Subterfuge is in confusion!

African Governance and the Globalizing World

Back in the 90s every American marketing textbook began with the view that the demand-side of the consumer world has changed. The age of slow (demand-side) pace of change has gone, so too has the age of fewer (supply-side) products and services. Supply-side channels of communication and distribution are more pervasive as is the sophistication (demand-side) of consumer needs. The books contrasted with the salesman’s reign; when “marketing” had enjoyed prolonged periods of relative stability while reaping maximum profits through "holding the customer constant" and optimizing the other variables. Now, the age of choice had arrived. The reasons are obvious. The shopping public has developed increasingly sophisticated sets of defenses to the “salesman’s pitch”. Thus, the cozy world of ‘demand and supply’ has been caricaturized as a new terrain wherein each side demands the other to change faster.

So challenged, the supply-side has responded through greater search for "brand loyalty". "Keeping in touch" has become the greatest challenge for all suppliers. Thus, buyers—generally considered genuinely ignorant of their full needs and wants—are continually bombarded with purchasing alternatives. This is done mainly through advertising and other mindboggling gimmicks to reach into customers’ fast shrinking wallets. People hardly have the time to savor their ‘purchase’ achievements—their trolley full of purchases—before they go out again to buy even better and newer goods and services.

In such a climate—the merry-go-round of demand pushing supply which in turn pushes demand—the salesman has been the main victim. He has since been dispatched to the museum. In his place, instead, now installed is the Marketing Manager. This is the guy who talks of refocusing away from ‘selling of products’ to ‘creating relationships with the customer’s wallet’. He argues: in the ‘new world’ marketing now represents an ongoing effort to keep the means of production—products and services—in touch with evolving social and personal conditions: i.e. the willingness by a customer to open her purse]. To the novice it is all mind tricks; after all salesmen were just as good at getting rid of the widgets coming off production lines. It this Western fad-ism all over again!

But this is all out there: possibly in the West. Unfortunately, here in Africa—save for the rare islands of cell-phone companies: doing their own funny bit—it remains largely ‘business as usual’. We continue to argue in favor of the salesman. At least—when it comes to our tobacco and other commodities—the salesman approach works. Who needs a marketing manager to play “shrink” with the customer? “What is he anyway, but a “shrink salesman?” we laugh as we watch the “poor” white Marketing Manager departs empty handed.

Typical of everything, we remain married to our old ‘salesman’ ways because we are ignorant. It’s in our cogitative nature—it takes nearly twenty-years for us to seriously open a book and ‘catch up’ on anything. Instead, we continue to exalt in our dismissive aloofness.

“Who can follow what the white man gets up to?” We charge from behind the not-so-new velvety drapes in our State Houses. And in reference to those failed IMF/ World Bank SAPs experiment we add: “When Americans cannot control something with one tool they throw out the workable tool as well as the ‘uncontrollable element’. In their place they install untried but supposedly ‘better and workable’ protocols!”

Yes—have you noticed? What used to be called ‘procedures’ and/or ‘approaches’ is now called ‘protocols’? But, school science taught me that a ‘proto-whatever’ is something not fully refined: an experiment. Yet, according to American-speak we are now supposed to refer to serious things as ‘experiments’!

“Any wonder they are in such a financial fix now?” Yes, I hear you Mr. African President.

But irrespective, our ‘marketing’ dilemma, a sad African situation has been looming since the Oil Crisis in 1973. The Yom Kippur War was a wake-up call to everyone; no less so to us in Africa. Associated with disappearing cheap oil and ‘marketing’ upheavals, also emerged new ways of doing business—goal-orientated approaches and meeting marketing [not sales] targets. These were basically centered on new ways of contacting and contracting to ‘exploitable quantities’ the mirage-like customer. She—because the bulk of customers with serious purse strings are now female—is a mirage given she is always right ahead but never to be caught and/ or compromised. How well it has been done, the jury is still out there.

Yet, in this new world African commodities must also be sold [or is it marketed]?] The question is how: when they want Marketing Managers to do it when we are still stuck with our ‘Global Commodity Salesman’. The latter is the guy who is generally informed by the commission-bit that falls before him. He who talks commission gets his attention. Relationships—what relationships? Is easy seed money is involved, is the right question! In Africa the salesman is the revered way of doing international commodity trade. By way this includes those blocks who visit Malawi once a year—to ‘steal our tobacco’ right in our presence! But, take your tobacco at nearly no cost to him is the way he makes his commissions once back home with your free sweat!

Surprisingly, we take pride in dealing with him. Worse—instead of ‘brand loyalty’ we have stayed with the African way: love the man first [man loyalty], business second. So, we cheat ourselves that—like the influenza in 1914—the ‘Marketing Manager Fever’ will pass. The trusted salesman—offering under the table deals with even ‘ready-to-use’ Swiss bank accounts—will return [for various salesman tricks see J.C. Levinson—Guerilla Marketing, 1999]. Patience—especially in the face of Western fads—is what has so far made Africa ‘resilient’!

