Investing in Human Capital and Expertise: The Key to Successful Reforms

This article outlines the transformative power of capacity development in the public sector as witnessed by our institution, the CEF (Center of Excellence in Finance). The CEF has been supporting public officials in learning and knowledge sharing in South East Europe for over 20 years. We’ve been focusing on ministries of finance, central banks, tax administrations, and budget intensive line ministries. Our approach has evolved from being solely focused on transferring technical knowledge from experts to public officials, to combining technical with non-technical knowledge and embracing a wider set of factors that enable real change to occur. What has prompted this development?

In our early years, the CEF’s role was to support learning and knowledge sharing by bringing together experts that had knowledge with those that needed it. The transfer of knowledge mainly took place in one direction: from lecturing experts to participating officials from finance ministries or central banks. There was relatively limited transfer of knowledge among the participants themselves or from participants to experts.

About ten years into our existence, we realized that we needed to increase the efficiency of learning and knowledge transfer. As a result, we broadened our attention from what people learnt to include how they learnt it. This required a step-by-step broadening of our focus from the technical expertise of PFM and central banking to non-technical areas of leadership for managing reforms and learning and knowledge ecosystems. The results on the ground showed that combining technical with non-technical expertise was CEF’s major value added!

Institutionally, this meant gradually developing our capacity from being organizers and conveners to being also facilitators of learning and knowledge sharing. Besides focusing on the technical content of a specific reform (for example, building a stronger medium-term budget process, or a treasury single account), we started to focus more and more on who the people that require the “content knowledge” are, and why they needed it. We also increased our interest in team dynamics, what is a public institution’s capacity to absorb new knowledge, and its readiness to implement reforms.

While developing and implementing our core program, we focused on key questions such as:

• What happens to knowledge that public officials gain at CEF activities (e.g., workshops, online courses, conferences)?
• Do public institutions have strategies that also promote strategic human resources (HR) development?
• Do their secretaries general give priority to HR development issues?
• Do they have developmental HR experts on their teams?
• Do they have a knowledge management strategy or policy?
• Do they have direct access to institutional leadership (ministers, governors, etc.)?

We developed a methodology on what it takes for public institutions to become learning organizations. It identifies six building blocks, namely: (1) governance and culture; (2) resources for learning; (3) partnerships; (4) knowledge capturing, packaging, and sharing; (5) communication about learning; and (6) monitoring and evaluation.^[1] To ensure that we practice what we preach, the CEF carried out individual trials of each building block. Today we function as a knowledge hub for other institutions that desire to become learning organizations in South East Europe. 

In developing new projects, we added components that addressed team and institutional dynamics, and knowledge management. For instance, in the EU-funded project Structural Reforms Better Integrated within Fiscal Frameworks that aims to strengthen the integration of structural reforms within fiscal frameworks in the Economic Reform Programmes (ERPs) of the Western Balkans and Turkey, we are supporting ERP teams in promoting: (1) budgetary and strategic planning of structural reforms; (2) the impact assessment of structural reforms and monitoring their implementation; (3) mechanisms for a coordinated and participatory ERP process; and (4) knowledge management and regional exchange of the ERP process.

Another example is a project that we co-developed with the National Bank of Moldova (NBM). It focuses on creating a knowledge-sharing ecosystem that will increase staff connectivity within the Bank, and on sharing these experiences with other stakeholders and partners. Starting in June 2023, the CEF will engage with NBM officials to capture specific professional knowledge possessed and developed by the Bank’s staff. Staff lessons learned will be packaged and stored, so that they can be retrieved and shared effectively. The project will support the NBM to transform into a learning organization through individual, team and institutional capacity development.

To conclude, besides addressing technical areas, we also address non-technical ones. These non-technical areas are crucial for public entities in putting their technical knowledge into practice, delivering on their respective mandates, and promoting change and development.

We believe that the CEF’s multifaceted approach is essential for creating sustainable, inclusive, and effective policies and practices. We remain committed to promoting the importance of investing in human capital and expertise as the key to successful reforms. And while we continue to support capacity development across the region of South East Europe, we welcome our partnerships with other international organizations, including the EU and the IMF.