|Strengthening Fiscal Transparency and Participation in Post-revolution Tunisia|
Fiscal transparency and participation is a cornerstone of good public financial governance and a necessary condition to make accountability work. Following the Jasmine Revolution of 2011, the Tunisian government prioritised the principles of fiscal transparency and citizen participation.
CABRI and the International Budget Partnership supported the Tunisian government in its budget transparency efforts by undertaking a joint peer-review in May 2014. The reviews aim to bring together practitioners and civil society representatives from a select number of peer countries to examine the status of fiscal transparency and participation in a given country. Together with the host country, the team develops reform recommendations that will advance budget transparency and participation. Being an in-country exercise, the country that is reviewed is always an equal participant and retains ownership of the process and implementation of recommendations.
Prior to the revolution, Tunisia had a low level of transparency as measured by the OBI Index in 2012: 85th out of the 100 countries that were assessed. Since then, there has been a great momentum for change, which is also anchored by a new constitution that entrenches the principles of transparency and citizens’ participation in budgeting and public expenditure.
Space for peer-learning and exchange
A peer-review team, consisting of budget officials and civil society representatives from Niger, Mali, Burkina Faso and Mauritius paired up with their Tunisian counterparts for an intense peer-review and learning activity. The week-long exercise provided an opportunity for the peer-review team to better understand the budget policies, systems and procedures that impact on transparency and participation. This was undertaken through a series of interviews with representatives from the Ministry of Finance, Ministry of Development and Cooperation, Internal and External Audit agencies and Parliamentarians. Together with the counterparts at the Ministry of Finance, findings and recommendations were developed by the review team on how to make use of the current momentum to take transparency and participation principles forward in the budget process.
Based on its own assessment, which correlates with PEFA scores, the peer-review team found that the PFM system in Tunisia is relatively strong and comparable with Rwanda and Burkina Faso, for example. Importantly, the Tunisian authorities strongly demonstrate the political will to move their reform agenda forward, which also includes the implementation of: programme-based budgeting and a standard chart of accounts; adjustments to budget classifications and the revision of the PFM Act of 2004.
Further positive developments since the 2012 OBI survey include the publication of the: citizen’s budget; pre-budget statement; and draft appropriation bill. These developments have already resulted in a significant increase in the amount of information that is shared with the public and accessible on the website of the Ministry of Finance.
The strong level of engagement is also shown by Tunisia joining the Open Government Partnership in early 2014. We are expecting to see Tunisia leap forward in the list with the next OBI scoring.
One of the main challenges Tunisia will be facing is to create an environment where public participation is possible and meaningful. There have been several innovations, such as the creation of a joint commission between the Ministry of Finance and civil society organisations, called “Commission mixte pour la transparence financière” (Joint Commission for Fiscal Transparency). The Commission brings together representatives from several civil society organisations working for an open budget as well as officials from several directorates of the Ministry of Finance, with the aim of accelerating the opening of the public finance process to the citizen.
The political transition in Tunisia provides the authorities with several exciting opportunities, but also poses complex challenges. The Tunisian National Assembly (Parliament) is still transitionary, with democratic national elections scheduled to take place in late 2014. It will be important for any new government to institutionalise the practices and procedures that the transition government has initiated. For example, although there is a reform unit with five clearly defined pillars, there is no consolidated medium-term PFM strategy. The new government would need to design and implement such a strategy that will need to be the outcome of a consultative process. The revision of the PFM Act and related regulations will also provide an ideal opportunity to incorporate principles and tools for transparency and accountability, which are reflected in the new constitution.
In this same effort, it will be important to re-think the budget calendar to ensure sufficient time for, amongst others, parliamentary oversight and civil society participation. The timely preparation of budget documents will be a critical first step in the endeavour to improve oversight and increased participation. At this stage, the main delay is with the audit report, which, according to international standards, should be completed 18 months after the end of a fiscal year.
The four key recommendations developed by the peer team are:
Following the in-country review process, CABRI, together with the Tunisian authorities, will work to track progress and share with the rest of the network the good practices that have emerged and will continue to emerge from Tunisia. One of the opportunities to actively engage on lessons learnt from the transparency reviews (DRC, Kenya, Tunisia and Liberia) will be a final workshop in early 2015, after the conclusion of the fourth and final joint review in Liberia in October this year.
|Agriculture Impact Evaluations for Improved Development Outcomes|
Though Africa is a continent unrivalled in its amount of resources and capacity to feed not only the continent, but also the world, its food import bill amounts to US$36 billion every year, excluding fisheries. Furthermore, a key finding of the 2014 African Progress Report states that “African countries can reduce poverty and inequality by boosting agriculture, which affects two thirds of the continent’s population”.
Impact evaluations for evidence-based policy-making
With more than half the total employment of sub-Saharan Africa located in agriculture, it is an important sector for the medium to long-term development plans of governments. Growth in agriculture does not only lead to increased GDP, but also to poverty alleviation. Various country contexts have shown that agriculture growth leads to more poverty-alleviation than growth in any other sector.
There is a growing global trend towards evidence-based policy decisions. It highlights the overall understanding of a need to reduce the risk of continuing to spend excessively on an intervention (e.g. fertilizer subsidies, rural land development projects) that may not result in the expected outcomes. Strategic decisions need to be taken in order to invest in those projects which achieve the most bang for buck and impact positively on a country’s population.
This is where CABRI’s work on value for money in sector financing comes in. Most recently, our work on agriculture has looked at tools to assess value for money in agriculture spending in Africa. Evaluating the impact of agriculture financing interventions strengthens the ability of governments in knowing where it is best to invest, supports in better motivating for funds (both internally and also externally), and a necessary input into policy-making. Primarily, the aim of agriculture investments by governments are threefold: (i) increase food security, (ii) reduce dependency on imports, and (iii) increase farmer incomes.
The 2nd CABRI Agriculture Dialogue brought together budget officials and representatives from agriculture ministries from 13 African countries to learn, discuss and share experiences on impact evaluation tools.
About impact evaluations
Impact evaluations are different from our understanding of Monitoring and Evaluation (M&E). Monitoring is a continuous process during which inputs, outputs and activities are tracked. Evaluation is the periodic review of a programme, which is either planned, ongoing or complete. Impact evaluation, on the other hand, focuses on asking and finding answers to questions around cause-and effect. This helps policy-makers evaluate and also correct interventions at different stages of a project cycle.
Qualitative and quantitative evaluation methods can complement each other very well. There is an increasing amount of mixed impact evaluations, combining qualitative and quantitative evaluations. Quantitative analysis provides average estimates which are important for policy decisions, but fails to uncover what happens during the implementation of the programme and hence is unable to tell whether the failure of the programme is due to “design failure” or to “implementation failure”.
Various evaluation methodologies are available, depending on the nature of the intervention to be assessed, all with different strengths and limitations:
An impact evaluation plan, detailing programme objectives helps to build a results chain, find the right performance indicators, and identify the correct evaluation methodology.
Evaluation challenges for agriculture
Impact evaluations in the agriculture sector sometimes seem to be more challenging than those in other sectors. Measuring agricultural impact is particularly challenging due to externalities or spill over effects of the agricultural intervention (e.g. subsidies). This needs to be taken into account at the evaluation level. A simple comparison of the users of an intervention versus the non-users would not reflect the programme impact, since spill-overs are easily achieved (though positive spill-over effects are desirable, they do complicate the process of measuring the impact of an evaluation). This can be demonstrated by a transfer of knowledge from one farmer in the evaluation region to another in a different region (control group). It can also be the effect a programme has on another crop that was not targeted. Though important to take into account, indirect effects are hard to extricate.
Additionally, being able to determine whether the results of a certain intervention are valid for a different context (external validity) is a challenge. Though this is a common fate for all impact evaluations, factors like geographic elevation, rainfall or soil play a big role in influencing agricultural outcomes that have nothing to do with the intervention.
