In reasserting its role, RBM’s new leadership must strive to be independent of undue external influences

Philip Madinga

* And to act responsibly in the best interests of free market principles—Standard Bank Chief Executive, Phillip Madinga

* In response to appointment of new Reserve Bank of Malawi (RBM) leadership team led by Dr. McDonald Mafuta Mwale as Governor and Dr. Kisu Simwaka as his deputy

* The two economists bring a renewed sense of vigour and confidence to the financial markets given their vast expertise in economics and financial regulation

By Duncan Mlanjira

Standard Bank Plc says it looks forward to working with the new leadership team at Reserve Bank of Malawi (RBM) under Governor, Dr McDonald Mafuta Mwale and his deputy, Dr. Kisu Simwaka — and emphasises that in reasserting their role, the new leadership “must strive to be independent of undue external influences and act responsibly in the best interests of free market principles”.

Mafuta Mwale returns to the Central Bank after a two-year spell as Secretary to the Treasurer and Madinga observes along with Simwaka — who was RBM director of economic policy & research — “the two economists bring a renewed sense of vigour and confidence to the financial markets — given their vast expertise in economics and financial regulation”.

“We are pleased to have a team that has built a track record working at the technical level in both respects of economic policy formulation and implementation,” said Madinga in a press statement issued this afternoon.

“In the recent past, the leadership at the RBM has been a keen participant of dialogue forums that Standard Bank Plc initiates and drives, namely the ‘Growth Conversations’ and ‘Leadership Round Table’.

“We look forward in further strengthening this dialogue with Dr Mwale and his leadership team,” he said, adding that specifically, Standard Bank would like to sustain the dialogue momentum on some key issues, and which aim to urgently address current economic challenges haunting the country — which include:

1. A return to free market-driven foreign currency management policies aiming to stimulate and incentivize the private sector, NGOs and donors to participate fully and effectively in contributing to the stabilisation of FX reserves

“This should help increase inflows and circulation of foreign currency in the market, much needed to support the country’s economic growth by making FX liquidity for export-oriented productive sectors readily available.

“Key amongst these sectors is agriculture, which is currently in season following the onset of Malawi’s rains. Other considerations are for mining, tourism and manufacturing sectors and this goes in line with Malawi’s long-term vision of building an inclusively wealthy and self-reliant nation as stipulated in the MW2063.”

2. Speed in tackling the country’s debt by taking bold steps and leadership in expediting debt restructuring negotiations with key creditors

“We are painfully aware that the current pace of debt restructuring is clearly not consistent with the need to speedily resolve Malawi’s debt burden to usher in meaningful recovery and growth.

“Fast-tracking the debt restructuring process should help free up the fiscal space and give the government much needed momentum and leverage to achieve fiscal stability, find resources to finance short-to-medium critical development expenditure, and stabilise supply of critical imports such as fuel.

“Lack of fiscal space will mean that prevailing supply-side constraints will continue to manifest. This will affect the private sector and negatively decimate production, especially in agriculture.

3. Responsive and independent regulation

“Based on feedback from various dialogue forums that Standard Bank Plc has convened, stakeholders are crying for a breath of fresh air in a Central Bank that reasserts its role in guiding economic policy direction and implantation.

“A paradigm shift and new thinking is required to drive and guide the country’s economic policy agenda, and no one else is better placed to assert in this role than the central bank itself.”

Meanwhile, Chief Economist for South Africa’s Don Consultancy Group (DCG), Chifipa Mhango also responded to the new RBM leadership soon after it was announced yesterday by the Office of the President & Cabinet.

Mhango, who is DCG director of economic research & strategy, stressed that the appointments of both economists at RBM “is welcomed news for an ailing Malawi economy”, saying this presents an opportunity for the new leadership to assert themselves with their own approach “in dealing with the challenges facing the Malawi economy from the monetary policy perspective with inflation rate remaining elevated at  current high level of  27%”.

“It is also the responsibility of the new leadership team to turn around the Reserve Bank financial position from a loss-making entity,” he said in a statement. “I expect the new team to be more visible to the public in articulating the country’s economic position and also engage key stakeholders in the decisions of the RBM that are likely to affect the Malawi economy.”

He emphasised that “gone should be the days when RBM decisions are just website-based publications with no visibility to engage with the media and on broader business society platforms”.

Mhango further said there is also “a need for the new leadership to be more independent and professional in approach in their decisions”, adding that “it is Malawi’s economy that should be the focus and not the politics that surround it”.

“The lack of alignment between fiscal policy, trade & industry policy implementation to the monetary policy objectives has at times rendered the RBM functions redundant.

“It is, therefore imperative that the new leadership team offer honest and right advice to Malawi Government’s polltical heads on issues such as fiscal mismanagement and its overall impact on monetary policy environment.

“It’s the expectation of some of us that there are standard regular official engagement between the new leadership at RBM with Malawi Government political heads to ensure policy alignment.”

Mhango thus applauded Mwale’s appointment by President Lazarus Chakwera and wished the new team all the best in their new roles: “It is important that this new team depart with the appreciation that it’s the people of Malawi and its economy that matter; and not the positions one holds.”