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USING THE CS-DRMS 2000+ IN SETTLEMENT OF FOREIGN
PAYMENT IN A DEBT MANAGEMENT OFFICE
by
George M Kariuki
A Paper presented to the MEFMI Secretariat
in partial fulfillment of the Fellows Development Programme
May 2007
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TABLE OF CONTENTS PAGE NO.
LIST OF TABLES ...........................................................................................III LIST OF CHARTS ..........................................................................................III LIST OF ANNEXES ........................................................................................III LIST OF ACRONYMS AND ABBREVIATIONS ................................................ IV ACKNOWLEDGEMENT..................................................................................V PREFACE .................................................................................................... VII EXECUTIVE SUMMARY ............................................................................. VIII CHAPTER ONE ............................................................................................. 1 1. INTRODUCTION ........................................................................................ 1
1.1 RESEARCH PROBLEM .........................................................................................................1 1.2 CONSTRAINTS OF THE CURRENT FOREIGN DEBT PAYMENT PROCESS ...................2 1.3 OBJECTIVE OF THE STUDY .................................................................................................5 1.4 PROJECT APPROACH AND METHODOLOGY ....................................................................5
CHAPTER TWO............................................................................................. 7 2. CURRENT STATUS ................................................................................... 7
2.1 THE BACK OFFICE ...............................................................................................................7 2.2 REVIEW OF THE EXISTING MANUAL PAYMENT ADVICES PREPARATION PROCESS.7
CHAPTER THREE ........................................................................................12 3. PROPOSED AUTOMATE D PUBLIC DEBT PAYMENTS SYSTEM DESIGN .12
3.1 OBJECTIVES OF THE NEW SYSTEM................................................................................12 3.2 SPECIFIC OBJECTIVES ......................................................................................................12 3.3 SYSTEM REQUIREMENTS .................................................................................................13 3.4 DATA REQUIREMENT.........................................................................................................14 3.5 DATA-SETS OF THE PAPS SYSTEM..............................................................................15 3.6 MAPPING OF DATA ELEMENTS TO PAPS ENTITIES. ....................................................15
CHAPTER FOUR ..........................................................................................24 4. USING CS -DRMS FOR EXTERNAL LOANS PAYMENT. .............................24 CHAPTER FIVE ............................................................................................26 5. CONCLUSION ..........................................................................................26 REFERENCES..............................................................................................27
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LIST OF TABLES TABLE 1: SYSTEM REQUIREMENTS..............................................................................13 TABLE 2: DATA SETS...........................................................................................................15 TABLE 3: PADATA TABLE .................................................................................................15 TABLE 4: FOREIGN KEYS IN PADATA TABLE...........................................................16 TABLE 5: DEMAND TABLE................................................................................................17 TABLE 6: FOREIGN KEYS FOR DEMAND TABLE......................................................17 TABLE 7: BANK TABLE.......................................................................................................18 TABLE 8: FOREIGN KEYS FOR BANK TABLE ............................................................18 TABLE 9: PAYMENT TABLE..............................................................................................18 TABLE 10: FOREIGN KEYS FOR PAYMENT TABLE .................................................19 TABLE 11: LOANDATA TABLE ........................................................................................19 TABLE 12: FOREIGN KEYS FOR LOANDATA .............................................................19 TABLE 13: PAYTYPE TABLE.............................................................................................20 TABLE 14: LENDER TABLE ...............................................................................................20 TABLE 15: FOREIGN KEYS FOR LENDER TABLE .....................................................20 TABLE 16: CURRENCY TABLE.........................................................................................21 TABLE 17: FOREIGN KEYS FOR CURRENCY TABLE...............................................21 TABLE 18: DEFAULTS TABLE ..........................................................................................21 TABLE 19: PAPSUSER TABLE...........................................................................................22
LIST OF CHARTS
CHART 1: THE PA PREPARATION PROCESS...............................................................11 CHART 2: SCHEMATIC VIEW OF THE TABLES..........................................................23
LIST OF ANNEXES
ANNEX 1: BLANK PA FORM ..............................................................................................28 ANNEX 2: ELECTRONICALLY FILLED PA FORM .....................................................29
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LIST OF ACRONYMS AND ABBREVIATIONS AC Files Accounts File
CBK: Central Bank of Kenya
ComSec Commonwealth Secretariat
CS-DRMS: Commonwealth Secretariat- Debt Recording and Management
System
DMD Debt Management Department
DMFAS Debt Management and Financial Analysis System
DRS Data Recording Section
EPRMD External Payments and Reserve Management Department
IBAN International Bank Account Number
ICT: Information Communication Technology
LAN Local Area Network
MoF Ministry of Finance
PA Payment Advice
PAPS Payment Advice Printing System
PDS Public Debt Section
SPAC Senior Principal Account Controller
SWIFT Society for Worldwide Interbank Financial Telecommunications
UNCTAD United Nations Conference on Trade and Development
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ACKNOWLEDGEMENT This paper is about enhancing foreign debt settlement using the ComSec’s CS-
DRMS 2000+ software and reflects what I have been up to in the last couple of
years. It all began in 2004 when the Ministry of Finance, Kenya nominated me to
attend a Fellows Selection interview conducted by the MEFMI in Harare,
Zimbabwe. After the highly contested interview, MEFMI selected me to be a
Candidate Fellow. Ever since I have interacted with many people who supported
me in one way or the other in my fellowship programme. Since it is impossible to
thank them all, I will therefore only mention those without whom this study could
never have been accomplished.
