My last blog on 2nd August 2014 asked the
question of whether the hoe is a symptom of poverty.
Poverty in Malawi has worsened in the past year. Newly
released World Bank data shows that Malawi is now the poorest country in the world by a measure
called Gross National Income (GNI) per capita. There were floods all over the
country in January this year that negatively impacted harvest. For a country
that is heavily dependent on agriculture, floods that destroy crops are not
good news.
Why is Malawi the poorest country in the world? Malawi has
always been a peaceful country. No wars to destroy the economy. It is a
democratic country with elections that result in peaceful transfer of power. Political
debates are vigorous both in the general assembly and outside with contribution
from civic organizations. The judiciary is professional. Malawi is rich in
natural resources. Leaders are very highly educated who understand how to set
goals and visions as well as implement them. The country is beautiful and the
people are nice. So what is the problem?
I do not agree with Sam Mpasu on politics but I agree with
him when he points the finger squarely at the International Monetary Fund
(IMF). Writing in the Daily Times of Malawi after Malawi’s July 6 independence,
he blamed globalization and the IMF for Malawi’s poverty and industrial failure. The role of the IMF on economies of countries has been debated for
many years so I will not dwell on this topic here.
Back to the issue of the hoe.
I will introduce a little bit of Mathematics to make my
point. If Mathematics is not your cup of tea, please do not let this scare you.
Read on.
Economists use a mathematical equation called the production
function: Y = f(L, K, N, H).
In English, this says an economy grows if there are people who
work more and make more money (L), capital and technology improves (K), more
natural resources are discovered (N), and/or people are trained and acquire new
skills (H). The hoe represents farming technology in Malawi so it is part of K.
The argument presented at last year’s CISANET conference is that agriculture
technology has not changed in Malawi for more than 50 years resulting in the
economy not growing (K not growing results in Y not growing). This makes sense.
But what about labor (L) and natural resources (N). The
answer is diversification. There is need to grow industry activity that uses
the natural resources and employs people. Malawi’s population was 4 million at
independence in 1964 and is estimated to be 16 million in 2015. This is what
they call exponential growth. Potentially, this represents a large labor force
and consumer market. Unfortunately, very few new industries have been
established in Malawi. In fact, Sam Mpasu’s article lists industries that have
died instead.
With regards to natural resources (N), there has been
increased mining activity in Malawi over the past 10 years. The jury is still
out as to whether this mining activity is helping the poor people of Malawi.
Africa tends to have the “curse of natural resources”. This is a phenomenon
where money from natural resources is embezzled by a few while most people remain
poor. Oil is the main example of such resources. This even leads to wars in
some countries.
Malawi needs to attract industrial investment that will
employ millions. Some of the industry will be processing the plentiful natural
resources to produce manufactured goods within Malawi.
