How Have Social Funds Performed

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How Have Social Funds Performed?

• David Warren
• Sr. Social Protection Specialist
• Human Development Network
• World Bank
• UN, New York, October 15, 2003

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Outline

• Defining performed by looking at objectives.
• What have we learned about impacts?
• Shorter term investment objectives
• Longer term systemic objectives
• Policy Issues / Debates

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First a definition Social Fund, at its most
basic

• A program that provides (grant) financing for
  (small-scale) public investments (in a variety of
  sectors, and including capacity building),
  targeted at meeting priority needs.
• Usually targeted to poor and vulnerable
  communities, but may target other valued
  priorities (e.g., cultural heritage).
• Usually emphasize community participation, but
  degree can vary greatly.
• Projects usually identified, and often carried
  out, by local actors (communities, NGOs, local
  governments).
• Increasingly emphasize contributions to social
  capital and local development, because these
  are increasingly valued.
• Philosophy Practice precedes policy.
• Many models, continuous evolution

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Performance must be assessed in light of
objectives.So what are the objectives of Social
Funds?
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A metaphorical way to think about Social Fund
objectives a Gap and a Bridge

• Gap between service delivery system and clients
  of that system Basic service needs of poor
  communities not being met

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Gap and Bridge (contd)

• SFs often used as a means of (i) bridging that
  gapdelivering basic infrastructure, capacity
  building in streamlined, efficient ways. Aim
  improve services in poor communities, today.
• Often assume special bridging roles during times
  of crisis, natural disaster (may emphasize
  employment generation, reconstruction)

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Gap and Bridge (contd)

• SFs also (ii) work on factors contributing to the
  gap. Aim Improve the way development is done,
  today tomorrow
• Community side
• help communities develop mechanisms to identify
  needs, to use local governance structures to
  plan, to develop capacities to operate and
  maintain services
• social capital, empowerment

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Gap and Bridge (contd)

• SFs also (ii) work on factors contributing to the
  gap (contd)
• Public sector side
• help advance decentralization strategies
  (building capacities, accountability (downward
  and upward)),
• strengthen public sector institutions (capacities
  in sector agencies and among sectoral
  staffthrough direct interventions, training,
  competition, demonstration effects, setting
  standards)
• incubate innovative new programs and approaches
  (RD function), including for poverty targeting,
  impact evaluation, social protection

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Gap and Bridge (contd)

• SFs also (ii) work on factors contributing to the
  gap (contd)
• Other actors (building up the floor of the
  canyon?)
• help integrate other actors into the strategy
  private sector, NGOs, etc.

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What do we know about impacts?

• Most serious evaluation work to date has focused
  on impacts related to the bridge function
• We have long known about outputs
• Efficient, quick-disbursing, agile, flexible,
  community oriented, beneficiary satisfaction
• Recent work looked at impact of SF investments in
  achieving the objective of improving access to
  economic social infrastructure services among
  the poor
• Focusing on main sectors of intervention
• World Bank Economic Review, Vol 16, no. 2,
• Evaluating Social Fund Performance A
  Cross-Country Analysis of Community Investments,
  Rawlings, Sherburne-Benz, Van Domelen (Armenia,
  Bolivia, Honduras, Nicaragua,Peru, Zambia)

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What do we know about investment impacts?

• Poverty targeting
• Reaching poor districts, and poor households
• Impacts on Well-being
• increased access, and (in most cases) utilization
• household impacts varied by country/sector, but
  many positive findings
• Sustainability
• Investments reflect local priorities
• SF infrastructure usually as well or better
  equipped/maintained
• As with all social infrastructure, needs for
  improvement
• Costs
• Operating costs lower than most comparator
  programs

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Reaching Poor?

• Geographical targeting
• Spend more per capita in poor districts
  improving over time.
• But large variations in per capita allocations.
• Household targeting
• Share of poor extreme poor beneficiaries equal
  or greater than share in population better or
  equal to other social programs
• but individually/household targeted programs are
  better at HH targeting
• some leakage of benefits
• overall neutral/mildly pro-poor distribution
• but this may be radical improvement, and may
  drive recurrent expenditures to follow)
• varies by type of project (latrines, health,
  education, water propoor sewerage regressive
  productive?)

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Impacts on Well-being?

• In all cases, SF investments increased access to
  basic social infrastructure
• In most cases, utilization also increased (more
  visits to clinics, increased enrollment, etc.)
• Impact on household well-being varied by
  sector/country
• Education effect on enrollment varied all saw
  improvements in some indicators vs. comparators
• Health Positive effect on quality, complementary
  inputs similar to non-SF facilities (but still
  needs improvement) increased utilization in many
  cases Bolivia, reduced infant/child mortality
  rates

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Impacts on Well-being? (contd)

• Water increased access Bolivia quality
  improvement (only study that measured)
  Nicaragua reduced stunting in lt6 children,
  Bolivia reduced duration of diarrhea, Peru
  reduced incidence of diarrhea no impact on
  incidence of diarrhea in Bolivia, Honduras,
  Nicaragua. Bolivia Peru decreases in child
  mortality. Systems functioning, but cost recovery
  questionable
• Sanitation Sewerage low impact on diarrhea (low
  connection rates) latrines, some impact in
  Honduras, Peru, but varied elsewhere.

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Sustainability?

• Projects reflected community priorities, high
  satisfaction, participation, willingness to pay
• In most instances, SF infrastructure as well or
  better equipped, maintained as comparators
• Important areas for improvement
  technical/managerial issues in water, supplies of
  medecines, texts (same for non-SF
  infrastructure), linkages to local government,
  line ministries. Challenge of measuring Social
  Capital

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Costs?

