Last week a well written article appeared on Al Jazeera arguing against the false and somewhat misleading picture of Corruption that is often put out by the western media. In it, it was suggested that over $900 billion a year is lost from developing to developed nations through tax evasion and illicit financial outflows. While this is a major problem for Africa, as was pointed out several years ago by Kofi Annan here, another reason which results in these outflows is that very few major industry (million dollar revenue generating) in Africa is in fact owned by Africans.
The combination of imperialist colonial legacies, poverty, a lack of capital, insufficient education, corruption, plain hypocrisy and other factors has resulted in a state of affairs whereby even capable Africans find it hard to buy into and run their continent’s biggest industries. While there are many Africans doing well in business throughout Africa, they are by far in the minority, and comparatively too few of them on the ground, than say the number of Canadians who own and control multi-million pound ventures within Canada, or say the number of Portuguese who own and control multi-million dollar companies in Portugal.
Thus, this picture inevitably creates an opportunity or gap for foreign corporations and investors to come in, and sweep away ownership of the whole lot – armed with huge amounts of capital. No surprise the profits end up everywhere else but in Africa…
In my view, far from the land grabs of Robert Mugabe (which others have tried to justify – see here and here), another reason in support of more Africans owning their continent’s industry is that doing so could mean that large amounts of money remain on the continent, to be used for education, health -building hospitals and providing good wages for doctors, eliminating poverty, fighting corruption, policing and security, building infrustracture, improving the plight of women, investment in the youth, creating jobs, etc. It means essential capital is not being wired out to already rich countries. This in my view is a better strategy against poverty, than aid and handouts, whose monies are comparatively miniscule to the monies being siphoned from Africa.
According to the website of Britannia Mining Inc (a US company with operations in Canada and Malawi) here, the Nthale Iron Ore surfacedeposits which they found before 2009 are estimated from their geological survey to be at least 4.6 million tonnes in quantity. As often happens with these things, especially if we focus on the word ‘Surface’,in practice the deposits can be far larger than the estimate.
Last Friday, on the 7th of February 2014, before close of trading the price of Iron Ore on the international market was hovering around $125 per ton (see latest figures here). Whichever way this price goes (whether up or down) the next few years, 4.6 million tonnes at $125 per ton is still worth at least $575 million, a hefty sum by any measure. Even if we go with the 68% iron ore component indicated on their website, that’s still worth $391 million
Suppose Britannia Mining invested $100 million into Malawi, to cover processing the Ore, overheads including construction, logistics, wages, corporate governance activities, etc, (and it was proved that they had indeed invested such sums because sometimes businessmen overestimate the level of investment when the truth is much lower) I’d think the benefit to the Britannia would be significantly higher and disproportionately in their favour than in the favour of Malawians. Looking at previous examples of resource conflicts involving corporations in Africa, I seriously doubt that first they would invest such sums. Further, I doubt that Malawians or the Malawian government would benefit equally or at least proportionally from the resource. Which begs the question, who actually owns the resource?
As many others have opined elsewhere (see this for example), the unrestrained greed and unguarded capitalism of western businesses in Africa is causing a lot of damage and harm to Africa, and Africans. And that’s even before we get to what China is doing…
Even if the market price of Iron Ore dropped to say below $100, (say it dropped to $65, which is highly unlikely – the last time it hit $100/ ton was back in Aug 2012, and that was only for a very brief period of time), there would still be at least $300 million worth of deposits to be mined.
Don’t you think if the company that was exploiting the deposit was owned or part-owned (say 50%) by the Malawian government, or a group of Malawians, that the majority of the benefit of the resource would remain in the country, as opposed to being wired out of Malawi?
Post Paladin, and the tax outrage they caused when it was revealed that the Malawian tax authorities were missing out on tax revenues worth $200 million, how much tax have Britannia paid to the Malawian government so far, and how much have they made out of Nthale? The reason that question is crucial is because no level-headed Malawian is keen to see Malawi descend into a chaotic easy target where rich corporations (which are already wealthy and well resourced) come into the country and make billions, while the local population remains poor.
And if governments across the world do not speak against unrestrained greed, who will, seeing most governments in Africa are headed by people who have neither the will nor inclination to do so…?
In my view, Africa needs trade partners who will help rebuild the continent, and not those looking for a quick buck, irrespective of the ethics of the means of acquiring that buck.
If you are looking to make money quick, stay away from Malawi. We don’t want get rich quick capitalists or investors. What Malawi needs are Responsible Capitalists, as opposed to a Liberal and unguarded Capitalists – a badge which brings to mind Halliburton’s Iraq heist (or even ILLOVO’s tax avoidance fiasco – ILLOVO [which is British owned via Associated Foods Limited] is company that last year posted a 43% rise in profits per share), an incident which it is fair to say has probably been responsible for not only much suffering, but also global unrest.
Depending on who you ask, its undeniable that corporate wrongdoing is currently happening, and the continent of Africa is being systematically ripped off. Yet there has to come a time when the tide turns, and the wrongdoing is forced to stop (sadly it’s not going to stop voluntarily). In the words of the African Development Bank president Donald Kaberuka here:
“The reality is, Africa is being ripped off big time …“Africa wants to grow itself out of poverty through trade and investment – part of doing so is to ensure there is transparency and sound governance in the natural resources sector”
In my view this means rectification, and possibly includes learning lessons from those whose policies do not exacerbate the already bad situation; lessons from the likes of Brazil instead of blindly accepting unfair and discriminatory terms from organisations such as the IMF – whose policies towards the poor countries couldn’t be said to be favourable for local ownership of industry.
Maybe Malawi’s mining sector has more to learn from the likes of Vale and Debswana. Debswana is 50% owned by the Botswana government and 50% owned by De Beers. Vale is the world’s biggest producer of Iron Ore, and their profits recently doubled (Interestingly, in the same article Vale says the price of Iron Ore would hit $130 per ton, which it did, confirming the plausibility of my above little theory). They’ve seen an increase in production, which last year hit 73.4 million tonnes of Iron Ore. They are also a major tax contributor to the Brazilian government, with recent tax payments of $9.6 billion, far greater than anything any corporation have had to pay to an African government.
I found the above article interesting for a number of reasons, not least that Cuffe’s interest in founding her business included wanting to improve the world’s image of Africa and an opportunity to alter some misconceptions. I think her motives are highly commendable as often times the image with which Africa is presented is negative, and definitely unfair.
Another point the writer flags which is worth repeating is that apartheid had prevented them from owning land or gaining access to capital. Unfortunately, as I opined here on a similar issue – citing the Radio 4 desert island discs of Sir Sydney Kentridge, the sorry tale of land and capital in Africa is politicised and quite sad (See a recent article by the Independent here). Much more worrying is the fact that there are capable people across Africa today who are underutilised and have been excluded by the powers that be, from fully participating in their society, not because they have no skills or potential, instead because they have no access to land or sufficient capital. The difference this time is that it’s not apartheid as was the case in South Africa, but some other equally abhorrent excuse.
That’s not to say that I’d advocate Zimbabwe style land grabbing at the expense of white Zimbabweans, no that’s not the way forward. What is needed is active participation by all the stakeholders, including a realisation that if the wealth of a country is shared more equally amongst its inhabitants, the country becomes stronger. We have the likes of Sweden and Norway as examples of this. However, for this to happen, people need a quality education that presents a global perspective to local issues.
Thus, I believe that increasing Africa’s productivity and cleaning-up it’s image is inextricably linked to allowing Africans access to Capital, Land and Natural resources. There is no other way if the goal is to ultimately see Africa develop, and I’m sure those who have read the histories of development of Western Countries can agree with me.
So not only ownership of mines or farms, but also ownership of industry, factories, etc. Add to that the ingredient of a quality education, and formal business management instruction, and Africa’s productivity will be on the increase, crime rates will reduce and some of the Africa’s woes will quickly disappear.
And it’s not about brokering deals with old politicians, comfortable and settled in their old ways, nor will it involve working with some other big-wig influencers with access to the powers that be. Not at all, in my view progress will come by empowering skilled and educated Africans Youths to control their destinies; to be able to thrive irrespective of which political party is in power, those young people who have a real passion for economic change, are entrepreneurial and not afraid of taking calculated risks. The continent probably has tens of thousands (or even hundreds of thousands) of these individuals already, and in my view empowering them is the first step.
No clearer is this passion exhibited than in TV shows such as Tutu’s children.
In my quest to find progressive views and forward-thinking ideas which if embraced could potentially improve Malawi’s economic situation, I found myself interviewing Sir Edward Clay, the former British Ambassador to Kenya, whose interview will be posted on this website soon. He spoke about some very interesting things, including introducing me to another individual, a British historian in the form of Nick Wright, who has spent several years in Africa, including some time in Malawi. It is my pleasure to share with the readership of this website his insightful observations:-
1. You’ve had some exposure to Malawi and Africa in general… if you were to summarise your experiences, what has been your African experience?
My wife spent several years as a physiotherapist in Mulago Hospital, [in] Kampala. We had several Ugandan friends from that experience. After leaving our jobs in Australia, we enrolled in the (British) Voluntary Service Overseas (VSO): I as teacher of English in Chimwankhunda Community Day Secondary School in Blantyre, Malawi; she as physiotherapist at Malawi Against Polio (MAP), also in Blantyre. We were there for two happy years. I became interested in Malawian politics at that time and started as Malawi correspondent for the London-based Africa Confidential. Journalism of this sort continued for several years after our departure from Malawi in 2001 and obliged me to make several return visits to Malawi in order to conduct interviews. I met the leaders of all major Malawian political parties and the heads of some government departments, foreign embassies, aid-agencies, newspapers and business enterprises.
