PRSPs

1
PRSPs relevance, progress private sector
participation.

• EBRD/DFID Learning Event 9/9/03

2
Origins of the PRSP Idea
Mixed record on poverty reduction in 1980s
1990s (SSA, Transition Economies, post-1997 Asia)
Findings on aid effectiveness Pro-poor policy
reforms failing because of lack of real country
commitment Donors often part of the problem
Multilateral funding for debt relief E-HIPC
needed a vehicle to link debt relief, poverty
reduction delivery of MDGs
3
Key Elements

• Country leadership of the policy process

• Opening-up to new forms of participation

• Comprehensive national development strategy
  linked to macro fiscal framework

• Making links between policy commitments results

• New incentives for monitoring evaluation

• New partnership possibilities new forms of aid
  delivery

4
Wheres the value added?

• Increased Government accountability for progress
  towards pro-poor goals (this includes growth
  PSD)

• Less focus on external accountability towards
  donors more focus on building robust national
  systems for policy formulation, execution,
  monitoring evaluation

• By permitting stakeholders to see and think
  through the implications of a set of policies,
  there is the prospect of a more informed national
  dialogue on trade-offs and policy choices for
  both growth poverty reduction

5
Facts Figures

• PRSP initiative now three half years old

• 65 low income countries are engaged

• 28 have produced full PRSPs (with JSAs
  endorsed by WB-IMF Boards)

• 37 are in the process of producing a full PRSP or
  in a few cases an i-PRSP

• Vast majority of PRSP countries are in SSA 12
  are in former Soviet Union/Eastern bloc

6
Experience to date

• Poverty analysis informing PRS priorities

• Policy detail still has limited pro-poor focus

• Participation is leading to greater openness

• Participation tends to be broad rather than deep

• Improved prioritisation of key public actions

• Prioritisation costing still work in progress

• Links with other reform processes beginning e.g.
  PEM/MTEF/CSR

• Integration of PRSPs into MTEFs annual budget
  has a way to go

• New donor arrangements are emerging

• Rhetoric still ahead of reality in many cases

7
Consultative Processes

• Latest WB progress report notes increased
  participation of private sector in PRSP
  formulation but quality highly uneven
  coordination of inputs freq. absent.
• Formal private sector organisations
  associations more likely to be engaged than
  informal sector groups
• Participation varies from informal engagement in
  consultation meetings to formal mechanisms such
  as regular sector or thematic working groups
  public-private dialogue groups
• A key criticism from stakeholders has been that
  some policy areas are not sufficiently open to
  public debate the macroeconomic framework in
  particular.

8
Content of Policy Frameworks

• All PRSPs emphasise primacy of accelerating
  growth for poverty reduction, most stress PSD

• Increased number draw attention to sources of
  growth, microeconomic constraints risks

Growth/PSD

• But choice of priority actions still not derived
  from identified growth sources risks

• Treatment of trade symptomatic of weak links
  between strategic goals priority public actions

• Improving the investment climate regulatory
  environment, financial sector infrastructure

Key Public Actions

• Increasing the assets of the poor productivity,
  service delivery, legal fws anti-corruption

9
Improving the Investment Climate
Percentage of PRSPs identifying as a priority area
Improving macro stability 91
Supporting SMEs 76
Infrastructure 76
Governance Corruption 71
Regulatory environment 67
FDI 67
Trade Policy 67
Finance 62
Legal System 62
10
Increasing Assets of the Poor

• Agricultural research extension
• Rural infrastructure /irrigation/electrification
• Land tenure reforms in rural urban areas
• Financial services micro-finance etc.
• Judicial reforms
• But, bulk of policy measures still emphasise
  improved social services as key route to
  increasing the assets of the poor

11
PEM Monitoring Issues

• Connections between spending priorities annual
  budget/MTEF process still evolving

• Weaknesses in costing public actions have
  repercussions for prioritisation

PEM

• Recent study by WB in ECA found significant
  weaknesses in PEM systems, especially in budget
  formulation

• All PRSPs identify PEM reforms as critical

• Coverage of indicators baseline data is
  improving, selectivity now critical

Indicators

• Range of PSD indicators, although good practice
  less evident in this area

12
What are Donors Doing?

• Increased evidence that PRSPs are a key point of
  departure for many donor strategies
• Much talk of alignment of donor instruments
  processes with PRSP cycle related national
  budget cycle (SPA, OECD/DAC, WB Fund )
• Tangible shift towards general budget support
  amongst some donors in SSA although still a
  relatively small of total ODA.
• Much emphasis on lining up capacity building/TA
  support, diagnostic analytical work with PRSP
  agenda (CFAAs, CPARs, PSIA, etc)

13
Building more effective public-private dialogue
why?

• Improved decision-making grounded in better
  understanding of real business needs
  appropriate scope of public action

• Increased transparency provides a boost to
  Govt. credibility with domestic foreign
  investors

• Context for promoting public-private partnerships
  in priority areas infrastructure (economic
  social), agriculture etc.

• Shared ownership of reform strategies better
  prospects for effective implementation

• Increased private sector awareness of policy
  context, poverty issues corporate social
  responsibility?

14
Getting the Conditions Right

• Important to reach a common understanding of the
  appropriate role of the public private sectors

• Ensure realistic objectives from the start given
  the economic political context be clear about
  expectations

• Build on existing consultative frameworks, BUT
  ensure participants represent all sizes of
  enterprise, including entrepreneurs from
  disadvantaged areas or groups

• Encourage private sector bodies to consider the
  wider policy context

15
Areas for Dev. Partner Support

• Sector wide analyses of constraints to PSD
  through seminars workshops timed to feed into
  national strategy formulation
• Studies of investment climate, firm-level
  surveys, micro-finance sector strategies to
  support the work of sector or thematic working
  groups
• Support for public-private consultation bodies,
  incl. strengthening analytical capacity.
• Support private sector participation in PRSP
  Technical Committees/Working Groups/PER processes
  e.g. Kenya