Evaluation of Public Financial Management Reform in Ghana, 2001–2010 Final Country Case Study Report
- Evaluation Type: Thematic Review
- Date Posted: 01/06/2012
- Date Completed: 01/06/2012
- Reference: TR10011
- Status: Completed
Authors: Mary Betley, Andrew Bird, Adom Ghartey
Joint Evaluation 2012:8
Commissioned by Sida, Danida and AfDB
Date of final report: June 2012
The evaluation aims to address two core questions presented in the Terms of Reference:
a) Where and why do PFM reforms deliver results (i.e. improvements in the quality of budget systems)?; and
b) Where and how does donor support to PFM reform efforts contribute most effectively to results?
- An active and open media and a citizenry who are actively engaged with the media (particularly, radio and print media, but also television), does put pressure on public officials and hold them accountable; however, the ability of the public to hold officials to account is undermined by the lack of timely financial information available to the public (e.g. in-year fiscal reports), the lack of comprehensibility of key budget documents (e.g. the Medium Term Expenditure Framework [MTEF]), and limited expertise on budgetary and financial matters by some officials, CSOs and the general public.
- Peer-to-peer learning – learning from the experience of relevant peers, e.g. through the Collaborative African Budget Reform Initiative (CABRI), has been cited as an important factor for generating internal demand by technical staff for specific types of reforms. Seeing how reforms work in practice (e.g. programme-based budgeting in South Africa) has provided an impetus and guidance for change. However, a sense of competition amongst different countries can lead to demand for reforms that are inappropriate to the local context and/or overambitious (e.g. the latest PFM trend) in order to be “first”. MoFEP middlelevel management (particularly in the Budget Division) have also prioritised the training of their staff through relevant mid-length overseas PFM programmes, which is serving to provide staff with exposure to alternative PFM processes and to generate a cadre of core staff with such experience. However, in the absence of progress on reforms, there is a risk that such training becomes quickly degraded. Sign Off Peer-to-peer learning from the experience of relevant peers, e.g. through the Collaborative African Budget Reform Initiative (CABRI), can be important factor for generating internal demand by technical staff for specific types of reforms, impetus and guidance for change.
- Development Partners' support which is flexible, demand-driven, involving a longer-term commitment, with the opportunity to design or (re)design the content of Public Finance Management reforms' is needed for the success of the reforms.
- Involvement of the political level early on, including Cabinet, and Parliament, can be an important facilitating factor in the reform process
- Tendency for overly ambitious reforms – can lead to the inappropriate design of some reforms, increased the risk of reforms, and led to unrealistic expectations of the timetable for undertaking the reforms and the outcomes of the reforms.
- Focusing on technology without addressing underlying Public Finance Management reform issues and incentives can led to a tendency to move (too) quickly to a technological solution without first tackling the requirement for changes to business processes.
- Pressure to introduce new and different complex forms of Public Finanace Management reforms before current ones are embedded only leads to further confusion that may potentially adversely affect full engagement with and derail the new reforms
- Insufficient time to plan reforms and explore alternatives. Reform planning, including planning how reforms will affect different stakeholders and how these changes will be addressed, is likely to take considerable time. Not exploring alternative methodologies could lead to inappropriatelyspecified reforms.
- Political economy - Reforms which potentially work against formal or informal institutional interests such as the transfer of the subvented agencies on to the central payroll system can be harder to achieve in a political economy.
Recommendation(s) to the Bank and the Beneficiary:
- Reform of PFM is a process – there is no “beginning” or “end” to reform. Both GoG and DPs should recognise the importance of continuity of reform, which may not follow a linear path. Longer-term support to the broad direction of reform (e.g. as with revenue administration reforms) can provide helpful continuity of support and allow reform to take advantage of windows of opportunity, e.g. political space.
- Understand the risks applicable to each type of reform and explicitly factor in risk management. One of the aspects to be addressed during the planning stage should include an analysis of readiness for reform (e.g. large IT projects should review the existing extent of IT culture in the organisations involved; the more limited the existing IT culture, the more risky is the reform).61 In planning reforms where functions are to be devolved, MoFEP should first test the preparedness and competence of the agencies involved before functions are devolved
- Less ambitious and stepped reform approaches set within a broader reform framework are likely to be more sustainable and involve less risk. Start out with limited changes that address a particular issue. Then incorporate the experience from implementation into the design of the next step in the reform process.
- Identify demand and management factors that are likely to facilitate successful reform: a) a strong demand for change and a common understanding of what is needed, including the sharing of international experiences with peers in other countries to build and strengthen a common knowledge base; b) clearly-defined (and understood) roles and responsibilities played by external stakeholders, particularly where the reforms involve agencies outside of MoFEP; c) strong accountability mechanisms in place, including externally with external scrutiny bodies and CSOs and internally with project management; d) an appreciation by stakeholders that the reforms are not only about technical changes; institutional arrangements need to be clear and facilitate discipline and decision-making and scrutiny of those decisions; e) strong, clear and evidenced leadership of the reform; f) Effective and respected arrangements for management are in place.
- Reforms need to be planned and sequenced. Appropriately planned and sequenced reforms should recognise that planning, design and testing takes (sometimes significant) time; this step should not be rushed. Systems (and technology) should support reform and not vice versa. Institutional and organisational issues (both within and across organisations) must be addressed as part of reform planning. There should be a short (time-bound) pilot phase included after testing but only when the reform is ready to roll out. Finally, it is important to be realistic, bearing in mind the PFM calendar and capacity demands. Too many reform initiatives may distract staff from their day-to-day tasks; managers should set priorities and manage the sequencing of reforms so that the budget process continues in a timely fashion.
- Ensure that there is sufficiently strong, active and appropriately dispersed leadership. The role of leadership of reform is most effective when it is visible, consistent, at the appropriate level, and actively engaged with the appropriate level in stakeholder institutions. Effective PFM leaders manage upwards (to the political level), downwards (to the management level), and outwards (both across government, and to those responsible for external accountability, including Parliament and civil society). Consideration may be given to providing training in leadership for senior political and administrative levels, particularly for those in newly-appointed positions
- Ensure appropriate management of reform at different levels – effective managers (i) ensure that there is a clear plan to get from where an institution is currently to the next step(s), (ii) take responsibility for delivering on the work plan, and (iii) delegate to staff and motivate them to deliver, ,giving appropriate recognition for activities done well and in a timely ,fashion, as well as enforcing sanctions when justified. Current efforts to introduce more performance elements into senior management, particularly ,for Chief Directors, are important
- Review and evaluate reform progress and be prepared to take action if things go wrong. In other words, GoG and partners should be ready to admit when reforms are failing and address weaknesses promptly, or actively take the decision to halt the reforms. Incentives to improve senior managers’ performance may facilitate in this process.