Sharpening the Rural Focus of Poverty Reduction Strategies

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Sharpening the Rural Focus of PovertyReduction Strategies:

Context, Lessons and Way Forward

Synthesis Report

Global Donor Platform

for Rural Development


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CONTENTS

TABLE OF CONTENTS

Preface 02

Acknowledgements 03

List of Acronyms 04

Executive Summary 05

I. PART ONE: Agriculture for development threats, opportunities 09

A. From benign neglect to renewed attention 09

B. Climate change and global markets: External shocks, internal responses 10

II. PART TWO: Rural aspects of poverty reduction and national development strategies 12A. Overview 12

B. Understanding rural poverty 15

C. Role of the state and the challenge of accountability 16

D. Giving a voice to the rural poor 18

E. PRS monitoring 22

F. The challenge of integration: Tensions and trade-offs 22

G. Asserting partners commitment 23

H. Aligning resources with priorities: Ownership, incentives and capacity 24

I. Good practices for PRS rural focus 27

III. PART THREE: Agriculture and aid effectiveness 28

A. The specificity of the rural productive sector and its implications28

B. Customising the Paris Declaration and the Accra Agenda for Action 29

IV. PART FOUR: Rural focus of poverty reduction strategies the way forward 34

A. Scaling up and the political economy of PRS 34

B. Key action areas for follow-up 35

Selected References 44

Global Donor Platform studies are joint analyses of its members designed to close identifiedinformation gaps and provide a global public good. Platform studies shall inform and guide policymakers and practitioners in the delivery of assistance in agriculture and rural development.

As such, Platform publications are not copyright protected. The Platform encourages duplicationof its materials for non-commercial purposes. Proper citation is requested at all times.Permission to make digital or hard copies of part or all of this work is hereby granted without feeand without a formal request provided that copies are not made or distributed for profit orcommercial advantages and that copies bear this notice and full citation on the first page.Information not owned by the Platform must be honoured and permission pursued with theowner of the information.


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Appendices

Appendix 1: Origin of the review, its scope and analytical framework 46

Appendix 2: Assessment of rural focus of PRS processes planning, implementation

and evaluation synopsis of case studies in Bolivia, Cambodia, Ethiopia,

Mozambique and Burkina Faso 48

Boxes

Box 1: Agriculture and environmental sustainability: Challenges, messages 09

Box 2: Mozambique: The challenge of balancing accountabilities 14

Box 3: Poverty traps in Ethiopia 15

Box 4: Ethiopia eliciting peoples views on poverty and services 19

Box 5: Poverty reduction strategy papers a participatory breakthrough? 20

Box 6: The dimensions of participation: Framing questions 21Box 7: Budget allocation and actual expenditures on agriculture in Africa 25

Box 8: Linking PRS with the budget 26

Box 9: Customising the Paris Declaration for the rural productive sector:

Tentative framing questions 30

Box 10: Key messages on agriculture for development 34

Box 11: PSIA and controversial rural sector reforms 36

Box 12: Aligning sector programmes with PRSP 37

Box 13: Strengthening capacities of farmer organisations for

policy monitoring in West Africa 39

Box 14: Building consensus for land redistribution in Cambodia 40

Box 15: M&E aspects of PRS implementation at sector and local levels 43

Graphs

Graph 1: Agricultural growth and poverty reduction 09

Graph 2: Rural poverty and ODA to agriculture 10

Graph 3: Climate change, agriculture and growth 11

Graph 4: Subsidies and public investments in India 17

Graph 5: Rural poverty and agricultural production in Latin America

and the Caribbean (1990 2005) 17

Graph 6: Budget allocation to agriculture and contribution of agriculture

to GDP in Africa (2002 2004 average) 24

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PREFACE

As part of the new aid architecture, Poverty Reduction and National Development Strategies

(PRS/NDSs) provide the agreed framework through which to pursue the MDG targets. As the

majority of the poor in most developing countries live in rural areas, agricultural development

for growth, poverty reduction and environmental stewardship deserves special attention in the

PRS and related budget processes at national and sector levels.

Previous assessments of the rural dimensions of Poverty Reduction Strategies (PRSs) have

brought to light a number of weaknesses in process and content. Several gaps and discon-

nections have been identified, from poverty assessments to priority setting, and from resource

allocation to actual implementation and impact on the ground.

With IFAD as the lead agency for a collaborative assessment under the aegis of the Global Donor

Platform for Rural Development, this synthesis report examines the root causes of the PRS

rural deficiencies, and provides an overview of findings from selected country case studies onthe rural productive focus of the PRS process in Africa, Asia and Latin America. The report also

incorporates lessons from other relevant country experiences, as well as examples of good prac-

tice. Finally, in the context of the debate on the specificities of the agriculture sector and implica-

tions on aid effectiveness, the report suggests a number of ways to sharpen the rural productive

focus of PRSs.

The financial, technical and other contributions from partners and specialised institutions,

including feedback from country consultations, inputs and/or peer review of draft reports, are

much appreciated (see acknowledgements).

The diversity of funding sources for individual studies and the interaction among partners during

and after the reviews have provided valuable insights into challenges associated with the imple-mentation of joint activities under the alignment and harmonisation agenda.

Findings and messages from this review do not constitute a formal position statement of the

Platform or its individual member institutions. The review is intended as a knowledge product, to

inform the judgement of decision makers and development practitioners at country level and in

the international policy arena. Its lessons and messages remain valid in the context of recent

external shocks such as climate change and soaring food prices which call for comprehensive

local and international responses.

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PREFACE

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Christoph Kohlmeyer, BMZ, Chair



B. Baldwin, IFAD, Vice-Chair




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03

ACKNOWLEDGEMENTS

The country case studies and the synthesis review on the rural focus of PRS were carried out as

collaborative products under the aegis of the Global Donor Platform for Rural Development (the

Platform), with IFAD as the lead agency.

The principal author of this synthesis report is Cheikh M. Sourang, Senior Programme Manager,

IFAD. As overall coordinator of the reviews, C.M. Sourang arranged for the original submission of

the study proposal and related consultations and supervised the country case studies. He also

drafted the synthesis report with substantive input from ODIs Steve Wiggins, taking into account

contributions from case study team leaders and IFAD colleagues including country portfolio man-

agers. The synthesis report was finalised in light of comments received on the draft. As IFAD

focal point for the Platform and Chair of the Platform Steering Committee, Brian Baldwin advised

on funding arrangements and interactions with the Platform Secretariat and Steering

Committee, and commented on the original proposal. Contributions from other IFAD colleagues

are also much appreciated, including K. Cleaver for his continuing support and guidance,E. Farmosi, F. Papitto and A. Montes for their assistance with administrative and budgetary mat-

ters and formatting, and S. Oystese for inputs at the design stage.

For each of the five country case studies, a lead technical agency and a team leader were desig-

nated. More specifically:

a: ODI collaborated with FES/ILDIS for the Bolivia study by S. Wiggins and C. Toranzo, with

funding from IFAD;

b: IFPRI led the Burkina Faso study by T. Ngaido and A. Ndiaye with funding from Finland

through IFAD, in cooperation with GTZ;

c: ODI was contracted by IFAD for the Cambodia study by D. Shields and M. Hobley;

d: Noragric, with funding from Norway through NORAD, carried out the Ethiopia study

by F. H. Johnsen, and A. Waktola in collaboration with E. Ludi from ODI; ande: An IFAD consultant from Bayreuth University, E. Macamo, carried out the Mozambique

study with ODI comments.

