|LILs are loans of $5 million or less financing small, experimental, risky and/or time-sensitive projects in order to pilot promising initiatives and build consensus around them, or experiment with an approach in order to develop locally based models prior to a larger-scale intervention. LILs are predominantly used in sectors or situations in which behavioral change and stakeholder attitudes are critical to progress, and where 'prescriptive' approaches might not work well.
A LIL focuses on experimentation, learning and piloting in search of possible developmental solutions, prior to potential larger-scale operations. A LIL is a learning exercise that shouldn't require the same amount of analysis at appraisal as standard investment loans (though the same quality of due diligence must be observed). It incorporates intensive monitoring and evaluation to understand the effectiveness of the approach being tried, and the project can include, for example, a detailed assessment of borrower capacity, stakeholders' response (social assessment), or economic rate of return as part of the project activities, when these are unknown in advance.
Use of Loan Proceeds
As with other investment loans, loan proceeds may be used to procure consultants services, small works, goods and equipment, or incremental operating costs associated with the project, for a total amount of up to US$ 5 million.
Special Design Features
- Again, the size of Learning and Innovation Loans is limited to US$ 5 million.
- The loan is approved by the Regional Vice President, although if the LIL (or at least the possibility of piloting in that particular sector) is not mentioned in the current Country Assistance Strategy, the Project Appraisal Document is circulated to the Board for information for a period of 7 working days prior to RVP approval taking effect.
- Clarity of the learning objectives and the system to monitor and evaluate them are vital to the purpose of the project.
- The typical LIL is for an amount of US $4 - 5 million, is prepared and approved within a period of 6-9 months, and has a planned implementation period of about 3.5 years.