Costing your free lunch
I don’t mean to distract you. It is a Friday, in the middle of the month. The bank halls are empty and so are the lines on cash dispensers. If you have an offer for a free lunch, why not take it up. Those that are lucky may even get a free drink. You never know, but there is always a cost to a free meal. It might be perceived as free but honestly someone is paying for it. You could be the one paying even not knowing.
I wandered into the business district of my village a few seasons ago. You think I am joking. No, I am not. Mzalangwe has its own business district, even though you may not have heard of this place. I am sure you all know its Member of Parliament (MP) but that is none of my business. It remains a story too common among most Malawians that visit their villages and engage in various activities such as farming.
There were two strong energetic men, offering to sell the subsidised fertiliser to me as I walked into a dealer shop to get the same at a commercial price for my little garden. In other words, these were the people at the root of the Farm Input Subsidy Programme (Fisp). Imagine the billions of kwacha spent on this programme and yet some beneficiaries simply sell off the coupons for an extra quid to enjoy themselves.
The taxpayer is paying for all this. The beneficiaries playing this game straight on reckon it is a free lunch. But in earnest think of billions of kwacha that could have actually gone to health centres in own villages are lacking essential medicines. They pay the cost. Maybe critics of the vote-winning Fisp have a point. I don’t know.
Maybe it is in the human nature to enjoy free things. While such nature sounds rational, it has its own limits. I tend to be overly critical, like many other commentators on the banking industry, especially the high cost of borrowing. I honestly do not like the huge disparity between lending and savings rates. For example, lending rates are above inflation while savings are below it.
It is the economics of banking in a country fused with the mentality of free lunch. Most of us simply will never repay loans even when we are capable of doing so. Many loan schemes such as those run by government have collapsed because everyone wants to default. Even MPs that were given the famous K50 000 loans a decade ago have not repaid them.
It is for this reason that despite high bank rates, commercial banks are always ruthless when it comes to demanding sound collateral before they let you take their money. Private microfinance companies are also known for being so ruthless in how repayments are made despite the disguised softness to access their money. Could it be that banks and other lenders are covering their lending strategies with our appetite for free meals. We could be the problem even if the central bank was successful in its many attempts to mop this money stuff to control inflation and bring rates down. It is a psyche that defines us.
Just imagine a former politician advocating for a 100 percent taxpayer-funded pension? How many of them are there? How many lunches will the taxpayer fund? What is quite surprising is that the legislature passed a pension law that compels employers to contribute to employees pensions. The law also expects each one of us to contribute to our individual pensions. In other words, making each one of us responsible for own pension. The law tactfully excludes those that make this law to contribute to their own future. This is all nothing, but our obsession with everything free. Why should someone get a 100 percent pension from their employer while also accessing public health services for free? At the same time, we are all reluctant to pay taxes and expect the other person to pay for it?
So, do not get surprised as the level of innovation is rising to pay for our free lunch galore. Someone even thought of that useless traffic register card to get as much kwacha to simply pay for our free meals. As long as we love these free things, well the ride will always be bumpy. Countries grow up just like kids do. n
