MDGs Needs Assessment/Costing: Why MDGs-based Planning-2: Technical Issues

1. MDGs Needs Assessment/Costing: Why MDGs-based Planning-2: Technical Issues A Presentation by Barth T. Feese, Head, Costing Unit Office of the Senior Special Assistant to the President on MDGs, State House, Abuja. At MDGs Costing Seminar, Organised by the African Institute for Applied Economists, Enugu, on 17th March, 2010.

2. Agenda • Introduction • Objectives of MDG needs assessments • Overview of different costing methodologies • The needs assessment approach: a practical illustration from the education sector

3. Motivation Needs Assessments aim to flip the question: FROM: How close can we get to Nigeria’s or Enugu State’s long-term goals under the current constraints? TO: What will it take to achieve Nigeria’s or Enugu State’s long- term goals? NOTE: Transformational Question

4. Principles of Development Strategies that are Goal-based Common strategy today Goal-based development strategy MDG target Level of MDG progress ? 1990 2005 2008 2015 MDG MDG Base Year Target Deadline 1990 2005 2008 2015 MDG MDG Base Year Target Deadline YEAR YEAR

5. Agenda • Introduction • Objectives of MDG needs assessments • Overview of different costing methodologies • The needs assessment approach: a practical illustration from the education sector

6. Objectives of an MDG Needs Assessment • Answers the question: “What will it take to achieve long-term goals, such as Nigeria’s 5th National Devt. Plan (mid-term implementation frame work for V20:2020, 7-point Agenda, Delta State’s 3-Point Agenda targets and the MDGs?” • Translate long term goals into operational targets • Develop a strategy for increasing “absorptive capacity” • Can be used as a framework for assessing needs of other relevant sectors for the country • Strengthens coherence between planning and budget processes and guides programming of expenditures • Provides a monitoring and accountability framework • Supports the national policy dialogue and negotiations with development partners

7. Approach to Aligning National/States’ Devt Strategies with MDGs Long-term plan aligned with the MDGs targets MDG needs assessmentthrough 2015 National/State’s Development Strategy • Inform NDP, 7-Point/3-Point Agenda (Delta) implementation, including • MTEF • Macro framework • “What needs to be done right now?” • Quantify and aggregate sub-country level inputs needed to meet national goals • “What” & “How Much” • Identify policies and institutions to meet nationally aggregated need • “How To”

8. Core Questions Answered by a Needs Assessment • Who andwhere are the poor? • Identify the target population for each sector • Map the locations of populations in need • Whatneeds to be done? • Identify critical interventions • How much? • Estimate capital and recurrent costs • Estimate infrastructure and human resource needs • Identify scale up path till target date, e.g. 2015

9. MDG Needs Assessment Approach 1.Identify interventions 2.Specify targets for each intervention 3.Estimate resource needs 4.Check results

10. Stages in MDGs Costing Exercise • Identification of Interventions (high impact/short time: Q/W) • Specification of MDG Outcome Targets-2007 baseline, 2015 target and Scale-Up Paths (front/back loaded, linear) • Estimation of Resource Needs • Target population (macro assumptions: Total- 140,003,542, rural- 91,002,302 , urban- 49,001,240, growth rate- 3.2%, household size-4.8 • Specification of Coverage Targets (population served): sector assumptions • Specification of Input Ratios (quantity or quality/efficiency) • Unit Costing: macro assumptions- Exchange rate: N117/$, Inflation: 8% • Review of Costing Results (realistic or affordable) • Review of Development Outcomes (The MBB tool) • Four excel sheets for assessing the impact of bottleneck reduction on morbidity and mortality. • By imputing new frontier coverage figures into an epidemiometric model.

11. Guiding Principles of MDG Needs Assessments • Plan to relax “absorptive capacity” constraints through investments in human resources, infrastructure and management systems • Focus on interventions that require full or partial public financing • Undertake total, not incremental costing • Ensure maximum transparency so that assumptions can be adapted to states’ needs. No “one-size-fits all”! • Periodically revise targets/interventions based on new information and implementation of programs

12. Suggested Investment Clusters • Rural development • Urban development • Health systems • Education • Gender equality • Environment • Science, technology and innovation • Cross-national infrastructure • Public sector management

13. Table 1: Mapping of Sectors to the MDGs

14. MDGs Costing Models (Customised for Nigeria) • UN Millennium Project Costing Models • Agriculture and Rural Development Costing Tool • Energy Costing Tool • Environment Needs Assessment Tool • Housing: Slum Upgrading Needs Assessment Tool • Roads/Infrastructure Needs Assessment Tool • Water and Sanitation Needs Assessment Tool • Other Costing Tools • Education Policy and Strategy Simulation Model (EPSSim), developed by UNESCO for Education Sector • Marginal Budgeting for Bottlenecks (MBB), developed jointly by UNICEF, the World Bank and WHO for Health Sector

15. Agenda • Introduction • Objectives of MDG based needs assessments • Overview of different costing methodologies • The MDG needs assessment approach: a practical illustration from the education sector

16. Limitations of Multi-Sectoral Needs Assessments Question addressed: “Which interventions are needed across sectors to achieve the Goals, and what are the associated requirements in terms of human resources, infrastructure, and financing?” Limitations: • Time intensive • High data needs • Cross-sectoral dynamics require iterative adjustment of coverage targets • Macroeconomic dynamics need to be modeled with the help of separate tools • Complementary policies and institutional reforms are not included

