Dr. Kandeh K. Yumkella
Sierra Leone Telegraph: 23 November 2015
On October 3rd 2016, our government finally accepted the reality that our economy is bankrupt, with the publication of a press release from State House. The statement detailed austerity measures they will take to improve revenue mobilization and fiscal sustainability, as a result of the gross mismanagement of our national economy.
However, within eight weeks, they decided that in fact “we the people” should pay for their mismanagement.
As if the pain of 22 percent currency depreciation was not enough, the government not only raised electricity tariffs by 80 percent, but also, a few weeks later, raised the fuel prices on poor citizens by 60 percent.
Not surprising, is the government’s failure to slash expenditure on itself by even one cent. Essentially, they passed the burden of saving the economy to the citizens, while ignoring reckless spending and institutionalized leakages.
During the budget session in parliament, the Minister of Finance, in addition to his Budget, tabled two policy documents before the House to study and deliberate upon. One was the “Budget Document” itself and the other was the document entitled “Fiscal Strategy Statement for 2017.”
A few weeks before the Budget Speech, the Auditor General had also submitted her report of the audit of five ministries that account for “25 percent of procurement.”
Thus, what can we glean from these documents to inform our own understanding of how the government spends our resources? Is there policy coherence and complementarity between and among these policy documents; and do they show a path to the much touted “Agenda for Prosperity”? Or are we being led to the land of “you-go-sober”?
A Bloated Bureaucracy
After all the preliminary sections of the speech that reviewed global and regional economic trends, the minister states that: “On this basis, allocations of Goods and Services for all MDAs have been broadly maintained at their 2016 budget levels” (page 15 paragraph 17 under the heading Expenditure 2017). No austerity? I asked myself.
Perhaps he had received directives that the new budget should be business as usual, and the austerity measures were just for propaganda to impress the international community. It is the classic case of “do as I say and not as I do”.
In case you have forgotten, the key austerity measures announced by by State House included “30 percent cut in recurrent expenditure” and a suspension of “all new domestically financed capital projects and suppliers’ contracts until further notice.”
Between 2011 and 2017, government expenditure would have increased five times, and wages and salaries would have increased six times. More specifically, in 2011, total spending and net lending amounted to Le1.41 trillion; recurrent expenditure was Le909 billion, with wages and salaries at Le382.7 billion.
Last week, the finance minister announced that total expenditure and net lending is projected to be Le 5.4 trillion – including a wage bill of Le 1.8 trillion. So expenditure has increased five times what it was five years ago, and wages and salaries jumped six times. (Photo: Dr. Kandeh Yumkella).
Paragraph 86 of the speech states that “wages and salaries are projected to increase marginally….the increase of Le10 billion will finance new authorized recruitment in the civil service”.
The question is: What happened to “the moratorium on new recruitment in the public and civil service” that the president directed as stated on the October 3rd press release approved at an emergency cabinet meeting to address the economic crisis that we face as a nation?
Why has the wage bill grown six times in spite of warnings from the IMF and World Bank? It is public knowledge that in most cases, to get a job in government you have to show “party loyalty” or present a party card.
So the bloated bureaucracy is just creating employment for “the loyal boys and clans men”. It is also true that there are many more ministers-of-state and more deputy-ministers today than ever before. There are also many more agencies and commissions.
A case in point about the bloated bureaucracy is how we deal with youth affairs. In 2007, there was only one minister of Youth and Sports (without a deputy minister) facing the huge youth challenge.
Today, there are two Ministers of Youth and Sports with two deputies and two Permanent Secretaries with full staffing. There is also a youth commission with staffing and a presidential youth aide. These institutional overlaps and duplication is not only a huge dent in the budget but it has resulted in greater inefficiency.
Over the last 5 years, we have recorded more open clashes and tensions between ministers and youth and sport officials than the progress expected in sports and youth development.
Proliferation of Slush Funds
There are key revenue collection agencies (some taking taxes from petroleum products), that have become slush funds for extra-budgetary spending. They include the Road User Fund, Petroleum Unit, Maritime Administration, Environmental Protection Agency and National Telecommunications.
In spite of several attempts by the IMF through various visiting missions to persuade government to include these agencies in the consolidated fund and increase economic governance and accountability of these agencies, they continue to be de-linked from the consolidated revenue fund.
Various audit reports have stated that accountability in these core revenue collection agencies is weak and their capacity to effectively deliver their mandate is compromised. For example, the Road User fund has not been effectively utilized for road rehabilitation, especially during the rainy season.
The Environmental Protection Agency (EPA) cannot effectively respond to environmental threats, and so we have turned to the Post-Ebola Recovery fund for initiatives on environment. Perhaps, this is why now the austerity proclamation is calling for “Transfer of 60% of existing resources including projected revenues of all financially autonomous agencies into the Consolidated Revenue Fund (CRF)”. Will this integration really happen now?
