Community-Based Rural Development Project in Kampong Thom and Kampot

October 2012

The objectives of the Community-Based Rural Development Project in Kampong Thom and Kampot in Cambodia were to increase food production and farm income and increase capacity of the poor to use the services available from the Government and other sources for their social and economic development. According to the present assessment, the project’s support to farmers contributed to increased agricultural and livestock production and better livelihoods through improved infrastructure and related access to services and markets. The project also made use of famer-to-farmer extension methods which have spread beyond the immediate demonstration areas. It was a front-runner in terms of putting Cambodia’s decentralization policy into practice.

There were some weaknesses in the hydrological and engineering design and the site selection, which impacted on the functionality of irrigation systems. Operation and maintenance of irrigation but also of roads remain a challenge, although the sustainability of the extension services is likely to benefit from the emerging commercialization, market linkages and resultant contract farming. The assessment recommends that future IFAD-supported projects pay more attention to the role of markets and facilitate farmer promoters to become agricultural input suppliers, in order to strengthen the rural development process.




Rural Recovery and Development Programme

October 2012

Burundi’s major challenge, at the time of start-up of the Rural Recovery and Development Programme, was to reactivate the economy in the wake of the crisis by restoring the production base and addressing the structural problems affecting production. The programme response was to improve food security and living standards, increase rural incomes and improve land conservation in four of the country’s poorest provinces.

The programme successfully achieved its objectives vis-à-vis the main target populations, in particular the most vulnerable households which had lost their means of productions. It had strong influence on government policies and institutions, with its greatest success lying in its innovations and their scaling up throughout the country. Its interventions also show good signs of sustainability, specifically the high degree of ownership by local populations and good financial returns on several activities.

The assessment notes some weaknesses in the conservation of agricultural land and environmental resources and remaining challenges to ensure long-term sustainability, particularly in consolidating infrastructure management committees.

LANGUAGES: English, French

Rural Areas Economic Development Programme

June 2012

The Rural Areas Economic Development Programme left a visible and positive impact on rural areas development in Armenia in many respects. Through establishment of the Rural Finance Facility the project improved access of rural small and medium entrepreneurs to short, medium and longer-term investment loans and facilitated employment in rural areas. Investment in infrastructure contributed to improving rural livelihoods, as well as increasing income and food security, and, through crop diversification, increased farming produce and commercial activity.

At the same time, the project could have had better pro-poor targeting design for both loans and infrastructure investments, as its main beneficiaries were rural medium-size enterprises. It is necessary to: step up to the next level of support to institutional and policy reforms in Armenia, including for insurance and leasing schemes in rural areas; diversify loan products; and target specific, more vulnerable groups. IFAD operations in Armenia should further support the value chain approach and include additional awareness activities about the project.


National Programme for Rangeland Rehabilitation and Development

May 2012

The IFAD-supported National Programme for Rangeland Rehabilitation and Development performed poorly during its first years and suffered as well from the socio-economic complexity and environmental vulnerability of rangeland management in the Badia. Nonetheless, it achieved several results overall: a national pastoral resources information monitoring and evaluation unit was established, water harvesting and conservation structures were constructed and a few protected areas were established. The project impact was however limited - some savings on supplementary feeding and water availability for the flocks - because of drought and issues of land use rights, and also because of serious implementation delays and poor participatory rangeland management.

The assessment recommends adopting a holistic approach to the sustainable rehabilitation of the Jordan rangelands with carefully planned long-term bottom-up approaches and setting up an enabling policy environment aiming to ensure the viability of herding within the overall context of national food security. The report also suggests defining thorough implementation strategies for IFAD-supported projects that include oversight mechanisms for rapid corrective measures when needed.



Area-Based Agricultural Modernization Programme

February 2012

The overall goal of the Area-Based Agricultural Modernization Programme in Uganda was to increase the incomes and food security of poor rural households in the programme areas and to modernize agriculture in the targeted districts. According to the project performance assessment, the programme’s support for and training of local farmer groups enabled them to expand their production and become more commercially oriented at a time when they were shifting from subsistence to market-based farming.

The programme also improved rural infrastructure, thus facilitating the commercialization of agriculture. Better rural roads improved access to other services, such as input and produce markets and financial services. There were concerns with the sustainability of some of these activities, but these concerns are relatively minor compared with the programme’s achievements. The assessment recommends to reinvigorate the infrastructure management committees as well as ensure the financial sustainability of the savings and credit cooperatives supported by safeguarding their nature as member-based and savings-first institutions.


Rural Financial Services Project

February 2012

Project performance assessment

The most important results of the Rural Financial Services Project in Ghana were of institutional nature. The project helped strengthen the regulatory and oversight bodies (Bank of Ghana, Ministry of Finance and Economic Planning) as well as the capacity of apex bodies for rural banks and credit unions. It also contributed to the professionalization of rural banks. At the micro level, however, access to lending products did not increase according to expectations, particularly for small-scale farmers.

Key recommendations of this project performance assessment pertain to the introduction of innovative approaches and products that can help deepen the outreach of lending to poorer clients and small farmers, such as matching grants and guarantee schemes. Innovative products need to be introduced in a more systematic manner, with pre-feasibility studies and pilot tests to ensure better adaptation to the context and risk management. Also, synergies need to be strengthened with other IFAD-financed projects supporting rural development in Ghana.



Smallholder Cash and Export Crops Development Project

December 2011

The Smallholder Cash and Export Crops Development Project (PDCRE ), which became effective September 2003, will close in September 2011.  Because the Government of Rwanda has indicated that it may ask IFAD to consider financing a follow-on project for PDCRE, IFAD procedures require that an interim evaluation be undertaken at this stage. The evaluation was carried out by the Independent Office of Evaluation (IOE). Besides providing an overview of the performance of PDCRE until now, this evaluation is expected to help guide the design of the potential follow-on project. The interim evaluation is also timely in the light of the planned Rwanda country programme evaluation (CPE) by IOE in 2011, as it will help identify strengths and weaknesses and how the project could be scaled up.

From 23 June to 13 July 2010, IOE fielded an evaluation mission who worked with PDCRE staff, beneficiaries, Government agencies, local governments, civil society, private-sector stakeholders, and development partners.

The evaluators used the IOE methodology specified in the Evaluation Manual of April 2009. The project authorities prepared a self-evaluation and results framework that were helpful for identifying the main achievements attained during the project period. The interim evaluation benefited from the project progress reports, the extensive supervision mission and mid-term reviews and their technical annexes, the reformulation document, and the policy and progress reports by PDCRE, stakeholder organizations and service providers. In addition, the Impact Assessment of 2010 prepared by the consulting group CIBLE Sarl, completed only a few months before the evaluation mission, provided comprehensive and timely primary data. Furthermore, the mission attempted to verify the information presented in the various documents as much as possible during its fieldwork, which included interviews of the project staff, public agencies, stakeholders and beneficiaries in Kigali and project areas. The mission visited all project areas and all but one of the cooperatives supported by the project. The mission then formed its independent views on the bases of its observations and the new information. In December 2010 a final learning workshop was held with the Government and IFAD staff to consider key findings and recommendations from the evaluation, which informed the evaluation's Agreement at Completion Point.

The country and its economy. Rwanda is a small, landlocked country of 26,338 square kilometres located near the centre of Africa, a few degrees south of the Equator. In 2010, Rwanda's population was 10.4 million people, and its annual population growth rate was about 2 per cent. With an average of 340 persons per square kilometer, Rwanda has the highest population density in Africa. The economy is largely subsistence agriculture; more than 85 per cent of the population lives in rural areas. Rwanda is one of the poorest countries in Africa. In 2009, its gross domestic product (GDP) per capita was US$866, making it No. 100 out of the 135 countries measured for the Human Poverty Index by the United Nations Development Programme (UNDP).

More than 80 per cent of Rwandans work in agriculture, and agriculture contributed an average of about 40 per cent of the total GDP in 2009. (Services contributed 46 per cent and industry 14.2 per cent). The average size of smallholdings is little more than half a hectare and relatively low yields are major concerns for Rwandan agriculture. The genocide-caused turmoil of the early-to-mid-1990s greatly reduced agricultural production, but it has subsequently recovered, reaching pre-war levels in 1998. Agricultural exports have long been dominated by coffee (US$47.1 million in 2009) and tea (US$39.8 million); together they account for more than 50 per cent of export earnings. Despite volatile international prices for coffee over the past few years, the country's best Arabica coffee is in strong demand and attracts a premium price on the international market. A major challenge for the Government is to ensure that food production keeps up with population growth. The key strategies at the time of appraisal were set forth in the Government's Poverty Reduction Strategy Paper in 2001 and IFAD's 2002 country strategic opportunities paper. To meet the current challenges the Government has articulated its long-term development goals in the Rwanda Vision 2020 document. In September 2007 the Government completed and adopted its Economic Development and Poverty Reduction Strategy (EDPRS).

