5.1. Management of Human Resources
5.2. Budget and Finance
5.3. Information and Computer Services
5.4. Physical Plant and Administrative Services
This chapter reviews the Divisions and activities assigned to the Deputy Director General for Management (DDG(M)) who has overall responsibility for all administrative and finance matters at IITA headquarters and field stations (see Figure 1.1). At Ibadan, these include Human Resources, Budget and Finance, Information Services, Physical Plant Services (PPS), and other services such as hotel catering, travel, computer services, and administrative services. Activities covered by PPS include support for the research Divisions and the IITA campus (or township) at Ibadan: housing, water treatment and sanitation, electrical power production and distribution, air conditioning, communications, building and grounds maintenance, metal and wood fabrication, and scientific equipment maintenance. The IITA school on the campus is independent, and the medical clinic is part of Human Resources.
5.1.1. Introduction
5.1.2. International Staff
5.1.3. National Staff
5.1.4. The Human Resources Function - Staffing and Approach
5.1.5. Other Human Resources Services
In 1990, when the last EMR was conducted, the human resources management (HRM) function was headed by a Director of Human Resources reporting to the Director General. This position was supported by two managers, one for Employee Relations and the other for Manpower Development. The positions of the Director and the Manager of Employee Relations were classified as internationally recruited staff. Since then, the two internationally recruited staff positions, the Director and the Manager of Employee Relations, have been eliminated, and all HRM functions placed under the office of the DDG(M) who has reorganized these functions under two broad categories: international and national staff. International staff functions are assigned directly to the DDG(M) assisted by executive assistants in the Director General's office. National staff functions are assigned to a nationally-recruited Personnel Manager who oversees staff development, training, recruitment and employee relations for NRS.
The Panel has reviewed the effectiveness of HRM policies and practices for both the internationally recruited staff (IRS) and the nationally recruited staff (NRS). Overall, the Panel's assessment is that there have been very significant improvements in staff relations during the past 4 years - i.e. since early 1991, when violent labour unrest shocked the Ibadan campus. The Panel commends the management and staff for having successfully overcome the earlier crisis.
This notwithstanding, it is the Panel's judgement that there is no room for complacency, given the heterogeneous, complex and decentralized IITA campus communities where people work and live closely together. The Panel believes that additional efforts are needed to satisfactorily resolve some of the pending issues, and to build adequate HRM capacity to meet the strategic needs of the Institute.
Some of the issues discussed below include, for the IRS, the rule limiting the scientists' tenure at IITA to 11 years (the "11 year rule"), management development, compensation administration, performance evaluation and relations with the International Staff Association (ISA). The issues addressed below with respect to NRS include compensation administration and relations with the Staff Associations.
To ensure that these issues are effectively handled, and to provide a full-time focal point for the HRM function, the Panel has reached the conclusion that IITA needs a well qualified internationally-recruited professional, specialized in human resources management, who reports to the DDG(M). Further details are discussed below.
5.1.2.1. Recruitment, Selection and Turnover
IITA currently employs about 128 international staff, recruited from 32 countries and deployed over 9 countries and 7 stations, including Ibadan (see Section 1.4.3). During the period under review, all divisions except RCMD were able to recruit and retain well qualified internationally recruited staff - and RCMD's staffing situation has not yet been satisfactorily resolved. There were only two departures from PHMD, the research division headquartered in Cotonou (Benin). In divisions located at headquarters, it is somewhat more difficult to attract IRS due to the socioeconomic conditions in Ibadan and Nigeria. In 1993, 8 vacant positions were frozen because of budget cuts.
Besides the general environment in Nigeria, recruitment for positions in Ibadan, particularly of mid-career professionals, is made the more difficult due to at least two other factors: opportunities for spouse employment and for secondary schooling in Ibadan. Spouse employment is a particularly vexing and complex issue, with no easy solutions. IITA, like many other international organizations, has been grappling with this issue for many years. The Centre has a spouse employment policy; but, that policy must conform with Nigerian immigration laws which management cannot change. The only way this policy can be officially changed is by modifying the Institute's Headquarters Agreement with the Nigerian government - and that would require time and effort, and could result in the loss of the Institute's diplomatic status for a period of time.
Since the recruitment of scientists of the highest calibre is essential for maintaining IITA as a centre of scientific excellence, the Panel recognizes management efforts for seeking ways of addressing the spouse employment issue. The Panel also notes that some related-problems are resolved by approaching the Nigerian immigration authorities for individual cases, as appropriate.
To resolve the longer term issues, however, a more detailed study of recruitment and turnover of IRS is advisable. Data could be collected from exit interviews conducted during the past few years, from candidates interviewed for recruitment, including those who subsequently declined offers, and from a general survey of current IRS. Besides the spouse employment issue, information could be collected on the impact - on recruitment and turnover - of the lack of a suitable secondary school on campus, the deteriorating medical services in Ibadan, and the limited medical services provided by the IITA clinic.
5.1.2.2. Management Development
The last EMR made a clear recommendation for the Human Resources Department to give priority to management development of managers and scientists. The Panel acknowledges management's efforts to implement this recommendation. Besides "on-the-job" training in management, several managers and scientists have been sent to the CGIAR-organized Management Development courses in the USA and elsewhere. This practice should be continued.
To further improve the managerial skills of scientists and administrators at various levels, the Panel suggests that IITA engage a short term consultant for the design and animation of a Performance Improvement Programme for the Institute. The terms of reference for this consultation should include a training needs assessment for IITA-specific management development programmes and the development of a detailed training strategy. The terms of reference should also include suggestions for the design of the curriculum and methodology of the initial trial programme, including the use of such cost-saving methods as distance teaching, audiovisual documentation and programmed instruction. Management could then make a decision about giving increased emphasis to training as an essential feature of human resources management at the Institute.
5.1.2.3. Performance Evaluation
Since the last EMR, when the recommendation was made that the systematic evaluation of scientific staff be given priority, a formal performance evaluation procedure has been instituted. The same appraisal form is used by all research divisions, and the weighting of various criteria is jointly agreed upon by the staff member concerned and the supervisor. This year, at the end of the standard procedure, RCMD and PHMD used an additional form to finally rate their staff from outstanding to below average. These evaluations were then discussed with the staff at the divisional level, and subsequently by the director with the DG.
