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Sarah Lucas
April 2007[1]
Honduras was the second country to sign a compact with the Millennium Challenge Corporation (MCC). It was also second in terms of when its compact "entered into force" (EIF).[2] Despite this early start, Honduras is last among Millennium Challenge Account (MCA) countries with regards to meeting disbursement targets. Delays in program implementation and disbursement are due primarily to premature entry into force. The official compact period began before key program designs and structures were in place, and on the cusp of a major political transition. MCA Honduras (MCAH)[3] has thus been playing catch up, trying to finish program design, staff up, create standard documents and procedures, secure buy-in from the new government, meet pre-conditions of policy change, implement programs, and try to close the timeline gap all at the same time.
This has created a number of interrelated risks for MCAH. The most fundamental risk is the ability to deliver implementation results on a compressed timetable without sacrificing quality and core program principles. For example, in an effort to accelerate operations will the MCAH relax policy pre-conditions and safeguards (such as resettlement plans); or will it stand firm on conditions even at the expense of not reaching program goals within the five-year timeline of the compact? This risk is exacerbated by weak government buy-in (of a newly-elected administration) that has made it particularly hard (and slow) to meet policy pre-conditions. The pace of progress has been further slowed by over-zealous oversight and risk management on the part of MCC Washington. To top it off, the MCAH’s intense focus on catching up and getting things done has led it to spend insufficient time and effort in building better relations with civil society, a core element of the MCA approach.
The MCAH faces a formidable set of risks. The good news is that even in this difficult context, MCAH’s early program interventions are excellent. They include an impressive approach to increase farmers’ productivity and connections to markets; a strong commitment to getting right a plan for resettlement of people affected by road construction; practical coordination with other donors; and a set of positive steps in institution building and policy reform.
Next Section: A Snapshot of MCA Honduras
1. This report is based on interviews conducted in Honduras in February and March, 2007.
2. “Entry into force” refers to the point at which the 5-year compact clock starts ticking. At this time disbursements of compact funds may begin.
3. The MCA program is known in Honduras by its Spanish name--La Cuenta Desafío del Milenio. In the interest of consistency with other MCA Monitor field reports, this report refers to the MCA Honduras as MCAH.