Procurement and Internal Audit
The worst part of the budget speech is paragraph-52 “Procurement” and para-57 “internal audit”. These sections are very short and signify nothing, when you consider the grotesque level of institutionalized leakages (fraud, over pricing and outright thievery).
In the Audit of the Procurement Activities in Selected Public Sector Entities for the period January – October 2015, the executive summary states clearly that: “The integrity of public procurement is a critical element of the rule of law and sound public financial management in any country.” “Sierra Leone is no exception,” the same summary underscores.
“Procurement is by far the largest non-payroll expenditure of the government. By reputation among citizens, it is thought to be a major source for fraud and corrupt practices and goes towards our placing in the top quartile of Transparency International’s Corrupt Perceptions Index, placing us at 119 out of 168 countries,” the summary continues.
Unfortunately, our Minister of finance does not seem to share this sense of urgency. He devoted only a few lines to procurement and internal audit; or he simply wants to keep the leakages open.
How serious is the looting through procurement?
The auditor general provides evidence of massive fraud and outright immorality and thievery in the award of major contracts.
In 2015 for example, the total actual expenditure (excluding salaries and wages) for five MDAs and the Western Area Council was Le427.4 billion – representing about 24.2 percent of national expenditure (the ministries of Defence, Education, Agriculture, Sierra Leone Police and Western Area Rural District Council, WARDC).
On page 19 of the 2016 Auditor General’s report – Procurement of “G1098”stores items – overpricing, she described how a contract whose true cost (based on international best practice) was raised from $3.9 million to $16.4 resulting in”$12.5 million overpricing”. She goes on to cite that around the period of the Ebola epidemic, our government may have entered into a deal to procure over $45 million on arms and ammunition, without performance bond.
Our Anti-Corruption Czar spends his time creating awareness in rural areas among the peasants about probity. But he does not seem to see the signs the auditor general is pointing to the “big fishes”. For example, a week ago the Anti-Corruption guys made a big noise in newspapers and on FM 98.1 over a small guy who could not account for $2,500 (Le18.5 million).
But they did not see the missing $12.5 million or $45 million performance bond in in the Auditor General’s report.
Let us reflect on what $45 million dollars can do for Sierra Leoneans today. It could build five new military barracks and provide jobs for the 18 thousand ex-combatants, who sacrificed their lives to restore democracy to our country after 25 years of APC misrule and the civil war.
Such large sums of money could build 150 well equipped schools for over 100 thousand students; build five new state-of-the-art hospitals (one for each region), employ over 100,000 primary health care workers and 200 hundred new doctors.
Equally, important, that amount of money could have paid the wages and salaries of hundreds of thousands of our people who have now gone unpaid for two months.
The missing $12.5 million and $45 million are just the ears of the hippopotamus. What about the many dollar-denominated contracts, such as those cited above that have been overpriced at magnitudes of double, or quadrupole their prices?
More Red Painted Buses
The October 2016 press release on the much touted austerity measures stated that: “No new procurement of Government vehicles until further notice”, and “70% of all payments to suppliers/contractors that have foreign components to be effected in Leones”.
How ironic that the budget speech announced by the minister mentioned that government plans to buy 100 new buses in 2017. Will these be purchased through competitive bidding?
Will parliament debate the terms if they will be acquired through a loan? Can we know the price per bus ahead of time? Will these buses be paid for in Leones?
The only part of the budget that I truly like is paragraph 72, which states: “It is important to note that about 94% of the projected additional resources of Le 780.1 billion will be utilized to finance key statutory expenditure, including activities of the National Electoral Commission for 2018 General Elections…”
The statement merits attention because at least, we the people will have our opportunity to show at the ballot box, what we think of the management of our economy.
Until then, Sierra Leoneans are bracing themselves for more hard times – including in our ability to find it increasingly difficult to afford our basic needs (food, water, electricity, healthcare), perpetuated through the unfettered and unbridled intimidation and repression of the already suffering masses, whilst those of us courageous enough to tell our people the facts will be accused of incitement.
Is not the arrest and incarceration of a young FBC female student – Theresa Mbomaya (Photo: Theresa appeared in court last Monday), for allegedly forwarding a text on social media via WhatsApp a harbinger of the new wave of intimidation and repression?
When APC youth dance in the streets, they seem to have the right to express themselves.
But when frustrated youth want to express their concern about their future, they are told that freedom of expression now requires clearance from “supreme authority.”
It is therefore, not a surprise to see the Sierra Leone Police brandishing new riot gear, armoured personnel carriers and other menacing technology, has now become a regular feature of life in the capital city of Freetown for the sole purpose of suppressing our constitutionally guaranteed “freedom of expression.”
However, Sierra Leoneans are not at war with themselves. If anything, the very government they trusted and put in power twice to look after their welfare, should be fighting a war on the corruption and poverty that is responsible for the present state and condition, which has left the vast majority in abject poverty, while a few enjoy our God-given natural resource for their personal aggrandizement.
A Luta continua.