REPORT OF THE SPECIAL COMMITTEE OF EMINENT PERSONS ON THE OPERATIONS OF COMESA 1 992 TO-DATE Presented to the Council of Ministers

04 March, 1997 LUSAKA, ZAMBIA EXECUTIVE SUMMARY 1.1 Introduction The Council of Ministers, having noted with concern the overall state of affairs of COMESA and in particular, the finances and management of the Secretariat, th e poor implementation record of the decisions of policy organs by the Secretaria t, and the lack of corrective action by the Secretary General despite repeated r eminders by the Council; resolved at its Extraordinary Meeting held in Lusaka fr om 16th to 17th January, 1997 to establish a Special Committee (the Committee) o f five eminent persons drawn form Zambia, Kenya, Uganda, Zimbabwe and Zaire, to investigate into and prepare a comprehensive investigative audit and management report for the period beginning 1992 to-date. 1.2 Terms of Reference The Committee was given the following terms of reference: alleged financial malpractices at the Secretariat and the state of finances of the organisation; financial systems and controls at the Secretariat; the efficiency in the management and utilisation of resources at the disposa l of the organisation; alleged administrative malpractices, irregularities and practices currently in place within the organisation at the Secretariat, relations between the Secre tariat and other COMESA institutions as well with the Member States; ways and means of improving the implementations of the COMESA Policy organs; and generally all measures hat will enhance the stature and image of the organis ation. 1.3 Composition of the Committee The Committee was composed of the following members Emmanuel Maposa Hachipuka (Zambia) John Muhaise-Bikalemesa (Uganda) Dan Ameyo (Kenya) Jean-jacques Mambe Ngala Masseke (Zaire) Phibian Mashingaidze (Zimbabwe) 1.4 Approach to the Assignment To accomplish the task we read and extensively analysed the provisions of the Tr eaty, the Staff and Financial Rules and Regulations and other financial and admi nistrative documents made available to us. We interviewed and received oral and written evidence and memoranda from professional and general staff at the Secret ariat. We also interviewed and received written submissions from the Chief Execu tives of COMESA institutions. We further interviewed the external auditors and the bankers. On the basis of th e information available from the documents, interviews and the oral evidence obt ained from those interviewed, we set out in the following paragraphs our finding s, and recommendations. Details and specific instances of the observations, find ings and recommendations are elaborately set out in the main Report. 1.5 Findings 1.5.1 (a) The financial position of COMESA is extremely poor due to lack o finan

cial support from Member States through prompt payments of Members contributions, and failure by the Secretariat to develop an effective a follow-up strategy (b) There is ample evidence of financial malpractices. The Secretary General has used COMESA funds to finance missions which cannot be confirmed to be official and beneficial to COMESA. The Secretary General has also used COMESA resources f or personal activities. 1.5.2 (a) The PTA Financial Rules and Regulations which are currently in use are inadequate as they have not been further developed to provide the intended effe ctive systems and controls; (b) In addition, there are no formal systems incorporating effective controls; (c) The internal audit, which was the only effective control instrument has been scrapped by the Secretary General without the knowledge of the Council; and (d) The scope of work of the external auditors as evidenced in the Audit contrac t has been severely restricted by the Secretary General contrary to the provisio ns of the Treaty. 1.5.3 The absence of a development strategy on which annual budgets should be ba sed has led to inefficiency in the management and utilization of COMESA resource s. As a result, funds have been utilized in non-priority areas. 1.5.4 (a) There is no formal organisation structure at the Secretariat. The abse nce of a well-thought-out and approved organisation structure has enabled the Se cretary General to: abolish some departments and redesign others; scrap internal audit of the organisation; fill established positions with consultants; and misplace and misallocate personnel without matching ability with the tas k to be accomplished (b ) The relationship between the Secretary General and COMESA institutions is s trained because of the Secretary Generals demeanor and management style. His desi re to have a domineering role in the management of these institutions is one of the causes of the strain. The Secretary General has, as a result, failed to conc lude cooperation agreements with these institutions as required by the treaty. H e has used funds of some institutions contrary to laid down rules and regulation s of the institution(s) (C) The Secretary General has failed to develop an effective and beneficial work ing relationship with Member States by arrogating himself status equivalent to H eads of State and Government thereby treating Ministers and officials responsibl e for COMESA Affairs as inferior to him. 1.5.5 There is no mechanism in place to ensure the effective implementation of t he decisions of the policy organs. Since 1992, several major decisions remain un implemented because of the Secretary Generals failure to find time to address the critical areas that need attention. 1.5.6 The current accommodation facilities of the Secretariat do not match the s tature of COMESA as an international organisation. This reflects on the caliber and character of the Secretary General. 1.6 Recommendations 1.6.1 The absence of a formal organisation structure for an institution such as COMESA has grave consequences on its ability and capacity to effectively dischar ge its mandate. We recommend that an independent consultant be engaged to prepare an organisatio n structure with clear reporting relationships and job descriptions of establish ed positions. We further recommend that the two Assistant Secretaries general provided for in

