Thoughts on the sale of Malawi Savings Bank (MSB) , and more

The trouble with capitalists (as with politicians) is that they think only about themselves. Until after things begin to go wrong, after which they still think only about themselves. Need proof of that?  What happened in the 2008-2009 financial crash?

Dont get me wrong, I’m pro Capitalism. Totally. May not entirely be proud of it, but I am pro ‘responsible Capitalism’, for lack of a better term. My line of work is made possible definitely only because of Capitalism. And yes, I enjoy what I do.

But when your only motivation and greatest priority is making money; and everything else including other human beings come second in the list of priorities, then it is more likely than not that you have lost the plot; that you need salvation.

But without digressing too much, why is the sale of MSB the wrong decision?

Well, firstly assets fetch more when sold at the peak of their value. When they are sparkling and in pristine condition; for companies, it’s when business is going well and the profits are pouring in in bucket-loads. During such times, the sale of a business can command serious financial digits and can really bring value to their owners. But when the business is  loan-laden with toxic debts it issued (some alleged to be politically influenced backdoor deals), when a bank is infested with inefficiency, corruption or dodgy deals, when there are some financial mishaps, you can’t possibly expect to get value for money, or for the bank to be sold for the real value it is worth. Had the management persevered and got its act together before selling, had the bank liquidated a significant part of the debts on its books, it’s likely that it could have fetched more on the market.

Think of it like selling your old car (which is partly owned by your friend who doesn’t want to sell it) when the windscreen has a chip in it, when the paint work needs improving, when one tyre is flat, and look! – .there’s a decomposing rat on the backseat..yuck!

Lets just say your car would have fetched a better price if you first reached an agreement with your friend, and fixed it; if you got it cleaned, …kuyikwecha bobo, before attempting to sell it.

Secondly, you can’t sell what you do not officially own. You can’t sell what you have no authority to sell. Imagine if I showed up to a potential investor and claimed that I owned the land on which the new stadium in Lilongwe is being built. Not only would my claims be laughable (and could possibly land me a stint in jail), but any foolish investor who dared believe such folly, without independent verification, would find themselves in the undesirable position of having to explain a useless contract – a piece of paper that would be completely unenforceable.

So, being state-owned, MSB is essentially a chattel held by the state in trust on behalf of the people. It is Malawians who should hold the key to its fate, they are the ones who can legitimately decide on whether to sell it or not. Malawians and not only the government of Malawi.

If that’s not currently the case, then that’s how it should be, for any state-owned property because otherwise there is a danger that the executive could make decisions befitting more of a dictator than a democratically elected president; that the legislature could act without consulting the people they represent.

Which is a problematic state of play since by selling the bank, the assumption is that the government is acting in the interests of Malawians – and has their blessing in undertaking such actions ; yet from the anti-sale demonstrations and all the opposition to the sale, it would be perfectly clear to anybody who was paying attention that there are many thousands, possibly hundreds of thousands, or even millions of Malawians who didn’t exactly approve of the decision (the very reason why it had been initially suspended). So without a vote or proper public consultation, wouldn’t the sale of MSB be undemocratic? Or illegal?

In addition, state-owned property is one means by which the state generates an income to pay for the business of government. Without enough state-owned property (or some other dependable source of an income), most governments are unable to generate enough funds from tax-collection alone. They struggle to pay for services, and the business of government (Civil servant salaries, Security and public order, food, medicines, infrastructure, education, etc) with the result they end up having to borrow money from institutions whose primary motive is making money; international banks who can’t possibly be said to have the best interests of the loan recipient country at heart.

It’s the capitalists I mentioned above who get to provide the loans, on their terms and not the recipient’s terms. Therefore, it must come as no surprise if they disregard the hungry children the poor country has.

North_Darfur_IDP_malnourished_childDisregarding overflowing maternity wards in the country’s hospitals – which desperately need upgrading; with no concern, sympathy or consideration for parents who can’t pay for medical care for their children. Make no mistake, Capitalists are not charities. They are not mandated as governments of western democracies are – to care for the people, especially the most vulnerable people in society. They work without care for the villagers who have no clean water, no electricity and no medicines in hospitals. They don’t think about the young people who have degrees but can’t get jobs in their own countries because there are no jobs available (and the government or domestic private enterprise are not investing in jobs or youth development initiatives).

It’s no big secret, but most Capitalists think only about how much money they can make for themselves, for their organisations / institutions and for their friends.

I may not have all the concrete data to support this somewhat wild claim, but I’m willing to bet a few quid that they do.

The result is inevitable; whole countries end up tormented by debt, with ballooning deficits which can never realistically be got rid of, as Argentina and Greece have found out the hard way in recent years. They become the butt of jokes and stand at the receiving end of blame. Unable to raise credit, and therefore unable to finance their activities. It’s virtually a coup.

greek-bailout-fund2Countries like Greece. Countries like Malawi.

