Why is good financial management imperative to developing nations?

Nigeria, now with a GDP of 509.9 billion has become the largest economy in Africa, finally surpassing the fiscal dominance of the South African government for the first time. But how does a country maintain this growth onto the world’s financial stage and avoid an economic crash.

An emergent market like Nigeria now needs to show its competence to funding agencies and beneficiaries as well as business investors. They need to have confidence in financial reporting which will contribute to a growth in foreign direct investment and economic growth, ultimately improving the lives of many.

For it to remain in the global financial limelight, handling it’s now vast monetary resources in an efficient and effective manner through good financial management, will be imperative.

Initiatives that promote standards and codes of good economic and financial governance in emerging nations are a way of safeguarding Nigeria’s fiscal future. One such initiative is the collaboration of International Federation of Accountants (IFAC) and the Department for International Development (DFID). These projects aim is to support professional accountancy organisations in emerging countries, sharing resources and experience to help ensure, ultimately, that business leaders and government have access to robust and proactive financial structures.

AAT is the first accounting technician body to be a full member of IFAC and we are representing the accounting technician level of the profession. As the UK’s largest accounting technician body, AAT works across a number of countries in Africa including Botswana, The Gambia, Malawi, South Africa and Swaziland.

Working in Africa for over 25 years AAT has strong experience of working to develop the accounting profession for example, leading the establishment of Occupational Standards for Accounting Technicians for Eastern, Southern, Central Africa (now the Pan African Federation of Accountants) that are also internationally benchmarked.

In summary, good financial management ensures accountability and efficiency in the management of public resources and it does this by providing:
•    The essential information needed by those who manage, implement, and supervise projects, including government          oversight agencies and financial institutions
•    The assurance needed by business investors, lenders, and donor community that funds are being used efficiently
•    A deterrent to fraud and corruption, since it offers the necessary controls to detect unusual occurrences quickly

For developments like this to succeed, strength in governance is essential as well as a strong partnership between the international community and emerging economy. This will ensure that the right solutions are achieved

The African continent is becoming a hot bed for foreign investment, with 11 of the world’s top 20 fastest-growing economies located there. The IFAC and the AAT are working hard to assist in capacity building in government, supporting and strengthening audit offices, and facilitating transfers of professional accounting standards. Initiatives like these will greatly benefit of the countries involved and ultimately the people of the African continent.

If you liked this article, you might be interested in reading the AAT comment article on South Africa’s youth unemployment.

Garvan Jones is a freelance writer. .