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

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

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 26 January 2010