Why Political Economy Analysis Should Precede Every Development Program

Every development practitioner has witnessed it: a technically sound program that fails spectacularly because it didn't account for local power dynamics, clan rivalries, government incentives, or the political economy of the sector it aimed to transform. In the Horn of Africa, where politics permeates every aspect of social and economic life, this failure mode is particularly common and particularly costly.

Political Economy Analysis (PEA) provides the antidote. Yet despite its proven value, PEA remains underutilised in program design, often treated as an optional add-on rather than an essential foundation. We argue that rigorous PEA should precede every significant development investment in the Horn of Africa.

What PEA Reveals

At its core, PEA examines how political and economic processes interact in a given context, and how these interactions affect the feasibility and sustainability of development interventions. A good PEA answers questions that technical assessments miss entirely.

In Somalia, for example, a PEA of the fisheries sector revealed that the technical barriers to developing a sustainable fishing industry were far less significant than the political barriers: competition between clan-based licensing authorities, disputes over maritime boundaries, and the political economy of foreign fishing vessel access. A program designed without this understanding would have invested heavily in boats, cold chains, and processing facilities, and would have failed to create a sustainable industry because the governance constraints were never addressed.

Integrating PEA into Program Design

The most effective approach integrates PEA findings directly into program design decisions. This means identifying potential spoilers and understanding their motivations. It means mapping the incentive structures that drive behaviour among all stakeholders, not just intended beneficiaries. It means understanding the formal and informal rules that govern how resources are allocated, decisions are made, and conflicts are resolved. And it means designing programs that work with the grain of local political realities rather than against them.

This doesn't mean accepting the status quo or avoiding politically sensitive issues. It means being strategic about how change happens, identifying reform champions, building coalitions, and sequencing interventions in ways that build momentum while managing political risk.

PEA in Practice: Three Examples

In a governance strengthening program in Somaliland, PEA revealed that the formal government structure mapped poorly onto actual decision-making authority, which remained heavily influenced by clan dynamics. The program was redesigned to work through both formal and informal governance channels, significantly improving uptake of reforms.

In a market systems program in Kenya's border regions, PEA identified that control of cross-border trade was a key source of political patronage. Rather than trying to formalise informal trade, which would have threatened powerful interests, the program focused on improving market information and reducing transaction costs within the existing system, achieving better outcomes with less political resistance.

In an education program in southern Somalia, PEA revealed that school governance was deeply politicised, with teacher appointments and resource allocation determined by clan affiliation. The program incorporated community education committees with balanced clan representation and transparent resource management, creating accountability mechanisms that improved educational outcomes.

Making PEA Standard Practice

For PEA to fulfil its potential, three changes are needed in how the development sector operates. Donors must require and fund PEA as a standard component of program design, not as an optional extra that gets cut when budgets are tight. Implementing organisations must build PEA capacity internally rather than relying solely on external consultants who parachute in for two-week assessments. And PEA must be treated as an ongoing practice, not a one-off exercise, because political economies are dynamic, and programs that don't adapt to changing political realities will quickly become irrelevant.

At Keystone Consulting, political economy analysis is embedded in our DNA. Our team's deep understanding of the political landscape across the Horn of Africa isn't just a competitive advantage; it's the foundation of everything we do.