NATIONAL ADDRESS STATEMENT BY HIS EXCELLENCY PROF. ARTHUR PETER MUTHARIKA PRESIDENT OF THE REPUBLIC OF MALAWI

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REPUBLIC OF MALAWI

NATIONAL ADDRESS

STATEMENT

BY

HIS EXCELLENCY PROF. ARTHUR PETER MUTHARIKA

PRESIDENT OF THE REPUBLIC

OF MALAWI

KAMUZU PALACE, LILONGWE

20

TH

DECEMBER, 2014

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1.

INTRODUCTION:

Fellow Malawians, Ladies and Gentlemen,

Our country, Malawi, remains one of the world‟s poorest, ranking 170th out of 187

countries on the Human Development Index (HDI 2013), a position it has been stuck on

since 2010.

As you all know, the HDI measures long-term progress in three basic dimensions of

human development, namely: a long and healthy life, access to knowledge, and a decent

standard of living. Between 1980 and 2013, Malawi‟s annual HDI increase averaged about

1.4 percent, against an average annual population increase of 2.2%. This suggests that

human development has been too slow.

When my party, the Democratic Progressive Party (DPP), got into government in May this

year, it inherited empty coffers, following the infamous „Cashgate‟ scandal that was

perpetrated by the previous government. The scandal was characterized by a huge

pilferage of public funds due to organized fraud and corruption, and led to a withdrawal of

development assistance that is channeled through the National Budget. The economy was

in shambles as a result, and the cost of living skyrocketed. The impact on the lives of

Malawians was severe.

Malawians will remember that the DPP government inherited huge domestic debt and

enormous arrears owed to providers of goods and services to the government. High

political aggrandizement, self-glorification, and massive corruption were characteristic of

most of the period between mid-2012 and May 2014. Further, the pride and confidence of

the Civil Service was fast waning off.

2.

OUR PROMISE TO THE PEOPLE OF MALAWI

Fellow Malawians, Ladies and Gentlemen,

During the campaign period leading to the May 2014 elections, the DPP was guided by its

election manifesto, entitled “Towards a People-Centered Development.” Through this

manifesto, we promised, among others things, to fight underdevelopment, economic and

social injustice, inequality, corruption, and theft of public funds and abuse of power. We

promised to keep Malawi on a sustained path to development, and not to stop, merely for

political reasons, whatever constituted the good work of previous governments.

We have since assessed the policies and practices of the previous governments, and

resolved to retain the Automatic Fuel Pricing mechanism, the flexible exchange rate

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regime, the return of foreign exchange bureaus, and other monetary policy measures

meant to entrench the role of markets in achieving sustainable economic growth.

We went further, however, by adopting fiscal reforms that would support and deepen the

previous reforms. We instituted reforms aimed at running the government most effectively

and efficiently, as follows:

 We appointed a cabinet of 20, including deputies, the Vice President and the

President.

 We restructured the Office of the President and Cabinet, by moving the Department

of HIV/AIDS and Nutrition and the Safe Motherhood Initiative to the Ministry of

Health; The Presidential Initiative on Poverty and Hunger Reduction to the Ministry

of Agriculture, Irrigation and Water Development; The National Registration Bureau

to the Ministry of Home Affairs, and The Government Contracting Unit to the Office

of the Director of Public Procurement. We also combined the Ministry of Finance

and the Ministry of Economic Planning and Development into one to facilitate

coordination of the economic management function.

 Further I directed that chief executive officers of public institutions, principal

secretaries and other senior public officers would not be attending public functions

except where the functions or events pertain to their organizations.

These reforms alone will save over K70 billion per annum. Further, my government

established the Civil Service Reform Commission, under the leadership of the Vice

President Right Honourable Saulos Chilima. The Commission aims to chart the national

direction and establish national priorities in public service reforms. We want an efficient

and effective public service. Once the reforms are completed, my government hopes to

save an estimated 30% of government resources which are wasted year after year.

3.

