Speech of the President of the Republic of Imagini, J. Kondwani Black, to the members of the Imagini Chamber of Commerce and Industry (ICCI)

Valued representatives of the private sector of the Republic of Imagini,

Welcome to this symposium on the economy and the future of our beloved Republic. I will explain my vision of the future, and your role in it. I welcome any suggestions from the private sector as how to achieve the goals set out in our government policy.

Allow me to skip the rest of the meaningless and time wasting protocol; we all know it, and none of us needs it.

Let me start by explaining my vision of the economy of our beloved Republic of Imagini:

You, the private sector are profit driven. Profit driven enterprise in a moderately free market economy has been shown by history to be the best driver of economic growth, which means wealth creation. The American sub-prime mortgage crisis has shown that a certain amount of regulation is needed, but communist economies have shown that the private sector is best at wealth creation. On the other hand some level of intervention from government is needed in the just distribution of wealth.

My administration will support the private sector in wealth creation, and we welcome any advice. At the moment the regulatory framework for business is out of date, over-complicated, and inefficient in achieving its goals. This also makes it prone to corruption. What we would like to hear from you is where we can improve the regulations, so we can open up your skills in wealth creation for all. Here we see a win-win situation:

With more facilitation and less interference for the private sector, you will be able to create more economic growth which means profit for you and more wealth for the nation. This wealth takes on the form of jobs (and good, well-paying jobs I hope!), tax revenue which can be used for social welfare as well as support for the private sector, and room for more Corporate Social Responsibility.

We view good regulations as:

  1. effective, in that the regulation achieves its stated goals
  2. simple, so it can be used evenly by SMEs who have less capability than big companies to hire professional lawyers to find their way in the regulatory framework
  3. proportional, so the inevitable side effects are strongly outweighed by the advantages
  4. targeted, so they do target the right sectors of society and not the wrong ones.
  5. Consistent both internally and with all other regulations, both national and international.

The current regulatory framework is far from where it needs to be, and we will appreciate your suggestions for improvement, the more precise the better.

I have sent a heavy delegation here, to make sure your suggestions are taken into consideration at the highest level. We have both the ministers of finance and of economy, as well as the principle secretaries of their ministries. Also we have many specialists from the higher echelons of the civil service, and the Parliamentary commissions of economy and business and trade.

When making your suggestions, please keep in mind the goals of government, so we can create a win-win situation. A win-loose situation is not acceptable.

You as members of the private sector are profit driven, and that is the way it should be. But we as a government have a different responsibility: we have been elected (and that means employed) by the whole population of the Republic of Imagini. We as government sector are responsible for every single citizen of our Republic. Remember: democracy means one-person-one-vote, not one-business-one-vote! (hahaha).

We as government see our responsibility to the private sector as supplying a good workforce, which means well educated and healthy. So we will improve education and health care for all our benefit, including the private sector. Also we need to provide security for private persons as much as for businesses. Then the unrelenting fight against corruption will benefit all: the government sector, the business sector, the NGO sector as well as private inhabitants of our beautiful Republic of Imagini.

Let me wind up with asking you to be open and frank with us: tell us where we are doing well, where there is room for improvement, and openly where we are going wrong. We need your support for the well being of everyone in our Republic of Imagini, including the private sector.

Welcome, and Thank you for your attention!

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IRRIGATION? GOVERNMENT? PRIVATE SECTOR? GOVERNANCE!

Yesterday we read in the paper that government, in the person of Minister of Agriculture Chaponda, is going to transfer funds from FISP (farm input subsidy program) to irrigation. Recently we heard a lot of opinions from experts on technical issues like irrigation, value addition, winter cropping and more. These calls are not new, these ideas have been around for decades. Initiative after initiative has been launched and has failed. This shows that the obvious is not where the actual problem is. Obvious is that we need these techniques. But what should also be obvious is that the way we have been implementing this has failed completely, Malawi is a least developed country.

