The Government of Malawi has introduced licence fees for the cultivation of medicinal/ industrial Cannabis, but some Malawians are unhappy

If there is one example of a country whose people are so engaged in it’s Political and Democratic process, but also so easily enraged that at the slightest whim they’ll publicly criticise any decision from their government – when such is deemed wrong or unfair, look no further than Malawi.

Recently the Tonse Alliance government of Lazarus Chakwera gazzeted cannabis licence fees for the cultivation of industrial or medicinal hemp (cultivation, storage, distribution & selling), as part of it’s commitment to implement the legalization of cannabis cultivation and processing (following a bill which Malawi’s parliament passed in February 2020), and take advantage of the huge opportunities that exist within the sector.

However the decision has sparked a huge national debate, with some Malawians complaining angrily that the fees are too high and unaffordable for the average Malawian farmer, whereas others disagree with this complaint and are saying that the fees present an opportunity for groups of farmers to work together in cooperatives, managing larger and more efficient commercial farms, instead of the archetypical small subsistence farms common in Malawi.

Among the complaints being made is also the assertion that since the fees are beyond the affordability of ordinary Malawian farmers, it will in fact be those with deep pockets and foreign investor companies who will ultimately come to dominate the market, creating another monopoly that is controlled by a select few, and which is beyond the reach of ordinary Malawians.

The government has missed an opportunity to empower farmers in the villages – some of whom have been cultivating cannabis illegally in hidden farms for years, who would have otherwise been legitimised had the licence fees been affordable.

The government has missed an opportunity to empower farmers in the villages – some of whom have been cultivating cannabis illegally in hidden farms for years, who would have otherwise been legitimised had the licence fees been affordable. – one person told me.

Sameer Suleman, chairperson of the Parliamentary committee on Agriculture, described the cannabis licence fees as a deliberate move to prevent Malawians from benefiting from hemp farming.

A Malawian tobacco farmer

It’s unfortunate that many Malawians cannot afford the licence fees for the cultivation of medicinal / herbal cannabis, but it is not surprising seeing Malawi’s weak economic standing on the global stage. It is also true that several large industries in Malawi (Rubber, Coffee, Tobacco & Sugar to name a few examples) have come to be dominated by deep-pocketed individuals or well-resourced foreign companies, some of whom demand cheap labour and low tariffs on the raw materials they export. For this reason, my sympathies lie squarely with those who are calling on the government to do more to help Malawian farmers, the great majority of whom would struggle to raise $10,000.

One way of achieving this would be a Cannabis Cultivation & Processing Loan Scheme that would be extended to a group of farmers, say a minimum of 3 farmers who get together to collectively cultivate the crop. The way it would work is that a ‘Commune‘ of 3 or more farmers would get together and register their interest for a licence with the Cannabis Regulatory Authority, including providing details of the size of the land that is to be used, it’s location(s) and what crop(s) are normally grown on it.

The government would then record these details and after a verification / inspection process, would issue the licence, stipulating that the licence cannot be transferred / sold to a party other than those to whom it has been issued; that only the farmers named in the commune can use that licence.

The farmers would then be assisted with technical know-how, training, equipment (Fencing, solar panels, irrigation equipment, etc.), or other essential inputs that are required for the optimal cultivation of the crop. All this would be part of the loan. A small collateral would probably be required, although such would need to be means-tested, in that poorer farmers should be exempt.

A Cattle auction

Once the crop is ready, an Auction House or stock exchange operating under the auspices of the Cannabis Regulatory Authority could be established that deals with marketing various grades of the crop to buyers, both local and international, both physically and online. The licensing fees (or a part thereof) for the licence issued to each commune, and other capital costs, would then be deducted at this stage, or over several years.

I believe such an approach would lessen the financial burden of raising the licence fees, and capital costs, on impoverished farmers, and would ensure that Malawians are not unfairly prejudiced by their economic circumstances.

I think this would be a better model of taking advantage of the opportunities in the sector, while not excluding Malawian farmers, however, an alternative approach could be the use of public private partnerships.

But to be fair on the government of Malawi, this sector is being seen as one way which can help them balance the country’s books. When Tobacco sales (Malawi’s largest source of export revenues) have been declining (they were down 31% recently) and the country’s economy has been negatively impacted by COVID-19, a fresh in-demand crop with established international markets presents a rare opportunity.

Our view as regulator is that if we get honest investors, the hemp industry can supplement export revenues from tobacco, and in some cases, surpass it. But it will not immediately replace tobacco” said one Boniface Kadzamira, the Board chair of the Cannabis Regulatory Authority.

So I don’t necessarily think the licence fees should be slashed by too much. As a compromise, maybe an explicit distinction needs to be made between “Private applicants” and “Corporate applicants”? Done this way, the licence fees for corporate applicants can actually be increased to say $25,000, helping subsidize the private applicants.

Malawi among other things is also famed for its recreational Cannabis sativa strain known as “Malawi Gold” , which is extremely hardy, and according to a World Bank report is among “the best and finest” marijuana strains in the world.

