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Performance-based budgeting reform: lessons from Seychelles on the use of performance information

A CABRI report on the status of performance and programme-based budgeting (PPBB) in Africa in 2013 showed that over 80 percent of African countries had introduced or were committed to introducing PPBB. One of the main findings of the report is that the main positive effects have been at the budget formulation stage. In some countries, the finance ministry is now more concerned with broader resource allocation decisions than with the micro-management of the spending of ministries. In addition, more flexibility has been provided to spending ministries and agencies in determining their annual budgets. Also, the quality of technical budget negotiations between the finance ministries and line ministries in some African countries has improved. Gradually, more performance information is becoming available.

At the end of August, CABRI participated in a World Bank assessment of the progress made on the implementation of PPBB in Seychelles, which complements our PPBB work in Namibia, Mali and Zanzibar, amongst others.

In the case of Seychelles, PPBB was introduced in 2013 as one of the pillars of a government-wide shift towards results-based management. The other three pillars of the reform strategy include: the development of a national development plan and associated sector strategies; monitoring and evaluation frameworks; and individual performance evaluations. In the budget pillar, the use of performance information is backed by a provision in the public finance management act (PFMA) that requires annual performance reports, and takes the form of medium-term budgeting by programmes. Progress is measured against a select number of performance indicators and targets that are informed by institutional mandates and strategic objectives. A provision in the PFMA requires the reporting of deviations from the targets.

To date, PPBB has been piloted in five ministries in Seychelles and will be rolled out to the remaining nine ministries on a presentational basis in the 2017 budget. The presentational PPBB will entail a programmatic presentation of estimates of expenditure with a description of programmes and programme objectives. At this stage, indicators to measure programme performance and the resultant changes to budget allocations will not be included.

A key test is how performance information that is included in the PPBB statements of the five pilot ministries will be reported, used in the management evaluation system, and contribute to expenditure allocations for the 2017 and 2018 budget.

While performance reporting requirements exist in form, with the PFMA and PPBB changes to the budget process, the important question is how institutions need to be strengthened to change the rules of the game so that performance information and its use is meaningful and that budgetary outcomes are improved. In order to boost the culture of performance reporting, the monitoring and evaluation pillar of the results-based management strategy will be initiated.

Experiences from other countries show that the use of performance information is not without challenges. In Mauritius, the implementation of PPBB increased awareness of performance and the need to monitor the achievements of targets, but challenges remained with the design of meaningful indicators and the integration of performance information in the budget allocation process. Reforms to improve the quality of performance information were undertaken to reduce the number of activity indicators and focus on output indicators. Similar to the lessons from Uganda, where they have minimised performance indicators to avoid the complex activity-based approach. This is an important strategic decision, which has curtailed unnecessary detail, and should be avoided when budget basics still require attention.

Finally, it is also worth noting that some non-African countries have now had more than 25 years’ experience with PPBB implementation. Over this time, countries have experimented with, learnt from results, and readjusted PPBB systems whenever necessary. For example, in Australia, although the current goals of its outcome-based PPBB system remain consistent with those originally announced in 1984, there have been spurts of reform and reductions in emphasis on certain initiatives only to see them re-emerge a decade later.