Global Facilitation Network for Security Sector Reform (GFN-SSR)

Public Finance, Security, and Development: A Framework and an Application to Afghanistan

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How can links between security and development enhance policies, processes and institutions in developing countries? This paper from the World Bank South Asia Region argues that understanding security risks and designing risk mitigation strategies are crucial to better development outcomes. With appropriate adjustments, traditional economic principles can be applied to the security sector. These include tools relating to public finance management, service delivery and governance.

Almost a third of developing countries are at risk of violent conflict or unstable. A growing number of development actors recognise that security and development are intimately linked. This departs from the traditional approach of development institutions refraining from involvement in security issues. There is growing research linking security, security sector reform, and development. Yet discussions of security and public finance management are less common:

• Developing a conceptual framework exploring relationships between security and development reveals two things. First, lack of security weakens the investment climate, erodes human and social capital and weakens public institutions. Second, security cannot be seen in isolation from these other areas.
• Standard public finance tools can be applied to the security sector. They are just as useful for analysis and policy recommendations in this sector as they are for others. This undermines the claim that the security sector is special and has to be addressed differently.
• Core principles of public finance – fiscal discipline, allocative efficiency and operational efficiency - yield lessons for the security sector. Principles of good finance management can be applied to the security sector at all three levels.
• Security is an essential service that needs to be delivered. Taking a service delivery approach therefore makes sense, providing guidance to improve public finance management in the security sector.
• Good governance principles can be applied to the security sector. Just as good governance is important in the security sector, security is needed in order to support good governance.
• The Afghanistan Public Finance Management Review included analysis of public expenditure in the security sector. This showed that the principles discussed here can help provide recommendations for improving financial management in the security sector of specific conflict-affected countries.

Government, civil society, donors and financial institutions familiar with these economic tools should apply them to the security sector. Actors directly involved in the security sector should familiarise themselves with these tools and concepts. Entry points for dialogue between the two include:
 

• Policy integration: Emphasise that security is a key factor for development and that development is a longer-term driver of improved security.
• Fiscal issues: Integrate the security sector in dialogue and frameworks for fiscal issues. Issues of fiscal sustainability are especially important to finance ministries.
• Public finance approach: Apply lessons learned in public finance management and service delivery and their implications for the security sector. Security sector actors are interested in how their expenditure demands can be met.
• Policy and implementation coordination: Develop institutional mechanisms to enhance the integration of the security sector with the rest of the development strategy and national budget. Bring together domestic and international actors.
• Skills: All of this requires the development of diverse skills in various institutions. These can be developed through practical experience, but will require resources.

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