Think twice on dependency

Malawi will on July 6 this year celebrate 49 years of independence from Britain, its former colonial master from the late 1890s to 1964.

Come to think of it, 49 years is a very long, long way by any standard.

Today, 49 years later, we are still depending on taxpayers in rich economies to finance our affairs, including the development budget. Of course, there were attempts by the late Bingu wa Mutharika to fund our expenditures with predominantly local resources. Sadly, the concept, apparently made out of anger and emotion after a diplomatic fall-out with Britain, has since been abandoned.

For example, in the proposed 2013/14 national budget, the Minister of Finance, Ken Lipenga, indicated that donor grants are projected at 40 percent of the total domestic revenue plus grants, up from 31.5 percent in the 2012/13 budget which was, of course, later revised to 39.6 percent.

This is besides the fact that 80 percent of our development budget depends on donors. The danger is that if they withhold their funds (based on their own opinions or wishes), contributed by their taxpayers, then all our plans fall by the wayside.

The effect of late disbursement of grants is that government is likely going to resort to domestic borrowing whose consequence is crowding out the private sector, the very engine of growth that drives the economy. By extension, the high cost of borrowing created by the situation will block an expected substantial fall in lending rates in commercial banks.

In the proposed budget, total revenues and grants have been pegged at K603.4 billion. Out of this, domestic revenue is projected at K363.1 billion or 60 percent of total revenue and grants whereas K240.3 billion or 40 percent are donor grants.

Now, in the development budget, as a country, we expect to put in 20 percent of the resources whereas the donors pump in the remaining 80 percent.

Really? Honestly, this does not reflect seriousness on our part 49 years later and counting. I mean, in this globalised world, where the world is one market place, do we expect to have a competitive advantage over our development partners?

Put it slightly differently, do we expect the donors to assist our country develop and have a competitive advantage over them? Seriously, we need to rethink our strategy towards development instead of overdependence on development partners.

This is the right time to reflect on our past, see where we went wrong and how we can improve on our weaknesses to rise to the occasion.

Dependence is also reflected in the mindset of the people who are always looking up to government or some development partner to assist them. It is like we have developed a freebie culture. Take, for example, the Farm Input Subsidy Programme (Fisp) and funding for public universities which are virtually free! The public health service? These are some of the areas weighing us down. Surely, we need to rethink and refocus our priorities if we are to develop in the next 50 years.

Most of the challenges facing the country, especially on the economic front, have come against a background of several prescriptions from international financial institutions such as the World Bank and the International Monetary Fund. Yet, despite all this, Malawi has lagged behind other countries such as Mauritius with whom it was on equal footing in terms of economic growth in the 1960s.

What went wrong? Did the economic “doctors” give wrong prescriptions or did the “patient” not follow instructions in swallowing the medicine?

We need to seriously look into encouraging local export growth by holistically implementing the National Export Strategy (NES). We need to walk the talk through action, action and more action than lip-service. The NES document should not simply gather dust on the book shelves of technocrats at Capital Hill and other places.

Finally, let us do an honest soul-searching and not let a ‘stranger’ call the shots. Remember, he who pays the piper calls the tune!