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Is Shared Services an ideal citizen centric model for East Africa counties and local governments?

October 8, 2015 by Andrew Waititu 0

The Digital Economy is connecting smart organisations in the same way as the’ Internet of Things’ is connecting smart devices, in Africa, local government is following suit.

In 2012, the East African Local Government Association (EALGA) drafted a Strategic Plan for 2013 – 20171. The fundamental goal: the integration of local governments across the region with the aim of improving the lives of citizens. There are a number of options available to achieve the Strategic Plan, but the one holding the most potential as a cost-effective and efficient solution is the adoption of a Shared Services model. In essence, a Shared Services Model allows for different departments – or, in this case, different local governments – to share fundamental administrative duties, efficient service delivery thereby amortising costs and allowing for greater information sharing.

Citizen Centric Shared Services Model in East Africa

East African counties are well placed for the adoption of a digital Shared Services Model that is citizen centric. According to an article published by ENSAfrica2: “East African governments have increased their annual budgets for 2015/16 with more spending directed towards security and key sectors expected to drive growth. According to the East African news publication this comes against the backdrop of faltering revenue collection and declining donor support, creating a fertile ground for increased domestic borrowing.”

The fundamental role of local government is to improve the well-being and quality of life of its citizens. SAP Africa is pushing this trend towards an even more citizen-centric approach through the ‘SAP Future Cities’ initiative which stems from working closely with local governments on a global scale. Through the use of secure, centralised cloud-based storage and sharing enabled by SAP’s S4/HANA platform, we are seeing how local governments using any of the three models are improving their service delivery to citizens in cost-effective ways.”

The benefits of adopting a Shared Services approach are well documented. In fact, in an article published on the Leadership Foundation for Higher Education’s website, entitled ‘Shared Services for Public Sector and Higher Education2 the following statistic is quoted: “A survey in 2011 found that 89% of English local authority organisations now share back office functions, front line services or a combination of the two with other local authorities or public bodies.” The sharing of services such as procurement, payroll and other administrative roles frees up significant portions of the budget for each respective local government, which in turn hastens the achievement of key objectives in the Strategic Plan.

Governments Centralise Administrative Functions

The Shared Services Model affords governments the opportunity to centralise various administrative functions such as IT, procurement and payroll, reducing overhead costs and freeing up budget for more customer-centric initiatives and making access to government services quicker and easier.

According to the local government of the South African region of Kwa-Zulu Natal2, where Shared Services has been in effect for quite some time, the necessity for Shared Services stems from various factors, including reduction of redundancy and duplication of tasks, benefits of economies of scale that reduce overhead costs, and increases in efficiency. Three models used in local government have been identified, namely:

1. Independent Municipal Entity
A new entity is set up and is run as a completely separate body to either the district or the local municipality.

2. District Agency Model
The Shared Service centre is run as part of the district municipality. This model is largely being used as the basis for Shared Services across local governments.

3. Local Agency
This is where the Shared Service centre is part of one of the local municipality structures.

The ability for local governments to invest jointly in a shared services model means taxpayer money goes a little further, it means the development of local skills and centres of excellence that can grow to support national government development plans. Shared services are now mainstay in private sector, it’s time for the public sector to reap the benefits.

1. www.mondaq.com/southafrica/x/403538/sales+taxes+VAT+GST/ANNUAL+LEXISNEXISENSafrica+MINE+HEALTH+AND+SAFETY+SEMINAR+VARIOUS+TOPICAL+ISSUES+WERE+DISCUSSED
2. http://devplan.kzntl.gov.za/General/Documents/2011Mar14/Development%20Shared%20Services%20part%201.pdf
3. http://ealga.org/wp-content/uploads/2013/06/EALGA-STRATEGIC-PLAN-2013-17.pdf
4. www.lfhe.ac.uk/en/research-resources/knowledge-resources/shared-services/shared-services-in-the-public-sector-and-higher-education.cfm

Author: Andrew Waititu, Regional Managing Director, SAP East Africa

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