Supporting Sector Programmes

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Supporting Sector Programmes

• A three - day learning event

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Objectives

• Key components of a sector programme and the
  language used
• Conditions for success and best options to
  support to the process
• Know your own and others roles
• Deal with major risks and challenges, and...
• Identify the next steps to move the process
  forward

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The Topics
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Module 1 The Aid Agenda key SWAp concepts
Sector Approach
Sector Programme
Support to Sector Programmes
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Harmonisation Alignment
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Programme approaches allow for

• Focus on effective policy processes and
  governance comprehensiveness, consultation
  processes, accountability
• Focus on government linking policies and the
  budget process
• Focus on other national stakeholders private
  sector and civil society role participation
• Focus on donors and aid coordination,
  harmonization, alignment

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What is the Sector Approach?
A way of working of government and partners with
three distinct objectives
Ensure local ownership over decision-making on
policy, strategy and spending.
Increase coherence between policy, spending and
actual results
Use/strengthen partners systems, harmonise donor
systems
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What is a Sector?

• Defined by the government
• Wide to ensure coherence, narrow to limit
  complexity
• Fairly coherent consistent policy
• Institutional framework
• Budget framework
• Links to macro framework

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Who are the sector stakeholders?
Donors
Powerful elites
Citizens, service users
Private service providers
Legislative, policy makers
Executive policy makers
Front line staff
Central level bureaucracy
Supervisory bodies, legal system
Unions
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What is a Sector Programme?
A Sector Programme is a product of the Sector
Approach. It is a government (not donor)
programme

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Sector programmes 5 typical elements
Public finance management
Sector policy in macro-framework
Services and enabling environment
Accountability Performance monitoring
Institutions and capacities
Aid alignment and harmonisation
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Five means of donor support to emerging or
existing SPs
Sector programme
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Financing modalities
Other Sector national
budget revenues support
Pool Fund Donor X Donor Y
Donor X
Donor Z
PPP
Through Treasury
Co-financed activities
Projects
Sector Programme
Own funds
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What a SWAp is not

• A financing modality (basket fund, budget
  support)
• Government decides, donors accept
• Donors gang up to twist arm on government
• Government and donors crowding out civil society
  and private sector

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What a SWAp can be..

• Focusing on strengthening the sector involving
  all stakeholders
• Building trust through mutual transparency and
  patient dialogue
• Dealing with the real, and often thorny issues
  and trade-offs in sectors
• Strengthening domestic ownership and
  accountability

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Aid instruments and associated burdens
Monitoring
On/off budget
Governm. Donors
On Off
Disbursement channel/system
Procurement conditions
Donor Government
Untied Tied
Donor Govt.
Narrow Broad
Tech. Assistance
Targeting
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Sequencing in Sector Programmes
Earlier Later
Policy and strategy dialogue Strengthened
coordination Single SP document
Medium term expenditure framework Common
monitoring Harmonization and alignment of
procedures
No fixed pattern.but some things are often
earlier in the process
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Assessment of Sector Programme elements

• Why assess?
• Agree where and how support is needed
• Agree on issues for analysis and dialogue
• Keep track of changes, adjust plans support
• What to assess?
• The 5 elements
• When to assess?
• Continually
• How to assess?
• Next modules!

Sector policy in macro-framework
Public finance management
Accountability performance monitoring
Services and enabling environment
Institutions and capacities
Aid alignment and harmonisation
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Module 2 The policy framework
Sector policy in macro-framework
Public finance management
Accountability Performance monitoring

• Key issues
• Policy-making
• The macro-setting
• Assessing the sector-policy
• Assessing policy processes
• From policy to actions

Services and enabling environment
Institutions and capacities
Aid alignment and harmonisation
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The ideal Policy-Results chain
National Sectoral Policy

• Set priorities phasing
• Strategic planning, medium term financing
• Operational planning
• Public finance management and accountability
  systems
• Implementation
• Performance Monitoring Client Consultation
  systems

Approved annual budgets
Feedback Process
Institutional assessment
Actual Spending
Service Delivery / Results
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Understanding policy making

• Policies are about politics and interests
  creating winners and losers
• Policies and strategies are rarely fully clear
  and consistent
• Policy making does not stop with a paper or plan
• Policy making is not a linear process
• Policy without power is pie in the sky

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Assessing the sector in the macro context

• Is macro-economic framework conducive for sector
  progress?
• Some consensus and broad endorsement of
  macro-policies and strategies?
• Articulation between national policy and sectoral
  policy?
• Sector stakeholders appropriately involved in
  macro-policy processes?

