Test of Joyce Banda leadership
There is always a moment in leadership when a stern challenge pops up, and almost an unwelcome visitor storms a president’s desk to stir national trouble.
But the president’s capacity to avert such a moment from spilling into a crisis is what defines if such a leader is great or not.
Yes, he might not rate as one of America’s greatest leaders, but Barack Obama rose to power at a time when the president’s desk was red hot, piled with timely bombs.
Two wars to end in Iraq and Afghanistan, and even more challenging, an economy on its knees to fix—an economy devastated by the worst recession since 1930.
If he had made a wrong call on fiscal policy, a million more people could have lost their jobs, or the wrong judgement about an enemy, thousands more could have lost lives.
Of course, America is yet to recover from the recession and the horrors of the two wars. But at least, it is not in a fiscal and foreign policy crisis it could have been if Obama had made poor judgements.
So, should Obama be christened a great leader?
Malawi President Joyce Banda, like Obama, inherited a presidential desk littered with piles of stern economic challenges to overcome.
Fuel, forex, rising cost of living and production, diplomatic rows, tense political intolerance, weak public sector—the list is endless.
In trying to avert the nation from crisis, she pursued an austerity budget and again, administered a bitter devaluation pill to the economy—a pill that has skyrocketed the cost of living and production.
And it is not just the 49 percent devaluation—arguably, the worst magnitude since 1967—but bank rates—the cost of borrowing from commercial banks—early last month, soared to 21 percent.
Experts agree the Reserve Bank’s move, though expected, was almost a nail on the economy’s coffin. It has shrunk further individual incomes and has hit business output hard as the cost of borrowing soared and inflation struck real earnings.
Should it be a surprise that workers, both from private and public sectors, are turning to industrial actions with resolute, demanding pay hikes from their employers?
Prices of goods—food, clothing, have, in the past two months almost tripled. You can add transport fares and house rents to the equation.
Surely, every employee, today—no matter the profession, needs a reasonable salary increment to meet the rising cost of living.
But are employers—both government and private sector—any better to respond accordingly?
Already purged with twin slaps of devaluation and the rise in the cost of borrowing from banks, most companies, today, face another hurdle: liquidity squeeze—shortage of kwacha in the commercial banks.
In fact, last week Malawi Confederation of Chambers of Commerce and Industry (MCCCI) executive director Chancellor Kaferapanjira talked tough on this.
“We [private sector players] are feeling the pinch because no company can survive without borrowing. It may lead to genuine bankruptcies in the country,” he told The Nation.
Even government—the country’s largest employer, is constrained. It is pursuing an austerity budget, and they can’t go beyond the ceiling to meet the demands of pay hikes by its various workers. Doing so would mean going into conflicts with the donors.
Hence, the entire economic scenario in the country, today, boils down to this: an angry and struggling employee on the neck of an angry and struggling employer.
Is there a way out?
“Of course, Malawi’s economy has, at times, been in this situation before,” argues Ben Kalua, professor of economics at Chancellor College, “but the magnitude today is too widespread and too gross. It represents a big shock in the economy.”
Such a shock, arguably, presents a storm, almost an unwelcome visitor on JB’s desk—something challenging that, if poorly handled, can lead into a crisis, or call it a social strife.
In fact, Consumers Association of Malawi (Cama) last week issued a stern warning that ‘if nothing is done, the public will act’.
“We had expected cautionary measures to be put in place by now, but nothing is happening. Consumers feel let down by their companies or the small businesses they are doing. Imagine people cannot find jobs at the moment,” said John Kapito, Cama’s executive director.
But what measures, then, does JB’s government need to be put in place to avert the looming crisis?
“We have started with rural people through the public works programme. We are launching the project this August. We want to lessen effects of devaluation on rural people as well. They will now be getting K7 000 instead of K2 400 they could get before,” says Minister of Labour Eunice Makangala..
Social strife, history shows, rarely begins from the rural poor. Mostly, it erupts from the urban poor—those out of work, those with shrinking incomes and those failing to adapt to the cost of urban living.
“We cannot do without a salary increment right now. The kwacha has been devalued twice but I haven’t had any salary increment at my company. How can I survive?” James Chilima, a resident of Nkolokoti, Blantyre, who works for an Indian shop, complained.
Surely, in whatever way, workers need an increment. But as argued by Dr Regson Chaweza, economics lecturer at Chancellor College; it would be costly for government and the private sector to effect increments as demanded by their respective workers.
“What I would expect from government [add private sector] is an honest commitment. Government can commit an increment, say 100 percent, which can be staggered for, perhaps, two years,” he says.
Chaweza—who advances that Malawi hasn’t been in this economic scenario before—believes that such a commitment would, at least, make a worker understand.
“I don’t think it would make sense to a worker for government just to come and say: ‘we have effected a 10 percent salary hike’. That’s too minimal to cushion the effects at hand,” he continues.
Beyond the drudgery of salary increment, Professor Kalua—who says we all, as a country, needs to bear the challenges—adds another insight.
“We need measures that will lead in the reduction of prices of goods. Basically, that means a big inflow of foreign reserves to make kwacha appreciate,” says Kalua.
However, beyond every dark day, there is dawn. Will Malawi come out of these economic hardships?
Professor Kalua is hopeful.
“But above all these insights and arguments about our troubled economy, there is leadership—those with a power to avert crisis.
The current economic woes, as such, present a stern challenge on JB’s presidential desk, at the same time a chance for her to prove her leadership credentials. How Malawi will come out of this will define ‘if she is the one Malawians were waiting for, or they should wait for another’. It is her test of leadership.