Flipping the Corruption Myth

Flipping the Corruption Myth by Dr Jason Hickel, a lecturer at the London School of Economics and an adviser to /The Rules
– Corruption is by far not the main factor behind persisting poverty in the Global South.  Original article via Al Jazeera here

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Transparency International recently published their latest annual Corruption Perceptions Index (CPI), laid out in an eye-catching map of the world with the least corrupt nations coded in happy yellow and the most corrupt nations smeared in stigmatising red. The CPI defines corruption as “the misuse of public power for private benefit”, and draws its data from 12 different institutions including the World Bank, Freedom House, and the World Economic Forum.

When I first saw this map I was struck by the fact that most of the yellow areas happen to be rich Western countries, including the United States and the United Kingdom, whereas red covers almost the entirety of the global South, with countries like South Sudan, Afghanistan, and Somalia daubed especially dark.

This geographical division fits squarely with mainstream views, which see corruption as the scourge of the developing world (cue cliche images of dictators in Africa and bribery in India). But is this storyline accurate?

Many international development organisations hold that persistent poverty in the Global South is caused largely by corruption among local public officials. In 2003 these concerns led to the United Nations Convention against Corruption, which asserts that, while corruption exists in all countries, this “evil phenomenon” is “most destructive” in the global South, where it is a “key element in economic underperformance and a major obstacle to poverty alleviation and development”.

There’s only one problem with this theory: It’s just not true.

Corruption, superpower style

According to the World Bank, corruption in the form of bribery and theft by government officials, the main target of the UN Convention, costs developing countries between $20bn and $40bn each year. That’s a lot of money. But it’s an extremely small proportion – only about 3 percent – of the total illicit flows that leak out of public coffers. Tax avoidance, on the other hand, accounts for more than $900bn each year, money that multinational corporations steal from developing countries through practices such as trade mispricing.

This enormous outflow of wealth is facilitated by a shadowy financial system that includes tax havens, paper companies, anonymous accounts, and fake foundations, with the City of London at the very heart of it. Over 30 percent of global foreign direct investment is booked through tax havens, which now collectively hide one-sixth of the world’s total private wealth.

This is a massive – indeed, fundamental – cause of poverty in the developing world, yet it does not register in the mainstream definition of corruption, absent from the UN Convention, and rarely, if ever, appears on the agenda of international development organisations.

With the City of London at the centre of the global tax haven web, how does the UK end up with a clean CPI?

The question is all the more baffling given that the city is immune from many of the nation’s democratic laws and free of all parliamentary oversight. As a result of this special status, London has maintained a number of quaint plutocratic traditions. Take its electoral process, for instance: More than 70 percent of the votes cast during council elections are cast not by residents, but by corporations – mostly banks and financial firms. And the bigger the corporation, the more votes they get, with the largest firms getting 79 votes each. This takes US-style corporate personhood to another level.

To be fair, this kind of corruption is not entirely out-of-place in a country where a feudalistic royal family owns 120,000 hectares of the nation’s land and sucks up around £40m ($65.7m) of public funds each year. Then there’s the parliament, where the House of Lords is filled not by-election but by appointment, with 92 seats inherited by aristocratic families, 26 set aside for the leaders of the country’s largest religious sect, and dozens of others divvied up for sale to multi-millionaires.

Corruption in US is only slightly less blatant. Whereas congressional seats are not yet available for outright purchase, the Citizens United vs FEC ruling allows corporations to spend unlimited amounts of money on political campaigns to ensure that their preferred candidates get elected, a practice justified under the Orwellian banner of “free speech”.

The poverty factor

The UN Convention is correct to say that poverty in developing countries is caused by corruption. But the corruption we ought to be most concerned about has its root in the countries that are coloured yellow on the CPI map, not red.

The tax haven system is not the only culprit. We know that the global financial crisis of 2008 was precipitated by systemic corruption among public officials in the US who were intimately tied to the interests of Wall Street firms. In addition to shifting trillions of dollars from public coffers into private pockets through bailouts, the crisis wiped out a huge chunk of the global economy and had a devastating effect on developing countries when demand for exports dried up, causing massive waves of unemployment.

A similar story can be told about the Libor scandal in the UK, when major London banks colluded to rig interest rates so as to suck around $100bn of free money from people even well beyond Britain’s shores. How could either of these scandals be defined as anything but the misuse of public power for private benefit? The global reach of this kind of corruption makes petty bribery and theft in the developing world seem parochial by comparison.

But this is just the tip of the iceberg. If we really want to understand how corruption drives poverty in developing countries, we need to start by looking at the institutions that control the global economy, such as the IMF, the World Bank and the World Trade Organisation.

During the 1980s and 1990s, the policies that these institutions foisted on the Global South, following the Washington Consensus, caused per capita income growth rates to collapse by almost 50 percent. Economist Robert Pollin has estimated that during this period developing countries lost around $480bn per year in potential GDP. It would be difficult to overstate the human devastation that these numbers represent. Yet Western corporations have benefitted tremendously from this process, gaining access to new markets, cheaper labour and raw materials, and fresh avenues for capital flight.

