INFORMATION SERVICES: RESEARCH
Oversight Experiences and lessons in Mozambique
1. Background
For decades before independence in 1974, Mozambique was a Portuguese colony. During this time Mozambique was considered an integral part of Portugal and assumed a status of "a province". Like many other African countries Mozambique's development under the colonial state was stunted and even at the very end of the colonial period, the population was overwhelmingly rural, the economy was predominantly agrarian and educational levels were low.
However, in 1974 Mozambique attained its independence after the liberation war, which began a decade earlier under the leadership of FRELIMO. Some analysts argue that this liberation was made successful by the overthrow of the dictatorship in Portugal. In 1974, power was handed to FRELIMO without elections and this was to be followed by a dominant system of a one party state, which governed the country until the early 1990s. During this time more than 95 percent of the settlers left Mozambique leaving a country with a weakened economy. The period before 1990 also saw FRELIMO establishing close ties with the USSR and it was no surprise when FRELIMO leaders adopted Marxism-Leninism as its guiding ideology. This however, estranged the Mozambique's relationships with its neighbouring countries mainly Rhodesia and South Africa, which lead to these two countries sponsoring an armed revolt by the RENAMO, which plunged Mozambique into a brutal civil war that lasted for approximately sixteen years.
2. Recent Developments.
The demise of the Soviet Union, political changes in neighbouring countries like South Africa and the collapse of Mozambique's economy prompted the parties at war to find a solution to the conflict. In 1990 a liberal constitution was enacted and this paved the way for talks between the warring parties FRELIMO and RENAMO. In 1992 a peace agreement was signed between these warring parties. After the signing of the peace agreement, more than 4 million refugees returned to Mozambique and foreign investors and donors were again attracted to Mozambique. Mozambique's political system was more stable than ever before and this culminated to elections in 1994, 1999 and 2004, all of which FRELIMO won.
3. Constitutional Democracy after 1990
The 1990 constitution formally led to a separation of powers between the Judiciary, Executive and Legislature and this has led to some labelling Mozambique a "liberal democracy". However, some commentators are quick to point out that, despite the formal recognition of a constitution, political systems in Mozambique continued to be polarised between the ruling party FRELIMO and the opposition party RENAMO with both parties focusing too much on history and their role in shaping the political system of the country before and after independence. These claims and debates according to many authors, seem to have overshadowed debate on more relevant topics like socio-economic priorities and development of policies and programmes to fight poverty. These deep political divisions became visible in 1994 and 1999 presidential and parliamentary elections won by FRELIMO when RENAMO rejected the results pointing to irregularities and claiming that the elections were rigged in favour of FRELIMO. Members or deputies (as popularly known in Mozambique) from RENAMO refused to take their seats in Parliament and this carried on fora period of twelve months. However, in October 2000, the deputies assumed their posts in Parliament. This however, was not the end of it as deputies from RENAMO continued to stage walkout of sessions whenever they reached a stalemate with the ruling party, FRELIMO.
4. The role of Parliament
Like South Africa, Parliament of Mozambique known as the Assembly of the Republic, is elected every five years. Parliament in Mozambique is a representative Assembly, which is assigned with the role of approving legislation and holding the Executive to account within a system of formal checks and balances. It sits for about 180 days per year and has two sessions during February to May and October to December.
However, Mozambique's political system has a powerful executive Presidency with considerable powers. Although a new Constitution adopted in 2004 made a few changes with regard to the rights of the citizens, no fundamental changes were made in respect of the powers that the executive has over the Legislature and the powers of the Presidency.
As a result, the Parliament of Mozambique remains weak and fragile with no visible effective system of checks and balances. Some authors however argue that the culture of Parliamentary scrutiny of the executive is still in its infancy. However, this is not an excuse, a number of countries like South Africa have made considerable progress in acknowledging fundamental principles of a constitutional democracy.
