Social Development And Financial Planning – The Importance

Financial planning is a vital part of social development. Underdeveloped countries are generally weak in financial planning capacity. The ability to control finances and to model future outcomes demands a high level of skill that is often in short supply. A lack of financial planning inevitably produces waste and poor outcomes. It leaves budgets open to deliberate siphoning of funds as well as loss through incompetent management.

Every government in a developed country has large numbers of officials whose sole task is financial planning. In every department from health to education, from agriculture and fisheries, to transport and industry there are financial planners at work.

Poor countries simply do not have the number of skilled people to fulfill all these tasks. Even if the education system of a poor country can produce enough graduates they may be tempted abroad by higher salaries and better prospects. It is extremely difficult for an underdeveloped country to create this human infrastructure of skilled financial administrators.

International bodies such as the UN and its many agencies, the IMF and the World Bank can help. They can provide trained personnel or they can pay the salaries of local administrators. Non Government Organizations often provide skilled people to work as volunteers training locals in the techniques of financial planning.

Developing countries may even lack the technical means to carry out financial planning. There may be too few computers available. Economic and social figures are frequently out of date. Up to date figures are essential to plot trends and plan ahead.

We hear more about medical and educational experts volunteering to help underdeveloped countries but people skilled in financial planning can be just as useful. Where long term development projects are concerned financial planning expertise can be even more important. They ensure that services can be delivered in the long term and not just as on an emergency basis. To achieve real, sustainable development financial planning must be established in underdeveloped countries.

There are important democratic issues involved. Emergency aid is essential in a drought, a famine or a war, but it is seldom controlled by local people. Once local people have the necesssary skills to undertake financial planning they are able to take decisions about where money should be spent.

Financial planning also makes transparency possible. If the finances of a government or agency are chaotic it is impossible to tell if its resources are being used well or honestly. Clear planning means that decisions can be reviewed. A program can be assessed for its effectiveness. Wastage can be eliminated.

If all the money is accounted for there is no danger of money being used as bribes or disappearing into the offshore bank accounts of powerful individuals. Vast amounts of the money intended as aid to developing countries has been lost in this way. There is not enough public scrutiny of funds to prevent it. Good financial planning can empower the society to control the government and enhance the democratic process.

Abhishek Agarwal