STATE OF THE ECONOMY

My fellow Malawians, Ladies and Gentlemen,

It is common knowledge that Malawi is now operating without general budget support,

meaning we have to rely more and more on ourselves to deliver the services that

Malawians need. Moreover, in the spirit of good economic governance, we can only spend

what we have. It is against this background that my government does not allow

unplanned expenditures, and has stepped up efforts to deepen adherence to the existing

economic governance laws.

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The past three months have seen our currency lose close to a quarter of its value in

relation to the US dollar, and the impact shows strongly through inflation arising to the

associated rising costs of our imports. This inflation has exerted pressure on interest

rates, hence lowered private investment and employment. Much as seasonality explains

part of the kwacha depreciation, a significant part of it is attributable to speculation. But I

have better news: the Kwacha has since stabilized. I am hopeful that the domestic

currency may even appreciate soon, because we are doing everything possible to get the

economy on the right track. Government has put in place policies that will translate into

increased exports in order to increase foreign exchange earnings which are needed to

defend the domestic currency.

My fellow Malawians, despite the aforesaid challenges facing our economy, the financial

system has stabilized and developments are visible in the financial institutions and the

capital markets. Let me cite a few, as follows:

 The payments system remains stable, and no major system disruptions have been

experienced during the past months. Payments, clearing and settlement of transaction,

therefore, are proceeding smoothly.

 The banking sector remains sound on account of a favourable macroeconomic

environment and improved banking practices. Despite the average Return on Equity

(ROE) declining to 31% from 38.7%, the banking sector remains profitable.

 Other sectors that remain profitable are:

o the Insurance industry, although this sector has to watch against the risk

associated with investments in money markets;

o the Pensions sector, despite its concentration risk coming from limited long term

investment options;

o the Stock market, despite the fact that the market is shallow and not effective in

providing the alternative source of raising capital as expected; and

o the micro-finance sector, despite a drop in the loan repayment rate due to the

combined impact from a lean agriculture marketing season and persistent non-

remittances of payroll deductions.

Of course, risks to the economy continue, and the government is specifically working its

way forward with the uncertainty regarding the resumption of budgetary support, delayed

donor inflows, and low tobacco prices. Inflation remains a risk that has to be tamed,

moving forward.

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Water Situation in Blantyre

My fellow Malawians, I am very aware of the water challenges in Blantyre, and I assure

everyone that government is doing everything possible to not only solve the problem for

now, but set the Blantyre Water Board to be able to supply sufficient water for the

population of year 2040. The BWB‟s infrastructure is aged and has out-lived its design

capacity which was meant for a population of 500,000 residents up to the year 1999.

Today BWB has over 1 million customers. Further, due to inadequate rains in the year

2012/13, the Mudi Dam which produces about 10% of the Board‟s water production dried

up by October 2014. Thirdly electricity, which costs BWB about K270 million per month

to pump water from Nkula, 40 kms away from the City has been another challenge.

I would like to thank the residents of Blantyre for their understanding. We embarked on a

total rehabilitation of the BWB production facilities and replacement of pumps at Walkers

Ferry and Chileka Pumping Stations, and by March 2015, the BWB will be able to meet all

the demand of 96, 000 cubic meters per day, up from the current 74,000 cubic meters

production capacity. In addition, we will construct a water supply system from Mulanje

Mountain at the cost of about US$ 15 million, to provide an extra 8,000 cubic meters of

water per day to Blantyre and surrounding areas.

4.

SECTOR SPECIFIC DELIVERABLES

My fellow Malawians, in spite of what others may say, my government is very determined

to turn this economy round. Today, I would like to account to Malawians what their

government has managed to achieve in the first quarter through a sampling of the

deliverables, as follows:

4.1

Office of the President and Cabinet

 Oriented all Cabinet ministers and principal secretaries on government policies.

 Updated the Administrative Common Service System, Cabinet Directives Monitoring

System, Policy Monitoring System and Inventory System.

 Performed organizational performance assessment for third and fourth quarters of

2013/2014 financial year

 Through the Civil Service Commission, appointed 312 officers to various positions;

promoted 427 officers; confirmed appointment of 35 officers and concluded 39

disciplinary cases.

