Nnenna L. Nwabufo, Director, Programming and Budget of the African Development Bank (AfDB) is a thoroughbred professional. She had her stint with Chase Manhattan Bank in Lagos, Nigeria where she started out working in Operations, reporting on letters of credit issued and paid, before moving to the Budget Department and later to the Treasury Department.

A graduate of the University of Lagos and Henley Management College in Henley-on-Thames, United Kingdom, she holds an MSc in Economics and an MBA. In this interview with AnnualMeetings Daily, Nwabufo provides an insight into the role of programming and budget in the actualization of the AfDB’s core mandate, how effective coordination has enhanced the activities of the Bank and areas that would be improved upon now that the AfDB has attained the golden age. Excerpts:

How would you describe the role of programming and budget in the actualization of the AfDB’s core mandate?
As you are aware, the role of programming and budget is very crucial to the existence of any institution, and the AfDB is no exception. This is so because the planning, allocation, deployment, and corporate performance monitoring of an institution’s operational, human and financial resources is dependent on it.

The Bank’s core mandate is to promote sustainable economic growth and reduce poverty in Africa and it plans to achieve this through short, medium and relatively longer term strategies such as the Bank’s Ten Year Strategy (TYS) for 2013-2022. Under the joint responsibilities of the Programming and Budget (COPB) and the Strategy and Policy (COSP) Departments, the Bank develops its three-year rolling work programmes and budgets from the strategy. The two departments work in close consultation with organizational units to coordinate the preparation, consolidation and implementation of the three-year work programmes and budgets.

COPB specifically ccoordinates resource allocation, budget management and execution, including budget and performance monitoring. It ensures that resources are allocated to strategic priorities. Thus the work programmes and budgets provide a framework for the implementation of the strategy, and therefore the Bank’s mandate. The work programmes build on SMART Key Performance Indicators (KPIs) which are derived from the Bank’s Results Measurement Framework (RMF). In collaboration with other departments, COPB periodically reviews the KPIs to ensure that they are consistent with the objectives of the TYS and other commitments made by the Bank, e.g. during the General Capital Increase and ADF replenishments discussions. COPB also coordinates the preparation of Budget and Performance Reports which inform Management and the Boards in taking corrective action.

Programming and Budgeting therefore play an important role in aligning resource allocation to the work programmes, strategic priorities and results. This definitely contributes towards the actualization of the Bank’s core mandate.

My assessment of the actualization of the Bank’s core mandate vis–a–vis the Programming and Budget Department’s role is that this is very satisfactory.  Of course there is always room for improvement and we must continue to build on our successes, while strengthening any areas of actual and perceived weaknesses.

How effective has the Bank been in monitoring its budgetary implementation and programmes?
Overall, the Bank has been effective in monitoring its budgetary implementation and programmes. This is partly due to the availability of relatively good systems, to manage work programmes and related budgets. For example, the Strategic Resource Allocation Software (SRAS) which is the Bank’s budget management system facilitates the capturing of the work programmes, and linking them to deliverables and strategic priorities.

While the Bank has the institutional RMF for monitoring results both at development and administrative levels, there are also specific KPIs which measure the effectiveness of the utilization of the administrative budget in delivering the defined work programmes and strategic objectives of the Bank.  Some of them are the performance management reports which are produced monthly, quarterly, semi-annually and annually.  In addition to the institutional KPIs, there are KPIs for specific Vice Presidential Units (VPUs).  Through these KPIs the performance of each organizational unit and their contributions to attaining the overall objectives of the Bank can be measured. This implies that Management staff can be held accountable for delivery of their assigned work programmes.  On the other hand, the KPIs also form part of the basis for the development of robust work programmes anchored on strategic objectives and results.

In order to take this further, the Bank in 2012 introduced the Complex Framework Paper (CFP) which obliges all complexes to prepare detailed documentation of their planned work programmes, with clearly indicated objectives, expected results and the resources required to achieve them.  Each Vice President had to defend the CFP before the Budget Committee following which the CFPs are used to feed into the Three Year Rolling Plan and Budget Proposal. Management has recently scaled up the use of CFP by linking it to performance contracts that are signed by all management staff. This will further strengthen and promote the culture of managerial accountability for work programme and budget management in the Bank.

The Bank also reinforces its monitoring of work programme and budget performance through periodic reports that are prepared highlighting key achievements in the various strategic areas of operation and its impact on human and financial resources.  These quarterly reports which are prepared and submitted to the Board of Directors also include detailed review of the performance against the KPIs.   While highlighting areas of good performance, the report reviews areas of weak performance and highlights challenges that are negatively impacting on performance; and proposes management action plan for improvements.

