Norway has suspended budget aid to Malawi, one of the poorest nations in Africa, because of alleged corruption and embezzlement.
The financial scandal, known locally as “cash-gate”, forced the government to shut down its payment system last week so that it could investigate over 4 million dollars that went missing, delaying the payment of salaries to teachers, nurses and doctors.
“There are clear signs that substantial funds have been embezzled from the Malawian Ministry of Finance,” Norway said in a statement it released on Friday
“We have a policy of zero-tolerance for corruption, and cannot disburse any more budget support to the Malawian authorities until this matter has been fully resolved,” development Heikki Eidsvoll Holmaas said.
So far this year Norway provided $41.4 millionworth of aid to Malawi, a fifth of which was in the form of budget support.
Norway is one of the world’s biggest foreign donors and expects to donate $5 billion this year to dozens of developing nations.
Malawi police said that about 10 junior government officials had been arrested so far for suspected graft, and that they had recovered tens of thousands of dollars in cash from their car boots and homes.
Last week, envoys from eight Western donor nations, whose aid traditionally has accounted for about 40 percent of the state budget, asked Banda to deal with the alleged corruption at the treasury and investigate an attack on the budget director.
Banda dissolved the cabinet on Thursday and has vowed to crackdown on culprits.