Domestic Politics

Bingu wa Mutharika had won the presidential polls in May 2004 after Bakili Muluzi had handpicked him as his successor and as the candidate of the then-ruling United Democratic Front (UDF). Mutharika, who throughout the election campaign was portrayed by the opposition as Muluzi's puppet, fell out with his mentor soon after assuming office. To strengthen his hold on government, Mutharika began sidelining prominent UDF figures as well as initiating investigations into their alleged misdemeanours. He also sought to strengthen his position in the UDF, demanding joint chairmanship of the party with Muluzi, whom he accused of attempting to rule the country. On the other hand, UDF bigwigs revealed how they had manipulated the May elections in favour of Mutharika, while pointing to corruption and cronyism among government ministers in the new administration.

A serious showdown between Mutharika and Muluzi took place on 3 January, when the latter arrived at the presidential palace with a large and armed delegation of UDF leaders for ‘discussions’. Several members of the delegation were arrested, but all charges against them were subsequently dropped. The president claimed that there had been an attempt to assassinate him. He replaced many senior staff at the national intelligence agency with persons close to himself. On 25 February, Mutharika resigned from the UDF and announced the setting up of his own Democratic Progressive Party (DPP). The UDF, no longer the ruling party, joined the ranks of the opposition.

Mutharika carried many government ministers with him as well as many of the UDF national executive committee members. He also secured sizeable support in parliament from UDF and independent MPs as well as most of the small opposition parties. However, the new DPP government remained without a majority in parliament. In June, some 80 of the 193 MPs were estimated to be behind the president. On the other hand, the opposition claimed in October that it could muster over 120 members of the chamber. The party with the largest representation in parliament was the Malawi Congress Party (MCP), which had ruled between 1964 and 1994 and was led by the veteran John Tembo. The MCP teamed up with UDF's pro-Muluzi rump. Tembo believed he had been robbed of the presidency by UDF manipulation of the May 2004 elections. In March, however, he joined with Muluzi in calling for Mutharika's resignation as state president, claiming that the elections had been flawed.

Parliament was turned into an unruly forum as government and opposition MPs traded threats and insults. On 23 June, while trying to calm a heated row, the parliamentary speaker, Rodwell Munyenyembe, collapsed in the chamber. He died of heart failure a few days later in a South African hospital. However, parliamentary passions remained high. When the national budget was presented on 10 June, the opposition raised various objections and much delay ensued before it was finally passed the following month, although with only minor amendments. As well, opposition MPs mobilised parliament to reject various presidential nominations to high-level government positions. For instance, they rejected the appointment of Mary Nangwale as inspector general of police. While civil society activists saw her appointment as a major move in favour of gender equality, as well as an important boost for improving the state of security in the country, the UDF opposition felt threatened by Nangwale's commitment to begin charging those suspected of corruption. Her rejection by the parliamentary appointments committee and subsequently by the whole house demonstrated the strong influence of the opposition. This was also clearly evident with regard to the president's ambassadorial appointments: of the nine envoys Mutharika nominated, only three were approved by parliament.

A dramatic display of opposition political muscle over presidential authority was seen when the MCP and UDF brought an impeachment charge against the president on 23 June. Mutharika was alleged to have violated the constitution by summarily sacking, without parliamentary approval, senior government officials such as the inspector general of police, the director of public prosecutions and the army commander, and to have used state funds to promote his newly formed DPP. The UDF accused Mutharika of using $ 300,000 of public money to launch the DPP. Debate on the impeachment motion was halted when the speaker died. It was resumed on 21 October, when UDF MPs filed the impeachment motion, only for the impeachment proceedings to be halted by the constitutional court, which ruled that it would conduct a judicial review of the procedures for impeaching the president. Nevertheless, in the view of the Malawi law society, the charges did not constitute a sufficiently serious violation of the constitution to warrant impeachment proceedings. Nor were these likely to gain the backing of two-thirds of MPs. Some 20 MCP MPs were also not in favour of the impeachment motion, which they said lacked popular support. In late October, the Malawi council of churches slammed opposition MPs for seeking to remove the president from power through a politically motivated impeachment process.

