We live in a ‘bankers’ economy

Production is the goose that laid the golden egg, so the saying goes. But the reality on the ground, at least in Malawi, is that production is often looked down upon as an inferior undertaking to careers like accounting, law, banking and administration, among others.

People that engage in production usually apply physical effort to their tasks, which is often misconstrued as unskilled or semi-skilled labour. As I worked for a printing company some years back, rumours of a pending strike filled the air one day.

A secretary asked me, “Eti malebala aku factory akufuna kuchita strike?” (Is it true that the labourers in the factory are planning to go on strike?). The people the secretary called “labourers” were mostly machine minders running big and small presses.

It takes a longer time to train a machine minder than to train a secretary and yet here was a secretary, calling machine minders labourers. This is a consistent attitude in Malawi and relegates production to a set of menial tasks. It is exacerbated by the meagre earnings that people in production get.

For some inexplicable reason, society believes that for anybody in production to earn a reasonable income, they must rise to some managerial position. It often happens that a brilliant machine minder or operator gets “promoted” to the position of superviser or manager, a position they would not have trained for.

The organisation loses a great production individual and gains a lousy manager. Things ought not to happen this way. A production person can surely be promoted to a higher grade while remaining in production.

If I came up with a stunning graphic design, people would want to get it for close to nothing because they do not consider graphic design or anything to do with production as important.

If a lawyer spent the same amount of time as I would spend on my design, offering some legal service, they would charge the moon for it. The same can be said about an accountant or a real property evaluator.

Agreed, services are important but, if truth be told, they do not create wealth. It is production that does. Lawyers, accountants, bankers and other service providers charge a premium for their services so that they should be able to comfortably buy products—a nice car or television set or the latest suit in town. If production were unimportant so would be these things, which are nothing but the end product of all manner of production processes.

In an ideal situation, people in production would create start-ups that would provide employment and a decent living to themselves and others by borrowing from banks.

In Malawi, this option is riddled with countless problems. Many who have attempted to go on that route have ended up being slaves of the banks they borrowed from. The main reason for this is that the going interest rates are exorbitant, for want of a better description. In fact, they have been higher in the previous years.

The terms that banks impose on borrowers presuppose that the latter’s market is flawless. Usually there is not any substantial grace period before you start paying back. When the prepayments commence, you dare not default in any period for to do so would have serious repercussions.

If, for argument’s sake, the sum borrowed was K100 million to be paid back over a period of 10 years at 13 percent, you would end up paying back K180 million, almost twice as much as you borrowed initially. But that is assuming that that you have been paying faithfully every month.

The interest payment has the notorious tendency of undergoing phenomenal growth in the event of any default in payment. So, fluctuations in market conditions expose the borrower to unforeseen vulnerabilities.

Since it is a requirement that you pledge property, usually a high value fixed asset, before you can qualify for a loan, many people have lost their assets going this route. I have known people who have owned residential or commercial houses and have lost them because of bank loans.

Meanwhile banks continue to post obscenely huge profits while the rest of the economy, especially production, is in ICU. We live in what I call the bankers’ economy since borrowers end up literally working for the banks and eventually lose it all.

Of course, Malawian borrowers are also hugely to blame because given any chance, they would pay back nothing and their conscience would not prick them. This partly explains why banks are so tough on borrowers. But by and large, those who engage in borrowing in Malawi do so at a huge risk to themselves.