South Africa: Country Strategy Paper 2013-2017 Completion Report Validation Note

This Validation Note of the Country Strategy Paper Completion Report for South Africa is the first of its type for IDEV. The purpose of the Validation Note is to provide an independent review and validation of the African Development Bank’s self-assessment of its country program performance, using the Combined Country Strategy Paper 2013-2017 Completion Report and 2017 Country Portfolio Performance Review for South Africa. The validation is based on desk review and is expected to contribute to the development of the Completion Report validation methodology, which will undergo further changes now that the Bank has adopted a new CSP format. IDEV will carry out a second pilot Validation Note, for another Country Strategy Paper Completion Report, before finalizing the methodology through a consultative process with the Bank’s Management.

For South Africa, total commitments by the Bank during the 2013-2017 period amounted to USD 2 billion, of which 76% (USD 1.56 billion) went to Pillar 1 Infrastructure Development (mainly energy), and 23.5% (USD 480 million) to Pillar 2 Support for Regional Integration, to fund a freight rail infrastructure project and Lines of Credit for cross-border investment. In general, the Validation Note rates the overall performance of both Pillars 1 and 2 as unsatisfactory, compared to the CSP Completion Report, which rates it as satisfactory. The difference is largely attributable to the slow progress of implementation achieved in areas other than the energy sector, and the portfolio’s limited contribution to key crosscutting issues (such as HIV/AIDS, gender inequality, and addressing the causes of violent crime). The Validation also found that the Completion Report presents an incomplete analysis of the implementation of the CSP and the challenges faced by the Bank, and that there were weaknesses in the CSP’s Results Framework.

1. The CSP Completion Report identifies the following lessons from the implementation of the CSP:
2. A well-balanced mix of macroeconomic, structural and microeconomic policies is essential to address high poverty, unemployment, and income inequality.
3. It is imperative to pay greater attention to the risks emanating from channeling more funds to high-risk countries through the South African financial sector.
4. The Bank should respond flexibly and swiftly to emerging needs and opportunities.
5. It is essential to ensure that collaboration with development partners, academia, think tanks and government agencies is a key principle for all new Economic and Sector Work (ESW).
6. Monitoring and results measurement requires identification of baselines and realistic target outputs and outcomes
7. Greater emphasis on quality-at-entry of private sector projects is essential to ensure smooth CSP implementation.
8. The use of country procurement system and procedures is desirable and the best solution to achieve efficient procurement outcomes.

The Validation Note largely concurred with these lessons, and identified additional lessons related to the need for greater synergies between different parts of the Bank’s operations, which should be clarified in the CSP. The lessons also indicate that it is essential to ensure complementarity between lending and non-lending operations (current or envisaged).

Finally, the Validation Note provides four points for Management’s consideration in future CSPs:

1. The Bank should revisit its approach to risk management, including consideration of greater use of country systems in project management.
2. The requirement for results reporting should be strengthened across all Bank operations.
3. The Bank needs to be more realistic in setting objectives and timelines.
4. The Bank’s proposed focus on infrastructure service delivery to townships etc. would need to emphasize the availability of adequate counterpart funding and cost recovery to guarantee program sustainability.

Task Manager: Akua Arthur-Kissi, Senior Evaluation Officer