2. Most of the African countries in which you spent time in gained their independence around early to mid-1960’s. And at the time, Pan-Africanism was probably at its peak, with a freedom fervour sweeping across the continent, something that can probably be compared to what we recently witnessed in North Africa with the so-called ‘Arab spring’; It’s now close to 50 years since those ‘glorious days’, but to what extent in your view have the goals or overarching expectations of ‘independence’ conceptualised by the founding fathers of African countries been realised for the majority of their citizens?
Nkrumah’s pan-African ideal of the 1960s was never adopted because arrogant African presidents, like Hastings Banda, were (and still are) too attached to the trappings of a threadbare sovereignty to be able to surrender all the flags, palaces, UN flummery, and motorcades. I think the Western powers had an interest in divide and rule, too.
I once wrote an article which mourned the collapse of the East African Federation for just such reasons: “Central Africa’s Sovereign Issues”. Regional federations, as stepping-stones to wider unions, make good sense for Africa – especially for land-locked, resource-poor, Malawi – and they must not be allowed to remain the modern taboo that Kamuzu Banda made them.
This is another example, I’m afraid, of too much power in the hands of Presidents who scorn institutions like Parliament, the Judiciary; the printed media; the Civil Service, the Constitution which are set up to be their “checks and balances”. Presidents are told by everybody around them (until they are toppled) that they are God Almighty, and they come to believe it. Only Nyerere came close to the ideal of a model, modest, president, and his modesty was treated with contempt by the others
I developed a healthy respect and liking for individual Malawians but a very strong feeling that Western aid policies were failing Malawi badly. Why? Because: (1)they fed complacency, idleness, irresponsibility and corruption within the Malawian elites; (2)they fed arrogance amongst the expatriate community who were forever in the company of grateful and respectful poor people; (3)they created passivity and feelings of helplessness in ordinary Malawian people, including those in government who had their responsibilities taken away from them. Whilst being aware of the many individual benefits brought to poor Malawians by individual aid- projects, I felt that the real beneficiaries of aid-money in Malawi were: (1)state-presidents and their family members, friends, and hangers-on; (2)the staff of a multitude of NGOs and aid-agencies, and (3)expatriate consultants expensively employed by DFID, the EU, the UN etc to write expert reports. Bingu wa Mutharika was on the right track with his angry denunciations of Western aid but his protestation was undermined by his own lavish personal spending and his grotesque toleration of corruption. How can a person who makes all the decisions in Malawi and whose immediately previous experience was in minibus driving and in the corrupt bureaucracy of COMESA(Bingu) or small business (Muluzi), be trusted to act solely in the public interest of Malawi? Bakili Muluzi was more likeable as a man than Bingu but identical in his failure to distinguish between personal and public.
3. And if such goals and expectations have largely not been met, what are the main reasons as to why they have not been met?
Far too much unchecked power is in the hands of individual Malawians, especially the President, because of the “Big Man” [similar link here] culture which prevails in the country and the weakness of public institutions. The independent national newspapers, like The Nation, do a reasonable investigative job but are easily intimidated by threats to their advertising revenues and by their own lack of resources; the MBC public broadcaster is entirely under government control and biased in favour of government; the Malawian churches retain a sporadic consciousness of their responsibility as “public conscience” of Malawi but are often distracted by their own factionalism. The Parliamentary committees occasionally exercise oversight on public spending but only when in session and they are often starved of vital evidence by government departments and tend to divide on party-lines. The Anti-Corruption Bureau (ACB) is widely considered to be only for “small-fry” financial criminality, and firmly under presidential control where corruption itself is often centred. Western embassies, (individually and collectively), sometimes exercise a restraining hand on the presidency through their aid-policies, but their staffs are usually too comfortably entrenched in their own luxurious lifestyles, and too suspicious of each other and of China, to risk serious confrontation with the president. The Executive arm of government (effectively the President) is overwhelmingly powerful in Malawi, and this patrimonial model of government filters down to all levels of administration. “Letat cest moi”
4. While there has been visible progress in some parts of Africa, when one travels in other parts, especially the rural areas, the story of suffering is the same. If it’s not wars and ethnic violence, then it’s disease and poor healthcare, or famine and hunger, else it’s lack of resources, poverty, corruption…the list goes on. After over 50 years of foreign intervention and billions of dollars in aid, what in your view is preventing Africa from getting its act together?
Aid is ruining Malawians self-respect and their natural honesty and capacity for hard work. Its gradual removal will cause as much consternation in Western donor capitals (“What will Bob Geldof say about all the hungry people?”) as it will in some of the poorest households of Malawi (“See how our politicians cant provide “Development”). But it is a “bullet” that must be “bitten” for the greater long-term good of Malawi. The Fertiliser Subsidy (FISP) which absorbs most of the agricultural budget has become a millstone around the neck of Malawis agricultural development.
The subject of overseas aid is a very important one and for the reasons explained above. Why should the presidency take note of competing institutions when the Executive is virtually guaranteed free money from overseas? Why should government departments do their jobs properly when overseas experts with university degrees in International Development seem to know all the answers? Why should Presidents feel the necessity of proper financial accountability?
All aid should be phased out. The endless tinkering between “good” and “bad” aid will not do for Malawi any more. It is ALL bad! If its abolition means the collapse of Western-style democracy in Malawi, then let it go. It will return in a different, better, African, form!
5. One of the problems that has been cited as holding back the growth of African economies is the relatively low levels of Venture capital investment into Africa, when compared for example with the Venture capital investment that has been flowing into Asia or South America. Do you agree?
Venture capital is largely absent from Malawi, except in uranium-mining at Kayelekera, and in tourism (i.e where Malawian control and profit-taking is minimal)
Nick Wright has worked in the History Department at Adelaide University (1975-1991) and for Africa Confidential as its Malawi correspondent (2003-2010).
Remember my post here, where I outlined what I believe to be the root causes of some of the behavioural problems affecting black children (and students) in schools in western countries?
This post can be considered to be its continuation.
As you can probably tell after reading that initial post, there is no one single answer to the present conundrum since there are quite a number of issues that need resolving if there is to be any chance in rectifying the situation.
But firstly, considering that reclaiming the afro-caribean or black child involves as much reclaiming their parents as the child itself, if I were to draw a mental snapshot of what I believe urgently needs re-addressing, it would probably look something like this:-
With each symbol representing something that either needs addressing, learning, re-learning, or that needs fixing in some way or form.
Thus, in my view, if society is to make any headway:-
We must address the trauma at its source
via initiatives such as [a] support groups (e.g. anti-substance / alcohol abuse, victims of trauma, anger management, unemployment forums) that refer to, or provide counselling [b] member based financing initiatives (e.g. crowd funding to support members who are experiencing difficulty) [c] Phone lines for children or parents with specific concerns (or for those who need to get something off their chest) to call in for independent and impartial advice or support [d] Food banks (without the stigma associated with them) and crucially [e] using Community Leaders with influence over certain communities. We need more organisations such as Turning Point and Self Help Services, but with a wide range of services, and critically, led by ethnic minorities. But, this will only work if those affected are willing to receive help and improve the situation in which they (or their children) are in…
such as employing teachers to provide free tuition for families that cannot afford it are essential. There are no two ways about it. In order for this to be a success, there is a need for greater community involvement (not only from black parents, but also parents of other ethnic minorities, especially those on low incomes) so that parents are ‘on-board’ as to why such activities are crucial for their children’s education in the long run. And to make things easier for the parents, transportation (and food) would need to be provided by the organisers (possibly an organising committee), essentially a bus and a driver to go around town collecting kids to take them to this central location, where free-tuition, mentoring and other after school activities are provided, say twice or thrice a week.
We have to study African and American history, African culture and African Art
Maybe African culture is too broad a term to use here, but, how do you instill a sense of pride and achievement in young Afro-carribbeans when some of them have been told (explicitly or implicitly) that their people are no good; that they have never made anything of value? How do you get to know why there is a problem in your society without studying exactly how, and at what point things went wrong? When the derailment occurred, and what caused the road to be slippery? If not for information, then at least for a sense of identity. Remember the 13 year old jewish boy example in the 1st part to this post?
Further, we have to write our own history + discredit (rather LOUDLY) the histories which have been written for us (some of which are extremely questionable, and were probably written with bad intentions, to degrade, belittle and subjugate people of afro-carribean origin). This is quite a hard thing to do (but not impossible) because how does one get rid of Rudyard Kipling’s poison, or rubbishing out the likes of Arthur de Gobineau and Georges Vacher de Lapouge, considering there are many people alive today, in western countries, who (whether consciously or otherwise) have a mental bias that conforms comfortably with some of the theories propounded by these men. I know at least 3 such characters in my circles, some of whom make no attempt to hide this bias, at least not to me.
Another problem is that when those who are largely responsible for setting up what I term ‘the racist institution‘ created their web of deceit, they went to great lengths in planting the roots of hatred and discrimination in society.
Their ideas infiltrated all aspects of society from drama and literature, religion and culture, sports, finance, politics and banking, … practically everything, and crucially some of the building blocks and segments of such an institution still remain standing today. In present times the remnants of these beliefs have created an unfair and irreconcilable society in which ethnic minorities are objects of ridicule and scorn.
Yet those with power, privilege, and position, some of whom appear to somewhat benefit from the status quo, and whose equals in ages past (and in some cases, even in the present) believed they deserved a greater share of the world’s resources (by virtue of these same crooked ideas, or by virtue of some rule/law, race, nationality, social background, gender, religion, etc) will not voluntarily renounce their beliefs, or even begin to act to rectify the clearly unbalanced and nonsensical situation that we currently have. Why, because they can’t see anything wrong…Which leads me to my next point
Instead of moaning noisily about why Oxford or Harvard is not accepting more black/ ethnic-minority students, I believe a better way is for leading and influential black and ethnic minority groups, academics, politicians, professionals and other influential ethnic minority individuals to begin to seriously think about why they can’t create their own learning institutions that will strive for excellence; and that with time, experience, and mistakes, can be considered world-class-in the long run; institutions that can give their children a quality education, and instill practical skills and values that will prepare them for a vocation, and for life.
