job creation (it is mentioned in Paragraphs 4, 8, 13, 14, 35, 36, 41, 44, 50, 60, and 64). But there is never a comprehensive support package that can actually start a surge in the private sector. Equally, there are no specific proposals that persuade readers that change will finally take place. Explicit commitments on the following would have been persuasive.
Government organisation for private sector development: Lesotho’s private sector is structurally weak. Its surge requires simultaneous inputs that include government leadership and all key ministries working in concert with the private sector directly on different support elements.
To work, it would require the prime minister to lead corrective action encompassing inputs from the Ministry of Trade and Industry and all its agencies, all health agencies, all education agencies, and all infrastructure agencies and in addition to the integrated planning and budgeting work of the ministries of Planning and of Finance. Anything short of this will not work. Even this will not be enough as shall be seen below.
Business support institutions: The Lesotho National Development Corporation (LNDC), Basotho Enterprises Development Corporation (BEDCO), One Stop Shop support investment, but these are too few and their mandates overlap. I would review their mandates and financing models, introducing better focus and depth while also establishing additional institutions to focus on entrepreneur development and mentoring.
Financing of start-ups and term lending: The budget does not address in any way financing of private investment. A combination of equity financing and development bank vehicles are key to support the private sector, provided the economy has stabilised. The restructuring of the mandates of LNDC and BEDCO should also take into account the roles they could play in equity financing.
Intangible inputs: Mobilising additional investment will require maintaining confidence in the economy which in turn will require several actions including the depoliticisation of the public sector, the de-militarisation of the government, running a clean corrupt-free government, and restoring security and political and macroeconomic stability.
Planning of infrastructure: Other than infrastructure deployed for a particular reason, planning infrastructure in Lesotho has historically followed a social motive to make the largest number of people happy. By contrast, the economic orientation of investment requires a different approach under which roads, water, electricity and telecommunications are provided together at the same time at the same place. In addition, planning for infrastructure requires a master plan approach rather than the project one reflected in this budget.
Devolution of power: A large proportion of the investment will take place in the districts, where urban councils presently play a spoiling rather than a facilitative role. For urban councils to be effective and contribute to investment and job creation, the authority to manage urban land would have to be devolved fully (along with necessary expertise) from the Ministry of Local Government.
The Job Summit: I am happy to hear that the work toward the job summit is continuing, although there has been discussion to change its title. I wish government luck in this endeavour, but wish to warn that success would still require the critical inputs articulated above.
The indications of political repression in recent weeks do not bode well for investment and job creation and government better heed the many calls to step back from this dangerous trajectory. Equally, continuing the territorialisation of ministries will make agencies working collaboratively impossible at worst and phoney at best.
V. Genuine decentralisation to local governments
There is puzzlement as to why the Lesotho decentralisation project has failed. There should not be. First, at any rate, devolution is a complex process that requires considerable commitment and strong intellectual capital. Second, our devolution has ended up as de-concentration from central government ministries to the central government ministry of local government — it seems more a reallocation of duties from one ministry to another within the central government and this is exactly what other ministries have resisted. It was not supposed to be this way.
Conceptually, decentralisation is governed by the principle of subsidiarity, which means decisions must be taken by those closest to where action takes place.
Central governments (including the Ministry of Local Government) are too far from local communities and needs and are therefore inefficient as decision makers. In our attempt to devolve central government power, we devolved imperfectly to the Ministry of Local Government and concentrated power on that ministry instead of local governments themselves.
The Ministry of Local Government, which runs parallel and competitive structures (offices of the DA and of the District Council Secretary) is the one that has gained power, but in violation of the principle of subsidiarity and decentralisation.
The previous government approved a new and better decentralisation model (based on the Rwanda model), which should come into force following the 2016 local government elections. The budget does not seem to provide funding for the reform of decentralisation nor the local government elections.
VI. Policy vacuum, outsourcing and contract management failures
Paragraphs 52-55 are devoted to appropriations to the health sector and the minister identifies several problems including inadequate focus on primary health, excessive expenditure on Queen ‘ Mamohato Memorial Hospital (Tšepong) and shortage of drugs.
What does Tšepong, Avis, and the Public Procurement Advisory Division (PPAD) have in common? They are glaring examples of where government has failed to establish expert contract management offices (Tšepong and Avis) or a professional oversight body (PPAD) and also neglected to establish written policies for contracting these services.
These failures have been costly, with large losses incurred by taxpayers because government has not seen it necessary to enforce its contracts or provide professional guidance to public procurement. The need for the Maseru District Hospital is due mainly to the inability of the Ministry of Health to manage the three filter clinics (Domiciliary, Likotsi and Gateway) in line with the agreement with the Tšepong investors.
The demand for the Maseru District Hospital should be based on the full functionality of the filter clinics and excess patients that the planning for the Tšepong did not foresee. Government could learn much from Cuba’s referrals system which is based on a strong primary health care system.
These are the facilities that were supposed to handle patients’ referrals to Tšepong, but the absence of effective contract management entities as envisaged in the contracts has imposed more costs on the Lesotho tax payers.
I wish the minister luck in renegotiating the public–private partnership (PPP) arrangements, taking into account the pervasive conflicts of interest in the deal.
Outsourcing government services better provided by the private sector is good policy, consistent with the aim to promote private sector development. However, any of these decisions should be preceded by policies that govern the interaction between the private sector and government and coupled with strong contract management expertise on the government side. The absence of policies or contract management
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Minister of Finance Mamphono Khaketla.