POLITICAL ECONOMY ANALYSIS Tilitonse Guidance Session GoC 2

Dr. Henry Chingaipe Institute for Policy Research & Social Empowerment

(IPRSE) henrychingaipe@yahoo.co.uk

iprse2011@gmail.com

Session Outline Defining political economy analysis

Key elements in PEA for project formulation

Levels of PEA

The importance of PEA in development interventions

Stakeholder Analysis

PEA: What is it? • An approach for analysing development problems and

formulating development interventions that recognises the primacy of politics and the significance of economics in shaping development outcomes – successes and failures.

• PEA situates development interventions (your projects) within a framework of the prevailing political and economic processes in society

• It focuses on power, resources and opportunities - how they are distributed and contested in different country and sector contexts, and the resulting implications for development outcomes

• It is concerned with incentives, relationships, distribution and contestation between different groups and individuals – all of which greatly impact on development outcomes.

Elements of PEA • Distribution of power, wealth and opportunities between

different groups and individuals, duty bearers and rights holders that are involved or affected by a programme or policy

• Political processes i.e. cooperation, bargaining, and conflict that create, sustain and transform relationships over time and allocate resources, rights and obligations.

• Institutions i.e. rules , formal and informal and values that underlie the distribution pattern and the political process.

Elements of PEA Cont’d

• The resources at stake for which inclusion, accountability and responsiveness are necessary

• The actors involved (both on the supply and demand sides) of the development problem targeted

• The interests of the various groups or actors and whether they will be for or against change.

• Strategies for building developmental or reform coalitions, identifying change agents and forging political settlements

Politics

• Should not be narrowly understood as ‘ndale’ i.e. Kutcherana.

• Politics should be understood as all the activities of cooperation, negotiation and conflict, within and between groups of people or societies, whereby people go about organising the use, production or distribution of resources to further their own interest

• Thus, what is political concerns “the distribution, exercise and consequences of power” which is at the core of cooperation, negotiation and conflict-making or conflict resolution processes.

• Achieving inclusion, accountability and responsiveness entails a redistribution of power through institutional change

Institutions • In PEA “institutions“ are understood as rules of the

game or the ways of doing things in society

– Conceptually different from organisations

• Institutions are understood as rules created by people to govern their regular political, economic and social interactions .

• These institutions underlie the distribution pattern and

they structure incentives for actors in political, social or economic activities

Institutions – a typology

• Institutions can be formal and explicit i.e. rules and procedures that are created, communicated and enforced through channels that are widely accepted as official e.g. Constitutional provisions, Acts of Parliament, Public Appointment guidelines, Programme Rules such as LDF, CDF etc.

• Institutions can be informal and implicit i.e. rules that are socially shared, usually unwritten, and are created, communicated and enforced outside officially sanctioned channels.

Institutions – a typology cont’d

• They include traditions and customs, values, cultural practices and other norms of behaviour that are treated as accepted ways of doing things

– Big finger appointments versus democratic elections

– Bulangete la a mfumu, Chamlomo

– Cultural values of equity versus programme rules e.g. LDF, FISP

Examples Rules guiding district allocation of LDF resources

• Formal: according to need, teacher/ pupil ratios, teacher/housing ratio etc.

• Informal: equal sharing by constituency or more to those areas that voted for the MP

Rules guiding selection of NICE board members

• Formal: Public advertisement, public nominations etc.

• Informal: Presidential appointments & prerogatives

Informal Institutions –their significance • Informal institutions give certain people or groups of

people private forms of power, influence and benefits • Informal rules operate behind, between and within the

formal ones, hence substantially influencing how public power is used to make or prevent decisions that benefit some and disadvantage others (inclusion, accountability and responsiveness)

• The interaction between formal and informal institutions shapes incentives for different actors in different ways and affect inclusion, accountability and responsiveness in different ways – requires ‘grounded analysis’.

• Patterns of governance at any level are shaped by effects of interactions between formal and informal institutions

• They affect formal institutions in different ways: complementary, substitutive, accommodating and competing

Institutions cont’d • There are four broad possibilities based on

two dimensions

1. the degree of convergence between formal and informal institutional outcomes i.e.

Institions cont’d

• Do informal rules produce a result substantially similar to or different from that expected from a strict and exclusive adherence to the formal rule?

