Up to 15 pc social security funds misused

KATHMANDU, July 12: Absence of effective monitoring and accountability has resulted in the misuse of millions under social security schemes.

Government agencies responsible for implementing the social security schemes admit that 10 to 15 percent of the total social security expenditure is being misused.

The misuse of funds on that scale has emerged as a serious concern for government agencies as the money earmarked for social security is a big part of the national budget, senior officials at the Ministry of Federal Affairs and Local Development (MoFALD) told Republica.

While the social security schemes are targeted at citizens in need, cases of misuse and leakage are serious flaws. Individuals other than the targeted beneficiaries have been pocketing the benefits, an official said, adding that the Department of Civil Registration (DCR) has already informed MOFALD about misuse of the funds.

“A manual payments system increases the volume of transactions but there are drawbacks,” Shaligram Rijal, director at DCR, said. “The department estimates that up to 15 percent of the budget spent on social security allowances could be saved if the allowances are disbursed through banking channels.”

There are several loopholes that the central mechanism has not been able to control. Several tricks including double entry of the same individuals and concealing facts relating to eligibility for social security benefits have been resorted to at the local level, according to an official at the Ministry of Finance.

A manual payments system is always prone to misuse as it cannot ensure control of minor loopholes, an MoFALD official also said.

Following complaints about the misuse of social security allowances, the government is planning to provide the allowances directly into the bank accounts of beneficiaries. “A Bank Accounts for All Nepalis campaign will be launched. Arrangements will be made through Nepal Rastra Bank for opening zero balance bank accounts,” reads the budget statement for fiscal year 2016/17.

Implementation of the plan, however, will not be easy, said Reshmi Raj Pandey, joint secretary at MoFALD. “Our banks and financial institutions (BFIs) are concentrated in urban and semi-urban areas, with no banking services in many rural parts of the country,” he said.

Effective coordination among various government agencies including MoFALD, the Ministry of Finance and Nepal Rastra Bank has become imperative, he added.

The government has started taking some measures to correct the flaws after receiving the complaints, Rijal at DCR said, adding that DCR is all set to introduce a Management Information System (MIS) for registering the names of beneficiaries.

The government has been providing social security allowances to senior citizens, single women, disabled persons, members of endangered indigenous communities, and children under five from Dalit families and in the Karnali region.

In its budget for fiscal year 2016/17, the government decided to double the social security allowances. It has allocated Rs. 32.7 billion for the purpose.