Darkness reins over Malawi's Cashgate

Following the massive looting of taxpayers’ money known as cash-gate, Joyce Banda’s government promised Malawians that they would thoroughly investigate the scandal so as to bring the culprits to book and to let Malawians know what really happened.

January 22nd, 2014

Following the massive looting of taxpayers’ money known as cash-gate, Joyce Banda’s government promised Malawians that they would thoroughly investigate the scandal so as to bring the culprits to book and to let Malawians know what really happened.

True to their word, the authorities launched a major probe and even requested assistance in October from Malawi’s development partners to help with investigations of the Integrated Financial Management System (IFMS) – loopholes in which were blamed for the loss of billions of kwacha from the national treasury. The British government responded rapidly, flying in some experts to collaboration with the Attorney General.

President Banda had to act swiftly not only because this year’s tripartite elections were looming but also because the donors announced an immediate suspension of budgetary aid, which affected many government operations. And she did – promising that the preliminary report would be publicly released in January so that all Malawians would know how their hard-earned tax money had been stolen.

And the preliminary report has been finished on time. But it has not been publicly released. Instead of sharing it with Malawians as promised, the report is being treated as a confidential document – and only very few people are being allowed to study it. And guess what – apart from a few high-ranking government officials – no Malawians have been given access to it.

Instead, it has been circulated to ambassadors from donor countries and submitted to the International Monetary Fund (IMF). This begs a host of questions, including why has a Malawi government report into the looting of Malawi’s treasury only been sent to foreign dignitaries and the IMF rather than being shared with those who are affected by it – the Malawian people?

In the absence of any facts, Malawians have understandably resorted to rumours and hearsay. The main rumour is that the report has implicated more top figures in the ruling party, which is why it cannot be released since it would further undermine the party’s chances in the forthcoming elections – and that the authorities are colluding with donor diplomats to keep everything under wraps until the polls are over.

This is not to say that the government should have kept the report from the donors or the IMF. Donors still contribute a sizeable chunk of Malawi’s annual budget and by suspending their support, the donors have left the government so short of funds that departments are currently running on half budgets. This has affected services across the board and has led to crises in both the health and prison systems.

Meanwhile, the IMF Board during the third and fourth reviews of Malawi’s Extended Credit Facility (ECF) programme agreed to release about US$20 million to the Malawi Government. The news brought a sigh of relief as the IMF said the funds were released because ‘Malawi’s macroeconomic performance under the IMF-supported programme has remained broadly satisfactory’ and that policy reforms initiated last May were showing positive results.

However, development partners under the Common Approach to Budget Support (Cabs) pointed out that the positive indicator from the IMF will not automatically trigger a flow of other funds from donor countries. Cabs countries are currently withholding US$150 million, primarily because of the cashgate scandal, but Chairperson Alexander Baum said that while a successful IMF review was necessary for the resumption of funding, it was not on its own sufficient justification to resume budgetary support.

However, despite the critical importance of donors and the IMF, the government in Malawi has a far more important duty – to the people of Malawi. The government should have published the preliminary report far and wide so that everyone knows what happened and to help to cleanse the stink of corruption that currently covers Malawi. Instead, the authorities have kept Malawians in the dark, proving that they are not accountable to their own people. Indeed, that they see themselves as solely accountable to donors and the IMF.

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