Cost of corruption to economy

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This is a true story. On March 6 2017 at the Malawi- Mozambican border in Dedza, The Nutcracker witnessed the most blatant arrogance in broad day corruption by members of the Immigration Department. This practice used to happen in the Mozambican side and those who travel on road between the two countries would understand what the hell is being talked about here.

There was a bus full of people that was coming from South Africa. Most of the passengers in the bus had Malawian passports and spoke Chichewa, hence the conclusion that they were Malawians. When The Nutcracker was presenting the passport for stamping, there was an interesting observation. What was surprising was that suddenly most of the passengers from this bus were folding the new K2,000 into their passports as they were handing them over for stamping. Those that did not have that money in the passports were given back their passport unstamped.

The Nutcracker lost his cool and confronted the officials and then all passports were stamped without the “missing pages” in it. This level of daylight courage to conduct corruption business in this manner is symptomatic of the “acceptance” of corruption that has now permeated the citizenry that the local citizens feel trapped, disempowered and hopeless. What is the price that Malawi must pay for the widespread corruption in the country? What is the cost of corruption for the Malawian and the state and its people?

There is also this argument in Malawi where Malawians believe that it is only the government official who is corrupt. In Malawi, it has been proven that the largest proportion of the infamous Cashgate was through the procurement of goods and services to the government. The question Malawians should ask is who provides those goods and services? It is the private sector and why is it that when Malawians discuss corruption, they automatically point the finger at the government officials? Both private sector and government officials are all corrupt. The cost of this private sector corruption is that profit in the private sector is then dependent not on business acumen but crooked business dealings. How does Malawi move to a proper manufacturing and exporting country if those businesspeople who play by the rules are outcompeted by the corrupt mafia masquerading as businesspeople? Corruption produces far-reaching, in¬direct effects on the provision of public services, on poverty and social welfare. Corruption damages and un¬dermines development.

Take the case of the Salima-Lilongwe Water Project and the Lilongwe Water Board. It is quite ironic that suddenly the Malawi Congress Party (MCP) does not see anything wrong with the project going on without an Environmental Impact Assessment (EIA). Is it not interesting that suddenly some CSOs have become the spokespersons of the Khato Civils (the contractors) of this important project? The Chairperson of the Parliamentary Budget and Finance Committee has taken it upon himself to justify the cutting of corners in the deal. Forget the fact that a few days before he was invited to the party of the owner of the engineering company. Lazarus Chakwera, who a few days ago was calling on us to go to the streets and revote against the government because it is corrupt, is very quiet on this issue. Would one be wrong to assume that it is because this famous Malawian son who owns this engineering company is said to have bought the MCP president a vehicle?

E n v i r o n m e n t Management Act,1996, clearly states that it is the duty of every person to take all necessary and appropriate measures to protect and manage the environment and to conserve natural resources and to promote sustainable utilisation of natural resources in accordance with this Act and any other written law relating to the protection and management of the environment or the conservation and sustainable utilisation of natural resources. Khato Civils has the responsibility to conduct the EIA according to Section 24(2) of the Act.

The impact on the private sector is also considerable. Corruption re¬sults in additional costs, increases the lack of competitiveness and crowds out honest, hardworking, small- and medium-sized businesspeople who are lo¬cal companies. Cashgate has tainted the image of Malawi and convinced the rest of the world making it difficult by our political leaders to convince the world otherwise. Corruption also has the poten¬tial to upset domestic politics by rais¬ing questions about the ability of the ruling party to manage public assets and resources for the national and public benefit. The political legiti¬macy and survival of ruling parties depend on economic prosperity and in¬clusive and broad-based development and should not depend on corruption.

Corruption increases the cost of public investment and lowers the quality of public investment. Corruption can distort the selection of public investment projects through bribery, rent seeking and cronyism leading to inflated costs due to inadequate procurement processes, resulting in poor investment outcomes. No wonder, roads collapse two months after being opened. This undermines efforts to reduce infrastructure gaps and boost growth.


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