PUBLIC SECTOR REFORMS SECRETARIAT

MINISTRY OF FINANCE

IMPLEMENTATION PERIOD: 1ST JULY 2020 TO 30TH JUNE 2022

DATE OF SUBMISSION: 21st OCTOBER 2020

Ministry of Finance

The Government of Malawi is committed to improving the welfare of the people of Malawi and to transforming the country to achieve the middle-income country status. This will require a public service that is fit for purpose, results oriented and high performing to facilitate positive transformation of the economy and modernization of the country.

The Reforms Performance Contracts will be used as mechanism to transform all public sector institutions to high performing institutions that will deliver quality services to the public and effectively implement policies and programmes that will contribute to the achievement of the national transformational agenda. The Reforms being implemented by Ministries, Local Councils, Parastatals Organizations and Constitutional Bodies are in line with the Vision and Mission of the Public Service which mainly seeks to provide services to the public in an efficient, effective and responsive manner in order to satisfy national aspirations in accordance with the Malawi Constitution. My Government hereby commits its total support to the Ministry by providing resources (financial, human and material) necessary for effective implementation of this Agreement. Ministries will be able to understand and translate people’s needs into policies and programmes and services to achieve ‘a better Malawi.’

Ministerial Statement of Commitment

Hon. Felix Mlusu Minister of Finance

I, Felix Mlusu, Minister of Finance commit myself towards the full implementation of the focus areas for reforms in the Ministry of Finance as outlined in the Performance Contract Document.

This Performance Contract (hereinafter referred to as “Contract”) is entered into between the Government of the Republic of Malawi (hereinafter referred as GoM) represented by His Excellency the President of Private Bag 301, Capital City, Lilongwe 3, of the one part, and the Minister, Finance, of P.O. Box 30049, Capital City, Lilongwe 3, of the other part.

WHEREAS The Government is committed to ensuring that services in the Ministry of Finance are well managed, supported and are cost effective in delivering quality service to the public in line with provisions of the Constitution of the Republic of Malawi.

The GoM recognizes that the Ministry of Finance holds a vital key to contributing to national socio-economic development through the formulation of economic and fiscal policies that seek to manage Government financial and material resources and provide strategic guidance on economic and development planning. The purpose of this Performance Contract is to establish the basis for ensuring efficient and effective services are delivered to Malawians in line with provisions of the Constitution of the Republic of Malawi, the Public Service Act and relevant Acts; and by requiring the Ministry to raise standards of performance and behaviours of public servants in order to provide socio-economic policies based on high quality and timely statistics; mobilize and prudently manage public financial and material resources in order to achieve sustainable economic growth and development.

The Ministry will also focus on improving public resource management so as to promote transparency, accountability, fiscal discipline, efficiency, and effectiveness in the management and use of public resources.

This Contract therefore represents a basis for continuous provision of sustainable high economic growth, macroeconomic stability and sound financial management for socio- economic development; and to provide reliable statistics as Government endeavours to meet the needs and expectations of the Malawian people. This contract forms the basis for the evaluation of the Ministry’s agreed Key Performance Indicators.

COMMITMENT BY THE MINISTRY OF FINANCE The Ministry of Finance on behalf of Public Sector institutions in the financial sector commits itself towards the full implementation of the focus areas for Reforms in the Financial Sector as outlined in the Performance Contract Documents for Parastatal Organizations in the Financial Sector. The following are the institutions: 1. Malawi Accountants Board (MAB) 2. Malawi Revenue Authority (MRA) 3. Public Private Partnership Commission (PPPC) 4. Public Procurement and Disposal of Assets Authority (PPDA) 5. Roads Fund Administration (RFA) 6. Financial Intelligence Authority (FIA) 7. National Audit Office (NAO)

PART I: MANDATE, VISION, MISSION, AND STRATEGIC OBJECTIVES a) MANDATE

The Ministry’s mandate is to formulate economic and fiscal policies that seek to manage Government financial and material resources and provide strategic guidance on economic and development planning and attainment of social economic development. b) VISION A sustainable high economic growth, macroeconomic stability and sound financial management for socio-economic development; and to provide reliable statistics. c) MISSION To provide socio-economic policies based on high quality and timely statistics; mobilize and prudently manage public financial and material resources in order to achieve sustainable economic growth and development. d) STRATEGIC OBJECTIVES i. To improve public financial management so as to promote transparency, accountability, fiscal discipline, efficiency and effectiveness in the management and use of public resources ii. To improve mobilization of domestic and foreign financed resources to fund the National Budget iii. To provide strategic guidance on economic and financial sector development to ensure stable macroeconomic environment that supports sustainable socio-economic growth and development iv. To improve institutional capacity for efficient and effective service delivery PART II: COMMITMENTS AND RESPONSIBILITIES OF THE MINISTRY OF FINANCE 1. Allocate adequate resources for reforms implementation; 2. Ensuring implementation of the reforms; 3. Conducting self-evaluation annually; 4. Resolving any issues that may arise after each self-evaluation; and 5. Submission of annual reports.

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PART III: COMMITMENT AND OBLIGATION OF THE GOVERNMENT 1. Ensure sustainable, and timely funding for the key reform areas; and

2. Ensure that relevant Government institutions provide the support role required for the successful implementation of the key reform areas. PART IV: FOCUS AREAS FOR REFORMS AND JUSTIFICATIONS REFORM AREA 1: ESTABLISHMENT OF A FUNCTIONAL INTERNAL AUDIT IN GOVERNMENT Objective/aim of the Reform Area The aim of the reform area is to enable the Government of Malawi to have an effective Internal Audit Function in line with the provisions of the Public Finance Management Act (2003).

Justification for undertaking the Reform Area The Internal Audit Function in Government, which is directed, supervised and coordinated by the Central Internal Audit Unit, is an important feature of good corporate governance and the Public Finance and Economic Management (PFEM) programme. However, there have been a number of challenges that have hampered its effectiveness. This was also evidenced by the recent PEFA assessment which downgraded internal audit in Government largely due to poor response rate to audit findings in Ministries. The challenges facing the Internal Audit Function include, but are not limited to, weak regulations on its mandate and enforcement of implementation of audit recommendations; insufficient coverage of audits in Ministries; untimely audits and their reporting; and generally incorrect positioning and placement. As such, the Ministry intends to improve the legal provisions for internal audit and audit committees; reposition internal audit through a functional review; institutionalize pre-auditing of all financial transactions to complement audits; roll-out continuous auditing to complement the current periodic audits and automate the current manual internal auditing processes.

Benefits for Implementing the Reform Area The reform in internal auditing are envisaged to result in the following: i. The legal provisions will strengthen the mandate and role of internal audit and audit committees in Government thereby strengthening the oversight mechanisms over public resources, preventing abuse of public resources and promoting a culture of addressing audit findings; ii. The restructuring of the Internal Audit Common Service will improve its effectiveness and improve the professional independence and objectivity of internal auditors; iii. Pre-auditing of financial transactions has resulted in the timely detection of erroneous and potentially fraudulent transactions. It is also expected to improve the quality of Government’s financial statements by minimising misallocation of expenditures; iv. Continuous auditing of IFMIS will enable real-time detection of errors and irregularities by internal auditors thereby enabling their timely correction; v. The Internal Audit Management Software is expected to enforce compliance by Government internal auditors with the professional requirements of conducting internal 2

audit assignments in Ministries. It will also enable internal audit work to be conducted efficiently, effectively and consistently within Government;

REFORM AREA 2: IFMIS FULLY CONFIGURED TO INTEGRATE ALL GOVERNMENT ACCOUNTS Objective/aim of the Reform Area The aim of the reform area is to improve MDAs’ systems and controls for accounting and financial management. Justification for undertaking the Reform Area This reform area would assist the Government to improve the efficiency and comprehensiveness of Government accounting and financial management systems in its MDAs, the compliance with the rules and regulations, and the comprehensiveness, transparency, and timeliness of fiscal reporting. This will be attained through (i) automatic capture of all Government revenues, expenditures and financing transactions in IFMIS; (ii) ‘interfacing IFMIS with the Central Bank to foster automation and hence efficiency in reconciliations’; (iii) implementation of an electronic payments system (iv) implementation of Cash Basis International Public Sector Accounting Standards (IPSAS); (v) harmonization of integrated financial management systems at central and district levels; (vi) review of annual budgeting, accounting and reporting processes and associated controls to be implemented through subsequent upgrading of IFMIS to a web based version with comprehensive coverage of all relevant modules and interfaces; (vii) purchase of new licenses if EPICOR or SN do not meet government requirements and ; and (viii) consulting services to analyze expenditure arrears and make recommendations. Eventually IFMIS configuration and full integration will then require (i) roll out of budgeting module to all the MDAs; (ii) devolution of financial management responsibility to MDAs; (iii) implementation of fixed assets register, (vi) roll-out of business intelligence and reporting tools to select users of all the MDAs and (v) decentralization support.

