Aid has failed Malawi—experts

Economic and governance commentators have backed a British legislator’s sentiments that Malawi is worse off than it was 50 years ago despite getting aid from cooperating partners, including Britain.

The commentators were reacting to sentiments by Roy Stewart, a Conservative Party member of Parliament (MP) and Britain’s Secretary of State for International Development, as quoted by British newspapers, including The Times of London and Daily Mail, that Malawi’s state of impoverishment has worsened despite the country getting a whopping £4.5 billion (about K4.5 trillion) from Britain in form of aid for the past 50 years.

In an address at Yale University, he said Malawi, the sixth-poorest country in the world, is an example of the failure of Britain’s foreign aid policy.

Said Stewart: “The British Government has spent something in the region of £4.5 billion over the past 50 years and Malawi is, if anything, poorer than it was when we started.”

In his reaction, Economics Association of Malawi (Ecama) executive director Maleka Thula yesterday agreed that aid has not resulted in growth in most countries the world over, including Malawi.

Citing available literature on aid effectiveness, he said: “Aid is not effective because it substitutes efforts by recipient countries to collect more taxes, thus, aid is said to be fungible.

“In addition, aid does not work because of corruption and weak governance. Thus, it fails to spur growth in recipient countries.”

In recent years, corruption has cost Malawi dearly, with the plunder of public resources, dubbed Cashgate, exposed in 2013, leading to withdrawal of direct budget support to government.

The country also continues to be categorised in the low human development category of poor countries, ranking 171 out of 189 countries, according to the Human Development Index (HDI) of 2017.

Available data also shows that in recent years, poverty rates have worsened in Malawi with poverty headcount moving to 51.5 percent in 2017 from 50.7 percent, according to the Integrated Household Survey (IHS) by the National Statistical Office (NSO).

Thula said it is strongly believed that sometimes aid given to Malawi and other developing countries is unpredictable and not enough to meaningfully impact on economic growth.

On his part, Centre for Social Concern (CfSC) economic governance programme officer Lucky Mfungwe said it was sad for a country such as Malawi to ‘harvest’ a bad impression in the eyes of the donor community when it comes to aid effectiveness.

He said: “However, it is not surprising because corruption and poor governance are the order of the day in our country.”

Against such a background, Mfungwe said CfSC, in its recent study on Malawi indebtedness, recommended that legislators should be empowered on monitoring debt and aid trends to effectively play their role.

He said the centre is also pushing for the establishment of an independent task force charged with the responsibility to monitor debt and aid related projects as well as debt contraction processes so that such processes are transparent and accountable.

It is estimated that the country has accumulated public debt of about K3.3 trillion as of December 2018, a figure which is more than double the 2018/19 National Budget of K1.4 trillion.

The debt stock represents about 72 percent of the country’s total wealth as measured by Malawi’s nominal gross domestic product (GDP) at K4.6 trillion. That means for every K100 of the country’s total wealth, K72 could be used to repay loans accrued by the country.

Weighing in on the topic, Malawi Economic Justice Network (Mejn) programmes manager Kelvin Chirwa, while saying it would be an overstatement to conclude that there has not been any progress due to aid, said it was only fair to say that the fruits of the investments through aid have not been as expected in Malawi.

He said: “We have had some internal challenges in the way we have utilised aid. Issues of investing in ‘wrong’ priorities, issues of massive abuse of the resources.”

On his part, Gowokani Chijere-Chirwa, a PhD in economics scholar at the University of York in the United Kingdom, yesterday said it was clear that aid perpetuates Malawi’s poverty rates through the country’s dependency on the same.

Barely a month ago, a World Bank bi-annual publication, Africa’s Pulse, also observed that Malawi’s economic performance between 1995 and 2018 failed to translate into improved living standards of the majority Malawians, citing poor governance (corruption), low levels of per capita income and public sector indebtedness, as some factors behind such an underperformance.

Minister of Finance, Economic Planning and Development Goodall Gondwe could not be reached on his mobile phone yesterday.

However, the minister was yesterday quoted by Zodiak Broadcasting Station as having said that since 1964, Malawi has witnessed some transformation manifested by the increase in the number of people graduating from universities, an increase in the kilometres of tarmac roads from less than 200 kilometres at independence in 1964 and an increase in per capita income to over $350 (about K260 000) per person per annum.

In recent years, Treasury has found itself in a tight corner to shore up expenditure in the national budget by balancing with available resources in the wake of continued withdrawal of direct budget support and dwindling grants since Cashgate was uncovered.

Meanwhile, donors have since changed their mode by preferring to re-channel their assistance to Malawi through non-governmental organisations in case of development budget.

Before revelations of Cashgate, donors used to provide about 40 percent support in the recurrent budget and about 80 percent in the development budget.

But the switch to off-budget mode of assisting Malawi has had little impact so far, according to almost all experts The Nation spoke with yesterday, as Malawi’s structural challenges such as corruption and poor economic government still persist.