Total Reform of Government: Realizing Demand-driven, Structured Growth in Malawi
I have always used the analogy that "when the brain is in a dysfunctional state, the body members cannot be put to their best productive capacities". The greater the extent of dysfunction of the brain, the greater the degree of unproductive use for which the members can be put to use.
And I have always upheld the argument that we have a grossly outdated government technical and administrative system whose decision-making frameworks are based on a state-driven industrialization approach, which Kamuzu Banda adopted – all for good reasons then, probably. But at that time, the world still operated in a fragmented mode, where each country was concerned about itself. The notion of private sector investment as the engine of growth was not a critical truth then as it is today, and markets were not integrated. Today, we operate in a global village with integrated policies in which the total performance of the world is measured by the performance of its parts. When one part lags behind, it drags the rest of the world with it.
As a way of trying to keep us on our feet, the part of the world that has caught on with global demands has been pumping monies and technical support into us countries that are perpetually lagging behind, thinking that this can help us catch up. This has not happened. We are economically worse off than we ever were. For over the past 20 years, the donor community has pumped in about US$300 million annually in the Agriculture sector alone in Malawi but what transformation do we see in the sector? Yet the American Government granted US$350 million and it upgraded the power transmission grid to enable new generation of over 1,000 MWs – just in five years. Presently, hunger still persists and the Agriculture sector is still very infant and highly vulnerable to external shocks.
I find it very distressing that not only is the Malawi economy fed by the poorest of the country, but each citizen in Malawi feeds and lives off the sweat of the brow of the rural farmer. Being an agro-dependent economy, 70% of all agriculture output is contributed by the rural smallholder farmer, over 90% of whom live in abject poverty. Most of the export proceeds that Malawi thrives in for its foreign transactions such as fuel are effectively contributed by the rural smallholder farmer, over 90% of whom live in abject poverty. The dynamics do not seem to be right here.
When I joined the Malawi Investment and Trade Center (originally MIPA), I had high expectations of the results but quickly came to understand that my expectations were far-fetched. At the time, we received delegations of both domestic and foreign investors who had bright concepts and the money that would have brought transformation to those concepts, but Government was largely non-responsive (the non-responsiveness is a lingering state of affairs). Let me cite a few significant ones as an example. When I started out with MIPA, Pepsi-Cola had wanted to come to Malawi as a franchise. Because of the magnitude of their investment they sought consideration for certain incentives in order to make their business case worthwhile, vis-à-vis the operating conditions in Malawi where business operating costs are so high. If granted, the country would have benefited over hundred-fold from domestic taxes, notwithstanding the many other benefits from direct and indirect employment, foreign exchange generation through regional and extra-regional exports, spatial development of supplier MSME companies that would provide this huge giant its many supply requirements, among others. Of course the government would have would have had to forego the once-off revenue it would have received in order to gain a better and sustaining source of not only direct revenue, but the uplifting of livelihoods through direct and indirect investment. We lost this company and opportunity because we refused to give them the incentives they wanted. Our decision was based on the short-term losses we envisaged and not the bigger long-term gains that would have accrued to us.
A second project I would like to cite which government rejected by its usual non-responsiveness is a hybrid gas and fuel pipeline which a billionaire investor had proposed for Malawi. Just to get an appointment for the investor to have a round-table with the relevant Ministry was a nightmare. Apparently the investor was already building a pipeline from Dar-es-salaam to Zambia and was willing to invest his own funds to build a pipeline to Malawi, as long as Government committed to use the pipeline. Whether Government would want the pipeline stop at Karonga or all the way in Lilongwe was a choice the investor gave government. After his presentation, the government side remained behind for a discussion, and what came up was that the project ‘would kill the northern corridor’ meaning that trucks would be out of business. That’s how we think. We are so keen at maintaining the status quo even if it is obsolete and grossly inefficient. A very familiar adage that you hear frequently in the public service when you bring forth a new and seemingly abnormal concept is “there is a way we do things in government. This can’t work.” They are so stuck with the as is mentality such that when someone proposes something extra-ordinary they become so spooked for the reason that they just can’t understand complex concepts and in order to cope with that non-understanding, they simply shun away from those innovating concepts that are necessary to take the country from this current economic state to another more favorable economic state.
Anyway, we did not hear anything back from government on this pipeline project until we just gave up. The promoter kept engaging us on progress till we run out of excuses. So, we also just shut down in regret. There are many other potential transformational projects that similarly did not implement because of Government non-responsiveness. I remember in 2013, the Crown Prince of Dubai (I’m sure that was him who led the delegation) visited Malawi with a delegation of rich investors. A project that they settled on was a development they called “upright Agriculture”, a capital-intensive agricultural activity where on one hectare of land you grow 5 hectares’ worth of vegetables. They achieve this by growing the rows of vegetables both horizontally and vertically on the land. Each planting station would have something like 5 plants grown on an upright trellis. The project budget that they were prepared to invest was up to U$3 Billion. I recall my Minister at the time telling us while seated in his office as we reviewed the day’s activities, that US$3 Billion was “too much.” Of course, the investment would be land-intensive but the project objective was to grow various vegetables in high tech controlled environments primarily for export back to the Gulf region. Well, we lost that project too because as we followed up with the responsible MDA’s, there was no meaningful response on account of “it was too good to be true”. But imagine our present status if this project was operational today.
