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Malawi: Financial Management Transparency and Accountability Project (FIMTAP)

Malawi Financial Management Transparency and Accountability Project (FIMTAP)
Strengthening Public Financial Management
Improving Service Delivery and Accountability through
Information Technology and Capacity Development

Overview

Using International Development Association (IDA) funding since 2003, Malawi has built a national government communications network; revised its public sector accounting system to be more efficient, accountable and linked to the budget; and introduced new payroll and human resource management (HRM) and debt management systems. An effective Integrated Financial Management Information System is linked to the budget development system to streamline budget and cost estimates. All government bank accounts can now be consolidated into a Treasury Single Account for greater control and accountability of the cash budget and to better control public debt management, providing far greater control over the public wage bill.

Challenge

Upon transitioning to multi-party democracy in the mid-1990s, Malawi undertook a broad range of public sector reforms, including on aspects of its civil service system, to strengthen the institutional framework for service delivery. Despite some successes, Malawi, like many countries in Sub-Saharan Africa, made only modest progress in achieving fiscal discipline and operational efficiency in the public service. Key challenges faced included: expenditure and debt management, accountability (particularly budget discipline), better financial management capacity, and greater general efficiency in the public service delivery.

Budgetary resources were spread thinly, with continuing pressure to overspend, while there continued to be large variations between planned and actual expenditures, and non-compliance with financial rules and regulations. In addition, lack of effective financial management, audit and procurement functions and inadequate capacity in these and associated functions in the public sector continued to hamper the government's ability to effectively and efficiently carry out service delivery functions critical to achieving the Millennium Development Goals (MDGs).


Approach

The Financial Management Transparency and Accountability Project (FIMTAP) was designed to provide a toolkit of solutions to poor fiscal discipline, transparency, accountability and operational inefficiency in the public service, all of which undermine achievement of the MDGs. The approach helped the government prioritize tasks in each of the above areas, and provided tools to monitor deliverables, which were aligned with an incentive scheme with supplementary funding for target achievement. Overall, the project focused on providing critical service delivery infrastructure (e.g. a broadband communications system, accounting hardware and software) and capacity building, and institutional strengthening, including establishing a bachelors program in procurement at Malawi Polytechnic; instituting a National Procurement Profession body; and launching a government procurement website as the basis of e-procurement.


Results

One key focus of FIMTAP was to build a robust Information and Communications Technology (ICT) infrastructure for the public service which could improve internal efficiency and accountability (e.g. beginning the development of a government intranet, e-mail, document transfer and on-line access to financial management and human resource and staffing information for all Ministries, Departments, and Agencies (MDAs) and provide a framework for electronic delivery of some services. This was done by:

  • The development of a national government virtual private network (VPN) covering an area of 645 km linking all major cities and all ministries, departments and agencies of government (June 2006)—as a result, government benefits from efficient intra-government communications and business transactions;
  • Initial development of electronic transactions of public services through the public procurement website to facilitate improved access by the private sector (July 2006);
  • Development of 50 km of urban fiber optic networks to link government buildings in major cities, including a Disaster Recovery Center in association with the U.S. Agency for International Development (USAID) (April 2008);
  • Trained 45 senior ICT technical staff to manage network operations (June 2009) and trained 2,038 staff in management, accounting, law, procurement and HRM and replaced or installed critical equipment for all these functions;
  • Provided approximately 1,800 senior staff with access to internet services through the VPN, with expansion to all civil servants in the four major cities as equipment becomes available;
  • Implemented effective control over public procurement that is regularly monitored and reported to the national procurement authority and provided critical training across areas of public sector accountability for more efficient management by MDAs.


Bank Contribution

Although the initial IDA allocation was US$23.7 million equivalent, the final cost was US$27.7 million due to exchange fluctuations.


Partners

A strong informal partnership was established with other development partners working in the public sector under the umbrella of the IDA-financed project. This partnership led to an informal, but effective coordination of activities in several areas:  Audit and accounting (USAID US$3.7 million and the European Commission €2 million); ICT (United Nations Development Programme UNDP US$2 million) and procurement (UNDP US$5 million, USAID US$.95 million); and capacity building (USAID US$2.9 million). Coordination meetings were regularly held between development partners and recipient agencies. Furthermore, the donor harmonization network provided other coordination and information-sharing mechanisms, and helped harmonized efforts in areas such as public finance.


Moving Forward

The IDA-financed Malawi Social Action Fund Phase 2, which launched in June 2008, included US$5 million equivalent in support of capacity building in areas such as auditing, accounting, procurement and service delivery at the local government level. This project built on the work done at the central government level, and leveraged the government communications network to integrate local and national government financial and HRM systems. These activities also complemented work already done by UNDP and the German Agency for Technical Cooperation (GTZ), which was requested by local governments who wanted more efficient procedures to help reduce funding delays from central government. This request gives greater assurance of sustainability because of the strong ownership by local governments.


Beneficiaries

With just a small staff dedicated to improvement and with support from IDA through FIMTAP, many changes were made in only three years. The beneficiaries of improvements include patients at health centers benefitting from improved delivery of drugs to clinics, pupils benefitting from broader availability of schoolbooks at schools, and farmers benefitting from improved delivery of fertilizers. The procurement service was professionalized, all procurement staff trained, bachelors and masters degrees introduced at local institutions, e-procurement initiated, and new laws, regulations and procedures were introduced to make Malawi’s public procurement one of the most transparent and accountable in Africa, thus benefitting the population of Malawi as a whole.


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