Knowledge and Capacity Development

IFAD Workshop Balancing Hard and Soft Investments

Knowledge and Capacity Development

G. AlaertsThe World Bank

April 18, 2011

Getting a grip on the issues“Hard investments” – works, equipment, surveys,

technical designs, etc.“Soft investments” – any activity in the social and

institutional spheres that increases (i) quality of the project prioritization, (ii) net development impact, and (iii) financial sustainability of investments and programs.Policy and strategic frameworksDialoguesInstitutional strengthening and reformsKnowledge and capacity development KCD

(encompasses all the above …)For financier: Project design, program

management, M&E, learning …

World Bank and international approachesWB: has strong interest in

quality of portfolio, development impact,sustainability capable institutions reforms

Much work on Impact assessment, M&EMuch work on Results in CPS and program

designComparatively little discussion on institutions

and KCDADB, UNDP, EU: More work on KCD and

how to assess capacity and its improvement

World Bank considerations

Better investment prioritization, plus design and ownership, have in past decade led to better results

Since mid-90s financing is no longer key impediment to sector development:Much observable need, but constrained internal

demandFinanciers (World Bank, ADB, IDB, …) often cannot

achieve lending targetsEU cannot disburse cohesion funds to member

countries; absorption is around 10-20%WSS PPP failed partially, partly because it was expected

that private partner can bring and help absorb funds

Major leap in efficiency of institutions and absorption capacity required within next decade

World Bank and international approaches

WB: two-pronged approach1. Organizations:

70-80s: 5% of loans used for TA and training > 80s: more KCD

2. Institutions: reforms through conditions, budget support and TA

Challenge: tension between (i) short-term “results”-driven and budget-driven /accountable approaches, and (ii) longer-term adaptive approaches building C

Hard to assess – the latter purported to be more robust; but the former arguably developing economy and providing the “marbles” to learn the “game”

But clear that KCD without hardware doesn’t work well

World Bank experience

WB review of Africa capacity development(2006): TA and training ineffective to build sustainable

public sector capacity.While some countries do well, average SSA

govt capacity has stagnated …Government Effectiveness: Average, Sub-Saharan Africa

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1996 1998 2000 2002 2003 2004 2005 2006 2007

Year

Perc

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World Bank experience: Africa Region

Is capacity included in the development objective?

World Bank Institute desk study, 2008 (unpublished).

Fiscal Year 2006 Fiscal Year 2007

Yes 62% Yes 75%

No 34% No 14%

Unclear 4% Unclear 11%

World Bank experience: Africa Region

Type of capacity development inputs in WB projects

World Bank Institute desk study, 2008 (unpublished)But – no specific data about reforms, institutional

strengthening, knowledge development, etc.

Fiscal Year 2006

Fiscal Year 2007

Equipment 20% 14%

Study tours 2% 7%

Consultants 32% 50%

Training 36% 54%

Knowledge sharing 12% 29%

Principles of KCD

Two basic approaches:1. Capacity can be developed through inputs,

leading in turn to better results positivist approach, assuming causal relations between input and output

2. Capacity is emerging from complex interactions that are partly endogenous and partly exogenous stresses non-plannable nature, prioritizes capacity not results, stresses need for adaptive management

“What works” can be either, or a combination … depending on the situation, start position (path dependency) and objectives

Principles of KCDCapacity is the “ability of people, organisations,

and society as whole to manage their affairs successfully”

OECD (2005)

“Capacity is the ability of individuals, groups, institutions and organizations to identify and solve development problems over time”

Morgan (1993), UNDP (1993)

external partners cannot “do” CD of others. Partners can support and direct CD processes, but they cannot manage the actual CD of others key criterion for success is that CD must be “owned” by those who develop their capacity

KCD Principles

“Capacity is the capability of an institution or society to(i) identify and (ii) understand its development issues, (iii)act to address these, and (iv)learn from experience and accumulate knowledge

for the future.”Alaerts (2009)

This definition is more Operational Linked with knowledge Allows to specify verifiable impacts “Extra” capacity for learning

Principles of KCD

Adaptive capacity: considers changes in external factors in a

proactive manner to develop a systemic process for improving management policies and practices, with a central objective of increasing the adaptive capacity of the management regime in general, and the involved actors in particular. (Morgan, Pahl-Wostl)

“Adaptive management is learning to manage by managing to learn.”

Knowledge and capacity – levels diagram (Alaerts and Kaspersma 2010)

Knowledge and capacity – measuring capacityIndividual level Organizational

levelInstitutional

level

Technical competence

Updated knowledge and skills.

Appropriate skills mixes : engineering, legal, financial, etc.

Expertises and skills mixes in a broader context

Management competence

Project mgt skills.Leadership.

