Technology Leapfrog Opportunity for Africa Government & Central Bank Governance
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Presentation given at the Africa Debt Capital Markets Summit 2013 in London http://www.ic-events.net/2013/adcm/ on the technology leapfrog governance opportunity for African governments and central banks. The majority of information systems used for treasury, payment, financial management and banking are proprietary and use closed systems. The use of open systems with modern technology enables integration to support improved decision-making and transparency. With less systems, African countries can leapfrog more developed countries to improve trust through accountability and improved effectiveness.
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Technology Leapfrog Opportunity for Africa Government & Central Bank Governance
- 1. Version 7 section • brief discussion Leapfrog Governance
- 2. Version 7 section • brief discussion Version 7 section change
- 3. Version 7 section • brief discussion 33
- 4. Version 7 section • brief discussion 44 0 50 100 150 200 250 Lincoln Lexus Jaguar Porsche Toyota Acura Buick Mercedes-Benz Cadillac Hyundai Honda Ford Saab Infiniti smart Chevrolet Vovlo Suburu Kia Audi BMW Scion Ram Mazda Nissan GMC Mitsubishi Suzuki Volkswagen Chrysler Dodge Land Rover Jeep Mini 2011 J.D. Power: Problems per 100 Vehicles
- 5. Version 7 section • brief discussion 55
- 6. Version 7 section • brief discussion “new normal” 0 5000 10000 15000 20000 25000 2006 2010 Portuguese Immigration to Angola Multiple Sources
- 7. Version 7 section • brief discussion growth 77 Economic Activity Developed and Emerging Economies 1990-2020 The Economist 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Developed Emerging % of World Economic Activity
- 8. Version 7 section • brief discussion 8 -15 -10 -5 0 5 10 15 20 25 30 35 Ireland Greece Italy Britain Japan Spain United States Portugal France Netherlands Canada Mexico Belgium Sweden Switzerland South Africa Germany Australia Russia Turkey South Korea Brazil Taiwan Poland Indonesia Argentina India China Economist: Real GDP per Person Q4 2007 to Q2 2011, % Change
- 9. Version 7 section • brief discussion trust and governance deficit Gross National Income per Capita to Government Effectiveness World Bank, World Governance Indicators, 2010 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2 2.5 100 1,000 10,000 100,000 1,000,000 Government Effectiveness Indicator GNI in $US exponential scale
- 10. Version 7 section • brief discussion FreeBalance help governments across the world leverage robust government financial management technology to accelerate country growth
- 11. Version 7 section • brief discussion TLA
- 12. Version 7 section • brief discussion Governance Linkages 1. back office GRP software provides 2. a set of Governance tools 3. whose effectiveness in improving governance is determined by institutional maturity 4. and can be seen 5. measured 6. shown to improve country outcomes
- 13. Version 7 section • brief discussion Integration Decision Making TransparencyParticipation Trust Open Systems Effectiveness
- 14. Version 7 section • brief discussion“silos”
- 15. Version 7 section • brief discussion technology leapfrog
- 16. Version 7 section • brief discussion
- 17. Version 7 section • brief discussion credit ratings
- 18. Version 7 section • brief discussion Mobile Penetration per 100 Inhabitants International Telecommunications Union 0 20 40 60 80 100 120 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Poorest Poor Middle Rich Richest
- 19. Version 7 section • brief discussion
- 20. Version 7 section • brief discussion Central Bank Government Accounting Revenue + Tax Systems Procurement & Payroll Payment Systems Debt Management Cash Management Bank Reconciliation Treasury Systems Budget Planning & Forecasting Commercial Banks multiple integration points throughout the budget cycle
- 21. Version 7 section • brief discussion Software Programming Language Popularity, October 2012 Tiobe Software, Programming Community Index 0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
- 22. Version 7 section • brief discussion 1. Open Systems enables Interoperability and Data Integration
- 23. Version 7 section • brief discussion 2. Open Systems support Integration
- 24. Version 7 section • brief discussion 3. Integration provides decision- making information
- 25. Version 7 section • brief discussion 4. Integration enables transparency
- 26. Version 7 section • brief discussion 5. Transparency + Improved Effectiveness = Trust
- 27. Version 7 section • brief discussion next step?
- 28. Version 7 section • brief discussion http://www.freebalance.com/news/whitepapers.asp
Editor's Notes
- The world has changed
- Many years ago, Japanese automobiles were associated with poor quality and rust
- Yet today, Japanese automobiles are prized for quality despite that fact that many manufacturers have caught up.
- Investing in Africa has been considered high risk
- Yet, we are seeing a “new normal” – a change in the economic status quo
- With high growth in emerging economies
- Despite shocks caused by the financial crisis to food security, trade and remittances, prudent fiscal policies by emerging economy governments and central banks made these countries more resilient than many developed countries.
- There remains a trust gap in Africa. As we can see here, the higher the government effectiveness World Governance Indicator, the higher the per-capita income.
- At this point in the presentation you might be wondering what FreeBalance is all about. We are a Canadian company providing software for public financial management with customers and operations in 25 countries around the world.
- Now that you know that we’re a technology company, you may be wary of all the 3 letter acronyms like GRC: Governance, Risk and Compliance or ICT: Information and Communications Technology.
- Bear with me for a minute. We’ve developed a framework that shows how technology enables good governance
- The governance gap can be closed by leveraging technology as part of reform to improve government effectiveness through improved decision making and trust through improved participation. But many governments and central banks are unable to achieve improved decision-making or transparency because of a lack of integration and the use of proprietary systems.
- You might argue that the state-of-the-art in developed countries including closed systems that are not fully integrated – something known as silos.
- That’s the nature of technology leapfrog: more developed countries do not feel compelled to change. There is an opportunity to leverage technology leapfrog more developed countries
- It’s through integration and open standards that a developing country like Timor-Leste provides 10 years of budget data, updated daily. And, to show the actual results of public investment projects.
- Credit rating agencies view a lack of transparency as an indicator of poor fiscal discipline.
- As we’ve seen with the Arab Spring, the penetration of mobile devices and social media has created increased political participation
- It’s better to harness transparency that to have it thrust on you
- There are multiple points of integration needed to provide leapfrog transparency and decision-making. This is true throughout the budget cycle. For example, debt repayment schedules and expected debt instruments need to be considered during budget planning. Payment and revenue systems need to be integrated to support effective cash and liquidity management. All public financial management components including procurement, payroll and tax administration need to be integrated with commitment accounting. And, electronic funds transfer needs to be fully supported to integrate with the banking system.
- This becomes even more challenging when you consider that the vast majority of software applications used for back-office financial management and treasury, debt management and central bank is legacy like Cobol or proprietary. Few applications in this space are built on popular enterprise-class programming languages like C sharp, C plus plus or Java.
- Central banking, government treasury, revenue collection, procurement and payroll systems in use in Africa lack interoperability
- These systems often use proprietary technology, sometimes custom-developed that makes integration difficult to supoort
- The lack of integration means that decision-makers are not provided with the right information at the right time
- This lack of integration makes it difficult for citizens and credit agencies to trust governments
- This is how the governance gap can be closed.
- Where do we go from here?
- You can look at our framework for automating good governance. You can talk to FreeBalance staff here at the conference to discuss how you African countries can leapfrog the state-of-the-art.