"It's shameful that the UDF party wants to take us back to the dark days,"

Mr Gwanda Chakuamba (2003)

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Friday, February 16, 2007

Absorbing Malawi’s Extra Liquidity and Economic Diversity

Feb 16,2007 by Rhodrick Junaid

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Recent statistical reports on Malawi’s economic performance have been very encouraging. An analysis of the economy, among other things, reveals that inflation is expected to hit single digits while interest rates are expected to fall due to the recent cut in the Liquidity Reserve Requirement (LRR) by the Reserve Bank of Malawi (RBM).

The Banking Act (1989) and the Reserve Bank of Malawi Act (1989) sanction that all depository institutions operating in Malawi, namely commercial banks, building societies and discount houses, are to maintain minimum cash balances in relation to the preceding week's total local currency deposit liabilities, including government deposits.

As a monetary economic policy instrument, the LRR acts as a regulatory toll to manage liquidity in the economy concurrently protect depositors’ money in the various banks and discount houses.

The supervisory purpose of LLR is to ensure that deposit-taking institutions have liquid funds to repay depositors if necessary. The instrument also restrains the ability of deposit-taking institutions to create credit, hence facilitates the credit flow between the various sectors of the economy.

Consequently, LRR affects very important macroeconomic factors such as interest rates, inflation and the value of the Malawi Kwacha. However, one drawback of this instrument is that funds maintained on deposit with the Central Bank for the purpose of meeting the LRR may or may not earn interest, regardless of whether the amount so carried exceed the requirement.

Effective February 1, 2007, RBM cut the LRR by 4.5 basis points from 20 percent to 15.5 percent. This is very good news indeed for an economy that is predicted to grow at 6% and experiencing a relatively stable currency.

The cut in LRR is expected to result in a rise in deposit rates coupled with a fall in lending interest rates. Ceteris paribus, this should generate new pressure for a further appreciation of the Malawi Kwacha and even lead to stock index rise on the Malawi Stock Exchange (MSE) as traders are buoyed by the good macroeconomic performance.

Eventually, the extra liquidity will prompt banks to increase and speed up lending to the private sector, which in turn will spur investment and lead to economic growth over and above the predicted rates.

In order to sustain ample fluidity, it is imperative that the RBM continue to weaken or relax liquidity control throughout 2007 by employing other monetary tools, especially through open market operations.

The government, private investor and economic policy makers must harness Malawi’s healthy economic status carefully. For the Government, there is need for appropriate macroeconomic policies and the provision of essential rural infrastructure and support services such as roads, markets, agricultural research and extension.

The time is right for Malawi to move from its agriculture dependency syndrome to a more and wider manufacturing and service economy. The rosy picture painted by our economic analysts must act as a rude awakening for us to put to rest the over reliance the agriculture.

The time is ripe for Malawi to diversify its economy by reviving manufacturing and expanding services such as finance, insurance, housing and transport. It is absurd to note that in the current economic environment, where service is a major part of economies, Malawi has 68% percent of its CPI attributed to food. This situation needs to be changed, and must be changed now.

Of course there is the daunting question of whether there is idle capacity in the economy to absorb the extra liquidity. With credit flowing to the private sector, there is a high chance that Private Equity Firms and Venture Capitalists can emerge to absorb the extra liquidity.

These firms will be responsible for providing the much-needed funds to finance business deals in transactions such as mergers and acquisitions, start-up firms and reviving the dwindling Small and Medium Enterprises (SME).

With such major economic activity, the apparent economic growth will be sustained and poverty alleviation will be a dream too easy to realise.

Thursday, February 15, 2007

Muluzi’s ‘09 candidacy
by Mzati Nkolokosa, 08 February 2007 - 08:04:37
It is the same man, the same tactics and the same position. Bakili Muluzi may end up not contesting but anointing and supporting a UDF presidential candidate.


