Op-Ed

Averting Further Crisis in Malawi

Julius Agbor

On July 20 and 21, protests spread across the streets of Lilongwe, Mzuzu and Blantyre in Malawi. These protests— triggered by brewing political and economic concerns in the country— led to the death of at least 18 people, several hundred arrests and serious property damage. The protesters demanded that President Bingu wa Mutharika urgently address the rising cost of living in Malawi caused by fuel, foreign exchange and power shortages, and tax hikes.

For nearly two years, Malawians have been lining up for fuel and the situation appears to be getting worse. The country’s unreliable power supply has severely hurt Malawi’s nascent industries and further worsened the unemployment situation.

A new tax law in Malawi— aimed at increasing state revenues and reducing the country’s dependence on foreign aid— increased taxes on traditional commodities and imposed new taxes on essential goods, such as milk and bread. The new taxes have created an extremely difficult economic situation for the people of Malawi. The other major concern of protesters has been about the acute shortage of foreign exchange. Malawi’s narrow exporting base, coupled with an increasingly uncompetitive exchange rate, has resulted in the progressive decline in foreign exchange.

Besides these numerous economic challenges, Malawians are also becoming weary of Mutharika’s authoritarian style of leadership characterized by the victimization of political adversaries, intolerance, human rights abuses and frequent media censorship. Yesterday, civil society organizations in Malawi decided to extend their initial deadline of August 17, which they gave Mutharika to redress these problems or face further protests. The decision by civil society organizations to postpone protests until further notice will allow the courts to clear a pending legal challenge against their plan. In the meantime, foreign donors—most notably, the United Kingdom and United States— have withheld further aid to Malawi until Mutharika demonstrates sufficient commitment to governance reforms.

While Mutharika has asked civil society organizations not to resume protests, his ability and willingness to meet their concerns remain questionable, at least in the short run. First, some of the country’s present economic challenges, such as acute power shortages, can be linked to severe droughts that have been affecting many countries in Africa. Second, the slow transformation of the Malawian economy from an essentially primary commodity producer to a valued-added manufacturing economy has made it difficult to stabilize domestic prices and foreign exchange reserves. The recent 10 percent devaluation of Malawi’s currency might not sufficiently increase foreign reserves, given the current uncertainty in international capital markets and potential domestic supply-side constraints. This suggests that the problem of insufficient power and Forex might be difficult to redress in the short run even with donor assistance.

Furthermore, barely two years after complying with the stringent requirements of the Highly Indebted Poor Country (HIPC) Program— an International Monetary Fund program that provides debt relief and low-interest loans— the Malawian economy was subjected to an unprecedented global oil and food price shocks during 2008-2010. For an oil-importing landlocked country, these global price shocks have had serious consequences, including: upward pressure on the exchange rate, depletion of foreign reserves, increased vulnerability of the economy and its accrued desirability of foreign aid. Malawi is now more than ever subjected to the actions and demands of international donors.

But Mutharika’s willingness to address Malawi’s problems appears to be incompatible with his erratic personality, which is why the donor community is pressing him to open up the country’s political and economic space. However, the suspension of aid to Malawi, which is meant to discredit Mutharika’s regime and force him to concede to reforms, comes at a very high price to the average Malawian in dire need of basic subsistence living. In the absence of aid to Malawi and should the deadlock between the country’s government and civil society continue after August 17, there is little doubt that living conditions will continue to deteriorate with possible negative spill-over effects to neighboring countries in the otherwise stable Southern African region.

Timely intervention by the international community, and particularly the African Union, is necessary to resolve the situation. The international community should facilitate a tripartite meeting between Malawi’s government, opposition and civil society. The support of the international community in this direction would not only facilitate dialogue, but would also ensure that the resolutions are binding for all groups involved. Possible parameters for discussion at the tripartite meeting should include: constitutional reforms to strengthen the independence of the legislative and judicial arms of government; the establishment of independent advisory councils on key sectors of the economy, such as energy, fuel and food; and the promotion of an independent media and human rights, as a means of empowerment, voice and transparency.

For his part, Mutharika must maintain a great degree of restraint and tolerance with his critics. This would improve dialogue and understanding among his countrymen. Indeed, all political actors in Malawi must exercise restraint and avoid jeopardizing the future of their country for selfish political gains.

More

Get daily updates from Brookings