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Collaborative Africa Budget Reform Initiative (CABRI)

Budget reform seminar: Overview and summary of discussions

Collaborative Africa Budget Reform Initiative (CABRI)

Pretoria, South Africa
1–3 December 2004

SARPN acknowledges the Collaborative Africa Budget Reform Initiative (CABRI) as the source of this document:
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Context of the initiative

Across Africa citizens are demanding that governments use public funds more responsibly and at the same time accelerate service delivery. More attention than ever before is focused on improved budget management and its contribution towards achieving welfare goals. The Collaborative Africa Budget Reform Initiative (CABRI) is an African-led initiative aimed at supporting senior budget offi cials in their reform efforts to deliver on these ideals.

Public finance management is central to the public sector reform efforts that are underway in many African countries. With the aim of long-term, multilateral African support for budget reform and sound public finance management, the ministries of finance in South Africa, Mozambique and Uganda jointly hosted a budget reform seminar from 1–3 December 2004.

The impetus for CABRI and the seminar arose from the recognition that budgets, as significant macroeconomic policy tools and determinants of the level and nature of public services, have an important role in development and poverty reduction. The extent to which this role is realised is greatly dependent on public institutions that are capable of efficiently allocating resources and effectively implementing public programmes. Therefore, quality planning, budgeting and implementation are important elements in determining a government’s ability to deliver on its development objectives. The link between budget management and development is a strong feature of reform programmes across Africa. Unfortunately, many of these programmes have had limited success.

Budgeting systems in Africa are characterised by systemic weaknesses that hamper the effective formulation and implementation of credible budgets. Some of these weaknesses are summarised in the box alongside. Financial volatility, fluctuating world prices for commodities, political instability and natural disasters profoundly impact on normal budget practices and undermine the significance of the budget as a vehicle for government action.

However, despite these difficulties, African countries have the scope to improve their budgeting systems. Many countries now recognise that the realisation of developmental goals – assisted by higher economic growth rates and increases in external resources – requires a disciplined and coherent framework for budget allocation and management. As a result, for much of the past decade and more, the management of public finances has been the subject of extensive reforms, which are both internally and externally driven.

Finance ministry officials are at the heart of many of these reform efforts, as success depends to a large extent on their ability to analyse existing deficiencies, decide on changes and manage implementation. While external assistance has been available for this process, experience has shown that it cannot replace the need for local ownership and management. The ability of officials to manage the budget process is dependent on their knowledge of what makes an effective public management system, what alternatives have been tried elsewhere, and their understanding of good practice when it comes to sequencing and implementation.

While there is a considerable literature on budget reform efforts, it has been developed mainly by multilateral providers of development assistance and international research institutions. These studies are valuable, but represent external evaluations of reform efforts based on external knowledge frameworks.

CABRI is an African-led and managed initiative that aims to improve the efficacy of public fi nancial management reforms in Africa. Its objectives are, firstly, to bolster the capacity of senior budget officials to take an active role in planning and managing reforms, and, secondly, to expand existing knowledge of successes and common failures.

As the first activity of CABRI, the budget reform seminar provided an opportunity for participants to share their experiences of reform modalities that had worked and those that had failed. Four main themes formed the basis of presentations and discussion between country representatives, regional and international institutions and experts, and also informed country case-study papers prepared for the seminar. Each of the themes – building budget credibility, introducing multi-year budgeting, improving the quality of expenditure, and reform design and implementation – and the deliberations of the seminar are summarised in this publication.

Characteristic weaknesses of budgeting in Africa

Unrealistic foundations for budget formation.
When actual revenues are below what was budgeted, the ability to meet aggregate expenditure targets is undermined, resulting in unanticipated in-year reductions to line ministries and the implementation of plans being abandoned.

Insuffi cient co-ordination between policies, planning and budgeting.
When policies, plans and budgets are developed in isolation of each other, there is likely to be a mismatch between what is promised and what is affordable.

Dual budgeting.
Many countries operate dual budgeting systems, in which the ‘development’ or capital budget is separated from the recurrent budget. This has resulted in co-ordination problems.

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