Sending in the consultants: development agencies, the private sector and the reform of public finance in low-income countries

Byline: Sara Fyson Private sector consultants have increasingly been called upon to assist aid-dependent countries in strengthening their public sector governance systems. This paper argues that the role of these consultants in shaping the reform process is not well understood. This paper offers a conceptual framework to capture the essential dynamics of the relationship between the donors, the governments and the donor-funded consultants in the implementation of Public Financial Management (PFM) reforms. Three main lines of inquiry are developed to assist in determining the lines of accountability that are drawn between these three sets of actors. The first, drawing on a rationalist principal-agent approach, focuses on the contractual process and the incentives that emerge from it at the micro level. The second, drawing from a constructivist approach, delves deeper into the normative agendas behind private sector participation and the meaning given to the concept of accountability in this context. Finally, a third line of inquiry centres upon the political environment within which the reforms are implemented and which acts as a filter both upon the contractual process and the ideas of best practice brought in by consultants. The implementation of an integrated financial management system in Ghana is used as an illustrative example.