Lessons learned in the design of sector grants in Niger, 1984-90

The major lesson learned is that there is no definitive answer on what works and what doesn't. Thus, maximum flexibility should be built into design and implementation. Every assumption must be tested, and no aspect can be assumed to function without continual monitoring, frequent status reviews, and, in many cases, periodic re-design. In the case of Niger, USAID/N and other agencies were overly optimistic in defining expected results; the economic gains anticipated from stabilization and structural adjustment programs did not occur. Expectations should be modest, and justification should be based not only on economic effects, but on human impacts as well. The Mission has not totally resolved the issue of how to measure impact, but program designers have learned to be as clear as possible in stating anticipated effects and defining monitoring needs. The more defined plans are at the design stage, the easier it is for later reviewers to use or modify them. Measuring the impact of local currency funds is particularly cloudy; no comprehensive guidance on the subject exists. The sector grants in Niger have all used somewhat different approaches in programming local currency. One gave preference to the partial funding of agriculture projects, one concentrated on activities directly related to the program's purpose, while another used funds for budget support. Each system has its advantages and faults, and it is still unclear if there is a best method. Whether or not strict policy reform benchmarks should be assigned remains an open question; in any case, implementors should be allowed flexibility in interpreting and modifying policy reform targets. This is important because key staff -- both USAID and indigenous -- are likely to change in programs lasting more than two years. Each change brings new interpretations of policy conditions and slows down implementation. One of the early misconceptions about sector grants was that they would be easy to implement. In fact, USAID/N and other Missions quickly learned that the grants are both personnel-intensive and costly. The Missions themselves, and not contractors, are ultimately responsible for monitoring grantee performance and program impact. For this reason, the Missions must have technically proficient (and therefore costly) staff. For Missions with limited operating expenses, this will require creating a trust fund out of a portion of the sector grant. However, if the trust funds run out before a tranche is released, there can be subtle pressures on a Mission to relax its vigor in monitoring policy conditions.