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 Through the Office of the Vice President, provided strategic leadership in the

introduction and implementation of the Public Service Reforms.

 Facilitated construction of a sugar processing plant at Chikwawa Site in Salima

under the Green Belt Initiative.

4.2

Ministry of Finance, Economic Planning and Development

Treasury

 Strengthened controls in IFMIS to avoid Cashgate.

 Introduced quarterly and monthly reporting of budget performance to ministries,

departments and agencies.

 Strengthened the cash management function.

 Launched and operationalised the Development Cooperation Strategy.

 Introduced a zero coupon promissory note to clear outstanding arrears.

 Completed a Public Financial Management Reform study as a basis for

implementing a PFM reform programme.

Accountant General’s Department

 Decentralized Bank Accounts at the Reserve Bank of Malawi for all Ministries,

Departments and Agencies.

 Successfully effected the interface between Epicor IFMIS and Local Councils‟

Serenic Navigator.

 Institutionalised pre-audit services at the Accountant General‟s Department Central

Payment Office.

4.3

Ministry of Labour and Manpower Development

 Conducted functional review for the establishment of community colleges.

 Finalized Career Guideline Book for technical colleges in Malawi

 Identified and withdrew 200 children in child labour and prevented a further 1,230

children from engaging in child labour.

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 Conducted 184 labour inspections; handled 5,798 labour complaints; and

completed 50 occupational safety and health inspections meant to ensure safe work

environment;

 Launched the TEVET Policy.

4.4

Ministry of Transport and Public Works

 Completed major works on the Blantyre-Zomba, Lilongwe Western By-pass and

Ngabu-Bangula roads.

 Commenced feasibility and detailed engineering design study on the rehabilitation

of the Sena Line, and completed the rehabilitation of the Nkaya-Nayuchi line.

 Procured Air Traffic Control Consoles and Very High Frequency (VHF)

Communication equipment; and the Chileka Instrument Landing System.

 Completed and validated first interim report on the navigability of the

Shire/Zambezi waterway, with the final report expected in early 2015.

4.5

National Audit Office

 Produced the final Cashgate forensic report from which 53 case files were made and

submitted to law enforcement agencies;

 Produced final forensic audit report for the Malawi Police 2010 K400 million fraud

with 7 case files submitted directly to Law Enforcement Agencies.

 Produced and submitted investigative audit reports on MRA and the Ministry of

Foreign Affairs and International Cooperation

 Verified 2,000 pension files and handed back to the Accountant General for

payment

 Submitted reports to Parliament which the Public Accounts Committee discussed.

4.6

Ministry of Agriculture, Water Development and Irrigation

 Completed registration of beneficiaries and suppliers in the 2014/2015 Farm Input

Subsidy Programme (FISP)

 Facilitated sale of 186 million kilogrammes of tobacco which earned the country

US$352 million.

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 Produced and distributed vaccines to over half a million livestock as one way of

improving livestock production.

 Facilitated production of 28,850 tonnes of fish which fetched K16.7 billion for the

fishers.

 Facilitated fish exports to the following countries: Germany, Hong-Kong, United

Kingdom, China, Denmark, France, Sweden and the United States of America.



Continued with design and construction of irrigation schemes in Neno, Chikwawa,

Nsanje, Phalombe, Thyolo, Mulanje, Mchinji, Kasungu, Salima, Zomba and Chitipa.

 Continued with rehabilitation and constructions of the Songwe River Development

Programme.

4.7

Ministry of Lands, Housing and Urban Development

 Championed and commenced implementation of the Decent and Affordable (Cement

and Malata) Housing Subsidy Programme

 Enforced standards at the following major construction projects: Construction of

National Stadium in Lilongwe, Construction of Chapanga Rural Growth Centre in

Nsanje, Construction of Commercial Court in Blantyre, Construction of Clinic and

Food Court at Capital Hill, Construction of Nkhatabay District Hospital; and

Construction of Health Centres in various districts across the country.

 Prepared layout plans for the following areas: Area 2 Extension, Dunduzu and

Areas 5 and 6 in Mzuzu, Area 13 and Area 51 in Lilongwe; Mzimba and Chitipa.

