Selling Malawi for Peanuts

In whatever we do as a country, we need to make sure that the development path we take should be sustainable for the inter-generational cause. Our generation inherited a beautiful country and as the current custodians of this land, it is our duty to safeguard the interests of current and future generations of native Malawians.

It is my belief that those who fought to extricate colonialism were driven with the fervent desire to see this country independent of foreign dominion that was British Imperialism. It is therefore our duty to honour the wishes of those who fought and died for our Malawi by making sure that native Malawians are the drivers of development in Malawi.

David Korten, one of the leading proponents of alternative development once wrote,

The survival of our civilization, and perhaps our very lives, depends on committing ourselves to an alternative development practice guided by the three basic principles of authentic development: justice, sustainability and inclusiveness-each of which is routinely and systematically violated by current practice‘.

Today, Malawi is slowly creating an economy which will become dependent on some foreigners who are only here on temporal basis to make a fortune. Native Malawians are slowly being excluded from many vast opportunities that this nation has to offer, and I believe that the development course taken today by us, will harm the interests of our children and future generations because of our shortsightedness.

The biggest issue that is worrisome in this country is the sale of lucrative land to foreigners. According to Watipaso Mzungu’s report in the Nation newspaper of 17th January, only 5 native Malawians own business land in Limbe. It is a sad development on our part because just about 3 decades ago, native Malawians owned lucrative land especially in the cities of Malawi.  At the rate we are going, native Malawians will end up being excluded in their own country because we only want to satisfy our current intra-generational needs. I am not saying that it is wrong for foreigners to invest in Malawi, but we need to exercise caution when prime land is being sold to foreigners without securing the interests of native Malawians. A good example is that of the conflict between the locals of Masasa in Mangochi and Mota Engil. The locals claim they were not consulted about the selling of their land by the government to Mota Engil. The traditional authority tried to coax the locals to give up their land to Mota Engil, a transnational corporation which has plans to build a 5 star hotel and golf course by the lake in Mangochi. In the end, the irate locals of Masasa fought with the T/A, councillor and the police which left 2 people dead and others seriously injured. These are the situations which are unsustainable for Malawi because we are ready to deprive our own people their lake which ancestors lived with for many generations. The 5 star hotel and golf course is a welcome investment but it should not be to the detriment of the locals at Masasa. I am sure the lake has many vacant tracts of land where this 5 star hotel can be built without displacing people. Development is about including a people’s livelihoods in projects which ensure that poor local communities are not excluded from benefitting from our natural resources.

Another worrying aspect of this land issue is that there are some unscrupulous chiefs who sell large tracts of valuable customary land to foreigners without securing the interests of future generations in their communities. Malawi has one of the most beautiful natural beaches in the world and there is need for us to limit and protect the sale of this land. The large swathes of land along Lake Malawi should be protected for our future generations’ livelihoods and investment opportunities. Future generations of Malawi might have the access to the much needed capital or funds to invest in these areas, and it is in our best interests that we preserve prime land along the lake shore. It would be very selfish of us to deprive our future compatriots of investment opportunities in their own country because of our ineptitude in prioritising national and indigenous interests. According to the Africa Conference on Land Grab’s research, over 55 million hectares of land in Africa has been “grabbed” since the year 2000. These land grabs are happening without any informed consent from development managers and thus millions of vulnerable communities in Africa are at risk of being displaced from their own lands.

Conflicts between Paladin the Australian mining company and the local people at the Kayelekera mining facility shows that Malawi is not ready to manage finite resources in a sustainable manner. Foreign investors scour the earth to find countries with surplus natural resources but with weak or ineffective environmental laws, because it reduces operating costs for firms.  Paladin has been mining uranium for years in Karonga but where do the proceeds go? Can anyone really point out any structure in this country that was built using proceeds from uranium mining? Uranium is a finite resource and if we are not careful, we will deplete our reserves with nothing to show for it. Once again, Malawians are handing out natural resources to the foreigner who will only continue to exploit us.

In the midst of conflicts between the locals and Paladin at Kayelekera, we hear that the government is busy employing foreign companies to explore the possibility of oil in Lake Malawi. Lake Malawi is a source of food and income for the poor living along the lake shore, and if there was to be an oil spillage, we risk the well-being and livelihoods of current and future lakeshore inhabitants. For centuries, our people have lived in harmony with this lake and it would be very selfish of our generation and our leaders to put others at risk because of our voracious greed. In terms of attraction for tourism, Lake Malawi is all we have. I’m sure no Malawian needs any reminder of what happened with Nyika National Park. If it was not for this lake, we would have no tourists coming to Malawi because Lake Malawi is the epitome of attraction in this country. I believe that oil drilling in Lake Malawi is not sustainable because oil is finite resource and also an environmental hazard that can destroy livelihoods and the lake’s Biodiversity. Lake Malawi provides 70 to 75 per cent of the animal protein consumed by both urban and rural communities. It would therefore be negligent for the government to sanction oil drilling in the lake which provides critical habitat for an amazing array of plants and animals including bacteria, fungi, algae, plankton, mussels, snails, crustaceans, insects, fish, amphibians, reptiles, birds and mammals.

