AN IFAD DESK REVIEW OF THE POVERTY REDUCTION STRATEGY PAPER PROCESS IN EASTERN AND SOUTHERN AFRICA

Transcription

1 AN IFAD DESK REVIEW OF THE POVERTY REDUCTION STRATEGY PAPER PROCESS IN EASTERN AND SOUTHERN AFRICA December 2002

2 Table of Contents Page List of acronyms Summary iii iv 1. The PRSP process and the HIPC Initiative 1 2. Preliminary findings from the PRSP country analyses The process for the preparation of the document The content The implementation Conclusions and recommendations 14 ii

3 List of acronyms AIDS CBO CSO CWIQ E-HIPC GoU HIPC IFAD IFI IMF I-PRSP MEJN MTEF MTFF NGO NPV ODI PAF PF PPA PRS PRGF PRSC PRSP SWAP Acute Immune Deficiency Sindrome Community Based Organisation Civil Society Organisation Core Welfare Indicators Questionnaire Enhanced HIPC (initiative) Government of Uganda Highly Indebted Poor Countries (initiative) International Fund for Agricultural Development International Financial Institution International Monetary Fund Interim Poverty Reduction Strategy Paper Malawi Economic Justice Network Medium-Term Expenditure Framework Medium-Term Fiscal Framework Non-Governmental Organisation Net Present Value Overseas Development Institute (London) Poverty Action Fund (Uganda) IFAD Eastern and Southern Africa Division Participatory Poverty Assessment Poverty Reduction Strategy Poverty Reduction and Growth Facility (IMF) Poverty Reduction Support Credit (World Bank) Poverty Reduction Strategy Paper Sectoral Wide Approach iii

4 SUMMARY Introduction This report is the first output for the engagement of IFAD s Eastern and Southern Africa Division (PF) in the PRSP process. This first step consists of an in-depth desk analysis of the PRSP process in the Region with the purpose of: (i) identifying the principles for the selection of a sub-group of countries where IFAD can potentially undertake a fruitful collaboration to develop activities and policy dialogue related to the PRSP process; and (ii) identifying areas in which IFAD can support the resolution of issues relative to rural poverty alleviation, either directly or working with local stakeholders indirectly. The desk analysis is based on 10 country reports analysing the PRSP process in Angola, Ethiopia, Kenya, Madagascar, Malawi, Mozambique, Rwanda, Tanzania, Uganda, and Zambia. Major findings from the desk analysis The analysis has reviewed three relevant aspects of the PRSP process: the process for the preparation of the PRSP; the content of the PRSP; and the implementation of the planned strategy. From the analysis of the process for the formulation of the PRSP, it has emerged that country contexts have been crucial to understand why the process has followed one path rather than another and is also determinant to understand whether the PRSP process is sustainable in the medium or longer term. The degree of aid dependency, the national political cycles, the commitment of the leading political figures, and the advocacy capacity of civil society organisations are all important determinants of the development of the PRSP processes in the different countries. Beside the importance of the country context in the definition of the PRSP process, some other relevant facts have emerged from our country reviews: In most cases the PRSP process has helped the formation of a network of CSOs/NGOs/CBOs able to begin a dialogue with government counterparts. In most cases the participation of civil society has been transformed into consultation Participation of civil society has often been limited to the participation of NGOs and membership organisations that might seem in principle to have greater claims to represent civil society have not been systematically included in the consultation processes, nor has the private sector produced significant inputs in the PRSP Parliaments have not been centrally involved in the PRSP consultations Country ownership is often restricted to technocrats and hampered by the link between the PRSPs and the HIPC Initiative From the analysis of the content of the PRSP it has emerged that: Notwithstanding the understanding of poverty has tremendously improved, the information available from the analysis of poverty does not always represent the basis of the formulation of the strategic plan. Most of the strategies contained in the PRSP are simply the sum of sectoral strategies and few countries have adopted clear and transparent criteria for the prioritisation of the activities. In relation to rural development, strategies tend to be agriculture rather than rural, livelihood based and, in most cases, there is not a clear vision of an economic development path for the iv

