The World Bank country manager Greg Toulmin has said corruption is one of Malawi’s major obstacles to prosperity.
Malawi is one of the poorest countries in the world whose gross domestic product per capita (GDP–PPP), which was at $711.20 in 1994, only grew to $1 095.04 by 2017.
“Corruption continues to be one of the major obstacles blocking Malawi’s road to prosperity,” observed World Bank country manager Greg Toulmin in an e-mailed response last week.
But government spokesperson Nicholas Dausi, in an interview on Thursday, disputed the assertion, saying what Toulmin said is his personal opinion.
“The World Bank continues to emphasise the need to address corruption both in relation to the funds we administer and in relation to government funds,” Toulmin said.
The World Bank country manager was responding to an inquiry on the role of the bank in the fight against corruption in the country after a basket fund by the country’s development partners—the Financial Reporting and Oversight Improvement Project (Froip)—withheld its contribution to the procurement of the Integrated Financial Management System (Ifmis), a software used in the management of public funds.
Toulmin said the bank and other development partners had initially planned to contribute to the procurement of Ifmis under Froip.
“But after discussions on various procurement options between the bank and government, it was mutually agreed that Froip would not finance the procurement, and that government could procure the system through its own resources and procurement systems,” he explained.
Instead, government continues to use the Ifmis that was easily manipulated, resulting in Cashgate, the massive looting of public funds that led to government losing K236 billion, between 2009 and 2014, which could happen again if the process is not stopped, according to the former Auditor General Stephenson Kamphasa who audited the system and discovered that it remains porous.
For the 2009-14 Cashgate, only some of the culprits mentioned in a forensic audit by a British audit and financial advisory firm Baker Tilly which looked at a six-month period in 2013, have been prosecuted. Although the Anti-Corruption Bureau (ACB) has found that some of the files for the earlier period have cases to answer, the prosecution of such cases is yet to start.
A leaked investigative report by the ACB has, meanwhile, revealed a food ration scam in which a supplier, Pioneer Investments, controversially increased the bid price by over K450 million and from the proceeds, the supplier made a donation of K145 million to a Democratic Progressive Party (DPP) bank account for which President Peter Mutharika is the sole signatory.
Cashgate also resulted in donors withholding direct budgetary support which accounted for up to 40 percent of Malawi’s recurrent budget.
“Cashgate exposed the reality of the pervasiveness of corruption in Malawi and rightfully increased stakeholder demand for much greater scrutiny in the management of public resources,” said Toulmin.
He said while technology in the form of the Ifmis is an important tool to help reduce the abuse of public funds, he cautioned, there was also need to address the human factor.
“Technology on its own cannot address human elements that affect effective administration. These include such issues as behavioural attitudes, incentives for managerial accountability and staff performance at all levels,” Toulmin said.
Transparency International (TI) which ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspersons, using a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean, ranked Malawi 31 in last year’s index having slipped from 43 in the previous rating.
In the wake of Cashgate, government in 2015 invited bids for the supply of Ifmis. Twelve bidders expressed interest but none was given the contract until this year when the Accountant General engaged a Zimbabwean firm, Twenty Third Century, whose bid in 2015 was K10 billion.
But Secretary to the Treasury (ST), Ben Botolo, three weeks ago, indicated that the Treasury is unhappy with the procedure followed to procure the software due to the time lapse and would prefer that the tender process be restarted.
Botolo said his fear is that a lot of things might have changed since the bidding was done in 2015 and that the price may have escalated.
Chairperson for the Public Accounts Committee (PAC) of Parliament Alekeni Menyani said, in an interview last week, that based on what has transpired so far in an attempt to acquire another Ifmis, it is safe to allow the Secretary to Treasury to take over the process and normalise all the short cuts.
“Treasury instructions are very clear, suppliers must not come in through the back door,” he said.
He said since government has understood the missed steps and made corrections to reinstate the best evaluated bidder the committee fully supports the measures being taken to give the award to the company that won and changes being made internally to finalize the procurement process.
“As Parliament, we recommend that the ST should move to re-engage the Best Evaluated Bidder with a no objection,” he said.
A Treasury source confirmed with this reporter that Twenty Third Century has been sent a letter accepting its bid, even though the firm was the third-ranked bidder in 2015 and its contract price—$13 million (K10 billion)—was higher than others.
Botolo last month said when the next vendor is identified, it will take some time to have the software running full throttle.
“There are issues of soft and hardware that have to be resolved in line with compatibility with the servers. All that has to be taken into account. Apart from this, we want the new Ifmis to interface with the Human Resource Management Information System,” Botolo said.
The bid opening was conducted in Salima on September 11 2015.
Ifmis is a common information and communication technology (ICT) platform which integrates core public financial management (PFM) functions to ensure efficient management of public resources.