- Email: [email protected]
Microcomputers and financial management in development ministries: Experience from Kenya
Agricultural
Administration
14 (1983) 151-167
Microcomputers and Financial Management in Development Ministries: Experience from Kenya
Thomas C. Pinckney Ministry
of Agriculture,
PO Box 47098, Nairobi,
Kenya
John M. Cohen Harvard Institute for International Development, 1737 Cambridge St., Cambridge, MA 02138, USA
David K. Leonard Department
of Political Science, University Berkeley, CA 94720, USA (Received:
10 February,
of California,
1983)
SUMMARY Kenya’s Ministries of Agriculture and Livestock Development have recently begun to use microcomputers as a tool for improved financial management. The conventional wisdom has been that the use of such high technology is inappropriate in a developing country, where capital is scarce and labour abundant. Such an assessment may well be mistaken with regard to microcomputers, for their capital costs are modest and they can extend the eflectiveness of scarce, skilled managers. In this paper case studies are provided of three applications of microcomputers to financial management in which the authors have directly participated. The likely preconditions are then evaluated for the successful use of microcomputers in similar situations. 151 Agricultural Administration 0309-586X/83/$03.00 England, 1983. Printed in Great Britain
0 Applied
Science Publishers
Ltd,
152
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
As we indicated in our previous paper on financial management in Kenya,3 the traditional expenditure reports from the Vote Control Section have not been an effective tool of financial management in the Ministry of Agriculture (MoA). (The same problem applies to the Ministry of Livestock Development (MLD) but to simplify our presentation we will refer in this paper only to the ministry which provides the best illustration of a system.) The expenditure reports have been unfocused, inflexible, untimely and inaccurate. In order to make the expenditure reporting system more usable for financial management, it was decided, in late 1981, to use a microcomputer which the Ministry had just acquired as a result of an experimental USAID-funded demonstration by Carl Gotsch.’ The particular microcomputer used was an Apple II with 64K, a CP/M card, two disk drives and a matrix printer. The whole system had been bought for under US$5000. Several other low priced microcomputers could have performed the same functions.5 The advantages of the Apple for use in Kenya were (1) the large number of pre-written programs (‘software’) available, particularly when the CP/M card is installed; (2) the Apple’s relatively high level of resistance to fluctuations in power supply; (3) the presence of several other similar machines in the country together with the accompanying personnel capable of repairing them and (4) the fact that the Apple system can accept expansion boards which substantially increase its capacity. (Subsequent to the developments reported here the Ministries purchased a 128K board for US$400.) MoA used the VisiCalc program with its microcomputer for all of its initial innovations in financial management systems. VisiCalc and similar ‘electronic spreadsheets’ are much easier to understand and teach than is normal programming. (A fuller description of the features of this program and examples of its application are discussed elsewhere4). Thus, we found that professionals in MoA could begin using VisiCalc with less than two hours of initial training if an experienced user were available for consultation as questions arose. The first step was to create a VisiCalc summary template for each subvote (sub-division) of the recurrent and development budgets for MoA. The data on field expenditures could then be entered into it as they were received. The advantage of this new step is that the machine can recalculate the totals and percentages almost instantly whenever asked. Thus, the final report is ready for printing by the microcomputer as soon
Microcomputers
and financial
management:
experience from
Kenya
153
as the last figure is entered.(We have presentedelsewhereexamples of this form and the other reports mentioned in this.paper4.) Several of the shortcomings of the traditional expenditure reporting system were lesseneddirectly by this application of the microcomputer. First, final reports were available much more quickly. In our experienceit was possible to take two to five weeks off the preparation time. This time difference proved crucial in getting decision-makers to seethe reports as current-and therefore relevant. Further improvements in the timeliness of the reports could be achievedby eliminating the preliminary processing of the data at the provincial level. Secondly, the accuracy of reports was improved. In the past, significant errors had been made in addition and in typing. Human error in calculation was, of course, eliminated by the machine. Typing errors were avoided by having the data processor enter his own figures. Carelessness by typists, to whom the figures had no intrinsic meaning, had been a major problem in the past and much professional time had beenabsorbed in the proof-reading and correction of their work. Thirdly, the final reports became much more focused and therefore usable by decision-makers. The microcomputer facilitated the calculation of percentages,the use of graphics and the preparation of summary reports. All of these deviceshelped to point the attention of busy senior administrators toward the figures that represented problems, and therefore required their attention. One of the great advantages of the microcomputer/VisiCalc combination is that it is easy to modify the format in which financial data are presented.In this way it is possible to experiment and constantly to improve the layout of the reports, making them much clearer and more ‘transparent’ to the reader. The problem of inflexibility of the reports was not solved by using VisiCalc. To be able to reassemble the data along different analytic dimensions for an organization as large and diverse as MoA, it is necessaryto use a more complex analysis program. The Ministry is now using dBase II to achieve this flexibility (as we describe further below). Such a useinvolves a difficult trade-off, for the dBasesystemis much more complicated to use-and is therefore accessible to smaller number of staff. (For comparative analyses of programs, see The Data Pro Directory of Microcomputer Software.‘) We want to stress,however, the remarkable fact that a USS112million organization like MoA was able to use such a simple and limited tool as VisiCalc to dramatically improve the quality of its financial reports. The result of the relatively simple changeswhich the microcomputer
154
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
brought to the expenditure reporting system was a significant increasein its use. In particular, the figures were used very extensively in that year’s budgeting exerciseat severalstagesin the process.They also were usedto addressmanagement problems of over- and under-expenditure of funds. PREPARATION
OF THE BUDGET
The 1982/83 budget preparation process in MoA began with the Treasury’s issuing a recommended ceiling which could not accommodate the Ministry’s existing activities, newly developed and signed projects, and expanded parastatal requests. The Recurrent Budget requestsfrom MoA’s constituent parts totaled KL90.5 million against a ceiling of KL24.4m, whilst Development Budget proposals were KL77.9m when the ceiling was setat KL3 1.7m. Senior finance officersin the MoA decided that, rather than simply passing on the requeststo the Treasury, as had been done in earlier years, they would hold an extensive set of in-house budget reviews in order to reduce the requests to a level at which the Treasury would take the Ministry’s budget submission seriously. In the past there had been no useful summary format for the Draft Estimates (i.e. budget) process. Typically, the Development and Recurrent Budget submission for MoA comprises more than 100 stencil pages.Such a document is not useful to decision-makers trying to keep a daily overview of the budget formulation process. Working with MoA’s financial officers,we used VisiCalc to devisea five-pagesummary format based on all the program sub-divisions of the two budgets. It presented basic financial data for each program, such as its 1981/82 Budget authorization, 1981/82expenditure, and 1982/83Forward Budget figure. For the Development Budget, requestswere broken down into those from old projects, new projects, and parastatals. Since eachof three groups was treated somewhat differently, the breakdown helped to shed light on where in-house cuts were taking place. The format proved valuable as a daily update on the present situation. After each session, during which programs or projects had been discussed,the agreedupon figures were entered into the microcomputer and new forms distributed at the beginning of the next session.Each form included the total amount agreedupon so far, the percentageof requests that had been granted, and the averagepercentagecut necessaryduring the remaining sessionsif MoA was to stay within the Treasury ceiling.
