'Votes' Economics Choking Malawi’s Development

Paradoxically, I have seen alarming escalation of appalling poverty. These conditions and facts have been baffling me (and I guess many others, too) and remain unsolved until now!

We have 'capacity poverty,' which affects our ability to mobilise development resources, manage resources prudently, implement plans as planned, and monitor/evaluate their impact. -analyst

Why did I write this piece? Simply put, I want to share with you what I believe is the root cause of our country's chronic poverty. I've lived in both the twentieth and twenty-first centuries.

I have witnessed the reigns of the country's first President, Dr Hastings Kamuzu Banda, Malawi's first democratically elected president, Dr Bakili Muluzi, the reign of the country's first president to die in office, Professor Bingu wa Mutharika, the reign of Malawi's first woman president, Joyce Banda, and now Professor Peter Mutharika.

As a result, I've seen the country's development swing back and forth like a pendulum.

Paradoxically, I have witnessed an alarming increase in deplorable poverty.

These conditions and facts have perplexed me (and I'm sure many others) and have remained unsolved until now, but they must now be explained.

As a journalist, I've travelled all over the country, rubbing shoulders with the rich, the poor, and everyone in between. Throughout my career, I have met with industry titans, chiefs, presidents, and ministers, as well as ordinary citizens.

I've met and become acquainted with the country's wealthy as well as its illiterate and impoverished citizens.

And as a result of these travels and experiences, I've been asking myself why Malawi is still poor 50 years after independence from Britain. But now I believe I understand why we are poor and will remain poor if nothing is done.

Here are some quick facts before I tell you why the country is still mired in agonising poverty.

According to the United Nations Development Programme's 2014 Human Development Report for Malawi, the country's Human Development Index—a yardstick of well-being introduced in 1990--stands at 0.414, which is lower than the average for low HDI countries (2013 HDI).

Malawi is ranked 174th out of 187 countries and territories, placing it among the world's ten poorest countries.

According to the 2014 HDI report, Malawi's poverty and ultra-poverty rates are higher and rising in rural areas, with the rural poverty rate standing at 56.6 per cent (up from 56 per cent in 2004/05 vs 17.3 per cent in urban areas).

According to the 2014 HDI report, female-headed rural households face the highest and worsening poverty-63 per cent (up from 60 per cent in 2004/04) compared to male-headed rural households (HIS 2004/05 and HIS 2010/11).

This simply means that the vast majority of our people are at risk of multidimensional poverty.

People with limited core capabilities, such as education and health, are less able to easily live lives they value, according to the UNDP 2014 Human Development Report. Those are some strong words!

Poverty, you would agree, disrupts normal early childhood development—and the majority of our children are living in extreme poverty, with approximately half of them stunted due to malnutrition.

And these impoverished children will arrive at school unprepared to learn, performing poorly in class, frequently repeating classes, and dropping out (in Malawi, it appears to be normal to be short [read stunted] and repeat classes).

Do you really expect such children to grow into productive citizens who will help the country develop? Search me! Let us now get to the meat of the issue: why?

According to Dr Blessings Chinsinga of Chancellor College, a constituent college of the University of Malawi, inconsistency in the implementation of development interventions and political interference have stymied the country's development.

Dr Chinsinga stated that Malawi's GDP per capita is 227 dollars, which is shocking and demoralising to every patriotic Malawian but not surprising at all.

We have not worked hard enough to deserve better, particularly since the transition from one-party dictatorship to multi-party democracy.

We have not used the democratic political dispensation to lift Malawi out of the abyss of underdevelopment, he said. GDP simply refers to a country's total output of goods and services.

It is calculated or measured as an average. In this case, it means that each Malawian produces US277 in goods and services per year on average.

This, in some ways, measures a country's productivity and sheds light on the degree of labour force productivity.

My extensive research into the reasons why Malawi remains one of the poorest led me to ask Dr. Chinsinga what he thought were the causes of Malawi's precarious position.

To say the least, the answer was shocking.

He stated, "It all comes down to one thing: we haven't had a completely homegrown development blueprint implemented consistently over time to facilitate fundamental but long-term structural transformation."

Development is about achieving long-term structural transformation, which does not occur in a single day, week, or month. It happens after years of concentrated attention, strategic visioning, and unwavering determination, all fueled by a deeply embedded culture of reflective learning.

According to Dr. Chinsinga, a country cannot develop if it implements more than ten development programmes in twenty years, the majority of which are influenced by fads and fashions in the development community.

We need to have a clear vision of what we want as a country and not fall for anything that masquerades as development, he says.

I understand that the truth hurts, but lies hurt even more.

Malawi has experienced relative peace, but it is ironic that it is ranked alongside countries such as Burundi and Central African Republic that have experienced some form of instability. Speaking with political and economic analysts, I learned that this is clear evidence of the country's unproductive peace, as Dr. Chinsinga refers to it.

While being peaceful is essential, it cannot work miracles on its own. If a country's elite are development conscious and committed to seeing their country develop, peace can serve as a catalyst for development.

The main challenge is that our country has lacked development-oriented elites, particularly since the transition to multi-party democracy. As I stated at the outset, I have lived from Dr. Hastings Kamuzu Banda's reign to the present and have witnessed it all.

And, as I've observed over the years, most of the elites have used their position of power to milk the state as much as possible.