the Treaty be engaged immediately. One of the two assistants should be in charge of operations and the other responsible for finance and administration to enabl e the Secretary General concentrate on policy coordination. We recommend that a Ministerial Advisory Committee be set up by Coun cil to provide the linkage between the Council and the Secretariat. This Committ ee should meet as regularly as possible and at least quarterly to monitor the op erations of COMESA. The Committee should be chaired by the Chairman of the Counc il and the membership should not exceed 10 for effectiveness. At present, the Treaty provisions enable the Secretary General to re port to both the Authority and the Council of Ministers. The dual reporting rela tionship has enabled the Secretary General to, not only ignore, but also bypass the Council on major decisions.

We recommend that the Secretary General should be responsible and report to the Council on all matters affecting the management of COMESA. He should report to a nd clear with the Chairman of the Council any decisions that have policy/financi al implications. In view of the foregoing, the Chairman of the Council should on behalf of the Co uncil exercise clear functions designed to secure effective monitoring of the af fairs of COMESA. There is no formal accounting system incorporating effective interna l controls. As a result, the Secretary General has been able to abuse his power by misusing resources of the institution. We recommend that the Council should e ngage an independent firm of consultants to develop systems supported by operati ons manuals. We further recommend that an effective internal audit should be reinstated. The final internal audit reports should be submitted both to the Secretary General a nd the Chairman of the Council. By limiting external audit to finances from Member States to the exc lusion of other resources available to COMESA, the Secretary General has effecti vely curtailed the role of external auditors as spelt out in the Treaty. The 199 4 audit by external auditors is flawed in several key areas to the extent that i t does not meet the international standards expected of such an exercise. We recommend that the external auditors should withdraw their report on the acco unts for the year ended 31st December 1994 because the audit did not address mat erial issues and was not carried out in accordance with the provisions of the Tr eaty and generally accepted auditing standards. The 1994 accounts should therefo re be re-audited. We further recommend that external audit function be re-advertised to cover Trea ty requirements and be awarded by Council to a reputable international audit fir m. The Council should award the tender from a short-list of three firms submitte d to it. COMESA does not have a development strategy as envisaged in the Trea ty. As a result, annual budgets submitted to Council for approval are not focuse d.

We recommend that a development strategy be developed either internally or by an external professional body. The proper image and stature of COMESA as an international organisat ion is wanting. We recommend that COMESA immediately acquires accommodation facilities consisten t with its stature as an international organisation. In the meantime, efforts be made to construct envisaged headquarters of the inst itution. Towards this end, we recommend that a Special Committee with powers to mobilize funds and implement the project should be established by the Authority. The Committee should be chaired by the Chairman of the Authority. In view of the management style pursued by the Secretary General, hi s inability to mould and motivate a dedicated management team, his fragrant and frequent breaches of the provisions of the Treaty, the Staff and Financial Rules and Regulations, his misuse of funds and office and in view of the spite demons trated to the decisions of the Council, the breach of the conditions of his comp ulsory leave, the Committee recommends that the services of the Secretary Genera l be terminated forthwith as he lacks vision to take COMESA in the next century. 1.7 Restricted Circulation Circulation of this Report is restricted and may only be circulated by the Counc il. The Committee takes no responsibility for unauthorized circulation and publi cation of any part of the report. 2 LEGAL MANDATE OF COMESA AND ITS INSTITUTIONS 2.1 The adoption in 1973 of the African Declaration on Co-operation, Development and Economic Independence by the Heads of State and Government in Addis Ababa m arked the beginning of a determination to foster, accelerate, and encourage the economic an social development of the continent. It was realized then that the p romotion of harmonious economic development required effective cooperation and a concerted policy of self-reliance. In 1980, the Heads of State and Government adopted the Lagos Plan of Action aime d at establishing an African Common Market by the year 2000.. As a first step to wards the common market, our leaders in the sub-region resolved in 1982 to estab lish the Preferential Trade Area (PTA) for Eastern and Southern Africa. The Trea ty (the PTA Treaty) establishing the institution came into force in 1982. The Tr eaty set out the clear objectives of PTA, and its various organs. It also set sp ecific targets in given areas of economic co-operation which had to be met withi n a given time frame. It was envisaged, inter alia, that the preferential tradin g arrangements were a first step towards more economic integration. Creation of a common market was specifically envisaged and provided for in Article 29 of the Treaty. At the tents meeting of the PTA Authority held in Lusaka in January 1992, it was decided to transform PTA into a Common market for Eastern and Southern Africa p ursuant to Article 29 of the PTA Treaty. The establishment of a common market wa s a new stage in the process of economic integration meant to consolidate econom ic operations through the implementation of common policies and programmes aimed at achieving sustainable growth and development. The Common Market for eastern and Southern Africa (COMESA) was duly established by treaty (The COMESA Treaty) in 1994. The Treaty makes provision for specific undertakings by Member States i n Article 4 and provides for fundamental principles underlying the relationship

between Member States c blocs are emerging, ts inevitably depends . The birth of COMESA

inter se in Article 6. In a world where mega trading economi a meaningful recognition of the sub-region in global marke on the sub-regions determination to forge a common approach has to be seen in this context.

