Development Picture & Donor coordination

Overall development assistance to Malawi totals about $400 million per year, excluding debt relief. The European Commission, United Nations and the World Bank are the major multilateral agencies active in Malawi. Britain, Canada, Germany, Japan, the Netherlands, and the United Statesare the major bilateral donors. Almost all donors are involved in a variety of programs in agriculture, infrastructure, finance, the social sectors, and the environment, with a common aim of reducing poverty

The Poverty Reduction Strategy (PRSP) has contributed to improving donor coordination. Major donors and sectoral donor working groups in the areas of economic management, poverty reduction, water and agriculture meet regularly. Work is ongoing towards common conditionalities and joint financing arrangements (including pooled funding), joint reviews and single reporting. Donor harmonization work is expected to be focused on the health sector, where a SWAp is being conducted, more specifically in the area of HIV/AIDS. SWAps are likely to be developed in education, agriculture and justice as well.

Several donors have entered into delegated cooperation agreements in Malawi, e.g., on country program (Norway and Sweden; Switzerland and the Netherlands), education (UK and the Netherlands), health (Norway and Sweden; Canada and Japan) water development (Canada and Japan), and energy (Germany and the Netherlands).

The United Kingdom is the largest bilateral donor to Malawi works in many sectors, including budget support. The USAID program ranks in the second tier of bilateral donors, which includes Canada, Norway, Japan and Germany. Germany focuses on health, education, and democratic decentralization; Norway addresses HIV/AIDS, health, education, agriculture, and natural resources management. Japanconcentrates on agriculture and infrastructure. The Canadian program focuses on health, HIV/AIDS, education, and governance and accountability. Multilateral donors include the various U.N. agencies (predominantly in national capacity, democratic governance, environmental sustainability, gender equity, and mitigating the impact of HIV/AIDS), the European Union, the World Bank, the International Monetary Fund and the African Development Bank. The European Union concentrates in transport infrastructure, health and conservation of natural resources, including agriculture).Through the Aid Coordination Group, donor coordination is improving in Malawi and helps to strengthen government capacity in many areas.

Several donors provide budgetary support. Five donors (Denmark, Sweden, UK, Norwayand EU) are co-ordinating their macro-financial support and the Common Approach to Budgetary Support group (CABS) was created. The Word Bank Group is in negotiations to enter the CABS. Not only through their regular reviews, but also through agreement on their own matrix of measures, the CABS group has tried to move Government towards a more transparent and pro-poor implementation of the budget. Although results were mixed, it is encouraging to see that the GoM is taking the concerns of the CABS group, and of the stakeholders in the PRSP, into account. Members of the CABS group continue to link their disbursements closely to progress in the implementation of the PRSP and to the achievement of its indicators.