Fellow Malawians, Ladies and Gentlemen,
Our country, Malawi, remains one of the world’s poorest, ranking 170th out of 187 countries on the Human Development Index (HDI 2013), a position it has been stuck on since 2010.
As you all know, the HDI measures long-term progress in three basic dimensions of human development, namely: a long and healthy life, access to knowledge, and a decent standard of living. Between 1980 and 2013, Malawi’s annual HDI increase averaged about 1.4 percent, against an average annual population increase of 2.2%. This suggests that human development has been too slow.
When my party, the Democratic Progressive Party (DPP), got into government in May this year, it inherited empty coffers, following the infamous “Cashgate‟ scandal that was perpetrated by the previous government. The scandal was characterized by a huge pilferage of public funds due to organized fraud and corruption, and led to a withdrawal of development assistance that is channelled through the National Budget. The economy was in shambles as a result, and the cost of living skyrocketed. The impact on the lives of Malawians was severe.
Malawians will remember that the DPP government inherited huge domestic debt and enormous arrears owed to providers of goods and services to the government. High political aggrandizement, self-glorification, and massive corruption were characteristic of most of the period between mid-2012 and May 2014. Further, the pride and confidence of the Civil Service was fast waning off.
2. OUR PROMISE TO THE PEOPLE OF MALAWI
Fellow Malawians, Ladies and Gentlemen,
During the campaign period leading to the May 2014 elections, the DPP was guided by its election manifesto, entitled “Towards a People-Centered Development.” Through this manifesto, we promised, among others things, to fight underdevelopment, economic and social injustice, inequality, corruption, and theft of public funds and abuse of power. We promised to keep Malawi on a sustained path to development, and not to stop, merely for political reasons, whatever constituted the good work of previous governments.
We have since assessed the policies and practices of the previous
Governments, and resolved to retain the Automatic Fuel Pricing mechanism, the flexible exchange rate regime, the return of foreign exchange bureaus, and other monetary policy measures meant to entrench the role of markets in achieving sustainable economic growth.
We went further, however, by adopting fiscal reforms that would support and deepen the previous reforms. We instituted reforms aimed at running the government most effectively and efficiently, as follows:
• We appointed a cabinet of 20, including deputies, the Vice President and the President.
• We restructured the Office of the President and Cabinet, by moving the Department of HIV/AIDS and Nutrition and the Safe Motherhood Initiative to the Ministry of Health; The Presidential Initiative on Poverty and Hunger Reduction to the Ministry of Agriculture, Irrigation and Water Development; The National Registration Bureau to the Ministry of Home Affairs, and The Government Contracting Unit to the Office of the Director of Public Procurement. We also combined the Ministry of Finance and the Ministry of Economic Planning and Development into one to facilitate coordination of the economic management function.
• Further I directed that chief executive officers of public institutions, principal secretaries and other senior public officers would not be attending public functions except where the functions or events pertain to their organizations.
These reforms alone will save over K70 billion per annum. Further, my government established the Civil Service Reform Commission, under the leadership of the Vice President Right Honourable Saulos Chilima. The Commission aims to chart the national direction and establish national priorities in public service reforms. We want an efficient and effective public service. Once the reforms are completed, my government hopes to save an estimated 30% of government resources which are wasted year after year.
3. STATE OF THE ECONOMY
My fellow Malawians, Ladies and Gentlemen,
It is common knowledge that Malawi is now operating without general budget support, meaning we have to rely more and more on ourselves to deliver the services that Malawians need. Moreover, in the spirit of good economic governance, we can only spend what we have. It is against this background that my government does not allow unplanned expenditures, and has stepped up efforts to deepen adherence to the existing economic governance laws.
The past three months have seen our currency lose close to a quarter of its value in relation to the US dollar, and the impact shows strongly through inflation arising to the associated rising costs of our imports. This inflation has exerted pressure on interest rates, hence lowered private investment and employment. Much as seasonality explains part of the kwacha depreciation, a significant part of it is attributable to speculation.
