Folks,24 hours ago, I asked if anyone has Kapito’s full recovery plan? In so doing, I wanted to be fair with the man’s noble cause in these times of Malawi’s great financial difficulties’. The one I’m seeing now is just some press reportage talking about fiscal issues-some sort of austerity suggestions and nothing else. A safe conclusion one can make from Kapito’s narratives is that we are in this economic situation because government is spending on luxuries.
But I think and verily so in my narrow thinking that the problem is more complex than Joyce Banda or Bingu bashing. Matter of fact you can’t trash Joyce Banda’s ERP and adopt Kapito’s so called alternative neither can you accuse Bingu for not devaluing the Kwacha yet fail to take advantage of the much touted “devaluation” as an economic model.
I am seriously troubled by both Kapito and Government’s presentations though. I could be wrong but I feel strong and patriotically so that they both are short of defining the problem, silent on the balance of trade, action plan and monetary interventions. None of them has made an estimatimation on the cost, immediate and remote to the nations purse and the nations character
Again, I could be wrong for Iam not a trained economist save for what I casually read in business reviews and country profiles and make sense of what I read to help form my own opinion. In both presentations, Iam haunted by the shear absence of problem definition, liquidity and financing issues
1) You need to define the problem so you know exactly what is it that you are going to recover
2) You need a stimulus package that addresses the financial market and players: banks are not lending, repossessions are in full gear, pensions are at risk from contractio, 3 banks may collapse in six months time and economy is in free fall. What measures are being taken to shore up the system? Selling jets, state lodges and ministerial limos, sarally cuts and travel bans may sound good to the preacher but can those measures create jobs or save people’s homes from being reposed due to high interest rates?
3) We’ve just started the 4th month of the budget which was duly planed on donors pledged who have since bolted. With shrinking buying power, businesses are closing and this automatically affects revenue collection. In the absence of donor support, the option is to seek liquidity and financing from World Bank and IMF. But to do that, we have to
a) fix issues of corporate governance such as the appointment of director of Ant corruption bureau, Auditor General and clerk of parliament but how possible can that be achieved for it seem to suggest that whoever makes those decisions is consistently perfecting the art of self destruction.
b)Secondly you need people who know people through their own personal network. How far and wide are the personal contacts of our minister’s of finance and foreign affairs? Are they strong enough to lobby for special drawing rights, high access precautionary arrangements, and flexible credit lines and make new arrangements to borrow global trade facilities, bank guarantees and capital replenishments?
c) Even then, how certain are we that these institutions will come on board when we have not disclosed the true nature of parastaatal debt burden for misreporting is a serious offence in the eyes of IMF and World Bank.
There is an old maxim of some infamous Latin writer that “the greatness of a nation is preserved by the same methods by which it has been won “That is to say a nation that has become great will find itself safe in adhering to the principles and policies by which it grew to be great .What is it that has worked before? How was it that this same nation of ours now finds itself in similar situation of the infamous 2001 and 2003 economic stagnation era, high infant mortality rates a period in which life expectancy was at 36, where interest rates were as high as 69% and a running inflation of about 30% and yet in the years that follow, all this was reversed to single digit inflationary levels, an average economic growth of 9%, reasonable credit rating profile, increase in life expectancy and to the ` no cholera cases between 2006 and 2009.
Where these prodigious economic changes have come. Where such unexampled wealth and prosperity have flown in such an abundant stream as that experienced between 2004 and 2009, difficulties must be expected comparable to the causes which produced them.
The chief problem I can see now and perhaps the fault that belongs to us all in common may perhaps not be what seem to be a universal norm by some that Bingu messed up our economy or an anti Banda obsession,but that of excessive modesty and self distrust. Our country’s confidence has been shaken into numbness to a point where we are failing short of sufficiently realizing the strength of our national character and the intellectual moral force which has carried us through our troubled past and a dangerous delusion that our economic woes can be reversed by generalities of economic essays flamboyantly launched with pomp and hectoring empty rhetoric.
At which point, I also must honestly blame the watchdogs. I mean something is fundamentally wrong with our local media if indeed what has been presented by government and Mr Kapito continues to be called economic recovery plan. I’m truly worried about how these plans would create confidence and break the free fall our national economy seems to be in.
For those of you at Capitol Hill, please revise your recovery blue print to reflect the following in clear and specific terms; LIQUIDITY AND FINANCING. You cannot recover economically without addressing these two fundamental principles. Kapito’s austerity measures are important but not a full story. Government’s rehashed MDG priorities are long and medium term. They cannot address the challenges Malawi is experiencing now. Simply put, they cannot save jobs, homes repossessions and clear toxic debts currently being nursed by struggling banks that may collapse if the current administration continues to nurture its insatiable appetite to fix and rid off planet earth Mulli brothers.
Talking of Mulli brothers, part of recovery strategy, should be preservations of jobs.Mulli may have been a pain in the fresh. He may represent all the evils with horns society may accuse him and his lhomwe deity but he is part of the economic fabric. He has 10,000 people on his wage bill and a further 2000 in informal labor from nsanje to Kalonga.By deliberately developing an aggressive policy to stifle his business, government is indirectly squeezing out 12000 families out of income, making him fail to honor his commitments leading to defaults which may end up creating a black hole in the economy. Certainly, if he continues to default, two banks will collapse and with them further job losses in the banking sector. Furthermore, it will make the price of maize and storage facilities to go up in order for him to make up for the losses he is incurring as a result of unfriendly business his empire is going through.
It must be mentioned here, despite his sins whatever they are that he is the only person who has been stabilizing the maize price. As per the Nigerian proverb, if your approach to people is to pull them down, you go down with them.
I strongly believe that where we are, the country’s leadership should seriously consider reaching out to the opposition and establish a real government of unity and not a government of the concerned individuals disguised as government of nationally unity .With a demotivated civil service, depressed business environment and apolitical process in despair our economic challenges have been allowed to develop into a crisis. Whether Bingu shall continue to be blamed for anything falling apart or not, whether the principles of self governing will be outsourced to the donors or not, whether this nation shall remain a homogenous republic or a nanny state driven by hatred against the dead, or indeed whether its citizen will engage into a career enterprise of subjugating government for lack of its sophistry, the damage being created out of will or default will take time to repare.
The language for any meaningful recovery plan should among others cover in great detail, issues such as Credit for trade, liquidity for struggling banks from central government or recapitalization, true, reflection of toxic debts and losses incurred from write offs and the widest possible safety net not safe motherhood. Taken together, they might lift confidence. Without which, people will go to their respective banks and fail to withdraw. I am seriously frightened and worried of what will become of Malawi in the next six months If nothing happens, I can predict a crash by April 2013. The sad thing though is that my previous predictions came to pass.