When our leaders go outside of this country, they are always selling Malawi to the world as a place of investment opportunities. Indeed Malawi is a peaceful country which offers cheap labour and less competition for businesses, and it is therefore a haven for foreign investors. What we have to remember is that a foreign investor is seeking to make maximum profits, and the only way to do this in a host economy is by “cost reduction”. In Malawi, a lot of native Malawians employed by some foreign companies are being underpaid and exploited for monetary gains which sometimes do not even benefit our economy. A lot of our able graduates are languishing without jobs because some of our so-called investors only employ their relatives in top-tier jobs while Malawians are employed in low-tier jobs. Foreign direct Investment (FDI) is important in modern-day economics and plays the largest part in the growth of economies in a globalised world. However, when FDI is benefiting the foreigner than the host country, there is need to improve the structures to combat unscrupulous employers exploiting the weak and poor. There are a lot of foreign owned companies in Malawi who are exploiting the local personnel simply because our institutional governance structures are either weak or corrupt.  Malawians should not just be used for menial jobs only because we have educated people in this country who can fill up higher positions in foreign owned businesses.

We also have foreign investors who travel hundreds or thousands of miles away to invest in salons, clothes shops or other small enterprise trading entities. As much as Malawi needs investors, I doubt that these small trading entities are bringing any meaningful monetary gains for the country. If our trading partners in the West were following our pattern and forms of foreign investment, it is highly unlikely that their economies would have grown to astronomical heights. Malawi is a poor country that has a high unemployment rate and there is need to protect local entrepreneurs with small business enterprises. If foreigners monopolise the smallholder business market, the local Malawian entrepreneur is at risk of losing his/her business.

If we are to sustain development, native Malawians need to be the primary drivers of the economy and not the other way round. When we give licences or contracts to transnational corporations, Malawians should also be included in these processes to ensure accountability and justice. The Kayelekera mine is a good example whereby we are giving away our uranium to foreigners without any visible gain for the country. If we cannot get a good deal with foreign mining companies, it is not wrong for us to preserve our uranium for our future generations who might be in a better position to manage such resources. In this modern age of technological advancement, uranium plays an important part in the generation of energy. As our population grows, our hydro-electrical plants will not be enough to sustain Malawi and who knows, the future generations of this country might have the capability of setting up nuclear plants! It is therefore important for us to always think for our future generations because they too have the right to enjoy the resources this country has today.

All in all, I believe that we are the generation that is supposed to build a strong foundation for the house of Malawi, and if we fail, our future compatriots will inherit a broken country with little or no promise. And don’t be surprised if at that time, your”investors” all flee, and the country is thrown into chaos and violence.

Development is about continuity and the little we can manage to do in our lifetime is enough for others to carry on. If we do not have the capability to extract natural resources today, then there is no need for us to entrust our wealth with foreigners who are only here exploit our God-granted gifts. We cannot do everything in our lifetime.

Paja amati kuthamanga sikufika!

Economic Empowerment

mg2I hate to be the bearer of bad news but I’m not sorry to be the one that spoils the party. Especially this particular party…because while Malawi is currently heated with election campaign fervour, some of the events happening on the ground have caused one part of me to doubt whether much substance will in fact come out of the leadership that will be appointed after the 20 May elections.

Are we really going to see the transformation being excitedly predicted by each party’s honchos? What kind of transformation will we see? Are the parties really going to deliver what they have promised in their manifestos? Weren’t similar promises made during the election campaigns of 1994, 1999, 2004 and 2009? To what extent were those promises honoured? So then, what major transformation came out of the administrations who won those elections?

I think no matter who you choose to vote for, it would be wise to be cautious, and carefully examine each candidate on their merits, and what their track records in terms of actual achievements the last 5 – 10 years (not just the last year or two) have been…

Many a times I have waxed lyrical as if on a soapbox about economic empowerment of Africans, and many a time, I have not exactly got through to the right people. Which is okay. The right people are rarely in the right jobs, they are rarely listening.

But this is an issue that has to be addressed sooner or later, otherwise African countries will continue to struggle with poverty and other ills. Donors and foreign corporations will not tackle the issue of empowerment because it’s not always in their best interests, and they are not good at doing so [See this: Between the Elusive and the Illusionary: Donors’ Empowerment Agendas in the Middle East in Perspective – Mariz Tadros].

