How long have you been involved with PSIAs, the PSIA MDTF, and have things improved over the years?
My involvement with the PSIA MDTF (and PSIAs) began in fiscal year 2011, the first year of the trust fund. The trust fund adopted a decentralized approach that placed the responsibility of managing the regional funding stream—that is, the call for proposals, selection of projects, and allocation of monies—squarely on the regions. The Africa chief economist’s office was tasked with implementing the region’s window or stream, and that began my association with this trust fund. I should add that in managing the regional stream, I have had a great team of regional focal points, who have been unparalleled partners in delivering on the goals of the trust fund.
Under the Africa window of the trust fund, we have funded PSIA work in over 25 countries in Sub-Saharan Africa, including in fragile and post-conflict countries. In discussions with TTLs, I find that the trust fund has helped to raise awareness of PSIAs and of innovative ways of doing PSIAs. Findings of PSIAs have helped to inform policies as well. For example, the findings from a study on women’s preferences for delivery at a health facility in the Kedougou region of Senegal have been used by the Government to design and to evaluate its national result-based financing program. Likewise, a study of Cameroon’s subsidy programs has helped to inform the government’s reform of fuel subsidies.
Are PSIAs relevant to the new World Bank Group? What role can it play with the new twin goals?
The relevance of PSIAs may be even greater in the new World Bank Group. The twin goals of ending absolute poverty and boosting shared prosperity in a sustainable manner are central to the Bank’s mission, and underpin the Bank’s country engagement and are the focus of strategy documents such as the SCDs. In helping client countries to find solutions to these development challenges, it will be important to have a sound understanding of what factors can increase the welfare of the poor and of lagging groups, what are the distributional and poverty reduction implications of different policies, how growth can be made more inclusive, how progress toward the twin goals can be accelerated, etc. Unquestionably, systematically examining distributional consequences of policies can help inform the design and prioritization of appropriate interventions and actions to achieve the twin goals.
What are the top three reasons you would recommend a PSIA to a TTL?
There are many reasons for doing a good PSIA. One, it helps to better understand the distributional effects of reforms before the reforms are implemented: who will benefit the most from reforms and who will lose; which groups (women, poor, orphans, elderly, etc.) are more vulnerable to reforms; and spatial differences in impact of reforms. Two, it helps support evidence-based policymaking. The findings of the PSIA will be useful in designing programs to protect or compensate vulnerable groups and the poor from the adverse effects of these reforms. Three, reforms can be difficult to implement. Often poor and vulnerable groups do not have voice, and so are not heard in the political decision-making process. This marginalization has implications for adoption of reforms that benefit these groups. Sometimes reforms (such as removal of universal fuel subsidies) are difficult to implement because of strong resistance by influential groups, who stand to lose from the reforms. Thus, political economy considerations may present a binding constraint to the adoption of appropriate policies. Through political economy analysis, PSIAs can provide insights on the positions of various stakeholders and help to build support for the reforms.
You have worked on PSIAs projects before, so from a technical perspective, what is exciting about the PSIA approach and what are the main challenges?
Let me share my perspective as a user of PSIAs. I believe that PSIA is a powerful approach that should guide policy making. Country interest in PSIAs is growing, which should help to mainstream PSIAs. PSIA is not without its challenges, however. A key methodological challenge is that the linkages between policy actions and outcomes are not always well known, especially when reforms are complex. Typically, the direct effects of a reform will be easier to measure than indirect effects, but to be useful, an aggregate assessment of the linkages is needed. Moreover, some effects may occur in the short term, but others might be realized only over time. Capturing long-term effects might be more difficult, but essential in order to provide robust recommendations. In some Sub-Saharan African countries, the availability of relevant and good quality information may present a challenge to conducting a robust PSIA. This underscores the need for building local capacity to collect data, undertake analysis, and monitor outcomes.
Punam Chuhan-Pole is Lead Economist in the Office of the Chief Economist Africa Region, World Bank. Her recent work includes development of a semi-annual publication—Africa’s Pulse—which presents recent economic trends and prospects for the region’s economies and provides analyses of issues shaping Africa’s future. Punam also led a study documenting and analyzing recent development progress in Africa—Yes Africa Can: Success Stories from a Dynamic Continent. She is currently doing research on growth and poverty reduction in Africa and on the management of mineral wealth for development.
Punam has also been a member of the core team producing the Global Monitoring Report, a joint World Bank-IMF annual publication that assesses the global development effort for achieving the Millennium Development Goals. She has worked extensively on monitoring and assessing vulnerability of developing countries to external shocks, analyzing the determinants of private capital flows, and evaluating the debt defaults of the 1980s and 1990s. She led the Bank’s participation in the Inter-Agency Task Force on Finance Statistics and has collaborated closely with staff from the BIS, ECB, IMF, and OECD in establishing new international standards on the measurement and reporting of debt and other financial obligations and in preparing the new Debt Guide. Punam has a PhD in Economics from Georgetown University. She worked at the Federal Reserve Bank of New York before joining the World Bank.