Public Budgeting in African Nations

Fiscal Analysis in Development Management

Peter Fuseini Haruna, Shikha Vyas-Doorgapersad

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9781498742139
• eBook ISBN: 9781317267539
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Public Budgeting in African Nations aims to provide usable budgeting and fiscal policy management information to development practitioners interested in improving the performance of governments in the context of good governance. It shares regional and cross-cultural experiences with international audiences and gives reflective attention to comparative budgeting and fiscal policy management. With a promising economic and fiscal forecast, such information is timely for international development practitioners and for scholars and researchers interested in advancing development management.

This book adopts an interdisciplinary/pragmatic approach to analyze and present research findings on public budgeting as a sustainable development tool. The central argument is that development practice will benefit from a bottom-up, decentralized approach to budgeting and fiscal policy management, involving national, sub-national, and civil society institutions. From this perspective, a balanced budget should draw from and reflect values and priorities across the full spectrum of social and political life.

1 Public Budgeting and Fiscal Sustainability in African Nations: Opportunities and Challenges in Development Management

Peter Fuseini Haruna

DOI: 10.4324/9781315637273-1

Introduction

Fiscal sustainability is a challenge to governments, especially those of developing nations faced with fragile economies and poor resource management capacity. This is more so with African nations that seem to be trapped between fiscal opportunity and fiscal vulnerability (Africa Progress Panel, 2013, 2014, 2015; York & Zhan, 2009).¹ The Africa Progress Panel paints a rosy picture of fiscal opportunity in which Africa stands to gain from the use of its natural resource wealth to transform the quality of life. In fact, sub-Saharan Africa is forecast to remain one of the fastest growing regions with an estimated growth of 5.2 percent during 2015–2016 (World Bank, 2014). But the reports also raise concern about fiscal vulnerability and uncertainty surrounding the proper management of economic growth toward achieving fiscal sustainability. It is unclear how governments can restrict expansion in current spending that has resulted in a pandemic of fiscal imbalances. In short, there is a risk that opportunities presented by oil, gas, and mineral wealth can easily dissipate if adjustments are not made in budgeting and fiscal reform. The question of interest then is: how should African nations approach budgeting in a manner that fosters fiscal sustainability and thereby advance the course of good governance?

Equitable and inclusive growth is a running theme in the Africa Progress Panel (APP) reports. The 2013 APP report (p. 4) raises the concern that: “In many countries, for example, although much has been achieved, a decade of highly impressive growth has not brought comparable improvement in health, education, and nutrition.” While acknowledging that there is evidence of encouraging developments, the 2014 Africa Progress Report (p. 14) is clear:

Yet the progress in reducing poverty, improving people’s lives and putting in place the foundations for more inclusive and sustainable growth has been less impressive. Governments have failed to convert the wealth created by economic growth into opportunities that all Africans can exploit to build a better future. The time has come to set the course towards more inclusive growths and fairer societies.

But how, then, can African nations begin the process of building “inclusive growths and fairer societies”? The 2014 Africa Progress Report continues with verve and clarity:

Governments urgently need to make sure that economic growth doesn’t just create wealth for some, but improves well-being for the majority. Above all, that means strengthening the focus on Africa’s greatest and most productive assets, the region’s farms and fisheries. This report calls for more effective protection, management and mobilization of the continent’s vast ocean and forest resources. This protection is needed to support transformative growth.

