Department for International Development: Aid to Malawi - Public Accounts Committee Contents

Conclusions and recommendations

1.  In a heavily aid-dependent economy, sustainability of progress is a key issue. The Department has, for example, funded the Government of Malawi's subsidy of fertiliser and seeds in order to address hunger. The Department accepts that this is not a long-term solution to food sufficiency, but neither it nor the Government of Malawi has an evident strategy for an exit from subsidies. The Department should:

  • Set out the criteria which would trigger withdrawal of its contribution to the subsidy, and
  • Work with the Government of Malawi to define a clear exit strategy through which farmers no longer depend on subsidies, releasing resources to assist structural change in agriculture.

2.  Much of the Department's programme is routed through the Government of Malawi's systems, which makes the quality of Malawian governance a key issue. Despite a relatively high level of Department funding, key elements of governance are not yet strong enough. State Audit coverage is increasing, but to only 80% of public spending and four of 28 aspects of public financial management are still assessed to be at the lowest level. The Department should, in concert with other donors, assess and close these capacity gaps as a priority, if it is to continue support through Government of Malawi systems.

3.  The Department achieved only 60% of the targets it set itself in Malawi, and acknowledges that these targets were not fit for purpose. The Department plans to revise its targets to identify relevant outcomes and outputs over which it has significance influence, and to define minimum levels of performance that represent value for money, along with the potential for better performance. The Department should make sure that these new targets set the required level of performance at a level that would represent real improvement and would be robust to external challenge. It should hold its Malawi operation to account for its performance against these targets.

4.  The Department has invested in improved data in Malawi, but data on the results of many of the programmes it funds remains weak or of questionable reliability. The Department needs to work with the Government of Malawi to get routine management information on service delivery—much of which exists at local levels, but is not collated.

5.  The Department provided only isolated examples of measures relating to the efficiency of the government services it funds. Such measures are largely absent from its monitoring frameworks. When challenged to report on the performance of its programmes it reverted too often to general statements about the amounts of money it had spent and unsurprising assurances that these disbursements had had some effect. The Department should reflect efficiency indicators in its management and accountability processes of its programme in Malawi, and the indicators should cover the bulk of its programme spend.

6.  There are several instances in the health and agriculture sectors where the Department has tolerated, and indeed supported Malawian policies or practices it does not believe are the most cost-effective. Clearly there are limits to the pressure that the Department can bring to bear on sovereign governments to spend money wisely. But the Department should make full use of the influence gained through its large contributions to Malawi to make sure risks to value for money are addressed. In practice this will require quicker or more robust responses to variance from agreed plans and to emerging results. DFID Malawi should put in place explicit strategies for securing changes needed to secure cost-effective development.

7.  The Government of Malawi procured excess fertiliser despite an agreement with the Department to limit the scale of its agricultural subsidy programme in two successive years. Weak or slow Departmental response in such cases weakens its ability to influence the Government. The Department should put in place contingency plans to deal with any breaches of agreements, and act on them.

8.  Staff cuts in Malawi and throughout the Department constrain the effective management of aid. The Treasury has decreased the Department's administrative budget, as it has for other departments, but unusually also greatly increased its programme budget. It has distanced itself from the staffing consequences, insisting that these decisions are for the Department. The Department needs to raise its game to give assurance of cost-effective aid management, which will require more work at the sharp end, not less.

  • The Department should measure better the added value of its staff on the ground, and assess its staffing resources in view of the scale of the risks and ambition of its objectives.
  • The Treasury should reflect that information in setting running cost limits for the Department so that the result is cost-effective overseas aid.

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Prepared 26 January 2010