ODIs engagement with IFAD started at the design stage with inputs from A. Shepherd and

L. Cabral to the study proposals and continued through preparation of the synthesis report to

which S. Wiggins contributed. GTZs strategic partnership with IFAD throughout the review

process has been very valuable, involving staff from headquarters and country offices (M. von

Eckert, M. Tertsunen, A. Bahm and H. Janus). Substantive comments on the synthesis report

were received from various partners including the World Bank (Q. Wodon and G. Feder on select-

ed country studies; J. Anderson and G. Feder on the synthesis report, on request from M. Cackler

and his ARD colleagues, N. Khouri and S. Thapa), the European Union (M. Bielder), the Austrian

Development Agency (W. Rabitsch) and the Netherlands (F. van der Wal).

C. Langenkamp and D. Gerecke from the Platform Secretariat arranged for feedback from the

Platform Steering Committee on the study proposal and subsequent feedback on the draft syn-

thesis from the Steering Committee and Platform member institutions, as well as report editing

and graphic design for the final publication.

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ACR

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LIST OF ACRONYMS

AAA Accra Agenda for Action

AGRA Alliance for a Green Revolution in Africa

ARD Agriculture and Rural Development

AU African Union

CAADP Comprehensive Africa Agriculture Development Programme

CLSP Cadre Stratgique de Lutte contre la Pauvret / Strategic Framework for

Combating Poverty (Burkina Faso)

GTZ German Technical Cooperation

IFAD International Fund for Agricultural Development

IMF International Monetary Fund

M&E Monitoring and Evaluation

MDG Millennium Development GoalsMTEF Medium-term Expenditure Framework

NDS National Development Strategy

NGO Non-Governmental Organisation

NSDP National Strategic Development Plan (Cambodia)

ODA Official Development Assistance

ODI Overseas Development Institute

OECD Organisation for Economic Co-operation and Development

PARPA Action Plan for the Reduction of Absolute Poverty (Mozambique)

PROAGRI National Agricultural Development Programme (Mozambique)

PASDEP Plan for Accelerated and Sustained Development to End Poverty (Ethiopia)PBA Programme-Based Approach

PND National Development Programme (Bolivia)

PIU Project Implementation Unit

PRS Poverty Reduction Strategy

RPO Rural Producer Organisations

SWAp Sector-Wide Approaches

UN United Nations

UN/ECA United Nations Economic Commission for Africa

UNDG United Nations Development Group

WB The World BankWDR World Development Report

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5. Past experience with the first and second generation of Growth and Poverty Reduction

Strategies has brought to light a number of good practices, which provide helpful starting

points for addressing some of the challenges listed above. These include:

a: Planning, budgeting and strategy formulation

Integrating different planning frameworks into one consolidated document which com-

bines the PRS (previously intended for about 70 of the poorest countries to mobilise con-

cessional financing), the national development plan (for all countries to prioritise

domestic resource mobilisation and allocation), and the MDG investment plan;

Identifying and making operational the minimal interface between the PRS/NDS and the

existing or planned sector strategies (agriculture, rural development, fisheries, environ-

ment, etc), decentralisation policies and the related budget processes.

b: Policy dialogue, advocacy and capacity building

Promoting champions and catalysts (for example, through country-level thematic

groups) to sharpen the rural focus of country-led processes;

Evidence-based policy dialogue and advocacy work informed by participatory povertyassessments, public expenditure reviews (PERs), and poverty and social impact analysis

(PSIA) or other forms of distributional analysis;

Supporting representative rural producer organisations. In response to high food prices,

and depending on the issue at hand (access to productive assets, inputs, technology or

markets, for example), consultations with rural stakeholders would involve represen-

tative organisations of natural resource users, rural producer organisations and

members or clients of rural finance institutions, with the aim of making a meaningful

contribution to the identification of priorities for public action, and the resource

allocation process;

Strengthening the capacity of rural sector ministries to engage in PRS processes and

promoting inter-ministerial coordination;

Mainstreaming rural issues in PRS-related debates involving country-level stake-holders and partners such as parliaments, NGOs, the private sector, donor thematic

groups, and research and academic institutions;

Customised feedback mechanisms tailored to the concerns of country stakeholders

including poor rural communities, civil society, the private sector, parliamentarians and

donors.

c: Innovation and learning

Targeted case studies to document successful approaches (such as on rural service

delivery) and analytical work (such as on livelihoods pathways);

Disseminating success stories in rural poverty reduction to support advocates and

convince the sceptics;

Piloting innovative interventions for prospective replication and scaling up in the

context of harmonised approaches. Some of the promising schemes relate to weather

insurance, commodity exchange, biofuel development (with due consideration of issuesof land allocation and food security), leasehold forestry, organic farming, microfinance

and remittances.

d: Monitoring and evaluation

Internalising rural benchmarks and indicators in PRS/NDS monitoring;

Early tracking of impacts on the ground to test validity of national monitoring systems

and inform decisions on resource allocation;

Customised country monitoring of aid effectiveness.

6. The principles of partnership and related targets and indicators set out in the Paris Decla-

ration are not sector specific. However, the agricultural sector has particular characteristics

that challenge the application of the Paris Declaration commitments. The strong role of the pri-

vate sector in agriculture is a case in point. The sector is very heterogeneous and diverse with awide range of stakeholders involved. The limited role of the state is often not well-defined or

there is a lack of consensus about it. Sector specificities and challenges, like the need to include

farmers and their organisations in planning, implementation and monitoring of sector develop-

ment, should be central to implementing the Paris Declaration principles. Planning for results

and mutual accountability needs to move beyond the government-to-government relationship.06E

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7. It remains an open question whether the specificities of agricultural development in particu-

lar, and the rural productive sector in general, make it relatively more difficult to comply with

the aid effectiveness agenda. Is it easier for the state to plan and deliver infrastructure and

services for human capital development (health and education), than to support improved

agricultural productivity as a source of food, feed and fuel? How far do sector-specific chal-

lenges relate to value chain linkages, livelihoods diversification, risk mitigation and vulnera-

bility management? Does this all point to a need to further customising the targets of the aid

effectiveness agenda in recognition of the fact that sector specificities may affect the pace

and scope of compliance at country level with the internationally agreed targets?

8. The Bretton Woods Institutions and OECD countries have made significant coordination

efforts to respond to the Paris Declaration by adopting Joint Assistance Strategies and pro-

gramme-based or sector-wide approaches. They have made arrangements for delegated

cooperation or empowerment of lead agencies to promote country-level dialogue with coun-

try stakeholders on thematic issues of common interest. A new UN model of engagement in

country-led processes is also under consideration by the UN Development Group, involving achange in culture and perceptions. This also confirms the potential for the UN system to re-

position itself in the context of the new aid architecture, including support for improved agri-

cultural performance as a condition for achieving the MDG targets on poverty and hunger.

9. With an eye on the MDG targets, there is growing consensus on what should be done in an

ideal world, in terms of policies, institutions and investments, to empower the rural poor to

control productive natural assets, and to gain access to technology, infrastructure and

services. Innovative approaches have shown that it is possible for rural producer organisa-

tions to respond to market signals against a backdrop of liberalisation, decentralisation and

globalisation; and for poor men and women to manage risks and vulnerability associated with

markets and environmental threats. The WDR 2008 is a powerful amplifier of related mes-

sages which need, however, to be customised at country level.

10. A major challenge is to define the ways and means of scaling up the most promising experi-

ments and to build on indigenous knowledge. To achieve large-scale impact there is a need

to identify champions and catalysts and to create space to grow. A PRS or NDS and related

budget and sector processes will probably remain the agreed framework through which the

government and its development partners can best create the required space for replication

and scaling up.

11. Consequently, the PRS/NDS and related expenditure frameworks and budget processes at

sector level can provide a tremendous opportunity for:

Mobilising the appropriate champions;

Opening a fiscal space for financing a scaled-up intervention;

Securing the necessary political commitments; Resolving the supply and demand sides of the resources-for-results equation, such as for

large-scale adoption of new crop varieties, inputs or technologies;

Addressing capacity-building issues;

Integrating cultural considerations; and

Building the required partnerships.

