If government ministries were characters in a play, the ministry of finance would likely be cast as the villain. Far from being the underdog, the finance ministry is often at the center of modern government, wielding a great deal of (formal and informal) power and influence over a country’s public resources by virtue of its control over the budget. Given this critical role, it is often the finance minister who becomes collateral damage when things go bad. Yet some finance ministers and ministries have managed to escaped vilification and been widely respected for shielding the country against excess and indiscipline of others who would lead it astray. (That is, the common pool resource problem.)
The obvious question, with a not so obvious answer, is why some finance ministries have been able to remain unscathed, even after implementing traditionally unpopular decisions such as spending cuts and/or tax hikes?
A recent conference, “Finance Ministries in the 21st Century,” offered one possible explanation: narratives matter. Jointly hosted by the Overseas Development Institute (ODI), the Collaborative Africa Budget Reform Initiative (CABRI), and the National Treasury of South Africa, the event brought together government officials, academics, and international experts to discuss how finance ministries can be made to work better.
“Reformers are more likely to generate buy-in for reforms both within and outside their organization if they are armed with a strong narrative.”
A key theme that emerged from discussions was that reforms, particularly unpopular ones, are unlikely to be implemented and even less likely to prove resilient unless they are accompanied by compelling narratives. Essentially the story of a policy change, a narrative typically defines a problem, explains how it comes about, and shows what needs to be done to avert disaster or bring about a happy ending. In short, what is wrong and how it can be put right.
The idea that narratives, or public communication campaigns more broadly, are important for selling products, ideas, and even people for political office, is far from novel. Hence the booming multi-billion dollar advertising and public relations industries whose primary purpose is to craft or manipulate narratives to sway public opinion. Moreover, the importance of a compelling narrative is almost always stressed in the literature as a critical factor underpinning successful reforms. Reformers are more likely to generate buy-in for reforms both within and outside their organization if they are armed with a strong narrative. A narrative can give a policy maker “room to maneuver” and enhance their ability to think about new alternatives or different approaches.
A narrative that fosters a sense of a common cause can be an invaluable asset to a finance ministry in particular, because of the nature of its job and the reality of cabinet decision making. If public revenue unexpectedly declines, a finance ministry can spend a lot of time and energy refereeing fighting among spending ministries over who will absorb the cuts, while withstanding great pressure to relax budgetary rules. This is not conducive to good government. It potentially wastes time and energy that could be otherwise spent enacting critical reforms and making tough political decisions.
The recent success of South Africa‘s treasury in implementing an explicit expenditure ceiling is a case in point. Introduced in 2012, the ceiling established a nominal limit on main budget non-interest expenditure – the core spending over which government has direct legislative authority. Not only have spending ministries generally complied with this ceiling, which has substantially reduced expenditure growth, there has also been broad support for the policy across the political spectrum.
The underlying narrative used to support the reform was: because of increasing current account debt, rising inflation, and stagnating economic growth in South Africa, fiscal consolidation could no longer be postponed in light of the principles of counter-cyclicality, debt sustainability, and intergenerational fairness. The ceiling would allow for sustained, but moderate, real growth in spending and a gradually declining deficit. This would enable government to stabilize debt and rebuild the fiscal space needed to fund new priorities. What is noteworthy is that maintaining the main budget expenditure ceiling meant that higher spending in some areas required lower spending in others. So, even though the move potentially threatened the interests of line ministries/departments (since to fund new priorities, government had to divert funds from non-performing or non-essential programs), the treasury has been able to maintain the ceiling. This is partly due to its convincing narrative.
“Narratives that increase the transparency of government’s decision-making processes and the expected results of reforms can help the public hold governments accountable.”
This is not to say that a compelling narrative alone guarantees success. In most cases it is likely to be a necessary but not sufficient condition. Moreover, its legitimacy is likely to vary with time and context. It has been suggested, for instance, that adhering to South Africa’s fiscal consolidation plan has become more challenging over time. Uganda in the early 1990s further demonstrates this point. Technocrats in the Ministry of Planning had long been making the case to the President that a lack of budget discipline was central to high inflation levels in Uganda. It was only after the dramatic surge in inflation in 1992 that they finally convinced the President that the key to inflation control lay in budget control. He subsequently merged the Ministry of Planning and Ministry of Finance, and gave the new Ministry of Finance and Economic Planning a clear mandate to enforce fiscal discipline in budget planning and execution.
There are several potential benefits that can arise from a finance ministry having a strong narrative. One important benefit is that it can help ensure that, in the theatre of government, the finance ministry isn’t always cast as the villain.