The policy organs of COMESA The Authority As a body corporate COMESA could only act, operate and discharge its mandate thr ough organs created by the Treaty and clothed with specific mandates. Article 7 of the Treaty establishes eight organs of COMESA. It also provides for the convening of meetings and the decision making process of these organs. Article 8 in particular provides for the composition and functions of th e highest policy organ the Authority. It consists of Heads of State and Governme nt of Member States. The Authority is the supreme policy organ responsible for t he general policy and direction, and control of the performance of the executive functions of COMESA and achievement of its aims and objectives. It was the intention of the Treaty that the Authority meet once every year with a proviso of extra-ordinary meetings should the need arise. In clothing the Auth ority with the overall policy formulation and direction of the executive functio ns of COMESA, cognizance was taken of the fact that to formulate policy, backgro und information and analysis of that information will have to be undertaken by s pecialized organs of the institution, hence the establishment of the other organ s of COMESA. The structure of the organs was designed to ensure that before a ma tter is taken to the Authority, thorough professional; input and analysis has be en undertaken by subordinate organs. 2.2.2 The Council of Ministers The second highest organ of COMESA is the Council of Ministers. Its composition and functions is set out in Article 9 of the Treaty. It meets once a year but ma y have extra-ordinary sessions. Its decision making process is spelt out in the Treaty. Among other things, it the Councils direct responsibility to: monitor and keep under constant review and ensure the proper functioning and development of COMESA in accordance with the provisions of the Treaty; make recommendations to the Authority on matters of policy aimed at the effi cient and harmonious functioning and development of COMESA; Give directions to all other subordinate organs of COMESA other than the Cou rt in the exercise of its jurisdiction; Consider and approve budgets of the Secretariat and the Court; Make staff Rules and Regulations and Financial Regulations of the Secretaria t; and Exercise such other powers and perform such other functions as are vested in or conferred on it by the Treaty. Our interpretation is that the Council has the responsibility to ensure that COM ESA operates efficiently and that its institutions and programmes are properly m anaged and administered. It is the organ that has to ensure that the policy deci sions taken by the Authority are implemented. It has power to direct certain act ivities to be undertaken and certain decisions to be complied with in furtheranc e of the aims and objectives of COMESA. The Council has to ensure that the finan ces of the institution are properly managed. This is why the Council is specific ally mandated to make staff and financial rules and regulations of the Secretari at. It is expected that subordinate organs of the Council will initiate action t o formulate the rules and regulations for the consideration of the Council. Ordi

narily, it is expected that the Secretariat would initiate such action. In the exercise of its mandate and in the discharge of its functions and respons ibilities, the Treaty specifically provides that the directives and decisions of the Council will be binding on all subordinate organs except the Court of Justi ce in exercise of its jurisdiction. The Secretariat The Secretariat constitutes the management arm of COMESA. It is headed by the Se cretary General. It is the vehicle through which all the activities and programm es of the institution should be implemented. It is expected to operate s a knit of professional group dedicated to the successful realization of the aims and ob jectives of COMESA. It is the responsibility of the Secretariat o carry out6 and implements the programmes set out in chapters seven to thirty two of the Treaty . In our view, it is the responsibility of the Secretariat to not only comply wi th the specific Treaty obligations imposed on it, but also to initiate action to facilitate the other organs to discharge their respective mandates. This is our understanding of Article 17 of the Treaty that the Secretary General as a legal embodiment of the institution and as the chief executive officer, shall service and assist the organs of COMESA in the performance of their functions. Reports on the status of the implementation proposals on the modus operandi and innovation s on how to successfully discharge COMESAs mission are expected to originate from the Secretariat for transmission to the Council and the Authority. Given such h eavy responsibilities, sound and dedicated management of the Secretariat is a mu st. In our view the chief executive officer of the Secretariat can ensure succes s of COMESA or lead it to total demise depending on how he administers the Secre tariat. The Secretary General Article 17 of the Treaty provides in paragraph 2 that the Secretary General shal l be the Chief Executive Officer and the embodiment of the legal personality of COMESA. The Secretary General is appointed by the Authority to discharge clearly spelt out responsibilities as the chief executive officer of the institution. Among other things, the Treaty provides that the Secretary General shall: service and assist the organs of COMESA in the performance of their function s;

