Responding to COVID-19: insight, support and guidance
One of the good news stories of the past couple of decades has been the remarkable decline in extreme poverty. According to the World Bank, between 1990 and 2015, the percentage of the world’s population living on less than $1.90 per day is estimated to have fallen from 36% to 10%.
It’s worrying then that the coronavirus pandemic threatens to reverse this progress. Job losses, rising prices and disruptions to public service delivery will all play their part in putting the world’s poorest citizens under greater financial pressure. Unfortunately, we can expect to see millions fall further into poverty, experience strained food and water supplies, see their educational opportunities shift out of reach, and lose access to healthcare.
So the work of international development agencies is more important now than ever. While it might be impossible for us finance professionals to do anything about the challenging macroeconomic tides coronavirus will bring in its wake, we can influence the impact that critical development projects are having on the ground.
Finance professionals in the development sector have power to make positive change. That’s everyone from individuals allocating funds at the institutional level, all the way down to those managing project funds in rural communities – and everyone in between. We know there’s a clear correlation between good financial management and practice and effective project management, and people are the backbone of that correlation.
Development projects not supported by properly trained staff and the necessary financial structures risk being plagued by inaccuracies, inefficiencies and exposure to economic crime. Because of coronavirus, we’re seeing lots of new programmes that are being implemented as quickly as possible. If these are to be successful, they will require real-time decision making and support from effective finance managers.
Experience shows us that sharpening the skills of staff and tailoring financial management practices to the needs of development organisations can be highly effective at increasing capacity and generating desired outcomes. Equipping finance staff with a knowledge of internal and external audit, internal controls, budgeting, accounting fundamentals and disbursement lowers the risk often associated with investing in development work.
If UK examples, like the application of our Financial Management Code, tell us anything, it’s that better decision making, value-for-money, greater transparency and consistent financial management will translate in to real results for projects and, more importantly, target communities. Strong financial management also benefits more than just a specific project’s local population, with impacts felt in national institutions, agencies and government ministries too.
While the scope and purpose of international development projects certainly vary, in many ways, financial management practices are inherently similar. The UN recently warned of looming famines on a ‘biblical scale’ following the coronavirus pandemic. This highlights why international development work cannot stop. The sector cannot shut up shop in the way that restaurants and theatres have. The need for effective development interventions is now greater than it has been in years, and is only projected to grow as economic vulnerability mounts. Good financial management is one strategic way international organisations can amplify their impact, ensuring financial resources get to those communities that need support the most.