Investing today to make better strategic choices tomorrow
The more favoured approach to a systematic approach within government to impact evaluations, involves a central government agency taking responsibility and integrating impact evaluations into the monitoring and evaluation processes. But it takes time and resources to set up such a system, with clear guidelines on procedures and methodologies. Covering for the costs of (sometimes quite elaborate) impact evaluations are difficult to justify, especially when introducing these in a sector where the attribution gap can be quite significant. Here, it is advisable to design an evaluation around a pilot project, before undertaking a whole-of-government exercise. If the budget permits, it would be a good idea to do a mid-term evaluation (intermediate outcomes) in addition to a final evaluation, which will determine whether the programme achieved its ultimate goal.
Though self-funded impact evaluation projects are preferable for reason of ownership, countries can explore support from external (donor) agencies. In fact, involving donors for ad hoc evaluations is one way that can lead to the institutionalisation of impact evaluations on the government level, with country institutions getting more and more involved per assessment and standardising procedures and methodologies along the way.The Agriculture Sector Dialogue is the fourth in a series of sector dialogues. Previous CABRI dialogues have focused on the health, education and infrastructure sectors. Policy officials from governments and international experts from various organisations across the globe engage in roundtable panel discussions and group work to examine specific challenges and agriculture financing mechanisms. The discussions are based on a country case-studies undertaken by CABRI. The 3rd Agriculture financing dialogue will focus on a thematic discussion of the various issues that inhibit or promote good budgeting in the agriculture sector.
|Using and Strengthening Country Systems for Better Aid Delivery|
CABRI wrote a guest blog on the Effective Development Cooperation website on Using and strengthening country systems for better aid delivery
Click HERE to see the what can be done to strengthen Africa's public financial governance.
|What can South Africa learn from Kenya on fiscal transparency and participation?|
On 5th and 6th February 2014, in Centurion, South Africa, CABRI and the International Budget Partnership (IBP) hosted the mid-term review workshop for the project “Supporting Fiscal Transparency and Participation reforms in Africa”. The workshop gathered senior budget officials and civil society representatives from Mali, the Democratic Republic of Congo, Kenya, South Africa, the Central African Republic, Burkina Faso, Liberia, Tunisia, Lesotho and Ghana.
It was the opportunity, to discuss, amongst other topics, lessons learned from the first phase of the project, including joint country reviews of fiscal transparency and participation, undertaken in the DRC and Kenya in August and September 2013 respectively, and plan the next phase of the project. It was agreed that joint country reviews will be taking place in Tunisia and Liberia in 2014.
Based on the discussions during the session on the opportunities for future reforms in Kenya, Mrs Euody Mogaswa, Director at the South Africa National Treasury’s Budget Office, contributed the following blog around her lessons learned on her participation in the Kenya joint country review.
Kenya can be seen to be following into South Africa’s footsteps in some respects. In 2010, Kenya adopted a new constitution followed, in 2012, by a new Public Financial Management Act (PFMA). South Africa’s constitution was adopted in 1996, and its PFMA in 1999, legislation which marked the beginning of a series of considerable reforms to South Africa’s budgeting system and processes.
Hence, Kenya is at an important juncture of strengthening its PFM system. In order to strengthen fiscal transparency and participation, one of the key challenges looking ahead for Kenya will be to reinforce programme based budgeting and move away from line item budgeting. This will involve refining existing budget programmes for departments and publish budgets and expenditure by programme, sub-programme and economic classification items. The Kenyan National Treasury will also need to distinguish budget programme structures from organisational structures and publish non-financial information by programme. Capacity may need to be enhanced in order to fully implement programme based budgeting.
A second key focus of Kenya in the coming years will need to be improving the accessibility and availability of budget information, by for example, publishing all relevant budget documents on the day of the budget (detailed, timely, reliable, comprehensive, consistent information), publishing expenditure, revenue and non-financial information for state corporations and enhancing information published in the Citizen’s budget.
In South Africa, a lot of this information is already being published on a regular basis. The programme based budget information is published, including programmes, sub-programmes and economic classification expenditure items for each department. Non-financial information for each programme within a department and financial and non-financial information for public entities are published in budget documents. All budget documents and related databases are made available online on the day of the budget. In-year expenditure reports are published and presented to legislature on request. The past year’s annual report, including the Auditor General’s report is available 6 months after the end of the financial year.
In Kenya, line item and some high level programme budgets for sectors are published, with some non-financial information. Sector expenditure review reports are made available to the public online during budget preparation and the budget strategy paper is also available. In-year expenditure reports for national and county government are also published on quarterly basis. However, the past year’s annual report has been available more than 12 months after the end of a financial year and the National Audit Office report available more than 12 months after the end of a financial year. Also, in 2013, only the budget speech and statistical annex, budget highlights were available online on the day of tabling the budget.
While transparency is stronger in South Africa than in Kenya, the South African Treasury can learn from Kenya regarding the progress it has made in institutionalising public participation in the budget process. In Kenya, public participation processes are institutionalised in the Constitution and PFMA, civil society is active and engages with government on budgetary issues and the public participation process is governed by 10 principles, formulated by civil society. Sector working groups have also been established, whereby civil society is invited to make recommendations on allocations. Public hearings are held by Parliament and the Parliamentary Budget Office (PBO) also engages with civil society on budgetary matters.
In comparison, in South Africa, there are no strong legislative requirements and only a few formal processes for public participation (for example, parliamentary budget hearings). Some civil society organisations are interested in sector specific budgetary issues, in specific provinces but generally are not as capacitated and active in engaging in budgetary issues.
South Africa needs to establish formal public participation processes, such as a process to identify relevant civil society organisations to participate in the budget process. South Africa can also investigate how it can help build capacity of civil society and it can consider regulating the participation processes i.e. timing, feedback process, and incorporating public inputs into budget documents.
Kenya’s effective PBO is also an example that South Africa can follow. Kenya’s PBO is fully established and operational and has strong capacity and networks to support its advisory role to parliament on the budget. It is also a purely technical office and hence non-partisan.
Finally, while Kenya’s Integrated Financial Management Information System (IFMIS) is currently being “reengineered”, it is a route that South Africa has not yet taken and could consider in the future.
More information on the discussions, as well as the supporting documentation used during the workshop, can be found here.
|Fiscal Transparency and Participation in Kenya: Implementing the 2010 Constitution|
Kenya’s 2010 Constitution, and the new Public Financial Management (PFM) Act that details the main public finance related principles of the Constitution, are ambitious. There is no question that Kenya is at an important juncture when it comes to PFM. Kenya was therefore deemed to be a good candidate for a review of the country’s budget openness, as part of the CABRI/IBP project on Budget Transparency.
The team that facilitated the Kenya review comprised of senior budget officials and civil society representatives from Lesotho, Liberia and South Africa. This team was supported by the CABRI Secretariat and the IBP representative in Kenya, a PFM expert and a representative from the World Bank.
The Kenya review of budget transparency followed a similar review in the DRC. Two more reviews are envisaged for 2014. The aim of the review is to define feasible objectives and plans for implementing country-specific transparency reforms that are drawn from African experiences.
How transparent is the Kenyan budget?
The International Budget Partnership conducts a survey every two years in 100 countries across the globe (30 African) that assesses the level of fiscal transparency, participation and monitoring in various countries. It encompasses a list of multiple choice questions that are answered through a consultative process and followed by an independent verification. Once the process has been completed, an aggregate score out of 100 is calculated for each country - 100 being the highest score.
Using three of the budget transparency surveys, Kenya’s Open Budget Index (OBI) score, as measured by the IBP, has hovered in the mid-range, with a slight deterioration between 2008 and 2010.
The review team set out to identify the main challenges that Kenya faces in making improvements with respect to fiscal transparency and participation. This exercise was undertaken by conducting interviews with representatives of various directorates in the National Treasury, including the Accountant General, the newly established Office of the Controller of Budget, the Parliamentary Budget Office, the PFM Reform Unit, the Ministry of Planning and Devolution, the Office of the Auditor General, and various civil society groups. The key themes discussed are described below:
Focus on results based budgeting
The Kenyan budget was appropriated according to a programme structure for the first time in 2013 for all Ministries. In several of the previous budgets, a list of programmes was annexed to the actual budget that was presented in the traditional line-item structure. This reform is a significant change to the budget formulation and appropriation process in Kenya, and also introduces greater transparency and accountability.
