LILONGWE-(MaraviPost)-The country’s civil rights group on good governance, Forum for National Development (FND) has written International Monetary Fund (IMF) and World Bank missions in Malawi regarding to the comprise financial arrangement between Malawi government and contractor Khato Civils on Salima Lilongwe Water Project (SLWP).
FND wants the two global financial institution to act on President Lazarus Chakwera’s Tonse Alliance government for continuing pay the contract huge some of money despite zero work on the ground for the last four years.
The grouping is worried with Khato’s additional MK70 billion funds towards the project due to recent devaluation of Malawi kwacha.
The letter issued and signed by FND National Coordinator Fryson Chodzi dated April 15, 2024 has also copied to The Secretary to Treasury and The Director General of Anti Corruption Bureau (ACB).
Below is FND full letter to WORLD BANK AND IMF..
Dear Sir or Madam,
Advocating for Increased Accountability and Transparency in the Salima – Lilongwe Water Project Intervention
The Forum for National Development (FND), as champions of good governance, transparency, and accountability, writes to your esteemed offices with deep concerns regarding the financing and actions surrounding the Salima Lilongwe Water Project (SLWP).
We have observed significant alterations in the project’s financing arrangement, with billions of taxpayers’ funds disbursed to a contractor, yet there is scant evidence of tangible progress on the project.
As background, the SLWP was conceived to provide water access to residences of Lilongwe and surrounding districts, with the government of Malawi contracting Khato Civils under the condition that the contractor would secure financing for the project.
However, it has become apparent that since the agreement was established, the contractor has failed to secure the necessary financing, rendering the signed contract legally void.
Despite these circumstances, in the 2018/2019 financial year, the Government of Malawi disbursed US$18 million (approximately K31 billion) to the contractor as mobilization funds for the project.
Allegations have surfaced suggesting that in the 2020/2021 financial year, an additional US$12 million
(approximately K20 billion) was paid to the contractor as part of the same mobilization efforts.
Subsequently, in 2023, with the realization that the contractor would not secure external financing, the Government of Malawi chose to seek local borrowing from commercial banks at commercial lending rates. Bill no. 11 of 2023, authorized by the Malawi Parliament, sanctioned the borrowing of a total sum of K105 billion (US$61 million) from National Bank and NBS Bank on behalf of the contractor to initiate the project works.
The passage of the bill itself raised suspicions. Allegations surfaced that before the bill was presented in Parliament, certain Members of Parliament were reportedly taken to Salima, where they were purportedly influenced or bribed to ensure the bill’s passage.
Additionally, Parliament appeared to disregard its own standing orders on bill procedures, which typically necessitate a minimum of 7 days for a bill to be read in Parliament. Remarkably, the bill was expedited
through Parliament in an astonishingly brief period of 4 hours, from the first reading to its conclusion.
FND received information from insiders within both the government and those affiliated with the contractor, suggesting that contrary to the bill’s assertions, the K105 billion was not intended for the project but rather part of a scheme to further exploit the Malawian government.
We proactively reached out to key entities including the Ministry of Finance, the Office of the President and
Cabinet, and the Office of the Attorney General seeking clarification on the monitoring mechanisms in place to ensure that the allocated funds would indeed kick start the project.
Unfortunately, none of the mentioned offices provided a satisfactory response, remaining non-committal on the matter.
In line with our commitment to governance principles, we pursued legal action against the Malawian government regarding the Salima Lilongwe water project, filing a case under Commercial Cause Number 75 of 2023. While awaiting the court’s decision, the Attorney General initiated an appeal process in the Supreme Court, despite procedural irregularities.
The Supreme Court ruled that the case should transition from the Commercial Division to the civil division of the high court.
Regrettably, our endeavors to uphold transparency and accountability have faced obstacles due to recent government actions.
We were disheartened to discover that the government proceeded with payments to the contractor prior to a court ruling. Furthermore, these payments were facilitated through a banking institution that was not originally included in the parliament-approved loan authorization bill.
Allegations suggest that by the end of February 2024, NBS Bank and CDH Bank had provided financing totaling K105 billion for the project.
The Government, through various channels including the State of the Nation Address (SONA) by President Dr. Lazarus Chakwera, the Budget Statement by the Minister of Finance, Hon. Simplex Chithyola, and statements from the Minister of Water, Hon. Abida Mia, affirmed that the project would commence on 1st March 2024.
Ironically, despite the provision of funds for the project, the contractor has yet to commence any work and is now requesting an additional K70 billion (US$40 million) for devaluation adjustments before initiating the project. This demand is concerning and raises questions about the handling of funds and procurement processes.
It deviates significantly from the contract’s initial obligation to structure funding appropriately and undermines the transparency and integrity of the project.
The government’s decision to burden Malawians with commercial-rate financing is unacceptable and exacerbates the existing debt concerns in the country.
It is deeply troubling that despite the release and commitment of funds, no progress has been made on the project, fueling suspicions that it may serve as a front for embezzling public funds.
Commercial loans can impose heavy financial burdens on the people of Malawi, and we demand transparency
regarding the feasibility study conducted for this new financing plan.
Moreover, we believe that there are grave governance issues surrounding this project that demand immediate attention.
We are prepared to engage with international bodies such as the IMF and World Bank if necessary to address
these concerns.
Additionally, we will not hesitate to pursue legal action if our concerns are not adequately addressed, although we are mindful of potential challenges with judicial impartiality in matters related to the SLWP.
We wholeheartedly urge your esteemed office to give our communication the attention it deserves and to actively engage with the Government of Malawi on behalf of the Malawian people.
It is imperative to ensure transparency and accountability in the Salima Lilongwe water project, as Malawians deserve to understand how their taxes are being utilized for such critical initiatives.
The burden of these loans and funds should not be borne by the people without proper oversight and assurance that their interests are being safeguarded.
By including you in this correspondence, we implore the Anti-Corruption Bureau (ACB) to launch a thorough investigation into the utilization of public funds by both the Contractor and the Government of Malawi in the Salima – Lilongwe Water Project (SLWP).
Allegedly, over K150 billion (US$89 million) has been invested in the project since its inception, yet there is little to show for such a substantial investment beyond mere mentions of equipment mobilization and project commencement.
We urge you to delve into this matter urgently to ensure accountability and transparency in the use of public funds.
Yours in Malawi Service
Fryson Chodzi
NATIONAL COORDINATOR
