Findings of an ActionAid study in six African countries, including Malawi have faulted International Monetary Fund (IMF) policiesin poor countries, saying they have led to deterioration of public services.
Titled ‘The human cost of public sector cuts in Africa’, the study highlights that developing countries tend to prioritise repayment of foreign debt at the expense of social spending in sectors such as health, education and agriculture.
In general terms, the study found that in 2024, external debt payments as percentage of national revenue was 25.4 percent while spending on health stood at 5.74 percent and public sector wage bill as percent of gross domestic product (GDP) was 4.5 percent, but IMF still called for cuts.
The report also shows that in 2024 alone, Malawi lost $51.3 million (about K89 billion) to illicit financial flows.
Health system crumbling
The cuts have resulted in shortages of equipment and medicines, with high inflation further leading to increases in medicine costs, yet there are increases in numbers of patients.
The report said a decline in real wages due to inflation has had negative impact on the living conditions of healthcare workers and their families, with some reporting reduced food intake and struggling with covering school-related expenses.
It further said that vulnerable communities were thrown into financial despair as mounting medical expenses forced families to delay or avoid treatment, only seeking medical help when conditions became critical.
Reads the report: “Those who do seek treatment often face financial strain, resorting to borrowing money, reducing food intake, or selling essential household items to cover medical expenses.
“To pay for treatment, community members, particularly in Malawi, have reported selling household assets, taking out loans, or reducing spending on essentials like food.”
Education affected too
The study also reports a 40 percent budget cut to education in the last three to five years while enrollment surged due to growing demand for education and is resulting in overcrowded classrooms in public schools.
It said 90 percent of surveyed teachers reported that a decline in wages due to inflation left them struggling to pay their bills while 65 percent reported a decline in working conditions due to overcrowded conditions.
Further reads the report: “This situation has negatively impacted the quality of public education services, with communities reporting significant declines in service quality since 2020, as the shortage of teachers and ballooning class sizes weakens the quality of learning.”
Experts wary, offer solutions
Reacting to the findings, Human Resources for Health chairperson Solomon Chomba feared that the health sector will collapse should donors stop supporting Malawi due to the lapsing of IMF’s Extended Credit Facility (ECF).
He said the Donald Trump executive orders on aid cuts have already cost some healthcare workers jobs while other essential services and medicines were cut off.
“Let us make sure that Malawians contribute towards their health needs. Free healthcare services are not helping. Again introduce a health levy on fuel and motorists because accidents on the roads are costing us more,” suggested Chomba.
Health economist Gowokani Chijere-Chirwa suggested compulsory health surcharge for people coming into the country.
On the education front, Civil Society Education Coalition executive director Benedicto Kondowe said the situation will weaken human capital development, entrench poverty and stall socio-economic development, making it harder for the country to meet its development goals.
“There is need to increase domestic resource mobilisation, prioritising pro-poor spending, and advocating for fairer international financing terms that do not undermine essential public services,” he said.
Link for Education Governance executive director Limbani Nsapato urged government to adopt innovative funding mechanisms including putting in place education levies, promoting diaspora investments and enhancing public private partnerships to get more resources for the budget.
ActionAid Malawi executive director Yandura Chipeta said in the long run the inequality gap between the rich and the poor in the country will widen as free public services are bound to collapse if the situation is not reversed.
She said: “The IMF must abandon its coercive policy. There is also need to increase grants such as the Loss and Damage Fund to developing countries like Malawi to revive its education and healthcare systems.”
There was no immediate comment from the IMF yesterday, but recently, President Lazarus Chakwera claimed that ‘rigid’ conditionalities under the collapsed ECF deal limited the country’s ability to spend on essential services.