However, the information provided in the programme budget is limited. This is due to highly aggregated information, as well as there being little budget narrative. The review team shared examples of how programme budgeting is done in South Africa and how the adoption of certain practices could lead to an improvement in budget transparency, such as:
In the coming years it will also be important for Kenya to distinguish between the Executive Budget Proposal (Budget Statement) and the Enacted Budget post parliament’s proposals. Efforts to increase transparency on donor projects will also be necessary.
IFMS and the downstream challenge
An opportunity for Kenya to improve budget transparency will be the production of more reliable and comprehensive annual financial statements. The complete roll-out of the IFMS provides the tool for more frequent and real time information releases. When the use of IFMS is strengthened and all payments are on-system, the IFMS will play an important role in improving accountability in the budget process (through, for example effective audit trails).
There is a need to accelerate accounting and reporting institutions and capacity to improve reliability and consistency of information. For example, the Auditor General may need to improve capacity to achieve legislative benchmarks on timelines. There is an opportunity to immediately include information on previous years in the same format as the budget proposal. Mid-year and year-end reports are also within easy reach, for example the tabling of the supplementary budget is an opportunity for the presentation of a mid-year update.
Counties and participation mechanisms
Counties play a strong role in Kenya’s new PFM structure. The 47 counties hold important responsibilities within the new decentralised constitutional and fiscal arrangements. From the visit by the review team to Nyeri County, it was found that the county publicises local budgets in novel ways, such as: on notice boards placed on the roofs of motor vehicles; church announcements; and publication in major newspapers.
This is an example of how participation is not only a National Treasury obligation – it is a feature of the new PFM Act at all levels of government and other state and non-state actors. Civil society has an important role to play in this regard, especially in their role as intermediaries that provide budget training and awareness to citizens.
From PFM Act to implementation
The Kenyan Government is currently developing regulations that will give effect to the full implementation of the PFM Act. The success of these reforms will depend on how these regulations will be defined and implemented. The concept of participation will need to be developed and a framework put in place in order for public participation to be regular, predictable and systematic, and importantly, for reports to clearly state how the public’s recommendations have been accommodated. The same can be said of transparency – what is “publish and publicise” as required by law? The term “publish and publicise” is generally referred to in Kenya as meaning that citizens are able to access a printed copy of documents through the government’s printer in Nairobi. However, this is at a cost and not always very practical for hefty volumes. Responsibilities for making documents available will also need to be defined within the National Treasury.
A collaborative effort for improvement
There is a strong legal foundation for greater fiscal transparency and participation reforms in Kenya. More useful information (e.g. move to programme budgeting) and better opportunities for participation have already been started (e.g. sector working groups, public hearings). But, as mentioned in many of the interviews conducted by the review team, Kenya is learning – it will first start by crawling before it can walk and run.
The review is a collaborative country-led effort and a starting point for a continuous process of engagement with the National Treasury and the various stakeholders involved. In conclusion, it is the view of CABRI that there is sufficient legal basis, ample enthusiasm and commitment, and capacity for the Kenyan Government to steadily improve Budget Transparency and Participation. CABRI and the IBP are committed to supporting the authorities in Kenya in this regard, through peer-exchange and learning initiatives.
For more information on CABRI’s work on fiscal transparency and participation, please contact Emilie Gay, Public Financial Management Specialist at the CABRI Secretariat.
|The Democratic Republic of the Congo: which path should be chosen to increase fiscal transparency?|
In mid-August 2013, a CABRI and IBP (International Budget Partnership) team spent a week in Kinshasa. The team worked in close collaboration with the DRC Ministry of Budget and comprised senior budget officials from the Central African Republic, Burkina Faso and Mali, as well as representatives of civil society from the DRC and Mali, and was supported by two representatives from the Budget Strengthening Initiative.
The joint study is part of a three year project with the IBP. Besides the review of budget transparency in the DRC, reviews will also be undertaken in Kenya and two more CABRI countries to define feasible objectives and plans for implementing country-specific transparency reforms that are drawn from African experiences. The reviews will also aim to assist countries achieve these goals.
The workshop organised for the launch of this project was held in Accra, in November 2012 and included budget officials and civil society representatives from Liberia, Kenya, Ghana, Central African Republic, Mali and South Africa
During the DRC review, the team engaged many stakeholders during its research into the state of fiscal transparency and public participation, including:
The joint study was initiated by an inaugural workshop during which the objectives of the review were presented as well as the concepts of transparency and participation in public finances. The week-long study concluded with a technical workshop that was attended by many national stakeholders where preliminary findings were presented.
What is the status of transparency in the DRC?
Firstly, the review found that there had been improvements in fiscal transparency and participation over the last few years, based on the Open Budget Index (OBI) results. The OBI assesses the level of fiscal transparency, participation and monitoring in various countries. The OBI encompasses a list of multiple choice questions that are answered through a consultative process that is followed by an independent verification. Once the process has been completed, an aggregate score out of 100 is calculated for each country - 100 being the highest score.
The DRC results on the Open Budget Index, which increased from 1 in 2006, to 6 in 2008 and then to 18 in 2012, deserve recognition. Our findings during the week would suggest that further progress has been made since the OBI 2012 study. We can therefore expect the DRC to achieve a higher score at the next OBI study which will be carried out in 2014.
The table below is a draft summary of the status of the eight key budget documents produced by the DRC that were examined during the study week. The main areas of progress achieved since the 2012 Open Budget Survey comprise the Pre-Budget Statement (PBS), the Citizens’ Budget, and the Year-end Report.
The absence of a legal framework regulating the public availability of budget information is another challenge to the improvement of transparency and participation in the DRC. As in many other countries in Africa, public engagement is more effective during budget preparation and review, whereas participation in budget implementation and monitoring is limited. Capacity-building of civil society at all levels will certainly be beneficial, but it is also necessary to improve the basic functionality of the websites of the Ministries of Budget, Finance and Planning.
In this regard, the review team identified preliminary priorities for reforms in the DRC, which we divided into three main categories and listed below. This is not a comprehensive list and further information on the draft recommendations made during the study week will be included in the upcoming report.
There are a number of opportunities and entry points for improving fiscal transparency and participation in the DRC, such as the creation of a new budget timetable, the development of legislation such as the law governing the Inspectorate General of Finance and the creation of a collaborative framework for civil society engagement. These entry points can be a means to improving transparency and participation within the framework of the strategic plan for reforming Public Finance in the DRC.
A report on the study will be finalised in October and posted on the CABRI website. The second case-study on fiscal transparency and participation will take place in Kenya during the week of the 16th of September 2013. We will pursue our collaboration with the DRC during the mid-term workshop of the CABRI-IBP project within the next few months.
For more information on the work of CABRI in regard to fiscal transparency and participation, please contact Emilie Gay, Public Financial Management Specialist at the CABRI Secretariat.
|Making Complex Policy Decisions To achieve Value for Money in Agriculture Spending in Africa|
The ability to make complex policy decisions that reflect good value for money in terms of cost effectiveness, cost efficiency, feasibility, scale of impact, relevance, and sustainability while placing countries firmly on a path to meeting their medium and long term development goals, is arguably the most important role of government.
The Collaborative Africa Budget Reform Initiative (CABRI) organises “sector dialogues” on value for money to assist senior government officials improve on this process using a case-study approach. The purpose of the case studies is to present a real life problem to the officials, which they work through, using the information presented in the case study, the knowledge from the seminar presentations and their own experience.
CABRI’s recent sector dialogue on Value for Money in Agriculture brought together senior officials from finance and agriculture ministries from 10 African countries. The dialogue was held in Dakar, Senegal on 29-30 July 2013. Four country case-studies were prepared for the seminar (available on CABRI’s website). This blog provides an essence of the practical exercise and demonstrates the complexity of policy making drawing from two of the four country case-studies that were prepared for the dialogue.
Key Dialogue Question: Should Ghana invest more in the processing of raw cocoa beans?