These international institutions masquerade as mechanisms for public governance, but they are deeply anti-democratic; this is why they can get away with imposing policies that so directly violate public interest. Voting power in the IMF and World Bank is apportioned so that developing countries – the vast majority of the world’s population – together hold less than 50 percent of the vote, while the US Treasury wields de facto veto power. The leaders of these institutions are not elected, but appointed by the US and Europe, with not a few military bosses and Wall Street executives among them.

Joseph Stiglitz, former chief economist of the World Bank, has publicly denounced these institutions as among the least transparent he has ever encountered. They also suffer from a shocking lack of accountability, as they enjoy special “sovereign immunity” status that protects them against public lawsuit when their policies fail, regardless of how much harm they cause.

Shifting the blame

If these patterns of governance were true of any given nation in the global South, the West would cry corruption. Yet such corruption is normalised in the command centres of the global economy, perpetuating poverty in the developing world while Transparency International directs our attention elsewhere.

Even if we do decide to focus on localised corruption in developing countries, we have to accept that it does not exist in a geopolitical vacuum. Many of history’s most famous dictators – like Augusto Pinochet, Mobutu Sese Seko, and Hosni Mubarak – were supported by a steady flow of Western aid. Today, not a few of the world’s most corrupt regimes have been installed or bolstered by the US, among them Afghanistan, South Sudan, and the warlords of Somalia – three of the darkest states on the CPI map.

This raises an interesting question: Which is more corrupt, the petty dictatorship or the superpower that installs it? Unfortunately, the UN Convention conveniently ignores these dynamics, and the CPI map leads us to believe, incorrectly, that each country’s corruption is neatly bounded by national borders.

Corruption is a major driver of poverty, to be sure. But if we are to be serious about tackling this problem, the CPI map will not be much help. The biggest cause of poverty in developing countries is not localised bribery and theft, but the corruption that is endemic to the global governance system, the tax haven network, and the banking sectors of New York and London. It’s time to flip the corruption myth on its head and start demanding transparency where it counts.

Dr Jason Hickel lectures at the London School of Economics and serves as an adviser to /The Rules. 

Follow him on Twitter: @jasonhickel

Global 100 Voices: No 8

crptn“Change the laws so that floor crossing is illegal and make it easy to impeach a politician if they do not deliver or are suspected of being involved in corrupt activities.”

After a few months without a contributor, finally a Malawian Ace has risen up to the challenge of the 100 Voices interview.

My guest today is a businessman who can clearly see the problems facing the country, and has the progress and advancement of Malawi close to his heart. He has established himself in South Africa, and runs a number of businesses there. Mr Elvis Chaweza, thank you for taking the time to do this interview.  But before we begin, and for the benefit of those who do not know you, perhaps you could take some time to summarise for us a bit about your background?

I am a Malawian resident in South Africa. I went to Blantyre Secondary school and went on to study Mechanical Engineering at the University of Malawi, The Polytechnic then worked for Lonrho (Makandi Estates) for a short while before coming to South Africa. I have been in South Africa for the past 25 years. I am married with two children, a daughter aged 21 and a son aged 6. I am the CEO and founder of GEBS Group  [website here] with interests in the security sector and the manufacturing sector. 

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

Socio- Economic stability is the backbone of development of any society and it is critical as it affects all spheres of development be it education, employment, health, agriculture, security and so on. Instability in any society starts when there is an imbalance in the social structure which feeds off events in the economic structure. It is important that at a family unit level the socio-economic status enables the family to access the basic needs for the development of the family unit.

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?

Well, it is difficult to point anything that has been significant since one party rule ended in Malawi. Most of the infrastructure that is still of significance to Malawi has the legacy of Dr Hastings Kamuzu Banda and in my view, the last 20 years have not seen a continuation of the pace set by the founder leader of the Republic of Malawi. I have not seen infrastructure investment in either vigorously maintaining the existing or building new ones that could have major impact on the economy. Examples are Escom. No future planning was implemented hence the grid is battling to meet demand. We all know that electricity drives the economy of any country and needs careful planning and additional investment all the time.

3. In view of the challenges you describe, what do you think is the role of government and the people in tackling them?

The role of Government is to create a vision that is developmental in nature and create an enabling environment for investors both local and international to invest into the economy. This vision must be biased towards developing infrastructure like the utilities (electricity and water) transportation and communication. These are primary drivers of any economy. The regulatory environment in Malawi is so poor that corruption has become the norm rather than the exception. All spheres of government together with the private sector are so corrupt. It will take a serious introspection to overcome this challenge and it requires a major shift of morals by each Malawian to stem the chronic corruption.

The level of corruption in the country has the potential to create political and social instability if not stopped before the critical mass is reached of the balance of the haves and have-nots.

