Malawi Economic Justice Network Civil Society Briefing Issue 16

25 June 2002

Inside this issue

Change of contact details

We would like to inform all members, stakeholders and partners that MEJN secretariat has relocated offices to the top floor of GOWA HOUSE, Off African Unity Avenue, City Centre, in Lilongwe.

Our new contacts are as follows:
P.O. Box 20135,
Lilongwe 2
Phone: +265 (0) 1 774643
Fax: +265 (0) 1 774648
Cell: +265 (0) 8 866092/(0) 8 892240

Government subsidised private traders

Stories around the causes of famine in Malawi are making new turns. The Minister of Finance and Economic Planning, Hon Friday Jumbe, has said that Government of Malawi subsidised prices of maize to private traders by over MK I billion, but failed to protect the poor Malawians from the thieving prices of the private traders.

The National Food Reserve Agency (NFRA) had bought maize at MK 7.80 kg in 1999 but sold the same to private traders and Admarc at prices ranging from MK 3/kg – MK 6/kg. The private traders, exercising their free marketing right, sold the maize to starving poor Malawians at prices ranging from Mk 17 – MK42 / kg. Government and most International Financing Institutions refused to subsidise the prices to the local Malawians, because “it is simply a question of demand and supply” and that “Malawi is a free trade area”. Later, government ordered that only ADMARC should sell the maize but at a price of K17/kg.

The revelation only concretizes the suspicion that some big officials played serious role in killing innocent Malawians. After all, they were part of the very same ‘private traders’ who were subsidised by government but sold the maize at a price 500% more. Over a thousand innocent people died of hunger and hunger related diseases this year alone.

Investigations into the issue have gone through several stages, with the Anti-Corruption Bureau (ACB) taking the lead, some Cabinet Ministers sacked, others relocated, while others still being protected. The Chairperson of the Parliamentary Committee on Agriculture was sacked because he had “stumbled upon evidence implicating people in high places.” The Parliamentary committee had revealed also last week that the State President had stopped the probe by the committee into whether “prominent politicians and individuals benefited from the purchase of maize from the grain reserves.” (Daily Times, Oct 1; Sept 25; Weekend Nation Sept 21-22)

This scenario made the Malawi civil society delegation to the World Summit on Sustainable Development (WSSD) carry the message: “No Sustainable Development Without Food Security And Fair Trade”

At the mercy of donors; government required to be on its kneepad

Malawi is now three months into implementation of budget 2002/2003. This year’s budget is of special feature as it is an exact translation of the Malawi PRSP, which was approved by the IMF/World Bank Boards a few months ago. The budget 2002/2003 is geared towards reducing the poverty of the poor through allocation of 17.1% of total budget to Priority Poverty Expenditures of Agriculture, Education, health, roads, water, Targeted Input Programme (TIP), Gender, Youth and Community services etc.

As is ‘normally’ the case in poor Malawi, donors play a crucial role. In this year’s budget alone, for example, there are 192 development projects of which only 1 is fully funded by Government, 60 funded from grants, while 131 are from loans (future debt burden for Malawi)

This is a very serious case as ‘development’ is at the mercy of external forces.

The experience of fiscal year 2001/2002 makes the probability of this year’s budget deliverance smaller. Last year, the IMF withheld over MK 3.5 billion (US $47 million) of its PRGF funds after Malawi got ‘off-track’ its economic management commitments. In the same year, DFID, a bilateral donor, withheld over MK900 million (US $12.5 million). We also saw DANIDA pack up its boots. This left government in a very tight corner. One thing was sure anyway, that from the ‘mistakes’ of a few, the whole nation was punished.

The situation has not changed much this year. Information from the Ministry of Finance and Economic Planning shows that at the moment government is relying solely on domestic collections because no donor has come yet to support the budget 2002/2003. It is hoped, prayed for, and wished that donor support would come in December 2002 after the IMF board reviews Malawi’s performance and compliance to the IMF Poverty Reduction Growth Facility (PRGF) that Malawi signed in December 2000. Unfortunately, most bilateral donors to Malawi would resume their support only if the IMF boards recommended resumption of the PRGF. Domestic revenue in Malawi amounts only to about half the total budget.

