July 8th – Malawi’s Explosive growth and China

So I was supposed to head out to Kasungu today by using public transport, but Stacia mentioned that she knew someone who would be going north that I could hitch a ride with. So today was a chill day. I just rode around with Stacia and Kristoff around Lilongwe.

It was during this time when I realized how quickly Malawi has changed. Malawi, like the rest of Africa, appears to have largely missed the global recession that has hit the western world. African banks were forced by the western world (IMF, World Bank) to keep their banks in order with large enough cash to debt ration and did not over leverage themselves. Ironically, as the western world made sure Africa’s banks where good order, they failed to monitor/regulate their own banks as made apparent by the current financial mess.

The strength of Malawi banks could easily be seen by all of construction going on around Lilongwe. Kristoff, mentioned that for the past year Malawi has had the second fastest growing economy at around 8-9% GDP and I believe it. On the out skirts of Lilongwe there were new suburban American style houses that were being built that the developers are going to rent out for about $1000/month!!! That is an insane amount money for a country where much of the rural population lives on less than two dollars a day.

In addition, I was struck by new Chinese influence there seems to be here. There are new Chinese restaurants and businesses all around Lilongwe. One had to look no further than the new Malawian parliament building to see the strength of Chinese influence. Initially Taiwan offered the Malawian government to build a new Parliament building at a good price for them and even started construction on the building. But then China, with its trillion dollars in cash, came in and told the Malawi government that they will build the Parliament building for free if they renounce their recognition of the Taiwanese government and stop working with Taiwan. The Malawian government of course accepted the deal. But the rumors I hear from some of the Malawians is that China has brought in Chinese prisoners to build the parliament building and is not employing many Malawians for the building project…….a seemingly bitter sweet deal for Malawians.