Production Credit for Rural Women (1995)

September 1995

Interim Evaluation

The Project is executed by the Women Development Division (WDD) of MLD and is implemented through a corps of Women Development Officers and Workers (WWs). Credit is channelled by Nepal Rastra Central Bank (NRB) through three participating banks: Agricultural Development Bank (ADBN), Rastriya Banijya Bank (RBB) and Nepal Bank (NBL).

Project design and objectives

The PCRW programme was conceived as a pilot project in mid-1982, and launched in 24 districts. The Project, as designed, covers 37 of the 75 districts in Nepal, 24 of which are co-financed by UNICEF on a parallel basis. The Project extends to all ecological zones and all five administrative regions. Six of the 13 districts funded entirely by IFAD are located in the Far Western Region of Nepal.

Target group

The target group comprises some 16 000 rural women below the poverty line. Per capita income was estimated for half of all rural households at below NRs 1 970 (USD 91 in 1988), which is the poverty threshold. Targeted categories comprise inter alia: landless households, female-headed households and disadvantaged women belonging to weak ethnic and/or social groups and small farmer households.

Objectives and components

The Project would: (i) increase incomes of poor rural women, thereby enhancing their status in society; and (ii) improve the welfare of their families.

The Project has five components: (i) community development programme (CD); (ii) credit for income-generating activities; (iii) support to WDD to establish a more efficient organisational structure, especially regional offices to provide technical inputs and marketing support to field staff; (iv) training of WDOs in group formation and curriculum development; and (v) support for the M&E Unit within WDD.

Expected effects and assumptions

At full development, targeted rural women would earn significantly higher incomes from livestock, crop production, non-farm enterprises, and irrigation. The number of people benefitting from community development activities would be even higher. In addition, the Project would seek to: (i) institutionalize linkages between national institutions, district administrative units and the community; (ii) improve linkages between rural women, extension staff and banks; (iii) improve self-reliance and self-esteem of rural women; and (iv) generate social benefits such as better health and nutrition.

Three important assumptions underlying design were: first, the overall situation of poor rural women is best advanced through a gender-directed project, with female extension officers providing services to rural women; second, the empowerment of rural women is best achieved if linked to ultimate credit provision for an economic activity; and third, the provision of WDD services in social mobilisation can become a bridge towards reaching sustainable provision of financial services by regular commercial banks.



The IE Mission visited Nepal between November 20 and December 14, 1994. A smaller team of the original mission reassembled in Kathmandu on 10 January 1995 for ten days to complete the field phase of the evaluation.

The Mission has analyzed a large set of data that relates to processes used by the Project and impact. It was preceded by a rapid diagnostic socio-economic survey (IES), funded by IFAD OE, conducted in Ghorka and Kapilvastu districts in May 1994 (Vol. II). This survey covered 81 project beneficiaries, who were members of 24 PCRW groups in 6 communities; and 11 WDD staff. The actual mission administered prepared questionnaires to the Project beneficiaries, bank branch office staff, and WDD district level staff. The mission split into two teams, which together visited eight sites and interviewed 35 groups. Eight bank branch offices were visited: three from the Nepal Bank Limited, three from the Rastriya Banijya Bank (RBB), and one each from the Agricultural Development Bank of Nepal (ADBN) and the Grameen Bank in Biratnager.

The IE has drawn upon also two useful impact studies conducted in 1994/95. The first, funded by OPS, purposely selected beneficiaries in the Far Western Development Region, in Dhading and Kavre districts. The second study, undertaken by the Benefit Monitoring Evaluation (BME) Unit of WDD reached OE in August 1995. It covered some 220 beneficiaries in 15 districts, not those visited by the IE mission.

Implementation context

Overall, the Project has been reasonably well implemented in spite of initial delays, a period of much political and institutional change: it stands out well in comparison with the other priority sub-sector lending programmes in Nepal. The WDD under the MLD within its limited sphere of control has many reasons to be proud of achievements. Admittedly, the WDD has been able to exercise very limited influence through the Nepal Rastra Bank on the implementation policies, procedures and incentive structures of the three participating commercial banks; moreover, mere reliance on the Project coordination mechanisms could hardly secure the necessary extension support from structurally weak line agencies.

Project achievements

Organisation and management

The Project's executing agency at inception was the Women's Development Section (WDS), established in 1980 within the Planning, Integrated and Women in Development Division of the Ministry of Panchayat and Local Government (MPLG). The WDS of the MPLG was upgraded in 1990 to the status of the Women's Development Division (WDD) of the MPLG; the name of the latter subsequently changed to Ministry of Local Development (MLD).

Community development

The rationale for well designed community development activities is strong. Barriers of poorer rural women are formidable, reflected in low literacy, community gender bias, caste, ethnic divisions and difficult physical terrain. It stands to reason that community development in relative terms should represent a significant proportion of total spending. Recent data for five districts showed that whilst administrative overhead represented 46% of total cost at the district level, community development accounted for not less than 38%; the remainder was split fairly evenly between credit and non-credit related training. True, community development becomes more sustainable if firmly linked to NGOs and local groupings. But, it is neither realistic, nor desirable in the medium term to expect community development to be handled exclusively by local NGOs. The capacity is not yet present for contracting out on a large scale community development services.

It remains that the penetration of the Project across rural areas has been slower than desired. Fewer PCRW sites have been developed than targeted: 88 against the SAR target of 125, or 68%. But in the sites developed, much progress has been made under community development, some of it unreported. Appraisal targets were exceeded with a vast margin for child care centers (358%), drinking water schemes (684%) and toilets (1 320%). Reported performance was not in line with targets in the case of smokeless stoves and water grinding mills; oddly, none of the planned 129 trails and bridges have been built.

Credit disbursements

The attainment of quantitative targets for disbursement is not a sufficient condition for successful credit operation. Nevertheless, much progress has been made towards reaching quantitative targets related to credit. Not less than some 18 200 women had obtained a first credit line by November 1994 and this represents not less than 88% of the total SAR target. Disbursements for services, agriculture and livestock reached 353%, 161%, and 112% of appraisal targets, respectively. Loan disbursements for cottage industries, in contrast, only reached 55% of targets.

Nepal Rastra Bank annual disbursements for credit almost doubled from a mean of USD 203 000 for the period 1988/89 through 1991/92, to USD 371 000 for 1993/94; and reached USD 303 000 for 1993/94. Delays have occurred in forwarding and processing withdrawal applications, but total cumulative reimbursements by mid-July 1994 were almost in line with the appraisal target.


In purely quantitative terms, training has performed reasonably well; 32 650 beneficiaries have been trained which represents 75% of the SAR target. Staff have been exposed to 1 780 training modules which represents 65% of the SAR target. Quickly disbursing items were study tours and bank staff training, 273% and 164% attainment of targets, respectively.

Effects assessment and sustainability

Overall impact of the project

The dominant message that emerges is that the Project, in spite of a difficult external environment has accessed the beneficiaries with planned initial services. It has had, and is having, an important effect in two vital areas: (i) the empowerment of poorer rural women; (ii) initial credit uptake and asset formation. Profitability of funded enterprises has suffered especially for small ruminants (goats), but is commonly higher for services and micro-enterprises. Insufficient data are available to gauge the impact of credit for crop production, but many cash or high value crops are reported with high returns. Irrigation is an area where the control of males or husbands dominate that of women; relatively few successful irrigation enterprises are reported with full women participation.


Targeting of beneficiaries has been reasonably successful, but modalities need to be improved. Of those reached, disadvantaged castes or ethnic groups represent 21%, female headed households 16%, and landless households (6%). The remainder, or 57%, represent the women of "regular" low income households. Two thirds of beneficiaries are illiterate. A more cost effective targeting is justified, not least to ensure service provision to poorer female headed households.

The poverty is more accentuated in the Hills than in the Terai and illiteracy is also higher in the former area. The frequency of seasonal migration is higher in the Hills (31%) than in the Terai (12%); migration increases with scarcer agro-economic potential, i.e. in the western development regions. When husbands are absent, their wives become de facto heads of households, and have to assume higher labour loads.

Empowerment of rural women

Rural women interviewed across rural districts stated that they have been empowered to organise themselves, participate, and meet with other women outside of their homes. Women: (i) are regarded as successful and more knowledgeable by their husbands, families, neighbours and communities; (ii) access more easily extension services and engage in problem solving; and (iii) have greater independence in being able to earn cash through the use and control of credit.

Asset formation

After joining the PCRW programme, almost three fourths of beneficiaries interviewed by the BME study report a positive trend in asset formation; 23% reported no change and 4% a deterioration in assets. The response pattern was roughly similar for the Terai and the Hills. The households with constant or deteriorating assets explained that this was due to livestock mortality, natural disasters and floods.

The self evaluation of beneficiaries may lead to an upward bias in the estimation of material benefits that do arise merely from the Project. Nor do the recordings provide a precise relationship between benefits and costs. Yet, the perceptions offered as to asset creation suggest a respectable impact. A common exception is financing of goats.

Profitability of enterprises:


Interviews with beneficiaries in Ilam and Jhapa suggest that goat raising has yielded few rewards. Mortality rates found were as high as 30% (Annex 3). Nearly all the women interviewed reported the death of at least one goat. In both districts, the mortality rates for goats were much higher than for cattle. Women dealing with livestock were asked which animal was most prone to diseases. All rated goats as the most susceptible: then came pigs, buffaloes, and cows. All interviewed groups that had raised goats and which took up second loans shifted out of goat rearing.

The estimated enterprise budgets for Jhapa suggest that with a mortality of 30%, the households may break even financially with the livestock insurance but that there is no compensation for on-farm labour inputs.

Services and cottage industry

Profitability of micro-enterprises, cottage industries and services is commonly superior to that of livestock. This is significant since the trend in comparative advantage in production is definitely in favour of off-farm earnings because of rising land pressure. Off-farm employment is important both in the Hills and Terai, but is of longer duration in the Hills. Moreover, food security is increasingly associated with off-farm employment rather than with ownership of land. For instance, all landless members interviewed in Kapilvastu were engaged in economic activities with relatively stable streams of income, e.g. shopkeeping and retailing (IES).

Credit recovery according to the recent OPS report was higher for cottage industry (47%) and services (39%) compared with that of livestock, (34%). These aggregate data must be used with caution. But the ranking provided of the degree of recovery is reasonably consistent with that obtained from site level data. The latter are normally more reliable and they suggest that the profitability of micro-enterprises, cottage industries and services is generally superior to that of livestock. The IES, for Gorkha and Kapilvastu, found a 518 recovery among eight interviewed members taking credit for micro-enterprises, as compared to an average repayment rate of 65% for the 66 surveyed beneficiaries with livestock loans.


Sustainability of groups

About 40% of the Project beneficiaries sampled in Gorkha, Kapilvastu, Jhapa and Ilam districts drop out, or become inactive. Beneficiaries usually dropped out of the programme after the first loan cycle, which is one to five years for services and industry; one year or less for crops; about three years for goats; and three to five years for larger ruminants.

Groups become inactive for several reasons: (i) the group composition was not appropriate in terms of socio-economic differentiation, caste and ethnic parameters; (ii) beneficiaries did not agree to norms for group operations because of internal misunderstanding; (iii) the group leader was passive; (iv) the enterprise undertaken by women failed inter alia because of crop failure, or livestock mortality; and (v) the loan was not utilized for the stated purpose.

Groups created after 1990, are less active and sustainable than those that were created previously. This finding is consistent with relatively low uptake of repeat loans in many sites, and falling credit recovery rates.

Uptake of repeat loans

About 10% of all borrowers (female members of PCRW groups) had obtained a follow-on loan (IES). The IES in Kapilvastu and Gorkha found that, on the average, only 10% of the group members had taken a second loan. Similar findings were obtained by the UNDP/OPS, in the FWDR region (Bajhang and Kanchanpur).

Interviewed groups in Mustang, Syangja, Jhapa and Ilam districts had taken follow-on loans, often sequentially larger ones. In Mustang district (Marpha), one out of nine groups interviewed, or 11%, had taken follow-on loans. In Syangja (Waling and Galyang sites), two out of twelve interviewed groups (16%) had follow-on loans. In Jhapa district, 18 out of 215 groups were found to have taken follow-on loans; this represents 8% of the total number groups. In Ilam, not less than 26 of 68 groups, or 38% had taken follow-on loans, primarily for ginger and potatoes.

The OPS survey sought out the two districts of Kavre and Dhading, where follow-on loans were particularly high; i.e. a purposive selection was used. On average, 32% of eligible borrowers in the survey sites had taken subsequent loans. Eligible borrowers are defined as those coming from groups without outstanding loans. Of the multi-cycle borrowers, an average of 88% had taken progressively larger loans.

The BME survey, on the other hand, suggests that not less than 39% of the women had taken subsequent loans. The uptake of subsequent loans varied widely across development regions. The BME preliminary survey data indicated that the FWDR had the smallest percentage of women taking second and third loans (20%).

Credit recovery

A proper analysis of credit recovery in PCRW programme is complicated by the varying definitions used, and by conflicting data. The repayment rate on PCRW loans for the 37 IFAD-supported districts from the start of the programme up to June-July 1994 was recorded at 68% (In this document, the recovery rate is defined as the repayment amount for the given year, as a percentage of the total due for this year, i.e. the repayment plus the overdue remaining at the end of this year). This is an improvement compared to the cumulative repayment performance of 62% up to June-July 1993.

The cumulative repayment rate, however, hides the deteriorating repayment performance in 1993/94. The improvement in the cumulative repayment performance resulted from the collection of past due loans. The overall repayment rate during 1993/94 in the 37 IFAD-supported districts was as low as 38%. The same estimate is obtained for end of 1994, from the data presented in the most recent OPS Supervision Report (dated April 1995).



The low or falling repayment rate has become the foremost constraint against successful continuation and replication of the programme. A low repayment rate is linked to increased pressures for rapid group formation and higher disbursement rates. But several issues are related and combine to jeopardize the PCRW Programme.

Community development

Properly designed self-help community development activities, in which the target group participates, generate the preconditions for the creation of cohesive and sustainable groupings. For this reason, three areas need attention. First, the original vision that community development has a merit on its own, and generates the preconditions for uptake of group based productive credit has fallen by the wayside. The efforts to mobilise women through community development and to prepare them for the uptake of credit in a group context have not remained in line with expectations. Community development efforts have not been sufficiently well targeted in line with needs and potential. Groups increasingly have been formed directly for the uptake of credit. Second, neither the processes that drive community development, nor the outcomes are monitored. Third, in the face of widespread malnutrition of children, it is odd to find that nutritional growth monitoring is not supported and used by the Project to guide its interventions.

Insufficient screening of group membersand financial enterprises

Programme Management has not provided sufficient instruction, and permitted WWs sufficient time, for creating sustainable groups. Such groups should be self-driven by transparent performance based rewards and promises for a follow-on loans. The BME survey found a high degree of central direction from the WDD/WDOs. Members' freedom to choose group members and type of credit funded enterprises was severely restricted.

The joint liability concept remains the core principle for the PCRW credit group formation. But the present command system does not allow beneficiaries sufficient time to screen each other as "potential credit risks". The best practice for such screening begins with community related training and self help activities and proceeds through regular meetings and savings contributions. Normally, a group becomes cohesive when the individuals with the lowest risk of default recognize their mutual interest in cooperating. Conversely, through a selection or exclusion process, individuals recognized as those with the highest risks are forced to group together. But with rapid coerced group establishment, members have little or no time neither for selecting their peers, nor for skills development and final selection of enterprises to be funded by credit. Consequently, the joint liability concept has not reduced in line with expectation risks of credit default.

Losing experienced cadres

Several explanations can be found for the present type of command systems or central direction. Such direction reflects an overly centralised administrative structure but also inexperienced staff. The Project has been losing precisely the cadres of the pioneer WDOs that started-up the programme and have relevant field experiences. This age bar issue, that staff in excess of 35 years cannot be maintained or hired, remains an unresolved issue. As an interim measure, such experienced cadres could be assisted to create independent NGOs, which then could be contracted by PCRW to deliver required services.

Human resource development

The training function is not up to par, neither for overall curriculum development, nor for staff in-service training, and training of beneficiaries. A relevant overall conceptual framework for human resource development is not available, nor have field staff been exposed to state of the art technologies for participatory need assessments and rapid diagnostic techniques. Beneficiaries commonly do not receive training prior to credit uptake, and quality of subsequent training is not in line with expectations. For instance, land less women engaged in off farm enterprises in Kapilvastu and Gorkha reported that they were not particularly interested in the present training programmes because of irrelevant course content and ill-timed sessions.

Insufficient incentives of bank branches

The WDD central command system discourages participation and has been compounded by similar tendencies within the participating commercial banks that emanate from their head offices. The bank branch office staff are not well informed; they are not aware of the relatively high profit margins of successively higher lending to the PCRW groups: the smooth progression towards uptake of repeat loans is blocked. The branch offices are not well supported to provide follow-on loans to the PCRW target group in line with actual profit margins on PCRW lending, risk and performance in credit recovery.

Limited profits on PCRW lending

The possibility of PCRW progressing towards sustainability through an increasing volume of repeat loans is impaired because of these systemic disincentives. With a limited volume of small subsidized loans, transaction costs have remained high and profit margins low. The PCRW needs to intensify its efforts to mobilize and enrol small borrowers to reach the banks' thresholds for critical mass, at which they become attractive business prospects. But action is also required that addresses the structural issues in the rural banking of government owned banks.

Limited profitability in rural banking

Programmes of the PCRW type that embody social intermediation costs, that remain external to the commercial bank rural branch offices, become more costly to internalize, the lower is the profitability of these branches. Three of the four bank branches studied displayed negative profit margins on their regular lending (Chapter VI, Table 6.5). In fact, the higher are the trans-action costs on the regular lending, and/or the larger are the losses on this lending, the greater are the subsidies required for social inter-mediation.

Future direction

On the positive side, the inherent rational for the PCRW programme remains. First, there is ample evidence for that the process of empowering poor rural women can become very successful, if linked to ultimate credit provision for an economic activity. Second, the original Project rationale for targeting support and credit by gender, or solely to rural women, remains a valid proposition for the foreseeable future, because: (i) the prevailing high illiteracy among poor women in Nepal; (ii) high malnutrition rates of children; (iii) remaining pervasive cultural barriers that reduce women's control over resources within the households and impede their active participation in economic activities; and (iv) the presence of a motivated cadre of women extension staff within the WDD. Many interviewed women in Syangja and Mustang confirmed their preference for continued gender targeting of credit services.

But three critical issues cloud the future of the Programme: if unresolved, IFAD funding of the current credit delivery system should not continue. First, will the credit recovery rate be raised, finally be properly defined and monitored; moreover, will a policy be formulated to deal with the past stock of long overdue loans? Second, can the provision of WDD services in social mobilisation become a bridge towards reaching a critical mass of repeat loans to former PCRW clients that can be sustained by the regular lending of commercial banks? Third, can the profitability of regular commercial banking in rural areas be sufficiently improved to reduce the thresholds, which raise the costs of required social intermediation for the PCRW?

If the answers to these three questions are negative, then service and credit provision to poor rural women in Nepal must find other and different institutional vehicles. A future PCRW programme should then look quite different.

But the Grameen bank approach does not necessarily offer an overall solution to the problem of creating a viable system for providing financial services in the rural areas. There is much to be said for a pluralistic approach to credit delivery in rural areas. Support for Grameen banks in Nepal should certainly continue. On the other hand, the drawbacks of the few banks that are emerging should also be recognized: their transaction costs may be relatively high; also their customers receive a significant subsidy, once the loan is fully repaid. Moreover, the number of outlets is very limited compared to the vast number of rural bank branches across Nepal. It remains that an overhaul of the entire system of financial policies, the rules and regulation for the present Priority Sector Lending in Nepal need to be overhauled.

Main issues and recommendations

Programme management

The Project Implementation Committee

This Committee should meet more often than a mere three times per year. It should meet at least six times a year inter alia to review progress and relate physical performance also to financial indicators such as credit recovery by district and by type of enterprise.

Decentralisation to regional level

The originally planned decentralisation of project management functions, service delivery and technical back-up should be enacted upon. The five regional offices proposed in the SAR should be established and six SMSs be posted initially (three each in livestock production and in micro-enterprise support, see below). This is essential for the vital continuous training and guidance process to district staff: for reassessing enterprise budgets, risks, relevant technology and marketing data, and to realign services based on feed back from beneficiaries. To this end, the Government is advised to first draw-up the desired future regional organisation of the WDD; the modalities for coordination with other line agencies at this level should be established. In the interim, the SMS posts recommended below should be assigned to district WDOs.


A serious staff issue threatens the performance and sustainability of the entire operation. The 35 year age limit for already hired staff to retain a WDO position, or apply for one, has inhibited maintaining, and hiring, senior and experienced women officers in WDO permanent positions. There is an urgency in resolving this issue.

Selection criteria for sites groups and beneficiaries

Site selection and expansion

The selection criteria for bank branch offices, sites, groups and beneficiaries should incorporate four elements: (i) poverty and need; (ii) agro-economic potential; (iii) performance; and (iv) availability of local women groupings/NGOs.

The Project should use a more cost effective approach in poverty alleviation. It should focus on the to medium stage adopters in a defined set of sites. The aim should be to obtain early on a critical mass of beneficiaries to ensure sustainable services, especially of credit. Early adoption is encouraged through well defined enterprises in line with the preferences of the target group. The Project then moves on to a second set of sites and so forth. The Project should not waste limited resources on the late adopters, trying to obtain from the outset a uniform high adoption pattern across households and communities. The late adopters can be still enrolled even when the Project has shifted from an intensive to an extensive phase in the given sites. The need to monitor the mobilisation specially of disadvantaged groups is crucial (Annex 4). On the other hand, women in households that are not easily, or immediately, credit worthy should be targeted for a proper complement of food aid, community development services (and food for work).

A proper needs assessment at the site/VDC level should precede the decision to expand the existing site, or select a new one. At time of site selection, the potential in terms of infrastructure, institutional framework and access is normally considered. But at present, the selection of sites does not reflects a combined assessment based on needs, potential, and performance. Preferential location of sites to areas where local women groupings are already emerging would certainly enhance the prospects for sustainability.

Screening of beneficiaries

The present system of screening female beneficiaries for programme participation based on a detailed numerative assessment of per capita income should be discarded. The methodology is excessively time consuming for already overburdened WWs; the assessments are often obsolete at the time of group formation. Given these limitations, the WWs' personal informal assessments understandably dominate in screening for eligible women.

Instead, eligibility should be assessed by using more easily obtained indicators; moreover, communities themselves should be enlisted in the screening process. In determining eligibility, four general criteria are recommended for four categories of households:

General criteria for eligibility

a) Monthly food requirements from all production and income sources have not always been met over the last three years;

b) House construction is not of cement; neither should beneficiaries at the outset possess corrugated galvanized roofing material;

c) None of the resident household members over the last three years have been employed in salaried positions for more than six months p.a.; and

d) Willingness of potential beneficiaries to contribute labour or cash for community development activities in their immediate vicinity.


Households with land:

less than 0.5 ha of high potential (irrigated) farm land owned and leased, but where weights are used that relate to productivity (and the weighted land area should not exceed 0.5 ha), i.e.:

  • Irrigated low land, and upland (weight 1.0);
  • Non irrigated lowland (weight 0.5);
  • Non irrigated upland (weight 0.3); and
  • Non cultivable (weight 0.2).

a) Landless households with resident family members with no member being salaried, (such as government employees);

b) Female-headed households with less than 0.5 ha of land, and where husband is absent for more than 6 months per year; and

c) Disadvantaged ethnic groups should receive fair attention in the targeting (WWs from the same ethnic groups need to be recruited).

