Sectoral Approaches

Mick Foster

December 2002

Plan of Session

• Definitions

• Rationale

• Where are SWAPs appropriate?

• Links to other instruments & approaches

• Lessons of experience

RationaleSWAPs were invented to solve problems of projects:• Distorted spending patterns (uneven provision, too

much capital but too little operating budget)• High costs for low coverage • Fragmentation of policy and budget process• Weak ownership• Poor sustainability• Bypassing of Govt systems weakens accountability for

public expenditure as a whole• Cross-cutting reasons why projects fail• SWAp definitions reflect this history:

One definition of a SWAP

“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)

Problems with this definition

• Focuses on role of public sector-

• But all sectors have many actors involved

• There are bigger sector issues than just how to finance public spending:-– Who pays and who provides what services?– What coordination processes are needed to

minimise waste & duplication while allowing consumer choice & encouraging innovation?

What process is needed to negotiate sector policy?

– Role of Govt and other actors in finance & service provision?

– Extent of joint or coordinated planning?– Who monitors and regulates to what standards?– How and at what level are public expenditure

priorities decided? – How balance benefits of consultation against

risks of capture & costs of endless discussion?

When is a sectoral strategy process appropriate?

• Whenever market failure or need to assure access by the poor requires Govt to take a leading role.

• But consider benefits & costs when deciding scope of strategy, who participates, what decisions require agreement, what processes should be joint.

• Subsidiarity principle:- take decisions at lowest efficient level.

When is a SWAp appropriate?

• Public expenditure is a major feature of the sector

• Donor contributions are large & causing co-ordination problems

• Reasonable Government and donor consensus on sector strategy

• There is a supportive macro and budget environment

– i.e. budgeted resources likely to be available

• Supportive institutional arrangements

– E.g. single line Ministry, and a manageable number of donors

• Government and donor incentives are compatible with SWAp

– Donors reliably deliver the flexible funding, Govt willing & able to respond to donor scrutiny of policy, implementation and accountability

Links to other Instruments & Approaches

• LT Perspective Plan (e.g. Vision 2020)• MT National Development Plan• PRSP• MTEF• Annual Budget• Sectoral strategy and spending plans• Province, regional, district plans• Projects• Regulatory mechanisms• M & E systems

Basic Elements of a SWAp

• Decide goals, e.g. UPE plus output from secondary and higher education sufficient to meet labour market requirements.

• Analysis of constraints, options for financing and provision.

• Define sector policy, roles, institutional arrangements.

• Develop sector public expenditure framework, linking Govt objectives to costed expenditure proposals to achieve them.

• Negotiate Govt and EDP funding through the national budget process, but taking account of other sources e.g. cost recovery. Revise the output targets in line with the resources available.

• Agree procedures for disbursement, annual review & rolling forward, accountability, M & E

Lessons of Experience-1

• Keep it clear, strategic, & simple:– Few, strategic objectives linked to outcomes– Linked to where resources will be allocated– Clarity on how they will be managed– & monitored

• Don’t Blueprint & overplan

Lessons of Experience-2

• Link to national budget process

• Plan and non-plan (development & recurrent)

• Explicit resource envelope & discussion of trade-offs coverage & quality

• Recognise cost barriers to household access

Lessons of Experience-3

• Need parallel process to deal with constraints above sector level, e.g. civil service performance management, disfunctional budget processes, corruption.

• Recognise limitations of public sector providers, may need other options.

Lessons of Experience-4

• Communication to staff at all levels always takes more effort than is originally designed for, needs continuous reinforcement

• Communicate also to households: they can be allies in ensuring the policy is implemented.

• Involve lower levels in review process, but• Will also need business meetings with more

restricted participation.

Lessons of Experience-5

• Process not destination• Don’t need to decide everything in advance;

gather content over time• Don’t let procedures & funding displace policy

content• Build trust:-

– Few commitments, but both sides honour them– Transparent & open discussions– Build PEM track record, & budget support will follow

eventually

Lessons of Experience-6

• Donors need strong Govt leadership to avoid drift: manage the agenda, ensure decisions get made

• In house research & policy capacity to prepare meetings• Allocate Govt staff to ensure follow up of decisions, not a

consultant or donor driven implementation unit• Don’t let minor partners dictate the pace• Informal working group of core Govt and major partners

can be helpful• Involve partners in the planning and budget process to

ensure they recognise the implications of limited funds for prioritisation

Lessons of Experience

• A core of reformers and flexible donor partners can achieve significant change

• But can deteriorate into a pointless talking shop or grind to a halt if:-– Donors still wedded to interventionist detail

– Sector Managers not committed to focus resources on improved service delivery to the poor

– & reformers not empowered to address the institutional & Governance constraints

Suggested Issues for Discussion

• What is the key level for intervention to improve sector outcomes:- national, sectoral, province, local?

• Who are the key participants in defining sector policy- does Pakistan want a SWAp process involving EDPs in policy dialogue?

• Are cross-cutting reforms needed before sector reforms can work?

• What are the risks of dependence on donors for budget support?

• What would be the potential gains from moving towards a sectoral approach?

• What would be the potential costs?

• What are the obstacles?