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Audit exposes subsidy mess

K2.2 billion down the drain

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The government has, through the Ministry of Lands, failed to recover loans amounting to K2.29 billion under the Decent and Affordable Housing Subsidy Programme (DAHSP)—popularly known as Cement and Malata subsidy—during the year ended June 2020, the Auditor General (AG)’s report of government accounts has revealed.

The report further notes that suppliers delivered low-quality building materials worth K1.002 billion under the programme during the same period.

According to the audit report, the DAHSP loans mortgage advance agreement states that the beneficiary of the fund shall be entitled to enter possession of a house purchased or built wholly or partially with the loan where the borrower or his agent accumulates arrears within 20 years.

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But a verification exercise revealed that DAHSP loans are not being repaid in full by beneficiaries, in some cases three years elapsing without any recovery attempt being made.

The audit indicates that the ministry failed to collect K757.7 million in Mchinji District, K412.8 million in Ntcheu District, K376.2 million in Dedza District, K316.5 million in Ntchisi District, K255.5 million in Salima District and K171.3 million in Kasungu District.

On provision of substandard materials, the AG’s report indicates that Public Procurement regulations stipulate, in Section 18(1) (i) for instance, that the general functions of internal procurement committees in ministries, departments and parastatal organisations shall be to assess the quality of procured goods, works and services.

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“The verification exercise indicated that most suppliers delivered substandard building materials. These substandard materials were subsequently distributed to DAHSP beneficiaries in form of a soft loan. The materials under query were worth K1,002,330,518.40,” the report says.

The audit further reveals that revenue amounting to K6.035 million was collected but used at the source.

Treasury instruction 5.7.2 (2004) states that sound cash management should be employed. It entails collecting revenue when it is due and banking it promptly.

“The audit verifications revealed that not all revenue collected was deposited in the designated Government Account # 1 with the Reserve Bank of Malawi. In one case, the cash not banked amounted to K6,035,000.00 which was used at source at Dedza District Council without an appropriation in aid/authority,” the report says.

Ministry of Lands spokesperson Enock Chongoni was not immediately available for comment.

During the last meeting of Parliament, Finance Minister Felix Mlusu presented the audit report and referred it to the Public Accounts Committee of Parliament for scrutiny.

Centre for Social Accountability and Transparency Executive Director Willy Kambwandira recently indicated that there was a need for the government to ensure that every tambala that is budgeted for is put to good use.

The DAHSP was launched on December 18 2014 in Msampha Village, Traditional Authority Chadza, in Lilongwe by former president Peter Mutharika.

Speaking at the launch, Mutharika said the programme was a government initiative designed to benefit all Malawians regardless of their political affiliation.

“Good housing is a human right. Everyone has a right to good housing,” Mutharika said, adding that there would be specific committees responsible for identifying beneficiaries.

“This a revolving fund. Beneficiaries should repay loans for others to have access to the loans. This is a pilot year. According to Lands Minister Bright Msaka’s report, we expect to build close to 15,400 houses each year for the next 10 years,” he said.

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