Microcomputers
and-financial
management:
experience from
Kenya
155
This constant update helped to promote a substantial reduction in the original requests. The availability of up to date expenditure reports compiled by the microcomputer (as discussedearlier) was crucial to the reduction of over-inflated requests. As each line item in a program was reviewed, it would be compared with expenditure for the current year, and the requestwould generally be cut if expenditure was low. Hence, the microcomputer-based information systems were used in two different ways during the in-house budget review process. Despite substantial cuts, the regular internal review processendedwith the proposed Recurrent Budget KL2.5m over ceiling and the Development one, KL25m over. The Ministry’s finance officers felt that submission of the latter figure, which exceededthe ceiling by 80 %, would lead to arbitrary cuts by the Treasury. They therefore decided that the senior officers of the Ministry should meet again and decideupon further cuts basedupon MoA’s priorities. Since thesesenior officials could not be expected to digest over 100 pages of budget documents, the microcomputer summary Tables were used once again. Most senior officers attended the meeting. Based on the priorities agreed, KL6m more were cut from the Development Budget submission. Still greater reductions could have been achieved if analyses had been available of the parastatal requests,which representeda substantial part of the surplus demands. To some extent the discussionwas facilitated by the budget format. Clearly, the simplicity and briefness of the summary printout helped to gain the attention of the officers attending and led to a focused analysis of particular items contributing to the submission’s being over ceiling. The meeting was important for more than the cuts achieved,however. Policy discussionson MoA priorities occurred. Previously, the details of the Estimates process had so overwhelmed the participants that policy issueshad not been explicitly pursued. The microcomputer also was central to a series of meetings held in MLD to establish spending priorities when it became evident that the Ministry would have a funding crisis during 1981/82. Here, the new technology encouraged officers to ask for expenditure information that had previously beeninaccessible.The microcomputer also was usedas an aid to projections and computations in the meetings themselves. While the decisions were being made, they were also being recorded on the microcomputer. Immediately after the meeting it was possible to produce a Table giving the exact decisions,on an item-by-item basis.The useof the
156
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
microcomputer in the expenditure cuts process made the financial decision-making quick, accurate and authoritative. Without the machine and the easeof calculation which it provided, much of what was done would not havebeenattempted, or it would havebeendone so slowly asto have been without effect on operations. Not only have the preceding applications of the microcomputer to budgeting beena success;the ministries intend to make the machine even more central to the 1982/83 budget process. The microcomputer will probably be brought to the in-house meetings and used to record decisions as they are made. This innovation will speedup the calculation and printing of the lengthy budget document and will overcome the problems causedwhen a change in one item necessitatesrecalculation of higher summary figures throughout the budget. It is hoped that the speed and accuracy achievedwill provide time for ministry officials to consider policy and operational issuesrather than proof-reading stencils, standing over secretariesand madly compiling massive documents as they race to meet Treasury deadlines. Becausewe were still in an experimental phase, we used the microcomputer only for analysis in the 1982/83 budget exerciseand relied on traditional methods to produce the final document. The results illustrate the problem. The in-house cuts in MLD were completed on the 24th of March and the Treasury deadline was the 25th of March. MLD was unable to make its submission until the 26th of April, largely becauseof typing delays and errors. The Senior Assistant Secretary for Finance of MLD spent almost all his time in these three weeks in the frustrating mechanical task of getting the document produced, not in analysing the proposals and preparing his casefor the Treasury. Despite all his work, the final document still contained at least three errors of addition. Clearly, further expansion in the use of the microcomputer for budgeting is merited. PREPARING ALLOCATIONS
FOR THE FIELD
Both MoA and MLD have experiencedproblems in past years with the issuanceof expenditure authority to spending stations. Given an increase in the ability of headquarters to monitor expenditures, it made senseto begin to receive information directly from the spending stations. If districit-level expenditureswere to be reviewedby headquarters,it seemed ’ best that districts should receive their allocations direct.
Microcomputers
and$nancial
management:
experience from
Kenya
157
This decision to allocate funds to districts was reinforced by the Government’s directive that the district was to be the hub of development activity in rural areas. Such allocations would treble the headquarters work in issuing Authorities to Incur Expenditures (AIEs) as they now would have to be made out for the districts in addition to the provinces. Both ministries therefore decided to use the microcomputer in the process. (Both MoA and MLD used similar procedures. Only the experienceof MLD will be described, eventhough MoA made the change first, as the processwas further refined and somewhat simpler there.) Since over 4000allocations to spending units would have to be made, it was decided that a mechanical procedure would be used to make preliminary proposals. Information was solicited from the field on actual expenditures in the previous year. The management advisors then used dBase II to produce preliminary allocations based on a combination of previous allocations and expenditures. These suggestedallocations were then reviewed by finance officers and program division chiefs, who checked for omissions and sub-optimal distributions of funds. This review stage was important as the previous year’s allocations had suffered from the problems mentioned in our previous paper.3Reactions ranged from those who made only a very few changes to those who altered every allocation for their programs. In previous yearsfew division chiefs had referred to past expenditure records in making allocations. The result of combining review with expenditurebased mechanical allocations was the best distribution of funds in many years. When the alterations suggestedby the division chiefs werereceivedthey were entered into the microcomputer as corrections to the existing program. After a few final checks and adjustments, the allocations were printed and distributed to the field officers. Thus, the working documents becamethe final, legal Authorities to Incur Expenditures themselveswith very little additional work. The result of the exercise was a more rational set of allocations combined with the timely issuance of AIEs. In MoA the issuance was earlier than in any previous year, despite the trebling in the number of AIEs to be written. In addition, districts no longer had to wait for their provincial director (PD) to divide up his allocation. They now knew their funding authority within two weeks of the start of the financial year, and should have them even more quickly in 1983. This speedwas possible because all the typing and analytic data could be entered into the
158
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
microcomputer at leisure before the budget was made public. Only the program item figures from the actual budget had to be enteredfor a trial set of allocations to districts to be produced. Once the corrections made by the program chiefs were made, a final copy of the AIEs could be printed without the delay of waiting for typists and proof-readers. The effectof using the machine was not to displace the work of the clerical staff but to spread it out into periods of less time stress, thus averting a bottleneck when the need to issue the final document was urgent. Furthermore, the microcomputer printer was able to cut all the documents onto mimeograph stencils, thus enabling the Ministry to use the most cost efficient (and intermediate technology) methods of duplicating them. A further successof the exercisewas the setting up of the district-level expenditure monitoring system. Issuing the AIEs on the microcomputer made such a system very easyto set up. Now, the Vote Control Section of MoA is able to enter returns from AIE holders directly into the machine as they arrive. If all returnsare in by the fifteenth of the month, the report on expenditurescan be out by the twentieth, including a list of expenditures by program, by AIE holder, and by those particular spending stations that have considerably over- or under-spent on certain items. Thus, not only is greater speedachieved,but more analytic information is provided than was ever available before. Ths advantage of using the microcomputer, while certainly present for the issuance exercise, becomes extraordinary when the same file of allocations is used subsequently for other purposes. Despite the considerable successes,there were errors in the allocations that we believe can be avoided in the future, In MoA errors arose in the processfrom three sources:sourcedata errors, errors in entering numbers into the machine and computer errors. Several of the provincial directors (PDs) were relatively late in submitting their allocation reports from the field. In many casesthere were typing errors in theseprovincial reports. Some of these were obvious and were corrected while the numbers were being entered into the machine. Others, however, only became apparent after the allocations had already been made. A few further errors were made by the operator entering an incorrect digit. Finally, the microcomputer itself had two problems with the storage and retrieval of information from the floppy disks. As MoA had distributed virtually 100% of its budget, these errors (about 25 in all) forced over 120 adjustments to allocations, as money had to be removed from some AIE
Microcomputers
andjnancial
management:
experience from
Kenya
159
holders in order to increasethe allocations of those who did not receive their share. GENERAL OBSERVATIONS ON THE USE OF MICROCOMPUTERS FOR FINANCIAL MANAGEMENT DEVELOPMENT MINISTRIES 1. Staff with secondary microcomputers
school
education
can be trained
IN
to operate