But I have better news: the Kwacha has since stabilized. I am hopeful that the domestic currency may even appreciate soon, because we are doing everything possible to get the economy on the right track. Government has put in place policies that will translate into increased exports in order to increase foreign exchange earnings which are needed to defend the domestic currency.
My fellow Malawians, despite the aforesaid challenges facing our economy, the financial system has stabilized and developments are visible in the financial institutions and the capital markets. Let me cite a few, as follows:
• The payments system remains stable, and no major system disruptions have been experienced during the past months. Payments, clearing and settlement of transaction, therefore, are proceeding smoothly.
• The banking sector remains sound on account of a favourable macroeconomic environment and improved banking practices. Despite the average Return on Equity (ROE) declining to 31% from 38.7%, the banking sector remains profitable.
• Other sectors that remain profitable are:
o the Insurance industry, although this sector has to watch against the risk associated with investments in money markets;
o the Pensions sector, despite its concentration risk coming from limited long term investment options;
o the Stock market, despite the fact that the market is shallow and not effective in providing the alternative source of raising capital as expected; and
o the micro-finance sector, despite a drop in the loan repayment rate due to the combined impact from a lean agriculture marketing season and persistent non-remittances of payroll deductions.
Of course, risks to the economy continue, and the government is specifically working its way forward with the uncertainty regarding the resumption of budgetary support, delayed donor inflows, and low tobacco prices. Inflation remains a risk that has to be tamed, moving forward.
Water Situation in Blantyre
My fellow Malawians, I am very aware of the water challenges in Blantyre, and I assure everyone that government is doing everything possible to not only solve the problem for now, but set the Blantyre Water Board to be able to supply sufficient water for the population of year 2040. The BWB‟s infrastructure is aged and has out-lived its design capacity which was meant for a population of 500,000 residents up to the year 1999. Today BWB has over 1 million customers. Further, due to inadequate rains in the year 2012/13, the Mudi Dam which produces about 10% of the Board’s water production dried up by October 2014. Thirdly electricity, which costs BWB about K270 million per month to pump water from Nkula, 40 kms away from the City has been another challenge.
I would like to thank the residents of Blantyre for their understanding. We embarked on a total rehabilitation of the BWB production facilities and replacement of pumps at Walkers Ferry and Chileka Pumping Stations, and by March 2015, the BWB will be able to meet all the demand of 96, 000 cubic meters per day, up from the current 74,000 cubic meters production capacity. In addition, we will construct a water supply system from Mulanje Mountain at the cost of about US$ 15 million, to provide an extra 8,000 cubic meters of water per day to Blantyre and surrounding areas.
4. SECTOR SPECIFIC DELIVERABLES
My fellow Malawians, in spite of what others may say, my government is very determined to turn this economy round. Today, I would like to account to Malawians what their government has managed to achieve in the first quarter through a sampling of the deliverables, as follows:
4.1 Office of the President and Cabinet
• Oriented all Cabinet ministers and principal secretaries on government policies.
• Updated the Administrative Common Service System, Cabinet Directives Monitoring System, Policy Monitoring System and Inventory System.
• Performed organizational performance assessment for third and fourth quarters of 2013/2014 financial year
• Through the Civil Service Commission, appointed 312 officers to various positions; promoted 427 officers; confirmed appointment of 35 officers and concluded 39 disciplinary cases.
• Through the Office of the Vice President, provided strategic leadership in the introduction and implementation of the Public Service Reforms.
• Facilitated construction of a sugar processing plant at Chikwawa Site in Salima under the Green Belt Initiative.
4.2 Ministry of Finance, Economic Planning and Development
• Strengthened controls in IFMIS to avoid Cashgate.
• Introduced quarterly and monthly reporting of budget performance to ministries, departments and agencies.
