Posts Tagged ‘DFID’

Corruption and Aid Outrage

Thursday, January 2nd, 2014

Doug Hadden, VP Products

Aid Outrage

According to the 'bastion' of British journalism, the Daily StarCorrupt dictators funded by £11.2bn of UK taxpayers' cash from Helene Perkins This seems to be part of the aid outrage: "why is so much going to corrupt foreigners and so little spent at home?" It gives the tantalizingly misleading impression that aid spending is orders of magnitude larger than reality.

via PBS.ORG

Corruption Narrative

The fuel for this outrage is corruption. And, providing a tenuous link between aggregate aid and dictators. For example:

"War-ravaged Afghanistan, Libya and Syria have also been given millions. The shock findings came as David Cameron hit his aid spending target."

How exactly is this a shock? Does Ms. Perkins think that one should have a war in Afghanistan and not attempt rebuilding? Should the UK not provide any humanitarian assistance in Libya or Syria? Is Ms. Perkins completely ignorant of UK aid policy? (i.e. more focus on humanitarian aid and post-conflict countries).

Ms. Perkins asserts that "a study from Transparency International (TI) said the cash was being siphoned off by some brutal regimes."

What study is this? We all know that there is aid money that goes into the pockets of elites in developing countries. There is a far cry from "some" to "all" aid money. There is a difference in corruption related to the type of aid and how the aid is disbursed. That, apparently doesn't matter to the corruption narrative.

Ms. Perkins goes on to talk about Somalia as "one of the worst governed" countries in the world. Exactly how does she propose that governance in Somalia is to be improved? Magic? Or, perhaps governance assistance. Yet, the African Development Bank has found that Somalia has made significant governance progress in 2013.

The blatant editorialing continues with about the  "whopping…£107m  to South Sudan whose president is the fearsome General Salva Kiir Mayardit." Is Ms. Perkins afraid of a man wearing black hats? 

As Aid Effectiveness Improves despite Narrative

Aid effectiveness is improving thanks to increased aid transparency and the use of big data analysis. It's exciting times for aid effectiveness where analytical tools are debunking myths like those espoused by Ms. Perkins. It's creating action such as in the World Bank reorganization to better share good aid practices around the world.

Towards a Scorecard for Public Financial Management Technology Maturity

Thursday, July 29th, 2010

Doug Hadden, VP Products

Phasing of Public Financial Management (PFM) “reform, through achieving gradual manageable steps (DFID 2005)” is considered a good practice. In fact, if any thing in PFM is considered a best practice – it’s the phased implementation of PFM reform and supporting information systems as we’ve pointed out before and validated at numerous conferences.

The sequence of reform depends on the country context. “Implementing public finance reforms of any kind requires an understanding of the entire public finance system in place in that country. It requires an understanding of the institutional arrangements (Rodin-Brown 2008).” As a vendor specializing in the government domain, Government Resource Planning (GRP), FreeBalance has developed a methodology called progressive activation that enables governments to modernize over time. That’s because, unlike the private sector, technology solutions like GRP need to follow reform. A company can easily change a chart of accounts to improve performance tracking or adopt secure electronic cheques with electronic signatures. Governments often need to change the law to support these “business process” improvements.

There is no established sequence of reform (Allen 2009) except at a fairly high level. David Nummy from Grant Thornton provided a good PFM framework at our FreeBalance International Steering Committee meeting in 2008.

It is rather frustrating to government PFM practitioners to determine the sequence of technology adoption to follow reform. Some technology adoption does not require legal reform. As I discovered in the Kyrgyz Republic, there is an appetite to understand the benefits of financial, budget and civil service automation to help determine priorities for legal reform. We have always identifed the three dimensions of sequencing GRP technology:

  1. Modules or functionality that is implemented by governments. We’ve created a PFM component map that provides an overview of general modules used in government GRP.
  2. Decentralization or the rolling out of functionality to other government entities.
  3. Modernization or reconfiguration of existing modules to support reform.

We have our first draft of a simplied scorecard to help identify the level of maturity of a government financial management software system. I’d very much like input and ideas. This will help all PFM practitioners regardless of software technology used.  The items in the “modernization” column may imply the acquisition of additional modules or it could be activating functionality that already exists. Governments can utlize the scorecard to show what is current implementd and what could be implemented in the future.

