Achieving the MDGs: RBA Training Workshop Module 3: MDG Needs Assessment May 9-12, 2005

2 Presentation Objectives Discuss the purpose of MDG needs assessment in support of MDG-based poverty reduction strategies; Outline an approach for carrying out an MDG needs assessment. Address frequent questions about needs assessments

3 Agenda Introduction to MDG needs assessment as part of an MDG-based poverty reduction strategy Overview of costing methodologies MDG needs assessment approach Frequently asked questions

4 Motivation The Needs Assessment Exercise aims to flip the question: FROM : How close can we get to the MDGs under the current constraints? TO : What will it take to achieve the MDGs?

5 Approach to MDG-based poverty reduction strategies MDG Needs Assessment through 2015 MDG-Based 10-year Framework MDG-Based PRS Identify combination of scaled up inputs needed to meet MDGs What & How Much Identify combination of policies and programs to meet needs How To Short-term 3-5 year strategy to launch 10-year strategy, including: MTEF Macro framework

6 What is an MDG Needs Assessment? Who and where are the poor? –Identifying the population in need What needs to be done? –Needs Assessment from now until 2015 –Goods, services, infrastructure How much will it cost and what are the human resource implications? –Local unit costs x population in need –Human resources required to meet each MDG

7 Objectives of an MDG Needs Assessment Answer the question: What would it take to achieve the MDGs? Translate the MDGs into operational targets Localize the MDGs Develop a strategy for increasing absorptive capacity Strengthen coherence between planning and budget processes and guide programming of expenditures Provide a monitoring and accountability framework Support the national policy dialogue and negotiations with development partners

8 Agenda Introduction to MDG needs assessment as part of an MDG-based poverty reduction strategy Overview of costing methodologies MDG needs assessment approach Frequently Asked Questions

9 Comparing Costing Methodologies Method & QuestionLimitations Costings based on ICOR Asks: What is the aggregate level of investment needed to meet the poverty goal? Provide little guidance to programming expenditures ICOR and poverty-growth elasticities cannot predict growth and poverty rates Dont project required changes in the composition of investments · Ignore MDG interventions that do not have a direct impact on growth Historical ICORs and poverty elasticities apply only to marginal changes Cannot estimate human resource and infrastructure requirements Cannot avoid double-counting of interventions across sectors Lump together public and private investments

10 Comparing Costing Methodologies Costings based on aggregate input- outcome elasticities Asks: What is the aggregate level of investment required to meet individual Goals? Can only model a small number of aggregate variables across few sectors Historical elasticities apply only to marginal changes May ignore the impact of interventions outside of the sector (e.g., impact of water and sanitation on health outcomes) Provide little guidance to programming expenditures and cannot calculate human resource & infrastructure gaps Cannot avoid double-counting of interventions across sectors The nature of production functions, elasticities of substitution, and number of parameters are partly dictated by the need to maintain a system of equations that can be solved rather than the actual dynamics of each intervention area Mathematical complexity makes models difficult to understand for non-experts

11 Comparing Costing Methodologies Costings based on aggregate unit costs Asks: What is the gap between current expenditures and those required to achieve each Goal? Unit costs based on current or historic expenditures,which may be a poor guide to future expenditures Little guidance to programming expenditures No information on human resource and infrastructure requirements for MDGs No differentiation between capital and operating costs Address only a subset of interventions within a sector No cross-sectoral dynamics Intervention-based needs assessments Asks: Which interventions are needed across sectors to achieve the Goals, and what are their associated costs? Cross-sectoral dynamics cannot be modeled dynamically, but require iterative adjustment of coverage targets It is time intensive to develop detailed investment models Requires links to macroeconomic dynamics that need to be modeled with the help of separate tools

12 Agenda Introduction to MDG needs assessment as part of an MDG-based poverty reduction strategy Overview of costing methodologies MDG needs assessment approach Frequently Asked Questions

13 MDG needs assessment approach

Develop List of Interventions Interventions are defined as investments in goods, services and infrastructure as distinct from policies and institutions For example, interventions include: Infrastructure (classrooms, roads, hospitals, toilets, water and electric connections) Human resources (teachers, training staff and materials, administrative support) Goods (books, medicines, improved stoves, computers) Interventions to reduce barriers (subsidies for girls, microfinance, abolition of school and health care fees)