It may be 2013, and yes many naysayers will sneer at the idea. But these are to be ignored, because how many things out there which were sneered upon in their early days have ended up as great successes?
There are many examples of institutions like these in the US, and while there is likely to be vicious opposition from some sections of society, I believe it is an important factor in rectifying the situation for a whole load of reasons, not least because it will instill in most of those who will be involved a sense of ownership, pride and responsibility to this cause. Further, there’s no shortage of prominent individuals of Afro-Caribbean background, including black Americans who can be consulted about such an initiative.
In addition, I believe some of the American colleges and universities listed above ought to do more to help students from other parts of the world receive a decent education. It may not be their call, but I think it would do them much good, by increasing their offerings and broadening their influence, in that it’s not only about offering a scholarship to a child from the Bronx, it’s also things like organising exchange programmes with coloured students from other parts of the world. In order for Africans and Afro-caribbeans to advance, I believe there must be more cultural and educational exchange initiatives. And it doesn’t have to all be grand or fantastical dreams. It can even be as simple as organising short (say week-long) holidays for afro-caribbeans from another part of the world, to visit Europe or America, to give them exposure and enrich their cultural experiences.
Religious instruction and activities
I’d like to say that religious instruction has no material role in helping to fix the current problems experienced by black children in schools…but unfortunately I can’t, not least because there is little incentive for a child to behave themselves, and keep order, if there will be no consequences or rewards. And the threat of a beating from the parent just doesn’t fully do it in my view, as it could create worse problems. Especially when the ‘superhero’ that is Social Services is about.
Disclaimer: I’ve never experienced what it is to grow up in a family where you do not acknowledge the existence of a supernatural being, so I probably can’t force this point too much.
However, what I do know is that there is evidence from research, that suggests that people who hold some kind of religious views are comparatively happier, and lead healthier lifestyles than those that do not. That’s not denying the uncomfortable fact that historically, religion has also had a wicked face to it. But my point is, religious instruction will be necessary not least to instill discipline and create a sense of community in young people. Interestingly, I’ve been to various churches where every summer, parents arrange for the children to go to a summer camp. This is an excellent idea because even those who cannot afford to pay for a ‘holiday’ for their children, are assisted, and the child is accommodated. Further, tied with the idea of a member based financing initiatives, this can be extended to pay for trips abroad, enriching the children’s cultural experiences.
In addition, some religious settings have lessons and activities on issues like parenting, fatherhood, rasing up kids alone, divorce, etc…and as much as some people may not fully agree with the core message offered by the ‘religion’ itself, these other additional offerings may go some way to provide help and support to those who need it.
Role Models and mentorship
There is a need to encouraging role models to give their time and effort into addressing the issue of trauma through personal stories as to how they (or someone they know) overcame certain problems. It doesn’t end there, those in positions of power could go a step further, by offering short internships ( if their position allows them to do so) to students of ethnic minority background, most of whom are hugely disadvantaged in terms of finding employment and getting the jobs for which they are qualified. They could also help provide emotional support to children whose parents for example are getting divorced, or those whose father or mother has been imprisoned, etc. I know that this would take a lot of time, but it also means more ethnic minorities should consider undertaking mentorship lessons on how to be a good mentor, as it will be uselful in the long run.
Skills and training
Another aspect is tertiary training. Not everybody can get a job as a doctor, engineer, lawyer or manager; not everybody can play in the Premiership, or become a Grammy award-winning hip-hop artist that can spin lyrics like Lil Wayne. Certainly not in the present society. Sometimes it will be practical for some of our children who haven’t performed well academically, or who can’t act or sing as convincingly, to try a shot at other of their skill sets (even if it is while they wait for the opportune moment of fame), with a view to adopting and developing that skill set for a living.
So, if a child is dexterous and good with their hands, let them try their hand at an apprenticeship, in a role where they get to develop the use of their hands (even if they are DJying part-time at the weekend). If they have some facility with electronics, let them train to be an electrician…and so on
It seems there is a lot of pressure from parents, for children to excel academically, and to a point this is justifiable as most parents want their children to do well, and traditionally, most Afro-carribbean parents view academic achievement as a safer route to stability, a job, success…
But there are other ways of killing a cat, and afro-carribean children should be provided with all the available options, whenever possible. This will also call for a united approach to raising children.
The Afro-carribean fraternity (that word again) have to develop independent industry. Unfortunately, there are no two ways about this, and a barber shop, hair dresser or convenience store is not really ‘industry’, unless 90% of the people you know buy their goods from it (or have patronised ), and it’s turning over a decent profit for the family that owns it.
Further, consider this: If far too few of your children are being offered jobs they are qualified for by the society in which you live in, and there is clearly a disparity in incomes and career prospects (between those of your children and those for the majority population), why not create your own job(s)? And give those jobs to your own children? Or at least help your adult children create their own jobs?
There are many business ideas out there, from the simple such as running a post office or going out to Asia to buy goods which are then resold online at a profit; to the not so simple, such as setting up an international currency exchange, or importing fruit and vegetables from across the world. One common thing about both simple and complicated is that they are doable :-), and it is possible to make a profit.
It will be essential for parents, and their children to re-learn economics and the machinations of money-making; re-investment, debt, profitability, tax, insurance, and everything else that comes with starting a business, because post-credit crisis, you can’t always bet that someone will give your child a job. In any case, if in prosperous times your children were struggling to get jobs, what about now, when ‘austerity’ is the most commonly used word??
Having said all this, I acknowledge that there are some ‘inflexibilities’ in the ‘system’ which are biased against ethnic minorities, and people of Afro-carribbean origin, and which will make one or more of the above difficult to accomplish. But such inflexibilities don’t make the task(s) impossible to accomplish. What is needed is persistence, unity and increased support from those who have overcome such challenges.
From friends, family, venture capitalists who believe in such causes, crowd-sourcing-obama-election-campaign style, from do-gooders, corporations and others. The more people are united in a cause or specific initiative, one that has clear advantages for a community, the easier in theory it will be to raise the funds for it.
Pride in Africa
Parents of children living in western countries need to re-affirm their pride in Africa. Here, I know there are some people who have had bad experiences with people in their home countries (or with people in countries from which their ancestors, grandparents or parents came from), but this point is important because it will help the child have an affirmation that they belong to a larger people.
Later on in life, much later on, if they do have an identity crisis, those visits to Africa will also give them an option. It can be done via annual trips, reconnecting children with their roots. It sounds cliché, but there are countless examples of young people who have been positively influenced by a visit to the motherland. Also, such visits could pave way for a trade-relationship later on in life…
Black children need to be taught from a young age that there are pirates about. Hateful shadowy figures and ‘Mercenaries’ with toxic minds, who they most definitely WILL meet (as long as they live on this planet) as they grow up (be it in school, at work, etc).
Some of these people are manipulative, others are ignorant and opinionated liars who will tell them many lies; a good number will not be pleased if the black child does well, excels or is succesful in some way. To the child, such knowledge alone will begin to prepare them mentally, to guard their minds, against what is to come later on in life.
This is not about instilling pessimism or negativity in children, instead if I am to draw from my own experiences, if I knew some of the things I now know about the world in which we live in, when I was much younger, I think it would have helped me avoid certain places, and certain kinds of people (who unfortunately have had a negative effect on my life), some of whom have created unnecessary problems for me.
This also means that from a young age, issues like alcohol abuse and drugs must begin to be addressed. If one or both of the parents in a house have an alcohol abuse or drug problem, close relatives (or close friends) MUST assume responsibility and begin to talk to those children. It can be in the form of taking the child from home for as many weekends as is possible, to sleep overs, etc… ideally the child needs to experience a healthy environment, they need to know that the circumstances at home are not common everywhere, and the message that a drunk (or ‘drugged’) father is not the typical father must hit home sooner than later. I’m not saying this is necessarily easy, instead what I’m saying is there must be greater involvement and support against negative influences, whether those negative influences come from the parents or not.
for able black / Afro-caribean kids to attend the best schools… It sounds like an anti-thesis of what I just advocated above, but it isn’t, as I never said we should create a parallel society. I’m not going to try to explain it, scholarships are essential and go a long way in helping the child financially. As someone who has won two during my studies, you are just going to have to trust me on this one.
Although this is a divisive issue, I believe It must be encouraged as there is money to be saved. Why have a spare room empty in your house, when someone you know who is also living alone in a space bigger than he needs can occupy it (and thereby save on his bills, and possibly put aside some money for some important purpose that will enhance your community), and you can have an additional £100 a month? Unity and a collective approach to even the little issues has to be harnessed, as its potential benefits could greatly outweigh the initial and minor annoyances.
It is sad to note that diaspora groups do not relate closely and are divided on national, religious and social lines. The Somalis hang around together in small cafe’s in their neighbourhoods, the Kenyans can be found in their own packs, the South Africans appear aloof, the Zimbabweans, don’t even go there…even when some of the common problems affecting all your children are the same. Why can’t there be greater dialogue between such groups. Unified formulation of problems, better engagement and exchange of ideas?
While there may be language barriers to blame for this fragmentation, I believe a united response to some of the problems outlined in my initial post has a lot of benefits for both the parents and the children.
Last week I got asked two questions which I found quite amusing.
The first question was why it was the case that there are very few African businesses who had weathered the test of time? In other words why are African businesses so short-lived? Having never thought of this issue before, I really didn’t know what the answer was.
The second question was why are African people not active in winter sports? … :-).
Despite the obvious cheek in the second Q, it was the first that gripped my interest.
