44889 Capacity Development briefs S h a r i n g k n o w l e d g e a n d l e S S o n S l e a r n e d Learning by Doing: The Japanese phrD FunD anD CapaCiTy DeveLopmenT by David potten, head, Trust Fund program management The Government of Japan has been supporting capacity development through the World Bank for 17 years. It has provided grants under its Policy and Human Resources Development (PHRD) Fund to support graduate scholarships, training activities, and preparation and implementation of loans and credits. Various evaluations have shown all three types of assistance to be effective, and grants to sup- port project preparation in particular have generally been judged highly successful, because they have contributed to rapid and high-quality preparation of lending operations. A recent independent evalua- tion has shown that these grants have also contributed substantially to human capacity development in recipient countries, because recipient execution has led to strong ownership, the nature of project prepa- ration has put a premium on capacity development needs, and the design of the program has favored capacity development activities. The Government of Japan has been supporting The Joint Japan / World bank graduate capacity development through its Policy and Human scholarship program Resources Development Fund since 1990. Since the fund's inception, its key objectives have been to The Joint Japan / World Bank Graduate Scholarship "develop human resources in developing member Program was launched in 1987 before the main PHRD countries of the Bank and to assist developing member Fund, but was incorporated within the fund after 1990. countries [to] formulate and implement development The program's mission is to award scholarships for policy."1 Since 1990 Japan has contributed more than graduate studies to well-qualified mid-career profes- $2.3 billion to the PHRD Fund.2 This figure includes sionals, who are then expected to apply their newly more than $186 million in contributions to the Joint acquired knowledge and skills in promoting socioeco- Japan / World Bank Graduate Scholarship Program, nomic progress in their own and other developing coun- more than $43 million to World Bank Institute (WBI) tries (WBI 2007). Between 1987 and 2007, the program capacity development programs, and more than $1.6 awarded more than 3,750 scholarships for study in 150 billion to the PHRD Technical Assistance Program, universities in 32 World Bank member countries. much of which has been used to support project prepa- Since 1994 a series of tracer studies has provided ration grants. the Government of Japan and World Bank with feed- The World Bank and Government of Japan give back on program graduates, which it has used for the a high priority to monitoring the achievements of continual improvement of the overall program's per- grant-supported programs and evaluating their results formance. The most recent tracer study (World Bank whenever possible. This Capacity Development Brief summarizes some of the conclusions from evaluations of the three major capacity development programs that 1PHRD Letter of Agreement, July 30, 1990. PHRD has supported. 2All dollar amounts are U.S. dollars unless otherwise noted. JUne 2008 nUMBeR 27 2007) investigated specific achievements in terms An overview of evaluation results from fiscal 2001 to of completion of studies, return to home country, 2006 (Khattri 2007) indicated generally improving employment, professional progress, and alumni per- trends for all WBI activities, using a range of variables. ceptions of the benefits gained. Key conclusions from the tracer study include the phrD and project preparation following: · More than 98.7 percent of scholars attained their PHRD has financed about 2,875 project preparation graduate degree, and the attainment rate has been grants, supporting development of World Bank lend- increasing over the years. ing operations in 144 countries. The major beneficia- · Almost 85 percent of the scholars returned to ries, each receiving more than 60 grants, have been either their home country (79.7 percent) or other Brazil, China, India, Indonesia, Mexico, Pakistan, the developing countries (4.8 percent). This figure Philippines, and Vietnam. has also been increasing over time. The World Bank views project preparation as the responsibility of the borrower. The Bank participates · Very few graduates were unemployed (1.5 per- in identification of possible lending activities and then cent) at the time of the study. Most are employed appraises the proposed loan, as prepared by the bor- in senior positions in government organizations rower. Only in exceptional cases does the Bank carry and with public service providers. out project preparation itself, and in such cases the · Scholars say that their new skills are recognized, Bank works very closely with the future borrower. and 60 percent indicated that their career progress Borrowers finance project preparation in various has been enhanced by the scholarship. ways. Some use their own resources (sometimes including funds borrowed under previous loans). The evaluation concluded overall that the graduate Some benefit from funds provided by bilateral donors, scholarship program "is achieving its goal at reason- but these tend to be highly country and sector specific. able cost. The overwhelming majority of scholars The World Bank's Project Preparation Facility provides attain their degrees, return to their countries, and advances against the anticipated loan to assist in engage in gainful employment that contributes to the preparation. The amount disbursed from the advance development of their countries" (WBI 2007). is then included in the subsequent loan value