By Richard Chirombo
The Malawi Union for the Informal Sector (Mufis) has contradicted Ministry of Finance and Economic observers on the immediate effects of the on going global economic crunch, saying contrary to perceptions the country would not be hard hit by the melt down, at least one million people are already filling its brunt.
Former Finance Minister, Goodall Gondwe, said last month during a budget consultative meeting with civil society organizations in Blantyre the pangs of the economic crunch would not be paralyzing for Malawi.
Gondwe said, contrary to common perceptions the country could be ill-prepared to stand the repercussions of the melt down, the development was a blessing in disguise as it would enable Malawi pick up a few economic gains,
The Bankers Association of Malawi (Bam), commenting on current effects of the same on the country’s banking sector, also said the sector has, so far, managed to come out of the meltdown unscathed- a development Executive Director Fanuel Kumdana attributed to the “generally” closed nature of Malawi’s economy.
He said the absence of strong connections with United States of America, and Western banks, meant that the country had so far escaped the first-line pangs, a situation more advantageous than that faced by regional economic powerhouse, South Africa, and other centre economic states.
But Mufis has quashed this, saying research conducted by the Malawi Congress of Trade Unions’ affiliate targeting vendors and other informal economy players has revealed that, at least, one million people were already affected.
According to Davies Chimombo, Mufis General Secretary, the global economic crisis had now become local, with vendors and other informal economy players bearing the most brunt.
“We have been researching the effects of the global financial crisis through focus group discussions, and something that has come out clearly is that one million people- we are talking about vendors and other informal economy players- have already started feeling the pinch of the global economic crisis. 5000 people, who are our registered members at the moment, have confirmed that their businesses were going through financial turbulence,” said Chimombo.
Chimombo said all vendors contacted had revealed plunging fortunes in their business enterprises “as the number of customers is diminishing by the day, and those (customers) who manage to turn up and buy merchandise are not buying in bulk any more: they have no money to spend of goods and products”, a development, he said, calls for immediate interventions from the Ministry of Industry and Trade.
“Now that we know for certain that the global economic crisis is here with us, we must device means by which we may come around the problems being faced by vendors and other informal sector players. This could be in form of low interest loans- the same as what will happen with the highly touted K3 billion Youth Development Fund,” said Chimombo.
The Mufis General Secretary further said there was need for sector specific research to count the affected eggs (due to the economic melt down), and urged against current trends where conclusions about its effects on Malawi were being drawn in general terms. He said the informal sector initiative was part of that sector specific response.
Chimombo’s sentiments were echoed by Mwanda Chiwambala, Informal Sector National Researcher, who said the country could no longer burry its head in the sand and pretend everything was “okay. The situation is now different, and people have begun suffering from the effects of the crisis”, a case in point being reduced take-home package for vendors.
Chiwambala said, with financial assistance from Women in Informal Employment Globalizing and Organizing (Wego) of South Africa, Mufis had also discovered that many employees from the formal sector were being laid off, thereby increasing the number of informal sector players and those currently affected by the meltdown.
“People are moving out of employment because of the same crisis and were resorting to finding solace in the informal sector. This will, in the long run, increase the effects of the crisis if our policy makers do not take any positive action now. Things are really getting worse,” said Chiwambala.
As part of the efforts aimed at curtailing the effects of the global crisis, Mufis organised a focus group discussion for the "affected" vendors and informal economy players in Blantyre yesterday. According to Chiwambala, the meeeting also confirmed their worst fears that the crunch had become "too local to be ignored".
However, the Economics Association of Malawi (Ecama), a local economics think tank, has refused to say anything on the Mufis findings, saying it would make an informed opinion once it gets a copy of the findings.
Ecama spokesperson, Juliana Chigumu, said the association would be better placed to comment once furnished with the “necessary figures and statistics. That will enable us to analyze and make an informed opinion”.
The global economic crisis started with oversights in the US futures market, and has now crept through other international economies, forcing Breton woods institutions such as the International Monetary Fund and World Bank to draw up contingency plans aimed at bailing troubled economies that may not sift through the muddy economic waters alone out of possible collapse.