Photo by Henry Kijimwana Mhango/HARAMBEE TODAY
The pulling out of major donors from funding Malawi in light of
resource mismanagement is negatively affecting the country’s economy.
The dire situation has forced local leaders to protest on the streets in
an effort to urge President Peter Mutharika’s administration to
immediately intervene in the economic crisis.
Contributions from donors which included the European Union, World
Bank, Britain, and Norway accounted for 40 percent of the national
budget. The donors withdrew financing the country mid last year after
being frustrated by massive misappropriation of public funds by
government officials, dubbed the “cash gate" scandal, which occurred
during the administration of the late Bingu Wa Mutharika’s Democratic
Progressive Party and continued under former president Joyce Banda, who
represented the People's Party.According to a forensic audit report by the British Company Balker
Tilly, about MWK 92 billion, or $206 million, was brown off from the public coffers during Mutharika’s rule between 2009 and 2012, while MWK 20 Billion was looted during Banda’s term.
The donors have since challenged to resume aid to Malawi only if government improves security on public resources and ensures that all those involved in cash gate are prosecuted and face justice.
“We can’t continue funding a system we don’t trust,” the Norwegian ambassador to Malawi, Kikkan Haugen, told a local Malawian newspaper last month.
The situation has forced the government to implement a zero deficit budget despite it proving disastrous between 2011 and 2012 when conventional donors closed their aid taps to Malawi, citing poor governance by the DPP. The zero deficit budget means the government will finance all expenditures using its own domestic resources.
Meanwhile, the conditions are taking a toll on Malawians. Currently, most Malawians are complaining about the high cost of living due to the economic crisis as government imposes high sales tax on goods and services to compensate for the 40 percent shortage in donor funding. Around the city, there were queues of people lined at gas stations to shops, scrambling for sugar, cooking oil, and other essential commodities. There has been reports of critical drug shortages in hospitals, while some multinational investors such as Unilever halted production for a period due to the poor business environment, as the government borrowed money from commercial banks to bluff critics who argued the zero deficit budget is not working. Public health facilities are also reportedly facing acute drug shortage and patients are being forced to buy some of the essential drugs in private clinics or pharmacies.
Many Malawians feel the government is less concerned about economic conditions and have fears that the country may return to the 2011 and 2012 crisis levels. “We can’t buy goods such as soap, salt or sugar because they are too much expensive. We are in (the) toughest economic times and we wonder (why) that government seems not to be concerned with this situation,” said Ana Nyaphiri, a 64-year-old women from the northern city of Mzuzu, during the protest last month. “We call on President Peter Mutharika to come out of hiding and provide sound leadership and facilitate genuine dialogue on the current national crisis,” she said.
Protesters gather in Malawi's capital Lilongwe in response to widespread economic hardship around the country. Photo by Henry Kijimwana Mhango/HARAMBEE TODAYExecutive director of one of the country’s leading human rights organization, Timothy Mtambo, said during the protests in the Capital Lilongwe as he was presenting the petition to the Statehouse, “Malawians are concerned that whilst the country is still facing shortages of antiretroviral. It is surprising to note that resources for such a purpose have been misdirected to entities that do not directly deal with HIV/ AIDS interventions such as BEAM Trust and Mulhakho Wa Alhomwe which is tantamount to abuse of resources.”
The scandal is alleged to have forced the Global Fund to suspend its funding for HIV activities to Malawi which included MWK 13 million or $30,000, but the president’s Chief Economic Adviser Collins Magalasi says the government has spoken to the Global Fund and obtained an assurance that its relationship with Malawi remains warm despite the NAC controversy.
“You must appreciate that the Global Fund support to Malawi is an enormous contribution to the economy and government had to quickly move in to make sure that its larger strategic and economic interests are safeguarded,” Magalasi said in an interview with HARAMBEE TODAY.
Mtambo said "Malawians are concerned with the dwindling state of governance as evidenced by lack of separation of powers, abuse and manipulation of public resources which are meant to serve the interest of Malawian people, high cost of living, nepotism, absence of decisive leadership among other things and asked the president to immediately provide tangible answers to the people's sufferings before the masses. The untold story about scarcity of essential drugs and demotivated work staff in the public health sector.”
As part of their demands, the protesters
said the president should immediately provide executive leadership by
delivering monthly public addresses on the steps being taken to fix the
prevailing conditions and suffering of Malawians until the economy
stabilizes. “Failure to comply with this demand, we will regroup and
decide the next course of action in order to ensure that justice and
sanity prevails on the matter,” the protesters proclaimed.
