1. Principles of Financial Management and Disbursement
Strengthening Fiduciary Management in Multi-Sectoral National HIV/AIDS Program for Sub-Saharan Africa
Network of National HIV/AIDS Program Practitioners in Africa (NAPPA) and
World Bank
July 2003
Presentation # 8
Duration = 20 min

2. Objective
Understand risks, opportunities and guiding principles for Financial Management and Disbursement in HIV/AIDS Projects

3. What are the challenges?
Emergency nature of HIV/AIDS Projects requesting a rapid response
Multi-sector/Multilevel/Decentralized approach
Categories of organizations:
Category A: National level entities (NAC, PMU), large civil society organizations (NGOs), private sector and public sector
Category B: Intermediate level or district, local government level entities, regional committee, NGOs, CBOs, FBOs
Category C: Grassroots level community groups
Disbursement and availability of funds
Coordination of multiple implementers
Transparency and Accountability
Capacity

4. What does it means for Financial Management and Disbursement?
Need to be responsive to the emergency nature
Quick disbursement
Not business as usual
Greater risks environment
Large number of parties and transactions involved
Small value and multiplicity of contracts
Geographical spread of implementers

5. What does it means for Financial Management and Disbursement?
More complex financial management and disbursement arrangements
Need to make funds available at different levels of implementation requiring different channels:
Public sector entities
Civil society organization (NGOs, CBOs, FBOs)
National, Regional, District levels
Need to ensure proper use of funds by a large number of recipients to achieve the objectives of the project
Difficulty in monitoring fiduciary compliance in this environment

6. Financial Management and Disbursement Principles…
Recognize and reflect the emergency nature of HIV/AIDS projects in financial management and disbursement arrangements
One size does not fit all:
Specific country circumstances
Specific needs/arrangements for each group of implementers (NGOs, CBOs, FBOs, Public and Private sector entities, National, Regional level)

7. Financial Management and Disbursement Principles…
Capacity
Different levels of capacity: different structures and within the structures
Lack of capacity impacts implementation and disbursement
How to access funds and reports on the use
Capacity building is an integral part of the project
During preparation: FM criteria, self assessment, identify capacity building needs and adequately plan actions to address these needs, can be included in project costing
Roles and responsibilities in capacity building
During implementation: training, technical support
Use of intermediary agencies and subcontracting; e.g. lack of capacity for CBOs, use of new experienced CBO to mentor new CBOs

8. Financial Management and Disbursement Principles…
A) National AIDS Program
B) Sub-national govt. entities
B) Intermediary organizations
C) Communities
Suppliers of goods and services
Flow of Funds

9. Financial Management and Disbursement Principles…
National AIDS Program
Sub-national
Govt. entities
Regional
NGOs
Private Sector
District
Communities
Reporting line

10. Financial Management and Disbursement Principles…
Flow of funds
Funds do not have to necessarily follow the reporting line
Ensure funds are readily available to the implementing organizations at all levels, where they are needed
Does not prevent from exercising control and monitoring
Flexibility in disbursement arrangements
Number and size of Special Accounts, sufficient balance in SA for decentralized and emergency activities
Use of 90-day advance and second generation special accounts

11. Financial Management and Disbursement Principles…
Flow of funds
Link between amount of funds disbursed and physical progress of activities financed
Where sufficient capacity exists
Use of Reports based-disbursement:
Facilitate disbursement process
Provide adequate funds in the SA
Ensure close monitoring of the link between physical progress and expenditures

12. Financial Management and Disbursement Principles…
Transparency and Accountability
Emergency nature of HIV/ADIS does not eliminate transparency and accountability requirements
Information
Access of financial information to the public:
Political consideration
Subprojects approvals, funds disbursed, defaulting fund recipients
Mechanism: publication, broadcasting, …

13. Financial Management and Disbursement Principles…
Reporting by fund recipients
Central level Accounting and Monitoring System to keep record of multiple subprojects and implementing partners and provide information on overall performance at different levels
Requirement adapted to the capacity of fund recipients
Link between reporting and disbursement
Harmonization with other development partners

14. Financial Management and Disbursement Principles…
Control Mechanisms
Inappropriateness of centralized controls in the multi sector and decentralized environment of HIV/AIDS Projects
Balance between tight central controls and efficiency
Complementary among the controls exercised at different levels:
National; Regional; District; Community; Self control
External audit to provide greater comfort of the efficiency of the internal controls and transparency
Information and Monitoring Systems