The passage of the 2006/2007 National Budget by the House of Representatives with some minor changes on the original submission is one good but insignificant step in the right direction. The lower house is reported to have increased civil servants salary to at least US$30.00, and included contributions from LPRC and other state owned enterprises (SOEs).

While I hail the lower house for insisting that SOEs contribute to the national budget, which in my opinion will serve as an incentive for these SOEs to exercise some sound financial management, I am particularly disappointed that salaries for civil servants are still not taken seriously in this country.

When the economy collapsed during the civil conflict, nobody lived on their legal earnings from government because the government did not pay salaries or consider the payment of salaries a priority. Civil servants were expected to create leakages in the system and make a living from those leakages. This was an acceptable way of life and nobody really complained. We have however branded this way of life as being corrupt, and are now blocking those leakages in our fight against corruption.

I champion this fight against corruption and support government’s reform programs that seek to build strong institutional capacities and effective governance systems. However, the obvious consequence of any successes we can boast of in our fight against corruption is that civil servants will no longer have or create leakages that they can make a living from. I cannot spell this out more simply than the fact that civil servants will not survive unless we pay them a living wage because they no longer have corruption as an alternative source of sustenance.

The knock-on effects can be surmised by anybody- if civil servants are not paid a living wage, their productivity will be impaired. Education will likely decline because teachers will be busy looking for alternative sources of income since they will not be able to make a living from teaching. The only teachers who stay on board will be teachers who have no viable options. Even then, these remaining teachers will seize every given opportunity to carry out deviant practices (or corrupt practices) that will put bread on their tables. The same is true of all the other sectors of the economy.

I dread what our police and other security personnel have the potential to do if they are not paid sufficient to ensure that they can feed themselves and their families. I am not going to talk about arm robberies here because the prevailing situation that seems to be accelerating with alarming intensity speaks for itself.

Interestingly, there are representatives calling on the President not to accept the lower house allocation of USD 30.00 to civil servants because they maintain that the government has not got money to meet that increased cost. These same representatives are the very ones advocating for a monthly remuneration of between USD 5,000 and USD 7,000.

Granted: at a projection of $129 million, the national budget is very small to meet the current needs of the state. Granted: it is also a big improvement from previous budgets. Granted: it seeks to allocate resources to every sector and addresses the wider economy. Granted: it seeks to be equitable while at the same time promotes some political objectives- as implied by the bigger allocations to the southeastern counties.

Unfortunately, we are talking about a $129m budget. This is nothing when compared to all the urgent needs of the state. The size of the budget is therefore the weapon that is being used by others (including the well intentioned) for the support of the current levels of civil servants salary.

But let’s look at some basic elementary economics here (and the budget is really about economics!). Resource allocation is the central theme of economics. Wants are differentiated from needs, especially because resources are scarce while wants are unlimited. The extraction of needs from wants is to facilitate prioritization. We therefore have to set clear objectives and directions to justify the identified needs to which resources are to be allocated. We also have to assess the impact of our budgetary prioritization to determine their ability to achieve the intended objectives. Do you see the link here to the budget?

My first disappointment with the budget is that there are no narratives enunciating the economic and political objectives that the budget seeks to achieve. What are the assumptions (largely economic) underlying the figures? For instance, tax on income and profits is expected to increase from $26m to $33m, but the government is very silent on where this increase is going to come from. Are individuals and corporations going to be taxed more, or will the collection of existing taxes be more efficient? At this time when we need more investment and therefore incentives to the investing community, it must be of interest to existing and potential investors what their tax burden is going to be.

Why are some sectors allocated more resources? What is the strategic position of these sectors in the overall national strategic objective? As things stand now, we can only guess from performing analytical procedures that because a particular sector gets more money, that sector is considered more important. It does not tell us WHY the sector is more important. That is anybody’s guess.

The current budget seeks to achieve so much, attempting to give everybody a piece of the pie. The problem is that because everybody will get a very small and insignificant piece of the pie, the impact will be negligible. Nobody is going to be satisfied when their absolute position is considered. Comparatively, the Education sector can be happy that it has been allocated 8% of the budget to emphasize its greater priority over the Health sector which has almost 6% of the budget.

In absolute terms, however, we are talking about just USD10m for instructional services, planning & development, subsidies & scholarship, University of Liberia, National Commission of Higher Education, Tubman College of Technology, and Administration & Management. When you look at the detailed allocation in these programs, the figures get even smaller, and smaller, and smaller, emphasizing my point that even though everybody gets a piece of the pie, nobody gets enough to make them notice any change or improvement in their current situation. The result is even more dissatisfaction and discontentment, and this will likely result in failure of government to achieve its economic and political objectives.

One would have thought that the economic planners would have sought to strike a note that would reverberate across every sector of the economy, in every county, and significantly impact every program and functional area. You ask me- “with a $129m budget, how is this impossible?”

My argument is that by identifying the critical factor in the economy that has the propensity to get the wheels of the economy spinning again- the factor that is common and present in every sector, county, program and functional area; the factor that can jump-start the economy. Interestingly, you don’t have to be a rocket scientist to figure out that Liberia is largely a labor intensive economy, therefore making labor the critical factor.

What would happen if government were to pay civil servants a minimum wage of USD 100? Estimating that there are 45 thousand civil servants, this would put the bill up to USD 54m. Would you argue that there would not be noticeable improvements in the education delivery system? How about health, security, etc? Do you think there would be so much dissatisfaction and discontentment as there is now? Already there is the downsizing and rightsizing to fuss about. Wouldn’t this justify the need for downsizing?

Of course this would mean sacrificing other activities, but just like we currently think that civil servants should wait until government’s revenue collection improves, we can argue that those other activities wait until government revenue collection improves. But it needn’t come to this, and here is why.

There are currently very many international organizations operating in almost every sector of the economy. The combined budget of these organizations is at least 5 times the size of the current national budget. Because Liberia does not receive any direct budgetary support, effective strategies and collaborative efforts should be pursued to harness the aid from these international partners. This would relieve the stress on government and in effect become an indirect budgetary support.

It would also amount to a form of comparative advantage specialization in the resource allocation process. Our partners can continue their programs but with adequate coordination and collaboration with the government, while the government can allocate resources to areas that are already not receiving support from the international partners, but could complement the activities of our partners while at the same time be seen to be looking after its own.

The perception that people have of this government right now is very important. After more than two decades of blood shed and national decimation, a vast majority of the people are still vulnerable to evil persuasions. With the robust downsizing program ongoing, and the blocking of the familiar “chopping”, it is important that respite is provided so that the people perceive the government to be for the people. Paying civil servants a minimum wage that constitutes a living wage is a right, and not a favor. To put it more firmly, it should also not be an economic policy option.

When the kids see their papa coming home, they do not want to scurry for cover. They want to see a bag of rice, rent money, transportation money, etc. They want their papa to assure them that things are indeed getting better, and that there are still better days ahead.

Authors Note: Government officials currently take home between USD500 and USD 5000 per month in allowances, in addition to their official salaries, but not included in their definition of salaries. For instance, an Associate Justice takes home a salary of LD 4500 [about US$76.00], but is paid an additional allowance of about USD 3500. When these officials talk about their salaries, they do not mention their allowances; they only talk about their LD salaries. Meanwhile, the ordinary civil servants only receive their LD salaries with no allowances. We expect these ordinary civil servants to wait until government collection improves. Meanwhile, we live very comfortably with no incentive to accelerate the improvement of government’s revenue collection. Do you call this an equitable and efficient allocation of government’s resources?

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