Government hides the truth

If you go to one demonstration and then go home, that's something, but the people in power can live with that. What they can't live with is sustained pressure that keeps building, organisations that keep doing things, people that keep learning lessons from the last time and doing it better the next time.
Noam Chomsky

Power is a drug on which the politicians are hooked. They buy it from the voters, using the voters' own money.
Peter Newman


The Mhlako Triumvirate

Tuesday, February 8, 2011


We've got it all wrong. Whoever said that Bakili Muluzi is a political engineer, got it wrong. He completely destroyed the political party that was foremost in bringing multi-party democracy to Malawi - more like a car-breaker than a car-maker. Whoever said that Bingu wa Mutharika is an economic engineer, got it very badly wrong, as most of you may have concluded as you waste your precious time searching for and queuing for fuel.Come to think of it, it had to have been Bakili Muluzi himself who invented those two deceptive titles. As with many of Bakili's statements, we were fooled for a time but the truth always reveals itself to those not too blind to see, too deaf to hear or who have a selfish, sycophantic interest in perpetuating lies.

My thoughts turned back more than sixty years to the England of my childhood. In those days I could buy something for a penny and still get change. Parents who wanted to introduce their children to the saving habit would open a savings account at the Post Office and give their children a piggy bank. Most of you will have no idea what a piggy bank is, so I'll explain. We could not be running to the Post Office to deposit the occasional penny or two or even the occasional sixpence from a doting aunt with no children of her own to spoil. We had a piggy bank which, originally, was made of pottery in the shape of a pig (see image here) with a slit in the top to accept coins. There was no way of emptying this 'bank' except by smashing it. The idea was that by the time it was full there would be enough in total to make a worthwhile deposit in the bank.

Children who may have been in a hurry to open their piggy bank, perhaps with the expectation of having something decent to spend instead of save, may have been tempted to stuff it with worthless metal like old washers just to fool the parents and speed the process.

And here we are in Malawi with an Economic Engineer at the helm, lauded around the world for the miracles of growth that he has brought about, given the honorary title of Professor and hailed by the sychophants as our Saviour - Ngwazi No. 2. After giving the Professor our tax money and entrusting him with the donations from doting aunts (Amayi an'gono) the donors to stuff in his piggy bank, we were expecting great things. Bingu's piggy bank is now smashed and its contents revealed as worthless dross! This 'Economic Engineer' has been revealed as a Piggy Bank cheat. The lie of rapid GDP growth has been exposed. It was based on grossly inflated maize production figures.


In a previous post, "Maize surplus - what maize surplus? NSO hides the truth from Malawi" I gave a link to the Government's own report which substantiates this. Unfortunately, Government has chosen to Forbid Access. Try it for yourself:
To prove it, you can see screen shot of this website page here. I hope in subsequent posts to obtain facts and figures as to how this deception has distorted other areas of economic activity and planning.
Here's the full link to the actual report:

But you can't find it there anymore because, surprise! Surprise!The pdf file has been damaged. Just as well that I made it available for all to read on:  

I have the pdf file. It is almost 1.5mb in size. If you would like a copy email me at and I will send it to you.


The main problem with Bingunomics is his belief that a word from him can change the basics of economics. Malawians have been conditioned from the days of Dr. Banda to believe that the President is all-powerful. While things are going well Presidents and Governments will encourage the people to believe that they have been the benificent architects.When things go wrong, as now with the fuel/forex shortages, Government seeks to excuse itself and find the scapegoats which have recently and dangerously been the Mozambicans and foreigners. This has two negative consequences: worsening relations with Mozambique who we rely on to handle our imports and exports efficiently; reduced confidence by foreigners or non-indigenous Malawians in the Government's intentions. Malawi already has problems. It has not done enough, in spite of an ongoing World Bank sponsored programme, to make this country more friendly to business. Established businesses in Malawi and would-be foreign investors find this equally frustrating.