If Mutharika were impeached, Vice-President Cassim Chilumpha, a founding member of the UDF and key ally of Muluzi, would assume the post of president. Relations between Mutharika and Chilumpha deteriorated, with the latter refusing to attend cabinet meetings and official functions. Chilumpha challenged Mutharika to dismiss him for remaining a member of the UDF. He also criticised his own government and indirectly the president for what he saw as persecution of the UDF and its former president. On 15 November, the vice-president was arrested on charges connected to a financial scandal during his tenure as minister of education five years earlier. A few days later, the high court suspended the investigation temporarily but ruled that the vice-president could be liable for prosecution. As well, Lucius Banda and Maxwell Milanzi, the UDF MPs who had been respectively involved in moving amendments to the standing orders of parliament on impeachment of a president and tabling Mutharika's impeachment motion in parliament, were arrested for alleged criminal offences. Banda was charged of forging a school certificate to enable him to qualify for nomination as an MP and Milanzi for theft by a public servant, which, if proven, would nullify his election to parliament in 2004. Both Banda and Milanzi were on bail and awaiting trial at year's end. The two MPs were, however, given vocal public backing by the vice-president, which led government legal officials, including the director of public prosecutions, to criticise Chilumpha for undermining the criminal justice system.

Since his inauguration, Mutharika's anti-corruption campaign had seen ten former cabinet ministers implicated in corruption cases. The president had abided by a tacit agreement not to have his predecessor charged for corruption. In October, however, the Anti-Corruption Bureau (ACB) began investigating allegations that Muluzi transferred $ 11.4 m in donor funds into his private bank accounts during his ten-year tenure of office. Muluzi denied any wrongdoing while in office: he condemned the charges as a “political witch-hunt”. Several close allies of the former president, including an ex-finance minister, appeared to have legitimate corruption cases to answer. When, however, the education minister, Yusufu Mwawa, was dismissed on 17 May on grounds of having misused $ 1,200 for his wedding, the smallness of the amount in question suggested that the president might be using corruption to sack Muluzi loyalists from government. As well, some former UDF leaders were reported to have been enticed to join the DPP in return for immunity from investigation for corruption. In November, civil society organisations accused the ACB of bias in investigating and prosecuting corruption cases. In addition, the opposition, and particularly the UDF, accused the government and the DPP of corrupt practices. Government ministers were criticised for using government resources and assets, including government vehicles and state premises, for party political purposes.

On 6 December, by-elections were held in different parts of the country to replace five MPs who had died, as well as one who had been convicted of a criminal offence. The DPP won all six by-elections. The results showed that there was nationwide support for Mutharika and the DPP. They also revealed considerable dissatisfaction with the opposition, particularly with the UDF, which had won three of the contested seats in the 2004 general election. There was growing public criticism of the opposition for continuing with its impeachment of the president.

Foreign Affairs

Malawi is confronted with enormous domestic problems related to poverty, food security, HIV/AIDS and the capacity to deliver services. International aid donors are critical to the government's ability to respond to these challenges. Donors finance up to 80% of the government's development budget and 44% of the national budget. Under Muluzi, donors had frozen economic aid in 2001, mainly because of corruption and poor governance. Under Mutharika, relations with donors have improved significantly and aid flows have resumed. During the year, the government gained increasing support from the main international donors – IMF, World Bank, EU and the UK. The government's economic reform programme and anti-corruption initiatives received the approval and financial backing of donors. The IMF granted Malawi a new $ 55.9 m Poverty Reduction and Growth Facility in June. There was also a resumption of funding to Malawi by Sweden and Norway earlier in the year.

