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Effect of Government Integrated Financial Management Information System (GIFMIS) on Public Sector Organizations in Nigeria

Effect of Government Integrated Financial Management Information System (GIFMIS) on Public Sector Organizations in Nigeria: A Study of Selected Ministries, Departments and Agencies (MDAs) in Nigeria

Background of Study

The pursuit of virtually every collective purpose has financial implications. Undertakings that have no cost seldom have many benefits (Beschel& Ahern, 2012).This has made the need for judicious use of finance more imperative.Therefore financial management system refers to the operation of those systems and processes designed for budget making and budget implementation; the maintenance of accounting system which records financial decisions, flows and transactions, and the auditing of all aspects of these accounts (Omokonga,2014)

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The socioeconomic crises which African countries have been experiencing over the last two decades have inspired governments to search for solutions, among other things, through studies and policy reforms on various critical issues of public sector management and administration (ECA, 2010). And interesting view was expressed byCurristine, Lonti and Joumard(2007) that “ Governments of   countries are under pressure to improve public sector performance and at the same time contain expenditure growth. While factors such as ageing populations and increasing health care and pension costs add to budgetary pressures, citizens are demanding that governments be made more accountable for what they achieve with taxpayers’ money’’

In most developing countries (DCs), budget execution and accounting processes are either manual or supported by very old and inadequately maintained software applications. The consequent lack of reliable and timely revenue and expenditure data for budget planning, monitoring, expenditure control and reporting has negatively impacted budget management (Diamond &Khemani,2005).

The role of budget in an economy cannot be overemphasized. As budget is an important instrument of national resource mobilization, allocation and economic management. It is an economic instrument that ensures effective link to policy objectives and value for money is secured(Michael,2010). A budget has to be well-designed, effectively and efficiently implemented, adequately monitored and its performance well evaluated.

GIFMIS which is Government Integrated Financial Management InformationSystemcan enable prompt and efficient access to reliable financial data and help strengthen government financial controls, improving the provision of government services, raising the budget process to higher levels of transparency and accountability, and expediting government operations (GIFMIS, 2011).   Integrated Personal Payroll Information System (IPPIS) is a non-core areain GIFMIS. This is incorporated in the GIFMIS and is saddled with the task of handling or managing personnel cost of all federal workers in Nigeria.  Donors and international institutions like the International Monetary Fund (IMF), the World Bank, and USAID have made tremendous support to this project ( Edwin, 2008).

1.2       Statement of Problem

Over two decades, many countries in Sub-Saharan Africa, made only modest progress in achieving fiscal discipline and operational efficiency in the public service. Key challenges faced included: expenditure and debt management, accountability (particularly budget discipline), better financial management capacity, and greater general efficiency in the public service delivery (World Bank Group, 2013). The consequent lack of reliable and timely revenue and expenditure data for budget planning, monitoring, expenditure control, and reporting has negatively impacted budget management. The results have been a poorly controlled commitment of government resources, often resulting in a large buildup of arrears; excessive borrowing, pushing up interest rates and crowding out private sector investment; and misallocation of resources, undermining the effectiveness and efficiency of service delivery. Furthermore, governments have found it difficult to provide an accurate, complete, and transparent account of their financial position (Diamond and Khemani, 2006).

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Nigeria has experienced more than its fair share in this worrisome situation of financial mismanagement.Nigeria’s recurrent expenditure is described as outrageous (Nweke, 2014). This has led to unproductivity and with the yearly budget traditionally based without adding value to the sectors in the economy. Economic planning has typically lost credibility with the failure to achieve targets in earlier plans. Budgets are often poor predictors of financial out turns and rarely act as an effective resource allocation tool(Bertucci, 1999).

Furthermore, GIFMIS (2012) stated that there are critical public financial management weaknesses which are as follows:

  1. Failure to enact the budget before the start of the financial year
  2. The budget is not based on realistic forecasts of cash availability
  3. Lack of effective cash management – multiple bank accounts within Treasury and MDAs that make effective control impossible; when combined with the lack of cash forecasting this leads to inefficient and unplanned borrowing.
  4. A lack of integration between different financial management functions and processes, e.g. budget is prepared in a way that makes it difficult to manage the budget execution through the chart of accounts.

In response to redeem the nation from this fiscal strait, coupled with increasing emphasis on proper fiscal management and discipline, prioritisation of expenditure and value for money and persuasions by the IMF, World Bank, US and European Union, the federal government introduced the central financial management information systems. These are Integrated Personnel Payroll Information System and Government Integrated Financial Management Information System.

According to Ministry of Public Service (2015).The Integrated Personnel Payroll System (IPPS) is an enterprise-wide integrated, computerized and efficient human resource management information system used by Ministries, Departments, Agencies and Local Governments to undertake human resource management activities from recruitment to separation including payroll and pension processing. The IPPS is designed to make use of modern information and communication technologies to help the Government manage the Public Service human resource more efficiently and effectively.

However, the sheer size and complexity of an IFMIS poses significant challenges and a number of risks to the implementation process that goes far beyond the mere technological risk of failure and deficient functionality. The introduction of an IFMIS can be regarded as an organizational reform which deeply affects work processes and institutional arrangements governing the management of public finance.