All of the usesof the microcomputer describedin this paper have involved the VisiCalc or dBase II packaged programs. One of the most important advantages of microcomputers is the availability of such programs at moderate prices, thus escapingthe needfor an accomplished professional programmer. The above applications of theseprograms were introduced into the two ministries by three advisors (the authors). All of us have PhDs and two of us had worked with computers before, but none of us had had prior computer programming experience.Still, our level of skills is not sustainable in the environment of developing countries, and one of our major concerns has beento develop indigenous skills that can sustain the uses of the microcomputer that we have introduced. Both software programs require two types of skill: (a) simple programming to set up the accounting matrix, and (b) the entering, storing and printing of data. VisiCalc is much easier to program than dBase, and this is one of the reasonswhy we beganwith it. The ministries have increasingly moved to the use of dBase, however, becauseVisiCalc could not provide some of the financial management information for which the ministries’ senior officers were beginning to ask. The shift to dBasehas had both costs and benefitsfrom a training point of view. Whilst dBase is more difficult to learn than VisiCalc, it doesallow someonewith programming skills to create formats and prompts on the screenwhich ask the user specific questions. Consequently, for 95 % of the usesto which the system is being put, the actual process is very simple, much simpler than with VisiCalc. To train a clerk to enter expenditure reports in VisiCalc requires a couple of days to explain editing, saving, printing and what numbers are to be entered where. With the dBase system that hasnow beendeveloped, a person has actually beentrained to enter and print the normal reports in 30 min. Furthermore, the ‘standard reports or lists of information which are now available more or lessat the
160
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
push of a button are more than what was available with considerable difficulty from VisiCalc. With respectto the task of entering data into either VisiCalc or dBase templates, the two ministries have had no difficulty in finding and training staff. The backgrounds of those who have learned to use the system and have worked on it have ranged from clerks with middle secondary education (Ordinary Level examination) without quantitative training up to those with university degrees. The task of programming the software packages for specific applications apparently requires a minimum of higher secondary schooling in mathematics (Advanced Level examination). The woman who has been so trained in MoA now does 90 % of the training of lower level personnel, knows VisiCalc inside out, and is quite good at interactive dBase. After lessthan a year of working approximately five hours a week with the microcomputer her programming skills were improving, and she was able to make minor variations in the dBase programs herself. We do not yet know whether she or someone of comparable skills will eventually be able to write original, complex programs. We would like to be able to train someonewith the equivalent of a BSc in mathematics, who we are sure could master all the complexities of the programming, but we have not yet been successful in getting such a person assigned within the constraints of the civil service system. The mathematics training at university or higher secondarylevel is not in itself a prerequisite to programming for the microcomputer. There is no particular item in the higher secondary level syllabus that teaches students to be more adept at using a microcomputer. The attained educational level is only a signal that this individual has sufficient mathematical abilities to be able to consider a problem and to figure out how the microcomputer and available software can be used to solve it. So far, very few senior officials seeminterestedin getting their fingers on the machine. They are more interested in asking for information and having it provided. Much of this may come from their lack of typing ability and a fear of consequent embarrassment. However, further attempts to provide ‘hands on’ experience to such officials are planned. 2. Microcomputers facilitate experimentation with data formats, thereby promoting easier analysis and contributing to better decision-making
The micrometer improves the ‘transparency’ of data. With VisiCalc one can quickly alter the format in which data is presented,and thus one can
Microcomputers
and financial
management:
experience from
Kenya
161
quickly convey to administrators and senior policy-makers the essential decision-making issues raised. For example, the budget estimates summary format was constantly changed as it was reviewed by finance officers. When they raised questions about interpretation of column labels, improvements were made. Columns could be shifted, new columns added, labels changedquickly, and new, more understandable, printouts produced. Both senior policy-makers and middle-level technical officers in most bureaucracies find budget and finance data time-consuming to understand and tedious in their implications. Any innovation which facilitates the translation of such data in a meaningful way merits further attention. 3. Faith in the microcomputer’s
abilities can blind users to possible errors
Several times we have heard the statement that ‘the numbers came from the computer so they must be correct’. Of course, errors can and do arise in the process. They are of four types: microcomputer errors, programming errors, data entry errors, and source data errors. All computers occasionally make errors. Usually these result from electronic current fluctuations, from dust contaminating a floppy disk and damaging the stored data, or from a command to store or retrieve data being improperly processedby the computer. Fortunately, most of these errors are easily detectable. In over a year of heavy work with the machine in the two ministries, we have detected only three computer errors. Data entry errors are more frequent. Whenever data is taken from one sourceand retyped therewill be some errors. While the computer’s storing of every keypunch makes checking for errors relatively easy,some errors will always slip by. Programming errors occur whenever the programmer creates a series of calculations that are intended to perform one function, but in fact do something else. This happens virtually every time a program is written; after one or two iterations, the ‘bugs’ are worked out. The largest sourceof error in the experienceof the ministries, however, has been reports from the field. In order to discover what sourcesof error occurred with the VisiCalc expenditure monitoring system, a Vote Control clerk with six years’ experience computed the December, 1981 returns by hand after the same work had been done on the machine. He discovered 53 cases where his reports differed. Of these, 49 can be categorizedasdata errors, which the experiencedclerk recognizedand the
162
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
inexperienced microcomputer operator did not. The other four differences resulted from data entry errors. In this particular casethere were no program or computer errors. Thus, reports printed by the computer can be in error. Stepshave been taken to minimize errors in the reporting system now, and the new expenditure system would catch all of the 49 errors mentioned above. Nevertheless, accurate reports at headquarters require that field accountants file accuratereports. It is hoped that feedback to the field on the importance of the returns will impress upon the accountants the necessity of providing good data. (In our judgement and experience, handwritten figures are more likely to be accuratethan typed ones,as they will have beendone by the reporting officer and will not havetypist errors. It is difficult, however, to break the habit of what a ‘good’ report looks like.) Meanwhile, it is useful to encourage senior officers to question statistics which surprise them and not simply to acceptmachine processed data and analysis on faith. 4. Once the technology is understood there is a tendency to use it as a solution to every problem encountered, leading to inappropriate uses of the machine
The microcomputer will help marginally in virtually every task that involves typing or punching numbers. The difficult choice for implementers is deciding which ones of an almost infinite number of tasks should use the machines, given the constraints on machine time, the implementer’s time, and the interest of government officials. Executives often have one of two extreme reactions. First, they may view the machine as a threat to their position or their importance, or simply misunderstand its nature, and thus want nothing to do with it. Secondly,they may act like the small boy with a hammer and find that everything needshammering. The first reaction may rule out, for the time being, somevery efficient uses of the machine. The second forces the implementing agents to make choices, balancing efficient uses of the microcomputer with the desire to continue to satisfy the needsof those officials who are enthusiastic about the machine’s presence. It is particularly important to think about the uses to which the microcomputer is put in a developing country, or else the abundant labour of Third World clerks will be displacedwith the important product of the scarcelabour of First World microcomputer designersand factory
Microcomputers
and financial
management:
experience from
Kenya
163
workers. Guidelines for efficient use come from the comparative advantage the microcomputer has over typists and clerks.6 Microcomputers have an absolute advantage in speed and accuracy of computation, ability to quickly revise formats, and in the rapid retrieval and analysis of large amounts of data. A secretarywith a typewriter has a comparative advantage (although often not an absolute one) over the microcomputer for typing letters. A clerk with a calculator similarly has a comparative advantage when using data that will be entered and used only once. These are fairly clear examples. Often, there are hard choices to make, however. Experienceelsewheresuggeststhat word processingactivities can easily force out other uses of the microcomputer. The machine offers tremendous advantagesin the production of committee reports that are going to go through several drafts. However, if this convenience is purchased at the price of data analysis for financial decision-making, it may well be undesirable. It most certainly will be a misallocation of resources if analysis is displaced by the production of straightforward letters and manuscripts. In the context of a developing country we would suggest,as an initial rule-of-thumb, that any task that is already being done fast enough to serve its most important purposes should not be done on the microcomputer. The machine should be reservedfor those usesthat have beenleft undone with the existing technology, or havebeendone so slowly or so inaccurately that they fail to meet the purposes for which they are needed.These are the tasks for which comparative advantageis relatively certain and which increase the efficiency of use of the scarce labour of senior managers. In our experience,there are many such uses for which this new technology can thereby be defined as ‘appropriate’. 5. The presence of a full-time specialist to introduce the microcomputer is essential for the first two years of use. Preferably such a specialist should have substantive training in economics
