By Andrew P.B. Mughogho
Evison Matafale sternly warns in his song, “Malawi”, that ufulu (independence) and mtendere (peace) do not equal to the availability of nsima. He goes further to passionately advise Malawi that her opportunity to choose a leader might be a bait. The central theme, in this song, is arguably and consequently coined in the philosophy that “independence and peace of any country are not an end in themselves; rather, a means to achieving the greater good for the people that is economic prosperity. The implication is that economies must go beyond the ordinary in order for them to attain self-sufficiency and economic development. Self-sufficiency and economic development must, therefore, not be understood in terms of availability of basic food.
In the spirit of the central theme in this great song, by a great son of the soil, we pause to look at our trade behaviour that defines our trade regime as an economy. We start from independence, 1964. Economists and trade experts generally agree that Malawi is a predominantly importing economy, importing even the most ridiculous of items, toothpicks, on the one hand. On the other hand, Malawi exports very little. There is, therefore, a huge trade deficit (negative trade balance). This negative trade balance has been there since independence, suffice to state here that between 1964 and late 1970s manufacturing contributed significantly to the country’s GDP at 8%. Back then, this was viewed by all and sundry to be a huge step towards the right direction: promoting manufacturing and industrialisation as drivers of the economy. It must be noted, however, that Malawi’s economy has been agricultural all the while (exporting raw tobacco, sugar, tea etc). The manufacturing sector dwindled significantly during the late 70s due to the global oil crisis. There was, therefore, one major trade product, tobacco.
Tobacco has been the economy’s main foreign currency earner to the extent that bad tobacco sales are almost equated to reduced forex reserves and, therefore, depreciation of the local currency. It is imperative to observe that tobacco has been the mainstay of our economy in six (6) distinct regimes: one party regime, first 10 years of democratic regime, second 8 years of democratic regime, third 2 years of democratic regime, fourth 5 years of democratic regime and the current democratic regime. It is quite astonishing and disturbing to note that we have miserably failed to graduate from exporting raw tobacco in over 57 years of self-rule. This is in sharp contrast to the prevailing thinking that the country has some of the most carefully woven and reliable policy documents with great life to propel the economy to greater heights: Vision 2020, National Export Strategy, MGDSs etc. Why is this so? Why do we have a monotonous trade regime that has blatantly refused to grow and graduate? Arguably, the economy’s trade regime failure to move forward is deeply rooted in systematic and structural monotony that has, in turn, invariably refused to speak to policy documents for direction and guidance. As a consequence, our national aspirations are but mere rhetoric.
The systematic monotony results from the rather disturbing belief that somehow comparative advantage only can propel the country to economic prosperity in this 21st century. In this context, we still believe in natural endowments. We still believe in rainfall. In the words of my supervisor, Professor Ronald Mangani, we believe that the chemical composition of rain water is different from that of the waters in our various rivers and the most majestic Lake Malawi. We would rather leave the waters in the rivers and the lake and pray for rainfall. As a result, we have limited the growing of tobacco to natural seasons only. We have miserably failed to grasp the concept of double cropping using irrigation. We literary do not know that we can grow tobacco twice a year and, therefore, somehow mitigate the problem of dwindling forex reserves.
Even tobacco double cropping is not necessarily good for a 57-year-old economy because it is well settled in economic literature that no country has ever developed by exporting raw materials. It can only be recommended for starters. The mind of the nation is entirely fixed on growing tobacco. We have failed to practically explore alternatives like growing wheat, kilombero rice on a huge scale, just lip service. Now, comparative advantage is not entirely bad. However, it becomes suicidal when there is no graduation. Developed economies graduated from comparative advantage to competitive advantage. Infact, competitive advantage can be grown. Some economies use competitive advantage to complement comparative advantage. In this regard, therefore, Malawi should have grown her competitive advantage to the extent that the economy should have been exporting tobacco related value added products. Competitive advantage takes us to structural monotony.
The structural monotony results from the failure to reform drivers of competitive advantage like immigration and education, for instance. As earlier noted, competitive advantage can be grown. For instance, technological advancement can be grown through importation and impartation to locals as well as offering educational programmes that speak to the same. This implies having a deliberate policy that allows only those foreign nationals with very rare technological skills to enter and reside in Malawi for purposes of engaging in either employment or businesses that would consequently see skills transferred to locals. As well as importation of rare technological skills, education sector must be reformed to align all the programmes offered to national aspirations of technological advancement, for instance. If we need to develop a competitive advantage in tobacco processing, we must invest in education programmes that speak to the same. We must woo investors that have the technical know-how in tobacco processing.
The state must be willing to set up industries whether private or state owned here in Malawi. After reforming the education sector to the extent that it speaks to national aspirations, the state must be willing to control brain drain. It is only after we have grown the competitive advantage that we can export value added tobacco related products. The other dimension of the structural monotony results from the prevailing trend of trading mostly in goods only. Recently, services have become a very important component of international trade. Successful services economies have strong economic bases. We have also practically refused to diversify hence maintaining the monotonous regime in exporting raw tobacco.
In growing the competitive advantage of an economy, the state must realise that basics like good road and rail infrastructure networks are a must. Good communication systems are a must. Efficient power sector is a must. The state must basically know that gains accruing to the monetary policy must speak the same language with the fiscus. These are economic fundamentals that underpin every competitive economy. In view of the foregoing, we ask, “have we been consumed in the captivity of monotonous trade regimes?” Evison Matafale would, most likely, argue that we are still in infancy where we are satisfied with the availability of nsima. Monotony must NOT be understood in the context of diversification. It must be understood in the context of backward trade theories.
The author is a student of International Trade Policy and Trade
Law.Andrew P.B. Mughogho