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

I think the environment is enabling for one to do different things ranging from further education to entrepreneurship. There is a lot of effort from government to encourage entrepreneurship at grassroots level. It is up to the population to take advantage of the opportunities provided by government.

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

In small economies like Malawi, politics seem to drive everything and this has had a detrimental effect in economic progress as people who should provide continuity have often been found to be lacking in the necessary skills to carry on where others left off. We have come to look at political leadership as something different to business leadership. We have not checked the credentials of political leaders to see if they have those intrinsic abilities to drive the various sectors of the economy. This has resulted in stagnation and massive corruption. If you put someone in charge of people who are better educated than him or her, that person will employ fear to command respect and this has the effect of creating a divide and rule scenario where those who identify with the leader view the better educated members of the team as a threat. So it is important to have a balance to ensure there is no polarisation of forces pulling in opposite directions. Poorly educated individuals should not be allowed to access power as they tend to misinterpret feedback from their environment. This creates sensitivity to their lack of knowledge and as a result they lose focus as they feel vulnerable and losing control. Once that happens dictatorial tendencies kick in and it is downhill all the way. It is far easier to destroy than to build.

6. When you last visited Malawi, what struck you the most as the greatest sign of improvement or development?

I will be honest here, I found that very little if any development has taken place. Educational institutions have been run down. I visited the Polytechnic and had the privilege of going into the “staff room”, a section we hardly were allowed to go in as students in my time and the place had lost its previous glory. It was filthy with broken tiles due to lack of maintenance. This is just one example of the lack of pride the current leadership (from the advent of multiparty democracy) has had in an important institution where future leaders are supposed to be trained.  I also observed that the level of poverty has gone up compared to the time I left the country. Political leadership has been preoccupied with bickering and mudslinging instead of directing developmental issues on a tangible course.

7. And what struck you as the biggest sign of stagnation or regression?

Regression in the way the schooling system has been given less or no priority at all. There is a huge sense of ‘them and us’ where people who can afford to send their children to private schools do not care about the child in the village where they came from. There is a huge number of young people who are not adequately educated to meaningfully contribute to the economy.

Skills programmes seem to be non-existent compared to the old days when there was a lot of support from government and industry to keep these institutions running. When you see local  musicians being roped in to become law makers and being handed ministerial posts, the question is, are these the best candidates we can put forward as the face of government? Are we serious about managing the country or feeding our ego to say we can do what we like because we have the power?

8. As you know, 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?

It is sad that the current politics emphasize on the individual. It has become characteristic that the personality of the political head permeates into every aspect of how government business is done. The ideal leader should be adequately educated. I mean formal education that is no less than a first degree – not honorary degrees which the recent crop of leaders seem to love so much.

The leader must be forward thinking and not use political membership as a ticket to employment for party loyalists. People must be appointed on merit based of their knowledge content and experience in managing an institution be it government or private sector. In that aspect, the leader must be pragmatic enough to appoint key[capable] people in relevant sectors regardless of political affiliation [who have an excellent history and experience in those sectors]. It must be their potential to create positive change that must guide their selection and appointment.

People in leadership must be thoroughly background checked to eliminate the possibility of bringing a hungry person to be in charge of government funds.

People who have been implicated directly or indirectly in corruption whether in government or private sectors must never be given positions of authority at all.

There are plenty of skilled people full of goodwill out there but if you put foolish people into power, they set out to eliminate any possible opposition (better qualified individuals) and put incompetent people into important positions.

No one should feel privileged to occupy a position. People must be there because they deserve to be there and have the desire to serve the country, otherwise you have people who plan and dream about how they are going to praise their leaders, composing songs of praise for the leadership,  instead of planning how they are going to work to improve on their mandated deliverables. Remember to be a servant of the people who elected you and not the slave master of the electorate. 

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

First the leader must embark on clean up of all state organs of all dubious characters. We have seen school dropout musicians becoming ministers in the past and that was indicative of how lacking in vision the leadership was.

Surprisingly Malawians in general embraced these choices of appointments!  I was left wondering where is the common man in the street to see that such people will never improve their lot. This is a populist tendency which most uneducated leaders embrace. You should never employ someone who will spend months pinching themselves to see if it is real that they are now a minister – something that never existed in their wildest dreams.

Malawi is a country that is so corrupt to the core and this corruption affects all spheres of government. Judges being bought by the private sector bosses and government officials to settle political scores.  People of dubious moral character occupying positions of influence. If this is not cleaned up by the upcoming leader, real transformation will be a pipe dream for Malawians.

On reducing dependency on aid, until the general population sheds the notion that it is okay to be given freebies, we have a long way to go to become independent in the real sense. We should never be comfortable with begging at all. It is a disgraceful activity that deprives you of your independence.

Malawi has resources which if used cleverly, they can improve the economic status.

