Public Financial Management Reform in South African Provincial Basic Education Departments
| Date | 01 October 2016 |
| Published date | 01 October 2016 |
| DOI | http://doi.org/10.1002/pad.1776 |
PUBLIC FINANCIAL MANAGEMENT REFORM IN SOUTH AFRICAN
PROVINCIAL BASIC EDUCATION DEPARTMENTS
TANIA AJAM*AND DAVID J. FOURIE
University of Pretoria, South Africa
SUMMARY
Since the transition to democracy in 1994, the South African government has engaged in a sustained programme of public
financial management (PFM) reform across the national, provincial and local spheres of government. This study evaluates
the progress of the nine provincial education departments (PEDs) in implementing the Public Finance Management Act of
1999 and explores the factors that facilitated or impeded reform. A PFM progress (PFMP) index is constructed to track each
PED’s performance from 1997/1998 to 2013/2014 and then used to benchmark its progress over time and relative to the
education sector as a whole. The indicators comprising the PFMP index assess key PFM functions (budgeting, accounting,
financial auditing and audits of performance information), financial leadership and the effectiveness of governance institutions
such as audit committees. While there has been considerable progress in PFM, distinct differences in the quality and effective-
ness of PFM practices across the nine PEDs remain. Stable top administrative leadership, availability of PFM skills, varying
degrees of accountability and departmental capacity to establish PFM systems that conform to new accounting standards drive
variances in reform outcomes. Copyright © 2016 John Wiley & Sons, Ltd.
Additional supporting information may be found in the online version of this article at the publisher’s web-site.
key words—public financial management reform; New Public Management; performance information; leadership; fiscal
governance; fiscal institutions
INTRODUCTION
Despite the thrust towards evidence-based policy-making and results-based reform, there has been comparatively
limited systematic analysis of the results or outcomes of public financial management (PFM) reforms. This is true
even of countries such as New Zealand and Australia on which many PFM reforms, in both advanced and
developing countries, were modelled (Jones and Kettl, 2003; Guthrie et al., 2005).
This has led to public management reforms being disparaged as ‘faith based’rather than evidence based
(Pollitt, 1995). Paradoxically, while recent public management reforms have required public sector organisations
to focus on results and assess outcomes while minimising costs, this rigour has not been applied to public manage-
ment reforms, supporting the claim that ‘the international management reform movement has not needed results to
fuel its onward march’(Pollitt and Boukaert, 2011: 159).
This lacuna is even more pronounced in developing country reform initiatives. Their PFM systems operate in
political, legal, institutional, historical, cultural and socio-economic contexts, which are vastly different from their
developed country counterparts (Caiden and Wildavsky, 1970; Schick, 1998; Hepworth, 2015). In particular, there
may be distinct divergences between their formal and informal institutions, with the latter strongly influencing the
actual administrative decisions, incentives and behaviours, which condition reform outcomes. For instance, Turner
(2013) identified a range of factors that inhibited public administrative reform in Cambodia, ranging from political
patronage, to weak accountability systems and bureaucratic dysfunction. The absence of these factors conversely
*Correspondence to: T. Ajam, School of Public Management and Administration, University of Pretoria, Private Bag X20, Hatfield, Pretoria,
Gauteng, 0028, South Africa. E-mail: tania.ajam@gmail.com
public administration and development
Public Admin. Dev. 36, 263–282 (2016)
Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/pad.1776
Copyright © 2016 John Wiley & Sons, Ltd.
increases the probability of reform success. Theoretical approaches to PFM reform that seek to articulate a ‘theory
of change’behind PFM reform design and implementation, especially in developing countries, remain underdevel-
oped (Cummings, 2015).
The objective of this study is to assess the progress of the nine provincial education departments (PEDs) in
South Africa in implementing the Public Finance Management Act of 1999 (PFMA), a key pillar of the
Government’s PFM reform programme (South Africa (Republic) (1999)). It also explores the factors that have fa-
cilitated or impeded reform. Through the construction of an index tracking PFM implementation progress, this ar-
ticle offers a quantitative perspective on PFM reform implementation in South Africa, a middle-income country
with pervasive poverty, inequality and unemployment. This approach would also be highly applicable to other de-
veloping countries that implement PFM reform in a decentralised environment with multi-level government.
PUBLIC FINANCIAL MANAGEMENT REFORM IMPLEMENTATION, ISOMORPHISM AND ITERATIVE
ADAPTIVE IMPLEMENTATION PROCESSES
The ongoing quest for alternative governance models and public administration models to foster development
effectively is likely to continue as developed countries grapple with the formidable challenges of combatting
poverty, extreme inequality, climate change and corruption while improving the accessibility and quality public
services and citizens’perceptions of the legitimacy, accountability and responsiveness of government. The extent
to which such models and knowledge can be transferred and adapted to other contexts is likely to continue to
feature prominently public administration discourse (Puppim de Oliviera, Jing and Collins, 2015). Despite low
success rates (World Bank, 2008; Andrews, 2013; Gao, 2015, Rinnert, 2015), developing countries are likely per-
sist in pursuing reforms such as decentralisation, PFM and other forms of civil service and administrative reform.
Failure of reforms in developing countries has been attributed to inappropriate reform design, based on the
ill-conceived replication of sophisticated administrative and conceptual models (e.g. the New Public Management
(NPM)) formulated in advanced countries. These transplanted models tended to be incongruent with, and dysfunc-
tional within, developing country contexts with weak institutional, government and market structures and an under-
developed civil society (Bunse and Fritz, 2012; Andrews, 2013; Shamsul Haque, 2013; Repucci, 2014). Even
within the same country, implementation outcomes can vary markedly across public sector entities pursuing the
same reform objectives, depending on highly context-specific features. These include, inter alia,fluctuating
political commitment to reform, capacity and resource constraints, external shocks, the interaction between
political and bureaucratic elites, and historical administrative development trajectories (Guthrie, Humphrey,
Jones and Olson, 2005; Pollitt and Boukaert, 2011; Rinnert, 2015). How reforms are implemented crucially affects
their ultimate impact (or lack thereof).
The PFM reform implementation, as opposed to reform design, has however attracted far less attention in the
literature (Diamond, 2003; Allen, 2009). While politicians and civil servants at national level typically define
reform objectives, their counterparts at subnational level may face different incentives to advance or hinder reform
implementation (Smoke, 2015). Implementation processes have to strike a delicate balance between adapting to the
specific context in which they are implemented, on the one hand, and being so diluted, captured and distorted by
various interest groups during implementation that their objectives are subverted (Andrews 2013, Smoke 2015).
Newer, more pragmatic post-NPM reform approaches caution against implementing over-ambitious ‘one size
fits all’reform templates based on international best practice in unstable political and administrative environments,
which lack the capacity and resources to internalise and sustain these changes fully, the institutions to shape the
incentives of stakeholders appropriately in support of meaningful reform and the underlying social norms and
administrative values conducive to lasting change. A synopsis of the recent literature by Brinkerhof and Brinkerhof
(2015) highlighted four key themes in crafting viable and effective public sector reform strategies. The first theme
focused on the importance of political economy dynamics, institutions and the incentives they create for the
political and bureaucratic leadership groups who frame reform policies and implement them. The second theme
emphasised leadership and change management: the need to mobilise individual and collective agency through
building commitment, encouraging policy entrepreneurs and innovation, and embedding ownership of reform on
264 T. AJAM AND D. J. FOURIE
Copyright © 2016 John Wiley & Sons, Ltd. Public Admin. Dev. 36, 263–282 (2016)
DOI: 10.1002/pad
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