Malawi’s Banda appoints ex-IMF Africa chief to fix economy

Malawi President Joyce Banda, facing growing dissent as commodity prices soar, has appointed Goodall Gondwe as economic minister to help fix a sputtering economy.

Gondwe, a former IMF vice president for Africa region,presided over years of economic growth which averaged 7 percent,reduced inflation to single digits and oversaw debt cancelation under the HIPC initiative before late President Bingu wa Mutharika dropped him from cabinet over graft allegations.

Gondwe was found by the country’s anti-corruption bureau to have acted corruptly in a fertiliser deal [2005/05 farming season] that cost Malawi $6.8 million. He is, however, yet to be prosecuted.

Gondwe replaces opposition leader Atupele Muluzi who resigned as economic minister following differences with Banda’s administration.

Many see his appointment as a chance to redeem himself. Last month he resigned as a member of the former ruling party — Democratic Progressive Party–and publicly announced that he was ready to work with the new administration as an independent.

He comes in at a time the IMF  has painted a gloomy picture of the country’s state of affairs — revising GDP growth forecast for 2012 to 1.9 percent from 4.3 percent, rising inflation and interest rates.

Gondwe has to also inspire confidence in the country’s external creditors who suspended open accounts two years ago, a decision that has impacted on fuel supply dearly.

He also has to reign in on runaway inflation which in the last four months been on the rise as food prices soar. In October it rose to 30.6 percent from 28.3 percent in September  due to soaring  food and non food prices, the National Statistical Office (NSO)  said.

However, the good news is that Gondwe comes in when donor confidence has returned with the UK and Germany announcing the unlocking of budget support, which together with other donors, accounts for almost 40 percent of the national budget.

The UK will spend an average of £93 million per year  until 2015 to help implement the Malawi Growth and Development Strategy (MGDS).

The  World Bank and the African Development Bank were the first to release budget support in the first quarter which ended in September this year.

Norway and the European Union are set to release a total of $60.8 million   support during the second quarter. Norway also intends to release $4.4 million in the third quarter.

Last month the PTA Bank signed a $250 million financial facility to help the southern African nation sustain the importation of fuel and fertilizers.

In the first ever cabinet reshuffle since she took over in April this year following the sudden death of President Bingu wa Mutharika, Banda also dropped two ministers. She also stripped off the Justice Minister of the Attorney General title. 

Apart from being commander in chief of the armed forces, Banda is also Minister responsible for Statutory Corporations, Civil Service Administration, Nutrition, HIV and AIDS, National Registration Programme and the Green Belt Initiative. 

Her deputy  Kachali is Vice President, will  be responsible for National Relief and Disaster Management, National Public Events Office, Central Government Stores, Department of Printing Services and Electoral Commission.