It seems like a journey towards a great coalition, to be led by former president Bakili Muluzi, to defeat President Bingu wa Mutharika in the 2009 presidential elections.
The latest call for Muluzi to contest in the polls is from leader of the New Republican Party (NRP), Gwanda Chakuamba, who was a sworn enemy of Muluzi’s 10-year rule. Now Chakuamba seems certain to support Muluzi in 2009.
“I, on behalf of the New Republican Party, declare my interest not to contest in 2009 general elections should Bakili Muluzi stand,” said Chakuamba in a press release last week.
This support is not an isolated case. It is within calls by UDF functionaries for Muluzi to contest in the 2009 elections. But what has happened that Chakuamba should now support Muluzi?
One, Chakuamba knows he lost his political constituency and he may not make it on his own. Two, his statement appears like a response to either general calls for Muluzi to contest, or an approach by the UDF, meaning there is, perhaps, some strategy seeking support for Muluzi.
It was stealth talk throughout 2006 until January 23 this year when Northern Region UDF governor Kajiso Gondwe nominated Muluzi as the party’s presidential candidate in 2009.
This, claimed Gondwe, was a source of celebration in a meeting where the resolution was made that one bought drinks for all. That someone, most likely, was Gondwe himself.
Seven days later, UDF committees from central, southern and eastern regions supported Muluzi’s candidacy in the 2009 elections. The latest was the district governors from UDF’s Sapitwa Region. They nominated Muluzi on Saturday. Now all UDF regional committees, made up of district committees, are backing Muluzi.
The party, so far, has maintained this has never been discussed at national executive committee (NEC) hence it should not be taken seriously. Further, UDF publicity secretary Sam Mpasu insists Muluzi has never, ever, expressed interest in the 2009 presidential elections.
But Muluzi’s silence is not strange. This is how he works. It is the way he sold the idea of open terms from 2001. Sometimes, Muluzi, like all politicians, doesn’t mean what he says and doesn’t say what he means and it seems he doesn’t know that silence is a speech act louder than sound.
Now he has not employed silence only but, for the first time, distance. He is in Britain from where he is listening to calls for his candidacy in 2009.
Does Muluzi
want to contest?
Politically, Muluzi may be likened to a tattered book, with torn pages and hard to read. Yet the most likely answer is that he wants the presidency.
But, one might say, he hasn’t said so? That is right, and that’s how he works. He didn’t speak for third term either but he used his cohorts to campaign for his tenancy at the State House beyond two terms. He likes silence. Now he has added distance. The same, old tricks made new by new tactics and most likely to bring new results.
Yet Muluzi may not stand in 2009. One, he is, of course, in good health but there is no assurance that he will not be seeing his doctors once in a while. Political campaign trail is a tiresome road and his health may deteriorate again.
Two, he will not contest because the Constitution may bar him. The spirit of the Constitution, according to some of the framers, was that every person should be President for a maximum of two consecutive terms. This is the interpretation of most people but subject to the High Court.
In this case, Muluzi will anoint a candidate for UDF. It seems the end of this talk will be like in 2004 when Muluzi brought Mutharika into UDF.
Alliance
Muluzi, according to party supporters, returns home on February 18. He will land at Kamuzu International Airport and live in Lilongwe, probably to monitor parliamentary proceedings from within the capital city.
He will also address rallies where key speakers will endorse him as UDF presidential candidate in 2009. The rallies will be in Central Region first, followed by the North and finally the South. This will be a chorus of the song that Muluzi started in 2001.
It will be less vocal than the 2004 campaign because the rallies will not be live on MBC. But it is clear Muluzi will build a coalition of parties to dislodge Mutharika from power. Chakuamba is already on UDF side. Congress for Democracy (CODE) might also be approached and most likely accept to work with UDF in 2009 elections. There is no harm.
The trick is on Malawi Congress Party. Muluzi needs its support but there is one question: Will Chakuamba and John Tembo work together? This is where Mutharika’s Democratic Progressive Party (DPP) may come in to divide Muluzi’s alliance.
Further, the DPP may build its own alliance with People’s Progressive Movement (PPM) and other parties, a move that will result in three presidential candidates: Mutharika, Muluzi and Tembo.
Back to power?
It may happen. It may not, most likely. But imagine the Malawi Electoral Commission (MEC) announcing that Muluzi has won the 2009 presidential race!
Immediately vendors will leave the flea markets and, like huge clouds of locusts, flock back to the streets without being told to do so. They will realise that time for chaos is back, meaning order gained in the past two years is gone.
Young Democrats (YDs) will immediately rush to the streets to terrorise people. Once again the distance between Chichiri Trade Fair grounds and Chichiri Roundabout would become infested with YDs. What ever happened to this area! The country will no longer be safe for people with alternative views.
The civil society, the free press, human rights activists and all people who love the country will be under fire. Emmie Chanika of Civil Liberties Committee will be assured of another beating in the presence of helpless Police.
The University of Malawi calendar will be in shambles again. Colleges will close anytime, indefinitely, without the slightest hint of the opening date.
Education in general shall be in chaos. Teacher Training Colleges shall be closed, again. Primary school teachers will be paid once in two months while pupils shall go to school to meet striking teachers.
Protest songs will be back. Billy Kaunda will be singing Mwataya Chipangano again. Sound debate and arguments based on intellectual premises, shall be drowned by cheap political talk from empty heads that will patronise government.
Corruption will flock back into the system. Dubious contractors, who have disappeared now, will take over again. Once Muluzi will be back in power, there will be another K187 million education scandal, another billion kwacha ID scandal, another Land Rover scandal, this and that scandal, yesterday, today and tomorrow; everyday, everywhere.
Such will be tough, undesirable times indeed.
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Thursday, February 08, 2007

