Malawi risks another financial collision with World Bank

Malawi Government which is currently struggling to refund US$937,905 (almost K394 million) to the GLOBAL the Global Fund to fight Aids, Tuberculosis and Malaria is yet on another financial collision course with the World Bank over a K350 million (almost US$833, 000) funding which is said to have not been properly accounted for.

The money was meant for the Malawi Social Action Fund lll (Masaf lll) to benefit the country’s city, town and district councils and the development means that Malawi may be forced to refund the money again.

A leaked document addressed to all councils, the funds were disbursed by the Local Development Fund (LDF) through the Masaf III Project funded by the World Bank.

The money was meant for implementation of activities covering public works programmes, capacity building activities, supervision of solar installations and completion of related sub-projects.

Ministry of Finance, Economic Planning and Development has since threatened the councils with a reduced budget allocation if nothing is done to track down the money.

The councils have been given up to close of business on Wednesday October 15, 2014 to submit reports on how the money was used.

Under question include Dedza, Chitipa, Dowa, Kasungu, Lilongwe, Likoma, Mangochi, Phalombe, Mwanza, Rumphi, Thyolo as well as both Blantyre District and Blantyre City councils.

The highest suspect is Kasungu with K100 million unaccounted for expenditure, and the least is Rumphi with K900 000.

“You are requested to submit these reports to LDF before close of business on Wednesday 15th October 2014. This will enable LDF to compile a consolidated report and submit to World Bank before the funds are declared ineligible expenditures,” reads part of the document.

Spokesperson for the Ministry of Finance Nations Msowoya confirmed the anomalies in the accountability of the funds but said these anomalies originate from the beneficiary councils and central government has no hand in it.

“The issue is not unaudited accounts, but non-submission of receipts or reports on expenditures by councils who were given money in advance by the LDF,” he said.

Msowoya explained that the funds used for Masaf were borrowed from the World Bank and will be repaid over a period of 40 years, including a grace period of 10 years.

He said that government was worried that taxpayer’s money will be used to repay the loan, yet the money was not used to its intended purposes.

“Failure to submit receipts would be interpreted as if funds were not used correctly. The consequence is that the Malawi Government will be required to refund these monies back to the World Bank,” added Msowoya.

Recently, Malawi Government, which is currently economically was thrown into another fix after the Global Fund wrote the administration demanding it to pay back the US$937,905 (almost K394 million).

The money was an outstanding installment of US$3,994,764 (almost K1.8 billion) which an audit carried out by the Office of the Inspector General (OIG) of the Global Found discovered in 2010 to have been abused out of the funds disbursed for rounds 1, 2, 5, 7 of the fund’s assistance covering a seven-year period.

The outstanding payment was due on March 31, 2014 and is one of the three requirements for Malawi to access additional funding amounting to US$574.3 million from the Global Fund under a new funding model.