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It’s Time to Integrate Aid and Financial Management Systems


January 15, 2010

Aid Management software enables governments and development partners to collaborate. To harmonize aid. To meet development objectives.

Government Resource Planning (GRP) software supports the entire budget cycle. GRP systems track government expenditures in support of objectives. These systems can also be used to manage donor funds provided to the government.  Donor projects and government expenditures are planned and executed in budgets. Budgets are forward-looking to enable multi-year planning and evaluation. Yet, these systems are rarely integrated despite the international effort through the Paris Declaration and the Accra Agenda for Action. It is time for action.

The lack of integration between aid and government financial management makes it difficult to monitor aid effectiveness. Some experts suggest that country systems should rarely be used – that a series of disjointed and disconnected systems can somehow improve development outcomes. Our view is that aid management is an integral part of GRP. And, we’re doing something about it.

FreeBalance and the Development Gateway Foundation

FreeBalance and the Development Gateway Foundation (DGF) have been partners since 2006. DGF is an international non-profit organization. We tested an integration between the DGF Aid Management Platform and FreeBalance Financials in 2006. We were able to transfer donor budget and disbursement information as budgets and allotments into FreeBalance Financials. And, we were able to transfer reporting information to AMP. Transaction costs are a significant concern in emerging economies. Governments require producing numerous project reports in different formats across different fiscal years in order to meet donor needs. This integration reduces these costs dramatically.  And, there are numerous benefits to integration in advancing aid harmonization and improving decision-making information.

We’re pleased that Jean-Louis Sarbib, the Chief Executive Officer of the Development Gateway Foundation, will be speaking to our customers at the upcoming FreeBalance International Steering Committee meeting.  We working on a joint white paper that describes the benefits and mechanisms for integration.

FreeBalance and the International Aid Transparency Initiative

The International Aid Transparency Initiative(IATI), “aims to make information about aid spending easier to access, use and understand.” DGF is an active member of IATI. And, FreeBalance has been assisting in creating a standard for financial information exchange. The Government Chart of Accounts, including budget classifications, often includes all of the metadata necessary to communicate objectives, progress and results for aid management.

FreeBalance has implemented GRP systems in every World Bank region. At all tiers of government. From post-conflict to G7. We’ve shared classification methods used by our customers and how the COA was modernized over time. We’ve been able to analyze classification systems from other countries. The IATI team is hard at work analyzing these in detail.

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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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