ANNUAL REPORT June 2003-December 2004
Partnership between TENNEESEE STATE UNIVERSITY and MALAWI INSTITUTE of MANAGEMENT
Submitted to Ms. Joan Zaffarano Educational and Cultural Affairs Specialist Humphrey Fellowships and Institutional Linkages Branch Department of State, SA 44, Room 349 301 Fourth St., SW Washington, DC 20547
By Dr. Galen Spencer Hull, Director Office of International Business Programs Tennessee State University Nashville, Tennessee
December 2004
Summary of Partnership Activities The State Department grant funding the partnership between Tennessee State University (TSU) and Malawi Institute of Management (MIM) became effective in November 2000. In late 2002 TSU began discussions with Ms. Farah Chery, Project Manager, concerning a no-cost extension to the grant. The request was granted in June 2003, extending the grant period for two more years to September 2005. Communication with Dr. Chery from November 2002 through May 2003 is submitted as attachments. Attachment D is a memorandum from the TSU Grants Office indicating our balance as of August 2004. As soon as the no-cost request was granted, TSU began to develop an approach to implementation of the new partnership plan. The first step involved developing Pre-MBA Foundation Modules in CD-Rom format in order to facilitate admission of those students who might not have had a business background. We contacted the School of Business at our sister institution, Tennessee Tech University (TTU). They had already a successful online MBA program and were producing CD-Rom disks for prerequisite courses which they had developed in their own lab facility. They agreed to copy five of them for our use, together with covers featuring both the TSU and TTU logos. The agreement was that we would set our own exams on the material covered in the foundation modules so as not to compromise TTU’s use of them. The advantage of these modules is that the student who has applied for admission into the online program but lacks prerequisite courses can take them at his or her own pace and be tested on them whenever ready. The price of the CD-Rom to the student is the cost of tuition. TSU paid TTU $1000 for each module. The Foundation Modules developed for TSU included: Accounting Finance Marketing Quantitative Methods In August 2003, Dr. Galen Hull, Director of the TSU Office of International Business Programs, traveled to Malawi to introduce the new online initiative. Copies of the Foundation Modules were delivered to MIM, with the idea that serious candidates for the program could avail themselves of the CD-ROMs in the MIM library or check them out for a certain period of time. Presentations were made to possible candidates in the MIM auditorium as well as the Blantyre Club in the main commercial city of Blantyre, near where the Polytechnic is located. The Polytechnic, part of the University of Malawi system, had just begun offering an executive MBA. At MIM, we discussed the need to expand the server in order to create greater access to the internet. The online approach would require students to be able to go online in order to obtain and submit courses assignments and tests. It was emphasized in each of the presentations that admission to the TSU MBA program had two important requirements: a copy of the undergraduate transcript and a GMAT (Graduate Management Aptitude Test) score. The latter would prove to be a serious impediment to the new initiative. Malawi, a former British colony, still holds to the British educational system. Although there are graduate business programs in the country offered by foreign partner institutions, they do not require the GMAT for admission. The GMAT exam is offered only once a year, in October, at the University of Malawi in Zomba. We lobbied the Princeton Review
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people who administer the GMAT in Malawi to offer it again in February to encourage more persons to sit for the exam. We have no information as to how many may have taken the exam then. TSU developed a hyperlink on the Office of International Business Programs website that includes a registration form for applicants to the online program. However, there have only been two or three Malawians expressing interest in the program, and they have not been counseled by MIM staff. Here at TSU the effort was begun to have TSU faculty members teaching MBA courses to convert their courses into online format with the use of Web-CT. OIBP entered into discussions with the Associate Academic Vice President in the Office of Extended Education in order to coordinate the process of recruiting faculty members, providing technical assistance to them in the conversion process, and of course securing extra service pay for their efforts. We began with the core MBA courses first. This office was already involved in assisting professors to convert courses into online format for delivery under the Regents Online Degree Program (RODP). MBA students at TSU must have 25 hours of core courses and nine hours of electives. The following is a listing of courses and faculty members associated with each course in the MBA curriculum. Core MBA Courses Management Accounting/Controllership Managerial Economics Managerial Finance Behavior in Organizations Production & Operations Management Marketing Management Statistical Decision Making Business Strategy/Economic Environment Executive Seminar Series Total Course Hours Possible Electives Business Data Communications Decision Support Systems Management & Evaluation of Information Systems Information Systems Project Manangement International Business International Economics Total 9 hours of electives required Total Credit Hours Required for MBA Santosh Venkatraman Santosh Venkatraman Aurore Kamssu Aurore Kamssu Galen Hull Dharmendra Dhakal 3 3 3 3 3 3 9 34 Online Ken Lea Soumen Ghosh Dharmendra Dhakal Phyllis Flott Joel Jolayemi Alan Miller Soumen Ghosh Phyllis Flott Alan Miller (in Malawi) 3 3 3 3 3 3 3 3 1 25
The first five COB faculty members were selected in the fall of 2003 and they agreed to work with the Extended Education staff to convert their courses for online delivery. Those
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courses, now nearing completion, are as follows: Production & Operations Management, Behavior in Organizations, Statistical Decision Making, Business Data Communications, Management & Evaluation of Information Systems. Our plan is to have an additional ten courses converted into online format by September 2005 when the grant ends. Meanwhile, we have continued to pursue the faculty exchange dimension of the TSUMIM partnership. At the beginning of 2003 three faculty members from MIM came to TSU to develop a working arrangement with COB faculty for case study development in three subject fields under the broad heading of privatization in Malawi. This visit was a culmination of several interactions between MIM faculty and their counterparts at TSU through email. Then in mid July, three TSU faculty went to Malawi for a nine-day case study development visit. At this stage, field work was conducted to collect information on the three areas of focus namely: dairy industry; maize liberalization; and hotel and lodging industry. The focus was on turning around stateowned loss making enterprises into private owned viable commercial entities. State-owned enterprises (SOEs) have existed in virtually every country in the world. There has however been a strong drive to increase the participation of private corporate entities and individuals in commerce in order to transform economies. To date the degree of existence of such enterprises varies from one country to the other. The dairy industry case study development was conducted by Professor M. Alan Miller and Franklin Yonamu of MIM. In November 2003, Mr. Yonamu traveled to the U.S. under the grant to present a paper on this topic with Prof. Miller at a conference in Florida as well as to visit the TSU campus and consult with TSU faculty and OIBP staff. Travel funds for this conference for the two presenters represent the only cost incurred for travel under the extension period. (See attachment).
