Spending better on human development in an age of austerity

The unprecedented scale of global cuts to official development assistance (ODA) coupled with downgraded economic growth prospects presents a critical challenge to sustaining progress in human development. In many countries, this calls for a radical revision of the financing strategies for human development and child rights, write Genesis's Tomas Lievens and Aaron Bermange

In this fiscally constrained environment, the simultaneous pursuit of three interconnected strategic pillars has become essential to preserve social gains. The first pillar is the imperative to maximise revenues for social sectors, exploring innovative and sustainable domestic financing mechanisms to lessen dependence on volatile ODA flows.

The second is to allocate expenditure to high-impact interventions, necessitating a shift toward evidence-based budgeting that prioritises programmes with the highest proven social return on investment, moving away from lower-priority spending. The strive for allocative efficiency must include the pursuit of equity in the financing of and access to social services. A rights-based approach to development can unlock substantial development gains at the margin through the extension of services to unserved or underserved populations. 

Finally, the third pillar requires an unwavering commitment to maximise operational efficiency of social expenditure - meaning every dollar spent must yield the greatest possible outcome through streamlined processes, reduced waste and enhanced service delivery effectiveness.

The failure to effectively and immediately apply these three strategic pillars risks depleting social service delivery, with damaging consequences for long-term economic development. 

Human development outcomes, which have seen decades of hard-won progress, are now projected to regress in countries that don’t adapt to this new fiscal reality. Child rights are acutely vulnerable, as cuts often disproportionately affect essential services like health, nutrition, and education, threatening to reverse progress on poverty reduction, survival rates and educational attainment. 

Development partners face their own limitations, with restricted ability to commission full-scale public expenditure reviews (PERs) that require months or even years of intensive data collection and analysis. 

A transformative shift is occurring in how to conduct analysis to drive for improved development outcomes. Genesis is leading this shift, developing innovative tools to enable governments and their development partners to maintain access to reliable diagnostics of a social sector’s performance.

A new model for public expenditure reviews 

The PER Focus and PER Plus approach can be deployed rapidly - in just three to six weeks - providing decision makers with a highly cost-efficient diagnostic of expenditure performance. The transformation chain underpinning the approach tracks the lifecycle of social sector spending from the raising of resources to allocation decisions taken by government, through to measures of wastefulness or inequities in service delivery, and how this impacts on human development outcomes.  

By addressing the constraints and ambitions of both central government and line ministries, the approach fosters consensus on the obstacles to high performance, fast-tracking policy dialogue toward the development of flagship reforms. 

For the country of focus, proprietary data can be seamlessly benchmarked against country peer groups or international targets, enabled by a data lake that collates vast swathes of previously disparate global data. Trends in performance over time are neatly visualised to map the momentum for change and the pace of progress toward government commitments.

We have applied this PER with governments, foundations and development partners across the Young World, often with exceptional success:

I have found the insights that emerge from this approach to be invaluable in UNICEF’s engagements with the senior policymakers in Kyrgyzstan (including the Presidential Administration) and the IMF’s Article IV mission. The holistic framework gives rise to critical and strategic talking points, assisting the integration of critical child rights issues with high-level reform dialogue in a very concrete manner, UNICEF Kyrgyzstan’s Samman Thapa told us. 

Accompanying the PER Focus, a performance brief provides a compelling narrative of key insights, proposing flagship priorities to improve spending performance.

The PER Plus contains deeper analysis including subnational deep dives and a richer set of infographics, driving decisions around which weak links to galvanise time and resources. Complementing this, a comprehensive diagnostic report incorporates country-specific research into contemporary sector policies and strategies, with the latest insights on public financial management (PFM) informing the ranking of reform options by their technical, economic and political feasibility.

The PER Focus and PER Plus approach meets the growing need for agile diagnostics which leverage the significant investment to-date in global data generation using leading-edge technologies. It’s also significantly cheaper and quicker to produce than comparable policy diagnostics. 

In an age of austerity, the imperative to spend better on human development begins with transforming how we uncover opportunities for progress.