Nurturing Innovation

Many economists hail the East Asia model of development as one which African countries should emulate. That is a strong role for banks and private companies and a stronger role for the government as a leader and a mover of capital, research, and develpment. This certainly worked well for East Asia under a highly controlled political environment. Today we see China becoming the biggest economy in the world but at the expense of a tightly controlled political spectrum where US and other foreign companies help perpetuate Communist control and one-party rule.
Lester Tandwe, a Malawian entrepreneur was interviewed by Nation Malawi and had some very interesting points to make on why Malawi is finding it difficult to innovate.

"The biggest challenge is access to capital. Banks are very difficult to lend money to indigenous entrepreneurs (...) this bank insisted on a house as collateral, and I had no house at the time. They simply refused to help...

One of the factors that led East Asian growth was state led banking. Capital was directed into those areas that would provide future growth. Tandwe explains that banks in general are wary to lend because of fear the loan will not be repayed. It's a valid complaint, but one which needs to be addressed, because as Tandwe alludes:

"Without access to finances, indigenous companies cannot go far despite the many big ideas (...) I think the government has a lot to do here. First, government must stop underrating local ICT firms. We often see it contracting foreign companies at the expense of locals. This is a drain on forex. The second critical issue has to do with tax. Government slaps a duty of 30 percent on imports of all computer accessories, yet a finished computer unit is duty-free, which in turn kills innovation and makes local ICT firms uncompetitive to the multi-national computer firms."

Government and banks must come to a consensus on what is positive for development and accomodate those entrepreneurs that are willing and able to provide the business prowress for successful growth. This will multiply into more jobs and in the case of Tandwe's firm, more technical jobs that require greater technical expertise. Thus alluding to greater levels of education. This is the type of environment that made East Asia so attractive to foreign investors and which has made it such a success economically. Doing this in an open political system as Malawi has may be easier or harder than it seems. The willingness of leaders to forgoe personal ambitions could give the answer.

Nation interview with Lester Tandwe