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Malawi and the African Peer Review Mechanism: a review of national readiness and recommendations for participation
South African Institute of International Affairs
23 August 2004
Ross Herbert(herbertr@saiia.wits.ac.za), Steven Grudz, Ayesha Kajee, George Lwanda
Posted with the permission of Mr Brian Mtonya, Ministry of Economic Planning and Development, Malawi Government, and the South African Institute of International Affairs, Johannesburg.
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Executive Summary
The African Peer Review Mechanism (APRM) examines four areas – Democracy and Good Political
Governance, Economic Governance and Management, Corporate Governance and Socio-Economic – based
on a variety of international codes and standards. In addition it identifies corruption as a significant crosscutting
issue that is mentioned throughout the guiding APRM texts. This report, commissioned by the
Ministry of Economic Planning and Development, is intended to assist Malawi in preparing for peer review
by identifying the major gaps between its practices and the APRM codes and standards.
The authors note that Malawi has a new government, which has signalled its commitment to reform. While
Malawi has made many positive changes since the advent of multiparty democracy in 1994 and is, overall,
a far more free and democratic country, it is not the brief of this report to offset discussion of problems or
governance gaps with praise for the positive developments in Malawi. However, the analysis expressed
here must address the broad patterns of recent years, noting, where appropriate, new developments. The
conclusions expressed reflect the consensus of expert opinion gathered through a six-week review of
existing written material and intensive interviews with government, business, academics, parliament, and a
variety of non-governmental organisations.
Key Issues for Malawi
The following are the most crucial gaps identified between Malawi government practice and APRM codes
and standards:
Economic Management and Governance: Malawi has significant gaps with APRM standards in this area.
Through a variety of United Nations, African Union and international standards, the APRM requires sound
fiscal management, transparency, accountability, regular public disclosure and well-funded, independent
auditing and anti-corruption institutions.
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A Crisis of Debt and Donor Confidence: Economic governance is the second section of the APRM
but it is discussed first in this report because of the four aspects of governance evaluated by the APRM,
Malawi has by far the worst performance in fiscal and economic governance. The government has been
living well beyond its means for several years, which has brought Malawi to the verge of an
unstoppable debt and deficit-spending spiral. If present trends continue interest on domestic debt will
within months consume the majority of government revenues. Donors, dismayed corruption and failure
to stick to agreed budgets, have withheld budget support and cannot be counted on to bail Malawi out
of the present crisis. The fiscal sums are unavoidable: Unless the government deficit is quickly and
dramatically cut in the next few months, Malawi will be forced to borrow still more, print money –
which will lead to hyper-inflation – and/or stop paying salaries and curtail core government activities.
Malawi has done itself grave damage through its management of donor affairs and disregard for
principles of sound budgeting and financial management. Perceptions of Malawi, which affect
investment and donor aid, have accumulated over many years and cannot be turned around by a few
symbolic acts. However, if Malawi announces its intention to become a leader in governance reform
and innovation and follows that announcement by steadily implementing a series of reforms over
several years, it has the potential to get donors and investors to see the nation in a different light. That,
in turn, has potential to tap into large reserves of new donor funds, but only in the longer-term.
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Sound Laws, Refusal to Obey: Nearly all of the experts interviewed for this inception report noted
that what Malawi lacks is not law (although there are a significant shortcomings that need focus), but
disciplined implementation and leadership to command compliance with existing rules. The
government has developed an internal culture of impunity in which regulations, laws and the
constitution itself are routinely ignored and violations are rarely punished. Present and former senior
members of the economic ministries, numerous government reports and non-government experts note
that the budget plans prepared by government bear little resemblance to actual spending. The budget
process was described variously as “fiction”, “theatre” and “a game.” The failure to stick to its word on
fiscal matters has deeply damaged Malawi’s reputation among donors. Unrestrained presidential power
and inadequate checks and balances need urgent attention.
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The Shadow Budget: Although Malawi drafts a formal budget approved by parliament, the present
cash management system is tantamount to a hidden second budget that is not accountable to parliament
and determined not by rational strategy but political influence behind the scenes. Without consultation, some areas of spending are expanded greatly while other crucial areas, which Malawi has pledged to
protect under its Poverty Reduction Strategy, have been cut. Some cuts have had the effect of
subverting key institutions of accountability, including parliament, the Anti-Corruption Bureau,
Ombudsman and Auditor General.
Democracy and Good Political Governance: Malawi has made significant improvements to its
constitutional structures from the pre-1994 period. Important new institutions, such as the ACB,
Ombudsman and Human Rights Commission have been established. However, two key areas deserve
special attention.
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Electoral Reform: Without the careful public deliberation it deserves, Malawi has shifted from an
electoral system demanding majority rule to one permitting presidential rule by a minority. Experience
in Zambia and Kenya show that the present arrangements will, in the longer-term, lead to greater
reliance on ethnic and regional loyalties as leaders only have to shore up support of a large minority
faction. Tensions surrounding the electoral system were compounded by credible complaints of unfair
election management and diversion of government resources toward ruling party campaigns. The
APRM codes call for independent electoral commissions, fair access to the media by all parties,
transparent political party financing. The codes also impose a duty on politicians to look beyond the
short-term political expediency and ask whether political structures over the long-term promote or
detract from social peace and good governance. In key ways the Malawi system does not meet this test.
