Moving an African country from poverty to prosperity: opportunities and challenges

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Below is a public lecture delivered at the University of London’s School of Oriental and African Studies on January 21, 2020, by Malawian President Professor Peter Mutharika in which he outlined his government’s efforts to grow the country’s economy and lift the people out of poverty without reliance on foreign aid

I HAVE been asked to speak about developments in Malawi and the on African continent as they relate to our quest to increase investment opportunities.

In turn, I also request to locate this conversation in time because I cannot speak about the present without speaking about the past.

As we say in one of our African proverbs, he who does not know where he comes from cannot know where he is going. In other words, we have been here before.

Foreign investment

Foreign investment is not necessarily a new thing in Africa. The idea of investment has a history in Africa. What is changing over time is the practice of that concept. The concept of investment goes together with that of trade. These are twin concepts. One puts their capital on the ground to produce goods that must be traded elsewhere. Trade is the end of investment.

The history of Western trade and investment in Africa began as a form of exploitation on the continent. The much-abominated African Slave Trade was certainly a form of trade – a trade in African human beings who were defined as commodities of that trade.

Later, a wave of investors came, gave themselves land and established companies that went into mining and farming. In fact, it was the need to protect these investors that led to the Scramble for Africa in 1884 in Berlin.

It was investment and trade that led to the formation of the nation-state as we know it today in Africa. We have a classic example where an entire nation could be named after one investor. Zimbabwe and Zambia were respectively called Southern Rhodesia and Northern Rhodesia after one man – John Cecil Rhodes.

The student society of Oxford thinks of Cecil Rhodes as an imperialist. He is to them a ‘dark blot’ of our history whose statue must be taken down from the gardens of Oxford University to signify how we loathe imperialism in this country.

 

But one man’s imperialist is another man’s investor. In other words, Cecil Rhodes was an investor. From the loot of Africa, he invested in building a good part of Oxford University.

As I argued at Oxford University three years ago, we must admit that no history can be wished away in human existence.

I asked one question to the students of Oxford: Suppose we take down the statue of Cecil Rhodes because he is an imperialist and a dark blot in our history, what do we do with the many buildings which Cecil Rhodes built at Oxford University in which the same students happily sit to learn about the evils of imperialism?

This is my point. Colonialism or any past imperialism cannot be erased from our history.

The nexus between trade and foreign investment on the one hand, and exploitation on the other, is also a fact of African history that cannot be wished away.

Exploitation

For about half a century, Europe has downplayed its exploitation of African resources by promoting the idea of aid. The popular image is that the West is the benevolent giver while Africa is the poor receiver.

The truth is that every year, more wealth leaves Africa than the aid and loans that enter the continent. While Africa receives about $162bn every year, about $203bn leaves the continent to Europe. Africa is losing $41bn or £32bn every year.  This is according to Honest Accounts 2017 Report, also published in The Guardian— your paper here!

Africa is not a poor continent, although its people are poor. The narrative that Africa is a poor continent is constructed and popularised to justify aid and overshadow the exploitation of the continent.

We are made to believe that Africa is a corruption-infested continent full of bad leadership because the world has to be kept blind from this global syndicate of exploitation. We are convinced to find a reason to blame Africans for their situation.

Likewise, our starting point in my country is that Malawi is not a poor country but only its people are poor. We refuse to accept that we are a poor country. As one African proverb says: It is not what you call me that matters; It is what I answer to that matters.

In moving an African country from poverty to prosperity, it matters all the way to set out from a position of positive thinking and a positive self-concept. We need to reject and unlearn all the myths, stereotypes and negative concepts of African people. We cannot achieve anything positive with negative thinking.

The foregone discussion asserts a number of positions. First, Western trade and investment in Africa have for years carried a history of exploitation. The problem is not foreign investment itself. But the problem has been the motive and the manner in which it has been practised.

It would be missing the point to demonise foreign investment just because it has been used as a form of exploitation. There are countries which have developed because of foreign direct investment. Some countries in Europe have developed because of the Marshall Plan and the huge sums of funds transferred from the US to Europe after the Second World War.

Aid

On the contrary, aid has never developed any country anywhere. No country has ever developed because of aid. At best, aid can only be a stop-gap measure in the transition to economic autonomy if that aid is invested in productive sectors of the economy such as agriculture and energy.

One of the great opportunities that Malawi is riding on is the advent of aid fatigue within Western society. More than ever, there is a growing movement of interrogating the aid culture with taxpayers, the media and non-state actors questioning their governments on the efficacy of aid.

The aid culture is declining against the rising demand for trade and investment. Malawi believes that we can develop with foreign direct investment, development of the private sector, creation of jobs and creation of new wealth on the principle of a free market.

The moment I came to lead Malawi, we aggressively started foreign direct investment programme. We also undertook public sector reforms to improve the doing-business environment.

These changes have included legal system reforms because it is our responsibility to set up laws that prevent Malawi from being exploited.

We have since then been fast rising in the World Bank Doing Business Index. We are now set to do business with the world. We need business investors who can invest in the production sectors of the economy.

Moving from aid to trade necessitates that we must invest in the production sectors of the economy. We need investments that will lead to the industrialisation of Africa.

Industrialisation

Industrialisation will ensure that we are capable of producing goods. We cannot participate in trade if we cannot produce goods that we must take to the market. Africa must industrialise.  Malawi must industrialise to create jobs for the people and goods for export. The question is: what are we doing to create an investment environment that moves us from aid to trade?