In Malawi most NGO’s do not have the power, nor are they sufficiently well resourced to influence the establishment of a nationwide empowerment initiatives that have a real chance to make a big enough impact. It’s all down to the government and MP’s, and for what it’s worth one part of me can’t see enough progress being done after the elections. Maybe I’m being unfair and prematurely judgemental, but I’m yet to be convinced whether any of the major parties truly can deliver what they promise. And this is not only because the practicality of what they promise in their manifestos is questionable but also because the vagueness of some of the promises render them useless.

But for those voters who are listening, and concerned, the important questions every Malawian should ask the candidates of the 20 May elections, before voting, are these:

What will they do differently to ensure that Malawians are economically empowered, and not taken advantage of? And why should we trust you?

This is important especially because it is clear to most Malawians that the tenures of the MCP, UDF, DPP and PP governments in the past have established very little for Malawians to show for. While countries like Kenya, Zambia, Rwanda, Ethiopia and Mozambique (where there was a debilitating 15 year long civil war) have powered forward with impressive results, Malawi, despite unsustainable blips of progress, is still languishing in the doldrums.

So, what will the candidates who vie for election to Parliament do which hasn’t been done already in the country’s 50-year-old history?

The reason that this question must be answered is that economic empowerment will not occur if the policies the new government institute turn out to be mediocre (like distributing cattle, chickens, houses or shoes) or the same as what has not worked in the past, and if corruption continues to be tolerated. In a country with 15 million people, the presidency would be best advised to think on a much larger scale, than wasting resources on mediocre projects.

Taking a simplistic general view, for people to be innovative and industrious they require one or more of the following:- an income, education, inspiration, tools/ building blocks (trucks, implements & equipment), and power (literally electricity). So, one would think that when a government articulates how they will provide these as part of a wider national transformation strategy, there will be a much higher chance of transforming Malawi than say distributing a million cows to villagers.

But that alone is not enough. Empowerment essentially means giving one power or authority to do something. So I’d like to see factories built, where young people can work, earn an income and develop transferable skills. And those factories, must be majority owned by Malawians, so that the profits made from Malawi stay within Malawi. Further, instead of giving a mining contract or power generation contract to a foreign corporation – which has its own interests, I’d like a government that promises, and implements a national  mining company, or power generation company, which is government owned, and whose profits are reinvested into Malawi.

That is precisely the kind of visionary leadership Malawians should seek and vote for.

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

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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Reshaping the African Politician – Nick Wright

reshaping-african-leaderIn 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. “L’etat c’est 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 can’t 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 Malawi’s 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).

Other Articles by Nick Wright:

 

Global 100 Voices: No 5

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My next guest describes himself as the proprietor of a recently opened media company(AGM Media).The company offers photography, audio and video services, amongst other services. He’s also undertaking International studies with the Open University. Mr MKOTAMA KATENGA-KAUNDA, thank you for doing the 100 Voices Interview!

  1. As a Malawian, how important is Malawi’s Socio-Economic stability to you and your family?

It is important because as a human being, one always aspires to have a better life for one self and his/her family. Socio-economic stability gives a better chance for someone with a dream to have a better quality life in a developing country.

    2. After nearly 50 years since independence, what visible progress do you think Malawi has made since independence, and in your view, what pressing challenges remain? In view of those challenges, what do you think is the role of government and the people in tackling those challenges?

It is really difficult to pinpoint any visible progress Malawi has made since independence. It is the same scenario of ‘the rich getting richer and the poor getting poorer’. It is sad that Malawi has not developed as it should have because the majority of visible structures in our country were built by Kamuzu Banda about twenty-plus years ago. It has been 19 years since we became a democratic country and not much has really changed in Malawi. In my view, I fail to register any visible progress that Malawi has made since independence because we have destroyed the very foundation which our nation once built (electricity and water supply is erratic, refuse collection is non-existent, our postal services are inefficient, Malawian-owned industries have been sold off etc). The most pressing challenge is ‘corruption’ at all levels of society in Malawi. For things to change, the government, starting with the executive, need to be exemplary by being tough on corruption at all levels in society. If the government is serious about such issues, then it is inevitable that citizens will follow suit.

  3. As someone who lived(or has lived) outside Malawi for some time, and has been exposed to modern and progressive ideas, what symbols of development in the foreign country in which you lived have had the greatest impact on you, and why?

I lived in the UK for 12 years and there are a lot of symbols of development in the UK that have had the greatest impact on me. My view is that, anybody that works hard in the UK has the chance to live life above the poverty line. Their social welfare is admirable in that it manages to help those citizens who are unemployed, homeless, sick and disabled etc. The roads, universities, transnational corporations, manufacturing industries and many more are all symbols of development that are prevalent in the UK. These symbols of development have had the greatest impact on me simply because my country of origin, Malawi, is lagging behind as one of the poorest countries in the world.