This work would not have been possible without the guidance, support and
encouragement of MEFMI staff, in particular Anna Msutze whose guidance was
very valuable. Some MEFMI staff also gave vital technical support and would be
failing if I do not recognize them, Jason Kamweru and Leslie Mkandawire.
I am deeply grateful to my mentor, Vikas Pandey, Systems developer Officer,
ComSec whose help, suggestions and encouragement helped me in all the time
of research for and writing this paper.
Other ComSec’s staff that I would also wish to thank for their support and
encouragement include Jose Maurel, Mac Banda and Carilus Odumbe.
I also wish to thank my supervisor, Haron Sirima, Deputy Director, Debt
Management Department (MoF Kenya) who always gave me confidence and
support challenging me daily to look beyond for the opportunities ahead of
successive completion of the programme.
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My sincere thanks to my colleagues, Andrew Mwariri and Andrew Njogu both
Information Communication Technology officers, for their extensive discussions
around my work.
Special thanks to the Debt Management Department staff for their support.
Finally, I owe loving thanks to my wife Emily, my sons Victor and Innocent.
Without their encouragement and understanding it would have been impossible
for me to finish this work.
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PREFACE Accurate and timely settlement of foreign payments remains a major challenge
for many developing nations. This is partly due to the manual processes involved
in preparing the payments. Another factor that affects the payment processes
includes poor communication channels between the creditors and the borrowers.
Bills from the creditors may take a long time before they are received by the
settlement sections. Unreliable databases also contribute to poor settlements of
foreign debts.
Two of the most widely used systems for debt recording are the Commonwealth
Secretariat Debt Recording and Management System (CS-DRMS) 2000+
developed by the Commonwealth Secretariat (ComSec) and the Debt
Management and Financial Analysis System (DMFAS) developed by the United
Nations Conference on Trade and Development (UNCTAD). These two systems
so far, however, do not address the issue of settlement of foreign payments.
This paper is an attempt to demonstrate how the CS-DRMS 2000+ can be
enhanced to assist in settlement of foreign debt payments. This would be a very
cost effective venture since it would use an already established platform. Most of
the data used for foreign settlement of loans is already recorded in the system
which means that very little extra effort will be required.
This added functionality would, however, not make the CS-DRMS 2000+ a
Financial Management System. It would only serve as an interface between the
CS-DRMS 2000+ and other financial systems.
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EXECUTIVE SUMMARY
The CS-DRMS 2000+ is a software programme designed by the Commonwealth
Secretariat to provide borrowers with a comprehensive information management
system for the effective recording, administration and analysis of debt. This
robust system has several modules namely the External Debt, the Domestic
Debt, Disbursements, Reports and Auctioning modules among others. The
External Debt module, which this paper focuses on, is used as a repository of
both public and private sector debt.
Effective debt management however goes beyond recording and analyzing debt
portfolios. Timely settlement of debts is also a key to good debt management.
Late payments attract huge penalties and should be avoided as much as
possible since penalties are not usually budgeted for. In some cases paying in
advance is also penalized. This paper demonstrates how the CS-DRMS 2000+
software can be used to enhance efficient and timely payment of external debts.
A study of the CS-DRMS schema was undertaken. This was done by reviewing
the available system’s manuals that are packaged together with the CS-DRMS
software. The system comes with five installable manuals namely the
Administrator’s, External Debt, Domestic Debt, Management Tools and Reports
Manuals. The Administrator’s manual is rich in the CS-DRMS schema details.
The study of the current debt service payment system revealed that the process
of debt serving starts when a notification of the payment (Demand Bill) is
received by the Director, Debt Management Department (DMD). There are
several notices from creditors namely: demand notes, new disbursements, loan
balances, variable interest rates advice, acknowledgements of payments and
repayment schedule. The study focused on the contents of the demand notes
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and the payment process. The current payment process takes not less than five
hours from receipt of the demand note to the time it is ready for signature. The
designed tool in this study is estimated to take less than fifteen minutes.
Whereas in the current system, anyone with access to the payment advices can
type in payment instructions, the proposed tool ensures that only authorized
personnel have access to the tool. It has been revealed in this study that there is
reduction in the typo errors.
