Evaluation: World Bank's PSIA contribution to country capacity 'negligible'

A recent report by the World Bank's Independent Evaluation Group (IEG) on poverty and social impact analysis (PSIA) finds implementation problems and a "negligible" impact on developing country capacity, echoing long-standing civil society critiques.

PSIAs were introduced in 2002 following civil society demands for analysis of the impacts of structural adjustment policies (see Update 30, 28). They are supposed to be carried out prior to the implementation of any project or reform programme that is likely to have "significant distributional impact." The analysis should then inform policy advice and design.

The IEG report follows papers released by the Bank in mid-2009 on the effectiveness of PSIA at country level and the links between PSIAs and development policy loans (see Update 66).

Objectives not met

The IEG evaluated three stated objectives of PSIAs: to influence country policies; to aid the development of country capacity for policy analysis; and to influence Bank operations.

Almost half of the 156 Bank-supported PSIAs from fiscal years 2002-07 were reviewed. Of these, a fifth did not explicitly identify which objective they intended to pursue. Although a third claimed to have addressed all three objectives, the report cautioned that "the pursuit of the multiple operational objectives of PSIAs can create tension and raise unrealistic expectations of what a PSIA can achieve."

The evaluation acknowledged the difficulty in measuring the extent to which PSIAs contribute to country level policy making given the many factors that may influence it. Yet it does not comment on whether the inability to quantify this objective raises questions as to PSIAs validity.

Critically, the report concluded that on average PSIAs made a negligible contribution to developing country analytical capacity and that they were "devoid of policy recommendations and did not feed into a policy debate or decision in the country." According to the IEG, inadequate time-frames made it impossible to sufficiently build government capacity for policy analysis and Bank staff approached PSIAs without a strategy to achieve this aim. They also lacked a common understanding of PSIA objectives and processes, resulting in wide variations and frequent departures from good practice guidance.

Such failings pepper the evaluation's country case studies. For example the energy pricing and subsidies programme in Ghana neglected pro-poor approaches suggested by the PSIA. It was also hindered by differences in opinion between staff responsible for the PSIA and those responsible for energy interventions.

Recommendations weak

Despite the serious nature of some of their critiques, the IEG evaluation makes limited proposals for change. They recommend that:

• Bank staff need to better understand the PSIA approach;
• objectives of each PSIA need to be identified and linked to intended outcomes;
• PSIA need to be better integrated into the Bank's country assistance programmes; and
• better quality needs to be assured through regional level monitoring and evaluation, and reviews of the process and intended effects.

Nora Honkaniemi of Brussels-based NGO Eurodad states that these recommendations do little to address long-standing critiques of the process' current ineffectiveness. Drawing on criticisms raised in a 2007 paper written by a coalition of NGOs (see Update 58), she argues that country-led PSIAs be conducted before decisions are made on policy reform, that the results inform a public debate, that a genuine attempt is made to survey a range of policy options, and that PSIA is made a requirement of development policy loans.

A Eurodad critiue of the IEG's report urges governments considering contributions to the IDA 16 replenishment (see Update 70) to insist that "country-led PSIA be used in all IDA-supported lending with a major distributional impact, and pressure the World Bank to ensure that proper PSIA is conducted in a way which enhances country ownership."

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Published: 16 April 2010 , last edited: 23 April 2010

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