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Volume 756: debated on Thursday 23 October 2014

Question for Short Debate

Asked by

To ask Her Majesty’s Government what action they are taking to support economic and social development in Malawi.

My Lords, Malawi is a nation of about 15 million people. It is a peaceful, democratic nation and a proud member of the Commonwealth. It is a landlocked country, but Lake Malawi is one of the most stunning lakes, and the ninth largest, in the world, with more species than any other. On 6 July this year, Malawi celebrated the 50th anniversary of its independence, on 6 July 1964. I thank those responsible for my opportunity to secure this Question for Short Debate. I am also delighted that observing the debate this evening are His Excellency the High Commissioner Bernard Sande and colleagues, who have joined us for our deliberations.

Since 1964, Malawi has seen many ups and downs. In 1994 it celebrated the introduction of multiparty democracy and in that time it has seen development in many ways. Malawians are a proud and good people, and good friends to the UK, and to Scotland and Scots in particular. Scotland’s relationship with Malawi goes back 150 years to the time of Dr David Livingstone, that pioneer who was described by Kenneth Kaunda as Africa’s first freedom fighter. Livingstone’s successors, such as Dr Robert Laws, who ran the Livingstonia Mission for decades, and Mamie Martin, who pioneered girls’ education in that part of Africa, were all committed to helping Africans develop Africa themselves. This was not the traditional colonial relationship but one that was much more about mutual respect.

In the 1950s it was the Scots who stood strongest with the Malawians, first to oppose their movement into the Central African Federation, which was a disastrous step by the then British Government that pulled together southern and northern Rhodesia with Nyasaland, as Malawi was then called. Secondly, the Scots supported the Malawians during the state of emergency that followed; in 1959 this included the General Assembly of the Church of Scotland leading the international voice that said that it was time for a daring and creative transfer of power to the people of Malawi. The transfer happened just five years later.

In the first independence Cabinet in 1964, a Scottish lawyer, Colin Cameron, one of the few non-Africans to serve in a Cabinet in post-independence Africa, served as Minister for Works and Transport. Forty years later, in 2004, he was to become one of the inspirations behind the Scotland Malawi Partnership, when Strathclyde University, which had been home to Dr Livingstone almost two centuries before, established with the two Lord Provosts of Glasgow and Edinburgh the partnership. This was reinforced and strengthened in November 2005 by a co-operation agreement between myself as First Minister of Scotland and the then President Bingu wa Mutharika.

The co-operation agreement was based, as all the work over those 150 years had been, on mutual respect, development and working together. Today, the Scotland Malawi Partnership has hundreds of members. It is a non-governmental organisation that has in its membership all of Scotland’s universities, half of Scotland’s local authorities and hundreds of schools. There are health projects and active health partnerships operating in everything from epilepsy to midwifery and from prosthetics to rural GP advice.

A recent survey showed that 94,000 Scots and almost 200,000 Malawians are now actively engaged in these links, and that 200,000 Scots and more than 1 million Malawians benefit from this activity, which contributes mostly in kind about £40 million to Malawian development every year. It also showed that there is widespread support: that 46% of Scots personally know somebody who is involved in people-to-people links with Malawi, and that 74% of Scots have been in favour of those links overall. It is a unique and special model. My first question to the Government is: will they encourage others around the world to look at similar opportunities to link either parts of nation states or small nation states with smaller areas in the developing world in a way that develops mutual respect and mutual benefit but, ultimately, development as well?

The second matter that I wish to address damages that respect and good will, and it is the issue of UK visas. The good will and respect that have been developed are regularly threatened by the shambles surrounding the UK visa system for those in Malawi and other poor countries trying to get to this country. The system is dysfunctional, it is certainly disproportionate and it is, in my view, deeply damaging. From the 15-page application form that people have to fill in to the posting of passports to countries far away, which then have to be returned on time but regularly are not, to the proof of wealth that is required as evidence to secure a visa to come to this country, to the cashless system that encourages sharks to charge a fee to use their credit cards, as people pay them cash—all these measures have led to a whole series of people month after month being denied the opportunity to come to this country from poor communities in Malawi, and indeed elsewhere, in order to contribute to debates and discussions here, even when their host is a highly reputable UK or Scottish organisation or even a government body.

