IFAD assistance in context

Sri Lanka as a Leader Among Developing Countries. Sri Lanka has been a leader among developing countries in a number of ways-in terms of sustained growth, per capita incomes, achievements in health and education, and rural-urban and gender equity. It has carried out two rounds of economic liberalisation since 1977, seen peaceful transfers of power at regular intervals, introduced the idea of devolution ahead of many other countries, and diligently pursued peace negotiations even with separatist forces. The country's Gross Domestic Product (GDP) per capita is USD 870, more than twice the average for South Asia as a whole, while it was $190 when IFAD assistance was initiated in 1978. The population of the country-about 20 million-is growing at the rate of only 1.2 percent per annum. The adult literacy rate is 91 percent (slightly lower among women) and primary school enrolment is 98 percent. Infant mortality is 16 per 1 000 live births, maternal mortality 24 per 100 000 and average life expectancy 73 years (higher for women).

The persistence of poverty and gender disparity. Despite economic growth and increases in prosperity, poverty has persisted at high levels in recent years. Relevant trends have been analysed most recently in Sri Lanka: A Framework for Poverty Reduction (November 2000) prepared by GOSL with the participation of donors, non-government organisations (NGOs) and independent experts. The Framework observes that poverty levels fell sharply during the 1970s and 1980s, but little progress was made in the first half of the 1990s except in urban areas. Overall, excluding the North Eastern Province, between one-fifth and one-third of the population is estimated to be poor, depending on whether poverty is measured with a low or 20 percent higher poverty line. According to the Framework, nearly 90 percent of the poor live in rural areas and the incidence of poverty varies greatly among provinces and also across districts.

On UNDP's Gender Development Index, which compares male and female life expectancy at birth, educational attainment and income, Sri Lanka scores almost 70 percent, while gender parity is achieved at 100 percent and the average for developing countries is 56 percent. On the Gender Empowerment Index, however, Sri Lanka comes out at 31 percent, which is lower than the average for developing countries (37 percent) and reflects the limited participation of women in politics and in senior positions in the public and private sectors.

Sri Lanka - IFAD Co-operation in the Perspective of Rural Poverty. IFAD has assisted Sri Lanka through 10 loans for 10 projects (listed in Table 1) for a total of approximately USD 112 million. At the time of the Country Programme Evaluation (CPE), four of the projects had ongoing status. UNOPS has been the co-operating institution in three projects, AsDB in four projects and the World Bank in two projects. The Fund's co-financiers in Sri Lanka have been: AsDB (for an amount of USD 48.1 million), CIDA (USD 6.5 million), GTZ (USD 3.8 million), Japan (USD 50 000), KfW (USD 20.9 million), UNDP (USD 2.5 million), SIDA (USD 3.3 million), WFP (USD 2.16 million), the Government of Sri Lanka (USD 50.18 million), the private sector (USD 398 000) and the beneficiaries (USD 2.37 million).

5. The first five projects seem to have been designed under a strategy of co-operation and convenience that IFAD adopted in its early years. The strategy, in effect, was to take the lead in project design from the larger and more established financing institutions, namely, the AsDB and the World Bank. The five subsequent projects-those formulated by IFAD itself-have more direct pro-poor objectives than the previous ones. IFAD assistance has been significant, in particular, for local development in some of the poorest districts of the country, and for some of the poorest segments of the population, initially through sectoral projects and subsequently through the Integrated Rural Development Projects (IRDPs).

Table 1: overview of projects funded by IFAD (1978 – 2000)

Analysis undertaken for the 1993 Sri Lanka: Strategy Report (IFAD Report No. 0488-SR) supported the idea of carefully identified target groups and pro-poor objectives. It acknowledged the usefulness of an area-based approach and highlighted the fact that a blueprint approach to the choice of interventions does not address the wide range of activities through which the poor sustain themselves. The Strategy Report questioned the capacity of bureaucratic agencies to respond to the poor in a flexible or integrated manner. With a view towards improved implementation arrangements, the Strategy Report recommended a specific role for NGOs but conceded the lead role to government agencies.

