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IFAD Workshop Balancing Hard and Soft Investments
Knowledge and Capacity Development
G. AlaertsThe World Bank
April 18, 2011
Getting a grip on the issues“Hard investments” – works, equipment, surveys,
technical designs, etc.“Soft investments” – any activity in the social and
institutional spheres that increases (i) quality of the project prioritization, (ii) net development impact, and (iii) financial sustainability of investments and programs.Policy and strategic frameworksDialoguesInstitutional strengthening and reformsKnowledge and capacity development KCD
(encompasses all the above …)For financier: Project design, program
management, M&E, learning …
World Bank and international approachesWB: has strong interest in
quality of portfolio, development impact,sustainability capable institutions reforms
Much work on Impact assessment, M&EMuch work on Results in CPS and program
designComparatively little discussion on institutions
and KCDADB, UNDP, EU: More work on KCD and
how to assess capacity and its improvement
World Bank considerations
Better investment prioritization, plus design and ownership, have in past decade led to better results
Since mid-90s financing is no longer key impediment to sector development:Much observable need, but constrained internal
demandFinanciers (World Bank, ADB, IDB, …) often cannot
achieve lending targetsEU cannot disburse cohesion funds to member
countries; absorption is around 10-20%WSS PPP failed partially, partly because it was expected
that private partner can bring and help absorb funds
Major leap in efficiency of institutions and absorption capacity required within next decade
World Bank and international approaches
WB: two-pronged approach1. Organizations:
70-80s: 5% of loans used for TA and training > 80s: more KCD
2. Institutions: reforms through conditions, budget support and TA
Challenge: tension between (i) short-term “results”-driven and budget-driven /accountable approaches, and (ii) longer-term adaptive approaches building C
Hard to assess – the latter purported to be more robust; but the former arguably developing economy and providing the “marbles” to learn the “game”
But clear that KCD without hardware doesn’t work well
World Bank experience
WB review of Africa capacity development(2006): TA and training ineffective to build sustainable
public sector capacity.While some countries do well, average SSA
govt capacity has stagnated …Government Effectiveness: Average, Sub-Saharan Africa
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1996 1998 2000 2002 2003 2004 2005 2006 2007
Year
Perc
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World Bank experience: Africa Region
Is capacity included in the development objective?
World Bank Institute desk study, 2008 (unpublished).
Fiscal Year 2006 Fiscal Year 2007
Yes 62% Yes 75%
No 34% No 14%
Unclear 4% Unclear 11%
World Bank experience: Africa Region
Type of capacity development inputs in WB projects
World Bank Institute desk study, 2008 (unpublished)But – no specific data about reforms, institutional
strengthening, knowledge development, etc.
Fiscal Year 2006
Fiscal Year 2007
Equipment 20% 14%
Study tours 2% 7%
Consultants 32% 50%
Training 36% 54%
Knowledge sharing 12% 29%
Principles of KCD
Two basic approaches:1. Capacity can be developed through inputs,
leading in turn to better results positivist approach, assuming causal relations between input and output
2. Capacity is emerging from complex interactions that are partly endogenous and partly exogenous stresses non-plannable nature, prioritizes capacity not results, stresses need for adaptive management
“What works” can be either, or a combination … depending on the situation, start position (path dependency) and objectives
Principles of KCDCapacity is the “ability of people, organisations,
and society as whole to manage their affairs successfully”
OECD (2005)
“Capacity is the ability of individuals, groups, institutions and organizations to identify and solve development problems over time”
Morgan (1993), UNDP (1993)
external partners cannot “do” CD of others. Partners can support and direct CD processes, but they cannot manage the actual CD of others key criterion for success is that CD must be “owned” by those who develop their capacity
KCD Principles
“Capacity is the capability of an institution or society to(i) identify and (ii) understand its development issues, (iii)act to address these, and (iv)learn from experience and accumulate knowledge
for the future.”Alaerts (2009)
This definition is more Operational Linked with knowledge Allows to specify verifiable impacts “Extra” capacity for learning
Principles of KCD
Adaptive capacity: considers changes in external factors in a
proactive manner to develop a systemic process for improving management policies and practices, with a central objective of increasing the adaptive capacity of the management regime in general, and the involved actors in particular. (Morgan, Pahl-Wostl)
“Adaptive management is learning to manage by managing to learn.”
Knowledge and capacity – levels diagram (Alaerts and Kaspersma 2010)
Knowledge and capacity – measuring capacityIndividual level Organizational
levelInstitutional
level
Technical competence
Updated knowledge and skills.
Appropriate skills mixes : engineering, legal, financial, etc.
Expertises and skills mixes in a broader context
Management competence
Project mgt skills.Leadership.
