If you were presented with a picture of the rather unassuming building of Somaliland’s Parliament for the very first time, you’d be forgiven for thinking that the place was in fact the site of Prakash Patel’s Tandoori Curry Bazaar in downtown Limbe.
Yes, looks are not everything, but the building is reminiscent of a glorified third-rate Bengali restaurant in a dusty part of town than the bonafide parliament building that it actually is. It looks more like one of those places where families go to after a sweaty day in Church, for Sunday dinner – complete with Biryanis, Chicken Kormas and Lamb Vindaloos.
So, what on earth is Malawi looking for in Somaliland?
Shouldn’t we instead be cosying up to the Singapores and South Koreas of this world? The glitzy success stories whose ‘breadcrumbs’ can catapult our tiny economy into the 21st century….no?
I mean, if we are serious about implementing a tried and tested formula of economic development which other countries have been using to develop their economies for decades then surely an official trip to New Delhi or Jakarta sounds more like it?
There’s been quite a bit of speculation as to the real reasons why Malawi is interested in Somaliland, and I won’t tire you by rehearsing those reasons here.
The adminstration of Somaliland has put out what to me sounds like regurgitated diplomat-speak. A cut-and-paste statement that is too generic to be meaningful or taken seriously. The government of Malawi too hasn’t provided a convincing reason for its interest in Somaliland. In any case if the issue was truly about Somaliland seeking support from Malawi for it’s national recognition on the world stage, then surely it should have been officials from Somaliland visiting Malawi, and not the other way round. As the Chichewa proverb goes, phiri siliyendera nyani koma nyani ndi amene amayendera phiri (A mountain doesn’t follow the monkey, it’s the monkey that follows the mountain)
What’s surprised me from the commentary about the visit in Malawian publications is to see almost no one pick out the most probable reason why Eisenhower Mkaka (Malawi’s Foreign Minister) visited Hargeisa – the capital city of Somaliland, which I’m quite sure most Malawians hadn’t previously heard of before Mkaka’s visit.
I think the real reason Lazarus Chakwera’s government is looking to befriend Somaliland is to do with Oil. Yes, it’s all about Petroleum. Why this is the most likely reason is because in recent years, there’s been quite a lot of talk about investment into Somaliland. Only last year, the London headquartered Genel Energy announced it had increased his stake in the SL10B13 block in Somaliland to 100% , after acquiring a 25% state that had been previously held by East African Resources Group. That block alone is said to comprise several interests each containing at least 200 million barrels of crude oil, with some analysts estimating that there’s at least 1 Billion barrels of oil underneath that one block. That means Somaliland as a whole could have significant petroleum reserves, possibly of the size comparable to those found in several of the neighbouring countries.
Further, when friends are hard to come by as has been the experience of Somaliland (which is still regarded as an autonomous region within Somalia, and hasn’t been officially recognised by any country) any sort of trade can make a significant difference. As other marginalized states (including sanction-laden states such as Venezuela & Iran) will tell you, any takers of your output including oil in circumstances where other countries are afraid of the consequences of trading with you can be a lifesaver.
In addition, Somaliland in 2016 signed a 30 year contract with the United Arab Emirates’s DP World, the third largest port operator in the world, to manage and expand its Berbera Port. Last year, a US$400 million road project connecting Ethiopias border town of Togochale to Berbera was launched, a route which some analysts say will be an alternative transit point for imports and exports out of Ethiopia. There’s been several other significant and notable investments…
But if the oil quantities are as significant as some think, its only a matter of time before a refinery is constructed. Already in the south Ethiopia is looking at building it’s first oil refinery. This follows the shelving of a Blackstone Group LP-backed fuel pipeline project 2 years ago. Thus, given the frosty nature of diplomatic relations between Somalia and Ethiopia, it’s not inconceivable for Petroleum from Somaliland being refined in Ethiopia in the near future, before being sent back to be shipped from Berbera to destinations across the world.