This scenario leaves government with no choice but to be on its kneepads, beg for international institutions’ support. This has further potential to derail implementation of the MPRSP whose success is built on commitment from donors to provide over 60% of the resources. Obviously the MPRSP is not being implemented to the full as was promised by Hon Jumbe in the budget statement. Which direction are we facing? Will the MPRSP join the pile of documents that will gather dust? Or government must put on its kneepad? Perhaps we should bank on the NEPAD (not PRSP), which relies on donor support too?

Towards / In Total Privatisation: Who said we will not go?

Often some government and donor officials have denied that Malawi will privatise nearly every lifeline. But progress indicates that the government intends to privatise institutions providing food security in Malawi, water, electricity etc. This will translate into the livelihood of the people being at the mercy of ‘forces of the market.’

This Privatisation behaviour has however been opposed by civil society. The latest case is that of ADMARC. According to figures from the Parliamentary Committee on Agriculture that was conducting hearings on the views of Malawians on whether or not to privatise Admarc, all of the 36 respondents were against ADMARC privatisation. We hope that the findings of the committee will add to the cries of the poor and government and pressurizing donors not to privatise the dear ADMARC but put proper management in place.

In South Africa, more than two million people, organised under the Congress of South African Trade Unions (COSATU) are from 1st – 2nd October 2002 on strike against privatisation. Many public Officers from important institutions such as the Police have taken leave in order to join the protesters. The comrades are protesting with banners reading “Create Decent Jobs. Down with Privatisation, Down with Casual jobs”.

Companies Privatised, Being privatised, To be privatised

Since the establishment of the Privatisation Commission of Malawi, 42 parastatals have been privatised. Government has sworn to privatise 28 more companies.Following is list of the companies sold so far, those in the process and also those for future privatisation:

Companies Privatisatised Parastatals under privatisation now Parastatals planned To Go
  1. Auction Holdings
  2. Central Tobacco Properties
  3. Chemicals and Marketing Ltd
  4. Chillington Agrimal
  5. Commercial Bank of Malawi
  6. National Bank of Malawi
  7. Malawi Daily Industries
  8. Malawi Lake Services
  9. Malawi Railways Ltd
  10. National Insurance Company
  11. New Building Society
  12. Optichem Malawi Ltd
  13. Import and Export
  14. Portland Cement
  15. Smallholder Sugar Authority
  16. SUCOMA
  17. Dwangwa Sugar Company
  18. Malawi Book Service
  19. Packaging Industries
  20. Government Hostel
  21. Encor Products Ltd
  22. Finance Corporation Ltd
  23. Kaombe Farm
  24. Kasungu Inn
  25. Ngabu Inn
  26. Kuti Ranch
  27. Likhubula Lodge
  28. Chigumukire Lodge
  29. Kachere Lodge
  30. Ntchisis Lodge
  31. Mangochi Lodge
  32. Limbe Rest House
  33. Blantyre Rest House
  34. Viply Ltd
  35. Vipcor
  36. Zomba Trout Farm
  37. Brick & Tile Company
  38. Chiphazi Farm
  39. Choma Ranch
  40. Mchenga Coal Mine
  41. Mining & Investment Development Corporation
  42. Mpwepwe Boatyard Company
  1. David Whitehead & Sons
  2. ESCOM
  3. Leopard Match Co
  4. Malawi Catering Services
  5. Malawi Finance Co
  6. Malawi Rural Finance Co
  7. Malawi Tea Factory Co
  8. Smallholder Coffee Authority
  9. Smallholder Tea Authority
  10. Kasungu Flue Cured Authority
  11. Lifidzi Farm
  12. Meru Ranch
  13. MPICO Ltd
  2. Bata Shoe company
  3. Shire Bus Lines
  4. Blantyre Water Board
  5. Lilongwe Water Board
  6. Dzalanyama Ranch
  7. Malawi Development Corporation
  8. Malawi Housing Corporation
  9. Lilongwe International Airport
  10. Government Press
  11. Indefund
  12. Mzuzu Smallholder Poultry Project
  13. Plastic Products Ltd
  14. Stockbrokers Malawi Ltd
  15. Sunbird Tourism

The Benefits(?) From Privatisation in Malawi

One of the concerns often raised by workers in the parastatals under privatisation is that of loss of jobs and poor welfare of the remaining staff. Most circles of the civil society see privatisation as process where government refuses its responsibility of providing for the basic needs of the people and referring the community to the mercy of profit-oriented private traders. Some critics also see privatisation as a deliberate loss of assets by government since often times the companies are sold at a loss. In Malawi, all these issues are testing themselves in the privatisation process.

