Well, that was different. 14 months after we left for a year in Malawi (Malawi time soon set in), my wife and I are back to reality in a country where things work, and where cheese is plentiful. My last act in Malawi was to officially hand over ownership of the business I built to its employees and an executive board established for guidance and oversight. It was an emotional end to an unbelievable and unforgettable challenge.

Certainly, it was frustrating at times. I won’t miss the days of trying to make a phone call 10 times before I got through, the weeks of false assurances that an invoice would be paid the next day, or travelling 800km to pick up a magazine I was told was ready for collection, only to find out that it hadn’t been printed at all (a ‘technical problem’, apparently – twice. Some careless member of staff must have been putting them too close to the time machine, tsk).

Nor will I miss the inability to make any plans to travel anywhere as there may not be any petrol, or waiting on a stifling bus for hours on end as more people are crammed on before it departs. I won’t miss queuing for over an hour every time I visit the bank, or turning up for meetings to find the other person hasn’t bothered.

Or, to be fair, the endless bureaucracy. Or being stopped at road blocks as the police try to invent a reason to fine you (the most innovative, I thought, was the charge of trying to run a policeman over: ‘If I was standing in front of the car while you were moving, you would have hit me’, the fact that he wasn’t in front of me and the car had stopped when he started walking over appeared to be irrelevant).

But I will miss Malawi deeply, and in particular the warmth, happiness and optimism of its people. I have learned that the inhabitants of a country we deem to be so desperate are in fact far happier than us. For me, the sound of Malawi is laughter (and, unfortunately, generators) and we must ensure that in our efforts to raise the quality of life for Malawians, we don’t compromise their unique spirit. I’ve never felt more welcome in a foreign country.

I had been brought up believing that Africa is a hopeless hotchpotch of dictatorships and starving children with flies on them. I was only three when Michael Burke reported on the famine in Ethiopia, but that’s the image of Africa that’s been reinforced throughout my life.

The reality in Malawi, though, is entirely different. We were based in the poorest region of the poorest peaceful country in Africa, but still I found a burgeoning business environment populated by an ambitious youth starved only of the opportunity to realise their ambitions.

In little over a year, we rose to become the largest magazine publisher in the country. Over half of all adverts placed in magazines in Malawi were placed in titles owned by us. We sold one of our magazines for three times the amount invested in the start-up of the whole business just eight months before, and the team now run a profitable magazine of which they have 100% ownership and control.

I say this not to boast, but to illustrate how possible it is to launch a business in Malawi if you have the education and experience to do so. I think it’s an interesting model for development. Rather than simply spending millions of dollars in aid donations, spending the time and investing the human capital in building a business can provide sustainable employment in a way that aid often cannot. I hope that’s what I have achieved in the short space of time I was out there. The fact that aid is not as effective as it could be is not a problem with aid in itself but the implementation of that aid. Early signs are good and the business has gone from strength to strength since I left. Time will be the ultimate judge of its success but I am confident that the team will succeed.

If anyone has the urge to do something completely different and is interested in doing a similar project in Malawi, please do drop me an e-mail and I can provide you with some contacts and advice on the local business scene.

Finally, thank you all for reading my rants and frustrations over the past year, it has been a pleasure writing this blog and sharing with you my experience in Malawi keeping me sane at the same time. I hope you have enjoyed reading them as much as I did writing them and I wish you all the very best.

My experience in Malawi has most certainly changed my perspective of the world.

One thing that really stands out is how misguided our attitude to development is. The current debate about the aid budget highlights the complete ignorance of many to the levels of poverty that countries such as Malawi have to tackle. But the very existence of such poverty shows how deeply rooted the problem is.

I simply do not understand how we can tolerate poverty and suffering on the scale that I often saw in Malawi. We would not tolerate an under-five child mortality rate of 15% in Wales, or an AIDS infection rate of 30% in Scotland. Nor would we allow people in France to go hungry because the harvest has not been sufficient.

We prioritise the bailouts of European economies over the education of millions of people worldwide. We tolerate the premature deaths of hundreds of thousands of people across the globe from malaria when we can buy preventative drugs in our pharmacies for a few pence each. We spend more on agricultural subsidies than we do on ensuring that people on this earth have enough to eat. How can we justify this? Because these people were born on a different continent?

Arguments against aid are invariably deeply misguided. The reason why people starve in poor countries is not because they ‘have too many children’ as I heard one pundit say the other week. It is because they do not have the infrastructure to guarantee harvests. Malawians do not go hungry every year. Indeed, in a good harvest the country will export maize. It is because the country does not have sufficient irrigation in place to ensure that the country does not rely on the rains. Surely we can do something to fix this?!