Benefits for Implementing the Reform Area The benefits of IFMIS reforms will bring the following: i. The upgraded Data Centre for IFMIS will meet tier II data centre standards as per Uptime Institute Standards requirement for a tier II Data Centre which is redundant capacity components hence ensuring availability and business sustainability; and

ii. The establishment of robust network connectivity will ensure improved operational efficiency for IFMIS

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REFORM AREA 3: ENSURING THAT FUNDING TO MINISTRIES, DEPARTMENT AND AGENCIES AS WELL AS PAYMENT SYSTEMS ARE WORKING EFFICIENTLY Objective/aim of the Reform Area To ensure efficient and timely funding allocation to MDAs

Justification for undertaking the Reform Area i. The CMU develops periodic spending ceilings in line with the resource envelope, however, due to pressures on the expenditure side the ceilings are not always respected hence there is higher reliance on short term advances from the Reserve Bank of Malawi. ii. The accuracy of the weekly and daily forecasts are compromised by the use of cheques. Thus the period between the cheque issuance and encashment at the bank may not be accurate.

Benefits for Implementing the Reform Area Government introduced Cash Management Committee Comprising Reserve Bank of Malawi, Malawi Revenue Authority, Accountant Generals Department and main division of Treasury namely; Economic Affairs, Budget, Debt and Aid Management, Public Finance Managements Systems and Revenue Policy Division. The Committee’s responsibilities include helping in cash allocation decision by the Ministry of Finance, negotiating cash flows with Controlling Officers so that cash releases to the ministry and Departments are predictable every quarter.

OTHER REFORM AREAS REFORM AREA 4: FINANCIAL OVERSIGHT OF PUBLIC ENTERPRISE AND GOVERNMENT INVESTMENTS Objective/aim of the Reform Area To improve the provision of financial oversight over statutory bodies.

Justification for undertaking the Reform Area Public Enterprises in Malawi were and are created to provide goods and/or services which could not be provided more effectively and efficiently by either the Central Government or the Private Sector. They were expected to operate on the Private Sector management model while leaving control over policy and regulation to the Government. It was, therefore, expected that would gradually be weaned from Government subventions and would later start remitting dividends or surpluses to Government. However, overtime, performance of Public Enterprises has been going down some of which entirely depend on Government bailouts and persistent borrowing while 4

others have lost their mandates of providing social services to citizens. In order to address some of the challenges facing the Corporations, a number of reforms have been done including: i. Developed Dividend and Surplus Policy for Statutory Bodies in Malawi; ii. Developed Public Finance Management (Ownership of Statutory Bodies) Regulations; iii. Developed Guidelines for the issuance of Parastatals Guarantees, indemnities, and letters of consent and comfort; and iv) Developed Guidelines on the preparation of performance management plans and budgets

Benefits for Implementing the Reform Area The benefits of implementing such reforms included: i. Improved domestic resource mobilization through diversifying source of government revenue and improving revenue collection and administration at National level; ii. Providing a framework for the ownership of Statutory Bodies, the management of state assets or shares in statutory bodies and a systematic coordination mechanism for state investment and shareholding in statutory bodies; iii. Ensuring that there is a well-coordinated, streamlined and efficient governance arrangements for issuing approvals for private loans, borrowings on overdrafts, guarantees and indemnities. The guidelines ensure that Statutory Bodies borrow in a sustainable manner thereby enabling the Government to avoid financial exposure that may arise from uncoordinated borrowings; and iv. Providing clarity to the parastatals regarding shareholder’s expectations with respect to the content, focus and format of the plans and budgets as enshrined in the Public Finance Management Act, 2003. In addition, providing the basis on which government assesses the performance of parastatals in the achievement of financial and non-financial outcomes and targets thereby enhancing accountability and transparency in the parastatal sector. The guidelines are due for review this year to incorporate emerging issues.

Going forward, the Ministry of Finance will be undertaking the following proposed reforms within the Public Enterprises domain including:

i. Development of Web based data base for Public Enterprises and Government Investments: The Ministry is in the process of developing a web-based database for the Public Enterprises and Government Investments with the aim of establishing a well- coordinated Management Information System (MIS) for monitoring the performance of Public Enterprises and other Government investments. Once established, the web-based database will provide an efficient data storage and accessibility to facilitate analysis and performance reporting. This will benefit not only the Ministry of Finance but all its stakeholders and the general public to access information on the performance of Public Enterprises and other Government Investments;

ii. Production and Publishing of consolidated annual Performance Report for State Owned Enterprises: The Ministry has recently piloted the production of consolidated annual performance report for State Owned Enterprises starting with audited 2017/18 financial year reports. These reports will eventually be published on the Ministry’s website and submitted to National Assembly. This report is a major reform that highlights 5

the financial and non-financial performance of both aggregate and disaggregated overview. It further highlights, the fiscal risks posed by each Public Enterprise and narrows down to developing case study reports for high risk Public Enterprises;

REFORM AREA 5: REVIEW OF PUBLIC FINANCE MANAGEMENT ACT OF 2003 Objective/aim of the Reform Area The objective of this Public Finance Management Act Review is to review to make it more robust in ensuring the effective management of public revenue and expenditure in Malawi.

Justification for undertaking the Reform Area In Malawi, Public Finance Management (PFM) has been a priority area of reform for a number of years. Given the recurring weaknesses in the public revenue and expenditure management, including budgeting, appropriation, accounting, allocation, disbursement, reporting, internal and external controls and other areas, the management of public funds has been deficient over an extended period undermining Government’s efforts to spur development and reduce poverty.

Benefits for Implementing the Reform Area Effectiveness of PFM reforms hinges on a supportive PFM legal framework since the PFMA governs the management of public funds. This review has therefore given an opportunity for identifying gaps, inconsistencies and overlaps and areas requiring change, improvement or amendment in the PFMA in order to come up with a more effective and robust PFMA.

REFORM AREA 6: REVIEW OF PUBLIC FINANCE MANAGEMENT ROLLING PLAN Objective/aim of the Reform Area The aim of the proposed reform is to improve the use and management of public resources through a financial management system that promotes transparency, accountability, fiscal discipline, efficiency and effectiveness.

Justification for undertaking the Reform Area

The Ministry developed a Public Finance Management Rolling Plan which is an umbrella strategy for the implementation of PFM reforms in Malawi. The Rolling Plan provides a framework and roadmap for enhancing Malawi PFM systems during a three-year period from July, 2018 to June, 2021. The Plan will guide public finance management reforms during its implementation period. This replaces the earlier Public Finance and Economic Management Reform Program (PFEM RP) which covered the period from July 2012 to June 2014. The document is supposed to be reviewed every three years. The next review is in 2020/2021. Through the PFM Rolling Plan, donors have been guided to invest in specific areas of public finance management reforms. For instance, in 2019/2020 the European Union invested about 22 6

million Euros in form of a grant towards a project called Finance Management "Chuma Cha Dziko” Programme. The programme is expected to improve public service delivery. The second project from the Rolling Plan is the Governance to Enable Service Delivery Project funded by the World Bank to a tune of (US$100 million) which is also a grant.

