We have no idea what countries are spending on education

Listen to some international education people and you get the impression that the education problem is mostly solved if we could just spend more money. The story goes something like “Poor countries spend X on education, if they could 1.5X then all the kids could get a good education, they can’t afford 1.5X, so we should fill the gap with aid."

The reality is, even if it was the case that just filling the gap would solve the problem (which is dubious to say the least) , we don’t really even know what the gap is.

This is Silvia Montoya, Director of the UNESCO Institute for Statistics:

"governments need detailed and disaggregated data to ensure that their resources are allocated equitably and effectively within their education systems. At the same time, donors need the data to better evaluate whether the aid they provide is an incentive for governments to increase spending commitments or if they are crowding-out domestic resources.

For the moment, the availability and completeness of education finance data is unfit for these purposes, with less than one-half of countries able to regularly report key information, such as total government expenditure on education” (my emphasis)

Nevermind the purpose of accountability and transparency to the citizens of developing countries...

Good luck to the new Commission on Financing Global Education!

PFM in Myanmar: do you have to choose between coordination and flexibility?

This is a guest post from Ben French (a policy adviser formerly based in Juba)

Following two short recent visits to Myanmar where I was looking at the Public Financial Management (PFM) and Planning aspects of Myanmar’s reforms, I kept encountering the same question: How to balance coordination between donors with the need for a rapid and flexible response to reform?

The PFM reform programme in Myanmar has strong government leadership and appears to be off to a good start. In line with best international practice, development partners, under the leadership of the World Bank, have taken the initiative to coordinate amongst themselves. This has been followed by the establishment of a donor-government PFM working group. Almost all donors interested in the sector have aligned behind this which is very much to the credit of both the government and the World Bank. The working group has been the locus for coordination of PFM activities with the recent PEFA (Public Expenditure and Financial Accountability Review) and the PER (Public Expenditure Review) to show for it. This coordination sets an impressive and important precedent for government leadership and donor cooperation in PFM. Moreover, it shows that the international community has been learning from experience and is prioritising planning and coordination (as discussed in this report by ODI).

At the same time, Myanmar is changing rapidly and has only 24 months to deliver on its reform agenda before the election period takes hold in the run up to 2015. Within this period there is a need to embed the government’s reform process into its day-to-day functioning, in order to limit backsliding and to strengthen the hand of reformers. Given this, a more immediate, direct and flexible package of support is essential and critical in direct contrast to a more measured approach focused on laying the foundation for future work through planning and studies.

As an observer looking in, there is considerable tension between the ongoing planning and coordination for future larger scale programming, and the immediate support needed by the government in order to prepare the ground. I wonder how to strike a balance between coordination and planning and a rapid, flexible response? Is it a zero-sum game between the two? A balance is clearly called for as running in too quickly without a coordinated, joint government-donor plan leads to poorly sequenced, uncoordinated reforms that are poorly understood at the national level. However, if those reforms aren’t supported right now they could die on the vine before any of the future planning gets a chance to take root.

In the context of Myanmar, and other countries with both immediate and longer term PFM needs (usually conflict-affected, post-conflict, fragile states as well as countries in political transition) it seems that the government and donors can become stuck in a cycle of ‘planning to plan’ at the expense of delivering a quick, flexible programme of support. Granted, immediate support will not resolve all issues but they do ‘soften the ground’ for the long term and are complimentary to that long term planning.

Obviously, context and circumstance are essential for determining the balance between the two. However, the balance must be considered and there are a number of ideas worth considering.

First, delivering quickly and rapidly builds trust between partners which is important in and of itself but is also critical for the success of any cooperation long term. The concept of building trust through short term support that supports basic skills and processes within government demonstrably achieves the objective of building relationships between various stakeholders - and not just at the senior policy level but down in the trenches where support for long term programmes is most critical. In other words, keep it simple stupid. Provide focused training and support to the current reform process with the aim of making the government an intelligent customer which is able to determine what it needs and wants from the range of options it will be presented.

Second, recognise that even if short-term support is limited it can be clearly and easily linked to future programme development and planning. Rapid implementation should not be allowed to evolve into full implementation but it can, and should, provide useful experience and information to inform the long-term full implementation. In practice this will mean that flexible, upfront, support will need to focus on basic training, simple implementation and refinements to systems and process (see some other interesting work from ODI here, and here).

