When a countryâ€™s politics is wrong the economics will also be wrong. This is the key to understanding the current economic situation in Malawi.
An opposition Member Parliament (MP) argued in Parliament that the devaluation of the kwacha by 49 percent has increased the number of people living below the poverty line from 39 percent to 60 percent.
His logic is difficult to follow. Devaluation impoverishes people when it drives an economy into recession. As we know, the Malawi economy was already growing very slowly even before devaluation.
Have we not all heard that the gross domestic product (GDP) growth rate has declined from the vaunted seven or eight percent to 4.3 percent?. If indeed Malawian standards have declined, devaluation cannot be the major cause.
Even before the late President Bingu wa Mutharika passed away, donors were inviting the Malawi Government to state what nature of cushioning it wanted to have. The British Government, if I am not mistaken, has indicated it is going to assist Malawi in coping with the negative effects of devaluation.
One day, as I was walking on a street of Blantyre, a lady who had a year ago been working for one of the local commercial banks, greeted me and we stopped for a chat.
“People are complaining a lot about devaluation because it has been given a lot of publicity,” she said. “When I was working at the bank, devaluations were taking place from time to time.”
How right she was. When the kwacha was introduced as a currency, two kwachas equalled one British pound sterling. The present exchange rate is a culmination of many devaluation that have taken place in the past 40 years.
People survived the devaluations then and will stop wailing when, with extra growth in the economy, they earn extra income from labour or business. Let us not be hysterical about the devaluation. It has been resorted to as one of the tools for reviving the economy.
A representative of a media sought my views as an economist on the suggestion to sell the presidential jet. I had not been mulling much over this matter. Nevertheless, I ventured some advice which I want to repeat here.
The jet issue should be approached without prejudice. Let technocrats, including those experienced in aviation economics, give the jet a cost and benefit analysis.
They should not just look at the short run when the economy is sickly, but in the longer term as well. Opportunity costs should be compared with financial costs. MPs should make maximum use of the technical advice not only within Malawi, but elsewhere as well.
President Joyce Banda should be congratulated on her unequivocal response to President Bashirâ€™s possible visit to Malawi. It is in the interest of the Malawi nation that between our partners in development and the Sudanese president, we should choose the partners.
To avoid the inconvenience of arresting a president of an African country with which we have no quarrel, we should inform the African Union (AU) that we will not allow the plane bringing the president of Sudan to land at our airports. However, envoys of the Sudanese government will be welcome. We know which side our bread is buttered.
President Al Bashirâ€™s posturing against South Sudan has not endeared him to most African States. These States will sympathise with Malawi in this respect.
Laws are made to serve the interests of all people. When implementing a particular law would jeopardise the welfare of the majority of the citizens, then that law must not be implemented.
The Speaker of Parliament should not heed the call to declare vacant the seats of MPs who have crossed the floor.
The government would ruin the economy and welfare of the people if it spent millions of kwacha holding by-elections. Compared with such spending amounts on fertilisers, spending the money on by-elections is an exercise in prodigality.
Section 65 ought to be revisited. During the Mutharika administration, those who crossed the floor helped to stabilise the DPP government.
Mutharika went on to do a good job during the first term. Those who have crossed the floor this year are performing the same job of buttressing a government that would otherwise be poorly represented in Parliament and unable to implement its programmes.
Foreign direct investors and donors want to deal with stable and fairly durable governments. Those who say the Speaker has no alternative but to declare the seats vacant are motivated by the desire to fish in troubled waters.