In September 2024, CABRI wrapped up Phase 1 of a new area of work on Enhancing Digital Public Financial Management (PFM) in Africa. This first phase of work sought to build a picture of digital journey’s taken by African countries and the challenges and successes they’ve faced. Through two webinars (1st webinar, 2nd webinar) and four country investigations in Kenya, Rwanda, Benin and South Africa, CABRI sought to:

1. Building an understanding of the common challenges faced when implementing digital reforms to improve PFM functionality and service delivery
2. Identify the different ways these issues have been overcome
3. Co-design CABRI’s future work in this space, based on country feedback and needs.

Phase 1 discussions confirmed that participants viewed digital tools as a key vector of Public Financial Management transformation. Each country is introducing tools or modules that seek to strengthen their PFM system – whether that be to improve efficiency of procedures, improve financial transparency or strengthen accountability of stakeholders. It is, however, a challenging process that requires a multi-disciplinary team and regular reviews and adaptations.

From the discussions, CABRI identified a few common themes and challenges, and will be using these to design the next phase of the work – starting with the International Conference on Public Finance in the Digital Era, which CABRI is hosting in partnership with ODI in November in Johannesburg, South Africa. Three common themes are outlined below:

1. Countries are increasingly taking a modular or incremental approach to digital PFM reforms, but still struggle to take full advantages of this method.

All of the four countries in the study have moved away from the idea of a ‘big bang’ approach, in which digitization of all facets of PFM are planned in one go. There were examples of how new tools were introduced and trialled with end users before a full roll out, and before an existing system was replaced. Benin, for example, acknowledged that a new system would run in parallel with old digital systems, until such a time that the reliability and credibility of the data could be ensured. This helps to build user-buy in, and to make any necessary adjustments to the tool during implementation.

For this modular approach to be successful, strong programme management capabilities are required. A large focus of capacity building for digital PFM is on developing in-house capabilities for programmers and software developers. However, in webinar 2, “resistance to change” was the most reported management challenge in digital PFM processes. This suggests more work is needed to build programme management capabilities to take an incremental approach to developing digital PFM systems.

Additionally, this modular approach would ideally be guided by strong data standards to enable interoperability, and linked to broader National Digital Strategies and initiatives. For example, reusable and connected digital “blocks”, such as e-government platforms, can help avoid duplication of systems development across ministries, and ensure PFM systems link to overall digital governance structures. Connections between national strategies and digital PFM priorities appear to still be weak in many settings. This was improved in countries where the national strategy was coupled with the responsibility and means to enforce compliance across public institutions by a Ministry of ICT or similar.

2. Decisions around digital tools for PFM often start with efficiency of Ministry of Finance processes, but improvements to higher-level PFM functionality objectives or experiences beyond MOF are still pending in many places.

Throughout the country investigations, CABRI was interested to understand how digital systems are use to strengthen the underlying functionality of a PFM system. This was in recognition that digital projects should be seen as a means to an end, but due to the scale of implementation, can become the end of itself. That is to say: success of a digital project should be measured not in the completion and roll out of the digital tool, but in how it improves the way money is used for the benefit of citizens.

These results align with the country discussions from Phase one. The experience in many countries is that the digital systems improved the availability of data, the ability to track expenditure or the efficiency of budget controls. The PFM impact, in terms of measuring the performance of funds used for the citizen’s service delivery and the measure of performance were less evident. This suggests that countries have taken a phased approach where the digital reform agenda starts with the low-hanging fruits to improve coherence and exhaustivity of data, ability to track incoherence and automate controls, and enforce traceability of funds. The digital PFM reforms should then begin aiming at the highest objectives of PFM functionality, such as accountability, performance measurement and advanced forecasting.

A common challenge raised was how to bridge the gap between technical IT staff, the business process owners, and the end users expectations. Sometimes, the underlying PFM process is not clear or in an optimised form to enable strong PFM functionality or outcomes. This was the case in at least one country investigation, where a digitized budgeting system improved the efficiency of budgeting, but the use of data to improve budgeting credibility was still needed.

There is also a need to look beyond Ministries of Finance, to understand the experiences of sectoral ministries, decentralised entities, public companies and citizens with regards to PFM systems. A true digital PFM strategy and implementation approach should consider each of these stakeholders as contributors to help design, strengthen and deploy digital systems. For example, many of the PFM systems discussed during this study considered the internal transfer to a local authority as the final step of the PFM system, without being able to track actual service delivery to ensure financing is achieving the planned citizen outcomes.

3. Ministries are interesting in learning more about what other countries have done, and how they can assess their own progress in their digital journey.

A few countries raised the need for more resources to assess their progress and learn from peers. There are already numerous resources available that can support a self-assessment. Public sector on-line resources include the OECD's 12 areas of digital transformation, IMF's Digital Guidelines/DIGIT methodology, IMF’s Modular iFMIS approach. In the private sector many standards exist that can be used to assess progress in public sector digital investments: CobIT approach from the information systems audit and control association (ISACA), the ITIL library, ISO standards including ISO27001 et ISO27005 for security, ADKAR approach for change management (Awareness, Desire, Knowledge, Ability, Reinforcement) and many others.

What appears to be missing is a view of what digital activities have been undertaken on the African continent, and how countries have overcome common challenges in their own context – in other words, opportunities to share the practical experiences and the praxis of digital reform.

CABRI is exploring how it can contribute to filling this gap – starting with the International Conference on Public Finance in the Digital Era, which CABRI is hosting in partnership with ODI. Over two days, 19-20 November, country officials and technical experts will come together to share their knowledge and experience in introducing digital systems for PFM, and beyond. The first day will look at how digital systems have been used within PFM processes, while the second day will explore what role ministries of finance play in promoting and utilising Digital Public Infrastructure – looking beyond the MOF’s own digital tools. Visit the event page to register to join virtually, or in person, and sign up for ODI’s Budget and Bytes for regular updates.