Transparency and Accountability Key for Successful Public Finance Management in Africa

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The African Economic Conference continued, Wednesday, October 31 in Kigali, Rwanda, with debates on public finance, led by high-profile speakers, conversant with public finance.

The World Bank’s Chief Economist for Africa Region, Shantayanan Devarajan, spoke on frameworks for public finance management and governance in Africa. Linking public finance management to the theme of this year’s African Economic Conference, “Inclusive and Sustainable Development in an Age of Economic Uncertainty”, he explained that, uncertainty does increase the premium on efficient public finance management. Because of global uncertainty, African governments need to improve the efficiency of public expenditures, while improving domestic resource mobilization. The gains from improved public expenditure efficiency can be at least as great as new aid. “Countries cannot be sure of a predictable flow of aid,” he underscored.

Assessing public finance management in Africa, Mr. Devarajan observed that there is a wide variation, with some countries such as Senegal, Uganda, Kenya and Ghana making significant gains. He revealed that for the past few years, public expenditure and finance assessment score has improved for these countries, while at the same time, by contrast, there existed large leakages and poor service quality, and public finance management was weak. In Chad, for instance, he observed that the leakage rate on non-wage public spending is 99 per cent, citing, as an example, teachers in public primary schools in Tanzania who are absent 23 per cent of the time.

Mr. Devarajan also reaffirmed that the main ingredients for successful finance management are transparency and accountability, providing opportunity to the general public especially, to scrutinize how the money is collected and spent. At the same time, accountability allows everyone to know what is expected of him or her, and there are penalties for not delivering what is expected.

Devarajan said he fully agreed with African Development Bank President Donald Kaberuka’s September 13 address to African Development Fund Deputies in Praia, Cape Verde, in which he emphasized “Strengthening Africa’s own institutions and taking advantage of their legitimacy is as critical as providing the resources.”

“Strong institutions are ones where individual agents are accountable, and that is what a good public financial system can provide,” Devarajan said.