Why is Corporate Longevity a tricky concept in Africa?
Ok, I’ll be the first to admit that Africa has had its fair share of turbulence, be they wars and animosity between tribes, drought and other evils. In addition, we probably need to account for the fact that institutions that allow registration of organisations as trading units are comparatively new to Africa, in comparison for example to those which were established hundreds of years ago in some parts of the world (e.g. Europe or Asia). But were there ever equivalent systems before ‘company law’ showed up, for example in Egypt during the reign of the Pharaohs? Or to put it in a different way, what institution (whether registered or not), ‘organisations’ or other commerce / merchant bodies have been undertaking trading activities of some sort, under the management or administration of the same family or groups of people, over many years, in Africa?
Thinking about it now, if it is the case that such undertakings are in a severe minority, could the absence partly because of political instability? Or is it a case of lack of management skills essential to ensure sustainability? But doesnt that depend on the environment aswell?
Further, with such a violent history, which others described (I suspect not entirely correctly) as being characterised by ‘savagery’ and ‘backward’ traditional practices, could such have created a restrained mentality in some people, such that they struggled with creativity, or innovation, resulting in a comparatively few that could think beyond the here and now?
I know I’m treading a thin and controversial line of thought here, but there are all just questions.
Or is the anomaly simply because of a lack of resources? Otherwise could it be a cultural thing? Here, like before, I must say I’m a bit wary over suggesting this as an explanation.
Further, could it be explained by the fact that Capitalism as we know it is a largely imported concept to Africa, such that for all sorts of complex and irreconcilable reasons it doesn’t entirely sit comfortably within people’s inter-relationships?
There may be other factors which are responsible for the lack of longevity, such as the lack of discipline (just ask how many people are desperate to drive a Mercedes even when they can’t afford it, yet?) which many have cried foul over. It could possibly even be because of the knowledge gap that exists between some businesses in Africa and those in the developed world (a fact which one would hope the internet, mobile phones, dissemination of knowledge in the form of improving levels of education of Africans, has gone some way to rectify)? Maybe even the comparatively few sources of venture capital has a bearing on the matter, I don’t know.
What I do know, is that there are organisations in Europe, Asia and America that have a long history, and a clear and distinct legacy. Some can trace their roots to a millennium ago (for one, an organisation which was only incorporated in 1958 is able to trace its history to at least 1086. See financial records here).
I think there is something good that African businesses can learn from this.
When injustice becomes law, resistance becomes duty.
– Thomas Jefferson
“Consume less; share better.”
― Hervé Kempf
[This article is written in a non-academic accessible format primarily to provide as much information as possible. It is the writer’s personal opinion. A ‘cleaner’ peer-reviewed version with standard citation format, references and supplementary resources will be posted on this website at some point]
Almost every Malawian I know agrees that Malawi’s economy cannot continue to rely on foreign aid for much longer. That by expecting others to help us run our country, we had effectively given up our sovereignty, and any incentive to make our own choices. But it’s much harder to find consensus on what the country must actually do to wean itself of developmental aid. Some Malawians think the answer is in Agriculture. Others think Manufacturing is the way while another group think Information Technology and the next Facebook. Scores more think exporting Sugar, Kachasu, Chibukhu or even Nkhotakota Gold may be the way.
With tobacco exports declining in industrialised countries (see extensive report here – via Time Magazine) and a determined anti-smoking lobby, tobacco will soon (if it hasn’t already) cease to be to a reliable export crop which Malawi can lean on.
Presently, around 40% of Malawi’s annual budget comes from donors including the African Development Bank, Britain, Germany, Norway, the European Union and the World Bank. A greater proportion of the rest is raised from tax revenue. Such monies are primarily spent on general government expenditure including salaries of civil servants, food, fuel and “fire fighting” one crisis or another, with few resources allocated to creating developmental projects with a potential to generate large Forex for the government.
Inevitably, this has created a situation where some donors have used this state of affairs to exercise influence over public policy, including erecting somewhat unreasonable demands like devaluation of the local currency.
When their demands have been challenged or are not fully met, they have threatened to withdraw, or have actually withdrawn budgetary support, which has led to economic instability.
The recent example of this came when former president late Bingu Wa Mutharika probably with good reason refused to devalue the Malawian Kwacha, citing the cataclysmic effect such an action would have on the fledgling Malawian economy, and the suffering it would cause. The donors pulled out, pushing the Malawian economy to the brink of collapse and causing a massive fuel and Forex shortages, and exponential rise in prices and commodities. There were sugar and water shortages, crippling businesses, including some well-established companies. Some businesses threatened to leave Malawi, thousands of jobs were lost, and at least one international airline suspended flights. In a comical twist, hundreds of motorists began leaving their cars parked in queues at gas stations for days on end, walking home instead, to wait for when petrol would arrive. Even the police force, having been unpaid for months, was allegedly charged to fend for itself, with disastrous consequences.
Since then, a lot has changed. Malawi has a new president, Her Excellency Joyce Banda, who is Malawi’s first female president and only second female president in the history of Africa. The local currency, the kwacha has been devalued by around 40%, donors have returned and emergency funds pumped into the economy. But numerous problems remain; The economy has not responded as expected and the cost of living has risen sharply. Many commodities are now twice as expensive as they were a year ago, and nobody can say for sure whether given similar circumstances in the future such a scenario would not repeat itself, causing further suffering.
With sudden changes has come an increasing number of Malawians who are justifiably unhappy with what is being viewed as unreasonable, insensitive, intrusive and somewhat tyrannical carrot and stick demands. In social media and online articles, there have been references to “economic slavery”, “neo-colonialism”, “donor dictatorship”, “and predatory aid” and the new president has been called a “donor puppet”.
Others have taken a more pragmatic view, seeing the government’s acceptance of donor funding conditions as a choice between a rock and a hard place and not necessarily a punishment to poor Malawians. But one couldn’t help sense a grudging acquiescence, fuelled perhaps by desperation.
It has been correctly pointed out that most countries from which the donors originate have had their own uncertain histories where extreme violence and repressive policies/conditions (like fiefdoms, child / orphan labour, forced annexation of land, ban on alcohol, slavery, etc.) by monarchies, land owners, industrialists and other leaders, were implemented, adversely affecting minorities and millions others; that it has taken a painstakingly slow process and hundreds of years of activism and mistakes for desirable change to happen. That in some donor countries, age old problems (racism, social inequality and sexism) are still widespread. Yet certain donors appeared to be putting excessive pressure on countries such as Malawi to effect similar types of changes overnight, in a country that was barely fifty years old.
Some of those enraged also correctly point out that most donors do not fully appreciate Malawian culture and most will never be adversely affected (in some cases – they would in fact benefit) by the negative effects their demands have (or are likely to have) on the Malawian economy.
Naturally, one conclusion to draw from this is that Malawi could probably be governed much more effectively if it was neither influenced by donors nor their financial support; if it generated its own income and acted in the interests of Malawians. In any case, how does one justify implementing unpopular policies when it is the people who elect you to office (not the donors) who will suffer disproportionately as a result?
This view is not unique to Malawi alone; others far afield have expressed similar concerns against some of the institutions that make up the donor bloc citing examples of countries like Botswana, that have made admirable progress in economic development by ignoring the very same Machiavellian advice they were prescribed.
But putting aside this causative and divisive rhetoric for a moment, the elephant in the room has always been what policies should the Malawian government urgently implement to generate its own money, which it can spend according to the needs of its population, since tax revenue isn’t currently raising enough income?
In my view, the difficult in answering such a question is partly because there are many forms developmental policies could take, making the job of policy maker slightly difficult, so much so that the question then becomes, which policies within the ‘pool of viable policies’, can be implemented in a relatively short space of time, at a reasonable cost, and to achieve a significant economic return? A return that will see hundreds of jobs created, that will perpetually generate sufficient foreign currency for the government and private enterprise, which will ensure the longevity of the policies and sustainability / environmental preservation
Answering such a question is the first step towards finding an answer to the donor aid dependency problem. A further problem is the constraints current donors have placed on the Malawian government. But surely, if such constraints are disproportionately negatively affecting people’s lives, and have been known to have produced negative or undesirable results elsewhere; surely their effectiveness must be questioned?
So, taking a simplistic view, in terms of job creation, obviously in a nutshell you will require a skilled or unskilled workforce performing certain functions that will ultimately lead to the development of a product (such as Chilli Sauce, Blankets or Electric Scooter), or provision of a service (such as a Call Centre, Security or Carpet Cleaning) which can be marketed. Both types of organisations will depend on how much capital investment is available, availability of raw materials, the skillset on the ground and the size of the target market itself. But generally, the bigger your investment budget and the available skills pool, the more likely you will be able to employ large numbers of people to fulfil your function.
However, classical capitalist theory dictates that for an investment opportunity (other than one for purely charitable purposes) to be beneficial, the profit, or potential profit must be attractive enough to justify the initial investment (which for big projects can run into millions of dollars). So even though you may want to employ hundreds of people, you are constrained in that essentially, there must be a return on investment(ROI), otherwise there’s little point in investing if you will only be losing money.
But how much profit is enough profit?
For a developing economy which currently relies heavily on donor support to function, I’m inclined to apply and translate this hypothesis such that when the government awards contracts to foreign investors, the underlying assumptions as to the opportunity (at least from the government’s point of view) is that it is
…attractive enough to provide a reasonable profit and incentive to the investor, while ensuring that the investor’s ethical obligations to the country in terms of paying adequate amounts of tax, creating employment amongst the local population and development of infrastructure, are proportional to the actual (not perceived /anticipated) profit they generate from their investment
But such a viewpoint may not be shared by investors, and in any case what is the definition of a proportional corporate social responsibility? Spending $1 million annually on the local population in developmental initiatives? $10 million annually? Or $100 million?
