Capacity Building in Support of Core Public Administration Functions and Service Delivery
Basil Fuleihan Institute of Finance

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Lebanon witnessed more than fifteen years of civil war (1975-1990) and invasions that have led to across-the-country destruction amounting to a loss of well over USD 25 billion in physical assets. By the early nineties, the Lebanese Ministry of Finance (MoF) premises were scattered over eleven buildings across the country. The average age of the Ministry’s staff reached a high 56 years for a retirement age set at 64 for civil servants, its skilled personnel had either emigrated, retired or passed away. Recruitment had been stalled since 1975 and there had been no single capacity building initiatives ever since. The compensation framework was inadequate, and administrative procedures were outdated, over-centralized and complicated. At the core of the problem figured an outdated public employment and human resources management system. The legacy of the Lebanese civil war weighed even heavier with the emigration of almost 200,000 professionals and skilled workers, while the entire country’s infrastructure was utterly destroyed. The lack of capacities by the end of the war translated in crippled Core Public Administration Functions (CPAF), as well as in inadequate service delivery to citizens. In 1993, the Ministry of Finance of Lebanon (MoF) implemented a reform program that mainly targeted Public Financial Management as an entry point for improving all CPAF, including fiscal and economic policy formulation and implementation, public financial management, and civil service reform. The aim of the ministry was to re-establish an efficient and accountable organization supported by modern fiscal, monetary, trade and market reforms. However, the administration was incapacitated by the fact that it had to address both CPAF and service delivery in a post-conflict context while lacking the human capacities to do so. As such, as institutional and procedural reforms were implemented, efficiency in the delivery of services did not improve. Moreover, the human resources present in the MoF as well as in key government bodies were unable to adapt to these reforms, many of which required new technical experience and a modern set of competencies. The fact that the staff of the entire public administration had no designed and integrated career path set by the civil service management, rallying civil servants around the reform process was practically impossible.

B. Strategic Approach

 2. What was the solution?
To help implement the government strategy to modernize the economy and place it on a sustainable growth path, to streamline reform initiatives and ensure their sustainability, and to provide local, intra-governmental support to CPAF and service delivery mechanisms, the Lebanese Ministry of Finance established the Institute of Finance (IoF) in 1996, for it to become a source of sustainable, high-quality, and specialized training and communication services as well as for it to properly coach and prepare the new generation of leaders, hence contributing directly to the building of capacities for CPAF in a post-conflict context.

