UNBUNDLING ESCOM

Malaŵi's Minister of Energy, Atupele Muluzi is today qouted in the Nyasatimes (http://www.nyasatimes.com/2014/07/14/atupele-says-escom-to-be-free-from-political-influence/)
as saying:  "We would like to separate the functions of [the Electricity Supply Corporation of Malawi] ESCOM into electricity production, distribution and marketing and this will be run by autonomous institutions away from political interference"

Now letting ESCOM free from political clutches and claws of politicians is a good and noble thing. However, we have been there before and as they say the taste of the phala (pudding) is in the eating - let us see how the Minister will resist his fellow polotishans (politicians) who want 'orders' - it is the 'orders business' that kills organisations such as ESCOM. ESCOM and other state companies have been milked by greedy politicians who put pressure on management of these state entities to award them lucrative contracts, most of the times without going through an bidding process at all. Reports have been made of some politicians being paid upfront and never delivering on their orders! There was a time when ESCOM's store yard was full of material that had been over-procured and which the utility did not need; thereby tying money in unproductive-assets.

I hope the Minister is aware that this is not the first time we have been told this. last time it was when Bakili Muluzi (his own father) was President. The move to fully unbundle ESCOM was resisted because it was revealed the plot was to sell the lucrative parts of the business (distribution) to some business magnates with no experience in the energy sector! The idea then was to unbundle it into generation; transmission and distribution. I hope this is not  "Attempt Number 2" of more-of-the-same! I hope the the Minister has done his homework well and realizes that fully unbundling a vertically integrated entity like ESCOM has consequences for a country like Malawi with great income inequalities.

In the energy chain, the distribution unit is always the money-spinner. The generation unit is the money-sinker. Most countries who have unbundled (and are now regretting) try to keep the transmission at least under state control. There are reasons why in poor countries, it is recommended to have electricity and water utilities under [some form of] state control. Already ESCOM operates as a holding company with distinct business units. Maybe the model can be enhanced and improved. I would hesitate to fully detach the units making them autonomous [at this stage]. The energy costs may soon become unbearable. The example of the de-regulated market in the UK is there for those who wish to see how the poor can be 'shut-out' and 'freezed-out'. On the other hand, Électricité de France (EDF) has remained a well operated and managed state entity and is now operating in other jurisdictions like the UK! Maybe we can learn lessons from this? To attain efficiency does not [always] equal to unbundle.

Is the Minister aware that ESCOM is already a private company and no longer a parastatal or statutory corporation (brought into existence by the enactment of a Parliamentary statute)? If so, shouldn't the company start 'behaving' like a private company in the truest sense? For starters, we can start with stopping the Statutory Corporations from appointing the ESCOM Board and issuing directives and controlling ESCOM as a parastatal. ESCOM is no longer a statutory body. It is [since the late 1990s] a private company owned by the Government. The Minister may also need to revisit the instruments incorporating ESCOM as a company. It is not the Ministry of Energy in charge of ESCOM (as representing the major shareholder), it is the Minister of Finance!

On a more broader level; shouldn't it be a government policy to let all state companies (whether parastatals or not) free from political interference anyway? What about ADMARC? The Water Boards, Malawi Housing Corporation etc? In a manner of speaking, are these still out for grabs? The President two days ago issued a directive that chief executive officers (CEOs) of parastatals should stop attending party and presidential function unless related to their business. The fact that the President has to issue this warning is worrisome and shows the 'level' of the CEOs that we have and how patrimonial our politics has become. Once again, let us see how this directive plays out. Once again, we have been there before, and it is the same politicians who put pressure on CEOs under the disguised threat of "we do not see you at the President's functions". Maybe the first thing is to ensure that the right people are hired as management of these state entities. Rewarding people based on political, ethnic or other grounds is what has led us to where we are. Time for a real paradigm shift? Unfortunately, so far, the words do not match actions. We see once again the vicious cycle whereby a new president fires most CEOs and top managers appointed by the previous CEO of Malawi inc. and replaces them with people that reek of political and ethnic connections. Now I must be clear; I have no problems in appointing anybody as long as they are appointed on merit. It is when we start questioning the merit and realize that 'other consideration' came into play that I take issue with. I always get baffled at how 'satisfying' it must be to surround one self with people who are always bound to agree with you! Shouldn't one attempt to get people who will challenge your intellect and force you to think outside the box, in a manner of speaking? On the other hand, one must fully appreciate the political ramifications of our political system. In a country where the President is not elected by a clear majority, what do we expect? Is it really fair for 'blocs' that did not vote for the President to expect him abandon his 'stronghold'?  Politics, it would seem does not mix well with social and distributive justice. Ideally the President should appoint his cabinet and top managers across the country. Ideally. But this is politics and our political landscape is as polarized as ever. However let us see how time, the best player of all, plays this one out. Maybe there will be a convergence between the words and the actions! As it is said, the President will be judged by the 'actions of his hands'!

