About GIFMIS

1 About GIFMIS

1.1 Background to GIFMIS

Since July 2003, the Federal Government has taken bold steps to begin to tackle the deep-seated risks to macroeconomic and fiscal stability and to address key sources of economic inefficiency. It is implementing policies to strengthen economic management and to deal with weak governance and corruption. The budget function has been consolidated in a strengthened budget office and greater transparency has been introduced to public expenditure management through regular publication of allocations of federation revenues to all tiers of governments, and through widespread dissemination of information on budget allocations and execution.
The budget is becoming better aligned with Nigeria’s poverty reduction priorities. Subsidies, which benefited better off Nigerians, are being eliminated and ploughed back into other expenditures that could benefit poorer Nigerians. Greater financial controls have been put in place through the creation of a Cash Management Committee chaired by the Minister of Finance, thus limiting the extent of deviation between budget and actual expenditure and the accumulation of new expenditure arrears.
The Government recognizes nevertheless that additional challenges remain and that Public expenditure management needs to be further strengthened to (i) build an integrated budget based on programs that are clearly linked to key development objectives; (ii) ensure greater accountability from budget holders; (iii) allow greater emphasis on budget outcomes and impact; and (iv) identify and address remaining sources of leakage in budget execution in order to strengthen efficiency of public expenditures.
This will require in addition to changes in policies and regulations, considerable modernization and automation of current budget and financial management and procurement practices.

1.2 Economic Reform and Governance (ERG) Project

The ERG project was approved by the World Bank in December 2004 and in line with the federal government’s goal to significantly strengthen governance and accountability, reduce corruption and deliver services more effectively, the objectives of this project are two fold:-

to improve the federal government’s economic and financial management systems and processes; and
to firmly establish a reform process of the federal civil service to improve professionalism and the government’s ability to deliver services.

The project has four broad areas of support:-

public resource management and targeted anti-corruption initiatives;
pilot civil service administrative reforms;
pensions reforms; and
statistics and statistical capacity

1.3 Government Integrated Financial and Management Information System (GIFMIS)

GIFMIS is a sub component of the ERGP which will support the public resource management and targeted anti-corruption initiatives area through modernising fiscal processes using better methods, techniques and information technology.
The GIFMIS is aimed at improving the acquisition, allocation, utilisation and conservation of public financial resources using automated and integrated, effective, efficient and economic information systems. The GIFMIS will aid strategic management of public financial resources for enhanced accountability, transparency, cost effective public service delivery, and economic growth and poverty reduction efforts.

1.4 Purpose of GIFMIS

The purpose of introducing GIFMIS is to assist the FGN in improving the management, performance and outcomes of Public Financial Management (PFM). The immediate purpose of this project is to enable an executable budget, i.e. a budget which can be implemented as planned by addressing the critical public financial management weaknesses including:

Failure to enact the budget before the start of the financial year
The budget is not based on realistic forecasts of cash availability
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.
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.

It must be underscored that whereas GIFMIS is part of the solution to the above problems, it (GIFMIS) cannot be a driver of change to better public financial management – rather it is a tool to facilitate change. To this end, the introduction of a GIFMIS will be combined with major changes to business processes. As a matter of fact GIFMIS provides an opportunity to move to Treasury Single Account and to reduce the number of stages in transaction processing. In addition it will provide better access to information which can be used to improve fiscal and operational management. GIFMIS will also reduce fiduciary risk by enabling greater transparency and by reducing the opportunities for manual intervention in financial transactions.

1.5 Objectives of the GIFMIS

The overall objective is to implement a computerised financial management information system for the FGN, which is efficient, effective, and user friendly and which:

Increases the ability of FGN to undertake central control and monitoring of expenditure and receipts in the MDAs.
Increases the ability to access information on financial and operational performance.
Increases internal controls to prevent and detect potential and actual fraud.
Increases the ability to access information on Government’s cash position and economic performance.
Improves medium term planning through a Medium Term Expenditure Framework (MTEF)
Provides the ability to understand the costs of groups of activities and tasks.
Increases the ability to demonstrate accountability and transparency to the public and cooperating partners.

1.6 GIFMIS Scope

The GIFMIS will be used to support the government in all aspects of budget preparation, execution and management of government financial resources. The system will cover all spending units financed from the government’s budget, and will process and manage all expenditure transactions (including interfaces) pertaining to these units. All steps in the expenditure cycle including, budget appropriations, financing limits, commitments, verification and payment transactions will be recorded by and managed through the system. In other words, the system will be a modern, efficient and user-friendly facility, providing comprehensive information on all the financial affairs of the Government. This will act as a reliable basis for multi-year budgeting, annual budgeting, commitment control, payment control, financial and cash management and economic planning.
The financial management functions of the GIFMIS will cover the entire financial management cycle including:

Budget preparation
Budget maintenance and management
Budget execution and treasury management.
General ledger
Procurement, including Commitments of purchase orders, Maintenance of a central supplier register and Support for e-procurement
Receipting, Accounts Receivable and Revenue Management
Payments and Accounts Payable
Inventory and Stock Control
Asset Management
Budget Execution reporting
Financial reporting
Project accounting
Loans and Advances

Interfaces with third party systems to be provided by the GIFMIS include:

Human Manager – Payroll – OAGF – Payroll costs/Loan repayments
ASYCUDA – Customs – NCS – Revenue
SAP – Taxation – FIRS – Revenue
CD-DRMS – Debt Management – DMO – Debt payments
Oracle ERP – Banking Interface – CBN – Bank statements
Oracle 9i – Medium Term Budgets – BoF – Annual budgets and ceilings

GIFMIS will be implemented centrally initially within the Budget Office, OAGF, six pilot MDAs with access by the Auditor General followed by a phased approach for remaining MDAs and FPO or State based processing centres.

1.7 GIFMIS Critical success factors

The following factors have been identified as critical to the success of GIFMIS Implementation,

Sustained Management Support
Effective Organisational Change.
Good Project Scope Management
Adequate Project Team Composition
Comprehensive Business Process Re-engineering
Adequate Project Sponsor and champion Role
User Involvement and Participation
Trust between Partners
Dedicated staff and consultants
Strong Internal & external communication
Formalised Project Plans
Adequate Training Program
Data Conversion Management
Empowerment of Project Management Team & Sponsor
Adequate GIFMIS implementation strategy
Avoidance of Extensive Customisation

1.8 GIFMS Project Governance Structures

1.8.1 The Purpose of the Governance Structures

The Governance Structure details the origination arrangements adopted for the implementation of the GIFMIS. The Governance Structures indicate the different structural set ups, the composition of those different structures, and the relationship/links between the structures. The Governance Structures also indicate the issue escalation procedures for all project related matters.

1.8.2 Responsibility of the Governance Structures

The Governance Structures are established by the Project Sponsor and managed by the GIFMIS Steering Committee to provide a structural mechanism to enable the effective management of all the implementation activities, and as a first step towards addressing the critical success factors.

These structures include the following:

The Project Sponsor
The Project Steering Committee
The Project Monitoring Committee
The Project Implementation Workgroups
The Project Manager
The Project Management Unit
The site support teams and
The Implementation Consultative Group (Users Forum)

The Governance structures shall be reviewed, revised and/or modified in the course of implementation.