On the basis of the Panel's discussions with staff, supplemented by the results of the Staff Survey conducted by the Panel prior to the main visit, it appears there is room for further improving the evaluation process to reduce perceived inconsistencies and subjectivity. The Panel recognizes that any performance evaluation system will have its critics, and IITA's system is no exception.
The reported inconsistencies could be the result of (among other reasons) lack of familiarity with the basic principles of performance assessment. Unless supervisors (i.e., scientists and managers) are properly trained in conducting appraisals, and held to a high standard of objectivity, they could easily make some of the common errors in assessing subordinates - for example, the tendency to rate everyone as "above average" or "outstanding"; or the tendency to be unduly influenced by the most recent performance-related incident, positive or negative. Such errors can quickly lead to lack of confidence in the system used, and need to be corrected.
Recommendation:
The Panel recommends that IITA take steps to improve the uniformity, transparency and due process of the current Performance Evaluation System.
The Panel understands that performance evaluation results are mainly used for awarding annual salary increments and extending or terminating contracts. While these are standard uses of such data - and should be continued - additional benefits could be derived from using performance assessments for determining training needs, assessing recruitment strategies, and validating selection procedures.
One suggested improvement is to clearly specify the performance criteria and relative weights for each criterion for each job family. For scientists, one additional step in the evaluation process could be considered, as a strictly voluntary option: any scientist could request to have sent to an external reviewer(s) his/her dossier for a "blind review" of performance. The results of the blind review would supplement the conclusions of the scientific review panels (involving scientists from across Divisions) currently used at IITA.
5.1.2.4. Contract Renewal Policy
In terms of IITA's policy regarding contract renewals, the Panel is concerned about the so-called "11 year rule" instituted by the Centre during the past few years. (This rule seeks to limit the scientists' tenure at the Centre to a maximum of 11 years). In practice, this rule has been enforced only in exceptional cases - for example, of the 10 staff members who came up for such a review in late 1994, 5 were extended for a full 5 years, and 2 for 3 years, till the end of the current MTP. However, there is considerable dissatisfaction among the IRS regarding the perceived arbitrariness of the rule, and of the review process and outcome.
The Panel fully endorses IITA's policy of offering renewable fixed-term contracts, with rigorous evaluation of performance at the end of each contract period, in addition to the annual performance evaluation (as recommended in the last EMR). However, there does not seem to be any convincing rationale for the ceiling of 11 years on a scientist's tenure at IITA, especially if his/her performance is good and the need for his/her services continues to exist. Elimination of the rule could also improve IITA's chances of recruiting scientists in mid-career (i.e., in their late 30s or early 40s).
Recommendation:
The Panel recommends that IITA rescind the "11 year rule", limiting the tenure of scientists at IITA, and delete it from the personnel policies applicable to internationally recruited staff.
5.1.2.5. Compensation Administration
The Panel has been informed that the salary grades of IRS are made available to them on request. The BoT decides on the overall annual salary increase, and this percentage figure is known to staff. The existing system for determining salaries and benefits is specified in the Personnel Policies and Procedures Manual, which is available to all IRS. These are all positive developments since the last EMR.
However, the Panel has noted that the Personnel Manual is silent on the following items: how the salaries are benchmarked and from which occupational markets recruitment takes place; the job evaluation procedures used; how frequently salary surveys are conducted; and the procedure for seeking redress of an individual grievance on salary matters. While the Panel could not delve into specific instances of reported inconsistencies in the application of salary policies, the Panel is of the opinion that, given the large number and diversity of countries from which IITA recruits its IRS, greater transparency in salary determination could only be beneficial.
Recommendation:
The Panel recommends that the Personnel Policies and Procedures Manual for Internationally Recruited Staff include the Institute's Salary Structure for all classes of internationally recruited posts, indicating the pay ranges, incremental steps and criteria for the placement of staff at each level.
Further, in 1993, the Committee of DGs (of the CGIAR-supported Centres) had commissioned a study of compensation of IRSs in the IARCs. This study (by Messrs. Hardin and Gormbley) is used by IITA management as a basis for comparison with other Centres, and is available to interested staff, on request. However, the Panel suggests that the salary grades be reviewed periodically by management and the BoT; and a copy of the latest salary structure for IRS be sent to each individual (as an update of the Manual) along with the letter indicating the annual salary adjustment.
5.1.2.6. The International Staff Association
The Panel notes that IITA has adopted participatory forms of management, as recommended by the last EMR. The need for such measures was sadly reinforced by the unfortunate incidents of violence that occurred on the Ibadan campus in early 1991. In order to devise a long-term strategy for preventing the recurrence of such unforeseeable incidents, management prudently established a broadly-representative Ad Hoc Committee of staff from various levels to uncover items affecting staff morale, both among the IRS and NRS. The Committee highlighted the need for improving communications within and among various groups on campus.
As a remedial measure, management encouraged the formation of a number of committees and staff associations - including the International Staff Association (ISA) - as ongoing mechanisms for regular consultation between management and staff. This willingness to open communication channels with all levels of staff is recognized as a distinguishing feature of the DG's management style, and is appreciated by the staff (and the Panel).
Based on the minutes of the ISA's discussions with management during the past few years, the Panel believes a serious effort has been made by all concerned to institutionalize this consultative body. Clearly, the ISA has potential - thus far underutilized - to serve as a forum for raising and discussing important HRM-related issues.
During the current review, some members of the Panel were able to attend a six-monthly meeting of the ISA with management. Unfortunately, from the sparse attendance at the meeting and from our discussions with members of the ISA executive, it appears that interest by international staff in this forum is waning. During the meeting there were not sufficient numbers present (either by proxy or physical attendance) to constitute a quorum - even though important issues of HRM policy and benefits were on the agenda.
While the Panel is unable to untangle the many factors that might underlie this situation, it is clear that all is not well with this important communication mechanism. The Panel's view is reinforced by the results of the Staff Survey conducted by the Panel Secretariat prior to the April visit to Ibadan, and from the results of the earlier ISA Questionnaire on staff concerns.
