Recent evaluations of A.I.D. commodity import programs (CIPs)

This report evaluates the effectiveness of CIP's on the basis of a review of four CIP's -- one each in Zimbabwe and Somalia and two in Egypt. Areas covered in detail include policy reform, beneficiary targeting, foreign exchange rates, and local currency programming. Major findings are as follows. (1) The linkage between CIP's and policy reform has been weak, the CIP's in both Egypt and Zimbabwe lacking policy conditionality. On the positive side, the Somali CIP did have policy conditions and the government initiated a package of reforms. (2) In all three nations, there has been difficulty in gearing CIP's to specific target groups. Faced with a trade-off between targeting and rapid disbursements, CIP's usually were designed to meet the disbursement objective. (3) In all cases, CIP imports were offered to importers at an "official" exchange rate, 30-100% below the free market rate, providing an opportunity for a windfall profit. Nevertheless, for most developing country importers, a CIP was not as desirable as free foreign exchange. (4) A.I.D. involvement in regard to local currency programming varied widely, being minimal in Egypt and heavy in Zimbabwe, where local currency programming has been used as a major development tool and has demonstrated the potential effectiveness of counterpart funds in affecting host government budget allocations and sectoral priorities. Policy implications of these findings are detailed in conclusion.