Introducing Financial Management Information Systems in Developing Countries

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In the past decade, developing countries (DCs) have been encouraged to reform their public expenditure management systems and have increasingly embarked on major projects to computerize their government operations. Most popular among these have been projects to computerize government accounting and payment operations, by introducing government financial management information systems (FMISs). This paper investigates the reason for almost universal failure to implement and sustain FMISs in DCs. It starts with a review of the “received wisdom” in implementing these projects, and then analyzes problems in its application in the DC context to identify key factors to explain why FMIS projects have been so problematic. Based on the identified negative factors, suggestions for addressing them are offered in the hope of improving success rates.]

In most developing countries (DCs), budget execution and accounting processes were/are either manual or supported by very old and inadequately maintained software applications. This has had deleterious effects on the functioning of their public expenditure management (PEM) systems, that are often not adequately appreciated. The consequent lack of reliable and timely revenue and expenditure data for budget planning, monitoring, expenditure control, and reporting has negatively impacted budget management. The results have been a poorly controlled commitment of government resources, often resulting in a large buildup of arrears; excessive borrowing, pushing up interest rates and crowding out private-sector investment; and misallocation of resources, undermining the effectiveness and efficiency of service delivery. Further, governments have found it difficult to provide an accurate, complete, and transparent account of their financial position to parliament or to other interested parties, including donors and the general public. This lack of information has hindered transparency and the enforcement of accountability in government, and has only contributed to the perceived governance problems in many of these countries.

Introducing Financial Management Information Systems in Developing Countries

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