This balancing act is starting to take place in Myanmar with the EU and JICA placing technical advisors in the Ministry of Planning who will build government capacity and understanding on how to effectively coordinate and engage with other government agencies and development partners across a range of sectors (health, education, electricity, etc.). This short-term approach will be implemented prior to and whilst a longer term plan takes shape, both meeting the government’s need for reform support and allowing the development partners to demonstrate rapid success.

And finally, a warning. Any short term, flexible support should be designed in such a way that it co-opts as many stakeholders as possible Short-term support parachuted in, acting in isolation, and with no tie to long-term goals undermines the balancing act. At minimum this should mean that the short term support is part of the coordination process and reports to all the actors involved in coordination. Various World Bank and regional development bank trust funds do this reasonably well when there are funds available.

These general observations should, by no means, detract from the on-going successes in coordination in countries such as Myanmar especially as these pockets of coordination are islands of sanity in a larger and more complex donor environment. Instead, this coordination should be fostered, incorporating both quick short-term support as well as long-term planning and research. Both are critical to confidence building between stakeholders, success of current reforms and PFM in the future. Finding, and striking, the right balance between planning and flexible support through good coordination is essential to long term positive outcomes.

UK Public Spending

I don't think I've seen any proper discussion of the composition of UK public spending amongst the current debates on cuts and benefits, so here are a few charts from the IFS. 

From a 2009 survey of public spending you can see what the main categories are - social security, NHS, education, and defence. 

Then this observation compares mid-Labour pre-crisis spending in 2003 to estimated spending by the end of the current government in 2007. They aren't all that different, except for increases in health spending, pensions, and debt interest.

Finally this 2012 survey of the benefit system breaks down the largest category, social security, into recipients. Unemployment benefits make up just 2.6% (though people out of work will also claim some of the low-income benefits such as housing allowance, and there are no doubt some people on sick and disability who could manage some form of useful paid activity, even if the reforms to the testing regime have been poorly handled and very unfair on some people). Nevertheless, 60% of social security is for the elderly and for children.

Child-focused budgeting

Interesting new briefing note from John Channon here at Oxford Policy Management on his work with UNICEF on "child-focused budgeting." This represents an interesting strategic shift for UNICEF from doing project-based work to getting to grips with government systems and PFM in order to help governments think more clearly about the outcomes and impacts of their programmes in health, education, and social protection, and better achieve their own goals with regards to outcomes for children.

John concludes:

"For donors looking to adopt a similar approach to UNICEF, there is an important underlying message: to achieve the changes in service delivery that many donors want to see - and governments themselves want to make - effective PFM systems must be in place first. These are the foundations for enabling wider, more sustainable social change, as the PFM approach ensures funding is aligned with policy priorities and long-term goals, rather than simply financing short-term projects, however superficially attractive these may be."

See the full note (just 4 pages) here. 

Doing governance is hard #163826353

First the good news: a new evaluation report from a community driven reconstruction programme in Eastern Congo (HT: Sarah Bailey) shows yet again that it is possible to evaluate messy hard-to-measure governance interventions using rigorous quantitative methods. IPA and JPAL have an evaluation of a similar programme in Sierra Leone.

Now the bad news: this kind of design only works with interventions at the local level because you need a large sample size of units - in this case villages. National-level interventions give you a sample size of one, not very conducive for quantitative analysis.

And the worse news: these local level governance interventions don't seem to work. Both this Congo study and the Sierra Leone study find no improvement in local governance.

Now for some better news: we actually already know what a lot of the national-level governance interventions that need to be done are. They are boring. Things like audits of government accounts. South Sudan has finally just published the audit of the 2007 accounts, to apparent astonishment and outrage by parliamentarians. It's pretty grim reading. Though I'm not sure how anyone is actually honestly surprised. Still, it's probably not totally outlandish to think that audits done a bit quicker than 5 years after the fact might improve budget governance.

And now for the worst news of all: much of this easy, boring, national-level governance stuff is around accountability - which means the national leadership intentionally putting in place limits on its own power. Binding its own hands. You have to be an incredibly enlightened leader to purposely reduce your own power. The whole point of the politics game is increasing your own power. Which means that you need people to demand accountability and force leaders into action. And despite all the talk about governance from the international community, we aren't really interested or able to be the ones doing the demanding.

Secretaries without borders

Secretaries without borders is what a colleague joked that the government in Juba needed a few years ago. My friends and colleagues Ben French and Nick Travis have a great post up on the new ODI blog beyondbudgets.org making this point in a bit more detail;

Investment is not just needed in getting the policy ‘right’ but also in making the ‘paper move’. Money needs to be spent on building the capacity of governments to maintain basic administrative and management processes, on training administrators and establishing functional IT systems. No matter how good policies are, without the basics in place - and the people to administer them - implementation will continue to be hindered by chaotic and ineffectual management.