To ensure that the ISA is able to effectively perform its intended function, and to strengthen its role as a genuinely consultative body for IRS-related matters, the Panel suggests that both management and the ISA redouble their efforts to become more responsive to the other's concerns.
5.1.3.1. Staffing, Turnover and Establishment Committee
The Panel has reviewed the effectiveness of human resources management (HRM) of nationally recruited staff (NRS). As noted earlier, staff relations are much better now than 4 years ago, when there was considerable labour unrest on the Ibadan campus.
In the Panel's view, since 1994 - after recruitment of the current Personnel Manager - the HRM function for national staff is being performed professionally and enthusiastically despite very trying circumstances. Management has addressed many of the HRM concerns of Ibadan-based staff; has set up an Establishment Committee to provide clarity on job rankings on an institute-wide basis; has computerized the personnel data base; and has developed a Personnel Information System.
It is apparent to the Panel that, within its limited financial resources, management has attempted to respond to the needs of NRS. However, there is room for improvement - for example, in such matters as implementing the job evaluation system or career development of staff, both of which are essential features of a responsive and progressive HRM system. Of particular concern to the Panel are apparent anomalies in the classification of such categories as research associates and interpreters, and the lack of career development opportunities for many NRS.
The turnover of national staff in Ibadan is low, as it is at other IITA stations. This provides indirect evidence of the relative attractiveness of the Centre in comparison with other employment opportunities in the local labour market. The low turnover is also, of course, a reflection of the difficult socioeconomic conditions in the external environment. The Panel therefore hesitates to read too much into the turnover data by itself.
Some members of the Panel met with the executive committees of the Management Staff and the Senior Staff Associations. The MSA and the SSA feel that the participatory forms of management which created their associations are not effective. Further, the IITA Productivity Plan (IPP), and its accompanying "idea boxes" and posters - while prominently positioned and displayed throughout the campus - have not generated many useful ideas. Minutes of the two meetings of the Productivity Committee held in the past two years indicate that the IPP has generated a sum total of 30 ideas, submitted by 18 employees. Only five of these ideas were considered by the IPP as deserving further investigation; but no further information is available to the Panel about the status of the IPP. Discussions with management and staff suggest that the programme has not been successful, and has essentially been abandoned.
A number of other concerns of an HRM nature have been brought to the Panel's attention during the course of two visits to Ibadan and field visits to outstation locations by Panel members. Some of these relate to matters essentially beyond the control of management, such as the impact of the deteriorating external environment - which has significantly eroded the living conditions of local staff, and has progressively contributed to generating unrealistic expectations about just what IITA's role and response should be in alleviating the national staff's difficult circumstances, particularly in Nigeria.
This should not be understood to imply that improvements are not needed in HRM policies - and in their implementation - within IITA. A number of HRM issues have been brought to the Panel's attention, and over these, management and national staff do have considerable control. These issues include matters relating to the terms and conditions of employment - such as which comparator organizations to use - and matters relating to wages and benefits, career development, performance assessment, and compensation administration for the NRS at Ibadan. All of these are important aspects of HRM, can be further improved, and merit continued management attention.
The Centre's BoT-approved policy on comparators is to use the local large-scale industries for this purpose, and to ensure that the remuneration package is in the higher part of the upper quartile. In the absence of a detailed study of this and other similarly complex issues (such as wages and benefits), the Panel is unable to comment in specific terms. On the issue of comparators, however, in general terms the Panel's view is that management's approach of maintaining IITA's competitive position in the local labour market seems appropriate under the prevailing circumstances.
One of the main concerns of national staff at other stations is the absence of comprehensive and well documented Personnel Policies and Procedures for those locations. Staff rules and policies do exist in some form, often as inter-office memoranda and administrative orders - but they are generally based upon the Personnel Policies and Procedures Manual for Ibadan, which is tailored to the Nigerian setting, and is unlikely to be applicable elsewhere without substantial adaptation.
Recommendation:
The Panel recommends that IITA prepare comprehensive and updated Personnel Policies and Procedures Manuals for nationally recruited staff at all field stations.
5.1.3.2. National Staff Associations
To help defuse the tension caused by the difficult labour situation in early 1991, and to improve labour-management communication, IITA management encouraged the establishment of three staff associations for NRS: for Management Staff (grades 11-15);
Senior Staff (grades 7-10); and General Staff (grades 1-6). Meetings have been held between management and the associations at least twice per year. However, there is an ongoing dispute over which of two competing unions would be legally authorized to represent the General Staff in collective bargaining. While the decision of the National Industrial Court on this issue is awaited, no collective negotiations can take place.
Members of the Panel have had fruitful discussions with the executives of the Management Staff and Senior Staff associations, the Personnel and Employee Relations managers, and some NRS. Although management and national staff are working hard to reach common ground, it is quite apparent that many of the labour relations problems cannot be considered to have been fully resolved. Hence, even though the deteriorating external environment will remain a source of dissatisfaction and unrealistic expectations, continued management attention to HRM issues could yet contribute to providing a reasonable degree of job security and satisfaction. The Panel urges such attention.
The recent appointment of a Personnel Manager for national staff provides the professional focal point to address this continuously-evolving labour relations situation. Additional external assistance from a suitable consultant well-versed in labour-management issues could be sought in the future, as appropriate. Such a consultation could conceivably lead to a systematic programme and action plan for labour-management cooperation and productivity enhancement.
Many of the routine administrative aspects of HRM are being satisfactorily handled at IITA; and there is genuine concern for the welfare of the Centre's human resources. However, it is the Panel's overall judgement that the approach adopted is somewhat reactive and ad hoc. While the earlier decision to abolish the two internationally recruited positions was based upon understandable exigencies of diminished financial resources, the Panel concludes - with the benefit of hindsight - that this may not have been the most cost-effective course of action for meeting IITA's longer term needs.
The Panel believes that to help improve staff morale and productivity, a more forward-looking and long-term perspective on HRM issues would be beneficial for IITA. We are convinced that there is a pressing need for full-time leadership of this important functional area, covering all categories of staff (i.e. both IRS and NRS).
