Accuracy of in Medias RES and EX-Post Cost-Benefit Analyses: A Case of National Special Programme for Food Security, Nigeria

Abstract

:The current global financial situation and low public expenditures on food and nutrition security in sub-Saharan Africa (SSA) makes the accuracy of the Cost-Benefit Analysis (CBA) technique imperative for project decision making. The study compared the in medias res and ex-post Cost-Benefit Analyses with the aim of determining the accuracy of the estimated Cost-Benefit Analyses. Data for the study were generated from secondary information obtained from the FAO Assisted National Special Programme for Food Security implemented in 109 sites across Nigeria. The study employed the Percentage Error (PE), Mean Percentage Error (MPE), Percentage Point Error (PPE) and Mean Absolute Percentage Error (MAPE) to compare the in medias res and ex-post CBA conducted under the Programme. Generally, the results under both CBAs differed under the three financial indices considered. For the incremental benefits, inflation adjusted percentage errors ranged from - 87% for aquaculture to as high as 1,139% for groundnut processing, with an MPE of 161%. The comparison of the Net Present Values showed overestimation of the in medias res for six of the analysed projects with MPE of -27%. With respect to the Internal Rate of Return, the in medias res of all the enterprises analysed were over-estimated except for the sorghum-based enterprise, while the MAPE stood at 15% across the enterprises analysed. The study concluded that there were considerable discrepancies between the in medias res and ex-post CBA values, with obvious implications for decisions taken by project implementers and policy makers. Arising from this outcome, there is need for Country-based CBA results’ review framework and guidelines to guide Analysts and Policy Makers in their decision-making process