South Western Region Small Farmers Project - Phase II

Dominican Republic  
December 2011

Completion evaluation

Introduction

Evaluation process and objectives. In 2008, the Executive Board of the International Fund for Agricultural Development (IFAD) requested the Independent Office of Evaluation of IFAD (IOE) to undertake the final evaluation of Phase II of the South Western Region Small Farmers Project (PROPESUR) in the Dominican Republic. This evaluation, which was conducted between July and December 2009, focuses on: (i) assessing the performance and impact of PROPESUR, and (ii) identifying lessons to be learned and recommendations that can be used to improve the design and implementation of similar development projects in the country. The evaluation report also seeks to provide inputs for the new IFAD countrystrategic opportunitiesprogramme (COSOP) for the Dominican Republic.

Methodology. The evaluation methodology entailed both a review of the existing literature and work on the ground in the Dominican Republic. Two missions (a preparatory mission and the main mission) were carried out. The field work included a representative survey of 33 community organizations that received assistance under this project and the triangulation of the findings derived from the full range of evaluation data. The final report was then drafted and reviewed by the Latin American and the Caribbean Division of IFAD and by governmental and other project officials. The agreement at completion point is included in this report.

The socio-economic context and rural poverty. The area near the border between the Dominican Republic and Haiti, which is where PROPESUR was sited, is one of the poorest regions in the country. Ever since the 1980s, IFAD has been providing support for projects undertaken by the Government of the Dominican Republic in an effort to promote the development of this zone, in which a high migration rate is combined with the relative absence of a State presence, public services and substandard living conditions.

The project. PROPESUR was designed in 1998 and executed between 2000 and 2007. It was extended on three occasions. The target population was made up of some 10,000 rural households. PROPESUR's objectives were to boost income levels, improve the living conditions of poor farmers and alleviate that population group's poverty by promoting the sustainable social and productive development in the project area. Project design included two programmatic components: community development and access to rural financial services. PROPESUR proposed a number of innovations, such as demand-driven planning/operations, the close involvement of the private sector in its execution, measures for strengthening rural financial services and emphasis on gender equity. The total project budget amounted to US$17.6 million and its budget execution to US$15.84 million.

Project performance

Relevance. PROPESUR was relevant within the context of the prevailing situation in the country. The changes made in the design of PROPESUR based on the outcomes of the previous project proved to be more effective in reducing poverty, despite the risks that were taken on board. In the course of the project's implementation, IFAD's approach evolved and matured as the result of a conceptual shift that expanded upon the focus on poverty reduction to include a human-rights- and citizenship-based perspective. This paved the way for a fuller understanding of how much social – in addition to economic – factors influence living conditions and for the introduction of the dimension of food security. New methods for gauging poverty levels were also introduced through the Results and Impact Management System (RIMS), and these changes influenced the direction taken by the project.

As far as the project design is concerned, the methodologies used for various courses of action and subcomponents – based on different approaches to the wide range of activities involved in servicing different categories of beneficiaries (communities, organizations, households, individuals) – were quite sound. The challenge that this posed for the project management team resulted in some difficulties in starting up the project on the ground, however. In its initial phase, emphasis was placed on social projects, to the detriment of strategies for providing appropriate support along the entire length of the production chains targeted by the project (coffee, bananas, sheep and goats).

Effectiveness. Grass-roots organizations were able to build their capacity for self-organization and project management under adverse conditions (absence of a State presence, emigration of young people, illiteracy, etc.), and gender mainstreaming in the various project areas was successful. Outsourcing to private groups proved to be an effective promotional means of including community organizations as project participants and executing agencies. By the same token, intermediary financial institutions (IFIs) that received support were strengthened, and the project succeeded in introducing additional professional capacity in their zone of influence. What is more, the project's social investments significantly improved the quality of life in the target communities. On the other hand, support for agricultural production was begun too late to permit the sustainable integration of a majority of the target households into the production chain, and the project was therefore not very effective in this respect. It made credit more accessible to a substantial number of poor clients on better terms, but the tie-in of this component with community development efforts remained weak. The project did not succeed in promoting the start-up of new rural microenterprises and was not effective in promoting sustainable natural resource management.

Efficiency. Between the project design stage and its launch, a number of changes occurred in the situation with respect to the dismantling of the decentralization strategy that made the project's implementation less efficient. It took a great deal of time to adapt the project to these changed conditions and for it to "take hold" on the ground. Its operating costs were high, with a third of the resources being used for the management and administration of a project that was outsourcing services via external coexecuting agencies. In addition, the expenditure on technical assistance for the development of production activities was excessive in view of the results obtained. There was an evident imbalance between sub-execution arrangements for programmatic areas such as community investment and credit funds, on the one hand, and expenditure on management, administration and outsourced operators and services, on the other. The cost of the area promotion agencies (APAs) relative to the institution-building effort was reasonable.

Impact on rural poverty

In the area of income levels and net assets, the project raised the incomes of 430 coffee-producing families, and the prospects for sustaining that increase are good. Most of the over 4,000 IFI clients expanded their operations and sales. The latrines that were built resulted in an increase in the assets of over 2,400 households, while the other community infrastructure works remained in the hands of the State. The project made it possible for the NGOs that managed the APAs and IFIs to increase their assets and incomes on a sustainable basis.

The project succeeded in considerably strengthening the administrative and management capacity of the grass-roots organizations that it supported, but without increasing the cohesiveness of the communities concerned to any substantial extent. Gender mainstreaming efforts had a notable qualitative impact in terms of the women's self-esteem and of how the roles of men and women are viewed, including within the family. The boards of directors of mixed organizations have not yet given women a greater role, however. Access to financing had the effect of obtaining greater recognition for female clients, both within the family and in their neighbourhoods.

With regard to agricultural productivity, considerable gains were seen in quality coffee and organic banana crops which can potentially have a significant impact. No sustainable improvements were achieved, on the other hand, in livestock activities (sheep and goats) or in terms of the provision of training in dry forest management techniques. The steps taken to increase food security did not result in a noticeable change in the quality or quantity of food consumed by families in the target group.

Project efforts to improve natural resource management had an impact at the household level (latrines, use of agrochemicals), but not in terms of the integrated management of microcatchment areas. Finally, at the institutional and policy level, the fact that the project worked fairly independently had the effect of strengthening the private institutions involved, whereas the integration of stakeholders with public agencies was hampered by the lack of appropriate policies and structures, although those components are now starting to be developed.

