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Using Political Economy Analysis to Better Tackle the Enabling Environment

This post was originally published on Agrilinks and was authored by David Jacobstein and Sarah Swift. 

Rwandan women perform the majority of the country’s agricultural labor, and represent 70 percent of those who make their living from agriculture. Yet, the productivity of their work, and their integration within market systems, lags behind that of men.  As we begin to ask “why,” the more limited access of women to credit is a factor that emerges. Why then, we might ask, does this gap in financing exist?

As we look for an answer, it can be tempting to search first for a law or policy that needs to be rewritten. However, the Government of Rwanda has already considered that, noting that “the dominant position of men in the agriculture sector is rife even with the presence of legal and institutional frameworks for equality.” Rather one finds a range of interrelated, informal norms and conditions that constrain a woman’s access to finance. These include the perception that men alone are responsible for control of assets and cultural expectations around the role of women in the household and family which limit the time they have to work on moving beyond a subsistence approach to farming.

In finance, as in other factors that enable agricultural businesses to flourish, there is more to the enabling environment than ensuring the existence of supportive policies. Yet it is uncommon to see programming focused on the unwritten social norms and understandings that constrain markets.

This divergence in attention — where legal and policy reform goals are at the forefront, while less effort is directed toward the informal side of the enabling environment — is a common concern with donor programming regardless of sector. It often leads to an “implementation gap” where improvement on paper isn’t matched by shifts in real-world behavior. In USAID’s Center of Excellence on Democracy, Human Rights and Governance, we’ve been promoting the use of political economy analysis (PEA) to chip away at this sort of problem, informing our understanding of the space for change and supporting our efforts to work with the grain of that space so that programming better addresses the tacit and informal side of conditions.

An example of this comes from Serbia, where the Mission used a PEA to consider a number of options to help micro, small, and medium enterprises (MSME) with ongoing coordination challenges and other limitations which hindered their ability to directly advocate for changes to the enabling environment. While cautious about the potential for sweeping change in attitudes and behaviors, the PEA illuminated how networking and relationship development could allow new ideas to emerge. Given the challenges in predicting such an evolution, a key implication for USAID and the MSMEs was the importance of being ready to respond to new ideas as opportunities emerge:

“MSME owners and managers have faced an extended history of challenges with minimal improvement through economic cycles and political transitions and reforms now dating back decades. But with successful initiatives and progress through collective, collaborative efforts we might begin to see visible changes in prevailing attitudes of pessimism, discouragement, and demotivation … Identifying leaders of change in private, public and civil society spheres and facilitating their relationships with young, motivated individuals — whether in sectors, clusters or regions — might provide a beacon for others to follow. Whatever approach is ultimately chosen, the facilitation of networking between national and local institutions, between Chambers and MSMEs, and between MSMEs themselves, should be central to the strategy.” --LEO Report #29

Applying Understanding: The TWP Mentality

TWP requires a particular mentality. We believe Walt Whitman described it well when he charged his readers to “be curious, not judgmental.” Openness and curiosity are also hallmarks of a team that is taking a market systems approach. For example, on a market systems project in Bangladesh, the team moved from benchmarking progress to analyzing to understand incentives and biases that explained behavior patterns. They shifted from monitoring against their own benchmarks to measuring system health and recalibrating their facilitation efforts. This requires individuals who, while comfortable having a theory of change that informs their programming, are constantly seeking a better understanding of what’s going on and how our programming can be more relevant and effective. Living with this sort of uncertainty can be a challenge — everyone is implicated in reflecting on the evolving situation. Attachment to one pathway for change can be a constraint, yet programming also cannot shift every moment as new information surfaces. Managing knowledge and defining agile decision-making processes are key to operationalizing this approach.

There have been pushes for USAID’s agricultural programming to incorporate TWP for some time, especially given how similar TWP is to market systems as a mentality. Sharon van Pelt and Philip DeCosse write that we must do “a better job of understanding market actors’ interests, motivations, relationships and power dynamics, and anticipating who or what will drive — or block — progress within any given context.” Such thinking was on display in the Bangladesh market systems work, where the informal drivers of behavior were carefully analyzed to inform programming. And there are myriad examples of effective efforts to find space for change in the enabling environment in contexts where it was seen as unlikely. For example, in the Philippines, USAID-supported work by The Asia Foundation realized significant outcomes for private sector policy reforms in telecommunications, sea and air transport, and land titling (among other areas) by using close understanding of the actors and incentives to forge unusual coalitions and exploit unforeseen moments of opportunity to overcome opposition that seemed overwhelming.

Increasingly, USAID is working in and working to change difficult enabling environments, and we will need to find ways to perceive and drive change on the informal side — getting past rules on paper to the real rules of the game. Leveraging insights from PEA, and translating these into programming, is a way to be more intentional and more effective in our approach.

David Jacobstein and Sarah Swift are Democracy Specialists at USAID's Center of Excellence on Democracy, Human Rights and Governance, where they focus on issues of cross-sectoral integration of democratic governance, local capacity development, systems thinking and applied political economy analysis.