UK to review its aid to Malawi

Britain intends to review its budget support to Malawi before the end of this year, Sarah Sanyahumbi, head of Britain’s Department for International Development (DfID) in Malawi, said on Monday.

This is the United Kingdom’s latest position, different from what is in an aide memoire signed on July 20, 2012 by the Malawi Government and the Common Approach to Budget Support (Cabs)—a grouping of key donors, including the UK, that normally contributes about 30 percent to the national budget along with other donors.

“As previously stated publicly and communicated to the government [of Malawi], the UK will review progress in relation to budget support before the end of this year,” said Sanyahumbi in a statement e-mailed to The Nation.

In the aide memoire, the UK did not make any commitments to finance the national budget until 2015, saying direct funds were stopped in 2011 amid concerns about economic mismanagement and governance issues by the late Bingu wa Mutharika administration. He died in April this year after a heart attack.

Sanyahumbi, however, did not say whether the review would result in immediate budget support to the current fiscal year. She also did not say when exactly the review will be conducted.

“All should play their part, as agreed, to implement and support the recovery package. That will need financial discipline, prioritisation and communication.

“Donors, including the UK, are on track in terms of their commitments and we encourage all to work together to maintain confidence in the path that Malawi is on,” said the DfID head.

Malawi’s economy was on the brink of collapse after Mutharika disagreed with major donors. But since President Joyce Banda took over in April, most donors have committed more support and urged government to walk the austerity talk.

Apart from direct funds (budget support), UK gives more than £90 million every year to Malawi focused on supplying drugs, improving sanitation and supporting the fertiliser subsidy programme which under Mutharika pushed economic growth above the six percent mark.

The decision to review UK’s position on direct support also comes as Malcolm Bruce, the British Liberal Democrat MP and Commons International Development Committee chairperson, continues to lobby that Banda’s policies deserve UK support.

“If this progress is maintained, general budget support will be the most efficient option—both for the Malawian people and the UK taxpayer,” Bruce told his countrymen recently.

Only the World Bank and the African Development Bank (AfDB) have released budget support in the first quarter of the 2012/13 fiscal year which ends this month.

Norway and the European Union are set to release a total of $60.8 million support during the second quarter. Norway, according to the aide memoire, also intends to release $4.4 million in the third quarter.

There was no comment from the Germany Embassy in Lilongwe on Monday. In the aide memoire, Germany had also indicated blanks on the aid commitment schedule till 2015.

Embassy officials said the ambassador was out of office for two days.

Germany, according to the aide memoire, continues to assess the human rights and governance situation in the country, with particular emphasis on legislation governing these sectors.