In addition, the Parliament of Mozambique too often faces severe capacity constraints with insufficient resources and research staff. Research shows that deputies (Members of Parliament) themselves are poorly educated and lack relevant skills and expertise to conduct proper oversight of government finances and service delivery. A number of studies conducted in Mozambique point out that the executive and government is more accountable to International donors like the (International Monetary Fund) IMF than to the Assembly of the Republic i.e. Parliament.
5. Financial Oversight
In looking at the financial oversight in Mozambique, it is important to examine the role of Parliament in the Budget cycle process. The 1990 constitution gives Parliament of Mozambique a responsibility of deliberating the State Budget. By Law, the government is required to submit Plano Economico e Social (PES) which, when translated into English means Economic and Social Plan and OE (State Budget) by the end of September to be deliberated, debated and approved during the Parliament's second session which begins in October and ends in December. It is said that government has consistently met this obligation since 2002. The downside of it is that members of Parliament only have access to these documents in mid October.
Parliament of Mozambique has a Standing Committee that deals with rules and procedures and a series of specialised Commissions, which are composed of five to fifteen deputies whose political composition is proportional to the parties represented in Parliament. There are eight specialised Commissions and these are:
While the OE and PES are available to the deputies, the commissions in particular t he Planning and Budget Commission, also have a duty to study them in detail. The Planning and Budget Commission is chaired by a FRELIMO deputy. This Commission has considerable powers in that it can question the Minister of Planning and Finance and it sometimes organises missions to review the implementation of PES and OE in provinces. After consideration and debating the PES and OE, Parliament approves the PES through a resolution while the OE gets approved bylaw. Parliament in Mozambique never makes changes in budget allocations, instead deputies only ask for clarity in certain areas.
Although the Parliament of Mozambique plays a certain role in the budget process i.e. budget debate and approval, it remains challenged in certain areas and these put limitations on the extent to which it can exert a real check on the executive and in the budget process. As it has been alluded to in the previous section, the extent of budget debate in Mozambique tends to be overshadowed by unnecessary topics, which tend to focus more on the question of legitimacy of government and those in power. Studies done reveal that although there is a detailed examination and deliberation of budget proposals in the Planning and Budget Commission, once the budget reaches plenary session whatever rigour existed in the Commission tends to evaporate in the heat of a wider political debate. Analysts point out that this is made worse by political resistance from deputies of the opposing parties with FRELIMO content to defend the PES and OE and RENAMO officially opposing the budget proposals. When parties reach a stalemate, voting normally becomes a procedure and under these circumstances RENAMO deputies usually walkout resulting in wide jeers from the FRELIMO deputies.
In Mozambique, Parliament also does not approve tax rates as part of the budget and this makes it difficult for the deputies and the public to appreciate the trade off between taxation and public services. The lack of transparency of the budget with the tax policy has also resulted in loss of interest from the general public about budgets particularly the budget speech.
It is also argued that the Parliament of Mozambique only plays a limited role in approving budget revisions. Instead, the Minister of Planning and Finance has a sole discretion to reallocate expenditure without prior consultation of Parliament and hundreds of reallocations take place in this process. This undermines the legitimacy of Parliament.
As it has been mentioned earlier, government in Mozambique is more accountable to donors than to Parliament. The main contributing factor to this problem is that a substantial amount of public expenditure in Mozambique is financed by international donors through off-budget allocations. This accounted for more than 30% of total government spending in the 2002 year. Accountability to donors has caused enormous problems and complications for the Planning and Budget Commission especially with regards to monitoring the implementation of projects and budgets. For example, a situation arose when the 2002 budget was approved by Parliament and it was not applied in practice because of objections made by the International Monetary Fund (IMF), which questioned the optimistic nature of Gross Domestic Product (GDP) and revenue projections on which the budget was based. This led to a situation where the government executed a new budget based on the IMF estimates while it quietly abandoned the revised estimates approved by Parliament.