Stanbic paints rosy picture
by Ephraim Munthali, 08 February 2007 - 07:37:16
The Standard Bank Group has painted a rosy picture of the Malawi economy, pegging this year’s Gross Domestic Product (GDP) at seven percent and predicting that inflation should hit the single digit mark in 2007.
The group said in its January 2007 economic “Blue Print” for Malawi that good weather conditions plus the K7 billion Fertiliser Subsidy Programme could sustain the rebound in agricultural output and push inflation to single digits so long oil prices remain low.
Last year, inflation averaged 13.9 percent from 15.4 percent the previous year, largely thanks to the bumper maize harvest, a stable exchange rate, declining world oil prices and, of course, prudent fiscal and monetary policies.
Some market analysts already see the plummeting inflation rate resulting in lower interest rates, especially after the Reserve Bank of Malawi slashed the liquidity reserve requirement from 20 percent to 15.5 percent effective 1 February this year.
The last time interest rates fell was last November when the central bank slashed the benchmark bank rate from 25 percent to 20 percent.
Authorities see low interest rates as a key clue in their intensive search for an economic growth rate of more than six percent which technocrats say is ideal for the country to reduce poverty that has left six in every 10 Malawians surviving on less than K140 a day.
“According to preliminary crop estimates, agricultural output should support a rebound in real GDP growth of more than seven percent,” said the pan-African banking group. Provisional real GDP figures estimate growth for 2006 to be 8.5 percent.
With government working hard to improve the macroeconomic environment through, among other measures, expenditure restraint, the coming year seems to have some room for even lower interest rates, it said.
The bank added that key macroeconomic objectives for 2006/7 remain largely consistent with the approved Poverty Reduction and Growth Facility (PRGF) arrangement with the IMF as the government is well aware of its need for continued donor support.
Donors finance close to 40 percent of Malawi’s national budget, making good relations with them indispensable to Malawi.
In June 2005, the IMF approved a new three-year US$55.9 million PRGF programme for Malawi after the Fund suspended the economic assistance in 2000 due to consistent poor economic management by the Bakili Muluzi administration.
The Fund renewed the programme after the Bingu wa Mutharika administration, which assumed office in May 2004, asked for a one year Staff Monitored Programme from June 2004 to establish a consistent track record of policy execution and win back donor support which had dried up.
Good implementation of the PRGF in the first year saw the Fund and the World Bank rewarding Malawi by cancelling 90 percent of the country’s foreign debt—only the 20th country to achieve the feat.
The debt forgiveness means that Malawi will be saving US$100 million or 1.7 months of import cover annually since the country will be retaining the money instead of externalising it to service the debt which stood at US$3 billion before the cancellation.
“The [PRGF] programme is strongly focused on improving expenditure control as the key to restoring macroeconomic stability and economic growth. The government is committed to programme implementation though it holds a minority position in Parliament and faces intense political pressure,” noted Stanbic.
The bank said it expects spending priorities to remain steadfast on improving food security, particularly through the development of agriculture-related infrastructure, such as dams, irrigation schemes and the rural road network.
“This is expected to tie in with schemes to encourage subsistence farmers to grow cash crops and diversify away from mainly maize. Economic policy is also expected to remain focused on boosting growth through developing the agro-processing, mining and tourism sectors. This will require improving the national infrastructure, particularly electricity and water provision,” said the bank.
It added that while doubts still linger on the performance of tobacco, continued donor interest in the country’s development initiatives could create confidence in the Malawi kwacha during the year.

