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  • Star Report:  Cabo Verde Compact II
  • May 2019

Lessons from the Compact

The policy and institutional reforms required a clear vision, fearless champions, great communication, and broad-based buy-in from the start. The compact was MCC’s first true reform-centric compact. In many ways, the compact served as a pilot for how to leverage MCC’s reputation and systems to effectively tackle transformative policy and institutional reform programs under second compacts. Compact success consolidating two, complex sectors, with over 50 new governing laws and procedures, creation of two new national authorities, the introduction of principles for gender and poverty-responsive service provision, and transition from nine municipal water utilities to one corporatized utility, was only possible due to vision, design, and tremendous buy-in from our host-country partners. Change at this level is never easy, and transformation was only possible due to a common vision that spanned national and local governments and one that was tailored to transcend partisan political positions. Sustaining buy-in required that MCC and MCA-Cabo Verde II develop and maintain the trust of multiple public and private stakeholders through personal and corporate communication strategies, lobbying, and strategic use of MCC’s systems and 5-year implementation clock. To successfully tackle these reforms and ensure sustainability of investment, MCC had to look beyond the traditional leverage point of a large grant and engage in more strategic use of communication and influence.

The staffing demands and resource requirements for this type of major reform initiative were significant. MCC’s experience with the compact demonstrated that reform projects require greater levels of planning, staffing, and resources than relatively more predictable and linear infrastructure investments. Compact implementation showed that putting reforms and laws into operational practice required resources, particularly people and time, and usually beyond the limits of typical MCA staffing structures. MCC and MCA-Cabo Verde II experienced delays with reforms for the Land Project because the associated GoCV implementation partners simply did not have the staff or resources required to complete the added workload of managing the time-intensive process of legal rights and boundary clarification and validation. While the GoCV fielded a very talented and dedicated team of professionals from the Ministry of Justice, National Land Management Institute, Ministry of Finance, and multiple municipalities, the Government was not equipped to handle the significant increase in workload generated by the Land Project. This staffing constraint proved difficult to solve as the gap could not be filled by hiring more technicians; rather, the project was handicapped by the rational limit of senior professionals holding the requisite legal authorities to certify and grant property title.

Linking grant facility disbursements to institutional/reform milestones provided critical leverage. The design of the WASH Project’s IGF only allowed for disbursement for capital improvements upon the completion of key institutional progress milestones. This strategy was successful in encouraging the development of an effective operating environment for the infrastructure investments because it provided clear incentives for completing difficult reforms. Implementation of the WASH Project would have been considerably more difficult without these incentives. The design of the IGF also helped support improved prioritization of works projects for the sector. Ideas were submitted by beneficiaries (i.e., local utilities), which meant that those closest to the ground were able to identify what was needed most in their communities. Additionally, the competitive selection process encouraged utilities to appropriately design and plan for capital improvements ensuring winning grants were well-planned, well-conceived capital improvements based on the country’s strategic priorities.

Coupling water infrastructure investments with water pricing reforms in poor and vulnerable communities may have been more pro-poor than tariff reforms alone. The WASH Project also included activities centered around revising the tariffs to ensure that they were based on cost-of-service principles and designed to be pro-poor. The project found that targeting the network-connected extreme poor with a tariff subsidy required accurate information for identifying poor and vulnerable households. In countries that do not have a national database for targeting the poor, this is challenging. When the Cabo Verdean national cadaster did not materialize during the compact’s timeframe as anticipated, the Government was not able to identify an alternative methodology for defining and identifying the poor by compact end. On the other hand, reforms to pricing of public standposts reduced the costs of water for the poor who disproportionately use them. When donors undertake sector reforms elsewhere, they should explore opportunities for tariff reforms and infrastructure improvements to vulnerable communities, including those outside of forma l tariff structures.

NGOs can be effective partners in project implementation to prepare communities to take advantage of new infrastructure and can serve as a bridge between households and utilities. All of the infrastructure projects were required to include Information, Education and Communications (IEC) campaigns. The interim evaluation found that the most effective approach seemed to be partnering with an NGO, whereas the contractor using in-house staff led IEC to fall far short of expectations with respect to community engagement and enabling disadvantaged households to benefit from the infrastructure. NGOs contracted to implement the SAF conducted IEC on topics including creating demand for household water connections and/or sanitation, reading and paying utility bills, conserving and handling water at home, and using and maintaining toilets, among others. The NGOs’ knowledge of and ability to bond with the communities contributed to IEC that effectively engaged poor households to connect to the network and increased their WASH knowledge, and to the willingness of house-holds, local government officials, and technicians to donate labor and materials to extend the reach of the SAF. The interim evaluation found that “based on stakeholder reports, the work the local NGOs accomplished in Cabo Verde was one of the most resounding successes of the project.” NGOs with experience in project communities should be integrated into project implementation, particularly when high levels of community engagement is essential to achieving expected outputs and outcomes.

