Fi­nance min­is­ter high­lights achieve­ments and chal­lenges

Lesotho Times - - Big Interview -

Fi­nance Min­is­ter Dr ‘Mam­phono Khaketla has the very crit­i­cal task of man­ag­ing the coun­try’s fi­nances, eco­nomic pol­icy and fi­nan­cial regulation. The Min­is­ter as­sumed her po­si­tion when the seven-party coali­tion govern­ment led by Dr Pakalitha Mo­sisili came to power af­ter the 28 Fe­bru­ary 2015 snap elec­tions. Dr Khaketla shares some of her min­istry’s achieve­ments and chal­lenges with Le­sotho Times (LT) reporter, Lekhetho Nt­sukun­yane.

LT: Since you as­sumed of­fice early this year, what could you say have been your most no­table achieve­ments and chal­lenges?

Dr Khaketla: First of all, you will re­call that the cur­rent coali­tion Govern­ment is only nine months old. How­ever, there are no­table achieve­ments to date which are as fol­lows:

Launch of Sho­prite Money Trans­fers Le­sotho in July 2015: The Min­istry of Fi­nance and the Cen­tral Bank of Le­sotho, to­gether with part­ners Fin Mark Trust, Sho­prite and Capitec bank, launched the above-men­tioned ini­tia­tive which is meant to as­sist the peo­ple of Le­sotho work­ing or re­sid­ing in South Africa to send money to Le­sotho in an af­ford­able, con­ve­nient ,im­me­di­ate and safe man­ner. To date, about 12 000 Ba­sotho have reg­is­tered for this ser­vice and about M20mil­lion has been re­ceived by Le­sotho res­i­dents from South Africa.

Launch of Re­source Link Sys­tem in Au­gust 2015: This is pi­loted in Min­istries such as Min­istry of Education, Min­istry of De­fense and Min­istry of Po­lice and Pub­lic Safety and is meant to im­prove ef­fi­ciency in the pay­ment of civil ser­vants’ salaries, among other ben­e­fits.

Strength­en­ing gov­er­nance of So­cial pro­tec­tion: The Min­istry has signed a Fi­nanc­ing agree­ment to the tune of euro 8 mil­lion with the euro­pean com­mis­sion for Sup­port to the Min­istry of So­cial De­vel­op­ment to strengthen gov­er­nance of So­cial pro­tec­tion in Le­sotho. Our re­la­tion­ship with the EU is on a very strong foot­ing, where it sup­ports the Govern­ment with money ear­marked as gen­eral bud­get sup­port.

Re­con­struc­tion of Moshoeshoe I In­ter­na­tional Air­port: The govern­ment of Le­sotho has se­cured com­mit­ment from Kuwait Fund as the ma­jor donor, in col­lab­o­ra­tion with BADEA, Saudi Fund, OPEC Fund and Abu Dhabi for fi­nanc­ing the re­con­struc­tion of Moshoeshoe i in­ter­na­tional air­port in or­der for it to meet in­ter­na­tional stan­dards. Our ex­pec­ta­tion is that work will be­gin in early 2016.

Pub­lic Sec­tor Mod­ern­iza­tion Pro­ject: The Min­istry is at ad­vanced stage of ne­go­ti­at­ing a US $10mil­lion fi­nanc­ing from the World Bank for the Pub­lic Sec­tor Mod­ern­iza­tion Pro­ject which is meant for strength­en­ing of hu­man re­sources man­age­ment, im­prov­ing fis­cal plan­ning man­age­ment and de­ci­sion-mak­ing, strength­en­ing the sta­tis­ti­cal ca­pac­ity as well as im­ple­men­ta­tion sup­port.

CHAL­LENGES: The big­gest chal­lenge has been out­stand­ing Debts from fi­nan­cial year 2013/2014 whereby there has been an out­cry from sup­pli­ers of var­i­ous goods and ser­vices who have not been paid for the ser­vices they pro­vided in the fi­nan­cial year 2013/14 (a sav­in­gram has been writ­ten to Min­istries to ad­vice the min­istry of fi­nance of all their out­stand­ing debts) and the Min­istry is work­ing on the strat­egy to set­tle such out­stand­ing debts and en­sure that such in­ci­dences do not re­cur.

LT: As the Fi­nance Min­istry, which ar­eas do you take as pri­or­ity and why?