The coordination of policy to seamlessly integrate all development initiatives in all sectors of the economy will ensure progress. For example you can not grant a mining licence to an investor before you have done an environmental impact assessment to determine whether the roads must be strengthened first.

These two activities belong to different ministries which must work together. In a corrupt society this will never happen.

I will say it again:The leader must be a servant of the people not the other way round.

10. 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?

First of all tobacco in not food, so developing agricultural products that do not add value to the human body, the first resource of production, is misplaced. Malawi has a lot of fertile soils and an abundance of water.

A clever and innovative combination of these assets can ensure Malawi is self-sufficient in food. When people use their energies to look for food, they will not have time to improve their economic status and surroundings. This feeds into the justification of a beggar mentality. Ironically poverty is now being used as political currency in Africa in general. That is why people want to rule forever instead of passing the baton. They are very uncomfortable to relinquish power that they would rather have a relative take over that a so-called “complete stranger”. If there is no blood line to take over, use someone who looks tame enough to continue the plundering. A friend of mine once told me that he used to refuse taking leave to avoid someone uncovering the skeletons under his desk. This is what corruption does to the leaders who enriched themselves improperly.

Malawi must have the will to [take another look] at the resources it has and use them efficiently to ensure there is economic progress. Transparency is the key.

11. 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?

Again, beggar mentality must stop from the top. Beggars are lazy people and are easily exploited. You must start from asking people to assist you in building your own sustainable resources with the aim of becoming independent. What the government is doing is like a person who goes to ask for a credit card so they can go drinking beer with the loan. In the end you pay more for the beer which if you first worked to get the money, you would buy it at the correct price. Coming to government, start by developing policy that will improve the economy at a micro level then move to the macro level. Accountability must be the key law makers must not be people who are corruptible.

If government is not made accountable for its expenses the looting cycle will continue.

When leaders find it difficult to explain their wealth, you know you have big problems. Transparency starts with self and the moment you are uncomfortable disclosing how your wealth is made, you should not profess to work for the interest of the people. Change the laws so that floor crossing is illegal and make it easy to impeach a politician if they do not deliver or are suspected of being involved in corrupt activities.

12. We have known for a few years now that Malawi has some precious minerals, including Uranium, possibly oil and other natural resources. How do you think the government is doing regarding managing Malawi’s natural resources, and are they benefitting Malawians in your view?

My take is that it can be better. Malawians are not benefitting because often these investors in these sectors are encouraged to give kickbacks to the government officials in exchange for lax tax incentives. The kickbacks do not go to the government coffers but the back pockets of individuals.

This deprives all Malawians of the tax revenue that would improve education, health, communication etc. Any serious leader would review all agreements the current mineral extractors have in place and revoke any licenses which were fraudulently obtained, review whether the agreements benefit the country or not and correct where necessary. It should not be activists outside government asking for transparency and accountability, it must be the elected parliamentarians demanding this from each other even before the electorate smells it..

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

They could by ensuring that the method used to manage the resources does not create secondary negative effects. By insisting on appointing experts in their field to manage these resources instead of appointing party loyalists with no capacity [or proven experience] to manage the resources.

14. We know that corruption is endemic in both the private and public sector in Malawi, and has been plaguing most African governments across Africa, including the government of Malawi. What is your answer to increasing transparency and eradicating corruption?

I think the value system has been eroded so much so that corruption has become the way of life. People no longer think twice swindling their brother of their hard-earned assets. The best way to clean up is to ensure the rules are clear. No leniency in dealing with corruption cases whether private or government sectors. Any system that is weak in ensuring compliance does not work even with the best intentions. Start by striking off the roll all judges implicated in corruption or engaged in unethical behaviour.

If a judge sits on a case for three years without pronouncing his judgement, he is not fit to be a judge unless he can account to the reasons why judgement was not given in the prescribed time frame. If the minister of justice can not hold the judge to account, you know that the minister does not have the powers and therefore his boss must be called to account in this case the president.

15. Any famous last words?

Empty pockets never held anyone back. Only empty heads and empty hearts can do that – Norman Vincent Peale 

* Emphasis in brackets added.

[Comment:   While there are other factors at play, it must be noted that countries who are good at exchanging of ideas, such as Germany, Britain, S. Korea, Norway, Taiwan and the US, are also countries who have very strong democracies and economies, and who are most innovative. As someone who works in Intellectual property, I know this to be true. Their populations are also people who cannot be easily deceived; a factor that breeds responsible governance.

The reason we began the Global 100 Voices interview was to give an opportunity to Malawians across the world to exchange ideas regarding their country’s past, present and future, and to ‘compare notes on what has worked elsewhere’…and by implication, what could work in Malawi.

