CHAPTER ONE INTRODUCTION
Introduction
This chapter presents the background of the study, the problem statement, and the objectives of the study, the research questions and the significance of the study. It also discusses scope, limitations and chapter organisation of the study.
Background of the Study
The public sector is very important to the economy and the case of Ghana is no exception. The significant role that public sector plays in the development of every country cannot be overemphasized. This is because public sector serves as a fulcrum around which economies evolve. The main motive for public sector is to enhance the economic well-being of its populace and provide an enabling environment for the private sector of the economy to thrive. Banerjee and Chau (2004) argue that economic sustainability and development as well as economic growth in every economy is mostly stimulated by a well-functioning private sector. This assertion is evident by the challenges developing economies with weaker public sectors mostly face (Uddin,2003).
As an antidote to the problems economies face as a result of poor public sector performances, there have been some plethora of measures that states and stakeholders have put in place to mitigate the problems associated with public sector challenges that have ripple effects on the other sectors of every economy. These reforms include New Public Management, Public Sector Reforms, Public Sector Management and many others that targets different segments of the public sector. These policies were necessitated because of the quest of governments to ensure and enhance the efficiency of public sectors, which in some studies have been referred to as the engine of growth. Curristine, Lont and Journard (2007) note that the public sector, especially that of
developing economies are often perceived to be most corrupt, inefficient, and lack accountability. The general negative perception people have regarding the public sector sometimes put undue pressure on governments to come with more pragmatic measures that aim at curbing the perceived menace at the public sector.
It is known that majority of the public sector reform programs are often superintended by supranational institutions such as the World Bank, IMF, the European Union (EU). This is evident in the number of World Bank and IMF initiated programs and projects in the mid-1970s and mid-1980s. According to Andrews (2013), the number of World Bank initiated and sponsored programs that target the public sector of various economies grew from 469 in the 1980s to about 3,235 in the early part of 2000. Moloney (2009) also added that this trend is evident in the portfolios of other development agencies such as the Asian and African Development Banks.
In Sub-Saharan Africa, public sector has experienced a number of reforms and evolvements since its inception (Chittoo, 2009). Kiragu (2002) argued that the public sector has experienced three major strands or waves since it began. The first wave was seen in the mid-1980s and the mid-1990s in Sub-Saharan Africa. This wave in the public sector focused mainly on restructuring the public service institutions, which is otherwise known as Structural Adjustment Program (SAP). The second strand of the public sector reform was observed in developing countries and it aimed at building the capacities of public sector personnel. The last and final wave of the public sector reform in Sub-Sahara Africa targeted the improvement in public sector delivery.
These notwithstanding, studies have shown that most of the reforms that have been initiated at the public sector of numerous economies were propelled by response to political, social and economic pressures on governments (Therkildsen, 2000). Other studies on public sector reforms have also found that the reforms in the public sector are most often inspired by the new public management (NPM) paradigm (Lapsley & Pallot, 2000).
The NPM was the main administrative blue print that governed the public administration reform agenda of most of the OECD countries in the part of the 1970s. The NPM concentrates mainly on the structural, organizational,
managerial changes that take place in the public sectors of the OECD countries that adopted and used it. Pollit (2002) considers the NPM as ideas, vision and a set of management approaches and techniques that emanate from the private sectors. The study concluded that NPM has succeeded to shift the emphasis of public sector from the traditional public administration to public management. The NPM therefore intends to eliminate the line that exists between the public sector and the private sector so that both the public and the private sectors enjoy equally good management practices. NPM thus proposes some public administration theories that will streamline the public sector thereby making it more efficient and consistent (Hood & Lodge, 2006).
At the heart of the numerous public sector reforms is the financial management reforms. Financial management reforms such as Integrated Financial Management Information System, the medium term expenditure framework have all been initiated and introduced in the public sector of most developing economies all over the globe. The reforms were introduced to shape and enhance efficiency and accountability of public funds that have been entrusted to various agencies and ministries. Brignall and Modell (2000) postulated that public sector financial management involves all the activities associated with budget execution, control, accounting, reporting, monitoring as well as evaluation. Pretorius and Pretorius (2008) also confirmed the earlier work of Brignall and Modell (2000) and added that public financial management concerns mobilizing revenues, spending and all the activities that regards debt management. Financial management also involves planning, controlling, implementation and monitoring of the fiscal policies and activities including accounting and audit of revenue, expenditure, assets, and liabilities (Barata & Cain, 2011). Peterson (2007) found that effective financial management is a recipe for good governance and therefore necessary for accountability.
Public sector reforms in Ghana predate the days of the Economic Recovery Program (ERP) in 1983. The ERPs was launched under the auspices of World Bank and the International Monetary Fund (IMF). In order for Ghana to fulfil the social, economic and political contracts between government and the citizens who voted them to power, accountability is very vital. The general public who deserves accountability from government officials
needs to have access to certain vital information without which serious assessment cannot be made. The government in its quest to make information accessible to people has introduced a number of initiatives among which include Budgeting and Public Expenditure Management Systems (BPEMS). The system is geared towards effective budget formulation and implementation, accounting and reporting and finally to provide a computerized platform that runs the entire financial management systems of the government of Ghana. The BPEMS has encountered numerous challenges and hence the need for government to implement a more transparent and workable system known as Ghana Integrated Financial Management Information Systems (GIFMIS). The GIFMIS uses computerization of budget management and government’s accounting system to provide a more integrated financial system that aims at providing effective and transparent management of public resources.
