XXX rated Malawi mafia drama: Dump a bank today, set-up two tomorrow!!

Preamble:

A well-known folk tale tells of a bus filled with politicians which was driving through the countryside. The bus driver, caught up in the beautiful scenery, lost control of the bus, and it crashed into a ditch.

An old farmer living nearby heard the horrible crash and rushed out, only to discover the wreckage. He found politicians bodies strewn all over – as is often the scene of a road accident.

imageHe proceeded to dig a hole and therein, he buried all of them.

The next day, a police man driving past noticed the wreckage, recognised the bus as one reported missing and came to the farm to question the old man.

“So you buried all the politicians?” asked the police officer. “Were they all dead?”

The farmer answered, “Some insisted they weren’t dead, but you know how politicians lie.”

Malawi Current Affairs:

When following debates on Facebook or on the treasonous WhatsApp on developments in Malawi, I am often struck by the degree of ability among the governed and the lack of it among the governing.

The latest wonder is the news that the Malawi Government has – at last – found the last piece of the puzzle to our poverty.

Plans, as we speak, are at “advanced stage” to open two development banks namely the Agricultural Cooperative Bank (ACB) and the Malawi Development Bank (MDB).

These banks will “extend banking services to other sectors” of the economy and we will all live happily ever after.

The devil, it is often said, is in the details. But so is salvation.

Therefore before laughing off the bearer of this excellent piece of news, the Minister of Finance, Economic Planning and Development Dr. Goodall Gondwe, or more aptly, before we begin counting our chickens before the eggs hatch, let us pause and ponder.

According to Goodal, Malawi Government has asked the African Development Bank (AfDB) to finance the establishment of the two financial institutions. Gondwe added that government is also seeking financial help from the World Bank (WB) for the two projects.

“We are courting AfDB on the same and we have been told to conduct a feasibility study, which of course might take time. But initially we need about $50 million [about K34 billion] to open ACB,” he said.

He explained that the bank will mainly advance agricultural activities, since Malawi’s economy is agro-based.

“We will need to organise smallholder farmers into cooperatives for them to benefit from the bank”, he said.

Gondwe said the establishment of MDB has, however, dragged because of the legal paper work that has to be approved by Reserve Bank of Malawi (RBM). According to Gondwe, RBM has concluded feasibility study on the viability of the proposed MDB and results were analysed and financial market experts duly consulted.

RBM earlier indicated that the bank will require an initial capital of $25 million (K17.3 billion), but can kick-start operations with at least $6.75 (K4.7 billion). Gondwe further said that government plans to have a 50 percent shareholding in both banks.

The supreme irony:

The supreme irony of life, as per one Robert Heinlein, is that hardly anyone gets out of it alive.

What makes this supreme irony pale in comparison is the fact that a year has not elapsed since the same Malawi Government stubbornly sold majority stakes in two banks, Indebank Limited and Malawi Savings Bank (MSB), to Malawi Stock Exchange (MSE)-listed National Bank of Malawi and FDH Financial Holdings Limited respectively.

The Malawi Government threw all voices of dissent into the dust bin and dumped the banks saying that running banks is not government’s business.

Blistering barnacles and thundering typhoons! So, Ronald Reagan was indeed right to remark that “the government’s view of the economy can be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it!”

With respect to Malawi, we can safely paraphrase this to read: If it moves, tax it – the private sector can bear me witness.

If it keeps moving, regulate it – the Press Corporation Limited, or rather the recent noise spearheaded by the Ministry of Dis- Information, can attest to this. And if it stops moving, sell it – the case of the Malawi Savings Bank (MSB).

One step forward, two backwards:

The decision to sell the bank dates back to 2013 and can be traced to advice from the World Bank and the International Monetary Fund.

This advice reportedly came after the bank failed to meet minimum liquidity requirements.

The two institutions said they observed that politically connected individuals had received huge loans from the MSB but were failing to repay them, a move they said was compromising the bank’s operation.

The solution, as per Goodal Gondwe, was that since the Executive cannot be trusted to leave banks alone, the Malawi Government should simply have nothing to do with banks.

This has left me, and many others too, wondering.

What has changed from last year to now for us the general public to trust the same politicians that grounded down MSB to prudently manage the Agricultural Cooperative Bank (ACB) and the Malawi Development Bank (MDB)?

For the record, with over 70 branches countrywide, the MSB was the only bank serving rural areas where over 80% of Malawians live.

Therefore, the mandate of the new banks to “extend banking services to other sectors” begs askance.

Which other sectors are there, other than the 80% unbanked rural masses? And if these are part of the new banks intended beneficiaries, why do we have to establish another bank or banks?

Was it not easier to re-capitalise and/or reconstruct the MSB?

Before anyone comes in to say that this is an expert field and am walking on a minefield, we should not forget that Niels Bohr was not exactly wrong in observing that the so called experts are simply people who have made all the mistakes which can be made, in a narrow field.