But, mark my word: if ‘tobacco stealing’ is done openly, the worst cases—since Kamuzu used to ‘forward sell’ peasant maize and then he and ADMARC would siphon the sales price differences [see Adams, Cavendish and Mistry circa 2002]—take place out of sight. The Malawian way of ‘selling’ commodities still largely involves getting commodities into some silos or warehouses in Southampton. Thereafter, we take a prolonged and ‘deserved breather’ while the commodity salesman do his ‘usual tricks’. That is the traditional way since the Farmers’-Marketing-Board [FMB] model of the sixties. Besides, how would one know the backstreets of Southampton to start hawking around one Malawian commodity or the other?

But, in this new ‘marketing world’, that is just one does not do; especially if your whole national wealth depends on it. Yet, listen to this: who in his right mind sends his precious agricultural commodities to Southampton when the grain trade hub has since shifted to Felixstowe and the European Channel Operations? We still do. So, Malawian commodities—unattended [gathering mold and all the bacterial rot] sit—waiting for the salesman to find us some buyers who happen to be cozily sitting on the other side of London! So, much for creating ‘brand loyalty’ for Malawian commodities! And all the time, we make it a political sport to accuse the guys in this or that industry of externalizing forex. Given the high percentage of rot, in-line product destruction and their supply chain ignorance, they can’t externalize what they haven’t sold yet or unlikely to ever sell!

And time marches on while we avidly await the “return of the salesman”. Meantime, African commodities pile up in those foreign ports and warehouses because the demand-side—the customer—has moved on without us. The commodity markets are now demanding more and more quality products and refined suppliers’ relationships—the kind of things we are not geared to do. Even the industrial market that uses African commodities also want to be courted, serenaded and feted in order to buy what—during FMB and Kamuzu days—they had bought with little or no ceremony. The problem is that while we mulled in self-entitled pride—unknowingly refusing to chase after their wallets—foreign buyers have been moving on. The ‘poor’ Marketing Manager we once laughed at has since “spied” the stranded and “orphaned” customers for African commodities and is having a field day splitting the rough-cut market; piling it with “substitutes” that are capable of customizing by design, service and variety.

Oddly, the same “choosy” western market—that had earlier resisted cheaper substitutes for ‘genuine African alternatives’—is now readily accepting these substitutes on the pretext that African supply chains are ‘increasingly inaccessible’. The latter is said with ‘good’ justification too: was it not their cousins in IMF and World Bank who introduced the SAPs that ushered in the ‘pothole age’—and thus poor commodity delivery systems—into post-colonial Africa! Meantime—as original and organic African alternatives disappear from Western supermarket shelves—“substitute pushing” has become Sunday afternoon on the beach. The only thing they are yet to introduce—in the coffee range—is a “self-brewing” line of products!

Back in Africa results have been coming. African commodity sales are down. Alternatively, they may jump in one sector and crazy ideas about forex hedging are suddenly bandied around. However, the general trend remains downwards.

“Where is the salesman?” every African President and his henchmen are wondering from behind now really worn-out velvety curtains that in these ‘hard economic times’ cannot be easily replaced. “Why isn’t he pushing our commodities into the markets that are traditionally “ours”?”

As more dismal sales figures arrive, the wait for the “missing” salesman is turning into visible despondency and the usual African “witchcraft” blame-games. Everyone argues:

“The Americans are once again up to their hegemonic and protectionist games. They are closing off their markets to African commodities because they take comfort in seeing belly-shriveled African kids on their TV-screens.” What a self kidding lie because last time I checked were performing dismally on the AGOA log sheet.

But, the lie is good story book copy. The last WSSD (World Summit for Sustainable Development)—in Johannesburg in 2002—even included a resolution that read:

“Recalling the mandate for the new trade round agreed at Doha, we underline the need to ensure that further trade liberalization should… lead to better access for developing countries to world markets…” (Mail and Guardian; August 23-29: 2002: p. 4).

And some people—names deliberately withheld—seeking cheap popularity proposed “new” solutions in defense to the African self-annihilation implied in the above failure to understand the centrality of marketing. They are calling for ‘localization’—as opposed to wholesale—‘globalization’. This they propose should be achieved through control of movements of corporations and multinationals in the process protecting local economies—so separated—to “maximize their local production.”

But, how does stopping the leftover sales offices of MNCs located elsewhere in the world begin to protect Malawi? The danger with such thoughts is that they plant even more stupid thoughts in locals. Here in Malawi we actually nurse the false hope—witness our great antipathy for the local vendor—that somehow these ‘sales offices’ will one morning transform into the Schumpeterian ‘small is beautiful’ sources for growth and actively support our export strategies! But, how can a Coca-Cola sales outlet in Malawi export into Zambia where another Coca-Cola outlet is already busy doing the same? So there has to be other motivations designed to postpone the need for Africans to learn how to market—because it is only if you know what your market wants that you design an export-oriented industrial base to exploit that demand. Coca-Cola realized that and hence their ‘sales’ or is it ‘marketing’ office is firmly developed in Malawi.

Admittedly, not all Africa-North interactions are equal: with some looking like putting a village boxer in the same ring with Mike Tyson—while the WTO umpire visibly dozes off in a corner! But, rather than have the village boxer defend his hard-earned wealth against the unequal Tyson—and possibly knock him for six!—these experts would prefer Apartheid-like “separate development” enclaves for Africa. But, knowing how Africans take advantage of any form of ‘free coupons’, these enclaves would increasingly look like some Darwinian zoo or autarkies where Africans will be accorded the opportunity to economically atrophy at leisure.

