Investment and Resource Mobilisation Sector Wide Approaches (SWAps) EASYPol Module 163

Investment and Resource Mobilisation Sector Wide Approaches (SWAps) EASYPol Module 163

Investment and Resource Mobilisation Sector Wide Approaches (SWAps) by Michael Wales, Principal Advisor, TCID, Guy Evers, Senior Advisor, TCID, Melissa Brown, Economist, TCIS, and Alicia Fernandez (TCID), Investment Center Division, FAO, Rome, Italy for the FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS FAO Policy Learning Programme aims at strengthening the capacity of high level policy makers in member countries in the field of policies and strategies for agricultural and rural development by providing cutting-edge knowledge and facilitating knowledge exchange, and by reviewing practical mechanisms to implement policy changes. About EASYPol EASYPol is a an on-line, interactive multilingual repository of downloadable resource materials for capacity development in policy making for food, agriculture and rural development. The EASYPol home page is available at: www.fao.org/ easypol. EASYPol has been developed and is maintained by the Agricultural Policy Support Service, Policy Assistance and Resource Mobilization Division, FAO. The designations employed and the presentation of the material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. FAO May 2007: All rights reserved. Reproduction and dissemination of material contained on FAO's Web site for educational or other non-commercial purposes are authorized without any prior written permission from the copyright holders provided the source is fully acknowledged. Reproduction of material for resale or other commercial purposes is prohibited without the written permission of the copyright holders. Applications for such permission should be addressed to: copyright@fao.org.

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) Table of contents 1. Summary... 1 2. Introduction... 1 3. SWAp concepts and definitions... 2 4. Establishing a SWAp... 3 5. Special characteristics of agriculture SWAps... 5 6. Agriculture SWAps in practice... 6 7. Study of SWAps in agriculture & rural development... 9 8. Readers notes... 12 8.1.Time requirements... 12 8.2. EASYPol links... 12 9. References and further reading... 12 Module metadata... 1

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) 1 1. SUMMARY This document presents background material for the session on sector wide approaches, or SWAps, as part of the module on investment and resource mobilization. It provides an overview of the SWAp concept and summarizes recent experience in SWAp implementation. It is based largely on a recently completed review of SWAps in agricultural and rural development and good practice guidelines developed by the Organization for Economic Cooperation and Development (OECD) 1. Other key reference documents are listed in the annex. 2. INTRODUCTION Objectives The aim of this document is to: Summarise the uses of SWAps in agriculture and rural sector development and in aid coordination; Describe the process and methodology of preparing SWAps, including arrangements for financing; and Summarise experience in the planning, financing and implementation of SWAps. Target audience The audience for this document includes stakeholders active in planning and programming within the agriculture sector, including staff of agriculture related line ministries and planning departments, ministry of finance, and development partners. Required background Basic knowledge of agriculture sector planning and financing. Readers can follow links included in the text to other EASYPol modules or references 2. See also the list of EASYPol links included at the end of this module 3. 1 See Evans, A; Cabral, L; and Vadnjal, D, 2006. Sector-Wide Approaches in Agriculture and Rural Development: A Desk Review of Experience, Issues and Challenges, report for the Global Donor Platform for Rural Development, April, 2006 GDPRD-FAO, IDS, ODI, [http://www.donorplatform.org/index.php?option=com_docman&task=doc_details&gid=343], and OECD, 2006. Harmonising Donor Practices for Effective Aid Delivery; Volume 2: Budget Support, Sector Wide Approaches and Capacity Development in Public Financial Management. [http://www.developmentgateway.com.au/jahia/jahia/op/edit/pid/3102] 2 EASYPol hyperlinks are shown in blue, as follows: a) training paths are shown in underlined bold font b) other EASYPol modules or complementary EASYPol materials are in bold underlined italics; c) links to the glossary are in bold; and

