In the past weeks 'issues' about travel allowances for the Minister of Sports (aka the Triple M scandal) which ended with the Minister resigning for inappropriate use of public funds and two public official being asked to refund $20,000 to the state made me remember two posts I did sometime in 2007. At its basic the posts (The Book of Efficiency, Chapter One Part One and Part two were about using technology to make public expenditure and procurement more transparent, efficient and cost-effective.
Expenditure by public institutions is a huge problem for any government and especially so for the present Mills Administration because it was of the pillars of their election campaign. Technology I believe can be used to address many issues surrounding public expenditure.
In the posts mentioned above (please read them; Part One & Part Two), the UK Government (the US & Canada have similar schemes) designed and deployed an electronic payment scheme for use in Low value, High Volume purchases by Government Departments and Agencies called the Government Purchasing Card (GPC) programme, way back in 1997.
The main problems I see with public expenditure are; Transparency, Control, Efficiency and Cost-Savings.
Government expenditure is usually the trickiest part of governance for any nation because it either creates wealth, improves the health and well being of a nation and protects citizens from harm or it enriches public officials and their cohorts. Transparency i believe is the key to ensuring government spends tax payers money in ways which broadly benefit the populace. If the public does not know what is being bought, contracted for or wasted, how do we approve or disapprove. Electronic transactions by their nature improve transparency and access to financial information about expenditure and reduce the scope for illegal activities.
In the case of Ghana, a similar scheme to the UK Government Procurement Card programme would provide information about financial transactions to several institutions: Ministry of Finance and Sector Ministries (eg. Ministry of Transport); Government Departments and Agencies (GDA eg. Municipal & District Assemblies, EPA, Urban Roads,etc); Financial institutions (Provider Banks, Visa, MasterCard); Scheme Merchants & Retailers.
In the preceding list, the most interesting are the financial institutions. Collusion and corruption between government ministries and its associated departments to perpetuate the $1,000 - $50,000 schemes suddenly must involve some of these public organisations to work flawlessly. Between rigorous audits from international regulators and shareholders, loss of millions of dollars in fines and lost credibility for $10,000 rip-off schemes, most will say, No Thank You!
Electronic transactions may ensure 'The Right to Information Bill' could allow access to expenditure information for monitoring and audits by the public and interest groups because electronic data scale better than paper. Transparency ensures better control.
The main principle in UK was "Relevant financial thresholds set to capture a large percentage of low value purchases with appropriate controls, but minimizing restrictions." Basically controls were set based on the requirements of individual cardholders tailored specifically to suit each department.
The linchpin of this framework [the GPC programme] was an organized series of automatic preventive checks regarding a range of limits on expenditure: the maximum value of each individual transaction carried out by the GPC holder; the card’s period of validity; the cumulative ceiling set for each department or office
In the case of 'Triple M' the person releasing funds under 'Travel Allowance' could not have credited the Minister with more than the maximum of $1,200. In more flexible implementations, payment can occur but will trigger in-built reporting mechanisms. Such control mechanisms ensure ad hoc revisions by cardholders are reduced to a bare minimum and each such allowed overspend is documented and must be accounted and explained.
The key in all this is to provide controls but not to overly restrict the ability of individual cardholders to take decisions within the rules. Control should therefore lead to efficiency.
Efficiency of government procurement is one of the main reasons for the enactment of the National Procurement Act, Act 669. In trying to attain efficiency it must be done in accordance with the legalities of this Act.
Pre-qualifying suppliers, merchants and retailers in compliance with Act 669 and without marginalizing local providers for goods and services procured using government cards can greatly improve procurement efficiency.
Administrative and management efficiency also increases with electronic transactions as electronic data can be manipulated more easily to improve decision making processes about expenditure.
Another area of efficiency is in payment settlement, which for government contracts usually deter the best suppliers and contractors from participating because of delays in receiving payments. Efficient buying and selling reduces costs.
Electronic transactions provide cost savings in a myriad of ways. The most important cost reduction benefit is in reducing the paperwork involved in procuring goods and services by government. This huge administrative burden provides significant cost savings in eliminating paper-based purchase orders and invoice processing, accounting, record-keeping, storage and retrieval of expenditure related data.
Efficient expenditure by procuring goods and services at competitive prices in bulk by government also saves money. Another cost saving usually ignored is brought about by better priced solutions when payment settlement is reliable. When contractors are unsure about payment they increase prices to ensure their profits do not erode when they finally receive payments.
In summary, electronic payments can provide transparency which allows both government and the public to control expenditure leading to efficient spending and reducing costs.