The home truth is that localization is not new around here. We once had a state-sponsored vendor system called ISI—import substitution industrialization. It failed because it was made up of over-protected and inefficient State-Owned Enterprises that—due to lack of product comparability—served more to rip off their own locals. Now, we should endure similar waste simply because Africans are lazy to internalize the strictures of ‘Global Marketing’!

Instead, of the one-way sieve model—designed to stop hemorrhaging of money by ensuring that “local” money stays in one country—we should be realistic and avoid ISI model in sheep clothing. How does an ISI-based economy of any design acquire its raw materials and “products that Africa does not have” unless it markets its commodities and maximize the revenues from what it has already produced?

Whatever we do the Marketing Manager is here to replace the salesman [see my blog ‘I dreamt I was the National Marketing Minister’]

Please leave your comments below and/ or contact the author at zivaiclaude@gmail.com

JOBS GALORE FINALLY

If this tickles your fancy start applying now. The jobs are coming.

Following my blog ‘On the cheap’, some clever chap in government—after I had written directing him to my blog site [I really need to learn how to twit]—has taken the initiative and spoken to the Americans. It is possible he was even accorded an audience with Obama. Now, some back actors [these are combined tractors with a plough at the front and trencher at the back], mechanical shovels and some bits have since been "cascaded" to Malawi. No don’t confuse these with the tractors from India [or is it Iran?] These are real American war surpluses. Never mind their sources. Get this:

1                      Parliament—the very last one—passed through a rush-rush bill on the creation of the National Irrigation Corporation [NIC]. That now is in position. If it tickles your fancy—that is if you are the office boy [girl] type—go ahead and apply for jobs in that organization too. We need you there if you are of the right and YAMBA [Young Ambitious Malawian Business Achievers]-supportive mindset!

2                      The Americans and a few friends—after a few visits by Malawian agricultural, irrigation and engineering delegations to their war scrap yards—managed to gather the things we had asked for.

3                      After the mandatory ‘radioactive testing’—remember some of these things were used in the military theater against Saddam Hussein—the equipment was passed and is now at Beira [while the Mozzies figure out to let them in by road or by pontoon to Nsanje World Inland Port].

So where are the ‘agriculture-related jobs’ going to start appearing? The order is not important though we may be guided by the supply and availability of fuel because—just like American Hummers—these back actors were built to be fuel guzzlers. So we shall need to be as close as possible to existing fuel supply lines. However, the main guiding principles will be twofold:

1                      Create jobs—any jobs—because the best measure of GNP [gross national product] on the HDI [Human Development Indicator] is national productivity. And generally we haven’t been doing very well there since Kamuzu abandoned ship in 1994. The Japanese can boast of grow and economic success because they manage close to 75% national productivity. The Malawian productivity—after subtracting three months in the fields pursuing ‘rent seeking’ production [because according to J. Michael Friend in ‘WTO: Trade and Development’ everything you produce to eat and not export is rent seeking], the other eight months are spent on kachasu drinking and dancing in funny traditional gear and then is here is aimless pursuits of most urban Malawians—hovers around 30% only! A few more aimless jobs digging irrigation trenches that may be used to grow exportable crops will not hurt; especially if real and nominal national productivity is pushed up to around 60%.

2                      Generate a new sense [or the outlines thereof] of national strategic independence [in another blog I define ‘strategic independence’ as that sense of achievement over-and-above political independence, usually associated with greater economic independence and ability to influence global political and economic direction and sometimes—as wrongly assumed by those who have the capability—through ‘military power’. If we work hard at these irrigation trenches we may just have such power to ‘tell off’ a few superpowers around us. Money gives power to be independent. Thus, the battlefront between government and NGOs in Malawi today is who ought to finance our economic needs: self-reliant autarky [government position] or planned begging [NGO vision]. Autarky on an empty stomach or chewing on empty gums is quite hurtful pursuit. It runs against the grain of how successful countries—including the increasingly ‘strategically independent’ economy of China—managed to achieve it. China—since Deng Xiaoping—became increasingly inward looking not merely to cut itself from external influences but also to create the vital economic capability [human capital, self-reliant mindset and realigned development infrastructure] critical to become economical independent to arrogantly ‘tell off a few Western interferers’ without losing face. Now, even American industry is describing a rat rut into China: the new factory of the global village. How does Malawi begin to define a ‘rat rut’ leading to our strategic independence one day? On the other hand, ‘planned begging’ is a bane even on a mildly devout Christian viewpoint. When you disrobe yourself and get ‘shacked’ for it is rather dishonest to scream ‘Rape!’ thereafter!

Now, here is the trenching work plan. We will dig the first section of the national irrigation canal perpendicular to the NSR [New Shire River]. This is the fresh water source extending from the source of the Songwe River to South Marka in Nsanje. Because we are people driven—with a mission—we will not wait for the guys in parliament to finish huffing and puffing on the final nature of a NIC. Thus, the first lot of jobs in the offing—the only way forward—involves volunteers: show the politicians we are serious and capable of DIY [Do It Yourself].

