25 May 2014

Liberia Spending Millions On Rental, State Buildings in Ruins

For two successive years, the government of Liberia has experienced budget shortfalls resulting in the streamlining of expenditures and budget cuts for projects, but yet the Government spends millions of dollars on rent, and other expenditures that can be easily be avoided if state owned building are renovated and jointly used by agencies and commissions.

In the ensuing 2014-2015 budget the Government claims it is carrying out austerity measures by cutting down expenditures through limiting spending on recharge cards, gasoline and foreign travels.

"Further steps would be taken to reduce excessive expenditure on goods and services by eliminating scratch cards and reducing spending on fuel and foreign travel. Fuel will be restricted to operational use only; and for all air travel less than eight hours in duration, officials and ministers will be required to fly economy class. The number of foreign trips will also be limited to three per year, with the exception of the President, Vice President, the Minister of Foreign Affairs and the Minister of Finance; and there will be a limit of no more than five members on any travel party" says President Ellen Johnson Sirleaf in her budget address.

Amid the pronounced measures by the government to minimize expenditure, FrontPageAfrica has gathered that the Government is spending more money on rent of buildings than what it will save from cutting down purchase of scratch cards, gasoline and foreign travels. In leases and other short term rent, the Government is pending millions of dollars to private individuals and some institutions.

In the wake of huge expenditures for rent and leases, there are several state owned buildings left abandoned where some have turned hideouts for criminals. Government has failed in eight years to do feasibility studies on the number of state owned buildings completed, uncompleted to match against the cost of completing some if not all of these public buildings for use by government entities against the total cost incurred on rent annually.

It has become a known fact that some of the private buildings being rented by some government entities are owed by relatives and in some instances higher ups of those functionaries of government, who benefit from the money paid in rent and leases and therefore do not prefer cutting down waste on behalf of the government for personal gains.

LTA $1.5 Million Lease

Amongst the huge spending by the state entities on rent, the Liberia Telecommunications Authority (LTA) is currently occupying a building at the cost of US$1.5 million, despite ignoring the advice of the Public Procurement and Concession Commission (PPCC) not having the Ministries of Justice and Finance signoff on the lease agreement signed with a Chinese Landlord in line with the PPC Act, 2010.

President Sirleaf ordered a freeze on the LTA account, but the entity is still operational and the building in question is now in use by the LTA, an indication of a failed attempt by the Government to avoid such huge expenditure for rent for the LTA with less than 500 employees.

The wide pronouncement by the government for cancellation of the contract could not hold water as the ministry of justice, which was mandated by the President as per a Ministry of Information, Culture and Tourism public pronouncement has taken no measure to ensure that contract is cancelled. With the advice from the PPCC that LTA should conduct a feasibility study on the possibility of renovating some state owned buildings or constructing its own building rather than renting for such huge amount of money, the advice has fallen on deaf ears.

Too much money on rent

President Sirleaf upon taking power in 2006 announced that she will ensure that Government is small but efficient, which resulted into the merging of several government entities and the closing down of others and the downsizing civil servants.

But in eight years, there has been increased in state entities contrary to the president's pronounced small but efficient government. There are new entities with undefined functions and in some cases overlapping of functions with existing ones. There is the National Bureau of Concessions (NBC), whose work is yet unknown since its establishment, the Internal Audit Secretariat, which has again been transformed into the Internal Audit Agency and dozens of others.

The Public Financial management Law, 2009 called for the establishment of the IAS as a small body to help management Government ministries and agencies internal controls, but the entity has been made into an agency with more staff and huge budget through an act passed by the National Legislature creating further financial burden for the Government.

NBC occupies a private building on 9th street in Sinkor, same as the IAA which is also in a private building on the United Nations Drive down Monrovia. The Land Commission is also occupying another private building in Jallah Town and several other agencies and commissions of the government. The National Commission on Higher Education which previously occupied the same building as the Ministry of Education is now on its own occupying a building in Paynesville.

Government's spending on rent has quadruple within the last three years as smaller agencies and commissions move to occupy private buildings committing state funds to huge payments for rents. Accordingly, when the act creating these entities are about to be passed into law by the National Legislature, the heads of these entities quickly negotiate with family members or friends for buildings to rent, committing the government to huge expenditures on rent and leases.

LRA $700K rent deal in Play

The Liberia Revenue Authority is about to begin operations by July this year and FrontPageAfrica has gathered that the new entity has negotiated a rent with the National Social Security and Welfare Corporation (NASSCORP) that will see the LRA paying around US$700,000 annually for rent of a portion of the building located at the ELWA junction in Paynesville.

With LRA yet to begin operations to show how it can boost the revenue generation of Government, it has already committed the government to US$700,000 just in rent, a situation that could create further constraints on the national budget. Combined with its staff cost and other institutional expenditure the LRA could just be creating more financial burden rather than helping to boost income.

According to the Government, the LRA will be separated from the Ministry of Finance in order to make the revenue collection more rigorous, but still some of the employees currently involved in revenue collection are amongst the same folks expected to move unto the LRA and until a year revenue collection report is available, committing the government to huge expenditure on a new entity is another liability and a mockery to Finance Minister Konneh's proclaimed austerity measure.

The Finance Minister is cutting down expenditures on scratch cards, gasoline and foreign travels, but yet just one new entity has created an expenditure line item of US$700,000, nearly one million dollars. Rents and leases are fixed expenditures incurred by the Government annually, which can only be reduced when some of these state owned buildings are renovated and jointly used by state entities.

For example the National Housing Building on Ashmun Street in Monrovia can host more than four government institutions when renovated and the combined cost of rent for private buildings by these four government entities can be minimized. The LTA, NBC, IAA and even the LRA can all easily occupy the National Housing building and the combined cost of their rent over a one year period is highly possible to cover the cost of renovating the building to minimize waste. Whatever the case, it is the question of matching minimizing waste on behalf of the state versus paying money to private individuals for the benefit of a few.

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