The Project and its Performance

The project and its financing. PDCRE was approved by the IFAD Executive Board in December 2002. The Loan Agreement between the Government of Rwanda and IFAD was signed on 7 February 2003 and became effective on 19 September 2003. The project will be completed on 30 September 2011 and the loan will close in 31 March 2012. The total cost was estimated to be US$25.09 million, of which IFAD's loan amounted to US$16.26 million. The goal of the project is to maximise and diversify the income of poor smallholder producers of coffee, tea, and new cash and export crops. The project comprises five components: (i) coffee diversification; (ii) tea development with two sub-components: (a) integrated smallholder tea development in the Nshili district and (b) smallholder tea plantations in the Mushubi district; (iii) guaranteed credit to smallholders tea and coffee producers; (iv) development of new cash and export crops; and (v) project coordination. Project achievements are presented in chapter IV.

The project's objectives and component have remained identical to those set at appraisal, but many political and economic changes—some policy-related, others dictated by circumstance—have affected the project. One financier, BADEA (Banque Arabe pour le Développement Économique de l'Afrique), withdrew because the Government decided to involve the private sector in tea development and BADEA's planned contribution especially electrification of the tea complexes was no longer needed.  The Government cancelled its contract with the only international service provider, TWIN Trading Ltd., and introduced a public-private partnership policy. The Government also introduced a "zero-vehicle" policy for all development projects, established savings and credit cooperatives in all local administrative areas (Umurenges), and introduced a new cooperative law, which introduced a new approach to cooperative development by emphasising the role of the members and instituting strict penalties for mismanagement of cooperative funds, among other things. IFAD transferred supervision of the project from the United Nations Office for Project Services to its own consultants. These actions and the reformulation of the project at mid-term made the project look quite different from the one appraised in 2002 and made the evaluation mission's assessments of the project's efficiency more complex.

Assessment of performance. The project was relevant (and continues to be so) because its design was consistent with national policies and with IFAD's strategies, and because it integrated lessons from other IFAD projects in Rwanda. The project has addressed the needs of the rural poor and women. Although the project does not deal directly with food security, it has addressed important dimensions of poverty such as income generation, human and social capital, and the empowerment and development of poor people's institutions. Some of the potential problems related to natural resources and environment were not addressed. Although IFAD managed the project design process, it was based on a common understanding of the Government's policies and regular communication with the Rwandan authorities. The Government and IFAD understood the obvious needs of the rural poor and have kept their strategies consistent, the design simple and the components appropriate, and they have used the lessons learned from previous projects. These positive aspects outweigh the weaknesses in the logical framework and the undue optimism in some aspects of component design.

Although the development goal ("maximising the farmers' incomes and produce prices") was vaguely worded, the specific objectives and an analysis of their attainment provided an adequate basis for evaluating the effectiveness of the project. The coffee component did not enrol as many families as had been originally targeted, and the target should have been modified at mid-term when the number of coffee-washing stations was reduced from 16 to 10 (in 2010 it was raised to 12 because funds were still available under the project). Most of the objectives have been attained to varying degrees, the most successful ones being the establishment of cooperatives and coffee-washing stations and substantial progress (though delayed) in reaching the objectives of tea development and "new export crops." Some cooperatives have yet to achieve a sound financial footing, and only four coffee-washing stations (CWSs) operate at full capacity as productivity and capacity vary greatly through the project areas. It is too early to fully appreciate the effectiveness of the project because it is incomplete and productivity of coffee and tea plants is low because plants have not reached their fertility so that full benefits will come only when the coffee trees and tea bushes are mature and cocoon production reaches its planned capacity. Experts from OCIR-Café, OCIR-Thé and the project coordination unit agree that the yields are substantially below potential as a result of management practices generally being suboptimal. However, the evaluation mission was confident that farmers' incomes and assets will improve by the time the project closes and allow the project effectiveness to be rated at least as moderately satisfactory.

In the case of the efficiency of PDCRE, the mission found that it would not be possible to prepare an economic analysis that would be comparable to the economic analyses prepared for the coffee and tea components at appraisal. Too many changes had taken place in the coffee and tea components during implementation of the project to allow comparison. In addition, the yields of both coffee trees and tea bushes are still very low because they have been recently planted and the need for further improvement in management practices, and forecasting their productivity increases is too uncertain to allow meaningful computations of an economic rate of return (ERR). However, trends have already begun to improve, and so the mission recommends that an ERR be calculated for the models at the time of project closing (that is, for coffee cooperatives with coffee-washing stations and tea complexes that use a public-private partnership—PPP approach).

The evaluation mission used various other methods to estimate the efficiency of the project. These included calculation of financial rates of return for a well-functioning CWS and a cooperative society with the results of 29 per cent and 60 per cent financial rate of return, respectively (taking into account the 50 per cent subsidy on investments). In reviewing the administrative costs, the mission concluded that, at 15 per cent, they were at the same level as similar projects financed by IFAD or other financial institutions, if one takes into account the fact that all consultant costs were charged to the project coordination component rather than to the operational components for which the consultant studies had been made. The mission also computed per family costs of the coffee and the tea components of the project (for cooperative members only). These costs appear to be high, but the evaluation mission did not have benchmarks from other coffee or tea projects and cannot evaluate whether these figures are reasonable. Moreover, a large number of families who were not members of cooperatives received partial benefits from the project (seedlings and a place to sell their produce). As the project became effective and will have been completed on time, related to similar projects' duration (and despite the inability to compute an ERR at this time), the evaluation mission projected that the efficiency will be at least moderately satisfactory at project closing.

Poverty reduction impacts. The poverty reduction impacts of PDCRE were in the satisfactory range for three domains, that is, household income and assets, human and social capital and empowerment, and institutions and policies. It is important to note, however, that the coffee and tea incomes for the smaller farmers (those with less than 0.5 ha of tea or 250 coffee trees) cannot raise them above the poverty line but can only contribute to their reaching that level. Also, the main vehicles for improving the incomes of the coffee and tea farmers under PDCRE are cooperatives, and cooperatives are economic institutions owned by their members, who, in the case of processing and marketing cooperatives, must own enough assets to have surplus production to sell in addition to subsistence crops. Thus, these cooperatives are not for the poorest of rural people. However, the poorest social groups, that is, those who do not have agricultural land, have to a limited extent benefitted from other PDCRE-supported activities through project-created employment. Moreover, because also the poorest people wish and can save (and consequently may qualify for loans), they could benefit further from the projects' support to savings and credit cooperatives (SACCOs), because SACCOs admit  as members anybody who can pay the memberships fee, which is a lower barrier to entry for the poorest as compared to  other financial institutions.

While not directly addressing food security, the project has contributed to its improvement through increased income for smallholders and employment for the poorest sections of rural population. Human capital has improved on several levels as a result of extensive training and advisory work, but it has improved perhaps most remarkably among women, who now occupy from 30 to 60 per cent of committee seats in the PDCRE-supported cooperatives. As for environmental impacts, fertilizers and pesticides are little used in coffee or tea production zones and thus are not considered detrimental to the environment. In contrast, the evaluation mission considered all 10 PDCRE-supported coffee-washing stations and two tea factories to cause more pollution of the environment than was estimated at appraisal.

The overall sustainability of project activities is still uncertain. The coffee cooperatives find it hard to get the funds required to buy all the coffee berries offered. The cooperatives are heavily indebted and rely on the Rwanda Development Bank for long-term and short-term loans. However, because 40 per cent of them are already working at full capacity and are profitable, the evaluation mission considers their future sustainability achievable, especially for coffee where the international prices are now at an 11-year high. The outlook for tea and sericulture cooperatives seems less certain, for both financial and managerial reasons. Also, because the tea cooperatives are quite new, they need time to improve their administrative and financial management techniques, and their productivity is still low (although it is expected to improve once the tea bushes mature). The financial sustainability of sericulture looks problematic, and it is too early to forecast its future results.

Evaluation Criteria

Interim Evaluation Ratings

Project performance








  Overall project performance


Rural poverty impact


  Household income and assets


  Social capital and empowerment


  Food security and agricultural productivity


  Natural resources and the environment


  Institutions and policies


  Overall rural poverty impact


Sustainability and Innovations




  Innovations, replication and scaling up


Performance of partners








Overall project achievement


* Ratings are assigned on a scale of 1 to 6 (6 = highly satisfactory; 5 = satisfactory; 4 = moderately satisfactory; 3 = moderately unsatisfactory; 2 = unsatisfactory; 1 = highly unsatisfactory).