Photo by Henry Kijimwana Mhango/HARAMBEE TODAY
Photo by Henry Kijimwana Mhango/HARAMBEE TODAY“If I was the country’s president, I would have facilitated the institution of a dialogue platform with civil society organisations, political parties and seek for their input on the current and future status of the economy” he said. Adding “I would have buried the partisan politics arrogance spirit which are contributing to these problems as well and come up with a government of national unity to bring confidence to donors and Malawians,” he said in an interview with HARAMBEE TODAY
Nyondo thinks this would inspire donors to resume aid to Malawi and attract investor to invest in the country.
Many people, however, including rural subsistence farmer Bruce Ngamanya from Maxwell Village on the border District of Karonga, feel the DPP led government will not implement Nyondo’s ideas, especially forming a government of national unity, due to arrogance and fears that the party would lose support which would eventually weaken their chances of winning the election in 2019.
Faster, cheaper cross-border transactions for EAC
After a dry run to test its efficacy, three members of the
five-nation East African Community are now fully engaged in the East
African Payment System, which allows cross-border transactions to be
made in any of the three currencies without involving intermediary
international banks. The new system will not only speed up transactions,
it will cut costs and boost inter-regional trade. Wanjohi Kabukuru reports from Nairobi.
The East African Payment System (EAPS) is now fully on. The system has started with Uganda, Kenya and Tanzania businesses transacting cross-border trade in their three different currencies.
This trio forms the initial, and larger economies of the five member East African Community (EAC) bloc nations which have advanced financial services structures. The two other community members, Rwanda and Burundi will join at a later date – most likely before end of this year.
Last year, EAC members signed the East African Monetary Union protocol. A key feature of this agreement was the institution of the East African Payment System (EAPS) which went on a dry run starting from 25th November. After a successful test run, the system was officially launched in May.
Through the EAPS, businesses within the three nations can receive and make payments in real time and it will take less time to clear cheques from the current 21 working days. A Ugandan-based firm can now pay for services in any of the three nations using the Ugandan shilling and the respective clients will receive payments in their preferred currency.
This is a major milestone achievement for the bloc. In the last five years the region has experienced frenetic integration initiatives marked by the rolling out of a single customs union, a common market protocol and a single customs territory. In the last decade, the regional central banks have been under pressure from businesses and the EAC to fast track a workable and business-friendly payment system.
EAPS works in a similar fashion to normal banking ‘real time gross settlement system’ (RTGS), which is preferred to the cheque system in the movement of cash between banks and branches.
It functions across borders and is supports all currencies. The plan to integrate RTGS regionally was started in 2012.
High-value payments, small and medium-sized expenditures, school fees and other transactions are now possible with fewer bureaucratic hassles and affordable commissions across the region. Landlocked members of the region have had a tough time in the past complaining of costly fees and regulations imposed by regulators, not to mention being surcharged for currency conversion when executing cross-border payments.
For years, the lack of an effective payments systems has been a hindrance to businesses in the region and in the continent as a whole. According to Payments Systems and Intra-African Trade, a study conducted by the African Trade Policy Centre, which is a division of the Addis Ababa-based United Nations Economic Commission for Africa (UNECA), “in spite of more than two decades of financial reforms, African payments system to transact trade and businesses have remained very cumbersome, underdeveloped, fragmented, costly and inefficient”.
Every country has maintained its own banking payment system with costly cross-border transactions riddled with burdensome procedures, expensive commissions and red tape. It is this barrier in regional trade that has now been addressed in the eastern African region.
By unveiling EAPS, the regional bloc has followed in the footsteps of COMESA’s Regional Payments and Settlement System, which had been set up as a separate payment system way back in 1999 to deal with cross-border payments. Other regional economic community bodies such as the Economic and Monetary Community of Central Africa (CEMACC) have also undertaken reforms of their regional central bank, BEAC, to reduce settlement and payments systems within the central African regional member states since 2003.
Other economic blocs, the Southern Africa Development Community (SADC), the Arab Maghreb Union (AMU) and the West African Economic Zone (WAEZ) have braved severe nationalistic hurdles and governance challenges to set up regional economic payments systems within the last decade. All these efforts are geared towards realising the elusive African Union’s long-held African Economic and Monetary Union ideal.
- See more at:
http://africanbusinessmagazine.com/african-banker/faster-cheaper-cross-border-transactions-eac/#sthash.YP1ONtjD.dpufThe East African Payment System (EAPS) is now fully on. The system has started with Uganda, Kenya and Tanzania businesses transacting cross-border trade in their three different currencies.
This trio forms the initial, and larger economies of the five member East African Community (EAC) bloc nations which have advanced financial services structures. The two other community members, Rwanda and Burundi will join at a later date – most likely before end of this year.
