Will explains why with their high salaries and flashy cars, some NGOs are jeopardising a delicate economy.

I have just come back from a few meetings in Lilongwe, the capital of Malawi. Blantyre, Malawi's financial capital, is an exciting and prosperous city that breathes business. Lilongwe is a dull city that's overfed on aid. My internet connection's far too slow to ascertain exactly how much aid flows into the tree lined boulevards of Lilongwe - but it's a hell of a lot.

I'm not an aid detractor, as my last blog affirms, but walking the streets of Lilongwe, I have the overwhelming urge to send a strongly-worded letter to Bono. Everywhere you look, Western NGO workers drive around in the latest top-of-the-range four-by-four demi-tanks, with their organisation or charity's name emblazoned across the sides, without a hint of embarrassment at the irony.

It's not just the cars: NGO workers are paid a lot. For some reason, international aid organisations have got it into their heads that if they don’t pay Western wages to foreign workers, people won’t come. Now, I'm not saying Western charity workers in Malawi should be paid K5,000 (£20) a month and made to live in houses with no electricity, running water or toilet; growing their own food and selling whatever surplus they have at the local market just to be able to afford to eat - but do charity workers really need to be paid Western salaries in Malawi, where GDP is about 1/600th of that of the UK. After all - they're not bankers.

The result is an extravagant aristocracy of aid workers. Hoards of Western professionals live it up in the expensive restaurants and bars in the city, rubbing shoulders with diplomats and driving to the few nightclubs in their  brand new Toyotas.

Aside from the extravagance, paying people tens of thousands of pounds a year is affecting the whole economy of Lilongwe: for one, house rental values are soaring. I spoke with a few Western NGO workers who said their organisation was spending $2,000 a month for their houses. Later, I asked a local businessman how much he would expect to pay for a similar-sized house in the same part of the city - and he told me $600 a month, maximum. He was astonished when I told him what they paid.

Office rent is also going up sharply: space in the most expensive office block in town now sells at K2,000 per square metre compared with K1,500 in Blantyre. When I went to that building, many of the offices are rented out by NGOs.

I think the biggest problem this trend is causing is in the labour market. Obviously, it would be entirely inappropriate to pay Western staff more than locals, so NGOs have to pay local staff the same wages (although a friend of mine who went for an interview at an international donor-funded private school was asked if he minded being paid less than the Western staff. He said yes. He didn’t get the job).

Consequentially, there's a brain drain away from the private sector. A friend of mine is setting up a big-budget processing plant and was looking to recruit the top talent. He ended up having to pay over $120,000 a year to tempt a COO away from a charity: an astonishing amount over here.  Through their irresponsible attitude to money, NGOs and charities are starving the economy they're supposed to be developing of the talent that can develop it and you can't help but wonder how Lilongwe is going to wean itself off this aid addiction.

Will explains why rather than reducing the amount of aid money we give to Malawi, we need to change how it’s spent.

I was reading one of the national newspapers over here last week and an article that quoted a recent piece in The Express caught my eye.  It was notable not only for the fact that opinions from The Express is rarely read outside Liverpool – let alone in sub-Saharan Africa – but it also reflected a seemingly growing wave of popular opinion in the UK. 

Headlined ‘The Great Aid Rip-Off’, the article claimed that the UK taxpayer was funding the lavish lifestyles of Malawi’s leaders. The article was absurd and completely misrepresented the Malawian government, dubbing the (albeit imperfect – but name one that is perfect) democracy a ‘regime’ and, without any foundation, calling the democratically elected (and very economically able) president ‘one of Africa’s most notorious leaders’. Er – can you name him?

It’s natural that, during tough economic times, questions are asked about foreign aid – and The Express article follows on from a recent editorial from Simon Heffer in The Daily Telegraph calling for foreign aid to be withdrawn in order to fund a Trident replacement. Now I’m no pacifist, but it’s hard not to notice the irony in condemning people to death in order to build something that will condemn even more people to death.

If the critics could see the impact foreign aid is having over here, I think they’d change their tune by at least an octave or two. Indeed, the few pence per year that each of us shells out for foreign aid probably has more impact on people’s lives across the world than any other expenditure.

To appease the critics, we might need to rethink how the aid money is spent. Malawi and a number of other countries in sub-Saharan Africa represent one of the few remaining areas of real economic growth in the world. The region hasn’t yet had its economic revolution. The form of that revolution is not yet clear: In Britain it was industrial, Japan technological, the US somewhere in between the two. The likelihood is that in Malawi it will be agricultural and come in an age where food is increasingly scarce. What’s any economic revolution if not a promotion to global trade?

Development economists are finally shedding the ‘trap’ theories arguing that countries like Malawi are permanently stuck in a rut. These theories are obviously nonsense, especially when you look at Malawian growth rates over the past three years. The biggest barriers to growth, though, remain skills and investment. Whether the lack of capital is the inability to develop a large-scale processing project or for a small village trader to install solar panels in order to trade later, it is significantly stunting economic growth. At the same time, lots of people over here lack the skills or confidence to realise the potential of their businesses.

Why, then, does UK Aid not look to ease these barriers to growth with the provision of a venture capital fund? For all the questions surrounding China’s involvement in Malawi, one thing it does understand (that we don’t) is that Malawi is a market, and one with the potential for significant growth. 