The Project rightly would like to enrol also wives of ex-army personnel in its activities. Typically, many such women are willing to be leaders of other women in their communities. These persons would normally neither qualify, nor need credit, but their enrolment can contribute to strengthen the Programme concept across communities.

Interviewing for eligibility

The interviewing proceeds in three steps. First, on arrival, an up-to-date list is made up of all households in the village (if not already available); second, through interviewing a small group of representative village women (6-10), the households listed are classified into three categories: (i) those who are relatively poor, category A; (ii) those who have an average or median farm size, number of working members, physical assets, and "income" in the village, category B; and (iii) those who are even better endowed, category C. These data are recorded.

Second, after these three sub-lists are available, the households in groups A and B are screened if they comply with criteria (i) a) - c) above. Third, at the same time the households are classified by the criteria listed in category (ii) a) through d), above.

Interviewing for selection

Prior to mobilisation, at the time of presentation of the programme concept, eligible households are screened about their willingness to abide by the "ground rules". Selection finally is contingent upon willingness to contribute labour or cash for community development activities (criteria i) d), above).

Link between community development and credit

a) Revision of operational guidelines

The original, basic conceptual framework for the Project remains valid, but present practices are no longer aligned with this concept. The recent dominance of credit delivery within PCRW is not in line with the original concept. The present situation where credit too often has become the direct entry point for contact with rural women, without first creating awareness of gender roles and social mobilisation, should be discontinued.

The Operational Guidelines for project support should be revised to clearly reflect the sequencing implied in the original design. It would be useful for the PCRW programme to adopt a transparent process approach to development that meets the requirements of predominantly illiterate rural women. Such a sequence of activities begins with creating first, "awareness"; second, "empowerment" to shift attitudes away from those of "helplessness" to "engagement", and to build group cohesion and mutual support mechanisms; third, expression of preferences" for type of community activity; fourth, skills in group building and for participation in community development activities; fifth, job and or enterprise-specific skills preceding credit uptake; and sixth, awareness of requirements for skills in credit management.

b) Formulation of indicators

The entry and exit points for each intervention directed at mobilizing groups of rural women need to be defined for the purpose of process monitoring. Indicators of achievement or performance need to be fixed at each exit point. The initial point of entry should always be an assessment of the needs of the disadvantaged women in each locality: they should be solicited to identify problems, those that affect them at the community level, and those that are household specific. The former can be pursued in terms of finding joint or co-operative solutions inter alia through community level activities to reduce excess labour loads and marketing constraints. The latter, reflecting inter alia low productivity and/or high cost of informal credit and forms of socio-economic bondage, can then be more easily solved. In the latter area, for household specific activities, the required skill uptake and job training need to be defined.

c) Issue-oriented workshops

A series of issue-oriented workshops should be held for WDO trainers and central staff. These workshops should be used to redraft the operational guidelines (also for credit delivery), establish the entry and exit points for each sequence of intervention, identify the respective indicators of performance, a core MIS, and the training methodology (see below).


a) Tripartite review

A tripartite review is recommended to be undertaken with participation by the NRB, the commercial banks and the PCRW/MLD of the cost and incentive structure of the rural banking branch offices of the commercial banks. (Such a study should build upon the recently completed AsDB Financial Sector Study). Such a review will have to consider the relationship between high cost rural banking operations of commercial banks and the feasible level of PCRW costs for social intermediation. Necessary outcomes, or recommendations, of such a study are that:

i) An action plan is defined with which to set performance standards for the commercial banks and for groups participating under the Project;

ii) Present lending interest rates to final borrowers are shifted upwards from present negative rates in real terms to positive rates that generate a sufficient margin for participating branch offices; and the present interest rebate system to final borrowers should be revised, and integrated into the comprehensive system proposed below (viii);

iii) Commercial bank decision rules are revised: the incentives for lending under the PCRW programme must be passed on from commercial bank head offices to the participating branches so that the latter become profit centers;

iv) Incentives are given to branch offices and their staff as rewards for performance in outreach and cost recovery;

v) Similar rules apply for commercial banks and for the Grameen banks that also lend to the Priority Sector customers; the nominal lending rate of the Grameen banks is set at 20% but a 50% rebate is given once the credit is recovered;

vi) Credit recovery is properly defined and measured (repayment in each period as a percentage of repaid and overdue at the end of the same period); the stock of old overdue loans is dealt with; and minimum standards for credit recovery under the Project need to be set (see below and Annex 1);

vii) The NRB, the participating banks and WDD take steps to ensure accurate and timely delivery of credit recovery data; and

viii) Performance standards and rewards are set for groups according to a ladder concept: AA "fully credit worthy" groups inter alia not less than 95% recovery and exemplary savings performance; AB "credit worthy" groups inter alia not less than 85% recovery; and AC "other not credit worthy" groups (see Annex 1 to Volume I): an interest rebate is given groups and members that consistently meet the AA standards.

b) Comparison of PCRW transaction costs with commercial bank branch office profit requirements

The NRB together with the NBL, RBB and the Project should establish standard criteria for the required critical mass of second and follow-on loans that is required for a bank branch office to break even under the PCRW lending.

The question remains as to the scope of the commercial banks to assume the transaction costs associated with follow-on loans for the PCRW clientele? Indicative financial statements and balance sheets for bank branch offices should be established to demonstrate the minimal lending volumes required under given conditions as to cost of funds, risk and interest spread.

Overall PCRW and bank transaction costs should be lower for handling second, or follow-on loans after successful repayment of the initial one; moreover, with higher lending rates for successive loans at higher loan amounts, profit margins improve. Attaining, early on, a critical mass can assure sustainability of the credit window: financial sustainability of credit institutions should be aimed for at least after five to ten years; institutional and financial viability of rural credit institutions over time necessarily is more important than continued uniform parcelling out of credit and slow build-up of credit volumes.

c) Credit Ladder for Selecting Successive Enterprises

Cautious lending in relatively small amounts serves as a protection against over-financing that leads to "credit trap." A ladder should be used: after successful repayment of the first loan, borrowers progressively become eligible for further loans at increasingly larger amounts. Emphasis should also be given to portfolio diversion so as to reduce co-variance of risks. This practice is found but is not common.

d) Loan recovery

i) Control mechanisms

Adequate control mechanisms for programme management need to be created as a matter of urgency; the NRB and the PCRW need to devise an up-to-date monitoring system.

More personnel are required; at least two persons should be deployed on a full time at the NRB in the monitoring of PCRW related credit and recovery.

e) Flexibility in repayment schedules

There is a need of more flexibility in realigning repayment schedules with cash earning possibilities. Once more flexibility has been introduced, it makes sense to review the provisions for enforcing better the repayment obligations.

f) Information about contractual obligations

Group members' knowledge about their repayment obligations need to be improved. Once, a group loan is approved, the bank should have prepared a loan disbursement schedule for each borrower. Many members complained that they were not aware of their repayment obligations.

g) Improved bookkeeping and transparency

Bookkeeping should be improved at the level of the branch office, group and site. A separate ledger should be kept at each bank branch office, and for each group. Each group member should have a pass book for the recording loan transactions, repayment and savings. This will increase transparency and reduce risk of fraud. For illiterate groups, the use of visual methods of recording should be explored.

h) Pilot projects

i) Exploring loans for purchase of land by women

The feasibility should be explored on a pilot basis to provide credit to rural women for the purchase of land; to begin with, amortization schedules should be drawn-up as a test case of feasibility, given the land market (and prices) in three representative sites in two districts; one in the Terai and one in the Hills.

ii) Individual loans under hire purchase agreements

The service sector is becoming increasingly interesting; tailoring is an attractive sector; for women who have successfully completed two loan cycles, the possibility should be explored of establishing hire purchase arrangements with regional agents for say "Singer" sewing machines.

Sustainable savings behaviour

a) Savings behaviour

Three to six districts should be chosen as pilots for intensive support of savings mobilisation and the mobilisation of inter-group savings. Expansion of savings is vital, it is a crucial determinant for the emergence first of sustainable groups, and second of a rural financial system supplementing those of the regular commercial banks. But the capacity of WDD staff, and the skills in local communities, are still weak to support savings mobilisation for the purpose of pooling funds and allocating them into productive pursuits.

b) Revolving funds

The revolving funds (RFs) have not taken off and the objectives and the context of these funds should be reviewed. The WDD set up RFs in nine districts; they were set up on an experimental basis to make funds available to satisfy credit needs of members not normally met by the bank. At a minimum, bookkeeping with separate ledgers needs to be introduced.

Extension support

a) Livestock

i) Preconditions for targeting livestock credit across locations

The targeting of credit for livestock across locations needs to firmly reflect a set of minimum preconditions in view of the high prevalence of animal diseases, low productivity, high mortality, and low repayment. Important preconditions inter alia are: (i) training especially in diagnosis of small ruminant diseases, prior to the credit, as a precondition; (ii) availability and affordability of veterinary drugs, and of vaccinations; (iii) planting of fodder trees and/or crops, and/or confirmation of adequate grazing area outside of the village; and (iv) livestock insurance certificate.

i) Posting of three additional SMS in livestock development at the regional level

Firm technology support must be built into design to raise profitability of selected enterprises. Three SMSs in livestock and fodder management should be posted in three of the regions to fill the gaps between line agencies/WDOs and WWs and beneficiaries. They should stay in close touch with research institutes and other animal husbandry programmes. Until an effective regional structure has been established, in the interim, these SMSs should be located at a suitable WDO district office. They should train WWs as well as local women who could reestablish the concept of para-veterinary workers. (The latter after completed training should be given a basic veterinary kit.)

b) Cottage industry and the service sectors: Entry points

i) Site surveys

The WDOs should assist women to identify entry points for the cottage and service sectors. Site surveys are vital to explore interactions with NGOs, access to markets and other preconditions. The WWs should be trained in developing profiles of low cost cottage industry.

ii) Hiring of SMS in entrepreneurship development

Three SMS should be hired to promote entrepreneurship development for off-farm enterprises. They should be posted at the regional level, in the interim at existing WDO offices, whilst an effective decentralised regional structure can be established. They would function inter alia as trainers for the district WDOs/WWs.

c) Producer groups

The concept of the "credit group" should be transformed into the that of a "producer group", or the new group should be linked with an existing cooperative group. The potential of groups is not sufficiently exhausted. The scope for group development is enhanced when individual efforts are combined; e.g. purchases of inputs in bulk; one billy goat to serve several groups, joint marketing activity, etc.

The cooperating institution

Positive is that OPS has become actively involved in supporting "the change processes" within the Project. Moreover, its assistance is required in supporting:

a) The restructuring proposed of the financial intermediation system; in particular, it should take the responsibility for assisting in the process of finally creating an accurate and timely reporting on credit recovery and arrears;

b) the defining of criteria with which investment proposals are screened prior to credit approval;

c) the process recommended for shifting from one site to the next based on defined graduation criteria; and

d) development in the poorest districts, found in the Far Western Region, by visiting

Lessons learned

Destructive Pressures for Accelerated Credit Provision

In the normal course of events, it is to be expected that over time pressures build-up for an accelerated provision of credit. Credit delivery, on the demand side, is driven by low or subsidized interest rates compared to alternative rates in formal and informal markets. These pressures on the demand side, met at site levels, are often compounded by those from the centre and from donors to accelerate disbursement rates. Excessive credit expansion is facilitated when accurate and verifiable information on level and trends in credit recovery rates is not available.

All too easily, the provisions in the design of rural development projects that contain credit components can be compromised. Careful preparation and build-up of group cohesion initially through community self-help and group savings then fall by the way-side. Groups which are hastily created soon fall apart after the granting of the initial credit: the joint liability provisions that should mitigate and reduce credit risk do not mature. Credit recovery drops. Project sustainability is threatened.

In contrast, active participation in community development may release women from labour constraints; training, group meetings and regular savings help them to select first peers with known risks of credit default, and second, the credit funded enterprises that they prefer. A necessary outcome for donors to accept is that with this process, overall project disbursement rates initially are lower, but that prospects for long-term impact and sustainability are greatly enhanced.

Impaired Decision Making to Improve Resource Allocation during Implementation

a) Investment and financing models are almost always obsolete

Investment models for major enterprises at the project sites are constructed at appraisal for purposes of determining the economic rate of return of the Project, but they are updated rarely if ever. Adapting the investment models to specific technological, marketing and socio-economic conditions in the project sites would have been most useful. Training in simple financial analysis should have been provided. The extension officers (WWs), the bank field officers, as well as the beneficiaries themselves would then have obtained a more realistic picture of cash flows, returns and constraints associated with micro-projects being proposed for financing.

The same lesson was derived for the IFAD Completion Evaluation of the Nepal SFDP II. Investment and financing models for typical enterprises in each site need to be drawn-up and updated at least once a year.

b) Monitoring of credit recovery

The SAR of the PCRW, similar to the one for SFDP II, neither foresaw the strong push for accelerating credit disbursement, nor did it set up control or monitoring mechanisms. At time of design, repayment rates need to be properly defined, performance criteria established, and effective reporting systems be set up. Decision rules can be defined a priori with which to take corrective action when standards are not met. But when these efforts are not undertaken at time of design, subsequent efforts to improve upon the situation remain ineffective: ultimately, the sustainability of the supported credit line is threatened. Far more attention and direction must be given to the importance of accuracy and timeliness in the financial reporting systems: detailed modalities, resources and funding need to be set out in the design documents.

Creation of technology support structures

Another lesson learned from this and other projects is the need to ensure that a proper decentralized structure for technology support and diffusion is established. Such a structure comprises specialist extension officers (subject matter specialists, SMS) located in reasonable proximity to extension workers and the target population. The SMSs operate as trainers of trainers, advise in diagnosis of constraints, financial analysis of profitability, enterprise selection and ensure link-up with applied research and veterinary institutes. In the absence of ensured provision of such decentralised technology support, profitability and sustainability of economic activities and enterprises funded under the Project remains at risk. The possibility of funding on-farm trials and experimentation supervised by such SMS should be explored. Operational mechanisms for technology support, together with funding for this purpose should be ensured at time of design.

Emphasis on institution building

Adequate financial services to the rural poor can be provided only when institutions become financially viable over the medium term. In the short run, costs of necessary mobilisation and training of staff and beneficiaries, and of outreach efforts, are high relative to loan volumes. In the medium term, under given preconditions, a delivery system for outreach of financial services can be created: when a critical mass of borrowers is reached, the credit line can become "financially viable". In practice, such graduation is rare. This situation arises, in part, because criteria have not been established for minimum benefits that translate into a critical mass of borrowers and loan volume, to be attained through a targeted outreach approach; and, in part, because necessary initial costs in extending a delivery system are not distinguished from the terms, or subsidies of the financial product (e.g. subsidized interest rates on lending that may be even negative in real terms). Moreover, if the "mother" institution and its branches" are not breaking-even on its normal operations, the entire effort in reaching financial viability may still be compromised.

The lesson learned for donors is that the building of financial systems is worthwhile, but the process is difficult and long. It is advisable to treat the building of financial systems for the poor as projects in their own right; at a minimum, distinct institution building components need to be formulated as part of future projects.




Smallholder Cattle Development Project - Phase II (1995)

September 1995

Completion Evaluation

The Indonesian economy grew robustly in the 70's as a result of favorable economic policies, but the fall in oil prices in the 80's has caused severe deterioration in the country's external terms of trade. In order to stabilize the economy and achieve growth, the Government of Indonesia (GOI) adopted policy measures that included restraints on public expenditures, tax reforms, and a more active exchange rate policy.

One of the strategies adopted by GOI for spreading economic growth is the opening up of new lands for agricultural production through the Transmigration Program. To overcome the lack of draught power, which has constrained the cultivation of more lands for food and tree crop production, GOI launched a program aimed at supplying draught animal to the transmigration areas.

The basic strategy of IFAD involvement in Indonesia emphasizes multi-component, area specific projects for the densely populated Inner Islands, and the introduction of technically and financially attractive smallholder farming in the Outer Islands. Five projects have so far been supported by IFAD in Indonesia with a total contribution of SDR 95.65 million, including SCDP I and II.

Major Lessons from SCDP I. Draught power provided by cattle raised agricultural output and increased the household incomes of the beneficiaries. The credit in kind system enabled the poor to obtain cattle at favorable terms and the SATGAS teams provided highly effective technical support to the farmers. The project's MIS assisted project management to develop appropriate technical and managerial responses.

Project design and objectives

The primary objective was to increase agricultural production by overcoming the draught constraint of farmers in transmigration sites. The components of the project included the procurement of 84,100 cattle for distribution and redistribution of about 60,500 calves returned to the project as in-kind repayments (65% of project costs), forage improvement, institutional support for project management, construction of handling facilities, and program support including M&E arrangements, consultancy services, special studies, and the investigation of the Jembrana disease.

Total project costs was USD 65.3 million. An IFAD Loan of USD 12.0 million equivalent and a IBRD Loan of USD 32.0 million would finance all the foreign exchange costs of the project and about 60% of the local costs. The GOI would finance the remainder of USD 21.3 million. Funds would be disbursed over a five year period. Two amendments to the Loan Agreement were made, an increase in the disbursements for cattle procurement from 20% to 30%, and reimbursement of project pre-financing.

The major beneficiaries would be sponsored and spontaneous transmigrants, and resettled families living near or in the transmigration sites. An estimated 700 farm households were to be assisted for forage seed production.

At the farm level, expected outputs were an increase in draught power in project areas resulting in increased agricultural production, improvement in incomes, food security and assets of smallholders. At the national level, the project impact was envisaged to be increased agricultural production, incremental beef production and superior technical and managerial services within the livestock industry.


Implementation context

Project coordination and management. The organizational structure and arrangements, as well as the tested operations policies and procedures of SCDP I were to continue. The Inter-ministerial Steering Committee for Foreign Aid Projects (ISC) was responsible for coordinating project implementation at the national level, and a Project-Management Office (PMO) was responsible for planning and implementing project activities at the central Government level.

Liaison between PMO and other agencies of GOI improved as project procedures and reporting were refined. At the provincial level a similar inter-departmental committee coordinated project activities. These meetings tended to be less frequent and would usually only be called when the need arose.

By the end of the project, project coordination had been institutionalized with the incorporation of PMO into the Directorate of Livestock Distribution and Development. There was also greater recognition of the need for better coordination and integration of other livestock distribution programmes and related activities.

The management style of the PD tended to be centralized, but delegation of authority and accountability to divisional managers was gradually undertaken. The management role of the PMU chiefs was also enhanced when, from being mainly coordinators, the PMO increasingly entrusted them with greater responsibility in handling implementation problems at the provincial level. This enhanced their integration into the regular livestock services and strengthened their links with other provincial services.

Project Management Units. The Project Mananagement Unit (PMU) was the main channel of information between PMO and the field level SATGAS units and between PMO and provincial government authorities. Their number was expanded to 12 units to allow for the inclusion of two additional distribution provinces. PMUs became one of the most effective implementing arms the project. It is difficult to assess to what extent the PMUs were "requested" by the provincial livestock services to work on other assignments, although there is reason to believe that at times - e.g. when cattle shipments for other government programmes had to be handled - this may have happened.

By the end of SCDP II, staffing of PMO had reached 70, PMUs had 173 staff, 582 SATGAS were operating in the field, and 22 project staff were working at BCDIU. The PMO staff had been disbanded and distributed to various directorates of DGLS while most of the PMU and SATGAS staff have been integrated into the provincial livestock services. They continue to be highly motivated.

Supervision missions repeatedly stressed the importance of institutionalizing the activities of the PMU within the livestock services at the provincial and district levels. At the time the Evaluation Mission was fielded, some action had been taken by DGLS to absorb the project field staff and to decentralize the MIS (see below).

Extension Service by the SATGAS. The project drew from the success of SCDP I with the SATGAS and aimed at establishing additional SATGAS teams to cover the new distribution sites under SCDP II. The number of SATGAS staff actually contracted over the years has been in conformity with the distribution. The establishment of the SATGAS teams has been successful. They acted as a key factor in the efficient implementation of cattle distribution and follow up. Their ability to carry out hands-on management "on the spot" has ensured a continuous progress of the project and provided farmers with the basic support and SATGAS staff have integrated themselves in the community.

SATGAS teams cooperated with extension staff from other departments and especially with the sub-district livestock services largely on an informal basis. There is, however, a need to clarify whether the responsibility for monitoring farmers who have repaid their credit would continue to be undertaken by the SATGAS or passed over to the sub-district livestock services. The increasing number of participants and size of project herd has however implied an disproportional amount of SATGAS time being spent on data collecting, administration and bookkeeping. This has also led to a slow process of loan documentation, particularly in peak periods of cattle procurement. The level of training received by the key farmers is generally good. However, the transmission of knowledge and information from key farmers to group member has been weak. It is important for the SATGAS to closely supervise the transfer of knowledge to group member and to ensure that this process is well functioning.

Consultancy services. The PMO continued to draw on the expertise of consultants for assistance in various technical aspects of the project. At the end of SCDP II, a total of 333 manmonths (mm) of consultancy services were provided to project management (as against 161mm at appraisal), 282 mm to BCDIU (160 mm at appraisal) and 350 mm to M&E and other studies (108 mm at appraisal). This led to an increase in project expenditures for consultants from USD 4.2 million at appraisal to USD 9.4 million when the project closed. It should be noted that studies and surveys not foreseen in the appraisal accounted for a large part of this increase.

Civil Works, Vehicles and Equipment. Less funds had been allocated to civil works under SCDP II as most facilities had been put in place during SCDP I. Upgrading was carried out on eight holding grounds and one quarantine station. Much attention was given to the provision of feed storage facilities and water supplies. These improvements have been instrumental in reducing the losses of cattle due to stress and inadequate feeding an watering. The mission found that constructions were solid and spacious, although specifications may have been excessive for some structures.

A further 550 motor cycles (341 at appraisal) were purchased. This high number was partly in response to the CI insistence that a ratio of 1 to 2 for the number of motor bikes per SATGAS unit was imperative and this was made available through a reallocation of budget in the Loan Agreement. Funds were also allocated for the replacement of motorcycles.

Cattle Procurement. A total of 84 150 heads of cattle were procured (518 of SAR). The quality of cattle has been of high standard, although shortages of good quality heifers and bulls were becoming evident. Trader's profit margin do not appear to have been excessive. The problem of high mortality of cattle in the course of transferring cattle was considerably reduced in SCDP II. Having learned useful lessons from SCDP I, the PMO refined its cattle procurement strategies and procedures in SCDP II. Losses and risks were reduced through rigorous rejection of animals which did not meet specifications and through the establishment and improvement of quarantine stations and holding grounds. Nonetheless, a number of weak animals got through to the distribution areas. Inferior quality of the breeding cattle is one of the reasons for late maturity of heifers, which causes late pregnancy, low calving rates and, eventually, delays in loan repayments.

Cattle Distribution. The project facilitated the distribution of 84 150 cattle to 76 500 farmers. Cattle procured under the project went largely to the Sumatera provinces (78%). SCDP II accounted for 28% of total cattle distributed by donor-assisted credit projects channeled through BRI. The selection of areas for cattle distribution was jointly undertaken by the Provincial Livestock Service, PMU, other Regional Government agencies, the Regional Transmigration Office and the local BRI officials based on selection criteria set by the project, although the PMU had lesser influence than other government agencies in the selection process. Once the area was selected, the Provincial Livestock Service did the selection of the precise project site. Sites actually selected for cattle distribution were predominantly upland farming areas, with the exception of South Sumatra. In Sumatra, 62% of the locations had predominantly red and yellow podsolic soils. Cattle distribution should have only taken place on sites with adequate soil nutrition. The mission concurs with PCR-II (1994) that the credit herd would slowly contract with the inclusion of ecologically unfavourable sites in the project.

