Pdia to overcome the limits of institutional reform

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09/01/2013

Pdia to overcome the limits of institutional reform

This post was in the Development Post blog on May 29. http://www.development-post.com/blog-posts/are-best-practices-in-development-fit-for-purpose/

Are best practices in development fit for purpose?

Matt Andrews of the Harvard Kennedy School of Government has been making waves across development and governance circles. He was in town last week promoting his new book, The Limits of Institutional Reform in Development, and the problem-driven iterative adaptation (PDIA) process, and Development Post went along for the presentation. We haven’t read his book yet but we’ve read several articles and papers authored by him on the topic.

What is PDIA?

From our understanding, his PDIA is not yet another “best practice” approach to institutional reform, but rather focuses on the process of reform. Funded by results-based lending, PDIA begins by identifying the problem, and emphasizes experimentation with different ideas using an iterative process. Monitoring and evaluation is built into the process, and there’s an instant feedback loop. Sounds like common sense, doesn’t it? That’s what we thought.

So what normally happens? The traditional approach to reform in international development is to begin with solutions, where developing countries are told to introduce, for example, international accounting standards when there are very few internationally accredited accountants in the country.

In his presentation Matt told an amusing story of an IMF official visiting a central African country to help improve their public financial management (PFM) systems. Upon arrival at the Finance Ministry there were about four members of staff there, writing their budget using a pencil and paper. The IMF official rocked up…to show them how to do accrual accounting.

“How’s the idea that in three weeks, we teach them how to transfer those numbers on to an excel spreadsheet, instead?” asserts Matt. Is this possible? What is the IMF official incentivized to do? To get another country to adopt accrual accounting, or to train them how to use excel? And on what basis do developing countries receive funding? By solving problems or adopting externally imposed international best practice?

Matt writes about Afghanistan in this Foreign Policy article, how the 2003 reforms transformed the quality of the government’s financial management and budgeting so that it ranked higher than a middle-income country in 2008. And we’ve all heard reports of corruption being rife in Afghanistan. South Africa is another example; they have the second most transparent budgets in the world, according to the Budget Transparency report, and yet they’re sliding on all governance and corruption indicators.

“The bottom line is that many governments – developed and developing – adopt the new, good, better and best practices in form but do not see improved functionality as a result. The reforms are limited and should thus not be considered successful.” – says Matt in this PFM post

PDIA sounds remarkably similar to a design thinking approach to policy design that Christian Bason from Mindlab in Denmark talked to us about earlier. Matt’s suggestion, if widely adopted, could shift the way development is funded by fully embracing the results-based approach, and by creating what he called institutional reform incubation trust funds – that is, financial support for a period of incubation of policy ideas. This is no different to what’s going on in the private sector – Twitter was created during a day-long tech brainstorming session, also known as a “hackathon”. So could incubation trust funds for policy-hackathons be the way forward institutional design and effective public service delivery?

Matt’s book is at the top of our reading list, and as soon as we send our delightful upcoming Summer edition off to press, we’ll hit the download button on our Kindle. If you want to learn more, here’s a great book review by Oxfam’s Duncan Green and this World Bank paper documents their experience experimenting with PDIA in Sierra Leone achieving positive results.

Have you heard or read about PDIA approach? If so, drop us a line, tell us what you think.

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The Limits of Institutional Reform in Development

09/01/2013