End of Term Evaluation of the Private Sector Development Project

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Evaluation Plan:
2012-2018, Malawi
Evaluation Type:
Final Project
Planned End Date:
06/2017
Completion Date:
06/2017
Status:
Completed
Management Response:
Yes
Evaluation Budget(US $):
35,000

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Title End of Term Evaluation of the Private Sector Development Project
Atlas Project Number: 00072218
Evaluation Plan: 2012-2018, Malawi
Evaluation Type: Final Project
Status: Completed
Completion Date: 06/2017
Planned End Date: 06/2017
Management Response: Yes
Focus Area:
  • 1. Poverty and MDG
  • 2. Others
Corporate Outcome and Output (UNDP Strategic Plan 2014-2017)
  • 1. Output 1.1. National and sub-national systems and institutions enabled to achieve structural transformation of productive capacities that are sustainable and employment - and livelihoods- intensive
SDG Goal
  • Goal 1. End poverty in all its forms everywhere
  • Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
SDG Target
  • 1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions according to national definitions
  • 1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance
  • 9.b Support domestic technology development, research and innovation in developing countries, including by ensuring a conducive policy environment for, inter alia, industrial diversification and value addition to commodities
Evaluation Budget(US $): 35,000
Source of Funding: TRAC
Joint Programme: No
Joint Evaluation: No
Evaluation Team members:
Name Title Email Nationality
Bruno Mukendi Dr. brunomukendi@wimi.net
GEF Evaluation: No
Key Stakeholders: Ministry of Industry, Trade and Private Sector Development
Countries: MALAWI
Lessons
Findings
1.

Responsiveness to Malawi’s development needs and priorities

 The National Industrial Policy (NIP) is aligned with the Vision 2020 and Malawi Growth and Development Strategy II (MGDS II) which recognize that Malawi should be transformed from a predominantly consuming and importing country to a predominantly manufacturing and exporting nation. Malawi being an agriculture-based economy, the policy‘s emphasis on the development and the expansion of agro-processing industries, is in perfect line with national needs, objectives and strategies. The NIP is fully consistent with the National Export Strategy (NES) whose primary objective is to promote the exports of the country’s prioritized productive sectors with a view to diversifying the productive base of the economy, creating jobs and employment opportunities, increasing incomes, particularly of smallholder farmers, and thereby contributing to poverty reduction. 2 It is a key strategy to accomplish Malawi’s desired move into the exporting of high value-added goods and for reducing the country’s over reliance on raw or semi-raw commodities. The National Industrial Policy, therefore, supports the identified target product clusters that have a high potential to generate significant spillovers and structurally transform the economy that is driven, among others, by a conducive business policy environment and improved market access. 


Tag: National Programme/Project Design Trade and Development

2.

 Alignment with UNDP ‘s programmatic priorities and core values

 The National Industrial Policy is in line with UNDP’s private sector strategy, in particular, the pro-poor private sector-led inclusive business model that calls for concerted efforts by the Government of Malawi to address the failures that prevent a private sector driven economy, and incentivize businesses to engage, innovate and invest in the expansion of the productive base of the country and export. The Policy also supports a conducive policy environment to enable pro-poor investments identified in the prioritized clusters of the NES (especially for women and the youth) to flourish. Hence, an improved policy environment, that effectively put the private sector at the center stage of the economic transformation strategy, is more likely to contribute to the achievement of sustainable human development, as advocated by UNDP. 


Tag: National Programme/Project Design Strategic Positioning

3.

Internal coherence of the logical framework and the change strategy 

While focusing on the enabling policy environment for a private sector-led growth in Malawi, it is necessary to understand how this output relates to the overall efforts to establish a more inclusive, innovative and competitive private sector, which was the specific objective of the Private Sector Development Project (PSDP). To this effect, the evaluation mission found that the project’s change strategy was clearly articulated, leading to a well-thought out sequence and prioritization of critical interventions. Indeed, underlying the transformational logic of the project was the inclusive business approach. Since Malawi’s business environment remains a key bottleneck to pro-poor private sector development and inclusive economic growth, the PSDP approach was to support the development of inclusive business or market systems in Malawi that integrate low income people, small farmers in their value chains, thereby creating opportunities for them in a more targeted way. 


Tag: Relevance Programme/Project Design Theory of Change Inclusive economic growth Jobs and Livelihoods Trade and Development

4.

The project was therefore anchored on a coherent change framework articulated around key areas that impact to a certain extent the development and the expansion of a private sector-driven economy. A successful implementation of these interlinked interventions would contribute to economic empowerment, through the creation of employment opportunities and increase in incomes, particularly for the poor, which was the outcome pursued by the project. Nevertheless, it should be recognized that the outcome to which Output 1 and other outputs of this project contribute, cannot be realistically achieved through these three outputs alone. For example, the increase in the share of non-traditional exports is influenced by demand and supply side factors, the improvements in the national infrastructure systems and macroeconomic conditions, which are not altogether under the control of UNDP or the UN system. It is also unrealistic to presume that transformations in a project environment will necessarily trickle down to the entire country.

While recognizing the coherence of the change strategy, some stakeholders interviewed argued that the project did not have sufficient resources to adequately fund all of its components, leading to one Component (Output 3: Soft Loan) not coming to existence 5 and Output 1, the focus of this evaluation, not having been sufficiently funded. Indeed, weak policy implementation was cited by most people interviewed, and one of the main reasons given was related to funding constraints.


Tag: Relevance Programme/Project Design Theory of Change Inclusive economic growth Jobs and Livelihoods Trade and Development

5.