• Operating Costs 5-15, lower than many other
  programs for delivering these investments (higher
  rates in small countries, and much variation in
  accounting)
• Unit Costs Variations community contracting
  leads to lower unit costs (25-40?), but speed
  and quality may be issues.

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Mind the Gap What about systemic impacts?

• More questions than answers.
• Many hypotheses, assumptionslittle evidence.
  Straw man arguments.
• Impact evaluation complicated counterfactual?
• Note impacts may be positive or negative.

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Social Capital other community-level impacts

• What is Social Capital?
• Collective action, Associational characteristics,
  Trust, Participation, Empowerment/voice,
  Inclusion
• Words can clarify or obscure
• Do SFs build social k, or do we exploit it
• How to measure?
• New tools being developed/field tested
• Operational design features matter a lot
• E.g., how / by whom investment decisions are
  made, menu options, who implements, capacity
  building)

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Institutions/Public Sector Management

• Do they distort public sector? (Bhatia,
  forthcoming)
• Autonomy Often exaggerated operational more
  than policy
• Salaries Comparisons of base salaries not
  valid relevant comparison should be
  cost/investment.
• Procurement/Financial Management Pioneering
  (e.g., contracting out direct financing of
  communities) accountable

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Institutions/Public Sector Management

• Do they distort public sector (contd)?
• Budgetary/Accountability Issues
• Integration into natl budgets improving, but
  still an issue
• Donor fragmentation
• Recurrent expenditures seem to be covered
• Little evidence of crowding out, may be crowding
  in ( to poorer areas)
• Political Influence
• Design features matter
• No evidence that other govt programs subject to
  less influence
• Corruption
• Little evidence
• Design features matter (e.g., MIS, allocation
  criteria)

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Institutions/Public Sector Management

• Do they distort public sector (contd)?
• Many of these issues are generic to IFI-financed
  programs (PIU issues).
• Decentralization a special category

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Coming to DecentralizationMeans Ends A
stylized history of Social Funds

• Social compensation (investments as means to end)
• Investments in basic infrastructure (community
  participation as means to end of identifying the
  right projects, and enhancing sustainability)
• Some attention to social services started
• Community participation (capacity building,
  voice, empowerment, social capital) and
  investments both ends

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So why are SFs now focusing on decentralization
and local governance?

• Means to current ends
• (To sustain community participation) Sustainable
  community participation, empowerment, means
  linking communities to the system
• (Works need maintenance and operation)
  Sustainable service delivery often demands local
  government intervention
• (To order project requests) Intra-district
  competition seems fairer than first-come,
  first-served, or handpicking communities may
  result in better decisions
• But also part of new end of improving
  development systems (fixing the gap)
• Other reasons?
• Political pressure?
• New fad?

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Questions about SFs and Decentralization

• Does it go without saying that SFs should focus
  on decentralization?
• Are there contexts in which SFs should remain
  relatively centralized?
• Is an emphasis on decentralization a luxury for
  less poor countries?
• Are there some investments that should not be
  decentralized (or is it all or nothing)?
• What about special needs groups?

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Questions about SFs and Decentralization

• Are there conditions that need to be met first?
  (elections, fiscal transfers, municipal
  capacities) Should SFs lead, or support?

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Questions about SFs and Decentralization

• When SFs do focus on decentralization, what
  operational features are most importantbest
  practices?
• Balancing community and local government for
  implementation
• Participatory Planning
• Maintenance Funds

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Questions about SFs and Decentralization

• Does this new role have implications for expected
  duration of SFs? (if so, what are we going to do
  about making the institutions sustainable?)

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What is the long-term perspective?

• Is there a long-term role for a bridge?
• Many years before all social and infrastructure
  programs can be financed through taxes so needs
  for external financing likely to remain great
• But even then, SF may be better for some
  functions than alternatives
• Is there a long-term role for gap-mending?
• Exit/Transition strategies increasingly tied to
  Local Development Strategies
• If so, what to do about making the institutions
  sustainable?

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Existential Questions

• Can a program that only does lots of little
  things have as much impact as a big reform
  project? Some even ask whether they undermine
  good policy development / implementation?
• Filling gaps vs. developing policy you need both
• SFs should ideally fit in with a development
  strategy.
• But does policy have to precede practice?
• In any case Aim for convergence.
• Need to apply best practices, esp. in rural
  infrastructure
• Are SFs to blame when governments fail to tackle
  policy issues?

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Existential Questions

• What is more important targeting the poorest, or
  broadening coverage of basic services?
• Prioritizing among various objectives leads to
  decisions about operational features operational
  features may reveal preferences regarding
  objectives

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Other, more operational, challenges

• Maintaining transparency (move to community
  contracting helps) dealing with political
  mandates
• Grant mentality (not good for everything
  productive projects?)
• Replicating / scaling up pilots
• Bulldozers vs. Think-Tanks may not be best
  Poverty Reduction Board (but sometimes put in
  that role)
• Need multisectoral teams (always tough)

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Concluding Remarks

• Social Funds are flexible and effective
  instruments that have
• Helped develop new approaches and instruments
• Had proven impacts on living conditions of the
  poor 10, 100, 1000 projects DO matter.
• But as time wears on, their systemic impacts
  are gaining in relevance. In particular, as
  strategic importance of Local Development grows,
  we need to address some key analytical challenges
• To clarify desired social capital and
  institutional impacts, and the hypotheses for
  how SFs are supposed to help
• To evaluate impacts at all levels
• To clarify the conceptual framework for local
  development, and attack the problem
  holistically. SFs may be helpful for this goal,
  but are not sufficient.