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November 2012
Promoting and sharing of development experience and debate on Sustainability of NDA funded projects
The National Development Agency provides grant funding to projects/programmes coupled with capacity building in order to ensure sustain- ability of these projects and programmes at the function even if donor funding were not to end of the funding contract between the NDA and the projects. Based on this background, the -profit organizations tend to be so reliant The methodology that defines the roles and funding dries up, so too do their activities. responsibilities that the NDA plays after approving the funds for the project until the have its role in the NGO sector, this paper projects, using its expertise to sustain them- selves after the beyond the contract funding The early warning signs of project failures In this paper the NDA argues that besides that can be shared so as to better mitigate the roles of project monitoring, capacity building and evaluations that it plays, the institution is also best placed as a develop- ensuring sustainability of projects; and sustainable after the end of the funding Next Page
Sustainability of NDA funded projects | Best practice | November 2012
Methodology and outline of research
From Previous section
In order to apply a useful methodology to arrive at Social development interventions may be directed conclusive assumptions one needs to distinguish towards an identified social problem that requires between income generating projects (economic de- velopment) on the one hand and those with a more immediate short-term relief and intervention. Once social development emphasis. These can typically be the social need is addressed the participants may divided into those enterprise projects where the pri- proceed to participate in other areas of community mary aim of the initiative or project is to generate income for the business. On the other hand, Early Childhood Development (ECD), Food Security or Capacity building projects share a common goal to The argument is not that the NDA should not address a particular social need identified in a tar- examine options to strengthen the sustainability of social development projects but rather that a blanket approach and methodology to the different The reason why research needs to draw this types of NDA funded projects may achieve distinction is because the nature of these two streams of projects differs fundamentally. They differ in inclusive results or worst may prove scientifically terms of approach and the underlying methodology flawed. Based on this background, the approach of ECD and Food security is based on social engi- on this paper will be dual in nature to examine neering principles aimed at addressing a social need what factors pose a risk to the sustainability of the to achieve positive future outcomes with regards to Different types of approaches
However, economic development projects are driven by micro and macro economic fundamentals and the There are five types of approaches required to
ensure integrated reporting during the funding

objective to maximize revenue to sustain or even ex- cycle of the project, they are:
pand the business. Therefore, the external environ- ment that influences the project design (and imple- Project reporting - The project implementers are
mentation) of ECD/Food security will be social fac- required to regularly report to the NDA on tors in nature, whereas the external factors that im- the progress they are making against the pact on project design for enterprises will be eco- agreed upon activities of the project. This includes reporting on outputs and inputs of More importantly, because of these differences, income generation projects normally posses the Monitoring report by the development manag-
elements that makes it easier for such projects to ers – As the project managers, the
sustain operations after the NDA funding ceases. This is simply because if they don’t generate sufficient cash flow or revenue, the business which sponsibility to continuously monitor the may be the source of livelihood for the participating progress and performance of the project and termination of a project based on its per- formance. This is part of overall project Continued Overleaf
Sustainability of NDA funded projects | Best practice | November 2012
Performance monitoring – This is a process that is
From Previous section
carried out by the Monitoring and Evaluation Unit of the NDA. The process includes: project field visit to assess Such a deviation must be directly linked to the long the progress made on the project, project interviews to term sustainability of the project – it may require a collect primary information that explain the drivers of new business plan to determine the viability of such progress and the review of reports produced by the devel- opment managers and the project staff on the status of the Dependency is another warning sign and therefore Mid – term evaluation – This is a process that is carried
project managers have to be really careful in main- out by external evaluators. These evaluators are commis- taining a healthy balance between project support, sioned to conduct an in-depth mid-term project assessment and creating dependence in decision making. The on achievements of the projects against set outputs of the NDA’s task is to project manage implementation project. NDA funding duration is mostly between 12-36 and not to take decisions on behalf of projects. Even months. A mid-term project evaluation report which if project implementation goes according to plan provides independent information on how the project is during the NDA funding period, such initiatives progressing. The report provides an opportunity for the collapse immediately once the core support pillar is project staff and Development Managers to address issues that requires attention and also re-enforce good practice A sign of dependence is when projects require the Close-out evaluation – Close-out evaluations are funder’s intervention for the smallest of decisions
conducted at the end of the funding cycle of the project. and initiative to be taken. It is also true that some This process also uses external evaluators to conduct these projects require a greater level of hand holding than evaluations. The aim is to measure the impact the project others, this then requires capacity building in the has had on the beneficiaries , the processes used by project form of mentoring, support, supervision as opposed and the value for money. This information is useful for to taking the responsibility of decision making by lessons learned and best practice that can inform future Some of the main challenges faced by the NDA
