‘Cashgate’ and the Malawi poll

 

The “Cashgate” scandal happened because loopholes in the Malawi government’s electronic payment system, the Integrated Financial Management Information System (IFMIS), enabled civil servants to steal money with ease. A forensic audit report by a British firm revealed that £19 million was stolen in six months. About 70 people have so far been arrested and charged in connection with the looting.

The charges against them are mixed. Some people are suspected of getting payments without rendering services, while others were found with unexplained wealth in the form of real estate, huge bank balances, and hard cash in car boots. In reaction to the looting, Malawi’s key donors have frozen their budgetary support, which amounts to 40 percent of the country’s annual budget.

 Donors have demanded that sufficient steps be taken to sort out the issue as a condition for releasing the frozen aid. 

The forensic audit report has so far done little to soften donors’ demand for greater transparency and accountability.

The last time Malawi suffered aid withdrawal on such a scale was in 2010, in the twilight of the late President Bingu wa Mutharika’s administration.

Mutharika, who was succeeded by Banda (following his death on April 5, 2012), fell out with the IMF following disagreements on the management of the economy. 

The main issue was Mutharika’s refusal to devalue the local currency, the kwacha, as the IMF had proposed.

Other key donors, including Britain, the country’s largest donor, were more worried about Mutharika’s style of governance. Britain withdrew its aid because it claimed that not only did Mutharika have a poor human rights record, but he was also becoming increasingly autocratic. 

In return, Mutharika expelled the British High Commissioner to Malawi, Fergus Cochrane-Dyet, following a leaked cable the high commissioner had sent to London accusing Mutharika of “becoming ever more autocratic and intolerant of criticism”.

The consequences of that aid freeze on the Malawian economy were dire. Petrol pumps ran dry, foreign currency became scarce, and the electricity supply became erratic. 

 Even locally produced commodities, such as sugar, became scarce. By the time Mutharika died, Malawi’s economy was in freefall.

Anticipation of the same this time around, which is very unlikely, has contributed to the conclusion that “Cashgate” will affect President Banda’s chances at the May elections.

A recent survey by the Catholic Commission for Justice and Peace (CCJP), a local faith-based NGO, has established that “Cashgate” is indeed among other factors that will determine the outcome of the elections, but it is far from being the main issue.

Other key factors include food security, economic stabilisation and fertiliser subsidies. 

The local newspaper, Weekend Nation, claims that people in eight districts covered by the CCJP survey are indeed angry at the scale of the looting of state resources. 

But Malawi has 28 districts, which makes the eight angry ones insignificant.

It is also important to take into account that the survey was done a month after the “Cashgate” scandal broke out.

 It is likely that by the time Election Day arrives on May 20, six months after the survey was conducted, people’s attitudes towards “Cashgate” would have changed.

Boniface Dulani, a political analyst at the University of Malawi’s Chancellor College, was reported by the same edition of the Weekend Nation as saying that it was unlikely that “Cashgate” would affect Banda’s election chances. 

“Thus, as much as I think ‘Cashgate’ is going to impact on the elections, I doubt it is going to have such a decisive effect on Joyce Banda’s chances,” Dulani said.

He added that the May 20 elections were still too close to call, and given the “weak” opposition candidates, “Joyce Banda, in my estimation, is still marginally ahead”.

“Cashgate” is a scandal that could easily bring down governments elsewhere, but not in Malawi, at least not on the current evidence. Malawians acknowledge and abhor “Cashgate”, but the scandal has not only united the country against Banda and her government. 

It has only polarised the already politically-divided nation further. Somehow, President Banda’s supporters see her as a victim and not a culprit in the scandal. Her opponents, on the other hand, want her to take responsibility for the looting. 

The £19 million was stolen on her watch, the opponents say, and among the people arrested are senior members of her cabinet and the ruling People’s Party.

Banda’s government has consistently argued that “Cashgate” is a “breakthrough” in the president’s fight against corruption. But one of the suspects in the scandal, Pika Manondo, says the full story about “Cashgate” will not be known so long as Banda is in power. It is a statement with many implications.

He has reason though. Given the history of high-profile cases in Malawi, there is the fear that nothing would come out of the “Cashgate” cases currently in court, or that the cases would ever be concluded.

In the past, similar cases have stalled in the Malawi courts, the most prominent being a corruption case involving former President Bakili Muluzi, who is accused of depositing government money into his personal account while in power.  

It is about eight years since Muluzi was initially arrested for that corruption case.

Although the current huge interest in “Cashgate” is justified, the emphasis on Banda’s chances at the polls is somewhat misplaced. 

The president has had a lot of goodwill at home and abroad since taking office on April 7, 2012. This is because in the last 22 months she has positioned herself as a “reformer” happy to risk her political career for the sake of Malawians. Last October, at an EU gathering in Brussels, she said: “I know the devaluation of the kwacha [Malawi’s local currency] by 40 percent and the economic reforms have a serious impact on the people. I have taken these steps [knowing that they] could cost me my political career.”

Here she was emphasising her courage in devaluing the local currency, something her predecessor flatly refused to do for fear of a backlash, because the devaluation would have inevitably pushed commodity prices high.

Banda has campaigned hard for the forthcoming elections. She is happy with international headlines portraying her as a likely victim of her necessary reforms. 

But though she may have a genuine passion to reform Malawi, this will not be at the expense of her electoral triumph. 

This is why she hired a top London-based public relations firm, Bell Pottinger, after the “Cashgate” revelations rocked her government.

At the end of the day, the president and all within Malawi’s political establishment will never go to bed hungry as a result of “Cashgate” – ordinary Malawians will. It is they who suffer when there is a lack of basic medical supplies in hospitals.

It is children from poor backgrounds that struggle in schools with insufficient learning materials. “Cashgate” is about the livelihoods of ordinary Malawians, not Joyce Banda’s political career. – New African

April 2014
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