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Country Assistance Program Evaluation for Sri Lanka: Inclusive Development and Conflict Resolution: Major Challenges in the Future (2007)

| country: Sri Lanka

1. Change management calls for an understanding of the reasons for resistance, and ways of overcoming impediments. Moreover, continuing efforts are needed to arrest the decline in the capacity of sector institutions to implement projects, mainly due to problems with recruiting and retaining qualified staff. An improvement in the incentive and reward system isimportant.

2. Policy-based lending requires a careful assessment of the reform environment and reform readiness. Country ownership and political will are fundamental. Policy reforms that are built on an apolitical process and a lack of understanding of the country’s history are bound to fail. Policymaking is often complicated by elections. Certain calls for economic reforms may not be heeded, particularly during the rise to power of political coalitions that have differing agendas. A balance must be achieved between setting the pace of reforms and ensuring social and political stability. Thus, the vulnerability and sensitivity of policy reform must be understood in program design and implementation.

A community-based approach to rural water supply systems can be effective in enhancing customer roles in project planning and implementation and in promoting greater ownership. Least-cost options for planning water supplyand sanitation projects should consider an integrated approach, including supply and demandfactors, to achieve more sustainable resource use.

A good understanding of political and legislative processes, including policy and regulatory environments, is a key requisite in project preparation and implementation. Monitoring changes in the macro context influencing a key sector is necessary, particularly the incentive environment for private sector participation.

Assessing the institutional and management capacity of executing agencies is extremely important.

Benchmarking can be an effective tool for improving the operational performance of water supply service providers.

Continued stakeholder support for policy reforms is essential to sustain the reform process.

Developing a project management and information system should be prioritized for effective project implementation.

For vocational training graduates, support services must complement the provision of loans for self employment, and more tracer studies of graduates must be conducted for future planning.

Handover of management of water schemes to local authorities and community-based organizations requires continued support during the transition and follow-up periods to enhance the sustainability of such schemes.

In distance learning, more awareness programs are necessary to promote readiness for online learning as well as to expedite the participation of nonstate agencies. A revolving fund will enable participants from non-affluent families to acquirecomputers for distance learning.

In technical education and vocational training, more social marketing programs are necessary to change the negative attitudes of private sector employers, parents, and students toward state-run technical education and vocationaltraining institutions. While education policies have been gender sensitive, concomitant motivation programs to encourage women to enroll in technical training programs are crucial. Across the education subsectors, results-based monitoring andevaluation must be promoted to track achievements over time.

In the context of sector reforms, country ownership and political will for implementing the reformagenda are requisites for which ADB assistance cannot serve as a substitute. Advancing policyand institutional changes requires champions and coherent support from within the country.Policy initiatives can take a long time to materialize, and such initiatives require sustainedsupport.

Investing in awareness campaigns to improve beneficiary participation is vital.

Power sector restructuring is a dynamic and complex process with enormous challenges. It calls for a deep understanding of the political economy; broad-based ownership of reforms; a comprehensive sector road map that recognizes pressing needs, such as least-cost power generation, other than reforms; and measures to knit reforms into a broader articulation of public interest. Conveying the costs and benefits of the reforms versus alternative measures isimportant. Work is necessary on all fronts, not only in putting in place a legal framework or animproved market structure, but also in building constituencies for reform. Where public andpolitical resistance is likely to hinder reform implementation, provision should be made forincreasing public awareness of the reform agenda and reaching a consensus on the means forachieving objectives.

The complexity and diversity of a sector should be matched by flexible and robust projectdesigns that can meet evolving needs.

The rapid divestment of state-owned enterprises tended to sacrifice transparency and due diligence.

Without continuing commitment from the government, ensuring cost recovery and financial viability through ADB’s loancovenants can be effective to some extent only.

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