Agriculture Public Expenditure Workshop organized by the Strengthening National Comprehensive Agricultural Public Expenditure in Sub-Saharan Africa Program Dar es Salaam, June 2013 Accra, Ghana, April 13-14, 2011

1. STRENGTHENING NATIONAL COMPREHENSIVE
AGRICULTURAL PUBLIC EXPENDITURE IN SUB-SAHARAN
AFRICA
Agricultural Public Expenditure Training Workshop
Accra, Ghana
(April 13 -14, 2011)
MODULE 5
SPECIALIZED STUDIES:
SECTORAL MEDIUM TERM EXPENDITURE FRAMEWORK
(MTEF)

2. CONTENTS
I) BACKGROUND
II) OBJECTIVE/SCOPE
III) METHODOLOGY
IV) DATA SOURCES
V) PROCESS
VI) TA TEAM
VII) TIMELINE

3. I) BACKGROUND
• SSA countries are working to strengthen the link between ag. policies,
strategies and budget processes and allocations (with support from
CAADP processes)
• CAADP is supporting post-compact strategy, focusing on assisting Govts.
to translate sector strategies into medium term investment plans (MTIPs)
• MTEF development comprise a specialized study, and builds on other
backward-looking components (Basic Ag. PER, PETS, IE), and is a
forward-looking tool to promote coherence
• MTEF has three main elements:
– projections of the aggregate resource envelope or budget ceilings for the
medium term provided from the MoF
– bottom-up cost estimates of the sector programme
– a political and administrative process that integrates and reconciles the two

4. • Unlike the other specialized studies, the role of MTEF
TA is to provide technical advise and expertise of a
Govt-led process.
• There are template TOR for MTEF (A5.1), to help
ensure a checklist of key items for soundness,
country consistency and comparisons, and which
draw for their methodology on various relevant
reports, including (excerpts of others in Annex 5):
– Practitioner’s Toolkit for AgPERs (WB/DFID)
– Public Expenditure Management Handbook (WB)
– Linking the PRS with National Budgets
– Also see A5.2, A5.3, A5.4, A5.5
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

5. II) OBJECTIVES AND SCOPE:
Objectives:
• To assist selected governments in sub-Saharan Africa to
strengthen their agriculture sector programming and
budgeting and the effectiveness of their public
expenditure in the sector through formulating
an agriculture sector MTEF.
• To support the CAADP Post-Compact process in enhancing
the draft MTIP, and to assist selected and eligible
governments to take the next step through establishing an
operational agriculture sector MTEF.
• To provide hands-on training and shepherding of key MOA
counterparts in formulating and institutionalizing the MTEF as
part of enhanced MOA budget processes, and promoting
performance-based budget allocations and execution for the
agricultural sector.
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

6. Scope:
Country/Sectoral Context
• Decision by govt. to formulate a sectoral MTEF is part of a policy
decision to shift in planning and budget processes towards a
a medium-term budget perspective, within a macro-economic
framework which projects the resources available to government.
• MTEF process also implies the adoption of a planning
mechanism which comprises the allocation of budget ceilings (by
MOF) to each sector, the formulation of sound sector investment
plans, a process to monitor programme effectiveness and, in its
most comprehensive form, includes a shift to performance based‐
budgets.
• It is important that the MTEF exercise is fully integrated into the
budget process.
• It is recognized that these country/sectoral prerequisites may be
evolving, and the MTEF specialized exercise can build on and
further promote them for the participating country.
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

7. MTEF Budget Coverage:
• It should represent consolidated government expenditure
in the sector, including both capital and recurrent budgets.
Country Selection: should meet key prerequisites -
• MoF has provided the necessary overall framework for task.
• Country circumstances are appropriate for an MTEF to be an
element of the PFM system, already initiated the process of
establishing a medium-term planning and budget system, and
agriculture is included as one of the sectors.
• An economy-wide public expenditure review has been conducted
recently, together with an AgPER.
• MoA has actively engaged with DPs with a view to moving towards
programme support.
• MOA has a signed CAADP country compact/agric strategy and a
sound sector investment plan (at least in draft form).
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

