“Public finances must impact society”

…as Model Law on Public Financial Management awaits adoption

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By Moses Magadza and Clare Musonda

Standing Committees of the SADC Parliamentary Forum and the Regional Women’s Parliamentary Caucus (RWPC)have unanimously endorsed a draft SADC Model Law on Public Financial Management (PFM) and will soon commend it to the highest decision body of the Forum, the Plenary Assembly, for adoption.

The endorsement happened at the end of a two-day consultation over the draft Model Law on PFM that took place in Johannesburg, South Africa, recently.

The validation was the climax of a series of similar engagements with different stakeholders over several weeks, as the SADC PF sought buy-in and strengthening of the Model Law, the first of its kind in the world.

The range of consultations gave rise to a wide range of improvements to the Model Law reflecting the perspectives and objectives of a wide range of public and private professionals with involvement or interest in public financial management.

Zambia’s Minister of Finance and National Planning, Hon. Dr Situmbeko Musokotwane, was the guest of honour at the final consultation which took place on 11 and 12 April. In a keynote address, he said the impact of public finances spent on community projects is important to Members of Parliament because they are the interface with the communities they represent.

Musokotwane reiterated that one of the regular activities of the Forum, among others, is to draft Model Laws for the region.

“This type of work captures experiences of problems across different countries. What remains is for individual Member States to utilise Model Laws how they deem fit,” he said.

“When the government expends money for hiring teachers, what assurances are there that the hired teachers will serve in remote places and teach according to acceptable standards?” he asked.

He continued: “What I am saying is that money may be spent correctly in accounting terms, but on the ground, that money may actually not create the impact that we had envisaged when we expended the money.”

Musokotwane, who was a member of the Forum as an MP between 2011-2021, said PFM Model Law or related laws must have provisions for the participation of all stakeholders to provide checks and balances regarding the utilization of funds and their impact.

“In this regard, the legislation must provide the MPs either individually or through committees of parliament the necessary voice and powers to check what impact is being created by the money that has been spent, otherwise you risk money being expended but other things taking place,” he said.

The Minister explained that the exact nature of the entire PFM legislation varies from one SADC country to another.

“In my country, for example, laws about taxation sit separately in other statutes. Importantly also, those governing public borrowing and guarantees sit elsewhere and not in the PFM Act as do some laws regarding regulation of finances of state-owned enterprises,” he said.

His view was that the job of changing legislation is only half done until the other aspects such as public borrowing is also informed.

“Experiences from the past and present systems are very insightful in this regard. If the laws on public borrowing are weak, a country will quickly find itself in deep trouble.”

The veteran politician said whatever good may exist in other aspects of public finances may be severely undone by the inadequate provision of public borrowing that does not have checks and balances.

Musokotwane urged MPs to look out for any defects in respective PFM legislation.

He said serving as an elected MP was“a great opportunity to learn about what works and what doesn’t work” on the ground.

“In particular, it became evident that public finances running on decentralised systems as opposed to centralised ones are more effective. So the first budget that we presented we did a lot to take money from the centre to the constituencies,” he said.

He said because of this,each constituency in Zambia now directly receives about US$1,6 million per year to decide on the development priorities in their areas.

“This is not controlled from Lusaka and it is up to them to decide where they need schools, clinics, boreholes, a small bridge across the street, etc. This is because if you leave some of these items to be determined by the centre, you ask yourselves: which Minister or which Permanent Secretary is bothered about a bridge on a stream that is two metres wide, which for the capital may appear to be too small to be bothered with, but for the local people, there are crocodiles there and children are getting eaten.”

He said Zambia would study the Model Law on PFM and the recommendations that the Forum will make and use those insights to improve “what we already have”.

He said public finance issues are very important as no other entity in the economy collects as much revenue as a government, as seen in the national budget.

According to the Minister, the main activity of revenue collections which is so huge, has profound effects on the economy, which can either be useful or harmful depending on how it is done.

The Minister congratulated SADC PF for succeeding to convince the SADC Executive wings and governments to allow the Forum to be transformed into a SADC Parliament.

The Johannesburg workshop enabled parliamentarians from across the SADC region and other delegates to understand the content, aims and objectives of the Model Law, approve and support the same.

With the intense consultations on the Model Law on PFM now over, the penetrating work in producing and perfecting the Model Law will now need be channeled into domestication and effective implementation.

Veteran legal drafter Mr. Daniel Greenberg led the development of the Model Law on PFM with support from a very knowledgeable and committed Technical Working Group. He said the most challenging aspect of developing the Model Law was “reflecting contrasting perspectives in a balanced way”.

On what it would take the Model Law to work for the citizens of SADC, Greenberg said: “The Model Law must be implemented in an effective and timely way in all SADC Member States, and all those involved in the public financial management sector must engage with the principles and provisions of the law enthusiastically and energetically, to achieve specific results including the prevention of illicit financial flows and to enhance the general citizens’ confidence in the efficacy, transparency and accountability of public financial management.”

SADC PF Secretary General, Ms Boemo Sekgoma, thanked the MPs and all those that participated in the many consultations over the Model Law draft for their “well thought out contributions and for sharing lessons from Member States doing something in line with PFM”.

“Honorable Members had carefully read the draft. It became clear from the many penetrating questions and suggestions that we all want the institution of Parliament to be at the center of the development, adoption, domestication and implementation of this Model Law,” the SG said.

She added: “We all seek a law that is cohesive, comprehensive, fit for purpose, alive to the clear separation of powers, is not unduly prescriptive, is persuasive, supports transparency and is gender neutral, among others. I am delighted that our legal drafter has gone to great lengths to demonstrate that this draft meets those expectations.”

She said although none of the many comments and questions on the draft were such as to prompt major surgery on the draft Model Law, further to comments garnered, certain provisions of the Model Law would be revisited accordingly.

“The PFM Model Law is a unique document.It is a baseline to lead and assist other countries in PFM as part of development cooperation between SADC Member States and other parts of the world,” she said.
New Ziana

* Moses Magadza is reading towards a PhD in Media Studies while Clare Musonda, a lawyer and social scientist, is Director of Corporate Governance at SADC PF.

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