17. Comparison with ICOR-based Approaches Question addressed: “What aggregate level of investment is needed to meet the income poverty goal?” Limitations compared to needs assessment: • Human resource and infrastructure requirements cannot be estimated • No guidance to programming public expenditures • No separation of public and private investments or composition of investments • No inclusion of MDG interventions that do not have a direct impact on growth • Based on historical incrementaI cost /output ratios (ICORs) and poverty elasticities that apply only to marginal changes

18. Comparison with Approaches Based on Input-outcome Elasticities Question addressed: “What aggregate level of investment is required to meet individual Goals?” Limitations compared to needs assessment: • Can only model a small number of aggregate variables across few sectors • Limited by number of variables and equations necessary to close the models mathematically • No guidance to programming public expenditures • Human resource and infrastructure requirements not estimated • Could lead to double-counting of interventions across sectors • Based on historical elasticities that apply only to marginal changes

19. Comparison with Approaches Based on Aggregate Unit Costs Question addressed: “What is the gap between current expenditures and those required to achieve each Goal?” Limitations compared to needs assessment: • Historical/current unit costs inadequately estimate future expenditures • No guidance to programming expenditures • Human resource and infrastructure requirements not estimated • No differentiation between capital and operating costs • Address only a subset of interventions within a sector

20. Agenda • Introduction • Objectives of MDG based needs assessments • Overview of different costing methodologies • The MDG needs assessment approach: a practical illustration from the education sector

21. 1 Develop list of interventions 2. Specify targets for each set of interventions Iteratively refine estimates 3 Develop investment model, estimate resource needs 4 Estimate synergies across interventions 5. Develop financing strategy MDG Needs Assessment Methodology UN Millennium Project

22. Target coverage rates for: • Primary Education • Secondary school • Adult Literacy Capital and recurrent costs per student Education Needs Assessment Approach (1) Demographic data Students reached by interventions TOTAL COSTS Cost components for key interventions

23. Education Needs Assessment Approach (2) Estimation of classrooms needed Direct and indirect financial costs Estimation of teachers needed Capacity Requirements _ _ _ =Total Education Needs

24. Key Assumptions for Education Needs Assessment • Interventions: Comprehensive set of interventions to achieve primary education, and literacy on the demand and supply side • Targets: Coverage targets should aim at meeting MDGs for entire population in need • Investment model: Service delivery models should reflect local needs and education structure; unit costs should reflect costs for reaching hard-to-reach populations. • Financing: User fees should be eliminated for primary education

25. Interventions Needed to Meet Universal Primary Education (UPE) Goal • Direct Primary Education interventions: infrastructure, human resources, learning materials, demand side interventions, etc • Secondary Education interventions because: • Availability of secondary education increases parents’ incentive to send children to primary school • Secondary school graduates are needed to meet supply of primary school teachers • Adult literacy programs • Radio programmes

26. Primary School Interventions (1/2) * Not included in MP preliminary cost estimates

27. Primary School Interventions (2/2)

28. Primary Education MDG Targets in Education Tool • Primary completion rates to reach 100 percent by 2015 • Gender parity achieved by 2005

29. Post-Primary Interventions and Targets

30. Estimating Resource Needs: Education Needs Assessment Tool

31. Key Drivers of Cost and Variation The key drivers of cost and variation across needs assessments are: • Differences in population in need • Differences in choice of interventions

32. Thinking About Nigeria’s Needs • What are the core set of interventions from the demand and supply side? • Are there additional interventions needed for specific regions/sub-populations (State-specific)? • How does the overall goal of UPE link to annual operational targets of enrolment and completion? • How will targets for secondary education be set, and linked to increasing primary coverage and increasing human resource needs in other sectors? • What are the important capital and recurrent expenditures that need to be scaled up to achieve the Vision 20:2020/7-point Agenda/State Agenda/MDG targets?

33. Nigeria MDG Costing Summary of Findings • A three-year partnership (2006-08) with key MDAs, NPC, BOF and UNDP to establish cost and funding requirements for the achievement of the MDGs in 8 sectors. Results published in 2009 • Total cumulative investments of $248bn are needed between 2007 and 2015 • On an annual basis, the cost rises from $15bn in 2007 to $43bn in 2015 • An annual average of $28bn (N4 trillion) • Average annual per capita cost of $164 • This is higher than other Sub-Saharan African countries due to a lower baseline, more ambitious targets and infrastructural challenges • Details in Tables 1 & 2

34. Table 1: Aggregate and Per Capita MDG Cost and Distribution by Economic Composition

35. Table 2: Sectoral Distribution of Aggregate Cost of Achieving the MDGs

36. MDGs Costing

37. MDGs Costing Summary (Cont’d) • Funding gaps: Given existing resources, an average funding gap of around $6bn per year is predicted to remain: • Scaling-up options include domestic resource mobilization, Internally-generated revenue by States and Local Governments, and creating the enabling environment for sustained Foreign Direct Investment • Alternative strategies for public-private partnerships to increase infrastructure investment • Coordinating development partner interventions to improve the effectiveness of aid

38. MDGs Costing: Next Steps • Integrating the costing methodology into the planning process • Scaling-up to contribute to 7-Point Agenda and Vision 2020 • Integrating the costing into the budgetary processes • Through the MTSS and annual budgets • Making ongoing use of the capacity and skills that we’ve generated in the key MDAs • Stepping-down costing to States and Local Governments • Helping State Governments to prepare realistic investment paths for 7-Point Agenda and Vision 2020 • Building capacity in State MDAs for costing of annual budgets and sector plans • Integrating costing into planning and budgetary processes at the sub-national level

39. Reaching MDG4 in Nigeria New estimates

40. Reaching MDG5 in Nigeria New