However, it is disconcerting that few people have been willing to contribute, despite numerous calls. Specifically, no women other than a single individual have up until now offered, or accepted to do the interview??? I’m not saying people don’t have other things to do with their time, but when you are living in a country where conditions are deteriorating every day, isn’t it normal to speak up, and join the hundreds of voices who are demanding action and change? It has been frustrating that the majority of Malawians I meet seem to have passed on the role of advocate (even ideologically) , to the next person …how then will a country improve or even develop, and its problems get rectified if those who are educated, have had exposure, those who are better informed, who have half a chance, are unwilling (or too preoccupied with their own personal matters, etc.) to rise up to the challenge?

Isn’t this the real reason why our politicians take us for granted? Because we are indifferent about the development of our own country (Sometimes, it appears as though certain people are more interested / passionate about luxuries, driving a Mercedes, Sports, etc than demanding responsibility from their government).

To understand my point, then please watch this (especially the last 5 minutes of it):

http://www.youtube.com/watch?v=-UMI9-6gmzE ]

Infrastructure

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While you’ll find several references to Infrastructure on this site, I think this time around I’ll leave it to the experts to do the convincing. Paja akulu anati mutu umodzi siwusenza denga

And if one takes time to browse through the cited references below (some of which are straight off page 1 + 2 of Google), it’s hard to argue against the fact that Infrastructure is one of the essential drivers of economic development. In this sense, and for the avoidance of doubt,  infrastructure is not limited to roads, railways, airports and buildings (for hotels, schools, Universities, hospitals, business centres, research facilities, etc), but also includes for example a good telecommunication network (internet, voice, data and the like) and power supply.

Infrastructure for sustainable development – European Commission

Intro reads: ” Good quality infrastructure is a key ingredient for sustainable development. All countries need efficient transport, sanitation, energy and communications systems if they are to prosper and provide a decent standard of living for their populations. Unfortunately, many developing countries possess poor infrastructure, which hampers their growth and ability to trade in the global economy. “

Infrastructure’s value to economic growth – Richard Lee, Partner, KPMG (via BBC)

which includes the statement : “…In fact, a recent KPMG International survey found that an overwhelming majority – 90% – of business executives said that the availability and quality of infrastructure affects where they locate their business operations…”

Needs For and Benefits of Infrastructure Connectivity – Asian Development Bank Institute
which includes the statement: “… The rapid economic and population growth of Asian economies in recent years has put huge pressure on its existing infrastructure, particularly in transport and energy, but also in communications. Asia’s infrastructure is world-class in parts, but is generally below the global average. This is a bottleneck to future growth, a threat to competitiveness, and an obstacle to poverty reduction.”
which includes the following statement: – “…An adequate infrastructure is a prerequisite to economic development. Transportation and communications are important in developing and strengthening social, political, and commercial ties. These ties must be developed before trade can be handled on a regular basis.”
Why Is Infrastructure Important – David Alan Aschauer, formerly Senior Economist, Federal Reserve Bank of Chicago, and now (at the date of writing/publication) Elmer W.Campbell Professor of Economics, Bates College
Infrastructure and Poverty – The Global Poverty Project
the Intro reads: “Infrastructure – physical resources like roads, telecommunication networks, schools and drains – is necessary for a society to function: people can’t access healthcare if there are no hospitals; trade can’t take place if there are no roads on which to transport goods to markets. Infrastructure facilitates the basic functions of a society that are necessary to transport resources and people, produce and trade goods, provide essential services and ultimately reduce poverty.”
it follows with ” Lack of infrastructure also leads to lack of employment by acting as a disincentive to investment. Companies who struggle to produce and sell goods in an area with inadequate roads, electricity or water supply do not want to set up the factories or businesses that could potentially generate employment, improve living standards and reduce poverty. “
and “Lack of infrastructure can also lead to poor health and high mortality. Where there are no clinics or hospitals available, or where lack of roads or bridges makes them inaccessible, people cannot access the medical services that they require to be healthy and productive. A villager in Mozambique explains “The most dangerous thing is that [cholera] has always appeared during the rainy season, and it is then that the river is in spate and boats cannot cross.”
The Broader Benefits of Transportation Infrastructure – Ian Sue Wing, William P. Anderson and T.R. Lakshmanan, Center for Transportation Studies and Dept. of Geography & Environment, Boston University [similar article here]
uses the term Meso-scale to describe their approach. A slide from their presentation is quite appropriate in summarising some of the developmental + ‘equilibrium’ impacts, and worth replication:-
infra-messo
Finance and Infrastructure: The Economic Benefits of Infrastructure Projects Procured with Private Finance –  Andrew W Morley, International Congress Washington, D.C. USA, April 19-26 2002.
Infrastructure – Engineers Against Poverty
Intro reads as follows: “Without significant progress in the provision of infrastructure services it will be impossible for many countries to significantly achieve the Millennium Development Goals (MDGs). Globally, more than 1 billion people have no access to roads, 900 million do not have safe drinking water, 2.3 billion lack reliable sources of energy, 2.5 billion have no sanitation  facilities and 4 billion are without modern communication services.”
which contains the paragraph “When it comes to infrastructure development, Thailand has done very well compared with some other Southeast Asian neighbors. In fact, appropriate infrastructure, including access to power and water, has helped Thailand fuel rapid economic growth during the past three decades. Good infrastructure has made Thailand attractive to foreign investment, helped facilitate international trade, and improved the efficiency of everyday business activities. All of these led to more jobs, and more jobs led to more income for the poor. For some not-so-poor people, good infrastructure also helps them improve productivity or fulfill their lifestyles.”
RURAL INFRASTRUCTURE AND ECONOMIC DEVELOPMENT –  Dr. Mohammad Tarique, Lecturer, University Dept. of Economics, B.R.Ambedkar Bihar University, Muzaffarpur.
Abstract reads: “Infrastructure development has a key role to play in both economic growth and poverty reduction. Failure to accelerate investments in rural infrastructure will make a mockery of efforts to achieve the Millennium Development Goals in poor developing countries while at the same time severely limit opportunities for these countries to benefit from trade liberalisation, international capital markets and other potential benefits offered by globalisation”
Private Sector Participation in Infrastructure:the case of Thailand – Deunden Nikomborirak – Asian Development Bank Institute Discussion Paper No. 19
Road Funding: Time for a Change :- Economic Growth Benefits of Transportation Infrastructure Investment – Dr. John C. Taylor,  Associate professor of marketing and logistics at Grand Valley State University and a senior policy analyst with the Mackinac Center for Public Policy in Midland, Michigan.
which contains the statement “…No, the key benefit and reason for transportation investment is from helping to make businesses and individuals more productive, across the geographic landscape. We rely on our transportation investments to increase the economy’s overall productivity – both in terms of making individual travel (business and personal) faster and more reliable, and in terms of the productivity benefits of making freight flows faster and more reliable…”
World Bank — Malawi’s infrastructure: A continental perspective: Vivien Foster; Maria Shkaratan, ISSN: 1813-9450.