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12. As part of a roadmap for follow up, such good practices can provide the starting point for a

more systematic approach for sharpening the rural focus of PRSs, which in turn will build on

previous assessments and recommendations by multilateral and bilateral partners to pro-

mote growth and poverty reduction in rural areas. Such an approach would revolve around an

agenda for research and action along the lines of the six key action areas listed below:

a: Strengthening analytical underpinnings as a basis for evidence-based policy dialogue and

related partnerships: sector expenditure reviews, participatory poverty assessments and

distributional analysis, combined with focused analytical work on selected thematic or

sector issues such as sources of growth and poverty reduction, climate change and

agriculture, food and energy markets would aim at filling knowledge gaps, and informing

public policy choice. Project-level good practices and related local policy gains can also be

a credible source of evidence to inform policy processes at sector or national level. In

terms of knowledge management and innovation, the findings and messages from knowl-

edge products should feed into relevant learning loops, including good practices for public

sector priority setting, grassroots initiatives, and publicprivate partnerships. The context-specific nature of some of these issues will require continuing country-level investigation

to illustrate successes and failure, identifying good practices and the conditions needed for

replication, and provide the basis for a more focused support to specific country-level

processes from development partners.

b: Integrated approach to PRS implementation at sector level: there is a need to pay special

attention to linking national planning frameworks with agriculture and rural sector strate-

gies and programmes, including PBAs/SWAps or multi-sector approaches to territorial

development in the context of decentralisation policies. Likewise, the criteria for defining

national components of a regional initiative should reflect considerations of coordination,

coherence, complementarities and subsidiarity with regard to country-led processes.

c: Institutionalising rural participation: it is essential to give a voice to the rural poor and

their organisations in PRS/NDS processes; this includes their participation in the formula-tion of strategies, prioritisation, influence in resource allocation and monitoring of imple-

mentation. An exciting challenge associated with this new situation in many countries will

be the use of ongoing or forthcoming PRS and related sector processes as a mutual

accountability framework, not only between government and donors but also involving the

rural poor and their organisations. This will present the opportunity for a participatory and

informed debate on the likely winners and losers from proposed policy measures in

response to soaring food prices.

d: Identifying and making operational the interface between PRS and regional initiatives

(such as the CAADP process in Africa or the Greater Mekong River Basin Initiative in Asia)

as well as processes related to intergovernmental negotiations on trade and environment.

e: Support to PRS sector monitoring and evaluation as a management tool and an instru-

ment for impact assessment. Linking sector monitoring with national- and project-level

results and impact assessment systems will provide the basis for a results-oriented PRSimplementation. Arrangements for early tracking of results on the ground are overdue in

most countries. This could ultimately affect a credible measure of progress towards the

MDGs, the availability of evidence for timely policy change and the redeployment or

increased allocation of resources for agriculture.

f: Building national capacities as a crosscutting activity targeted at government services, as

well as the poor, rural women and men and their organisations relative to the five action

areas above with the aim of facilitating replication and scaling up of successful interven-

tions towards agreed MDGs targets. There is a need to build up domestic capacities:

for government services to generate, maintain and disseminate institutional memories

of analytical work;

for specialised institutions to undertake research, grounded on actual field experience,

and to explore institutional, financial and policy implications of applying traditionalknowledge and replicating and scaling up innovative approaches and project-level policy

gains; and

for the poor, rural women and men and their organisations to engage in documenting

their own livelihoods trajectories and articulating their own vision, targets and ex-

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I. PART ONE:

AGRICULTURE FOR DEVELOPMENT THREATS, OPPORTUNITIES

A. From benign neglect to renewed attention

1. There is renewed interest in agriculture as an engine for growth and poverty reduction

(see Graph 1) as well as a means of environmental stewardship (see Box 1). This is based on

the realisation that:

the vast majority of the poor live in rural areas;

agricultural growth has more impact on rural poverty reduction than other sectors;

the Millennium Development Goals on hunger and poverty reduction cannot be met unless

sufficient emphasis is placed on agricultural development; and

agriculture is not only part of the environmental problem, but also part of the solution.

Graph 1: Agricultural growth and poverty reduction

Source: World Bank, 2007

Box 1: Agriculture and environmental sustainability: challenges, messages

Major challenges and uncertainties on the environmental side

> Growing land and water scarcity

Agriculture uses 85% of water with growing competition from non-agricultural users

> Resource degradation and pollution

Land degradation, agricultural chemicals

MessageReducing agricultures large environmental footprint is an inevitable requirement for success,

and providing environmental services one of the contributions of agriculture to development


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Expenditure gains induced by 1% GDP growth in ag. and non-ag.

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Poorest 30% Middle 40% Richest 30%

Agriculture Non-agriculture

GDP growth fromagriculture benefits

the poorest most

Expendituregains(%)


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If we are to meet the challenges associated with the multiple functions of agriculture, a significant

amount of resources will need to be devoted to agricultural development. In contrast to the past

trends of declining ODA and a dwindling share devoted to agriculture in ODA, a win-win approach to

resource allocation between sectors is required. Recognising the positive impact of roads, educa-

tion and health on the rural productive sector, there is a need for a multi-sector approach to MDG

targets, in step with the progressive build up of national capacities.

Graph 2: Rural poverty and ODA to agriculture


2. The MDGs provide the long-term planning context for the mobilisation and allocation of domestic

and external resources to combat poverty. Poverty Reduction and National Development Strategies(PRS/NDS) are the agreed medium-term strategic frameworks linked to relevant budget processes

through which to pursue the MDG long-term targets. Issues of ownership, capacity, and incentives

persist at various levels. This all adds up to a daunting challenge for governments to set priorities

for public action to stimulate the rural productive sector as an essentially private sector domain.

B.Climate change and global markets: external shocks,internal responses

3. The global threats and external shocks relative to climate change and commodity markets call

for comprehensive local responses. The unprecedented range and pace of soaring food and

energy prices in 2007/2008 has created tension and calls for trade-offs: hard policy choices are

facing both donors and partner countries, in pursuit of food, energy and income security, withoutprejudice to environmental sustainability.

4. The changing patterns of consumption associated with improved living standards in large, fast

developing countries like China and India, together with a shift to biofuels production to mitigate

climate change in industrialised, food-exporting countries, have resulted in higher prices and

dwindling stocks, exacerbated by drought, floods and, more recently, speculative moves on com-

modities markets. Consequently, many governments in Africa and the Middle East, Asia and

Latin America and the Caribbean including those visited during this study have recently cut

taxes on food imports, banned cereal exports, and subsidised food items in anticipation of, or in

response to, food riots. Yet, most of these countries in particular the poorest cannot afford

such measures in the medium term.

5. The soaring prices of food, feed and fuel exacerbate tensions in policy dialogue, as developing

country governments struggle with issues of resource mobilisation, coordination capacity, social

inclusiveness and empowerment of the rural poor as agents of change. External partners them-

selves still need to confront their own domestic constituencies on policy issues related to the

removal of agricultural and biofuel subsidies. These subsidies distort markets and, in a way,10

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1990 1995 2000

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defeat some of the development objectives, including creation of income opportunities and

livelihood diversification for the rural poor, managing international migration and related risks,

promoting international growth and fair trade, and reducing inequalities. In terms of harmoni-

sation and alignment, the challenge for governments and donors alike will be to deal with

short-term responses providing emergency food assistance or inputs including seeds and fer-

tilisers for the next cropping season without prejudice to the need for coherence and sustain-

ability of proposed policy measures.

Graph 3: Climate change, agriculture and growth

Source: Mejia, 2008

6. External partners in poorer countries should encourage and support the kind of social protec-

tion measures that some of the larger developing countries (Brazil, Mexico, India) have been

implementing for a while, with encouraging results. Developing country governments and external

partners alike also acknowledge the need for medium- and longer-term measures to boost agri-

cultural productivity, while improving resilience to climate change and variability.

