NEEDS Costing and Prioritization

Costing a NEEDS Assessment

The Bottom-up Approach

5 Steps

Guiding Principles

Salaries and Allowances

Outline

Approaches to Costing

Bottom-up approach based on sectoral or program analysis

Field studies

Baseline statistics

Sector-specific, disaggregated unit costs

Macro approachEconometric models, estimated growth and resource envelope

IterationsBottom-up/macro/expected commitments

The 5 steps in a bottom-up cost approach

Which policies and interventions (broadly) would likely put Nigeria forward on a path for fulfilling MDGs and reducing poverty?

Some of these interventions or policies, however, might not directly lead to fulfilling the MDGs but are indirectly necessary for progress. For example, in order to reach the goal of gender equality in education, access to transport or infrastructure is necessary (but not sufficient) for securing girls’ school enrolment.

1. Identify pro-poor policies and interventions

Which targets are desirable and realistic in Nigeria, and what interventions would be needed to fulfill the targets?

Agree on quantitative long-term targets, and divide into short-term monitorable indicators. Result matrices are a good tool to use for dividing up MDGs and other targets into yearly indicators that are quantitative and monitorable. The number of teachers, classrooms, increase in enrolment rates, pupil-teacher-ratio (PTR), teaching materials, etc. are examples of input indicators for reaching universal primary education.

2. Identify sector-specific targets and monitorable indicators

North Year Source South Year Source

6. Net primary enrollment rate 59% 2000 C 20% 1999-02 B7a. Percentage of cohort reaching grade 5 66% 2000 A 28% 2002/00 B7b. Primary completion rate, % 50% 2000 D 2% 2002 B8. Youth literacy rate (% ages 15-24) 78% 1999-00 A 31% 1999-02 B

9. Ratio girls to boys in primary ed (%) 88% 1999 C 40% 2003 B10.Ratio literate females to males (% ages 15-24) 84% 1999-00 A 35% 2000 C11. Share of women in non-agriculture wage employment - -12. Proportion of seats in parliament (in the South, National Liberation Council) held by women 10% 2003 C 18% 1994 C12. [South] Proporation of seats in SPLM Leadership Council held by women 0% 2004 C

MDG 2: Education

MDG3: Gender Equality

Example Sudan: Baselines for MDG 2 and 3

MDG 2: Education

Net primary enrollment ratio (% relevant age group)

0%

20%

40%

60%

80%

100%

1993 1999-02 MDG:2015

North

South

Youth literacy rate(% ages 15-24)

0%

20%

40%

60%

80%

100%

1993 1999-00 MDG:2015

North

South

Example Sudan: What does it take to achieve universal primary education?

Example Burkina Faso: What does it take to achieve universal primary education?

Source: Clemens, Kenny and Moss (2004) “The Trouble with the MDGs: Confronting Expectations of Aid and Development Success.” Center for Global Development working paper 40.

Nigeria: What does it take to achieve universal primary education?

Data source: Nigeria: Demographic and Health Survey, National Population Commission Federal Republic of Nigeria, 2003

Net primary enrollment ratio (% relevant age group)

0%

20%

40%

60%

80%

100%

2003 MDG-2015

North Central

North East

North West

South East

South South

South West

Nigeria Targets – Main Interventions

Eradicate poverty

Primary Education for All

Gender Equality

Reduce Child Mortality

Improve Maternal Health

Combat HIV, Malaria ++

Environmental Sustainability

Global Partnership

Estimate recurrent and capital costs of each intervention with the help of country-specific disaggregated unit costs, baseline statistics, transparent and simple cost models. Deep country knowledge and interaction with “people on the ground” extremely important. But also, international experience important.

Sectoral or programmatic approach.  

3. Estimate costs using country-specific disaggregated unit costs

Why is costing so diffucult?

No exact rules exists

Costs vary from one country to another

Regional differences

Transport, security, urban/rural

Many teams/persons – Consistency problems

How to do the actual costing?

No rocket scienceCommon sense and knowledgeThink local! Strategy to decrease dependence on external inputsBreak down programs in activitiesUnit costs guidelinesBaseline quantities

Develop a simple model for costing

(Example: Education)

Baseline statistics

Capital and recurrent costs per student

TOTAL COSTS

Estimated number of students reached by the

interventions

Target coverage rates, for:Primary EducationSecondary Education Adult Literacy

Country-specific disaggregated unit

costs (teachers’ salaries, textbooks,

construction and equipment of

classrooms, etc), and data on PTR,

sets of textbooks, etc.,

Human resource needs in Teachers and Staff

Infrastructure needs

+

+

+

An iterative process to integrate synergies, avoid overlaps, and ensure consistency between clusters. Important with strong management and central coordination.

 

4. Integrate synergies, avoid overlaps, and ensure cost consistency

A financing strategy should be developed by matching the estimated costs for the NEEDS with available domestic resources and the possibility of either increasing domestic resources and/or reallocating the budget. In this way, financing gaps are estimated.

5. Develop financing strategy

Guiding PrinciplesCapital vs. recurrent costs

Investment’s full operational costs as recurrent costs

Total vs. additional costsTotal costs include resources required to sustain also current coverage levels

Cash vs. accrual costsLink to budget - cash easier?

Fixed vs. floating exchange rateCosts in US$, fixed rate as of today

Guiding Principles

Factoring in absorption capacityDelays in implementation

Quick wins?

Emphasize use of local resources

Country vs. International responsibility

Ownership

Keep it simple

Salaries and allowances

Rule 1 – Link to public financesStaffing impact – costs for service delivery

Rule 2 – SimplicityHigh, medium, low, and superscalesCivil servants, local and international consultants

Rule 3 – Think localAgreement on which simplified scales to use

Salaries and allowances

Civil service salary scalesLocal consultants, UNDP scales?International consultants, WB scales?

Civil service

Local consultants

International consultants

Superscale

High

Medium

Low

Salaries and fees, US$ per year