Britain, UK letter to Malawi President on aid

Dear Mr President

We recently agreed that Malawi should be one of 27 priority countries for future UK development support. Stephen O’Brien discussed our future plans with you in January, and confirmed them in his letter of 24 February to your Finance Minister. But as you know, following your expulsion of our High Commissioner, we’re reviewing the wider relationship with Malawi. Before I make decisions on the future of the aid programme, I would welcome your views on the concerns set out in this letter. Until I have completed my consideration of these issues, following your response, I will not be making any budget commitments to Malawi.

Mitchell: Pens Bingu 

Our partnership is based on a commitment to poverty reduction, respect for human rights and accountability and sound public financial management. Malawi’s economy has grown well in recent years, and good progress has been made on maize production and against some of the MDGs. But major development challenges remain and I am concerned that some of the policies of your government may jeopardise progress in reducing poverty.

First, there are growing risks to the Malawi economy, which if not urgently addressed will seriously limit progress in reducing poverty. Malawi’s chronic foreign exchange shortages are having a very serious impact on the private sector, which should be driving future growth. Declining global demand for tobacco combined with rising fuel and fertiliser prices also suggest a serious terms of trade shock for Malawi. In the short term this requires some changes to economic policy agreed with the IMF.

In the short term export competitiveness, power shortages, high transport and finance costs and skills gaps need to be addressed. These issues are all covered by joint work between your government and the development partners, but I’m unclear what action you propose to take. As a relatively small and landlocked country, there are opportunities to take advantage of regional integration of transport and power. Again I am not sure of your government’s intentions.

Second, on human rights and domestic accountability, I welcome the greater transparency and accountability around the national budget and consultations to inform the new Malawi Growth and Development Strategy. But there have been a number of worrying developments over the last eighteen months. Reports that demonstrations have been suppressed and civil society organisations intimidated indicate that space for normal democratic debate is narrowing and that tolerance for opposition voices, and for organisations that can help to hold the government to account, is declining. Stephen O’Brien raised with you in January our concerns about the implications of the revised Penal Code for freedom of expression and minority rights.

We are extremely disappointed to learn that this Bill was signed into law shortly afterwards and that homosexuality between women will be criminalised. I hope also that we can work together to ensure that institutions, such as the National Audit Office, the Anti Corruption Bureau, the Ombudsman and the Malawi Human Rights Commission, are given the necessary independence and financial support to do their jobs and provide a formal avenue for Malawians seeking redress.

Third, on public financial management, I remain concerned about the use of scarce public resources for luxury items, including the $22 million plane in 2009 and continued purchase of expensive cars. As you will recall, the UK deducted 3 million pounds of general budget support in 2009 and recently reclaimed 500,000 pounds following evidence of poor value procurements in the health sector.

I understand that reviews of fertiliser and road procurement highlight opportunities for major savings. At a time of austerity in the UK when the Coalition Government has agreed to continue increasing the aid budget, I need to be able to assure British taxpayers that partner governments are using our resources, and theirs to deliver better results in reducing poverty. I would welcome reassurance on your commitment to value for money and details of your next steps.

Fourth. I was disappointed with the Government’s slow and limited response to the hunger faced by many families in Southern Malawi, following localised droughts in 2009/10, especially given the assurances I received last November. This weak response undermines the Government’s very positive record in improving food security at the national level.

I look forwad to your response on all of these issues, which are fundamental to our future partnership. I would like to reassure you that we respect Malawi’s right to shape its own policies. But you will understand that I also have responsibilities to the British taxpayer to ensure that their money is used to reduce poverty in the most effective way. I will be making decisions on the UK’s development programme in Malawi by the end of June.

I would like to take account of your answer to this letter and would be happy to discuss the concerns in this letter with you. I also intend to consult Malawi’s other development partners. The Foreign Secretary, the Right Hon William Hague, will be interested in your reply as he considers other aspects of the UK’s relationship with Malawi.

With best regards

Yours sincerely

Andrew Mitchell

Secretary of State, Department for International Development (Britain)