ANNEX 1

NPI IMPLEMENTATION: Illustrative Examples Based on Existing Mission Programs

The following examples are purely hypothetical. They are intended to be of assistance to missions already juggling multiple competing demands and to move the discussion of NPI from the abstract realm to the concrete realities of the field. The goal is to provide a vision of the ways in which NPI might be of use to missions in a variety of different country settings. Rather than "inventing" a hypothetical country and risk establishing self-fulfilling parameters, it was decided to apply the NPI framework to a series of real world contexts. In each case, the selection was made through informal consultation with bureau and/or mission staff, a number of whom have met with the NPI team.

Of course, actual programmatic decisions about NPI implementation in any particular country will be the result of a field-based exercise, involving the NPI team, the bureaus, the missions and their development partners. These illustrations are intended to ground the NPI theoretical framework in the real-life circumstances at USAID missions.

Illustrative example #1 - MALI

I. Country Context and NPI Rationale

In contrast to the depressing and discouraging news coming out of Africa over the past several years, the overall social, economic and political situation in Mali is positively inspiring. A popular revolution overthrew the 23-year military dominated regime of Moussa Traore in March, 1991. Since that event, the march toward sustainable democratic governance and economic growth has only been forward. The liberalized political climate has fueled an explosion of private initiatives in the print and radio media and the government is actively pursuing a decentralization program designed to breakdown the structures of post-colonial bureaucratic centralism. Additionally, the 50 percent devaluation of the CFA franc has opened enormous opportunity for the export of Mali's primary products.

But the future is not completely rosy. Mali is starting on this upward path from the very bottom. Social and economic indices such as per capita GDP, literacy, infant mortality and life expectancy are among the very worst in the world and with a population growth rate of approximately three percent per year, the positive trends will need to remain strong for a long time before they can overcome the existing obstacles.

Donors, international NGOs, the Malian Government, and the Malian people already recognize that the most promising development strategy for the country is one that emphasizes the building of partnerships. Public-private partnerships have led to some dramatic improvements in transportation infrastructure and Mali's vibrant and flourishing NGO community has developed rapidly in recent years through partnership programs with international organizations. The existing commitment to local empowerment and capacity building, evidenced by the importance placed on NGOs and the concrete plan for decentralization, all combine to make Mali an obvious candidate for a USAID program that combines the themes of the New Partnerships Initiative.

Current USAID Country Strategy and Program

USAID/Mali is in the process of developing a new, eight-year strategic plan. The new strategy will be reviewed in Washington in mid-September. While the details of the strategy and its final approval remain to be completed, the broad outlines of the strategy that will be presented are known and they offer some exciting possibilities for collaboration with the New Partnerships Initiative.

SO 1 In a clear departure from more traditional USAID strategic objectives, USAID/Mali intends to focus its primary SO on a particular age-set -- youth between the ages of 0 and 24. The mission anticipates multi-sectoral interventions in health, education, environmental management and job training to prepare youth for their adult lives. The SO is stated, "Malian youth acquire skills and behaviors to meet their needs and those of society." The approach provides for gains in each sector to reinforce gains in other sectors, giving the overall program a synergy of impact. The programmatic implementation of this SO relies upon both governmental and nongovernmental organizations to build and operate local institutions to serve the needs of the targeted population segment.

SO 2 "Increased value contribution of specific economic subsectors to the national income." This SO seeks to balance the need for economic growth within a sustainable environment. It combines political and economic policy reform initiatives with targeted, site-specific interventions promoting market and tech-nology access that empowers communities to manage local resources.

SO 3 "Community organizations play the leading role in local development." Under this SO the mission plans to focus on civil organizations in both rural and urban areas. The objective seeks to build the capacity of civil society organizations to demand good governance while, simultaneously, undertaking policy reform actions to improve the legal, regulatory, and economic environment for the sustainable development of local organizations.

A cross-cutting Special Objective, "Improved access to and better use of information", responds to the needs of all three SOs and the need to help Mali catch up--and keep up--with the information technology revolution. The mission anticipates experimental, small-scale interventions in collaboration with the private sector to support the information and communication needs of its other strategic objectives.