5 rural sector. As a result, there is a lacking of a structured strategy leading to actions, which are neither prioritised nor sequenced. Cross-cutting principles of the IFAD Regional Strategic Framework are not always at the core of the Strategic Plans. Targeting is hardly operationalised, empowerment of the rural poor is neither a building block neither a principle of the PRSPs, and accountability is promoted only through the decentralisation processes. The strategic thrusts of the IFAD Regional Strategic Framework do not always represent the building blocks of the strategy for the development of the rural areas. HIV/AIDS is not considered as a cross-cutting issue for rural development but is purely addressed as an health issue. At the present stage of the PRSP process in the Region, it is difficult to make robust conclusions related the strategic plans. Only Tanzania and Uganda completed the full PRSP two years ago and most of the other countries completed their process in So far, two features emerge from the analysis of PRSP implementation for Tanzania and Uganda: the two areas where implementation is lagging behind are those of agriculture/rural development and of the promotion of good governance (through decentralisation processes and related activities). In both cases such delay reflects the poor development of plans vis-àvis those for education, health, and infrastructure The plans for monitoring PRSPs activities are still quite weak, and do not promote participation of the beneficiaries Conclusions and recommendations From the review pf the PRSP process in Eastern and Southern Africa it has emerged that the core principles of the PRSP process are (i) its holistic approach in trying to reconcile uncoordinated efforts to reduce poverty; and (ii) its efforts to promote a sustainable development process through the active participation of the poor in the planning, implementation and monitoring of poverty reduction actions. This review has stressed that so far the inadequate adoption of these core principles in the actual development of the PRSP represent the major weakness of the PRSP process. IFAD has two opportunities to capitalise on both the poverty concern and the participation concern. The poverty concern can be addressed by assisting national stakeholders in the elaboration of concrete and flexible strategies and programmes for a sustainable rural poverty reduction. Indeed, PRSPs are giving impetus to the development of sectoral strategic plans with the aim of operationalising the general objectives contained in the PRSP. In addition, there is a momentum in the international agenda towards the development of strategies for rural development as the effort of the World Bank related to the elaboration of its rural development strategy clearly shows. Based on IFAD s knowledge of rural areas and on the in-depth review of its approach to rural development that led to the formulation of the Regional Strategy Paper in 2002, IFAD can add value to the policy formulation for rural areas. The participation concern is related to the fact that poor people, in rural areas, remain largely outside the policy process. Therefore a major task for a successful and sustainable strategy for poverty reduction is to empower the rural poor so as to enable them to play an active role in the policy process. IFAD can add value to the PRSP process through the promotion of the democratic accountability of governments to poor rural people and grassroots empowerment of groups and communities of rural people. The precise range and mix range of activities is necessarily country-specific with the ultimate purpose of enabling the rural poor to interact with v

6 local institutions, and participate in, and have a decisive influence on, the formulation and implementation of public sector activities. This can be achieved through the establishment of partnerships with NGOs/CBOs, and through the strengthening of the capacity of these where necessary. The partnership-based, bottom-up approach such as advocacy and capacity-building activities from the grassroots will exploit IFAD s comparative advantage: IFAD s knowledge and capacity developed through its projects and programmes. vi

7 Introduction IFAD s Eastern and Southern Africa - Division (PF) has decided to undertake a desk review of the Poverty Reduction Strategy Paper (PRSP) process in the region with respect to its Regional Strategy Paper developed in Following a major effort to understand rural poverty, with the publication of the IFAD Rural Poverty Report in 2001, the Assessment of Rural Poverty - Eastern and Southern Africa, and of the Regional Strategy Paper Eastern and Southern Africa in 2002, the intention is to address the PRSP process and content from the perspective of IFAD s Strategic Framework in order to understand how it can best add value to the PRSP process. The PRSP is increasingly representing national strategies designed by governments to tackle poverty and to target expenditures on tools and measures to reduce poverty. In addition, national governments are in the process of aligning their medium-term budgeting instruments with the PRSP. To date, the involvement of PF in the exercise has been somewhat marginal, and, while its influence has not been negligible, it has been ad hoc and unstructured. To improve this, since 2002, PF has been making a concerted effort to engage more proactively in the PRSP process in the countries of its Region. The objective of such involvement is to ensure that both the documentation and the implementation approach for the PRSPs (i) adequately focus on issues of rural poverty reduction, and (ii) advocate and support appropriate policies, strategies and activities in support of rural poverty alleviation. The first step of such involvement has been an in-depth desk analysis of the PRSP process in the Region with the purpose of: (i) identifying the principles for the selection of a sub-group of countries where IFAD can potentially undertake a fruitful collaboration to develop activities and policy dialogue related to the PRSP process; and (ii) identifying areas in which IFAD can support the resolution of issues relative to rural poverty alleviation, either directly or working with local stakeholders indirectly. The desk analysis is based on 10 country reports analysing the PRSP process in Angola, Ethiopia, Kenya, Madagascar, Malawi, Mozambique, Rwanda, Tanzania, Uganda, and Zambia. This review is organised as follows: Section 1 briefly outlines how the PRSP approach was originated, its rationale and the findings of a major review of the PRSP process undertaken by the International Monetary Fund (IMF) and World Bank in March 2002; Section 2 summarises the preliminary findings from the 10 country reports; and Section 3 concludes and suggests areas where PF can best add value to the PRSP process. 1. The PRSP process and the HIPC Initiative The Poverty Reduction Strategy Paper (PRSP) process started in December 1999 with the adoption by the Boards of the IMF and the World Bank of a new approach to the challenges of reducing poverty in low-income countries. Since then 48 countries have embraced the PRSP process and, as at September 2002, 18 countries have produced a full PRSP. In Eastern and Southern Africa 1, 14 of the 21 countries of the Region are at some stage (see Table 1) of the PRSP process and eight countries have already adopted the PRSP as their policy document for poverty reduction. The PRSP approach was originated as part of the Highly Indebted Poor Countries (HIPC) Initiative, a programme established by the IMF in 1996 to reduce countries external debt to 1 Angola, Botswana, Burundi, Comoros, Eritrea, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe. 1

