Finance Minister Goodall Gondwe yesterday changed his tune over the K4 billion earmarked for disbursement among constituencies, saying the funding was an experiment outside the current mechanisms.
But analysts have described the minister’s explanation as unconvincing and suspicious.
Speaking when he addressed the media at Parliament Building in Lilongwe, Gondwe reiterated that the K4 billion, which will now be shared among all 193 constituencies and not just 86 as earlier planned, was not budgeted for.
He further said the funding was an experiment outside the current normal mechanisms following complaints of abuse.
“It is a legitimate experiment at new funding modalities for local councils. Our formula was to fund projects identified by the area development committees (ADCs). I think as a country we should look for other ways of funding local councils because you have complained that CDF [Constituency Development Fund], LDF [Local Development Fund] or DDF [District Development Fund] are being abused. So, we are looking at other ways, we may come to Parliament and say why can’t you make this universal,” said Gondwe.
But his attempts to defend the expenditure fell short of explaining how the money granted to MPs will be disbursed once given to local councils.
Gondwe conceded that while his ministry had agreed with the Ministry of Local Government and Rural Development that the projects should be conceptualised by ADCs, he had no idea how constituencies were selected.
In a huge departure from previous statements by the Local Government Ministry and Treasury, Gondwe said the money was not budgeted for in 2017/18 budget but while reviewing the budget, some projects were added.
“In respect to what happened to the magic K4 billion amount that you are talking about, we were looking at how the budget was responding. I told you we had two problems on the maize side and receipt side it was MRA [Malawi Revenue Authority] not collecting enough money and expenditure we had were increasing the money.
“When we did the calculation, we had some resources that we could do over and above the K33 billion which we had passed in the House,” he said.
Gondwe said the K4 billion was the total surplus, adding: “If I had K5 billion, I could have given the K5 billion to this experiment.”
But the Finance Minister failed to convince the press, who mostly questioned how government planned to disburse the funds.
He then pledged to hold another press briefing in the day, which had not taken place as we went to press.
But in an interview, economic expert Henry Kachaje, who is also former chairperson of the Economists Association of Malawi (Ecam), said Gondwe’s explanation was unconvincing and suspicious.
“The allocation and the whole process leaves a lot to be desired. It’s questionable and has not been a transparent process. Questions remain on where was this money obtained when Goodall indicated MRA was under collecting; and the exact modalities of the funding to the MPs,” he said.
Kachaje also wondered why Gondwe had entrusted the MPs to spearhead development projects after telling Parliament that the CDF, which was ran by the same MPs, was being abused.
He further observed that Gondwe had earlier cut funding to crucial sectors citing lack of funds.
Reacting to the issue, opposition Malawi Congress Party shadow finance minister Joseph Njobvuyalema said while Gondwe’s initial plan was illegal, the parties in the House had agreed to rectify the matter and ensure the expenditure was legalised.
He said: “Government on its own identified some savings within the national budget and without consultations with Parliament, they allocated some money to 86 constituencies, which was unconstitutional and illegal.
“So, as you are aware, some members from the opposition raised the matter and agreed that there should be some consultations.
“So Parliament formed a group of members who met with the Finance Minister and agreed that the money should be distributed equally to all constituencies. Therefore, that recommendation was tabled in the House and we approved that is the proper way to go.”
Gondwe’s press briefing followed mounting pressure on government to explain the planned disbursement amid fears of possible abuse.
The Anti-Corruption Bureau (ACB) on Wednesday said it was reviewing the matter to assess if there is merit to warrant its action.
Both Secretary to the Treasury Ben Botolo and Minister of Local Government and Rural Development Kondwani Nankhumwa indicated that the money was previously allocated in the 2017/18 Budget, but both fell short of explaining the modalities of the expenditure.
Budget and Finance Committee of Parliament chairperson Rhino Chiphiko earlier described the transaction as suspicious.
He said Gondwe’s explanation on the source of the funding is questionable as Treasury has been forced to cut on expenditure for various programmes due to inadequate funding .