In the last week or so, the report of the Commission of Inquiry into the death of world-renowned historian and scholar, Dr. Walter Rodney, has attracted a variety of comments. I worked two years in Africa with the United Nations Peacekeeping Operations and was always proud to refer to Dr. Rodney as my compatriot. Several people I spoke to knew him as a freedom fighter for the African cause and the author of “How Europe Under-Developed Africa”, among other publications.
One evening in the late 1970s, I was shopping around the Kitty Market Square. There was a political meeting in progress and I stayed back out of curiosity to listen to the speakers. Dr. Rodney was at the podium. As I listened to his address, which lasted for over two hours, I was glued to what he was saying about the political state of affairs in Guyana. He seemed so sincere in his analysis that from then on, I followed Dr. Rodney at every public meeting he spoke at in Georgetown until his untimely death. I remember Army helicopters hovering over the Le Repentir Cemetery at the time of his funeral. Whenever I drove through Cemetery Road, I would always look in the direction of where he was buried as a mark of remembrance.
On two occasions, I was one of the recipients of State violence unleashed on supporters of Dr. Rodney. I was part of the crowd that the Police had tear-gassed at the Merriman Mall. Dr. Rodney was reluctant to speak at one of the meetings, and a few of us lifted him bodily onto the stage for him to do so. The other occasion was when there was a large gathering in front of Guyana Stores, and a march to the Prime Minister’s Residence was to have taken place. A contingent of policemen with batons in hand charged into the crowd, and I was forced to take refuge at the Guyana Telecommunications office at the Bank of Guyana building. Two of my close relatives also lost their jobs as school teachers because of their close association with the Working People’s Alliance. Lest it is misconstrued, I am not and was never a member of any political party.
Another recent news item relates to the Court of Appeal’s overturning of the ruling of the Chief Justice in the “2012 budget cuts” case. This column is on record as having flayed the Chief Justice’s ruling which contributed enormously to: (a) the problems associated with the approval of the 2013 and 2014 budgets and the resulting tensions in the Guyanese society; (b) the excess expenditure of $4.544 billion incurred in defiance of the wishes of the National Assembly; (c) the motion for a vote of no confidence in the Government; (d) the prorogation and subsequent dissolution of Parliament; and (e) the holding of fresh elections after three years. The Chief Justice did make amends for his decision when in February 2015 he ruled that the then Minister of Finance violated the Constitution in authorising the excess expenditure. But it was too late, as the damage had already been done.
Now for today’s topic. The Kaieteur News reported that the Central Housing and Planning Authority (CH&PA) failed to implement the Integrated Financial Management System (IFMAS) that the Government had introduced in 2004 to replace the manual system in place for the processing of transactions. IFMAS was implemented for all Central Government financial management activities by linking Ministries, Departments and Regions through a network of computers. It was not meant to extend to the rest of the public sector, i.e. public corporations, Government companies, statutory bodies, and local government organisations. These are governed by their own individual legal frameworks, such as the Public Corporations Act, the Companies Act, and individual legislations that created certain bodies. These frameworks contain detailed requirements on the sources of funds and how they are to be used, procedures for ensuring proper accountability, and financial reporting and audit. For example, the operations of the CH&PA are governed by the Housing Act while the Guyana Geology and Mines Commission (GGMC) and the Guyana Forestry Commission (GFC) have their own legislation. In contrast, all Central Government activities are regulated by the Fiscal Management and Accountability (FMA) Act. It follows that non-Central Government entities must determine what IT-based systems are best suited to meet their needs, having regard to the nature of their operations as well as their sizes and complexity.
It is not expected in this day and age that organizations will not take advantage of the rapid advances in information technology. There are several off-the-shelf accounting packages that can conveniently serve the needs of many small and medium organisations, including the use of Quick Books, Oracle and SAP. On the other hand, large organisations, including regional and international organisations, have their own elaborate Enterprise Resource Planning (ERP) systems which provide integrated suites of IT applications that support activities, such as finance and budget management, human resources management, supply chain management, central support services, and other core functions. ERPs allow for the streamlining of operations in an organization through process re-engineering, sharing of common data, and the implementation of best practices and standards. The United Nations Secretariat has a specially designed ERP called Umoja which is a SAP-based enterprise resource planning software that replaces the fragmented IT systems in place over the years. The complete roll-out of Umoja is expected this year. Quite appropriately, because of Umoja’s integrated nature, the name was chosen from the Swahili word meaning “unity”.
IFMAS in perspective
IFMAS (or IFMIS) is an IT-based budgeting, accounting and reporting system that manages spending, payment processing, budgeting and reporting for governments and other entities. It incorporates essential financial management functions into one software suite that can be an off-the-shelf one or a custom-made system, depending on the size and needs of the organization using the system.