Creating Large State owned corporations

They have them in most developed countries, and there is no reason why Malawi shouldn’t have a few.

For example did you know that Parpública, the Portuguese behemoth founded in 2000 and with assets worth US$13 billion, and which owns Air Portugal is a state-owned enterprise?

In the quest to find alternative solutions of economic development, the very first thing our country needs, maybe besides a mindset change, is to raise significant amounts of Capital.

This can be done in a number of ways, but probably one of the best ways is by issuing Sovereign Bonds. Using Sovereign bonds can lessen the debt burden on Malawi, and prevent the country ending up in the debt mess spiral that countries like Zambia and Angola have found themselves in.

This is because aside from the fact that the government would set the terms and conditions of the Sovereign Bonds issuance, it would also allow domestic Investors to invest and would not disproportionately make the country beholden to a foreign financier, private or public.

The reason we need such Capital is to make large strategic investments into infrastructure and equipment, which with proper planning and execution can enable Malawi to manufacture certain products which our people need most (domestic market),  but also for foreign markets, and for which we have a steady and affordable supply of raw materials.

So for example, we can use such Capital to buy a refinery to manufacture Ethanol for use in the Pharmaceutical industry and in alcoholic beverages, and for use as an additive in Vehicle fuels, by expanding and starting one or two additional sugar plantations and processing plants as the ones they have in Dwangwa and Nchalo, in a similar rural area. The ethanol product can also be exported to neighbouring countries cheaply undercutting their current supply chains, but creating a new revenue stream for the Government.

The waste products from the sugar plantations (bagasse https://www.sciencedirect.com/topics/agricultural-and-biological-sciences/bagasse ) can be used as a biofuel, reducing our country’s over-reliance on firewood – which is worsening deforestation situation in Malawi, and is responsible for the numerous floods we experience almost every year.

Similarly, a large Sheet Metal Fabrication factory could be established to manufacture Iron sheets for roof houses (malata) to be used to supply hardware stores across the country.

Both the Sheet Metal Factory and the new Sugar Processing Plant would create employment for thousands of Malawians, and can be scaled intonmuch bigger operations if required. New and organised dwellings and townships can then be created around them. 

This is one way of creating large state owned corporations that can give jobs to thousands of citizens, creating employment across the country.

There would be other added benefits, such as more equitable spreading of the prosperity of the cities into the rural areas, decongesting the cities of traffic, and reducing migration to cities – as more working-age people would choose to live closer to these rural factories – where they can find jobs.

Finally, it would accelerate the provision of decent housing, water, sanitation, communications, energy and transportation infrastructure to the rural areas – factors which would contribute to the fight against poverty.

The Secret to successful state-owned enterprises is how they’re run (The Conversation)

More interesting posts at

http://malawiace.com

What Young Malawian Entrepreneurs Need

Draft Template/ Working Document/ Collection of thoughts. Introducing the Youth Development Cooperative (YDC).

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Overview

unemployment-africa

Young people across Africa are hungry for success. From the technology clusters currently popping up in Kenya, to those in Ethiopia young Africans want to do well.

As a small landlocked country, Malawi is disadvantaged in many ways. But those geographical challenges also present the country with an opportunity. It means we must work smarter than our neighbours to not only survive, but to thrive. It means we must innovate.

Thus, there is hope in that the government can enact several laws, pass executive orders and generally assist in creating a climate which would improve the business environment for many young people, as long as they have a desire to succeed, and are willing to work hard for it. I hope Peter Mutharika’s government does this because such will in the long-term stimulate growth, employment, and contribute to poverty alleviation across Malawi and neighbouring countries.

The text below is a collection of thoughts, ideas and inspiration from multiple sources, and should be understood to be a working document, or template that can be improved, and not a perfect suggestion. Any critique is welcome.

Firstly a public body [Youth Development Cooperative (YDC)] would need to be created that has:-

  • An executive branch made up of seven salaried senior positions (Director, Company Secretary, a Commercial Director, a Business Development Adviser, a Human Resources Director and two Administrative assistants) each on a 3 year once-renewable contract. They will be appointed on merit based on their qualifications.
  • They will be the face of the organisation, and in charge of management and other functions as outlined below, including employment (each of the centres described below will need a Manager, a Business Adviser and five or six employees to work shifts in running the centres).
  • The YDC will have a Board of Governors made up of nine people (for example 3 from CSOs, 2 from clergy, 2 from the Business Community, and 2 diplomats from foreign embassies) who will serve an unsalaried maximum term of 3 years. While this may seem like a random and unusual collection of people, the thinking behind is to create a board that is resistant to ‘interference’, or as resistant as can possibly be, and that is truly interested in the development of the youth, as opposed to financial gains / allowances. From my experiences, and close observation of boards of parastatals in Malawi, patronage can disable / destroy an organisation which would otherwise thrive.
  • The Board of Governors will have the power to make appointments of the executive of the cooperative (by vetting & voting). They will be responsible for reviewing the individual performances of each of the members of the executive, and decide whether to renew their contracts or not.
  • The seven members of the board of Governors (excluding the diplomats) must be selected by a public vote (on a district majority basis) in which any Malawian aged 16 years and above can participate. No more than one candidate may be selected from each of the 28 districts of Malawi AND no more than 3 people can be selected from each region (South, Central, North).  The 2 posts offered to diplomats will rotate among foreign embassies who elect to take part, and they will be free to send a person they choose.

