Session 1 UK Department of International Development

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Session 1 UK Department of International
Development
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A brief history

• Established in 1997 following New Labour election
• a Cabinet position (with Clare Short as
  Minister) i.e., made independent of the FCO
• 2 White Papers (1997 and 2000)
• Eliminating world poverty a challenge for the
  21st century
• Eliminating world poverty making globalisation
  work for the poor
• IDTs to MDGs
• Translating these into operational goals
• MDGs-PSA-SDA-CAP/ISP
• Target Strategy Papers poverty, women, human
  rights, health, UPE, water, urban areas,
  governance, HIV

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Three strategic shifts

• From aid to development
• from agency to department
• from administration to development

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Session 2 DFID in operation -strategies,
approaches and instruments
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At a global level

• attempts to influence other actors (OECD, UN,
  World Bank with regard to
• poverty reduction as focus of development and
  aid
• aid volume
• debt relief
• restrictive trade arrangements / market access
• donor practice (lighter / harmonised procedures,
  untying aid, from projects to programmes)

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At a country level

• Country ownership (NB not just Government)
• Moving upstream from projects to programmes,
  sectors, and country strategies
• Focus on policy and public expenditure management
  (PEM) for poverty reduction
• Participation both to inform policy-making, and
  for accountability

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At country level why?

• Critiques of aid effectiveness
• failure of SAP and conditionality critical role
  for national ownership, process conditionality
• Limits to a project-based approach to aid
• Changing opportunities end of Cold War ,
  election of new UK government in 1997

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At country level what?

• Depends (or should depend) on country
  circumstances - particularly the policy
  environment
• Since 1999, a broad move among donors to use
  PRSPs as overall framework for agreed policies
• Thus a choice of financial aid instruments (from
  projects to general budget support), depending on
  macroeconomic situation, PEM system, Government
  capacity, etc.
• Plus of course TA and commodity aid not used by
  DFID, but by some other donors (e.g. USAID)

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Types of financial aid instruments
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Choice of financial aid instruments

• Depends on
• level of agreement on priorities and policies
  (PRSP and PEM, SWAPs)
• impact / net benefit - donor co-ordination costs,
  aid efficiency, policy influence
• capacity of Government (various levels) to plan,
  execute and account for public expenditure
• (see decision tree in handout)

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The usual starting point what donors look for
in PEM

• integration of recurrent/development
• outcome oriented
• prioritisation
• integration of planning and finance
• fiscal discipline enforced by MoF
• strengthening links to policy making process)
• all usually captured in an MTEF

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Session 3

• Sector approaches

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Outline of this session

• What do we mean by a SWAp or sectoral policy
  process?
• What is the rationale for such an approach?
• When and where are sectoral approaches
  appropriate?
• How do sectoral approaches fit with other reform
  processes or instruments?

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What do we mean by a SWAp, or sectoral approach?

• The defining characteristics of a SWAP are that
  
• all significant public funding for the sector
  supports a single sector policy and expenditure
  programme,
• under Government leadership,
• adopting common approaches across the sector,
• and progressing towards relying on Government
  procedures to disburse and account for all public
  expenditure, however funded.
• The working definition focuses on the intended
  direction of change rather than just the current
  attainment.
• (Foster and Mackinosh-Walker 2001)

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The rationale for a sectoral approach

• Part of a general trend donors recognised
  drawbacks of project approach, and the importance
  of Government policy and financial systems
• A SWAp is, in other words, an attempt to link
• improved Government sector policy and sectoral
  PEM, seen as crucial for improved development
  outcomes
• and
• more intelligent donor support, with more
  coordination, under Government leadership, so
  less transaction costs - and possibly greater
  total donor funding too

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When is a sectoral approach appropriate?

• Public expenditure is a major feature of the
  sector
• Donor contributions to the sector are large
  enough to give rise to co-ordination problems
• Basic agreement exists between Government and
  donors re sector strategy
• There is a supportive macro and budget
  environment
• i.e. sector decisions can be made with reasonable
  confidence that budgeted resources will be
  available
• Supportive institutional arrangements
• i.e. sector policy falls under the purview of a
  single line Ministry, and a manageable number of
  donors
• Government and donor incentives are compatible
  with SWAp-type changes

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Basic elements of a sector approach

• Sectoral situation analysis - incorporating links
  to poverty
• Agreement on sector priorities, and on role of
  public policy and public expenditure in relation
  to other sector actors
• sector strategy and sectoral expenditure planning
  - participation policy / budget consistency
• building sector management structures building
  capacity, avoiding PMUs
• setting sector targets and agreeing ME
  arrangements
• establishing financial accountability,
  procedures, donor funding modalities
• agreeing joint annual sector review arrangements
  mutual accountability rather than conditionality

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How does a sectoral approach relate to other
reforms / instruments?

• There are limits to achievements possible with
  policy / PEM improvements within a single sector.
  
• A SWAp should fit with whole-of-Government
  initiatives (a national poverty strategy, public
  expenditure reforms, and public administration
  reform)
• In practice, these separate initiatives may fail
  to mesh, and can work against each other -
  especially if different donors involved in each

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Summary of lessons of experience

• Ownership, partnership and conditionality
• SWAps not universally appropriate
• needs broad and high-level Government commitment
  to a strategy donors can broadly support.
  Requires hard choices (MTEF helps).
• Takes time incremental rather than revolutionary
  improvement.
• Sector management structures

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Questions for discussion

• At what scale (Federal or Provincial) should a
  sectoral approach be planned in Pakistan? What
  are the advantages and drawbacks of each?
• How do sectoral approaches relate to public
  administration policies, PRSP, etc.?
• What would be the potential gains from moving
  towards a sectoral approach?
• What would be the potential costs?
• What are the obstacles?