7. There is a strong case for turning the socio-economic crisis due to soaring food prices into an

opportunity to make agricultural development a driver for growth and poverty reduction. However,

there is no evidence from the field that higher food prices have systematically translated into higher

farm-gate prices and improved incomes for the rural poor. Similarly, some field assessment

missions including one in mid-2008 assessing the impact of food prices in IFAD project areas in

Cambodia have confirmed that the inflationary trends associated with soaring food prices may

also have a negative impact on the quality of service delivery.

8. Coordination efforts are underway at the country as well as at the global level, as shown by the

recent completion of the Comprehensive Framework for Action by the High-Level Task Force on the

Global Food Security Crisis chaired by the UN Secretary-General and bringing together UN agencies

and Bretton Woods Institutions. However, it will be of critical importance, for the sake of sustaina-bility, to place the medium- and longer-term responses to high food and fuel prices in the overall

context of country-led processes related to PRS/NDS. Governments and partners have come a long

way building up the potential of these as mutual accountability frameworks, with mixed results but

an overall trend of improvement, as long as stakeholders avoid the trap of over-planning and under-

implementing. 11P

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II. PART TW0

RURAL ASPECTS OF POVERTY REDUCTION AND NATIONALDEVELOPMENT STRATEGIES

A. Overview

9. While the overall trends in Poverty Reduction Strategies (PRSs) are promising, there remain

significant challenges for governments including:

integration of various planning and strategic frameworks;

striking a balance between internal and external accountabilities; and

allocating resources between social and productive sectors (World Bank/IMF, 2005;

Shepherd and Fritz, 2006).

Several studies (from the World Bank, IFAD, FAO, GTZ and ODI) have focused on the

treatment given to rural poverty and the rural economy in PRSs. These identified a series ofweaknesses and knowledge gaps regarding the PRS policy content and process.

10. With regards to the policy content of earlier PRS documents, the studies reveal:

Gaps and disconnects between poverty diagnostics and the prioritisation of public inter-

vention, target setting and resource allocation;

Public expenditure bias of policy interventions with less emphasis on enabling and regula-

tory measures;

Many early PRSPs were drawn on blank political canvas and the links between PRS and

other strategies which command stronger national ownership remain unclear; and

Poor understanding of linkages and trade-offs between poverty reduction and growth, with

a tendency, in many cases, to treat poverty reduction and growth as one and the same

thing (growth benefits will eventually trickle down to the poor). In other cases particu-larly under the first generation of PRSPs there was more emphasis on social sectors

than on growth.

11. With regards to the PRS policy process (the design, implementation, monitoring and evalua-

tion of PRSs), previous studies have shown:

Little engagement of rural stakeholders, especially the rural poor participation often

taking the form of consultation at the diagnosis stage;

Limited domestic ownership, particularly by the rural poor;

Weaknesses in assessments and diagnostics of rural poverty which tend to treat the poor

as a homogeneous group and say little about poverty dynamics and the context-specific

needs of the rural poor;

Weak links and consistency between PRSs and other policy instruments and frameworks,

in particular policy implementation instruments such as Medium-Term ExpenditureFrameworks (MTEF) and national budgets. This illustrates a missing link between policy,

planning and budgeting under the MTEFs;

Insufficient donor alignment and harmonisation around pro-poor policies in the rural pro-

ductive sectors due partly to the debate on paths to pro-poor growth in these sectors, but

also to the considerable challenges of coordination in sectors made up of a diversity of

very heterogeneous stakeholders; and

Controversial identification of the role of the state in the rural productive sectors charac-

terised by private economic agents (for example, through the establishment of an enabling

policy environment and addressing other market failure issues).

12. However, it is encouraging to see consistent improvement in the new generation of PRSs

characterised by more assertive country ownership, though significant challenges remain.When moving away from the classical PRSP blue print, it is a daunting task to turn a pro-poor

vision into action with targets and indicators, integrate decentralisation policies with national

and sector planning, and strike a balance between internal and external accountabilities.

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13. In Bolivia, experience gained from the earlier PRSP (EBRP in Spanish) showed that there is

no point in going for a comprehensive approach to poverty reduction when local priorities are

much more precise and concrete, and political regimes are highly unstable. Another thing to

avoid is inviting participation but excluding key issues from the agenda, and then rewriting the

results of the consultation to suit major donors. The new National Development Programme

(PND) is a home-grown framework (as opposed to a donor-driven PRS) with indigenous

people and the rural poor as the priority, against a backdrop of frustration about access to

assets and services. The Bolivian Government is attempting to coordinate donors around

thematic groups mesas de coordinacin even during times of social tension and political

confrontation.

14. While PND targets and indicators (for impact and process) are still undefined, one of the

many challenges is how to put into operation a community-based approach to rural (private)

enterprise development? How to ensure effective and sustainable delivery of rural services

(technical assistance, rural finance and market linkages) pending agreement on the role of

local governments municipios as a potential relay between central administration andlocal communities?

15. In Burkina Faso, the Strategic Framework to Combat Poverty (CSLP) is a second generation

PRS linked to general budget support. Sector thematic groups include agriculture and rural

development. There have been significant achievements in soil and water conservation, but

the challenge of scaling up needs to be addressed in a systematic manner.

16. In Cambodia, the National Strategic Development Plan (NSDP) is a country-owned (second

generation) planning framework guiding the allocation of domestic and external resources, in

light of what the authorities call a triangular strategy. The NSDP is a common reference for

efforts to establish thematic groups. But aid is fragmented and there is a risk of over-design

at the sector level, at the expense of synergies and operational bridges at the local level.Pragmatic solutions are worth exploring in the context of decentralisation policies (based on

an organic law) and a change of paradigm from an input/output orientation, to an outcome-

based allocation of resources to communities.

17. In Ethiopia, the country-led Plan for Accelerated and Sustained Development to End Poverty

(PASDEP) is characterised by the integration of a second generation PRS with the national

development plan in the form of an MDG-oriented strategic framework. After validation by the

national parliament and sub-national political institutions, the government shared this docu-

ment with other national actors and used it in negotiations with partners as a basis for

General Budget Support (GBS), subsequently re-named the Protection of Basic Services

(PBS).

18. PASDEP reflects a long-standing government priority to agriculture, and efforts to address astructural dependency on food aid. PASDEP priorities also illustrate the long-standing debate

on the function of agriculture in many developing countries, including the role of the state and

the scope for private-sector partnerships in promoting smallholder agriculture as an engine

for national growth and rural poverty reduction. One of the significant challenges facing

PASDEP like similar frameworks in other countries will be one of integration with sector

processes and decentralisation policies.

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Box 2: Mozambique: The challenge of balancing accountabilities

The available data suggest that the root-causes of PRS weakness lie in three main areas:

1. Lack of clarity over the proper place of PARPA in Mozambiques planning landscape. While there

are moves towards seeing PARPA as a planning instrument, the overall context tends to make the

process hostage to the immediate interests of those involved. The government and civil society

organisations want to document their commitment to poverty reduction and in this way secure

donor support. Donors, in turn, need immediate success to justify their commitment to Mozam-

bique before their own electorates, and the IFIs use the PRS as a way of buffeting the impact of

their macroeconomic prescriptions. These interests are not necessarily consistent with the long-

term goal of strengthening Mozambiques ability to tackle its social and economic problems. In

fact, they seem to be turning the PRS into a massive technical intervention that both stretches the

human resources of Mozambique to their limits, and at the same time, insulates poverty reduction

from domestic political discussion.

2. Inability to build into policy-making mechanisms that make implementation unavoidable. BothPARPA I, PARPA II and PROAGRI are technically very good documents. The same applies to many

sector plans. Yet, in Mozambiques current institutional environment, there appears to be little

incentive to implement the policies. Designing policies appears to have become an end in itself.

