subject: Recent trends in financial management in governments with special referance to some african countries [print this page] Recent trends in financial management in governments with special referance to some african countries
During the past decades, Public Administrations (PAs) have undergone a profound restructuring process in order to renew organizational, managerial and accounting aspects.
In many African countries, the necessity for reform was particularly felt in consideration of the persistent lack of efficiency and effectiveness that characterized its activity and by the strong impulse induced by some changes in the socio-economic environment. The crisis of the model of the welfare state, the need to pursue policies for balancing public budget, the demand for a growing quantity and quality of services supplied, and the demand for public participation are some of the signals of the need to find accounting tools suitable for adequately answering these needs.
Nevertheless, public financial management systems of many countries are still characterized by a significant heterogeneity.
In particular, the reform process has interested the following aspects;
a) changes to institutional and political system;
b) interventions in the provision of public goods and services;
c) introduction of managerial techniques and mentality.
With reference to the first reform area, legislators and experts in the field aimed at re-distributing powers within public institutions in terms of their dealings with other social and economic players and the articulation of these powers within a framework.
The second area of reform has been re-defined by public intervention in areas such as regulation as well as in the direct provision of public services. In short, this area of reform includes interventions, such as privatization, outsourcing, and other mechanisms aimed at increasing competition in the provision of public services.
As a consequence, a spirit of competition is replacing the traditional monopolistic mentality of public services provision and as such the provision of public services, which was once strictly within the government domain, has been partially transferred to private companies (profit and non profit) that adhere to competitive marketplace principles or at least adhere to the principles of market efficiency and economical management mechanisms.
The third area of reform has concerned PAs models of operational activities; in this case, the objective of reform is to identify technical and organizational solutions and operative and management methods (often adopted and adjusted from private companies) through which PAs may improve their performance.
Their goal is to improve the internal efficiency of the operations and increase the level of customer satisfaction. What generally happens and naturally so because of the norms and regulations at hand, is that PAs tend to introduce managerial techniques, keeping their attention focused on management activities and the connection between goals and results as well as how to use new technologies for improving efficiency and effectiveness
It is evident that PAs need to be evaluated by looking at the management of the financial resources at their disposal. Yet, this kind of analysis of accountability would be too limited. PAs and top political players are called upon to integrate their professional, financial and technological energies for the proper functioning of PAs, the public owned group of companies and other economic partners to guarantee, within the pre-requisites of the budget, an adequate and appropriate social and economic development of the area/issue under their governance.
There is need to systematize an important field of study in the public sector financial management. This last has been interested by a vast reform process that has totally changed its content and structure. Therefore overall objectives are to explore the changing process and to forecast future development of public financial management (PFM) systems in order to (re)define both its theoretical structure and practical implementation.
Public financial management has been interested by almost five categories of reform:
1. Changes to financial reporting systems, including the promotion of accrual-based financial statements and a reliance on professionally accounting set accounting standards;
2. Development of commercially minded, market oriented management system and structure to deal with the pricing and the provision of public services;
3. Development of a performance measurement approach.
4. Devolvement/decentralisation or delegation of budgets;
5. Changes to internal and external public sector audits.
Impact of budgeting reform process on and between politicians, managers and citizenry;
With reference to budgeting process, both academics and practitioners have underlined the advantages of passing from an input-based to a programme budgeting process. There are several advantages in the programme budgeting approach over the traditional, line-item approach.
Firstly, the former aims to direct funding more towards the achievement of actual policy objectives or outputs. Under programme budgeting, PAs activities are divided into the hierarchical structure of programme, sub-programme, activity and component (if necessary). Appropriations can then be made to particular programmes according to the priorities of the actual PAs political leadership. Therefore, it allows a better allocation of resources and politicians can to some extent reassert its control over budgeting. In this sense, at the same time the budgeting reform process has given more power both to political leadership and public managers.
Secondly, with a programme budgeting process forward planning is enhanced. Thirdly, people operating within PAs have more incentives for implementing better management practices.
Finally, a programme budget is a document in which PAs are more accountable and transparent for the money advanced to them by
Summary;
The policy goal behind the pursuit of fiscal transparency is to ensure that the objectives of fiscal policy, it's legal, institutional, and economic framework, policy decisions and their rationale, data and information related to monetary and financial policies, and the terms of agencies' accountability, are provided to the public on an understandable, accessible, and timely basis.
Fiscal transparency is propagated as part of a larger policy goal of good economic governance pursued to achieve poverty reduction and attain the Millennium Development Goals (MDGs).
Indeed, on the African continent, the calls for more openness in the budget processes is part of a set of endeavors aimed at solving the paradox of copious natural resources and increasing donor magnanimity, on the one hand, and seemingly intractable abject poverty, on the other hand. It is also aimed at addressing corruption and theft of State resources and money laundering, among many.
Against this background, the fiscal transparency practices in 15 African countries are as follows. It is relied on published reports including those of the international financial institutions, theoretical literature, press reports, various websites to access laws, budget documents, reports, regional and international guidelines and case studies. It looks at critical areas of transparency, namely: clarity of roles and responsibilities; public availability of information; open budget preparation, execution and reporting; independent assurances of integrity; and the extent to which these are practiced in Africa.
At variance with the views of a number of commentators, this study concurs broadly with the recent findings of the ECA African Governance Report (AGR), that, overall, Africa is making progress towards better economic management, and, it appears that the prodigious pace of reforms is likely to continue.
These events include the end of the Cold War and cessation of support to corrupt regimes such as that found in former Zare; the revelations of stolen assets by officials entrusted with State funds; the ponderous attention devoted to the effectiveness of aid; the recent announcement by G8 countries of debt cancellation and other forms of aid to poor countries that are implementing good governance practices; the wave of democratization in Africa; and Africa's own initiatives such as the New Partnership for Africa's Development (NEPAD) and the African Peer Review
There is a deluge of new laws and regulations of international standards in many countries indicates a commitment to fiscal transparency, supported by the Poverty Reduction Strategy Paper (PRSP) and multi-year budgeting processes to better link policy to budget and entrench fiscal discipline. On the negative side, it is found seemingly insurmountable implementation shortfalls of these laws, partly reflecting lingering capacity constraints, susceptibility to the whims of weather, gyrations in commodity prices and anemic foreign aid flows. Reinvigorated efforts are keenly needed to enhance transparency in procurement and privatization processes, ensure the integrity of budgeting data and documents, and to address auditing and critical deficiencies in the involvement of Parliaments and other independent oversight organs.
Final conclusion:
The most important constraint that Africa faces in applying good fiscal transparency practices is the need for political will and commitment. Without this element at the core of economic reforms in general and fiscal reforms in particular, no amount of foreign assistance or legislation can extricate the continent and her peoples from the economic mismanagement, corrupt practices and the dire poverty plaguing the continent.