Credit-in-kind enabled the poor to acquire breeding cattle-cum-draught animal on very favorable terms, and this accounted for the widespread interest and participation in the project. Attempts were made to simplify the lending procedures but delays in processing credit documents became even more widespread in the redistribution of offspring. Redistribution of offspring began in 1986. As of 30 June 1994, some 25 308 offspring from SCDP II cattle had been returned as in-kind repayments. This represents 23% of the maximum number of offspring (110 000) SCDP II farmers were expected to return to the project within the maturity period of five or six years. If the monetized value of the cattle credit is used as a basis for determining repayment performance, the repayment rate would be recorded at 40.7% as at 30 June 1994. This is the percentage of total matured loans that have been repaid. The Mission also evaluated the quality of the project's "cattle loan herd" by looking at the past due ratio. This ratio indicates the proportion of outstanding loans which are in arrears. In SCDP II, 27.4% of outstanding loans were in arrears as at 30 June 1994. Loans in arrears have increased from IDR 1.39 billion in 1990 to SDR 7.20 billion in 1994.

Factors explaining the low repayment performance include the distribution of poor quality heifers to beneficiaries, the selection of project sites with unfavorable agro-ecological conditions, and poor animal husbandry practices of the beneficiaries. Loan processing and documentation continued to be a problem area. The attempt to monetize credit in kind also created unnecessary complexities.

Forage Seed Development. In the procurement areas, the forage seed development scheme worked quite well in the initial years, but the demand for forage legume seeds declined in latter years, owing to which the prospects of the program dimmed. A salient feature of the scheme was savings mobilization among the participants. This was a practical way of educating village people on the use of bank services. In the distribution areas, mixed farming systems were designed and promoted aimed at improving the sustainability of the dominant cropping component while securing forage for the livestock.

Jembrana Diseases Investigation. Fully equipped and operational, the BCDIU in Denpasar has determined that the disease is caused by a virus, but it still needs further funding support for developing a cheaper vaccine. It is the opinion of the evaluation mission however, is that financing of BCDIU's activities should not be included in a project with a limited time horizon. GOI should look for a partner among the international scientific organizations for longer-term collaboration.

Financial performance. GOI contribution had only reached USD 7.7 million at loan closing, 16% of total costs as against 34% envisaged at appraisal, owing to constraints on GOI budget and rigidities in its investment policy. This led IFAD and World Bank to increase their share of financing cattle purchases.

Project achievements

Institutional development

Strengthening of livestock services. A high level of performance was maintained all throughout SCDP II. The project has contributed to the reduction of weaknesses in the livestock extension services and in strengthening its extension force. A total of 175 staff members were trained with financial support from IFAD. Farmer groups (kelompoks) were strengthened, but they need to be revitalized and given a permanent function if they are to be sustainable.

Institutionalization of SCDP. At the time of project closing, the Livestock Services were undergoing a process of restructuring that aims to integrate the erstwhile project organization into the management structure of DGLS. Several threats to the process of institutionalization need to be dealt with: (i) transfer of responsibilities from experienced full-time managers at PMO and PMU to less experienced livestock staff at provincial and district levels; (ii) recruitment of experienced SATGAS staff to district or province levels without replacing them with adequately trained new recruits in the field; and (iii) the limited involvement of district level livestock services during project implementation. The integration of project personnel into DGLS could be sustained by using part of the revenue from credit herd cull sales to cover the salaries.

Monitoring and evaluation system

Management Information System (MIS). The MIS has been a key factor to the project's capability of meeting physical and financial targets. A comprehensive computer based system provided management with necessary information for decision-making. Measuring physical achievements and credit repayment was overemphasized. The system still lacks socio-economic indicators. The practice to erase a farmer from the system once he had repaid his credit defeats the purposes of follow-up and post-project evaluations.

The present MIS has centralized the livestock and credit database at PMO, leaving only aggregated cattle data at PMU level. This design was very efficient in the implementing stage of the project cycle, but in the post-project stage the MIS has to be adapted to a decentralized structure with local databases. This will give district and province level management the possibilities to analyze field data and take immediate action where so required.

At PMO level the Planning Division was responsible for MIS. All reports were compiled into monthly, quarterly and annual reports and analysis were made to provide feedback to the PMUs. The decentralized MIS was introduced in 1992 and included a programme package name SIM P3T with one version for district level: SIMKAB, and one for province level: SIMPRO. To date, the system is still not operational.

Socio-economic Impact Evaluation. It was recommended not to renew the contract of the consultants, BMB Ltd, after the mid-term review found the socio-economic surveys they did for the project were lacking in analaysis and considered below acceptable standard. Surprisingly, their contract was renewed in 1984, 1986, 1988 and 1990. Annual surveys were conducted during the period 1987 - 1990, but the integration of their findings and information into management's decision making was never achieved.

Effects assessment and sustainability

Animal Performance. The calving rates in the distribution areas are not different from those in the procurement areas. However, the mortality rates in the distribution areas are lower than those in the procurement areas. Of 107 project sites surveyed in SCDP I, 55 sites or 51.4 percent had lower than 50 percent calving rates, and 25 sites or 23.4 percent have calving rates of 60 percent and higher.

Impact in Distribution Areas. The principal project benefits to the farmer are derived from incremental food crop production generated by ploughing. The use of cattle allowed an average increase of cultivated area of 0.5 to 0.7 ha per farm. Studies indicate that the extra income from crop and livestock sales is smaller than the extra income which non-ploughing farmers obtain from off-farm work. Nonetheless, ploughing farmers are able to achieve better food security and food intake levels.

Impact in Procurement Areas. The project's socio-economic study estimates that farmers receive 30 to 40 percent of the contract price of the animal, and the remainder is distributed between collectors and traders. Collectors and traders do not appear to be making excessive profits, given the costs and risks of supplying cattle to the distribution areas.

Impact on Women. Field discussions by the mission revealed that many women were clearly involved in the regular care of the cow but saw their role as assisting, rather than management. When extra labour was required for collecting fodder, where the children were old enough they were more likely than the wife to be called upon to help.

Environmental Impact. Following the movement of the cattle, there are six stages of interaction with the environment that need more in-depth study and analysis: (i) the impact of grazing patterns on soil erosion; (ii) environmental degradation by cattle faeces and urine; (iii) risks of transporting weeds associated with the forage programme; (iv) effect of cattle manure on soil fertility; and (v) risk of exhausting soil fertility through ploughing;

Impact of Jembrana Disease research. Evidence has now been obtained that Jembrana Disease is caused by a virus belonging to the family Retroviridae. Production of a low-cost vaccine is highly possible but more funding is required.

General assessment

The Project enabled the poor to acquire breeding cattle-cum-draught animal without imposing on them the burden of generating substantial cash income for the repayment of loans. The project has had a positive impact on the lives of the beneficiaries in the areas of income, labour saving and nutrition. The project's approach is highly recommended for future IFAD smallholder cattle development projects.

Availability of cattle has led to reduction in the heavy work of hoeing in preparation for planting and the opening of more land for agricultural production. The area of land cultivated by the farmers generally increased from 0.25 ha when they used the hoe for clearing the land, to 1.0 ha when they used cattle for ploughing. As a result, household earnings from agricultural production increased for most of the beneficiaries.

Some factors that were influencing project performance are:

  • One of the factors contributing to the project's success was the high level GOI support for the project. This was possible because the project objectives dovetailed with GOI objectives for the development of transmigration areas.
  • Most of the project sites selected for cattle distribution were transmigration areas whose food crop production was constrained by the lack of draught animal. There were project sites, however, with harsh agro-ecological conditions and the cattle in these areas generally had poor health and low calving performance.
  • During the project period, local prices of cattle steadily increased, thus giving beneficiaries brighter hopes for future cattle sales and continuing inspiration to care for their cattle.
  • Project management succeeded in strengthening DGLS services and in establishing a well-knit organization to support a credit-in-kind system rooted in a tradition that continues to be socially acceptable and widely practiced. The MIS turned out to be the right tool for management to control the vast operations throughout the country. Adaptation of the MIS at the district level (SIMKAB) and province level (SIMPRO) is yet at an infant stage and needs considerable attention before these would be institutionalized. Most of the project directors have proven to be capable managers.
  • Project support for civil works has contributed to a great extent in minimizing the risks identified at Appraisal. GOI funding was less than anticipated, prompting IFAD and World Bank to increase their contributions particularly for cattle procurement. The PMO developed a computer based financial accounting system which has greatly assisted in establishing a high standard of financial recording and reporting.
  • The project underscored the importance of improving the quality of project staff by organizing training courses for them.
  • Discipline in the organization was reinforced by an above normal honoraria paid by the project and by adequate provision for housing, travel, vehicles, equipment and training - all of which contributed to the high morale among the project staff and their willingness to handle difficult situations and to produce good results.


DGLS can operate the credit herd as a self-perpetuating, revolving commodity credit facility. In the long haul, DGLS should devote more efforts and resources in creating and maintaining a herd of high quality breeders, and to entrust the offspring redistribution to institutions operating as "credit intermediaries" at the village level (e.g village cooperatives, NGOs, rural banks, or even farmer groups). This course of action is best implemented by a decentralized organizational set up. Sharing of the proceeds from the sale of culled bulls should be restructured in favour of the provincial livestock services.

Main issues and recommendations

Site and Beneficiary Selection. More attention should be devoted to the selection of distribution sites with favourable agro-ecological conditions and the selection of beneficiaries who are poor and who have an effective need for draught animal.

Purely in-kind credit model. The concepts and operating procedures of the credit in kind system should be kept along the purely-in-kind model in order to avoid unnecessary complications in operating the "revolving cattle credit" scheme.

Cattle Procurement. For future inter-provincial or inter-island shipment of cattle, a 500-head shipment is deemed practicable. There should be a lesser need for costly infrastructure of holding grounds when shipment is done during the dry season.

Cattle Development. A practical system of individual recording of cows is imperative. Such a simple record could be a valuable tool for the farmer and the SATGAS to keep track of the cow's fertility and later, selection of offspring.

Forage Development. SCDP created an artificial demand for seeds which was unsustainable. This should be avoided in future projects.

Jembrana Disease Investigation. It is more appropriate for GOI to seek funding support for this as a separate technical assistance project rather than as part of a loan package.

Livestock Project for Women. Project impact on women will be more conspicous if they were given credit for raising goats, chicken, or pigs. The credit program for women is best organized along the established group lending procedures of Grameen Bank.

Decentralized MIS. In post-project period, the MIS should adapt to a decentralized structure with local databases. The decentralized MIS will give district and province management the possibilities to analyze field data and take immediate action where so required. The design of socio-economic surveys needs to be simple, low cost and sustainable.

Savings mobilization. Savings mobilization should be introduced in the distribution areas and regarded as an indicator of people's participation in the project. In view of government difficulties in raising its equity for such projects as SCDP, future IFAD projects could increasingly recognize the supporting role that people's savings can play in development projects.

Training. Further training on how to operate the MIS is needed. This should involve not only the MIS-operators but also management at all levels who will use the system for better management.

Lessons learned

In transmigrant areas dedicated to tree crops there is less opportunity to use cattle for ploughing. A farmer who is able to benefit twice from the project is at risk of becoming dependent on the project. They should be able to purchase calves from the sale of their previous cattle or to accept extra cows from traders or neighbours through the traditional gaduhan. Often they financial position of key farmers was so much better than their peers that any demonstration effect of the project on poverty alleviation could not be manifested.

The SATGAS may not have the time nor the experience in how to support farmers utilizing the combination of cattle and land in a most profitable way. This could be achieved better if farmers are linked with other extension services.

Due to simultaneous cattle procurement activities of many projects, the procurement areas were running dry of breeding stock. Coordination in cattle procurement among various projects is imperative.

Farmers will produce fodder if they also have other benefits from the activity such as soil fertility and soil conservation. Closer links should have been established between project staff and research institutions particularly to obtain better knowledge on native legumes and grasses.

A decentralized organization would facilitate a "micro-management" approach to post-project activities. The continuation of the SATGAS numeric strength, multi-skilled technical capability and budget and resource support is crucial for project sustainability.

There is a need for adequate specification of the M&E system from the very beginning of the project. Necessary information for management should be identified, indicators and ways of measuring them clearly stated and responsible staff appointed before field activities commence.

Protein consumption will not improve significantly among project beneficiaries until there is greater awareness of the importance of protein in the diet, and there is greater availability of meat at the village level. For the project to have direct relevance to women, animals normally managed by women such as goats, pigs and chicken should be included.




Tamil Nadu Women's Development Project - Mid-term Evaluation (1995)

April 1995

Mid-term evaluation


The Tamil Nadu Women's Development Project (TNWDP) has considerable achievements. It has almost reached the quantitative targets of loans disbursed and has overachieved by 40% the number of groups to be formed specified in the Appraisal Report. Its strongest positive points are the following:

i) Women's groups have been formed and group members have been helped to develop the habit of systematic savings.

ii) It has made it possible for unregistered self-help women's groups to open savings bank accounts, an important achievement in itself.

iii) When the Non-Governmental Organisations (NGOs) involved in the project, and the bank's branches allowed groups to rotate their savings as small, flexible, internal loans for a minimum of one year, group members were able to develop a "repayment culture".

iv) The recovery rate of bank loans is excellent due to the extensive support system developed by the project. This has demonstrated that banks can give loans to women's self-help groups and enjoy high repayment rates. As a result of this positive experience, the Indian Bank is now in the process of experimenting with a scheme that will further decrease transaction costs through investment group lending.

v) Despite initial difficulties, good coordination has been established between the Government, the Tamil Nadu Women's Development Corporation and officers from line departments, the Bank and the NGOs.

vi) There is evidence of considerable social impact of the project on women, especially in well functioning, homogeneous groups of very poor women, in which women report a greater degree of self-confidence, greater mobility, and greater ease to visit banks and to converse with different officials visiting the village, compared to what was the case before group formation.


The project has placed very heavy emphasis on loan disbursement and recovery, almost to the neglect of beneficiary training. A key reason for this to happen has been that NGOs are paid on the basis of the number of beneficiaries that get loans from the bank. Furthermore, the overemphasis on land-based activities has limited the inclusion of some of the poorest women.


In view of the fact that up to December 1994, on the basis of claims filed the project has utilised only 34.63% of available project funds, and given that the perception that "the project is coming to a close" is creating uncertainty among the project staff, some of which are looking for other opportunities (the same being also the case with the concerned NGOs), the Mission recommends the extension of the project for another two to three years, without additional funds but with the condition that the following changes in the overall strategy of the project will be immediately implemented:

i) Additional targets are set referring to the number of well functioning groups with high member solidarity and cohesion and an active participatory process and to the training of beneficiaries in group dynamics and participation skills as well as in practical, technical skills.

ii) The emphasis is no longer placed on creating new groups but on the consolidation of existing groups and on the improvement of those groups to be classified in the second and third best category (according to the criteria proposed in Annex 1 of this report). The Mission recommends that no more than 600 new groups are created from 1 April 1995 to 31 March 1996 and that those groups are limited within the villages already reached by the project. After 1 April 1996, it is recommended that no new groups are created because it is important, from the point of view of sustainability, to give to new groups the full benefit of all project services and resources. Half of these groups should be entirely made up of landless women and the other half should be representative of the different types of truly poor women.

iii) The needed adjustments to group size should be made in the following fashion: (a) groups with up to 20 members are left as they are; (b) groups with over 20 members should be allowed to divide themselves into groups of no more than 20 members, in such a way that group homogeneity is increased.

iv) There is a need to diversify the profitable productive activities for which loans are available to women in order to increase women's awareness and empowerment. Poor, illiterate village women have a very limited exposure to productive activities beyond milk cows, sheep and goats. This diversification, however, needs to be based on the results of good market research undertaken in the different localities of project concentration. The project is advised to avail itself of market research capability on a contractual basis.

v) Banks should allow the groups to withdraw their savings, after completion of three months for the purpose of extending small, internal loans. Also applications for bank loans should not be accepted before a minimum of one year of high loan-savings ratio through the rotation of small, internal loans to a large number of group members.

vi) The Capital Development Fund (CDF) of Rs.7500 should be handled as a grant to the group.

vii) All attempts to create some kind of group federation should not be undertaken until the groups have attained a mature level of functioning, appreciate themselves the importance of such federation, and are in a position to control it. The present experience indicates that such federations should limit themselves to a social and information sharing role, refraining from playing any kind of financial role. The mission, therefore, recommends that all financial contributions already made by the groups to any type of federation or cluster be returned to the groups (as well as interest payments made for the CDF).

viii) The Mission recommends that the basis for payment for NGO services needs to be changed. From now on, they should be paid exclusively on the basis of number of beneficiaries trained in group dynamics and/or in technical skills.

ix) Taking into consideration the pattern already set during the fourth year, starting from the fifth year the type and size of payment extended to animators should be up to the individual group and on the nature of services rendered.

x) The bank loan should be adequate to purchase the asset financed without the beneficiary having to supplement it from other sources and banking plans should be implemented on a flexible basis.

xi) The admissible subsidy should be given as "bonus" on completion of full repayment of the loan. Groups should also be given the option to maintain the funds in the bank as a risk coverage for future loans.

xii) Through appropriate amendments to its rules, Indian Bank should begin to give the loans under the project to the best groups thus treating them as financial intermediaries.

xiii) Simplified procedures for keeping accounts by the groups need to be immediately developed through a short-term consultancy. On the other hand, passbooks regarding small, internal loans need to be issued that will allow both Project Implementation Units (PIUs) and Project Management Unit (PMU) to collect detailed data and to follow-up this issue.

xiv) The groups should be able to charge a small service charge for loans received by beneficiaries. While the groups should decide themselves, a guideline of 1% to 2% (on the total amount of the loan) could be suggested.

xv) In mature, well functioning groups, a system of individual deposits should be introduced on a pilot basis.

xvi) The project should provide funds for computerisation of ten Indian Bank branches serving more than 50 groups in order to speed up loan sanction and to diminish lender and borrower transaction cost.

xvii) Intensive efforts need to be made by the project so that different types of training, including training in groups dynamics, group management and participation as well as technical/skills training are provided to all women group members.

xviii) Depending on available training capacity on the part of line ministries and NGOs, the technical training may be offered by technical people attached to the NGO, by members of line ministries or by technical trainers retained on a contractual basis by the project.

xix) In all cases, in order to accommodate women's work overload and multiple responsibilities, their training should be offered at the village level and should be practical, on-the-job training, well adjusted to women's reality.

xx) Training in poverty and gender issues should be extended to all project officers, deputized members of line ministries and bank officers at district and branch levels as well as to NGOs.

xxi) An appropriate consultant should be commissioned by the project to identify training needs (group dynamics, group management, gender and poverty issues and credit related subjects including microenterprises) of collaborating NGOs and arrange for such training to be provided by specially trained trainers.

xxii) A short training in participation should be given to animators in order to enable them to modify their own often dominating behaviour and to create a participatory environment for all women members.

xxiii) An important training aid to be developed is a video of the behaviours and interactions between women members in a well functioning group, illustrating successful group dynamics, active participation and democratic decision making. The video could also include a contrast with a group that is not functioning well. Specific funds should be allocated for these and other communication activities.

xxiv) All training activities and particularly the quality of training offered to all target groups and especially to beneficiaries needs to be carefully monitored by the project, mainly by the Training Coordinator, and in his absence by contracted training specialists.

xxv) Data concerning all types of training of beneficiaries as well as data regarding the classification of the groups with regard to the degree of consolidation (according to the proposed criteria) should be disaggregated by branch and by collaborating NGO in order to allow for corrections and changes in direction.

xxvi) Animators and supervisors should be trained in recording the number of trained beneficiaries, the type of training provided, and the number of visits by the technical staff (e.g. veterinarians) to the group.

Lessons learned

The TNWDP provides a number of important lessons that can benefit the planned National Women's Project in India. Four outstanding lessons are the following:

(a) There is a striking diversity of results not only among districts but even within districts of a same state. This should lead to great caution in replicating experiences such as those of the Tamil Nadu Development Project. Crucial success factors are the presence of motivated and competent NGOs, committed financial institutions and adequate procedures (particularly with respect to the mode of payment to NGOs).

(b) The poorest women included in groups and provided with appropriate support services performed as well as less poor women with respect to savings, loan repayment and ability to productively utilize loans.

(c) direct subsidies provided to the beneficiaries as a bonus after loan repayment do not constitute a significant motive for members of well functioning groups. On the contrary, they may be creating expectations for future subsidies that cannot be fulfilled; and

(d) A key indicator of the dynamism and cohesion of a group is the degree of rotation to all members of small, internal loans based on their savings prior to applying for bank loans.



Xieng Khouang Agricultural Development Project (1995)

Lao People's Democratic Republic  
April 1995

Interim evaluation

The project covers the whole of the Province of Xieng Khouang, a mountainous region in the North-East of Laos. In 1989, its population was 177 000 people and some 217 000 in 1997. At Appraisal time, the effects of the war were still visible: refugees just returned, infrastructure not fully rehabilitated, weak administration, dominant subsistence economy. In 1997, the scope had changed with economic liberalisation, road and trade opening, transition to monetary economy, impressive growth of the Provincial capital. The Province, however, is not self-sufficient in rice (total production 1995, 44 000 tons). Livestock is a major activity, accounting for 110 000 heads of bovine (as against 73 000 in 1989).

Project design and objectives

Target group

Project beneficiaries were defined as the households that were unable to produce enough food for family consumption, that had less than average productive assets and that produced opium. Beneficiaries were to be identified in all districts of the Province, according to pre-established criteria. Target figure was ambitious: some 13 000 families, i.e. half of the total number of households in the Province, at Appraisal time.

Objectives and components

IFAD Loan 256-LA is part of a programme including the following components:

Xieng Khouang Agricultural Development Project, co-financed by IFAD (loan 256-LA) and UNDCP (LAO/91/551), the latter covering the Technical Assistance component.

District Development in Opium Growing Areas of Xieng Khouang (UNDCP Grant LAO/91/552)

Labour Based Road Construction in Opium Growing Areas of Xieng Khouang (UNDCP LAO/91/553)

Initially, however, the Project was approved (on 25 July 1990) without parallel arrangements for Technical Assistance. Those were negotiated only later with UNDCP.

Project global objectives were:

Improved food security for households with production deficits to meet family needs

Increased incomes for poor families ( below average)

Greater equality in access to resources and services

Progressive elimination of opium production

Project Components included:

An agricultural component mainly intended at strengthening the Province and District Agricultural Services, with a main focus on training, extension and adaptive research

A livestock component to enhance animal health services and to help the farmers to stock their farms, through a mechanism based on Cattle Bank groups

An irrigation component which targeted the construction of new schemes (750 ha) and rehabilitation of 18 schemes (1950 ha)

A credit component initially due to be operated by the State Bank of Laos

Provision for bridge construction (but not for roads).

Expected effects and assumptions

The internal Economic Rate of Return (ERRI) was estimated at above 18%. The Project was expected to have an impact on farm income, rice production, women involvement, environment (reduction of slash and burn cropping as a result of irrigation), opium production (reduction as a result of new economic opportunities).


Implementation context

The project suffered delays and slow disbursement during the first three years for various reasons which were extensively reported in the 1994 OPS report and in the 1995 IFAD Mid Term Review report. They include, in particular: problems encountered with IFAD disbursement and procurement procedures; priority given to expenditures made on the UNDCP account instead of using IFAD funds; late arrival of the technical assistance (no arrangement was made during Appraisal for TA financing; solutions were negotiated with UNDCP only after project start; delays for approval and recruitment occurred). Government also indicates lengthy OPS procedures as a reason for the project slow start. Later, IFAD had to cancel part of the loan (some USD 1.5 million), in particular because some components were financed both by IFAD and UNDCP and the latter grant was used first.

