Feature Article of Monday, 9 July 2012

Columnist: Thompson, Nii-Moi

Why Can't District Assemblies Buy their own Vehicles?

The Galloper Flopper: Why Can't District Assemblies Buy their own Vehicles?

Whether there was a contract or not, one thing is for sure: The central government is facing the prospect of paying US$1.5 billion to African Automobile Ltd. over a botched vehicles procurement deal. That's about 13.0% of the government's total budget for 2012.

Details remain fuzzy and contested, but one fact remains incontestable: Between 1999 and 2000, the government in Accra made an effort to buy vehicles for the 110 district assemblies then in existence.

That, of course, was not the first time the central government was buying vehicles or other equipment for the district assemblies. Nor was it the last.

As recently as early 2012, there were blaring headlines of how government had "donated" motorcycles to some districts. The practice predates even the Fourth Republic.

The problem is that the outward appearance of benevolence by the central government towards seemingly hapless districts hides the ugly underbelly of the practice: An inordinate concentration of power - and resources - in Accra that ultimately deprives the districts of money for their development.

Even the language often used to describe this top-heavy relationship can be misleading. What the media calls "donations" are in fact compulsory and often unnecessary purchases made by the central government and paid for "at source" through deductions from the beneficiary districts' share of the District Assemblies Common Fund (DACF).

The pervasive deductions for a range of goods and services (including even fumigation services!) supplied by the central government are the major reason why most of the monies voted yearly by the central government for the districts do not physically get to them for their development: They are spent in Accra on their behalf.

The familiar justification for the practice is that it saves the districts (and the nation) money. But as the AAL imbroglio shows, it can be far costlier and riskier than it would if the districts were allowed to make their own procurement decisions on the basis of their locally identified needs and capabilities.

Any breach of contract in that case would be a localized affair, and the rest of the country would be free to go about its business as the affected districts sorted themselves out. Outside help may be warranted only in extreme cases, or upon the request of the districts.

So why does the central government insist on a practice that is not only costly and risky but also anti-development?

The answer may be found in the motives and influence of what one might call the Business-Bureaucracy Complex (BBC), a loose collectivity of shady business men and women who collude with unscrupulous bureaucrats in Accra to buy things that the districts (and sometimes even the central government) do not need - and at inflated prices.

Higher public officials may or may not be aware, but mid-level bureaucrats in charge of procurement are almost always part of this insidious racket.

In one instance, the central government purchased television sets in bulk and "donated" them to districts, including those without electricity, for the national distance-education program.

When one of the districts decided to check the local price of the sets, they found that it was far less than the price for the "donated" ones. The difference between the two prices, multiplied across the number of sets and districts, represented a siphoning of development resources from the districts to the parasitic elites and their confederates in Accra. Strictly speaking, it was criminal.

In another instance, the central government bought graders for the districts, including those that did not need them. For the BBC, it was an opportunity to sell big-ticket items to captive clients and make super profits. For the districts, it was yet another raid on their resources for development.

Districts that found themselves stuck with graders they did not ask for later put them by the roadside with 'For Hire' signs on them. Others took to grading roads, just for the satisfaction of it, without any intention of paving them. In the end, many roads were graded several times over and eventually became worse than they were before the graders arrived.

The wahala doesn't end there. Oftentimes, districts are also compelled to sign long-term maintenance agreements with the suppliers of these unnecessary equipment, leading to a further drain on their financial resources. One medium-sized district was paying as much as GHc25,000 per month to a private company through a scheme conceived and imposed on it by the central government.

Revealingly, in its 2009 budget statement, the district's assembly stated: "In 2008, we were unable to start and complete all projects and programmes marked for the year. This was due principally to the fact that there were several unbudgeted deductions at source. This was unprecedented in the history of the assembly".

For this particular district, a whopping 77.1% of its DACF allocation was deducted from source, leaving it with only 22.9% for local development. Among the items covered for these source deductions were: Fumigation (GHc60,000); electricity poles (GHc97,000); waste management (GHc213,000); and "other recoveries" (GHc51,638.6). Between them, three private companies managed to get the central government to serve as debt collector and deduct over GHc80,000 from the Assembly's common fund allocation before it had any claim to it.

Yet, these are activities and transactions that must be the sole preserve of local government, not central.

Besides corruption and waste, centralized purchasing also does not allow for the diversification of risk, as evidenced by the US$1.5 billion AAL impasse.

If each district had used its own internal processes and resources to purchase the Gallopers (or any 4-wheel drive of their choice) directly, the risk of defaulting and incurring additional costs, if any, would have been localized, and national resources would be put to better use than paying judgment debts, whatever the amount, over a decade later.

The unsolicited purchasing of equipment for districts by the central government also tends to distort local development priorities, which leads to the misallocation of already-scarce resources.

It is doubtful, for example, that in 1999, the purchasing of vehicles was the priority of every district in Ghana. Some might have had education or health or infrastructure or sanitation as their priority, yet once the order (or threat?) came from Accra, they had to oblige and divert their resources to vehicles that they did not need.

DCEs, of course, can protest such disruptive interference in their affairs, but they face a governance dilemma: Because they are appointed by the very government imposing the unsolicited purchases on them, they are reluctant, even afraid, to question the illogic of it all, lest they be fired.

A paradox thus emerges where the DCEs become accomplices in a conspiracy to undermine their own authority and to sabotage the development of their districts.

It is clear that we can't proceed like this and expect to have real, equitable and sustainable national development. The time to give "power to the people" is now.

As usual, opponents of change, many of whom have held themselves out as "revolutionaries" for years, will tell us that the districts don't yet have the capacity to make informed choices or to manage their own affairs.

This presupposes a superior management capacity of the central government, which, of course, is false, if recent scandals of mismanagement and abuse are anything to go by.

Nor can it be argued that the capacity constraints of the districts - and there are many - can be addressed by consistently refusing them the opportunity to learn, even make mistakes, by doing. How else can we progress as a nation?

Economic history teaches us that national development takes place not from national capitals but in local communities. Indeed, national development is ultimately the aggregation of local "developments", with central government mostly providing the direction and resources, not subverting and dissipating them, for such development.

The longer we defy this truism, the closer we get to the kind of social and political instability that unequal development inevitably breeds.

We've been warned.

Credit: Nii Moi Thompson The author is a former chief technical advisor on local economic development for the ILO in Ghana. He is currently an economic advisor with the United Nations Development Program in South Africa.