In a bid to improve transparency and combat corruption in the public service, Guinea-Bissau has adopted blockchain technology to manage civil servants’ salary expenses.
Officials charged with overseeing public payroll management in the country have deployed a new software platform that leverages blockchain to securely store and exchange salary and pension information, preventing unauthorized changes. This initiative is being rolled out across all ministries and agencies and is part of a wider package of policy reforms that the government has agreed in its program with the International Monetary Fund (IMF).
“After four years of collaboration with the Fund and technology advisor Ernst & Young, and with financial support from selected partners, Guinea-Bissau is moving forward with the implementation of this new technology,” the IMF said, noting that the platform should track the information. for all 26,600 civil servants and 8,100 retirees in the country by November.
The IMF says the platform offers a secure and transparent digital ledger to manage public sector payroll data, enabling “near real-time tracking” of salary and pension eligibility, budgeting, payment approvals and disbursements of salaries and pensions.
“Each transaction is recorded in near real time on a tamper-proof register. The blockchain solution identifies discrepancies and triggers alerts in case of inconsistent salary information,” noted Verdugo Yepes, blockchain project manager.
Improve governance
According to José Gijon, head of the Guinea-Bissau mission at the IMF, this initiative will help the authorities improve governance and gain public trust.
“More broadly, the initiative will help increase accountability and reduce any perception of public corruption, and will in turn help build confidence in fiscal institutions,” he said.
Gijon argued that the blockchain solution, which went live in May, would help reduce the public wage bill as a percentage of taxes, freeing up more resources for public services and the development of the nation.
“When we started the project in 2020, payroll accounted for 84% of tax revenue… there was little room left for health, education, infrastructure or debt repayment. This ratio has now improved to 53%, but it remains high compared to the region’s convergence rate of 35%,” he said.
The lack of rigorous controls in the management of the public payroll remains a significant factor in government corruption across Africa. This problem is primarily evident through the presence of ghost workers – fictitious employees placed on payrolls by corrupt officials seeking to fraudulently withdraw more than one salary from the public treasury. Additionally, cases of embezzlement, where money intended for salaries and pensions is diverted for other purposes, continue to dominate local media coverage in many African countries.
Other countries could follow suit
To combat this type of corruption in public office, more African countries should follow in Guinea-Bissau’s footsteps and leverage blockchain technology, says Babatunde Oladapo, a tax administrator based in Abuja, Nigeria.
“This is a welcome development given that most governments in the region are struggling with bloated public sector payrolls,” he said. African affairs. “This should be replicated in other countries,” he said, noting that the move would likely result in significant savings for governments.
He warns, however, that any attempt to promote transparency in the public service will invariably run into political risks. Policymakers must prepare for resistance. “To further consolidate the gains of this initiative in Guinea-Bissau and any other country, it is important to build a sustainability framework that will ensure that political interference does not derail the cost reduction objective. »
Jason Braganza, executive director of the African Forum and Network on Debt and Development (AFRODAD), emphasizes that the adoption of new technologies alone is not enough for effective payroll management – policymakers must also pursue additional reforms.
“Government efficiency gains are usually not just about introducing technology,” notes Braganza. “Certain decisions, such as privatization and reduction of budgetary allocations, need to be considered. These measures, combined with technology, will improve transparency and governance.
