Local councils have come under fire for allegedly mismanaging a whoping K4 billion. In this interview with our Staff Writer SUZGO CHITETE, Malawi Local Government Association (Malga) executive director Hadrod Mkandawire blames the central government for some audit queries.
Q: What is your take on the recent audit which suggests that up to K4 billion has not been accounted for in councils?
A: Yes some funds could not be accounted for, but the figure is negligible, not necessarily K4 billion. We need to understand that misallocation is not abuse and or theft of funds. Further, if you analyse audit reports for the past five years, there is a significant improvement in terms of the magnitude of audit queries. So, we need to focus on the positives, of course, without overlooking the shortcomings.
Q: How small is the negligible amount?
A: If you pay attention to details of the report, you will notice that the total sum subject to audit queries is around K165 million. The queries are specifically on financial statement related to lack of title deeds for council assets, project management, untreatable Constituency Development Fund projects, irregular expenditure, and Teveta levy that was collected but not remitted.
In essence, lack of title deeds for council assets cannot be attributed to the councils as the central government has paid deaf ear despite several reminders to calls to have the assets ownership transferred to the councils. We urge the Auditor General not to include this as a query next time as it is beyond the reach of the councils.
On non-remitted pay-as-you-earn and pension, this is a general liquidity problem in the public service, including at the central level and the local governments. Even Capital Hill has not been spared. As we have repeatedly stated, this is the reason the bailout package request needs to be seriously considered in the 2022/23 Budget under discussion in Parliament.
Q: Malga has actively engaged councils and other stakeholders to promote local governance systems.
What are you doing to deal with this financial management challenges to avert audit queries of this nature?
A: As per our mandate, we exist to build viable and credible local government authorities as vehicles of entrenching decentralization and local development. Therefore, we commend the Auditor General for instituting this audit and releasing the report. However, what was reported in the media that K4 billion was lost in local authorities is misrepresentation of facts. It paints a wrong picture and defeats the great deal of work the local authorities in collaboration with the National Local Government Finance Committee have put to improve the public finance management in the local governments. Much as we acknowledge some shortcomings in the audit report, the real audit queries are minimal and some are beyond the control of the local governments.
Q: Why do you seem to blame the Central Government for what appears to be councils’ failures?
A: On projects implemented bit being in the District Development Plans and or Urban Development Plans, the central government is to blame for introducing ad hoc funding windows that are not aligned to the development plans of local governments and for persistently treating local governments as development agencies of the centre, not development actors in their own right.
On expenditure being done outside the integrated financial management information system (Ifmis), this is a result of malfunctioning of the system and you don’t expect the council operations to stop for a month when Ifmis is not working. However, we take note of failure to issue general receipts, misappropriation of deceased estate, failure to recover loans, other expenditure management issues, financial statements issues among others and the corresponding recommendations.
Q: What do you expect from the Central Government to deal with misa-appropriation of funds?
A: We call upon the central government to recruit and deploy internal auditors and other accounting and finance personnel to the local government authorities to enhance public finance management in the local authorities. It’s also high time we established the department of commerce in district councils to enhance revenue collection. Finally, we would like also to urge the office if the Auditor General to ensure that management reports are comprehensively responded to before releasing audit reports from the local governments. We have observed over time that reports are rushed to be released before management letters are addressed by management.
