PRSPs – relevance, progress & private sector participation.

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. Where’s 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 JSA’s 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

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