The Northern Region Agricultural Rehabilitation Project (1991)
The project area consists of a narrow fringe of land along the Nile in northern Sudan and covers about 120 000 feddans (fd) or 50 000 hectares with about 100 villages. The climate is extremely dry with very hot temperatures from April to September - irrigation is essential for cropping. Wheat, legumes (faba beans, chick peas, field beans, lentils), vegetables, spices, sorghum and maize are the main annual crops while dates (by far the most important crop), citrus and lucerne (alfalfa) are the important perennial crops.
Project design and objectives
Staff Appraisal Report (SAR) estimated the project beneficiaries to be 40,000 low income farm families, with an average family size of six persons. The average family holding was estimated as 2.8 fd with 2.0 fd cultivated and 0.8 fd fallow. The annual income was estimated in 1983 at Sudanese Pound (LS) 665 per family or USD 85 per capita. In addition to the farmers, the following institutions were expected to benefit through institutional strengthening:
- Agricultural Bank of Sudan (ABS)
- Regional Ministry of Agriculture (RMOA)
- Agricultural Research Corporation (ARC)
- Northern Agricultural Production Corporation (NAPC)
The project was designed specifically to raise the productivity and income of small farmers and cooperatives, increase food production and thereby substitute for imports. These objectives were to be achieved through intervention in three areas; investing in irrigation rehabilitation, funding incremental annual inputs in the irrigated schemes through credit and by strengthening the service institutions in the project area.
Credit for investments and incremental annual farm inputs were to be provided through the ABS following the procedures already established under the on-going World Bank-supported Agricultural Services Project (ASP). NAPC's pumping stations in the Northern Province were to be repaired and kept operational until the implementation of a full rehabilitation scheme to be funded by IFAD and ODA under separate arrangements. The main project components were:
- Agricultural Credit and ABS Institutional Support (USD 2.3M)
- Agricultural Services, Extension and Training (USD 4.5M)
- Adaptive Agricultural Research (USD 2.2M)
- NAPC Pumping Station Repairs (USD 2.5M)
The total area cultivated was expected to rise from 90 000 to 11 600 fd as a result of improved water supply reducing fallow from 32% to 25% of the area. New land would be brought under cultivation through the establishment of project-financed wells for irrigation. Production of broadbeans, wheat, sorghum, berseem, citrus and dates was expected to increase by 79, 147, 58, 152, 24 and 33%, respectively, by project year 6.
An intention of this report is to provide an evaluation of the NRARP for the appraisal mission to the Northern Province Irrigation Rehabilitation Project (NPIRP - Phase II). The report also focuses on any directional changes or corrective measures that could still be taken before the implementation of the NRARP is completed. Although the mission would have liked to develop a more substantial analysis on project impact on farmers it chose to focus on project performance and its impact on the institutions, these being a significant beneficiary. This approach is partly a result of the mission's view that as institutions would be critical in the follow-up project they warrant a substantial amount of attention and partly because the mission found it difficult to quantitatively isolate the project's impact on farmers since:
- other programmes were involved;
- independent private investments and favourable producer prices have had a significant influence; and
- there is a shortage of consistent time series data on prices, production and consumption.
In order to assess the overall status of the project, the mission reviewed the supervision reports as well as a Mid-term Review (February, 1988), a Mid-term Evaluation (Feb/March 1990) as well as several other reports pertaining to the project area. The mission visited Sudan from the 17 May 1991 to 7 June 1991 during which time it spent ten days in the project area.
Agriculture which is the predominant sector in the Sudanese economy grew by only 0.5% per annum from 1975 to 1980 and has subsequently declined further. The main reasons for the decline were low producer prices for export crops, a shortage of foreign exchange for agricultural inputs and a deteriorating infrastructure. In the context of the Northern Region, difficulties in obtaining agricultural inputs and ageing irrigation equipment were the major causes of a deterioration in productivity. The Government of Sudan (GOS) attached priority to rehabilitating the irrigation sector of the Northern Region and requested IFAD assistance.
