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REPUBLIC OF MALAWI

STATEMENT BY HIS EXCELLENCY, PROF. ARTHUR PETER MUTHARIKA,


PRESIDENT OF THE REPUBLIC OF MALAWI
AT THE LAUNCH OF THE PUBLIC FINANCE MANAGEMENT REFORM
PROGRAMME
FRIDAY 10TH APRIL, 2015.
Your Excellency, the First Lady, Madam Gertrude Mutharika;
Right Honourable Saulos Chilima, Vice President of the Republic of Malawi
All Cabinet Ministers and Deputy Ministers here present
All senior government officials here present Members of the Press;
Distinguished Ladies and Gentlemen;
It gives me pleasure to be here this morning as we are launching the Public Finance
Management Reforms Program. As you will recall, on 11th Feb 2015, I launched the
Public Service Reform agenda and some Ministers committed to an improvement in the
delivery of services to the public. Alongside this program, I have directed the Minister of
Finance, Economic Planning and Development to lead the Governments pursuance of
the Public Finance Management Reform Program.
Ladies and Gentlemen,
Today, I wish to address you, as senior officials of the civil service, on this crucially
important program, particularly as regards your duties and responsibilities.
Let me first share with you my views on the civil service, which I consider to be a central
piece of the Governmental system. There is an adage that says; Show me a country that
has a dedicated civil service, and I will show you a country that will succeed to achieve
its goals of providing quality services to the public and one which will achieve the
needed accelerated economic development. I could continue with the adage that says;
Show me a country whose civil service is dedicated to the conduct of a disciplined
public finance management, and I will have no difficulty to show you a country with an
effective and achieving Government. You will have observed that the meaning of these
adages is that you, as senior civil servants, are essential agents of the economic
development of this country, provided that you conduct a sound Public Finance
Management System. It is because of this that I regard my meeting with you to be
important to the welfare of this country. There is no doubt in my mind that the ability of
our country to accelerate economic growth and to uplift the lives of the majority of
Malawians relies on how dedicated you are to your duties, and how ethical you are in the

management of public finances and the physical assets of the Government. The civil
service in Malawi is crucially important for the attainment of a transformed and a
developed Malawi.
Ladies and Gentlemen
There was a time when our civil service was the envy of most countries in our region for
its dedication, efficiency, discipline and integrity. This was a time when the pride of a
civil servant and his aspirations was his contribution to the effectiveness of his unit,
department or ministry. He exuded with confidence when he was satisfied of his
contributions, regardless of his own lamentable personal welfare. You will agree with me
that these attributes have progressively declined. The mindset of the civil service appears
to have changed somewhat, despite the fact that we now have a far better educated cadre.
It is sad that most people now take pride in the acquisition of personal material gains
from their official positions, and no longer take the protection of public resources as an
accomplishment of their duty towards society. A lot more people take more time on their
personal businesses than they do on their official jobs. A few go further by maintaining
their official jobs only because it facilitates their private businesses. As Malawians, we
should be embarrassed to honour through court proceedings what some civil servants did
during the cashgate scandal. There is little or no dedication to official duties. Concerns of
personal welfare, at the expense of dedication to duty is what has gone wrong for the
once disciplined civil service. This has progressively led to an increased abuse of public
funds up to 2013 when this urge to abuse public funds culminated into what has been
dubbed a cashgate scandal.
Ladies and Gentlemen,
I want to appeal to you that you and I must make it a conditional goal to resume the noble
attributes of the earlier civil service; it is mandatory that we should reform the public
service and the public finance management system. A study of what has gone wrong has
highlighted a number of factors that has brought down the civil service to a point where
cashgate could be tolerated within the Government system even at the highest levels. The
first is that, progressively, there has been a continued and ever growing culture of noncompliance of our own laws, rules and regulations that provide a framework within
which public finances have to be managed. We still have an excellent framework of
financial laws, rules and regulations that follow well established international standards
of public finance management. When these were observed, and complied with, financial
frauds were rare and resources were protected with pride by supervisory staff such as
yourselves. This was the time when the reputation of the civil service in Malawi was
considered to be one of the best in Africa. Regrettably, these laws, rules and regulations
have been ignored progressively with impunity by politicians and the public servants,
particularly those who are entrusted with managing resources. The result has been a
persistent erosion of accountability of funds, and a lack of control of expenditures. More
and more resources are lost through financial malfeasances and fraud, and budgets are
never taken seriously. The non-compliance culture has been compounded by the laisse
faire attitude of the political leadership which I intend to address separately. Lack of