As discussed earlier, in relation to IRS, besides the day-to-day issues of personnel administration, there is need for periodically undertaking such activities as: conducting training needs assessments; analyzing the results of performance appraisals; conducting morale surveys and culture audits; conducting exit interviews; designing and implementing wage and salary surveys; and utilizing this information for devising appropriate HRM strategies and programs. In the Panel's view, this would require the continuing attention of a specialist in human resources management.
Hence, although the DDG(M)'s duties should continue to include overall responsibility for HRM, it is the Panel's conclusion that, given the large scope and diversity of activities under the DDG(M), it is now essential that IITA recruit a professionally qualified, people-oriented manager to serve as the focal point for all HRM functions at IITA.
This manager would be expected to take the functional load for HRM off the DDG(M), but would report to him administratively. We expect he/she would be based at headquarters, but would provide functional guidance on HRM matters to the heads of all IITA stations, including Ibadan.
Recommendation:
The Panel recommends that IITA appoint a professionally qualified, internationally-recruited specialist in human resources management as Head of Human Resources, reporting to the Deputy Director General (Management).
The Panel had the opportunity to meet with members of the Community Council, the Women's Group and the School Board. It also met informally with staff, spouses, and other members of the IITA community. Panel members have used the services and facilities of the International House and the dormitories; and our overall impression is positive.
However, the following concerns have been brought to the Panel's attention; and on each we give below our views for consideration by management:
· The scope of services provided by the medical clinic, and the sourcing of drugs. This concern has been heightened by the deterioration in hospital-based specialist care in Ibadan in recent years. In addressing this issue, the Panel is aware that improvements at the clinic - including the acquisition of a new ambulance with life-support systems (currently awaiting clearance at Lagos port), construction of an enlarged clinic and pharmacy, and hiring of more nurses and a pharmacist - are being undertaken. However, the Panel understands that the recommendations of the study of the clinic - undertaken in 1989 by external consultants (Management Sciences for Health, a reputable firm based in the USA) - have not been implemented. A new study of the scope of services that should be provided by the clinic is suggested.· The lack of a good international-standard secondary school in Ibadan - and hence the issue of extending the campus-based elementary school to the secondary level. The Panel is aware that an in-house study was done some years ago, and concluded that such an extension was not justified at that time. However, as noted above, this issue could have significant implications for the recruitment and retention of IRS, and a new detailed study seems warranted.
· The marked increase in (mainly weekend) visitors to the IITA campus, to take advantage of the excellent lodging, catering and recreational facilities. Although the Panel is aware of the financial and social attractiveness of opening these facilities to the general public on a fee-paying basis, these benefits have to be balanced against the staff's concern for privacy and access to facilities. A cautious approach to a further increase in visitors is suggested.
· The issues raised by the ISA, particularly the cost-of-living allowance (COLA) and hardship allowance. The Panel is aware that these issues are under review by management, and a new BoT-approved policy on hardship allowances is expected to be in place by year-end. However, as a general principle, the Panel suggests a more pro-active stance by management on HRM issues, instead of waiting for the ISA to take the lead.
· The provision of religious services on the Ibadan campus. In the Panel's view, IITA should seek to retain its secular identity on campus, as was suggested by the last EMR as well.
In conclusion, the Panel believes that all such concerns can be effectively addressed by the management remaining responsive to the needs of staff; reorienting the role and activities of the HRM function; re-establishing a senior full-time focal point for the head of human resources at IITA; and further strengthening the various consultative fora already established on the Ibadan campus.
5.2.1. Financial Condition and Budget Strategy
5.2.2. Financial Management System
5.2.3. Auditing
5.2.4. Integrated Planning and Budgeting
5.2.1.1. Overview
In spite of the financial turbulence that has afflicted the CGIAR System during the past several years, and the severe budgetary stringency that IITA has experienced, IITA today enjoys a relatively sound financial position with a high degree of liquidity. It has not had to resort to short-term borrowing to manage its cash flows, and it has managed to strengthen its reserves.
IITA has achieved this result by following a very conservative budget strategy. It has left vacant many positions, deferred annual salary increases for international staff, energetically sought out economies in support services, and exploited opportunities for self-generated income to partially offset reductions in the purchasing power of grants from core donors. At the same time it has found ways to cope with the financial and logistical stresses resulting from the seriously deteriorating conditions in the host country.
IITA Management and Board are wisely committed to maintaining a very conservative budget and financial strategy in the foreseeable future. Inevitably, such a strategy involves trade-offs - which invariably cause hardships to staff. These hardships and cuts in benefits have, on occasion, led to difficulties in staff relations - but given the extreme financial uncertainties faced by IITA during the past several years, the management's approach has been broadly successful and appropriate.
IITA ranks among the five largest of 16 IARCs in terms of operating expenditures (CGIAR 1993 Financial Report), but has one of the lowest rates of dependence on core funds of all the Centres. In 1993, only 65% of the total was from core grants. Slightly more than half of core grants was from the three largest donors (Japan, United States and the World Bank). IITA has diversified its financial sources by:
· participating in Nigeria's debt conversion programme;
· exploiting other opportunities for self-generated income; and
· attracting complementary and special funds from a wide array of donors.
5.2.1.2. Nigeria Debt Conversion Programme (NDCP)
In 1989 the Federal Government of Nigeria (FGN) established a debt conversion programme carried out through an auction process administered by a newly-formed Debt Conversion Committee (DCC). IITA immediately sought, and obtained, approval from the FGN to participate in the NDCP. Except for the brief period between October 1990 and February 1991 when the DCC temporarily suspended the auctions, IITA has effectively participated in the auctions.
IITA purchases dollar-denominated promissory notes and/or restructured bank debt under refinancing agreements negotiated by the FGN with external creditors. The purchase price is determined by the New York and London markets dealing in these instruments. The debt currently trades at 30 cents per US dollar of principal amount or face value. The Institute offers the instruments for sale to the Central Bank of Nigeria for local Naira currency. The effective exchange rate obtained by IITA through these series of transactions is better than the Central Bank official exchange rate. The difference thus computed can be a significant cost saving to the Institute's Nigerian operational costs.
