Poverty Reduction Strategy Process and Lessons from Around the World

1. Poverty Reduction Strategy Process and Lessons from Around the World Raj Nallari and Yan Wang ywang2@worldbank.org Prepared for workshop on NEEDS Implementation, Abuja, Nigeria March 7-10, 2005

2. Outline • Core Principles • Main element of a Poverty Reduction Strategy • Main finding of PRSP reviews • Growth matters for Poverty reduction but not sufficient to reach MDGs • Pro-poor public spending and service provision • Participation by the parliamentarians, civil society and other stakeholders key • Prioritizing, costing and macro-fiscal framework • Monitoring and evaluation systems

3. Core Principles • Country-driven • Results-oriented • Comprehensive in scope (e.g. conflict issues, indigenous people, human rights, HIV-AIDS) • Partnership-oriented (donors, civil society, government, private sector) • Long-term in perspective • Participatory

4. Main Elements of a PRSP • Poverty diagnostics • Targets to be achieved (three year targets) • Medium-term policy framework (macroeconomic and sectoral policies) • Costing of priorities (bottom up approach) • Description of participatory process • Summary policy matrix with objectives, policy actions, intermediate progress indicators, implementing agency and timing (transparency and accountability- Who does what, when and how)

5. Degrees of Participation • Dissemination of Information • Consultation • Consensus Building • Partnership in design, implementation and monitoring: • Growing parliamentary involvement in PRS oversight and implementation, M&E, e.g. Ghana, and Chad • Parliaments are focusing more on prioritization and costing, MTEF and monitoring (BF, Cameroon) • Now there is a need to broaden and deepen participation Private sector and trade unions in Cameroon, Senegal; or PPP in Ethiopia, Mauritania, Rwanda, and Tanzania; Anti-corruption strategies in Uganda & Mozambique.

6. Main Findings of Reviews (2002, 2003, 2004 + OED Evaluation) • PRSP approach still evolving – 45 countries implementing, average implementation of 2 years • 24 countries produced at least one annual progress rep. • MDGs vs PRSP Indicators: e.g. Vietnam • Growth matters most but is not enough to achieve MDGs/PRSP Goals • Public spending for poverty reduction increased by 1.4% of GDP (3.9% of govt spending) • Participation: growing ownership, open dialogue, centrality of poverty reduction • Institutionalize participation, involve all groups, incl. parliamentarians, PS trade unions, donors

7. Reviews continued • Medium term orientation of PRS should be strengthened – the link between PRS and MTEF is key for operational relevance. A good example is Nepal –MTEF plus “immediate action plan” • IMF-Bank template of PRSPs should be eased for country’s to customize PRSP • Analysis of increased aid and its impact on debt sustainability needed– need to use PRSPs as a framework for mutual accountability between govts and donors

8. Poverty Data • Poverty data inadequate in most countries • Policy making w/ incomplete diagnostics • Hampering sectoral analyses and implementation • Constraining M & E and PSIA • Need to enhance capacity in data collection and analysis

9. Prioritizing Public Actions • Growth, pro-poor spending increased • Peace consolidation • agriculture and rural development • HIV-AIDS • Governance • institutions

10. Macro-Fiscal Issues • Integrating PRS into govt decision making • Weak costing, prioritizing, and linking policies to diagnostics • Fiscal flexibility • Strengthening Public Expenditure Mgmt • Alternative macro scenarios, contingency plans

11. Other Issues • Ensuring M & E – role of parliament and broader participation. E.g. BF, Cameroon, etc) • Capacity in government and civil society • Aligning donor assistance and harmonizing procedures • Countries – institutionalize participation, priorities w/ budgets, public-private partnership in service delivery, better M&E • Donors – financing framework, market access, catalyzing private flows, donor harmonization