Extravagant CCA in financial crisis

• Salaries gobble up 70% of govt subvention and other revenue
• CCA has only 33 full time staff
• Broke parastatal closes nine offices
• CCA rejects tag of “extravagant”

CCA is responsible for the prevention of, and redress for anti-competitive practices in the economy, and the removal of constraints on the free play of competition in the market; as well as the protection of consumer rights by means of investigation, prohibition and control of unfair business practices. Motivated by recent reports that CCA may be sinking into a financial quagmire, The Business Weekly & Review scrutinised financial statements of the past three years, and a disturbing trend appeared.

Being a parastatal, the revenue of CCA comes mainly in the form of annual subventions from the government. However, a perusal of its books shows that about 70 percent of this is channelled into salaries and related benefits while the paltry remainder is directed to its core mandate and other operations. CCA’s core mandate is is the prevention of anti-competitive practices in the economy, the removal of constraints on the free play of competition in the market; as well as the protection of consumer rights by means of investigation, prohibition and control of unfair business practices.  But this function according to the Authority’s financials, is somehow neglected.

In 2020, CCA was granted P33 407 198 as government subvention. In addition, other revenue came from contracts with customers and some capital assets of the parastatal, including sales of tender documents. This took CCA’s total income for the period to P36 494 673. What raises eyebrows and wrinkles the forehead is how the money was spent. P20 325 606 of it, which is 55.6 percent, was spent on staff costs. Only P16 169 067 of the total income remained to be spent on core and non-core duties of CCA.

In 2021, the parastatal was given P42 642 955 by the government. An addition of other revenues increased this to P45 009 200 as total income. This time around, the staff costs of CCA (salaries, allowances and related staff benefits) ballooned to P31 328 440, which is 70 percent of total. Only 30 percent, which amounted to P13 680 760, was set aside to finance the parastatal’s core and non-core operations. Such has been the trend at CCA, even for the preceding years.

Since the bulk of the CCA money finances staff costs and not core operations, this has led to nine CCA offices being closed and unavailability of services of the parastatal at the affected places across Botswana. Nevertheless, staff salaries keep bulging. Concerned, The Business Weekly & Review engaged with the Director of Communications and Stakeholder Relations at CCA, Gideon Nkala, by email. Nkala has confirmed that the parastatal has closed nine offices across Botswana. “These are Kanye, Jwaneng, Tsabong, Hukuntsi, Ghanzi, Maun, Kasane, Selebi-Phikwe and Serowe,” he wrote in an emailed response.

Asked what led to this, he said budgetary constraints were the main reason. “Remember, these offices were always run by the Department of Consumer Affairs at the Ministry of Investment Trade and Industry (MITI) (MITI) until the responsibility was transferred to the CCA in December 2019,” said Nkala. When the parastatal completed its integration process in December 2021, the CCA Board, in consultation with the Ministry of Investment, Trade and Industry, decided that “while the intention was to maintain all the offices, more resources were required, and given the economic hardships under COVID-19, this was not possible, hence the decision to close down the nine offices”,Nkala said.

However, despite closure of the nine branches, CCA says no jobs have been lost. “Not a single individual lost their job at the end of secondment of former Consumer Protection Office employees to the CCA,” Nkala said. “All seconded employees who could not be absorbed by the CCA have been absorbed back into the public service.”

However, despite shutting down offices, for inability to maintain them because of budgetary constraints, “the CCA, like all other public funded institutions, has been given (a) budget to meet their operating costs under the current structure, i.e. running two offices in Gaborone and Francistown”, Nkala said. Although he admitted that the scaling down of CCA will affect provision of its services, he was quick to say CCA has put in place business continuity measures to ensure that “consumers, businesses and the public continue to get due services from the CCA by predominately using a combination of digital platforms, consumer groups, routine follow-ups and collaborations with other public offices to assist clients”.

He added that before taking over from Consumer Affairs Department, CCA had a staff complement of 33 and seconded staff of 110, bringing the total number of staff during the integration period to 143. Nkala does not accept the view that CCA is extravagant, especially in staff salaries and other emoluments. “The CCA is a public institution bound by a set of strict governance structures, audited by credible independent audit firms and its daily operations are overseen by a governance body, the CCA Board,” he said. “There has been no suggestion of extravagance by the CCA sniffed by the oversight institutions. The perception of extravagance doesn’t even come into the picture.”

According to Nkala, CCA basically has 33 full time staff members. The rest are 129 secondees from MITI and 15 interns who are not on the payroll of the parastatal and therefore do not draw any remuneration from it except an occasional overtime pay. The secondees are primarily employees of MITI while the interns are allocated to institutions through the government internship programme. Therefore, in its 2021 fiscal period, CCA spent P31 million on its 33 full time staff members. A perusal of CCA financials (2021) by The Business Weekly & Review shows that only P2.8 million went to the secondees as allowances.