- Category: Economics and Business Forum
- Published Date
- Written by Desmond Dudwa Phiri
Little hinges swing big doors. This is good. Little holes sink titanics. This is bad. The economy of Malawi is like a titanic. There are little holes which if not closed on time could ruin the economy.
We will talk of these holes first before we discuss the essence of efficiency in government.
From time to time, newspapers publish decisions made in courts or out of courts which are crowned with millions of kwacha paid or payable individuals whose rights someone in the bureaucracy had infringed.
One of the commonest infringements in recent times is the termination of a contract before it is due. The dismissed person is usually assumed to be potentially disloyal to the administration though he or she has done nothing to deserve the suspicion. The real reason for terminating the contract is to make an opening for a crony.
In a multi-party democracy, there is room for the American style “sports system”, but when it is stretched too far it deprives the tax-payer the benefits of his or her. The millions could buy drugs or settle accounts of money the drug suppliers awarded are withholding the services because they say the government department to which they had supplied the drugs has left the bill unpaid too long.
I suggest a parliamentary committee should examine the problem of these hefty compensations to see how occasions for these wrangles taking place could be reduced.
The parliamentarians will need an external advisor in this because it is not a matter of pure politics. Rather legal, economic and accounting.
Questions to be asked: If the sum is awarded as compensation is out of proportion to what was provided for in the contingencies do you go ahead and pay it even if in doing so someone you sacrifice the lives of patients in the hospital.
Justice is indeed expensive, but when you cut your own throat or the throat of someone you are supposed to care for them. This is brutal justice. There is no problem if a person earns the million while rendering a service, but if he is paid all, then just to compensate him for the infringed rights, then occasions for such infringements should be minimised.
From time to time, we hear rumours of relatively junior officials paying a contractor to build him a mansion in the Capital City which is rented out. Such person ought to explain how he got that amount. If you shrug shoulders, and say it is his private affair you encourage dishonesty in the public service.
In companies, we say a company is being managed efficiently when the profit and loss account indicates that the company has made profits rather than losses. In other words in a company, profitability and efficiency are synonym.
A government service is not intended to yield profits, but public satisfaction, at minimum cost. This is very difficult to attain.
Efficiency in government demands that the least combination of inputs be used to accomplish any government programs.
A government must have a budget and provide the services according to the provisions of the budget. A budget is a plan for government expenditures and the means of financing those expenditures in a given year. Through the budget, politicians, bureaucrats and citizens interact to propose, debate, approve and finally spend the funds on given items.
Controlling government expenditure is not easy. There are statutory entitlements to the paid even during difficult economic conditions, such as pensions, social security benefits.
Still, parliament should review all the entitlements from time to time and, if necessary, modify them to suit changed times.
Budget authority is the term used to mean the permission granted to a government department or agency to actually spend funds on programmes that have been approved by parliament. Budget outlay is the actual expenditure of those funds for the authorised purpose. The budget is passed in one financial year while the outlay is incurred in the following year. Expenditures rarely match provisions.
Experts on cost cutting in the civil services have recommended the following techniques:
a) Zero-base budgeting under which the bureaucracy must justify the programme at alternative levels. Advocates of zero-base budgeting say that it improves the efficiency of operations in government by forcing bureaucrats to consider alternatives.
b) Cost- Benefit analysis. This represents a practical technique for determining the relative merits of alternative government projects.
There are three steps involved in a cost benefit analysis:
1. Enumerate all costs and benefits of the proposed project
2. Evaluate all costs and benefits in monetary terms.
3. Discount future net benefits
I do not pretend to be a virtuoso in these matters. But those who have mastered them should be consulted in the course of trying to minimise wastage in the provision of government services.