Tag: companies

What does a Pro-Malawian Position on Foreign Direct Investment (FDI) into Malawi look like?

by Sang N., posted in Development, Investment, Lazarus Chakwera, Malawi, Natural Resources, Opinion, Public Policy, rural development
  • Listen to this article here

Last week President Chakwera took part in a webinar hosted by Invest Africa. (https://investafrica.com/event/malawi-insights-for-investors-with-his-excellency-lazarus-chakwera-president-of-the-republic-of-malawi/ ). It was a good decision that minimally should show that he is proactive in attracting Foreign Direct Investment (FDI) into Malawi. However, there are some painful lessons from the past that must be learned.

I think as far as Malawians are concerned, one of the main concerns is how the Tonse Alliances policies of President Lazarus Chakwera in regards to attracting Investors will translate into tangibles that will positively benefit and impact people’s lives.

Specifically, people will be interested to know how The Government of Malawi’s (GOM) policy on FDI will affect them in terms of employment, environmental protection and a stake in the national wealth creation, not only for the short term, but in the long –term.

Besides these concerns, Malawians will want to know what level of transparency will be established to safeguard against and prevent the corrupt practices of past administrations whereby influential party cadres illegally benefitted from contracts awarded to foreign companies via backhanders and by charging investors “access fees”.

This means that President Chakwera would be best advised to structure his policies on FDI to focus on Inclusive Prosperity for all Malawians, as has been his theme in many of his speeches, especially now that with the COVID-19 pandemic there sadly are many people who have been laid off work, and whose livelihoods have been disrupted and are uncertain.

Thus, the Tonse Alliance Government must publish its position on FDI, including deliverables and should enshrine into Law Investor Responsibilities towards the Malawian people, including how such will be monitored, and the penalties for failing to abide by such laws. This is important to give confidence to Malawians that the Tonse Alliance, unlike previous administrations is truly serious about creating shared prosperity for all Malawians.

Let us put an end to the days when an investor would come to Malawi, invest a couple of hundred thousand dollars, use low-pay Malawian labour, utilise Malawian roads, and our weak labour laws, to extract raw materials (including minerals), export those raw materials abroad, refine and add value to those exports, then sell them at a large profit to reap tens of millions of dollars from their investment – while the people of Malawi do not benefit proportionally.

I am not against investors making money, far from it. But in a poor country such as Malawi, with so much want and poverty around, the benefit to Investor versus the benefit to Malawi should be proportional and acceptable. It is not right for an investor to walk away from their investment extremely rich, but pay little or no taxes, and critically, leave behind impoverished communities that have not benefitted or been empowered beyond the token gestures (bad roads that soon disintegrate, mediocre school blocks built hurriedly with little thought, no decent hospitals, no decent services, poor infrastructure, no pension plans for former employees, no facilities for children of former employees, etc.).

Another reason why things must change is that unfortunately some investors in Malawi have left behind problems including polluted rivers / lakes/ grounds, deforestation, environmental degradation including soil erosion, sick former employees and suchlike. This is simply unacceptable in the 21st Century and should not be allowed to happen.  

A well thought through legal framework will reduce the likelihood of such omissions happening in the future.

There are some lessons from what countries like Tanzania, Rwanda and Botswana are doing, which Malawi can learn from. There are even lessons from China! For example, Rwandair is owned 51% by the government of Rwanda and 49% by Qatar Airways (See this).   Similarly, Airtel Tanzania is owned 49% by the Government of Tanzania.

These companies contribute millions of dollars to the state coffers of these countries.

So how much more are such resources required for a country such as Malawi, where ~ 70% of the population live in relative poverty? I propose that as much as FDI is desired, and as much as it is needed, the deals that are signed can no longer be about only appeasing the investor with disproportionate ownership stakes, while the people of Malawi who are supposed to own the resources are left with next to nothing. This can’t possibly be right.

You can try and justify investor ownerships stakes of 80%+ or 70%+ of industry in poor countries whichever way you like, but with the current global levels of inequality, such type of disproportionate ownership stakes just don’t cut it.

FDI under the Tonse Alliance Government of President Lazarus Chakwera should be about how to ensure the Malawian people are stakeholders who actually benefit from investments into Malawi. Enough with the rhetoric of the past, right now show us how investment will actually pull people out of poverty.

So Government of Malawi FDI policy should be about protecting the people from the exploitative and corrupt practices of some companies, which leave far too few long-term positive benefits or sustainability in the areas they invest in.

Of course protection of Investor Rights and strong pro-Investor Laws are necessary, even essential to ensure that the private sector flourishes. But there has to be a balance in that equally Strong Labour Laws that protect workers should be established, complemented by Strong Environmental Laws and strong Consumer Protection Laws to ensure that Malawians are treated with dignity, and that there is fairness; to ensure that each investor receives written obligations / responsibilities towards consumers/ people living in the areas which will be affected by the FDI.

It’s not a zero sum game, so both groups can benefit from the investment.