As you can see, the above papers + articles present a credible argument that a good and functional infrastructure is essential for economic development.
But that’s not to say that there are no credible counter arguments against infrastructure. That’s not what I’m saying. I’m sure one can cite the prevention of deforestation or preservation of natural habitats as factors against excessive infrastructure. Also, there is the issue of encouraging tourism which could probably mean encouraging greater biodiversity, creating / preserving forests  and wildlife reserves (but even in such circumstances, you still need a world-class airport for a good first impression (the kind of impression you get when you first land at Hong Kong International); functional roads (at least 3 lanes on each side between major cities) that minimises journey times; and world-class hotels and resorts. Why should you give tourists (who in large numbers can be the source of much-needed forex revenue) less than what they are accustomed to, and expect that they will return to your country, or recommend a visit to their friends?). Never mind recommendation, how can you compete on the global stage, when your facilities are substandard? Further, why shouldn’t it be possible to build modern factories with reduced carbon footprint (see Marks & Spencer’s ‘eco-factories’ initiative here) side by side with wildlife/forest reserves?
So, considering all this, I find it hard to imagine a credible setting in which arguments against infrastructure may find pre-eminence, over arguments for infrastructure; especially for a poor country whose majority infrastructure was built  50-year ago; whose roads are littered with pot-holes, with virtually no world-class business centres; that has old airports – with poor facilities including smelly badly looked after toilets; a country that experiences intermittent blackouts almost every week; that is struggling to attract significant investment from abroad; a country where 74% of the population live below the poverty line; which is heavily reliant on agriculture and dwindling tobacco exports + has negligible industrial output; has few natural resources; has a large relatively unskilled young population and suffers widespread corruption and cronyism, even in the upper echelons of its government.

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My question to you then is: why are the leaders of such countries not investing heavily (sooner than later) into major infrastructure projects, when it is in fact a determinant factor in economic development and a serious game changer? Is it because they are in fact not cut out for the job and would be better followers instead of leaders?

Global 100 Voices: No 7 (Part 1)

My next guest is a true son of Malawi and a businessman who has done remarkably well for himself and his family. Based in South Africa, he is the founder and CEO of the Ulalo Group of companies, who have operations in South Africa, Malawi and China. He has a great desire to see Malawi and Malawians advance, grow and become economically independent, and I must say his experience in this regard is something we can all learn from. Mr Joshua Chisa Mbele, thank you for doing the 100 Voices interview.

[Note- this particular interview is a transcription of an audio file which will be available from this website soon]

Thank you very much for having me, my name is Joshua, Joshua Mbele, a Malawian by birth, I come from Salima, I’ve stayed in South Africa for almost 24 years, I’m married here, I have got kids, here, I have got businesses here and also in Malawi, I also have operations in China. I came to South Africa in 1989 or somewhere there, to seek I’d say I was an ‘economic refugee’; I was looking for greener pastures. Coming in 1980’s early 90’s it was not easy to settle in South Africa as you can imagine, it was a white South Africa, but I tried my luck, and persisted, buried my ways and settled, that’s the background. In terms of Malawi, I went to Robert Blake sec school, I went to Malawi Polytechnic to do Mechanical Engineering, and then I came here both to work and to pursue education. Today I am a fully fledged business person. As I indicated, I do have businesses in Malawi, I think if I’m not mistaken, I was the first Malawian who took hard-cash in terms of US$4 million then to invest in Malawian telecommunication industry, I have also invested in other sectors of the economy, we hold shares in Sunbird hotels, we hold shares in Mpico, we also hold shares in other sectors of interest and are still looking for opportunities in Malawi. Thank you.

