First a disclaimer... I am not an expert, these here are just my thoughts and my observations...
I have not written anything pertaining to the politics or economic issues of my beloved motherland... there was a time I had wanted to do so but decided against it, well I was also advised against it. Anyway.. on this post I will just be sharing some of my observations.
In my short lifetime, I have seen all 4 presidents of Malawi. I don't have many memories for the first president, except that I was one of many kids who admired his motorcade and would stand by the road outside our nursery school waving flags each time he was in town and was passing by. For me, and for many of my friends at the time, it was fun. For those who might not know who I am talking about (and I doubt there are many of those), our first president was Dr. Hastings Kamuzu Banda.
Anyway, he is credited to have set the country on a good development path through his DEVPOL's (Development Policy). However, the Structural Adjustment Programmes seem to have hampered much of the progress that was supposed to have been made. This I believe is an argument used by many African countries that implemented these programmes. In general though many today look back to the Kamuzu days and point to the progress that was made at the time. And to a certain extent there is much we are to thank him for, because he pretty much laid the foundations for our economy.
But, because of he was a dictator and he led a one party state, the early 1990's saw a move for multiparty democracy. I remember the euphoria and excitement at the time, although I did not understand much of it. I remember, my mum and aunt coming home, after voting in the referendum, showing me their red fingers that had been dipped in ink and proclaiming that their finger had killed the black cock which is the symbol of Malawi Congress Party, Banda's party. The first general elections saw Bakili Muluzi of United Democratic Front come to power as the country's second president. He was the darling of the nation in his first 5 year term, but when power began to get to his head his popularity began to decline.
During his time in power, the economy went through a lot of changes and he left it in a worse state than he found it. We had a high inflation rate, our kwacha lost its value like never before, domestic debt was very high, corruption was very high, and crime also increased. He had brought democracy and with it came a lot of economic ills.
Then came in our third president, Dr. Bingu Wa Mutharika, who Bakili gave the title of "Economic Engineer". And in his first term he lived up to that title. By his second/third year, Malawi's debt was significantly reduced under the HIPC programme. Inflation rates fell to single digits, and at one time Malawi was the second fastest growing economy in the world with a stable exchange rate and low domestic debt. The Malawi Growth and Development Strategy which was Bingu's brainchild was a success as Malawi achieved growth rates averaging 7.5% in 5 years which was above the targeted 6%. Malawi, for the first time after many years, consistently produced more maize than it needed and the country was food secure.
However, he began to show some dictatorial tendencies especially in his second term. Donors began to withhold funding and the country began to experience some economic problems, mainly due to fuel and forex shortages. The IMF wanted the exchange rate to be liberalized but Bingu did not agree, this led to the IMF programme being suspended and as a result all other donor programmes were also put on hold.
Upon Bingu's death, Malawi had its first female head of state, Joyce Banda. She has clocked 100days in office and has been on a clean up campaign, righting all of Bingu's wrongs. So, the exchange rate has been liberalized, and inflation has soared as a result. Recently, the bank rate was raised, this is the interest rate at which the Central Bank lends to commercial banks, has been raised. This was a rate that was significantly reduced under Bingu's government. What this means is that it is now more expensive to companies borrow, and seeing as Malawi remains a hugely importing country, the cost of importing raw materials for production has also increased. So generally, the cost of doing business has increased.
Generally, it looks like Joyce Banda is taking us back to the Bakili era in terms of her economics without really taking into consideration what Bingu did although the rhetoric might suggest otherwise. It is early days yet, but from what I see, it will not change much. The euphoria of the first month is slowly going away and the rhetoric is beginning to show for what it really is... plain rhetoric.
So for me... in terms of the economics of our new president, we will be taking a trip down memory lane to Bakili's time.