The importance of such an arrangement is to ensure that the organisation is truly independent, and not be politically aligned. In this case,  it is in the interests of all Malawians for young people from across the country to thrive irrespective of  political party affiliation, thus the board should be representative of the country.

The organisation will be created to tackle five primary areas in which the Malawi government can intervene in stimulating growth, and helping young people thrive.

1. Lower barriers to entry for Malawian Nationals

barriers2entry

The government must ensure that they lower barriers to entry for young people in Malawi:-

  • Information Technology – We live in the information age, and IT is critical to the growth of our country’s economy. So the government must establish Public IT Centres providing free internet (satellite or other reliable service with minimal outages) and hot-desking facilities to support any Malawian under the age of 35 who wants to start a business. It should be a place where young people can receive free advice and teaching on web technologies and other subjects. It should be a place where young people can go and exchange ideas, a place to read national and international newspapers, and get exposure about what is happening across the business world across Africa and internationally. This will help in inspiring young people of promise about where the opportunities are, and how to take advantage of such opportunities locally. It will also be a place where they can learn how to code and write software, including networking with other like-minded folk. Each YDC centre must be equipped with 2 or 3 classrooms, 3 meeting rooms, an IT room with at least 30 desktop computers in it, printing facilities (a paid service), a canteen (to sell drinks and snacks), a common room stocked with everyday newspapers in English from Malawi and from across the world, a news room with 3 or 4 TV sets showing different channels, a storage basement, and toilets.
  • Following a successful pilot run in 3 centres, (Blantyre, Lilongwe and Mzuzu), if 7 additional centres can be created across the country (one in each of the following towns/ cities: Chikwawa, Zomba, Mchinji, Salima, Kasungu, Nkhotakota, and Karonga) to begin with, that would be a promising start.
  • Such centres would create direct employment, initially for around 77 people, and could later be expanded to include specialist science and business libraries (to encourage reading and for dissemination of information, and to teach modern technologies).
  • They could be used as bases for visiting foreign health specialists to hold community clinics. Additionally, the classrooms can be let out to Aid Agencies (for a fee) for community work or rented out to others needing space to hold meetings.
  • Software will be installed to block social networks, and ensure the facilities are used for educational / business purposes, and critical bandwidth is not wasted on downloading entertainment videos. Wi-Fi would be provided for free for those with laptops / smart phones, although depending on bandwidth, computer time will be capped to only 6 hours per person each day to give access to moree people.
  • In order for each centre to be functional, it must run on both the energy grid, and eco-friendly energy like solar panels, and have backups in the form of diesel generators, so that services should be up and running even when ESCOM  power supply is down.
  • Business Support – Many young people in Malawi feel powerless and disillusioned. They leave school only to find there are no part-time jobs for them to do, nothing to help them in their quest to get independent and be part of the economy. Most live at home years after graduation, doing nothing. They end up wasting time, in gangs, mixing with the wrong crowds, committing crimes, drinking their lives away, or being an expense and source of shame and worry to their parents and neighbourhoods.

This vicious circle is unsustainable for a country in which ~45% of the population is less than 16 years old.

What is needed is a pipeline where those young people aged between 16 and 35 years, who are interested in entrepreneurship and business, can be tutored, guided, mentored, directed, and empowered. For those still in school or undertaking exams, YDC centres can contract local teachers to provide tuition for students who need more help with their studies, benefitting both teachers and students.

For those who want to start a business, gain additional knowledge to improve their lives, the YDC centres could offer classes and guidance on

  • (i) Venture Capital
  • (ii) Business & Revenue Management including book-keeping and such daily tasks
  • (iii) Advertising
  • (iv) Saving
  • (v) Taxation
  • (vi) Legal compliance
  • (vii) Managing Debt, and
  • (viii) Customer Service.

Using the YDC centres around the country, such type of instruction can be provided to young people to enable them to be entrepreneurial and support them in being productive citizens. This will also create employment, and Public Private Partnerships could be utilised to communicate such knowledge.

Capital23

  • Business Loans / Venture CapitalThis seems to be the biggest challenge/ barrier to entry for young people in Malawi. Most are willing to learn, to venture out and have a shot at a business, but many have no source of capital.