Furthermore, it is a common practice for many international companies to pursue tax efficiency schemes, declaring losses where perhaps a profit could have been made, or offsetting a loss in one region with a profit in another, and if you inquire from any accountant worth their salt, you will be surprised to learn how creatively a profit can be ‘converted’ into a loss.
Admittedly, it’s a tricky balance since when attracting investment, a government also has to take note of what its neighbours (in this case Zambia, Zimbabwe, Tanzania and Mozambique) are offering in comparison to its own offering, because if an offer is not as competitive, an investor may end up basking in the neighbour’s back garden, instead of yours.
This state of play concentrates the bargaining power squarely in the hands of investors, and has been known to lead to the signing of grossly unfair contracts which disproportionately and exponentially favour the investor far more than it benefits the local population.
But as you will see below, this is an artificial problem that can be rectified, especially when the attractant bringing the investor to your country happens to be a natural resource. But only if personal agendas are set aside and officials begin to act in the country’s best interests.
In terms of Forex and the closely related issue of raising venture capital, there are no easy answers because for a country such as Malawi, there’s not much money floating around and you have to give others a good reason to want to invest in your country. But some things are more obvious than others.
So, in an industry such as oil extraction or mining, and considering that Malawi has comparatively fewer resources than other larger African countries, and few Malawian industrialists have the capital to invest in large projects, then instead of granting a tender to a foreign based company to establish mining operations (which may well be the easy way out), a wiser decision (at least in the long term) would be for the Malawian government itself to enter the business of mining/ oil extraction. In the information age in which we live in where one can easily recruit skilled professionals from all around the world, in industries as diverse as nuclear physics and aeronautics to marine science and nanotechnology, Malawi wouldn’t be universally refused assistance/ technical support in creating and running its own heavy industry. Assistance sought from the Arab Countries, South America and Asia would not be refused.
Therefore, in my view, the government would be best advised to create a planned economy firstly, before ushering in measures that work only in a market economy. By forming and co-own an organisation they would be doing just that. The state would hold between 48 – 51% equity, and offer the remaining stock to the public through a venture capitalist funding round. It is important to stress that this organisation will differ from “parastatals” in that it will not be governed, managed nor influenced by government/ ministries in any way. To have a greater chance of success it will need to be run like a private company, with enough checks and balances to prevent abuse.
Suppose it did this, issuing 4,900,000 (four million nine hundred thousand) shares at say between US$10 – US$17 per share, in respect of 49% of the shares; that alone would have a potential to raise between US$49 million to US$83 million three hundred thousand for the undertaking, a decent amount of capital.
Depending on the subscription levels to the stock and in order to achieve some kind of spread on ownership, no single person /family or undertaking (other than Malawian registered cooperatives) would be allowed to own more than 15% of the stock. In addition, nine of the biggest shareholders would be invited to become members of the board of directors, together with eleven other non-political appointments, appointed by government as its representatives, from across the country.
Once the stock goes live, the public would be given a 2 – 3 weeks advantage window to purchase shares before corporate entities were invited to buy. In order to expand the reach of such a scheme, publicity could be generated using various methods including online, local and foreign radio and TV advertising. There would be fund raising events at all Malawian Consulates across the world; using Malawian Associations in the diaspora; in Malawian faith gatherings (for example Churches) and celebratory gatherings in the diaspora, events at which the virtues of the scheme would be triumphed, and details of the opportunity, growth plans, brokers would be communicated; Mining companies (in particular VALE), African Development organisations (i.e. African Development Bank, or pro African organisations such as the Mo Ibrahim Foundation) and others would all be invited to invest. So would Sovereign Wealth or Pensions Funds respectively such as the Fundo Soberano do Brasil, Investment Corporation of Dubai, Abu Dhabi Investment Authority, Hassanna Investment Company of Saudi Arabia, South Africa’s Public Investment Corporation (PIC), Norwegian Government Pension Fund, China’s Africa Development Fund, Russian National Wealth Fund, Korea Investment Corporation, National Development Fund of Iran,Khazanah Nasional Berhad,Kuwait Investment Authority, State Capital Investment Corporation of Vietnam, Government of Singapore Investment Corporation Private Limited, Qatar Investment Authority and several such investment houses. Alternatively, or additionally, the organisation could issue a standard IPO, although the 15% stock rule would still have to be enforced.
Admittedly, setting up such an organisation would be a daunting task, requiring an experienced, dedicated, progressive, well-informed and energetic team that has had exposure to fresh ideas that have worked elsewhere around the world. However, as you will see below, the net benefit of such an organisation to Malawi (or indeed any African country struggling with the development aid problem) would far outweigh initial headaches (and costs), and would have a much higher chance of ending dependency on donor aid than most endeavours that are currently taking place.
There would be many concerns and hurdles, and setting up would not be easy. But by far the largest concern would probably be that of accountability, in that strict money controls would need to be implemented to ensure that the capital raised, and revenue generated would be used for growth of the organisation and social purposes such as revamping hospitals, buying essential medicines, building infrastructure developmental, and not for personal gain. To this effect, it would be mandatory for all senior officials, including those with access to the organisation’s finances to declare all their assets before taking up office, and to be independently audited bi-annually by external and independent auditors. No executive would be allowed to sign for transfer of funds of more than $15,000, as decisions on transfer of funds over $15,000 would be made collectively by the senior management team. Further, the government would need to issue a guarantee to secure against each investment in the event of fraud.
In addition, from the onset, an organisational culture of nurture (complete with an Environmental Preservation Programme and a Corporate Social Responsibility programme which would include volunteering to charities, schools, hospitals and suchlike) would need to be established to nail this message that employees of the organisation are hired to serve.
To safeguard the longevity of the organisation, it would also be essential that the company be run as a meritocracy, independently of the government or any other political institutions. This would call for a military style discipline in that while the organisation would be answerable only to its management board, it would also be answerable to a non-executive board of directors made up of officers from nine of the largest shareholders and eleven non-ministerial, non-political state representatives from across the country. Members of the non-executive board would have a fixed, non-extensible tenure of 2 years, and its management board would be contracted to a thrice renewable 4 year contract. Specialist advice would be sought from members of management boards of companies in other parts of the world, such as in Brazil for example, where their state run enterprises some of whom have now been nationalised, have proved to be commercially successful.
Addressing Red Tape
Ask any entrepreneur who has worked in Malawi and they’ll tell you that the bureaucracy is ridiculous. There are delays and lengthy procedures over everything. Delays in incorporation, delays in getting consent or a signature over one aspect or another, delays in getting import licenses, delays unless you pay a bribe, delays! In buying land and getting the purchase officiated, delays imbedded deep in the system.
The effect of red tape is that it tarnishes the country’s reputation, hampers business operations, repels investment and causes frustrations to investors who would otherwise help fix our economy.
So the government would be best advised to introduce a sui generis instrument that transformed the way businesses incorporate in Malawi by allowing an accelerated incorporation of a business within a week. Everything regarding incorporation, taxation and issues such as exemptions on capital equipment would be dealt with by a dedicated team occupying a central computerised system, firstly located in each of the major cities, and subsequently gradually rolled out across the country. The system would allow an entrepreneur to make an appointment, pay a fee, show all the required documents, get the incorporation documents and exemption certificates printed that same day, and if he needs land, show proof of purchase and get a bill of rights to the land by the end of the week. By the next week he can open a bank account, collect his machinery from customs and begin employing locals and commence operations for the building of his factory, having secured everything he required within a week.
The effect of such speedy processing times would be phenomenal and would greatly stimulate Malawi’s industry. In any case, if we look at the small country of Singapore (whose size is just larger than the size of Lilongwe), it’s no surprise that it is ranked as being the easiest place to do business in the world because according to a Report by the accountants Grant Thornton, it also has the least red-tape. In fact Singapore is so successful in this regard, it has been voted as the easiest country to do business in 7 times
To cement a culture of nurture, the organisation’s chief executive would be answerable to Parliament, and would be under an obligation to appear before a Parliamentary committee, once a year, to present an annual report on the organisations progress, direction, challenges and dealings.
Since the organisation’s aim would be primarily to develop Malawi’s economy, its structure, aims, functions, operations and investments and such like would need to be clearly articulated from the outset. It would have to maintain total impartiality in politics and there would be a need for strict checks and balances, and stringent hiring procedures, to safeguard for example against political influence, tribalism, regionalism, nepotism, ageism, or any other cancerous bias common in African countries.
A long–term management plan (at least > 10 years) that would include growth forecasts and a diversification plan to spread financial risk would be implemented, mapping the organisations goals and ambitions and providing a back-up plan. Fraud, mismanagement and corruption would be dealt with swiftly, uncompromisingly and decisively, and without political interference. In the event of a particularly acute crisis, or mismanagement, the CEO can be summoned and questioned before parliament, although he can only be forced to resign, if his position becomes untenable, by a two thirds majority vote of both its management board and Non-executive board of directors.
Such an approach would be crucial in terms of efficiency, transparency and would help establish investor confidence. It would also avoid some of the mistakes and problems documented elsewhere, for example those that have plagued Malawian parastatals or South African state owned enterprises [see here and here]
Further, if such an organisation does not lay a clean, responsible and credible example, and does not pre-emptively act against known inefficiencies common in parastatals, prospective investors are unlikely to purchase shares in any subsequent offerings under any similar state co-owned corporations. Already there are credible reports that suggest that the performance of State owned enterprises can be significantly improved, leading to profitable organisations [See Arief Budiman, Diaan-Yi Lin, and Seelan Singham , 2009, Mckinsey Quarterly here] In any case, with the benefit of hindsight, such organisations can be managed with the knowledge and expertise that will ensure that they steer clear of the ‘plagues‘ that thwarted State run companies of the 1970’s to 1990’s.