2 EASYPol Module 163 Analytical Tool 3. SWAP CONCEPTS AND DEFINITIONS A SWAp has been defined as a programme that supports a single sector policy and expenditure programme, under government leadership, adopting common approaches across the sector and progressing towards relying on government procedures to disburse and account for all funds 4. Thus, SWAps typically involve the coordination of external and government financing under a single policy or programme umbrella, establishment of common procedures for managing expenditures, and the use of Government systems as the basis for planning and monitoring progress. It is often a process that involves gradual movement towards greater sector coverage and increasing participation and dialogue by government and donor actors. There is, however, no blueprint for a SWAp and it should be understood as an approach that varies according to country and sector context. SWAps grew out of the experience of highly aid-dependent countries, where aid was often delivered through multiple donors and characterized by fragmented budgetary and management structures, and a lack of coherence between existing policies and activities implemented on the ground. SWAps were first developed in the education and health sectors and later in non-social sectors such as infrastructure and agriculture. SWAps are now common in countries where external aid represents a small percentage of the overall budget. In general, a SWAp has four main objectives: To broaden ownership by partner Governments over decision making with respect to sector policy, strategy and spending; To improve coordination among all relevant policy stakeholders in the sector; To increase coherence between sectoral policy, spending and results by bringing the sector budget back into the centre of policy-making and unifying expenditure programming and management regardless of the sources of funding; To minimise transactions costs associated with the provision of external financing. The term SWAp is not exclusively used to describe the concepts outlined above or the actual programmes that are based on SWAp principles. Programmes that are based on a SWAp model are often called sector investment programs (SIPs), sector programmes, and agricultural sector programmes, among others. Other terminology has also been developed over time to describe approaches based on the same concepts underpinning SWAps, other closely related approaches include: Harmonization and alignment: In 2005, OECD countries agreed to the Paris Declaration on Aid Effectiveness, which called for harmonization and alignment of donor support to developing countries. In this sense, d) external links are in italics. 3 This module is part of the EASYPol Training Path: Policy Learning Programme, Module 3: Investment and Resource Mobilization, Session 5: Risk mitigation in agricultural investment. 4 Foster, M; Brown, A; and Naschold, F. Sector Programme Approaches: Will They Work in Agriculture? Development Policy Review, 2001, 19(3)

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) 3 harmonization is where donors agree to common procedures and systems and to coordinate aid in a more effective way, and alignment is where donor countries support policies and systems established by recipient governments, rather than imposing donors own policies and systems. Programme Based Approach: Programme Based Approaches (PBAs) are a more general term than SWAp but based on the same principles. PBAs are intended to support locally owned programs of development and the word programme refers to the programme of a developing country or institution, which one or more donors have agreed to support. The programme may be a Poverty Reduction Strategy, a sector program or a thematic program or the program of a specific organisation such as a non-governmental organisation. A SWAp is a policy planning and management approach rather than a funding mechanism and can in reality be funded by a variety of financial aid instruments. These include: General budget support: Assistance is provided in support to the government budget and can be used to increase spending, reduce borrowing or reduce taxes. Funding is disbursed into the government accounts and used and managed according to the national public financial management procedures. Sectoral budget support: This modality is provided with sector conditions usually requiring agreement between government and donors on the sector s policy. Funds are hence earmarked to financing an agreed expenditure plan for the sector and disbursed and accounted for through government systems, sometimes with some additional sector specific reporting. Sector earmarked support or basket funding: This modality is a variation of sectoral budget support and is used when specific earmarking within the sector s programme and expenditure plan is required because of donor limitations on aid to specific expenditure categories within the sector. 4. ESTABLISHING A SWAP Developing a SWAp will involve a process of policy development and dialogue. Effective partnerships will need to be established between government and development partners and integrated monitoring and budgeting systems put into place. Developing a SWAp can be a sometimes slow process as actors work to define and develop a programme that meets the needs of the various stakeholders. Important elements that should be addressed in establishing a SWAp include: A clear nationally-owned sector policy and strategy. A coherent and consistently applied sector policy is at the heart of any successful SWAp and focuses the government, donors and other stakeholders on achieving collective results. It must be derived from, and consistent with, the government s overall strategic objectives and strategic framework (including the Poverty Reduction Strategy).