 

FUNCTIONALITY

DECENTRALIZATION

MODERNIZATION

PUBLIC FINANCIALS MANAGEMENT

  • Budget controls
  • Assets
  • Audit
  • Line ministries
  • Regions
  • Municipalities
  • Segregation of duties
  • IPSAS & GFS
  • Accrual accounting

GOVERNMENT TREASURY MANAGEMENT

  • Cash management
  • Cash controls
  • Debt management
  •  Investment management
  • Delegated treasury
  • Bank reconciliation
  • EFT
  • Treasury Single Account
  • Cash forecasting

PUBLIC EXPENDITURE MANAGEMENT

  • Expenditure Controls
  • Purchasing
  • Delegated purchasing
  •  Procurement
  •  e-Procurement
  •  Procurement transparency
  •  Grant management

GOVERNMENT RECEIPTS MANAGEMENT

  • Non-tax revenue
  • Income tax
  • Customs
  • Local tax collection
  •  Case management

CIVIL SERVICE MANAGEMENT

  • Payroll
  • Pensions
  • Workforce management
  • Civil service planning

 

  •  Recruitment
  •  Talent management
  •  Capacity building
  •  Performance appraisal
  •  Succession planning
  •  Self-Service

GOVERNMENT PERFORMANCE MANAGEMENT

  • Budget classifications
  • Management reporting
  • Budget preparation
  • Budget circular

 

  • Budget delegation
  • Bottom-up Budgets
  • Local PEFA assessments
  • Citizen services
  •  PEFA assessments
  •  Program budgeting
  •  MTEF
  •  Budget transparency
  •  Macro-fiscal framework
  •  Scenario planning
  • Performance budgets
  • Outcome measures

 

Public Financial Literature Review Published

Thursday, March 5th, 2009

The African Development Bank, CIDA, DFID, Dutch Ministry of Foreign Affairs, SIDA have collaborated to publish ”the first phase of what is intended to be multi-donor evaluation of PFM reform. The first phase – a literature review  to synthesise the main theoretical approaches and findings from evaluations of PFM reform programmes, and to identify knowledge gaps – was led by DFID.” 

PFM Lit Review Final

View of Integrated Financial Management Information Systems (IFMIS)

This is a comprehensive review of the PFM reform literature. The conclusions made about success in IFMIS implementations are generally fair. There have been many unsuccessful IFMIS implementations in emerging countries. “Failure rates were reportedly high, because of unrealistic timescales, lack of ownership, insufficient consultation and inadequate specifications,” according to the report. Most of the literature on IFMIS failure from multiple sources focuses on these project issues.

It is typical to attribute standard project management characteristics to success or failure of IFMIS implementations. Although these characteristics are important, we believe that there are factors that are specific to IFMIS in emerging countries. Some standard project management characteristics are more important in this context.  Some of these characteristics include:

  • Facilitated implementation and training because of the underlying design of  the IFMIS software.
  • Effective implementations through high of vendor commitment and knowledge in the public financial management domain.
  • Managed milestones for sequenced roll-outs adapted to the country context enables capacity building through technology.
  • Progressive activation to enable future reform and modernization.
  • Program management that addresses risk factors up front and provides an implementation blueprint to increase stakeholder buy-in.

One of the more important references in the report is the “failure to undertake parallel reforms.” This is a very important observation because IFMIS implementation should follow reform  

More Needed about IFMIS Success 

The report concludes that the “evaluation of’ ‘first generation’ implementations of MTEF and IFMIS highlighted a number of critical success factors; however, no evaluation appears to have been carried out on whether lessons have been learnt.”  This is somewhat true because many reports are anecdotal. Nevertheless, the review that did not seem to reference a large body of literature, particularly the International Journal on Government Financial Management published by ICGFM.  The review of the 2007 ICGFM Winter Conference on the subject of IFMIS is an excellent primer.

 

Use of Financial Management Information Systems to Improve Financial Management and Accountability in the P…

Two sources for success are referenced in the review. “Diamond and Khemani (2005) promote the use of a modular approach to IFMIS implementation, with the initial introduction of just the core functions of budget execution, accounting, payment processing, commitment control and financial reporting. Based on experience in Ethiopia, Peterson (2006) argues that process change not process (innovation) re-engineering is the best method.” The consensus in the PFM community is that the modular approach is the best method. There does not appear to be a consensus on the nature of process engineering. It is our experience that process improvement can be accomplished as part of the modular approach. Reform processes requires capacity building that can be enhanced through modular implementation followed by progressive activation.

Realistic Time Frames

Governments are often blamed for having “unrealistic time frames” for the IFMIS implementation. Most of these systems were acquired through formal proposal cycles. The winning vendors agree to the time frames. Blaming the government for the time frames is blaming the victim. 

Some government IFMIS implementation time expectations are unrealistic. FreeBalance does not bid when we think that the time frames are far too risky. The FreeBalance software design that leverages configuration and is designed exclusively for government has enabled us to implement very rapidly.