 Initiated survey exercise to reaffirm boundary between Malawi and Mozambique

along the boundary line where it is described as following the road in Dedza, Ntcheu

and towards Mwanza.

4.8

Department of Disaster Management Affairs

 Coordinated development of 2014/2015 food insecurity response plan for the

640,000 food insecure people in 19 districts (December 2014-February 2015).

 Developed the 2014/2015 national contingency plan that focusing on flood, drought

and ebola virus outsbreak.

 Conducted community search and rescue trainings for over 800 Civil Protection

Committee members in Nsanje, Chikwawa, Salima and Karonga.

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4.9

Ministry of Health

 Immunised over 91% of all children under the age of five to protect them from

vaccine-preventable diseases.

 Reviewed the National HIV and AIDS and Strategic Plan 2015-25.

 Dispensed free ARVs to over 505,000 people and provided HIV/AIDS testing and

prevention of Mother to Child Transmissions (PMTCT) for all mothers delivering at

public health facilities across the country.

 Treated over 3.7 million Malawians at public health facilities across the country, of

whom 780,000 were inpatients.

 Supported and maintained training of 2,500 medical and nursing students in

various colleges and institutions across the country.

4.10 Ministry of Education, Science and Technology

 Successfully mapped all schools under the School Mapping Exercise and details of

all education institutions in Malawi have been properly documented.

 Completed the construction of 1,100 classroom blocks and 8 urban schools under

the LDF window; completed civil works for upgrading and expansion of Community

Day Secondary Schools in Salima, Lilongwe, Nkhotakota, Nkhatabay , Mzuzu and

Mzimba.

 Recruited 9,374 qualified teachers out of a total of 10,500 under ODL 3 and IPTE 7;

started recruitment process of 10,000 primary school teachers; and deployed 1,118

newly graduated teachers for 2013.

 Achieved 65% completion rate in construction of 24 girls‟ hostels and identified

additional 12 new sites for girls‟ hostels.

 Completed construction of 50 school feeding facilities to support 50,000 learners in

Rumphi, Nkhatabay, Salima, Mangochi, Dowa and Dedza

 Decentralised payroll in all six Education Divisions.

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4.11 Ministry of Local Government and Rural Development

 Developed Integrated Rural Development Strategy aimed at improving coordination

and implementation of Rural Development Programmes in Councils.

 Oriented 426 Councilors on their roles and responsibilities in councils.

 Oriented 520 chiefs on their roles and responsibilities, as well as primary justice.

 Facilitated the backstopping and mainstreaming of Climate Change and

Environment issues into Socio-Economic Profiles and District Development Plans

for Blantyre, Balaka, Ntcheu, Nkhotakota and Thyolo districts.

4.12 Ministry of Gender, Children, Disability and Social Welfare

 Institutionalised Gender and Development Diploma, Degree and Masters

programmes at the Lilongwe University of Agriculture and Natural Resources.

 Developed Gender Responsive Budgeting Manual

 Provided cash transfers to 30,000 ultra-poor and labour constrained households in

Balaka, Chitipa, Likoma, Mangochi, Machinga, Thyolo and Salima districts

benefiting 150,000 inividuals.

 Submitted State Part Reports on the Convention on the Elimination of All Forms of

Violence Against Women (CEDAW); Convention on the Rights of the Child (CRC);

The African Charter on the Rights and Welfare of Children; Two optional Protocols

on CRC.

 Rehabilitated 450 persons with disabilities at community level in Mzimba, Liwonde,

Balaka and Blantyre Rural.

4.13 Ministry of Information, Tourism and Culture

 Finalised drafting of the National Cultural Policy

 Increased the number of local television channels from 5 to 10

 Classified 95 films and documentation of 12 National Monuments

 Developed tourism data bank, promoted 6 tourism events and updated Malawi‟s

Tourism Profile.

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 Conducted district law enforcement and protected areas patrols, anti-poaching

patrols and sensitization exercises with 25 border posts officers aimed at combating

illegal trade and exportation and importation of wildlife resources.

