“Let them waste their time plotting against us, We will spend our time planning for this country. As a party, we have progressive plans for our country- And our plans will conquer our suffering”. Professor Arthur Peter Mutharika, DPP Presidential Candidate, April 2013
A couple of years without donor aid has not been an easy ride for the new government of Peter Mutharika who went into office a year after donors had decided to stop disbursing aid due to the crumbling of the financial system at Capital Hill.
Coming from that background, the recent disbursement of more than K270 billion aid by the European Union (EU) to Malawi signifies a shift of mindset by multilateral and bilateral donors to a Third World country that has been in the spotlight for all the wrong reasons following the Cashgate scandal.
The donors left in 2013 following the siphoning of K22 billion out of government coffers into pockets of politicians and civil servants. The free-for-all plunder came to be known as Cashgate and tainted the image of Malawi world over.
Reacting to such a shameful malaise, donors under the Common Approach to Budget Support (CABS) announced after its review meeting in November 2013 that it was going to delay aid to Malawi. This came as the last nail on the coffin following similar pronouncements by the European Union, the UK’s DfID, and Norway.
The pulling out of donor aid put a strain on the country’s economy whose national budget relies demands 40 percent of donor money. In total, these donors have been withholding some $150 million meant for Malawi’s budget waiting for full macro finance reforms at Capital Hill.
Immediately after taking the reins of power, Mutharika initiated a drive that was meant to restore donor confidence. This was only going to be achievable with an added injection of political will that had been lacking previously. It was incumbent upon the new regime to do things differently and with utmost caution to achieve such a feat.
The Ministry of Finance was quickly positioned to adopt the Aid Management Platform which has in the long run increased transparency of where project aid is going and monitoring how it is being used.
Convincing the donors that their project aid is being used prudently was always going to be a prerequisite of restoring budgetary support in the long run. That task has been achieved in the past year and it comes as no surprise when the EU emerges with this K270 billion project aid.
The return of this agreement between Malawi and EU comes as a result of satisfaction by development partners with the current economic reforms that are been taken by the Peter Mutharika administration.
Other donors such as the International Monetary Fund (IMF) have also been making headway with their periodic review missions which are likely to yield full resumption of aid shortly.
Even in the middle of these review missions, there has still been some good news in the interim with IMF already okaying the disbursement of $18 million under the Extended Credit Facility (ECF) program.
Mutharika has been quoted as saying IMF’s nod is likely to open doors for all the multilateral and bilateral donors to resume full support in the foreseeable future.
True to economic laws, the sound macroeconomic policies executed by the Mutharika government in the 2014/2015 financial year have brought in the stability of the local currency, a situation that sets the ball rolling for expanded economic activity and desirable growth of the economy itself.
To think that these achievements have come about in the absence of donor aid signifies the President’s commitment and acumen in restoring lost glory and win back donor support both at budgetary and project aid levels.
Besides the economic reforms that aim at strengthening public financial management, government has also made tangible headway in dealing with Cashgate cases.
Top government officials have been taken to courts and charged with relevant charges in line with their role in the plunder.
This commitment to see through Cashgate cases is also a catalyst of restoration of trust of donors to Malawi government.
Over 81 people have been brought to court with about 7 convictions while numerous cases are progressing satisfactorily. In addition, 35 accounts belonging to suspects have been frozen and government is closing in on property that was acquired dubiously using the stolen money.
As the dark economic cloud clears, it is foregone knowledge that Mutharika and his government deserve the credit for turning around an economic situation that looked so dire when they entered office twelve months ago. And o f course this is a timely gift to the Mutharika regime for clocking one year in office.
- The author is Presidential Press Secretary at State House