Thus, if Malawi had established four or five such corporations, then once the companies were on course to declare a profit, and while adopting a strict cost control strategy, the funds would be sufficient to purchase capital equipment (oil drilling equipment, mining equipment, agricultural equipment [ploughers, combine harvesters, planters, trucks, pumps, generators] , pharmaceutical equipment, manufacturing equipment [for industries including fertiliser making, cement making, steel refinery, juice extraction, sugar processing, motor vehicle / railway carriage assembly, petroleum refinery] and any other necessary raw materials or equipment for industries the organisation was considering to diversify into.
The funds would be sufficient for the development and upgrade of infrastructure such as flats, houses, shops, a hospital, a police station, schools, a post office, banks, an airfield, libraries, markets, sporting and health facilities and roads to cater for the new workforce that would be required to work in the new mines / factories, all of which would create massive employment and would stimulate the Malawian economy like never before.
It would be sufficient to cover investment in alternative sources of energy such as wind, solar, tidal wave and novel hydro/ underwater turbines (here and here) power generation, to ensure that the new extraction / manufacturing facilities (and subsequently the new towns or settlements) are as environmentally friendly as possible, generating as much of their own energy as possible. It would be sufficient to cover employment costs for the organisation, including hundreds of miners and salaries of specialists from around the world to provide training and assistance in construction of the mines/ factories, conducting geological scans, using, servicing and maintenance of equipment, etc.
To aid in understanding the workings of such an organisation, say one focussed on mining/ oil extraction, a hypothetical picture of its staff and annual financial commitment may be most helpful. Thus, I’m inclined to include this rough, sketchy and extremely simplified draft of what the financial commitment at its very bare bones would look like. Obviously, the figures although lower in comparison to the levels in the developed world, can be adjusted accordingly in view of national salary levels / trends, performance targets, generated revenue, market forces (food / fuel prices and inflation, etc.) and to attract some of the best talent to the organisation [Click here: Annual Costs]
Note that in the subsequent years after the first, the capital equipment or buildings budget will be significantly lower, since funds for infrastructure will already have been allocated and costs such as heavy machinery or motor vehicles maintenance will be minimal in comparison. Thus, while the figures in the annual costs may at first sight appear indulgent for a small African economy, its structure would be designed with hindsight regarding diversification and future growth into other industries in national and international markets.
If the company generated US$300 million in sales of its ore in its first year of full operation (let’s assume this occurs after total sales at the end of the 2nd year from commencement), then deducting the operational costs [US$26,903,000(1st year); $8.9 million (2nd year: this is estimated by deducting first fiscal year costs minus the sum of contingency, infrastructure & capital equipment costs – giving $35.8 million) leaves US$264 million operating profit. [Note that these calculations do not take into account any “losses” carried forward from the previous year(s) before full operation, nor does it fully consider that employees would not be hired all at once]. For the purposes of this article, for simplicity and assuming there are no tax incentives, if we levy a flat Corporation Tax rate of 30% (US$79.26 million), the net profit becomes be US$184.74million.
Thus, at 51% government ownership, and subject to other considerations/ deductions, the government % share of the profit would be a not insubstantial US$94.2 million, roughly about 7% of the 2012 Malawi National budget.
But even if the management board decided that only two thirds of this $184.74 million (~ $123.16 million) would be paid out to investors in dividends in the third year, while one third would be kept as reserves (a part of which would be re-invested into developmental programmes, acquisitions, growth / expansion, operating capital, shares buy-back programmes and other purposes), 51% of $123.15 million is still a substantial US$62.8 million, which would be a considerable contribution to the Malawian government over and above the US$79.26 million already paid in corporation tax. There is then income tax paid by the employees, which would further generate tax revenue for the government.
And Investors would make a fortune. Since 4.9 million shares for 49% means that 1% stake in the business is equivalent to 100,000 shares, then at US$17 per share, it means that 1% stake is worth $1.7 million in investment. Thus, if $123.16 million of the profit will be paid in dividends, then 49% would be worth $60.34 million, valuing each percentage (1%) at $1.231million. Theoretically, this means that if the company maintains or improves its performance for the next few years, then within 3 – 6 years of making an investment, an investor would have recouped or even doubled all of their initial investment in dividends.
But suppose instead of US$300 million in its first year of full operation, only half, or even a quarter is generated in sales. Even then, taking a similar approach, the organisation could still be managed to remain profitable.
And what if instead of the 4.9 million shares, only 2 million shares are issued at $17 – $19 per share in the funding round, raising between $34 million – $38 million. I believe with some creative adjustments and a lean approach (for example, ‘thirding’ / halving the salaries of the top quartile, reducing size of middle management, and salaries of middle management by say $4k -$7k; reducing the expenditure on capital goods & buildings), the venture would arguably still be commercially viable, more so because after the first year, the capital expenditure (buildings, infrastructure, Plant) would be much less.
Obviously, in practice there would be far many more considerations, and the figures would probably not look as optimistic, but the above provides a plausible and realistic picture of the financial commitment and nature of such an organisation. With such a framework, and depending on the amount of ore deposits, the miner workforce can be increased, short-term internships provided to hundreds or even thousands of low income earners from across the country, know-how sought from international experts and the company could still generate a profit, meet its tax obligations, and issue an attractive dividend.
Contrast this to the common arrangement where the government only owns few or no shares in its country’s largest heavy industry, what you will find is that corporation tax revenues or dividends are often miniscule in comparison; disproportionate by any scale, and the government loses out on hundreds of millions of dollars, just another repetition, dare I say, of the age old adage that everybody except Africans themselves benefit from Africa’s mineral wealth.
And you see it everywhere; recently a Fortune Global 500 Italian oil company, ENI (which is the largest industrial company in Italy with 30% government ownership) has acquired a 70% shareholding for Natural Gas reserves off the coast of Mozambique, one of the biggest finds of its kind with potential for over $15 billion.
Think about it, with the expertise Mozambique and Southern Africa currently has, was it necessary to give away such a large stake to a rich European company when your own country is littered with massive problems caused by poverty? Doesn’t this clearly add to the imbalance of trade between Africa and Europe? And even if the companies that will develop the reserves are to invest $1 billion. Yet if $10 billion (which is 70% of $15 billion) is the net benefit to the Italian company, say over 15 years, clearly Mozambique will not have gained proportionally?
Or would it have done so? How?
In any case, when was the last time you heard an African based mining company had been awarded a 70% interest /contract in North America or off the coast of Italy?
In my view such decision making from African leaders showed incompetence and left much to be desired. When European legislators had used every trick in the book to protect their markets, it was wasteful, short-sighted and negligent and couldn’t possibly represent the true position of the majority of Mozambicans. Mozambique, which faces similar problems as Malawi needed the benefit of such resources a lot more than ENI, whose 2012 3rd quarter profits (4th Quarter to be announced in February 2013) stood at €14.80 billion, a 13.9% increase from 2011.[See source here]
The Younger generation ought to take note of such crippling anomalies and rectify them when their turn in public office arrives because this trend where the net movement of resources is only from South to North, or South to West, is precisely what got Africa into a mess in the first place. In particular, according to British historian Dr. Hakim Adi,
“From the middle of the 15th century, Africa entered into a unique relationship with Europe that led to the devastation and depopulation of Africa, but contributed to the wealth and development of Europe…..”
He follows to state that:-
“The forced removal of up to 25 million people from the continent obviously had a major effect on the growth of the population in Africa. It is now estimated that in the period from 1500 to 1900, the population of Africa remained stagnant or declined. Africa was the only continent to be affected in this way….was a major factor leading to its economic underdevelopment.”
So, if things have indeed changed since the exploitative days of slavery, wouldn’t you think that the economic imbalances that currently exist would be squarely addressed, decisively? That not only would African leaders be alert in negotiations and minimally demand a proportional shares of their resources, but western business leaders would have policies in place to ensure that a larger, or atleast equal benefit of natural resources go to the country that owns them?
This is probably one of the drivers which influenced South Africa to finally open its first state owned mine. The implications of such must never be understated. For a start, how much potential revenue in taxes and dividends has the South Africa’s government lost in income from diamonds and gold since the end of apartheid as a result of lack of ownership of a proportional share of the country’s mining industry? Funds which because of private ownership were wired out of the country, or concentrated in the control of a small rich minority, instead of being used for developmental purposes within the country, lifting millions of ordinary South Africans out of poverty, building quality hospitals, developing medicines and raising the standard of the poorest and such like.
By owning a majority stake in most of its country’s major industry, and having an informed management strategy, the net benefit from the proceeds of its natural resources can be significantly increased.
This is what Park Chung-hee (the South Korean general who is credited with the industrialisation and rapid economic growth of South Korea) practiced [see Export-oriented Industrialization here]. While he had a darker side to him, and while there were other contributory factors at play (for example American money – Chung-hee’s support of the US in the Vietnam war is said to have attracted substantial financial rewards to the tune of $3 billion, between 1964 to 1972, in exchange for sending 300,000 Korean soldiers to Vietnam), his policies including creation of economic agencies, ownership of banks, soliciting technology and investment from Japan, encouraging the creation of efficient but cheap products and expanding Korean exports helped create and strengthen the industry that now defines South Korea.
It’s what Botswana has done, whereby Debswana, their sole mining company is 50% owned by Botswana and 50% by DeBeers. [See recent Debswana revenues here]
These types of policies are especially important where private individuals struggle to tap into capital markets, and while there has been criticisms against them, even countries such as the US, and the UK developed partly on the back of such policies.
