Knowledge and Capacity Development

IFAD Workshop Balancing Hard and Soft InvestmentsKnowledge and Capacity DevelopmentG. AlaertsThe World BankApril 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  reformsMuch 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 considerationsBetter investment prioritization, plus design and ownership, have in past decade led to better resultsSince 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 approachesWB: two-pronged approachOrganizations: 70-80s: 5% of loans used for TA and training> 80s: more KCD Institutions: reforms through conditions, budget support and TAChallenge: tension between (i) short-term “results”-driven and budget-driven /accountable approaches, and (ii) longer-term adaptive approaches building CHard 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 experienceWB 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 …

World Bank experience: Africa Region Is capacity included in the development objective? World Bank Institute desk study, 2008 (unpublished).

World Bank experience: Africa RegionType 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.

Principles of KCDTwo basic approaches:Capacity can be developed through inputs, leading in turn to better results positivist approach, assuming causal relations between input and outputCapacity 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 toidentify and understand its development issues, act to address these, and learn from experience and accumulate knowledge for the future.”Alaerts (2009)This definition is moreOperational Linked with knowledgeAllows to specify verifiable impacts“Extra” capacity for learning

Principles of KCDAdaptive 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 capacity

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:Focus on short-term tangible results, within set time frames and budgets, and with clear accountability / measurability … 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 readinessDesign flexibility to allow learning-as-we-go (use of Additional Financing, APL and phased projects)Lower ambitions on Development ObjectivesMix in institutional strengthening where opportunity seems to existUse investment to improve economic outlook firstUse investment to engage and prepare institutionsNo 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 approachManuals with laborious capacity assessmentMore geared for macro tasksUNDP (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 forwardMain constraint to development is lack of institutional capacity  need major leap in institutional performanceFundamental 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 programProjects prioritizing both capacity development and results are undermining effectiveness on both countsAn 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 KHow to build on local K and endogenous capacity and preferences

Knowledge and Capacity Development

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