Three actions require immediate attention from the MCC, GOES and the U.S. Congress to enhance implementation progress:
- The MCC should streamline procurement processes and continue to enhance resources and expertise as a means to accelerate implementation and increase disbursements.
- Decentralization and sliding scales of oversight, based on an evaluation (and standard-setting) of country systems and capacity, should be adopted to build country capacity and improve implementation.
- Communications and consultations should be incorporated throughout the life of the compact from negotiation to the end of the program.
- The U.S. Congress should allow the experimental nature of the MCC to thrive, including a focus on results, not disbursements; consideration of flexible financing (e.g., graduated budget support in countries with strong fiduciary capacity); and expanding the staffing cap to allow for full-time procurement specialists in each MCC compact country (based on lessons learned to date).
In response to recent reports highlighting the slow pace of disbursements in the implementation phase of compacts,[27] the MCC noted that the following changes will be undertaken:
- Reorganization at headquarters along with detailed portfolio reviews
- Quarterly reporting with disbursement projections
- Lengthening the time prior to EIF to ensure that accountable entities are prepared to begin implementation, prior to the start of the 5-year clock
- Revised disbursement projections
While these are positive movements toward identifying institutional problems, none significantly changes practices in the compact countries; in particular the issue of procurements is not addressed. The estimated large increase in disbursements by the end of FY 2008 is largely dependent on the pace of procurement and the ability of both the MCC and the accountable entity staff to finalize and manage contracts in the field. The MCC will need to prioritize this area in order to grease the wheels of implementation—and continue the steps they have begun to take to increase resources and expertise dedicated in this area. Despite the purposeful delay of EIF in El Salvador per the third point above, the bottlenecks have continued to exist in implementation due to procurement. This oversight function, along with infrastructure project management, will be two key areas affecting the pace of implementation.
Alternatively, or in tandem, the oversight requirements could be calibrated to better reflect the level of country capacity. In El Salvador, in many cases this would mean a reduction in requirements. In some sectors, however, it would not. For example, the implementing entity for the transportation component has never dealt with a project of the scale of the Northern Longitudinal Road. To address such situations, in El Salvador the MCC has opted to use outsourced project managers to guide implementation given the staffing cap constraint. This in turn may limit the level of capacity building within GOES; the increase in training for Fomilenio in tandem with the provision of outsourced expertise may mitigate this issue to some extent. Regardless of the method adopted, however, steps must be taken above and beyond the largely administrative measures advanced to date. And Congress should be open to allowing flexibility on the staffing cap should the MCC be able to demonstrate that efficiency and effectiveness gains could be made—both for them and for the countries—by having a full-time procurement expert on the ground.
The MCC should continue two particular trends with regards to country ownership: decentralization and use of a risk management system to achieve effective oversight and compliance balanced with country capacity. The experiments in El Salvador with increasing discretionary approvals for the Regional Country Office to a set monetary limit as well as the liberalized language requirements are welcome innovations and should be good litmus tests. These experiments can help to help flesh out the framework of indicators of country capacity which could underlie decisions to reduce levels of oversight—the sliding scale. If the approvals are aligned appropriately, this would be a win-win situation in which countries are rewarded for increasing project accountability and management capacity, and the burden is reduced on MCC headquarters to shuttle approvals and expertise back and forth.
Lastly, communication and consultation plans must be systematically incorporated into program activities for all compact countries, which will both smooth implementation as well as meet MCC requirements for participation. The case of El Salvador highlights the need to close the feedback loop as well as the importance of putting a consultative process into practice beyond compact signing. Although this is not the main focus of the newly expanded Congressional and Public Affairs team, perhaps the MCC expertise in-house could be utilized by compact countries as well, through MCC University or trainings. A participatory process that includes an information strategy could assuage concerns of stakeholders and foster support of this important assistance initiative.
27. See GAO report "Independent Reviews and Consistent Approaches Will Strengthen Projections of Program Impact"