Wednesday, November 29, 2023

Empower Malawi Government to Establish New Companies for Economic Intervention

So the Malawi Government seem to have a way of disposing of State-Owned companies but does not seem to have a way of establishing new companies.

The current situation which sees importing more than it exports, seems to require an intervention such as establishing companies to manufacture high-quality substitute products and services to reduce dependence on imports and also to manufacture products for exports from the raw materials we produce so as to increase the value of exports. Just the imposition of import taxes and devaluation does not seem to be a sustainable solution for managing the import and export balance.

Normally in the capitalist economy, it is expected that entrepreneurs would see the need to manufacture substitute products for local consumption and for exports but for some reason, Malawian entrepreneurs are not taking this opportunity to establish new companies. Thus a direct intervention from the government itself to establish new companies seem to be important.

Where international organizations such as the International Monetary Fund and World Bank often require the government to dispose of its state-owned companies through privatisation, the Malawi Government may still establish companies through the Public-Private Partnership Model. So apart from empowering the Public Private Partnership Commission to dispose of state-owned companies, the commission must also be empowered to establish new companies. In this way, direct intervention of the economy in filling the economic resource gaps would be ensured.

We don't need to devalue our currency or impose high import taxes(an indirect intervention) to manage the trade deficit when we can just establish new manufacturing companies(a direct intervention) for import substitution and export value addition and diversification where entrepreneurs are failing to achieve this.

Sunday, November 26, 2023

Understanding Cost of Living Adjustments (COLA) Using the Consumer Price Index (CPI)

Cost of Living Adjustment (COLA) is a crucial concept for individuals and organizations aiming to maintain financial equilibrium in the face of inflation. The formula for calculating COLA using the Consumer Price Index (CPI) is a valuable tool in adjusting salaries and other payments to account for changes in the cost of living. In this article, we'll delve into the formula and its significance.

The Consumer Price Index (CPI)

The Consumer Price Index is a measure that examines the average change in prices paid by consumers for goods and services over time. It serves as a vital indicator of inflation, reflecting how the cost of living evolves. The CPI is often used as a benchmark to calculate COLA, ensuring that adjustments align with the changing economic landscape.

The Formula for Calculating the Inflation Rate

\[ \text{Inflation Rate} = \left( \frac{\text{CPI}_{\text{New}} - \text{CPI}_{\text{Old}}}{\text{CPI}_{\text{Old}}} \right) \times 100 \]

To calculate the inflation rate, subtract the old (base) CPI from the new CPI, divide by the old CPI, and multiply the result by 100. This formula expresses the percentage change in the CPI over a given period, indicating the overall inflation rate.

The Formula for Determining COLA

\[ \text{COLA} = \text{Inflation Rate} \times \text{Current Salary} \]

Once the inflation rate is established, applying it to the current salary yields the Cost of Living Adjustment. This adjustment reflects the percentage change in the cost of living, allowing individuals and organizations to adapt to the economic shifts caused by inflation.

Alternatively, a direct formula using CPI values is:

\[ \text{COLA} = \left( \frac{\text{CPI}_{\text{New}}}{\text{CPI}_{\text{Old}}} \right) \times \text{Current Salary} - \text{Current Salary} \]

This formula calculates the adjusted salary by considering the ratio of the new and old CPI values. The difference between this adjusted salary and the current salary represents the COLA.

Significance of COLA and CPI

  • Maintaining Purchasing Power: COLA ensures that individuals' purchasing power remains relatively constant despite the rise in the cost of living. It is a mechanism to safeguard against the eroding effects of inflation on real income.
  • Fair Compensation: Organizations use COLA to provide fair and equitable compensation to employees. Adjusting salaries based on changes in the CPI helps to align compensation with the economic realities employees face.
  • Economic Planning: Governments and businesses use CPI and COLA data for economic planning. It assists in making informed decisions regarding fiscal policies, budgeting, and resource allocation.

Considerations and Variations

  • Specific Components: The CPI is composed of various components, each with its own weight. Some organizations may use a specific subset of the CPI or adjust weights to tailor the index to their needs.
  • Frequency of Adjustments: The frequency of COLA adjustments varies. Some entities make annual adjustments, while others might do so more or less frequently.
  • Geographical Variations: Inflation rates can vary by region. Organizations may consider regional CPI values to make more localized adjustments.