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

The socio-economic stability of Malawi to me is of paramount importance. As you know that the building blocks of the society is a family, that’s the root. Now, where there is economic havoc, you have unstable family structures. To have a stable economy also stabilises family lifestyles. A family which is skilled, which has got a father and a mother as professionals, which can send their kids to school and educate them adequately, which can put food at the table every evening, it means that it has got a more meaningful role to play in the economy, an active family is a productive family. A productive family is part of a productive community, it’s part of a productive society, and the two, the productive society and social economic environment of the country, the stability of it are integral to each other, so it is very important that we stabilise both the social and political environment in Malawi. For me as a family person and as a business person those are fundamentals that we need most.

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?

Well, that’s very true…in chatting with my friends; I normally refer to myself as a founding father, to the amusement of many, what I mean by that, not that I founded the Malawi nation,  but I try to say that I was born just before the dawn of independent Malawi, because I was born in 1964, I’m as old as Malawi itself. Now, I know for sure that I have grown up seeing Malawi, we’ve grown up together I’d say so, from the dawn of the independence, Malawi made quite a lot of significant inroads, or there was significant tangible development so to speak, just to give you brief outline of that, since 1964, Malawi embarked on to be an agricultural country and Dr Banda established so many farms, tobacco, maize, cotton. We already had the established tea industries in Thyolo and Mulanje, and he went on to plant the forestry, you remember the Chikangawa forestry in the North, and not only that, he revamped what was then Farmers Marketing Board (FMB), into a corporate commercial ‘ADMARC’, which was there to serve both the growers and the market. It was the meeting point. And in terms of the infrastructure, things do speak for themselves. We upgraded what was the colonial rail from Luchenza, Nsanje, Blantyre, Salima, and later on, it was extended from Salima to Lilongwe and Mchinji under the Malawi Canada project. And also from Machinga, going out to Mozambique to Nacala port. We also had the development of the lakeshore road, not forgetting the Kamuzu International Airport. We should also not forget that Malawi established its own University of Malawi with the constituencies of Chancellor College, Bunda College, Kamuzu college of Nursing, Malawi Polytechnic  and he also planned for school of Medicine; those were Dr. Banda’s plans, not to mention the movement of the capital from Zomba to Lilongwe, to centralise administration. But, after 1994, the advent of the multiparty democracy, which I welcomed so much, to some extent we downplayed the development that we had, we did not insist to maintain the momentum of development, it seems that we threw away the bucket together with the dirty water, because we slowed down, from 94 to-date, very small tangible infrastructure projects that have taken place, compared to what Malawi achieved, from 64 to 1994, so there was progress during the era of the Dr. Banda and we have slowed down in development, even the quality of education has gone down, so  those are some of the areas that we need to look at very carefully; we can look at the congestion on the roads, roads with potholes, we can look at the dilapidated universities and schools, we can talk of the empty hospitals without medications, the clinics … up to now Malawians do not have continuous supply of electricity, not everybody has got access to clean running water. These are the basics that we should have had by now 50 years down the line, but we are still struggling, even worse we have fallen behind with our agricultural outputs, we are now a begging nation, no longer self-sufficient.

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

That’s a good question. I would start by saying that first, I’m not a public administrator but I would try as much as I can to define the role of the government from my personal perspective, experience as a citizen, and also experience as a business person. The government is there to take care of the social welfare of anybody that lives in the land, take care of the environment, okay; Now with that in mind, we need to bear that the first and foremost the duty of the government is to uplift the lives of its citizens; how can the government do that? That is by putting economic policies, okay, based on stable political environment, to make sure that there is tangible progress in the economy, because economy governs everybody, it also governs politics of the day; if we’ve got policies that are conducive for economic growth, the multiply effect is shared benefits for everybody, now the government role in this regard is to facilitate progress, prosperity and development; in our case to make sure that policies are in place that invites and ‘water’ the development of businesses from ‘nobody’ into ‘smaller businesses’, ‘smaller businesses’ into ‘medium businesses’, ‘medium businesses’ into bigger businesses’, that should be the trick; Private public partnership another aspect, where the government invites the private sector and say: look, these are the sectors that we would like to develop, it’s not the duty of the government alone, we want the private sector to come and join hands, here is an axe, lets join hands, so that we mobilise resources jointly and tackle the challenge together, so that we realise the benefit as a nation.