In discussions with scores of western trained colleagues (most of whom are African – many now working in Africa, including Malawi), there were many different views exchanged. Among them were concerns that certain donor officials (not only in Malawi) were discouraging African governments from ownership of industry (in one instance advising the Malawian government not to buy tractors for agriculture “because it was bad for the soil”). Such thinking was unhelpful, as highlighted by one Rick Rowden on Foreign Policy.com where he states that:
Today many African countries need to use industrial policies, such as temporary trade protection, subsidized credit, and publically supported R&D with technology and innovation policies, if they are ever to get their manufacturing sectors off the ground. This is true for all the same reasons that it was true for the U.K. and other nations that have industrialized successfully. According to today’s ideology of free trade and free markets, however, many of these key policies are condemned as “bad government intervention.” Bilateral and multilateral aid donors advise against them (and structure loan conditions accordingly). WTO agreements and new regional free trade agreements (FTAs), as well as bilateral investment treaties (BITs) between rich and poor countries, frequently outlaw them.
When most western countries (from whom the donors originate) had phases of Planned Economies before adopting Market Economies, how honest was advice against a planned economy? In any case which industrialised country still uses hoes or cattle ploughers for agriculture? If private industry is generally unable to raise sufficient capital for purchasing of equipment which would provide benefits and efficiencies in farming, how can farming methods improve and the quality and quantity of the yield increase?
This point is worth exploring in a bit more detail. If it is the case that such advice was provided, how honest was it when it was clearly the case that raising capital for large projects which would involve outsourcing technical functions, buying expensive machinery or consulting a considerable number of foreign specialists, was beyond even the wealthiest entrepreneur in Malawi? And when no entrepreneur was willing to risk putting their own money into such a venture, without an assurance from the government that they would be awarded at least a contract that would ensure that they recouped their money back?
Further, in terms of credibility and securing against an investment, the government can create credibility with relative ease and would be able to secure against an investment, whereas private entities can sometimes be viewed more circumspectly, and wouldn’t always be able to secure against an investment.
So, it was again left to foreign investors to develop heavy industries, marginalising local entrepreneurs, who must settle for employee. And as most people already know, many corporations are masters at “legal” tax avoidance, using tax incentives, off shore companies, tax-free zones and other sophisticated schemes to deprive their government coffers of millions or even billions of dollars. It happens everywhere, even in the UK [see here and here]
But unlike the UK, where there are hundreds upon hundreds of multimillion pound revenue generating companies, such that even in the presence of widespread tax avoidance schemes, Her Majesty’s Revenue and Customs (HMRC) is still able to collect hundreds of billions of pounds in Tax every year [see this source, in particular page 7] that lists 2010 -2011 collections to be £468.9 billion, most poor countries such as Malawi had no such luxuries. With few multinationals, advice against government co-owned industry was unhelpful, discriminatory and suppressive to say the least.
And if you look at the US, similar patterns emerge in that the state collects huge chunks of incomes from big business -simply because there is a lot of large industry!
Therefore, if the Malawian government was reluctant or under duress not to own industry, yet Malawian businessmen were unable to overcome financial barriers to entry, and foreign owned corporations paid miniscule taxes, what hope of creating sustainable economies was there? Wouldn’t this create or perpetuate the rather familiar situation in which resources of very poor countries were developed predominantly by foreign corporations most of whom paid very little taxes, and did very little towards lifting the standards of life of the locals? Doesn’t that fact in itself perpetuate a donor aid dependency?
In my view, the Malawian government, and other Africans states would be best advised to ignore such misleading advice and begin to invest into heavy industry that will create an export economy, as other countries have done in the past because a planned economy would greatly benefit Malawi.
Malawi, like many African countries, gets plenty of sunlight, more so by virtue of its equatorial proximity. So, imagine if every roof, whether iron sheets, tiled or thatched had a solar panel on it. Would there be power cuts or shortages every other week? Further, how much fuel would that save? And how many trees would be saved as a result? And on a similar theme, what if every household planted one tree a year, for example in the fashion of say the Youth Week programme of the Hastings Banda days, and following lightly in the footsteps of the Nobel Peace Prize laureate Wangari Maathai’s greenbelt movement. Having the benefit of a fresh water lake, if Malawi can strive to become the greenest country in Africa, literally and in terms of greenhouse gases emissions, that factor in itself would inevitably stimulate biodiversity within our wildlife ecosystems and would most certainly improve our tourist industry, bringing in much more Forex into the country [See lessons from Costa Rica here]. It would also carve unity and create a sense of togetherness towards a common purpose.
In my view, a government owned corporation such as suggested here would be the perfect opportunity to implement environmentally friendly projects that have worked elsewhere [one example here], including an extensive national tree planting programme, creation of additional forests and wildlife reserves, importing additional species of animals from other countries(e.g. the Congo basin and Madagascar) to increase our biodiversity and such like. In building infrastructure, and pending cost-benefit analyses, the organisation would adopt measures, practices and technology adopted by “green cities” in other parts of the world such as in Brazil, Sweden, Canada and Qatar. [See Turning Deserts into Forests here]. In any case, doing so would likely help combat the challenges brought about by climate change. In fact according to a World Bank Report tackling climate change is linked to ending global poverty.
A further point worth mentioning and that is somewhat linked to the dependency problem is the role of Education. There are many educated people in Malawi, loads! Every single day, whether in the newspaper, on the radio, or amongst friends, you will hear a reference to some Dr. or Professor, or somebody who has a Masters degree in some field. Many of them are foreign educated but if you investigate further, you quickly find that very few of these “intellectuals” have been given a real challenge that will stretch them mentally and utilise their many skills. Many settle within the boisterous frustrations of working as university lecturers, going months on end without pay; Or receiving breadcrumbs in one NGO or another, undertaking dead roles, and led by unresponsive, short-sighted, fat-cat bosses. If not they are in regressive government departments doing clerical jobs for which they are overqualified; or they are working as consultants, underutilised. Else, they are in farming or in some other function, but because of lack of sufficient capital, still heavily underutilised. In contrast, and as if a mockery, the old guard (or neopatrimonials known respectfully as Achikulire) despite having little formal education, and who achieved notoriety in business or politics under the one party system or as a result of their affiliation/relation to a minister or president, are still doing relatively better, and dominate some industries. Yet the Malawian government appears powerless to help these educated individuals, and in the words of a friend, “they are left to slowly rot away and become irrelevant”. What then was the purpose of all the highly advanced training, the PhD’s and Masters? Is this not waste? How will Malawi develop if those who have the skills are not utilised and supported to practice their vocations? Most of these people have years of experience, and their activities and contacts both on the ground in Malawi and abroad have given them a unique depth of understanding as to why countries develop and the root problems plaguing Malawi’s economy. Yet the furthest they vent their knowledge is at parties, amongst friends, or at the bottle store, amongst strangers.
In my vision for Malawi, foreign educational institutions such as Universities will play a pivotal role in assisting to end aid dependency. So, if 100 Universities across the world were “compelled” to loan to 200 of the entrepreneurial of these professionals $35,000 each in Venture Capital funding, I find it extremely difficult to accept that, with the knowledge, exposure to progressive ideas, with their experience and contacts (be it other Africans in Ghana, Kenya, etc., or with former classmates in Europe, the US, Asia or Australasia, etc.) that such capital wouldn’t enable a majority of the recipients to create sustainable business models on the ground.
It wouldn’t be a free lunch. There would be a need to comply with Financial Services regulations regarding lending by Educational Institutions. For each applicant, a business plan would need to be submitted for vetting and fraud checks including credit checks to ensure that only the genuine applicants were assisted. There would be a need for training and business management support to ensure that the entrepreneurs are constantly being equipped with skills that could be of use in their businesses. Minimally, it would allow those ideas which had the best potential, low entry barriers, possibly a successful pilot run, and a big enough market for a viable sustainable model to be created, to be funded.
To make things a bit more interesting, suppose those universities included a clause in its loan agreements that stipulated that if the initial investment is doubled, excluding costs, then as soon as the initial loan is repaid, say within a space of 3-5 years, the borrower would be entitled to another loan, this time twice the amount ($70,000) and so on. In my view, such a scheme would be a huge incentive to innovation that would challenge Malawi’s underutilised entrepreneurs and would have a tangible and measurable impact within a short period of time because the entrepreneurs would have access to essential capital and Forex, which most currently struggle to find. Such resources which would enable them to buy equipment and employ a couple of people to assist them roll-out their business ideas.
The Universities would also benefit in other non-obvious ways, for example, Business School students would have an opportunity to be seconded on short term internships (a couple of weeks to several months) in these ventures to gain experience, transfer additional skills and arguably contribute to these companies. And those that prove to be commercial successes could even offer these students full-time employment.
Because of the resources at its disposal, a national corporation can seamlessly diversify into other industries and branch out to create other companies. For example it could invest in Tourism, partnering with local tourism providers to establish high quality standards and / or cooperatives; it could invest in Commercial Farming (everything from Soya beans, Poultry, Bee keeping to fish, cattle / pig farming, all on a large scale); It could dive into Telecommunications; Information Technology outsourcing(from graphic design and call centres to cloud networks + unified systems); Manufacturing (foodstuffs, alcohol, furniture, fertilizer, cement, glass, plastics products, cosmetics and such like.); Assembly (computers & electronics, bus & rail carriages, motorcycles and such like.); Pharmaceuticals; Education (creation of new learning institutions/ universities with research specialisations in medicine, engineering, agricultural technology, business, etc.); Recycling (metal, plastics, wood, paper, carbon-composites, etc.); Shipping – an International Import and Export / Logistics business; Banking & Insurance; or even investing in the development of Real Estate (flats and houses, hotels and world class business centres).
Much of the systems and machinery would already be in place, as would be staff and a management. In essence the first corporations would act as a training ground to equip employees with transferrable skills that are essential in the subsequent corporations. Once issues such as demand, market/ viability analyses, type of crop / animal, vets and vaccinations, pesticides, nature and cost of new machinery, logistics, profit margins, import / export tariffs, procedures and legal compliance, specialists, etc. in each of the identified opportunities had been determined, “satellite” management boards would be hired to independently run the spin-offs as independent national corporations in their own right. This also means that shares would be issued in a similar manner as above and the whole cycle repeated all over again.