8 sustainable levels. By September 2002, 26 countries are benefiting from debt relief under the Enhanced HIPC (E-HIPC) Initiative 2, eight of which are in Eastern and Southern Africa (see Table 1). What is a PRSP? The PRSP has a double definition and is referred to as the PRSP document and to the PRSP process. The PRSP document can be considered as a national strategy designed by government to tackle poverty and to target expenditures on tools and measures to reduce poverty. There are 6 core principles underlying the development and implementation of poverty reduction strategies. According to the World Bank guidelines, the strategies should be: (i) country-driven, involving broad-based participation by civil society and the private sector in all operational steps; (ii) results-oriented, and focused on outcomes that would benefit the poor; (iii) comprehensive in recognising the multi-dimensional nature of poverty, (iv) prioritised so that implementation is feasible, in both fiscal and institutional terms; (v) partnership-oriented, involving coordinated participation of development partners (bilateral, multilateral, and non-governmental); and (vi) based on a long-term perspective for poverty reduction. A PRSP document starts with a poverty analysis based on national surveys, participatory poverty assessments (PPAs), and with a consultation process of the country s relevant stakeholders. On the basis of the poverty analysis, the PRSP identifies the poverty reduction targets and outcomes that the country wishes to achieve. Therefore, a strategy the key public actions (policy changes, institutional reforms, programmes, and projects) is defined in order to achieve the targets. Finally, a monitoring process is put in place with adequate indicators to control the implementation phase. The PRSP process is divided into two logically different phases: the process for the preparation of the PRSP document and the implementation phase while the national strategy is put into practice. During the first phase of the process the country is required to produce an Interim PRSP (I- PRSP) which can be considered as a road map for the definition of the complete strategic document, i.e. the Full PRSP. The I-PRSP may differ in its forms and can represent preliminary government policy intentions as well as simply defining the steps and building blocks for the formulation of the Full PRSP. Normally the I-PRSP is produced in a relatively short time (between two and six months) and does not involve a consultation process. The latter instead can be considered as one of the building blocks for the Full PRSP s formulation and, depending on a country s specific situation, can also set the stage for the participation of relevant stakeholders, such as CSOs, NGOs, local administration and CBOs, to the whole PRSP process. Other relevant building blocks for the formulation of the Full PRSP are: the definition of the macro-economic scenario underlying the poverty reduction strategy; the budgetary allocations to poverty reduction actions; and the integration of the PRSP in the existing institutional framework. The second phase is the implementation of the planned strategy. Here, the normative elements are the annual PRSP Progress Reports describing the status of implementation of the strategic pillars through monitoring and evaluation and where it is crucial to ascertain whether the service providers are accountable to the beneficiaries of the actions undertaken to reduce poverty. Every three years there is a review and a revision of the PRSP based on annual progress reports and evaluation. 2 The E-HIPC Initiative started in 1999 and enlarged the scope of the original HIPC Initiative. 2

9 Table 1: PRSPs and HIPC Initiative in Eastern and Southern African Countries (September 2002) Country PRSP Process HIPC Initiative PRSP Country Interim PRSP Full PRSP PRSP Progress report HIPC Country E-HIPC Decision Point E-HIPC Compl. Point Debt Reduction in NPV Terms 1 (USD million) Angola Yes Dec 01 2 No Burundi Yes Dec 01 2 To be consid Comoros Yes To be consid Eritrea Yes Mar-02 No Ethiopia Yes Nov-00 May-02 3 Yes Nov-01 Floating Kenya Yes Jul-00 Jun-01 No Lesotho Yes Dec-00 No Madagascar Yes Nov-00 Yes Dec-00 Floating 814 Malawi Yes Aug-00 Aug-02 Yes Dec-00 Floating 643 Mozambique Yes Feb-00 Sep-01 Yes Apr-00 Sep Rwanda Yes Nov-00 Jun-02 Yes Dec-00 Floating 452 Tanzania Yes Mar-00 Oct-00 Aug-01 Yes Apr-00 Floating Uganda Yes ( 4 ) Mar-00 Mar-01/Apr-02 Yes Feb-00 May Zambia Yes Jun-00 May-02 Yes Dec-00 Floating Botswana No - - No Mauritius No - - No Namibia No - - No Seychelles No - - No South Africa No - - No Swaziland No - - No Zimbabwe No - - No Notes: (1) Reduction in NPV terms including Original and Enhanced HIPC Initiatives. (2) Not endorsed by the IFIs. (3) Draft version. (4) Full PRSP directly. The HIPC Initiative mirrors the whole PRSP process if the country has access to the debt relief scheme. The HIPC Decision Point is achieved once the boards of the IMF and of the World Bank endorse the I-PRSP. At this stage the country receives the Interim Debt Relief funds granted by the IMF to pay a proportion of the country s debt service payments. One year after the successful implementation of the Full PRSP and after a further record of good performance under the IMF/World Bank-supported programmes, the HIPC Completion Point is achieved. Debt cancellation begins according to the amounts and the timetable agreed between the government and the IMF and World Bank. In addition, several other donors, multilateral and bilateral, are providing debt relief under the HIPC Initiative umbrella. Funds saved from the debt service are allocated according to the budget of the PRSP. Finally, if the PRSP represents the overarching national strategic plan for poverty reduction, other government resources for poverty reduction aside from those available from debt relief are allocated according to the PRSP budget. In March 2002 a major review of the PRSP process was undertaken by the IMF and World Bank, following the International Conference held in Washington in January The key messages stemming from the review underlined: 3

