Integrated Financial Management Information Systems (IFMIS) Presentation of Zambian IFMIS Integrated Financial Management Information Systems (IFMIS) Chitundu N Mwango Accountant General Ministry of Finance and National Planning Lusaka, Zambia Telephone 260 (1) 251471 Email: {cnmwango@zamtel.zm} Notes

Background The Government has been implementing the Public Service Reform Programme (PSRP) from 1993. The aim of the PSRP is to improve the quality, efficiency and effectiveness of Public Service delivery. In 1999 a concern arose as to whether the measures taken under the PSRP framework had resulted in improved performance. It was acknowledged then that these measures had not led to tangible improvements in the delivery of public services. Therefore, Public Service Capacity Building Project (PSCAP) was designed to support the implementation of the Public Service Reform Programme. PSCAP is financed by the World Bank and managed at Cabinet Office One of the PSCAP component was the “Financial Management, Accountability and Transparency” IFMIS is a project within the “Financial Management, Accountability and Transparency” component

Background In 2000 a local consulting firm was engaged for 6 months and produced the IFMIS roadmap In 2001 a local short term consultant was recruited to initiate the implementation of IFMIS Assisted in recruiting Project Manager, Manager IT and Manager Accounting. Other Managers (Budget, Audit, Debt, Training) identified by roadmap were not recruited due to lack of funds Initiated the process of engaging a consulting firm to analyse and design IFMIS Government seconded one principal accountant and three principal analysts to the Project team but did not stay because of lack of incentives

IFMIS Design In 2002 Government issued a tender for a long term consultant to analyze and design IFMIS However the tender for the long term consultant was annulled (cancelled) because of disagreement between the Government and Bank on the procurement process An IFMIS advisor was recruited through Bank but was based in Washington and Government terminated the contract Government decided to use the local IFMIS Project team to analyze and design IFMIS This saved Government about $1million The Project team undertook a comprehensive assessment of user requirements and conducted IFMIS sensitization workshops

IFMIS Design The local team designed the IFMIS chart of accounts which took into consideration the GFS and IPSAS Produced the IFMIS assessment report, Requirements Specification, and Chart of Accounts as part of IFMIS design Undertook study tours of IFMIS implementation in Tanzania and Uganda Initiated a tender for installation and implementation of IFMIS using the World Bank procurement guidelines

Implementation Plan Zambian IFMIS will be implemented in three phases Phase 1 (Pilot Implementation – 8 months) A total of 3 Ministries and 2 Provinces will be hooked to the Data Centre (Accountant General). Interface with Bank of Zambia and Zambia Revenue Authority for the Treasury Operations. The pilot sites are: Ministry of Finance and National Planning, Lusaka Ministry of Education, Lusaka. Ministry of Works and Supply, Lusaka North-Western Province, Solwezi Eastern Province, Chipata Phase 2 (Rollout Implementation – 20 months) 41 Ministries, Provinces and Spending Agencies will be hooked to Data Centre Phase 3 (Interface Implementation – 6 months) Local authorities, parastatals will interface with Data Centre

Status on IFMIS tender Prepared two bidding documents (pre-qualification and IFMIS main bid) Pre-qualification bid documents were issued in Jul 2003 and (19) applicants were received. Initially 4 firms were pre-qualified but later increased to 7 firms and main bid documents were issued to 7 firm in Dec 2004 Only 3 bids were received and after evaluation undertook post-qualification assessment of the lowest evaluated bidder in Jun 2004 Pre-contract negotiation held in Aug/Sep 2004 and requested for no objection from the World Bank to sign contract

Progress/Achievements – Systems and Infrastructure Developed the Activity Based Budgeting (ABB) software and MTEF in 2003 and implemented in 2004 Parts of the IFMIS chart of accounts adopted in the ABB and FMS Upgraded the FMS and commitment control system using the local team (the system was appreciated by IMF and IDA) Implemented the Payroll Management and Establishment Control (PMEC) system using SAP to efficiently manage and control public service payroll Currently piloting CAATS in two ministries

Progress/Achievements – Systems and Infrastructure Developed and implemented a Static Arrears database in June 2003 (saved $90,000) Developed and implemented an Asset register for moveable assets in line ministries which will be an input to the IFMIS assets module Currently upgrading the LAN at MOFNP compatible to IFMIS Currently completing the preparation of the five (5) IFMIS pilot sites

Progress/Achievements – Training & Change mgt 400 Accountants trained in FMS and CCS 50+ Procurement Officers trained in Commitment Control System 12 Persons trained in Prince2 project management 120+ internal auditors and Auditor General staff trained in Computer Aided Audit Techniques (CAATs) Sensitized members of Parliament (Public Accounts Committee and Estimates Committee), Permanent Secretaries, Directors in Ministries, accountants and auditors in IFMIS Salary officers in all line ministries trained in PMEC systems Developed an in-service syllabus (including IFMIS) in Government accounts for accountants, auditors and non-accounting staff

Progress/Achievements – Other initiatives Revised the Finance Act (currently being debated by parliament) Constituted the PEMFAR steering committee to provide policy guidance to the IFMIS project (with representation from Zambia National Tender Board, Auditor General, Bank of Zambia, Revenue Authority, Clerk of National Assembly) Formed six (6) IFMIS implementation working groups to facilitate stakeholder involvement in IFMIS implementation and ensure sustainability after the project ends Internet Connection to commercial banks to download the bank statements