The table below plots the difference in dollars between the Central Bank official exchange rate and the effective rate achieved by IITA through the Debt Conversion Programme.
|
US$000 | ||||
|
1990 |
1991 |
1992 |
1993 |
1994 |
|
1,689 |
1,428 |
1,000 |
750 |
3,010* |
* In January 1994 the Nigerian Government announced that the exchange rate for the Naira was to be fixed at Naira 22 per US dollar. Earlier, during the second half of 1993, the exchange rate had been determined by market forces, which caused the Naira to trade at a rate of Naira 40 per US dollar (London Financial Times quoted rate of 31 December 1993). In 1994 IITA achieved an average effective rate of Naira 37 to the dollar. The figure of $3,010 above represents the difference between the effective rate (Naira 37) and the official rate (Naira 22). However, in the context of the 1994 foreign exchange market, this cannot be viewed as a saving because the parallel rate was over Naira 50 per US dollar on average for the year.
Real savings to research programmes were enhanced by a policy of procuring equipment and supplies within Nigeria using Naira to the maximum extent feasible, rather than importing goods and services using dollars. During the first two years of the NDCP, the Naira's parallel (black) market rate averaged only about 25% higher than the official rate. Since then, a major upheaval in the Nigerian economy and currency markets has resulted in an ever-widening spread between the official rate (22 Naira to the dollar in December 1994) and the parallel rate (100 Naira to the dollar in December 1994). Since the parallel rate is the rate normally used by suppliers, the effective cost savings attainable under the NDCP is rapidly disappearing. Recently the official exchange rate has been adjusted, and the prospects for future significant cost savings to IITA have diminished.
5.2.1.3. Other Self-Generated Income
In addition to the NDCP, IITA has aggressively exploited other opportunities for increasing self-generated income in recent years. Including amounts under the NDCP, it is estimated that IITA will finance about 10% ($3.3 million) of its total expenses ($33.6 million) in 1994, including capital depreciation, from self-generated income.
The single largest source of such income, about one-half, is derived from revenues earned by the Hotel and Catering Service at IITA Headquarters in Ibadan. Currently, the Hotel and Catering Service is generating nearly $1 million in annual income (and part of this revenue could conceivably be used to improve campus facilities).
The next largest source of self-generated income is from investments of cash balances, primarily interest on bank deposits. At its April 1990 meeting, following the recommendation in the February 1990 Report to the Second External Management Review (EMR), the IITA Board adopted an investment policy specifying IITA's investment objectives and the authorized financial instruments. The investment policy is quite conservative, emphasizing preservation of capital. Investments are primarily in short-term obligations of the US, EEC and Japanese governments and their agencies or instrumentalities, and in deposits in large, well-capitalized banks in Nigeria. Income from such investments has been averaging around $350,000 per year, about 1% of IITA annual expenses.
Opportunities exist for seeking a higher level of income, while maintaining short-term liquidity and preserving capital, by accepting a somewhat higher level of risk. However, the current sound financial position of IITA and its strong balance sheet do not call for a more aggressive investment programme at this time. Nevertheless, in view of the continued uncertainty regarding the future budgetary climate, the Panel suggests that the BoT closely monitor the Institute's investment programme and reassess the BoT's investment policy from time to time.
5.2.1.4. Financial Condition
With highly diversified sources of income, a strong cash management process, and a conservative budget strategy, IITA has managed to achieve and maintain a strong and sustainable financial position in spite of the budgetary stringency experienced in recent years.
As indicated in the Table 5.1., since the 1990s IITA's working capital and operating fund balances and liquidity measures have improved consistently.
With a sound financial position, IITA has not had to borrow to meet cash flow needs. However, starting in 1994 IITA did begin to utilize overdraft facilities for Naira expenditures to take advantage of the fact that interest rates (21%) were currently significantly less than the inflation rate (about 70% in December 1994).
As evidenced by its strong financial position, IITA has a well developed and energetically administered financial management system (FMS). The FMS can be characterized as conservative, complex, risk-averse and labour intensive. The conservative risk-averse nature of the system is a function of the conservative philosophy of top management, reinforced by the high risk conditions of operating in-country and within the sub-Saharan African regions.
Table 5.1.: IITA's Operating Fund Balances and Working Capital
|
|
1990 |
1991 |
1992* |
1993 |
1994 |
|
Operating Fund Balances | |||||
|
US dollars (millions) |
3.7 |
4.2 |
5.6 |
5.6 |
7.6 |
|
Days equivalent of operations |
38 |
45 |
57 |
60 |
92 |
|
Working Capital | |||||
|
US dollars (millions) |
4.9 |
6.3 |
9.2 |
10.2 |
12.4 |
|
Days of equivalent of operations |
51 |
68 |
94 |
108 |
149** |
|
% of Grant Income |
14.0 |
18.5 |
25.8 |
29.8 |
39.3 |
|
Ratio | |||||
|
Current Ratio |
1.34 |
1.48 |
1.60 |
1.76 |
1.69* |
|
Quick Ratio |
1.16 |
1.40 |
1.44 |
1.68 |
1.84 |
|
Cash Ratio |
0.59 |
0.78 |
0.92 |
1.10 |
1.36** |
Notes
* As restated to reflect a change in accounting policy from Commitments to Accruals basis.
** Targets: 180 days of working capital; current ratio of 1.6; cash ratio of 1.0.
5.2.2.1. Financial Information System (FIS)
The FIS was inaugurated in 1989. After one year's operation the Second EMR Report noted that there were many complaints by users, including long processing times, delayed reports, and excess paper generated (1990 EMR Report, page 50). It recommended a Task Force review of the FIS; the transfer of the FIS from Budget and Finance to Computer Services; and a reduction in the size of the chart of accounts and in the level of detail in the monthly reports. The Report also recommended against any large investments in a new computer mainframe, and deferral of upgrades to existing hardware until the FIS was made more efficient and responsive to users. IITA's response to these recommendations has been a mixed one.
The FIS staff continues to report to the Budget and Finance Director, since no apparent advantage is seen in a transfer to Computer Services. IITA has deferred upgrades to the computer system. After lengthy study and deliberations over several years, a decision was taken in December 1994 to refrain from a major hardware/systems replacement and to pursue minor upgrading to the existing configuration to facilitate networking and speed up processing time. This decision was wise, considering the potential need for substantial systems re-design to accommodate an evolving re-structuring of the research project budget structure and supporting management systems.