 3. How did the initiative solve the problem and improve people’s lives?
In collaboration with local, regional and international stakeholders, the IoF was able to successfully support CPAF areas, particularly PFM and civil service (CSR) reforms that were initiated by the MoF in the immediate aftermath of conflict. By ensuring that civil servants had access to entry level as well as career-long training, all while providing citizens with the information required for them to understand their relation with the state and the fiscal and financial authorities, the Institute played a supportive role which allowed the MoF to successfully implement its reforms. The IoF benefited from the support of consecutive Ministers of Finance and of the senior officials from both the MoF and other administrations, and hence provided training and capacity building services, enhanced the learning environment within the Lebanese public administration through extensive partnership-building, facilitated the transfer of expertise and good practices from partner administrations, international organizations and donors to the Lebanese public administration, and improved the quality of end-user service delivery by providing access to information and contributing to promote citizens' fiscal and financial knowledge. In 20 years, a total of 50'000 civil servants from the Ministry of Finance and the public sector at large participated to capacity building programs organized by the Institute. This constitutes more than a third of the total number of employees in central government, and more than a quarter of the civilian central civil service (including public school teachers and contractual employees and excluding armed forces). As an example, when the VAT was first introduced in the year 2000, the IoF trained the first batch of 18 civil servants for the new VAT unit who later became the heads of departments, and exposed them to a number of good practices from around the world. The 300 new recruits who were affected to this directorate later on were all provided with extensive specialized training on systems and procedures for 140 days before integrating their jobs. Awareness sessions were also organized to help citizens adapt and better understand this tax and its implications. The completion of the computerization of the land registry and cadastral system provides yet another example. The same service was extended for the roll-out of automated customs procedures to all units of the customs administration along with the implementation of the new Code of Customs. The results of initiatives such as those stated above resulted in substantial service improvements for citizens in terms of speeding up the delivery of services provided by the Ministry of Finance (such as post-clearance controls in customs, e-declaration, and payments in private banks), increasing the validity, accuracy and consistency of assessments and records, improving the availability and accessibility of valid, comprehensive and up-to-date financial, fiscal, and trade data, and improving the delivery of services to other government entities. In addition, customs training programs, have not only allowed for better service delivery, but protected the physical integrity of citizens, as training on the use of the X-ray, clearance, control and investigation techniques have allowed for an increase in the number of arrests related to illicit and counterfeit-related trafficking. Finally, the Institute complemented these initiatives with an extensive communication and publications programme. Hence, the "Citizens' Guides" series was created to provide simplified information on the modalities for completing all key fiscal procedures. In 20 years, 255,000 citizens' guides were distributed, which would amount, as an aggregate, to one citizen guide for every twenty Lebanese citizens. By 2007, the MoF, which had exited the war suffering with massive shortages in CPAF and service delivery not more than 16 years earlier, was awarded the United Nations Public Service Award for its service to citizens.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
The management of the Institute rests on a transformational leadership, positively influencing innovation, with a special focus on collaborative efforts. It values openness and civil service values, embraces creativity, transparency, accountability, ethics and professionalism. The Institute works as a learning organization, concentrating a high level of dynamism and productivity within a small team with whom the management built individualized relationships, considering their needs, aspirations, and skills. Work and responsibilities are characterized by a high level of delegation and staff are offered training opportunities inside and outside Lebanon, at the most prestigious institutions and are invited to share lessons learned. Senior staff are put in positions that stretch them beyond their current skill sets, and are coached to align IoF goals with their professional development and to help them grow, develop and learn new skills. Communication channels within the various departments and the leadership are kept open and the Institute's orientations are openly discussed and communicated in an understandable, precise and engaging way. This is done every 5 years as the Institute undergoes an assessment of its capacities and activities in a participatory approach, therefore making sure that every team member is inspired and motivated to work towards this vision.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
Figuring among the top partners of Lebanon in the field of institutional cooperation, France contributed to the Lebanon's reconstruction through five financial protocols of a total of 1.3 billion francs, which included grants of 130 million francs to support the reforms of vital sectors, particularly that of PFM. Hence, 9.5 million francs were allocated to the Ministry of Finance for the establishment of the IoF and for the modernization of the accounting plan of enterprises. The IoF then enjoyed support from the Governments of Canada, the Netherlands, the EU, the Arab Fund for Economic and Social Development and others, and was placed within the Ministry of Finance and firstly managed by French experts. It was transferred, in the year 2000, to Lebanese management, and granted the status of autonomous public agency in 2003. Twenty years later, the Institute had catered for more than 50,000 beneficiaries. The Institute's direct beneficiary is the Ministry of Finance, which is composed of around 5,000 employees. The Institute also caters to the community of PFM practitioners across the public sector in Lebanon, as around 14,000 persons benefited over 20 years from training programs on PFM related topics. Law enforcement agencies also benefited from training programs on combating financial crimes. The Institute targets senior civil servants through high-level training workshops, publications, and a journal specialized in public finance and state modernization. The IoF also caters for the private sector and the youth, as it is present in fora and holds meetings to discuss the content of citizens' guides, while students are invited to "Youth at the Ministry of Finance" programs. It is to staff as well as to students and citizens that the doors of the Library of Finance, which today houses more than 22'000 books and references on finance, administration, economics and law, are open.