A system should be created where low-interest loans (not more than 10%) as low as $500 to upwards of $5000 are extended to young people with promise, without the stringent collateral of land /property required by banks ( most young people don’t own property or land…). In order to safeguard against abuse, eligibility should be tied to an examined course spread over 3 – 4 months designed to test certain competencies–with classes which every applicant must attend, and an exam which they must pass to be eligible. A criteria should be formulated which ascertains the merits of each business proposal. And once an applicant is successful, the funds must be disbursed in phases, and primarily be used for:-

  • procurement of goods or resources for use or for sale by the new business, including for example buying a service online
  • for logistical support, such as ordering goods abroad.
  • for payment of business costs such as company registration, marketing, or transportation
  • to pay for educational courses, or web design, web hosting and such like.
  • for minor expenses not exceeding $50 each.
  • possibly for start-up wages to employees (strictly from month 1 to month 3 only) depending on the monthly turnover.
  • And to pay for specialist expenses (for example a young man who wants to start a butchery, or a takeaway restaurant will need to rent out a building. Their needs and requirements will be different to those of a person running a removals / commercial cleaning business, which will be different to someone who wants to establish a call-centre/ video game development company.

Funds must not be used to pay salaries beyond month 3, nor be used for food, or paid directly to an applicant’s personal account.

Each Centre Manager and his Business Adviser together with the Secretary and the YDC’s Commercial Director (both of whom would roam across the centres as required) must review each request, and properly consider whether such would be the best use of funds for that business.

  • Finally, any assets, property or land acquired by an entrepreneur using funds from the YDC will remain the property of the YDC until after each loan is repaid in full. At that point 70% of the equity stake in the new business will pass to the entrepreneur, whereas 30% will remain with the YDC. This is important for liquidity, although in the event that a funded business turns out to be a great commercial success, the entrepreneur can buy out the YDC on payment of an agreed fixed sum.

A business will be able to begin its operations as soon as it has procured its requirements, thereby allowing use of the acquired assets to service the loans it owes to the YDC. One of the duties of the centre manager and his business advisor will be to monitor the progress of each business registered to his centre, and give advice as appropriate.

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  • Affordable office SpaceThis is also a challenge. However, with the above centres, the hot-desking facility could create casual shared office space for 40 – 50 people at each location. Collectively that’s giving an opportunity to 500 or so young people the ability do something positive with their lives. And should 0.6% of those people (3 people) create ventures with an annual turnover greater than $500,000, the potential of such centres would begin to look significant.
  • Users of the centre’s hot-desking facility would need to book use of the rooms by text or phone beforehand, however the other aspects like the computer room and news rooms will be on a first come first served basis.
  • Affordable Warehousing Space

warehouse1So, you’ve taught them how to run a business, and provided resources such as a business address for them to receive post from, to enable them to seek opportunities. What you also need to do especially for those businesses who will be importing raw materials, equipment or products from abroad,  is provide a secure warehouse space, whereby a person can hire a locker, space on a shared shelf, or a small room, to store and stock their wares and goods at low prices. This way we are reducing the cost of doing business, and removing another barrier.

2. Lower Logistical costs

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a truck with a trailer

It is also important to lower logistical costs for new businesses because this is one of the barriers stopping our economies from moving forward. On this note, more resources should be invested in better roads, and in particular in ensuring that the Nsanje Zambezi inland Port is cleared by the Mozambican Government, so that it opens for business.

In the interim, the cost of importing goods and equipment must be reduced by:-

  • The YDC hiring a 40 foot container, for imports from Europe, (departing from a port in the UK), another 40 foot container for imports arriving from the US and a third 40 foot container for imports from Dubai and Asia (including China), to operate once every two months. The shipping fees must be preferential to Malawians, and at least 35% cheaper than those charged by other shipping operators. This means a number of things.

(i) Malawians in the diaspora can use such a service as a way of giving back to Malawi to send their goods back home instead of using foreign services that do not benefit Malawi.

(ii) Thus, it means additional Forex for Malawi, money which can be used to expand the scheme or donate to worthy causes such as building new schools or hospitals.

(iii) It also means some aid organisations and charities in Malawi could be persuaded to use the YDC’s shipping service, and not any of the others foreign ones.

(iv) Businesses in Malawi, including those under the YDC will have a cheaper and reliable way of getting goods to Malawi.

(v) The YDC will have a revenue stream which it can rely on to pay its employees and finance the expansion, development and operation of its centres.

  • Similarly the YDC could invest in at least 4 heavy goods Trucks (to get the containers from ports in Tanzania or Angola to Malawi), 2 Buses, 3 minibuses, 10 estate vehicles, and 10 vans, as capital assets, and to assist in the functions of the centres. All these assets will be sources of revenue, and contribute in lowering the cost of doing businesses for businesses operating from within YDC premises. To keep costs low, such capital assets can be purchased second-hand at reasonable prices.

3. Civic Education

Image from UNESCO
Image from UNESCO

An educated population is an empowered population. So Civic and adult Education is very important not least because when parents are educated, they will emphasize the value of education to their children. Thus, it would be in the best interest of the Malawi government for such to be provided to help increase literacy levels and educate the rural populations. Thus the YDC centres can be used as a way of crowdsourcing resources. So for example, a group of farmers could be assisted by the YDC to procure a tractor for their local cooperative. The YDC could act as a middle institution to identify the need, facilitate the procurement and assist in maintenance or upkeep.

This initiative may also be a way of safeguarding against corruption and attracting investment from donors in that funds are provided to a whole bloc of people with a common purpose instead of being given to individuals.

