Suicidal optimism or plain lies?

Tom Sangala July 5, 2016

33 3 minutes read

For those who care to remember will recall that in The Daily Times of January 8, 2016 there was an article entitled “RBM targets inflation at 14 percent by June”. Some of us argued that the projection was flawed because by that time it was evident that the agricultural production was going to be lower than normal and hence by June food prices will go up and since Malawi’s inflation is dominated by food inflations this assertion was simply not possible. The reality is that in May 2016, inflation in Malawi stood at 21.5 percent and prices have continued to increase and hence there is no way inflation will get to 14 percent in June 2016. I do not believe that the technocrats at the RBM were not aware of this but they simply decided to lie to the nation and the authorities.

In a similar vein the Minister of Finance, Goodall Gondwe, told the nation as quoted in The Daily Times of January 6, 2016 in an article called “Economy to Stabilise by May”. Again, this is July and the economy is anything but stabilised. That was despite all the indications showing that this was just plain talking and that it was far from the reality.

Now we are being told that the Malawi economy is going to grow by 5.1 percent in 2016/2017, this is a very unfortunate statement since everyone who knows the Malawi economy understands that it is driven by agricultural production and it is beyond comprehension that this will ever happen. I understand that as a nation we need to be optimistic, but this suicidal optimism must stop. I argued in this column on 14 June 2016, that this is completely impossible in an entry titled A little honesty would help!. Now the World Bank and the IMF have said categorically that the economy will not grow beyond three percent.

My fear is that it is this type of suicidal optimism that guide the type of measures the authorities put in place to solve the country’s economic problems. No wonder the measures seem to fail more often than they succeed. How can such measures help resuscitate the sick economy and put it on a sustainable growth path if they are based on wrong premises? Is it a surprise then that Malawi’s ailing economy has been under IMF “treatment” for too long? Similar “patients” in the region have since recovered, checked out of the “IMF hospital” and are now on Policy Support Instrument, as they do not want or need IMF financial support. But this patient has been on IMF treatment since mid-1980s. Why has this patient been confined to the sick-bed for so long? It’s not that the doctors have been prescribing wrong medicine for the sick patient, far from it. Oftentimes, the patient has not been adhering to the doctors’ prescription due to this type of suicidal optimism.

Obviously, if the government overestimates its growth projections, it will inevitably overestimate its revenue projections. It will in turn plan to spend the money it never has. At the end of the year, the country will continue to run deficits on wrong things. Soon it will go to the market to borrow to meet the gaps in expenditure leading to high interest rates, which hurt all of us. It is my belief that some of these folks know the truth, are educated enough to know the truth but simply mask their lies in suicidal optimism. What is at play is the influence of special interests, where government operations provide substantial benefits to a few while imposing costs on many. It is a case of over-borrowing, over-spending, and over-stealing.

Is it not time for a serious reality check? As technocrats, we need to start asking ourselves the hard questions like where are we? Where have we come from? Why are we passing through such a difficult economic period? Where are we going? How do we intend to get there? When? Honest answers to these questions can only come from a system that rewards merit and effort, rather than kinship ties and ethnicity. Government, in particular, has a big role to play in resuscitating the sick economy and putting it on a sustainable and equitable growth path. The first step is to stop this suicidal optimism and setting unrealistic targets. Let us use data and statistics to guide our decisions and not to score political points or lie to save our jobs. When that happens and if that happens, then we can then deploy our energies towards building our economy, an economy based on factual diagnosis of the problems and a realistic level of optimism and not lies!