This is an issue that the Government need to take more seriously than they have done in the past. What steps will they take to clear up this chaos and improve the system in the short term? In the longer term, will they initiate a proper investigation to see how the system can be made more likely to contribute to the good relations between this great friend of Scotland and the UK, rather than damaging the relations that are being developed today?

As the 50th anniversary celebrations got under way this year, Professor Peter Mutharika, the new President of Malawi, said very clearly that,

“we need to transform our country from being a predominantly importing and consuming country to a predominantly producing and exporting country … we must strive for economic and development independence”.

I am sure that all of us wholeheartedly endorse and support that vision. However, today in Malawi 60% of the population still live on less than £1 a day. For every 1,000 children born, 68 will die before the age of five, and one in 200 women will die in childbirth. Although 24% of children will have had diarrhoea in the last two weeks, only 16% will have gone to secondary school. Malawi today is still only 170th out of 187 in the Human Development Index.

While there has been progress towards the MDGs on HIV and child mortality, Malawi is unlikely to meet the MDG targets on poverty, primary education and maternal health. Growth and development has been damaged in recent years by political instability, by economic ups and downs and by some more serious problems, as well as by the recent “cashgate” scandal that the new Government are trying so hard to deal with. As a result, UK aid has been partly suspended and direct support to the Government has been suspended indefinitely.

My final questions to the Government are about that UK aid, which is so critical, along with that of other donors, in the short term at least, to securing Malawian development towards the vision of economic independence. First, can the Minister outline for us what plans the Government have in the medium term to move back to a system of general budget support and sectoral budget support that would reinforce the capacity of the central Government of Malawi to deliver for its citizens?

Secondly, what support is the UK providing to build the capacity of central government and national institutions in Malawi to help ensure that scandals such as “cashgate” do not happen again? Thirdly, I have to tell the Minister that I found it very difficult to secure these figures from the DfID website, which I found to be a little bit out of date in places, including referring to the future elections in 2014 rather than the ones that had just happened.

I ask the Minister, if she can tonight, to outline exactly where UK aid is going at the moment. What is the expenditure targeted towards and what is the impact of that expenditure this year? I think that is important information that reinforces the friendship between our two countries and also allows us to hold the Government accountable for that expenditure.

In conclusion, Malawi is for very good reasons regarded as the warm heart of Africa. The friendship between our two nations, not just Scotland but the whole United Kingdom and Malawi, will be there for a very long time. I hope that, in addressing these questions this afternoon, we will be able to contribute to that friendship and move forward together to development and proper independence in the future.

My Lords, the House should be very grateful to the noble Lord, Lord McConnell, for initiating this short debate on a small, faraway country of which many people know little but which he and I know extremely well. I join him in congratulating the Scotland Malawi Partnership. I was on the preparatory committee that set up that partnership and he was the First Minister who saw it implemented. It has gone from strength to strength. The Scottish Parliament and the Scottish Government have continued to support it very strongly, and I endorse what the noble Lord said. When the noble Lord referred to the history of Malawi, I remembered on one occasion sleeping on the bed of Dr Laws in Livingstonia—not an experience I would recommend to anybody. It was simply a bed constructed out of rope.

In a very short speech I want simply to raise two issues. The first is the question, to which he alluded, of “cashgate” and our aid programme. The figures may not be on the DfID website but sources in Malawi suggest that some $500 million went missing over eight years during the period of the previous Government in Malawi. That is, according to Malawi sources, something like 30% of Malawi’s total budget. When you think that it is a very small country with a population of 16 million and an economy smaller than the London Borough of Hackney, you realise that the damage done by the “cashgate” scandal is enormous. Therefore, it is understandable that not just Her Majesty’s Government but the new Malawi Government are doing their best to see that those who were responsible for this are brought to book.

The former President, Joyce Banda, in a lecture at the LSE this month, said that she was alerted to this scandal at the tail end of her regime by Alexander Baum, who was the European Union representative in Malawi. That enables me to say that I do not share the general view that has been put about that the European diplomatic community is somehow less effective than our own. In my many visits to Malawi, I have found that the small diplomatic community there worked together more cohesively than I have seen in any other country. I pay tribute to the European representative as well as to our own.

