STRENGTHENING NATIONAL COMPREHENSIVE AGRICULTURAL PUBLIC EXPENDITURE IN SUB-SAHARAN

AFRICA

Agricultural Public Expenditure Training WorkshopAccra, Ghana

(April 13 -14, 2011)

MODULE 1: OVERVIEW

“Minding the Gap”: Ag. Public Expenditure Analysis requires an integrated approach and

tools + effective implementation + strong teamwork (at various levels & stages) = coherent agr.

policy-PE allocation linkages, enhanced quality and sustainable impacts

“Without” Key Elements “With” Key Elements

2

CONTENTSI) PURPOSE & COMPONENTS OF

WORKSHOP

I) BACKGROUND

III) PROGRAMME OVERVIEW: AG. PERs in SSA

IV) AG. PERs: TYPES & KEY CONCEPTS

V) ROADMAP/PHASES OF AG. PERs

3

I) PURPOSE AND COMPONENTS OF TRAINING WORKSHOP

• To provide an overview and orientation of the template TORs (4) and of the main tools available for Ag. PER analyses, to be targeted to key persons who will be involved in overseeing the carrying out (by consultants) of the Ag. PER country level studies in SSA

• Training is comprised of 3 modules, over 8 sessions

1: Overview: SSA Context, Strengthening Ag. PER in SSA Programme (Annex 1.1) & Ag. PER Toolkit (A1.2)

2: Basic Agricultural Public Expenditure Review (focused on diagnostic aspects and tools, in two sessions)

3: Specialized Studies: Expenditure Component Impact Evaluation; PETs;MediumTerm Expenditure Framework

II) BACKGROUND: Importance of Ag. PE • Agricultural spending is one of the most important

instruments in promoting ag. growth (see Graph)• Low and misallocated ag. public expenditures (PE) are

key factors in variable and weak SSA agricultural performance in growth and broad income generation, & not meeting MDG 1; ag has low share of tot. exp.

• Maputo Declaration (2003) set a target of 10% of total public expenditures for ag. , reaffirmed at AU Summit (2009); most countries lagging.

• NEPAD has: a mandate to monitor & accelerate SSA growth and to meet the 10% target, with emphasis on enhanced quality; launched CAADP as a commonly agreed SSA- and country-driven framework.

• Slides that follow show trends

Agricultural GDP growth

Page 6

2002: Only 9 countries achieved 6% or more annual ag. growth6% CAADP target

2008: At least 20 countries achieved 6% or more annual ag. growth

6% CAADP target

Source: WDI

Changes in poverty% population in households below $1.25/day

Source: PovCal database

How have governments allocated their total spending?

The share of spending on agriculture in SSA increased since 2000 but remains at the 1980

level and below 10%.

Since 1980, the share of spending on health, education and agriculture in SSA has increased slightly while spending on

defense has declined.

Sources: Calculated using data from International Monetary Fund's Government Finance Statistics

Required Ag Spending in Africa for Achieving MDG1

Source: S. Fan (IFPRI, 2009)

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0Actual Expenditure on Agriculture in 2004, billion USD

Annualized Ag Spending Required, billion USD (2008-2015)

Spending not adequate for achieving development goals

• Progress towards 10% budget allocation of the Maputo Declaration

Only 8 countries

have met the 10% target

(Omilola, et al.)

II) BACKGROUND: African and Donor Initiatives

• CAADP approach includes supporting four pillars, country-driven compacts, and country investment plans (CIP) to facilitate generating & financing sound multi-year country investment plans (CIPs)

• NEPAD implemented an Ag. Expenditure Tracking System (AETS) to facilitate meeting 10% Ag. PE target, together with enhanced results (A1.3/CAADP guidance note and A1.4/status note)

• Donor agencies are re-focusing on supporting the agricultural sector in SSA, and increasing funding of Ag.& PEs through supporting the CAADP approach/CIP (e.g. Multi-Donor TF)

II) BACKGROUND: Strategic Priorities

• Prioritizing and enhancing quality of agricultural investments are vital:

