Performance improvement activities consist of targeted interventions to address specific problems that weaken the credit standing of sub-national entities in eyes of potential lenders. These activities range from minor changes in auditing and reporting to major improvements, such as restructuring a utility. By improving their financial performance, sub-national entities can increase their creditworthiness and access to commercial loans.
PPIAF’s Sub-National Technical Assistance (SNTA) program provides technical assistance for performance improvement in sub-national governments and utilities. SNTA’s performance improvement activities help sub-national entities build financial sustainability plans, strengthen existing or identify new revenue flows, diagnose current financial management problems, increase transparency, and strengthen financial monitoring mechanisms.
Below are several examples of SNTA performance improvement activities and related materials.
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In 2008 the SNTA program helped La Promotora, a development finance institution owned by the Colombian city of Pereira, improve its credit rating. Risk management and activity-based costing systems were prepared and a strategic planning exercise was conducted in this activity. As a result of SNTA’s support, La Promotora issued $6.5 million loans to both the Municipality of Pereira and Empresa de Telcomunicaciones for infrastructure improvement projects.
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In 2008 the city of Dakar, Senegal requested assistance from the SNTA program to review the state of public financial management in the city. An analysis was conducted using the Public Expenditure and Financial Accountability (PEFA) methodology, the first of its kind to be implemented in an African municipality. The study recommended city officials to improve the fiscal management, allocation of adequate resources, and effective delivery of municipal services. As a result of SNTA support, Dakar received a €10 million loan from the Agence Française de Développement to finance a public lighting program.
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In 2009 the city of Ouagadougou, Burkina Faso requested technical assistance from PPIAF to conduct a Public Expenditure and Financial Accountability study. The objective of this activity was to improve the creditworthiness of the municipality and to increase the transparency of its financial management. In January 2010, an action plan based on the study was approved by the Mayor and other local authorities. The city is expecting to receive a €3 million loan and €650,000 grant from the Agence Française de Développement as a result of this activity. The loan will finance the rehabilitation of the city’s bus stations and a new bus station management system.
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In 2010 the Brazilian state of Sergipe requested assistance from the SNTA program to improve the financial performance of the state-owned water utility, DESO. This activity helped DESO prepare key financial and operational information, assess the impact of its institutional development program, and compile information requested by commercial lenders. As a result of this support, DESO obtained an $11 million loan from the International Finance Corporation to finance a non-revenue water reduction project. Read more about this activity in the impact story SNTA Supports a Water Utility in Brazil’s Frontier Region.
Related materials
SNTA Supports a Water Utility in Brazil’s Frontier Region
Teaming up to Support Subnational Water Utility in Brazil’s Frontier Region