Govt loses K600bn annually, says Lungu
Govt loses K600bn annually, says LunguBy Joan Chirwa
Tuesday March 20, 2007 [08:45]
THE government loses an average of K600 billion every year through expenditures losses and unreceipted revenues, Transparency International Zambia executive director Goodwell Lungu (right) has disclosed. Making a presentation under the theme: “Is the end of corruption in sight for Zambia?” at a discussion forum organised by the Zambia Institute of Purchasing in Lusaka on Friday, Lungu said the whole government system needed a complete overhaul.
He observed that losses to the national treasury had shot up to K700 billion in 2004, and statistics showed that much of the funds has been lost during President Levy Mwanawasa's administration. He said during the Second Republic under former president Frederick Chiluba's administration, the average losses were around K275 billion a year, but stated that the figures could be even higher since corruption was not widely spoken about that time.
Over a 20-year period to date, government has lost over K2 trillion in unaccounted-for money. “These figures are an indication that corruption remains an uphill battle and that its end is not yet in sight,” Lungu said. He said it was surprising that corruption cases, especially within the government systems, had continued to go up despite massive publicity on the dangers of corruption and its preventive measures.
He said a number of government departments and institutions had not been audited in some cases for over ten years, hence creating room for misappropriation of public funds by financial controllers. "A very good example is the University of Zambia. Last year it had problems and government sent auditors to the institutions but they failed to do the job because they did not find any information needed to carry out an audit," Lungu said. "Because of situations like this, Zambia is nowhere near ending corruption since we are still close to zero." Lungu hoped that the formulation of the Public Expenditure Management and Financial Accountability (PEMFA) under the Ministry of Finance and National Planning would help overcome imprudent financial management.
And Lungu urged the procurement staff in both government and private institutions to guard against corruption. He noted that government was the largest buyer of goods and services provided through procurement processes using taxpayers' money. "Total public procurement is estimated at US $485 million (15 per cent of GDP in 2001). If 10 per cent of this can be saved through better management of procurement policies, the gain to government coffers would be about US$ 83 million (approximately K400 billion)," Lungu said.
He said corruption in public contracting led to a distortion of fair competition.
"If corruption in public procurement is not contained, it will grow," Lungu said. "It is estimated that systematic corruption can add to 20-25 per cent to the costs of government procurement and frequently results in inferior quality goods and services and unnecessary purchases." Lungu noted that corruption was common in public procurement because it was easier to cover up one's tracks. Unofficial payments to get government contracts are also quite widely spread and managers report forfeiting up to 32 per cent of the invoice value to public officials in order to expedite contract payments from the government.
And ZIPS has lined up a number of discussion fora and workshops across the country aimed at educating its members on the benefits of transacting under laid down procedures in the procurement profession. ZIPS executive director Mwape Mutakila said the institution would now be strict on who carries out duties in procurement departments to help reduce corruption cases. "You will now have to be qualified to be in the procurement department. We have had too many unqualified staff in procurement departments. This is denting the profession," observed Mutakila.
Labels: CORRUPTION, INEFFICIENCY
posted by MrK @ 5:22 PM
9 Comments:
This again goes to show how much money can be made (saved) by streamlining the procedures of government payment and income and monitoring those. I think the pressure will build even on Levy Mwanawasa, to actually streamline government procedures, payments systems, etc. It is no different in the procurement departments, than it is at the Ministry of Land.
The inexplicable absence of accountability structures in our agencies are a definite hot bed for corrupt practices and all such sundry. What prevents an ambivalent individual (neither good nor evil) from dipping their sticky fingers in an alluring cookie jar left conspicuously ajar? Corruption is not inherent--but neither is honesty. The average individual is ambivalent and can be swayed either way--self interest, personal comfort, and a cost/benefit analysis being the main determinants. Our friends in Finland and Iceland are not inherently less corrupt (as some racist social scientists tried to posit in the 70’s.) The rigid -albeit not flawless- systems of checks and balances in these countries ensure that corrupt practices will in general, not go without reprisal and this acts as a strong dis -incentive to dishonesty. We cannot depend on the elusive idea of ‘inherent goodness’ to prevent graft in any country, much less in a country like ours, where the temptation to steal is intensified by the need to subsidize one’s paltry wages.
