The Development Situation in Malawi - International Development Committee Contents

2  DFID Malawi during the Mutharika era

5. Bingu wa Mutharika became President of Malawi in 2004, at the head of a minority administration. His first term in office, between 2004 and 2009, included some notable achievements. Poverty fell; social indicators improved; economic growth was strong; and the macro-economic environment was stable.[4] In 2009, following these successes, President Mutharika's Democratic Progressive Party secured a parliamentary majority for the first time.[5] Only then did Malawi begin its descent into crisis.

Economic crisis of 2009-12

6. Following his re-election in 2009, President Mutharika opted for a fixed exchange rate, with the Malawian kwacha pegged to the US dollar. The kwacha consequently became dramatically overvalued, with devastating effects for the country as a whole: foreign exchange shortages made it near-impossible to meet the country's import needs.[6] By 2011, for example, fuel queues were a daily occurrence in Malawi.[7]

Political crisis of 2009-12

7. After assuming majority control in 2009, the second Mutharika administration became increasingly authoritarian and autocratic. A number of new laws were passed, including measures granting the Minister of Information the power to ban any publication of his choosing in the name of 'public interest', and giving police the right to search properties without the need to obtain a warrant.[8] Many of these repressive laws were subsequently sent back to the Law Commission for review, though they were to remain active whilst the review process took place.[9] It was announced that local elections, which had been continually delayed since 2005, would not now be held until 2014—the official reason being allegations of fraud concerning the Electoral Commission.[10] In February 2011, a public policy lecturer was reprimanded by police for giving a lecture on the nascent Arab Spring: it was suggested that he was seeking to incite revolution.[11] Subsequently, on 20 July 2011, civil society activists held demonstrations in major cities across Malawi. These demonstrations turned violent, with 20 protestors being shot dead by police, and hundreds arrested.[12]

8. In April 2011, Fergus Cochrane-Dyet, the British High Commissioner to Malawi, described President Mutharika as "increasingly authoritarian and autocratic" in a diplomatic cable which was subsequently leaked. As a consequence he was expelled from Malawi; the Malawian representative was expelled from London in response.[13] (During our visit, however, it became clear that the Malawian Government had come to regret this move: we were told by Peter Mutharika, the then Foreign Minister and brother of President Mutharika, that the appointment of a replacement would have been welcomed.)

9. During the same period, political tensions were heightened by the uncertainty around who was to succeed Mutharika as the Presidential candidate for his Democratic Progressive Party. (President Mutharika's second term was due to end in 2014, whereupon he would be constitutionally required to stand down.) The President's preference was for his brother to be the candidate. His Vice-President, Joyce Banda, was expelled from the DPP in December 2010, reportedly because she intended to put herself forward in 2014:[14] she subsequently founded her own People's Party (PP).[15] However, Banda remained Vice-President, since President Mutharika was constitutionally unable to remove her from this post.[16]

The UK's response to the crises

10. Following the expulsion of the British High Commissioner from Malawi, HMG opted not to appoint a replacement High Commissioner to Malawi while the Mutharika regime remained in office. (The Government finally announced its intention to re-appoint a High Commissioner in April 2012, following the change of Government in Malawi.[17]) During our visit, a number of civil society representatives stressed to us that any re-appointment—at that stage—might have been misconstrued as an indication of UK support for President Mutharika.

11. We believe the UK was right to delay the re-appointment of a High Commissioner while the relationship with Malawi remained strained. We feel strongly that any re-appointment at that stage could have been misconstrued.

12. General budget support is the provision of funds directly to the Exchequer of the recipient country. The funds can be used by whichever ministry the recipient government wishes. Sector budget support, by contrast, is the provision of funds directly to a specific Ministry in the recipient country.

13. DFID suspended general budget support to Malawi on 11 July 2011.[18] Other general budget support donors (European Union, World Bank, African Development Bank, Government of Germany, Government of Norway) took similar action.[19] However, DFID continued to provide sector budget support throughout the period of crisis. The Secretary of State for International Development, Rt Hon Andrew Mitchell MP, told us that:

...where we were happy with sectoral budget support and could see the way in which the money was being effectively spent, delivering services on the ground, we did continue with it.[20]

We feel this was a wise decision: unlike general budget support, sector budget support remains effective even when the motives of the recipient government are questionable, since the decision as to which sectors to support remains with the donor.

14. There was a widespread misconception—both in the media and in official submissions to this Committee[21]—that DFID's entire programme in Malawi had been suspended. In practice, the funds which DFID had intended to provide via general budget support were spent in other ways (such as by funding NGOs). DFID's total spend in Malawi remained as originally planned—it was simply the method of delivery which changed.[22]

15. DFID was right to suspend General Budget Support in July 2011. Given the political and economic crises in Malawi at that time, general budget support was not a sensible option. By stopping general budget support yet maintaining overall aid levels, DFID was able both to send a signal of its disapproval to the Malawian Government, and—simultaneously—to continue supporting poor people in Malawi.

4   Ev w1 Back

5   Ev w36; Carl W. Dundas, The Lag of 21st Century Democratic Elections: In the African Union Member States (Bloomington, IN, 2011), p 327 Back

6   Malawi's political settlement in crisis, 2011, Africa power and politics background paper (Diana Cammack), November 2011, Back

7   "Government to suspend general budget support to Malawi", DFID press release, 14 July 2011 Back

8   Ev w36 Back

9   Ev 26 Back

10   Malawi's political settlement in crisis, 2011, Africa power and politics background paper (Diana Cammack), November 2011, Back

11   Malawi's political settlement in crisis, 2011, Africa power and politics background paper (Diana Cammack), November 2011,; DFID, written evidence; Christian Aid, written evidence Back

12   Ev w35; Ev w69; Malawi's political settlement in crisis, 2011, Africa power and politics background paper (Diana Cammack), November 2011, Back

13   Ev w36; "Malawi expels British ambassador", The Guardian, 28 April 2011 Back

14   Ev w35-36 Back

15   Malawi's political settlement in crisis, 2011, Africa power and politics background paper (Diana Cammack), November 2011, Back

16   "Obituary: Bingu wa Mutharika, Malawi's president", BBC News Online, 7 April 2012, Back

17   Ev 28 Back

18   Ev 27 Back

19   "Government to suspend general budget support to Malawi", DFID press release, 14 July 2011 Back

20   Q 45 Back

21   Ev w62; "UK cuts aid to Malawi government", BBC News Online, 14 July 2012,; "Britain suspends aid to Malawi", Guardian website, 14 July 2011,  Back

22   Ev 27 Back

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Prepared 24 July 2012