The case study of the sale of Malawi Railways (MR) to Central East Africa Railways (Cear) in 1999 which till now rural rail transport in Malawi’s central region remain undeveloped which has worsened communities transportation of goods and services
Economic growth is the key to any country’s development. Thus, sustainable increase in public and private sectors’ capital formation is vital for economic prowess through reasonable strategies in support of its implementation.
This is the reason privatization, the economic concept, is adopted in many developing countries including Malawi for fiscal growth and development. Thus, privatization is the economic notion which assets or provides services transferred from the public to the private sector
“Through, privatization, the government is taking a new approach; providing an opportunity to the private sector, both to take over the operation of existing enterprises and finance new infrastructure assets”, justified, Maziko Sauti Phiri, the former Executive Director of Privatization Commission (PC) currently called Public Private Partnership Commission (PPPC) in the PC’s 2004 Annual Report.
Malawi initially established state-owned enterprises (SOEs) in the 1960s and 1970s to create employment and ensure that its citizen have access to goods and services at affordable prices and to correct market failures.
SOEs such as Water Boards, Electricity Supply Corporation of Malawi (ESCOM), Rail, bus companies and others were created to provide services at subsidized rates to the public hence heavily dependable labour force’s source of employment for the country’s economic progress.
Potential drawbacks of running SOEs in 1990 prompted the Malawi government to introduce liberation policies with sponsorship from the International Monetary Fund (IMF) and World Bank to fortify the country’s economy through rational strategies for better performance.
Privatization is advocated to boost completion and reduce monopoly in the economy and raises revenues for the drain of public enterprises on the government’s national budget.
But, if economic ambitions are good servants, they are bad masters, says R.H.Tawney in his book titled, “Religion and Rise of Capital”. No, wonder, critics have described privatization as an evil economic concept from its responsibilities since the private sector controls the economy.
“Most essential entities are run by private sector that monopolizes the market hence the populace aren’t served better”, observes Hastings Kafundu, a Lilongwe-based economist.
Since the inception of the privatization concept a decade ago, 64 out of 98 SOEs have been sold to the private sector from within and abroad where as six percent of staff have been laid off through mass retrenchment.
“The retrenchment packages were just pain-killers which made a little difference to the ex-workers. Private companies always recover their full operation cost from consumers which result in exorbitant prices pegged on products and services”, notes Kafundu.
For instance, the selling of Malawi Railways (MR)-the then government-owned and the only rail transport operator-to a consortium of international investors trading as Central East African Railways (Cea) through a 20-year concession in 1999 (such that last year, 2014 the agreement was extended to 40 year) left hundreds jobless, a move that was unhealthy to the economy.
“The experience of losing of a job is pathetic that your whole life changes for the worse”, says Traditional Authority Ganya of Ntcheu district upon sympathizing with ex-employees of Malawi Railways Limited.
Apart from unemployment levels through privatization of MR, transportation of agricultural produces remain affected as the rail transport has been developed in the central part of Malawi which connects with Zambia leaving the rural masses dismay on how to transport their agricultural products to markets as before.
Since 1999, central region, railway transportation was terminated for passenger services as a routes served by Malawi Railways Limited such as Sharpe Valley in Ntcheu, Mtakataka in Dedza, Chipoka in Salima, Kanengo, in Lilongwe and Namitete in Mchinji and other are no longer served.
“Proceeds realized from the concession of MR Didnt tricle down to the poor man or woman in the village. This is a rude awakening that the reforms aren’t uplifting certain quarters which used to benefit a lot from the bi investment the country made through external financing of construction like the Lilongwe-Mchinji railway line with Canadian funds”, outlines Kafundu.
Besides the areas being linked to two models of transport-road and water-MR’s commuters helped the local smallholder farmers to purchase cheaper farm inputs and basic needs from urban areas of Salima and Lilongwe.
Traditional Authority Kachindamoto of Dedza district lamented that she cannot afford to transport three bags of maize to either Salima or Lilongwe using a minibus due to the insufficient space and higher fares compared to what the passenger train used to offer.
Similarly, the use of minibuses, Lorries and other means of road transport to serve passengers and goods are prone to fatal accidents on May roads of Malawi unlike the train services.
Consequently, Center for Social Concern (CFSC), a faith-based organization in Lilongwe, recently, carried the survey to assess the impact privatization has brought to Malawians’ social welfare since Parliament acted it Act in 1996.
“Whether the intention of the program might be, privatization has brought more harm than good to local Malawians and Malawi’s fragile economy where as 60 percent of its 15 million population lives in absolute poverty”, says the report.
CFSC’s swot analysis continues revealing that many concessionaires are unable to provide social entitlements to their workers.
The study revealed that most privatized enterprises do not provide better packages to their staff. Many of them according to the survey are silent on loans, medical schemes, death gratuity, sick leave and house allowances while in some case salaries are very low.
On the privatization of MR to Cear, the study says the railway system in Malawi should revert to government as the only essential entity responsible for provision of social benefits to its citizens.
“Private operators are profit oriented since many cheap services were terminated. For example, the termination of passenger services after the concession of MR (1994) to Cear is denying people of, Mtakataka, Chipoka, Salima, Lilongwe, Mchinji their rights to good services and cheap transport for their agricultural produces”, says the report.
CFSC’s report suggests that there should be an open discussions where people can talk gains and losses from privatization.