The introduction of any new technology requires the presence of individuals who understand the technology and can think of new ways to use it in the present context. Without continued suppor for some length of time, the local personnel will either fail to rout 1nize use of the technology, reverting to the old and better understood methods of accomplishing the task, or they will key in on the first use of the machine
164
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
and fail to consider other, and perhaps more efficient, uses of the technology. In addition, the microcomputer needsto be introduced by a ‘teacher’ if it is to gain wide application. If someone who knows the possibilities of the machine is present in the room, the potential user can be at work in half-an-hour. Otherwise, he may need several days to identify the appropriate software program and to learn the parts of the manual that are essentialto his needs. If a ‘teacher’ is not available, very few people will actually use the machine. There is a danger of the specialist being too enthusiastic. The previous four observations have highlighted the need for an individual who can teach, simplify data, be sensitive to the poor data situation, and decideon efficient usesfor the machine. In addition, the specialist must be sensitive to nuances from ministry officials whose support is important to the machine’s institutionalization. This sensitivity must include the ability both to raise and lower expectations when appropriate. While no academic training will prepare the specialist for all of these roles, an economist with considerable microcomputer experience is probably the best candidate. A computer scientist would be over-trained in areas of computerization and under-trained in the tasks to which the machine will be put. On the other hand, an economist will be of usein the machine’s substantive tasks. He or shewill be quicker to identify the ways in which the microcomputer could assist with the problems at hand and will be fully utilized by working on the problems themselves. The microcomputer has forecasting and modeling possibilities that the ministries have only begun to tap, and an economist is best suited for leading into such applications. 6. Hardware
back-up must be available
In addition to support personnel, somemachine back-up is essential.One component of the hardware revolution in microcomputers is the durability of the machines. Microcomputers are very hardy compared with earlier computers and even with present-daymainframe computers. Nevertheless,problems can occur, most often in the disk drives and the printer (the only mechanical devices) but occasionally in the microprocessor itself. It is necessary,therefore, to identify someone who can handle and deal with failures. (In fact, a recent consultant’s report to the World Bank recommended that the availability of support facilities be one of the most important criteria in the selection of a microcomputer.‘)
Microcomputers
andjnancial
management:
experience from
Kenya
165
If there is no one available locally, the technical assistanceprogramme must establish links to external repair resources. The best and most reliable ‘technician’, however, is a complete back-up system. Since the machines are inexpensive, it is both cheap and prudent to have an extra microcomputer in caseof a breakdown. This ensuresthat no delays will result from machine failure, as is often the case with mainframe computers. Having an extra system also allows for interchanging of parts-and thus quick identification of the problem area. An additional reasonfor having two machinesinitially is that it ensures flexibility in responseto rapidly developing opportunities. In Kenya, as time pressureson the machine increased, the only way to meet demands was to havethe person most adept at using the machine perform the tasks. Thus, the expatriate advisor did all the work and Kenyans trained to use the machine were unable to acquire the experiencenecessaryto become primary users.Also, as usesfor the machine increased,seriousscheduling problems arose and those tasks which were less immediate, such as training, were neglected. 7. It is difficult to ascertain the causal relationship between microcomputer output and better financial and budget decisions, although it seems clear that better decision-making does occur
The microcomputer is a tool. It is uselessif it is not utilized, and it may not create a particularly good product if it is usedby someonewho lacks skill. Similarly, a really good craftsman can make a fine product even with inferior tools. The importance of good tools is that they make it easierto do a job and therefore increasethe likelihood that it will be done. They also sometimes make it possible for a less skilled workman to do a better job. It would be misleading to overstate the impact which the microcomputer per se has had on financial management in the two ministries. Many of the changesthat have occurred have beenprimarily the result of other factors. In fact, the presenceof the microcomputer itself is a result of many of the forces that have been conducive to reform. First, the microcomputer came into the two ministries partly as a result of donor pressuresfor improved management, and partly becausethe ministries themselveswished to seeimprovements. If the atmosphere had beenunreceptive to reform the machine might not have beenintroduced, or might well have remained unused.
166
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
Secondly, a junior economist came with the microcomputer to teach people how to use it. Furthermore, he joined two experienced management advisors. These three technical assistancestaff were under pressureto improve the financial management of the ministries and they used the machine to help them to do so. If the microcomputer had not been available they almost certainly would have carried out some of the same reforms anyway. Similarly, if they had had lessskilled or supportive senior officers to work with they probably would not have been able to accomplish much, with or without the machine. Nevertheless,it is clear that the microcomputer did contribute to the reforms that occurred. Its speedand storage capacity made it easier to obtain certain types of critical information and made it possible to carry out analysis during the course of a meeting-something that was previously impossible. Its accuracy and formatting capabilities made the data more reliable and easier to understand. Thus, the ‘costs’ of the information in terms of time and inconveniencewere lowered and senior officers decided to ‘buy’ more of it. Although labour in general is abundant in developing countries, skilled managers are not. Capital investments that will make this very scarceresourcemore productive are very likely to be ‘appropriate technologies’. Furthermore, the presenceof the microcomputer visibly changed the technology of financial decision-making. It made it clear to everyonethat it was possible to do things that had not beendone before. Thesereforms might have been possible without the machine, but it would have been harder to convince people that they were desirable or worth the effort. Similarly, the microcomputer legitimized a role in financial decisionmaking for those who could use it, therefore making it easier for new, reform-minded individuals to participate actively. Once again, the microcomputer did not cause-or even permit-the reforms that have taken place. It was a tool and has simply made the process of improvement and change easier in a setting that was already conducive to it. Given the difficulties of any organizational reform, however, a tool that makes change easier is a precious commodity. CONCLUSION The uses of the microcomputer which we have described in this paper broke new ground in Kenya. They also were critical to initiating and
Microcomputers
andjnancial
management:
experience from
Kenya
167
executing a processof improvement in a governmental system of financial management which had deteriorated significantly in recent years.There is a very good reasonto hope that the careful application of microcomputer technology may help to achieve similar reforms in other poorly administered countries. At first one is tempted to argue that, as a capital intensive technology, microcomputers are inappropriate for poor, labour-abundant economies. Our experiencesuggeststhat such a conclusion would be in error. Unlike many usesof mainframe computers, microcomputers do not seem to displace semi-skilled workers in the financial management area. At worst, they smooth out the peaks of demand for the time of typists and clerks. The labour that microcomputers render more efficient is that of skilled managers, and these are in critically short supply in most poor countries. At least for some applications, microcomputers do pass the ‘appropriate technology’ test for poor countries. REFERENCES 1. Data Pro Research Corporation, The Data Pro Directory of Microcomputer Software, Chicago, McGraw-Hill, 1982. 2. Gotsch, Carl, Report to the Permanent Secretary on the Potential Benefits of Selective Computerization in the Ministry of Agriculture, Palo Alto, Gotsch Associates, Inc., January, 1982. 3. Leonard, David K., Cohen, John M. and Pinckney, Thomas C., Budgeting and financial management in Kenya’s Agricultural Ministries, Agricultural Administration,
14 105-20.
4. Pinckney, Thomas C., Cohen, John M. and Leonard, David K., Microcomputers and financial management in Development Ministries: Experience from Kenya. Development Discussion Paper No. 137, Cambridge, Massachusetts, Harvard Institute for International Development, August, 1982. 5. Stone, Jeffrey, King, Hal and Owens, Mary, Microcomputer selection study, Washington, DC, The World Bank, Computing Activities Department, 16 July, 198 1. 6. Wad, Atul, Microelectronics: Implications and strategies for the Third World, Third World Quarterly, 4(4) (1982), pp. 677-97.
