Guinea-Bissau has adopted the use of blockchain technology to manage civil servant salary expenditures, with the aim of increasing transparency and curbing corruption in public services.
Officials overseeing the country’s public wage bill management have introduced a new software platform that leverages blockchain to securely store and exchange payroll and pension information and prevent unauthorized changes. The initiative is being rolled out across all ministries and is part of broader policy reforms agreed to by the government in a program with the International Monetary Fund (IMF).
“After four years of collaboration with the Fund and technical advisors Ernst & Young, Guinea-Bissau is moving forward with the implementation of this new technology with financial support from selected partners,” the IMF said. It noted that the platform is expected to track the information. By November, all 26,600 civil servants and 8,100 pensioners in Japan will be eligible.
According to the IMF, the platform will provide a secure and transparent digital ledger for managing public service wage invoice data, and will “nearly It enables real-time monitoring.
“Each transaction is recorded in a tamper-proof register in near real time. The blockchain solution identifies discrepancies and alerts us when there is inconsistent salary information,” said Verdugo Yepes, blockchain project leader. .
Improved governance
José Gijon, the IMF’s representative in Guinea-Bissau, said the initiative will help authorities improve governance and win public trust.
“More broadly, this initiative will help strengthen accountability and reduce perceptions of public corruption, which in turn will help build trust in fiscal institutions.”
Gijon argued that the blockchain solution, which went live in May, will help reduce public wages as a percentage of taxes, allowing more resources to be devoted to public services and national development.
“When we started this project in 2020, wage bills accounted for 84% of tax revenue…there was little room for health, education, infrastructure and debt payments. This ratio is now 53%. , but it is still high compared to the convergence rate of 35% in the region,” he said.
The lack of strong controls in public wage bill management remains a significant factor contributing to government corruption across Africa. This problem is mainly manifested by the presence of ghost workers. A ghost worker is a fictitious employee who is placed on a payroll ledger by corrupt officials in an attempt to fraudulently extract multiple paychecks from the Treasury Department. Furthermore, misappropriation cases, where funds earmarked for salaries and pensions are diverted to other uses, continue to dominate local media coverage in many African countries.
More countries may follow suit
More African countries should follow Guinea-Bissau’s example and leverage blockchain technology to curb this type of corruption in public services, argues Babatunde Oladapo, a tax official based in Abuja, Nigeria. do.
“This is a welcome development, bearing in mind that most governments in the region are grappling with ballooning public sector wages,” he told African Business. “Other countries should do the same,” he said, noting that the measure would likely lead to significant cost savings for governments.
But he warns that any attempt to promote transparency in public services will always face political risks. Policymakers need to prepare for resistance. “To build on the success of this initiative in Guinea-Bissau and other countries, it is important to develop a sustainability framework that ensures cost reduction goals are not derailed by political interference. ”
Jason Braganza, executive director of the African Network for Debt and Development (AFRODAD), said implementing new technology alone is not enough to effectively manage wage claims, and that policymakers also need to pursue additional reforms. Emphasize.
“Improving government efficiency is typically about more than the adoption of technology,” Braganza points out. “Certain decisions such as privatization and reductions in budget allocations need to be considered. These measures, combined with technology, will enhance transparency and governance.”
