EU aid freeze hits hard transport sector

Minister of Transport and Public Works Mohammad Sidik Mia on Tuesday said the country’s transport sector and the economy as a whole has entered into a difficult period with the freezing of budget support by development partners.

Mia expressed the sentiments in Lilongwe when he opened the Fifth Joint Transport Sector Review aimed at taking stock of development in the sector and progress made in the implementation of agreements made at a similar meeting last December.

“This has an impact on the transport sector as it means we will not be able to receive a second disbursement under the road sector budget support until maybe this year,” he said.

Two weeks ago, Malawi’s major donors sitting under the Common Approach to Budgetary Support (Cabs), comprising Britain, the European Union (EU), Germany, Norway, the World Bank and the African Development Bank, announced the withholding of $150 million (about K60 billion) earlier earmarked for October and December 2013, due to financial mismanagement at Capital Hill.

Earlier, the International Monetary Fund (IMF) announced the suspension of $20 million under its Extended Credit Facility (ECF) over the same concern.

Donors were meant to contribute 41 percent of resources to the 2013/14 national budget.

“This [the freezing of budget support] will further compound the challenges that are faced by road transport sector and our ability to meet the targets set out in the Transport Sector Performance Monitoring Indicator Framework,” said Mia.

Mia later informed the conference that EU is planning to move out of the transport sector as one of its focus areas in its National Indicative Programme for the 11th European Development Fund (EDF).

He said such a situation will likely lead to a huge loss to Malawi.

In a separate interview on the sidelines of the meeting, EU Ambassador Alexander Baum insisted that EU is concerned about the current financial mismanagement, hence the withholding of resources which it earlier pledged.

The ambassador said there is need for Malawi to put a lot of effort in the management of public resources and hinted that if progress is made, the country will see the resumption of its funds.

Baum, however, lamented that over the last 35 years, EU has invested heavily in transport infrastructure in Africa, but said most partner countries are not maintaining the infrastructure ‘and this is very expensive.