A major change occurred with the 1994 UNDP/OPS supervision mission. The 1995 IFAD Mid-term Review Mission was able to notice the first positive changes. Since then, the project has considerably progressed and it has been able to largely offset the delays in disbursement. The various components have been operated with increasing effectiveness, although with uneven results. It is a fact that the project has now created a strong momentum in the province and that it plays a significant role in agricultural development. The assessment of project performance, however, has also to take into account the major changes which occurred in the Province since Appraisal. Over the past eight years, communications have improved, urban development in the head town is booming, there is a banking sector, trade is flourishing, in particular with Viet Nam, and in rural areas, self subsistence economy is opening to monetary economy. Subsequently, some project approaches and components which were justified at appraisal time, might appear inappropriate in the present context. Their evaluation therefore, has to be made accordingly.

Project achievements

Irrigation. Between 1993 and September 1997, the project completed 21 schemes, including 10 rehabilitated schemes and 11 new schemes. These schemes presently irrigate a total of 600 ha, and have the potential to irrigate 300 ha more when the command area is fully developed, bringing the total to 900 ha (equivalent to 25% of total modern irrigated area in 1995 and 32% of modern schemes number). Project implementation is through the Provincial Irrigation Service (PIS), and the beneficiaries provide labour, local materials and even some of the capital costs. Another 8 schemes are planned for the 1997-1998 dry season, irrigating an additional 400 ha at full development. Overall, the irrigation component is very positive.

Main strengths are the following: (i) good overall quality of the works, (ii) concentration on small projects, (iii) projects are "bottom-up" (requests from farmers, delivery via PIS), (iv) training of PIS staff, (v) operation through loans to the beneficiaries, a first in Laos (good for ownership, O&M), (vi) free labour, free local materials, (vii) use of bulldozer for 1st cut of main canals (UXO, unexploded bombs risk), (viii) good Government policy support (ix) effective Water User's Groups, (x) enthusiastic/motivated CTA and PIS staff.

Main weaknesses: (i) very little use of irrigation schemes during the dry season, (ii) at some sites, poor construction caused by insufficient construction supervision (PIS staff over committed), (iii) some technical aspects can be improved (i.e. overflow spillways at canal intakes), (iv) very poor quality works on one experimental design (Ban Nammen).

Livestock, Animal Health Support for the livestock sector was provided mainly through procurement and distribution of cattle to livestock raisers. The beneficiaries of the Cattle Banks (CB) were targeted with interventions addressing disease and nutritional constraints of cattle and, to a lesser extent, other classes of small farm livestock. Training was provided for Provincial Agricultural Services (PAS) staff in the provincial and district offices. Village Veterinary Workers (VVW) who were also villagers themselves, were trained to provide animal health and other technical services to Cattle Banks beneficiaries, as well as other livestock raisers. Support for farmers was provided through VVWs in respect of vaccination for cattle, buffalo, pigs and poultry. Trials were conducted under the guidance of a technical assistant to identify suitable wet and dry season pasture grasses and legumes. Extension methods were introduced to deal with animal health and nutritional constraints. In 1994, credit for livestock was provided through the Agricultural Promotion Bank (APB).

The distribution of 3,165 head of cattle through 39 Cattle banks has reached 863 farm families from a total of 29,300 provincial households. The project provided support for the establishment of a CB holding station outside Phonsavanh where future repayment animals are to be held and conditioned before redistribution. Cash credit became available to borrowers for livestock through the Agricultural Promotion Bank, within its lending limits.

Twelve kerosene refrigerators were provided as key units for a cold chain holding livestock vaccines at provincial headquarters and at the district offices, although attempts by the project to transfer operation of the units to the private sector were unsuccessful.

A total of 305 VVWs received equipment for cattle and buffalo vaccination, mainly against Haemorrhagic Septicaemia and Black Quarter, and some pigs and poultry were vaccinated against other diseases. Although not envisaged during Appraisal, a Disease Diagnostic Laboratory to support investigation into the causes of cattle under-performance was established.

Some 21 project staff were trained in livestock production subjects, and 305 VVW received training in vaccination as well as a number of animal health and production topics. In-village training sessions were conducted in pasture establishment and about 500 farmers, received training in vaccination, de-worming, the urea treatment of straw (UTS) and the manufacture and use of mineral blocks and bone meal for supplementation.

During 1993-1994 about 66 pasture varieties including twelve cool season varieties, were tested in two Training, Trials and Demonstration Centres (TTDC) and in 22 different locations. A number of species suitable for distribution were identified. Pasture demonstration plots were established in six CB villages in 1996.

Agriculture, crop development and agricultural extension The Crop Development component was set up to provide a source of improved technology and a means to disseminate this to the target population. Main activities to this end were carried out by the Provincial Agriculture Service, supported by the Training, Trials, and Demonstration Centres (TTDC), and District Agricultural Offices. The basis of the extension activity are Village Extension Workers (VEW), selected at village level and based in each target village, to pass information to the community.

Main project achievements include: (i) adaptive trials carried out from 1992-1995, and confirmed in farmers fields in 1995-1996; they provided seeds of promising lines of maize and rice that have been distributed to farmers in 1995 and 1996. (ii) training of both staff and farmers which has taken place mainly during 1994 and 1995; however figures are not up to appraisal levels. (iii) establishment of TTDCs; their number was reduced to two. (iv) development of most District Offices, adding one nursery in each, (v) some 252 Village Extension Workers were established at village level. In addition, the project has developed the horticultural activities within the project area following a consultant's recommendation (1994), through the introduction of improved fruit tree planting material from overseas and local sources. This material has been planted both on the TTDCs, and on the farms of village co-operators.

Strengths in the project include the integrated farming systems, and very positive farmer attitude. Farmers are not adverse to change, know their requirements, and have a reluctance to accept pesticide use. This provides a very strong base for the introduction of alternative technologies through an extension system. In addition, the project has effectively followed consultant advice, and expanded activities to include nurseries and fruit tree production which was not included in the Appraisal.

There are however a number of weaknesses: (i) alternative cropping systems have yet to prove their financial benefit and sustainability to farmers. Systems tested are not yet ready for larger scale implementation.(ii) no effective extension system is in place, and staff attitude and the linkage between different levels and organisations are generally poor, (iii) farmer training has been conducted, but lacks a practical approach, (iv) promotion of varieties have proceeded without sufficient farmer selection and evaluation, resulting in the rejection of most of the rice and maize seed distributed. Methodology employed was basically correct, but required greater farmer involvement in the early stages, (v) TTDCs are not being fully utilised, (vi) VEWs have been trained, but they need follow up to provide them with the suitable technologies required at village level. An unsatisfied need for information and guidance exists in villages.

Credit The credit situation in Laos at the time of project design was difficult and there was only one credit institution in the project area, which did not focus on agricultural credit. The Phonsavanh Branch of the Agricultural Promotion Bank (APB), which started lending operations in the project area in 1994, has rapidly expanded it operations, from 800 borrowers in 1994 for a loan total about of 300 million kip to an estimated 4500 borrowers for a total annual lending estimated to reach 1.2 billion at the end of 1997. Recovery performance stands at around 95%, with some farmers late with their repayments; bad debt accounts for less that 2%, which is comparable with a good private bank. Public Investment Programme in Agriculture for 1997 is expected to be about 117 million kip, while lending by the Phonsavanh APB branch will probably reach 1.2 billion for 1997. Public Investment Programme in Agriculture is thus about 10% of the APB Provincial lending program.

IFAD lending was about 14% of APB lending in 1994, and about 7% this year. APB lending in the Province has been an effective development tool, if there are adequate marketing outlets. IFAD financed loans have followed the pattern of APB loans, with a similar success rate for the activities financed and for recovery. IFAD financed lending was to be on market terms (over 30% at the time) but loans have been extended to farmers at subsidised government interest rates (7 to 10%).

Government explained that the interest rates adopted at the time of the creation of APB reflected market interests, but there has been divergence since then. The mission signalled that the two-tiered interest rate structure that currently exists for APB lending (7-10% terms on government funds provided to farmers and 20-24% on APB mobilised funds) could be problematic, and that the Sayabouri Project recently appraised by IFAD would use a commercial bank and commercial terms for the provision of credit to farmers.

At Appraisal, total lending was estimated to exceed USD 800 000, but has only reached about USD 205 000. APB lending in the Province has reached only 25% of the objective foreseen at Appraisal, because lending started very late and because repayments by farmers are not being used to establish a revolving fund for further extending credit to farmers. This because APB is required to sign a special loan agreement for the disbursement of each tranche (USD 50 000) of IFAD loan funds. The terms and conditions for repayment of IFAD loan funds to BOL are laid out in these agreements. For 1996, APB had to repay within one year. For 1997, APB must repay the total amount by 2002. The short duration of these agreements violates the IFAD loan agreement. Because of the short duration of the agreements, APB has had no opportunity to deposit farmer repayments into a revolving fund established in the Phonsavanh Branch.

In addition to the above problem, there have been long delays (six months) between the time that APB headquarters has submitted withdrawals requests and that the Bank of Laos (BOL) has released the tranche of IFAD funds to APB headquarters. Because of the delay in funds arriving to the Branch, APB has applied IFAD financing to loans already evaluated as part of its own Work Program, although it has also tried to focus on group lending to farmers with a lower level of assets than those normally required by its own policies.

Labour Based Road Construction Further to the successful implementation of the UNDCP LAO/91/553 Project Labour Based Road Construction in Opium Growing Areas of Xiengkhouang during the period from 1992 to 1995, the mid-term review mission of June 1995 recommended that IFAD funds be used to continue the programme. From January 1996 to March 1997, about USD 600,000 of IFAD funds were used to build 29 km of new roads, and place a total of 17 km of road metal, all in Nonghet.

Main strengths include: (i) Labour based (income, ownership, construction techniques), (ii) road building (access!) is the first step for any development, (iii) overall: good quality (considering village built and price per km). Areas of weaknesses include: maintenance, which has to improve. On the technical side, cross drainage techniques/structures should be improved, more steep crossfall should be constructed and larger stones for metal on steep slopes should be used. Resources should not be used for large bridges on major roads.

Project Costs The Project as appraised was to cost about USD 10.6 million, with USD 2.8 million in Technical Assistance. IFAD funding was to total about 5.3 million, co-financing was to total about USD 3.9 million and Government share and Beneficiary contribution were to total about USD 1.2 million. It took about one year to reach agreement with UNDCP about co-financing and for TA to be put in place.

The actual status of Project cost is estimated as the following: a total project cost of USD 6.1 million, with IFAD financing of about USD 2.9 million, UNDCP (Project no. 551) financing of technical assistance and equipment of USD 3 million and Govt share and Beneficiary contribution of about USD 250 000. In addition UNDCP has financed two projects which have been implemented in tandem with the Xieng Khouang Highland Agricultural Development Project: the District Development in Opium Growing Areas Project (Project no. 552) for USD 1.3 million and the Labour Intensive Road Works Project in Opium Growing Areas (Project no. 553) for USD 1.7 million. The total financial support to the province of Xieng Khouang of these projects stands at about USD 10.6 million.

IFAD, Government and Beneficiary financing of the project currently totals about USD 3.15 million, i.e. about 90% of the loan amount after cancellations.

The largest share of spending from the IFAD loan has been on road construction, followed by livestock. If the cost of road construction is eliminated, spending on livestock represents about 40% of expenditure. Government explained some of the reasons for slow disbursement under the IFAD loan: it is not government policy to use loan funds to purchase vehicles and there was a lack of clarity in general about procurement and disbursement procedures as a result of language constraints. With regard to the cancellation of IFAD loan funds following the Mid-term Review, Government expressed the view that this decision had been taken extremely rapidly, and has meant that the project is now tight of funds.

Effects assessment and sustainability

Project beneficiaries The project has been present in 112 village (out of 506 in the Province), corresponding to 25 subdistricts (out of 50) and six districts (out of 7). The density of project interventions, however, has been uneven: there has been a concentration in the Pek and Kham district while the Nonghet district, which should have received special attention because of the opium problem in this area, has been neglected until the Project last years. These 112 villages total 8758 households, of which 2225 have directly benefited from the Project. The cost per beneficiary household is USD 1303, about three times the average cost in IFAD projects.

Direct beneficiaries include 863 households for the livestock component, 682 for the irrigation component, 680 for credit, of which 40% women Beneficiaries of the crop component and of training activities are in the process of evaluation. Ethnic minorities have also benefited from the project but not in proportion to their demographic distribution.

The mission, with project staff assistance, has conducted a statistical analysis of project beneficiaries income distribution as compared with village average income distribution. An opinion survey has also been conducted with about 70 farmers to better assess their attitude toward project and their views of future developments. These surveys indicate that the targeting criteria have been unevenly respected. Credit, in particular seems to have been allocated to a number of farmers who were above the proposed appraisal thresholds ( less than one hectare of paddy and no cattle or only one buffalo).

Irrigation. The increase in irrigated land has mainly brought the following benefits:

Increase of paddy areas

Increase in yields for existing rainfed rice paddies, as a result of more controlled irrigation.

Decrease in slash and burn agriculture, as more rice can be grown in the paddies

Increase in dry season crops, although still on a limited scale.

Livestock The productive impact on project beneficiaries to date has been limited. Inorganic fertilisers are seldom used, therefore the manure from distributed cattle has been the main contribution to agricultural production on these farms. The reproductive performance and calf survival of Cattle Banks cattle has been low whereas the selection criteria used by project staff and APB for identifying project beneficiaries, did not ensure the poorest were selected.

Supporting VVW to provide vaccinations to Cattle banks cattle has reduced deaths to some extent, and has increased farmer awareness of the advantages of regular vaccination for all stock. It has also resulted in husbandry technologies being introduced to some villages. Compared to those provided by the MA however, project vaccinations cover a small proportion of the livestock population. About 1700 head (74%) of CB cattle were reported vaccinated during 1995, and 500 head (19%) were vaccinated in 1996. MA coverage for non-CB villages during the same period covered about 14700 (21%) and 10200 head (14% from the provincial herd).

Few villages made mineral blocks or bone meal after these were first demonstrated and none have adopted UTS technology. The retail outlets in Phonsavanh report only a small trade in these products. Conversely, the use of Piperazine treatment for calves seems more generally accepted and has imparted benefit, perhaps because of its availability, cheapness, effectiveness and small labour demand.

Although some suitable pasture species were identified for local use, a system whereby supplementary, dry season pasturage might be permanently established, has not eventuated. Free ranging animals and the lack of and cost of fences as well as common pastures management issues which the project has not yet addressed, remain important social constraints effecting pasture establishment and use.

The Cattle Bank programme was appropriate at the time the Project was appraised although off-take from the cattle has been poor and the targeting criteria the project used, have failed to ensure that cattle are directed to the rural poor. Based on the calving opportunity for all cows since distribution began, the 1,478 calves produced between 1992-1997, suggest a reproductive rate of about 12 percent, or a to-date average of less than one sixth of the Appraisal (80%) estimate. As a result, a number of farmers may be unable to repay within their loan period.

Other than some reduction in mortality from vaccination, the project's extension activities have generated few identifiable benefits. The technologies introduced thus far, addressing the nutritional constraints of cattle and buffalo, were sound, but have not been generally adopted. There remain important social constraints effecting establishment of dry season grazing reserves and farmers continue to view a herd size as more important than production efficiency.

Agriculture Mission field assessment for cropping and extension activities indicated very little presence of improved seed resulting from the seed distribution program. Only isolated farmers have adopted improved seed as it did not fit their quality requirements. There were however specific cases of benefits where individual beneficiaries had been targeted as village demonstrators. Benefits from project intervention from dry season rice production, water melons, asparagus, improved fruit trees, and nursery production were evident. Since the appraisal in 1990, there has been a dramatic economic change in the Province, making specific project impacts difficult to differentiate from those associated with this change.

Credit Field assessment of APB lending in general and IFAD financed lending indicate that credit has effectively provided cash resources for a number of income earning activities; and in particular, women's credit for weaving has appeared quite attractive and viable. Preliminary assessment shows that IFAD supported lending seems to have gone to beneficiaries with smaller plots than normal APB in the same villages. Comparison however made with average land distribution in the same villages indicates distribution of IFAD beneficiaries above average.

Roads New roads have had a significant impact in the Province. They allow to get harvest from field back to village, and from village to the market. They also allow access to hospital and children to go to school by bicycle. In addition, they are expected to have an impact on opium reduction in the long term. They will decrease the need for resettlement of people. Beneficiaries received income during construction (over 500 million Kip), and some of this was reinvested in small scale investments.

Project management In 1990, the situation in Laos was completely different from today: the number of staff working for the PAS was extremely limited with weak qualifications and national management capacity was limited. In 1997, there is: (a) a strong national project management staff with good knowledge of international and national procedures responsible for the management of IFAD loan funds; and (b) PAS which has managed to implement a cattle bank scheme and has constructed a number of irrigation schemes, both of which have been well appreciated by farmers. The management arrangements established for the project in 1990 can not be the same management arrangements for a Second Phase Project to start in 1998, and will require a redefinition of tasks and responsibilities.

Opium reduction Opium reduction was a stated project objective. Practically the project had only late activities in the opium growing area and these do not seem to have had any measurable effect. Other programmes components, carried out under the UNDCP Project - schools, health, detoxification, educational information, may have had some effects but those equally are not measurable. However national estimates seem to indicate a global reduction of opium production in the province.

Main issues and recommendations

The conclusions which are drawn from the First Phase project are the following:

Institution building has been a major achievement, as demonstrated by comparison of present and initial situation. Enhanced experience in management and skill development are also to be recognised;

Experience with group approach, for credit, irrigation and cattle banks, has demonstrated its effectiveness, although often too much specialised and insufficiently integrated with village other activities. This is due to the fact that the project has been implemented according to a vertical approach which has prevented integration of development efforts, particularly at village level. As a result, organised groups - except for irrigation - do not appear to have provided an alternative for participatory management;

Technical Assistance was essential for the project take off. Delays in providing it was one of the main reasons for initial slow disbursement. Seven years later, technical assistance is still needed but in quite a different way: provincial staff has gained experience, know much more about procedures and project management; As a result, present needs are mostly for well identified support in specified fields; Such needs could most probably be met under new approaches to TA;

Approaches to irrigation and labour based road construction seem to be appropriate and should be continued. In particular, investment cost recovery of irrigation work, which is new in Laos, has proven effective and has helped development of a sense of ownership;

A number of activities, initially justified, appear uneconomic and seem now less justified - as for the cattle banks. Concerning the latter, however, Government has different views and is not convinced that this activity should be discontinued;

Despite the training efforts, the extension system is still inefficient and need improvement; and

Cost per direct beneficiary has been extremely high. This calls for a better knowledge of project costs per unit so as to be able to adjust project approaches in real time.

Justifications for a Second Phase Project The mission believes that a Second Phase Project is justified and it recommends that IFAD continues to be involved in the project, for the following reasons:

After an extremely slow start, the project has gained an impressive momentum over the past three years. Performances against appraisal physical objectives have been good;

The project has become a backbone of agricultural services activities. Institution building and skills improvement - whatever are still the weaknesses - have appeared an outstanding project result. Second Phase activities could help bringing an added value to this institutional and human resources investment. Government particularly emphasises this aspect;

Farmers are demanding more project support, particularly in areas not yet concerned by the project. Motivations seem strong; and

The Xieng Khouang province is one of the five provinces which have been selected for implementing the new policy for decentralised development planning.

Development Strategy Context Since the first project appraisal time, the province has experienced considerable changes; It has moved from a predominantly subsistence economy towards a monetized economy, improved roads communications have favoured trade with neighbouring provinces and Viet Nam. The province, in addition has a significant potential for livestock development, forestry, fruit trees (including temperate fruits) and, in many areas, for irrigation. Provincial Government has embarked on a long term development strategy based on irrigation, livestock - meat and dairy -, and better management of the uplands where swidden cultivation would be banned. Priority is also given to access roads expansion. A Second Phase Project could support this strategy to the extent its assistance could significantly result in poverty alleviation.

Suggested approaches A Second Phase Project would have to be designed taking into consideration lessons learned from First Phase as well as the changes in the socio-economic structure in the province since First Phase Appraisal:

A major attention should be paid to setting more appropriate approaches to target project activities on poor villages and poorest strata. In particular, socio-economic surveys should be used to select target villages;

Targeting should be improved. An appropriate monitoring system could help in a continuing assessment of the beneficiaries status and in adjusting the targeting criteria and process;

Credit would be a major instrument to help target group farmers in developing agriculture, livestock an other productive activities. It would have however to be better targeted. Villages organisations could play a role in channelling information and identifying borrowers. Credit in kind - mainly for livestock -, which was justified eight years ago, is now challenged by a more effective credit system and should be reviewed;

Group approaches, which were successfully implemented during First Phase should be continued and expanded. However better integration would be sought at village level by selecting the village as an "entry point" for most project activities;

Villages would be considered as primary partners of the project. Their existing structures should possibly be enlarged to include all village groups and organisations likely to play a role in development (such as, for instance, the Villages Development Committees created in Nonghet);

Besides activities which, in villages, could concern directly individuals or specific groups, there are a number of other activities which call for village responsibility or initiative. So are, for instance, activities linked with common lands management, environmental actions, water supply, social equipment, village nurseries, participative trials, etc. Special consideration could be given by the project to supporting villages in these activities;

Provincial administrations would continue to play a major role in project implementation. However they should, as much as possible, move away from involvement in production and direct execution of works to concentrate more on technical advisory functions, information, the development of an appropriate regulation framework and its enforcement, assistance in programming, etc.;

Training at all levels would continue to be needed and should have a significant place in a new project; and

Private sector involvement would be sought whenever they can operate at lower costs functions now performed by administrations, as for instance, constructions works, veterinary services, etc.



Livestock and Pasture Development Project in the Eastern Region - Mid-term evaluation (1995)

April 1995

Mid-term evaluation

The geographic area covered by the Project consists of nine rural communes in Figuig and Oujda provinces, accounting for a total area of some 3.1 million hectares. The population in these communes in 1990 totalled an estimated 76 800, representing about 9 000 herder families. The climate is arid, rainfall being largely of the storm type and totalling an average of about 200 mm/year, though with major fluctuations occurring both within and between years.

The extensive grazing practised in the project area relies on rough rangeland and seasonal transhumance; the size of the movements depending on the commune and on the year and as governed by the complementarity of the different ecological sectors, use rights on common land, rainfall, the state of the rangeland and the availability of water for the animals. The range based on alfa and, especially in those parts of it where Artemisia (armoise blanche) is the basic species, is mostly degraded through overgrazing, while other parts at a distance from cropped areas or lacking in water points are undergrazed. Livestock are frequently in an underfed condition, especially in drought years. Their state of health is generally poor, so that their performance is for the most part mediocre and markedly below the biological potential both of the range and of the herds. Livestock raising is the principal source of income for these country people. There is some crop growing but this is of little economic importance. The smaller herders have extremely limited cash resources and they are obliged to remain nearer the watering points, where the surroundings are often overgrazed. A sizeable proportion of the herders have a base in one or other of the towns.

Project objectives and design

Target group

The project accords priority to helping the resource-poorest herders, who account for 59% of the herder total, their animals representing 15% of the herd. The target group's resource base consists of grazing land held in common by the entire herder population. No improvement of this resource base would be possible without involving the other categories of herders, namely, the medium and the large operators (representing respectively, 34% and 7% of herders, holding 45% and 40% of the herd).

Objectives and components

The project took as its objective that of increasing both range yield and livestock production in the hope of raising the incomes of the herders, with special concern for improving the living conditions of the poorest among them. Activities planned under the project include an attempt to halt range degradation and, over the long term, the adoption of sustainable systems of production capable of remaining in equilibrium with the newly achieved levels of the potential reconstituted in this manner. A further aim of the project is that of organizing the herders in cooperatives to be responsible for range management. Since use rights on these resources are commonly-held rights, the cooperatives are expected to be organized along lines keeping with the existing social and ethnic/family structures.

