LILONGWE-(Maravi Post)—Malawi’s major local development financing mechanisms for improving the poor’s livelihoods and giving them better services—are on course to becoming the biggest fraud in the country’s history.

Weekend Nation investigations reveal that at least half of the projects implemented under the Local Development Fund (LDF), the Constituency Development Fund (CDF) and the District Development Fund (DDF)—are not completed yet money has vanished due to “mal-administration and suspected fraud”.

According to the paper very few LDF-funded bridges last long due to poor construction.

And the chief culprits—as our investigations show from reviews of study reports, field visits and interviews with consultants—are officials at council secretariats, members of Parliament (MPs) and ward councillors most of whom have torn up the funds’ rule books.

The publucation team that visited Chiradzulu, Phalombe, Mulanje, Balaka, Neno, Mchinji, Lilongwe, Dowa and Karonga observed incomplete structures that appeared abandoned for years; saw school blocks and bridges whose workmanship was substandard at best.

This observation is backed by a 2013 independent assessment of LDF-funded classroom blocks that Ruo Consultants carried out showing that “generally, construction of school blocks has not met the engineering standards as one would expect”—with concrete mixing and roof configuration being a major problem in almost all the schools visited.

The money that goes to councils almost matches the K30 billion that was budgeted for maize buying in the 2016/2017 financial year to avert the food shortages that had left more than half the country’s population starving.

Through LDF, CDF and DDF, the central government at Capital Hill transfers around K31 billion annually to councils for local level development projects.


A CDF project which is yet to be completed
Just the LDF—a local development financing arm of the Ministry of Finance, Economic Planning and Development—on average sends around K20 billion to councils every year, according to Treasury figures.

The money is mobilised from the government of Malawi and development partners such as the World Bank, the African Development Bank (AfDB) and German aid agency KfW.

Through CDF, councils now receive a combined K4.4 billion annually based on the current yearly allocation of K23 million for each of the 193 parliamentary constituencies nationwide.

On the other hand, DDF—says an official from the National Local Government Finance Committee (NLGFC)—has this year transferred K6.7 billion to local authorities.

But mismanagement of the three funds is sucking these investments dry and has largely left beneficiary communities no better than they were before the projects, studies show.

One such study—published in August 2016—is on budgetary allocations and local revenues that researchers Andrew Mpesi, Roy Hauya and Kalako Mondiwa carried out for DanChurchAid in seven selected district councils.

The report revealed that 55 percent of sampled LDF projects in the seven districts were not completed due to “mal-administration and suspected fraud”.

In some districts such as Dowa, Lilongwe and Neno, none of the sampled projects were completed.

On CDF—which channels money from central government directly to electoral constituencies for local infrastructure projects—the study reveals that 71 percent of all sampled CDF projects were not completed “likely due to fraud”, according to Mpesi, Hauya and Mondiwa.

Similar trends are observed in a public expenditure tracking report by Karonga CCJP and Development Communication Trust (DCT) with support from Oxfam under Tilitonse Fund.

The tracking covered the 2016/17 financial year and found that with just a month before expiry of the fiscal calendar and project deadlines, at least 50 percent of tracked LDF, CDF and DDF projects were far from completion yet the bulk of the money had been spent.

“The implementation of the LDF projects in Karonga District Council looks very worrisome. Five out of the eight projects that have been tracked in this project in the catchment area are incomplete despite the implementation period having phased out,” said the report.

In Dowa, a similar project also discovered that the majority of LDF projects remained incomplete well after the implementation period and having spent the bulk of the money.

The abuse

Most of the waste is due to poor workmanship, political interference, dubious procurement, project abandonment after budget busts, discarding of set guidelines and outright theft.

A Central Internal Audit Unit (CIAU) probe covering the period between July 1 2014 and June 30 2016 for Lilongwe District Council, for example, highlights some of the abuses development funds are being subjected to, in this case, CDF.

In some scenarios, the audit found that millions are being spent without a council’s internal procurement committee (IPC) approving the purchases.

In some cases, MPs personally get quotations for materials and proceed to procure—an activity that CDF guidelines state should be carried out by council officials.

The audit found that out of K90 million worth of transactions, K47 million was used for procurement without IPC’s nod.

Furthermore, quotations for procurements amounting to K26 million were sourced by MPs instead of the council’s procurement unit.

Such abuse of authority by MPs, for example, led to funds amounting to K1.2 million wasted after a legislator in Lilongwe bought and installed a submersible pump at Nathenje Health Centre that only worked for a week, according to the report.

Lilongwe district commissioner Lawford Palani said the council is working on addressing some of the loopholes the audit highlighted.

Speaking in general terms, Palani admitted that a number of councils sometimes flout procedures, but said Lilongwe District Council was currently working on ensuring that its systems are flawless.

A district commissioner (DC) we talked to last week—who sought anonymity—explained that a lot of money is stolen at the procurement stage as most of the times council officials over-budget a project with the aim of pocketing the extra money.

Then there are fake procurements, according to another DC, especially in afforestation projects. He cited the buying of tree seedlings under the LDF that no one can trace.

“Most of the ‘Cash for Work’ money is stolen through the Forestry Department. Only 10 percent of the actual seedlings are supplied and planted and different funding organisations are shown the same trees whenever they come for audits,” Palani said.

The case in point is Chiradzulu where—according to a well-placed official we met at the council during our fact-finding field visit—a council official prepared invoices for 10 suppliers of tree seedlings totalling K18 million. He was, apparently, supposed to collect the money on behalf of ‘suppliers’.

“There are a lot of ghost companies, ghost trees and ghost workers,” said the DC.

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