Such a policy position is also important for social cohesion. For example if you go to any township in Malawi today, and ask people what they think about certain companies, you’ll find that some companies (and the senior people who work there) are disliked by large sections of the populations in those areas because those companies are perceived as exploitative and not doing enough to empower the local man on the street. Yet such companies benefit from locals – who buy their goods, or provide cheap labour. Clearly this is not a desirable situation.

So while Malawi is open for business, when an Investor comes to invest, be it into a resource, or to extract a raw material, it should be the Government’s clear position that the company will be expected to establish a development fund, where 10% of the profits must be invested, to develop schools, to build decent housing, hospitals, roads, transportation links, to provide electricity, high speed internet, & to provide scholarships & loans to children in the area including children of employees and former employees. All this must be in black and white, enshrined in the contracts which are signed with each investor. Otherwise there is a real danger, based on past experiences, that verbal promises some investors make will amout to nothing.

What everyone needs to understand is that historically, most investors who come to Malawi walk away having made a lot of money. Our weak laws, poor bargaining, corrupt officials and poor implementation of measures designed to protect against exploitation are the reasons why we have failed to benefit proportionally from the profits that FDI has generated the last 25 years or so.

Thus, if you really want to develop the county, then the state can no longer be a mere passive observer in terms of ownership stakes and management of major industries. Malawi should have a greater stake in industry, so that, as a developing poor country, the proceeds from these interests can help catapult us forward economically.

This means deals of 51% GOM ownership (like Ethiopia and Kenya are now doing), and Botswana has done for a long time, whereby the investor holds no more than 49% of the stake in each major interest / industry / company,  should be standard.

That can still translate into profitable returns of millions of dollars for the Investors. But the difference is that GOM, and Malawians will benefit proportionally than has been the case in the past.

Mind you, these are Malawian resources we are talking about, for Malawians to benefit from. So 51% ownership by GOM by 49% ownership to Investors is quite generous. In my view that is how you create a win-win position.

There will be criticisms to such policies, as has happened in other countries. But such criticism is levied by people who :-

  • are thinking only about themselves
  • do not understand where our country is coming from (and the level of poverty/ want in our villages)
  • believe incorrectly that Africans should be subservient or otherwise in deferment to what Western Capital dictates – including unfair geopolitical neoliberal policy positions on resources, agricultural produce & raw materials.

What the Tonse Alliance Government should do is to communicate to any interested investor that while Malawi is open for business, essentially they will be dealing with a deprived man, who has been taken advantage of and abused for a very long time; who has few resources and who needs every penny from those resources to move forward, to rebuild his ruins and to feed his young.

That deprived man will only do business on his own terms. And with investors who care beyond just about making profits.

Ultimately, there’s always another fairer, more ethical, more responsible, more empathetic and more compassionate investor down the road …

Leadership for the Africa we Want – Kigali, May 2014

by Sang N., posted in Causes, Corruption, Development, Education

Sponsored by the African Development Bank.

Shorter version focussing on points made by Thabo Mbeki and Benjamin Mkapa:-

My Comments

  • Education has not been a priority for most countries across Africa. As a consequence, Africa doesn’t have enough high quality and decisive leaders and effectors capable of transforming not only their own countries, but the continent. Thus, Africa needs to develop and entrust young people with the knowledge that will empower them to be agents of change. Agents of change capable of prioritising what the continent needs.
  • Further, African people are disunited. Most African people have been divided on political lines such that they often fail to distinguish when our economies are failing because of external influences (or external cause) – which calls for supporting the leadership – and when a national leader’s policies are failing – which calls for criticism.
  • The Neo-liberal Institutions such as the IMF have fed African governments a crippling poison of conditionalities that work for them and their backers but that has made it extremely difficult for sustainable progress to be made across Africa. Before countries like Great Britain, the US, Canada and New Zealand had market based economies operating under market forces, there were long periods of a planned economy in these countries. In fact in Britain, it was only beginning the 70’s and 80’s that state-owned companies were privatised. Before that most infrastructure (not only in Britain) from Railways, Hospitals, Factories, Utilities (Energy companies, Water companies and Gas companies), Mining, Telecommunication companies belonged to the state (or the state was a large and active player in such industries). And that ownership provided employment, tax revenues and dividends to the State. Yet when the likes of the IMF and World Bank came to Africa, they told African leaders that the state must not own anything. The reasons they gave was that it was inefficient for the state to be in business. They were right to an extent but only because the inefficiencies came as a result of the inherent limitations which those state companies possessed. Specifically, these parastatals were not run efficiently as profit-making businesses in a business sense:- you had the wrong kind of leadership calling the shots (not innovators of the calibre and ingenuity of say Lord Alan Sugar, Sir Richard Branson or Sir Philip Green). So how do you expect an organisation to be profitable and innovate if it’s run by the wrong people? Secondly, there was little investment in employee training – so lifelong and transferable skills in tune with technology were not being passed down. To see understand this anomaly consider this: What percentage of over 60’s who were civil servants in the 70’s and 80’s or who were working in government institutions at the time of the privatisations of major UK industry were comfortable with using computers and other technology at the time or even today? Most were not, and even now only a small percentage is conversant with technology. The reason :- Because when they were working for  these government-owned businesses, there was little or no investment into their skills development. In other words when technology was changing, they didn’t have the skills to keep up. Further, there was little competition between these companies and other independent companies so not enough incentive for innovation. No surprises then that parastatals were inefficient and didn’t perform particularly well. But since we now know all these things, as I clearly articulated here, I don’t believe that its impossible to run a government-owned company profitably in this day and age.
  • Ageism is a real problem in Africa. So is Regionalism and Tribalism. Until we begin to entrust people with responsibility on a merit-based criteria (and not by how old they are or from which region they come from, or what religion they are) we’ll struggle to find an edge.
  • Advanced Business Training If Steve Jobs had a business school which he run, what kind of graduates would the school produce? Correct me if I’m wrong, but I think formidable ones. Africa needs to train its young people to be formidable in business…
  • Capital Without money Africa can’t advance, because where will the tools of development come from? Financial Investment in young people (and I’m not talking minute $1000 – $2000 type business loans) is a necessary tool to development.

