The Malawi Disaster

Caitlin Williscroft

Malawi is on the brink. Fuel is rarely available. There is a serious shortage of forex. Malawi’s leading man, President Bingu wa Mutharika, has lavish taste for red carpets, luxurious holidays, mansions and authoritarianism. Yet the World Bank claims that Malawi is one of the few countries in the world on track to achieve most of the Millennium Development Goals (MDGs) by 2015.

The World Bank’s Take on the “Warm Heart of Africa”.

The World Bank recently revealed that “four countries: Cape Verde, Ethiopia, Ghana, and Malawi will likely achieve most of the Millennium Development Goals by 2015 or soon thereafter.” The World Bank cited strong progress on various social indicators to support their claims that four African countries are en route to achieve the MDGs. From the World Bank’s perspective, Malawi is on track to achieve the MDGs.

Sustained economic growth (around 7% annually) and stabilizing food security and rates of HIV/AIDS, in addition to the of reduction of child mortality, are all indicators that this small, landlocked country will hit the finish line in 2015.

Upon further analysis, the World Bank’s forecast may be a tad optimistic for Malawi. Without significant political and economic reform, Malawi risks derailing and pushing the MDGs even further out of reach.

The Rise and Fall of Mutharika (and Donors).

Malawi’s President Bingu kick-started his Presidential career in 2004. During his first term he was highly celebrated, mainly because of his Farm Input Subsidy Programme (FISP) that cut the costs of maize fertilizer and seeds for farmers. FISP enabled short-term food security, putting more food on the plates of Malawians than ever before. Unsurprisingly, he won a landslide re-election in 2009 and was hailed for unifying an electorate notorious for regionalism.

Fast forward to 2011: Malawi’s governance is on a decline. In a diplomatic spat, Bingu expelled British Ambassador Fergus Cochrane-Dyet after a leaked cable exposed that Cochrane described Bingu “as autocratic and intolerant of criticism.”  Ultimately, the severing of diplomatic ties ended in DFID cutting general budgetary support indefinitely.

Nation-wide demonstrations were held on July 20th, protesting poor economic and political governance. Nineteen people died at the hands of the police and military. Bingu responded to his opposition: “I will smoke you out.”

Donors responded by issuing statements of condemnation, calling for investigation of protest-related deaths. The U.S. responded more radically by freezing an energy project worth $350 million.

The fact that donors account for approximately 40% to Malawi’s annual budget, 20% coming directly from Britain, puts Malawi’s diplomatic isolation into a troubling context.

A Crumbling Economy.

Beyond political troubles, Malawi’s economy is collapsing. When a fuel tanker rolls into a fuel station, Malawians pay $2.30 for petrol and $2.10 for diesel. You’ll have to exercise patience while cueing for 4-10 hours. Chronic fuel shortages result in fleets of NGOs and businesses being grounded when they cannot pay black market prices or make it to Mozambique to fill up.

Foreign exchange is also scarce. The Reserve Bank of Malawi has tight rules on forex due to scarcity, limiting the availability of USD through legal routes. Large-scale businesses and even telecom networks do not have dollars to pay for supplies necessary for the execution of their services. Offshore accounts and reserves are drying up.  As a result, a vibrant black market has emerged where complex networks exist to trade forex, as well as to bring forex in and out of the country.

What Does this Mean for the MDGs?

The World Bank may have it wrong in their analysis of Malawi. Current political trends and strains on Malawi’s economy are sidelining progress on the MDGs.

It will be incredibly difficult, if not impossible for Malawi to achieve health related MDGs (MDG  # 4 Reduce Child Mortality, MDG # 5 Improve Maternal Health and MDG # 6 Combat HIV/AIDS, Malaria and Other Diseases) by 2015 without donor assistance.  If donors aren’t providing general budgetary support for Malawi to implement health strategies and programs, then health programs will remain underfunded and unable to meet the health needs of the population.

A forex shortage also hits the health sector exponentially hard. Medical suppliers will not accept payment in Malawi Kwacha, meaning that there is often inadequate forex to buy drugs like morphine.  Hospitals face chronic shortages of supplies and medication, limiting the effectiveness of programs tackling public health issues of HIV/AIDS and child/maternal mortality.

Perhaps the most fundamental of all MDGs is reducing extreme poverty and hunger. The withdrawal of Britain’s budgetary support and Malawi’s zero-deficit budget has resulted in increasing prices for most commodities. Over the past 6 months the price of almost all commodities has risen. Rising fuel prices has resulted in increased tariffs for local transportation. Bread that used to cost 100 Malawi Kwacha is now 160-200 Malawi Kwacha. Higher costs for maize seeds risks reigniting previous food shortages for households in Malawi.

Wages remain unchanged despite rising prices, meaning that Malawians are struggling more than ever to survive on a daily basis. Considering an estimated 75% or Malawians live on a dollar a day, Bingu’s zero deficit budget and isolation of donors increases financial strain on Malawian households and plunges more people into extreme poverty.

What’s next?

The ruling party is facing growing opposition among political parties and civil society. On July 20th, civil society presented Malawi’s President  a lengthy petition calling for reforms. Some want Bingu to step down, others want him to step up to the plate.

Bingu has reopened dialogue with Britain through apologizing for the expulsion of Cochrane-Dyet, recognizing the importance of Britain’s general budgetary support. Bingu ought to continue this trend by rebuilding relations with neighboring countries like Mozambique and Zambia. Rebuilding diplomatic ties, improving governance and transforming the economy will improve Malawi’s chances of achieving the MDGs.

The President should also return to Malawi as he is allegedly “missing with $500 000 USD” according to unconfirmed reports since appearing at a conference in Australia.