Administration
14 (1983) 151-167
Microcomputers and Financial Management in Development Ministries: Experience from Kenya
Thomas C. Pinckney Ministry
of Agriculture,
PO Box 47098, Nairobi,
Kenya
John M. Cohen Harvard Institute for International Development, 1737 Cambridge St., Cambridge, MA 02138, USA
David K. Leonard Department
of Political Science, University Berkeley, CA 94720, USA (Received:
10 February,
of California,
1983)
SUMMARY Kenya’s Ministries of Agriculture and Livestock Development have recently begun to use microcomputers as a tool for improved financial management. The conventional wisdom has been that the use of such high technology is inappropriate in a developing country, where capital is scarce and labour abundant. Such an assessment may well be mistaken with regard to microcomputers, for their capital costs are modest and they can extend the eflectiveness of scarce, skilled managers. In this paper case studies are provided of three applications of microcomputers to financial management in which the authors have directly participated. The likely preconditions are then evaluated for the successful use of microcomputers in similar situations. 151 Agricultural Administration 0309-586X/83/$03.00 England, 1983. Printed in Great Britain
0 Applied
Science Publishers
Ltd,
152
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
As we indicated in our previous paper on financial management in Kenya,3 the traditional expenditure reports from the Vote Control Section have not been an effective tool of financial management in the Ministry of Agriculture (MoA). (The same problem applies to the Ministry of Livestock Development (MLD) but to simplify our presentation we will refer in this paper only to the ministry which provides the best illustration of a system.) The expenditure reports have been unfocused, inflexible, untimely and inaccurate. In order to make the expenditure reporting system more usable for financial management, it was decided, in late 1981, to use a microcomputer which the Ministry had just acquired as a result of an experimental USAID-funded demonstration by Carl Gotsch.’ The particular microcomputer used was an Apple II with 64K, a CP/M card, two disk drives and a matrix printer. The whole system had been bought for under US$5000. Several other low priced microcomputers could have performed the same functions.5 The advantages of the Apple for use in Kenya were (1) the large number of pre-written programs (‘software’) available, particularly when the CP/M card is installed; (2) the Apple’s relatively high level of resistance to fluctuations in power supply; (3) the presence of several other similar machines in the country together with the accompanying personnel capable of repairing them and (4) the fact that the Apple system can accept expansion boards which substantially increase its capacity. (Subsequent to the developments reported here the Ministries purchased a 128K board for US$400.) MoA used the VisiCalc program with its microcomputer for all of its initial innovations in financial management systems. VisiCalc and similar ‘electronic spreadsheets’ are much easier to understand and teach than is normal programming. (A fuller description of the features of this program and examples of its application are discussed elsewhere4). Thus, we found that professionals in MoA could begin using VisiCalc with less than two hours of initial training if an experienced user were available for consultation as questions arose. The first step was to create a VisiCalc summary template for each subvote (sub-division) of the recurrent and development budgets for MoA. The data on field expenditures could then be entered into it as they were received. The advantage of this new step is that the machine can recalculate the totals and percentages almost instantly whenever asked. Thus, the final report is ready for printing by the microcomputer as soon
Microcomputers
and financial
management:
experience from
Kenya
153
as the last figure is entered.(We have presentedelsewhereexamples of this form and the other reports mentioned in this.paper4.) Several of the shortcomings of the traditional expenditure reporting system were lesseneddirectly by this application of the microcomputer. First, final reports were available much more quickly. In our experienceit was possible to take two to five weeks off the preparation time. This time difference proved crucial in getting decision-makers to seethe reports as current-and therefore relevant. Further improvements in the timeliness of the reports could be achievedby eliminating the preliminary processing of the data at the provincial level. Secondly, the accuracy of reports was improved. In the past, significant errors had been made in addition and in typing. Human error in calculation was, of course, eliminated by the machine. Typing errors were avoided by having the data processor enter his own figures. Carelessness by typists, to whom the figures had no intrinsic meaning, had been a major problem in the past and much professional time had beenabsorbed in the proof-reading and correction of their work. Thirdly, the final reports became much more focused and therefore usable by decision-makers. The microcomputer facilitated the calculation of percentages,the use of graphics and the preparation of summary reports. All of these deviceshelped to point the attention of busy senior administrators toward the figures that represented problems, and therefore required their attention. One of the great advantages of the microcomputer/VisiCalc combination is that it is easy to modify the format in which financial data are presented.In this way it is possible to experiment and constantly to improve the layout of the reports, making them much clearer and more ‘transparent’ to the reader. The problem of inflexibility of the reports was not solved by using VisiCalc. To be able to reassemble the data along different analytic dimensions for an organization as large and diverse as MoA, it is necessaryto use a more complex analysis program. The Ministry is now using dBase II to achieve this flexibility (as we describe further below). Such a useinvolves a difficult trade-off, for the dBasesystemis much more complicated to use-and is therefore accessible to smaller number of staff. (For comparative analyses of programs, see The Data Pro Directory of Microcomputer Software.‘) We want to stress,however, the remarkable fact that a USS112million organization like MoA was able to use such a simple and limited tool as VisiCalc to dramatically improve the quality of its financial reports. The result of the relatively simple changeswhich the microcomputer
154
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
brought to the expenditure reporting system was a significant increasein its use. In particular, the figures were used very extensively in that year’s budgeting exerciseat severalstagesin the process.They also were usedto addressmanagement problems of over- and under-expenditure of funds. PREPARATION
OF THE BUDGET
The 1982/83 budget preparation process in MoA began with the Treasury’s issuing a recommended ceiling which could not accommodate the Ministry’s existing activities, newly developed and signed projects, and expanded parastatal requests. The Recurrent Budget requestsfrom MoA’s constituent parts totaled KL90.5 million against a ceiling of KL24.4m, whilst Development Budget proposals were KL77.9m when the ceiling was setat KL3 1.7m. Senior finance officersin the MoA decided that, rather than simply passing on the requeststo the Treasury, as had been done in earlier years, they would hold an extensive set of in-house budget reviews in order to reduce the requests to a level at which the Treasury would take the Ministry’s budget submission seriously. In the past there had been no useful summary format for the Draft Estimates (i.e. budget) process. Typically, the Development and Recurrent Budget submission for MoA comprises more than 100 stencil pages.Such a document is not useful to decision-makers trying to keep a daily overview of the budget formulation process. Working with MoA’s financial officers,we used VisiCalc to devisea five-pagesummary format based on all the program sub-divisions of the two budgets. It presented basic financial data for each program, such as its 1981/82 Budget authorization, 1981/82expenditure, and 1982/83Forward Budget figure. For the Development Budget, requestswere broken down into those from old projects, new projects, and parastatals. Since eachof three groups was treated somewhat differently, the breakdown helped to shed light on where in-house cuts were taking place. The format proved valuable as a daily update on the present situation. After each session, during which programs or projects had been discussed,the agreedupon figures were entered into the microcomputer and new forms distributed at the beginning of the next session.Each form included the total amount agreedupon so far, the percentageof requests that had been granted, and the averagepercentagecut necessaryduring the remaining sessionsif MoA was to stay within the Treasury ceiling.
