Monitoring the Social Impact of the Economic Crisis in West & Central Africa

Quentin Wodon

Development Dialogue on Values and Ethics

Presentation at HDN-PREM Workshop

June 11, 2009

ContextLarge impact from the economic crisis

Examples include :(1) Food prices (many countries had increases in prices

of 35% or more, and food prices remain higher than before); (2) Remittances (expected drop of 4.4% in

2009 from base level of $20 billion); (3) Prices of export commodities (drop in oil prices; cotton; others); (4) wealth effects (Nigeria’s stock exchange index has

fallen 60%, Kenya’s 40%); (5) risk of drop in ODA; etc.

ContextLimited data and analytical capacity

Examples include :(1) Most countries have one LSMS or extended CWIQ

survey every 5 years or so; (2) Many countries lack income and employment modules in their surveys; (3)

Statistical offices are cash-trapped, don’t have funds for M&E and are donor dependent; (4) Existing economic

indicators are often not nationally representative (inflation data for capital city only); (5) analytical

capacity to use existing data is weak; etc.

Suggestions

1. Do the best with what you have - this includes using simulation-based M&E;

2. Implement light data collection mechanisms that are low cost but nevertheless informative;

3. Rely on qualitative data even if it is small scale and not statistically representative

(and progressively build statistical and analytical capacity, as well as culture of M&E and evaluation)

1. Do the best with what you have - this includes using simulation-based M&E

Illustration: Likely Impact of food price crisisExample 1: Impact on aggregate poverty measuresExample 2: Geography of impactExample 3: Macroeconomic multiplier impactsExample 4: Targeting of policy responses

Question: what is the level of analysis or monitoring needed given the type of policies considered?

Answer: In many cases, the existing data is enough to answer the policy questions with reasonable accuracy

Example 1: Impact on Headcount of Higher Food Prices

Figure 1: Upper and Lower Bound Poverty Impacts

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Ghana Togo Guinee Nigeria SierraLeone

Gabon RDC Mali Liberia Niger

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Example 2: Likely Geography of ImpactsFigure 1: Ghana Poverty Map and Impact of 50 Percent Price Increase for Five Food Items

(A) Poverty Map for 2006 (B) Upper Bound Poverty Impact

Source: Authors’ estimation using 2003 CWIQ and 2005/06 GLSS5 data.

Choice of poverty indicator matters often more than getting perfect M&E data

Headcount Poverty Gap

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Example 3: Multiplier effects Using SAMs

Example 4: Policy Responses: Subsidies

•CD curves show share of consumption of a good by cumulative share of population ranked by consumption

•Best goods to subsidize are those with highest CD curve (Kerosene, and to a lower extent firewood and bus transport)

•CD curves can also be used for balanced budget tax reforms

2. Implement light data collection mechanisms that are low cost & informative

4 examples

(1) Economic Crisis and mechanisms of solidarity survey in SenegalCost at $35,000 for 1,000 observations in greater Dakar areaLink with national household survey (predicted consumption)Various modules on impacts (quantitative & subjective)Modules on 4 types of responses or coping strategies: 1)

household (labor supply, expenditures); 2) state-funded programs; 3) NGOs and FBOs; and 4) private transfers

(2) Evaluation of Liberia & SL cash-for-work programsCost at $20,000 or less for 1,000 individualsLight questionnaire with info on 3 main topics: 1) household

characteristics (to predict consumption and targeting performance); 2) labor supply (to assess substitution effects); and 3) perceptions regarding infrastructure projects funded

2. Implement light data collection mechanisms that are low cost & informative

4 examples

(3) Individual perceptions and priorities of the population surveys Implemented in Burundi & DRC at time of PRSP preparationCost of $50,000 for 3,000 individuals in BurundiGeneral questions on well-being, priorities, etc., and

possibility to add special modules (coffee in Burundi)

And (4) Special modules added to already planned surveysBurkina Faso 2003 survey (after 2002 coup in Cote d’Ivoire)

included special module on remittances to assess shock

3. Rely on qualitative data even if it is small scale and not statistically representative

2 examples

(1) PRSP preparation in Cape VerdeNo new survey data with good consumption informationRapid qualitative assessments with focus groups: key issue

is unemployment, but not in all areas, plus feedback on social programs implemented by governments

(2) Participatory poverty monitoring in CARPPA key to understand challenges confronted by population

(issues of conflict and governance, incl. inn service delivery)Concept of participatory monitoring for PRSP implementation

And build statistical and analytical capacity, as well as culture of M&E and evaluation