submit reports in consultation with the Intergovernmental Committee (another organ of the institution), on the activities of COMESA to the Council and the A uthority; subject to the provisions of the Treaty, be responsible for the administrati on and finances of COMESA; submit the budget of COMESA to the Intergovernmental Committee act as Secretary of the Authority and the Council; ensure that the objectives set out in the Treaty are attained and either on his own initiative or on the basis of a complaint, investigate a presumed breach of the provisions of the Treaty and report to the Council; on his own initiative or as may assigned to him by the Authority or the Coun cil, undertake such work and studies and perform such services as related to COM ESA etc. In addition to these specific responsibilities, the Secretary General as the hea d of the Secretariat is expected to mould and lead a committed and dedicated tea

m in the discharge of the mandate of COMESA as an institution. He is expected to prudently exercise all attributes of a chief executive generally or specificall y as set out in the Treaty. Conscious of the complimentary role these institutions will continue to play in the attainment of the overall aims and objectives of COMESA Article 174 of the C OMESA Treaty recognizes the existence of these institutions as COMESA institutio ns and maintains their existing specific mandates in accordance with the respect ive charters establishing them. The intention of retaining these institutions was the fact that they have key ro les in COMESAs overall strategy and objective. This is why the Treaty provides th at in the implementation of the provisions of their respective charters, account must be taken o the objectives, policies, programmes and activities of COMESA. COMESA Secretary General is required by the Treaty to maintain a harmonious work ing relationship with these institutions so as to further the implementation of the Treaty. He is further expected to enter into co-operation arrangements to se cure co-ordination and eliminate duplication in the activities of these institut ions inter se and with those of COMESA Secretariat. Co-operation rather than compe tition was the intention of creating these institutions. Despite these noble intentions, we have observed that the working relationship b etween the Secretary General and some of these institutions is strained for a nu mber of reasons. The desire by the Secretary General to control the activities o f the institutions and his determination to influence who becomes the chief exec utives and attempts to make respective chief executives subservient to him is at the core of the strained relationship. There are also instances of misuse of th e facilities of the institutions by issuance of the directives that flout financia l regulations of not only these institutions but also those of COMESA itself. De tails of specific problem areas, illegal directives and breaches are set out els ewhere in this Report. COMESA Clearing House A visit to the COMESA Clearing House was undertaken by the Committee. Discussion s were held with the Acting Executive Secretary of the COMESA Clearing House MR. D. B. Marape and an officer of PTA Bankers Association Mr. Leodinas Nitereka. T he discussions centred on the relationship of the COMESA Secretariat with the CO MESA Clearing House. The Clearing House is governed by its Charter of January 1992. Article 2 establi shes the Clearing House; Article 3 defines the membership while Article 6 gives the organs of the Clearing House; the monetary and financial co-operation Commit tee; and the secretariat. The Charter defines the Committee of Central Bank Gove rnors as the principal organ of the Clearing House. Under the Charter this Commi ttee is expected to submit annual reports to the Committee of Finance Ministers on the status of activities of implementation of the Clearing House. Article 7.3 of the Charter states- the executive Secretary shall make arrangement s to enable the Secretary General of COMESA to obtain such reports and informati on as he may require for the purpose of discharging his duties under this Treaty. From the above, it is clear that the Secretariat or 5the Secretary General has n o executive power over the Clearing House. However, notwithstanding the above, g overning statutes and instruments in place, the COMESA Secretariat in particular the Secretary General has ignored and attempted to exert executive authority ov