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Attachment A: November 2002 Memo to Dr. Chery To: Dr. Farah Chery, Program Manager Bureau for Educational and Cultural Affairs U.S. Department of State Dr. Galen Hull, Director, Office of International Business Programs Tennessee State University Request for No-Cost Extension to State Department Grant FY2000 COLLEGE AND UNIVERSITY AFFILIATIONS PROGRAM November 2002
From:
Subject:
Date:
This letter follows our conversation this week concerning the CUAP linkage partnership between Tennessee State University (TSU) and the Malawi Institute of Management (MIM), begun on November 1, 2000, and scheduled to end in October 2004. To date we have drawn down only one third of the resources in the CUAP budget ($45,000 out of $146,000), with just over $100,000 remaining. TSU and MIM would like to request a no-cost extension to the grant in order to pursue objectives beyond the scope of the original grant agreement. Following an intensive week of discussions involving Mr. Precious Givah, Deputy Director of MIM, TSU faculty and administrators, we wish request an extension to the life of the partnership, with the primary purpose of undertaking a TSU distance MBA degree for Malawians. The original proposal, which was the basis of the grant agreement, included three principal objectives: Objective #1: Collaborative Applied Research. This objective has been focused on case studies of Malawi firms that have undergone full or partial privatization. Three cases being developed will be submitted for presentation at conferences and for publication. Objective #2: Faculty and Student Exchange/Advising. TSU faculty members have traveled to Malawi to provide seminars in survey and case study methodologies. Malawi staff have come to TSU to develop an approach to case study methods. Objective #3: Assessment of Specialized MBA Program. The proposal aimed at exploring the possibilities of an MBA degree in Malawi. It is this third objective that is the focus of this request to extend the life of our grant activities. From the outset we envisaged partial steps toward developing an MBA program. Following a field visit to Malawi in June 2001, we proposed a Certificate in Business Administration to be assured in Malawi by TSU College of Business faculty. Several factors have militated against that proposed plan of action: After several months of marketing it became clear that there was not sufficient demand for an MBA-type certificate in Malawi. Malawians want the full MBA degree. The events of September 11, 2001, severely interrupted the process of planning for the certificate, resulting in a significant loss of momentum.
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Most TSU College of Business faculty were not overly keen to travel to Malawi, taking two weeks out of their normal teaching responsibilities and making extra preparations. We have explored various alternatives to the original plan, including possible collaboration with an MBA degree-granting university in Kenya, which the MIM Board of Directors declined to support. We are persuaded that a distance MBA degree is now plausible. Several factors have gone into this request: No American-style MBA degree is currently offered in Malawi. The only comparable program is an MSc in Strategic Management offered by the University of Derby (U.K.) in collaboration with MIM. The University of Malawi’s Faculty of Commerce has for some time offered an undergraduate degree in Business Administration, with a U.S. style curriculum, therefore providing graduates with potential credentials for admission to the TSU MBA program. Malawi banks, parastatals and private firms have shown an interest in supporting their senior managers in pursuit of an American MBA. The Tennessee Board of Regents now offers two online undergraduate degrees. Tennessee Tech University, a TBR institution, has just begun offering a Distance MBA degree. The TSU Office of Distance Education is supportive of masters level distance education degree programs and is preparing for this by hiring technical support staff, which may be considered a cost-share contribution. The costs of offering a distance MBA from TSU would be considerably less than undertaking a complete MBA offering in Malawi. The TSU distance MBA with Malawi, once in place, would of course be available to anyone and would eventually become a new source of revenue for the College of Business. Likewise, MIM would also become the champion throughout southern Africa for the American-style distance MBA program. We realize that there are numerous other considerations that will go into this plan of action if it to become a reality: We secured the official approval of the Graduate Policy Committee with in the College of Business in a vote of its members November 21, 2002. We anticipate the approval of TSU Academic authorities as well. We must persuade the TSU professors who currently assure core MBA courses of the value of converting them online, as well as those who teach the MBA elective courses. Some have already committed to the project For this, we will need to allocate resources for curriculum development, an item that does not appear in our current grant agreement. The TBR requires that faculty receive release time or a development grant for developing an online course.
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MIM must begin to market the idea of the distance MBA in Malawi, identifying candidates for the program who are willing to submit applications to the TSU graduate school. We will certainly need the approval of the Bureau of Cultural and Educational Affairs for the re-design of the grant agreement for a period of at least one year to a year and a half. Our request would entail the transfer of line items from travel and per diem to curriculum design for the purpose of implementing a distance MBA degree program. Recognizing that this proposal represents a significant expansion of our original application, we respectfully request your guidance and recommendations for the steps in securing Bureau approval for the no-cost extension. We are coming to you a full year in advance of the end of our grant period in the hope of securing approval in a timely fashion that will allow us to put our plans into action in Tennessee and in Malawi. We anticipate that grant activities under Objectives one and two will continue their due course without significant re-design changes. We look forward to your favorable response as usual.