This post was written by Paolo de Renzio, International Budget Partnership.
Two big meetings related to the Post-2015 Sustainable Development Goals (SDGs) will take place in the coming months: the Financing for Development conference, and the UN Summit to adopt the Post-2015 Development Agenda. This has shifted focus to the short-term negotiations that will decide the shape and content of the SDGs, what the targets and indicators will look like, and what resources will be available to try and achieve them.
We have been following this debate very closely at IBP, calling for transparency, participation, and accountability to be at the heart of the new framework. In previous blogs (see here and here) we have argued that one of the great shortcomings of the Millennium Development Goals (MDGs) has been the lack of a system to monitor the resources that governments and donor agencies invested in reaching the development targets. This made it difficult to hold them accountable for what are often seen as disappointing results.
“The public availability of budget information, in other words, can create an environment where governments can be held accountable for how they use public resources.”
Last year, we published research showing there is a link between budget transparency, the tracking of development expenditure, MDG spending, and MDG results. The public availability of budget information, in other words, can create an environment where governments can be held accountable for how they use public resources. This, in turn, can lead to a more targeted use of resources, better service delivery, and improved development outcomes.
To make sure that some of these benefits materialize in the Post-2015 SDG era, we need a system that promotes effective monitoring and accountability, both domestically and internationally. This means the final agreement must include provisions for the disclosure of information on policies, and on resources allocated and spent, with the aim of achieving the various development targets. While the draft versions of the goals, targets, and indicators all look promising, the end result is still uncertain – some governments are pushing back strongly.
Even if the short-term battle is won, and transparency and accountability are firmly embedded in the Post-2015 agreement, finding ways to turn all of this into practical arrangements by the time the SDG indicators are finalized early next year might not be as straightforward as it seems. How can the international community make sure that timely and detailed data on spending and results related to the SDGs are made widely available?
Three ongoing initiatives point to some possible solutions.
Government Spending Watch
A joint initiative by Oxfam and Development Finance International, Government Spending Watch has collected data on government spending toward seven of the MDGs for more than 60 low- and middle-income countries. Covering 2012 to 2014, the dataset draws on budget documents made available by governments, complemented by data from the IMF and World Bank. To date, it is one of the few and the most ambitious independent efforts at gathering MDG spending data. But, while it has great potential as a model, it only provides very aggregate numbers and often relies on informal contacts with government officials for access to data and their interpretation.
The World Bank’s BOOST initiative was created as “a one-stop shop for budget data worldwide.” It makes public spending data available in very detailed and open formats – i.e. by sectors and sub-sectors which can be linked to existing and future development goals. Unfortunately only a handful of governments have agreed to have their data posted on the portal so far, despite the fact that the World Bank has been working with around 40 countries on this initiative. Also, the data is compiled from government sources that are usually not accessible to the public.
The Budget Data Package
Finally, last year the Open Knowledge Foundation, with help from Google, the Omidyar Network, and IBP, drafted a data specification called the Budget Data Package. This aims to provide a common format for governments to publish open budget data that is useful to citizens, easy to process, transparently structured, well documented, and rich enough in content to be meaningful and understandable – including being “linkable” to specific development goals. While the specification is still being piloted, and can certainly be improved, it could provide the basis for future reporting, ensuring wide access to data that can be compared across countries.
“All governments need to commit to providing information that is detailed enough to be meaningfully linked to the various goals and targets.”
Each of these three initiatives provides a partial answer to our question of how we ensure that data related to the SDGs are made widely available. The full answer might come from a combination of their different approaches. To enable effective monitoring and accountability of SDG-related spending and results, all governments need to commit to providing information that is detailed enough to be meaningfully linked to the various goals and targets. This information should be easy to access and reuse, and comparable across countries.
The final outcome of the SDG negotiations is still uncertain. But a clear lesson from the MDG era is that it is crucial that a wide range of actors have the ability to track both the resources being spent to achieve the goals and the results of that spending. Establishing how this can be achieved is not a simple task. We need to start thinking about the details now, lest we are caught unprepared and have to wait another 15 years.
ODI’s report has a welcome emphasis on the imperative of data serving the needs of citizens. Drawing on IBP research, the report also recognizes that without access to information on both development finance and government budgets it “will be impossible for stakeholders to hold governments and other actors accountable for funding delivery of the SDGs [Sustainable Development Goals].”
Governments already produce a great deal of budget information, they just don’t make it available to the public.
