Lilongwe, May 2: Malawi Finance Minister, Goodall Gondwe, Thursday described the plunder of public funds that happened in the country as an embarrassment to Malawi even in international meetings.
Gondwe made the remarks in Lilongwe at the launch of Malawi Digital Payments Ecosystem, an initiative that will see the country shift away from cash payments to electronic or digital payments.
Minister Goodall Gondwe and the Peter Mutharika government however I fear is still not understanding the causes of Cashgate fully.
The Malawi Government like many in the region used Public Financial management (PFM) system to manage the flow of funds across various levels of government. The accounting systems was to enable a centralised and efficient management of government funds (generally income and expenditure) across departments and enable the money a government receives or spends to be reconciled with the actual funds in the government’s bank accounts, countrywide.
Due to the vast sums that passed through government bank accounts, it was important that PFM systems be robust and effective at managing government funds (be they raised from taxes, donors, dividends, etc.), detecting and resolving problems.
Unfortunately for Malawi and many African governments these PFM systems are developed by western countries and by design are generic meaning they address your business model about 80% and the rest 20% has to be customized within the country with its own IT department. When I say IT department, it has to be a fully-fledged department with Database administrators, Data warehouse developers for custom reports, developers, Quality control. System admins, business analysts that understand how Malawi does business and trained users at all levels from Managers to data entry clerks.
These applications while well written fail at implementation because like I said the client in this case the Malawi government requires its own experts to help with implementation, customization, support and maintenance. Failure to do so will always leave a system with no checks and balances.
The minister said he believed that if Malawi had migrated to electronic payments way back like was the case with other countries, Cashgate could have been avoided, the minister does not know that for sure.
I strongly disagree with the Minister as he clearly does not know how Applications such as one’s he is talking about work. Digital Payments Ecosystem are a lot easier for people within to hack If the internal audit logs and alerts are not implemented correctly. In fact the manual process that the Minister refers to can easily trigger curiosity from an observant person with the accounts payable of government or someone alert at the Bank.
From what I have followed in the papers as to how they are tendering the new Integrated Financial Management Information System (IFMIS), the government is relying on the same failed personnel that approved the failed system to help decide what to settle for, implement, customize, support and Manage. They are basically following the same failed methods as the past to make decisions based on promises made to them by sleek sales people from the vendors. Goodall Gondwe does not know how an electronic payment is made and is basing all his statements from a representations made to him by a software sales rep.
“I’m just coming from Washington where my colleagues and I held a number of meetings and it was just inescapable; the issue of Cashgate kept coming up in each and every meeting and it was quite embarrassing,” said Gondwe.
He added: “I would like to challenge each one of us working in the financial system that we must swear that the issue of Cashgate must never happen again.”
Whether anybody swears or not that cashgate will not happen, I doubt seriously most of those doing the swearing have an idea how the original IFMIS failed to alert enough people as to what was going on with un-approved checks without the audits to make sure that the work was completed or the goods delivered before authorizing payments. Putting a direct deposit application will actually make it easier to make un-approved payments If not implemented correctly.
Gondwe said as Minister of Finance, and as one of the statesmen of the country, he would like to see the people behind the implementation of the launched Digital Payments Ecosystem moving fast to avoid further challenges the country’s financial system faces.
Here I take issue with the Minister once again. The vendor selling and installing this system is from outside the country and does not understand how Malawi government systems interact with Banks and the Reserve Bank. He make false promises of clearly something he has no understanding of. Attending a few sales pitches gives the minister no leg to stand on. We need to be hearing from the technocrats from Office of President and Cabinet.
He said the country was 40 years behind in terms of electronic payments and that there was need to catch up and move with the rest of the world.
