Loopholes in Ghana’s budgetary process

This report is a summary of a conversation with Honourable Albert Kan Dapaah, Chair, Public Accounts Committee, Parliament of Ghana on Thursday, 3 November 2011. Dapaah is a senior National Patriotic Party (NPP) member who held four portfolios in the previous administration (2001-08), but who is universally regarded as an incorruptible corruption fighter. The PAC is a non-partisan Government committee whose mandate is to monitor the budgetary process.

STEP 1: Formulation/preparation by the Executive branch of the annual budget to make sure it conforms with medium- and long-term policy goals. This, quite simply, does not happen.

STEP 2: Presentation of the budget to Parliament for approval. Parliament is supposed to question seriously the budget prepared by the Executive. Again, this does not happen. The main reason is that the process is politicised. Whips keep party representatives in line. Also, there is a voice vote, which precludes individual accountability. In this regard, Ghana is unlike the US, for example, where the media holds legislators responsible for their votes. This fact goes a long way toward accounting for the scandals that have surrounded recent large, bad loans made by the Ghanaian government.

The approval process is also hamstrung by the one-week limit for debate. Few of the 239 parliamentarians even get to speak; and even those few are carefully selected by the party whips. Interestingly, what qualifies a parliamentarian to speak is not only his/her political affiliation, but seniority. Since seniority in the Ghanaian parliament stems from having been elected repeatedly, it can reflect either accomplishment in the delivery of services to one’s constituency or demagoguery: rhetorical skills.

A big criticism of the whole budgetary process is that the mass of Ghanaians have no say in it. Even parliamentarians are not involved in planning the budget, and they are restricted from raising or lowering allocations in the proposed budget to particular ministries. Thus, putative parliamentary independence in Stage 2 of the budgetary process is illusory. In fact the only government in the modern era that witnessed parliamentary rejection of its budget soon gave way to Jerry Rawlings (1981-92).

STEP 3: The implementation phase. The allocated monies go to the ministries. An accounting system is supposedly in place to provide a variance analysis in the way these monies are spent, such as when ministers go over budget. A computerised accounting system called BPems was instituted at great cost, but did not work. A new, very costly system, GifMis, is currently being developed. The constitution also requires annual statements of expenditures from each ministry, but, in practice, these are never rendered.

STEP 4: Auditing: The Auditor General audits the accounts of all ministries, sending the information on to Parliament for review and possible action. This is a key accountability measure but, again, it does not work; in the first place because the AG can’t audit spending records which do not exist. Although the AG is also supposed to be independent, the office is, in fact, under presidential control. During the NPP regime, an inherited AG was fired; the same has happened under the current administration, the National Democratic Congress (NDC). Also, Finance would seem to be a key ministry to be audited, but the minister of Finance is the one who sets the AG’s budget, typically under-funding the office.

In the US and Canada, with reliable accounting systems in place, 75 percent of auditing focuses on management and only about 15 percent on systems. In Ghana, without reliable accounting systems, the AG spends 80 percent of their efforts on financial audits. Ironically, the same absence of accounting systems also makes it difficult or impossible to catch those who misuse budgets. This futile focus keeps the AG too busy to deal with more important management issues, such as procurement, debt and environmental regulation.

When the auditor has completed his investigations, a report is issued to parliament, which passes it on to the Public Accounts Committee (PAC), which is the only independent, non-partisan committee in parliament and hence, in the entire budgetary review process. The membership is proportional to parliamentary representation, so currently 13 members belong to the NDC and twelve, including the chair, to the NPP.

Right now, apart from the leadership, only two parliamentarians even have offices, the chairs of the Finance Committee and of the PAC. But the PAC labours under constraints in its fight for parliamentary accountability. They lack even a single professional research assistant. By contrast, the Ghana Centre for Democratic Development (CDD), an eminent civil society organization (CSO), has several such assistants.

After the AG explains his/her report to the PAC, the latter contacts all ministries that were audited (that is, found to have violated budgetary procedures). Parliament can also ask to be party to the audits, as can the president, but only with the approval with a group of respected elders, the Council of State. The PAC then holds a public hearing to which the media are invited, and at which the audited Ministers are named and shamed. Although their reputations may be temporarily tarnished, one can ask how lasting the effects are.

What next ensues? Dismissal, sanctions or prosecution are in the hands of Audit Reports Investigative Committees (ARICS). But since each ministry has its own ARIC, the consequences of malfeasance are, in effect, left in the hands of the malefactors! Recognizing this weakness, in 2000 a law was passed establishing a new Financial Administration Court to supplement the ARICs. But the then Chief Justice decreed that the law establishing this court was unconstitutional. In or about 2003, another law was passed that would have circumvented the constitutional objection to the previous one by making the new court a division of the fast-track High Court, an existing institution. But a new CJ found a new flaw in this arrangement, and the matter is still unresolved. Meanwhile, by default, an already existing Economic Crimes Court does the job of enforcing audits.

REFORMING THE PROCESS

Meting out punishment is one thing. However, 80 percent of the current PAC’s recommendations for reform involve not chasing malefactors, but improving accountability measures in the budgetary process. An administrative body, not a court, is now advocated for these reforms. Asked to predict the outcome of these efforts, Kan Dapaah says, ‘I will make sure this happens. I will get MP support.’ Especially as oil looms as an engine of economic growth, corruption also looms larger in Ghana. Not that Ghanaians are any more venal than, say, Canadians, but in Ghana the door to the vault is wide open. The only way to close it is through instituting real accountability mechanisms.

Change must begin with the balance of power among groups in society. Currently, the political class rules Ghana, but CSOs such as the CDD must be given a bigger role in public affairs. The change would enable frustrated reformers within the system to finally gain some traction. It would also help if CSOs devoted less of their efforts to criticizing individual parliamentarians and more to pushing for systemic reform.

WHEN KAN DAPAAH WAS ON THE OTHER SIDE

Asked about his financial oversight of the four ministries for which he held portfolios in the course of the reign of his own party, the NPP, Kan Dapaah admits that some of these ministries were audited. However, the constitution keeps the minister, a political appointee, from participating in the financial affairs of his ministry. By law, these are the purview of civil servants. The minister is also too busy to keep his finger on the financial pulse of his ministry. Would it even be a good idea to let political appointees do this? It would be a tricky business to come up with a method of intra-ministerial governance that balanced the need for oversight by the minister with the need to keep finance separate from politics. Instead, let’s concentrate on systemic reform, the main theme of which would be to create real, working checks and balances to the power of the Executive and his party in the budgetary process.

Kojo Asante, research officer for governance and legal policy at the CDD, vouches for Kan Dapaah’s record during the previous administration. Asante said that, even when he was a minister, Kan Dapaah pushed for reform. This was highly unusual, since ruling parties in Ghana almost always try only to ‘reform’ the opposition.

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* Ron Singer interviewed Albert Kan Dapaah twice for his forthcoming book, Uhuru Revisited: Interviews With African Pro-Democracy Leaders (Africa World Press/Red Sea Press). The other focus of the interviews was the path by which Kan Dapaah traveled from a small village in eastern Ghana to his current position.
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