In the lead-up to the referendum after Dr Hastings Banda’s period, I was involved in the struggle to bring better democracy and transparency to Malawi. It must be frustrating for the population of Malawi to realise that they have suffered under kleptomaniac rulers who have made a mockery of democracy. I know that our Government and the German Government have financed the external audit that is trying to track down what exactly happened. The United Kingdom has to be tough on this issue. It cannot resume the full aid programme until it is resolved. It should also warn even the new Government that extravagance will not help. There have been press reports from Malawi that the current President took 68 people with him to the General Assembly of the United Nations in New York—not a good example to set when he is doing his best to track down the blatant corruption of the previous Government.

Although we have suspended budgetary aid to the Government, I hope that it will still be possible for DfID and other organisations to continue to give direct programme support to various factors in Malawi. In the areas of health, education, agriculture and support for the judiciary, it is important that, even though we cannot give government budgetary aid, we continue to give direct assistance.

To give an example from my own experience, the last time I was there, which was a couple of years ago, I visited a hospital which was very well organised. It had rural outreach clinics and took drugs out to the villages on motorbikes. Somebody had given about a dozen motorbikes to the hospital. I am not a motorbike expert but I think they were probably Chinese—they were quite cheap—and a lot of them had broken down. In fact, there was only one left that worked; the others were all in a shed. Here is an example of when a little ingenuity and a little money, to get a mechanic out there to cannibalise the motorbikes so they could work again, would greatly increase the efficiency of that service. Not a large sum of money was involved. That is the kind of imaginative thinking that our hard-pressed DfID staff in Malawi should be looking at. The Government should be willing to finance such individual projects even if they cannot give direct help to the Malawi Government.

The second issue I want to touch on is the visa regime, ably mentioned by the noble Lord, Lord McConnell. As it affects Malawi, it is particularly bad because visa applications have to go to Pretoria in South Africa. Under the Malawi rules, one cannot pay in rand without clearance from the banks. The whole thing is a bureaucratic nightmare. We had a debate on this issue, which is totally unsatisfactory, in the Moses Room a few months ago. We have lost accountability for the visa service. It has been farmed out to an agency, which in turn has farmed it out to subcontractors, presumably on a cheap contract basis. The result is that the service is extremely expensive for Malawi citizens and it is very time-consuming. Mr Tom Greatrex the MP who represents Blantyre, David Livingstone’s birthplace, feels very strongly about this. He has raised it several times and is about to have an Adjournment debate in the Commons on the issue.

In the mean time, I want to make two suggestions, which my noble friend might pass on to the Home Office. First, I do not understand why, when people are coming for short contributions to public seminars of a kind that I complained about before, and will be here for only a few days with firm sponsorship, those issuing the visas cannot telephone the sponsors to make sure that the application is genuine. The idea that visa applications are rejected because people might overstay or give up their careers, families and everything else in Malawi to stay in Britain is simply ludicrous. Another suggestion is that we might change the visa system to insist that sponsors for short-term visits should themselves sign declarations accepting responsibility for the person returning and being liable to a fine if the person does not return. That might cut through a lot of the bureaucracy and establish a visa regime that is fit for purpose.

Better still, I would like to be rid of the agency and go back to the system we used to have. I can remember as an MP on several occasions having to phone a high commissioner or an ambassador and say, “I hear that so-and-so has made an application for a visa and has been turned down. Can you have a look at this?”. They would look at it and say, “This is why it has been turned down. It is perfectly reasonable. It is good policy not to let this person come here”—or, alternatively, they would say, “We have looked at this. It is bureaucratic nonsense and we are issuing the visa”. There is no accountability any more. It has gone. If we cannot get it back, at least steps should be taken, as the noble Lord said, to ensure that the system is improved. I hope that the Home Office will respond in the debate which Mr Greatrex is having shortly in the other place and will come forward with positive ideas on how to improve the system for the benefit of good relations between Malawi and ourselves.

My Lords, I, too, want to thank my noble friend for initiating this debate tonight. As we have heard, Malawi is one of the poorest and least developed nations in the world, ranking 170 out of 187 in the Human Development Index and with rural poverty increasing in the last decade to 57% of the rural population.