er the Clearing House in more than one way. The following examples have been obs erved: Evidence was provided of several payments made out of the Clearing House bud get on behalf of COMESA Secretariat at the insistence of the Secretary General o f COMESA on such items as air tickets, daily subsistence allowances, office furn iture, motor vehicle repairs and spare parts etc; Attempts to install Dr. Ramsamy of the COMESA Secretariat as by the Secretar y General as the Executive Secretary of the Clearing House following the death o f the incumbent in early 1996 ignoring the laid down procedures. This attempt wa s made notwithstanding the fact that several other applicants from various Membe r States had applied for the job. The applications were retained in the custody of the Secretary General and Dr. Ramsamy was not even one of the applicants; Attempts to interfere in the day-to-day running of Clearing House by insisti ng to address workers after the death of the Executive Secretary and also insist ing on taking to the Committee of Governors Dr. Ramsamys candidature before tabli ng it to the relevant sub-committee of the Clearing House. It was very clear from the discussions held and correspondence provided that rel ationship between the Secretary General and the Executive Secretary of the Clear ing House is strained. The Eastern and Southern Africa Trade and Development Bank (PTA Bank ) The Committee visited Nairobi on 19 February 1997 and held extensive discussions with the President of PTA Bank Mr. Martin Ogang. The Committee wished to unders tand the legislative set-up of the Bank, its operations and linkages with COMESA . The PTA Bank operates in accordance with the Charter executed on 19th July 1995 as amended from time to time. The Charter sets out the Banks objectives in Articl e 4 and its policy organs in Articles 26, 27 and 30. The supreme policy of the Bank is the Board of Governors. The second highest policy organ is the Board of Directors established under Article 27. The membership of the respective boards is provided for in the charter. It is worthy noting that t he role of the chief executive officer of COMESA or his representative is not pr ovided for in the composition of the two boards. Indeed, in the word of the Pres ident of the Bank, apart from inviting the Secretary General of COMESA to the an nual meeting of the Board of Governors, there is no day to day between the Bank and COMESA secretariat. The relationship between the Bank and COMESA Secretariat is lukewarm at best. Fr om inception, the PTA (COMESA predecessor) desired to have a domineering role in the affairs and operations of the Bank. For about one and half years, the PTA S ecretary General was the de facto head of the Bank. It was assumed that the Bank w as part of COMESA and that the latter had an automatic right to the directorship of the Bank. On its part, the Bank considered and still considers the Board of Governors and more particularly its Chairman the de jure boss of the institution. The divergence in appreciation who was superior created some strain in the Bank/ COMESA Secretariat relationship. The strain was exacerbated by an incident durin g the inauguration of the present President of the Bank in Bujumbura where the C OMESA Secretary General felt and bitterly complained that the facilities made av ailable to him during the function were inferior and demeaning. He blamed the Ba nk management and has ever since not forgiven the management. This further strai

ned the inter-personal relationship the two chiefs of complimentary institutions . During the drafting of the COMESA Treaty the Secretary General desired to introd uce in the Treaty provisions subjecting the chief executives and the making of k ey polices of COMESA institutions to the overall jurisdiction and control of COM ESA policy organs below the Council. This was vehemently opposed by the Bank man agement which argued that they had their own jurisdiction and decision-making pr ocess. A heated argument with the Secretary General ensued and has since account ed for the cool relationship between the two chief executives. The net effect of this relationship has lack of co-ordination and co-operation in the implementat ion of the activities of the Bank and COMESA. Indeed, the Bank believes that COM ESA lacks technical competence to properly identify and appraise projects for wh ich Bank financing could be procured. The President of the Bank no longer considers COMESA policy meetings effective b ecause apart from the Secretariat producing reports on the same programmes since 1992, none of which has taken off, nothing substantially new comes up at these meetings. The bank further states that a Memorandum of Understanding which it submitted to the Secretary General which was intended to foster co-operation and co-ordinati on in projects between the two institutions, remains unanswered by COMESA severa l years after its submission. The Committee considers such state of affairs, caused primarily by the demeanour and management style of the COMESA Secretary General, inconsistent with the nob le objectives and aspirations of Article 1765 of the COMESA Treaty which require s the Secretary General to: ..maintain such continuous working relationship with the institutions of COMESA as further the implementation of the provisions of the Treaty, and for this purpos e, make co-operation arrangements with each institution of COMESA. The failure to conclude the Memorandum of Understanding which would have provide d for required co-operation arrangements with the Bank not only stifles the aims and objectives of COMESA but is also a direct breach of the Treaty provisions. Preferential Trade Area Re-insurance Company (ZEP-RE) The agreement establishing ZEP-RE was concluded at Mbabane, the Kingdom of Swazi land on 23rd November 1990. As a company, the membership is open to Member State s who elect to become members. The objectives and functions of Zep-RE are respec tively set out in Article 4 and 5 of the Agreement. Among other things, the obje ctive of Zep-Re is to support sub-regional economic development. It is for this reason that the Commit tee met the Managing Director of ZEP-RE Mr. Lubasi on Monday 17th February 1997 to discuss how, in its operations ZEP-Re relates to COMESA and the working arran gements and relationships that exist with COMESA Secretariat. Unlike the PTA bank, the Managing Director of ZEP-RE has enjoyed a good working relationship with COMESA as an institution and the Secretary General as a person . He has found the Secretary General useful in making contacts in Member States. In his view the nature of business of ZEP-Re and its clients makes in unnecessa ry to have direct working and operational relationship with the Secretariat. ZEP -Re clients are specialized and apart from attending annual ZEP-Re meetings, COM ESA Secretary General has limited intervention in the operations of the company. The Managing Director however finds the Secretary General generally arrogant an d intolerant to criticism. He cited two incidences in Kampala and Mozambique whe re he felt, the Secretary General acted in a manner inconsistent with his status

