1) How long have you been involved with PSIAs, the PSIA Multi-Donor Trust Fund (MDTF), and have things improved over the years?
I conducted my first PSIA in 2003 when I was on a team assessing the social impacts of rising electricity tariffs in Moldova. In terms of breadth and relevance it was the most interesting analytical work I had done to date. On the one hand there was a rigorous data analysis dimension – we merged billing data with Household Budget Survey data to estimate changes in consumption behavior. On the other hand, it involved holding meetings across an entire country’s social strata – from poor villagers, to NGOs, to academics, to private sector CEOs, to civil servants, all the way up to the Minister of Energy. I learned a great deal from Julian Lampietti (the World Bank manager for that PSIA) who had done a number of early PSIAs in the energy sector. After Moldova I decided to do as much of this type of work as I could, and since then I’ve been directly involved in about two dozen PSIAs. A large number of these have been in the utility sector, but they’ve also covered mining, forestry, shipyards, trade, and land administration.
My impression is that, over the years, awareness and acceptance of PSIA (within the Bank and at a few other development agencies) has grown. The approach has been refined and its utilization has become better. I’ve seen how it can inform and reframe debates on reforms. However, I am unsure just how much greater awareness of PSIA has translated into ‘willingness to pay’ within the Bank. There are a number of TTLs who strongly believe in doing PSIA, but because of the cost, managers are often reluctant to draw on their limited budgets. This is so even though the cost is moderate compared with other analytical work conducted at the Bank. On the client side, most governments, who are (or should be) the real beneficiaries of PSIAs, are generally unwilling to finance them. So we probably need to do a better job of demonstrating PSIA relevance.
2) Are PSIAs relevant to the new World Bank Group? What role can it play with the new twin goals?
With the Twin Goals, as well as the new Sustainable Development Goals, I think PSIA is as relevant now as it has ever been. It can help the Bank put its money where its mouth is: if reducing poverty and inequality is the aim, then a PSIA should really be done for every DPL or project with potential economic impacts on households. By the way, disregarding the potential distributional impacts of policies can actually increase inequality. How? Imagine a project or policy reform that benefits primarily the middle class because the poor are too far away, or don’t have the mean to take advantage of sector improvements. For example, transportation investments or institutional reforms which have broadly positive economic effects can be a boon to those who use the services. However, for the poor and vulnerable who can’t access them it could mean watching their better off fellow citizens climb the economic ladder while they stay on the bottom rung.
3) What are the top three reasons you would recommend a PSIA to a TTL?
I believe a TTL will find value in commissioning PSIA because: i) it fills information gaps, shedding light on poverty and social dimensions of a sector; ii) it stimulates policy dialogue on the design and implementation of reforms; and iii) it is a highly adaptable approach – all kinds of quantitative and qualitative methods can be used to address the core questions. Of course, this assumes that a good, multi-disciplinary team is assembled, that there is regular contact with the project preparation team, and that there is plenty of interaction with the relevant government counterparts during the study.
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?
Think of PSIA as being the node between policy and evaluation. You use evaluation methods (household surveys, statistical analysis, qualitative research, political economy analysis, etc.) to address critical questions while engaging with stakeholders throughout. In fact, the analytical work involved in doing PSIA can serve as an excellent platform for discussing issues that maybe wouldn’t be aired otherwise.
The biggest challenges I’ve encountered relate to obtaining good data and sufficient time to analyze and analyze it. However, every single PSIA is challenging in some way. That’s just the nature of the beast. It usually addresses a controversial issue which carries significant fiscal, social, and political implications. Almost always trade-offs, and short-term sacrifices, are called for. There are vested interests opposed to the reforms. Getting the government to make use of PSIA findings and recommendations can be a struggle.
Nonetheless, more governments should take advantage of the approach, because a PSIA, executed well, can ease the path to difficult reforms. It can help address thorny issues, such as spreading the burden of price increases, and subsidy cuts in a way that is socially acceptable and politically feasible. For example, putting insufficient effort into designing and communicating tariff increases or subsidy cuts can end up costing governments hundreds of millions of dollars, and lead to social unrest. While conducting PSIA on the controversial restructuring of a copper mine in Serbia, we organized several rounds of dialogue with trade unions, local stakeholders, ministry officials, and others. The restricting was going to lead to job cuts, and severance pay was a big stumbling block. The PSIA had the effect of moving parties from a confrontational stance to dialogue and problem solving. I’m not saying PSIA is a magic bullet, but you can do a lot with it!
It’s possible that the acronym is a barrier to more widespread awareness and uptake. You always have to unpack the term. PSIA doesn’t seem to be known within the larger research and policy community, although it should be. If you enter ‘PSIA’ into scholar.google.com, only about one percent of the hits relate to ‘poverty and social impact analysis’. I would argue that it can be characterized as a sub-category of evaluation (which is a huge and growing area), and it should be promoted as such.
A policy advisor and evaluation specialist, Nils Junge works closely with governments and development partners (including the World Bank, ADB, IMF, and USAID) to develop evidence-based reform options that are socially acceptable and politically feasible. With a career spanning over 15 years and work in over 30 countries, he conducts quantitative and qualitative research and analysis in the electricity, water supply, district heating, agriculture, employment, mining, and trade sectors. He has conducted over 20 PSIAs. He is currently leading a team helping the Kyrgyz government develop a new water supply and sanitation policy. Mr. Junge holds an MA from Johns Hopkins University's School of Advanced International Studies (SAIS) with a concentration in development economics and conflict management. He is based in Washington, DC and speaks eight languages.