Four project implementing agencies (PIA's) have been involved in project execution: NAPC, ABS, RMOA and ARC. Each agency was given the responsibility of implementing its respective component. This arrangement of using existing GOS departments was the only practical way of implementing the project.
Coordination problems arose between the agencies and it became apparent that the Regional Coordinating Committee (RCC) was unable to perform its coordinating and directive functions properly. It became obvious also that the PIA's found it very difficult to deal separately with the funding agencies, (GOS, IFAD) in matters of procurement, disbursement and training. A Project Coordination Unit (PCU) was created in July 1987 (i.e. three years after IFAD Loan became effective). It proved to be an adequate response to shortcomings on project coordination and liaison.
In order to ensure that the annual work programmes and periodic reports are submitted regularly, and in the proper format, PCU was given some executive powers and control over the implementing agencies particularly with respect to the preparation of work programmes and budget and the release of funds.
The IFAD loan became effective in July 1984 while the OPEC Fund loan became effective in May 1985. However, because of previous GOS arrears on OPEC Fund loans, a suspension of disbursement of the OPEC Fund loan was imposed simultaneously with loan effectiveness. Due to the joint financing arrangements stipulated in the Loan Agreement, IFAD was also forced to curtail foreign exchange disbursements. Because of the suspension the project was able to undertake important start-up activities with the limited funds available, including the appointment/re-deployment of required field staff, finalization of the main procurement arrangements and the establishment of credit and extension programmes. IFAD resumed its disbursements in October 1986, and vital farm inputs and machinery was finally procured for the project. Effectively, therefore, project implementation commenced in the 1986/87 financial year. Disbursement of the OPEC loan caused problems throughout the implementation phase.
The overall performance of the project must be viewed in the context of the difficulties imposed by problems with OPEC funding, which effectively delayed implementation until 1986/87, as well as by the country's economic situation. For this reason some important sub-components including construction of training and research facilities, have not been started. The 1988 flood also affected project implementation and caused some temporary change in its direction.
Largely because of unforeseen changes in funding arrangements, disbursements are well below SAR allocations. However, some 80% of a revised IFAD contribution agreed to between the donors and GOS and has been disbursed. About SDR 1.88 million remain to be disbursed.
Production. While the appraisal projected a total cultivated1 land of about 100 000 fd and a total annual irrigable area of 135 000 fd by project completion an estimated 210 000 fd were cropped in 1990. The project contributed an estimated 26 000 fd of cultivated area either by maintaining cultivated area (replacement of pumps both in NAPC and private schemes) or extending irrigation to previously uncropped land. An estimated 210 000 t of incremental crop production was expected to result through the project's contributions to irrigation capacity from 1986/87 to 1990/91. Incremental production was projected to peak at about 77 000 t in 1990/91 when the full effects of the pumps supplied in 1989 and 1990 were felt. This is similar to the 70 000 t of extra production projected for year 6 by the SAR. An estimated 10 000 t of incremental production can be attributed to project-provided fertilizer.
Institutional Strengthening. While the project undoubtedly helped strengthen some implementing agencies, the sustainability of some of these improvements remains in doubt.
- NAPC. The use of external loans from ODA and IFAD to finance a crash irrigation grants rehabilitation programme was instrumental in improving water delivery and, consequently, in raising funds by being able to increase (and improve collection of) water charges. While increased charges may be viewed as a first step towards sustainability, the corporation's structural problems which relate to sustainability were, by definition, not addressed (the structural problems include overstaffing, low efficiency of the irrigation network, inefficient water management practices, etc.).