Nor is it logical that corruption should result in the removal of aid. Corruption certainly requires us to rethink our strategy on aid, and ensure that we do not keep filling up the Swiss bank accounts of despotic rulers (of which there are now very few). But to deny children an education because their government is corrupt is hardly rational or indeed fair.

The idea that in times of austerity we should cut our aid shows how misguided the advocates of that argument are. The closure of a local library cannot be compared to the removal of funding for anti-retroviral drugs to enable people to live, nor the opportunity for children to go to school. Yet it seems many people equate the two.

Poverty in Malawi is not our fault. But it most certainly is our moral responsibility to do all we can to alleviate it. I find it amazing that the Daily Mail can rage against bankers’ bonuses while at the same time urging the government to cut back foreign aid. It seems their attitude to inequality is radically different when they are at the bottom to when they are at the top.

Aid alone is not the answer. Neither is the bizarre concept of raising awareness, which in fact has bred an acceptance of and apathy towards death and poverty. I do not have the answer. But I know that one can be found; it will just take time and dedication. For a start, aid must be supported with people on the ground, and with time and effort; transparency must be improved; and aid cannot be used as a political weapon that the recent threats by the UK government to Malawi indicate it currently is.

Most of all, we must acknowledge that it is our responsibility to help. Living in Malawi for a year brought home to me what a privilege it is to live in a country where there is not a 15% chance my children will die before they are five – and where I can expect to live to see their children being born.

The privilege of living in the UK is one we have not earned as individuals. But we can use it to alleviate suffering in countries like Malawi – and it is our moral obligation to do so.

Being in Zimbabwe brought home how one man can single-handedly destroy a country. Of course, you need an element of popular support and, crucially, the full support of the army, but Zimbabwe is not the only example of the one-man destroy-all principle in recent times in sub-Saharan Africa as the inhabitants and refugees of Ivory Coast will testify.

It is this supreme power of the executive that made doing business in Malawi both disconcerting and challenging. In the UK, if you make a profit, pay your taxes and abide by regulation, you can be pretty confident that you will stay in business.

In Malawi, there’s no such comfort. I’ve written before about how unhelpful the introduction of legislation that enabled any cabinet minister to ban any publication for any reason was during the time I was selling part of the publishing business.

But it’s not just that kind of draconian legislation that keeps you awake at night. Laws in Malawi are vague, numerous and mostly unenforced. It’s simply impossible to keep up with all the laws that exist in the country and for most people, it’s never an issue.

But it does mean that you’re always at risk of closure. Write the wrong article, upset the wrong person and you can and will be shut down. All this creates a culture of fear and deference to the government.

A national newspaper ran an ill-advised article about Robert Mugabe and his wife’s alleged infidelities on the morning of a state visit by the Zimbabwean president (Malawi is a key ally of the dictator). The government closed the paper down citing the minor transgression that it had not registered with National Archives.

The newspaper fought back and lawyers succeeded in overturning the decision. So the government just changed the rules and introduced legislation enabling it to ban publications. Not healthy in the pursuit of foreign investment.

The problem is not one of democracy per se. Malawi is a relatively healthy democracy. It held peaceful multi-party elections in 2009, resulting in a win for the Democratic Progressive Party (the general rule of thumb with parties in Malawi being that inserting ‘not’ before the first two words in a party name gives you a basic overview of the party’s manifesto – the silent not once more?).

Now, Malawians don’t see the point of being on the losing side if they can avoid it (as I found in a bar full of people with England tops on fanatically cheering Germany’s fourth goal in their 4-1 win over England in the World Cup last year). And so, immediately after the 2009 election, almost all politicians jumped ship and joined the DPP, creating a de facto one party state overnight.

The judiciary is strong and independent in Malawi, but the parliament has the power to make laws without consultation, which is at the root of the business owners’ uneasiness.

The president of Malawi made great strides in his first term, putting the economy on a firm path to growth and enabling food security for the first time. Increasingly, he’s showing signs aspiring to a more authoritarian leadership, urging violence against his detractors and attempting to put his brother in power. For Malawi to realise its vast potential, such ambitions – and executive power as a whole – must be curtailed.

Dawn on a crowded bus from Victoria Falls to Harare. We were seven hours into the fourteen-hour journey and all night the speakers had been blaring out the same gospel CD. Sleep was impossible, especially for the tens of people standing in the aisles.

