"Déjà Vu All Over Again." This is the best way I can sum up what is percolating on the beautiful country of Malawi. Remember Africa of 1980s and 90s, when International Monetary Fund (IMF) inundated many cash strapped countries with austerity measures before granting credit lines to them; this is exactly what Malawi is experiencing at the moment.
For those who do not know anything about Malawi. It is a landlocked country in southeast of Africa, with a total population of 16,323,044 and a GDP less than $6 Billion. It is among the poorest country in the world. Malawi sources of foreign exchange are tea and tobacco, with supplementary economic aid coming from donors notably World Bank, African Union, IMF and others.
The president of Malawi, Joyce Banda is a powerful and resourceful politician, whose commitment for improving the lives of her people is unquestionable. She was sworn as the first woman president in her country and Southern African region when President Bingu Wa Mutharika passed away.
President Banda was recently invited to the White House by President Barrack Obama and she was showcased as one of the progressive leaders in Africa. In the company of three other African leaders from Senegal, Cape Verde and Sierra Leone they partake in the political economy dialogue at United States Institute of Peace. President Banda was articulate and very knowledgeable on the economic globalization and she pulled all the strings she can to impress United States investors.
President Banda has limited options to juggle with in order to improve the economy of her country. The country has no adequate source of foreign exchange and there is nothing much President Obama can do for her country unless to dole out a miniature foreign aid which will not make any difference to her country. Malawi is on her own and IMF is not going to make life easy for her country. Although that signing up to IMF austerity measures has opened up to trickling of liquidity, but the price Malawi paying is may be too high.
Trade Liberalization and Tough Austerity Measures
Trade liberalization at its extreme may backfire in Malawi, the sudden removal of all trade barriers may encourage the dumping of cheap foreign commodities in the country. Without the protection of emerging industries from outside competitors, there may be stunting in the springing and germination of industrial growth in Malawi. The ramification will be registered in the increase of unemployment and inflation. Speaking of spike in the inflationary trends, Malawi has experienced a massive increased in the rate of inflation since the inception of structural adjustment of the economy.
What IMF could not accomplish in Europe has become quite so easy for her to accomplish in Africa. While IMF is struggling to convince Eurozone financial troubled spots to cut down on spending; Malawi, a meager African country has already embarked on one of the toughest austerity measures you can ever think of.
IMF compelled Malawi to devalue her currency Kwacha substantially, and as of today Kwacha (Malawi currency) has been devalued by almost 50 percent. With the devaluation, Malawi Kwacha now floats and was recently reported to be trading for MK400 to $1 US Dollar. Before the floating and being subjected to market forces of demand and supply, kwacha was pegged at MK167 to $1 US Dollar as of first quarter of previous year.
The idea for devaluation is to make Malawi products cheaper for foreign buyers. But the danger for Malawi with her currency devaluation is her limited products to export. Malawi does not have arrays of finished products to export and now with devaluation of Kwacha her agricultural products mainly tea and tobacco will bring in lower returns.
The Malawi was also asked to rein-in spending by removing subsidies given to the poor masses and to privatize public own entities. Malawi external debt stood at $1.214 billion as of 31 December 2012 and servicing of the debt continues despite structural adjustment and reduction in spending.
The bite of the bitter prescriptions by IMF has begun to be felt by the poor masses of Malawi who are mostly subsistence farmers that dwell in rural areas. The inflation rate stood at 36.4 percent and this is a huge number that it brings Kwacha to its knees, even to a point of insolvency because its value as medium of exchange has been drastically diminished by devaluation and inflation. There be increase in unemployment and prices of essential commodities will soar. All these are already happening.
These conditions are too way harsh for Malawians, this is not to say that Malawi does not need any restructuring of her economy but IMF austerity measures may turn out to do more harm than good. The conditionalities for granting of credit lines and attraction of donors may be self defeating due to enormous toil been foisted on the people of Malawi.
The shock therapy by IMF may threaten the economic and political stability of Malawi that President Banda pledged to stabilize. And it must be noted that sound macroeconomic fundamental may not be unsustainable when the desperate poor masses are left in the cold.
Political stability may unravel when the people become unhappy with the political leaders due to drastic depreciation in the standard of living and undesired scenario may bring about the rise of civil disobedient. And together with sharp rise of criminality may overwhelm the system. And this is not the intended objective that IMF and Malawi policy makers intended in the first place.
Malawi needs some form of reforms but shock therapy without adequate palliative measures to cushion its effect, is not the best way to maintain and achieve sound macroeconomic stability.
As vice-president, the mother of three assumed the top job in the landlocked and impoverished country on Saturday under the terms of the constitution. The 61-year-old cuts a maternal figure that presents a stark contrast to her professorial predecessor, who styled himself the "Economist in Chief".
