‘Cut the chaff’: JB’s Mudzi Trust will either duplicate LDF or kill it off

In Weekend Nation newspaper, award winning columnist  Ephraim Munthali of the  ‘Cut the chaff’ has taken a critical approach on President Joyce Banda’s state opening address of Parliament  which she announced the establishment of  a Mudzi Trust Fund . Here is the full article as it appeared:

One of President Joyce Banda’s many dreams is “seeing” prosperity of the nation. She has now brought her mental picture down to the village thanks to her Mudzi Transformation Project.

The President told Parliament in her State of the Nation Address two weeks ago that she is so concerned with the deep levels of poverty in most rural Malawi that “I have decided that for the first time, government will specifically target individual villages across the country with comprehensive high impact interventions that will accelerate the betterment of well being of rural and urban poor.”

And so it pleased Her Excellency to set up the trust, whose objective will be to mobilise accessible, responsive and flexible resources to support social and economic projects for the transformation of the lives of Malawians in all 29 districts.

Banda: I have decided that for the first time, government will specifically target individual villages across the country with comprehensive high impact interventions that will accelerate the betterment of well being of rural and urban poor.

Banda: I have decided that for the first time, government will specifically target individual villages across the country with comprehensive high impact interventions that will accelerate the betterment of well being of rural and urban poor.

To this end, she said, government will formalise the registration of 20 000 village heads who will work with the trust to mobilise communities for implementation of the programme.

If this approach to community development sounds familiar, that is because it is. You see, what the President announced is the DNA of the Local Development Fund (LDF), without the political tinge.

Established under the Public Finance and Economic Management Act of 2003, LDF harmonises resources from multiple sources for financing local development activities implemented through local authorities.

So far, the World Bank—through the Masaf project—African Development Bank (AfDB), Germany’s KfW and Malawi Government have poured funds into the LDF basket. Masaf, however, is the largest, accounting for roughly 65 percent of the pooled resources.

As a nationwide, sustainable, standardised and transparent community development financing mechanism, LDF allows for harmonised national resource mobilisation, equitable allocation of development resources, effective development implementation capacities and results accountability within the context of decentralisation and the Paris Declaration.

I am aware that the President says Mudzi Transformation Trust will be led by the private sector. I don’t know what she means by that. Maybe I should pose this question: Is the trust a public body or a charity organisation that will operate outside the country’s systems?

My take is that with the President announcing it in arguably the most important government speech—the State of the Nation Address—it is likely that government machinery will be involved. Why then should we split hairs? Why can’t Mrs. Banda use her office to get these resources from the private sector as she says she can and direct them to LDF?

Someone should also tell the President that using village heads to implement programmes when there are already local governance structures such as Village Development Committees (VDCs), Area Development Committees (ADCs) and council level committees is wrong and has the potential to destabilise the local governance architecture that deliberately and for good reasons did not put traditional leaders at the centre of managing development.

And because it is no other than the President championing the trust’s activities with powerful village heads as her foot soldiers, the politically driven Mudzi Trust could see the LDF sidelined at local level where community involvement is crucial, especially in view of the fund’s community demand driven development model.

This is what could lead to the silent death of the LDF, which would be tragic because the fund is probably the most effective, responsive, apolitical (compared to Constituency Development Fund, for example) and trusted local development financing mechanism in Malawi.

The LDF also happens to have the most effective formula for social protection and, so far, it is the best partner for the Economic Recovery Plan (ERP) when it comes to stimulating the economy and protecting reform casualties and other vulnerable citizens.

LDF’s social protection interventions, especially under the World Bank-funded Masaf—the fund’s flagship project—are able to reach even the remotest of rural areas where vulnerability is increasing largely due to repeated shocks as well as depletion of assets and where poverty is more pervasive.

The LDF also has the ability to rapidly reach urban areas where, according to the World Bank, pockets of poverty are growing at a faster rate than in rural areas.

During this financial year alone, Masaf—under the LDF framework—has disbursed billions of kwachas under the Public Works Cash Transfer component that is expected to benefit more than 600 000 households that would get K14 400 (about $36) in two phases.

The first part, implemented between November and January, helped provide resources to poor households to enable them buy subsidized fertiliser, food as the hunger crisis deepened last year and for investing in income generating activities under the LDF’s savings and investment initiative managed by Compsip.

The savings and investment initiative is aimed at helping targeted communities to graduate out of the vicious circle of seeking emergency help in a country where—even the World Bank complains— has the nasty habit of always treating the long-term problem of chronic and predictable hunger as an unpredictable emergency.

The second phase, which is currently under way up to July this year, is set to leave enough cash in community members’ pockets so that they need not sell their farm produce to traders at exploitative prices and then buy back from the market at exorbitant prices during lean periods.

Now, given their good outputs and outcomes as well as better fiduciary management arrangements that the LDF has demonstrated, should we really kill the fund off in the name of some obscure trust whose operational framework and its chances of success are as clear as opaque beer?

Meanwhile, I hear that some misguided and confused folks are busy trying to persuade President Banda to apply for a Masaf-like funding from the World Bank so that it acts as seed capital for Mudzi Transformation Trust.

How gullible can some people be?

As we speak, the LDF Technical Support Team—under the leadership of the Ministry of Finance—is involved in negotiations with the World Bank for Masaf IV within the institutional structure of the LDF.

Even the President mentioned this imminent project in her State of the Nation Address (never mind that she claimed it is Masaf V).

Can you imagine the embarrassment of two initiatives from the same government fighting for the same money from the same institution?

I shudder to think!

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