Questions and Answers
What
is the Poverty Reduction Strategy Paper (PRSP)?
The PRSP is a focal point for Government’s efforts to reduce poverty, which has been identified as its core objective. The process of designing and updating the PRS will be as inclusive as possible, so as to ensure that many voices (including those of the poor) are heard. The PRSP is intended to be a well-focussed policy document, which will promote rapid economic growth and ensure that the benefits of this growth are equitably distributed. As such, the PRSP is intended to replace the PFP, the PAP, and other similar papers as Government’s central definition of policy. It will act as the framework for all Government interventions and provide a focal point for all donor assistance to Malawi. As such, apart from in exceptional circumstances, no Government department should implement policies that are not contained in or are entirely consistent with the PRSP. It is therefore necessary that all Government departments are fully involved in the development of the PRSP.
The key features of the PRSP will be that it will be an implementable, prioritised plan of action. It will be updated on a rolling basis as necessary, with an annual progress report and review process together with a comprehensive overhaul every three years. Revisions to the PRSP will be made in line with the findings of the annual progress reports detailing the implementation of the PRS and performance against quantitative targets.
What is new about the PRSP?
The PRSP is intended to build on past efforts to define national and sectoral strategy. It differs from previous work in several respects:
 | Explicit Poverty Focus – all interventions should be judged on their impact on reducing poverty, Government’s core objective, both directly and indirectly. |
| Broad Malawian ownership – The strategy will be developed and amended by Government with the participation of a broad variety of stakeholders |
| Comprehensive approach – the PRSP will cover all Government interventions, providing a coherent framework for all Government activity. |
| Focus on implementation - previous efforts have fallen short of expectations due to a lack of attention paid to implementation. In order to overcome this, the PRSP will contain a detailed (including estimated costs and timeframe) action plan together with policy implementation and poverty reduction targets. A monitoring structure will be put in place to measure performance against these targets. |
| Prioritisation – Malawi has severe financial and human resource constraints. Therefore, in developing a realistic detailed action plan that can be translated into the budget, the PRSP must include explicit and comprehensive prioritisation, both inter- and intra- sectoral. |
How
will the PRSP fit in with other initiatives?
The PRSP is complementary to other initiatives in the area of public expenditure policy and planning. In particular, a well-defined and operational PRS is a prerequisite for the development of Sector Wide Approaches (SWAps). A developed SWAp involves all stakeholders (including Government, donors and NGOs) committing to using their resources in the sector only through the Sector Investment Programme (SIP). SWAps are envisaged largely as a donor co-ordination tool, to reduce the administrative burden of the individual project approach to donor funding and ensure that there is a unified strategy for the sector, with no overlapping or contradictory activities by different actors. As agreed at the Consultative Group meetings held in May 2000, the development of SWAps is a medium to long-term objective, and different sectors and different donors will move at different paces. By defining a clear overarching Poverty Reduction Strategy, Government will pave the way for the development of SIPs based on national strategies and resource constraints, thus enabling the development of SWAps.
Figure 1 below demonstrates how the PRSP fits into the public policy and planning framework. This framework is based on existing tools and is consistent with a SWAp provided that there is adequate consultation of stakeholders at the various levels.
As demonstrated in Figure 1, the PRSP will be derived in part from Government’s overall vision as defined in Vision 2020. In effect, the PRSP will translate the aspirations captured in Vision 2020 into more practically defined and prioritised strategies. These strategies will then be further clarified in the Sectoral Investment Programmes (SIPs). The SIPs are essentially medium to long-term sectoral plans translating the vision and overall direction laid out in V2020 and PRSP into prioritised, costed and implementable policies. The PRSP, by giving a national overview of poverty reduction efforts, will act as a starting point for the SIPs. It is essential that the SIPs are consistent with the PRSP – for example, the SIPs should contain only strategies that are contained in the PRSP. In practice, the relationship between the PRSP and the SIPs will go both ways – the existing SIPs will be used in formulating the PRSP and revisions made to the SIPs will be incorporated into the PRSP during the annual review where agreed. What is important is that SIPs are not just a “wish list” for each sector with little reference to national resource constraints and priorities.
The next stage in the process is for the SIPs to be translated into three year sectoral Medium Term Expenditure Frameworks (MTEFs) on an annual basis by the line ministries, with the first year of the MTEF representing the annual budget. After revisions made during the budget hearings, these individual MTEFs and budgets are consolidated into the national MTEF and Budget as presented to Parliament. This process of defining national and sectoral strategies and translating these strategies into budgets will help to ensure that the annual budget reflects Government’s priorities and the opinions of those consulted throughout the process.
