Mohun Kanhaya

The Guy must go!

 

— Mohun Kanhaya

 

We saw it coming. And the chickens have finally come home to roost. We were given some preliminary warnings that the whole structure at the Ministry of Finance and Economic Development (MOFED) was not just dysfunctional but non-functioning but we kept hoping that it would be able to reform itself to see better days.

But the recent piece of breaking news about the falsification of documents by junior officers of the Ministry appears to be the last straw that is revealing the cracks in the system — nothing but the result of a long culture of arrogance, me-knows-everything and poor management!

 

 

What is at issue at the Ministry of Finance is not the accumulation of blunders and unprofessional behaviour; it is the strikingly inept management of the Ministry that has been allowed to carry on unchecked for years. The Ministry suffers from the gaffes that are made by political appointees, ardent proponents of the TINA (There is no alternative) policies — people who believe that, no matter what they do, they will get away unscathed.

It is this lack of accountability that has contributed to a series of one-man shows, unilateral decisions, economic policy failures and blunders that reflect a lack of understanding of the dire realities of public policies and administration. They have started by flouting the rules and regulations and procedures of the PSC and the Civil Service. Protégés, who were quite junior and inexperienced officers, were promoted to position of authority and those who were not toeing the line were transferred away. Ad-hoc allowances, selections to Boards and overseas missions were given to protégés of the inner circle without any transparent selection criteria; these doings went against the procedures and best practices in other departments and institutions. Special budget allowances, which had earned the reprimand of the Director of Audit, were distributed generously to protégés — to the extent of Rs 100,000 — for budget work which is one of the main duties of the officers of the Ministry while denying to other officers of the Civil Service their hard-earned overtime.

We then had a plethora of experts under Capacity Building and Service to Mauritius that were costing more than Rs 50 million per year. (With a maximum salary for local recruits of Rs 200,000 per month all inclusive and up to US$10,000 monthly for international recruits, it is alleged.) The biggest joke at the Ministry that was making the rounds during that time was that, given the wave of recruitment of consultants in different areas of “expertise”, including Office Administration and Management of Financial Secretary’s Office, the office attendants, especially those serving tea, would have to be assisted by an international consultant soon.

You recall the Rs 233 million package to Microsoft for software licenses; the clearance to sign the deal with Microsoft was not obtained from the Ministry of Information and Communication Technology (MICT) or the Prime Minister’s Office (PMO) or IT specialists. This contract concerned the purchase of 7000 licenses Microsoft for personal computers, 28 000 customer Access Licenses and 16 servers. The intrigue turns around the rapid decision of the Treasury to sign this contract, on 27 June 2008, on behalf of the MICT. More serious, in mid-June 2008, this ministry had flatly refused to affix its signature to this contract. The motive invoked to justify this reservation was unambiguous: « It is a waste of money! ».

After this big fiasco, we had some more of the same — those of the hedging sagas. Under their watch, unsound hedging activities at Air Mauritius and STC swallowed billions of rupees and burdened the national debt. The Ministry of Finance is supposed to have representatives on the Board of our national airline, the CEB, the NTC and the STC and other non-performing parastatals to precisely have an oversight over such financial issues. These same officers are being rewarded with hefty ad-hoc allowances while our lambda citizen carries the burden of the mismanagement and hedging losses.

Similarly in the case of the stimulus packages, the officers of the MOFED failed to properly monitor or impose any restructuring plan on the recipient firms. There were very little measures to improve the competitiveness of labour and capital in both the short and long term. A more visionary leadership would have implemented an emergency response while laying the ground for long-term measures… The TINAs ended up approving millions of rupees to doubtful lame enterprises while acknowledging that they were not sure of recouping our money! Individual enterprises were thus allowed to feather their own nests with cash. It is just a transfer of wealth from the public purse to the private sector with absolutely no influence whatever over what they do.

The TINAs promised us a lot on fiscal consolidation and proclaimed high and loud all kinds of golden rules for the budget, which they were themselves, the first to flout. With much improved tax administration, higher economic growth has automatically brought more revenue under VAT and other taxes. Yet, fiscal revenue as a proportion of GDP has stagnated at 20% of GDP, despite the breast-thumping of the TINAs. A simple yardstick of competence of successful fiscal consolidation is the extent to which fiscal revenue has been strengthened, not in absolute terms, but as a proportion of the country’s total income. The TINAs were able to reduce the fiscal deficit by slashing capital expenditures sharply. A mark of a performing technician, besides strengthening revenue, is to reduce the proportion of current spending as against capital spending. Instead, they did the opposite, and put the burden of fiscal adjustment on capital expenditures, which are sorely needed to boost the country’s infrastructure.

The MOFED, singularly incapable of a proper understanding of the present policy issues, is absent on all fronts, be it the strategic plans of Ministries (MOH for e.g.) or of parastatals (such as the NTC for instance), the Tertiary Education Commission ( such as its Open and Distance Learning Policy for instance), energy and food policy, the innovation, diversification or democratization of the tourism sector or the MID project… you name it. This was an important role that the dismantled Ministry of Planning and Economic Development (MEPD) was assuming with brio and authority and also in taking initiatives in policy reforms and advocacy. The MEPD was also giving its views on important policy matters that would come up. Unlike other ministries, it did not have a vested interest and so could be expected to give an unbiased opinion.

Why has MOFED fallen so low? Because most of the analysts have been castrated into mere number-crunching Finance Officers within a structure that has mainly a short-term budget focus. Economists have been reduced to glorified finance officers carrying out mainly mundane day-to-day administrative work and the routine fire-fighting of line ministries. One of the building blocks for policy is strong research skills. The TINAs do not believe in research; they dismantled the Economic Analysis and Research Section (EARS) of the earlier MEPD and for more than five years now the Documentation Centre of the Ministry has not purchased any economics book — not even a cheap version of the bestsellers ‘Freakonomics’ or the ‘Money Mischief: Episodes in Monetary History’ or ‘Fair Trade for All: How Trade Can Promote Development’ and so on. Unbelievable that our friends at MOFED were starved of food for thought for more than five years!

We are indeed concerned that there has been an erosion of the capacity at MOFED for research, analysis and evaluation, even though these are the very skills that underpin the fresh thinking that has the potential to resolve national problems. Only a genuine “redynamisation” of the planning function in MOFED will enhance the breadth and depth of the policy, leadership and management skills needed at the Ministry and reinforce the capacity of economists to provide strategic policy advice. Only such a redynamisation will provide for an integrated and consistent macro-picture and framework for policy analysts in allocating public investment, for designing implementation strategies to see that outcomes are realised cost-effectively. It will of course have be supported by an effective monitoring mechanism to monitor and evaluate service delivery from both a financial and non-financial perspective and to see that targeted outcomes are in fact realised. A more medium- to long-term view would thus enable the policymakers to see holistically the big picture and achieve a proper cohesion in their vision, strategies and implementation capacities. For all this to happen the Guy must go! We are not getting value for money.

 

Mohun Kanhaya

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