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[REPORT] IFMIS implementation in Kenya’s Government

BY · June 26, 2015 10:06 am

Brief On Integrated Financial Management Information System (IFMIS) Implementation In National And County Governments

INTRODUCTION

The Government of Kenya’s IFMIS is an Enterprise Resource Planning (ERP) Software. ERP applications are large-scale computer software and hardware systems that attempt to integrate all data and processes of an organization into a unified system housed in a centralised database which is accessed through a secure network. ERPs have capabilities for handling enterprise wide business processes ranging from functions such as manufacturing, logistics, distribution, inventory, shipping, invoicing, and accounting. They can also aid in the control of business activities like sales, marketing, quality control, and human resource management.

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ERP functionalities are managed through a system of modules, which allows for flexibility in implementing various functions. This not only plays an important role in streamlining the efficiency and effectiveness in the management of public financial resources, but further contributes to fighting corruption through the promotion of greater comprehensiveness and transparency of information across government institutions.

HISTORY OF THE INTEGRATED FINANCIAL MANAGEMENT SYSTEM -KENYA

1996

In 1996 the GoK, through the Accountant General’s Department undertook an in-depth analysis of financial management and audit, people management and organisation and financial management information systems in the government, and established the way forward in addressing the financial management problems in government.

The Accountant General’s Department developed a project proposal for IFMIS emphasizing the need to address the problems that had been identified which included:

  • Poor record management
  • Untimely presentation of financial reports
  • Poor accountability of financial resources
  • Lack of proper audit trail
  • Enhanced transparency and accountability
  • Improved efficiency

1997

The development of an IFMIS commenced with diagnostic reviews to identify issues and problems of finance and accounting in GoK. This review was carried out in three phases. The first two phases were undertaken between 1997 and 2000.

In 1997, DFID provided some development assistance to GoK for “Strengthening Government Finance and Accounting Functions”. This was carried out in two phases which concentrated on team building and investigating the issues, problems, deficiencies and needs. Subsequently, a Comprehensive Project Framework (CPF) was developed.

The DFID CPF set out to improve the performance of GoK finance and accounting functions, especially in financial management control and audit, financial management information system and people management and organizations. Specifically, the following issues had been identified in relation to PFM issues in GoK:

  • Accountability and transparency is poor
  • Irregular payments are significant
  • Outstanding bills to suppliers have escalated
  • AIE holders lack up to date and accurate information for effectively monitoring and controlling expenditures
  • Revenue streams are poorly identified and collection rates are low
  • Mobilisation of donor funds is poor, causing delays in implementing projects
  • Donors lack confidence in existing systems
  • Current emphasis is on monitoring inputs rather than outputs
  • There is no objective or effective mechanism for disseminating budgets to the district level
  • GoK proposes to move to a modified accrual basis of accounting
  • Motivation, morale, compliance and enforcement are all low

2003

IFMIS implementation in Kenya commenced in 2003, originating from gaps and weaknesses within the SIBET system that was in use at the time. It was felt that there was need to introduce different modules comprising of Accounting, Revenue management, and Asset management among others, and the establishment of interfaces with the Central Bank payment information system, Kenya Revenue Authority and the Ministry of State for Public Service for payroll and human resource management modules.

The GoK therefore procured an integrated financial computer package, Oracle Government Financials for the Public Sector by State Informatics Ltd of Mauritius and Simba Technology Ltd of Kenya.

2006

The GoK Strategy to Revitalize Public Financial Management, by the PFM Reform Coordination Unit at the Ministry of Finance in 2006 recognized IFMIS contribution to the six PFM reform pillars to improve the government’s capability and systems to utilize public financial resources towards Economic Recovery Strategy (ERS) for Wealth and Employment Creation. The PFM pillars were:

  1. Financial Sustainability and budgeting
  2. Resource mobilisation
  3. Budget execution
  4. Procurement
  5. Oversight and evaluation
  6. Cross cutting issues

In 2006, the Ministry of Finance sought to procure the services of a consultant to undertake a diagnostic review of the Integrated Financial Management Information system.  A Contract was given to M/S Information Technology Associates Limited for provision of consultancy services to the IFMIS project in January 2007 for 20 weeks. This contract was to perform a situational analysis of the extent of implementation of IFMIS and prepare an action plan and recommendations for fast tracking IFMIS implementation.

This consultancy established the following:

  • General Ledger – rolled out to 24 out of the 43 accounting units.
  • Purchase Order and Accounts Payable modules – rolled out in 24 out of 43 accounting units
  • Budget module set up but was not in use due to an inadequate SCOA structure and inability to produce printed estimates in a format acceptable to the users, especially reflecting personnel details. This led to the development of an in-house budget system.
  • Cash management module was initially set up in 2006 but did not go beyond testing. The local supplier had no experience in implementing this module.
  • The financial analyser module had not been set up, and this was attributable to lack of understanding of its functionalities.
  • Hardware procured was not aligned to IFMIS requirements, and were allocated to ministries for non-IFMIS use. The report made recommendations that GITS should take over the management of acquisition, installation and support of all IFMIS hardware
  • Lack of installation of data recovery hardware for IFMIS operations
  • Insufficient capacity building on sun solaris in IFMIS
  • Bespoke (GoK) manuals did not reflect government business processes especially in accounting, budgeting and procurement, but only focussed on IT processes
  • It was unlikely that customized manuals could be produced without being derived from an output of business re-engineering. The report recommended that detained documentation of business processes for each functional area be undertaken and used as the basis for customized user manuals
  • The business process re-engineering was also useful to identify areas that require policy, legal and procedural authorisation
  • The location of the IFMIS office in the AGD gave the perception that IFMIS is an accounting project. The report recommended that each of the project components, eg budget, GITS, procurement oversight authority, accountant general, internal auditor general and controller and auditor general should establish office facilities to support their respective modules.

It was therefore recommended that an IFMIS project charter be developed that would guide the re-engineering of business processes, and a comprehensive management and technical infrastructure be established to support IFMIS deployment. Identification of systems to be in