or must be repaid if no loan emerges. In recent years, however, Wbi Capacity Development grants PHRD project preparation grants have played a much larger role than other sources of external funding for The aim of the PHRD Capacity Development Grants project preparation. More than 30 percent of all Bank program is to support World Bank Institute programs operations between fiscal 2000 and 2006 benefited designed, developed, and delivered either solely by from PHRD project preparation grants. Their average WBI or jointly by WBI and partner institutions to help value was $650,000, of which the recipient disbursed build individual skills and strengthen organizations an average of about 75 percent. Countries in all the and societies as a whole. The program has been par- Bank's Regions used the grants for preparation of ticularly critical to its support for implementing multi- both International Development Association credits/ year, country-specific programs in Asia. grants and International Bank for Reconstruction and PHRD-supported activities are integrated into WBI's Development loans. larger program and have never been evaluated on their own; however, WBI attaches high importance to The impact of phrD project preparation grants continual evaluation of all its activities. A substan- tial proportion are subjected to "level 1" (participant Evaluations of the PHRD project preparation grants assessment) evaluations, and WBI conducts focused program were conducted in 2001 and 2007. The first evaluations to identify the broader impact of its work, covered fiscal 1988 to 1999 and observed that for example, covering unusually large events, work in specific countries, evidence from tracer studies, and analysis of the ratings produced by the World experience from working in association with specific Bank's Operations and Evaluations Department partners.3 Between fiscal 2005 and 2007, 111 PHRD- (OED) [show that] these PHRD-prepared invest- supported WBI activities were the subject of "level ments have higher development effectiveness 1" evaluations. These indicated generally high levels than investments prepared without PHRD grants. of participant satisfaction and a generally improving More significantly, the quality at entry of these trend; the proportion of participants reporting "overall PHRD-prepared investments, and the implemen- usefulness of the activity" increased from 79 percent in fiscal 2005 to 89 percent in fiscal 2007. This is con- sistent with long-term analysis of WBI performance. 3See, for example, Khattri (2007). JUne 2008 nUMBeR 27 tation of the corresponding investment opera- building in itself, the conclusion that such an impact tions by borrowers were also significantly better on capacity building exists deserves closer attention. compared to investments prepared without PHRD grants. The evidence also suggests that the grants how and Why Did project preparation grants have helped to improve policies, institutions, and support Capacity Development? capacity in the 143 countries that received them" (World Bank 2001, p. ii). The evaluation team categorized capacity-building An independent consulting company carried out the contributions at three levels: individual, organiza- second evaluation, which covered fiscal 2000 to 2006. tional, and operational environment (box 1). It confirmed, once again, that These PHRD grants had such an effective impact on capacity building for three main reasons: First, there the PHRD TA program remains a unique strategic was clear ownership of the grants by the recipients, instrument for providing technical assistance to because they executed the grants themselves. Second, improve the quality of [Bank-supported] projects. the project preparation phase appeared to be a critical The program's focus on upstream project prepa- entry point for capacity building, as explained below: ration, as well as its requirements that grants be untied and implemented directly by recipient · For most agencies involved in implementing devel- governments, are valued highly within the World opment programs, the first experience they have Bank and by member governments and have working with bilateral or multilateral development been key to its continued high relevance and agencies comes during project preparation. An effectiveness in strengthening development assis- agency that is new to the development process con- tance across many sectors and in all developing fronts a steep learning curve. Not only may there regions (Universalia 2007, p. xii). be new challenges within the agency's own area of technical expertise (e.g., a new approach to road This second evaluation carried out six country case construction or pensions administration), but the studies, and one of the strongest conclusions the organization will have to meet new requirements teams reached was that the grants had substantially related to financial management, procurement, envi- contributed to capacity building in the countries vis- ronmental and social safeguards, project manage- ited. Given that the primary purpose of these grants in ment, techniques such as logframe or critical path the view of most stakeholders was rapid and quality analysis, monitoring and evaluation, and audit. preparation of lending operations, rather than capacity Many of the skills that the agency first applies in box 1: Capacity Development Contributions at Three Levels at the individual Level · Increased knowledge, especially of prevailing international (specifically, World Bank) standards and procedures (procurement, logframe, and financial management) · Enhanced technical competencies through (a) workshops in financial management, monitoring and evaluation systems, and data collection and