Neither the government nor any of the four public entities investigated by the office of the auditor general had made any public statement so far but the minister of information, Mohamed Bangura, and the majority leader and head of government business in parliament, Ibrahim Bundu, MP, had addressed the issue of government’s decision to look at the possibility of removing fuel subsidies. Minister Bangura had told journalists at his Youyi Building in Freetown that: “Subsidies on fuel are costing the government some Le400 billion annually. In the first half of this year we have spent Le89.5 billion, which could be converted to other sectors,” adding that the money saved from the exercise could then be used to finance other on-going projects.
“Fuel smuggling to neighbouring Guinea and Liberia means our government is paying subsidy for them as well”, he maintained, adding that they had been advised to engage and raise awareness among Sierra Leoneans, but said they were not afraid to make the decision to remove subsidies.
· Deputy Minister of information, Cornelius Devaux, had said that the decision to dispose of government quarters on a case-by-case basis had been reached in a cabinet conclusion in 2001 by the SLPP which was in government at the time. He argues that they were merely trying to make “the process looks fair”.
On 3 September, 2016 the government reached a decision in cabinet to take serious measure to tackle the economic slowdown, proposing several cuts in spending.
The latest statement by the SLPP was in apparent response to the desperate austerity measures, saying they were proofs the government was doing badly.
“On October 6, 2016, the SLPP in a press conference on austerity measures instituted by the government to address economic problem, attributed the dismal economic situation among other things, to corrupt practices including overpricing of government contracts, abuse of duty waivers and high public spending on ostentatious goods.
“The Audit Service Sierra Leone recently laid before Parliament a report on the audit of the procurement activities in selected public sector activities for the period January to October 2015 thereby validating the position of the SLPP. The audit covered 5 government agencies namely, Ministries of Defence, Education, Agriculture, Sierra Leone Police and Western Area District Councils with total actual expenditure (excluding salaries and wages) for 2015 of Le 427.4 billion representing nearly a quarter of actual national expenditure”.
Making reference to some of the key findings in the report, released in September on the government’s procurement activities for the period January to October 2015, and using baseline indicators of the organisation for economic co-operation and development, OECD, to measure overall performance in audit, the SLPP said “there are substantial evidence of breaches in laws and regulations relating to procurement indicative of massive fraud and corruption”.
“Overall the indicator tool showed a score of 1.4 on a scale of 4 (representing 35% efficiency in procurement) compared to 1.8 in 2013 (representing 45% efficiency in procurement). This means a 22% deterioration in efficiency in procurement between 2013 and 2015”, the statement said, adding that there were appallingly poor internal controls such as inadequate segregation of duties, poorly trained procurement staff and weak record-keeping.
The SLPP further complained that there were “evidence of restrictive bidding criteria, unfair application of criteria, excessive price variations, unreasonable ignoring of lowest bidder, excessive use of restricted bidding or sole sourcing, ignoring of technical advice, incomplete and unavailable documentation, specifications tailored towards a predetermined supplier, ignoring some selection criteria among others”, adding that one notable example of leakages from procurement was the overpricing of US$12.5 million (estimated at Le 87.5 billion) for the purchase of arms and ammunition costing US$46.9 million (estimated at Le 328.3 billion).
“The report notes that the procurement process was skewed to deliberately allow for incurring additional costs, thereby preventing transparent, competitive, economical and cost effective procurement. In short, the Ministry of Defence in 2015 cost the public purse an unnecessary US$12.5 million at a time when the government was desperately seeking cash to meet its basic obligations to the citizens of Sierra Leone”.
Please read the rest of the statement verbatim
The SLPP considers the decision to buy arms and ammunition worth US$46.9 million or Le 328.3 billion) at a time we need all resources for post-Ebola recovery and provide basic services for all people not only as misallocation of public money but an act intended for huge kickbacks. To better understand the implications of such decision, the amount for purchase of arms and ammunition exceeds what government spends on fuel subsidy for two years (estimated at about Le 300 billion).
The amount spent on arms and ammunition also exceeds the total budgetary allocation of Le262.7 billion to the health sector in 2015 by about 25%. Additionally, this amount is more than enough to provide 500 new classrooms. With a national average of 50 pupils per classroom, this amount can provide classroom accommodation for at least 24,000 pupils. This will eliminate the double shift system in at least western area.
(v) Another example relates to the purchase of fertilizer by the Ministry of Agriculture, Forestry and Food Security (MAFFS). MAFFS budgeted Le 11.03 billion for the purchase of 21,000 bags of fertilizers as stated in its procurement plan. Had the ministry awarded the contract to Premier Logistic at a price of Le 10.28 billion, a potential saving of Le 756 million could have been made. In addition, it could have cost the ministry US$1,706,400 to purchase 18,000 bags of fertilizer from Premier Logistic. When compared to US$1,142,000 cost incurred buying 18,000 from Royal International, it could have led to an additional saving of US$435,600 (US$2,142,000- 1,706,000) equivalent to Le 2.25 billion. Total potential savings is Le 3,003,000 (Le 756,000,000 +Le 2,247,000). The report states that, had the ministry placed value-for- money at the centre of its decision-making process, a net amount of Le 3 billion of public funds would have been saved.