Some progress was made in reducing the chart of accounts. From a total of 403 accounts in December 1990, some 61 operating accounts were deleted. However, another 38 were subsequently added, primarily in the balance sheet accounts, leaving a total of 380 remaining (a net reduction of only 23, or 6%). Complicating the reporting detail further, there was a net increase in the number of cost centres, which increased from 319 in 1990 to 385 in 1994 (up 66, or 21%). The continued proliferation of cost centres (which are, in fact, responsibility centres) is a function of the devolution of responsibility to research programme and project leaders and establishment of decentralized research stations throughout Africa.
This combination of extensive delegation of authority, a lengthy chart of accounts, a felt need for maintaining a strong control environment to satisfy donor requirements in a high-risk and difficult operating environment, and a computer system that is overburdened leads to a reporting system that is detailed, complex, labour intensive, error prone and perceived by users as being late. The timetable for producing monthly management accounts is, however, generally adhered to. Accounts are available to all budget officers 5 weeks after the month-end together with full details of transactions. A dichotomy exists between the researchers' requests for more condensed financial information and their demands for full transaction detail. Management's planned upgrade of the FIS hardware should provide on-line enquiry capability for budget officers and obviate the perceived need for vast amounts of transaction data.
Some further reduction in the chart of accounts is needed. Many of the detailed subaccounts were introduced as a result of special requests for information (most often from donors) that required time-consuming manual search of the files. It is time to reassess these "requirements". Donors, as well as top management, should be systematically queried as to whether there is a real need for producing such information. In addition, IITA's current plans to upgrade the existing hardware platform should improve efficiency and response time. A reduction in the chart of accounts, and possible consolidation of some cost centres, would enhance this process.
Some of the user frustration and problems with the FIS derives from the frequency of errors (especially coding errors), many of which could be due to carelessness or lack of knowledge on the part of accountable fiscal officers. IITA management is committed to the concept of employing scientists as managers of research projects and stations. Some of the current FIS problems that are correctable in the near term are, in part, problems of systems discipline, and involve the decentralized outstation locations. Training of station personnel in FIS requirements and procedures is suggested.
Further, research programme/station leaders need to be held accountable for their administrative performance (and, therefore, that of their subordinates). The Panel suggests that management revise the performance rating system for scientist-managers to give adequate emphasis to their performance as managers, not only of staff but of budgets as well.
5.2.3.1. Internal Audit
IITA's Internal Audit Group (IA) is led by a well-qualified, internationally-recruited person with a Canadian CMR certificate, extensive experience with a variety of private sector firms, and a thorough knowledge of IITA's financial and management operations. He is supported by four locally recruited staff including one senior auditor position, two audit trainees and a secretary.
The IA reports directly to the DG, and to the full BoT, through the AC, and operates in a completely independent mode. It appears to have full support from top management, including complete access to all records, information and personnel, and enjoys adequate budgetary support. The scope of the audit programme is comprehensive, covering outstations as well as headquarters, and reflects due consideration to the need for risk assessment in allocating audit resources.
The current IA head has occupied the position since 1991. As suggested by the 1990 EMR Report, he has gradually shifted the focus of the audit effort more toward operational auditing while maintaining substantial level of effort on traditional financial audits. Prior to 1991, he was a major participant in the design of IITA's FIS and has been actively involved in the current re-evaluation of the present system.
With the contemplated changes in the FIS, especially the introduction of networking access, some upgrading of skills in the IA staff will be needed to assure that adequate controls and audit access are provided. Professional training of the type and quality needed is not currently available in Nigeria. To facilitate this, it is suggested that management provide an opportunity (and funds) for training the IA staff, to equip them with the computer knowledge and skills required to assure adequate audit coverage of the up-graded FIS.
It has not been the practice to include BoT expenses within the scope of the IA programme, although there is no implicit or explicit restriction on doing so. The omission reflects the view that the size and nature of the BoT budget does not warrant audit attention in view of the competing demands on audit resources from higher risk areas. While it is true that BoT expenses are not sizeable enough to justify an annual audit, the BoT should consider requesting a periodic audit (perhaps once in every three years - that is, once in the term of each Trustee). This would help sensitize Trustees to the need to be aware of their own spending practices and would help demonstrate to donors the BoT's concern for fiscal propriety and economy.
5.2.3.2. External Audit
IITA's external auditing has been performed by Arthur Anderson and Company since 1986. The audits are professionally performed by local auditors under the close supervision of an expatriate partner operating out of Lagos. The principal effort of the external audit programme has been at IITA headquarters in Ibadan and at field stations within Nigeria. Because of the high cost of using a commercial firm out-of-country, the IA has assumed primary responsibility for such work.
The external auditors have reported that IITA's internal controls are operating satisfactorily, and that management is responding satisfactorily to the findings and recommendations of the internal as well as the external audits. External audit reports in recent years have been "clean" with only minor findings reported.
As required by CGIAR financial guidelines, IITA's overhead rates and practices are examined periodically by the external auditor. The review focuses on the logic of the methodology and computational correctness, but does not deal with equity issues.
Meetings between the BoT AC and the external auditor are open, frank and comprehensive. The external auditor has never met with the full BoT, a practice other IARCs have found to be beneficial. While not recommended as an annual event (the AC does an excellent job in representing the full BoT's interest), the BoT might consider having a closed session with the external auditor once every three or four years or so. Such a meeting might focus primarily on an overall appraisal by the external auditor of the control environment within IITA, an evaluation of the scope and quality of the internal audit work, and a strategic risk assessment of the Institute. It would also provide an opportunity for Trustees who are not on the AC to raise any questions they might have directly with the external auditor.
The BoT has considered and rejected the idea of automatically rotating external auditors every five years or so. Instead, it has adopted a policy requiring a formal review every five years of the advisability of rotating auditors. Given the satisfactory quality of the work performed by Arthur Anderson and Company, and limited alternatives available in Nigeria, the BoT's position seems quite sound.