Following the review of the current tool (demand note) and processes the
following data elements of PAPS are designed in this study: PAData (The actual
details of the PA, including number and date), Demand (Bill details, including the
actual part-payments), LoanData (Loan details as recorded in the agreement),
PayTypes (The various types of payments, including penalties), Payments (All
payments that have been made to creditors), Lenders (Creditors details –
updated periodically), Currencies (Currencies used), Banks (Bank details,
including IBAN and SWIFT), Defaults (CBK authorized PA signatories) and
PAPSUsers (System User access rights and privileges in the system).
The study further maps the data elements to the detailed PAPS entities. The
output of the study is the electronic draft demand notice with all information
extracted from the CS-DRMS and additional information extracted from the
current demand note but not captured in the CS-DRMS.
This facilitates timely settlement and ensures security of payments.
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CHAPTER ONE
1. Introduction 1.1 Research Problem
Debt portfolios are usually the largest financial portfolios in many countries. Poorly
managed portfolios would lead nations to experience economic and financial
shocks which may result to economic crises. Debt portfolios, therefore, calls for
prudent management to avert any economic crisis. The first step in debt
management is to have an accurate inventory of all public debt. The
Commonwealth Secretariat (ComSec) is amongst institutions that have come up
with a computer based systems to help manage debt portfolios. ComSec’s system
is called the Commonwealth Secretariat Debt Recording and Management System
(CS-DRMS) 2000+. The current version of the software is CS-DRMS 2000+
VERSION 1.2. Besides the occasional upgrades, ComSec usually releases a new
version of the software every year. The need of new releases arises from the
dynamism of the debt management practices and also issues raised by users.
The CS-DRMS 2000+ is a software programme designed by the Commonwealth
Secretariat to provide borrowers with a comprehensive information management
system for the effective recording, administration and analysis of debt.1 This robust
system has several modules namely the External Debt, the Domestic Debt,
Disbursements, Reports and Auctioning modules among others. The External
Debt module, which this paper focuses on, is used as a repository of both public
and private sector debt.
Effective debt management however goes beyond recording and analyzing debt
portfolios. Timely settlement of debts is also a key to good debt management. Late
payments attract huge penalties and should be avoided as much as possible since
1 External Debt reference Manual - ComSec
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penalties are not usually budgeted for. In some cases paying in advance is also
penalized. This paper will demonstrate how the CS-DRMS 2000+ software can be
used to enhance efficient and timely payment of external debts.
In this paper Kenya is used as case study and demonstrates how the system can
further be utilized to assist in the foreign debt settlement.
The payment process is initiated by the Ministry of Finance upon receiving
demand bills from creditors. In some cases schedules are used. Payment Advices
(or Payment Vouchers) are forms of cheques prepared by the Ministry of Finance.
They contain the payment instructions, that is, the Creditor being paid, the
Creditor’s bank details, the payment type and amount among other details. Signed
Payment Advices are then sent to the Central Bank of Kenya (CBK) for the
payment to be effected as per the instructions in the Payment Advice.
1.2 Constraints of the Current Foreign Debt Payment Process
A review of the current debt payment process revealed that the process is
characterized by delays, which at times lead to penalties that would otherwise
have been avoided if such payments were made on time. Double payments of
loans and typographical errors have also been reported. The Payment Advice
forms are typed using typewriters which at times breakdown throwing the whole
process into disarray.
Upon receipt of a demand notice in the Back Office, a Payment Advice is
prepared, a process that takes up to two days before eventually submitting it to
Central Bank for the payment to be effected. Head of Public Debt Section marks
the demand notice to one of the officers to prepare the payments advice. Upon
receiving the Payment Advice, the officer gets the file for the loan from the registry.
At times the file may be in use by another officer in another debt section and this
occasions delay in the payment preparation process. Incidences have occurred
where a file goes missing for more than a week. When the officer gets file, a draft
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Payment Advice is prepared. After authorization by the head of the section the
draft is ready for typing, a stage that has remained a bottleneck to the process.
The Payment Advices are then taken for coding, a unique code that is assigned
as a security measure, the CBK understands the code. Coding is then followed by
signing of the Payment Advice. Three signatories, including the Permanent
Secretary to the Treasury are authorized to sign the Payment Advice. They duly
signed Payment Advices are then taken to the CBK for payment.
There have been instances where printed PA forms have been cancelled, leading
to repeated preparation processes.
It should be noted that there is a lot of repetition that happens over time in the
processing of the PA. Most of the times the information that changes is only the
type of payment, the payment amount and due dates. Details of creditor or Banks,
for example, do rarely change. This then means that most of the work the officers
do over time is quite repetitive.
The bills, at times, have a language that the officers in the Back Office, with their
limited banking knowledge, are unable to accurately interpret. This has resulted in
data being keyed in the wrong fields of the Payment Advice forms. A case in point
is a situation where a creditor happens to be a banking institution. In such cases
the creditor, just like the payment receiving bank, has a SWIFT code. You’ll find
then that both the creditor’s and bank’s SWIFT codes are typed in the receiving
bank’s field .
