The perils of donor dependency, fully on display in Malawi under Mutharika

Jul 25, 2011

Zimbabwe's usually peaceful northern neighbor Malawi is in sudden turmoil, with an unexpected descent into political violence in which 20 people or more were shot to death by police, and many more injured. The social and economic pressures leading up to the crisis are not much different from those in Zimbabwe and many other countries all over the world. But there is an aspect of the recent tightening of those pressures that should be heeded by all African countries, including a Zimbabwe just coming out of isolation and looking for solutions to its economic problems.

Among the reasons that are being cited for the anti-government protests in Malawi are fuel shortages that have become chronic, power cuts, rising prices and a government increasingly seen as aloof and arrogant. These are issues that have been building up for a long time.

What has helped precipitate the present crisis is the cut of the British foreign aid that formed up to 40% of Malawi's budget, over president Bingu Wa Mutharika's explusion of the UK envoy for a leaked cable in which he accused the president of being increasingly autocratic. Britain in turn expelled Malawi's ambassador and things continued going downhill from there.

The government has said, ''There is no crisis, we will just run a cash budget.'' But with such a large cut in what the country has to work with, of course everything is affected. Spending within your means sounds admirable, but when that is suddenly forced on you as in Malawi's case, the adjustments are wrenching.

This is not a long-planned return to self-sufficiency, but a crisis-caused emergency plan. The many expectations of what was going to be possible for the country to do have to suddenly be massively slashed. Huge negative consequences are entirely to be expected, and it is not surprising that the Mutharika regime is in panic mode.

Foreign exchange, always hard to come by for a country whose needs do not match its income, has become suddenly acutely short, worsening shortages of everything imported and increasing prices further. The Malawi kwacha's value against hard currencies is plummeting, putting even more pressure on the economy.

Zimbabwe has experienced all these problems, perhaps to an extent far worse than Malawi has yet done, and is on a slow but steady march upward.

A success for which Mutharika and Malawi have been celebrated in recent years has been in farming. From famine in the early 2000s, Malawi in recent years has enjoyed maize bumper harvests, even exporting the surplus to neighboring countries like Zimbabwe. A government-funded fertilizer/farming inputs subsidy programme is credited for this success.

A cut in the number of beneficiaries and extent of this subsidy scheme may have one of the most far-reaching effects of Malawi's sudden loss of Britain as a benefactor.

Commenting on how the rosy IMF/World Bank-style statistics of the country's performance are at odds with what ordinary Malawians are experiencing, a Reuters analysis says, ''For most of the years since Mutharika came to power in 2004, it has been one of the world's fastest-growing economies, with annual expansion near 10 percent, due mainly to a donor-funded fertilizer subsidy scheme that boosted maize harvests.''

That the fertilizer subsidy scheme became ''donor-funded'' is the point of this post.

The western/IMF/World Bank free-market orthodoxy held that farm subsidies were bad for poor countries like Malawi. Among other reasons given were that they killed the growth of the local private sector and were hard to sustain. Never mind that the western countries who preach this gospel are themselves closely tied to subsidies for their agricultural sectors.

Mutharika, tired of his country suffering the yearly indignity of begging for food, decided to reject the advice of the donor 'experts' and institute the farm subsidy from the government's own coffers. Fortunately they were accompanied by good rains from the first year, and the results in increased production by Malawi's small holder farmers have been spectacular.

Seeing this success, the western 'donors' who had opposed the subsidy scheme changed tune and decided to share in the glory by getting on the bandwagon of supporting it. And that it is how it changed from a Malawi-funded programme to a donor-funded one.

In exchange for the donors latching on to the scheme and being able to say, ''See, we really are 'saving the poor Africans,'' Malawi's government was able to expand the programme with the additional foreign funds.

There is no doubt that it has made a huge positive difference to Malawi's food security, and to its sense of national pride and confidence. If it can be sustained, it will spur the economy in a way few other initiatives could do in a country which is not resource rich. The sudden cutting of the scheme would also hurt Malawians in a big way, especially if food deficits and their many downstream effects return, which will put Mutharika's regime in even worse trouble with the citizens.

But as long as the scheme was 'donor-funded,' there is a way it wasn't really Malawi's. Even if there had not been the current diplomatic spat between Malawi and chief benefactor Britain, 'donations' can be stopped at any time for any reason. More importantly, they are an instrument of control, as Malawi is finding out.

If the donations were entirely humanitarian/developmental, why is Britain stopping them on an unrelated political matter?

The answer is that it is not possible to separate the humanitarian from the political. If it was, the British government would have found another way to show displeasure at the Mutharika government's perceived petulance than cutting aid which mainly benefits the Malawian people they (the donors) always claim to be most concerned about.

While the coming on board of the donors to support the fertilizer scheme made it possible for Mutharika's government to extend it to more farmers, it also automatically made that government more beholden to the donors and their whims. Mutharika is finding that overnight, the budgetary basis of years of his government's plans has been withdrawn by a foreign power.

If Malawi was troubled before the UK's withdrawal of aid, things are about to get dramatically worse because of the dangerously high proportion of the country's budget that the aid represented. Malawi could not claim to be 'independent' in any meaningful way when 40% of its annual expenditure directly came from another government. That wasn't as obvious as it should have been before is only because it was assumed that relations between the Malawi and UK governments would always be friendly, a naive mistake made by many African countries towards their 'donors.'

As long as your 'donor' considers that your behavior is acceptable to him the money keeps flowing, with tight conditions of course. But as soon as he thinks you are being rude and disrespectful, he cuts your legs off, as the UK has just done to Mutharika's government.

It is interesting that it is not over the fact of the increasing autocracy of Mutharika that Britain has cut off its aid. It is not per se a concern over threatened 'democracy and human rights' that the aid has been withdrawn. It instead has been pulled over the perceived outrage of poor, aid-dependent Malawi asking Britain to replace its diplomat.

This is not supposed to happen! Donors may routinely make demands of their dependents, but it is unheard of for those dependents to behave in the way Mutharika's government did. It is to the perceived petulance of Mutharika Britain is responding, not so much his increasing repression.

''Who does that bloody Mutharika think he is, getting 40% of his government's budget in aid from us and then treating our diplomat that way? We have to teach him a humiliating lesson."

Hence the heavy-handed British reaction, even at the cost of making nonsense of a claim to be motivated to give 'poverty reduction' aid by a concern for the welfare of suffering Malawian farmers.

A reformist democrat who has turned arrogant autocrat is a familiar story in Africa, one Zimbabweans are painfully well familiar with. This is only one layer of Malawi's present troubles, and perhaps the most obvious one, hence all the media focus on it.

For Africans looking for new answers to old questions of 'development' that plague their countries, it is necessary to dig below the surface of the obvious.

As Zimbabwe stirs from its decade-long slump, many lament how the Mugabe government is still in bad books with most western countries, especially Britain and the U.S. Some of those who present themselves as Zimbabwe's best political future and alternative to Mugabe effectively say, ''Vote for us, we will leverage our good relations with the 'donor' countries into more handouts for Zimbabwe.''

In a country also grappling with needs that far outstretch income, just like Malawi and many others, this is spoken and often received as if more aid is necessarily a good thing. Donor-dependency has become a dangerously deeply imbedded part of African thinking/problem-solving, making most African countries easy to manipulate by their benefactors while not making them any more 'developed.'

Malawi's current troubles are a reminder that 'aid' is not 'free. It can actually be extremely costly to a nation, especially when it is suddenly, unexpectedly withdrawn.

Weak, donor-dependent African countries, beware of the motives of those smilingly offering you gifts!


Post a Comment