The Second EMR Report noted deficiencies in IITA's planning and budgeting processes and recommended that the processes be simplified and made more participative and consultative, and that budget allocations directly reflect the goals of the Institute. Management agreed with those recommendations and has made sustained effort to improve both processes. Today, the planning process is based directly on the Institute's approved MTP, and involves the wide-spread participation of research managers and programme leaders.
IITA's budget development takes place in three distinct decision processes covering personnel, capital investment and all other costs. The basic resource allocation decisions pertain to the staffing of research programmes and priorities embodied in the MTP. These decisions are essentially taken during the programme planning phase. Adjustments in staffing patterns required by shortfalls in expected availability of funds are basically determined at the top management level between the DG and the research Division directors and Department heads. Costing of the resulting staffing patterns is relatively mechanical, using standard ratios and approved salary and wage scales.
A capital budget is developed by a Capital Budget Committee consisting of the three research Division directors, the DDG for International Cooperation, the DDG for Management and the Director of Budget and Finance. Capital items requested by research programme leaders and management staff are prioritized and approved for inclusion in the budget within the ceiling previously established by the DG and BoT for the capital budget.
All other input costs (objects of expenditure) are derived by negotiations between the Budget Officer and the responsible research division directors and department heads, relying heavily on the previous year's expenditure patterns adjusted for revised estimates of costs and inflation.
Once the budget is approved, Division directors and Department heads must allocate funds to some 385 cost centres and distribute funds among the detailed object class breakdowns. (There are 180 core operating centres, of which 128 are in research and the other 205 cost centres are for special projects and Funds in Trust). The distribution of allocated funds is input for the FIS and serves as the basis for monthly status reports to all management levels.
The step-wise approach to annual budget development, combined with the turbulence introduced by unpredictable reductions in core funding during the last several years, has made it difficult to achieve consistency between programme priorities and resource allocations across the full range of IITA programmes. However, the FIS software is a powerful package which includes roll-up and consolidation facilities allowing costs to be grouped by research programme, research division and commodity. The information currently produced is in keeping with the requirements of the Institute's divisional management structure and, with suitable adjustments, can be made compatible with the proposed project-based budgeting, reporting and priority-setting systems (see Sections 4.3.2. to 4.3.4.).
What is lacking, and needed, is an overarching, time-phased strategic plan to drive the several development efforts in a more coordinated way. The BoT, as part of its oversight responsibilities, should be more assertive in requiring management to develop such a plan for BoT review and approval. Among other essential concerns, the BoT should assure itself that the programme/project structure that emerges will serve the BoT's needs for strategic and medium-term planning as well as annual budgeting, and that it will be compatible with the CGIAR's requirements for activating the promised matrix under the re-engineered CGIAR System.
To focus attention on this important issue, it would be appropriate for management to prepare a time-phased plan for the further development of an integrated programme/project planning, budgeting and management structure, including a streamlined financial reporting system (see Section 4.3.1). The purpose would be to effectively link strategic and medium-term planning, annual budget development and execution, and management control and accountability processes. The plan would include the designation of a single official to be responsible for coordinating the integrated system design and implementation effort. It would also include the specification of milestones and reporting schedules to keep the BoT informed of progress, problems and design changes contemplated, if any.
Recommendation:
The Panel recommends that IITA develop an integrated programme/project planning, budgeting and financial reporting system to support the transition to project-based research management.
To facilitate this process - as also recommended in Section 4.3.3 - one research working group could be selected to develop and pilot-test the proposed structural concepts of a fully integrated system, working closely with the Institute's Chief Financial Officer and the representatives of the research staff.
IITA's Information Services Programme consists of the three Units: Public Affairs, Publications, and Library.
The Public Affairs Unit promotes public awareness of the Institute's activities and accomplishments and helps create a positive image for the Institute and the CGIAR system. It provides regular Briefing Reports to donors and others, organizes the International Development Lecture series, the Media Forum for Agriculture, and contributes materials for local, regional and international mass media of the Institutes activities.
The Publications Unit with its editing, production and distribution services disseminates IITA's research findings to the broad range of users of such information. It also manages the Institute's peer review process for journal articles under the guidance of IITA's Publications Review Panel. Information Services provides the secretariat to this Review Panel (which consists of research scientists). The production of refereed journal articles by IITA scientists has been steadily increasing in recent years. Contributing factors to this positive development may have been the activity of the Publications Review Panel with its secretariat in the Unit as well as the decision to exclude non-refereed materials from the publication in the Institute's Research Bulletin. The Panel commends staff for this achievement. The Unit has been equipped with advanced desk-top publishing and graphics systems.
IITA's Library and Documentation Centre has the primary function of serving the needs of the Institute's researchers and trainees. It has, however, also become an important reference library in the region. The Library database with currently a little more than 100,000 records is searchable from terminals located in the library and others located in the Institute's laboratories and offices. The database, so far served by the Institute's VAX mainframe system, will soon be converted to a Pentium-based system operating under Unix and be accessible in the PC network. The Centre has acquired 22 external databases on CD-ROM and has produced guidelines for their easy access.
The Panel notes that two important constraints faced by the Informations Services Programme and raised by the Third EPR and the Internal Review of the Programme in 1992 have not yet been satisfactorily addressed:
· Both the Library and the Publications Unit (the latter in the production and distribution areas) continue to work under conditions of extreme shortage of space.· While there are Board-approved guidelines for the activities of the Public Affairs and Library Units, there is still no agreed institutional policy on publications activities.
The Panel repeats the statements made by the Third EPR on the need for priority space allocation to Information Services. The reassessment of the organizational setup of the Information Services Programme, as recommended below, should be an opportunity to readdress these urgent requirements.
Recommendation:
The Panel recommends that a Publications Policy for IITA be established, and that an Advisory Committee monitor its implementation.
The Panel noted that there is a certain duplication of efforts, skills and facilities between the Publications Unit and the Training Unit with regard to editing, audiovisuals, graphics and desk-top publishing.
The Panel agrees with the decision made by the DG to transfer the Information Services Programme to the International Cooperation Division, where its needs can be more adequately catered for than in the Administration Division. This also should provide the opportunity for more closely relating Information Services with Training, Monitoring and Evaluation, and Interpretation and Translation, and possibly Geographic Information Systems for the use of synergistic potentials and to avoid duplication of efforts.