Understanding the formula for calculating COLA using CPI is essential for individuals and organizations navigating the dynamic landscape of inflation. By staying attuned to changes in the cost of living, individuals can protect their purchasing power, and organizations can maintain fair and competitive compensation practices. As economic conditions evolve, the COLA formula serves as a valuable tool for adapting to the ever-changing financial landscape.

Thursday, October 26, 2023

The Land of Canaan: Whose Land Is It?

With the conflict going on between the Israelites and the Palestinians, the question arises: Whose land is it? From the Book of Genesis to the Book of Joshua, it is called the Land of Canaan. But who is Canaan? Canaan is the grandson of Noah who was cursed because of the sin of his father Ham when he made fun of Noah's nakedness. Genesis 9:18 - 27 tells the story of how this happened. Canaan was cursed to be a slave of Shem and a slave of Japhet. 

The sons of Ham were Cush, Egypt, Libya and Canaan and their ancestors are said to bear their names. Canaan too had descendants and a land in which his descendants dwelled. The Land of Canaan. The Land God promised to give to Abraham and his descendants.

Did God give the Land of Canaan to Abraham and his descendants to wipe the Canaanites from the face of the Earth? I think not. When God was making a covenant with Abraham(then Abram) in Genesis 15, he told him that his descendants would be slaves in a foreign land. Abraham was a descendant of Shem and not of Canaan and according to the curse, Canaanites were supposed to be slaves of the descendants of Abraham. However, God decided that the descendants of Abraham suffer slavery and cruelty in a foreign land before coming to possess the land of Canaan. I believe God did this so that the descendants of Abraham could develop empathy regarding slavery before coming into the Land of Canaan. 

Gibeon was a Canaanite and later an Israelite city, which was located north of Jerusalem. According to Joshua 11:19, the pre-Israelite-conquest inhabitants, the Gibeonites, were Hivites; according to 2 Samuel 21:2, they were Amorites. - Wikipedia.

The Book of Joshua in chapter 9 tells the story of how the Gibeonites made a treaty with the People of Israel. I believe that such wisdom as would be required for the Gibeonites to make the treaty the way they did, could be possible with revelation from God. So as a result of this treaty, Gibeonites ended up being workers in the Houses of God. I believe it is better to be a servant in the House of God than to be a slave of Shem or of Japhet. Even David testifies in Psalm 84:10

Better is one day in your courts than a thousand elsewhere; I would rather be a doorkeeper in the house of my God than dwell in the tents of the wicked. - Psalms 84:10

 As a result of the treaty between Gibeonites and the people of Israel, In 2 Samuel 21, we learn that God punished Israel with famine because of the guilt of Saul who is said to have killed some of them and wanted to kill them all. It is only when David reparations by handing over the seven descendants of Saul to the Gibeonites to be hung in Saul's home town, that God answered the prayers of the people of Israel.

It is my understanding from this that God does not have intentions to wipe out the people of Canaan from the face of the earth but would rather have them close to Himself in His House of Worship.

So whose land is it? It is the Land of Canaan and Israelites are just Stewards.


Sunday, October 08, 2023

A Three-State Solution for Gaza, Israel, and the West Bank: Keeping Jerusalem Whole


The Israeli-Palestinian conflict, stretching over seven decades, has seen multiple peace initiatives and solutions proposed, with the two-state solution being the most prominent. However, with evolving ground realities and challenges, it's time to reassess and propose a more viable solution. A three-state solution involving Israel, Gaza, and the West Bank with Israel retaining undivided control of Jerusalem offers a potential pathway to lasting peace.

The Case for a Three-State Solution

1. Historical Precedence: Historically, the West Bank was controlled by Jordan, and Gaza by Egypt before the 1967 Six-Day War. Returning to a configuration where Gaza and the West Bank are separate entities can capitalize on historical ties, enabling each region to develop in a way that's most consistent with its heritage and socio-political inclinations.

2. Different Governance and Politics: Over the years, political divergence has grown between the West Bank, led by the Fatah-dominated Palestinian Authority, and Gaza, controlled by Hamas. By allowing each region its own state, this solution addresses the distinct governance styles and political aspirations of each territory.

3. Economic Development: Separate states can pursue economic strategies that suit their unique strengths and challenges. For instance, Gaza, with its Mediterranean coastline, could focus on maritime trade and tourism, while the West Bank might emphasize agriculture, trade, and technology.

