1. How to Deliver Value for Money in DFID’s BER Programmes including updates on Economy and Effectiveness Edward Hedley & Gulden Bayaz
29 September 2016

2. Introduction to this presentation:
DFID’s approach to VfM
IFC’s approach to VfM in BER
Effectiveness: suggested VfM indicators and using ToCs to explain impact pathways
Emerging issues on economy, effectiveness and equity from consultations to prepare BERF VfM Evidence Note

3. DFID’s approach to conceptualising VfM
DFID uses the NAO Framework of 3Es (Economy, Efficiency, Effectiveness) plus the 4th E (Equity).
The ways VfM is measured in DFID programmes:
Quantitative methods (mainly using Cost Benefit Analysis, Unit Costs analysis, Efficiency Savings).
Qualitative methods (case studies, before and after studies, procurement practices, etc).
The trend is towards using VfM indicators, which are like logframe indicators but have costs attached to them. Monitored periodically (annually or bi-annually).
This is the general approach for DFID programmes and not different in BER.

4. IFC’s approach to conceptualising VfM in BER
The way VfM is addressed in IFC BER programmes:
Based on three levels: reform, outreach (number of benefitting firms), compliance cost savings
Aimed to cover IFC’s main workstreams in BER (such as tax compliance, business entry, business licensing, etc)
Benchmarks were defined for the VfM of projects (based on information from previous/ ongoing IFC projects)
VfM metric
Calculation
Cost per BE reform
Cost / No. of reforms
Outreach per 10 million population
Cost / Number of firms benefiting per 10 million population
Compliance cost savings per 10 million population
Compliance cost savings per 10 million / Cost

5. Other VfM frameworks relevant to BER
Similar VfM frameworks in other BER outcome areas:
Work is under way, by the IFC, to address the VfM in jobs measurement, similar to the private sector cost savings based framework.
Feedback from key informants for the VfM Evidence Note was that public sector cost savings should also be considered for a similar VfM framework.

6. Example cost effectiveness indicators (by IFC workstreams)
Applicable IFC workstreams
Business entry
Business licensing
Inspection
Tax process simplification
Tax comp mgmt.
SME taxation
Risk-based audit
Trade logistics
Cost Effectiveness
Cost per £ of increased income for beneficiaries
  
Cost per job created

7. Using ToCs to explain programme effectiveness (1)
ToCs are helpful:
To communicate expected results to internal and external audiences.
To explain programme attribution from inputs to high level impacts, such as changes in Doing Business indicators.
To articulate impact pathways on how reforms such as PPPs, regulatory work or competition relate to poverty reduction.
When they are populated with context- specific evidence.

8. Using ToCs to explain programme effectiveness (2)
ToCs and programme impact:
Business registration related cost savings and job creation links example. Positive example from Mexico (Bruhn, 2008) but did this assumption apply in Nigeria?
In terms of higher level impacts, particularly to poverty reduction, an analysis of BRICK Kenya ToC (2014) found that:
The ToC needed clearer links on how reforms such as regulation, competition and PPPs had impact on poverty reduction.
More evidence was needed on the assumption that: regulatory work impacted mainly large companies and they are the ones creating jobs for the poor.
Links between competition, consumers and poverty and how different segments of population will be affected from price fluctuations, etc .

9. Emerging Issues from Evidence Note Consultations (1)
Economy:
Further disaggregating project budgets and expenditure information by IFC.
Providing unit costs of key inputs under economy related information.
Expenditure tracking to assign costs at workstream levels.
Effectiveness:
Better understanding of government opportunity costs (costs to the government of implementing one type of reform over another).
The need to use political economy analysis at design and during implementation, particularly for ‘resource allocations between project components’ (IFC, 2014).

10. Emerging Issues from Evidence Note Consultations (2)
Equity:
Better understanding beneficiaries of reform and equitable reach of BER programmes, for instance impacts broken down by income quintiles.
Better understanding of the gender impact of programmes (more than gender- disaggregation of project data):
to examine, through in-depth studies, changes in social statures of women
To choose sectors that have more potential for engaging and benefitting women.