The project components comprise:

  • Pasture Improvement - rangeland management consisting in the planting of bush fodder over 3 200 ha; re-seeding - 20 000 ha; scarifying - 60 000 ha; and land resting - 750 000 ha. Water supply management activities under this component are aimed at improving the network of water points (boreholes; tanks and mobile tanker supplies);
  • Livestock development with, as the two principal approaches, animal health and a genetic improvement programme;
  • Extension, research and development, and vocational training;
  • Credit, chiefly for the benefit of the small herders;
  • Promotion of women's activities;
  • Institution strengthening, to include the setting up of a project management unit (PMU) and a monitoring and evaluation unit (MEU).

The project was to come under the responsibility of the Livestock Services (SE) and executed by the Provincial Directorates of Agriculture (DPAs of Oujda and Figuig), in accordance with programmes defined and coordinated by an independent PMU.

Expected results

As a result of project activities, fodder production should increase from 112 to 181 million fodder units (FU) - a 62% increment. Of this amount, 64% would derive from improved range management and 36% from investment in pasture improvement. Meat production would rise by 35%. The basic economic rate of return (ERR) was estimated at 19%. Project activities were also expected to bring about a better equilibrium in the ecosystem.

About 9 000 herder families should benefit from the project, priority being accorded to the small herders, who should at least double their incomes. The cooperative organization set up by the project should be able to manage, on its own, a system of pasture rotation designed to secure a sustainable use of the range resources.

One important expected result would derive from testing a novel approach in the setting up of range users' associations. Success here, following many failures or successes limited to technical demonstrations, would imply that an enduring solution had been found for the problems of Morocco's animal husbandry sector.


The Mission had available to it the information contained in the yearly Reports, in the sociological studies conducted under the project and in the self-evaluation documents prepared for the Mission's benefit. Information from these sources was supplemented by talks with the project Officers and those of the Government, by meetings held with groups consisting of all the Boards of Directors of the cooperatives, by field trips to the major project activities and by talks with the herders, the Mission members in many cases spending the night with the people. Field work enabled the Mission to try out a methodology for sociological mapping, which had hitherto been lacking. The information acquired through the monitoring system, however, proved to be highly inadequate, especially where economic analysis was concerned. The Mission was able to visit the entire project area in the course of 17 days.

Project execution context

Generally speaking, the project has been carried forward as required by the Loan Agreement. The only major modification to the latter was introduced, at the time of project start-up, by a Ministry circular whereby the project was assigned to the Figuig DPA instead of to a management unit distinct from both this DPA and that of Oujda, as had been the original intention. It should further be noted that several appointments were left unfilled as regards the M&E officers and the sociologist for the women's activities component.

Project achievement

At 31 December 1994, i.e. roughly at mid-term, US$ 45 million (some 61% of the project funds) had been committed. At the same date only 11% of the IFAD loan had been disbursed. This low figure can be explained by accounting delays in the payment to Morocco of the expenses it had financed out of Treasury advances and by the hold-up with the credit component, which represented a 20% share of the loan.

In terms of their share of the total financing allocated to the respective components, these amounts committed as at 31 December 1994 account for 94% of the allocations to civil engineering works, 103% for material and vehicles, 72% for technical assistance, 0% for agricultural credit, 41% for inputs and rangeland improvement services and 45% for operating expenses. Disregarding the credit that was not disbursed (because of the carryover indebtedness of the herders to the National Agricultural Credit Bank (CNCA)), one notes that the last two items will have available to them in the second half of the project an amount of funding comparable to what they had during the first half. Civil engineering works and purchases of supplies have used up all the funds allocated to them.

The first group of project achievements consisting of activities directly concerning the improvement of the production context (pasture and water resources) and concerning herd productivity, and land resting involving 296 500 ha (i.e. 72% of the target for mid-term) has proved to be the most spectacular and the most decisive achievement in the matter of persuading the herdsmen to participate in the project. The most successful interventions here are to be seen in the communes in Figuig province, where there was excellent cohesion among the cooperatives. In the North (Jerada province) several project interventions have been held up by land ownership disputes. The other range improvement activities yielded good results in the case of the plantings, while technical refinements are still needed in the other cases. Work done in the domain of pastoral water supply very quickly reached their funding ceilings (as early as 1992 for the tanks). Equipment for the water points did much to improve the situation but is still insufficient to provide a good "coverage" of the rangeland. The most important activities in the animal production sphere have been the preventive measures and animal health care. The project has strengthened the facilities available to the veterinary services and has ensured the logistic support needed for the sheep vaccination campaigns. The extent to which the herders have welcomed these campaigns can be measured by the number of animals treated since 1992 (511 000 heads treated against internal parasites) and the regular increase in the number (778 000 in 1994 out of a 929 000 total herd). The Beni Guil sheep breed selection programme has been carried forward, with relative success, with the National Sheep Breeders Association. In this way it has been possible to lay the foundations for a larger-scale adoption of upgraded sires and rams.

A second group of interventions concerns the components associated with the so-called "programmes d'accompagnement". Here the project called for the mounting of a R&D programme in order to define the extension packages. The project itself was carried through under an arrangement with the Hassan II Agronomy and Veterinary Institute but tended to concern itself unduly with conventional subject matters and failed to make sufficient allowance for the priorities identified by the extension workers and the herders themselves. The Extension component has been one of intense activity (over 1 000 sessions have been organized), with the result that it has been possible to encourage the wider use of several technical innovations and to facilitate the acceptance of cooperative rules and the discipline of land resting. And yet, only a limited number of the beneficiaries seemed to have been reached here - and these being mostly the herders of a certain size. Vocational training activities were conducted as planned except that, the health assistants were replaced by cooperative managers. Women's development activities have been carried out on schedule but have been few in number and are difficult to assess in terms of their impact. The limitations described above emphasize the need for a different approach to the problem of integrating women in development. As for credit, due to the institutional difficulties this has failed in its support role for the resource-poorest.

It has been the purpose to organize the herders in ethnic group-lineage cooperatives, a novel formula which it was hoped would bring together the benefits of a modern type of structure and those of a traditional system with its commonly-held use rights over rangeland. The formula found ready acceptance by the herders. With this starting point it was possible for the project to regroup some 9 600 members into 38 cooperatives constituted on the basis of sub-units of tribes. A process designed to exclude non-herdsmen has brought this figure down to about 8 000 members by 1995. The cooperatives have been vigorously supported by the project, with extension services and training programmes, and were very soon able to play an effective role, notably in the management of land resting arrangements. Even though they had only limited resources, their financial situation is generally sound, the exceptions being certain "blocked" cooperatives due for winding-up. Even so, the cooperatives are still too dependent on project activities and are far from being able to stand on their own feet. What is more, they are largely dominated by their economically and politically more important members.

Project organization, as already noted, differs from that envisaged at pre-appraisal. The formula decided upon offers less flexibility but has the advantage of being better geared to Government procedures. The decision has made it possible to prepare and execute the annual programmes for the respective components strictly according to plan and to coordinate budgeting with the procedures of the African Development Bank (AfDB). This system is ponderous and time-consuming and offers no leeway for adjustment as the programme proceeds. Government departments' ways of doing things, moreover, preclude bringing cooperatives into the process, so that the latter are not fully consulted. The project management system seems to have functioned better in the South (where there is an identity with the bulk of the Bouarfa DPA's activities) than in the North, where the project constitutes only a fraction of the Oujda DPA's activities. Despite the efforts of the project management unit and the cooperation afforded by the directors of these DPAs, there persists a certain dualism within the project. The latter, in any case, is organized on sectoral lines corresponding to the individual components, and this has made interaction between the latter more difficult.

Monitoring and Evaluation (M&E) should have an essential role so that it will be possible to observe, guide and evaluate the action of a relatively innovative project. The self-evaluation activities and sociological studies have indeed made for a better understanding of the context in which the project is operating but the monitoring activities in the strict sense have fallen short of expectations, having remained for the most part sectoral. The formula decided upon for project organization and execution has largely rendered pointless a system of project "piloting" that relies on following up activities among the target group. Again, M&E was introduced without any benchmark experience to refer to, and has therefore failed to provide an overall view of the interaction of project activities with one another or of their impact on production systems. Readjustments are under way but, given the organizational context already described, they continue to be based unduly on sectoral approaches.

Project effects - immediate and lasting

Effect on target group. It is probably in its impact on the target group that the effects of the project are most questionable. The fact is that pasture improvements have, in quantitative terms, benefitted in particular the herders who had the most animals. Cooperative services, likewise, have benefitted first and foremost the more powerful members. Yet could things really have been otherwise? Could one have improved pastures productivity without having common range resources utilised pro-rata with the number of animals held? Could one have ensured that the cooperatives were not dominated by the "elite" from the traditionally important families? All this does not mean that the small herders benefitted only marginally: they have more use of the improved rangeland and the veterinary services; and they have participated in cooperative activities even if their powers of decision there continued to count for little. A matter for regret is that the credit component, which was particularly intended for them, has been held up so far.

Effect on integrating women in the development process. Despite the efforts made here, women's production activities have had only a limited impact. If anything, experience shows that these activities are insufficient by themselves to attain an objective that in any case needs to be better defined. This component, therefore, needs redefining.

Project's environmental impact. The project has unquestionably had a positive effect on the way rangeland is managed and on the environment, chiefly thanks to the land resting requirement; and this has brought about a thoroughgoing revolution in attitudes. The herders have accepted the idea of using the range only at certain times, of limiting the carrying rate, and of paying dues for grazing. It has not been possible to implement the initial programme under the project calling for generalized pasture rotation (the key to an enduring range management) but it can be said that the project has furnished a solid basis for this practice and one that can be improved as time goes on.

Effects on animal production. Land resting, with the reserves that can be constituted in this way, has unquestionably helped to mitigate the dangers that droughts bring in their train. Veterinary campaigns have, in their turn, improved flock safety by reducing the risks due to disease and parasites. These are noteworthy results but are not enough by themselves. This is because, by concentrating on selective activities, the project has failed to pay sufficient attention to understanding, and to the possibilities for improving, the different systems of animal production.

Effects in terms of durability of the cooperative formula. The cooperatives formed with members of the same ethnic and family groups have been characterized by the very contradiction that presided at their conception. As to the viability of the formula, one must find out if cooperative rules will, with the passage of time, be able to impose novel rules of operation on social structures that have been made largely unbending by traditional practice. Several possibilities are open here but their realization can only come about via approaches that the project has yet to consider, namely ensuring a better representativeness, decision-making more fully in the hands of cooperative members via the creation of "cooperative sections", the emergence of additional spheres of competence, the development of countervailing powers, and financial self-government for these cooperatives. Approaches of the kind presuppose that the Government itself will promote greater participation, and by that token agree to its own effective disengagement. None of these things have yet come to pass; any efficiency shown by the project being largely a matter of the efficiency of the Government, it being the principal operator of the project.

Other effects. Data and, perhaps, the possibility of standing back to view them, are lacking at mid-term, if one is to analyse the effects of the project on incomes, nutrition, food security or job opportunities - areas where information is seriously inadequate. Further effort is needed in order to evaluate these between now and the end of the project.

Trends. The situation at mid-term is one of successes and inadequacies. When all is said and done, however, two important conclusions have to be drawn: (a) that an undeniable dynamism has been set in motion; and (b) that there is the risk of final failure if certain strategic rethinking is not done and acted upon. The dynamism created by the project is there for all to see: the project itself is present over an immense area of country; all the herders have joined cooperatives; technical innovations have been tried out with success; and considerable capital in terms of know-how has been built up. Yet this very dynamism generates a demand for change and for a greater open-mindedness where the strategic options are concerned.

The second of these conclusions is alarming. The benefits accruing from the dynamism referred to have gone to the better-off categories of herders. Again, the project has operated for the most part through the Government and along sectoral lines. This modus operandi - inevitable in the early stages - has made for success in those things that fitted into the logic of the government services. On the other hand, it has precluded any alternative stand being taken such as would enable preparations to be made for when the project comes to an end. The project should be placed in a position where it could begin reflecting - at its own level - on what it is there for, on Government disengagement and on the need to transfer responsibilities and resources to the most direct beneficiaries.


The project's dynamics and the successes that it has achieved; despite the many constraints, have created a demand for novel approaches in order to gear activities to the longer term - an inescapable conclusion even at mid-term. The question then arises as to whether the project can change direction within the four years left for it to run and gear its activities accordingly. The answer is obviously: No, since the time is too short, and the rigidities in organization and procedures, including financing procedures, leave little room for manoeuvre in the direction of flexibility, however gradually the attempt is made.

The principal recommendation of the Mission is that decisions need to be taken, even now, regarding what is to be done in a possible second-phase project, the chief purpose here being to bring about the changes that the first project has made possible. This implies that the promoters state their views here and now as to the worthwhileness of such a second phase. The task before one during the next four years would then be clear, namely to bring to termination the programme called for under the project as it stands at present but, even at this stage, with an eye to what follows - i.e. by examining the alternatives for action and testing these as far as possible. The starting point for so doing would be a period of reflection on the strategic options, and this would begin, if agreed, immediately following the meeting called upon to examine this Report.

The Mission has taken its stance advisedly in terms of these proposals, which are abundantly justified by the dynamism engendered by the project so far. In doing so it has sought to make a contribution in the recommendations it is making here by suggesting, in the second part of this Report, certain avenues of approach, whose feasibility emerges from a rethinking of the present situation, namely from an attempt to understand the dynamics of the Eastern Region context.

As distinct from this conclusion, the Mission, in concert with the project team, has formulated a series of recommendations for immediate implementation designed to improve project intervention procedures and project performance over the next four years whatever decision is made regarding any follow-on to the project. These recommendations are detailed in the body of the Report and are outlined below:

Recommendations regarding the Pasture Improvement and Livestock Development components

  • Understanding of the surveillance of the environment and the herding system to be improved;
  • Experience built up regarding rangeland improvement to be turned to profit, inter alia, in order to manage the land resting system more efficiently;
  • Intervention procedures in the animal husbandry context to be refined, in particular through a better targeting of production systems here.

Recommendations regarding the Water Supply component

  • Funds allocated to this component to be increased since budget provisions here are practically exhausted;
  • Pending contracts to be revised;
  • Alternative arrangements for managing the mobile workshops;
  • Caretaker arrangements for water points to be defined;
  • Buried water tanks to be cleaned;
  • Water rates to be introduced.

Recommendations regarding cooperatives

  • Various measures to be executed in order to improve cooperative operation and management;
  • Design and testing of procedures to introduce contractual relationships with the cooperatives to be put in hand. The "programme contract" formula is proposed.
  • Authorities concerned to be made aware of the need for legislation on pastoralist cooperatives/range users' associations.

Recommendations regarding the Extension, R&D and Farmer Training, and Women's Economic Development components

  • R&D to be restored to its rightful place in long-term outlook. Extension workers and the herders to be associated in the process;
  • The Extension function to have its facilities strengthened and adapted, and be geared more fully into project activities;
  • The Farmer Training Programme to be reactivated (for the children of herders, cooperative managers and administrators, and project officers) under ongoing training and impact assessment arrangements;
  • The Women's Economic Development component to be redesigned by gearing it into the extension component and assigning to it more specific objectives, beginning with a support function for micro-projects.

Recommendations regarding project operation

  • An analysis to be made of the possibilities for a reorganization of project administration. Allowance will need to be made for the fact that, even with the disadvantages attached to the various options, the present formula, once improvements have been introduced as regards technical organization, might nevertheless offer the best compromise solution;
  • The distribution of technical functions to be revised especially in order to offset the constraints of the present sectoral organization and to facilitate interaction among components;
  • Greater reliance to be placed on the Extension centres (centres de travaux - CT), and the latter strengthened accordingly;
  • Project responsibilities to be downsized through fuller collaboration with the cooperatives, which must be looked on as "partners in development".
  • Project officers and other workers to be motivated;
  • Budgetary constraints to be relieved. For this purpose funds should be reallocated and registrations opened with donors with a view to the possibility of obtaining additional financing.

Recommendations regarding Monitoring and Evaluation

  • Methodologies proposed by the Agronomy and Veterinary Institute (IAV) to be reviewed in order to ensure that evaluation shall be less sectoral and based more firmly on indicators enabling one to monitor the interaction between project activities;
  • Approaches proposed as a result of the evaluation to be revised in order to better understand the dynamics accompanying the project and to identify appropriate indicators;
  • Self-evaluation sequences - i.e. evaluation by the herders, the cooperatives, project officers and other partners themselves - to be introduced.

Lessons from experience

From its findings, the Mission has drawn a first lesson that it considers essential, namely that a Mid-Term Evaluation process needs to be integrated into the very life of a project. From the start, the idea of securing the synergism that this offers was agreed upon but in practice, the Mission seems to have arrived on the scene at the appropriate moment for helping project officers to make a more thorough analysis of the problems arising out of the very success of their action. It seems, therefore, that the Mission has proved a catalyst in a learning process.

Whenever projects have generated a dynamism such as that emerging from the present project, it immediately - i.e. before a project comes to an end - becomes necessary to start thinking about what comes after. That being so, it is difficult to avoid the need for a "collective brainstorming" effort to consider the strategic options capable of giving direction to the project in the long term. A reexamination of the present dynamics of the context where a given project is operating represents a decisive stage for formulating these strategic options.

Such a re-examination moreover brings out the linkage that there exists between certain projects and the policy environment within which they are going forward. The implementation of projects may often lead to further questioning of certain aspects of national development policies; and it may facilitate the adoption of novel positions and so make for progress.

In any case, experience tends to show that it is necessary to bring order into the legislative context within which project-promoted activities take place. And this is one of the conditions governing the sustainability of any project's effects.

Beneficiary targeting, if this implies trying to exclude the rural "elites", is neither realistic nor desirable, when such people can be the driving force in local development. However, projects that confine themselves to supporting the most dynamic participants are unlikely to attain their objective of equitable development. The lesson here is that spontaneous dynamism needs to be piloted and channelled by, among other things, bringing out countervailing powers. And this is where the special responsibility of the Government comes in, as being guarantor of the collective interest; and this, too, is the primary justification for Government engagement. Otherwise the Government will have only words to say about equitable development but no policy and no effective plan for achieving it.

Finally, the experience of the Evaluation Mission points to the need for enquiring into the replicability of the project in Morocco or in the geographic area facing similar problems in the pastoralist sector, for example sub-Saharan Africa or western Asia.


LANGUAGES: English, French

Special Country Programme

March 1995

Interim evaluation

With an estimated GNP per capita of just USD 100, Ethiopia is one of the poorest countries in the world - about one third of the population live in absolute poverty. Ninety per cent of the population, which was 60 million in 1995, live in the rural areas, where subsistence agriculture is the main economic activity. Because of higher rainfall and healthier climatic conditions in the highlands (above 1500 m asl), nearly 90% of the population choose to live there. The Special Country Programme area lies in the crescent shaped Ethiopian highlands east of the rift valley, and was defined as being between the 400 and 800 mm isohyets. The area consists of both extensive plains and also a dissected ridge section stretching to the Somali border; temperatures and rainfall vary with altitude and geographic location, with the higher massif receiving over 1,000 mm of rainfall. The main crops are wheat, barley and maize, plus various pulses, fruits and vegetables, but yields at the time of project design were generally low. About 10,000 ha in the area was estimated as being in farmer-developed small-scale irrigation schemes (SSIs), which usually consist of simple diversion structures, earth canals and poorly or completely unlevelled fields, resulting in very low water use efficiencies. Many rural areas have no roads at all, and the transport of agricultural produce relies on animal transport over mountain trails.

Project design and objectives

In 1984, following an extensive and prolonged period of drought, IFAD prepared the Rehabilitation Programme for Drought Affected Areas, which was designed to provide immediate relief in the form of seeds, tools, etc. and to rehabilitate drinking water and primary health care facilities. This was a three year (USD 19.4 mn) programme financed with the BSF. In addition to the major components, there were also small components forsoil and water conservation andsmall-scale irrigation schemes; during appraisal of the Rehabilitation Programme IFAD agreed to extend these activities in a new programme, to be financed under SPA.

Target group

The programme's target group consisted of about 25,000 farming families in drought prone areas who were expected to benefit from the six-year development and rehabilitation of 6,100 ha of SSIs, and a further 300,000 farm families who would ultimately benefit from the soil conservation measures. The creation of small vegetable gardens and the funding of income-generating activities would also bring benefits to about four hundred women. In a normal rainfall year, it was estimated that incomes from farm and off-farm sources amounted to about USD 65 per capita, hence it was assumed that most highland farmers were living in absolute poverty.

Objectives and components

The main objective of the Small Scale Irrigation programme was to achieve increases in crop production and hence to improve food security in drought prone areas, with the intention of providing a minimum food supply in deficit years and a marketable surplus in more normal years. The Conservation and Agricultural Support (CAS) programme addressed the problems of land degradation in the highlands, with the specific aims of fully involving the farming communities in the design, construction and maintenance of conservation schemes, and the promotion of activities which would be of demonstrable long term benefit to the participants. Each programme component consisted of a number of related sub-components; total base costs were estimated at USD 29.5 mn, to which contingencies added a further USD 10.7 mn. In summary the base costs covered:

Small Scale Irrigation Prog. (national support, zonal support, agricultural support, scheme investments) USD 20.1 mn (68%)
Conservation and Agricultural Support Prog. (conservation planning, trials, ag. extension, bund stabilisation, women's support) USD 8.3 mn (28%)
M & E USD 1.1 mn (4%)

Under the SSI programme there were four sub-components for: (i)National Support, which concerned the strengthening of the Irrigation Development Department (IDD) in the MOA to enable it to prepare a national strategy and policy to provide the framework within which the programmes could be implemented, and was also to facilitate the preparation of criteria for scheme selection (a total of 5 years of TA, plus equipment and vehicles, additional staff and training was included in this package); (ii)Zonal Support, the zonal offices of the MOA/IDD would be upgraded to enable them to actually implement programme activities, this would include buildings, construction equipment, vehicles etc.; (iii)Agricultural Support, would be provided to enhance the capabilities of MOA in irrigated agriculture, this would involve training for the extension agents and research at the Soil and Water Management Research Centre; (iv)Scheme Investments, would fund the rehabilitation and also construction of SSIs ranging from a few hectares to a maximum of 200 ha, by providing for construction materials, operation of construction equipment, skilled labour etc.- unskilled labour would be provided by the beneficiaries. Under the construction programme the requirements for roads would be estimated and construction undertaken by unskilled labour on the basis of food-for-work, financed by WFP.

The CAS programme would provide: (i)National Support for Conservation Planning, in the Community Forest and Soil Conservation Development Department (CFSCDD) to enable it to prepare a National strategy, to become the centre for conservation planning and to co-ordinate procedures with other government departments and with donors; (ii)Zonal Support/Conservation Trials, six trials sites of 15-20 ha each were to be identified, and 30 on-farm demonstration trials of about 5 ha each were to be established. Under this heading,Agricultural Extension would be provided, closely linked to the trials in order to develop extension messages and ensure that farmers were fully aware of the potential of the conservation activities,Bund Stabilisation, was to be encouraged by planting suitable cover and binding crops, in the first instance a number of nurseries were to be established andRural Women's Development Support would be included, aimed at promoting the establishment of vegetable gardens and creating a development fund which could be used by women for small-scale income-generating activities.

Monitoring & Evaluation was to be undertaken by the existing units in the MOA and the Agricultural and Industrial Development Bank (AIDB), but both would be assisted by the programme, including the provision of office equipment, vehicles, training, TA and incremental operating costs.

