Malawi loses K6 trillion in public contracts
A study by Lilongwe University of Agriculture and Natural Resources (Luanar), Economic Consultative Association of Malawi (Ecama) and international charity Oxfam has revealed that Malawi lost K6 trillion between 2012 and 2021 due to poor management of public contracts.
Results of the study were unveiled in Lilongwe Thursday.
Presenting the results of the study, titled ‘Public Contract Implementation: Any Feasible Remarkable Gains and Losses to National Development over 2012-2021 Period in Malawi’, Luanar Associate Professor of Economics Kennedy Machila said, among other things, the funds were lost through delays in implementation of projects, resulting in the ballooning of project costs.
Among other things, the study has established that change of specifications after award of a contract contributes significantly to cost overruns.
It further says additional scope of work attracts an unreasonable added cost which is not competitive.
The study results also indicate that lack of adherence to evaluation ethics on public contracts, notably when the contractor is experiencing payment cash flows, has a negative bearing on project implementation.
The results further show that a scramble for resources in local councils, attributed to the problem of inadequate Other Recurrent Transactions funds to support public contracts implementation, has become an impediment to project progress.
Machira said the study also unearthed failure to complete projects due to lack of commitment by implementing partners as one of the factors affecting project implementation.
He said, through the study, they also learned that inconsistencies in the use and implementation of District Development Fund and Constituency Development Fund allocations have ended up perpetuating the problem of poor accountability.
“The study has also revealed inadequate oversight in contract management and implementation by mandated institutions such as the Government Contracting Unit (GCU), the Public Procurement and Disposal of Assets Authority, Ministry of Justice and Ministry of Finance.
“The study has also revealed faulty vetting processes which apply [to the] least evaluated bidder. This has the potential of leaving out competitive bidders,” Machira said.
He said some challenges come in as a result of government overcommitting itself to too many projects even when it does not have resources.
GCU Contract Management Technical Adviser Alfred Nyasulu has, meanwhile, said the observations by the report are important.
“For instance, they are raising an issue of regulating contract management in Malawi and the nonexistence of a policy regarding contract management as well as a law to decisively deal with challenges that Malawi is facing, including institutional challenges and professional misconduct.
“When you look at these issues, they actually set us on a path where, as we are looking at Malawi 2063 [goals], if we do not sort out these challenges today, we will have challenges in realising Malawi 2063 goals,” Nyasulu said.
Ecama Secretary General Andrew Kumbatira said there is a need for authorities to cut careless wastage of resources through public contracts.
“We, as Ecama, have observed serious weaknesses in the Public Finance Management framework that is currently obtaining in the country.
“There are a lot of gaps and weaknesses in the system and these are leading to wastage of public resources. Therefore, the research findings we disseminated today tried to highlight those weaknesses,” Kumbatira said.
He said there are plenty of resources that have been lost in Malawi because of mismanagement of public contracts.
Kumbatira cited the Malawi Traffic Information System, or Maltis, the passport printing contract, Automated System for Customs Data, also known as Asycuda, at the Malawi Revenue Authority and other big contracts where the contract sum is small but at the end of the contract, the price is bloated.
