Applied Political Economy Analysis: A Tool for Analyzing Local Systems

September 2014

A PRACTICAL GUIDE TO PACT’S APPLIED POLITICAL ECONOMY ANALYSIS TOOL FOR PRACTITIONERS AND DEVELOPMENT PROFESSIONALS

pact applied political economy analysis

Table of Contents

Table of Contents ........................................................................................................................ 2

Purpose of this handbook ........................................................................................................... 3

The Pact Applied Political Economy Analysis Methodology –Description and Overview ............... 4 Why analyze the political economy? ..................................................................................................................... 4 Pact's APEA – What is it? What does it do? .......................................................................................................... 5 Where does it come from? .................................................................................................................................... 6 Why is it needed? .................................................................................................................................................. 6 What makes it unique? ......................................................................................................................................... 7 Who does it engage? ............................................................................................................................................. 7 Key Principles of APEA ......................................................................................................................................... 7

How does it work? ...................................................................................................................... 9 Construction of the Tool/Preparatory Activities .................................................................................................. 9 Step-by-step process ........................................................................................................................................... 10

Step 1: Analysis of explicit incentives .............................................................................................................. 10 Step 2: Analysis of implicit incentives............................................................................................................. 10 Step 3: Action and advocacy planning ............................................................................................................ 10 Step 4: Mainstreaming iterative APEA into project management .................................................................. 10

Timeline & major milestones ............................................................................................................................... 11 Resources required .............................................................................................................................................. 11

Staffing ............................................................................................................................................................. 11 Budget ............................................................................................................................................................. 12

Lessons Learned from Experience ............................................................................................ 13 Case story #1: Political Economy of Maternal, Newborn and Child Health Service Provision in Northeast Nigeria ................................................................................................................................................................. 13 Case story #2: Political Economy Analysis of Namibia Institutional Strengthening Project ............................. 14 Overarching success factors ................................................................................................................................ 16 Mistakes to avoid ................................................................................................................................................ 17 Additional operational lessons............................................................................................................................ 17 Adaptations and impact/approach area applications ......................................................................................... 18 Contextual considerations .................................................................................................................................. 19

Appendices and Resources ........................................................................................................ 20 Appendix 1: Glossary........................................................................................................................................... 21 Appendix 3: Methodologies for Information/Data Collection ............................................................................ 22 Appendix 3: APEA Contacts within Pact ............................................................................................................ 24 Appendix 4: Links to other materials ................................................................................................................. 25

2

Purpose of this handbook This handbook is intended to help development practitioners understand how to use and what can be achieved by Pact’s Applied Political Economy Analysis (APEA) methodology. This document will provide Pact managers and other practitioners with information on how the Pact APEA methodology works and how best to incorporate it in their country strategy or program. While this document is designed primarily for internal Pact purposes, it may be shared with donors and partners when they require more information to make funding or partnership decisions. Note: Thanks to Alex ORiordan who provided invaluable input into this handbook. Developed by the Productization Project Team: Kwasi Ansu, Marc Cassidy, Mason Ingram, Andrew Meaux. Guidance provided by the Productization Oversight Group: Eddie Byrd, Hannah Poole, Katie Schwarm, John Whalen, Olga Yakimakho and Graham Wood. Please send any questions or comments you have to mcassidy@pactworld.org.

This work is licensed under the Creative Commons Attribution – ShareAlike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 444 Castro Street, Suite 900, Mountain View, California 94041, USA.

3

The Pact Applied Political Economy Analysis Methodology –Description and Overview

Why analyze the political economy? Pact carries out programs across its six impact and approach areas in complex and unique cultural, economic and political contexts. Achieving successful and long-lasting results that improve the lives of communities requires more than technically sound programming. Local stakeholders must frequently forge new relationships and embrace and lead the development of new institutional structures and policies. Facilitating such change requires a sophisticated understanding of local systems and the overarching enabling environment that determines the behavior of key stakeholders.

“Political economy” refers to the intersection of political and economic forces within a given society. The importance of understanding the political economy where we implement programs is captured in James Ferguson’s classic work, The Anti-Politics Machine. Ferguson tells the story of a donor-funded livestock support project in Lesotho that tried to help farmers by encouraging them to sell their cattle when forecasts predicted feed crop failure or low prices. The logic of the project held that farmers, if given access to forecasts, would respond to explicit economic incentives by selling their cattle at the best possible price. The project incorrectly presumed that farmers held on to cattle only because they were unable to gauge the likelihood of feed crop failure or low prices. However, this reliance on explicit financial incentives was misplaced. In Lesotho, cattle have enormous social status and to sell stock results in an immediate loss of social standing. A loss of social standing has implicit consequences, including reduced access to social (and familial), cultural, political and economic opportunities. In the end, the project failed because farmers were more willing to risk losing their cattle or selling at a lower price than to accept the certainty of lower social standing from selling their cattle.