– Simply increasing resources is not enough – spending must also be efficient, well-targeted and supplemented by investments in non-agricultural sectors

– Pro-poor investment priority areas include (based on results of empirical analyses):

• Staples and livestock subsectors have large domestic demand and share of value addition

• Irrigation: During the Green Revolution, Asia irrigated an average of 30-50% of total arable land. Today, Africa irrigates only 3-4%

• Rural Infrastructure has high poverty reduction effects per unit of investment and links farmers to inputs and markets

• Africa’s current road density is low at 26 km per 1000 km2

• Agricultural research and development (R&D): every 1% increase in yields from agricultural R&D can lift 2 million Africans out of poverty

II) BACKGROUND: Scaling-Up Ag. Public Expenditures

• Scaled-up funding for Ag PEs also includes increased programmatic support, in line with the harmonization and alignment strategy of the Paris Declaration and Global Donor Platform for Rur. Devt. (GDPRD) (A1.5)

• It is desirable to carry out expanded and sound Ag PE analysis to sharpen the focus and quality of scaled-up Ag Public Expenditures, especially while relying more on enhanced government processes

• Strengthened and scaled-up Ag PE analysis in SSA is funded by Gates Foundation and CAADP multi-donor trust fund (MDTF)

Some Conclusions on Ag Expenditures in SSA

• Compared to other regions, spending on agriculture as a share of total spending and as a share of agricultural GDP is lowest in Africa

• Spending levels have increased in many countries, but governments will need to continue this trend to fulfill CAADP and Maputo commitments and achieve poverty reduction

• Investments to agricultural R&D are particularly low in Africa, and given their high returns, they could have huge positive impacts, if scaled up

• Complementary investments in rural infrastructure are also crucial

III) PROGRAM OVERVIEW: STRENGTHENING NATIONAL AG. PUBLIC

EXPENDITURES IN SSA

A) Overall Objective: To support analyses of public expenditure priorities and impacts which would provide evidentiary bases for increasing AgPE levels and improving the impact of scarce public resources on agricultural sector development.

PROGRAM OVERVIEW: (B) FOUR COMPONENTS

• Basic Agricultural Public Expenditure Reviews:

diagnostic reviews, undertaken in a dozen or more countries.

• Specialized Country Agricultural Public Expenditure Analyses

(after completing a basic diagnostic AgPE):

– Expenditure Component Impact Evaluation;

– Public Expenditure Tracking Surveys (PETs);

– Medium-Term Expenditure Framework (MTEF) for Ministries of Agriculture.

• Agricultural Public Expenditure Outcomes Links Analysis:

country and cross- country studies to improve understanding of the impacts of public agriculture expenditure levels and composition on sector growth and welfare outcomes.

• Workshops to focus on training, cross-study and -country learning.

PROGRAM OVERVIEW:(C) TEMPLATE TORs

• Template TOR have been prepared for the Basic AgPERs and Specialized Country AgPE analyses (Annexes 2.1, 3.1, 4.1,5.1)

• Purpose of Templates:– Provide a clear framework which defines scope, methodology, data

aspects and processes to be adopted for each country study– Allows flexibility for task to be tailored to specific context and needs, data

availability and analytical capacities • Basis for TORs:

– CAADP country level processes and documents (including Stocktaking and Institutional Analysis for various countries; Post Compact Review: Guidelines) (A1.6)

– Toolkit for Agriculture Public Expenditure Analysis (2011) (A1.2)• Provides checklists for practitioners with aim to strengthen AgPE

analysis and inform better public spending decisions• Provides examples

– Other relevant reports experience (e.g.,NEPAD,WB, IFPRI, FAO, others)

IV) Ag. PERs: TYPES, KEY CONCEPTS & TOOLS (A) Types (Figure 1.2)

Greater scope for allocative efficiency analysis

Greater scope for technical efficiency analysis

(A) TYPES of Ag. PERs (cont.) • Spectrum of Ag. PERs vary by:

– Breadth of analysis (thematic and institutional coverage), and greater scope for allocative efficiency analysis

