Confronting Corruption- An Effective Approach

By Paul C. Collins


The Perspective
Atlanta, Georgia
May 13, 2006


President Ellen Johnson-Sirleaf has made corruption her administration’s public enemy number one, and has convinced the electorate that high on her priority of reforming the government is tackling corruption head on. Very recently the president is reported to have strongly admonished her cabinet to take concrete action to weed out corrupt practices and officials, stressing her displeasure at what she calls the slow pace at which the phenomenon was being dealt with. There is even talk that there could be a cabinet reshuffle in those ministries that were perceived not to be taking a proactive role in dealing with corruption.

The challenge however is really about how to deal with corruption, as opposed to the lack of will power to tackle corruption. This author is convinced that almost all government officials would like to be seen to be tackling corruption head on, but are a little lost on how to even begin. A cabinet minister (name withheld) even told this author that corruption was a cultural phenomenon, suggesting that there had to be a radical paradigm shift before corruption could be curtailed. But paradigm shifts are like a metamorphosis – they do not happen; they are driven by agents of change (Thomas Kuhn, 1962: The Structure of Scientific Revolution).

Some ministries and agencies have begun what we are being made to believe is a war on corruption: they are firing as many people as they can fire and creating panic in the workforce. The result is an exacerbation of our already dire unemployment situation. It is however unclear what the firing and hiring criteria are. Some people are being fired because they were political appointees; others because they are excesses; and still others because their positions are needed by the new appointees of the new administration. It remains to be seen whether this is an effective approach to combat corruption.

Editor's note: Ministry of Commerce charges L$10,125 to register a business, but gives you flag receipts for only L$8,200. It is not clear why the balance L$1925 is not accounted for.
For this author, however, it is important to critically look at the causes of corruption in Liberia before one can embark upon any anti-corruption strategy. In one of the author’s Public Sector Economics lectures, a group of his students made a presentation on the Civil Servants Wage Bill and began their presentation by making the case that a civil servant whose minimum necessary cost of living for any month was L$10,000.00, but legally earning L$800.00, had a 92% (9200/10000 x 100) vulnerability rate to corruption. The point was that this employee would have to make up the extra necessary sum of $9,200 to survive during the given month.

The extra income of $9,200 could easily come from remittances from family and friends abroad, petty trade or some other sources. It could also well be from corrupt practices. Wherever it comes from, the fact that the government does not pay a living wage to this employee makes it highly (92%) probable that this employee will be corrupt. Will you fire this employee for doing the necessary to stay alive, if you don’t pay him or her a living wage? Will his or her replacement settle for the same salary without being so vulnerable to corruption?

If corruption is blamed largely on our culture, then the fact that comes to mind is that like our local employers and government, our international partners are also guilty of creating and fostering an environment that necessitates corruption because most of them pay below the living wage threshold, as they mostly design their compensation plans to match what is obtaining in the market, rather than a consideration of the prevailing economic realities necessary in the computation of any remuneration package.

Fighting corruption in Liberia has to take a wholistic approach, well crafted from the onset before actual implementation. Begging for time is not the argument here. However, one would have thought that any government coming into office would have by now some sort of framework for dealing with corruption. Key in this strategy would be restoring the dignity and humanity of the labor force while simultaneously demanding greater accountability and efficiency. The two have to go hand in hand. Leaving out one makes the one left out (or postponed) in a precarious situation which creates a time bomb that is bound to explode sooner or later.

Running a government is not like running a private business enterprise. The former is responsible for keeping unemployment at an acceptable level and ensuring the welfare of the citizenry, while the latter could care less since their primary objective is to maximize their returns on investment. Firing people just for the sake of reducing cost and maximizing net revenue is not a justified public economic policy. However, if employees must be fired to enhance efficiency and effectiveness and curb corruption, then a viable income redistribution mechanism must exist to transfer income from the employed to the unemployed. There should also exist a private sector capable of absorbing the fired or redundant employees.

An easier and more realistic alternative (not necessarily mutually exclusive with that in the preceding paragraph) considering our circumstances in Liberia could be a redundancy package sufficient to promote micro enterprises. This could be facilitated in collaboration with our international partners and local banks, and designed with a monitoring component and other business support mechanisms to increase the success rate of such a program.

Additionally, those remaining in employment cannot be left to receive the same insulting salary packets that reduce them to the sub-humans that they have been reduced to. Instead, budgetary allocations should prioritize paying civil servants a wage that reflects their qualifications and skills, their level of responsibilities, and the economic realities in the country. Of course this would require sacrificing other priority programs, and also a funding source adequate to keep the government solvent. Inflation will also be a factor to consider, and the burden on monetary policy is surely to increase.