The current context. The Government's Framework for Poverty Reduction (November 2000) has been prepared with the participation of important stakeholders and establishes a wide-ranging framework within which Government and donor strategies are prepared. The framework is wide-ranging in institutional terms because of its expectation that "Government, its development partners, the private sector, non-governmental and community organisations could join forces to devise and act upon a Framework to combat poverty." It is also wide-ranging because of its pursuit of pro-poor growth through seven priority areas, namely, the contribution that peace can make to poverty reduction, a stable macro-economic environment, improved market access within the country, small- and medium-scale enterprise promotion, broad-based rural and urban development, improved education and health care, and innovative environmental management¹. A social protection system aimed at those who do not benefit adequately from the planned growth is also outlined in the Framework. Finally, the Framework lays particular emphasis on empowering and mobilising the poor and strengthening governance, for which it seeks to promote community-driven development, decentralisation and governance reform, reversing gender discrimination, making the law accessible to the poor and other measures.

As IFAD embarks upon a strategy formulation exercise that will guide its assistance to Sri Lanka for the next few years, it faces a number of challenges in common with the GOSL and other donors in Sri Lanka as well as some that may be specific to IFAD. One of the most adverse developments is that the country's civil strife picked up momentum as negotiations for peace took place, off and on, without success. The cost of war is reflected only partly, but quite significantly, in increased defence expenditures that have helped push the budget deficit to 7.5 percent of GDP, high by any standards and the highest in South Asia. The quantity and quality of public services is, therefore, bound to be affected adversely, and there are signs (e.g., in relation to the maintenance of public works) that this has already happened.

The country now appears at a crossroads: economic growth may be slow, the pressures on the budget appear unrelenting, and a by-and-large centralised system of governance is faced with an unprecedented diffusion of power brought about by political and economic compulsions. The interplay between resource pressures and institutional complexity at various levels has created its own dynamic. In particular, the idea of devolving power to the Provincial Councils has resulted in duality rather than devolution and a set of complex and potentially conflicting administrative arrangements at the provincial and project levels. The idea of social mobilisation, generally associated with voluntary association through civil society organisations, has become the donor-aided mechanism for augmenting the human and financial resources of the line departments. And, NGOs appear too small and the line departments too slow in relation to the time between elections and the mass constituencies to which representative leadership is accountable.

IFAD projects have introduced concepts of change faster than the institutions concerned, including IFAD itself, have been able to manage change. IFAD has introduced rapid change at a conceptual level in calling for inclusive development, poverty alleviation, social mobilisation, decentralisation, bottom-up planning, integrated or holistic development, mainstreaming gender, sustaining more with community resources, and so on, but without eliciting commensurate responses from the institutions concerned. The assistance strategies of the other donors in Sri Lanka do not show IFAD a way out of this predicament, except insofar as the contribution of technical assistance to reform processes is concerned. There is a need therefore, to address not only the concepts of development that are important and familiar to IFAD but also the processes that it can facilitate in attaining its objectives with greater certainty.

Country programme (CPE)² objectives and approach

The CPE was undertaken in the first half of 2001. Its main objectives were to: (a) evaluate the results, impact and sustainability of the Fund's programme in the country; (b) assess the compatibility between IFAD and its partner institutions in terms of their development strategies for poverty alleviation; (c) assess national strategies for inclusive development and the strategic role of IFAD in influencing policies and development strategies for improving the welfare of women, the poor and the vulnerable in Sri Lanka on a lasting basis; (d) develop a series of lessons learned and recommendations that would contribute towards improving current operations, as well as the design and implementation of future activities; and (e) provide building blocks for the preparation of the IFAD Country Strategy and Opportunities Paper (COSOP) for Sri Lanka.

