Public Sector Governance and Accountability Series: Budgeting and ...

Automating Public Financial Management in Developing Countries 325
process . . . it is unlikely that significant improvements will occur. Critical
actions will be those directed towards enhancing budget discipline and
improving accountability of all those responsible for budget preparation,
execution, reporting and evaluation. Lienert (2002: 31)
Lienert’s conclusion—that the basic designs of public finance systems
in Africa (with exceptions) are reasonably sound while their execution is
not—may not be universally accepted, 3 and clearly scope for improvement
always exists. Nevertheless, his conclusion supports the contention of this
chapter that in most African countries there is a reasonably strong base,
existing or potential, from which to evolve financial systems—a process
change approach. 4 A major reason for the success of the budget and accounts
reforms in Ethiopia was that the existing system was evolved through a
process of learning by doing—process change.
In summary, the current approaches to IFMIS development as set out
in most of the existing literature (the same literature that testifies to widespread
failure) often propose excessively sophisticated solutions to an
ill-defined problem (the need for better information for management, control,
and reporting) in an unsupportive and risky environment. Automation
strategies thus should be driven by procedural improvements (process
change) and should manage risk.
The rest of this chapter is in four sections. The first section outlines an
automation strategy that supports process change. The second presents a
framework for managing risk in financial information systems and examines
several country examples. The third section illustrates an appropriate
automation strategy of process change in a difficult environment using the
example of the Ethiopian reform. The final section concludes with a summary
of the issues that developing countries should consider when they
embark on the automation of their financial systems.
An Automation Strategy for Process Change
A complex system that works is invariably found to have evolved from a simple
system that worked.
—John Gall (1977)
Emerging experience from the public sectors in both industrial and developing
countries suggests that the greater the complexity and scale of the
IT platform to support financial systems, the greater the risk of failure or
underperformance of that platform and, by extension, the system as a whole.
IT systems that started small and are iteratively expanded are less likely to