Malawi at the Intersection of Morality, Politics and the Economy

Updated: Dec 30, 2019


The Nation on Sunday of 15 September 2019 reported the government's position relating to the fears that many had in the heated parliamentary debate on the proposal to use public coffers to construct two stadia for Nyasa Big Bullets FC and Be Forward Wanderers FC (Nomads). The promise made by Peter Mutharika’s government is that, once the mega projects are completed, the Malawi Government would maintain and manage the proprietorship of the two stadia.

In a normal world where the appreciation of a poor economy would necessitate the induction of demand-enhancing injections, one would see the genius in Hon. Joseph Mwanamveka, Mr. Mutharika’s Finance and Economic Planning Minister, who presented the largely suspicious proposal to Parliament. The alleged genius emanates from the very fact that Malawi’s real growth projections do not assure us of an outlook that is great to anticipate. The World Bank has shown, using available data, that real GDP remains low and unstable (fell from 4% in 2017 to 3.5% in 2018; expected to return to 4% by end of 2019). However, for an economy that is already weak, the impact on the economy that this growth brings is marginal. A looming global recession, variability caused by climate change and an insatiable appetite for manufacturing offspring would likely drive these numbers to the negatives very easily.

So, infrastructure realized via mega projects is the bet the GoM would take to boost local demand. Two stadia in Blantyre, then, sounds like a great idea. For it is not just employment of local expertise and the unskilled – considering a squad of Chinese laborers do not take over, as they’ve always done – that benefit, but there are industrial linkages as the networks of suppliers of goods and services, who themselves are linked with many other economic sectors, would jolt the economy to life. Only if managed well.

But alas! Malawi, being the pit of controversy it usually is, there are good reasons to fret at the proposal Mr. Mwanamveka is pitching to the country’s lawmakers. The economic argument - which he is not making - is easily superseded by simple moral arguments that enquire what the plan for strengthening education or health is. At the same time the stadia were being shoved in the faces of Parliamentarians, the University of Malawi was rolling back the number of government-issued University loans to students. When one considers these sectors from a human capital development perspective, only folly would drive Mr. Mwanamveka to even put the stadia proposal on paper.

Yet these are not quite the only issues this website is interested in. The funds mobilized for these infrastructure projects must be coming from somewhere, and the government must explain whence those sources materialize. To start, the Malawi Revenue Authority (MRA) cannot be that source. In 2018, the taxes MRA collected were only 18% of GDP and does not seem to want to grow much further anytime soon. The second, and more likely source, is that our good government will convince a foreign creditor or issue bonds to loan Malawi’s taxpayers some dosh to build Malawi’s two most esteemed football clubs the promised stadia. The government could also consider printing more money, another costly idea if one considers the runaway inflation this would cause. If these are the courses the GoM wishes to take, then the Malawi public deserves to know the net present value projected for the viability of these investments today. Our guess is probably as good as yours that this is likely to be a failed test, on two accounts: (1) it is highly unlikely that the expected patronage that would rake in the amounts of cash in the presence of at least three other functional stadia in Blantyre City alone will happen, and (2) it is evident, by a simple examination of the poor state in which all existing stadia are in today, that there isn't enough revenue going around. Perhaps more importantly is how the government cannot quite guarantee that the stadia will be utilized at full potential.

But perhaps the moral and economic arguments can’t beat the political underpinnings of the proposal. The Democratic Progressive Party (DPP) campaigned to its cheering fans on the promise to construct these very mega structures, among other promises. Although following through on such a promise is tantamount to sheer absurdity, much as Muluzi’s shoe promise or the likely would-be failure of Saulos Chilima’s 1 million jobs, the DPP might just be determined to fulfill its campaign promise on this one. The question is "why is it a must?"

And there are very good reasons, including those above, to believe that such a plan would backfire on Malawians. But many DPP fans are happy to stay hoodwinked and receive no explanation on where the resources for construction are to be obtained from, and neither whether they will benefit from the proceeds coming out of the finished product beyond purchasing a ticket for a football game. Unfortunately, although the football fan feels gratified by such a campaign promise fulfilled, they overlook the fact that they will have helped usher in a project that will likely take money from them than keep it. If anything makes sense out of our article of 27 February 2017, then it is that a government that sets out to make such a promise reflects the quality of the electorate that puts them into power in the first place. And if it is the will of the ignorant majority that the politicians pander to, which we believe to be misguided and opportunistic, we are, simply, a country that is doomed.

Now, it is indisputable that, in Malawi, even good campaign promises are never delivered in full, if at all. The fact that the DPP unashamedly continues to pursue the stadium proposal reeks of another threat that has surrounded Malawians for the decades of its independence era, corruption. The first is how the externalities or the networks generated by these stadia will be characterized. With fewer loopholes remaining and too many whistle-blowers around any tampering of Account #1 after Cashgate, construction or the provision of goods and services associated with the two mega projects are most likely to see those with and in power to have access to contracts.

The bigger issue is that we may be using public resources to fund potentially private assets, inadvertently rerouting the political accountability argument back to the moral one. Even the claim by government to have the knack for managing two stadia whose returns may not suffice to address the public need is a mockery to the people who hope for better. It is retrogressive for politicians to make promises for the sake of votes, not for the sake of the well-being of the people; for the sake of the Big Bullets and Nomads above the needs in our hospitals or schools. And if we would like to ensure that they deliver what they promised, who will guard the public purse?

Should public money be spent on what is promised or on what is needed? The cadre of politicians in our country would rather keep their fans uneducated so that they are easier to manipulate. An appeal to “cut money for student loans and build the people two stadia for their best teams” finds an irresistible platform to execute.

The systems themselves could not be bad per se, but self-serving politicians find ways of engineering them to their advantage.

Left unchecked, that's how Messrs. Mutharika and Mwanamveka will create Cashgate #2.

#POLITICS #ECONOMICSANDDEVELOPMENT

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