Although fragile and despite many challenges, DfID’s latest annual report—which, I accept, is a little out of date—shows that Malawi’s macroeconomy is displaying some signs of improvement. There is no doubt that progress has been achieved through DfID’s focusing on the key priorities of attacking poverty and inequality, and through investment in education, health, agriculture, water and sanitation, with an emphasis on the rights of girls and women—that is absolutely right. DfID has promoted wealth creation and economic growth by expanding its private sector development portfolio to improve growth in the agricultural sector.

More women are being helped to access finance through village savings and loan schemes. Of the 26,000 additional people supported to access credit through DfID in 2013-14, 21,000 were women. DfID’s work in resilience is helping to improve rural incomes and reduce the vulnerability of farmers to external shocks. An additional 74,000 people were supported to cope with natural disasters in the 2013-14 period. In the same period it helped 140,000 people to have access to clean water and improved sanitation, and by 2015 it will have supported 750,000 people in that way.

Despite DfID’s work supporting accountability reforms and preparing for the 2014 general elections, poor governance and corruption continue to prevent Malawi from achieving its full potential. As we heard from noble Lords tonight, DfID has frozen its direct budget support to Malawi as a result of the so-called “cashgate” scandal, which saw substantial sums of aid funds going missing, with the Government of the then President, President Banda, being heavily implicated in the diversion of funds. This is the second suspension of direct aid arising from corruption in the past three years. As we have heard, the suspension is ongoing despite the May 2014 elections, which saw the removal of President Banda and her replacement with Peter Mutharika.

Clearly, we support the move to suspend aid if there is strong cause to believe that misappropriation is happening. However, for a country so dependent on aid, this is a huge hit, especially when other donor nations have also frozen budget support. I am of course aware that DfID believes that sufficient action has not been taken to address financial and management issues under the new Administration. However, in these circumstances there is a need for DfID to engage closely with the new Malawi Government to ensure that there is a clear road map of steps that can be taken that will lead to the reinstatement of budget support.

In that respect there are a number of questions that I would like to ask the Minister, which have been reflected already by noble Lords, particularly my noble friend. First, have DfID Ministers met with Malawi Government representatives to discuss progress on tackling corruption and steps towards the resumption of budget support? Secondly, what assessment has been made of the willingness of the new Government to take serious steps to improve financial management? Thirdly, what was the outcome of the DfID-funded forensic audit team operating in Lilongwe to attempt to identify misappropriated funds?

Despite the progress I have referred to, Malawi still faces huge challenges in health and education, where just 66% of young people complete their secondary school education. Can the Minister highlight for noble Lords what impact the suspension of budget support is having on public services? Is the department happy that the continuing funding for NGO-based programmes in Malawi is proving effective at limiting that impact? Moreover, as and when budget support recommences, is there the potential for back payments to be made that will help to reverse the negative impact of funding shortages on public services?

Sustained youth unemployment, underemployment and low pay are a severe drag on the nation’s ability to tackle poverty levels, a situation that is set to be exacerbated in a nation where almost 47% of the population is under the age of 14. As I have indicated, the UK’s development programme for Malawi rightly includes a substantial private sector development programme, but it is not clear that it is adequately focused on the particular issues of youth unemployment or on moving people from precarious work into more secure and properly remunerated jobs. The private sector development programme concentrates particularly on the oil seed sector and on reforms that would help to grow it as an export sector, but as with much agricultural work in Malawi, wage levels and working conditions are extremely poor. Is there enough focus on encouraging sustainable, properly remunerated employment in this sector, and how is DfID ensuring that its funding and support for agricultural regulatory reform strikes the right balance in enabling private sector led employment growth while protecting the small-scale farmers who make up the bulk of Malawi’s rural population from land grabs and unfair practices?