Benefits for Implementing the Reform Area The benefits of implementing the proposed reform area shall include: i. Greater fiscal discipline and integrity through the PFM cycle by observing, complying with and enforcing key PFM legislation at central and local government level; ii. Substantial improvement in the alignment of results of MDAs and national budget and programmes with the national development strategy; and

iii. Efficient mobilization of resources leading to enhanced yields and greater stability in financing the national budget.

REFORM AREA 7: ESTABLISHMENT OF TREASURY SINGLE ACCOUNT Objective/aim of the Reform Area Providing a consolidated cash position with a clear overview of all cash flows in and out of the accounts.

Justification for undertaking the Reform Area

The current structure of banking arrangement has numerous bank accounts which are difficult to manage. This affects precision of the Government cash positing at any given point in time. And also, costly bank charges are incurred in managing these numerous bank accounts. A TSA is not a single account per-se but a unified structure of bank accounts where cash resources are pooled and treated as fungible.

Benefits for Implementing the Reform Area: i. Support cash management to ensure funds are available to meet vital expenditures when due and assist the prioritization of payments; assist in better planning and timing of borrowing ii. Reduce the overall volume of bank accounts simplifying their management and oversight, standardize processes, reduce banking fees and transaction costs due to more efficient operations, e.g. eliminating the costly CCA operating accounts, simplify bank account management including reconciliation iii. Improved oversight of revenue collections and timeliness of banking

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REFORM AREA 8: INSTALLATION OF NEW INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEM (IFMIS) FOR CENTRAL GOVERNMENT Objective/aim of the Reform Area To improve the performance in the financial management processes for Government.

Justification for undertaking the Reform Area The Epicor IFMIS runs on an outdated software and therefore pose many challenges to the Government in terms of system performance. Government resolved to procure a new software run on SAP (Systems, Applications, and Products in Data Processing).

Benefits for Implementing the Reform Area The benefits of implementing the proposed reform area shall include: i. Providing better quality information for management at all levels, resulting in improved fiscal control, resource allocation, management of resources, cash management, and control of expenditure ii. Improving transaction efficiency, with reduced paperwork and less duplication of activities and reports. The new IFMIS will interface with other key information management systems such as the Human Resource Management Information System (HRMIS), Malawi Revenue Authority (MRA) System, Public Sector Investment Program System (PSIP), Reserve Bank of Malawi (RBM) Core Banking & Electronic Funds Transfer (EFT) systems iii. Improving commitment control; the new IFMIS will have improved built-in controls over expenditure and will be more accessible to internal and external auditors. iv. Enhanced transparency; the new IFMIS will be easier to monitor and support implementation of Government development policies and identify how much is being spent on the different functions of Government. v. Improved financial record keeping and management through implementation of an electronic document management system.

REFORM AREA 9: IMPLEMENTATION OF ACCRUAL INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS Objective/aim of the Reform Area The objective of this reform area is to enhance the financial reporting both at MDA and Consolidated level in adherence to the provisions of the Public Financial Management Act 2003.

Justification for undertaking the Reform Area IPSASs are a global set of accounting standards developed to meet the accrual based accounting needs of Governments and the Public Sector. Traditionally, Governments and public sector 8

institutions have been using conventional ‘cash accounting’ financial reporting unlike ‘accrual accounting’. Cash accounting has got many weaknesses in that the financial statements do not fairly represent the true financial position of the reporting entity due to the following factors; i. Cash accounting is traditionally based on budgetary constraints concept. Recognition of revenues and expenses is not linked to the provision of services or the transfer of goods hence, it is impossible to measure the performance of a public public-sector entity correctly, i.e., to know the real cost of a service rendered or a good provided. For example, the absence of a notion of inventory in public sector accounting makes it impossible to determine and control the cost of production of goods. ii. Cash accounting is traditionally characterized by the absence of the concept of the balance sheet. There is no distinction between expenses for activities, and those for fixed assets which pertain to the asset base of a public sector entity. Cash accounting also completely misses out the value of assets held by a reporting entity, and the benefits derived from them in providing goods and services iii. There is no notion of accruing for commitments given for various receivables, or financial commitments taken for payables. Cash accounting therefore does not assist in making correct future cash projections. Basing on the above weaknesses highlighted above, Government of Malawi sought to migrate their accounting systems from cash accounting basis to accrual accounting basis. Moreover, this was already provided in the Public Finance Management Act of 2003.

Benefits for Implementing the Reform Area i. Comparability: The adoption of IPSAS will provide high quality financial reporting which will enhance comparability of the financial reports prepared by Government of Malawi and financial reports from other countries that have also adopted the IPSAS. ii. Improved financial management information reporting and transparency. The Government will benefit from the professionalization that comes with clear accounting standards. Pursuing higher level standards and being measured against a clear benchmark will improve the Government accounting. iii. Greater accountability and fight against fraud and corruption. Resulting from the transparency above, the financial statements of Government will become more auditable which will in turn result in greater accountability of public resources. Professional information resulting from clear standards is a key and important aspect for fighting corruption. iv. Improved use and management of public sector resources, particularly assets. Accrual accounting includes assets as a core component of financial statements and becomes a key audit area. This brings a sense of accountability and tracking of how public resources are being used. This will bring about a trickle-down benefit in form of proper asset utilization by the Government.

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v. Improved cash-flow management. Accrual accounting includes commitments of cash inflows and outflows as an integral part of the cash flow management system. This will improve the management of cash resources in the Government. vi. Enhance Trust - High quality financial reporting will contribute to building trust between Government of Malawi and its stakeholders like the taxpaying public, lenders and donors through accountability by providing transparent, understandable and high-quality financial statements.

REFORM AREA 10: REVENUE MANAGEMENT

Objective/aim of the Reform Area Implementation of the proposed automation in management of Non Tax Revenues would help fill the information gaps for optimal payer management. With the built-in provisions to register payers, real-time update on payments and reconciliation, and ability to generate custom reports, the module would be able to support MDAs in their payer management processes. Justification for undertaking the Reform Area Current un automated processes of collecting Non Tax Revenues creates a number of challenges which includes untimely production of reports, challenges faced during reconciliation as well as uncollected revenues due to inefficient payer management processes.

Benefits for Implementing the Reform Area Once the revenue module has been integrated with the New IFMIS, the following shall be the derived benefits: Once the revenue module has been integrated with the New IFMIS, the following shall be the derived benefits: i. Monitoring of revenue collected will be easy as everything will be automated; ii. Real time reporting as it will be on the touch of the button. No more manual processes; iii. Loss of revenue will through fraud shall not be an issue any more as there will be improved controls in the system; iv. Revenue collection will greatly improve because clients will be able to pay using different platforms and at any time without necessarily walking into government accounts office; and v. There will be improved levels of accountability.

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REFORM AREA 11: BUDGET REFORM

11.1. PROGRAM BASED BUDGETING Objective/aim of the Reform Area PBB is a budgeting approach that focuses on linking resources and results for agencies by tracing these results to strategic outcomes. Justification for undertaking the Reform Area Integrating planning with budgeting will result in: a) Budget process will become strategic decision making tool, and not analytical tool; b) Greater awareness of national strategic objectives across Government institutions; c) Alignment of priorities will trickle down to Institutions; d) Increased accountability for public resources and results; and e) Improved efficiency and value for public money

Benefits for Implementing the Reform Area i. Program based budgeting provides emphasis on results or performance and this is in line with International best practice and Results Based Management (RBM) Initiative; ii. It’s a forward looking budget planning aimed at improving decision making; and iii. Links Government’s policies, priorities and requirements within limited resource envelope over time.

REFORM AREA 11.2: MEDIUM TERM EXPENDITURE FRAMEWORK Objective/aim of the Reform Area To ensure revenues matches with planned expenditures to minimize overdependence of foreign aid and borrowing

Justification for undertaking the Reform Area Huge increase in statutory expenditure such as wages, interest payments and pensions (60 per cent of domestic revenue), which has resulted in a smaller proportion being allocated for development projects and Government operations to enable service delivery. Need to develop a fiscal framework that strives to reduce the deficit to 1.5 per cent of GDP in the medium term. In addition, inadequate information in preparation of MTEF such as donor commitments and MDA plans. Build capacity in MDAs in the preparation of medium term budgets

Benefits for Implementing the Reform Area i. Minimal variations between budgeted and actual expenditure; and ii. Resource allocation in MDA’s becomes efficient.