10 the importance of country ownership as a guiding principle; a recognition that the focus should now shift beyond process to content and implementation; the importance of improving the understanding of the linkages between policies and poverty outcomes; the importance of utilising and building local capacity in core areas needed for effective poverty reduction strategies; the need for realism in the setting of goals and targets, as well as in managing expectations, both within countries and among their development partners; the importance of openness and transparency, both within each country and in international development partnerships; the importance of flexibility to allow for different country starting points; the desirability of debate about alternative policy choices; the importance of patience and perseverance with implementation. Further, the Monterrey consensus has underlined the centrality of nationally-owned poverty reduction strategies to achieve the Millennium Development Goals. In addition to the IMF and the World Bank 3, other donors, such as Nordic countries and the EU, are increasingly looking at the PRSP exercise with the aim of basing their lending programmes according to the priorities outlined in the PRSP framework. It is therefore of utmost importance for IFAD to review the PRSP process and to understand the path delineated by those poverty reduction instruments. 2. Preliminary findings from the PRSP country analyses As at September 2002, the PRSP process can be considered quite young: less than three years of life in general and, in Sub Saharan Africa, only Uganda has fully adopted the PRSP as the overarching policy document for the eradication of poverty for two budgetary years. The rest of countries in the Region are still at the beginning of the process, although in Mozambique and in Tanzania the Full PRSP has been in place for considerable time. Nonetheless, we can already highlight some of the facts arising from a review of the process. To accomplish this task we have decided to adopt the same analytical framework for the selected countries. Three relevant aspects have been critically reviewed: the process for the preparation of the PRSP; the content of the PRSP; and the implementation of the planned strategy. The process for the preparation of the document where aspects such as the existing political context, the degree of national ownership, the consultation process, and the government commitment to the poverty reduction strategies are assessed. The content of the PRSP where the poverty profile, the basic thrusts of the strategy as outlined in the document, and the PRSP budget are analysed. Moreover an in-depth analysis of the strategies relating to rural development is undertaken as well as an assessment of how the strategic pillars of the PRSP respond to the strategic principles and thrusts of the IFAD s Regional Strategy Paper. 3 The World Bank Country Assistance Strategy (WB CAS) is increasingly aligned with the PRSP. The two lending programmes introduced by the IMF and the WB in tune with the PRSP are the IMF Poverty Reduction and Growth Facility (PRGF) and the World Bank Poverty Reduction Support Credit (PRSC). 4

11 The implementation of the PRSP where the status of implementation of the activities defined in the PRSP is undertaken and the monitoring and evaluation system is analysed. In addition, an assessment of: (i) whether major changes have occurred with respect to previous PRS/PR Programmes; (ii) the budgetary allocation; and (iii) whether the strategy has changed to address IFAD s principles and thrusts for the regional development of Eastern and Southern Africa. The basic findings arising from the country analyses are outlined below The process for the preparation of the document The understanding of the process for the formulation of the strategic document is relevant not only per se but can serve as the starting point of the second stage of the process, i.e. the implementation of the planned strategy. At the same time, it can serve as a guide for the comprehension of the content of the strategic document since the PRSP is a policy document and it reflects the strength, the needs and the capacity to articulate the policy arguments of the stakeholders involved in the process. We do believe that as a starting point in order to analyse the process for the preparation of the PRSP, it is worthwhile analysing the country context in terms of the political systems and the national political conjuncture. Indeed, their analyses can help us understand why the process has followed one path rather than another and can also guide our judgement of the sustainability of the PRSP process in the medium or longer term. Although a generalisation of the country contexts is by its own definition difficult since the 14 countries analysed are different in terms of political development, with some countries still in transition, others emerging from a civil war, or in a prolonged period of political stability, we consider that some common features have emerged from the analysis: Civil society organisations 4 in the Region only began to emerge a decade ago, and can be considered still immature. It is growing fast, in size and importance, but compared to other regions such as Latin America for example, or West Africa, it is still young and it lacks organisational and advocacy capacity. The PRSP process has been important not only for the emergence of several CSOs but has also represented a unique opportunity to combine dispersed efforts of existing organisations, in most cases working with donors projects rather than in advocacy activities. Most of the countries analysed are institutionally aid dependent. In most cases aid represents over 10 percent of gross national income, and for Malawi, Mozambique and Eritrea, aid is more than 20 percent of gross national income 5. Translated as a percentage of public expenditures, such percentages often mean that over a third of the total public budget is donor-financed. In addition, most of these countries are severely indebted as the inclusion of the HIPC Initiative clearly shows (see Table 1). Therefore, as recently stated in the ODI PRSP Institutionalisation Study (Booth 2001, p. 12) Institutional aid dependency is understood [ ] as a loss of capacity to make and implement planning decisions arising from the gross imbalance between domestically-generated revenues and the actual or potential availability of external finance. It seems likely that high aid volumes, whatever the form of 4 Here we consider as civil society : Civil Society Organisations (CSOs), NGOs, and Community Based Organisations (CBOs). 5 World Bank WDI 2001 data (average data of aid as a percentage of Gross National Income) 5

