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Sector-wide Approaches:. Challenges and Opportunities for Rural Development. Eastern and Southern Africa. Background. By mid-1990s, concern for aid effectiveness: Development ‘projects’ criticised for their ‘cocooned’ approach, reliant on TA

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slide1

Sector-wide Approaches:

Challenges and Opportunities for Rural Development

Eastern and Southern Africa

slide2

Background

  • By mid-1990s, concern for aid effectiveness:
    • Development ‘projects’ criticised for their ‘cocooned’ approach, reliant on TA
    • Recognition that development cooperation requires supportive policy environment to achieve impact
    • Donor conditionality had been poor at achieving policy change
    • Perception that donors, acting in isolation, represented a part of the problem
response new approaches
Response: new approaches
  • New focus on poverty reduction as prime purpose of government expenditure and development assistance – MDGs, PRSPs
  • Priority to ownership and institution-building for sustainable development
  • Relationships between governments and donors need to be partnership-based
  • Recognition of importance of effective and efficient management of public expenditure and accountability – MTEF
  • Aid should support accountability of governments to their people … harmonisation
sector wide approaches swaps
Sector-wide Approaches (SWAps)
  • Coordinate government and donor assistance in support of a common sector policy and expenditure framework under government leadership
  • A process of delivering policy and institutional reform, not simply a financing mechanism – can be financed by several instruments
  • ‘The process by which what needs to be done is done’
  • … Not to be confused with the financing instruments used to support them
financial aid instruments for swaps
Financial (aid) instruments for SWAps
  • General Budget Support (GBS)
    • Channelled through Treasury but into the general fund, subject to public expenditure priorities
  • Sector budget support
    • Through the Treasury, but earmarked towards specific sectors
  • Sector basket funding
    • Extra accountability arrangements and earmarking
  • Project support (gov’t or parallel systems)
    • Can have advantages of flexibility, timing, risk
  • … So GBS is not a substitute for SWAps
relationship between development approaches and aid instruments
Relationship between development approaches and aid instruments

Development Approaches

(what is done)

Financial Aid Instruments

(how it is financed)

PRSPs

GeneralBudget Support

Sector Budget Support

SWAp

SWAp

Sector Basket Funding

Project Support

evolution of agricultural swaps in the region steps 1 and 2
Evolution of agricultural SWAps in the Region: steps 1 and 2
  • Mid-90s, ASIP: (e.g. Zambia ASIP):
    • World Bank-led, little government ownership
    • unsatisfactory implementation and weak impact
  • Late-90s, SWAp: (eg Proagri I, Mozambique):
    • A process of policy and institutional reform, not just investment … but difficulties:
    • Key expenditures in other sectors
    • Policy issues key for Ministry of Agriculture
    • Enabling not doing role
    • Broad stakeholder involvement
evolution of agricultural swaps in the region the 3rd step
Evolution of agricultural SWAps in the Region: the 3rd step
  • 2000 – onwards: ‘Second generation’ SWAps (e.g. PMA Uganda)
    • Internalise lessons from earlier models
    • client-driven: ‘what constrains livelihoods’
    • multi-sectoral, rural pillars of PRSPs – go beyond Ministries of Agriculture
    • Recognise importance of policy and institutional issues
  • New challenges: coordination between Ministries, with other non-government actors, enabling role of Ministry of Agriculture, PRSPs, decentralisation, financing of ‘agriculture’
current status of agricultural swaps in the region
Current status of agricultural SWAps in the Region
  • Of the 21 countries in the Region:
  • 7 have, or are moving towards, some form of agriculture SWAp or sector framework
  • Of those 7 countries, all already have a PRSP
  • Of those 7 countries, six receive assistance through GBS, and 3 receive basket funding
  • But only few of the second generation SWAps are actually underway in practice … early days to assess performance
performance of agricultural swaps to date
Performance of agricultural SWAps to date
  • Policy and institutional reform: positive, but ‘informal’ rules difficult
  • Financing: Complex in some cases, relaxed in others – ceilings, unprotected budgets, expectation of transparency & compliance
  • Focus of SWAps: later ones focus more on key issues … but new cross-sectoral challenges
  • Link to PRSP: early SWAps not adequately poverty focused, later ones better; nest in PRSPs
  • Impact on poverty: little evidence so far, some promising experience
what are the lessons for agricultural sector support 1
What are the lessons for agricultural sector support? (1)
  • No blueprint – country-specific context
  • Label ‘SWAp’ not important – distinguish from sector financing … a process
  • Result oriented, root causes of poverty and poor performance
  • Policy and institutions as important as money
  • Can be supported by various financial instruments, including GBS
  • Complementary to PRSPs … national goals
  • Civil society engagement complements supply of policy with demand for policy
what are the lessons for agricultural sector support 2
What are the lessons for agricultural sector support? (2)
  • Must be integrated with PRSP, MTEF, decentralisation, civil service reform etc
  • Nested within budget process to strengthen PEM .. hard budget constraint
  • Ownership and commitment is essential .. sector and national
  • Realism and flexibility essential – reform will be slow … political dimension
  • Governments manage donors, not the other way round
some questions about swaps 1
Some questions about SWAps (1)
  • Are SWAps effective mechanisms for policy and institutional reform? How could they be made better? Are there other, preferred alternatives?
  • Do cross-sectoral second generation SWAps focus on key issues? Are the concerns of farmers, the private sector and government adequately reflected?
  • Is the requirement for cross-sectoral coordination implied by second generation SWAps realistic? How can this be achieved?
  • Are SWAps effective at reducing the transaction costs of dealing with many donors? Do they improve government-donor interactions?
  • Do they support PRSPs? Do they make relationships between sector and central Ministries more effective?
some questions about swaps 2
Some questions about SWAps (2)
  • Where does the move towards SWAps, PRSPs, GBS, MTEF etc come from? Who really wants them? Do sector Ministries want them?
  • Does the adoption of SWAps and PRSPs mean the end of projects? What instruments will we have in future, and why?
  • What are the implications of a shift from project to sector financing for agriculture? What happens to finance for agriculture under GBS and MTEF?
  • Are SWAPs more effective at enhancing agricultural growth and reducing rural poverty?
  • Do SWAps enhance government ownership of development processes, and allow rural people’s priorities to be addressed?
how should ifad support swaps in the region
How should IFAD support SWAps in the Region?
  • Should IFAD focus on SWAps? What should it stop doing?
  • What can IFAD add to SWAp development and implementation?
  • Does IFAD need to change the way it does business to give better support to SWAps?
  • Should IFAD continue to support government-owned projects, or does SWAp engagement satisfy all sectoral needs?
  • Under what conditions should IFAD provide GBS?
slide16

Thank you

Eastern and Southern Africa