Capacity Development has become one of the recurring themes in institutional literature and in the agenda of public administrations, international agencies, governmental and non-governmental organisations. There is now emerging agreement in the development community that capacity development is the engine of human development.
However, despite its increasing importance from the point of view of dialogue and the activities of organisations, there is not, at this point in time, a single, unequivocal definition of the concept of “capacity building”.
But what exactly is meant by capacity development? Confusion around the term seems to have grown along with its popularity. For some, capacity development can be any effort to teach someone to do something or to do it better. For others, it may be about creating new institutions or strengthening old ones. Some see capacity development as a focus on education and training, while others take a broad view of it as improving individual rights, access, or freedoms.
Wikipedia defines capacity development to mean the process by which individuals and organizations obtain, improve, and retain the skills, knowledge, tools, equipment, and other resources needed to do their jobs competently or to a greater capacity (larger scale, larger audience, larger impact, etc). Capacity building and capacity development are often used interchangeably.
The United Nations Development Programme (UNDP) sees capacity development as the process through which individuals, organizations, and societies obtain, strengthen and maintain the capabilities to set and achieve their own development objectives over time.
A primer on capacity development by UNDP identified three points where capacity is grown and nurtured: in an enabling environment, in organizations, and within individuals. These three levels influence each other in a fluid way – the strength of each depends on, and determines, the strength of the others:
- The enabling environment is the broad social system within which people and organizations function. It includes all the rules, laws, policies, power relations, and social norms that govern civic engagement. It is the enabling environment that sets the overall scope for capacity development.
- The organizational level refers to the internal structure, policies, and procedures that determine an organization’s effectiveness. It is here that the benefits of the enabling environment are put into action and a collection of individuals come together. The better resourced and aligned these elements are, the greater the potential for growing capacity.
- At the individual level: these are the skills, experience, and knowledge that allow each person to perform. Some of these are acquired formally, through education and training, while others come informally, through doing and observing. Access to resources and experiences that can develop individual capacity are largely shaped by the organizational and environmental factors described above, which in turn are influenced by the degree of capacity development in each individual.
It further identifies four core issues that seem to have the greatest influence on capacity development at the different levels described above to include; institutional arrangements, leadership, knowledge, and accountability.
In the accountancy profession, capacity development is vital to enable individuals to execute their duties and tasks as per the requirements of the profession. Accountancy firms invest sums of money in capacity development to facilitate improvement in the quality of work, efficiency, and effectiveness of the employees.