«Published by the Center for African Studies, University of Florida ISSN: 2152-2448 African Studies Quarterly E Staff Elizabeth Beaver Lin Cassidy ...»
The Malawian state experienced rapid economic growth after independence and there was an increase in socio-economic infrastructure. The four primary goals set forth in the Development Plans of 1965 and 1969 were realized by the end of the 1970s, as agricultural production expanded rapidly for domestic consumption and exports, infrastructural facilities were built for agricultural exports, educational institutions were constructed and enrollment increased to provide skilled manpower for the civil service and private sector, and the growth of the private sector was encouraged as the basis of development.41 Malawi's share of world exports increased from 2.2 percent in 1965-67 to 3.3 percent in 1977-79, while tea exports rose from 2.4 to 3.8 percent.42 Concurrent with rising exports, Malawi attained self-sufficiency in food production, especially maize. With economic growth averaging 7 percent per annum in 1970, Malawi was able to eliminate dependence on foreign development assistance by 1972-73, and reallocate capital to such sectors as manufacturing.
By the late 1970s, Malawi ceased to be a developmental state as the economy faced severe difficulties stemming from a decline in export prices on the world market, failure to build up reserves during years of good export earnings, poor judgement in policy formulation and implementation (e.g. giving priority to big private farmers instead of small farmers), expenditure on imported consumables, and accumulation of external debt. Consequently, the government was unable to finance its own development and resumed dependence on foreign development finance.45 Persistent economic problems made Malawi adopt the World Bank (WB) and International Monetary Fund (IMF) structural adjustment programmes (SAPs) in 1980 to liberalize the economy. However, SAPs exacerbated the economic decline primarily because the same few export crops - tobacco, sugar, and tea - with low prices on the world market, were given support by the state in terms of credit and marketing. Again, small farmers were denied an incentive to improve production.
Zambia: Struggling Economy?
Zambia's economy is dependent on copper mining, which accounts for 90 percent of its export earnings and serves as an engine of growth. At independence in 1964, the leadership was committed to the promotion of economic development and restructuring the economy by adopting a mix of public and private participation. State intervention in the economy was set in motion with the 1968 Mulungushi Reforms, which permitted the government to acquire 51 percent shares from private retail, transport, and manufacturing firms through the Industrial Development Corporation (INDECO), a parastatal. The Matero Reforms of 1969 resulted in the government purchasing 51 percent shares from the mining companies, Anglo American Corporation and Roan Selection Trust, leading to partial nationalization of the copper industry.46 Consequently, the state controlled 80 percent of the economy through parastatals involved in mining, energy, transport, tourism, finance, agriculture, services, commerce, trade, manufacturing and construction.
In spite of its impressive national development plans, the Zambian state failed to realize most of the goals embodied in the plans. Admittedly, Zambia experienced reasonable growth rates in the 1960s and early 1970s, primarily due to high copper production and prices, as well as increases in maize and manufacturing outputs. Consequently, until 1970, Zambia had an export surplus from copper and accumulated huge foreign reserves due to high copper prices on the London Metal Exchange (LME). The GDP grew at an average annual rate of between 2 and 3.4 percent from 1972-76.47 However, the economy went into decline in 1974 as copper prices plummeted on the world market, and by 1976 copper earnings contributed only 3 percent to the Zambian treasury. Primarily because of the fall in world copper prices, the economy has still not recovered.
However, state intervention in the economy, discrepancies between planned objectives and resource allocations as well as implementation, and lack of commitment to planning also contributed to poor economic performance. This in turn contributed to balance of payments problems, making it difficult for the government to import goods and service its external debt, and reducing government expenditure on development. Since 1974, budget deficits have become the norm.48 However, other factors are also to blame for Zambia's poor economic performance. First, lack of accumulation of savings by the government during periods of high copper prices (1965-70) to cushion the impact of any fall in copper prices worsened the economic situation since the mid-1970s. Instead, government increased expenditure on socioeconomic services like health, education and infrastructure, imported luxury goods and compensated workers with high wages, especially mine workers.
Second, the highly capital-intensive technology utilized in mining and manufacturing meant that parastatals contributed little to employment creation, eradication of poverty, and improvement in standards of living for the mass population. Mismanagement and corruption further reduced the effectiveness and viability of parastatal enterprises and government bureaucracy. The fact that very few officials were prosecuted encouraged corrupt and inefficient practices.49 Third, Zambia's support for liberation movements in southern Africa seriously affected the implementation of development plans as resources were diverted from productive to infrastructural facilities, including the Tanzania Zambia Railway (TAZARA).
African Studies Quarterly | Volume 5, Issue 1 | Winter 2001 http://www.africa.ufl.edu/asq/v5/v5i1a2.pdf 28 | Hwedi In 1983, the government, following recommendations of the IMF and WB, undertook economic policy reforms to rejuvenate the economy through deregulation of prices, auction of foreign exchange, reduction of subsidies to consumers and parastatal companies as part of budget deficit reduction, increase in agricultural output, and liberalization of marketing of agricultural commodities as well as devaluation of the local currency. However, such reforms worsened rather than improved the economy, as both agricultural and manufacturing outputs and exports failed to increase significantly due to inadequate incentives for farmers and the poor competitiveness of manufactured goods on the world market. The country borrowed heavily from international institutions, especially multilateral institutions on a nonconcessionary basis. Consequently, since the 1970s, Zambia has become one of the most indebted countries in the world relative to its GDP. In 1990, for example, the debt was $7.2 billion, equal to 185 percent of the GDP and 719 percent of export earnings, making debt the most important cause of economic stagnation, with 67 percent of households poor and 58 percent extremely poor in 1991.50
SUCCESS AND FAILURE - A DISCUSSION
Botswana and Mauritius continue to perform well economically compared to the other three countries. The Human Development Index (HDI), which is a combined measure of national income, life expectancy and educational levels, ranks 175 countries from the highest to the lowest level of human development. The HDI places Mauritius at number 61 in the high level of human development and Botswana at 97 in the medium level, with Zambia at 143, Angola at 157 and Malawi at 161, in the lowest level of human development.51 This means that Zambia, Angola and Malawi have failed to promote development beneficial to the general populace. Why? It is the discrepancy between policy decisions and implementation and how public resources are utilized and allocated, which differentiate developmental states, like Mauritius and Botswana, from non-developmental ones such as Angola, Malawi and Zambia.