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Attachment B: May 2003 Request for No-Cost Extension
FY2000 COLLEGE AND UNIVERSITY AFFILIATIONS PROGRAM
Development of Management Training and Education in Malawi
Submitted to
U.S. Department of State Bureau for Educational and Cultural Affairs Grants Division, ECA-IIP/EX/G Room M-22, 301 4th Street S.W. Washington, DC, 20547
By Dr. Galen Hull, Director Office of International Business Programs Tennessee State University
And Partner Institution
Mr. Precious Givah Deputy Director Malawi Institute of Management
May 2003
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Table of Contents
Rationale for a Proposed No-Cost Extension The Distance MBA Degree Implementation of Proposed Partnership Activities Budget and Budget Notes TSU Resources for the Proposed Distance MBA Degree Resumes of TSU College of Business Faculty
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Rationale for a Proposed No-Cost Extension The Bureau of Educational and Cultural Affairs linkage partnership grant (CUAP) between Tennessee State University (TSU) and the Malawi Institute of Management (MIM), begun on November 1, 2000, is scheduled to end in October 2003. We are requesting a two-year, no-cost extension to the grant in order to achieve objectives identified in the original proposal. To date we have drawn down only slightly more than a third of the resources in the CUAP budget ($51,000 out of $146,000), with a balance of $95,000 remaining. TSU and MIM would like to request a no-cost extension to the grant in order to pursue objectives beyond the scope of the original grant agreement. It follows several months of discussions with MIM, represented by Mr. Precious Givah, Deputy Director of MIM, and TSU faculty and administrators. The primary purpose for the extension is to develop and offer a TSU Distance MBA degree for Malawians. The original proposal, which was the basis of the grant agreement, included three principal objectives: Objective #1: Collaborative Applied Research. This objective has been focused on case studies of Malawi firms that have undergone full or partial privatization. Three cases being developed will be submitted for presentation at conferences and for publication. Objective #2: Faculty and Student Exchange/Advising. TSU faculty members have traveled to Malawi to provide seminars in survey and case study methodologies. Malawi staff have come to TSU to develop an approach to case study methods. Objective #3: Assessment of Specialized MBA Program. The proposal aimed at exploring the possibilities of an MBA degree in Malawi. It is this third objective that is the focus of this request to extend the life of our grant activities. From the outset we envisaged partial steps toward developing an MBA program. Following a field visit to Malawi in June 2001, we proposed a Certificate in Business Administration to be assured in Malawi by TSU College of Business faculty. Several factors have militated against that proposed plan of action: After several months of marketing it became clear that there was not sufficient demand for an MBA-type certificate in Malawi. Malawians want the full MBA degree. The events of September 11, 2001, severely interrupted the process of planning for the certificate, resulting in a significant loss of momentum.
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Most TSU College of Business faculty were not overly keen to travel to Malawi, taking two to four weeks out of their normal teaching responsibilities and making extra preparations without compensation. We have explored various alternatives to the original plan, including possible collaboration with an MBA degree-granting university in Kenya, which the MIM Board of Directors declined to support. We are persuaded that a distance MBA degree is now plausible. Several factors have gone into this request: No MBA degree is currently offered in Malawi by a U.S. university. The only comparable program is an MSc in Strategic Management offered by the University of Derby (U.K.) in collaboration with MIM. The University of Malawi’s Faculty of Commerce began offering an MBA degree for the first time just this year. For several years it has offered an undergraduate degree in Business Administration, with a U.S. style curriculum, therefore providing graduates with potential credentials for admission to the TSU MBA program. Malawi banks, parastatals and private firms have shown an interest in supporting their senior managers in pursuit of an American MBA. The Tennessee Board of Regents (the governing body of TSU) now offers several online undergraduate degrees. Tennessee Tech University, a TBR institution, has just begun offering a Distance MBA degree. We anticipate collaboration with TTU in the use of their CD-ROMs developed for Foundation courses. The TSU Associate Vice President for Academic Affairs, responsible for Distance Education programs, is supportive of masters level distance education degree programs. Her office has been actively involved in the formulation of this proposal and is a major source of the TSU cost-share contribution. The TBR requires that faculty receive release time or a development grant for developing an online course. The costs of offering a distance MBA from TSU would be considerably less than undertaking a complete MBA offering in Malawi. The TSU distance MBA in Malawi, once in place, would be available to anyone and would eventually become an additional source of revenue for the College of Business. Several steps have gone into the preparation of this proposal which augur well for its success:
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Official approval for the development of an online MBA degree was secured by a vote of the members of the Graduate Policy Committee within the College of Business November 21, 2002. A substantial number of College of Business faculty members have endorsed the Distance MBA plan and are committed to converting their MBA-level courses online. (See resumes in appendix). MIM will be contracted to serve as the agent for administering the Distance MBA application process in Malawi (as reflected in the proposed budget). MIM will assist in marketing the Distance MBA in Malawi, identifying candidates for the program and informing them of requirements for admission to the TSU graduate school. Our request entails the transfer of some funds from travel and per diem line items to curriculum design for the purpose of implementing a distance MBA degree program. Recognizing that this proposal represents a significant expansion of our original application, we approached our Project Manager, Dr. Farah Chery, in November 2002, a full year in advance of the end of our grant period, to seek guidance and direction in formulating a formal no-cost extension request. We are grateful for her assistance. Why Offer a Distance MBA Degree? In 1989, when GetEducated.com, began tracking accredited distance degrees, only five MBAs were available to the public. Today, GetEducated.com’s free guidebook, Best Distance Learning Graduate