Macroeconomic advice for poverty reduction

Project description

Title: Macroeconomic advice for poverty reduction
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Benin
Lead executing agency: Ministère de l'Economie, des Finances et des Programmes de Dénationalisation (MEFPD); Ministère du Développement, de l’Analyse Economique et de la Prospective (MDAEP)
Overall term: 2007 to 2016

Context

A national budget survey found that, according to all conventional definitions of poverty, 36.2% of the population of Benin were poor in 2011. Over one third of people were living below the poverty line of USD 1.25 per day.

Since 2003, a comprehensive national development strategy has been in place, which serves as a basis for the development efforts of the Government of Benin and international partners. This strategy places a focus on pro-poor growth with a view to reducing poverty in the country. Implementation of the strategy represents a major challenge for the government – in part because of the complexity of each overall development process, but also because it involves the coordination of many different actors.

Objective

The Ministry of Economy and Finance and the Ministry of Planning are in a position to effectively steer and monitor the process of implementing the national development strategy.

Approach

The project provides a combination of technical, organisational and institutional advisory services. Key areas of focus include improving economic analytical skills, building steering capacities as part of the development process and optimising the management of public finance. In the field of improving analytical skills, support measures aim primarily to improve political decision-making. Here, the objective is to align strategies more closely with the needs of particularly poor sectors of the population, as well as to improve the reliability of official estimates, such as those for government revenues.

The steering and implementation capabilities of the ministries and institutions involved are being improved thanks to ongoing development of the instrument portfolio, support with the structuring of coordination and communication processes, and the creation of a results-based monitoring system. This is also having an impact on programme budget preparation, macroeconomic framework planning and medium-term financial planning – all key instruments for successful implementation of the national development strategy.

Results

Improvements to various statistical data sets such as the national accounts have established a more reliable basis for economic analyses and forecasts. An interministerial working party on macroeconomic modelling is using its wide-ranging and complementary experience to raise the quality of economic analysis.

The project has also helped establish a network of experts to propagate and support the systematic use of instruments relating to ex ante policy and social impact analysis (PSIA) in Benin.

As part of a long-term process, the project is helping the Ministry of Economy and Finance to mainstream the issue of gender in Benin’s budgetary process, to increase the transparency of the budgetary process and to meet the demands of members in regional organisations.