A longstanding criticism of PFM reform approaches is their propensity to sideline implementing agents and neglect broader service delivery and equity objectives. A primary rationale for the CABRI-UNICEF joint BPFCC[1]
programme is to bring together ministries of finance and line ministries on equal footing to tackle problems at the intersection of public finance and sector financing. Since the start of the action-learning period in February 2023, collaborative teams from ministries of finance, health, education, and local government across Malawi, Mozambique, Somalia, Zambia, and Zimbabwe have tackled the following problems:
| Malawi | Inequitable and insufficient financial resources and limited autonomy of health facilities impede their ability to plan and forecast their needs, budget, execute funding, and monitor expenditures. |
|---|---|
| Mozambique | Weak implementation of transversal sectoral programmes has resulted in inefficiencies, including duplication, inequitable allocation of resources, and ineffective spending. |
| Somalia | Execution rates for donor-funded projects in health and education were 16% and 35% in 2022, respectively. This has contributed to 60% of children being out of school and one of the highest under-five mortality rates in SSA. |
| Zambia | Low own-source revenue and a collection efficiency rate of 37% in local authorities have led to inadequate provision of social services, ultimately perpetuating poverty. |
| Zimbabwe | Underutilisation of the non-wage budget for primary and secondary education contributes to insufficient numbers of schools, inadequate infrastructure and learning materials, and more than two million children out of school. |
Over the first six months of the action-learning period, teams have already reported progress through working across line ministries and finance.
Malawi
From the inception of the programme, the team undertook broad consultations to test their suspicion that greater facility autonomy would mitigate key challenges in primary healthcare financing and delivery in Malawi. Through these consultations and deep problem deconstruction, it became clear that there is strong support at all levels for increasing health facility autonomy through direct facility financing (DFF).
They documented lessons from the education sector’s experience with school autonomy. These include that direct facility financing need not be conditional on the “cost centre argument” – it may be possible to implement DFF without making facilities cost centres; with sufficient capacity building, facility staff (like teachers) and communities can effectively manage and account for public funds; and DFF needs to be supported by frameworks, such as resource allocation formulae, to objectively and transparently allocate resources across facilities.
The team has undertaken field visits with six districts to understand resource use and needs at facilities and identify impediments to introducing provider autonomy. The findings of these consultations will be central to the success of implementing DFF in Malawi. The team also held a national stakeholder consultation workshop where they presented their problem statement and proposed action ideas. That this is a joint effort across the National Local Government Financial Committee, Ministry of Health, and Ministry of Finance bodes well for the success of this reform effort.
Mozambique
To improve linkages between policy and budget allocation, Team Mozambique has targeted three cross-cutting programmes: Social Protection, the Education Access Programme, and Tourism. In June 2023, the team held a workshop with relevant line ministries to present their understanding of their problem statement and gain insights from line ministries. The line ministries highlighted weak intersectoral coordination as a challenge in addition to poor planning and budgeting processes, the lack of policy evaluation culture, and poor staff training. The team has attempted to refine planning and budgeting manuals for intersectoral programmes and encourage programme-based budgeting. The team has come up against resistance for both. They have reflected that this may be because officials from all sectors are not represented in the team and, therefore, may feel a lack of ownership. This month, another workshop is planned with the line ministries, where consultation and acceptance will be prioritised.
Zambia
In attempting to uncover the causes of low-own source revenue at the district level, Team Zambia opted to do a deep dive in one district – Katete. At a workshop in Eastern Province, the team brought together four districts (including Katete) to further deconstruct the key causes of low own-source revenue across the districts. This workshop provided a unique and highly valuable opportunity for peer learning across districts. With officials from Katete, the core team has further deconstructed the problem and embarked on action steps such as providing capacity building for revenue collectors; updating the taxpayer database; and, developing a strategy for enhancing own-source revenue, which will have promotion of voluntary tax compliance as a core component.
Somalia
The BPFC has previously shown promise in tackling complex problems in challenging environments. While Team Somalia has reminded us of the challenges facing officials trying to improve PFM systems and service delivery in fragile states, they have already made progress. This includes sensitising stakeholders in the health and education sectors on the importance of budget credibility. The team has communicated that large gaps between approved and executed budgets result in lost opportunities and distort future planning and budgeting processes. It also reduces trust amongst citizens, donors, and investors, eroding tax compliance and the availability of external funds. To increase understanding of challenges inhibiting budget execution, the team has surveyed 34 officials in the Ministries of Health and Education. The survey and subsequent report detailed technical skills gaps associated with high staff turnover. It also highlighted that budgets are frequently developed by individuals in isolation rather than through broad consultation within the ministry. This may be related to another finding that line ministry finance functions are under-capacitated or non-existent. The team has committed to developing a PFM capacity-building plan for the health and education sectors. They are also considering how to strengthen or establish finance directorates in these ministries.
Zimbabwe
Team Zimbabwe has focused on developing a manual for accounting procedures in the Ministry of Education and is advocating for the allocation of accountants to each budgetary programme. It also looks at ways to strengthen coordination between the ministry’s finance, procurement, and administration sections, including setting timelines for process execution by each. Monthly budget committee meetings have been established to review budget execution. While this committee is currently focused on reviewing absorption rates, it intends to extend its mandate to review value-for-money concerns. At the mid-term review of the programme in June, the team also expressed that the Ministry of Finance and Ministry of Education engagement has strengthened, resulting in timelier releases of funds.
The final push
The teams are now entering the final stretch of the programme, with the Progress-Review Workshop scheduled for November. While this will mark the formal close of the programme, it is simply the first step in markedly improving coordination between line ministries and finance ministries and instilling a problem-oriented focus on PFM reform in the social sectors.
[1] CABRI and UNICEF launched the 12-month Building Public Finance Capabilities for Improved Social Services for Children programme in November 2022. The first two months of the programme were dedicated to an online course on problem-driven iterative adaptation.