 

Con Artists: Deception, deception and more deception

by Sang N., posted in Natural Resources, Opinion, Thoughts

The typical con artist of the 21st Century is a puppet organisation whose employees have important sounding job titles, wear suits, have well manicured fingernails and sport pricey haircuts. None of that amateurish I have a gun give me your money or I’ll blow out your brains twaddle.

This morning, I found myself reading a hilarious article that suggested that the World Bank (of all the neoliberal outfits out there) was fronting some initiative designed to help Africa in preventing pricing irregularities of its minerals, in the process saving the continent billions of dollars?

Yeah, essentially that’s what it says…which is… how do I put it….dishonest, or at least not entirely truthful, if one is to be mild-mannered.

Yes, it will be good for people to know the actual price of their country’s minerals, but who exactly are we talking about here. Aren’t the prices of commodities evident and freely available to the public on international markets? Aren’t the people working in Natural resource departments of government agencies somewhat a bit more savvy (and knowledgeable) than the local man on the street? All you need is a computer (or even a mobile phone) and an internet connection. Don’t tell me government ministries of natural resources across Africa don’t have access to an internet connection to enable them to check the price of Platinum or Rare Earth Minerals on the international market…or are too incompetent to do so?

Which is why I think this initiative is merely a distraction. Having a map of your country’s natural resources and the cost thereof doesn’t immediately translate into physical or tangible gains. It doesn’t mean that you, the native, controls, owns or has the real benefit of those natural resources. Or does it?

At the most this is a PR stunt designed to mislead, a nefarious ploy to distract the people’s attention from the unfair, unethical and illegal state of play, where African resources are owned and exploited by foreign corporations who have no interest whatsoever in improving the lives of African people. It’s purpose in my view is simply to provide an illusion that something is being done, when the fact remains that nothing of any real substance is being done. It’s as hollow as announcing to the world that the UN is considering a resolution against Switzerland and other Tax Havens, to stop them receiving illicit funds from third world / developing countries, and then doing absolutely nothing else other than that annoucement….no action, zero! Meaningless.

So, you can mineral map the whole world if you like, but the locals in third world countries will still remain deeply afflicted by poverty, often going without, or with very little; there will continue to be poor or non-existent healthcare facilities, hunger and disease will continue to run amok, corruption will remain high, wars will tear the landscape and displace millions … as in the backdrop, an alliance of tycoons and wealthy billionaires multiply their wealth – their catalyst, a resource that should be owned by Africans, and yet isn’t.

How many African companies have contracts to mine minerals in North America? How many have contracts for oil extraction in the North Sea, or off the coast of Australia? What percentage of Canadians own Multimillion dollar companies registered in Canada? Similarly, what Percentage of Nigerian/ South Africans / Malawians own multimillion dollar companies in their own countries? Those are the questions the World bank or indeed any serious commentator should be asking, because addressing the disproportionate imbalances or anomalies in those questions is what has a far higher potential to reverse capital flight from Africa and third world countries. That’s what has a higher chance of improving the plight of the people of Africa. Not mineral mapping…or some silly PR stunt.

It can never be right, whether you have a mineral map or not, no amount of sugar-coating or window dressing will ever put that unfair state of play right. The truth is there has been a clearly indisputable economic unfair advantage gained by western countries (helped by wars, bad policies and stupid African leaders), and something serious must be done to reverse and rebalance the playing field. Half-hearted deceptive stunts fronted by agents of the neoliberal right will only harm the little sincere good that others are currently working on.