FINDINGS ON OUTPUT EFFECTIVENESS

Effectiveness measures the extent to which the intended objective (s) was (were) achieved, taking into consideration the performance indicators and targets specified in the project results matrix. After a careful review of documents and interviews, the evaluation mission has concluded that all key policy frameworks and strategies have been delivered, although their implementation is lagging behind. Above all, the National Industrial Policy was completed, approved by the Cabinet and launched in October 2016. This is considered by many as the first ever stand-alone Industrial Policy (NIP) that Malawi has ever had. An outcome of a long process of consultations including the government, private sector, and development partners, the NIP is well-written and provides strategic guidance and direction on how Malawi can develop the productive base of its economy and industrialize.


Tag: Effectiveness National Implementation Modality Project and Programme management

6.

The National Trade Policy

The National Trade Policy (NTP) is another flagship achievement of the project, a well-thought out roadmap to deal with the binding constraints that have hindered Malawi’s ability to take full advantage of market and trade opportunities in the domestic, regional and global landscape. The Policy was completed and approved by the Cabinet, and was launched in October 2016.

Like the NIP, the NTP was formulated through a consultative process that included stakeholders from the public and private sectors, civil society, academia and development partners. It was developed against the background of the country’s widening trade deficits despite numerous trade opportunities in the domestic, regional and global markets. In line with the MGDS II, the NES and the industrial policy framework, the NTP provides the vision and strategies to make Malawi a globally competitive export-oriented economy, generating higher and sustainable livelihoods through trade that recognizes the role of MSMEs and the vulnerable groups. The Policy covers five major priority areas: market access, business environment, narrow productive base, high entry costs for small scale producers and traders, and implementation gap to develop the trade sector.


Tag: Effectiveness National Civic Engagement Financial Inclusion Inclusive economic growth Trade and Development

7.

Review of the Industrial Rebate Scheme (IRS)

The Industrial Rebate Scheme was introduced in the nineties to promote the local industry by exempting manufacturers from paying customs duties and excises on selected materials they import to be used in the production of goods. The companies had to apply for an IRS license from Malawi Revenue Authority, the governance body. The eligible companies must demonstrate that at least 20% of the value of the goods produced is added locally. The study was conducted by the MoITT with UNDP assistance to find out why the Industrial Rebate Scheme (IRS) was no longer attractive to industries. It concluded by identifying areas where innovations are needed in the legislation and made recommendations to improve transparency in the Scheme governance as well as in its management.


Tag: Effectiveness National Partnership Project and Programme management Country Government

8.

Review of the Export Processing Zones (EPZ)

 In an effort to stimulate industrialization, this study was commissioned by the MoITT with UNDP assistance in order to review the existing Export Processing Zones (EPZs) regime and to find out why most industries were not taking advantage of the preferential incentives provided to eligible industries. The study supported the relevance of the EPZ model and identified key areas of the legislation that needed to be revisited to stimulate export-oriented industries. Accordingly, an amended Export Processing Zones Act was prepared by the MoITT, based on the recommendation of the study. The final draft was submitted to the Ministry of Justice and Constitutional Affairs for vetting. During interviews, the evaluation mission was informed that the Amended EPZ Act passed. 


Tag: Effectiveness National Country Government Trade and Development

9.

Business Licensing Act (2012) and Business Licensing Regulations 2014

As part of the reform of economic laws to facilitate the implementation of government’s economic transformation strategy, new Business Licensing Regulations were proposed by the MoITT. Afterwards, handouts on new regulations were distributed, press releases prepared and other events (radio programs and TV jingles ) organized to sensitize the public and the business community about the new regulations. Awareness raising workshops were also organized throughout the country on business licensing Act and regulations, which, among others, require all foreign businesses to be licensed at the national level while domestic businesses are licensed at the local level by local authorities. The sensitization campaigns were important, in part, because local authorities were also asking foreign businesses to license at their level in contravention of the statutory requirements. At the time of this assessment, the mission learned that these practices were diminishing and the new measures were having some positive impacts as discussed in the Chapter on Output contribution on outcome and impacts. However, the mission was informed that funding constraints did not allow the MoITT to pursue with awareness building activities, in particular to address mounting capacity problems shown by local Councils which tended to make bad interpretations of the regulations.


Tag: Effectiveness National Local Governance Awareness raising

10.

Buy Malawi Strategy

To encourage the consumption of locally produced goods and services, thereby contributing to increase in employment, income, tax revenues and growth in priority sectors, the Buy Malawi Strategy (BMS) was updated and launched on March 18, 2016, with great attendance from the public and private sectors. The head of state has proclaimed March 18 Malawi Day. An interim Secretariat in the MoITT is in place. Subsequently, a Marketing & Communication Plan for the BMS has been developed. Various promotional materials promoting BMS have been produced and distributed to the public. Various media houses have now slots on BMS.


Tag: Effectiveness National Partnership Trade and Development Coordination

11.

Agricultural Supplier Development Program (ASDP)

This concept note on ASDP was developed following a two day training on the subject. The training was facilitated by UNDP’s Africa Facility for Inclusive Markets (AFIM), part of the UNDP Regional Service Centre for Africa. The course was attended by 50 participants from a cross-section of stakeholders, ranging from the private sector, business organizations, farmers associations, mainstream ministries and civil society. The overall objective of the training workshop was to support Government Partners to develop and establish a “National Agribusiness Supplier Development Program” for Malawi. The Agribusiness Supplier Development Program is aimed at linking smallholders to markets; it is a market-led initiative. It is expected that the program will trigger a sustainable partnership between smallholder farmers and off-takers, with the initial assistance of government and development partners.


Tag: Agriculture Effectiveness Civic Engagement Trade and Development

12.