8. Sector Investment Plan….a key link:
• A vital element of a sector MTEF is a sound, multi-
year sector investment plan (MTIF)
• CAADP Country Roundtable Process
– Signing of country compact/agric sector strategy
– Progress in Post-Compact Stage, focusing on
translating agric strategy into a MTIP
• Sectoral MTEF task to be carried out in countries with
adequate progress in MTIP
• Role of TA team, with donor working group, will review
and enhance the MTIP and focus on assisting
government to take the next step by establishing
sectoral MTEF.
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

9. Institutional Scope:
• Institutional scope of agricultural sector, as defined
by COFOG, and scope of the MTIP, may determine
the institutions which will participate in the sectoral
MTEF.
• In most cases, MOA will be the main entity to be
covered; an early decision will be needed to include
and support other relevant sectoral ministries.
• MOF (and Planning, if existing) will be a key
collaborator in the task.
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

10. III) METHODOLOGY
(a) Overall process: Key steps in formulating sectoral MTEF/see Table
– Development of a macroeconomic/fiscal framework *
– Development of sector programme **
– Development of sector expenditure framework **
– Definition of sector resource allocation *
– Preparation of sector budget **
– Final political approval **
* Refers to responsibility of MOF; **refers to responsibility of MOA
(b) Development of an Agriculture Sector Programme: Formulation of a
MTIP is key element in operationalizing a MTEF. Five key elements
in the process are:
(i) Sector Investment Plan:
• TA team to review adequacy of draft MTIP, focusing on
portions in line with agreed scope of sectoral MTEF
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

11. Table: Six Stages of MTEF
STAGE CHARACTERISTICS
I. Development of
Macroeconomic/Fiscal
Framework
• Macroeconomic model that projects revenues and
expenditure in the medium term (multi-year)
II. Development of Sectoral
Programs
• Agreement on sector objectives, outputs, and activities
• Reviewand development of programs and sub-programs
• Programcost estimation
III. Development of Sectoral
Expenditure Frameworks
• Analysis of inter-and intra-sectoral trade-offs
• Consensus-buildingon strategic resource allocation
IV. Definition of Sector Resource
Allocations
• Setting medium term sector budget ceilings (cabinet
approval)
V. Preparationof Sectoral Budgets • Mediumterm sectoral programs based onbudget
ceilings
VI. Final Political Approval • Presentationofbudget estimates to cabinet and
parliament for approval
Source: PEMHandbook (WorldBank, 1998a: 47-51), adapted.

12. • Criteria to review and enhance soundness of MTIP:
– Consistent with the sector strategy
– Aligned with the national poverty reduction strategy
goals, particularly rural poverty reduction and food
security
– Evidence-based, built upon evaluations of the
performance of different sub-sectors and services
– Prepared following consultations with key actors
– Prepared in close collaboration with Development
Partners and based on realistic projections of
external resource availability
– Prepared with an explicit financing role for the
private sector
– Fully costed, based on sound assumptions
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

13. ii) Indicative Financing Plan
• Senior MOA management to decide on the scale, and
modality for financing the plan
• TA team to help develop a financing strategy to close gap
• MOA to decide whether to propose moving towards a
programme-based approach (PBA), or to follow a
traditional project approach
iii) Sector Programme Costing: Need to assess the extent
to which the costing of the investment plan is realistic. This
will involve:
• Examination of cost consistency across sub programmes‐
• Adequacy of standard costs applied (ex.: O&M costs)
• Incorporation of reasonable physical and price
contingencies
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