Last year, EAC members signed the East African Monetary Union protocol. A key feature of this agreement was the institution of the East African Payment System (EAPS) which went on a dry run starting from 25th November. After a successful test run, the system was officially launched in May.
Through the EAPS, businesses within the three nations can receive and make payments in real time and it will take less time to clear cheques from the current 21 working days. A Ugandan-based firm can now pay for services in any of the three nations using the Ugandan shilling and the respective clients will receive payments in their preferred currency.
This is a major milestone achievement for the bloc. In the last five years the region has experienced frenetic integration initiatives marked by the rolling out of a single customs union, a common market protocol and a single customs territory. In the last decade, the regional central banks have been under pressure from businesses and the EAC to fast track a workable and business-friendly payment system.
EAPS works in a similar fashion to normal banking ‘real time gross settlement system’ (RTGS), which is preferred to the cheque system in the movement of cash between banks and branches.
It functions across borders and is supports all currencies. The plan to integrate RTGS regionally was started in 2012.
High-value payments, small and medium-sized expenditures, school fees and other transactions are now possible with fewer bureaucratic hassles and affordable commissions across the region. Landlocked members of the region have had a tough time in the past complaining of costly fees and regulations imposed by regulators, not to mention being surcharged for currency conversion when executing cross-border payments.
For years, the lack of an effective payments systems has been a hindrance to businesses in the region and in the continent as a whole. According to Payments Systems and Intra-African Trade, a study conducted by the African Trade Policy Centre, which is a division of the Addis Ababa-based United Nations Economic Commission for Africa (UNECA), “in spite of more than two decades of financial reforms, African payments system to transact trade and businesses have remained very cumbersome, underdeveloped, fragmented, costly and inefficient”.
Every country has maintained its own banking payment system with costly cross-border transactions riddled with burdensome procedures, expensive commissions and red tape. It is this barrier in regional trade that has now been addressed in the eastern African region.
By unveiling EAPS, the regional bloc has followed in the footsteps of COMESA’s Regional Payments and Settlement System, which had been set up as a separate payment system way back in 1999 to deal with cross-border payments. Other regional economic community bodies such as the Economic and Monetary Community of Central Africa (CEMACC) have also undertaken reforms of their regional central bank, BEAC, to reduce settlement and payments systems within the central African regional member states since 2003.
Other economic blocs, the Southern Africa Development Community (SADC), the Arab Maghreb Union (AMU) and the West African Economic Zone (WAEZ) have braved severe nationalistic hurdles and governance challenges to set up regional economic payments systems within the last decade. All these efforts are geared towards realising the elusive African Union’s long-held African Economic and Monetary Union ideal.
Faster, cheaper cross-border transactions for EAC
After a dry run to test its efficacy, three members of the
five-nation East African Community are now fully engaged in the East
African Payment System, which allows cross-border transactions to be
made in any of the three currencies without involving intermediary
international banks. The new system will not only speed up transactions,
it will cut costs and boost inter-regional trade. Wanjohi Kabukuru reports from Nairobi.
The East African Payment System (EAPS) is now fully on. The system has started with Uganda, Kenya and Tanzania businesses transacting cross-border trade in their three different currencies.
This trio forms the initial, and larger economies of the five member East African Community (EAC) bloc nations which have advanced financial services structures. The two other community members, Rwanda and Burundi will join at a later date – most likely before end of this year.
Last year, EAC members signed the East African Monetary Union protocol. A key feature of this agreement was the institution of the East African Payment System (EAPS) which went on a dry run starting from 25th November. After a successful test run, the system was officially launched in May.
Through the EAPS, businesses within the three nations can receive and make payments in real time and it will take less time to clear cheques from the current 21 working days. A Ugandan-based firm can now pay for services in any of the three nations using the Ugandan shilling and the respective clients will receive payments in their preferred currency.
This is a major milestone achievement for the bloc. In the last five years the region has experienced frenetic integration initiatives marked by the rolling out of a single customs union, a common market protocol and a single customs territory. In the last decade, the regional central banks have been under pressure from businesses and the EAC to fast track a workable and business-friendly payment system.
EAPS works in a similar fashion to normal banking ‘real time gross settlement system’ (RTGS), which is preferred to the cheque system in the movement of cash between banks and branches.
It functions across borders and is supports all currencies. The plan to integrate RTGS regionally was started in 2012.
High-value payments, small and medium-sized expenditures, school fees and other transactions are now possible with fewer bureaucratic hassles and affordable commissions across the region. Landlocked members of the region have had a tough time in the past complaining of costly fees and regulations imposed by regulators, not to mention being surcharged for currency conversion when executing cross-border payments.