Implementing the IT system was as risky as implementing an infrastructure project, requiring knowledgeable experts at MCC and MCA to effectively manage design and execution. Compact design failed to fully prepare for the complexities of designing, installing, and managing the new software platform necessary to form the backbone of the new land management information system. In the future, MCC needs to ensure adequate capacity at MCC, MCA, and implementing entities before, during, and after project implementation. These systems require highly specific technical expertise, experience contemplating and negotiating IT risks, legal authorities for safe and secure handling of confidential or sensitive information, and expertise and resources to implement and oversee IT system development and deployment. As with any multiple user interface information management system, data security, as well as administrator and user roles/responsibilities, must be clearly defined upfront and codified under relevant contracts and agreements. Land IT systems require specific service level agreements with each user institution, which should be the responsible party to develop key tasks to be delivered by the service provider and validate outputs and functionalities. To ensure timely and informed decision making, and in Cabo Verde’s case, with regard to allocation of land for investment purposes, it is critical that investment agencies and government authorities are part of the consultation process to develop Land IT systems and have access to relevant data, particularly parcels located in the land domain managed by those institutions.

Understanding of the country-specific social complexities related to land rights and restrictions was critical. Land rights comprise a complex field, involving many country-specific formal and informal rights and restrictions that affect people differently across socioeconomic and cultural contexts. These need to be well understood, and land reforms need to address these complexities explicitly in the new systems. In Cabo Verde, the vast majority of couples are unmarried, but live in several types of civil unions conferring different types of property rights under family law. These complexities were captured in project fieldwork databases, but were difficult to include in the land registration system. This limited the documentation of the rights of both partners, with men’s names typically appearing on the document. Additionally, it is challenging to include land use restrictions, environmental or otherwise, in the land registration system. The land use restrictions were also documented in the fieldwork database, but not transferred into the registration system, which would have made them more widely available to all Cabo Verdean citizens. While wealthier households have resources to investigate restrictions to their registration in the land registry, lower-income households are less likely to be able to investigate restrictions and are thus more vulnerable to their land rights being weakened or not protected under the new system. An important lesson is the need for adequate attention and commitment among stakeholders to addressing the challenging country-specific complexities of land rights and restrictions through new legal and administrative systems, in order to avoid the risk of unintended consequences.

Results-based financing was effective in building local capacity for sustainability and expansion of project objectives. The compact successfully established the National Land Management Institute (INGT) and built its capacity through a results-based financing structure that eschewed traditional, upfront technical assistance in favor of back-end, market-based payment for results. MCC purposefully took a different approach to capacity building between the WASH and Land Projects, providing foundational funding and technical assistance for ANAS and AdS, while providing incentive and opportunity for INGT. The compact proved that results-based financing structures can indeed be very effective as INGT out-performed expectations and exceeded targets for data collection and clarification work on the island of Maio. This specific approach was not originally planned and represented an important lesson as there is now local know-how on the legal, procedural, and technological aspects of implementing rights and boundaries for: (1) continuation of the works on the other islands by INGT itself; or (2) adequately monitoring and overseeing the work of other private parties that can be hired by the GoCV to complete this work. A similar results-based implementation strategy could be used for other similar projects in the future to improve sustainability of investments.

Piloting and then scaling projects can be an effective implementation strategy, but is difficult under MCC’s five-year implementation cycle. The Land Project validated a pilot-first approach for tackling new policy and institutional reforms with national reach. Understanding the need to pilot, test, modify, and deploy a nationwide system, the compact was effective in piloting the rights and boundary clarification activity on the island of Sal, setting the stage for robust expansion across the remaining islands. However, while the piloting approach was effective in refining process and procedures, the length of time required for uptake pushed subsequent interventions far into the implementation timeline which created new challenges for completion.

Updating targets and baselines as better quality data becomes available can improve grant facility decisions. Finally, the compact yielded important lessons around setting performance targets and evaluating results in the WASH and land sectors. Due to the fact that data from due diligence research often requires quality checking, it is important during the compact period to update targets and baselines as better quality data becomes available. The WASH project found that it was difficult to produce economic rates of return (ERRs) for facilities like the IGF because the projects are not known beforehand. Nonetheless, with some effort a project typology can be developed with illustrative approaches to ERR calculations. Individual project selection would then need to ensure an ERR sufficiently high to meet the threshold, including overhead. Validation of estimations of the overall economic return to the infrastructure fund and of the utility of the approach are in progress (many of the works were not commissioned before the end date of the compact). For the Land project, the completion of work towards the end of compact meant that observations from administrative data were not yet available to make judgements about results. Anecdotally, the original project rationale regarding the utility of the implemented interventions for enlarging the scope for tourism development and associated value added may be weaker than previously thought. However, there may be other channels through which the parcel mapping and improvements in administrative procedures and documentation may be contributing to development on various islands. The results are likely to be specific to the context and are the subject of the on-going land project evaluation.