Malawi Reviews Expenditure on Environment and Natural Resources

On 23 October 2015 the Malawi Ministry of Finance and Economic Development Planning invited representatives from sector ministries, district council, private sector, civil society and development partners to discuss and validate the country’s first Public Expenditure Review on Environment and Natural Resources and Disaster Risk Management conducted with support from the United Nations Development Programme-UN Environment Poverty-Environment Initiative.  

According to the review, Malawi’s total expenditure on environment and natural resources and climate change between 2006 and 2012 was US$278 million. The average national expenditure on environment and natural resources and climate change during the six year period was equal to 3.15% of the national budget or 0.96% of the country’s Gross Domestic Product (GDP). Considering that unsustainable use of environment and natural resources has been estimated to cost the country 5.3% of GDP annually, investment levels of 0.96% are low. This also prevents the Government of Malawi to achieve development goals such as poverty reduction as soil erosion alone has been estimated to keep 1.88 million Malawians in poverty.   

It was noted that as Malawi experienced economic growth between 2006 and 2010 the country’s expenditure on environment and natural resources and climate change increased dramatically, however, as the country entered into economic contraction in 2010/11 the environmental expenditure declined as sharply as it had once risen.

As the financing and expenditure on environment and natural resources and climate change declined for the line ministries over the years so did their level of output achievements vis-à-vis environment and natural resources and climate change related policy objectives. While the lack of financial resources is an important factor for explaining the reduced level of output achievements, the disconnect between policy and budget processes, the slow process of approving the revision of key policies in environment and natural resources and climate change related sectors as well as the lack of human and technical capacity to implement and monitor the objectives are equally important. For example, while the district councils have been recognized to be well positioned to deliver on environment and natural resources objectives for an impact on the ground only 1% of the environment and natural resources funds were spent at the district level due to low capacity.    

Based on these findings the Government of Malawi is encouraged to speed up the policy approval process and ensure that policies in the environment and natural resources and climate change segment have a financing framework and a close link to the budget process. Conducting capacity assessments of local councils as well as enhancing the capacity for implementation at the national level is of crucial importance. 

A challenge when conducting the expenditure review has been to separate the expenditure on environment and natural resources vis-à-vis expenditure on climate change since there is currently no specific budget code for climate expenditure. Likewise, Malawi lacks budget formulas for environment and natural resources  management to devolved sectors as well as budget lines for environment for statutory cooperation. These are some of the limitations of the study and conversely the government is recommended to review the possibility of introducing a budget code for climate change, review formulas for devolution guidelines.    

The scope of a public expenditure review is to analyze the use of public funds that are entered through the national budget system. In Malawi a significant proportion of the expenditure on environment and natural resources is supported by development partners but the report revealed that only about half of that support went through the national budget system. This is problematic in light of the emphasis of national ownership coming out as strong recommendations from the Busan and Paris agenda but not surprising in the context of Malawi where big public financial scandals have been revealed in recent years. In order to put aid on budget there is a need for the Government to work together with the development partners to strengthen the public financial management system.   

Following the validation workshop the report was also presented to the joint Steering Committee for the Poverty-Environment Initiative and the National Climate Change Programme comprising of principal secretaries from relevant ministries. The steering committee welcomed the study and agreed that the technical staff will review the recommendations and disseminate these at the higher level for consideration in the planning and budgeting processes.

Figure 1. Environment and Natural Resources spending 2006-2012