I am not suggesting we take profits out of Malawi: that wouldn’t help at all. But I think it should be taking equity stakes in businesses, putting advisers on the board, helping these businesses grow and regaining its investment when the business is afloat so that it can continue to invest elsewhere and appease the Heffers (and Express readers) of this world.  

Will is learning quickly that Malawians may not always be reliable - but at least they're honest about it.

I had a typically Malawian experience last week when I was sending 600 magazines out with a local transport company. Emblazoned across the signs all over the site was the phrase: “here today, there tomorrow”.  And so, this being on a Wednesday afternoon, it was with confidence that I expected the magazines to be delivered on Thursday.

Confirming that my confidence was well placed, I asked the chap writing up the invoice when it would be delivered.

Blowing out his cheeks in a manner implying deep thought, he completed this exhalation and said: 'Should be there by Saturday, possibly.'

'Saturday?' I exclaimed, 'But what about that?' gesturing to the three-foot proclamation behind him.

'Oh,' he said in all seriousness. 'That’s just a sign.'

Now, while I don’t think it was completely unreasonable of me to infer from their motto that it was not beyond the realms of possibility that the firm offered next day delivery, it did get me thinking about the numerous mottos and company names that brighten up many a day.

Would you for example, want to learn to drive with the Afterlife Driving School? Indeed, religious connotations account for many of the great business names, 'If God Says Yes, Who Can Say No Grocery' must have been a great job for the sign writer. Also, I can confirm that the chips are not as tasty as the implied illustriousness of the Lord at the 'God is Great Chip Shop'.

Then there is the downright honest. I am sure that half of the company name is correct at a carpenters called 'Slow but Sure' and I am sure many are keen to meet the proprietor of the 'Stolen Kisses Fabulosity [sic]' jeweler. In addition, I have seen a couple of 'non-profit shops' on my travels, which I imagine to be more an analysis of the bottom line rather than the donation of profit.

However, the crown of the best motto must go to a bus that plies the road from Blantyre to Mzuzu. I say a bus. In fact it is a lorry that carries a container converted to a bus with all the comfort and efficiency that must come with such a method of transport.

But despite the limitations of such a conversion its motto is a work of art and one that, as it chugs off on the 18 hour journey to Blantyre, I have no doubt that all of its passengers will whole-heartedly agree with. For emblazoned across the back of the bus in huge capital letters is the motto: 'I feel like flying'.

I'm not convinced mobiles are necessarily a boon for Malawi. People here just can't afford to run them.
 
It seems that almost everybody has a mobile phone in Malawi. Drive out to a remote village and you will see adverts for mobile phone credits and points to recharge mobile phones from home made devices based on car batteries.
 
It is perhaps the most blatant example of a technology leap enjoyed by Africa. In a continent where landlines are sparse in most countries, mobile phones enable people to communicate where traditional phone infrastructure would never be built.
 
Development economists are falling over themselves to point to the benefits of mobile phones in the developing world. Citing examples of Somali herdsmen phoning ahead to find out the prices in two different markets before deciding which to sell their livestock, these economists hail the mobile phone as a bedrock of economic development, pointing to all sort of statistics that for every addition x number of mobile phones in use, GDP rises by y.
 
However, I am not so convinced that mobile phones are the Holy Grail of economic advance. There are not many Somali herdsmen in Africa and there are none in Malawi. In this country, the arguments for more efficient markets assume a level of mobility that, in my experience, simply does not exist.
 
In fact, I'd argue that in Malawi, mobile phones are actually stunting economic growth. Mobile phone credit here is horrifically expensive. A K250 credit (about £1.20) will last you around three minutes if you are calling a different network or a landline. This in a country where the average wage is around K7000 a month, and that's in urban areas; in villages, those few that have access to a regular income will earn a lot less than that (even in urban areas the wage is considerably lower for many people: a friend of mine told me that his wife, a trainee teacher, earns just K2000 a month and works full time; that's a lot of work for a 30 minute conversation with your mother-in-law).
 
An expat friend likened the mobile phone industry over here to the Nestle milk scandal of the 1970s. This is perhaps a bit extreme, but he does have a point. My wife, who works as a pediatrician at the local hospital, says she regularly sees children brought in suffering from malnutrition - yet the mothers of the children are texting away on their mobile phones. Each text costs K10; a bag of maize is around K40.
 
Prices for credit continue to rise at well above inflation. Lack of competition is part of the problem. When we arrived in February there were adverts everywhere for G-Mobile: 'Coming soon', they proudly announced. It hasn’t come. Last I heard, they'd been given an extension on their license to produce the goods by May. Then, as is so often the case over here, nothing.
 
But it can't just be that - both of the incumbent providers are struggling to make a profit too. The prices are an inevitable consequence of an environment where contracts can't be granted for a myriad of reasons, ranging from a lack of security to an inability to bill people who live in villages with no addresses. Instead, providers must rely on a complicated network of scratch card distribution, selling credit in uneconomically low units.
 
There is no doubt that the mobile phone is an important part of development, and I would not for a moment want to deprive the many that can afford to operate a mobile phone without sacrifice. But I wonder the technology has come too soon for rural Malawi, where providers are unable to provide a service at low enough prices to make it an ethical sell to people surviving on significantly less than a dollar a day.