The joint seminar on Malawi’s economic and development model took place at Crossroads Cresta Hotel in Lilongwe on the 10th of June 2010. The Seminar was co-organised and co-hosted by the Economics Association of Malawi (ECAMA), Malawi Economic Justice Network (MEJN) and the Konrad Adenauer Foundation (KAF) who also sponsored the event. At the core of the seminar was a discussion on analyzing Malawi’s economic and development model and finding out whether it was capitalist, social market or a hybrid. Participants were also to explore if there was need to fashion a model best suited for the Malawi. The meeting brought together members of parliament, civil society groups, scholars, development and financial analysts and donor agency representatives, interested citizens, and the media among other participants.

2.Presentations:

The first presenter, Associate Professor Blessings Chinsinga spoke on ‘social market economy vs. capitalism: a political economy perspective of Malawi’s economic and development policies.’ In his presentation, Dr. Chinsinga said both models are in a crisis with respect to the prevailing financial problems, which he attributed to capitalism and the high cost of social services provided under the social market model. He cited the key distinctive feature of capitalism being its quest for “as much market as possible, and as minimal state as feasible” while social market economy stresses of “as much market as possible, and as much state as necessary” noting that social market economies have demonstrated resilience to adapt to changing contexts.

As ideal for Malawi, Dr. Chinsinga proposed for a developmental state model inspired by strengths of both the capitalist and social market economy virtues. He referred to the current fertilizer subsidy programme, the recently initiated Social Protection Policy and the defunct Agricultural Development and Marketing Corporation (ADMARC) as some social market (oriented) policy initiatives that Malawi has embarked on. Dr Chinsinga said for this to work there was need for an efficient bureaucracy, which he said was currently lacking in Malawi. He cited Botswana, Mauritius, Seychelles and Cape Verde as countries that are doing better on the continent on growth and governance fronts as developmental states.

The second presenter, Dr Thomas Munthali spoke on ‘the quest for an ideal option for Malawi’s economic and development policy: merits and demerits of social market and capitalist policies’. Dr Munthali said it was evident that no model was superior. He said Malawi experimented with nationalist, socialist and capitalist models at different political and economic junctures since independence. His presentation underscored the fact that it is evident from the Malawi Growth and Development Strategy (MGDS) that Malawi has adopted a capitalist model (with private sector as engine of growth), with moderate State interventions to deal with market failures, where necessary- others would call it a Social Market Economy.

The first and second respondents to the two presentations were Honorable Ralph Jooma, Chairperson of the Budget and Finance Committee of Parliament, and Honorable Sostein Gwengwe- the MCP Spokesperson on Finance in Parliament, The two legislators observed the need for continued debate to find the most suitable model for Malawi. A general discussion on the theme then ensued.

3.Outcomes:

From the questions and comments made by participants, and the responses provided by presenters, the following outcomes emerged from the Seminar:

a)It is evident that Malawi’s economic and development model is a hybrid- with elements of capitalism and social market economy.

b)There is lack of clear identity as a nation in many other aspects not just economic or development terms.

c)Malawi needs to consciously and flexibly derive its ideal economic model from the merits of both the social market and capitalist models.

d)There is limited/distorted understanding of the social market economic model as some participants used socialism interchangeably with social market economy.

e)It remains unclear on the degree to which State interventions are upholding capitalism or gradually leaning towards the social market orientation.

4.Way Forward

a)Participants recommended for follow-up Seminars to take the discussion further on economic and development model and other social-economic questions.

b)There is need to clarify the social market economy so that it is discussed in proper context and understanding. This could be done with press releases or media talks or other forms of presentations.

Samson Lembani, National Coordinator KAF Malawi