However, donors have expressed much concern over the effect of the ongoing power struggle on urgent domestic development problems. They were disturbed that the political bickering stalled approval of the national budget till late July. During the budget debate, resident IMF officials made statements warning that if the budget were not adopted by 18 July, donors would suspend financial assistance to Malawi. As well, apart from the finance bill, parliament failed to pass any other legislation throughout the year. In mid-October, the British high commissioner, David Pearey, warned politicians against putting personal ambitions ahead of the interests of millions of impoverished Malawians. He appealed for an end to the political impasse and urged the parties to focus on the food crisis. On 27 October, an open letter to parliament signed by envoys from the UK, the country's largest bilateral donor, the US, Germany and others voiced their concern with the impeachment motion at a time when Malawi was experiencing a “serious and prolonged food crisis”. They also indicated that they might not support a government that came into being as a result of Mutharika's removal from office. A government that came into power, they warned, after a “hasty and less than transparent constitutional process would be less likely to command the respect and support of the international community…” The envoys asked the opposition to drop the impeachment charges. John Tembo scoffed at these implied threats from donors and asked them to keep out of Malawi's internal matters, claiming that Mutharika and his associates were themselves corrupt. In December, the donors were obliged to caution the president about the use of government resources by himself and his ministers in the by-elections then taking place.

A loss in donor financial support would have damaging economic effects on Malawi. Bilateral donors, particularly the UK, US and Sweden, increased their financial support following the IMF's agreement on a PRGF in July 2005. UK aid to Malawi was $ 65 m, making it the largest bilateral donor. The multilaterals, however, were the biggest sources of funding. In September, the US government approved a grant of $ 20.9 m under the Millennium Challenge Account, which was to be used mainly in improving governance, especially strengthening anti-corruption institutions. In November, the World Bank approved a $ 40 m grant to the agricultural sector while in September it had provided a $ 30 m emergency grant to finance food assistance and improve agricultural production. Also in September the UN launched an appeal for $ 88 m for food aid. By the end of the year, some $ 54 m had been received.

At the regional level, Malawi enjoyed good relations with neighbouring states such as Mozambique, Tanzania, Zambia and Zimbabwe. The Mozambique-Malawi electricity inter-connector project, involving the construction of a power transmission line between the two countries, reached an advanced stage of preparation in the year. A second project, which reached the planning stage in October, was the Shire-Zambesi waterway project. It proposed linking southern Malawi with Indian Ocean ports along the Mozambican coast and thereby reducing the transportation costs of land-locked SADC countries such as Zambia and Zimbabwe. Such projects were evidence of cooperation and good relations with SADC member states. On 29 December, Mozambique and Malawi concluded a preferential trade agreement to liberalise trade between the two countries.

Malawi remained an active member of various international organisations, including SADC, COMESA, AU, the Commonwealth and the UN. In November, President Mutharika visited Scotland, returning an earlier visit paid to Malawi by the Scottish first minister. Relations between the two countries go back to the advent of Scottish missionaries in Malawi in the 19th century. Under the Malawi-Scotland partnership, agreements were signed whereby Scotland would assist Malawi in the areas of education, health, agriculture and tourism. Mutharika was also awarded an honorary doctorate by the University of Strathclyde.

Socioeconomic Developments

The ongoing political wrangling distracted both government and parliament from finding ways and means of mitigating the severe food crisis. In September, the Malawi council of churches, a grouping of 22 churches, called on government to declare a state of national disaster in order to attract more international food aid and also focus more national resources on the hunger crisis. Government ministers and opposition politicians exchanged barbed accusations as to who was to blame for the hunger situation. Mutharika defended his government by saying that it was managing the situation. It had set up a Feed the Nation emergency fund and mobilised the donor community. In October, opposition MPs moved a motion in the house condemning “the manner in which government is handling the hunger crisis in the country”. They also summoned the president to explain to parliament why “he is not declaring a state of disaster”. On 15 October, the president declared a national disaster over the food crisis.

The annual maize harvest was the worst for over a decade. Drought had drastically cut production of maize as a staple food. The crop was estimated at 1.2 m tonnes, about 60% of the total annual national consumption requirement of around two million tonnes. The United Nation's World Food Programme (WFP) reported in October that Malawi was in the grip of severe food shortages. More than 4.6 m people were in need of food supplies, although by the end of the year that figure had swelled to just over five million. The southern region, the most densely populated part of the country, was most seriously affected. By October, most smallholder rural households in the south were facing acute hunger. Their reserves were nearly exhausted and food stocks would not last till the next harvest in April 2006. As well, the nutritional status of people in the rural areas was deteriorating. According to the Malawi vulnerability assessment committee, an umbrella of government and donor representatives, some 2.2 m children under the age of 18 years were particularly vulnerable. Malnourished children were becoming a common sight in the southern region.

