Final evaluation of project 522-0325-01 : policy analysis and implementation project

COHEP has had a remarkable impact on economic policy in Honduras and functioned effectively as an umbrella private sector association. It has developed a capacity to conduct quality analyses; influenced the free market-based economic policies now in effect and was virtually responsible for designing the national economic recovery program; and helped put into place economic policy mixes, which resulted in increased investment and competitiveness, though not reduced unemployment. COHEP's management is effective and responsive to private sector needs. COHEP has generally done a good job in recruiting staff with sufficient academic preparation and experience; its data bank is complete and provides reliable statistics. USAID interventions contributed to the expansion of a viable institution; of particular importance was the establishment of an endowment. While alternative assistance strategies could have been used, the one selected by the Mission produced solid results -- the ultimate test. Post-project sustainability is feasible, but limited. A priority need is to formulate a strategic plan, including a financial strategy, to guide activities over the next 5 years. Much will also depend on the election of a Chairman of the Board who can galvanize stronger private sector support. COHEP also needs to maintain the identity and credibility it has earned as a policy analysis organization (hiring of one or two key economic policy experts to complement its staff is recommended), while continuing to promote the interests of the private sector; tension has existed between these two roles which should be complementary. COHEP should also ban the airing of internal disputes, which has tarnished its image. COHEP's strengths as a representational organization are that it is the only game in town, it has built credibility, and it is taken seriously by the Government. Its weaknesses are those of Honduras itself: constant rivalry between Tegucigalpa and San Pedro, as well as "presidencialismo". It is also not fully financially independent, at least to the point where it can operate at capacity. The following lessons were learned. (1) USAID's low profile coupled with effective TA helped to insure COHEP's credibility as a Honduran organization, not an appendage of USAID. (2) Boards of directors play a key role in organizations like COHEP. Boards, especially chairpersons, need to learn not to micromanage, yet maintain a forceful but not controversial presence and provide positive leadership. A divisive board can cripple an organization. (3) Good staff (along with effective boards) -- are the essence of an organization. Institutional development efforts should focus on the human resource component. It is important to try to maintain competitive salary structures. (4) Maximum utility of USAID resources could be achieved through expanded use of endowments, which provide more stability than annual funding. COHEP's endowment will permit it to function indefinitely.