USAID/Banjul assessment of program impact

The program included: the Financial Sector Restructuring (FSR) program (6350233); the Financial and Private Enterprise Development (FAPE) program (6350232); the Agriculture and Natural Resources (ANR) program (6350235); the Human Resources Development for Africa (HRDA) project (698046335); and the P.L. 480 Title II Program. Much of USAID"s assistance has been both successful and effective. In particular, USAID collaborated closely with the World Bank in negotiating policy conditionality and providing TA, while its rich history of identifying new technologies continues to provided a strong technical basis for NGO programs in the country. Impact indicators taken in 6/94 show that the reforms supported by the program were having a significant impact, particularly in the formal private sector. Inflation was under control, agricultural production per capita increased slightly, average real wages continued to increase, and the banking sector showed continued progress. By 12/94, however, less than 6 months after the coup, employment levels had dropped by 25% in the formal economy, especially in the trade and tourism sectors, and real wages were up, but because the employees who were laid off first were the lowest paid. However, indicators also suggest that the Gambian economy can pull out of its recession with the proper mix of stable macroeconomic policies and donor support. The most positive lesson of the coup d"etat is that policy reform is a long-term, continuous process; although many expatriate advisors were withdrawn from the Ministry of Finance and the Central Bank after the coup, institutional support for reform remained strong. In fact, the two agencies were able to protect essential reforms and keep the lid on the budget (the value of the Dalasi did not plummet, as some expected, primarily because of action by the Central Bank). Officials were also able to resist pressures from the ruling council to adjust the foreign exchange rate. That the reforms do seem to be eroding is probably due to continuing pressure from the military rather than weakness in the reforms themselves. Public education is a critical part of policy reform. Although proposed changes in business law were publicized and discussed, most negotiations took place in secret, behind closed doors, when frequent public discussions would have helped to consolidate support. In addition, public debate could have educated those young people who supported the coup as to how much real economic progress had been made since the 1980"s. Some Gambians argue that, ironically, the benefits of economic reform are now helping to perpetuate military rule; that, had the coup occurred in 1984, when economic conditions were very bad, the economy would have very quickly ground to a halt -- and popular support for military leaders along with it. While this is no argument against reform, it does undercut the military government"s criticism of the former regime"s acceptance of donor-imposed" reforms. The major lesson taught by FSR is this: Privatization and debt recovery are both economic AND political actions with the potential to contribute to significant political upheaval. FSR"s effort to privatize the Gambia and Commercial Development Bank and recover debts owed to it was far more difficult and complex than was originally realized. Unfortunately, USAID did not respond to the complexity by showing its willingness to be flexible and to address constraints that had not been identified earlier -- including lack of an independent judiciary, an inefficient court system, weak enforcement mechanisms, and insufficient public support. Several lessons can be learned from FAPE. (1) Tax reform should begin with administrative improvements and then proceed to policy. (2) For human capacity building, recurrent short-term TA may be better than long-term TA (over reliance on expatriates was resented by U.S.-trained Gambian professionals, who were not given opportunities to grow in their responsibilities). (3) The salary and incentive structure for civil servants was inadequate. (4) Use the private sector (not government) to promote the private sector. (5) One-time, short-term TA was ineffective in strengthening Gambian businesses. (6) FAPE overemphasized trade with the United States rather the traditional European markets. (7) Education is key. The greatest constraint on The Gambia"s economic growth remains low human capacity. Lessons from ANR: (1) Policy formulation and decentralization must go hand in hand. (2) Program budgeting requires a long time to institutionalize. (3) Although The Gambia"s environmental information system is a model for Africa, USAID"s investment in it of over $1 million could be lost, because some level of TA is needed to sustain it. (4) ANR assumed that the availability of grant money would magically increase NGOs" capacity to work in the sector, but in fact, NGOs did not necessarily want to expand their operations just because there was money available (this was just one of several obstacles to the plan for implementing local-level ANR control). (5) ANR"s emphasis on environmental education, on the other hand, succeeded in providing a basis for community-based natural resource management. Finally a lesson from HRDA: gender equity in training is very hard to achieve -- due to mostly to the incredibly high illiteracy rate of The Gambia"s women. The Mission tried to compensate by emphasizing in-country business training for women, but was never fully satisfied with its attempts.