Other performance criteria

PROPESUR furthered the application of more effective forms of action and of a viable model for channelling Government funds to a marginalized, rural target population. Reinforcing grass-roots organizations and communities and working directly with them heightened the social sustainability of project interventions. In the economic and financial sphere, facilitating commercial-crop producers' integration into production chains helped them to become self-reliant, as did the work with profitable local IFIs.  The outlook for the sustainability of project interventions focused on food security and the environment is poor, however.

The project introduced a number of major innovations: coexecution in partnership with private NGOs in building organizational capacity at the community level; the combination of a demand-driven approach to planning/operations for grass-roots organizations or communities with the analysis of organizational, local and regional potential; greater gender equity in all spheres; and the provision of access to rural financing using an approach that differentiated among various areas of activity, rationales and instruments. While these experimental initiatives are replicable and can be expanded upon, they have not been taken on board or disseminated within State institutions, private-sector enterprises or international cooperation agencies. Thus, these innovations have, as yet, neither been replicated nor expanded upon in any significant way.

Performance of partners

IFAD's performance in the implementation of PROPESUR merits recognition in view of the fact, first of all, that it piloted the direct supervision approach 1,which is a model in whose use IFAD has had only limited experience. It continued to use monitoring tools such as on-site biannual visits and project status reports and was able to follow the project closely through the Senior Technical Advisor, who was well versed in IFAD standards. The Government counterpart, Oficina Nacional de Planificación (ONAPLAN2) values the role played by IFAD in providing constructive support and cooperation. IFAD also made good use of the technical resources available from regional programmes such as, for example, FIDAMERICA (Network of IFAD-supported projects in Latin America and the Caribbean) and PREVAL (Regional Platform for Evaluation Capacity Building in Latin America and the Caribbean). Nevertheless, from a strategic standpoint, the guidance provided by IFAD in the course of the project was rather limited, particularly in view of the proposed innovations, the project's relative institutional and geographic isolation, and the changes that were made, both in the project environment and in IFAD's project concept. The difficulties that the project had in "taking hold", frequent changes in the logical framework, and the limited implementation of project management and administrative measures called for decisions at the supervisory level that were not made. The mid-term review did recommend major adaptations, but it should have been done a year earlier in order to rectify the delays that occurred in implementing the productive development support strategy; this would have saved time, which would have been of crucial importance in achieving better results. At project completion, suitable exit strategies were lacking in the production and microfinance components of the project, and the valuable experiences and lessons that could have been learned from PROPESUR have not been systematized or disseminated.

The Government of the Dominican Republic followed the PROPESUR pilot with interest and facilitated its operation with capital inputs. The executing agency (ONAPLAN)

played an active part in project management, although its capacity to provide guidance and strategic oversight was limited by the fact that it does not have a great deal of expertise in rural development. While the continuity of professional project staff was maintained, various changes were made in the management team (a critical factor, given the innovations proposed by the project and the strategic weaknesses mentioned earlier) during the first phase of the project which undermined its leadership capacity. In the second project cycle (2005-2007), the management team improved substantially, thanks to the arrival of a new manager with the necessary experience and qualifications. The Government honoured its financial commitments despite the difficulties it had in doing so owing to the economic and financial crisis that broke out in 2002. At times the funding for project activities was late in arriving, particularly at the start of each year and after changes of government administration.

The coexecutors – associations formed by members of the target group, NGOs, IFIs and other service providers – exhibited a strong commitment to the project and performed well. The performance of the APAs was particularly noteworthy.

Overview of Ratings

The following table provides an overview of the project's ratings based on the various evaluation criteria:

 
Evaluation Criteria Ratings*
Core performance criteria
Relevance 5
Effectiveness 4
Efficiency 3
Project performancea 4
   
Rural poverty impact 4
Household incomes and assets 4
Human and social capital and empowerment 4
Food security and agricultural productivity 3
Natural resources and environment 3
Institutions and policies 4
   
Other performance criteria
Sustainability 4
Innovation, replication and scaling up 4
   
Overall project achievementb 4
   
Performance of partners
IFAD 4
Government 4
Coexecuting agencies 5

a  Average of ratings for relevance, effectiveness and efficiency.
b The overall project achievement rating is calculated based on the ratings for project performance; rural poverty impact; sustainability, innovation and scaling up.
* 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).

Conclusions

PROPESUR combined the promotion of rural production activities with an approach designed to involve beneficiaries in setting priorities, project execution and monitoring. The innovative project design left some aspects to be defined or fine-tuned in the course of implementation within a changing project environment. As a result, PROPESUR needed a fairly long time to consolidate its strategy on the ground, especially in the case of its production component. In this kind of trial-and-error situation, it is crucial to have oversight at a higher level at which decisions can be taken as to the project's strategic direction. There was not enough of this sort of guidance in PROPESUR's case.

Although the project did target the poor population, this group is composed of a number of very different segments. Effective management requires that specific strata be selected as the target group for project efforts.

The project was effective in various areas (grass-roots organization and gender equity, service delivery, social infrastructure, access to financial services) and less so in others (production and environment, food security). The synergies between (sub)components were more modest than expected. The work done in order to strengthen commercial production chains needs to be completed in order to integrate the producer associations into the more profitable chains. It is of critical importance to learn the lessons to be drawn from this experience in order to combat poverty in this zone more effectively.

A comparison of the total investment in this project (US$16 million) with its results reflects the cost of the delay experienced in getting it onto a solid footing. The efficiency of resource use was diminished by a lack of clarity at the strategic level.

For a number of sound reasons, as well as because the State maintains a very limited presence in the area, this project was given a great deal of scope for experimentation. Since support for rural development in this zone is to be continued, further progress needs to be made in increasing inter-agency cooperation, both within the public sector and between the public sector and the private sector.

Although some efforts have been made in this respect, room for improvement exists with regard to the dissemination of these experiences and the lessons learned about development in the zone, particularly in view of the highly innovative nature of PROPESUR.

Recommendations

PROPESUR closed its doors in mid-2008. In the interim, the Government of the Dominican Republic and IFAD have agreed to prepare two new rural development projects, one of which is to be sited in the same zone along the border with Haiti (although it will cover a larger area than PROPESUR did), and the new COSOP was approved in April 2010. The evaluation team is making the following recommendations for the future projects in the country to be pursued under the new COSOP.