4. Security Dynamics: A distinct separation between Gaza and the West Bank could lead to clearer security arrangements, with Israel working out different protocols with each entity based on their specific security situations and needs.

Jerusalem: An Undivided Capital

A significant hurdle in peace negotiations has always been the status of Jerusalem. Here’s why it's essential for Jerusalem to remain whole under Israeli control:

1. Religious Significance: Jerusalem, particularly the Old City, holds religious importance for Jews, Christians, and Muslims alike. Under Israeli control, there has been a demonstrated commitment to maintaining religious freedom for all.

2. Security Concerns: Dividing Jerusalem would introduce complex security challenges. Keeping it whole under a single administrative authority ensures better security coordination and responsiveness.

3. Administrative Efficiency: Dividing Jerusalem could lead to intricate administrative challenges, including infrastructure, transportation, and service provision. Keeping the city undivided ensures more efficient governance.

4. International Oversight: Israel could ensure international participation in overseeing religious sites to assuage concerns of bias. This would reinforce the idea of Jerusalem as a city for all religions.


A three-state solution, while divergent from previous proposals, offers a fresh perspective that might just be the key to unlocking lasting peace in the region. By recognizing the distinct identities and aspirations of Gaza and the West Bank, and acknowledging the complexities around Jerusalem, this solution has the potential to lay down a roadmap that leads to coexistence and prosperity. As with any peace initiative, the willingness of all parties to compromise and engage in genuine dialogue will be crucial. It's high time to explore new paradigms for a conflict that has lasted far too long.

Thursday, September 28, 2023

The Effects of Devaluation on the Purchasing Power Parity

Currency devaluation, a deliberate downward adjustment in the value of a country's money, has widespread economic ramifications. One of the key concepts it intersects with is Purchasing Power Parity (PPP), the theory positing that in the absence of transaction costs and other barriers, identical goods will have the same price when expressed in a common currency. The dance between currency devaluation and PPP is intricate, with devaluation often temporarily distorting the parity. This article delves into the various ways devaluation affects PPP.

1. Immediate Impact on Import Prices

The first and most immediate effect of a currency devaluation is the increased cost of imports. When a country's currency is devalued relative to others, it becomes weaker in foreign exchange markets. Consequently, purchasing goods from foreign markets becomes more expensive. From a PPP perspective, this introduces an immediate discrepancy since identical goods will now have different prices when converted to a common currency.

2. Exports Gain Competitive Edge

On the brighter side, domestic goods intended for export now appear cheaper to foreign markets, giving them a competitive edge. This can lead to an increase in demand for the country's exports, potentially boosting the domestic economy.

3. Inflationary Pressures Mount

The rising cost of imports, especially essential ones like oil or raw materials, can exert inflationary pressures on the economy. As the prices of imported goods rise, there's a cascading effect on domestic products. The increasing prices can erode the domestic consumer's purchasing power. Over time, if this inflation persists, it can offset the initial competitive advantage gained by the devaluation.

4. The Natural Tendency Towards PPP

One of the tenets of the PPP theory is that markets, over time, adjust to bring about a state of equilibrium in prices. Following a devaluation, there may exist a considerable price discrepancy for similar goods across countries. This price difference creates an incentive for consumers to buy the cheaper alternative until the advantage is no longer significant, pushing the market back towards parity.

5. Interest Rate and Monetary Policy Interactions

Central banks play a pivotal role in post-devaluation scenarios. They may opt to adjust interest rates to control inflation or to stabilize the currency. These changes in monetary policy can have indirect effects on PPP by influencing capital flows and investment sentiments.

Structural and Policy Reactions

It's also worth noting that post-devaluation, the trajectory towards PPP is not merely a market-driven endeavour. Governmental policies, structural reforms, and external factors play a significant role in determining the pace and nature of adjustment. For instance, a country might seize a devaluation as a strategic moment to implement reforms that enhance domestic productivity or attract foreign investment. Such measures can influence the journey back to PPP or even redefine the new equilibrium.


While currency devaluation presents immediate deviations from the Purchasing Power Parity, there exists an intrinsic market mechanism that tends to restore equilibrium over time. However, the pathway to this equilibrium is influenced by myriad factors, including monetary policies, market reactions, and structural changes. The interplay between devaluation and PPP underscores the complexity of international economics, reaffirming that while theories provide a foundational understanding, real-world dynamics often bring in nuances that demand deeper exploration.