Industrial Database Analytical Report

To support evidence-based decision making on industrial development, the MoITT, with UNDP assistance, launched in 2016 this study with the aim of developing an industrial database for the Ministry. Findings, lessons and recommendations from the industrial data collection survey, which will be conducted annually, are expected to contribute to improvements in future decisions on programming and management of interventions targeting the manufacturing sector in the country. Although this first report had a limited scope, covering only Lilongwe and surrounding areas, while the industrial and economic capital of the country is Blantyre, it provided valuable information. For example, the survey revealed that the clusters identified under the NES were not exporting as expected of them, and discussed the reasons for this situation.


Tag: Effectiveness National Policies & Procedures

13.

Capacity Development

Two officers, one from the Department of Industry and another from the Department of Trade of the MoITT received a four month online training course with ICT/ILO on Enterprise Development through Value Chains and Business Service Markets: A Market Development approach to Pro-Poor Growth. The participants were satisfied with the training program. A Manufacture Expert was recruited to assist the Manufacture TWG under TIP SWAp. However, his contract was terminated due to performance issues. A Capacity Development Plan was prepared for the TIP SWAp Secretariat. Finalized in early 2017 with UNDP assistance, this Plan seeks to strengthen the Secretariat’s strategic, management, resource mobilization and monitoring and evaluation capacities. It was approved by the MoITT and needs funding for its implementation.


Tag: Effectiveness Value Chain Capacity Building Institutional Strengthening

14.

TRADE, INDUSTRY, PRIVATE SECTOR DEVELOPMENT SECTOR WIDE approach (TIP SWAp)

Another flagship achievement under Output1 is the Trade, Industry, Private Sector Development Sector Wide approach (TIP SWAp), the coordinating and implementing structure of the NES and the industrial development policy frameworks and strategies, which was created in 2013 with UNDP’s technical and financial support. UNDP’s assistance to TIP SWAP was anchored in Enhanced Integrated Framework’s (EIF) Tier 1 project in Malawi which sought to strengthen institutional capacities of trade-related institutions, especially of the Ministry of Industry, Trade and Tourism (MoIT), to formulate, implement, review and evaluate sector policies. TIP SWAp is actually the structure through which the above policies, strategies, documents and/or the issues related to them were debated and appropriate solutions found in a multi stakeholder context, to make the business environment more conducive for private sector investment and growth, hence making Malawi a producing and exporting country spearheaded by the NES.8 A TIP SWAp Secretariat was established by the MoITT and is hosted by its Department of Planning.Critical to the TIP SWAp’s effectiveness under Output 1 of the PSDP are its Sector Working Group (SWG) and its Technical Working Groups (TWGs). Based on documentary reviews and interviews, the evaluation mission believes that the overall performance of these two critical working groups was partially satisfactory. 


Tag: Inclusive economic growth Trade and Development Effectiveness Partnership

15.

SECTOR WORKING GROUP (SWG)

The SWG is the governance and oversight body of the TIP SWAps with high level representation from each stakeholder group and with the main mission to guide and endorse the recommendations made by TWGs. It is chaired by the Secretary for Industry, Trade and Tourism of the MoITT, and co-chaired by the Executive Director of the MCCCI. Its decisions are channeled to the Cabinet through the Minister of the MoITT. The membership in the SWG comprises of government, private sector, NGOs and development partners.


Tag: Effectiveness Human and Financial resources Project and Programme management Country Government Coordination Technical Support

16.

Comments

Related to the specific concern raised by some stakeholders during interviews about the dormancy of TIP SWAp, the data show that these working technical groups have rather maintained an acceptable level of meetings over the last four years, the organization and the regularity of meetings constituting one of the main indicators for assessing the functionality of any coordination structure. Indeed, out of the expected 16 quarterly meetings for the four year period, the oil seed TWG has successfully held all of them. At the same time, the data indicates that no TGW fell under 11 quarterly meetings, therefore suggesting that the decreasing trend in meetings (dormancy), could have started in the last quarter of 2015 to worsen during 2016.The main reason that was given for the suspension of the TWG meetings related to funding constraints. The main reason that was given for the suspension of the TWG meetings relates to funding constraints.


Tag: Effectiveness National Country Government Inclusive economic growth Jobs and Livelihoods Trade and Development Coordination Technical Support

17.

The poor involvement by high-ranking officials in TIP SWAp work was reportedly compounded with their increasing inability to push forward reforms and to show concrete results. Consequently, the majority of stakeholders, in particular, the private sector started to disengaging from the process, increasingly focusing attention on dialogue frameworks, such as the Public Private Dialogue Forum attended by Ministers, to air issues high on its agenda. One study commissioned by UNDP under this PSD project arrived at the same conclusion by the same conclusion by stating that: 

“Lack of senior level participation, including from MoITT, has led to gradual disengagement with the TIP SWAp, especially from private sector’s representatives. The lack of high-level engagement by various Ministries, Departments and Agencies (MDAs) as foreseen in the original TIP SWAp governance mechanism’s design, has prevented matters arising at the SWG level to be followed up through adequate formal channels of government: the Cabinet and the Economic Management Committee of Principal Secretaries… These challenges were compounded by the lack of engagement on the TIP SWAp by the MoITT –at the level of the Minister, PS and directors - to push forward reforms and policy initiatives, the relative lower hierarchy of the MoITT in the government structure, and capacity constraints in the TIP SWAp Secretariat which is in principle the entity responsible for following up and tracking action in between SWG meetings”. 


Tag: Effectiveness Civic Engagement Human and Financial resources Partnership Project and Programme management Country Government Coordination

18.

The evaluation mission established that this critical success factor was not met, which amplified coordination and resource mobilization problems under TIPS SWAp. The mission did not see a Secretariat, or a team of full time staff members for TIP SWAp Secretariat, and this observation was confirmed during assessment by the Department of Planning of the MoITT, the host of the Secretariat. During the two first years of the Secretariat, its performance was high and sustained by foreign technical assistants. This period was viewed as the golden area of the TIP SWAp when meetings were held regularly by technical working groups. As technical assistance left, financial resources also dwindled.