From the sale of 42 companies, government raised an amount of MK 1.67 billion (about US $ 20 million). The proceeds from the privatisation are not used for viable investment either. From the sale of the above companies, some money is used to run the Privatisation Commission, restructuring / making the other prospective parastatals ‘viable for privatisation,’ support payments for retrenchment / redundancies and in funding ‘any project within the government development plans’

The privatisation process itself also costs jobs! For example, 322 jobs were lost at Malawi Railways Ltd, 220 at Portland Cement, 130 jobs lost at Malawi Book Service, 45 jobs at the Government Hostel and 25 at Malawi Daily Industries just to mention a few.

Below is the breakdown of the use of proceeds from the Malawi privatisation process:

Use Amount (MK)
Funding the Privatisation Commission 135.7 million
Restructuring public enterprises ready for privatisation 67.3 million
Retrenchment costs & settlement of debt 200 million
Construction of 8 Day Secondary Schools (Kagulama, Jalasi, Walemera, Madzanja, Nansomba, Chingale, Mpira & Wenya Day Sec Schools) 257.7 million
Road maintence 83.9 million
Purchase of Dawa House (government house) 15.5 million
Privatisation Special fund 21.5 million
Boreholes 57.3 million
Youth Credit Scheme 34 million
Retained by ADMARC and MDC 818.54 million

As at 30th June 2001, there was a balance of MK 133 million in the privatisation revenue account. (Source: Ministry of Finance and Economic Planning and the Privatisation Commission).

Alternative view of Gender and Globalisation

An interesting booklet on gender and Globalisation has been released by the International Labour Resource and Information Centre (ILRIG). The booklet is in lay-person’s language and is ideal for public education and economic literacy programmes on dimensions of international trade. To obtain copies contact: ilrig@wn.apc.org

Malawi Economic Justice Network

Gowa House, City Centre,
Off African Unity Avenue,
P.O. Box 20135,
Lilongwe 2
Phone: +265 (0) 1 774643
Fax: +265 (0) 1 774648
Mobiles: +265 (0) 8 866092/(0) 8 892240

MEJN Secretariat is in Lilongwe. Focal points are available also at CCJP and Livingstonia Synod in the North and Christian Service Committee and Oxfam in the Southern region of Malawi

MEJN mission statement

MEJN is a coalition of civil society organisations. We stand for poverty reduction through equitable distribution of economic opportunities, resources and income. We will achieve this by the full participation of civil society in economic governance using policy research and dissemination, advocacy, dialogue, monitoring and capacity building”

Activities of MEJN

  • Maximising the participation of civil society in issues of economic governance concentrating on:
  • Economic literacy to members and civil society in Malawi
  • Support the efforts of the sectoral networks in reaching out to the grassroots in the implementation, analysing, monitoring and evaluation of the programmes.
  • Research and advocacy
  • Participation in the formulation, implementation, monitoring and evaluation of government development programmes – PRSP, Budget, etc.
  • Advocacy for democratic and participatory economic governance
  • Campaign for debt cancellation and proper use of the relief thereof

MEJN has 61 member organisations in Malawi. MEJN works hand in hand with the sectoral networks of CSCQBE, CISANET and MHEN.

The Sectoral networks introduced

Civil Society Coalition for Quality Basic Education (CSCQBE) is made up of 23 organisations providing services to improve education in Malawi. (Coordinator: Mc Billy Ng’ombe, can be contacted through Teachers Union of Malawi; 01 727006 / tum@sdnp.org.mw)

Civil Society Agriculture Network (CISANET) consists of 13 organisations, delivering services to improve agriculture and rural livelihoods in Malawi (Coordinator: Vic Mhoni, can be contacted through Christian Services Committee, Lilongwe; 08 872926, vicmhoni@sdnp.org.mw)

Malawi Health Equity Network (MHEM) is made of 12 organisations working in the health care sector in Malawi. (Coordinator: Dr Adamson Muula, and can be contacted at College of Medicine in Blantyre; 08 838067 / a_muula@yahoo.com)