Agriculture Sector Assessment - Ukraine

Overview of the Sector Wide Approach (SWAP)

SWAP: Concept and Approach

• An effective approach of working together between government and development partners; • A mechanism for co-ordinating support to public expenditures; • A mechanism for improving the efficiency and effectiveness of budget resource utilization in the sector (through medium-term budget planning); • A truly programme-based approach operating at the level of an entire sector, addressing ‘cross cutting’ issues; 2

SWAP: A Shift in Emphasis

• FROM …

• Project-based approach • Micro Level focus • Donor-led approach • Short-term and immediate issues • Donor ‘independence’ • Parallel application alongside Government • Fragmentation and low communication

• TO …

• Sector-based approach • Macro Level focus • Government-led approach • Longer-term and ‘cross cutting’ issues • Donor ‘co-ordination’ • Integrated with Government programmes (and Budget) • Planned process with transparency and improved communication 3

SWAP versus Typical Project Approach

Factor Focus Government Role Impact on Partner Country Sustainability Donor – Recipient Relationships Overall Approach Implementation Mechanisms Donors Collaboration Sector Wide Approach Typical Project Approach

 

Long-term strategic and integrated view on entire sector Core strategy elaboration

 

Bringing coherence between sector policy, spending and results Strengthen Government and Ministerial capacity



Higher



Partnerships with mutual trust and shared accountability



Process-oriented approach through ‘learning-by-doing’ and reviewing



Through national Government or line Ministry; Increased use of local procedures



High level of co-ordination and collective dialogue

     

Short or mid-term, focus on a particular problem of a sector, setting narrowly defined objectives



May be outside or additional to core donors’ strategy Results limited to specific project area No links between policy and budget Low involvement of the Government



Lower



Recipient accountable to donor



‘Blue-print’ approach (that is perceived as ‘imposed’)



Project-level implementation units and parallel implementation arrangements Low level of integration Donors’ collaboration not a priority; with each donor the norm

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Short Comings with the ‘Traditional’ Project-based Approach

• Undermining the ‘ownership’ programmes by national authorities; of policies and • Fragmentation, duplication of efforts and loss of coherence; • Funding of multiple investments by donors has led to unbalanced sectoral development; • High transaction costs of delivering aid through projects; • The reliance on non-government project management, undermining the effectiveness of government systems; • Corroding the accountability; normal structures of democratic 5

SWAP Objectives

•

Broaden ownership

sectoral spending; on policy, strategy and •

Increase coherence

between policies, spending and results; sector •

Minimise transaction costs

in the provision of external funding directly, by adopting established government procedures, harmonisation of donor procedures, etc.; 6

SWAP Benefits: For Recipients

• • • • • • •

More funds are made available for development of agriculture i.e. up to five time more funding is provided ( €12m rather than €2m on average); The Agriculture Sector Development Strategy is streamlined, with a focus on a selected number of key sector priorities or ‘bottlenecks’; Closer links between sector policies and implementation are established; coherence between spending and results are increased; Quality of medium-term budget planning and implementation, or medium term expenditure framework (MTEF) is improved; Inter-sectoral co-ordination and addressing cross-cutting issues, in terms of planning and budgeting, including inter-ministerial links, is improved; Capacity within Government and the sector Ministry regarding strategic planning and sector-wide programme implementation is increased; Sector performance transparency and budget accountability is increased;

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SWAP Benefits: For Donors

• Donors’ transaction costs are minimized due to:     better co-ordination harmonizing of procedures improved information flows, and fewer costly project management units; • Funding efficiency is increased because of better focus and co-ordination; • Donors’ aid is generally more effective because of a better response, integration with national priorities and a more co-operative attitude from Government; 8

SWAP Components in Agriculture

• •

Sector Development Programme (SDP)

heart of any successful SWAP initiative is at the

Medium –Term Expenditure Framework (MTEF)

is what makes a Sector Development Programme operational • • • •

Programme-based Budgeting

links ‘projects’ and activities clearly to assured sources of funds, and to detailed work programmes

Performance Monitoring

whether ‘milestones’ and goals are achieved and have impact

Co-ordinating Mechanism

effectiveness provides the means to judge for greater integration and

Harmonisation of Information Flows

decision-making and partnership

SWAP Components

Comp. 6: Harmonisation of Information Comp. 5: Co-ordinating Mechanism Comp. 4: Performance Monitoring Comp. 3: Programme- based Funding Comp. 2: Sector MTEF (Budget) Comp. 1: Sector Development Policy Capacity Development and Sector Performance

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How Can SWAP be Implemented? Can it be Done in One Step?



