An example of red tape

I’ve written previously about tangible expenditures in the world of development – expenditures that may be sub-optimal. Today I want to talk about intangible costs, particularly those that arise as a result of bureaucracy and red tape. We’re all anecdotally and/or theoretically familiar with these problems in the development context. I’d like to highlight a specific example garnered from a primary source.

In the interests of disguise, let’s consider the following actors:

• A country in Africa: Africania
• A most-well known development bank: RFDI (really famous development institution)
• A leading global accountancy: LGA

Background:

• Ministry of Agriculture (MoA) in Africania decides it needs some funding from RFDI for a project
• Project divided into multiple components, each with a different implementing agency (IA)
• Leading global accountancy (LGA) hired to manage a project

Here is the process:

• Step 1: IAs report budget projections to LGA
• Step 2: LGA consolidates and corrects and sends projections to MoA
• Step 3: MoA approves projections (after possibly altering) and sends to Ministry of Finance (MoF)
• Step 4: MoF receives request for funding and sends to local disbursement office of RFDI
• Step 5: Local disbursement office of RFDI approves and submits proposal to RFDI headquarters in the US
• Step 6: Money sent from RFDI headquarters in the US to Africinia government account in London
• Step 7: LGA makes a request for withdrawal from that account and sends to MoA
• Step 8: MoA approves/changes withdrawal request and sends to MoF
• Step 9: MoF approves withdrawal request, includes it in budget expenditures and sends it to Central Bank
• Step 10: Central Bank withdraws money and sends it to MoF account
• Step 11: MoF hangs around a bit, delays, and sends it to MoA account
• Step 12: MoA hangs around a bit and sends money to project account
• Step 13: LGA can now disburse to IAs and project beneficiaries

Wow!

Of course, by now the circumstances under which the original projections were reported (step 1) are likely to have changed significantly. So, many times there are mismatches between available funds and expenditures.

I realize many of these steps are in place to avoid corruption and misdirection / misallocation of monies, but surely there are at least some efficiency improvements in the offing!