|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 )|