– Depth of analysis (flow of funds and impact) and greater scope for technical efficiency analysis

• 3 Types: (and their variants; see Figure 1.2 for illustration)– Comprehensive: extensive breadth and depth; detailed self-standing

sector-wide Ag. PER; undertaken periodically (every 4-5 years), with both diagnostic and forward looking strategies; could require 4-10 mths

– Rapid: extensive breadth, but limited depth; quick review to deepen policy dialogue, support annual planning and budgetary process, frame strategic plans, input for multi-sector PER; could take 1-3 months

– Thematic: limited breadth, but extensive depth; carried out on a specific strategic issue, subsector or program; could require 4 to 12 months

(Uganda (A1.7), Lebanon and Zambia (A1.8), respectively) • Choice of type will depend on need, time-frame and resources available

(B) Key Concepts of AgPERs (cont.): 2 Core Pillars

(1) Allocative Efficiency: extent to which the budget allocation is aligned to the national & sectoral development strategy. How has this changed from previous years, with analysis of budget execution? Actual expenditures versus allocations? the timeliness of these expenditures? wage vs. non-wage? IS MONEY ALLOCATED TO THE RIGHT THINGS?

The basic diagnostic AgPE analysis focuses on allocative efficiency issues

(2) Technical Efficiency: what is the efficiency of achieving strategic outputs and outcomes? Unit costs? Leakages? assessed through using different tools: public expenditure tracking surveys, cost-efficiency, incidence analysis, impact evaluation. IS IMPLEMENTATION EFFECTIVE?

The specialized expenditure tools focus on technical efficiency issues

Changing Role of the State and Implications for Allocating Public/Private Goods/Services: Challenges of Getting the Right Balance (WDR/2008)

Ag. Exp. Analysis: 3 Key Concepts:

• Public Goods: a good or service that is nonrival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability that no one can be effectively excluded from using the good

• Private Goods: opposite of public goods– Excludable - it is reasonably possible to prevent a class

of consumers (e.g. those who have not paid for it) from consuming the good or service.

– Rivalrous - consumptions by one consumer prevents simultaneous consumption by other consumers.

• Poverty Reducing Goods/Services:various options–

(B) AgPERs:Types of Indicators -- Concept and Rationale (see following Figures for macro framework and illustrations of each indicator

type)

• Input indicators: what is the overall level of effort invested?– CAADP processes, policies, institutions, investments, etc.

• Output indicators: what is the level of provision, coverage, and utilization of goods and services?– Extent of provision of goods and services (e.g. ag. services,

provision of technologies; access to infrastructure).• Outcome indicators: what is the effect of outputs on outcomes

that contribute toward goals?– Yields, production, wages, prices, trade, etc.

• Impact indicators: what is the ultimate effect on goals?– Growth, income, poverty, food security, hunger, etc.

• Conditioning indicators: how confident are we that any observed changes are due to the intervention(s)?– Total budget resources, climate, natural disasters, wars, etc.

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Conceptual Framework: Public Spending and Impact (Macro and Sectoral Perspective) source:

IFPRI/Fan (2009)

GOVERNMENT SPENDING

ECONOMIC SPENDING: -Agriculture -Infrastructure (energy,

transport, telecom, etc.) -Technology

INCOME POVERTY

SOCIAL SPENDING: -Health -Education -Nutrition -Social safety nets

GROWTH -aggregate growth -sector-specific (agriculture,

services, industry) -regional distr. of growth

SPENDING OUTCOMES: -Better access to infrastructure -More use of technology

SPENDING OUTCOMES: -Human capital accumulation -Basic needs/Capability -Income distribution

DETERMINANTS OF ALLOCATION:

-Financial

-Political -Economic -Governance

DETERMINANTS OF EFFCACY:

-Governance -Capacity -Targeting

EXOGENOUS FACTORS: -Population Growth -Agroecological Conditions -Macro and Trade Policies -Asset (Land) Distribution

TAX REVENUES: -Income -Corporate -Value-added taxes -etc.

OTHER SPENDING: -General administration -Defense -etc.

