The United Nations (UN), through its Development Assistance Framework (DAF), plans to pump in about K733 billion ($1.1 billion) in Malawi in the next five years, but has cautioned on aid dependence.
DAF, which runs from 2019 to 2023, is the joint publication of the Government of Malawi and the UN in Malawi, outlining its strategic contribution to the country’s national development priorities and actions.
DAF shows that in the next five years, its work will revolve around three strategic pillars—peace, inclusion and effective institutions; population management and inclusive human development as well as inclusive and resilient growth.
In the DAF, UN has since cautioned the country’s dependence on external development assistance, which it says can affect fiscal policy implementation and development.
Reads the DAF in part: “The changes in aid flows can affect implementation of fiscal policy and delivery of development. The rise of populism in Western countries is creating uncertainty regarding the future of development aid to countries such as Malawi.
“For example, the US, the world’s biggest bilateral aid donor, is considering refocusing its aid to internal programmes rather than overseas aid. A growing reliance on China for trade and investment could make Malawi vulnerable to China’s economy slowing down or if geopolitical factors constrained its economy.”
DAF says strengthening oversight and financial management systems remains work in progress.
In November last year, European Union (EU) Ambassador Sandra Paesen urged Malawi to move towards trade for development and not just consumption to be on track to achieve Sustainable Development Goals (SDGs).
Her observation came at a time Minister for Finance, Economic Planning and Development Goodall Gondwe was expecting to receive budgetary aid from the EU and World Bank to prop up the K1.4 trillion 2018/19 National Budget which has a deficit of K243 billion out of which K67 billion is projected to be financed from foreign resources and K176 billion from domestic resources.
On his part, Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe argued that it is not easy for Malawi to graduate from donor dependence, citing missing links on technological advancement as one of the challenges that can derail Malawi.
He said: “Graduation from aid dependency does not just happen as an event. As Malawi, we need to work on it continually. This, therefore, means developing appropriate technologies and access to finance should be some of the steps taken towards this.
“Aid which helps us carry out social services that we should have been able to do ourselves if we had developed as a country should shame us into action.”
Catholic University of Malawi-based economist Gilbert Kachamba said Malawi does not have capacity to produce enough to replace aid.