Most of the problems and constraints outlined above can be explained within the
PIECES framework for classification of problems, opportunities, and directives,
developed by James Wetherbe (1984, p. 114). The acronym PIECES is derived
from the first letter of each of the six framework categories as outlined below:
1. The need to improve performance;
2. The need to improve or control information (or data);
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3. The need to improve economics or control costs;
4. The need to improve control and security;
5. The need to improve efficiency of people and machines; and
6. The need to improve services to employees, managers, partners, etc.
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1.3 Objective of the Study
This study seeks to demonstrate how the CS-DRMS 2000+ software can be
further enhanced to facilitate foreign debt repayments. Currently the system is
widely used in recording and analyzing debts. Since most of the details used in
settlement of foreign debt is already recorded in the CS-DRMS database, only
very little upgrade would be made to the system to achieve this objective.
Currently the preparation of Payment Advice forms for the foreign debts settlement
is done at the Back Office using manual systems. The use of a computerized
system for settlement of foreign debt payments, therefore, would lead to the
automation of the Back Office processes. This would be a step towards proper
control of printing of the Payment Advice forms, avoid risk of loss of information
and would enhance productivity in the Back Office.
For the purpose of this paper the Payment Advice forms printing system will be
referred to as the PAPS.
1.4 Project Approach and Methodology
The initial work of computerizing the Payment Advice form preparation process
began with consultations with key stakeholders. These included personnel from
the Debt Management Department (DMD) and the External Payments and
Reserve Management Department (EPRMD) of the Central Bank of Kenya (CBK).
The former being responsible for settlement of foreign debt payments and the
latter responsible for the transfer of the payments to the creditor’s foreign
accounts.
A preliminary study of the current Debt Management Department’s (Kenya) Back
Office operations was undertaken. The main purpose of the study was to identify
the problems of the current system, limitations, and constraints associated with the
foreign debt payment process.
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Several meetings were conducted with members drawn from Debt Management
Department, Back Office section and the Kenya’s Central Bank’s EPRMD. The
meetings aimed at understanding the business operations of the PA form
preparation process.
Further a review of the CS-DRMS schema was also undertaken. This was done by
studying the available system’s manuals that are shipped together with the CS-
DRMS software. The system comes with five installable manuals namely the
Administrators, External Debt, Domestic Debt, Management Tools and Reports
Manuals. The Administrator’s manual is rich in the CS-DRMS schema details.
The following are the steps undertaken in developing the tool:
STEP 1: The software concept. The existing manual system was found to be too
slow. A need to minimize the time taken for preparing the Payment Advice forms,
increase productivity, quality and efficiency of in the back office was seen as
something that needed to be addressed. There was a need to use the Information
Technology to help the Back Office achieve its strategic objectives.
STEP 2: Requirements Analysis. The new system requirements are defined. The
data structures (field names, data types and lengths) were identified.
STEP 3: Architectural design. The database and the user interface were done
using Clarion 6 Programming tool. The control procedures and access privileges
were also designed. The users were further trained on the system.
STEP 4: The system is put into use. The developed tool was put use and it proved
very successive. PA forms were printed and a sample is given in Annex 2 below.
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CHAPTER TWO
2. Current Status 2.1 The Back Office
The Kenya’s Ministry of Finance (MOF) is the arm of Government charged with the
responsibility of mobilizing domestic and external funds for financing Government
budgetary requirements. The funds are in form of loans and grants.
The responsibility of loan repayment rests with the Debt Management Department
(DMD) whose functions, among others, include formulation of Public Debt
Management policies and strategies; maintenance of a comprehensive inventory
of loans together with forecast of debt service; and effecting debt service
payments accurately and on timely basis. DMD is divided into Front, Middle and
Back Offices
The Back Office is responsible for processing all foreign payments upon receipt of
demand notices, also called demand bills, from creditors. This includes typing of
the Payment Advice forms, forwarding them for signatures to authorized
signatories and eventually submitting them to the Central Back for the payments to
be effected.
2.2 Review of the existing manual Payment Advices Preparation Process This section reviews the existing Payment Advices preparation process in the
Back Office of the Debt Department. The main source of information is copies of
all the demand bills, Payment Advice forms, and draft Payment Advice forms used
in the current system. Work procedure manuals and written instruction guidelines
are other useful data sources. These documents were very useful for one to
understand the technical terms used in the back office.
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The writer spent time observing what role each officer was playing in the back
office. This was useful as it provided first hand information on issues relating to the
Payment Advices preparation process.
Additional information was gathered through holding of meetings with the users to
further clarify the issues raised. These users included those from the Front and
Back Offices in DMD, and also those from the Central Bank of Kenya who deal
directly with foreign payments.
(i) The process of debt serving starts when a notification of the payment (Demand
Bill) is received by the Director, Debt Management Department (DMD). The
following are the forms of notifications from creditors: -
a) Demand notes
b) New disbursements
c) Loan Balances
d) Variable Interest rates advice
e) Acknowledgements of payments
f) Repayment Schedule.