As practitioners, it can be tempting to ignore the messy cultural, economic and political realities that can challenge our programmatic assumptions. Unlike the implementers in Ferguson’s story, however, Pact seeks to design and implement its programs with close attention to the various factors that explain how and why actors behave in a defined sector or geographic area of interest. This includes understanding the legal/policy framework and financial incentives that influence the decisions of actors. It also includes understanding the underlying norms, values and interests that constrain their behavior. Importantly, understanding these explicit and implicit factors is a prerequisite for (1) structuring program interventions in a way that avoids risks and maximizes opportunities in a given political/economic context and (2) developing a deliberate strategy for realigning interests in a manner that achieves program results and improves social outcomes.

“Frequently we don’t have the time or resources to pay attention to the governance and local politics; it is easier just to focus on the technical aspects, such as health, livelihoods, etc…”

Senior Pact staff on our tendency not to give attention to the political economy considerations

4

Pact’s APEA – What is it? What does it do? The Organization for Economic Cooperation and Development (OECD) defines political economy analysis (PEA) as being concerned with the interaction of political and economic processes in a society: the distribution of power and wealth between different groups and individuals, and the processes that create, sustain and transform these relationships over time. PEA is used to understand the explicit legal, policy and economic frameworks, as well as the implicit and unwritten norms, values and interests that help determine how individual and group actors behave. PEA as a methodology can be applied at various levels:

National-level analysis: Focuses at the macro-level on the interplay between political and economic power and the distribution of resources within a society.

Sector-level analysis: Focuses on the manner in which wealth and power impact decision-making within a given sector, such as the education, energy or health sectors.

Project-level analysis: Focuses on how existing economic and political power structures may impede or facilitate project objectives.

Pact’s Applied Political Economy Analysis (APEA) is a methodology for conducting project-level analysis. At its most basic level, APEA is used to check assumptions and better account for the risks associated with implementing projects in complex environments. APEA focuses on how power and resources shape local systems, organizations, communities and sectors involved in a Pact project. By observing both the explicit and implicit political, economic and socio-cultural incentives, Pact is better positioned to devise innovative and locally appropriate solutions to development challenges. APEA contributes to project impact and sustainability by enabling Pact to critically assess the operational environment on a continuous basis in a way that helps managers implement interventions that are tailored over time to the local context.

Employing APEA to analyze local systems Donors and implementing agencies have increasingly emphasized strengthening and leveraging indigenous, local systems to achieve sustainable development objectives. As USAID explains in Local Systems: A Framework for Supporting Sustained Development, “the basic idea [of using local systems] is simple: development investments in poor countries, of whatever form, should catalyze the economic, political and social processes within those countries that yield ever-improving lives for their citizens.”1 USAID identifies 10 principles for engaging with local systems in its Local Systems Framework:

1. Recognize there is always a system 2. Engage local systems everywhere 3. Capitalize on our convening authority 4. Tap into local knowledge 5. Map local systems

6. Design holistically 7. Ensure accountability 8. Embed flexibility 9. Embrace facilitation 10. Monitor and evaluate for sustainability

To constructively engage local systems, projects must have a sophisticated understanding of the underlying dynamics that explain how those systems function. APEA serves to map the stakeholders, processes and institutions that make up local systems. More fundamentally, the methodology helps illuminate the written and unwritten rules and interests that govern those systems. As is explained in Case Study 2: Namibia Institutional Strengthening Project, Pact applies the 10 principles from USAID’s Local Systems Framework to structure its analysis of sectors and local systems.

5

Where does it come from? PEA as an approach that results from the frustration that “rational” technocratic solutions to development problems frequently fail due to political and economic realities that are not accounted for in program designs. Over the last decade, development practitioners have taken incremental steps toward analyzing the political and economic contexts in which their programs are implemented. The Department for International Development’s (DFID) Drivers of Change methodology encourages implementers to investigate the root causes of particular development problems, which are often political and economic in nature. Similarly, the Dutch Ministry of Foreign Affairs developed the Strategic Governance and Anticorruption Analysis methodology, which outlines a structured process for examining key factors that contribute toward governance and corruption outcomes. Furthermore, the World Bank employs Problem-Driven Political Economy Analysis to link diagnosis of political and economic drivers to a specific policy problem. USAID is currently developing its own methodology to mainstream PEA at the country-level and sector-level into its programs.

While donors have led efforts to develop PEA methodologies that facilitate country-, sector- and policy-focused analysis, few NGOs or contractors have systematically applied PEA at the project level. Oxfam developed the Power Cube to guide analysis of who wields power and influence in a defined locality or sector. In 2011, DAI’s publication Developing Alternatives produced an issue titled “Political Considerations” devoted to applying PEA to different sectors within their projects. Pact’s APEA methodology has been developed with reference to the tools and frameworks used at both the donor and implementer level.

Why is it needed? APEA methodology is necessary because the political and economic context of where we work has the potential to make or break Pact programs to improve the lives of the individuals and communities we serve. At a minimum, it helps to ensure that we do no harm through our development interventions. Consider the following examples:

To encourage the entry of informal artisanal gold miners into the formal economy through a mines-to-markets program in Zimbabwe, Pact first had to understand how the existing legal framework and interests of various actors incentivize miners to remain in the economic shadows.

To improve the quality of maternal and newborn child health (MNCH) services provided at government health centers in northern Nigeria, Pact had to analyze the formal policies and informal interests within the State Ministry of Health, local governments and private-sector interests that explain the low quality of existing services.

