Finance minister highlights achievements and challenges
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?
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