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Assessing the sector policy

• Goals adequately pro-poor?
• Goals accommodating elite interests?
• Goals reasonably specific and results oriented?
• Long term affordable?
• Priorities matching resources and capacity?
• Focus on whole sector needs?

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Assessing the sector policy process

• Authored by government and domestic stakeholders?
• Evidence based?
• Permanent stakeholder consultation channels?
• Endorsed by cabinet and parliament?
• Endorsed by power elites?
• Publicly available?
• Will policy failure have political consequences?

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Assessing the policy-plan-action links

• Track record?
• Fairly clear roles responsibilities?
• Proliferating and disconnected planning
  processes?
• How much remains off plan/off policy?
• Local governments on policy?
• Intra-sector link, cross-cutting issues?

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Module 3 Public finance management
Sector policy in macro-framework

• Key issues
• The policy - budgets results link
• The MTEF principles and practices
• Financial accounta-bility to the public
• The quality of PFM
• safeguard concerns
• Implications for SP

Public finance management
Accountability Performance monitoring
Services and enabling environment
Institutions and capacities
Aid alignment and harmonisation
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What do we expect of the PFM system?
Financial accountability to the public
Strategic allocation of resources
PFM System (Budget MTEF-Accounts-Audit)
Aggregate fiscal discipline
Efficient service delivery
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For whom is PFM important?

• Citizens developmental and fiduciary interest
• Government development and policy goals
• Donors to support successful aid delivery and
  utilisation (including issues of accountability
  at home)
• Issues and challenges
• Focus shifts from budget allocation to
  accountability and FMIS - but all dimensions are
  important
• Capacity how to strengthen institutional
  capacities?
• How to ensure political buy-in?

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Public financial accountability

• The role of parliament
• The role of an independent Auditor General
• Timely and widely available public accounts/
  budget out turns
• Ombudsman
• Think tanks, elite(s) pressure groups
• Media

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The annual budget cycle transforming plans to
spending
Service outputs
Reporting and audit
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The budget process

• Allocating resources to policy priorities who
  participates?
• Is their a medium term view?
• Predictability
• A clear budget calendar what information and
  negotiation is needed when, where and between
  whom?
• Monitoring of budget out turn and reporting
• External scrutiny and audit

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Disciplined top-down/bottom-up processes
Strategic macro level budget framework Macro
fiscal framework Analysis of cross cutting
issues Analysis of inter sectoral resource
allocation issues Sector resource ceiling
Sector strategies Programme resource
allocation Resource implications of sector
policies and strategies Identification of new
efficiency measures Review of expenditure
programmes
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Linking spending to policy while maintaining
fiscal discipline
Medium term fiscal framework Hard budget ceiling
Service outcomes
Medium term budget expectation
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Medium term financing process

• Can help look at alternative sector policy
  financing scenarios
• Strategic role in informing budget preparation
• May or may not lead to a separate document
• Status may differ - depends on country
• Ideally includes history, policy, objectives,
  priorities and financial tables

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Making medium term planning realistic

• Be pragmatic
• Build sector expenditure framework progressively
  
• Look at affordability issues, cost structure,
  drivers of costs
• Be comprehensiveness all (public) funding
• Dont stop at policy planning

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PFM reforms and implementation of Sector
Programmes

• Possible focus of PFM reform for SPs MTEF
• Budget classification/ accounting coding
• Budgeting techniques and link to performance
• Shift in, and strengthening of control systems
• Cash flow planning and budget management
• In-year reporting and monitoring FMIS
• Procurement
• BUT how far can the sector go it alone?

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PFM reform any good practice?

• Realistic strategy
• Sequence and prioritise reforms
• Coordination (incl. donor support) paramount
• Comprehensive capacity development including
  incentive issues
• Ensure political support to tackle vested
  interests in status quo
• Monitoring PFM reforms using PEFA

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PFM good practice

• PEFA 6 key characteristics, 31 indicators
• Credibility of the budget
• Comprehensiveness and transparency
• Policy-based budgeting
• Predictability and control in budget execution
• Accounting, recording and reporting
• External scrutiny and audit

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Module 4 Institutions and capacities
Sector policy in macro-framework

• Key issues
• External drivers
• Incentives
• Output focus
• Joint support to CD

Public finance management
Accountability performance monitoring
Services and enabling environment
Institutions and capacities
Aid alignment and harmonisation
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Capacity and Capacity Development

• CD is key part of a sector programme
• Look for external drivers of and constraints on
  CD beyond the sector
• Assess incentives and disincentives to
  performance
• Use outputs as proxy indicator for capacity
• Joint approaches to CD support

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Capacity development in sector programmes

• The SWAp is all about strengthened sector
  capacity
• Capacity often the difficult missing link
• Capacity development should be a core part of the
  sector programme
• ..but is most often treated poorly, as add-on
  reflecting donor concerns and focusing on
  donor-supplied inputs

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Analytical framework
Contextual factors beyond influence
Inputs
Outputs
Outcome
Impact
Contextual factors within influence
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The context shapes capacity

• Domestic pressure on the sector to deliver?
• Effective oversight?
• Enabling legal framework?
• Predictable resources?
• Cross-sector civil service conditions?

