UK call to aid Malawi's economy

 
Malawi's President Joyce Banda Banda is the first female leader in Malawi

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Britain is calling for urgent action to prevent a Greece-style financial crisis in Malawi, one of the world's poorest countries, where recent political turmoil, a suspension of foreign aid, and an abrupt currency devaluation have conspired to leave the new government with a gaping hole in its budget.

"Malawi is at a crossroads today and action in three to six months may be too late," said Andrew Mitchell, UK Secretary of State for Development.

The UK was among those which suspended direct aid to the government last year.

Now it is scrambling to bring forward some £30m ($47m) - not due to be handed to the Malawian treasury until later in the year - in the next few weeks, and is urging other donors to do the same.

"We need a lot of support, very quickly - in the region of $500m," acknowledged Joyce Banda, Malawi's new president, who grappled her way to power last month after her predecessor Bingu wa Mutharika died of a heart attack and his aides briefly attempted to subvert the constitution to keep her from taking over.

"Look at me - I'm not panicking," said President Banda, in an interview at State House in Lilongwe.

She argued that much of the cash has already been pledged by foreign donors, then suspended last year because of the increasingly autocratic behaviour of her predecessor, and could be released to Malawi swiftly once the IMF gives her new government's economic programme its blessing.

"We have moved quickly. The situation was self-made therefore things can be corrected - and the good thing is that we know what to do," said President Banda, pointing out how swiftly her team has moved to restore diplomatic relations with Britain, and to invite the IMF back to Malawi.

The 33% currency devaluation - although widely recommended by economists - has put huge strain on the treasury, and on many ordinary Malawians, as the price of imported goods has soared.

Privately, western diplomats here are warning of the possibility of economic collapse, and a backlash against President Banda, if the situation isn't handled firmly and fast.

"An inflationary spiral is a real threat - if the economy collapses, Banda will lose support and political instability could follow. The cost of rescuing Malawi will be much more expensive than supporting it now," said one diplomat, speaking on condition of anonymity.

 
Andrew Harding, Africa correspondent Article written by Andrew Harding Andrew Harding Africa correspondent

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  • rate this
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    Comment number 23.

    International aid is sorely needed in Malawi. I agree with Mbugwile in that it is a temporary fix. Malawi needs to be economically independent producing enought food for all her people, and needs to be a catalyst for business development for new industries. I would hope aid agencies would seek to educate, train, and empower Malawians to be self-sufficient and not play the donor without an ending

  • rate this
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    Comment number 22.

    It is good to see President Banda taking all necessary steps to revive the economy and put Malawi back on the path to democracy. Donors can assist the country by providing aid in a timely manner.

  • rate this
    0

    Comment number 21.

    I'm I the only seeing what I see? There's a story about President Banda talking about lifting the ban on gays. Last year PM Cameron said aid will be liked to gay rights. Now the UK's call to lift the aid blockade is appearing at the same time as the President's call to lift the blockade on gays. And the two articles are appearing on the British Broadcasting Corp's webpage. What;s the connection?

  • rate this
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    Comment number 20.

    What's bad is Malawi's penchant for corruption, not NGO's and not foreign aid. Malawi has been desperately homophobic, as well, which hurts Malawi's own citizens in their thousands and violates basic human rights. Hurray for Pres. Banda !! It's about time !!

  • rate this
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    Comment number 19.

    The only people jumping for joy in Malawi today are the aid addicted NGOs. These are the people who were urging the late president to change Malawi's policies to please the aid donors. These people were so desperate for aid that they were willing to do anything that the aid donors asked them.

    I can tell them for nothing that devaluation isn't going to fix the economy. It's a temporary fix.

  • rate this
    +1

    Comment number 18.

    Aid is a gift horse, we Africans, must look in the mouth. We must be able to say "No. Thank you. Keep your nag."

    Aid is pernicious. It is seductive. It is addictive. It is easy to take money you haven't worked for. But aid comes with a huge price tag. It comes with loss of independence. It comes with loss of dignity. It comes with loss of pride.

  • rate this
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    Comment number 17.