4. Export Advice

Malawi is a small market and for our businesses to truly grow and survive, we need resources from far and wide. This will also mean selling as many of our products abroad, and making a profit in the process. It means that for our entrepreneurs to create sustainable ventures, they will need to be competitive on the global market.

  • Thus, the education our entrepreneurs receive must be comparable to global standards,
  • Businesses must be encouraged to have a cross-border strategy following proven principles.
  • The YDC can help small businesses to export to our immediate neighbours and even internationally.
  • Export Experts would need to be contracted  to run seminars to teach businesses  about exporting, and why exporting for a small economy is crucial.

5. Tax Breaks

Why should young people in Malawi – who have more obstacles – not get tax breaks when foreign corporations are allowed to do so? For the first 18 months of each new business / company that is incubated within a YDC centre, tax breaks must apply so long as its revenues do not exceed $20,000 a month, and so long as it’s not a subsidiary of a larger company. Tax breaks can help create a breathing space for a new business to be established, before the state’s demand of tax becomes a factor to be considered. In any case, employees will still be paying income tax, so the country will not be losing out significantly. Audits will be required to prevent abuse.

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Why didn’t successive Malawi Governments act to stop the looting of US$2 billion+ from government accounts?

Photo Credit: Nation Publications Limited
Photo Credit: Nation Publications Limited

Before any talk of a new IFMIS is taken seriously, Malawians need to be told how much money is missing from government accounts, and why successive governments failed to stop the recklessness and impunity that has led to the loss of at least US$2 billion from Malawi Government accounts the last 6 years.

Anything less is simply not acceptable. And I must say that task could have some serious casualties, complete with more blood than seeped out of Mphwiyo’s gunshot wounds.

Lets see, under DPP’s watch at least US$500 million went missing. That’s only from 2009 to 2012. Who knows what happened before that? Who knows how much was lost between May 2004 to December 2008, or even before that during Muluzi’s tenure?  Do we have the audits going back all the way? Should we have such audits so that there is full accountability? In any case, if there is no accountability how can the system be fixed?

What about aMai? From the depths of her self-imposed exile, what does Joyce Banda and her people’s party have to say for themselves about presiding over the loss of at least US$400 million? And this is only from sums over MK1 million, as I tried to explain here.

I think Malawians deserve to know.

If it is accepted that at least US$2 billion has been misappropriated the last 6 years, then both the government of Bingu Wa Mutharika and Joyce Banda’s government had access to the same IFMIS reviews and reports which contained advice on how to tackle the problems in the government financial system. Make no mistake the PwC report is not the first!

This is not about finger-pointing, but understanding where things when wrong. The question remains, why didn’t Bingu Wa Mutharika, or Joyce Banda (and their officials) plug the holes to the government financial systems when they each had the chance?

When they were informed of the loopholes on numerous occasions? When people at the National Audit Office, at the Ministry of Finance and at OPC knew what needed to be done.

Did it really have to take Mphwiyo’s blood for the issue to come to the fore? And millions of dollars spent on international accountancy firms – churning out dubious reports? When numerous official reports had been commissioned previously, pinpointing the problems, and how to fix them?

I don’t think so.

Watch this space to learn why.

Growing African economies that will work for African people

African market
Women at an African market

Tanzania just announced that it will dump English as its official language in schools, opting for Kiswahili instead. This morning, I read this article that somehow appears to suggest that this is a bad idea.

I must say I disagree, and below I’ll try to explain why.

When the colonial powers came to Africa, one of the first things they did was to impose their own languages as the language of learning in their territories. France imposed French in the various west African territories it colonised, Portugal imposed Portuguese, Holland imposed Dutch and Britain imposed English and so on. This had the effect of dividing communities which were otherwise related. The overall effect was to stop any hope of large countries the size of the Democratic Republic of Congo from ever emerging out of Africa. It was divide and rule of the purest form. Fragmentation – a cruel tactic designed to tie the future of those then colonies forever to the colonial powers.

So the english taught was not necessarily to be a conduit of knowledge transfer that would empower the colonies as some people would have you believe. Instead, it was a move to make sure that schools produced compliant subjects which could easily be manipulated, and do the bidding of the colonial masters in Europe.

And that is reason enough in my view for Tanzania to change the official language to Kiswahili, because the motive of colonised Tanzania having to communicate in foreign languages was entirely driven by foreign interests.

Secondly, groups of people often associate and define themselves as an ethnicity on various terms, but one of the most common denominators, other than ancestry is language. You identify as Chewa because your parents are Chewa and they spoke Chichewa, they lived in the land of the Chewa, their village was in the Chewa belt. Therefore you are Chewa.

This is the norm, not the exception.

So as Tanzanians, the question which the above article answers is that Kiswahili is a unifying force in Tanzania. It holds together the people, even though they are made up of 130 different ethnicities.

So why then should they conduct their lives based on an imported language when they have a language of their own?

Who’s interests does having English as an official language of education ultimately serve?

Why teach in English when students could learn in their own African language? Are people not proud of being African?