But I digressed. Coming back to the 'poor state of electricity', is the root not in the deprivation that the generation sector has endured especially in post-one party era? Yes we have had the development of the Wovwe Generation Plant in Karonga and Kapichira in Chikwawa but these have all been to try to 'meet current demand'. Interestingly since building a generation pant takes a very long time (the decision, planning, financing, building), by the time these power stations were finished, the demand had already moved further upwards (should we really be surprised?). Is it not time we had real and earnest investment in electricity generation? There is talk of a Chinese firm building a coal-fired 500 Mega Watt generation plant in Mwanza. Now whilst the ethical debate (from an environmental point of view) building a coal-fired power station in the 21st century is one which may preoccupy our minds, the more direct question would be is 500 MW even enough? It may lead to more than doubling the current generation capacity but it is imperative to bear in mind that the demand that ESCOM  refers to for electricty is what is referred to as 'suppressed' demand. What this means is that the actual demand may actually be much much more. And in some sectors of the society there is no demand because there is simply no electricity to demand! Shouldn't we be looking at ensuring that we have enough electricity production not only for now but for the next 10-20 years? Shouldn't we be more forward-planning? An example may illustrate this point. 30 years ago, most middle income households only used electricity for lighting. Radios were mostly battery operated (remember the Xirico?). And we hade the charcoal iron! Within a decade, this expanded to include heating water (and the geyser is an energy guzzler) and cooking. Now a typical middle income household will use electricity almost for everything; lighting, cooking, heating, cooling, ironing, TV, Hi-Fi Stereos with Sub-woofers etc. In other words, the energy demands have taken a quantum leap whilst the capacity (supply) has not coped up. And to make matters worse, the number of Malaŵian who have moved intro the middle and apple classes has increased as has the population.

Therefore it is all well and good to have dreams on increasing customer base but how will the customer base be expanded if there is no energy 'reserve' to connect them from? If after 50 years of independence, only 4% of the population is connected to the grid, then there is need for a more grander and bold plan. Now in the energy sector, it is trite that investment in generation is capital intensive and provides returns only in the long-term. Maybe the Minister and the Government need to seriously consider serious investment in the generation and transmission sectors. Energy distribution is self-financing and usually takes care of itself. Like I said earlier, it is the 'mint'. However, without a reliable energy source, we should forget about developing the country and attaining ~7% growths in the economy. Meanwhile as we await for investment (and ensure energy security), should we not be revisited the interconnection with Moçambique? This would provide a mid-term solution to our electricity needs although personally I think the country needs to ensure energy self-sufficiency in the long term. Now this is not to  trivialize the real bottlenecks that hampered the conclusion of the deal under President Bingu wa Mutharika. However I believe that these can be overcome. And maybe the electricity deal with Moçambique could be discussed together and levered with other projects such as the Nsanje Port?

The above views notwithstanding, the Minister should be applauded for the bold stance to remove ESCOM from political interference. But let us hope his fellow politicians are on the same wavelength with him!

Let us reflect as we celebrate

Sunduzwayo Madise

21 June 2014

“He who finds a wife finds a good thing,

And obtains favour from the Lord.”

Proverb 18:22.

Congratulations to the President and the First Lady of Malawi on their wedding.  And it seems 2014 is a year of celebrations for Malawi. A new President, a state wedding and we shall soon celebrate half a century of independence.

And it is at this moment where we celebrate and send our congratulatory messages that we need to reflect on a specific issue: full colour adverts in our dailies taken by Government Departments, Ministries and Parastatal organisations.