The interim evaluation has focused on the recommendations summarized below:

Potential Follow-on Project

The evaluation mission agrees with the Government that a new project similar to PDCRE is justifiable. The main focus of the follow-on project should be to consolidate the progress made and scale up the lessons learned with particular emphasis on coffee and tea. The cooperatives currently assisted by PDCRE must be able to consolidate their activities and become financially viable. New cooperatives may be added—and would be up and running faster as the project coordination and oversight agencies learn the lessons from PDCRE 1. The evaluation team has the following recommendations for the team that prepares the new project:

Meeting the processing challenges.The next phase should emphasize expanding the capacity to process coffee. When the 15.5 million coffee tree plants that were distributed in the PDCRE areas to cooperative and non-cooperative farmers (paragraphs 44, 90) become mature, they may produce up to 48,000 tons of cherry beans. Because the capacity of PDCRE-supported cooperatives is only 4,600 tons, some 80 to 90 new CWSs of the same size as under PDCRE will be needed to meet the processing requirement. This situation justifies planning more CWSs for the existing cooperatives or expanding the present ones, even if the new project extends outside the current area. However, the "old cooperatives" should rely more and more on bank loans for their investments, possibly with some kind of loan guarantees from external financiers. Also, in the next project a modular approach should be considered for CWS to avoid excessive loan burdens as happened during the present PDCRE with a standard-size of 500 tons CWS design (paragraphs 44, 100).

Capacity and institution building.The next phase should expand the training capacities of central cooperative agencies. Cooperative staffs and committees—as well as other members—will need training, and this should happen through expansion of the training capacities of the central agencies [Rwanda Coffee Cooperative Federation (RCCF), Federation of Tea Growers Cooperatives (FERWACOTHE), Rwanda Cooperative Agency (RCA)] (paragraphs 92, 120-123). Given the relatively limited capacity of these agencies, in the near term, a mixed approach using these agencies as well as NGOs and companies to provide capacity building services may be the most appropriate approach. It would be important to develop common procedures and practices for cooperatives (to have uniform training materials, manuals, accounting systems, and management information systems). Moreover, cooperative audit and control capacities need to be enhanced because private audit firms are not interested in small cooperatives. Because Rwanda has more than 4,200 cooperatives, establishment of a cooperative college should be considered (such a college has operated for instance in Kenya since 1969).

Financial services.The next phase should support savings and credit cooperatives (SACCOs) as a means to facilitate financial services for small farmers.Under PDCRE, support to SACCOs was a positive addition to the project as they can provide a useful service for small farmers and should be further supported.  However, in the context of promoting SACCOs (paragraphs 65 and 68), some individuals in Rwanda have proposed that SACCOs could serve as intermediaries for outside loans to local farmers. In terms of providing credit to cooperatives, BRD should be considered a viable partner as it has demonstrated its willingness to work with PDCRE and has performed satisfactorily. Although, if interested, commercial banks should be given the opportunity to participate.

Development goal. The development goal of the next phase should include an institutional element as institutional sustainability is required. In the current project, the development goal and even some specific objectives were expressed in obscure language, that is, the wording did not permit direct verification of whether the goal and objectives had really been attained (paragraphs 40, 87). For the follow-on project the mission suggests that the goal and objectives be made more specific and measurable, and that the main goal would in part be institutional and include an exit strategy rather than only focusing on farmer incomes or produce price

Cooperatives and their Management

In the next phase strengthening cooperatives and their management should be a priority. To do so a detailed analysis of the challenges of sustainability should be undertaken. To address the challenges that have been highlighted in the report and summarized in paragraphs 168-169, cooperative members and committee members need training and education, and it is equally important to improve the control and monitoring functions. To find out where improvements are most urgent, a detailed analysis of management's shortcomings and of gaps in the skills and competencies among the members, committee members and staff is needed.

Studies or Reviews

In addition to the need for analysis of the cooperative management problems just mentioned, the evaluation mission recommends a number of other studies. During the project period, PDCRE has organized carrying out a large number of studies and reviews on specific topics. They are listed in appendix 3(b). In addition, specialists hired by UNOPS and IFAD have prepared numerous reports on project-related topics during the mid-term review and supervision missions. However, some of these are out of date or the evaluation mission was concerned about their validity in the current situation. The evaluation mission recommends the following:

Environment: A study on the environmental effects of the coffee-washing stations and tea factories (paragraphs 118);

Cash crops: An updated study on "other cash crops" because the earlier one is 6 to 7 years old (paragraph 72) and the economy of sericulture appears uncertain; and

Coffee: A cost-benefit analysis of organic coffee production in Rwanda coffee cooperatives (paragraphs 43, 48). A technical and economic analysis of why parchment coffee processing accounts for more than one-half of the costs at CWSs (paragraph 89). A feasibility study of establishing a hulling factory for cooperatives (as in the original project design) (paragraphs 43, 94, 99, 136).

Public-private Partnership

The next phase of the project should work to ensure that the PPP is pro-poor. The PPP introduced in the tea component offers potential benefit to small farmers. However greater attention and support is needed to ensure that benefits accrue to all parties. The tea cooperatives require advice on the economic and managerial aspects of cooperatives, and on fair practices toward cooperative members under the public-private partnership arrangement (paragraphs 146-147). IFAD should look to learn lessons from other projects with experience with PPPs such as the Vegetable Oil Development Project in Uganda where there are lessons from using a pricing formula involving representation of smallholders with the private company.

Food Security and Cash for Work Programme

In the next phase the project should introduce a "money-for-work program". Land in Rwanda is so scarce, particularly in the Mushubi area, that smallholders could not always afford to allocate any part of their small plots to coffee and tea crops because they needed to grow food (paragraph 114). They and some stakeholders have recently suggested that farmers with the smallest lots get cash loans to carry them over until the new crops produce enough income to allow them to buy food. However, the mission believes that such cash loans could create undesirable dependency, or simply be misused.

Instead, the evaluation recommends introducing a "money-for-work program" into the follow-on project. This will contribute to smallholder's income and improve local conditions and develop local resources, for instance, by financing labour-intensive works on low-quality and stony roads, improving the very poor, unsafe roads (there are no safety rails or even poles on the very steep mountainside feeder road), supporting afforestation and forest maintenance, developing village water schemes.



Rural Financial Intermediation Programme

December 2011

Interim Evaluation


An interim evaluation of the Rural Financial Intermediation Programme (RUFIP) in the Federal Democratic Republic of Ethiopia was conducted in 2009. The main objectives were to: (i) assess the performance and impact of the programme; and (ii) generate a series of findings and recommendations to guide the Government and IFAD in the preparation of a possible second-phase programme.

Despite recent economic growth, Ethiopia remains one of the poorest countries in the world, ranking 169th out of 177 countries on the Human Development Index and 105th out of 108 countries on the Human Poverty Index. At a growth rate of 2.5 per cent, its population has grown to 83.1 million as of 2009 and is overwhelmingly rural. Poverty prevalence declined in 1999/2000-2004/2005, from 44 per cent to 39 per cent at the national level and from 45 per cent to 39 per cent in rural areas. At the time of RUFIP design in 2000-2001, the microfinance sub-sector was fairly nascent with an average lifespan of about three years or less.

During the period from appraisal in 2001 until 2008, the macro economy shifted from deflation to rising inflation. In 2001/2002, the average annual inflation rate stood at -10.6 per cent, whereas it surged to 44.4 per cent during the 2008 calendar year. As a result of effective measures taken by the Government, inflation fell to 2.7 per cent in June 2009. However, during that period, interest rates did not keep pace with inflation, resulting in highly negative real rates.

The programme aimed to enhance access of the rural poor to regular and reliable financial services. The specific objectives were to (i) expand outreach to about 1.5 million rural households through financial deepening, institutional development, and provision of equity and credit funds concomitant with savings mobilization; (ii) develop a community banking framework through the establishment of self-managed rural savings and credit cooperatives (RUSACCOs); and (iii) promote linkages between rural financial institutions and the banking sector. The intervention comprised four components: (a) institutional development: 19 per cent of base costs; (b) improved regulation and supervision of microfinance institutions (MFIs): 2 per cent; (c) equity and credit funds: 78 per cent; and (d) programme coordination and management: 1 per cent.