(R1) Ensure that the institutional/political anchor for the new projects is an institution that specializes in rural development within the framework of the Government's new policies and strategies in this area of endeavour. Interaction with various public bodies at the central and municipal levels, with other development projects and with private organizations should be scaled up with a view to identifying possible synergies and establishing a more solid anchor for activities in the new project areas.

(R2) Design and targeting:

Improve the definition of the target population by indicating the types of units that the project will focus on (households, individual microenterprises, grass-roots organizations, communities), and ensure that there is a clear differentiation of the "instruments-interventions-time horizons" cluster based on the differing needs and capacities of the various target groups and their differing approaches to the dynamics of progress;

Ensure that project beneficiaries actively participate in the definition and implementation of lines of action throughout the project. This should be a demand-driven process, but other elements should also be taken into consideration, including the potentials and risks associated with the various organizations and with the region, the environment and the market;

Bear in mind the provisional nature of some aspects of the initial project guidelines. A distinction should be made between the mandatory components of the project (commitments made in the loan agreement) and those that are indicative and subject to the determination of those responsible for its implementation (steering committee and management). It is recommended that implementation guidelines to be followed by executing agencies be pre-defined in the loan agreement3

(R3) Implementation arrangements:

Ensure that tasks of strategic importance for project implementation are performed by organizations with the necessary experience and capacities. These tasks include: supervision of operational and financial execution, monitoring of implementation and decision-making with regard to the project's direction (especially when significant changes take place);

Examine the approximate costs of different implementation models (execution by project, outsourcing of services, or a combination of the two) in order to establish suitable guidelines;

Plan for the appropriate outsourcing of technical/financial services. The utilization of existing capacity in the area will require the use of an explicit negotiating strategy, in particular for dealings with the major NGOs that are active in each territory.

(R.4) Lines of action/components:

  • Complete the activities undertaken to support commercial crops (e.g. coffee and bananas) grown by farmers' groups at all stages along their production chains 4 and revisit the range of potentially job-creating rural production activities to be promoted, including irrigated farming (as outlined in the design of PROPESUR);
  • Promote the use of competitive project funding applications as a means of financing productive projects at the community leveland encourage young people to take part in these processes. It is recommended that an effort be made to encourage innovative ideas and the development of economic relations between communities and urban areas;
  • Evaluate the stage of consolidation reached by the social organizations for which support is to be provided as a basis for determining the specific kinds of assistance to be supplied by the project in each case 5;
  • If the decision is taken to continue to support the construction of social infrastructure works, explicitly define the relationship between community representatives and the grass-roots organizations involved with regard to the division of responsibilities for maintenance and possible future extensions or expansions;
  • The nexus between the provision of access to financing and the demand for credit in rural areas should be (re)considered, and support should be provided for microfinance initiatives that are more solidly rooted in the rural communities concerned. Weather insurance instruments merit support, and thought should be given to ways of contributing to the development of a model that could be applied nationwide (rather than a service tailored exclusively to project clients while they remain in the project area 7);
  • In the area of food security, it is recommended that investment be directed towards the design of a programme focusing on improvements in the medium and long terms, rather than the short run, 5 and that the possibility of combining this line of action with Government subsidy programmes be explored8.
  • With regard to knowledge exchange, the evaluation team recommends that the systematization of the PROPESUR experience be completed and that this information be disseminated and exchanged with specialized stakeholders (NGOs, public stakeholders, projects) in order to support good practices and contribute to lessons learned.

1/  PROPESUR was selected as one of the 15 projects worldwide that tested the direct supervision approach as part of the Direct Supervision Pilot Programme approved by the Governing Council of IFAD in 1997.

2/ As part of the project design, ONAPLAN was in charge of promoting and strengthening local government capacities and of consolidating a participatory local planning process by setting up provincial planning councils.

3/ For example, a timetable showing administrative benchmarks to be reached within a set time, such as the establishment of standards and structures for project administration (operating manual, accounting structure, etc.), management (management information system) and programme (a definitive logical framework) covering activities up to the second year of the project.

4/ So that, for example, coffee-growing associations that have a mill that is not being used can obtain credit to purchase coffee beans.

5/ As recommended in the mid-term review of 2005. There are suitable methodologies for this purpose. See, for example, the 2006 study by the Rural Development Programme for Las Verapaces (PRODEVER) in Guatemala

6/ The Government is developing an agricultural insurance policy for which the producer's premium will initially be subsidized by the State (the producer will pay 25 per cent of the cost). The idea is for producers to gradually take on more and more of the cost of the premium until they assume its total cost. For the time being, this scheme is being applied to rice and banana crops.

7/ For example, the sale of poultry in combination with the start-up of a small chick-breeding enterprise at the community level.

8/ For example, the start-up of programmes for home-grown fruit and vegetable production.

 

 

LANGUAGES: English, Spanish

Rural Financial Services Programme and Agricultural Marketing Systems Development Programme

Tanzania  
October 2011

Interim evaluation

The Independent Office of Evaluation of IFAD (IOE) conducted a joint interim evaluation of two IFAD-supported programmes: (i) the Rural Financial Services Programme (RFSP); and (ii) the Agricultural Marketing Systems Development Programme (AMSDP) in Tanzania in 2010. In line with the IFAD Evaluation Policy, this interim evaluation was undertaken as a standard procedure in preparation for a possible follow-up phase of the project. The main objectives of the evaluation were: (i) to assess the performance and impact of the programmes; (ii) to generate a series of findings and recommendations that would guide the one joint follow-on programme, "the Marketing Infrastructure, Value Addition, and Rural Finance Support Programme" (MIVARF), which was in the process of being developed by the Government of Tanzania, the African Development Bank (AfDB), the Alliance for a Green Revolution in Africa (AGRA), and IFAD.  

To assist in the evaluation process and to maximize the lessons from the evaluation, a Core Learning Partnership (CLP), consisting of IFAD, Government, and other stakeholders, was established and feedback gained from the CLP during the preparatory mission in March 2010 was incorporated into the evaluation Approach Paper.  The main evaluation mission was conducted in May 2010. Given the advance stage of the design of MIVARF a final evaluation workshop was not held.  Instead discussions were held, based on the evaluation findings and recommendations, between the evaluation team and IFAD and the government about key lessons from the evaluation. These discussions informed and set out the understanding between IFAD and the Government of Tanzania for the Agreement at Completion Point (ACP).