Over the last two decade, I have noted a worrying trend whereby Government Departments, Ministries and Parastatal organisations buy full page and full colour adverts to congratulate the President for anything from opening up a function to getting married. I am not currently in Malawi so I cannot say whether this has happened at the occasion of the President’s wedding. My contention is not the gesture of congratulating the President, in fact it is normal to do so. What I take issue with is the fact that all these Departments and Ministries are fully funded from the tax purse. For the Parastatals, few of them make a profit anyway but most of them depend heavily on Government subventions. Others are literally on life-support going to treasury with a begging bowl month-in month-out. So in effect what is happening is that Government is paying adverts using tax payers’ money. And for what purpose? To what end? To show royalty? To show they love and support the President more? Is it really necessary? And just read the adverts; you have Ministers and their Principal Secretaries even including their middle names, essentially trying to outshine each other. Really? Mpaka mpikisano zomwezi? And I recall one advert where the Secretary to the President and Cabinet took a full colour advert to congratulate the President. Now how absurd is that!

Last time I had checked, a full page black-and-white advert cost over K100,000.00. I presume a full colour full page advert complete with logos should cost a great deal more. Is this money we can afford to just blow? Does Parliament appropriate funds for this purpose? And for these Departments, Ministries and Parastatals, whilst they can afford to be this extravagant at our expense, they cannot even provide basic office necessities for their staff such as beverages and toiletries. Some of them have also been reported to have failed to pay for their water and electricity bills! The only people smiling all the way to the bank are the newspaper owners! Free money if there was one to be made.

My plea therefore is that the new Minister of Finance needs to put this to a stop immediately. If a Minister wants to send a message of congratulations, let him or her do so in person to the President. After all the President is the the CEO of Malawi Inc. and Ministers are the Managers! Pasavute! If the Minister feels that the personal message is not enough, and there is need to put one in the papers (for what purpose I cannot fathom), then the Minister concerned should dip into his or her pocket and pay for the advert (an the system must ensure they do pay). But the Minister of Finance should ban these adverts. And seriously I wonder how the President feels seeing this waste of money? You buy a newspaper, it looks thick and you look forward to a good read only to find that it is full of back to back congratulatory adverts by people who are always complaining of having budget deficits! If the Minister of Finance does not issue a ban, then the President needs step in and put this wastage to a stop once and for all. The President has promised a lean cabinet. Would it not be ironic that instead of channelling savings made from this brave decision, the funds end up just going down the usual drain?

So as we celebrate this state wedding and as we celebrate 50 years of our beautiful country’s independence, let us reflect. Let private companies and individuals take out these adverts. We surely can put this money to good use, one Kwacha at a time.

"ORGANISED CHAOS" - the case of the 2014 General Elections in Malaŵi

Sunduzwayo Madise

31 May 2014

Malaŵi on 20 May, 2014 was supposed to hold tripartite elections. Now for the record tripartite means in our context, a three-way election viz: president, parliamentarians and councillors. However the country has now given the term new meaning; “a three-day election”. So how did a one day election in a relatively small country like ours end up stretching to 3 days? The answer is what I refer to as organised chaos or what magicians call misdirection. Every time there is chaos that seems to be organised, it is important that one takes a step back and analyses who is benefitting from the chaos. Someone always benefits!

The elections in 2014 were unprecedented due to a countrywide network of mobile phones that made the election like a live soap. Even before voting started, reports started trekking in that certain polling centres had not received materials. Pictures were loaded constantly on Facebook. And the problem seemed so widespread that it was almost like a deliberate botched up job had been carefully planned. And we almost fell for it!

Now let me bring in a similarly scenario which however ended differently, thanks to the vigilance of Malaŵians and the strong leadership at the Electoral Commission (EC).

In 2008 I was part of the SADC Observer Mission that went to monitor the elections in Zimbabwe. The mood on the days leading to the election, especially in the hotbed places was people were tired of the status quo and wanted change. At that time the price of bread would change three times a day! It is what economists called the worst case of hyper-inflation ever witnessed. The Zimbabwe Electoral Commission (ZEC) seemed to have everything under control.

On the day of voting, it became clear that the places considered adverse to the ruling party were being denied voting material. There were running battles between riot police and would-be voters, mostly young men.  It soon became clear that a section of the population deemed ‘hostile’ was being deliberately disfranchised.  And the organisers of this deliberate chaos succeed too, but just. Most people in the main cities were frustrated and did not vote. But even with this, the rumour was that Morgan Tsvangirai he called for a re-run. In the middle of the chaos the president was hastily sworn in at state house.