II. Illustrative NPI Country Program

If USAID/Mali's new strategic plan is approved as designed, the mission will already be what could be called a NPI Leading Edge Mission. Local capacity building and empowerment is what the proposed strategy is all about, although the current program envisions improving the enabling environment for small businesses rather than direct involvement in this sector. In addition, as a reengineering country experimental lab, USAID/Mali has initiated the creation of a "Maximum Center." The center would serve as the program nexus, linking interventions in the different SOs together and providing ongoing monitoring and evaluation of results to stimulate innovation and improvement. The Maximum Center would be the obvious location for a concentrated emphasis on the implementation of a New Partnerships Initiative.

NPI opportunities with additional funds

A small amount of additional funding could go a long way in helping the Maximum Center to operationalize its many ideas and plans. Some possibilities include:

• funds for innovative grants submitted by community institutions for activities that will serve to build local capacity to meet local development constraints and needs;

• funds for targeted research activities to generate lessons learned and disseminate best practices on, for example, 1) building partnerships (among local institutions and between local and international organizations), 2) on the relationship between customary local governance and decentralization actions, and 3) on the relationships and overlap between service delivery NGOs and advocacy organizations;

• funds for a new program intended to build small business capacity by helping second and third-time recipients of microenterprise loans to acquire the skills (tax payment information, employee management) they will need to make the transition from the informal to the formal economy.

NPI Opportunities not requiring additional funds

Even without additional funds, USAID/Mali will, through its Maximum Center, be able to identify and build synergy and partnerships among the institutions involved in its programs. All of the activities listed above, with the possible exception of the creation of an endowment for small grants, will be possible to effect through normal program implementation, albeit somewhat more slowly than if additional funds were available. Research to discover what is working and what is not in terms of building local capacity and empowering local communities will be part of the mission program, but specific studies may have to be staggered over a longer time period. Similarly, without funds for a new pro-gram, assistance for the transitions of enterprises from the informal to the formal domain will have to be gradually incorporated into the mission's microenterprise lending programs as they are renewed and redesigned.

Illustrative Example #2 - ROMANIA

I. Country Context and NPI Rationale

Like most of the countries of Eastern Europe and the former Soviet Union, Romania is grappling with the challenges attending the transition from central planning and communist rule to a market-based economy and democratic polity. Democratic institutions and practices have begun to take hold, but they remain fragile. The governing Party of Social Democracy of Romania is in coalition with nationalist parties which have extremist elements; the pro-reform opposition is seriously divided. Both the parliament and judiciary are institutionally weak and the independent media, while relatively unfettered, is not yet sustainable (e.g. news-papers are still dependent on the government for newsprint supplies).

The NGO sector continues to grow yet many organizations, institutes etc. appear to lack staying power. Meanwhile the ethnic Hungarian minority presses for greater autonomy and discrimination and even violence against Roma (Gypsies) is an ongoing concern. A tradition of centralized control combined with the adoption of a prefecture system akin to the French model has retarded the diffusion of political power to the local level.

Romania has registered significant headway in macroeconomic stabilization, having reduced inflation dramatically and cut the budget deficit. After four years of decline, GDP showed positive growth in 1994. The Government has taken steps to liberalize prices, trade and the exchange rate system and overseen impressive privatization at the level of retail trade and services. However, privatization of medium and large state-owned enterprises has lagged badly, in part due to fears of rising unemployment that has already topped double digits. Living standards have fallen, exacerbated by a faltering social safety net.

From the standpoint of the broader application of NPI, Romania offers a compelling case because it is representative of the common tasks confronting former communist states while also holding relevance for other categories of developing nations faced with centralized governing structures, embryonic democratic political culture and institutions, structural impediments to introduction of market mechanisms for determining resource allocation, ethnic divisions, environmental damage, and deteriorating infrastructure and social conditions.

Current USAID Country Strategy and Program

The animating logic and central goals of NPI dovetail well with USAID's present strategy in Romania. U.S. assistance under the SEED program has focused on increasing the role of the private sector, including the creation of small businesses, developing and strengthening the NGO sector, and enhancing the administrative capacity and commitment to democratic principles of regional and local government. At the same time, the mission is working at the national level to create an environment conducive to political and economic pluralism and to encourage devolution of decisionmaking authority to local institutions.

Several features of the Romania program stand out as embodying the spirit of NPI. In the area of promoting small business, USAID has funded a national center for training business counselors and aspiring entrepreneurs while also providing technical assistance to small and medium-sized private enterprises through the International Executive Service Corps (IESC), Volunteers in Overseas Cooperative Assistance (VOCA), Citizen Democracy Corps, and the Peace Corps.

