While the narrative has appeared that it is only the recurrent budget that donors are shying away from, a Treasury report shows that the development budget is also falling sharply.
According to the latest annual Malawi Development Cooperation Atlas Report—a mechanism for increased transparency and effectiveness of development—development cooperation has dropped in the financial years between 2012 and 2015, by about $350 million. This represents a cumulative 30 percent fall over the years, says the report.
It says total disbursements under development cooperation fell from $1.259 billion in 2012/13 to $1.011 billion in 2013/14, translating to roughly 20 percent reduction.
A further decrease of about $100 million or 10 percent occurred between 2013/14 and 2014/15, according to the report we have seen.
The World Bank, the report adds, continues to contribute the most development assistance, but its contribution too is decreasing.
For example, after disbursing $287 million in 2012/13, the World Bank—by far Malawi’s largest development financier—gave $171 million in 2013/14; and $139 million in 2014/15, consistently trimming in each year.
At bilateral level, it is the United States (US) that is leading in provision of development assistance.
“In each of the three fiscal years, both the United States [including Centre For Disease Control, Millennium Challenge Corporation, Office of US Foreign Disaster Assistance, and United States Agency for International Development] have consistently contributed the largest amount of assistance among bilateral funding organisation groups,” reads the report.
As expected, general budget support has significantly decreased over the last three years too, mainly due to the suspension of aid following Cashgate from 19 percent in 2012/13 financial year it dropped to just two percent of the total national budget in the 2013-14 financial year.
According to the report, majority of the assistance continues to be provided as grants. On the other hand, loans have increased slightly with the World Bank providing a majority of them. The report has classified technical support as stable and that the health sector continues to dominate the aid still being received.
EU Head of Mission, Marchel Germann, yesterday said the report needs more time to be reviewed, but explained EU’s own dwindling aid to lapse of specific funding lines.
“We might need more time to look into this. As for the EU, we are coming towards the end of some of the disbursement and that would explain why the flow is decreasing,” said
However, during the opening of the meeting of the Development Cooperation Group—comprising donors, civil society, government and other players in Lilongwe to discuss aid modalities on Tuesday, focus was on food security and long-term development planning.
Speaking during the opening, Germann, whose EU is the current chairperson, lamented the ongoing hunger crisis affecting 2.8 million Malawians saying the cycle of food insecurity has gone on for a long time.
“It is time to act. This downward cycle of food and nutrition insecurity needs to be broken. We should use our collective resources to strengthen resilience in a way that prevents hunger rather than responds to it,” said Germann.
In his reaction to the report, Secretary to the Treasury Ronald Mangani said the country’s agriculture system fails to cope with national demand for food for the growing population because of a multiplicity of factors.
He added that the country needs to move towards “a regime that penalises suicidal negligence rather than reward it” hence “greater avoidance of disaster risk enhancing behaviours.”