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Afritac East’s agenda for 2004 stresses improving fiscal and customs administration

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
March 2004
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On January 26, the East Africa Regional Technical Assistance Center (AFRITAC East) held its fourth semiannual steering committee meeting in Kigali, Rwanda, to review progress and agree on the center’s work plans for the year ahead. Priority aims for 2004 include raising the effectiveness of individual projects through close monitoring and follow-up, and building on the good relations with other technical assistance providers in the region to enhance coordination. Later this year, an independent evaluation of AFRITAC East and its counterpart center in West Africa will help to determine whether this regional approach to delivering technical assistance will be extended to other parts of sub-Saharan Africa.

From the outset, AFRITAC East has emphasized country involvement in the development of its work programs, and the six countries served by the center have a strong voice in the semiannual steering committee meetings. As John Crotty, who served as the center’s first coordinator, explained, “the governance structure of AFRITAC East was designed to ensure that countries themselves effectively drive the process.”

Commenting on his impressions of the meeting in Kigali, Bassirou Sarr, the incoming coordinator for AFRITAC East, said that he “was impressed by the frankness and the quality of the discussions.” The networking and sharing of successful experiences among peers during these meetings can also provide a powerful impetus for reforms. As one example, Sarr pointed out that Tanzania’s success in carrying out tax reform has spurred other countries in the region to look at a more centralized tax administration model that can increase revenue collection.

Building on 2003 priorities

Since most capacity-building efforts, by their very nature, have multiyear time horizons, AFRITAC East’s work plan for the coming year largely continues and builds on activities begun in 2003. When it met in January, the steering committee reviewed the work plan to ensure that the proposed capacity-building activities continued to be fully consistent with the priorities stated in countries’ Poverty Reduction Strategy Papers (PRSPs). These activities can be grouped into five broad categories:

• Public expenditure management. The center undertook 17 activities in public expenditure management in 2003, including two major regional workshops encouraging the sharing of information and experiences in fiscal decentralization and treasury reform issues. In Eritrea, for example, AFRITAC East focused on modernizing budgetary and accounting classifications and implementing a cash management system as part of a broader treasury reform action plan. In other countries, such as Rwanda, assistance involved an overall review of public expenditure management systems.

• Bank supervision. All six of the countries served by AFRITAC East benefited last year from bank supervision assistance. Kenya, Rwanda, and Uganda received significant help in improving supervision of nonbank financial institutions. The center’s 16 activities in this area in 2003, which included support for two regional workshops sponsored by the African Capacity Building Foundation, mostly centered on helping countries improve the legal and operating environment by providing advice on countries’ plans for legislative reform and measures for addressing problem banks and strengthening their supervision.

• Central banking operations. AFRITAC East’s work so far has focused on helping countries with their foreign reserves management, monetary operations, government securities market development, and payment systems. A regional workshop on foreign reserves management was an important priority under the work plan last year and was followed by detailed operational reviews of foreign reserves management functions in Ethiopia, Kenya, and Rwanda. Improving the environment for implementing monetary policy also featured prominently, with most countries undertaking activities relating to the development of the government securities markets and payment systems reform.

• Revenue administration. AFRITAC East has provided revenue administration assistance—which has concentrated on modernizing organizations, their systems, and procedures—for all of the countries served except Uganda. This, too, has been a key area for coordinating assistance from development partners. AFRITAC East has endeavored to build good relations with development partners, Crotty said, citing the center’s strong cooperation with six donors on revenue administration reforms in Tanzania as an example of a particularly effective partnership. In response to requests by Ethiopia, Rwanda, and Tanzania, detailed evaluations of revenue administration operations have been carried out, with significant support from the IMF’s Fiscal Affairs Department. These evaluations have helped the national authorities identify reform priorities and develop comprehensive reform plans.

• Statistics. A key focus of assistance on statistical issues has been on developing short-term indicators of production and prices, with Rwanda, Tanzania, and Uganda having benefited thus far. Developing a comprehensive strategy for strengthening the legal and institutional infrastructure for statistical systems and developing a methodology for compiling regional national accounts have been important activities in other countries. Close coordination with other sources of technical assistance has also been particularly critical in AFRITAC’s delivery of assistance on statistical issues. For example, the United Kingdom’s Department for International Development (DFID) is a major provider of technical assistance in this area. AFRITAC East’s statistical advisor has worked closely with DFID counterparts over the past year to ensure that the center’s activities complement that agency’s projects.