As the sun rose, one of the passengers began reading from the bible. He misread one verse, changing the meaning slightly. A cry came out, “That is a misinterpretation,” the man said. “God created man in his form, man is not a spirit.”

Immediately the bus erupted in a passionate but good-humoured theological debate. People that had had no sleep all night suddenly burst into life, extolling their beliefs on the creation of man by God.

Within minutes, the bus was ablaze with furious debate. I turned to my wife and smiled. This was the Africa we knew and loved, and for the thousandth time, we were humbled by the resilience of its people.

This small example of resilience is what gives me real hope for the future of Zimbabwe. Read More »

A $10 million fine for illegal parking might seem a little steep. As might a $100 million charge for taking wedding photos in a park. But in Harare, you wouldn’t have even noticed the money going out of your bank account.

In December 2008, inflation in Zimbabwe reached 6.5 quindecillion novemdecillion percent. The following month, the reserve bank introduced a £100 trillion dollar note worth (briefly) around $30. Eventually the government decided that enough was enough, and in April 2009, the currency was suspended and dollars, pounds, rands and euros began to be accepted. The suspension of the currency was supposed to last one year. Visiting last month, on a two week holiday, there was still no sign of the new currency.

The signs announcing the vast fees are just two of the many indicators of the economic strife that hyperinflation wrought on the population. Speaking to locals, my wife and I were regaled with tales of visiting bars with the boot of the car stuffed full of notes – and having to enlist the help of your friends to to carry enough cash in from the car to buy the next round. Others told of how shops weighed rather than counted the cash. And the richer people we spoke with of having to go to Botswana to do the grocery shopping.

President Mugabe blamed the hyperinflation on people raising prices. So a ban was placed on the practice – meaning that shops soon ran out of all their wares.

“Me and my friends were all trillionaires,” one local in a bar in Harare told me. “But we were the poorest trillionaires in the world.”

Despite the cancellation of the currency and the introduction of dollars, commerce still is not entirely functional. There are two main problems: a shortage of notes and an absence of coins. No shop will ever have change, so you can end up waiting for over an hour while the shop assistant runs around in search of some. In addition, there are no one cent coins, so pretty much nothing costs less than a dollar. If you want to buy some bananas, you had better be hungry.

When there is a need for smaller change, rands and dollars are used in parity. For example, a ride in a shared minibus into the centre of Harare is priced at 50c or 5 rands. Change is also given out in many shops in rand, with 20c being converted to 2 rand. With seven rand to the dollar at the official rate, there’s a significant opportunity for arbitrage here!

Some shops, however, are making significant additional profits from the situation. If you shop in one of the big supermarkets, rather than being given change you are given a credit note or simply given some sweets. Rather unfairly however, when we tried to pay in sweets our currency was refused.

Although Zimbabwe’s political and economic woes have been well documented, it was a welcoming and beautiful country to visit. The suicidal economic policies pursued by the government have devastated the economy. But there is hope yet, which I will turn to in my next letter…

One of the things that you learn pretty quickly doing business in Malawi is that if you want something done fast, you have to pay for it. This was a reality that I stubbornly fought against for many months. But in the end I caved in.

The problem I had was cash-flow. The business was performing way ahead of expectations, with operating profit margins of around 70%, and my clients were all blue-chip companies – but my cash-flow was still pretty much non-existent. I was owed thousands of dollars and the bills were taking months to pay. Initially, when I was running the one magazine and I was the only member of the company, this wasn’t too much of a problem – the bills were all paid eventually and I could always pay my basic overheads, and I had some savings in the UK to dip in to from time to time while I waited for Godot.

However, when we launched the second magazine and I got a team on board, it became clear that something had to be done about the business’s chronic cash-flow problem. It was soon after the launch that I was on one of my regular frustrated walks back from the bank (where I’d once again discovered that the various assurances I’d had that cheques were being paid in had been lies) that I was particularly concerned that the cash-flow issue could end up scuppering the business before it had a chance to take off. Chasing invoices was beginning to become my sole job and topic of conversation.

Returning to the office, I explained the problem to one of the team. ‘Who are you paying to sort this out?’ he enquired. When I replied that I was paying no one, he replied matter-of-factly that if I wanted to be paid, I would have to ‘share’. He recited some saying in the local language outlining his stance. Under his instruction I called up the accounts department of one of my creditors.

‘Umm, I really need this bill paid as soon as possible,’ I said nervously following the script that had been set out for me. ‘How can I help you out – you help me, I help you kind of thing?’ I expected my door to be immediately broken down by police and to be carted off to the nearest cell. But the person on the other end of the phone, who was until this moment front-runner for the least helpful person on Earth award, sprang into action.