RUFIP was approved by the Executive Board in December 2001 and declared effective in January 2003. Completion and loan closing dates are 31 March 2010 and 30 September 2010, respectively. Total programme costs were estimated at US$88.73 million, of which US$25.7 million (29 per cent of total cost) was financed by IFAD; US$37.5 million (42 per cent) by the African Development Bank (AfDB); US$20.2 million (23 per cent) by the Development Bank of Ethiopia (DBE) and other participating commercial banks; US$4.5 million (4 per cent) by the Government; and US$0.8 million (1 per cent) by participating MFIs. The International Development Association (IDA, World Bank Group) was the programme's cooperating institution, responsible for loan administration and programme supervision.

Summary of iImplementation results

The programme's main implementation results were in accordance with and, in a number of cases, significantly above the targets established at appraisal. However, issues related to procurement caused delays in training and capacity-building. In line with programme design, the evaluation separately discusses the two rural finance sub-sectors covered by RUFIP, namely, the microfinance and credit cooperatives sub-sectors. It is important to bear in mind that around 90 per cent of total programme resources were allocated to the microfinance sub-sector.


The programme helped to bring about a significant increase in the number of MFIs. As of mid-2009, 26 such institutions were operational (19 of which have benefited from RUFIP assistance) with 2.2 million active clients (147 per cent of the appraisal target and 14.4 per cent of all Ethiopian households).

Financial outreach data on the microfinance sub-sector has also been significant, as exemplified by a 14-fold increase in the value of loans (in United States Dollars) outstanding over the life of the programme and an almost fourfold increase in average loan sizes (again, in United States Dollars). RUFIP loans have financed 11.3 per cent of the outstanding portfolio of the 19 MFIs covered by RUFIP, or 11.2 per cent of the 26 MFIs operational as of mid-2009. The contribution of the RUFIP loan as a source of funding of the loan portfolio varies widely, from 6 to 61 per cent. Concerning the repayment performance, an assessment of the portfolio-at-risk indicates that, while there is considerable variation; two thirds of the MFIs have stayed below the 5 per cent limit stipulated (2006 data).

While the overall savings mobilization by MFIs increased tenfold over the life of the programme, the share has since declined thanks to the influx of other sources of funds, particularly RUFIP and, more recently, bank borrowings. Up to the advent of RUFIP, savings increased as a percentage of loans outstanding, e.g. from 47 per cent at appraisal to 55 per cent as of December 2003. As of December 2008, savings accounted for 34 per cent of the portfolio.

RUFIP support to the microfinance sub-sector helped prepare the ground for commercial bank loans to MFIs. By the end of PY5, eight MFIs under RUFIP had borrowed a total of US$133.1 million from commercial banks. The Government-owned Commercial Bank of Ethiopia (CBE) is the major lender to MFIs, at both preferential interest rates and on collateral conditions. As of 30 June 2008, MFI borrowings from banks accounted for 29.1 per cent of the outstanding portfolio. In line with its Rural Finance Policy of 2000, IFAD's credit line has thus served as a bridging fund, attracting a substantial amount of commercial bank resources on the domestic market.

The programme allocated US$8 million (or 9 per cent of the overall budget) to provide equity for MFIs. Reportedly, MFIs have shown little interest in equity investments of RUFIP funds by DBE, the bank that would have been responsible for channelling RUFIP investments. As a consequence, the funds were finally reallocated to the credit fund component. So far, MFIs have not paid any dividends as this would entail losing their tax-free privileges – a disincentive to potential investors. In addition, foreign banks or other entities are not permitted to make equity investments in MFIs.

The programme has provided support to the Micro Finance Supervision Division (MFSD) of the National Bank of Ethiopia (NBE), which now carries out regular supervisions of MFIs. NBE has also drafted new microfinance legislation, building on its experience and international best practices.

Activities related to MFI institutional development and capacity-building have had a mixed implementation record. Supply of vehicles and computers to implementation partners, support to the Association of Ethiopian Microfinance Institutions (AEMFI), development of training modules, training of sub-branch-level staff and MFI board members, staff-exposure visits and savings mobilization, have all achieved positive implementation results. Other activities, such as diversifying ownership, client education, product development, MFI staff training and improving management information systems, have performed less well, mainly owing to delays in procurement. RUFIP supported a comprehensive training needs assessment, which led to the preparation of detailed training modules. Despite implementation delays, RUFIP has trained well over 3 000 MFI staff with the support of AEMFI, which was able to mobilize alternative funding sources to help carry out the training programmes.

Credit cooperative sub-sector

nstitutional development and capacity-building are the only subcomponents of the financial cooperative sector to which funds have been disbursed. This is because RUSACCOs were unable to meet the RUFIP criteria to access credit funds, as established jointly with stakeholders. Owing to weaknesses in the reporting system, all RUSACCO financial and membership data are unreliable.

Having said that, by the end of PY5, some 2,529 RUSACCOs (113 per cent of the appraisal target) had been established. Total membership reportedly stands at 183,649 (205 per cent of the appraisal target), all of whom are shareholders and savers; the average membership of each RUSACCO is 73. This includes 651 women's RUSACCOs (271 per cent of appraisal target), with 24,096 members (251 per cent of appraisal target); the average size is 37 members, compared with 85 members in all-male and mixed RUSACCOs. 49 per cent of all RUSACCO members are women, thanks to special efforts to include them under RUFIP. Ninety-six per cent of the RUSACCOs are to be found in the four original, most populous, programme areas.

The financial operations of the RUSACCOs are entirely self-financed. As of June 2008, total member savings were reported to stand at US$3.33 million, averaging US$18 per member. Total equity was US$2.99 million. Without adjustment for inflation, total savings were reported as 53 per cent of appraisal estimates; in constant prices of the year of appraisal, they were but a fraction of that amount. Some 44,894 members were reported as borrowers, corresponding to 18 borrowers per RUSACCO and 24 per cent of total membership. Loans outstanding were given as US$2.42 million. Loan amounts were below the actual demand that RUFIP set out to satisfy.

RUSACCOs reacted to the credit crunch by lowering loan sizes and shortening loan periods. These unfavourable loan terms were given as the main reasons for the lack of growth in membership and for drop-outs.

Programme Performance

Relevance. Programme design was consistent with both national policies and IFAD strategies prevailing at the time of design. The overall development objectives set out at design remain highly relevant, given the high demand for rural financial services in areas with almost non-existent access to formal financial institutions. Specific programme objectives have also generally remained relevant – namely, expanding outreach, financial deepening, institutional development, savings mobilization, provision of incremental credit, operational sustainability and enhanced governance. However, the relevance of RUFIP equity investments in MFIs must be questioned, there having been no effective demand. The huge (although unforeseeable) spike in inflation, particularly in 2008, raised concerns as to the relevance of savings promotion and, indeed, debt financing for the sector, although the rapid decline in inflation witnessed in 2009 seems to allay this concern.

Effectiveness. Overall, the programme achieved both its primary objective of promoting access to financial services for the rural poor, and its specific objectives, expanding outreach to well over 1.5 million rural households targeted at appraisal, and promoting linkages between rural financial institutions and the commercial banking sector. It also successfully supported expansion of the credit cooperative sub-sector (the community banking framework) although there are concerns regarding the sustainability of these grass-roots institutions.

Efficiency. In general, the programme achieved or exceeded its planned objectives at similar costs to those estimated at appraisal. It helped build up the efficiency of Ethiopian MFIs by providing low cost-incremental credit, thereby creating economies of scale that allowed the MFIs to expand their markets while lowering unit costs. The single most important factor undermining the efficiency of the MFIs, particularly in 2008, was their failure to adjust lending rates to positive real levels. Overall, the credit cooperative sub-sector is inefficient, as the programme's emphasis on institutional expansion was not matched by a sustainable cost structure. Under conditions of inflation without interest rate adjustment, the value of share capital and members' savings decline every year. Without access to external sources of refinancing, loans are so small that members cannot compensate the loss of value of their savings from the gains of their credit-financed investments. Ultimately, therefore, this renders the cooperatives inefficient. This situation also reflects on RUFIP, which placed emphasis on expansion but without activities aimed at financial system development and institution-building.

Rural poverty impact

In general, measuring the impact of microfinance presents a number of methodological challenges and, in the context of this intervention, it has not been possible to directly attribute impact to RUFIP. The programme has undoubtedly made both a direct and indirect contribution to expanding the MFI sub-sector; but it is not possible to quantify the extent. As far as the credit cooperatives sub-sector is concerned, attributing impact to RUFIP is even more difficult. On the one hand, RUFIP support to the Federal Cooperative Agency has been a crucial factor in stimulating the tremendous increase in the number of RUSACCOs in anticipation of RUFIP support; on the other hand, the RUSACCOs had no access to the RUFIP credit line and only limited, greatly delayed, capacity-building support. In view of difficulties in developing the credit cooperative sub-sector, the overall rating for impact on rural poverty is considered only moderately satisfactory.

