Find us on Google+

Thursday, 13 October 2011

How much does government spend on embassies?

That question was triggered by the revelation that government plans to set up foreign missions in Spain, Portugal, Argentina and Saudi Arabia (Source:  Daily Mail). On our Facebook page we noted that this proposal is a "bad idea", unless it comes with rationalisation of existing foreign missions. In short, our assessment is that the economic case for additional embassies does not exist given competing priorities and rampant corruption in these embassies.

We were subsequently challenged to provide more information. We have pulled together this table to give a fuller picture of annual spending, based on information to hand. In short, London over the next lifetime of the present Parliament will cost Zambian taxpayers a minimum of K60bn. The two embassies in DRC will cost around K50bn. The three embassies in close proximity Paris, Brussels and Rome will cost nearly K120bn. The question we are asking is simple : how many schools can we build if we rationalised some of these embassies? We don't need new embassies, we need a new foreign policy that will take these issues into account. This position is not new - we have made this clear many times e.g. here and here.



Foreign Missions Budget Allocation, 2007, 2008 and 2009
 (Kwacha)
Foreign Mission
2009
2008
2007
Abuja
4,616,700,986.
2,474,664,715.
Accra
Addis Ababa
5,659,081,300.
4,135,433,753.
Beijing
4,853,407,835.
4,735,411,281.
Berlin
7,455,055,894.
6,463,139,586.
Brasilia
Brussels
9,699,608,731.
6,966,713,142.
Cairo
4,641,508,614.
5,040,870,000.
Dar-Es-Salaam
4,236,375,165.
9,468,020,712.
Gabarone
3,855,072,186.
5,125,421,610.
3,019,071,465.
Geneva
10,184,332,300.
7,590,904,914.
Harare
5,433,190,504.
4,384,625,910.
Kinshasa
5,632,451,091.
3,957,337,697.
Kuala Lumpur
Lilongwe
London
15,769,256,438.
Luanda
5,214,640,128.
4,608,102,537.
Lubumbashi
4,375,893,620.
4,818,819,899.
Maputo
3,493,734,687.
4,063,563,013.
Moscow
6,516,826,948.
4,611,134,014.
Nairobi
4,027,102,680.
3,822,049,607.
New Delhi
4,333,205,558.
3,842,061,065.
New York
Ottawa
6,747,496,911.
3,239,020,013.
Paris
6,939,712,455.
6,294,738,951.
Pretoria
6,993,414,949.
6,300,942,106.
6,374,992,266.
Rome
7,239,123,334.
5,472,121,191.
Stockholm
7,596,698,569.
6,346,183,915.
Tokyo
4,511,595,884.
3,773,406,994.
Tripoli
5,524,534,204.
Washington DC
7,024,511,879.
8,233,677,419.
Windhoek
3,363,137,691.
3,684,940,113.


The natural question is what this money is being spent on. As the table below reveals over 905 of the money in embassies go on "personal emoluments". In short, we can save huge amounts by cutting diplomatic posts, though it would make sense to undertake a thorough cost effectiveness review. Not all embassies are the same. A proper economic case must be demonstrated. 

Sample  of Foreign Missions Spending :
Distribution of Spending, 2009
(Source: Auditors General Report for 2009 Accounts)
London*
Tripoli**
Personal  Emoluments
K14.3bn
K9.3bn
General Administration
K0.2bn
K0.1bn
Utilities
K0.2bn
K0.1bn
Political / Economic Relations
K0.2bn
K0.0bn
Infrastructure Development
K0.9bn
Areas
K0.0bn
Total         
K15.8bn
K9.5bn
*Allocated budget **Actual spend

7 comments:

  1. I feel that I should point out to readers that the only digital source of numbers available for these Foreign Mission budgets comes via the Office of the Auditor General. Because of the peculiarities of their work, when the AG publishes figures it is solely because there are discrepancies in the accounting. The good people over there never get to bring us good news, so when you look over these tables please keep in mind that the only reason a particular mission appears is because the Auditors found something wrong with the accounting for funds there.

    Those wishing to peruse Auditor General reports for themselves can find them here (warning these are long documents): http://www.auditorgeneral.gov.zm/index.php?option=com_docman&task=cat_view&gid=35&Itemid=54

    ReplyDelete
  2. Some selected tidbits from the AG reports may help to further illuminate the nature of high personnel spending at embassies and consulates. This goes far beyond supporting a few foreign service officers in overseas residence, it also entails various benefits to dependents and significant levels of employment for nationals of the hosting country:

    From 2008 AG report, p.78, paragraph 31b-ii, in reference to the Moscow mission, "Irregular Payment of Overtime Allowances:

    During the period January to December 2008, a total amount of K100,489,603 was irregularly paid to Locally Engaged Staff as overtime allowances. However, there was no evidence to show that the staff had worked overtime."

    From 2008 AG report, p.87, paragraph 34d, in reference to the Beijing mission, "Payment of Education Allowances:

    According to Foreign Service Regulation No. 48 (ii), an officer whose child is in college or university and below the age of 21 years shall be eligible to receive 50% of the education allowance.

