Posts Tagged ‘accountability’

The Accountability – Democracy – Human Rights – Governance Linkage

Tuesday, December 17th, 2013

Doug Hadden, VP Products

One of the advantage of living in Washington is access to events at the Brookings Institution. There is a lot of analysis in issues that touch global public financial management and good governance. There was a very interesting discussion early today about the linkages between democracy, human rights, and governance. I’ve attended enough discussions about this linkage to question how simple these connections are. Here’s my observations:

Evidence of FreeBalance GRP Success

Wednesday, September 11th, 2013

An Integrated Financial Management Information System (IFMIS) or Government Resource Planning (GRP) “can enable prompt and efficient access to reliable financial data and help strengthen government financial controls, improving the provision of government services, raising the budget process to higher levels of transparency and accountability, and expediting government operations.

FreeBalance is recognized as a major provider of Integrated Financial Management Information Systems (IFMIS) for Governments

FreeBalance International Steering Committee  (FISC)

FreeBalance government customers from countries such as Afghanistan, Antigua and Barbuda, Kosovo, Kyrgyz Republic, Liberia, Mongolia, Sierra Leone, Timor-Leste and Uganda meet yearly. The purpose of FISC is to share lessons learned and adapt the FreeBalance product roadmap to better meet government reform needs. Country representative provide updates in confidential presentations. Some achievements described as bullet points from  these presentations include:

Fiscal Controls
  • Efficient budget control and execution
  • Automated budget controls
  • Better budget control
  • Improved salary controls
  • More than 99% of the government’s budget execution is captured on real-time basis
  • Strengthened commitment controls in the budget management.
Decentralization
  • Decentralisation of commitments and revenues countrywide
  • National roll-out to all budget entities at all levels of government
  • Decentralization of performance budgeting functions
  • Decentralization so that Treasury now focused on strategic issues and cash management
Timeliness and Accuracy
  • Clearance of all backlog of annual financial statements
  • Timely and accurate fiscal reporting
  • For two past years we have submitted on time audited budget statements to the National Assembly
  • Accountability and accuracy in the financial management has improved
  • Timely Preparation of Annual Accounts
  • Unqualified audit report of Government financial statements
  • Timely production of reports that support GFS and IPSAS cash-basis
  • Timely clearance of revenue and expenditures
Reporting and Decision Making
  • Availability of useful reports for management decision-making
  • Help achieve fiscal surplus
  • Adoption of the Cash Basis IPSAS
  • Reliable Management Reporting in real-time mode applying modern information technologies
  • Increase in quality of decisions
  • Dashboards improve government performance
  • Automatic generation of budget books
Security Controls and Audit
  • Improved security and availability of complete audit trail
  • Automated audit trials and security controls
  • Proper Segregation of duties
  • Auditability and transparency of budget adjustments
Efficiency
  • Efficient for cash management
  • Time and cost saving
  • Reduction in processing time
  • Reduction in labor costs on management of civil service personnel
  • Increase in labor productivity of civil servants

Trust

  • Donor trust – World Bank, ADB, and other donor funds are channeled through the Treasury
  • Improvement in PEFA assessment
  • We have 2 PEFA Assessment, the second showing improvements
  • Open budget index scores have improved
  • Supports anit-corruption efforts
  • Reduction in supplemental budgets
  • Improved budget credibility
  • 40% of aid received from IFI’s and donors, is spent using country systems
  • Visibility to the public via a web publishing capability
  • promote credibility, control and transparency of fiscal and budget management

 

Additional Country Examples

FreeBalance and the FreeBalance Accountability Suite have been recognized as key to many PFM successes round the world.

Afghanistan

Antigua and Barbuda

Kosovo

Liberia

Sierra Leone

Timor Leste

FreeBalance Has Received Awards and Certifications

Corruption takes 3 to Tango

Tuesday, August 20th, 2013

Doug Hadden, VP Products

Huguette Labelle of Transparency International was one of the speakers at the first session of the Institute of Public Administration of Canada (IPAC) conference “Reinventing Public Administration” held in Montreal on August 18th. Recent corruption scandals in the province of Quebec has brought more attention to the role of developed world actors in corruption in developing and developed countries. And, the role of transparency and accountability to improving governance. Here are some “storified” observations from the session “Transparency and Accountability in the Public Sector in Canada and Around the Globe.”


