The dancing arena that is Capital Hill

It is a dance that is as ridiculous as the reasons for it and as unimaginative as the dancers themselves.

Yet, we have had to endure it as our bureaucrats and their political masters waltz around before a very unresponsive audience.

This ballet of public finance management always comes as soon as a new administration marches triumphantly into State House and Capital Hill.

The boogie started in 1994 when the United Democratic Front (UDF) won the first election under the re-introduced multiparty system of government.

The UDF declared that they had found the Treasury penniless and that the Malawi Congress Party (MCP) regime had left huge debts and payment backlogs that the UDF would have to settle.

The jazz returned after UDF’s reelection in 2004 for a consecutive third term and immediately lost its governing power when Bakili  Muluzi’s hand-picked successor—Bingu wa Mutharika—raised the middle finger at his mentor, walked out of the party that sponsored him into government and formed the Democratic Progressive Party (DPP).

The move left the self-acclaimed political engineer open-mouthed as the student turned tables on the master and beat him at his own game.

Immediately after the fall-out, the Mutharika administration announced that the Muluzi-led government had left behind accumulated arrears to the private sector amounting to around K10 billion.

The message to the Malawian public from the new DPP regime was clear: What an irresponsible administration the UDF was! And how hard it will be for the DPP to clear the Muluzi mess!

But when the private sector started pushing for their payment, guess what the DPP administration said? They said wait until we audit and verify the arrears.

That process took years and, for the life of me, I cannot recall how it ended—which suppliers got the money and under what circumstances?

The argument then was that some of the goods and services were procured under dubious circumstances; that some of the bills may have been inflated and that some companies claiming the money never rendered any service to government.

On the face of it, such fears appear genuine, but they are a good example of how inefficient the Capital Hill system is.

Most seriously, the so-called audit and verification exercise is a fertile ground for corruption as those processing the payments and powerful politicians use this process to make ‘10 percent deals’ with desperate private sector players.

In 2012, when the People’s Party (PP) and Joyce Banda chanced on the presidency after Bingu wa Mutharika’s sudden death, the circus returned.

As soon as they got keys to State House and Capital Hill, the Banda administration—just like the DPP before it—went on an anti-hill with a loud speaker and screamed that the Bingu regime had left behind suppliers’ arrears amounting to K72 billion. And, of course, they were “committed” to pay, but only after “an audit and verification exercise.”

But after the National Audit Office (NAO) carried out the exercise, it was discovered that the arrears that the Banda administration inherited were in excess of K100 billion, not the K72 billion initially announced.

It was later learnt that when the Ministry of Finance presented the verification report to the President, a ‘gallant’ Mrs. Banda was reportedly unhappy with the higher figure and what were considered suspicious claims, including those that did not have supporting documents such as contracts and delivery notes.

Mrs. Banda then ordered Treasury not to pay anyone until a second round of verification involving, among other ways, physical comparisons of invoices against goods supplied, was done.

Meanwhile, genuine suppliers continued to be starved of working capital as their money remained stuck in the dancing arena that is Capital Hill.

The results of the second round of the verification exercise—as far as I can remember—was never made public and I have no idea who was paid and why.

But I do know that some politically connected people smiled all their way to banks to get their arrear payments while others could not get theirs.

And when the DPP returned to power after the May 20 2014 Tripartite Elections, your guess is correct: they announced that Banda’s PP administration had “left behind” accumulated unpaid bills amounting to K158.5 billion and a domestic debt overhang of K340 billion.

As I said on this column the other day, this money (nearly K500 billion in arrears to government suppliers (of course real and fake ones) and domestic debt (some of which is Cashgate induced) should have gone to businesses and the financial sector to re-capitalise enterprises to produce more goods, create more jobs and generate more taxes to government, but is now tied in at Capital Hill.

Indeed, as I said before, for an economy of our size, releasing half a trillion kwacha into the economy could put a lot of money into people’s pockets.

But, again, instead of paying, new Secretary to the Treasury Ronald Mangani has come up with a dancing style similar to the previous ones: “The government would like to inform all concerned stakeholders that it is committed to settling all arrears as soon as practically possible.”

This sounds okay if it is not for the dancehall caveat that Mangani has included: those owed will be notified of an arrears settlement plan once—you got it right again—the auditing and verification exercise is completed.

Just how many times will these exercises be made? Capital Hill must end this cyclical dance. It has become boring beyond endurance.