    A scrutiny of accounting records revealed that amounts totalling K218,112,750 (US$57,375) were paid to four (4) officers during the period January to April 2008 as education allowances. However, it was observed that the payments were not supported by relevant documents such as vital statistics forms, birth certificates and adoption papers. In this regard, it was difficult to verify the authenticity of the payments."

    From 2008 AG report, pp.89, paragraphs 35b-i, in reference to the Abuja mission, "Unaccounted for Fuel:

    During the years 2007 and 2008, fuel costing K145,533,096 (N4,626,900) was purchased for three (3) generators owned by the Mission to service the Chancery, the High Commissioner's and Deputy High Commissioner's residences. However, contrary to Stores Regulation No. 16, there were no receipt and disposal details in respect of the fuel."

    From 2008 AG report, pp.92-93, paragraphs 38a&b, in reference to the New Delhi mission, "a. Child Allowance:

    Foreign Service Conditions and Regulations (FSR & CS) No. 45 (i) states that Child Allowances shall be paid to an officer to enable him/her meet incidental expenses in respect of a child under legal custody of the officer at a Foreign Mission/Station. Contrary to the regulation, a total of K26,873,177 (US$4,987.50) was paid to the High Commissioner in respect of his three (3) adopted children who were not at the station.

    Inquiries at the Embassy revealed that the adopted children were actually his grandchildren who were with their parents (the ambassador's children) in Lusaka."

    b. Education Allowances:

    Foreign Service Regulations and Conditions of Service No. 47 (i) provides for the payment of education allowance directly to the officer to assist him/her meet the cost of education of his/her children at a Foreign Mission/Station. In this regard, amounts totalling K114,520,312 (US$29,999) were paid to two (2) officers.

    It was observed that the officers who were in receipt of education allowances were also beneficiaries to school fees paid for their children on their behalf by the Mission in amounts totalling K26,220,177 (US$ 4,608.06 and Rs.68,325)."

    From 2008 AG report, p.103, paragraph 39j, in reference to the Pretoria mission, "Locally Engaged Staff:

    Contrary to Foreign Service Regulations and Conditions of Service for 2007, the Mission engaged twenty one (21) local staff against an approved establishment of seventeen (17) resulting in an excess of four (4) staff."

    ReplyDelete
  3. A Mission (Diplomatic Mission) can either be an Embassy or a Consulate.

    A consulate is like a junior embassy. It's generally located in a busy tourist city, and takes care of minor diplomatic tasks such as issuing visas. The word consulate literally means office of the consul, who is a diplomat appointed to foster trade and take care of expatriates.

    Embassies are much bigger deals. The word embassy comes from the French ambassy, or office of the ambassador. Ambassadors are high-ranking diplomatic representatives who serve as spokespersons for their national governments. If one country recognizes the sovereignty of another, they generally establish an embassy there. Embassies take care of the same administrative duties as consulates, but they also represent their governments abroad.

    This can be tricky business. For instance, the United States doesn't maintain an embassy in Taiwan (in order to maintain diplomatic relations with China), but it does operates a consulate there to take care of its overseas citizens.

    Zambian Economist, people look up to you for objective analysis of public affairs. I find your concern in this regard quite lacking on this account! The proposed countries have Zambian Citizens, over and above several other Zambian interests holden therein. The President was categorical especially on Argentina, where he said the Mission there will be relatively smaller (maybe because Zambia has an Emassy in Brazil).

    Let us support this government when necessary.

    ReplyDelete
  4. First of all, I wish to mention that I am a development policy technocrat.

    The one missing link in some of the analyses afore-posted is that people cry for creation of jobs, yet do not understand how Governments meet this societal aspiration!

    It would be naive of anyone to expect Government to employ all those unemployed citizens in the country. Of course world-over, Zambia inclusive, Governments are the biggest employer, in terms of unitary or singular measure. However, the Private Sector accounts for the higher percentile of aggregate employment factor. What Governments do is to create an ENABLING ENVIRONMENT that facilitates increase of employment placements in the Private Sector. The question is JUST HOW DO GOVERNMENTS DO THIS? If we can answer this question, then we are closer to understanding why nations, world over, need strategic diplomatic relations - especially a Developing Nation like our own.

    What our government is doing is working at preserving the already existing Foreign Direct Investment (FDI) or Direct Foreign Investment (DFI), if you choose. Alongside this Government policy, there is also need on creation of foreign policy that works towards meeting aforementioned societal aspiration. If you read my earlier comment on this thread, you will understand and appreciate the need and essence of Foreign Missions.

    As Economies of Scale would dictate, existing employers (both local and FDI) have a finite number of job placements, hence the need to attract more prospective employers and avenues of public revenue. You effectively do this through established foreign diplomatic relations.

    You can argue this in terms of Opportunity Cost, but the question I should ask is, SHOULD THE GOVERNMENT INSTRUCT YOU TO EMPLOY AN EXTRA DOMESTIC MAID AND AN EXTRA SHOP KEEPER AS A SOLUTION TO REDUCING UNEMPLOYMENT LEVELS OR GOVERNMENT SHOULD EMPOWER MORE PEOPLE THROUGH ADJUSTMENT IN POLICIES, THUS RESULTING IN CREATION OF MORE JOBS??