FreeBalance Customers and Government Effectiveness, More Analysis

Monday, August 12th, 2013

FreeBalance Clients on the Road to Success, Part 8

Carlos Lipari, FreeBalance Advisory Services

This post covers the interpretation of the data analysis on FreeBalance customers and improved government effectiveness.

In order to analyze the statistical association between governance indicators on economic growth we considered several variations of a multiple regression model. 8 scenarios were considered. A benchmark scenario (1) and 7 additional specifications. In (1) we include every variable (all 6 governance indicators and 6 control variables). In (2), (3), (4), (5), (6), (7) and (8) certain control variables are removed. This is done in order to increase robustness of results.  

a)      Our dependent variable (Y) is the 2010 economic growth rate and is presented as a level variable.

b)      Governance Indicators (all 6) are presented as log variables. Therefore we have a level-log functional form. Δy=(β1/100)% Δx

c)      Control Variables are presented as level variables. In this case we have a level-level functional form where Δy= β1 Δx

Among the dependent variables analyzed in our baseline scenario, only effectiveness, HDI and Investment are statistically significant at standard levels (1%, 5% or 10%). In alternative scenarios Voice & Accountability also becomes significant but only at 10% level (it will not be considered).

Government Effectiveness:  the results state that a 1% increase in government effectiveness is, everything else constant, on average, associated with a 0.14 percentage point increase in the economic growth rate.

Human Development Index (HDI): results suggest that a 1 percentage point in the HDI index is, on average and everything else constant, associated with a 0.088 percentage point decrease in the economic growth rate. Therefore, a country that has a 0.9 HD, which is a very high HDI, is expected to, on average, have 1.76 percentage points less of economic growth rate than a country with a relatively high HDI of just 0.7. In simple terms, less developed countries are, ceteris paribus, expected to grow faster than more developed countries. Barro (1991) found evidence that it is, on average, easier for countries with lower income per capita to grow at faster rates than higher income per capita countries. This, together with a high correlation of income per capita with life expectancy and levels of schooling might explain much of this tendency of less developed countries growing faster than highly developed.

Investment:  one percentage point of GDP increase in Investment is, on average and everything else constant, associated to an increase of 0.105 percentage point of the economic growth rate. Therefore, if we had two set of similar countries, one investing 30% of its GDP and another investing just 20%, if the first group registered an average growth of 4% a year, it is reasonable to expect the second group to grow about 3% a year. Without surprise, this result highlights the importance of investment on economic growth. 

Cross-Sectional Analysis Results and its limitations

It appears that only governance effectiveness, HDI and Investment are statistically significant at standard levels (1%, 5% or 10%). In alternative scenarios Voice & Accountability level becomes also significant at the 10% level. Even though only one governance indicator appears as statistically significant, its economic significance appears to be very large: a 1% increase in governance effectiveness being associated with a 0.14 percentage point increase of the economic growth rate.

A more complete study would be a Panel Data research (combining cross section and time series analysis) to include data of previous years. A panel data specification this would also allow us to better deal with omitted variable bias, since first differencing the model would eliminate individual specific non time varying unobservable, which may be correlated with the error term.

The fact that certain governance indicators are not statistically relevant in this research does not necessarily mean they do not impact economic growth. Not only we are focusing in just one year, the quality of the information currently provided by such governance indicators might also need some improvement. 

Contents

  1. Introduction to the Study
  2. Government Revenue
  3. Government Expenditures
  4. Government Gross Debt
  5. Country Investment
  6. Real Investment Growth Rates
  7. Government Effectiveness
  8. Interpretation
  9. Conclusions

Corruption is not just a Problem “over there”

Thursday, July 18th, 2013

Doug Hadden, VP Products

There is a startling Ted Talk from Charmain Gooch of Global Witness from earlier this month that puts corruption, particularly tax evasion and money laundering in perspective. This is certainly not the world of "petty corruption." Ms. Gooch describes how corruption at scale requires global facilitation that includes international banking, the use of shell companies and failure of politicians in developed countries to back up the rhetoric. And, the supply side of corruption such as resource companies are part of this facilitiation. I was struck by her comments about how these forms of corruption are to the benefit of wealthy elites at the expense of the poor. And, the global elites across countries – the centre-periphery model in operation. Ms. Gooch points out that the scale of resources outflow from developing countries dwarfs inflows of aid. 