Microcomputers
and-financial
management:
experience from
Kenya
155
This constant update helped to promote a substantial reduction in the original requests. The availability of up to date expenditure reports compiled by the microcomputer (as discussedearlier) was crucial to the reduction of over-inflated requests. As each line item in a program was reviewed, it would be compared with expenditure for the current year, and the requestwould generally be cut if expenditure was low. Hence, the microcomputer-based information systems were used in two different ways during the in-house budget review process. Despite substantial cuts, the regular internal review processendedwith the proposed Recurrent Budget KL2.5m over ceiling and the Development one, KL25m over. The Ministry’s finance officers felt that submission of the latter figure, which exceededthe ceiling by 80 %, would lead to arbitrary cuts by the Treasury. They therefore decided that the senior officers of the Ministry should meet again and decideupon further cuts basedupon MoA’s priorities. Since thesesenior officials could not be expected to digest over 100 pages of budget documents, the microcomputer summary Tables were used once again. Most senior officers attended the meeting. Based on the priorities agreed, KL6m more were cut from the Development Budget submission. Still greater reductions could have been achieved if analyses had been available of the parastatal requests,which representeda substantial part of the surplus demands. To some extent the discussionwas facilitated by the budget format. Clearly, the simplicity and briefness of the summary printout helped to gain the attention of the officers attending and led to a focused analysis of particular items contributing to the submission’s being over ceiling. The meeting was important for more than the cuts achieved,however. Policy discussionson MoA priorities occurred. Previously, the details of the Estimates process had so overwhelmed the participants that policy issueshad not been explicitly pursued. The microcomputer also was central to a series of meetings held in MLD to establish spending priorities when it became evident that the Ministry would have a funding crisis during 1981/82. Here, the new technology encouraged officers to ask for expenditure information that had previously beeninaccessible.The microcomputer also was usedas an aid to projections and computations in the meetings themselves. While the decisions were being made, they were also being recorded on the microcomputer. Immediately after the meeting it was possible to produce a Table giving the exact decisions,on an item-by-item basis.The useof the
156
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
microcomputer in the expenditure cuts process made the financial decision-making quick, accurate and authoritative. Without the machine and the easeof calculation which it provided, much of what was done would not havebeenattempted, or it would havebeendone so slowly asto have been without effect on operations. Not only have the preceding applications of the microcomputer to budgeting beena success;the ministries intend to make the machine even more central to the 1982/83 budget process. The microcomputer will probably be brought to the in-house meetings and used to record decisions as they are made. This innovation will speedup the calculation and printing of the lengthy budget document and will overcome the problems causedwhen a change in one item necessitatesrecalculation of higher summary figures throughout the budget. It is hoped that the speed and accuracy achievedwill provide time for ministry officials to consider policy and operational issuesrather than proof-reading stencils, standing over secretariesand madly compiling massive documents as they race to meet Treasury deadlines. Becausewe were still in an experimental phase, we used the microcomputer only for analysis in the 1982/83 budget exerciseand relied on traditional methods to produce the final document. The results illustrate the problem. The in-house cuts in MLD were completed on the 24th of March and the Treasury deadline was the 25th of March. MLD was unable to make its submission until the 26th of April, largely becauseof typing delays and errors. The Senior Assistant Secretary for Finance of MLD spent almost all his time in these three weeks in the frustrating mechanical task of getting the document produced, not in analysing the proposals and preparing his casefor the Treasury. Despite all his work, the final document still contained at least three errors of addition. Clearly, further expansion in the use of the microcomputer for budgeting is merited. PREPARING ALLOCATIONS
FOR THE FIELD
Both MoA and MLD have experiencedproblems in past years with the issuanceof expenditure authority to spending stations. Given an increase in the ability of headquarters to monitor expenditures, it made senseto begin to receive information directly from the spending stations. If districit-level expenditureswere to be reviewedby headquarters,it seemed ’ best that districts should receive their allocations direct.
Microcomputers
and$nancial
management:
experience from
Kenya
157
This decision to allocate funds to districts was reinforced by the Government’s directive that the district was to be the hub of development activity in rural areas. Such allocations would treble the headquarters work in issuing Authorities to Incur Expenditures (AIEs) as they now would have to be made out for the districts in addition to the provinces. Both ministries therefore decided to use the microcomputer in the process. (Both MoA and MLD used similar procedures. Only the experienceof MLD will be described, eventhough MoA made the change first, as the processwas further refined and somewhat simpler there.) Since over 4000allocations to spending units would have to be made, it was decided that a mechanical procedure would be used to make preliminary proposals. Information was solicited from the field on actual expenditures in the previous year. The management advisors then used dBase II to produce preliminary allocations based on a combination of previous allocations and expenditures. These suggestedallocations were then reviewed by finance officers and program division chiefs, who checked for omissions and sub-optimal distributions of funds. This review stage was important as the previous year’s allocations had suffered from the problems mentioned in our previous paper.3Reactions ranged from those who made only a very few changes to those who altered every allocation for their programs. In previous yearsfew division chiefs had referred to past expenditure records in making allocations. The result of combining review with expenditurebased mechanical allocations was the best distribution of funds in many years. When the alterations suggestedby the division chiefs werereceivedthey were entered into the microcomputer as corrections to the existing program. After a few final checks and adjustments, the allocations were printed and distributed to the field officers. Thus, the working documents becamethe final, legal Authorities to Incur Expenditures themselveswith very little additional work. The result of the exercise was a more rational set of allocations combined with the timely issuance of AIEs. In MoA the issuance was earlier than in any previous year, despite the trebling in the number of AIEs to be written. In addition, districts no longer had to wait for their provincial director (PD) to divide up his allocation. They now knew their funding authority within two weeks of the start of the financial year, and should have them even more quickly in 1983. This speedwas possible because all the typing and analytic data could be entered into the
158
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
microcomputer at leisure before the budget was made public. Only the program item figures from the actual budget had to be enteredfor a trial set of allocations to districts to be produced. Once the corrections made by the program chiefs were made, a final copy of the AIEs could be printed without the delay of waiting for typists and proof-readers. The effectof using the machine was not to displace the work of the clerical staff but to spread it out into periods of less time stress, thus averting a bottleneck when the need to issue the final document was urgent. Furthermore, the microcomputer printer was able to cut all the documents onto mimeograph stencils, thus enabling the Ministry to use the most cost efficient (and intermediate technology) methods of duplicating them. A further successof the exercisewas the setting up of the district-level expenditure monitoring system. Issuing the AIEs on the microcomputer made such a system very easyto set up. Now, the Vote Control Section of MoA is able to enter returns from AIE holders directly into the machine as they arrive. If all returnsare in by the fifteenth of the month, the report on expenditurescan be out by the twentieth, including a list of expenditures by program, by AIE holder, and by those particular spending stations that have considerably over- or under-spent on certain items. Thus, not only is greater speedachieved,but more analytic information is provided than was ever available before. Ths advantage of using the microcomputer, while certainly present for the issuance exercise, becomes extraordinary when the same file of allocations is used subsequently for other purposes. Despite the considerable successes,there were errors in the allocations that we believe can be avoided in the future, In MoA errors arose in the processfrom three sources:sourcedata errors, errors in entering numbers into the machine and computer errors. Several of the provincial directors (PDs) were relatively late in submitting their allocation reports from the field. In many casesthere were typing errors in theseprovincial reports. Some of these were obvious and were corrected while the numbers were being entered into the machine. Others, however, only became apparent after the allocations had already been made. A few further errors were made by the operator entering an incorrect digit. Finally, the microcomputer itself had two problems with the storage and retrieval of information from the floppy disks. As MoA had distributed virtually 100% of its budget, these errors (about 25 in all) forced over 120 adjustments to allocations, as money had to be removed from some AIE
Microcomputers
andjnancial
management:
experience from
Kenya
159
holders in order to increasethe allocations of those who did not receive their share. GENERAL OBSERVATIONS ON THE USE OF MICROCOMPUTERS FOR FINANCIAL MANAGEMENT DEVELOPMENT MINISTRIES 1. Staff with secondary microcomputers
school
education
can be trained
IN
to operate
