Closed Compact Report: Philippines Compact | June 2018

Lessons Learned

Finish detailed design work before compact signing. Given the complexities of implementing a very large development assistance program within five years, a key lesson from the Philippines Compact is that programs must be as fully designed as possible at compact signing, balancing aspirational objectives, MCC investment considerations, and the mandated implementation timeline. In each of the Philippines Compact projects, the extent to which the activities benefitted from a thorough and advanced design had both positive and negative implications for results throughout the course of implementation. For example, the creful incorporation of climate-resistance considerations in the road project designs provided opportunities to overcome the significant challenges posed by Super Typhoon Haiyan, not only for the project, but also for the impacted communities. The Kalahi-CIDSS project focused on taking a proven design and incorporating key improvements to broaden its impact and coverage, and served as a model for a larger national program. In contrast, the Revenue Administration Reform Project suffered most notably from some project design weaknesses, which created significant implementation issues that were ultimately overcome, but provided important lessons.

Kalahi-CIDSS Community Driven Development Project

Improve oversight of small-scale infrastructure projects through shared tools and processes. Three-fourths of poor people in the Philippines live in rural areas.  For Kalahi-CIDSS, a very complex project over a geographically disperse area, effective oversight and management of the project was a risk.  However, after approximately two years of compact implementation, MCC oversight of the Kalahi-CIDSS project established a rhythm of oversight where several key stakeholders – MCC, MCA-Philippines, and the Department of Social Welfare and Development – began using the same oversight tools and processes in field visits. Whenever a member of the MCA-Philippines or MCC project and technical teams traveled to the project sites, they used similar tools and processes, such as a project completion report summary and rating form which monitored performance at a technical level.  This allowed for a shared understanding of oversight and common language and understanding as site visit findings were discussed, best practices were shared, and problems were resolved. This shared approach reduced the perceived risk of project oversight and management and can be adopted by other widely dispersed small infrastructure projects as well.

Incorporate sustainability measures in project design. The sustainability of results was considered a risk in the Kalahi-CIDSS project. To ensure the sustainability of sub-projects, MCC and MCA-Philippines incorporated several key activities into project design.  First, the organization of operations and maintenance groups in the project communities was critical.  Moreover, the project provided technical support to educate project beneficiaries on operations and maintenance matters through technical manuals and training on the repair and maintenance of the facilities. Finally, developing partnerships with local NGOs and the private sector served to enhance project performance and functionality of sub-projects.  MCA-Philippines partnered with local companies FELTA Multi-media, Inc. and Synergeia to provide training on the use of Lego blocks as educational tools for early childhood development to 121 day care center teachers.  The training was accompanied by a donation of a Lego Charity Box to each of the day care centers. These partnerships included training of teachers and local school boards on Lego blocks as educational tools in early childhood development and teaching problem solving, visual and motor skills, and values formation.  This thoughtful and layered approach to sustainability could serve as a model for small, community-led development projects in the future.

Revenue Administration Reform Project

Design with implementation in mind. The Revenue Administration Reform Project included four distinct activities that together were intended to increase tax revenues over time and support the Department of Finance initiatives to detect and deter corruption within its revenue agencies.  This investment would have been more effective with greater focus on fewer integrated activities, developing achievable goals and timelines, recalibrating scope definitions in the face of technical setbacks, and managing expectations.  While a number of sub-activities were implemented smoothly, the absence of these factors was evident in the implementation of the eTIS sub-activity. Setbacks resulted in partial implementation and system development that continued past the compact end date, creating challenges for the government in securing donor funding to build upon the systems and procedures initiated under the project. The primary hurdle to overcome related to the size and scope of the system development effort, the first investment of its kind for MCC.  The result was implementation challenges involving several sequential stages and reassessments of the project’s direction, coupled with slow decision making.

Drawing from this experience going forward, projects involving major IT systems installation and adoption must ensure no more than a manageable level of customization of off-the-shelf software.  For eTIS, the volume of software customization was one of the main sources of implementation delays, which ultimately reduced the scope and reach of the final product.  The system will require continued investment to not only adapt its functionality to changes in tax laws and regulations, but also to modify and implement several modules that were not part of the version that was implemented during the compact.  A persistent commitment to policy reform and continued investment in the staff and infrastructure of BIR is required for the project to be sustained.

Explore donor partnerships to improve program sustainability and maximize sectoral impact. Given MCC’s technical expertise and timeline limitations, the agency engaged the expertise of the International Monetary Fund (IMF) as a third-party project resource to provide technical assistance to the Bureau of Internal Revenue to implement a program of tax administration reforms over a five year period.  Rather than follow a narrow, prescriptive scope of pre-identified services, the IMF had the flexibility to independently identify problems during the compact period and to recommend timely measures to address them. This allowed for a range of activities that were not identified initially but were responsive to the prevailing circumstances and the current operational environment. As a result, the IMF advisory activities were free to focus on several critical topics, including VAT audit and arrears management.

The experience illustrates the benefits of engaging third-party assistance to meet a country’s needs in a sector.  The long-standing partnerships and technical expertise that these agencies enjoy in the recipient countries and the donor community, coupled with their process flexibility, can be used as a comparative advantage and enable technical assistance to be developed on the basis of a more inclusive dialogue and within the context of a coherent development framework that goes beyond just the financial aspect.  As part of this effort, MCC can use these existing relationships to strengthen its partnerships with the donor community by collaborating on a broader, longer-term and more strategic basis.

Gender Integration

Leadership support and capacity building activities help ensure gender integration is a priority for compacts during implementation. MCA-Philippines had high capacity, willingness and openness to integrate gender equality objectives throughout compact activities. High-level CEO support trickled down to team leads and other members of the team, helping to ensure that the compact was highly successful in gender integration.  At the same time, in particular during compact implementation, experiences in this compact reinforced the importance of continued capacity building for contractors, implementing entities, and others tasked with implementing gender requirements that may be unfamiliar to them. These experiences reiterate several critical lessons for future compacts. The first is the importance of MCA leadership setting the tone about the importance of gender integration from the beginning of compact implementation. Ensuring and incentivizing MCA CEOs to show leadership for social and gender integration is critical and could be encouraged through a variety of ways by MCC, such as performance evaluations or annual recognition by MCC for MCAs that do a good job with social and gender integration. The second lesson suggests the need for incorporating capacity building activities, such as training on critical social and gender issues in infrastructure, into compact implementation processes and milestones, in order to ensure that implementers and contractors understand and can adequately address these requirements. Contractual clauses, Social and Gender Integration Plans, and implementing entity agreements are good tools for such capacity building.