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Stefan Leiderer et al. 3.3 Structure of this report The remainder of this study is structured as follows: Chapter 4 explains why Malawi was selected a case study and provides readers with some relevant background information on the country. Chapter 5 contrasts theory and practice of public financial management in Malawi and tackles the following sub-questions: — Do legal regulations and institutional arrangements provide a coherent and comprehensive framework for PFM procedures (at all government levels)? — What does current PFM practice look like and does it reflect the formal framework (at all government levels)? Chapter 6 presents the empirical results in more detail based on the following sub-question: — What are the key areas where challenges arise in the PFM process (at central and local levels) and what is the exact nature of those challenges? Key areas where challenges for PFM arise in Malawi and the mechanisms of these problems are then drawn together and put into relation to each other in Chapter 7. The impact of the problems identified on the PFM process are laid out and an analysis of current PFM practice is provided at a higher aggregated analytical level. These findings are also put into context of recent literature on institutions and state-building in Africa. Chapter 8 identifies starting points and provides recommendations for possible solutions to the identified challenges. It does so with particular attention to the role of donors and in particular German development cooperation in the PFM process in Malawi. 4 The Case of Malawi This chapter explains why Malawi was chosen for this case study. It provides the reader with some relevant background information on the country, particularly with regard to the Malawian PRSP. Furthermore, it briefs on recent political history, and decentralisation in Malawi. Finally, it provides information on the local institutional set-up and the education and health sectors. 44 German Development Institute
Public Financial Management for PRSP Implementation in Malawi 4.1 Why Malawi? Malawi was a particularly interesting choice for a case study because PRS implementation, decentralisation and reforms of the PFM system are all currently being carried out simultaneously in the country. It therefore reflects well the current dynamics in much of sub-Saharan Africa and developing countries elsewhere. Lessons drawn from this case analysis are thus likely to be relevant in other comparable situations. In addition, conducting this study in Malawi in early 2005 was particularly interesting due to the specific history of PFM reforms in the country. Gross irregularities and massive overspending under president Muluzi’s government led a number of donors to suspend development assistance in 2001. In 2004, however, a new president was elected, who was initially given considerable credit by the international donor community for appearing to be strongly committed to policies aiming at fiscal stability and austerity. Malawi, therefore, provided a particularly interesting case to study the role of political commitment and other potential factors for formality and quality of PFM practices in sub-Saharan Africa. Box 7: The Malawi Poverty Reduction Strategy Paper Malawi prepared its first PRSP in 2001/2002. The Malawi Poverty Reduction Strategy (MPRS) was based on four strategic pillars: 1. Sustainable Pro-Poor Economic Growth – economically empowering the poor by ensuring macroeconomic stability, access to credit and markets, skills development and employment generation. 2. Human Capital Development – ensuring the poor have the health status and education to lift themselves out of poverty 3. Improving the Quality of Life for the Most Vulnerable – providing sustainable safety nets for those who are unable to benefit from the first two pillars. 4. Good Governance – ensuring that public and civil society institutions and systems protect and benefit the poor. In addition, there were four issues cutting across these pillars: HIV/AIDS, Gender, Environment, Science and Technology. While PRSPs are considered key documents in joint efforts by governments and donors to achieve sustainable development in many countries, the Malawian PRSP German Development Institute 45
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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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