4 EASYPol Module 163 Analytical Tool A medium-term expenditure programme 5 that reflects the sector strategy. The expenditure framework is what makes a sector development programme operational. It ensures that proposals in the sector action plan have been properly costed and prioritised against a realistic estimate of (government and external) resources available. Systematic arrangements for programming resources that support the sector. Programming is essential, it links projects and activities clearly to assured sources of funds, and to detailed work programmes based on agreed schedules for implementation. In practice, even when the resource parameters of a sector development programme are broadly realistic, planned activities are always likely to exceed available budgets; hence, the allocation of funds requires a further prioritisation of planned activities. The whole process is made much more complex by the need to combine funding from many different sources. A performance monitoring system that measures progress and strengthens accountability. An agreed approach to performance monitoring is an essential part of a SWAp. It provides the means for the partner government and donors to judge whether sector goals are being achieved and whether sector strategies are effective. It is also the basis for shared accountability. Broad consultation mechanisms that involve all significant stakeholders. SWAps require formal, government-led mechanisms for co-ordination and dialogue at the sector level. Thus the national budget should be the principal mechanism for allocating public resources (including aid) and the national parliament should be the source of authority for national policies, plans and budgets. Where these systems are weak, a key objective for SWAps and for other aid co-ordination arrangements should be that they help to restore appropriate lines of national accountability. SWAps have at times been criticised for being too focused on government s role as a service provider and on the relationship between the central government and external donors, while taking insufficient account of the interests of other stakeholders. The interests of the clients for services should be central, as part of the general accountability relationship of government to its constituency. It is also important to take account of, and consult with, non-governmental service providers in the sector. These may include NGOs, community-based organisations and the private sector. A formalised government-led process for aid co-ordination and dialogue at the sector level. One of the principal reasons for adopting a sector-wide approach is to break out of a vicious cycle in which weak national capacity leads donors to make use of parallel systems for aid, which further undermines and debilitates government systems. SWAps are expected to make use of national systems of planning, management, implementation, monitoring and evaluation, and to contribute to the reinforcement of those systems over time. To some extent, this is expected to happen through learningby-doing, but there will also be a need to provide for the appropriate institutional development and capacity building required for these changes. 5 A medium term expenditure program or framework (often referred to as a MTEF) is a system for planning actions and programming spending over a three to five-year period. It reconciles systematically the achievement of strategic objectives with respect for aggregate resource limits. (OECD, 2006)

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) 5 An agreed process for moving towards harmonised systems for reporting, budgeting, financial management and procurement. A fundamental objective of SWAps is to improve harmonisation among donors as well as strengthening their alignment with national strategies. Relying on common arrangements for budgeting, disbursement, accounting, procurement and reporting is a key objective for any SWAp and in many cases the one on which partner governments place the most emphasis. Care should be taken, however, to not focus too much on ideal solutions that may be too difficult to implement as a first step, such as one common pool for donor resources. It is important to identify appropriate intermediate steps and the required sequencing needed to achieve harmonised systems. Figure 1: Components of a sector approach 5. SPECIAL CHARACTERISTICS OF AGRICULTURE SWAPS The agriculture and rural development sector has special characteristics that complicate development of SWAps. Agriculture is a complex and heterogeneous sector; it provides employment to the majority of the population in many countries and any intervention can have potentially large and extensive impacts. Other key characteristics which affect development of agricultural SWAps include: Diversity of private sector actors: Most activity in agriculture takes place through private sector actors who have varying resources, capacities, and interests. Production systems are extremely diverse and sub-sector markets often have unique characteristics. Interventions in the sector are likely to require specialized solutions and may result in complex interactions or tradeoffs that should be understood in advance.

6 EASYPol Module 163 Analytical Tool Multiple public sector actors: Unlike social sectors, agriculture is a productive sector and many of the policies that affect the sector are not the sole domain of the line ministry. Line ministries take a lead role in service delivery and regulatory functions, but macroeconomic policies affecting exchange rates, inflation and fiscal spending and infrastructure development in communications, roads and irrigation are equally important to the development of the sector. In addition, growing decentralization has devolved control over resources to regional or district governments. Sector programmes may create expectations of higher funding among various public entities where it is not planned. Consensus on the role of the state: The role of public institutions in the sector has changed over time and consensus has not emerged on the exact role of the state in the sector. Often governments and donors disagree about the role of the state in agriculture. Donors also disagree amongst themselves, making donor coordination more difficult for government. In general, there may not be strong political support for agricultural reforms, which may make implementation of a SWAp involving significant reforms difficult to implement. 6. AGRICULTURE SWAPS IN PRACTICE Mozambique: Mozambique s SWAp, PROAGRI, was launched in 1999 after a long preparatory phase in an attempt to create both a comprehensive policy approach and a common aid management approach aligned with national public financial management systems. The SWAp was introduced in response to a highly fragmented aid management and policy landscape populated by many different and often contradictory projects operating outside the budget and often unknown to the ministry. The development of a common funding mechanism (CFM) was therefore a crucial first step in phase one, including laying down common procedures for planning, budgeting, procurement, reporting and monitoring for all PROAGRI funding. The CFM is aligned with national public financial management procedures, although some donors maintain specific additional provisions within the PROAGRI framework. Along with the CFM, PROAGRI I focused heavily on improving planning and financial management systems within the agricultural sector at central and provincial levels and improving dialogue and coordination between government and donors and between donors themselves. An evaluation of PROAGRI I carried out at the end of 2002 acknowledges PROAGRI s achievements in the above areas, but also noted a series of shortcomings including excessive focus on capacity building of central administration, limited participation of beneficiaries, weak inter-sectoral coordination, weak alignment with the Mozambique PRS and continued funding by donors outside of the programme s framework. PROAGRI, it was argued, had been more successful in improving management systems than in achieving better results on the ground. As a result, PROAGRI II, which is currently being developed, has expanded to a framework for interventions bringing together agriculture, infrastructure, financial services, health and education with a stronger emphasis on inter-sectoral coordination and decentralised policy formulation and implementation