Early warning signs of projects failure
are as follows:
Write-backs of projects—these are projects There are several challenges that the NDA faces with that are stopped by the NDA before they are regards to projects being able to sustain themselves after the end of funding agreement with the project. A generic warning sign is disfunctionality of the governance struc- Projects starting much later than the agreed ture of an organisation. There are examples of projects “project start date” as per the contract. This that the NDA has implemented where governance in the hinders the milestones as stated in the project Civil Society Organisation is strong, the oversight role of plan, if the project plan is not adjusted to the Board is normally functional and effective. In such instances, the risk of financial mismanagement is mini- Projects not being able to sustain themselves mized. One can draw a direct correlation between inef- after the NDA funds have stopped. This may fective governance and the systematic erosion of proper speak to the approaches and strategies used in procedures and financial management in most projects. the implementation of the project, which may not have taken into account the holistic needs A request for fundamental deviations to the original project plan soon after the 1st tranche is paid is also an indication of problems faced by the project, unless the project can provide compelling evidence for the need to Continued Overleaf
Sustainability of NDA funded projects | Best practice | November 2012
From Previous Page
A Project Example: this is an example of where a late
Mentorship must be looked at as a component for effec- start in a project went on to become a very successful tive capacity building. Income generation projects that project in Northern Cape, Eksteenskuil. The NDA have done well in the past can be linked to the mentor- approved the project only in July of 2009 and the 1st ship programme that was associated with the project. tranche was only paid in September 2009. The project Mentorship programmes that work best are those where involved the establishment of 18 ha of wine grapes. the mentor is on site for a period of time. Good You can only plant grapes in winter, however, when the examples of this are the Tshwaraganang hydroponics funds were paid to the project it was already too late to and Richmond Opkomende Boere Cooperative. The mentors in these two projects are absolute experts in their respective fields and have established proper busi- Moreover, the project could not be given a guarantee ness and administrative systems at the project in addi- that it would be approved, which means they could not tion to transferring skills to beneficiaries. order their plant material earlier in the year. It is normal practice that plant material is ordered a year in advance. Partnerships with other private institutions are also im- portant in order to ensure that these projects are driven However, it was then decided after the NDA paid the 1st by a business model and have mitigation strategies for tranche in September 2009 to wait until the following sustainability. Partners also bring on board a range of year to plant the wine grapes. Material such as poles other applicable skills that may benefit the project in and wire were ordered in so as to prevent price escalations. Most materials were bought a year in ad- vance but the actual project started in July 2010 when Although it may be difficult to manage, the NDA must ensure that specific sector departments come on board during project implementation to provide the necessary Although the late approval and transfer of the first post implementation support for projects. This is tranche proved a disaster, the situation was turned into possibly one of the most important aspects that must be something positive by managing the project and plan- planned for and put in place to ensure long term sustain- ning a year in advance with the available funds. The risk in such conditions is normally that the project may Revolving funds is a big issue in the NDA, but it can also be abuse the funding while they are not actively engaged an innovative way by the projects to become independent in project activities. The difference in the case of and not reliant on the NDA for continuous support. It also Eksteenskuil was that the strong governance structure offers a counter performance strategy because beneficiaries ensured that the entire process was a success. must perform and not just accept it as donor funding where there is little consequence when the project fails. It is argued The project established 18,5 hectares of grapes in July that projects cannot use the NDA grant funding and create a 2010. This project exports sultanas (dry grapes) to credit scheme out of it. So, this is a continuous debate on Europe. Wine grapes come into full production after 4 to 5 years. Some of the vines will only produce at 20% this coming harvesting season. Most of the vines should produce at least at 30 to 40 per cent in 2013/14. However, full production of the vines is really expected to peak around 2014/15. The vines are looking good and the project is progressing well. The Cooperative decided to create a revolving fund with the NDA contribution. Each farmer who has bene- Revolving
fitted from the wine grape project has signed a loan agreement with the Cooperative. They will pay back the funds….
funds to the Cooperative body once they start making money from the vines (year 5). In this way, the Coop-erative is creating a development fund which they will Lead Author: Nthabiseng Kraai
use to empower other Cooperative members rather Knowledge Manager: Research and Development than relying on the NDA in future for further funding. This strategy has also forced farmers to perform since Additional contributors: Clive Moses
they will have to pay back some of the development Additional contributors: Nonhlanhla Koza
By: Clive Moses (NDA Northern Cape provincial manager)
Sustainability of NDA funded projects | Best practice | November 2012
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Sustainability of NDA funded projects | Best practice | November 2012


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