Expected effects and assumptions

It was estimated at appraisal that 2,750 ha would be rehabilitated and a further 3,350 ha would be developed in new irrigation schemes; at full development (12 years) yield levels under irrigation were expected to have doubled. Agricultural extension advice would cover the whole farming area, i.e. including rainfed crops; conservation activities were anticipated to gradually improve practices and production levels, and yields were anticipated to rise by 20% in the rainfed areas over the six year programme period. These increases should allow income levels to rise to between USD 109-167 per capita. One aspect of the conservation programme, bund protection, was expected to affect between 50-100,000 families, covering 9,500 ha; the treatment would reduce maintenance requirements on bunds and increase the fodder available for livestock. The support at national level was expected to produce consistent policies with respect to irrigation and conservation activities.

The programme contained a number of assumptions, these were: (i) that the main benefit from the irrigation programme would be increased cereal production; (ii) that a high priority would be given to soil conservation activities by the government; (iii) that national policies on irrigation or conservation would be widely disseminated and practised; and (iv) that farmers would accept and adopt maintenance activities for the irrigation facilities provided.


The multi-disciplinary interim evaluation mission visited Ethiopia in November 1995. There was no impact data available to the mission, but farmer interviews were held whenever a site was visited, as well as meetings with women's groups and water user associations (this resulted in contacts with about 50 beneficiaries). Discussions were also held with government Departments and agencies, programme officers and other donors, and a wide selection of documents made available to the mission was reviewed.

Implementation context

In 1990/91, security in the programme area deteriorated and implementation was adversely affected by the events leading up to the violent change of government in 1991, by the administrative hiatus that immediately followed those events, and by subsequent decentralisation and associated restructuring that has occurred with irregular frequency. From the beginning of the project, co-ordination was merged into the complex system of committees (national, regional, zonal, and programme) that was trying to manage agricultural development in Ethiopia. Consequently, in the programme's opening years, when lines of communication were being established between the implementing bodies (i.e. zonal offices of central government departments) and the centre, few programme activities were begun.

In 1992, the transitional government introduced decentralisation, in which many of the activities of central government were transferred to new ethnic regions and urban councils. Many central government staff working on the programme were transferred to regions and ceased to be involved in programme implementation, the system of central co-ordinating committees collapsed, and programme implementation became the responsibility of two of the new regional offices, two urban councils and appropriate subordinate zonal offices. Programme assets, once held centrally, were divided between regions and zones, and in some cases lost to the programme altogether. Restructuring by central government resulted in the separation of the regional and zonal departments dealing with irrigation and agriculture, and occasionally that separation was manifested as mutual hostility between the departments and non-co-operation in programme activities. In a later attempt to revive flagging agricultural activity, the government allowed the unpopular peasant collective farms (producer co-operatives) to collapse/, which had severe implications for implementation. By 1991/92, the fifth year of operations, all aspects of the programme were seriously behind schedule. However, activities were then restarted in earnest, the irrigation and supplementary conservation targets were reduced, and the programme was extended for a further two years, to December 1995.

Project achievements

All significant achievements in the programme's two main components trace their start to either 1992 or 1993. That applies particularly to staff foreign training, when two thirds of the programme's USD 1.4 million budget was expended. However, it was to be of little avail to programme performance; about three quarters of the 35 staff who attained higher degrees abroad had left the service of the programme, and sometimes of government, by December 1995.

By July 1995, eight years after the loan became operational, and after two extensions, loan and grant disbursements amounted to USD 13 million (38.5%). About 1,300 ha of incremental irrigation had been established (which, with an existing 200 ha, meant there were 1,500 ha of small-scale irrigation schemes), but other than trial and demonstration sites, none of the mountain areas subject to erosion had benefited from supplementary soil-conservation techniques. About 5 000 farm families had benefited from the irrigation schemes, and over 300 women had established gardens. Very few women had benefited from assistance with income-generating activities.

The absence of a government policy on SSIs means that there were no clear guidelines on either cost recovery from beneficiaries, or the necessary extent of participation and commitment by those beneficiaries. Either before or on completion of their scheme, beneficiaries are asked, through their water users' association, to agree to contribute towards capital and operation and maintenance costs. Because of their vagueness and open-endedness, these agreements are unenforceable, and rarely result in beneficiaries making any contribution towards scheme costs. Of the 25 schemes completed at the time of the IE, one has started making token cost recovery payments (although such payments are already in arrears). These are sufficient to cover about one fourth of normal operation and maintenance costs, but make no contribution at all to capital costs. The positive achievements of small-scale irrigation are at risk in the medium- to long-term because of the absence of a clear workable government policy on cost-recovery and responsibility for scheme operation and maintenance.

Although scheme design has usually been good, the procedure for scheme selection left much to be desired. Notwithstanding the agreement at appraisal that government would prepare a definitive set of scheme-selection criteria, and notwithstanding the presence of a suggested set of criteria in the appraisal report, such criteria were never formally completed by government. The consequence is that at least two completed schemes are not in drought-prone areas, some schemes have ignored the rights of down-stream water users and other schemes have failed to make provision for compensation of lost land (to canals, headworks, etc.), or for re-allocation of land (when farmers give up land in the command area to increase the number of beneficiaries). None of the schemes is designed to prevent infestation by bilharzia-carrying snails, and the investment costs of some schemes were so high, that they were not economically justified.

Technical Assistance was supplied to the irrigation departments in Addis and in the Zonal offices, however, because of the political circumstances in Ethiopia, the TA in the Zonal offices could not function effectively or be widely deployed. The TA cost USD 3.7 mn, or enough to construct a further 1,300 ha of new irrigation schemes. It would probably have been wiser to have postponed the technical assistance to a period when zonal irrigation departments were more active, i.e. from 1993. This issue, and the question of scheme selection generally, were matters on which the IDA supervision missions could have been expected to provide some comment, but they did not appear to rate them as important.

Although three conservation-based agronomic trial sites were established, one was reduced in size (to 3 ha) and is ineffective. Bund stabilisation and crop production trials were installed on the two operating sites for the first time during 1994/95, and yield data were collected from one of these sites. A creditable 20 (out of 30 planned) on-farm demonstration trial sites have been set up in the programme area, while only 12 (out of 100 planned) farmer demonstration plots are in place. Soil conservation activities did not benefit from TA, because the budget was never restored after 1991, and specialised staff needed to manage the sites were never recruited. Vehicles have been in short supply, extension training materials have not been forthcoming, and funds have never been available when required. Consequently, although the zonal extension service has used the agronomic and demonstration trial sites for their own training purposes, it has been unable to formulate any conservation-based agronomy messages for farmers. This may account for the absence of bund stabilisation measures anywhere in the target area.

Soil Conservation and Agricultural Support. The bunds in Harerge are constructed of rock and soil, and unless they are protected by vegetation, they will be costly to maintain, and they will not be fully effective in abating soil erosion. By rehabilitating 12 ha of existing grass/legume-seed nurseries, the programme acquired a resource that was theoretically capable of supplying all the programme's seed requirements. Unfortunately, the administrative difficulties of the programme's opening years, and the violent disturbances of the middle years meant that only 10% of annual seed requirements were produced. At the time of the first programme extension in 1992, the target of 9,500 ha of bund stabilisation was reduced to 1,800 ha, with a proportionately much lower seed requirement, but so far, even this has not been achieved. However, by late 1995, the nurseries were planted near to capacity and showed good potential for fulfilling the revised seed requirements.

Agricultural support features of the programme have been positive. Irrigation agronomic trials have been successfully established on nine sites for at least one year, and promising results from those trials have been tested for a further year. Farmer training appeared to have kept pace with the rate of irrigation site completion. Despite some shortages of staff, the extension service has successfully operated a modified training and visit system, and has achieved extension worker:farmer ratios of around 1:1,300 or better. Crop production on the newly completed irrigated schemes concentrates on annual vegetable crops and perennial crops rather than grain. All schemes faced limited markets for their vegetables and downward pressure on crop prices was already apparent. Vegetable yields were lower than anticipated at programme appraisal, but provided cropping intensities of more than 518 are achieved, irrigated vegetable production is still profitable. Seed shortages, especially of biennial crops, were reportedly one of the greatest production constraints.

Women's Development. The successful creation by the programme of over 300 women's gardens (between 200 m² and 600 m² each) has not only improved family nutrition in East and West Harerge, but has increased women's income too. However, nocredit has been provided either for women's income-generating activities or for farmers to fund their own irrigation development. Crop marketability is being affected by poor access; no roads have been constructed under the programme's USD 1 mn food-for-work budget.

Effectiveness of the M & E system.

A Project Coordination and Monitoring Department was established in the MOA, with a Division in charge of M&E; 12 man-months of TA were provided for the design of the M&E system and specific performance indicators were identified and a logical framework prepared. In 1991 all activities stopped and the M&E Division was included in the general restructuring which later took place, but now the carefully constructed functions could no longer apply because they were designed for a centralised system and not the regional system that was established. When the M&E system was functioning as designed the zonal officers collected a considerable amount of detailed information and produced comparisons of progress against targets. No evaluations were undertaken, supposedly because in the early years of the programme there were no impacts, but zonal staff also did not consider that evaluations were part of their duties.

Effects assessment and sustainability

By the time the programme ends in December 1996, total expenditure is likely to be USD 16 million of which USD 13.8 million will have been expended on small-scale irrigation activities (including institutional strengthening and capacity-building), and USD 1.8 million on supplementary soil-conservation and women's activities. About 2,500 ha of small-scale irrigation will have been completed, to benefit about 8 000 farm families. Incremental irrigated crop production is expected to have an annual value that stabilises at USD 1.9 million, compared to an anticipated USD 4.4 million at programme appraisal.

Up to December 1995, operation and maintenance costs of completed irrigation schemes were being paid from programme funds. It is highly improbable that regional government can take on these costs when the programme ends, and it is apparent in most cases that beneficiaries are unaware of the impending responsibility. Without clear commitments that someone (beneficiaries and/or government) will pay operation and maintenance costs and major renewal costs when necessary, none of the schemes completed under the programme is sustainable. In addition, on some of the schemes there are signs of discord between the upstream and downstream water users, and between those who have "lost" or gained from the development, i.e. have not been adequately compensated for land lost to canals, headworks etc. Also, without a proper cost recovery scheme that meets at least some of the capital costs, then the development programme cannot continue without donor support.

Farmer-participation in small-scale irrigation design and construction has been nominal only, and has been inhibited by farmers' reservations about the democratic legitimacy of imposed institutions such as Peasant Associations (government's smallest unit of administration) and Service Cooperatives. Even water users' associations have usually been formed only at government urging. True beneficiary participation therefore will not be a reality until democratic farmer-initiated organisations are established. Farmers' and women's reluctance to form cooperatives is generally attributed to the stigma of coercion and oppression they acquired during the Marxist-Leninist era. This is also affecting the credit facility; the mandate of the bank only permits it to lend to groups that are corporate legal entities (e.g. cooperatives), and because so far not one women's group or water users' association has transformed itself into a cooperative under the new cooperative law of 1994. AIDB (now the Development Bank of Ethiopia) has used virtually nothing of the USD 1 million or the USD 240 000 credit lines made available by the programme for small-scale irrigation and women's income-generating projects respectively.

Traditional irrigation practices do not seem to cause significant problems of soil erosion - in fact farmers seemed more aware of potential problems on irrigated areas. Water is not used efficiently, and there is much over-irrigation, but water quality is good and irrigable land is reasonably well drained. The use of chemicals and fertilisers is very low, and is likely to remain so for some time. Overall the programme is not a cause for concern from the environmental aspects, although it is a matter of regret that in fact there have not been any more positive gains from the sub-components in the conservation programme.

There is some evidence that the development of kitchen gardens has contributed to an improvement in the nutritional standards, and may also be providing small surpluses for sale.

Recommendations and lessons learned

Many of the lessons that have emerged from evaluation of the Special Country Programme are not new. The Staff Appraisal Report was aware of the need for commitment by government, farmers, and departmental staff if the programme were to succeed. For example, irrigation scheme selection criteria were recognized as of paramount importance to the success of the irrigation component, and were even a feature of the loan agreement. There was a clear implication in the report that irrigation schemes would face trouble without the use of proper selection criteria. That the government did not define the selection criteria is no fault of the Staff Appraisal Report. Praise is due to its authors for attempting to steer the programme away from familiar dangers. However, despite this prior knowledge, one of the primary lessons of this evaluation is that without proper selection criteria properly applied, irrigation schemes will not be sustainable.

Connected to this, unenforceable cost recovery agreements between government and farmers, in which the latter agree to contribute something later in return for something else now, are of little value in promoting participation, ownership and commitment. The process needs to be turned around and made enforceable: farmers should be required to contribute something in advance of any investment of government funds, as their part of the investment, to engender ownership and commitment.

Regional and national government needs to play a much more effective role in promoting awareness of cooperative legislation, and they should make registration of WUAs a condition of public investment in irrigation. Government should then enter into irrigation support and cost recovery agreements only with WUAs that are corporate legal entities.

Future project appraisal reports should contain a detailed plan, prepared by the project formulation or preparation mission in consultation with the borrower, and endorsed by the appraisal mission, which should equip the implementers for the tasks that are expected of them, and give guidelines to which they could refer during implementation. Similarly, sustainable irrigation development requires that planners (i.e. the engineers) must be re-oriented towards social, environmental, and economic aspects of planning. In addition, any future irrigation or other project or programme should limit itself to a single operational region.

Given the apparent waste of programme funds on overseas academic training that had no long-term effect, future funding for foreign training must be carefully considered in the light of the opportunity cost of the funds involved and the real long-term capacity-building benefits to be derived. Where the training for the public sector is thought to be worthwhile (e.g. M&E), then future programmes should take account of post-graduate salary differences between public and private sectors, and "top-up" where necessary.

Supervision missions should be geared to what is implied by the term; they should be more frequent and of longer duration, aimed at keeping the project on track in qualitative as well as disbursement terms. For example, supervision should be involved in approval of investment decisions for sub-projects within a programme.

Farmers' associations need to be democratized, so that they become genuine people's organizations where farmers can debate, analyze, and decide what they need, and learn how to solve their problems. Farmers, and the civil society they inhabit, should have the power to participate democratically in the decision-making process.

Women's groups should be given assistance to organize themselves into legally recognized organizations, as a means of empowering them to participate in available credit schemes.

The market's competitive capacity for designing and building irrigation schemes should be explored as a matter of course in project implementation.

The M&E system should be redesigned to conform to the new federal structure of Ethiopia. Given the increased number of authorities within the federal system, the redesign should attribute particular care to providing smooth information flows between the programme's grassroots and the central administrative structure. Officers in charge of central, regional and zonal M&E should be provided with specific training. Particular efforts are needed to develop impact-evaluation skills. In that connection, M&E officers in the field should be provided with the financial and logistical means to keep in frequent contact with target groups.

At an early date, the Minister of Agriculture or a high-powered delegate should meet with his or her counterpart at the Ministry of Finance to settle the issue of unnecessary payment of customs duty on equipment and vehicles imported under the programme's aegis.

Given the great need for some action that would ameliorate soil erosion and bund destruction, the donors should propose a new bund stabilization project for East and West Harerge. This would allow completion of the SCP bund-stabilization work, formulation of extension messages, and diffusion to hill farmers. Alternatively, a bund stabilization component could be included in a potential follow-up project including the SCP project area.

A soil scientist with experience in soil erosion measurement techniques should be consulted for recommendations on corrections for errors in the present system of erosion measurement.



Agricultural Development Project

March 1995

Completion Evaluation

The project area, in the northern part of Uganda, covers about 25% of the total land area, or approximately 59,000 square km, in seven administrative districts. The terrain is flat to undulating with numerous low-lying areas around lakes and swamps which were estimated to cover 3.6 million ha and to provide as much as 60% of the country's fish. The whole region is in the tropical savannah belt, where mean annual rainfall varies from 1000-1500 mm: in the south a bimodal rainfall pattern permits double cropping, but in the north the rainfall is unimodal and only cropping season is possible. Except for the cracking clay soils in areas of impeded drainage near lake Kyoga, the land lends itself to cultivation with ox ploughs and simple hand tools. The agricultural pattern throughout the area is quite homogeneous, with cotton as the main cash crop, and maize, millet, groundnuts, cassava, beans, sorghum and banana as food crops. There is a large cattle population in the region, over one million head, or more than one third of the national herd. Land ownership is vested in the tribal clan, which allocates usufruct rights to individual clan members, hence there is no absolute security of land tenure. Grazing areas and water resources are communally owned.

Project design and objectives

After many years of turmoil and civil unrest the production systems of much of Uganda had been completely devastated; in 1981 IFAD funded the Agricultural Reconstruction Programme (ARP) with the objective of assisting the Government of Uganda (GOU) in its recovery programme by providing basic agricultural inputs and services to north and east Uganda. The agricultural Development Project (ADP) was designed as the second phase of this emergency programme with particular emphasis on smallholder food production capacity.

Target group

The three tribal groups in the area are Bantu, Nilotic and Nilo-Hamitic in origin. At appraisal in 1984 the population was estimated at 2.6 million; the target group consisted of the 387,000 families who were either small-scale farmers, livestock owners or fishermen, on the assumption that the economic levels of this entire group were about the same. However, this also included about 15% of the population who were handicapped, and had little potential to participate in this type of project. The unrest of the recent past had caused the status of women to change rapidly for the better, and the rapid rise of the AIDS epidemic (10% of the population and 20% of the male population were estimated as HIV positive) also meant that there were a significant number of women-headed households. Traditionally, men exert total control over land through clan and household leadership, and have authority over all economic decisions in the household. However, as agricultural activities decreased as a result of the socio-political unrest, so that crop inputs were no longer available and cattle rustling was rife, then women's ability to be income earners came to the fore, increasing their decision making role in the household. (At the same time their work load also increased, since they were responsible for most of the work on the farms.)

Objectives and components

The objectives of the ADP were to increase food production, upgrade the health of the livestock population, increase the fish catch and provide a basis for the long term development of agriculture in Uganda through the strengthening and improvement of institutions and by carrying out adaptive trials. Through this process the intention was to improve the incomes and food security of the project's target group of poor households. The objectives were to be attained by (i) the provision of basic agricultural, fisheries and livestock inputs, (ii) support for adaptive research, tsetse fly control programmes and various studies, and (iii) institutional development covering extension, training, a pilot T & V extension system and support for a monitoring and evaluation unit. The project's total base cost was estimated as USD 23.9 mn, plus an allowance of USD 7.4 mn for contingencies; the component analysis was:

Input Supplies USD 17.7 mn (74%)
Research & Technology Dev. USD 2.5 mn (10%)
Institutional Development USD 3.7 mn (16%)

IFAD's share of the funding was 46% of project costs, IDA 33% and GOU the balance of 21%.

Input Supplies, by far the largest component at 74 % of the funding, included, for crop production, hand tools, ox-carts and ploughs, small flour mills, seeds, bicycles, wheel-barrows, workshop equipment, spare parts and chemicals and forestry nursery supplies. For livestock, supplies were vaccines, veterinary drugs and equipment, acaricides, spare parts, vehicles and a mobile laboratory. Fishery inputs to be provided were outboard motors, spares, fish nets and accessories, twine, boat building materials and vehicles/. Support for the Research and Technology component included surveys to generate new information for planning and extension, and an adaptive research programme carried out on farmers fields. Tsetse fly control was to be tested using traps (this was later extended to a full catching programme), and fish catches and fish populations were to be studied in lake Kyoga. Fish preservation was to be addressed by demonstrations of a chorkor kiln smoking house. The Institutional Development component covered the provision of funds for civil works, building renovation, office and field equipment, audio visual aids, survey equipment, technical assistance, training and some operating costs. Agricultural extension was to be strengthened by rehabilitating training centres and introducing a T & V scheme in one of the districts. A Monitoring and Evaluation Unit (MEU) was to be established and equipped within the project management unit. Staff training would be included in most activities (including overseas training courses) and incentives would be paid to staff based on performance and responsibilities.

The implementation of the project was affected by a number of factors (see Implementation Context below), which led to the project being reformulated in 1991. The modified project kept the original components but added a pilot credit scheme, ox-cultivation, cassava mosaic disease (CMD) control and a women's programme. All this was still within the original total budget. The pilot credit component was to enable farmers to purchase the inputs which were being supplied, and also to help rural entrepreneurs: credit was to be provided to 3,000 farmers in groups and societies of between 10-30 members each, identified as having "high potential", and was linked to the uptake of inputs, extension and technology. It was also specified that women should make up at least 50% of the beneficiaries. The cost allocation for the credit component was USD 1.8 mn, of which USD 1.4 mn was for the establishment of a revolving fund. The CMD programme was added after a devastating outbreak of the disease virtually wiped out the crop and caused widespread famine in one of the project districts. The objective was to import clean/uninfected planting material, multiply this at selected centres and distribute it to farmers for further multiplication and dissemination; extension services were also to be strengthened for this operation, which was designed to cover an area of 5,000 ha.

Expected effects and assumptions

The inputs component would have a direct effect on production, the incremental benefit from the 1.9 million hoes and 30,000 new or repaired ox-ploughs would allow the area cultivated to be extended and the improved seeds, pesticides and storage chemicals should lead to increased yields; it was estimated at appraisal that this would result in production worth an addition USD 9.3 mn annually. The livestock inputs would improve the health and numbers of the herd, and result in increases in milk and meat production worth USD 0.82 mn annually; fish offtake was predicted to rise significantly, giving an extra USD 12.7 annually. Other indirect benefits would come from the institutional strengthening and the various adaptive trials undertaken, and the social infrastructure would be improved by the group formation exercises. Overall theses changes were expected to result in enhanced food security in the whole region and higher farm income levels. A Credit Needs Survey was carried out during project design and this suggested that credit was not perceived by the farmers as being necessary, hence it was assumed that there was no need to include a credit component in the design. Under ARP the programme distributed the inputs to cooperative stores at set fairly low prices, whilst for ADP the distribution was stopped at three regional warehouses, from where inputs could be purchased wholesale by cooperatives and traders; it was assumed that this method would (i) resuscitate the private sector traders, but without leading to exploitation of the farmers and (ii) help to establish realistic market prices for the various inputs.


The multidisciplinary Completion Evaluation mission (CEM) undertook its work in Uganda in November and December 1994. The mission had an extensive field itinerary, holding discussions with the ADP implementing agencies, farmers' groups, and individual beneficiaries. Part of the project area could not be visited because of security problems. The mission was able to assess the reports and other documents produced on the project, and presented preliminary findings to a wrap-up meeting chaired by the Permanent Secretary.

Implementation Context

The entire cycle of implementation of this project was dominated by severe civil unrest. Under these circumstances the start-up of ADP was delayed one year to May 1986, and the project implementation period expanded from four to seven and a half years. The plan of implementation was repeatedly modified to keep abreast of the changing map of insecurity and working conditions, hence the geographic location of project activities and the duration of component implementation underwent significant changes during the life of the project. The project was also restructured in 1991, adding the new components described above; at loan closure 76% of the funds allocated had been utilised.

Project achievements

Input Supplies. With the exception of a few items, procurement whether depicted in volume or value, has exceeded considerably appraisal estimates. However, the CEM was unable to obtain accurate data on the final amounts of inputs eventually distributed to farmers, and it was not possible to estimate losses due to looting and diversion with any degree of accuracy. (The results from a Baseline Survey (1986) and Repeat Benchmark Survey (1988) indicated that there had been significant penetration of ADP inputs even in the very early stages of the project and field investigations during the course of the CEM indicated that the uptake of inputs in the later stages of the project may have been considerably higher.) Production and productivity increases could also not really be assessed for individual farmers, and the effects of the credit component on input uptake could similarly not be gauged. In addition there were some delays incurred by the procurement methods used and also in ensuring the quality and acceptability of the tools to be supplied. Livestock Inputs. In spite of severe constraints it had been reported that 50% of cattle had been vaccinated against rinderpest and CBPP every year of the project, which is a praiseworthy achievement, and largely the result of project impetus. Vaccination of poultry against Newcastle Disease had, however, been disappointing.

