IMF hails Malawi on aid usage
By DANIEL NYIRENDA - 24 August 2007 - 08:35:05

An International Monetary Fund (IMF) senior official has hailed Malawi for being a good user of foreign aid inflows.

Benedicte Christensen, Deputy Director of the African Department, said Malawi has plans for using additional donor inflows.

Briefing members of international NGOs early this month through a conference call, he singled out the Sector Wide Approach (SWAp), a health sector donor supported programme aimed at ensuring that the health sector has enough resources to avoid brain drain.

He said the sectoral programme was particularly developed in Malawi such that there are advance plans for how money could be spent.

Christensen said the country’s PRGF-supported programme has a wage bill ceiling that is a performance criterion.

IMF employs wage bill ceilings in a number of Fund-supported programmes, especially when wage dynamics threaten macroeconomic stability and when a country's budgetary and other control systems are weak.

According to Christensen, an adjuster applies to that wage bill ceiling and would allow for additional expenditure under the SWAp programme, in case additional donor funds emerge during the programme period.

“In other countries cases, this is not the case. As you probably know, the health sector is one of the weaker ones in many of the African countries. It is weak on administrative capacity, on the ability for planning.

“So, therefore, if there is a good case with good plans for spending additional aid money, it can be spent, and that is the case in Malawi. In other cases where we don't have that well-developed sectoral programme, we have reviews every six months and those reviews under the programmes do allow us to look at the spending, also social spending,” Christensen says in a transcript posted on IMF website.

During the conference call, several IMF officials emphasised on the need for low-income countries to make full use of aid inflows through increased spending and absorption.

Mark Plant, Deputy Director of Policy Development and Review Department, said the IMF board reaffirmed that the Fund needs to work with low-income countries to create an enabling environment for full use of aid.

“When we talk about spending, we are talking about the government making room for increased spending as a result of the inflow of aid, so that the government budget expenditures on health and education, and whatever the aid is going to be used for, increases,” Plant said.

The absorption, Plant said, is when aid given to a country effects a transfer of real resources, real goods and services from abroad into the country- drugs to combat malaria or HIV/Aids or it could be that the foreign exchange is used through the private sector, so the private sector then increases its absorption of foreign resources.

He said in that way aid could be helpful, when resources move from abroad into the low-income country.

Sanjeev Gupta, Senior Advisor in the Fiscal Affairs Department said effective use of aid inflows might require some aid to be saved temporarily, but there are limits to how much a country can save.

“Donors have an interest in seeing that resources they transfer are, in fact, used for intended purposes, and there are domestic political pressures in aid-receiving countries to spend aid to improve economic and social outcomes,” Gupta said.

Mixed reactions in Africa’s anti-graft fight

Written by Joseph Kayira

Friday, 24 August 2007

Anti-corruption campaigns are increasingly geared towards silencing leaders' political opponents, say accused... Cases in countries such as South Africa, Malawi, Zambia and Nigeria show that in the course of removing the rot from the public service and instilling fiscal discipline instilling fiscal discipline, African leaders will apply all sorts of deception – be it politics or petty jealousies. In June 2005, South African President Thabo Mbeki sacked his deputy of six years Jacob Zuma after his former financial adviser, Schabir Shaik was convicted on fraud and corruption charges. Zuma has since been charged with graft himself. Apart from the graft case, the African National Congress (ANC) deputy president was saved by the courts when he was accused of raping an HIV-positive family friend. The verdict saved Zuma who was once seen as Mbeki’s successor in 2009 from political oblivion. He remains a widely popular figure but despite this broad appeal the rape case and the pending graft charges, will make it almost impossible for Zuma to recover his former prominence. “I think the judicial proceedings have been beyond reproach, but whether this means that Zuma political future is still intact is still in question,” said Ebrahim Fakir, senior researcher at the Centre for Policy Studies at the time. Zuma an ethnic Zulu from Kwazulu-Natal province has been instrumental in mediating for peace between the ANC and the Zulu-dominated Inkatha Freedom Party at the height of violence in the 1990s. His position in the ANC strikes a tribal balance in an organization dominated by leaders from the Xhosa tribe of freedom icon Nelson Mandela and Mbeki. Further north in Malawi, President Bingu wa Mutharika has been touted as an economic engineer who is poised to transform the economy of the tiny southern Africa nation. The IMF and the World Bank, which act as catalysts for donors to release funds for development are pleased with Mutharika’s economic programme. He has made headlines the world over for his tough stance on corruption and he describes it as a cancer that is affecting prospects for economic growth. “It is appalling that some Malawians engage in corrupt practices as a way of promoting their personal selfish economic and financial gains at the expense of national goals and aspirations,” explains Mutharika. Determined to fight corruption in all its forms, Mutharika has pounced on former president Bakili Muluzi who he accuses of plundering public resources in the 10 years he was in office from 1994 to 2004. Vice President Cassim Chilumpha too has not been spared the rod. He is currently under house arrest for plotting to assassinate Mutharika. Government has also shown interest to pursue “the education scam case” in which millions of dollars went down the drain through dubious contracts when Chilumpha was Minister of Education in the Muluzi administration. While both Chilumpha and Muluzi acknowledge that corruption hinders economic growth because it increases the cost of economic transactions including investment processes they deny any wrongdoing and feel they are victims of a political witch hunt disguised as a fight against corruption. Just next door in Zambia, former president Frederick Chiluba accused of siphoning $488,000 while in office. As soon as he assumed the high office, his handpicked successor Levy Mwanawasa launched an anti graft campaign which has seen the ex-president and his associates answering charges on corruption. Just last week, a British judge found Chiluba and his associates guilty of siphoning $46m from the treasury. Chiluba, whose wife will also be tried in July for buying properties with money stolen from state coffers, says the court order “bordered on racism”. Following the ruling Chiluba is personally expected to return $41m. Information and broadcasting minister, Mike Mlongoti says Chiluba must return the money or his property will be seized. “The attorney general would file papers to issue a seizure notice for the funds which were frozen in 2006 in Britain, Belgium and other parts of the world,” he said. In West Africa, outgoing Nigerian President Olusegun Obasanjo has had a sour relationship with former Vice President Atiku Abubakar all in the name of fighting corruption. The Economic and Financial Crimes Commission (EFCC) accused Abubakar of diverting public funds and that he should be indicted for corruption. Obasanjo wanted the Senate to exploit a clause in the Constitution which says that a person cannot qualify for elections as president if indicted for fraud. Apparently, it was a calculated move to block Abubakar from contesting the presidential poll, recently won by ruling People’s Democratic Party (PDP) candidate Yar’Adua. The accusations were part of a long running battle for supremacy in the PDP. Abubakar, who was saved by the courts, accused Obasanjo of wishing to hold on to power beyond his constitutional mandate. Obasanjo steps down after failing to successfully stay for a third term. He wanted another term of office fearing his policy of economic reform could be reversed after he retires. Such is the state of affairs in African democracies and it remains to be seen if leaders will rise above politics in their quest to root out corruption in all its forms.