Some 20,000 farmers in Malawi currently benefit from fair trade schemes, particularly in the tea, coffee and groundnut sectors, with premiums being reinvested in rural schools, healthcare and infrastructure. However, with 90% of the population working in agriculture, there is clearly enormous scope for further expansion. Yesterday, along with my noble friend, I met with members of the team from the CDC Group who highlighted the direct investment being made in a company in the DRC to develop palm oil—in a very difficult situation for arable operations. This has already resulted in improved wages. I discovered that the negotiations with the trade unions were carried out on television, so they were there for everyone to see; it is a practice that we could perhaps adopt here because it might improve things. A major ingredient of the success which the CDC highlighted was the level of co-operation between DfID officials locally and the CDC in assessing the resilience and sustainability of what is clearly going to be a long-term investment. Does DfID’s private sector development programme in Malawi provide a specific focus on and assistance to the fair trade sector? Also, in encouraging British investment in Malawi, does the department, along with the high commissioner, actively seek to promote fair and ethical trade opportunities?

The noble Lord, Lord Steel, and my noble friend have raised the issue of visas, and I want to repeat their questions. In the end I would ask the Minister to ensure that there is a review of the current operation to assess its effectiveness, proportionality and impact on the current system of civic and community links. As my noble friend so ably put it, we must recognise the essential role that civic society can and should play in Malawi and among its partners in the United Kingdom—particularly, as we have heard in the debate, in Scotland. We must strengthen both economic growth and good governance.

My Lords, I thank the noble Lord, Lord McConnell, for initiating today’s debate and for his passionate and well informed introduction. I also welcome His Excellency the High Commissioner and others from the high commission who are interested in the debate today. The noble Lord, Lord McConnell, has a deep and long-standing interest in Malawi. He points out that there are particularly close links between Scotland and Malawi from David Livingstone onwards. He outlined very effectively how close those links are today. We have, of course, close links in the United Kingdom with other developing countries, often developed from a shared history, as in the case of a number of other African countries, and from diaspora links, as with Pakistan and Bangladesh.

The noble Lord, Lord McConnell, notes that Malawi celebrates 50 years of independence this year. In that time, it has achieved a significant reduction in child mortality, an increase in food production, free primary education for all and the establishment of a multi-party democracy, with a vibrant free press and civil society and a series of peaceful elections. Development assistance, including from the United Kingdom, has been critical but that is quite a series of achievements.

Yet, compared to some of its neighbours, Malawi’s progress has been slow. Average life expectancy at birth remains 55 years, 90% of people live without electricity, and only 28% of girls finish primary school. Landlocked and resource-constrained with a high population growth, Malawi continues to face the problem of lifting its people out of deeply entrenched poverty. Development assistance that addresses the underlying barriers to progress remains essential.

The recent multi-million “cashgate” corruption scandal, to which noble Lords have referred, in which it was discovered that significant amounts of public money had been stolen through systematic manipulation of the Government of Malawi’s public financial management system, was, and continues to be, of great concern to the UK. This money was stolen from the Malawian people, setting back much-needed poverty reduction. My noble friend Lord Steel and the noble Lord, Lord Collins, make extremely clear how significant this has been.

At the request of the Malawian Government, the UK funded—reference has been made to this—a forensic audit of government accounts to establish the extent of “cashgate” losses, the methodology used and those involved. Now the final report has been handed over, Malawi’s law enforcement agencies must continue to work methodically to bring the perpetrators of “cashgate” to account through the courts and deliver justice for the Malawian people. I assure the noble Lord, Lord Collins, that we are monitoring this very closely. The United Kingdom is committed to ensuring that every pound of UK aid money achieves its intended results and maintains a zero-tolerance approach to corruption. This is why, in concert with other donors, we took the decision to stop providing all financial aid to the Malawian Government in November 2013. There can be no consideration of putting UK funding through government financial systems in Malawi until the necessary actions to strengthen these systems have been taken and independently verified. We will keep this situation under review.

While we cannot work through government systems, the UK continues to work with Government and others for change in Malawi. The noble Lord, Lord McConnell, asked about capacity building to avoid future “cashgates”. The new Government of Malawi have committed to a greater degree of transparency and we will be working with them to take broader and sustainable action to tackle corruption and foster a culture of integrity in public life. As I have said, we are monitoring this very closely.

The noble Lord, Lord Collins, asked about meetings with Malawian Ministers. A Minister in the Foreign Office, my honourable friend James Duddridge, whom the noble Lord will know, met the Malawian Minister of Foreign Affairs at the United Nations General Assembly recently.

