… Government officials create ghost beneficiaries

… Community leaders demand a cut


Up to 12.6 million people in Malawi live below the international poverty line of $1.90 per day where they struggle for basic necessities; for this reason, the Government is overseeing the implementation of the Social Cash Transfer Programme (SCTP).

Modesta Kachikuwo from Namangale Village, Traditional Authority Chikowi in Zomba District was enrolled on it in 2013. She was 69 then.

A year earlier, she was struck by stroke, which rendered her unable to continue with her business selling vegetables, largely tomatoes, in markets around the area.

The business was the lifeline for her family comprising four orphaned grandchildren under her care.

At the time she fell sick, the eldest of the grandchildren was in Form 2 at Mayaka Community Day Secondary School. The business was paying his fees.

“Then I fell sick. He dropped out of school because we couldn’t manage anymore,” she said.

It was the SCTP that rescued the family, enabling the grandson to complete secondary education. Later, he acquired some electrical work skills through a local apprenticeship at Mayaka Trading Centre. That led to his employment with a construction company in Blantyre.

Now 27, he is the pillar of the household and the family graduated out of the programme.  

However clearly a well-intentioned social protection initiative it is, after 15 years of implementation, the programme has to date rescued just slightly over a million lives from tipping over the cliff.

There is evidence suggesting that this safety net for the poor has been a cash cow for some who have comfortable welfare, effectively limiting its impact.

From the theft of cash meant for the recipients to extortionist practices that milk them to systemic weaknesses that facilitate diversion of resources, the programme has been fraught with challenges that stretch through the levels of the system.

Lilongwe Rot

In the latest of the documented cases which sources in district councils describe as the epitome of the stealing from the poor that has bedevilled the programme over the years, an audit of the programme under Lilongwe District Council found that as much as K95 million was misappropriated.

“That was just in 20 months [between May 2018 and December 2019] and one local council. The programme has been running since around 2006.

“The controls may have been improving over time but this is the kind of theft that people are still able to execute now,” said a senior ranking official at Lilongwe District Council.

The misappropriation of the K95 million means that a host of targeted beneficiaries — the elderly, the chronically sick, the disabled, child-headed households, the not-fit-for-work, and other ultra-poor – did not receive the money.

The investigation –conducted by a team of auditors from the National Local Government Finance Committee (NLGFC), Central Audit Internal Unit, and Lilongwe District Council – uncovered that at the heart of the abuse was the collusion between technical and accounts officers at the council.

Taking advantage of inadequate and ineffective internal controls, among other systemic weaknesses, they cooked up the books to misappropriate the funds. 

The report directly points out who the masterminds of the scheme ripping off the poor are: “It must be highlighted that it was the technical officers who initiated the whole process of misappropriation of funds,” reads the report, dated 29 October 2020.

In the scheme, technical officers generated a falsified reconciliation report of how many beneficiaries were paid or not paid in all the cycles, a move apparently aimed at covering up the footprint of the theft.

As much as 23 accounts personnel were “responsible for the mismanaged transfers” amounting to K63 million. However, the NLGFC, which is the policy holder and the central unit for the financial management of the programme, gave only four officials as having been arrested by Fiscal Police last year in relation to the misappropriation.

Theft at Community Level

At community, level are also practices that steal from the poverty-stricken resources meant to prop up their welfare.

Community structures are entrusted with the responsibility of identifying and enrolling beneficiaries on to the programme on account of their better knowledge of the poverty situation in their areas as compared to council teams.

But in our visits to communities in Zomba, Lilongwe, Dowa, Ntcheu, and Chiradzulu district, we gathered testimonies from beneficiaries and community committee members alike of how these leaders demand a pound of the flesh from the beneficiaries as a “Thank you” for putting them on the programme.

A community leader in Dowa, Tchamos Msangambe, who claimed he stopped demanding ‘Thank Yous’ after some beneficiary reported him to a local NGO said:

“It is common practice here, not only for this but also for public works and farm input subsidy programme. The thing is it is a tradition in Malawi to say ‘Thank you’ but I think we pushed it too far it became blackmail.

“Leaders use their role to cash in. They threaten beneficiaries that they won’t register them if they are not pay a percentage of what they receive.”

