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Thursday, December 2, 2021

Legalized theft: 2022 Appropriation projections

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Independence promised Freedom, Dignity and Prosperity. A democratic government is simply self-governance. Elected officials are representatives of the people. The people hold all powers of state, while representatives derived authority from The Constitution, hence LIMITED GOVERNMENT. Their main responsibilities are to organize so that we can live in relative peace as a human community and provide common welfare needs/wants that improve quality of living.

We authorized the government(s) to tax to govern. The monies are collected and house at the Treasury. Spending is authorized by law – appropriation. The National Assembly (NA) is the only law-making authority under our constitutional system. Thus, NA are the custodians of the National Purse and not The Executive.

Our government prepares annual spending plan called Appropriation Bill and at times may come up with Supplementary Bills. The Appropriation Bill tells us what they hope to collect and what they planned to spend it on. Those numbers are all projections and not actuals. It would be in order at the end of a period, be it a month, quarter and/or year we have a Variance/Utilization Report that compares the Projections to the Actuals. Such reports are also useful in developing subsequent plans. This is not done, at least not for public consumption. Thus, we don’t know how realistic are budget projections.

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Stated before, the monies are paid in by Gambians for the procurement of our common welfare needs/wants. Government (representatives) only exist to fulfill that goal. Reason suggests a good spending plan should have at minimum 75% to the people and only 25% or less on overheads. The school of thought I came from will tell you every effort should be made to lower that 25% to 10% or less. This can be attained by fundamental democratic restructuring of government and increase national/domestic revenue. Bottomline the money is the people’s and for their needs, suffice to say every effort should be made to ensure the greatest ratio possibly go to them.

The matrix above is basic rundown of the essential numbers of 2022 budget alongside 2020 and 2021’s. Besides year after year increase in the size of the numbers, the plans are materially the same. Please closely look at the basic components – Revenues, Costs (costs of government & debt servicing) and deficit management (more debt). Notice zero allocation to our common welfare needs/wants, which is the purpose of the money in the first place.

Issue I: No monies for common welfare needs/wants

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The 2022 budget has nothing for roads, paracetamols, schools, water, electricity, refuse collection, etc. This year after year irresponsible fiscal policies are central causes of poverty. It is not lack of natural resources they made us believe.   To the contrary we have factors of production commensurate to the population at birth of our nation. If you ever wonder paying taxes for 56 years, 3-administrations and counting we do not have reliable and affordable water, electricity and other basic social services – this is it. Notice D1b and D13.16b earmarked for covid-19 and Organization of Islamic Countries (OIC) Conference respectively. It could be argued both those allocations are common welfare wants and that may be true. Do not be surprise all or great part of those allotments are no different from sector allocations which are heavily utilize on travel, perdiems, air fares, fuel, maintenance, tea/coffee, sugar, cream, etc. Equally the D13.16b earmarked for OIC Conference set aside to maintain/repair roads, electrical cables, water pipes, telephones, internet services, paint buildings, etc. except not for the people but some Arab King coming to town. It was only few years ago Yahya wasted billions building a village, buying vehicles, importing exotic furniture, painting places, etc. for a similar cause. How has that better our lives?

Issue II – Revenues (sources and sizes)

Generally speaking revenues are receipts from taxes and other collections of government. Taxes are the base and main source of revenue. Non-taxes are revenues generated from payments for certain services afforded by government such as passports, licenses, various registration fees, etc. Non-taxes also include dividend payment and/or profit-sharing payments of our SOEs. Thus, taxes and non-taxes are our assured sources, called National (Domestic) Revenue. Gambia government also receives many kinds of support from our foreign friends – grants. Although grants are generally free benefits straight up adding them as revenues post many accounting problems. Many grants are often non-binding, thus receipt is not assured. Grants are hardly time to budgeting but rather opportunistic occurrences. Many grants are offered for a specific purpose thus accounting it as a general fund will deceitfully inflation revenues. Others come in kind and in such cases our Treasury do not take possession of any funds. Several other grants are managed entirely by the donor. Even the so-called ‘budget support’ grants which could be accurately credit to general funds and debt at the appropriate wage expenses are not necessarily promised at budgeting.  The point being grants numbers in our budget are at best dubious.

Government projected a national revenue of D17.57b. This is D13.6b in taxes and D3.67b in non-taxes. These are very small numbers in relation our GDP (size of the economy). Taxes are some fraction of GDP. Estimates suggest that a dalasi earned and spent in Gambia is taxed between D0-60b – D0.80b. For an economy estimated at US$2.1b (D105b) in 2022 our tax revenue should be between D63b – D84b. Less than D20b projected collection is simply abysmal.