Volunteers will clear bushes at soon-to-be-announced irrigation sites. Here your CV will be made up of: a burning desire to become a Yambakata, readiness to do hard and sometimes not-immediately rewarding work. No referees are required for this one. Former Kamuzu Youth Weekers are welcome—more as advisers on the ‘selfless self-help spirit engendered. Generally, this will be on the job self "mchokocho"! Remember, though: bring along a bag of ufa because it could be days while we are out there. Meanwhile let no cheap politician lie to you that this is modern Thangata or Kamuzu's "youth exploitation". It’s for you, and once again, early birds on the NSR will soon sing alongside Lawrence Mbenjere [you know the song]!

Second lot of jobs goes to electrical transformer winders. The way things are going in ESCOM we have to go DIY to the hilt. Not surprisingly there are bucket lots of you. For the last 20 years you have been making homemade MATRADAS [Malawi Transformers and Adapters] which have kept you busy behind the road signs saying "Battery Charge". The NSR Irrigation Project requires no fewer than 500 transformers—that ESCOM now on hand-to-mouth operations currently cannot afford—if we are to pump water up hill.

As an aside let me tell you of the things Africans do to themselves. Once in the 60s, an African leader went to Taiwan. While there, he met among other dignitaries a guy called K. T. Li—the author of a book: ‘The Economic Transformation of Taiwan’ who was also Taiwan’s Finance Minister; when that country was absorbing US ‘Marshal Plan’ style aid that never came to Africa. During one of those begging chats our African leader let it be known that Africa could not be irrigated because all our rivers sit in deep ditches and ravines. In turn Li wrote this story in his book—and the World Bank read it. Now you know why the World Bank has over the decades refused to extend irrigation-related loans to Africa. Africans abroad: Shut up and shovel down your Sushi with less difficulty!

So MATRADAS specialists we don’t need to see your CVs. Just bring yourself, your backside and your skills to a venue soon to be announced.

Third lot of jobs is for ESCOM—if they know their bacon. This project will need enough linesmen to run an electricity grid along the NSR. ESCOM don't tremble in your boots. This will not demand new power generation capacity—what with your underperforming 60Megawatt stories. Our vision requires just enough power to run our electric water pumps pushing water up to a miserly fifteen kilometers perpendicular to the NSR. At night mind you. We will require you work with us after 20:00 hours—when everyone with a legitimate claim to your current electricity capacity is now dozing off. So, there will be no serious issues about load shedding here. Let "industry"—or whatever was left after the IMF—and whoever else enjoys their current rights use the power before that. But after supper—peaking at 22:00 hours—we will crank up water pumps using your underutilized low-demand capacity and push water up our irrigation canals and the ravines that K.T. Li argued are ‘near to impossible to irrigate’. Thereafter, gravity will bring the water back into the NSR via a series of canal bypasses and "night time" irrigated fields! The beauty of this is that there will be more jobs and less time to gaze at the nightly moon. This will translate into high rural productivity for smallholder producers.

Fourth lot of jobs goes to seed factories. The NSR is a full 600,000 meters of fresh waterfront. Multiply that with a perpendicular depth of 15000 meters you have almost 900,000 irrigable hectares per quarter or 2,700,000 hectares per year. At 20 kilograms of seed per hectare 135,000 units of 20kg bags of seeds are required!

And guys if seed factories and suppliers show any signs of disorganization then here is another opportunity for YAMBA jobs. Set up your own seed packing factories and bugger the TRIPS [Trade Related Intellectual Property Rights (TRIPS] noise from WTO and the so called registered ‘seed suppliers’. We are on a trip here and no room for niceties—ask the Chinese how it is done. They did not rush to Morocco—like certain of our Malawian leaders—to sign the WTO agreement! To this day they are yet to sign because they have a mission to become a superpower and ‘patent-access limiting’ agreements only serve to delay what the West achieved through ‘free slavery’ [they have yet to pay reparations!]. We must ‘enslave’ their patents if we are to get anywhere. So while you are at this, don't just pack maize seed. Include mpendadzuwa and gontha. The English name for this grass is not known to me. But growing up in Thyolo—on the edges of tea estates—I came across this versatile grass that pigs simply love to eat. It is an adventitious vegetable: you cut it today and overnight it will have re-sprouted! And if, like me, you are observant it is also growing along the Limbe stream. For mpendadzuwa let's prove Sasakawa guys wrong—we will interplant it with maize in the processes trebling the harvest capacity of each irrigable hectare! This means Chitedze, NRC and Mikolongwe get crash extension officers' programs organized now. Thousands of those officers will be needed to practice this new MPA—the maize, mpendadzuwa and gontha—planting approach! Besides we need smallholders to learn new approaches to pig stall feeding and ensure pigsties are truly pigsties.

Who else hasn't got a job? Two opportunities appear here. Someone must find enough Land Rover chassis and axles. It is going to be ngolo galore, draw-oxen/ donkeys supply and training opportunities. The second opportunity is for someone to supply us with "cascade" oil and oil cake processing machinery. There is going to be just too much mpendadzuwa—it must be beneficiated at source. OVOP get your act right—bring in "utility models" in this area. Get out of those experimental trips responsible for those poor cassava traders at Bunda Turn off. For whatever it takes you created false hope and then abandoned those farmers who now must leave their land each day and waste time on that roadside!