To promote the use of robust environmental impact assessments (EIAs) for infrastructure projects in Southeast Asia, Pact had to understand why environment ministries and other government agencies fail to enforce existing EIA laws.

To ensure HIV/AIDS funding in Namibia is sustained after international donors halt funding, Pact must understand which individuals and institutions are best positioned to sustain the “fight” and how best to support them during the handover period.

Many Pact managers already understand that they need to take account of the political and economic forces that impact their projects but do not have established instruments to guide such inquiry. APEA helps Pact institutionalize a more disciplined and intentional approach to the analysis of the political economy. Importantly, this allows Pact to design and adjust programs to reflect the realities of the enabling environment,

6

as well as to develop informed strategies for realigning interests and incentives so that they are in line with project goals.

What makes it unique? Pact’s APEA approach is unique in multiple ways. As explained above, while most PEA methodologies are directed at national- or sector-level analysis, Pact’s APEA is focused at the project level. The methodology, therefore, is focused on understanding the political and economic dynamics that influence a project in order to facilitate improved project design and decision-making by Pact managers.

Pact’s APEA is also unique in that it is more than an analytical tool. APEA is best understood as process that helps project teams analyze the enabling environment, as well as to develop strategies for positively impacting political and economic drivers to contribute to desired results. Furthermore, the APEA process is explicitly designed to be participatory and to support shared understanding of key development challenges among a diversity of stakeholders.

Who does it engage? APEA is designed to be a flexible and participatory approach that invariably includes a wide range of stakeholders. The exact composition of stakeholders included in a given APEA is context-specific. In fact, practitioners should avoid establishing a fixed, predetermined list of stakeholders to be included in an APEA. The actors engaged over the course of an APEA typically snowballs through the consultative process that unfolds; practitioners will frequently identify a host of new stakeholders and central actors only after an APEA is well underway. Stakeholders engaged during an APEA may include:

Government ministries, departments and agencies

Bilateral and multilateral donors Private sector entities Civil society organizations

Media organizations Research institutions and universities Religious and other traditional leaders Community members and CBOs

Key Principles of APEA Pact’s APEA methodology is aimed at enabling projects to generate practical analysis that informs project design and implementation, while strengthening key relationships with project stakeholders. This process is driven by a set of key principles:

Focus on what’s “core”: An APEA is driven by a defined question or set of questions. Wherever possible, practitioners should adopt the narrowest definition of the core question(s) in order to generate analysis that is

An APEA for a mines-to-markets project that aims to formalize the mining activities of small-scale artisanal miners in Zimbabwe may be driven by the following core question:

What are the explicit and implicit incentives which inhibit the entry of artisanal and small-scale miners in the gold sector from operating within of the formal economy?

This question cuts straight to the heart of the problem the project is trying to solve and will likely elicit more useful information compared to a more general question:

How does the gold mining sector in Zimbabwe operate?

7

actionable. Loosely defined questions are apt to generate information that may be interesting, but less informative for project design and implementation.

Flexibility: APEA is a flexible process as opposed to a scripted tool. While practitioners should remain directed by core questions, they should remain flexible how they gather information and from whom. Approaches used for collecting key information include desk reviews, stakeholder interviews, focus group discussions, formal and informal surveys and various participatory research methods.

Participation: An APEA is built around participatory consultation with a wide range of stakeholders and key actors connected to the project. Practitioners update the list of stakeholders on a continuous basis as an APEA unfolds.

Consensus-building: The development problems addressed by Pact programs are invariably complex. An APEA offers an opportunity to consolidate learning and perspectives from a wide range of stakeholders to promote a shared understanding of key challenges.

Action-oriented: The purpose of an APEA is not to generate analysis for analysis sake. Rather, it is to (1) adjust the design of projects to reflect political and economic realities and/or (2) develop strategies for changing political and economic dynamics in order to achieve project results. As such, an APEA does not end with analysis. Instead, it includes processes for translating analysis into action, frequently in the form of the development of advocacy plans.

Iterative process: While a large APEA frequently occurs at the start of a project, the process is not a one-time event. APEA is most effective when it is integrated into a project’s management plan and any analytical report developed at the start of the project is treated as a “living document” that is revisited on an iterative basis.

8

How does it work?

Construction of the Tool/Preparatory Activities The following step-by-step process was developed for utilizing APEA to inform the design of a project or to recalibrate a project that has already been designed. While many of Pact’s projects are designed by the donor, an increasing number of donors encourage Pact to take the lead in project design, or to co-design the project with the donor. Ideally, APEA is used prior to or early in the life of a project. However, it can be used at any stage of the project cycle. The process aims to improve the likelihood that a development intervention achieves its intended outcomes – such as organizational capacity development, institutional reform or policy change – by making use of robust and ongoing analytical research into the political economy influencing key actors associated with the project.

The figure below provides a map of an APEA that is focused on understanding the behavior of a single organization or institution. An APEA examines both explicit policies and implicit interests and norms to understand the organization’s performance and relative incentive to change. Based on that analysis, a project team develops strategies for aligning interventions with underlying incentives to support the desired change. For example, efforts to improve service delivery in health clinics in northern Nigeria may require policy reforms aimed at promoting performance-based management of clinics and improved oversight of supplies and equipment. A project may be able to advance such reform by linking advocacy efforts to a local leader’s desire to win political elections.

