Whatever we may think about the intentions of the businesses that first encouraged the use of revenue assurance techniques for comms providers and other organizations, a growing number of Africans now treat ‘revenue assurance’ as synonymous with corruption. They think of revenue assurance companies as parasites that use bribery to secure lucrative long-term contracts from public officials. Sam George is a Member of Parliament in Ghana who has a track record of expressing his frustrations with revenue assurance. George belongs to the National Democratic Congress (NDC), the leading opposition party, but he was relatively even-handed in his criticism when he recently went on TV (pictured) to vent his feelings about the history of national revenue assurance audit contracts signed by governments of both main parties.
In principle… I don’t think revenue assurance is a bad thing, but revenue assurance has become the biggest looting avenue in the state. And look, I will be fair here, and honest here: it is not peculiar to only this government.
Sub-Saharan Africa is the only part of the world where a mainstream politician can discuss revenue assurance on national TV whilst expecting the audience to recognize what he is talking about. This is true although the meaning of the term remains the same as that understood by telecoms professionals who follow this website. RA began with the notion of identifying errors in the calculation of the amounts of money owed to and by telcos. For most of the world, the interest in RA remained limited to telcos that wanted to prevent and detect their own errors, or who wanted to check for errors in bills received from other telcos. That interest rarely spread beyond a niche group of telecoms professionals even though the public also has an interest in receiving accurate phone bills. The difference in Sub-Saharan Africa was the extent to which governments depended on taxes from telcos to fund expenditure, especially by taxing inflows of foreign money captured through hefty government-mandated termination fees for inbound international calls.
Most companies that provide niche RA systems and services have always focused on making sales to telcos, but a different breed of suppliers targeted African governments by promising to increase the amount of tax they would collect. The assurance techniques should have largely been the same, but the character of the customer was markedly different. Telcos do not need to boast to the world about how much money they saved as a result of implementing RA systems. Politicians do need to brag to voters about the benefits of RA systems, especially when they have agreed that the state will pay eye-watering amounts for them. This has created an environment that encourages kickbacks to public officials who decide which RA suppliers will win the contracts for national RA audits and systems.
It’s something that private enterprise has seen as a lacuna; uses the whole concept of revenue assurance to corrupt public officials to loot the state in connivance with them.
George referred to the supposed gap in understanding between state agencies that are tasked to collect taxes and the companies whose accounts they are meant to review. Some African tax collecting agencies are oddly comfortable with asserting that they lack the skills to determine when businesses have filed incorrect statements of their financial affairs. They simultaneously throw shade at the work of the regular financial audit firms tasked with independently assuring annual financial statements. Firms that described themselves as experts in revenue assurance have inserted themselves into this gap, claiming that they alone have the technological and analytical skills to determine if there have been errors with the revenues reported, and hence with the amount of tax paid.
What should be seen as a shameful admission of the incompetence of both tax collectors and financial auditors has instead been presented to the public as the adoption of international best practice, although this practice is unknown in rich countries. When writing this article, I know already that it will be ignored in most countries because they do not have national RA audits like those conducted in Africa, and because nobody in those countries sees any need for them. Public support for this kind of work in African nations is crucial because the amounts paid to the revenue assurance firms through government contracts are staggering when compared to the value of contracts that telcos or other private sector enterprises would choose to pay for equivalent RA systems and audits. Obtaining this support often involves politicians making unfounded accusations about businesses consciously engaging in tax evasion.
The analysis of the corruption encouraged by RA continued with George referring to Subah, a business engaged by Ghana’s tax collection agency to assure telecoms taxes and whose contract prompted a series of controversies within Ghana (see here, here and here).
We all heard how members of this government, in fact members of parliament, today, in fact one of them is a sector minister, she sat on this your platform and sang with Subah in their song. You remember? How Subah was wrong… Subah was a revenue assurance in the telecoms sector. She said it was wrong, it was criminal. She sang with it and she campaigned with it.
George then noted how Subah’s RA audit of telco revenues was superseded by the government giving a new contract to another firm, KelniGVG, a supposedly ‘local’ firm despite being part of the Global Voice Group (GVG) founded by a former Haitian Prime Minister who has since been barred from entry to the USA because of his involvement in corruption. GVG has won most of the revenue assurance contracts that have been awarded by African governments.
What did she do? She signed KelniGVG and paid more than Subah was being paid.
The deal with KelniGVG prompted even more outrage in Ghana and has been the subject of a string of scandals; see here, here, here, here and here.
George is not somebody whose analysis can be trusted. He glossed over evidence that Subah failed to do its job, and he did not even mention a third RA company that was also given a fat government contract to ostensibly do the same work as Subah prior to the appointment of KelniGVG. It is because a government run by his NDC party employed two separate firms to do the same RA work that their successors from the New Patriotic Party (NPP) could argue that replacing both deals with a single contract with KelniGVG would save money, despite the NPP agreeing to pay KelniGVG more than USD1.5mn per month across a contract that will last for a minimum of five years, and which could potentially run for a full decade. George encourages the unsubstantiated belief that telcos are cheating their taxes despite the absence of any money trail that shows how they are supposedly collecting money from millions of customers and then making it disappear without a single financial auditor or RA firm gathering any evidence that might support a prosecution for tax evasion. But George’s words do reflect how people think about revenue assurance in some African governments. They think its primary purpose is to line the pockets of crooked public officials and crooked businesses. The widespread nature of this belief should be a source of profound shame for anyone who wanted revenue assurance to improve and maintain integrity in business dealings.
The opinions expressed by George were conveyed during a conversation about a recent scandal where the concept of revenue assurance was applied by a business called Strategic Mobilisation Ghana Limited (SML) to the supply of petroleum. Like the telecoms RA deals involving Subah and KelniGVG, SML was engaged by Ghana’s tax collection agency at great expense but it is now widely believed that they failed to provide any meaningful service. The subtext is that national telecoms revenue assurance contracts established a template for corruption which is being recycled through other crooked RA deals that ostensibly relate to different industries. The interview can be replayed below; skip to the 4-minute 40-second mark for George’s comments specifically about government contracts awarded to telecoms RA businesses.