The countries of Eastern Europe are particularly well positioned to create a vibrant small business sector which in turn can help to strengthen civil society as well as the national economy. In Poland, for example, emerging small enterprises have been one of the main engines of economic reconstruction and a growing political force by virtue of success in mobilizing group interests.

As far as strengthening the NGO sector, USAID--along with other donors such as the Soros Foundation--has been instrumental in enhancing the capabilities and influence of various nongovernmental actors ranging from environmental groups and social service organizations to independent trade unions. USAID has provided funds for training of NGO/PVO staff both in-country and in the U.S., facilitated collaboration among Romanian organizations, and has been a major force in the development of business and professional associations (e.g. the Young Lawyers Association; local Chambers of Commerce) which are becoming effective vehicles for aggregating and articulating members' policy interests. Other projects which contribute indirectly to empowering NGOs include training for parliamen-tarians on constituent relations (legislators have opened up more than 300 district offices) and a successful partnership between the National Democratic Institute and the Romanian Pro-Democracy Association designed to increase parliamentary transparency.

U.S. strategy in Romania strongly supports the decentralization of political power to local communities as a means to broaden participation in the decision-making process. To this end, USAID has funded the International City/County Management Association (ICMA) to improve municipal administration. The Agency has also played a central role in establishing the National Federation of Mayors which has begun to lobby the national government on a range of policy issues, including the granting of some taxing authority to municipalities. A planned new public administration project will build directly on ICMA's local government activities.

II. Illustrative NPI Country Program

As is evident from the discussion above, USG strategy in Romania already reflects some of NPI's chief goals and priorities and therefore would not necessitate an overhaul of existing strategic or program objectives in the event the mission decided to embrace NPI explicitly. Still, a good deal would have to be done to incorporate the three components of NPI into the country strategy in a more systematic and synergistic way. It is probable that budget allocations would also change to reflect an even greater emphasis on local level actors and processes.

Should the mission receive supplementary seed funds as a Leading Edge Mission, there are a number of candidate activities designed to build on existing efforts to expand local capacities which merit consideration. First and foremost this would require maintaining the current strategy's "beyond Bucharest" focus, looking for opportunities to work with receptive municipalities to augment their administrative capacity and attempting to promote greater cooperation between local authorities and constituents, including civic and other types of organizations.

This might take the form of a modest social investment fund which would make small grants to local organizations for community projects. Such an undertaking would help local NGOs to address common weaknesses such as inadequate management, financial and strategic planning skills. To the extent the project also provided short-term employment opportunities in economically depressed communities there is also the possibility of leveraging more funds from other donors. As far as other USG funds for local capacity building, the mission anticipates there will be at least one small loan window and/or community lending facility established by the Romanian-American Enterprise Fund.

In Romania, USAID-funded activities to work directly with municipalities to enhance both administrative capacity and transparency must be accompanied by continued efforts to promote decentralization of political power. Lobbying by local government officials aimed at both the executive and legislative branches is one source of pressure. USAID is contributing to such efforts through its support for the National Federation of Mayors. Despite the circumscribed autonomy of local officials, there are selected opportunities to upgrade Romanian management and service delivery at the community level. ICMA has already met with success in helping a few municipalities to reduce water and electricty consumption and in assisting a few of the country's larger cities to secure direct loan financing from the EBRD. Attention should be given to follow-on efforts to make local governing institutions more accessible to citizens and more responsive to their needs while adhering to internationally-recognized democratic standards.

Another candidate activity is to expand existing programs which draw on the expertise of U.S. organizations (e.g. VOCA, CDC, Peace Corps) that provide technical assistance to new small businesses using resident volunteers. These society-to-society linkages have already proven extremely effective in Romania. Alternatively, the extra funds could be used for small loans or grants to would-be entrepreneurs, perhaps targeted to women. Securing start-up capital can be a daunting task, especially outside Bucharest, given the underdeveloped state of credit markets.

The attempt to stimulate small business has both an economic and political rationale. These firms are the key to job creation and economic growth and also constitute a potential force in national economic and political policymaking by aggregating the interests of an emerging middle class. Associations of private business owners are an effective counterweight to still-powerful proponents of central control.