• Strengthened the cash management function.
• Launched and operationalised the Development Cooperation Strategy.
• Introduced a zero coupon promissory note to clear outstanding arrears.
• Completed a Public Financial Management Reform study as a basis for implementing a PFM reform programme.
Accountant General’s Department
• Decentralized Bank Accounts at the Reserve Bank of Malawi for all Ministries, Departments and Agencies.
• Successfully effected the interface between Epicor IFMIS and Local Councils‟ Serenic Navigator.
• Institutionalised pre-audit services at the Accountant General’s Department Central Payment Office.
4.3 Ministry of Labour and Manpower Development
• Conducted functional review for the establishment of community colleges.
• Finalized Career Guideline Book for technical colleges in Malawi
• Identified and withdrew 200 children in child labour and prevented a further 1,230 children from engaging in child labour.
• Conducted 184 labour inspections; handled 5,798 labour complaints; and completed 50 occupational safety and health inspections meant to ensure safe work environment;
• Launched the TEVET Policy.
4.4 Ministry of Transport and Public Works
• Completed major works on the Blantyre-Zomba, Lilongwe Western By-pass and Ngabu-Bangula roads.
• Commenced feasibility and detailed engineering design study on the rehabilitation of the Sena Line, and completed the rehabilitation of the Nkaya-Nayuchi line.
• Procured Air Traffic Control Consoles and Very High Frequency (VHF) Communication equipment; and the Chileka Instrument Landing System.
• Completed and validated first interim report on the navigability of the Shire/Zambezi waterway, with the final report expected in early 2015.
4.5 National Audit Office
• Produced the final Cashgate forensic report from which 53 case files were made and submitted to law enforcement agencies;
• Produced final forensic audit report for the Malawi Police 2010 K400 million fraud with 7 case files submitted directly to Law Enforcement Agencies.
• Produced and submitted investigative audit reports on MRA and the Ministry of Foreign Affairs and International Cooperation
• Verified 2,000 pension files and handed back to the Accountant General for payment
• Submitted reports to Parliament which the Public Accounts Committee discussed.
4.6 Ministry of Agriculture, Water Development and Irrigation
• Completed registration of beneficiaries and suppliers in the 2014/2015 Farm Input Subsidy Programme (FISP)
• Facilitated sale of 186 million kilogrammes of tobacco which earned the country US$352 million.
• Produced and distributed vaccines to over half a million livestock as one way of improving livestock production.
• Facilitated production of 28,850 tonnes of fish which fetched K16.7 billion for the fishers.
• Facilitated fish exports to the following countries: Germany, Hong-Kong, United Kingdom, China, Denmark, France, Sweden and the United States of America.
• Continued with design and construction of irrigation schemes in Neno, Chikwawa, Nsanje, Phalombe, Thyolo, Mulanje, Mchinji, Kasungu, Salima, Zomba and Chitipa.
• Continued with rehabilitation and constructions of the Songwe River Development Programme.
4.7 Ministry of Lands, Housing and Urban Development
• Championed and commenced implementation of the Decent and Affordable (Cement and Malata) Housing Subsidy Programme
• Enforced standards at the following major construction projects: Construction of National Stadium in Lilongwe, Construction of Chapanga Rural Growth Centre in Nsanje, Construction of Commercial Court in Blantyre, Construction of Clinic and Food Court at Capital Hill, Construction of Nkhatabay District Hospital; and Construction of Health Centres in various districts across the country.
• Prepared layout plans for the following areas: Area 2 Extension, Dunduzu and Areas 5 and 6 in Mzuzu, Area 13 and Area 51 in Lilongwe; Mzimba and Chitipa.
• Initiated survey exercise to reaffirm boundary between Malawi and Mozambique along the boundary line where it is described as following the road in Dedza, Ntcheu and towards Mwanza.
4.8 Department of Disaster Management Affairs
• Coordinated development of 2014/2015 food insecurity response plan for the 640,000 food insecure people in 19 districts (December 2014-February 2015).
