For years, donors—especially bilateral development partners—would suspend budgetary support from the Malawi Government based on opinions of the International Monetary Fund (IMF) emanating from the country’s performance under its supported economic programmes—from the Poverty Reduction and Growth Facility to Extended Credit Facilities. The reasons the fund would give for red lights to general budget support would include “economic slippages”, corruption and other governance challenges.
Given that donors constituted at least 40 percent of the national budget, such aid freeze destabilised the country’s fiscal plan, threw the kwacha downhill since foreign aid was the second largest source of foreign currency after tobacco and, therefore, a crucial pillar in terms of balance of payment support.
Capitol Hill would then work hard to get back into good books with the IMF and, therefore, donors who used to congregate under the banner of Common Approach to Budgetary Support (CABS), a powerful group of largely Western donors who exerted massive influence on any administration in Malawi.
But CABS later disbanded and the donor community has never been more confused, even confusing, when it comes to positions on various policy developments in the country.
Even journalists get confused because one moment it is Britain responding to issues on behalf of all donors, the next it is the United States and later it is yet another Western embassy.
The donor community has never been so weak in Malawi. Even the once dreaded IMF is a shadow of its former self as each donor makes decisions based on its own assessment frameworks and not necessarily waiting for greenlight from the fund.
But that is not the subject of today, thus I digress.
The point is that after Cashgate—the blatant thievery that estimates show may have stolen as much as K236 billion in the five years leading to December 2014—most donors killed budgetary support.
Only multilateral institutions such as the World Bank and the African Development Bank (AfDB) would once in a while throw in some crumbs of general budget support, most of which has disappeared lately.
Britain was the first to pull out between 2009 and 2010 after the late president Bingu wa Mutharika pissed the Brits off by kicking out of Malawi their High Commissioner and following Mutharika’s decision to buy himself a presidential jet that his successor, Joyce Banda, eventually sold off to save running costs for a struggling economy.
Of course, under Banda, the money that should have been proceeds from the jet sale miraculously grew wings and flew to mysterious lands.
But other bilateral donors dumped Malawi in 2013 at the climax of Cashgate. That was when we started hearing strange words like off-budget support and donors’ funnelling of money into non-governmental organisations (NGOs), abandoning a government system the development partners described as ‘leaking bucket’.
And so, at least K1 trillion every year found their way from donor capitals into NGOs operating in the country, leaving government to fund its operations mostly with locally generated revenue.
Now donors are up to a rude awakening from their nightmare wrapped in naivety to discover that those who said it is better to stick with the devil you know than the one you don’t, knew what they were talking about after all.
It turns out the NGOs donors trusted so much are no better than Capital Hill. Some observers say they are worse. Even the impact of whatever the NGOs flushed with donor money have been doing wherever they claim to have been with the inflows is nowhere to be seen.
Donors are now bewildered, not knowing what to do or who to deal with anymore. All they could say this week was that they will “continue to monitor” the NGOs as if they were not monitoring them all this time.
How can donors continue trusting NGOs, 90 percent of which do not provide financial reports to the NGO Board as the law dictates? If donors provide these resources in the name of Malawians then is it not right that the NGOs become accountable to the institutions that are funded by Malawians to protect their interests?
So, what happens now?
Donors are confronted by a set of bad news: government—the best machinery for redistributing income and spreading development—is a leaking bucket and full of hardened and heartless thieves. The NGOs donors thought were the alternatives are harbouring thieves too, wearing fake transparency and accountability robes that they discard with contempt once the cameras are gone and journalistic pens stop scribbling.
It is a rock and a hard place that development partners have found themselves in. But when all the chaff is gone, the grain is that the government system remains our best bet despite its faults—and there are many.
This country has systems for checking the Executive, including Parliamentary committees as well as legal and regulatory tools. I know they are still weak, but they can be strengthened. If the government system is broken, let’s all work together to fix it and donors should help the country in doing so.
The problem with NGOs is that they are not a system—they are a bunch of individual predators with special interests, not national priorities that only a central government can champion.
Besides, there is no way donors can claim to support implementation of the Malawi Growth and Development Strategy (MGDS III) when they are propping up parallel forums not aligned to the national blue print to execute programmes in support of broader development goals.
There is need for a serious rethink here.