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) 7 Uganda: The Plan for the Modernisation of Agriculture (PMA) was initially led by the Ministry of Finance and was intended to address agricultural growth and poverty reduction through a restructured sector governance framework. The PMA saw agricultural reform as a matter to be tackled by a range of different policy actors beyond the Ministry of Agriculture. The PMA emphasised decentralisation and empowerment of local communities as well as encouraging private sector provision of goods and services. PMA has a very strong connection with the national poverty reduction policy (PEAP) and has a strong focus on targeted service delivery for poorer subsistence farmers. The PMA is financed through a combination of government, donor and NGO specific funds. Donor support to the sector comprises direct funding of projects, indirect financial support through general budget support (GBS) and earmarked support. There is no common financing mechanism specifically for PMA. A recent evaluation of the PMA (OPM 2005) points to strong and genuine ownership by government of the programme; widespread adherence to the PMA objectives and principles across government; better dialogue between the donor community and government and strengthened donor coordination and harmonisation in the sector. However, roll out of the seven pillars prioritised for action under PMA has been very uneven with a potential loss of synergy between them and frustration for key stakeholders. Other problems reported include weak buy-in from line ministries other than Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) which feel that the PMA is mainly a framework for agriculture which gives limited benefit to other ministries. The PMA is also seen as being too donor driven. Although substantial progress has been made at the policy level under the PMA and sector priorities are fully aligned with the MTEF, the PMA financing remains somewhat fragmented. This confirms the importance of integrating macro and sector level reforms as part of the sector approach. Ghana: Ghana currently has three mechanisms that have SWAp like features - the World Bank financed Agricultural Services Sub-sector Investment Programme (AgSSIP), designed between 1998 and 2000; Food and Agricultural Budgetary Support (FABS) led by CIDA to provide budgetary support to MoFA; and a DfID led Support to Agricultural Sector Harmonisation programme started in 2005/6 aimed at harmonising agricultural sector policy and improving its effectiveness through the revision of agriculture sector policy, improved inter-ministerial coordination, improved policy coherence and institutional reform and donor harmonisation. A large part of this programme will be financed through on-budget sector budget support to be harmonised with the FABS mechanism. Although there have been several attempts, it seems that so far it has been difficult to move forward to a joint donor support arrangement aligned at the sectoral level. The AgSSIP was designed as an agricultural sector programme but in practice has failed to put in practice many of its SWAp-like features, namely alignment with national planning and budgeting processes and coordination and harmonisation between donor agencies. An example of the latter was the unilateral decision by the World Bank to take out from the programme the infrastructure and rural finance components following the