14. iv) Role of Donors:
• Close collaboration with DPs is vital
• DWG should be engaged in the process from outset
• The sector MTIF should build upon commitments
made by DPs when signing the CAADP country
compact, and should aim to enhance the
harmonization of donor assistance to the sector
v) Decentralized Units: Important to account for
countries with substantial fiscal decentralization.
Actions include:
• Enhance sub-national investment plans
• Adopt a “partial” MTEF
• Ensure decentralized units consider relevant factors
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

15. (c) Devt. of Agric Sector Expenditure Framework
• Purpose of MTEF: To strengthen link and
coherence between policy/strategy and budget and
introduce “results” orientation to agric budget.
• Proposed scaling-up funding for agric sector to be
based on performance assessment and sound
MTIP/proposals.
• Sectoral MTEF usually for 3 year period.
• MTEF to be based on consolidation of all projected
public expenditures in the sector on the basis
of investment plan proposals for new programmes,
together with on-going programmes, including
recurrent and capital expenditure.
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

16. (c) Development of an Agriculture Sector Expenditure Framework
(cont.)
Review sector options: As sector MTIP is being formulated, TA team to
emphasize identification and analysis of options or tradeoffs between
different investments, based on following key actions:
Using available sectoral Computable General Equilibrium or other
econometric modeling, identifying the main sources of growth in
the sector, trade offs between different sub-sectors, inter linkages‐ ‐
between agriculture and the rest of the economy, and the effects of
alternatives upon households
Deriving lessons from the sector AgPER, from PETS, and IEs,
in order to evaluate:
 Capital budget
 Recurrent budget
 Individual sub programmes and expenditures‐
Reviewing programmes & projections of expenditures at lower levels
At this stage, MOA, with the TA support, can review/decide (with
MOF) on a series of investment options for programmes and
expenditure items.
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

17. (d) Preparation of an Agriculture Sector Budget
• MOA/TWG to complete and reach consensus (internal) on sectoral MTIP
and MTEF.
• TWG to discuss with MoF the identified “financing gap” between projected
agriculture sector expenditure and the MTEF budget ceilings issued by
MoF.
• TA team to assist the MoA TWG and Management reconcile the sector
investment components with the announced budget ceiling, including a
strategy for prioritizing options and closing the financing gap, and reaching
consensus.
• Key outputs of budgetary process:
– Portfolio review of on-going projects
– Estimated budgets for a set of capital investment projects or
programmes
– Estimated budgets for modified (or retrofitted) on-going development
projects and programmes
– Estimates of existing and future recurrent budget commitments
– Sector budget to show full details for Yr. 1, projections for Yrs. 2+
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

18. (e) Recommendations
• A “strategic phase” early in each budget planning cycle should
enable sector line ministry discussion with MoF on key issues
• Streamline assembly of programmes from decentralised units
for inclusion in the overall sector MTEF
• Enhance soundness of sectoral resource projections made by
MoF
• Establish strategies/measures to enhance: the alignment and
performance of on-going project portfolio; PFM in the sector,
in particular central and/or decentralized unit accounting,
auditing and procurement procedures
• Identify measures to fully integrate the MTEF into the budget
process and secure high level political engagement in the
approval process, for sustainable MTEF use
• Enhance oversight mechanisms, especially a strengthened
and operational sectoral M&E system
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

19. IV) SOURCES OF DATA & INFORMATION
• Official published budget-related documents will form the primary
source of data
• Existing special studies on the sector as well as unpublished material should
be used
• Focus group discussions with key officials (MOA, MOF, Planning),
especially on agric budget
• Other sources (see TOR for details):
– Official sources, including budget estimates, reports, sector reports
– Relevant studies and “grey” sources, including donor, CAADP reports,
sector and project evaluations
– Sources for reviewing sector outputs and outcomes, including:
• MoA and donor studies and reports
• Project appraisal documents, mid-term reviews, Implementation
Completion Rreviews
• Focus group discussions with project managers and teams
• Sector models and/or impact assessments
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