Develop List of Interventions: Suggested Investment Clusters 1.Rural development – increasing food output and rural incomes 2.Urban development – promoting jobs, upgrading slums, and developing alternatives to new slum formation 3.Health systems – ensuring universal access to essential health services 4.Education – ensuring universal primary education and expanded post-primary and higher education 5.Gender equality – investing to overcome pervasive gender bias 6.Environment – investing in improved resource management 7.Science, technology and innovation – building national capacities 8.Cross-national infrastructure – trade integration and government cooperation 9.Public sector managementstrengthening the governments ability to plan and implement the MDG strategy DISCUSSION : How do these clusters apply to your country?

Specify Targets for Each Intervention Reduce the proportion of food insecure subsistence farmers by half by 2015 Primary completion rate to reach 100 percent, gross enrolment rate to reach 107 percent by 2015 Electricity for all schools and health facilities by 2015 Coverage targets need to be specified for interventions. For example:

17 Total Hunger Needs Increasing Agricultural Productivity Rural Income Generation Improving Nutrition 3. Estimate Resource Needs Identify the Scope of Action Invest in Soil Health Small scale water management Improved seeds Extension Research Storage Livestock Processing Credit Farmer associations Market space Food for Work Pregnant women, lactating mothers and infants (7-24 months) School meals Supplementation for vulnerable groups Diet diversification Food Aid

Estimate Resource Needs Estimate All Required Inputs Direct and indirect financial costs + Number of people needed Number of Infrastructure units needed Capacity Requirements ++ Total Hunger Needs

Estimate Resource Needs Estimate the Total Cost Country demographic data Costs per beneficiary TOTAL COSTS Target Population Target coverage rates Cost components for key interventions

Estimate Resource Needs- Key Assumptions Average unit costs used instead of marginal costs Inclusion of capital and operating costs Total costs instead of incremental costs Financial cost analysis (as opposed to economic costs) Different assumptions for scale-up of interventions from

Check Results: Synergies Across Interventions Long-term sectoral synergies: Maternal education leads to higher enrolment of children Immediate sectoral synergies: Prevention interventions in health have rapid impact on disease incidence rates Cross-sectoral synergies: Provision of roads increases access to emergency obstetric care Interventions will have direct benefits and in some cases will positive externalities across sectors. These impacts should be accounted for in the needs assessment. Examples of direct benefits and synergies include:

Check Results

23 Key Drivers of Cost and Variation The key drivers of cost and variation in a comprehensive country-wide needs assessment are: Health interventions to combat infectious diseases and strengthen health systems Large-scale infrastructure interventions such as for roads and energy services

24 Guiding Principles of MDG Needs Assessments Absorptive capacity constraints are real in the short term, but can be gradually relaxed through investments in human resources, infrastructure and management systems Focus on interventions that require full or partial public financing Include capital and operating costs for all sectors Strive for maximum disaggregation Ensure maximum transparency so that assumptions can be modified depending on country contexts and specific needs

25 Guiding Principles of MDG Needs Assessments Undertaken in national planning contexts Target setting, identification of interventions, unit costs done in consultative manner, reviewed by technical experts Periodic revision of targets/interventions based on new information and implementation of programs Methodology can be adapted to suit local contexts, provided basic MDG assumptions remain- no one-size-fits-all

26 Limitations Of Needs Assessments Planning, not implementation tool Input into planning process, not a plan in itself A necessary, but not sufficient step for achieving the MDGs Requires complementary efforts in policy formulation, institutional structures, local decision making and regular review and monitoring

27 Agenda Introduction to MDG needs assessment as part of an MDG-based poverty reduction strategy Overview of costing methodologies MDG needs assessment approach Frequently Asked Questions

28 Frequently Asked Questions Why undertake an unconstrained needs assessment? What to do in the case of limited absorptive capacity? Dealing with Target 1 (income poverty) Distinguishing between policies and interventions. Synergies between interventions Double-counting of interventions and cross-cutting issues Macroeconomic issues (e.g. Dutch disease)

29 Next Step: Develop Financing Model Long-term (10 year) financing framework: Share of needs that can be borne by households Share of needs that can be borne by domestic revenue mobilization (predicted to increase significantly over time) Share of needs that can be borne by debt relief Gap in resource needs that will need to be externally financed