Will still can't work out why the Chinese are pumping money into resource-light Malawi...

Chinese interest in Africa is well-documented. To detractors, it represents a neo-colonialist invasion aimed at stealing the natural resources of a country; to advocates, China is providing invaluable infrastructure to countries in need of development. To me, at least in the case of Malawi, it is completely baffling.

I have asked myself (and others) many times why China is investing in Malawi. And investing it certainly is. Last month, the President of Malawi opened the stunningly kitsch new Chinese-built parliament building - a structure that now dominates Capital Hill in Lilongwe, with its neo-classical architecture and grandeur that would embarrass an American. It looks like it's made from plastic, and if the Chinese goods that I have bought in Mzuzu recently are anything to go by, it probably is. In addition to the new parliament building, the Chinese are erecting a five-star hotel in the city, exactly what Malawi is in desperate need of! In its defence, it has also involved in the construction of a number of roads across Malawi, which the country certainly does need.

But why? Why on earth is China interested in a country whose natural resources could fit in a small bucket? Chinese traders are flooding into the country. In Mzuzu alone, almost half of the retailers on the main street are now Chinese-owned, selling goods for almost nothing. (Incidentally, everyone has a word to say on the dubious quality of these goods. I recently bought a multi-plug adapter. Pre-warned about the quality issues, I decided to go for the most expensive - it was still pretty cheap. I don’t know if the other ones would have lasted for even less than ten minutes before blowing up, so it's hard to say if my extravagance was worthwhile.) Local traders are not happy. Rents are soaring (one local trader told me his rent had more than doubled in six months) and the word is that the Chinese are bringing thousands of dollars in cash with them to put deposits down on shops and turf out the incumbents.

Now, I'm a free marketer, so I'd normally welcome this extra competition. However, there is a strong suspicion that the Chinese are not paying tax. The goods are so cheap, it's difficult to see how they can be. (The other day, I bought three large batteries shipped over from China for K40, which is about 18p. How on earth can you even ship something from China for 18p?) Others claim that the Chinese are criminals expelled from China to start a new life in Mzuzu. Possible, but unlikely.

The most likely answer is that these infrastructure 'gifts' are not gifts at all. Those I have spoken with in higher positions of authority claim that the Chinese government is loaning the Malawian government the money to build these projects - loans that it will take many years to repay. But the government and media appear to maintain that these are gifts. In fact, a recent article in a national newspaper argued that the Chinese are better friends than the British, as they do not make the country release homosexuals from prison and instead just build lovely new parliament buildings. Comments from readers with inside info on the Chinese in Malawi would certainly set this confused mind to rest!

In which Will discovers some major shortcomings of the Malawi postal system...

Dear MT,

My last letter was a celebration of the fact that things in Malawi don't quite work in the same way they do in the West. This one, I am afraid to report, is not.

The task: mailing out 700 copies of a magazine. In the UK, this is simple. Get your printer to polywrap it with the addresses printed on the polywrap and send it via downstream access at a low cost with guaranteed next day delivery. An e-mail with an Excel attachment; that's all it takes. Easy! But not in Malawi. Oh no.

For a start, printers don't do polywrapping. Which was fine, I wasn't expecting them to. However, no one in the city I live in sells address labels either, so all the envelopes need to be written out by hand. Before I did this, I thought it worth enquiring at the Post Office as to how much it would cost to send. No reduced-rate downstream access, having to handwrite envelopes and suddenly the value of each recipient is called into question. At this point I should explain that Malawi does not have a postal system like we do in the UK. Instead of door to door deliveries, it has a postal box system (most people live on roads with no names) so essentially my magazines were only going to three places: Lilongwe Post Office, Blantyre Post Office and Mzuzu Post Office (in which I was standing).

Upon being told I could bulk mail the envelopes at a low cost of 5000 kwacha, about £20, I set about writing the envelopes. 700 hand-written envelopes later (writing really does hurt your hand when you haven't written anything more extensive than 'eggs, milk, bread' in one go for the past 10 years), I was ready to go.

