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02/05/2012 A Very Short Political Economy of Malawi Martin Prowse, University of Antwerp           ...
02/05/2012                                                Structure  1.   Introduction  2.   Aims  3.   Structure  4.   19...
02/05/2012                        1964 – 1994 Malawi Congress Party                                         – Kamuzu Banda...
02/05/2012                     1994 – 2004 United Democratic Front                                          – Bakili Muluz...
02/05/2012                                      2005 – 2011 UDF/DPP                                         – Bingu Muthar...
02/05/2012                               Neo-patrimonial development?1994 – 2004 United Democratic Front – Bakili MuluziDe...
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Ppt prowse neo patrimonial developmentalism in malawi - 27-04-12 so [compatibility mode]


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Ppt prowse neo patrimonial developmentalism in malawi - 27-04-12 so [compatibility mode]

  1. 1. 02/05/2012 A Very Short Political Economy of Malawi Martin Prowse, University of Antwerp 1. Introduction• Growing interest in how state/party/business relationships contribute to economic transformation and development (structural change, poverty reduction)• Do authoritarian neo-patrimonial polities perform better at transformation/development than ostensibly democratic forms of governance?• Numerous concepts describe relationships between and within elites and citizens which can lead to successful transformation/development (social contracts, social compacts, political settlements, active citizenship.....) 1 Messages • In essence, this research agenda is a quest to understand a country’s political economy: How groups in a society (based on ideology, class, ethnicity, kinship, patronage or collective economic interests) compete for and use resources, rents and power Key question: How can this competition for and use of resources, rents and power lead to transformation/development? • To understand a low-income country’s political economy we need to focus on the most important industries 2 1
  2. 2. 02/05/2012 Structure 1. Introduction 2. Aims 3. Structure 4. 1964 – 1994 Malawi Congress Party – Kamuzu Banda 5. 1994 – 2004 United Democratic Front – Bakili Muluzi 6. 2005 – 2011 Democratic Progressive Party – Bingu Mutharika 7. Neo-patrimonial developmentalism in Malawi? 8. Conclusions 3 Key referencesChinsinga and Chirwa (forthcoming) The Political Settlement, Development Policy and Inclusive Development in MalawiCammack (2011) Malawi’s Political Settlement in CrisisCammack et al (2010) Developmental patrimonialism? The case of MalawiBooth et al (2006) Drivers of Change and Development in MalawiVan Donge (2002) The Fate of an African ‘Chaebol’: Malawi’s Press Corporation after DemocratisationHarrigan (2001) From Dictatorship to Democracy 4 1964 – 1994 Malawi Congress Party – Kamuzu BandaEconomic policy1964 – 1968 - Promotion of smallholder agriculture via extension, infrastructure and expansion of parastatal marketing board - Lack of sustained supply response and balance of payments crisis led Dr Banda to turn towards estate production1969 – 1979 - Large-scale estate expansion by the political elite, parastatals and youth league contributed to 6% economic growth pa - Provision of estate licences and loans key form of patronage - Rents from smallholders channelled into estate expansion and to cross-subsidise maize consumer prices 5 2
  3. 3. 02/05/2012 1964 – 1994 Malawi Congress Party – Kamuzu BandaEconomic policy1969 – 1979 cont. - Success based on: (i) specific distribution of rents and assets to actors who would use them productively; (ii) an insulated, professional cadre of civil service technocrats - Considerable growth in business development, manufacturing (7% pa) and service sector (financial services grew at 15% pa) - Food security assured through fertiliser subsidies, high producer prices for maize and subsidized consumer prices - Intrinsic flaws and exogenous shocks (drought, oil prices) undermined developmental model 6 1964 – 1994 Malawi Congress Party – Kamuzu BandaEconomic policy1980 to 1994 - Malawi’s malaise due to an anti-smallholder bias, low producer prices, a lack of competition in input/output channels - National food security was not of great concern to the IFIs who argued shortages could be met by imports. - Rapid expansion of small-scale estates, mainly by mid-level civil servant, previous estate managers, and ‘graduating’ smallholders - Growth in 1980s at 2% pa. Agricultre at 0.8% pa. Developmental model? Rents not available for allocation to productive actors. Resources squandered on conspicuous vanity projects. 7 1964 – 1994 Malawi Congress Party – Kamuzu BandaGovernance1964 to 1994 - In 1964 MCP emerged as a de facto one-party state - Power concentrated in Dr. Banda: party and state were the same - Regime became deeply centralised, repressive and authoritarian: regionalist tendencies - Civil society did not exist, nor did any other centres of possible countervailing power (incl. local government) - “There was total retreat of the citizenry from the public arena” Chinsinga and Chirwa (2012) 8 3