Schools, Business and Management 2003, profiles 103 accredited distance MBAs. The MBA is by far the most popular degree offered in distance format in the USA. Two independent research studies have compared distance learning MBA students to their residential peers. Both studies have found more similarities than differences between groups in learner satisfaction and educational outcomes. Researchers at Colorado State’s AACSB-accredited business school compared distance students to their campus counterparts and to executive MBA cohort students on 12 specific competencies. Since all groups took virtually the same curriculum, with many having the same instructors, with the same AACSB-accredited degree awarded at conclusion, the school sought to determine if delivery method alone made any significant difference. All students were being awarded the same degree, but were they all really receiving the same education? Since GetEducated.com began surveying employers and distance learning students, research indicates two solid trends. First, public acceptance of distance degrees has increased steadily. The years since 1996 have brought a sharp increase in level of acceptance. This appears to be related to the rise of the Internet as a delivery method. Americans trust the Internet and therefore tend to trust degrees delivered this way more than those delivered by older technologies such as cable TV and mail correspondence. A sharp rise in the number of established brick and mortar educational
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institutions that offer distance degrees has also heightened public acceptance. Provided an institution is accredited by a recognized agency, greater than 85% of those GetEducated.com surveyed in 2001 believed that quality should not be an issue. Another website (www.allbusinessschools.com) maintains a list of some 170 business schools that are said to offer an MBA by state. Only three of these are in Tennessee. However, neighboring Tennessee Tech University, which is not on the list, has only recently begun to offer a 100% online Distance MBA program. The Tech DMBA features faculty lectures on CD-ROM, including Foundation courses for MBA pre-requisites. The Foundation modules are $325 per module and can be made available to candidates for the proposed TSU Distance MBA in Malawi who need courses in order to qualify for full admission to the MBA program. Nevertheless, a report in USA Today (“More Students Get MBAs Online”) Feb. 10, 2003) indicated that just 3.3% of the schools accredited by the Association to Advance Collegiate Schools of Business (AACSB) have significant online programs. Many of the top-tier business schools have stayed away. Smaller, regionally accredited schools have attracted thousands of student using internet courses to obtain an MBA degree. The most popular master’s degrees are the MBA and education. There is an increasing array of materials available online from which to draw in developing a distance education program. One that is particularly relevant to our proposed Distance MBA is Michigan State University’s Center for International Business and Economic Research. The MSU-CIBER website contains the globalEDGE portal, an extensive sourcebook for global business. This is a knowledge web-portal that connects international business professionals worldwide to a wealth of information and learning resources on global business activities. The portal was designed and developed as the ultimate research tool, with over 2,000 online resources. Implementation of Proposed Partnership Activities Development of Online Courses This proposal has been developed in concert with the academic authorities of the College of Business as well as the office of the Associate Vice President for Academic Affairs, responsible for distance education at TSU. Dr. Evelyn Nettles has funds in her budget for the enhancement of the MBA program, and specifically the development of web-enhanced courses. These funds can be tapped to enter into contracts with TSU faculty who are willing to convert their courses into online format, beginning as early as this summer. It is our expectation that at least four or five MBA courses can be developed in the course of this summer 2003, drawing upon the technical expertise of the Associate Vice President’s staff. Candidates for this initial exercise have been identified. The budget proposal assumes that that her office will fund the development half of the
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courses to be developed under the Distance MBA, while the other half are to be paid out of Bureau funds. Marketing of the Distance MBA in Malawi Once the no-cost extension is officially approved, we will proceed to formalize the curriculum and TSU faculty members associated with each course to be offered. Based on this we will develop a catalog of the Distance MBA that can be used to promote the program in Malawi. Subsequently, during the course of this summer we will need to undertake an intensive survey of the possible candidates for the initial cohort for the Distance MBA program in Malawi, in collaboration with our partner Malawi Institute of Management. This will entail revisiting past contacts with the university, Department of Commerce alumni, private firms, and agencies in order to identify candidates who can qualify for admission into the TSU MBA program. Basic requirements include an acceptable GMAT score, undergraduate transcript, including foundation courses deemed necessary for work at the MBA level. Foundation Courses It is often the case that students applying for admission to the MBA program must take pre-requisite courses before beginning core MBA courses. Upon review of the candidate’s transcript, the TSU College of Business will determine which courses are to be taken. We anticipate that these courses can be offered to Malawians, using the CD ROMs developed by the Tennessee Tech School of the Business. We would expect those interested in the Distance MBA program to begin these courses as early as the fall of 2003. If they have had to take no more than a couple of courses they would then be eligible to begin the Distance MBA courses by the spring semester of 2004 (January). In the fall of 2003, the TSU Project Coordinator will travel to Malawi to meet with candidates likely to begin MBA courses in spring 2004. He would present the format for the Distance MBA program, the modalities of online studies, and the overall objectives of the MBA program. An initial intensive MBA course could be offered in the traditional classroom format to familiarize the students with U.S. business graduate school methodologies, and particularly the case study approach. Distance MBA Course Delivery The delivery of the first online courses should be ready to offer by January 2004. There will be a total of 11 courses required for completion of the TSU Distance MBA degree. In order to complete the full program within the two-year period, students will need to take two courses each semester. Malawi Institute of Management Administration in Country.