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Respect for the Rule of Law: The loose attitude toward rules evidenced in the fiscal sphere has spread
to the political realm. In crucial ways, the rule of law and the constitution have been eroded as political
forces put short-term expediency ahead of principle. Crucial aspects of the balance of powers have been
intentionally subverted by the past administration. Malawi needs to strengthen key checks on executive
power by shoring up parliamentary independence, electoral fairness and fiscal oversight.
Corporate Governance: Malawi needs to take action to improve the business and investment climate by
improving regulation, responding more quickly to tariff and trade problems and reducing the costs of doing
business in the country. Laws governing money laundering, bankruptcy, commercial dispute settlement and
shareholder rights and reporting requirements are weak.
Corruption: Cited as a major issue in all four areas of APRM governance, corruption is a major and
growing problem in Malawi, which grows out of the lax management of government financial affairs. It
also has been a significant factor in the withdrawal of donor aid and lending.
Socio-Economic Governance: Economic development and achievement of the UN Millennium
Development Goals are the key areas of focus in this APRM section. While Malawi’s Poverty Reduction
Strategy was initially praised as sound by international observers, the nation is moving away from the UN
goals. The fiscal crisis is increasingly starving social sectors of funding. Weak reporting and management
have compounded problems of declining resources. To make progress, Malawi needs to fundamentally
rethink its strategy in many social sectors, concentrate effort on growth and aggressively follow through on
the sound work already begun on a growth strategy by government and the National Action Group.
Such an initiative will require consistent delivery over a five to 10 year period. There has been a
fundamental shift in attitudes among donor nations. More funds are available but they are increasingly
being concentrated on a few well-performing nations who most enthusiastically embrace good governance
and the fight against corruption.
The APRM Process
The African Peer Review Mechanism is a six- to nine-month process that begins with a preliminary
consultation by the APRM Secretariat.
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Country Structures: The country under review is expected to appoint an APRM co-ordinator or focal
point to assist the ARPM Secretariat in making appointments and gathering information. In addition,
the country must create a panel including civil society to co-ordinate public input into the process.
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Self-Assessment and Action Plan: Once these bodies are in place, the country begins a detailed
national self-assessment using the APRM Self-Assessment Questionnaire, which is to be completed
with broad civil society participation. The country is expected to produce a National Programme of
Action that should explain specific, time-bound steps that the country intends to take to bring itself into conformance with Nepad and APRM standards and which are required to address the major
developmental, economic and political shortcomings identified in the nation.
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What the APRM Will Examine: The APRM Secretariat will conduct background research and
prepare a paper on the nation’s major issues, which will guide the three-week in-country visit by the
APRM Secretariat. The APRM Secretariat will examine the self-assessment, National Programme of
Action, existing governance literature and a wide variety of interviews to be conducted the in- country
visit.
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Standards: The APRM report will evaluate a country against its pledges and the variety of African
Union, United Nations and other international standards of governance and best practice, which are
listed in Appendix A. The process will consider the country’s historical circumstances and levels of
governance upon acceding and expect it to make concerted progress.
Malawi’s Progress Since Ending One-Party Rule
The purpose of this study, like peer review itself, is to identify areas where governance in Malawi falls
short of African and international standards. However, in identifying problems it is important not to lose
sight of the positive things that have been accomplished in the 10 years since Malawi ended one-party rule.
This is but a partial list, but ought to be borne in mind when considering the subsequent analysis on
governance in Malawi.
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Malawi has successfully moved from a repressive one-party state that existed for 30 years to a
pluralistic political environment in the past decade. Its citizens hammered out a new constitution in
1994/5 that is largely fair and equitable, enshrines a bill of rights and cannot be whimsically amended.
Malawi is a democratising society, although not yet a fully mature democracy.
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Malawi has held three national elections for president and parliament since 1994, and local government
elections in 2000, although observers note that these elections have become increasingly problematic.
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Several important new institutions were created post 1994 to safeguard governance: the Ombudsman’s
Office, the Malawi Human Rights Commission, the Law Commission and the Anti-Corruption Bureau.
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Malawi is one of the few African countries that has not experienced civil or inter-state war since
independence.
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The third-term debate and the 1993 referendum on multiparty politics offer strong evidence that
Malawi society has learned fundamental lessons from the Banda era and is prepared to assert itself,
which is a sign of maturing democratic practice.
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The judiciary successfully overturned attempts to remove independent-minded judges from the bench,
and is seen as independent from the executive and legislature. Judges enjoy relatively secure tenure.
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Freedom of expression is guaranteed in the Constitution, and the print media in particular is becoming
increasingly vocal and vigorous. Independent private radio stations are emerging to challenge the
dominance of the state broadcaster, the Malawi Broadcasting Corporation. Other personal freedoms
have largely improved since the Banda era, and do not appear to be under threat.
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Malawi has developed a poverty reduction strategy and has generated sound economic recovery plans
such as the Malawi Economic Growth Strategy.
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Despite declining overall health indicators, HIV infection rates have stabilised, and, considering its
meagre resources, immunisation levels are high with over 85% of children under age one vaccinated.
As a result, measles and polio have been virtually eliminated. Medical training is appropriately focused
on public and community health, and by recruiting applicants from rural areas has a relatively high staff
retention rate.
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Malawians have had access to universal primary education since 1995.
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The National Action Group has been established as a regular forum for business and government to
interact and consult on policy and identify top priorities for government action.
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Different institutions in Malawi are promulgating and enacting codes of good conduct.
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Laws have been developed in an attempt to improve financial management – chiefly the new Public
Finance Management Act, Procurement Act, and Public Audit Act.
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