The rhetoric of increased value addition resonates within the continent. Why should Africa remain producers of raw materials and not manufacturers of processed goods? Ghana is the second largest producer of cocoa beans in the world after its neighbour Ivory Coast. However, less than 25% of Ghana’s cocoa beans are locally processed - limiting Ghana to capture only 5% of the estimated $28 billion of the global intermediate products market, and only an insignificant share of the global final consumer market of $87 billion. With these statistics, the answer would seem obvious: process, process, process! But, let’s look at the other side of the coin which explains the difficulty in making this policy change. To begin with, raw bean cocoa production contributes 10% of Ghana’s GDP and generates 25% of export revenues. Therefore, it’s a valuable commodity for the economy and an important source of rural employment.
Here is the trap: Ghana’s main cocoa crop is considered to be among the finest in the world with its bigger size beans and higher butter yield and therefore fetches an additional 4 to 6 percent premium on the international market. Not only would the premium be lost if Ghana processed its beans, but would then have to face higher freight costs and high tariff walls. For example, the EU levies no duties on the import of raw cocoa beans, but levies a 7.7% and 15% - ad valorem duty on cocoa powder and cocoa cake, respectively. It’s interesting how international trade agreements are designed to keep developing countries producers of raw materials!
In addition to trade barriers and losing the premium, there are valid concerns about losing Ghana’s firm footing in the market as a leading cocoa producer and venturing into the unknown in terms of competing internationally on processed goods and with no history in the market. Venturing into processing in the short and medium term will also mean supporting foreign owned businesses who dominate the processing industry in Ghana.
The question of “to process or not to process” created an interesting debate at the dialogue, especially in light of the context. With a heavy deck of cards stacked up against processing, it was interesting that no one at the dialogue suggested that Ghana maintains the status quo. It was agreed that more incentives for processing is needed but at the same time, it’s important to maintain the quality of raw beans at source. Ghana cannot neglect the long term potential benefits of processing. In the short and medium term, cocoa beans revenue may decline and foreign companies, who dominate in the processing industry, may stand to gain a large share of profits. However, there are potential long term benefits that could transform the economy including an untapped regional market. Kenya offers some examples whereby a lot of local companies are now processing coffee and selling profitably in the East African region.
Key Dialogue Questions: (a) Agriculture or Industry? Which should be the leading sector for economic development in Ethiopia? (b) Smallholder or Commercial Farms? Which should be prioritised?
In answering these two questions, context is important. Agriculture is the backbone of the Ethiopian economy; it’s the main livelihood for more than 85% of the population; it accounts for about 45 % of GDP; almost 90 % of exports/foreign exchange earnings originate from agriculture sector; and it’s the main source of industrial raw materials for agro-industries. At the same time, there are some arguments to support the move from agriculture towards industrial development. For example, industries could potentially create more employment and even absorb excess labour in agriculture. Furthermore, public investment in industries would not encounter the sorts of challenges that are inherent in agriculture and render it a risky investment e.g. climate change.
The difficulty in making a decision on the policy choice for Ethiopia is compounded by the fact that agriculture is mainly in a form of a small-holder structure (the topic of the second question but also relevant here). The discussions acknowledged that there is no precedent for high levels of growth and development stemming from small-holder farming structures. This makes an agriculture-led strategy for Ethiopia rather stifling. At the same time, a leap to industry appears to be unrealistic. The group consensus was that the pillar of growth should be one of an agriculture-led industrialisation, involving the development of an agro-industry sector.
On the second question: smallholder versus commercial farmers, it was important to appreciate that the smallholder sector accounts currently for 83% - 95% of all cultivated land and of agricultural production. The group felt that in the context of high poverty levels and food security concerns, support to smallholder farmers was a good policy decision. There was a thought that smallholder farming could also be innovative and this should be explored while continuing the support for commercial farmers. The Ethiopian government, in its Plan for Accelerated and Sustainable Development to End Poverty (PASDEP) is however, very clear on this policy dilemma. A commercialisation of agriculture with an emphasis on private sector led growth and a shift to high value export crops will be the overall agriculture strategy going forward. This probably means a phasing out of support for small holder farmers. It will be interesting to see how this policy transforms the economy while avoiding an exacerbation of poverty and income inequality.
|Message to President Obama from CABRI: Transparency will help build stronger institutions|
“The proof of the pudding is in the tasting,” says CABRI’s Executive Secretary.
CABRI submitted the following blog to Oxfam America’s Politics of Poverty blog on occasion of President Obama's visit to Africa:
We all know that policies and budgets in Africa are formulated much better than they are executed. But when the African finance ministers I work with don’t know what the US is funding in their countries, it is hard for them to plan their own development efforts. Therefore adequate levels of transparency on both the donor aid side and on the side of governments receiving aid are needed to translate reform rallying cries into action.
An opportunity to make use of this enthusiasm is during US President Barack Obama’s visit to Africa this month.
Information on aid from donor countries to countries in Africa needs to be comprehensive. That means being timely, useful, accessible, reliable, and comparable. Donors can report better to their constituencies, while helping recipient governments to plan and implement more effectively.
Those finance ministers and their structures and personnel need to play their part too, by ensuring that the rules are clear, i.e. the responsibilities of national and sub-national governments in terms of the disbursement of funds. This means that these rules are brought into legislation and that people are held responsible for the implementation of programmes. This also means sharing information so that citizens and civil society can hold their representatives accountable.
If President Obama is serious about supporting good governance and strengthening institutions in Africa, here are three things he must remember while speaking with leaders in Africa.
1. Who sets priorities for aid remains a critical rallying point. Country ownership of reform and home-grown approaches that take into account capacity needs, technological and skills transfer, and the dynamic changes and significant progress in countries receiving aid, are indispensable to aid’s contribution to achieving sustainable development.
2. African governments recognise that the absence of good governance undermines development. Countries implementing public financial management reforms still struggle with insufficient budget and aid transparency, impaired constitutional accountability, as well as technical and managerial shortfalls that hinder the implementation of budget reforms. But the Declaration on Good Public Financial Management, which was endorsed by African Ministers of Finance in 2012 at the Annual Meeting of the African Development Bank, is an important touchpoint.
3. Providing development assistance through Country Systems should be the rule, not the exception. Donors should not just build or provide funds for roads, but capacitate countries to plan, construct, and maintain their own roads. In other words, donors should utilise national arrangements and procedures for priority setting, public financial management, procurement, monitoring and evaluation, audit, and social and environmental impact assessment procedures. The benefits of donors using country systems have been well researched and include a more stable macroeconomic framework, higher efficiency of public expenditure, lower transaction costs, and higher potential for overall impact.
“Yes we can” took off like wild fire throughout the world, Mr. President, when you first campaigned for your office. What can we do now?
Most importantly, aid transparency may only be one step, but it’s a vital starting point for greater and more effective governance and accountability. Grab a spoon. Let’s taste the pudding.
Neil Cole, CABRI Executive Secretary
|Mali Communication on Fiscal Transparency, Accountability and Grassroots Participation in Africa|
This blog is a summary of the remarks made by the Chairman of the CABRI Management Committee during a parallel event held by CABRI on the 27th of May at the Annual Meetings of the African Development Bank, in Marrakech, Morocco.
Over the last decade, Mali has made considerable progress in the area of transparency. This blog covers three important points of the progress made in fiscal transparency. The three points are as follows: (1) Budget preparation and implementation; (2) Access to budget information; and (3) Transparency, financial oversight, auditing and assessment of the Public Financial Management (PFM) system.
As regards the preparation and implementation of the budget, the areas of progress are as follows:
A national workshop launching the preparation of the budget always marks the beginning of the budgetary preparation process with the participation of all the governmental and non-governmental actors as well as the technical and financial partners. Hence, the engagement of civil society in the budget preparation has increased its role in decisions concerning public policies.
Progress in the area of access to budget information is evinced by the following initiatives:
Finally, in regard to the transparency, oversight, auditing and evaluation of the Public Financial Management (PFM) system, the following initiatives are noteworthy:
In conclusion, the government intends to make better use of the audit reports, especially the reports of the Office of the Auditor General, in order to step up the fight against corruption and to improve governance with a view to achieving greater accountability to the general public as regards the use of public funds. The government is therefore considering the enactment of a Law on illicit enrichment in order to guarantee the proper use of public funds. Furthermore, the government has recently passed a Law on the Code of Transparency in Public Financial Management with a view to improving the transparency and financial governance of the Budget in Mali.