In absence of demand note from a creditor, the Head Public Debt Section (PDS), a
section in the Back Office, will forward the relevant accounts file (called the AC
file) to the Director, DMD so that the latter may authorize the payments of amounts
falling due as per the schedules in the files. AC files are maintained by the Back
Office and contain copies of loan agreements, correspondences between the
Government and the Creditors, including copies of past Payment Advices that
have been processed.
(ii) Upon receipt of the payment notification, the Director, DMD forwards them to
Head, Debt Recording Section (DRS) for necessary action by the relevant officers
as follows: -
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a) Demand Notices
I. Verify contents of the demand notices against the Commonwealth
Secretariat Debt Recording and Management System (CS-DRMS)
database. The amounts demanded by the creditor must be forecasted in
the system. Should they be penalties, the system should also show some
past underpayments or late payments.
II. Record relevant data on the Demand Note in the CS-DRMS debt database
as a bill.
III. Indicate the relevant AC file number and Loan Key number on the Demand
Note. This will assist the Public Debt Section quickly identify which
accounts file (AC file) to use.
IV. Forward the Demand Note to the Head, Public Debt Section (PDS). The
latter will initiate the payment preparation process.
V. In absence of Demand Notes, the Director DMD will authorize initiation of
payments to the creditor on the basis of records available pending receipt of
creditor demand notes.
(b) Notification of new interest rate applicable
i. Head, DRS will update the CS-DRMS debt data base with the new interest
rate applicable
ii. Indicate the relevant AC file number and Loan Key number on the
notification of interest rate applicable
iii. Forward the notification of the new interest rate applicable to Head, Public
Debt Section (PDS) to note and pass for filing in the relevant AC file
(c) Preparation of Payment Advices (PAs)
i Head, PDS checks for approval to process the Demand Notes from the
Director, DMD and Head, DRS or relevant officer from DRS
ii Head, PDS instructs the relevant officers to draft the PAs
iii The Draft PAs are examined
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iv PAs drafts are typed and rechecked
(d) Approval of Payment Advices (PAs)
i. Typed PAs accompanied by respective AC files are taken to Head, PDS for
signature
ii. Head Accounting Unit (Senior Principal Accounts Controller [SPAC]) will
provide the Second Signature
iii. Coding of the PAs by Head, Accounting Unit (SPAC)
iv. PAs submitted to the Director, DMD for endorsement
v. The Permanent Secretary/Treasury approves the PAs and forwards to
Head, PDS
vi. Controller & Auditor General audits the approved PAs.
(e) Payment of the PAs
The Head, PDS will:
i. submit PAs accompanied by a schedule of all the PAs signed by two
authorized signatures to Central Bank of Kenya (CBK)
ii. use CBK acknowledged schedule of PAs to update the Payment Monitoring
Report
iii. receive Debit Notes from CBK
iv. Counter check Debit Notes against CBK acknowledged
(f) Record payment transactions
i. Forward Payment Monitoring Report to Head, DRS
ii. Head, DRS to update CS-DRMS data base using Payment Monitoring
Report
iii. File Payment Monitoring Report.
(g) Generation of management reports
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The following management reports must be generated by the Head, DRS at the
beginning of every month and submitted to the Director DMD.
i. Payments falling due during the month, report 300 from CS-DRMS system
ii. Actual payments during the previous month
iii. Arrears position
iv. Disbursements
v. The Debt Stock position
CHART 1: THE PA PREPARATION PROCESS.
Director, DMD Receives and Okays Demands Notices for Payment
Debt Recording Section (DRS) Verifies Demand Notices against the CS-DRMS System Updates CS-DRMS using the debit note
PS, Treasury Signs Payment Advices (PAs)
Public Debt Section (PDS) Initiates Preparation of Payment Advices Retrieves AC files Signs prepared PA.
Senior Principal Accounts Controller Codes the PA Signs the PA
Controller & Auditor General Audits the PAs
Central Bank of Kenya (CBK) Effects the Payments to the Creditors Sends Creditor’s acknowledgment to PDS Sends Debit notes to PDS
1
2 3
4
5
6
7
8 9
10
11
12
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CHAPTER THREE
3. Proposed Automated Public Debt Payments System Design
Having reviewed the existing manual Payment Advice preparation process, this
chapter articulates the requirements for an automated system.
3.1 Objectives of the New System
The general objective of the Payment Advice Printing System is to develop a
system integrating the Payment Advices preparation process with the CS-DRMS
data. The data will be used for printing the Payment Advice forms.