12 aid delivery, foster institutional aid dependency. Some research suggests that states which rely heavily on aid are less effective than those that draw substantially on other income sources, such as tax revenues (Moore, 1998; Moore et al., 1999). In addition, the project modality funding donor attitude 6 implies the building of parallel structures and independent accountability arrangements, shifting away skills and capacity from government bodies and institutions. National political cycles and the commitment of the leading political figures are crucial to understand why the PRSP has taken stock and the modalities of process. Indeed, without mentioning the relevance of basic political structures in the shaping of the PRSP, it is our belief that the timing with respect to the national political cycles has proved to be critical both in the reception and significance of the PRSP initiative. Some examples may help to understand our findings. Tanzania developed its Full PRSP in seven months (between March and October 2000), and is highly motivated by the reaching of the HIPC Completion Point was election year and the ruling party took the opportunity of the E-HIPC Initiative to present itself as guarantor of good relations with the international community. In addition, the government backed the PRSP process to present itself committed to reducing poverty in the country. In Mozambique the harsh confrontation between the two political parties after 16 years of civil war has been the major reason for the lack of an in-depth and serious parliamentary debate over the PRSP, which in fact did not require the parliament approval. In addition, the strength of the institutions in most cases is deeply embedded in the charismatic role of the leading political figures and the political system is quite fragmented. Therefore, in most cases the shape of the PRSP process is highly influenced by the beliefs of relatively small political circles at the head of the policy process. Beside the importance of the country context in the definition of the PRSP process, some other relevant facts have emerged from our country reviews: In most cases the PRSP process has helped the formation of a network of CSOs/NGOs/CBOs able to begin a dialogue with government counterparts. The degree of technical capacity and of advocacy of the NGO network is highly variable from country to country but the request by the Bretton Woods Institutions to involve civil society organizations in the formulation of the Full PRSP has represented a remarkable opportunity for those organisations to pool their efforts into a network. Notwithstanding such significant achievement 7, structural weaknesses may hamper the sustainability of civil society networks. Indeed, the donor community has financially helped most of these civil society organisations during the formulation of the Full-PRSP. Therefore the financial viability of such networks is doubtful and once the key phases of the PRSP process end there is the risk that those networks could vanish 8. The financial dependency may also represent a stumbling block in the developing of an independent and credible civil society. 6 Although there is a large debate over the potential shifting from project funding to basket funding, the percentage of the latter is still negligible compared to the former. 7 A good example is the development in Malawi of the of the Malawi Economic Justice Network (MEJN) established by church groups and supported by a consortium of international NGOs. Although the PRSP process has been dominated by government and by negotiations between the latter and IMF and the World Bank, MEJN has been able to extend the process by 6 months, to involve civil society in thematic working groups, and to integrate PRSP findings into the budget. Despite logistical problems and uneven depth, this has been the most participatory policy process in Malawi to date. 8 Kenya may be a useful example to show the funding role of the donor community: NGOs in Kenya have been determinant in implementing the consultation process at the district level. NGOs were the lead agencies in the consultation process and government funds received by donors were transferred to the NGOs. 6

13 In most cases the participation of civil society has been transformed into consultation. Indeed, for the formulation of the Full PRSP, CSOs have normally been consulted through district, regional and national workshops. In most cases, the findings from those workshops have been synthesised and included as a separate chapter in the PRSP rather than used as a building block for the poverty reduction strategy. In addition, in several Full PRSPs the strategies follow the lines already defined in the I-PRSP where consultation did not take place. At the same time, if the strategy has changed with the formulation of the Full-PRSP, proposals arising from the consultation process have hardly been considered in the final strategic formulation. In most of the countries analysed, the role of CSOs in PRSP policy formulation and implementation is not institutionalised and the inclusion of the proposals arising from the civil society crucially depends on the attitude and willing of the government 9. Participation of civil society has often taken the form of participation of NGOs. Membership organisations that might seem in principle to have greater claims to represent civil society have not been systematically included in the consultation processes, nor has the private sector produced significant inputs in the PRSP. As in the case of Mozambique, the narrow involvement of the private sector can be explained by the limited ability of the government to carry through with intended reforms and to the related lack of interest of the private sector to participate in planning activities. The level of representativeness of civil society is consequently questionable. In addition, rural organisations and CBOs from rural areas are normally less present compared to advocacy groups from urban areas. NGOs are normally based in the capital cities and in some cases the ties with their rural counterparts are weak. It is therefore the potential case of civil society represented by groups not institutionally linked to rural areas, where the majority of the poor live, claiming the cause of poor people with potential lack of knowledge and comprehension, or even worse with manipulation, of the needs of the rural poor. Finally, the non-existence of technical capacity or information in rural areas to deal with the process and the content of the PRSP is often translated into lack of participation of the rural poor. Parliaments have not been centrally involved in the PRSP consultations. In most cases, parliaments have only ratified (in the case of Mozambique parliamentary approval is not required) previously defined documents and parliaments have not set up ad hoc commissions to debate the content or the process of the PRSP. Several reasons concur to such outcome such as the uneven weight of governments vis-à-vis parliaments, the lack of capacity within 9 In Ethiopia, as an example, the tremendous effort undertaken to promote consultation has not been fully used as a basic input for the formulation of the poverty reduction strategy. The PRSP itself does not suggest how the information collected at district level, together with the suggestions arising from consultations with NGOs have been used in the formulation of government priorities, plans and strategies. In addition, the strategy has remained basically the same as the one proposed in the I-PRSP, based on the same pillars and principles. In Kenya, for instance, the consultation process was probably one of the widest and in-depth ones, and districts finalised their own District PRSPs. Therefore, the potential for the definition of a national strategy based on grassroots needs and priorities was remarkable. Instead, although transparent, the mechanism to reconcile sector priorities at the national level with district priorities has been based on historical trends of national and district expenditures. As a result the sector priority weight was equal to 86 percent while the decisions taken at district level counted only for 14 percent. Therefore, the great effort at district level for the policy formulation was almost irrelevant in the final choice of strategic priorities. Significant exceptions are the cases of Uganda and Rwanda. Indeed, in Uganda, CSOs are building blocks of the PRSP process and have played a major role in the PPA undertaken for the formulation of the strategy (PPA findings fed into the PRSP through representatives of the PPA project on key Sector Working Groups and civil society inputs were sometimes wholly incorporated into the PRSP draft). In Rwanda, the government has promoted the development of indigenous concepts of participation, such as Ubudehe, to empower poor people to become active partners in implementing and shaping the national poverty reduction strategy. 7

