Dr. Okine writes: Of mathsets, past questions – let’s talk about risk management in governance
The Minister of Education, Dr Yaw Osei Adutwum has said the ministry procured 446,954 sets of past questions at a unit price of GHS 78 in 2021, totalling GHS 34.8 million.
He said in parliament, the unit price represents a 32% increase over the 2020 unit price of GHS 59, which was procured at a total cost of GHC 33.6 million.
The past question initiative was meant to help Senior High School students prepare for the West African Senior School Certificate Examination (WASSCE).
We can always debate whether it is prudent to supply free past questions for the final year students. But in this article, I want to focus on the quantum increase of 32% in the per-unit cost of each set of questions in just a year.
When I first saw the massive percentage increase of the per-unit cost for the set of past questions, my first inclination was that this was just another avenue the government is using to create and loot the public purse.
But I gave the government the benefit of the doubt and performed a little statistical analysis. But my results were screaming at me, saying the reported percentage increase in fishy.
To help explain my analysis, according to the 2021 Budget, the inflation rate at the end of 2020 was 11%. Note inflation rate is the percentage increase or decrease in prices over a specified period of time.
So a simple 99% confidence interval of inflation with the mean being the rate reported in the budget gives us a lower bound of 4.6% and an upper bound of 17.4% (Note, I select a standard deviation such that the four standard deviations from the mean to the left is equal to zero). The 99% confidence interval here means that we are 99% confident that the inflation rate is between 4.6% and 17.4%.
The confidence interval tells us that the reported 32% increase in the unit price of the per-unit cost of the set of questions is a highly unusual event or a simple plot to loot the public purse.
Thus, we deserve more explanation as to why the increase was that high. I am aware the Covid-19 pandemic led to huge price hikes on certain goods and services but does that argument hold for printing Past Questions?
Even if we believe this price increases, it also shows how badly the government has managed the economy.
Another point that needs to be discussed is the failure of the procurement team to implement risk management practices. We can all learn a lot from the concept of risk and risk management.
Risk concerns the possibility of occurrence of undesirable events leading to losses. Whiles Risk management involves identifying, assessing, and controlling risk to minimize risk. Risk management’s common strategies are reducing risk through insurance, avoiding risk through risk selection, and transferring risk through hedging contracts.
For example, if you buy a car, to reduce the risk of losing the car through accident, you purchase car insurance to reimburse you when there is an accident. Risk management practices help us to identify key risks and to respond to such risks with limited resources. By so doing, it improves productivity and helps to stabilize cash flows over a period.
With the procurement of the set of past questions, the ministry of education should have known there is a risk of inflation if the initiative was to run for several years.
Hence the procurement team should have taken steps to protect the public purse by entering into a contract that protects the public purse from an astronomical increase in prices. One may think there are experts involved in the procurement process that knows this.
Therefore, when you see blatant disregard of simple risk management practices, you are led to think this entire Past Question initiative was a scheme to create and loot, as we have seen repeatedly in this country.
For example, if the ministry of education entered into a contract in 2020 that hedged the price increases in the subsequent years to the inflation rate, i.e., 11%, then the 2021 expenditure on the past questions would have been GHC 5.6 million less than the reported figure for the spending on the set of past questions.
This shows that the advantages of hedging prices increases are clear, and probably the experts involved in the procurement process knew this and ignored it to provide room to loot.
There is a saying that we don’t cry over spilled milk, so I urge the Ministry of Education if this past question initiative is to continue in the future, to enter into contracts that reduce the risk of astronomical price increases. Unless, of course, this is just a scheme to create and loot the public purse.
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The writer, Nii-Armah Okine PhD, is a concerned citizen, an Assistant Professor, Mathematical Sciences Department, Appalachian State University, NC, USA