and that of the office he holds. 2.5.4 Leather and Leather Products Institute Dr. Arunga, the head of LLPI was interviewed by the Committee on 19th February 1 997. The discussions centered on the relationship of the COMESA Secretariat with LLPI. The LLPI was established by the Charter signed by COMESA member States in Mbabane, Swaziland on 23rd November 1990. The Institute operates as a separate legal entity with a Board of Directors curr ently consisting of seven members from Ethiopia, Kenya, Lesotho, Sudan, Tanzania , Zambia and Zimbabwe. As an organisation, LLPI is funded through an assessment of contributions on the Member States who have acceded to its Charter. The Institute, through the COMES A Secretariat, proposed ways of mobilising funds and other support for the estab lishment and running of the Institute. Of particular importance, is the decision of the Council of Ministers to combine the annual budgets of both, but to be sp ilt, by the Secretariat upon receipt of contributions in such a way that one ten th is paid to the Institute. The decision was taken in view of the infancy of LL PI. Contrary to this decision of the Council of Ministers, the Secretariat informed the Institute it had no obligation to collect from member states contributions f or LLPI on the grounds that the Institute is independent and that the Secretaria t has a serious shortage of staff. Subsequently, a letter dated 8 April, 1996 communicating this position was writt en and copied to all member states. The tone of this letter implied that the Secretariat had nothing to do with LLPI. Indeed the Secretary General told L LPI to stand on its own feet. It was clear from the discussion that Dr. Arunga has expected the Secretariat to give him assistance especially in the formative stages of the Institute. The to ne of the correspondence between the Secretary General and the Director clearly demonstrates that the relationship between the two is far from cordial. 3 GENERAL MANAGEMENT AND ORGANISATIONAL STRUCTURE Staff Establishment The authorized professional posts at COMESA on 1st January 1997 were 38. the hig hest grade at DII is that of the Secretary General. The Directors are at P5 whil e the lower management and professionals are spread down to P1. The authorized G eneral Service Staff are 74 as of 1st January 1997. The grades are spread betwee n GS9 at the top while at lower end the grade is GS1. It was intended to have 7 Directors each heading the following divisions: Transp ort and Communication; Customs and Trade; Administration; Agriculture, Monetary and Financial Cooperation; Industry and Energy; and the Le gal Secretary. The balance of 31 posts were to be spread between junior manageme nt and experts in various fields. Out of an authorized professional establishmen t of 38 only 20 posts are filled in while 18 remain vacant. Of the 7 Director po sts 5 are vacant due to contract expiry and awaiting Council decision. Consultants are holding established posts contrary to Staff Rules and Regulation s. There is sheer lack of recruitment efforts on the part of management. However , there are several irregularities relating to positions being held by consultan

ts or staff upgraded to act in positions far superior to their grade and compete nce in certain cases. There are 46 General staff employees against an establishment of 74 leaving 28 v acancies. One can easily see the limited manning levels currently in place both at professional and general services. The reason being given is inadequate fundi ng due to member states contributions arrears. We consider this excuse inadequate given the wastage of funds on unproductive missions dealt elsewhere in this rep ort. The high number of vacant positions at both professional and general staff grade s has had a negative effect on the execution of programmes. It is difficult to a ppreciate how certain programmes can be carried out when directorships are vacan t. Apart from the foregoing, the Committee has observed that the calibre of some of the staff at the Secretariat holding senior posts is far below that expected fo r staff of such an organisation. The interviews and discussions we held with sta ff and the quality of submissions presented to the Committee clearly confirmed o ur conclusion on their calibre. On the other hand, we have highly intelligent of ficers who could be a big asset in the Secretariat but have been relegated to no n-management cadres. It has been established that evaluation of staff performance as provided for und er the staff rules and regulations has not been in use and a search on their fil es has confirmed this. The non-use of this to determine capabilities of the empl oyees has denied the organisation a major instrument to determine staff progress ion for promotion and salary increments. This has had a negative effect on the m orale of staff. We recommend that staff evaluation be carried out to match ability with assignme nt. Role of Consultants The Staff Rules and Regulations authorize the Secretary General to recruit consu ltants. The terms of these consultants are to be determined by the Secretary Gen eral provided that their tenure of office does not exceed one year. By definition a consultant is an expert who gives professional advice or service s and is often hired from outside for a specific problem area and for a specific period of time. Unfortunately there appears to be a misapplication of this rule in that the Secretary General has often extended stay of staff whose contracts have expired by retaining them and offering them consultancy contracts. The net effect is the misuse of the consultancy provisions by converting expired contrac ts into consultancy, a factor which was never intended by the rules. This conver sion has condoned inefficiency and enabled failure of the Secretariat to invoke recruitment procedures I advance of the expiry o employment contracts. An exampl e of this was the expiry of Mr. Z. Demisses contract on 20th August 1996 which wa s presented to Council of Ministers meeting in April 1996 for a nine month consu ltancy extension instead of invoking the recruitment process. As at the time of writing this report, efforts made to recruit his replacement had not been comple ted purportedly due to lack of funds.