• Developed the 2014/2015 national contingency plan that focusing on flood, drought and Ebola virus outbreak.
• Conducted community search and rescue trainings for over 800 Civil Protection Committee members in Nsanje, Chikwawa, Salima and Karonga.
4.9 Ministry of Health
• Immunised over 91% of all children under the age of five to protect them from vaccine-preventable diseases.
• Reviewed the National HIV and AIDS and Strategic Plan 2015-25.
• Dispensed free ARVs to over 505,000 people and provided HIV/AIDS testing and prevention of Mother to Child Transmissions (PMTCT) for all mothers delivering at public health facilities across the country.
• Treated over 3.7 million Malawians at public health facilities across the country, of whom 780,000 were inpatients.
• Supported and maintained training of 2,500 medical and nursing students in various colleges and institutions across the country.
4.10 Ministry of Education, Science and Technology
• Successfully mapped all schools under the School Mapping Exercise and details of all education institutions in Malawi have been properly documented.
• Completed the construction of 1,100 classroom blocks and 8 urban schools under the LDF window; completed civil works for upgrading and expansion of Community Day Secondary Schools in Salima, Lilongwe, Nkhotakota, Nkhatabay , Mzuzu and Mzimba.
• Recruited 9,374 qualified teachers out of a total of 10,500 under ODL 3 and IPTE 7; started recruitment process of 10,000 primary school teachers; and deployed 1,118 newly graduated teachers for 2013.
• Achieved 65% completion rate in construction of 24 girls‟ hostels and identified additional 12 new sites for girls‟ hostels.
• Completed construction of 50 school feeding facilities to support 50,000 learners in Rumphi, Nkhatabay, Salima, Mangochi, Dowa and Dedza
• Decentralised payroll in all six Education Divisions.
4.11 Ministry of Local Government and Rural Development
• Developed Integrated Rural Development Strategy aimed at improving coordination and implementation of Rural Development Programmes in Councils.
• Oriented 426 Councilors on their roles and responsibilities in councils.
• Oriented 520 chiefs on their roles and responsibilities, as well as primary justice.
• Facilitated the backstopping and mainstreaming of Climate Change and Environment issues into Socio-Economic Profiles and District Development Plans for Blantyre, Balaka, Ntcheu, Nkhotakota and Thyolo districts.
4.12 Ministry of Gender, Children, Disability and Social Welfare
• Institutionalised Gender and Development Diploma, Degree and Masters programmes at the Lilongwe University of Agriculture and Natural Resources.
• Developed Gender Responsive Budgeting Manual
• Provided cash transfers to 30,000 ultra-poor and labour constrained households in Balaka, Chitipa, Likoma, Mangochi, Machinga, Thyolo and Salima districts benefiting 150,000 individuals.
• Submitted State Part Reports on the Convention on the Elimination of All Forms of Violence Against Women (CEDAW); Convention on the Rights of the Child (CRC); The African Charter on the Rights and Welfare of Children; Two optional Protocols on CRC.
• Rehabilitated 450 persons with disabilities at community level in Mzimba, Liwonde, Balaka and Blantyre Rural.
4.13 Ministry of Information, Tourism and Culture
• Finalised drafting of the National Cultural Policy
• Increased the number of local television channels from 5 to 10
• Classified 95 films and documentation of 12 National Monuments
• Developed tourism data bank, promoted 6 tourism events and updated Malawi’s Tourism Profile.
• Conducted district law enforcement and protected areas patrols, anti-poaching patrols and sensitization exercises with 25 border posts officers aimed at combating illegal trade and exportation and importation of wildlife resources.
4.14 Ministry of Home Affairs and Internal Security
• Produced zero draft National Migration Policy
• Arrested 3,394 suspects in sweeping exercise; 171 illegal immigrants; and pursued 597 court cases to completion. 3,127 illegal firearms were destroyed.