  4. 4. 02/05/2012 1994 – 2004 United Democratic Front – Bakili MuluziGovernance1994 to 2004 - Transition to democracy and new constitution in May 1994 - Regional voting patterns in 1994/1999 saw the populous Southern Region return a UDF president – Bakili Muluzi - Succession battles at the end of the MCP era led to a continuation of power concentration in President Muluzi - Traditional authorities co-opted by the new UDF government - Informalisation of politics – achikulire (big men) stymied emergence of cadre of young politicians (Lwanda, 2006). Increase in clientelism and corruption. - An open policy-making process 9 1994 – 2004 United Democratic Front – Bakili MuluziEconomic policy1994 to 2004 - Period of lost economic opportunities - Paradox of growth (5% pa) with limited poverty reduction: 11.5% pa smallholder growth based burley tobacco production - Increase in ODA, but fiscal slippages led to stop-go flows - Rapid increase in domestic and external debt - Recurrent food security crises, especially famine in 2001/02 10 1994 – 2004 United Democratic Front – Bakili MuluziEconomic policy cont.1994 to 2004 - UDF regime lacked a ‘developmental’ vision – rents were directed towards non-tradeables: construction (7% pa growth) and transport (5% pa growth). Manufacturing stagnated (-0.5% pa). - Fewer rents available: cartel of leaf merchants on the auction floors depressed tobacco producer prices. Tolerated by Muluzi, who created his own cartel in sugar. - Government unable to implement effective policy – civil service incapacitated - Donors effectively settled policy but in an incoherent, fragmented manner 11 4
  5. 5. 02/05/2012 2005 – 2011 UDF/DPP – Bingu Mutharika Governance 2005 to 2011 - Muluzi handpicked Mutharika as UDF candidate with aim of retaining power as UDF party chairman - But Mutharika was his own man - broke away from UDF to form the DPP - Led to political stalement with the opposition - But economic policies and ‘zero corruption’ drive won him support from citizens and donors. DPP won a landslide victory in 2009 - Since 2009 Mutharika became increasingly autocratic, paranoid, corrupt and cranky - Relied on neo-patrimonialism to buy-off opponents 12 2005 – 2011 UDF/DPP – Bingu Mutharika Economic policy 2005 – 2011 - Growth averaged 6% pa based on an agricultural development strategy - input subsidy, infrastructure - National food security achieved for the first time in decades - Obtained HIPC debt relief and improved fiscal discipline - Attempted to bust cartel on the tobacco auction floors: introduced minimum prices; state-supported leaf companies; deported the CEOs. But with no success. - After 2009 elections, fiscal discipline disappeared, corruption increased, pegged the exchange rate to the US$, led to forex and petrol shortages 13 Neo-patrimonial development? 1964 – 1994 Malawi Congress Party – Kamuzu BandaSuccessful developmental strategy only between 1969 -1978Rents from keeping producer prices for export crops, esp. fire-cured tobacco, below export parity channelled to productivepeople and investments: estates, manufacturing, service sector.Led to considerable growth in business development,manufacturing (7% pa) and service sector (financial servicesgrew at 15% pa). Food security was assured through subsidies.Ended with exogenous shocks (especially oil prices), fiscalindiscipline and direction of rents to non-tradeable investments(vanity projects)Kelsall et al (2010) Long-horizon, centralised rent relation – yes,but only between 1969-1978, not from 1964 14 5
  6. 6. 02/05/2012 Neo-patrimonial development?1994 – 2004 United Democratic Front – Bakili MuluziDespite influx of ODA, the UDF lacked development strategy.Investment directed towards non-tradeablesDespite smallholder growth from burley tobacco, food security wasprecarious.Fewer rents available: leaf merchants cartel tolerated by the UDFregime. Possible rents not invested domestically.Corrupt procurement with kickbacks – not the same kind of rents!Civil service became incapable. Donors started to settle policydiscussions in an incoherent, fragmented mannerKelsall et al (2010) short horizon decentralised rent relationship.Yes, but recognise the cartel exported possible rents so lessdomestic investment potential! 15 Neo-patrimonial development?2005 – 2011 Democratic Progressive Party – B. MutharikaMutharika’s expensive agricultural development strategy - voucher-driven input subsidy programme, infrastructure.National food security achieved but fiscal discipline eroded. Limited revenue base. Limited rents.Attempted to capture more of the rents from tobacco cartel but failed. Leaf companies responded by reducing commitment.Repression and human rights abuses alienated donorsKelsall et al (2010) long term centralised rent relationship. Onlydevelopmental in reducing poverty and attaining food security. Notransformation. Failed to secure rents for domestic investment.Alienated key development partners. Couldn’t control a source ofrents. 16 Thank you! Comments to: 17 6