PUBLIC FINANCE MANAGEMENT PUBLIC FINANCE that leadsto transparent managementofpublicfinances. top intheglobalrace,itiscrucialto beaware ofhowto usetechnologyto buildtheroad by the book to ensure a fair business environment. To ensure your country comes out on thatmustbeaccessibleonline.They alsohaveservices to make sure everybody plays by rapidtechnologicaldevelopment andpublicexpectationsforseamlessgovernment Public financemanagementasthefiscalbackboneofany government ischallenged transparent publicfinances Build astronger statewith WHITE PAPER

nortal.com Build a stronger state with transparent public fi nance management

We live in an era where data, and their taking systems from paper to cloud is importance, is growing exponentially. Data no longer an interesting opportunity, it’s have been declared the most valuable a must for any country who wants to resource in the world and this brings new prosper. rules for competition, both for enterprises and countries. Governments can take advantage of data in various fi elds, public fi nance By collecting and organizing data, a fi rm management being one of them. Finding has more scope to improve its products, the data is like being in control of all the which attracts more users, generating even leaves in a forest. It's a diffi cult task, but more data.1 We are confi dent the same with the help of technology, it's possible. applies to countries. Bringing a country’s public fi nance management systems In this white paper we concentrate on up to date with today’s technological reasons why it's benefi cial to go digital requirements is not an easy task, but with public fi nance management.

1 The world’s most valuable resource is no longer oil, but data, The Economist, May, 2017 WHITE PAPER BY NORTAL 3

Data helps create real-time economy

Through improved cost and operational provide any government with an active performance, capturing the full potential infrastructure for analyzing the economy. of government digitalization could free This provides valuable industry insights up 1 trillion USD annually in economic for government and business alike. It value worldwide, a McKinsey analysis also helps businesses — and revenue suggests.2 from taxes — to grow.

The OECD also believes that successful But things can be taken even further: application of information technology combining Big Data with advanced will determine the future success analytics and increased digital presence of revenue bodies in managing helps countries move towards a real- compliance risks and meeting rising time tax system and new options for service expectations.3 Building an managing taxes, countering fraud, intelligent and modern public fi nance dealing with the shadow or hidden management system that takes full economy and assessing how assets are $1 trillion advantage of technology and data will actually being used.4

Real-time economy builds signifi cant value

A modern public fi nance management advantage of its potential to encourage system is a great enabler of real-time economic growth by making the data economy. Fully digital public fi nances accessible. This enables them to explore lead to governments having the best new business opportunities or identify possible up-to-date overview of the risks within current ventures and country’s economy and processes. partners.

The quality of such data exceeds In short, by sharing the data with society, the knowledge of any consultancy a government can create more value for The amount of money that could be freed up annually if full potential of government fi rm. Instead of keeping the data to different actors, whether businesses or digitalization is captured, is immense. themselves, governments can take full citizens.

Goverment

Digitalization helps to reduce red tape, freeing up time to build better services for citizens.

Citizens and businesses

Less red tape means more time for meaningful things such as increasing the willingness to pay taxes.

2 Public-sector digitization: The trillion-dollar challenge, McKinsey, 2014 http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/public-sector-digitization-the-trillion-dollar-challenge 3, 4 Technologies for Better Tax Administration. A Practical Guide for Revenue Bodies, OECD, 2016 http://www.oecd.org/publications/technologies-for-better-tax-administration-9789264256439-en.htm Build a stronger state with transparent public fi nance management

Goverment Citizens and Having an overview of real businesses time data means govern- Having overview of real ments can focus on how to time data increases trust help businesses thrive. towards the government and facilitates new business.

Transparency saves billions of dollars

Having a detailed overview of your GIFMIS has become a true success country’s fi nances and managing story known right across . As them properly will facilitate a more part of GIFMIS, moved all the effi cient budget allocation. This government’s money to a Treasury will wind up decreasing costs and Single Account (TSA). increasing transparency. One of the governments that has witnessed During the process, more than 20,000 a drastic change in their savings is government bank accounts were closed, Nigeria. and now the Nigerian government saves on average 1.3 million euros a month on With the help of Nortal, Nigeria went banking fees. through a radical change in their NIGERIA public fi nance management some What’s even more impressive, the $7 billion saved years ago when Nortal built the government has reported that they have Government Integrated Financial saved more than 7 billion USD after In just a few years, proper public fi nance Management Information System switching to TSA. GIFMIS also helped to management has resulted in saving (GIFMIS). The value of this project has reveal around 60,000 ghost workers on 7 billion USD in Nigeria. been immense. the government payroll. WHITE PAPER BY NORTAL 5