If the US, Britain or Spain is unlikely to begin teaching their students in Nyanja or Kiswahili which are African languages, why is it somewhat acceptable or expected for Africans to teach their students in foreign languages?!?

In any case, shouldn’t Tanzania develop an economy that first and foremost works for Tanzanians (if you can allow me to temporarily step out of my usual Pan-African shoes), people who are citizens of a sovereign country?

In the above article, the author quotes Ahmed Salim, a senior Associate at Teneo Intelligence, a political risk consultancy that works with U.S investors, who makes what I consider to be a hopelessly narrow-minded point:

However, in terms of overall impact, the main challenge will be felt long-term when companies set up shop in Tanzania and are left with hiring staff that are either bilingual Tanzanians or from neighboring Kenya or Uganda. This will somewhat hinder Tanzania’s competitive advantage in the future.”

Now, I’m not saying they should stop teaching English altogether, or that English isn’t an important international language. That’s not what I’m saying. Instead the argument for English is tied to this over-emphasis on foreign investment (money coming from the outside of Africa) to help and rescue Africans, to give them jobs and create an economy – as if Africans themselves couldn’t use their own resources to create economies that work for the benefit of African countries.

Tanzania has many natural resources including natural gas (See the following links Tanzania’s Natural Gas Reserves Almost Triple on New Finds ; Statoil makes another natural gas find offshore Tanzania ;  BG Group touts Pweza as its largest Tanzania gas find ). The country’s economy is growing at a rate of 7% which is quite high and above the international average. If those resources are utilised properly by the government of Tanzania for the benefit of the country’s citizens (as opposed to liberally auctioned-off to the highest corporate bidder) they could be a source of some serious economic development that would create jobs for young Tanzanians, investment into security, and used for infrastructure development, investment in Education, Healthcare and women’s issues.

That investment, derived from wholly Tanzanian owned resources, could be a serious game changer if utilised wisely.

But if some corporation is allowed to own a majority stake, or lions share of Tanzania’s Natural Gas resources, I can tell you now what difference it will make to the Tanzanian economy in the long run:

NONE.

The profits that corporation makes will be wired out of Tanzania to already developed and rich countries. Countries that needs the benefit of the resource much less, and that have billions in cash reserves to fall back on. And those profits will find their way into the fat pockets of already rich shareholders in those rich countries. Ultimately such funds will trickle down to contribute to the tax system of those already rich countries, benefitting their economies.

Meanwhile, poor Tanzanians already struggling with poverty, low incomes, unemployment, high cost of living, government corruption, who do not own property, poor healthcare in hospitals and the lack of medicines, no electricity in most areas, deforestation, poaching and lack of clean water in the villages will not have benefitted proportionately from such natural gas deals. Instead they will have to continue receiving handouts, breadcrumbs from aid organisations – when their country possesses the natural resources that could be used to create wealth for them…all just because of greed of some corporations

How absurd and stupid is that?

So the scare mongering self-serving attitude against Tanzania choosing to teach their students in Kiswahili is wrong, It’s anti-African and I vehemently disagree with such dishonest views.

Africans and other developing countries have been stamped on for too long. We must end this corporate driven theft and madness and begin to create economies which are designed to serve and benefit us as Africans, just as others have been building economies to benefit their own economies, and their own people.

10 Reasons to Love Uruguay’s President José Mujica

The following article was originally printed on Counterpunch here

José MujicaPresident José Mujica of Uruguay, a 78-year-old former Marxist guerrilla who spent 14 years in prison, mostly in solitary confinement, recently visited the United States to meet with President Obama and speak at a variety of venues. He told Obama that Americans should smoke less and learn more languages. He lectured a roomful of businessmen at the US Chamber of Commerce about the benefits of redistributing wealth and raising workers’ salaries. He told students at American University that there are no “just wars.” Whatever the audience, he spoke extemporaneously and with such brutal honesty that it was hard not to love the guy. Here are 10 reasons you, too, should love President Mujica.

1. He lives simply and rejects the perks of the presidency. Mujica has refused to live at the Presidential Palace or have a motorcade. He lives in a one-bedroom house on his wife’s farm and drives a 1987 Volkswagen. “There have been years when I would have been happy just to have a mattress,” said Mujica, referring to his time in prison. He donates over 90% of his $12,000/month salary to charity so he makes the same as the average citizen in Uruguay. When called “the poorest president in the world,” Mujica says he is not poor. “A poor person is not someone who has little but one who needs infinitely more, and more and more. I don’t live in poverty, I live in simplicity. There’s very little that I need to live.”

2. He supported the nation’s groundbreaking legalization of marijuana. “In no part of the world has repression of drug consumption brought results. It’s time to try something different,” Mujica said. So this year, Uruguay became the first country in the world to regulate the legal production, sale, and consumption of marijuana. The law allows individuals to grow a certain amount each year and the government controls the price of marijuana sold at pharmacies. The law requires consumers, sellers, and distributors to be licensed by the government. Uruguay’s experience aims to take the market away from the ruthless drug traffickers and treat drug addiction as a public health issue. Their experiment will have reverberations worldwide.