Organisational Structure

There is no formal organisation structure at COMESA. The assumption by the Secre tariat that the list of staff establishment constitutes an organisation structur e is absurd. The informal arrangements currently in use are fluid, erratic and o perate at the whims of the Secretary General. In the present arrangements there 13 employees reporting directly to the Secretary General although in practice on ly the directors report to him. The Committee has established that the Secretary General is inaccessible even to the directors whenever he is the office. The absence of a wee-thought-out and approved organisation structure has enabled the Secretary General to alter approved posts such as the Director of Monetary and Financial Co-operation to that of Director of Finance and Technical Co-opera tion thereby shifting emphasis. It has also enabled him to scrap internal audit thereby undermining internal controls of the organisation. It has enabled him cr eate and fill posts with inexperienced close associates as consultants. It has a lso enabled him to change staff from place to place without justification.

We recommend hat an independent consultant be engaged to prepare an organisation structure with clear reporting relationships and job descriptions of establishe d positions. Conditions of Service Other than those areas covered in the staff rules and regulations such as educat ion, dependency, spouse, housing, language, installation, travel allowance, medi cal expenses, gratuity and base net pay, nothing else is provided for. We recommend that comprehensive conditions of service in the form of personnel m anuals be developed by an independent consultant for submission to Council. We further recommend that staff training be given the emphasis it deserves as it has a direct effect on staff productivity. Management Team We have observed that the Secretary General has not fully utilized his directors for decision making as a team. He rarely holds meetings with them. When he summ ons them, it is either to lecture them, rebuke or impose his will on them. The net effect has been to reduce his directors to implementers of his directives which by and large breach the existing legal instruments. Indeed , he uses them to rubber-stamp his decisions. During his long absence from the o ffice, the officer-in-charge he appoints has no authority to take any management decision without reference to him wherever he is. There is no delegation result ing in a one-man show. Effectiveness of Technical Committees Article 15 of the Treaty creates 12 Technical Committees, their compositions and functions. Of these 12 committees only 7 have been actually formed and are func tioning. These are the committees on: Administrative and Budgetary Matters; Agriculture; Finance and Monetary Affairs; Industry; Legal Affairs; Trade and Customs; and

The Committee on Transport and Communication.

The remaining 5 have not yet taken off, the reason given being inadequate fundin g. We do not accept this excuse because participation at all technical committee s s financed by individual Member States outside the COMESA budget. We have observed for example that the Agriculture Committee met in July 1992 in Lusaka and thereafter only met in August 1994 in Kampala, Uganda and has since n ot met. The Trade and Customs Committee met in August 1992, October 1993, Septem ber 1994 and February 1997. Transport and Communications Committee met in August 1992, August 1994 and October 1996. The Industry and Energy Committee met in Se ptember 1992 and September 1995. As a result, the Intergovernmental Committee ha s not met resulting in the Council of Ministers not also meeting particularly in 1995. It appears the meetings of these Committees have progressively become irr egular. Our observation is that the pace at which COMESA is moving toward programme impl ementation is very slow. We believe this is due to the ineffectiveness of the CO MESA leadership.

4 FINANCE Background Information The Council is entrusted with the responsibility of establishing the financial r ules and regulations to govern the financial administration and budgetary contro l of COMESA. The Treaty provides for the application of Financial Rules and Regu lations during the interim period until new rules and regulations for COMESA are adopted by Council. The Committee has confirmed that COMESA is still applying PTA Financial Rules an d Regulations (1991) edition under the Treaty transitional arrangement. The PTA financial rules and regulations being applied are general in nature and do not spell out the detailed procedures which should be in place to ensure effe ctive financial administration and budgetary control. These rules and regulation s require the Secretary General to establish detailed procedures in the form of operational manuals. The Committee has observed that the Secretary General has n ot established the detailed procedures supported by accounting manuals as requir ed by the rules and regulations. Functions and organisation of finance section As already explained above, the detailed procedures, in the form of accounting m anuals, spelling out the responsibilities of finance section with respect to the effective financial administration and budgetary control have not been establis hed. The work of the finance has therefore not been formally spelt out and can b e varied any time by the Secretary General. This section is more or less operati ng as an information processing centre with no authority and responsibility dele gated to it by the Secretary General. The functions performed by the section are clerical in nature and can be summarized as follows: Receiving and accounting for funding;