Rather than merely seeing the production of an analytical report as the principal output of the CPE, the exercise was conceived to provide maximum opportunity for all the stakeholders to jointly reflect, learn and express their opinion about past experiences and future options. A preparatory mission was undertaken in January 2001 by the lead IFAD evaluator to initiate the process. During this period, a CPE brainstorming workshop was organised to discuss and finalise the CPE Approach Paper and terms of reference. As a key input to this workshop, each ongoing IFAD-supported project prepared and presented a self-assessment report on the opportunities and constraints faced by their projects.

A CPE team then visited Sri Lanka from 4 to 30 March 2001. In addition to reviewing a series of documents, the team held discussions with various partners in Colombo, and travelled to 6 out of the 10 IFAD-assisted projects³ in the country. During its field work, the evaluation team visited project areas, assessed field activities, conducted group and household-level discussions with the target group, and organised informal workshops at the local level. A wrap-up meeting was organised at the end of March and a multi-stakeholder workshop was organised in Colombo in July 2001 to discuss the evaluation report and formulate the CPE's agreement at completion point. The latter offered a unique opportunity to bring together various stakeholders and partners to discuss over two days the key evaluation findings and conclusions, as well as to agree on core issues that deserve special attention in the forthcoming COSOP.

Assessment of IFAD projects

Relevance of Project Objectives. Individual projects have tended to target provinces with the highest incidence of poverty and groups of poor identified in the IFAD country strategy. In general, all the projects have been relevant to the overall government priorities and IFAD objectives at that time and the specific objectives of the projects addressed the problems to be solved. The first five projects, however, did not have sharply articulated objectives in relation to the IFAD target groups.

Project Preparation and Design. Project preparation and design of IFAD-financed projects was undertaken by private consultants for the first two projects, the FAO Investment Centre for the next three projects, and by IFAD itself for the subsequent five projects. With the benefit of hindsight and an overview of ten projects, however, it is possible to identify across-the-board weaknesses in design including the following: too many project components and implementing agencies; over-optimistic in relation to the capacity and poverty orientation of implementing agencies; inadequate benefit and poverty monitoring and evaluation arrangements; lack of built-in flexibility for project management to make course corrections; fixed menu of interventions with little flexibility for adjusting to local needs; and, lack of design parameters to ensure sustainability. These features now appear as problems because the underlying assumptions and objectives of development changed rapidly, especially during the 1990s, without a commensurate change in Government and IFAD capacities for planning and implementation.

Intervention methods for engaging beneficiaries. The strategies adopted in IFAD projects for engaging beneficiaries are one illustration of IFAD and the Government struggling to keep pace with the changing trends in development. Taken as a whole, IFAD projects appear to have followed three distinct models for engaging beneficiaries, though there have been additional experiments and improvisations in microfinance. The first few sectoral and IRD projects followed traditional top down approaches with minimal community involvement in planning, implementation or decision making. A second category of IRD projects actively promoted community participation with large project components for social mobilisation and capacity building to channel and sustain project services and development activities at the village levels. The third category of projects relies mainly on the existing social capital (a variety of village level organisations) with limited degrees of facilitation applied through the projects.

Even among the second and third categories of projects, beneficiary participation in the project cycle has been generally weak and confined mainly to need identification and varying degrees of inputs toward project implementation. The role of beneficiaries in planning and decision making has remained marginal. Starting with the SBIRDP, the projects have worked with multiple community organisations. These organisations, however, demonstrate no organisational or operational linkages to each other. Most Farmer Organisations (FOs)-the mechanism through which small irrigation schemes are executed-show limited organisational, technical and financial capacity and seem ill-prepared to take on the responsibilities of O&M for the large number of rehabilitated infrastructure scattered throughout the country. Reports from the line agencies indicate that a large majority of the registered FOs (as many as 80 percent) are inactive and exist only on paper.

