Tuesday, October 27, 2020

Govt’s silence on its outsourcing programme is a source of concern

In 2012 the government announced through budget Speech that its wage bill would be reduced annually by 5 percent for the subsequent three years. This was to be partly achieved through outsourcing non-essential services to the private sector as per the advice by the International Monetary Fund (IMF).

Three years down the line the extent to which this has been achieved is not clear due to lack of data but the government had hinted then (2012) that the number of civil servants will be cut by 5 000 per year.

What is quiet clear though is that, to date, both the central and local government’s dominant role as an employer continue to translate into a relatively large public wage bill as a share of total expenditure. For example, in 2011/12, the public wage bill accounted for about 31 percent of total government expenditure.

The estimated outturn for 2012/13 financial year however showed a slight reduction of the wage bill to about 30 percent of total expenditure, suggesting that the process is being implemented with caution due to the significant social considerations that such a reform entails.

We all are aware of the fact that prior to the 2008 global financial crisis, our government ran budget surpluses and accumulated substantial savings. As the saying, “days are never the same”, our government recorded sharp reduction of 46 percent in diamond production in 2009 due to the said global financial crisis. The sales reduction pushed the budget into a substantial deficit of 11.3 percent of GDP, from an average surplus of about 4.7 percent over the previous five years.

For deficit-plagued governments like ours, outsourcing may seem like a perfect solution, but the truth of the matter is that its “morning after” can bring some unpleasant surprises.

At the same time, if done properly, outsourcing or reducing the size of government as IMF may want to call, should have broader beneficial effects to both the government and the civil servants who are being laid off.

A good outsourcing deal starts with a thorough cost-benefit analysis to see if a third party can effectively deliver services better and more cheaply than public employees. The key question is, has our government done that? We hear so far the outsourcing has been done in some hospitals, precisely the cleaning services has been outsourced. What happened to the people who were working as cleaners? Have they been absorbed into other government departments or they have been laid off? If they have been absorbed to other departments does it serve the purpose of trimming down the wage bill…and if laid off, how empowered are they, economically to face the new life?

We all are aware that the 2008 global economic recession has strangled budgets, forcing layoffs in some countries and disbanding of government departments in our instance. As such, the search for financial salvation continues to sweep our country, and in theory, the idea of contracting public services to private companies to cut costs makes sense.

The fact of the matter is that the disbanding of government departments, or trimming down of the government wage bill as IMF would want to call it should not be “all bad thing”. The fact that some people are being laid off could somehow appear as bad thing, but this could be an opportunity for us as a nation to empower them even more.

Finance and Development Minister, Kenneth Matambo said in his 2012 budget speech that the Government embraced citizen economic empowerment in the absence of a specific citizen empowerment policy as evidenced in its localisation policy, Preferences under Public Procurement, Citizen Entrepreneurial Development Agency (CEDA) and Local Enterprise Authority (LEA).

Would it be asking too much, to suggest that some of these women and men, if not all, who work as cleaners at government enclave, and are facing possible lay off, to be grouped into companies which could in turn be awarded contracts to carry the job they have been doing?

Put differently, our government stands an opportunity to economically empower the locals who are facing lay off by grouping them into a society or cooperative, that could start a company and render its service to government and other sectors of the economy. 

While we ponder on how we could economically empower the fellow citizens, we ought to state that the government’s sudden silent on the matter is quite worrisome. When it was first announced in 2012, we were told that the laying off will be done for a period of three years, and it’s been three years now but no word from the government enclave. Have the government decided to shelve the idea? 

The #Bottomline though is that the government should come up with a definite law on citizen economic empowerment because the current status quo puts the population at a disadvantage while unscrupulous foreigners capitalise on the prevailing environment. 

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The Telegraph October 28

Digital edition of The Telegraph, October 28, 2020.