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

As this is a globalised world, a lot of Malawians have travelled and are still travelling. When we travel, it broadens our horizons and whatever we see in developed countries, always inspires us that we can also develop to the level of western countries. The lesson to be learnt is that as a nation, we should be resilient and ambitious with our developmental plans, because it is possible for third world nations to become developed nations. We should study and analyse those countries that have developed and try to figure out where we have gone wrong to strengthen our weaknesses on our path to development.

   5. When you last returned to Malawi, what struck you the most as the greatest sign of improvement or development since the last time you left?

I think the most clear sign of improvement that struck me was the number of better cars in Malawi.

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

The biggest sign of stagnation was corruption because everywhere i went, people preferred to do things through the back door.

frgl7. Malawians will be going to the polls in 2014, to elect a new president. In your view what kind of leader does Malawi NEED, considering the country’s current challenges? And specifically, how should that leader approach the top job in terms of creating sustainable development and foreign reducing aid dependency?

The biggest challenge Malawi has, is that we are dependent on foreign exchange for economic stability. As we approach the elections, Malawi needs an innovative leader that’s ready to initiate an ambitious blueprint to try to become self-sufficient. Malawi needs a frugal, transparent and incorruptible leader who is willing to make sacrifices for the future of our nation. This means that we need to utilise all our natural resources in a meaningful way where we get full returns that in turn spark developmental pathways for our nation.

   8. As you know, Tobacco is Malawi’s biggest source of export revenue. Looking at the problems that have plagued the tobacco industry in recent times, what alternatives do you think Malawi has besides Tobacco, and why are they viable alternatives?

Malawi’s alternatives to acquiring foreign revenue apart from Tobacco, is through natural resources. We have uranium in the northern region which is a sought after mineral in nuclear energy physics. Lake Malawi is rumoured to have gas and oil deposits underneath its seabed, which is believed to have caused tension between Malawi and Tanzania. However if the prospect is true, the returns from natural resources are always rewarding to countries with natural resources.

   9. Considering our troubled history with donors and funders such as the IMF and World Bank, most recently when  Bingu Wa Mutharika was president, how do you see Malawi progressing from this relationship in view of the criticisms these organisations have received in the media across the world?

The only way to progress from such a relationship is by becoming self-sufficient. Countries like Malawi are in a vicious cycle where they have become used to being dependants of the IMF and the World Bank. To come out of the reach of the IMF or the World Bank, Malawi needs to utilise its natural resources by channelling monetary gains into improving our social welfare.

   10. We know that Malawi has some precious minerals, including uranium, possibly oil and other natural resources. How do you think the present government is doing regarding managing Malawi’s natural resources?

The present government’s management of natural resources is poor. Rumours were rife in the previous administration that they signed a weak contract with Paladin an Australian company that was given concessions to mine uranium in Malawi. The current government has also kept the nation in the dark about the contract and no one really knows whether Malawi is gaining from it or not.

   11. In your view, can the government do better to manage natural resources? If so, how can it do better?

Yes, the government can do better by becoming transparent in its dealings with foreign companies that are given concessions to extract minerals from Malawi. Contracts should be negotiated for the benefit of the nation and not for just a select elite few. There is need for our government to realise that natural resources are for the benefit of all the people of the country, and not just for the leaders in the executive.

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

The answer is to have a strong constitution without any loopholes, a constitution that punishes anyone in contempt of the law. There is also a need to separate the police from the state so they can work independently without government interferences.

   13. Any famous words?

Running a government is very serious business – Bakili Muluzi

 100 Voices is a collection of reflections, views, opinions, ideas and thoughts by Malawians across the world, regarding the past, present and future of Malawi.

Rich Warm Heart

A Vision and Organisational Template for creating Sustainable Economic Growth in Malawi [Part 1]

(c) European Union
Image (c) European Union

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]

aid

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.

child-labour-South Carolina 1908
Child Labour, South Carolina, 1908

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$10US$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.

tractor

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.

greenway_poultry

underwater

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.”

[See here]

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.

[See here]

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!

Image source: Washington Post
Image source: Washington Post

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.

Sustainability

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.

Could wind turbines be an alternative source of power?
Could wind turbines be an alternative source of power?

Diversification

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.

Chinese propaganda poster, April 1965, it reads: “Fully engage in the movement to increase production and to practice economy to set off a new upsurge in industrial production” via http://chineseposters.net
Chinese propaganda poster, April 1965, it reads: “Fully engage in the movement to increase production and to practice economy to set off a new upsurge in industrial production” via chineseposters.net

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]

(C) 2012 -2013 Sangwani Nkhwazi