The National Audit Office (NAO) has flagged 10 of Malawi’s 28 local government authorities (LGAs) for weaknesses in managing Governance to Enable Service Delivery (Gesd) funds, raising fresh questions about the country’s fiscal devolution drive.
In a letter to the National Local Government Finance Committee dated July 2 2026, Auditor General Thomas Makiwa said the 10 councils accounted for about K5.1 billion in audit queries for the year ending March 31 2025.
Nine councils received qualified audit opinions, meaning their records were mostly accurate but had specific exceptions.
One council, Nkhotakota, received a disclaimer—the most serious finding—meaning auditors could not obtain enough documentation to form an opinion. The district has alleged irregularities of about K3.9 billion.
| Nation
Those with qualified opinions are: Chiradzulu, Karonga, Likoma, Mchinji, M’mbelwa, Ntchisi, Phalombe, Rumphi and Zomba.
Councils with clean opinions include: Salima, Ntcheu, Nsanje, Nkhata Bay, Neno, Mwanza, Mulanje, Mangochi, Machinga, Lilongwe, Dowa, Dedza, Chitipa, Balaka, Blantyre and Chikwawa.
- Nkhotakota in worse position
- Nkhotakota alone accounts for 76 percent of the K5.1 billion in question. NAO listed 10 major issues under the council:
- lK983 million: Inter-borrowing between council accounts for unrelated purposes
- lK807.5 million: Funds transferred to untraceable account sources
- lK752.5 million: Unauthorised transfers between council bank accounts without approvals or justification
- lK476 million: Missing payment vouchers and funds transfers
- lK245.6 million: Unsupported payment vouchers
- lK219 million: Unauthorised transfers from the Gesd account
- lK135.4 million and K113.6 million: Unclear adjustments to financial statements
- lK132.9 million: Unsupported trade payables
- lK32.5 million: Transfers to personal bank accounts
Other major findings
Other councils also showed gaps in record-keeping and controls:
- lRumphi: Missing documentation for K403 million in payments related to Development Fund for Local Authorities (DFLA) loan applications.
- lKaronga: Misstatement of K764.8 million in financial records.
- lLikoma: Missing supporting schedules for K102.6 million in social cash transfer payments.
- lM’mbelwa: Overpayment of allowances by K12.9 million—paid K14.9 million instead of K1.9 million.
- lNtchisi: No evidence that prior year issues were resolved, including K123.2 million overstatement of depreciation, K33.5 million omission of employee benefits and K838 739 in unexpensed prepayments.
For Rumphi District Council, it emerged that documentation for payments made to a property valuer for the DFLA loan were not provided to the auditors; hence, the inability to determine total expenditure.
Gesd is a $100 million (about K173 billion), five-year performance-based programme launched in 2021 to strengthen local governance and service delivery. The current cycle ended on June 30 2026 with the second phase on its way.
The programme is central to Malawi’s fiscal devolution agenda—the transfer of money and responsibility from central government to councils so that decisions on development are made closer to citizens.
More than 60 percent of councils got clean audits, which Malawi Local Government Association (Malga) said show progress. But the fact that over one-third still had qualifications or a disclaimer points to persistent weaknesses.
Malga executive director Hadrod Mkandawire welcomed the results.
“This sets a good message that the cautious approach to meaningful fiscal devolution should be abandoned. This builds citizens’ trust that public funds at the local level are actually directed towards development and service delivery,” he said.
But governance watchdog Centre for Social Transparency and Accountability (Csat) said the problems cannot be ignored.
Csat executive director Willy Kambwandira said in an interview yesterday: “The fact that nine councils still received qualified audit opinions is unacceptable. This means serious weaknesses in financial management persist and puts public resources at risk.
“These councils must not treat qualified opinions as routine. They should be subjected to time-bound corrective action plans.”
The findings come as government moves to enforce stricter accountability ahead of Gesd II.
The World Bank has also approved $80 million, about K140 billion, for Gesd II. The new phase will tie funding more directly to performance and audit results.
Last month, the Ministry of Local Government and Rural Development signed a memorandum of understanding with the Anti-Corruption Bureau to strengthen fraud prevention in councils with minister Ben Phiri declaring: “No official will be shielded.”