Tag: Effectiveness Human and Financial resources Project and Programme management Trade and Development Coordination Technical Support

19.

FINDINGS ON OUTPUT EFFICIENCY

Efficiency measures the extent to which processes were optimal and allocated resources were used in the most economical and cost effective manner possible. Based on documentary analysis, interviews and personal observations, the mission found that the development and delivery of policy frameworks were marred with a myriad of inefficiencies that threatened the ability of the project to achieve its planned activities and results within the required time frame. Considerable delays were experienced throughout the process of policy formulation and execution.


Tag: Efficiency Policies & Procedures Programme/Project Design Service delivery Country Government Trade and Development

20.

Moreover, the recommendations made in some studies were either delayed (example: study on Production and Investment Incentives), or executed in a selective manner (example: the Industrial Rebate Scheme). A weak reactive capacity was the dominant feature of the project administration, as well. The evaluation mission was informed that despite the fact that the MoITT‘s relevant staff had received training on procurement to enable them to properly write their requests to UNDP in ways to ensure compliance with its corporate rules, policies and procedures, the submission of requests or proposals (example for acquisition of equipment) turned out to be a formidable time consuming task that could take one to two weeks. Another example given was drafts of terms of reference that were said by UNDP’s stakeholders, could take three to four weeks before UNDP decided to take over the responsibility for their finalization.


Tag: Efficiency Human and Financial resources Operational Efficiency Policies & Procedures Procurement Project and Programme management

21.

Coordination challenges as well as capacity constraints within the Ministry hampered a speedy implementation of activities and distracted concerned stakeholders from working closely together to mobilize energies and advocate policy change to boost the competitiveness of the END OF TERM INDEPENDENT EVALUATION OF THE PSDP- DR. BRUNO MUKENDI - WIMI Page 48 agro-industrial sector in Malawi. They prevented relevant actors to find mutually agreeable solutions to administrative issues. In addition, some payment requests could not be processed in due time because none of the two signatories (Deputy Director of Industry and Deputy Director of Trade) was available.


Tag: Agriculture Project and Programme management Coordination

22.

OUTPUT CONTRIBUTION TO OUTCOME AND IMPACTS

Outcome and impacts measure the extent to which output results contributed to changes through improvements in human conditions and institutional strengthening, taking into account the outcome’s performance indicators and targets specified in the project results framework. As indicated in the Inception Report and in the first chapter of this Report, the scope of this evaluation did not allow for a complete assessment of the outcome, the focus being on output evaluation. Since the terms of reference required gauging the contribution of outputs to the planned outcome, which refers to economic empowerment indicators that are covered under Output 2 (MICF), it was agreed that the evaluation mission glimpsed the annual reviews prepared under this output to familiarize with any outcome and impact information. The mission also undertook site visits to meet with beneficiaries and to inquire about their views on the project. While insufficient, the information gathered through these processes was used to appraise any contribution to the UNDAF outcome. In a separate section, the mission will assess the impact of the business enabling policies on beneficiary sector and on achieving the national objective of a competitive private business-led growth that is export-oriented in Malawi.


Tag: Impact Monitoring and Evaluation

23.

Output Contribution to the outcome: Productive poor benefit from decent work, income generation and pro-poor private sector growth by 2016.

The specific output of the project that closely correlates with the aforementioned outcome corresponds to the establishment of the Malawi Innovation Challenge Fund (MICF) as an operational mechanism to increase inclusiveness and competiveness in the value chains in agriculture and manufacturing in Malawi (Output 2). Suffice here to say that the MICF provides grant finance for innovative business projects that integrate smallholder famers in their supply chains. The goal is to accelerate economic diversification and to increase the opportunities for the poor to benefit from economic growth, through higher incomes and better job creation. The first round of the MICF was launched in 2014, and implementation of the projects commenced in January 2015. The second round was launched in July 2016 and projects were to commence implementation by January 2017.


Tag: Agriculture Impact National Inclusive economic growth Jobs and Livelihoods Trade and Development Value Chain

24.

The evaluation mission also visited three MICF projects in Blantyre and Zomba. In all of them, small farmer beneficiaries pointed out several value additions of their respective projects, suggesting that the projects are having recognizable economic and social impacts, yet to be fully quantified.

? Satemwa Tea Estates (STE): is implementing in Blantyre a project that involves establishing a small holder based supply chain for herbs, flowers and fruits to be used for naturally flavoring specialty tea. The project has also established a smallholder tea brand, known as ‘Yamba Tea’ while at the same time it is working on introducing tea bags on the market.

A dozen of smallholder farmers interviewed by the mission cited a number of benefits derived from the project: (1) supply of new herbs to enable them earn extra income, in addition to their normal income currently being earned through sales of green tea leaf sales to STE; (2) the company is training them to attain special plucking skills to improve their overall quality standards and the green leaf coming from this stream would be used to produce the “YAMBA” brand of tea which is a 100% smallholder brand of tea for the domestic and regional market; (3) an Out-grower Manager was recruited and is responsible for capacity development and for coordinating all the extension services being provided to the farmers.


Tag: Agriculture Impact Women's Empowerment Inclusive economic growth Jobs and Livelihoods Trade and Development Value Chain

25.

Furthermore, the Out-Grower Manager was providing extension services support through the provision of technical advice on chicken feeding schedule, disease control and treatment and general hygiene of the cages. Through this technical support most of the farmers have ended up significantly improving their productivity, from as a low as 50% to as high as 80%, edging closer to the 85% production rate achieved by the company at its chicken farms.

