The World Bank is of the view that improvements that make government payment programmes more efficient, safer and more transparent can cut related administrative costs by as much as 75% in developing countries such as Ghana and other countries.
According to the Bank, millions of people in developing countries worldwide receive their salaries, benefits and pensions through government-to-person (G2P) payments but in many cases, they are not being delivered in a cost-efficient way.
“Only 25% of low-income countries process cash transfers and social benefits electronically and this percentage is only slightly higher for public sector salaries and pensions,” Gaiv Tata, World Bank Director, Financial Inclusion Global Practice, said in a statement August 2, 2012.
“This means that many governments are stretching limited resources, and spending more than they should on paying benefits and salaries,” Tata added.
Ghana has an electronic payment platform known as E-zwich. According to managers of the platform, the Ghana Interbank Payment and Settlement Systems (GhIPSS), the value of transactions involving payment of salaries and loans went up to GH¢35.5 million in 2011 from GH¢15.5 million in 2010.
However, as part of its commitment to helping governments modernize in this area, the World Bank said it is releasing “General Guidelines for the Development of Government Payment Programmes”.
It is to promote best practices and establish standards for developing and improving government payments programmes.
More efficient government payment programmes not only optimize government payouts, but they can also improve revenue generating activities, the World Bank indicated.
“It is estimated that government expenditures and tax collections, which make heavy use of government payment systems, amount to 15%-45% of the GDP,” explained Massimo Cirasino, World Bank Manager of Financial Infrastructure.
Cirasino argued “More efficient electronic payment systems not only save the government money, they can also potentially benefit taxpayers and all other users of electronic payments.”
By Ekow Quandzie