Examination of Witnesses (Question Numbers 120-139)


30 NOVEMBER 2009

  Q120  Chairman: It alarmed me, Dr Shafik, that when Mr Davidson asked you to list examples of waste you could only give one example which we have already read about in the Report. I would have thought when we are talking about what has been historically one of the worst-run countries in the world you could have listed a whole series of examples. Are you on top of this?

  Dr Shafik: We have already talked about the agricultural inputs subsidy.

  Q121  Chairman: We talked about fertiliser and we have given you that and I am going to ask about this cancer thing in a moment, but I would expect you to have been able to give a bit more of a list.

  Dr Shafik: This is a country which does not have vast resources so it is not like one can give a huge long list of all the ways that money is wasted. We have looked at things like civil service reform and found some evidence of problems with payrolls in some government departments and we are working with them on that.

  Q122  Chairman: You had better put your thinking cap on and write us a note.[2] Let us look at this cancer thing that Geraldine Smith asked about. In 2004, to reiterate, the Malawi government spent US$1.2 million on treatment abroad for 15 patients, equivalent to the current budget of a full health district or some US$79,000 per case. Were any of these people related to any members of the Malawian elite?

  Dr Shafik: As I said, we cannot identify them. We do not know the names of the individuals. We checked what income quintile they came from to see whether they tended to be from richer families or not and there was no evidence of bias.

  Q123  Chairman: All right. Education—I think this is always a theme that Mr Davidson is interested in. Just as a matter of interest, it is not in the Report but I am curious to know, is this rather ridiculous school which Hastings Banda set up in Malawi, which he modelled on an English public school where he was devoting a huge proportion of the national budget to one school for the elite, still going?

  Dr Shafik: Yes.

  Q124  Chairman: So what are you saying about that?

  Ms Hines: That is the Kamuzu Academy which is to all intents and purposes a private school which is still used by the elite and that is not something that we as DFID are funding. As I say, we are very much focused on the government system.

  Q125  Chairman: How much of Malawian government expenditure goes on that school; any?

  Ms Hines: I do not have a figure to hand but I would be very happy to provide one.[3]

  Q126  Chairman: I would suggest to you that quite a lot goes on it. Tell me—you must know about this—you are working there. This is a big issue.

  Dr Shafik: It is not something we fund so it is not something that we would devote lots of resources to finding out.

  Q127  Chairman: But you do fund education and if you are funding a government which is wasting a significant proportion of its tiny educational resources on one public school for the elite, I would like to know about it. I would like you to tell me now rather than just promising me a note. You are living there, you must know what is going on; tell us.

  Ms Hines: As I say, it is not information I have to hand. I will be happy to provide it. I can tell you that when we do regular budget scrutiny, which we do at least every six months as part of the budget support reviews, it is not a significant enough item to appear in the headline budget, but I would be very happy to look at it.[4]

  Q128  Mr Carswell: I have one follow-up question, Ms Hines. You talked about a government decision to over-procure fertiliser. Those are the words you used. It was a pretty large-scale over-procurement. Did anyone in government benefit? Was there an ulterior motive? Was anyone connected in any way to government benefiting from it in any way?

  Ms Hines: What we did last year is the same as we are doing this year: we funded civil society to look into the monitoring of the programme and they went to a selection of villages across the country. They looked at the sum total of the fertiliser that went out through last year's programme. As I say, the bulk of it that was over-procured was held back for this year's programme. When they looked at last year's programme, despite it being election year, they found that it was no more politicised than in previous years.

  Q129  Mr Carswell: So no-one in government was basically benefiting from this vast misallocation of resources?

  Ms Hines: I fail to see how they would benefit from it because the fertiliser that was bought goes out to people in the villages through this slightly complicated process I have explained which is designed to ensure it gets to the right people.

  Q130  Mr Carswell: Excuse my ignorance but who is the fertiliser bought off?

  Dr Shafik: It is bought on the international market.

  Q131  Mr Carswell: And it is supplied via middle men?

  Ms Hines: It is done through an open tender process to private sector fertiliser companies.

  Q132  Mr Carswell: And no-one in government had any connection with any of those companies?

  Ms Hines: Malawi is a small country so to that extent there are links between private sector entities and the Malawi government in the same way as there are between a lot of people within Malawi.

  Q133  Mr Carswell: So there could be scope for ulterior motives and corruption?

  Dr Shafik: We have no evidence of that and we need evidence before we can make these sorts of accusations.

  Mr Carswell: Thank you.

  Q134  Mr Curry: Tobacco and maize are both hugely impoverishing crops for the ground and they depend on fertiliser. The word "malawi" in Malawian means "lake". What evidence is there of nitrogen run-off into the lake? Is this a possible danger in the future? What can one do so that Malawi does not become a Bassin D'Arachon where maize is grown year upon year upon year and begins to destroy the environment?

  Dr Shafik: It is part of the conversation we have started to have with the Ministry of Agriculture to look at diversifying the crops that are grown in Malawi because, as you say, part of the reason that fertiliser is so essential is because the soils have been depleted. Gwen, do you want to say something about the issue of run-off?

  Ms Hines: Just to add first of all in terms of the crops, whilst this subsidy is largely about maize it does also support other legumes, so various other kinds of crops, and people are being encouraged increasingly to grow them together.

  Q135  Mr Curry: Legumes put nitrogen back into the soil?

  Ms Hines: Absolutely so that helps from that perspective.

  Q136  Mr Curry: Beans are very good!

  Dr Shafik: Maybe for many reasons.

  Ms Hines: The issue of run-off is not something I have looked at specifically in terms of that, but we are working with other donors increasingly on environmental issues, partly as part of our scale-up on climate change. We are looking generally for Malawi as a whole at what are the most serious environmental issues, and this could well be part of it.

  Q137  Chairman: A last question from me. You mentioned that you fund the Malawian NAO. Do you have any assurance over the 20% of expenditure not subject to annual audit by the Malawian NAO?

  Dr Shafik: No, but we have the wider measures of public expenditure.

  Q138  Chairman: How wide are these wider measures?

  Dr Shafik: They cover the entire system. Sam, do you want to explain how PEFA works and what the 21 indicators are? You do not need to list all 21.

  Mr Sharpe: I will not list all 28 PEFA indicators but they cover the setting of the budget, the accounting for the budget and the external scrutiny and the auditing for the budget, so we do have that assurance about the overall improvement in the system.

  Q139  Chairman: Improvement overall. This is incredible. 20% of expenditure is not subject to annual audit. This is a country to which we have provided £312 million of aid.

  Dr Shafik: These overall measures cover 100% of the budget and the issue is the NAO's review of public expenditure covers 80% but there are these other measures—does the Malawi government budget properly, do actuals match budgeted amounts.

2   Ev 18-19 Back

3   Ev 19 Back

4   Ev 19 Back

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