Therefor when problems started in places considered “opposition” strongholds, I started having an uneasy sense of de javu. It looked all too similar. It was like someone had read the Zimbabwe script and had adopted it for the Malaŵian voters. But that is where they may have miscalculated. Although there were incidences of rioting, these were not widespread in our case but were localised. People exercised restraint. The EC also insisted that everyone should exercise their right to cast their vote. This decision has been criticised by some politicians because results had by the second day started being announced. Indeed it was not the ideal situation but in the circumstances it may have been the lesser of the two evils. And to me this is where the election may have conclusively been decided. Hitherto the margins may have been close but this decided the winner. The people who went to vote on the second and third day were clearly an angry lot and wanted to express their anger through the ballot box. Therefore if the plot had been to misdirect the attention of Malaŵians, it may have failed because of the resolute Malaŵian vote and the conduct of the EC.

Now by midnight of 20 May, 2014, it seemed all too clear that president Joyce Banda (JB) had suffered a crushing defeat and that her People’s Party (PP) was heading in the same direction. On the contrary, the Democratic Progressive Party (DPP) and the Malaŵi Congress Party (MCP) seemed to be on the ascendancy. However it was clear from the start of the trickling in of results that DPP candidate Professor Peter Mutharika was consistently gaining votes and accumulating votes in constituencies where he had been projected to do badly. By this time most of the results in his home base had not started coming out. Any astute political analyst knew that it was game over. To me it is obvious that by this time, all the parties had by an idea of how they had performed. This is because parties have monitors and intelligence gatherers in the polling centres who update their secretariats of how the party and its candidates have. I can therefore say that I truly believe that by the midnight of 20 May, 2014, JB knew for a fact that she had lost, Professor Arthur Peter Mutharika (APM) knew that he had won and Rev Lazarus Chakwera (LC) knew that he had come a close second. Even Atupele Muluzi, (AM), him of the ung’ono ung’ono fame knew that he had come out last of the big four.

So it was not surprising to some of us that by the morning of 21^st May, 2014, stories of rigging started making rounds. And for the first time an opposition party was accused of rigging the poll! What a first! This was unprecedented! Now in the run up to the election, the MCP, United Democratic Front (UDF) and the DPP had been sounding alarms that the PP had put in place a massive rigging operation. There was hyper vigilance in the country and everyone seemed to be suspicious of everyone! The famous example of this is evidently the incident where Nicholas Dausi was heard in a video clip alleging that they had ‘impounded’ a truck containing already marked ballots at Mwanza border. The truck when opened, at the orders of Electoral Commission (EC) chair Justice Mbendera JA, SC revealed to be carrying reflector apparel for the EC officials! It begs the question; how did Dausi ‘know’ the contents of the truck? But that is a debate for another day.

By the 22^nd of May stories were so ripe that they started gaining some credibility. And why was this so, it is because in my view the PP, MCP and UDF miscalculated in their strategy. It seems all the parties had realised that the vote would be decided in the South, because of its population, as well as the number of parties considered to have the stronghold there. The PP and MCP hoped for a split vote in the South. The PP hoped the UDF would split the Machinga-Mangochi vote. It also thought it would bag in the Zomba, Balaka and the Lower Shire. The north was considered a safe region for the PP. The UDF was counting of doing very well in its stronghold and gaining ground in the central region. The youth vote in the urban areas was deemed a UDF vote. Only DPP run a campaign truly targeting the whole country. And if truth be said, it was deemed by most as the underdog of the big four. Its candidate, criss-crossed the length and breadth of the country. He and his running mate were using a modest Toyota pickup bakkie. The other candidates were going to rallies in vehicles considered luxurious such as hammers, top range land-rovers and VXs. Therefore when UDF cried foul, to the non-discerning neutral observer, it made sense. How could the party do so badly in its stronghold? And what had happened to the ‘Chakwera mood’ that seemed to engulf the social networks leading up to the election? Clearly LC could not have performed this badly? And how could APM, whose party had been considered to be on the demise spring up like this? But the results of the incumbent JB may have been the most puzzling. How could she and her party do so badly? How? But that is the mistake of trying to think for people. The reasons people make the choices they do are only known to themselves. The election result shows how Malaŵians think. But it is not as if we were not forewarned. Afrobarometer, an independent research institution, which had in 2012 put JB’s popularity at 68% had predicted an APM win this time. In the history of this country, I have never known Afrobarometer to be wrong.

