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Stefan Leiderer et al. Consequently, informal procedures in planning and budgeting are common at local government level. Local development planning is formally required to be done through a participatory bottom-up process, involving Participatory Rural Appraisals (PRAs) in villages throughout the districts. Based on these appraisals Village Action Plans are to be developed and incorporated into a District Development Plan (see Section 5.1.3). However, due to time and resource constraints most of the districts do not adhere to these formal procedures. Instead, in many districts planning is done on an ad-hoc basis by members of the district administration or even by external consultants with technical and financial support of the Decentralisation Secretariat. The same is true for budget formulation at district level. Regular funding is not available to prepare and convene district assembly meetings to discuss and approve the local budge. For example, the councillors in Rumphi district reported that they did not receive the budget draft before the full assembly’s budget session simply because the District Secretariat does not have the resources to copy and send the drafts. Even invitations to assembly meetings are not always communicated, as the District Secretariat may not send them by official mail. To avoid costs, invitation letters are entrusted at random to passengers on vehicles travelling to the home villages of the respective councillors instead. DAs are supposed to have at least six service committees, as specified in the Local Government Act. These committees are supposed to meet quarterly. However, due to funding constraints they meet less frequently (see Table 5). In order to meet the formal deadlines for submitting the budget to the National Local Government Finance Committee, districts have repeatedly turned to ad-hoc solutions. For example, they discuss and approve the budget only in the budget and finance committee instead of the full assembly, as is formally required. Obviously, this undermines the legitimacy and credibility of local budgets. In a similar fashion, local governments’ internal auditors are not adequately equipped with resources like computers and motor vehicles due to the lack of resources. In addition, they have no formalised audit procedures manual to guide them. Consequently, audit reports are largely below acceptable stan- 100 German Development Institute
Public Financial Management for PRSP Implementation in Malawi Table 5: Service committee meetings in Dedza and Rumphi DA Suggested frequency of meetings Frequency of meetings in Dedza Frequency of meetings in Rumphi Education Committee quarterly “Around twice a year” “Not even once a year” Budget and Finance Committee monthly “Around five to six times a year” “Three to four times a year” dards (GFA 2005, 44). Even worse, external auditors do not regularly scrutinise local accounts because of scarce resources (see Box 13). A particular challenge at district level is the frequent lack of funding for salaries of local staff. Because lower level staff are employed directly by the DA their salaries have to be paid, at least partially, out of local revenues. Local revenues, however, are extremely scarce as the following section illustrates. 6.2.2.1 Sources of local finance for recurrent expenditures According to Section 44 of the Local Government Act, District Assemblies (DAs) in principal have access to three different sources of revenue for recurrent expenditures, namely central government grants through the General Resource Fund (GRF) and sector funds, ceded revenue collected by central government within districts, and locally generated revenue. The General Resource Fund The GRF is an unconditional block grant. Three-quarters can be used for recurrent expenditures, whereas one quarter must flow into the assembly’s DDF account for development purposes. 28 The NLGFC distributes the GRF to the 40 DAs in accordance with a formula approved by National Parliament and based on factors such as population; poverty indicators and equalisation. 28 The most important funds for development expenditure at local level, including the DDF, are described in Section 5.1.3. German Development Institute 101
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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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