However, by prioritizing salaries, fiscal policy will be expansionary, and will directly affect every sector of the economy. No doubt, an expansionary fiscal policy is necessary for our economy because the economy has contracted over the war years to a level today that is unacceptable and unreflective of the needs of the citizenry. The government and her partners accept that an expansionary fiscal policy is necessary to rebuild the country, but so far that expansion is not being immediately directed to improve the welfare of the citizenry, but rather being targeted at building roads and other (important) programs such as education, health and debt repayment.

The current Liberian budget cannot support a normal civil servants wage bill while at the same time fund these other programs. However, our international partners are already greatly involved in all the programs that the government also needs to address. Since the government cannot address these programs adequately even if it chooses not to pay salaries, some sort of collaboration and coordination should be worked out with our partners so that the government concentrates on those budget items that our partners will not assist us with, leaving the partners to assist in the sectors that they are comfortable with.

For example, most of our partners will not pay the Liberian civil servants wage bill because their rules do not allow them to do so. Their rules however will allow them to support the health programs in Liberia. Some sort of bilateral arrangement, even if it requires some matching contribution in whatever form, could be worked out. This way, the government could do some things properly such as paying normal salaries. This argument emphasizes the need for better communication and coordination between the donor community and the government. The donor community needs to align their strategies and objectives with those of the government’s, and seek a greater collaborative effort in the implementation of their programs.

Paying normal salaries will however lead to inflation and some currency exchange difficulties. However, with a robust monetary policy response the possible overheating of the economy can be contained. For instance, monetary policy could be tightened. The government could also require that salaries be paid directly into bank accounts for employees to help manage the quantity of money in circulation. Through the commerce ministry some sort of price control could be imposed on essential goods and services. The central bank could also become more proactive in the currency exchange market.

In a typical Keynesian fashion, one would expect the increased demand due to increase in the purchasing power of the citizenry to encourage more investment in the country and therefore lead to improvement in the supply side of the economy. Micro enterprise has already been mentioned as a program that can be tied in to the civil servants wage bill reform. More substantial investment activities will also follow suit, especially if the environment is made to be conducive and accommodating enough.

Having made the case (I hope) for prioritizing the reform of the civil servants wage bill in the strategy to combat corruption, the other focus could be on ensuring that the intent and spirit of GEMAP is fully supported to ensure that GEMAP succeeds. The Finance Ministry is already making progress in this direction. The international controllers funded under GEMAP are also now taking up their posts at the various state owned enterprises.

However, the results framework expected includes an identification of all government revenue sources, an expansion of the revenue base through creative thinking without necessarily increasing the cost of doing business with the government, ring-fencing the revenues through proper internal controls and accountability systems, and a customer service program that will ensure customer satisfaction.

The expenditure side of the coin should look at the predetermination and pre-validation of government expenditure, an expenditure reasonableness and allowability analysis, and a funds availability certification process before expenditure transactions are entered into. In such a system, one would expect a requirement for adequate audit trail and appropriate documented authorization of all expenditure. Of course the procurement system would be critical to the process as it must be seen to be open and fair, giving the best value to the government.

The rule of law component to any anti-corruption approach cannot be overemphasized. The culture of impunity has always been heralded as a prime factor for the complete disregard for good governance and accountability. Not only must the judiciary be empowered to carry out their constitutional functions, proactive mechanisms must be put into place to ensure accountability. GEMAP already has provisions for an anti-corruption commission clothed with the authority to investigate and prosecute alleged corrupt officials. Draft anti-corruption legislation was also published in the local dailies very recently. It is important that the public is kept informed of these anti-corruption programs and a healthy debate encouraged to promote greater awareness.

Confronting corruption in Liberia requires an approach that will be effective since otherwise it will continue to cost the nation substantial resources. Firing people just because they are not very busy, or because they were hired by the previous administrations is not enough justification. A thorough analysis of the conditions making corruption a necessary part of life is required, and these conditions need to be adequately addressed in any anti-corruption strategies. Delaying the reform of the civil servants wage bill, while implementing other programs to combat corruption risks creating a situation that could lead to even greater deterioration of the economic welfare of the citizenry. Anti-corruption efforts must be well planed and coordinated, with sufficient support mechanisms in place to eliminate the downside to what otherwise could be very good intentions.

About the author: Paul C. Collins is a Finance and Economic Professional residing in Liberia

© 2006 by The Perspective

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