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The Thumb: Malawians getting a raw deal from government

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The Business Times a few days ago run an article in which it highlighted a report from the World Bank revealing that a US$19 million project it started financing in 2013 to help the Malawi government improve financial management systems and address re-occurrence of cashgate had failed to achieve its objectives six months before its conclusion in June 2016.

In a periodic Implementation Status Results report dated December 31, 2015 on the Financial Reporting and Oversight Improvement Project (FROIP), the World Bank said its review has found Malawi’s progress towards improving its financial management systems “unsatisfactory”.

The bank said key pillars of Public Financial Management in Malawi such as cash management, commitment controls, debt management, payroll management, and financial reporting, are still weak and that the country remains at risk of cashgate types of fraud.

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The report also observed that there was less commitment to strengthen the control environment in the Malawi government.

Problems observed included inability by the government to prepare bank reconciliation statements, prepare and publish in-year financial statements quarterly as well as prepare and publish audited annual financial statements in accordance with the Public Financial Management (PFM) Act.

The government was also not able to communicate budget ceilings to ministries and departments, enforce commitment controls; prevent misapplication of funds due to non-adherence to rules regarding budget virements; ensure adequate segregation of duties between end users and system administrators of the Integrated Financial Management Information System; and enforce managerial accountability to ensure compliance with rules and regulations.

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The World Bank team noted significant deterioration in the effectiveness of payroll controls where there were “several anomalies” and that the team was unable to confirm any of the actions taken by the government because no evidence was made available.

The team went further to recommend that beneficiaries as well as the officials who manipulated the payroll system should be arrested, investigated and prosecuted.

The team also observed that there was inadequate managerial accountability in government operations and that staff were usually not held responsible for not performing.

It was also noted that the Independent Audit Committee could resolve only 22 of the audit issues referred to them and that over 50 cases were outstanding and that observations or internal control issues raised in previous internal and external audits reports remained largely unattended to or repeated over the years.

The report states that statutory financial reporting deadlines were substantially violated and observed, in particular, that the draft financial statements for the financial year ended 2013 were submitted to the Auditor General in May 2015 instead of October 2013 – about 19 months after the statutory deadline.

The draft financial statements for 2014 were submitted to the Auditor General in September 2015 – almost 12 months after the deadline and that although it is a legal requirement that financial reports be published in the National Gazette and national newspapers, that did not happen.

The report also observes that audited financial statements were in arrears, with statements for 2010, 2011, 2012, 2013 and 2014 either not completed or yet to be published in the gazette.

Now, do we really expect donors to resume aid to the country with such a state of affairs? Where are the reforms we have been told are being implemented to improve systems in the Malawi government?

Malawi is currently going t h r o u g h unprecedented e c o n o m i c problems largely because of the suspension of donor aid in 2013 following massive looting of public resources dubbed “cashgate”.

Donors withdrew their aid because it was clear that the Malawi government lacked proper systems that could prevent theft of their money at the expense of poor people and national development.

The donors made it clear that they would only consider resumption of aid to the country once they are satisfied that systems have been strengthened to prevent theft and fraud.

Two years down the line, government has still not been able to put in place adequate measures to prevent re-occurrence of cashgate. And donors still don’t feel comfortable to entrust their resources with the Malawi government.

The revelations as contained in the World Bank report as outlined above are, to say the least, shocking and an embarrassment to the people in Malawi.

Does it really make sense for the entire government machinery; with many highly qualified financial management experts who include PhD and Masters Degree holders as well as chartered accountants, to completely fail to put in place measures for the proper management of resources?

Or the officials are deliberately keeping the systems weak so that they should continue stealing money from the government?

Whatever the case, this state of affairs is unacceptable and Malawians are clearly getting a raw deal from the people they entrusted with the management of their resources. Malawian deserve better than this. Somebody is really sleeping on job. And it’s now very worrying. #ThumbsDown to the leadership.

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