For years, the lack of an effective payments systems has been a hindrance to businesses in the region and in the continent as a whole. According to Payments Systems and Intra-African Trade, a study conducted by the African Trade Policy Centre, which is a division of the Addis Ababa-based United Nations Economic Commission for Africa (UNECA), “in spite of more than two decades of financial reforms, African payments system to transact trade and businesses have remained very cumbersome, underdeveloped, fragmented, costly and inefficient”.
Every country has maintained its own banking payment system with costly cross-border transactions riddled with burdensome procedures, expensive commissions and red tape. It is this barrier in regional trade that has now been addressed in the eastern African region.
By unveiling EAPS, the regional bloc has followed in the footsteps of COMESA’s Regional Payments and Settlement System, which had been set up as a separate payment system way back in 1999 to deal with cross-border payments. Other regional economic community bodies such as the Economic and Monetary Community of Central Africa (CEMACC) have also undertaken reforms of their regional central bank, BEAC, to reduce settlement and payments systems within the central African regional member states since 2003.
Other economic blocs, the Southern Africa Development Community (SADC), the Arab Maghreb Union (AMU) and the West African Economic Zone (WAEZ) have braved severe nationalistic hurdles and governance challenges to set up regional economic payments systems within the last decade. All these efforts are geared towards realising the elusive African Union’s long-held African Economic and Monetary Union ideal.
- See more at:
http://africanbusinessmagazine.com/african-banker/faster-cheaper-cross-border-transactions-eac/#sthash.YP1ONtjD.dpufThe East African Payment System (EAPS) is now fully on. The system has started with Uganda, Kenya and Tanzania businesses transacting cross-border trade in their three different currencies.
This trio forms the initial, and larger economies of the five member East African Community (EAC) bloc nations which have advanced financial services structures. The two other community members, Rwanda and Burundi will join at a later date – most likely before end of this year.
Last year, EAC members signed the East African Monetary Union protocol. A key feature of this agreement was the institution of the East African Payment System (EAPS) which went on a dry run starting from 25th November. After a successful test run, the system was officially launched in May.
Through the EAPS, businesses within the three nations can receive and make payments in real time and it will take less time to clear cheques from the current 21 working days. A Ugandan-based firm can now pay for services in any of the three nations using the Ugandan shilling and the respective clients will receive payments in their preferred currency.
This is a major milestone achievement for the bloc. In the last five years the region has experienced frenetic integration initiatives marked by the rolling out of a single customs union, a common market protocol and a single customs territory. In the last decade, the regional central banks have been under pressure from businesses and the EAC to fast track a workable and business-friendly payment system.
EAPS works in a similar fashion to normal banking ‘real time gross settlement system’ (RTGS), which is preferred to the cheque system in the movement of cash between banks and branches.
It functions across borders and is supports all currencies. The plan to integrate RTGS regionally was started in 2012.
High-value payments, small and medium-sized expenditures, school fees and other transactions are now possible with fewer bureaucratic hassles and affordable commissions across the region. Landlocked members of the region have had a tough time in the past complaining of costly fees and regulations imposed by regulators, not to mention being surcharged for currency conversion when executing cross-border payments.
For years, the lack of an effective payments systems has been a hindrance to businesses in the region and in the continent as a whole. According to Payments Systems and Intra-African Trade, a study conducted by the African Trade Policy Centre, which is a division of the Addis Ababa-based United Nations Economic Commission for Africa (UNECA), “in spite of more than two decades of financial reforms, African payments system to transact trade and businesses have remained very cumbersome, underdeveloped, fragmented, costly and inefficient”.
Every country has maintained its own banking payment system with costly cross-border transactions riddled with burdensome procedures, expensive commissions and red tape. It is this barrier in regional trade that has now been addressed in the eastern African region.
By unveiling EAPS, the regional bloc has followed in the footsteps of COMESA’s Regional Payments and Settlement System, which had been set up as a separate payment system way back in 1999 to deal with cross-border payments. Other regional economic community bodies such as the Economic and Monetary Community of Central Africa (CEMACC) have also undertaken reforms of their regional central bank, BEAC, to reduce settlement and payments systems within the central African regional member states since 2003.
Other economic blocs, the Southern Africa Development Community (SADC), the Arab Maghreb Union (AMU) and the West African Economic Zone (WAEZ) have braved severe nationalistic hurdles and governance challenges to set up regional economic payments systems within the last decade. All these efforts are geared towards realising the elusive African Union’s long-held African Economic and Monetary Union ideal.
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