integrating aid management with government financial management gerhard pohl senior director...

Integrating Aid Managementwith

Government Financial Management

Gerhard PohlSenior Director

Development Gateway Foundation

International Consortium for Government Financial ManagementAnnual Conference Miami, May 25, 2007

2

Corporate financial management is simple:revenues and expenditures are for traded goods

General Electric: Income Statement (US $ million)

2006 2005 2004 2003 2002

Total Revenue 163,391 147,956 134,291 113,420 132,226

- Cost of revenue 93,396 81,916 73,375 61,665 63,007

Gross Profit 67,458 64,357 59,852 51,154 68,206

- Sales, General, Administration 7,053 7,215 6,974 6,821 20,692

- Net Interest Expense 908 986 728 308 326

- Other Operating Expenses 37,414 35,143 32,917 26,480 29,229

Operating Income 24,620 22,696 20,297 18,147 18,972

- Income Tax - Total 3,954 4,035 3,696 4,056 3,790

- Extraordinary Items 163 -1,950 559 1,470 -1,015

Net Income ($ million) 20,829 16,711 17,160 15,561 14,167

The bottom line, net income, is a powerful measure of performance, in $ (!)

3

Government financial management is much harder:public goods are usually not traded

• Revenues are not market-based (taxes!)• Goods and services are not “sold”• Only “costs of revenue” are market-based• Establishing the “value” of services is difficult

• Government accounting has no “bottom line”• Performance cannot be expressed in $$$• Performance evaluation is hard,

….but very important !

4

Government financial management remains work in progress:

Only basic issues have been resolved:

• Accounting tracks only costs, not values• It can detect outright fraud and management• But does not provide measures of performance• Governments have a myriad of performance

evaluation mechanisms:– elections, separation of powers, parliamentary debates,

watchdog agencies, publication requirements, reviews, “audits”, M&E requirements, “impact” evaluation, etc, etc...

5

Government financial management requires open systems that can talk to others

6

Aid is large for many countries

All developing countries (150):– 1% of gross national income (GNI)– 8% of government revenue

Poor and small countries (50):– >10% of GNI– >50% of government revenue

7

1990s aid “fatigue” due to poor performance

1

% o

f G

NI

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

OD

A (

200

4 U

SD

bill

ion

)

DAC members' net ODA 1990-2005 and DAC Secretariat simulations of net ODA to 2006 and 2010

0.40

0.35

0.30

0.25

0.20

ODA a s a % of GNI (le ft sca le )

0.33

0.22

0.26

0.33

0.36

140 120 100 80

0.15

Tota l ODA

(right sca le ) 60

0.10 40

0.05

0.00

Tota l ODA to Africa 20 (right sca le )

0

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…replaced by the New Millennium “Aid Compact”

…with strong emphasis on better, common systems for:

financial management, procurement, and M&E

Partner sets the agenda

Alignment with partner’s

agenda

Reliance on partner’s

systems

Common agreements

Simplification of procedures

Sharing of information

Ownership

Alignment

Harmonization

9

Aid has shifted from infrastructure to basic government services

“Old” aid: Dominica “New” aid: Rwanda

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…these require new aid management tools

…that are more than accounting systems

AMP Overview

• Web-based tool that allows a government to view, plan, and report on its entire development ‘portfolio’ for the country;

• Integrates the most common development and management tools into one secure, team-based workspace;

• Encourages broad use by multiple government Ministries, specialised agencies, donors and aid effectiveness experts.

AMP Key Features (Modules)

• Aid Information - Summary view of all development activities in the team’s portfolio

• Advanced Reporting - Create periodic and customised reports on financial and physical progress

• Document Management - Store frequently used project documents and web-sites directly in each activity file

• Planning Calendar - View key events and missions in one common calendar accessible to government and

donors • Monitoring and Evaluation (M&E) - Track project indicators against financial and physical goals and assess activity risk

AMP Background

Steering Committee: OECD DAC (Chair)

UNDP

World Bank

AMP was developed in response to the 2003 Rome Declaration on Aid Effectiveness, with Ethiopia as the test country

AMP Competitive Advantage

Open-Source - AMP is provided under a royalty-free and source-available license to government partners

Capacity Building - AMP is wholly transferred to the partner government, who can utilise and modify it as necessary

Universal Architecture - AMP can integrate with a country’s existing systems, databases and standards

Technical Assistance - AMP is not just software, but technical assistance to a partner government’s human process

AMP Funding

Bilateral lines of financing:

Pre-negotiated grants to provide financing for a number of AMP implementations in priority countries:

Swiss Agency for Development and Cooperation (SDC)

Inter-American Development Bank (IADB)

African Development Bank (AfDB)

Belgian Development Agency

European Commission

UNDP

Soon:

Luxembourg

AMP Implementation - Status

about to commence:

• Albania• Montenegro

implementations:

• Ethiopia• Bolivia

coming:

Burundi, Congo, Ghana, Mali, Mauritania

Aid Management Platform (AMP)

Aid Information Module (AIM)

Advanced Reporting Module

Documents and Internet Resources

Aid Portfolio Calendar

Monitoring and Evaluation (M&E)

Coming Up - New Functionality

Integration with National Budgeting System

• Bring together national budgets with aid management for more effective, efficient, and transparent aid management (i.e. FreeBalance, Oracle, SAP)

• With the union of the two systems, AMP’s “managing for results” function - the capacity to monitor and evaluate impact on multiple levels - will enable governments to track the impact of projects in the national budget

Integration with UNICEF DevInfo and GIS

• Link national statistical data with international data on development metrics (DevInfo) in a Geographical Information System, mapping progress visually across the country and from national to local levels

• Provide Monitoring and Evaluation data to policy-makers for analysis against national planning, and Millennium Development Goals

dgMarket The Online Solution for Government Procurement Information in Developing Countries

Development Gateway FoundationApril 2007

Aid Management Platform (AMP)

Questions?

Contact:

gpohl@dgfoundation.org

www.dgfoundation.org