Bruce Lazenby is an economic warrior. And while he may
not like the description, his company's financial-accountability software
can actually change how countries work.
Lazenby is president and chief executive officer of
FreeBalance, whose Accountability Suite can be plugged into a finance
ministry to improve or create transparency and credibility. It was honed
in Canada and the United States, but is finding an expanding niche in
developing and reconstructing countries.
"The problem in many of these places is that (aid and
financial) institutions want to put money into them, but they don't want
to give cash," Lazenby says.
"The reason is corruption and lack of accountability.
Now they're being told: 'Get your financial act together or your donor
funds will dry up.' " FreeBalance's software is used to prepare budgets,
track grant and aid money, and manage procurement funding. For most
international customers, it is the first time records like that have been
kept.
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| Ashley Fraser,
Business Edge |
| A Mongolian
delegation meets with FreeBalance's Bruce Lazenby, front right, and
World Bank's Ron Points, rear right. |
"What we do is combine multiple bank accounts in
one, automate it and divide (fiscal) responsibility so one person can't
control everything," Lazenby says. "This leaves a trail for an
auditor. So, if there's a problem, the political thing kicks in and the
bad guys find out this isn't an academic exercise.
"Without this type of responsibility, there can be no
economic stability," he says.
The Ottawa company's latest client is the government of
Mongolia. Using funds from the World Bank, the north Asian country, which
moved to a market economy in 1990, is reworking how its finance ministry
operates.
Multinational software suppliers such as Oracle and SAP
were considered, but their eight-figure pricetags were out of reach.
FreeBalance's solution came in the low seven figures and
has been in use since the beginning of the year. The results have been
smooth enough that for the first time the World Bank is moving funds
directly into a recipient country's financial system.
Kh. Purevsuren, director general of Mongolia's Treasury
Department, says the transition hasn't been easy, especially bringing all
21 of the country's provinces "into the modern style."
FreeBalance was "the best opportunity for us because it
has been used in many places and has worked well," Purevsuren says.
Lazenby believes the World Bank's vote of confidence now
makes Accountability Suite "the default program for developing countries"
because of cost and configurability.
That honour has not come easily.
Now about 20 years old, FreeBalance's software was
developed to be a systems-design manager for North American
governments.
The company made the move into international markets to
help less-developed countries deal with potential Y2K problems.
By 1999 the software caught the notice of the World Bank
and the International Monetary Fund, which approached Lazenby about its
potential for special clients.
The list read like a who's who of dire straits: Kosovo
and East Timor (now Timor-Leste) in 2000 and Afghanistan in 2002.
Success measured in provable financial accountability,
according to project finances, led to projects in Antigua, Guyana,
Jamaica, Sierra Leone and Sudan.
"People said it was impossible to be successful in
places like East Timor, but as long as you can find good local people I
think it's possible to make a difference in the world," Lazenby says.
Company revenues now top $10 million, an increase of
about 50 per cent during the past three years.
Its track record has also attracted venture-capital
funds such as TechnoCap Inc. and Multiple Capital Partners, both of
Montreal, although Lazenby will not reveal investment figures.
Playing the international results-based game is not for
the weak-hearted.
Gerard van der Burg, vice-president of technology and
information management at Global Development Group, says it is tough to
convince potential customers of the value of IT-management technology.
Consistent funding is also a problem.
Van der Burg's department at the independent CARE Canada
spinoff provides global-satellite technology, IT support and results-based
management expertise to organizations such as non-government organizations
and the United Nations that are involved in relief and reconstruction in
Indonesia, Chad, Gambia and Cameroon.
"Performance-based results are so often linked with
social results in the places we operate so that you never know where the
priorities lie. There's a tendency to mix financial with non-financial
(information)," van der Burg says.
"International work like this requires a very good
understanding of how to assess local needs and risks. It becomes like a
network that builds business," he says.
Making the right contacts is key and a role where the
federal government plays a part.
The Canadian Trade Commissioner Service (CTCS) was
established to help Canadian businesses find market opportunities
overseas. It does this by producing market and company intelligence,
arranging key contacts and by troubleshooting potential deals.
With products such as Accountability Suite, "we hope a
company, when it arrives at a market strategy, would contact us," says
Kevin Sinnott, deputy director of the service's marketing division.
Funding and financing are left to other government
bodies such as Export Development Canada, Canadian International
Development Agency or the Canadian Commercial Corp.
Andrew Jackson, FreeBalance's vice-president of
marketing, says the company uses CTCS's services for research.
"They're very useful for strategies for a particular
opportunity, such as a network of local partnerships. That's the No. 1
challenge of developing countries and a requirement for building
capacity," he says.
Even with the best product available, the odds of
building this capacity are not high, however.
Lazenby quotes a World Bank study that shows only one in
10 financial-system reconstructions work. Most make it through the
introductory stage but falter when local financial people see how big the
changes will be.
FreeBalance's success rate has been much higher because
it has been able to show, often only months into the project, how a
country's GDP rate has increased.
Lazenby says he sees about 50 countries as potential
customers. There is an imperative to expand operations because the stakes
for government accountability are getting higher every day, he adds.
Funding reconstruction "used to be done for altruistic
reasons. Now it's about homeland security and creating stability," Lazenby
says.
"What we do is simply sell software that helps
institutions achieve their own goals of transparency and efficiency. In
today's world, that result is being interpreted in a much bigger context,"
he says.
(Mike Levin can be reached at [EMAIL PROTECTED])
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