Research and Technology Development. Precise information on the adoption of recommendations from adaptive research and on-farm trials was unavailable but the CEM's impression was that, with the exception of a few recommendations, such as rouging of cassava plants affected by CMD, cassava spacing and the use of an improved maize variety, few farmers were using the recommendations as a matter of course. This was not because they were generally unaware of them, but because of lack of finance, physical shortages of improved seed varieties and lack of confidence in markets. The capacity to conduct adaptive research trials had been significantly enhanced. Because of insecurity, research into Tsetse Fly Control did not proceed in 1986-91, but after project reformulation and as security returned, communities assisted staff in setting and monitoring traps and large areas were cleared of tsetse fly. Similarly, after 1991 Fishery Surveys on Lake Kyoga resumed and were well conducted. They provided valuable information on fish catches, and confirmed that overfishing and the use of illegal nets was prevalent (but no action was taken on these findings). The project assisted in the control of water hyacinth/, by training staff in biological control methods, establishing a breeding centre for weevils, and providing tools for mechanical weed clearance. These initiatives, though meagre, were an important start to the national effort to control this weed.

Institutional Development. Surveys conducted to assess the performance of the extension services indicated that farmers in the one district selected for the pilot Training and Visit (T&V) scheme had adopted recommended husbandry practices and technologies more than those in the other six districts, which used traditional extension methods. The pilot extension system interacted with only a modest number of beneficiaries but whenever it did, changes in farmers' husbandry practices occurred and these contributed to increased production. The performance of the Media Resource Centres (MRC's) established under the project was satisfactory, however, in spite of the substantial amount of material produced, the CEM saw little evidence of it in the field; the lack of extension aids was a common complaint encountered. Without ADP's contribution, the training facilities in the project area, including the District Farm Institutes (DFIs), would not be functioning. All rehabilitation work and the necessary refurbishing had been completed and all the facilities were currently being utilised.

CMD control. Multiplication Centres (MCs) had been established in the designated areas, using CMD tolerant planting material. Although this constituted a positive step in combating CMD, varieties giving total resistance would have been preferable. The propagation and spread of CMD tolerant and resistant varieties in the project area is now being addressed by the Northern Uganda Reconstruction Project (NURP), as well as various NGOs.

The Credit Component was originally designed to operate in just three districts, but due to political pressure, was expanded to cover over 70% of the project area. This meant that administrative, technical, managerial and financial resources were spread very thinly. In spite of a concerted effort to extend credit to farmers, only about 40% of funds allocated to rural credit have, in fact, been distributed. The group formation task progressed more or less according to the programme, depending primarily on cooperative societies and female-oriented savings mobilisation schemes. At project completion the number of beneficiaries organised into groups (in particular women) had exceeded the targets set. The pilot credit component established an institutional/operational arrangement which though ad hoc in nature provided credit to farmers and rural entrepreneurs for two seasons. This structure left much to be desired and had it not been for the World Bank's project in the same area (NURP), it would not have been sustainable.

The original design advocated ensuring beneficiaries commitment to repayments through group training and dependence on peer pressure, however the recovery rates have been considerably lower than the 95% anticipated, in the range of 45-70%. The prevailing culture, that credit is merely financial support from the government, contributed to these low recoveries. To improve the situation the Credit Component Management Unit attempted to add collateral to the credit contract, but in the absence of land titles only moveable assets could be pledged. Notwithstanding these constraints, some useful experiences in rural credit delivery have been gained, particularly related to social organisation and group formation.

Counterpart funding was a chronic problem prior to 1991; the Treasury tended to disburse approximately 50% of requirements, but on occasion (1988/89) this fell as low as 8%. This situation was completely rectified in the later stages of the project (100% counterpart funding in 1993/94) by, firstly the donors agreeing to meet upto 75% of the local costs, and secondly by GOU allowing all the proceeds from the input sales to finance the counterpart allocation.

Effectiveness of the M & E system

The M&E system has delivered a substantial volume of work, in spite of the security problems and shortages of staffing and equipment in the earlier years; in terms of institution building, it has been one of the more successful activities. The Monitoring and Evaluation Unit (MEU) not only provided information to the management of the project (although not always on a timely basis), but also assisted the government in designing sectoral and national development plans and has now become the core of the proposed MAAIF ministry-wide unit. However, its impact has been constrained by (i) an absence of specific targets in the project design documents, (ii) lack of baseline data, and (iii) lack of a unified and consolidated project management for a considerable part of the life of the project.

During the first few years of project implementation, monitoring of the T&V extension pilot activities was only partial and of limited value, because of failures to take advantage of some simple recordings, the poor presentation of results and the absence of a non-contact control farmer group. Incorporation of a control group would have provided a critical indicator of message diffusion, and hence the effectiveness of the delivery system. The MEU has also compiled very little information on livestock activities, because staff were not asked to provide the required information in their regular reports. This will make it difficult to gauge the extent to which livestock, tsetse and fisheries inputs and surveys contributed a lasting impact on food production and household earnings.

Effects assessment and sustainability

Crop Inputs. The final survey of the project showed that most of the gains in agricultural production have been the result of the expansion of cropped areas. The project provided substantial amounts of essential inputs at a period during which farmers had very little access to these materials, and also took prompt action in supplying disease free resistant varieties of cassava, which had an important effect on food availability to the rural population, particularly the poor. It was estimated by the CEM that over 60% of livestock farmers benefited directly from livestock inputs, but the effects of these veterinary inputs would have been greater if farmers had received husbandry and management information at the same time. After project reformulation more emphasis was given to small stock management but the project ended before much could be achieved in this respect. The overall effects of the fisheries inputs were reduced because they arrived late, but when they became available, fish catches improved significantly and family incomes clearly increased despite a reduction in fish prices, though precise figures were not available. The water hyacinth control measures had negligible effect due to the vast increase in the weed during project life. The tsetse fly control measures had a definite, though unquantifiable impact in 1991-93, and large areas were cleared of the menace of the flies.

The pilot credit programme has had some noted effects. Firstly, the emphasis on rural women, their organisation and enhancing their creditworthiness, especially in the Ugandan social context has been highly appreciated by the women themselves, and secondly, there are indications that credit has contributed to the increase in areas planted, restocking, and the expansion of markets for various agricultural and fisheries products. Overall, rural households have increased food self-sufficiency as a result of credit being available for the purchase of inputs. The project's support for women's groups has clearly had a positive impact on women through such activities as training, group mobilisation and credit, and has contributed to improving women's productive capacity and in maintaining their enhanced social status. The project's social organisation model was based on the largely non-functioning cooperative movement, which was a high risk strategy given the inheritance of the cooperatives, and groups were also formed hastily.

Although the years of unrest had caused a flattening of the socio-economic differentiation in the project area, the CEM perceived that there were still clearly underprivileged groups, determined by access to land, education and position in the clan. It was not clear who had actually benefited from the ADP, neither was this built into the M&E system as a measurement factor. Project awareness was, however, quite high (over 50%), although it was twice as high in men as in women. The CEM commented that project benefits appeared to have gravitated more towards those groups and individuals with greater influence in the communities, especially after the restructuring which took place in 1991, and led to much higher prices for many of the inputs. The T & V system was dropped in 1991, as it was seen that it was bringing main benefits to the more "progressive" farmers, which were also the larger and more influential farmers. The only specific targeting in the project was for women and credit, but even here the CEM noted that the funds appeared to go to the more influential groups. Nevertheless, group formation was quite spontaneous when there was a specific objective, and the project's training has reinforced group activities generally.

The provision of project financed vehicles, office equipment and some buildings provided immediate relief for the Ugandan administration in the area of rural development. In addition, extensive training has upgraded the capacity of large numbers of civil servants who, for the major part, remained in government service.

In the immediate future, some ADP activities have been incorporated into the IDA funded projects such as Northern Uganda Rehabilitation Project (NURP), Agricultural Extension Project (AEP) and Agricultural Research and Training Project (ARTP). While these will provide funding in the short to medium terms, they will not secure the sustainability of ADP activities in the long run. Currently GOU does not have enough financial resources to support project activities unless they are included in the Government's "core" programme or they become self-sustainable through privatisation and/or efficient cost recovery.

Main issues and recommendations

The major recommendations from the CEM were as follows:

  • Policy dialogue with GOU should seek to ensure that (i) poverty alleviation constitutes an important criterion in the selection of core projects (i.e. those with a higher priority to receive GOU funds), and should address the issue of regularising input and product markets;
  • The privatisation of the delivery system of input supply should be enhanced at all stages, starting from importation. The procurement should be undertaken by private established dealers, who would compete for the foreign exchange allocated for input supply.
  • - There is a need of careful procurement planning. Procedures should be streamlined to ensure timely delivery of quality goods and services.
  • Being the staple diet especially of the rural poor, developing and disseminating CMD resistant varieties of Cassava should have a high priority. The search for CMD resistant varieties with good yield potential, palatability and without additional processing costs should be continued.
  • In the fisheries sub-sector policies and measures are required to ensure: (a) the control of overfishing, for example by the introduction of fishing nets with a proper mesh size; (b) the improvement of marketing outlets, particularly roads and means of transportation for fresh fish; (c) the preservation of excess fish through smoking and (d) the promotion of fish farming, by training farmers in pond management and feeding methods
  • Tsetse fly constitute a very important health hazard especially to members of poor households and herders in the bush. In future projects located in areas infested with tsetse fly assistance should be provided to the Uganda Trypanosomiasis Research Organisation.
  • With regard to water hyacinth control, the CEM recommends that it should be undertaken within a context of regional cooperation involving all countries in the Nile basin. It would be extremely difficult for IFAD to assist in a substantial way except, perhaps, in the training of technical staff.
  • There is a need to properly assess the demand for agricultural inputs through farm surveys which would, in addition, include the farmers' preferences for various brand names. These need assessments should be undertaken in the context of an overall crop production and livestock survey.
  • The GOU should adopt policies that would ensure the financial viability of credit operations. This means addressing the savings threshold necessary to obtain a loan, and the wide disparity between the interest paid on savings and interest charged on loans. In addition, ambiguity in the legal status of borrower groups, makes legal action for the collection of debts complicated.
  • The future of some input supply activities has been adversely affected by the protection of inefficient local industry, which has led to disappointing results as local manufacturing (and distribution) capacity appears to be well below farmer's needs. There is a need to balance the promotion of local manufacturing with the welfare of the farmer.

Lessons learned

Counterpart funding was a major problem for ADP; the situation improved considerably after reformulation, when the GOU authorised the use of the proceeds from input sales to fund project activities. At appraisal a more realistic estimate of GOU's capacity to fund project activities should have been made, and this assessment should have been reviewed as part of the CI's role. In similar circumstances or projects more attempts at providing avenues for local financial support of project activities from within the project should be made.

Extension messages should be suited to the social and financial realities of communities in the project area. Farmers needs and priorities should first be assessed, and schemes determined to meet those needs - this did not happen under ADP. Until profitable cropping ventures are identified and efficient marketing channels are developed there are limited incentives for farmers to adopt improved technologies if they entail additional initial outlays. For example, the CMD resistant varieties were met with enthusiasm and similarly fisheries inputs, but pig raising was met with reservations.

The project's impact on livestock would have been greater if some attention had been paid to animal husbandry and management practices, at the same time as animal health interventions. Complementarity would have led to increased benefits, and could have been undertaken with very limited, if any additional costs. Small stock development was introduced in the later stages of the project and was particularly important for the poor and women (being an activity which required only a small amount of credit and with a fast turnaround); the design of future IFAD projects with livestock improvement components should not exclude interventions for small animals.

Where farm tools and implements are being supplied, they should be tested in the local environment, and certified as being acceptable by the relevant authorities; equally important is the certification of the quality and expiry dates of chemical inputs and drugs. Care should be taken that imported inputs, e.g. seeds and chemicals, are packaged in accordance with farmers needs, otherwise repackaging should be introduced.




Animal Health Services Rehabilitation Programme

March 1995

Purpose and scope

The Kenya Animal Health Services Rehabilitation Programme aimed to improve the delivery of animal health services to the large number of small livestock owners nationwide. This was to be done through a strengthening of the management structure of the Department of Veterinary Services (DVS) where the institutional arrangements had remained virtually unchanged for many decades. Considerable support for the major activities of DVS was also to be provided by the project. The recent weakening of Kenya's economy had put severe strains on the Government of Kenya (GOK) budget. This restricted the monies available to DVS whose main activity, the control of major livestock diseases, was jeopardised. The project provided considerable support which was directed at controlling the main endemic cattle diseases,

Four international agencies contributed funds to the project. IFAD, IDA, OPEC and UNDP. The initial IFAD appraisal projected a total project cost of US$ 19.3 million. The final IDA/World Bank appraisal finished with a project cost of US$ 70.5 million of which GOK agreed to contribute US$ 41.52 million. Project costs were divided into 5 components (i) Disease Control Campaigns US$ 23.9 million - 42% of investment, (ii) Tick Control Programme US$ 21.8 million - 39% of investment, (iii) Laboratory Services and Surveillance US$ 2.7 million - 5% of investment, (iv) Clinical Services US$ 6.0 million - 10% of investment, (v) Pilot Trials US$ 0.3 million - 0.5% of investment and (vi) Management and Studies US$ 1.6 million - 3% of investment.

The Completion Evaluation mission carried out its work in Kenya from November 16th to December 9th 1994. The terms of reference for the mission emphasised the need to make an assessment of the projects overall concepts and performance. The mission also had to draw lessons from the projects activities and performance and make recommendations for IFAD's future lending in Kenya. The mission reviewed in detail Supervision Mission reports, the Mid Term Review Report and the Completion Report done by the World Bank. Extensive field trips and discussions with both livestock owners and DVS field staff provided the mission with the information used to write this report.

Summary of mission findings

Review of project performance

After a detailed review of all the project components the mission concluded that the project had performed poorly.

Delays in project start up, shortages of GOK counterpart funds, time delays in goods and services procurement, and failure to staff adequately and to equip the Project Management Support Unit (PMSU) all added to a low level of project implementation. Project disbursement was very slow. A two year extension was granted for disbursement, but even then only 51% of total projects funds were utilized.

All but one component fell far short of reaching their appraisal target. Details are provided below.

Disease control campaign

Figures indicate that the project managed to vaccinate, on average, only 35-40% of the country's national cattle herd against the three main diseases; Rinderpest, Contagious Bovine Pleuropneumonia (CBPP) and Foot and Mouth Disease (FMD). The appraisal target was 75%. This is the figure quoted as necessary to prevent sporadic outbreaks becoming epidemics. Vaccine shortages and a lack of field operating expenses contributed to this poor performance.

Tick control programme

The appraisal forecast a significant increase in annual cattle dippings from 70 million head to 95 million head over the project period. In contrast actual animal cattle dippings fell significantly from an estimated 64 million head at project start to 14 million head at project end. As a result tick borne disease outbreaks, particularly East Coast Fever (ECF), increased significantly in the latter stages of the project. Livestock owners suffered heavy losses. The dramatic rise in dipping fee charges implemented by GOK to reflect full cost recovery, followed by a further large increase when GOK decided to privatise dipping, brought about a negative reaction from livestock owners. They refused to dip their cattle.

Clinical services

The ever increasing demand for individual animal treatment from Kenya's growing number of high producing dairy cows was creating an unacceptable burden for DVS. The project aimed to provide appropriate interventions so that this demand could be met. At the same time a policy of reclaiming from livestock owners the cost of individual animal treatment was included on the project agreement. The project aim was not fulfilled. Only some 10% of the projected individual animal treatments were recorded as having been performed. Farmer reluctance to pay vastly higher charges, non recorded treatments carried out by Government veterinarians for some personal remuneration, a shortage of vaccines drugs and medicines, and a complete lack of transport for DVS staff all contributed to the low level of clinical services performed during the project period.

Veterinary laboratories and surveillance

Rapid and accurate disease diagnosis is vital for effective control of major diseases. Kenya's veterinary laboratories had fallen into disrepair and operating expenses were totally inadequate. Disease outbreaks were not being diagnosed quickly or accurately. The project aimed to refurbish and provide operating resources for Kenya's central and regional veterinary laboratories. Bureaucratic delays, particularly in procurement, prevented a rapid implementation of project proposals. There was negligible improvement in the contribution the veterinary investigation laboratories made to disease control during the project period.

Pilot trials

Project intervention contributed successfully to disseminating proven methods of controlling tsetse flies from limited scientific trials to a full scale operation. An attempt by the project to develop alternative tick control methodology based upon threshold levels of tick infestation and appropriate dipping intervals was not implemented.

Management support and training

The Department of Veterinary Services (DVS) was given direct responsibility for project management. The appraisal put much emphasis on strengthening and partly restructing the management of DVS. The aim was to make DVS more cost effective, provide a better standard of animal health to livestock owners and to introduce modernised management practices, this involved including field staff in management decisions. It further aimed to introduce monitoring and evaluation and develop appropriate training needs. Specific staff appointments were to be made within DVS to assist this exercise and a specific unit, the Project Management Support Unit (PMSU) was to have additional staff and equipment to oversee these management innovations. Most of these innovations were to be based upon consultancy studies carried out at the beginning of the project. Almost all the studies were inordinately delayed, and when eventually completed often not accepted by DVS. Recommended staff appointments were not made, the PMSU was not staffed, or equipped as was planned and only a minor part of the training programme was implemented. No meaningful project monitoring took place. As a result there was virtually no change in the management of DVS during the period. The project suffered throughout its entire life from a poor standard of management.

Project impact

It must be clear from previous paragraphs that the impact the project had on delivering improved animal health services to livestock owners was far below expectations.

During the project period there was a reducing number of outbreaks of the three major endemic diseases, rinderpest, CBPP and FMD. On the other hand the number of ECF cases (the major tick borne disease) rose greatly towards the end of the project. The recorded number of treated clinical cases fell and there was no increase in the number of samples diagnosed by the Veterinary Investigation Laboratories.

The appraisal projected incremental production benefits for livestock owners, particularly the smaller livestock farmers, in both meat and milk.

Largely due to external factors, droughts and market forces, actual production of meat and milk fell during the project period . Because no baseline survey occurred prior to project interventions and also because no meaningful monitoring occurred no impact of project intervention on individual livestock owners can be measured. It is fair to say that the impact on the IFAD target group may well have been negative. Because animal health services were in restricted supply those who received the limited services available were inevitably the more influential members of society.

Summary of conclusions and recommendations


In virtually all aspects the project failed to achieve the targets set in the appraisal report. Vaccinations against endemic diseases were only 50% of target. Cattle dipped were 15% of appraisal projections, clinical cases recorded as treated were a mere 10% of project estimates. There was no increase in the diagnostic and surveillance work of the veterinary laboratories. Only the tsetse control trials showed a marked positive response to project interventions. The principal project objective of markedly improving the management of DVS did not happen. Most of these failures can be attributed to (i) the failure of GOK to provide its financial contribution to project funds, and (ii) the refusal of DVS to implement the management changes recognised as essential in the appraisal report and recommended by follow-up supervision missions.

Genuine efforts were made by many District Veterinary Officers (DVOs) and their field staff to implement project activities. These efforts were largely nullified by DVS central management refusing to allocate adequate vehicles and operating expenses.

There were also external factors which had some indirect effect on project performance, these included the appalling state of Kenya's rural roads which contributed largely to vehicle breakdown and transport repair costs, and the failure of Kenya Cooperative Creameries to make timely or reasonable payment for milk supplies to farmers. Farmers were deprived of resources to meet their cost recovery charges.


Where possible multidonor projects should be avoided in countries like Kenya where project implementation capacity has been shown to be limited. Where multidonor projects have to be implemented they should be simple with clear cut agreements on the role of each donor.

At appraisal close attention must be paid to the true availability of government counterpart funding. Where some of this funding relies upon cost recovery from beneficiaries, then beneficiary reaction to policy changes involving increased charges must be clearly gauged.

There is no guarantee that the IFAD target group will be the main beneficiaries from projects designed to benefit all members of a specific sector even if the IFAD target group is in the majority of that sector.

Kenya has limited project implementation capacity. This has to be recognised and accepted by GOK. Future Kenya projects must have an emphasis on management strengthening, even if requiring outside consultancies. GOK must also be made to understand that loan agreements have to be adhered to even if it means cessation of disbursement to ensure loan agreements are implemented.



Small-Scale Agricultural Development Project - Completion Evaluation (1994)

December 1994

Completion Evaluation
October 1994

Executive Summary


Over the last twenty years, Mauritius has undergone major structural changes from an agricultural mono-crop economy with a rapidly growing population, high unemployment and low per capita incomes to a situation characterised by fairly stable population growth, near-full employment and an economy which is undergoing rapid diversification with the emergence of new sources of growth in export manufacturing and tourism. Rapid economic growth, besides creating employment, also altered the occupational structure of the country. In 1972, the number of people employed in the agricultural sector was 2.5 times the number in manufacturing. In 1983, this ratio had fallen to 1.2 and by 1990, this situation had reversed. Mauritius is heavily dependent for its food supplies on imports. It imports the total amount of its two basic staples, rice and flour (both of which are subsidized), and over 80% of its consumption needs in milk, beef and lamb.

There has been a definite improvement in the education levels of the labour force over the last twenty years largely as a result of the introduction of free education in 1976. The proportion of workers with no eduction has been reduced to a negligible level and the proportion of those with secondary education has doubled over the same period. The country has a comprehensive social security assistance system with a wide coverage which may be under threat due to the high recurrent expense.

The current Government's rural development policies emphasise improving the agricultural productivity of smallholders and encouraging agricultural diversification whilst paying due attention to natural resource conservation and rural employment creation.

The completion evaluation mission

In 1992, IFAD fielded a General Identification Mission to Mauritius to explore opportunities for future IFAD investment. In this connection it was decided that a completion evaluation of the project could contribute to the process of defining a conceptual and strategic framework for future IFAD assistance in Mauritius.

The Completion Evaluation mission was fielded in June 1993 and findings and recommendations are based on field visits, comprising interviews with beneficiaries and on-site observations, interviews with bank staff, project and other government officials, and the review of project documentation. Although the mission was unable to access sufficient data in the banks on the performance of the individual small-scale loans, the conclusions reached by the mission on this subject generally coincided with those of the government officials involved in the project and were confirmed by field observations.

Project rationale and objectives

At the time of appraisal, the economy of Mauritius relied heavily on the mono-crop cultivation of sugarcane and was therefore vulnerable to international market fluctuations of this crop in addition to being subject to sporadic incidence of cyclones. In rural areas, unemployment had risen to over 10% of the rural workforce. Some 12% of the rural population lived below the absolute poverty line (USD 190 per caput in 1981) and Government policies were geared towards eliminating unemployment and improving living conditions in villages which often lacked basic services and amenities. Crop diversification on land marginal for sugar-cane cultivation was identified as a main opportunity to both raise domestic food production and to increase the resilience of the rural economy.

The Mauritian Small-Scale Agricultural Development Project aimed at improving the incomes and living conditions of small-scale farmers other than those engaged in sugarcane growing, to promote crop cultivation and livestock raising, promote productive use of available land and support a number of discreet activities for the development of the rural sector. In addition, the project was to create local capacity to carry out and monitor effectively small-scale agricultural development projects. The project had a total cost of USD 8.70 million. This was made up of the IFAD loan (078-MT) of SDR 5.25 million (equivalent to USD 6.3 million), GOM contribution of USD 1.7 million and farmers contribution totalling USD 0.7 million. The project was to be implemented over a five year period following loan agreement signing, with implementation to be coordinated by the Rural Development Unit (RDU) of the Ministry of Economic Planning and Development (MEPD). The cooperation institution was the World Bank.

