Reform Failure

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By Festus Poquie

President Sirleaf
President Sirle

Following more than a decade in office President Ellen Johnson-Sirleaf is witnessing the crashing of several governance and economic reform programs and policies adopted in post conflict Liberia.

Since 2004, with the assistance of international aid, Liberia had benefited from numerous reforms principally introduced to address century old economic mismanagement and bad governance, which had generally been considered the causative factors for the country’s bush war that killed nearly  half a million people and damaged infrastructure to ground zero.

In the financial sector there exist the Public Finance Management and the Public Procurement and Concession laws designed and approved to ensure fiscal discipline, accountability and openness in public financial transactions coupled with deriving efficiency, economy and value for money relative to government’s procurement.

While setting up these schemes was promising news, its effective implementation has been disappointing with public financial transactions in many instances still bearing the outlook of pre-reform era.

On 28 March, 2015, International Public Finance –Matt Andrews made the following assertions about public finance regime in developing countries with a conclusion that it was introduced to mainly gain international legitimacy.

“Governments from Afghanistan to Liberia and Uganda showed improvement on overall measures of PFM processes – like Public Expenditure and Financial Accountability (PEFA) scores.

“But these governments often lacked better outcome scores on these and other indicators – budgets were not more reliable than they had been in the past, and money was still not flowing effectively to foster the kind of service delivery countries needed,”

Other components of the PFM regime include: MTEF (Medium-Term Expenditure Frameworks), IFMIS (International Financial Management Information Systems), and IPSAS (International Public Sector Accounting Standards).

In spite of these reform instruments, there continue to be documented instances of financial mismanagement and corruption. Officials sidestepped the law, causing the country to lose millions of dollars intended for national development.

More than hundred audit findings The New Democrat has reviewed from the General Auditing Commission Audit point to systematic abuse of the PFM and adopted accounting standards.

The situation is the same with the Public procurement law, which appears to be virtually non existence. Officials are ignoring the law, siphoning public money and doing so with impunity in some cases.

The use of the sole sourcing Method of procurement has been cited as a porous root for procurement fraud. When taking over as Executive Director for the PPCC in October, 2014, James Dorbor Jallah promised to crackdown on such practice.

“Let this be known that PPCC under my leadership will not cooperate with those who will seek to defraud the system by creating unnecessary emergencies, so as to seek the approval of the Commission to utilize the sole source method of procurement, which is prone to corruption, “he said.

In its Analysis of the statistics from supporting document, the PPCC  said in its first monitoring report of 2006  that 90% of the procuring entities did not comply with the ACT of 2005 and that the sole-source method of procurement which eliminates competitions was over used by many of the entities.

On 27 May 2015 the Chair of the House’s Committee on Contracts, and Concession announced that 75 percent of procuring entities were acting outside of the PPC law.

The Public Procurement and Concession Commission itself as a regulating entity has been underperforming with evidence of failure in detecting, investigating and sanctioning abuses and abusers of the law.

In 2010, the procurement house and other public officials were embarrassingly linked to a scandalous carbon credit deal between Liberia and a British company – Carbon Harvesting Corporation with report that million dollars was accepted in bribe and 400,000 hectares of rainforest were granted the company in return.

T. Nelson Williams – ex managing Director of the Liberia Petroleum Refining Company entered into a US$13million contract with no respect to the procurement law. At the Ministry of Foreign Affairs procurement and financial laws and regulations were ignored, leading to more than a quarter million United States dollars being squandered.

President Sirleaf in January, 2015 State of the Nation address called for changes to be made to the procurement law. Judging from the output of these reforms, it leaves the impression that they were introduced into the financial governance sphere to lull the nation into a false state of accountability, transparency and fiscal probity.

Security sector Reform

At the end of the civil war, the security sector was one key area urgently targeted for reform. It succeeded in the dissolution of the national army and security apparatus and building of new security forces. Individuals were recruited, trained but the strength and quality of the Armed Forces of Liberia, Police and Immigration remain appalling.  The army is experiencing high attrition rate with pitiable moral.

A 2015 Senate document analyzing the situation would revealed that  Liberia security forces received incomplete training from inexperienced trainers hired to reform the country’s police and military, thus the nature of their training is to blame for the unfolding scale of poor judgment and brutality being meted against civilians.

“Considering the behaviors and attitudes of the Police and Soldiers which reflect the kind of discipline they were mentored and or impacted with, for example, at the NPTA, it was forbidden to teach discipline and courtesy as a course and I am told was the same for the military; the emphasis was on human rights, failing to know that discipline and courtesy prevents human rights abuses. Courses such as the police geography, diplomatic immunities and discipline and courtesy, which could reinforce institutional memory, were not taught,” Senator   Stephen J.H. Zargo, Chair of the Senate Defense and Intelligence Committee indicated in his security sector analysis.