OTHER SOURCES: -Borrowing -Exte rnal aid -Domestic nontax revenue

Input Indicators:Investments and Disaggregation

AGRICULTURAL & RELATED

INVESTMENTS

Space

Province, district, rural/urban, Agro-

ecology

Agriculture

Research, extension, irrigation, input support,

markets, ...

Sub-sector

Crops, livestock, fishery, forestry

Economic

Salaries, capital, operations and maintenance, …

Commodity

Staples, traditional, high value, export, ...

Source

Government, Donors, Private

Sector

Other

Gender, socio-economic groups

CAADP Pillar

1, 2, 3, 4

Sector

Agriculture, roads, education, health,

water & sanitation, ...

Output indicators: Coverage and Utilization of Ag. Services

Investment /Intervention

OutputsProvision /

Coverage (e.g.)

OutcomesUtilization (e.g.)

Disaggregation

Research Number of technologies dev’d

Area under technology

Commodity, gender, space

Extension Extension-farmer ratio

Number of visits received per year

Gender, space

Irrigation Capacity of irrigation (irrigable area)

Area under irrigation Commodity, gender, space

Farm support Quantity of support Area under input Commodity, gender, space

Feeder roads Length or density of roads

Reduced transport time and cost

Space

Market Distance to nearest market

Share of output sold Commodity, gender, space

Post harvest Capacity of storage Capacity utilized Commodity, gender, space

…

Outcome Indicators:Agricultural Sector Performance

AGRICULTURAL SECTOR

PERFORMANCE

Use of factors (land, labor, capital) and inputs by:

sub-sector, commodity, gender, socio-economic group,

Space

Growth returns to different types of investments by:

sub-sector, commodity, space

Sub-sector growth and contribution to

AgGDP by:

Space

Commodity growth, contribution to

AgGDP by:

Space

Productivity of factors (land, labor, capital)

and inputs by:

sub-sector, commodity, gender, socio-

economic group, space

Sector growth and contribution to overall GDP by:

Space

Production, trade and prices by:

sub-sector, commodity, space

Impact Indicators(and disaggregated components)

INCOME, POVERTY, FOOD AND NUTRITION

SECURITY, HUNGER

Returns to different types of investments by:

gender, socio-economic group, space

Decomposition by:

sector (agriculture, services, industry); sub-sector (crops, livestock,

fishery, forestry); commodity (staples, high

value, export, etc.)

Distribution by:

gender, socio-economic group,

space

Returns to commodity growth by:

gender, socio-economic group, Space

Unit costs by:

gender, socio-economic group,

space

Returns to sub-sector growth by:

gender, socio-economic group, Space

V) ROAD MAP OF AgPERs: (A) Overview

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ROADMAP: (B) Main Phases and Elements

Phase 1: Preparation– Engage with key actors (within Govt., development

partners, private sector, civil society/academia– Define the objectives and scope– Identify the types and sources of data, data

constraints/strategies, and appropriate analytical methodology(ies)

– Prepare the concept note (overall task/product) and specific TOR (for specific consultants) & reach consensus with actors

– Estimate/mobilize budget and set timeframe

ROADMAP: Phase 2 - Analysis and Recommendations: Overview of Key Concepts and Tools

Budget cycle Budget cycle Public spending analysis

Public spending analysis

Budget Cycle & Links to Type of AgPER Analysis & Tools (see Ag. PER Toolkit for details)

Sector objectives and strategy

Sector objectives and strategy

Budget Allocation (annual & multi-year)

Budget Allocation (annual & multi-year)

Budget Execution & Management

Budget Execution & Management

Governance: Accountability Processes and Monitoring and

evaluation

Governance: Accountability Processes and Monitoring and

evaluation

• Desk reviews (strategy alignment) • Performance comparisons• Desk reviews (strategy alignment) • Performance comparisons

• Simple descriptive analysis (trends, composition, financing)• Simple congruence & consistency anal.• Estimating marginal returns & B/C anal.

• Simple descriptive analysis (trends, composition, financing)• Simple congruence & consistency anal.• Estimating marginal returns & B/C anal.