The ACP is the agreement of IFAD Management and the Government to the main evaluation findings and their commitment to adopt and implement the evaluation recommendations within specified time frames. This agreement will be signed by IFAD Management, the Director of the East and Southern Africa Division, and the Government, the Permanent Secretary of the Prime Minister's Office. The recommendations agreed upon will be tracked through the President's Report on the Implementation Status of Evaluation Recommendations and Management Actions.  The role of IOE is to facilitate the ACP process leading to its conclusion.

Main Evaluation Findings

The areas selected for support, rural finance and markets, were and are highly relevant.  Improving farmers' access to financial services and markets has over the last decades been a top government priority and the Government continues to consider these two areas as being crucial in its strategy to boost the relatively modest agricultural sector growth. 

The design of both programmes appropriately used holistic thematic approach addressing issues at macro, meso and micro level. However, the designs underestimated the time and resources required for establishing viable private/cooperative enterprises and did not fully appreciate that there are limits to what governments can do. The programmes targeted vast geographical areas in order to gain experiences from working in different agro-ecological and socio-cultural contexts. This scattered approach over a large geographical area resulted in high delivery costs. The programmes were covering many of the same geographical areas, had obvious linkages and were both implemented by the Prime Minister's, the designs did not adequately explore options for synergies and cost-savings e.g. through joint management arrangements. This was done later on during the implementation phase.

The evaluation finds that both programmes have made satisfactory contributions to the immediate objectives that were defined in the design such as RFSP's support in building management and technical capacity of gMFIs to strengthen their operational and financial performance and AMSDP's success in forming and/or strengthening existing and new producer groups.  The contributions were more significant at the micro/field level than at national level where they had a modest influence on the national policy and institutional frameworks. And at meso level, RFSP's support did not result in strong apex organizations for micro and rural finance.

The combination of operating largely in project mode and the ambitious area coverage reduced the project efficiency and resulted in a situation at project completion where the expenditure on Coordination & Management and Monitoring & Evaluation accounted for 41 per cent of total expenditure in the case of RFSP (against 25 per cent in design) and 17 per cent for AMSDP (against 10 per cent in design).

Both programmes achieved their quantitative targets for establishment of SACCOS and agricultural producer/marketing groups whose services have impacted positively on many of the members in terms of improving household income, crop prices, and agricultural productivity and food security.

Furthermore, AMSDP's investments in road and other market infrastructure have provided thousands of households with better access to markets and higher prices.

While the sustainability prospects of supported infrastructures are found to be reasonable, there are sustainability challenges for several of the SACCOS and the majority of the agricultural marketing groups. While the institutional development of SACCOS and producer groups has been substantial, at programme completion few have reached the stage where they are self-sustaining.

Both programmes introduced innovations and positive experiences that provide an agenda for consolidation and scaling up under MIVARF. For example, thanks to cooperation between the two programmes, a warehouse receipt system was successfully introduced, allowing farmers to postpone their crop sales till prices become more attractive.  Moreover, RFSP introduced the concept of complementing individual membership in SACCOS with group membership whereby a group of poor women could join while converting to individual membership once they had the financial capacity to do so. RFSP's collection and distribution of performance data of the SACCOS was an innovative way of introducing benchmarks and a sense of competition among the SACCOS.  Another innovative aspect in AMSDP was supporting the capacity of producer/marketing groups largely through contracting of private/civil society service providers and developing the capacity of the district administrations to manage such outsourcing and contracting.

Agreement at Completion Point

The Government of Tanzania in collaboration with IFAD, AfDB and AGRA has designed the Marketing Infrastructure, Value Addition and Rural Finance Support Programme (MIVARF). The design of MIVARF took into consideration lessons learnt from the implementation of AMSDP and RFSP based on the recommendations from the draft interim evaluation report. The design team also had the opportunity of meeting with the interim evaluation team to discuss on the findings. The Programme is expected to begin implementation in July 2011.

The government agrees with all the recommendations given by the interim evaluation team and these have been incorporated in the design of MIVARF and will be followed up during its implementation. The four recommendations and the responses by the government are:

Recommendation 1: Scale up the positive experiences of RFSP and AMSDP and avoid support to organizations and activities with little potential for success

Opportunities for replication and scaling up. As highlighted in the report, there are many positive experiences from RFSP and AMSDP. Many of these positive experiences may need to be refined and further developed but they already represent lessons that MIVARF can consolidate, replicate, build upon, and scale up. However, the scaling up phase may also involve a transition from the project mode (to a large extent a feature of RFSP and AMSDP) to a more decentralized approach relying on mainstreaming support into government systems (see the discussion in paragraph 251 of the evaluation report). The risks associated with this and other issues related to scaling up should be considered in MIVARF.

Avoid support to unsuccessful activities and organizations. In some of the programme interventions, RFSP and AMSDP did not achieve the expected results and it is unlikely that continued or different forms of support under MIVARF will produce acceptable results.  IFAD, the Government, and/or local government authorities (LGAs) should resist different kinds of pressure for continuing the support in these cases "in order to save the organization".  Similarly, certain levels of mortality are to be expected for the supported gMFIs, producer groups and agribusinesses. The design of MIVARF should attempt to define acceptable mortality rates (or targets/success indicators for survival) for the different target groups/enterprises.

In order to improve transparency and mutual accountability, it would be useful to define the support for beneficiary groups in a contract or Memorandum of Understanding between the district/programme and the beneficiary group. Such a contract or Memorandum of Understanding would specify mutual responsibilities and obligations, what type of support will be provided and for how long, etc. This would eradicate any wrong perceptions among groups that they are entitled to eternal support, and it would also give the district/programme the tool to terminate support if the group fails to meet its obligations.

Response: The Government of Tanzania has already implemented this recommendation in the design of MIVARF. Implementation of MIVARF is scheduled to commence in July 2011. The Prime Minister's Office is the lead agency for this Programme. In order to ensure that support is provided where there is potential for success, the design underlines "competition for resources" as a principle for engaging the various levels of beneficiaries in implementation.

Deadline date for implementation: Done during the design phase of MIVARF project

Entities responsible for implementation: MIVARF Project Design Team under the leadership of Tanzania CPM

This recommendation has been implemented during the design of MIVARF

Recommendation 2: In design, maintain the focus on improving access to financial and marketing services of the rural economically active poor but emphasize financial and commercial viability and sustainability in the support to the beneficiaries.