Privatization in the housing sector also encourages citizen empowerment through individual ownership and formation of condominiums. Again, additional monies could be used to expand ongoing programs aimed at privatizing the existing housing stock and establishing a real estate market.

Supplementary NPI money might also be used to foster stronger ties among diverse local NGO/PVOs, for example, through regional conferences or technology links, and to forge partnerships between these organizations and U.S. counter-parts. Too often U.S. implementors concentrate on capital-based indigenous organizations which tend to have little if any presence at the grassroots level.

A number of the activities described above could be implemented even in the absence of additional NPI-related funds or a decision not to reallocate existing resources to emphasize NPI priorities beyond present plans. For example, USAID could promote the formation of associations of private enterprise owners in the manufacturing and service sectors to complement ones it helped bring to fruition in agribusiness. Similarly, the mission could widen its efforts to facilitate town meetings bringing together community representatives, local authorities, NGOs, and relevant national government officials, to discuss critical issues confronting municipalities in a search for common ground.

Finally, another way to advance the goals of NPI without expending extra resources is to collaborate more closely with other bilateral and multilateral donors who share USAID's perspective on strengthening local capacity. Although European donors tend to view USG assistance strategy in the ENI region as bordering on anti-statist, they do recognize the importance of small business development, grassroots citizen empowerment, and local government adminis-trative competence. In view of impending budget cuts in virtually all ENI country programs, mission staffs have added incentive to enlist other donors' suppport for NPI objectives.

Illustrative example #3 - BRAZIL

I. Country Context and NPI Rationale

Brazil is a continent-sized country with a population equal to all of Spanish-speaking South America. It is a country of great contrasts, with a world-class industrial economy in the South and India-like poverty in the Northeast and Amazon regions. Brazil boasts the world's largest Gini-coefficient (i.e. the greatest divergence of income levels between rich and poor). Less than ten years ago, the country emerged from decades of military rule and is still struggling to establish and consolidate effective democratic political processes.

Because of a severe economic downturn during the 1980s and early 1990s, Brazil's federal government has been effectively insolvent and unable to finance social programs as it had in the past. Citizens have gradually learned not to depend upon the federal patronage of the past and have begun to organize to address education, health, environment and other problems at the level of their communities and states. The federal government has delegated to the state and municipal governments greater program and financial responsibility. NGOs, community schools, and other local initiatives have proliferated while pressure for political reform at the state and local (municipio) level continues to grow. Unfortunately, many of these initiatives have been short-lived due to lack of funding, weak organizational and management capacity, and the tendency toward political motivation or dependence on a single dominant founding personality.

Current USAID Country Strategy and Program

USAID phased out a massive assistance program in the early 1970s as Brazil attained annual double-digit rates of economic growth. A small USAID office was reopened in 1986 when USAID/W realized that it could not address the global problem of population growth without including a program in Brazil. Global problems remain the raison d'être for USAID's presence in Brazil. The program, now almost $20 million per year, also addresses global warming via environmental activities in the Amazon, as well as HIV/AIDS prevention (Brazil has the second largest number of HIV cases in the world). The USAID program focuses primarily on these three global problem areas with strategic objectives (SOs) in the areas of environment, family planning, and HIV/AIDS prevention. In addition, very modest resources are being directed at two important issues which have regional implications: democratization and street children.

Due to legislative prohibitions regarding nuclear proliferation and debt, the new USAID program has been implemented without a bilateral agreement with the federal government. The program has been designed and implemented via U.S. PVOs, universities and central USIAD contractors/grantees. This approach has given program strategists and project designers unusual flexibility to work with Brazilian NGOs, state and local governments, and the private sector in establishing sector objectives and designing activities which bring Brazilian organizations together to solve common problems.

With a tiny budget in a large country, USAID has focused the activities within each SO in only a few carefully selected states where political and NGO leadership has shown a willingness to address important problems related to these areas. This will facilitate the development of model programs, as well as the testing and replication of innovations. USAID mission staff also work closely with larger donors, other states, and federal ministries to encourage their participation in addressing the SOs, replicating successful pilot projects, and changing policies based upon USAID's field experience. This strategic approach is reinforced by external evaluations which have found the USAID program to have had a significant impact in its chosen sectors, despite the small size of the program.