A winner of national and international awards for her work as a supporter of women's rights, Banda was last year named by Forbes Magazine as Africa's third most powerful female politician after Liberian President Ellen Johnson Sirleaf and Nigerian Minister of Finance Ngozi Okonjo-Iweala.
She will hope her influence stands her in good stead as she looks to rebuild ties with Malawi's main foreign donors - including former colonial power Britain and the United States - who had squabbled with and been alienated by Mutharika.
Until now the policeman's daughter has spent a lot of her time and energy campaigning on behalf poor rural African women, trying to persuade them they should not simply accept the existence they have inherited.
She has said her ambition is to set women on the world's least developed continent free from the cycle of poverty and abuse that has haunted them for centuries.In an interview late last year, she cited the case of a childhood friend in her ancestral village as one reason she has kept on campaigning.
She said her friend, much brighter than herself, was forced to leave high school after just one term because her family couldn't afford the $12 needed for the school fees.
"I went on to go to college and I became the vice president of Malawi. She is still where she was 30 years ago," Banda said in the interview with the Global Post.
"The vicious cycle of poverty kept her there and took away her options. I made up my mind at that point, whatever would happen in my life, I would try to send girls to schools."
EXPERIENCE IN GOVERNMENT
This personal pledge was behind Banda's decision to complete a Bachelor of Arts Degree in Early Childhood Education from Columbus University in the United States.
Setting up a garment manufacturing business and later a bakery, she said she used the proceeds to send underprivileged girls to school.
She also founded three major organisations in Malawi: the National Association of Business Women, the Young Women's Leaders Network, and the Joyce Banda Foundation.
"We know that early marriage, early pregnancy, and early death of young women in childbirth are connected to how long they stay in school," she says. The campaigning for women's rights did not stop when she joined the government in 2004. As Minister of Gender, Child Welfare and Community Services she fought to get a domestic violence bill enacted.
She became Minister of Foreign Affairs in 2006 and the country's first female vice president in 2009. A year later Banda was kicked out of the ruling Democratic Progressive Party (DPP) as Mutharika pushed to groom his brother Peter, Malawi's foreign minister, as his replacement.
Creating her own People's Party, Banda maintained her state position as vice president. She is married to Richard Banda, a former chief justice of Malawi and Swaziland.
Banda's presidency seems set to usher in a fresh opportunity for Malawi, and many will be hoping that under her leadership the small southern African state can reclaim its tourist brochure reputation as "The Warm Heart of Africa".
Raising Malawi- was initiated by Madonna with a partner that is dedicated in contributing to the well being of less privileged women and children of Malawi. Madonna who was known as a material girl was projected as being mundane by the media. But with this African venture she has defined herself and show to the whole world what is important to her. Family, children and philanthropy are the core and at center of Madonna’s life.
She is now building a modern Academy school for girls in Malawi while caring for AIDS orphans. According to her the Academy school can become a model for girl schools in Africa. Madonna’s love for Malawi started when she adopted a boy from Malawi, since then she has adopted a girl from the country. Madonna was known for being compassionate but this strategic move on her part was unexpected. Thinking in the line of uplifting the poor by laying a strong foundation for scholarship and education is a strategic move. By providing education to the less privileged girls of Malawi she had opened a door of opportunity and empowerment that cannot be taken away from them.
No type of philanthropic effort that can be undermined nor underrated but some are more durable and everlasting than others. When you feed a hungry person, it is a noble gesture. But when you give a poor person a skill, you have changed the life. When the poor can feed herself especially in developing world the significance is enormous. Instead of the continuous lecture about caring for the poor, Madonna is doing something about it. African leaders will receive thousand of recommendations on how to eradicate poverty but a Madonna is taking the step to change the lives of young girls. By empowering these young girls the entire village has been empowered. Education is the greatest tool to eradicate poverty for it will enable the recipient to think wisely and venture into the world without ignorance and illiteracy.
The greatest strike against young girls of Africa is lack of opportunity, in some instances they are compelled to start working at every tender age. As a result of poverty and lack of opportunity, girls and boys could not even attend primary school in some parts of Africa. When young minds are condemned to life of ignorance, they dwell in darkness and abject poverty.
Madonna deserves a lot of credit for helping the poor of Malawi and it shows the content of her character. Madonna, one of the greatest musicians of our time and Hollywood actress do not have to put her money, time and prestige to help a nation that is very far away. But she has compassion and love on the suffering children and blighted youths. Instead of calling meetings and conferences she set a project in motion to solve the problem the best way she can. She put her money where her compassion was and by so doing pushed our collective humanity to a brighter corner.
Poverty and lack of opportunity have destroyed lives of children in Malawi and Africa. Madonna project in Malawi involved helping thousands of children that were orphaned by AIDS. These children need somebody to help and guide them. Nobody is saying that Madonna is an angel but she done something that only a person with the fear of God will do.
Education and healthcare will bring a great beginning for the children of Malawi and Africa. Madonna has become part of the solution and this is a victory for the children of the world.