3 February 2013

Liberia: 'Creative Corruption' On Rise - CDC Says More Govt. Money Goes To Private Pockets

Inks have hardly got dry on the nearly 30-page state of the nation address delivered by President Ellen Johnson Sirleaf when analysts, pundits as well as political opponents got into action; some lavishing praises on the President while others continue to plow the gray areas. Over a week going, the public looked to the major political actors, specifically the Congress for Democratic Change (CDC) widely considered the largest political party, for comment on the President's address. Hopes were nearly running out on whether or not the party had anything to say when yesterday it cited journalists to announce its verdict on the President's statement. Largely, the CDC acknowledged several of President Sirleaf's perspectives on the state of the nation but came a thousand miles apart on the state of corruption and the prudent management of scarce national resources. The Analyst reports.

Virulent Critique

The Congress for Democratic Change has expressed dissatisfaction over the failure of President Sirleaf to contain the waves of theft and plunder of the country's treasury by public officials. Lauding the President for ensuring the enactment of "good laws" since her incumbency, the CDC said the President has failed to stop public officials using "creative ways" to siphon money out of nation coffers at the disadvantage of the impoverished majority of Liberians.

In a well-attended press conference yesterday (Sunday, February 3, 2013), the party said corruption remains a significant threat to poverty reduction and national development, urging President Sirleaf to review the performance of the LACC and proposing that the National legislature summons hearings on the LACC.

According to the CDC, the hearings will seek to expose weaknesses in the current anti-corruption law, conjecturing the law as currently written does not give the LACC sufficient legal force or mandate or perhaps that the LACC is beyond the pay grade of its current administrator who needs to be replaced.

The party contends that public spending has to be pro-poor and wonders what factors are underpinning this low impact of the Sirleaf administration's spending regime.

"We posit the following factors. One, the size of the leakage due to endemic corruption may be large so that a huge slice of public spending is being siphoned into personal projects," the CDC said in a statement emailed to The Analyst. "Corrupt public contracting and other forms of 'creative corruption' are on the rise and are undermining poverty reduction."

While the President is correct that patterns of corruption are ingrained in the nation's social fabric, the party asserted, her inability to act decisively in cases of corruption has driven a moral hazard.

"Corrupt government agents who know the President will not act decisively have an incentive to continue," the party further stressed, adding: "This is why strengthening the LACC and building an effective collaborative platform against the corruption menace are serious presidential responsibilities."

The party also postulated that "it may be that a significant portion of development aid--the portion not under the control of the Liberian government--does not reach the poor. Anecdotal evidence appears to suggest that administrative costs on aid resources administered by NGOs are as high as 70%. This is unacceptable."

The party called on the Government of Liberia, in partnership with donors, to remedy this situation, as "a huge chuck of public spending appears to be frittered away in inefficiencies and waste. Fiscal authorities should to ensure public spending rides an optimal trajectory: the country is challenged to squeeze the maximum bang out of the marginal dollar spent on the poor."

While commending the Executive and Legislative branches of government for numerous laws passed over the years, the party said, passing legislation is only one part of the legislative agenda but the ability to effectively enforce and oversee legislation is probably the most important component of governance.

The party said the problem of the current governance system is the lack of effective oversight of the laws intended to improve the lot of the people but in most cases they turn out to be weakly enforced.

While the CDC says it does not dispute the facts and gains alluded to by President Sirleaf in her state of the national address, it wonders why these improvements in statistics have not translated into measurable impacts in the lives of ordinary Liberians.

The Party argues: "The President is correct that the proportion of Liberians living on less than US$1.00 a day dropped by 7.5 percentage points between 2007 and 2010, from 63.8% to 56.3%. When viewed from the perspective of the US$1.6 billion expenditure on the Poverty Reduction Strategy (PRS) over much the same period, getting 7 out of every 100 Liberians from below the US$1.00 poverty mark is extremely troubling. This means that for the each of the three years of the PRS I (2008-2011) the country spent about US$533 million per year, on average pushing about 2 out of 100 persons over the poverty line. If public expenditure of US$533 million cuts the rate of poverty by only about 2.5 % annually, the UP administration is experiencing a crisis in public expenditure management of monstrous proportion. The President, National Legislature and Development Partners who have contributed a lion share of these funds in Official Development Assistance (ODA) must establish strong partnership to understand the low impact of public spending on the poor.

