Data Quality, Back Offices, and the Burden of Legacy

Back in the day (as my kids always say to me) the debt management office in many developing countries was little more than a back-office. The primary objective was to collect loan agreements, extract information, and record them in recently launched debt recording systems. Data entry sheets were prepared for input in the system, and staff, mainly data entry clerks, set about entering the data with little understanding of the complexity of the agreements.

Policymakers at the time just wanted to know the size of the debt and the cash flows. They needed staff who were entry level recruits, who were at the bottom of the salary rung, and who could simply key in vast amounts of data quickly. Computer systems were relatively new and were a mystery then to those outside this group.

Fast forward to today. There are smart phones, and Google, social media and AI. More importantly for debt offices, there are a plethora of different types of debt instruments. Creditor practices differ and are wide-ranging, loan agreements are replete with new types of provisions, instruments are more sophisticated, financial options are innovative and complex.

Back-office staff have to be skilled. They have to have a deep knowledge of public debt accounting and statistics. They need to understand financial market calculations. They need to carefully read through and interpret loan agreements and then record the terms and conditions in a way that conforms to the business rules of a debt management system. The data generated must accurately reflect the loan's terms. Added to those interpretative skills, back-office staff have to do the necessary forensics to undertake creditor reconciliations and data validation. They must be numerate, analytical, meticulous, investigative, problem-solving, detailed, knowledgeable about creditors, markets, loan provisions, business practices, debt statistics and compilation.

Yet for all that, many debt offices recruit back-office staff who lack these skills. The job descriptions for many back office staff still reflect the legacy of data entry clerks.

I've met HR managers in the public service and finance ministries who can't wrap their minds around the need to recruit higher level staff who have these analytical skills. I've met a financial secretary who is perplexed that DMOs don't recruit back office staff from secondary schools. “All they do is plug in numbers”, he said. Purely mechanical.

Obviously, we've got to do a better job at explaining to public service recruiters and even to Heads of DMOs that back-offices need to be staffed with highly skilled, professional staff. Without doing so, we are going to continue to get debt management strategies and produce policies underpinned by poor quality data. Let's revamp our back-offices, recruit better, and pay better. Public debt management will be thankful for it.