Sidiki Traore, Budget Officer, Ministry of Economy and Finance, Mali
|A Snapshot of PPBB reforms in East and Southern Africa|
CABRI recently participated in two IMF Afritac workshops on performance and programme- based budgeting. In March, CABRI took part in an IMF East Afritac workshop, and three weeks ago CABRI returned from an IMF South Afritac workshop. At both of these, CABRI presented research findings from its soon to be published report on the status of Performance and Programme Based Budgeting (PPBB) in Africa.
PPBB is being embraced by African governments to achieve better service delivery and to improve value for money in public spending. These objectives are linked to the goal of making governments accountable to achieve the objectives of poverty reduction strategies or national development plans and to deliver results from annual budget spending. The report investigates the progress that countries have made in the implementation of PPBB reform, what the impact has been, and some of the main challenges.
The two workshops helped us to further gauge how countries from two regions are tackling PPBB reforms. Whether from East Africa or Southern Africa, one thing which is clear is the significant disparity in the approaches taken and the progress made in implementing performance and programme based budgeting.
Within these regions, one can find countries which have:
Progress in Africa regarding this reform is not strictly linked to cultural or administrative heritage, although, it is generally the case that Anglophone countries seem to be more advanced with the reform. Southern Africa includes the two countries in Africa, which are the most advanced with the reform, namely Mauritius and South Africa, which qualify as having a direct programme based budgeting system.
In the two regions, there are also countries which are currently making great strides in pushing the reform further, such as Kenya, Tanzania, Comoros and Rwanda, which would fit into the performance informed category. In the case of Mozambique, Namibia, Zimbabwe and Zambia, the line item budget remains the one which is appropriated. There is also a grouping of countries which has not yet - and for various reasons - considered adopting the reform. These countries are Botswana, Swaziland, Lesotho and Angola.
It is also worth noting that some countries have started the reform almost a decade ago, such as Namibia, while others are only now starting to consider the implementation of programme budgeting, such as Malawi. Some countries have taken a gradual or pilot based approach, such as Kenya and Ethiopia, whereas others opted for the “big bang” approach in implementing the reform, such as Mauritius and South Africa. Different approaches have been taken in terms of the programme structure selected, the chosen costing methodology or the type of performance information and monitoring system that is used.
These highlighted differences are only some among many. Based on this observation, and as CABRI deepens its knowledge on some of the good practices and experiences within Africa, four important guiding principles for implementing this reform can be identified.
1) Understanding the context
2) Acknowledging the gaps – some may be huge schisms.
3) Paying attention to the content
4) Change management matters
 The East and South Afritac centres are regional technical assistance, which are a collaborative effort between the International Monetary Fund (IMF) and several bilateral and multilateral donors, with the aim of providing technical advice in core macroeconomic and financial management areas and providing technical assistance.
 Present were: Rwanda, Tanzania, Kenya, Zanzibar, Ethiopia and Malawi.
 Present were: Mauritius, South Africa, Swaziland, Zanzibar, Mozambique, Botswana, Angola, Lesotho, Zimbabwe and Namibia.
 A reference made by Professor Matt Andrews
|CABRI Sector Dialogue on Value for Money in Education Spending|
The CABRI Sector Dialogues on “value for money” are designed as thematic seminars for a relatively small group of senior officials working in finance and line ministries. The dialogue provides an opportunity for the exchange of knowledge and experience on planning, budgeting, financing and management of expenditure in a particular sector. Two previous CABRI sector dialogues focused on the infrastructure and health sectors. The Education Sector Dialogue, held on 25-27 February, 2013 in Accra, Ghana, was the third in a series of CABRI sector dialogues. Dialogue participants included finance and education officials from eight countries: Ghana, Kenya, Mauritius, South Africa, Botswana, Mali, Senegal and the Republic of Congo. There were also education policy experts from the African Development Bank, Hewlett Foundation, the Association for Development in Education in Africa; the Education Policy and Data Center, the Abdul-Latif Jameel Poverty Action Lab, and the Innovation for Poverty Action. The dialogue was opened with a keynote address by the Director of Budget of Ghana, Mr Simeon Kyei, who underscored the importance of education in growth and development and relayed the Ghana experience.
The dialogue centred on the education policy challenge, efficiency spending in education and innovative financing. The recent South African experience of technical inefficiency in the form of the failure to deliver textbooks to schools opened the way for a rich discussion on the importance of monitoring performance and the need for decisive sanctions in the public service. Strategic allocation was also discussed as a problem in some countries such as Senegal, where the bulk of the education budget goes into primary and tertiary education, leaving secondary-level with only 10 percent of the education budget. A related challenge in Senegal is the lack of sanctions when results are not delivered and the absence of allocating resources to well performing activities. The sharing of Mauritius’ experience in allocating resources in line with key performance indicators (KPIs) offered the Senegalese officials and other participants much to consider in their respective education reforms.
How to finance education in the context of limited resources was a relevant topic for all participants. Although it was acknowledged that Overseas Development Assistance (ODA) will continue to be a dominant source of public funds for education in several African countries, other sources of innovative financing was discussed. Examples of innovative financing sources include: flight levies, diaspora bonds and philanthropic funds. Countries shared their own experiences and ideas about innovative finance such as taxing mobile phone operators, progressive taxing of high earning African football players, tapping more into the private sector, etc. At the same time, delegates acknowledged the need to better understand the risks associated with innovative financing. For example, in Senegal, taxes were levied on the construction of new airports. The costs were transferred to the consumer in the form of increased ticket prices. The consequence was a decrease in travel. Mali had a more positive experience, where the school governing bodies in the northern part of the country were encouraged to set-up and roll-out income generating activities. Mali also has a special commission for innovative finance.
Making complex policy decisions using case-studies
The ability to make policy decisions that reflect good value for money in terms of cost effectiveness; cost efficiency; feasibility; scale of impact; relevance and sustainability is vital. A case-study on Mozambique allowed for a practical exercise in small group settings on making these type of decisions. The case-study which was prepared beforehand by a CABRI consultant, showed a real case of three financing mechanisms being implemented by the Government of Mozambique to improve education outcomes. The three financing models were: (i) a direct support (grant) to schools; (ii) establishment of early childhood education in rural communities; and (iii) the distribution of school vouchers. The group were given additional information about each of the three interventions, as shown in the table below.
The task was to consider the information above and select (as a group) the intervention that they could convincingly put forward to the Ministers of Finance as the one that was most cost effective, sustainable, feasible and relevant to achieving the objective/s. Most participants gravitated towards Direct Support. It was cost efficient, did not require targeting and was easy to manage. However, it did not exactly deliver on the purpose for which it was established. It delivered results on enrolment and completion, which is useful, but it was set up to reduce dropout, repetition and failure. The case-study therefore served as a very practical exercise on how to make complex policy decisions.
The Way Forward
Participants were asked to indicate future topics that CABRI should focus on in future work in value for money in education. Below are some of the topics that were identified:
From the quality of the discussions, as highlighted above, it can be said that the dialogue achieved its goal of: (i) sharing ideas; (ii) fostering an in-depth understanding of the education challenge; and (iii) facilitating discussion and generating a better understanding of efficient ways to plan, finance and manage public spending in the education sector. Participants also benefited from presentations on equity and efficiency (delivered by the ADB); the use of data/simulation models to assist in policy making and financing of education (by the Education Policy Data Center) and the use of randomised control trials in evidence-based policymaking (by JPAL and IPA).
By and large, the dialogue helped to improve the communication and mutual understanding between finance and education ministries.
The keynote, case-studies and presentations are available here on the CABRI website.
|Open Budget Index 2012 – Where does Africa stand?|
The International Budget Partnership (IBP) released the 2012 results of the Open Budget Index (OBI) in January 2013. The Open Budget Survey measures the state of budget transparency, participation and oversight in countries. The OBI is a list of multi-stakeholder choice questions that are completed through a consultative and verified process. Once completed, a composite score is calculated for each country, with 100 being the highest score possible. The OBI undertakes the survey every two years; the first took place in 2006.
How well did Africa perform?