20. V) PROCESS
(a) Participating countries: request for assistance; meet key selection criteria
(b) Participatory Process:
• Establish working partnership with key actors, and active counterparts
• Establish a TWG to be responsible for work, with TA support
• TA team to formulate “road map” for work and outputs
• Ensure active SWG to provide oversight and guidance
(c) Key Stages: to be facilitated by TA team
• Stakeholder briefing: agree on purpose, outputs/milestones
• Inception Workshop: within 2 weeks of start, to review updated TOR,
scope, issues, milestones, counterparts and access to key information
• Sector Working Group: to support and oversee the exercise
• Technical Workshop: Within 1 month, to review initial progress
• Draft Report Workshop: Within 5 - 7 months to discuss main
conclusions and recommendations
• Facilitating/Managing Change (as part of TA role): manage
expectations, transition to MTEF, portfolio alignment
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

21. (d) Implementation Arrangements
• Overall responsibility and main role for preparing a sectoral MTEF will lie
with key planning and budgeting staff of MOA, to be constituted as a
technical working group/TWG
• Specialized study will provide hands-on TA support to TWG
• A Steering Group (SG) of key stakeholders will provide “neutral”
oversight of the exercise and access to high level decision-makers
• Exercise to require 1 year; to be timed with the budget cycle
• TA team to carry out the IA, but with a role to support the TWG through
technical advise & expertise
o International Expert (1) : methodological & cross-country expertise
o Local Expert (1): country/sub-sector knowledge and analytical skills
• Important to engage donor working group in key aspects/phases, given
its role

22. VI) TA TEAM: Role/Outputs (working with TWG)
• Help to launch the sector MTEF process
• Advise on setting up the SWG, including its composition
• Draw up the terms of reference of the SWG
• Define the institutional scope of the MTEF
• Commission technical working papers from the TWG & review
them
• Evaluate the basis for costings and consistency of application
• Review the sector investment plan
• Identify capacity building needs and priorities
• Facilitate the reconciling of the sector expenditure framework with
finally announced medium-term budget envelope
• Assist in preparing briefs for budget hearings
• Liaise with the donor working group
• Formulate recommendations for enhancing the MTEF process
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

23. Main Reports and Data Base
Reports:
• Inception report: within two weeks, focusing on key issues
and scope
• Draft report: at least one month before conclusion of the
exercise, which consolidates and presents recommendations
• Final report: within 12 months, incorporating comments
on and discussion of the draft report
Data Base:
• During the assignment, the TA team, in collaboration with
MoA and MoF, will establish a database
• Database will be used for capacity building purposes as
part of a joint learning activity under the overall public
expenditure programme.
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

24. VII) TIMELINE
Estimated to require up to one year
Resources Required:
• TA Consultant Team (1 senior international plus 1
national expert), each working about 12 weeks,
within the timeframe of one year.
• MOA and MOF will be requested to provide one
full-time counterpart or team equivalent for each
consultant.
• Think tanks, universities and other local
participants will be encouraged to participate, but
not remunerated.
Background Objective/Scope Methdology Data Sources Process TA Team Timeline

25. KEY REFERENCES/DOCUMENTS
(See Annex 5 for selected excerpts)
A5.1: Template TOR for Sectoral Medium-Term Expenditure Framework
Development (June 2010)
A5.2: Medium Term Expenditure Frameworks: From Concept to Practice:
Preliminary Lessons from Africa (prepared by P. Le Houerou & R. Taliercio,
February 2002, World Bank): Excerpt: Table of Contents and Summary
A5.3: Formulation of a Sectoral MTEF: Frameworks for Aligning Policies and
Budgets and Country Examples
A5.4: Sectoral MTEF Framework: Example of Nicaragua’s Evolving ProRURAL
A5.5: Institutional and Sectoral MTEF: Suggested Financing Framework and
Strategic Elements
Relevant Website references include: www.worldbank.org/afr/agperprogram
and web.worldbank.org/apea