The data revolution has generated a great deal of momentum around the idea that open, accessible, and better quality information is needed to improve development outcomes. And the promise the movement holds – a better understanding of the world we live in, and of the needs of the poorest amongst us – is tantalizing.
But when it comes to public finance, “data revolutionaries” sometimes overlook two important points: governments already produce a great deal of budget information, they just don’t make it available to the public; and the narratives contained in official budget documents are crucial for gaining a better understanding of how public finances are being managed.
More than Numbers
Open data activists have tended to emphasize the need for budget data to be published in machine readable formats. While this is an important innovation that can enhance the ability of actors outside government to do independent analysis, it can sometimes overshadow the need for narratives to accompany the numbers.
As development economist Morten Jerven has pointed out, “data is not the same as numbers.” Indeed, when it comes to understanding how public money is being used, numerical data is rarely sufficient. Numbers can give us the “what,” but to piece together the story of the budget we also need the “why.” The best place to get this is from the narratives contained in the budget documents governments produce and use themselves.
Without these narratives, determining justifications for expenses, linking policies and budget allocations, and understanding differences between actual and estimated expenditures is essentially reduced to guesswork. Each key budget document is a part of this story, and the gritty details contained in their narratives are imperative for budget information to be meaningful.
The good news is that improving the availability of fiscal data doesn’t always require deep investments in National Statistics Offices. The even better news is that if official budget documents are published, civil society can help scrutinize and improve the information contained within. This will not only improve accountability and foster greater trust, but also stands to improve government’s own picture of how public finances are being managed.
Budget Information is Low-Hanging Fruit
The data revolution has been successful at capturing the imaginations of governments around the world. In March, finance ministers from all across Africa released a joint statement (PDF) embracing an, “African data revolution […] built on the principles of openness across the data value chain and a vibrant data ecosystem driven by national priorities and inclusive national statistical systems.”
Yet, as pointed out by Mo Ibrahim in an article for the Financial Times, “Only 3 per cent of African citizens live in countries where governmental budgets and expenditures are made open, according to the Open Budget Index.”
Governments that wish to drive the data revolution forward can do so remarkably quickly and at very little cost: publish the budget documents that are being produced.
Why is this the case? One big reason for the paucity of budget data is so much simply goes unpublished. This is by no means a problem confined to Africa: of the hundreds of budget documents found by the 2012 Open Budget Survey to be unavailable, 40 percent were produced by governments but remained off limits to citizens. This fact is reinforced by data collected by the IBP in its monthly Open Budget Survey Tracker.
There are clearly issues of capacity (many important budget documents are not produced at all). But governments that wish to drive the data revolution forward can do so remarkably quickly and at very little cost: publish the budget documents that are being produced.
So You Want to be a Revolutionary?
The ambitions of the data revolution stretch well beyond public finance. Data hold the promise of improving our collective understanding of our world. Our ability to marshal this understanding to improve the lives of poor people is a crucial test of the age we live in.
This article was written by Keren Ben-Zeev, Heinrich Böll Stiftung Southern Africa.
The South African government spends almost half of its budget each year on education, health, and welfare services. A further 20 percent of the budget goes to the provision of housing, water, electricity and sanitation. By some measures, though not all, these levels of expenditure compare favorably to similar economies and should be sufficient to provide quality public services to the majority of the population.
Despite these significant investments, however, public education and healthcare are both in crisis, and last year public outcry over failing services reached fever pitch: a record 185 “service delivery” protests took place in 2014, with residents demanding improvements to basic services such as water, sanitation, housing, roads and electricity. Whether public services can be significantly improved, however, largely depends on fixing accountability and transparency deficits inSouth Africa’s political system.
In response, South African civil society has been increasingly exploring participatory methods to enable citizens to hold the government to account for how it is using public money to deliver services. One powerful participatory tool that is emerging in South Africa is social audits.
Social audits enable citizens to interrogate the state on specific budget and expenditure choices, as well as their outcomes. In South Africa, where state driven participation has failed to challenge vested interests, social audits provide platforms for citizens to hold the government to account on their own terms.
In an effort to develop and expand the use of social audits in South Africa, the Heinrich Böll Foundation, the Social Justice Coalition (SJC), Ndifuna Ukwazi (NU), and IBP organized a study visit to India for South African activists. Among the delegates were those who already use social audits in their work, such as those from SJC, NU and Equal Education, as well as delegates involved in monitoring the extractive industry and urban development for whom social audits are new, such as PlanAct and Afesis Corplan.
