Councils risk lawsuits over piling unpaid bills

Malawi Local Government Association (Malga) says local councils face law suits from suppliers of goods and services following central government’s failure to disburse K3.2 billion that was allocated to them in the last budget.

The concern comes after Local Government, National Unity and Culture Principal Secretary Richard Hara told The Nation on Tuesday that the K3.2 billion councils were due to receive in the financial year ended March 31 2024 was an estimate, not arrears, due to resource constraints.

The K3.2 billion comprised K389 million for District Development Fund (DDF), K1.3 trillion for Other Recurrent Transactions (ORT), K171 million for Water Structure Fund (WRF), K975 million for Constituency Development Fund (CDF) and K366.3 million for city roads.

But in an interview yesterday, Malga executive director Hadrod Mkandawire said the local councils have a legal obligation to pay contracts, especially in those places where the DDF, WRF, CDF and city roads have yet to be paid.

He said: “We are not talking about funding cuts in the many months the local authorities were not being funded. Does it mean that their budget was only funded for seven or nine months? During the months that the councils were not being funded, they were engaged in a number of contracts.

“Some councils didn’t get CDF or DDF, but contracts were executed based on estimates and those projects might have been completed and contractors were not paid. Definitely, this money has to be paid because it is a legal obligation to do that.”

Mkandawire said the local authorities were also incurring costs for operations, like running ambulances, paying utility bills and holding statutory meetings, which required money and most councils went into debts.

He added: “So, there are no two-ways about this. We need to find a solution for the money to be reimbursed. As the Secretary to the Treasury [Betchani Tchereni] had stated, we need a stakeholders meeting to address these challenges.

“If we do not act properly, there will be a litany of legal suits against local authorities, which might not be conducive for them looking at the government’s current posture is positioning the local authorities as key actors in implementation of the Malawi 2063.”

Parliamentary Local Authorities and Rural Development Committee chairperson Horace Chipuwa also stated that the K3.2 billion was not arrears, but bemoaned that it is such failure to disburse all budget estimates that leads to stalling of projects.

Earlier, Hara said authorities were aware of the problem and will be addressing the issues as time goes, insisting that councils should know that the government budget is only an estimate.