Companies operating in Malawi’s public procurement sector face a very high risk of corruption, and several large-scale corruption cases have become public in recent years (ICS 2015). Bribes are often exchanged in the procurement process; one-third of businesses expect to give gifts to officials to obtain a public contract (GCR 2015-2016; ES 2014). Major tenders do not involve competitive bidding, the process of awarding contracts is opaque, and even the system for allocating bids is not transparent (Transparency International, Sept. 2014; GI 2016). Reportedly, the government has awarded contracts to companies bidding on projects with no relevant experience (GI 2016). In addition, entrenched networks of patronage and clientelism in the Malawi economy have undermined transparency in the procurement process of public contracts; favoritism of procurement officials’ decisions is a known problem (Transparency International, Sept. 2014; GCR 2015-2016). Discrimination against indigenous Malawians is also reported to occur in the awarding of contracts, a consequence of the opaqueness of the evaluation criteria used to decide on awards (GI 2016). The diversion of public funds due to corruption is widespread in Malawi (GCR 2015-2016).
The Office of the Director of Public Procurement (ODPP) oversees all public procurement activities and most tenders are published on the ODPP website. The Public Procurement Act stipulates the necessary provision of thresholds for the application of procurement methods, bid evaluation procedures and contract management; however, these provisions are poorly enforced due to the inefficiency of the ODPP (Transparency International, Sept. 2014). Companies found guilty of corruption are prohibited from participating in future bids, a provision that is fairly well enforced (GI 2016).
A high-level corruption case involving the diversion of public funds broke out in late-2013; USD 250 million of public revenues were siphoned by public officials into private bank accounts (Transparency International, Sept. 2014). The case became known as the ‘Cashgate’ affair and triggered foreign donors to withhold USD 150 million in aid to the country (Transparency International, Sept. 2014). Former accountant general David Kandoje was arrested in connection with the case in March 2015 for allegedly authorizing the payment of two cheques to contractors without appropriate documentation (GI 2016). Approximately 70 people have been prosecuted in connection with the case as of 2015 (HRR 2015). Nevertheless, the Anti-Corruption Bureau has been criticized for only going after lower-level officials and failing to investigate former presidents Bingu Mutharika and Joyce Banda, despite allegations of their involvement in the case (GI 2016).