Transparent fi nances mean stronger a state

Making public fi nancing more of revenues needed for sustainable transparent does not only result in more development.5 Transparent public money in the budget. According to the fi nance management reduces the OECD, tax crime, money laundering, administrative burden of all citizens, corruption and other fi nancial crimes allowing them to contribute more threaten the strategic, political and revenue to the state and establish a economic interests of both developed thriving economic outlook. and developing countries. This ensures equal conditions for all They also undermine citizens' confi - entrepreneurs, guaranteeing the accrual BOTSWANA dence in their governments, affect tax of revenue as estimated, and provide the 5 minutes for paying taxes morale (the willingness of citizens to government with information needed to pay taxes beyond their legal obligation steer economic processes and improve Paying taxes in Botswana used to mean to do so), and deprive governments the welfare of the nation. queueing for hours at the Botswana Unifi ed Revenue Service's offi ce. Thanks

to an online system Nortal built, it now takes about fi ve minutes.

Goverment Citizens and Transparent government businesses fi nances encourage better tax accural. Transparent government assures that everybody is treated equally.

5 OECD work on taxation, OECD, 2017 http://www.oecd.org/tax/administration/centre-for-tax-policy-and-administration-brochure.pdf Build a stronger state with transparent public fi nance management

Conclusion Nortal's competence and solutions cover all As the fi scal backbone of any government a signifi cant advantage – a aspects of public fi nance government, public fi nance means to boost the economy and have a management is challenged by rapid more transparent state. management: technological development as well as public expectations for seamless A good example is Nigeria, where the Treasury management government services that are accessible government has managed to save more online. By digitizing a country’s public than 7 billion USD in just a few years fi nance management, the government after implementing the Government Budget cycle: preparation, execu- can take full control of revenues and Integrated Financial Management tion and management allocating taxpayers' money. Diving into Information System. This money can the data forest and harnessing every now be used for building better services single leaf in that forest will give any for Nigerian citizens. Government spending: structural funds distribution, resource management, social benefi ts management, aid management “Every responsible government has the mission to build and maintain a thriving business climate in order to maximize wealth for society.” Revenue collection and tax management

Marek Helm State statistics management and Former Director General at 's Tax and Customs Board policy impact assessment Head of Public Finance Advisory at Nortal WHITE PAPER BY NORTAL 7

Goverment Citizens and Using data enables businesses real-time economy that allows the government to Transparent and un- help boost economy. bureaucratic government fi nances create a better life for everybody. About us: Building a seamless Nortal's offering: transparent public society globally fi nance management

Nortal is a multinational strategic change and Public fi nance management is the fi scal backbone of technology company. Combining the unique any government. We at Nortal believe it is paramount experience of transforming Estonia into a digital leader to have a transparent system that covers everything and creating change in businesses with a strategic from fi scal policy making to the implementation of the approach and data-driven technology, our vision is to budget cycle. build a seamless society. Nortal has conducted large-scale strategy Nortal works to build a seamless society that development, change management, and technology stands on three pillars — enterprise, e-health, and projects. We have also been responsible for reforming e-government. In each of these three areas, Nortal has fi scal effi ciency worldwide. helped influential customers achieve strategic change and build better experiences. Our competence and solutions cover all aspects of public fi nance management, including: treasury Operating in , the , Africa, and North management, budget cycle (from preparation to America, Nortal doesn’t just provide IT services, but execution to management), government spending actual structural reforms, focusing on the underlying (funds distribution and resource management), impact on the target organization, whether it be revenue collection and tax management, state governments, hospitals or private enterprises. statistics management and policy impact assessment.

Get in touch with our expert

Andres Raieste, currently head of the Public Finance Management e-government business area at Nortal, is among the world’s top experts in e-government transformation and analytics. During more than six years at Nortal he has worked on numerous large-scale projects and reforms, including fully digitalizing ’s tax authority and business registry.

Andres Raieste Nortal’s Head of Public Finance Management [email protected]

Learn more about Public Finance Management at https://nortal.com/government/public-fi nance-management/