The document discusses Malawi's "Cashgate" corruption scandal of 2013, in which billions of dollars intended for government services were stolen. This led international donors providing 40% of Malawi's budget to suspend aid. However, the scandal also brought an opportunity to transform Malawi's reliance on foreign aid by increasing domestic resource mobilization in line with the UN's Sustainable Development Goals. Key lessons are the need for political will against corruption, a clear development strategy focused on efficiency and rules, and directing existing and potential funds through smart tax administration toward priority programs and projects. With these reforms, Malawi can turn the scandal into a success story of sustainable development led by the nation itself.

1. F R O M C O R R U P T I O N S C A N D A L
T O T H E
T R A N S F O R M AT I O N O F A N AT I O N
L E S S O N S F R O M “ C A S H G AT E ”
W I T H I N T H E C O N T E X T O F S D G s & D R M
P o w e r To T h e P e o p l e !
E n o u g h I s E n o u g h ! !

2. M A L A W I ’ S M I R A C L E I N D I S G U I S E ? ?

3. CASHGATE!
Though brazen theft of public finances was
not a new phenomenon in Malawi, in 2013,
the beautiful (often referred to as “The Warm
Heart of Africa”) but poorest nation in the
World (according to the World Bank - with a
GNI per capital of $250) was struck by its
biggest corruption scandal to date.
This time...it had gone too far!

4. D O N O R W I T H D R A W A L
A N D A I D F R E E Z E .
Many of the International Donors - The European
Union,The World Bank, The United Kingdom, Germany,
Norway...who collectively had been providing the
government of Malawi with aid amounting to up to 40% of
its national budget, decided to suspend their budget
support, instead choosing to provide some limited support
directly to development programs, left the government -
and nation - in dissarray.
This was a self inflicted wound...but what can we learn
from this situation?
A N G R Y A N D S H O C K E D D O N O R S S U S P E N D A I D W O R T H U P T O 4 0 %
O F T H E N AT I O N A L B U D G E T. . . a n d w h o c a n b l a m e t h e m . . .

5. C O R R U P T I O N I N M A L AW I .
Even before cashgate, a data analysis report carried out by pricewaterhousecoopers, investigating transactions by the government
in malawi from 2009 to 20014 had shown $1.4 billion (580 billion kwacha) could not be accounted for.
It showed that the total number of bank statement payments by the government from 1 jan 2009 to 31 december 2014 was
1,788,295. However the total entries on the cash book for the same period was 1,007,075 leaving transactions781,220
unaccounted for!
Enough to run the ministry of agriculture for 4 years, the ministry of education for 5 years, or the ministry of health for 8 years!!
C
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. . . .
the plunder of donor funds continued unabated. During the rule of malawi’s first female president joyce
banda, the impoverished nation had lost 24 billion kwacha in 6 months from april to september 2013 to
corruption in what was to be dubbed as the cashgate scandal...
E V E R Y O N E E L S E . . . .
M E A N W H I L E . . .

6. T H E W O R L D O F D E V E L O P M E N T F I N A N C E
I S T R A N S F O R M I N G .
No longer will governments be able to blindly rely on ODA
as a prime driver fo their greed or development agendas.
Not only are new global financial realities restricting the
extend and seize of such donor funds, but the SDGs 2030
now clearly put the responsibility on the nations
themselves, through DRMs, to re-organize, re-prioritize
and become the primary drivers of their sustainable
growth. Malawi, like many other countries badly needed a
WAKE UP call. The populations of such mismanaged
countries also need a WAKE UP call.
THE WORLD OF DEVELOPMENT FINANCE IS
TRANSFORMING!

7. T H E R E I S H O P E !
The most powerful lesson to remember is that sustainable success is possible
where there are these 3 ingredients:
1. POLITICAL WILL - Pressured from both outside forces such as international
donors, but also from within through constant pressure and zero tolerance
attitude from local populations towards corruption and mismanagement.
2. CLEAR STRATEGY - Primary reliance on DRMs for development means
that efficiency, discipline, rules and goals have to be prioritized and sanctified.
No one should stand above them!
3. ADEQUATE RESOURCES - Rather than lining the pockets of a few, existing
and potential funds (Smart Tax Administration) must be directed and targeted at
the right actions, programs and projects.
The hopeful news is “THE TECHNIQUES ARE NOT A SECRET” and “THE
BLUEPRINT IS RELATIVELY STRAIGHFORWARD”.
Will it require sacrifices from everyone including the populations?...yes of
course...but it pays off, for present and future generations!!
This latest corruption scandal CAN and MUST be turned into a success
story...by getting everyone - International Donors, Government and Population
- on a new, better, more responsible and committed path...one committed to
SUSTAINABLE DEVELOPMENT!...by the nations...for themselves!
T H E M O S T P O W E R F U L L E S S O N . . .

8. L E S S O N S F R O M “ C A S H G AT E ”
W I T H I N T H E C O N T E X T O F S D G s & D R M