We have begun with encouraging Malawians to develop a self-dependent spirit and do away with the dependency syndrome in our economy. For the last five years, Malawi has managed to function without budgetary support from outside.

  • Without budgetary support, we have managed to make Malawi’s economy the fastest growing economy in the Southern African region. Without budgetary support, we have done the following:
  • We have reduced inflation from 24 percent to a single digit.
  • We have reduced interest rates form almost 50 percent down to 13.5 percent.
  • We have taken our import cover from the lowest point to the highest point in our economic history. Our import cover has risen from below 2 months to 6 months.
  • We have made our local currency stable and predictable for four years.
  • We have raised economic growth above the Sub-Saharan and IMF global average growth. I found GDP Growth Rate at 2.4 percent when I started leading Malawi five years ago. Now we can expect growth rate to rise as far as 6 percent in the 2019/2020 financial year.

One of the things we are doing is investing in the Youth. We are capitalising on the fact that in Africa, about sixty percent of the population is the Youth under the age of 35. We have a similar situation in Asia. For us, the Youth population is an opportunity and not a problem.

One of the challenges has been that our education system had for a long time been too academic. There are instances when every student who went to school in Malawi was supposed to know who discovered the Congo River or Lake Malawi. This is the kind of education colonialism left and was adopted for a long time.

Sometimes, every Malawian learner was taught to dissect an insect and label all its parts. In that process, you would qualify a person and certify them as educated. But what is the use of that education? This dissection and labelling of the insect is in fact a simulacrum of many other instances of our curriculum.

What we have done in Malawi is to introduce a programme called skills development targeting the Youth. We are building community colleges across the country.

We have a practical curriculum that focuses on industrial skills. In doing so, we are creating a human engine for industrialisation for us to move from a predominantly importing and consuming country to a producing and exporting nation.

Our current emphasis on providing industrial skills to the mass of the Youth is a paradigm shift in our education system because we want the Youth to be the driving force of industrialization in Malawi and a growing private sector.

The demographic dividend

This new emphasis of empowering the Youth with industrial skills is focusing on the mass of the Youth who finish secondary education but cannot go to University.

While some continue on the vertical access to education by proceeding to University, the majority of the post-secondary Youth now have horizontal access to education by spreading across various technical community colleges.

At the same time, empowering the Youth with industrial skills is our formula for enabling the current generation of the Youth to be included in economic participation.  Empowering Youth with industrial skills is decisive in economic participation.

My conviction is that no society can develop without a skilled labour force. This is the reason why we started a skills development programme with the community technical colleges.

We have also ensured that Malawi must remain a democratic society because this is essential to economic participation.  I believe citizens only prosper when given freedom but within the law.

Whatever negative perceptions that you may read about Malawi, the reality is that Malawi has an internationally well-rated government.

The United States Government, through the Millennium Challenge Corporation, assessed Malawi in the 2019/2020 financial year as follows:

  • In economic freedom, we scored 91 percent and in Trade Policy and 91 percent in Access to Credit.
  • Under Ruling Justly, Malawi scored as follows:
  • Control of Corruption – 63 percent
  • Government Effectiveness – 69 percent
  • Rule of Law – 90 percent
  • Freedom of Information – 75 percent
  • Civil Liberties and Political Parties – 88 percent
  • Under Investing in People, we scored an average 69 percent.

We have been equally rated highly by:

  • The Mo Ibrahim Index on good governance
  • The World Justice Project Index on good governance

And the IMF has consistently praised us for excellent economic performance. In fact, IMF has said Malawi is economically over-performing. This is the truth about my country.

Our philosophy is that in whatever we do, we believe in being accountable to principles, the laws and the people.

As I spoke at Washington University recently, as a Law Professor, I had always thought the essence of democracy is the Rule of Law, as most scholars do. But my people changed my political philosophy. I have now learnt that the essence of democracy is accountability. In good governance, everybody must be accountable to someone else – and let God be accountable to himself.

Let me conclude in this way. Malawi is doing everything possible to use investment opportunities and move from aid to trade. This is how we want to move from poverty to prosperity.

For this reason, our plan is to ensure that:

  • Every community must be food secure. We have launched a greenbelt revolution to make Malawi food secure.
  • Every community must have electricity. We are taking electricity to every community in a rural electrification programme.
  • Every community must have a good road network. For the past five years, we have been constructing more roads than any other Government in the history of Malawi.
  • Every community must have a good secondary school. We have just launched a programme that will build good secondary schools in every community. Every child who finishes primary school must go to secondary school.
  • Every community must have a community technical college. The Youth who finish secondary education in every community but cannot go to university must be trained in industrial skills. And we are already constructing these colleges.
  • Every community must have access to good health care. We have launched a Universal Health Coverage program in which Malawians must access health care in every 5 kilometres.
  • Every community must have potable water. We have already rolled out a piped water supply programme across the country.

I want people in every community to create their own jobs, have basic social services for them to be productive and be happy.

It is by empowering the Youth, men and women with access to education, industrial skills and access to capital that we can industrialise Malawi and create new wealth. This initiative must be done in a free and democratic society with a government that is accountable to its people.

Wealth created must be for the benefit of every community. Ultimately, the goal of every government is the happiness of its people. In the end, I hope to leave Malawi happier than I found it.

Thank you for your attention.

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