Arriving at the Post Office and having lugged in all the copies (beyond the point of no return), I was told that in fact the bulk mail service was only for letters being delivered to the same place and I would therefore have to pay 150 kwacha per magazine. A total of 105,000 kwacha (over £400). 'But they're going to the same places', I protested. 'Three post offices, one load each. In fact, 150 of the magazines aren't even going anywhere,' I said, pointing to the row of post boxes six feet away from me.

But no, they all had to go to the same post box if I wanted bulk mail. As I had promised my advertisers these magazines would be delivered, I had to pay the fee - an extortionate sum in Malawi, equivalent to the monthly wages of ten administration staff. I reluctantly agreed and the man disappeared for about 15 minutes.

'He's probably gone to get stamps,' I thought jokingly, looking at the enormous pile of magazines - before a sudden jolting realisation that the chance of this was actually very high. 'Oh God, he's gone to get some stamps'.

Sure enough, he came back with his arms laden with stamps. 'We don't have any fifties I am afraid. So you're going to have to put a hundred, two twenties and a ten on these,' he said jovially.

That's ok, I wasn't planning on doing anything ever again. 'You know, you really should get a franking machine,' I said, desperately wishing that I wasn't condemned to this miserable fate before me.

'We have. But it's on maintenance,' he replied.

'B*****d,' I thought.

So I licked and stuck 2800 stamps, for four hours. Amused only by conversations such as 'So, Gordon Brown is your new Prime Minister' (he'd obviously been using the local postal system to receive his news from the UK).

By the time I'd finished, I'd missed the post for that day. But that wasn't a problem; in Malawi you think of the post in terms of weeks, not days.

'When is the franking machine coming back?' I asked, rasping with my swollen tongue and hoping that I wouldn't have to go through that ordeal ever again.

'Tomorrow,' he said, with a perfectly straight face.

In which Will tries to work out when a bribe is not a bribe - and weighs up the positives of corruption.

Dear MT,   
I had been warned about corruption before I came out here. A friend who runs a business in Uganda had told me to expect to have to pay my way when starting out. Ever the ethicist, I came out here resolute that I wasn't going to indulge in any form of corruption, no matter how frustrating not doing so may be (although I'd pay all the money I have for the printers to actually deliver the bloody magazine - four weeks and counting).

Contrary to my friend's predictions, my resolve has thus far not been tested (although I may have inadvertently bribed someone in the Post Office to find a spare PO box for me: it was all very confusing and I don't suspect it counts if you didn't know you were doing it - surely corruption has to be mutual?). Even when collecting an Apple CPU from customs (where the official guessed the value of the strange box before him, lowered it in response to my protestation and then asked me what it was while I was paying the tax), I have never even acknowledged an opportunity for a bribe.

That said, when doing business out here, there are things that aren't quite right. These aren't necessarily challenges - indeed, for a fledgling publishing business, these quirks (I shy from the word corruptions) can present an opportunity. During my last trip to Blantyre, while waiting for the printers to disregard another assurance on when the magazine would be ready, I decided to pay a visit to a bigwig media buyer.   

I went to see him to ask how I could get his clients into the magazine. Having explained the situation, he paused, got up and closed the door, and then coyly suggested I outsource all my advertising to his company.

How much do you want to make next issue?" he asked, growing in confidence at the proposal. Upon giving my response, his eyes lit up. "OK, I will guarantee you 20% of advertising above what your target is and take 10% of the revenues," he proposed.

"That sounds interesting," I said. "But how do I know that people will book with you?"

"Because they are my clients and I control their advertising spend," he responded.   

And to think that corruption has such a bad reputation when it comes to doing business...   