Benefits of interim measures Improved cash monitoring through internet connection to the banks Bank reconciliation on time due interface with banks Timely production of financial reports (the 2003 financial report is being printed) Production of monthly expenditure returns by Ministries, Provinces and Spending Agencies within 15 days Eliminate ghost workers and other irregularities by linking (matching) establishment to the payroll

Way Forward - PEMFA Programme In 2003 Government and the World Bank completed the Public Expenditure Management and Financial Accountability Review (PEMFAR) which is a diagnostics tool Comprehensive Integrated Reform Focus on inter-linkages ensures appropriate sequencing and timing Entire public expenditure management procedure chains reformed Table on next slide summarises the 12 components identified within the Government Strategy Document.

Way Forward - PEMFA Programme 1 Accounting and IFMIS implementation (MFNP, OAG) Goal: To improve public expenditure management through an integrated and automated financial management system in order to ensure efficient and effective utilisation of public resources. 2 Improved Fiscal Policy and Economic Planning (MFNP, Planning) Goal: To ensure macro-economic stability and attain a policy based planning and budgetary process capable of facilitating the effective mobilization and allocation of resources in a systematic, effective, efficient and predictable manner. 3 Reformed Budget Preparation (MFNP, Budget) Goal: To establish a credible budgeting process and a transparent and clear presentation of the budget document. 4 Improved budget execution (MFNP, OAG, Budget) Goal: To implement the budget in a more efficient and predictable fashion and reduce variance between budget and actual spending. 5 Improved Debt Management (MFNP, Investment and Debt) Goal: To manage Zambia’s debt, both Domestic and External to sustainable levels and effectively manage Government Investments. 6 Improved Internal Audit (MFNP,Internal Audit) Goal: To strengthen internal controls throughout the public sector for improved public expenditure management and financial accountability.

Way Forward - PEMFA Programme 7 Better External Finance Coordination (MFNP, ETC) Goal: Improve overall budgetary planning and coordination of external financing by integrating donor flows into budget. 8 Consistent Legal Framework for PEM (MFNP and MOLA) Goal: To have a consistent and harmonised legal framework ton support transparency and accountability in the Public Sector 9 Strengthened External Audit (Auditor General) Goal: Enhance external auditing function for improved accountability and transparency in the utilization of public resources. 10 Enhancing Parliamentary Oversight (Parliament Clerk) Goal: To develop the capacity of the Parliament to play its oversight role in public resources management in order to promote accountability, transparency and a culture of democratic governance, 11 Accountancy Training and Regulation (ZICA) Goal: To strengthen the accountancy profession and to provide effective regulatory services in order to promote high professional and ethical standards 12 Public Procurement Reform Goal: To promote and institutionalise a transparent, accountable and efficient public procurement system in order to improve expenditure management

Challenges/Lesson Learnt –Procurement issues The IFMIS procurement procedures are too long, for example it has taken about 20 months to procure the IFMIS system Delays in obtaining no objections and approvals from stakeholders Pressure from strong stakeholders causes delays and selection of suppliers who may not deliver, eg increasing the pre-qualified firms Conflict between procurement procedures and standard Information Systems development procedures For example, procurement procedure did not allow all pre-qualified firms to demonstrate their solution to Government before making final selection

Challenges/Lesson Learnt – HIPC Benchmark IFMIS as a HIPC Benchmark helped to sensitizes stakeholders on importance of IFMIS and secured political will Puts pressure on Governments to rush the implementation of IFMIS

Challenges/Lesson Learnt – Financing issues Shortage of equipment and lack of connectivity (LAN) delayed the pace of implementing the retooled FMS and CCS IFMIS costs are huge (US$24million) and difficult to find partners who are willing to finance Financing arrangement of IFMIS project through third party delayed implementation Justification of IFMIS in view of competing social needs such as education, health and development projects Continued support by cooperating partners is not easy to maintain

Challenges/Lesson Learnt – Human issues User resistance and other important stakeholders not participating Change management issues Power and politics as to who is the IFMIS Champion Retention of core team to implement the IFMIS and the issue of incentives for civil servants

Conclusion Although the IFMIS main contract has not yet been signed with the Supplier due to lengthy procurement procedures, Government has made a number of significant achievement in public financial management and preparing for full implementation of IFMIS Experience acquired from development and implementation of ABB, FMS and CCS as well as study tours will help Government in the implementation of IFMIS

Conclusion Thank You

Development of FMS   FEATURES/ COMPONENTS OLD FMS NEW FMS V1 Year of Implementation 1995 2002 2004 Software COBOL MS-Access Budget Management  Funding Management  Commitment and Arrears Excel Expenditure Management centralized Automation of the printing of the Payment Voucher Activity Based Budget Peer to peer network

Development of FMS – Major Reports Type of Report OLD FMS NEW FMS V1 NEW FMS V2 1 Listing by Document type  centralized decentralized 2 Monthly Expenditure Returns   decentralized 3 Statement C (financial statement) Annual only monthly/ annually 4 Vote Book