The government parastatal, Agricultural Development and Marketing Corporation (ADMARC), was supplying maize at a subsidised price. However, maize availability at ADMARC depots was insufficient and also susceptible to theft. Little was known as to whether the subsidised maize was reaching the most vulnerable households. In late October, the government contemplated using the army to distribute maize as well as to prevent the nocturnal pilfering of maize from ADMARC depots. By the end of the year, however, foreign aid agencies were supplying Malawi with sufficient amounts of relief food assistance, thereby averting the threat of mass starvation. The WFP reported, that despite transport obstacles and floods, the programme was getting food assistance to those requiring it. The WFP had also doubled its school-feeding programme to cover more than 400,000 children. According to UNICEF, admissions of severely malnourished children to nutrition rehabilitation units in December were 18% higher than the same period in 2004.

Malawi's economic growth is strongly affected by the performance of its agricultural sector. Agriculture usually accounts for more than one-third of GDP and over 90% of export earnings. The country's staple crop is maize, while tobacco is the largest export, earning just over one-half of export receipts. During the year, because of the drought, both the maize and tobacco production were down substantially. The reserve bank of Malawi estimated that real GDP declined from 4.3% in 2004 to 1%. The food shortage, as well as high international oil prices, pushed inflation to 15.6%, according to the country's National Statistical Office (NSO). Despite a large increase in donor grants as well as a continued rise in domestic revenue, government spending increased because of the substantial cost of maize imports. This pushed the budget deficit to 3.4% of GDP. A decline in tobacco exports and the need for emergency maize imports was expected to cause the current account deficit to increase to 11.8% of GDP. The exchange rate depreciated as well, with the kwacha falling to K 118.4 to the $. Poverty levels were growing: 60% of the estimated 12 m population lived below the poverty line of less than $ 1 per day. A household survey conducted by the NSO revealed that the southern region had a worse poverty rate than other regions of the country. Several years of drought had impoverished many farmers, who have also been afflicted by the spread of HIV/AIDS. Some 16% of people aged 15 to 49 are infected with HIV/AIDS and the disease has orphaned some 400,000 children under 15. The government had reached nearly 38,000 HIV positive people with antiretrovirals by the end of 2005, a large increase from the 4,000 people in December 2003.

As noted earlier, a three-year PRGF worth $ 55.9 m was approved by the IMF and commenced in July. The IMF lauded the government for its management of public finances as well as for adhering to conditions laid down in its interim 12-month staff monitored programme, which ended in June. This contrasted with the persistent over-expenditure of the Muluzi administration. The new PRGF is centred on expenditure control and reducing domestic debt, which could release funds for increased spending on rural development, education and healthcare. However, when the Mutharika government suspended the privatisation of Malawi Telecommunications Limited (MTL) in August, mainly on the grounds that the agreed price was too low, donors were concerned that government was reneging on its commitment in the PRGF to privatise remaining state-owned enterprises. However, on 10 December, as a result of donor pressure, government approved the sale of an 80% stake in MTL to a consortium comprising the local Press Corporation as the majority shareholder and a German company, Detecom, as the technical partner. Moreover, when government began increasing public administration spending in late 2005, particularly by increasing the size of the cabinet, the IMF expressed concern about the maintenance of fiscal discipline and the implementation of PRGF policies.

In mid-September, two civil service trade unions – the Civil Service Trade Union and the Teachers Union of Malawi – went on strike to protest the new pension formula the government had begun implementing. The new formula for calculating terminal benefits was based on a five-year average and was considered to be disadvantageous to retiring civil servants. The two unions called for the resignation of the finance minister, Goodall Gondwe, an ex-IMF official, who was accused of pushing IMF policies without consultation with those affected by them. Gondwe withdrew the circular on the new pension formula and indicated that government was willing to reopen negotiations. However, following strong IMF pressure, the government announced it was not ready to revert to the old, unsustainable system of calculating pensions and would need an extra K 7 bn to finance pension benefits at the level demanded by the civil servants. A proposed increase in government spending of this sort ran contrary to the PRGF conditions on expenditure control.