What is AFRITAC?

As part of the Africa Capacity Building Initiative—which aims to increase the volume, range, and coordination of assistance from various multilateral and bilateral providers—the IMF opened two African Technical Assistance Centers (or AFRITACs) in 2002-03. AFRITAC East, based in Dar es Salaam, Tanzania, serves Eritrea, Ethiopia, Kenya, Rwanda, Tanzania, and Uganda. AFRITAC West, its counterpart based in Bamako, Mali, serves Benin, Burkina Faso, Côte d’Ivoire, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, and Togo. Focusing on the IMF’s core areas of expertise, the AFRITAC initiative aims to strengthen the capacity of African countries to design and implement their poverty-reducing strategies and to improve the coordination of technical assistance relevant to the Poverty Reduction Strategy Paper (PRSP) process.

The IMF has made use of this regional approach to delivering technical assistance to its member countries since 1993, when it opened the Pacific Financial Technical Assistance Center (PFTAC) in Fiji. All of these regional centers are guided by steering committees with representatives of participating countries and supporting donor agencies, as well as observers from regional institutions involved in capacity building. Each country appoints a representative and an alternate to the committee, and both members often attend its semiannual meetings, which are chaired by a country representative (currently the Governor of the Bank of Tanzania) and hosted by the participating countries on a rotating basis. Center coordinators have responsibility for day-to-day management.

At each of the centers, a small number of resident advisors deliver technical assistance and training throughout the subre-gion, typically supplemented by short-term specialists. The benefits of this regional center approach include flexibility to respond rapidly as the need arises; ability to field frequent and consistent follow-up visits, which keep up the momentum of reforms and solidify relationships; and continued access to high-quality technical expertise that might otherwise be difficult to obtain for resource-constrained countries. In addition, the format and role of the regional centers enable them to help shape and advance regional policy initiatives and strengthen cooperation and coordination.

Attention to fiscal, customs administration

While technical assistance priorities are set to remain broadly unchanged for 2004, AFRITAC East intends to devote more attention to helping countries improve their tax and customs administration. This is being driven partly by efforts to accelerate the creation of a customs union among the three members of the East African Community—Kenya, Tanzania, and Uganda. For Ethiopia, Rwanda, Tanzania, and Uganda, assistance in carrying out fiscal decentralization—more effective revenue sharing between central and local governments, greater devolution of spending, and improvements in tracking poverty-related spending in fiscal reporting systems—will also be in higher demand this year. This is in line with priorities identified in these countries’ poverty reduction strategies—namely, Sarr said, “to further enhance the delivery of public services at local government levels through more empowerment of local authorities.”

The countries making the most use of the resources of AFRITAC East so far have been Eritrea, Rwanda, and Tanzania, with work in revenue mobilization and statistical issues expected to increase this year, particularly for Rwanda and Tanzania. For Eritrea, work in monetary operations and financial sector supervision is expected to pick up. Given its limited resources, the center will continue to pay particular attention to prioritization and sequencing to ensure that resources are channeled to the most effective activities.

In Kenya, the volume of work is expected to increase significantly this year, partly to catch up on some delayed assistance and also to capitalize on the momentum for reform created by the country’s policy program newly approved by the IMF for support under the Poverty Reduction and Growth Facility (PRGF). AFRITAC East has worked closely with senior officials there since the new government took office to determine how best to provide more support for capacity building. “Two areas, in particular, where I expect that we will be providing additional assistance in Kenya,” Crotty said, “are public expenditure management and revenue administration reforms.” Last year, the center participated in a multidonor assessment and action plan intended to develop an overall public expenditure management reform program for Kenya. Toward the end of the year, the center began providing assistance to improve budgetary and accounting classifications. AFRITAC East has also undertaken significant preparatory work with the Kenyan authorities toward modernizing revenue administration.

Aims for 2004

“One of my first priorities in 2004,” Sarr explained, “will be to work closely with all providers of technical assistance in the subregion—both bilateral and multilateral—in carrying out the work plan, to ensure effective coordination and cooperation.” Increased coordination will be essential to avoid duplication and ensure that the assistance delivered remains coherent, complementary, and cost-effective. While noting that an effective mechanism to coordinate the various providers will always be a challenge, he indicated his intention to build on the good working relations with the subregion’s donors and technical assistance sources established by his predecessor, Crotty, and by center staff.

