Fragmented donor funding: Malawi’s Social Cash Transfer Programme

This blog provides a ‘behind the scenes’ look at the various donor funding approaches to Malawi’s Social Cash Transfer Programme (SCTP). There are four donors that directly fund the transfers and each has an established history with Malawi’s institutions. They also have different demands from their home constituencies, varying risk appetites, and priorities. The result is a fragmented funding landscape resulting in multiple audits and different communication and accountability channels. With the cash transfers to 27 out of Malawi’s 28 districts being funded by donors, the Government of Malawi (GoM) has little ability to impose its own wishes for a harmonised funding pool. 

Malawi’s Social Cash Transfer Programme  

Malawi's SCTP is an unconditional cash transfer programme that has been operational for a decade, with ever-expanding coverage. Currently, almost 750,000 Malawians benefit from the programme. Beneficiaries need to be both ‘ultra-poor’ as well as ‘labour constrained’. Depending on the number of members, a household receives between 2,600 – 5,600 Malawi Kwacha ($3.6 – $7.7) per month with additional bonuses for school-going children. The programme “seeks to reduce poverty and hunger; increase school enrolment and attendance; and improve the health, nutrition and well-being of vulnerable children” (Pozarny and O’ Brien, 2015).

Funding the Programme

At the national level, we see a myriad of stakeholders: various ministries and government bodies, four donors who fund the transfers, and several international actors who provide technical assistance (Abdoulayi et al., 2017). There is constant discussion about how to finance the transfers and if donor funds should go into a ‘funding pool’.

Currently, two donors have teamed up and use an external consultancy firm, which carries out the financial management of their funding. The third donor has decided to retain control over their funding themselves. A fourth donor channels their funds through a separate government entity. The GoM also funds one district itself. Consequently, there are numerous financial flows, which demand considerable administrative duties from the GoM.

Therefore, there is only limited donor harmonisation, as intended by the Paris Declaration on Aid Effectiveness (OECD, n.d.). Donors and the GoM alike recognise the drawbacks of fragmented financing. The GoM is in favour of creating a common funding pool. However, donors have reservations about how to proceed with such a plan and have the power to stall progress towards it.

History matters: Cashgate

One reason for caution among donors, is Malawi’s biggest financial scandal in recent history: Cashgate (BBC News, 2014). The extensive corruption and financial mismanagement that Cashgate brought to light in 2013 has made some donors very waary to entrust the GoM with the sole responsibility of managing (European) taxpayer money. To mitigate the risks of financial mismanagement, part of their agreement with the GoM has been that their financial contribution to the SCTP is overseen by an external firm which acts as a co-financial manager.

Donors are very wary of the bad publicity they might face if funds from their taxpayers are found to be misspent. There have also been considerable issues with programme implementation in the district that is funded by the GoM, which doesn’t instil much confidence either. As such, accountability is a high priority and so far, the sentiment is that the GoM has not demonstrated sufficiently that it is able to adequately manage the funds independently.

Barriers to harmonised donor funding

An alternate approach would be for the four donors to join together in harmonising SCTP funding. Unfortunately, there exist multiple barriers. First, the smallest donor to the SCTP has opted to channel its funds through Malawi’s Reserve Bank before it is sent to the Ministry of Gender, Children, Disability and Social Welfare, which implements the programme. While this entails considerable monitoring, this donor believes it is the best approach as it strengthens government systems. Interestingly, this is also the reason for the fourth and newest SCTP donor to channel their funds through government, although they use a different agency and mechanism.

This fourth donor has a long-standing relationship with the GoM. It had been working for many years with Malawi’s Local Development Fund in implementing different social protection programmes. Moreover, the Local Development Fund is an important actor when it comes to Malawi's decentralisation efforts, which are also encouraged by this donor. When this donor decided to also fund the SCTP, it felt it was natural to continue using the same mechanism they had been using for years. Trust has been established and while they recognise the LDF has some shortcomings, they have enough confidence to continue entrusting them with their funds.

Conclusion
This blog highlights the power donors have in shaping the administrative design of Malawi’s SCTP. The different donors all have their own unique history with Malawi and its institutions. They also have different additional objectives which they combine with their support for the SCTP. Together, these factors have led to a fragmented funding landscape for the SCTP in which the GoM is unable to enforce its wish for a common funding pool. I hope this blog has inspired you to think about the cash transfers you have experience with and how they are financed. I would love to read your thoughts in the comments section!

In next month’s blog, I will explore the limits of a policy’s power when it comes to the implementation at community level. Communities and the individuals that comprise them yield significant power over how the programme is implemented.

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Disclaimer
Roeland Hemsteede is a PhD student at the University of Dundee. He looks at how power relations at the national and international level affect the design and implementation of cash transfers in Malawi and Lesotho. The views expressed in this blog are his personal views based on ongoing research and do not necessarily represent those of the research team he is a part of (www.cashtransfers-youth.net). Moreover, this blog only expresses broad ideas without the nuance and specificity that is required for a full understanding. It is intended to stimulate discussion rather than a definite and unchangeable argument.

“This blog post is published as part of the Ambassador Series, which presents insights into social protection around the world from the viewpoint of our Ambassadors, a group of international online United Nations Volunteers who support online knowledge sharing, networking and promotion of socialprotection.org.”

References

Abdoulayi, S., Angeles, G., Barrington, C., Brugh, K., Handa, S., & Kilburn, K. et al. (2017). 2016 Malawi: Malawi Social Cash Transfer Programme Endline Impact Evaluation Report | Evaluation database | UNICEFUNICEF. Retrieved 3 October 2017, from https://www.unicef.org/evaldatabase/index_94228.html

Malawi's murky tale of cash, shooting and corruption. (2014). BBC News. Retrieved 3 October 2017, from http://www.bbc.co.uk/news/world-africa-25912652

OECD. The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action. Retrieved 3 October 2017, from http://www.oecd.org/dac/effectiveness/34428351.pdf

Pozarny, P., & O’ Brien, C. (2015). The Impacts of Malawi’s Social Cash Transfer Programme on Community DynamicsThe Impacts of Malawi’s Social Cash Transfer Programme on Community Dynamics. Retrieved 3 October 2017, from http://www.ipc-undp.org/pub/eng/OP276_The_Impacts_of_Malawi_s_Social_Cas...

Social Protection Programmes: 
  • Social assistance
    • Social transfers
      • Cash transfers
        • Unconditional cash transfers
Social Protection Topics: 
  • Financing social protection
  • Political economy
  • Social protection systems
Cross-Cutting Areas: 
  • All areas
Countries: 
  • Malawi
Regions: 
  • Sub-Saharan Africa
The views presented here are the author's and not socialprotection.org's