If you really want to know what this is all about, the ending of the article itself says it all:

BDs2

 

OECD Forum on Africa focuses on turning uneven economic growth into shared and sustainable economic transformation

by Sang N., posted in Institutions, News

 

…It was a day of many harsh truths: “Africa’s 5, 6, 7% growth is all very well, but China has managed an annual 10% for 30 years”, said Mallam Sanusi Lamido Sanusi, Governor of the Central Bank of Nigeria. “We have much further to go. And where does our money go? It goes on things like salaries, overheads, production subsidies – and not where it ought to go. In Nigeria, we are sitting on $25 billion of pension money, which we could be investing in meeting our own infrastructure needs, or in building our manufacturing and processing capacity. We grow tomatoes, and yet we import tomato paste.”

…

All agreed that the first challenge of natural resource management is to secure its full revenues and to use them wisely and fairly. Government tax revenues from natural resources for 2011 may have been up by 40%, but profits for international companies went up by 110%. This is a huge mismatch. Africa is said to be losing over $60 billion a year in illegal outflows and price manipulation in the extraction of minerals, with most of the proceeds going offshore. The easiest and the worst option for governments is merely to take the short-term rent paid by international companies for the right to discover and develop the continent’s natural resources, rather than do the hard work of creating jobs and ploughing back the proceeds into where they are needed most, in areas like health and education.

…

OECD Forum on Africa focuses on turning uneven economic growth into shared and sustainable economic transformation

Ahmed Dassu Letter to President Joyce Banda

by Sang N., posted in Thoughts

On Jun 7, 2013, at 2:42 PM, Ahmed Dassu wrote:

 Excellency

 I refer to your response to my request for an audience during your visit to London for the G8 summit, which was “not available. JB,” which appears both intentionally abrupt and unbefitting of your high office and public servant number one!  Therefore I feel it prudent to address in this email the issues I had wished to discuss with you had you granted me the audience, in order to avoid any misrepresentation or misunderstanding.

 That I share a passionate interest in Malawi and its future with my colleagues Edgar and Thom of Nyasa Times, as I do with many other Malawians is widely known.  Arising from this I had expressed to Edgar and Thom some concerns regarding recent political developments and the continued unabated and open corruption in the sector of public procurement, and asked if Nyasa Times would carry an opinion piece by me, expressing these concerns.  Instead both Edgar and Thom suggested that as you were travelling to London soon I should meet you, Excellency, to put across my concerns directly.  This is what prompted me to request an audience with you.

 Turning first to the political scene.  On President Mutharika death, although I had previously expressed deep reservations about your leadership in a TV interview on MTV, I was amongst the first to publicly demand that constitutional order should prevail, and that as Vice-President you should be sworn in as President.  I convinced others to do the same, including a person who had during President Mutharika’s administration been at the forefront of publicly humiliating you and who had publicly demanded press censorship – now a leading office-bearer in your party, the PP. 

 Indeed on your swearing-in as President, in common with a majority of Malawians, I considered this as a Godsend for a new beginning for Malawi; this conviction was further strengthened by the words of wisdom in your inaugural address to the nation – full of promise and hope.

 Sadly, in office instead of being the stateswoman we had all expected you to be, you practise the politics of marginalisation and victimisation based on whether one is perceived to be your supporter or not. Instead of honouring the high expectations we Malawians built up on your assuming office, your Presidency is built and sustained on the foundations of Members of Parliament, now transformed into political prostitutes who who have been induced to defect from their own parties to your party by patronage and corruption , which the high office of President enables you to practise. Given the opportunity I would have pleaded with you, Excellency that it was not too late for you to live up to the high expectations and hope for a new beginning that were aroused on your ascendancy to the highest office in the country.  That you should focus on how Malawians judge you and how they will perceive you in posterity, and be the stateswoman that the world assumes you are instead of the power hungry, corrupt, vindictive woman, engaged in theft of public funds and who will do whatever it takes to remain in power, which is what a majority of Malawians now see you as doing.  What we see is you practising the politics of marginalisation and victimisation, all glitter in orange with no substance where it concerns democracy, accountability and transparency. 

 You are not minded to accept that you were not elected to the high office of President, just as your party was not elected to govern.  It is blatantly obvious that you are subjecting Section 65 to the patronage and corruption to sustain you an unelected President, in office instead of leading Malawi by consensus.  You have followed in the footsteps of President Mutharika and set aside Section 65 by encouraging resort to courts in the usurping of the powers of Parliament. You have condoned and sheltered those ‘political prostitutes’ who have defected to your party. In a parliamentary democracy there can be no more damning indictment.  Sadly the Speaker himself has fallen victim to allowing the usurping of the powers enshrined in the Constitution for Parliament and become a political prostitute himself.

Turning now to the issue of business, I believe that Edgar and Thom had conveyed to you the need for the wiping out of corruption in government procurement so that companies like mine and others which were prejudiced during President Mutharika’a administration could be encouraged to submit competitive tenders for fertilizer and in other areas of government procurement and thereby reduce costs and improve delivery.  

