Botswana and Malawi: Mixture of Fortunes and Misfortunes of their economies.


31-08-2004.
MOGODITSHANE, GABORONE, BOTSWANA.

By Gregory Gondwe.

When Malawi and Botswana managed to break the shackles of the English colonial servitude in 1964 and 1966 respectively and attained self rule, there was a heart throbbing feat on the part of the ‘new leaders’, considered to posses zero experience by the colonialists.
The ‘inexperienced’ leaders had to positively respond to the call of improving their people’s economical and social welfare through prudent and competent economic management thereby proving a point about their credibility to the colonialists.
At independence, Botswana’s population of around 340,000 people was experiencing a particularly severe drought that left one person in six dependent on food aid handouts.
World scale showed Botswana as one of the twenty poorest countries, which had minimal infrastructural growth. Foreign aid and remittance of Batswana males employed in SA, was critically the lifeline of the government revenues hence Botswana had a predominantly subsistence economy.
However, the fortune deities were all at Malawi mercy. Malawi adopted an agro-based economy — soundy, for the time being, for an infant Independence state — which, managed to cater for her 3 million people.
At that time, the two countries had some common factors that would influence their socio-economic growth: i.e.; they were both landlocked and they both set agriculture as the centrepiece of their economic programmes.
Three decades down the road, both counties’ state of economy is of an ironic, if less dramatic twist. Malawi whose success prospects looked bright, while that of Botswana was grimy is now faced with mixed misfortunes while the tale for Botswana is complete romantic, beginning from just outside the periphery of the colonial rule.
Malawi, one of the world’s six poorest countries at the time of independence, devoted its meagre treasury and considerable energies to its one natural resource; farmland. Few years following it did not need to import food and instead it exported, which was rarity in Africa.
The evident fact is that the fortune gods did not stay long for the Malawian State. Its economic growth slowed in 1970s as wars in Southern Africa limited its access to seaports, which affected, among other things, its export oriented growth.
It seems Botswana was the destination of the fortune gods while the country was struggling to improve its beef industry- as commercial livestock sector turned out to be its largest contributor to GDP and export earnings — it stumbled on the fortune of diamond exploits in Opara towards the end of the 60s. Although it was in the early 70s large scale mining exploitation began.
It was at this particular time that the common agrobased economies of the two countries diverged. The Middleton Encyclopaedia of Africa— South of Sahara, notes that Botswana’s rise in the mineral sector was reflected in changes in its economic structure after 1966.
In its analysis of Botswana’s economy, the book said the contribution of agriculture of GDP fell dramatically, from almost 40% of the total at independence at an average of 4.3% between 1990/91 and 1994/95.
The mining, however, increased from 0% at independence to an average of 35.0% during the same period having reached an exceptional of 49.8% in 1988/89.
It is also indicated that a similar situation prevailed in exports, with beef sales falling from over 90% of merchandise earnings in 1966 to an estimated 4.4% in 1993 while visible export earnings from diamond rose from 0% in 1966 to an estimated 67.2% of the total in 1995.
In frustrated effort Malawi’s leader at Independence Dr Hastings Banda — the sole and principal player in the country’s economic reform, having expelled the people who assisted to gain political, social, economic independence — defiantly staged full diplomatic ties with the white ruled apartheid South Africa what he believed would improve the country’s economic status.
The self styled dictator Banda, a capitalist who would later plunge into kleptocracy, vehemently refused to push what he termed ‘unrealistic’ economic policies onto the country. He managed to a point of paying Malawi’s debt on time, organised his small civil service into efficient and relatively honest machinery.
But the ties with South Africa and his policies still failed to bail the country from the eminent economic disaster, which threatened the country’s tentative economic structure.
Banda was forced to turn to the World Bank and IMF for help.
Owing to the efficiency of Malawi’s civil service, it quickly became a star pupil of free-market reform. But this was short-lived, in the full glare of problems ranging from subsistence agriculture, low educational levels, shortage of skilled personnel lack of mineral resources, inadequate infrastructure to import-dependent industries, compounded by land locked position and small domestic market.
