Malawi needs permanent solution that will lead to self-sufficiency—Thomas Ngoma

Thomas Ngoma — a UK-based Malawian executive management consultant with over 35 years’ experience

* CBA is a proven monetary policy that can address the economic challenges immediately and permanently

* Including tackling both the monetary policy discipline as well as curtailing government wastage and deficits

By Duncan Mlanjira

Malawi cannot continue going around the world with a begging bowl for financial help but needs a permanent solution that will lead to self-sufficiency to address the chronic shortage of foreign exchange and low foreign reserves.

This is said by Thomas Ngoma — a UK-based Malawian executive management consultant with over 35 years’ experience advising clients on strategic business transformation both in public and private sector regulated environments.

In his executive summary of his assessment that Malawi should adopt the Currency Board Administration (CBA), which he authored in September 22, he maintained that the “CBA is a proven monetary policy that can address the economic challenges immediately and permanently including tackling both the monetary policy discipline as well as curtailing government wastage and deficits”.

Ngoma is a graduate from the Polytechnic — ( now Malawi University of Business & Applied Sciences (MUBAS) — in Mechanical Engineering Summary of Industry Skills & Experience (1986) as well as B.Sc in Manufacturing Systems Engineering attained at University of Warwick, UK (1988).

In the executive summary, Ngoma said the Malawi economy is currently facing a debt crisis and that many factors have converged to exacerbate the situation such as CoVID-19 pandemic and war in Ukraine.

“However, the economic fragility was there even before these crises. Ever since Malawi suffered its first balance of payment dislocation that led to the first IMF intervention in 1979, the country has never recovered or been able to graduate from the IMF support programs.

“Since independence Malawi has used discretionary monetary policy (DMP). This policy has not been able to resolve the worsening of the twin deficits, neither primary nor secondary over the years it has been in operation in Malawi.”

He thus recommends the use of CBA monetary policy rather than continuing to struggle to reform the existing discretionary policy, saying this will assist the Malawi kwacha to be pegged at a fixed exchange rate against an anchor currency — presumed the US dollar or the South African rand, British pound and the Euro.

“Several factors will be considered when making this choice,” he continues. “Many countries facing economic crises of the worst kind have adopted the currency board policy to achieve economic stability and growth.

“For example, since independence Namibia successfully anchored its currency against the South African rand. Other examples include Singapore, Russia, Estonia and Bulgaria.

“Malawi faces a stark existential choice. Either continue with the current monetary policy that has not worked for 58 years or adopt a new monetary policy, CBA.”

He gave an example of a recent IMF report, article IV, which highlighted “profound structural dislocations within the Malawi monetary and fiscal policies”.

“The report states that public debt and external debt have both reached unsustainably risky levels and that the current pace of adjustments of 1% of GDP cannot fix this worsening economic situation.

“The report recommends immediate reforms in public financial management to contain the ever-widening fiscal deficit and debt. The IMF does not believe the current discretionary monetary policy can address this required profound change.

“Instead, they recommend that Malawi seeks non-debt capital inflows from development partners. The problem with using non-debt inflows by itself is that it will only be a short-term, band-aid solution.”

Thus he stressed that Malawi cannot continue going around the world with a begging bowl for financial help and attesting that the CBA “is a proven monetary policy that can address these economic challenges immediately and permanently including tackling both the monetary policy discipline as well as curtailing government wastage and deficits”.

According to his background check, Ngoma’s work covers cross sectors in banking, finance & insurance, technology & telecommunication, mining & manufacturing, public sectors, aerospace industries, chemicals, oil & gas and pharmaceutical.

In terms of geography, he works across the globe in the US, Latin America, Europe, Asia and ANZ sharing industry best practices to address and solve business problems.

As well as devising strategies, Ngoma has extensive experience in managing program implementations controlling budgets, people management and scope as part of steering committees and influencing at corporate Board level.

He has extensive experience of industry application of macroeconomic accounting systems including ISIC 4, balance of payments (BPM 6), government finance statistics manual, monetary & financial statistics manual, SNA 2008 and debt sustainability analysis (DSA).