Donors confidence with Malawi still low
Malawi’s major donors under the Common Approach to Budget Support (Cabs) on Wednesday hailed Malawi’s progress in addressing the Capital Hill cashgate, but said regaining donor confidence in the country’s public finance management system will take time.
Cabs co-chairperson Sarah Sanyahumbi, who is also head of the British Department for International Department (DfID) in Malawi, said this at Capital Hill in Lilongwe during a wrap-up Cabs review meeting.
She said: “Once you lose confidence, restoring confidence and strengthening the system takes time… Yes, the government is doing a good job so far, but there is a far way to go and will take a bit of time simply to restore the confidence and take necessary steps to strengthen the [Ifmis] system.”
Sanyahumbi said currently, investigations into the cashgate are in early stages and that results from the forensic audit on the Integrated Financial Management Information System (Ifmis) will only be out in January 2014, adding that significant improvements would only be visible in March next year.
But the DfID Malawi boss said donors have been participating in weekly meetings of the Government Action Plan where, she said, initial steps on addressing cashgate have been shown.
She also reiterated that despite withholding budget support, donors under Cabs continue to assist Malawi in other sectors such as health and education.
According to Sanyahumbi, over the past month, government and Cabs have been working on an Extraordinary Performance Assessment Framework (Epaf) which, she said, has now been agreed to by both parties.
She said the framework seeks to address the causes of massive looting of public resources in government and is focused on short-term and medium-term measures.
Sanyahumbi explained that the successful implementation of the Epaf, which was made public on Wednesday, will be an important step in restoring confidence in government’s management of public finance.
On his part, Minister of Finance Maxwell Mkwezalamba said although donors have delayed budget support, there is evidence on the ground that they continue to help Malawi though not through the government system.
He also assured the donors that government is committed to undertaking measures aimed at strengthening the public finance management system by implementing the Government Action Plan on cashgate.
“I am sure we should see things moving in the right direction after the IMF meeting in January and Cabs meeting in March,” he said.
Eeh? Tili pa moto basi. Ngati chiri chilango basi mwatitha.
Onse amene anadya Ndalama za Cashgate a wee basi, sitikufuna kukuchititsani manyazi kapena kukumangani ayi. Mungo bwenzi zonse. Amen
How can the confidence of Donors get restored when the planderers are still holding big positions thereby hindering investigations?
Let this cash-gate be a watershed for Malawi economic growth. Unfortunately, things are not as easy as they may seem on the surface. Economic fundamentals are not well known or understood so they are easily undermined in Malawi in favour of well known well understood social justice. I see two streams of lessons from the cash-gate saga .
1. Malawi Internally, cash-gate has revealed the very weak systems of controls and lack of oversight. Those involved must hang their heads in shame. It is obvious corruption is pandemic and must be challenged by every responsible citizen against this quick, law defying mentality driven by greed and short-termism. Sometimes it feels like democracy has been more of a curse than a blessing to these lands. Yes, it got rid of dictatorship but it ushered in lawlessness and “greed is good” mentality. It has also legitimised tribal/regional infighting instead unifying the country for a common cause. Malawians must unite to guarantee economic progress. Party politics cannot be allowed to undermine national economic goals. Nonetheless, choose the long road to democracy any day.
2. Externally, donors also must re-appraise their reaction to the recurring malfunctioning of the govt of Malawi to ensure that the overarching goal of aid, “poverty alleviation”, is not undermined by donor reaction to events on the ground. If our goal around the world is to tackle this ‘pimple of shame’ on humanity that while some countries are rich others like Malawi are languishing in abject poverty, then we must remain vigilante and seek more effective solutions of delivering aid. Why undermine their attempt to achieve economic growth and job creation? Employment and economic growth are the only ways out of poverty known to man (and woman). Investment drives both of these. Aid freeze undermines the very core of what donors came there to solve – poverty. How?
a) Aid freeze cut government spending, discourages investor confidence in the country, reduces consumption, and causes reverse multiplier effect. By withholding aid, donors have effectively undermined economic growth of Malawi in GDP terms – being the sums of government spending, investment/capital formation and consumption (plus external balance). Start-ups and small companies that rely on government contracts have laid off employees. The overall impact is serious economic decline and shrinking of employment sending aspirants back into abject poverty, especially young people.
b) An even more serious case, unbeknown to many people because it is a monetary economic issue, is the impact on the monetary system where aid freeze undermines the local currency and exacerbates hyperinflation through currency depreciation. In the extreme cases of the IMF cutting off the country like last year then the economy comes to a complete standstill, wiping out any little wealth that might have been gained over the years.
It is against this background that aid freeze must be regarded as punishment for the poor country. These are serious side effects or unintended collateral consequences. Four times now this “aid freeze” option has been exercised in Malawi; under MCP, UDF, DPP and now PP govts. Each time it was done for “the right reasons” but with devastating side effects and consequences on the economy. It is 100% likely that one of these four parties will regain power after the next election in which case “aid freeze” is guaranteed to happen again!! Last year aid freeze resulted in 26% Malawi GDP loss from $5.7bn to $4.2. That is $1.5bn or K630bn wiped out of the national wealth of Malawi through aid freeze. According to the MGDS II plan Malawi GDP is supposed to grow to $7.4bn by 2013 but aid freeze has dwarfed that to a mere $4.5bn. Thousands of Malawians have lost their jobs as a result of company closures due to economic hardships that aid freeze instigated. Even more are the deaths tolls that followed due to lack of medicine in hospitals ranging from old to the unborn including the president. What kind of aid management causes such ruthless devastation? The merit of aid freeze is further put in question when the US leaves $350m millennium challenge fund intact while others freeze theirs. CABS arrangement makes triggering of aid freeze too easy, so please “dismantle it”. It has served its purpose but hindsight being 2020 vision, CABS was a mistake that perpetuates neo-colonialism! Devise other ways to deal with govt malfunctioning that do not punish the poor in this way, with aid freeze. It is no good justification that ‘some aid is still trickling down‘ but please consider points a) and b) above. Otherwise aid is a poisonous chalice that promotes more poverty than it claims to solve as per above evidence! This “aid malpractice” must be legislated against at the UN and the international aid transparency body must add it to its aid monitoring matrices.
Why waste so much tears crying over other people’s money when all what has to be done is to simply stop the looting at the Capital Hill?
Joyce Banda is part and parcel of cash-gate. That is where lies the problem. If it was a mere minister like Ken Lipenga it could not have been a big problem but here we are talking about the whole president in it and hiding some big fish and helping others get money for bail.
My mother Malawi is breeding profusely, but the head of state and government seems not caring. To her, the situation is normal & as usual hence her frequent travelling!