The Development Situation in Malawi

24 July 2012

The Government should re-instate its programme of General Budget Support for Malawi, according to MPs on the International Development Committee.

The Department for International Development (DFID) suspended General Budget Support to Malawi – the provision of funds directly to the Malawian exchequer – in July 2011, preferring to provide its aid by other means. This decision was taken in response to the policies of the then President of Malawi, Bingu wa Mutharika. His policies had created an economic and political crisis, whilst his authoritarian tendencies were becoming ever more apparent: the UK’s High Commissioner had been expelled from Malawi for criticising Mutharika.

However, following the death of President Mutharika in April this year, his successor – President Joyce Banda – has begun to reverse many of his policies. The currency has been devalued, whilst the new Government has indicated its intention to repeal many of its predecessor’s authoritarian measures. Subject to the continued progress of reforms, general budget support is likely to be the most efficient way of providing aid to Malawi.

Rt Hon Sir Malcolm Bruce MP, Chair of the Committee, commented:

"Malawi has seen dramatic changes over recent months. When we visited the country in March, the political climate was very unstable, and the economy had almost entirely ceased to function.

President Banda began to fix these problems immediately upon coming to office. The policies she is currently pursuing deserve UK support.

If this progress is maintained, general budget support will be the most efficient option, both for the Malawian people and for the UK taxpayer."

DFID provides some financial support for the Malawian Government’s Farm Input Subsidy Programme (FISP). This programme, which provides seeds and fertiliser to smallholder farmers at subsidised prices, is fundamental to the achievement of food security in Malawi. The MPs urge DFID to continue with this support, since cutting it would have serious consequences for the people of Malawi.

Rt Hon Sir Malcolm Bruce added:

"Malawi remains one of the poorest countries in the world, so achieving food security is obviously challenging.

The Farm Input Subsidy Programme was actually set up during President Mutharika’s time. Despite his many failings in office, he deserves some credit for this.

DFID’s support to the programme has been of great value to poor people in Malawi, and it is important that this support continues."

In a number of countries, including neighbouring Zambia, DFID provides funding for cash transfers – small cash payments provided directly to the poorest. In Malawi, DFID does not currently deliver any of its aid in this way. The MPs argue that DFID should re-consider, since its refusal to fund cash transfers in Malawi is inconsistent with its policy elsewhere.
Rt Hon Sir Malcolm Bruce said:

"We recently visited Zambia, and saw for ourselves how effective cash transfers can be as a means of delivering aid.
In Malawi, which shares a border with Zambia, we would urge DFID to deliver some of its aid in this way."

Further information

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