Not to be outdone, JB decides to turn on the heat. She goes on radio and announces that she is making a proclamation annulling the elections and the nation should vote again in 3 months. Those sympathetic to her and the MCP and UDF seem to agree with her. However let us pause for a moment. Under the law, the president of the country has no power to annul elections. The section she misquoted and misrepresented does not give her that power. Exercising executive leadership can never mean doing what she did. Whoever advised her to make this proclamation did her a grave injustice. Furthermore, in a democracy, presidents do not make proclamations! This is term of a bygone era! More associated with tyranny. Rightly the proclamation was stayed by the court. There has been debate that the parties that obtained the stay did not have the standing (locus) or right to do so. The Malawi Law Society (MLS) obtained the stay and I must say the body has the statutory right to do so.  And people started wondering why the MLS, which had supported Joyce Banda’s ascension to the presidency in April 2012 after the demise of Professor Bingu wa Mutharika should now be ‘seemingly’ against her. It was never about her. The MLS was ensuring that the law is upheld. It did so in 2012 and was doing so now. It was not about persons, it was about rule of law.

But then all this could have fizzled out if the EC had not joined in the fray. What happened next is what I called the “Elections debacle”. The EC went on radio and stated that there were glaring and serious irregularities that warranted a decision to quarantine results of some centres. This statement was revealing. Any election always has irregularities and anomalies. But when these are glaring and serious, then there is cause for concern. Hitherto the EC had been putting a brave face that all was ok. We were told problems were only in 1% of centres. However if what happened in Blantyre and Lilongwe is a yardstick, then things were definitely not ok. Something was definitely rotten in the kingdom of Nyasaland! Where voting takes 3 days in a small country like Malawi, something is definitely not ok. But by stating that things were not ok, the EC threw the whole electoral process into turmoil and the conspiracy theory into overdrive. Even the official broadcaster, Zodiak was at pains to profusely ‘apologise’ for ‘misleading’ the nation with its unverified results. I listened to the ‘apology’ and it seemed to me someone had forced Zodiak to make this apology. It was so unlike them

Then the EC announced that it would hold a recount and then the injunction battle started. Injunctions were being granted and discharged so fast that most Malaŵians were left confused. Reminds me of the advert; “confused-dot-com”. But let us pause here once again and restate the law. The Practice Direction issued by the Chief Justice is  clear that in relation to elections, injunctions can only be granted if both parties are present (inter partes not ex parte). It was therefore irregular to see injunctions being granted with only one party present. But that is for lawyers to ponder over and debate. It is also for the judiciary to reflect on. In times like this, as an arm of the government, the judiciary should be sending out a ‘unified message’.

In all this hullabaloo, the EC was gagged and caged. Some of us argued that the EC should be left to do its job. It should fulfil its constitutional and statutory mandate and announce the results and then the due process of swearing in the president-elect should be performed by the prescribed judicial officers (Chief Justice assisted by the Registrar of the High Court). I remember saying “akakaniza stadium, let it be done at the High Court”. And indeed APM, Malawi’s 5^th President and Saulos Chilima (SKC) have been sworn it at the High Court premises. Now I am not saying it is because I said so because I am sure it is not, but it just confirms that it can be done ‘anywhere’. I heard one journalist that the swearing in was being done at the High Court to reflect that even the president is under law. No this is not the reason and cannot be the reason. It was done at the High Court because courts are considered public places and the swearing-in ceremony, is traditionally done at a public place for the public to witness. That is why JB too her oath at Parliament, another public place. I also liked the simplicity that APM has conducted his swearing in. If it’s a sign of things to come that kudos to the prof. Too much of the same can be boring at times, we must learn to do things differently at times! And sometimes there is beauty in simplicity.

And hours before APM and SKC were sworn in; I am told JB gave her concession speech. I say too late and too late. As stated above, by midnight of 20 May, 2014, I have no doubt that JB knew that APM had won the election. She should have picked up her phone and congratulated APM and wish him well. If she did not want to announce the winner (this being the exclusive jurisdiction of the EC chair that has to declare the winner), she should have told the nation that she was no longer in the running. This would have made the nation started thinking in a new direction. It would also have assisted her supporters to accept loss and move on.  That is what beings stateswoman would demand of her. Clinging on to the presidency may have eroded any gains that she made in her presidency. Indeed she may yet be remembered as the president who did not want to let go.