Malawi’s already poor economic performance got a severe blow when it was beset by drought during 1979-81, resulting into a decline in her agricultural output which adversely affected export earnings.
The Middleton encyclopaedia, states that this drought necessitated the import of food while associated industries began to experience severe reduction in revenue with virtually no sector of the economy unaffected.
The book says GDP growth in the real terms declined to 3.1% per year during the period of 1980-91 and in an effort to restore growth; the government supported by the Bretton wood institutions initiated a programme of reform in 1981.
The book notes that Malawi’s terms of trade continued to worsen during the period especially when another lethal blow was stricken when there was complete closure in 1984 of the country’s Mari- time access routes through war-torn Mozambique which resulted to raised export freight costs.
A further reform programme, the book says was began in 1986. Although a number of anticipated measures-which included a reduction in subsidies and organisation of major parastatal bodies- were implemented the economy began to falter again with GDP growth falling the 2.8% compared with the target of 4.2% and win the budget deficit amounting to 11% of GDP, compared with a target of 3.5%.
Malawi cancelled its 3-year extended facility with IMF in August 1996, two months before its expiry month of October because of the economy’s disappointing performance.
The adage, ‘it never rains but pours’ was synonymous with Malawi’s economic woes. Contrary to its late 70s projections that things will change for the good towards the new millennium, Malawi’s economic performance was adversely affected again by severe drought conditions in 1992.
And the situation deteriorated with the suspension of non-humanitarian donor aid, as since the collapse of cold war, a number of counties were brought under spotlight, and Malawi’s Dr Banda was found to be flagrantly violating human rights with impunity.
So, the donors’- otherwise known as neo-colonialists in other cycles pressed for a democratic change which would respect human rights and observe the rule of law if Malawi- very dependent on donor aid- was to get anything.
Malawi government figures indicated that because of this, GDP tumbled in real terms, by 7.3% in 1992 while the yearly inflation averaged 23.2% compared with 8.2% in 1991. This was caused by the two pulls of devaluation of its currency.
An unprecedented level of industrial unrest, which forced Dr Banda to call for a referendum that resulted into the first multiparty general elections after thirty years, followed this.
When elections were held in 1994, the new government inherited an unstable fiscal and monetary situation, as they were unable to adopt the despotic policies of Dr Banda whose government had subsidies in all necessities.
Instead, they introduced what was termed as a liberalised economy, which did not help as real GDP fell by 10.2 % the same year.
While Malawi’s tales of woe was painstaking to unveil, Botswana romantic tale was a pleasant to unfold. During the 1980s, Botswana’s economic performance exceeded that of all other non-petroleum producing countries in Africa.
GDP in real terms pushed up by a yearly average of 10.3% in 1980-90 giving Botswana one of the world highest economy growth rates.
For Botswana, Middleton encyclopaedia states that a higher than anticipated diamond production and price levels rendered projections in its 6th National Development Plan 1984/85-1989/90 too pessimistic.
Botswana feared that growth based on such narrow foundation (beef production and mining) was vulnerable and difficult to sustain in the long term-hence the 6th NDP which was predicted on substantial diminution in growth rates, to an average of 4.8% per year, through stabilisation of diamond and beef out put.
Contrary to these fears GDP increased in real terms, by an annual average of 12% in 1985/86-1987/88 period, before slowing in 1989/90-1991-92 to an average annual rate of 7.5% owing to rapid increase in government expenditure.
During the 90s, Middleton says Botswana’s economic performance was adversely affected due to easy 90’s international economic recession and GDP which declined by 0.1% in 1992/93, dropped below the rate of population growth for the first time since independence.
It further says in 1995/96 upturn in the mining sector lifted GDP growth of 7.0%.
The economy’s social impact
While the cost of living for a Malawian Joe public is nightmare, for a Tswana it is the opposite. While the presence of street beggars comprising juveniles, orphans and people with disabilities especially those with vision impairments is a constant eyesore in Botswana it’s the opposite.
Malawi has only moved from the group of the world’s six poorest countries to the one of the world’s 12 poorest countries with $367.7 million (1998) as its international reserves.
While Botswana rose to become an ‘upper middle income’ country, under World Bank definitions, which acknowledged that it was unusual for an African country,

