Responsibilities for financial management
Each level of government has specific financial management responsibilities as outlined below.
Financial management at federal level
Responsibility for the overall financial management system of the Programme at federal level lies with MoFED. They are responsible for opening foreign currency accounts to receive funds from donors and then transferring these funds into the CWA. From the CWA, funds are transferred by MoFED to special accounts opened for the other three WASH Ministries (MoWIE, MoH, and MoE) and the regional BoFEDs on the basis of approved plans and budget reports.
All BoFEDs and the WASH sector ministries are responsible for reporting to MoFED on all OWNP financial matters. Based on these reports, MoFED prepares a single consolidated report and distributes this to the Development Partners and other stakeholders.
Financial management at regional level
The regional BoFEDs are responsible for managing government and CWA funds at regional level. They have a number of specific tasks, including opening regional, zonal and woreda bank accounts at the nearest area branch of the Commercial Bank of Ethiopia and transferring funds for OWNP implementation. (Note that the National Bank of Ethiopia is used for accounts at federal level and the Commercial Bank of Ethiopia at regional and lower levels.) They also provide technical support to the implementers to ensure that proper accounting systems are established and competent accounting staff employed. They are responsible for preparing and submitting regional financial reports to MoFED and to regional government.
Financial management at woreda level
Woreda offices of Finance and Economic Development (WoFEDs) have similar responsibilities for proper accounting systems and competent accounting staff at woreda level. As a member of the Woreda WASH Team (WWT), the WoFED assists the WWT in the planning and budgeting process. They collect and aggregate the required financial data and information and submit reports to the Woreda Administrative Council (Cabinet) and BoFED.
Financial management at town level
As you learned in Study Session 10, towns are categorised into three levels:
What are the three categories of town?
Towns that have utilities managed by a Water Board, towns with utilities but without a Water Board, and those with only WASHCOs.
Larger towns in the first two categories with populations greater than 20,000 receive funds by loan through the Water Resources Development Fund (WRDF). Towns with a population of fewer than 20,000 receive funds by grant through the relevant BoFED. These two funding arrangements for towns are further described below.
Water utilities are directly responsible for opening a special bank account to receive loans from the WRDF and must have proper accounting systems in line with government policies and procedures. (You learned about the WRDF in Study Session 9.) They also collect and aggregate required financial data and report regularly to the WRDF. Like the federal WASH sector ministries, the WRDF is responsible for reporting to MoFED on all financial matters with respect to towns financed through loans under the Programme.
The grant component for urban WASH projects may be transferred in two possible ways. One option is from BoFED to the town’s Finance and Economic Development office (ToFED). The other is for the region or zone to control funds on behalf of the town, which may be the case if the town does not have the capacity to do this for themselves. If small towns recognise that they lack capacity to implement the WASH fund, they can assign the regional or zonal WASH bureaus to take on this role. They will request BoFED to transfer the grant amount to the regional or zonal water sector institution to implement their activities.
Any grant transferred from BoFED to the ToFED office is disaggregated into water supply and sanitation components based on the approved budget. The grant for water supply improvement is transferred to the water utility, if there is one. Other WASH components (sanitation and hygiene) are managed by the Town Finance and Economic Development office.