6 October 2018

Ethiopia: Finance Ministry Integrates Financial Systems Across Institutions

The system is launched at 37 federal institutions and their branches

The Ministry of Finance & Economic Cooperation will launch an integrated financial management system in 125 federal institutions this fiscal year.

Costing 29 million Br, the Finance Ministry expects the Integrated Financial Management Information System to enhance the efficiency, transparency and accountability of the federal institution's management of public funds.

The system is part of the government's public financial management reform, known as the Expenditure Management Control Program. The program aims to integrate all of the government's expenditures and revenues.

Currently, the system has been launched at 37 federal institutions and their branches, while six institutions are in the pilot stage.

One of the first institutions to launch the system was the Ethiopian Civil Aviation Authority, which did so in November 2017. The Authority had been using software such as the Integrated Budget & Expenditure (IBEX) and Peachtree, a Microsoft accounting software used for billing and invoicing, inventory management, analysis and reporting.

The Ministry's Project Office provided a seven-day-long training on the new system to 60 staff members from the management, finance, procurement and property divisions of the Authority.

"The system has enhanced our efficiency, especially by significantly reducing paperwork, in addition to improving accountability, traceability and transparency," says Samuel Woldeyohannes, manager of Finance, Procurement & Property Administration at the Authority.

The Authority met with some challenges as it implemented the system.

"We are currently forced to use Excel to process incomes collected from navigation services and miscellaneous license fees, since we can only make inputs on the system monthly," Samuel says. "We hope they improve this as time goes by."

Meseret Damte, vice chief auditor at the Office of the Auditor General, is also optimistic about the system, saying that it simplifies manual and paperwork and enables better control of budget utilisation in the institutions. But she has reservations.

"It will not help reduce auditing problems unless the institutions properly utilise financial laws and regulation," she says. "But the system helps to create a uniform auditing environment, as well as helps us to audit every institution centrally."

The Ministry of Finance expects to integrate every federal institution into the system in the first phase, the regional bureaus and larger towns in the second phase and, finally, every zone and wereda in the country, according to Haji Ibsa, communications director at the Ministry.

The development of the system began in 2011 by the US-based Oracle Corporation and Transnational Computer Technology. The former developed the software, while the latter consulted.

A pilot program was employed at six federal institutions, including the ministries of Finance, Education, Public Service & Human Resources Development and Health as well as the Ethiopian Revenues & Customs Authority. They were chosen as they were institutions where large amounts of public funds pass through.

Transnational Computer consulted on the project until to 2016, winning two consecutive bids. By the time the third round bid floated, controversies rose between the Ministry of Finance and the consultant on the procedure of the bid, which hindered the program for some time in addition to the time taken to transition from IBEX.

"The project could not materialise with the expected speed as the transition to the new system and the readiness of infrastructure took too long in some institutions," Haji said.

Early last year, Techno Brain, established in 1997, was hired to consult and launch the system in 125 institutions by February 2019.

The Project Office, which consists of a team from different institutions together with the consultant, customizes and installs the software, provides training to the staff, tests and reports the performance, audits the institutions for the proper operation and provides support and quality assurance certificates before it hands them over to the Ministry of Finance.

A human resources management expert at Addis Abeba University's College of Business & Economics applauds the effort by the Ministry of Finance to automate financial management in government, which he says has been the main cause of poor governance.

"Beside launching the software, a department that oversees the financial management of the respective institutions needs to be set up, since the system requires continuous training of users and a stabilised network infrastructure," Worku Mekonnen (PhD) said.

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