Devaluation, inflation, Joyce Banda and her Peoples Party (PP) are the buzz words characterising every talk and discussion forum across the country. Simply, the talk is about economy which is undergoing a turbulent time.
On regional and global scale, respective economies are sailing through troubled waters as well and things are worse for countries with weak economic bases that are heavily dependent on donors. It remains a challenge for countries to steer the course to economic recovery.
As the status quo stands, Malawi’s economy is predominantly agriculture based accounting for one third of gross domestic product (GDP) and 90 percent of export revenues.
It must be recognised that there is significant contraction in the agriculture, forestry, fisheries and manufacturing sectors. In the 2011/2012 growing season, it was anticipated that tobacco production would reach 165 million kilogrammes, but in the end, only 80 million kilogrammes of the crop was produced; hence, a reduction in foreign exchange earnings.
The tobacco industry is threatened by the anti-smoking lobby and poor pricing. Competitive prices on tobacco are now being offered and contract farming is being encouraged so that only demanded quantities of tobacco are produced and sold. Government is on a serious diversification drive and is encouraging investment in such sectors as tourism and mining.
As poverty is at its height, Malawians want a quick magic to prevailing economic woes, but the road to economic recovery cannot be completed overnight.
Recalling history, it took the Bingu administration five years to restore the economy and get it ranked second fastest growing to Qatar. In the same vein, it is virtually impossible to expect the Joyce Banda administration to restore the economy within six months as expected by many. Since 2009, Malawi has experienced some setbacks, including general forex shortage which made it impossible for the country to pay for imports, resulting in fuel shortages.
By 2009, investment had fallen by 23 percent and it continues to nosedive. Successive governments have failed to address unreliable power supply, water shortages and poor telecommunications infrastructure. No wonder Integrated Household Survey 3 (2010/11) revealed that the proportion of pro- poor had increased from below 22 to 25 percent as of seven years ago.
Mechanisms such as the Malawi Growth and Development Strategy (MGDS II) and the Economic Recovery Plan (ERP) have been instituted to articulate self-reliance, wealth creation and reduce poverty. In the aftermath of a bitter pill, Malawi economy is to slow down further this year.
In view of this, it is not right to place the current regime under tight corner over the prevailing economic woes as drastic efforts to steer the economy on course are showing results. Forex situation has substantially improved enabling easy coordination of trade policies with other countries and in turn awakening domestic economy. Although this has not reached the climax, Malawi needs $200 million (K66 billion) a month—an amount the country was no able to raise two years ago.
As the situation is about to normalise, the economy is set to grow by 5.5 percent next year, according to government projections. While criticism and suggestions are health for any vibrant democracy, it is imperative that the Joyce Banda administration is constructively advised on austerity measures and that it demonstrates the willingness to walk the talk. The presidential jet is on the hammer, presidential motorcade already slashed, salaries for the presidency symbolically reduced by 30 percent: these are commendable initiatives. Although people rush to criticise without thorough investigation on the importance of the President’s trips, its sponsors and entourage size, it is important for the State House press office to be transparent with details because most emerging outcries arise purely on malice and frustration.