All of the usesof the microcomputer describedin this paper have involved the VisiCalc or dBase II packaged programs. One of the most important advantages of microcomputers is the availability of such programs at moderate prices, thus escapingthe needfor an accomplished professional programmer. The above applications of theseprograms were introduced into the two ministries by three advisors (the authors). All of us have PhDs and two of us had worked with computers before, but none of us had had prior computer programming experience.Still, our level of skills is not sustainable in the environment of developing countries, and one of our major concerns has beento develop indigenous skills that can sustain the uses of the microcomputer that we have introduced. Both software programs require two types of skill: (a) simple programming to set up the accounting matrix, and (b) the entering, storing and printing of data. VisiCalc is much easier to program than dBase, and this is one of the reasonswhy we beganwith it. The ministries have increasingly moved to the use of dBase, however, becauseVisiCalc could not provide some of the financial management information for which the ministries’ senior officers were beginning to ask. The shift to dBasehas had both costs and benefitsfrom a training point of view. Whilst dBase is more difficult to learn than VisiCalc, it doesallow someonewith programming skills to create formats and prompts on the screenwhich ask the user specific questions. Consequently, for 95 % of the usesto which the system is being put, the actual process is very simple, much simpler than with VisiCalc. To train a clerk to enter expenditure reports in VisiCalc requires a couple of days to explain editing, saving, printing and what numbers are to be entered where. With the dBase system that hasnow beendeveloped, a person has actually beentrained to enter and print the normal reports in 30 min. Furthermore, the ‘standard reports or lists of information which are now available more or lessat the
160
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
push of a button are more than what was available with considerable difficulty from VisiCalc. With respectto the task of entering data into either VisiCalc or dBase templates, the two ministries have had no difficulty in finding and training staff. The backgrounds of those who have learned to use the system and have worked on it have ranged from clerks with middle secondary education (Ordinary Level examination) without quantitative training up to those with university degrees. The task of programming the software packages for specific applications apparently requires a minimum of higher secondary schooling in mathematics (Advanced Level examination). The woman who has been so trained in MoA now does 90 % of the training of lower level personnel, knows VisiCalc inside out, and is quite good at interactive dBase. After lessthan a year of working approximately five hours a week with the microcomputer her programming skills were improving, and she was able to make minor variations in the dBase programs herself. We do not yet know whether she or someone of comparable skills will eventually be able to write original, complex programs. We would like to be able to train someonewith the equivalent of a BSc in mathematics, who we are sure could master all the complexities of the programming, but we have not yet been successful in getting such a person assigned within the constraints of the civil service system. The mathematics training at university or higher secondarylevel is not in itself a prerequisite to programming for the microcomputer. There is no particular item in the higher secondary level syllabus that teaches students to be more adept at using a microcomputer. The attained educational level is only a signal that this individual has sufficient mathematical abilities to be able to consider a problem and to figure out how the microcomputer and available software can be used to solve it. So far, very few senior officials seeminterestedin getting their fingers on the machine. They are more interested in asking for information and having it provided. Much of this may come from their lack of typing ability and a fear of consequent embarrassment. However, further attempts to provide ‘hands on’ experience to such officials are planned. 2. Microcomputers facilitate experimentation with data formats, thereby promoting easier analysis and contributing to better decision-making
The micrometer improves the ‘transparency’ of data. With VisiCalc one can quickly alter the format in which data is presented,and thus one can
Microcomputers
and financial
management:
experience from
Kenya
161
quickly convey to administrators and senior policy-makers the essential decision-making issues raised. For example, the budget estimates summary format was constantly changed as it was reviewed by finance officers. When they raised questions about interpretation of column labels, improvements were made. Columns could be shifted, new columns added, labels changedquickly, and new, more understandable, printouts produced. Both senior policy-makers and middle-level technical officers in most bureaucracies find budget and finance data time-consuming to understand and tedious in their implications. Any innovation which facilitates the translation of such data in a meaningful way merits further attention. 3. Faith in the microcomputer’s
abilities can blind users to possible errors
Several times we have heard the statement that ‘the numbers came from the computer so they must be correct’. Of course, errors can and do arise in the process. They are of four types: microcomputer errors, programming errors, data entry errors, and source data errors. All computers occasionally make errors. Usually these result from electronic current fluctuations, from dust contaminating a floppy disk and damaging the stored data, or from a command to store or retrieve data being improperly processedby the computer. Fortunately, most of these errors are easily detectable. In over a year of heavy work with the machine in the two ministries, we have detected only three computer errors. Data entry errors are more frequent. Whenever data is taken from one sourceand retyped therewill be some errors. While the computer’s storing of every keypunch makes checking for errors relatively easy,some errors will always slip by. Programming errors occur whenever the programmer creates a series of calculations that are intended to perform one function, but in fact do something else. This happens virtually every time a program is written; after one or two iterations, the ‘bugs’ are worked out. The largest sourceof error in the experienceof the ministries, however, has been reports from the field. In order to discover what sourcesof error occurred with the VisiCalc expenditure monitoring system, a Vote Control clerk with six years’ experience computed the December, 1981 returns by hand after the same work had been done on the machine. He discovered 53 cases where his reports differed. Of these, 49 can be categorizedasdata errors, which the experiencedclerk recognizedand the
162
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
inexperienced microcomputer operator did not. The other four differences resulted from data entry errors. In this particular casethere were no program or computer errors. Thus, reports printed by the computer can be in error. Stepshave been taken to minimize errors in the reporting system now, and the new expenditure system would catch all of the 49 errors mentioned above. Nevertheless, accurate reports at headquarters require that field accountants file accuratereports. It is hoped that feedback to the field on the importance of the returns will impress upon the accountants the necessity of providing good data. (In our judgement and experience, handwritten figures are more likely to be accuratethan typed ones,as they will have beendone by the reporting officer and will not havetypist errors. It is difficult, however, to break the habit of what a ‘good’ report looks like.) Meanwhile, it is useful to encourage senior officers to question statistics which surprise them and not simply to acceptmachine processed data and analysis on faith. 4. Once the technology is understood there is a tendency to use it as a solution to every problem encountered, leading to inappropriate uses of the machine
The microcomputer will help marginally in virtually every task that involves typing or punching numbers. The difficult choice for implementers is deciding which ones of an almost infinite number of tasks should use the machines, given the constraints on machine time, the implementer’s time, and the interest of government officials. Executives often have one of two extreme reactions. First, they may view the machine as a threat to their position or their importance, or simply misunderstand its nature, and thus want nothing to do with it. Secondly,they may act like the small boy with a hammer and find that everything needshammering. The first reaction may rule out, for the time being, somevery efficient uses of the machine. The second forces the implementing agents to make choices, balancing efficient uses of the microcomputer with the desire to continue to satisfy the needsof those officials who are enthusiastic about the machine’s presence. It is particularly important to think about the uses to which the microcomputer is put in a developing country, or else the abundant labour of Third World clerks will be displacedwith the important product of the scarcelabour of First World microcomputer designersand factory
Microcomputers
and financial
management:
experience from
Kenya
163
workers. Guidelines for efficient use come from the comparative advantage the microcomputer has over typists and clerks.6 Microcomputers have an absolute advantage in speed and accuracy of computation, ability to quickly revise formats, and in the rapid retrieval and analysis of large amounts of data. A secretarywith a typewriter has a comparative advantage (although often not an absolute one) over the microcomputer for typing letters. A clerk with a calculator similarly has a comparative advantage when using data that will be entered and used only once. These are fairly clear examples. Often, there are hard choices to make, however. Experienceelsewheresuggeststhat word processingactivities can easily force out other uses of the microcomputer. The machine offers tremendous advantagesin the production of committee reports that are going to go through several drafts. However, if this convenience is purchased at the price of data analysis for financial decision-making, it may well be undesirable. It most certainly will be a misallocation of resources if analysis is displaced by the production of straightforward letters and manuscripts. In the context of a developing country we would suggest,as an initial rule-of-thumb, that any task that is already being done fast enough to serve its most important purposes should not be done on the microcomputer. The machine should be reservedfor those usesthat have beenleft undone with the existing technology, or havebeendone so slowly or so inaccurately that they fail to meet the purposes for which they are needed.These are the tasks for which comparative advantageis relatively certain and which increase the efficiency of use of the scarce labour of senior managers. In our experience,there are many such uses for which this new technology can thereby be defined as ‘appropriate’. 5. The presence of a full-time specialist to introduce the microcomputer is essential for the first two years of use. Preferably such a specialist should have substantive training in economics
