Having been sworn in on the 7th of January, 2017, the president, H.E. Nana Addo Danquah Akuffo Addo, begun configuring his team and taking some other decisions he deemed necessary to help him discharge his duties satisfactorily as required by the constitution and other relevant laws. One area of his decision that became a matter of public debate was apparently his unprecedented size of government (110 ministers), which some citizens have argued as a burden on the public purse or the tax payer’s money. The centrality of the debate was Value for Money, which to the citizen, ‘what value they receive from public services in return for the utilization of public funds.’ Linna, Pekkola, Ukko and Melkas (2010).
Debate about our public sector wage bill as a proportion of our tax revenue is a longstanding one. The Monday, February 4, 2013 edition of the Daily Graphic carried a story captioned ‘Public sector wages consume 70% of national revenue. According to the story, attributed to Dr. Sulley Garibah; Ghana risks using up all its revenue in paying public sector workers if careful consideration is not given by all to their work and their contribution to value addition to goods and services in the country. By this publication it means very little of tax revenue is left to fund the country’s development needs. It is therefore precedential that the 2016 budget allocated 48.57% of tax revenue to employee compensation, and the 2017 budget also allocated 46.55% of tax revenue to same item.
As a student of performance measurement, I find discussions about public sector wage bill interesting and one that is deserving of my opinion for public education purposes. Measuring performance in the public sector is quite a challenge unlike the profit making organization that has set profit as its primary objective that makes it straightforward to tie performance to profit. The Public sector by its creation and objective exists to deliver public goods and services, hence a rather complicated performance measurement criteria. The challenge notwithstanding, performance in the public sector is tied to Value for Money analysis. Most often than not, political pundits and stakeholders in government sight the phrase in debating government expenditure, although in most instances they have faulted to bring out the key underpinnings of Value for Money, but zero the phrase down to “efficiency”, which is only one side of the concept.
In limiting Value for Money Analysis to only efficiency, we in turn ignore explaining what efficiency means in the proper sense of it, and as such found drifting towards dictionary definitions which only defines efficiency in abstraction and thereby creating a vacuum in connecting the word to what it ought to explain. For instance, the English Thesaurus dictionary defines efficiency as “skillfulness in avoiding wasted time and effort”, and according to the Oxford Leaners Dictionary, too, it is “the quality of doing something well with no waste of time or money”. In an article titled “PUBLIC SECTOR GOVERNANCE-PART 1” written by one of the ACCA paper P1 examining team, and published on 4th December, 2015, on the ACCA website, efficiency was defined as “…work output divided by work input and it is all about getting as much out as possible from the amount put into a system.” it can also be defined us. Simply put, maximizing output for every resource input. These two latter definitions puts efficiency in its practical and measurable context. For instance, considering the number of appointments the president has made in our general security apparatus, from Interior Ministry, Ministry of Defense and the National Security; and the resources that have been allocated to these institutions, could we reliably measure at the end of the year that we have had Value for Money because the incidence of violence, robberies and other criminal activities have reduced? Efficiency should be able to establish that for every GHC1 we spent on employee compensation, crime has reduced by 1%.
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Having put efficiency in its proper context, what is also significant is the measure of performance in its entirety in the public sector. To exhaust the subject matter of Value for Money demands that we don’t end at our appreciation of Efficiency- maximizing output for every resource input (input versus output measures), but to as well appreciate what it means when we say we have been Economical-operating as cheaply as possible (lowest possible cost); and Effective-achieving objectives or results (output meeting objective)-in the use of our resources. If we can establish these three underpinnings of Value for Money, stakeholders would have confidence in how their taxes are used. In advancing the practicality of Value for Money, we should also identify what our Key Performance Indicators (KPI) are as well as the Critical Success Factors (CSF). By CSF, I mean what are the things we have got to do right to achieve our objectives. In this case, if our objective is to be efficient, economic and effective in the utilization of our funds what are the measures we have put in place to realize that? And by KPI, I mean, to what extent have we done things right to achieve our objectives. Our quest to achieve value for money for the tax payer will impose on leadership the responsibility to communicate to citizens what the objectives for a particular appointee are, the CSF’s as well as the KPI’s. This will empower citizens to independently tell if a particular appointee has delivered value for the tax payers’ money.
Also related to Value for Money is Cost Management. Most of the appointees are heading institutions that are a traditionally cost centers. In as much as it is the tax payer’s expectation to have value for money, public funds must be prudently managed without diminishing product quality. By this, the government must endeavour to eliminate activities that do not add value to the delivery of service or the final output. Processes must be computerized and those that create waste must be eliminated. We should engage more experts and skilled professionals to head public sector institutions to shrink the size of public sector payroll. Our ability to marry proper performance management and cost management techniques would ensure that resources are freed up to solve pressing development needs of the people. Citizens have no reasons to be spectators when the vision, objective and general strategy of leadership have been clearly communicated to them.
Author: Alhassan Tairou Manaf