14 parliaments to debate complex macro-economic issues, and the lack of funds to set up capable parliamentary commissions. Country ownership has been promoted through the development of the PRSPs. During the formulation of the I-PRSP the involvement of the Bretton Woods Institutions has, in some cases, been direct and in some cases strong. On the other hand, during the formulation of the Full-PRSP which took, in all cases, a longer period of time, the involvement of IFIs (International Financial Institutions) has been more subtle and the countries have been able to develop their own country document, although almost all country documents have the same structure and the need of a stable macro-economic framework as the first strategic pillar. The type of country ownership is highly variable and it is difficult to find a common feature. As expected, the leadership role played by government has often led to government ownership. In some cases, only a small pool of technicians within the Ministry of Finance was fully aware of the content and of the process. In other cases an in-depth consultation process (as in Kenya and Uganda), the popularisation of the document undertaken by the media and NGOs (as in Tanzania with the translation into Kiswahili and into a plain language version) have often broadened the knowledge and ultimately the ownership of the document. Commitment of the government is crucial for the whole process for the participation of the relevant stakeholders, and for the actual implementation of the planned strategy. Considering the case of Uganda, it is clear how the strong commitment and belief of the ruling party and of the Presidential Office have been relevant in all the stages of the process. The Ugandan government (GoU) ensured that CSOs were given enough space in the PRSP process by organising independent consultations and incorporating as much of their inputs into the documents as possible. At the same time GoU has recognised civil society as a partner in the development process of the country. For implementation, GoU has created a Poverty Action Fund (PAF) to ensure that increased funds are allocated to poverty reducing activities specified in the PRSP. The PAF, originally designed for resource allocation of HIPC debt relief, has attracted additional donor funding and has in practice become a mechanism for ensuring the reallocation of the incremental expenditures directly to poverty reducing public services The content Several aspects have been analysed related to the content of the PRSP. In general, we have briefly reviewed how the poverty profile has been conceived, as well as the structure of the strategy. The main thrusts have been listed and an in-depth analysis of the building blocks of the strategy for rural areas and agriculture has been undertaken. The strategy for rural development and/or agriculture contained in the PRSP has been systematically confronted with the sectoral strategy for agriculture and/or rural development if the latter is developed in a separated strategic document. In addition, the sectoral budget allocation contained in the PRSP has been scrutinised and, whenever possible, the operational and planning linkages with the ordinary budgetary instruments have been assessed. In addition, we have assessed how the basic principles, strategic thrusts, and the threats to livelihoods outlined in the IFAD Regional Strategy 8

