I refer to your article in Cut the Chaff. Going by the mechanisms of money supply in an economy, interest is only a theoretical concept. Nevertheless, it is more important as a monetary policy issue when managed outside the realms of politics.

But it is not my intention to go into principles of interest per se. For me, too much is at stake. The money market in which we all have an interest has already been through extremes of circumstances towards breaking point.

In the first place, right now, it is a welcome trend to have a drop in the interest rate that, hopefully, should translate to positive business by the big players, which include the commercial banks.

At my level though, as an individual, it is the spending power and that demand for cash following that drop in cost of borrowing that captivates my imagination. That does not make me an influential player given that my undertakings are insignificant and the scope of impact very small.

In the bigger picture , the many individuals out there are too deep into katapila (usury)—the black market of lending despite the punitive repayment regimes applying.

The individuals are ‘happy’ with informal business. Beyond katapila is unregistered village banking. Few people now keep cash under the pillow. Recently, some tried to use car boots for safe keeping with disastrous results. Anyway for once, let us remove gambling and speculation out of it to see what really lies ahead.

Today, personal business is in vogue and against so many odds it is thriving. A few friends, for example, are still crossing the border not just for procuring goods for resale, but fitting into the supply chain gap left by the consortium or conglomerate traders.

This happens in the face of restrictive forex and expensive landed cost, including by air. If this trade is left to flourish there will be an increase in general demand, including for air tickets.

Village banking is succeeding under its own devices and in part as a result of this kind of business. How would such a demand be sustained? Perhaps by protection of the consumer and regulating or legitimiSing that trade.

If the drop in interest ends up translating into attracting that investor and supplier offering affordable iron sheets, cement, soaps and detergents, there can be no cause to doubt the efficacy of it.

There are one or two sectors of the economy with the dynamism that cannot be diverted. Examples include agriculture and tourism where a range of products and crops are possible just depending on rain or simply supply of water.

The process of adding value has been off and on, but is vital for taking this economy to the next level. In the case of agriculture, thankfully, there is still water available.

The wastage in times of plenty could be avoided. This country could do better with fewer cars so that the needed forex saved from that side could be chanelled to the essentials.

People should brace for public transport as a cheaper alternative of travelling. We need a face lift in tourism , grow more tees and improve infrastructure, including upgrading roads to attract travellers.

A lot of what I am saying does not have much to do directly with the Reserve Bank of Malawi (RBM).

It has to do with the wealth of this economy in the natural resources, precious stones and money. So ordinarily there should be some connection in the business of one sector to the goings on elsewhere—some sort of interdependency syndrome.

The State needs money to provide essential services and supplies without which we all become endangered species.

What this boils down to is that much of the clandestine activities such as charcoal burning and logging that lead to unsustainable deforestation must stop. Growing our own food should be encouraged and be done efficiently—graduating from the hoe and using experts with technical know-how. There is no time for anyone to sit back. The formal sector of the economy is stalling judging by the companies shrinking their activities and in a few cases folding up altogether.

The citizen cannot be made into a pawn to pay a high price perpetually for bad policies while there is no light at the end of the tunnel. It is time we used experts. Malawi has professionals whose Western education has benefited other countries more than home, which gives us a head start in the area of research and education sector.

Finally even with an interest drop of as much as the 2.5 percent, it leaves the base rate on the high side. This economy is not the only one with high interest rate worldwide. So, it is worth considering other ways or factors in which under-performing sectors can be strengthened to stabilise general demand.

We must be prepared to take a closer look at, say, into the fishing, perhaps, mining industry as one of the ways to moving forward.

Point taken that the drop in interest might serve as a conduit for more money in the economy as long as it is in a dosage enough to make the currency create a positive exchange rate. But overall, informed decisions pay. No betting or gambling for me.

From Anderson Msosa

Thank you Mr Msosa for your thoughts. They are very constructive.

Ephraim.