Today, I’m queuing on the fuel lines together with those same public servants who are the primary reason for this present economic situation. But I don’t think they even think twice about it. Their children have graduated from University but three years down the line, they are still unemployed because they cannot find a job…and somehow they can’t figure out that they are the root cause for the situation. Productive businesses are disinvesting and I recall a few companies calling me to say that the President of Zambia (former) had personally called them to invest in Zambia with promise to take good care of them. And we wonder why the Zambia Kwacha is stronger against the Rand. Just a few days ago I was with one senior public servant and he was asking me, “what is Zambia doing right?” And I looked at him and was like; “DUH!”
The public service is the brain. Other sectors cannot perform as long as the policy sector does not know how to perform with regard to private sector growth and inclusiveness. The fact is, our public technical structure is not business-oriented let alone private sector growth oriented, and cannot effectively think in a commercial manner in its present state. I was a panelist at a forum recently and the question I was asked was “what should Malawi do in order to achieve an inclusive private sector.” And I responded that indeed private sector is not performing and there are so many deficiencies there, but which I call symptoms, and added that I do not fault the private sector for its non-performance. The elephant in the room, I stated, is the public service. I continued that public service is not providing the direction, support, administrative interventions and responsive frameworks for private sector to thrive in as it should. It does not integrate private sector into its operations. It’s like these are two systems that are distinct from each other rather than the ideal of having one system with private sector seen and treated as a sub-system – an ally.
But, at this point, if the government were given a chance to comment to this insinuation, they would state that it has provided a conducive framework (meaning an incentives package which is unpredictable, and enabling policies such as the freedom to invest…probably that’s it!) and that it is up to private sector to thrive…what more is it expected to do? But it takes more than just a framework on paper for private sector development to take place. On the ground, the treatment must be practical and warm, supporting interventions must be deliberate in order to unlock deterrence and to stimulate private sector growth, and government should be positively responsive and quick to continuously address the constraints that private sector is facing in its development path...all to ensure that private sector is happy and is producing so that we resultantly prosper as a nation. However, Government in Malawi largely views private sector tantamount to an enemy and foreign body rather than a constructive ally and partner requisite for foreign exchange generation, enhancement of livelihoods, import substitution, employment among many others, and, whenever private sector and government meet, it is mostly a confrontational environment, with private sector on the offensive and Government on the defensive. I remember during my time with MITC and indeed even in my present job tenure, I have heard – in meetings and workshops –senior public servants raise the question several times: why do we trust private sector? If decision makers can think this way, then our present economic situation is justified.
My conclusion: the brain must be holistically reformed to think and act pro-private sector growth. Our system is operating in a traditional mode that is not designed for the globalized way of thinking. If Governments such as the UK, USA, Australia reformed their governments after realizing that they were not structured to efficiently serve the citizenry and facilitate growth of the private sector, who are we to keep on embracing obsolete administration approaches? The West calls it the New Public Management Policy (NPM). They reformed their administrative processes, policy & institutional frameworks among others to establish a format that was citizenry and private sector development responsive. They borrowed management approaches from the private sector and integrated that into their public systems to enhance service delivery efficiency and private sector responsiveness. Now they offer the economic success we so often enjoy when we so frequently visit their countries – without learning anything. They have successfully and harmoniously integrated private sector into public sector decision-making and growth strategy.
In Malawi, we have been doing piecemeal reforms which do not have any significant impact. However, there are in my opinion very few success stories of reforms which I can cite. One sector in Malawi that has partially done some commendable structural reforms that are private sector growth oriented is the transport sector. They devolved services such as the issuance of Certificates of Motor Vehicle Fitness (C.O.F) to private sector which not only enhances efficiency of service (I can get my C.O.F in 10 minutes compared to a whole day previously while it was under government oversight), but also drastically reduces corruption while harmoniously integrating private sector in a partnership mode with Government operations. That’s the kind of thinking that must propagate to all facets of the public service system.
I would like to suggest that government engages a team of professional foreign consultants on the subject - working with local counterparts - who are hands-on professionals on reforming public sector systems to a format which promotes amicable citizenry engagement, integrates private sector considerations into public sector management, and positively promotes private sector growth – like the UK did. Then government implement a holistic reforms process according to recommendations. This approach is very critical if Malawi is to achieve success (Rwanda reformed Government and its success attracts scores of delegations from Malawi, which have been going there to learn from them for probably over the last 10 years or so, but still have not got it). Presently we are a negative reference to many across the world – more like a case study. For example, South Africa’s then President Zuma referred to our roads as a bad example. We have been a case study in lectures abroad (mainly on what not to do).
Let us not resist change – which you are good at, public service – but let’s be open to it, as painful as it may be to our personal welfares. Let us at least create a positive foundation for our children –the best we can do at this age. We need new rules, systems within systems, checks and controls, processes and procedures, and institutional set ups that will promote coordination between MDAs – all in order to fast-track development. This is what will bring about mindset change to the rest of the country. It starts with Government. But if a whole Government can have a Department of Debt and Aid in its Ministry of Finance in this day and age when the world is talking about debt and not aid, how will the rest of the economy think?
As I’ve always said to my colleagues, 2063 remains a farce just as 2020 was if we leave our systems the way they are.
Joshua Nthakomwa was former Director of Investment Promotion for the Malawi Investment and Trade Center