- ABS. The bank is a centralised organisation which integrates trade and banking activities. It provides strategic goods and services at subsidised prices through the mechanism of overvalued official exchange rate and negative real interest rates. ABS's services are, not surprisingly, in high demand. Any external loan, such as IFAD's present one, is primarily viewed as a contribution to the overall organisation's objective and consequently pooled with other available resources. IFAD has basically contributed directly to the ABS operating funds and by doing so has helped the bank to expand its operations. ABS performance in the project area has been significantly improved both through the funding of its operations and the provision of office buildings and storage facilities.
- RMOA. The IFAD project brought two major changes. First, it provided a substantial amount of resources in the form of transport, equipment, capital goods and incremental operational costs. Secondly, it introduced the T&V system within the extension service and allocated the major share of the additional resources made available to the RMOA for this purpose.
- ARC. Provision of transport to the Hudeiba Research Station (HRS) has allowed it to supervise off-station trials related directly to the project more effectively.
Monitoring. Project monitoring failed because the various implementing agencies have narrow and divergent perceptions of the project in line with their own policies and constraints. The inadequacy of project coordination and monitoring arrangements at the regional level as well as the marked weakness of the RMOA in charge of those tasks also contributed significantly to the problem. The project, as a result, relied heavily on substitutes for effective monitoring. This is illustrated by the increasingly intensive involvement of PCU and to a lesser extent of consultants reporting on project achievements in addition to the significant involvement of supervision missions.
Effects on production. An estimated 26 000 fd of cultivated area was either maintained or added to previously uncropped land. Incremental production, as a direct result of IFAD's interventions was projected to peak in 1990/91 when the full effects of the pumps supplied in 1989 and 1990 were expected to be felt. This increase will only be sustainable if allowances are made for adequate maintenance and periodical renewal of irrigation equipment. Project-provided fertilizer represented a one-off injection which resulted in an estimated 10 000 t of incremental crop production.
Effect on target group. A socio-economic report in 1991 estimated a net income of about LS 36 000 for a farmer with a gross income of LS 55 000. This compares to an estimated net income of LS 665 per family of USD 85 per capita in the SAR. While it is difficult to compare the estimates because of inflation, the figures strongly suggest that the farmer today is much better off. This content is supported by socio-economic report (1991) which states "... it could be safely concluded that the quality of life of the farming population in the project is highly satisfactory. People have access to the basic needs of life in terms of housing, utilities and food. They also have access to the basic community services ..." The extent to which the project contributed to this favourable situation is unclear, but its assistance with inputs (through the provision of credit to ABS), support to NAPC's pumping operations and emergence contributions through pumps, jute bags and drainage after the 1988, was significant. It is believed that at least 28 000 farmers out of an estimated total of 110 000 farmers have benefited directly from project interventions. An estimated 50 to 60% of the beneficiaries in the private schemes belong to the target group while most of the NAPC schemes farmers are small farmers.
Effects on institutions. While the project has undoubtedly helped strength some aspects of the implementing agencies, the sustainability of some of these improvements remains in doubt.
(i) NAPC. Basically, the project contributed to the corporation's survival strategy by financing a bridging operation. This, in fact, was the project's intention. The organisation's structured problems which relate to sustainability were not addressed by definition.
(ii) ABS. Its performance in the project area has been improved significantly as a result of the financing of office buildings, housing and storage facilities. However, despite the effectiveness of ABS as an agency for disbursing inputs and credit, unless adjustments in price and exchange rate policies are made so that agricultural inputs are sold at market prices and on-lending rates are made positive, the ABS's current operations are not sustainable.
(iii) RMOA. The RMOA is responsible for providing a wide set of agricultural services to the Northern Region. Its administrative structure follows the Regional Government structure with Headquarters at Ed Damer, and representation at the provincial, district and rural council levels. The Ministry's culture is typically that of a public bureaucracy experiencing budget austerity, staff frustration and a lack of sense of direction. Decision-making is quite a laborious process in this context as the problem is compounded by difficult communications between offices (no telephone, distances and rough roads, etc.) and generally poor working conditions.
