PLATEAUS NOT SUMMITS: REFORMING PUBLIC FINANCIAL MANAGEMENT IN AFRICA
| DOI | http://doi.org/10.1002/pad.601 |
| Published date | 01 August 2011 |
| Date | 01 August 2011 |
| Author | Stephen Bovard Peterson |
PLATEAUS NOT SUMMITS: REFORMING PUBLIC FINANCIAL
MANAGEMENT IN AFRICA
STEPHEN BOVARD PETERSON*
Harvard University, USA
SUMMARY
Successful public sector reform is rare in Africa. Over 12 years, Ethiopia transformed its public financial management (PFM) to
international standards and now has the third best system in Africa that is managing the largest aid flows to the continent. This
article presents a framework for understanding PFM reform based on the Ethiopian experience. Reforms succeed when they are
aligned with the four drivers of public sector reform: context, ownership, purpose, and strategy. PFM is a core function of the state
and its sovereignty, and it is not an appropriate arena for foreign aid intervention—governments must fully own it, which was a
key to the success of Ethiopia’s reform. The purpose of PFM reform should be building stable and sustainable “plateaus”of PFM
that are appropriate to the local context, and they should not be about risky and irrelevant “summits”of international best practice.
Plateaus, not summits, are needed in Africa. Finally, a strategy of reform has four tasks: recognize, improve, change, and sustain.
Ethiopia succeeded because it implemented a recognize–improve–sustain strategy to support the government policy of rapid
decentralization. All too often, much of the PFM reform in Africa is about the change task and climbing financial summits.
Copyright © 2011 John Wiley & Sons, Ltd.
key words—public sector reform;financial management; Africa; public financial management
NUMBER THREE IN AFRICA
Successful public sector reform is rare in Africa. Over 12 years, Ethiopia transformed its public financial manage-
ment (PFM) to international standards and now has the third best system in Africa that is managing the largest aid
flows to the continent (Hedger and de Renzio, 2010, p. 3; World Bank, 2010).
The financial reform succeeded because it was embedded in a government‐led political and administrative
reform—decentralization. The reforms were driven by a domestic political imperative, not a foreign technical
agenda, and rapid results were needed in PFM to keep up with the accelerating pace of decentralization. Rapid
results required improving the existing financial system rather than changing it with advanced financial techniques
of “international best practice.”
Against all odds
One could not find a more challenging environment than Ethiopia in 1996 in which to reform PFM. The four
horsemen of the apocalypse were permanently stabled in the country. The country had been devastated by a 17‐year
civil war, and the revolutionary party that assumed power was an ethnic minority with tenuous control over a vast
country. The bureaucracy was demoralized, and many skilled professionals had fled the country. Foreign aid rushed
in to support the new regime, which produced an inchoate and crowded aid agenda that further burdened a weak
administrative system barely coping with daily operations. The government’s strategy of ethnic decentralization to
regions implemented shortly after the change of power stretched further an already strained administration. Less
than 2 years into the start of the reform, the horsemen of war, famine, pestilence, and death arrived in even greater
force (a two‐year war with Eritrea and a hundred‐year famine).
*Correspondence to: S. B. Peterson, Harvard University, 111 Pine Street, Belmont, MA 04278, USA. E‐mail: stephen_peterson@harvard.edu
public administration and development
Public Admin. Dev. 31, 205–213 (2011)
Published online 27 June 2011 in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/pad.601
Copyright © 2011 John Wiley & Sons, Ltd.
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