3. In August 2013, Mujica signed the bill making Uruguay the second nation in Latin America (after Argentina) to legalize gay marriage. He said that legalizing gay marriage is simply recognizing reality. “Not to legalize it would be unnecessary torture for some people,” he said. In recent years, Uruguay has also moved to allow adoption by gay couples and openly gay people to serve in the armed forces.

4. He’s not afraid to confront corporate abuses, as evidenced by the epic struggle his government is waging against the American tobacco giant Philip Morris. A former smoker, Mujica says that tobacco is a killer that needs to be brought under control. But Philip Morris is suing Uruguay for $25 million at the World Bank’s International Center for Settlement of Investment Disputes because of the country’s tough smoking laws that prohibit smoking in enclosed public spaces and require warning labels, including graphic images of the health effects. Uruguay is the first Latin American country and the fifth nation worldwide to implement a ban on smoking in enclosed public places. Philip Morris, the largest cigarette manufacturer in the United States, has huge global business interests (and a well-paid army of lawyers). Uruguay’s battle against the tobacco Goliath will also have global repercussions.

5. He supported the legalization of abortion in Uruguay (his predecessor had vetoed the bill). The law is very limited, compared to laws in the US and Europe. It allows abortions within the first 12 weeks of the pregnancy and requires women to meet with a panel of doctors and social workers on the risks and possible effects of an abortion. But this law is the most liberal abortion law in socially conservative, Catholic Latin America and is clearly a step in the right direction for women’s reproductive rights.

6. He’s an environmentalist trying to limit needless consumption. At the Rio+20 Summit in 2012, he criticized the model of development pushed by affluent societies. “We can almost recycle everything now. If we lived within our means – by being prudent – the 7 billion people in the world could have everything they needed. Global politics should be moving in that direction,” he said. He also recently rejected a joint energy project with Brazil that would have provided his country with cheap coal energy because of his concern for the environment.

7. He has focusing on redistributing his nation’s wealth, claiming that his administration has reduced poverty from 37% to 11%. “Businesses just want to increase their profits; it’s up to the government to make sure they distribute enough of those profits so workers have the money to buy the goods they produce,” he told businessmen at the US Chamber of Commerce. “It’s no mystery–the less poverty, the more commerce. The most important investment we can make is in human resources.” His government’s redistributive policies include setting prices for essential commodities such as milk and providing free computers and education for every child.

8. He has offered to take detainees cleared for release from Guantanamo. Mujica has called the detention center at Guantanamo Bay a “disgrace” and insisted that Uruguay take responsibility to help close the facility. The proposal is unpopular in Uruguay, but Mujica, who was a political prisoner for 14 years, said he is “doing this for humanity.”

9. He is opposed to war and militarism. “The world spends $2 billion a minute on military spending,” he exclaimed in horror to the students at American University. “I used to think there were just, noble wars, but I don’t think that anymore,” said the former armed guerrilla. “Now I think the only solution is negotiations. The worst negotiation is better than the best war, and the only way to insure peace is to cultivate tolerance.”

10. He has an adorable three-legged dog, Manuela! Manuela lost a foot when Mujica accidentally ran over it with a tractor. Since then, Mujica and Manuela have been almost inseparable.

Mujica’s influence goes far beyond that of the leader of a tiny country of only 3 million people. In a world hungry for alternatives, the innovations that he and his colleagues are championing have put Uruguay on the map as one of the world’s most exciting experiments in creative, progressive governance.

 

Yanis Varoufakis: Confessions of an Erratic Marxist

Yanis Varoufakis: Confessions of an Erratic Marxist /// 14th May 2013:

I must say after all the attention Yanis Varoufakis has received in recent weeks, this video is an interesting window into what is driving the man. Looking at recent events in Greece,  it’s easy to understand why Africans countries which have a narrow manufacturing, industrial and export base, and which are laden with debt, and often at the mercy of proponents of (i) austerity economics, and (ii) a predominantly market driven economy (as opposed to a policy incorporating both planned and market driven aspects), will want to pay close attention to what this man does with Greece.

And here are some reasons why:

(1) Because like Greece, many African countries have huge debts which they cannot currently pay off, without some drastic measures.

(2) Similarly, most African countries that have sought the help of the IMF have been force-fed the poisonous pills of austerity, and the effects are causing far more suffering, disproportionately so than any hint of remedial good that has been observed.

(3) Its been a while since, a sovereign country with an electorate backing has stood up to the large neo-liberal organisations that dominate debt and lending. Arguably, not since Hungary and Iceland showed them the finger have any other leader or government’s top money honcho openly expressed disdain against these organisations. But Varoufakis has done precisely that.

So, although the game African politicians play with the likes of the World bank and IMF is starkly different, Goodall Gondwe and his boss Peter Mutharika ought to pay very close attention to Varoufakis’s fiscal maneuvering.

Inequality in graphs and images

Lately, talk of inequality has dominated the media. Everybody is talking about it. Probably because of this year’s Davos Summit, but everyone seems to be keen on reminding us just how economically unbalanced the world is. Just how a few people own huge amounts of wealth, while the rest live on breadcrumbs.