On average, Sub-Sahara Africa scored 31 on the 2012 OBI, which is below the average score of 43 for all regions. The Middle East and North Africa grouping has an average score of 18. These performances mask varied scores within the continent.
Out of the 30 surveyed African countries (both North Africa & Sub-Saharan Africa):
Which countries in Africa improved the most?
Encouragingly, on average, the scores from the surveyed countries from Francophone West Africa doubled since 2010 from 8 to 16.
Amongst this group, Burkina Faso is one of the two greatest improvers in Africa over the period. Burkina Faso’s score jumped by 19 points, as it started publishing the pre-budget statement and the in-year reports in a timely way and increased the comprehensiveness of the executive’s budget proposal.
In Mozambique, the score of which jumped by an impressive 18 points, the progress was led by the executive’s budget proposal and the pre-budget statement being published for the first time. As highlighted in the recent CABRI Report “Fiscal Transparency and Participation in Africa: A Status Report” (October 2012), quick gains are possible in many countries, for example by making already produced key budget documents publicly available.
Some worrying trends
Some countries however registered dramatic declines in scores between 2010 and 2012. The scores of Egypt and Zambia fell by 36 and 32 points respectively over the period (see the table below, which plots OBI scores for those countries which have been surveyed since 2006).
This decline in the OBI score is mainly the result of the non-publication of the executive’s budget proposal or the fact that it is available only at a high price. In Egypt’s case, the mid-year review was also not publicly available and in Zambia’s case the year-end report was available but only at a high fee. This demonstrates that transparency gains are not always sustained but can indeed be reversed, due to various factors such as political instability or transparency practices not being enshrined in law.
In several African countries, the transparency score has remained flat or near flat over many years, such as Ghana, Kenya, Nigeria and Cameroon.
Developments with Public Participation
The 2012 survey included a new section on public engagement in the budget process to assess the extent to which the three main institutions surveyed provide spaces for public participation in budget processes. The section includes six principles, including that public engagement should occur throughout the budget process, with all parts of government and should have a legal basis. This part of the survey identified interesting developments for participation in Africa. For instance, the OBI report mentions the Botswana “budget pitso” initiative, a consultation forum system for the public. In Kenya, the constitution stipulates that a parliamentary committee should seek participation from the public.
The report also underlines the fact that countries in which legislatures and SAIs are weak, are also countries where there is little budget transparency and few opportunities for public participation, implying that the overall system of budget governance is deficient. In Africa, Angola, Cameroon, Tunisia, Zimbabwe, Morocco and Equatorial Guinea are characterised by this combination of factors.
The Open Budget Survey 2012 report draws further recommendations on how to improve budget transparency and participation. For more information, please access the website of the International Budget Partnership. CABRI, the IBP and the World Bank Institute will be jointly working with up to four African countries to undertake peer reviews of budget transparency and participation in the next three years. For more information, see the section on Budget Transparency Promotion and click CABRI's blog.
|CABRI-IBP Workshop on Fiscal Transparency and Participation|
On the 22nd and 23rd November 2012, CABRI and the International Budget Partnership (IBP) held a workshop in Ghana on fiscal transparency and participation. The workshop served to launch a three-year programme, which will aim to work with up to four participating CABRI countries to undertake joint reviews of transparency and participation.
The discussion on how to improve fiscal transparency was taken up by participants from Ministries of Finance as well as civil society representatives from Liberia, Kenya, Ghana, Central African Republic, Mali and South Africa. The workshop served to present and discuss the findings of the recent CABRI publication, entitled Fiscal Transparency and Participation in Africa. Guidelines and standards for budget and fiscal transparency and participation were also discussed and timelines and teams for the peer supported country reviews were identified.
The joint review of country transparency programmes will take place in a phased approach. The first two countries will be reviewed in 2013. The Central African Republic, Mali and the Democratic Republic of Congo will participate in the francophone review and South Africa and Liberia will be reviewing the Kenyan participation reforms and transparency systems. The results of the reviews will be discussed and shared within the broader CABRI network.
Where does Africa stand in terms of fiscal transparency?
The report analyses the status and progress made with respect to fiscal transparency and participation in Africa, primarily based on the Open Budget Index (OBI) and Public Expenditure and Financial Accountability (PEFA) scores since 2005. The report found that while on average, African countries are less open about their fiscal activities than their counterparts in other regions of the world (see chart, which plots OBI scores for 2006-2010), there is a wide disparity in country performance within the continent.
Note: EAP: East Asia and Pacific, ECA: Europe and Central Asia, LAC: Latin America and Caribbean, ME: Middle East, SA: South Asia.
Despite the fact that countries in Africa provide no or meagre information, in many cases, information is already available internally, and significant progress can be made relatively quickly by focusing on transparency reforms that produce standard external documents. Some countries, such as Egypt, Uganda and Angola, made significant improvements in transparency over the six years covered by the OBI survey. In many countries, improvements are however often not stable over time.
The report also found that the administrative heritage of a given country is a better predictor of fiscal transparency performance than income group. The status of the country with respect to whether it exports natural resources and its ‘fragile state’ status are also significant factors.
African countries fare poorly in respect of transparency on three types of non-core fiscal data, namely donor funds, extra-budgetary activities and contingent liabilities. Africa trails other regions with regard to the provision of non-financial information, but has made progress over the last six years in the provision and quality of performance information.
Average country performance in Africa has deteriorated with regard to the provision of medium-term estimates and in-year actual expenditure, and improved with regard to the provision of past years’ information and budget year estimates. And while there have been improvements in the usefulness and comprehensiveness of data, on average, the provision of information has been less timely from 2006 to 2010.
Fiscal Participation in Africa
Audit systems in Francophone and Lusophone countries lag behind systems in Anglophone countries. In some countries, audit systems are in fact functioning well but the public does not have access to audit reports.
African countries assessed in all three rounds of the PEFA have made progress in terms of legislature engagement strength between 2006 and 2010. Anglophone countries appear to have more effective legislative budgetary institutions.
Between 2006 and 2010, while Anglophone countries have made progress in terms of opportunities for citizens to engage in the budget process, on average, these opportunities diminished in Francophone countries.
The discussions enabled to delve deeper into identified issues in the report, including that of capacity, both technical and financial, and that of the lack of communication of legal avenues for transparency. The importance to promote standards and the culture of transparency was identified, as well as the need to prioritise reforms depending on the country context.
The need to further institutionalise the role of civil society in the budget process and empower civil society to participate more actively in the budget process was also discussed. Avenues to engage civil society were identified, such as organising forums for civil society or publishing citizen’s guide to the budget.
To access the report, Fiscal Transparency and Participation in Africa, please follow the link.
|Namibia’s reform journey towards Programme Based Budgeting|
From the 5th to the 9th November 2012, CABRI undertook a Joint Country Case Study (JCCS) on Programme Based Budgeting (PBB) in Namibia. The JCCS is one of CABRI's innovative tools, which provides participating CABRI members an opportunity to investigate and document the experiences, successes and lessons learnt of reforms to a particular aspect of a country’s budgeting system.
|Moving Towards Performance-based Budgeting in Africa: Opportunity or Curse?|
The Collaborative Africa Budget Reform Initiative (CABRI) held its 8th Annual Seminar in Pretoria, South Africa on 9-11 May, 2012. Senior budget officials from 28 African countries and CABRI’s partners attended a highly interactive event structured around panel discussions, peer learning working groups and roundtable discussions. The theme of the seminar was: Budgeting for results: moving towards performance-based budgeting (PBB).
The theme of the seminar took into consideration that many African countries are progressively moving away from line-item budgeting towards a system that is more focused on outcomes and places emphasis on results. At the same time, the shift towards this new budgeting framework has not been a source of debate. Critics have stressed the importance of a prudent approach and placed emphasis on “getting the basics right” for instance, producing credible annual budgets, exercising effective budget execution controls and adhering to sound cash management practices – practices that many African countries struggle to achieve. Critics also perceive programme-based budgeting (PBB) as externally imposed and a form of conditionality for funding from international financial institutions. Some have even called it a passing “fad”.
