1Then Elisha said, “Hear the word of the Lord. Thus says the Lord , ‘Tomorrow about this time a measure of finely-milled flour will sell for a shekel, and two measures of barley for a shekel, at the gate of Samaria.’” 2Then the royal officer on whose arm the king leaned answered the man of God and said, “If the Lord should make windows in heaven [for the rain], could this thing take place?” Elisha said, “Behold, you will see it with your own eyes, but [because you doubt] you will not eat of it.”- 2 Kings 7:1-2
The announcement this week of Ethiopian Airlines stopping local agents handing tickets to travelers on its airlines, speaks volumes about how Malawians, government, private sector, locals, and foreigners manage matters involving forex. At best the country consumes forex without creating ventures that will boost the economic reserves – Malawi needs to stop importing more than it exports. It is time to go to the drawing board and produce a policy that will put the sinking ship called Malawi, on the right course.
The Ethiopian Airlines and Kenya Airlines announcements this past week that they were cancelling Malawian agents issuing airline tickets, were both an unwelcome bombshell to Malawi travelers. Instantly three questions came flying as I read the Times Facebook report. These were 1. What, if anything, can the government through the regulatory body, Reserve Bank of Malawi (RBM) do to reverse this decision, thereby mitigating the shock on operations such as travel, especially outside Malawi? 2. Is there anything people in the diaspora could or should do to help Malawi? And Lastly, 3. Is there anything Malawians should do or stop doing to help ease the shortage of forex?
An observer in the media fraternity told me “it seems the only solution is with the IMF/GOVT talks. He said the country was expecting IMF officials next week.” Reserve Bank Governor Wilson Banda said (sic) there is no need to panic as “we are resolving the Ethiopian Airlines and Kenya Airlines issue this week.” He went on to explain that “the truth is that forex is a challenge in Malawi, however this is a short-term problem.”
Indeed, a short-term and bitter problem indeed. Meanwhile in parliament, Principal Secretary for the Department of Economic Planning, Winford Sanjala, told parliamentarians that the forex crisis “will not be solved anytime soon.” He cited that the country is “not doing well in terms of exporting.”
How did Malawi get here? Rather than blame the current government, as a historian, which we should be, so that we can have a better tomorrow, having prevented the urge to repeat past mistakes, I am always and will forever be at war with the time Malawi sold its own national (government owned) shares and companies to private investors. The majority of the investors were foreigners with little or any love for Malawi. This was in 1994.
The IMF and World Bank solution to removing government involvement in business, dubbed the privatization program, frankly, speaking was a cut to the country’s economic throat, it was suicidal, and led to no local investment boost for Malawians. It did however, lead to Malawi bleeding itself out of economic livelihoods as a host of Malawian-brewed companies were sold (regrettably to foreigners), Malawians losing jobs, and reducing the country to pick up the begging cup to donors, including the IMF and World Bank. China has been added to the group of countries the begging cup is hoisted. This latter donor, however, has meant Malawi also importing cheap, unskilled or semi-skilled labor, cheap second-hand clothing (killing in one shot the cotton growing, cloth manufacturing, and tailoring industries, and adding numbers to unskilled of Malawi labor unemployment in one proverbial kiss).
A liberalized economy has done little to help Malawians. Malawi does not own an airline, and now Malawians cannot even issue airline tickets to travelers outside the country. Hello somebody, forex is still needed here! This will mean a scramble and more forex depletion as those with large money bags will scramble to get sticky hands on the forex.
On his recent visit to the US, Malawi President Dr. Lazarus Chakwera pleaded with the diaspora to make remittances to their country. This is no small request; it is a big lifeline that has boosted the economies of countries such as the Philippines and Kenya. In the case of the Philippines, there is the beautiful report whereby the United Nations needed money to undertake a project in the Philippines; the big multilateral organization lacked the funds but was able to borrow from the forex reserves of the Philippines, and finalized the project, using the country’s own reserves. Of course, the UN paid a pretty good interest in the transaction.
It takes dedicated and long-term, foresighted resolve. There are approximately 2 million Malawians living outside the country; if every Malawian sent $100.00 home (into a local Malawian bank account – hence the word Remit), this would lead to $2.4b. in 10 years this is $24b. This chicken mathematics has been working for the Philippines and even Kenya and other countries. But it requires Malawians’ unified dedication to work toward resolving the forex drain.
Another longshot solution to forex depletion is for Malawian traders to carry Malawian products to sell in the foreign lands where they are buying their imports. This helps in dousing the one-way only trade route. This would help reduce the lopsided large imports versus small meniscal export graph. Malawi should increase its export portfolio, especially in the processed goods such as sugar, material, tea, coffee, cigarettes (not just tobacco), and many other products.
Lastly, the Minister of Tourism needs to scout the tourist shelters (some are built as private homes, but play host for foreigners that come empty-handed, after paying their host foreign bank accounts). Tourism only brings in the added attraction of forex if all Malawi’s tourists bring their forex into the country. If private homes (mostly owned by Asians, are getting the forex deposited in foreign banks, then the tourism numbers reported by the tourism ministry are giving the country a false climax.
Malawi as a nation needs to focus on re-inventing forex-boosting ventures. Malawi as a nation needs to bring back national companies. We did it before, we can do it again, and through these national companies and other strict fiscal measures, the country can stop relying on outsiders to provide its solution, stop the country from begging, and most of all, stop foreign-owned companies from issuing debasing announcements as those by ET and KQ.
In Malawi 1975, proudly reported having balanced its balance of payments. That was many years ago, but it can happen again, although it will require strict, coordinated, unified, and disciplined controls of country earnings and spending. There needs to be a hawk-eyed control of the forex drainers. There needs to be less reliance on the IMF or China and others. Historically both have given short-term feel-good solutions. Both have been kicking Malawi’s butt for far too long. Time to cut this umbilical cord!