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REFORM AREA 11.3: COMMITMENT CONTROL MONITORING AND TRACKING Objective/aim of the Reform Area To Control the accumulating payment arrears by MDAs Justification for undertaking the Reform Area Some information not being recorded in the system which makes monitoring of commitments in complete.

Benefits for Implementing the Reform Area i. Controlling the accumulating payment arrears by MDAs

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LEAD LEAD PERSON PERSON Director Central Internal Central Internal Director for Secretary Unit/ Audit Resources Human and Management Development. Director Central Internal Central Internal Director Public Director Audit/ Management Finance Systems FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL Approval of the the of review Approval Function Secretary by report and the President to Cabinet Enactment of the of Enactment by bill draft within Parliament year the financial BENEFIT BENEFIT EXPECTED EXPECTED auditors auditors and role of internal of role and audit andaudit in committees thereby Government the strengthening mechanisms oversight resources, public over of abuse preventing and resources public of culture promoting a audit addressing findings Audit the Internal will Common Service its improve and effectiveness the improve professional and independence internal of objectivity PERIOD PERIOD 13 EXPECTED EXPECTED COMPLETION COMPLETION TARGET TARGET 1 December, 2020 Strengthened mandate mandate Strengthened 2020 December, 1 of restructuring The 2021 June 1 KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE Functional review Functional review report Draft legal provision legal Draft and audit internal for committees audit in revised included PFMA

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ Service Service meetings meetings Commission conduct to DHRMD the functional of the review Audit Internal legal provisions for for legal provisions and audit internal in committees audit through Government any arranged consultative audit committees in committees audit for Government in PFMA inclusion the Support lobbying of the of enactment Draft legal Draft for provisions and audit internal KEY ACTIONS ACTIONS KEY

1. 2. 1.

REFORM1: AREA ESTABLISHMENT OF FUNCTIONAL A INTERNAL INAUDIT GOVERNMENT PART V: PART OPERATIONAL MATRIX

OUTPUT OUTPUT

conducted conducted Internal Audit Internal Service Review of the the Review of Functional

committees committees and audit audit and provisions for for provisions audit internal Improving Improving legal

LEAD LEAD PERSON PERSON Secretary to the Treasury/ the Treasury/ to Secretary Human for Secretary Management Resources Development. and FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL by the Secretary for for Secretary bythe Resources Human and Management Development Creation of of of Creation Posts hiring Established and inspectors financial BENEFIT BENEFIT EXPECTED EXPECTED erroneous and and erroneous fraudulent potentially and transactions the quality improved of Government’s by statements financial minimising of misallocation expenditures PERIOD PERIOD 14 EXPECTED EXPECTED COMPLETION COMPLETION June 2021 Timely detection of detection Timely June 2021 22 22 Ministries Establish filled 60%

ment Warrant posts TARGET TARGET 1. 2. 3. KEY KEY Finance Finance Recruitment warrant of additional financial inspectors Staff return return Staff showing placement of financial in inspectors ministries Establishment for warrant of Inspectorate INDICATOR INDICATOR

PERFORMANCE PERFORMANCE 3. 1. 2.

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ Hiring additional additional Hiring meet to inspectors the increased ministries of number workload and creation of creation for Posts Established the financial who are inspectors currently all staff temporary Place financial financial Place all in inspectors including ministries newly created ministries the Facilitating Common Service Common Service the Implement of recommendations the functional report review Facilitate the the Facilitate of the compilation functional final for the report review Audit Internal KEY ACTIONS ACTIONS KEY

3. 1. 2. 3. 2.

OUTPUT OUTPUT

Inspectorate of Inspectorate Finance institutionalize throughthed Government Government financial financial in transactions Pre-auditing of Pre-auditing LEAD LEAD PERSON PERSON Director Central Director Central Internal Audit Director Central Director Central Internal Audit FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL Financing for for of Financing procurement the consultancy for services software Financing for for of Financing procurement licences ACL BENEFIT BENEFIT EXPECTED EXPECTED be conducted conducted be effectively efficiently, within consistently and by internal auditors auditors by internal their enabling thereby correction timely by Government with auditors internal the professional of requirements internal conducting It assignments. audit enable also will work to audit internal IFMIS will enable IFMIS of detection real-time irregularitiesand errors PERIOD PERIOD 15 EXPECTED EXPECTED COMPLETION COMPLETION June, 2021 Continuous auditing of of Continuous auditing June, 2021 TARGET TARGET 1 June - 2021 Enforced compliance compliance Enforced 2021 - June 1 5 pilot pilot 5 ministries KEY KEY Functional lab training Continuous training auditing manual Continuous reports auditing pilot from 5 ministries INDICATOR INDICATOR

PERFORMANCE PERFORMANCE Bespoke internal Bespoke management Audit Software 1. 2. 3.

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ Hire a consultant to to consultant a Hire bespoke the develop Audit Internal Management Software Develop technical technical Develop for the specifications Internal bespoke Management Audit Software Develop continuous continuous Develop manual auditing inauditors Train auditing continuous approach readiness of roll-out of roll-out readiness of continuous auditing training a Establish for laboratory auditing continuous Procure ICT ICT Procure for equipment auditing continuous internet Improve five in connectivity ministries in pilot KEY ACTIONS ACTIONS KEY

2. 1. 4. 5. 3. 1. 2.

OUTPUT OUTPUT

Processes in Processes Government Auditing Automation ofAutomation Internal

Periodic audit Periodic assignments compliment compliment Government’s Government’s to transactions continuous continuous of auditing Rolling out LEAD LEAD LEAD LEAD PERSON PERSON PERSON PERSON AG AG

FACTOR FACTOR SUCCESS SUCCESS FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL CRITICAL CRITICAL of Availability financial resources

BENEFIT BENEFIT EXPECTED EXPECTED Government Government EXPECTED BENEFIT BENEFIT EXPECTED

the facilitate will link The of EFT, implementation bank electronic sharing of automated for statements reconciliation. bank IFMIS in Improvement of the delivery service RTC Region Northern IFMIS in Improvement RTC of the delivery service South PERIOD PERIOD 16 EXPECTED EXPECTED COMPLETION COMPLETION PERIOD PERIOD EXPECTED EXPECTED COMPLETION COMPLETION

December, 31 2020 2020 October, 31 T T TARGET TARGET TARGE

1 1 KEY KEY KEY KEY INDICATOR INDICATOR INDICATOR INDICATOR PERFORMANCE PERFORMANCE PERFORMANCE PERFORMANCE Network Area Local Northern for Treasury Regional (RTC) Cashier Fiber AGD-RBM Link

PLANNED PLANNED PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ internalall Train the in auditors Internal bespoke Management Audit Software KEY ACTIONS ACTIONS KEY ACTIVITIES/ ACTIVITIES/ Treasury Cashier Cashier new Treasury North (RTC) offices. progress. progress. a of Installation Network Area Local Regional for (LAN) Establishment of a a of Establishment between link fiber in is RBM and AGD KEY ACTIONS ACTIONS KEY

3.