Meantime someone please seriously supply us with piglets—not those NGO-funded "village scoundrel" projects in Neno the other year. We need real volumes—close to three million piglets per every six-to-eight-month's raising cycle. Besides we are not sequential pork and pig products producers. In one cycle we shall operate eight to twenty raising sets or 30 million piglets per shot! With each Chinese devouring 40 kilograms or a whole pig per year [see my blog ‘Gander is the Way’] we have a mammoth task filling up nearly 300 million Far Eastern bellies! The other day I popped into Shoprite and had my eyes nearly popped out when I saw Brazilian pork selling for MK1500 per kilo! Well at a mere MK800 per kilo while moving 1, 200 million kilograms to China I work it out the YAMBA has the power to have Malawi reclassified—overnight—into the "Economic Lion of Africa"!

But think of the number of jobs involved in slaughtering, processing and properly packaging three million fully grown pigs before dispatching the same to Taipei, Beijing, Tokyo and Seoul? It is jobs galore in the processing plants! But that too is to jump the gun because the YAMBA have the task to mould bricks and then build pig lots, abattoirs, install processing machinery and freezers. My master schedule calculations says to manage one container per hour—at 40 kilograms per pig weight—means 10,000 pigs must be processed per hour. By the way specialists I have spoken to have advised a pig can be cut into 17 different grades and quality in the process enhancing the revenue per pig from MK800 to the MK1500 the Brazilian pork is fetching!

Because live and/ or rotten pork doesn't market very well, there are more jobs in the logistics and transportation front. This will require freight forwarders, logistics operators and a whole new PEDC [Pork Export Development Corporation] with local and international branches—as part of a well organized JIT [Just-in-Time] based marketing strategy [see my blog ‘African Governance and the Changing World’]—into receiving markets for our pork.

I already can see—in addition to being the "Warm Heart of Africa"—Malawi being proudly called the first "Economic Lion of Africa". The latter is a "brainpower" act that goes beyond mere political platitudes. Someone get off your backside and talk to the Americans. The YAMBA need the back actors ASAP!

Please leave your comments below and/ or contact the author at zivaiclaude@gmail.com

Of Tins-of Paint Peacocks—When a New Mindset Is Critical

Picture this: A man parks his car in a narrow city lane [outside a paint shop] to load tins of paint into his car and everyone else—especially the majority of us who cannot afford the ‘economic feat’ he is presumably undertaking [building his own expensive family mansion somewhere in this city]—are forced to pause in a long queue of cars and watch: appraise what he is achieving!

The only problem with the above picture is that the man is actually and intrinsically involved in one of the most ‘stupid’ national pursuits: i.e. Malawians investing their hard won personal income and thus ‘potential business capital’ into long-term and un-mortgage-able assets called ‘houses’! But tell that to an average Malawian—including those who were forced to pause and admire the ‘elevated national stupidity’ this man was indulging in—they would probably have you lynched.

Has it not been drummed in our minds time immemorial: ‘for whatever we may not have, a decent man must have a roof over his head?’ [Was that not Kamuzu himself?] So, how can one consider ‘building a roof over one’s head’ stupid; let alone call it a national development stupidity?’ Are there no whole national housing industries being bandied around? Indeed, the lack of the ‘Sectional Title Act’ in Malawi—allowing people to parcel and sell off parts of their houses and buildings—is currently being blamed for the slow take off of the Malawian housing construction industry similar to that in Kenya and other parts of Africa. Everyone will tell about the success story that is the housing construction industry in the USA. Just like ‘New Jobs’, ‘Housing Start’ is a very important statistic on the USA’s economic development barometer. We ought to have that one here too—‘housing start’ or ‘housing finish’ [given houses built on personal incomes take ages to finish around here].

On the other hand, have you not heard government officers—and even politicians—bemoan the high rental cost that government is paying for office accommodation because government does not have its own buildings and properties? Look across the Capital Hill and you will see a new government building going up there. Its express purpose is to house government agencies at the Hill and reduce the government rental bill—running in billions of kwacha per year—in and around Lilongwe City. It is the thing to do: build your own roof: avoid paying money to outsider ‘blood sucking profiteers’ [the nastier the description if they happen to be of Asian origins!]. Those billions being given to Asian property owners could then be used to meet other government recurrent costs in these days of ‘Zero Deficit’. People are being promoted into senior government posts for mouthing such ‘sense’! The operative mindset is ‘own-to-succeed’.

Indeed, the more DIY [do it yourself] you build your house, the most recommended. I remember even renowned Malawian economist Thomas Munthali PhD once wrote in his weekend newspaper article recommending that we—middle class Malawians—go DIY in everything we do about our houses! Cut out all those ‘blood sucking’ and exorbitant ‘ganyu’ people [and ‘vendors’ while you are at it]. Imagine—in anticipation for his wages for a job ill performed—the ‘bugger’ also demands a cup of tea and even lunch before he leaves with his day’s loot! It defeats the purpose DIY, doesn’t it?

