By Rattan Khushiram
Back in 2012, the World Bank’s Public Sector Performance – Development Policy Loan – 2012 (WB-DPL 2012) had highlighted that “…the fact that delays often occur in the implementation of planned public investment projects can be seen in the low levels of actual expenditure of the capital budget. This highlights not only that financial resources are inadequate but also that there is inadequate institutional and human capacity to implement these infrastructure projects in the short term.”
Capital spending has been averaging a dismal 2.6% of GDP annually under the previous regime. With the new regime the situation has worsened. For the third year running, budgetary capital expenditures are less than 2% (1.7%, 1.9%, and 1.7%), thus even worse than the previous regime. There has been persistent substantial under-execution of investment spending at all levels of government.
Public investment has been stagnating at around Rs19 billion annually for several years. For example in 2017, public investment was forecast by Statistics Mauritius to grow sizeably by 20.2% in real terms, to an amount of Rs 23.7 billion, or 5.1% of GDP. In the estimated outturn for 2017, public investment in fact fell by 3.0% in real terms, to a lower value of Rs 18.8 billion, and to a smaller level of 4.1% of GDP.
As for 2018, the prospect of a big push in public investments is not borne out by the current trend in government capital spending, which accounts for about half of public sector investments. As at October 2018, only Rs1.2 billion of the Rs 11.4 billion earmarked in budget 2018-19 have been spent, or only about 11%, reflecting a major shortfall in government capital spending. Thus, year after year, our money is not being properly utilised.
Over the years, various agencies have drawn attention to the weaknesses of the public sector in delivering quality, cost-effective and timely services, and in project implementation. The Ministry of Finance has tried to take on the responsibility for the implementation and monitoring of planned public investment projects through its Project Monitoring Unit. However, due to lack of the necessary competence and skills and being more apt at numbers crunching, they have failed to deliver on the priority projects as the figures show.
A Project Monitoring & Delivery Unit, under the direct responsibility of the PMO – a multi-disciplinary unit comprising engineers, accountants, architects and economists – promises better prospects. Such Delivery Units have been set up in other countries.
The first Delivery Unit – the Prime Minister’s Delivery Unit — was established in June 2001 in the United Kingdom during the second term of office of Tony Blair. The mission of the Unit was to support the Prime Minister on the delivery of public services through the monitoring of progress on, and strengthening capacity to deliver on, key government priorities/specific targets, e.g. reducing waiting time in health, reducing crime rate, improving scores in schools.
The Unit reported to the Prime Minister through the head of the Civil Service (the Cabinet Secretary) and the focus was on “delivering results”. The dilemma of the Unit was not so much as to “what” should be done, rather it was “how” things should be done.
Several countries have adapted and refined the concept of “Delivery Units” to suit their own institutional circumstances and country contexts, e.g. Australia, Indonesia, Jordan, Kenya, Malaysia, Pakistan, and Tanzania. The interesting feature remains that, in all circumstances, the Unit is located at the “centre of government” (President Office or Prime Minister’s Office). Conceptually, the objective of all the Delivery Units is to galvanise resources to improve delivery of those public services that matter most to citizens in terms of quality, cost and time.
I am sure that such a Unit will be a more strengthened one with the “mandate and authority” and equipped with the skills to better grasp the complexities of project management — including a proper evaluation of costs, funding options and risks and tendering procedures which are often the cause of most cost overruns and delays — to ensure “deliverology” on our priority capital projects.
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Promoting Public Sector Governance
Governance matters. Government lays the foundation, Government sets the framework but good governance cannot be imposed from the outside; it must be constantly nurtured, inculcated, advocated and goaded if we want to reap its benefits.
This government does not seem to believe in good governance, and we should not be surprised that we have reached such levels of “satisfactory underperformance” of State Owned Enterprises (SOEs) – institutions that are not held fully accountable for their performance. SIFB, IBA, SIC, MBC… you name it, and you’ll come up every week with a new one joining the long list of defaulters and underperformers.
Why does every government have to undo what the previous one had done and considers it a necessity to start from scratch again lest the credit goes to institutions set up by its predecessor?
The ex-Office of Public Sector Governance, working closely with the World Bank (WB) was doing a good job of painstakingly putting up the framework for promoting and monitoring the implementation of good Corporate Governance Practices in SOEs and supporting the development of a cost effective and outcome-oriented public sector. With the help of the WB, it had worked out an action plan that encouraged a gradual approach within a framework that held sector ministries and SOEs accountable, fostered a dialogue among all stakeholders and clearly defined the efficiency gains that must be achieved by each SOE.
Some of the main elements of Action Plan were as follows:
- The classification the Public Entities for e.g, into commercial Public Enterprises and non-commercial Public Entities;
- Updating the Public Financial Management to clarify the ownership relationships between the state and SOEs;
- All SOEs were to have strategic plans and business plans with well-defined Key Performance Indicators;
- Each SOE should conclude a “Corporate Objectives Statement” (COS). This COS must be agreed to by the board and the parent Ministry;
- Improved monitoring using the Parastatal Information Management System (PIMS) to gather relevant, accurate, and up-to-date information to benchmark their performance and monitor efficiency gains and the development of an SOE Corporate Governance scorecard;
- Reform plans for underperforming SOEs;
- a structured process for nominating SOE boards and a register for a Director’s Database for SOEs…
Such work should have been maintained, and we would have had a lesser number of SOE scandals and improprieties in our midst today. Better managed public sector organisations reflect on the performance of Government as a whole. Such institutions as the OPSG were also part of the dynamism that was built by strengthening the capabilities of public bodies to establish appropriate mechanisms to control corruption while ensuring that they move to a higher plane of openness and trust, and, above all, a new sense of commitment to moral and ethical values. Indeed, if we want to see progress, good governance has to be driven and nurtured. The good example must come from above.
* Published in print edition on 7 December 2018