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Donors halt aid to Zambian social welfare scheme over suspected misuse

LUSAKA (Reuters) - Britain and Finland have frozen funding to Zambia on suspicion that $4 million they channelled into a social welfare scheme may have been misused, the Zambian presidency said on Tuesday.

FILE PHOTO: Zambian President Edgar Lungu at a panel discussion in Durban, South Africa, May 4, 2017. REUTERS/Rogan Ward/File Photo

President Edgar Lungu later gave the country’s top civil servant a week to take decisive action to curb all “malpractices” in the administration of the scheme.

The social cash transfer scheme is a donor-supported programme under which the government relays money to vulnerable households in rural areas in Africa’s No.2 copper producer.

The British High Commissioner to Zambia, Fergus Cochrane-Dyet, said in a tweet that Britain had frozen all bilateral funding until audit results were known. “(Britain) takes a zero tolerance approach to fraud and corruption,” he said.

Officials from Finland did not immediately comment.

Presidential spokesman Amos Chanda said Lungu ordered an inquiry four months ago into possible “misuse” of the aid funds between 2012 and now, and a number of suspects were due to be prosecuted.

“They notified us about the suspension of aid to the social cash transfer scheme but all other forms of bilateral aid are ongoing,” Chanda said. “Following the investigations, the secretary to the cabinet actually presented a report to the president on Friday.”

In a statement late on Tuesday, Lungu said he was not satisfied with the pace of the administrative measures and gave the secretary to the cabinet the deadline for action.

“I want a speedy and decisive investigation into the matter to establish the status of the disbursement of the social cash transfer programme,” Lungu said.

“Wherever cases of abuse requiring criminal investigations may arise, such cases must be reported to relevant agencies and where administrative action is required I want to see prompt action taken.”

He gave no indication what the consequence would be if the matter was not resolved.

Lee Habasonda, a political analyst at the University of Zambia, said the withdrawal of the funding would hurt the poor in the southern African country at a time when Lusaka is struggling to manage its debt.

“We hope that the government will take quick remedial measures to ensure that the funding is resumed,” Habasonda said.

Zambia’s external debt rose to $9.37 billion (7.1 billion pounds) by the end of June from $8.7 billion in December, the finance ministry said in August, a week after the International Monetary Fund raised concerns over its high borrowing.

Chanda said the welfare scheme would “continue on a smaller scale and we hope the donors can quickly get back on board”.

Reporting by Chris Mfula; Editing by James Macharia and Alison Williams