The management of this program is unique and may be a model for future USAID programs. The program is managed by only 2 USDH officers, 9 Brazilians and 1 U.S. PSC - 12 officers in total. This extremely low personnel:program funding ratio is matched by an equally low OE:program budget ratio. "Overhead" costs constitute only two percent of the program budget managed in Brazil. This is partly due to the important role that American organizations (e.g. PVOs, univer-sities, grantees and contractors) play in coordinating sector programs and managing sub-grants to Brazilian NGOs, state and local governments, and private sector organizations.

This management approach is not only perhaps a model for other NPI countries, but--along with USAID's experience in building partnerships between NGOs-local governments and the private sector--puts USAID/Brazil in a unique position to carry out NPI objectives and effectively use special NPI funding.

In sum, Brazil is an NPI model for countries where:

• civil society is expanding roles and responsibilities;

• government responsibilities are beginning to shift from central to local level;

• the USAID staff is small and funding is tightly focused on a few objectives.

II. Illustrative NPI Country Program

This discussion assumes that USAID/W will continue to insist that the USAID/Brazil program focus on no more than three SOs and 1-2 special problem areas--street children and democratization. How can NPI help expand the impact of this USAID program?

Presently, all mission programs are active at the local level in selected sites. The local activities are part of carefully designed strategic attempts to build up from these sites to influence government policies, and country-wide project selection and budget decisions by Brazilian government entities and by donors. The following are some initial ideas on how the key elements of NPI--enabling environment, capacity building, linkages and pilot projects--might be applied to one sector of the USAID/Brazil program: the At-Risk Youth (street children) or POMMAR program. These examples can be adapted to also increase the local impact of the other programs in the USAID portfolio.

• Support the creation of local partnerships to address key municipal problems

  USAID's POMMAR project, implemented by a U.S. PVO, presently provides sub-grants to local institutions (NGOs and municipal governments) in three large cities in Brazil's poor Northeast. This innovative program is being carefully watched by large donors--especially the IDB and the World Bank--who plan to invest money in this sector.

  NPI can stimulate the creation of local partnerships between NGOs, the municipal government and the small business sector in these cities to more systematically address the multiple causes of a widely recognized problem. An example is the recentestablishment of a "Pacto da Cidade" made up of six NGOs and two local government agencies in one of the three project cities, Fortaleza. The "Pacto" was created after a Congressional inquiry to address the problem of child and adolescent prostitution. NPI funds channeled via POMMAR could finance a participatory review by the partners to clearly define what needs to be done to resolve the problem of child prostitution. POMMAR could then facilitate discussions about which institutions are best suited for which tasks and how their combined institutional efforts fit together. An outside organization such as POMMAR can be essential both to facilitate the process and to provide a neutral venue for discussion when potential partners have a history of conflict, such as in another of the project cities--Recife--where the "Pacto" model is desperately needed.

• Institutional Strengthening Grants to Build NGO Capacity

  Many NGOs have sprung up across Brazil in recent years in response to the very visible problems of homeless children, weaknesses in the adolescent justice system, child prostitution and children's rights. Most are well-meaning, but they are typically small, inexperienced, lack professional administrative or financial management, and are constantly bedeviled by the need to make the next payroll.

  USAID experience in other sectors in Brazil has shown that small institutional strengthening grants to NGOs at this stage of development have been critical to the survival and growth in capacity of those Brazilian NGOs which now implement major programs. In AIDS prevention, for example, the major NGOs now managing up to $1 million in donor and GOB funds were all aided in the previous decade by small "institutional strengthening grants" of various types provided by the MacArthur Foundation, Ford Foundation or USAID.

  By providing small institutional strengthening grants to NGOs working with At-Risk Youth across the Northeastern region of Brazil, NPI would develop their capacity to absorb larger amounts of donor "project" money in the future and would help build a critical mass of organizations which together can have a real im-pact on this problem. This grant program might best be managed by a U.S. PVO.

• Foster linkages between U.S. and Brazilian entities and among Brazilian entities

  USAID/Brazil has a very successful mechanism for fostering linkages among Brazilian NGOs. The mechanism has been managed by a U.S. PVO working with a Brazilian partner organization. Five national or sub-regional workshops and conferences are organized each year focusing on important sectoral issues (e.g. AIDS in the workplace, the role of NGOs in the democratization process, etc.). Often the results of USAID-funded pilot projects in Brazil or PVO or local government programs in the U.S. are highlighted. Unfortunately, due to lack of funds, USAID's role in the linkage process has stopped here.