• Different outcome implies divergence; similar or same outcome implies convergence

Institutions cont’d

2. The effectiveness of the relevant formal institutions i.e. The extent to which rules and procedures that exist on paper are enforced or complied with in practice

– Effective – high probability of sanctioning non compliance

– Ineffective –low probability of enforcement

Interaction of formal and informal institutions

Outcomes/effectiveness Effective formal institution Ineffective formal institutions

convergence complementary substitutive

divergence accommodating competing

Formal & Informal Institutions cont’d

• Complementary:

– Shape behaviour in ways that do not violate the main formal rules and do not produce substantively different outcomes

– They enhance the efficiency or effectiveness of formal institutions

Formal & Informal Institutions

• Accommodating:

– They create incentives to behave in ways that change substantive effects of formal rules but without directly violating them

– They contradict the spirit but not the letter of the formal rule

– Often created by actors who dislike outcomes generated by the formal rules but are unable to change or openly challenge those rules

– Often helps to reconcile actors’ interests with existing formal rules

Formal & Informal Institutions

• Competing

– They structure incentives in ways that are incompatible with formal rules

– To follow one rule, the actor must violate another

– They trump formal rules, generating outcomes that are markedly different from those expected of formal rules

Formal & Informal

• Substitutive

– Used by actors who seek compatible outcomes with formal rules and procedures (like complimentary)

– Exist where formal rules are not enforced (like competing) i.e. They substitute formal institutions

– Exist where formal or state structures are weak – they get by-passed.

Levels of Political Economy Analysis

Macro- Country level

Sector level

Problem driven Project

level

• Country level

– Analysis focuses on the structures, institutions, processes and actors at the country-level

– Enhance general sensitivity to country context and understanding of the broad political-economy environment.

– This can be useful to inform country planning processes but also an overview to specific projects

• Sector level- – What are the political, economic and social forces that drive or block policy

change in specific sectors? e.g. water, agriculture, education, health – The aim is to acquire better understanding and more effectively influence the

political, economic and social structures, institutions, processes and actors determining the dynamics of sector reforms.

– to identify specific barriers and opportunities within particular sectors

• Problem/Project level – Aimed at understanding a particular problem at the project level, or in

relation to specific policy issue so that appropriate strategies can be taken.

Steps in a Problem level Political Economy Analysis: Linked to step 2.1 in the concept note form

• What is the problem to be addressed. -e.g. persistent corruption, continued food insecurity, inequitable allocation of development resources in the districts, role of chiefs in democratic governance...

Reflection: Problem identification

• What are the associated institutional set-up and governance arrangements? Are they ‘fit for purpose’ ? Involves mapping of:

• relevant structures, ministries, agencies and their interaction, existing laws and regulations, policy processes

• Formal and informal rules driving the given issue

• How these interact to produce the challenges identified?

Institutional governance arrangements and

capacities

• Why are things this way? Why are institutional and policy arrangements not being improved? This Involves analysis of:

• Stakeholders, their interests and incentives.

• Historical legacies and earlier reform processes

• Social trends and forces and how they shape current stakeholder positions and actions

Political Economy Drivers

What can be done? What actions/interventions can

be proposed?

STAKEHOLDER ANALYSIS • A key component of political economy analysis

– It is about identifying actors who have power and influence to impact on your project for good or worse

• Who are stakeholders:

– People and/or organisations who are affected by a particular issue or who can influence the issue in any significant way

– Can be individuals, groups or categories of people and organisations who share a broadly common position and interest on the issue.

Doing a stakeholder analysis

• Best done with a small core group of people –those able to think to a sufficiently high level of abstraction

• Participants should be familiar with the stakeholder analysis technique –those present here!

• Participants should be familiar with the issue being addressed

• Maximise participation by writing on wall charts or flip charts

Stages in SHA 1. Ensure clarity on problem and intervention

2. Brainstorm all stakeholders

3. Analyse the stakeholders

4. Sort the results of the analysis

5. Select your targeted audiences/actors

6. Develop strategies of engagement with stakeholders

Stage 1

• Ensure there is clarity on the development problem identified

• Ensure there is clarity on intervention proposed

Stage 2

• Brainstorm all stakeholders • which people or organisations are affected by the problem? • Which people or organisations would be affected by or interested

in the intervention? – Get a long and comprehensive list ! – Accept all suggestions and write them down – Don’t discuss or criticise any idea until the brainstorming is over – Keep the pace quick and the mood light-hearted – Clarify the definitions of some of the stakeholders so that the

description is specific – You may need to divide some stakeholders into smaller groups or

combine them into larger groups so that each group can be said to have a broadly common position and interest on the issue

Stage 3: Analyse stakeholders • Assess each stakeholder using three basic questions

using simple categories for answers: 1. How influential, relative to others, can the stakeholder be over the duty bearer or rights holders?

