NOLAN’S SEVEN (7) PRINCIPLES AND VIRTUES OF PUBLIC ADMINISTRATORS: PFM ACT 2016, ACT 921

Introduction: Beyond the Headlines of Waste

We’ve all seen the headlines that make our blood boil – stories of government waste, inefficiency, and financial irregularities that seem almost unbelievable. Reports about the government “paying dead people nine months after they are dead” are exactly the kind of thing that fuels public frustration and cynicism. It’s easy to look at these failures and conclude that the system is broken.

But when you look past the frustrating headlines and delve into the principles and pressures that shape public finance, a more complex and fascinating picture emerges. The seemingly simple act of managing public money is governed by deep ethical frameworks, surprising human virtues, and systemic incentives that can produce results.

This article shares four of the most impactful and surprising truths about public sector finance that will change how you think about government spending.

1. “Value for Money” Isn’t About Being Cheap: It’s About Being Effective

When we hear the phrase “value for money” in a government context, our minds often jump to one thing: finding the lowest possible cost. But in the public sector, it’s a far more sophisticated concept, built on three distinct pillars known as the “Three E’s.”

• Economy: This is the part we’re most familiar with. It means obtaining quality resources at the least cost, ensuring that the government isn’t overpaying for projects or services.
• Efficiency: This measures the relationship between input and output. It asks: Are we getting the best possible outcome from the resources we are using?
• Effectiveness: This is arguably the most crucial and often overlooked element. It asks a simple but profound question: Does the project actually achieve its intended objective?

The concept of failed effectiveness is on full display in many public projects. Imagine the government builds a footbridge over a busy highway to prevent accidents. The project may be economical (built at a reasonable cost) and efficient (well-constructed for the money spent). But if it’s not effective, it delivers zero value.

In places like Ghana’s Kaneshei, footbridges have turned into market centres. Citizens refuse to use them, instead “jumping in the middle of the highway,” often complaining that the bridge is too far from the bus stop. As one observer noted, “War betide you. If you pass by and you kick someone’s thing… you’re going to ask yourself whether you were born into the wrong country.”

In this scenario, the project failed because it was ineffective—it didn’t solve the problem it was intended to address. This distinction is critical because it shifts the focus of public administration from merely cutting costs to ensuring that public projects actually serve the public’s needs.

2. There’s a 7-Point Moral Compass for Public Officials (But Many Have Lost Their Way)

Behind the complex machinery of government, there is a clear ethical framework that should guide every decision made by a public official. These are the “Nolan Principles,” a seven-point moral compass for public life.

• Selflessness: Making decisions for the benefit of the public rather than for personal gain. This is to prevent corruption and build trust.
• Integrity: Maintaining integrity means officials act with honesty and adhere to moral and ethical standards.
• Objectivity: Making decisions based on merit and evidence, without bias.
• Accountability: Being answerable for one’s actions and decisions.
• Openness: Operating with transparency in decision-making to allow the public to understand how and why decisions are made, which enhances trust and prevents secrecy.
• Honesty: Being truthful and straightforward in all dealings.
• Leadership: Leading by example and demonstrating adherence to these principles in one’s own behaviour.

The pressing question is how many public officials today actually exhibit these qualities. The principle of Leadership is especially vital, as it sets the standard for the entire system.

3. The Job Requires Virtues You Won’t Find on a Resume

Beyond the formal Nolan Principles, effective public administration demands a set of deeply personal character traits, or virtues, that are rarely listed on a job description. As identified by academics Alan Lawson and Michael McCauley, these virtues are essential for navigating the immense pressures of public life.

Three of the most surprising are:

• Personal Resilience: This is the capacity to bounce back from intense public pressure, criticism, and professional setbacks and continue to function effectively. Public officials are constantly under scrutiny and must be able to withstand it without compromising their duties.
• Fearlessness: This is not the absence of fear, but the courage to act in the public interest despite potential personal or professional risks, such as political opposition or even physical threats. An example is Ghana’s Office of the Special Prosecutor (OSP) continuing its work despite facing alleged assassination attempts. This virtue is also essential for whistleblowing, as officials note that while many people report wrongdoing, they are often too fearful to come forward with evidence. A true public servant must be fearless enough to stand up and do their job well.
• Political Sensitivity: This is the skill to understand the political environment and manage actions in a way that respects democratic processes without becoming partisan. It must be noted that “It is about being astute, not partisan.” It’s a delicate balance of navigating political realities while remaining focused on the public good.

4. Why Spending the Entire Budget Isn’t Always Wasteful: It’s Survival

Here is one of the most crucial realities of public finance. We often criticise government agencies that seem to “blow the budget” with a flurry of spending at the end of the fiscal year. We see it as wasteful, but from a manager’s perspective, it can be a matter of survival.

The logic is simple and deeply ingrained in the system. If a government agency spends less than its allocated budget, the Ministry of Finance may interpret the surplus as evidence that the agency was over-funded. Consequently, that agency’s budget is likely to be cut the following year.

This creates a powerful incentive for managers to spend their entire allocation to demonstrate that they need every dollar they were given. Failing to do so risks having their funding permanently reduced, potentially jeopardising their ability to deliver essential services in the future. This reveals a systemic flaw where the incentive structure designed to control spending can inadvertently undermine the goal of saving taxpayer money.

Conclusion: A Final Thought

The effective and ethical management of public money is far more complex than it appears on the surface. It’s not just about accounting and spreadsheets; it’s a discipline rooted in deep ethical frameworks, demanding personal virtues, and shaped by powerful systemic pressures. Understanding these hidden truths moves us beyond simple outrage at waste and toward a more nuanced appreciation of the challenges faced by those tasked with stewarding public resources.

It also leaves us with a critical question to consider: When we choose our leaders, should we focus more on their political promises or on the underlying character traits, such as integrity, selflessness, and fearlessness, required to truly serve the public good?

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Public Sector accounting and finance, value for money