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For this program to succeed, there will need to be an efficient coordinating mechanism in Malawi. As official grant partner, we proposed to enter into a contract with MIM to serve as the primary point of contact for in-country program administration. This will consist of marketing the program, assisting in the identification candidates, and the dissemination of required course textbooks. Sources GetEducated.com. Best Distance Learning Graduate Schools, Business & Management 2003, http://www.geteducated.com/bdlgs_bm.htm GetEducated.com, Best Distance Learning Graduate Schools, Technology 2003 http://www.geteducated.com/bdlgs_tech.htm Mark Kretovics and Jim McCambridge, Measuring MBA Student Learning: Does Distance Make a Difference?, International Review of Research in Open and Distance Learning, October 2002, http://www.irrodl.org/content/v3.2/kretovics.html. Michigan State University, Center for International Business and Economic Research website: http://ciber.msu.edu Tennessee Tech University, Distance MBA website: http://www.dmba.tntech.edu
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TAB F
NO-COST BUDGET SUBMISSION PROPOSEDTWO YEAR SUMMARY BUDGET FY 2003/2005
TENNESSEE STATE UNIVERSITY COST SHARE MALAWI INSTITUTE OF TOTAL MANAGEMENT PROJECT COST SHARE COST
BUREAU REQUEST International Travel 2 COB rt @ 3,400 - Nashville-Lilongwe, COB project management In-country Travel in Malawi Lilongwe-Blantyre rt x 4 Per diem Lilongwe - 2 x 10 days @ $228/day 2 MIM rt @3400 - Lilongwe-Nashville, Project Coordinator Per diem MIM Project Coordinator in Nashville 10 days @ $114/day Total Travel & Per Diem Salary, Honorarium, Faculty release Time a. Staff time- Project Mgt (OIBP) - 10% time, $8,784 x 2yrs b. COB Project Coordinator, Liaison with MIM, $9,000/yr x 2 c. COB Faculty - pay for course preparation 11 courses @ 3000; COB shares cost with Office of Distance Education d. COB Grad Assistant - $9000/yr assist in managing grant. e. MIM Contract Management - $10,000/yr x 2 yrs Total Salary/Honorarium Equipment Indirect Cost (20% of salaries & wages) Health Insurance evacuation insurance 4 trips @ 30 days x 54.00/person Direct Administrative Costs: a. Long Distance Telephone b. Postage c. Printing - publication/marketing d. Program Orientation GRAND TOTAL FOR 3-YEAR BUDGET
$13,600 $2,000 $4,560 $6800 $1,140 $28,100 $6,000
$13,600 $2,000 $10,560 $6800 1,140 $34,100
$6,000
$17,568 $18,000
$17,568 $18,000
$16,500 $9,000 $20,000 $63,500
*$16,500
$33,000 $9,000 $20,000 $63,500
$6,900
$6,900
$216 $500
$216 $500 $500 5,000
$500
5,000
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$97,816
$40,968
$138,784
*TSU Cost share contribution half of course development, Bureau half.
Budget Notes 1. Travel and Per diem In the CUAP grant agreement $113,360 of the funds allocated by the Bureau were for travel and per diem expenses, out of a total of $146,208. This was predicated on 12 round trips between Nashville and Lilongwe, a combination of TSU College of Business faculty members traveling to Malawi to offer short-term training and intensive management courses and Malawians coming to TSU for case study development. Of this, only $47,704.30 has been expended to date, even though there have been 12 round trips as anticipated in the proposal. This leaves a balance of $97,816.00 in the Bureau account. The savings is accounted for by several factors. Airfare tickets have often cost considerably less than budgeted, sometimes because of having purchased them in Malawi where prices were less than in the U.S. Also, we have claimed far less in per diem expenses than originally budgeted, owing to the cost-share feature of the partnership. Most of the time TSU faculty members have been housed in the MIM facility free of charge for lodging, resulting in a greater than committed cost-share contribution of MIM. The proposal for no-cost extension is owed in large measure to these savings. The travel and per diem budget ($28,100) reflects a basic shift of line item allocations away from travel and per diem. With the new emphasis on expenses related to delivery of MBA courses online ($63,500), there is less focus on international travel. We propose four round trips, primarily for coordination and administrative purposes but also for the delivery of at least one short intensive course in Malawi. 2. Salary, Honorarium Faculty Release Time In the grant agreement the only line item in the Bureau column was $10,200 for student stipends, which has not been tapped. As mentioned above, the no-cost extension request reflects a radical shift of Bureau funds toward salaries and honoraria. Funds requested of the Bureau are for four line items:
College of Business Faculty pay for converting MBA courses into online format; half of the projected $33,000 needed for 11 courses @ $3000/Course, the other half cost-shared by TSU’s Distance Education office; a College of Business Project Coordinator responsible for liaising with MIM on academic and administrative matters; a COB graduate assistant computer application skills, responsible during the first year for assisting COB faculty members in putting courses into online format;
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Malawi Institute of Management Contract – $10,000 for each of the two years of the extension period, totaling $20,000; this would provide for MIM’s management of in-country marketing and administration of the DMBA.
TSU has done a Break-Even Analysis to determine the level of tuition to be charged to Malawi participants in the DMBA. The cost of delivery of courses under the proposed DMBA would be covered by tuition, the amount to be determined by the number of students enrolled in the program. 3. Direct Administrative Costs The grant agreement contains $7,648.00 for direct administrative costs, including insurance, telephone, postage, and printing. Of this, only $1,150.42 has been expended. Our no-cost extension request is for a total of $6,216, to include telephone, postage and printing of marketing materials. 4. Cost Share Contribution The TSU Project Manager function will continue to be a cost-share item (10% of salary for two years). A second significant cost-share is the $16,500 which TSU will fund for the preparation of online courses
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TSU MBA Curriculum and College of Business Faculty
Foundation Courses (Required for admission to MBA Program) Accounting Principles Information Systems & Statistics Economic Principles & Business Finance Algebra & Calculus (may be waived) Management & Marketing Principles Legal Environment of Business Total Semester Hours Credit Hours 4 4 4 6 4 3 25
(The above courses should have been taken at the undergraduate level. If not, it is possible to offer courses on CD Rom developed as MBA foundation courses available through our sister Tennessee Board of Regents institution, Tennessee Tech University, in its Distance MBA) MBA students must have 25 hours of core courses and nine hours of electives. Core MBA Courses Management Accounting/Controllership Managerial Economics Managerial Finance Behavior in Organizations Production & Operations Management Marketing Management Statistical Decision Making Business Strategy/Economic Environment Executive Seminar Series Total Course Hours Possible Electives Business Data Communications Decision Support Systems Management & Evaluation of Information Systems Information Systems Project Management International Business Management International Economics Labor Economics/Labor Relations Total 9 hours of electives required for MBA Total Credit Hours Required for MBA Santosh Venkatraman Santosh Venkatraman Aurore Kamssu Aurore Kamssu Galen Hull Dharmendra Dhakal Abu Wahid 3 3 3 3 3 3 3 9 34 Robert Hayes Soumen Ghosh Dharmendra Dhakal Phyllis Flott Joel Jolayemi Alan Miller Soumen Ghosh Phyllis Flott Alan Miller (in Malawi) 3 3 3 3 3 3 3 3 1 25
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Resumes of TSU College of Business Faculty COB Faculty Member
Dhakal, Dharmendra Dhakal, Dharmendra Flott , Phyllis Flott, Phyllis Ghosh , Soumen Ghosh, Soumen Hayes, Robert Hull, Galen Jolayemi, Joel Kamssu, Aurore Kamssu, Aurore Lukosius, Vaidotas Miller, Alan Olorunniwo, Festus Thach, Sharon Venkatraman, Santosh Venkatraman, Santosh Wahid, Abu
*MBA Course/s
Managerial Finance International Economics Behavior in Organizations Business Strategy Managerial Economics Statistical Decision Making Management Accounting/Controllership International Business Management Production & Operations Management Management & Evaluation of Information Systems Information Systems Project Management Marketing Management Marketing Management Production & Operations Management Marketing Management Business Data Communications Decision Support Systems Labor Economics/Labor Relations
________________________________________________________________ *More than one faculty member may be available to teach the same course. Not all electives will be offered.