This appears to be the result of weak domestic accountability. Indeed, policy interventions seem to

be based on the belief that the services rendered by government reflect priorities established by

the government and not by the stakeholders concerned. This turns the latter into recipients of

services without any influence over policy formulation.

3. Lack of clarity over the relationship between poverty reduction and economic growth. Generally,

poverty is treated as a residual category to be taken care of by economic growth. In other words,

poverty reduction appears to be conceptualised as the goal of economic growth and there is little

recognition that it can also be a means of achieving that goal. The draft Rural DevelopmentStrategy has made significant moves towards this recognition by placing changes in patterns of

accumulation in favour of rural growth, at the heart of Mozambiques overall development efforts.

In order to address these weaknesses, a range of requirements need to be met which concern

Mozambique in particular, but are also relevant to the general thinking about PRSs, especially as far

as rural development is concerned. The requirements concerning Mozambique are as follows:

1. A stronger integration of PARPA with general planning tools in the country. The challenge is to

ensure that poverty reduction is not residual to what different sectors do, but part and parcel of

their work. An important step in this direction could be the strengthening of the Technical

Secretariat for PARPA in the Ministry of Planning and Development to enable it to centrally collect

and collate dispersed information on poverty alleviation activities.

2. A clear focus on rural development. The challenge is not to reduce rural poverty, but to trans-

form the rural economy in a way that turns it into the pivot of major structural changes in the

Mozambican economy as plausibly argued for in the draft Rural Development Strategy. An essen-

tial condition to meet this requirement may be a stronger commitment to decentralisation which

should actually devolve policy formulation to the local level.

3. A greater integration of parliament in decision making over PARPA. The challenge is to ensure

that poverty-reducing measures are the result of domestic political debate, and not arrangements

between government and donors with the inclusion of civil society representatives.

4. The empowerment of rural communities and individuals to ensure that they are in a position to

make effective demands on the political system. This is perhaps the major challenge facing PRSin Mozambique. Domestic demand for accountability and performance is the main test of the

soundness of technical interventions.

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19. In Mozambique, the PRS rural focus study confirms that poverty-reduction initiatives are

enjoying a very special momentum, in the context of the Action Plan for the Reduction of

Absolute Poverty (PARPA). Both the government and civil society organisations have put a lot

of effort and commitment into poverty-related work. Likewise, the country has taken signifi-

cant strides towards pursuing agricultural policies likely to have an impact on the livelihood

of rural communities. Further initiatives towards helping Mozambique respond to the chal-

lenge of poverty reduction and agricultural development that benefit the poor depend on

technical support to enhance planning, implementation and M&E capacity. The promotion of

internal demand for performance and accountability of state institutions can also contribute

here (see Box 2).

B. Understanding rural poverty

20. Depending on the context, the diagnosis of the problem will be different (see for example Box 3),

and given complex rural systems, the analysis of problems and their causes will leave roomfor differences and disputes. In the case of Africa, there are different views on the key prob-

lems faced, including lack of appropriate technology, too little demand at the farm gate for

farm produce, failures of government policy that discourage private investment and initiative,

and failures in markets that discourage investment.

21. Others argue that problems with international trade (including agricultural subsidies in

industrial countries) and environmental degradation are the main problems in rural Africa. In

particular, there are strong disagreements over markets. Some see the market as a device

that allows all, including the poor, to progress even if there are some market failures that

require (modest) state action. Others see markets as delivering riches for the rich, poverty for

the poor, so flawed that they require considerable state action to control or be replaced.

Box 3: Poverty traps in Ethiopia

The interaction of poverty and population pressure with the productive resource base is a

crucial mechanism that has perpetuated poverty in Ethiopia. Unprecedented population pres-

sure has resulted in decreasing plot size (average land holdings declined from 0.5 hectares per

person in the 1960s to 0.11 in 1999), making an increasing number of households dependent on

inadequately small and unproductive plots, more vulnerable to the vagaries of unpredictable

rainfall, and rendering some traditional farming practices unsustainable. These households are

too poor to leave land fallow or invest in it, leading to a progressive deterioration of their asset

base. In the past, moving onto new land absorbed additional population growth, but in many

areas, the limits of useable land have been reached, forcing farmers onto fragile lands with

lower productivity.

Poverty and low investment in human capital present another type of self-perpetuating

dynamic. Investing in education may be prohibitive for poor households, due both the direct

costs, as well as the fact that all members need to contribute to the family income, including

time-consuming tasks such as collecting water and firewood. Even if returns to education are

high, the inability to finance that initial investment means that there is under-investment.

Without significant increases in productivity, it is difficult to accumulate capital, so returns to

unskilled labour are unlikely to grow. Poverty and low education, therefore, reproduce them-

selves in future generations. (continued on the next page)

Source: Johnsen et al, 2007

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Box 3: Poverty traps in Ethiopia (ctd.)

Low levels of infrastructure resulting in underdeveloped markets, high transaction costs and

coordination failures offer another example of perverse dynamics. The benefits of exchanges

cannot be realised and the economy remains trapped in a largely subsistence-oriented structure.

Without basic economic infrastructure, returns to private investment may be too low to spur

dynamic growth, while the large, lumpy nature of infrastructure costs makes it hard to make the

initial investment to break out of this trap. In the rugged and difficult geography of Ethiopia, many

remote areas see their potential for dynamic private sector growth and diversification out of agri-

culture hindered by the lack of basic infrastructure.

The low-risk/low return trap. Small farmers, who constitute the bulk of the population, are often

trapped in the production of low-risk/low-return food grains. With insufficient cash funds, and

unpredictable outcomes, they cannot afford to risk diversifying from subsistence food production

into potentially higher-return activities (such as cash crops). Neither dare they spend their limited

cash on purchased agricultural inputs, because if they fail either because of crop failure, pricecollapse, or failure of demand they will have neither the basic food they would otherwise have

produced, nor the cash to purchase it, so their families will go hungry.

The early-childhood trap. Nutrition offers a similar story, with malnutrition very early in life

affecting long-term mental and physical development, so limiting lifetime potential and pro-

ductivity, and creating a low-income, low-consumption household in the next generation.


22. Available evidence in Bolivia is that country-led processes did not lack the ability to diagnose the

countrys problems. On the contrary, there is a coherent analysis of what has gone wrong in the

country and what needs to be done. Of course, not everyone will agree that the remedy for povertyis greater state control of the economy, the promotion of collective enterprise in villages, and an

apparent marginalisation of private enterprise. But that is a political judgment about the desira-

bility of certain economic configurations. There is major concern about feasibility: it is just not

possible to construct an economy without private enterprise, and private investment and initiative

will not flourish without some public support and encouragement.

23. Experience across the world suggests that when governments marginalise private enterprise,

investors are likely to look elsewhere to invest. Bolivias challenge according to observers is

that central government would like to be much more active, but it has limited capacity to do so.

Because of political differences, some parts of government may not accept that departmental and

municipal governments have capacity that needs to be put to work. They may be even less

inclined to accept that NGOs and private enterprise are key actors to work with.

C. Role of the state and the challenge of accountability

24. The role that the state (by default or deliberate choice) is influenced by the combined effects of

various factors including but not limited to historic legacies and the development vision, domestic

power relationships and external aid dependency. Box 2 provides an interesting illustration of account-

ability mechanisms in Mozambique which may affect the scope and pace of the PRS rural focus.

25. It is one thing to make a policy decision on what the state should do, but another to devise effective

programmes that respect the capacity and political will of the state to do it. Some things are not

easy to do such as offering technical assistance that is responsive to farmers demands across a

country where their demands vary between regions and between particular categories of farmers.From this perspective, a 2006 OECD/DAC publication on pro-poor growth and agriculture provides

an interesting distinction between five rural worlds which facilitate a more refined approach to

targeted interventions. Finding solutions to market failures in supply chains that harness the ener-

gies of farmers, traders and processors is a lot harder than running a state corporation that

replaces the traders and processors (Omamo, 2003).

