MCC’s investments can provide the impetus to adopt legal reform; however, legal change takes time. Compacts should consider the use of conditions precedent (CPs) if legal reforms are required for key outcomes. Mongolia’s Property Rights Project (PRP) funded a legal and regulatory commission to review and draft changes to the law and regulations to improve land governance, but there were no compact requirements to pass legal reforms because reforms were not considered essential to successful implementation of the PRP. Many recommendations were eventually adopted but these legal reforms were passed by parliament five years after the compact ended and beyond the evaluation period. And in Mongolia, a CP requiring registration buildings delayed the project and related implementation by a year which pushed back the timeline to build the electronic property registry. The Mongolia Vocational Education Project required a legal change as a CP, but it led to an eight-month delay in implementation and related risks. In other compacts, MCC has faced similar issues with passage of legal reforms either not occurring or occurring years after the compact has ended like in Benin. Critical legal reforms might require a CP but MCC needs to be willing to assume the risk that the CP requirement may delay compact implementation. Another option is to require legal reform prior to compact signing as was done in Lesotho and Burkina Faso. Moving forward, a realistic timeline around legal reform should be proposed during compact design and ensure that any legal changes, which are absolutely necessary for program success, are built in as CPs or enacted prior to compact signing.
Lesson Learned