Friday, April 26, 2013

Industrialising Malawi

Malawi is in a serious drive to scale up industrialisation after recording widening trade deficits.

What steps or strategies  should Malawi take to achieve its dream. Mind you the wish has been there ever since it got independence. The following strategies have been used before:
  • Import substitution strategies
  • Investment incentives such as tax free packages for investors equipment and tax holidays
  • Open trade
  • Joining regional trade integration arrangements
  • And now its the national export strategy
But little has been achieved with more old manufacturing companies closing. Losing to new competitors who have their manufacturing plants in far away countries. What is wrong with us, any suggestions?

What can Malawi do to break through?





Tuesday, April 23, 2013

The Reason we have Perpertual Foreign Exchange Shortages

Malawi Recent Trade Statistics http://trade.ec.europa.eu/doclib/docs/2011/january/tradoc_147317.pdf

Malawi has challenges to connect to the world or regional value chains.  That is why it cannot produce and sell much to its external customers. This tells us that Malawi is not well linked in this global village.

Let us concentrate on services. But in services too you need to well linked and connected. Services are supported by optimum networking.

Its time to shift gear!!!!!

CAN MALAWI GET ON THE ROAD TO PROSPERITY?

I hate reading "Malawi is one of the poorest countries in the world," yet it is true. Those who have been given chance to lead Malawi have tried all sorts of tricks and tactics within their reach but have failed to make a break through leaving their subjects in abject poverty. So before answering the question of this article I need to first answer why Malawi is failing to get on the road to prosperity that it is still moving in a circle of the poverty trap.

Most commentators: political, economic, historical, etc have put the blame on various elements that stops our economic and social economic progress. Among the highlighted ones are colonialism that did not want natives to be empowered; dictatorship that stuck to retrogressive policies and banished rich families; education that some democratic leaders got dizzy and lost in macro-economic management; corruption that institutional managers  have not been the best in terms or merit in managing institutions but could better be used as vehicles for corruption thereby enriching participants mostly the elite; governance that the democratic system disrupts government strategies as each new regime overhauls senior government controlling officers at starts from scratch  and many more....

I believe Malawi need to address the following salient issues if it is to get on the road to prosperity
  1. To motivate Malawians who are hard working in terms of industrialisation buy not milking them too much through horror taxes
  2. Keep interest rates and inflation at minimum through sound economic management - any government regime that threatens this should be impeached
  3. Malawians should be properly helped and encouraged  in undertaking joint ventures and partnerships to be able to make big investments in growth  potential areas locally or internationally
  4. Help Malawians  to as much as possible penetrate the SADC, COMESA, AFRICA, EUROPE, USA and ASIA where they can either trade,  learn skills, do professional work etc so that Malawi can have a critical mass of wealthy people, economic and  policy influencers too.
  5. Expose Malawians to motivational speakers
  6. Help half of Malawians to learn above average ICT skills, to own and use them 
  7.  
The nation can better develop  and be lead by empowered citizens. When citizens are not empowered and majority live in abject poverty yet they vote and influence elections, politicians will always manipulate them to enrich themselves by always using the donkey and carrot tactics as this case in Malawi.

Friday, April 19, 2013

MALAWI TO CHAIR SADC FROM AUGUST 2013

It is at least an opportunity for Malawi to Chair SADC. Why? Malawi will have the chance to push for issues that it feels hinder it to benefit from this peculiar regional integration. Malawi mainly trades with South Africa in the region for both exports and imports. It should, therefore, push for an agenda that could unlock its export to the immediate  neighbouring countries as well. These countries are Zambia, Mozambique and Tanzania and even Zimbabwe.

It is a fact that Malawi trades a lot more than what is captured in statistics with these neighbouring countries but most of the transactions are informal hence unrecorded. The porous borders are conduit for such informal trade. Otherwise why is it that after every bumper crop harvest Malawi suffers from food insecurity despite the various export bans of food crops.
 
Anyway, I would suggest that Malawi should push for issues that could lower cost of exports such as competitive transportation, telecommunication, flight and ICT services (but other countries could laugh at this because its own policies are anti-competitive in these sub-sectors); quick development ant launch of Zambezi Waterway Inland Port as well as rail network to Zambia and Mozambique ( but this could lead to influx of imports as it will be cheaper to bring them in too); joint tourism 'package' promotion (but what if payments are made in the more tourism developed countries): free movement of production resources( but Malawi ease of doing business is appalling few my opt for it as a destination) etc

Yeah, the chairpersonship will give Malawi visibility but its own leadership and policies will help it  gain from the preferential regional market. This is true with the other struggling SADC countries. Mining is not the best option. The best option is knowing the tricks of value addition and value chain linkages- upward and downward linkages that support SMEs.

Monday, April 8, 2013

IS MALAWI ECONOMY RECOVERING?

It is now one full year since Joyce Banda started ruling following the sudden death of the former President Bingu wa Muntharika. Then the economy was shrinking following tightly managed monetary policies that led to influx of imports on the local market and scarcity of locally produced products because most companies either scaled down production or closed production facilities. The raw materials and fuel were had to get because enough forex for raw materials and fuel was acutely scarce. Foreign exchanged almost dried up! Key donor partners and IMF stopped supporting the Muntharika a

JB's administration came up with economic recovery measures: kwacha devaluation, floatation and floating fuel price, yes and an insignificant safety nets. The other administrative measures were to repair relations with the donor partners and foreign governments with which the relationship were strained, as well as complying with the IMF fiscal management dosage.

Today, 12 month later, after much pain and sweat, finger pointing and much wider criticism, the economic activities are gliding forward and upwards though at slow pace. On the negative side Kwacha value is deeply low such that earnings particularly salaries have been trimmed to pulp and workers can hardly buy their basic needs, prices are daily rising and importers are facing foreign exchange losses in international transactions. However, on the positive side, the horizon is promising: foreign exchange and fuel are available and  the private sector is active, slowly rising. Development partners are supporting government as much as they are able to do so. Investors are coming into the country with much hope.Imports have slowed pace. Public capital projects have been reactivated.

Economically I feel the administration has done better of course with some more gaps to be filled. Politically the measures have been dangerous because they have made people poorer by reducing the value of their disposable income.In the short term, political solutions may be provided but need careful handling to avoid disrupting the positive progress. This is where wisdom and intelligence ought to bridge and work as a pair!