15 Paper 10 are integrated into the PRSP. A brief summary of some of findings of the analysis undertaken follows. Regarding the poverty analysis and the general structure of the strategic plans, some of findings are the following: The understanding of poverty has, in most cases, tremendously improved with the development of the PRSP process. In almost all cases household budget surveys have been carried out and other instruments, such as welfare monitoring surveys and core welfare indicator questionnaires (CWIQs), have been used for poverty analysis. In a few cases (Kenya, Rwanda, and Uganda), Participatory Poverty Assessments (PPAs) have been used to guide policy formulation. For those countries, PPAs have also been included in the implementation plans as monitoring mechanisms or as data-gathering exercises. Information available from the poverty profile does not always represent the basis for the formulation of the strategy. In most cases, the determinants of poverty outlined in the poverty profile and the qualitative perception of the poor do not represent the starting point for the definition of the strategy. The poverty analysis and the strategy are two separate blocks of the document: in most cases, it appears as an inclusion of a chapter with the poverty profile, following a binding request from IFIs and does not arise from a domestic need. The strategy contained in the PRSP is the result of the government s understanding of poverty tuned with the donors plans and priorities and the wealth of information and the analysis contained in the poverty profile are kept separated from the strategic document 11. Few countries have adopted clear and transparent criteria for prioritisation of the activities for poverty reduction. The strategies contained in most of the documents are rather all-encompassing ones. The need to maintain a stable macro-economic framework is often put together with sectoral policies for agriculture, heath, education, good governance and infrastructure development. Criteria, which clearly spell out the most pressing needs to reduce poverty, are not presented nor elaborated. As a result, the difficult task of allocating the scarce resources is not done according to a defined strategic plan and the whole process for poverty reduction may lead to uncoordinated and dispersed efforts with a likely inadequate impact on the reduction of poverty. In addition, the strategic activities are not 10 The logical structure of the IFAD Regional Strategy for Eastern and Southern Africa Cross cutting principles Strategic Thrusts Threats to Livelihoods Implementation Approaches Targeting/Gender Empowerment Accountability Promoting efficient and equitable market linkages Developing rural financial systems Improving access to & management of land and water Creating a better knowledge, information and technology system HIV / AIDS Responses to conflict and postconflict situation Projects, Programmes (loans & grants) Policy dialogue Building Partnerships Knowledge sharing 11 The case of Ethiopia may shed some light on the above statement: the poverty analysis presented in the Ethiopian PRSP is amongst the most detailed presented in the Region. Although based on traditional data sources such as household budget and welfare monitoring surveys, the tools used are rather sophisticated. Nonetheless, the strategy is based on the same pillars outlined in the Interim PRSP and has not benefited from the poverty analysis developed for the formulation of the Full PRSP. 9

16 always costed and therefore another crucial component for a sustainable implementation of the strategy is missing 12. The strategic plan elaborated in the PRSPs is often the sum of sectoral strategies instead of a flexible strategic tool used as a guiding principle for the elaboration or redefinition of sectoral strategies. The rationale underlying the structure of the strategic plan is not always evident from the PRSP and the strategy is often a list of several strategic pillars with sub-strategic axes and components. Although the strategies have the merit of limiting the duplication of efforts, the linkages and interactions between the different building blocks/strategic thrusts are not fully analysed. Regarding strategies for rural development and how these address IFAD s regional strategic thrusts and cross-cutting principles, some of findings are the following: The development of rural areas is at the core of the strategies for poverty reduction but the analysis of the actions envisaged for their development is fairly generic. In almost all cases rural development is either treated as a cross-cutting thematic issue or as one of pillars of the strategy. Nonetheless, core asset areas (human, natural, physical, financial, and social) are not adequately analysed and the key public actions for rural development such as human capital development, infrastructure, technology improvements, the deepening of the financial system, are treated separately. In addition, incentive mechanisms able to reactivate the economy of rural areas are, in general, not considered. As an example, information regarding prices, markets and products are not always building blocks of the whole strategy. Policy intervention in areas such as markets tended to focus on transaction costs, infrastructure, and not on regulatory and policy issues. The lack of a structured strategy, in most cases, leads to the lack of listed actions neither fully prioritised nor sequenced. Further, the costing of public actions for rural development is still at preliminary stages. The cross-cutting principles of IFAD s Regional Strategy (targeting/gender, empowerment and accountability) are not always at the core of the strategic plans. Targeting 13 is not adequately articulated nor operationalised in the PRSPs of the Region. The poverty profile and the poverty analysis at the beginning of each PRSP are not linked to the action plan. In addition, the poverty profiles are based on household needs and on consumption behaviour, therefore important dimensions of targeting and of determinants of poverty, such as market linkages which may be relevant at community level are not considered. Gender can be considered at the top of national agendas. Many countries have a National Gender Policy and in most cases offices for gender issues have been set up. Nonetheless, the engendering of all policies has been promoted in few countries and the so-called gender issue is, in general, institutionally separated from sectoral polices. 12 Uganda and Rwanda represent two remarkable exceptions. In the first case, the prioritisation criteria is clearly defined and forms the basis for the allocation of resources under the budgetary tool, the Poverty Action Fund, created for the PRSP and for HIPC debt relief. In Rwanda the process, less developed if compared to Uganda, presents strategic pillars ranked by importance according to detailed criteria which will form the basis for allocation of public resources. 13 In IFAD s Regional Strategy Paper, targeting means that a growth-oriented strategy for rural poverty must focus on where the poor are and on what they do for living. Therefore a strategy for rural areas must identify who the poor are; it must understand their livelihood; and, working with them, it must analyse the constraints they face and the opportunities they have open to them. 10