" The rigid -albeit not flawless- systems of checks and balances in these countries ensure that corrupt practices will in general, not go without reprisal and this acts as a strong dis -incentive to dishonesty.'
Actually no. It is transparancy and accountability, not deterrence that make systems less prone to curruption.
And I don't think that anyone is working on the principle of inherent honesty either.
What is needed is a electrification of government. Let all payment of government workers be done electronically. That way, there is no excuse for any delay in payment. There is no reason why any government employee would be paid one day late, let alone months or years late.
There is no reason why government suppliers shouldn't be paid on delivery, including the farmers.
‘It is transparency and accountability, not deterrence that make systems less prone to corruption.’
I think you will agree with me that accountability (crudely defined as the duty to give an accounting vis a vis a responsibility bestowed) has a strong deterrent effect: the certainty that you will be called upon to ‘balance the books’ and account for your actions is a definite constraint on dishonest behavior.
‘And I don't think that anyone is working on the principle of inherent honesty either.’
Consciously no, but when we fail to put effective accountability measures in place, and then act bewildered/incensed by corruption, what we are essentially saying (by logical inference), is that despite the absence of these controls and constraints ,we expect/believe that people will still not behave corruptly i.e. people will be inherently honest. While the ‘inherent honesty’ thesis is blatantly unpersuasive, in practice this is precisely what we demand of our bureaucrats.
I have to agree with Kate. As I said in one of my blogs http://zambian-economist.blogspot.com/2007/02/getting-best-from-poor-bunch.html
The best way to tackle corruption is clearly defined rules of the game. I do not believe that you can rely on "inherent honesty" or what I call the "dedicated fellow hypothesis" to resolve the problem. What is needed are clear checks and balances, and of course in line with Kate's assessment, a credible threat i.e. clear penalties.
One blogger told me that the government ministries aren't even computerized.
In such a situation, talking about deterrence is like talking about the man on the moon.
People who break the law don't do so because they don't fear punishment, but because they don't fear getting caught.
Clearly delineated systems make corruption more difficult, which is all one can strive for.
"People who break the law don't do so because they don't fear punishment, but because they don't fear getting caught"
They fear punishment, but they know they won't get caught!!
lol!!
Both are important!!
Put it this way, when a person decides to steal, they look at the expected benefits of stealing against the expected cost of stealing.
The expected benefits are obvious.
The expected cost of stealing is simply the probability of being caught times the the penalty incurred if caught.
So you could dissuade a person stealing in two ways: either raise the cost of being caught (through raising the penalty) and keep the probability of being caught the same, or increase the probability of being caught and keep the cost of being caught the same.
Clearly if the probability of being caught was zero, no matter how high the penalty was, it would not be enough to stop a person stealing. And similarly, if the probability of being caught was very high as you advocate, while the penalty was very low, it would have no effect.
So you would see that there's a case for both improving systems and raising the penalty.
CHO,
" Put it this way, when a person decides to steal, they look at the expected benefits of stealing against the expected cost of stealing. "
Sometimes yes, sometimes no. If they have a starving relative, or need to buy medication they can't afford, they may not care too much about the likely outcome.
Or if there is an extringent circumstance, like during Katrina, it is actually the moral thing to put human life above property rights.
However, many crimes are committed at the spur of the moment, over Christmas dinner, when people are forced to be in a confined space with eachother.
My point is that there are many reasons for crime, and 'corruption', and that deterrence is much liked by politicians, because locking up the odd individual is actually the cheap way out.
In the case of Zambia, streamlining payment and archiving systems, actually leads to a loss of opportunities for corruption, and therefore the political power that goes with that - senior politicians can no longer reward loyal supporters with the opportunity to loot.
And then there is the big corruption. Someone has taken bribes to sell the mines at these terrible prices and conditions. But who is going to punish the corporations that benefited from that and who paid the bribes?
Their only punishment is nationalization.
I am beginning to see that our disagreement on this thread is purely semantic.
According to Mrk…
‘People who break the law don't do so because they don't fear punishment, but because they don't fear getting caught.’
The fear of punishment and the fear of being found out are twin characteristics of Deterrence. The definition of deterrence then, is in fact dualistic; it includes not only the fear of punishment but crucially also includes the perceived probability of being caught. (There is numerous support for this in the literature) When I used deterrence I used it within the context of its broader holistic meaning. Just thought I should clear that up.
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