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

Yes, that is very true, just a bit of a background; That as much as I’ve stayed in South Africa for so long, but I’ve reached South Africa as a spring-board. My profession took me from working for one big company to another big company; with this I had an opportunity in my areas where I worked with BHP Billiton, BHP Billiton is the largest mining company under the sun. And with them I travelled to countries and worked in those countries, for example I worked in Belgium and France, to master the aluminium technology with the Pechney company for their latest technologies, and I worked in Kwazulu-Natal for that. After that I left South Africa and went to the US to pursue some of my ambitions, so I know what life looks like in the US, I was in Miami for some time, and I commuted between Miami and Atlanta, Georgia.  But when I delved into my private business, I did consulting, in my consulting field I worked for telecommunication industries; I worked for companies like MTN South Africa, MTN Nigeria and I also worked for companies that develop the software, I happen to also work with that company in Athens, to do the Application developments for telecommunication industries, so I have seen quite a lot, I have absorbed a lot, to observe how ‘catchers’, and ordinary citizens behaviour to influence the economic development. Today I am in China, I understand where China is coming from. In 1949 it was the poorest, today it is the second largest economy under the sun. What is it that other nations are doing that we are not doing?  First and foremost is the access to skills, if we cannot develop our own skills, forget about any development, secondly innovation, creativity, skills development as a priority in whatever we do. We must re-align our educational curriculum to our prerogatives as to where we want to take the country in the next 20, 30 years; science and technology, very important; we cannot do anything without such skills.  Now, my observation is that we are lacking behind because we still believe in the ‘I am going to school so that I can be employed as a manager, as a supervisor, I’m hoping to be appointed as a CEO’ No! Each one of us, every Malawian is a CEO in his or her own right. If anybody [among] us has a hunger to succeed, we should be able to create our own jobs, and employ others. Examples are there in China, China is a thriving economy, it is solidly built on small businesses, of course there are big businesses [in china]; look at Brazil, look at India, you know, there is no major intellectual difference between them and us, it’s simply the attitude, we can be just like any other nation, which was once the poorest and today is one of the most successful. Just in History, just to compare Apples with Apples, Malawi and Singapore in 1964 were in the same basket; President Lee and President Banda were friends. Actually Lee visited Dr Banda in Malawi, in his book he (Lee) said [something in the lines of]: ‘One of my best friends which I visited was a country that was also under the British rule, Malawi’…the difference between Singapore and Malawi was the attitude of the citizens and commitment to develop themselves, long-term plans, long –term strategies, today Singapore is a first world [country], Malawi still remains the poorest under the sun, so the attitude, the drive from the government, skills development, access to resources, partnership, those things are key to take the country forward.

more-art golf early days

5.  When you last visited Malawi, what struck you the most as the greatest sign of improvement or development?

I go to Malawi very often, as I indicated that I do have businesses in Malawi so almost every year; in the recent past I used to go to Malawi almost every other month. I’ve seen the change of guards from the UDF government, 2004, to Dr Bingu Wa Mutharika, I must say I recommended him, he started very well, he did quite a lot of good work, he improved the road networks in the country, he had his own vision and I recommended him, I complimented him, you might be interested to know that I had a meeting with Dr Bingu Wa Mutharika on the 20th August 2007 at the state house, where he narrated his vision for Malawi by heart, which road will be linking which one, what building will be wherethe expanding of  Lilongwe capital city reaching the frontiers of the Kamuzu Central Hospital, creating the five-star hotels, building the new stadia,  the highways, I was very impressed, and true to that word, when you go to Malawi today, the skyline of Lilongwe has changed, you cannot miss the Malawi parliament, you cannot miss the five-star hotels, you cannot miss the convention centre, you cannot miss the road, the presidential drive that takes you from the city centre to area 18, the roundabout, it’s quite beautiful. And the roads connecting the other rural areas, Chitipa, Karonga road is there, in the south there are a number of roads going from Blantyre to Mulanje…, those are developments that happened under his first term of office. But as usual, things changed, things changed for the worse, apparently he decided also to reward himself, so what was intended for Malawi became for himself, and things went wrong I must say and its only today that we realise to what extent things went wrong, but he started very well, there is evidence to that, but unfortunately, it wasn’t like that at the end.

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5b. I note that in your description of your encounter with the late Bingu Wa Mutharika, you haven’t touched on anything to do with industrialisation – did Bingu’s plan have anything to do with increasing Malawi’s industrial output?]

I’m here to make an honest and objective assessment. If Dr Bingu drove his vision, the way he articulated everything, in the earlier days of his presidency, he was on the road to achieve that. What happened later on is that when things started going wrong, companies that were supposed to expand or small businesses that were supposed to grow were wiped out, one, It was difficult for people to have access to Forex to import machinery or to import raw materials, but most importantly, he played a cronyism card such that only those connected to his regime were developing; Now, you cannot develop a country based on family framework, or friends framework, it doesn’t work.

[Part B coming soon]

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.