 It may be foolhardy to ask you to recall, so in the light of what has since transpired, so permit me to remind you that as Vice-President you had publicly said that President Mutharika had institutionalised corruption in government procurement of fertilizer and that you would be exposing the corruption. So it was reasonable, your having implied President Mutharika was corruptly awarding government contracts to selective companies, that these companies were guilty accomplices in the corruption of which you accused President Mutharika.  However in office you have proved no less corrupt, in fact even more so, as immediately on assuming office you proceeded to award contracts for the supply of fertilizer to the very same Indian-owned companies, except for a black indigenous Malawian who, because of his tribe and colour, was identified as a supporter of President Mutharika, when in fact he was no more a supporter of Mutharika then were Abdul Master, Apollo or the other Indians who are paying you millions of Dollars in corrupt deals.

 Indeed the vast unexplained assets and resources now at your and your party’s disposal since you assumed office are ample evidence of the high level of corruption in your government.  I go so far as to challenge the very concept of the Supplementary Fertilizer Subsidy Programme as being a manifestation of the unprecedented corrupt practices and an instrument for the bribing of voters with corruptly acquired funds by you. For as if you were cheating children in a kindergarten you cloud your corrupt misdeeds by telling Malawians that “I personally and my friends will fund the fertilizer for the Supplementary Fertilizer Subsidy Programme”. Where will the funds come from? No doubt the public purse that you are busy looting.

 And who are these friends other than those who are awarded the government contracts by you corruptly?

 In conclusion let me add that I know that in writing to you I expose myself to your reknown vindictive nature and possible victimization by you.  But I shall persevere whatever consequences I am made to suffer, for the struggle for a better, democratic, free Malawi, free from the hunger for power of individual politicians like you have turned out to be, is one I have engaged in since 1972.  My commitment to Mother Malawi is for Malawians to judge.  Indeed, I am convinced posterity will judge me a far better citizen of Malawi  than contemporary politicians like you have done.

God Bless Malawi

 Ahmed Dassu

Source: The Oracle

African Queens: the catty spats inflicting havoc on Africa’s first two female presidents

by Sang N., posted in Opinion

Malawi-President-Joyce-Banda
Joyce Banda and Ellen Johnson Sirleaf via http://womensenews.org

If you thought the verbal missiles flying between the Malawian President Joyce Banda and several prominent women in Malawi (Seodi White and Jessie Kabwila to name a few) was a phenomenon unique only to Malawi, think again.

In recent months, the Liberian president Ellen Johnson Sirleaf has also been on the receiving end of criticism by a woman she is well familiar with. Arguably one of her staunchest critic, Leymah Gbowee, the Nobel Peace prize laureate with whom Sirleaf shares her Nobel Peace Prize resigned last October as head of Liberia’s Truth and Reconciliation Commission, citing Johnson Sirleaf’s failure to combat corruption in government as one of the reasons. Further, she questioned why the president’s sons had important official jobs in Liberia. Gbowee said Sirleaf’s sons needed to be swept out. Singling out Robert Sirleaf, a senior adviser and chairman of the board of state-owned National Oil Company of Liberia Gbowee said:-

“This is wrong and I think it is time for her to put him aside,” Gbowee told the BBC. “He’s a senior economic adviser, and that’s well and good, but to chair the oil-company board—I think it’s time he stepped aside.”

An account on the Guardian puts it as follows:

While the criticism might come as a surprise to the international community, it’s nothing new in Liberia. “The issues raised by Gbowee are discussed in every sector of Liberian society,” said an official with an international NGO operating in Liberia, speaking to Daily Maverick. “There have been public outcries for months if not years that all the top positions in the government are friends and family. Corruption has overshadowed the country. And the gap between rich and poor is huge. Cabinet ministers have monthly allowances of $30,000 per month, while the average civil servant makes $100.”

This is not the first time Sirleaf has been criticised for her inability to tackle corruption. Despite her many accolades as a beacon of hope for Africa and women’s’ rights, her first term was littered with corruption scandals (to scratch the surface see here and here ) and indecision over corrupt figures in her government. One account reads:

Then, [Charles] Taylor’s presidency became a case study in kleptocracy and warlordism. By political necessity, the transitional government that followed, preceding Sirleaf’s administration, was made up by many of those who made money during the Doe and Taylor years. Even some members of Sirleaf’s government retains shady figures from the past.

Her 2011 re-election was very much in doubt such that the election was decided by a runoff in which her main opponent boycotted, leading to claims that she did not have a clear mandate; that she won by default because the voters of the other candidate never showed up.

Her Cabinet reshuffles have been criticised as superficial:

Minister of Agriculture Florence Chenoweth, for example, was spared despite being deeply implicated in a scandal regarding the questionable manner in which 25% of Liberia’s land and 40% of its rainforests were sold off to foreign logging companies….

Even the awarding of her Nobel prize just days before presidential elections in Liberia in 2011 didn’t go through smoothly, and was criticised as a political move by hidden forces attempting to win her political support; some have even called her a puppet forced onto the Liberian people by imperialist powers…

And fighting back she has, being quoted in 2012 to have said “she [Leymah Gbowee] is too young to know what we’ve done to reach peace and security in our country.” a statement which in my view hints of ageism, a bias not entirely desirable in a political leader.