9

Step-by-step process Step 1: Analysis of explicit incentives An APEA begins by examining the explicit political and economic incentives that serve to influence and constrain the behaviour of key actors. Practitioners typically complete a comprehensive literature or document review to develop a complete picture of the legal and policy framework, as well as the formal economic relationships and incentives present in the locality or sector. Practitioners may need to conduct stakeholder interviews to fully understand explicit political and economic structures.

Step 2: Analysis of implicit incentives At this stage, practitioners seek to understand the complex web of implicit interests, values and norms that serve to influence the decisions and actions of key stakeholders. In some cases, the implicit incentives present within a given sphere may mirror the explicit incentives; in other cases, they may contradict the formal political and economic incentive structure. For example, in certain industries legal regulations related to workers’ safety and minimum wage may be supported by employers’ implicit interest in maintaining a productive and satisfied work force. In other industries, the impact of worker’s safety and wage regulations could be blunted by powerful incentives to minimize labor costs.

Implicit incentives are by definition difficult to identify. Projects may be able to make use of policy and academic research that explains the informal factors that influence stakeholder behavior. However, it is more likely that practitioners will need to rely on stakeholder consultation in order to develop a textured understanding of the implicit incentive structure. Key consultative approaches may include stakeholder interviews, focus group discussions, stakeholder mapping and various other participatory research methods.

Depending on the topic, many stakeholders may be uncomfortable discussing or even acknowledging informal incentives. Practitioners must be adept at explaining the purpose of APEA activities in an honest and non-threatening manner.

Step 3: Action and advocacy planning The lessons generated through an APEA lead directly to improved programming and strategies for positively impacting the formal and informal incentive structure influencing stakeholder behavior. The analytical portion of an APEA ends with one or more stakeholder dissemination workshops aimed at sharing key learning from the process. Dissemination workshops help cement a common understanding of opportunities and challenges. Even more importantly, they help stakeholders (and the project) establish a list of action items and advocacy plans aimed at bringing about desired change. Importantly, any action and advocacy planning process should develop clear roles and responsibilities.

Step 4: Mainstreaming iterative APEA into project management Intensive APEA analytical and planning activities are ideally frontloaded in the design or early project stages. However, analysis of the political and economic drivers continues throughout the life of a project. Discrete APEA activities are embedded into the project’s overall management plan. The management plan identifies specific mechanisms for monitoring changes in political and economic dynamics and for tailoring project

Four Steps of Comprehensive APEA:

1. Analysis of explicit incentives

2. Analysis of implicit incentives

3. Action and advocacy planning

4. Mainstreaming iterative APEA into project management

10

activities to the current context. This may be accomplished through the continuous review of secondary research and data, as well as through structured stakeholder consultation. Additionally, the project leadership team and key stakeholders review and update any APEA documents/reports created at the beginning of the project.

Timeline & major milestones Implementation of the research and analysis steps of an APEA (Steps 1-2) typically takes 1-3 months to complete, depending on the context and complexity of the project. Ideally APEA is an unrushed process that allows practitioners to expand the base of key participants consulted and issues investigated. The action and advocacy planning stage (Step 3) may occur over the course of one or only a few workshops. However, for complex projects, follow-up consultative work with key stakeholders may be required to complete the planning. Finally, PMP-based analysis activities (Step 4) should be implemented over the course of the entire project.

Figure X: APEA timeline

Resources required The resources required for conducting an APEA depend on the level of complexity of the project and its intended duration.

Staffing The main cost associated with APEA activities is local and/or international staff and consultants. More complex projects may require larger APEA teams, as well as teams with specific technical capacities. In most cases, a combination of international and local expertise is required. Ideally, key staff will have the following skills and knowledge:

Strong country knowledge and, given the current trend towards more narrowly specified problem-driven analyses, strong knowledge of the sub-sector and project in question, including competence in dealing with relevant technical issues.

Strong networks of key informants in-country, including subject-specific contacts. Experience suggests that this often-overlooked attribute is absolutely critical to the success of political economy work.

11

Appropriate linguistic skills. Ideally relevant linguistic capacity should be held throughout the team, but failing that, at least one highly-skilled multilingual team member is needed.

Knowledge of the aid industry, which is helpful in recognizing and including in the analysis an assessment of donors active role in the context in question. Such knowledge is also useful in making crucial links between analysis and operational implications.

Writing and other communication skills. Such capabilities are critical not only for the production of the final study outputs but also for managing the entire exercise, including conducting stakeholder consultation and dissemination workshops.

Budget The cost of embedding an APEA capacity into a project is largely dependent on the complexity of the project and the corresponding need in terms of human resources. Experience suggests that a robust APEA capacity can be established for $100,000-$150,000 on a five-year project, with most costs going toward local and international staff and consultants. Projects with more limited budgets may be able to integrate key elements of APEA methodology into their project management cycle by using staff and partners to deliberately collect and analyze information on the implementation context.

