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The Economics Association of Malawi (Ecama) last week demanded an update on the growth strategy, a government plan expected to help Malawi attain the targeted six percent annual GDP growth.
“While this growth strategy has been applauded by many as a very good plan for the country that could spur economic growth, its implementation remains uncertain and unclear [just] like many other past documents that this country has prepared.”
“No deliberate efforts by its stake-holders, it would seem, have been made to implement the agreed action plans and monitor progress,” said Simon Itaye, Packaging Industries chief executive in a paper presented at an Ecama public talk on economic growth prospects in Malawi.
The growth strategy, developed by private and public sector with donor’s participation, identified key growth areas of agriculture, manufacturing, tourism and mining as means through which the growth target can be met.
When he was Economic and Development Planning Minister, President Bingu wa Mutharika told The Nation in October last year that government was waiting for aid from donors to launch the plan.
But a month after the budget was tabled and passed in Parliament, nothing on the ground seems to move towards the plan’s execution.
Observers say Malawi’s economy has since the 1990s failed to hit the six percent growth bench mark due to high level corruption, macroeconomic instability, mismanagement, poor infrastructure, an unfriendly business regime and external shocks.
Itaye, who was guest speaker at the meeting, said although attempts have been made to address the problems, the efforts have been disjointed and have, therefore, failed to have their desired effect.
He noted that liberalisation of the economy—removing trade protection, introducing financial deregulation and bringing a more disciplined approach towards fiscal and monetary management—are some of the remedies that government is using to achieve economic prosperity.
But despite these efforts, said Itaye, Malawi’s industrial performance still remains weak and its competitive position is one of the weakest in the Sadc region.
Itaye said with the opening up of the 1980s, mainly through a World Bank structural adjustment programme, land locked Malawi manufacturers now face competition largely from South Africa and to some extent Zimbabwe.
Both countries, he observed, have better shipping routes, superior international transportation networks and good general infrastructure.
He added that the two countries, especially South Africa, have a longer tradition of industrialisation and larger domestic markets that provide their manufacturers with more easily captured potential for attaining both economies of scale and scope in production.
“As some Malawian companies cannot favourably compete in such a liberalised environment, the result has been the closure of some businesses and inability by a larger proportion of manufacturers to shift production abroad or export goods and services to foreign countries,” said Itaye.
He added that low investment in education to produce quality school leavers and university graduates who can be turned into well trained artisans and qualified technical staff has affected the country’s out put.
On macroeconomic mismanagement, Itaye said this has led to high interest rates partly due to expectations on future inflation and government’s tendency to crowd the private sector out of the capital markets.
Itaye then suggests a way forward. “With a strong political will, concerted efforts by both private and public sectors and a willingness to adapt, this country could be transformed.”
“It is, however, clear that there are no quick fixes to prosperity. Economic growth is a long process that cannot simply be tackled by periodic plans but requires a vibrant private sector and a committed well trained public sector,” said Itaye.
During the same meeting, National Bank deputy chief executive George Partridge said government’s economic policies can only achieve crucial growth targets if the country puts in place a solid foundation of good governance.
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