Furthermore, Parliament's role in maintaining and conducting a proper oversight over budgets is limited by a lack of medium term government policy objectives. In fact, the government of Mozambique does not submit to Parliament the Medium Term Fiscal Framework that normally helps in situating the budget in the longer-term context. This is in contrast with international best practices adopted by countries like South Africa. To make matters worse, the Parliament of Mozambique has never been involved in debating or approving sector strategic plans which have been produced in several of the most important sectors like Health, Agriculture, Education, Roads, Justice and Roads since the late 1990s. This creates a huge gap in the whole financial oversight process.
With regards to quarterly reports, Parliament of Mozambique does not formally review quarterly expenditure reports produced by the Ministry of Planning and Finance. This limits the content and extent of Parliamentary debates, as these debates are not informed by past performance. This shifts the focus of the debates into narrow insignificant non-budgetary issues.
The system of internal control within the government in Mozambique is also weak. The Finance and Inspectorate General (IGF), which is assigned with a duty of checking out government's internal controls including internal auditing of all public institutions, suffers from a lack of financial resources and human capacity. The IGF for example, lacks qualified staff and appropriate equipment like computers. The IGF is said to have 60 professional staff in its employ. However, none of them holds an internationally recognised qualification such Chartered Accountant or a Certified Public Accountant. Nevertheless, there have been improvements since 2004.
An important finding of the World Bank study was that the government of Mozambique holds its bank account in the central bank as well as numerous other commercial banks. It is estimated that at the beginning of 2004, the government of Mozambique had 4 500 active bank accounts. And it can therefore be concluded that satisfactory reconciliation of bank accounts with accounting records does not occur.
With regards to annual reporting and auditing, the Administrative Tribunal (AT), a judicial body in Mozambique, is assigned with auditing duties. The AT has designated powers and responsibilities. For example, it has power to investigate and report financial misconduct and can impose sanctions and punishment. In spite of these powers however, the external auditing in Mozambique suffers from serious delays. As a result, financial statements have lost its relevance and importance as an accountability mechanism.
In Mozambique, government annual financial statements are supposed to be submitted to the AT twelve months after the end of the financial year, i.e. 31 December of the following year. The AT is then required by law to submit its report and opinion on those financial statements to Parliament, on the 31 August the following year. This effectively means that the Audit Report together with the Audited financial Statements, are only available to Parliament 20 months after the end of the financial year. In addition to that, Parliament then has four more months to study the report meaning that the whole process takes two full years. This is too late to permit Parliament to consider the results of the Audits in the budget debates. Clearly, Parliament cannot realistically monitor the implementation of its recommendations with respect to audit outcomes on a regular basis, as it needs to wait for at least two years to determine the extent of implementation of these recommendations. The World Bank and the IMF believe that the delays are mainly due to the serious lack of human resource capacity in the Administrative Tribunal. It is also reported that the staff at the AT is not only small but its also under-qualified and underpaid.
Lastly, evidence suggests that Mozambique procurement system has serious legal, human and institutional weaknesses. Mozambique government does not have an adequate legal and regulatory framework for procurement of goods and services. The present legislation is seriously fragmented and inadequate. This has serious negative impact on the efficient use of government resources and those from donors as it leaves government procurement system open to serious risks of corruption and fraud.
6. Conclusion
Although Mozambique continues to face a number of challenges especially financial oversight and accountability, a lot of progress has already been made and the government, with assistance from donor countries is in the process of addressing these challenges and implementing international best practices of good governance. However, the IMF and other donors need to re-assess their role and impact in shaping up the political system in Mozambique. Perhaps the donor countries need to find mechanisms of transferring their expertise to the people of Mozambique to allow them to be more involved in bringing about changes in the political arena.
References
Public Expenditure Management Country Assessment and Action Plan: Mozambique. Prepared by the World Bank and the IMF in collaboration with the Mozambique Authorities, October 2004.
Tony Hodges and Roberto Tibana. Political Economy of the Budget in Mozambique, December 2004.