In Practice A Standardized Approach to Estimating the Cost of Economic Inclusion Programs Sarang Chaudhary, Hugo Brousset Chaman, and Jenny Swatton 6 © 2022 International Bank for Reconstruction and Development | The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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Cover photo: Edwin Huffman | World Bank Volume 6 November 16, 2022 In Practice The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs B Contents Acknowledgements.............................................................................................................................. i About the In Practice Series............................................................................................................ ii Abbreviations............................................................................................................................................. iii Introduction................................................................................................................................................. 1 What Is a Cost Analysis—and Why and When Should It Be Conducted?...... 3 PEI’s Quick Costing Tool.............................................................................................................. 7 Costing Tool Framework............................................................................................................... 7 Cost Analysis Steps.......................................................................................................................... 9 The Quick Costing Tool in Action: Country Case Studies...................................... 10 Panama: Strengthening the National Social Protection and Inclusion System.............. 10 Peru: The Haku Wiñay Program.................................................................................................. 12 Malawi: Concern’s Graduation Program.................................................................................... 14 Conclusion............................................................................................................................................. 16 Appendixes.................................................................................................................................................. 17 Appendix A Cost Breakdown of Government- and NGO-Led Economic Inclusion Programs......................................................................................... 18 Appendix B Types of Economic Inclusion Interventions Captured in the Costing Tool................................................................................................................ 22 Notes................................................................................................................................................................. 24 References.................................................................................................................................................... 25 The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs C Boxes Box 1 What is EI programming? ......................................................................................................... 2 Box 2 Looking beyond a program’s sticker price............................................................................ 4 Figures Figure 1 Framework – Quick Costing Tool..................................................................................... 8 Figure 2 Breakdown of costs of Panama’s Strengthening the National Social Protection and Inclusion System Program (percent of total)........................................................................... 11 Figure 3 Overall Unit Cost (per household) for three country cases in PPP.......................... 12 Figure 4 Breakdown of costs of Peru’s Haku Wiñay Program (percent of total)................... 13 Figure 5 Breakdown of costs of Malawi’s Haku graduation program (percent of total)...... 15 Figure A.1 Cost breakdown of economic inclusion programs, by region and funding source (percent of total)......................................................................................................................... 19 Tables Table 1 Timing and objectives of cost analysis................................................................................ 6 The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs D Acknowledgements This note was written under the guidance of Colin Andrews, Program Manager of the Partnership for Economic Inclusion (PEI). The authors thank Lani Trenouth (World Bank and UNICEF) for her exceptional work on background research. The note also benefited from the rich discussion in PEI’s Open House webinar “Economic Inclusion: At What Cost?” in December 2021. The authors are particularly grateful to Ralf Radermacher (GIZ), Bessie Msusa (Ministry of Economic Planning and Development, Republic of Malawi), and Robin Audy (World Bank). The authors also benefited from feedback from the PEI team, especially Janet Heisey and Puja Vasudeva Dutta. The team also received invaluable inputs and resources from World Bank country team members Gaston Mariano Blanco, Ursula Milagros Martinez Angulo, and Elisa Seguin for the Panama and Peru case studies and from Thokozani Kalanje and Chris Connelly from Concern Malawi. The team also want to thank Claudia P. Rodriguez Alas (World Bank) and the World Bank’s Atlas of Social Protection Indicators of Resilience and Equity (ASPIRE) team for their valuable inputs on costing analysis and Purchasing Power Parity calculations. The authors are also grateful for the comments from peer reviewers Cornelia M. Tesliuc (World Bank) and Carolina de Miranda (Fundación Capital). The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | i About the In Practice Series The Partnership for Economic Inclusion introduces the In Practice series featuring accessible, practitioner-focused publications that highlight learning, good practice, and emerging innovations for scaling up economic inclusion programs. Guide to Navigation The In Practice series is interactive and provides built-in technical features to assist readers as they progress, including a navigation bar, progress bar, and the ability to jump to endnotes and back to the text throughout. Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Chapter navigation Progress bar Jump notes1 The navigation bar at the top of This bar orients readers to their Endnotes throughout the text are each page allows easy naviga- progress in each chapter and interlinked to allow easy naviga- tion with a simple click. through the document. tion from notes and the main text. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | ii Abbreviations CCT conditional cash transfer CRM customer relationship management EI economic inclusion FAO Food and Agriculture Organization FONCODES Cooperation Fund for Social Development, Peru INADEH National Institute of Vocational Training and Training for Human Development, Panama M&E monitoring and evaluation MIDES Ministry of Social Development of Panama MIDIS Ministry of Development and Social Inclusion, Peru NGOS nongovernmental organizations PEI Partnership for Economic Inclusion PPP purchasing power parity VSL village savings and loan The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | iii Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Introduction Economic inclusion (EI) programs have become a key feature of national social protection systems globally, with many actors scaling up and adapting approaches to match local contexts and reach different population groups (box 1). A large and growing body of evidence suggests that EI programming can increase the incomes and resilience of people living in extreme poverty (Banerjee et al. 2015; Andrews et al. 2021; Bossuroy et al. 2022). As a result, there is strong operational demand to better understand the cost drivers, cost-effectiveness, and sustainability of EI programs, including how these interventions interact with other services targeting the poor. Impact evaluations, process evaluations, and The unique design and institutional other performance management approaches characteristics of EI programs makes costing have been a common feature of development them both more challenging and more and social protection programs for decades. important than it is for traditional safety net There is now growing recognition of the programs. Cost analysis of these programs can relevance of cost analysis, cost-effectiveness provide valuable information for designing, analysis, and other forms of economic planning, and evaluating programs. It can also evaluation alongside measurements of be used to advocate for a shift in priorities programs performance to inform evidence- and resource allocation. Without a robust based policy and programming decisions. understanding of the drivers of program costs, policymakers lack the information required to make decisions about which interventions to pursue, replicate, or scale up. Box 1 What is EI programming? The World Bank’s the State of the Economic Inclusion Report 2021: The Potential to Scale (Andrews et al. 2021) defines EI programming as “a bundle of coordinated multidimensional interventions that help poor individuals, households, and communities increase their incomes and assets to achieve the long-term goal of economic self- sufficiency.” Graduation programs, pioneered by BRAC, are also considered EI programs. EI programs are normally anchored in three preexisting entry points: social safety nets, livelihoods and jobs, and financial inclusion. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 1 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Costing is also critical because governments, Until now, one of the challenges of reporting nongovernmental organizations (NGOs), cost data on multidimensional EI programs and donors are increasingly asking for has been the different ways in which demonstration that the programs they organizations budget, handle financial support yield value for money. accounting, analyze, and report costs. These differences make it very hard to communicate To make informed decisions about which average program costs and easy to make programs to invest in, policy and decision flawed comparisons of different programs. makers want evidence that a program works and if so at what cost. Experience This note seeks to make quick costing a part analyzing the costs of EI programming of EI program management. It complements is limited, however. Too little is known and adds value to the existing PEI landscape about the costs of different packages of survey by standardizing the process by services or activities and the sequencing which contributing organizations analyze of components and understanding of the and report their costs. The note and the value of cost analysis in EI operations is Quick Costing Tool can help practitioners limited. As a result, it is rarely conducted. and researchers unpack cost drivers. Programs teams can submit the request Decision-makers tend to focus on the “sticker to access the tool on PEI’s Data Portal3. price” of a program—such as the average cost per participant—without recognizing the The note is organized as follows. The first relevant aspects required to contextualize section explains what cost analysis is and why and interpret cost estimates. Sticker prices and when it should be conducted. Section 2 do not fully capture value for money, introduces a revised Quick Costing Tool and longer-term impacts, or sustainability. presents the steps in the cost analysis process. Section 3 presents three case studies that The limited availability and lack of describe how the tool has been applied to comparability of data create another real-world EI programs. Section 4 reviews the challenge, especially for novel EI implications of this work for EI programming. programs, as expenditure and costing data remain very limited. This note provides a standardized approach to costing EI programs using the Quick Costing Tool1 of the Partnership for Economic Inclusion (PEI). It offers guidance to programs teams on how to perform costing analysis, highlighting the operational relevance of cost data.2 The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 2 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies What Is a Cost Analysis— and Why and When Should It Be Conducted? A cost analysis, or costing, is an estimate of the total or incremental financial cost or economic value of the resources required to implement a program or provide a service.4 Such resources may include labor; required to implement a program or policy commodities (including cash, assets, or in- at a given scope and scale, program cost kind transfers and cash grants); training to analysis and budgeting are two separate program beneficiaries; training of program but linked processes. Cost analysis may personnel; supplies and supply logistics; be useful as an input into analyses of facility management; operational and fiscal space and financing; on its own, it capital investments; and other costs. is insufficient to determine the financial feasibility or sustainability of a program. A societal costing includes the value of all It can, however, provide decision makers resources, regardless of who bears them or with valuable cost-related information when the costs are incurred. They typically required to operationalize policy choices. include direct and opportunity costs to beneficiaries and their communities. Cost analysis provides an estimate of the An institutional cost analysis includes value of the resources required to implement only the costs borne by implementing a program. There are inherent uncertainties bodies or other institutions. It typically in any estimate, especially when it is not includes only financial costs. Whether a possible to directly observe and valorize costing is conducted based on a societal the consumption of resources. Most cost or institutional perspective depends on analyses present a single point estimate, but the objectives of the analysis. This note the actual cost may be much higher or lower and the corresponding quick costing tool based on how precisely implementation focus on the institutional perspective. costs are estimated. Some analyses present a most likely scenario as well as plausible Cost analysis is not a financial audit high- and low-cost scenarios. The more or a mechanism for assessing financial detailed the analysis is, the greater the accountability; it is not a method for tracking precision and certainty of the estimate. investments or public or social spending. Sensitivity analysis can be conducted to Although the results of a cost analysis better understand the sources of uncertainty can provide data to support budgeting, and how much the estimates may vary. by determining the envelope of resources The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 3 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Cost analysis can be an important instrument NGOs play a key role in piloting EI programs, for making the case for scaling up EI testing different approaches to inform programs. Government-led programs are program design and adaptations for specific normally subject to budget and capacity contexts and integrating these approaches constraints, with competing priorities to in national-level policy and programming. fund other human development interventions. However, funders often focus on the sticker As EI programs move to scale and are prices of NGO-led EI programs, which integrated into national social protection are higher than those of long-established systems, reliable cost data and analysis can safety nets (box 2). Overcoming “sticker provide information that supports cost shock” and generating evidence of what optimization and improves cost-effectiveness. works, where, and at what cost requires analysis of the costs of different components of a program and value for money. Box 2 Looking beyond a program’s sticker price The total cost of an EI program, or its sticker price, is insufficient for assessing its value, for multiple reasons. First, program costs vary widely by context, design, and costing methodological choices. Contextual factors—such as geography, accessibility, recur- rent environmental or political threats, existing infrastructure, and the macro-economic environment—all affect the cost of a program. Second, the cost of a program must be compared with its financial or economic benefits, such as asset accrual or improvements in earnings or the value of human or social impacts, such as knowledge, confidence, or self-efficacy. Assessing the value of an EI program is challenging for a variety of reasons: • Programs are often not comparable. The bundling of