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Stefan Leiderer et al. of government. At the same time there is a need to effectively address specific and sometimes very different capacity development needs of individual districts. While MoLGRD should assume the overall responsibility for the mini-basket, the management of funds and activities could be assigned to the NLGFC. Strengthened support for the National Assembly to improve budget scrutiny and control Malawi’s National Assembly is severely underfunded. Currently very few donors are supporting the National Assembly, not least because in the light of modern development approaches such as PRSPs, budget support and other programme-based approaches most international donors tend to focus on the executive. In order to increase parliament’s relevance and its ability to contribute to a sound PFM by executing its oversight functions, it is recommended that more development assistance be directed towards the National Assembly. In order to minimize coordination needs, it is suggested that donor agencies pool their funds and delegate the programme implementation to one lead donor. This could be done in a similar fashion as DFID is currently contributing funds to the CIDA-run parliamentary programme. Provision of equipment and financial resources for administrative processes One important capacity shortcoming in Malawi’s PFM system is insufficient equipment and financial resources in government institutions, especially at local level. Donors should continue to assist local authorities by providing equipment. For good reasons, maintenance of equipment is not always a priority for donors, who argue that in the interest of sustainability recurrent costs of development investments should be covered by the recipient government. However, it must be kept in mind that local authorities often simply do not have enough own resources to cover operational costs and central government may have few incentives to provide the necessary resources. Therefore, there is a role for donors to ensure that the responsibility for operational costs is clearly assigned and enforced. Nonetheless, as the resource envelope of local government institutions is usually thin, donors should also consider financing recurrent costs by providing some form of budgetary support. Donors should also take into account that spare parts for special equipment and technologies are not always available or affordable in Malawi. They 146 German Development Institute
Public Financial Management for PRSP Implementation in Malawi should therefore rely more on domestic procurement in order to allow local authorities to acquire equipment and technologies that are locally available. Reduced salary gap between the public sector and private entities or donor organisations for middle-level staff High staff turnover in Malawian government and oversight institutions both at central and local level is an important factor that hampers the PFM process. This is partly due to relatively low salaries for middle-level staff. Therefore, it is important to reduce the salary gap between the public sector and employees working for the private sector or donor organisations in order to attract and retain qualified employees in the public sector. The GoM should continue to implement the Civil Service Pay and Employment Reform to render middle-level positions in public institutions more attractive for qualified personnel. Reduced payment of allowances and their transformation into a fixed component of civil servants´ salaries The payment of allowances for the attendance of workshops and meetings is a common way to top up salaries in Malawi’s civil service. Allowances were initially intended to improve the performance of civil servants, but in fact this system creates perverse incentives and delivers an opaque salary scheme. Therefore, the government should consider raising salaries by fixed sums and in exchange reducing allowances to a refund of the actual cost of transport and catering. Donors should support this policy and avoid creating adverse incentives by paying high allowances for workshop attendance. Better incentives for civil servants to work in remote areas The GoM faces serious difficulties to attract qualified staff for jobs in remote districts, where living and working conditions are poor. Therefore, it is necessary to create more and better incentives for civil servants to work in these districts (e.g. salary top-up for remote areas or other compensatory measures) in order to compensate for less attractive living conditions. German Development Institute 147
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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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