    ReplyDelete
  5. Interesting points, and welcome. If I follow correctly the assertion is that spending on Diplomatic Missions has a measurable economic multiplier effect on subsequent FDI inflows and/or favourable treatment of exports to that region and resulting employment. A persuasive argument for Missions which can demonstrate efforts and progress towards such goals (if not current results, international diplomacy is understood to be a long term endeavor). Please forgive me if I still favour examination of existing Foreign Affairs activities prior to expansion, if only to properly structure the new Missions with an eye towards avoiding the pitfalls that seem to have engulfed some of the others.

    I am not certain that I understand the context of your question regarding opportunity costs and domestic maids. I will try to answer as best that I can. I will infer from context that you are not referring to foreign nationals currently being employed as domestic maids by Diplomatic Missions overseas. I think that you are trying to point out the absurdities to which Command Economies have been taken by misguided and ill-informed leaders globally. Point well taken, though I am uncertain as to how this is avoided by opening additional Diplomatic Missions.

    Crafting of an enabling environment for job creation and private sector competition is not always a straight line between either/or propositions. For example, many first time visitors to Oregon are surprised to discover that "self service" petrol stations are illegal here, and there will always be a minimum wage employee present to handle the pumps for you. Prices are slightly higher than in neighboring States, but this has not prevented major multinational corporations from growing or relocating to Oregon. Because all stations must meet the same employment requirements (and the demand for petrol is relatively consistent across wide price ranges), the competitive playing field is level and price/service competition is fierce. A substantial number of otherwise unemployed persons become employed. Other jurisdictions have similar measures for low wage job creation in other sectors such as grocery baggers, parking/luggage valets, and security guards.

    This is arguably unnecessary government interference with the private sector resulting in low productivity employment and additional costs to consumers for limited gain, and diminishes profit opportunities for prospective investors (with follow-on effects to credit ratings). However, it does create jobs for low income individuals, who will in turn spend all of their wages back into the economy, and therefore is also arguably an extremely efficient means of economic stimulus with relatively mild and widely distributed effects on other sectors.

    So the question of whether or not more domestic maids or shop keepers should be mandated to be employed by private industry in certain capacities would be subject to investigation as to the proper level of additional staffing to infrastructure, the consistency of demand for the industry in question and potential for diversion to sources outside of the jurisdiction, the extent and distribution of additional costs across the consumer population, as well as the prospective economic stimulus to be provided by the additional low wage employment and multiplier effects through consumption.

    ReplyDelete
  6. Here is what I know -
    have known - to be factors that attract FDI:
    1. Labour Costs
    2. Human Capital ( productivity, skill of
    workforce, etc)
    3. FDI policy
    4. Specific Industry Regulatory Environment
    5. Infrastructure ( roads, railway lines,
    bridges, etc)
    6. Political and Economic Stability
    7. Market Size
    PF government needs to watch and invest in
    these not in quantity of foreign missions.
    If someone can find - or knows about - a
    paper/study that proves the link between
    number of foreign missions and FDI , kindly
    post the link or title of that paper and where
    it was published.
    As an aside, some economists claim China
    attracts more FDI than India because of
    factors 1, 2 & 5.

    ReplyDelete
  7. Interesting debate! However, i wish to point out that foreign policy reflects the national interest which can be political, economic and even social as recently evidenced by UK to give AID to countries supportive of gays. Once a country`s foreign policy has been well defined then the necessary structures to implement it are supposed to be created to meet the national interests identified. Diplomatic Missions are the structures which sovereign states create to serve their national interest and thus the numbers and the kind of technical expertise required to run Missions will reflect this.The staffing of Missions is supposed to be ring fenced by a career foreign service to ensure efficiency. Further, there should be clear deliverables in terms of what the Missions intend to achieve. One of the problems Zambia has is that our foreign policy is still in draft form and thus there is need to revisit it so that it is given strategic focus. For example, we will need to justify why we want to open Missions in Portugal and Spain whose economies like most of Europe are in problems and not in Asia where the mantle of economic leadership is going!
    Given the foregoing, the debate about how much is spent in Missions abroad is neither here or there!All govts in the world have no choice but to spend, what is important is to ensure that their benefits to the country. Please note also that Diplomatic Missions work is mainly facilitation which is very hard to quantify! How do you quantify the value of the Mission working hard to make the President of Angola talk to the President of Zambia to avert a war?....
    First things first..lets define our foreign policy clearly and then everything will fall into place!

    ReplyDelete

All contributors should follow the basic principles of a productive dialogue: communicate their perspective, ask, comment, respond,and share information and knowledge, but do all this with a positive approach.

This is a friendly website. However, if you feel compelled to comment 'anonymously', you are strongly encouraged to state your location / adopt a unique nick name so that other commentators/readers do not confuse your comments with other individuals also commenting anonymously.