Sustainability and innovation

Sustainability. RUFIP design incorporated a clear approach to achieving post-programme sustainability. Ethiopian MFIs have achieved operational self sufficiency ratios that are among the highest in Africa and, thanks to support provided through RUFIP, commercial banks have begun providing loans to MFIs. The potential for resource mobilization this indicates, along with the huge unmet demand for rural financial services and the strong commitment demonstrated by the Government to continue providing support, bodes well for sustainability of the microfinance industry in Ethiopia. That said, the viability and sustainability of established RUSACCOs gives rise to concern. Rapid expansion has not been accompanied by adequate support in financial terms, as the programme rightly refrained from making funds available to cooperatives that did not meet the requisite performance criteria.

Innovation, replication and scaling up. There is limited evidence of innovation, adoption of new agricultural technologies or replication, despite explicit references in programme design to the need to develop innovative loan products more attuned to the needs of the rural poor. The cofinancing arrangement with AfDB made it possible to expand the programme's outreach throughout the country, thereby helping RUFIP to become the rural finance programme in Ethiopia.

Performance of partners

With the exception of AfDB, the performance of partners involved in RUFIP has been assessed as moderately satisfactory or better. IFAD was commended for its design process, staff continuity and flexible approach during implementation, and continuous positive follow-up. However, it could have done more with regard to addressing management constraints and issues related to the credit cooperative sub-sector. The Government and its agencies contributed to the successful design and implementation of RUFIP, supporting the programme with an increasingly robust microfinance policy framework (also thanks to the programme), and allowing implementing agencies to work autonomously and without interference. However, the programme coordination and management unit (PCMU) was understaffed and programme coordination met with difficulties throughout the entire implementation period. The regulatory framework necessary to ensure successful implementation of the cooperative credit component is still to be developed. IDA/World Bank, the cooperating institution for RUFIP, fielded regular supervision missions and addressed most fiduciary issues in a rapid and effective manner. While AfDB was the main cofinancier of the programme and its significant financial contribution made it possible to expand outreach throughout the country, strong staff discontinuity and a rather inflexible approach to procurement regulations presented a real constraint on implementation.


In line with the assessment, the programme's overall achievements have been rated as satisfactory. The ratings in relation to each criterion and for partners' performance are presented below.

Evaluation Ratings

Evaluation Criteria


Evaluation Ratingsa


Core performance criteria




Relevance 5
Effectiveness 5
Efficiency 4
Programme performance 4.6

Rural poverty impact  
Household income and assets 4
Human and social capital, and empowerment 4
Food security and agricultural productivity 3
Natural resources and the environment *n.a.
Institutions and policies 4
Overall poverty impact 4

Other performance criteria  
Sustainability 5
Innovation, replication and scaling up 4

Overall programme achievement 5

Performance of partners  
AfDB 3
IDA/World Bank 5
Government 4

  a/ Ratings are assigned on a scale of 1 to 6 (6=very satisfactory;
5 = satisfactory; 4 = moderately satisfactory; 3 = moderately
unsatisfactory; 2 = unsatisfactory; 1 = very unsatisfactory)
*    Not applicable

The IFAD-funded intervention addressed the two main sub-sectors of rural finance in Ethiopia: (i) the regulated microfinance sub-sector, which was well advanced and part of the formal financial sector; and (ii) the credit cooperative sub-sector, which was still in its infancy and not regulated by a financial authority. In taking account of these factors, the design of RUFIP focused on the different needs of the two sub-sectors, with strong emphasis on provision of incremental resources for on-lending through MFIs and targeted institutional support on the one hand (around 90 per cent of total resources); and, on the other hand, greater focus on capacity-building for the credit cooperative sub-sector. Given the vastly different stages of development of the two sub-sectors at start-up, the programme had differing levels of success in achieving its objectives in support of MFIs and credit cooperatives.

The microfinance sub-sector has greatly benefited from RUFIP support, particularly through the access that a small number of strong MFIs had to IFAD and AfDB credit lines and to RUFIP technical assistance, which allowed them to substantially expand their outreach. This was complemented by assistance provided to NBE and the capacity-building support made available, with RUFIP assistance, to the entire MFI network through AEMFI. The clearest indication of the end result is the provision of commercial credit lines through a growing number of commercial banks, indicating the increasing maturity of the sector. While this is a major accomplishment, it remains circumscribed to a limited number of cases. RUFIP has been successful in achieving its objectives with regard to the microfinance sub-sector, with a real and sustainable impact on rural poverty and the development of institutions that are now beginning to consider raising capital on commercial terms (the ultimate sustainability litmus test for a financial institution). Although the performance of RUFIP in support of the growing microfinance sub-sector has been very positive, more remains to be done if continued expansion is to be sustained. Rural Ethiopia, which continues to be poorly served by commercial financial institutions, has a huge pent-up demand for access to rural financial services. At present, one of the most pressing issues is to provide access to financial resources in order to stimulate expansion and meet demand.

In contrast, the emerging credit cooperative sub-sector has benefited from mobilizing government resources under the institutional framework provided by RUFIP for establishing large numbers of credit cooperatives. The emerging institutional strength of these cooperatives is to be found in three areas: presence at the community level; character as self-governed and self-financed self-help organizations; and individual lending technology. The cooperatives operate at low cost, but with inadequate margins. With RUFIP assistance, their number has expanded rapidly; yet their viability has been affected by having to operate in a regulatory void. There is real concern that the widespread and very rapid expansion of the RUSACCOs may not be sustainable. Designing a credit cooperative structure with a fully functional operating system and an arrangement for appropriate regulation and supervision by a financial authority should have come first.

In view of the foregoing, and based on the evaluation findings, it is clear that RUFIP may be considered to have been successful, and has therefore been rated as satisfactory. This rating has been possible thanks to the programme's strong overall performance, which balances the issues identified in this analysis. The programme is relevant and has been effective in achieving its results (especially with regard to microfinance activities). It has had a positive impact on rural poverty in a number of domains.


Based on the evaluative evidence and analysis presented in this report, there is a strong case for developing a second phase of RUFIP. The following recommendations on strategic and operational issues should be carefully considered in the design and implementation of an eventual second phase of RUFIP.

Separate sectoral focus on MFIs and credit cooperatives for future IFAD support in Ethiopia. The performance of RUFIP has been mixed: achievements in the microfinance sub-sector have been significant, whereas implementation progress in activities related to RUSACCOs has been limited. IOE understands that both IFAD and the Government are strongly committed to continuing to support the rural finance sector. In the light of this, it is the view of IOE that careful consideration should be given to the further development of the MFI and RUSACCO sub-sectors.

While both sub-sectors have great potential (albeit with very different strategic requirements) for a possible second phase of RUFIP, IFAD should consider supporting the two sub-sectors independently.

Enhancing savings mobilization in the microfinance sub-sector. Given the vast underserved rural market in Ethiopia (estimated at about 85 per cent), a major constraint faced by MFIs in broadening and deepening their outreach is the shortage of loanable funds. Savings represent an important source of funds and provide the basis for institutional self-reliance. Since their inception, Ethiopian MFIs have mobilized increasing amounts of savings, yet are still far from exhausting this potential source of funds. Several different strategies will need to be pursued, particularly in terms of expanding outreach: (i) developing new savings deposit products and expanding outreach in savings mobilization efforts among rural households; and (ii) ensuring that attractive deposit rates are offered in order to mobilize deposits while MFIs continue to remain operationally-sustainable institutions.

Engage in policy dialogue with the Government to facilitate the mobilization of funding for MFIs. There is a huge unmet demand for microfinance in rural Ethiopia. While RUFIP has provided access to funding, continuing to expand the outreach of MFIs calls for mobilizing additional resources, either through continued borrowing from RUFIP-type initiatives or through commercial banks. Over the longer term, if the MFI sub-sector is to continue to expand to meet unmet demand for rural financial services, in the follow-up phase RUFIP should encourage commercial bank lending to MFIs.

This would entail entering into policy dialogue with the Ministry of Finance and Economic Development, NBE and commercial banks on several issues, and exploring the potential, inter alia, for: (i) creating an MFI apex institution in the medium to long term in order to: mobilize financial resources from domestic and international resources; wholesale such resources to MFIs on a competitive basis; and supervise MFIs on behalf of NBE in accordance with international best practices; (ii) assisting in the establishment of a credit guarantee fund that would make it possible for MFIs to borrow on commercial terms without significant collateral requirements; and (iii) studying collateral-substitution mechanisms, including independent ratings of MFIs as currently implemented in other countries.