So as an example, Blueberries cultivated on a commercial scale in South America (notably Argentina + Chile) find their way to England, and are subsequently used in everything from fruit and desserts to juices and pet food. In the UK alone combined retail sales value for strawberries, raspberries, blueberries and blackberries are close to £700 million [see here]
Similarly, the US imports Meat and poultry from New Zealand. According to this source ( Office of the US Trade Representative):
The five largest import categories in 2011 were: Meat (frozen beef) ($906 million), Albumins, Modified Starch and Glue (mostly caseins) ($312 million), Dairy, Eggs, and Honey (milk protein concentrate) ($286 million), Beverages (wine) ($224 million), and Machinery ($182 million)…”
According to a ACDI/VOCA report (source: Value Chain Assessment: Indonesia Cocoa , by Henry Panlibuton & Maggie Meyer, June 2004), Cocoa Beans exports from Indonesia are currently valued at approximately $600-700 million per year, however there have been concerns regarding the quality of the beans and a much documented fall in production in recent years which could mean an opportunity for a savvy new entrant??
Similarly, the US imports raw materials, foodstuff, fish and food grains from Thailand, and in 2011 they included Prepared Meat, Fish (shrimp and tuna) (worth $1.4 billion), … Agricultural products from Thailand to the US totalled $2.6 billion in 2011, the 8th largest supplier of Agricultural imports, and included: rubber and allied products ($1.0 billion), processed fruit and vegetables ($468 million), and rice ($419 million) [See here]
According to 2009 statistics from Economy Watch, the Netherlands imported a total volume of $358.9 billion worth of goods. This may be a market worth exploring, in terms of what do they need, where are they currently buying it and why, what can we supply them, what are they short of which we can grow, what are we already supplying, etc. In any case, South Africa exported over $700 million worth of goods to the Netherlands [Source Mail & Guardian] and in 2009 the Netherlands imported $290 million worth of Cocoa from Nigeria [See The Observatory of Economic Complexity] all of which may be indicative of opportunities worth exploring in greater detail?
According to this source, the US imported over $1.4 billion worth of fruit and vegetable juices from the world in 2010. The global market for fruit and vegetable juices is forecast to reach 64.46 billion litres by the year 2015 [See here].
With all the fruit trees (notably mango trees) in Malawi, and considering that Zimbabwe is no longer a big producer of fruit that it were in the eighties and nineties, Malawi should be churning out hundreds of millions of litres of fruit juice each year.
In addition, Sugar exports from Australia are worth between $1.5 billion to $2.5 billion [See here]
Think, Dwangwa Sugar Corporation, which is only 8% government owned. An investment into two or three large government co-owned Sugar plantations in which the government held a majority stake was the most obvious thing to do. If availability of land were a problem, the corporation could “rent” unused land south of the border and develop such large plantations in Mozambique, Angola, Botswana, Zimbabwe, or even across the Mozambique Channel in Madagascar, and negotiate fee sharing arrangements with the governments of those countries.
Further, it could do a lot more; the Dangote Group for example was built partly on sugar products, which probably shows that there is still a large market for processed sugar products across Africa. As a sugar producer, Malawi shouldn’t have to import processed sugar, coffee or tea products from abroad, let alone have shortages in times of crisis. These must be processed in Malawi, marketed extensively and exported. And in austere times such as is currently the case, the buyer is more likely to buy on price.
According to the Bureau of International Recycling, the global recycling industry is worth at least $200 billion. In 2010 alone, the US generated $30 billion from export of commodity grade scrap products. [see here] Surely, this has got to be a market worth exploring in more detail?
According to Vinexpo Chairman Xavier de Eizaguirre, the global Wine industry is worth at least $170 billion. And is growing rapidly, largely driven by consumption in China [See here] Such is the growth that not only have South American countries like Chile and Argentina become prominent grape growers, even the South of England which previously wasn’t considered to have the ideal climate is becoming a vineyard region. [For more information see here].
According to this link, in 2008, footwear industry exports from Vietnam were worth $3.16 billion.
With a government co-owned corporation, it will be possible to bid for projects internationally, and possibly even acquire other potentially profitable opportunities elsewhere. You see it with Vale which began as government owned and has grown from a national mining company into a behemoth which is now the second largest mining company in the world, with acquisitions in Canada, Japan and other parts of the world. Surely, there are some practical lessons Malawian industry can learn from such companies?
A further point is that Malawians must learn to reject deals or proposals that are bad for Malawi in the long run. In the case of mining, this is metal ore we are dealing with so if someone doesn’t want to buy it or if the price they are offering is too little (or insulting) – you can always refuse to sell it to them. And store the ore. Tomorrow another customer will show up, and in the case of Uranium, there are many customers: Iran, India, Brazil, China, the US, and many others, all with huge energy needs. So, as an example, if Iran wanted to buy our uranium in exchange for petroleum, you couldn’t get a better deal. In any case, many countries including the EU are still trading with Iran, despite trade sanctions, with EU imports from Iran in 2011 amounting to ~€15.8 billion.
In conclusion, the above presents only a tiny picture of the global opportunities such an organisation could target. However, I believe that with a considered vision, fresh thinking, extremely careful planning, a deliberate and calculated risk, a progressive and sacrificial team, and with a stringent management strategy, and an organisational culture focussing on integrity, service and nurture, and by referencing to what has borne positive fruits elsewhere, it is possible to create and harness three or four such home grown brands into remarkable and profitable multi-billion dollar conglomerates.
If run responsibly, such national corporations would be the pride of Malawi, and would most definitely propel our country’s economy into the 21st Century, helping Malawians enjoy the sort of financial freedom enjoyed by countries such as Botswana, Mexico, Brazil, Kenya, Ghana, Malaysia, South Korea, Venezuela, Thailand and China respectively, some of whose industry began as state owned, and many of whom still have state owned industry. It would help bridge income disparities and would raise the standards of living of hundreds of thousands of low income families, equipping workers with transferrable skills in the process. Its environmental credentials would be attractive to foreign investors and its social policies would help with healthcare initiatives, tertiary training and be a model for responsible corporate governance. Most importantly, it would provide ordinary Malawians with a means of realising a proportional benefit in their resources.
For Malawi and several other African countries facing this aid dilemma, the resources, expertise and answers are arguably already available; the only ingredient yet to be added to this equation is the exercise of a determined, concerted, well-informed and independent political will. But in the event that such highly desirable political will was not forthcoming, for whatsoever reason, individuals and Malawian businesses must act quickly to organise themselves and pool resources together to form ‘cooperatives’, for example as was the case with the group that in 2012 bought biodiesel equipment from the US.
The collective pooling together of resources would arguably allow the cooperatives to begin targeting national and international opportunities such as those outlined above, because unless the Malawian economy can become self-sufficient and industrialised, we will forever struggle to maintain true independence on the global arena.
And it’s not about embarking on some heroic stunt. It’s the things that matter: – where our medicines and consumables come from and whether we can save money by manufacturing a few ourselves? Whether we can create savings on the source of our electricity? The quality of healthcare(access to a clean hospital bed + medicines; family planning being standard); if every child has an access to a good level of education, if the homeless and hungry can be housed and fed, and the jobless provided with training and a job(even if it meant part time job, so long as they can be resourceful), if our lakes, national parks and game reserves are protected and enhanced; corruption thwarted mercilessly, if our industry is developed so that (i) it caters for most of our basic needs (ii) generates sufficient Forex (for fuel and more sustainable + eco-friendly industry, etc.) to enable us to tap into the global economy, if Malawi can strive to construct world class facilities to attract international business, reduce crime and increase security (to say 1970’s levels) across the country for international visitors to feel safe; if civil society is resourced to educate against deforestation and offer alternative and sustainable sources of energy, if the priorities of a majority of our politicians’ can shift from being archetypically self-centred, to being servants of the state, paid similar salaries as doctors, if our mentality can change from what J F Kennedy referred to as what my country will do for me, to what I will do for my country, the pillars of economic development will have been laid.
In any case, if countries like China, Brazil or South Korea stuck to inefficient and archaic agricultural methods or core industries by which they were defined 60 years ago, do you think they would have developed at the pace they have? Taking the example of China, despite the controversy with an artificially maintained currency, cheap labour and poor working conditions [which is not unique to China as even industrialised countries had a phase of poor working conditions], has their sacrificial spirit and hard work not paid off, benefitting millions of Chinese?
I urge every Malawian who reads this to carefully consider these observations and other inspirational works ( for exa ple Henry Kachaje’s Imagine an economically Independent Malawi). Each one of us needs to play a part in terminating this toxic debt cycle that has enslaved our country for decades.
“You cannot pick up a pebble with one finger.” – Malawian proverb
Let us graft together and transform Malawi for the better. We may not be able to do it as individuals, it will not be easy, some people will be against it, but together, united, irrespective of tribe, religion, customs,colour of skin, irrespective of language, irrespective of social status, it is possible to make real progress; Malawians shouldn’t accept mediocrity, hand-outs and unending hardship as standard.
Not every problem can be solved overnight, and while mistakes WILL be made, yet in seeking to develop Malawi (in substance, not rhetoric), if we collectively, sacrificially and selflessly begin structured meaningful projects, hand in hand with willing trade partners, we can achieve progress that has never been seen previously. Progress mapped not by foreign aid organisations or vested interests that have neither sympathy for nor responsibility towards the poorest Malawians; instead, progress which terminates aid dependency once and for all.
[In the next and final part, I will outline examples as to how other countries and businesses have specifically implemented planned and strategic Economic policies, and lived to reap the benefits]