Diesel queues, forex searches, private jets

Probably for the first time in my 15 months here I feel compelled to write something that lacks a positive angle.

The picture shows trucks and cars queuing for diesel in a Blantyre station. This is now a usual occurrence since diesel has been in short supply for a month now. Increasingly less trucks on the road are having knock-on effects as fertiliser and maize are not getting distributed for the key planting season. The rains have started and Malawi is buzzing with people planting (a survey suggests 90% of Malawians grow the majority of their own food!)

Many key industrial and capital goods items are no longer available as the diesel shortage is linked to a foreign exchange shortage so Malawi is unable to service the cost of large imports. This story was not helped by the news that Bingu wa Mutharika, the President, has apparently bought a jet using at least the value of one month of normal foreign inputs (some say more).

This may be scaremongering but there is undeniably a bit of gloss coming off the second term of the President, especially since there are so few variables which have changed in the economy here. The tobacco harvest was fine, prices were lower but this was known about for months, so how do you reach such a crisis point?

The other aspect is that, as usual, when you wonder how people are functioning who trade overseas and need diesel in large quantities you are told the same thing: “it’s about who you know.” Again, I fear that corruption means certain people do function in this crisis but at a cost. It should not have to be like this: it is hard to move forward when back-handers and influence remain the key ways to ‘do business’ here.

Many argue that Malawi is too vulnerable to shocks to open the economy fully and let the currency respond properly to market forces but I would argue that instead of a one-off transitional period we are prone to these constant bouts of shortage and disarray, and I am not convinced that they lead to any resolution.

Malawians are great at coping but I think at times that the authorities abuse this skill.

Mo Ibrahim, Africa's most successful entrepreneur

I was fortunate last week to attend a conference organized by an African who has really transcended the condition of this continent and thrived in business. This was Mo Ibrahim, the founder of Celltel, Africa’s largest mobile phone network, which has eventually been bought by an Arabic company and is now branded as Zain. I think he is sub-Saharan Africa’s only billionaire outside South Africa (he is Sudanese).

He now puts his vast wealth behind finding solutions, commercial and governance, to the Africa question, summarized as why such a resource rich continent with only 53 countries and a population smaller than India cannot become an economic powerhouse.

This is a big question and my blog or anyone else’s is certainly not going to provide the answers but the forum deals with governance, i.e. who is in charge of driving this agenda and what areas do they need to champion.

The forum covered three key areas: Climate change, which although not caused by Africa is having a huge impact on the largely agrarian economies; Economic Unions, why Africa has not followed the strong example of the EU or ASEAN (Asian Economic Union) and finally Agricultural development. Malawi, and Africa more generally, remain a land of farmers and finding ways to improve their livelihoods is key to the economic transition ahead.

The forums were attended by a diverse group of people from leaders, the President of Tanzania , diplomats, development workers, UN/World bank players, financiers (George Soros) and more normal players in society e.g. teachers, farmers and employees of the MicroLoan Foundation!

We were left with two strong messages: First, the challenges ahead are hard, will need huge commitment and better leadership than we currently have here and much more accountability by all parts of society. Second, and most importantly, the potential is really huge. The example of Mo Ibrahim is testament to this - a man who made his fortune by betting that African’s could afford and would harness mobile phone technology and miss out decades of other innovations.

I think capital remains key to unlocking this growth and the constant mention of grass-roots finance at the conference convinced me that ‘microfinance’ is as important as any other ingredient if the next decade/century is going to be different from history.

The Mo Ibrahim foundation also scores African countries on objective measures of governance and is a great resource for a guide to how countries like Malawi measure up versus their peers. Check it out on www.moibrahimfoundation.org

Summoned by the Chief

We live next to the village of Mbame, a small village of farmers which is famous ‘at least locally’ for having a tree that David Livingstone took shelter under on his journey to the South of Malawi in the 1850s.

The chief in Mbame is Chief Banale and he looks after the affairs and squabbles of a few hundred people. The chief stills plays a huge role in society here, acting as a reference for job applications, bank applications etc. and is seen as having power even beyond the legal system in local problems and issues.

The message came via one of our local friends that we must see the chief on Sunday after his Indaba. Indaba is like an AGM for the chief’s clan and when we arrived they were just finishing off.

The Indaba was about the five year plan for the village, which the chief wanted to share with us. Chief Banale has extensive experience of Malawi through travels with his previous employer and has recently retired from a senior job with the Malawian electricity company. He wants his subjects to plan for the future, and the message is one of creating surplus in this growing season which can be used as capital for more long-standing projects.

The village has worked out how to irrigate the land from a nearby water source and the excess production will be sold and re-invested in business ideas that villagers bring forward. The chief wants everyone to forego luxuries today (an easy lure from a surplus crop) and think about businesses such as livestock and furniture production that can create something sustainable for the community. The message for the youngsters is they must do their part and help out with businesses in their free time, and focus on excelling in their studies at school.

It is a wonderful concept and one which offers a beacon of hope for Malawi: intervention by local groups, driven by clear vision and strong leadership without conditionalities so often imparted by foreign NGOs. Let’s hope the planting season is good to them, a crucial aspect of life in Malawi where 95% of people grow some or all of their own basic staple food. I will update you as the project progresses.