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REFORM AREA 2: IFMIS FULLY CONFIGURED TO INTEGRATE ALL GOVERNMENT ACCOUNTS GOVERNMENTALL FULLY AREA INTEGRATE REFORM TO IFMIS 2: CONFIGURED

OUTPUT OUTPUT

OUTPUT OUTPUT

connectivity connectivity Network Network Reliable IFMIS IFMIS Reliable LEAD LEAD PERSON PERSON AG AG AG FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL processes by E- processes Government through Digital Project. Malawi Availability/delay delivery ins the due of equipment and 19 Covid to forex shortage of Availability/delay delivery ins the due of equipment and 19 Covid to forex shortage of of Conclusion procurement EXPECTED BENEFIT BENEFIT EXPECTED IFMIS in Improvement AGD the at delivery service Headquarters. Continued IFMIS operations operations IFMIS Continued of the failure in of case link. primary 17 PERIOD PERIOD EXPECTED EXPECTED COMPLETION COMPLETION December, 31 2020 December, 31 2021 December, 31 2020 T T TARGE 1 1 1 KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE

Redundant Link Redundant AGD and between MRA Local Area Upgraded Network RTC SouthRTC to Connected Fiber National Backbone

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ AGD. AGD. between AGD and and AGD between MRA. Area Local Upgrade at (LAN) Network link IFMIS an Establish redundant Connection of the the of Fiber the Connection to South RTC National Backbone; KEY ACTIONS ACTIONS KEY

   OUTPUT OUTPUT LEAD LEAD PERSON PERSON LEAD PERSON PERSON LEAD Accountant General General Accountant AG AG FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL Human Resource Resource Human support Financial Delays in supply supply Delays in due of equipment the 19 Covid to effects. Upgrading of Core RBM System. Banking EXPECTED BENEFIT BENEFIT EXPECTED weekly forecasts. forecasts. weekly EXPECTED BENEFIT BENEFIT EXPECTED fast, a easy, Provide efficient secure, convenient, payment effective cost and for Government. method environment to the IFMIS IFMIS the to environment service for efficient servers delivery 18 N PERIOD PERIOD N EXPECTED EXPECTED PERIOD PERIOD COMPLETIO June 2022 Improved accuracy of accuracy Improved June 2022 EXPECTED EXPECTED COMPLETION COMPLETION 2021 June, 30 T T TARGET TARGET TARGE 1 1 31 March, 2021 Provide secure and ideal ideal and secure Provide 2021 March, 31 1 All MDA All MDA accounts

KEY KEY KEY KEY INDICATOR INDICATOR INDICATOR INDICATOR PERFORMANCE PERFORMANCE PERFORMANCE PERFORMANCE outflows. outflows. Cash Management Management Cash weekly Unit (CMU) inflows and daily and Upgraded IFMIS IFMIS Upgraded Centre Data and New IFMIS interface RBM ENSURE THAT FUNDING TO MINISTRIES, DEPARTMENT AND AGENCIES AS WELL AS PAYMENT PAYMENT AS WELL AS AGENCIES AND DEPARTMENT MINISTRIES, TO FUNDING THAT ENSURE

PLANNED PLANNED PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ ACTIVITIES/ ACTIVITIES/

KEY ACTIONS ACTIONS KEY KEY ACTIONS ACTIONS KEY orientation. orientation. planning and and cash Strengthening through planning management management the for building capacity MDA cash and committee the New IFMIS and and IFMIS the New Banking Core RBM System Rehabilitation and and Rehabilitation of Installation for Data the Equipment Centre of an interface Develop

REFORM AREA 3: AREA REFORM WORKING ARE SYSTEMS EFFICIENTLY

OUTPUT OUTPUT OUTPUT OUTPUT

Transfer (EFT) (EFT) Transfer Electronic Fund Fund Electronic

Data Centre Centre Data Upgraded IFMIS IFMIS Upgraded

payments. payments. all Government Government all Funds Transfer for for Funds Transfer to the Electronic the Electronic to payments migrated migrated payments Government Government

LEAD PERSON PERSON LEAD PFMS PFMS CRITICAL CRITICAL SUCCESS FACTOR FACTOR SUCCESS Financing to finalize finalize to Financing database web based the support Financial BENEFIT BENEFIT EXPECTED EXPECTED the fiscal risks risks fiscal each the by posed enterprise public down narrows and case developing to for reports public study risk high enterprises. highlights the the that reform major highlights non- and financial of financial performance and aggregate both disaggregated overview.

This report is a a is report This highlights, further It information information

  PERIOD PERIOD 19 EXPECTED EXPECTED COMPLETION COMPLETION TARGET TARGET KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE Performance report 1 December 2020 2020 December 1 report Performance available Timely 2020 December 1 based database Web FINANCIAL OVERSIGHT OF PUBLIC ENTERPRISE AND GOVERNMENT INVESTMENTS GOVERNMENT AND FINANCIALPUBLIC ENTERPRISE OVERSIGHT OF

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/

KEY ACTIONS ACTIONS KEY Performance Report for for Report Performance Enterprises Owned State Production and and of Maintenance Production annual Publishing consolidated Database Testing and and Testing Database Deployment users ofTraining Entry Data REFORM AREA 4: AREA REFORM

OUTPUT OUTPUT

report produced produced report SOE consolidated consolidated SOE

operational operational developed and and developed

Database Database Web based based Web LEAD PERSON PERSON LEAD Director Public Finance Public Director Systems Management CRITICAL CRITICAL SUCCESS FACTOR FACTOR SUCCESS Enactment of the draft of Enactment bybill Parliament financial within the year

EXPECTED BENEFIT BENEFIT EXPECTED promote transparency, transparency, promote fiscal accountability, and efficiency discipline, the in effectiveness of use and management resources. public Improve public resource resource public Improve to as so management 20 PERIOD PERIOD EXPECTED EXPECTED COMPLETION COMPLETION 2021 February, 2020 2020 TARGET TARGET 1 November 30, 30, November 1 KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE Draft PFMA Bill PFMA Bill Draft after finalised incorporating comments

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY for vetting vetting for Cabinet to Submitted approval. for (DP, CSO and and CSO (DP, MDAs). final ofSubmission Ministry to Bill draft of and Justice Affairs Constitutional Committee. Committee. the of Finalization Bill draft meeting Validation Stakeholders keywith Re engaging the the engaging Re Parliamentary Legal, on Committees and Accounts Public Finance and Budget

5. 4. 2. 3. 1.

REFORM5: AREA REVIEW PUBLIC OF FINANCEMANAGEMENTACT OF 2003 OUTPUT OUTPUT

reviewed reviewed PFM ActPFM

LEAD PERSON PERSON LEAD LEAD PERSON LEAD PERSON Accountant General General Accountant General Accountant FACTOR FACTOR FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL CRITICAL SUCCESS SUCCESS CRITICAL Timely agreement on agreement Timely TSA the proposed arrangement Financial Support PFMS PFMS Support Financial Reduce the the Reduce volume overall of bank accounts thereby simplifying their management oversight and Reduce feesbanking BENEFIT BENEFIT BENEFIT BENEFIT

EXPECTED EXPECTED EXPECTED EXPECTED   practice of practice TSA the implementing delivery delivery on the best expert 21 PERIOD PERIOD PERIOD PERIOD EXPECTED EXPECTED EXPECTED EXPECTED COMPLETION COMPLETION COMPLETION COMPLETION December, 2020 2020 December, June 2021 Improve public service service public Improve June 2021 TARGET TARGET TARGET TARGET 200- 300 300 200- bank accounts PFM PFM Rolling Plan KEY KEY KEY KEY INDICATOR INDICATOR INDICATOR INDICATOR PERFORMANCE PERFORMANCE Training report Six officers September, 2021 Learn from the TSA TSA from Learn the 2021 September, officers Six report Training Number of bank ofNumber bank in accounts operation PERFORMANCE PERFORMANCE Revised PFM PFM Revised Rolling Plan

PLANNED PLANNED

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY Engagement of a a of Engagement to consultant on staff train TSA and arrangement current Government accounts bank Rationalise Rationalise the (streamline) of number ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY components components Consultative and and Consultative validation with exercise beneficiary PFM

TREASURY 7: ACCOUNT AREA SINGLE OF ESTABLISHMENT REFORM REFORM AREA 6: REVIEW OF PUBLIC FINANCE MANAGEMENT ROLLING PLAN PUBLIC 6: AREA MANAGEMENT OF FINANCE REVIEW REFORM

OUTPUT OUTPUT

OUTPUT OUTPUT

reviewed reviewed Rolling Plan Rolling Plan Management Management Finance Finance Public Public

