The success of programme implementation relies heavily on the ability of the grantees and sub-grantees to undertake the planned activities and report accurate results to the relevant body, including the funding entities, government authorities, etc.
Through years of practice in various African contexts, it is noticeable that there is a general lack of capacity within the financial management aspects of programme implementation, which cuts across both grantees and sub-grantees.
This has historically resulted in misappropriation of funds (a concern that has riddled audit reports of both private practitioners and supreme audit institutions in various countries), under absorption, and unimplemented programmes.
Another adverse consequence of weaknesses in financial management systems relates to the discontinuation of funding to areas where it is needed most.
A significant proportion of aid is targeted at achieving results at the population which is most in need. In most instances, this population is in the rural areas or in the urban poor, where generally attracting appropriately qualified labour is often difficult. Nevertheless, the role played by the organisations serving this population cannot be underestimated. It is therefore critical to provide the necessary input to facilitate the successful performance of these organisations.
There is wide acceptance that the success of the development interventions rests on the functional maturity of the financial management systems.
However, it remains one of the most neglected areas in terms of capacity building.
In fact, recent trends in international development point to a shift away from government funding (through the SWAP model), to providing funding through Non-governmental organisations and civil society organisations and more recently through the private sector, which have more established financial management systems.
Historically, unlike programmatic capacity building, financial management matters have been left in the hands of auditors (both internal and external) whose input, though absolutely essential is often provided post facto, and so does little to aid programme implementation.
Due to the reasons cited above, there is an immediate need to provide financial capacity building to these organisations in order to achieve the intended programme objectives.
A different model
For each entity with grantees and/or sub-grantees, management should evaluate the ones with the weakest financial management systems. Depending on the severity of the weaknesses, a plan involving hand-holding of the financial management team at the grantee or sub-grantee should be developed.
During this period, a financial management specialist should sit with the team for up to five days and go through the key financial controls and procedures with the aim of providing on-the-job coaching as well as demonstrating the required performance.
Such exercises could be clustered around key processes at the end of every month.
These processes include (a) monthly reconciliations, analyses and reporting of financial performance, (b) budget versus actual variance analysis, and (d) linkage of financial performance and programmatic achievement.
This approach facilitates risk management through targeted assistance to the grantees or sub-grantees that have weak financial management systems. Such assistance can either be provided through a “pull” system where the grantee or sub-grantee requests for it or through a “push” system where the donor, fully aware of the weaknesses in financial management at the grantee or sub-grantee, proactively provides assistance.
At the end of the duration of the plan, the grantee or sub-grantee should be able to (i) provide good quality and timely financial reports as required, (ii) increase the budget absorption capacity as a result of efficiencies gained from streamlining financial operations, (iii) link financial performance to programmatic objectives, and (iv) provide coherent analyses of any variances between budget and actual expenditure and between intended targets and programmatic achievements.
Samwel Wangombe- Manager, Public Sector Group, PwC Uganda. E-mail: firstname.lastname@example.org
*The views expressed in this article are the author’s and not necessarily those of PwC.