Model law on PFM adopted |15 July 2022
Right Honourable Nellie Butete Kashumba Mutti, the Speaker of the National Assembly of Zambia, enjoins the 5st Plenary Assembly Session to adopt the SADC Model law on Public Financial Management (PFM) in Lilongwe, Malawi (Photo: Moses Magadza)
The 51st Plenary Assembly session of the SADC Parliamentary Forum yesterday adopted the much-anticipated Model Law on Public Financial Management, raising hopes in a region in which lack of accountability in the use of public funds has perennially jinxed socio-economic development.
The Plenary Assembly is the highest decision making body of the Southern African Development Community (SADC) Parliamentary Forum (PF), the deliberative body that brings together 15 national parliaments of the SADC PF. It met under hybrid conditions ‒ largely physically and partly virtually ‒ in the Malawian capital city of Lilongwe and was taken through the provisions of the Model Law on Public Financial Management (PFM) by veteran legal drafter Daniel Greenberg.
In an impassioned and factual submission, Right Honourable Nellie Butete Kashumba Mutti, the Speaker of the National Assembly of Zambia, enjoined the plenary to adopt the model law.
She said the PFM affects all aspects of any nation’s life as it is the fulcrum upon which the implementation of all government programmes hinges.
“It is a critical cog in the wheel of state operations as it encompasses the administration and supervision exercised over state finances in a continual activity in which the executive and parliament complement each other through checks and balances,” she said.
She added: “There is a multiplicity of legal and regulatory gaps across SADC member states which impede sound public financial management. Most SADC countries have such lacunae in their public financial management systems in one form or another.”
She argued that there were the limitations in the scope of the mandates of parliaments in terms of oversight of public resources, in particular the lack of scrutiny over the financial operations of parastatals and other public bodies.
“Even where the legislature identifies wrongdoing and recommends corrective action to curb poor financial management, no action is taken on those recommendations by the relevant authorities,” she stated.
Right Honourable Mutti said another common shortcoming in PFM in a number of SADC States is the inadequate regulation and oversight of public debt, whereby the executive is empowered to contract public debt of any amount without the approval of the legislature.
“Closely related to the challenge of inadequate parliamentary control on public debt is the fact that in many SADC countries, there is no cap on the value of public contracts that can be entered into by the executive without parliamentary approval,” she said, adding that while it is legitimate for the executive to contract debt, the issue is when once taken debt binds successive governments, often for 20 to 30 years ahead.
Right Honourable Mutti noted that in many instances, there is excessive utilisation of supplementary budgets to finance expenditures which should ordinarily have been foreseen and budgeted for.
This means such expenditures escape the legislative and public scrutiny that they should be subjected to through the normal democratic process, she further said.
“Cognisant of the fact that only the legislature is bestowed with the necessary authority to interrogate the executive regarding its execution of public functions and the expenditure of public funds, the 46th Plenary Assembly resolved to develop this Model Law on PFM,” the Speaker explained.
She said: “All the provisions in this model law are intended to help our respective member states to strengthen their PFM systems through strengthening the parliamentary oversight of these systems and the provisions ought to be of great interest to every parliamentarian, whether present here and even those who may not be present.”
She said it is also notable that the SADC Model Law on PFM is the first of its kind globally – no such model legislation exists anywhere in the world.
“This means with this initiative, the SADC Parliamentary Forum is a pioneer, and we expect other regions to follow suit,” she said.
She said the benefits of a strong and functional PFM system hardly need elaboration as a strong system would lead to an improved investment climate in the individual member States and in the SADC region in general.
She told the plenary that an improved investment climate attracts private capital nationally, transnationally and internationally. On the contrary, a weak or non-functional PFM system opens doors for fraud and corruption and other forms of transnational or cross border organised crime and ultimately discourages investment, she reasoned.
She said as representatives of SADC citizens, it is in the parliamentarians’ interest to champion the clarion call for the domestication and implementation of this model law in their respective jurisdictions in accordance with respective constitutional arrangements.
Once domesticated, the provisions of the model law would enable legislators to effectively perform their oversight role on public finances and push for the progressive realisation of the rights of their constituents.
“I am delighted to inform this august Assembly that the development of the SADC Model Law on PFM has charted a decidedly democratic path of inclusiveness and leaving no one behind.”
Stakeholders, ranging from PFM practitioners, parliamentarians, auditors general, judicial officers, prosecutors, representatives of Central Bank governors, police, legal practitioners, ministries responsible for finance, governance and anti-corruption, accountants general as well as academic institutions, were invited to share their expertise and experience so as to enrich the content of the Model Law, she said.
“All in all, close to 1,000 individuals from all walks of life participated in the consultative process on the SADC Model Law on PFM,” she said
According to Right Honourable Mutti, the consultations were followed by a validation process during which the standing committees of the forum and the Regional Women’s Parliamentary Caucus (RWPC) convened in a joint session and pored over the draft model law, examining it clause by clause, and gave their seal of approval to each provision.
“This process serves to reinforce the resolve of the forum to remain a flagbearer in the SADC region as far as regional integration and democratic governance is concerned, in keeping with its strategic objectives for the period 2019 to 2023,” she added.
In seconding the motion, Right Honorable Catherine Gotani-Hara, MP, Speaker of the Parliament of Malawi, said by virtue of their mandate, legislators have a sacrosanct duty to pursue the improvement of the quality of life of the citizens they represent. She said there were many ways to do this, but one of the most effective ways is by ensuring prudential planning and utilisation of public resources to attain various public aspirations.
Hon. Hara said such public aspirations include commitments encapsulated in regional and international instruments including the sustainable development goals (SDGs); the 90-90-90 targets to eradicate HIV/Aids by 2030; the implementation of regional strategies such as the SADC SRHR Regional Strategy (2019-2030); or the SADC Regional Strategy for HIV Prevention, Treatment and Care and SRHR among key populations (2018).
She said as legislation and annual budgets are adopted by the legislative arm of government, in that context, parliamentarians are gatekeepers in the attainment of these aspirations.
She also reasoned that model laws are therefore, a critical tool for the improvement of the livelihoods of the people and once this tool is in the hands of parliamentarians, they are mandated to use it in the pursuit of the interests of the people.
“We, therefore, cannot allow the process to end at development of the Model Laws,” Hon Gothani-Hara noted.
She said in light of the foregoing, it is laudable that the SADC Parliamentary Forum was effectively sing its mandate as a regional parliamentary body to formulate normative standards in the form of Model Laws, which SADC member States could adopt or adapt, in keeping with their domestic context.
The Speaker said the management of public finances across SADC member states continue to face various challenges such as corruption, misappropriation, overspending and other forms of illicit financial flows.
“The challenge of revenue leakages had been exacerbated by other vices such as tax evasion, tax avoidance, rent seeking behaviour and transfer pricing. All these negatively affect the ability of SADC states to deliver quality public services, reduce poverty and make a better life for their people,” she had told the Assembly.
In addition, she said the legal framework governing public finances continues being flouted with impunity. Against the backdrop of shrinking economies and general financial resource constraints in the region, the region now faced the compounding impact of the economic effects of the Covid-19 pandemic.
By Moses Magadza in Malawi