Views, ideas, inspiration, vision and practical tips for a better more prosperous Malawi

Malawi Government Financial Audit: how many billions are unaccounted for?

Beware when an official document of any sort begins with a disclaimer. More often than not, something fishy is going on in the background, and someone somewhere is trying to wash their hands off it.

Last week, the leaked PwC ‘audit’ report (titled ‘Reconstruction of the Malawian Government Cashbook for purposes of further investigation’) which some people (including the Legal Affairs chair Peter Chakhwatha) claim is just an outline or at most a data analysis, revealed that MK577 billion was unaccounted for from Malawi government accounts between 1st January 2009 and 31st December 2014:-

shortfallThis news has shocked many people in Malawi, and media reports are saying theat MP’s are pressing government to publish the real report, and submit it to parliament.

But irrespective of whether the K577 billion truly reflects the total shortfall or not, or whether there is more damning news in the real report, I think it would help with putting things into perspective if we analysed the kind of figures we are dealing with here, in US$ as opposed to Malawi Kwacha (MK) only.

A direct exchange of the MK577,238,840,510.67 on Xe.com  shows the sum to be equivalent to US$1,312,092,746.42 (1.3 Billion dollars). But this is incorrect since devaluation will have altered the power of the Kwacha over the years.

I believe the question which must be asked is how much of this shortfall was unaccounted for in each year during this period?

Meaning to find a less inaccurate dollar equivalent, we need to know how much of the K577 billion went missing in each of the years between 2009 and 2014. But again this method would have limitations since the exchange rate would have varied from month to month during this period, necessitating conversions from month to month.

However, a less inaccurate figure can be obtained by converting the sums in each year with the exchange rate at the time. Thus, looking only at the total value of payments greater than or equal to MK 1 million not in Cashbook as outlined by the PwC report:-

All-Payments greater than MK1 million, on Bank Statement not on Cashbook

a more credible figure of the US$ equivalent can be ascertained by taking averages of historical exchange rates in each year, or better in each month. Using this method, then in 2009, an Oanda conversion of MK21, 313,307,081.36 (21 billion) would have given you between US$146 million and US$154 million. But the statistical number crunching used looks somewhat complex. And I’m neither an Accountant, nor an economist…

An easier conversion as of 1st January 2009, on Xe.com would have equated US$1 to MK142.7, meaning MK21, 313,307,081.36 on that date would have been equivalent to US$149, 357,442. (149 million dollars).

average-fxThus, using average exchange rates such as those on FXtop.com or on Mundi, it follows that MK21, 313,307,081.36 in 2009 was equivalent to US$151,008,268.96. This means that give or take, the Malawi government couldn’t account for at least US$ 150 million in 2009, if we consider payments greater than MK1 million only as shown in the above table!

Who knows what the real figure is if we include sums below MK1 million ??

Similarly, in 2010 US$188,244,090.18 (188 million dollars) was unaccounted for; in 2011 US$112,357,926.19 (112 million dollars) was unaccounted for; in 2012 US$53,806,121.29 (53 million dollars) was unaccounted for; in 2013 US$357, 264,295.90 (357 million dollars) was unaccounted for, and in 2014, US$35, 412,203.75 (35 million dollars) was unaccounted for.

This gives a total shortfall of US$747, 084,637.31 (747 million dollars)

But since we are currently only looking at the total value of payments greater than or equal to MK 1 million not in Cashbook (K217 billion), then, it means if we consider the whole MK577 billion alleged to have been unaccounted for, then we are looking at US$1, 981, 858, 599 (1.9 billion dollars*) which is unaccounted for, assuming a uniform spread in the data.

So the last 6 years, under various Malawian Governments, civil servants and other corrupt types have misappropriated or failed to account for at least US$2 billion.

There you have it.

* [MK577 billion x US$747million divide by MK217billion]

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About Sang N.

Writer, Entrepreneur & Activist. Interests: History, Entrepreneurship, Business, Motors, Architecture, Aviation, Travel, Food and Art.

2 comments on “Malawi Government Financial Audit: how many billions are unaccounted for?

  1. Pingback: Why didn’t successive #Malawi #Governments act to stop the #looting of US$2 billion from government #accounts? |

  2. Pingback: Citizen led Development |

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This entry was posted on June 26, 2015 by in Fraud, Opinion, Research and tagged , , , , , .
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