Let’s look at the facts: the FISP was moderately successful when it was introduced. We could say that the challenges were growing pains that could be eradicated as experience with the program grew. But the opposite happened: the experience with the program was not used to improve it, and make it more cost effective. It was used by unscrupulous politicians, unscrupulous civil servants and unscrupulous well-connected business people to divert money and inputs. The cost of the program sky rocketed, while the efficacy went down the drain. Now it is a millstone round the neck of the tax payer, and it only benefits the few well connected unscrupulous thieves.

The FISP appears not easy to implement well: large amounts of money are going round to procure, transport and distribute inputs to deserving people. And at every stage money and inputs were diverted.

Look at other development projects: the procurement of tractors and other farming equipment: failed.

The construction of a sugar factory in Dowa: failed.

The Green Belt Initiative: failed.

The Nsanje Inland Port: failed.

Now look at the complexity of a large (or huge) irrigation scheme. Here are the unanswered questions:

Who is going to procure, install, maintain and manage what type of equipment where?

Who is going to benefit?

Apart from the tax payer, who is going to pay for the use of equipment (or the resulting water)? Is that going to be the farmers? Are they going to do that on credit? How is the credit going to be managed? (Think of the study loans, the MSB fiasco, the YARDEF etc. All government loan schemes that were never repaid, which means the tax payer foots the bill!)

If we look at the complexity of management of this irrigation plan, it is quite clear that this is too complex for a government that makes such a mess of a simpler FISP, that now has to be abandoned because corruption, inefficiencies and incompetence in the government apparatus have rendered it useless. This irrigation scheme is much bigger and more complex than the sugar factory in Dowa that is not running, which means the tax payer looses a huge amount of money to the types who profited from it. There is no reason to presume that the same is not going to happen with the irrigation scheme.

The alternative would be the private sector. This could be either big companies (foreign investors or local companies, both representing rich people), or the smallholder farmer. The big companies have expertise, but they will not benefit the poor, only the rich. And on top of that the Malawi business climate is so hostile that DFI (Direct Foreign Investment) is near impossible to realize. Smallholder farmers (they are private sector too!) do not have the expertise to install, maintain and manage a scheme this complex. So that seems not realistic either. To create the expertise would take decades: the quality of education for the poor is very poor, and only dwindling now the Malawi Government is diverting funds from education to State Residences (which is: the president’s personal comfort). So even if extension work were prioritized this is not realistic either.

That leaves the conclusion that this scheme is doomed before our tax money has been invested. And that makes it a bad investment (bad for us, the tax payer that is, but of course it will be good for the unscrupulous politicians, unscrupulous civil servants, and unscrupulous well-connected business people who are hunting for kick-backs, lucrative contracts, opportunities for corruption and such).

What is the alternative?

We need to think out of the box. Inside the box has failed for 51 years, and we should do away with business as usual. We need to change the way we look at government, governance, the responsibility of government and private sector, and the whole organization of the economy.

Government has proven for 51 years that it is incompetent to run big initiatives like this irrigation scheme, and this is costing us tax money every day. Tax money that could have been used productively if well managed.

We need to stamp out corruption, I have written about this before, with the actionable recommendations to government that our (clue less) president has been asking for at the meeting with PAC (Public Affairs Commission) recently.

We need to reorganize the civil service, which means the President will have to back the Chilima initiative much more forcefully than he is doing now. And we need to overhaul the regulatory frame work of the whole business sector, so it is 100% consistent, 100% clear, and lean, and we need to enforce it consistently. In the book Economic Gangsters the technicalities of this operation are clearly described with a wealth of real world examples, and a wealth of “actionable recommendations”.

We need to create rule of law for all, not just for the rich and powerful, which means overhauling the justice system, making it independent from the President, and forcing individual judges and magistrates to deliver quality in time. (those who don’t should be demoted, those who do should be promoted)

We need to grow the private sector, so it can create wealth (which it is good at). We need to overhaul the government sector so it can become good at redistributing wealth where needed, from the rich and powerful to the poor (and not the reverse, which sometimes is the case now).

