By Christopher Guta, PhD:
My thoughts on Malawi’s development last week, which ended with an opinion on the impact of China on Malawi, were, in essence, a postulation that Malawi’s trade with China, to the extent that it affects progress regarding manufacturing, would negatively impact the rate at which Malawi could develop.
I took time in the week to ground my postulation on the basis of what is already known regarding Malawi-China trade relations. I found two sources of evidence supporting my postulation. The first was a 2014 academic paper by Theodora Thindwa, then staff associate at Mzuzu University, titled: China-Malawi Relations: An Analysis of Trade Patterns and Development Implications. Her conclusion, based on trade and investment data, was that, on balance, Malawi was on the losing end of the relationship. On the trade front, China had a significant trade balance over Malawi. The reason cited for this was that while China was exporting to Malawi manufactured goods, Malawi’s exports to China were agro-based, often low value-added goods. Officials from the Ministry of Industry explained this situation as arising from supply constraints and low quality of Malawi’s products. On the investment side, Thindwa demonstrated, by way of example, that Malawi’s productive capacity for leather shoes was destroyed by imports of shoes from China and exports of raw hides to China.
The second source of evidence was an article by Richard Chirombo of Blantyre Newspapers Limited published under the Africa-China Reporting Project of the University of the Witwatersrand, South Africa titled: Has Malawi become a Dumping Ground for Chinese Products? A relevant observation in the article was that while in the short term Malawi could accrue benefits from the China-Malawi trade relations, there was likelihood that they would ‘inhibit the growth of the infant industries (in Malawi), thereby negatively affecting the levels of employment, production and exports’ –especially ‘if Malawi continues to import at an increasing rate commodities from mainland China, particularly the consumer goods which can locally be produced using locally available resources…’.
In 2009, I met Professor Shulin Guwho who is affiliated with the Institute of Policy and Management of the Chinese Academy of Sciences. She is an influential scholar writing on innovation and development and science and technology system reform in China among other subjects. Inspired by her thoughts on managing change and complexity in economic development, I asked her in private the question: Why is China not active in supporting development of the technological and production capability of African countries such as Malawi? Her answer was to the effect that: if African countries are to develop their technological and productive capability, they will have to do that on their own.
Indeed, it will require purposeful and deliberate steps if Malawi is to develop further its technological and production capability in fields that would enable the country to enhance its benefits from the China-Malawi relationship in the economic development space. But a journey of a thousand kilometres starts with the first step. My first step on this journey would be to foster what Bright Simons, a member of the Study Group on Technology, Comparative Advantage and Development of the Centre for Global Development, calls the Alibaba Industrialisation model. Simons claims that this model is taking root in Ghana, Uganda, Senegal and Ivory Coast. At the centre of the Alibaba Industrialisation model are small and medium-sized Chinese technology enterprises which supply capital goods in packages that support establishment of small and medium enterprises in these African countries and elsewhere.
The country is politically charged and awaiting the decision of the Constitutional Court regarding the disputed presidential election results. This column is apolitical and will remain such going forward. During the week, however, President Peter Mutharika was interviewed on Aljazeera Television and I am not taking sides by saying that the President was on point regarding what Malawi needs with respect to development: a focus on manufacturing in a manner that implements late Bingu wa Mutharika’s clarion call of converting Malawi from an importing and consuming nation to a producing and exporting one. Hearing this, I went back to the Democratic Progressive Party manifesto to remind myself of its promises regarding industrialisation. My conclusion was that, if the party walks the talk, the Alibaba Industrialisation model which Ghana, Uganda, Senegal and Ivory Coast are implementing is possible in Malawi. I do not think that we are doing so already. My evidence comes, once again, from Simons who reports that the contribution of manufacturing to GDP in Ghana, Uganda, Senegal and Ivory Coast has been increasing in the last decade. On the contrary, the contribution of manufacturing to Malawi’s GDP has been declining. I wonder what the Chinese businesses, registered as manufacturers and accorded wide-ranging incentives through the Malawi Investment and Trade Centre, are doing.