Professor H. Kwasi Prempeh, Executive Director of Ghana Centre for Democratic Development (CDD-Ghana), has called on the government to provide a clear regulation to govern or control the use of discretion in the disbursement of public finds by state-owned enterprises to eliminate the practice of embarking on projects using discretion instead of law.
He said although it is not bad for state enterprises to undertake Corporate Social Responsibility (CSR) activities, it is important for them to first execute their primary responsibilities accurately before venturing into CSR to avoid misplacement of priorities and misapplication of funds.
Speaking in an interview he said, he said the public outcry following the donation by National Health Insurance Authority and Social Security Social Security and National Insurance Trust (SSNIT) to the Covid 19 Trust Fund was justifiable.
This, he said, is because of long existing battle between SSNIT and pensioners over benefits. The concerns should be prioritized by SSNIT before any other project, particularly, when the operations of SSNIT are not in any way linked to health and for that matter, COVID -19.
He said the NHIA donating to the COVID-19 Trust Fund wouldn’t have been questioned if they adequately satisfied their core responsibilities. It is public knowledge that NHIA owes service providers, a phenomenon that has forced some health institutions to halt service delivery to NHIA card bearers, hence using resources which could have helped service providers as a donation is arguably a misplaced priority.
“The regulation is needed to ensure that the institution benefitting from the donation is directly linked to your core responsibility. That would prevent institutions from using their discretion and justifying later. NHIA deciding to donate to the COVID-19 fund simply because COVID-19 is a public health issue is a no! It is COVID -19 but can you make a clear connection between that and your core responsibility?
“Malaria related issues is one of the major costs incurred by NHIA, hence investing in campaigns to bring down mosquito infestation, which will bring down malaria cases has a direct relationship between that investment and core duties of NHIA.
“If the campaign is done effectively, it will bring down the cost of operation of NHIA because malaria claims will reduce. That is a direct connection.
According to Professor Prempeh, the absence of regulations to control spending in the various state institutions set up, ends up giving heads of these institutions too much power to take decisions based on discretion. This he said is one of the main causes of corruption.
“The lack of regulation can permit heads of state institutions to embark on developmental projects in communities all in the name of CSR when the actual reason for project is to benefit a friend or a personal political ambition in that particular community,” he said.
Adding that donations must be made to institutions or projects directly relating to the key responsibility of the state institution doing the donation. Ghana National Petroleum Commission (GNPC), for instance, donating to a petroleum engineering department of a university will be a worthy donation as graduates of that department can become assets to GNPC.
“India has a law that regulates even private sector because CSR is an expense, hence the more a company does it, the more it reduces the profit made, so government should be interested in CSRs of private institutions as well. We should be interested in how much money a private company is spending on CSR because they can use CSR to reduce their tax liabilities,” he said.
He said, when state enterprises start doing such investments it turns out to be like an attempt to take over the direct responsibility of the government because the government has its own responsibilities and so do the state enterprises. Focusing and executing their core mandate to perfection must be the way to go.
In a follow-up interview with Zakaria Tanko Musah, a Legal Practitioner, he argued that in the absence of specific regulation that seeks to regulate the use of discretion in the disbursement of public funds, there are different acts and regulations that require those in whose hands public funds or resources are entrusted to ensure the regularity and proper use of those funds. He cited the Public Financial Management Act, 2016 and Public Financial Management Regulations, 2019 to support his argument.
Mr Musah added that per section 90 of the Public Financial Management Act, governing bodies of public corporations and state-owned enterprises have a responsibility to “establish and maintain (a) policies, (b) procedures, (c) risk management and internal control systems, and (d) governance and management practices, to ensure that that public corporation or state-owned enterprise manages its resources prudently and operates efficiently in accordance with the objectives for which the public corporation or state-owned enterprise was established.”
Mr Musah further quoted section 96 (1) of the Public Financial Management Act which says that, “a person, acting in an office or employment connected with the procurement or control of Government stores, or the collection, management or disbursement of amounts in respect of a public fund or a public trust who (a) makes an unauthorised commitment resulting in a financial obligation for the Government, (c) is responsible for any improper payment of public funds or payment of money that is not duly verified in line with existing procedures, commits an offence and is liable on summary conviction to a term of imprisonment of not less than six months and not more than five years or to a fine of not less than one hundred.”