Uganda should emulate Malawi for faster economic growth

It is heartening to learn that Ugandan leaders joined their Kenyan, Tanzanian and Swazi counterparts who have gone to Malawi over the past three months to learn how the poor southern African country defied donors three years ago and subsidised its farmers whose response was the doubling of maize production in one year.

In retrospect, it seems incredible any half-competent economic policy-maker could have a country as poor as Malawi not to give subsidies to its farmers at a time when entire population was facing mass starvation. But the donors, led by the World Bank and the International Monetary Fund (IMF) did exactly that at a time when the country needed to import 400,000 tonnes of maize.
Malawians’ plight was made worse by its having to import all its needs through South African ports, railways and road networks which the country shared with its other land-locked neighbors, Zambia and Zimbabwe.

Fortunately for Malawi, its President Mbingu wa Mutharika had worked with the Washington-based Bretton Woods institutions – the World Bank and the IMF—long enough to know their lack of understanding of African problems although this did not stop them from writing prescriptions and demanding that they be followed to the letter or else.

When Malawi refused to toe the then economic orthodoxy that the peasant farmers be left at the mercy of free market forces, the donors walked away. But three years later, after first dismissing incontrovertible evidence that the subsidies had enabled farmers to increase their production to 3.6 million tones, more than double the country’s requirement of 1.6 million tonnes, the donors are going back to Malawi.

The lesson here for Uganda and other African countries that have suffered unnecessarily because of heeding donors’ advice to free up the markets and get out of business, is that they take a second look and see what sectors of the economy would be better served by the state’s involvement.

Those countries that have not completed a wholesale sell-off of public assets should also reflect on the fact that the developed countries that supported the free market doctrine most vocally are today competing on who will buy a greater stake in their countries’ financial sector.

In Uganda, the argument should not be on whether the government should subsidise farmers or get involved in industry or any other business but on how best it can do so to ensure that tax-payers get the best value for their money. Perhaps, this soul searching could result in the government kick-starting agro-business that would add value to local agricultural produce before exporting them to the regional and global markets.

This would be undoubtedly better than waiting for private investors mainly from the industrialised countries many of whom seem more interested in the incentives they get from government, such as free land, than in setting up sustainable industries and businesses.

The result is that some of these fly-by-night carpet-baggers sell off the land as soon as they get their hands on the title deed. Other brief-case investors are more interested in taking advantage of their employees poverty by paying them slave-wages and forcing them to work in appalling conditions.

Yes, the Malawi experience should lead to a re-think of every policy that has been imposed from Washington and other industrialised world capitals over the past four decades. After all, instead of these policies making the majority of the population richer even in countries like Kenya where there were no civil wars during the period they became poorer and increased the gap between the rich minority and the poor majority.