In some respects Joyce’ Banda’s experiences as Malawi’s leader are not too dissimilar to those of Ellen Johnson Sirleaf as Liberian president. Like Johnson Sirleaf (who came to power after 23 years of war had devastated Liberia), Joyce Banda inherited a broken country that was on the brink of collapse as a result of Bingu Wa Mutharika’s troubled relationship with donor countries. While Malawi’s condition was a lot less severe than that of Liberia, Banda came to power when there was little forex in the country, and many services had been crippled; when foreign companies had pulled out (or were threatening to pull out); when there was shortage of sugar – this happening in a sugar exporting country; there were water shortages, and even the main brewery in the country scaled down operations (this was happening in a country which has a 360 mile long fresh water lake!?!); when teachers were on strike, the civil service including the police and lecturers hadn’t been paid for months (and the police were told to fend for themselves); corruption was commonplace; the price of fuel had gone through the roof and there was severe fuel shortages; prices of goods were increasing uncontrollably, there were demonstrations on the streets, and police brutality had killed at least 19 civilians and injured 58…

One and a half years on, while the situation has significantly improved from those turbulent days, most people agree that Joyce Banda’s honeymoon is long over. It is time for the president to show real leadership and put in place genuine policies that have a realistic chance of transforming Malawi. There is increasing frustration amongst many Malawians that the Malawian president has done too little to improve the lives of ordinary Malawians, and that nepotism (hiring family members to serve in government – the president’s sister was appointed as Principal Secretary in the ministry of Education) continues to be rife. There is a general feeling of discontent in some quarters that only people in government (or those who have connections with them) are truly benefitting from her presidency.

The president has publicly attacked unmarried women, and fuelled a spat with the above mentioned female activists. Further, like Johnson Sirleaf, there is concern that the president has turned a blind eye to corruption inside her cabinet, whereby several members of the government (including senior ministers) have been implicated in corruption scandals but have received no flak, and have not been prosecuted. In addition, there is growing concern that just as during Bingu Mutharika’s era the presidency was too close to a handful of corporations, Joyce banda’s government has been criticised for being too close to certain companies and corporations, in one instance the president was pictured clothed in attire having the logos of a local private bank –which had donated K28million (~£52,000) to one of the president’s initiatives. Then, there is the issue over the independence and competency of the judiciary – as the old legal maxim goes

“Justice delayed is Justice denied”

there are several high-profile cases (including several corruption cases) pending in the Malawian courts, which appear to be dragging through at snail’s pace, with little or no sign as to when a decision will be issued. Some observers state that this is unconstitutional and with good reason believe that the president has not done enough to ensure that justice is served promptly on such cases, or that any obstacles (be they shady judges or otherwise) are set aside from obstructing the course of justice.

In Education , and despite some glimmers of hope, there is concern that the president has not done enough to increase the standard of education in the country. To build more Universities and technical colleges to equip the large number of unemployed youths with skills necessary for vocations such as entrepreneurship or commercial farming.

Talk is also rife that Joyce Banda’s son, Geoff Kachale, raised eyebrows over the apparent quick and sudden accumulation of wealth he is said to have acquired. Further, according to Face of Malawi, there are reports that the man has been putting pressure on some parastatals to award him contracts, or suffer consequences. Whether this is in fact true or mere speculation is anyone’s guess? Similar to such allegations is another allegation that Mr Kachale imported a large number of trucks into Malawi, a few of which are now being used by Mota Engil…??

Add to that poor judgement (Madonagate, South Korea labour fiasco (more here), selling presidential jet to buy maize); the wasting of public resources (e.g. The president’s excessive travelling [with too many members of cabinet – all of whom claim allowances], Facebook fiasco – wasting unjustifiable amounts of public money to create a personal Facebook page); her troubled relationship with the media; carrying hard cash to distribute to rally goers; Refusing to disclose her assets; getting ‘cosy’ with Mugabe (more here); and like Johnson Sirleaf, Joyce Banda promised to repeal Malawi’s anti-gay laws, but has yet to make good on her promise…

Finally, there is also concern that most of Banda’s policies lack sustainability and potential for long-term wealth creation. Many of her widely publicised activities involve giving maize handouts, giving free money to supporters, distributing  blankets or livestock and such menial tasks that can be entrusted to a junior minister or low-level civil servant. They are mostly hand to mouth initiatives, and could never help Malawi achieve economic independence in the ways that other countries globally have done in the past.

However, unlike Joyce Banda, who is known to have travelled far and wide in an attempt to attract investment into Malawi, some of the achievements of Johnson Sirleaf are quite remarkable. Prue Clarke and Emily Schmall write in the dailybeast:

… Johnson Sirleaf deserves credit for some stunning economic achievements. The Harvard-educated (Kennedy School of Government, 1971) president used her credentials as a former World Bank and Citigroup economist, along with a mighty dose of charm, to persuade Liberia’s creditors to write off nearly all of the country’s crushing foreign debt. International investment in industries like oil exploration, iron ore, and palm oil has soared from nothing to $19 billion, much of it from emerging economies of India, Brazil, and China. Government revenue has grown 400 percent.

