This document provides an overview of the political economy of Malawi from 1964 to 2011 under three different ruling parties. [1] Under Kamuzu Banda and the Malawi Congress Party from 1964-1994, there was successful development and growth when rents were allocated productively, but this declined over time. [2] Under Bakili Muluzi and the United Democratic Front from 1994-2004, there was limited development despite aid due to lack of strategy and rents being exported. [3] Under Bingu Mutharika's Democratic Progressive Party from 2005-2011, food security was achieved but fiscal discipline eroded and attempts to control tobacco rents failed.

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A Very Short Political Economy
of Malawi
Martin Prowse, University of Antwerp
martin.prowse@ua.ac.be
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.....)
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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
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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
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Key references
Chinsinga and Chirwa (forthcoming) The Political Settlement,
Development Policy and Inclusive Development in Malawi
Cammack (2011) Malawi’s Political Settlement in Crisis
Cammack et al (2010) Developmental patrimonialism? The case
of Malawi
Booth et al (2006) Drivers of Change and Development in Malawi
Van Donge (2002) The Fate of an African ‘Chaebol’: Malawi’s
Press Corporation after Democratisation
Harrigan (2001) From Dictatorship to Democracy
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1964 – 1994 Malawi Congress Party
– Kamuzu Banda
Economic policy
1964 – 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 production
1969 – 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
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3. 02/05/2012
1964 – 1994 Malawi Congress Party
– Kamuzu Banda
Economic policy
1969 – 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
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1964 – 1994 Malawi Congress Party
– Kamuzu Banda
Economic policy
1980 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.
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1964 – 1994 Malawi Congress Party
– Kamuzu Banda
Governance
1964 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)
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4. 02/05/2012
1994 – 2004 United Democratic Front
– Bakili Muluzi
Governance
1994 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
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1994 – 2004 United Democratic Front
– Bakili Muluzi
Economic policy
1994 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
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1994 – 2004 United Democratic Front
– Bakili Muluzi
Economic 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
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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
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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
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Neo-patrimonial development?
1964 – 1994 Malawi Congress Party – Kamuzu Banda
Successful developmental strategy only between 1969 -1978
Rents from keeping producer prices for export crops, esp. fire-
cured tobacco, below export parity channelled to productive
people and investments: estates, manufacturing, service sector.
Led to considerable growth in business development,
manufacturing (7% pa) and service sector (financial services
grew at 15% pa). Food security was assured through subsidies.
Ended with exogenous shocks (especially oil prices), fiscal
indiscipline 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
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6. 02/05/2012
Neo-patrimonial development?
1994 – 2004 United Democratic Front – Bakili Muluzi
Despite influx of ODA, the UDF lacked development strategy.
Investment directed towards non-tradeables
Despite smallholder growth from burley tobacco, food security was
precarious.
Fewer rents available: leaf merchants cartel tolerated by the UDF
regime. Possible rents not invested domestically.
Corrupt procurement with kickbacks – not the same kind of rents!
Civil service became incapable. Donors started to settle policy
discussions in an incoherent, fragmented manner
Kelsall et al (2010) short horizon decentralised rent relationship.
Yes, but recognise the cartel exported possible rents so less
domestic investment potential!
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Neo-patrimonial development?
2005 – 2011 Democratic Progressive Party – B. Mutharika
Mutharika’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 donors
Kelsall et al (2010) long term centralised rent relationship. Only
developmental in reducing poverty and attaining food security. No
transformation. Failed to secure rents for domestic investment.
Alienated key development partners. Couldn’t control a source of
rents.
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Thank you!
Comments to:
martin.prowse@ua.ac.be
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