The Sector Approach Overview and lessons from experience

1. The Sector ApproachOverview and lessons from experience Presented by Andrew Lawson Team Leader PCM-SWAP-BA Helpdesk European Commission - AidCo 03

2. The Sector Approach: Overview and lessons from experience What is a Sector Programme: definitions, key principles and components What are the main lessons of experience? What is EC policy on Sector Programmes? What is the new role for projects?

3. Many projects, little lasting capacity Aid agencies have a history of trying to ‘cocoon’ their projects using free-standing technical assistance, independent project implementation units, and foreign experts - rather than trying to improve the institutional environment for service provision……..They have neither improved services in the short run nor led to institutional changes in the long run. (World Bank, Assessing Aid: what works, what doesn’t and why. OUP, 1998)

4. Sector (Wide) Approach A way of working between Government and Donor partners. Involves progressive development of a sector policy, of a unified public expenditure framework & a common management, planning & reporting system. Sector Programme The product of the Sector Approach Largely synonymous with SDPs, SIPs, etc By following a Sector Approach, Governments with Donors & other stakeholders may develop an updated sector action plan. This is defined as a Sector Programme where it includes: 1) An approved sectoral policy document and overall strategic framework; 2) a sectoral mtef; and 3) a government-led Donor co-ordination process. Sector Approaches & Programmes: definitions

5. What are the objectives of a Sector Approach? Broaden ownership by partner Governments over decision-making on sector policy, strategy and spending. Increase coherence between policy, spending and actual results, through a comprehensive view of the sector. Minimise transaction costs of external financing either by using government systems or by harmonisation of donor systems.

6. The typical components of a Sector Programme Agreed process for harmonization of systems Government-led process of Donor Coordination Sector Programmes Systematic client consultation mechanism Clear &agreed sector policy and strategy Common performance monitoring/ reporting Sectoral mtef (all local and external resources)

7. Bringing the sector budget back to the centre of policy-making a)

8. Bringing the sector budget back to the centre of policy-making b)

9. Pre-conditions for Sector Programmes Reasonable degree of macroeconomic and political stability Consensus between Govt & Donors over key sector issues Sector Programmes Strong & effective leadership at sector level Commitment in MoF and at political level

10. 4 Big lessons of experience • Respect need for Govt leadership and ownership • otherwise quickly becomes donor led. • Avoid establishing parallel systems and processes • No special secretariats or “SWAP Coordination Units” • Ensure close involvement of Ministry of Finance • Remember it is MoF that sets the budget envelope. • Ensure high-level political support • Sector policies must be consistent with political concerns • Sector officials must brief Minister, Cabinet and Parliament.

11. 4 important tactical issues • Plan for some quick wins • tangible gains for service users, eg better road maintenance. • improvements for sector staff & managers. • Control demands on management, planning and policy skills while building capacity • limit numbers of meetings; keep systems simple • Move cautiously on developing pooled funding arrangements. • Takes time and money and may not be necessary • Put emphasis on common review processes and timetables. • Give attention to procurement issues.

12. EC Policy on Sector Programmes • Joint statement on Development Policy, Nov 2000 • DG Dev/ Relex Programming Guidelines • Whenever possible,focus on individual projects should be replaced by a sector programme or policy based approach • Guidelines for European Commission Support to Sector Programmes • Being considered by AidCo management • Will be supported by a programme of training.

13. Guidelines on EC Support to Sector Programmes • How best to support a Sector Approach • How to assess a sector programme to judge whether and how to provide EC financial support • Seven key assessment areas • How to manage the cycle of operations • How to choose the appropriate financing modality to use in each context • Sectoral Budgetary Aid • A Commission contribution to a Pooled Fund • Specific procedures (EC Budget or EDF)

14. The case for different public sector projects

15. The case for fewer public sector projects

16. The future of projects: tentative conclusions • Always, there is room for imaginative projects with private sector, CBOs and NGOs • Conditions for BA/ SWAps reasonable to good • Public spending should use Govt systems not donor projects • A case remains for certain project types • Conditions for BA/ SWAP are not good • best to minimise projects but possible case for ‘hanging in’, to maintain an engagement with Government and protect key services