 6. How was the strategy implemented and what resources were mobilized?
The Institute began as a French bilateral project funded partly by the French government through the Technical Cooperation Agency of the Ministry of Economy and Finance of France – ADETEF, and remained so between 1996 and 2000. In 2000, as the first Lebanese director was recruited and the institutionalization process began, it benefited from partial funding from the European Union for two years. In 2003, the Institute was granted the legal status of public autonomous agency operating under the tutelage the Minister of Finance. Since then, it benefits from a yearly budget allocation from the MoF and enjoys independent management as well as financial and administrative autonomy. Its sources of funding today include: an annual share from the Ministry of Finance of Lebanon, grants and donations awarded by local, regional and international organizations, while some of its services are provided on a cost-recovery basis by external partners. Initially created in 1996 to support capacity-building and human resources development at the Ministry of Finance at a time when PFM reforms were being undertaken, the Institute's mission between 1996 and 2001 was to improve the technical skills of the Ministry’s agents, develop their sense of adherence to a community and instill a culture of belonging within the Ministry. As of 2001 and until 2005, the reforms themselves needed to be “embedded” through emphasis on improved procedures, implementation and improvement of human resource development strategy, staff selection, and the recruitment and induction training of a new generation of civil servants. Delivering specialized capacity building services, the Institute was able to improve its standing as a local magnet for continuing education and training, particularly for the Lebanese Public Sector. Between 2005 and 2012, the Institute was able to consolidate its position as a sustainable source of high quality, specialized training and communication services in public financial management in Lebanon and the MENA region. Acquiescing to the need for a concerted effort to respond to common needs in training and capacity building in the MENA region, the Institute of Finance launched, with the support of its partners, the Governance Institutes Forum for Training in the Middle East and North Africa, GIFT-MENA, a South-South initiative that gathers 60 members from MENA and 20 partner institutions, among which figure the World Bank and the French government, for which the IoF acts as the permanent secretariat. Based on the success of this platform and in an effort to encourage synergies among national capacity building providers and to be able to offer a coordinated training offer nationwide, the IoF contributed to the establishment of the National Training Network in 2014, gathering nowadays more than 20 representatives of the various training providers operating in the Lebanese public sector. As a center of excellence with extensive experience in PFM, the IoF contributes nowadays to the support of CPAF and service delivery through training, capacity building and knowledge building. At the core of its practice figures cooperation, networking and the transfer of knowledge and good practices and the provision of assistance and consultancy in its areas of expertise. It promotes a culture of excellence and innovation in public sector and maintains an institutional management of high caliber, built on professional standards and a modern style of management. In terms of human resources, the Institute was able to recruit and retain a group of 15 dedicated staff members who constitute its specialized personnel along with 8 equally dedicated general service staff members. The Institute's staff has been essential in translating the vision into a reality, and has participated on an equal footing to all of the training programs held at the Institute and abroad.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
The stakeholders involved in the design of the initiative were, in the 1995-1996, on the Lebanese side, the President of the Council of Ministers, the Minister of Finance and his advisors, and on the French side, the Minister of Finance and the French agency for international technical cooperation –ADETEF- which managed the establishment of the Institute. It was established with the primary support from the Government of France, and was subsequently supported by the Governments of Canada, The Netherlands, and the European Union. Lebanese management took over in the year 2000, and hence came the support of the nine consecutive Ministers of Finance, while the community of stakeholders expanded over the years to include all of the senior civil servants of the community of public financial managers throughout the Lebanese public sector. Many donors also supported the Institute's national and regional projects and initiatives throughout the years, among which figure the Arab Fund for Economic and Social development, the Arab Planning Institute of Kuwait, the Islamic Development Bank, the ESCWA, the World Bank, UNDP, the Governments of France, Spain, Italy, Great Britain and the Netherlands, all of which hence became stakeholders involved in the elaboration of the local and regional capacity building agenda. Indeed, asides its local direct institutional environment which is composed of the Ministry of Finance and its affiliated directorates and agencies, the IoF maintains 11 Memoranda of Understanding with local institutions and 15 with regional and international institutions and organizations, all of which are today involved in the design and support of the initiative.

