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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 $ (!)
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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 !
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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...
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Government financial management requires open systems that can talk to others
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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
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1990s aid “fatigue” due to poor performance
1
% o
f G
NI
19
90
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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
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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?