Instead of pursuing policies that benefit the general public, most elites have focused on enacting policies that provide them with ample opportunities for rent seeking.

We have been busy robbing ourselves as a nation in an environment where democracy has been misconstrued as indiscipline or, more precisely, a scapegoat for misdeeds.

Right now, for example, implications of the country’s public financial mismanagement of billions of kwacha in 2013 popularly known as cashgate are putting the government under pressure, as donors have withdrawn budget support. 

In my quest to know why we continue to wallow in gut-wrenching poverty, I quizzed Dr Chinsinga whether we are finding ourselves in this situation because, as a nation, we are simply poor and we just cannot do anything about it, or our ideas are poor and unrealistic; hence, this current situation in which the country now finds itself? 

Not at all! said Dr Chinsinga.

Malawians are neither poor nor incapable of coming up with big, game-changing ideas. In fact, the majority of the ideas that are working wonders in Southern Africa originated here, but the challenge has been that we have never taken the time to embrace a transformative development agenda.

This all comes down to the leadership we've had thus far. The concept of leadership has been misconstrued.

Almost all post-multi-party leaders see themselves as great men and women of history, rather than as a process of mobilising the country toward a shared vision and destiny.

In this regard, our leaders, as great men and women of history, waste time focusing on themselves rather than working with all segments of society to advance this country.

As previously stated, we have devolved into a situation in which patronage follows policy rather than policy following patronage.

Dr Chinsinga's reasoning appears to be shared by another renowned economist, Dr Thomas Munthali, who stated, "I hold the strong belief that we still lack political will to get things done."

There is no legacy leadership.

This country is still mired in 'vote' economics. In other words, 'what will increase the number of votes cast for me and my party in the next general election?'

According to Dr. Munthali, most politicians focus on the peasantry's short-term economic needs, such as handouts and subsidies, in order to be re-elected (the Farm Input Subsidy Programme-FISP comes into mind here).

Politicians appear to be afraid of supporting SMEs and creating a middle class because it will pose a threat to their political power.

So they'd rather have polarity - the majority poor and the rich, where the rich are the politicians and their backers, he says.

The economist went on to say that all we need is leadership that wants to leave a legacy, even if it means only serving for one term.

"Look, once you are president, your future needs as a person and family will be taken care of for life - so you don't have to worry about those around you who cheat you into extending your term of office simply to secure their own future at your reputational expense," he said.

My conversations with some learned economists and political analysts while working as a journalist in Malawi and abroad reveal that when it comes to implementing plans, we don't have leadership that punishes mediocrity and rewards good performance.

This frequently leads to government business as usual, with visions and plans never being translated into tangible implementation.

This is linked to when we begin to define success as how much donors continue to support Malawi rather than how productive we are as a country in order to graduate into economic independence - at least in terms of recurrent budgets.

Without realising it, we end up implementing programmes like the IMF's Extended Credit Facility (ECF), which ties us to chasing inflation and keeping interest rates so high that no one can invest.

According to the World Bank Malawi Economic Monitor, March 2015 edition, the country's inflation is currently significantly higher than the regional average, with inflationary pressures continuing to harm Malawi's economy (the 2014 inflation rate stood at 23.8 percent compared to 27. 3 percent in 2013).

According to Dr Munthali, the problem is exacerbated by the fact that our central bank has been captured and lacks a mind of its own.

The central bank of India clearly regulates the production direction of a country where banks need to lend money.

According to him, a bank must devote a certain percentage of its portfolio to sectors designated as a priority, and failing to do so will result in sanctions.

When asked why Malawi still has such high policy rates as 25% (which implies even higher for commercial banks - as high as 39%), the renowned economist replied, "Because the IMF says so."

You see, in a Western and American economy, they operate at nearly full capacity. As a result, any reduction in interest rates will cause inflation because there will be too much money chasing a few goods.

However, in Malawi, we are operating at less than full capacity, sometimes as low as 50%. So, lowering interest rates would not cause inflation, but would instead result in massive production, lowering inflation - common sense economics.

But we continue to listen to the IMF and refuse to listen to our own domestic economists.

What a sad situation we find ourselves in!

But, as a country, do we have a silver bullet that will turn things around?

If we continue to have the same type of leadership (non-transformative leadership), I honestly believe there is no solution to this challenge.

This is because policies that foster an enabling environment for development are difficult to implement because they necessitate structural transformation, which many people in positions of power tend to oppose.

Actually, it appears that our politicians prefer populist policies that are easier to implement and provide direct benefits to voters, such as subsidies, but they oppose policies that create an enabling environment for transformative development, such as land reforms.

What is required is what the Public Affairs Committee refers to as "visionary leadership," which is not obsessed with pleasing people for the sake of pleasing people, but rather with governing responsibly, which includes making difficult decisions.

These difficult decisions should be made in the context of a well-defined development blueprint that is articulated and consistently implemented. In general, it appears that Malawi's problem is not a lack of short or long-term plans, but rather a lack of capacity to implement those plans.

As Dr Munthali would put it, we have 'capacity poverty,' which affects our ability to mobilise development resources, manage resources prudently, implement plans as planned, and monitor/evaluate their impact.

So, unless we put an end to this vote economy, Malawi will continue to languish in abject poverty while her neighbours prosper. We have a choice! 

The choice is ours!

*This article was first written in 2014.