Malawi risks losing out on the next round of funding from the Millennium Challenge Corporation (MCC) because of slow progress to seal loopholes in public finance management and prosecution of Cashgate suspects.
Malawi is currently benefitting from a five-year $350 million compact with MCC to increase access to electricity and improve transmission infrastructure which will be completed in 2018.
However, the MCC scorecard for 2017 indicates that while Malawi passed 16 out of 20 indicators the board uses as one consideration for selecting new beneficiaries, the country is on a downward spiral on the most crucial indicator: control of corruption.
In the 2017 scorecard, Malawi has scored 57 percent, seven percentage points below last year’s score under the ruling justly indicator.
Speaking in Lilongwe during the briefing on the 2017 scorecard yesterday, MCC resident country director Oliver Pierson said if the downward trend on control of corruption continues, Malawi could risk failing the indicator in 12 months, when it goes below the 50 percent threshold.
He said to maintain a good score on control of corruption, government needed to continue efforts to improve public finance management and public sector reforms.
Said Pierson: “As the compact winds down, there is renewed focus because the MCC board of trustees may want to look at Malawi for a second compact and if Malawi is interested as well, it would be extremely important to work on passing scores on at least 10 of the indicators among them the hard indicators like control of corruption.”
He said under control of corruption, the scorecard—which uses information sourced from 15 different sources among them World Bank and Brookings WGI— looked at whether the country was making efforts to fight against corruption, levels of prosecution and investigations.
Pierson added that Cashgate and resulting investigations and prosecution of public servants involved had contributed to increasingly low score on the corruption control indicator.
Commenting on the correlation between governance weakness in the corruption fight as evidenced by stories in the media pointing to disagreements on investigations by the Anti-Corruaption Bureau, Pierson said if there was no correction of real or perceived weaknesses in the corruption fight, this would impact negatively on the future scorecards.
He said: “Malawi is still passing on control of corruption because the government is making efforts to charge and prosecute those involved in Cashgate and this needs to be sustained.”
Other areas in which Malawi has failed is fiscal policy, inflation, gender in the economy as well as business start up.
On business start up, Malawi has registered slight improvement on how many days it takes to register a business, access to land for investment as well as provision of tax breaks.
With the ongoing creation of one stop centres under Malawi Investment and Trade Centre (Mitc), the score might improve from the current 27 percent.
Malawi has also not improved on removing barriers to equitable participation of women in the economy resulting in a score of 50 percent.
However, the country has done well on regulatory quality, trade policy, land rights and access to credit under the indicator of economic freedom.
In the area of investing in people, Malawi has scored high on health expenditures, primary education expenditures, immunisation rates, child health and girls primary education completion rate.