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Attachment C:
THE WARM HEART OF AFRICA: Privatisation of the Dairy Industry in Malawi
A Case Prepared For ACADEMY OF BUSINESS DISCIPLINES PROCEEDINGS Ft. Meyers, Florida November 2003
By
Franklin J. A. Yonamu Malawi Institute of Management yonamufranklin@yahoo.com
M. Alan Miller Tennessee State University (ret.) tna2@juno.com
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ABSTRACT The case involves the privatisation of the dairy industry in Malawi. Having long been run by the government, a cold turkey approach to privatisation has left the industry undercapitalized, having to adjust to the private enterprise approach to operating, and struggling. Low per capita milk consumption, high maize prices, shortage of fresh cows, scarce and expensive bovine medicines, devaluation of the kwacha, competition from sterimilk imports and a slowdown in breeding activity are all elements of the problem facing the industry. In addition to introducing readers to the small country of Malawi, they are exposed to a typical example of the often lethargic nature of economies that have been dominated by bigbrother government and the resulting cultural, economic, and competitive impediments to an industry’s growth and success. In order to reach a viable problem solution case briefers must research how government-industry cooperation is effected in countries where the dairy industry is successful. INTRODUCTION A top official of the Malawian Privatisation Commission admits that the transfer of a number of state-owned enterprises to the private sector over the past few years has not resulted in an instant panacea for the country’s economic woes. As with any change, some people may suffer, but there can be no doubt that overall privatisation is a change for the better. (Malawi newspaper The Nation, Feb. 28, 2002, p. 3). Despite such optimism there is a steady drumbeat of impatience with the progress of the economy in the press and among the populace. Following Nyasaland’s independence from Great Britain in 1964 its name was changed to Malawi and the country entered into the almost 30-year reign of the western-educated, benevolent Life President, Dr. Hastings Kamuzu Banda. Overnight the hand of “big brother” had been removed and the country was left to find its own way in a rapidly changing political and economic world. Communism was spreading like wildfire through the emerging nations and, in an attempt to speed the development of his country, Dr. Banda borrowed a page from the then popular play book of the left and established an impressive portfolio of state-owned enterprises. Banda’s successor, businessman Dr. Bakili Muluzi, was elected in 1994 to become His Excellency the President of the Republic of Malawi for a maximum of two four-year terms. Noting the inefficiency of the state-owned enterprises and desiring to disentangle them from the governments budget Dr. Muluzi embarked on a steady and deliberate journey that would hopefully transform his country into a flourishing market economy, which had recently been acknowledged as the most viable economic model. MALAWI Briefly, Malawi is a land-locked country in south eastern Africa, nestled among its larger neighbors: Tanzania, Mozambique and Zambia. While appearing tiny in the context of the African map it must be remembered that Africa is the second largest land mass in the world and most of its countries are immense. By comparison, Malawi is almost as large as either Germany or England. With an area of 118,484 kilometers (45,747 sq. mi.), Malawi is 8% larger than the U. S. state of Tennessee, but with about twice the population (12 million). The country was settled around 600 years ago and acted as a magnet for black Africans fleeing the slave trade, persecution, and wars. Just perhaps this is the reason for Malawi’s reputation as the
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warm heart of Africa. These peace-loving people, despite widespread hardships, are eversmiling, humble, hospitable, and eager to please. The small minorities of non-blacks contribute to the modest middle class of the country, mainly as merchants. Literacy is reported to be around 58% and as many as 80% of the population practice Christianity. Poverty dominates since the country is reported to have one of the lowest per capita incomes in the world. Mean household size is 4 and expenditures average 12,238 kwacha ($160/month) in urban areas and a mere 3,411 kwacha ($45/month) in the countryside. Births per child-bearing woman are 4.5 in the cities and 6.7 in rural areas. A number of Malawians work in nearby countries in mines and factories and their incomes contribute greatly to the economy. English is the official language but a handful of tribal languages rule the streets and countryside. Chichewa is the predominant tongue, being spoken by 57% of the population.
