Malawi knows the cure, but…..

A reader’s perspective

Last week, I questioned whether another devaluation of the kwacha would resolve Malawi’s persistent foreign exchange shortages without addressing the underlying structural weaknesses.

A reader, who opted for anonymity, responded with an interesting perspective:

Malawi’s economic challenges could be addressed within a relatively short period through good governance and sound economic management. The solutions do not require rocket science.

We need a lean government with fewer ministers, principal secretaries and senior officials, alongside merit-based appointments throughout the public service.

Further, I strongly recommended genuine austerity measures, enforceable performance contracts for senior officials and stronger anti-corruption institutions, including the Anti-Corruption Bureau, Police and Judiciary.

Furthermore, local authorities should align government expenditure and programmes with the Malawi 2063 First 10-Year Implementation Plan (MIP-1), negotiate and adhere to an International Monetary Fund programme, and addressobstacles confront private businesses.

Within three years, these reforms could stimulate businesses, increase exports and foreign exchange earnings, create employment and improve government revenue.

The layman’s reflection

There is considerable economic logic in the proposals. Indeed, few would dispute the importance of fiscal discipline, competent public officials, institutional accountability and a conducive business environment.

However, there is a catch. None of these prescriptions is particularly new. Successive administrations have promised similar reforms, yet many of the economic challenges they were intended to address persist.

As Malawians, we need to ask a very painful question: If the solutions are relatively straightforward, why have successive governments struggled to implement them?

I suspect the answer lies partly in the relationship between political incentives and economic management. Look at appointments to Cabinet, statutory corporation boards and senior management positions in public institutions.

Ideally, such appointments should prioritise competence, experience and the capacity to deliver institutional objectives. This is pure common sense!

However, political considerations can sometimes outweigh professional qualifications, with appointments serving as rewards for loyalty or instruments for accommodating political interests.

And history has repeatedly proven, political affiliation does not automatically imply incompetence.

Nevertheless, when loyalty becomes the overriding consideration, institutional performance risks becoming secondary. And herein lies the difficulty with the reform proposal, and arguably the answer to why they have never gained traction.

Reducing the size of government limits opportunities for political accommodation, while independent anti-corruption enforcement can expose politically influential individuals.

In other words, reforms that benefit the economy may impose immediate political costs on those responsible for implementing them. What makes economic sense for the country may not necessarily serve the interests of those governing it.

The consequences extend beyond public administration.

Poorly managed State-owned Enterprises can become a burden on Treasury, diverting resources from productive investments.

Weak institutional accountability can undermine expenditure controls, while inefficient public services increase the cost of doing business.

These weaknesses ultimately affect investment, production and the country’s capacity to generate foreign exchange.

Of course, good governance alone cannot manufacture dollars either. Malawi still needs competitive exports, reliable infrastructure and productive investment.

However, achieving these objectives becomes considerably harder when institutions responsible for implementing economic policies are weakened by competing political interests.

This is why I find the proposed three-year recovery timeline rather optimistic. Economic reforms can produce results within three years, but transforming productive capacity and institutional behaviour requires sustained commitment.

More importantly, there is little evidence that the political incentives responsible for undermining previous reform efforts have fundamentally changed.

Perhaps the question, therefore, is not whether Malawi has the right economic prescriptions, but whether its political leadership is prepared to accept the consequences of implementing them.

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