policies. President George W. Bush embraced their idea and to some extent, raised the Millennium Challenge Account (MCC). The thesis, as we know it, remains that countries pursuing policies synonymous with good governance are likely to benefit from foreign aid. In turn, such aid effectively leads to economic growth.
I do not advocate foreign aid and perpetual dependence, plus dignity issues that come with begging. But, for Malawi, foreign aid will continue to play a crucial aspect in development. We can only make it more effective as we vigorously seek to turn around our shaky narrow export base by fully embracing norms and values of a democracy. Our leaders do not have a good history of tolerating dissenting views. Its costs are high, particularly in how foreign exchange flows into the country.
There are huge costs an aid-dependent economy can incur if governance is questionable. Sometimes governance is a vague term. We can agree that it includes a free press, freedom of assembly, respect for human rights, practical fight against corruption, an independent Judiciary and protection of property rights, a free enterprise economy and many more. Our recent wars with development partners have generally bordered on bad governance other than misguided neo-colonialism rhetoric.
When the Daily Times, a couple of years ago reported about possible environment costs of the Mulunguzi Dam, the response was swift. A regional governor of the ruling UDF directed that no government business should be given to the publication. When government changed hands, a similar directive was put in place against Nation Publications Limited (NPL), publishers of this paper, for simply reporting news considered unpalatable to the DPP regime. Furthermore, a law was enacted giving ministerial powers to ban publications deemed unfit for the public. A Friday afternoon tabloid known for its sex scandal news almost got the hammer.
Fast forward. A leaked diplomatic cable led to the expulsion of the British High Commissioner after highlighting intolerance of dissent and autocracy at the pinnacle of the Executive. We still have sedition and the popular protected names laws. Generally, our history towards a free press is not good. With respect to flows of foreign aid, that we cannot afford to lose, a free press is a critical indicator for good governance.
With respect to economic rights, we have seen how government cracked down on forex bureau operators, as an example. Firstly, it was done through increasing capital requirements to force a couple of them out of business. While such regulations are important, forex bureaus do not take any deposits and once they become insolvent, the public does not lose a single penny. Later on, forex bureaus were forced to align themselves with dealer banks or faced closure. Most of them closed. Such a policy stifled economic governance by restricting freedom of choice with respect to how the public transacts business. Worse still, it was akin to forcing operators into a business alliance with banks, contrary to their business model or idea. It only made the black market vibrant amid an overvalued kwacha, but never addressed forex shortages.
And the story of July 20 and the murder of a Polytechnic student followed. Both have hallmarks of intolerance for dissent and stifling of people’s freedoms. Add a purchase of presidential jet without the approval of Parliament.
The entire bloody calabash came along with huge costs. Donor aid was frozen simply because of gross governance issues. The costs have been huge and the current government have had to correct a couple of things, albeit at huge political costs. Devaluation simply added an extra force to inflation that had been fast rising. Forex bureaus freely operate and the trading public has more options. Foreign currency controls seem to ease, but not enough.
But again, the road to recovery requires avoiding mistakes president Bingu wa Mutharika made. Unfortunately some habits never die. State House has of late taken a swipe at NPL for simply running stories deemed unpalatable, to the extent of linking it to an anti-JB agenda. To the public and development partners, such barrages of attacks are nothing but a threat to freedom of press, a bad governance indicator. It can erode some confidence gains built over a couple of months.
With January 17 fast approaching, another test awaits government on how it deals with dissent, rights of its citizens to freely assemble and express an opinion. The costs can be huge as we have learnt previously, particularly with respect to potential losses in aid flows. With import cover under one month, it is less costly to Malawi if folks wanting to demonstrate are allowed and provided with adequate security. It doesn’t matter whether the six-point petition makes sense or not. They do not need an excuse to send a message that government is stopping its citizens to exercise their constitutional guaranteed rights. Democracy, sadly operates that way, and public leaders must accept that accountability is an indispensable element of our choice on June 14 1993. Citizens, ultimately choose the way and manner in which to express their opinions, harsh as they may sound sometimes.
Otherwise, assaults on freedoms of citizens have previously led to freezing of foreign resources we critically need to do business and live comfortably. Protections of basic freedoms are an ingredient in how a country is ranked in-terms of ease of doing business. Don’t spoil the recovery dish.