Develop an appropriate regulatory and supervisory system for RUSACCOs. Should RUFIP continue to provide support, under a second phase, for further developing the credit cooperative network, this would require a system of appropriate regulation and supervision by a financial authority, a fully functional operating and reporting system and the complementary institutional capacity-building functions that this would require. The second-phase programme could build on the significant international experience acquired, by forging a partnership with an institution that has a recognized track record in credit cooperative system development. This would make it possible to leverage international technical assistance in credit cooperative system development (recognized centres of excellence in this field include, inter alia, the German Cooperative and Raiffeisen Confederation, World Council of Credit Unions and Rabobank) to complement IFAD financial assistance. The exact course of action would be determined by the Government in consultation with the international technical assistance partner, stakeholders in the credit cooperative sub-sector, and IFAD.



Rural Income Diversification Project in Tuyen Quang Province

Viet Nam  
December 2011

Project Performance Assessment 

During the implementation of the Rural Income Diversification Project in Tuyen Quang Province (RIDP), in 2002–2010, Viet Nam was still undergoing the fundamental transition from a centrally-planned to a market-based economy.

After more than two decades of continuous rapid economic growth, Viet Nam was reclassified by the World Bank as a lower-middle-income economy in 2009. In tandem with economic restructuring, the Government's administrative reform devolved substantial authority for socio-economic development to subnational governments. While most parts of the country shared in this progress, the mountainous rural areas with large ethnic minority populations, including the Tuyen Quang Province, generally lagged behind.

RIDP's overall objective was to improve the socio-economic status of 49,000 poor households living in upland areas, especially ethnic minorities and women. The critical change the project intended to introduce was the enhanced linkage between small farms and markets, as well as support to crop and livestock production, building access roads to markets and providing vocational training for rural youth. The project also endeavoured to promote microenterprises with a view to moving local production up the value chain.

The design of RIDP represented a step forward in IFAD's country strategy, inasmuch as it moved away from focusing on subsistence-level agricultural production to engaging in market-oriented production and enterprise development. The present project performance assessment (PPA) describes RIDP's remarkable achievements in terms of upgrading government services for market-oriented agriculture and rural development, and advancing smallholder farmers' progress with regard to integrating with markets and eventually moving out of poverty. The PPA also acknowledges the tremendous challenges faced by the project in connecting smallholders to markets and generating employment opportunities. These challenges were the consequence of constraints – encountered during the early stages of the country's transformation into a market economy – such as lack of familiarity with market functioning and value chains, and limited private-sector investment in the province.

Project performance was assessed as satisfactory, a composite judgment based on satisfactory ratings for relevance and effectiveness and a moderately satisfactory rating for efficiency. With respect to relevance, the project design built on experience with a previous project in the province and took new steps to support market integration, which corresponded to the rising demand of project beneficiaries to address problems of limited non-farm and business market opportunities. The project also achieved synergy with the national rural poverty reduction programmes, because the approaches used in RIDP were included in the implementation guidelines for the National Target Programme for Socio-economic Development for Ethnic Minorities and Mountainous Areas. Regarding effectiveness, the project fully or largely achieved the objectives of: increasing capacity related to the decision-making process through decentralization and participation; enhancing food security and diversifying rural income opportunities through promotion of market-oriented farm and livestock production, supporting savings and credit, and building access roads to markets; improving sustainable use of forest resources by facilitating the issuance of land-use certificates to both wives and husbands; and providing support on forest land through a balance of production and protection. However, RIDP made no significant progress in microenterprise development, which evidences the challenges faced in supporting the business development services of provincial and local governments, and engaging with the private sector. RIDP's performance in terms of efficiency was somewhat less impressive in that the implementation period was extended by one year. Moreover, comparisons of the effectiveness lag and average costs per beneficiary put RIDP below the average of the country portfolio, despite experience gained with the previous project in Tuyen Quang Province.

The project's rural poverty reduction impact is rated as satisfactory based on positive performance in each impact domain.  RIDP's contribution to social and human capital and empowerment has been particularly successful in that it helped to establish institutions and build capacity for the villagers, including the decentralized commune development boards, village development boards, grass-roots level village groups, business connections with banks, increased access to markets, and schools and kindergartens. Meetings of these village groups, in particular the savings and credit groups, together with the village development boards, have gradually evolved into informal forums for villagers to share concerns and formulate requests to be discussed with government agencies.

Given in particular the provincial government's efforts to replicate the decentralization approach piloted by RIDP in small-scale infrastructure and agricultural services, sustainability is rated as satisfactory, as are innovation and scaling up. A major innovative feature of RIDP was its piloting of full decentralization at the commune level and the strong possibility that exists for replicating its training approach for rural youth. The project was very successful in meeting national targets for women's advancement and gender equality and for the empowerment of ethnic minority women for poverty reduction, which is rated as highly satisfactory.

Looking forward, two important lessons should be considered when designing future projects for Viet Nam. One lesson relates to enhancing market integration through more active involvement with the private sector and investments in building physical markets. RIDP fell short in connecting farmers to markets, particularly in building physical markets in the communes, providing marketing information support and involving the private sector in creating market opportunities, though developing partnership with the private sector was not part of the project design. As concluded by the recent evaluation of IFAD's Private-Sector Development and Partnership Strategy, in future projects, IFAD-supported projects will need to join up more effectively with the private sector to create both business connections and marketing opportunities, and to ensure a sustainable local market mechanism with the active engagement of private market participants. The second lesson has to do with the need to explore a holistic approach to the development of ethnic minorities in upland areas. In particular, it will be important to avoid treating ethnic minorities as monolithic, but to adapt programmes to the socio-cultural specifics of individual ethnic minority groups. Above all, to promote the development of these areas, the approach will need to encompass education and health services, and increased computer literacy.

Overall, the PPA found that RIDP responded effectively to the country's economic and social evolution and that the shift to support for market-oriented production and enterprise development reflected both the needs of the rural poor and IFAD's comparative advantage. In the context of the country's rapidly evolving economic development, RIDP achieved the objective of improving the socio-economic status of poor households living in upland areas. What underlay this success, among other things, was the Government's firm commitment to reducing rural poverty and advancing the market-based economy. The Government appreciated IFAD for its promotion of a participatory rural development approach and supports the project's efforts to promoting decentralization and participation. A decisive factor in the success of RIDP was that the Tuyen Quang provincial government provided strong political and financial support. Starting from 2011 a new IFAD-funded project, focusing on market integration, will cover Tuyen Quang and two other provinces. The strong government commitment bodes well for the sustainability of the key pillars built by RIDP: decentralization and market–oriented production.



Sustainable Development Project for Agrarian Reform Settlemen North-East (Dom Hélder Câmara Project)

December 2011


Objectives. In line with the decision of the Executive Board of the International Fund for Agricultural Development (IFAD) at its 98th session on 15 December 2009, the IFAD Office of Evaluation (IOE) undertook an interim evaluation of the IFAD-financed Sustainable Development Project for the Agrarian Reform Settlements in the Semi-Arid North-East – the Dom Hélder Câmara Project (DHCP) – in Brazil. The objectives of this evaluation were: (i) to assess the results and impact of the project; and (ii) to generate findings and recommendations that will inform a possible next phase of the project.

Project background. DHCP was conceived in answer to the lack of technical assistance and opportunities for social development and income generation for newly settled farmers and communities in the semi-arid North-East under the agrarian reform process. The initial project cost was US$ 93.0 million, including an IFAD loan of US$25.0 million. No cofinancers were included at project design, but the project management unit (PMU) was able to mobilize further funds from international and domestic partners. The objectives of the project were to develop a culture of co-existence with the semi-arid conditions of Brazil's North-East region and to ensure that families living in agrarian reform settlements and neighbouring rural communities could lead dignified lives and become models for sustainable human development. The target group consisted of 15,000 families in federal agrarian reform settlements and neighbouring communities in selected territories in the states of Ceará, Pernambuco, Paraíba, Rio Grande do Norte, Sergipe and Piauí.

DHCP distinguished itself by institutionalizing bottom-up participation in planning through its territorial committees, which consist of representatives of communities, trade unions, technical service providers, municipal councils and DHCP; they take decisions each year on proposals to be submitted for financing. In particular, DHCP established a self-regulating working relationship of three major actors: (i) beneficiaries and their organizations; (ii) social mobilizers – rural trade unions; and (iii) providers of technical assistance, mainly non-governmental organizations (NGOs). DHCP invented a compelling and easily communicable concept – Conviver com o semi-árido – to promote the idea that it is possible for family farmers to establish a sustainable relationship with the environment of the semi-arid North-East and at the same time develop their technical and entrepreneurial skills.