supervision and negligence of duty by many senior officials has gone unpunished,
contrary to the provisions of our laws. There have been, for instance, occasions when
units in a ministry have congregated to plan how money can be shared through fraudulent
travels. Although senior people were aware of such practices, they did nothing to prevent
these malfeasances. The Public Finance Management Reform Program seeks to reverse
this non-compliance culture. We must resolve to make such reforms work. Secondly, it is
evident that lack of political will and leadership has undermined the public finance
management framework of rules and regulations, including laxity in enforcing
procurement procedures. We will have to reverse this trend as well. It is simply
unbelievable how we have allowed the usurpation of perks such as officials cars whose
maintenance is a drain of public resources. In most cases, these cars are being used for
personal gains and, at the end of self-proclaimed periods, the officials buy the cars at
token prices. The whole system of Government has accepted this without question, even
in times of financial difficulties. Thirdly, the introduction of electronic technology
(IFMIS) into the Public Finance Management System is incomplete, not fully understood
and not used by senior civil servants. As a result, IFMIS is only operated by a younger
generation of officials. This has added to the laxity of the senior civil servants to enforce
Public Finance Management rules and regulations. In some cases, there has been an over
reliance on IFMIS, which has led to untold losses of funds than was the case during the
manual system days. It is well known that the Introduction of IFMIS was done
haphazardly, rendering the proper use of the system impractical. The requirements of the
system were not properly defined and EPCOR, the software system of IFMIS, was
introduced without customization to Malawi conditions. The training on the use of IFMIS
was not done, particularly for the supervisors. As a result the supervisors remain IFMIS
illiterate. Controlling Officers disregarded the need to safeguard the system to an extent
where they easily shared passwords with their junior officers. It is for this reason that
the unscrupulous junior officers looted funds while the supervisors either shared or
watched helplessly. The public finance reform management program reforms will have to
redesign IFMIS so that it can be comprehensive and can use a software that is customised
to the Malawi conditions. In short therefore, the public finance management reform
program envisages the restoration of financial discipline by enforcing compliance of the
service with the laws, rules and regulations for governing the management of financial
resources in Government. It seeks to train civil servants on what this framework is about
and why it is necessary, and will introduce an IFMIS that is comprehensive and
customised to the local conditions of Malawi. In order to achieve these objectives, we
have decided to embark on the following program: 1. To rehabilitate the Public Finance
Management System to ensure that it is conducive to expenditure control, financial
accountability and transparency, and be able to generate financial reports that reflect the
actual management of financial resources. For example, because of the incompatibility of
the IFMIS and the system that is used at the Reserve Bank of Malawi, the needed bank
reconciliations between the Accountant Generals Department and the Reserve Bank of
Malawi were never possible therefore, and it has proved impossible to account for the
resources that flow in and out of the public financial system. As a result of the reforms
that we have already instituted, this is now possible. Secondly, although all financial
receipts by the Government are mandated to be credited to the Malawi Government No. I
Account, IFMIS itself did not include this account. Worse still, resources from the

Malawi Revenue Authority that flow into the Reserve Bank of Malawi were
(infrequently), transferred into the No. 1 account. These serious anomalies and clear
blemishes of the public finance system have since been rectified in the course of the
conduct of reforms that have progressed intensively and well. The main result is that it is
now possible to conduct bank reconciliations. However, there are other blemishes
relating to various accounts of MDAs at commercial banks that need to be subjected to
similar reviews so that reconciliations relative to these accounts can also be conducted.
Donor withdrawals from Malawi were particularly caused by revelations that, in the
absence of bank reconciliations, accounting of resources was not possible nor were
financial reports credible. These shortcomings have now been rectified.
The reforms, therefore, will include the rehabilitation of the public finance system to
ensure proper accountability, transparency and control of the financial flows.
2. In order that the accounting staffs comply with the financial laws, rules and regulations
routinely, it is being decided to conduct courses at the MIM as used to be the case at
Mpemba Staff Training College. These would be attended by staff at various levels in the
civil service so that they can be conversant with the financial procedures, rules and
regulations that are expected to guide them in the conduct of their work. We also intend
to feature ethical courses aimed at reorienting the mindsets of participants. At such
courses, the proper use of IFMIS by the operating staff as well as the supervisory senior
staff will also be conducted. The senior staff, including controlling officers (Principal
Secretaries) and directors of finance, will be expected to attend workshops and refresher
courses very soon to remind them of what is expected of them.
3. The Central Internal Auditing service is being reformed and revitalised as a
compliance tool of the government. To begin with, we will introduce qualified internal
auditors from the private firms in 10 large ministries to train official internal auditors and
establish proper internal auditing practice. To avoid the likely personnel familiarisation
between the accounting staff and internal auditors, the latter will rotate every six months.
In conclusion, let me emphasize that we will conduct this program as our on-going efforts
to re-establish fiscal discipline. I will expect regular reports on its progress. I would
therefore remind Controlling Officers that, with immediate effect, we will exercise
punitive provisions of the Public Finance Management Act against those of you who will
continue fiscal infractions. This country cannot afford another cashgate. Please do your
jobs and be assured that I will do mine. With these remarks, I declare the Public Finance
Management Reform Program officially launched and I wish you all success in the
implementation of this program.
I thank you for your attention.
May God bless us all.