Anal­y­sis by

Lesotho Times - - Business -

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.

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