Targeting. Though medium and large scale farmers and agribusinesses are important to growth, and indirectly also for the poor, IFAD should - given its mandate – continue concentrating on support that more directly benefits the rural active poor.1   IFAD support for small and medium sized agribusinesses, such as through guarantees from financial institutions, should be a secondary priority or carried out in partnership (e.g. with AGRA). In addition, IFAD should support linkages between producer groups of small farmers and larger producers and agribusinesses.

Approach (pursuit of economic viability).While focus should continue to be on the rural active poor, it needs to be emphasized in selection and support strategies that grassroots financial institutions as well as producer/trader/processing groups are market-based and that only a good social rationale is insufficient to ensure their survival. Financial and commercial viability must be at the forefront when deciding whom to support and how to do it. This will also require that more attention is given to scale – e.g. instead of supporting the emergence of many small and weak SACCOS the programme should consider to support the expansion of larger SACCOS, having good survival potential, so that these SACCOS may open branches in non-served areas. In this context, there may also be a need for facilitating mergers. This will improve sustainability prospects and reduce the cost of delivering support and financial inclusion.  Also, it may not be necessary to work with SACCOS in some areas that now benefit from the availability of other financial services (e.g. MFIs and banks).A similar approach should be applied in support for producer/marketing groups. Working with fewer and larger groups with good prospects for expansion and increasing their value added is preferable to giving temporary and insufficient support to many small groups who are left in nowhere with limited prospects of survival as the support ends.

MIVARF duration. In sequencing and phasing the support for beneficiary groups there is now sufficient evidence to indicate the duration of support that groups at different developmental levels require in order to become self-sustaining. Thus, it should be possible to avoid inclusion (towards the end of the implementation period) of groups for which the support duration will be too short. In this context, it is of concern that the partners are considering an implementation period for MIVARF of only five years. 2  IFAD should consider extending the MIVARF implementation period to ensure sufficient time to establish well-functioning, sustainable groups.

Response: The design of MIVARF has taken into consideration this aspect and a lot of resources have been allocated to improving access to financial and marketing services. The eligibility criteria and principles of engagement to be employed by the Programme are geared towards ensuring financial and commercial viability and sustainability of supported beneficiaries.

Deadline date for implementation: During the seven years implementation period of MIVARF project

Entities responsible for implementation: MIVARF Project Management Unit under the directive of its steering committee Chaired by Permanent Secretary, Prime Ministers Office

This recommendation will be implemented during implementation of MIVARF

Recommendation 3: Reduce delivery costs and investment per beneficiary, and improve cost effectiveness

The high delivery costs and investment per beneficiary would not be acceptable in the scaling up phase. If the ambition is to scale up to national level coverage, this will multiply the challenges faced in RFSP and AMSDP manifold but may, in principle, present opportunities to improve the cost effectiveness and efficiency of the implementation and management of MIVARF. 

Clarifying implementation approaches and introducing lower cost options. First, MIVARF, by combining the two programmes which have many synergies may reduce some of the administrative and management costs.  Also, where possible in moving to a national programme, MIVARF should try to concentrate its investments to deepen impacts and avoid scattering resources within or across too many districts. This would enable MIVARF to succeed in the Value Addition (VA) part of its title.

The district administrations remain the appropriate place for anchoring the field implementation, however, they will require substantial external hand-holding and support (from a PCU) in order to handle the business and value chain development activities. Such hand-holding is costly and will result in very high delivery costs if the investment per district is modest (because the MIVARF budget may be spread over many districts). To be most cost effective, MIVARF should clearly articulate how it will work with both the LGA system and private service providers to optimize service delivery to the beneficiaries and reduce costs. For example, while the investments in marketing infrastructure (e.g. feeder road rehabilitation) clearly are within the mandate, daily activities and competence of district administrations, this is less so when it comes to facilitating establishment and development of private enterprises (i.e. gMFIs, producer/trader groups, agribusinesses) and value chains, which are the focus of IFAD support under MIVARF. Such facilitation requires special skills and substantial resources.  It may not be a first priority for the district administrations which already struggle to meet the demands for education and health services and economic and social infrastructures.

There are other options for reducing delivery costs and improving cost-effectiveness. Within rural finance, the landscape is changing rapidly. MFI/NGOs, such as BRAC, are becoming major players and mobile-phone banking is becoming accessible to rural communities while expanding its range of services, which may offer low-cost opportunities for financial inclusion of the rural poor. Similarly, within agricultural marketing, there are options for using well-functioning producer groups as service providers to assist newly formed groups in their development. There may also be options in contract farming schemes where large nucleus farmers or contract farming enterprises may be facilitated to support the capacity development of the small farmer groups who supply the enterprise. Such "service providers" may only require a small financial contribution as compared to the cost of contracting professional business development services providers and consultants.

Build on existing knowledge and experiences from AMSDP and RFSP. Finally, the lessons and experiences of RFSP and AMSDP make it possible to avoid costly searches and experiments on how to do things. Either as part of the closing of AMSDP and RFSP or as part of the inception phase of MIVARF, IFAD should facilitate the production of practical what-to-do manuals, developed based on the experiences and lessons learnt. Such manuals should inform district staff and other implementers about what to do and how to do it for different activity areas of the programme. Development of such manuals could be done in facilitated "write-shops" with participation of a few selected beneficiaries and stakeholders. The manuals would contribute to speed and cost-efficiency in the scaling up phase. In developing such manuals, it should be an overriding priority to reduce delivery and unit costs.    

Response: The two programmes preceding MIVARF have produced a number of key lessons which will enable a reduction in the delivery cost and investment per beneficiary to improve cost effectiveness. As from July when the implementation begins MIVARF will strive to use the lessons learnt from the two preceding programmes to improve cost-effectiveness. This will entail building up on efforts by other development partners during implementation as well as ensuring a close link to support provided by the Agricultural Sector Development Programme (ASDP) through District Agricultural Development Plans. MIVARF will also make use of the existing investment that has been developed by RFSP and AMSDP in terms of human, physical and technical investments.

Deadline date for implementation: During the seven years implementation period of MIVARF project

Entities responsible for implementation: MIVARF Project Management Unit under the directive of its steering committee Chaired by Permanent Secretary, Prime Ministers Office

This recommendation will be implemented during implementation of MIVARF

Recommendation 4: Emphasize development of partnerships and linkages at all levels

Strategic partnerships. There are many organizations and programmes that support the development of rural finance, agricultural marketing and value chains. Some address levels (e.g. investment finance for large agribusinesses) that are beyond the scope of IFAD's support but still important for development of the value chains. Some may fill other gaps in the MIVARF support while some have a time horizon that goes beyond the completion date for MIVARF. For these and other reasons, it is important that the MIVARF develops operational partnerships with such programmes and organizations and also facilitates the MIVARF target districts to access such cooperation.