But while there have been many poor decisions, and lack of sustainable policies with developmental potential, Banda has been in power for just one and a half years now,…which may not be sufficient time to roll out a real developmental agenda. With the pressure of running a country, and elections looming in 2014, now may be the last chance for Joyce Banda to try to get things right.

Most foreigners who visit Malawi temporarily don’t get to see the real drama played out, and leave the country singing praises, a good example here are Tony Blair and Clinton, who promised to help Malawi fix its problems. However, for those who stay a bit longer to properly study the dynamics and  observe the course of things , they soon get to see the real deal

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Global 100 Voices: No 4

by Sang N., posted in Business Ideas, Economy, Energy, Natural Resources, Opinion, Politics, Public Policy, Thoughts

My next guest is a good friend and a brother who I have known for many years. Based in London, he is a true son of Malawi, and someone who I genuinely believe has a bright future ahead of him. Yet it was only recently that I discovered just how much passion and ‘fire’ he has for Africa. Mr James Woods-Nkhutabasa, thanks for doing the Global 100 Voices Interview!

[ Brief profile: James has several years’ of communications experience working for public and private organisations, in promoting achievement in African leadership, issues concerning global governance and development. He is also one of the founding members of Diaspora Capital LLP (dCAP), a members investment club which seeks to make socially impactful investments in Africa ]
  1. As a Malawian, how important is Malawi’s Socio-Economic stability to you and your family?

I believe a socio-economic stable environment is beneficial not only for the nation only provided government can create an arena of good governance, accountability, transparency and no corruption. This is also attractive for investors.

  1. After nearly 50 years since independence, what visible progress do you think Malawi has made since independence?

The visible progress for me is that Malawi is now a democratic nation, people have more access to goods and are also more connected due to the digital revolution. On the downside Malawi is still fighting the goals set at independence and poverty levels remain high. We still have a long way to go.  Maybe regional integration is key to addressing this weakness through the delivery of wider social and economic benefits that would benefit the country and drive its development further. We need to stop thinking of Malawi as a single unit but think of it as a major part of the remaining 53 nations on the continent. Only then will we sing our success story. But we need to get our house in order first.

recycleds      3. In your view, what pressing challenges remain and what should Malawi aspire towards?

Malawi, similarly to other African countries is facing major corruption issues and a lack of good governance. Our parliament is also filled with recycled politicians – what I aptly name – ‘The Kamuzu/Muluzi Giants’. It seems to me that our politicians change allegiances as much as they change suits. The political world, leading a nation, serving your people should be a vocation or ‘a calling’ but not a pension, as it currently seems to be for some.

Malawi should aim to be a success story in good governance.

  1. In view of those challenges, what do you think is the role of government in tackling those challenges?

Create an environment of patriotism, transparency and competence. The government needs to remember that they are there to serve their people: men, women and children and thus to run the country accordingly as it is their responsibility. We need strong leadership and this can be achieved collectively, through government and civil society. Malawi needs an enlightened and dedicated sort of leadership that looks forward and not backward. Most importantly get the right sort of people involved in government.

  1. As someone who has lived outside Malawi for several years and hopefully been exposed to modern and progressive ideas, what things in your country of residence have had the greatest impact on you, and why?

The competitive work ethic and drive that people have in London is absolutely brilliant. People have the desire and resilience to achieve the best possible outcome. This has taught me to continuously improve to keep up with this ‘rat race’ and be able to be significant in the growth and development of the nation.

  1. What lessons do you think Malawians and the Malawian leadership can learn from those ideas?

Malawi has extremely bright individuals who can contribute great things for the nation. The leadership needs to promote an open society – welcoming of all and not based on ethnicity, tribe or social standing, but instead on what you can offer to drive forward development.

  1. If you have recently visited Malawi, what struck you most as the greatest sign of improvement or development?

The amount of women and youth trying to make a living through a business; truly inspiring to see the entrepreneurial spirit and a can-do attitude, be it selling vegetables on the side of the road to managing small wholesalers. It is really amazing at how they have adopted technology such as the use of mobile phones to sell and place orders. This has inspired me.

  1. What struck you most as the biggest sign of stagnation or regression?

I believe the lack of good educational standards and opportunities have really been under-played. Youth are the future of Malawi, the leaders of tomorrow; they are being frustrated by the lack of opportunities and a lack good of education. These youth can be a curse or a blessing and rather sadly it has been a curse on the nation with increased criminal activity. If we do not invest in the youth and create jobs how are we to have a good future? Without the right investment we will continue to face the same problems of corruption, poor leadership and bad governance.

  1. Malawians will be going to the polls in 2014, to elect a president. In your view what kind of leader does Malawi NEED, considering the country’s current challenges?

