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Thinking Development

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By Christopher Guta, PhD:

In today’s episode, I pay attention to what the Democratic Progressive Party (DPP) manifesto proposes regarding how Malawi’s development will be propelled forward with the support of development partners; that is, donors.

Malawi’s dependence on overseas development aid has a long history. My analysis of national budgets for the period 1964 – 1975 reported by the World Bank revealed that significant proportions of funds for both recurrent and development expenditures of the country were contributed by the British Government. That situation has persisted to such an extent that Malawi was classified as a Highly Indebted Poor Country by the early 2000s. It has been argued that, by 2005, Malawi was, economically, on the ‘edge of an abyss’. Thanks to the benevolence of the international community, a significant proportion of Malawi’s debt was cancelled. This action gave impetus for Malawi’s faster rate of growth and development during the first Bingu Administration that run from 2004 to 2009. Many people benefitted from resources released from debt servicing and applied to development activities such that, by 2009, a middle class of Malawians was emerging. Regrettably, the country has, again, accumulated significant amount of foreign debt. Records show that, as at December 2018, the amount stood at $2.1 billion. It is sobering that this amount is well above the foreign exchange our economy is capable of earning in a year.

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The administration of funds that Malawi can access from development partners is based on five principles in the Paris Declaration on Aid Effectiveness that were agreed between donor and recipient countries, including Malawi, in 2005.

First is the principle of ownership under which Malawi is required to put in place national development strategies with clear strategic priorities. This must be the reason Malawi outlined a specific development strategy one year after the Paris Declaration, the Malawi Growth and Development Strategy: 2006-2011. Second is the principle of alignment, where donors are expected to align the allocation of their development assistance funds with the national strategy. Third is the principle of harmonisation. Consequently, Malawi’s development partners have a forum where they coordinate, or are expected to coordinate, development cooperation actions. Fourth is the principle of producing and measuring results. Here, both Malawi and development partners are required to demonstrate that there is value for the money spent on donor-funded development programmes. The fifth principle is mutual accountability, where regular reviews are undertaken to assess progress in implementing aid commitments.

There are significant challenges regarding adherence to these principles by both Malawi as a recipient country and its development partners. The most significant of these is that a lot of development funding is bypassing the government, thereby undermining the principle of ownership. That said, the issue at hand is how has the DPP positioned itself regarding development cooperation?

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To begin with, words ‘donors’ and ‘development partners’ are scarce in the current DPP manifesto, occurring just three times and once, respectively. The party has been discouraged by action taken by donors to withdraw financial support to Malawi delivered through the national budget during the period 2014 – 2019. While this breaks the principle of ownership, I am of the view that the rationale for the withdrawal – rampant theft of public funds called Cashgate – is understandable. It has, however, come at a heavy cost to the ordinary citizen, in the form of compromised efficiency and effectiveness of public services and levels of absolute poverty.

I must say that the best route out of our development dilemma is one where we depend more on our resources rather than on aid from donors. But, recognising our limitations regarding productive capacity and hence ability of the economy to generate the revenues needed to ensure delivery of efficient and effective services, development partners are going to be needed for a while, especially in areas such as investments in human capital development and development of infrastructure that would make doing business in Malawi attractive to both domestic and foreign investors.

I was taken aback when I read an article co-authored by our own Dr Micheal Chasukwa of Chancellor College, University of Malawi, to the effect that Malawi is being projected in development circles as a unique case regarding its development prospects. I, therefore, appreciate the undertaking in the DPP manifesto that “aid from development partners will be used for long-term development projects that are related to the international trade interests of Malawi, instead of aid that merely promotes short-term consumptive priorities”.

Let us all look out for how DPP will walk the talk in the next five years. Indeed, we must focus on trade and not aid. That means focusing on production and, by extension, the accumulation of knowledge needed for innovation.

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