12

Lessons Learned from Experience

Case story #1: Political Economy of Maternal, Newborn and Child Health Service Provision in Northeast Nigeria In 2013-14, Pact implemented a “Learning Project” with funding from the Bill and Melinda Gates Foundation (BMGF) to develop a deep understanding of the Maternal, Newborn and Child Health (MNCH) sector in the states of Adamawa and Gombe, Nigeria. As part of this project, Pact conducted a sector-level APEA to examine the various formal and informal incentives that guide the behavior of key actors within the MNCH sector, including the Ministry of Health, state-level health agencies, health centers, ward development committees (WDCs) and village development committees (VDCs). The goal of the APEA was to inform the design of an anticipated multiyear project funded by BMGF focused on demand- and supply-side interventions to improve MNCH services.

Pact designed and conducted the APEA activity, employing a mixed methods approach to generate data. The APEA was conducted in two distinct stages. First, Pact conducted a desk review in order to understand the overarching legal and policy framework for the MNCH sector in Nigeria, and particularly Adamawa and Gombe states. Furthermore, the desk review included an examination of secondary sources discussing the political economy of the health sector in Nigeria, as well as other regional and fragile states. Second, Pact held a number of stakeholder interviews with individuals in the MNCH sector at the national, state and local levels to understand the various incentives that explain service delivery outcomes.

The APEA identified a number of critical constraints facing the MNCH sector. In particular, the analysis pointed toward significant, overlapping responsibilities across various levels of government charged with delivering MNCH services. It also demonstrated that party politics frequently impedes the ability of different government institutions (and different levels of government) to coordinate activities. Health staff face poor work conditions and frequently receive their salaries late, reducing incentives for the efficient delivery of quality services. Furthermore, the APEA identified that while various top-down oversight mechanisms exist through which national and state agencies monitor the work of WDCs and VDCs, they are weak and bottom-up accountability mechanisms are weaker.

The APEA led to a number of specific recommendations for future programming:

Establish mechanisms for improving coordination between service providers (and funders of service providers). The APEA called for establishing state-level mechanisms to facilitate joint planning. Furthermore, it noted that multiple donors and implementing partners – including the World Bank, UNICEF, FHI360 and Pact – make significant MNCH investments in Adamawa and Gombe states. However, there exists no formal working group or meeting structure for those partners to coordinate their investments.

Invest in service delivery capacity and institutional capacity of state agencies. There exist clear constraints in terms of the capacity of service delivery providers within state health agencies. Furthermore, multiple state agencies are still in their infancy and need to establish clear systems and procedures.

Implement with attention to party politics. MNCH projects need to understand the competing party loyalties of different levels of government and how they affect service delivery. While it is beyond the

13

scope of an externally funded project to fully address the challenge of party politics, awareness of the issue can allow the project to push competing agencies to work together more collaboratively.

Connect with National Advocacy Campaigns. There exist multiple legislative initiatives in Nigeria that could help clarify the roles and responsibilities of different health agencies and promote downward accountability within the health system. Improving service delivery at the state and sub-state levels requires investing in national policy reform initiatives.

The staff and consultants responsible for implementing the Gates MNCH Learning Project found that the APEA provided a set of higher-level political and economic insights that complemented community-level findings. However, Pact found that the impact of the APEA was somewhat limited by the fact that it was a late “add-on” to the MNCH Learning Project’s larger research study. The APEA was carried out as a discrete activity, largely separate from the project’s larger research agenda. The technical lead for the MNCH Learning Project concluded that “issues related to political economy are best built into the project design from the outset.” Furthermore, she suggested that future projects could benefit from embedding the APEA specialist within the larger project team and placing the specialist in a position where they can influence the overarching research agenda and instruments.

Case story #2: Political Economy Analysis of Namibia Institutional Strengthening Project The Namibia Institutional Strengthening Project (NIS) is a three-year, USAID-funded project aimed at facilitating improved Namibian institutional capacity to sustain quality delivery of priority and integrated HIV/AIDS services. During the first year of the project, Pact carried out an APEA in order to deliberately test key assumptions underpinning the project design and, more generally, to develop effective strategies for enabling Namibian institutions to deliver improved HIV/AIDS services.

The APEA team completed a thorough review of relevant articles, policies and laws in order to develop a clear understanding of the legal and institutional framework governing the HIV/AIDS sector in Namibia. The team then conducted a series of stakeholder consultations and key informant interviews. This included consulting collectively and individually with project staff to review project assumptions and discuss their understanding of the implementation landscape. It also included extensive meetings with institutional partners within the Government of the Republic of Namibia (GRN) and civil society to identify opportunities and constraints related to sustaining the level of HIV/AIDS service delivery after international partners reduce their financial and technical support.

Pact tracked a range of key project assumptions that were tested with the APEA. A partial list assumptions tracked is provided below:

14

What assumptions does the project have

now? (approaches, relationships, other)

What does the literature say about the project’s

assumptions?

Do the findings alter

the project approach?

[If so] How?

COUNTRY CONTEXT

HIV/AIDS is a political priority

HIV/AIDS is not a dominant political priority although it does feature in related political priorities

Yes Mainstream HIV/AIDS in related political priorities.

Government has capacity to coordinate the HIV/AIDS response.

Not sufficient capacity in special projects/ Ministry of Health and Social Services both at a technical level and because of staff turnover. Lack of senior management support also undermines capacity to coordinate.