The seminar acknowledged that moving to programme and especially performance-based budgeting is a lengthy and complex process. As one expert panellist noted, “PBB is a relatively simple concept but incredibly difficult to implement”. The fact that European countries are still “experimenting” with PBB is revealing of the daunting process involved.
Despite these challenges, it is telling that the delegates at the Annual Seminar viewed PBB as instrumental in improving service delivery, achieving greater efficiency and could be a useful tool for meeting national development goals. Some delegates referred to it as “a vehicle to poverty reduction”. For example, Rwanda attributed the 12 percent reduction in poverty levels to the introduction of PBB and a strict enforcement of performance contracts among public servants. Experience from the WAEMU Directives has also shown improvements in budget transparency and an introduction to multi-year budgeting, among other PFM reforms.
There was a general feeling among the participants that PBB is important for the efficient, transparent and accountable management of public resources. However, there needs to be political will as well as technical capacity. Much of the success in Mauritius, South Africa and Rwanda is attributed to high level champions of the reform (Ministers and Prime Ministers) and administrative capacity and commitment. For instance, an environment of hyper-inflation such as in Zimbabwe, may not be conducive for PBB reform. Inclusiveness and broad-based participation are also critical – this requires a dialogue with citizens and a meaningful engagement of the legislature, civil society and line ministries. Another key message that came across is that PBB reforms need to extend beyond the Ministry of Finance – capacity is equally required (if not more required) in the line ministries and also in parliament and among the civil society.
The seminar also discussed the variations in programme-based budgets across the continent and globally. In some countries, the budgets are activity-based; some are output-based and others are framed around objectives. Differences are also noticeable between Anglophone and Francophone countries. The seminar discussed the advantages and disadvantages of the various models, while using actual programme budgets from Mauritius, Mali and South Africa as case-studies. There was a sense that a trade-off needed to be drawn between the complexity and the detail included in the document and the accessibility of the document. Another point of discussion was the importance of linking financial and non-financial data in the document.
Senior budget officials further discussed the organisation and change management implications of PBB reform, particularly, how to manage change, what approaches are available to changing the behaviour of key actors and how to motivate politicians, budget officials and line managers to use performance information. Issues on sequencing and incorporation of performance measures were also discussed.
A full set of the seminar’s documentation is available here.
|CABRI’s recent work on Budget and Aid Transparency|
In the follow-up of CABRI’s participation at the 4th High Level Forum on Aid Effectiveness, which took place in Busan last year, CABRI has pursued its work on budget and aid transparency. On the 24th and 25th January, CABRI took part in a conference organised by the International Budget Partnership (IBP) on fiscal transparency and public participation. The meeting, which took place in Dakar, brought together representatives from civil society and representatives from Ministries of Finance and Economics from Niger, Cameroon, Mali, Senegal, and DRC, as well as representatives from international organisations.
The focus on these particular countries was motivated by the IBP’s observation that this region had performed relatively disappointingly in the 2010 Open Budget Index (OBI). The OBI ranks countries with respect to their practices in terms of budgetary transparency and public participation based on international best practice. Best practice in this field has emerged as the production and publication of eight key budget documents:
In terms of these publications, the OBI gives importance to the comprehensiveness, reliability and completeness of the content of these documents, as well as the timeliness under which they are published. The survey also takes into account the extent to which these documents are made accessible to the public and the extent of public participation in the various phases (planning, approval, execution and evaluation) of the budgetary process.
Within the given region, Mali was the best performer in 2010, scoring 33% on the OBI, while the rest of the pack scored poorly, between 2% and 6%. Based on this observation, the dialogue between civil society and government representatives sought to establish an assessment and ensuing recommendations to improve fiscal transparency and public participation in their respective countries.
The dialogue was also an opportunity for these countries to recall why fiscal transparency and public participation are important and the benefits which they generate. The senior budget official from DRC identified that the main goal of fiscal transparency and public participation was to serve the population. The representative from Niger made the essential point that fiscal transparency and public participation contribute to a democratization process, which leads to citizens becoming more equal faced with the budget. Fiscal transparency and public participation also create a virtuous circle, which can participate to a more optimal use of public resources and hence better service delivery, greater economic efficiency and more growth. Meanwhile, the Malian delegate indicated that having involved, engaged and active citizens could help the government to improve its methods, documents and practices, establishing a culture of learning.
Other benefits which were identified were that fiscal transparency and public participation can:
- Limit the extent of corruption and misuse of funds;
By bringing these actors together and through country break-out sessions, observations emerged with respect to the status and scope for progress regarding fiscal transparency and public participation in the region.
Improvements since 2010
Participants shared their experiences with respect to the progress made in the planning phase of the budgetary process since the last OBI results. For example, Mali established an internal control system and started publishing quarterly budget reviews. DRC has made many of its publications available on its website and government procurement laws have been reformed. Senegal has added many annexes to the budget proposal, such as those relating to risk assessment, information systems have been established and a good governance programme has been put in place. Meanwhile, although progress has been made in the execution and approval phases of the budgetary process, progress has been less wide-ranging than that in the first phases of the cycle.
Encouragingly, it came to light that the OBI scores in the region could easily be improved. As such, many budget documents are already produced by the Ministries of Finance and Economics, but not published. Most importantly, one of the key documents, the budget proposal, represents a vital step in improving fiscal transparency and is not being published in many countries of the region. In the OBI questionnaire, the budget proposal represents more than 55 questions out of a total of 92 questions, reflecting the importance of this document. Other in-year reports are also already being produced and could easily be made accessible through internet. The discussion did raise the issue though that internet may not be sufficient to increase transparency and public participation, as in most countries, internet access remains limited. Furthermore, OBI scores were brought down by documents being published outside of the delays recommended by best practice. Correcting this may mean clarifying the budget calendar, which may not require such an additional effort as changing the format and content of a document.
Few frameworks for public participation
While civil society representatives acknowledged that there is scope in the current state for some sort of participation in the budget process, the latter is not collaborative, due to asymmetry of information, for example, which biases the dialogue between civil society and ministries. The civil society representative from Cameroon indicated that the budget calendar was not always published. In Mali, while civil society was able to make recommendations and observations to the pre-budget statement, these were not always sufficiently taken into account in the final budget proposal. It was also noted that division of civil society weakened its power to participate and hence civil society needed to organise itself more efficiently in its lobbying and participative efforts. This challenge was due to the fact that, unlike with respect to fiscal transparency, there is no such thing, as yet, as a best practice in terms of public participation. This is because public participation in the budget process is more complex and country-specific, than the production and publication of key budget documentation.
Weakness of the legislature and media
In many of these countries, the media remains weak and not sufficiently empowered to spread information and raise the debate within the population. The civil society representative from Niger went so far to say that, in his country, disinformation was taking place by the media. What’s more, it was noted that the legislative power was not sufficiently strong. Meanwhile, some representatives of civil society noted that even if appropriate involvement of the legislative branch was achieved, the parliament in certain countries sometimes failed to represent the interests of the people. In this context, it was also raised that political opposition should play an important role in the budget process and should effectively participate in the budget debate.
Institutional and capacity constraints
Another key point of discussion was the extent to which institutional and capacity constraints mean that progress is difficult to achieve in certain sectors. For example, in Mali there are constitutional constraints, which mean that the audit institution is part of the Supreme Court, which means that the government is finding it challenging to make the audit institution independent. This, in turn, means that the audit institution remains understaffed to fulfill its duties and produce the audit report. This is also causing delays in the external audits report, the last one having been published in 2008. A system of internal audit is still absent, partly due to the lack of an audit culture and capacity constraints in terms of human resources. What’s more, internal controllers in Mali are appointed by the President, which limits the independence of the control system. Meanwhile, another element which creates a so-called “transparency leak” is the inefficient control and accountability of agencies and para-public institutions.