Processing all disbursements; Maintaining staff payroll Ensuring excess funds are properly invested; Servicing meetings of Policy Organs; Maintaining fixed assets register; and Undertaking any assignment delegated to the section by the Secretary Gen eral This section is headed by a Chartered Certified Accountant with many years of ex perience mainly in tax and internal audit areas. He is assisted by three assista nt accountants with qualifications at technician level. The Staff have the potential to improve their performance if the necessary train ing and conducive working environment are provided. Assigning challenging work a nd delegation of authority to this section will improve the morale of staff henc e their performance. The head of this section is currently reporting to both the Secretary General an d the Director of Administration. There is, therefore, a need to streamline the reporting relationships of this section with other sections and departments in o rder to avoid confusion. It is advisable to divide the administration department into two departments one in charge of administration, and the other in charge of budget and finance, eac h headed by a director. This will ensure that the director of budget and finance is fully responsible for the operations under his department. It is apparent from the above that the responsibility of ensuring that funds of COMESA are spent and accounted for in accordance with the rules and regulations and generally accepted accounting standards has not been assigned to this sectio n. This responsibility has been carried out by the Secretary General and the Dir ector of Administration who are not qualified accountants! Source of funding Member States contributions COMESA is currently being funded mainly through members contributions based on a pproved budgets by the Authority. Under the Treaty each member country is requir ed to pay fifty percent of the assessed amount into the budget of the Secretaria t within one month from the beginning of the financial year and the remainder wi thin six months of the same year. The Committee has, however, noted that Member States are not assessed and billed on time due to delayed budget approvals. For example the Member States have not yet been assessed and billed for 1997 as the budget for 1997 has not yet been a pproved by the Authority. A mechanism should be put in place to ensure that Member States are promptly bil led. The practical way of handling the situation of delayed budget approval is t o bill on the basis the previous years approved budget level. Such provisional bi llings will then be adjusted to actual through use of debit and credit notes as soon as the delayed budget is approved. In this way the operation of COMESA will not be hampered due to lack of funds resulting from delayed billing. Due to financial problems experienced by some Member States coupled with lack of serious follow-up for payment by the Secretariat seventeen Member States are no t up-to-date with their contributions. This means therefore, COMESA cannot imple

ment all approved programmes due to lack of finance.

The following is the status of members contributions as at 4 February 1997 Country Balance outstanding UAPTA Years in arrears ANGOLA 736 533.74 1992 1996 BURUNDI (18 775.55) NIL COMOROS 178 479.27 1991 1996 ETHIOPIA 151 203.00 1996 ERITREA (5 596.61) NIL KENYA 230 391.17 1996 LESOTHO (12 642.00) NIL

MADAGASCAR 340 079. 1994 1996 MALAWI 103 406.83 1996 MAURITIUS 18 130.00 1996 MOZAMBIQUE 184 597.00 1995 1996 NAMIBIA 132 860.00 1995 1996 RWANDA 496 259.31 1991 1996 SUDAN 659 547.41 1994 1996 SWAZILAND 73 700.00 1995 1996 TANZANIA 371 039.00 1994 1996 UGANDA 83 841.59 1996 ZAIRE 297 646.85 1995 1996 ZAMBIA 309 275.46 1995 1996

ZIMBABWE 210 783.50 1996 TOTAL 4 450 759.91 The total amount in arrears of UAPTA 4 450 759.91 is equivalent to one and half times the approved budget of 1995 of UAPTA 2,924,600.

Report of Members contributions for the period 1987 - 1996 Year Arrears brought forward UAPTA Annual Assessment UAPTA Total Due UAPTA Payments Received Amount Outstanding Percentage of Receipts Against Total Due 1987 831 843 2 261 688 3 193 531 2 752 232 441 229 86% 1988 441 299 2 396 700 2 837 999 2 313 281 525 718 81% 1989 525 718

2 558 900 3 084 618 2 667 153 417 465 86% 1990 417 465 2 670 400 3 087 865 1 981 702 1 106 163 64% 1991 1 106 163 2 724 600 3 830 763 2 743 939 1 086 827 72% 1992 1 086 827 3 048 655 4 135 482 1 690 978 2 444 504 41% 1993 2 444 504 3 112 100 5 556 606 3 181 985 2 374 621

57% 1994 2 374 621 3 279 200 5 653 821 2 627 744 3 026 077 46% 1995 3 026 077 3 413 536 6 439 613 1 402 061 5 037 522 22% 1996 5 037 522 2 924 600 7 962 122 1 895 353 6 066 796 24% The percentage of total receipts from member states against the total amount due for each year has declined from 86% in 1987 to a low level of 24% in 1996. The decline in percentage is an indicator that the member states financial support t o COMESA has decline greatly over the years.

Due to the seriousness of the problem, the Council at its meeting in April 1996 approved the following measures against non-paying Member States: Any member state that fails to meet its budgetary commitments for two years or more should have all benefits and operations suspended in that country after three months notice and should lose its rights and privileges including addressin g policy organs meetings during the period of suspension; All arrears at the end of every financial year should accrue interest of 10% per year; No new staff recruitment should be undertaken from member states with arrear

s of two years or more; That Member States with arrears of five years or more should be expelled.