Based on the observed shorting comings of the Security Sector Reform Process, the Senate Defense Committee Chair- who served the Liberia National Police as it Intelligence chief has called for the review of the program.

Oil & gas reform

With immense prospects for Liberia’s hydrocarbon sectors, the Johnson-Sirleaf administration announced it has effected reforms in the industry.

The President positioned her son – Robert Sirleaf at the helm of the reform process, netting millions of United States dollars from various multinational oil companies, via signatures fees, licensing and geo seismic data information sale.  But soon after his departure, the National Oil Company of Liberia has melted into bankruptcy occasioned by financial mismanagement and waste. The reforms the President praised her son for had crashed and she has ordered its reorganization.

Electricity Reform

The President was elected to office on the back of a promise to provide electricity in six months from the date of inauguration. It did not happen.

And in 2010, the Johnson-Sirleaf administration, with technical assistance from the International Finance Corporation (IFC), agreed to a management contract with Manitoba Hydro International (MHI), a Canadian firm. The management contract would allow the Canadian firm to take charge of LEC’s operation. The European Union, Norway, USAID and the World Bank, provided an initial amount of US$53 million for MHI to expand the electricity distribution system and improve services in Monrovia and its surroundings

Molley O. Kiazolu, the Director for Direct Taxation at the Ministry of Finance and Development Planning analyzed and rated the electricity reform in policy paper published 18March 2015.

Mr. Kiazolu: “Access to electricity remains a major challenge for Liberia’s economic recovery despite recent efforts by the government to reform the sector. This paper assesses the post-war reforms of the electricity sector relative to their outcomes – accessibility, affordability and the quality of electric power. The paper also evaluates Liberia’s electricity sector reform by comparing it to reform in Cote d’Ivoire. The paper argues that existing reforms do not adequately address the underlying challenges facing the electricity sector. Both productive and allocative efficiencies remain low amidst excessive government influence, and investment in infrastructure is grossly inadequate compared to regional benchmarks. Presently, electricity is one of the major, if not the single largest, cost for businesses in Liberia, and less than one per cent of households are connected to the public grid. This paper offers some policy recommendations to improve efficiencies in the sector. First, that the electricity sector
be restructured; the Liberia Electricity Corporation (LEC) should be reorganized as an independent economic regulator, while the Ministry of Lands, Mines and Energy (MLME) should perform the legal and social regulatory function. Second, the sector should be unbundled into power generation, transmission and distribution, and each component privatized through competition for the market. Third, that as an independent economic regulator, the LEC should adopt cost-of-service regulation to encourage long-term and sustained investment in power generation and transmission, thereby improving access to electricity.”

This month, Senators have been debating full privatization of electricity, meaning the previous policy has been unsuccessful.

Other reforms that have been crumbling include those on the forest, and civil service. From 2005 to present, there has been two (Land Reform Act, Community Rights Laws) separate laws governing the forest sector with no success. The Third Community Rights law is being debated.

Anti Corruption Agencies

President Sirleaf was a lead figure in the creation of several transparency entities in the country, but in her presence these anti corruption institutions in the country are showing fading signs.

They were established to serve as corruption watchdogs statutorily obligated to prevent, investigate and apprehend fraud but appear passive with respect to   mandates.

For instance, the Liberia Anti Corruption Commission is empowered to investigate all corruption related matters in the country either real or based on suspicion and to design systems to track fraud and prosecute perpetrators.

The same is with the General Auditing Commission, which has the legal right to audit all government’s entities and financial transactions.

Also, there is something called the Internal Audit Agency (IAA). This agency is an autonomous government body responsible for internal audit functions within the public sector. Its mission is to help government accomplish its objectives by bringing a systematic, and disciplined approach to evaluate and improve the effectiveness of risk management, internal controls, and governance processes.

Auditors  from this agency focus on 10 key areas including, human resource management, bank reconciliations, procurement controls, asset management systems, accounting and budgetary control systems, pre-audit of disbursements, prior audit recommendations, time processing efficiency, deliverables validation, and revenue management system.

Despite the existence of these public institutions that are notables offshoots of post conflict public finance and governance reform programs, NOCAL crumbled into financial mismanagement undetected. And even after the mess had occurred, they have demonstrated no known willingness to probe into possible financial wrongdoing and economic crimes. On the other hand the Central Bank of Liberia has been resisting audit and no action has been taken to compel its compliance.

If measures are not instituted to address the troubling state of reforms and governance in the country, the next administration, comes 2018 will start from ground zero, illustrating waste of donors’ and national funding. Writes Festus Poquie