F R O M C O R R U P T I O N S C A N D A L

T O T H E

T R A N S F O R M AT I O N O F A N AT I O N

L E S S O N S F R O M “ C A S H G AT E ”W I T H I N T H E C O N T E X T O F S D G s & D R M

P o w e r To T h e P e o p l e !

E n o u g h I s E n o u g h ! !

M A L A W I ’ S M I R A C L E I N D I S G U I S E ? ?

CASHGATE!

Though brazen theft of public finances was not a new phenomenon in Malawi, in 2013, the beautiful (often referred to as “The Warm Heart of Africa”) but poorest nation in the World (according to the World Bank - with a GNI per capital of $250) was struck by its biggest corruption scandal to date.

This time...it had gone too far!

D O N O R W I T H D R A W A L

A N D A I D F R E E Z E .

Many of the International Donors - The European Union,The World Bank, The United Kingdom, Germany, Norway...who collectively had been providing the government of Malawi with aid amounting to up to 40% of its national budget, decided to suspend their budget support, instead choosing to provide some limited support directly to development programs, left the government - and nation - in dissarray.

This was a self inflicted wound...but what can we learn from this situation?

A N G R Y A N D S H O C K E D D O N O R S S U S P E N D A I D W O R T H U P T O 4 0 %

O F T H E N AT I O N A L B U D G E T. . . a n d w h o c a n b l a m e t h e m . . .

C O R R U P T I O N I N M A L A W I .

Even before cashgate, a data analysis report carried out by pricewaterhousecoopers, investigating transactions by the government in malawi from 2009 to 20014 had shown $1.4 billion (580 billion kwacha) could not be accounted for.

It showed that the total number of bank statement payments by the government from 1 jan 2009 to 31 december 2014 was 1,788,295. However the total entries on the cash book for the same period was 1,007,075 leaving transactions 781,220unaccounted for!

Enough to run the ministry of agriculture for 4 years, the ministry of education for 5 years, or the ministry of health for 8 years!!

CO

RR

UP

T GO

VE

RN

ME

NT O

F F I CI A

L S. .

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the plunder of donor funds continued unabated. During the rule of malawi’s first female president joyce banda, the impoverished nation had lost 24 billion kwacha in 6 months from april to september 2013 to corruption in what was to be dubbed as the cashgate scandal...

E V E R Y O N E E L S E . . . .

M E A N W H I L E . . .

T H E W O R L D O F D E V E L O P M E N T F I N A N C E

I S T R A N S F O R M I N G .

No longer will governments be able to blindly rely on ODA as a prime driver fo their greed or development agendas. Not only are new global financial realities restricting the extend and seize of such donor funds, but the SDGs 2030 now clearly put the responsibility on the nations themselves, through DRMs, to re-organize, re-prioritize and become the primary drivers of their sustainable growth. Malawi, like many other countries badly needed a WAKE UP call. The populations of such mismanaged countries also need a WAKE UP call.

THE WORLD OF DEVELOPMENT FINANCE IS TRANSFORMING!

T H E R E I S H O P E !

The most powerful lesson to remember is that sustainable success is possible where there are these 3 ingredients:

1. POLITICAL WILL - Pressured from both outside forces such as international donors, but also from within through constant pressure and zero tolerance attitude from local populations towards corruption and mismanagement.2. CLEAR STRATEGY - Primary reliance on DRMs for development means that efficiency, discipline, rules and goals have to be prioritized and sanctified. No one should stand above them!3. ADEQUATE RESOURCES - Rather than lining the pockets of a few, existing and potential funds (Smart Tax Administration) must be directed and targeted at the right actions, programs and projects.

The hopeful news is “THE TECHNIQUES ARE NOT A SECRET” and “THE BLUEPRINT IS RELATIVELY STRAIGHFORWARD”.

Will it require sacrifices from everyone including the populations?...yes of course...but it pays off, for present and future generations!!

This latest corruption scandal CAN and MUST be turned into a success story...by getting everyone - International Donors, Government and Population - on a new, better, more responsible and committed path...one committed to SUSTAINABLE DEVELOPMENT!...by the nations...for themselves!

T H E M O S T P O W E R F U L L E S S O N . . .

L E S S O N S F R O M “ C A S H G AT E ”W I T H I N T H E C O N T E X T O F S D G s & D R M