? Dairibord Malawi is implementing an innovative project which aims to address the vagaries of the supply and demand cycle in the dairy industry in Malawi. This project was set up in Blantyre and is supporting farmers in the Thyolo, Mulanje and Chiradzulu districts, the leading milk producing districts in Malawi. The key problem being addressed by the project emanates from the challenge that during the period July to October, milk demand peaks due to improved consumer disposable incomes following the harvest season and public service annual salary increments in July. At the same time, milk production at bulking group level during this period of high demand is low as the pastures have dried out at the end of the rainy season and the farmers do not have enough to feed the cows due to the high cost.


Tag: Agriculture Agriculture land resouces Impact Inclusive economic growth Jobs and Livelihoods Capacity Building

26.

The potential impacts of the industrial policy frameworks on beneficiary sectors and on the advancement of the economic transformation agenda in Malawi 

The new policy frameworks and legislative instruments have contributed to improving systems at the macroeconomic level, even if their implementation is still lagging behind. If they are effectively executed, they will have positive effects on employment and incomes, therefore contributing to this outcome. Indeed, the industrial policy has created an overall framework that would facilitate the industrialization of Malawi around clearly targeted sectors and industries, thereby helping it to become an emerging and exporting economy. By upgrading the agro-industrial sector, the NIP clearly searches for a dynamic comparative advantage of the Malawian economy. The new policy frameworks set the vision and define the strategies articulating how Malawi can produce high quality and value added products to be able to compete in the domestic and international markets. These policies show how to link small producers to the markets in ways that enable them to connect to new opportunities, increase their incomes and improve livelihoods. 


Tag: Agriculture Impact National Rule of law Monitoring and Evaluation Country Government Inclusive economic growth Jobs and Livelihoods

27.

On the other hand, the Ministry of Labor and Manpower Development, through policy frameworks, studies and the technical working group of the TIP SWAp must have understood by now the urgent need to educate and supply the markets with a competent labor force with appropriate technical skills, especially in the prioritized sectors or products. What is needed for concerned national institutions is just to aggressively move into implementing the relevant recommendations. Moreover, the policy frameworks and the discussions in technical working groups have raised awareness about the complexity of factors that affect the competitiveness of the private sector in Malawi , and have particularly highlighted the need for collaborative efforts and commitment from all relevant Ministries (MoITT, Finance, Agriculture, Energy, Transport, Water, etc), private sector, development partners and non-governmental organizations to work together in order to improve the business operating environment in Malawi. There is a shared understanding that effective changes are needed in areas that constitute the binding constraints to the productive sector of the Malawian economy

It is also important to draw attention to the potential impacts of new business regulations and strategies, developed through the project. In the past, private investors had little information on how to establish a business in Malawi and what was expected of them in their dealings and transactions.


Tag: Agriculture Impact National Country Government Inclusive economic growth Institutional Strengthening Technical Support

28.

FINDINGS ON OUTPUT SUSTANABILITY

Sustainability of work under Output 1 The policy frameworks were produced. Since their implementation is embedded with existing national structures and institutions, this could have contributed to sustainability. However, a number of factors make the potential for sustainability of the work done under the business enabling policy environment component even more problematic:

  1.  Inadequate resources: the policy frameworks are in place, but their implementation is made difficult due to lack of financial resources. The project support document did not define a clearly articulated exit strategy for this project component, other than stating that the Project will leave behind improvements in the policy environment affecting the performance of prioritized sectors. Yet, to ensure the sustainability of these improvements as well as the coordination structure put in place through the project, would require that appropriate capacity for coordinating, managing, mobilizing resources and delivering public and private support interventions in trade, industry and private sector development be further strengthened in ways to bolster MoITT’s ownership.
  2.  Weak engagement by leadership from key ministries and agencies, including the MoITT and the Ministry of Finance to support TIPS SWAp’s work, push for changes and show concrete interim results to reassure stakeholders and enhance credibility.
  3.  Inexistence of a strong and fully dedicated Secretariat with full time staff to lead the implementation of TIP SWAp, notably through the mobilization of resources, support to the implementation of the Joint Sector Strategy and technical working groups. The effectiveness of the TIP SWAp Secretariat was one of the preconditions for the success and sustainability of the work under Output 1. Therefore, the current fragility of the Secretariat constitutes a major failure of the project and its inability to sustain the activities and results that were achieved.
  4.  Human capacity constraints within the MoITT.
  5. Weak support system for effective implementation of privateled industrial growth policy initiatives: inadequate transportation, telecommunication, power and water supply systems, macroeconomic instability and high cost of capital.

Tag: Sustainability Human and Financial resources Policies & Procedures Coordination

29.

FINDINGS ON OUTPUT SUSTANABILITY

Sustainability of work under Output 1 The policy frameworks were produced. Since their implementation is embedded with existing national structures and institutions, this could have contributed to sustainability. However, a number of factors make the potential for sustainability of the work done under the business enabling policy environment component even more problematic:

  1.  Inadequate resources: the policy frameworks are in place, but their implementation is made difficult due to lack of financial resources. The project support document did not define a clearly articulated exit strategy for this project component, other than stating that the Project will leave behind improvements in the policy environment affecting the performance of prioritized sectors. Yet, to ensure the sustainability of these improvements as well as the coordination structure put in place through the project, would require that appropriate capacity for coordinating, managing, mobilizing resources and delivering public and private support interventions in trade, industry and private sector development be further strengthened in ways to bolster MoITT’s ownership.
  2.  Weak engagement by leadership from key ministries and agencies, including the MoITT and the Ministry of Finance to support TIPS SWAp’s work, push for changes and show concrete interim results to reassure stakeholders and enhance credibility.
  3.  Inexistence of a strong and fully dedicated Secretariat with full time staff to lead the implementation of TIP SWAp, notably through the mobilization of resources, support to the implementation of the Joint Sector Strategy and technical working groups. The effectiveness of the TIP SWAp Secretariat was one of the preconditions for the success and sustainability of the work under Output 1. Therefore, the current fragility of the Secretariat constitutes a major failure of the project and its inability to sustain the activities and results that were achieved.
  4.  Human capacity constraints within the MoITT.
  5. Weak support system for effective implementation of privateled industrial growth policy initiatives: inadequate transportation, telecommunication, power and water supply systems, macroeconomic instability and high cost of capital.

