Creaming away nation statehood


It is widely believed that “dysfunctional” state bureaucracies constitute the biggest impediment to development. Recent revelations in Malawi have uncovered mass misappropriation of public resources meant for development work.

The embezzlement of amounts in millions of dollars starting in 2009 by the country's civil servants and political party functionaries has laid bare dysfunctional fiscal management systems and corrupt practices in the Malawi Civil Services leading to the shooting of governments' Director of Budget and the arrest of 68 individuals, including owners of business companies that government paid for services and goods that were either never supplied or were fraudulently procured.

A forensic audit report conducted by a United Kingdom-based firm, the Baker Tilly International, which gives details of the looting and plundering of more than US$250 million public resources between April and September 2013 has been presented to the national assembly for scrutiny.

The report was originally set for publication on February 14, but Malawi's National Audit Office announced recently that it wanted to delay release until March 18 so the document would conform to international standards.

However, the decision to turn the report immediately has come after angry reactions from Malawians who had been pushing for release of the document before the May elections. 

The southern African country's civil society organisations have also been agitating for unspecified action against the government should it fail to release the report before parliament is dissolved on March 21 in readiness for elections in May.

The report exposes lapses in public financial management, corruption and theft of State resources by public servants, politicians and unscrupulous business people. Malawian taxpayers' contribute 60 percent to the national budget while donor agencies and partners chip in with 40 percent into the national purse.

In his study, findings titled Civil Servants in Malawi: Mundane Acts of Appropriation and Resistance in the Shadow of Good Governance, Professor Gerhard Anders of the Institute of Social Anthropology at University of Zurich notes that “excessive red-tape, opaque procedures and corrupt civil servants are perceived to delay and reroute badly needed aid”.

The professor cites a World Bank report that blamed “bad governance”, which includes a bloated bureaucracy, patriarchy and corruption, for the elusiveness of economic growth in sub-Saharan Africa

Drawing on anthropological evidence gathered, Prof Anders observes that political liberties enjoyed in the southern African nation after the attainment of multiparty politics 20 years ago reflect the widespread disillusionment and the dire economic situation in the country.

He says that since market liberalisation in 1994, the economy has plummeted and many people are facing social decline or even abject poverty.

“I could tell the familiar story of failure of policy reforms in Africa due to bad planning and the prevalence of particularistic interests,” he says adding, “on the other hand, one could challenge this assessment and conclude that the implementation of the civil service reform programme had not resulted in the improvement of the performance of the civil service.”

The study shows that implementation of the civil service reform in Malawi was shaped by the internal dynamics of a deeply fragmented civil service.

“As a consequence of civil service reform the fault lines within the civil service were deepened, resulting in a more fragmented civil service,” he notes.

Malawian civil servants responded in a casual way to the dramatic political and economic changes the country experienced in the 1990s.

Prof Anders says workers’ salaries have been eroded for years under the pressure of the high inflation rate and most civil servants could not depend exclusively on their salaries. 

He observes that the civil servants responded enthusiastically to the emergence of workshops and field trips, which had become their indispensable sources of income.

“Allowances and lucrative field trips were unevenly distributed in the civil service,” he says in the study adding that the senior civil servants, managers and professional cadres were in a better position to attend workshops than were the rank and file.

“Many senior civil servants earned many times their monthly salary through allowances,” says Prof Anders observing that the junior civil servants complained about bosses who attended workshops and claimed generous allowances while they, the “juniors”, had to “hunt” for allowances.

“Allowances were often linked to corruption. It was common to organise ‘ghost workshops’, workshops that never actually took place, and distribute the profit among the senior staff and the accountants of a department,” he points out explaining that it become common practice to declare costs for field trips that never took place.

“The dependence on allowances exacerbated the dependence of subordinates on the goodwill of their superiors,” he says. 

Whereas a civil servant was entitled to a salary he or she was only eligible for a workshop.

The professor says workers in Malawi's civil service, which constitutes the largest employer in the country considered a job in the civil service as a secure life-long position that entitled its holder to a regular – albeit small – salary and a whole range of benefits including paid sick leave and terminal benefits upon retirement.

He notes that superior officers in the ministries provide clients and kin with government jobs and because there was no effective control from the ministerial top or controlling departments, the numbers of staff grew unchecked.

The assassination of the budget director, Paul Mpwiyo, last September opened a can of worms with investigations revealing that a treasury sanctioned audit report of the central payment system through a new computerized financial management system the Integrated Financial Management Information System (IFMIS by former president the late Bingu wa Mutharika led to the bleeding of over US$3.150m between 2006 and 2012. A report by the media found out that government officials and political leaders then were reluctant to implement the recommendations raised in the audit.