Explaining why some developing countries have grown rapidly while others have not, Bradford has identified the adoption of a positive development philosophy with a policy framework that leads through market mechanisms to efficient allocation and utilization of resources.52 This suggests that complementarity between the states and market forces has paved the way for the promotion of national development and the importance of politics in Botswana and Mauritius. Thus, the congruence between political systems and choices of economic policies is very important. As democracies, the governments of Botswana and Mauritius are most inclined to select sound economic policies to efficiently allocate and utilize resources to satisfy the majority of the population. It is the commitment to development by both the political and bureaucratic elites that underlies the pursuance of realistic economic policies and good management of economies, relatively low corruption which explains their ability to take advantage of EC and US preferential treatment and high demand and prices on the world market. The governments' sensitivity to relatively equitable distribution of public resources ensures political stability. Their reputations as stable, legitimate democratic governments have endeared the two countries to foreign investors. These characteristics are lacking in the other three countries.
Angola, Malawi, and Zambia, which were authoritarian one-party states, moved towards political liberalism with multiparty elections in the 1990s. As a result, they are more preoccupied with problems of consolidating democracy and rejuvenating ailing economies.
Prospects do not look promising since they still retain some elements of authoritarianism including repression of political opposition, lack of responsiveness, accountability and transparency, corruption and misuse of public resources. They face even dimmer prospects in view of the breakdown in international negotiations, under the auspices of the World Trade Organization (WTO), for export concessions for developing countries. In contrast, Botswana and Mauritius have multiparty democratic systems which have survived for a very long period of time, allowing for popular acceptance and acquisition of legitimacy by ruling governments, and relatively better prospects for growth due to a stable high demand for Botswana diamonds and high prices for Mauritian manufactured goods, guaranteeing sufficient revenues to meet electorates' demands.
Botswana and Mauritius have successful records of economic development primarily because of their democratic systems of government which, due to the need for accountability and responsiveness to electorates, are compelled to select appropriate economic policies for efficient allocation and utilization of resources, and to provide sufficient incentives to foreign investors to propel development. This logically means that for Angola, Malawi and Zambia to be developmental states, they have to adopt fully-fledged democratic state structures, which are legitimate and popularly accepted by society as in Botswana and Mauritius. Angola, Malawi and Zambia, as relatively newly democratizing countries, have a long way to go toward consolidation to create political environments conducive to successful development. Thus, Botswana and Mauritius as successful models of 'popular, responsive democracy and 'distributive' capitalist economic development might not be easily emulated because the factors which account for their successes are only partially present in the three countries and the rest of 'non-democratic' Africa.
1. Judith Streak, "The Counter-counterrevolution in development theory on the role of the state in development:,Inferences for South Africa?", Development Southern Africa, 14 (3), October 1997, pp.307-25.
2. Adrian Leftwich, "Bringing Politics Back In: Towards a Model of the Developmental State", Journal of Development Studies, 31(3), 1995, pp. 400-435; Gordon White, "Developmental States and Socialist Industrialisation in the Third World", Journal of Development Studies, 21(3), April 1985, pp. 92-100.
3. Richard Sandbrook, The Politics of Africa's Economic Recovery. Cambridge University Press, Cambridge, 1993, p. 58.
4. Leftwich, "Bringing Politics", pp. 405, 420.
5. The Economist, 20 August 1988, p. 32.
African Studies Quarterly | Volume 5, Issue 1 | Winter 2001 http://www.africa.ufl.edu/asq/v5/v5i1a2.pdf 30 | Hwedi
6. The Economist, 14 December 1996
7. United Nations Development Programme (UNDP), Human Development Report, 1997.
Oxford University Press, New York, 1997, p. 146.
8. Mail and Guardian, 20-26 February 1998; The Economist, 1 October 1998.
9. The World Bank, Mauritius: Managing Success. Washington, D.C: The World Bank, 1989, pp. 4, 10; UNDP, Human Development, p. 92.
10. The Botswana Guardian, 25 September 1992, p. 14.
11. World Bank, Mauritius: Managing, pp. 5,10,54.
12. Ibid, pp. 5,16-17,22.
13. Ibid, pp. xii,xiii,8,12.
14. Ibid, p.23
15. Ibid, p. 25.
16. UNDP, Human Development, p. 146; UNDP, Human Development Report 1996, Oxford University Press, New York, 1996, p.93.
17. Roy Laishley, "Botswana:new challenges to success", Africa Recovery, December1992February 1993, p.16.
18. UNDP, Human Development, pp. 147,191.
19. Laishley, Botswana:new", p.16
20. Republic of Botswana, National Development Plan 1997/8-2002/03. Government Printer, Gaborone, August 1997, p. 17.
21. Ibid, p.17.