It’s now ‘trade, not aid’

Honourable Folks,

not all of us can have the opportunity to see how the 2015/15 National Budget has rolled out, especially on whether the projected revenue targets are being met and controls on overexpenditure enforced.

But IMF’s inconclusive sixth periodic review of its Extended Credit Facility (ECF) programme with the government is a telltale sign—even to the most economic illiterates in our midst—that the train has derailed.

The IMF delegation which was in Malawi for the past two weeks saw for itself how the government’s zero-aid budget gets fuelled by borrowings from the domestic and foreign markets.

It could be that the heavy borrowing is to cater for the deficit of K107 billion spelt out when the budget was being presented in Parliament in September.

But if revenue targets aren’t being met, then the borrowings could also be desperate attempts to survive at sea while the waves are raging. You try to cling on to anything!

Unfortunately, government is forced to borrow heavily when it’s already saddled with a combined foreign and domestic debt which is almost equal to the budget itself! Debts are a run-away train!

The IMF delegation acknowledged that the freezing of budgetary support by donors in the wake of Cashgate has had a major impact on our woes. Are the donors heartless?

The massive pilferage of public revenue is a local problem. I dare say it was caused or aggravated by lack of political will by previous presidents of the multiparty dispensation era to pay more than a lip service to the fight against corruption in government.

Although Cashgate is said to date back 2005 when Bingu wa Mutharika was at the helm, let’s not forget the scam in the Ministry of Education during Bakili Muluzi’s administration in which politicians, senior civil servants and unscrupulous contractors fleeced government of millions and kwacha meant for the construction of school blocks, fences and teacher houses.

People got paid for construction jobs half done or not done at all. Cashgate! Some of those cases remain unresolved to-date and some lucky folks implicated in that scandal ended up in leadership positions in the public sector. The defenders of corruption—and the bad guys are well-shielded by astute lawyers—simply argued that in Malawi everyone is presumed innocent until proven guilty by the courts.

That time donors opted for quiet diplomacy. If at all they spoke against corruption in government, it was probably in their confidential internal mail. Our past presidents took advantage of that donor indifference to leverage on the politics of patronage.

Friends and cronies of His Excellency could shred their rags and become millionaires overnight by exploiting short-cuts in the procurement system. Now that donors have frozen aid, government has taken the war against corruption to another level—arresting Cashgate suspects and investing in the public finance management system.

Rumour has it that “Cashgaters” in Lilongwe are no longer showing off their ill-gotten wealth by buying for all imbibers they bump into at watering holes as used to be case before.

But caution is coming rather late. While government is desperately trying to woo donors, it’s obvious that after the Millennium Development Programme meant to reduce global poverty by half by 2015 expires, the relations between the “donors” and sub-Saharan Africa will be based on “trade, not aid.”

Already, China is leading the pace on investment and trade in our part of the world, followed by the European Union, the US and other members of Brics (Brazil, Russia, India, China and South Africa). Barak Obama probably captured the spirit of the time when he said while in Cape Town, South Africa last year that the US-Africa relations will have to be “a partnership of equals that focuses on your capacity to solve problems and your capacity to grow.”

If our poverty attracted aid like street lights attract moths at night, that night is fast turning into another dawn. Government will have to figure out how to empower the 85 percent rural population and turn it into a productive machine for commodities that can attract investment and trade. Aid is fast becoming out-dated.