• Processed and issued 38,194 passports and 1,112 temporary travel documents; 28 applications for citizenship; and 1651 various permits and visas.
4.15 Ministry of Youth and Sports
• Graduated 25 sports administrators on University of Pretoria Sports Business Management programme.
• Facilitated the participation of the Malawi National Netball Team in the 2014 Glasgow Commonwealth Games where it maintained position 5 in the world; and also the Malawi National Football Team in the 2015 African Cup of Nations where it played in the group stages.
• Scaled up the CONDOMISE campaign, directly reaching over 5,000 youths and 54,000 condoms distributed.
4.16 Ministry of Justice and Constitutional Affairs
• The Law Commission completed reforms in the Sheriffs Act and Chiefs Act; reviewed the Abortion Law; and undertook reforms in the Prisons Act and development of Legislation on Sentencing Guidelines.
• The Malawi Human Rights Commission conducted 39 investigations of complaints on reported violations of human rights; Monitored 168 child care institutions; trained head-teachers, Community-Based Organisations and Human Rights Clubs on human right-based approaches; and contributed to the Government State Party reports.
• The Ombudsman resolved 76 cases; established performance management system and launched a Democracy Accountability-Social Waste Management in Local Councils pilot study.
• The Judiciary cleared a backlog of 12,714 cases (representing 21.5% achievement of the total planned cases of 58,910 cases in year 2014/2015; and conducted 56 camp courts across the country to ensure that vulnerable groups such as women and children access justice.
5. WHERE ARE WE HEADING TO?
My fellow Malawians, Ladies and Gentlemen,
Based on the tangibles seen so far on the ground, we maintain the estimate that Malawi will grow by an average of 5.5% in 2014, from an estimated 5.0% in 2013. This rate is agreed by the International Monetary Fund (estimated 6.12% growth), the World Bank (4.4%), and the Reserve Bank of Malawi (6.3%).
The bankable projects compendium that we launched early this month provides hope for Malawi’s future. I invite investors, both local and international, to take advantage of these business opportunities. On our part as government, we will provide the environment that will make businesses flourish, as this creates a win-win situation between private investor and the government.
Donor disbursement of aid has an impact on Malawi’s growth since donors have traditionally funded over 70% of the development budget. But as everyone knows now, donors significantly reduced budgetary support to Malawi because of Cashgate. My government has strengthened the financial system to make sure that Cashgate never occurs again in Malawi; we have resourced fairly well the Law Enforcement Institutions, including the Anti-Corruption Bureau (ACB), so that they do a thorough independent job, prosecute all suspects, and recover the stolen resources where possible.
We are exercising fiscal discipline and making sure that we do not disturb the macroeconomic fundamentals. We are doing everything possible to make sure that all Malawians and the international community have the confidence in their government. We have only one Malawi, and we must all work towards making our country the true Warm Heart of Africa.
I want to share with you the background to a number of developments in our country and to explain why they are occurring. I will also like to inform the public how the Government is dealing with these matters.
We have, as a country, embarked on a number of initiatives that are intended to transform our country. These are aimed at improving its socio-economic status and principally to accelerate our fight against endemic poverty. As you are aware, there is a general disappointment around the country that our socio-economic performance during the first 50 years of our independence was unsatisfactory. In the event, the general consensus inter alia was to demand for a transformation of the public service which is the key instrument for economic development, and the rehabilitation of other institutions. Only then, it is being argued, do we stand a chance of creating conditions for achieving a better economic performance. This view was so prevalent that during political campaigns for elections, this subject dominated debates to demonstrate its importance.
The Democratic Progressive Party, in its manifesto, adopted public service and public finance management reforms as priority programs of the needed transformation programme of action and wage harmonization in the public service is made the cornerstone of the public service reforms. Wage harmonization is not only necessary to revitalize the service but it is considered an important means of curbing the propensity for fraud in the Service. Equally important is the fact that it restores the principle of “equal pay for equal work” in the public service as was the case up to 1998 before a multiplicity of salary scales emerged.