Corruption facilitation thrives in opaque processes. Of the lack of transparency among governments and the financial system. That's why transparency standards like IATI, EITI, CoST and the emerging OpenContracting are so critical. Otherwise, the "big fish" get away. I believe that transparency changes behaviour even when the accountability mechanisms may be weak. And, that accountability mechanisms thrive in the ocean of transparency. 

Automating Good Governance through Government Resource Planning software by FreeBalanceGRP

How Can Government Resource Planning (GRP) Software Automate Good Governance?

Thursday, May 23rd, 2013

FreeBalance Examines the Impact of Technology to Enable Public Financial Management (PFM) Reform


Miami, USA (May 21, 2013) – FreeBalance, a leading vendor of Government Resource Planning (GRP) software, today released a white paper describing how technology can assist governance reform in developing nation and emerging economy governments. The white paper was released at the 27th Annual International Training Conference of the International Consortium on Governmental Financial Management (ICGFM) in Miami.

The Automated Good Governance white paper consists of a framework with use cases. “Some observers believe that technology has a limited impact on governance,” said Doug Hadden, Vice President of Products. “Our experience shows that effective financial management software designed for government improves governance through automated controls, IT security and transparency. GRP is a necessary tool for critical institutional reforms to take hold.”

A set of four (4) use cases were released at ICGFM addressing important governance opportunities of:

  1. Procurement Anti-Corruption
  2. Progressive PFM Reform
  3. Public Service Reform
  4. Budget Credibility

The white paper augments FreeBalance PFM good practices documents and follows the company’s mission, as a For Profit Social Enterprise (FOPSE), to share lessons learned with the global PFM community. The Miami conference is focused on good PFM practices “in a period of global adjustment.”

About FreeBalance

FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance is a recognized as leader in fast, adaptable and successful GRP implementations. FreeBalance software manages a global civil service workforce of 1,500,000, and a quarter trillion ($US) annual budgets worldwide. FreeBalance provides software solutions for public financial and human resource management, and supports reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results. For more information, visit www.freebalance.com.

Three Myths About Corruption

Friday, February 22nd, 2013

Doug Hadden, VP Products

We’re on the front-lines helping those governments with political will to improve fiscal transparency and accountability. I encountered this recent Ted talk from Afra Raymond on the

We started a Three Myths about Corruption: Some Lessons from Trinidad. He speaks about his experience with freedom of information, transparency and corruption. Well worth viewing to gain a good perspective, especially if you don’t view corruption as a serious governance problem today.

I was most strucl by Mr. Raymond’s corruption calculation :

PUBLIC EXPENDITURES

minus TRANSPARENCY

minus ACCOUNTABILITY

equals CORRUPTION

The other important food for thought, in my view, was the contribution of “government to government” funding relations to overall corruption.

(What’s so Funny ‘Bout) Standards, Agility and Accountability (in government)

Tuesday, October 18th, 2011

Doug Hadden, VP Products

While contemplating the state of government shared services, I was reminded of the Elvis Costello version of the song: (What’s So Funny ‘Bout) Peace, Love and Understanding.

Which led me to remember the the Canadian and Commonwealth governance concept of Peace, Order and Good Government.

Government shared services is often presented as a magic pill to overcome myriad government challenges. Standardization is seen as the key ingredient to catalyze cost savings and performance improvement. Some go so far as to suggest that standardization will improve agility and accountability.

It’s not surprising that technology vendors that make money on shared services use a little hyperbole.

Standardization and Good Government

  1. Standardization does not improve agility. The more standard the processes, the less agile the organization.
  2. Standardization does not improve discretion. The more standard the processes, the less discretion public servants have to make decisions that will improve performance.
  3. Standardization does not improve accountability. The more standard the processes, the less ability public servants have to demonstrate merit. Accountability requires discretion and agility.

At least standardization improves government efficiency. Or does it? Generic processes can introduce inefficiencies, can limit streamlining, can add management burden.

At least standardization improves government risk management. Or does it? Standardization can provide an atmosphere of risk adversity, reducing effectiveness and innovation.

Searchin’ for light in the darkness of insanity?

As captured by Mr. Costello’s version of the lyrics, we need to consider a shared services approach that weighs all factors. My sense is that many financial management software vendor shared services implementations lack the ability to achieve the right balance between standardization and accountability.

