Public Finance – Building State Capability

Managing Public Finances for the Future

Written by Matt Andrews

I have been part of a creative team teaching an executive course on public finance for over a decade. This team has spent lots of time discussing the changes we have all experienced in the world in recent decades, and what the main objectives of public finance might be now—in what is an ever-changing world.

Out of this discussion, I propose what I call the Pillars of Public Finance Performance in Our Changing World—the objectives we should be paying attention to when determining how well our public finance systems are working:

How does the system impact equity?
How does it foster fiscal sustainability?
What about the way our public finances impact environmental sustainability?
Do we have a high level of effectiveness in the system?
Do we foster inclusion in the processes and products of our public finance system?
How is our public finance system impacting innovation and growth?
You add yours…
Does our system promote accountability, of politicians to citizens, and bureaucrats to politicians and citizens, and current citizens to each other and future generations?

Budgeting, planning, and economic strategy in Mozambique

Guest blog by Bruce Byiers

Several years ago, I was involved in what seemed like quite a practical, consultative – perhaps even problem-driven – project in Mozambique: to better connect their ‘plan’, their ‘budget’ and their medium-term expenditure framework. As one might expect, this entailed multiple internal meetings in the Ministry of Finance, meetings with line Ministry staff involved, meetings with provincial staff, and workshops to discuss ways to link these connected but separate budget and planning processes. We came up with an agreed approach. But it was agreed at the technical level. The Minister never bought it. And so it never got anywhere.

Debt Management Strategies in Kenya

Guest blog by Fredrick Oluoch Odhiambo

1. What were your expectations of IPP Online when you signed up?

When I expressed an interest in the Implementing Public Policy (IPP) at the Harvard Kennedy School (HKS) Program, I was not sure I would get accepted, especially during these crises around the globe, particularly the COVID-19 pandemic that was ravaging the world indiscriminately. In terms of my expectations for the course, I thought it would be theoretical, book-oriented program with some interaction space and lots of academic work to do. To my surprise, the HKS program turned out to be an exciting experience that was not entirely theoretical, boring or book oriented. I really learned by engaging and participating through the groups and experiences of our professors.

My hope was that the IPP course would provide me with insight and new skills on how to navigate the political forum and how to be held in esteem with senior leaders to advance my initiative among the over one hundred other corporate priorities currently in-flight. I have never in my life been so captivated without getting distracted or weary from listening to a speaker. I was surprised to see a few key PDIA elements similar to the trainings I have received from other courses in my career. In particular, the cause and effect, or fishbone diagram approach to brainstorming true root causes of an issue which I have learned in the past 20 years in my education career. I finally learned from Matt Andrews the true nuances of why one couldn’t expect to apply the same approaches in the public sector with the same results.

Independent Evaluation of PDIA Application in Africa

In April 2017, we began our engagement with the Collaborative Africa Budget Reform Initiative (CABRI), an intergovernmental organization based in South Africa, to design and launch the Building Public Financial Management Capabilities (BPFMC) Program using the PDIA approach. In this program, CABRI’s member countries could apply for a team of 5-7 members to work on their locally nominated PFM problem for the period of 7-months. The training included online modules, an in-person framing workshop, virtual progress updates, and an experience sharing workshop at the end of the program. Each team was paired with a coach from CABRI who held regular check-ins to motivate and support them.

Teams from Ghana, Liberia, Lesotho, Nigeria, Sierra Leone, South Africa and The Gambia, participated in the inaugural program from May to December 2017. At the end of the program, the teams made significant progress: they developed a deeper understanding of the root causes of their problems; developed capabilities and confidence; financial reporting rates went up; budgets were prepared faster; and virements and arrears decreased.

In April 2018, we began a second iteration, this time offering the program in both English and French. Teams from the Central African Republic (CAR), Côte d’Ivoire, Ghana, Lesotho, Liberia, and Nigeria, participated in the program. The Bill & Melinda Gates Foundation, a funder of the program, commissioned an independent evaluation to assess the application of the PDIA approach in the African context.

The evaluation included desk research, baseline and midline surveys of participants, interviews and observations from the framing workshop and experience sharing workshop, field visits to CAR, Lesotho, and Liberia, and interviews and observations from a review seminar, five months after the conclusion of the coaching support from CABRI.

Creating Space for Better Post-Covid Public Policy Spending

written by Matt Andrews

Governments across the world are struggling with the many policy challenges wrought by Covid-19. While this pandemic is not yet over, many are already thinking about the recovery to come. Governments will undoubtedly be needed in this recovery process, helping people get back to normal or charting new paths to better normals—what some call ‘building back better’.

I fear that governments are set to fail in their efforts to provide such help, however, because of limits to the budgetary and policy prioritization space needed to address post-Covid needs.

Will we have enough money to build back better?

Covid-19 hit the world at a time when many public finance experts were already commenting on the large role governments have turned out playing in their economies. Government spending as a share of Gross Domestic Product (GDP) was at historical highs in many countries prior to the pandemic given decades of growth in budgets across the world. Consider the following graph and examples of such growth in countries as varied as South Korea, India, South Africa, the USA, Spain and Italy.