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26. The political economy of subsidies and rents is also an important factor. There are hardly any

limits within the available budget to what the state can do to help farmers by subsidising

inputs, buying up produce at above-market prices, and protecting domestic markets against

competing imports. These are all highly visible ways of helping farmers and gaining political

support. Its difficult to avoid the temptation of offering such support. Arguing against support

to farmers seems irrational and mean: the concept of the opportunity cost of the resources

involved is hard to get into political debates.

27. Substantial budget allocation is not necessarily good for the rural poor. Agricultural subsidies

or other measures to boost agricultural production do not necessarily translate to pro-poor

investments in public goods, as shown by policies in India (see Graph 4) and Nigeria.

Graph 4: Subsidies and public investments in India

Source: World Bank 2007

28. Likewise, promotion of agricultural exports through incentives for the private sector does not

necessarily result in poverty reduction, as seen in Latin America (see Graph 5).

Graph 5: Rural poverty and agricultural production in Latin America and the Caribbean

(1990 to 2005)

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Public expenditures in India

7

6

5

4

3

2

1

01975 -79 1980-84 1985-89 1990-94 1995-99 2000-02

subsidies

Public Investment

120

115

105

100

95

90

85

80

75

70

70

65

60

55

50

45

40

35

301990 1994 1997 1999 2000 2001 2002 2003 2004 2005

Rural PovertyExtreme Rural PovertyAgricultural Production

Percent

%o

fag.

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D. Giving a voice to the rural poor

29. True representation is key for rural organisations. This in turn depends on:

Organisational function, such as advocacy for voice, assets and access, improved service

delivery for production, rural finance, market access, common property resources man-

agement;

Incentives for membership, such as commercial gain or political leverage; and

Transparency, integrity and accessibility of the organisations management team towards

its members.

30. Sustained support to farmer organisations is a contribution to both democratic processes and

poverty reduction efforts. For the sake of country ownership and long-term sustainability,

more and more governments and development partners find virtue in promoting stakeholder

buy-in to proposed reforms (see Box 4, Box 5, Box 6), instead of external conditionality which

governments are willing to observe only as long as there is external funding behind it.

31. The role of representative rural organisations as a conduit for reaching out to the grassroots

may also appeal to private sector agents acting out of corporate social responsibility or

enlightened commercial interest.

32. Bolivias experience shows that devolution to municipalities can be an excellent way of re-

viving popular engagement with politics in a situation where most people are disillusioned

with central government. It also demonstrates how effectively local government can deal with

some services and investments. Giving local governments a share of the national revenue to

use as they see fit for local purposes makes a lot of sense. But such actions are unlikely to

drive national outcomes. Central management of the macro-economy, reasonably consistent

policies, institutional development, and investment in public goods such as roads, health and

education require an effective central government.

33. Participation is clearly desirable, but the record shows countries China, Vietnam, Indonesia

doing much to reduce rural poverty without significant participation by the rural poor, or

indeed by ordinary rural citizens. Mexicos much admired Oportunidades is seen in some

quarters as a top-down programme designed and implemented by elites. In Africa, Ghana is

said to have had some success in reducing rural poverty in recent times: but how much of

that that been through popular participation? More controversially, how much local participa-

tion went into Zimbabwes land reform? Some critics suggest many examples of empowering

the rural poor are the results of the actions of enlightened elites in national government,

NGOs, donors, and sometimes also, private enterprise.

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Box 4: Ethiopia eliciting peoples views on poverty and services

The Citizens Report Card (CRC) is a simple but powerful tool to elicit systematic feedback from users of

public services on aspects of service quality, which enables public agencies to identify the strengths and

weaknesses of their work. The NGO Poverty Action Network of Ethiopia (PANE) conducted a citizen

report card survey in 2004/05 to investigate the level of public services under the SDPRP in four sectors:

health, education, water and sanitation, and agriculture. They surveyed 3228 households in Tigray,

Oromiya, Southern Nations Nationalities and Peoples Region (SNNPR) and Dire Dawa. The findings

generally reinforce the messages emerging from the Welfare Monitoring Surveys, and provide some

interesting insights for service providers.

Drinking Water: Three-quarters of rural respondents depend on non-potable water sources for drink-

ing and domestic purposes. About half of rural respondents reported scarcity. Natural sources need to

be improved, since they provide for many people during times of scarcity. About 70% of those using

rivers expressed concern about pollution. People feel levels of water supply have improved over the last

two years but lack of access to protected water sources remains a key concern for the majority of

Ethiopians. There is wide regional disparity in the provision of water sources.

Implications for the PASDEP: Efforts to increase water supply in the PASDEP are urgent. Give this

sector high priority in the event of limited funding. Target the regions with the lowest water supply.

Health and Sanitation: In rural Ethiopia, malaria was reported as the most common illness. Access to

medical treatment is a major issue for rural communities. This was most acute in Tigray where 45.5%

of patients had to travel more than 10 km to reach a medical facility. The cost of getting treatment was

considered high in government facilities and the cost of medicines varied widely between the regions.

Very few respondents reported getting contraception advice from government facilities. Less than a

third of people in rural areas reported using a toilet, with custom being the major reason.

Implications for the PASDEP: Place emphasis on malaria. Aim to achieve universal primary health care

coverage. Intensify delivery of contraceptive services. Review the cost of medical treatment and drugs.

Promote increased use of latrines through health extension packages.Education: Most childrens schools are within 3 km of their residences. However, in Tigray a third of

children travel more than 5 km to school. There is an acute shortage of drinking water in schools, with

less than a third of pupils in rural areas being able to access it. The cost of education varies widely

across the regions. Standards and norms need to be established. Community involvement in schools is

high but more through informal than formal means; and parents said they were highly satisfied with the

behaviour of teachers but less so with the standard of buildings.

Implications for the PASDEP: Give attention to school construction and facilities. Recognise the com-

munities involvement in schools. Establish minimum standards of schooling. Review the costs across

different regions.

Agriculture: Government agencies are the main source of information on agriculture for communities.

Most support received by farmers is on crop production. Support provided for marketing agricultural

products and for providing inputs like seed was quite weak. Most farmers reported that extensionagents were available but often they were not accessible. Only 56% of farmers found extension services

adequate. Despite the fact that people felt extension services had improved, satisfaction was low with

less than a quarter of respondents being completely satisfied. Only 26% of farmers accessed credit.

Most farmers used direct marketing, with only 37.5% getting a fair price. More than 50% of farmers

reported the loss of cattle or crops.

Implications for the PASDEP: Emphasise marketing and extension as vital components of agriculture

policy to ensure farmers have access to increased knowledge and a fair price for their goods. Assess

extension services to ensure they are accessible for farmers and respond adequately to needs. Develop

monitoring systems to ensure the quality of extension services. Insurance schemes may also help

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Box 5: Poverty Reduction Strategy Papers a participatory breakthrough?

A 2006 study looked at the situation in four countries: Malawi, Zambia, Uganda and Tanzania. The

paper describes various aspects of the PRSP process its antecedents, formulation (from 1999),

implementation and reformulation (from 2004). The focus is on the participation of non-state

actors, in particular rural producer organisations (RPOs). The depth, scope and level of their par-

ticipation in the PRSP process is assessed and compared.

Malawian rural producer organisations have reason to be very satisfied. The Zambian and

Ugandan RPOs have reason to be quite satisfied. The Tanzanian RPOs are very dissatisfied with

their participation in the PRSP process.

In terms of good experience, the government in Malawi was generally open to non-state partici-

pation. Civil society in Zambia was able to mobilise itself and tap into the policy dialogue during

early formulation as well as final policy evaluation. Uganda had a participatory set up for monitor-

ing policy implementation.