Alefa Kumchenga, from Mponela Village, Traditional Authority Mponela in the same district shared her experience.

She had just received her money in July 2018 when one of the community team members approached her.

“He demanded that I give him a ‘Thank you’ for including me on the list. I asked him to bring all the members of his team so I can give him the money in their presence. He did not return,” said Kumchenga, 62, refusing to name the member as she feared she could be removed on the beneficiary list.

A draft review of the programme processed by an insider at Dowa District Council says direct cash disbursement has been one smooth route through which money meant for the poor has been bled.    

“The mode of payment where beneficiaries line up to receive direct cash has been used over the years by community committees and officers to connive and tamper with information and defraud beneficiaries,” reads the review.

The analysis also turns the spotlight on monitoring and evaluation mechanism as deficient and narrow it does not pick out weakness in time and counter them promptly.

It also emerged in the investigation that one of the factors aiding abused of the funds is the illiteracy of beneficiaries. Most of the beneficiaries we interviewed had little or no formal education, to an extent that some cannot not read and write.

To cash the money, they have been using proxies some of whom cheat them on their payouts, according to some of the beneficiaries.

Gift Trapence, chairperson of the Human Rights Defenders Coalition (HRDC) whose whistle-blower initiative contributed to the investigation into the Lilongwe District Council programme, said one of the biggest complaints they have received on the programme is about ghost beneficiaries.

“There is need to strengthen the systems to make sure that the funds go to the intended beneficiaries,” he said.

He further challenged government to show a little more responsibility towards its citizens by taking charge of funding the programme, instead of relying on donors.

Government’s Contribution

Out of the 28 districts where the programme is being implemented, government is responsible for financing the programme only in Thyolo District which has 16,821 households under the programme. 

This means that donors are funding the welfare of around 257,903 households out of the 274,724 households that were on the programme by December 2020.

But there is also a feeling that the dominance of the donors in the programme is helping to minimize abuse of the funds, as compared to if government was fully in-charge of it.

In a typical case of pressure from donors keen on accounting for every penny they put in the programme, Irish Aid which funds the programme in Ntcheu and Balaka demanded a refund of K4, 000 from Ntcheu District Council.

“This is the amount that the auditors have declared as ineligible expenditure in the audit report dated 30th June 2019. This was allowances expenditure not supported by signed allowance sheets…,” reads the demand letter, dated 6 September 2021, from Secretary for Gender, Community Development and Social Welfare.

Minister of Gender, Community and Social Welfare Patricia Kaliati says government is planning on scaling up its reach and, generally, expanding the programme so it can have more beneficiaries.

But that depends on the availability of funds in the public purse, she said

On fraud undermining the programme, Kaliati said government is strengthening system controls, one prime intervention being the introduction of e-payments.

“We are subcontracting the payments to banks and other financial institutions. We are phasing our direct cash payments. We think e-payments will not only minimize fraud but will also make recipients be able to keep some of the money in their accounts for better use,” she said.

The challenges regardless, NLGFC rates highly the performance of councils in the execution of the programme.

NLGFC acting Executive Director Kondwani Santhe said the expectation of the NLGFC is for councils to deliver transfers to at least 95 percent of the beneficiary households. In its analysis, councils deliver to at least 98.6 percent of the households.

“As such on a rating of 1 (bad) to 5 (best), councils are rated at 5 as they are able to execute as expected,” he said.

Last year, NLGFC carried out normal audits in 10 district councils funded by World Bank.

“The audit’s general rating is that the controls are ‘strong’ and funds utilisation is ‘satisfactory’.

“The only real challenge the audit noted was that a few beneficiaries whose passbooks got damaged or those looking for new passbooks (replacing beneficiaries who had died or exited) were struggling to have their passbooks printed on time. However, the Ministry of Gender has already resolved the issue as we speak,” Santhe said.

A product of the National Social Protection Policy (2008), the programme is designed to support 10 percent of the ultra-poor in each district.

Records show that in its inception phase between 2006 and 2012, the programme covered only 6 districts, enrolling up to 28,000 households. The programme now covers all the 28 districts, reaching out to 274,724 households with a combined 1, 259, 260 people as of December 2020.