p. 14

This chapter contends that transformative growth requires reform in budgeting and fiscal management, one anchored in and by fiscal sustainability. Current budgeting approaches that are fixated on short-term fiscal objectives are unsustainable in the long run. As Stein argued long ago, “if something is unsustainable, it will stop” (Stein cited in Posner et al., 2013, p. 25). However, with the exception of a few studies (e.g., York & Zhan, 2009) that examine fiscal sustainability in oil-producing African nations, much of the contemporary discourse mostly addresses short-term budgeting and fiscal management. For example, the United Nations Human Settlements Programme and Municipal Development Partnership (2008) recommend participatory budgeting that has the potential to “improve transparency” and “strengthen social networks” while mediating “differences between elected leaders and civil society groups.” Likewise, the Africa Parliamentary Strengthening Program for Budget Oversight (2010) exerts efforts on clarifying the “consultative process during budget preparation,” emphasizing the need to strengthen the supervisory role of African legislatures in public budgeting and fiscal management. Of course, this kind of work is much needed and has contributed to the enhancement of knowledge and understanding of public budgeting in the context of development management. Nonetheless, on the question of public budgeting as the means of acquiring financial resources and allocating them judiciously among competing public purposes to serve both current and long-term interests of society, much more work needs to be done.

The perspective taken in this chapter is that fiscal sustainability—taking a long-term strategic view of the ability to finance both current and future public needs—presents continent-wide opportunities and challenges, but that this perspective has hardly gained the needed critical mass to translate it into coherent budgeting and fiscal administration policy. The theme of fiscal sustainability resonates well with and reinforces an emerging stream of public administration and policy theorizing that emphasizes a holistic, equitable, and far-sighted approach to decision-making (Zanetti & King, 2013; Cohen, 2011; Leuenberger & Bartle, 2009; Nelson, 1999). In a nutshell, a sustainability approach has the potential not only to alter the ways that humans relate to each other, but also how natural and human resources are nurtured, harnessed, and allocated for public interest purposes over time. Thus the theme of fiscal sustainability ought to foster knowledge, skill, and ability not just in short-term economic growth, but also in a deep sense of fiscal responsibility, interrelationships, civic environmentalism, and civic engagement.

This perspective should not deny the role of a macro-economic principle based on which current budgeting approaches are formulated. To be sure, sustainability budgeting should consider the question, “On what basis shall it be decided to allocate x dollars to activity A instead of activity B?” (Key, 1940, p. 1132). In Key’s view, this question should be explored from the perspective of the economic theory of budgeting.² Although he raised this question in the context of US society several decades ago, it is of critical relevance to contemporary Africa where governments continue to face the basic challenge of just how to channel public resources into creating inclusive, equitable, and transformative growth.

Although the long-term development planning approach that characterized Africa’s post-colonial experience has been abandoned, the short-term budgeting substitute now ingrained in Africa’s public management culture is hardly helpful. The current budgeting approach has not only become an annual ritual, but also has been unable to grapple with the deep-seated hard-core poverty plaguing much of rural Africa. The adoption of the medium-term expenditure framework as a part of budgeting and public finance reform is a move in the right direction, but it is a critical piece of the “standardized international best practices thinking” that tends to ignore the contextual realities in Africa (Andrews, 2014; Savage, 2013; Beschel & Ahern, 2012).³ As Savage (p. 894) points out, financial management reform should be customized to fit a specific “political, social, and economic context” and also take administrative capacity into account. The need for long-term, home-grown budgeting and fiscal policy reform considerations is even more urgent given Africa’s fiscal pressures and its vulnerability to world commodity price volatility.

The purpose of the chapter, then, is to argue for budgeting reform, one that elucidates and is based in the need for fiscal sustainability in Africa. The chapter proceeds by synthesizing country case studies, as well as the literature on sustainable development, fiscal policy, and public management with the goal of raising the salience of fiscal sustainability. The first section lays out the context of public budgeting by summarizing conditions in, opportunities for, and challenges of Africa.⁴ This section argues that public budgeting occurs neither in a political nor an economic vacuum: unique material conditions and socio-economic experience should be taken into account. The second section examines and critiques current budgeting approaches as a way of laying bare the basis for harnessing, allocating, and utilizing resources for development purposes. Because resources are scarce relative to public demands, the assumption is that returns from expenditures must be worth the costs. But budgeting should be more than business as usual because it is “where politics, policy and public management” meet (Purtell & Fossett, 2010).