The components of the project were:

  • support for an agricultural credit programme to be implemented by the Mauritius Cooperative Central Bank (MCCB). This was to finance the following: three small irrigation schemes for production of mixed vegetables (95 ha); a small-scale irrigated litchi production scheme (25 ha); drainage of a swamp for rainfed production of rice and vegetables (105 ha); planting of mulberries for silkworm production (42 ha); improving goat production by providing selected breeding stock; funds for unspecified small-scale agricultural schemes; and technical assistance to strengthen MCCB capability in provision of effective lines of small-scale credit;
  • support for rural development activities. This was to finance the following: equipment for research into food crops; six small rural health centres; self-help schemes in 100 villages for the provision of kitchen gardens; improving the goat breeding stock and strengthening the veterinary outreach of MOA; a study on marketing of fruit and vegetables and construction of storage facilities; and, training and transportation for RDU field officers;
  • support for M&E activities of MEPD. This component was to provide technical assistance, local consulting services, training, vehicles and equipment.

Due to slow disbursements in the initial years a reformulation of the project took place that introduced a general line of credit administered by the MCCB and the Development Bank of Mauritius (DBM), to provide credit for agricultural and non-agricultural enterprises to individuals rather than to cooperatives.

General observations

General outcome of the project: Among the more successful outcomes of the project were: the strengthening of the small-scale lending capabilities of MCCB and DBM; the improvement of the goat breeding stock of MOA; the introduction of credit for small-scale enterprises in rural areas; the provision of decentralised health centres; provision of three veterinary centres; and a stimulus for successful kitchen gardens for more than 900 families. The following were the main failures of the project: the low productivity and profitability of the small-scale agricultural projects; the abandoned irrigation projects because of non-availability of land, the initial failures to improve the goat breeding stock by the MAO; the marketing study did not lead to any improvements in storage or marketing of fruits and vegetables; the MEPD failed to implement M&E functions to any useful degree; the project failed to disburse at the anticipated rate and took almost twice as long to complete as was envisaged at appraisal; and no system was designed to monitor the impact of the project on beneficiaries.

Targeting: Beneficiaries targeted under the project were to have an annual per capita income not exceeding the absolute poverty level of USD 190. In 1987, this was raised to USD 300. The attempt was to target the unemployed and/or marginally employed. Initially, Regional Development Officers (RDOs) from the RDU were involved in the selection of beneficiaries. Even though income criteria were adjusted to take account of Mauritius' economic boom, targeting criteria appear to have been less rigidly applied later as it became increasingly difficult to find beneficiaries. Many of them, originally targeted for cooperative loans during the first phase of the project, left altogether or farmed only on a part time basis due to better, more secure employment opportunities elsewhere. For the banks implementing the project credit lines, the viability of projects was considered to be more important than income targeting. Furthermore, given the nature of the extended family system in Mauritius, targeting and genuinely assessing income is a complicated exercise accentuated by the lack of a strong grassroots appraisal and monitoring system.

Beneficiary participation: Beneficiary participation was not part of the original project design or of the reformulated GLC. The farmers' community was hardly involved in any of the stages of the project cycle. Project identification, preparation, implementation, and monitoring and evaluation were carried out with little prior participation of the farmers. This was consequently reflected in poor performance of several subprojects. Several of the technical activities undertaken by the project failed due to their imposition on farmers rather than testing them under their local conditions and discussing their proven technique and economic viability with the beneficiaries. However, where the RDOs were actively involved in project implementation, there were opportunities for interchanges between beneficiaries and project implementors. But when the RDU was moved to the Prime Minister's Office (PMO) in 1988, and the functions of National Development Officers (NDOs), the ex-RDOs, were redesigned, formal channels for beneficiary grassroots participation were severed.

Impact on beneficiaries: The loan agreement provided for a monitoring system which in theory would have enabled an estimate of the economic impact of the different project components. However, apart from the irrigation sub-projects, no data on yields, production and cash flows of the small-scale enterprises were available to the mission. Activities carried out under the Agricultural Credit Programme have suffered from absenteeism of farmers which has effected productivity and the efficient use of the land. Farmers remaining in operation (as part-timers) employ seasonal labour, particularly for crop maintenance and harvest activities. Very few employ permanent workers. Skilled labour is hired locally and is commonly associated with soil preparation. Low cropping intensities have diminished the significance of income generated from farming. Although the mission found that farm income could reach or even surpass income obtained from manufacturing if land is efficiently used and well managed, nevertheless most farmers sought other employment also for more security and income stability. Both the full-time farmers (20%) and part-time farmers (80%) seem to have better economic conditions (than at project design) with significant improvements in income levels.

Without a tracer study it is extremely difficult to disaggregate the general impact of the economic boom from the impact of the project. At the very minimum, the project created credit facilities for a section of the population who would not normally have been eligible for loans and provided for training of entrepreneurs and their employees. An unquantifiable success of the project is that it created a special institutionalized window of loans for poorer people in Mauritius. The down side of this is that unsecured loans had a higher rate of arrears than those which were secured. The project financed 16 Health Centres, 10 more than originally planned. The overall impact of these centres has been highly positive (especially for women) both in improving the quality and the coverage of the health services. IFAD financed health centres reach a total population of 264 000, which is 36 percent of the population served by all centres on Mauritius. The majority of the centres are fully utilized, are performing well and patients interviewed were very satisfied with the services provided. The overall impact of the services provided by the veterinary services sub-project is satisfactory. The centres provide fully-integrated veterinary services to the community of livestock breeders. The impact of the animal health laboratory has also been positive as the rate of parasitism is approaching the target of 75% and the struggle against stomoxys nigra is improving.

Women: The project does not include a specific component for the promotion of rural women. They were thought to benefit indirectly from land development and intensification of cultivation. As they contribute more than 70% of total seasonal labour and an estimated 18.5 percent of the total households in Mauritius are headed by a woman, this has proved to be a valid assumption. It can be said that sub-projects still in operation contribute significantly to the access of rural women to productive work and to their participation in the development process. However, there are no formal women extension programmes or training facilities, though the issue of the role of women in extension and agricultural development is economically important. Women are traditionally in charge of livestock, as well as fruits and vegetables, which gives them a key role in production and also in shifts towards high-value products. The rural health component had a very positive impact on women as to family planning. Women have been visited at their homes and benefited from medical personnel providing them with mother and child health care, nutrition information for children and family planning service. The birth rate has been decreasing significantly due to the services and women were reported to be in a better health condition.

Institutional impact: Both the MCCB and the DBM had dealt with small enterprise credit before IFAD's project. Nevertheless, the experience of each institution under the GLC increased their experience immensely. Unfortunately, the experience gained by the Project Unit at the MCCB, which was supported by the project was lost when first the advisor left and subsequently the unit was altogether disbanded and its functions placed under the general Credit Department. As a result of the shift of the RDU in the MEPD to the PMO where it was renamed the National Development Unit (NDU), the project lost considerable grassroots support from the RDOs whose functions changed from socio-economic to infrastructure advisors. The NDU assumed the role of the principal implementing agency; however, it lacked the executive authority necessary to obtain data from the banks or to verify the status of the revolving funds at either. At the same time, the reorganization effectively sidelined the MEPD whose function was reduced to macro-economic monitoring and to producing evaluation reports.

Sustainability: Few of the plots cultivated under the agricultural credit sub-projects seem to be sustainable, except where full-time farming is practised. As for the rural development activities, only the health centres and the veterinary activities represent a sustainable activity as their operations have been integrated into the national services. Although the GLC was instrumental in terms of delivering credit to persons who would otherwise not have had access to it, the high cost of lending and the problematic position of arrears on these loans, brings the sustainability of the credit schemes into question. The benefit from the technical assistance is not sustainable as the trained counterparts left the project to take better paid jobs.

Extensions: The project was to close in 1986, but low disbursements in the initial years allowed it eventually to be closed in December 1991, having received 5 extensions. The main concern in granting the extensions seems to have been the low level of disbursements and less attention was given to verify if the reformulated project was serving the IFAD target group.


Financial performance: Until the changes in project scope introduced in 1986, disbursement stood at only 6.7% of the loan amount, but thereafter it quickly increased to 31.9% in 1987 and to 76.0% in 1989 to reach 99.4% as at the loan expiry date. Due to the extended period during which the project was implemented, exchange rate fluctuations played an important role. In total, a devaluation of 76% occurred causing a substantial increase in the loan amount expressed in the local currency. Part of these funds have been used to finance additional health centres and the institutional strengthening of the NDU. Originally planned at 20%, the Government's contribution to the project eventually amounted to some MUR 32 million or 25 % of project costs. It is not possible to estimate the contribution of the farmers toward the project costs. Reimbursements of the loan have always been regular and timely.

Project coordination and management: Coordination of project implementation was the responsibility of an inter-ministerial committee, the Project Coordination Committee (PCC). The PCC did not perform optimally and in November 1984 a Project Implementation Committee (PIC) composed of senior working-level staff of the project's implementing agencies was set up to closely monitor progress under all sub-projects. Policy issues would be referred to the PCC. It met frequently and served as a useful forum for thrashing out many implementation problems at the field level. The implementation of the various project activities was to be carried out by Government agencies, parastatal bodies and cooperatives under the overall direction, supervision and coordination of the RDU. In 1988, when the RDU was transferred to the PMO it was restructured to become the NDU. The main effects of the shift were a greater visibility of the Unit as part of the PMO resulting in an increased authority conferred by this allegiance and at the same time a more political role through the attachment of Parliamentary Secretaries to the PMO. These are elected politicians and are responsible for the identification and follow-up of development projects in their respective Village Council Areas. Whereas the point of reference of the RDOs in the village had initially been the informal village or council leaders, it was now an elected politician. One of the results has been a shift toward infrastructural projects, away from small-scale productive development initiatives. It would therefore appear that the rational for the project to be under the aegis of the RDU is no longer valid.

Cooperating institution and supervision: Regular supervision was carried out and it appears that sufficient attention was given to emerging issues regarding project progress, although this was not always followed up by corrective actions. Agricultural irrigation and livestock did not receive adequate coverage (as reflected in the choice of specialisation of consultants) and this was reflected in the poor performance of these sub-components. For the needed reorientation of the project towards the creation of a general line of credit, the CI takes full credit, but there has been a lack of emphasise from both the CI and IFAD on the importance of data on project impact and individual loan performance.

Agricultural credit programme: Sixty-five percent of the loan was earmarked for on-lending by MCCB to small-scale agricultural borrowers through producers' cooperative societies. Three small irrigation scheme (total 295 ha) earmarked at design were replaced by a single scheme at Riche Terre due to unsuitability of land. This scheme is only yielding sub-optimal results, as most farmers have opted for part-time farming, or have even abandoned their plot in favour of a more secure income generating activities outside the agricultural sector. Cultivation on the one arpent (0.422 ha) plots was further constrained by inadequate and uncertain irrigation, lack of credit (due to unsettled land deeds, insufficient extension services, and problems O&M of irrigation equipment. The same is true for the Litchi Production scheme where yields are not promising, many plots are heavily infested with weeds and intercropping is only sporadically practised. As for the rice-subproject, the farmers decided to change to other crops because of low-returns on paddy rice and preference of farmers for traditional crops such as sugarcane and vegetables. The Sericulture sub-project was also abandoned, because traditional crops regained their attractiveness, as their prices went up relative to that of silk and the free family labour that was assumed to be available did not materialise because of the changing structure of the Mauritian economy and the labour market. The Goat Upgrading Sub-project was initially hampered by the poor management of the newly introduced breed. There was a lack of control and monitoring of the animals' health and adaptability to the new environment and in addition the breed was more suitable for milking than for meat which does not concur with the preference of Mauritians. In the second phase, three rounds of breeding took place at the Veterinary Service Division, which assured that the goats were able to adapt to their new environment. However, results were similarly unpromising with less than a quarter of the offspring distributed to farmers, and half of the population remaining unsold at the breeding station. No criteria were used in the selection of farmers and no monitoring of the breeders was being done.

The general line of credit general line of credit: Following a major project reformulation and amendments to the loan agreement in 1986, two schemes, the Small Agricultural and Rural Industries Development Scheme (SARIDS) at MCCB and the Small Rural Enterprises Scheme (SRES) at DBM, eventually became the central plank of the whole project. The system of loan administration was designed with an intention to rely on the grassroots involvement of RDOs in preparing and monitoring loans. Once their responsibilities changed, this role was lost and an important step in the process of loan administration was severed. The MOA, SIDO and MOC were all to be involved in the appraisal of loans, however, this system was never implemented, and presently the loans are appraised entirely by the bank's loan officers. A subsidiary credit agreement was made between the GOM and the banks, but the institutional developments described above generated a junction in the project, by effectively separating the project management from the credit line which was not foreseen in the subsidiary agreement.

Publicity of the availability of the credit had been successful and beneficiaries were reached through the media, the network of RDOs and by word of mouth. Collateral requirements changed from general floating charges to personal guarantor, in view of the high arrears and non-performance of outstanding loans. Although cases are reported to have been filed for legal action the results of these steps are not yet clear. The institutional support provided to the banks consisted of an internationally recruited TA Financial Analyst for MCCB and staff of RDU/NDU seconded to both MCCB and DBM. Although the TA provided some staff training and assisted in designing a loan administration system, the subsequent departure of the individuals trained and the dismantling of the Project Unit effectively minimised the impact on the operations of the Bank.

The inadequate provision of data by both banks but in particular the MCCB, has impaired the efforts of the evaluation mission in evaluating the financial or economic performance of the schemes. At MCCB 65% of the loanees have loans in arrears, and total arrears amount to 32% of the outstanding balance. Although MCCB management claims that some funds are being recycled, both NDU and the mission were unable to verify that these funds are being kept in a special account and outlent at the agreed upon interest rate. The situation for DBM is similar, with 65% of the small industry loans in arrears representing 51.6% of the value that is due. Of those, almost 60% have arrears greater than 12 months, while 91% of the amount due has been in arrears for more than a year. For the agricultural portfolio the situation seems somewhat better with 47% of the borrowers in arrears for 35% of the amount outstanding. More disturbing is the fact that 95% of the amount in arrears have been outstanding for 12 month or more. It seems that the situation has rapidly deteriorated over the last two years, with arrears doubling, suggesting perhaps high accumulated interest charges on loans overdue by more than 12 months. According to the banks, the following factors contributed to the high level of arrears: (i) technical capability of beneficiary, (ii) marketing capacity of loanee, (iii) equipment failures, (iv) insufficient returns on investment, and (v) some mala fide borrowers. The mission was of the opinion that apart from these factors, poor managerial and business organisation of the enterprises also contributed to the situation of high arrears. The low level of support these credit windows received from the banks also created an environment were loan appraisal and monitoring was extremely difficult.

Rural development: The self-help scheme for the cultivation of kitchen gardens, although successful in terms of the number of households reached (930), could not be continued for its high cost and heavy monitoring requirements. Both the marketing study and the sub-component for foodcrop research equipment found alternative funding. This may have been foreseen at appraisal with a more careful screening of funding options of the GOM. The rural health component proved successful and 26 health centres were eventually built and equipped, whereas only six had been planned. These centres reach a population of 264 000. The accessibility to health care services increased and pressure on hospitals was relieved. Three veterinary centres were fully equipped and provide around-the-clock services to the farming community. Livestock extension services and feed supplies are also provided by these centres.

Monitoring and development: Responsibility for M&E was assigned to the Programme Implementation and Monitoring Section (PIMS) of MEPD with RDU only involved in providing field support and ex-post evaluation to be undertaken in cooperation with the University of Mauritius. Eventually a division of tasks between the Monitoring and Evaluation Division (MED) of MEPD (formerly PIMS), RDU, MCCB and DBM evolved, with MED largely responsible for baseline surveys and evaluation studies and the other three agencies for the monitoring of their respective activities. The University was never involved in the project, apparently because of a lack of interest and absence of technical capacity. The former RDU became the NDU in 1988 and was moved from MEPD to the Prime Minister`s Office. The MEPD became responsible for macro-programme evaluation, the NDU for specific monitoring and evaluation and the banks for the monitoring of their credits. An internationally recruited consultant was temporarily stationed in PIMS. He established a M&E system, and trained one economist and two sociologists. Part of the funds from cost savings on a few other IFAD sub-projects were allocated for the purpose of strengthening the Monitoring Section of the NDU by way of computerization, procurement of vehicles and oversees staff training. Under this arrangement, two vehicles and four personal computers have been acquired. However, the training of staff has not been achieved. Although these arrangements seemed conducive for an effective system, in practice the division of responsibilities resulted in inadequate monitoring and evaluation by all parties and the major problem encountered in making the M&E system operational was the difficulties in obtaining the required information from all the executing agencies involved in the project. The actual monitoring is presently done by one RDO and the whole operation is centralised at the MEU (of NDU) which is responsible for the monitoring of all NDU projects.

In retrospect, the project did not develop an effective M&E capacity. The project managers did not have access to the data required to ensure efficient management. There is no method of objectively determining impact on beneficiaries. Management seemed more concerned with the progress of implementation than with analysing what the various projects are producing in terms of socio-economic results. IFAD support for the design of the project did not bring the expected results, mainly because of institutional changes introduced throughout the project.

Lessons learned

Design elements: The objectives set for the project appear to have been over-ambitious. The risk analysis made in the appraisal report overlooked some of the main constraints to the project. With the economic development of the country, labour availability turned out to be a constraint. The assumption that land for irrigation projects would be available proved to be misplaced in a country with an intensive land use pattern. The appropriate authorities concerned with land utilization were not effectively consulted.

Only limited consultation of targeted beneficiaries took place during the design stage. This led to delays as well as failure of some activities. A thorough and effective consultative process with the beneficiaries and implementors of the project from the outset of project preparation could have avoided a number of problems encountered by the project.

The appraisal report failed to address the issue of extension services and the need to improve or expand those to promote the input packages needed for the project.

Institutional Capabilities: The project was not based on a realistic assessment of the capacity of the institutions involved in implementation. Whilst RDU/NDU had an adequate planning capability, it did not have the technical skill, nor the political and administrative support required to implement the project effectively. It would therefore appear that the rational to place a small-scale agricultural development project under the aegis of the NDU was not valid, especially after its transfer to the PMO.

The experience with cooperatives as vehicles for credit and other support services for farmers in this project has not been positive.

The implementation of the small-scale enterprise credit schemes suffered from an absence of staff at the grassroots for appraisal and follow-up either from the banks themselves or from the Ministry implementing the project. Qualifications and suitability of international TA staff should be carefully screened by IFAD and fully endorsed by the recipient country.

Imposition of technical solutions: Several of the technical activities carried out under the project failed without being tested at pilot scale or being based on proved techniques. In particular the Goat Breeding, the Rice Production and sericulture proved not economically viable. This contrasted with the more successful results of the GLC. The lesson is that local entrepreneurs and farmers have a better idea of the techniques that will work than outsiders. Where new technical solutions are needed, they should be tested under local conditions prior to distribution to beneficiaries for production.

Monitoring and Evaluation: The project did not generate an effective M&E system. Monitoring should pay more attention to assessment of changes in socio-economic indicators at the level of the beneficiaries. Experience from the General Line of Credit taught that data on performance of credit lines should at all times be available. Project managers should have access to data to ensure efficient management, flexibility of approach or identification of issues affecting implementation. An effective M&E system must be installed from the outset. This includes identification of criteria to be monitored in assessing project impact. M&E operations are highly dependent on the institutional set-up of a project and they should be fully re-appraised after any reformulation or change in the institutional arrangement of a project takes place.

Reformulation: The project was subject to a fast changing social and economic situation of Mauritius. This required rapid responses from project management that was not built into the project from the start. The issue of "part-time" farming became a factor of some importance which should have been dealt with in a more decisive manner. The project reformulation that took place, relied too much on the capacity and willingness of the banking community and the Government authorities to cooperate and subsequent restructering of the government services was not followed by an adjustment in the appraisal and monitoring arrangements. However, improved disbursement records after the reformulation led the CI and IFAD to belief that the project was performing satisfactory and little was done to verify that project funds were targetted towards the poor and were supporting economically viable projects.

Recommendations and issues for follow-up

Future interventions should be designed in a flexible manner so as to enable the beneficiaries to engage in profitable activities, taking into account the open character of the Mauritian economy and its propensity for fast change. A thorough and effective consultative process should be entered into with potential beneficiaries from the outset of project preparation.

Extension of closing dates should considered less on the possibility it will give to the project to disburs all the loan funds and more the ability of the project to channel those funds to activities that will clearly serve the intended beneficiaries.

For agricultural activities, due attention should be given to the capacity of the extension services and the importance of the farmer systems approach. Land requirements should take into account present and future alternative uses and should be based on realistic assumption regarding farming needs.

The choice of implementing agency for any future IFAD project in Mauritius should take into account the ability of the agency to follow up on project implementation at the grassroots level. The rational for placing a future small-scale agricultural development project with the NDU is no longer obvious.

Credit programmes: When a line of credit is administered by a commercial bank, clear guidelines should be laid down from the beginning on the access that project authorities should have data relating to the individual loan performance. It is recommended that data on credit should be made available by the banks in a standard format which is cleared by IFAD or the CI.

Unless the banks, implementing the small scale credit schemes have separate project units from which thorough screening of applications and active follow-up of the loans is guaranteed, the credit schemes and their expected results in terms of increased incomes of beneficiaries will not materialise to an extent that would justify IFAD's intervention. To establish a viable small enterprise in the context of Mauritius' booming, relatively open economy is extremely difficult. Sound appraisal of loan applications, careful monitoring and extension support services is required.

Consideration should be given to the possibility to make some training (e.g. in business administration) compulsory for credit takers. The availability of support services should also be assured. The redeployment or creation of additional countrywide RDOs to support appraisal and monitoring of loans is to be considered.

The Evaluation Mission was not able to obtain satisfactory information on the revolving funds. IFAD should receive assurances that the revolving funds are properly managed and used for the purpose for which they were created.

Irrigation authority: Breakdown of irrigation equipment occurred frequently but repairs were not carried out promptly, leading to insufficient irrigation of the two irrigation schemes financed under the project. The Irrigation Authority should enhance the efficiency of its maintenance services to irrigation schemes.

Extension services: The extension service should endeavour to make periodical visits to farmers, prepare an inventory of resources available to the farmers and of their constraints. Therefore, the extension worker should start with the concept of the farm-household system, analyze constraints and potentials and list possible solutions before preparation of an extension program. Efforts should be made to pay more attention to train farmers and extension officers in management, farming systems approaches and farmer's participation. Sufficient technical training for women (extensionists workers and farmers) should also be given, and a rational strategy for extension including programs for women and small farmers should be worked out. In addition to basic agricultural extension, the extension service needs to concentrate on water savings and other environmental aspects of agricultural production, thus playing a leading role in the development of sustainable agriculture.

Marketing: The need for storage of vegetables should be considered. There is at the moment a low capacity for storing vegetables in the country whereas there are frequent occurrences of oversupply. The construction of refrigerated cold stores would provide such storage, but it is unlikely that the high cost involved could be offset with higher market price. It would be better to use present storage capacity more efficiently and to develop additional market outlets coupled with improved market price intelligence. To reduce the margin of the middlemen, MEPD could play a role in supervising the marketing process.

Cooperatives: The Ministry of Cooperatives should focus on helping cooperatives to reestablish financial viability, to advise on basic management reforms, and to undertake, or commission feasibility studies for medium and long term investment by farmers under cooperative societies. The validity of cooperatives as vehicles for credit and other support services for farmers should be reviewed in the light of the negative experience of the closed IFAD project.