Yes Build coordination capacity outside of Government with civil society, faith based organizations and parliamentarians.

Government has incentives to implement

No evidence that delivery of HIV/AIDS services is a key performance criteria of senior government officers

Yes Strengthen civil society leadership to lobby parliament to ask targeted questions about HIV/AIDS when permanent secretaries report

PROJECT CONTEXT

Local champions and allies exist

The relationship with local champions is compromised by the impression that HIV/AIDS is donor driven

Yes Pact needs to actively identify and build partnerships with champions in related priority areas

Responsible party/advocacy group.

There is no obvious ‘grouping’ of like-minded actors that we can appeal to for support when we have challenges

Yes Work towards building a cohort through building leadership in civil society and in lobbying parliament and government

A central element of the NIS APEA was the team’s use of USAID’s Local Systems Framework (LSF) in order to help guide analysis of the implementation context for HIV/AIDS in Namibia. The LSF provides an analytical structure built around 10 principles for understanding local systems. The final APEA linked specific analysis and corollary recommendations to each of the principles, some of which are presented below:

LSF Principle #1: Recognize there is always a system: Public sector actors commonly bemoan the failure of government institutions to implement established policies. While this “implementation gap” is typically blamed on capacity constraints, there is a failure to recognize that the GRN effectively implements a subset of priorities. This implies that political will is frequently the decisive factor in whether or not policies are implemented.

15

LSF Principle #2: Engage local systems everywhere: Various constellations of key actors – including local constituencies, churches, political parties, CSOs and politicians – no longer view HIV/AIDS as a high priority. Building broad support for reform among these and other constituencies will require mainstreaming and linking HIV/AIDS with other priorities.

LSF Principle #9: Embrace Facilitation: NIS is designed to facilitate (i.e. not dictate) efforts aimed at strengthening the capacities of key institutions within the HIV/AIDS sector. Given the number of stakeholders involved in HIV/AIDS service delivery, it is critical to recognize that successful facilitation efforts require the prioritization of inter-agency (and even inter-sectoral) coordination.

As noted above, a key conclusion of the NIS APEA is that despite the fact that there are still prevalence rates for HIV/AIDS that declare the disease an epidemic, it is seen as “yesterday’s news” by many within and outside of government and is not seen as a top priority, hampering efforts to advance key policy reforms related to HIV/AIDS service delivery. In this context, the final APEA report recommended linking HIV/AIDS to government priorities. As the report explained, “the most effective path to desired results is aligning the project with the existing power relationships, incentives and disincentives.” The report specifically recognized opportunities to link HIV/AIDS service delivery to government priorities related to economic development and efforts to combat social exclusion.

The NIS experience highlights the importance of having significant buy-in from both project staff and donors for conducting robust APEA activities. The NIS APEA led directly to the modification of a range of project assumptions, as well as recommended adjustments to the project work plan and design. Project managers and donors must be willing to reshape key elements of projects if APEA is to be useful at a project mid-point.

Overarching success factors

1. Establish focused, problem-driven research questions as the basis for APEA activities. It is important that APEA activities be animated by a set of core questions that relate directly to critical project interventions. APEAs that fail to adhere to core questions (or try to address too many questions) risk meandering and leading to findings that have little direct value to implementers.

2. Clearly explain the purpose of the APEA to project stakeholders. Inquiry into the underlying incentive structures that guide behavior in a particular locality or sector have the potential to come across as threatening. APEA practitioners must be adept at explaining both the purpose and value of the study so as to win the full participation of key stakeholders.

3. Ensure donor support for APEA activities. APEA works best when it not only has the explicit support 0f project staff but also donors. APEA activities frequently point to the need to adjust work plans or even

Providing Positive, Constructive Analysis

In their review of a cross-section of PEAs during the 2000s, Duncan and Williams warn that “in some cases political economy analysis has become the “dismal science of constraints.” While APEA activities should provide projects with a healthy dose of realism, practitioners should remember that the ultimate goal is to provide actionable recommendations. As Duncan and Williams explain, APEA should focus on identifying room for maneuvering.1

16

fundamentals of project design. Receiving donor support for such changes is more likely if donors endorse and even participate in the APEA process.

4. Understand the risks associated with APEA activities in a given locality or sector. Research into local power dynamics has the potential to bring project staff and partners into conflict with powerful, entrenched interests. For example, an APEA into child labor may threaten certain constituencies that have a direct stake in illegal labor practices. Practitioners must understand and establish plans for managing risks up front. In the case of a child labor project, this may involve formal risk planning to identify groups that may directly or indirectly challenge efforts to collect information on labor conditions.

5. Triangulate information. It is important to recognize that respondents necessarily speak from visible and invisible biases. Wherever possible, key conclusions and recommendations should be based on information corroborated by multiple sources.

6. Revisit APEA findings in a systematic way. Projects should start from the premise that the enabling environment is less static than it might appear. Given this, an APEA is most useful when it is revisited on a regular basis in order to track changes in key assumptions and shifts in the incentive structure facing key actors.