Malawi needs oil at as cheap a price as can be found. Thus if you can sign contracts with ‘friends’ who are relatively new to the oil game to sell you oil at ‘friendly prices’ (as opposed to Market rates) in exchange for support regarding the friend’s sovereignty, then theoretically everyone stands to benefit. Malawi gets its relatively cheap oil at prices it can afford without having to deal with the baggage of the likes of Nigeria, Somaliland gets some Forex, and a measure of the international recognition it very much craves, there’s a boost to intra-African trade. Everyone’s a winner!
My next guest is a good friend who I have known for just over 13 years now. He’s a Malawian businessman who currently is the manager of Phalombe Hardware in Limbe. Mr Ibrahim Nathanie, thank you very much for taking the time to do the 100 Voices interview.
As a Malawian, how important is Malawi’s Socio-Economic stability to you and your family?
As a Malawian, Malawi’s socio economic stability is very important. I am a fourth generation Malawian and all my immediate family has been born and bred in Malawi. We have businesses running in Malawi that have recently struggled when dollars were scarce, fuel queues were rife and inflation was high. Things have now stabilised and as a result business is slowly improving. When things are not stable it directly affects how I can provide for my family.
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?
Since independence there has been progress in a few areas. For example we have now more graduates in various fields than we had then, more hospitals, more hotels. However, a lot of the progress mentioned has been donor funded.
Our pressing challenge is to try to reduce our dependence on being donor funded. One way this can be made possible is to take advantage of the natural beauty and fertile land we have in Malawi. Government has to improve infrastructure and provide incentives to the tourism industry. Improve airports, improve electricity generation.
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 studied in London, and a major symbol of development that had an impact on me was the transport facilities. As a student I could catch a bus or train and travel throughout London and not be dependent on anyone.
Another thing I thought was quite impressive was theNHS (Although I know the British people don’t think it is). Although, I have never had to use the service while I was studying; coming from Malawi I found it very impressive that anyone living in the UK has access to free hospital care.
4. What lessons do you think Malawians and the Malawian leadership can learn from those ideas?
Malawi and its leaders really need to look at ways to improve our transport sector. We need to improve our rail link and our airports. We need to break the monopoly South African Airways has on the Malawian market. For example if I wanted to fly Johannesburg from Blantyre it would cost me 450,000 MWK (~£859). If I wanted to fly from Johannesburg to London it would cost me the same. Surely government should realise that they need to open up the skies so that there is competition in aviation field and that potential tourists are not priced out of coming to Malawi.
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?
When I returned to Malawi in 2006 , the greatest sign of improvement was the opening up of banks and businesses in rural trading areas such as Mangochi, Balaka, Dedza, Ntcheu, Mulanje, etc.
“For example how can employees at the National Food Reserve Agency fail to realise that a silo had a leak. If this happened in the UK the guy who was responsible would have resigned. “
6. What struck you the most as the biggest sign of stagnation or regression?
The fact that I had to use a paper driving licence for a year as Road Traffic had run of cards to print them on. The fact that nobody in the government is being held accountable for wrongs being done. For example how can employees at the National Food Reserve Agency fail to realise that a silo had a leak. If this happened in the UK the guy who was responsible would have resigned.
7. 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 foreignreducing aid dependency?
I find the work that Joyce Banda has done in the short time she has been president is commendable. There is now forex in Malawi, no shortage of goods and no fuel queues. My only criticism of her presidency is that she has not taken any active steps to reduce our dependency on foreign aid.
I would vote for Joyce Banda but would advise her to introduce incentives for investors to come and invest in Malawi. Provide incentives for our farmers to add value to their crop before exporting their crop. For example instead of Malawi importing cigarettes we should encourage cigarette companies to come and open manufacturing plants in Malawi.
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?
Tourism sector really needs to be exploited, you only have to look at how Zambia and Kenya are benefitting from exposing themselves to the rest of the world. We are blessed with beauty that is unmatched in the world; we however are not blessed with people in power who can see this.
They need to build international airports at the lake, and domestic airports dotted along the lake shore. We need to attract tourists who actually spend money in Malawi not just back packers who are looking to get stoned on Malawi Gold (On a side note we could actually legalize the export of marijuana and rake in substantial forex). We need to reduce the cost of coming to Malawi. I gave an example earlier of how expensive it is for us to fly to Johannesburg.
