MDCHL sustainability,capacity under scrutiny
With plans underway to set up Malawi Development Corporation Holdings Limited (MDCHL) to spearhead investment in strategic sectors, analysts fear the move could face challenges because government is “more oriented towards running social programmes”.
In the State of the Nation Address (Sona) delivered in Parliament in Lilongwe on Friday, President Lazarus Chakwera said by setting up MDCHL, government wants “the resources of Malawians to be used for production and development that yield exponential returns”.
The government intends to use MDCHL to power investment in areas deemed high-risk by commercial banks such as agriculture, which is one of the three pillars outlined in Malawi 2063 (MW2063), the country’s long-term development plan.
Reacting to the development, Mzuzu University agricultural economist Christopher Mbukwa said yesterday the plan could fail because the government is more oriented towards running social programmes and enterprises and has a poor track record in commercial enterprises.
“Whenever government tries to run commercial enterprises to drive investment in the private sector, it fails,” he said.
Mbukwa cited the way government has been operating Agricultural Development and Marketing Corporation.
He urged the government to focus on removing the barriers such as high interest rates and inefficient government bureaucracies that have been stifling private sector investment in strategic sectors of the economy.
In a separate interview, Catholic University economics lecturer Greenson Nyirenda cautioned that the success of MDCHL could be compromised by political patronage and interference.
“Most of the State-Owned Enterprises fail because they are filled with people who are not competent enough to run them,” he said.
National Planning Commission director general Thomas Chataghalala Munthali, whose organisation spearheads the implementation of MW2063, said MDCHL is meant to be a holding company not a development bank.
He said MDCHL’s main role would be to catalyse investments in all the strategic sectors of the economy, especially where there are glaring market failures despite huge investment and market potentials.
Said Munthali: “The governance framework for the new MDC will comprise professionals not mere political appointees.
“The key lesson from the past is that MDC will this time be a holding company working in strong alliance with the private sector through special purpose vehicle not going it alone saves for few exceptional cases where the private sector is completely non-responsive.”