• Public expenditure tracking surveys (PETS)• MTEF analysis• Cost effectiveness and efficiency

• Public expenditure tracking surveys (PETS)• MTEF analysis• Cost effectiveness and efficiency • Assessment of institutional aspects and budget processes (at various levelsl)• PETS • Incidence analysis• Impact evaluation (strategic subsectors)

• Assessment of institutional aspects and budget processes (at various levelsl)• PETS • Incidence analysis• Impact evaluation (strategic subsectors)

Budget cycle Types of analysis/tools

ROADMAP: Phase 3- Dissemination and Implementation

Dissemination: To whom, and in what form?• Identify/agree on the main target audience.• Who are the main “champions” to promote the

implementation of the main recommendations?• Actively involve key stakeholders including sectoral

ministries/agencies, MOF, Planning, development partners, private sector, academia.

• What are the most effective approaches and sequencing for disseminating & discussing/debating the results recommendations?

ROADMAP: Phase 3- Dissemination and Implementation

Implementation of Recommendations: Some leading questions

• What is the implementation strategy and action plan for maximizing the operational benefits of the findings and recommendations, especially with respect to government counterparts and other key stakeholders? The action plan might warrant some technical assistance to support implementation, including capacity building among key stakeholders.

• What are the most appropriate implementation mechanisms that can be worked out and used within the country to promote and monitor the implementation of recommended actions?

• How can other key stakeholders, especially broad-based farmer groups or apex organizations, “accompany” and support the implementation process and help provide accountability for implementing the agreed actions?

ROADMAP: Phase 3- Dissemination and Implementation

More leading questions:

• What is the most effective capacity-building and analytical support that donors can provide to enhance the effectiveness and timeliness with which the action plan is implemented?

• What cost-effective approaches and mechanisms can be used in periodically reviewing progress in implementing the action plan?

• How can the implementation phase be used strategically to lay the groundwork for an updated AgPER, especially in the context of a sequential approach and the development of subsequent products?

• How can institutional memory be maintained? A stronger institutional/sectoral M&E system and appropriate incentives for evidenced-based decision making can help ensure a smooth transition when the government changes, and it can also encourage a culture of transparency, learning-by-doing, and continuous innovation and improvement.

Orientation Frameworks:

(National and Sectoral policies, strategies and plans)

Frameworks of Priority Criteria: (Established by Min. Of Finance/Planning, MOA)

Framework Procedures:

(financial mgt., procurement, audits, in line with strengthened national and sectoral legislation and related procedures)

Sectoral Plans: Programs/Projects

“PBIG”Cycle:(Planning,Budgeting, Implementationand Governance)

PULLING IT TOGETHER -- PBIG Cycle: KEY ELEMENTS/PROCESSES(to ensure coherence and impacts of Ag PEs)

Project Cycle

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REFERENCE DOCUMENTS (see Binder - Session 1/Annex 1 for copy)

A1.1: Strengthening National Comprehensive Agricultural Public Expenditure in SSA Programme Document (Nov., 2009)A1.2: “Practitioners’ Toolkit for Agriculture Public Expenditure Analysis”, World Bank and DFID (March, 2011)A1.3: NEPAD: Guidance Note for Agricultural Expenditure Tracking System in African Countries (Sept. 2005)A1.4: CAADP: National Compliance with 2003 African Union-Maputo Declaration to Allocate at Least 10% of National Budget to Agricultural Development: 2007 Draft Survey Report (Prepared by NEPAD, August, 2008)

A1.5: Joint Donor Principles for Enhancing Harmonization and Alignment in Agriculture and RD (2008)A1.6: CAADP Post Compact Review: Guidelines (prepared by NEPAD, April 2010) A1.7: Uganda Agriculture Public Expenditure Review (Prepared by the World Bank, Feb. 2010)A1.8: Zambia Impact Assessment of the Fertilizer Support Program Analysis of Effectiveness and Efficiency (prepared by the World Bank, June 2010)

Website: www.worldbank.org/afr/agperprogram and web.worldbank.org/apea