I think we need a bit of the positive characteristics that our past and present leaders have shown but most importantly we need a leader who has an entrepreneurial spirit, a socio-entrepreneurial impactful spirit. We as African’s are natural-born entrepreneurs…we need a leader who will use an entrepreneurial approach to create sustainable development and leadership in so doing promoting a culture of hard-working, ambitious young people to drive forward development. A leader who has innovative ideas and simply not just focussing on what has been done, but looking at what can be done. We need a leader who will deal with disparities in wealth that exist between the poor, the middle class and the rich. High on their specification will be better business and financial acumen, infrastructure, education, employment and better health services.

  1.  Specifically, how should that leader approach the top job in terms of sustainable development and reducing aid dependency?

I believe aid is still vital to Malawi for the next few years at least, but our president needs to really focus on the fruit of a stronger regional economic integration across the continent; and build economies of scale to enable Malawi and Africa to better compete in the global economy. Malawi seems to be attracting a lot of investors to the vast minerals in the country ranging from bauxite, gold, limestone (marble), monazite, niobium and uranium…then we’ve got oil and agriculture. The key aspect to ensuring the leadership moves away from aid dependency is to create a strong and efficient financial system that could support high levels of investment…also the need to eliminate the tax breaks these foreign investors have in the country as we are losing millions of US dollars annually.

Malawi can have a wonderful future. By strengthening its financial and legal systems respectively, and focusing on regional integration, Malawi has the potential to become one of Africa’s fastest growing economy by the end of this decade provided that political stability, social protection, quality education, private sector and good governance are implemented.

  1. Looking at the problems that have plagued the tobacco industry – which is our biggest source of export revenue– in recent times, what alternatives do you think Malawi has besides Tobacco, and why are they viable alternatives?

There is a major problem by relying on tobacco. Let us look at the bigger picture – tobacco farming is a major employer in Malawi where it employs 70% of the nations workforce – in terms of providing a living to the population it plays a big part.

The country does need to diversify and not only focus on tobacco as the international controls on tobacco are surely having or going to have an effect on the economy.

I think a strong emphasis should remain on agriculture produce such as tea, coffee, macadamia nuts, groundnuts, sugar, cotton, soya and timber. The potential for agribusiness is there but we need the right mentality in promoting good practice to increase efficiency and bring in investment and expertise to help scale up production but also go into agroprocessing, where higher prices for commodities can be achieved.

Infrastructure development is vital for Malawi’s economy to flourish. There is a need for better roads, airports and aviation, rail, ICT, water and sanitation.

Stronger focus on the extractive industries and corporate realisation of Malawi’s objectives in oil found in Lake Malawi. Mining currently accounts for only around 2% of GDP, with tobacco, sugar and tea remaining the main exports by value, but we all know the short and long-term potential of the mining industry if we play our cards right.

Tourism is another sector to focus on. This would bring the needed foreign exchange and foreign direct investment and importantly raise the profile of the nation as truly ‘the warm heart of Africa’. I do not know if you are aware but Malawi was recently crowned runners up in the 2012 Safari Awards “Best Africa Tourist Board” beaten by Kenya. This is definitely an important space.

12. Considering our troubled history with donors and funders such as the IMF and World Bank, how do you see Malawi progressing from this relationship in view of the criticisms these organisations have received in the media across the world?

Malawi, is still too fragile to sustain herself – as mentioned earlier I believe once the powers that be start developing the nation, attracting more investors and regional integration is in place Malawi will be on the right path to stand with the rest of Africa as partners and not rely on these international bodies.

13. How do you think the government is doing regarding managing Malawi’s natural resources?

Problems are there, such as issues to do with mining legislation. The main legislation governing mining is the Mines and Minerals Act 1981.

The Mines and Minerals Act 1981 states that companies operating in Malawi need to employ and train local staff but this is left at the discretion of the company, thus local workforce are often found to be losing out. There is lack of regulation, think of the people who are displaced by the mining companies? There is no protection for these people – regulatory framework for resettlement only requires compensation to be given for land, livestock etc…but nothing is in place to give those people back land of same quality. Most people living in villages where these mines are based do not own the land through purchase but through living there for generations thus when the mining companies come, these people are evicted and not titled to any compensation. Most importantly there is a lack of transparency – mining companies are not revealing their profits in line with expenditure and taxes. The mining companies are not required by Malawi government to reveal their spending in Malawi.  

14. Can the government do better to manage natural resources? If so how?

Government needs to address the points I’ve just raised and ensure something is done to curb this behaviour of secrecy. They need to tighten legislation, this will be achieved by revising the Mines and Mineral Act 1981 – I understand that this is being done.

15. What is your answer to increasing transparency and eradicating corruption which is plaguing most governments across Africa?

African governments need to be accountable to their citizens. The responsibility for dealing with corruption and transparency falls equally on all parties from governments and donors, to civil society and citizens. We all have to fight to ensure we can develop better leadership with the tools of good governance.

We have to remember, when we the people have information; we have the power to hold our leaders and governments accountable to improve the systems, tackle corruption and have transparency.

16. Any famous last words?

Let’s continue driving our country and continent forward. In the words of Kwame Nkrumah ‘’We face neither East nor West: we face forward’’.

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