The loan to the Government for financing DHCP was approved by the IFAD Executive Board in December 1998. The project was under the direct supervision of IFAD. According to the original loan agreement, the project was expected to close in June 2007, but after approval of two extensions the actual loan closing date was December 2010.

Implementation results

The introductory phase of DHCP was challenging. DHCP was required to establish partnerships with state authorities, NGOs and civil society organizations for implementation of the proposed approach. The innovative nature of the concept and resistance by some potential partners affected the uptake of the strategy. The years 2003–2005 saw the conceptual maturation of the DHCP strategy in line with the commitment by the Government to support initiatives to reduce rural poverty and address the needs of family farmers. The years after 2005 saw the full application of DHCP strategy for the benefit of the target group: it introduced new activities in response to new demands from the Government and private actors, and devoted greater attention to the search for international partners interested in supporting and cofinancing activities in line with DHCP principles.

Organization for social development. DHCP supported 346 associations of beneficiaries. Social organizations trained by the project – mainly trade unions – had an important role in this component. The project trained a network of 113 social mobilizers, who became responsible for motivating community members to participate in project activities, providing information about opportunities available under government programmes, helping to organize initiatives for interest groups, promoting linkages with technical assistance providers and supervising activities to ensure correct use of DHCP financial resources.

Development of production and commercialization. The project contracted 65 NGOs to deliver technical assistance, extension and advisory services, and involved them in capacity-building initiatives in a range of technical areas. DHCP organized 372 demonstration units for agricultural capacity-building, and financed 511 production and social initiatives submitted by beneficiaries' associations under the Fundo de Investimento para Projetos Sociais e Produtivos (FISP). The proposals for demonstration units and FISP were formulated by beneficiaries' associations and reviewed by the territorial committees. If approved, the funds were transferred to beneficiaries' associations for the purchase of inputs and implementation of activities. DHCP helped family farms to create opportunities for access to markets through two main sales channels: (i) the institutional markets that constitute the Government's food-acquisition programme; and (ii) the creation or expansion of 36 agro-ecological markets.

Financial services development. By training professionals in NGOs and credit cooperatives, DHCP addressed a major bottleneck in the delivery system for PRONAF loans – lack of qualified personnel to help clients to formulate acceptable credit proposals. The Banco do Nordeste disbursed R$43.0 million (US$25.0 million) in 9,780 credit operations promoted by DHCP, but this was less than the US$40.0 million allocated in project design. The main reason for this was indebtedness among DHCP target beneficiaries resulting from previous participation in credit programmes. The DHCP facilitated the provision of bottom-up financial services by supporting the enhancement of five Cooperativa de Crédito Rural e Economia Solidária (ECOSOL).

Education and training. DHCP included various initiatives for capacity-building for agricultural families aimed at enhancing understanding of the environment and improving living conditions. A range of context-related educational activities for children, young leaders and professionals, teachers, farmers and adults were undertaken. DHCP used an innovative method for adult literacy activities that featured results-based incentives to teachers. Context-specific training was also provided for quilombola communities. Under this component, DHCP financed the programme Escola Familia Agrícola, which applied the alternancia pedagógica (half classroom, half applied learning) method. Technical training of young men and women was conducted with a view to facilitating their employment in social organizations.

Gender, age and ethnicity. DHCP mainstreamed gender, age and ethnicity issues as cross-cutting matters in all its components, including demonstration units, FISP and credit schemes. The main objectives were to promote the participation of men and women of different ages, increase the role of young people and promote the development of quilombola communities. With regard to gender an important action was the campaign for women's identity documents, which involved 14,257 women that was later scaled up across Brazil by the Ministry of Agrarian Development.

The Sertão Project. The Sustainable Land Management in the Semi-Arid Sertão Project is one of 32 projects financed by the Global Environment Facility (GEF) in Brazil.The project has a budget of US$15.5 million, of which US$5.8 million is provided by GEF through a grant and US$10.0 million through the Government of Brazil. The project builds on the strategy adopted by DHCP, to which it added a cross-cutting environmental dimension aimed at generating a model for tackling the causes and negative impacts of land degradation on the caatinga ecosystem through sustainable land use. The project finances a range of activities involvingexperimental learning, environmental incentives, the introduction of environmental education in schools, biological production methods and the monitoring of environmental effects in targeted territories.

The Elo Project. This project was financed by the Syngenta Foundation with the objective of creating employment opportunities in rural areas through access to appropriate production technologies, support for agro-processing, access to markets and certification of products. The project promoted the establishment of 19 processing facilities for a variety of market products such as honey and cashew nuts, helped to introduce eight product brands and facilitated the installation of ten agro-ecological market places.

Project performance


DHCP was aligned with the IFAD country strategy, but it remains the only IFAD-financed project whose loan is administered at the federal level. This contrasts with the 2008 results-based country strategic opportunities programme (RB-COSOP), which favours state-based administration of IFAD loans. DHCP went beyond simple alignment with government policies in that it saw itself as a facilitator for a number of public policies focusing on poor farming families. DHCP succeeded in working with different segments of society in a differentiated manner. It adopted a pragmatic approach to the empowerment of rural women by identifying their needs and gathering them in interest groups focused on production or income-generating activities. The correct sequencing of activities contributed to the relevance of the project: DHCP initially targeted the immediate development of human capital and living standards; the succeeding work on developing production aimed to increase food security and gradually promote participation in markets. The water infrastructure financed by DHCP also addressed a major need among the rural poor.

Some of the difficulties faced during implementation can be related to specific features of project design: the inclusion of six states, although justifiable in view of project objectives, increased the complexity of implementation, supervision and monitoring. The administration of the DHCP loan at the federal level, however, largely freed DHCP from bureaucratic restrictions and allowed it to engage in a range of partnerships and to experiment with new mechanisms for supporting family farmers. The negative aspect was that the strategic orientation from the federal government level was not strong, and at times the implementation of DHCP activities was delayed by insufficient and delayed allocation of counterpart funds.


The DHCP was characterized by satisfactory performance in terms of effectiveness. The project had positive effects on the capacity of family farmers to organize themselves into autonomous associations. Before the project, many beneficiaries' associations existed only on paper and were not perceived as an instrument for empowerment or access to the opportunities available under government development policies. DHCP invented a compelling and easily communicable concept – Conviver com o semi-árido – to promote the idea that it is possible for family farmers to establish a sustainable relationship with the environment of the semi-arid North-East and at the same time develop their business skills. Another great merit of DHCP was its contribution to easing one of the main constraints to agricultural development in the semi-arid North-East – access to water. In many communities, however, water continues to be scarce: the management of limited water resources should be improved.

The adult literacy campaigns produced good results as a consequence of an innovative learning method inspired by one of the NGO partners that provided incentives for teachers to deliver results. Although project actions for promoting education were effective at the individual level, they have not yet generated changes in official school curricula. Significant progress was made in terms of promoting the idea of contextualized education. Leadership training for young women and men led to employment opportunities and improved the management of associations and rural institutions. The project also attempted to promote market-oriented, bottom-up financial services suitable for the rural poor. Given the objectives of the project, however, a major knowledge-sharing initiative would be required to promote DHCP as a model for future development policies.


DHCP experienced a 24-month delay in becoming effective and required extension by three and a half years to compensate for the late start and the initial disbursement delays. Such prolonged duration inevitably brought about an increase in IFAD and government expenditure on management and supervision. The operating cost of DHCP was primarily a result of the wide geographical coverage established in its design, but this was essential to achieve the objective of applying the proposed model in a range of contexts. The expansion of DHCP into other territories toward the end of the project did not contribute to efficiency.

The resources available were efficiently administered thanks to the effective application of a self-steering system in which social mobilizers, grassroots associations and technical assistance providers supervised each other to ensure optimal use of available resources. With regard to the cost of the technical assistance model piloted by DHCP, the average cost per family targeted was in line with national standards, but the services offered by DHCP were broader and more effective in generating results.

Impact on rural poverty

The impact of the project on rural poverty was satisfactory. Most significantly, the project had a strong impact on empowerment and self-esteem among the target groups, including women and rural young people. This resulted from factors such as direct management of financial resources for development activities and increased participation in local markets and decision-making processes. With regard to women, DHCP enabled an extension of women's social functions by promoting their participation in productive and income-generating activities, in combination with activities to promote their education and citizenship rights. DHCP also targeted young people with a view to offering them prospects for building their future in the rural North-East.

The evaluation found evidence of increased agricultural productivity and diversification of farm production in the targeted territories.