In conclusion, some us are wary of bringing lawyers and using the law to solve political problems. It is what is called juridfication of what is clearly a political process. There is too much law around. Please do not involve the law in everything. Let our leaders be decided by the vote not the court. The US case of Bush v Gore is not one that lawyers and courts fondly remember. It amounts to imposition of a candidate by the court. Judicial interference in politics if you ask me! Luckily the High Court has managed to get out of this debacle without picking up too much mud. There has been debate about the ruling made by Justice Kenyatta Nyirenda which held that the EC has the power to recount but any such recount must be done in 8 days. On the law, I cannot fault the judge. Others have called him positivist (following the black letter law and sticking to the written law) but there is nothing wrong with this. Maybe had it been another judge he could have decided another way. But that is academic. It is for academic discourse and discussion. The court has decided that it cannot extend time and we must be content with that and move on.

The election had interesting moments, but maybe the most fitting closure was the excellent and articulate speech made by Justice Mbendera JA, SC, chair of the EC. Now there is a voice one likes hearing. Authority, clarity and cogency. It gives me hope for the future. And although there were stories that there was a mutiny amongst the commissioners in the EC, the EC showed that it was a united front when the official result was announced and the declaration of the chair as to the winner of the presidential race

The heralding of a new dawn? 

In Bishop Kayira Bwanaissa Kaponda Karonga v Electoral Commission (EC), the plaintiff sought for an injunction to:
- stop the EC from conducting the tripartite elections on the 20th of May 2014;
- an order disqualifying all Parliamentary candidates who were nominated whilst they were public officers;
- an order calling for fresh nominations in all the constituencies where such candidates have been disqualified;
- and an order mandating the President to call for a national referendum within a shortest period possible on the issue of bringing back the repealed Section 64 of the Constitution (on recall of Parliamentarians by their constituents) and Sections 65 and 86 of the Constitution which, makes them ineffective.

The Court in dismissing the application pompo pompo (per Kapindu J) said:
"The Applicant states that he is the President of the African Nyasaland Party, a party duly registered in accordance with the laws of Malawi. The issues he has raised directly relate to the exercise of the people of Malawi of their political rights, rights which are of immediate and direct concern to the Applicant as a leader of a political party. The application that he has made presents a cocktail of frivolous and vexatious claims on the one hand, and good and arguable claims, that raise serious questions to be tried on some important constitutional issues, on the other. I will summarily address the frivolous and vexatious aspects as I address the issue of the balance of convenience below"
----------------------------
Definition:
Pickard v. London Police Services Board, 2010 ONCA 643, holds:
"A frivolous [application] is one readily recognizable as devoid of merit, as one having little prospect of success.  The reasons may vary.  A vexatious [application] is one taken to annoy or embarrass the opposite party, sometimes fuelled by the hope of financial recovery to relieve the respondent's aggravation"

Alibaba: New kid on the financial block

Sunduzwayo Madise
7 May 2014
Chinese technology giant Alibaba is today set to offer its shares on the New York Stock Exchange in the world's biggest initial public offering (IPO) so far. Alibaba will make available to investors 12% of its shares and is expected to raise $20 Billion eclipsing the record set up by Facebook's IPO ($18B). For those who have dealt with or are aware of eBay and Amazon, Alibaba conducts e-commerce more than eBay and Amazon combined and is also into other technology fields. It has 80% market share of China's 300 million e-commerce users. It is the second largest technology company after Google, worth some $168B. There has been debate in the financial world as to whether Alibaba is worth this much. There has been debate whether any if the technology companies (such as Google, Facebook, Twitter) are worth the money tagged to their shares. For Alibaba at least, the results if the IPO will start answering that. Whatever the case, Alibaba seems to have come with a bang!

But is a share really worth anything or nothing or "whathing"? It's all in the mind of the investor! And it perpetuates the illusion that one owns a piece of a company!

Ridiculous bank rates!