Project Management and Supervision. Most projects have relied on a centralised project management system, typically working with a variety of existing central and provincial public sector agencies, administrative departments, non-governmental organisations, regional banks and a range of service providers in the private sector. While the sectoral projects and the earliest of the IRDPs focused mainly on meeting service delivery targets, the second generation of projects started addressing the need for enhancing institutional capacities. But the institutional strengthening initiatives have remained quite modest and have been dwarfed or undermined by the politico-administrative changes in the country and, upon closer examination, consistently show an emphasis on vehicles, equipment and physical infrastructure with insufficient focus on human resources or improvements in agency policies or procedures.

Although the IRDPs theoretically became a devolved subject in the post-1987 period, many sectors and sub-sectors (within the IRDP portfolio) remained centrally controlled. Several agencies provide services in agriculture and the rural infrastructure sectors, and a number of agencies show duplication of responsibilities. These factors have impacted negatively on the overall management and implementation of project activities, as a great deal of energy and time was consumed in straddling or responding to the multiple layers of authorities at the divisional, provincial and central levels. Despite the obvious complexity of the agenda, most PMOs do not show evidence of the required capacity and more critically the freedom to steer and shape the direction of projects.

Under the circumstances, project supervision has to be seen as a particularly demanding task for IFAD and its co-operating institutions, made all the more difficult by the fact that, unlike other donors, IFAD does not have a presence in the country. Not surprisingly, each of IFAD's co-operating institutions for project supervision-AsDB, the World Bank and UNOPS-has managed the task in its own distinctive style. In particular, UNOPS supervision reports show greater sensitivity to targeting of beneficiaries and related approaches. The fact that UNOPS does not have a presence in the country seems, however, to have created delays in communication with IFAD projects, which depend on joint decision making and, therefore, approvals from IFAD/UNOPS, in order to make course corrections and bring about changes during implementation. The absence of an in-country office has also greatly inhibited information sharing, co-ordination and participation in policy dialogue.

Monitoring and Evaluation. Monitoring and evaluation (M&E) has remained a weak area in most projects and appears to have focused on traditional inputs and output level assessments. This remains true even for the second generation of projects (starting in the late-1980s) that show a sharper focus on poverty and vulnerable groups. Except in SFLCP, the emphasis on poverty that emerged as a feature of project design since the late-1980s is not reflected in reliable data on how the poor improved their lives and livelihoods. Though women's participation in IFAD projects improved over the years, indicators of the economic and social gains made by women have not been assessed systematically in project records. In general the projects have no documentation on process monitoring and very little information on impacts. If targeting women and the poor and enhancing their participation in the development process are institutional imperatives for IFAD and its partner organisations, then failure to document their participation and benefits can be considered an institutional failure.
22. Project Impacts. A review of documents and visits to six project areas confirms that project achievements in terms of infrastructure development, agricultural development and credit have been significant. In the first few projects, beneficiary and development targets were significantly below what was projected at appraisal. In more recent projects, however, the number of beneficiaries invariably exceeds the appraisal target, especially after re-structuring of the project through the mid-term review process, but the inclusion of target groups has not been established systematically.

As indicated above, most projects did not have proper arrangements for monitoring and evaluation and it is difficult to make assessments of the outcomes and impacts on poverty, incomes, etc. of the projects themselves, leave alone their individual components and sub-components. On the basis of assessments made in project completion reports of projects that have closed, however, it may be said that the outcomes (increases in yield, cropping intensities, farm incomes, employment, poverty reduction and institutional strengthening) of agricultural development components were generally significant but below expectations.

In relation to savings and credit, the limited amount of evaluation findings there are on income changes point to quite modest effects amongst the poorer families and difficulties in establishing clear casual relationships for the changes that were seen. Significantly, however, the beneficiaries value their empowerment, through coming together, through the introduction of the habit of regular saving, and a new route to dealing with borrowing and debt. Similarly, women's groups have generated a new way of thinking and co-operation among the poor, building personal initiatives and mutual help, even though projects have tended to see groups as limited purpose institutions to serve as units for receiving and recovering credit. Though income increases for women's economic activities have been reported, women also reported doing more work than before as a result of project credit.