Sustainable field-based partnerships.  It is also important to eliminate the perception of "MIVARF groups" and instead promote an approach whereby producer groups and gMFIs that are supported by MIVARF are facilitated support and services from other organizations and programmes. From the start of MIVARF's support for a group, attention should be given to avoiding the development of "MIVARF-dependency" and to promoting self-reliance.
Response: One key aspect of MIVARF is building partnerships and linkages for more effectiveness and greater impact. The MIVARF design has positively considered this aspect by bringing together IFAD, AfDB and AGRA in financing the Programme. During implementation, MIVARF will use a set of criteria developed to encourage partnership and linkages at different levels which will ensure success and lead to sustainability of its interventions. Moreover, MIVARF has also been nominated as a member to form a committee (under the ASDP) that will strive to leverage the various efforts within the agricultural sector to achieve a bigger impact on a wider area.
Deadline date for implementation: During the seven years implementation period of MIVARF project

Entities responsible for implementation: MIVARF Project Management Unit under the directive of its steering committee Chaired by Permanent Secretary, Prime Minister's Office

This recommendation will be implemented during implementation of MIVARF

Signed by:

Mr Ramadhani Khijah
Permanent Secretary
Ministry of Finance and Economic Affairs
Date:  04/07/2011

Mr Ides de Willebois
Director, East and Southern Africa Division
Programme Management Department, IFAD
Date: 15/06/2001


The preliminary proposal for MIVARF support to rural finance included elements that directly focus on the medium and large scale producers and enterprises. These proposals also involved optimistic assumptions regarding institutional engineering (please refer to appendix 8). Subsequent revisions to the design report have taken care of this.

Reportedly, AfDB can only consider an implementation period of five years for the AfDB-financed infrastructure investments. However, this should not exclude that other components, which do require more time, are included with longer implementation periods.

 

 

LANGUAGES: English

Rural Financial Services Programme and Agricultural Marketing Systems Development Programme

Tanzania  
October 2011

The Government of the United Republic of Tanzania has requested IFAD to provide continued support for rural finance and agricultural marketing in a second phase programme that builds on and merges the successful support interventions of two IFAD-supported programmes. One of the programmes closed in 2010, the other one is closing in 2011: (i) the Rural Financial Services Programme (RFSP); and (ii) the Agricultural Marketing Systems Development Programme (AMSDP). IFAD procedures at the time of this evaluation required that an independent evaluation be undertaken for consideration of a second phase of a programme or project and the Independent Office of Evaluation of IFAD (IOE) has the responsibility of implementing such interim evaluations. While interim evaluations are normally limited to one programme or project, IOE responded to the request for a merger and, in this case, covered two programmes in one interim evaluation.

The main evaluation objectives were: (i) to assess the performance and impact of the two programmes; and (ii) to generate findings and recommendations useful for ongoing and future programmes, and specifically for the design of the follow-on programme which has the working title: "Marketing Infrastructure, Value Addition and Rural Finance Support Programme" (MIVARF). With respect to the latter, the evaluation attempted to identify gaps and challenges in the programmes but most importantly, what worked well and how it may be scaled up.

After preparatory work, a field mission of four contracted consultants was implemented during 29th April – 14th May 2010. The mission visited selected sites in all programme zones in the vast geographical area covered by the two programmes and presented and discussed an Aide Memoire with IFAD and the Prime Minister's Office (PMO) which, on behalf of the Government, is responsible for the coordination and implementation of the two programmes. 

Description of the programmes. Both programmes were designed and approved under the 1998 country strategic opportunities paper (COSOP). At the time of design, Tanzania was struggling to fill the vacuum left after the collapse in the late 1980s of the state controlled/managed cooperative and banking sectors. The collapse had reduced farmers' access to markets and financial services. During the liberalisation/privatisation in the 1990s of the financial sector and agricultural markets, the private sector had not responded as quickly and forcefully in the rural areas as one could have hoped for. In order to fill the gaps government and development partners launched a series of initiatives including the IFAD-supported RFSP and AMSDP. Improving farmers' access to financial services and markets has over the last decades been a top government priority and the Government of Tanzania continues to consider these two areas as being crucial in its strategy to boost the relatively modest agricultural sector growth (only marginally above the increase in population).

Before RFSP and AMSDP, IFAD had provided support (at micro level), with limited success, for rural finance and agricultural marketing in the form of components and sub-components in more diverse programmes. For example, rural finance or agricultural credit had been supported in six previous programmes with disappointing results. The design of RFSP and AMSDP represented IFAD's first attempt in Tanzania to apply a more holistic programmatic approach (and in the case of RFSP a financial-sector approach) addressing issues and constraints at the macro, meso and micro levels. At micro level, both programmes had very ambitious targets for geographical coverage, each targeting areas the size of Italy - in the case of RFSP covering the Northern, Central and South Western parts of the country while AMSDP was targeting the Southern and Northern marketing zones.

RFSP. In December 2000, the Executive Board approved a loan of US$16.3 million for RFSP which was designed with a nine-year implementation period using the Flexible Lending Mechanism, providing for three phases, where the transition from one phase to the next was conditioned upon fulfilment of defined "triggers". Swiss cofinancing of US$2.2 million was obtained while scheduled cofinancing from the OPEC Fund did not materialize. The completion date was December 2010 and the closing date was June 2011.

RFSP was designed to improve access to financial services of the rural poor and to develop a rural financial architecture with roots at the village and ward level in the form of semi-formal Savings and Credit Cooperative Societies, Ltd. (SACCOS), 1 and more informal village banks, Savings and Credit Associations (SACAs) and other informal groups, referred to as grass roots microfinance institutions (gMFIs). The design had five components of which one was for programme coordination and management while another separate component was for monitoring and evaluation.  The other three components - though not systematically structured around the macro, meso and micro levels – included: (i) at macro level, support for improving the institutional, policy and legal framework; (ii) at meso level support for strengthening of apex organizations and linking gMFIs to banks and other formal sector financial institutions including capacity development support for banks and NGOs; and (iii) at micro level, support for developing the human and physical capacity of gMFIs and informal groups as well as for micro entrepreneur development, including vocational training.

