Macra trapped in regulatory capture

Malawi Communications Regulatory Authority (Macra) is under siege. The parastatal has always been the subject of political interference and business capture, with the stand-off with MultiChoice Malawi being a case in point. Well, this week, Macra issued perhaps the shortest update on the state of impasse with MultiChoice.

In previous statements, Macra went to town narrating events surrounding the stand-off in lengthy paragraphs. The change of tone in the short statement smells of frustration on the part of Macra after waging such a gallant battle against the imperialism of multinational business corporations. Clearly, Macra has been trapped in regulatory capture.

Regulatory capture is a situation where regulatory agencies may come to be dominated by the interests they regulate and not by the public interest. The result is that the agency instead acts in ways that benefit the interests it is supposed to be regulating. The regulatory agency also becomes powerless as it cannot enforce its own mandates.

Political interference often mediates regulatory capture. Economic interests also divert the legal mandates of the regulator and disturbs the accountability, monitoring and oversight functions.

As a result of regulatory capture, institutions serve the interests of powerful businesses elites. Sadly, the industries to be regulated begin to unleash power and begin to behave in ways that undermine the regulator. Multi-national corporations and transnational industries often use their global power and resources to overpower national regulatory agencies.

In certain extreme cases, multinational corporations with vast amounts of wealth have the potential even to influence election outcomes because they have preferred political leaders who will advance their capitalist agendas. Unfortunately, these powerful multinational businesses often prioritise their commercial interests at the expense of sovereign or national interests of countries they operate in.

For example, business firms in oil producing countries such as Nigeria have unleashed their venom of regulatory capture to the extent that corruption, plunder and conflicts have become the order of the day. Weak regulation in the mining regions of Democratic Republic of Congo has resulted in massive looting of mineral resources and other forms of natural wealth, breeding Africa’s longest war, and generating deep and severe poverty. Regulatory capture has deepened the resource curse where national wealth is exploited with no traceable benefits to citizens and local populations.

In Malawi, regulatory capture is tangibly visible. Allegations of bribery, fraud and corruption in oil deals mean that Malawi Energy Regulatory Authority (Mera) is sank in the mire of regulatory capture, with National Oil Company of Malawi (Nocma) facilitating some bad oil procurements. Failure to properly exercise regulatory powers is also visible when water boards continue to operate with gross inefficiencies and shrouded in abuse that lead to poor water and near-crisis sanitation conditions in both rural and urban areas.

Similarly, regulatory capture in the road infrastructure sector is the reason Malawi continues to live with bad roads that are infested with award-winning potholes. Escom also suffers episodes of political capture where for years the parastatal has been hijacked with personal and narrow political interests resulting in inadequate capacity to distribute electricity.

Recently, elements of capture bulldozed their way into the electricity sector to the extent that Power Market Limited was dissolved, a situation that makes Egenco nervous. Breakdown in land regulations is the reason chunks of land have been sold to foreigners and rich people, leaving ordinary villagers landless

However, the story of Macra offers interesting lessons in terms of how a regulator can relate with its parent Ministry of Information. Is it possible that cabinet ministers went behind the back of Macra to negotiate the deal? Well, Macra might have lost the battle, and rule of law might have lost, but yesterday DStv was back on air.