Adopting an historical institutionalist approach, we show that the politics of state-business relations (SBRs) in Malawi have been shaped by three historical factors, namely (a) the low level of capitalist development in the country; (b) the dominant influence of the Malawian state and political regime under Dr Banda for the first 30 years of independence; and (c) the manner in which informal institutions of generalized reciprocity, deeply and authentically embedded in Malawian culture and values, have contributed to blurring the distinction between the public and the private. Historically, the post-independence state exercised excessive influence through regulations and restrictions and dominated the business sector itself through statutory corporations and their subsidiaries. The private sector has been viewed by the state with suspicion and mistrust while the private sector has regarded the state as a source of patronage and opportunity. Close links and personal traffic between the elite of the main business association, the Malawi Confederation of Cambers of Commerce and Industry (MCCCI), and political office have entailed collusive relations which do not necessarily represent the interests of the many and predominantly small and micro businesses. Neither state nor business have yet developed the levels of relative autonomy vis a vis each other which might form the basis for effective and synergetic SBRs. With the exception of the recent privatization programme, efforts to strengthen the private sector have, till recently, gone through cycles of what appear to be superficial policy fashions. Despite rhetoric to the contrary, the net effect is that political processes continue to shape institutional patterns of SBRs in Malawi which are characterized by a continuing dependence of the main business association on the state and by reluctance on the part of the state to allow or encourage autonomous capitalist development. This suggests that the influence of historical patterns and informal institutions has been strong, and remains so, though there have been recent indications that efforts are being made to de-politicize the MCCCI. From a policy point of view, encouragement, support and the provision of opportunities and incentives for business associations to recognise the benefits of autonomy need to be considered. Likewise, providing opportunities for state leadership to recognise the benefits that can flow from building a synergetic relationship with business needs consideration. In short, investing in processes which help to encourage and institutionalize autonomies and synergies on both sides is the way forward if SBRs in Malawi are to shift more quickly and effectively from their path-dependent trends of the past, typified by state-domination, elements of collusion and opportunism and pervasive mistrust.
IPPG Discussion Paper Series Number Seven, DFID, London, UK, 43 pp.