Figure: Government spending as a share of Gross Domestic Product, various countries, 1850-2020

*Source:* Our World in Data and the IMF data mapper

These budgets continued expanding in response to Covid-19, fostering record debt levels across the globe. A Brookings paper written last year notes, for instance, that “In 2020, global government debt increased by 13 percentage points of GDP to a new record of 97 percent of GDP. In advanced economies, it was up by 16 percentage points to 120 percent of GDP and, in EMDEs [emerging markets and developing economies], by 9 percentage points to 63 percent of GDP.”

The case for a New Development Strategic plan in Cameroon

Guest blog by Boris Owona, Senior Civil Administrator at the Cameroon Prime Minister’s Office

I started this IPP program after completing the Emerging Leaders and Public Financial Management programs with a solid foundation of what public policies can look like in a bureaucratic setting. In fact, coming into the course, I felt quite satisfied with my own policy-making abilities, but I was still looking for a more practical insight that can be helpful to explain the causal strains that explain why Government fails or succeeds in each context and what could be the solutions on the way forward.

Now, I have come to realize, pursuing these ideas of legitimacy and functionality that we need first to frame the problem, and then to find the tools useful to solve it, according to the actual level of complexity that we are facing. My assumption about the course was that it would be a tremendous professional development experience applied to a policy intervention for which I care the most, the National Development Strategy (NDS) of my country. Learning from the failure of the past, it was mandatory to establish NDS, that will pave the way for Cameroon, standing as an emergent country by 2035.

Budget Crisis in Nigeria

Guest blog written by Ajani Solomon Oluwatimilehin, Jil Faith Bandele, Olusegun Michael Bandele, Victory Oluwafunmilayo Bandele.

This is a multidisciplinary team with different backgrounds living in Nigeria. They successfully completed the 15-week Practice of PDIA online course that ended in December 2018. This is their story.

The common goal, the ideas shared, the meetings, the arguments, the agreements, the team work, the working deadline, the lessons learned indeed it has been 15 wonderful weeks of the PDIA journey. We are delighted to be sharing our journey blog as we have crossed all weekly hurdles and successfully reached the apex of this 15 weeks course.

When the opportunity to enroll for this course came up, the first challenge was setting up the team, when that problem was solved, most of us in the team where clueless about the course……what is PDIA? What does it entail? 15 whole weeks…..?

Fortunately for us, one member of the team had prior knowledge of PDIA and its application and he encouraged us. In his words he said “PDIA will open your mind’s eye individually and collectively as a team” he also said, “this is the future so grab a seat in the front row.” With these words, we were encouraged and eager to see what the next 15 weeks will bring. We are glad to say that this decision was worth it.

We enrolled in this “Practice of PDIA course with one topic in mind; we aimed to understand in which way PDIA (which stands for Problem-Driven Iterative Adaptation) could help us to solve the budget crises in Nigeria which has over the years has become cyclic in nature as we have the same issue every year. Budget crisis in Nigeria is a reoccurring problem which over the years has tremendously slowed down the process of development of the country. Budget creation and approval has always been a tug of war, between the presidency, the executive and legislative arms of government which eventually has a ripple effect on the everyday Nigerian and the system in its entity as the budget has to be approved so that funds for fiscal projects can be released. It is a yearly occurrence and the crisis can last for the greater part of the year, with accusations and counter accusations arising on the budget documents and the budgeting process in its entity. That is why the team is embarking on a problem solving exercise through a data driven budget system based on facts and figures to eliminate areas of contention brought about by intuition, assumptions and gut feeling in the budgeting exercise. So with this in mind, we were more than eager to learn new ways so to break the cycle. Continue reading Budget Crisis in Nigeria

New connections and better performance in Nigeria’s budget process

written by Matt Andrews (with wise words from Nuhu Mahmud Sani)

A team from Nigeria used the PDIA approach to effect change in their budget process. They had coaching from fantastic colleagues in CABRI (an African intergovernmental organization working on budget reform) who collaborated with us at the Building State Capability Program to expand the reach of PDIA programs across Africa.

This interview is with Nuhu Mahmud Sani, who was a member of the Nigeria team.

Continue reading New connections and better performance in Nigeria’s budget process

Getting things done: PFM reform in Africa

written by Tim McNaught

We recently wrote about the closing workshop we held in December, in collaboration with CABRI, for the Building PFM Capabilities in Africa program. There is now a summary event page on the CABRI website with all of the presentations from the seven participating country teams. During the workshop, each team presented on the progress they made on their self-identified problems over the previous six months, the lessons they learned, and their next steps. Continue reading Getting things done: PFM reform in Africa

PDIA and PFM in Africa

written by Salimah Samji

We just held our final workshop for the Building PFM Capabilities in Africa Program, in collaboration with CABRI, in Johannesburg from December 11-13, 2017. Teams from Ghana, Liberia, Nigeria, Sierra Leone, South Africa, The Gambia, and The Kingdom of Lesotho, participated in this program. Continue reading PDIA and PFM in Africa