8 EASYPol Module 163 Analytical Tool 2000 AgSSIP appraisal. This is said to have created strong resentment among other donors and might have encouraged CIDA and DfID to embark on their own SWAp experiments. In the meantime, other donors hold on to their projects and parallel implementing structures and arrangements, carrying with them significant transactions costs. A critical question is whether there is still space for a truly joint donor supported agricultural SWAps and what steps Government of Ghana needs to take to assume greater leadership of the policy and aid management process. Nicaragua: Approved in December 2005, PRORURAL was mainly promoted by the Ministry of Agriculture and a core group of active donors (World Bank, EC, Finland, Norway, Sweden, Switzerland). It encompasses four main components: (i) a mediumterm strategy for the rural productive sector (5 years), in line with the PND (Plan Nacional de Desarrollo, a sort of national flavoured PRSP appeared in 2004); (ii) a multi-year budget, which considerably increases financial resources devoted to agriculture and rural development; (iii) semi-formalized multilevel mechanisms for stakeholders coordination and negotiation (public agencies involved in agriculture and rural development policies, other relevant public agencies, donors, NGOs, private sector) to discuss and reach formal agreements on relevant issues related to the strategy; and (iv) a basket funding mechanism called common fund financed by Switzerland, Sweden, Finland and Norway, and which provides 8% of the resources stated in the multi-year budget. The most successful feature of PRORURAL is the active involvement of stakeholders (donors, government agencies, private sectors, NGOs) in formal and informal consultation and coordination mechanisms during formulation and implementation. PRORURAL is vested with a high degree of legitimacy that has enabled it to survive to a change of government in January 2007. Nonetheless, the strategy is considered by many as too broad and lacking of clear priorities, probably as a result of wide participation. Lack of priority setting in the strategy partially undermines the relevance of alignment and harmonization. Apart from the establishment of the common fund, there is no significant harmonization of managerial aspects among donors, and resources for PRORURAL are still mostly channelled through projects. Prior to PRORURAL, the governance context of agricultural policy was characterized by an oversized number of mutually competing agencies that were dependent on fragmented funding from international projects and lacked strategic focus. The endorsement of a mid-term strategy has provoked a reflection among relevant public officers about their respective institutional mandates, strategies and resources allocation mechanisms and impelled them to gradually amplify areas of cooperation and coordination. Though at a moderate pace, the new focus is cascading down to the medium and low levels of administration in the national and sub-national levels, giving place to a renewed leadership by the MoA, a gradual redefinition of roles, and considerable mainstreaming of overlapping activities. In spite of these positive changes, not enough has been done to build and enlarge the capacity of these agencies and to define operational strategies for implementation. Thus PRORURAL s capacity to produce tangible results in the field remains its main challenge.

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) 9 Tanzania: The Agriculture Sector Development Programme (ASDP) grew out the Government s Agriculture Sector Development Strategy and is designed to address major constraints to development of the agricultural sector in Tanzania in an integrated fashion. The design reflects lessons learned and good practice from other SWAp programmes both in Tanzania and the region and has been guided by several themes: (i) decentralization with increasing control of resources by local government and beneficiaries; (ii) pluralism in service provision with a greater role for the private sector; (iii) results-based resource transfers aligned to a capital development grant system; and (iv) integration of development assistance within general government systems. ASDP built on the experience of SWAp arrangements in other sectors and the Joint Assistance Strategy, which is a tool for harmonizing external development aid in Tanzania. Although Government and development partners were committed to development of ASDP, the process was lengthy and sometimes contentious, particularly in regard to SWAp financing modalities. The Government and at least two of the original seven donors regarded the adoption of a basket fund approach as old-fashioned given their parallel commitments to general budget support. The basket fund approach became a mechanism to improve donor coordination in the sector given variable commitment to general budget support and concerns about policy focus and capacity within the sector. The ASDP is sometimes not regarded as a SWAp because many current sector expenditures are outside of the common policy and expenditure framework. However, there is clear intent to progress towards a single expenditure framework in the sector and the Tanzanian agricultural SWAp is properly understood as a process. All the budgets of the agricultural sector line ministries are intended to be incorporated under ASDP within the next few years but this may not be feasible without widespread understanding and commitment to the ASDP process within government and development partners. Initially started in 2000, ASDP became operational only in 2006/07, demonstrating that higher than expected transactions costs and donor coordination can significantly slow SWAps development. 7. STUDY OF SWAPS IN AGRICULTURE & RURAL DEVELOPMENT The Global Donor Platform for Rural Development (GDPRD) has commissioned a study of the experience of SWAps in agriculture and rural development around the world. The results of the study are due to be synthesized in June 2007. The aim was to determine whether the SWAps examined had achieved their goals and whether they significantly added to aid effectiveness, and the long term contribution of agriculture to growth and poverty reduction. Changing A&RD governance: the study came to the conclusion that changes in the mandates of Ministries of Agriculture as a result of the new aid architecture, meant that there were new and increased challenges of coordination and coherence within the sector that were not present when much of development assistance was channelled through projects. Complexity of A&RD sector(s): not surprisingly, the challenges are particularly big because agriculture and rural development are intrinsically complex, with a great many