17 Empowerment 14 is neither a building block nor a principle of the PRSPs of the Region. The core area of the PRSPs, active participation of the civil society and of the poor in the planning, monitoring and implementation of actions for poverty reduction is not considered as a key priority. There are no actions envisaged apart from minor statements regarding the encouragement of the formation of farmers cooperatives to assist the poor in building the institutions, skills and knowledge needed to articulate viable livelihood strategies and to contribute to their realisation. Empowerment has been partially promoted in the countries where PPAs have been used as a poverty diagnostic tool (Uganda, Rwanda and Kenya). Another remarkable exception might be the case of Rwanda where community action planning is currently being developed through a traditional Rwandese practice of working together: the ubudehe mu kurwanya ubukene. Indeed, the developing of such approach has the primary objective to revive and foster collective action at the community level. Accountability is often promoted through decentralisation processes. Almost all the countries in the Region are at some stage of a decentralisation process. So far, the decentralisation process is being confronted with two major shortcomings as in the case of Uganda, probably the country at the forefront of the decentralisation process in the PRSP countries in the Region, clearly shows. Firstly, it is increasingly evident that the implementation of the decentralisation policy is creating tensions between the priorities determined at local level and those developed at the national level through the Sectoral Wide Approaches (SWAPs). Secondly, the lack of adequate human capacity at local level may lead to mismanagement of funds. As a result, in Uganda, in the face of clear evidence of district administration diverting funds intended for the delivery of services 15, the central government has limited the discretion of local government, providing 80 percent of its funding in the form of highly conditional grants 16. On the other side of the accountability equation, i.e. in supporting the poor by building their capacity to exercise greater influence over local and national institutions none of the PRSPs examined have developed deliberate policy efforts. The strategic thrusts of the IFAD Regional Strategy (the promotion of market linkages, the development of financial services, the improvement of the access and management of land and water, and the creation of better knowledge, information and technology systems) do not always represent the building blocks of the strategy for the development of rural areas. It is difficult to make general statements since the strategies differ greatly across countries. Nonetheless, it is clear that, following the policy and institutional reforms introduced in the last decade, which have freed space for the development of private initiatives, policies have not been adequately developed to assist stakeholders in this new market environment. How the government can support the emergence of the private sector is not adequately analysed nor understood, and, at the same time, there is a lack of policy frameworks to assist farmers in the understanding of a new market environment and to help them to survive with it and to benefit from it. Such a feature is applicable for all IFAD 14 In IFAD s Regional Strategy Paper, empowerment embraces access to material goods and to organisation in order to collectively assert influence. 15 Steep decline in spending on primary health care following administrative decentralisation in 1993 and the large proportion of funds intended for schools and health facilities used instead for administrative costs at higher levels of Government. 16 The conditional grants set out what the grant is intended to be used for, and impose various requirements on local Government to set out workplans and comply with reporting requirements. The grants are in some cases allocated centrally down to individual school level or to sub-county level. 11

18 strategic thrusts: the development of the macro-framework has not been followed by micropolicies to support farmers. Policies for market linkages have not addressed the farmers gap in terms skills for having access to markets; the issues of high transaction costs, and of farmers lack of organisation is not always at the core of the strategy. Another example is related to the reform of the financial sector, at an advanced stage in some countries, which is not linked to a policy framework for banking systems in rural areas able to respond to the needs of the rural population: credit in rural areas is often promoted with micro-credit institutions and is not always coherent with the macro-framework. Access to natural resources, land in particular, is poorly addressed in the PRSPs: land reform crucial in many countries is not the building block of the strategy for rural development. In many cases, the issue of land access and land tenure, although mentioned, is not understood and possible solutions are not presented. Finally, PRSPs strategies for rural development are still deeply rooted in research and extension programmes which in turn are today in profound crisis. In many cases, governments in the Region are fully aware of the difficulties that extension programmes are actually facing. Nonetheless, there is still a gap in terms of proposals relative to alternative approaches cost-effective, efficient and sustainable research and extension programmes. In most cases, public polices and programmes to combat HIV/ AIDS fail to address the economic and social effects of the pandemic. Notwithstanding most of the countries have adopted a national policy for HIV/AIDS, specific actions are, in most cases, limited to health and education and PRSPs fail to recognise the pandemic as a multi-sector problem which affects poor people and therefore rural communities at the most. Measures against the pandemic do not consider the long-term effects of HIV/AIDS on the transfer of generational knowledge, on traditional social-security mechanisms, and on the basic demographic and socio-economic characteristics of rural communities. As an example, education activities related to HIV/AIDS are more oriented in the dissemination of informational material on HIV/AIDS for students and teachers and not in helping the communities with increasing number of orphans to work against the loss of indigenous farming methods, intergenerational knowledge or specialised skills and practices. Regarding the allocation of the PRSP budget and its institutionalisation into the budgetary mechanisms, the main findings are the following: In most cases, the institutionalisation of the PRSP in the budgetary mechanisms is still at its preliminary stages. One of the main objectives of the PRSP initiative was the definition of medium-term priorities on the basis of resource ceilings and outcome objectives. The latter includes the totality of public resources for poverty reduction, including donor and government funds. The adoption of such criteria varies across countries and it is crucially linked to the implementation of public management reforms. If such reforms are stalling or not in the pipeline, PRSP means just a repackaging of existing poverty focused projects and programmes. On the other hand if reforms are introduced, such as the Medium-Term Expenditure or Fiscal Frameworks (MTEFs/MTFFs), the PRSP is increasingly becoming the reference strategic tool for poverty reduction activities. The budgetary allocations for agriculture and rural development are not comparable to those allocated for other activities for poverty reduction. Although there is a certain degree of variability, and considering only public expenditures allocated to poverty reduction activities on average less than 10 percent of expenditure for poverty reduction activities is 12