Guinea-Bissau is implementing blockchain technology to manage public wage bills, enhancing transparency and combating corruption in the public sector. Backed by the IMF and Ernst & Young, the new platform will support real-time monitoring of wages for over 26,000 public officials. The initiative aims to improve governance, reduce the wage bill’s impact on tax revenues, and restore public trust while acknowledging potential political challenges.
Guinea-Bissau has adopted blockchain technology to enhance transparency in managing public wage expenditures. A new software platform is being introduced to secure salary and pension information, ensuring unauthorized alterations are prevented. This initiative covers all ministries and agencies, aligning with broader reforms agreed upon with the International Monetary Fund (IMF).
The rollout follows a four-year collaboration with the IMF and Ernst & Young, backed by financial support from various partners. The blockchain platform is expected to monitor the salaries of approximately 26,600 public officials and 8,100 pensioners by November, providing a secure digital ledger for public service wages.
The system allows for real-time monitoring of salary payments and eligibility, which assists with budgeting and disbursements. The blockchain solution implements a tamper-evident register that triggers alerts for discrepancies in salary data, as explained by Verdugo Yepes, the blockchain project lead.
According to Jose Gijon, IMF mission chief for Guinea-Bissau, the initiative aims to improve governance and restore public trust. The project should heighten accountability and reduce perceptions of corruption while also optimizing the public wage bill in relation to tax revenues.
Previously, the wage bill consumed 84% of tax revenues, limiting funds for critical services. Recently, this ratio has improved to 53%, still high compared to the regional norm of 35%. The absence of strong controls often leads to government corruption, including issues like ghost workers and misappropriated funds.
Experts, like Babatunde Oladapo, advocate for the expansion of blockchain solutions across Africa, citing the common struggle with bloated public wage bills. Such replication could lead to substantial fiscal savings. However, the transition may not be smooth, as political resistance is anticipated.
Jason Braganza emphasized that technology alone does not guarantee effective wage management; comprehensive reforms, including budget adjustments and privatization, must accompany the technological advancements. Such reforms, combined with blockchain adoption, could significantly enhance governance and transparency in public service.
Guinea-Bissau’s transition to blockchain for wage management represents a significant step towards enhancing transparency and combating corruption within the public sector. By facilitating real-time monitoring and establishing secure ledger systems, the government aims to reduce the public wage bill’s burden on tax revenues while improving accountability and public trust. Other countries may benefit from this model, yet successful implementation requires careful consideration of political dynamics and additional reforms.
Original Source: african.business