If fully and properly implemented, including ensuring requisite training for key operatives of the system, IFMAS can improve significantly an organization’s financial management practices through better management of cash resources; improved accountability for all assets (including inventories) and liabilities; more timely and accurate budget and financial reporting; enhanced decision-making; and improved overall efficiency and effectiveness of operations. These could in turn lead to significant cost savings. IFMAS can also play an important role in fighting corruption and in enhancing transparency and accountability.
Status of implementation of IFMAS
Prior to 2004, the Government’s financial management systems operated largely on a manual basis. The introduction of IFMAS was therefore not only timely but also a step in the right direction to take advantage of available information technology and to lessen the burden and paperwork associated with manual systems. The objective was to implement a robust integrated budgeting and accounting system for the Government as part of an effort aimed at improving its financial management practices, particularly in the areas of budgetary and expenditure control, cash management and reconciliation, procurement management, and accountability for fixed assets and inventories. IFMAS was configured in seven modules: Appropriation, Expenditure, General Ledger, Budgeting Preparation and Reporting System (BPRS), Purchasing, Revenue and Asset & Inventory.
The training of staff to be involved in IFMAS implementation was completed in October 2003 in preparation for the roll-out in January 2004 of the first three modules. At a seminar on 1 March 2006, the then Canadian High Commissioner stated that the improvement of the management of public finances is a movement towards more efficient and transparent public administration and consequently, better governance. The then Minister of Finance commented as follows:
Progress of IFMAS so far, represents a quantum leap from the period when government accountants and financial managers were inundated with tons of paper and multiples of filing cabinets…Government is committed to the development and sustainability of IFMAS in the future…To consolidate IFMAS this year, government will be configuring and installing new modules that include state-of-the-art budget preparation and reporting system, and revenues, purchasing and asset management programmes…The great emphasis placed by the government on public accountability and sound and effective management of public finances is widely known.
Since then, two additional modules – Budgeting Preparation and Reporting System (BPRS); and the Revenue Module – were implemented, leaving the remaining two modules, i.e. Purchasing; and Asset & Inventory unimplemented to date.
In our June 2014 article, we bemoaned the fact that after ten years, we were still to implement two of the seven modules. These are the Purchasing and Asset & Inventory modules. We stated that, with 70% of the National Budget devoted to public procurement, we were at a loss to understand why these two modules have not yet been activated. We also drew parallel with the failure to have the Public Procurement Commission in place, despite the 2001 constitutional amendment providing for the establishment of such a commission. The previous Administration had argued that these two modules are only suitable for mature economies. However, the developers of IFMAS disputed this claim and indicated that: (a) they were unaware of any case where a government bought the system and did not use all of the modules; and (b) they had implemented IFMAS in countries with a far less mature environment than Guyana. To date, these modules are still to be implemented.
I spent two months last year in Afghanistan assisting the Government with the institutional strengthening of its National Audit Office. Following the overthrow of the Taliban, it was discovered that public financial management was in a state of complete ruin. With the assistance of donor agencies, significant efforts have been made to improve the country’s financial management practices. An IMF PFM blog dated July 2010 had the following to say in relation to the implementation of IFMAS in Afghanistan:
… the following key factors, among others, seem to have contributed to a successful implementation of AFMIS in Afghanistan: (i) ensuring strong MoF support and leadership throughout the period of gradual expansion and upgrade of the AFMIS; (ii) making the development of AFMIS an integral part of the overall PFM reform program, and not considering the AFMIS as an end in itself; (iii) anchoring the AFMIS development on complimentary PFM reforms; and (iv) starting with a modest system configuration and gradually enhancing the system functionality as PFM reforms take hold. The two phase approach—implementing the key system tasks in the center first and embarking on the system implementation in line ministries and provinces later—seems to have served well in the Afghanistan context taking account of the country’s specific challenges.
Sierra Leone, one of the countries that began the implementation of IFMIS around the same time as Guyana, suffered immensely from the ravages of civil war during the period 1991 to 2002, resulting in a complete destruction of all systems of public accountability. The implementation process was sequenced in three phases while the Purchasing and Asset & Inventory modules were rolled out in January 2006. By the end of 2006, IFMIS was implemented at the Ministries of Health, Education, Agriculture, Works and the Auditor General’s Department. Other countries that have enjoyed a relatively smooth and successful implementation of IFMAS include Slovakia, Kosovo, Tanzania and Ethiopia.
Key challenges to successful IFMAS implementation
The implementation of IFMAS is not without its challenges. According to the Anti-Corruption Resource Centre, IFMAS has been promoted as a core component of public financial reforms in many developing countries. The Centre, however, offered the following words of caution:
Yet, experience shows that IFMIS projects tend to stall in developing countries, as they face major institutional, political, technical and operational challenges. Case studies of more successful countries indicate that factors supporting successful implementation include clear commitment of the relevant authorities to financial reform objectives, ICT readiness, sound project design, a phased approach to implementation, project management capability as well as adequate resources, and human resource capacity allocated to the project.