Leaders able to operate with goals agreed with supervisors and stakeholders.
Workable task assignments of sector agencies;minimal overlap
Governance competence
Ability to engage with and listen to stakeholders. Inclusiveness.
Transparent decision making. Consultations. Accountability.
Regulations to ensure transparency and accountability.
Learning competence
readiness to critically reflect on own's performance.
Procedures , incentives and resources to support learning by staff.
Openness to review sector performance and revise policies.
KCD rationaleVery few efforts to quantify ERRIndonesia Irrigation Improvement with Water
User Associations (WUAs) empowerment (2003):Conventional rehabilitation ERR of 10 - 18 %Capacity development only ERR of 20 – 30 %Rehab plus enhanced knowledge and capacity
of the WUAs ERR of 30 – 40 %Education: Long-run effect of 1 additional year of
education in OECD area == 3 – 6% increment in GDP/cap.
World Bank tools for results: (i) prioritizationCountry Partnership Strategy (with MoF,
stakeholders)Country Poverty Reduction Strategy (with other
donors)Sectoral policy and strategy studies (ESW and
TA)Operational Risk Assessment Framework (ORAF)Quality-at-Entry and other peer-reviewsImplementation Completion Report (ICR)Independent Evaluation Group (IEG) reviews and
reportsEtc.
World Bank tools for results: (ii) MonitoringIDA Results Monitoring: with key indicators:
Growth and poverty reductionPublic financial management and investment
climateInfrastructure and access to servicesHuman development (education, health, equity,
…)Quality and effectiveness of IDA program
activities Regular sectoral policy and operational policy
reviewsExperience with Inspection PanelOther
World Bank tools for results: (iii) investment tool kitIDA Poverty Reduction Support CreditGlobal Food Response Crisis ProgramClimate Change Mitigation and Adaptation programs HPIC and Fragile and Conflict-Affected StatesGlobal Floods and Disaster Response and Reduction GEF-supported projects for environmental sustainabilityProgram for Results (P4R) (replaces SWAps, OBA etc)Development Policy Loans (budget support + reforms)Sectoral programs: Irrigation, agriculture, municipal
development, WSS, flood management, health, etc.Etcetera
World Bank tools for results: (iv) in short …
Two approaches are advocated:1. Focus on short-term tangible results, within
set time frames and budgets, and with clear accountability / measurability …
2. Focus on longer-term capacity development recognizing endogenous capacity growth, with lower measurability …
World Bank tools for results: (iv) in short …
WB takes pragmatic route 1 enhanced with: Priority for sustainable investments, meeting
a demand and with demonstrated institutional readiness
Design flexibility to allow learning-as-we-go (use of Additional Financing, APL and phased projects)
Lower ambitions on Development Objectives Mix in institutional strengthening where
opportunity seems to exist Use investment to improve economic outlook
first Use investment to engage and prepare
institutions No a priori inclusion or exclusion of KCD
Diagnosis: multiple paths to a capable state(World Bank Institute 2007)
From diagnosis to selection of intervention
reforms
Other approaches in developing capacityOECD, UNDP, EuropeAid –
stress the complexity nature of capacity and the adaptive management approach
Manuals with laborious capacity assessmentMore geared for macro tasks
UNDP (2007): Capacity Assessment Methodology: starting from Capacity assessment, then Desired future capacities, Capacity gap assessment, Work planMostly for sector-wide or governance areas
Other approaches in developing capacity (ADB)
ADB – Practical Guide to Capacity Development in Sector Context:Focuses on institutional change / reforms, and
change management10 sections with tools for diagnosis, dialogue
and planningThough the diagnosis and dialogue give good
guidance, risk exists of over-analysis
Other approaches in developing capacity (ADB)
Balancing Soft and Hard investments: A way forward
Main constraint to development is lack of institutional capacity need major leap in institutional performance
Fundamental decision: Positivist concept of development vs. constructivist concept:
Planned mgmt vs. adaptive mgmt.What works best when? Flexible opportunistic approaches based on risk
analysis and realistic objectives are probably bestShort-term projects to support long-term program
Projects prioritizing both capacity development and results are undermining effectiveness on both counts
An opportunistic blend of H and S is probably best in short and long run
Need stronger guidance framework & lessons
“Soft investments”: A way forward in KCDWe make advances on the diagnostics --
need to understand better how KCD instruments work best, e.g.How to maintain engagement and facilitate change
processesHow to develop effective networks, formal and
social onesHow to make partnerships effectiveTacit knowledge is more important than explicit
knowledge yet we know little about how tacit K works; and especially in developing countries education is geared to explicit K
How to build on local K and endogenous capacity and preferences
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