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Stefan Leiderer et al. different position performing entirely different functions. Knowledge about formal rules and regulations is thus frequently lost and has to be permanently learned anew. This significantly limits the effectiveness of efforts to build capacity in the public sector. Another important issue for sustaining and building up capacity are monetary incentives to retain qualified staff in the public sector. While the upper cadres in Malawi receive comparatively high salaries, many government institutions find it difficult to attract or retain qualified middle-level employees. These civil servants often leave their jobs to work for private companies and, more importantly, for donor organisations. There is a huge discrepancy between public salaries and those paid in the private sector or by donor organisations. This difference is only partly reduced by the widespread use of paying civil servants allowances for attending workshops and seminars. In addition, these payments create adverse incentives of their own. 25 A recent study (Valentine 2003) commissioned by the Department for Human Resource Management and Development in the Office of the President and Cabinet concludes: 26 — Real salaries in the public sector in 2001/02 were half of those paid to civil servants in 1980. — The differences in salaries between job grades are too small to offer sufficient reward for experience, skills, responsibility and performance. — Salaries and working conditions are inadequate to attract and retain staff with managerial, professional and technical skills. — Promotions are awarded for the length of service, not merit. There are no awards/sanctions in the incentives regime for good/bad performance. 25 For more detailed information about the incentive structures in the public sector and the importance of allowances in Malawi see Durevall / Erlandsson (2005, 13–14). 26 The report (Valentine 2003) was prepared as an input into the design of a medium term pay policy reform and gives a comprehensive overview about the situation in the Malawian civil service and makes recommendations on how to overcome some of the problems. Based on these findings, the GoM is currently undertaking a broad Civil Service Pay and Employment Reform to improve transparency and incentive structures for civil servants and to increase transparency within the system. A key element of this reform consists in a substantial raise of salaries for the entire civil service. However, whether sufficient resources are going to cover this reform is being debated (Scek 2004, 7). It was too early to draw conclusions about the possible impact of the reform process for this study. 92 German Development Institute
Public Financial Management for PRSP Implementation in Malawi — The compensation package is not transparent due to various forms of allowances and benefits. The incentives for civil servants to work in rural districts are especially low. Many are reluctant to take on government posts in rural areas because living and working conditions are less attractive than in urban areas. Several key positions are being transferred to districts or are newly created as ongoing measure in the decentralisation process. This makes it even more important to improve the incentive structure for qualified civil servants to work in these areas. Insufficient delegation of tasks and responsibilities Civil servants in senior positions tend to be reluctant to delegate tasks and responsibilities to lower staff levels. They perceive lower level staff as not having sufficient abilities to follow procedures and instructions and carry out the delegated tasks to their satisfaction. This occurs at central and local as well as between government levels and potentially leads to work overload for senior staff. But it also implies that lower level staff have few opportunities to gain additional work experience and improve their skills through learning by doing. Contributing to this phenomenon are also the many vacant government positions in middle level management. A similar mechanism applies to the ongoing devolution process in Malawi. Many stakeholders in central government institutions are reluctant to devolve functions to local government levels because they have concerns regarding the capacity of staff in district secretariats and assemblies. Lack of effective capacity development and professional skills Conversations with different stakeholders at both central and local government level revealed a significant lack of effective capacity development and professional skills throughout the public sector. This is in part because recruitment in the public sector in Malawi does not always seem to select candidates strictly based on their merit. As a number of interview partners stressed, on-the-job training cannot substitute basic education in the principles of accounting, for example. In addition, once employed, civil servants are frequently inadequately trained and prepared for their tasks, especially when new policies and PFM tools are introduced. A prominent example was the introduction of Activity Based Budgeting (ABB) at local level. Local staff German Development Institute 93
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Public Financial Management for PRS
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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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DS EHP ESAF EU GBS GDP GoM GRF GTZ
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TOR UDF UNCDF UNDP UNV USAID VAP VD
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Stefan Leiderer et al. PRSP impleme
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Stefan Leiderer et al. A particular
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Stefan Leiderer et al. come to vary
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Stefan Leiderer et al. Particularly
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Stefan Leiderer et al. donors are s
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Stefan Leiderer et al. - Improved c
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Stefan Leiderer et al. medium- to l
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Stefan Leiderer et al. tion of the
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Stefan Leiderer et al. and systemat
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Stefan Leiderer et al. The methods
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Stefan Leiderer et al. Part I: Conc
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Stefan Leiderer et al. the PRSP app
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Stefan Leiderer et al. Those arguin
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Stefan Leiderer et al. accounts, bu
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Stefan Leiderer et al. It must be n
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Stefan Leiderer et al. The typical
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Stefan Leiderer et al. Administrati
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Stefan Leiderer et al. ety may have
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Stefan Leiderer et al. 9. Transpare
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Annexes
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Stefan Leiderer et al. are employed
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Stefan Leiderer et al. Box A 1: Tri
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Stefan Leiderer et al. 6 Committee
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Publications of the German Developm
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Discussion Paper 16/2007 Schirm, St
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