The introduction of any new technology requires the presence of individuals who understand the technology and can think of new ways to use it in the present context. Without continued suppor for some length of time, the local personnel will either fail to rout 1nize use of the technology, reverting to the old and better understood methods of accomplishing the task, or they will key in on the first use of the machine
164
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
and fail to consider other, and perhaps more efficient, uses of the technology. In addition, the microcomputer needsto be introduced by a ‘teacher’ if it is to gain wide application. If someone who knows the possibilities of the machine is present in the room, the potential user can be at work in half-an-hour. Otherwise, he may need several days to identify the appropriate software program and to learn the parts of the manual that are essentialto his needs. If a ‘teacher’ is not available, very few people will actually use the machine. There is a danger of the specialist being too enthusiastic. The previous four observations have highlighted the need for an individual who can teach, simplify data, be sensitive to the poor data situation, and decideon efficient usesfor the machine. In addition, the specialist must be sensitive to nuances from ministry officials whose support is important to the machine’s institutionalization. This sensitivity must include the ability both to raise and lower expectations when appropriate. While no academic training will prepare the specialist for all of these roles, an economist with considerable microcomputer experience is probably the best candidate. A computer scientist would be over-trained in areas of computerization and under-trained in the tasks to which the machine will be put. On the other hand, an economist will be of usein the machine’s substantive tasks. He or shewill be quicker to identify the ways in which the microcomputer could assist with the problems at hand and will be fully utilized by working on the problems themselves. The microcomputer has forecasting and modeling possibilities that the ministries have only begun to tap, and an economist is best suited for leading into such applications. 6. Hardware
back-up must be available
In addition to support personnel, somemachine back-up is essential.One component of the hardware revolution in microcomputers is the durability of the machines. Microcomputers are very hardy compared with earlier computers and even with present-daymainframe computers. Nevertheless,problems can occur, most often in the disk drives and the printer (the only mechanical devices) but occasionally in the microprocessor itself. It is necessary,therefore, to identify someone who can handle and deal with failures. (In fact, a recent consultant’s report to the World Bank recommended that the availability of support facilities be one of the most important criteria in the selection of a microcomputer.‘)
Microcomputers
andjnancial
management:
experience from
Kenya
165
If there is no one available locally, the technical assistanceprogramme must establish links to external repair resources. The best and most reliable ‘technician’, however, is a complete back-up system. Since the machines are inexpensive, it is both cheap and prudent to have an extra microcomputer in caseof a breakdown. This ensuresthat no delays will result from machine failure, as is often the case with mainframe computers. Having an extra system also allows for interchanging of parts-and thus quick identification of the problem area. An additional reasonfor having two machinesinitially is that it ensures flexibility in responseto rapidly developing opportunities. In Kenya, as time pressureson the machine increased, the only way to meet demands was to havethe person most adept at using the machine perform the tasks. Thus, the expatriate advisor did all the work and Kenyans trained to use the machine were unable to acquire the experiencenecessaryto become primary users.Also, as usesfor the machine increased,seriousscheduling problems arose and those tasks which were less immediate, such as training, were neglected. 7. It is difficult to ascertain the causal relationship between microcomputer output and better financial and budget decisions, although it seems clear that better decision-making does occur
The microcomputer is a tool. It is uselessif it is not utilized, and it may not create a particularly good product if it is usedby someonewho lacks skill. Similarly, a really good craftsman can make a fine product even with inferior tools. The importance of good tools is that they make it easierto do a job and therefore increasethe likelihood that it will be done. They also sometimes make it possible for a less skilled workman to do a better job. It would be misleading to overstate the impact which the microcomputer per se has had on financial management in the two ministries. Many of the changesthat have occurred have beenprimarily the result of other factors. In fact, the presenceof the microcomputer itself is a result of many of the forces that have been conducive to reform. First, the microcomputer came into the two ministries partly as a result of donor pressuresfor improved management, and partly becausethe ministries themselveswished to seeimprovements. If the atmosphere had beenunreceptive to reform the machine might not have beenintroduced, or might well have remained unused.
166
Thomas C. Pinckney,
John M. Cohen, David K. Leonard
Secondly, a junior economist came with the microcomputer to teach people how to use it. Furthermore, he joined two experienced management advisors. These three technical assistancestaff were under pressureto improve the financial management of the ministries and they used the machine to help them to do so. If the microcomputer had not been available they almost certainly would have carried out some of the same reforms anyway. Similarly, if they had had lessskilled or supportive senior officers to work with they probably would not have been able to accomplish much, with or without the machine. Nevertheless,it is clear that the microcomputer did contribute to the reforms that occurred. Its speedand storage capacity made it easier to obtain certain types of critical information and made it possible to carry out analysis during the course of a meeting-something that was previously impossible. Its accuracy and formatting capabilities made the data more reliable and easier to understand. Thus, the ‘costs’ of the information in terms of time and inconveniencewere lowered and senior officers decided to ‘buy’ more of it. Although labour in general is abundant in developing countries, skilled managers are not. Capital investments that will make this very scarceresourcemore productive are very likely to be ‘appropriate technologies’. Furthermore, the presenceof the microcomputer visibly changed the technology of financial decision-making. It made it clear to everyonethat it was possible to do things that had not beendone before. Thesereforms might have been possible without the machine, but it would have been harder to convince people that they were desirable or worth the effort. Similarly, the microcomputer legitimized a role in financial decisionmaking for those who could use it, therefore making it easier for new, reform-minded individuals to participate actively. Once again, the microcomputer did not cause-or even permit-the reforms that have taken place. It was a tool and has simply made the process of improvement and change easier in a setting that was already conducive to it. Given the difficulties of any organizational reform, however, a tool that makes change easier is a precious commodity. CONCLUSION The uses of the microcomputer which we have described in this paper broke new ground in Kenya. They also were critical to initiating and
Microcomputers
andjnancial
management:
experience from
Kenya
167
executing a processof improvement in a governmental system of financial management which had deteriorated significantly in recent years.There is a very good reasonto hope that the careful application of microcomputer technology may help to achieve similar reforms in other poorly administered countries. At first one is tempted to argue that, as a capital intensive technology, microcomputers are inappropriate for poor, labour-abundant economies. Our experiencesuggeststhat such a conclusion would be in error. Unlike many usesof mainframe computers, microcomputers do not seem to displace semi-skilled workers in the financial management area. At worst, they smooth out the peaks of demand for the time of typists and clerks. The labour that microcomputers render more efficient is that of skilled managers, and these are in critically short supply in most poor countries. At least for some applications, microcomputers do pass the ‘appropriate technology’ test for poor countries. REFERENCES 1. Data Pro Research Corporation, The Data Pro Directory of Microcomputer Software, Chicago, McGraw-Hill, 1982. 2. Gotsch, Carl, Report to the Permanent Secretary on the Potential Benefits of Selective Computerization in the Ministry of Agriculture, Palo Alto, Gotsch Associates, Inc., January, 1982. 3. Leonard, David K., Cohen, John M. and Pinckney, Thomas C., Budgeting and financial management in Kenya’s Agricultural Ministries, Agricultural Administration,
14 105-20.
4. Pinckney, Thomas C., Cohen, John M. and Leonard, David K., Microcomputers and financial management in Development Ministries: Experience from Kenya. Development Discussion Paper No. 137, Cambridge, Massachusetts, Harvard Institute for International Development, August, 1982. 5. Stone, Jeffrey, King, Hal and Owens, Mary, Microcomputer selection study, Washington, DC, The World Bank, Computing Activities Department, 16 July, 198 1. 6. Wad, Atul, Microelectronics: Implications and strategies for the Third World, Third World Quarterly, 4(4) (1982), pp. 677-97.