In relation to specific interventions in agriculture, paddy and tea production initiatives attract praise for contributing to small farmers' welfare, while crop diversification has been slow and gains in upland farming systems, though promising, are not yet widespread. While agricultural research has had little to contribute through IFAD projects (except in the CDP), the lack of extension and seed and planting material appear as recurring constraints on agricultural development. Outcomes associated with livestock development present a mixed picture, with the goat package being cited as a particular success and the lack of access to veterinary care a major handicap. Lack of co-operation among projects and line agencies inhibited farmers and livestock owners from developing more of their potential, and the continuity of project-sponsored interventions beyond project closure remains questionable.

The rehabilitation of irrigated tanks has contributed significantly to small farmer incomes, though benefit-cost assessments suggest that interventions were not always designed to generate benefits exceeding the cost. Be that as it may, micro tanks had the added benefit of serving as an incentive for farmer organisation. Even in the IRDPs, however, there is little to show that agricultural extension, credit, marketing and other interventions helped small farmers capitalise on the investment in irrigation and farmer organisation. On the other hand, the subsidised investment in agro-wells, often supported by extension and subsidised planting material from the project, benefited a small number of relatively better-off farmers and raised questions about its effects on the acquifer. Access roads built under IFAD projects are reported to have resulted in tangible benefits including increased land values, but their contribution to linkages with larger markets has been weak. As observed by many before this mission, the maintenance and repair of infrastructure remains problematic in view of the resources available to the beneficiaries and agencies responsible.

Although agreeing to the generally positive impacts of the IRDPs on productivity, incomes and employment in agriculture and off-farm sectors, independent evaluators have described these gains as "level effects" rather than "growth effects." The project interventions are seen to have led to one-off increases in productivity, incomes and employment but failed to help generate the growth dynamic needed to set the rural poor on an autonomous growth dynamic. The gains are described as relatively short term (limited mainly to the duration of project interventions) and likely to have been eroded by inflation and other factors: the impact on poverty, if any, is passing. As suggested in its Framework for Poverty Reduction, the Government is not as sanguine about the impact of the IRDPs on poverty reduction as it was when these projects were designed. The overall finding is that single-sector and IRDP-type initiatives are necessary for a region's development but not necessarily the best way of approaching poverty alleviation.

Main conclusions and recommendations by component

Agriculture and Natural Resources. The selection of beneficiaries for several activities supported by IFAD projects tends to favour better-off farmers. For example, in the SBIRDP, the support programmes for tea and export agriculture crops were not extended to farmers with less than half an acre of land as the number of such small farmers is too large for the staff of the line agencies to handle in their subsidy schemes. Credit for cattle purchases is also not extended to very poor farmers on the grounds that they cannot afford to provide the care (vaccines, etc.) that the cattle need. Recommendation: In future projects, greater attention should be paid to selecting pro-poor agricultural interventions (and technologies), and to implementing them in such a way that even farmers with only micro holdings or home gardens and landless farmers would also benefit.

With the liberalisation of markets, input subsidies and floor prices will disappear. Furthermore, agricultural commodity prices in general and rice prices in particular will almost certainly decline while factor prices rise. Sri Lankan farmers will then have to compete on equal terms with farmers of other countries. Recommendation: In future projects it is recommended that only crops in which Sri Lanka has a comparative and competitive advantage using existing technology or new improved technology proposed under the project should be promoted.

Rural Infrastructure. Most projects are biased towards water sector interventions that benefit only some of the target groups. Certain interventions were not pro-poor and had little spread effect: large agro-well programmes with 20-30 percent subsidy mainly benefited the well off and household level water supply schemes (rain-water harvesting type) were subject to elite capture. Recommendation: Ensure the relevance of infrastructure interventions to respective target groups. The scope, size and nature of such interventions should be flexible and address the needs of all groups.