The litany of anecdotes on people peacock-ing with national development capital and resources are aplenty. Meantime, quite a lot of us pause to admire and even applaud such acts because—irrespective of the actual reason and purpose of such ownership—‘owning is a sign of Success’. Hence, that guy with his tins of paint felt quite superior and appreciated for inconveniencing all of us. Everyone is into ‘white elephants’ too! Yeah, that is exactly what your investment in your house is: a white elephant.

The other day, I had the pleasure of listening to a certain senior civil servant warn fellow-but-lesser civil servants to ‘stop bugging government about government standing ‘last-resort guarantor’ with banks on housing loans’.

‘It’s economic suicidal!’ he was emphatic. ‘To even think of building a house through a bank loan! You’ll be working for the bank all your working life and your pension too!’ Better kungoomba basi!

He was right because—beside putting up the house and paying the mortgage—what other value as ‘business investment’ collateral is the house to you? So therein is the problem with ‘having a roof that does not leak over your head’. It doesn’t leak but you have just put all your ‘potential personal development eggs’ in one basket for the rest of your life! So why is every Malawian making a beeline towards such a ‘one-basket’ mistake?

We are imperfect copy cat that is why.

‘If I build a house I can draw a second mortgage,’ is the traditional response. So now we are into building ‘houses for rent’ too. It makes sense. It increases the national housing stock. Isn’t that how national wealth is estimated? Higher housing stock equals greater national wealth and possibly greater national happiness! Major economies are rated in that way. But if it were hip to slurp mucus off one’s upper lip in one part of the world would it also be hip here? Well, the American property bust since 2008 came from such hip, didn’t it?

The first national stupidity is we copy indiscriminately—worse we don’t understand the underlying logic of a good deed. It has never occurred to us that there are good and honest deeds that are highly poisonous if the timing of the good deed is wrong. Housing industries and even owning a house are good and commendable deeds. Malawi needs that desperately. But at what point in one’s stages of economic development should these be prioritized? As I said in a previous blog, Kamuzu saw roads being built during the Roosevelt ‘New Deal’ and thought that ought to come before everything else. Now we have goods roads and nothing else to go in the name of national development—white elephants! Don’t get me wrong. Building roads and other peripheral infrastructure are important. Indeed ‘infrastructure’ is a key consideration when FDI [foreign direct investors] assess an investment opportunity into a country. But, one has to have timing and finesse; all the more reason China shut out those foreigners—imposing their development priorities on a system. Playing according to foreigners tunes diverts resources from critical areas of development.

Are we into housing ownership ahead of the correct time? Have we internalized building houses; even when we can rent? Increasingly, it is taboo—almost criminal—to rent a house when you can build one. It is considered ‘irresponsible’—like remaining unmarried in a sea of desperately unmarried spinsters. But is the timing and finesse right?

There are other factors too. If there had been a separate housing industry in Malawi [once Malawi Housing Corporation under Kamuzu had fulfilled this function] then it would have been possible to rent. Yet, there are no independent records to indicate that back then people were able to invest their ‘surplus income’ [read capital if you are business minded] into various ‘liquid cash’ ventures. On the other hand, the Kamuzu MHC went the way of the other ‘failed’ economic white elephants of the time. Indeed, in the absence of a fully developed housing industry we must invariably divert valuable personal development capital towards ‘providing roofs over our heads’.

But where a rental house is available then I believe the economic finesse is renting one. This is because on a continuum—between liquid cash and hard cash—building a house [not very easy to quickly convert into cash] involves tying valuable liquid cash [capital] into illiquid cash [a fixed asset]; especially in this country where ‘sectional titling’ does not exist and therefore a fully fledged housing market is impossible. A house—especially with the bank holding the title deed until the last mortgage installment is paid—is the most notorious form of personal development capital. In my mind, I think giving mortgages to working families was one of those ‘marketing afterthoughts’ [a sales agent desperate for his monthly commission] that really should not have happened wherever this ‘business started’. Mortgages—and that should apply to you—should be restricted to corporations and/ or employees whose companies are prepared to carry the legal responsibility of paying back that money! If you own a company then by all means take a mortgage in the name of the company that belongs to you. There is a clear difference therein terms of legal responsibility for the mortgage. By default, Malawians have diluted the arguments therein—confused who really ought to carry the mortgage burden [mortgages should be part of a business managers pay or ‘withdrawals’ structure]. Instead, by ‘building the houses ourselves’ we are withdrawing from ‘withdrawals’ and in so doing we have fully exposed ourselves to what should not be our Shauri.

Mistake number two—besides assuming other-level Shauris—is that we have come to accept, even for those with their housing assets unencumbered by mortgages, very low returns on our investments. What clever company executive [if you were a proper chief executive of this ‘housing business’ you have opted to run from the comforts of your bedroom] puts up a ten million kwacha investment and expects 800,000 kwacha per annum return-on-investment and smiles about it? Yeah that is the best ROI you can get in this country of ‘poverty salaries’ [because CEOs in Malawi earn the same as floor foremen in the USA]. Naturally, no ‘decent’ Malawian tenant [earning an equivalent of unemployment benefit check in US] will pay you 80,000 per month—in a ten million kwacha house [one without even have a decent carport to park his ramshackle scrap metal of a car!] By the way, 800,000 kwacha on ten million kwacha works out to be below 10% p.a. ROI. So, that ‘tins-of-paint peacock’ in town was inconveniencing us for an income he could have earned—at 23% p.a. interest—if he had left his ten million kwacha in a simple savings account at the bank anyway! So much for DIY or is it ‘Poverty Economics’ in Malawi. Add up the number of ‘tins-of-paint peacocks’ across Malawi—sweating for 8% ROI per annum when they could have invested the whole ten million kwacha into certain businesses—with a potential 25% ROI. It makes you wonder why Malawi is sweating under the weight of economic underdevelopment [national economic stupidity] that surrounds us!

