Donors in the transport sector have criticised government’s financial and procurement management of the sector, a week after President Peter Mutharika said in London that the country’s fiscus is much cleaner.
The donors—the World Bank, the African Development Bank (AfDB), the European Investment Bank (EIB), Japan International Cooperation Agency (Jica), Britain’s Department for International Development (DfID) and the European Union (EU)—on Wednesday also told government to comply with procurement procedures on the ground.
The donors expressed their concerns through EU Ambassador Marchel Gerrmann in Lilongwe during the Seventh Joint Transport Sector Review where players in the sector reviewed challenges and achievements in 2015.
They also expressed worry at the accumulation of overdue payments in the road construction sector, observing that this is crippling the industry’s growth.
He said: “As mentioned in previous joint sector reviews, we are concerned by the accumulation of overdue payments in the road construction sector.
“These overdue payments are crippling the industry and have come about as a result of over-commitment of new upgrading construction contracts without sufficient consideration to the cash flow required to sustain these multi-year projects.”
Gerrmann also said the macro-economic and fiscal situation remains dire, asking government to allocate the scarce resources more effectively.
In particular, he said donors expect to see the postponement of non-essential road upgrading projects until later.
“During these times of limited funding available to your ministry [of Transport], it is imperative that only those investments that can guarantee the highest financial returns are selected for implementation,” he advised.
On procurement processes, the ambassador said it is crucial that the processes be followed to allow contracts achieve the highest standards of transparency and value for money.
He said donors also observed that development of rural roads has lagged, asking government to address the short-coming.
Minister of Transport and Public Works Francis Kasaila said most of the infrastructure in the transport sector has deteriorated due to inadequate resources on the back of direct budget support freeze.
He said: “As a result the condition of our infrastructure continues to deteriorate and this is evident in all the indicators that cover the condition of infrastructure as we have been unable to meet any of the targets we set.”
The donors’ concerns on public finance management and procurement come barely a week after President Peter Mutharika pleaded with the British government to resume direct budget support to Malawi.
In his plea, the President outlined several reforms his administration is implementing to regain lost confidence from development partners who withdrew their 40 percent contribution to Malawi’s national budget in October 2013 amid concerns of Cashgate—the plunder of public resources at Capital Hill.
He said, among others, his administration has put in place strict measures to restore discipline in financial management and win back the donors trust.
In April this year, Mutharika outlined Public Finance Management Reforms which, among others, included reformation and revival of Central Internal Audit Services as a compliance tool.
However, in an interview with The Nation at the time, International Monetary Fund (IMF) resident representative Geoffrey Oestreicher described the action plan as a strong commitment whose test stood in implementation.
Malawi’s public finance management has been rocked with reports of abuse of funds with the Directorate of Public Prosecutions (DPP) at one time proclaiming that about 30 percent of resources allocated in the national budget went into people’s pockets.
Meanwhile, Kasaila also announced at yesterday’s review meeting the end of a special relationship Malawi had with the EU as a lead development partner in the transport sector after 20 years.
He admitted that the shift of EU’s attention to other sectors will, therefore, leave a huge gap in the transport sector. n