Rigidity in infrastructure "menus" clashed with participatory, demand led approaches and reduced relevance and potential impact on several target groups. Recommendation: Flexibility could be built in through flexible "Village Development Fund" type programmes demonstrated under some projects. The scope and size of such components may vary, but appropriate criteria may need to be developed to ensure that the benefits reach the poor target groups.

Maintenance and repair of project assets has also remained a major concern on all projects. There is a high likelihood that the planned benefits of various infrastructure interventions may have dropped to unacceptable levels. Recommendation: Future programmes may consider a detailed review of past projects to draw specific lessons, including continued focus on simple, rugged and community friendly designs, a larger focus on the strengthening of local organisations aimed at resource generation and capacity building and continued dialogue with the central, provincial and local governments to ensure resource allocations for the required M&R.

Rural Microfinance. The IRDP as the main intervention method embodied significant weaknesses as a vehicle for developing rural financial services. These included weaknesses of a more general nature including a lack of clarity of objectives, insufficient technical bias in supervision arrangements, and the strangulation of project management in rigid frameworks. Above all else shortcomings arose through the rate of change in the rural finance sector and the serious lack of sector expertise in projects. Such expertise will be more important in future projects as problems of sustainability are now at the front of the agenda. Recommendation: Future IFAD support for the sector be implemented through projects specifically for the rural financial services sector as opposed to integrated projects.

Microfinance sector issues are to be addressed through an AsDB project preparation technical assistance mission to identify key issues in policy and institutions and thereby improve the enabling environment for sustainable operations, with a follow on rural finance sector project to commence in 2003. Recommendation: Future projects should take into consideration the priorities for sustainability in the sector identified through the forthcoming AsDB assisted Rural Finance Project. Opportunities for a collaborative approach through the piloting, accelerated or intensified implementation of strategies in districts may be the subject of future discussions with AsDB and the Government.

Gender Perspectives. Projects with neither a women's component nor village level organisations created through social mobilisation have tended to exclude benefit flows to women and the poor. In such cases benefits, if any, have been incidental, and the absence of village institutions prevented implementers from getting a wider beneficiary perspective, resulting in wrong choice of persons identified for resettlement and excluding the perspectives of the worse off and women in infrastructure choices, training and income generating activities. Recommendation: Future projects intended for poverty alleviation and rural development should invariably be based on supporting village institutions and social capital.

There is an absence of knowledge about gender issues among project staff, line departments and bankers even though is a cross cutting issue across project components. Recommendation: Internal capacity building on gender should be taken up within IFAD without delay. The capacity of local institutions should be built on gender issues, promoting capabilities to carry out gender analysis, design and implement projects and carry out monitoring and evaluation in a gender disaggregated and gender sensitive manner.

Insights and choices for the future

Contradictions in Strategy and Implementation. As with some other donor-assisted initiatives, the central point of tension in IFAD strategy arises from the tension between working with the government and working with participatory institutions. This tension is illustrated most comprehensively in the 1993 Strategy Report but is also present in several project design documents and other reports. It has been addressed in practice, to the extent possible, by engaging NGOs and project staff (including social mobilisers) to organise rural communities, introducing participatory planning techniques, giving some responsibility to the beneficiaries and linking beneficiaries to commercial institutions. The lead role in implementation, however, has always remained with a central government agency. In effect, the tension that is unresolved at the strategic and project design levels is transferred to the operational level, and that is where contradictions give rise to problems during implementation.

Though the CPE has identified several issues for the attention of IFAD and its partners, the question of balance in working with the government and the people is fundamental in view of IFAD's poverty alleviation focus and project mode of assistance. It is also a more manageable issue for IFAD and its partners than matters of policy on which national debate and consensus may take place over a period of several years. With the experience that is available, from Sri Lanka as well as other relevant countries, it is possible and desirable to make a fresh attempt to resolve some of the basic contradictions observed in the past.