‘Well bwana,’ he said. ‘If you help me I will help you. That is no problem.’

And minutes later I was assured that the cheque would be paid in that afternoon. Miraculously the next day, the cheque was indeed in my account, two months after the due date and after seven weeks of daily requests for payment and numerous assurances that it was to be, resent invoices and false promises that it had been paid in. I repeated the process with some of my other debtors and by the end of the week my debtors sheet was all but empty.

What I find flabbergasting about it is that I was basically paying someone to do their job, a job that they are also being paid to do by their company. In addition, the amount I paid appeared to be completely irrelevant. I was speaking with people earning up to 100,000 kwacha a month, offering 500 kwacha for the job to be speeded up. It seemed that fact that I knew the system was enough to get things done.

I did feel guilty, as I was perpetuating a system that was blatantly immoral, but if the business continued not to be paid for months, the growth we achieved in the year would have been impossible. Ultimately, I saw it as a very cheap, informal system of invoice factoring – a financing option which has not yet found its way to Malawi.

We caught one of our staff stealing the other day. It wasn’t much, just a few hundred kwacha from the magazine sales. But obviously I was pretty furious. I was ready to sack the chap on the spot, but the decision wasn’t down to me. In order to give the team the best possible chance of making a success of the business when I leave Malawi next month, I have for the past two months effectively handed over full control of the running of the business to them – acting as a consultant rather than an MD. And so I sat with the directors to discuss the theft.

“It is completely unacceptable,” I said. “If this business stands any chance of working long-term, we need to be able to completely trust everyone. We can’t have anyone that is out for themselves.”

However, my protestations were met with opposition. The absolute consensus among the directors was that the theft was in fact mainly my fault, for not putting in place a system that would prevent any opportunity for theft; sacking the chap would just see us losing a good salesman when all we needed to do was bring in some checks and balances. Read More »

In the week before a meeting to hold final negotiations about selling a magazine, there are two things that, in an ideal world, you would not want to happen. The first is that the government passes a law enabling any cabinet minister to ban any publication. The second is the discovery that the name of your magazine may well be illegal. Yet this was the situation I found myself in last month.

The problem was that I had used the word ‘Malawi’ in the title of my magazine. I knew that to use the word in a company name required the express permission of the Office of the President (a process that by all accounts can take over a year), but was advised by my lawyer that permission was not needed for a brand. I am still none the wiser as to the situation (calls to the President’s Office went unanswered). But it is testament to the tolerance of risk that one needs to do business in Malawi that the sale went ahead, albeit at a lower price.

In fact, given the draconian law passed by the government allowing any member of the cabinet to ban any publication, it’s really neither here nor there whether the magazine’s name is illegal – as pretty much anything we did could now be interpreted as such. But it is this uncertainty that you must grow to live with in Malawi. Read More »

Over the past few weeks, I’ve been looking at how an exit strategy for aid to Malawi might work. Rather than a shock, it should be a long term strategy – with more investment in infrastructure and a steady reduction of trade tariffs allowing the private sector to flourish and replace aid revenues with taxes.

Today I turn my guns on NGOs who, to my mind, are the biggest culprits in the perpetuation of aid to Malawi. There are two cardinal sins committed by NGOs in Malawi: the creation of a Dutch Disease through massive aid injections into the economy and the pursuit of well-intentioned but unsustainable projects. The larger NGOs are responsible for the former, and the smaller ones for the latter.

I’ve already written about the bubble that aid has created in Lilongwe, so I won’t repeat myself – except to say that large multi-national NGOs must stop paying their staff Western wages in a country where the average urban wage is around £50 a month. This is patently ridiculous: it’s hugely (and artificially) inflating office and home rental prices, and it’s fuelling a brain drain away from the private sector.

If the (you’d have thought) benevolent aid workers insist on being paid Western wages, save the majority of the cash and give it to them in one payment when they go home. Again, this should be staggered so the economy of Lilongwe can adapt to the lower wages these aid-created aristocrats have to spend in the bars and restaurants of the city. But the process must start now, as there’s no way that the private sector can raise its wages to these levels any time soon.

Large NGOs must also stop dictating policy and enable governments to move freely without the ever-present threat of withdrawal of funds (a friend that  sat in a meeting with a large multinational charity and the relevant minister witnessed the NGO trying to force the minister to abandon the government’s plan for education, because it didn’t meet exactly with the new guidelines the charity had put out). Malawi is run by donors, not the government – and the disjointed and ever-changing set of demands does not make for a coherent policy or well-functioning democracy.