In addition, the RFSP design included a microfinance facility which was to provide: (i) credit lines to financial intermediaries for on-lending to the more mature gMFIs; (ii) lease funds to existing leasing companies and NGOs to allow them to extend their operations in the programme area; (iii) equity funds for community banks and the Tanzania Association of Microfinance Institutions for expanding their lending to mature gMFIs; and (iv) an insurance fund (credit guarantee) to cover part of the lending risks of the microfinance institutions (MFIs).

AMSDP. In December 2001, the Executive Board approved a loan of US$16.3 million for the Agricultural Marketing Systems Development Programme. The major financing was provided by the African Development Fund (ADF) with about US$14.5 million for marketing infrastructure (feeder roads, market places and storage). In addition, Irish Aid provided US$1.1 million while another scheduled cofinancing of US$4.5 million was not obtained. The programme was completed in December 2009 and was closed in June 2010.

AMSDP was designed to improve the structure and performance of the agricultural marketing and pricing systems in order to improve food security of the rural poor, raise their incomes and diversify their production. IFAD's funding was allocated for programme management and coordination and three components: (i) policy development aimed at improving the efficiency of the marketing system; (ii) capacity development of producer groups, grass roots organizations and small and medium scale traders and processors with the aim of developing their efficient participation in markets and enhance their bargaining power in relation to larger organized market participants; and (iii) financial market services which included a guarantee fund for a commercial bank, introduction of a warehouse receipt system, lending for processing activities and technical assistance to support the financial activities.

Results. Both programmes achieved their quantitative outreach targets. RFSP had by December 2009 assisted 276 gMFIs against a design target of 275 but total membership of the assisted gMFIs was only 116,000 against a target of 190,000. AMSDP had by programme closure assisted 1,202 groups with 46,500 members against a target of 1,000 groups with 25,000 members. However, while surpassing the targets for producer groups, targets for groups of traders and processors, in particular medium-sized agribusinesses were not achieved. In the ADF-funded market infrastructure component AMSDP achieved most of its quantitative design targets except for market places for which the design had significantly underestimated the costs.

RFSP. While achieving the quantitative outreach targets, it was more difficult to bring the gMFIs to the targeted level of institutional development, partly because the gMFIs were significantly weaker than assumed at design. The targets at meso level were only partly achieved; while most gMFIs were linked to formal financial institutions, the support for the apex organizations did not achieve the expected results. The support at macro level was relatively modest and achieved some minor results. Finally, the Microfinance Facility was not implemented.

Partly due to the large geographical coverage, the achieved outreach had very high transaction costs. With a programme area the size of Italy, there is a long distance in-between the 276 gMFIs. While the budget at design allocated substantial amounts for programme coordination (17 per cent of the total) and monitoring and evaluation (8 per cent), these budgets were significantly surpassed. By December 2009, 29 per cent of total expenditure had been spent on programme coordination while 12 per cent on monitoring and evaluation (M&E), thus in total 41 per cent of programme expenditure. This over-expenditure was made possible by exchange rate gains and by a significant under-expenditure (78 per cent) on component C: Empowerment of the Rural Poor.   

AMSDP faced problems in bringing the assisted producer groups to the targeted levels of institutional development, ensuring their viability and sustainability. In its financial market services component, AMSDP achieved to introduce the warehouse receipt system where 12 SACCOS have been assisted to access loans from banks for on-lending to depositors. However, the guarantee fund and the scheme for lending to value addition and processing activities were not implemented.

AMSDP also had high transaction costs, though relatively less than RFSP partly due to the heavy weight of the infrastructure investments in the overall budget. At programme completion, programme coordination accounted for 17 per cent of total expenditure against 10 per cent in the original budget. This over-expenditure was financed by exchange rate gains and under-expenditure on the budget for Producer Empowerment (21 per cent against 31 per cent in the original budget).

Performance (the combined assessment of relevance, effectiveness and efficiency) is for both programmes assessed as moderately satisfactory with the following combination of ratings: relevance is rated only moderately satisfactory, effectiveness is rated satisfactory while efficiency is rated moderately unsatisfactory for RFSP and moderately satisfactory for AMSDP.

Relevance. Considering the issues of the rural poor in Tanzania and government and IFAD policies and priorities, it was highly relevant for IFAD to support rural finance and agricultural marketing. The partners should also be commended for applying a holistic programmatic approach. However, the design of both programmes had a number of deficiencies so that relevance overall is assessed as being only moderately satisfactory.

Both programme designs included budgets for which the full financing was not secured. In relation to available budgets, the designs had highly ambitious area coverage, implying dilution of support on selected "dots" within a large area. This resulted in high transaction costs which the designs underestimated. Considering that the programmes covered many of the same areas and were implemented by one and the same partner, the designs did not adequately exploit opportunities for savings in delivery costs and for synergies (for example why include a financial services component in the AMSDP). However, such opportunities were pursued during implementation.

The designs underestimated the time and resources required to build viable and sustainable rural grassroots organizations. Furthermore, the designs applied a demand-driven approach instead of pro-actively "picking the winners", i.e. working only with those groups and institutions that have good prospects of viability. Related to this, the designs had the common dilemma that outreach targets had to be phased with a part of the beneficiary groups entering towards the end of implementation, thus receiving support only for a limited period. In the case of RFSP, the design was based on too optimistic assumptions about the level of institutional development of SACCOS and SACAs in spite of past lessons.

The RFSP implementation period was structured in three phases where initiation of the second and third phases was subject to satisfaction of detailed targets (triggers), which to some extent were defined based on uncertain assumptions, e.g. about the level of institutional development of the SACCOS. The Loan Agreement included these details which implied a risk of loan cancellation. While the Flexible Lending Mechanism was intended to introduce flexibility and provide a framework for testing and experimentation, definition of detailed targets/triggers and inclusion of these in the Loan Agreement obviously reduced the space for flexibility and experimentation. Throughout implementation, management felt forced to gear its efforts towards achieving numbers (triggers) and broad coverage in order to move to the next phase, however at the expense of piloting different models and approaches for quality development of rural intermediation institutions.

Effectiveness. With respect to achievement of objectives, both programmes have generally had a satisfactory performance, however with some exceptions. It should also be highlighted that in most cases the appropriate judgement would be to say that the programmes made a contribution to the objective rather than saying that the objective has been achieved and that the achievement can be attributed entirely to the programmes.