Global Wealth 14Yesterday, it seems Mark Carney, governor of the Bank of England entered the fray, when he said:

“Without this risk sharing, the euro area finds itself in an odd position,”

While the context of Mr Carney’s statement may have been different to the subject of this post, and directed more to institutions on a country level, on a personal level, I don’t believe in the RobinHoodesque notion of ‘stealing’ from the rich to give to the poor. I don’t believe that such an approach works because it’s a dangerous idea that is not only open to abuse, but that can backfire. And before you jump on me and criticise my socialist credentials, let me qualify it.

I know inequality is real, and I know its crippling effects on people and communities across the world, especially in poor countries.

My contention is that if people work hard to earn their money, if they pay their taxes and do not accrue wealth using dodgy (or outright illegal means); if they do not use tax havens or other immoral ways of depriving governments of the much-needed lifeblood of corporation tax; if these business magnets are no more than scions bequeathed of inherited blood money (money tarnished with the proceeds of slavery and colonisation), if they have earned their way to the top, why should anybody sensible think it is a good idea to take it away from them?

Why!?

wealth-gap-2I believe in fairness, I believe that corporations must pay their fair share in taxes. That the government must act in the interests of the people, not just working for the interests of corporations. I believe that those who are rich, or who have the means, must do more to help the disadvantaged – whose spending ironically often drives the profits. Doing all these things will likely lead to less inequality, less strife, and better social harmony.

And here’s why:

If you look at recent events, not only comments made at Davos, what you find is that it’s not so much that the money isn’t there. Instead the problem is that the money which is made on the back of extremely liberal national and international tax regimes – is stashed away in enclaves where cash-strapped governments be they in Africa or elsewhere cannot get to it.

As a result the government cannot sufficiently invest in services, cannot create jobs or help those at the bottom of the pyramid improve their lives. This increases inequality, including spurning side effects such as crime and social unrest.

So then, where’s a good place to start, when addressing this problem of inequality?:-

1. Change the laws to ensure that companies pay a fair share in taxes from the revenues they generate.

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Essentially, it also means being firm with tax havens to reveal the sources of blood money or any untaxed funds.

offshore_tax_jurisdictions

2. Crack down on corruption, and stop illicit financial outflows.

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3. Streamline services (a streamlined small government that is cheaper and efficient to run is preferrable to an inefficient large and bloated government that is expensive to run).

4. Stop unnecessary privatisation. But encourage responsible Investment

US_Africa_Summit_Day_1If you privatize everything, from where will the state earn its income??

Everybody knows that employment tax revenues are not a sufficient revenue source. That’s why there are so many governments across the world that have budget deficits, simply because all the tax companies pay plus the tax their employees pay – IS NOT ENOUGH to sustain all the functions of government. From Britain, the US, France, Ireland, Italy and Greece to South Africa, Malawi,  Ethiopia and Mozambique, and many others, budget deficits and debt are commonplace. As a consequence most of these countries fail to adequately invest in healthcare, in poverty alleviation, in education, in job creation for young people, in women’s health and advancement…because there isn’t enough money coming into the government coffers for them to spend on these things.

Simply put, the state has no full-time job and is only employed part-time. So how the hell can it spend, or raise its family properly?

5. Instead of privatisation, countries should enter into joint venture partnerships with businesses, for win-win deals because these will not only provide tax revenues from employment tax, and corporation tax,  but will additionally earn the government dividends (which can be significantly higher than corporation tax and employment tax combined).

CossartDevelopment_webfg2

It also means deals that involve raw materials should principally benefit the people of the country in which the raw material is first (NOTE I’m not using ‘politicians’ or a country’s leaders here. Contracts must benefit the people not a handful of politicians). As I like to put it, when was the last time an African mining company was given a 70% mining/ oil drilling stake in Europe or the Americas?

africas-natural-resource-wealth6. Empower young people by training them to acquire advanced entrepreneurial skills so that they become assets capable of adding real value to communities.

Providing Aid is not good enough, emphasis on ‘Trade not Aid’ (other than Fairtrade or better) is becoming cliché. Further, I think the advantages of possessing a first degree are overstated. In my experience they rarely equip students with entrepreneurial skills.

business-paper-clipWhat is required to begin denting inequality is to train young people to be ‘go-getters’. And that is a different ball game altogether over and above merely providing a quality education.

7. Finally invest in services (hospitals, transport, policing and security, infrastructure, the youth and women, etc) including investing in things like ecofriendly energy. Because if everybody paid their dues, such investment would create jobs. And they’d be enough funds for people to receive living wages.

One among many

One among many via Economist.com

China has become big in Africa. Now for the backlash

…A decade ago Africa seemed an uncontested space and a training ground for foreign investment as China’s economy took off. But these days China’s ambitions are bigger than winning business, or seeking access to commodities, on the world’s poorest continent. The days when Chinese leaders make long state visits to countries like Tanzania are numbered. Instead, China’s president, Xi Jinping, has promised to invest $250 billion in Latin America over the coming decade…