Zambia progress report...

Made my second visit to our new office in Chipata, Zambia this week and can report on some progress we have made.

When I visited earlier this year it was an office and some staff. Now it is 9 loan groups , around 150 beneficiaries, and plans to grow before the rainy season starts at the end of the year. The Eastern province is very farming-orientated, and many of our clients will devote time to their crop from October onwards so their businesses often then take a back seat for a few months.

The Loan Officer, Samuel Banda (who was previously a community social worker), took me to visit a mixture of rural and urban groups. Urban groups are new for us, but relate to the fact that Zambia pushed urbanization post independence and ‘compounds’ emerged when populations moved from the rural areas into the town area.

The needs and livelihoods of clients are very similar to those of true rural dwellers; geography does not change their way of life and the need for the provision of credit as a building block to their economic and social development.

All the groups I saw shared the key attribute I always see in Malawi: ENTHUSIASM. These are people who want more and are willing to work hard to get it. Lots of success stories abound already, with businesses boosted by more capital and the spin off benefits of improved schooling for kids, home improvements and even the odd radio and bicycle!

I have to say that from a personal perspective it is great seeing our operation working in a new country, particularly having been involved in some of the initial set-up dramas. Worth it so far …!

Inauguration Day

Another five years for Dr. Bingu wa Mutharika, a second term for the president. The faces of Malawians definitely told a story, the jubilation in the streets of Blantyre is something just short of Washington when Barack Obama was sworn in.

The impression I get from a cross section of Malawians from wealthy business men, church leaders, housewives to gardeners and policemen is that everyone has seen progress in his first five years and they feel he deserves longer. Economic growth as a whole was 6.6% during his last term, four times higher than the previous five years and according to government statistics the number of people under the magic $1 a day poverty measure is now 40% (Dec 2008) from 52% in 2004.

The opposition party was an alliance of the party that ruled under the one party state (Malawi Congress Party) and the one that followed them in 1994 (United Democratic Front)and their leader John Tembo appeared to suffer the wrath of the electorate for not being good enough in either guise.

Democracy is still in its infancy in Malawi, only 15 years have passed since the first multi party elections but already there are good signs from this election that Malawians know what they want and what they are voting for, the regional bias has not been seen in this election, the power of local celebrity has seen limited success and the parliamentary candidates who tend to ‘buy’ the electorate with hand outs are generally losing out to those who promise to improve the constituency they stand for.

Bingu seems to offer hope to a country that deserves better than their lot as the poorest country in the world excluding those where civil wars or mass conflicts are currently taking place. Let us hope the president avoids the lure of other African leaders with long presidential terms and improves the country over his own personal situation. Rob Mugabe who was present today at the ceremony as one of our neighbouring leaders serves as example of the pitfalls.

The party is likely to last for a while but for the president and his new team, the challenges are clear and the hard work must begin again.

Moving Home

Last week we moved house, not out of choice. During March, we were broken into three times at our home in central Blantyre. In Malawian circles these were petty incidents: outside taps stolen, part of the guest house toilet and some of the security razor wire pinched (the irony of thieves stealing an anti theft wire was not lost on us).

Unfortunately it appears urban crime rises with the seasons and we are now in the barren period for many Malawians where the maize stores are low, the harvest is not yet ready and generally times are tough.

I think this highlights the gaps between the 'haves' and 'have-nots' and, although we are merely volunteers here, we fit firmly in the ‘have' camp. The crime is endemic of this and has forced us to move somewhere we feel safer, out of town living on a well secured farm guest house.

This is the age old problem of being an outsider, trying to fit in with a community but finding it difficult, and I suppose with slight guilt retreating. It also highlights the extremes of urban life here where contrasts between rich and poor are blatant and high populations put strains on society.

Anyway we will start again from our new home and focus on the main reason we are here: our work (my wife works as a Physiotherapist in two Blantyre hospitals, Cure and Queen Elizabeth’s) and trying to make sure we do something additive here, not reinforce the current problems.

As soon as we moved our dogs out of the yard, the monkeys came by to wave us off (top photo). This is a photo of the sunset from our new house ... good start!

2,3,5,7,5,6,2

Not some Enigma code to crack but something that was written on my recent drivers’ licence application in Malawi

The Road traffic department here prides itself on the new systems paid for by donors which allow electronic finger print and photograph data for all drivers in Malawi . The only problem is that the number sequence represented the room numbers which I was expected to use in order to finish my application. By the time I returned to Room 2 after a four hour trip via Rooms, 3, 5, 7, 5 and 6 (not including when they closed for lunch in the middle of room 5) I realised Malawi has a problem.

Development experts always talk about the need to create a framework for outside investment and a culture that encourages capital and people to ‘do business’. If it takes four hours to get a drivers licence, how long do you think it takes to get a business permit or a loan or planning permission for a project?

Answer: a very long time. With experience in Zambia and South Africa while travelling this week , I think Malawi is still way behind in the ease of ‘doing business’ stakes. This is something which has to be fixed if scarce foreign capital is going to be attracted here.

Interestingly, this running order is backed up empirically by the world bank who publish an index of ease of doing business in a country. Malawi ranks at 134th out of a 181 countries measure, an indication of just how much remains to be done here.