Africa-Press – Malawi. Malawi has lost approximately K52.705 billion in African Development Bank (AfDB) funding after the institution revised downwards its African Development Fund (ADF-16) allocation for the 2023–2025 cycle from K174.6 billion to K121.895 billion, citing weak compliance with procurement rules, financial management gaps and deteriorating governance indicators.
The AfDB says the revision follows weaker Country Policy and Institutional Assessment (CPIA) and Debt Sustainability Assessment (DSA) scores, which directly influenced resource allocation under the current funding cycle and forced a concentration of support into fewer priority sectors.
The funds were originally intended to support major infrastructure and energy interventions, including the rehabilitation of Kapichira, Nkula and Wovwe hydroelectric power stations, the Eastern Backbone 132kV transmission line, and the SADC Sub-Regional Transport and Trade Facilitation Project Phase Two, among others, but parts of these programmes have now been scaled back or deprioritised.
According to AfDB’s 2025 Country Portfolio Performance Review, the Bank has now redirected its Indicative Operations Pipeline to only two of the four initially prioritised sectors, concentrating resources on agriculture and water-related interventions, including the Shire Valley Transformation Programme II (UA 20 million), Agricultural Productivity and Commercialisation Programme (UA 10.01 million), and Rumphi Water and Sanitation Services Improvement Project (UA 23 million).
The report is blunt on performance, noting that Malawi’s portfolio recorded a low disbursement rate of 32.31 percent, with several projects flagged for chronic delays and weak execution capacity.
Among the worst performers are the SADC Trade and Transport Facilitation Project, which stands at 0.29 percent disbursement since December 2022, the Rumphi Water and Sanitation Services Improvement Project at 2.43 percent since December 2023, the Digitisation, Financial Inclusion and Competitiveness project at 14.83 percent, and the Nacala Road Corridor Development Phase V at 15.62 percent since 2019.
The AfDB further raises red flags over closed operations with unresolved balances, demanding refunds of about K94.37 million in unjustified special account balances.
The report states that “several closed operations had outstanding special account balances that were unjustified and were due for refund to the Bank,” including the Jobs for Youth Malawi Project (UA 26,032.60) and the Sustainable Rural Water and Sanitation Infrastructure Project (UA 8,575.92), although it notes that some refunds have already been made, including the Catchment-Based Climate Resilient Water Security Project (UA 6,432.38).
Beyond financial recovery issues, the Bank attributes the poor performance to systemic implementation weaknesses, stating that limited capacity within Project Implementation Units (PIUs) has led to non-compliance with procurement procedures, delayed approvals, and weak contract management, all of which have slowed disbursement and execution.
The AfDB warns that despite Malawi’s status as a grant-only beneficiary under ADF-16, “poor disbursement and high share of red-flagged projects highlights the need for urgent improvement plan implementation and stronger government ownership to improve results,” signalling potential tightening of future funding conditions.
Economics Association of Malawi (ECAMA) president Bertha Bangara-Chikadza warned that donor actions reflect declining confidence in Malawi’s project execution systems, stating that “these developments are likely to lead to reduced access to concessional financing, pushing the country towards more expensive options such as domestic borrowing, and further constraining the fiscal space.”
Economist Milward Tobias said the implications are severe given that “about 80 percent of the development budget is financed by donor resources,” adding that inefficiencies in absorption deprive the economy of foreign exchange inflows and delay critical infrastructure delivery.
Mzuzu University economist Christopher Mbukwa cautioned that the trend risks undermining future aid flows, while Centre for Social Transparency and Accountability executive director Willy Kambwandira described the situation as a “systemic breakdown in public financial management,” warning that the consequences ultimately “punish ordinary Malawians through stalled infrastructure and social services.”
Ministry of Finance spokesperson Williams Banda acknowledged the inefficiencies, stating that there are “challenges in the management of donor funding” and confirming that some Project Implementation Units have been summoned for corrective action, but said government would provide a comprehensive response at a later stage.
The AfDB development comes amid broader concerns over Malawi’s inability to fully absorb external financing, including large-scale programmes supported by the World Bank and the International Fund for Agricultural Development, further intensifying scrutiny of the country’s development implementation capacity.
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