Making Poverty and Social Impact Analysis happen

17 November 2003

On 13-14 October the Dutch and British governments organised an international workshop on Poverty and Social Impact Analysis (PSIA). Attended by officials from eight bilateral agencies and from the World Bank and IMF, plus a few civil society representatives, the workshop aimed to clarify what PSIA is for and how it is being undertaken, as well as agree plans for how bilateral aid agencies could improve implementation in the future.

PSIA seeks to open up policy formulation and increase the understanding of the likely distributional effects of different policy choices. The World Bank claims to be carrying out 70 PSIA studies, although there is still disagreement about what constitutes an adequate PSIA. Participants at The Hague workshop agreed that PSIA should be an integral part of the PRS process and linked to Bank and Fund poverty reduction loans. PSIA should, where possible, use existing structures such as PRS consultative fora.

Characteristics of an ideal PSIA should be:

  • Integration with PRS, budget and WB/IMF lending cycles;
  • Topic selection should be country led;
  • Broad participation in study design;
  • Long lead-time so can look at policy choice rather than policy formulation;
  • Transparency throughout;
  • Pro-active dissemination;
  • Results should support final policy choice, and develop a credible policy dialogue.

Professor George Gyan-Baffour Of The National Development Planning Commission, Ghana, presented an overview of the impressive PSIA framework in his country. The Government of Ghana has decided to assess energy and petroleum sector pricing, pro-poor decentralization, tackling vulnerability and exclusion, and agricultural modernization. The selection process and the studies themselves are overseen by a Technical Committee and a Steering Committee, the latter consisting of Ministers and heads of stakeholder organisations. The involvement of politicians is intended to ensure that the policy work is relevant and will lead to action. However the role of donors is still very clear. The Ghanaian stakeholders originally identified 16 research topics, then prioritised this to seven, but were only able to get funding for five.

However conference participants could not agree on some areas, especially on who should control the PSIA process. There is a tension between donors pushing both for country ownership and for IFIs to honour their commitment to do PSIA on all major reforms. If national governments are not interested in doing PSIA, should the IFIs do it anyway? Some participants, especially those from civil society, called for specific standards of what constitutes adequate PSIA, while others were content with flexible good practice principles. There was also insufficient time to resolve the question of whether the IMF should just respond to PSIA produced by others or start undertaking such studies itself.

Bilateral donors agreed to raise the need for PSIA at donor coordination fora such as Consultative Groups, and to develop shared positions on IFI approaches to PSIA to raise at the Bank and Fund’s Boards. Further technical work will be done to develop tools for PSIA for macroeconomic issues and to examine the possibilities for practical ways of funding PSIA (including through Trust funds and pooled funding). Progress will be assessed within a year.