Tag: Sustainability Business Model Human and Financial resources Policies & Procedures Jobs and Livelihoods Coordination

Recommendations
1

While UNDP has a strong comparative advantage in upstream work, the institution could consider some targeted interventions to support the implementation of policies and strategies it has helped to develop with a view to facilitating the realization of the desired improvements in institutional strengthening to achieve the needed economic transformation and developmental impacts.

Indeed, UNDP has delivered a commendable policy work, but the total expected benefits of this work, as discussed in this Report, has not yet been felt due to the slow pace of implementation. This support will go along with increasing the chances of sustainability of benefits given the current institutional fragility and budgetary constraints faced by the MoITT. One potential area for consideration would be the TIP SWAp Secretariat as further discussed below. It is understood that TIP SWAp is not the onus of UNDP, and, therefore, other development partners, such as the EU which is in the process of preparing its future cooperation program with Malawi, and has provided assistance to TIP SWAp in the past, could be approached to discuss possible areas of collaboration.

2

UNDP should provide support to enhance the capacity of the TIP SWAp Secretariat to support the implementation of policy frameworks and strategies that have been developed with UNDP assistance, through effective functioning of the SWG and the six Technical Working Groups. The Secretariat is the best entry point for building the capacities of the Ministry of Industry, Trade and Tourism to lead, coordinate and implement reforms. A well-functional and dedicated Secretariat was one of the preconditions for the effective implementation of the National Export Strategy, the Joint Sector Plan and the TIP SWAp as a consultative mechanism for trade, industry and private sector-related policies.

To ensure its visibility, the revamped Secretariat, rather than being hosted by the Department of Planning of the MoITT, would be attached to the Permanent Secretary and led by a National Coordinator. Critical capacity gaps that hampered a good functioning of TIP SWAp Secretariat were already identified in the MoITT’s functional review of 2013/2014 and were taken into consideration in the preparation of the Capacity Development Plan for TIP SWAp, formulated with UNDP’s assistance in 2015 and finalized this year. To this effect, the evaluation proposes support in four areas, the two first of which are in line with the recommendations made in the aforementioned Plan:

1) Support the capacity development of the Secretariat and the MoITT in five critical areas that will help to cement its ability to lead, coordinate and manage the structural transformation process underway: (1) strategic leadership or capacity to build consensus among stakeholders, to push for reforms, to champion TIP SWAp and to produce actionoriented policies; (2) coordination or the ability to organize different stakeholders so that they can effectively work well together , or the ability to synchronize efforts to produce unity of action; (3) resource mobilization or the ability to raise money and mobilize other resources to support the implementation of TIP SWAp work and technical working groups; (4) management or the ability to practice management styles that foster team building and two-way communication; and (5) monitoring and evaluation, or the ability to measure and follow progress, learn from it, account for results and adjust policies. 

2) Ensure the visibility of the Secretariat by establishing a direct reporting line from the TIP SWAp Secretariat to the PS- Level Executive Committee of the TIP SWAp through the MoITT’s Permanent Secretary. 

3) Support the recruitment of three national consultants/experts (chief economist and two economists) for initial duration of at least ten months for the Secretariat to ensure continuity and ownership. They will be responsible for strategic guidance, coordination, management operations, communication and resource mobilization to facilitate the implementation of TIP SWAp-related policies and activities. It is expected that these national consultants would be later hired as full time staff members by the Ministry as its budgetary situation improves. 

4) Advocate for the Secretariat to have its own office space and be provided with acceptable working conditions. 

3

The MoITT with UNDP’s assistance has developed multi -year implementation plans for the National Industrial Policy and the National Trade Policy. UNDP should work with the Ministry to identify priority actions, especially those in need of financing and on which it could provide its support. 

In particular, interventions could be considered for : 

  • Strengthening the linkages between domestic and international trade through support for institutional strengthening of the MBS’s capacity and the implementation of the National Trade Facilitation Plan.
  •  Eliminating external and domestic policy barriers to trade (support to negotiations for the elimination of non-tariff barriers prevalence in exports, support for the development and maintenance of a national trade database).
  •  Supporting a training program to facilitate MSMEs in meeting standards for priority products and markets.
  •  Mainstreaming trade priorities into sectoral plans and budgets.
  •  Strengthening the capacity of the Ministry and trade-related institutions in trade negotiations and investment promotion.
  •  Improving the participation of MSMEs in manufacturing and market linkages.
4

UNDP should consider the possibility of supporting a youth entrepreneurship project. Youth unemployment is one of the major development issues in Malawi given the high proportion of the youth population in the country (more than 60%). UNDP could help establish a start-up grant mechanism to support young entrepreneurs in the agribusiness and industrial sector. The grant could be accompanied with business incubation services (financial management training, coaching, physical space, and business advisory services). The EU has an entrepreneurship program in its next cooperation framework for Malawi, and UNDP could discuss with them the potential areas of cooperation.

