Aid project exit strategies: building strong sustainable institutions

© 2010 Dr. Jeffrey Edward EngelsForeign aid project exit strategies that contribute to sustainable development have been rarely considered throughout the history of development studies and practice. The philosophical underpinnings of early development were based on economic theories. Over the years initiatives have manifested themselves by investments through international aid projects. As aid projects are donor-driven, most exit strategy planning involves closing down a project without turning it over to another organization to continue implementation. This means that aid benefits end with whatever impact the project has made, leaving ill-equipped local ministries or under-resourced NGOs to meet local development needs and fill the gap of terminated services. The project cycle—a popular development tool used by multinational and bilateral organizations alike—provides a framework to induce development, but makes no accommodation for an exit strategy that perpetuates development. This is a missed opportunity that reveals a flaw in the project cycle. This flaw can be corrected by revising the project cycle implementation stage to include building the capacity of people to perform the functions the project was designed for, as well as a local implementing entity through which they can work. Once accomplished, a sponsor can transfer project activities and resources to the local implementing entity though a phase-over process to extend development post-project for ongoing impact. The aim of this thesis is to promote a greater understanding of exit strategies and analyze an aspect of project management essential to all foreign aid projects since every project must eventually end its interventions upon completion of its goals or within prescribed financial and time constraints. What are the conditions necessary to complete a foreign aid project phase-over to a local institution successfully? How can in-country local project staff contribute to institution-building before, during, and after a phase-over? What are the appropriate ways to measure the success of a phase-over? This thesis examines the concept of exit strategy within the context of a case study of the United States Department of Agriculture’s Marketing Assistance Project (USDA-MAP) in Armenia (1995-2005) and the innovative phase-over approach it used to establish the Center for Agribusiness & Rural Development (CARD). To do this, the writings of Levinger & McLeod (2002), Gardner et al. (2005), and Esman (1972) are drawn upon to analyze this case. The actions taken by the USDA illustrate how an emphasis on internal local project staff, over external technical interventions, furthers development. The USDA’s exit strategy incorporated collective participation, empowered local stakeholders, promoted development ownership through localization, and built individual and institutional capacity. The resulting organization that was created is evidence of a successful phase-over and an innovative institution. This phase-over model offers a paradigm that embraces and promotes social/human assets within aid projects for sustainable development, and in so doing has ramifications for policy makers, project designers, and development practitioners to rethink conventional development practices