components, institutional arrangements, and delivery mechanisms of programs can vary substantially across countries—and even between interventions handled by the same implementing agency—making it difficult to compare programs. • Disentangling administrative expenses can be tricky. Many EI interventions include cost items that look like administrative expenses but are actually part of direct implementation costs, including staff, travel, and other items needed to roll out skills training and form savings groups. Ideally, administrative costs should be defined as any portion of staff and per diem costs that is not used for direct program implementation. • Different entities often implement different program components. In some programs, components are implemented by different entities, through partnerships or service contracts (for example, livelihood activities provided by an NGO build on safety net provision provided by the national government, or a private actor provides vocational training). Each delivery actor is likely to have a different way of accounting for and reporting costs, complicating the identification of these costs and their harmonization across programs. • Government costs that are directly linked to programs are often excluded. Many government-led programs are jointly implemented by government staff who support several other interventions and activities; some of these costs may not be appropriately accounted for. The exclusion may reflect difficulties obtaining such data from ministries and estimating staff time and cost allocations to specific interventions. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 4 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Box 2 continued • Opportunity and sunk costs are often not accounted for. Cost estimations often exclude the opportunity costs of participating in a program, including training sessions, traveling to payment sites, and so forth. These exclusions apply to both monetary and time costs. Cost analysis also often ignores sunk costs, such as the cost of developing a social registry, a program management information system, or training content. As these interventions are often designed as part of larger social assistance programs, it is challenging to account for these sunk costs. • Gaps in impact assessments make it difficult to assess cost-effectiveness. Broadly in the development sector, fewer than one in five impact evaluations integrates cost-effectiveness analysis (Brown and Tanner 2019). The State of the Economic Inclusion Report 2021: The Potential to Scale (Andrews et al. 2021) collected costing data on 34 programs, but impact evaluation results are available for only one. The lack of data on program costing makes it challenging to conduct value for money analysis. Cost is often cited as a bottleneck to scaling Costing may also reveal opportunities for up EI programs. But costs are often poorly improving efficiency by avoiding duplicative understood. Factors such as insufficient efforts sometimes encountered when capacity for targeting beneficiaries, poor layering new programs into an existing or fragmented local community–based structure or implementing a multipronged networks to support outreach and/ or EI program. A better understanding of the training coaching components, and a cost structure of a program may also help lack of robust coordination mechanisms identify opportunities to improve planning and incentives for bundling components and increase the efficiency of back-office are often what hinders scale-up. costs and shared activities at the central and local levels, including beneficiary Paired with a fiscal space analysis, cost targeting and registration, monitoring analysis can help set priorities, by assessing and evaluation (M&E), information the financial feasibility of programs under dashboards, outreach, and other activities. consideration. It can be conducted at several stages of the program cycle (table There is also a strong rationale for analyzing 1). Comparable data can be exploited to costs ex post. Examining actual rather find opportunities to scale up interventions than budgeted costs allows more accurate along with other social safety net programs. estimation of the cost per beneficiary. When Modeling the cost of programs or design paired with process evaluation, an ex post features within a program ex ante can help cost analysis can inform future program decision makers make better-informed design, particularly the optimization of decisions about what to prioritize while cost. An ex post analysis can also identify highlighting potential tradeoffs. Cost analysis gaps between the initial budget estimates/ ex ante can help tweak a program’s design, allocations and actual expenditure. Analyzing scope, and scale to meet budget envelopes the reason for the discrepancy increases or identify the need to seek additional program transparency and can inform resources. Ex ante costing can also be used future programming/mitigation strategies. to operationalize a program’s scale-up strategy and embed resource requirements into multiannual budget decisions. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 5 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Table 1 Timing and objectives of cost analysis PURPOSE TIMING OBJECTIVE AND EXAMPLES Planning Ex ante • Provide cost-related data to help decision makers set priorities and allocate resources. • Assess financial feasibility and sustainability of a program, policy goal or scale-up plan. Budgeting Ex ante • Support budget advocacy, processes, and coordination with cost estimates rooted in local context and program design. • Contribute to development of operationalized action plans. Financing Ex ante • Contribute context-specific data to help estimate financial resources to be mobilized. • Pair with public or social expenditure reviews, budget analysis, or fiscal space analysis to identify funding gaps or disconnect between policy objectives and resourcing. Program Ex ante, in real • Compare costs of alternative program scenarios based on variations in design time, or ex scope, scale, intensity, or other programmatic choices. post • Explore lower-cost alternatives to standard practice. • Estimate incremental cost of adding a component to an existing program. Program In real time or • Determine cost drivers and identify opportunities to decrease costs without adjustment ex post reducing program quality. • Identify underutilized opportunities for cost-sharing and avoidance of duplication. • Identify program components that may be over- or under-resourced. • Estimate potential cost savings by changing a program’s design. Other Ex ante, in real • Better understand economies and diseconomies of scale of a scaled-up time, or ex and/or integrated program. post • Explore reasons for potential inequalities in access to intervention based on differential costs of reaching different populations. • Assess beneficiary cost of participation and determine whether erosion of transfer value is sufficient to warrant changes to delivery design. A transparent and detailed understanding and why it will lead to a better return than of program costs help program proponents investing in an alternative. Government-led advocate for external funding or internal interventions require several inputs from resource allocation. A clear view of the cost multiple implementers. Understanding architecture provides donors an opportunity how these inputs are mapped out, planned, to make financial commitments that align and executed in a coordinated fashion to with their priorities. The prospect of become products and services is critical to contributing strategically to a component of efficient program management. Being able a larger, more holistic approach may draw to communicate robust analyses on the full donors in. Detailed cost analyses provide or incremental cost of a program, the cost the possibility for greater ex ante financial per beneficiary, or the potential return transparency, which donors increasingly on investment can help build the case for demand. It is not enough to provide a investing in an intervention or design feature. sticker price; policy makers need to know what they are getting for their investment The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 6 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies PEI’s Quick Costing Tool For complex EI