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The East African Rift Valley crosses the country on its eastern border. Much of the land is situated on a plateau at 9,000-18,000 sq. meters(3,000-6,000 sq. ft.) above sea level. The most prominent feature of Malawi is Lake Nyasa (or Lake Malawi), which was reached by the missionary David Livingstone in 1859. The lake, at 29,600 square kilometers(11,430 sq. mi.), is larger than Lake Erie in the U.S. and would cover 1/4 of the state of Tennessee. Nyasa, the third largest lake in Africa, is extremely deep in the Northern part and boasts some 200 species of fish. Needless to say, freshwater fish is a substantial part of the Malawian diet in areas near the lake. Malawi has an agriculture-based economy and this industrys output makes up 90% of exports. Subsistence farming is the rule, with 86% of the population living in rural areas. Firewood is used as the main source of energy by 94% of Malawians. Only 5% use electricity for lighting and a minute 2% use it for cooking. The soil, which is very fertile, allows the people to feed their families and affords exports of basic products such as tobacco, tea, cotton, tung oil, rubber, cotton, sugar, and peanuts. Goods to be shipped beyond neighboring countries must travel through Mozambique to reach port. Major imports include transportation vehicles, machinery, and consumer goods. At this point in its development Malawi is dependent upon other countries for even the most basic consumer products. Difficulty in attracting capital and its being situated so close to the ultra-modern nation of South Africa hamper development. In addition, the age-old tradition of occupying oneself as a trader (traveling to nearby countries for consumer goods, and selling them back home at high markups) further retards the establishment of local industry. GOVERNMENT ACTION No one could be happier about the privatisation of 52 enterprises than the Malawi Government. Records show 1.6 billion kwacha (exchange rate: 76 kwacha to $1) accruing from these new tax units into the state coffers since the initiation of privatisation in 1996. And, that does not even consider the subsidies once paid for the enterprises operating in the red while under government control. The new tax revenue has been spent on projects such as: eight secondary schools, highway maintenance, a youth credit program, loans to Malawians to buy shares in private enterprises, government offices, restructuring public enterprises for further privatisation, settling credits and paying retrenchment benefits for privatised companies, and funding the 18-member Privatisation Commission (projects listed in order of magnitude of expenditure). THE DAIRY INDUSTRY In the 1970s the Malawi government established the Malawi Milk Marketing Project as well as the Dairy Cattle Development Project in order to develop the dairy industry. In 1987 these two entities were merged into the Malawi Dairy Industries (MDI). In essence, the government was the dairy industry. It operated seven units: three dairy processing plants, three dairy farms, and a head office complex. In June of 1997 investors were asked to bid on these government holdings as part of the privatisation impetus. The aim of the government through its Privatisation Commission was, and continues to be, to increase industry efficiency, competition, public participation, and tax revenue. The seven units of MDI were grouped into three entities and purchased by a mix of foreign and domestic investors.
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As a result of these transactions, government officials are satisfied that dairy industry workers as a whole are better off under privatisation due to the employee-shareownership schemes which provide profit sharing. A further perceived advantage of the move is that of the increase in competition. Privatisation of the dairy industry in Malawi has, however, brought little change with regard to the actual number of processors or dairy farmers. Basically the action merely shifted investment from government to the private sector, superimposed the profit motive, and expelled the industry from the state feeding trough. Improved efficiencies have been reported by both processors and dairy farmers but low per capita milk consumption, high maize prices, shortage of fresh cows, scarce and expensive bovine medicines, devaluation of the kwacha, and competition from sterimilk imports has served to keep milk production and sales low. Some external capital has been attracted to the industry and the government has made funds available for Malawians to purchase stock in privatised companies. Zimbabwe Dairiboard now owns approximately sixty percent of the Blantyre Dairy. Crystal Foods Limited bought sixty percent of the New Capital Dairy near the capital. Each of these has a capacity of 40,000 liters per eight-hour shift. A Malawianowned company (Northern Dairies Limited) purchased Mzuzu Dairy, which is able to produce 9,000 liters per eight-hour shift. The government’s three dairy farms have also been privatised. The 650 hectare* Capital Hill Dairy near Lilongwe was sold to Nature’s Gift Limited owned by a South African couple. The wife runs the farm/dairy/ lodge/grocery while the husband holds a professional position in the capital. Katete Dairy Farm, just south of Lilongwe, with its 745 hectares, was sold to a local consortium of investors. Ndata Dairy farm, the largest of the three with 841 hectares of land and located 20 km south-east of Limbe, was sold to local investors. Managements at dairies and at farms are struggling to turn around the bureaucratic mentality prevalent in the decades old state-owned system. Private sector enthusiasm, more skilled staffs and improved production techniques have been offset by the negatives enumerated above, namely low per capita milk consumption, high maize prices, shortage of fresh cows, scarce and expensive bovine medicines, devaluation of the kwacha, and competition from sterimilk imports. Another pressing problem has been that of the slowdown in breeding activity. In a bright spot, small farmers in various parts of the country have organized themselves into bulking groups and created cooperative, centralized facilities for storing and cooling the milk before it is transported to the processor. At some locations milk collection is no longer prompt, due to aging distribution equipment. Annual average per capita milk consumption is a scant four liters per year compared to 90 in Kenya, 23 in Uganda and 14 in Tanzania. The world recommended standard is 200 liters per year. To further illustrate the extremely low purchase of milk, only 5,000 of the country’s 750,000 cattle are dairy cows and only 65% of those produce milk at any given time. Only 13,000 liters of milk per day are produced in the country. A national dairy association (Malawi Dairy State Quotas Association) was founded in 1999 to represent farmers. The national association is fledgling and is taking the agonizingly slow route of “bottom up” growth. Dairy processors do not yet have an association.