Through the financial abuse, civil servants, politicians and private sector players are reported to have accumulated vast wealth in money, housing property and vehicles.

A report by the country's graft busting body, the Anti-Corruption Bureau (ACB) in 2008 revealed that 35 percent of Malawi's revenue (about 10 per cent of the GDP) was lost through waste, bribery fraud and corruption.

Another report by the Auditor Generals' office showed that financial irregularities in Malawi included failure to account for cash and fees, failure to recover loans and advances, over invoicing of supplies, payments without supporting documents, unauthorised payments, payments for undelivered goods or incomplete work and dubious procurements such as payments to ghost workers.

In addition, there exists widespread low-level corruption in Malawi such as bribes and graft paid to influence public officers to work behind established rules and regulations. Low government salaries, poverty, weak institutional checks and balances, lack of ethical leadership and the prevailing culture of regionalism, tribalism and patronage.

President Joyce Banda, Malawi's first woman president under whose watch the irregularities at Capital Hill, the seat of government where the mass pilfering of government money has reared its ugly face, has ordered an number of governance reforms.

The reforms come in the wake of warnings by the International Monetary Fund (IMF) that the poor southern African state was to wait until December to get US$20m under the Extended Credit Facility (ECF). 

The European Union (EU) too warned that it was withholding an aid payment of 29m euros until proper measures were taken to address the country's largest financial scandal.

Meanwhile, the Forum for National Development, a grouping of civil organisations in Malawi has called on the former ruling party Democratic Progressive Party’s (DPP) presidential aspirant in the 2014 tripartite elections Professor Peter Mutharika to surrender houses he acquired at an undervalued price during the reign of his late brother Bingu wa Mutharika who is also at the centre of investigations on how he amassed US$21m during his presidency.

Professor Anders says that good governance entails setting up of policy-measures intended to transform “dysfunctional” public institutions into efficient and transparent service-providers that will be accountable to the public and subject to the rule of law.

One of the measures that the Banda administration took was to put through Parliament the Assets Declaration Bill that proposes stiffer provisions to the law that governs declaration by public officers their assets, liabilities and business interests. The proposal for the enactment of the law comes on the heels of an invitation of British forensic asset recovery experts by the Malawi government to help it trace both local and international properties and interests of public servants and the private sector alleged to be involved in the looting of public coffers.

Last year the British development arm, DFID, launched its anti-corruption strategy for Malawi aimed at setting the highest standards in the manner that its aid is spent as well as to reduce the incidences of corruption.

The strategy follows an Independent Commission on Aid Impact (ICAI) review of November 2011 where the aid agency found out the need to raise DFID’s awareness of fraud risks in order to safeguard UK taxpayers' money.

The strategy also sets out to support efforts to reduce corruption and its impact in Malawi, a country which in December 2012 the Transparency International's Corruption Perception Index gave a score of 3.7 out of 10 making the southern African nation the 12th least corrupt country in sub-Saharan Africa and placing it ahead of its regional neighbours despite the country remaining in the 43rd percentile in the World Bank's Control of Corruption Index in 2011.

DFID Malawi's budget for 2012/13 to 2014/15 is currently set at £307.5 million. DFID Malawi uses a number of different channels to deliver its programmes and achieve results which include supporting the Malawi government with 45 percent of DFID's projected portfolio expenditure in Malawi and is focused on support to the delivery of basic services such as health and education, the distribution of farm inputs such as seeds and fertiliser, and also to assist the operations of key institutions such as the Anti-Corruption Bureau and the Judiciary.

Twenty-seven percent of DFID Malawi's support goes to local and international non-governmental organisations (NGOs) while 18 percent is channelled through multilateral organisations such as funding provided to a United Nations Development Programme (UNDP) Trust Fund and a further nine percent is for commercial service providers.

In its strategy paper DFID will help Malawi strengthen the Public Financial Management systems in Malawi both at the centre and in ministries that are crucial to delivering services that UK aid supports.

Over the next three years, DFID will support Malawi in tackling corruption through increased support for nationally-owned Anti-Corruption efforts, backing government, civil society, media and private sector initiatives to combat corruption and ensure accountability in the use of public resources, reads part of the strategy paper adding that the agency will help facilitate greater political dialogue with the Malawian government on corruption issues, and agreement of robust targets on tackling corruption as a condition for UK aid while assisting to identify any corruption and arrest those responsible.

The British aid department will also help “strengthen national public financial management capacity, including in particular the capacity of Malawi's National Audit Office to scrutinise government expenditure”.

March 2014
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