4.14 Ministry of Home Affairs and Internal Security

 Produced zero draft National Migration Policy

 Arrested 3,394 suspects in sweeping exercise; 171 illegal immigrants; and pursued

597 court cases to completion. 3,127 illegal firearms were destroyed.

 Processed and issued 38,194 passports and 1,112 temporary travel documents; 28

applications for citizenship; and 1651 various permits and visas.

4.15 Ministry of Youth and Sports

 Graduated 25 sports administrators on University of Pretoria Sports Business

Management programme.

 Facilitated the participation of the Malawi National Netball Team in the 2014

Glasgow Commonwealth Games where it maintained position 5 in the world; and

also the Malawi National Football Team in the 2015 African Cup of Nations where it

played in the group stages.

 Scaled up the CONDOMISE campaign, directly reaching over 5,000 youths and

54,000 condoms distributed.

4.16 Ministry of Justice and Constitutional Affairs

 The Law Commission completed reforms in the Sheriffs Act and Chiefs Act; reviewed

the Abortion Law; and undertook reforms in the Prisons Act and development of

Legislation on Sentencing Guidelines.

 The Malawi Human Rights Commission conducted 39 investigations of complaints

on reported violations of human rights; Monitored 168 child care institutions;

trained head-teachers, Community-Based Organisations and Human Rights Clubs

on human right-based approaches; and contributed to the Government State Party

reports.

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 The Ombudsman resolved 76 cases; established performance management system

and launched a Democracy Accountability-Social Waste Management in Local

Councils pilot study.

 The Judiciary cleared a backlog of 12,714 cases (representing 21.5% achievement of

the total planned cases of 58,910 cases in year 2014/2015; and conducted 56 camp

courts across the country to ensure that vulnerable groups such as women and

children access justice.

5.

WHERE ARE WE HEADING TO?

My fellow Malawians, Ladies and Gentlemen,

Based on the tangibles seen so far on the ground, we maintain the estimate that Malawi

will grow by an average of 5.5% in 2014, from an estimated 5.0% in 2013. This rate is

agreed by the International Monetary Fund (estimated 6.12% growth), the World Bank

(4.4%), and the Reserve Bank of Malawi (6.3%).

The bankable projects compendium that we launched early this month provides hope for

Malawi‟s future. I invite investors, both local and international, to take advantage of these

business opportunities. On our part as government, we will provide the environment that

will make businesses flourish, as this creates a win-win situation between private investor

and the government.

Donor disbursement of aid has an impact on Malawi‟s growth since donors have

traditionally funded over 70% of the development budget. But as everyone knows now,

donors significantly reduced budgetary support to Malawi because of Cashgate. My

government has strengthened the financial system to make sure that Cashgate never

occurs again in Malawi; we have resourced fairly well the Law Enforcement Institutions,

including the Anti-Corruption Bureau (ACB), so that they do a thorough independent job,

prosecute all suspects, and recover the stolen resources where possible. We are exercising

fiscal discipline and making sure that we do not disturb the macroeconomic

fundamentals. We are doing everything possible to make sure that all Malawians and the

international community have the confidence in their government. We have only one

Malawi, and we must all work towards making our country the true Warm Heart of Africa.

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Salary Strikes

I want to share with you the background to a number of developments in our country and

to explain why they are occurring. I will also like to inform the public how the

Government is dealing with these matters.

We have, as a country, embarked on a number of initiatives that are intended to

transform our country. These are aimed at improving its socio-economic status and

principally to accelerateour fight against endemic poverty.As you are aware, there is a

general disappointment around the country that our socio-economic performance during

the first 50 years of our independencewas unsatisfactory. In the event, the general

consensus inter alia was to demand for a transformation of the public service which is the

key instrument for economic development, and the rehabilitation of other institutions.

Only then, it is being argued, do we stand a chance of creating conditions for achieving a

better economic performance. This view was so prevalent that during political campaigns

for elections, this subject dominated debates to demonstrate its importance.