The United Kingdom remains one of Malawi’s major development partners but, as I said, is not routing that support through the Government. We continue to provide a large programme of support to reduce poverty and assist poor people across Malawi through other channels. I assure the noble Lord, Lord Collins, that we work hard to ensure that the poorest people do not suffer further as a result of “cashgate”.

I also note the projects that my noble friend Lord Steel mentioned. I hope that noble Lords will be reassured to know that in the financial year to March 2015, the United Kingdom is providing £61 million of bilateral support to the people of Malawi, representing 2% of its national income. That is complemented by the UK’s considerable contribution to Malawi through other channels, including the World Bank, the European Union—to which my noble friend Lord Steel paid tribute—the Global Fund to Fight AIDS, Tuberculosis and Malaria, UK-based NGOs, and regional programmes. United Kingdom support creates educational opportunities for girls and boys, supplies life-saving drugs to the health sector, tackles undernutrition in young children and in people living with HIV, and provides vital inputs to farmers. The noble Lord, Lord Collins, mentioned several of those areas.

We are delivering significant demonstrable results for poor people. Since 2011, the United Kingdom has helped more than 350,000 women to access family planning services. By 2015, more than 400,000 women will have improved access to security and justice. By 2016, we will have ensured that 750,000 more people have access to safe, clean water. Our support enabled 5.2 million people to vote in recent general and local elections.

Those results are underpinned by important transformational changes: governance reforms, health systems improvement, transparency and accountability for citizens, and girls’ and women’s empowerment. We enable households and communities across Malawi to build resilience to climate change and chronic food insecurity. However, we are well aware of the need, as the noble Lord, Lord Collins, outlined, for people to have jobs. That is vital.

However, Malawi’s future needs to move beyond a heavy reliance on aid. Malawi must stimulate the creation of growth, markets, jobs and incomes for all its citizens, as the noble Lord pointed out. To that end, the UK is supporting Malawi’s economic development. We are working to improve the business-enabling environment, and the diversification and development of Malawi’s export market. We support smallholder farmers to diversify their production. We are helping to connect these farmers at local markets in Malawi to regional markets.

The new Government now have an opportunity to address the issues which have long held Malawi back from the most sustained growth and progress. They have an opportunity to set a strong vision for poverty reduction and to implement essential reforms to public financial management and the civil service, necessary to restore the confidence of the Malawian people and investors. I welcome those who are attending the debate today. They have an opportunity to rebalance the Malawian economy from one heavily supported by donors and reliant on the state to one more driven by private-sector investment and entrepreneurship.

The people of Malawi have seen past Governments promise much but fail to deliver. The new Government will want to show that they are different by working hard to deliver real change for all their citizens. This is what we want to see.

We welcome the first signs from the Government that they are serious. We welcome the civil service and public service reform commission, the President’s stated commitment to zero tolerance on corruption and the fiscal discipline prioritised in the recent budget.

The noble Lord, Lord McConnell—indeed all three noble Lords—flagged up the issue of visas. We are very keen for Malawians to be able to travel to the United Kingdom. We have alternative payment methods for those who do not have credit cards. This was an issue that was mentioned. Poorly paid people from Malawi are not discriminated against in applying for visas. There is no income threshold. I hope that it reassures noble Lords that 84% of applicants processed in Pretoria are successful. About 1,400 visas were issued last year.

The noble Lord, Lord McConnell, was critical of our online system. A recent IT upgrade has improved this capacity by about 33%. I will of course pass on to my colleagues in the Home Office the comments made in this debate. I note that there will be a future debate in the other place. I hope that I can also reassure noble Lords that these are areas that of course we will keep under review to balance the costs of our process and its purpose, and at the same time encourage visits.

We value our relationship with Malawi and Malawians. It is a country with such a bright future. We are closely engaged in trying to ensure that it can deliver that bright future for the people of Malawi, whose level of poverty has been made extremely clear in this debate.

The United Kingdom, which I am extremely glad also includes Scotland, has been a long-standing supporter of the people and communities in Malawi. While working hard to protect all UK taxpayers’ money, we will continue to provide much-needed continued assistance for sustained improvements in poor people’s lives.

House adjourned at 5.36 pm.