3.2 Specific Objectives The system will have several objectives. These are:- § Address the problems of manual preparation of the Payment Advices;
§ Ensure that only loans registered in the CS-DRMS system are serviced;
§ Ensure that only loans forecasted for payments are serviced at any
particular time;
§ Ensure that amounts on the demand notices are also verified against the
forecasted amounts;
§ Ensure that payments are made to creditors registered in the CS-DRMS
system;
§ Ensure that only authorized personnel are allowed to prepare the Payment
Advices.
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3.3 System Requirements
A solution to integrate the Payment Advice preparation process with the CS-
DRMS was sought to address the issues raised above. The solution was geared to
satisfy the requirement for automation of the payment process.
TABLE 1: SYSTEM REQUIREMENTS System type - a fully computerized solution as opposed
to the current semi-computerized system;
Processing methods and procedures - system to exhibit a high degree of on-line
processing support to facilitate faster
access of information;
Information storage/retrieval methods - system to implement a database oriented
solution to facilitate easy and flexible
storage and retrieval of information;
Internal controls - system to ensure high level of security
and reliability;
User interface - system must provide reasonably user-
friendly man-machine interactions;
Necessary equipment - to have enough capacity and processing
Computer programs - to have capabilities to exhibit all the
characteristics mentioned above;
End-user roles and functions - System to preserve job descriptions as
much as possible while transforming
users into more productive beings. This
will be achieved by training the existing
staff in the Back Office.
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Design and Construction - To employ the popular interactive
prototyping methodology. This is a
participatory approach where the user and
the systems analyst work closely together
to ensure that the information system
addresses all the user requirements.
3.4 Data Requirement
A Payment Advice (PA) form has the following details ;
1. The A/C (Account) file reference number. This is a unique number that the
Back Office uses to reference the particular file that contains the loan
agreement and any transactions that have taken place in the past for that
particular loan. It also contains copies of demand notices.
2. The associated loan key number as recorded in the Commonwealth
Secretariat Debt Recording and Management System (CS-DRMS)
3. The payment date – Usually the day of printing the Payment Advice.
4. The account to be debited. This is the Ministry of Finance’s account held at
the Central Bank.
5. The currency and total payment amount, both in figures and in words
6. The receiving bank’s name and address
7. The beneficiary’s name and address
8. A breakdown of the payment, the creditor’s reference number and title for
the loan being paid
9. The due date for the payment.
10. The Payment Advice signatories
Following a review of the above PA data requirements, the necessary sets of data
of the PAPS were identified as depicted in the table below. Most of the data is
already stored in the CS-DRMS.
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TABLE 2: DATA SETS 3.5 Data-Sets of the PAPS System
1. PAData The actual details of the PA, including number and date.
2. Demand Bill details, including the actual part-payments.
3. LoanData Loan details as recorded in the agreement.
4. PayTypes The various types of payments, including penalties.
5. Payments All payments that have been made to creditors
5. Lenders Creditors details – updated periodically
6. Currencies Currencies used
7. Banks Bank details, including IBAN and SWIFT
8. Defaults CBK-authorized PA signatories.
9. PAPSUsers System User access rights and privileges in the system
3.6 Mapping of data elements to PAPS entities.
The study further maps the data elements to the detailed PAPS entities as
depicted in the following tables.
TABLE 3: PADATA TABLE Table Name PAData
Primary key PANum
Description The actual details of the Payment Advice (PA), including PA number
and Print date. This table will store all PAs that have been authorized
for printing. It will also store any cancelled PAs. Field Name Field
Type
Characters Description
PANum Long 7 Number of the PA
LoanNum Long 7 Loan number as appears in CS-DRMS system
PADate Long 8 Date of the PA
DueDate Long 8 Payment due date as per demand note
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CurrCode String 3 PA Currency
PrintDate Long 8 Date when original PA is printed
CopyDate Long 8 Date when a copy of PA is printed
DatePaid Long 8 Date when CBK debited the PA
ExChRate1 Decimal 6.4
Exchange rate used for requisitioning cash from
exchequer
ExChRate2 Decimal 6.4 Exchange rate at time of debiting the PA
Replacer Long 7 Number of the PA
Sign1 String 25 First Signatory
Sign2 String 25 Second Signatory
Sign3 String 25 Third Signatory
Sign4 String 25 Fourth Signatory
LoanRef1 String 30 Creditors original loan reference
LoanRef2 String 30 Creditors new reference if current one changed
LenderCode String 4 Beneficiary name and address
BankCode1 String 10 Receiving Bank
AccountNum1 String 40 Repayment account number held at BankCode1
BankCode2 String 10 Correspondent Bank
AccountNum2 String 40 Repayment account number held at BankCode2
TABLE 4: FOREIGN KEYS IN PADATA TABLE Table Name Relating Column/s
LoanData LoanNum
Demand LoanNum,DueDate
Bank BankCode
Currency CurrCode
Payment LoanNum, DueDate
Lender LenderCode
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TABLE 5: DEMAND TABLE Table Name Demand
Primary key LoanNum, DueDate
Description Bill details, including the actual part-payments. When a demand bill is
received, the details are stored in the demand table. This data is not
approved as yet for payment Field Name Field
Type
Characters Description
LoanNum Long 7 Loan number as appears in CS-DRMS system
DueDate Long 8 Date when the payment is due as per demand note
CurrCode String 3 PA Currency
Sign1 String 25 First Signatory
Sign2 String 25 Second Signatory
Sign3 String 25 Third Signatory
Sign4 String 25 Fourth Signatory
LoanRef1 String 30 Creditors original loan reference
LoanRef2 String 30 Creditors new reference if current one changed
LenderCode String 4 Beneficiary name and address
BankCode1 String 10 Receiving Bank
AccountNum1 String 40 Repayment account number held at BankCode1
BankCode2 String 10 Correspondent Bank
AccountNum2 String 40 Repayment account number held at BankCode2
TABLE 6: FOREIGN KEYS FOR DEMAND TABLE Table Name Relating Column/s
LoanData LoanNum
PAData LoanNum,DueDate
Bank BankCode
Currency CurrCode
Payment LoanNum, DueDate
Lender LenderCode
Signer PNum
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TABLE 7: BANK TABLE Table Name Bank
Primary key BankCode
Description Bank details, including SWIFT. Some Creditors don’t give the
SWIFT.