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Incentives and disincentives

• Good systems, structures, processes..but
• Getting incentives, motivation and power to
  perform right may be biggest obstacle
• Distorted incentive regime often beyond sectoral
  repair
• Sector capacity development ambitions has to be
  adapted to this

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Two complementary dimensions of capacity
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Four dimensions of analysis and change
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Capacity development options
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Outputs as proxy for capacity

• Immediate effect of capacity sector outputs!
• Past outputs trends often point to likely future
• Focus on outputs can involve users
• Output focus for CD rather than focus on inputs
  (TA, training)

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Donor support to capacity development

• Respect ownership, all the way through
• National leadership is essential no will, no
  way
• Look for change drivers in the context, and help
  getting incentives right
• Supply-driven TA and training for CD continues to
  have poor track record
• Push for joined-up and sector wide attention to
  CD
• Phase out piecemeal single donor initiatives

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Module 5 Accountability and performance
monitoring
Sector policy in macro-framework

• Key issues
• The results agenda supporting accountability
• The focus on outputs and outcomes
• Information demand and supply
• The monitoring process
• Good indicators
• Implication for support to SPs

Public finance management
Accountability performance monitoring
Services and enabling environment
Institutions and capacities
Aid alignment and harmonisation
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Accountability
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Focusing on performance the demand-side

• The State
• Evidence based policy making, internal
  accountability and ownership, learning,
  accounting to citizens
• Civil society
• Pressure for social and political accountability,
  informs participation in policy making
• Providers
• Responsiveness to clients and account to them and
  state
• Donors
• Transparency of donor behaviour accountability
  to constituencies, informs participation in
  policy dialogue

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The supply-side sources of information and
quality

• Administrative data (sector ministries, routinely
  collected)
• Broad Surveys (National Household Surveys)
• International data bases (Cross-country
  comparison)
• Special studies and ad-hoc collection of data -
  PETS
• Donor-initiated data collection and reports
• The quality of most data depends on
• multiple capacity factors
• usefulness of the data at the level they are
  collected
• the power and intentions of those requesting the
  data

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Sector Assessment Framework
Intl commitments (MDGs,WTO), PRS
Impact
Review and monitoring
Evaluation
Sector policy making Strategic
planning Managing and budgeting
Targets agreed with donors
Outcomes
Effectiveness
Outputs
Efficiency
Processes
Inputs
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Performance monitoring processes

• How strong are govt systems to service this
  framework? What are the reporting systems and
  procedures in place?
• Clear identified information needs at each
  level
• Agreed timetable of events
• Capacities to collect, select and relay
• Capacity to analyse and integrate in decision
  making
• Timeliness of data for key activities and
  outcomes
• Feedback mechanism/ process into policy,
  planning, management, experience sharing

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Common issues

• Annual targets - how, who, when, and any role for
  donors conditionality?
• Performance assessment frameworks, performance
  based contracts, results-orientation does it
  all add up, and are distortions manageable?
• Input and process or only outputs or outcomes?
• What if targets are not being reached?
• What if the data is not clean or timely?
• Can ad hoc collection of data be justified in SP
  support?

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Module 6 Aid alignment and harmonisation,
support modalities and tools
Sector policy in macro-framework

• Key issues
• Alignment and harmonisation agenda
• Reality of aid coordination
• Areas for alignment and harmonisation
• Alignment instruments
• Support modalities

Public finance management
Accountability performance monitoring
Services and enabling environment
Institutions and capacities
Aid alignment and harmonisation
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Harmonisation Alignment
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The ideal.

