Wondering where the money goes is a common problem in Ottawa. That issue is compounded in Afghanistan, which does not yet have all the financial controls that Canada does.
Ottawa tech firm FreeBalance has been in the war-torn country since the interim government took over from the Taliban in 2001, implementing its financial tracking system province-by-province to help chart the flow of aid money through government spheres.
Just this spring, the last Afghan province – Nuristan – signed on to FreeBalance's system, which is a small yet crucial part of a government-wide software solution designed to allow people away from central government to decide where to spend money next, said Doug Hadden, FreeBalance’s vice-president of products.
“It’s considered a good practice because it brings decision making to the people who are in the field. Even in Canada, one tends to have more of a direct relationship with municipal and provincial governments than the federal government since you’re dealing with social services and the day to day,” he said.
“It adds a level of financial discipline, based on budget control. Then you get a position of effectiveness in citizen services.”
Adding the system to Afghanistan’s governance provides an added boon, which is seeing where the flow of money from non-governmental organizations or other outside companies goes once it gets into the system.
There are still questions about how the outside entities handle the money – as shown by a recent Wall Street Journal article detailing millions of dollars in cash trading hands at Afghanistan’s airport – but Hadden emphasized the tracking is far better once the money arrives in government coffers.
“Using these controls, a government actually operates based on the objectives that the government spent the money where it was meant to be spent, and is more likely to understand where they overspend,” he said.
“That’s how managers can ensure that the money appropriated is going to the appropriate and proper purpose.”
FreeBalance first became involved with the country at the turn of the decade, when the United States Agency for International Development (USAID) put out a request for proposals asking for an entire public financial management reform program.
A small part of that was taking a look at the finances of government itself, which is where FreeBalance felt it could offer its expertise in tracking the money spent in several Ottawa departments, which it has been doing for a number of years.
The value of the contract
Part of the staff training went to basic knowledge in capacity-building and working in a developing country, especially given how much of a frontier Afghanistan was at that time, and still remains, Hadden said.
But the major advantage of FreeBalance’s system, Hadden said, was it was easy to run and configure even remotely, which was handy given the nearest tech support person was often a continent away.
Now that the system is up and running across the country, Hadden said Afghanistan can expect to see a few changes.
“We will likely see an increase in tax revenue … it doesn’t sound like a good thing as a taxpayer, but the reality is there’s a linkage when people are paying taxes to a government they are more likely to participate in the governance of the country,” he said.
“This is a huge movement over the past few years, particularly Latin America. So I suspect we’re going to see a significant push into improving the revenue base, which will also likely improve participation, which will likely create a better country.”
As for FreeBalance, Hadden said the company has “grown significantly” since 2006, with offices in several developing countries.
Most recently, they implemented a civil management system in Uganda, for a government base of 90,000 people. They’ve also done work in Liberia and Sierra Leone, and in the West Bank, all of the municipalities there are running our software.
“Reports back from people in the government would suggest they think it has improved for citizens,” Hadden said.
“The other big effect is the government itself – particularly the minister of finance – is upgrading to a certain level of fiscal discipline that it was not at before.”