Field Name Field
Type
Characters Description
BankCode String 10 Bank Code
BankName String 50 Full name of the bank
SWIFT String 20 International Bank Identifier Code
Address String 255 Bank’s address
TABLE 8: FOREIGN KEYS FOR BANK TABLE Table Name Relating Column/s
LoanData BankCode
PAData BankCode
Demand BankCode
TABLE 9: PAYMENT TABLE Table Name Payment Primary key LoanNum, DueDate, PTypeCode
Description All payments that have been made to creditors. This is the table with
all transactions that have taken place.
Field Name Field
Type
Characters Description
LoanNum Long 7 Loan number as appears in CS-DRMS system
DueDate Long 8 Date when the payment is due as per demand note
PTypeCode Byte 2 Code for Type of Payment
Amount Decimal 15.2 Loan Amount For Specific Payment Type
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TABLE 10: FOREIGN KEYS FOR PAYMENT TABLE Table Name Relating Column/s
LoanData LoanNum, DueDate
PAData LoanNum,DueDate
PayType PTypeCode
TABLE 11: LOANDATA TABLE Table Name LoanData
Primary key LoanNum
Description Loan details as recorded in the agreement. This is the
instruments table with details of each particular instrument Field Name Field
Type
Characters Description
LoanNum Long 7 Loan number as appears in CS-DRMS system
LoanTitle String 100 Brief description of the Project
LoanDate Long 8 Loan Agreement Date
LoanFile String 20 Reference number given in accounts
Amount Decimal 15.2 Original Loan Amount
CurrCode String 3 Original Loan Currency
LoanRef1 String 30 Creditors original loan reference
LoanRef2 String 30 Creditors new reference if current one changed
LenderCode String 4 Beneficiary name and address
BankCode1 String 10 Receiving Bank
AccountNum1 String 40 Repayment account number held at BankCode1
BankCode2 String 10 Correspondent Bank
AccountNum2 String 40 Repayment account number held at BankCode2
TABLE 12: FOREIGN KEYS FOR LOANDATA Table Name Relating Column/s
PAData LoanNum
Bank BankCode
Currency CurrCode
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Table Name Relating Column/s
Payment LoanNum, DueDate
Lender LenderCode
TABLE 13: PAYTYPE TABLE Table Name PayType
Primary key PTypeCode
Description The various types of payments, including penalties. It is good to
note that payments made are either interest or principal, but there
is a need to include the penalties as well. Field Name Field
Type
Characters Description
PTypeCode Byte 2 Code for Type of Payment
PtypeName String 50 Full description of the type of payment
ShortName String 15 Abbreviated name, either interest or principal
CSDRMSCode String 3 Code used by CSDRMS system
TABLE 14: LENDER TABLE Table Name Lender
Primary key LenderCode
Description Creditor’s details – updated periodically. In payments the lenders are
the payment receiving agencies. Field Name Field Type Characters Description
LenderCode String 4 Creditors Code
LenderName String 100 Creditors Full Name
Address String 100 Creditors Contacts
TABLE 15: FOREIGN KEYS FOR LENDER TABLE Table Name Relating Column/s
LoanData LenderCode
PAData LenderCode
Demand LenderCode
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TABLE 16: CURRENCY TABLE Table Name Currency
Primary key CurrCode
Description Currencies used in payment of the loans.