Sarr anticipates that these efforts will be aided by the African Development Bank’s plans to increase its physical presence in the subregion, thereby further improving the information flow between AFRITAC East and this important regional institution. Moreover, the structure of the steering committee lends itself to effective use as a forum for exchanging information between country representatives and donors about the likely sources of technical assistance and the nature of supported activities in the region. A planned website for AFRITAC will help to further speed the dissemination of information on the center’s activities to a much wider audience, he added.

A second priority for 2004 that emerged clearly from the January steering committee discussions will be to raise the effectiveness of individual projects. Indeed, one specific aim of the IMF’s capacitybuilding initiative is to accomplish this objective through close monitoring, follow-up, and more transparent reporting of outcomes. The steering committee is the main vehicle for this, Sarr said, because its semiannual meetings review the center’s strategic issues and operational activities and assess results in each country against the work plan’s agreed benchmarks. “It is through this peer review mechanism that stakeholders can determine whether the assistance provided has resulted in actual reforms and the degree of commitment of recipient countries in making full use of the technical assistance provided,” Sarr said. A number of quantitative and qualitative benchmarks are used in carrying out this assessment: for example, the completion of specific legislative steps needed to implement a particular reform effectively. The indicators used to monitor performance are expected to be refined further over the course of the year. Moreover, according to Crotty, the presence of the center’s advisors in the subregion has greatly facilitated follow-up and monitoring of projects and activities in a cost-effective way.

Later this year, a team of outside experts will carry out an in-depth and independent evaluation of the center to assess its effectiveness and the sustainability of its capacity-building approach. “Judging from the discussion at the recent steering committee meeting, there was unanimous praise and full support for the work of the center so far—from both donors and participants,” Sarr reported. Based on the recommendation of this evaluation team, IMF staff and the Executive Board will determine whether to set up more centers to serve other parts of sub-Saharan Africa. “While it is still too early to draw definite lessons,” Sarr said, “I am fully convinced that the peer review mechanism through which donors, technical assistance providers, and country officials collectively assess and monitor assistance and discuss any needed corrective measures can substantially improve technical assistance effectiveness”

Delivering technical assistance

Although AFRITAC East’s work plan for 2004 continues to emphasize sectorwide and strategic projects over hands-on support, it will be important to retain the capacity and the flexibility needed to respond to pressing needs for more ad hoc assistance. “One advantage of this regional initiative,” Sarr emphasized, “is precisely the ability of technical assistance advisors to provide quick and continuous hands-on support to counterparts and help them resolve specific technical issues before they become a serious problem.” This is typically done by e-mail or telephone or through a short visit.

AFRITAC’s five resident advisors were on the road for a large part of 2003 because, given available human and financial resources, this proved the most effective way to support capacity-building activities. In the first year of operations, about two-thirds of the advisors’ time was spent in country, working directly with counterparts.

Short-term, peripatetic experts hired by the center complement the skills of resident advisors. Most short-term experts are employed in specialized areas requiring immediate attention. “As 2003 progressed,” Crotty noted, “we drew heavily on our short-term resource allocation to help us complete our busy schedule of work. We expect to fully utilize all of the short-term resources available this year.” For 2004, short-term experts will chiefly provide assistance with budget and treasury reforms and anticipated fiscal decentralization activities.

In 2003, the center’s advisors also devoted quite a lot of time to an active program of regional workshops, closely linked with the main areas of capacity building in which the advisors were engaged. A number of seminars and regional workshops are planned for this year and will be carried out in collaboration with regional institutions, such as the African Capacity Building Fund and the Macroeconomic and Financial Management Institute of Eastern and Southern Africa, and in consultation with the IMF Institute. Short-term consultants based in the region and recruited internationally assist in conducting the seminars and workshops, which are held at facilities provided by participating countries and regional organizations. The topics—which for 2004 are likely to focus on monetary operations, financial sector supervision, and public expenditure management—are generally selected based on country requests and reflect training needs and the desire to strengthen cooperation among relevant country officials.

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