However, there was no in-depth participation by members of any of the rural producer organisa-

tions in any country, and civic participation did not reach the level of real joint decision-making.

Furthermore, there are no signs that the PRSP has contributed to reducing poverty in the coun-

tries studied. Nevertheless, national RPOs report that the PRSP has made governance and policy

making more democratic and participatory. The few sub-national RPOs consulted in the Tanzania

study did not share this view.

From this study, three new issues for follow-up action and research emerge:

(1) Rural poverty: Has poverty declined since 1999/2000? As concluded earlier, there is no evi-

dence in any of the four countries that that there has been any substantial reduction in poverty

with the coming of PRSP. In particular, we need to establish the changes in the level of poverty inthe rural population.

(2) Governance: Have new paths towards more participatory governance and policy-making been

laid? If so, what lessons can be drawn for RPOs in other countries?

(3) The linkage: Have changes in governance, if any, had any impact on policy implementation and

the level of poverty?

Source: Braathen, 2006

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Box 6: The dimensions of participation: framing questions

The agreed list of criteria for satisfactory participation is centred on the three main dimensions of

participation: depth, scope and level of participation (Fung and Wright, 2003). The sub-dimensions

are explored by the following questions:

Depth of participation: Who is involved and who influences policy formulation? To what extent

were marginalised or disadvantaged groups within the rural producer organisations (RPOs)

included in the PRSP processes through the current arrangements for civil society participation?

Did the process include any in-depth studies or group work? What measures did the RPOs them-

selves take to deepen participation?

Scope of participation: What is the type of involvement of rural stakeholders (including state

agencies, NGOs and the private sector corporate, smallholders, rural micro-enterprises, etc.) in

PRS processes? What is the range of social and economic issues and services that RPO represen-

tatives dealt with in the participatory process? Did they participate solely in agricultural issues, ordid they also deal with general policies (macroeconomics), crosscutting issues (such as HIV/AIDS

and gender concerns) or other sector-specific policies (microeconomics). Was there any expan-

sion during the process, and was this due to initiatives taken by the RPOs?

Level of participation: What factors determine the degree of participation capacity, location,

vision or interests? How could the participation process be institutionalised by defining the roles

and responsibilities of each actor? How could the voices of the poor be better reflected in the poli-

cy debate and policy making? How could rural stakeholders participate in the PRS policy formula-

tion and implementation process?

McGee and Norton (2000) suggest that a ladder of participation could be used as a tool to evalu-

ate PRSP processes. The ladder consists of four steps: i) information sharing; ii) consultation; iii)joint decision-making; and iv) initiation and control by stakeholders. At what level in the decision-

making process was RPO participation included? Was RPO participation limited to consultation or

comments given on an individual basis, or did RPOs take part in deliberations and as such influ-

ence proposals through work groups and committees? To what extent did RPOs participate up to

the authoritative decision-making level (veto rights in the adoption of the final paper)? On which

issues (see scope)? Did/do RPOs participate in the follow-up process and implementation of the

Poverty Reduction Strategy, through institutionalised consultation or participatory monitoring?

Have there been advancements or set-backs during the process?

If little or no satisfactory participation was found, the research should attempt to establish an

explanation or a set of reasons for why there was a lack of participation. Was it due to internal

factors the capacity or information/access to information, and/or general organisational weak-

ness? Or was it due to external factors, which we could categorise as politics of participation decisions by designers and managers of the PRSP, or priorities of participation made within the

larger social structure of civil society itself?

Source: Braathen, 2006; Shepherd and Fritz, 2006

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E. PRS monitoring

34. A comprehensive review of PRS monitoring in 12 countries (Bedi et al., 2006) proposes a

helpful paradigm revolving around two concentric circles: an inner circle of activities that

take place largely inside the public administration and that ensure the production of data on

asset of priority PRS indicators and an outer circle of connections between the monitoring

system and key points in the policy-making cycle and the democratic process. In light of this

review, recommendations are made for an incremental approach, gradually building on exist-

ing elements, clearly defining relationships, incentives and activities, identifying decision-

making processes including budget processes, tailoring outputs to client needs, and allowing

for improvements based on experience.

35. While such a common sense approach is most welcome, the rural productive sector presents

a major complication in terms of design and transaction costs due the multiplicity of private

actors as main protagonists outside the sphere of public administration. This is com-

pounded by a deep legacy of urban bias, leaving the rural poor out of what should be partici-patory PRS monitoring and learning loops that link national and sector strategies and related

resource allocation and implementation processes. Box 12 (Aligning sector programmes with

PRS) and Box 15 (M&E aspects of PRS implementation at sector and local levels) illustrate

this challenge.

36. It appears from PRS rural focus case studies and from current experience elsewhere that a

considerable amount of time has been devoted to planning and setting up systems and proce-

dures, rather than to expediting actual implementation on the ground and early tracking of

results. Monitoring systems are overly sophisticated or have deficiencies in terms of feedback

and learning loops between national or sector policy processes and local livelihoods strategies.

37. Part of the problem may be that there are no well-accepted indicators to track rural welfare.There is a lack of outcome-based rather than input- or activity-oriented approaches to

resource allocation from central to sub-national government levels, linked to demand-driven

service delivery mechanisms. However, given the many uncertainties about the links between

inputs, outputs, effects and impact, it is hard to push for results-based budgeting in agricul-

ture.

38. In Cambodia, the adoption of customised systems for routine country-level monitoring of the

Paris Declaration on Aid Effectiveness now makes it possible to identify donor preferences,

potential for partnerships and issues for early follow up (Royal Government of Cambodia,

2007). Learning from this example and internalising rural benchmarks and indicators in

PRS/NDS monitoring could add significant value to customised country monitoring systems.

F. The challenge of integration: Tensions and trade-offs

39. Different country approaches provide interesting illustrations of the challenge to governments

of integrating various planning frameworks (MDG investment plans, national development

plans and PRSs) at the national level and between national and sector levels (agriculture and

rural development). In some countries (such as Bolivia), a home-grown national development

strategy or plan has superseded the older PRS process. Other countries (such as Ethiopia

and Burkina Faso) have also shown significant movement away from the previous generation

of PRS although with a less dramatic departure to generate a document that combines

the requirements of classical PRS, national planning documents as well as MDG planning

frameworks. The introduction of decentralisation policies has complicated these integrationprocesses even more and, when the learning curve is too steep, serious tensions may arise in

terms of ownership and sustainability.

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G. Asserting partners commitment

40. Donors are also increasingly receptive to the message that governments need space and time

(see Box 2 on Mozambique) to perform balancing acts between internal and external account-

abilities as highlighted in the WB/IMF 2005 review of PRS implementation. The Bretton Woods

Institutions (BWIs) and OECD countries have deployed significant coordination efforts to

respond to the Paris Declaration in the context of Joint Assistance Strategies and pro-

gramme-based or sector-wide approaches. Arrangements have been made for delegated

cooperation and/or empowerment of lead agencies to promote country-level dialogue with

national stakeholders on thematic issues of common interest.

41. A new model of engagement of the UN system in country-led processes is also under con-

sideration by the UN Development Group, involving a change in culture and perceptions. This

also confirms the potential for the UN system to re-position itself in the context of the new

aid architecture, including support for improved agricultural performance as a condition for

achieving the MDG targets on poverty and hunger.

42. The BWIs previously perceived as unduly driving or influencing the PRS processes will

now receive PRSs just for the information of their Boards rather than for formal approval as a

precondition for assistance. Joint Staff Assessments are changing into Joint Advisory Notes to

allow for candid progress reviews by WB/IMF staff.