• Based on assumptions about
• Trust personal ties
• Joint objectives or shared cause
• Loyalty towards the country group
• Everybody has a voice
• Once you are in, you stay

Donor 4
Government leads..
Donor 5
Donor 3
Donor 1
Donor 2
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struggling with reality
HQ and hinterland
HQ and hinterland
Donor 4

• Where there is also
• Distrust rotation
• Multiple objectives not always shared
• Loyalty towards HQ and patrons
• Some have bigger voices than others
• Suddenly you go

Government leads..
Donor 5
HQ and hinterland
Donor 3
Donor 1
HQ and hinterland
NGOs
HQ and hinterland
Donor 2
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Areas for coordination harmonisation and
alignment

• Reporting, budgeting, financial management,
  procurement
• Preparation of support
• Monitoring and reviews
• Evaluations
• Analytical work, knowledge acquisition
• Policy dialogue
• Cycle alignment

62
Alignment Instruments

• Memorandum of understanding
• Code of Conduct
• Joint financing agreement
• Joint Assistance strategies
• Agreed, limited agenda
• Functional division of labour
• Coordinating systems timetables (donor/
  government)
• Go-between TA??

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Support to Sector Programmes

• Key issues
• 5 types of support
• 3 financing modalities, their advantages and
  disadvantages
• The role of donors

Sector programme
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What of conditions?

• Conditions are often part of SP support
• Macro level
• Sector level
• Sub-sector level
• Programme level
• How are conditions/triggers/targets negotiated?
• Are sanctions/rewards enforced?
• How open is dialogue about effectiveness?

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Three financing modalities for support to a SP
Direct budget support
Pooled funding
Donors own procedures
...or a combination of these
66
Financing modalities
Other Sector national
budget revenues support
Pool Fund Donor X Donor Y
Donor X
Donor Z
PPP
Through Treasury
Co-financed activities
Projects
Sector Programme
Own funds
67
Sector budget support

• Transfer of resources to the budget of a partner
  country, uses that countrys budget, financial
  management and procurement systems
• Monitoring of set of sectoral indicators
• Dialogue with sector actors

68
Budget Support can be
Non targeted
Funds are used as others national revenues
Targeted
Executed against specific budget lines and
approved by the donors
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Considerations for sector budget support

• In principle, most completely aligned modality
• Requires adequate PFM
• May undermine PRS and wider coherence
• Fear of mismanagement
• Excessive donor focus on PFM
• Dialogue on policies and medium term outcomes
  only, loosing touch with ground realities
• May add inputs without addressing capacity
  constraints
• Longer term sustainability

70
Pooled common fund

• Use of third party procedures donor or
  government, if latter often with extra checks
  which should strengthen systems
• By definition targeted to specific expenditure
  items
• Different types according to
• Who manages it
• The coverage
• Disbursement, procurement, accounting and
  reporting

71
Considerations for common pooled funding

• Only one set of procedures, as opposed to each
  donor using own procedures
• May accommodate safeguard concerns of donors when
  PFM or capacity is weak
• May focus on specific priorities (e.g. capacity
  development)
• May undermine wider fiscal coherence and sideline
  Ministry of Finance
• May be costly in transaction costs to establish/
  maintain
• May create/ maintain parallel implementation
  structures
• May dilute legal accountability

72
Donor specific procedures

• By mandate, only legal option for some donors and
  countries
• By preference of some, preferred option for small
  grants, technical assistance, preparatory phases,
  pilot activities
• By risk assessment, choice others to comply with
  fiduciary safeguard requirements
• By some, modality of last resort

73
Considerations for donors own procedures

• Can be adequate in building up of a sector
  approach
• May serve flexibly for piloting, TA,
  post-conflict
• May by-pass red tape and add flexibility
• Safeguard level high
• Easily undermines ownership, purse strings are
  with donors
• Higher transaction costs
• Often less flexible
• Fragmentation of efforts
• By-passes implementation constraints rather than
  addressing them

74
A combination of modalities?

• Often the reality, preferred or not!
• More complex for government in terms of
  programming and accounting
• No matter the combination, all modalities can
• Be within the multiyear budget framework and
  adapt to government classifications
• Be within the sector policy framework
• Use joint monitoring and reporting procedures
• Participate in sector policy dialogue

75
Typical challenges in SWAp

• For donors
• back off, take the back seat
• recognise own limited capacity to understand and
  deal with complexity
• accept that ownership is more important than
  perfection
• curb disbursement and visibility pressure
• patience and humility

76
Typical challenges in SWAp

• For governments
• open books and embrace dialogue also on
  sensitive issues
• build some order in own house
• get results on the agenda, curbing patron-client
  relations
• patience and humility

77
Joint challenges

• Initially higher transaction costs
• Balance quick results with long term capacity
  development
• Get a critical mass of development partners and
  national sectors aboard
• Take decentralisation into account