In order to ensure that the PRSP and ultimately the MTEF/Budget continue to reflect the best poverty reduction strategies, the public expenditure policy and planning framework described in figure 1 also includes two annual review vehicles – the PRSP review and the PER.
The PRSP will also build on the work done through the Policy Analysis Initiative (PAI), the Public Expenditure Review (PER) and other cross-sectoral reviews and reform initiatives that have taken place in recent years. The inclusion of their recommendations into the PRSP will make implementation more likely and ensure that the previous work is not wasted.
What
will be the content of the PRSP?
The structure of the PRSP will be based around answering the following questions:
o Who are the poor and why? - The starting point of the PRSP will be a situation analysis of poverty. The objective is to identify different groups in poverty and the root causes of their poverty. From this point, possible solutions can be derived.
o
What has been done up to
now? - The next stage of the PRSP is to identify and assess past and
existing poverty alleviation and reduction strategies so as to learn from the
past and retain effective policies. This
will be done both on an overall and sectoral/thematic basis.
o What will be done in the future? – The core of the PRSP is the identification of a Poverty Reduction Strategy based on the answers to the previous questions. This involves asking a number of additional questions:
| What
policies are needed to support more rapid growth? |
| How can we ensure that the poor benefit from this growth? |
| How can we support those who cannot benefit from growth? |
o
How can progress be
monitored? – In order to ensure the implementation of the PRSP, it must
contain a well-articulated action plan together with policy and poverty targets
that need to be achieved in the medium or short term.
In addition, a mechanism must be created to monitor progress in
implementing the action plan and meeting the targets.
Again, these questions will need to be answered both on an overall and sectoral/thematic level. In articulating the Poverty Reduction Strategy, individual policies need to be made as specific as possible in terms of the actions to be taken and the outcomes expected, although the details of the implementation of each policy should be left to development through the SIPs and the MTEF/Budget.
How
and when will the PRSP be prepared?
On a practical level, the responsibility for the preparation and maintenance of the PRSP lies with the Ministry of Finance and Economic Planning. The technical poverty analysis and during implementation, monitoring and evaluation, will be co-ordinated by the National Economic Council. The formulation of the PRSP is intended to be as inclusive as possible, involving all departments in Government, donors, NGOs and religious and political groups. An outline of the process is given in a separate paper.
Who
will use the PRSP?
The PRSP will be the framework for all Government interventions. It will greatly assist in ensuring that plans and strategies are translated into the budget and actions. In the past, a frequent complaint by numerous stakeholders of Government’s failure to translate often impressive plans in to action. The design of the PRSP process is intended to rectify this situation.
Another benefit of a well-functioning PRSP is the associated improvement in donor co-ordination, as mentioned above in relation to Sector Wide Approaches (SWAps). Further to the advantages of SWAps, the PRSP is a vehicle for Government to take a leading role in relations with donors. Many donors have expressed willingness to base future assistance to Malawi on the PRSP and SIPs. This will reduce the number of donor sponsored reviews and consequently duplication of effort. Specifically, donors wishing to contribute resources should limit support to strategies and activities described in the PRSP and SIPs – donors’ country assistance strategies thereby become a subset of the PRSP.
In addition, the implementation of the PRSP for one year is a requirement if Malawi is to receive the full benefits of debt relief under the Highly Indebted Poor Countries (HIPC) Initiative.
How
will Government ensure that the PRSP is implemented?
Implementation of the Strategy depends on four main elements: broad ownership, realism, the institutional framework and monitoring. By ensuring broad ownership, the PRSP process will ensure broad commitment to the Strategy, creating incentives for its implementation. By basing the action plan on resource constraints and ensuring consistency, the process is intended to produce a prioritised and therefore realistic Strategy. By using the public policy and planning framework outlined above, Government can ensure that the PRSP is translated through Sector Investment Programmes and the MTEF into the Annual Budget and is implemented. The success of this framework and the implementation of the MTEF/Budget also depends on a number of ongoing reforms to the MTEF/Budget process. These include strengthening accountability, improving the predictability of resources and focusing policies and budgets on affordable outcomes and outputs.
Finally, the implementation of the PRSP will be monitored and the activities evaluated by the annual review process involving all stakeholders based on quantitative targets set in the PRSP itself. According to the results of this review, as well as the annual Public Expenditure Review, the PRSP will be adapted as necessary. In addition, the PRSP will undergo a more comprehensive overhaul every three years following consultations with stakeholders, new poverty analysis and updated SIPs.