Dr Khaketla: Pri­or­ity ar­eas are aligned to the Coali­tion Agree­ment, Na­tional Strate­gic De­vel­op­ment Plan (NSDP) and Vi­sion 2020 and can be sum­ma­rized as fol­lows; In­creas­ing Eco­nomic Growth to­wards a sus­tain­able level of be­tween 5 and 7 per­cent per an­num and to en­able the pri­vate sec­tor to cre­ate more jobs; Re­duc­ing Food in­se­cu­rity by in­creas­ing pro­duc­tion on av­er­age by 16Ha per year; Re­duc­ing Child mor­tal­ity by 2/3 and ma­ter­nal mor­tal­ity by 3/4 by 2017/18; Re­duc­ing in­ci­dence of HIV by 25 per­cent and in­crease cov­er­age for anti-retro­vi­ral treat­ment (ART) to 80 per­cent by 2016/17.

The achieve­ment of th­ese pri­or­ity ar­eas would go a long way in im­prov­ing Le­sotho’s sta­tus in the in­ter­na­tional arena and also con­trib­ute sig­nif­i­cantly to­wards in­creased pro­duc­tiv­ity, re­duc­ing un­em­ploy­ment, eco­nomic and so­cial vul­ner­a­bil­i­ties and im­prov­ing Pub­lic Sec­tor ef­fi­ciency and ser­vice de­liv­ery. LT: As the Min­istry re­spon­si­ble for the pub­lic purse, how do you hold govern­ment de­part­ments ac­count­able?

Dr Khaketla: We have so far made var­i­ous ef­forts to en­sure that govern­ment funds are ac­counted for and that govern­ment min­istries are ac­count­able. There is an es­tab­lished cab­i­net sub­com­mit­tee on bud­get chaired by DPM (Deputy Prime Min­is­ter) whereby min­istries have to re­port on the col­lec­tion of rev­enue and use of funds on a quar­terly ba­sis and where min­istries have not met their Rev­enue col­lec­tion and Ex­pen­di­ture tar­gets, they have to ac­count for such fail­ures and come up with mit­i­ga­tion mea­sures go­ing for­ward.

LT: Cor­rup­tion within govern­ment min­istries, par­tic­u­larly when it in­volves pub­lic funds, ob­vi­ously also im­pacts on your min­istry since you are re­spon­si­ble for en­sur­ing tax­payer’s money is safe. At what stage do you get in­volved when you hear about such wrong­do­ing?

Dr Khaketla: If the in­ci­dent in­volves other min­istries, the Min­istry of Fi­nance gets in­volved at the ear­li­est stage pos­si­ble and nor­mally the Min­istry of Fi­nance re­ceives a writ­ten re­port from the rel­e­vant min­istry which, among other is­sues, would high­light the ex­tent of the fraud and mea­sures un­der­taken, in­clud­ing re­port­ing of the in­ci­dents to the po­lice.

How­ever, if it in­volves the Min­istry of Fi­nance di­rectly, the min­istry gets in­volved im­me­di­ately and sends its staff to as­sess the mag­ni­tude of the prob­lem and to en­sure that the in­ci­dent is re­ported to the po­lice. For in­stance, in the most re­cent in­ci­dent of break­age and rob­bery of around M380,600.00 at Hlotse Post Of­fice in Leribe on the 4th of De­cem­ber, the min­istry sent its staff the same day of the in­ci­dent and the is­sue is cur­rently in the hands of the po­lice.

LT: Di­rec­torate on Cor­rup­tion and Eco­nomic Of­fences (DCEO) Di­rec­tor-gen­eral Borotho Mat­soso, re­cently an­nounced in an in­ter­view that “99 per­cent” of cases the anti- cor­rup­tion body deals with are re­lated to flawed govern­ment pro­cure­ment pro­ce­dures.

Could you please tell us how such crim­i­nal acts im­pact on your min­istry and what you have done to ad­dress this sit­u­a­tion from the fi­nance min­istry’s per­spec­tive since the is­sue also in­volves other govern­ment de­part­ments?

Dr Khaketla: i am not aware of this high in­ci­dence of DCEO deal­ings with cases re­lat­ing to flawed govern­ment pro­cure­ment pro­ce­dures.

How­ever, I can­not dis­pute the fact that there is high in­ci­dence of not fol­low­ing com­pet­i­tive ten­der­ing as stip­u­lated in Pub­lic Pro­cure­ment reg­u­la­tions of 2007 in the pro­cure­ment of goods and ser­vices within min­istries and this poses a chal­lenge in that Govern­ment may not achieve value for money.