Well worth reading in full. They have also just published a couple of briefing notes on the new government Aid Strategy in South Sudan and the 2009 Donor-Government compact. 

Sudan Links

Or rather, John Asworth's Sudan links:

1. An important statement from the UN recognising that the basis for demarcating the border is the 1956 border, not the current de facto border that Khartoum has been pushing as a basis for negotiation.

2. "Has the AU become a pawn in the hands of the Khartoum regime?" A question apparently on the lips of many South Sudanese.

3. An excellent open letter from South Sudanese to Salva Kiir on corruption. Really well written. Members of the international community concerned about corruption might want to start here.

4. The Budget Speech. Including details on financing plans. Of a total SSP 6.4 billion budget, 10% is expected to come from domestic non-oil revenues, 15% from reserves, 15% from domestic borrowing, and the remaining 60% from yet to be negotiated international loans and oil/mineral concessions. So, er, good luck with that (and let's really hope that Khartoum will be pressured into making a fair deal on oil soon).

War! Huh (What is it good for) (Apparently PFM reform)

Or that was one of the more colourful* claims made by Stephen Peterson in a seminar a couple of weeks ago on his work over 12 years with the Ministry of Finance in Ethiopia. Apparently the war with Eritrea meant all the other international advisers left, leaving him alone to work with the government without the distraction of competing missions from different donors.** He was the only expat in the Ministry of Finance, compared to something like 282 at one point in Kenya.

Ethiopia now has the third best PFM system in Africa, after South Africa and Mauritius.

*Damn you America, for making me have to pause and think about the correct spelling of common words like this
**Just to be clear, I'm really not trying to imply that war is in any way a good thing. War is still bad yeah?

More on Budget Support, Cash-on-delivery, and Cash Transfers

Ranil makes some valid criticisms of my (over?) enthusiasm for new and shiny forms of aid.

Notably, that COD does not dispense with conditionality, just shifts it from process to results. I would still argue that this form of aid is potentially more respectful than process conditionality. It is more transparent and more upfront about the conditionality. There is even an explicit contract involved, rather than arbitrary judgement calls on eligibility (Malawi?).

Furthermore, the taxpayer audience point is a really important one here - COD wins hands down. Budget support will never be able to satisfy rich country taxpayers that there is no waste or corruption going on. Many people think that their own government wastes much of their money, never mind a foreign government with no accountability to them.

Nonetheless, this is an unproven technology, which clearly shouldn't just replace all traditional aid. But I do see it as an evolution.

I am more optimistic about cash transfers. Basically, I just don't see how there is any scope for mis-spending money which goes directly to someone who earns less than $1.50 a day. As long as we are confident that they do indeed get the money, I don't even see the need for an impact assessment. They just get the money that they were desperately short of.

Giving money to the poorest could tautologically eradicate income poverty. And if it is technically feasible and affordable, which it kind of is, I basically think we should just do it already, regardless of concerns about long-term constraints to national economic development, or access to education, health, security, and other public goods. I'm still not sure if Charles Kenny meant his $100 billion as a serious proposal, but why the hell not? It's really just peanuts in the grand scheme of things.

And I don't think we should be afraid of permanent handouts. We don't talk about exit strategies to redistribution within the UK. In Owen's words;

the richest people in the world have a duty to support the poorest people in the world - whether they are in the same country or not - as a matter of social justice rather than charity. This is a principle that we accept within our own countries - few of us think that we should aim to exit altogether from national insurance, state pensions or unemployment benefits in our own countries. The same principle should apply globally: there will always be people who are relatively rich and people who are relatively poor, and we should be aiming to evolve institutions which are effective at transferring income from the best off to the wost off around the world. And we will be doing that for the foreseeable future.

It sounds radical, but its really just some pretty old school liberal philosophy. Free markets are fine as long as everyone gets a fair shot, and you don't get a fair shot when you are born into extreme poverty. So as a matter of ethics there should be transfers from the richest to the poorest, for them to provide enough for their children to eat. No child should go hungry just because their parents don't earn enough.

And the evidence? How about Brazil lifting 20 million people out of poverty in just six years through Bolsa Familia? Has there ever been a better anti-poverty program?

Does it Matter if Budget Support Goes Extinct?

Simon Maxwell is worried about budget support going extinct.

