In 2020, Malawi was a country on the rise, and its democracy was a beacon of hope. The year before, relentless street protests followed the results of a general election that saw the incumbent, Peter Mutharika, declared the winner. The vote, widely perceived to be rigged, was contested by the opposition. In the end, constitutional court judges ruled to reject the election outcome.
The presidential elections were held again, votes recast and the Tonse Alliance – a union of the two main opposition parties – emerged victorious. The leaders, Lazarus Chakwera of the Malawi Congress Party and Saulos Chilima of the United Transformation Movement, vowed to rid the country of its endemic corruption.
They also promised to create one million jobs. It was exactly what a citizenry struggling to get any form of employment wanted to hear. And the international community duly rewarded the efforts to root out systemic and electoral corruption.
Government Failure
First, Government failure may arise because of unanticipated consequences of a government intervention, or because an inefficient outcome is more politically feasible than a Pareto improvement to it. Government failure can be on both the demand side and the supply side.
Secondly, Governance failures tend to occur when there is a miscoordination or disjunction between various stakeholders in a governance process. Frequent consultation and seamless coordination could lead to a greater success in implementation whereas ignoring stakeholders during the process may result in a policy failure.
Conflicting objectives:
Thirdly, Governments tend to think in the short term rather than the long term therefore fail to consider long term costs / benefits. If governments control an industry, they may be more concerned with their interests than those of the public.
Therefore, theorists expect that numerous special interests will be able to successfully lobby for various inefficient policies. In public choice theory, such scenarios of inefficient government policies are referred to as government failure – a term akin to market failure from earlier theoretical welfare economics.
Fourthly, Governments provide the parameters for everyday behavior for citizens, protect them from outside interference, and often provide for their well-being and happiness.
The crowding out effect is a theory that suggests that increased government spending decreases private sector spending. This is due to the higher cost of loans and reduced income that can result when the government increases taxes or borrows by selling Treasuries to obtain more revenue for its own spending.
It explains in detail some of the major reasons for barriers in good governance, such as red-Taoism, ineffective implementation of rules and laws, exceptionally low level of awareness of rights and duties among citizens, and the lack of accountability.
Finally, Major corporate governance issues include violations should be redressed effectively. Transparency – the organization should not need to keep secrets. Outsiders should be able to observe the organization’s transactions and processes.
Note: Red-tapism is the excessiveness of laws, procedures, and rules imposed by the government, which eventually delay organizations’ work.