IFAD project brought two major changes to this situation. First, it provided a substantial amount of resources in the form of transport, equipment, capital-goods and incremental operational costs. Secondly, it introduced the T&V system within the extension service and allocated the major share of the additional resources made available to the RMOA for this purpose. It is estimated that the IFAD project provides up to 70% of RMOA resources (not taking the salaries into account). This dependency upon external resources which remain, however, below the needs, clearly indicates the limits of this pattern of development.
(iv) ARC. Provision of transport to HRS has allowed it to better supervise off station trials related directly to the project. However, until a complement of research staff is based at the soon to be built Dongola research station the impact on ARC's ability to effectively carry out project-oriented work will remain limited.
Environmental Impact Effects. The project has contributed to the proliferation of irrigation wells (mataras) both in the Nile flood-plain areas and the slightly elevated land (upper terrace) adjoining the flood-plains by providing pumpsets. While it is unlikely that mataras near the Nile will, as such, harm the agricultural land in their vicinity, the sustainability of mataras in some high terrace areas is questionable.
The project has been successful in its main aim of helping increase agricultural production and raising the incomes of small farmers in private and cooperative irrigation schemes. Some import substitution through increased production of food, particularly wheat, has been achieved. The ability of the PIAs to operate, has been enhanced mainly through a generous provision of transport and funds to operate the vehicles. However, it is unlikely that this increased productivity is sustainable for the following reasons:
- the combination of an overvalued official exchange rate (five to six times lower than the black market rate) and of negative real interest rates for credit, has heavily subsidised the imported agricultural inputs, equipment and machinery. These arrangements are not sustainable under Sudan's conditions of ever-decreasing foreign exchange earnings and acute budget deficit;
- because of the shortage of foreign exchange, the physical availability of fuel, spare parts, fertiliser and pump sets, most of them imported, is dependent to a significant extent, on the project resources; and
- implementing agencies face a number of structural problems which reflect on their managerial performance and their capacity to use equipment and vehicles provided by the project capacity to use equipment and vehicles provided by the project efficiently. Unless new resources are injected into the system, the operational capacity of the implementing agency to follow-up after the project will be unavoidably reduced.
In defining a rationale on which to base recommendations for improving project performance and impact, it should be first recognised that the structural nature and the magnitude of the constraints identified are to a large extent beyond project control2.
The obvious recommendation is that the macro-economy be adjusted so that agricultural inputs are sold at market prices, leading to the disappearance of parallel markets and that lending rates are made positive. Such a recommendation seems far-reaching for a project at micro-level, yet this issue is critical to sustainability.
As far as the on-going project is concerned, it is recommended that the following corrective measures which are likely to minimise the effects of the above-mentioned constraints and increase the commitment of various implementing agencies to the achievement of project objective be taken:
- hold annual programming workshops at district and provincial levels and establish, in close cooperation with RMOA, ABS and NAPC, set performance targets and make the release of funds linked to minimal achievements in this field; and
- adopt a substantial staff incentive framework based on staff's effective contribution to the project.
A basic recommendation is that the agricultural component concentrates its efforts on implementing an effective T&V system as its priority during the remaining period of the project. The effectiveness and impact of the T&V system should be assessed in the second half of 1992 (at which stage the system will have been implemented for two years in the Central District).
With regard to future IFAD projects, decentralisation of implementing agencies should be encouraged as part of the project's objective. To achieve this, project resources should be allocated to task managers at the provincial, district and scheme levels.
NAPC/Irrigation. The survival strategy applied through necessity to date, by NAPC management is not sustainable. Structural adjustments in addition to rehabilitation are needed. The fact that GOS has decided to privatise NAPC but has not clearly defined its modalities has created a wait-and-see situation. It is the mission's opinion that the follow-up project's aim should be to help GOS devise a functional way of privatising NAPC.
In view of the proliferation of mataras and the significant lowering of watertables in some locations within the project area, a hydro-geological study which could develop a groundwater utilisation plan is recommended.