Mistakes to avoid

1. Inadequate investment in staff/consultants to conduct analysis. APEAs are by definition complex. Analyzing the implicit incentive structure of a sphere of activity necessarily takes time by well-chosen practitioners. Project designers must scale and scope the resources dedicated for APEA activities to the given study’s level of complexity.

2. Approaching an APEA as an academic study. While an APEA will touch on many issues of academic interest, the purpose of the analysis is to inform project and stakeholder decision making and shared understanding of core challenges and opportunities. Practitioners should develop APEA products that are useful to project managers and key partners. Products may need to be differentiated for different audiences.

3. Treating an APEA as a separate and stand-alone activity. APEAs can be implemented as discrete studies. However, as the Nigerian case study makes clear, APEA can be most powerful when it is mainstreamed into the core project design and implementation activities. This allows project teams to benefit from the insights and design ideas of APEA specialists. However, it also allows those conducting an APEA to benefit from the knowledge and experience of project teams. Furthermore, project teams are more likely to value the findings of an APEA if the activity is seen as part of the project’s core package of interventions.

Additional operational lessons Keep interviews informal. Pact has found that formal interviews frequently lead respondents to be less

candid with their answers. Interviews should be kept as informal as possible and one should prevent interviewing respondents in a big group. Ideally only one or two staff/consultants should attend interviews so as to encourage respondents to speak freely and, in particular, to express their criticisms of project assumptions. In some cases, researchers may be advised to avoid taking notes during the sessions.

17

Recognize response bias. Because of the staff’s or consultant’s perceived relationship to donors, conversations may be influenced by the presumption that the researcher has influence over funding decisions. This results in respondents who speak to a according to a donor or NGO “script” and are often unwilling to engage honestly about how they understand the project’s real challenges.

Maintain impartiality. APEA practitioners should remain agnostic about who the champions and spoilers to change are and attempt to identify why these changes are occurring. Keep in mind that predicting the emerging decision makers is an imperfect science (e.g., think the Arab spring) and those in power often too easily dismiss the potential of their competition. No society, sector or system is static; every power arrangement is being contested and the role of the APEA is to map this potential. Be sure to focus both on disenfranchised groups (e.g. women, youth, rural populations) as well as emerging elites (e.g. new cadres of public servants, academia, urban elites, newly rich, etc.).

Pay attention to public discourse. Try to identify how information and concepts make their way into public sphere and do not discount their importance. For example, in Namibia the press is criticised by many actors as being insufficiently critical and analytic, but it is immensely influential and widely read by all social and economic classes and ethnicities.

Use and interview local staff and partners as much as possible. Too often vital information is known even by junior staff in the office but not made easily available because of office hierarchies and a local-international divide.

Remember anything government communicates is propaganda whether correct or not. Government only communicates for political purposes and thus government policy and communication should be closely studied and understood as signs of the existing political economy.

Adaptations and impact/approach area applications APEA is highly adaptable and has clear applications across Pact’s impact and approach areas. Below are sector-specific questions that APEAs could help answer:

Health: What are the explicit and implicit incentive structures that explain the failure of health agencies to deliver high quality services?

Livelihoods: What are the legal and economic factors that may inhibit the ability of marginalized groups to access credit and start microenterprises?

Natural Resource Management: Why are community, government and traditional authorities unable to carry out a joint approach to managing local fisheries resources?

Capacity Development: Will staff targeted with training and mentoring within a government department be able to apply their new skills, given the norms, incentives and policies governing the institution?

Governance: What is the potential to advance a defined policy reform agenda? Who are the stakeholders required to support that agenda?

Mines to markets: What are the factors that prevent artisanal mining from being part of the formal economy? Which stakeholders are content with the status quo and what, if any, incentives can be offered to them to change their positions?

18

Contextual considerations APEA is fundamentally about understanding and analyzing local context. As such, it makes sense that researchers must take into account contextual considerations when implementing an APEA. Depending on the subject matter, stakeholders may or may not be forthcoming with information that is sought for the study. For subjects that are politically sensitive or otherwise taboo, researchers must clearly and diplomatically explain the purpose of the APEA and ensure that information is collected in a way that protects project staff, partners or other stakeholders.

Depending on local context, researchers may need to consider the balance of the APEA team in terms of gender, age, ethnicity and other factors. Researchers may need to develop context-specific approaches to ensuring the optimal participation of women and other marginalized groups.

19

Appendices and Resources

These appendices are intended to provide additional information which the Pact manager or marketer may find useful in understanding more about the Pact’s Applied Political Economy Analysis.

20

Appendix 1: Glossary Core Question: The main, practical research question that drives an APEA activity; it defines the parameters of an inquiry. Explicit Incentives: Formal motivating factors that influence the decisions and actions of key actors, such as laws and policies. Implicit Incentives: Informal motivating factors, such as cultural norms, values and economic interests, that influence the decisions and actions of actors. Mixed Methods Research: An approach to research that combines multiple methodologies, such as desk reviews, key informant interviews, focus group discussions and simple surveys. Political Economy: The intersection of political and economic processes and forces within a given country, sector or location. Political Economy Analysis: Concerned with the interaction of political and economic processes in a society: the distribution of power and wealth between different groups and individuals and the processes that create, sustain and transform those relationships over time (OECD definition). Theory of Change: A form of project planning that defines a desired goal and outlines key inputs and lower-level outcomes that must be achieved to meet that goal.

