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Stefan Leiderer et al. Box 11: Counterproductive competition among local stakeholders The PFM cycle process at district level and beyond seems to be based on a sound regulatory framework. The principles of broad participatory and bottom-up planning and implementation are very well integrated into the formal procedures. However, it is striking that organisational structures especially at community level are sometimes not clear. Counterproductive competition among local stakeholders is common. This becomes obvious in the relations between chiefs (TA), councillors, and Members of the National Parliament (MPs). In Malawi’s rural society Traditional Authorities tend to receive more respect than elected local councillors. The same applies to MPs who are perceived to represent a higher authority than local assembly members. It is common practise in Malawi that TAs with good local connections are used by national politics to gain additional political support at the grass roots level. TAs who are successful in acting as local agents for development are more likely to link up with their communities in their areas and districts. This strengthens their trustworthiness for the people and on the other hand makes them more interesting for national politics to broaden their support. In sum, the better TAs prove their connections, the better they can also benefit from national politics and thus have an incentive to broaden their clientelistic relations. Nevertheless, this means that TAs have to interfere in local procedures, which in theory are reserved for elected officials such as councillors. This observation has important implications for the way in which the devolution process is undertaken to empower the citizenry so that it can hold public officials and institutions to account for their performance in the delivery of public goods and services Source: MoLGRD (2005); own compilation 84 German Development Institute
Public Financial Management for PRSP Implementation in Malawi 6 Determinants of Informal PFM practices in Malawi Various recent studies on PFM in Malawi recognise that it is mainly informal institutions and procedures that predominantly shape PFM processes in Malawi. However, most studies do not discuss the underlying mechanisms causing the observed discrepancy between formal and informal PFM institutions in Malawi in detail. One of the most recent studies commissioned by SIDA, for example, comes to the conclusion that although capacity constraints in implementing PFM reforms must be recognised, in the past the main limiting factor for sound PFM in Malawi appears to have been a lack of commitment from political leaders (Durevall / Erlandsson 2005, 35). The findings of this study, however, suggest that although lack of political commitment is important, it is only one reason among many why the PFM system is characterised by informal practices; and that it is not necessarily the most pressing problem for MPRSP implementation in Malawi. After summarising existing studies on Malawi’s PFM system and looking at the findings of this research, the following statements apply: — The effectiveness of the PFM system is limited; therefore, implementing strategic policies (e.g. PRPS) through this system is unlikely. — Enforcing accountability is extremely difficult in Malawi’s PFM system. — The relevance of formal rules and procedures for PFM in Malawi is limited and is constantly being undermined by a lack of resources, capacity and a general mode of uncertainty. Actual PFM practices and the budget process in particular depart substantially from formal rules and procedures. Instead of being guided by the formal legal and institutional framework, the actual PFM process is characterised by three main features: — Ad hoc mode of planning and budgeting: Malawi’s PFM is not characterised by routine standard bureaucratic procedures but rather by an ad hoc mode of action throughout the PFM process. 24 — Informal practices: Apart from deliberate manipulation of processes for personal gain, informal practices are often used as pragmatic solutions to cope with unexpected problems. 24 This is to a somewhat lesser extent the case for strategic planning at central level, e.g. the MPRSP formulation process. German Development Institute 85
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Studies Deutsches Institut für Ent
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Preface The present study on ‘Pub
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4 The Case of Malawi 44 4.1 Why Mal
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Bibliography 151 Annexes 157 Tables
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Boxes and Tables in the Annexes Box
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