Budget support should not be allowed to fall off the agenda. Developing country finance ministers would miss it ... So would development practitioners ... Budget support ... delivers at scale, empowers developing country Governments, reduces transactions costs, and increases accountability.

All of which is true. But also makes the most sense when you are comparing it with "old" aid. Aid projects designed to replace government functions. Budget support is an improvement on these parallel systems, and a better form of government-to-government aid, in large part because it is built on respect for the recipients.

But is the best possible form of aid? I think that two new forms of aid can do better.

Cash-on-delivery is a close relative of budget support, but it does even more for empowerment and respect, as it manages to do away with all the process conditionality required for budget support, by paying only for results. No need to worry about PFM systems. Either the government delivers for its people, or it doesn't, no need for us tell them how to do it.

Cash transfers to individuals goes one step further from respect and empowerment for developing country governments, to respect and empowerment for poor individuals. It seem so obvious, when our goal is to make poor people less poor, to just give them the cash, especially when it is feasible at low overheads (see GiveDirectly) and globally affordable (see Charles Kenny).

Kenny estimates that $100 billion a year in cash transfers to individuals could eradicate extreme poverty.

There are about 1 billion people living in the rich world. So for just one hundred dollars a year each we could eradicate extreme poverty.

Cash-on-delivery and cash transfers also counter the #1 complaint from taxpayers about aid - that it is wasted.

The only trouble with cash-on-delivery and cash transfers? They get rid of the need for development experts.....

-------------------

Update: Response from Ranil at Aidthoughts here

And the Award for Best-dressed Finance Minister 2011 goes to....

Finance Minister Maria Kiwanuka minutes before reading the 2011-2012 Uganda Budget (from the Sunday Monitor)

Tanzanian Budget Analysis

Or democracy in action. This makes me very happy.

The Chadema vision and the proposal to do away with MPs sitting allowances is just the start of our salvation. 

The Loliondo cure needs to be investigated carefully. 

Some MPs do not act in the Nation’s interests 

The National Budget 2011-12 is still fragile (hurts)

via Swahili Street

Why there are ODI Fellows

"Sh251 billion [~USD 2.5 billion] mathematical error in the 2011-2012 Kenyan Budget pointed out by Mars Group."
Daily Nation.

Kudos to the Mars Group for actually reading the budget.

I should add that its not just developing countries that need economists/numerate people. I once had to review a report prepared by a British civil society organisation whose careful analysis revealed that as many as half(!) of the British population earn less than median income.

How to make a government planning process from scratch

The Southern Sudan experience provides useful insight into appropriate approaches to developing planning and budgeting systems in other post-con¬flict settings. Above all, it injects a note of realism about what can be achieved. The key policy lessons are as follows: 

1. A strong technical lead by an integrated Ministry of Finance is essential. Although international technical assistance can provide support to system design and management, it is not a replacement for the leadership role and decision-making capacity of Government. 

2. When designing post-conflict support programmes, efforts are needed to fully understand the levels of local capacity, and the systems used prior to and during the conflict, so that starting points are realistic. 

3. For system development to be fully grounded, it needs to be aligned with the rate of improvement of local capacity. This means accepting that process development can take years, and that best practice, however desirable, cannot always be achieved overnight. 

The Ministry of Finance received continuous technical assistance throughout the development process, including long-term TA based in the Ministry, short-term consultants for training and quality assurance, and logistical and financial support for workshops. Although this support played a key role in the design and development of the systems, decision-making and strategic direction always belonged to the Ministry of Finance. In addition, the gradual recruitment of technical staff meant that the Ministry was increasingly able to manage systems itself, although with back-up support. Key providers of support included the UNDP’s ‘Support to Economic Planning’ project, Overseas Development Institute (ODI) fellows, USAID and more recently the ODI’s Budget Strengthening Initiative.

From a new ODI briefing paper by Fiona Davies and Gregory Smith.

Is Aid Fungible?

No this has nothing to do with mushrooms.

“Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution.”

In the world of aid, this refers to the question of whether or not donors are able to successfully ring-fence their additional funds. If a rich donor gives £50m to the Ministry of Health in a poor country, can and will the poor country just cut its own MoH funding by £50m, freeing up that cash to spend on whatever it wants?

A new CSAE working paper by Nicolas Van de Sijpe suggests that aid fungibility is not so important. He uses a new datatset to test cross-country correlations between the sectoral distribution of government spending and donor spending.

