Malawi in poverty trap despite decades of aid

In Balaka - a typical Malawian town with its low buildings, bustling market and cyclists filling the roads - there seem to be aid organizations everywhere.

Two international non-governmental organizations have large offices by the main road. Turn to a side road, and there is another NGO. Signposts point the way to still others.

The town of 350,000 residents at about 300 kilometres south of the capital Lilongwe has 35 registered NGOs working in every possible field from education and AIDS to agriculture and human rights, said Harold Kachepatsonga, coordinator of such groups in Balaka.

"My subjects have benefited a lot from the NGOs. But sometimes you think they are only here to enrich themselves," said a traditional leader who asked not to be named.

Balaka is no exception in Malawi, a southern African country of 16.7 million people, which has about 2,500 non-governmental organizations, according to the semi-statal Council for NGOs in Malawi (Congoma).

They comprise about 450 groups registered with Congoma - including 150 international ones - and more than 2,000 community-based groups many of which receive funds from abroad.

The number of NGOs has increased over the years, as has the amount of aid given by foreign governments and development banks.

Malawi started getting financing for development projects already prior to independence in 1964. Direct budgetary support was introduced in the late 1990s and "has grown on and off since then," said Nations Msowoya, assistant director at the Finance Ministry.

Under incumbent President Joyce Banda, Malawi received nearly 1 billion dollars from Western donors and development banks in 2013, until donors suddenly cut off a portion making up 40 per cent of the country's budget following a massive corruption scandal known as Cashgate.

"Despite all the aid that has been poured into Malawi, the country has hardly moved forward in 50 years, while neighbouring countries have developed," a Western diplomat said.

In the countryside, time seems to have ground to a halt. Grass-roofed huts dot the roadside, people travel on oxen-driven carts, and kiosks made out of tree branches sell bags of potatoes.

About 80 per cent of the population are subsistence farmers struggling to scrape a living out of their small plots.

Analysts explain the sluggish development with a rapid population growth, lack of natural resources, a low level of education, widespread corruption, a highly hierarchical administration where decision-making is slow, and accusations of witchcraft against successful people who are thought to have resorted to magic.

Aid has become "a habit that has stifled our innovation," Msowoya admitted.

"We [donors] are part of the problem," said several diplomats, who felt the West should act tougher to pressure Malawi to "assume its responsibilities."

Malawians, on the other hand, feel they should deal more forcefully with donors who orientate and thus distort government policies, sometimes even contradicting each other.

"One donor wants to put money into helping the handicapped, while another stresses agriculture," Msowoya said. NGOs also do overlapping work which often escapes government control.

"There can be five NGOs doing the same thing," said Emily Banda, head of the governmental NGO Board. NGOs are supposed to submit annual reports to the board to make sure their activities fit in with government policies, but "there is not enough capacity to enforce that," Banda said.

"The high salaries and travel costs of foreign NGO staff eat up funds that could be used for development," economist Robert Egoled said. But Western donors say they cannot rely on local NGOs, because they do not manage their finances well enough.

Many Malawians launch NGOs to employ themselves with funds from abroad, analysts said. Malawi's best-known donor is Madonna, who adopted two children from the country.

Her plan to build an elite academy for girls collapsed over alleged financial irregularities. A US NGO supported by her has now built 10 two-classroom blocks, according to Emily Banda.

But the pop star is not appreciated in Malawi, where many see her as the epitome of an arrogant white benefactor.

Madonna requested VIP treatment at the airport and to meet Joyce Banda without having scheduled an appointment, Emily Banda complained. "We do not want to lose our dignity," she added.

It was not immediately possible to get a comment from Madonna's NGO, Raising Malawi.

The recent withdrawal of aid over the Cashgate corruption scandal came as a painful reminder of the price of dependency.

The loss of budgetary support left civil servants without pay, hospitals without drugs, schools without books and the crime rate reportedly going up as police had not been paid. Malawi is looking into increasing its self-sufficiency by diversifying the economy into new fields such as tourism and mining.

"There is a realization that aid may not be there forever," Msowoya said.