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Using Performance Contracting to Strengthen Public Institutions: The Case of NRA

By Ann Marie Dumbuya

Government, in the ‘Agenda for Prosperity’, has set a target for Sierra Leone to become a middle-income country by 2035. The achievement of this ambitious dream though depends on multiple factors, including building strong institutions for growth and development. Poor performance of the public sector has become a major concern over the years. Since government ministries, departments and agencies (MDAs), state corporations/parastatals and local councils have vital roles to play if the quality of lives of all Sierra Leoneans and the country’s global competitiveness is to be highly developed, improving public sector performance by an increased focus on results, in terms of efficiency, effectiveness and quality, has become imperative.

So, in 2011, government introduced Performance Contracting in the Public Service when performance agreements between the President and heads of public institutions were signed as a means of developing a more performance-oriented culture in the public sector. The purpose of Performance Contracting (PC) though is not limited to establishing a basis for efficiency and effectiveness in public service delivery, but also as part of wider efforts to institutionalise a culture of accountability, transparency and responsiveness in delivering such services.

Performance contracting in the public sector, being a new phenomenon in Sierra Leone, presents several opportunities and challenges for strengthening public institutions. Obstacles already faced in the implementation of the concept across diverse public institutions highlight the difficulties of using PC to improve public sector service delivery. Nevertheless, PC presents an opportunity for government to ensure that the needs and expectations of the public are met by setting comprehensive performance targets that give greater clarity over what public agencies should achieve, while monitoring the achievements of such targets through annual reviews. It is clear that participating institutions are benefiting through improved performance in administrative and service delivery functions as public institutions are now required for the first time in history to develop service charters in consultation with their clients and work towards achieving set targets.

In the case of the National Revenue Authority (NRA), the 2013 Performance Contract report on commissions and parastatals saw the institution again scoring high points. This is the second year running that the NRA has been awarded the Silver Award in recognition of its outstanding performance in the annual performance contract reviews. The key concern for government now is how to use PC as a tax reform tool to sustain performance gains and encourage a stronger performance from the NRA for subsequent years. This is more so as the need to optimize domestic financing to meet budgetary challenges intensifies due to the increased downside risks of overreliance on donor support in funding budgetary expenditures. This was highlighted in 2013 when the NRA, which has accelerated tax collection over the years and become central to government development agenda, exclusively funded government expenditure for the first 9 months of that year due to gaps in projected donor funds flowing into the state treasury.

The government has ambitious targets to increase tax revenue with the NRA expected to collect Le2.468 trillion in 2014, compared to Le2.103 trillion in 2013. This indicates that concerted efforts must be made by NRA’s management and government, through the Ministry of Finance and Economic Development, to ensure that the performance obligations of 2014 agreed upon by the Authority through the signing of the performance contract should be cascaded to all departments, especially operational departments, for a complete integration of the process. According to the 2013 performance review, the higher-than-anticipated revenue collection in 2013 was due to an improved performance by all operational departments and modernisation of operations through modern technologies to improve service delivery. While NRA’s revenue growth potential remains on solid footing with an improvement in tax administration, the efficiency and capacity of the Authority to optimize collection of tax revenues for the funding of public services and macroeconomic stability can be further enhanced by developing human capital at all levels of management and driving greater compliance with tax laws.

NRA’s partnership with international organizations, especially the UK Department for International Development (DFID), in recent years, has been fruitful. DFID has provided enormous support to the NRA, which has helped the Authority engage in institutional reforms through modernising and computerising its tax administration systems and building capacity, thus resulting to the Authority being more successful and efficient in tax collection and service delivery. By meeting several benchmarks, including implementation of customs and domestic taxes reforms as well as introducing tax investigation and enforcement strategies, DFID has approved the second phase of its modernization support programme to the NRA (2014-2017).

Consequently, the NRA Commissioner-General, Haja Kallah Kamara, who is acclaimed for spearheading several reforms aimed at improving service delivery efficiency and effectiveness in ensuring that revenue collection is optimized, is currently benefiting from a refresher programme on corporate governance and management at the Harvard University in the United States of America, through DFID’s sponsorship.