Malawi to donate, sell maize surplus - president

Tue 21 Aug 2007, 5:36 GMT

[-] Text [+]

BLANTYRE (Reuters) - Malawi will sell its surplus maize or donate it to food-short neighbours, President Bingu wa Mutharika was quoted as saying on Monday.

Malawi is enjoying its second surplus harvest in a row, with a crop of 3.4 million tonnes, 1.3 million more than the national requirement.

But the opposition has questioned plans to donate food aid to neighbours when two of the country's own districts are suffering from shortages after their output was destroyed by floods.

Officials have said they have started distributing food to these regions but communities say they see little evidence of that.

Mutharika said his government, which has already sold 400,000 tonnes of the staple grain to Zimbabwe, would donate 10,000 tonnes of maize Lesotho and Swaziland.

"Is it wrong giving this maize to people who require food," Mutharika said in The Nation newspaper on Monday.

2009 too far

by GEORGE KASAKULA

Should we now wait for 2009 for the feud that is going on between the government and MCP and UDF to be resolved once and for all? Does it mean this is the penalty that the country has to pay for Bakili Muluzi’s mistake to impose a minority government on the country after he imposed Bingu wa Mutharika on UDF and the president left the party with some MPs?

I am saying all this because it is now clear that it will take something to break the impasse that is rocking the country. Government refused to sign the Memorandum Of Agreement facilitated by the clergy which, among other things, could have ensured that the budget is discussed now and passed as soon as possible, something that government wants.

In turn government could have made sure that Parliament is not closed until Section 65 is applied as the opposition MCP and UDF want.

Yes, Parliament has started discussing the budget but I say here it is all cosmetic and we have a long way to go before we have a full 2007/08 budget. Hasn’t MCP gone to court to challenge government for withdrawing from the Consolidated Account. Don’t they want an injunction stopping government from spending? It can take anything to spark another row and we would be back to square one.

You just have to see how MCP and UDF behaved just before they were outmanoeuvred and forced to discuss the budget. Led by their commander John Tembo, they demanded that government brings a financial resolution to validate its unauthorised spending before they could discuss the budget.

It is only pro-government MPs who responded to the budget on Tuesday before MCP and UDF fell into line on Wednesday, something that does not inspire confidence at all and does not bode well for the future.

The question is for how long and how much is the country going to pay for the personal feud of Muluzi, Bingu, and Tembo. Is it until 2009 (or is it sooner as Bingu is suggesting)?.

The budget and Section 65 are only a means for UDF and MCP to get even with Bingu. For how else do you explain an opposition that is constantly looking for excuses to block the budget at all costs. What was their interest for the tune to change from Section 65 to financial resolution to normalise the expenditure? Of course, expenditure must be legalised but why not do it by discussing the whole budget? What crime have we committed in the eyes of UDF and MCP not to have a budget two months after a new financial year?

