Assessing Risks & Vulnerabilities: Emerging Good Practices March 21- 25, 2011 AMREF International Training Center, Nairobi Sahr J. Kpundeh 12/1/2018 Sahr J. Kpundeh

“Emerging Good Practices” Identify the underlying constraints and potential entry points for achieving reforms Political Economy Analysis Identify governance & corruption risks at the sector and project level Value Chain Analysis 12/1/2018 Sahr J. Kpundeh 2

Governance Issues at the Sector Level Primary focus is on constraints to achieving optimal service delivery Key areas include: Policy & incentives Budget & resource management Human & institutional capacity Important to distinguish between governance issues, corruption issues, and simply capacity constraints 12/1/2018 Sahr J. Kpundeh

Corruption Issues at the Project Level Who? How much? And where does it all go? T he impact: outcomes, competition, value for money, and public perceptions The Anatomy of Corruption: How it works in Bank projects? 12/1/2018 Sahr J. Kpundeh

GAC in Projects: the Role of Political Economy Analysis Political economy analysis: an emerging practical framework GAC in Projects: the Role of Political Economy Analysis May 26, 2010, Dakar, Senegal Sahr J. Kpundeh

What is political economy analysis? PE analysis can promote development effectiveness by helping to develop approaches that take contextual factors (systematically) into account Cross-cutting and complementary to technical analysis, and analysis aimed at identifying priorities Political Economy Analysis is concerned with the interaction of political & economic processes in a society: the distribution of power & wealth between different groups and individuals, the processes that create, sustain & transform these relationships over time (OECD/DAC) 12/1/2018 Sahr J. Kpundeh

Business rationale: why PE diagnostics? Managing risks – developmental, reputational, and fiduciary – requires monitoring political trends rather than ignoring them Bank teams are often ‘surprisingly’ surprised by policy decisions (or non-decisions) in client countries Many teams & TTLs (already) spend a lot of time understanding politics – and it can be useful to systematize this more: Bank strategies & operations based purely on technical analysis and best-practice approaches have often proven un-implementable 12/1/2018 Sahr J. Kpundeh

Three layers of problem-driven GPE analysis Vulnerabilities& concerns Evidence of poor outcomes to which GPE issues appear to contribute E.g. repeated failure to develop solutions to lack of results in sectors. Infrastructure is constraint to growth but is not being improved What are the institutional arrangements & are they capable, effective & efficient? Why are things this way? Why are policies or inst. arrangements not being improved? Mapping of institutions: laws, regulations; responsible public bodies; formal and de facto rules of the game; analysis of integrity/corruption challenges Analysis of stakeholders, incentives, rents/rent-distribution, historical legacies & earlier reform experiences; social trends & forces and how they shape stakeholder actions Problem driven Institutional/ governance arrangements & capacities Political economy 12/1/2018 Sahr J. Kpundeh

Problem-driven GPE can be applied to country, sector, or project level Country level Analysis of overall country context. Also as a background note for sector and project level work Thematic and sector level Thematic problem-driven GPE analysis, e.g. on natural resource management, linking governance and growth Sector-focused problem-driven GPE to inform CAS pillars, sector strategies & Development Policy Loans, complementing technical sector analysis Projects or policies Analysis focused on generating direct advice to a single operation or for the dialogue on a specific policy issue (e.g. Prior Action) 12/1/2018 Sahr J. Kpundeh

Operational value added: Examples of value added Spectrum of reform space “Incremental” approaches – adapting design given existing reform space “Transformational” approaches – seeking to expand reform space Zambia telecoms: focus on local winners India power: reform sequencing Ethiopia PBS to mitigate reputational risk: support sub national service delivery with participation WBG assessing water governance and building capacity in conflict setting Mongolia mining: TA with local think tank for public debate Paraguay & Bangladesh roads: external monitoring by stakeholders Philippines public procurement reform: pro-active coalition building to combat entrenched corruption networks 12/1/2018 Sahr J. Kpundeh

When is GPE analysis most valuable for projects? However, even if that is not feasible/did not happen, it can still be valuable to undertake GPE analysis during implementation Project which (clearly) has governance risks – developmental risk (including risk of capture, etc.) and fiduciary risk Usually, it is best to do the analysis upstream – i.e. as part of project preparation Project-level GPE analysis is greatly facilitated when it is possible to draw on existing country-level (and possibly sector-level) analysis Country-level analysis could be Bank produced or generated by other donors (e.g. DfiD, Netherlands) 12/1/2018 Sahr J. Kpundeh

Some key lessons GPE diagnostics should be focused on particular challenges/questions/puzzles Expectations from task teams & actual approach to PE diagnostic need to be well matched Management attention is crucial and valuable E.g. if analysis suggests that additional supervision effort is needed Consider dissemination issues early on Disseminating PE work can be sensitive There are many options between 2,3 people only and full/broad dissemination Ensure that findings reach relevant Bank teams Ensure that key messages reach local stakeholders Integrate PE diagnostics as closely as possible with other project preparation work Pay attention to processes as much as to products Process of producing the analytic output – including quality management Follow-up process of using PE diagnostics for decisions – strategy or operational design, whether to adjust these, whether and how to engage in coalition-building for reforms, etc. 12/1/2018 Sahr J. Kpundeh

Thank you!