1 The Department's choices about the
shape of its Malawi programme
1. The Department and other donors in Malawi
have divided responsibilities for different sectors amongst themselves.
The Department took the lead on health and education where it
assessed that it has most to offer, leading to other donors areas,
like energy, in which they have a comparative advantage.[2]
The Department performed well against international criteria used
to measure how effectively donors and partner governments work
together.[3]
2. The Department is conscious that it may spread
its £80 million programme too thin, and it has sought to
focus on Malawians' top priorities. The first was food security
because that matters most to poor households. The second was health.
In both areas, progress has been made. The shortcomings in education
in Malawi are good examples of where the Department would like
to do more but cannot.[4]
3. Challenged on whether the UK has run down
its capacity in agriculture over the years, the Department agreed
that the international donor community has neglected this sector
in recent years because of the strong focus in Millennium Development
Goals on health and education. The food crisis in 2008 was a wake-up
call and the Department is redressing that by putting more resources
into agriculture.[5]
4. Food insecurity is a major longstanding problem
in Malawi which the Department considers must be addressed before
further development, such as agricultural diversification, is
possible.[6] As recently
as 2005-06, five million people needed emergency food aid, towards
which the Department spent £21 million.[7]
Since 2005, the Department has spent £26 million on the Government
of Malawi's agricultural subsidy, aimed at increasing harvests
and reducing hunger. The Department would prefer to support a
more sustainable programme based on market-based approaches, such
as improving small farmers' access to credit to help improve their
productivity, but considers this is not yet viable in Malawi as
plots are small and communally owned so not usable as collateral.
While the subsidy is a second-best option, it has helped Malawi
produce enough food to feed itself. The Department wants Malawi
to move towards a more sustainable approach, and indeed the Government
of Malawi is now taking cash crops like tobacco out of the subsidy
programme. The Department claims a positive economic return from
the subsidy, though to date there has been sufficient data to
establish only its potential return.[8]
5. About a third of the Department's aid to Malawi
is General Budget Support, which is aid provided directly to the
Government's central exchequer and not earmarked for specific
purposes.[9] Most of the
Department's earmarked programmes also use Government systems.[10]
So enhancing the scrutiny and accountability of Government within
Malawi is important.[11]
The Department funds organisations to boost their capacity to
hold the Executive to account. Corporately, the Department has
committed to spending 5% of its programme in Budget Support countries
on improving governance. In Malawi it is spending 11%, supporting
Parliament, the NAO, the Anti-Corruption Bureau, the Electoral
Commission, civil society and the media.[12]
Governance has improved but not as quickly as the Department envisaged.[13]
The extent of missed targets amongst the Department's governance
activities are of particular concern (Figure 1).
6. The Department defended the use of General
Budget Support, when we asked about its relative vulnerability
to fraud and corruption. Before giving Budget Support, the Department
makes a series of risk assessments.[14]
The Department suspended Budget Support in 2004, but since then
most of the worst-rated areas of governance have improved, although
the Department still assesses four of 28 indicators of public
financial management at the lowest D-level on an A-D scale.[15]
The Department believes that Budget Support or aid to governments
is no more liable to fraud than other types of aid.[16]
The Department has supported the Anti-Corruption Bureau in Malawi
with some £0.5 million each year to bolster capacity to detect,
deter and prosecute corruption.[17]
There are risks to its independence and it has suffered from chronic
shortages of professional investigating staff. Two Bureau Directors
have been replaced by Presidential decision since 2006.[18]
The Department cited how the Bureau is prosecuting senior figures,
some but not all from Malawi's previous administration.[19]
7. Malawian civil society is constrained by lack
of data on district level expenditure and results across the country.[20]
We questioned whether the Department was supporting trade unions
and other civil society groups which represent ordinary people.
The Department gave some assurance that it was supporting a range
of different civil society groups.[21]
A Public Accounts Committee exists and the Department is trying
to get them much more involved.[22]
8. The Malawi National Audit Office, like many
other parts of Malawi's government, suffers from capacity constraints.
It has only recently cleared a three-year backlog of audits. [23]
The Department is funding its use of private sector auditors to
clear the backlog of audits of all the district assemblies by
the middle of 2010. The Department cited an increase in the independent
audit coverage of government spending, from 50% to 80%. Whilst
evidence of progress this is not up to the standards of coverage
we expect for UK government spending.[24]
The Department asserted in mitigation that Malawi's total expenditure
per capita is only £80 per person and the UK's is £11,000
per person; a different scale and stage of development.[25]
But in a context of limited administrative capacity and weak systems
there are more risks and the need for scrutiny is therefore higher.
For example, a survey in 2008 found 'leakage' of funds intended
for teachers' salaries ranging between 5% and 28%, necessitating
a change away from disbursement through local officials.[26]
2 Qq 71, 91 and 92 Back
3
Qq 10 and 115 Back
4
Q 71 Back
5
Qq 36-38 Back
6
Qq 43 and 44 Back
7
Q 7 Back
8
Qq 41 and 42; C&AG's Report, paras 6 and 10 Back
9
Q 54 Back
10
C&AG's Report, para 1.4 Back
11
C&AG's Report, para 1.9 Back
12
Q 112 Back
13
Q 2; C&AG's Report, para 11 Back
14
Q 55 Back
15
Q 67 Back
16
Qq 62 and 70 Back
17
Qq 58, 59 and 78 Back
18
C&AG's Report, para 1.10 Back
19
Qq 59 and 67 Back
20
C&AG's Report, para 2.9 Back
21
Q 113 Back
22
Qq 141 and 143 Back
23
C&AG's Report, para 1.11 Back
24
Q 64 Back
25
Qq 137 and 140 Back
26
Ev 18 Back
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