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Those who thought that waiving the wand of privatisation would instantly cure all the ills of this small and struggling economy have been sadly disappointed. Reality dictates that industry success is a proactive, ongoing process and successful entrepreneurship demands that impediments to growth must be dislodged in an ordered, step-by-step fashion much like that of a PERT diagram. ______________________________________________________________________ *a hectare = approx. 2 acres. TEACHING NOTES Case Overview: A brief history and description of the small, southeastern African country of Malawi is followed by an abbreviated discussion of industry privatisation by its government in the mid 1990s. Due to the government’s late arrival to the privatisation conclusion there is no indication that it is being at all innovative or even pro business. The decision appears to be primarily motivated by following the international trend and budgetary issues (divesting itself of cost-inefficient state enterprises and eagerly anticipating needed tax revenues from their private-sector replacements). The final section of the case chronicles some of the progress and misadventures of Malawi’s privatised dairy industry. Objectives: The primary objective of The Warm Heart of Africa: Privatisation of the Dairy Industry is to illustrate that a government may have an obligation beyond merely privatising an industry and expecting it to “hit the ground running.” Secondarily the case seeks to expose the reader to the often lethargic nature of economies that have been dominated by “big-brother” government. A third objective is to force the case briefer to deal with the cultural, economic, and competitive impediments to an industry’s growth and success. Courses and Levels: This case was designed primarily for the beginning meetings of an International Business or International Marketing course. It could also be used early in the term in the Business Policy, Economic Growth and Development or Government course. With its lack of complication, it should serve case neophytes well as they cut their teeth on the case analysis process. Discussion Questions and Answers 1. From whose perspective should the problem be solved? [The Malawi Government - the only entity mentioned in the case with the resources to aid the dairy industry] 2. Does the dairy industry in the United States a free market system? [No! Milk production is heavily subsidized, making this highlynutritious product cheaper than bottled water] 3. What is sterimilk? [Sterimilk is milk that has been treated so that it requires no refrigeration in either the store or at home. It has the same taste and consistency of regular milk but a shorter shelf life than uhtmilk. Uhtmilk is milk that has been pasturized at an ultra high temperature(uht) - 138 degrees centigrade - for two seconds, then cooled rapidly to preserve flavor, so that it may be stored for long periods of time at room temperature. It also requires no refrigeration in either the store or at home and has the same taste and consistency of regular milk]
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4. In economic terms what is the effect of people and livestock vying for the same commodity? [Normally humans will outbid livestock producers unless almost identical substitutes are recognized.] 5. Does supply create demand or vice versa, and how does this relate to the case? [Naturally, demand creates supply, which means that convincing Malawians to drink more milk will attract the necessary resources to the industry. However, It should be noted that bringing additional fresh milk cows on-line requires adherence to natures gestation period or the much more expensive option of bringing them in from outside the country.] Analysis: While problems abound and should be easily recognized, the perspective from which they could or should be undertaken and resolved is somewhat obscured. This is a purposeful ploy to force the students into discussion. Since the case will no doubt be used in business classes, the typical student will wish to solve it within the context of the industry. However, since the industry in question appears to be both financially and managerially stretched to the limit, the key issues can, and probably should be, dealt with by government. After all, government will be a major beneficiary of the success of a privatised dairy industry and has the power and resources to promote it as well as nurse it through its fledgling stage of development. From a national health standpoint milk drinking is an efficient way of providing needed nutrients to an impoverished people. With both milk consumption and production low, the government faces the dual costs to national health and to the state coffers. In addition, sale of the lower-priced sterimilk drains away needed revenue to a neighboring country. Governments have never been bashful in subsidizing behavior they desire to encourage. Direct subsidies to the dairy industry have long been the practice in the U.S. Governments may also utilize public service announcements to promote approved behaviors. In addition to subsidies to the dairy industry for milk production, similar short-term subsidies may be necessary for the maize industry to keep this valuable commodity from slipping over the border to markets where it may command a higher price. A campaign to encourage milk drinking could be easily piggybacked onto the AIDS prevention promotion by government. Both dairy cow breeding and the availability of bovine medicines are problems likely to correct themselves through market forces. In the longer term, and if a free market system is the objective, the milk and maize subsidies could be gradually withdrawn in a step-graded system that would gradually wean the industry off these crutches. Milk drinking could continue to be included in the context of other health-related promotional messages sponsored by the government. Entry into sterimilk production should be encouraged and the necessary capital attracted. Since the majority of the population has little way to effectively cool milk, sterimilk is an attractive interim product until refrigeration is more widespread. Stopping abnormal devaluation of the kwacha requires sound fiscal policy on the part of the government. With a stabilized kwacha Malawians should be expected to depart from a survival modus operandi and feel freer to address personal needs such as health.
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As milk production increases the government could consider a state run milk program in the country’s public schools. (In the U. S. such a program accounts for 5% of milk production). Public service announcements concerning the health benefits of drinking milk must be transmitted in media utilized by the people. Billboards in the prevailing language of the area will most likely be the number one medium for the countryside. Picture-oriented posters in places where people congregate should communicate well. Such posters should be located in places like markets, transportation stops, etc. Pamphlets at medical facilities, schools, and in food stores are also likely to be effective. The broadcast media would be of importance for reaching the small middle and upper classes. Summary: Key Problem - How may the Malawi government deal with a struggling privatised dairy industry? Alternatives - 1) Continue the hands off approach and allow the market to work; 2) Come to the industrys aid Solution Institute milk and maize subsidies in the short term. In the longer term wean the industries off the subsidies, promote broadly the health benefits of milk drinking, encourage in-country sterimilk production. Allow the market to correct the bovine medicine and breeding shortages. Stabilization of the kwacha and access to refrigeration are outside the scope of the key problem. Epilogue: This case was written as a result of a seven-day trip within Malawi and discussions with government officials, dairy farmers, and dairy processors. Funding came through the Tennessee State University College of Business Office of International Business Programs from the College and University Affiliations Program of the Bureau of Educational and Cultural Affairs in the U.S. State Department.
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Attachment D: Malawi Grant Balance as of August 2004 TO: Dr. Galen Hull International Business Veronica Jones Grants Accounting August 4, 2004 Budget Load for Account Number 531159
FROM:
DATE: SUBJECT:
The original budget was loaded for $35,000.00. Thirty thousand was for travel and $5,000.00 was for operating expenses. The amendment was loaded as follows: TRAVEL OBJECT CODE 3000 International transportation costs In-country travel overseas and in the U.S. and local transportation. Per diem Insurance Honoraria including travel costs SUB-TOTAL $42,600.00 8,000.00 65,244.00 2,148.00 10,200.00 $128,192.00
OPERATING EXPENSE OBJECT CODE 4000 Educational materials Administrative cost including communications, postage, reproduction and evaluator fees SUB-TOTAL GRAND TOTAL $15,000.00 6,700.00 _________ $21,700.00 $149,892.00
A budget revision was submitted reducing travel by ($55,000.00) and increasing operating expenses by $55,000.00. Another revision was submitted reducing travel by ($11,725.00) and increasing academic salaries by $11,725.00.
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