In the Panel's view, the forthcoming transfer of responsibilities for IITA's Information Services to ICD could be combined with a general reassessment of the functions and activities covered by these services. This would lead to agreements on priorities, strategic goals and organizational arrangements. This assessment could cover the entire range of IITA's internal and external information functions (Publications, Public Awareness, Library, Training Materials, Interpretation and Translation, GIS, computer services and data bases).
Recommendation:
The Panel recommends that a comprehensive review of Information Services be undertaken as soon as possible.
Computer Services is a support unit within the Management Division and its objective is to ensure that the Centre is served with the most effective computer system available in terms of cost and performance. It also contributes to the necessary level of hard- and software standardization for effective support and cost savings.
The equipment installed in the Institute's headquarters consists of three DEC VAX systems serving the needs primarily of the administration support services, and also of the Library. There are approximately 275 IBM compatible computers, mostly serving the scientific users, and approximately 200 Apple Macintosh computers serving the administrative and scientific support staff. The Cotonou station almost entirely works with Apple machines while the other stations primarily rely on IBM-compatible PCs.
Local area networks have been established in each of the headquarters buildings and their linking is being completed. The Cotonou station has also established a network. E-mail is now available to IITA scientists - which is a definite achievement and is highly appreciated by staff.
The Panel suggests that in the further development of computer services at IITA, preference be given to PC (and Apple) network-based solutions. The proposed upgrade of the DEC hardware is expected to include network compatibility, and is likely to meet IITA's current needs.
Since Computer Services provides user services to the entire Institute, including Central Stores, PPS Stores, FIS, Library, Personnel, Research and all other users of PC and Apple machines, the Panel agrees with management's view that the Unit should remain in Administration with other cross-Institute services. The Information Technology Committee, which has members from all relevant groups in IITA, including research, can continue to provide guidance and strategic direction to Computer Services.
5.4.1. Physical Plant Services
5.4.2. Administrative Services
5.4.1.1. Service Coverage
The Physical Plant Services (PPS) programme provides essential services to the research Divisions and the Ibadan campus (or township). Its activities include: housing, water treatment and sanitation, electrical power production and distribution, air-conditioning, communications, building and grounds maintenance, metal and wood fabrication, and scientific equipment maintenance. PPS also serves as a technical resource for other stations outside Ibadan.
The PPS receives over 7,000 service requests annually, some during weekends and holidays. An average of 10 vehicles are serviced or repaired on a daily basis. Approximately 1,000 hours of emergency power are generated and over 400 million litres of potable water are delivered every year. In spite of the problems associated with the aging buildings and equipment, the PPS has managed, since 1988, to reduce materials and supplies by 20%, abolish one internationally recruited position at the director level, and change two internationally positions to nationally recruited. The current Head of PPS reports to the DDG(M).
5.4.1.2. Service Efficiency
The Panel is of the view that although improvements in service provision and efficiency may be needed, PPS has a team of dedicated and hard-working staff and managers who are able to keep the Institute in relatively good shape despite the very difficult external environment. This was amply demonstrated in 1994 when the Ibadan campus and research facilities were kept operating throughout the six weeks-long strike by public utilities and services in the surrounding community.
Since the range of services provided by PPS is very large and diverse, and the work load is heavy, it is to be expected that for some activities there would be a greater need for improvement than in others. Procurement of goods and services is one such activity; and for this activity, IITA's location at Ibadan, some distance from Lagos, is a definite disadvantage.
Despite IITA's decentralization policy, the centralized importation of goods and services (equipment, supplies, spares etc.) is often necessary, and is the responsibility of the materials management section of PPS. Based on discussions at headquarters and during visits to other IITA locations, the Panel understands that the time taken for procurement is often longer than expected because the procedures used are more bureaucratic than necessary.
Some of the scientists' frustrations could obviously be reduced by further streamlining procurement procedures wherever possible, without sacrificing accountability. In addition - assuming that the scientists are familiar with (or can be trained in) the standard procedures and principles of procurement - authority for local purchasing could be further delegated to the heads of field stations. The Panel suggests that at headquarters, it might also be useful to consider a Users' Procurement Advisory Committee, comprising selected scientists and administrators, to periodically review the problems being encountered - both by the users and the providers of service - and to seek improvements.
As noted earlier, a large number of administrative services are provided by the Administration department of IITA. Most of these services are of reasonably good quality; and, as in the case of PPS, the Panel has not found it necessary to examine them in detail. Only two service units have been especially brought to our attention - perhaps because they are widely used - and these units are briefly commented upon below.
5.4.2.1. Hotel and Catering Services
This service Unit comprises the International Guest House, Dormitory, Restaurant, Snack Bar, Staff Canteen, Laundry and Recreation Centre at Ibadan. The Unit provides hotel and cafeteria services for official IITA visitors and increasingly to third parties. With nearly 5,000 visitors per year and with the serving of 80,000 meals and over 300,000 lunches, the Unit has established an effective record of service quality. The Panel notes that this Unit has been successful in providing good quality services in spite of difficulties in obtaining local supplies.
In recent years, IITA has "opened" the hotel and related recreational facilities to selected groups of outsiders on a fee basis for meetings, conferences and recreational events. Customers are primarily restricted to the diplomatic community, collaborating scientific and educational institutions, and selected business groups. Despite the substantial revenues generated, this extension of services to outsiders is not universally appreciated by the campus community, as the Panel has noted earlier (see Section 5.1.5).
5.4.2.2. Travel Services
The Travel service Unit comprises airline ticketing, travel documents, immigration and airport services. Its objectives are to provide travel services similar to those available at a private travel agency - such as airline flight information, airline bookings, ticketing and seat confirmations - as well as to assist staff and families obtain proper residence permits and visas.
The Panel notes that providing the above services in Nigeria is not always easy. Many external factors play their part, including frequent changes in immigration rules or procedures, breakdowns in telephone communication links, the changing security situation at Lagos airport, and an unreliable public transportation system, to name just a few. The Panel understands from some users of the Travel Unit that, although service has improved in recent years with the computerization of airline bookings, further improvements are still possible.