The ideal financial management shared services platform should adjust to the standardization – accountability balance:

  • Enable thick standardization rather than thin. Thin standardization takes lowest common denominator, typically a part of a process. This often leaves orphan processes that are automated through custom development – or not automated at all. Thick standardization enables government organizations to share the processes that are appropriate.
  • Respect mandate and agility. Different legal and organizational mandates mean that government organizations have many unique processes. These processes should be supported by multiple configurations. Those processes that should be standard are standardized, those that are unique remain unique. All operating in the same data centre or private cloud to achieve IT cost savings.
  • Bottom-up governance. Standards must change to reflect changes in government objectives and recognition of good practices. This is enabled through governance mechanisms that adapt to real-life situations. Shared services must not be static and must not inhibit change.

Standardization, agility and accountability is serious stuff indeed.

 

Building sustainable communities in Africa through technology and government accountability

Wednesday, August 3rd, 2011

Liza Benkovitch, FreeBalance Washington

With the current state of tech innovation spreading in Europe, Asia & North America, it is not surprising to see the rise in tech communities in Africa. Technological revolution fosters new growth of local businesses and provides a better infrastructure for sustainable development within the continent. This trend is often termed ICT4D or Information and Communications Technologies for Development.

Africa: The Continent of Opportunity

According to Gallup Survey, entrepreneurship in Africa is becoming a popular notion, with 1 out of 5 African young adults are planning to start a business in the next year. This will help overcome the negative stereotypes and rebrand Africa as a continent of opportunity, sustainability and a land of capacity building initiatives.

Given the current IT infrastructure limits in Africa, the high growth rate of African start-ups is impressive.  In sub-Saharan Africa alone, over 90% of business operations are conducted through SMEs and they contribute around 50% of GDP. Hence, more people have started their own small businesses and internet ventures. Obinna Ekezie, for example, is a Founder of a Nigerian start-up, www.wakanow.com. Wakanow is an online travel booking company that provides customers with convenience and flexibility to make online travel arrangements within Africa. E-services range from online tickets, corporate travel, hotel booking and even airport pickups.  And to add to the convenience factor – the Wakanow mobile app was just launched.

Funding African Startups

The nature of start-ups in Africa is evolving. Start-ups been funded primarily by venture capitalists and philanthropic investment firms, with the support of intermediary organizations. Active SMEs investors in Africa include Soros Economic Development Fund, Omidyar Network, and Google. Omidyar is known to fund companies and organizations that promote capacity building, government transparency and accountability projects. In Africa, the Omidyar Network is a financial backer of many organizations, including iHub, a Nairobi based incubator, known as the “nerve center for technology.” iHub is particularly interesting because it supports sustainability initiatives in Kenya by hiring local people to run the center and encouraging entrepreneurs to invest in their country by establishing small business enterprises (SMEs).  The brainchild behind this innovative project is Erik Hersman, a technology influencer and startup guru. iHub, and other incubators such as ActivSpaces (Cameroon), Bantalabs (Senegal, Paris, London), MEST Incubator (Ghana), all serve as an essential nexus for technology, financial capital and skills.

Government Transparency and Accountability Trends in Africa

Part of Omidyar Network’s investment strategy thus far has been to invest in the government transparency initiatives.  Most recently, the Omidyar Network and a Dutch NGO, Hivos, launched a multimillion dollar Nairobi fund, the Africa Technology and Transparency Initiative (ATTI). The purpose of ATTI is to invest in technological platforms that help citizens track government activities & expenditures throughout the country.

African countries are also committed to the International Aid Transparency Initiative (IATI) and Extractive Industries Transparency Initiative (EITI).

As many African countries are becoming hotbeds of tech activity, government transparency and accountability has become more critical in Africa. Good governance is considered critical to improving development outcomes and to improving the business climate.

In mid-June, the Government of Liberia launched the Integrated Financial Management Information System (IFMIS) at the Ministry of Finance. The IFMIS is the FreeBalance Accountability Suite software that enhances “government’s credibility with its citizens and development partners, and demonstrate its continuous commitment to transparency and accountability,” said Minister of Finance, Augustine Ngafuan.

The Government of Kenya launched an Open Data Initiative, a data web portal that enables official government information to become accessible to the general public.  The World Bank, along with Google and iHub assisted with the publication of the data and the Government of Kenya has contributed to the launch. The data sets are readily available through an online portal, where users can view the information on a local, national and constituent level.

Closing the Digital Divide: Africa Success Stories

The rise of small business enterprises and tech communities has influenced the political and economic landscape of many countries. Governments are now held accountable by financial institutions for all the loans, grants and credits. Now governments are accountable to citizens.