Structure Structure Account Single of a Treasury of a Development Development LEAD PERSON PERSON LEAD Accountant General General Accountant General Accountant LEAD PERSON LEAD PERSON FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL Accountant General General Accountant General Accountant Availability of of Availability resources financial end of trainingfor users FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL Approval of the of the Approval TSA proposed structure

EXPECTED BENEFIT BENEFIT EXPECTED

Provide timely, accurate, timely, accurate, Provide for data consistent and budget and management decision-making. BENEFIT BENEFIT EXPECTED EXPECTED PERIOD PERIOD EXPECTED EXPECTED solutions for all all for solutions that issues outstanding were resolved not online the during learning support effectively will the flow of control and of for Gvt the funds Malawi COMPLETION COMPLETION 22 December, 31 2021 31 March, 2021 March, 31 TARGET TARGET 1 5 5 PERIOD PERIOD EXPECTED EXPECTED COMPLETION COMPLETION KEY KEY TARGET TARGET 2 March, 2021 Review and find find Review and 2021 March, 2 that model have the To 2020 November, 1 INDICATOR INDICATOR PERFORMANCE PERFORMANCE Revenue Management, Management, Revenue AssetSystems, Project Management, Inventory and Management Contracts modules Management KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE structure structure Training Review Review Training Benchmarking and report TSA Proposed NTLAIN F E ITGAE FNNIL AAEET NOMTO SSE (FI) FOR (IFMIS) SYSTEM INFORMATION MANAGEMENT FINANCIAL INTEGRATED NEW OF INSTALLATION : :

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY new modules modulesnew Implementation of 5 of Implementation

 PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY trainings and and trainings benchmarking benchmarking benchmarking exercise TSA proposed after Structure learnt the lessons fromthe Cash Cash ( Management reasons) Online one inworkshop African of the a and Countries EOM RA 8 AREA REFORM GOVERNMENT CENTRAL

OUTPUT OUTPUT

OUTPUT OUTPUT

management management system information financial financial Implemented fully fully Implemented New functional

Production of the the of Production Training review Training LEAD PERSON PERSON LEAD LEAD PERSON PERSON LEAD Accountant Accountant General General Accountant General Accountant General Accountant FACTOR FACTOR SUCCESS SUCCESS FACTOR FACTOR CRITICAL CRITICAL due to the Covid 19 19 the Covid to due effects. of Availability resources financial end of trainingfor users the of Readiness to systems other the with interface New IFMIS of supply Delays in gadgets biometric CRITICAL SUCCESS SUCCESS CRITICAL Full Compliance with Compliance Full and guidelines issued templates BENEFIT BENEFIT EXPECTED EXPECTED EXPECTED BENEFIT BENEFIT EXPECTED management and budget budget and management decision-making. timely, accurate, Provide for data consistent and budget and management decision-making. security system Enhance processing when transactions. timely, accurate, Provide for data consistent and IPSASs IPSASs complied by MDAs on by MDAs complied with progressing PERIOD PERIOD PERIOD PERIOD EXPECTED EXPECTED EXPECTED EXPECTED COMPLETION COMPLETION 23 December, 31 2021 2021 March, 31 July,2021 1 COMPLETION COMPLETION July 2020 Issued guidelines easily easily guidelines Issued July 2020 TARGET TARGET 8 1 84 TARGET TARGET All MDAs Councilsand KEY KEY KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE INDICATOR INDICATOR Biolock Integrated New the System in IFMIS MDAs All remaining using New operate IFMIS New with Interfaces IFMIS PERFORMANCE PERFORMANCE Delivery of Delivery of training orientation on financial reporting

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ PLANNED PLANNED KEY ACTIONS ACTIONS KEY Implement Biolock Biolock Implement functionality Increased number of number Increased other with interfaces Systems Government Roll out to the the to out Roll MDAs remaining ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY

   Hold meetings before meetingsbefore Hold on issuing of instruction statements financial with MDAs preparation Councils Local and

REFORM AREA 9: IMPLEMENTATION OF ACCRUAL INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS PUBLIC ACCRUAL SECTOR INTERNATIONAL OF ACCOUNTING 9: AREA IMPLEMENTATION REFORM

OUTPUT OUTPUT OUTPUT OUTPUT

Meetings held held Meetings LEAD PERSON PERSON LEAD IPSAS Project IPSAS Project Project Manager Project New IFMIS Manager Project IPSASfor Project Accountant General/Project for Manager IPSAS Project Accountant General/Project for Manager FACTOR FACTOR CRITICAL SUCCESS SUCCESS CRITICAL Configuration of IPSAS IPSAS of Configuration requirementsby report Consultants SAP Chair the of Availability Technical and Members Committee the Consultant for TORS GIZand developed financing by Tour of the Approval Technical the IPSAS Committee BENEFIT BENEFIT EXPECTED EXPECTED advice and direction to to direction and advice Project the IPSAS Team shallinformon report train to strategies on staff accounting MDAs all IPSAS in countries neighbouring IPSAS accrual achieved for learnt lessons and the achieving inMalawi challenges How same. if and were overcome to replicated be could up set Malawi eased eased PERIOD PERIOD EXPECTED EXPECTED 24 COMPLETION COMPLETION TARGET TARGET 4 November 2020 Provision of Technical of Technical Provision 2020 November the from output The 4 2021 March MDAs ALL All MDAs October 2020 IPSASs Compliances Compliances IPSASs 2020 October All MDAs KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE Study Tour Report 3 June 2021 Appreciation on how on Appreciation June 2021 Report Assessment 3 Report StudyTour Vote Level, Level, Vote Quarterly and Annual Consolidated Reports Meeting Technical Minutes Need Training

PLANNED PLANNED ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY Undertake Study tour in 3 in tour Study Undertake whichare countries accrual implementing IPSAS meetings meetings and consultant a Engage trainingneeds prepare exercise assessment Development of new of Development SAPin take into to reports account IPSAS requirement Technical Conduct IPSAS quarterly Committee

OUTPUT OUTPUT

Undertaken Undertaken for 3 Countries 3 for Country Tour Tour Country Engaged Engaged Consultant Consultant Meeting Meeting conducted Technical Technical

developed developed IPSAS reports IPSAS reports LEAD PERSON PERSON LEAD Accountant Accountant General Accountant Accountant General FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL Availability of of Availability financing adequate Availability of of Availability financing adequate BENEFIT BENEFIT EXPECTED EXPECTED reconciliation. reconciliation. Improved Improved revenue and collection reporting 2020 2020 October,

PERIOD PERIOD Done Done and November 2019 December, Done – 2019 December, Done – – 2020 January, Done 2020 September, Done – November2019 – – November2019 6. EXPECTED EXPECTED COMPLETION COMPLETION

2. 3. 4. 5. 1. December 2020 Improved bank Improved 2020 December 25 1 report report 1 meetings 2 report 1 report 1 report 1 1 report report 1

TARGET TARGET 6. 2. 3. 4. 5. 1. All revenue receipting receipting All revenue MDAs

Minutes Minutes for meetings

KEY KEY

 Consultants Consultants engagement report Draft Report Report Draft document FinalDocument analysis Gap willthat report include recommendatio inclusion for ns in SAP BPR Report BPR ofMinutes the validation workshop

E INDICATOR E INDICATOR PERFORMANC 6. 3. 4. 5. 1. 2.