5

If the same private sector development project has to be reformulated, or to design a similar project, UNDP should ensure that:

? all key stakeholders are involved at the design stage, including potential donors to discuss possible co-financing options when UNDP has very limited resources to invest in the project;

? there is no dispersion of efforts by concentrating on a few selected areas where it can achieve a maximum developmental impact;

? the formulation of project results and indicators is based on SMART criteria, and does not lend to multiple interpretations. This will facilitate project monitoring and evaluation within the context of the results-based management approach

6

Human capacity development is critical to ensure ownership and sustainability of benefits in Malawi. The present phase was weak in capacity development interventions. UNDP should facilitate the participation of key national officers and officials in short-term residential and external training programs as well as study visits to strengthen their performance capacities in key areas, such as enterprise development and value chains, industrial and trade policy formulation, coordination, implementation and evaluation; international marketing and export promotion, international trade negotiations, project cycle and leadership and change management within the context of structural economic transformations involving the private sector. Programs that are designed to help participants acquire specific technical competencies must be privileged as opposed to those intended to raise awareness around some thematic areas.

7

If the future PSDP is executed under the National Implementation Modality and one of the major responsibilities of its Project Manager is to advise the government, it would be preferable that the Project Manager be housed where national counterparts are to facilitate coaching and capacity development.

8

UNDP should invest in analytical work designed to show case best practices in industrial policy coordination involving the private sector, using the example of TIP SWAp. The generated knowledge could be shared with all relevant national stakeholders and could be disseminated at the regional and international level.

9

UNDP should plan for the sustainability of project benefits by defining specific exit strategies during project design and formulation.

1. Recommendation:

While UNDP has a strong comparative advantage in upstream work, the institution could consider some targeted interventions to support the implementation of policies and strategies it has helped to develop with a view to facilitating the realization of the desired improvements in institutional strengthening to achieve the needed economic transformation and developmental impacts.

Indeed, UNDP has delivered a commendable policy work, but the total expected benefits of this work, as discussed in this Report, has not yet been felt due to the slow pace of implementation. This support will go along with increasing the chances of sustainability of benefits given the current institutional fragility and budgetary constraints faced by the MoITT. One potential area for consideration would be the TIP SWAp Secretariat as further discussed below. It is understood that TIP SWAp is not the onus of UNDP, and, therefore, other development partners, such as the EU which is in the process of preparing its future cooperation program with Malawi, and has provided assistance to TIP SWAp in the past, could be approached to discuss possible areas of collaboration.

Management Response: [Added: 2017/12/27] [Last Updated: 2021/01/19]

UNDP agrees with this recommendation. UNDP should focus on facilitating implementation of policies. 

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Identify catalytic interventions from policies and strategies for UNDP’s support
[Added: 2017/12/27] [Last Updated: 2018/04/18]
RSG 2018/10 Completed UNDP supporting implementation of the Buy Malawi Strategy, Marketing and Communications Plan as indicated in the 2018 project annual work plan. History
2. Recommendation:

UNDP should provide support to enhance the capacity of the TIP SWAp Secretariat to support the implementation of policy frameworks and strategies that have been developed with UNDP assistance, through effective functioning of the SWG and the six Technical Working Groups. The Secretariat is the best entry point for building the capacities of the Ministry of Industry, Trade and Tourism to lead, coordinate and implement reforms. A well-functional and dedicated Secretariat was one of the preconditions for the effective implementation of the National Export Strategy, the Joint Sector Plan and the TIP SWAp as a consultative mechanism for trade, industry and private sector-related policies.

To ensure its visibility, the revamped Secretariat, rather than being hosted by the Department of Planning of the MoITT, would be attached to the Permanent Secretary and led by a National Coordinator. Critical capacity gaps that hampered a good functioning of TIP SWAp Secretariat were already identified in the MoITT’s functional review of 2013/2014 and were taken into consideration in the preparation of the Capacity Development Plan for TIP SWAp, formulated with UNDP’s assistance in 2015 and finalized this year. To this effect, the evaluation proposes support in four areas, the two first of which are in line with the recommendations made in the aforementioned Plan:

1) Support the capacity development of the Secretariat and the MoITT in five critical areas that will help to cement its ability to lead, coordinate and manage the structural transformation process underway: (1) strategic leadership or capacity to build consensus among stakeholders, to push for reforms, to champion TIP SWAp and to produce actionoriented policies; (2) coordination or the ability to organize different stakeholders so that they can effectively work well together , or the ability to synchronize efforts to produce unity of action; (3) resource mobilization or the ability to raise money and mobilize other resources to support the implementation of TIP SWAp work and technical working groups; (4) management or the ability to practice management styles that foster team building and two-way communication; and (5) monitoring and evaluation, or the ability to measure and follow progress, learn from it, account for results and adjust policies. 

2) Ensure the visibility of the Secretariat by establishing a direct reporting line from the TIP SWAp Secretariat to the PS- Level Executive Committee of the TIP SWAp through the MoITT’s Permanent Secretary. 

3) Support the recruitment of three national consultants/experts (chief economist and two economists) for initial duration of at least ten months for the Secretariat to ensure continuity and ownership. They will be responsible for strategic guidance, coordination, management operations, communication and resource mobilization to facilitate the implementation of TIP SWAp-related policies and activities. It is expected that these national consultants would be later hired as full time staff members by the Ministry as its budgetary situation improves. 

4) Advocate for the Secretariat to have its own office space and be provided with acceptable working conditions. 

Management Response: [Added: 2017/12/27] [Last Updated: 2021/01/19]

UNDP is already supporting TIP-SWAp. Placing the TIP SWAp under the Office of the PS might indeed raise the profile of the Secretariat.  However, UNDP might not have much influence on such a decision.

In principle, UNDP supports capacity building activities.  However, such efforts need to be well thought of and planned to produce the desired results.  There will be a need to carry out capacity needs assessment before developing any programme.

