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

  • Listen to this article here

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Second Class Citizens – Part 1

(c) Institute of Race Relations
(c) Institute of Race Relations

“#Jesus endured sufferings to oppose tyrants who had put humans in hell in this world& the hereafter while he backed the oppressed. #Ferguson”

Today like previous years, African-Americans are still under pressure, oppressed and subjected to discrimination. #Ferguson

“At events in #Ferguson US is fighting w its ppl. #BlackLivesMatter”  

–  Ayatollah Ali Khamenei, Tweeting about Ferguson

“No group conceives itself as the One, the essential, the absolute, without conceiving and defining the Other. The Other is the stranger, the outsider, the alien, the suspect community: Otherness begets fear, begets hostility, begets denial.”

“…Bristol, like Liverpool, had grown wealthy on the back of the slave trade. Its black communities were well established, as was the racism they endured”

Phil Scraton, THE AUTHORITARIAN WITHIN: REFLECTIONS ON POWER, KNOWLEDGE AND RESISTANCE, Inaugural Professorial Lecture, Queen’s University, Belfast, 9 June 2005   (accessed at http://www.statewatch.org/news/2005/nov/phil-scraton-inaugural-lecture.pdf )

‘criminalisation as a process ‘does not occur in a vacuum’ but is derived and sustained in a climate of ‘contemporary politics,
economic conditions and dominant ideologies … evolving within the determining contexts of social class, gender, sexuality, race and age’

Phil Scraton & Kathryn Chadwick, Sage Dictionary of Criminology.

“Black men are routinely questioned, detained, arrested, and charged. They are sometimes beaten, sometimes killed, not because their guilt has been demonstrated but because they must be guilty of something” –  Kristin J Anderson, Ph.D., “Benign” Bigotry

Beware when a supreme leader of a sovereign state condemns defining interactions between the police and people of another sovereign state. The chances are something fishy lies beneath the surface. The second tweet by Khamenei above is from August 17, 2014. And since then we know that several other unarmed black men were killed in the US at the hands of the police. We also know that in all of those events, grand juries appointed to review the actions of the police officers involved refused to indict them.

I’m not a big fan of Khamenei’s or indeed anyone who’s title is (or gets others to call them) “Supreme”. But, my personal politics aside, this post is not about the woeful intricasies of how police in the US treat black people. Instead following recent events among them Chelsea supporter’s racist incident on the Paris Metro not too long ago, I’d like to present a broader view that explains why racism still lingers.

To write about racism is not easy because of the nature of the subject. Further, many people do not appreciate racism in a broader sense simply because it’s often localised, and often people choose to confront the type they see at play in their own immediate environments. The type that affects them. But let me ask this, can the environmental pollution of northern Ecuador for example – an area where a large population of non-white inhabitants live be a result of racism? When you consider that the culprits are unlikely to get away with such practices in their own predominantly white majority country? What about land Grabs in Ethiopia where poor black villagers are dispossessed of their land, to make way for interests owned by large foreign multinationals? Is that an extension of racism?

It’s easy to ignore such matters and look away. Its very easy to live in a cocoon. Anybody can look away, both the brave and the cowardly. Infact plenty of cowards do that every day. It takes real courage to question and squarely confront the issues no one wants to talk about, publicly.

I know people who say it doesn’t affect me. I’ll mind my own business.

Anyone can delude themselves that if they bury their head in the sand, if they play ‘nice’, and abide by ‘the rules’, and just get on with their own private life in the corner, racism will go away. That it won’t affect them. If only that were true.

Unfortunately it isn’t true. The effects of racism, it’s drivers, prejudices and multifaceted manifestations affect all non-white people (not just black people), be they living in Paris, London, Manchester, Johannesburg or anywhere else across the world. It affects the way people view black people, the opportunities (educational, employment or otherwise) we have in society, it affects for example your chances of getting a loan with which to start a business; your interactions with the authorities (I’ve been stopped 3 times for no reason, and many of my black friends have also been stopped by the police, for no reason. I know people with families who have been forced to leave their jobs over a mistake by a government agency. The only common denominator is that they are all black). Racism historically has affected the financial circumstances of non-white people (whether they know it or not), and the chances are if you are non-white and claim to not have been affected by racism, then you are either ignorant, or a liar. Someone in your wider family has been affected. Most probably your grandparents were affected in a way that shaped their lives, and consequently as a result your life.

Racism has a role in the way some western investors deal with Africa, and how the West deals with African politicians in negotiating investment deals. In their comfort zones some of those businessmen don’t think much of African politicians (you can’t really blame them considering the brutish conduct of many African politicians, but thats besides the point). To them, your people are no more than gullible pawns in a game of resource control. The result is that business deals that are unfair and keep countries hostage, having negative and far reaching repercussions for the lives of millions of poor people, are signed with little or no opposition in the way.

Whichever ethical lens you choose to wear, it can never be right.

So, the essay* below by Hilary Arnott, is particularly relevant in so far as attitudes to black people have shifted in Britain between the late 1970’s and the late 1980’s, and probably gives a reference point on race relations, if not a picture of how black people were perceived by officials in the British government during this period, and by implication how they are perceived by some white people today. I’d go as far as say that maybe these kinds of entrenched attitudes is part of the reason why racism is still alive and well today. [* apologies that the article is missing a page]

This slideshow requires JavaScript.

Ok, so some one may be asking, what’s the point?

Well, in my pursuit of knowledge, I’ve often been at pains to find ‘convincing’ narratives that encapsulate the black person’s experience of living the western world. At least those that do so honestly, without being patronising or omitting important details. Especially since such was omitted during my formal education in Malawi, and I know many Malawians (both young and old ) who do not clearly understand these things, or how they are affected by them.
So far, while there are many resources (for example this powerpoint presentation at the Institute of Race Relations and the lecture mentioned in the quote at the beginning of this article) there aren’t many which I’d say stand out remarkably, and which I’d recommend to young audiences who are unlikely to read a long article or big book on African History.

Having said that, there are many accounts (including blog posts) that attempt to explain how we got here, why we got here, and where we are going from here.  In the lecture by Phil Scraton refered to above, he says:-

“Henry Giroux argues that in the context of ‘increasingly oppressive corporate globalism … educators need to resurrect a language of resistance and possibility’. For: ‘Hope is the precondition for an individual and social struggle … the mark of courage on the part of intellectuals in and out of the academy who use the resources of theory to address pressing social problems’. It is more than this. It is about bearing witness, gathering testimonies, sharing experiences, garnering the view from below and exposing the politics and discourses of authoritarianism. It moves beyond the resources of theory into praxis, recognising the self-as-academic as the self-as-participant. It takes political responsibility. As my good friend Stan Cohen concludes: ‘Intellectuals who keep silent about what they know, who ignore crimes that matter by moral standards, are even more culpable when society is free and open. They can speak freely, but choose not to.’ – Stan Cohen  “

That is precisely why I choose to publish material about the black experience on this blog.

Links and resources

 
‘Dr Stanislas warns that when examining crime and the black community it is essential to separate genuine issues of concern with what is in reality an ongoing criminalization of black people. Black families should not be used as an excuse for crime within black communities or placed under a microscope, especially when “the white family produces more dysfunctional individuals, ” he said.