39. Matching Institutions with their Comparative Advantage. The point of departure is to recognise the comparative advantage of different types of institutions in addressing poverty alleviation. In specific terms, there are clear differences in the orientation and effect of representative, administrative, commercial and participatory institutions. A delineation of institutional roles that is consistent with the findings and recommendations of the CPE and the reviews undertaken for it is presented as follows:

Future IFAD projects are likely to be more efficient and more effective, and generate broader and more lasting impact on the poor, if they are guided by rational and realistic expectations of what specific institutions can and cannot do.

Developing Ownership. IFAD projects would also be more successful if they generated greater ownership at all levels. Greater ownership is required at the highest levels of Government because poverty alleviation cannot be undertaken on a large scale without this kind of commitment. It is required at the project management level because IFAD projects are implemented by host country managers. And it is required at the community and household levels because harnessing the potential of the people is vital for all aspects of their development.

Developing ownership at the highest levels implies that IFAD should include interested central and provincial policy makers in identifying and formulating poverty alleviation initiatives. In order to be responsive to policy makers, IFAD may have to work increasingly (though not exclusively) at the provincial level. The choice among provinces may be based, as in the past, on poverty indicators but should give primacy among poorer provinces to those whose political and administrative leadership can demonstrate a long-term commitment to poverty eradication. Taking an area-based approach, as in the past, and working with the Sri Lanka Framework for Poverty Reduction, IFAD can offer policy makers a number of concrete options for poverty alleviation in a given area, including the following:

Having an IFAD presence in the country is an important corollary of the importance of developing ownership. An in-country presence would greatly improve communication with stakeholders in the country, reduce operational delays, facilitate information sharing and co-ordination, and significantly enhance IFAD's participation in policy dialogue. These are some of the more obvious ways of developing greater ownership and the conditions that help projects improve their impact. IFAD should, therefore, consider allocating adequate resources for establishing an effective presence in the country by means of more intensive project supervision and follow-up through programmed technical assistance or ad hoc missions.

Autonomous Support Mechanism(s) for Poverty Alleviation. The experience from several countries is that permanent autonomous support mechanisms are needed to further the cause of the rural poor, particularly by fostering local organisations, local leadership and skills and linkages to service providers and policy makers, and protecting the poor from vested interests. This experience has unfolded differently in different settings, the most recent being that of the Rural Support Programmes (RSPs), a term used generically to describe autonomous support mechanisms that are extant in some of the South Asian countries. Unlike social investment funds that are controlled by the government, the RSPs are established with support from the highest levels of government, but their corporate governance is autonomous of the government and the management is strictly professional. The organisation may be established as a private company limited by guarantee. An endowment fund whose income sustains the recurrent costs of the organisation may be contributed by the government and supplemented by donors. Government ownership, autonomy and professionalism facilitate donor support and responsiveness to the community across a wide range of sectors, and the concept has been replicated on a large scale with variations that take account of local circumstances. IFAD and its partners in Sri Lanka may wish to determine the conditions under which it is realistic to expect that one or more (central, provincial or district) autonomous support mechanisms could be established in order to facilitate a holistic approach to poverty alleviation.

Towards an Integrated Approach to Service Delivery. In some innovative cases, particularly in project settings, a co-ordinating function is assigned at each level of operation to or on behalf of an official local entity that funds and focuses only on participatory local development. In addition to ensuring co-ordination at each level through control over the flow of funds, a methodology for co-ordination is agreed with all concerned and responsibilities assigned for important stages of the planning and implementation process. The entity controlling the funds for local development may be supported through a permanent endowment such as the Local Trust Funds observed in Nepal, though extreme care has to be taken to ensure that funds are utilised for the target groups. Planning and implementation is undertaken by organised communities with the technical and financial assistance of relevant agencies. IFAD and its partners in Sri Lanka may wish to determine the conditions under which it is realistic to expect that dedicated local development funds will be committed to local development co-ordinators for facilitating the requisite alliances and a holistic approach to poverty alleviation.