10 EASYPol Module 163 Analytical Tool different players and institutions impinging on the sector. Furthermore, the fact that most activities in the sector are in the private sector in the form of small-, medium- and large-scale farmers, and in agro-industries, public expenditure is not the main source of financing and therefore has limited direct influence. Aid processes in A&RD: as the level of assistance going to the sector has fallen, there has been a greater focus on policy-making, institutional capacity strengthening and public financial management. Themes of the study: the study has looked at a range of themes including: improved aid management - coordination, harmonisation and alignment; enhanced sector policy coordination and planning and locally-owned processes; improved institutional capacity and government leadership; enhanced public expenditure, financial management and equitable service delivery; and stronger private sector interface. Preliminary findings of the study: although all the analysis has not been completed, the initial findings include: Improved aid management: there is limited concrete evidence of improvements in aid effectiveness arising from sector approaches. Some of the disadvantages of the approach include the lengthy design processes and increased transaction costs, both elements that have been confirmed in Tanzania and Mozambique. There is also a conceptual conflict with the trend towards the commitments made by donors in many countries to DBS. However, some donors and some substantial donor funds stay outside the DBS mechanism and may even support traditional-style projects. Improved policy coordination and planning: the study found that in general policy coordination and planning was improved through a SWAp, but to some extent, there was continued overlapping in terms of policy statements, setting of priorities and strategies. In addition, inevitably not all sector activities are included in SWAps. The challenges of decentralisation, which is a strong trend in public administration world wide, shifts control to local administration (districts) and renders a SWAP even more complex to manage. Enhanced public expenditure, financial management and service delivery: one of the most positive conclusions is that public expenditure and financial management seem to be showing signs of improvement, especially when operated within MTEFs. The SWAP can be an effective tool for integrating planning at all levels. However, in almost all cases, M&E remains weak. Improved institutional capacity and government leadership: there has been limited progress in terms of institution building through SWAPs and no obvious sign of greater government leadership and ownership. As in existing modalities, domestic politics can interfere with priorities, and outcomes may often be at odds with donor views of how a programme in the sector should be managed and targeted. Furthermore, MoAs have generally not yet assumed full leadership of their programmes.

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) 11 Enhanced private sector interface: whilst SWAps were expected to strengthen the role of the private sector in the management and delivery of services within the sector, there are no obvious signs of any improvement in this respect. There are some examples of outsourcing initiatives, such as in extension service delivery or veterinary services. Also, attempts to initiate PPPs has resulted in such areas remaining projectised. Some important initial messages emerge about the future and viability of SWAps in agriculture: Ownership: effective ownership of SWAps by government is related mainly to a more generalised weakness in government leadership of the policy process, regardless of the sector. Aa always, the development partners want to continue to drive the policy formulation process and even to meddle in implementation. Decentralisation: a major challenge is how to make the SWAp process compatible with decentralisation. This confronts the major issue of central government resource allocations to lower levels in the administration and implies that major allocations of resources must be made to local government levels. Inevitably, however, policy priority-setting and even indirect control of resource application, often remains at the centre. Aid harmonization and alignment: it seems clear that GBS, by its very nature, achieves far greater effective harmonisation and alignment than a SWAp. With the creation of the PRS and its linkages with a rigorous MTEF, development partners are able to rely upon GBS and no longer need to engage in direct funding to any particular the sector. The instances of basket funding or common funding for a sector are out of step with the principles that dictate full delegation of responsibility to governments. Policy and institutional coherence: broad coordination and coherence around a common policy and operational framework within the sector is extremely difficult to achieve, simply because of the complexity of the agriculture sector and its interactions with other sectors. It might be better to focus sector support around specific areas (such as extension, rural infrastructure) rather than across the entire sector so as to minimise the complexity in design. Performance and results: it has been difficult to identify tangible results on the ground from the SWAps that have been evaluated. For example, PROAGRI in Mozambique cannot be seen to have made a tangible impact on production or productivity in the country. An implementation completion report (ICR) on PROAGRI by the World Bank (2007) makes the case that the true objective of the SWAp was institutional reform and system improvements, and that development results were not clearly established from the start. The ICR concludes that the design of PROAGRI was innovative, bold and commendable and that the objectives were neither operational nor measurable. That is, the SWAp was really intended to set the institutional development scene at a later date for operational and direct development impact. It also ran into problems because of the demand by donors to track all expenditures in detail for fiduciary reasons, and that the development impact had to be traded-off against institutional strengthening. The lessons from PROAGRI include: weak institutions, such as those in Mozambique after a long

