Southern African countries discuss public investment management
Eivind Tandberg from Vista Analysis recently contributed to a regional workshop on public investment management in Southern Africa, with participants from Angola, Botswana, Comoros, Lesotho, Madagascar, Mauritius, Mozambique, Seychelles, Swaziland and Zambia. The workshop took place at the Afritac South technical assistance center in Mauritius, which is a collaborative effort between the International Monetary Fund (IMF) and several bilateral and multilateral donors.
Recent analytical work by the IMF’s Fiscal Affairs Department (FAD) has suggested that the current outcomes of public investment projects in developing countries could be improved by more than 30 percent, if current efficiency gaps could be addressed. During the course of the seminar participants learnt how to identify and quantify efficiency gaps and assess public investment planning, allocation and implementation institutions, using the IMF’s new Public Investment Management Assessment (PIMA) tool. Participants were very engaged and active, posing questions and raising issues for discussion across a broad range of themes:
• There were many questions regarding the impact of fiscal rules, in particular debt limits, on the fiscal space for public investment. Some participants felt that public investment might be unduly constrained by restrictive debt targets and limited financing opportunities. There was a clear view that improvements in transparency and in public investment management capacity should have positive impacts on country credit ratings.
• Many participants were interested in how Public-Private Partnerships (PPPs) could expand private sector participation in infrastructure investments. It was noted that PPPs can promote the efficiency of investments, but PPPs are complex instruments that require considerable capacity building on the government side.
• There was general agreement about the need to ensure stringent appraisal and selection procedures for capital projects, including through transparent and well-defined procedures. Countries have different institutional arrangements in this area, and the optimal solution must be based on the specific situation of each country. The importance of sufficient checks and balances was noted, including by ensuring that project appraisal is done by a different body than the one that develops the project, and by requiring independent verification of important project parameters.
• Institutional arrangements for project monitoring were also widely discussed. It was emphasized that project management and project monitoring are fundamentally different functions, and that there must be identified senior managers that are held accountable for implementation of all major projects.