Many times I hear the cry that foreign-owned businesses do well compared to those owned by indigenous Malawians. I don’t know whether this is indeed true.
Similarly, indigenous business groups cry foul that they are not given opportunities or at least not favoured when it comes to certain deals.
Examples abound. Not only are they restricted to tenderprenuers who love the idea of supplying government with stationery and fertilisers. Others go at lengths to supply complex equipment such as transformers or medical equipment despite having no idea of the technical specification of the equipment in question.
At small-scale level, the Burundians are calling the shots in all suburbs selling anything that one can get in a well convenience store that can even rival the famous Japanese convenience outlets. What we do in return is go to their shops and at the same time complain that they are taking over our business opportunities.
You can add to the list. The Peoples or otherwise PTC, belonging to our biggest conglomerate with listing on the Malawi Stock Exchange (MSE) has fast reduced itself to a franchise of South Africa Spar. It has gone to the extent of closing shops across the country.
Its business is simply buying and selling. Basically, to bake bread and sell bread effectively involves the sophistication of a franchise, I suppose. At the same time, the Chipiku group has risen to become a preferred retail/wholesale supermarket without any franchise. So, how does this happen?
Under such circumstances, it is quite common to play the nationalistic or indigenous card. It’s rational human behaviour. To this extent, there have been some legislation restricting who should be allowed to trade in the districts. Furthermore, the threshold of foreign direct investment have been increased over time to keep away doggy investors that open small shops to sell various fake/ counterfeit products.
At parliamentary level, an amendment to the Public Procurement Act has been made in which indigenous business will be given preference in supplying goods and services to government. It is a good idea. After all, the likelihood of indigenous business externalising foreign exchange are quite minimal. We are not saints, but Malawi is our centre of economic interest. At the same time, we ought to recognise that we are linked to the globe and need foreign investment. Getting the balance right is critical as well.
For the economist, sentiments of giving priority to certain business groups smacks of protectionism. It benefits traders or producers or their groups that are protected. In terms of trade loss, the argument remains loss in welfare of a country. Making it simple, the consumer is often ignored whenever such calls for protection are made. Protectionism raises prices, making life miserable for average households whose choices tend to be restricted. It benefits traders who enjoy some artificial monopoly.
Coming back to the notion of foreigners doing well and all of us going to town over them, I share a few recent experiences. Wanting to have my car washed at a local outlet, a worker literally says he can’t do the work because they are closed for the day. I explained that the washing will be paid and he has a chance to make an extra income. It only happens after insistence.
The same can be said about these Burundians. Their shops stay open very late and open quite early, besides being well stocked. You can literally see that the shop owners do very good market research about what households need in the suburbs as opposed to huge outlets managed by 50 point plan academics that stock shops in Rumphi with single malt whiskies or fine wines expecting to make a profit.
There are some points to indigenous-owned business. No one will come and buy from you simply because you are indigenous no matter how much protection you get from the law. The basics remain the same. Value for money and the convenience that comes with flexibility of operating hours besides the pricing of goods and services.
While we cry foul and envy our foreign colleagues, investing in the art of customer care could change the dynamics. Protectionism often breeds an element of entitlement and laziness while ignoring the basic art of selling and buying depends on who makes a decision, to buy what and from who. n