Consultancy in a Changing Aid Environment: OPM Workshop

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2. Finnish Aid in a PRSP context Helsinki workshop 19th – 21st May 2003 Day 3: Consultants & Researchers

3. Plan for today Introduce OPM Look at changes in demand for services Highlight new skills that are needed Look at what skills are already in Finland Examine changed environment in relation to business plans and strategies

4. What is OPM? Small consultancy based in Oxford Privatised department of the university 25 consulting staff mainly economists Works mainly for DFID, WB, EC, ADB and other bi-lateral donors Worked in over 80 countries Main focus in SSA, South Asia, the Caribbean

5. What sectors do we work in? Economic policy Social policy Public sector finance and management

6. Changes in aid context: Shift in objective from stabilisation & adjustment to growth and poverty reduction Change in instrument from project to sectoral/budget support Shift in framework to PRSP aligned to budget Possible change in volume of aid (aid flows may increase to support achievement of MDGs)

7. Changes in aid management: More untied aid Greater use of local technical assistance More decentralisation by donors to local offices Larger projects More recipient government management/co-ordination

8. At the same time as PRSP/GBS, donors adopting new themes, including: Pro-poor growth/sources of growth Private sector development Business environment Trade Governance

9. What does this mean for consultancy companies? With GBS/sectoral support, aid flows directly to recipient governments, not through companies We won’t be implementing projects any more All that is left is technical assistance to support PRSP process and implementation of GBS

10. It’s not the end of the world… Many countries not ready for GBS and won’t be for a long time (2001/02, £290m of budget support was provided to 17 countries, equivalent to 18% of the DFID bilateral programme) Cynics waiting for sectoral support/GBS to fail Unless PRSP and GBS completely aligned then plenty of room for “projects” within PRSPs

11. But, fewer projects when:

12. And projects outside GBS when:

13. Technical assistance in a PRSP/GBS world

14. Policy formulation Financing PRSP process: Results oriented, evidence based policy making? Communication Poverty analysis Monitoring and evaluation Policy implementation Reminder

15. Policy formulation Financing • Quantitative and qualitative • data on poverty • Analysis of growth and poverty linkages • Goal setting • Facilitation of participatory process • Research eg impact of macro policies • on poverty (PSIA) • Strengthening statistical agencies PRSP process: the theory Communication Poverty analysis Monitoring and evaluation Monitoring Policy implementation Poverty Analysis

16. Policy formulation Financing • Examining performance of existing • programmes (though service • delivery surveys etc) • Identifying policies and programmes • that can contribute to poverty reduction goals • Costing policies and programmes PRSP process: the theory Communication Poverty analysis Monitoring Policy implementation Policy formulation

17. Policy formulation Financing • Aligning PRSP with budget process • Strengthening PFM • Supporting specific diagnostic tools (see below) • Supporting transition from projects to sector/GBS • Identification of fiduciary safeguards for donors • Training donors in PFM PRSP process: the theory Communication Poverty analysis Monitoring Policy implementation Financing

18. Developing communications strategies • for recipient governments • Participatory process with civil society Policy formulation Financing PRSP process: the theory Communication Poverty analysis Monitoring Policy implementation Communication

19. Supporting improved • implementation • Continuing to provide services • but within PRS framework • Running pilot projects • within PRS framework • Implementation of (new) • poverty programmes • within PRS Policy formulation Financing PRSP process: the theory Communication Poverty analysis Monitoring Policy implementation Policy implementation

20. Supporting the design • of m&e frameworks: • Aid flows/donor behaviour • PRSP process • Policy commitments • Budget processes • Inputs/outputs • Poverty outcomes Nb monitoring of GBS and PRSP should be linked Policy formulation Financing PRSP process: the theory Communication Poverty analysis Monitoring and evaluation Monitoring Policy implementation Monitoring and Evaluation

21. Policy formulation Financing PRSP process: Results oriented, evidence based policy making? Communication Poverty analysis Policy implementation Monitoring and evaluation Policy formulation process

22. What skills are required? • Process skills • High level policy advice • Research on outcomes and impacts (like PSIA, • LSMS, SDSs, PPAs) • Statistical/monitoring support • PEM and PFA

23. Example: GBS requires new diagnostic tools Three requirements are necessary to build capacity for PFA: (1) An effective, transparent and publicly accountable system for revenue, expenditure and cash management (2) External audit that is independent and open to scrutiny (3) Information on operational efficiency and results Knowledge of formal systems for PFA has developed since the late 1990s. It remains in many case incomplete. Diagnostic instruments (2)

24. Change in type of work required: Until the late 1990s, diagnostic work focussed on one aspect of PFA – namely budget processes through public expenditure review work. The emphasis has now shifted from management to the governance of public resources (involves issues of internal control, reliable and timely public accounts, performance reports, external audit. More attention is now given to the effectiveness of legislative and corporate oversight functions (ie: budget and audit committees), access to information, and the freedom of the media. Good accounting and audit in the private sector are necessary Diagnostic instruments (3)

25. Changing diagnostic instruments: Public Expenditure Reviews (PER) focus on the policy-budget link, budget processes and expenditure control Key new PFA diagnostic instruments are the CFAA and CPAR to support the exercise of fiduciary responsibilities, by helping to identify the risks to the use of donor funds and development objectives The Country Financial Accountability Assessment (CFAA) designed to gather detailed data on accounting, auditing and internal control systems. Country Procurement Assessment Review (CPAR) on the public procurement system. Diagnostic instruments (5)

26. Other new instruments: Other instruments include Public Expenditure Tracking Surveys (including payroll), Service Delivery Surveys, which provide a mix of qualitative and quantitative impact data. IMF Report on Standards and Codes, which looks at fiscal transparency practices (quality, timeliness, availability, completeness and use of fiscal data). Highlights problems with internal control and recording systems The Institutional Governance Review, attempts to assess capacity and constraints (social, economic, cultural) to improvement. Diagnostic instruments (7)

27. Strategy Policy Review Budget Form. Budget Exec. Acc. & Mon. Rep. & Audit Public Expenditure Review CPAR Country Fin. Acc. Assessment • The budget process Diagnostic tools Where do they all fit?