  Much more could be done to both stimulate sub-regional or national linkages between Brazilian local government entities and Brazilian PVOs who work with at-risk youth, and stimulate linkages between U.S. and Brazilian entities. A search by CDIE could help determine which kinds of USAID-fostered linkages have proved over the years to be most cost-effective and sustainable. These processes could be added to the Brazilian program and could be carefully monitored and evaluated as a case study by CDIE to determine their impact. CDIE might also do a retrospective study of the sustainability of the myriad of U.S.-Brazil linkages very purposely established by the USAID program before the mission to Brazil was closed twenty years ago.

The following are other NPI-type activities that might be considered:

• Identify and award monetary prizes to "best practice" examples of partnerships between NGOs, local governments and small businesses to address a community issue;

• Strengthen or help establish NGO support associations in a Brazilian region (e.g. Amazon, Northeast) where NGOs are beginning to blossom;

• Finance short-term "people to people" training programs for local government officials to visit and learn from their counterparts in the U.S. Do the same for leaders of "less than mature" Brazilian NGOs;

• Support the municipal outreach programs of the Brazilian Institute for Municipal Administration (created with USAID assistance in the 1960s);

• Join with the IDB to finance a study of the "enabling environment" for NGOs at the federal government level and in a sampling of states.

III. Results and Indicators

The results of NPI activities in Brazil should probably be measured over a five-year period, with an initial evaluation halfway through this period. Results would be measured in terms of:

• number and institutional strength of NGOs working in a sector/problem area;

• success of the partnership model in pilot cities and replication of the model;

• increased effectiveness of local governments in addressing selected problems (e.g. child prostitution); changes in local government policies or administrative procedures which previously hampered effectiveness;

• additional and more effective linkages between U.S. and Brazilian NGOs working in a particular sector and between Brazilian NGOs working in different geographic regions.

Illustrative example #4 - PHILIPPINES

I. Country Context and NPI Rationale

The Philippines has benefited recently from positive economic trends--a GNP growth rate of 5.1% in 1994, low inflation, and dramatic increases in foreign direct investment and export earnings--and these have been accompanied by an increased political and social stability since 1989. But the proportion of the population below the poverty line, 46%, has remained steady, driven by population growth and accompanied by marked environmental degradation.

During the last decade, the Philippines has attained levels of economic growth which approach levels necessary to support goals for sustainable develop-ment across sectors. Performance by the Philippines augurs well to make it a "model NIC democracy by the year 2000". But to assure success, increased access to the benefits of growth is still needed, and consolidation of democracy at the national level must be accompanied by broadened participation in the expression of interests and public policy outcomes at the local level. Growth with equity requires increased chances for direct participation in productive economic roles, and the tangible stake in broader social benefits that can come through broader-based community control of resources.

In 1991 the national government of the Philippines passed a revolutionary Local Government Code. The code's purpose is to decentralize authority and resources from the national government to local governments. Under the current revenue sharing formula, 40% of national revenues are given to local government units to carry out new responsibilities. In addition, the code mandates broad participation by local civil society in the key decision-making bodies of local government. USAID is currently initiating pilot projects with 10 local governments. This assistance will use participatory methods to establish more efficient service in critical areas of local governance. These areas will include resource mobilization, investment prioritization and promotion, and environmental planning and manage-ment. The participatory process will revolve around the Local Government Code's provision for local special bodies (including a health board, school board, environmental board, and an overall development council) that must have at least 25% membership from local NGOs.

Particularly since the fall of authoritarian rule in 1986, Philippine civil society has seen remarkable growth, marked by an expansive nongovernmental sector of over 20,000 NGOs representing a great diversity of goals, services, interests, and responses to widely perceived opportunities for organization and collective expression. In addition to its many partners in the health, population and social services areas, on the economic front, USAID and other donors similarly find a large number of capable private sector organizations, from agricultural export associations and business advocacy groups to unions, cooperative federations, small business councils, and NGO service providers to microentrepreneurs. Parallel to a liberal business climate, legal and practical conditions to permit NGO registration and operation of activities are generally positive. At the same time, however, the large, diverse nongovernmental sector lacks cohesion, and links to disadvantaged and under-represented groups and communities are weak.

