Digital transformation critical to advance government transparency and compliance across Africa

The rise of interconnected devices will transform how governments respond to citizens, handle enquiries, and manage service delivery. Global market intelligence firm IDC estimates that there will be 212 billion ‘things’ connected by 2020, hastening the rise of the Digital Economy. The Digital Economy is aimed at alleviating some of the most prevalent socio-economic realities, including unemployment, quality of life, service delivery and creating economic opportunities for small and midsize enterprises.

Innovation in the public sector is critical to help governments, utilities agencies, employees and citizens to quickly tackle issues such as education, healthcare and revenue collection management. Governments now have the agility and confidence to deliver services, bridge the economic gaps and drive transformation across the private sector. The labour market ecosystem does not generally create jobs, but rather plays a support role to the private sector and more specifically, SMEs in creating sustainable jobs that strengthen communities both from an economic and social perspective. Governments are responsible for creating enabling environments for the private sector and businesses to engage, grow, and prosper, both socially and economically. Traditionally governments tended to focus on providing citizens monetary and non-monetary benefits, and a robust collection engine, thereby creating a welfare state.

The evidence of governments across the continent actively embracing digital transformation abounds. One such example is of the Kenya Power and Lighting Company (KPLC) which, as a State Owned Enterprise, is expected to comply with the Public Procurement and Disposal Act of 2005. The latest amendment of the Act mandates the migration of all “State Corporations” to the Integrated Financial Management Information System (IFMIS), the aim of which is to improve transparency and compliance within the tender process.

In addition, only 47 per cent of Kenyan citizens currently have direct access to electricity, a figure that Kenya Power wants to increase to 70 per cent by 2017, and 100 per cent by 2020. However, as Samuel Ndirangu, General Manager of ICT at Kenya Power and Lighting Company says, they cannot accomplish this simply by building more capacity. Most of the success will come from smart and lean operations that seek to gain efficiencies where they can be found. As examples, Kenya Power has adopted technology to cut down on costs by delivering electronic versions of billing statements to consumers. More than one million of Kenya’s electricity users now receive their bills via email or SMS services. Secondly, KPLC currently spends most of its procurement budget with foreign sources supplies, and wants to support local industry by increasing procurement from local suppliers.

In a recent article, Philip Armstrong: Senior Advisor, Corporate Governance at the International Finance Corporation (IFC), said that well-run state-owned enterprises (SOEs) can offer tremendous potential as a driver of inclusive economic growth and development in emerging markets. “The importance of SOEs to the economies and welfare of emerging markets cannot be overestimated: in Africa, SOEs are estimated to represent 15 per cent of the gross domestic product (GDP)”. His statement echoes the renewed focus on transformation and compliance with regulations that is currently being experienced across the African continent.

Armstrong explains the impact of good governance on the economy: “Recent research by Dag Detter and Stefan Foelster as quoted in a recent issue of Foreign Affairs magazine reveals that better-governed state-owned enterprises around the world would enable central governments to generate an astonishing $3 trillion in annual returns – more than the entire world’s yearly investment in infrastructure, including transportation, power, water and telecommunication.”

The use of technology will ease the road to compliance; digital transformation is not going to stop any time soon. The SAP platforms able to assist organisations with these elements are fully automated, making compliance and risk analysis relatively easy. When an organisation has Governance, Risk and Compliance (GRC) fully integrated into their cultures, all levels of employees are empowered for the betterment of the company, ultimately leading to a better-run, more effective country that benefits all.

(Andrew Waititu is the Regional Managing Director, SAP East Africa)

References

http://www.emc.com/leadership/digital-universe/2014iview/internet-of-things.htm

http://ethicalboardroom.com/leadership/corporate-governance-and-soes/