Improved access to water was a major driver of these results. DHCP promoted the participation of agrarian reform beneficiaries and family farmers in local markets with positive consequences on income and self-esteem. The partnership with Syngenta Foundation and the ELO project improved the market orientation of DHCP and favoured the establishment of agro-processing units and agro-ecological fairs. DHCP also partnered with the government food acquisition programme, which constituted a secure source of income for family farmers. Evaluation data show that after the project DHCP beneficiaries increased their incomes to four times the average real income before the project. DHCP contributed significantly to these results, because a major share of the increase derives from the income-generating activities that it supported. There is also evidence of increased household and productive assets.

Positive results were achieved in terms of promoting environmentally friendly technologies and inputs. The principle of conviver com o semi-árido was an essential element of DHCP human, social and economic development strategies. The project nurtured in family farmers a new way of thinking: considering the environment and natural resources as partners for long-term development that require care and comprehension. The partnership with GEF helped to increase the impact of DHCP on the use of natural resources. In terms of impact on policy and institutional development, the project helped to enhance the capabilities of rural institutions such as NGOs and rural trade unions and participation by the poor in policy-making processes.


The social and economic effects of DHCP at the family farm level have a good chance of being sustained. DHCP actions were oriented towards a production system adapted to the capabilities of family farmers and targeted products in high demand in local markets. At the same time, DHCP fostered a mutually reinforcing linkage between environmental and economic sustainability. The project also proved that family farmers have good business prospects if they are provided with the necessary skills, information and capabilities. Solidarity principles in local markets and subsidized purchases from state companies currently protect the competitiveness of family farmers and favour the gradual development of their production and marketing skills. A necessary condition for continuation of the benefits, however, would be further consolidation of the production capacities of family farmers, upgrading of the quality of farm produce and integration with other markets including small and medium-scale agribusinesses companies operating in targeted territories.

DHCP adopted a timeline for ensuring sustainable results that went beyond the planned lifetime of the project. In 2006 new areas and territories were included, even though in these areas sustainable changes could not be generated before the closing date. The lack of an explicit strategy of disengagement inevitably affected the assessment of project sustainability. Indeed, the strategy of DHCP was to create the conditions for a second phase of the project that would lead to sustainability. This was, however, a risky strategy because an unexpected political change could halt the process.


The design of the project was characterized by various innovations that were successfully applied: these included the adoption of a territorial development strategy and a multi-dimensional approach to poverty reduction, and involvement of a wider range of partners such as social organizations and rural trade unions. None of these constitutes an innovation in absolute terms, but the combination of innovations and their application to agrarian reform beneficiaries and communities in the North-East region clearly distinguishes DHCP as an innovative programme.

This evaluation identified two other important innovations: (i) the clear differentiation between the roles of social mobilizers and technical assistance providers, which fostered specialization and the capacity to reach the rural poor; and (ii) the concept of the project as an instrument to enable the rural poor to access opportunities available under government development policies. The evaluation also acknowledged various small-scale innovations applied at the local and community levels through the partnerships with NGOs. In this case, DHCP acted as an instrument for scaling up small-scale innovations.

With regard to replication and scaling up, DHCP became an example for other development project in the North-East and was used as a reference for the design of a territorial development policy in 2003.

Evidence is available of initiatives implemented by DHCP (such as the campaign for providing women with identity documents) that have been scaled up and replicated in other parts of Brazil. DHCP approach can be replicated and scaled up in other poor semi-arid areas of Brazil or in other countries, but this requires further evaluation and adaptation to the new contexts. A strong social entrepreneurship function with sufficient means to combine different actors and public policies would be required, particularly in territories with weak institutional environments.

Performance of partners

All DHCP partners performed satisfactorily. The evaluation provides a positive assessment of IFAD's performance in direct supervision: IFAD was a responsive partner in terms of clarifying aspects of project design and facilitating the adaptation of project approaches to the changing development context. Thanks to the partnership with IFAD, DHCP benefited from the status of international project, which gave it significant space for experimentation and innovation. IFAD also responded promptly when supervision requirements increased.

The quality of technical assistance provided by IFAD had a modest impact on implementation performance.

The Government of Brazil played an important role by providing a favourable economic and policy context for rural poverty reduction.

Government partners complied with major loan covenants, but allocation of counterpart funds delayed implementation early in the life of the project. The performance of the PMU contributed significantly to DHCP achievements: the evaluation recognized in particular the capacity of the PMU to mobilize domestic and international resources and to establish partnerships with a range of stakeholders. The PMU also ensured that financial management and accounting were sound.


The evaluation provided a positive appreciation of DHCP performance and impact. The main reasons for positive performance were:

  • The favourable political and economic context in which the project was implemented and the Government's commitment to reducing poverty and inequality.
  • The organization of DHCP, which enabled a decentralized working modality that increased operational costs but freed the PMU from political and bureaucratic constraints.
  • The considerable capacity of IFAD and the Government to adapt to new situations and their flexibility in modifying the initial preferences and strategies as required.
  • The outstanding performance of the PMU, which was a major factor in the success of DHCP, especially its capacity to establish fruitful partnerships with a range of stakeholders and to mobilize additional financial resources at the domestic and international levels; and
  • The correct sequencing of activities, whereby early actions aimed to address major constraints and enabled the project to gain credibility among beneficiaries and institutional partners.

DHCP Ratings*

Core performance criteria








Project performance




Household income and assets


Human, social capital and empowerment


Food security, agricultural productivity


Natural resources and the environment


Institutions and policies


Rural poverty impact


Other performance criteria




Innovation, replication and scaling up


Overall project achievement


Performance of partners




Government of Brazil






* *  Ratings are assigned on a scale of 1 to 6 (6 = very satisfactory; 5 = satisfactory; 4 = moderately satisfactory; 3 = moderately unsatisfactory; 2 = unsatisfactory;1 = very unsatisfactory).



In view of the positive achievements of DHCP, this evaluation recommends to IFAD and the Government of Brazil the financing of a second phase of the project. The evaluation recommends IFAD and the Government of Brazil to take note of the main lessons learned, especially with regard to geographical coverage, the strategy for sustainability and the emphasis on knowledge sharing.

Institutional set-up. The RB-COSOP prepared by IFAD in close consultation with the Government of Brazil in 2008 establishes that "the state governments will be the partners of preference to carry out investment projects" and that "new loans will be agreed between IFAD and the state governments with the guarantee of the Federal Government". Considering the positive results of the DHCP and being this a multi-state project with IFAD loan managed at federal level, a second phase of the project would require IFAD and the Government of Brazil to reach a clear agreement on the institutional organization of DHCP-II and the level of administration of project loan. This would include a commitment from the Government of Brazil to carry out, jointly with IFAD, the project design and the procedures for negotiations and signature of the loan agreement. In the new project, opportunities to reduce administrative and management costs by making use of decentralized structures should be identified.

Likewise, in line with the rationale of the RB-COSOP, opportunities for cooperation and involvement of state-level governments should be included in order to maximise the potential influence of the DHCP-II at state-level.

Policy linkages. Define the links between DHCP-II and public policies at the federal, state and municipal levels to clarify existing and possible further connections for more effective channelling of development policies to the family farming system.

Knowledge generation and dissemination. Incorporate in project design a strategy for knowledge generation with a view to increasing the knowledge captured from experience. This requires a results-oriented M&E system that will enable the project to measure the progress in implementing the proposed approach and the results achieved at various levels (gender, ethnicity, age, households and institutions). The new phase should incorporate instruments for extracting information about the DHCP experience with a view to disseminating knowledge in national and international fora. In this context, IFAD should increase and facilitate opportunities to transfer DHCP experience at the regional level and in forthcoming initiatives for South-South cooperation.

Support for rural income generation. The project should include strategies for income generation through agricultural and non-agricultural activities. With regard to agricultural activities, support should be provided for upgrading products with high value-added and facilitating linkages of family farmers with value chain and markets. These activities should be implemented in line with the principle of environmental conservation that was a distinguishing feature of DHCP. The project should also identify instruments and strategies for the expansion of non-farm employment opportunities, especially for young people. In both contexts, the project should continue its support to initiatives aimed at facilitating access of beneficiaries to bottom-up financial and non-financial business development services.

Managing for sustainability. Define at the outset the strategy for engagement with settlements and communities, and its duration.

This includes the type and length of support and the indicators triggering the termination of project support – the exit strategy. The design should specify the institutional features and conditions expected at the time of project completion to ensure the continuation of benefits after the end of project financing.

Maximize synergies with the IFAD country programme. Where applicable, look for complementarities among DHCP actions and experience with IFAD programmes operating in the same states and territories.



LANGUAGES: English, Portuguese