Considering the potential of all the potential sources of non-tax revenues, D3.67b is utter minuscule. We have 8 or more SOEs on Performance Contract that are supposed to pay portions of their earnings (dividends) annually. Instead other parts of our budget suggest we are sending them subvention checks (cheques). Isn’t that lack of seriousness, as a matter of fact these SOEs are created over 30 years ago – if by now they can’t deliver on the promises; we should not simply cut them off but divest them from the public. By the way some of them, specifically GPTC, has since disappeared in thin air. Do you notice and/or even care?

Grants in many ways give us handsome outputs. Among others some famous grant outputs are RVH, The Independent and Friendship Hostel, GGFP, CRD/URD-FP, LADEP, Mixed Farming, NGOs, etc. These outputs should be accounted and reported to the people, only differently. Inflating revenues for appropriation purposes will only produce insurmountable budget deficits.

Issue III – Very high overhead costs (legalized theft)

Costs are generally foremost expenses to any operation to achieve some set goal(s). One such necessary costs of government are overheads. In Gambia we elect a President and Members of NA. These are direct representatives of the people. Together with a third branch, Judiciary, that they assembled (not elected) are the government. Each branch has a unique set of roles and not subordinate to any of the other 2. They in turn hire bunch of aides from Ministers to Judges to drivers, etc. Why? To govern! Together their cost is called costs of government and is presented: Personnel Emoluments D5.1b and Recurring Expenses of D11.3b. This is a total of D16.4b. To fully appreciate how bad this is – 1st remember the money is ours and for our needs and that is only D17.57b. Thus D16.4b overhead costs are 93%. To simply put it, 93 bututs of every dalasi of national revenue will go to our employees. Up to this point that left the people (owners) with only 7 bututs per dalasi. Terrible! It is unacceptable! Since 1994 (Jawara’s last budget), our overheads are no less than 61% annually of national revenue. This is legalized theft and robbing us our meager resources. Bottomline Gambia do not exist to feed these fat cows; rather we created representative government to serve our needs.

Deducing costs of government left us with D1.17b; yet they planned D1b on Covid-19 and D12.16b on OIC conference. Those will put us in red column by (D11.99b). Excluding supposed grant revenues this is the actual budget deficit thus far.

Issue IV – Debt serving

Regardless of what may or may not happen in all the above, we have due debt repayment obligation. These are the amortized principal and interest due. For 2022, they’ve estimated a total of D5.74b. These are legal liabilities to be paid before or on due date otherwise both legal and economic consequences may ensue. On the other hand, paying the due debt and interest will grow the budget deficit to (D17.73b). We’re already heavily in the red column and not a dalasi allotted for our needs/wants. That is legalized robbery by our government. 

Issue V – Financing the deficit (increasing the national debt)

This is simply spending more monies we don’t have.  Our representatives fly around the globe begging on our name. The proceeds from such efforts may or may not patch holes but it won’t give us the nation promised at the dawn of independence. Sustainable management of our ‘Factors of Production’ is the only assured path.

Borrowing is another scheme that is keeping us afloat. Our nation has national debt estimated at 130% of our GDP. That would be about D136b; that amounts to D68,500 debt per capita – simply the share of each Gambian. As if that isn’t already beyond our ordinary ability to pay, for 2022, Barrow administration intends to borrow D2.46b from Gambians and another D1.905b from outside sources. That will be a total of D4.365b to add to an already bloated national debt. This vicious cycle of macro-economic ineptitude is responsible of our socio-economic miseries.

Conclusion

Gambia government is the solemn creation of the people. The purposes are to organize our collection community to assure coexistence in relative peace that supports improvement of livings. Their only legitimate duty is to serve as per constitution.

There is no justification for that government to live on 93 bututs of taxes and no-taxes collected. The government is too bloated and redundant for the purposes it was created for; hence too expensive and corrupt. To change will require a fundamental paradigm shift where Banjul will be strip to only functions relevant at the center. The rest of governance will be kick to the people where they live. After all Independent democratic republic is self-governing. That’s freedom and dignity independence promised.

On the other side prosperity will not grace our shores with begging and grand-parties. It will come and sustained through time tested management of resources of production. We are blessed with able human resources that are capable of accounting for the interface of our needs/wants and our Factors of Production. We do not have everything, but no country does – all that we need is right public policies, right mobilization and right organization.

Generating a mere D18b (17%) from taxes and non-taxes from an economy of D105 shows lack of seriousness, lack of know-how and public corruption. Taxes cannot be collected rightly and fairly without adequate systems that account outputs in the economy. For the most part it is not our inability to institute such systems but our refusal because it will curtail stealing from the public.

Finally, human nature is intertwined with vices, guess from creation. No system is perfect enough to completely contain those vices. The fixes are constant battles of innovative changes.  Gambians are generally good and pious yet hard to find one that will not illegitimate rob the public given a chance. This is an interesting contradiction between our spiritual and physical beings. I will leave that to psychologists/social-scientists to worry about. Nonetheless, for any chances to the promises of independence we have to be better than what we have being the past 56 years and counting.

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