The third section turns attention to and presents the building blocks for considering sustainable budgeting and fiscal management that advance the interest of development management. It argues for the notion of “sustainability budgeting,” which has the potential to mitigate fiscal risks in the long run due to exhaustible mineral and oil wealth, as well as unstable non-oil budget balances. Unlike precipitous annual budgeting, the sustainability approach will serve as a proxy for Africa’s development priorities by providing a systematic, clear, and transparent view of how public resources can be harnessed, allocated, and managed to address public interest purposes. This entails institutional change both within African nations and the donor community in spite of the deep-rooted “solutions-driven and international best practices development playbook” model now in vogue. The chapter concludes by analyzing the feasibility of sustainability budgeting and assessing Africa’s preparedness. As African nations look ahead to the “post-2015 global development agenda and the UN’s Sustainable Development Goals” and their own priorities in climate governance, the prospects bode well for sustainability budgeting reform.

Public Budgeting and Fiscal Sustainability in Context

Africa has come a long way since the attainment of political independence and self-governance, but it still has a long road to travel. There is evidence of slow but steady positive change in the conditions and lived experiences of the people.⁵ In assessing progress toward achieving the Millennium Development Goals (MDGs), the UN Economic Commission for Africa (UNECA) has asserted that “when effort and initial conditions are factored in, African countries are among the top achievers of the MDGs” (UNECA, 2014, p. vii).⁶ UNECA has also noted the rapid growth that African nations have experienced in the past decade. Concurring with this assessment, the APP has observed that poverty and child mortality rates have fallen “for the first time in over a generation.” In spite of these changes, the panel has expressed concern that “economic recovery is less impressive” when viewed from the perspective of rural Africa. Panel Chair, Dr. Annan, raises two questions:

Will we invest our natural resource revenue in people, generating jobs and opportunities for millions in present and future generations? Or will we squander this opportunity, allowing jobless growth and inequality to take root?

These are fiscal sustainability questions that go to the heart of this chapter. Because budgeting does not occur in a vacuum, a brief review of Africa’s structural and environmental conditions is needed to facilitate the analysis of the continent’s sustainable development effort.

Historical Conditions

Much of the analysis of Africa’s material circumstances is devoted to its unique historical experiences—and rightly so: devastation of its valuable human resource during the infamous transatlantic and East African slave trade, as well as the exploitation of its natural resources and subjugation of its people during Western colonial rule.⁷ In particular, the colonial legacy has been documented extensively elsewhere, especially by Afrocentric scholars and by scholars of the externalist school of thought (e.g., Ayittey, 1998; Ake, 1996; Mazrui, 1986; Davidson, 1966), so only a summary statement is necessary. This body of literature has sought to explain the cause and consequence of the human condition in Africa based in pre-colonial, colonial, and post-co...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Figures and Tables
• Foreword
• Preface
• Acknowledgements
• About the Editors
• 1 Public Budgeting and Fiscal Sustainability in African Nations: Opportunities and Challenges in Development Management
• 2 Public Budgeting in Africa: The Case of Botswana
• 3 Public Budgeting in African Nations: The Case of Cameroon
• 4 Economic Policy Formation in Ghana: is the Budgeting Process a Ritualized Anti-national Transformation Process?1
• 5 Reforming the Ghanaian Budget System from Activity-based Budgeting to Performance-based Budgeting: Eureka, or another Reform Illusion?
• 6 Public Budgeting in African Nations: The Case of Kenya
• 7 Public Budgeting in African Nations: The Case of Malawi
• 8 Public Budgeting in African Nations: The Case of South Africa
• 9 Public Budgeting in African Nations: The Case of Uganda
• 10 Public Budgeting in Zimbabwe: Trends, Processes, and Practices
• 11 Public Budgeting in African Nations: The Case of Rwanda
• 12 Public Budgeting and Service Delivery in Tanzania
• 13 Evaluating Public Budgeting and Fiscal Management in African Nations
• Index