Themicroloanfoundation's Blog

Big business and social care in Malawi
June 7, 2010, 2:08 pm
Filed under: Uncategorized

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Grace Kaliati, Malawi’s Minister of Gender, Child and Community Development blasted some of the largest companies in the country for not supporting children or giving larger donations to local charities. One has to wonder why this criticism comes now after Malawi has actually stepped up privatisation of state enterprises since Bingu took power. To privatise companies, then expect them to become mechanisms of social care seems hypocritical.

Illovo sugar, one of the companies Kaliati lashed out against was privatised with the applause of the central government. While output increased dramatically, more than a quarter of staff were laid off (4,000 workers) and forced into the informal economy, where most of MicroLoan’s clients earn their livelihoods. The aim of these enterprises, like most others, is profit maximisation. Rather than expect companies to betray their shareholders and suddenly adopt a charitable mission, perhaps the central government should backtrack on some of their privatisation and deregulation measures. Ensuring steady wage employment for poor families by retaining some state-control over these enterprises will have a much greater impact on poverty reduction than waiting for these companies to become charities.

Otherwise, donors and the central government should look at micro-enterprise as a way out of poverty for those disadvantaged by privatisation. Since most of these ex wage workers are now trapped in the informal economy, it seems reasonable that they should be given an option to grow themselves out of it. Quite a few of our clients have grown their small informal enterprises into larger, regulated businesses. Many of the enterprises also employ regular wage labour (one group of clients I came across in March had grown their market stalls into businesses with over twelve employees each). The opportunities are there.

But then again, scape-goats are always a convenient option.


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