“Do not dwell in the past,
do not dream of the future,
concentrate the mind
on the present moment”
If truth be told, these are not good days to be Joyce Banda. Granted, Forbes Magazine has just ranked her the 47th most powerful woman in the world, up there in the stars with the likes of Angela Merkels of this world.
In fact she is Africa’s most powerful woman, beating the continent’s first female president, Ellen Johnston Sirleaf, if the American magazine is to be believed.
But, locally, if truth be told, these are not good days to be Joyce Banda. To quote Chinua Achebe’s big book, the centre cannot hold, everything is crumbling, money is being plundered at Capital Hill, her trusted boys and girls are being implicated right, left and centre, everyone is helping themselves to handfuls of cash like there is no gate-keeper. It is an open sesame!
This week, however, the Muckraker leaves the page to a reader, a muckraker, who – in fact – thinks President Joyce Banda has one leadership strength that her two other multi-party era predecessors, Bakili Muluzi and Bingu wa Mutharika, lacked.
Joyce Banda’s presidency mirrors lasting legacies of great leaders such as Britain’s Margaret Thatcher. Remember how the ‘Iron Lady’s unpopular fight against unreasonable labour unionism as well as her privatisation crusade within the free-market framework transformed the British economy and put it on a sustainable path until Tony Blair and Gordon Brown wrecked it?
India’s Mahatma Ghandi, America’s Abraham Lincoln, as well as civil rights leader Martin Luther King Jnr. and South Africa’s Nelson Mandela are some of the few other really transformational figures that graced the face of the earth.
If you read these leaders’ biographies, and any literature about them, there is one thing in common: They all took a long view and did not worry much about the short-term political consequences they could personally suffer both in terms of popularity and at the ballot.
That is what President Banda has demonstrated — she does not calculate political ramifications in her decision-making process, but, rather, she computes what is good for the country and individual citizens in the long haul…and damn the consequences.
When President Banda announced her free-market governing platform in May 2012, a lot of commentators, and opinion leaders, said that was both political and economic suicide ostensibly because the move would hurt potential voters.
At the time, the Mutharika regime had bequeathed us a country without foreign currency, yet the local unit remained ‘stable’ officially, but upwardly volatile on the black market — the only place where people, including well-established businesses, could find hard currency.
The country was living a big fat lie, a double life on all accounts. Since there was no forex, the country could not import basic goods. As a result, there was no fuel, forcing people to spend up to three days on a filling station, abandoning their work and families.
The twin problems of fuel and forex shortages hurt the economy real bad, only growing by an anaemic 1.8 percent in 2012, a slowdown from another slackened expansion of 3.8 percent registered in 2011 as shortages of fuel and forex devastated the agriculture sector, manufacturing, wholesale and retail trade.
This dire economic environment forced companies to either downsize or close, thereby worsening the unemployment levels and hitting individual incomes hard.
The solutions to these problems were there for all to see: liberalise the economy by freeing actors from the tight grip of stringent price controls that were suffocating them. Stop pretending that the kwacha is strong while it is rotten inside and worth very little.
Indeed, the solution to the foreign currency conundrum was clear: Get real and let the unit stand on its own and measure up.
None of these things were done because the leadership at the time was worried about the political backlash.
And so the cancer spread, until President Banda took the reins of power and did the needful convinced that it was the right path to take to achieve macro-economic balance and rescue the economy dangling on a thread from a free-fall.
Despite the fear-mongering that was there at the time, President Banda ploughed ahead and her tough economic reforms kicked in —austerity budget, devaluation and floatation of the kwacha, re-introduction of the automatic pricing mechanism on fuel, deregulation of water and electricity tariffs.
This was painful medicine at first, but necessary as it has now been proved as the economy heals and everything — from fuel to forex —is being taken for granted again.
As the kwacha gave in to free-market principles and plunged, goods and services started rising sharply. Fuel prices went north and so did inflation.
While everyone was panicking at the short-term pain of the surgery that had to be administered to heal the economy of the cancerous wound that was left for too long, President Banda was only interested with the outcome 12 months later — her consistent policy message being that things will get worse before they get better.
She was right. Within two months, fuel queues disappeared from filling stations and it is now taken for granted that once you pull up at a service station, your tank is quickly filled up without bribing an attendant.
What followed was even more shocking to critics, but not to President Banda who knew exactly what would be the results of her actions: Fuel prices actually started going down!
And not only did the kwacha stabilise, it appreciated by as much as 25 percent. Headline inflation, which reached 37.9 percent high in February 2013 on the back of a devaluation and subsequent change in the exchange rate management regime to a freely floating currency, has been falling steadily, standing at 21.7 percent in September.
Granted, the country is now in the lean forex period that would last up to March 2014; hence, the kwacha may marginally depreciate and downward inflation momentum could be derailed but, according to National Bank of Malawi in its latest (October 2013) Economic newsletter, “the rate of [price] increase is expected to be modest compared to 2012…This is a result of stickiness of prices as most firms already adjusted pricing and wages when the kwacha peaked against the US dollar at K420 in April 2013, but did not reduce prices when the currency subsequently strengthened.”
The bank also notes that the effect on inflation will not be much.
Growth in real Gross Domestic Product (GDP) is expected to re-bound from 1.8 percent in 2012 to five percent in 2013 and 6.1 percent in 2014.
All this demonstrates that the Malawi economy has not just stabilised over the past 18 months, but it is growing strongly again, thanks to President Banda’s bold policy decisions that may have been painful at first, but have now put the country on a sound and sustainable economic footing for the benefit of everyone.