Aid effectiveness

When funding is discontinued

Development cooperation depends on donors and recipient governments agreeing on what needs to be done. Last year, Malawi experienced what it means when these parties no longer achieve consensus and donors stop granting budget support.

By Raphael Mweninguwe

The expectations of the 13.1 million Malawians were high when President Bingu wa Mutharika began his second and final five-year term in 2009 after voters gave him an overwhelming mandate. In the country’s parliament, Mutharika’s Democratic Progressive Party won over 120 of 193 seats. It is thus strong enough to pass legislation on its own.

Malawi is one of the poorest nations on Earth. Almost half of its people still live in abject poverty. After 47 years of independence from Britain, many Malawians still do not have access to safe drinking water and good sanitation.

In his first term, Mutharika served his people well. Poverty rates were going down, in particular in rural areas, because the government supported farmers with subsidised fertiliser and seed. Thanks to such success, Mutharika was re-elected.

In his second term, however, Mutharika’s attitude in office has become increasingly authoritarian. He used his party’s majority in parliament to curtail people’s freedoms. Moreover, municipal elections were postponed again and again. Generally speaking, the rule of law has suffered and governance has deteriorated.

During Mutharika’s first term, international donors granted his government budget support. Some experts consider budget support the best way of implementing the Paris Declaration on Aid Effectiveness. When several donor institutions join forces to fund a developing country’s national budget in support of specific policies, they are obviously respecting that nation’s Ownership, aligning to its institutions and acting in harmony. The European Commission tends to consider budget support favourably, whereas Germany’s Development Minister Dirk Niebel is sceptical. In his view, budget support invites corruption.

In Malawi, around 40 % of the national budget was funded by international donors, including the World Bank, the International Monetary Fund, the African Development Bank, Britain, Germany, Norway and the USA. The basis for such support was the 2006–2011 Malawi Growth and Development Strategy, which the government had drafted and which had found donors’ approval. This strategy was geared to achieving the UN Millennium Development Goals.

Last year, however, the donors decided to discontinue budget support in view of deteriorating governance. They stated they would not grant such support again unless Mutharika showed respect for his people’s fundamental rights and the principles of democracy. They began to channel aid for specific programmes through non-governmental organisations (NGOs).

Zero deficit

Mutharika has since adopted what he calls a “zero deficit” policy. He has reduced government spending and raised taxes. At first, he said Malawi could fund its development activities with its own resources. According to him, it did not matter that the donors decided to pull out. In the meantime, however, he had to admit that the country is in economic crisis. Malawi’s foreign-exchange reserves have dwindled fast and fuel prices have soared. Many petrol stations are no longer supplied. Companies are shutting down and cutting jobs. Government hospitals lack drugs and equipment. The cost of living is skyrocketing.

Malawi’s civil society organisations generally agree with donor assessments and demand that people’s rights be restored. In their view, Mutharika has caused the current crisis. Mutharika, in turn, blames civil society organisations, the donors and even Satan the Devil for the country’s woes. In his Christmas address, however, he assured the people that the “government is spending sleepless nights” in order to find solutions to the fuel and for-ex problems. He promised to come up with ways to sort out the problems “in the near future”. However, he remains defiant against donor demands, arguing that Malawi is a sovereign state.

In the international aid effectiveness debate, it is generally appreciated that civil society organisations serve a watchdog function. Their activism helps to keep state agencies in check. The Mutharika administration, however, does not listen to any advice either from experts or civil society organisations. Of course, the non-governmental organisations are unhappy to see Malawians suffer. However, they were equally unhappy to see the government abusing donor funds whilst suffocating Malawians with bad laws at the same time.

The government is becoming increasingly hostile towards NGOs. Christopher Ngwira, the deputy minister of land, housing and urban development accuses independent organisations of “derailing development by telling donors not to help Malawi.” Mutharika himself even accuses civil society leaders of inciting the people to revolt against his government. “I was not voted by civil society to be the president,” he says, “I was voted by the people of this country and I am not answerable to civil society, let alone Undule Mwakasungura.”

Mwakasungura heads the Human Rights Consultative Committee, a network of church-based organisations. He has repeatedly spoken out against the government. Mwakasungura and several other human rights activists are under the threat of physical abuse by government supporters since the president told the nation that he would “smoke” them out “wherever they are hiding”.

Opposition from NGOs

The civil society organisations are not caving in, however. Moses Mkandawire of the Presbyterian church, for instance, insists that the role of NGOs is to ensure that people’s rights are respected and that governments adhere to the rule of law. He says he wants Malawi to benefit from budget support, but that the government must change its course to make that possible.

Despite some shortfalls, aid to Malawi was beneficial to millions of people in the past. For example, Malawi’s Emergency Human Resources Programme (EHRP) increased the health workforce by an estimated 53 % between 2004 and 2009. According to official statistics, it was therefore able to save some 13,000 lives. Among other things, aid money was used to top up civil servants’ salaries, especially in the health sector. Thanks to such funding, nurses and other health workers stayed in the country. According to the Malawi Health Equity Network, a local NGO, joint donor funding helped to improve health care.

According to Martha Kwataine, the organisation’s executive director, aid withdrawal is now negatively affecting service delivery. She bemoans the shortage of drugs and praises the donors who continue to support the health system in Malawi through NGOs. Though such support is valuable, it is no substitute for coherent government action in the sector.

Aid withdrawal, moreover, is affecting the economy in various ways. Agriculture is an example. The government used to subsidise farm inputs such as fertiliser and seed. This policy is running into difficulties because the government does not have the foreign exchange to buy such inputs. Moreover, lack of fuel is increasingly making it impossible to transport such goods within the country.

Things need not be this way. But for the time
being, Malawians have little hope that things will change. “The government is so adamant, it does not want to listen to anyone,” says MacDonald Sembereka, a leading human rights campaigner. “It considers everyone who criticises the state an enemy.”

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