Current USAID Country Strategy and Program

USAID's strategy to support the Philippine drive for growth with equity has posed four strategic objectives, each based on crucial partnerships with U.S. and local organizations. In addition to specific objectives for reduced population growth and improved health, and for enhanced management of renewable natural resources, two strategies already have strong NPI components. These two objectives are:

• enhanced economic particpation (Mindanao emphasis), and

• broadened participation in the formulation and implementation of public policies/local governance

USAID has chosen to focus its economic strategy regionally on Mindanao, which ranks near the top in poverty and the bottom in social indices, income, and women's economic particiaption, even though the island is relatively resource rich. A key program goal, to expand participation of the lower income half of the popula-tion, requires improved access to markets and technology, as well as financial sector services. Here, USAID's track record with small business development programs is based on its work with advocacy and program partners such as the National Credit Council, Mindanao Business council and chambers of commerce and industry, the Federation of Rural Cooperatives, export groups and universities, and will count on hundreds of Mindanao private and community organizations. "Results Packages" will, i.a., focus on:

• increased economic particpation of Mindanao's lower income group, via new contract farming and other linkages between investors and small producers; new market links; improved production/marketing, and increased women's employment;

• national-level advocacy to deregulate and expand trade; and

• broadened particpation in financial systems, via policy reforms and advocacy to expand microenterprise credit programs; facilitated micro-lending of coop banks.

Success in meeting USAID's strategic objective for broadened particpation in policy formulation and implementation will depend on effectively implementing plans to devolve and decentralize power, and by creating successful alternatives to formal governmental processes by institutions of civil society, above all those that can empower citizens to address issues of local resource investments, sharing, and benefits. It will be crucial to work through partnerships that can help fashion and maintain avenues of access to groups of interests now under-represented in formal government processes. Results packages will focus on:

• direct assistance to strengthen the Leagues of Provinces, Municipalities, and Cities, and to Local Government Units (LGUs) in 10 provinces, to use particpatory mechanisms to implement service delivery, prioritize investments, and plan for management of environmental resources;

• opening new arenas for disadvantaged communities and groups, especially via membership associations (i.a., agricultural laborers, fisherfolk, tribal minorities) and linking these through coaltions to centers of power; and

• an 18-month initiative to formulate a Philippine Democratic Action Agenda, through a broad coalition of NGOs, women's and producer groups, to promote the democratic process.

II. Illustrative NPI Country Program

NPI opportunities with additional funding

Additional synergies can be joined to the activities already underway in the Philippines. The USAID program, while drawing on the strengths of past country, USAID and donor experience, is relatively new, and is now based on reengineering principles of a Country Experimental Lab that have more fully integrated customer survey and participatory mechanisms in planning and design. Some areas where "seed capital" can find points of entry for impacts:

• Economic participation, local governance:

  After another six to twelve months of "on-the-ground" experience, the timing will be ripe to join the work with Local Government Units with a "deeper" demand-side approach to local democracy-building. A number of local NGOs and membership-controlled associations will be more able to work with a larger number of local citizens' interest and community-based groups to organize around an agenda to influence decisions on use of resources that are made available by the LGUs. These would include both nationally-allocated revenues and, potentially, locally-generated revenues. However, in many cases, some funding of operational and other costs, and assistance to conceive and manage local activities, will require new partners--or new "line items" in the budgets of current NGOs and other local partners in order to organize activities.

Whereas the current Mission strategy looks to working with communities in ten provinces, this strategy would ideally be extended horizontally, both within Mindanao, and possibly to one or more selected targets in other regions.

NPI opportunities not requiring additional funds

The above-described, more intensive work with local community-based groups, could potentially be undertaken with little or no additional funding to the extent that issues and approaches already identified at the local level and endorsed by self-interested political parties are supported by these latter. NGO partners that did not have additional funds for operational costs and/or "sub-grants" might be less able to engage local community groups on a continuous basis to organize around local issues and press interests before local councils.

There are possible synergistic impacts for a democracy strategy that looks to parliamentary and local elections, currently some two years away in the Philippines, to promote policies and candidacies from the USAID-supported coalitions seeking to enter the public policy arena. Cross-cutting themes of the strategy--especially, women's participation--would also be raised strategically by focusing efforts on, for example, work to organize women, and women candidates, via one or more of the coalition efforts.

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