    Britain's Aid to Malawi is mainly influenced by the Gay issue which the current President has accpted. This will be the begining of the End for Africa Aid program making it a global camaign with un early invitation to Anti Christ.This is the new Carrot & Stick Aid Policy and Africa has to wake up.

  • rate this
    0

    Comment number 16.

    The fact that President Banda is able to take bold decisions in the shortest possible time shows that she is a good and confident leader. If pregnant woman has complications during birth, Doctors resort to a Cesarian births in order to save both the mother and the child. Devaluation of the Kwacha is Malawi's caesarian birth of the economy. The economic situation is too bad in Malawi. Viva Banda.

  • rate this
    0

    Comment number 15.

    Malawi and Britain must one day understand that AID IS BAD and that fairy godmothers (dressed like Andrew Mitchell) are BAD people
    If aid was good for Malawi it would have done some good by now
    If aid was good for Britain, the UK would not be bankrupt and hugely in debt, as it currently is
    Aid makes beggars of us all
    Don't have anything to do with it! Bingu was right, at least about this!

  • rate this
    0

    Comment number 14.

    No doubt that the donor will always ask for something in return, but if one makes good use of the aid, the dependency is gradually diminished.

  • rate this
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    Comment number 13.

    The ordinary people of Malawi are suffering not Joyce Banda. The 33% currency devaluation is hurting poor Malawians. What a pity. Joyce Banda the darling of the West is up to "get rich or die trying" as stated by 50cent. Aid should not be allowed anywhere in Africa. The West want to make AFRICA their farmland what Mugabe called economic colonialism. This must be stop by all Africans by all means

  • rate this
    0

    Comment number 12.

    Aid is a curse. Aid allows the donor to dictate policy to the recipient. It allows the donor to wring economic advantage out of the recipient.

    President Banda has now reversed several policies, which she would not have done, had she been in a stronger economic position.

    The only way to get rich is to create wealth with the resources we have. Aid wont get us out of poverty.

  • rate this
    0

    Comment number 11.

    What many Africans leaders don't understand is that Western so call Aid don't come in Cash money. It comes in loans from IMF. it comes in guns and munitions, it comes in expired medicines. it come in old military tanks and jets are useless. All these are sent from the West to Africa as Aid. In return the West take back cash money from Africa as payment. You can emagine what a devil the West is.

  • rate this
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    Comment number 10.

    Malawi as a nation is now held hostage to the West by Joyce Banda. A pity for all Malawians. If the dead were to be called back. Bingu wa Mutharika must come back and save Malawian economy from Joyce pending ruin of a lovely country. That African leaders have to turn beggers now to be appreciated by the West is an insult to all Africans. Western Aid is not meant to help but to kill all possibility

  • rate this
    -2

    Comment number 9.

    What are Malawians up to? Poverty is a curse. If the western countries are going to support their budget, build them infrastructure, then may be its worthy it. I see African morals being eroded because of poverty. The former president would not have allowed this nonsense. What about 'don't ask & don't tell'.

  • rate this
    -2

    Comment number 8.

    The West and Britain can kiss their aid to Malawi, their sweetheart Joyce Banda won't see the beautiful African sunshine for long.

  • rate this
    -2

    Comment number 7.

    Any African leader who love the West is always credited by the West as ally is making reform. The West now toys with Malawi because Joyce Banda gave them good reasons to come and play in Malawi and African. Joyce Banda deserve a medal for the best drama in African falling apart of the century

  • Comment number 6.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 5.

    Donors refused to release up to 40M dollars; US suspended a 350M dollar grant. At the time, almost 40% Malawi's national budget was donor-dependent. Many donors have since pledged to help Banda restore economy. Devaluation of the Kwacha & liberalisation of the FEM are expected to contribute to govt's attempts to reach an early agreement with the IMF TO UNLOCK DONOR FUNDS.

  • rate this
    0

    Comment number 4.

    Malawi needs urgent support. President Joyce Banda has implemented all the required reforms within a month after taking office. If the donors who promised support following reforms fail to respond immediately then they will lose their relevance. What are these donors waiting for? Waiting for a complete collapse?

 

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