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Thinking Development

Thinking Development

By Christopher Guta, PhD:

Malawi is in the throes of reviewing the near to end Vison 2020 as a basis for a new national vision. Visions and missions are important components of strategy. The word strategy comes from a Greek word whose Greek letters would be pronounced ‘strategema’. It means ‘the act of a general, piece of generalship’. Strategy, therefore, has military origins where it entails a general optimally allocating resources and effectively organising activities to win the war.

I ended last week’s entry with a promise to share my thoughts on how, given the resources available to the country, we can win the war against the declining contribution of manufacturing to economic growth. The resources I flagged were: (1) availability of reasonably priced technology from China which can be packaged, using the Alibaba Industrialisation model, to enable manufacturing of goods in enterprises owned by black indigenous Malawians, (2) availability of market for the goods – given the provision of the Procurement Act which requires government to source 60 percent of goods from black indigenous Malawian enterprises and (3) labour – as in the significant number of unemployed graduates and the emphasis on technical skills training. Is there something missing? Yes. Land and buildings – as in where to place the machines from China; and funds to invest in and operate the business.

On the funding side, my solution rests on the understanding that money runs after good ideas, good projects. There are windows in existing banks that can be used to access investment funds. Examples here are the newly established National Bank of Malawi plc owned Development Bank, the Export Development Fund and other private and public financing windows. I would like to suggest one other window. A modified operation of the already existing Malawi Innovation Challenge Fund (Micf). Currently, the fund operates as a matching grant where a business gets 50 percent of investment costs as a refund of total verifiable expenses. I propose a window in Micf that gives the 50 percent grant in advance to projects that meet a robust selection criteria buttressed with appropriate safeguards including forward contracts with off-takers of the goods to be manufactured by the enterprise. In the case at hand, one off-taker is government given the provisions of the Public Procurement Act, 2017.

On land and buildings, I suggest government establishes places, much like what obtains elsewhere and referred to in the literature as ‘industrial districts/industrial clusters’. Interestingly, without sounding political, the Democratic Progressive Party manifesto has conceived something like this already under the chapter on Trade, Private Sector Development and Rural Industrialisation.

In 2008, I partnered with a Malawian scholar (name withheld) in developing a model for innovation in public goods. I leave you to Google on the internet for what the term ‘public goods’ means. In that three node model, we identified a prescriber as an entity that takes action to facilitate interaction between producers and consumers/ users. The prescriber, directly or indirectly, creates an environment where producers are enabled to supply goods and services that meet consumers’/users’ needs. I independently worked backwards on this model and identified the three corresponding areas of action that Malawi needs in order to foster development. First is governance and communication where government, operating as a prescriber performs the functions of a general in the military sense of the word. Acting in an entrepreneurial manner, government provides leadership as in championing development initiatives and building coalitions. Hastings Kamuzu Banda, our first president, used to lead us in singing ‘Tiyende pamodzi ndi mtima umodzi’. That was all about championing and coalition building. That’s what Paul Kagame is doing in Rwanda. It has to do with organising for production. All governments agonise or should agonise over this matter – how to organise the economy. Second is knowledge infrastructure. Here, the issues include the development of knowledge, even through procurement of Chinese and other nations’ technology needed to manufacture goods. This is where enterprising black indigenous Malawians, willing to learn and innovate, become essential. Third is market and social capabilities where consumers – as in individuals and businesses – that are open and socially transformed are essential. This is where the issue of mindset change, which Mr Chimjinthi-Nyirenda raised in relation to our attitudes towards locally manufactured products, comes into play.

I found this model fascinating because development is about knowing new things in relation to production, organisation and consumption.

I think that Malawi already has the elements needed to reverse the trend regarding the contribution of manufacturing to economic growth and development. From a policy perspective, government is well apt to play the role of a prescriber. But here is our disease: implementation failure. Malawi is at war with poverty and, in certain instances, absolute poverty. Can our generals in government and private sector use ‘strategema’ to help us win, not only the battles, but the war?

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