5.2.11. The MicroCLIR Process

Step 1: Value Chain Analysis

Understanding the nature of the value chain is a key first step in conducting a MicroCLIR assessment. Assessors must understand how the value chain system functions, how the players interact with each other, how the good or services flow to end markets, and most importantly the incentives and governance structures of the industry. The USAID approach to a value chain analysis can be found at www.microlinks.org/vcwiki (select Value Chain Analysis). The MicroCLIR assessment analyzes the value chain from a policy and regulatory point of view, seeking to understand which obstacles affecting value chain growth are as a result of a regulatory or policy problem.

Step 2: Develop a long list of policy, regulatory or institutional constraints

By doing the value chain analysis from a policy and regulatory perspective, assessors will develop a long and non-prioritized list of impediments to growth.  Some of these constraints will be systemic to the entire value chain, and some will be specific to one or several specific segments such as only input suppliers, processors, or exporters.

Step 3: Prioritize constraints using a set of criteria

Once the long list of constraints is established, the assessment teams need to prioritize the constraints for further analysis. The following questions can be used to begin to narrow and prioritize the topics for analysis:
 

• Are there regulatory, policy, or institutional aspects of the constraint?
• How important is the constraint to the largest set of stakeholders?
• How impactful in economic terms will removal of the constraint be?
• What is the likelihood of change?
• Are there actions USAID can take through programming efforts to have an effect?
• What are the behavioral or social dynamic impediments to change?

Step 4: Analyze each constraint from four dimensions – Legal Framework, Implementing Institutions, Supporting Institutions, Social Dynamics

The CLIR framework relies on an analysis of an issue or topic from four perspectives, the Legal Framework, Implementing Institutions, Supporting Institutions, and Social Dynamics. This framework allows the assessors to be both comprehensive and systemic in conducting their analysis recognizing that every issue or set of constraints are usually interlinked.  During the MicroCLIR assessment, each constraint is then analyzed from each of the four dimensions to understand the key policy, regulatory, or institutional dynamics.

Legal Framework. An analysis of the laws and regulations that govern are the structural basis for the particular constraint. The analysis will examine how the laws, regulations, and policies affect the different players in the value chain, whether the legal framework causes or promotes the constraint, how clear the guidelines are, how closely they follow global standards, and what inconsistencies exist.

Implementing Institutions.  The institutions with the primary responsibility for implementing a regulation or policy are enabling or alleviating a particular constraint.  These institutions include government ministries, authorities, and registries, and, in certain cases, private institutions such as banks and credit bureaus.

Supporting Institutions. The supporting institutions are institutions and organizations that have a role to play in ensuring regulations and policies are properly administered and adhered to.  The analysis examines how they affect or interact within the value chain as a result of a particular constraint. Examples include farmer associations and cooperatives, rural banks, professional associations, agriculture and other university faculties, and donors.

Social Dynamics. Key social or cultural issues that underpin the constraint. Roadblocks to reform, in particular, are considered, including those entities that may be undermining change.  Social dynamics also concern such important matters of gender, human capacity, and public health, each of which may have a significant bearing on how the business environment truly functions.
 

Step 5: Where possible, quantitatively model the economic impact of the constraint, even in approximate terms.

Quantitative models of the economic impact of a particular regulatory impediment are a critical aspect of building an advocacy platform for reform. Quantitative metrics demonstrate a cost associated with poor regulation and can be a compelling argument for change. During the MicroCLIR assessment, key data on prioritized constraints should be gathered during the stakeholder interviews to execute an accurate or, if data is less available, an approximate model of the costs of specific constraints. Whether it is the economic impact of an export ban on long term productivity or the total loss to the economy of counterfeit inputs, any attempt to quantify this, is beneficial to the analysis. In the case of counterfeit inputs, for example, data points would be income losses for farmers who buy inputs that don’t produce results, income losses to input suppliers who unknowingly sell counterfeits who then lose business as a result of poor performance, and future losses in productivity for farmers who once using counterfeits come not to trust the enhancing effects of real inputs.

Step 6: Develop actionable recommendations

When conducting an assessment at the level and timing of a MicroCLIR, it is important to formulate specific and actionable recommendations. The results of a MicroCLIR assessment will either be programmed into a subsequent RFP or into the work plan of a value chain project. As such, it is important that recommendations be substantial, clear, and action-oriented.  MicroCLIR recommendations are prioritized into three distinct categories: Strategic, Tactical, and Operational.

Strategic: The strategic lens helps articulate the long term impacts of certain recommendations, how the recommendation aligns with USAID and host government objectives, and the big picture view of how the recommendation will effect change.

Tactical: The tactical lens highlights the specific elements that need to be addressed as part of a larger strategic effort.

Operational: The operational lens details how to implement the recommendation. What activities need to be done, with which partners and stakeholders, and in what time framework (short, medium, or long-term).