For SATHI, social audit work has evolved into the Community Based Monitoring and Planning (CBMP) approach. CBMP involves establishing regular forums for citizens to engage with the government on service delivery problems that have been identified through citizen monitoring. SSAAT, a politically independent but state funded agency, organizes social audits government programs on a mass scale. Samarthan works in one of India’s poorest states to enable communities to take charge of the state’s social audit platforms.
Delegates from South Africa were directly linked with experienced social auditors from these organizations. They accompanied youths to audit infrastructure projects and employment programs; attended CBMP forums aimed at improving health clinics; and observed public hearings to report on audit findings. Delegates were also able to directly engage with villagers, civic leaders and government officials involved in auditing practices.
What we Learnt
A number of lessons emerged from the delegates’ own reflections on their experience.
Social audits can drive systemic change as well as deliver immediate justice. Including political leaders alongside the officials directly responsible for resolving specific issues enabled solutions to be found and immediate justice to be won for communities. In one public meeting, an official who mishandled scholarship funds paid back the money. In a CBMP forum, identifying alternative accommodation for doctors helped to increase the length of medical consultations.
In contrast, social audits in South Africa have tackled systemic problems and targeted high profile office bearers. This is essential and must continue. But it leads to long term campaigns that don’t immediately improve people’s lives, and leaves communities to deal with “basics” like broken toilets outside of the audit. CSOs should consider an approach that combines regular forums with local officials to address specific problems, and special public hearings to address systemic issues with higher level representatives.
Communities need to be in the driving seat. While the monitoring forums and social audits we observed were supported by CSOs or the Indian government, residents in the community took the lead.
In South Africa, social audits have been largely associated with the CSOs who led them. Structuring audits so that so that they are led by communities could strengthen the legitimacy of audit findings and the government’s response.
Combining social audits with community based monitoring should be explored. Holding regular forums for the community to monitor services allows individual problems to be tracked until they are solved, facilitates collective action, and provides space for the community to take the lead.
Establishing resident committees to monitor the implementation of commitments won through social audits is one way this can be achieved. In time, these could also become inclusive and community based forums for planning and leading social audits.
Social audit findings should be integrated into official planning, oversight, and budgeting processes. This could help to strengthen the state’s own planning and oversight processes, as well as the institutions themselves. This is particularly relevant in South Africa, where oversight institutions have largely failed to effectively interrogate government programs and champion the interests of the most marginalized.
Local power dynamics need to be considered. As one official explained to us, SSAAT audits allow for “impartiality at every level.” To prevent the intimidation of the auditors by local elites, SSAAT trains youths from different locales to audit one another’s villages; and public hearings are overseen by district level representatives rather than local politicians.
This is more relevant for a context where communities can rely on a politically powerful state institution to lead the audit and ensure that its findings are remedied, rather than those where communities have only themselves to rely on. Nonetheless, there may be cases where it would be useful to creatively consider how localized power dynamics should be managed – whether through circumvention or challenge.
Over the next few years we will support PlanAct and Afesis Corplan to undertake their first audits. With Benchmarks, we will experiment with the use of audits to hold mining companies to account. Drawing on our lessons from India, Equal Education, SJC and NU will experiment with different approaches and adapt these insights to the South African context.
Collectively, these actions will hold government to account for failures to provide sanitation to informal settlements in Cape Town, the appalling conditions in township schools in Gauteng, and unreliable water provision to settlements in Mpumalanga. While these will address problems in specific locales, we hope they will also catalyze country wide action that strengthens participatory and oversight institutions, public services, and, most importantly, the citizenry’s ability to ensure that public funds are used to improve their lives.
The post-2015 Sustainable Development Goals (SDGs) are now more or less finalized. However, two big questions remain: How will the SDGs be paid for? And how should progress towards their achievement be measured?
There is much to like in both of the drafts, with budget transparency and participation explicitly included in each. Crucial details, however, are missing in both documents and we have recommendations for ways to improve future iterations.
Financing for Development
The “revised draft” addresses the not insignificant question of how global development – including achieving the SDGs – will be financed. It also seeks to ensure that resources are used effectively.
Paragraph 27 of the draft contains some welcome language pledging to “increase transparency and participation in all aspects of the budgeting process, and encourage those who have not yet done so to join the Open Government Partnership.” This focus should be upheld by the member states in the outcome document and in practice. It is nevertheless essential to articulate the steps needed to achieve this. In other words, how to deliver on the commitments.
