That the World Bank remains non-committal on resuming direct budget support to government on account of fiscal mismanagement should come as no surprise. Government has been cautioned time and again to re-align its policy towards strengthening public finance management and procurement frameworks to prevent fraud and embezzlement of public resources.
The World Bank has joined a long list of local and international stakeholders who have been calling for reforms in the implementation of key policies and frameworks to promote economic growth and inclusion in the country.
The Budget and Finance Committee of Parliament recently asked Treasury to implement sound and stringent fiscal controls in the 2019/20 to contain wastage, corruption, misprocurement and private sector arrears.
This is not the first time government has been urged to exercise fiscal jurisprudence. Memories are still fresh of the infamous looting of public resources in 2013, popularly known as Cashgate and how it cost the nation $32 million, or an estimated 9.2 percent of GDP in 2014.
Institutionalised corruption is one of the country’s most prominent socio-economic problems in the democratic dispensation; marginalising the poor, hindering economic opportunity and social mobility, undermines trust in institutions, and if the recent demonstrations are anything to go by, unravels social cohesion.
Containing corruption might just be the best pathway to promoting productivity and efficiency in the economy. Corruption has an uncanny way of undermining governments’ to generate revenue from taxes “ability to tax and distorts spending away from valuable investments in areas like health, education.
If government can prove that it is more responsible with public resources and are using them for their intended purpose, uplifting the lives of Malawians and not lining up the pockets of unscrupulous individuals, it could unlock the necessary funding we need to improve the economic outlook.
But this is not the first time Capitol Hill has been advised on containing corruption. After news of Cashgate broke, a forensic audit, conducted by Baker Tilly at the behest of the Malawi government through the National Audit Office, revealed that the Financial Management Information System (FMIS) had some structural and systemic weaknesses that government officials used to bypass its controls and embezzle public funds.
The auditors found that the government officials bypassed the FMIS control mechanisms by, among others, using pro forma invoices to issue payments and the system’s inexplicable failure to prevent users from logging on restricted terminals. Five years down the line, it is unclear if these systemic flaws have been rectified.
Granted, a few people have been arrested and some of the assets they accrued from the ill-gotten gains have been recovered. But to be truly effective, anti-corruption strategies must go beyond merely arresting people. It will require broader regulatory and institutional reforms.
The only fool proof way of dealing with corruption is to promote strong, transparent and accountable institutions. It is baffling that government is still failing to contain fraud when it has the Anti-Corruption Bureau (ACB) and the Financial Intelligence Authority (FIA) at its disposal.
With such institutions, and accompanying laws, Capitol Hill has a ready-made blue-print and basis to implement the necessary reforms to set a solid foundation for future economic stability and later on, economic growth. The only problem is government’s apparent lack of political will to contain corruption.
To begin with, government should have been more vigilant with ensuring that the political parties adhered to the Political Parties Act and declared their sources of finance. Considering suspicions that most of the embezzled funds are channelled towards financing political activities, this would have been a good signal of Capitol Hill’s intent to root out corruption.
The fact that none of the political parties declared the source of their funding, coupled with government’s apathy to address it, will not inspire confidence among Malawians, and of course the donors, that there is enough resolve within government to address corruption.
Second, there is a need to strengthen the procurement controls within the Financial Management Information System (FMIS) to prevent future fraud. Governments should expedite the installation of security upgrade in the system to prevent misprocurement procedures that allowed the looting of public funds since the system was installed.
Of course, this presents an unfortunate caveat for Capitol Hill. Government reportedly needs the World Bank’s financial support to install the upgrades. Ironically, the Bank withheld its funding amid reservations over the procurement procedures government used when awarding the contract. Amazing!
All the while, public resources keep going down the drain and the economy is in near-stagnation. People at the grassroots are still denied their right to decent public service after Malawi’s donors withheld the much-needed financial support to provide the same and spur economic growth.
After all is said and done, the question remains: Will Capitol Hill and the Treasury do the needful, clog up its “leaking budget” and prompt the donors to re-open their aid taps? Only time will tell.