Field Name Field
Type
Characters Description
CurrCode String 3 Payment Currency
CurrName String 50 Full name for the currency
WBCode Short 3 World Bank Equivalent code
TABLE 17: FOREIGN KEYS FOR CURRENCY TABLE Table Name Relating Column/s
PAData CurrCode
LoanData CurrCode
Demand CurrCode
TABLE 18: DEFAULTS TABLE Table Name Defaults
Primary key RowNum
Description Central Bank of Kenya’s authorized PA signatories. The CBK will
check the PA signatories against their signatures. Field Name Field
Type
Characters Description
RowNum Long 14 Unique Record Counter
Sign1 String 25 First Signatory
Sign2 String 25 Second Signatory
Sign3 String 25 Third Signatory
Sign4 String 25 Fourth Signatory
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TABLE 19: PAPSUSER TABLE Table Name PAPSUser
Primary key Pnum
Description System User access rights and privileges in the system Field Name Field
Type
Characters Description
PNum Long 10 Employee's(User) Personal Number
UserName String 40 Employee's Name
DCode Short 2 Employee District
UserID String 20 User Identifier
SuperUser Byte 3 Super User
SubSystem Byte 3 Subsystem to access
Edit Byte 3 Allow to edit
Print Byte 3 Allow to print
AccessDate Long 6 Last access date
AccessTime Long 6 Last access time
The tables are represented diagrammatically as below;
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CHART 2: SCHEMATIC VIEW OF THE TABLES
PayType
PAData Demand Bank
Payment Lender
Currencies LoanData Defaults
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CHAPTER FOUR
4. Using CS-DRMS for External Loans Payment. The purpose of the study of automating the debt service payment process was to
design and proto type a software facility that would enable the printing of the PA
using a computer and a printer in the shortest possible time in an efficient manner.
This was achieved using the above entities. The choice of these entities was done
in such a way that they would relate to those in the CS-DRMS schema. The
reason for doing this is to enable future deployment of the Payment Advice
Printing System into the CS-DRMS schema would be done with ease.
The system was installed in a server and users accessed the system from their
workstations via the Local Area Network (LAN) already in place.
To ensure some level of security, each user had a user logon name and password
to access the system. Users were also assigned different roles to enhance
security. The roles include Administrator, Controller, Manager, Supervisor and
Operator.
In the system, no PA can be printed unless the system’s supervisor authorizes it.
Further only the system’s manager has the right to edit or enter a new loan in the
system. The system’s Controller was responsible for editing the look up tables,
whereas the system’s operator prepared the demands and printed the duly
authorized PAs.
A careful look at the data requirements shows that the CS-DRMS 2000+ has
almost all the data required for preparing a PA.
Data present in CS-DRMS.
1. All details on Currencies
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2. All details on Instrument Details
3. All details on Beneficiaries (Agencies)
4. All details on Payment Types
Data not available in the system.
1. Bank details
2. Account Numbers
3. Payment Advice numbers (Voucher Numbers)
4. Signatories
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CHAPTER FIVE
5. Conclusion Using the Kenya’s example the study has found out that the current payment
process takes not less than five hours from receipt of the demand note to the time
it is ready for signature. The designed tool in this study is estimated to take less
than fifteen minutes. Whereas in the current system, anyone with access to the
payment advices can type in payment instructions, the proposed tool ensures that
only authorized personnel have access to the tool. It has been revealed in this
study that there is reduction in the typo errors.
One way of measuring the effectiveness of a back office in Debt Management
Office is by the accuracy and timeliness of payments of debts. This study, by
integrating the payment process with the CS-DRMS system, has demonstrated it
is possible to significantly reduce the process of settling payments and improving
on the accuracy.
However there are a few areas that need further research, namely:
1. CS-DRMS software requires that each transaction be done on loan by loan
basis, however, with some creditors whose loans may be falling due on the
same dates it would be more cost effective if the payments are aggregated to
reduce cabling costs. The developed tool does not aggregate payments and
therefore, further research would be vital to reduce cabling costs.
2. Further enhancement in the payment process could be made by introduction of
the electronic signature, in which the digitized PA form would be electronically
transmitted to the Central Bank of Kenya. This will be an area of further
research.
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REFERENCES
ComSec, 2006 January, Debt Management Section Special Advisory Services
Division Commonwealth Secretariat Administration Manual, London, United
Kingdom
ComSec, 2006 January, Debt Management Section Special Advisory Services
Division Commonwealth Secretariat Domestic Debt Manual, London, United
Kingdom
ComSec, 2006 January, Debt Management Section Special Advisory Services
Division Commonwealth Secretariat External Debt Manual, London, United
Kingdom
ComSec, 2006 January, Debt Management Section Special Advisory Services
Division Commonwealth Secretariat Management Tools Manual, London, United
Kingdom
ComSec, 2006 January, Debt Management Section Special Advisory Services
Division Commonwealth Secretariat Reports Manual, London, United Kingdom
UNCTAD, The United National Centre on Trade and Development Website
http://r0.unctad.org/dmfas/
ComSec, Commonwealth Secretariat Website http://www.csdrms.org/
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ANNEX 1: BLANK PA FORM
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ANNEX 2: ELECTRONICALLY FILLED PA FORM
Recommended