Conduct stakeholder meetings REVENUE MANAGEMENT REVENUE : : PLANNED PLANNED



ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY with on recommendations be to items which in SAP included SAP of Engagement on the consultants the in raised issues analysis report Gap Production of the of the Production report Draft of the Production Report Final a of Formulation workon the to team analysis gap the BPR between the and New report requirements IFMIS up come and in SAP Engagement of theof Engagement to (PWC) consultant BPR work on the Conduct two validation workshops before report the BPR

3. 4. 5. 1. 2. 6. OUTPUT OUTPUT REFORM AREA 10 AREA REFORM BPR BPR Banking structure structure Banking incorporates that Reengineering Reengineering (BPR) Business Revenue Process LEAD PERSON PERSON LEAD FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL

BENEFIT BENEFIT EXPECTED EXPECTED oversight ofoversight revenue and collections in timeliness banking reconciliation. of Timeliness revenue reports. Loss of revenue fraud through greatly shall be as minimized will be there improved the in controls Real time time Real as it reporting the on be will a of touch button. Loss of revenue fraud through greatly shall be as minimized will be there improved the in controls system. Improved PERIOD PERIOD EXPECTED EXPECTED COMPLETION COMPLETION June 2020 Improved bank Improved June 2020 26 TARGET TARGET All revenue receipting receipting All revenue MDAs Banking structure report KEY KEY

 been signed signed been Bank accounts in operation Training report report Training have that MOUs

E INDICATOR E INDICATOR PERFORMANC   

Draft proposed banking structure approval Seek the for banking structure PLANNED PLANNED

 

ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY agencies staff staff agencies of Development with MOUs banks commercial ofOpening bank accounts Training ofTraining implementing

   OUTPUT OUTPUT Bank structure rolled rolled Bank structure out receipting MDAs MDAs receipting developed recommendations recommendations revenue non-tax for LEAD PERSON PERSON LEAD FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL

BENEFIT BENEFIT EXPECTED EXPECTED at any time. anyat time. willbe There improved accountability. of Monitoring revenue will collected easy as be will everything automated be will collection greatly improve clients because to able be will using pay different and platforms system. system. Improved ofoversight revenue and collections in timeliness banking will collection greatly improve clients because to able be will using pay different and platforms PERIOD PERIOD EXPECTED EXPECTED COMPLETION COMPLETION 27 TARGET TARGET 5 MDAs June 2020 Revenue Revenue June 2020 MDAs 5 Revenue June2025 MDAs 7 MOUs MOUs with mobile money service providers Minutes Minutes for meetings MOUs with banks Operation bank al accounts Training report Minutes for meetings KEY KEY

      E INDICATOR E INDICATOR PERFORMANC accounts for for accounts MDAs Conduct stakeholder meetings (MDAs, money mobile service providers, banks reserve GOM and meetings (MDAs, Commercial reserve banks, banks and GOM consultants) Develop for MOUs banks Conduct with trainings usersend bank Open Conduct stakeholder PLANNED PLANNED

    

ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY OUTPUT OUTPUT receipting through through receipting service mobile providers Electronic – – Electronic receipting through through receipting banks Electronic - - Electronic

PERSON PERSON LEAD PERSON PERSON LEAD RESPONSIBLE RESPONSIBLE Budget Director Director Budget Division) (Budget FACTOR FACTOR SUCCESS SUCCESS FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL CRITICAL CRITICAL Controlling sending Officers providing and officers to support for responsible the to budgeting BENEFIT BENEFIT EXPECTED EXPECTED at any time. any at time. willbe There improved accountability. of Monitoring revenue will collected easy as be will everything automated be BENEFIT BENEFIT EXPECTED EXPECTED aligned to national to aligned strategic and are priorities formulated, and implemented PERIOD PERIOD EXPECTED EXPECTED PERIOD PERIOD COMPLETION COMPLETION EXPECTED EXPECTED COMPLETION COMPLETION 28 TARGET TARGET 100 June 2021 Budgets that are are that Budgets June 2021 100 TARGET TARGET KEY KEY Training Training report INDICATOR INDICATOR KEY KEY

PERFORMANCE PERFORMANCE  % of MDAs aligning aligning of% MDAs policy to their budgets documents E INDICATOR E INDICATOR PERFORMANC

service machines) for cash receipting Conduct with trainings users end consultants) consultants) Develop with MOUs money mobile service providers Procure (POS gadgets machines, computers, & self- phones BUDGET REFORMS BUDGETREFORMS PLANNED PLANNED : : PLANNED PLANNED

ACTIVITIES/ ACTIVITIES/   

KEY ACTIONS ACTIONS KEY ACTIVITIES/ ACTIVITIES/ KEY ACTIONS ACTIONS KEY

improved programme programme improved budgeting approach based Engaging MDA’S to to MDA’S Engaging performance the improve the for information OUTPUT OUTPUT REFORM AREA 11 AREA REFORM

OUTPUT OUTPUT

aligned to policy to aligned documents All budgets MDAs PERSON PERSON RESPONSIBLE RESPONSIBLE Budget Director Director Budget Budget Director/Sector Working Groups Director/ Budget IFMIS Director Budget Budget Director/IFMIS Director/Controlli ng Officers

FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL Availability of of as Availability Information donor and commitments expenditure MDA of for required plans preparation ceilings MTEF working are Sector that groups vibrant the track ability IFMIS New to Budget Director. Director. Budget Internet and Connectivity continued BENEFIT BENEFIT EXPECTED EXPECTED efficient. efficient. and amounts and performance performance and for information Subvented and Organisations TreasuryFunds national to aligned strategic and are priorities formulated, and implemented monitored budgeted between actualand expenditure allocation Resource in becomes MDA’s efficient. in becomes MDA’s monitored interactive sessions sessions interactive monitored performance budget PERIOD PERIOD EXPECTED EXPECTED COMPLETION COMPLETION 29 TARGET TARGET 1 2021 Reduction in Reduction 2021 1 1 June 2021 Budgets that are are that Budgets June 2021 variations Minimal 1 2021 March 1 allocation Resource 2020 December 1 2 June 2021 Improvement of Improvement June 2021 2 KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE Strategic issues issues Strategic meetings hearing reports/minutes control Commitment report IFMIS produced PBB PBB produced IFMIS Documents Ceilings Indicative report Report of review of Report meetings/PBB for documents Subvented and Organisations TreasuryFunds PLANNED PLANNED ACTIVITIES/ ACTIVITIES/

KEY ACTIONS ACTIONS KEY

Development of a a of Development or tracking for tool/system Introduce the strategic the strategic Introduce at meetings hearing issues working level group sector coordination. improved for Introduce the strategic strategic the Introduce at meetings hearing issues level group working sector coordination. improved for Training for officers in in officers for Training and implement to MDAs costing. budget the finalize of PBB Production Newusing document IFMIS that has been adopted adopted hasthat been the budget Strengthening monitoring to performance the to adherence ensure activities planned OUTPUT OUTPUT of payment arrears arrears of payment build-up Potential circulate reliable reliable circulate PBB accurate and ceilings MTEF Develop and and Develop than 10% (Credible (Credible than 10% 2022-24 2021-22, Ceilings MTEF developed) ceilings as a a asceilings of percentage ceilings less MTEF annual of Variation MDAs budgets to to budgets MDAs documents policy institutionalised Alignment of Alignment of Organisations and and Organisations TreasuryFunds PBB Review of for documents Subvented PERSON PERSON RESPONSIBLE RESPONSIBLE FACTOR FACTOR SUCCESS SUCCESS CRITICAL CRITICAL commitments and and commitments sanction Controlling whocreate Officers or arrears payment outstanding default payments. BENEFIT BENEFIT EXPECTED EXPECTED frequency of by arrears payment MDAs PERIOD PERIOD EXPECTED EXPECTED COMPLETION COMPLETION 30 TARGET TARGET KEY KEY INDICATOR INDICATOR PERFORMANCE PERFORMANCE PLANNED PLANNED ACTIVITIES/ ACTIVITIES/

KEY ACTIONS ACTIONS KEY monitoring of of monitoring commitments

OUTPUT OUTPUT reduced reduced

Lead Person Person Lead Department Director Central Internal Audit/Director FinancePublic Management Systems

No No progress progress Accountant General

In Progress Progress In Progress Status Status Progress

Completed Completed

September, 2020 th

31 End Date EndDate Jun 2021 2020 2020 2021 Jun, 2021 Jun, 2021 Jun, 2021 Jun, Jun 2022

Time Frame Time Frame Start Date Start u 00 u 01 Jun 2021 2020Jul Jul 2019 Jul, 2016 Dec, Dec, 2016 Jul, 2018 Jul, 2017 Jul, 2019 Jul, 2019 Jul, Jul 2020