According to Otunla (2013) in an article, the federal government had till date saved over N120 billion from the elimination of ghost workers through the operation of the Integrated Payroll and Personnel Information System (IPPIS), from April 2007. He said the savings also captured excess personnel cost discovered which had been siphoned into non-personnel sub-heads by Ministries, Departments and Agencies (MDAs) but returned at the instance of the Office of the Accountant General of the Federation. He further said that the IPPIS had also led to the streamlining of personnel process and payroll and that the Government Integrated Financial Management Information system (GIFMIS)” went live in April, 2012 and as at date;it has over 209 MDAs on the system.

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According to Eze (2013) in an article, the deployment of the IPPIS started in October 2006 with seven pilot MDAs, namely the Federal Ministry of Education, Federal Ministry of Information and National Orientation, Federal Ministry of Finance, Federal Ministry of Works, Federal Ministry of Foreign Affairs, National Planning Commission and Budget Office of the Federation. Seven years down the line, the IPPIS is yet to cover half of all MDAs. This indicates that the speed of IPPISroll-out is slower than that of a snail. The PENGASSAN has refused to enroll and even threatened with industrial action as maintained in an article by(Eroke, 2014) and federal universities, polytechnics and colleges of education and Para-military agencies have remained adamant. Their reasons range from that the scheme is not conducive or suitable for them and that the system is still facing some teething problems and not well organized. And it is as though the Federal Government lacks the political will to implement the scheme nationwide (The Tide News Paper, 2012).

However there is extensive research in developed countries like USA, Canada etc on Integrated Financial Management Information System and its guidelines towards implementation but in contrast, there is a considerable paucity of studies on IFMIS in the context of sub-Sahara Africa. To this end, guided by increasing pressure and concern for proper financial management, the study aims to extend the body of existing literature by examining the effect of Government Integrated Financial Management Information System on public establishments in Nigeria.

1.3       Research Objectives

The main objective of the study is to ascertain the effect of government integrated financial management information system on public sector organisations in Nigeria.

The specific objectives are:

  1. To determine whether GIFMIS ensures transparency and accountability in the financial undertakings in public sector organisations in Nigeria.
  2. To ascertain the effect of GIFMIS on financial transaction processing in public sector organizations in Nigeria
  3. To assess the extent of effect of GIFMIS role on financial control and governance in public sector organizations
  4. To ascertain whether GIFMIS promotes efficiency in government spending.
    • Research Questions
  5. To what extent does GIFMIS ensure transparency and accountability in the financial undertakings in the public sector organizations in Nigeria?
  6. What is the effect of GIFMIS on financial transaction processing in public sector organizations?
  7. What is the effect of GIFMIS on financial control and governancein public sector organizations?
  8. To what extent does the effect of GIFMIS ensure efficiency in Government spending?

1.5     Research Hypotheses

H1: There is no significant relationship between GIFMIS and transparency and accountability in financial undertakings of MDAs.

H2:There is no significant relationship between the effect of GIFMIS and financial transactions processing in public sector Nigeria

H3:There is no significant relationship between the effect of GIFMIS and  financial control and governance in the public sector in Nigeria

H4: There no significant relationship between the effect of GIFMIS and efficiency in government spending.

1.6       Significance of Study

The outcome or result of study will bring to light the effect of Government Integrated Financial Management Information System on the public sector organizations in Nigeria

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It will be beneficial to government in planning and making strategic financial management decisions.It will help the Government to achieve strengthened accountability and increased transparency in the public sector. The knowledge acquired will help improve the quality of human resource information available to decision makers within the Public Service. It will assist in driving efficiency in public spending. It will bring to light any deviation from the plans of the authorities in other to take corrective action.It will be beneficial to the government in showing the accessibility of relevant information for strategic decision making. Knowledge of this work will aid auditing activity in the public sector enormously.

1.7       Scope of Study

The main focus of this study is to carry out an objective analysis of the Government Integrated Financial Management Information System. The study concentrated on the management of finance in the public sector organizations of Nigeria. The studies covers areas of efficiency, transparency and accountability in public finance management, budget preparation, execution and reporting with a view to bringing to light progress and challenges encountered so. The choice of MDAs arises because they are the sector which are funded and managed by the government. This will involve all processes in budget execution and management of government financial resources.  The system will cover all spending units financed from the government’s budget.  It also assessed the use of integrated personnel payroll information system in managing the personnel cost of MDAs in the Nigeria. The study affects the MDAs in the country.

Furthermore, in an attempt to find out the perceptions of personnel,theresearcher concentrated on the MDAs in the Southern Nigeria and in Abuja the federal capital territory.

1.8       Limitation of Study

Due to the large number of federal staff and wide dispersion of MDAs across the whole federation, the researcher explored his work within the government establishments insouth eastern Nigeria .Also cost implication and time constituted greatly to the limitation.

Effect of Government Integrated Financial Management Information System (GIFMIS) on Public Sector Organizations in Nigeria: A Study of Selected Ministries, Departments and Agencies (MDAs) in Nigeria

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