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Thinking Development

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By Christopher Guta, PhD:

The World Bank plays an important role in Malawi’s development. I will not judge as to the virtues of that role but we all know that our economy is vulnerable and requires ‘prescription medicines’ to treat our economic woes from time to time. Drawing from its pool of economists both locally and in Washington, the World Bank provides advice and support to Malawi. The framework for this support is called the Malawi’s Country Economic Memorandum.

The 2009 version of the memorandum described economic growth in Malawi as being export-led. The meaning of this is that, in the view of the bank, the expansion of Malawi’s total economic output (GDP) per capita and employment comes from successful exportation of goods and services across our borders. An export-led development strategy is good and many countries have used it to move their people from poverty to prosperity. In human history, no other country has performed better than China in this regard. Indeed, the World Bank asserts that China has experienced the fastest sustained expansion by a major economy in history that has lifted more that 800 million Chinese people out of poverty. China’s export-led strategy, despite its disadvantages – including that of making a country’s economy vulnerable to changing economic fortunes of its trading partners – has moved China upwards in rank on the United Nations’ Human Development Index which measures performance in a wide range of social and economic indicators.

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This is 2019. Ten years after the accolade that Malawi’s economic growth is export-led and we are not moving upwards on the Human Development Index. I leave it to others to explain why this is the case but, as we wait for them to come in, one factor accounting for this could be that export revenues and profits have not been optimally used by those who earned them to increase capital investments which trigger a multiplier effect by increasing production capacity leading to increased exports. I hope that the Reserve Bank of Malawi is effective and efficient in its monitoring role in order to ensure that exporters are not short-changing the economy beyond what is legally permissible by the country’s regulatory framework. Indeed, may I ask: How much have the exporters of tobacco, sugar, tea and cotton – Malawi’s leading and/or potential export commodities – reinvested into their production capacity in the past 10 years? Public domain data shows that private sector investment in Malawi fell from 17.3 to 6.6 percent of GDP in 2009 and 2017 respectively.

The situation in the cotton sector has come to the limelight in the past two weeks and has attracted my attention. The Nation recently quoted a global leader in the cotton industry to the effect that Malawi’s productivity in cotton is the lowest in the world. In an earlier report, The Nation quoted Cosmas Luwanda, Executive Director of Cotton Council of Malawi, as saying that the current low cotton productivity arises from the country’s inability to benefit from inputs that could be made available if Malawi had been a member of the International Cotton Advisory Committee. From a science, technology and innovation perspective, the low productivity in cotton, pegged at 500kg per hectare, is said to be on account of poor seeds. I can cite another problem from history.

Immediately after our independence in 1964, Government identified the need for knowledge as a basis for improving agricultural productivity. This led to the eventual integration of the then Bunda Agricultural Training Centre into the University of Malawi as Bunda College of Agriculture. Knowledge agents in the form of extension workers supported technology acquisition and transfer to farmers. I remember growing up, as I did in Chikwawa, a major cotton growing area, seeing aircraft spaying farmers’ cotton fields to control pests. This support is no longer that intense these days. It does not, therefore, pay us to dilly-dally in joining global organisations which could help the country regain its glory as an efficient producer of cotton.

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As we work towards improving productivity in the cotton sector, including the potential use of biotechnology-based seeds, a matter being investigated by our National Agricultural Research System, let us also gear up our efforts to process cotton into finished products rather that exporting it as a raw material to China and other countries. Let us entice these countries to invest in processing capabilities transforming cotton and other commodities into value-added products rather than taking them to their countries to perpetuate their export-led growth strategy at the expense of ours. That way, Malawi can also climb up the United Nations Human Development Index rather than forever remain in the low human development category of this league table of nations.  

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