Leaders able to operate with goals agreed with supervisors and stakeholders.

Workable task assignments of sector agencies;minimal overlap

Governance competence

Ability to engage with and listen to stakeholders. Inclusiveness.

Transparent decision making. Consultations. Accountability.

Regulations to ensure transparency and accountability.

Learning competence

readiness to critically reflect on own's performance.

Procedures , incentives and resources to support learning by staff.

Openness to review sector performance and revise policies.

KCD rationaleVery few efforts to quantify ERRIndonesia Irrigation Improvement with Water

User Associations (WUAs) empowerment (2003):Conventional rehabilitation ERR of 10 - 18 %Capacity development only ERR of 20 – 30 %Rehab plus enhanced knowledge and capacity

of the WUAs ERR of 30 – 40 %Education: Long-run effect of 1 additional year of

education in OECD area == 3 – 6% increment in GDP/cap.

World Bank tools for results: (i) prioritizationCountry Partnership Strategy (with MoF,

stakeholders)Country Poverty Reduction Strategy (with other

donors)Sectoral policy and strategy studies (ESW and

TA)Operational Risk Assessment Framework (ORAF)Quality-at-Entry and other peer-reviewsImplementation Completion Report (ICR)Independent Evaluation Group (IEG) reviews and

reportsEtc.

World Bank tools for results: (ii) MonitoringIDA Results Monitoring: with key indicators:

Growth and poverty reductionPublic financial management and investment

climateInfrastructure and access to servicesHuman development (education, health, equity,

…)Quality and effectiveness of IDA program

activities Regular sectoral policy and operational policy

reviewsExperience with Inspection PanelOther

World Bank tools for results: (iii) investment tool kitIDA Poverty Reduction Support CreditGlobal Food Response Crisis ProgramClimate Change Mitigation and Adaptation programs HPIC and Fragile and Conflict-Affected StatesGlobal Floods and Disaster Response and Reduction GEF-supported projects for environmental sustainabilityProgram for Results (P4R) (replaces SWAps, OBA etc)Development Policy Loans (budget support + reforms)Sectoral programs: Irrigation, agriculture, municipal

development, WSS, flood management, health, etc.Etcetera

World Bank tools for results: (iv) in short …

Two approaches are advocated:1. Focus on short-term tangible results, within

set time frames and budgets, and with clear accountability / measurability …

2. Focus on longer-term capacity development recognizing endogenous capacity growth, with lower measurability …

World Bank tools for results: (iv) in short …

WB takes pragmatic route 1 enhanced with: Priority for sustainable investments, meeting

a demand and with demonstrated institutional readiness

Design flexibility to allow learning-as-we-go (use of Additional Financing, APL and phased projects)

Lower ambitions on Development Objectives Mix in institutional strengthening where

opportunity seems to exist Use investment to improve economic outlook

first Use investment to engage and prepare

institutions No a priori inclusion or exclusion of KCD

Diagnosis: multiple paths to a capable state(World Bank Institute 2007)

From diagnosis to selection of intervention

reforms

Other approaches in developing capacityOECD, UNDP, EuropeAid –

stress the complexity nature of capacity and the adaptive management approach

Manuals with laborious capacity assessmentMore geared for macro tasks

UNDP (2007): Capacity Assessment Methodology: starting from Capacity assessment, then Desired future capacities, Capacity gap assessment, Work planMostly for sector-wide or governance areas

Other approaches in developing capacity (ADB)

ADB – Practical Guide to Capacity Development in Sector Context:Focuses on institutional change / reforms, and

change management10 sections with tools for diagnosis, dialogue

and planningThough the diagnosis and dialogue give good

guidance, risk exists of over-analysis

Other approaches in developing capacity (ADB)

Balancing Soft and Hard investments: A way forward

Main constraint to development is lack of institutional capacity need major leap in institutional performance

Fundamental decision: Positivist concept of development vs. constructivist concept:

Planned mgmt vs. adaptive mgmt.What works best when? Flexible opportunistic approaches based on risk

analysis and realistic objectives are probably bestShort-term projects to support long-term program

Projects prioritizing both capacity development and results are undermining effectiveness on both counts

An opportunistic blend of H and S is probably best in short and long run

Need stronger guidance framework & lessons

“Soft investments”: A way forward in KCDWe make advances on the diagnostics --

need to understand better how KCD instruments work best, e.g.How to maintain engagement and facilitate change

processesHow to develop effective networks, formal and

social onesHow to make partnerships effectiveTacit knowledge is more important than explicit

knowledge yet we know little about how tacit K works; and especially in developing countries education is geared to explicit K

How to build on local K and endogenous capacity and preferences