Smaller NGOs and private charities are guilty of the second cardinal sin of NGOs: the absence of a sustainable plan. So many times I have come across projects that were built in good faith but have collapsed – either because the project was too dependent on the individual who set it up and subsequently left, or because the money ran out. If you want to build a school, build it and hand it over to the government to run (which is what a friend of mine did, with impressive and heart-warming results). It may cost just £10,000 to build an orphanage out here, but it will cost a damn sight more to support it. When it comes to small scale donors from the West, Malawi is a land of broken promises.

NGOs do good work in Malawi. I do not deny that, and I do not want to tarnish many of their good names. However, they are getting the Malawian economy more and more hooked on aid. There are some areas of aid that will need more time: education and Aids in particular. However, all NGOs must sit down with the government and say: ‘How can we help you to get rid of us?’ It is not in their interests, of course, which may be why they don’t. But if they really want to help Malawians, they should let them stand on their own two feet.

Our trade policy to Malawi is at odds with our aid policy. And it’s clear to me that if one was to go, it would be beneficial for all involved if it was aid. Over the past few weeks, I’ve been writing about how we need to draw up an exit strategy for aid to Malawi. Today I want to look at how Western tariffs on imports from Malawi, and Malawi’s own import policies, are preventing economic growth.

The development economist Paul Collier sums it up best when he says: “It is stupid to provide aid with the objective of promoting development, and then adopt trade policies that impede that objective.”

Stupid indeed. I was chatting the other week with a friend of mine who runs a coffee plantation in the North of the country. He told me that he used to be able to export raw coffee beans to the US tariff-free. The raw beans sell for just $3 per kg. He invested in processing facilities and began exporting processed beans to the US selling them at over $10 per kg.

His investment paid off in a matter of months. However, subsequently a large coffee chain, and his main buyer, lobbied the US government successfully for a 300% tariff on coffee imports. His processing facilities are currently mothballed while he develops new markets.

This scenario is repeated across most agricultural industries in Malawi. And it’s preventing investment in vital value-adding manufacturing processes. It is all well and good teaching a man to fish, but unless you allow him to put that fish in a tin and export it to the global market, you haven’t really done him much of a favour, have you? (Plus Malawians are excellent fishermen)

There have been a number of trade agreements with Western markets that are supposed to have promoted trade, such as the Anything But Arms Agreement and the African Growth and Opportunities Act (AGOA). But these have been widely criticised for being too short term (often agreements are signed on a specific crop for only a few years, meaning that there is no visibility and hence little investment in the crop) and for limiting the opportunity to add value through processing. Without that opportunity to add value, which can be promoted by reducing tariffs, Malawi will remain poor and reliant on aid.

However, the trade challenges that Malawi faces are not entirely the West’s fault. On the face of it, Malawi’s tax system appears to be bizarrely protectionist. Tariffs on imports are ludicrously high. Importing a new car can cost you over 100% of the value of the car; when we imported £300 of toys to give out at an orphanage on Christmas day, we were charged £400 in import taxes. Protectionism, yes – but bizarre since it’s not as if Malawi has a domestic car industry or billionaire toy manufacturers lobbying the government to protect their domestic prices.

But then you realise it is not protectionism at all; it’s a way of overtaxing the people that are prepared to pay, in order to meet the shortfall caused by the huge numbers that are on the fiddle. Being a customs office in Malawi is one of the best paid jobs in the country, but salaries are very low. I spoke with a local businessman who, after a few beers, told me that he paid around 80% of the value of the import tax in bribes in order to save the 20%. From what I have heard elsewhere, he is not alone.

Regardless of the reasons behind the tax, there is no doubt that high taxes are stifling economic growth over here. And the quicker Malawi’s consumers grow as a market for foreign investors and domestic importers, the more tax revenues will be able to replace aid revenues. Rectifying this will mean a gradual reduction of import taxes in order to maintain revenues, encourage importers and give the Malawian government time to sort out the massive corruption issues on its borders (which it is now taking steps to do).

Every year Malawi runs out of forex as it fails to balance its imports and exports. Only through increased trade at higher rates can it secure the money it needs to realise the continued growth of its economy. This must come through trade and not aid.

In today’s paper there was an article on how the UK government was promoting value-adding services in Malawian manufacturing. This is great news. But unless we allow access to our markets for processed goods there is little benefit.