Successful Decentralization Requires Prudent Financial Management

Executive Secretary of the Inter-Ministerial Coordinating Committee (IMCC) on Decentralization, Mr Salifu Mahama has said Metropolitan, Municipal and District Assemblies (MMDAs) need sufficient financial resources to adequately perform essential expenditure functions and responsibilities.

This, he said, was one of the reasons why the Public Financial Management (PFM) Act of 2016 (Act 921) was passed to encourage and ensure judicious use of resources and improve financial management systems in the public sector.

Mr Mahama was speaking at the opening of a zonal workshop in Accra to retrain staff of the 254 MMDAs on the Ghana Integrated Financial Management Information Systems (GIFMIS).

The workshop, organized by the IMCC Secretariat in collaboration with the Fiscal Decentralization Unit and PFM-Reform Project under the Ministry of Finance and the GIFMIS Secretariat under the Controller and Accountant General Department, seeks to build the capacity and increase the knowledge of staff of the local government service on the GIFMIS.

GIFMIS contributes to improving aggregate expenditure control, predictability of financial flows, expenditure and investment planning, ability to monitor expenditures and fiscal accountability and has become a pillar of PFM system to enhance effective implementation of the reform agenda.

The workshop created an opportunity for the 38 newly created MMDAs to set-up and hook on 'live' to the GIFMIS platform.

It also gave the participants a platform to provide information and feedback on the status and reliability of connectivity at the MMDAs level.

Mr Mahama said the workshop was a classic example of the unquestionable zeal and enthusiasm to accelerate two significant reforms, the Decentralization Reforms and the PFM Reforms.

He said while decentralization seeks to transfer essential functions to the sub-national level, its responsibilities comes with the fundamental need to ensure that funds that follow these functions are efficiently managed and accounted for.

He said the increased use of the GIFMIS for transactions was as a result of the expanded coverage of the platform to capture, track and report transactions related to funds.

The Executive Secretary said the relevance of technology to achieve modernization and efficiency in government financial management should not be underestimated.

He announced that the PFM-RP and the GIFMIS team had worked to ensure that all the then 216 MMDAs have gone 'live' with GIFMIS and currently on-going with its usage stabilization.

He said since the introduction of GIFMIS across MMDAs, some progress has been made despite the fact that monitoring reports have revealed some operational challenges such as inadequate understanding and skills of the users at the subnational level, poor record keeping on public financial transactions and undue delays in processing transactions due to cumbersome parallel automated and manual processes in release of funds.

Also, weak accounting and fiscal reporting system and delays in financial reporting.

Mr Mahama expressed the hope that the participants would return to their various Assemblies with improved skills to deploy GIFMIS in their budgeting, revenue and expenditure management, debt and cash management, asset management, accounting and financial reporting to improve efficiency, comprehensiveness and transparency in PFM in their MMDAs.

'I am personally interested in how we can find ways to improve our procurement processes and will be happy to hear your experiences about the rollout of the Procure-to-Pay (P2P) module of the GIFMIS which is intended to impose greater discipline on the management of transactions'.

He also advised the participants to continually polish their Information and Communication Technology skills, since GIFMIS revolves around the utilization of technology to manage the government's budget, revenue and expenditure.

The IMCC is responsible for coordinating decentralisation reforms across sector MDAs which include core 'local government sector' institutions such as the Ministry of Local Government and Rural Development, the Office of the Head of Local Government Service and other relevant MDAs.

The ongoing decentralisation reform is driven by the National Decentralisation Policy Framework and Action Plan (2015- 2019).

The IMCC Secretariat supports policy coordination as well as relevant legal and institutional reforms especially those that have become critical as a result of the passage of the Local Governance Act of 2016 (Act 936) and the PFM Act 921 among others.

GIFMIS is an integrated computerized financial management system used by the Government of Ghana to facilitate key PFM processes for all public funds including the Consolidated Funds, Internally Generated Funds, Statutory Funds and Donor Funds across Ministries, Departments & Agencies (MDAs) and MMDAs.

GIFMIS was introduced to reduce fiduciary risk by enabling greater transparency and by reducing manual intervention in financial transactions, with the attendant results of preventing corruption and enhancing effective service delivery.

—GNA