Malawi has been tremendously affected by Bretton woods institution imposed economic policies on Economic structural adjustment programme (SAP) adopted wholesale soon after change of political system in 1994 according to research conducted by the Non-governmental organisation in Malawi (Congoma).
The findings released in the month of July in 2004 reveals that the policies by IMF, and world bank in collaboration with the government has had negative impact because it was not well assessed and understood by the policy makers before its implementation.
The findings says ‘the programme was passed on to the people without proper analysis of its effects.’
Malawians were given false hopes by the programme, which have never come to fulfilment as ‘the people were made to understand that more jobs will be created and wealth generated for all’.
Contrary to the ‘milk and honey’ hopes, findings observed that ‘the situation has led to pauperisation’ as the experiences are that of a double blow. More people are instead being laid off because of the privatisation – a recipe for SAP, – coupled with the folding up of businesses and other alternatives are yet to be found.
The findings also observed that there is lack of strategic plans on how to cushion the impact of the economic reforms on the on the poor, despite the fact that Malawi is grappling with introducing private sector perspectives and approaches to take the place of government directed activities as a result of SAP.
In the same vein of misfortunes, the findings unveiled that among thirteen African countries assessed recently Malawi had the highest Gin co-efficient of 0.62, “meaning that it is of the countries in the world with most unequal distribution of wealth.
High ranking politicians have become millionaires in Malawi overnight, a concern that was raised by a ruling member of parliament, which earned him a wrath from all members of the ruling party including the president.
A local man in the village can longer afford a good meal made from well processed maize flour; instead, he has to settle for maize bran.
The government has continued to render a deaf ear and has instead chosen to back the implicated corruption culprits amidst its high ranking officials.
While Malawi’s cost of living is unrealistic, Botswana’s is reasonable. Although Malawi government boasts improvement of its economic stance, people live and yet to shift from it’s deep seated sorrow to some little happiness.
FINDING THE ALTERNATIVE ANCHORAGE OF THE ECONOMY.
In February 1997, Botswana introduced its eighth NDP (1997/98 — 2002/03) with the theme ‘sustainable economic diversification’ putting an emphasis on the growth of the private sector.
The main goal of Nap’s is to accelerate growth of non-mining GDP and concentrate in areas like manufacturing—like the recently identified aircraft manufacturing company, AVTEC— tourism and trade, hotels and restaurants, banking, insurance and business services.
Although mineral reserves for Botswana has span right into the 21st century the government is poised to identify what it calls additional engines growth.
Despite mining accounting for about a third of GDP as it is not ready to take risks is that growth based on a narrow mining foundations not only vulnerable but difficult to sustain in the long term.
Agriculture is the major sector of Malawi’s economy, which contributes more than a third of the GDP and generates more than 90% of the total export earnings. Tobacco contributed over 70% of Malawi’s export shares.
With such statistical standing, a campaign to ban tobacco by the international anti-smoking lobbyists who are branding it a life threatening health hazards and a dangerous drug has therefore dealt Malawi a death blow that the country is desperately looking for an alternative source to replace the once fondly called Malawi’s gold leaf.
Just this year, through a close share Malawi’s economy would have fallen to a disaster of unprecedented scale. The country’s traditional tobacco buyers offered laughable but piteously, threatening prices at her auction floors, in the first day of the exercise.
This sacred the living day lights out of Malawi’s economy. Thanks to the grower’s boycott, in protest against what analysts described as unrealistic prices.
Malawi badly in need of alternative commodities released a report which indicated that heavily dependence on a single commodity—tobacco—makes its foreign exchange earnings extremely vulnerable to change in the world market, hence the need for some diversification to increase the range of export commodities is highly desirable to reduce the inherent instability of its economy.
This discovery had forced Malawians to look beyond their noses in search for an alternative commodity, to such an extent that the search has landed other sectors to settle for a would be saviour crop which the world at negatively.
The first to suggest this crop in question was the country’s deputy ministry of agriculture, Joe Manduwa. In this year’s first sitting of parliament the minister suggested legalising the growing of non-narcotic hemp, which he alleged could easily take from the less favoured tobacco crop.
The tales of the two countries’ economies are a total manifestation of what type of leaders (both post independence and present) leaders proved and prove their credibility.
Today is the posterity of yesterday and let it judge them fairly for much as it involves a lot of facets to put countries’ economies on track the qualities of their leadership also plays a major role to the economies.
Ends.

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