Towards Improved and More Inclusive Project Cycle Management. For developing ownership at the project management level, it is vital that project formulation, appraisal and approval include the project team designated for implementing the project. IFAD should insist on this condition in the future, with the expectation that decision makers (such as the Minister and Secretary of Plan Implementation) who are interested in working with IFAD would be supportive. Institutional analysis for determining the poverty orientation of possible implementing partners should be an integral part of project identification, formulation and appraisal. Specific components and interventions, particularly those carrying a subsidy for individuals, should be reviewed critically in terms of their suitability for the poor, the poorest and women and their impact on equity and sustainability. A clear exit strategy entailing zero or minimal recurrent cost liability for the Government should be built into project design from the outset. For each intervention, Benefit Monitoring and Evaluation should be designed at the design stage with a clear focus on identifiable groups of women and poor beneficiaries and mechanisms for regular beneficiary participation. Staff training and orientation in project management and in accordance with the other requirements for capacity building identified during project design should be the foremost priority for implementation. Additional opportunities for improving upon project cycle management and making it more inclusive are illustrated in the concluding chapter of the report.

It is worth emphasising in this context that selected IFAD interventions have not always benefited the poorest, in part due to the nature of project design, some of which tended to exclude the poorest from participating in development activities. For example, in some projects, the Fund promoted the development of large agro-wells requiring an initial contribution from the beneficiaries for them to benefit from the intervention. The CPE noted that by and large the poorest have been bypassed in such development activities, as they have not been able to muster the necessary initial contribution. In other cases, projects rehabilitated irrigation schemes in areas where the poorest were not in possession of land. Likewise, the emphasis on women has been limited. In general, the participation of the underprivileged in planning, implementation and M&E needs strengthening.

These and similar conclusions brought out in the CPE draw attention to some aspects of policy that are best approached through the COSOP and policy dialogue. There is also a need, however, for greater attention to the inclusion of the poor at various stages of the project cycle. It is recommended, therefore, to assist implementers in at least one province to strengthen the pro-poor orientation of project management, with particular attention to the three areas highlghted in the CPE, namely, better targeting of the poor, design of pro-poor interventions and monitoring the participation of and impact on the poor. These three aspects of project management are highly inter-dependent and require, therefore, to be addressed within a single, internally consistent framework. The development of such a framework through a dialogue with selected implementers is the first step towards assisting them during implementation.

1/ Each of these priority areas includes several elements considered to be important for poverty reduction.

2/ The Country Programme Evaluation (CPE) team was composed of the following members: Mr Tariq Husain (team leader/institution and policy), Mr Kingsley de Alwis (Agronomist), Mr Iain Francis (rural financial services), Ms Anuradha Rajivan (gender and participation), Mr Rashid Khan (rural infrastructure) and Mr Sarath Mananwatte (project management/M&E and CPE Facilitator). The evaluation was conducted under the overall responsibility of Mr Ashwani Muthoo, IFAD evaluation officer. Mr Muthoo participated in various stages of the CPE exercise. The CPE was steered by a Core Learning Partnership, which included representatives of the Govt. of Sri Lanka (Ministry of Plan Implementation), NGO Seeds, UNOPS, and IFAD (represented by OE and PI).

3/ Kegalle Rural Development Project
Small Farmers Landless Credit Project
Second Badulla Integrated Rural Development Project
North-West Province Dry Zone Participatory Development Project
North-Central Province Participatory Rural Development Project
Matale Regional Economic Advancement Project

4/ Reference is made to the Saemaul Undong Movement in South Korea, the farmer associations and co-operatives in Taiwan and Japan, and Rural Support Programmes (including the UNDP-assisted South Asia Poverty Alleviation Programme) in Pakistan, Bangladesh, Nepal and Andhra Pradesh (India).