Sunduzwayo Madise
7 May 2014

The Reserve Bank of Malaŵi (RBM) as regulator of the financial services, has published bank charges and rates of banks indicating that some banks are charging as high as 47% as lending rate against a savings rate of 5%.

During the days of old, we had three rates for katapila (usury):
mwala ku mwala (rock to sand) - 100%
mwala ku njelwa (rock to brick) - 50%
mwala ku mchenga (rock to sand) -25%
[The 'rock' being the principal amount lent]

The reports indicate some banks are charging 47% as lending rate (and this may climb up to 50% if you are a taken to be high risk borrower). This is mwala ku njelwa! Katapila or usury legalised! The RBM is right to 'expose' such  banks but the RBM cannot then put its head in the sand and blame it all on 'market economy'. That is the reason why others have called for a National Credit Act and rules of capping what a person can repay (in South Africa this capped at 2 times the principal). Protecting consumers indirectly does not wash. The regulator needs to protect the consumer directly! The profits made by Malaŵian banks are astronomical, and not because of good business models but because of the 'water' between the savings rate and the lending rate and between the bank rate and the lending rate. The reason that Malaŵian banks have not diversified and come up with new financial instruments is because they do not have to; there is easy money to be made just with the status quo, so why take the risk of new financial instruments. The bank rate (as decided by the RBM) stands at 25%. Savings are averagely 5%. Lending is averagely at 45%. How the RBM and Ministry of Finance expect Malaŵi to continue on a pattern of growth with these rates is beyond me. It draws Malaŵians into a vicious circle of poverty (where they have to dig two holes to fill one hole and in the end you have holes dug everywhere). The RBM as regulator needs to step into the fray. This market economy vichi vichi (yada yada) is an old-used excuse. After all, there is no such thing as a perfect market economy or free market. All markets and economies are hybrids, essentially a complex mixture between a free market economy and a controlled one (capitalism and socialism combined). Malaŵi cannot afford to have a pure capitalist economy, Mupha wandu! (you will kill people financially). The reason why we have regulator in the financial services is not for the regulator to 'feel pity' for the consumers but to protect consumers. Financial stability and consumer protection are the key twin rationales of regulation. However, the RBM also needs to take some of the blame. The RBM asks (nay, legally demands) every commercial bank to deposit with it a percentage of customers' deposits at no interest. The commercial bank however, still has to pay returns to the depositors on this and ends up hiking the lending rate. Maybe the RBM needs to reconsider this and allow banks not to have an 'excuse'. And does anyone wonder why people are not saving? They are busy repaying loans!

http://mwnation.com/rbm-exposes-banks-lending-rates-high-47/

Hypothesis on Malaŵian surnames

Sunduzwayo Madise

30 April 2014

I am trying to build a thesis based on the hypothesis that if we group Malaŵian surnames using the first letter of surnames as follows:

Group Category
1. ABCD
2. EFGHIJ
3. KLMN
4. OPQRST
5. UVWXYZ

I have observed from observing elections and other data sets where surnames are used that Malawian names seem to be grouped in certain peculiar densities. In other words they are not evenly spread across the English Alphabet. Referring to the above table;

i. Groups 1 and 3 usually have the longest queues and concentrations. Most Malawians seem to have surnames starting with with letters in these groups.
ii. Group 5 has the least. This is mostly in my view due to the fact that our surnames are Bantu based and most of the letters in this group are not favourite for starting surnames in Malaŵi

iii. Groups 2 and 4 form the second tier of concentrations.
iv. However between 1 and 3, 3 clearly wins hands down and usually by a ratio of slightly more than 2:1
v. Group 2 usually slightly edges group 4

If I were to rank estimations of our populace it would be (in order of concentration):
1. Group 3 with 52%
2. Group 1 with 25%
3. Group 2 with 12%
4. Group 4 with 10%
5. Group 5 with <1%

Now this hypothesis needs to be tested on real data set samples and may change. The groups may also be tweaked a little. But even as a hypothesis, I am convinced groups 1 and 3 are in the absolute a majority. Therefore the hypothesis, in my view, if it can be refined into a scientifically proven thesis, would form the basis for starting credible opinion polls and surveys in Malaŵi! But more importantly too the thesis if proved can assist institutions for example, suppose a school wants to enroll new students; putting them in clusters of the above groups and ensuring that each cluster is well manned proportionate to its density may reduce a day long exercise to one of hours.