21

Appendix 2: Methodologies for Information/Data Collection APEA activities will employ a mixed methods approach that uses a variety of methodologies to identify and collect key information. APEA teams should be empowered to think through what approaches stand the best chance of generating desired data and information. It is a best practice to identify methodologies to be used at the start of an APEA, frequently in a design workshop. However, APEA teams should be flexible in terms of utilizing new, appropriate strategies as they move through the research tasks. The final APEA report should include an explicit and detailed discussion of the methodologies used over the course of the study.

Some of the research approaches commonly used in an APEA includes the following:

Desk/Literature Review Almost all APEA activities will include a desk or literature review component. A literature review is frequently completed up front to allow researchers to familiarize themselves with the overarching context in which the APEA is being conducted. Importantly, a comprehensive literature review will enable the APEA team to develop a more targeted approach to collecting information from primary sources based on (1) a firm understanding of the context and (2) an understanding of existing information gaps in secondary sources. A literature review is often a primary tool for analyzing the explicit legal and policy framework. It is recommended that researchers maintain an annotated bibliography of sources consulted during a literature review. Findings from a literature review are typically captured in a separate report that can serve as a section of the final APEA report.

Stakeholder Interviews Stakeholder or key informant interviews are the most commonly used method for generating primary source information as part of an APEA. Stakeholder interviews can be highly structured, driven by a pre-established set of questions. They can also be relatively unstructured, taking shape based on the prerogatives of the interviewer as the session unfolds. In most cases, it is a best practice for researchers to think ahead about (1) the information they hope to collect from a given interview and (2) some basic questions that will elicit the desired information. At the same time, researchers will want to remain flexible to exploring new lines of inquiry that open up over the course of a given interview.

Focus Group Discussions Focus group discussions sometimes serve as a more effective means of eliciting information from key stakeholders than individual interviews. Furthermore, focus group discussions can serve as a time-efficient way to include a wider array of voices within an APEA. Researchers must give significant thought to the composition of focus groups, considering factors such as age, gender, ethnicity and occupation. In different contexts, more homogeneous or heterogeneous focus groups may generate more and better quality information. In either case, strong facilitation is the key to effective focus group discussions. Additional information on focus group discussions can be found at: http://www.odi.org.uk/publications/5695-focus-group-discussion.

Stakeholder Mapping Stakeholder mapping is used to develop a complete picture of relevant actors operating within a defined geographic area or sector. Stakeholder mapping is frequently one element of other information generating approaches, including stakeholder interviews, focus group discussions and surveys. It is important that APEA teams develop an explicit strategy for generating comprehensive information regarding key stakeholders. There exist various tools for conducting stakeholder mapping, such as net-mapping: http://netmap.files.wordpress.com/2008/06/net-map-manual-long1.pdf. Where possible, APEA teams may be

22

able to use a project’s use of Pact’s Organizational Network Assessments (ONA) tool to identify and map key stakeholders.

Surveys APEA teams may use surveys to collect information, particularly if there is a need to efficiently generate data from a wide range of stakeholders. Depending on the information being sought, simple, non-scientific surveys may suffice. In cases where APEA teams need to conduct scientific surveys, it is recommended that they consult with Pact’s Results & Measurement Team and/or in-country M&E staff.

Public Opinion Polling In certain cases it may be necessary to develop an understanding of public opinion on a subject that is not adequately covered by existing secondary sources. Where budget exists, APEA teams can consider incorporating public opinion research as part of its overarching methodological approach. To conduct such research, it is recommended that APEA teams partner with local research institutions with significant experience in designing and conducting scientific public opinion polls.

Organizational Network Analysis Pact’s Organizational Network Analysis (ONA) is a participatory diagnostic tool used to identify and map networks of institutions and/or individual actors. When time and resources allow, the ONA can provide more robust information regarding the degree and nature of connectivity between actors than standard stakeholder-mapping methodologies. In particular, the ONA provides a measurement of “network density” and eliminates key “hubs” within a given network. A full description of the tool can be found in Pact’s ONA handbook.

23

Appendix 3: APEA Contacts within Pact Marc Cassidy, Director of Governance Washington, D.C., USA mcassidy@pactworld.org skype: casavera1

Mason Ingram, Senior Technical Officer, Governance Washington, D.C., USA mingram@pactworld.org skype: masoningram

24

Appendix 4: Links to other materials Below are links to useful external materials for understanding applied political economy analysis:

From Political Economy to Political Analysis. This is one of the more recent publications covering PEA, taking a comprehensive look at the different generations and applications of PEA.

Applied Political Economy Analysis: Five Practical Issues. This report notes that varied frameworks have been developed by different agencies for “brand recognition.” The paper highlights the aspects that bind various PEA tools together and issues to consider in application.

Applied Political Economy Analysis: A Problem Driven Framework. This paper describes the key components of the problem driven framework, the relationships between them and how to use the framework to undertake analysis.

This work is licensed under the Creative Commons Attribution-ShareAlike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/

or send a letter to Creative Commons, 444 Castro Street, Suite 900, Mountain View, California, 94041, USA.

26