Credit. ABS should make every effort to improve recovery rates and rates and replenish the resolving fund as a pre-requisite to the expansion of its operation. ABS should improve its record keeping to firstly separate disbursements from various credit sources; secondly to distinguish between the demand for credit and for inputs which farmers could buy with their own cash resources; thirdly ensure that the revolving fund is credited with loan repayments properly; and fourthly collect data and analyse credit impact on beneficiaries.
Agricultural Services. To effectively install the T&V system, the following measures are considered essential:
- a motivated and experienced Team Leader (Extension) must be appointed to work with the T&V system. Sufficient incentives3 must be provided to attract such a person;
- an Extension Consultant to work in total cooperation with the Team Leader must be employed as a priority; and
- a system of developing annual work programmes and budgets from the field level upwards must be installed so that consolidated Annual Work Programmes (AWPs) and budgets can be delivered
Agricultural Research. When the proposed Dongola research facility is established, agricultural socio-economic work on small farm management should receive priority together with the issue of salinity/sodicity in matara situations.
Forestry. Prior to a commitment of further support to the Northern Province Community Forestry Project (NPCFP), a consultant specialising in desert control should assess the long-term effectiveness of control measures taken by NPCFP to date.
As noted in para 17, project monitoring was not effective. The following recommendations aim at creating a situation which will increase the awareness of line managers and critical tasks operators of the need for an effective monitoring mechanism as a support to decision-making. More delegation of authority (and of the corresponding resources) to the lower levels of the hierarchy within all implementing agencies, and particularly within RMOA and NAPC, is a prerequisite in this regard. It is further essential that line managers and critical tasks operators be responsible for defining their information needs in accordance with performance targets set at their level of responsibility. Monitoring indicators should be primarily based on these performance targets. The latter should be agreed on annually in the framework of an enhanced programming process starting from the rural council/scheme level. In-service training and technical assistance are extensively needed to implement the above recommendations. However, it should be ensured that assistance does not lead to substitution: concerned managers should be the one to take the decisions regarding their information needs.
Although the project has increased productivity this increase is not sustainable as it is dependent largely on heavily subsidised imported agricultural inputs, equipment and machinery. The subsidies are untenable under the country's acute budget shortfalls and lessening foreign exchange earnings. IFAD should, along with other aid agencies, urge GOS to make macro-economic adjustments including market prices for inputs, which would lead to the disappearance of parallel markets, and the imposition of positive bank lending rates.
Without structural adjustments large-scale irrigation schemes controlled by parastatals are not sustainable. Before further aid funds are invested in such schemes, given the GOS's intention of privatising parastatals involved in irrigation, the economics of sustaining such schemes under a realistically prices user-pays system should be assessed.
The lack of decentralisation, particularly in the matters of financial delegation, and the ineffectiveness of linkages between the task manager at the field level, the region and the central authorities have been major impediments to project implementation. The decentralisation of implementing agencies, in future IFAD projects, should be encouraged with project resources allocated to managers at the provincial, district and scheme level.
The development of annual work annual work programmes (AWPC) through workshops at the district and provincial level, involved project implementation agencies (in the case of NRARP the line agencies RMOA, ABS and NAPC) are necessary to ensure better coordination and use of scarce funds. The eventual allocation of funds should based on the quality of the AWPs submitted by individual agencies and the immediate past performances of the respective agencies. The scope of the AWPs should be strictly related to the likely funding available.
With regard to the T&V system its successful implementation requires systematic planning, motivated and experienced leadership, regular flows of budgeted funding and sufficient incentives for field workers. Incentives are particularly critical in isolated, remote areas. These ingredients are all dependent on incremental funding which the GOS will not be able to provide through its normal revenue sources. Logically a system with fewer, but better motivated and supported personal, should be developed which is commensurate with the available level of funding.
13 September 1991