Given the importance of ensuring that available resources are used efficiently and effectively in achieving work programme objectives in the identified strategic areas, Management towards the end of 2013 created the Delivery and Performance Management Unit (COPM).  This Unit will contribute towards the strengthening of the work programme and budget management process in the Bank.

In a complex organization like the AfDB, coordination is an indispensable tool in accomplishing set goals. To what extent has effective coordination enhanced the activities of the Bank?
From the point of view of the Programming and Budget department (COPB) coordination with its clients has been at the centre of all of its processes.  Generally speaking, across the Bank, there is coordination in the formulation and implementation of policies, strategies, work programmes and budgets.  For example, during the programming and budgeting process, in order to ensure a credible lending operations programme which is in line with the country strategies and priorities, the country programme officers, field office resident representatives and regional directors work in close collaboration with the sector directors and managers, to prepare the lending programmes and budgets.  This concerted effort ensures that the Bank’s operations in the Regional Member Countries (RMCs) are aligned with the strategic areas as contained in the Bank’s Ten Year Strategy.  Through this collaborative effort, the Bank Group has been able to implement regional economic integration programmes amounting to about UA 5 billion (About US$7.74 billion) over the last 5 years. The need for coordination cannot be overemphasized in such programmes due to the involvement of different Bank Departments, other financial institutions and the recipient RMCs.

Specifically on fostering collaboration in the budget process, coordination has been reinforced with the shift of the programming and budgeting exercise from focussing on direct budget management to a collaborative role that is seen to add corporate analytical and support values.  In this light, COPB working closely with colleagues from other departments produces a number of reports, including but not limited to:  monthly reports on budget status for all cost centers, quarterly and mid-year budget and work programme performance reports, and annual retrospective review reports for the budget and work programme performance of both the administrative and capital budgets.  Working diligently with colleagues from the Strategy and Operational Policies department (COSP), and the Delivery and Performance Management Office (COPM), we have fostered greater engagement with senior management on budget and, performance monitoring and reporting.

In order to ensure an effective coordination with the various VPUs (Complexes) of the Bank, each Complex has been assigned a budget coordinator since 2010, so that necessary capacity is available to assist the organizational units efficiently plan, execute, monitor and report on their budgets.

The budget process itself would not have been a success without effective coordination. The important roles played by the Boards, Senior Management, the FVP/COO’s office, COSP, COPB, VPUs, organizational units, Budget Coordinators and Focal Points have ensured that the work programme and budget is compiled and approved in time for implementation from the first day of any new financial year.

The AfDB is marking its 50th anniversary this year.  Are there some ways that you have been coordinating the Bank’s programming and Budget in the past which you intend to improve upon now that the Bank has attained a golden age?
Let me start by saying that despite the fact that 50 years is a long time, the magic is not in turning 50.  The Bank has indeed come a very long way in improving everything that it does and the Budget Department has not been left behind in this effort.

Of course there is always room for improvement in everything in life and the Bank’s budget processes are no exceptions.  There are a few areas where we would like to bring some improvement in the near future, such as, First, Process Ownership: There is need for greater ownership of the budget process by the VPUs. Formulation of the budget should not be considered as an exclusive responsibility of the Budget Department;

Second, Communication and Capacity Building: While we have made a lot of improvements in communicating with our clients, we are hoping to take this to a higher level by seeking closer collaboration with clients and using appropriate communication channels and messages while avoiding technical jargons.  We have to ensure that all managers and a critical mass of staff are familiar with the key Bank Group budget policies and processes, including the rationales and values.

We need to keep working on building staff capacity and reinforcing our communication ability. We recognize that over the years there has been a steady improvement in the level, and depth of information communicated on budget processes and initiatives.  For instance, at the beginning of each budget exercise, training sessions on budget and work programme preparation are conducted for all organizational units. Formal and informal information sessions, dialogues, user validation workshops for new initiatives and training sessions are held for the Bank-wide user community including the field offices.  We have also started a communication and capacity building programme targeting all organizational units including field offices, which offers continuous information on budget initiatives and issues as well as training. We need to formalize all these into an annual training programme and if possible build this into a budget academy which has annual programmes that staff can register for and attend; even other MDBs may be interested in sending their staff to these programmes.

Specifically for managers (especially newly recruited ones) we plan to have bi-annual training sessions on budget processes, and work programme planning and its linkage with the budget planning, execution and monitoring processes.

Third, Alignment of Budget to Work Programme Activities: We have noted that in some cases, the costing of the work programme is not well aligned to the activity levels. The Bank’s newly implemented Cost Accounting System will be fully operational in 2016, and will provide cost parameters to facilitate optimal resource allocation/budgeting and utilization, including allocation to strategic priorities. This will enable the promotion of cost and efficiency comparisons over time, as well as across organizational units and other organizations. Based on this information, Management can set clear measurable goals for cost savings and efficiency improvements, and thus position the Bank for greater effectiveness.