With regard to recruiting, experts to carry out capacity building activities, again the approach to capacity building needs proper planning to ensure cost-effectiveness. Different options would have to be considered.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Conduct a capacity development needs assessment for the TIP SWAp and Ministry
[Added: 2017/12/27] [Last Updated: 2018/04/18]
RSG 2018/04 No Longer Applicable [Justification: This activity has been absorbed in an African Development Bank initiative.]
History
Development a capacity building programme
[Added: 2017/12/27] [Last Updated: 2018/04/18]
RSG 2018/04 No Longer Applicable [Justification: Activity to be part of an AfDB initiative. However, UNDP is supporting skills development in the area of web site maintenance.]
History
3. Recommendation:

The MoITT with UNDP’s assistance has developed multi -year implementation plans for the National Industrial Policy and the National Trade Policy. UNDP should work with the Ministry to identify priority actions, especially those in need of financing and on which it could provide its support. 

In particular, interventions could be considered for : 

  • Strengthening the linkages between domestic and international trade through support for institutional strengthening of the MBS’s capacity and the implementation of the National Trade Facilitation Plan.
  •  Eliminating external and domestic policy barriers to trade (support to negotiations for the elimination of non-tariff barriers prevalence in exports, support for the development and maintenance of a national trade database).
  •  Supporting a training program to facilitate MSMEs in meeting standards for priority products and markets.
  •  Mainstreaming trade priorities into sectoral plans and budgets.
  •  Strengthening the capacity of the Ministry and trade-related institutions in trade negotiations and investment promotion.
  •  Improving the participation of MSMEs in manufacturing and market linkages.
Management Response: [Added: 2017/12/27] [Last Updated: 2021/01/19]

Agree in principle, the Ministry needs to prioritize interventions from the two policies and mobilize resources to implement the initiatives. UNDP should instead assist the government to develop programme to implement priority initiatives.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Facilitate identification of priority interventions from the Trade and Industry Policies.
[Added: 2017/12/27] [Last Updated: 2018/11/11]
RSG 2018/12 Completed The exercise will be conducted as part of the planning process for a new project on private sector support in 2019 if decided History
Facilitate formulation of project support document for implementation of the priority initiatives
[Added: 2017/12/27] [Last Updated: 2018/11/11]
RSG 2018/12 No Longer Applicable [Justification: The project will close in 2019. It is not certain whether the project will be continued.]
The project ends in 2019. Any decision on preparation of a new project will be made in 2019. History
4. Recommendation:

UNDP should consider the possibility of supporting a youth entrepreneurship project. Youth unemployment is one of the major development issues in Malawi given the high proportion of the youth population in the country (more than 60%). UNDP could help establish a start-up grant mechanism to support young entrepreneurs in the agribusiness and industrial sector. The grant could be accompanied with business incubation services (financial management training, coaching, physical space, and business advisory services). The EU has an entrepreneurship program in its next cooperation framework for Malawi, and UNDP could discuss with them the potential areas of cooperation.

Management Response: [Added: 2017/12/29] [Last Updated: 2021/01/19]

Agreed – UNDP project quality standards require that each project should articulate an exit strategy or sustainability plan for the project results. Sustainability will   To be taken into account in developing project support documents.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Ensure that terms of reference for project formulation exercises include strategies of sustaining project results.
[Added: 2017/12/29] [Last Updated: 2018/11/11]
Resilience and Sustainable Growth and Responsive Institutions and Civic Engagement portfoilos 2018/12 No Longer Applicable [Justification: Project formulation will be decided in 2019.]
History
5. Recommendation:

If the same private sector development project has to be reformulated, or to design a similar project, UNDP should ensure that:

? all key stakeholders are involved at the design stage, including potential donors to discuss possible co-financing options when UNDP has very limited resources to invest in the project;

? there is no dispersion of efforts by concentrating on a few selected areas where it can achieve a maximum developmental impact;

? the formulation of project results and indicators is based on SMART criteria, and does not lend to multiple interpretations. This will facilitate project monitoring and evaluation within the context of the results-based management approach

Management Response: [Added: 2017/12/29] [Last Updated: 2021/01/19]

Agreed.  UNDP is developing Standard Operating Procedures (SOPs) for project formulation which will complement the standard project quality requirements. These will ensure involvement of stakeholders, focus on results and development of SMART indicators, among other quality standards.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Develop project formulation SOPs to ensure that standard quality requirements are met.
[Added: 2017/12/29] [Last Updated: 2018/11/11]
Planning, Monitoring, Evaluation and Programme Coordination Specialist 2018/10 Completed Project formulation SOPs have been developed. In addition, UNDP project quality assurance assessment tool acts as a check list of quality requirements. History
6. Recommendation:

Human capacity development is critical to ensure ownership and sustainability of benefits in Malawi. The present phase was weak in capacity development interventions. UNDP should facilitate the participation of key national officers and officials in short-term residential and external training programs as well as study visits to strengthen their performance capacities in key areas, such as enterprise development and value chains, industrial and trade policy formulation, coordination, implementation and evaluation; international marketing and export promotion, international trade negotiations, project cycle and leadership and change management within the context of structural economic transformations involving the private sector. Programs that are designed to help participants acquire specific technical competencies must be privileged as opposed to those intended to raise awareness around some thematic areas.

Management Response: [Added: 2021/01/19]

Key Actions:

7. Recommendation:

If the future PSDP is executed under the National Implementation Modality and one of the major responsibilities of its Project Manager is to advise the government, it would be preferable that the Project Manager be housed where national counterparts are to facilitate coaching and capacity development.

Management Response: [Added: 2021/01/19] [Last Updated: 2021/01/19]

Key Actions:

8. Recommendation:

UNDP should invest in analytical work designed to show case best practices in industrial policy coordination involving the private sector, using the example of TIP SWAp. The generated knowledge could be shared with all relevant national stakeholders and could be disseminated at the regional and international level.

Management Response: [Added: 2021/01/19]

Key Actions:

9. Recommendation:

UNDP should plan for the sustainability of project benefits by defining specific exit strategies during project design and formulation.

Management Response: [Added: 2021/01/19]

Key Actions:

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