K30 billion debt money in Malawi goes to the waste

Malawians have since 2004 been forced to service a total of K30 billion (US$94.4 million) in foreign debts for funds acquired to implement non-existent and stalled projects which have not gone down to benefit the intended citizens who are responsible for re-payment of the loans, Centre for Social Concern (CfSC) has revealed.

The projects under question include the construction of the Zomba-Jali-Phalombe-Chitakale Road which has seen a total of six loans amounting to US$58.26 million (almost K18.93 billion) approved by Parliament since 2004 and Phalombe District Hospital whose loan amounting to US$7 million (K2.3 billion) was approved in 2010.

According to the CfSC report entitled ‘The Paradox of Continuous Foreign Borrowing in a Rash of Stalled Debt Sponsored Projects’,  the Zomba-Chitakale road got its first loan of US$21.06 million (K6.8bn) in 2004 from Kuwait, then another US$7 million (K2.3bn) from the World Bank in 2005 before getting another US$10 million (K3.25bn) from the same Bank.

Yet in 2011 Parliament  approved three loans for the same road amounting to US$19.2 million (almost K6.42bn) from Arab Bank for Economic Development in Africa (Badea), the Kuwait Fund for Arabic Development and Opec Fund for International Development.

Msowoya: Projects still in progress

Msowoya: Projects still in progress

In the just ended budget session Parliament has again approved a further K3.4 billion with the project title now reading Zomba-Jali-Kamwendo-Phalombe-Chitakale Road thereby making the road once it is completed to cost tax payers a total of K22.17 billion .

The other project is the construction of nine teachers’ training colleges (TTCs) across the country whose loan now totals US$30.2 million (almost K9.8 billion) with only one in Phalombe now under construction despite that the first tranch of the loan amounting to US$7 million (K2.3 billion) was approved in 2009.

The loans for the nine TTCs include US$7 million from Badea obtained in 2009 and a further US$11 million from the Opec Fund and US$12.2 million from the Saudi Fund but the report says almost all these TTCs are “conspicuous non-existent”  and it is only the Phalombe TTC being constructed.

On the Phalombe District Hospital the report says there is no sign yet of such a hospital with even no foundation stone laid yet Parliament approved US$7 million (K2.3 billion) in 2010 from Badea and the 2013/2014 budget session has also approved another loan amounting to K1.2 billion.

Minister of Finance spokesperson Nations Msowoya said although there have been challenges to some of the cited projects, almost all the projects are still in progress and none has been abandoned.

“In all these projects the Government is dealing with foreign creditors and in this case more than three who have their own processes and procedures which have to be appreciated,” he said.

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