The Democratic Progressive Party, in its manifesto,adopted public service and public

finance management reforms as priority programs of the needed transformation

programme of action and wage harmonization in the public service is made the

cornerstone of the public service reforms. Wage harmonization is not only necessary to

revitalize the service but it is considered an important means of curbing the propensity for

fraud in the Service. Equally important is the fact that it restores the principle of “equal

pay for equal work”in the public service as was the case up to 1998 before a multiplicity of

salary scales emerged.

The wage harmonisation policy therefore is not only needed to ensure the needed

enhancement of the effectiveness and efficient of the public service but it is also intended

to curb the potential for financial frauds and eradicate laissez faire attitudes that have

thrived in public service particularly during the past two decades. The principle of “equal

pay for equal work”in the form harmonization must be a core element of the

transformation process and must be implemented. For itsimply does not make sense that

a newly recruited doctor in the mainstream Civil Service should receive a starting salary

that is equal to the salary of a driver in the Anti-Corruption Bureau or in Human Rights

organisation. Nor does it make sense that a Budget Director or the Accountant General

for example should receive just about half the salary of his counterparts in the Judiciary

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or in the National Assembly. We are unlikely to get the best from such people and we

have created an environment that is conducive to fraud which progressively led to a

disregard for public money as we saw during the cashgate days. It is in view of this that

the Government has decided that as part of the needed transformation, salary scales in

the public service be harmonized as they were between 1964-1998.

Let me deviate and give you the background to the present controversies that have

engulfed our country. In order to achieve harmonization, the government decided that,

within the budgetary limit of an average wage bill increase of 24.4 percent, the

mainstream Civil Service should have a higher increment that would permit their salary

scale to be notionally higher than other salary scales in the public service except for the

Anti-Corruption Bureau that remains the highest. We then allowed other scales to

increase up to the new mainstream Civil Service salary scale. But because their scales

were originally higher than that of the Civil Service, it followed that their increment were

smaller. The gist of the strikes and other controversies is that those who had privileged

salary scales want to continue to earn more than their mainstream Civil Service

colleagues. In short they demand equal salary increments that would maintain their

superiority over the mainstream Civil Service. To do this, of course means, that we would

have to find extra money from somewhere. There is just no money for us to increase their

salary scales. Recently the IMF programme that we have signed is premised on

expenditure and therefore wage containment.

If we break this agreement with the IMF, the chances of reducing inflation and interest

rates and returning to normality will have vanished. Bwanas and Donnas you can see

that between wage containment demanded by the IMF and finding means to perpetuate

privileges for a few people, the country must choose wage containment.

However, I am aware that there is need to resolve the controversies so that the country

can resume normality. For this reason, I am prepared to continue to negotiate with those

who feel aggrieved. But these negotiations must be within the legal framework. We are

prepared to prevent the prevalence of anarchy that is being fueled by a few disgruntled

power hungry politicians within and outside the country. We have the means, within the

law, to deal with such elements of people.

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Lastly, I wish to appeal to you Bwanas and Donnas to be understanding as we pass

through these turbulent times.

When deciding to implement such a policy, we knew that groups within the public service

that are privileged to enjoy higher salary scales would fight against this policy. I must

confess that I equally expected that the sense of fairness and decency would prevail

quickly.

Unfortunately, unscrupulous politicians within and outside have taken

advantage of the situation to perpetuate the controversy and extend it to other sectors

inside and outside the public sector.

I wish to appeal to the public to support the Government in this matter that is ultimately

intended to enhance our economic performance and accelerate the eradication of poverty

in our country as I have explained.

Let me thank you for listening to me on this very important subject.

6. CONCLUSION

In conclusion, I would like to thank all government ministries, departments and agencies

that worked so hard in the past quarter. Together we have achieved a lot; and together we

will transform this nation.

In the coming few weeks, government will announce the specific targets that each

ministry and department will be pursuing in 2015. The public is therefore encouraged to

directly interact and/or question the relevant ministry and/or department in line with

their mandates. Further, I have directed that every two weeks at least one ministry

and/or department must face the public and account for their planned deliverables.

Remember, this DPP-led government aims to double the economy by 2019. So, Action,

and more action is all we need.

Let me thank you for listening to me.

May the Almighty God bless you all and bless Mother Malawi.