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Re-thinking our economy

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Recent news on the IMF assessment of our economic performance can only create uncertainty in the country. The resultant lack of sorely needed support from donors and confidence from foreign investors will impact on each and every one of us – from the ordinary Malawian, worrying about the cost of living, to the owners of businesses concerned with increased capital costs and the reduction in disposable income.

I trust that the government ministers entrusted with managing our economy for us strongly share this concern and will speedily and actively seek and apply innovative intervention to damage limit the economy over the next 12 months, as well as lay the foundation for our future economic security. It is easy to dwell on the negative aspects of this, and refer to higher costs for education and data services, which together will stifle innovation and increase the digital divide and probably poverty.

The hard thing to do is to accept when one had made a mistake and review current strategy urgently and with the ruthlessness required by the seriousness of the situation. I believe a number of our neighbours have done just this and I am re-visiting some of these success stories in this column.

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At least three of our African neighbours are seeing a direct economic benefit to the country from adopting innovative policies to drive their local economies for the benefit of all. Nigeria, the world’s 26th biggest economy and the most populated nation in Africa has recognized that IT will play a large part in driving it to be the within the top 20 largest economies in the world.

The ICT sector currently contributes almost 9% of GDP of the country. It is believed that by the year 2020, ICT revenues will exceed revenues from the petroleum sector in this oil producing country. Non voice usage is one of the bases for this growth. The strong deployment and widening of usage of affordable internet is seen as key to the country’s economic development as it allows easier and faster ways to communicate, transact and govern.

In Kenya, robust IT policies has led to the ICT sector contributing 12.1% to the country’s economy in 2013 and it is still growing. The telecoms space and mobile money services are the largest contributors to this growth. M-Pesa, the leading telecoms mobile money service has more than 19 million users currently.

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And once again to Rwanda, whose government has been on an admirable mission over the last few years to drive the use of technology to develop their country. Their approach in ICT is reflected in their policy statement: “Information and communication technology is a central engine to driving Rwanda’s transformation to a knowledge based economy, a fact Rwanda has acknowledged by allocating a budget to ICT – as a percentage of its GDP – that is at par with Organisation for Economic Co-operation and Development countries.” The application of this government policy has led to Rwanda being ranked the top nation amongst development countries with affordable internet, as well as being re-elected to the Council of the influential International Telecommunications Union (ITU) for a further four years. What an amazing achievement for a country that only a few years ago was decimated by civil war and genocide.

Positive results of this approach is the increase of foreign direct investment to this sector to 45% of total country inflow, in direct competition with sectors including trade, financial, mining and manufacturing. Apart from growing investment in country, the direct economic result has been that the ICT sector in 2014 started contributing more to the GDP than agriculture and mining exports combined.

Could we see a future Malawi where ICT earns the country more than our agricultural exports combined? Could we wean ourselves off the dependency on the dwindling tobacco global demand? It is time to take a long hard look at ourselves and learn from our neighbours at home.

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