programs, existing accounting systems and practices typically do not allow for easy coding of program activities or components to facilitate cost analysis. A standardized costing tool can improve consistency. The Quick Costing Tool was developed to The Quick Costing Tool looks at the latter. demystify and unpack the cost of EI programs. One of the limitations of the tool is that it It was first developed in 2020, as part of the uses a standardized approach to estimate background research and analysis for the State direct costs of an EI program from the of the Economic Inclusion report (Andrews et.al. perspective of the implementing institution 2021), to understand the range of costs of only; it does not incorporate the opportunity EI programs and the cost drivers, including costs of beneficiaries’ participation in the the complexity of the programs and the program. Measuring opportunity costs is modality of delivery, the costs of delivering complicated. However, as we get a better interventions, and the dosage. The tool was understanding of direct program costs, PEI field tested with self-reported cost data intends to integrate estimations of indirect from 34 programs from around the world, costs, both monetary and time, incurred by including programs in low- and lower-middle- recipients in the further iterations of the tool. income countries, different sociopolitical contexts, and different implementation modalities. Of these programs, 24 were COSTING TOOL FRAMEWORK government-led, and 10 were NGO-led. The quick costing tool operates under a (Appendix A provides a cost breakdown simplified cost analysis framework (Figure 1) for all of these programs.) Testing the tool where the first step is to disaggregate program with a diverse set of programs provided cost, to an extent possible, to identify key cost insights on how to collect and enter cost data drivers in a diverse set of EI programs. This is (Appendix B). As a result of feedback from followed by standardizing costs, by estimating users, PEI refined the tool to make it more adequacy and affordability, across comparable intuitive and created a detailed instruction programs or similar program components. manual. Wherever feasible, the tool allows Finally, the disaggregated and standardized annual changes in prices to be incorporated. data can help provide guidance to program There is often variation in the understanding teams on how to optimize program costs. of a unit cost. The term unit cost is sometimes We now look at these steps in detail. understood as the cost per participant of an entire service or program. It can also be understood as the cost per unit of resources required to provide a service or program. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 7 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Disaggregating Program Costs The costing tool uses a bottom-up approach. Program teams often struggle to disaggregate It first identifies total program cost before the last two sets of costs, as there are (a) disaggregating the cost of direct overlaps, especially in accounting for staff benefits (such as transfers, grants, costs, that result in double-counting. and asset/input transfers) received by beneficiaries; (b) estimating the cost of To address this challenge, the tool human resource–intensive components, highlights the differences in costs if the such as training, coaching, and formation sum of the costs entered exceeds the total of savings group; and (c) estimating the program cost. It also provides detailed program’s overhead (indirect costs), such guidance on how to estimate delivery and as the cost of targeting, the cost of staff implementation costs. It shows the share of not involved in the direct delivery of total costs of all components, which helps components (such as communications or identify the key cost drivers and provides administrative staff), communication costs, initial estimates of cost per beneficiary. and other administrative expenses.5 Can be used Figure 1 Framework – Quick Costing Tool Ex ante for program design During implementation Cost to monitor program standardization expenditures Post completion to Bottom-up approach Estimating the identify key cost drivers Rich database of to EI program adequacy of grants/ program costs across costing transfers contexts Outcomes Unpacking delivery, Assessing Open access cost data Guidance to program implementation, and affordability and on PEI Data Portal for teams on how to admin costs potential to scale programming and optimize costs policy making Disaggregated Cost First step toward program costs optimization estimating cost- effectiveness Systematic understanding of costs for policy dialogues Source: Authors’ Illustration Standardizing costs The tool provides estimates of the adequacy of This feature provides guidance to program grants and transfers.6 This feature is managed teams as they negotiate with policy makers at the backend by the PEI core team.7 on increasing benefit amounts with Estimating the adequacy of financial support government counterparts.8 Combined with interventions at the household level can the estimation of unit costs at the individual provide useful design information to program and household level and comparison teams on benefit levels as a share of household with similar EI interventions, the tool consumption for targeted beneficiaries. allows users to assess the affordability and potential to scale for these programs. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 8 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Optimizing costs The tool collects design information on 3. Conduct sensitivity analysis. Account aspects such as delivery modalities, the for uncertainty in estimates by frequency and duration of interventions, considering a plausibly optimistic linkages with NGOs and the private sector, and plausibly pessimistic scenario in and government/community structures addition to the base case estimate to that can be leveraged, all of which affect unpack the implementation costs. program cost. The team performs a 4. Harmonize the data by converting qualitative review of design, implementation, figures into purchasing power parity. and institutional arrangements. The key backend function of the tool, managed by PEI, is to harmonize costs As more cost data are collected and i.e., Purchasing Power Parity (PPP) analyzed across countries, understanding conversions,9 estimating adequacy, etc., of the costs of EI programs will grow. to allow for cross-country comparisons This rich information can then be used to and integrate the programs in existing understand how to optimize program costs. costing database on PEI’s Data Portal. 5. Conduct a qualitative review. COST ANALYSIS STEPS Review design, implementation, and institutional arrangements. The Quick Costing Tool follows six Alongside program team, PEI will simple steps to disaggregate, standardize, perform a qualitative review, to and optimize program costs: put the analysis in context. 1. Identify the objective of the analysis 6. Provide guidance on cost optimization. and the unit of analysis (individual, Once the tool is applied across household, group, or community diverse contexts and a strong level). The objective could be analyzing database is created, it will be possible program costs ex post for the entire to benchmark program costs and duration of the program using actual provide guidance on improving expenditures or assessing program program features. As a follow-up to activities ex ante using budget data. the analysis, PEI will engage with 2. Collect data. Identify the data sources program team to provide guidance such as annual reports, budget on how to optimize program costs. allocation and expenditure statements, or MIS data and enter them into the Quick Costing Tool. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 9 Introduction What Is a Cost PEI’s Quick The Quick Conclusion Appendixes Analysis—and Why Costing Tool Costing Tool in and When Should Action: Country It Be Conducted? Case Studies The Quick Costing Tool in Action: Country Case Studies The Quick Costing Tool was recently Panama’s social protection programs, applied in three countries: particularly social assistance transfers and conditional cash transfers (CCTs), • In Panama, the World Bank task played a significant role in reducing team used the tool ex post to analyze extreme poverty in rural areas. However, the costs of a World Bank–funded these programs did not reach the remote EI pilot program implemented by indigenous population, and programs lacked the government over two years. components for improving employability. • In Peru, the country team used the tool to assess the costs of the The broad objective of the EI program Haku Wiñay program, a fully was to both increase the efficiency of the government-funded flagship EI social protection system and to improve program implemented since 2012. the income-generation capacity of the poor and vulnerable. The efficiency of the social • In Malawi, Concern Worldwide (a protection system was increased by expanding global NGO) used the tool to analyze coverage and improving harmonization with the cost of its graduation program. the country’s flagship CCT programs. The These brief case studies show the utility of income-generating capacity of the poor and the Quick Costing Tool in diverse contexts, vulnerable was addressed by increasing their for different programs designs, and at various participation in productive/EI programs. stages of the program implementation cycle. The Quick Costing Tool was used to analyze the expenditures of the productive inclusion PANAMA: STRENGTHENING THE pilot “Cohesion Social,” implemented NATIONAL SOCIAL PROTECTION by the Ministry of Social Development AND INCLUSION SYSTEM of Panama (MIDES), the Food and Agriculture Organization (FAO), and the Panama made rapid progress in reducing World Bank. The EI interventions targeted poverty over the last two decades. Between CCT beneficiaries; more than 95 percent 2007 and 2014, the headcount declined of direct beneficiaries were households from 39.9 percent to 25.8 percent for headed by women. The program exploited poverty and from 15.6 percent to 11.3 the capacity of the National Institute of percent for extreme poverty (World Bank Vocational Training and Training for Human 2014). Despite largely pro-poor growth, Development (INADEH) to design and differing rates of poverty reduction resulted implement skills training and coaching. in concentrations of poor and vulnerable people in remote areas, where the majority of the indigenous population resides. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 10 Introduction What Is a Cost PEI’s Quick The Quick Conclusion Appendixes Analysis—and Why Costing Tool Costing Tool in and When Should Action: Country It Be Conducted? Case Studies The objective of the productive About 82 percent of the program cost inclusion program component was to reached beneficiaries directly in the form complement CCT programs with support of financial support, with cash transfers to investments in human capital that representing 66 percent of the cost10 and enhance income-generating capacity. This asset transfers 16 percent (figure 2). component institutionalized productive and training activities for the poor and vulnerable population registered in Figure 2 Breakdown of costs of the single registry living in indigenous Panama’s Strengthening the National communities. On top of CCTs, the pilot Social Protection and Inclusion provided three EI interventions: System Program (percent of total) • Productive asset transfer: 0% Communication costs 1% Beneficiaries received agriculture 1% 3% 4% Monitoring and evaluation costs inputs, such as seeds, organic fertilizer, 5% Staff training costs 5% and tools, as well as poultry and fish. Other costs 16% • Skills training: Cost of service providers Training combined two types of skills modules: (a) a life-skills training Coaching module to help beneficiaries in Skills training specific behavioral, psychosocial, 66% Asset transfer and remedial activities and (b) a technical skill module focused on Cash transfer specific entrepreneurship activities. Training services were delivered through farmer field schools, using a learning-by-doing model. • Coaching: The program provided about US$50 a month The local staff of INADEH as a CCT for 24 months, and the average provided coaching services cost of productive assets was about US$286. to program participants. The program spent 10 percent of its budget The costing tool was used ex post to analyze delivering skills training and coaching. The the cost per beneficiary and identify cost average duration of a training course was drivers. Total budget expenditure for the about 250 hours within a three-month period. EI pilot was about US$1.8 million (all figures in 2017 PPP). The estimate of The delivery cost was low because the the cost per beneficiary included US$3.7 program leveraged government capacity million in direct cash transfers. At a total for implementation and the FAO provided cost of US$5.5 million and 3,087 direct international experience based on the farmer beneficiaries’ households, the total cost field school model. As government staff per beneficiary household was US$1,825 were not paid using program’s resources (figure 3) over two years of program and the team was unable to quantify the delivery. Removing the cash transfers from cost of time spent by government staff in the unit cost estimations reduces the cost implementing the program, the unit cost to US$607 per beneficiary household. estimate represents a lower bound.11 The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 11 Introduction What Is a Cost PEI’s Quick The Quick Conclusion Appendixes Analysis—and Why Costing Tool Costing Tool in and When Should Action: Country It Be Conducted? Case Studies The analysis also ignores the cost of targeting, Haku Wiñay provides a three-year as the program was layered on existing social productive EI intervention for rural assistance programs and used Panama’s agricultural households. Rural households existing social registry to identify the poor in the subsistence economy receive and vulnerable. Overall administrative costs technical assistance and training to develop were also low, at 9 percent of program costs, productive skills and enhanced linkages with 4 percent going to service providers, to markets, training, and basic assets to 1 percent going to staff training, 1 percent develop rural businesses. The program going to Monitoring and Evaluation, and 3 is delivering four EI components: percent going to other administrative costs. • Skills training: Farmers receive technical assistance in PERU: THE HAKU WIÑAY PROGRAM implementing simple, low-cost technology innovations. Economic growth in Peru was continuous and sustained between 2005–15 (World • Productive asset transfer: This Bank 2017). However, growth was component promotes inclusive disproportionately in urban areas, especially rural businesses by helping farmers around the capital city, Lima. Although organize into business associations poverty rates declined overall, significant and prepare business plans and gaps exist between urban and rural areas, transfers productive assets to them with the poverty headcount falling from by including them in competitive about 25 percent in 2008 to less than government funding programs. 15 percent in 2018 in urban areas and • Coaching/mentoring: Coaching/ from 61 percent in 2007 to 41 percent mentoring helps participants develop in 2018 in rural areas (INEI 2020). savings plans and teaches them basic accounting skills. It also focuses on To support smallholders in rural areas, developing and maintaining healthy in 1991 the government created the housing, such as safe cookstoves, water Cooperation Fund for Social Development and solid waste management, vegetable (FONCODES). FONCODES provided gardens, and a barn for small animals. technical assistance to small farmers in its early years, funded primarily by donors. • Market linkages: Delivered through a specialized training session, this The government later funded programs component helps facilitate access aimed at improving the human capital of to markets, by creating value chain small farmers (Haku Wiñay/Noa Jayatai) and linkages. It helps farmers purchase medium-size farmers (Agrorural). In 2012, productive inputs and sell farm and FONCODES and Haku Wiñay were tasked, off-farm products; it also develops as part of the newly created Ministry of agriculture infrastructure. Development and Social Inclusion (MIDIS), with implementing the fourth pillar (EI of the working-age population) of the National Development and Social Inclusion Strategy. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 12 Introduction What Is a Cost PEI’s Quick The Quick Conclusion Appendixes Analysis—and Why Costing Tool Costing Tool in and When Should Action: Country It Be Conducted? Case Studies The cost analysis was based on the program’s About 5 percent of the cost of the program first cycle of implementation (2021), using was used to integrate programs beneficiaries actual expenditure data from Ministry of into markets, primarily by organizing fairs Finance. Total program expenditure was S/. at which households sold their products/ 260.7 million (US$125.2 million in 2017 services. About 5 percent of the total cost PPP) for 175,081 beneficiary households, of the program went to staff costs, and yielding an annual program cost of US$715 another 5 percent went to administrative per beneficiary household (figure 3). costs, including services, capital goods, and other goods for programs management. The program shares organizational and Figure 3 Overall Unit Cost (per institutional capacity with other delivery household) for three country systems and implementing agencies as part of cases in PPP Peru’s national social protection sector. Use Cost per household (US$ PPP 2017) of an existing targeting system (SISFOH) and territorial information systems (MIDIStrito, 1825 Mi Region) kept expenses low. Because of complex institutional structures and 1185 standardized government accounting lines, it was not possible to estimate the cost of 715 staff time used to deliver program activities. Figure 4 Breakdown of costs of Peru’s Peru Malawi Panama Haku Wiñay Program (percent of total) Delivering productive assets to beneficiary 0% 5% Monitoring and evaluation costs Other costs households accounted for 38 percent of 5% Staff costs total expenditures, followed by delivering 5% Market ingergration/linkages coaching/mentoring services (27 percent 19% Skills training of the total cost) (figure 4). Coaching was provided to households using community structures; it included technical assistance and 27% Coaching capacity-building on the use of productive assets and enhanced technologies (including home improvements) using a farmer-to- farmer training model (called Yachachiqs). 38% Asset transfer Nineteen percent of program expenditure was used to deliver technical skills training. Specialized technical assistance and training (including financial literacy Note: Some beneficiaries received a Conditional Cash training) was provided to selected Transfer as part of the "Juntos" program. Since the overlap does not necessarily respond to an intentional groups of households for implementing design, it is therefore not included in the final cost. and managing business activities and linking their businesses to markets. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 13 Introduction What Is a Cost PEI’s Quick The Quick Conclusion Appendixes Analysis—and Why Costing Tool Costing Tool in and When Should Action: Country It Be Conducted? Case Studies MALAWI: CONCERN WORLDWIDE’S • Savings and financial access: All GRADUATION PROGRAM beneficiary households were included in VSL groups. Concern worked Between 2017 and 2021, Concern Worldwide closely with village agents, whom implemented a graduation program in Malawi, it trained to provide support and known locally as Tiwoloke. The program was capacity building for the groups. designed to simultaneously boost livelihoods and income, provide access to financial • Productive asset transfer: Alongside services, improve people’s self-confidence, business skills training, graduation and reduce social exclusion. It targeted 8,000 households were advised on how to households (approximately 40,000 direct identify suitable income-generating beneficiaries) including (a) 2,000 households activities (IGAs). After a suitable IGA that received a comprehensive package of had been identified and business skills support over 18 months, comprising time- training delivered, case workers worked bound regular and predictable income- with participants to develop business support, market-driven technical and business plans. After completion and approval skills training, a capital transfer, and access of the business plans, graduation to community-based savings facilities, households received a capital transfer and (b) 6,000 households within the same of MK 96,000 (US$396 in 2017 PPP) community that received a smaller package to either initiate a new IGA or boost of support that included training on climate- an existing one. Graduation households smart agriculture techniques and support also received technical training related to access financial services. Components to their IGA in various income- of the program included the following: generating activities (such as Climate Smart Agriculture, tailoring, carpentry, • Cash transfers for consumption support: baking, motorbike mechanics, brick Graduation households were given MK laying, and haircutting). The sale of 15,000 (US$62 in 2017 PPP) a month fish, production and sale of agricultural over either 12 or 18 months.12 They produce and rearing of livestock were used the consumption support mainly the IGAs most commonly engaged to buy food and household items, pay in throughout the program. school fees, and cover health expenses. The program adopted a two-pronged • Skills training and coaching: Case approach—targeting a subgroup of workers (field monitors) made individuals as well as the wider community— bimonthly visits to each graduation in order to help create an enabling household, during which they discussed environment for sustainable movement a wide range of topics, including out of extreme and chronic poverty. performance of income generating activities, health and nutrition, hygiene Total expenditure for the five-year and sanitation, budgeting and savings intervention was €7.9 million. With 8,000 behavior, life skills, long-term goals beneficiary households, the cost per household and (more recently) COVID-19. They was €990 (US$1,185 in PPP 2017 (Figure 3)). also followed up on the application of learning from other specific activities such as climate smart agriculture training  and  gender  transformation sessions. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 14 Introduction What Is a Cost PEI’s Quick The Quick Conclusion Appendixes Analysis—and Why Costing Tool Costing Tool in and When Should Action: Country It Be Conducted? Case Studies Consumption support (cash transfers) Skills training included business skills accounted for just 7 percent of the total trainings, which were given only to the cost of providing asset transfers to 2,000 2,000 graduation households, and broader households (about 3 percent of the total community trainings in food processing, cost) (figure 5). The main cost drivers were preservation, and home gardens to create the human resource–intensive components: an enabling business environment. coaching/mentoring (14 percent of the total cost) and natural resource management Because of the multidimensional graduation (13 percent). Natural resource management program design and the complex involved specialized training of lead farmers environment, miscellaneous administrative and the setting up of demonstration plots. costs were the biggest cost driver (17 percent of the total cost). These costs included costs for offices, staff accommodations and transport, start-up meetings, the setting up Figure 5 Breakdown of costs of of a Customer Relationship Management Malawi’s Tiwoloke graduation program (CRM) tool, capital expenditure (purchase of (percent of total) hard assets), and other smaller administrative costs. The high administrative costs partly 0% 1% Support to government partners reflected the fact that the program had to 1% 3% 3% Cost of service providers adapt to the challenges posed by COVID-19. 3% Covid response 5% Staff cost accounted for 10 percent of the 6% Facilitate access to financial services total cost. To ensure high implementation 6% Market intergration/linkages quality, the program spent 11 percent 7% Asset transfer on M&E, which included quarterly and 10% Skills training annual review meetings, monitoring/ Health supervision visits, and surveys, including 11% Gender annual performance surveys. The cost of Cash transfer targeting/identifying program recipients was 13% Staff cost included in the M&E budget for the first Monitoring & evaluation cost year. This targeting included community- 14% Natural resource management based wealth ranking and selection surveys. Coaching Other administrative 17% Another 12 percent of the program cost went to delivering gender (6 percent) and health (6 percent) components. About 5 percent of program cost was used to deliver skills training, 3 percent went to facilitating access to financial services, and another 3 percent supported with market linkages. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 15 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Conclusion EI programs are designed to bring about Accurate costing is a first step in conducting sustainable changes in well-being, especially cost-effectiveness analysis. Program teams by people living in extreme and chronic frequently conduct impact evaluations, but poverty. In 2021, EI and graduation cost data are often not available or not in programming served an estimated 92 a format that is conducive to cost-benefit million people (directly or indirectly) analysis. Costs are rarely disaggregated in 75 countries (Andrews et al. 2021). by component, as budgeting/financial These programs are now a key feature monitoring uses standard accounting lines. of national social protection systems. The costing tool presented here, along with To support transformative and sustained technical assistance provided by PEI, can changes in livelihoods, practitioners and provide the cost information needed for policy makers need to understand how cost-effectiveness analysis, especially at these programs are implemented—including the household level. Real-time operational how they operate within existing systems research, such as process evaluations and and institutional structures—and how other operational documentation (profiling), much they cost. Governments and funders could incorporate some costing aspects, which are interested in the potential return on the Quick Costing Tool can help analyze. investment of these programs, which often have higher price tags than traditional Qualitative approaches can complement social safety nets. A robust understanding costing; they can be especially useful in of their cost and return on investment can identifying opportunity costs for program help make the case for EI programs and beneficiaries. Use of the costing tool can support their implementation and scale-up. also support efforts to improve budgeting and accounting data and systems, including The PEI Quick Costing Tool helps data collection at the local, subnational, and practitioners understand cost drivers. national levels, by governments and NGOs. Adoption and expanded use of the tool As newer programs collect, systematize, by country teams in diverse contexts and and share their costing information, PEI for different program bundles can help will be in a better position to earmark development partners optimize program resources, make cross-country comparisons costs and move these interventions to scale. to benchmark costs, and discuss costs in policy dialogues with national governments to move EI programs to scale. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 16 Introduction What Is a Cost PEI’s Quick The Quick Costing Conclusion Appendixes Analysis—and Why Costing Tool Tool in Action: and When Should Country Case It Be Conducted? Studies Appendixes The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 17 Appendix A Cost Breakdown of Government- and NGO-Led Economic Inclusion Programs The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 18 Figure A.1 Cost breakdown of economic inclusion programs, by region and funding source (percent of total) a. Sub-Saharan Africa, government-led Benin, Burkina Faso, Cameroon, Support to Communes and Communities Youth Employment and Social Safety Net for the Expansion of Social Services Skills Development Project 0% 0% 1% 1% 1% 3% 5% 8% 5% 8% 9% 15% 12% 14% 16% 17% 28% 60% 57% 38% Local development Staff Communication Grant Targeting Public works Communication Skills training Targeting Staff Emergency cash Other Monitoring and Other Monitoring and Public works transfer Cash transfer evaluation cost Public works evaluation cost Targeting Cash transfer Côte d‘Ivoire, Democratic Republic of Congo, Ghana, Productive Social Safety Net Project Eastern Recovery Project Support Rural Income Generation of the Poorest in the Upper East Region Project 1% 0% 1% 1% 2% 1% 3% 4% 8% 3% 12% 14% 17% 24% 86% 27% 67% 29% Coaching Targeting Communication Other Targeting Other Communication Grant Staff Public works Monitoring and Skills training Staff Cash transfer Asset transfer Local development evaluation cost Grant Skills training Rwanda, Togo, Zambia, Minimum Package for Graduation Employment Opportunities Girls’ Education and Women’s for Vulnerable Youth Project Empowerment and Livelihoods Project 1% 1% 0% 0% 3% 1% 1% 2% 4% 4% 11% 6% 2% 4% 1% 5% 8% 14% 15% 38% 30% 71% 44% 35% Other Insurance Targeting Public works Communication Skills training Communication Public works Staff On job training Targeting Staff Staff Asset transfer Monitoring and Employment int. Other Grant evaluation cost Grant Monitoring and Communication Skills training evaluation cost Vocational training Coaching The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 19 b. Sub-Saharan Africa, NGO-led Ethiopia, Malawi, Resilience Programming with the Graduation Model Graduation and Evidence Building for Structural Dialogues 0% 1% 0% 0% 1% 1% 0% 1% 2% 2% 1% 6% 12% 11% 15% 15% 16% 21% 50% 45% Targeting Communication Skills training Grant Monitoring and Cash transfer Savings group Other evaluation cost Grant Communication Cash transfer Savings group Staff Local development Staff Skills training Other Monitoring and Local development evaluation cost South Sudan, Uganda, Building Resilience through Asset Graduating to Resilience Creation and Enhancement 0% 0% 0% 0% 27% 33% 33% 67% 39% Communication Communication Grant Staff Coaching Cash transfer Cash transfer Monitoring and Staff evaluation cost c. South Asia, government-led India, India, India, Bihar Rural Livelihoods Promotion Andhra Pradesh Rural Inclusive National Rural Livelihood Project Society, Rural Development Growth Project Department, Government of Bihar 0% 0% 0% 0% 0% 1% 2% 6% 1% 9% 1% 2% 6% 4% 9% 10% 16% 10% 11% 25% 11% 24% 15% 17% 46% 50% 24% Communication Specialized funds Communication Credit/loan Monitoring and Local development Vocational training Staff Monitoring and Staff evaluation cost Staff Monitoring and Targeting evaluation cost Other finance Communication Targeting evaluation cost Capitalization support Local development Other Producer group Capitalization support Market links Savings group Asset transfer Market links formation Savings group Human development The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 20 d. South Asia, NGO-led Bangladesh, Pakistan, Targeting the Ultra Poor Building Disaster Resilience in Pakistan 2% 1% 1% 6% 13% 5% 22% 18% 23% 30% 36% 32% Health Communication Monitoring and Other Monitoring and Other evaluation cost Staff evaluation cost Coaching Skills training Vocational training Credit/loan Asset transfer Extension services Other finance Staff e. Middle East and North Africa, government -led Republic of Yemen, Republic of Yemen, Smallholder Agricultural Production Restoration Yemen Emergency Crisis Response Project and Enhancement Project 1% 1% 1% 1% 1% 0% 5% 13% 2% 18% 23% 94% 42% Extension services Targeting Communication Staff Skills training Public works Monitoring and Cash transfer Monitoring and Staff evaluation cost evaluation cost Asset transfer Communication Local development f. East Asia and Pacific, NGO-led g. Latin America and the Caribbean, NGO-led Philippines, Ecuador, Transform Program, Graduation Model Approach International Care Ministries 0% 0% 1% 3% 2% 4% 1% 5% 12% 8% 20% 16% 25% 63% 41% Communication Other Other finance Vocational Asset transfer Staff Targeting training Skills training Cash transfer Monitoring and Asset transfer Monitoring and evaluation cost Staff evaluation cost Local development Cash transfer The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 21 Appendix B Types of Economic Inclusion Interventions Captured in the Costing Tool The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 22 Types of Economic Inclusion Interventions captured in the costing tool Intervention Description Cash transfer Conditional or unconditional