The SLPP notes with consternation that despite the efforts by the former government to enact the Public Procurements Act 2006 and the Government of Budgeting and Accountability Act 2005, among many others, in order to improve on economic governance, the current Government has persistently abused the provisions in these Acts and destroyed the institutions that were set up under these Acts thereby imposing considerable loss to the state.
To address this malaise, the SLPP calls on (i) the Anti-Corruption Commission (ACC) to speedily investigate all the indications of corruption highlighted in the Audit Reports since 2010 and persecute all those who are directly or indirectly causing such huge loss to government (ii) Civil Society Organizations (CSOs) working on governance and accountability to join the SLPP to ensure the ACC acts on Audit reports.
Sale of Government Quarters
In 2001, the SLPP government suggested in Cabinet to sell government quarters.
After careful policy review, the SLPP government realized it was not in public interest and therefore abandoned the decision to sell the government quarters. The rethink was based on the facts that the sale of government quarters will impose additional burden in the form of rents allowance and reduce the incentive to the Civil Service thereby discouraging sound professionals entering or continuing in the civil service.
About 15 years later, the current government in a callous manner has decided to sell these valuable government quarters in order to raise revenue to finance its administration. The SLPP continues to believe that the policy to sell government quarters is wrong and not in public interest and is only proposed to fill the fiscal gap this government has created for itself. This policy is awesome for the following reasons viz:
First, without the quarters, the government will be forced to pay huge rent allowances which may exceed the cost of repairing these quarters.
Second, it will not encourage new entrants into a poorly paid civil service.
Third, SLPP holds the view that the Government only want to use this as a means to loot state resources. The poor records in procurement is sufficient evidence to show that the sale of these assets will not be without problems. Cronies of the ruling Government will be favored and persons perceived to be anti- APC will be disadvantaged.
The SLPP therefore urges the government to stop this bad policy and instead focus on developing a comprehensive national housing program. The SLPP is prepared to work with government to design a bi-partisan 20-year National Housing Program.
This program should be enacted into law and it will be mandatory on any government to continue implementing it. Also, the fact that the Government has illegally sold many state’s asset, the SLPP also calls on Civil Society Organizations and all well-meaning Sierra Leone to join the national campaign to recover and protect state’s asset.
Removal of Subsidy from Petroleum Products
The attention of the SLPP has been drawn to the plan by this government to remove subsidy on petroleum products. Whilst the SLPP recognizes the probable long-term benefit of this policy, the Party is opposed to it now for the following reasons:
i. First, the timing is wrong. The removal of subsidy will worsen the already growing hardship on the population. In this situation of economic austerity and hardship, with inflation in double digit, any attempt to remove subsidy without any mitigating measures will worsen the already bad situation. The removal will lead to increased transport costs causing ripple effects on other sectors of the economy, notably agriculture which revolve around transportation. Also, there will be increase in cost of small scale business services. These businesses depend on subsidized fuel to render services as public electricity is not reliable and recently made expensive.
Additionally, the removal of subsidy will increase cost of production. Factories and industries that depend on petroleum products and goods transportation will experience some difficulty and have to increase production costs in order to meet market demands and finally will open the floodgates of inflation, thereby drowning all prospects to sustainable development.
ii. Second, the SLPP believes there are many areas in the budget the government can make savings and at the same time continue subsidizing petroleum products.
Eliminating overpricing of goods or inflating of contracts and reduced spending on ostentatious goods such as huge security apparatus and vehicle maintenance can cause substantial savings for government.
A good example is US$12.5 million (about Le 87.5 billion) overpricing of necessary arms and ammunition valued at US$46.9 million as highlighted in the Audit Report on Procurement Activities for 2015. There are many other areas indicated in the report where contracts were inflated. Adding other areas in other sectors outside the report will provide more savings for government to continue to provide Le 150 billion per year and at the same time finance essential social services.
iii. Third, smuggling is used as a smoke-screen or propaganda taunt to divert the attention of the populace that our national currency is on a nose dive. The SLPP is of the view that the current government cannot gloss over the reality-that the purchasing power-parity of the Leone vis-à-vis the Franc Guinean has depreciated considerably since last year by 20%
Until the value of the Leone takes an upward turn the problem will continue to persist not only on fuel but all commodities including rice. With the current rate of exchange the Franc-Guinean can buy more goods in our markets at cheaper cost.
The answer to the problem is for Government to scale down drastically public expenditure that will reduce the awesome budget deficit and reduce the total aggregate supply of the Leone in the market. We are now confronted with the fact that eschewing an ounce of prevention, a pound of cure has become necessary.
The SLPP therefore urges this government to maintain the subsidy on petroleum products by identifying other sources of savings of government spending to finance the subsidy and target it so that more poor people than rich persons will benefit. If this government is to continue with the subsidy removal in line with IMF requirements, SLPP recommends that government institute measures and develops programs to cushion the impacts of the subsidy removal. Such programs can be partly financed by the cut-backs in subsidy. Also, the Party would like to caution
CSOs who have been hired to misinform the public on this policy to stop this practice and encourage more progressive CSOs including the trade unions to campaign against this killer policy.