In my next blog I will tell you about the people who have accosted me—literary reminded me—to return the hired car I have been driving since Christmas!

The author can also be contacted on zivaiclaude@gmail.com

Anchor Tenant Defined

In 1996—upon completing the ‘seamless services’ project at Spoornet—I landed myself a lucrative job—as Business Manager: Multipurpose Terminals—at Portnet. Back then Portnet was both the port authority as well as conducted port operations. I joined the operations part of this South African supply chain system and was located in the port in Port Elizabeth.

As Business Manager—some mouthful term for General Manager for those who are into simplicity—I had the opportunity, among other things, to be involved in the process of deciding on the location of a new deep sea port at Ncquka—some twenty kilometers outside Port Elizabeth. Why would Port Elizabeth need another port nearby? Was it sheer wastefulness among those who already have?

No. Rather, it was in response to competition from elsewhere. That right! When under attack defend yourself not otherwise—as Malawians are wont to do. For instance, once upon a time—when Mugabe got busy getting rid of white tobacco farmers—I wrote [while in South Africa] to certain political figures; advising on how we could capitalize on that error of judgment. The response was—instead of ‘grabbing’ the white farmers—Malawi got busy empathizing with Mugabe. A Malawian President flew across and feted Mugabe for his anti-colonial stance! On the other hand, the Mozambicans [and indeed the South Africans] had no such compunctions. They took in the farmers. To this day, Mozambican tobacco is doing roaring business while Malawians scratch about in this self-made economic confusion.

So, it happened that in the early 90s South African ports, on the eastern seaboard, came under attack from Port Louis, in Mauritius. From the South African shores we watched deep sea ships bypassing South Africa. Traffic was being lost and those fickle ship captains—once they get into a habit of ignoring you—take some doing persuading back. So, the South Africans visited Port Louis NOT to praise the Mauritians for such an economic ‘coup de etat’. Instead, secret missions went in to study what it was that ocean-going vessels found attractive about that island port. The answer came.

Port Louis was situated out at sea—enabling massive 500,000+ toner deadweights to anchor and release their cargo from out there without the hassles that Port Elizabeth—ensconced in the shallow waters of Algoa Bay—had become. Hence to win back the traffic—disappearing towards Port Louis—a deep sea port was needed in and around Port Elizabeth. After some brain scratching, Ncquka—a salt mining village some twenty kilometers away the existing port—was finally settled upon.

That’s it: ‘Build a port at Ncquka?’ The political decision was convinced this was a simple ABC process. Indeed, some black elephants, within the new African ruling party, truly promoted this thought. Clearly, a white elephant was in the making. However, some of us—with some business thought between our ears—began to ask questions. A deep sea port—yes. Steal back traffic from Port Louis—may be. But, what else after that traffic has been won back?

You have, by now, heard of the arguments that were put forward in support of the ‘Nsanje Port Dream’. The figure of two thousand containers per year and some indeterminate regional traffic and nothing much else was bandied about. People in the civil services cheated their way into having their petty ‘David Livingstone’ project developed.

Now, having worked in the ports in South Africa, I happen to know that two thousand twenty-footers are the stuff you put into one ocean-going ship and go to lunch while tugs push the thing out of harbor and into the high sea! So, someone in the civil service of Malawi had lied to whole President that we would set up a port on the basis of a single ship load! Just as well the Mozambicans decided to be ‘nasty’. Can you imagine the kind of egg we would have had on our faces for the other 355 days that the Nsanje Port would stand idle?

At Port Elizabeth and Ncquka we got busy thinking deeper: how would we keep Ncquka fully occupied; considering the port at Port Elizabeth was to remain functional for some time to come. Indeed, ideas of moving away traditional Port Elizabeth traffics—manganese ore [from Keetmanshof], fresh orange exports, scrap metal, ore scintilla, VW cars to China and containers carrying in VW parts etc—to Ncquka were bandied around. But, these ideas were soon rejected because they amounted to ‘moving around existing furniture’ and calling that development. We needed a real and visible bonanza!

Credit to my colleague, Kevin Wakefield—then Chief Executive of Eastern Cape Chamber of Commerce and later: because of successes at Ncquka Chief Executive of the South African Chamber based in Johannesburg—we had to think outside such narrow boxes. We needed to keep Ncquka busy for 356; if not 500 days of the year. Out of the numerous meetings emerged new thought processes and terms. One of these was ‘Anchor Tenant’.

What is an anchor tenant? Where did the term come from? What was its relevance to Ncquka? What is its application to a vibrant Nsanje Port? How can it be applied to processes of economic development in Malawi?