And that, if Noah had trusted the experts of his time, he would not have built the ark.

And therefore, if selling the MSB, to establish the Agricultural Cooperative Bank (ACB) and Malawi Development Bank (MDB) came out of expert advice, then I have no respect for such experts.

To say that there is little common sense in this move, is an understatement; to say that there is no common sense is also misleading.

The truth is: someone, through the give away of the MSB, made a fortune at the tax-payers expense and now that someone is at it again. Mission = amass political capital at the electorates’ expense.

And as sure as the sun will rise tomorrow, we will see idiots being appointed to run these banks; only that we will have to be very lucky to see the banks take off at all!

Goodall eating own words:

Defending the controversial MSB sale, Goodall Gondwe was adamant that the deal was necessary and that the alternative would have cost the government a lot of money.

“The issue is that MSB did not have enough capital to discharge the responsibility as required by the banks and this could have affected the whole banking system,” he said.

“So it would mean government putting in some money every year from the budget to save the bank from collapse. We think that would not have been the way to handle matters and that is why we thought we should get rid of it.”

What guarantee is there that the two new magic wands will not, sooner or later, require “government to pump in more money every year from the budget”?

The one thing that banged the last nail on MSB’s coffin were the so called toxic loans. Put simply, these were loans given to people connected to the president or his party, with the full knowledge that they would never be repaid.

The loans’ issuance was in most if not all cases as a result of a presidential directive.

Given that Pres Peter Mutharika is not too keen to have his power curtailed as per his own campaign promise, what will stop him from dipping his blue finger into these new banks?

Am I wrong to assume that the prospect of sinking his blue teeth into these banks is why he will not permit anything and anyone to reduce his power?

It’s a tragedy!

Have you ever heard about the day when Donald Trump was visiting a primary school, and was taken into the room of a class discussing words and their meanings?

The teacher asked Donald Trump whether to lead a discussion on the word “Tragedy”. So the good old Donald asked the class to give him an example.

A little boy stood up, and said,

“If my best friend, who lives on a farm, was playing in the field, and a tractor ran over him, and killed him, that would be a tragedy”.

“No,” said Donald Trump, ‘that wouldn’t be a tragedy: that would be an accident”.

A little girl raised her hand: “If the school bus had fifty boys and girls in it, and it drove over a cliff, killing everyone inside, that would be a tragedy”.

“I’m afraid not,” explained Donald Trump; “That is what we would call a great loss.”

The room went silent. No child volunteered. Donald Trump’s eyes searched the room.

“Can no one here give me an example of a tragedy?”

At the back of the room, a little hand went up, and a quiet voice said,

“If a plane carrying you and Mr Ted Cruz was struck by friendly fire and blown to smithereens, that would be a tragedy”.

“Magnificent!” exclaimed Donald Trump, “That’s right! And can you tell me why that would be tragedy?”

“Well,” said the quiet voice, “It has to be a tragedy, because it certainly wouldn’t be a great loss, and it probably wouldn’t be an accident.”

The point is: at the rate we are going, and with the sort of idiotic round-about decisions that are the order of the day, what Malawi needs is nothing short of a revolution.

If some of these Mafia characters left the scene, it certainly wouldn’t be a great loss, and it probably wouldn’t be an accident; just a tragedy.

Surely, we cannot justify selling a bank today while we are – in parallel – planning to establish new ones.

Why, if I may ask again, was it deemed so difficult to recapitalise and reconstruct the MSB rather than dump it and restart all over?

And I am still asking, is running banks, all of sudden, now Government’s core business?

Parting shot:

Let me leave you with a story. There were three contractors bidding to fix a broken fence. The first two were bona fide civil engineers and the third was a character running a brief-case company.

All three, in the company of the Works Manager, went to examine the fence.

The first contractor took out a tape measure and did some measuring, then worked some figures with a pencil.

“Well,” he said, “I figure the job will run about MK900,000. MK400,000 for materials, MK400,000 for my crew, and MK100,000 profit for me.”

The second contractor also did some measuring and calculating then said, “I can do this job for MK700,000. MK300,000 for materials, MK300,000 for my crew, and MK100,000 profit for me.”

The third one, the brief case company owner, did not even pretend to measure or calculate anything. He simply leant over to the Works Manager and whispered, “MK2,700,000.”

The Works Manager, incredulous, protested: “You didn’t even measure like the other guys! How can you come up with such a ridiculously high figure?”

The wheeler dealer whispered back, “MK1,000,000 for me, MK1,000,000 for you, and we hire this second contractor to fix the fence.”

“Done!” replied the Works Manager.

And this, my friends, Ladies and Gentlemen, is how the Goodals, the Mutharikas and Sons Malawi Limited are looting your and my tax money.

Come to think of it, the MSB sale, was akin to something like this! If you think hard enough and care to go back in our recent history, you will see that the infamous FISP operates much the same way, the MHC houses went the same way, and so on and so forth.

I could go on and on, but I must for now, rest my case.

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