Sunday, June 21, 2009

Finance Minister' s Challenges

Our new finance Minister takes a task with many challenges. The first of these is taking over from a Minister who rightly or wrongly accredited with extremely impressive economic performance. He will have to maintain that level of performance. Any slippage will be blamed on him, even it is caused by factors beyond his control..

The second challenge is establishing his own standing in the financial world. In today’s world Both the need to attract aid money and the need to “signal” international financial institutions have increased the role of economists certified by international organizations. One is supposed to be ~former IMF official”, “Harvard trained economists” etc. You ought to be able to throw around such expressions “sound macroeconomic policy”, “prudent fiscal policy” “good governance” with natural ease. It also helps to have the right label. The labelling of Africa politicians for Western consumption is fascinating. Bingu whose career was mainly in the UN and African regional organisation became the “former IMF or World Bank official” and of course Gondwe had the perfect credentials. Our finance Minister who for domestic consumption is labelled as the nephew of Dr. Banda, or as head of Blantyre Newspapers and Print and National Food Reserve Agency now appears as “a former UNICEF financial consultant” (Reuters). Presumably this enhances his status as finance minister although it is difficult to see the link. Until quite recently, UNICEF was a staunch critic of the folks from Washington. Our new Minister might find it wise to stress he is from the private sector. Although the current crisis has tarnished the image of auditors, he should also highlight the fact that he worked for the renowned international auditing firm KPMG. He should not worry too much about such questions as the relationship between auditing and macroeconomics.

The third challenge will be around the issue of devaluation. One fatal blunder Gondwe commited just before the elections was his statement that devaluation was then politically impossible, given the then forthcoming elections. The impression he gave was that devaluation would be seriously considered only after the election. It is likely that this indiscretion cost him the ministry and this may be the point Bingu was making when he talked about the importance of “secrecy” in government affairs. Gondwe-s indiscretion may have simply encouraged speculation against the Kwacha. Whatever is the case, the President has promptly dismissed the prospect of devaluation. We do not know where Kandodo stands on the issue. He has yet to visit the Hole for a chat. Malawi businessmen seem to favour devaluation and he will surely hear a lot of it in the financial circles he will now be moving in. Donors and NGOs love devaluation because it makes their money (including their personal incomes) go a long way. He will soon or later have to have a position.

The final challenge is reminding the President of the fiscal constraints within which the government is operating. This can be a hazardous task. It cost Aleke Banda 12 years in jail when told third. Banda the national coffers could no longer afford his profligacy and that Tembo then at the Reserve Bank told him so. Confronted by Kamuzu Banda, Tembo swore he had never told Aleke such a preposterous thing. Aleke ended up in jail, labelled as “wa bodza leni leni”. That also marked the beginning of the Malawi economy since to meet Dr. Banda’s increasingly bizarre demands (the New State House, costly entourages of Mbumbas etc) investments in crucial sectors – infrastructure, education --- had to be cut sharply.

On the positive side, our President understands the economic problems and the international environment. In addition mining will be adding US$30 million to the national coffers from next year and double as much a year after.

Thursday, June 18, 2009

Cabinet List

 

 

President

Dr. Bingu Wa Mutharika

 

Vice President

Joyce Banda (Mrs) 

1

Agriculture and Food Security

Dr. Bingu wa

 

Deputy

Magret Roka-Mauwa(Ms.) 