Wednesday, February 07, 2007

A day Malawi was robbed of a dedicated Blogger - RIP

Feb 05,2007 by Editor, Nyasatimes

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January 18th, 2007 the Malawi blogosphere was robbed of one of its prominent bloggers, Mangaliso Jere (27), whose blog, Mangaliso’s World, covered different topics of interest including information technology in Malawi. The news was broken by a Malawian blogger Austin Madinga on his blog Austin Madinga’s Big Mouth, where he announced, “Mangaliso’s world is over”:

A good friend and fellow blogger, Mangaliso Jere, left this world today in Mzuzu! I really have no words to describe this brother only that he was a cheerful lad, a hardworking techie and one who loved his motherland. Rest in Peace Dear Brother!

The news quickly spread onto Malawian listservs, including IT Malawi, where Mangaliso was a frequent contributor. According to Boster Sibande, IT Malawi contibutor, Mangaliso, emailed his colleagues on Thursday morning telling them he would report late for work, as he had a doctor’s appointment that morning. He was scheduled for surgery to remove a growth from his nose. According to Boster Sibande, quoting Mangaliso’s workmates, Mangaliso never woke up from the surgery.

A comment on his blog questions the integrity and professionalism of the doctors who operated him:

It is sad that you had to be taken out of this world exactly seven days after posting this article. Unfortunately, its not the malaria that took you per se, if it wasnt for those careless medics at mzuzu central hospital who decided to operate on your sinus and convinced you it was a minor surgery. Where on earth can opening ones nostrils be categorised as minor surgery? am not a medic but lol.. i tend to doubt the integrity and professionalism of some of our medical practitioners considering my aunt was prescribed wrong medication for a different ailment at the same hospital which also almost cost her life. But am sure God is watching over you and its a matter of time that we shall be together in the heavenly glory.

I will miss your jokes now and forever more.
May your soul rest in eternal peace my bururu!

In order to keep Mangaliso’s dreams alive, a UK based blogger, Nyumbazi, has started a new blog dedicated to him, Mangaliso’s World 2. Her fist post is Mangaliso Jere Eulogy:

I will start with CEREBRATING your life.
You are A Ngoni who was proud of who you are, a man who had the heart to accommodate everybody, a man who found the meaning of life at very young age, a man who found a purpose for his life, a man who realised his potential very well ahead of most the people I know, a man who loved wisdom and knowledge, a man who brought me laughter, a Manchester United Fun, a gentle man, a man who was informed about currents affairs, a man who had big dreams, a man who has gone through tough experiences in life at a very young age, a man who came out shoulders high a against all odds, you embraced the seasons of change in your life integrity beyond your age. I can go on and on.

Still in shock about his death, Nyumbazi writes:

Dear Mangaliso
Your voice still fresh in my ears when we spoke to eachother about you going for surgery.
Can’t understand what went wrong during your op.

The son of a former Malawi High Court Judge and a retired Senior Matron at the Kamuzu Central Hospital, Malawi’s second largest hospital, Mangaliso started his blog in July 2005, and posted his last entry on January 14th, 2007. Mangaliso was a man of diverse interets, as evidenced in his posts. He was very proud to call himself a Malawian and an African, and wrote on topics as wide ranging as debt relief, Malawian politics, world football, and events in his work life. But his greatest passion was technology and the Internet in Malawi.

In one of his posts, he blogged about Internet cafĂ© rates in Malawi, noting that the price of bandwidth in the Malawi’s northern city of Mzuzu, where he had moved just months prior, were going down.

Mangaliso worked as assistant network engineer for the Malawi Sustainable Development Network Programme (SDNP), one of Malawi’s biggest Internet service providers. Mangaliso worked in SDNP’s office in Mzuzu, Malawi’s third largest and youngest city. According to SDNP’s website, Mangaliso’s academic and professional qualifications included a Diploma in Information Technology obtained from the University of Malawi in 2001; and an ACCA Accounting Technician Diploma.

Mangaliso was experienced in user support, leased connections, wireless, mstreams data lines, and dial-up Internet services, and networks. As a student at the University of Malawi, Mangaliso was a member of the Polytechnic Student Union Council, according to Dr. Matthews Mtumbuka’s post in MalawiTalk, a Malawian email listserv. Dr. Mtumbuka served as president of the students’ union council there at the time Mangaliso was a member.

Messages have been appearing on Mangaliso’s World from friends and colleagues, expressing shock at his unexpected death, and noting that he did not even fall sick, as he had been sending routine text messages to friends only the day before. Mangaliso leaves behind a mother, a brother and two sisters, according to close family friend Bonaventure Mkandawire. One reader left this message on his blog:

Anemwechi! as we fondly used to call each other,
Exactly four days after posting this comment, you decided to answer Gods call to go and be with him, leaving behind your dream of meeting Keith Wallis.