Yours,   
William

In which Will sees Blantyre's flourishing banks at close quarters – and the magazine’s progress is pagono, pagono…

Dear MT,

At the moment, I’m in Blantyre, the financial capital of Malawi, to launch the magazine. Or was: the printers had forgotten to print the magazine, so the launch has been delayed, which is a bit embarrassing. I do have assurances, though that it will be ready tomorrow. Not that I can be sure. Pagono, pagono.

The unexpected time off has, though, given me a chance to explore the city. Sitting in the beautiful garden of a guest house in the centre of the capital in glorious sunshine, it’s easy to forget I’m in one of the poorest countries in the world. Blantyre breathes business: as suited businessmen rush around, the shell of the enormous new headquarters of the National Bank looms above me. It’s vibrant and exciting, and thoroughly dominated by the banking sector.  

The new National Bank building is one of many the company’s erecting across Malawi. In fact, almost all the new buildings across the country are glistening new banks, towering above market stalls and dilapidated shops and offices. The banking industry is phenomenally wealthy compared to the rest of the country – and it’s easy to see why.

Take my personal account, for example: it’s actually a savings account, but we chose it because it offers a better interest rate than the standard current account. It pays 2.5% a year, roughly in line with what others pay. The central bank rate, on the other hand, is 15%. For the privilege of being 12.5% poorer each year, I pay 800 Kwacha (£3.70) a month. If I wanted a loan, I could expect to pay around 30% - and outside the banking system, I would be looking at 50%.

In the UK, we think lack of competition in the banking sector is detrimental to the consumer. That argument isn’t borne out in Malawi: there are 12 national banks, and only about 19% of the population have bank accounts – which means just 2.7m people fund the profits of 12 banks.

And those profits are huge – last year, National Bank paid out K1.2bn (£5.5m) in dividends on a pre-tax profit of K5.6bn (£26bn), which means the profits of one of 12 banks was equivalent to 1.15% of GDP for the whole of Malawi. Yesterday, the state-owned Malawi Savings Bank posted a profit of K865.5m (£4m) (up 101% from the previous year - crisis, what crisis?). That’s an astonishing performance on revenues of K2.1bn (£9.7m).

People here don’t have pensions or investment instruments, so the money’s largely circulated around a small group of politicians and professionals. There’s only one cinema in Malawi and, being based in Blantyre, it’s likely its patrons will be comprised of this small group. It makes me wonder if the new Robin Hood film will be a success here.

Yours,   
William Mitting

In which Will weighs up the fairly frightening risks of using the Malawian national airline.

Dear MT,

Air Malawi has announced it’s going to resume flights to Mzuzu. I can’t wait. At the moment, the only way to get from where I am in Mzuzu to Blantyre, the financial centre of Malawi – which is where I do all my business/interviews – is a gruelling 18-hour overnight bus ride, which manages, paradoxically enough, to hurtle down the road at a terrifying pace, but taking an inordinate amount of time to cover a relatively small distance. In hindsight, it was probably a bit of a mistake to decide to live 700km from where I work in one of the least developed countries in the world, where the roads are more pockmarked than a fast food worker’s forehead.

Obviously, the prospect of getting back to business is most welcome – but I’m not so sure how much I trust Air Malawi. Recently the UN announced it had banned its staff from using the air carrier, and locals say it’s too unreliable to be trusted. The government, on the other hand, is desperate to persuade people to use Air Malawi – not unlike BA, the state-owned carrier is facing a number of serious financial problems and desperately needs the cash.

The government might have its work cut out, though – an article in The Daily Times newspaper the other day had the headline: ‘Air Malawi cancels flight mid-air’. That’s going to put you off using the airline, isn’t it? Still, Air Malawi CEO Wisdom ‘Ratner’ Mchungula attempted to placate worried customers, saying: "It is true the flight which had over 90 passengers developed a technical fault which even if I explained it, you wouldn't understand. It's not a big deal. We know our passengers had their own destinations but when a flight is not safe to fly we cancel it. It happens all the time.” Somehow, that 18-hour bus ride suddenly doesn’t seem so long.

Yours,
William Mitting