Institutional Assessment and Capacity Development Why, what and how?
Tools and Methods Series, Reference Document No 1
This note offers a conceptual framework for dealing with 1) institutional and capacity assessment; and 2) capacity development issues, mainly in the public sector areas. This framework will be particularly useful in the in the preparation of support to sector programmes and budget support exercises. More generally the objective of the note is to enable readers to engage in dialogue with stakeholders and specialists about issues regarding institutional assessment and capacity development, as well as support to capacity development, in design and implementation of sector or budget support operations.

Why is a focus on capacity and capacity development important?
Making public sector organizations work better is one of the most persistent and difficult challenges in development and development cooperation. At the same time, nothing is more crucial for achieving sustained progress, growth and poverty reduction. Aid must also be tailored to existing capacity to ensure effectiveness and to avoid unintended distortions. The size, scope and modality of aid influence partners’ capacity and prospects for capacity development (CD). Assessing institutions and capacity is thus a central element of preparing and implementing any kind of support, not least support for sector reforms following the sector approach and in supporting national development strategies through general budget support programmes.