My conclusion. We have not committed any crime. We are merely paying for Bingu’s "crime" committed to leave UDF and its Muluzi. The penalty of the "crime" cannot be paid in full until 2009 when the three will sort each other out at the poll. Some of my readers think it should be earlier and I understand them.

One of them, Matthew Timms wrote: Malawi needs a general election now to give the victor genuine authority...a mandate from the people.

Another one, Grant, was even forthright when he wrote: To Backbencher, Raw Stuff and My Diary. The truth of the matter is what the Bencher has written that JZU and Bakili think they can get the presidency. Even our children know the problem. That is why come 2009 Malawi will become a one-party state if UDF and MCP do not change leadership. The gentleman had no roots until when the issue of Section 65 was given preference.

The sad part is that before 2009 (Bingu wishes it were nearer), the feud of the three people is causing great damage to the country and in turn affecting all of us?

There is already a paralysis in some institutions like Malawi Electoral Commission which has no quorum as the commissioners Bingu appointed are being challenged in court by MCP and UDF who argue they were not consulted during their appointments. There is also paralysis in the Judiciary as this arm of government has no Chief Justice. Government is afraid of bringing nominee Lovemore Munlo to Parliament for fear of his being rejected like so many other worth Malawian men and women before him who were merely rejected for nothing else apart from the opposition throwing weight around and getting even with Bingu. So too was Steven Mchenga for auditor general, Tumalisye Ndovi for ACB director, the list is endless.

These innocent men and women were casualties of a war they do not have a clue about. They are being denied the honour of serving their country in various capacities simply because of a personal feud of three people.

While all this is happening, the donors are watching. We cannot access their free money unless there is a budget. And yet MCP and UDF are clearly unfazed. Why should they when their plan to squeeze Bingu and get even with him is working perfectly? They do not care what happens to the rest of us.

We can only wait for 2009 so that all this is settled once and for all for the people. But it looks is a bit too far for comfort.

Budget debate: Opposition praises govt
by NATION REPORTER (8/16/2007)

After almost four months of political bickering, Members of Parliament on Wednesday sobered up and spoke on the same wavelength, giving hope to Malawians that the 2007/2008 national budget would finally be approved.

Spokespersons on finance from main opposition Malawi Congress Party (MCP) Respicious Dzanjalimodzi and Friday Jumbe of the United Democratic Front (UDF) set the promising tone by praising the Bingu wa Mutharika administration for achieving remarkable economic growth and turning the country into a foodbasket, after years of food insecurity, among other achievements.

Dzanjalimodzi—who nevertheless expressed disappointment that the government side had refused the House to discuss a financial resolution allowing the Executive to withdraw money from the Consolidated Fund to cover operations for three months—said Malawi was regaining its status of a "star performer" which is reminiscent of the Kamuzu Banda era.

Both Dzanjalimodzi and Jumbe commended government for the fertiliser subsidy programme which they said has yielded tangible results, despite some logistical problems it faced.

Dzanjalimodzi asked Finance Minister Goodall Gondwe, who listened attentively to the contributions, smiling at some points when patted on the back for a job well-done, to consider reducing the value added tax (VAT) currently at 17.5 percent and increase the tax-free bracket for employees so that they have more disposable income.

Like his colleague, Jumbe also urged the government to consider increasing the Constituency Development Fund from K2 million to K5 million.

He said he would accept the 2007/2008 budget as being pro-poor if only it improves the buying power of ordinary Malawians and brings about infrastructural development in all sectors of the economy.

President of People’s Progressive Movement (PPM) Aleke Banda also expressed optimism for a better Malawi, saying macro-economic indicators during the Mutharika administration have improved tremendously compared to other countries within the Sadc region.

He said he was happy that after facing a lot of turbulence, the House was now able to discuss the budget, which would benefit all Malawians regardless of their political affiliations.

"It is, therefore, my hope that political will, good economic policies and their implementation should continue as we implement the 2007/2008 budget. My plea is that despite our political differences, all honourable members should deliberate the budget objectively and close ranks on areas that we can quickly reach agreement," Aleke said without interjections and noise that have been the trademark of parliamentarians since they started meeting on-and-off three months ago.

Aleke, however, expressed concern over the high vacancy rates in key ministries and government departments, wondering how the government would operate effectively.

"Definitely, the pace, quality and value for delivery of the budget will suffer with these high vacancy rates," he cautioned.

Aleke said there are hundreds of young Malawians with diplomas and degrees loafing around because government is not willing to recruit them due to lack of work experience.

"Rather than emphasise on experience for the new entrants in the public service, I suggest that we establish tailored on-the-job training initiatives and revival of well-planned induction courses at the Staff Development Institute at Mpemba [and] also utilise the Malawi Institute of Management [Mim].

As if they had not been on each other’s neck, the MPs from both sides shared jokes and shook hands during tea break and after Speaker Louis Chimango adjourned proceedings to this morning, where Alliance for Democracy (Aford) lone legislator Loveness Gondwe and others are expected to continue with debate on the budget.