The forex shortage is the result of a high demand for that 'commodity'. The demand is twofold - for the necessities and for the desirables. It is no secret to Malawians that when tomatoes or any other commodity is in short supply, the prices increase. This is a natural rationing process dictated by the realities of the market - assuming, that is, that the market is not distorted by rigging or or monopolistic practices. When there is a shortage of cash in the home the controller of domestic finances has to decide on priorities - whether to spend on his beer, girl-friends (if he is a man) or on hair-care and beauty products (if she is a woman - and, perhaps in these days of gender equality, Toy Boys)  - OR the necessities for the family such as food, rent, water, electricity, clothing and whatever. The decisions of many millions of households feed back as demand to the many thousands of traders. They have to risk their own money on their best guesses of what demand will be. They are the ones who can react swiftly to changes in demand and changes in the rate of exchange. The efficient improve their businesses and the inefficient lose.

Under the free market conditions that our Constitution actually mandates, the market should dictate the cost of forex. If forex is in short supply it goes to those prepared to pay the most for it and, in line with changing exchange rate trends, the importer will decide whether he can expect to find enough customers for his goods at the new prices.

Governments want to protect the poor - a worthy but often misguided sentiment. If there is a forex shortage it is because the importers of 'desirables' can still afford to buy it and find a market for their goods. The importers of 'essentials' continue to import but have to 'fight' with the others for that scarce commodity - forex - which government through a subservient Reserve Bank continues to manipulate. In effect, the Reserve Bank now has to ration the forex which IT CANNOT DO EFFECTIVELY. In effect, imports are too cheap. 'Too cheap' not in the perception of the end user but in relation to the market value of the Kwacha. Can you imagine how the government would allocate 'permits' to buy tomatoes or how they could even resolve the conflicting claims for preferential treatment in times of tomato shortage?

We have been through all this before in the later stages of Dr. Banda's rule. Possession of an allocation of forex was like a licence to print money. Goods became scarce in the shops. Importers with good official connections could get hold of forex. In the end the poor customer always pays by way of price gouging, queuing, black marketeering or just good, plain old bribery.

We are seeing it already. Reports in the press say that vendors are selling petrol at as much as K500 per litre - almost double the pump price. Would it not be better for it to sell at K350 per litre if that reflected the true value of a now devalued Kwacha.When everything is readily available, albeit a new higher prices, the market has achieved some sort of equilibrium. Those with money will be able to buy according to their perceived priorities. Not only that, businesses will not be tempted to engage in enterprises that cannot be sustained through artificially maintained import prices.


Scary! The elephant in the room is fertiliser pricing. A massive rise in the price of fertiliser as a result of a large adjustment in the value of our Kwacha would cause much hardship - and reduce the chances of the political party of government being voted back into power. However, should Government keep out of the business of rationing forex, fluctuations in exchange rates would be expected to  change gradually at a pace to which buyers can easily adjust. Unfortunately, after the value of our currency has been artificially maintained at too high a level for too many years, when it is no longer sustainable (as would now appear to be the case) the change could be massive and disruptive - but not as disruptive and as damaging to the economy as permanent outages of fuel and other necessities.


It is unfortunate that the media cannot look further than its nose. It is buying into the idea that Government should impose forex rationing on the basis of priorities. Unfortunately, also, what Government prioritises may not accord with the buying requirements of the masses whose collective needs are agglomerated by thousands of traders who risk their own wealth in getting the market right.


We should not allocate all of the blame to the President. After all, he has to rely on his civil servants to keep him properly briefed. But we must blame him for  having a personality that may discourage the honest presentation of bad news. Can we blame the civil servants for lying if the truth, for which they are not to blame, results in Presidential displeasure and the end of a promising career? Shoot the messenger!

Mr President - keep out of the markets for maize, tobacco, cotton, fuel, forex and all. Make sure that your civil servants promote a system that encourages investment and growth. Make sure that they prevent monopolisation or rigging. Do away with the piggy bank that obscures the truth until it is too late. Let us have the truth - always!

Very importantly - remove the fuel import monopoly. Free the resale of fuel. Remove price controls. Let fuel importers and dealers negotiate credit terms with their suppliers. Other importers manage to achieve flexibility - why not fuel importers?

And - most importantly - remove exchange controls.
Don't ask us who has taken all the forex. Tell us.Give us names, proof, specifics. Or open the Reserve Bank books to public scrutiny.

1 comment:

  1. These are the signs of times and Bingu will not be spared Malawians let us unite to get rid of this "Hitler"