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?
To be honest I feel we have already progressed from this relationship. The donors are in love with the donors.
Without a doubt we have to reduce our dependence on the donors as we all know it’s a vicious cycle. It is not in their interest for Malawi to be self-sufficient; as if we were they could not enforce their views and western cultures upon us.
10. We now 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 people in charge in my opinion have done nothing with regards to managing our resources. This is evident in that Paladin got a great deal from the government for our uranium???
The guys in charge have to look at how Zambia is doing with it copper resources, Ghana with its oil and even other European Countries with their natural resources such as Norway to realise we have got it horribly wrong.
11. In your view, can the government do better to manage natural resources? If so, how can it do better?
“When oil was discovered in the Norwegian continental shelf in 1969, Norway was very aware of the finite nature of petroleum, and didn’t waste any time legislating policies to manage the new-found resource in a way that would give Norwegians long-term wealth, benefit their entire society and make them competitive beyond just a commodities exporter. “Norway got the basics right quite early on,” says John Calvert, a political science professor at Simon Fraser University. “They understood what this was about and they put in place public policy that they have benefited so much from.” This is in contrast to Canada’s free-market approach, he contends, where our government is discouraged from long-term public planning, in favour of allowing the market to determine the pace and scope of development. “I would argue quite strongly that the Norwegians have done a much better job of managing their [petroleum] resource,” Prof. Calvert says. While No. 15 on the World Economic Forum’s global competitiveness rankings, Norway is ranked third out of all countries on its macroeconomic environment (up from fourth last year), “driven by windfall oil revenues combined with prudent fiscal management,” according to the Forum. Before oil was discovered, the Act of 21 June 1963 was already in place for managing the Norwegian continental shelf. This legislation has since been updated several times, most recently in 1996, now considered Norway’s Petroleum Act, which includes protection for fisheries, communities and the environment. In 1972, the government founded the precursor of Statoil ASA, an integrated petroleum company. (In 2012, Statoil dividends from government shares was $2.4-billion). In the same year, the Norwegian Petroleum Directorate was also established, a government administrative body that has the objective of “creating the greatest possible values for society from the oil and gas activities by means of prudent resource management.” In 1990, the precursor of the Government Pension Fund – Global (GPFG), a sovereign wealth fund, was established for surplus oil revenues. Today the GPFG is worth more than $700-billion. While there’s no question that Norway has done well from its oil and gas, unlike many resource-based nations, Norway has invested its petro dollars in such a way as to create and sustain other industries where it is also globally competitive. The second largest export of Norway is supplies for the petroleum industry, points out Ole Anders Lindseth, the director general of the Ministry of Petroleum and Energy in Norway. “So the oil and gas activities have rendered more than just revenue for the benefit of the future generations, but has also rendered employment, workplaces and highly skilled industries,” Mr. Lindseth says. Maximizing the resource is also very important. Because the government is highly invested, (oil profits are taxed at 78 per cent, and in 2011 tax revenues were $36-billion), it is as interested as oil companies, which want to maximize their profits, in extracting the maximum amount of hydrocarbons from the reservoirs. This has inspired technological advances such as parallel drilling, Mr. Lindseth says. “The extraction rate in Norway is around 50 per cent, which is extremely high in the world average,” he adds. Norway has also managed to largely avoid so-called Dutch disease (a decline in other exports due to a strong currency) for two reasons, Mr. Lindseth says. The GPFG wealth fund is largely invested outside Norway by legislation, and the annual maximum withdrawal is 4 per cent. Through these two measures, Norway has avoided hyper-inflation, and has been able to sustain its traditional industries. In Norway, there’s no industry more traditional than fishing. “As far back as the 12th century they were already exporting stock fish to places in Europe,” explains Rashid Sumaila, director of the Fisheries Economics Research Unit at the University of British Columbia Fisheries Centre. Prof. Sumaila spent seven years studying economics in Norway and uses game theory to study fish stocks and