How GESD has ‘jacked up’ councils’ performance in Malawi

Lilongwe, August 15, Mana: Since the coming in of the Governance to Enable Service Delivery (GESD) project, councils across Malawi admit that there has been a revolution in their handling of public resources, records keeping and financial reporting.

“GESD has had a lot of impact to our councils in general, and to my council in particular” explains Chitipa Director of Finance (DoF), Gift Msowoya. “Through GESD, I have attended a number of financial management trainings and workshops, including the International Public Sector Accounting Standards (IPSAS), which is the accounting model that government is currently advocating for."

GESD is a 5-year US$100 million project funded by the World Bank and its objective is to strengthen Local Authorities’ institutional performance, responsiveness to citizens and management of resources for service delivery.

With GESD, there came LAPA (Local Authority Performance Assessment) – a tool designed to determine councils’ eligibility for, and the amount of, Performance Based Grant (PBG) that the Project awards to councils.

Thus, based on individual score on the LAPA, PBG is awarded – or not awarded at all – to councils in varied amounts for the implementation of service delivery projects to supplement the District Development Fund (DDF).

GESD introduced the LAPA between November and December 2020 to assess the councils’ performance in the 2019-2020 Financial Year, and determine their individual eligibility for the PBG in the subsequent year.

Since then, the LAPA has kept councils on their toes, leading to a remarkable turnaround in public finance management and service delivery.

In the 2020 LAPA, four councils, namely Mchinji, Nkhotakota, Blantyre and Thyolo, did not make it for the first PBG due to their poor performance (failure to pass both the Minimum Access Conditions and Triggers), while 24 councils qualified for the PBG 1.

A notable improvement was registered in 2021 when 25 councils qualified for PBG 2, representing an increase of 4 percent as compared to 2020.

The year 2021 also saw 4 councils, namely Chitipa. Nkhotakota, Dowa and Phalombe, attaining unqualified opinion audit report, the top score on the audit scale.

For the LAPA 2022, the number of councils attaining unqualified opinion has doubled from 4 to 8, with other councils attaining the score for the second time in a row, while three councils, namely, Balaka, Machinga and Zomba completely missed out access to PBG 3.

The outstanding councils include Chitipa, Rumphi, Nkhotakota, Lilongwe, Ntcheu, Phalombe, Thyolo and Nsanje.

The councils attribute their outstanding performance to GESD project and its LAPA tool, which, according to the councils, is leaving them cautious to ensure that there is prudent management of public resources.

“The National Local Government Finance Committee (NLGFC), through which GESD funds are disbursed, have consistently provided technical advice on prudent finance management and record keeping, among other things,” explains Msowoya, Chitipa DoF.

Rumphi, which is among the councils that have attained unqualified opinion for the first time alongside Lilongwe, Ntcheu, Thyolo and Nsanje, also speaks highly of GESD as the reason the council has achieved the much-sought-after score.

DoF for the council, Fyson Zidana, concurs with Msowoya on NLGFC’s role throughout the journey.

"The NLGFC analyst, Sara Banda, has been very helpful, throughout, checking the IFMIS if we are performing within the cost line items and, where we have a problem, she advises us how to go about it,” explains Zidana, adding: "We have also been having technical advice from Local Government Accountability and Performance (LGAP), which has also been very instrumental in our success."

The DoF notes that through GESD, councils have learned to pay close attention to instruments such as Financial Management Act, Local Government Act, Procurement Act, and other related instruments for smooth handling of transactions.

GESD's contribution in the councils' improved performance in public finance management and records keeping is also evident in how Nkhotakota achieved a turnaround from adverse opinion audit report in 2020, to unqualified opinion audit report in 2021 and, again, in 2022.

According to the council's DoF, Khumbo Masankhula, the council was in disarray before GESD but with the project's close monitoring and supervision through the NLGFC, it's now all paradise for the council.

"GESD is a game changer,” explains Masankhula. “The guidelines for the project are flexible, for example, the council has got an element of 30 percent for commercial investment – which is a plus for us especially the secretariat because we are able to propose projects that we feel are relevant for the council.

"The 70 percent is for service delivery to the residents that we serve – so this is also critical because most of the areas in Nkhotakota are lacking a number of social services facilities."

The DoF adds: "The NLGFC financial analysts help us perfect the records – you can see where we, as a council, have come from: adverse opinion. We failed to access PBG1 and that hit us hard as it affected the trust that our donors, and our yet-to-be donors, had on us.”

But the adverse opinion audit report served as a catalyst to Nkhotakota district council and, now with two successive unqualified opinion audit reports on the shelf, the council has become more attractive to donors than ever before, according to Masankhula.

GESD’s influence on the councils’ performance is also echoed by DoF for Lilongwe District council, Charles Mhone, who has been in government finance system since 2003.

Mhone describes the LAPA as having 50 percent of its parameters dwelling on financial management hence its introduction to the councils has stimulated positive delivery in that regard.

According to Mhone, the increase in the number of councils attaining unqualified opinion audit reports over the past two years is evidence of GESD's impact in the councils improved performance.

"I’ve worked in government financial management for quite some time and this improvement has never been there," explains Mhone, whose council is among the 8 that outshined the rest by attaining unqualified opinion audit report for the 2022 LAPA.

He continues: "No councils have ever been issued unqualified opinion in terms of numbers as they have now; So it’s basically because of GSED. Everyone wants to tap resources from GESD and for you to do that, financial management prudence is key."

GESD has also helped build the capacity of the councils through recruitment of accounting staff and training of the same as observed by all the 8 councils on the spotlight.

Phalombe, for instance, boasts about four accountants recruited by GESD and the council is also in the process of developing functional review whereby the council has factored in a lot of required staff in the finance department, according to the council's DoF, Martin M'baya.

"We feel that in future we’ll have a very vibrant financial management team with the support that we have received from GESD through NLGFC, explains M'baya, whose council is a two-time achiever of the unqualified opinion audit report.

He adds: "There has also been a lot of capacity building trainings: Recently, Phalombe was involved in a trip to Mauritius for IPSAS benchmarking – all this courtesy of GESD through the NLGFC."

Still on the subject, the DoF for Thyolo district council, Andrew Jafali, caps it all on how GESD is being instrumental in energizing the councils to perform better in managing public resources.

Jafali observes that GESD's LAPA tool has urged councils to observe timely financial reporting unlike before when they could report anyhow and anytime.

He explains: "Councils are expected to report on the previous month by the 10th of the succeeding month, unlike the time before GESD: there was laxity and we could report on 15th, or 20th – it was not an issue – but such is not the case now with GSED.

“So by ensuring that the reporting is done timely, even the transactional entering is done carefully to ensure that you don’t miss out on the time lines, and miss the sweet cake that is the Performance Based Grant (PBG),” concludes Jafalli, whose council hit the wall in the 2020 LAPA and, painfully failed to access PBG1.