The CDC says considering the high level of corruption that has been, and is often, associated with infrastructure projects--corrupt contracting and procurement—it is proposing power, road development should no longer be the exclusive preserves of ministries and agencies dealing with power and roads respectively.

"We propose a multi-sectoral governance framework, bringing all infrastructure ministries and agencies around the table with the private sector and civil society. Under this model the design and choice of infrastructure projects and the management of their implementation are collectively owned. Issues of contracting and procurement involve multiple actors, significantly reducing the incidence of '10% get-back' arrangements in contracts and promoting public ownership of infrastructure projects."

Aura of Commendation

The party did not only criticize; it also acknowledged multiple areas of the President's annual message that speak truly to the state of the nation.

"The CDC is thankful to both the President and the 53rd National Legislature for continuing in this tradition in passing the many pieces of legislation, including those that the President has announced sending to the Legislature for possible enactment. The party named the bills as the Bill Creating a Special Economic Zone; a Bill to Merge the Ministries of Planning and Finance to create the Ministry of Finance and Development Planning; A Bill Establishing the Liberia Revenue Authority, disaggregating the Revenue Division of the Ministry of Finance to establish a new autonomous Revenue Authority; the Gender Equity Bill; The National Pension Bill; A Bill to Ratify the Treaty on the West African Power Pool that expands electricity to all four Mano River countries; A Bill to Ratify the United Nations Optional Protocol to the Convention on the Rights of the Child on the Sale of Children, Child Prostitution and Child Pornography; A Bill to separate the land function from the Ministry of Lands, Mines, and Energy to establish an agency with a focus on land matters; An Anti-Drug Bill; a new Police Bill; A Bill to Establish within the Ministry of Justice a Bureau for Child Justice; A Bill to Establish a National Tourism Authority; A Bill to Establish a Special Fast-Track Court to handle Corruption Cases, but which will have non-exclusive jurisdiction over such cases"

CDC acknowledged that there is consistently improved revenue performance and stringent limits placed on borrowing which it described as hallmarks of effective public financial management.

The party asserted: "The CDC commends the adherence to limits on borrowing as enforced by the Cash Management Committee. With a 2012/13 annual budget in excess of US$672.00 million, a more than 700% increase over 2003 revenue levels, the UP administration aided by international financial strictures, has assured massive improvements in the nation's fiscal governance."

According to the Party, "the passage of the Medium Term Expenditure Framework (MTEF) budget, which affords multi-year planning is praiseworthy, as is the fact that financial authorities were able to save more than US$105 million in recurrent expenditure over the previous 2011/12 budget year, resources that have now been applied to public sector investments in youth development, capacity building, national reconciliation and infrastructure development. The US$15 million investment in youth development is particularly noteworthy since it aims to impact vulnerable youths who are generally not employable."

However, the CDC has asked the Ministry of Finance, "which sits at the fulcrum of these public investments, to ensure US$15 million reach targeted beneficiaries. We are heartened by the launch of the Open Budget initiative which affords greater public scrutiny of government expenditure."

The party says it is equally encouraged that the Central Bank of Liberia (CBL) continues to assure monetary stability and to keep inflation at the moderate 7% level.

The CBL's intervention in the microfinance sector is also noteworthy, the party asserted, adding: "We believe the CBL will have to do more to ensure the financial sector provides long-term credit to Liberian-owned businesses. Short-term loans run contrary to aims of long term economic development. The CDC is prepared to offer its expertise to both the Ministry of Finance and the CBL to develop these programs."

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