The answer is usually

“NO”

, not at once!

 As SWAP is a dynamic long-term partnership that continually develops, implements and improves the sector development programme,

all

the components develop

gradually and incrementally

together as evolves, led by the Government.

the programme 11

SWAP Development: Step Approach to Reach Objectives

Sequencing through ‘Steps’ on a ‘Staircase’ Each step adds value, but also builds to the next step Enables Step 3 SWAP In Action Enables Step 4 SWAP Reaching its Objectives Enables Step 2 SWAP Launched Step 1 Streamline SWAP Pre-Conditions

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SWAP Implementation Conditions

Fundamental is the Government firm intention and will to collaborate with donors in preparing and implementing a Sector Development Programme

• Consensus between Government and the international donors over key sector issues; • Strong and effective leadership at Sector level e.g. MAP; • Good institutional and inter-Ministerial co-ordination and integration, led by the Ministry of Finance; • Basic capacities and skills in Budget programming (MTEF); • A reasonable degree of macro-economic and political stability and policy predictability; • Agreement and co-ordination among the donors on the issues and priorities, with a ‘lead donor’ ideally identified; 13

SWAP Implementation Conditions



Where can the Sector-Wide Approach (SWAP) be best used?

 The public sector plays a substantial role  There is broad agreement on the Sector Strategy  The donor contribution is significant  There is a supportive macro Budget (MTEF)  Institutional relationships between manageable and co-ordinated Ministries are  Where countries have strong positive incentives to support SWAP objectives e.g. EU-Ukraine Action Plan 14

Experience and Lessons Learned

The most important success factor for SWAP is establishing

true ownership

by the local partner.

Indicators of Ownership:

• Government policy priorities are backed by budget allocations • High-level Government and Ministries involved, especially the Ministry of Finance, as well as the Sector Ministry • Government has gone through an ‘internal’ consultation processes • Government is committed in terms of explicit policy agreement

Many donors particularly emphasized the need to incorporate the SWAP within the overall national budgetary strategy. This was considered to be the surest way of securing broadly based Government ownership and of enlisting the national and sub-national Government bodies in support of the programme.

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Swap for Ukraine: Can Ukraine Meet the Conditions for the SWAP?

 The simple answer is

CURRENT STATUS YES, But… with Conditions!



Consensus between Government and international Donors over key sector issues



To be developed



Government intention and will to collaborate with donors in preparing and effectively implementing a Sector Development Programme



To be developed



Leadership at the Sector Level i.e. MAP



Needs to be strengthened



Institutional coordination



Needs to be strengthened



Basic capacities and skills in budget programming; some experience in mid-term financial planning at sector level



Needs to be strengthened



A reasonable degree of macro-economic and political stability



Needs to be strengthened

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Swap for Ukraine

Ukraine Agriculture SWAP Development Step 4 Step 3 Step 2 Step 1 Step 1: Streamline SWAP Pre-Conditions Step 2: SWAP Launched

Outline sector development strategy and key sector needs Basics of MTEF Basic arrangement for performance monitoring and budget programming Dialog and co-ordination Assessment of information flows and institutional links - Agreed agriculture sector targets and instruments Prepared MTEF for agriculture sector Deepen linking resources to performance Set-up performance monitoring system Ongoing dialogue, co ordination and consultation Set-up reliable financial information system

Step 3: SWAP in Action

- Sector development programme is integrated with MTEF; - Strengthen capacity for programme-based managing for results - Agreement between Government and Donors on funding arrangements - Financial information and performance monitoring coherent

Step 4: SWAP Reaching Objectives

- Streamline sector wide budget implementation; - Integrated fully functioning sector budget system - Accountable and transparent economic and financial performance of the sector 17

Future EU Interventions in the Ukraine Agriculture Sector

•

The following been identified: ‘priority’ issues have



Market Infrastructure and Competitiveness issues



Food Safety and Quality Standards issues



Rural Development issues

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