The wage harmonisation policy therefore is not only needed to ensure the needed enhancement of the effectiveness and efficient of the public service but it is also intended to curb the potential for financial frauds and eradicate laissez faire attitudes that have thrived in public service particularly during the past two decades. The principle of “equal pay for equal work” in the form harmonization must be a core element of the transformation process and must be implemented. For it simply does not make sense that a newly recruited doctor in the mainstream Civil Service should receive a starting salary that is equal to the salary of a driver in the Anti-Corruption Bureau or in Human Rights organisation.
Nor does it make sense that a Budget Director or the Accountant General for example should receive just about half the salary of his counterparts in the Judiciary or in the National Assembly. We are unlikely to get the best from such people and we have created an environment that is conducive to fraud which progressively led to a disregard for public money as we saw during the cashgate days. It is in view of this that the Government has decided that as part of the needed transformation, salary scales in the public service be harmonized as they were between 1964-1998.
Let me deviate and give you the background to the present controversies that have engulfed our country. In order to achieve harmonization, the government decided that, within the budgetary limit of an average wage bill increase of 24.4 percent, the mainstream Civil Service should have a higher increment that would permit their salary scale to be notionally higher than other salary scales in the public service except for the Anti-Corruption Bureau that remains the highest. We then allowed other scales to increase up to the new mainstream Civil Service salary scale. But because their scales were originally higher than that of the Civil Service, it followed that their increment were smaller.
The gist of the strikes and other controversies is that those who had privileged salary scales want to continue to earn more than their mainstream Civil Service colleagues. In short they demand equal salary increments that would maintain their superiority over the mainstream Civil Service. To do this, of course means, that we would have to find extra money from somewhere. There is just no money for us to increase their salary scales. Recently the IMF programme that we have signed is premised on expenditure and therefore wage containment.
If we break this agreement with the IMF, the chances of reducing inflation and interest rates and returning to normality will have vanished. Bwanas and Donnas you can see that between wage containment demanded by the IMF and finding means to perpetuate privileges for a few people, the country must choose wage containment.
However, I am aware that there is need to resolve the controversies so that the country can resume normality. For this reason, I am prepared to continue to negotiate with those who feel aggrieved. But these negotiations must be within the legal framework. We are prepared to prevent the prevalence of anarchy that is being fueled by a few disgruntled power hungry politicians within and outside the country. We have the means, within the law, to deal with such elements of people.
Lastly, I wish to appeal to you Bwanas and Donnas to be understanding as we pass through these turbulent times.
When deciding to implement such a policy, we knew that groups within the public service that are privileged to enjoy higher salary scales would fight against this policy. I must confess that I equally expected that the sense of fairness and decency would prevail quickly. Unfortunately, unscrupulous politicians within and outside have taken advantage of the situation to perpetuate the controversy and extend it to other sectors inside and outside the public sector.
I wish to appeal to the public to support the Government in this matter that is ultimately intended to enhance our economic performance and accelerate the eradication of poverty in our country as I have explained.
Let me thank you for listening to me on this very important subject.
In conclusion, I would like to thank all government ministries, departments and agencies that worked so hard in the past quarter. Together we have achieved a lot; and together we will transform this nation.
In the coming few weeks, government will announce the specific targets that each ministry and department will be pursuing in 2015. The public is therefore encouraged to directly interact and/or question the relevant ministry and/or department in line with their mandates. Further, I have directed that every two weeks at least one ministry and/or department must face the public and account for their planned deliverables. Remember, this DPP-led government aims to double the economy by 2019. So, Action, and more action is all we need.
Let me thank you for listening to me.
May the Almighty God bless you all and bless Mother Malawi.Follow and Subscribe Nyasa TV :