ecosystems. Fish don’t heed international borders and his research shows how co-operative behaviour is economically beneficial. “Ninety per cent of the fish stocks that Norway depends on are shared with other countries. It’s a country that has more co-operation and collaboration with other countries than any other country I know,” Prof. Sumaila says. “That’s [partly] why they still have their cod and we’ve lost ours,” he adds, pointing out that not only are quotas and illegal fishing heavily monitored, policy in Norway is based on scientific evidence and consideration for the sustainability of the ecosystem as a whole. Prof. Sumaila cites the recent changes to Canada’s Fisheries Act, as a counter-example: “To protect the habitat, you have to show a direct link between the habitat, the fish and the economy,” he says, adding, “That’s the kind of weakening that the Norwegians don’t do.” Svein Jentoft is a professor in the faculty of Bioscience, Fisheries and Economics at the University of Tromso. He adds that Norway’s co-operative management style, particularly domestically, has been key to the continued success of the fisheries. “The management system [for fish stock] is an outcome of the positive, constructive and trustful relationship between the industry on the one hand and the government on the other hand,” Prof. Jentoft says. “They have been able to agree on issues that you and many other countries haven’t been able to, largely because the government has listened to the fishermen.” However, Prof. Jentoft isn’t on board with all of his government’s policies. He’s concerned about how the quota and licensing system is concentrating wealth and the impact that this will have on fishing communities. He predicts that Norway’s wild stocks will remain healthy in the foreseeable future and that the aquaculture industry (fish farms), where Norwegians are world leaders, will continue to grow. In 2009, Norway’s total fish and seafood export was $7.1-billion, $3.8-billion was in aquaculture. By 2011, Norwegian aquaculture exports grew to $4.9-billion. In Canada, total fish and seafood exports in 2011 were $3.6-billion, with approximately one-third from aquaculture. Norway’s forests are another important natural resource, and its pulp-and-paper industry has many parallels to Canada’s. Both nations are heavy exporters of newsprint. With much less demand since the wide adoption of the Internet and competition from modern mills from emerging markets, both nations have suffered through down-sizing and mill closures over the past decade. Both have been looking for ways to adapt. The Borregaard pulp and paper mill in Sarpsborg has become one of the world’s most advanced biorefineries. From wood, it creates four main products: specialty cellulose, lignosuphonates, vanillin and ethanol, along with 200 GWh a year of bioenergy. “You have a diversified portfolio of products,” explains Karin Oyaas, research manager at the Paper and Fibre Research Institute in Trondheim. “The Borregaard mill uses all parts of the wood and they have a variety of products, so if one of the products is priced low for a few years, then maybe some of the other products are priced high.” She feels this is a key change in direction for the industry in Norway. She doesn’t want to see the industry putting all of its eggs in one basket, as it did with newsprint. Dr. Oyaas also thinks that rebranding the industry is key to its survival and success in Norway. The forestry industry doesn’t get the same kind of attention as the oil industry, nor does it have the high-tech image. But it is just as high-tech, and it has the bonus of being a renewable resource. “You can make anything from the forest. You can make the same products that you can make from oil,” explains Dr. Oyaas.”
12. What is your answer to increasing transparency and eradicating corruption which is plaguing most governments across Africa?
Corruption is prevalent everywhere. It is just more prevalent in Africa. The reason being is that our civil servants e.g. the cops, the guy connecting your water or ESCOM metres are not paid well enough. We need to improve wages.
Consumers also need to change the way we operate. In order to get things “done” we feel we need to bribe. This enables people who do simple things like process your driver’s license or come to inspect your imported goods being offloaded not even being shy about asking for a bribe.
I reckon we need to start with these small steps and then look at the bigger bribes.
13. Any famous last words?
I manage Phalombe Hardware in Limbe – directly opposite Standard Bank in Limbe. At the moment investing in Malawi by building a house or commercial property is the way to go. We can provide all building materials from the foundation right up to the finishing stages for your house. Please visit us on face book or email us for a quote. Phalombe@africa-online.net
Global100 Voices is a collection of reflections, views, opinions, ideas and thoughts by Malawians across the world, regarding the past, present and future of Malawi