Aid Transparency and Management
Finally, another key element, which arose from the discussion, was the fact that aid flows are not sufficiently transparent, raising the importance of aid transparency to achieve fiscal transparency. This brings us to CABRI’s participation, from the 24th to the 26th January, in the Aid Management Platform Workshop, organised by Development Gateway, also in Dakar. CABRI brought a budget perspective for aid coordinators present at the conference, by emphasizing the need for them to bring the aid information that they hold on budget. The session served as a reminder that having aid off-budget causes the following problems:
- A duplication of funding for the same services;
The lack of aid transparency is created by several factors, such as donor systems not being set up to provide information, information by donors being incomplete and provided too late, international information being incompatible, and line ministries not willing to share information. Notwithstanding these factors, it is vital to create an interface between the aid management process and the budget management process, in order to report and import aid information in the budget process and cycle.
|3rd Africa Policy Seminar on Regional Public Goods|
Regional public goods (RPGs) can be summarised as goods or resources that can be shared by people across countries in a more or less non-rival, non-excludable way. RPGs can support developing countries to achieve higher economies of scale in market size and thereby contribute to the development of a region, but also to regional peace and stability. Yet, due to political issues and market failures, such as the dilemmas that RPGs create due to presence of positive or negative externalities, the provision of RPGs tends to be sub-optimal.
The Collaborative Africa Budget Reform Initiative (CABRI) has an interest in RPGs because of their impact on the public finances of countries in Africa.
This is why CABRI (with the support of the African Development Bank) has conducted research on a number of RPGs in Africa in order to examine the benefits and challenges which result in their provision from a financing perspective. At CABRI’s 3rd Africa Policy Seminar in Cape Town senior officials from 14 African countries and representatives from various international organisations met to examine Regional Public Goods in the African context, the incentives to enter into such projects, the institutional arrangements thatenable their provisioning as well as the available financing frameworks.
Collaboration on RPGs is not an easy task. An example of the challenges is a railway line between Malawi and Mozambique which needs maintenance work in a swamp area on the Mozambique side. This railway connects Malawi to a Port and is therefore of more importance to Malawi than to Mozambique. Yet, due to the lower importance of this railway link to Mozambique, the repair work on the railway line is not undertaken and Malawi struggles with the resulting negative externalities.
Regarding the implementation of Regional Public Goods Projects, the key points raised during the discussions on project design include the following:
(1) Commitment: A shared purpose as well as a long term commitment of participating countries are the basis for any regional public cooperation;
(2) Institutional foundation: In order to have a sustainable collaboration, the necessary institutional arrangements need to be created in a robust and flexible manner. It is also important to reassess the circumstances in the course of the project in order to explore whether contributions need to be weighted differently, or partnerships possibly redefined;
(3) Capacity: Sound project design includes ensuring that financial mechanisms are carefully scrutinised beforehand in terms of the capacities of the involved parties in order to ensure regulation and also enforce the implementation of regional projects.
(4) Coordination of projects: While the different nature of infrastructure needs to be taken into account, the coordination of projects can result in higher cost efficiency (e.g. jointly coordinating the construction of a cross-boundary road and an underground cable running next to it).
(5) Strong leadership: Most times RPGs are not of equal importance to all countries involved. It can, however, still be useful for a strong country or institution to take a leading role and support a weaker country (even if this country can draw a greater benefit from the provision of a public good), as the entire regional collaboration on an RPG might otherwise be undermined.
Partnership solutions for regional projects
The question that remains is how to begin operationalising collaboration on regional public goods and how to tip the scale from national solutions to more regional ones? Some countries have the mindset of “1 dollar buying more domestically” and remain reluctant to enter into collaborations on RPGs. This is why institutions like CABRI are considered important for sensitising decision-makers towards seeing the benefits and potential of RPGs in the broader context. Some of the following financing options were discussed:
Public Private Partnerships (PPPs): When public and private sector aims are aligned, the benefits of collaborating become obvious: strong private sector participation can improve the execution of regional public projects. The Maputo Development Corridor that links South Africa and Mozambique is a good example for this. The private sector can also be instrumental in providing risk capital, as project financing from debt alone does not provide equity and is not sustainable. What is important to bear in mind is that while the vision of providing a public good in the public sector mostly represents a long-term goal, the private sector interest may be limited in time and provisions need to be made for an eventual end of such a partnership. PPPs can, indeed, go well, but the enforcement of agreements on the international level needs to be carefully thought through.
One suggestion is to introduce a database of bankable projects which are freely accessible in order to stimulate more involvement from the private sector (and other donors).
Regional Banks: In order for regional initiatives to take off, regional banks need to be brought to the floor as main actors for the financing of RPGs. Regional banks are especially important when it comes to the initial project phases (feasibility studies etc.), when return on investments might be unclear and therefore still unattractive for private sector investors. This also means that the capacity of regional banks needs to be strengthened, both in terms of financial means to support regional initiatives and capacitating staff through training regarding questions such as: what kind of financing structures to develop, which of the partner in the RPG project will receive the funds etc.
Creative regional solutions
One example for creative financing options that can be learned from is the Africa Risk Capacity (ARC), a new mechanism that has been created from collaboration between the African Union and the World Food Programme. The ARC is not a pure regional public good, but it is an example of a club good aiming towards reducing the risk of negative externalities that arise from natural disasters. It is a risk financing facility that provides the possibility for member gouvernments to access contingency funds as a potential disaster response with the objective to avoid gouvernments‘redirecting resources originally planned for other activities.
Though co-operation on Regional Public Goods is a challenging endeavour, cross border-collaboration has clear success stories. One of these is the river blindness control work in sub-Saharan Africa: the African Programme for Onchocerciasis Control (APOC). The APOC is generally considered as a good practice example, where, despite internal and cross-border political conflicts, the programme continued to work and has substantially contributed towards combating Onchocerciasis in Africa.
The publication Regional Public Goods. Incentives, Financial Frameworks and Institutional Arrangements and the CABRI Briefing Paper on Regional Public Goods served as the basis for discussions at CABRI’s 3rd Africa Policy Seminar
 Externalities can occur whenever an action of an individual (or a group of individuals) or a natural event positively or negatively influence the well-being of any other another individual(s).
|IMF Africa Fiscal Forum|
|Open Budget Survey 2010: How did Africa perform?|
|Good Financial Governance in Africa: The Status Report|
Over the last decade, Africa achieved demonstrable progress towards improved political and economic governance and consistent economic growth. Deep challenges, however, remain for the continent to grow out of aid and bring about progressive and sustainable improvements in its citizens’ quality of life. Unless Africa focuses on strengthening the good governance foundations of its progress, in the context of globalisation, the balance between progress and the remaining challenges could tilt in the wrong direction.
|Good Financial Governance in Africa|
Effective states, economic growth and sustainable development is associated with states’ ability to raise taxes, borrow prudently and manage other revenue flows effectively; to plan and manage the spending of public money effectively and efficiently; and to account for the use of funds and the results achieved. The management of public funds in states that achieve these outcomes commonly are characterised by elements of transparency, participation, responsiveness, oversight, accountability and predictability and by the rule of law. Together these features are constituent elements of good financial governance, the subject of a key work stream for CABRI in 2010/11.
|Programme-Based Budgeting (PBB) in Mauritius|
Programme budgeting is always a topical issue within the CABRI fora. Many countries are currently grappling with how to design and implement programme-based budgets. The Ministry of Finance and Economic Empowerment in Mauritius (MoFEE) has taken important steps, by learning from their neighbours in order to navigate through the complex terrain of programme budgeting. CABRI has seized the opportunity to gain an understanding of Mauritius’ successes, challenges and lessons learned by conducting a Joint Country Case Study.
A CABRI expert group consisting of senior budget officials from Ethiopia (Mr Melaku), Kenya (Mr Kiiru), Rwanda (Mr Baingana and Mr Karakye) and South Africa (Dr Brown) spent a week in February 2010 reviewing the implementation of programme-based budgeting in Mauritius. The review involved an intense schedule of meetings, interviews with Mauritian officials and late night discussions amongst the team. The team was supported by the CABRI secretariat and a short-term consultant.
|Africa Infrastructure Country Diagnostic|
This is an excerpt of the press release.
|Africa's performance on the Open Budget Index|
|Tuesday, 03 March 2009 11:20|
The 2008 Open Budget Index (OBI) has been released by the International Budget Partnership on 1 February 2008. The OBI has been constructed in 2006 and “evaluates the quantity and type of information available to the public in a country’s budget documents” according to generally accepted good practice criteria for public sector management.
|Last Updated ( Thursday, 13 October 2011 15:14 )|