Person:

Peterson, Stephen

Little is written about the critical success factors that make or break a project implementing a public financial management reform in Africa. Based on the twelve year experience of Harvard’s DSA project which transformed Ethiopia’s financial management in the third best on the continent, this paper presents the key factors of the projects success: task, context, patrons, roles, staff and decisions. The task was focused from the start on the basics of financial control (budget and accounts and their budget classification, chart of accounts and financial calendar) and the development of an often forgotten end state in PFM reform—the self-accounting unit. Three features of context supported the project: political (close ties between the US and Ethiopia government established during the civil war), task environment (a hard budget constraint) and, serendipity (a war that ensure one set of cooks in the kitchen and removed the inevitable critique by foreign aid agencies, and the government policy of second stage devolution—which made the focal point of district level decentralization). The third CSF, the projects patrons, stayed the course, met stated commitments and did not meddle. The project performed four roles (go-between in the vacuum of decentralization), decider (making the key decisions on pilots), first responder (providing PFM innovations not specified in the terms of reference) and perhaps most important, the furniture (an object that could be kicked and blamed). The project was able to assemble the array of essential staff: all rounders, managers, technicians, networkers and a closer.

The global economy and especially its poorest members, face a perfect storm. The crisis has been created by a Global LIE: leverage that is unfathomable, institutions that are discredited, and, experts who are uncertain about the uncertainty. The poorest countries have been the hardest hit by the crisis, and their recovery may be years away. Under these circumstances, the Millennium Development Goals (MDGs) are not a best bet development strategy for Africa. As a financing decision, developed countries have never adequately resourced the MDGs and are unlikely to do so in future as they face more pressing priorities: entitlements, terror, climate, stimulus, and unwinding. As an investment decision, the MDGs focus on social services, not infrastructure, which creates fiscal stress on the budget. The failure of the MDG to address revenue mobilization means that this strategy is fiscally unsustainable. A better strategy for foreign aid are DIGs (Decade Infrastructure Goals) that focus on the investment in growth promoting infrastructure (revenue, roads, power, and agriculture) rather than social services.