Malawi is stuck. Among the five poorest countries at independence, in 2021 it was ranked second from the bottom globally.
Currently per capita income is $390, a quarter of the sub-Saharan average, itself seven times less than the global average. Malawians were very poor at independence in 1964, their average income just 5% of the global average; today they have unimaginably slipped further backwards, to a paltry 3.5%.
Put differently, Malawians are nearly 30 times poorer than the average global citizen, an astonishing statistic when one contemplates its development advantages (a lake covering one quarter of its total area, and rich agricultural land) and how well we understand development choices, challenges and options by now.
Following independence, Malawi’s growth patterns initially tracked those of sub-Saharan Africa, increasing at 3.7% annually. Since 1980, however, it started to fall behind the rest of the continent, by then hardly a stellar performer.
Malawi’s real per capita GDP grew at an average of just 1.5%, for example, between 1995 and 2015, well below the 2.7% average in non-resource-rich African economies.
There are few countries as poor which are not in war. At least Malawi has that going for it. To add insult to injury, Malawi has remained vulnerable to episodic financial crises, characterised by balance-of-payment issues, forex unavailability, rising inflation, high debt levels, and a collapse in growth rates.
Why is Malawi so poor, and why the recurrent tendency to crisis and constant slipping further backwards?
This is a result of many factors, of course.
Many Malawians emphasise a combination of the poor colonial inheritance, being landlocked, poverty, and unfavourable terms of trade. Others would prefer to point to the harsh regime of Kamuzu (Hastings) Banda, the Scottish-educated authoritarian who ran the country with an iron fist until the advent of multipartyism in 1994 – though Malawians are divided in their loyalty over the legacy of a man who referred to his own people as “children in politics”.
Even though things started to fall apart during Banda’s rule, especially by the late 1980s, forcing the arrival of the World Bank and imposition of a series of pro-market reforms, and growth was low, he was feared and, as a consequence, remains revered. As Dr Banda put it in 1966: “If I am a dictator, it is because my people want me to be. I am a dictator of the people, by the people and for the people.”
Banda’s brand of big-man politics highlights a consistent element over the past six decades: the poor choices made by leadership and the corrosive nature of governance. It’s not that Malawi lacks governance, but that the purpose of government is to enrich an elite at the expense of the poor.
One World Bank document explains this as follows: “Malawi’s stagnation is in large part driven by a stable but low-level equilibrium, in which a small group of elites compete for power and political survival through rent seeking. The competitive-clientelist political settlement creates strong incentives for policies that can be seen to address short-term popular needs (such as agriculture subsidies, market and price distortions), while undermining the ability to credibly commit to fiscal discipline and long-term reforms needed to spur productive structural transformation.”
What this boils down to is the preference for a political pact among the elite to extract rents – even to the extent of driving macro-instability. According to this argument, there is no consensus to grow the pie for all. Instead it is shared among the few.
This is substantiated by the resistance to securing a proper rail network (acting in the interests of a transport mafia), the resistance to land reform (keeping the people poor, and elite interests secured), the resistance to reform fertiliser subsidies (for those who sell and distribute) and in the variety of state intermediaries in almost every area of the economy, from tobacco auction houses to buying agents for maize.
In each of these areas there are rents to be protected and constituencies to be maintained.
This argument is used to explain why the government has retained the middle-man style of state intervention in the economy when this had, even by the end of the supposedly relatively prosperous 1980s, proved unwieldy, to the point that the government had to seek assistance from the World Bank.
It also clarifies why Malawi keeps going with agriculture input subsidy schemes and bucking regional market opportunities, and why the civil service is comparatively large (at 180,000), yet guided less by performance than loyalty and a pernicious “per diem” culture of allowances to augment low salaries.
How can this be broken so that Malawi progresses so that its growing number of citizens can lift themselves out of poverty? And can outsiders help?