 8. What were the most successful outputs and why was the initiative effective?
The core output for which the initiative was initially designed and implemented, is that it succeeded in establishing a culture of continuous learning within the Lebanese Ministry of Finance, hence offering key support to CPAF and PFM in particular, while seeking to improve service delivery by strengthening managerial capacities on one hand, and citizens’ knowledge on the other. Indeed, support to CPAF and service delivery by capacity building was provided through career-long training from induction to specialized technical training programs. In order to institutionalize training further, the Institute developed the first competency framework for senior civil servants, and fostered a culture of leadership and financial governance among middle and senior civil servants by encouraging them to dialogue and exchange among peers. Capacity building was given further endorsement when the Government of Lebanon brought the IoF to participate in the establishment, in 2005, of a merit-based recruitment procedure for senior officials in leadership and policy-making positions to bring about a change in organizational culture and the enhancement of organizational performance. The IoF also undertook key steps to support policy reform for better PFM practices and developed a national Procurement Manual and standard bidding documents to ensure fair and transparent procurement practices, and implemented a comprehensive training strategy on public procurement with internationally recognized certified programs. The IoF also contributed to the establishment of similar Institutes in Arab countries (Jordan, Palestine, Morocco) and promoted a pioneering initiative that is South-born, South-owned and South-managed through the Network of Civil Service Schools and Institute in the Middle East and North Africa Region – GIFT-MENA, the Secretariat of which it houses. Similarly, it contributed to the establishment of the Lebanese National Training Network to reinforce the culture of training in the public sector. Acquiescing to the importance of partnership for development, it is a member of 14 local, regional and international networks. In its effort to provide support to service delivery, the IoF promoted citizens’ knowledge on fiscal and financial issues. It hence contributed to creating synergies between the State and the citizen through several outreach initiatives, the publication of 111 technical manuals, citizen guides, policy briefs and reports and its "Bibliothèque des Finances", with more than 25,000 references, and welcomes university students for “Youth at the Ministry of Finance” days. It also launched the first scientific journal specialized in PFM and state modernization in the Arab word in 2011.