This is the reason why so many countries are in debt, because their governments do not own enough assets from which to extract a dependable and sustainable income, and they have to rely on harmful debts which damage their economies more than they help. Put simply, these countries do not have a job that pays enough for them and ‘their families’ to survive on, so they go to loan sharks who tie a noose around their necks.

In Friedmanian economics (or what he termed neoliberalism), the same governments – most of whom at the time were operating surpluses or relatively small budget deficits in comparison to the current levels –  were told by mostly pro-capitalist economists to relinquish ownership of high yield assets (in industries which were dominated by few individuals/ merchants in monopolies that traded side by side with the state-owned enterprises) they owned, in the process ‘laissez-faire’ economics morphed into ‘market competition’… a phenomenon similar in effect to the fall of the USSR’s property ownership framework while urging in the rise of the Oligarchs. Before you had fewer players gnawing at the national cake, and the government was a significant player- now you have more players at the banquet(even though they are still a minority in comparison to the whole population), but this time, the government is not even at the table.

No prizes for guessing who bought those assets, but the state – these fellows argued, shouldn’t be in the business of running anything. As a result, several decades later – culminating in Thatcherism in Britain – everything from utility companies (including gas and electric suppliers) were mostly owned by corporations; so were the mines, railway and telecommunication companies, virtually every large industry with the capacity to raise huge sums for the government fell out of majority stake public-ownership, in preference to some private outfit, whose primary motive was profit and little else.

Some of these countries do not have oil, or other high demand resources on which to depend in the long-run (and even many which do struggle to manage them properly).They have to rely on a small tax base (~ heavily taxed citizens) for revenues, crops such as tobacco which are fast becoming unpopular, on tax-evading companies to pay their fair share of tax to the state; how crazy do you have to be to depend on profit-shifting (cost-shifting) corporations to stop their dirty tricks and behave (even though there is little indication this will happen anytime soon)? They rely on meagre inflows of Foreign Direct Investment, on aid organisations whose ethics/ morality is often in question. And if all that isn’t sufficient to support their budgets, these countries have a ‘safety’ net which can only be described as a poisonous concoction of interest-driven donors and austerity-prescribing institutions – to provide loans.

In contrast, countries rich in natural resources such as Saudi Arabia, Qatar and Kuwait own significant parts of their largest industries, and can therefore afford to finance almost all the business of government from the sale of their natural resources (in this case oil).

When was the last time you heard that Kuwait or Qatar had asked for a loan from the IMF?

They don’t need to hold onto many state-owned assets outside of the petroleum realm, because the petroleum industry generates enough income to cover the business of government and give them budget surpluses for every other luxury – from financing huge construction projects, to paying for a controversial world cup that’s now increasingly doubtful – thanks to the FIFA scandal.

What about all the bailouts, someone may ask, and loans and aid provided to struggling countries over the last 50 years, where has all that gone? Well, mostly to the banks. And to companies from the countries of the aid providers. In the case of Greece which is suffering the same kind of debilitating debt onslaught as most African countries but on a much larger scale, the money went back to the same capitalists (see another link here from the Guardian) who created the very same mess in the first place.

Thus, considering all this, and more, I have to say for me it’s entirely valid to believe that if you don’t have a large multi-billion dollar industry in your country, if you have few natural resources to exploit, and if many of the common problems African countries have to battle with plague your economy, then it makes perfect sense as a government to hold on to as much industry as you can – and try to make it profitable. Maybe in the same way as Norway has done.

Such a strategy to me has a better chance of achieving a zero deficit budget, giving your country a surplus of disposable income others fail to achieve.

And that is why I think Peter Mutharika and the government of Malawi has got it wrong on Malawi Savings Bank (MSB)

P/s: Go tell the Malawian commentator who appeared to be saying that Malawians were wrong to voice their concerns over the sale of MSB that he has got it completely wrong this time. If anything, Malawians should be mad  for being taken for fools! far from being silent more Malawians should stand up to be counted. Foolish ideas deserve nothing but condemnation!

Con Artists: Deception, deception and more deception

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

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

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

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

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

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

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

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

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

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



The IMF and the WORLD BANK: Puppets of the Neoliberal Onslaught

If you thought my article the other day about why I oppose drilling for oil on lake Malawi was unbalanced or not well thought through, this article titled The IMF and the WORLD BANK: Puppets of the Neoliberal Onslaught published around September /October 2000 will qualify my point and probably set you right. I’ve had it bookmarked for a while, but forgot about it until a discussion with a friend recently reminded me of it. The discussion centered upon the news a few days ago that Christine Lagarde was questioned by a court in France, answering questions over her role in a €400million payout to an ex football boss.