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August 03, 2020

How African Civil Society can Promote Effective Use of COVID-19 Finance

Afrc19
Posted by Jason Harris and Concha Verdugo Yepes[1]

Big things are afoot in Africa. The economic and humanitarian impact of COVID-19 is devastating and governments are reacting. So is the international community, with debt relief being provided and the IMF providing financing support through emergency facilities. Civil society has an important role in ensuring government’s response and use of emergency financing is well managed.

Exactly what CSO’s role is, and how they can interact with the IMF and governments was the topic of a half-day seminar hosted by the Africa Training Institute on 14 July. Over seventy CSOs from across the continent joined, to hear opening remarks from the Directors of the IMF’s Africa, Legal and Fiscal departments. Other participants included the Ghana Anti-Corruption Commission, the International Budget Partnership, the Zambian Consumer Unity and Trust Society and the Senegal Civil Society Forum. This was a valuable opportunity for the IMF staff to listen in to what CSOs say, and one overriding message was clear:

CSOs are worried about corruption and want to work with IMF staff to prevent it.

From FAD, Jason Harris and Concha Verdugo Yepes presented in two sessions, drawing from the COVID-19 special series. Here are some highlights from our remarks:

Session 1: Good governance standard for emergency financing

Times of crisis like now are when the fiscal institutions that keep governments running come under the most stress. There are great demands on them to meet this crisis, both health and economic, just as the resources to finance them are drying up. There were three main messages for CSOs:

First: The need for speedy implementation does not require abandoning fiscal controls. Governments should react, are reacting, but this should be done without circumventing important controls. While the speed of response is crucial, governments should be submitting supplementary budgets to parliament. Extraordinary times may require increased flexibility, for instance through enhanced contingency funds, but this should be made clear upfront, with clear parameters and eligibility criteria. These emergency policy responses should be done transparently, and CSOs should be demanding this so that the public can understand the response.

Second: Increased flexibility requires heightened accountability. Enhanced external audits are key to verify that pandemic-related spending is being used for what is intended. More frequent audits are required, particularly where extrabudgetary funds are being set up to channel spending. As a guide, Liberia’s Ebola Trust Fund was subjected to quarterly external audits, rather than the standard annual audit. Audits should be able to verify whether goods and services have been delivered. CSOs have a role here in supplementing limited audit capacity by providing a grass roots vision of how support packages are being implemented, such as in Nigeria and Ghana where they have been asked to provide information on disease and prevention measures.

Third: Transparency is paramount. Governments should be providing clear and frequent updates on their delivery of crisis-related policies, measured against what they said they would do. At a macro level this means: reporting on fiscal outturns, borrowing activities, how measures are being implemented and the results of the audits. At the micro level: who are getting the contracts, how much for and for what. This is true of direct government spending, but even more so for spending outside of standard channels. Extra budgetary funds should be required to report clearly and frequently, as they are particularly vulnerable.

Here CSOs can play an important role. Budget and audit documents are dry, tables impenetrable, and the language interminable. The public requires the key messages to be translated into clear language, and to flag problems and issues that arise. CSOs act as a translator, so that all stakeholders can share a common understanding of the policies and the use of resources, and to flag governance issues that are arising and need to be stopped.

Session 2: The need for verification and the role for CSOs

To respond to increasing risks, countries will need to strengthen the institutional frameworks for transparency, accountability, anti-corruption, and anti-money laundering and the effectiveness of these policies. CSOs can play their part in improving these institutions but need to expand their capabilities to make the most of their potential.

For our part, the IMF has increased its focus on governance and transparency over recent years.

Our capacity development activities support strengthening governance in member countries. In governance missions, we assess vulnerabilities to corruption in areas of PFM, revenue administration and policy, supervision of the financial sector, and central bank operations. IMF missions to six African countries have identified governance weaknesses and included discussions with the government and other players about reforms that might be carried out. CSOs were involved in many of these discussions. In Guinea- Bissau, the strategy to strengthen the anticorruption and governance framework has already been published.

Our Fiscal Transparency Code is the global standard for fiscal transparency practices. Evaluations based on the Code support our policy dialogue with governments on how to strengthen fiscal surveillance, policymaking, fiscal risks management, accountability and the role of external audit. This includes an assessment of public participation in the budget process and citizen accessibility to budget documentation. There have been six of these missions to African countries, that are leading to measurable improvements in transparency. in Senegal, an extensive array of budget documents is now made available to the public. In Kenya, the number of unreported entities and transactions fell dramatically between the first fiscal transparency evaluation and the second.

In the context of the COVID-19 crisis, we have been providing advice to countries on how best to manage the emergency support programs they have set up so that fiscal risks are avoided. In Sierra Leone and Guinea, we recently advised the governments on the legal, operational, financial management and reporting arrangements for their COVID-19 extrabudgetary funds.

While the IMF’s main counterparts are governments, we continuously engage with CSOs, and look forward to boosting this engagement in the future.

Reactions and Discussions

In the first session, a lot of the discussion centered around how CSOs could work with the IMF. CSOs asked for examples of effective work by CSOs in holding governments to account. An interesting example was provided from Ghana, where the government ordered the auditor general to take on 167 days of accumulated leave, a move that CSOs are pressuring to be overturned.

In the second session, CSOs raised concerns around international debt and the lack of transparency around related operations and reporting. Relatedly, they were upset by the wasted money in infrastructure projects, and the lack of transparency in project selection. CSOs flagged that the data and reports provided by countries in the context of COVID-19 are not easily readable or accessible. They asked whether the relationship between CSOs and IMF staff could become more structured. Finally, they noted the need to strengthen their own capabilities.

The discussions were rich, and participants from both the CSOs and IMF learned a lot from listening to each other and hearing fresh perspectives. The challenges are great, but so is the energy and determination to work through this crisis, and to continue this fruitful dialog.

This article is part of a series related to the COVID-19 Crisis. All of our articles covering the topic can be found on our PFM Blog COVID-19 Articles page.

 

[1] Fiscal Affairs Department, IMF.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.

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