ICT4D has  become an indispensible tool for achieving development goals in Africa. It has created a window of opportunity for ‘out of the box’ tech entrepreneurs to leverage resources and improve their socio economic conditions at home.  African leaders have caught-on to the importance of investing in ICT and have made it a priority to provide communication technology services to citizens. Rwanda is a great example of a country that is committed to its ICT goals, especially when President Paul Kagame won the 2006 ICT Award for the second time in a row in Accra, Ghana. President Kagame was selected as the best head of state in Africa in support of ICT policy, surpassing South Africa, Ghana and Tanzania.  The success of the policy is attributed to Rwanda’s commitment to its ICT visions and “we in Rwanda have no intent to stand still as the rest of the globe moves forward at an ever increasing pace,” stated President Paul Kagame.

Speaking of moving forward, the technology boom in Egypt is also one not to be missed. International Finance Corporation reported that in 2011, out of 183 economies, Egypt’s “Starting a Business” ranking rose to 18 from 23 in 2010. Those who relied on social media to ignite the uprising in Tahrir Square are now creating businesses to jumpstart the economy.

Sustainability is a major theme in Africa entrepreneurship

Also exciting are the “made in Africa” solutions. These solutions tend to be more environmentally sustainable and operate better in the African context than products and services designed in “the West”.  The South African government has recently commissioned the first large scale solar panel facility in the country, while Nokia Siemens network has launched an energy solutions program to help reduce  network operating costs and power consumption through the use of renewable energy. Leading telecom operators in Africa, MTN and Vodacom, are also looking into renewable energy to power the stations in Sub-Sahara Africa.

South African green media company, Eco-Bin, transforms the use of advertising to promote eco sustainability. The ads on the back panel of the bins are used for educational purposes, while the E-lite material offers brand exposure all day, without using any extra power. Eco-Bin is a one stop shop for earth-friendly and sustainable products for South African communities.

The digital divide is closing in Africa through emerging tech- savvy nations and entreprenuers.

Aid Effectiveness and Performance Management

Thursday, July 14th, 2011

Doug Hadden, VP Products

Charles Grodin remarks in the movie Dave, “If I ran my business like this…” It’s a standard view – if only governments ran like businesses. As many former businessmen have discovered (and not a few enterprise software vendors), it’s not as easy as it sounds. And, aid effectiveness is perhaps an order of magnitude more complex.

Corporate Performance Management

Corporate performance management uses techniques like key performance indicators (measure what is important) and balanced scorecards (show what is important) to improve performance. Government organizations use many of these same techniques.

Don’t let it fool you, it isn’t simple in government.

Private sector organizations have a bottom line: profit. There are established measurements like market share, and return on assets. Output measurements like the number of customer complaints handled, and outcome measurements like customer satisfaction survey ratings are factors that influence financials – profitability. If all the KPIs are green and the company is not making a profit, than the indicators are incorrect.

There is no bottom line in government. Outputs and outcomes are the results. Financial – in this case, budgets, is the input. This makes it very difficult to determine whether the KPIs are correct.

(On an aside, performance management links to accountability. Accountability has generally hurt government stakeholders more than the private sector, as CEO salaries show. The NewsCorp/News of the World hacking scandal is the exception that proves the rule.)

Aid Effectiveness and Performance Management

Does aid work? Some like Dambiso Moyo in Dead Aid, claim it doesn’t. Hans Rosling provides compelling visualization in gapminder.org that aid does work. Owen Barder of the Center for Global Development suggest that we need to consider what type of aid works.

Despite information overload, we don’t have enough data to overcome the narrative that aid is a waste of money. That’s because the aid environment is not a closed system. There’s foreign direct investment, climate and geography (droughts, floods) and many other factors that conspire to make aid appear more or less effective than it is. And, yet there is enough information for interpretation – to act as confirmation bias.

Need for Aid Transparency

Aid donors have performance criteria. Performance information is often not shared. There is often no consistency among donors. And, the contribution of governments to a shared goal with donors is rarely measured. That’s why aid transparency is so critical to determining how aid can be improved.

That’s why you need to sign up to making aid transparent. Over 5,000 people have done so. More is needed.

What could aid transparency accomplish?

  1. Better key performance indicators for aid effectiveness
  2. Alignment of many small initiatives at the micro level to more macro measurements
  3. More effective coordination of donors with governments
  4. More understanding of the sequence of aid initiatives based on the country context
  5. Value of foreign aid for international security