How­ever, Ex­cep­tional pro­cure­ment pro­ce­dures are catered for in the reg­u­la­tions for cer­tain cir­cum­stances. None­the­less, the Min­istry of Fi­nance, in col­lab­o­ra­tion with De­vel­op­ment Part­ners, Par­tic­u­larly the African De­vel­op­ment Bank, has since launched the In­sti­tu­tional Sup­port for the En­hance­ment of Pub­lic Fi­nan­cial Man­age­ment Pro­ject (ISEP-PFM) on the 22nd of Septem­ber 2015 and one of the com­po­nents of this pro­ject is to align Pub­lic Pro­cure­ment with In­ter­na­tional best prac­tices in ef­fi­ciency and trans­parency.

I am the Chair­per­son of Pub­lic Fi­nan­cial Man­age­ment Im­prove­ment and Re­form Steer­ing Com­mit­tee and this com­mit­tee holds quar­terly meet­ings. The Min­istry also on 28th Oc­to­ber 2015 held an aware­ness work­shop for the en­tire Cab­i­net and key Govern­ment Of­fi­cials such as prin­ci­pal sec­re­taries, pro­cure­ment of­fi­cers and fi­nan­cial con­trollers on Govern­ment Pro­cure­ment Pro­ce­dures and Govern­ment Pay­ment Sys­tems and the work­shop was well-at­tended.

LT: How do you see the Le­sotho econ­omy at large? Do you be­lieve it is on the right track to achieve its de­sired goal of en­sur­ing jobs for all Ba­sotho?

Dr Khaketla: Eco­nomic in­di­ca­tors such as in­fla­tion (av­er­ag­ing below 6 per­cent per an­num), eco­nomic growth rate (at the av­er­age rate of 5 per­cent) and pub­lic debt ra­tio to GDP show that over­all, Le­sotho is per­form­ing fairly well and also has a high po­ten­tial to achieve its de­sired goal of cre­at­ing new jobs for all Ba­sotho.

For in­stance, the Govern­ment of Le­sotho is work­ing on re­view­ing Visa and Work per­mits laws and pro­cesses and to ease travel by busi­ness per­sons and tourists.

This will at­tract po­ten­tial in­vestors and will also im­prove tourism busi­ness in the coun­try. The Govern­ment also in­tends to com­plete the Es­tab­lish­ment of the One — Stop Busi­ness Fa­cil­i­ta­tion Cen­tre (OBFC) with all the nec­es­sary func­tions and im­prove ac­cess to fi­nance by im­prov­ing co­or­di­na­tion be­tween LNDC and Min­istry of Fi­nance credit guar­an­tee fa­cil­i­ties and im­ple­ment mech­a­nisms for con­trol of us­age of funds and fa­cil­i­tate the es­tab­lish­ment of the Stock Ex­change.

Govern­ment is also in the process to com­mer­cial­ize agri­cul­ture, trans­form the tex­tile sec­tor and di­ver­sify prod­ucts and mar­kets and im­prove the man­age­ment of in­dus­trial zones, es­tab­lish in­cu­ba­tion cen­tres for se­lected in­dus­tries and iden­tify tal­ent and es­tab­lish in­cu­ba­tion cen­tres for mu­sic, film and fine art to take ad­van­tage of op­por­tu­ni­ties brought by ana­logue to dig­i­tal mi­gra­tion.

LT: There have been con­cerns by the pub­lic about Cab­i­net’s de­ci­sion to pay­off mem­bers of the Eighth Par­lia­ment’s loans they took from First Na­tional Bank. Could you please tell us how this de­ci­sion was reached and also if the leg­is­la­tors are still go­ing to set­tle the loans with govern­ment?

Dr Khaketla: This is not a Cab­i­net is­sue but is based on the Loans and Guar­an­tees Act of 1967, Statu­tory Loans Act of 1975, Mem­bers of Par­lia­ment Salaries Act of 1998 and its Reg­u­la­tions of 1998 and their sub­se­quent amend­ments of 2013 which in sum­mary stip­u­lates that the Govern­ment should guar­an­tee the loans.

This means that if a loan is not paid and the bank calls the guar­an­tee, Govern­ment is obliged to com­ply to this com­mit­ment. How­ever, I need to men­tion that there are mem­bers of Par­lia­ment who have fully ser­viced

their debt de­spite this guar­an­tee.

