Weak absorption of project funds by ministries, departments and agencies (MDAs) is haunting the speedy rollout of government projects under the Public Sector Investment Programme (PSIP), a performance report has indicated.
The PSIP sets out prioritised public projects to be implemented by the government, in five-year cycles, with funds from the fiscus, development partners and private entities.
Public investment generates economic benefits, including job creation, and amplifies productivity, which are deemed essential ingredients for the attainment of the country’s economic objectives.
According to the Performance Report of 15 large projects in PSIP in the 2022-23 financial year, which the Ministry of Finance has posted on its website, the absorption of government funds by MDAs is inefficient, with 57 percent of government funds not being absorbed and only 43 percent being absorbed.
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“This is a concerning situation, as it means that a large sum of money allocated to MDAs is not being used as it should be. The situation is further exacerbated by the fact that 13 percent of donor funds have also not been absorbed.
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“Clearly, steps need to be taken to improve the absorption rate of government funds by MDAs in order to ensure that funds are used as efficiently as possible,” the report reads.
PSIP Secretary Patrick Zimpita says in the report that it is important to ensure that appropriate competencies are developed at all levels of project and programme implementation.
Zimpita says despite the government’s ambition to execute all the priority undertakings and programmes, fiscal restraints due to the current economic circumstances have limited the availability of funds.
“Nevertheless, the 2022- 23 PSIP reflects a reasonable compromise between national necessities and fiscal space.
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“In light of the limited fiscal space, it is essential that the PSIP is carried out in the most expeditious manner to realise maximum return on investment. To this end, it is imperative that appropriate competencies are developed at all levels of project and programme implementation,” Zimpita said.
According to the Ministry of Finance, the 2022-23 to 2026-27 PSIP is devised to augment national capabilities and expedite comprehensive and sustainable development.
“The PSIP highlights the significance of fostering private sector-led economic expansion and public-private partnerships in the delivery of public services, which is essential to achieving development for the populace. It is also recognised that these initiatives will only be effective in the long-term if a substantial amount is invested in economic and social infrastructure.
“External assistance remains an integral part for the successful execution of the PSIP, thus it is of paramount importance that the government and development partners [should] collaborate more diligently than ever to enhance the efficacy of PSIP so as to guarantee the most beneficial outcome for the people of Malawi,” it reads.