The lack of fungibility of technical cooperation may be a consequence of effective donor conditionality. If donors are able to monitor the recipient government’s spending, they may be able to credibly enforce the condition that the government does not cut back its planned expenditure after receiving technical cooperation. An additional reason to explain the low degree of fungibility found, that applies specifically to technical cooperation and less to the other aid types, is the observation made by Gramlich (1977) that heterogeneity in government expenditure might contribute to reduced fungibility. To the extent that governments in developing countries spend few of their resources on the type of goods and services that are provided by technical cooperation, it becomes impossible to reduce this class of expenditure by much, as it quickly hits a lower bound of zero. If, in addition, the substitutability between different types of expenditure in the recipient government’s utility function is limited, low fungibility for technical cooperation may ensue. Finally, a lack of information on the recipient government’s part may also reduce the degree of fungibility.

How to make Dutch friends and influence people

“Osborne predicted that this [increase in aid] would make Britain the first "major country" to cross that [0.7% of GNI in aid] threshold.” The Guardian. Better luck next time Norway, Sweden, Luxembourg,  Netherlands, and Denmark.

3 Problems with Constituency Development Funds

I was introduced to Constituency Development Funds in Southern Sudan. I had an instinctive dislike for the idea but never really put my finger on why.

A new International Budget Project paper helps out.

This list includes Ghana, Kenya, Liberia, Malawi, Namibia, Nigeria, Rwanda, Southern Sudan, Tanzania, Uganda, Zambia, and Zimbabwe. CDFs are funding arrangements that channel money from central government directly to electoral constituencies for local infrastructure projects. Decisions about how these funds are allocated and spent are heavily influenced by members of parliament (MPs).

So what is the problem?

1. CDFs breach the principle of the separation of powers by conferring parts of the executive function of budget execution on the legislature.
2. CDFs contribute to clientelism
3. the executive tends to support the introduction of CDFs because such schemes could help to shift the responsibility for capital investment away from them and onto MPs

But what caused what? Do CDFs really encourage clientelism or are they merely a natural outcome of an already clientelistic politics?

And how are CDFs related to the donor-led drive for decentralisation and community participation? Are CDFs a perversion of the latest fad for “Community-Driven Development”?

Sadly this is probably the kind of scheme that would be somewhat difficult to evaluate through randomisation…

Malaria Strikes. And Planning.

Posting will be continue to be slow this week due to malaria and government budget planning meetings. Mainly due to the planning meetings. I also have some tough malaria breed which Coartem won’t kill, so I’m now on to Quinine.

Fun Quinine fact - it makes your saliva taste like tonic water.

Next week is also my last in Southern Sudan (for now). Reflections to come once I have had time to catch my breath. I might need a new sub-title for the blog. Suggestions welcome.

Also to come - notes on adventures in Kenya the week after next, when I’ll be learning how to do a randomised controlled trial.

Watch this space.

Will the UK austerity budget sink the Tories?

Probably not.

The conventional wisdom about the political economy of fiscal adjustments goes more or less as follows.  Deficit reduction policies cause recessions which (in addition to the direct political costs of tax increases and spending cuts) create political problems for incumbent governments.

…

Fortunately the accumulated evidence paints a different picture.  First of all, not all fiscal adjustments cause recessions.  Many even sharp reductions of budget deficits have been accompanied and immediately followed by sustained growth rather than recessions even in the very short run.  These are the adjustments which have occurred on the spending side and have been large, credible and decisive.  Second and this is most likely a consequence of the first point, it is far from automatic that governments which have reduced deficits have been routinely not reappointed. Governments which have initiated thorough and successful fiscal adjustment policies have not systematically suffered at the polls.  This has been especially the case when the electorate has perceived the sense of urgency of a crisis or in some cases in the presence of an external commitment.   On the contrary fiscally loose governments have suffered losses at the polls.

Alberto Alesina, Fiscal adjustments: lessons from recent history, April 2010

Making Poverty History in Southern Sudan

How much would it cost to lift everyone in Southern Sudan above the poverty line? The answer is the triangle to the left of the red poverty line and beneath the blue population distribution line.

That triangle (apparently also known as the poverty gap - why didn’t I pay more attention in class!), is roughly equivalent to SDG 1.8 billion, or $750 million at official rates.
So in theory it would cost an annual $750 million to eradicate poverty in Southern Sudan.
The value of aid spending in Southern Sudan in 2010?
$739 million.
The value of the GoSS 2010 Budget?
SDG 4.5 billion ($1.9 billion)
Just saying.
--------------------------------------------
Sources:
National Baseline Household Survey, 2009
The GoSS Donor Book, 2010
The GoSS 2010 Budget-at-a-glance