cash transfers to support consumption Public works Payments made in return for employment (cash for work, food for work) In-kind transfers Physical goods, such as food rations, emergency food supplies, supplementary feeding, clothes, school supplies, and agricultural inputs Near cash Benefits such as food stamps, vouchers, coupons, fee waivers, and exemptions Lump-sum cash grant Business grants provided to beneficiaries, usually as a lump sum (productivity grants, start-up grants) Productive Asset/ Transfers of assets or inputs such as cows, seeds, and fertilizer input transfers Matching grants Co-financing provided to beneficiaries to match their own contributions, such as start-up grants provided to beneficiaries who are able to meet a minimum threshold of capital investments Loan Formal or informal loan provided to set up businesses Investment funds to Business capital provided to self-help or saving groups in rural areas to provide self-help groups and self-employment, training, social mobilization community-based organizations Insurance Health, life, disaster and extreme weather, and other forms of insurance Coaching/mentoring Guidance, provided in relatively unstructured, conversational way, to enhance beneficiaries’ knowledge Skills training Time-bound structured teaching that transfers specific skills and knowledge, such as literacy and numeracy, financial literacy/capacity training, and entrepreneurship/business management training Vocational training Training on sector-specific skills or knowledge On-the job training Paid or unpaid training internships and apprenticeships Wage employment Interventions aimed at helping participants gain wage employment, by, for example, providing facilitation/ access to information on jobs, establishing a pool of resumes, providing job placement intermediation assistance, and working with the private sector to create job opportunities Market integration/ Strategies may include establishing new and/or developing existing producer organizations, linkages facilitating access to improved inputs and/or technology, linking beneficiaries to service providers and local/regional/national/international buyers, linking beneficiaries to infrastructure programs, and providing agricultural extension services Access to financial Interventions that facilitate access to financial services, such as savings, loans, and insurance. services Can be delivered using training and/or coaching/mentoring Support for Activities aimed at promoting the effective use of natural resources, reducing emissions natural resource from livelihood activities, and mitigating climate change, through workshops and awareness management and campaigns adaptation to climate change The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 23 Notes 1 Quick costing tool is an excel-based tool available on request to program teams who want to analyze program costs. The tool can be applied to both government- and NGO-led EI programs. Along with the tool, PEI also provides an instruction manual to program teams and peer-to-peer guidance for program teams on how to enter program costs. 2 This note does not cover the measurement of cost-effectiveness, which requires impact evaluation results. Rather, it makes the case that program cost analysis informs cost-effectiveness analysis. 3 As part of PEI’s next website update, the tool will be made available on the PEI data portal for open access. 4 Financial cost is the value of market-traded goods and services; economic cost can include mar- ket-traded value and the value of nontraded resources in terms of opportunity or shadow cost. Financial cost analysis includes only resources for which there is a monetary expenditure; economic cost analysis also includes the value of government staff time, for instance, in addition to monetary expenditures. 5 Different organizations may have different understandings of different terms. For some, for example, overhead refers to indirect costs; for others, it refers to a service margin or, in other words, operating costs for implementing or managing a program. The costing tool standardizes this terminology and pro- vides guidance on where different costs should be assigned. 6 The tool measures the adequacy of financial support components (cash transfers, grants/asset trans- fers, and public works wages) by comparing the benefit amount with household consumption. Adequacy is calculated by dividing the cost of a component by the average annual per capita consumption of the poorest 20 percent of households in the country. 7 Adequacy estimates will be shared with program teams that share their costing data. 8 The real value of the benefit amount is calculated using inflation estimates from the International Monetary Fund’s World Economic Indicator. 9 PPP Conversions (US$ 2017) = [intervention cost(t) ÷ CPI (2017)] ÷ [ICP (2017)]. This is a standard- ized World Bank methodology to convert local currency units into US$ using Consumer Price Index (CPI) and International Comparison Program (ICP) factors published by World Bank on a periodic basis for all countries. 10 This figure includes only the cash transfers themselves, not the costs of making the transfers, which was excluded because the transfers were delivered as part of a much larger social assistance programs implemented by the government (Red de Oportunidades). 11 Although the tool allows for the accounting of government staff cost, it is often not feasible to accurately measure the staff time used by government staff in the implementation of program activities. Therefore, cost estimates for programs delivered by governments underestimate the true cost of the pro- grams. Ideally, programs should measure the time spent by government and other staff who are not paid directly by the programs as part of its M&E systems. Doing so is especially important for cost-effective- ness analysis, where imprecise cost estimates can result in inaccurate analysis. 12 The program was delivered in three cohorts. Cohort 1 beneficiaries received transfers for 18 months; cohort 2 and 3 beneficiaries received transfers for 12 months. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 24 References Andrews, Colin, Aude de Montesquiou, Inés Arévalo Sánchez, Puja Vasudeva Dutta, Boban Varghese Paul, Sadna Samaranayake, Janet Heisey, Timothy Clay, and Sarang Chaudhary. 2021. The State of Economic Inclusion Report 2021: The Potential to Scale. Washington, DC: World Bank. https://openknowledge.worldbank.org/ handle/10986/34917. Banerjee, Abhijit, Esther Duflo, Nathaneal Goldberg, Dean Karlan, Robert Osei, William Parienté, Jeremy Shapiro, Bram Thuysbaert, and Christopher Udry. 2015. “A Multifaceted Program Causes Lasting Progress for the Very Poor: Evidence from Six Countries.” Science 348 (6236): 1260799. Bossuroy, T., M. Goldstein, B. Karimou, et al. 2022. “Tackling Psychosocial and Capital Constraints to Alleviate Poverty.” Nature 605: 291–97. https://doi.org/10.1038/s41586-022-04647-8. Brown, Elizabeth D.; Tanner, Jeffery C. 2019. Integrating Value for Money and Impact Evaluations: Issues, Institutions, and Opportunities. Policy Research Working Paper No. 9041. World Bank, Washington, DC. World Bank. https://openknowledge.worldbank.org/handle/10986/32586 License: CC BY 3.0 IGO. Instituto Nacional de Estadística e Informática (INEI). 2020. Evolución de la pobreza monetaria 2008–2019: Informe técnico. Lima. Ministerio de Desarrollo e Inclusión Social (MIDIS). 2014. Estrategia nacional de desarrollo e inclusión social “incluir para crecer.” Lima. World Bank. 2014. Panama: Locking in Success: Panama Systematic Country Diagnostic. Washington, DC. ———. 2017. Peru: Systematic Country Diagnostic. Washington, DC. documents.worldbank.org/curated/ en/919181490109288624/ Peru-Systematic-Country-Diagnostic. The Partnership for Economic Inclusion | In Practice | A Standardized Approach to Estimating the Cost of Economic Inclusion Programs | 25 The Partnership for Economic Inclusion (PEI) is a global partnership with a mission to support the adoption of national economic inclusion programs that increase the earnings and assets of extremely poor and vulnerable households. PEI brings together global stakeholders to catalyze country-level innovation, advance innovation and learning, and share global knowledge. PEI is hosted by the Social Protection and Jobs Global Practice of the World Bank. In Practice