1) How long have you been involved with PSIA, and have things improved over the years?
We have been doing PSIA-type of work in Ukraine since 2012. It involves social, financial, fiscal and other aspects. A few years ago we got a big installment of the trust fund of a subsidies reform facility, and we did a full-blown PSIA work related to Ukraine’s energy tariff increases. We did a technical assessment, and suggested different trajectories of how the government could reach cost-recovery. For each path we did analysis of social impacts, using the household survey. We also did focus groups in parallel, and looked at what social networks should have been put in place, or how they should be optimized so that the impact of tariff increases could be minimized. Since then Ukraine incorporated a very aggressive energy subsidies reform and the government followed our advice, and that was one part of our involvement in PSIA. Another involvement we had was with the Subsidy Trust Fund. Right now we are working with Uzbekistan: here, we are also looking at energy prices to see how far they are from the cost-recovery prices, and also monitoring the trajectory of how those prices could be adjusted, and what social and economic impacts these adjustment would have. This work also involves working with the Energy, Macro-fiscal, and Poverty teams.
2) Are PSIAs relevant to the new World Bank Group? What role can it play with the new twin goals?
Doing PSIA is extremely important. In the work that we do, and for example in the energy sector, the reforms that we promote, looking at the social aspects and the impact of the reforms is extremely important. For example, in Ukraine when they increased gas prices almost 6 times, it was huge! You cannot do such a reform without looking at a) whether you can afford it or not; b) how it affects your people, and whether the next thing that will happen is that people will be on the streets, so this is the end of your reform; or c) people would just not buy into this reform, and whatever prices you are increasing nobody would pay. So this is a very important part of the assessment, to ensure sustainability and actually viability of each reform like for example the energy sector. You cannot embark on such a huge reform without looking at the social aspects, and risking loss of jobs for a lot of people. Incorporating social impact analysis is important for any big reform-type of work that we are doing. PSIA is more than social impact of something, to me it’s an important piece of a bigger puzzle, but without this piece the puzzle will not stay together.
3) What are the top three reasons you would recommend a PSIA to a Task Team Leader (TTL)?
It doesn’t really matter whether you start a dialogue with the government on an important reform, or the government is willing to continue that dialogue. It’s important to see the social impact of the reform. 1) It will strengthen your position while discussing things with the government; 2) It will make policies more viable and sustainable. In countries like Uzbekistan the social work is not very easy to do. We had to get a special permission, and we were not allowed to do surveys, or these were only requested after we completed focus groups, and again not all the results that we received can be presented to the government the way we recorded them. What we found needs to be very carefully phrased, but it strengthens the argument that we are presenting to the government, and it makes the dialogue much more meaningful rather than presenting numbers and pure assessment based on some data. However, in my experience with PSIA it’s very important to maintain the balance between this technical number crunching and then getting information from people, and doing number crunching based on that. It’s very easy to get bias on one side or another. Some TTLs put more emphasis on numbers and then they do focus groups or assessment as a follow up, but you can also find TTLs who prefer to go the other way around: they put more emphasis on social work but then the numbers are secondary, or the sectoral work is less important. I think it’s very important to strike the balance when you decide to do a poverty and social impact assessment. We are not just looking at the impact on the poor and getting emotionally involved (sometimes we go and talk to people, and it’s too much). Or we are not just looking at numbers and calculating how much people can afford. That’s why you need to find the balance, and make sure that these two pieces of quantitative and qualitative work complement each other rather than compete. Also, it’s important to understand why you are doing it. For example, in Ukraine first it was about the numbers, how far apart are domestic prices and what is the trajectory? And is this trajectory feasible? And that’s when the social assessment came in. In Uzbekistan it’s different because there is not that many numbers and we are only allowed to start picking at qualitative data so we cannot rely on either. It’s just to inform the dialogue. We did 34 focus groups: Uzbekistan is a huge country so even with these 34 groups we cannot say they are representative. But what we can say is that it poses very interesting questions, similarly on the quantitative side. We did not get all the data that we wanted so we had to find other ways to make the point.
4) 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?
What is most exciting is also what is most challenging: if you do it fully, you work with people from different backgrounds, groups, and skills, so basically it’s across Global Practice work. It’s extremely exciting because you learn a lot. For example I’m an Energy Economist, I never did the social part, and to me this part is particularly interesting. I never did macro stuff, but now I look at how energy affects macro stuff, so I learn something. And I know that other experts who work with me learn something about energy that they never knew before. It gives you a different perspective and a different picture of the world. But it’s also a challenge, and sometimes it’s not that easy to find the compromise to move forward. The first PSIA work fell apart because we could not work together as a team. That’s a challenge, but more an internal challenge. An example of external challenge: it’s fun if you work with a government that is engaged, they may not totally agree with you but they’re responsive and there is dialogue. You may very well be engaged in a country that is closed and doesn’t want to liaise with you. That’s a different type of dialogue, and it’s still interesting because it’s new, but it’s extremely challenging because you’re engaging the client in something that they either never thought of or don’t want to do. So there are two parts of the story. One is that you make sure you learn together, and if you do it benefits your work, and on the other hand once things start moving with the client you benefit a lot and the country does as well.
Yadviga Semikolenova is a Senior Energy Economist at the World Bank. She has extensive experience in energy policy issues, including energy efficiency, energy sector regulation, energy pricing reform and energy subsidies reform. She has worked on a range of energy activities in Albania, Southern Caucasus countries, Ukraine, Uzbekistan and other countries in Europe and Central Asia. Currently, Yadviga is leading energy program in Rwanda, supervising implementation of energy access projects and supporting the Government in developing of an Off-Grid Electrification Strategy. She also is also leading a high-level dialogue in Uzbekistan on energy subsidies reform. Prior to joining the World Bank Group, she was an Assistant Professor at the Colorado School of Mines. She has an MA in Economic Theory from Kiev School of Economics and Kyiv Mohyla Academy and a PhD in Economics from the University of Pittsburgh.