– High, Medium, Low.

2. To what extent does the stakeholder agree or disagree with your problem definition and proposed intervention?

– Strongly in favour; In favour; Neutral; Against; Strongly Against

3. How importantly, relative to the others, does the stakeholder view the problem, the intervention?

– High, Medium, Low

• Answer questions based existing knowledge of stakeholder attitudes and interests

• Tabulate results

Raw Results of SHA stakeholder Influence over

DB/RH Attitude to problem definition /intervention

Importance of problem/intervention to stakeholder

A H AA M

B M N L

C L P

H

D L PP H

E M AA L

Key: AA=very anti; A=anti; N=Neutral; P=pro; PP= Very pro; L=Low; M=Medium; H=High

Stage 4: Sort the results of the Analysis • In order to make sense of the results, transfer them onto

the Allies & Opponents Matrix • The Matrix should be written on large wall charts with

names of stakeholders in appropriate boxes according to the analysis set out in the table

• The vertical axis represents the influence of the

stakeholder; the horizontal axis shows their attitude to your project

• The 3rd dimension – importance of your issue- to the

stakeholder relative to the other issues they face, is represented by colour or symbol

Allies and Opponents Matrix

Influence of S/H on

DB;RH

High S/H B £££ S/H C £

S/H E ££ S/H I £

Medium

S/H A £££ S/H F £££ S/H G £

S/H J ££

S/H K £££ S/H L £

Low S/H D £ S/H H £ S/H M £££

Very Anti Anti Neutral Pro Very Pro

Attitude of the stakeholder to your ‘project’ Importance of Issue: £££ =High ££ =Medium £ = Low

Strategies of Engagement • From the Allies & Opponents Matrix, identify your

most significant – allies (High influence, very pro), – Opponents ( High Influence, very anti) – Neutrals (High influence, Neutral attitude) –they are your

battleground.

• Stakeholder groups are not fixed in their positions – you can influence them to shift the balance of power and ideas in your favour

• Engagement strategies should aim at getting stakeholders into the top right hand corner and keeping them there!

Engagement strategies, project activities

• Key issue: how to achieve a shift in the balance of power and ideas

• Matrices provide some insights, e.g. – for influential neutrals and soft opponents - Persuade

them to agree with your position – Potential allies with high influence but low interest –

persuade them that the issue is important – Allies – build alliances/coalition – Allies with low influence – help to increase their influence – Opponents with high influence –reduce the influence of

the stakeholder – Be realistic on how many stakeholder groups can be

targeted

Importance of PEA to project success • PEA can support more effective and politically feasible

strategies, as well as more realistic expectations of what can be achieved, over what timescales, and the risks involved.

• PEA can focus attention on informal institutions, and cultural and social practices, which often explain why formal institutions do not work as intended.

• PEA generally cautions against relying on technical fixes, and assuming that formal institutions can be made to work through the transfer of ‘international best practice’

• PEA can help identify where change is most likely to occur and which types of reform will have the greatest pro-poor impact given prevailing interests.

Why is PEA important?

• Clearly identifies problem elements that have to be addressed

– Helps in making sure that root causes of the problem and not their symptoms are addressed

• PEA contributes knowledge about the major obstacles and opportunities surrounding the project. – It is able to point to useful entry points for the project.

– We can begin to assess the kinds of change support which we might or might not expect to be effective in each case.

• Ensures that interventions do not just change ‘players’ of the game but also the rules of that game...

• It helps in the design phase to identify appropriate assumptions, and the means for engaging with different actors around the chosen issues.

• It provides clear implications of activities/interventions

• Realistic analysis of the balance of power for and against reforms

• Ultimately it gives a fair indication of the feasibility of the project

END of Presentation

Thank you very much for your attention

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