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

Automating Public Financial Management in Developing Countries 347
agencies. The project faced a complex and rapidly evolving environment
(Ethiopia introduced a massive second-stage devolution to weredas literally
overnight just as the reform was being piloted in the first region). The
need to bring the government along at all levels of administration and to
support the rapid devolution meant the adoption of an evolutionary
strategy or process change. The virtual lack of resources for the financial
information systems meant a custom rather than a costly OTS system
driven by a rapidly evolving procedural reform.
In summary, the custom automation strategy of the Ethiopian budget
and accounts reform was an appropriate scale and sequenced to the pace of
the procedural rollout and the limited financial resources available. It has
managed risk well by keeping a focused scope and by adhering to a tight and
frequent schedule of system updates. The very limited budget has reinforced
a clear scope and schedule.
Lessons for Developing Countries
Automation of Ethiopia’s financial procedures exemplifies a dolphin
approach. The financial reform was focused on a limited core of functions
(budget, accounts, disbursement, reporting) and was procedurally driven.
Automation supported the procedural reform by matching the periodic
improvements in procedures.
This case is an appropriate example for other developing countries for
several reasons. First, it is based on firsthand experience over 10 years, unlike
much of the literature, which is based on static second- and thirdhand
descriptions and, in many cases, interpretations of outcomes at particular
points in time. Second, it is an example of an effective financial reform that
has been supported by an appropriate financial information systems strategy
(customized and iterative) in a difficult and unsupportive task environment
(ARD Inc. 2006). This task environment is similar to that faced by most
developing countries. Third, the information systems have been successful.
Their success, however, cannot be fully separated from the broader reform in
which they were embedded.
Several criteria are used to argue that the systems were successful. They
worked. They never failed. They were promptly delivered and never delayed
the procedural rollout. They were rapidly expanded to meet new user needs.
They were relatively inexpensive. They have been continuously upgraded
and are now technically robust and sophisticated and meet international
standards. They were inextricably linked to dramatic improvements in the
performance of budgets and accounts. 30