Building on the lessons learned from the Millennium Development Goals (MDGs), and 20 years of development and budget experience, IBP and our partners recommend strengthening these commitments as follows:
Specify that budget documents covering each stage of the budget cycle should be published in a regular and timely manner. The Open Budget Survey Tracker has demonstrated that many governments are failing this basic test, leaving serious gaps in our understanding of how budgets are being planned, executed, and audited.
Spell out practical and accessible public participation mechanisms, such as public hearings, for the public to engage in all stages of the budget process and governments to report on how public inputs have been taken into account.
Connect resources with development outcomes by pledging to track both spending and results at the global and national level. This information should be made publically available to ensure all stakeholders can monitor progress.
The UN Statistical Commission has published a draft of the indicators that will be used to monitor progress toward achieving the SDGs and targets. As a part of this process, national statistical offices around the world were asked to grade each of the indicators according to their feasibility, suitability and relevance.
While we welcome the inclusion of budget indicators in the draft, much like the Financing for Development draft, the devil is in the details. Three indicators under Goal 16 could be greatly improved by firming up how transparency and participation are measured (see Table below).
Improving the Indicators for SDG 16
Target 16.6 Develop effective, accountable and transparent institutions at all levels.
Indicator Actual primary expenditures per sector and revenues as a percentage of the original approved budget of the government.
Ratings from National Statistics Offices B) Feasible with strong effort B) We need to discuss and/or consider other indicators B) Somewhat relevant.
IBP Comment This is difficult to assess when fiscal reports are not produced and made available. It is also difficult to define “primary expenditures” and “sector.”
Suggested Indicator Regular reporting on budgeted vs. actual revenues and expenditures, disaggregated by type of revenue and by sector/sub-sector.
Target 16.7 Ensure responsive, inclusive, participatory, and representative decision-making at all levels. Indicator 1 Diversity in representation in key decision-making bodies (legislature, executive, and judiciary).
Ratings from National Statistics Offices B) Feasible with strong effort B) We need to discuss and/or consider other indicators A) Very relevant.
Indicator 2 Percentage of population who believe decision-making at all levels is inclusive and responsive.
Ratings from National Statistics Offices C) Difficult, even with strong effort B) We need to discuss and/or consider other indicators B) Somewhat relevant
IBP Comment on Both Indicators There is growing consensus that public participation in budgeting is an essential component of any public finance management system and decision-making process. This consensus is affirmed by the High Level Principles on Fiscal Transparency issued by the Global Initiative for Fiscal Transparency (GIFT), endorsed by United Nations General Assembly Resolution 67/218. This consensus is also supported by the International Monetary Fund, which recently included public participation as an indicator in its revised Fiscal Transparency Code, and by the Organization for Economic Cooperation and Development, which has similarly included public participation in its Principles of Budgetary Governance.
Suggested New Indicator Extent to which the executive and/or the legislature receive inputs through written submissions or public meetings from citizens during the budget cycle, and provide feedback on the use of such inputs.
Target 16.10 Ensure public access to information and protect fundamental freedoms, in accordance with national legislation and international agreements.
Indicator Percentage of actual government budget, procurement, revenues, and natural resource concessions that are publicly available and easily accessible.
Ratings from National Statistics Offices B) Feasible with strong effort B) We need to discuss and/or consider other indicators A) Very relevant.
IBP Comment Bundling these elements together makes it difficult to measure their public availability and accessibility as a percentage. On budgets, at least five budget documents should be made publically available (Executive’s Budget Proposal, Enacted Budget, Year-End Report, Audit Report, and Citizens Budget). Each should provide breakdowns according to expenditure allocated and spent towards each of the SDGs.
Suggested Indicator Extent to which budget information, including expected and actual on-budget and off-budget revenue and expenditure, procurement, and natural resource concessions, is publicly available and easily accessible in open data format.
Humanity has sufficient resources at its disposal to make substantial progress toward eradicating extreme poverty and achieve each of the SDGs. But only if these resources are managed effectively and allocated equitably. We welcome the recognition, in each of these draft documents, that transparency and participation are means by which we can ensure global resources are managed well. But without further detail – and firmer commitments for measuring and financing these lofty goals – we risk merely articulating good intentions, rather than ensuring good policies and actions.
Both documents remain, of course, in draft form. So we’ll be looking out for the next iterations.
On Financing for Development, the next consultations will be 26-29 May and 1-5 June, and the next drafting session will be in New York from 15-19 June. We hope participants will seize this opportunity to firm up commitments to transparency and participation as per our recommendations above.