Germany suspends budget support to Malawi

Germany, a development partner since Malawi's independence in 1964, announced a change in its membership status within the Common Approach to Budget Support (CABS) group: it is now only taking on an observer status in the group, which was set up by donors to provide direct monetary aid to the government of Malawi.

Asked whether this meant that Germany was actually ending its budget support, the German Ministry for Economic Cooperation and Development (BMZ) said in a written reply to DW that this step did not represent a final decision to end general budget support. Instead, the present decision was "based on the fact that Germany's general budget support has been frozen since 2011."

"Given the deficit in public financial management in Malawi, Germany does not see a perspective to disburse general budget support in the near future," the ministry stated.

Other CABS group members include the African Development Bank, the UK's Department for International Development (DFID), the European Union, Norway, and the World Bank. The International Monetary Fund, the United Nations Development Program (UNDP) and Ireland have an observer status.

The CABS group has been delaying funds for Malawi's 2013/14 budget. This delay comes after reports that the government has mismanaged state resources and failed to prosecute officials accused of overseeing projects that never materialized.

The government is embroiled in a 6.1 billion kwacha ($14.5 million) corruption scandal known locally as the cashgate scandal. According to Augustine Magolowondo, Africa regional program coordinator at the Netherlands Institute for Multiparty Democracy, Germany's decision has also very likely been prompted by the scandal. "Probably, this is actually the most decisive factor that has been considered, because it doesn't really come as a big surprise, given the developments that have evolved until this time," he told DW.

In a press statement, Peter Woeste, the German ambassador to Malawi, said it was important for the people of Germany to know that every cent of their hard-earned taxpayers' money reached those who were really in need and brought relevant improvements to their livelihoods. "Germany is committed to continue supporting the people of Malawi on their path to sustainable development, it is just that we are exploring alternative ways how best to achieve this goal," the ambassador said.

On the streets of Blantyre, news of Germany withdrawing direct financial aid to the government has caused outrage among Malawians. "How do we have better education, health facilities, good roads with this development?" Alfonso asked. "I think government has to justify the matter, because it seems Lilongwe was aware," he demanded. "What this means is that there is a loss of trust in the government by Germany," Mercy said. "I think Germany is not happy with the looting of taxpayers' money, because even justice has not been executed."

"We don't have to rely on donors for 50 years, and then we keep on relying on donors for the next 50 years again - that will be retrogressive," Watipaso Mzungu, a Blantyre-based commentator on socio-economic issues said. "I feel like the decision by Germany is good: It will teach Malawians - or Malawi's government - to start budgeting using its own materials generated locally," he said.

"The impact Germany's pullout will have on ordinary Malawians is something that will still have to be assessed," Augustine Magolowondo of the Netherlands Institute for Multiparty Democracy said. "Obviously, if the resources are not going to be channeled through some alternative means, this is going to have a serious negative effect," he told DW. "As a matter of fact, Germany was and remains one of the most important development partners for Malawi."