 9. What were the main obstacles encountered and how were they overcome?
The IoF faced numerous challenges throughout its 20 years of existence, one core challenge being the fact that it is operating in an unstable, challenging and changing economic and security environment. Lebanon is facing one of the most critical challenges of its modern history: Syrian refugees fleeing the conflict constitute now 50% of the Lebanese population, weighing heavily on Lebanon's infrastructure, weakening confidence and security, and declining social cohesion. This in addition to structural and cyclical factors that hamper the smooth functioning of the administrative apparatus, in particular the absence of voted budgets since 2006, a public debt estimated at 139% of GDP at the end of 2015, outdated regulations that limit the implementation of modern managerial practices, the dominant position of central administration that creates administrative and bureaucratic burdens, and the lack of strategy regarding regularity and systematization of recruitment since the year 2000. Moreover, the absence of a national strategy for training backed by a legal status instating the right of civil servants to training, the absence of linkages between training and career path development, and the absence of a link with the public budgeting process hindered the IoF’s work. However, this was overcome largely by the IoF's contribution to the creation of the National Training Network in an effort to strengthen the culture of training in the public sector, foster coordination between the various Lebanese service providers, promote civil service values and agree on a national training strategy. Moreover, the IoF has a limited budget to run its operations and respond to the numerous training demands, while the size of its staff is limited to 15 full-time employees by the budget article of its establishment. These obstacles were overcome by resorting to grants and donations awarded by local, regional and international organizations and the provision of technical assistance, consultancy services and some training services on a cost-recovery basis by external partners and donors on one hand, and outsourcing and project-based recruiting on the other.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
Efficient and qualified human capacities at both CPAF and service delivery levels reflect themselves directly in both the institutional and development dimensions. Both lead to a better management of taxpayers' money, maximizing the effectiveness and efficiency of public expenditure and securing the greatest value from spending decisions and avoiding waste, errors, fraud and corruption. Building the capacities of law enforcement agencies including the Ministry of Finance’s Customs Administration, law enforcement officers including General Security and the Interior Security Forces, the Ministry of Economy and Trade inspectors, as well as army officers in the field of border enforcement, intellectual property rights, financial crimes, customs related topics, the use of the X-ray, clearance, control and investigation, money laundering, smuggling, international procedures and trade facilitation, strengthen not only the PFM dimension but contribute directly to creating a safer, secure and more peaceful environment for citizens. Moreover, the IoF’s promotion of fiscal and financial literacy in Lebanon, in line with its objective of providing support to public service delivery by fostering a financially literate community has benefited (i) students at schools and Universities through targeted programs and study visits (ii) a total of 205 teachers through capacity Building Programs for Economics Teachers in Public Schools, hence impacting the learning of students in public schools and iii) Lebanese citizens through the various financial and fiscal awareness and literacy campaigns undertaken by IOF. It is specifically in that respect that the Library of Finance, the Institute’s public documentation center housed in its premises, plays a pivotal role. With 25’000 references in Arabic, English, and French, and its online catalogue providing Lebanese citizens with economic, financial, and managerial resources, the Library of Finance provides free access to all of Lebanon’s civil service, students, and citizens. Its program, “Youth at the Ministry of Finance”, which has welcomed 1'800 students from all universities since 20 years, has raised the awareness of students on fiscal and financial topics while introducing them on the main functions of the PFM administration. Finally, the IoF's publications including guides, videos and interactive tools for citizens, technical manuals, and reports conference proceedings and research papers, policy briefs and magazines and internal bulletins convey to specific target groups relevant information in the most appropriate form. These publications tackle very sensitive topics such as the modernization of the state and public finance, public procurement, taxation and customs, among other topics, all of which serve to strengthen the financial knowledge of the Institute’s direct service recipients as well as that of the recipients of the services of the Institute’s client institutions and administrations.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The IoF addressed a key portfolio of the PFM dimension: budget execution, and more particularly, public procurement, a governance area that is highly vulnerable to corruption especially in a post-conflict situation and where public procurement accounts on average 13% of the Lebanese State budget. The IoF developed a three-year strategy for capacity development in public procurement (2013-2015), that led to offering the first certified training programs in public procurement in Lebanon, developed in cooperation with the Chartered Institute of Purchasing and Supply (CIPS) in the United Kingdom, and established cooperation between the Institute, the Tender Board, the Office of the Minister of State for Administrative Reform, and the Court of Audit, in an effort to create synergies and build on the efforts of other stakeholders involved in this portfolio. Secondly, the IoF surveyed public procurement practices and made available information on best practices to decisions makers, professionals and practitioners, through a report “Professionalizing Public Procurement in Lebanon: Diagnostic Review and a Vision Forward”. It then contributed to the dissemination and transfer of knowledge and the facilitation of learning in Sustainable Public Procurement with the launching of two reports, “Current Legal Status Related to Sustainable Public Procurement (SPP) in Lebanon”, and “Readiness of the Lebanese Market for Sustainable Production and Consumption”, in addition to setting a National Action Plan for SPP implementation over three years. Thirdly, it contributed to the improvement of public procurement practices across the Lebanese public sector by making available to ministries and public institutions a set of 5 Standard Bidding Documents reflecting good practices and balanced conditions of contracting, with the core objective of unifying all procurement practices throughout the Lebanese administration. Promoting the agenda of sound policies in public procurement was accompanied with a vast training and capacity building program. Hence, the IoF trained a group of 25 trainers in Lebanon and abroad for them to form an expert trainers' group in public procurement, and implemented, since 2008, more than 45 continuous and specialized courses and workshops on public procurement, hence building the capacities of more than 1100 civil servants on public procurement, including 150 certified practitioners. Finally, the IoF sought to attract SMEs to the public market by raising awareness on public procurement regulations, procedures and practices, as it could contribute to socio-economic development in Lebanon. Since 2015, 62 SME's managers were trained on public procurement.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
The Institute is an active member of the Gender Diversity and Governance around the Mediterranean Network which gathers women senior civil servants from Euro-Mediterranean countries with the common goal of reinforcing workplace equality and to encourage gender diversity in the public sector. It launched, in 2016, the national branch of the network, and celebrates every year International Women's Day in the presence of inspiring women who share their path, success stories, and the challenges they faced with their peers. As to the youth, capacity building initiatives addressed to public school economics teachers undertaken as of 2009 was not only destined to ensure that the knowledge of teachers is up to the requirements, but to ensure that public school students, most of whom are from vulnerable backgrounds, are provided with empowering knowledge on the functioning of the public finance as well as on how to manage personal budgets. Finally, conscious that empowerment is largely an empowerment at the economic level, the Institute ensured that its citizens' guides and other developed awareness material were distributed in all regions and put at the disposition of citizens at entrances of Ministry of Finance and other administrative buildings.

Contact Information

Institution Name:   Basil Fuleihan Institute of Finance
Institution Type:   Public Agency  
Contact Person:   Lamia Moubayed Bissat
Title:   Director  
Telephone/ Fax:   009611425147/9
Institution's / Project's Website:  
Address:   512, Corniche al-Naher
Postal Code:   16-5870
City:   Beirut

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