Back in mid 1996 the term ‘Anchor Tenant’ was not new. In fact, it is as old as the first viable supermarket and/ or department store in the USA back in the mid to late 1930s. In other words, it is a property development and/ or asset development term. The property development guys in NICO—in building a successful shopping complex at Chichiri had an understanding of what was involved. That is a thing that the old PTC Supermarket—and thus Kamuzu—on Victoria Avenue did not understand. It had no anchor tenant and expectedly it is closed, isn’t it? Indeed, I saw, in the late 80, a few such sorry shopping complexes in Liverpool, England; products of ill thought shopping complex development or disappearing local and regional anchor tenants.

Putting up a shopping complex—the brick work—is a simple exercise; just as putting up a port is. The challenge is figuring out who the anchor tenant of that shopping complex—in our case the port at Ncquka and now Nsanje—would be. It is not by some nomenclatural accident that Chichiri Shopping Center is also called Shoprite Shopping Center. Shoprite is the ‘anchor tenant’ of that complex. Take out Shoprite today [while not making arrangements to bring in another major operator of similar caliber and operations] and Chichiri Shopping Center would be on its way to death. It may not be immediate but that is the final outcome. This is where ‘economic euthanasia’—as I wrote in an earlier blog—may become necessary.

So an anchor tenant—to use a shipping terminology—is the ‘anchor’ that ensure that the ‘ship’ does not, during heavy weather, float about; hitting itself and crushing to smithereens expensive quay walls. Indeed, one of the reasons why all ports [until Port Louis refused to buck the trend and was built in open seas] are situated in a bay or mountain alcove. This is to provide additional controls against such weather vicissitudes. The idea is to make sure the ship is not overturned or run ashore during a storm. So besides deadweight anchorage, ships need physical shelter or break winds.  I am not sure what kind of anchors and wind breakers the architects of Nsanje Port designed for ships in the port in case of a dangerous storm?

An anchor tenant [plus the wind breaker] is the economic institutions in a port and/ or economy [including shopping malls] that ensure that the economic viability of the complex is sustainable throughout its economic life. Indeed, in property development business operations such as Shoprite generally occupy over 30% of the floor space of the complex. Yet, they have enough clout or power to negotiate down the rentals to less than 10%; while the small or subsidiary anchor tenants [those shops that come to the complex to assemble around the ‘anchor’] end up meeting 90% rentals and operating costs of the center! Unfair but a necessary evil for those who will make money from the traffic that the anchor tenant attracts!

So at Ncquka we needed to define an anchor tenant—the big guy that would attract continuous and year-long traffic to the port after the Port Louis traffic was won. We embarked on finding such an anchor tenant. The first lesson came from Richards Bay, in Kwazulu-Natal. Originally, a coal ‘conveyor belt’—nearly 350 million tons of coal is delivered into this port for shipment into the global system—Richards Bay was a sleepy town because the coal operation involved handling of coal into ‘pre-stacks’ in between ship arrival and loading. To generate continuity, an aluminum processing plant was established at Richards Bay—just outside the port area. Consequently, a comprehensive support industry—supplying both the port and the aluminum plant—has emerged. Additional ships, collecting aluminum ingots into the global market, now ply in and out of Richards Bay on a daily basis. Now, a beehive-like city—including the old Empangeni Town nearby—has grown behind the coal port.

Ncquka needed a similar industrial base around so as part of the Eastern Cape Chamber we went about attracting Billington HBP of Australia to establish and aluminum processing plant at Ncquka. Today, Ncquka, Port Elizabeth and the VW Assembly city at Eikenhof are fast coming together as one unified Nelson Mandela Bay.

Similarly—something those who developed the Nsanje Port concept failed to appreciate—there was [is] a need to define an anchor tenant. A viable and sustainable economic activity is needed to sustain Nsanje for the other 355 days of the year; long after the two thousand twenty-footers have left for Chiinde. How do we avoid creating a ghost town out of the Nsanje Port dream? It is a frightening specter but we already have such things around Malawi. For example, if you want to see a port without an anchor tenant take a lazy ride to Chipoka, Chilumba or even Monkey Bay when the Mtendere and/ or Ilala are not in port. Dead, aren’t they?

Nsanje needs an anchor tenant within the port itself. We need to get organized and approach the Billingtons of this world to establish an anchor tenant at Nsanje. The answers are there. The bauxite coming into Richards Bay and Ncquka is fetched from as far as Tete in Mozambique. Don’t we have bauxite right here—in Mulanje?

But more importantly, Nsanje needs an economic miracle in-country—somewhere in the Lower Shire or beyond. My suggestion that we persuade the-powers-that-be to establish a Nsanje Port Development Authority [NPDA]—responsible for formally and actively promoting development for Nsanje Port has met with wane smiles from certain technical authorities: nothing much else thereafter! Besides, the bauxite in Mulanje and an aluminum plant in Nsanje Port, the NPDA wo and the potential industrial complex around it. The traffic from theuld be responsible for resuscitating the mothballed Bangula Dam industries would keep Nsanje Port night and day!

So are anchor tenants only for Nsanje Port? In my next blog I link this argument to my earlier blog on economic engines; developing the thesis that even the national economy needs such anchor tenants.

The author can also be contacted at zivaiclaude@gmail.com