Magazine article New African

Malawi: Will 'Cashgate' Sink Joyce Banda?

Magazine article New African

Malawi: Will 'Cashgate' Sink Joyce Banda?

Article excerpt

According to media reports, last year's revelations of high corruption in Malawi, dubbed "Cashgate", are likely to undermine President Joyce Banda's chances of winning elections slated for 20 May, but as Jimmy Kainja reports from Lilongwe, "Cashgate" is unlikely to lose Banda the elections.

The "Cashgate" scandal happened because loopholes in the Malawi government's electronic payment system, the Integrated Financial Management Information System (IFMIS), enabled civil servants to steal money with ease. A forensic audit report by a British firm revealed that 19m [pounds sterling]was stolen in six months. About 70 people have so far been arrested and charged in connection with the looting.

The charges against them are mixed. Some people are suspected of getting payments without rendering services, while others were found with unexplained wealth in the form of real estate, huge bank balances, and hard cash in car boots. In reaction to the looting, Malawi's key donors have frozen their budgetary support, which amounts to 40% of the country's annual budget. Donors have demanded that sufficient steps be taken to sort out the issue as a condition of releasing the frozen aid. The forensic auditing report has so far done little to soften donors' demand for greater transparency and accountability.

The last time Malawi suffered aid withdrawal on such a scale was in 2010, in the twilight of the late President Bingu wa Mutharika's administration. Mutharika, who was succeeded by Banda (following his death on 5 April 2012), fell out with the IMF following disagreements on the management of the economy. The main issue was Mutharika's refusal to devalue the local currency, the Kwacha, as the IMF proposed.

Other key donors, including Britain, the country's largest donor, were more worried about Mutharika's style of governance. Britain withdrew its aid because it claimed that not only did Mutharika have a poor human rights record but he was also becoming increasingly autocratic. In return, Mutharika expelled the British high commissioner to Malawi, Fergus Cochrane-Dyet, following a leaked cable the high commissioner had sent to London accusing Mutharika of "becoming ever more autocratic and intolerant of criticism".

The consequences of that aid freeze on the Malawian economy were dire. Petrol pumps ran dry, foreign currency became scarce, and the electricity supply became erratic. Even locally-produced commodities, such as sugar, became scarce. By the time Mutharika died, Malawi's economy was in a free-fall. Anticipation of the same this time around, which is very unlikely, has contributed to the conclusion that "Cashgate" will affect President Banda's chances at the May elections.

A recent survey by the Catholic Commission for Justice and Peace (CCJP), a local faith-based NGO, has established that "Cashgate" is indeed among other factors that will determine the outcome of the elections, but it is far from being the main issue.

Other key factors include food security, economic stabilisation, and fertilizer subsidies. The local newspaper, Weekend Nation, claims that people in 8 districts covered by the CCJP survey are indeed angry at the scale of the looting of state resources. But Malawi has 28 districts, which makes the 8 angry ones insignificant.

It is also important to take into account that the survey was done a month after the "Cashgate" scandal broke out. It is likely that by the time Election Day arrives on 20 May, six months after the survey was conducted, people's attitudes towards "Cashgate" will have changed.

Boniface Dulani, a political analyst at the University of Malawi's Chancellor College, was reported by the same edition of the Weekend Nation as saying that it was unlikely that "Cashgate" would affect Banda's election chances. …

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