Kennedy School Project Helps Ethiopia Reform Public Financial Systems

January 30, 2003
Catherine Gorodentsev

For the past six years the Kennedy School's Decentralization Support Activity Project (DSA) has helped Ethiopiareconfigure its public financial systems - an overhaul critical for the African nation to qualify for desperately-needed international assistance. A possible 15 million people are at risk of starvation following a drought in 1999. As the second most populous country in Africa, Ethiopia has the third largest number of HIV/AIDS cases and faces unrest on virtually all of its borders.
"Reform of the public sector financial systems can play a critical role in helping the government manage its scarce resources, deal with crises as well empower local communities," says adjunct lecturer Stephen Peterson who leads the project. DSA has helped various levels of government design and install appropriate and efficient financial procedures. It has also created partnerships among the country's management institutes where over ten thousand government staff have been trained.
The obstacles have been substantial as Kennedy School students learned last fall while Steve Peterson was teaching a six-week module in public finance at the Kennedy School late last year. The financial training manuals had to be translated into four different languages - one manual took two years to translate because of the complexity of finding words to fit accounting terminology in a language that lacked those concepts. And donkeys were used to distribute new budget forms to a region where the road were impassable due to rain.
"We are providing the 'financial plumbing' systems," Peterson explains. "The absence of such 'plumbing systems' in other African countries that attempted sophisticated economic and planning reforms, led to failure."
The Ethiopian government has been pleased with the success of the effort, as among other things, it has successfully been able to catch up on reconciling fiscal accounts, reducing a backlog from six years to one. The World Bank has also praised the project, describing it as "very successful" in a recent World Bank country assessment report.
The project runs through the spring of 2004 and this summer Peterson's team will include Kennedy School student interns. Originally financed by the US Agency for International Development, the project recently received additional funding from Irish Aid and is negotiating funding from the European Community.

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