Key Outputs Outputs Key (EFT) Interfaced (EFT) transactions complimentto Periodic audit assignments Internal Auditing Processes Governmentin automated IFMIS Reliable Network established connectivity Upgraded for for internal andaudit audit committees Functional Review of the Internal Audit Service conducted Pre-auditing financial of transactions Governmentin institutionalized through the Inspectorate of Finance Roll-out continuous auditing Government’sof Improved legal provisions

Reform Area Area Reform IFMIS CentreData Fund Transfer Electronic IFMIS fully configured to integrate all governmentaccounts Establish a a Establishfunctional Internal Audit in Government ReformsProgress forTrackingthe First Quarter Ending30

No No

2 2 1 1 Budget Division Budget Division Budget Division Cash ManagementUnit PFMS Division PFMS Division PFMS Division PFMS Division

32 May 2021 Feb Feb 2021 Jan 2021 Feb 2021 2021Jan Jun 2021 Mar 2021 2021 Jul 2020 Mar 2019 Jun 2020 May 2016 Jun 2019 Jul 2020 Jul 2020 u 07 Jun 2017Jul documents Organisations Subvented Treasuryand Funds reviewed budgetsto policy documents institutionalised produced PFM reviewed Act FinancePublic ManagementRolling Plan reviewed aligned policy to Government payments migrated Electronic the to Funds allfor Transfer Government payments. Web Database based developed and operational

Alignment MDAs of PBB documents for PBB documents budgets MDAs All Budget Reforms Finance Finance Management Act 2003 of Review Public Of Finance Management Plan Rolling SOE consolidated report consolidated SOE Governmentand Investments Review Public of Agencies as as Well Payment are Systems Working Efficiently Financial Oversight Enterprise Public of Ensure Ensure Fundingthat Ministries, to Department and

7 7 6 6 5 5

4 4 3 3 Budget Division Budget Division Budget Division

33 Dec Dec 2020 Jun 2021 Jun 2021 Jul 2020 Jul 2020 Jul 2020 payment arrears reduced paymentreduced arrears ceilings as a percentage of ceilings of percentage a as MTEF ceilings than less (Credible10% 2021-22, MTEF2022-24 Ceilings)developed MTEF ceilingsDeveloped circulated and

Potential build-up of of build-up Potential Reliable and accurate PBB and Reliable accurate Variation of annual Variation annual of

PART VI: RESOURCE REQUIREMENTS KEY PERFORMANCE FINANCIAL SOURCES OF OUTPUT INDICATOR REQUIREMENTS FUNDING Improved legal Draft legal provision for internal MK6,060,000.00 Government of provisions for internal audit and audit committees Malawi- ORT audit and audit included in revised PFMA. committees Functional Review of Functional review report MK44,700,000.00 Government of the Internal Audit Malawi- ORT and Service conducted GIZ- PFEM Pre-auditing of 1. Staff return showing placement MK51,073,500.00 Government of financial transactions in of financial inspectors in Malawi- ORT Government ministries institutionalized through the 2. Establishment warrant for Inspectorate of Finance Inspectorate of Finance

3. Recruitment warrant of additional financial inspectors

Roll-out continuous 1. Functional training lab MK331,456,853.00 GIZ-PFEM auditing of Government’s 2. Continuous auditing training transactions to manual compliment Periodic audit assignments 3. Continuous auditing reports from 5 pilot ministries

Internal Auditing Bespoke internal Audit MK313,500,000.00 GIZ-PFEM Processes in management Software Government automated KEY PERFORMANCE FINANCIAL SOURCES OF OUTPUT INDICATOR REQUIREMENTS FUNDING

Meetings held Delivery of orientation training on MK10,000,000 Government ORT financial reporting funding

IPSAS reports Vote Level, Quarterly and Annual MK70,000,000 Government developed Consolidated Reports Development Part II funding

Technical Meeting Technical Meeting Minutes MK16,000,000 Government conducted Development Part II funding Consultant Engaged Training Need Assessment Report Not known GIZ Country Tour for 3 Study Tour Report MK 60,000,000 Government Countries Undertaken Development Part II funding KEY PERFORMANCE FINANCIAL SOURCES OF OUTPUT INDICATOR REQUIREMENTS FUNDING All MDAs budgets % of MDAs aligning their budgets 12,800,000 ORT aligned to policy to policy documents documents

34

KEY PERFORMANCE FINANCIAL SOURCES OF OUTPUT INDICATOR REQUIREMENTS FUNDING Capacity and MTEF Reports produced and submitted 50,000,000 ORT planning within the Budget Division and Ministries and Departments strengthened Alignment of MDAs IFMIS produced PBB Documents 11,073,500 ORT budgets to policy documents institutionalised

Variation of annual Reports produced and submitted 11,486,000 ORT ceilings as a percentage of MTEF ceilings less than 10% (Credible 2021-22, 2022-24 MTEF Ceilings developed)

Develop and circulate Strategic issues hearing meetings 21,000,000 ORT reliable and accurate reports/minutes PBB MTEF ceilings

Potential build-up of Reports produced 0 payment arrears reduced SOE database Web based Database 40,000,000 ORT developed and functional Public Finance PFM Rolling plan in place 30,000,000 EU, GIZ Management Rolling Plan Reviewed Automation of Non Tax  Activated Revenue Module in MK250,000,000 Government of Revenue Business New IFMIS Malawi- ORT and Process and Collection GIZ- PFEM systems  Operational Digital Payments System

Public Finance Revised PFMA, 2003 32,000,000 ORT,EU,GIZ Management Act of 2003 reviewed SOE consolidated Performance report 25,000,000 EU,GIZ report produced KEY PERFORMANCE FINANCIAL SOURCES OF OUTPUT INDICATOR REQUIREMENTS FUNDING Reliable IFMIS  AGD-RBM Fiber Link MK20,000,000 GIZ Network connectivity  Local Area Network for MK8,000,000 GoM Northern Regional Treasury Cashier (RTC)  RTC South Connected to MK7,000,000 GoM National Fiber Backbone  Redundant Link between AGD MK20,000,000 GIZ and MRA  Upgraded Local Area Network MK200,000,000 GoM/World Bank Loan 35

KEY PERFORMANCE FINANCIAL SOURCES OF OUTPUT INDICATOR REQUIREMENTS FUNDING GoM Upgraded IFMIS Data Upgraded IFMIS Data Centre MK1,200,000,000 Centre

GoM Electronic Fund New IFMIS and RBM interface MK70,000,000 Transfer (EFT)

Implemented fully  Revenue Management, Project MK2,000,000,000 GoM functional New Systems, Asset Management, financial management Inventory Management and information system Contracts Management modules  All remaining MDAs operate MK2,900,000,000 using New IFMIS  Interfaces with New IFMIS MK400,000,000  Integrated Biolock System in GoM the New IFMIS MK60,000,000

GoM GoM KEY PERFORMANCE FINANCIAL SOURCES OF OUTPUT INDICATOR REQUIREMENTS FUNDING Revenue Business BPR report GIZ Process Reengineering (BPR) Banking structure that Banking structure MK20,000,000.00 To be advised incorporates BPR recommendations for non-tax revenue receipting MDAs developed Bank structure rolled Banking structure rolled out MK 32,000,000.00 To be advised out Electronic - receipting Electronic bank transfers MK 45,000,000.00 To be advised through banks Electronic – receipting Payment through mobile money MK 45, 000,000.00 To be advised through mobile service service providers (procurement of gadgets providers not included Development of the TSA structure report GIZ TSA Structure

36

PART VII: FREQUENCY OF MONITORING AND INFORMATION FLOW The Ministry of Finance undertakes to prepare and submit quarterly performance and annual performance reports in the prescribed formats.

PART VIII: DURATION OF IMPLEMENTING REFORM AREAS The implementation period of the Reform areas is from June, 2020 to July, 2022.

37

Signed:

...... Date......

H. E. Dr. Lazarus McCarthy Chakwera

President of the Republic of Malawi

Signed:

...... Date......

Honourable Felix Mlusu

Minister of Finance

38