LT: There was an­other pub­lic out­cry when govern­ment re­cently ter­mi­nated AVIS Fleet Sup­ply and Main­te­nance’s con­tract and awarded it to BID­VEST of South Africa. How has the re­la­tion­ship with BID­VEST been go­ing?

Dr Khaketla: The Govern­ment of Le­sotho en­tered into a Short Term Rental Agree­ment with Bid­vest for a pe­riod of six months from Oc­to­ber 2015 to March 2016. The re­la­tion­ship be­tween the two par­ties is a nor­mal sup­plier /client re­la­tion­ship and so far, Bid­vest has pro­vided al­most all the ve­hi­cles that the Govern­ment has re­quested. The Govern­ment is hon­our­ing its obli­ga­tion of pay­ing for ser­vices ren­dered by Bid­vest.

LT: You are also on record as say­ing BID­VEST will not be al­lowed to bid when govern­ment in­vites com­pa­nies/ in­di­vid­u­als to ten­der for the con­tract. Do you still stand by this state­ment?

Dr Khaketla:

YES.

LT: When should we ex­pect this ten­der since the BID­VEST con­tract ends in the next three months or so?

Dr Khaketla: You will be ad­vised on this is­sue in a few weeks time. The Min­istry is at an ad­vanced stage of procur­ing a Trans­ac­tion Ad­vi­sor who will then as­sist in the pro­cure­ment of a fleet ser­vice-provider.

LT: In your view, has Le­sotho re­alised its full po­ten­tial as far as eco­nomic de­vel­op­ment is con­cerned?

Dr Khaketla: eco­nomic De­vel­op­ment is a broad term since it en­com­passes is­sues such as ac­cess to education, poverty re­duc­tion as well as im­proved em­ploy­ment lev­els and maybe I need to also bring to your at­ten­tion that some of the key in­di­ca­tors that the econ­omy is mov­ing to­wards eco­nomic de­vel­op­ment are Free­dom of speech, Free­dom to par­tic­i­pate in pol­i­tics and equal op­por­tu­ni­ties among oth­ers and as such, Le­sotho as a small land­locked econ­omy with lim­ited re­sources, has made re­mark­able progress in some of th­ese ar­eas and the Govern­ment is mak­ing ef­forts to move to­wards full at­tain­ment of Eco­nomic de­vel­op­ment.

For in­stance, the lit­er­acy rate of about 85% is above av­er­age rate for Africa and Le­sotho is among the few African coun­tries that have reg­is­tered im­proved per­for­mance in the par­tic­i­pa­tion of women in pol­i­tics as well as lead­er­ship po­si­tions.

LT: What is your Vi­sion for the min­istry both in the short and long term?

Dr Khaketla: My Vi­sion for the Min­istry in the short to medium term is to re­duce the huge wage bill which takes about 23 per­cent of Gross Do­mes­tic Prod­uct (GDP), to con­tain ex­pen­di­ture in other govern­ment ac­tiv­i­ties and im­prove Rev­enue col­lec­tion.

In the Long run, the Min­istry is plan­ning to Strengthen Macroe­co­nomic Man­age­ment so as to sup­port shared and in­clu­sive growth; Im­prove do­mes­tic and Ex­ter­nal Rev­enue poli­cies and man­age­ment; Strengthen plan­ning, bud­get­ing, mon­i­tor­ing and ac­count­abil­ity sys­tems to de­liver timely, ef­fi­cient and ef­fec­tive use of pub­lic funds; Put in place and en­force an ef­fec­tive Pub­lic Fi­nan­cial Man­age­ment (PFM) le­gal frame­work and sys­tems to en­sure trans­parency and value for money in the use of pub­lic funds; Im­prove the in­vest­ment cli­mate and ac­cess to fi­nance to sup­port pri­vate sec­tor growth and job cre­ation and fi­nally, In­crease op­por­tu­ni­ties for stake­hold­ers to un­der­stand, par­tic­i­pate in and con­trib­ute to Bud­get Poli­cies and de­ci­sions.

LT: What other mes­sage would you want to pass to Ba­sotho?

Dr Khaketla: Ebang bo ‘ mesa mehloane. ‘Muso ona ke oa lona ‘ me le tlameha ho o boulella ho sa khathal­letse hore na motho o ne a khethile joang. Ha re etsa han­tle le re bolelle, le moo liphoso li ba teng, tlale­he­lang Makala a ikara­belle.

Fi­nance Min­is­ter Dr ‘Mam­phono Khaketla

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