Guinea-Bissau took a bold decision to introduce blockchain technology in May 2024 to modernize and optimize several national operations. This ambitious move aimed to strengthen the transparency, security and efficiency of administrative and financial processes.
Guinea-Bissau plans to expand its blockchain-based payroll management platform to all public sector employees. The solution will reach 26,600 civil servants in the country by November 2024, said Concha Verdugo Yepes, the International Monetary Fund’s chief economist for Africa and head of the agency’s blockchain solutions program. The company says it will be able to track data on 8,100 retirees. He shared this information in an interview published by IMF Country Focus, the IMF’s news platform, on Wednesday, October 2.
“The platform provides a secure and transparent digital ledger for managing public service wage bill data, enabling near real-time payroll and pension entitlements, budgeting, payment approvals, and salary and pension payments. This greatly improves data integrity and supports the production of timely and accurate financial reports for use by policy makers and the public, especially for payroll and pension management. , one of the first platforms in sub-Saharan Africa to use blockchain technology to improve government operations,” Verdugo Yepes explained.
When the project was first conceived in 2020, 84% of the state’s tax revenue was used to pay the salaries of Bissau-Guinean civil servants, the highest in the region, according to José Gijon, head of the IMF’s Guinea-Bissau mission. It became a ratio. “For every $100 of tax collected, $84 was spent on wages. This ratio is now down to 50%, a significant improvement, but wages account for 35% of tax revenue,” he said. remains high compared to the West African Economic and Monetary Union (WAEMU) regional fiscal convergence standard of not exceeding .
The Guinea-Bissau government has adopted blockchain technology to address various issues such as poor governance, embezzlement, and corruption in the national finances. The system aims to eliminate ghost workers, payroll fraud, and other schemes that have perpetuated due to poor traceability of public funds. The platform securely records, stores, and shares information in a way that prevents it from being tampered with. All transactions are inviolable and the system detects discrepancies in payroll data and flags them to the relevant authorities.
For the IMF, the solution provides additional benefits by simplifying audit reporting and reconciliation processes. It also provides reliable, up-to-date, high-quality data for artificial intelligence models.
According to the Organization for Economic Co-operation and Development (OECD), governments must have a reliable fiscal management framework to build trust with international donors and domestic and foreign investors. A crisis of trust in government threatens the financial resources needed for the country’s economic and social development.
Adoni Conrad Kenham