If atleast you told me you were going for surgery in that last SMS you sent me a day just prior to thet fateful afternoon, i would have discouraged it in the strongest terms. I called too late to be told you are in a ward and that guy couldnt let me talk to you.

I really feel guilty for not having called in time to hear your plans.
God will forgive all the misdeeds am sure.
Rest In Eternal Peace captain.

He is going to be missed by not only his close family and friends, but also fellow IT specialists in Malawi, and fellow Malawian bloggers.

This is probably the second time the African blogosphere loses one of its own. Last August, Kachumbari, a Kenyan village blogger, was killed in a car accident in Nairobi, Kenya. Kachumbari started to blog in January 2006 and quickly added a rare voice in the African blogosphere, that of an African villager. According to a post in his memory on Kenya Unlimited site, his work did not go unnoticed. His blog was featured in the Daily Nation of Kenya in March, 2006 and on BBC in June, 2006:

Britain pledges $550 mln in aid for Malawi

By Mabvuto Banda

LILONGWE (Reuters) - Britain has pledged 280 million pounds in aid to Malawi over four years and praised the impoverished southern African country for tackling corruption.

Hilary Benn, Britain's international development minister, pledged the funds at a news conference in Malawi late on Tuesday, applauding the country's economic management and efforts to fight HIV/AIDS.

"As Britain we congratulate Malawi for attaining debt relief, for its incredible achievements in having over 80,000 people on HIV treatment within a short period of time and for good economic management," Benn said.

The World Bank and the International Monetary Fund (IMF) agreed to cancel most of Malawi's external debt of about $2.97 billion in September after it completed economic reforms, under a programme aimed at easing debt burdens that stifle economic progress and poverty reduction.

Malawi's President Bingu wa Mutharika has made the fight against graft a top priority since he won power in 2004, winning praise from international donors and lenders but alienating him from the political class.

Benn congratulated Malawi for cracking down on corruption after previous leaders squandered aid, and urged wa Mutharika to elect a new chief for its powerful anti-corruption bureau after the last boss was sacked amid a political row.

"The UK is committed to helping the country's...fight against corruption," said Benn, whose government provides most of the funding for wa Mutharika's anti-graft squad.

Wa Mutharika's government is probing former president Bakili Muluzi for allegedly diverting over US$50 million from donors during his administration, in a row that has at times edged the country close to political deadlock.

Britain is Malawi's biggest bilateral donor and in the last five years has contributed over 312 million pounds in development aid.

Most of Malawi's 12 million people live below the poverty line and survive on subsistence agriculture. The country has been hit by droughts and food shortages in recent years, which have been exacerbated by a rampant HIV/AIDS pandemic.

PCL uncovers K800m telephone scam at MTL
BY DICKSON KASHOTI
03:07:38 - 07 February 2007

PRESS Corporation Limited (PCL) has uncovered shoddy procurement deals that siphoned about K800 million from the privatised Malawi Telecommunications Limited (MTL).

PCL boss Mathews Chikaonda said Monday in Lilongwe during the commemoration of the national anti-corruption day, unscrupulous staff used a parallel structure to defraud the company.

Chikaonda, who represented the business community at the function, said the corrupt staff used the backdoor line to let people telephone outside the country, as far as India and Pakistan whilst pocketing K65 million a month.

"They were making international telephone calls. They used the line as their [telephone] bureau. We have since taken the line off," Chikaonda said.

Chikaonda also said the new investors at MTL have changed the procurement procedures as one way of sealing holes that have let company funds seep down the drain.

The PCL boss, who once served as a finance minister in the Muluzi administration, commended President Bingu wa Mutharika for his relentless fight against corruption.

He asked the government to clean up the salary and pension system in the civil service-to remove what he called 'ghost' workers on the payroll.

The business captain, whose company has interests spanning from real estate to banking, advised government to use smart card technology for civil servants' salaries.

"Use the technology to fight corruption. The Reserve Bank of Malawi has this technology-we can eliminate ghost workers through this system. If a person is dead, no one would be able to cash his salary," Chikaonda said.

He said corruption increases the cost of doing business and this is why, he added, the business community in the country formed the Business Action Against Corruption two years ago, and it is now about to adopt a business code against corruption.