analysis, (b) experience in drafting proposals and terms of reference, and (c) working alongside more experienced experts and international consultants · Awareness of alternative working styles, for example, how to reach group consensus, how to listen to the views of other stake- holders, the value of "soft" investments to improve quality, and so on at the organizational Level · Improved organizational systems, such as financial management and procurement systems, project design, planning and management, and restructuring that leads to improved capacity to deliver programs · Implementing more decentralized management systems that are more efficient and participatory, allocate tasks more appropri- ately along the national-local spectrum, and work with civil society · Better coordination and information sharing among different agencies, such as interministerial discussions to agree on priori- ties, timeframes, and indicators at the operational environment Level · Increasing awareness at the policy level of the value of stakeholder participation for better project outcomes · Disseminating knowledge beyond the original group of local consultants trained through sharing of the training through local organizations · Building the capacity of the domestic consulting industry · Leveraging best practice in national contexts: The World Bank's requirements helped some implementing agencies to press national authorities for higher standards and good practice in project management and procurement systems, and so on. Source: Universalia (2008). project preparation will be needed, often scaled up, processes could have been improved. Other observers during subsequent project implementation. have noted that the program created no synergies; · During project preparation, speed is of the each grant has been country, institution, and proj- essence. Slow preparation delays all activities that ect specific and has not led to the sharing of results, follow; this results in heavy pressure on recipi- experiences, or lessons learned. The purpose in pro- ents and multilateral agencies to accelerate project ducing this Capacity Development Brief was to ensure preparation. that some of the broader lessons from the almost 20 · Fiduciary or safeguard issues may need special years' of experience in all three PHRD capacity devel- attention at the project preparation stage. The opment programs are more widely shared. capacity to approach environmental or social safeguard issues effectively or to handle finan- references cial management and procurement issues may be particularly weak for agencies preparing projects. Khattri, Nidhi. 2007. Annual Evaluation Review, High-quality attention to these issues is of par- FY06. Effectiveness, Outcomes, and Quality of ticular importance to other stakeholders, particu- WBI's Learning Programs: What Do es Evaluation larly because environmental and social safeguard Evidence Show? WBI Evaluation Study Studies issues may involve significant externalities. EG07-128. World Bank, Washington, D.C. Universalia. 2008. Evaluation of the Policy and Third, the PHRD project preparation grants were Human Resources Development Trust Fund, vols. specifically designed to emphasize their use in capac- I­IX. Montreal, Quebec. ity building. At least 90 percent of the grant had to be WBI (World Bank Institute). 2007. Joint Japan/World used to recruit domestic or international consultants; Bank Graduate Scholarship Program, Annual Report a maximum of 10 percent was available for additional 2006. World Bank, Washington, D.C. training activities or other necessary costs. World Bank. 2001. Development Impact, Japan Policy and Human Resources Development Fund. Resource Conclusion Mobilization and Cofinancing Vice-Presidency (now the Concessional Finance and Global Partnerships The project preparation grants component was Vice-Presidency, Washington, D.C. included in the scope of the Japanese PHRD Fund ----. 2007. Joint Japan World Bank Graduate partly because of a clear need to improve the qual- Scholarship Program, Tracer Study VII. Washington, ity and speed of preparation for World Bank lending D.C. operations; however, it is clear that this grant program has made a substantial and continuing contribution to Note: Copies of these documents can be found at the human and institutional capacity in the 144 benefit- following Web sites: www.worldbank.org/phrd and ing countries, particularly because recipient execution www.worldbank.org/wbi/scholarships. has meant recipient ownership and because the proj- ect preparation stage is a critical point at which capac- peer reviewers: ity-building requirements are needed and appreciated. What could have been done better? The evalua- Marie-Hélène Adrien, Universalia Management tion consultants suggested that some of the grant Group and Sajjad Ali Shah, The World Bank about World bank institute (Wbi): Unleashing the Power of Knowledge to Enable a World Free of Poverty The World Bank Institute (WBI) helps countries share and apply global and local knowledge to meet development challenges. WBI's capacity development programs are designed to build skills among groups of individuals involved in performing tasks, and also to strengthen the organizations in which they work, and the sociopolitical environ- ment in which they operate. Wbi Contact: Mark Nelson; program manager, Capacity Development Resource Center Tel: 202-458-8041, e-mail: mnelson1@worldbank.org Ajay Tejasvi; program coordinator, Capacity Development Resource Center Tel: 202-458-4064, e-mail: anarasimhan@worldbank.org Visit our website for more information and download the electronic copies of all Capacity Development Briefs at http://www.worldbank.org/capacity JUne 2008 nUMBeR 27