March 26, 2010Doug Hadden
Emerging country governments want more transparency
by Doug Hadden, VP Products
The prevailing view: governments are reluctant to be transparent. Especially governments in so-called “developing countries”. Huge “disincentives” for transparency. Imagine the surprise for some attendees at the IATI (International Aid Transparency Initiative) Technical Advisory Group meeting in Oxford this week when I explained some of the initiatives by the Government of Timor-Leste: transparency and procurement portals. It should be noted that the Ministry of Finance publishes budget preparation, execution and important reports already. The government plans to publish even more information and provide dynamic analytical capabilities.
Conventional wisdom and globalization
Conventional wisdom states that governments need to be pushed into transparency by providing other incentives. Development partners have pushed countries into PFM reform and the acquisition of Government Resource Planning (GRP) systems. And, most development experts assume that these governments will be the most reluctant in the value chain of aid management to be transparent. As I pointed out in my previous post, it is good to get out of your context. There are two television commercials in the UK that come to mind from Macedonia and Georgia pointing to great improvements in the World Bank Doing Business Index. The creator of this annual report, Simeon Djankov, is now the Minister of Finance of Bulgaria.
What is happening here? Governments are pulling to become more transparent. We attend many PFM conferences around the world and have been witnessing this increasing thirst for transparency. Among public servants and politicians.
It all goes back to our first FreeBalance International Steering Committee meeting in 2007, coincidently in the UK. We ask our customers to present successes, challenges and lessons learned to foster knowledge transfer. The Mongolian presentation mentioned that “competition” was a primary driver for PFM reform. The notion: advancing PFM reform makes countries more competitive. Especially during a financial crisis, as it turns out. Globalization gives businesses choices. Countries with reduced risks of doing business attract more business. And, more partner funds.
Conventional wisdom also states that PFM reform should be sequenced and slow. Sequenced yes. But slow? FreeBalance emerging nation government customers do not have many of the built-in organizational biases against transparency. Technology is also more easily integrated. Yes, there are “disincentives” and capacity issues. (As we have seen in Afghanistan, capacity building can be accelerated.) The incentive – the Economic Value Add – for improving transparency in emerging country governments is orders of magnitude higher than in the G7.