Friday, March 17, 2006

Problems at the Grassroots in Malawi

D. D. Phiri writes a column in Economic and Business Forum in Nation Online ( from Blantyre, Malawi (17 March):

There has been concern for sometime that certain business people in Malawi mark prices of their merchandise in foreign currencies such as US dollars and British pounds. Are they doing this to aggravate inflation and fleece the wretched ones of the earth?Primarily, these traders are responding to the natural instinct of self-interest and self preservation. Whether in doing so Adam Smith’s invisible hands leads them to do public good is a matter of debate.”

The columnist goes on to discuss the impact of inflation on business decisions and the availability, or rather the scarcity, of entrepreneurial talent. Inflation is a macro-question and must be squeezed out of the economy if development in Malawi is to take place. The lack of entrepreneurs in Malawi could be a micro-problem, related to risk, always made worse by the uncertainties of inflation.

D. D. Phiri gives an example from the grassroots:

The average Malawian prefers business lines that sooner than later get cash flowing in. Unfortunately, these are over-crowded by “me also” business people. When one man opens a grocery at one spot soon others erect theirs nearby. When one man starts a minibus service in no time the country is flooded with minibuses, some of them with rickety seats and doors that are difficult to close.”

What Malawi does, please don’t institute regulations to ensure taxi doors shut and the vehicles are ‘safe’. I know it sounds daft (even callous), but the army of inspectors needed to nominally enforce the regulations only adds to unproductive activity and to regimes of petty bribery, the last thing Malawi needs.

Make it easier to set up businesses, especially small businesses. Yes, there will be over-crowded markets but these find their own level pretty quickly - those losing money either find a way to make it from what they are doing, such as diversify into parcels carriage, repairs and auctions (competition!), or they turn their hands and money to some other line of business. It’s called mobility and flexibility (and the division of labour).

I liked the line: “Whether in doing so Adam Smith’s invisible hands leads them to do public good is a matter of debate.”

Of course, D. D. Phiri may not have meant by it the same that I would if I had written it, but he/she should hold on to that idea, forget about mythical ‘invisible hands’ and continue highlighting the problems on the ground, because that is where solutions will be found, provided inflation is beaten, law-and-order established, corruption reduced, then eliminated, and elementary work-disciplines become the norm not the exception.

Recently, the Scottish First Minister, Jack McConnel, announced an initiative from Scotland to regard Malawi worthy of Scottish support and assistance. I do not have much hope for this support if it only tackles problems at a government-to- government level (much talk and travel, not much impact), and I offer the advice to think at the grassroots level if self-sustainable development is to take root.

Scottish Presbyterian churches have a long history of a presence in Malawi (Nyasaland before independence – Blantyre is a place in Scotland, near Hamilton and Glasgow) and it may be appropriate if Adam Smith’s ideas are applied to the development phase as part of the initiative conducted under the aegis of the Scottish Executive.


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