12 EASYPol Module 163 Analytical Tool civil war, can be revived quite quickly; the efforts needed on capacity building for staff are far greater than imagined; joint donor and government operations can strengthen government ownership of the process; and improved PFM is an important part of being able to track expenditures and build the confidence of the donors in the national system. 8. READERS NOTES 8.1. Time requirements Time required to deliver this module is estimated at about 2 hours. 8.2. EASYPol links This module belongs to a set of modules which are part of the EASYPol training path Policy Learning Programme, Module 3: Investment and Resource Mobilization, Session 6: Sector-wide approaches (SWAps). Readers can follow other EASYPol documents under Module 3, which is structured as follows: Module 3: Investment and Resource Mobilization Session 1: Investment in agriculture & rural development Session 2: Environment for private investment in agriculture & rural development Session 3: Sources and uses of financial resources Session 4: Strategies for increasing farm financing resources Session 5: Risk mitigation in agricultural investment Session 6: Sector-wide approaches (SWAps) Session 7: Socio-economic & livelihood analysis 9. REFERENCES AND FURTHER READING Evans, A, Cabral, L, and Vadnjal, D, 2006. Sector-Wide Approaches in Agriculture and Rural Development: A Desk Review of Experience, Issues and Challenges, report for the Global Donor Platform for Rural Development, April, 2006 http://www.donorplatform.org/index.php?option=com_docman&task=doc_download&gid=343&itemid=37 Foster, Mick; Brown, Adrienne; and Naschold, Felix (2001). Sector Programme Approaches: Will They Work in Agriculture? Development Policy Review, 2001, 19(3) for purchase at: http://www.blackwellpublishing.com/journal.asp?ref=0950-6764&site=1 or, an earlier draft available free at: http://www.odi.org.uk/pppg/publications/papers_reports/dfid/issues/nr01.pdf

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) 13 International Fund for Agricultural Development (2005). IFAD Policy: Sector Wide Approaches for Agriculture and Rural Development: http://www.ifad.org/pub/policy/swaps/swaps_e.pdf Organization for Economic Cooperation and Development (2006). Harmonising Donor Practices for Effective Aid Delivery; Volume 2: Budget Support, Sector Wide Approaches and Capacity Development in Public Financial Management OECD. http://www.oecd.org/dataoecd/53/7/34583142.pdf Watt, Patrick. 2005 Transactions Costs in Aid: Case Studies of Sector Wide Approaches in Zambia and Senegal Human Development Report Office Occasional Paper http://hdr.undp.org/docs/publications/background_papers/2005/hdr2005_watt_patrick_26.pdf World Bank, (2004). Agricultural Investment Sourcebook http://www.worldbank.org/agsourcebook

14 EASYPol Module 163 Analytical Tool MODULE METADATA 1. EASYPol module 163 2. Title in original language English French Spanish Other language FAO Policy Learning Programme Programme de formation aux politiques de la FAO Programa de aprendizaje sobre políticas de la FAO 3. Subtitle in original language English Investment and Resource Mobilisation Sector Wide Approaches (SWAps) French Investissement et mobilisation des ressources - Approches sectorielles Spanish Inversión y movilización de recursos: Enfoques sectoriales (SWAps) Other language 4. Summary The document summarise the uses of SWAps in agriculture and rural sector development and in aid coordination; describe the process and methodology of preparing SWAps, including arrangements for financing; and summarise experience in the planning, financing and implementation of SWAps. 5. Date January 2008 6. Author(s) Michael Wales, Principal Advisor, TCID, Guy Evers, Senior Advisor, TCID, Melissa Brown, Economist, TCIS, and Alicia Fernandez (TCID), Investment Center Division, FAO, Rome, Italy 7. Module type Thematic overview Conceptual and technical materials Analytical tools Applied materials Complementary resources 8. Topics covered by the module Agriculture in the macroeconomic context Agricultural and sub-sectoral policies Agro-industry and food chain policies Environment and sustainability Institutional and organizational development Investment planning and policies Poverty and food security Regional integration and international trade Rural Development

FAO Policy Learning Programme Investment and Resource Mobilisation - Sector Wide Approaches (SWAps) 15 9. Subtopics covered by the module 10. Training path FAO Policy Learning Programme 11. Keywords Sector Wide Approaches (SWAps); Programmatic Support; Gene