London: Britain has indefinitely suspended part of its aid programme, worth £19m, for Malawi over the country's repeated failure to address concerns over economic management and governance. The money is used for general budget support, which helps governments deliver their own national strategies for poverty reduction against an agreed set of targets. The UK's Department for International Development (DfID) said the decision is in line with international concern over Malawi's current position. The World Bank, the EU, the African Development Bank, Germany and Norway have all suspended or ended general budget support to Malawi.
"The UK provides development assistance in order to help communities lift themselves out of grinding poverty, whether that's through getting children into school, ensuring women survive childbirth or helping farmers grow enough food to feed their families and communities," said Andrew Mitchell, the international development secretary. "But poor people in Malawi and British taxpayers alike have been let down. In these circumstances I cannot justify the provision of general budget support for Malawi."
DfID said demonstrations in Malawi have been suppressed, civil society organisations intimidated and an injunctions bill passed that would make it easier for the government to place restrictions on opponents without legal challenge.
The department, which has made aid effectiveness a priority, also expressed concern over Malawi's overvalued exchange rate, which has created chronic foreign exchange shortages and which has badly hit the Malawian private sector.
"There are now daily fuel queues, tobacco exports have deteriorated and Malawi is off-track with its IMF programme," said DfID.
Britain - Malawi's main bilateral donor - is expected to spend £90m on aid on the landlocked country this year and an average of £93m a year in Malawi until 2015. The largest portion of Britain's aid - 39% - goes on health.
Malawi has enjoyed economic growth of about 7% in the last five years, with a peak of 9.7% in 2008, thanks to several bumper tobacco harvests. But Malawi remains one of Africa's poorest countries, with 72% of Malawians on less than $2 a day.
The decision to suspend aid for general budget support comes at a time of rocky relations between Britain and Malawi. In April, the former British colony expelled the British ambassador after he called the Malawian government autocratic in a leaked diplomatic cable. Fergus Cochrane-Dyet was quoted in a leaked message to London describing Malawi's president Bingu wa Mutharika as "ever more autocratic and intolerant of criticism". Cochrane-Dyet wrote to the foreign secretary, William Hague, saying that in Malawi the "governance situation continues to deteriorate in terms of media freedom, freedom of speech and minority rights".
The ambassador was summoned to Malawi's foreign ministry in Lilongwe and ordered to leave the country within days. At the time, the Foreign Office insisted that declaring its man "persona non grata" would be unacceptable and warned that any such action would have "consequences".
Britain cut aid to Malawi by £3m last year after the purchase of a presidential jet that cost more than £8m. British officials said they had concerns about the purchase given the impoverished state of the nation and the fact that it relies on donor support for up to 40% of its development budget and the salaries of its 169,000 civil servants. Mutharika defended the new jet, saying it was cheaper to run it than hire an aircraft each time he wanted to travel abroad.
Experts said the aid decision will hit the country hard at a time when it is short of foreign exchange and experiencing serious energy shortages. The country's sole electricity provider, Electricity Supply Commission of Malawi (Escom), recently announced planned power cuts in its ageing power system that will see the whole of Malawi in darkness every day from 4pm to 10pm for the rest of this year.
This is not the first time Britain has suspended aid to Malawi. It suspended general budget support in 2001 and 2004.
The Malawian Institute for Policy Interaction, a pro-democracy group, called Britain's decision "huge", politically and economically. "Britain has been supporting the budget to the tune of 30%", said Rafique Hajat, IPI's executive director, who criticised the government's "zero deficit budget", introduced in anticipation of reduced international financial support.
"The government has put VAT on salt, flour, cooking oil, bread and milk, exorbitant taxes that hurt the poor, while the government has not trimmed expenditure," said Hajat. The bloated cabinet has 40-plus members, each with their own Mercedes and 4x4 and the president swans round in his French-made jet."
Hajat, who had just handed in a letter to Malawi's police commissioner in connection to a demonstration planned for next week, said Britain was absolutely justified in reducing aid. "The British government has a duty to the taxpayer who wants to see aid used fruitfully and wisely," he said. "Joe Bloggs on the factory floor in Manchester couldn't give a toss if the head of state is driven around in a car, but he would be very pissed off if good money is pouring in after bad."
* By Mark Tran