Corrupt Malawi risks losing out on US funds in Millennium Challenge Corporation deal 

Malawi  risks losing the $350 million Millennium Challenge Corporation (MCC) Compact from the government of the United States of America by 2018 if the government fail to seal loopholes in public finance management and prosecution of Cashgate suspects, the United States government has warned.

A five-year $350 million compact aims to help Malawi  transform its electricity sector and improve transmission infrastructure .

MCC resident country director Oliver Pierson said in Lilongwe that  Malawi government needed to continue efforts to improve public finance management and public sector reforms to be considered on the next round of funding

Person cautioned Malawi that it has to meet anti-corruption criteria of an MCC “threshold programme” that aims to resolve issues that prevent countries from qualifying for the grants.

Malawi’s score on the MCC’s annual anti-corruption test has actually fallen in the past year.

MCC scorecard for 2017 indicates Malawi has scored 57 percent, seven percentage points below last year’s score under the ruling justly indicator.

Countries cannot qualify unless they clear this hurdle.

“As the compact winds down, there is renewed focus because the MCC board of trustees may want to look at Malawi for a second compact and if Malawi is interested as well, it would be extremely important to work on passing scores on at least 10 of the indicators among them the hard indicators like control of corruption,” Person sain in Lilongwe  on Monday during the briefing on the 2017 scorecard.

Cashgate and resulting investigations and prosecution of public servants involved had contributed to increasingly low score on the corruption control indicator, according to MCC boss.

Recently, President Peter  Mutharika  admitted that  corruption in his country is “worsening” .

He said corruption and fraud continue to affect the country’s development efforts.

“Thirty per cent of donor money goes into the drain through corruption and fraud practices by both government and civil society organizations and we cannot develop with such undesirable practices,” he said.

It is estimated that about 35% of government funds have been stolen over the past decade in systematic looting of public coffers by civil servants, private contractors and politicians, a scandal christened ‘Cashgate’.

Malawians have always known that corruption is rife in the country. But the sheer size of the Cashgate scandal, both in terms of the amount and the wide number of people involved, has shown how deeply rooted the problem is.

The University of Malawi’s Blessings Chinsinga recently pointed out that: “Efforts to root out corruption do not stick because the existing institutional milieu makes it almost impossible to introduce changes that can effectively stamp out corruption.”

The observation is instructive in that Cashgate  spans two political administrations. Malawi was led by the late president Bingu wa Mutharika in 2004 and the scandal unravelled on the watch of Joyce Banda in 2013.

Malawi has also failed is fiscal policy, inflation, gender in the economy as well as business start up.

However, Malawi passed 16 out of 20 indicators the board uses as one consideration for selecting new beneficiaries.

The country has done well on regulatory quality, trade policy, land rights and access to credit under the indicator of economic freedom.

In the area of investing in people, Malawi has scored high on health expenditures, primary education expenditures, immunisation rates, child health and girls primary education completion rate.

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