43. The World Bank has adopted an operational policy which encourages poverty and social

impact analysis (PSIA) or its equivalent, as a basis for its prospective support to policy

reforms that may have distributional impact. As part of an initiative by a group of partners

including the WB, GTZ, DFID and many others to promote PSIA, two significant learning

events were hosted by IFAD in 2004 and 2006 and attended by the BWIs, UN, OECD/DAC and

bilateral donors, to take stock of progress in PSIA and agriculture policy in PRSP countries.The issue of integration was also discussed. However, continuing efforts are needed to inter-

nalise ex-ante and ex-post policy impact assessments in what government and partners do,

and to harmonise approaches and make them more participatory.

44. A 2008 UNDG study on the role of UN country teams in the PRS process noted that the MDG

process, the Paris Declaration and the One UN reform enable the UN to play a critical role at

country level and in the international policy arena. This scenario is contrasted with the cur-

rent situation, the mixed feelings in some quarters about the PRS process is noted, and the

new imperative for the UN to engage in a more proactive and systematic manner in PRS and

related country-led processes is stressed.

45. Bilateral donors have shown increasing interest in the Paris Declaration and have made sig-

nificant efforts to comply with its principles and more recently in the Accra Agenda forAction, albeit with mixed results at country level. As the PRS provides a basis for donor busi-

ness planning, the pressure to move forward with country strategies and funding targets may

in some cases send wrong signals from both bilateral and multilateral agencies to some gov-

ernments about the resource = results equation.

46. At country level, the anxiety of both departments of finance and their donor counterparts to

expedite PRS adoption and implementation may, in some cases, have jeopardised the quality

of the process of synchronising development planning and budgeting. The integration of plan-

ning frameworks at national and sector levels with decentralisation policies may also have

been adversely affected (see Box 2 on Mozambiques experience).

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H. Aligning resources with priorities: Ownership, incentives and capacity

47. Making the budget process more responsive to agreed priorities is more easily said than

done, the final decision being dictated by considerations of political economy. Political

announcements at the regional level (Maputo and Sirte Declarations) or the global level

(Rome Declaration) have provided encouraging signals of the level of government concern

about agriculture. However, these declarations may not have been enough to trigger in-

creased budget allocations (see Graph 6 and Box 7) and actual decisions (tax cuts and subsi-

dies) of the kind that recent rises in food, feed and fuel prices have triggered.

48. African governments follow up to the Maputo Declaration allocating 10% of the national

budget to agriculture shows a mixed picture, illustrating issues of ownership, incentives and

capacity. Targets are yet to be achieved (see table below). Observations of budget processes at

the individual country level and the national choice of priorities (Senegal, for instance, allo-

cates 40% of its budget to education) show that the combined effect of the long-term govern-

ment view of economic development and short-term internal political imperatives will prevailover non-binding external commitments.

Proportion of countries complying with the 10% Maputo Declaration

2002 2003 2004 2005 2006 2007

Compliance Cluster Percentage

< 5% 53.33 61.29 59.38 60.00 58.62 57.14

5% 10% 33.33 25.81 21.88 16.67 20.69 23.81

> 10% 13.33 12.90 18.75 23.33 20.69 19.05

Graph 6: Budget allocation to agriculture and contribution of agriculture to GDP in Africa

(2002 2004 average)

50

45

40

35

3025

20

15

10

5

Allocation to agricultreContribution of agricultre to GDP

Ben

in

Burun

di

Cameroon

Cha

d

Ethiop

ia

Ga

bon

Gam

bia

Kenya

Maur

itius

Mozam

bique

Niger

Senega

l

Simba

bwe

Su

dan

Swaz

ilan

d

Tanzan

ia

Tun

isia

Ugan

da

Zimba

bwe

Percent


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Box 7: Budget allocation and actual expenditures in Africa

Graph 6 shows that the contribution of agriculture to national GDP in Africa is much higher than

the share of the government budget allocated to agriculture. The average budget allocation to agri-

culture for the 19 countries studied over the 2002 2004 period was 5% whereas the average con-

tribution of agriculture to the GDP for these countries over the same period was 29%. These

figures show a large shortfall in allocations to a sector that contributes so much to the national

GDP. The literature shows that compared to developed countries, agricultural spending as a per-

centage of agricultural GDP is extremely low in developing countries. In developed countries, it is

usually more than 20%, while in developing countries it averages less than 10%. Agriculture is the

largest sector in many developing countries in terms of its share of GDP and employment. More

importantly, the worlds poor live in rural areas and depend on agriculture for their livelihoods.

Therefore, agricultural expenditure is one of the most important government instruments for pro-

moting economic growth and alleviating poverty in rural areas and countries.

Source: UNECA

49. A further complication is the fact that about only half of the originally allocated budget to

agriculture is actually spent, hence the decision to base the tracking system on actual expen-

ditures rather than earmarked budgets.

50. Linking PRS with the budget raises issues of ownership, capacity and incentives as illustrated

by a 2007 World Bank series of case studies (see Box 8) including Burkina Faso which

concludes that while both the PRS and budget offer scope for enhanced domestic accounta-

bility, fractures in planning and budgeting systems pose obstacles for donors and national

governments. The following challenges emerge from the WB case study countries: the priori-

tisation of plans and coordination between planning and budgeting units; the creation of

incentives to formulate realistic budgets and execute them as planned; the expansion ofownership of the PRSP at the sector level; the development of a multi-annual perspective in

strategic resource allocation; and the integration of reporting mechanisms (World Bank,

2008).

51. According to the World Banks 2007 study, there is a typical pattern of asymmetrical owner-

ship which, if applied to the rural sector, would mean that rural stakeholders have, at best,

an opportunity to participate in the PRS and sector strategy process whereas delibera-

tions and decisions on the budget are left to the government and parliament.

52. Ethiopia and Mozambique (which are part of the PRS rural focus study but are not included in

the World Banks 2007 study) offer two interesting illustrations of asymmetric ownership. In

Ethiopia, the PASDEP which simultaneously represents the PRS, the MDG investment plan

and the national development plan has been subject to an intensive two-week debatebetween relevant government departments and parliament, which was preceded by a series

of stakeholder consultations at national and local levels (see also Box 4). In contrast, the

Mozambique PARPA review points to a relatively limited involvement of parliament and

suggests, as a corrective measure, that a stronger commitment to the decentralisation

process may provide an opportunity for debate with rural stakeholders and local government

(see also Box 2).

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Box 8: Linking PRS with the budget

Four lessons, in particular, can be gleaned from the positive and negative experiences of country

case studies (comprising a sample of nine low-income countries Albania, Burkina Faso,

Madagascar, Malawi, Mali, Mozambique, Rwanda, Tanzania and Uganda and four higher-income

countries that are internationally considered to be successful reformers in public financial

management and service delivery Australia, Chile, Republic of Korea and South Africa.

Lesson 1: Focus on strengthening and harmonising existing processes and adopt a gradual

approach to reform. The enhancement of the policy-making function of the budget in line with PRS

priorities often requires a flexible approach to PRS design, building on existing processes and tai-

loring interventions to the local context and realities. An increased focus on results requires not

only technical capacity but also a change in culture and thinking. Experience in the case-study

countries shows that successful budget reform processes tend to start simply, evolve gradually,

and be framed within an integrated approach to public financial management reform.

Lesson 2: Build support from within, through high-level ownership of policies, a challenge

function within the executive and clear sector roles. Intra-governmental accountabilities, starting

at the political (cabinet) level, can be a powerful tool in promoting reform and have so far not achie-

ved sufficient attention. Initiatives that may help to catalyse the improvement of core policy proces-

ses and internal accountability include:

Introducing or reforming cabinet committee structures, to strengthen high-level political owner-

ship and a challenge function within the executive.

IStarting with the budget. Successful reform efforts have focused on core policy processes, and

on turning budgets into more policy-oriented tools, rather than starting from long-term plans

and turning them into annual budgets.

IIntroducing a strategic phase in the budget process to ensure that there is a stage, before the

preparation of detailed operational budgets

Sharpening the Rural Focus of Poverty Reduction Strategies

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