Malawians should expected a ‘Marshal Plan’ like economic programme from new President Joyce Banda through which radical reforms will be implemented to facilitate a private sector-driven growth in the country.
That is of course if Banda’s most comprehensive speech on the economy that was made at the opening of her People’s Party Head Offices in Blantyre in May last year is anything to go by.
“The People’s Party has an investment programme that will mobilise Malawian private sector for an economic emancipation that will usher in a period parallel to the Marshal Plan in Europe,” said Banda in her speech.
The Marshal Plan, named after the United States’s Secretary of State General Marshall is economic recovery plan implemented by the United States to assist with recovery efforts for Western Europe after World War II in 1947.
Under the plan, the US provided US$13 billion in loans to deteriorated countries in Western Europe and was used to rebuild infrastructure, remove trade barriers, modernize industry, and make Europe prosperous again.
It is credited for the renewal of the transport system, the modernization of industrial and agricultural equipment, the resumption of normal production, the raising of productivity, and the facilitating of intra-European trade.
In her speech, Banda observes that during the first term of President Bingu wa Mutharika, the country’s economy stabilised, donors returned, infrastructure projects started appearing and the country experienced food security.
“The first DPP administration, where I served, was referred to as the fastest growing economy in Africa by some institutions such as the UK-based think tank, Economic Intelligence Unit,” said Banda.
She says, however, that months into the second term of the administration, the economy took a downward spiral and now face challenges of availability of foreign exchange, fuel shortages and failure to pay civil servants on time or at all.
She said, however, that apart from poor political management, Malawi has long-held structural problems that need to be addressed.
“Malawi has daunting structural challenges in its development. Chronic power outages, shortage of water, high costs of transport and communication, high costs of transport, bureaucratic legal challenges in all sectors, shortages of foreign exchange and fuel which have impacted negatively on business,” she said.
She cites the country’s over-dependence on the primary commodities such as tobacco, tea and cotton as one of the key structural problems that must be changed.
“With the global campaign against burley tobacco, Malawi’s economy faces real threat,” said Banda.
She also identifies increasing unemployment problems regarding access to tertiary education as one priority area to be looked at by her government.
“I checked and found out that in some years, 7,000 young men and women qualify for university and yet only 1,000 to 2,000 students make it to university,” observed Banda.
Banda said under People’s Party administration, government would promote an inclusive government and equitable socio-economic development for all the Malawian people.
She says development of the private sector would be prioritised for the development of the middle class and a strong and broad middle class that will ensure a stable and progressive society with increased decent formal jobs.
“The People’s Party strongly believes that the private sector can change the economic landscape in this country given appropriate support and mentoring,” said Banda, adding: “The country needs to urgently find alternative sources of foreign exchange.”
On food security and rural development, Banda said the People’s Party will strengthen social security sector by bringing more innovation in food security interventions and to HIV/Aids prevention, mitigation and treatment.
“The agriculture sector needs to be restructured to make it less monotonous,” said Banda.
“While acknowledging the critical contribution subsistence farmers, the sector needs to look at commercialisation of some aspects. This sector needs to be diversified, it needs to be mechanised,” she said.
Banda said the People’s Party government will within its first five years seek to achieve the required levels of pupil-teacher ratio at both primary and secondary level and increase university intake.
She said the party will vigorously pursue the realisation of the decentralisation programme, including holding of local government elections.
“Our commitment is to reinstate the necessary legal framework to make local government elections mandatory and predictable. Our name suggests that we belong to the people and the people are at the core of our being, therefore decentralisation is a necessary strategy for entrenching power in people’s hands,” said Banda, who is yet to make a speech on national affairs as head of state.
While some historians today feel some of the praise for the Marshall Plan is exaggerated, that style of economic recovery is viewed favorably and many thus feel that a similar project would help other areas of the world.
Commenting on economic prospects under Banda’s government, former Loita Investment Bank Vice President Max Honde said he expect that donor relations and support and negotiations with International Monetary Fund (IMF) to be restored quickly.
“These [donor relations] had derailed because of policies of one man, who even directed monetary and fiscal issues instead of leaving responsibility to technocrats at an independent Reserve Bank, financial Institutions and the Ministry of Finance,” said Honde.
“The Kwacha may devalue in the process but it will be mitigated by new foreign capital inflows, boosted by new investor confidence and foreign support,” said Honde, adding: “We will see problems of fuel and forex scarcity disappearing, as a result, which will re-energize the private sector and arrest the problem of business shrinkage.”