Deeper debate!

 

tumblr_static_6w0vdp2kwbwo0kookow8o04c4_2048_v2The political debate in Malawi tends to be very limited. It is about singular decisions and singular people. But what we see happening is a repetition of the same problems: a President taking increasingly erratic decisions, a press and CSO that criticize. A President declaring he does not read the newspapers (as if that is some kind of achievement) and taking increasingly draconian measures to stop the criticism (not to solve the problems that cause the criticism). We see a ruling class that evades accountability, look at the fate of the ATI bill. Once enacted it would facilitate an important accountability mechanism.24752960-grunge-rubber-stamp-with-word-debate-vector-illustration-stock-vector

We see rising corruption, increased self enrichment at the top and increased poverty at the bottom. At the moment, through the combined causes of inept government policy, freeze of budget support (and a government that does little to win it back) and adverse weather conditions that the food situation for the poor is worse than in many years.

We have seen all this before. We saw Muluzi going off track. We saw Bingu wa Mutharika going off track. We saw Joyce Banda going off track. And now we see Arthur Peter Mutharika doing the same thing. This means that we cannot limit our debate to the details. The details, such as increased allocation for state residences combined with a lowering of the allocations for the critical sectors of health and education are important and need to be addressed. But we see that our efforts (press, PAC, public debates, CSOs etc) are falling on deaf ears as they did with previous governments.

This repetition of the problems means that we need to look at the system that causes governments (and Presidents) to act in this way. We need to look at the way decisions are arrived at. What are the considerations for these weird looking decisions? This is hard to find out because the authorities are often silent (like with the cabinet reshuffle) or they feed us obvious lies as when the President announced the tabling of the ATI bill, or announced there was plenty of maize in the country. The same with Chiyembekeza (minister of agriculture and food security) telling us that Admarc buys maize late because they wait for it to be completely dry. We all know it is because of a lack of funds and a lack of foresight to make the funds available in time. Still he holds on to the lie. Now this way, even though we know he is lying, we get no information out of him other than what he wants us to believe.

This way we never get to know the machinations in the ruling circles, and we are prevented from analyzing the ways of the powerful, so we cannot interfere with their doings, good or bad.

Because of the limitations of the debate, both with opposition and with CSOs the debate is embedded in the structures of power. The people come and go, but the structures remain as ineffective as they are. And that is where the real problem lies. We need a major shift in the power structures in the country to have a chance at development.

We need a widening of the debate to the structural problems. But it seems the capacity for that type of debate is lacking (obviously I am not referring to debates about simple majority versus first-past-the-post or federalism). We need analysis of the scale of Karl Marx’ Communist Manifesto, or Marcuses “One dimensional Man”. Or liberation theology. Something of the level of the ANC analysis of apartheid South Africa.

Our problem is that our thinkers do not go deep enough. They are not schooled in that type of thinking. Our university students are required to read some books, but many don’t and still pass their exams. And few who read them internalize the critical theory to a level that they are capable of applying it to Malawi. And that is just what we need. (Remember: our Unima came second last in a ranking of African universities. And when they heard it, the Unima authorities adapted, not by improving our university but by calculating in a different way, so the Unima came a few places higher in the ranking, but still horribly low. An our private universities are of even lower quality)

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And it is not just our universities. Our whole education system is so low quality we have a very badly skilled population. Badly skilled for the workplace, and badly skilled for analyzing power structures and finding ways of attacking the challenges. Which takes us back to the reason why there is more money for the Presidential Palaces and less for education: the current ruling class wants to stay in the rung class, they do not want a population so well educated they are capable of challenging the powers-that-be.

Let’s lift up the level of the debate to a structural level. I do not claim to have the answers, but I do think I have addressed a big challenge in our efforts at development.