May 17, 2011Matthew Olivier
James Elrick, PR Specialist
Transparency International is the global coalition fighting against corruption. On the Transparency International blog, author Maria Gili of the International Defence and Security Programme at Transparency International UK recently published an article titled “Corruption in Afghanistan: The Status Quo is Not an Option”.
The article describes how corruption is becoming endemic and ranks as the highest concern for the people of Afghanistan. To prevent corruption from becoming the status quo, the author provides options that include a report on the total funds flowing into the country.
As the majority of funds spent in Afghanistan come from international donors, most of it is off-budget – not on the government books. Some of these funds are provided directly to government entities outside of the budget process. Most of it is expended directly by donors or through 3rd parties, such as NGOs.
This reduces the ability for donors and the government to coordinate action. This also reduces aid effectiveness, which can be as big a problem as corruption in some countries.
But the real problem is that off-budget money is very hard to trace, especially cash payments. On-budget is much easier to trace, control and audit.
The Afghanistan Ministry of Finance has made great strides at reducing corruption substantially in public financial management (PFM). Since 2002, the Ministry of Finance has been using the Afghanistan Financial Management Information System (AFMIS). The AFMIS is an automated PFM system based on the FreeBalance Accountability Suite that can generate fully auditable reports on all transactions. Using the AFMIS, more than 99% of the government’s budget execution is captured on a real-time basis.
Highlights of the AFMIS include:
- 2010 saw the AFMIS Rollout team in Nuristan print its first cheque. With this achievement, the rollout of the AFMIS across the provinces of Afghanistan was completed as Nuristan was the last province to be connected to the AFMIS network.
- All 34 Afghanistan provinces and all line Ministries at the centre now have system-based budget controls, and can execute system-based payments with a very high degree of fiduciary control.
- In the April 2011 World Bank Economic Premise note titled “Strengthening Public Financial Management in Postconflict Countries,” the Government of Afghanistan was given a rating of “substantial” — the highest rating — for PFM rebuilding and reform progress.
And, as the documentary piece pointed out, Afghanistan has made significant capacity building gains as regular training on the AFMIS has resulted in 262 government employees being added to the AFMIS skilled workforce.
These are significant achievements that fail to get too much attention because of the overarching narrative that all government institutions are corrupt.
Evidence suggests that public finances have improved in Afghanistan to be better than peer countries. Using the AFMIS, the Government of Afghanistan has improved governance, accountability, and transparency.
For more information:
Case study at: http://freebalance.com/news/2011/Afghanistan-Improves-Governance-Through-Public-Financial-Management-Reform.asp. The case study illustrates how the Government of Afghanistan has built capacity and effectively decentralized budget execution.
IMF Study on capacity building and public financial management: http://blog-pfm.imf.org/pfmblog/2010/07/implementing-a-financial-management-information-system-in-a-fragile-state-context-afghanistans-succe.html
How public financial management reduces corruption: http://freebalance.com/blog/?p=1609
A rant on the corruption narrative in Afghanistan: http://freebalance.com/blog/?p=1561
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