2

Finance

Mr. Ken Kandodo 

 

 Debuty

Mr. Fraser Nkhoma Nihora 

3

Foreign  Affairs

Dr. Eta Elizabeth Banda 

 

Deputy

Augustine Mtendere 

4

Education

Dr George Chaponda

 

Higher education, Science and Technology (Deputy)

Otilia Moyo-Jere (Ms) 

 

Primary Education (Deputy

) Victor Sajeni 

5

 Development Planning and Cooperation

 Abi Marambika  Shawa 

 

Deputy

 Daniel Siwimbi 

6

Transport and Works

 Khumbo Kachali 

 

Deputy

Lazaro Kasaila 

7

Justice 

Dr. Peter Mutharika 

8

Irrigation

Ritchie Bizwick Muyewa 

 

Deputy

Gringer Musolira Banda 

9

Local Government

Goodall Gondwe 

 

Deputy

MacJones Mandala Shawa 

10

Industry and Trade

Eunice Kazembe (Ms) 

 

Deputy

Steven Stanford Kamwendo 

11

Lands and Housing and Urban development

Dr. Peter Mwanza 

 

Deputy

Tarsiziu Tony Gowelo 

12

Gender, Children and Community Development

Patricia Kaliati (Ms)

 

Deputy

 Catherine Gotani-Hara(Ms) 

13

Tourism, Wildife

Anna Kachikho (Ms) 

 

Deputy

Shadreck Jonasi 

14

Labour

Yunus Mussa 

 

Deputy

J ohn Bande 

15

Health 

Moses Chirambo 

 

Deputy

Teresa (Gloria) Mwale (Ms

16

Youth and Sports

Dr Lucius Kanyumba 

 

Deputy

Billy Kaunda 

17

Home Affairs

Aaron Sangala 

 

Deputy

Annie Lemani (Ms) 

18

National Defence        

Sidik Mia 

19

Information and Civil Education

Lenford Mwanza 

 

Deputy

 Kingsley Namakwa 

20

Natural Resources and Energy

Grey Malunga 

 

Deputy

Ephraim Chiume)

21

Disabilities and Aged 

Bessie Reen Kachere (Ms) 

 

Deputy

Felton Mulli

 

Wednesday, June 17, 2009

On new cabinet

Bingu's cabinet seems well thought out. There does not seem to be any really egregious misallocation of a Ministerial post. Perhaps the biggest surprise in the new cabinet is the replacement of Goodall Gondwe by Ken Kadondo. An American saying goes "if it works don't fix it". It all seemed the Malawi economic management team was doing a good job. The Malawi economy has performed remarkably well in the last four years, enjoying high growth rates under reasonably stable macroeconomic conditions. Driven by agriculture its growth path has has significant on poverty, albeit without relaxing the grip it has only the lives of millions of Malawians. So you have thought Bingu woud keep the team. But then politics is politics.

There are some important lessons to be drawn in the four year experience. The first of these was the importance of the committment by the head of state to economic development and stability. Government ought to pursue its developmentalist mission while ensuring fiscal feasibility of the strategy. Notions of fiscal prudence, efficiency etc need not be harnessed to a deflationary development agenda such as as those propounded by the IMF/World bank teams.

The second lesson is the importance of coherence within government. Here the combination of a developmentalist President and a quite disciplinarian Minister of Finance has been crucial. The President has suggested the bold developmentalist project - fertiliser subsidies, major infrastructural projects etc - but has also respected the fiscal constrains the economy faces. No project has been launched without ensuring that the funds were available. The Minister of Finance has, in turn, understood that his duty is not simply to restrain the developmentalists impulses of the President (as many new Finance Ministers are wont) but to facilitate the achievements of those goals. One strong point about Goodall was his tactful insistence on financial stability while being able to understand the import of the vision of the President. The tough job for Ken will be how to play that role of facilitating the developmental vision and while remaining a prudent and trustworthy guardian of the national purpose. Ken's task may be facilitated by the fact the President himself understands the value of fiscal prudence. The worst he can do is to encourage profligacy by ingratiang the President’s whim and thereby failing to remind the President of the fiscal constraint within which policy is being made.

It aso seems that Bingu has outmanouvred the independents. By waiting so long before announcning his cabinet, he set aside enough time to make the independents aspiring for a ministerial position to declare their adhesion to the party. Some of the independents will feel taken for a ride. This, by the way, may good for the country. Independents, even those who have announced their loyalty to the party, can now play their independent role without having to worry about ministerial posts.