RFSP has developed the capacity of 276 SACCOS and some 571 informal self-help groups, in some cases linking them to SACCOS, introducing the concept of "group membership". In many remote places, the support has contributed to giving the rural poor access to semi-formal financial services for the first time while support for SACCOS located in district towns has mainly provided people with an extra choice or service in addition to the services offered by banks and microfinance NGOs. The support has helped many SACCOS to develop their capacity but there is still for many some distance to go before they become self-sustainable; they need to increase their membership, improve their management skills and reduce their portfolio at risk. RFSP has also provided support to improve the entrepreneurial and business skills of the members/borrowers, but inability to properly assess investments and make business plans remains a major challenge. RFSP also contributed to enhanced rural access by facilitating the urban-focused MFI/NGO, Pride, to move into rural microfinance.

The Microfinance Facility included in the design various innovative features, but was not implemented. RFSP only partly achieved its objective of developing new products though there is demand for longer term loans for investments, insurance products, and money transfer services. 

RFSP contributed to improving the capacity of district cooperative officers who support and supervise the SACCOS. However, with the increase in the number of SACCOS, there is need for increasing the number of officers. Furthermore, the cooperative officers, who cover all types of cooperatives, do not generally have the skills to assist SACCOS with more specialized support related to financial services

At meso level, linkages between SACCOS and banks were facilitated and some of these relationships play an important role in the institutional development of the SACCOS. The support for two apex organizations, one for SACCOS [Savings and Credit Cooperative Union League of Tanzania (SCCULT)] and one for MFIs [Tanzania Association of Microfinance Institutions (TAMFI)], did not facilitate these organizations to play an important supportive role for the gMFIs. At macro level, RFSP has worked with the Ministry of Finance and Economic Affairs, Bank of Tanzania and the Ministry of Agriculture, Food Security and Cooperatives to improve the regulatory framework for micro and rural finance, an area that has been receiving significant support from other development partners, notably the World Bank and the Financial Sector Deepening Trust (a major joint initiative of development partners and government).  

AMSDP contributed to the development of an Agricultural Marketing Policy but there is still a long way to go to before the policy paper can have impact and influence on the ground. During the implementation period, Tanzania experienced a decline in its ranking with respect to "trading across borders", partly because government temporarily introduced restrictions on food exports due to local food shortages. Because of these restrictions, some AMSDP beneficiaries in surplus regions with food exports to neighbouring countries suffered a reduction in their prices and income. In some of the AMSDP districts, support was provided to rationalize local taxes and levies that impacted negatively on agricultural trade while at the same time assisting district councils with raising revenue through other means.

In 36 districts, AMSDP contributed directly to formation of producer groups or further development of existing producer/trader groups, in total 1,202 groups with 46,500 members. Per district this comes to an average of 33 groups and some 1,300 beneficiaries, a small fraction (<1 per cent) of the population of most districts. However, in a number of cases people have spontaneously copied the initiative without receiving programme support. Though many groups are at an early stage of institutional development, the evaluation also met many groups that had been able to increase sales and obtain better prices and in a few cases also engage in simple processing, adding value to the produce. A special and innovative feature in developing the capacity of the groups was that the capacity development services were outsourced to contracted partner agencies, i.e. NGOs and private service providers. With a few exceptions, this was a positive experience.

The better prices obtained by many of the groups is not only due to group bargaining power. The support for market information systems, the warehouse receipt system and the construction of feeder roads and market places also contributed. The warehouse receipt system was implemented in 11 districts and is being copied. The warehouse receipt system provides the depositors with liquidity so that they do not have to sell their produce immediately after harvest when prices are lowest. The upgrading of feeder roads has significantly reduced transport costs and in some cases provided communities with access to markets.

The warehouse receipt system was the only intervention of AMSDP's financial services component that was implemented and it was done in close cooperation with the RFSP and the SACCOS, while commendable efforts were made to separate warehouse management from the business management of the SACCOS.

Efficiency. Both programmes faced problems of high delivery/transaction costs partly due to the large geographical coverage. However, AMSDP's expenditure on programme management and coordination had less relative weight in overall expenditure thanks to ADF's US$25 million infrastructure investment which was implemented within standard unit costs, using local and cheaper contractors. 

Both programmes have had very high investments per grassroots institution supported. In the case of AMSDP, an average of US$8,000 was invested in each producer group (excluding programme management costs) 2 while many of the groups have annual turnover of less than US$2,000 and a much smaller net income. Investment per direct beneficiary is also very high for the warehouse receipt system but an increase in the number of depositors in supported facilities as well as spontaneous copying of the system would contribute to justifying the high investment.

RFSP focused on SACCOS as the means of expanding financial inclusion. Investment per SACCOS member was high (>US$200). Observers consider it feasible to financially include a person at a cost of US$20 – US$50 which would avoid a continued rise in the total number of financially excluded Tanzanians. However, the SACCOS model has potential for efficiency improvements e.g. by raising membership per SACCOS through mergers or growth from 200-400 to 2,000–3,000. This would reduce unit costs of supervision and capacity development, including training of management and board and committee members. Larger SACCOS would also make it feasible to engage more professional management, which in turn may improve efficiency of operations and improve portfolio quality.  

Impact. The evaluation finds that both programmes have had a satisfactory impact on rural poverty. Available information combined with interviews and observations in the field clearly suggest that AMSDP and RFSP have to a satisfactory degree assisted groups of rural poor in their institutional and business development and individual poor farmers with improving their income and quality of life. While part of this improvement is attributable to other factors, unrelated to the two programmes, most beneficiaries indicated a linkage to programme outputs and activities, clearly perceiving AMSDP and RFSP as crucial to the improvements. Interviewed beneficiaries expressed a high degree of satisfaction with the interventions.

In addition to improving income, assets and food security, the significant investments in developing the capacity of SACCOS, producer groups or other grassroots organizations have made a very positive contribution to empowering members to take better control of their lives and operations. In the area of gender equality, the achievements are significant. Women account for 44 per cent of the total membership in the RFSP-supported SACCOS and groups and do often occupy key managerial positions. In several cases, this experience has induced the women to take part in local politics. In the AMSDP-supported producer groups, women account for 42 per cent of total membership and some producer groups are only constituted of women.

RFSP has contributed to giving some 100,000 households access to financial services. There are some 85,000 borrowers in the RFSP-supported SACCOS and in many cases the credit has contributed to higher agricultural productivity and income as well as establishment of non-farm income generating activities. The increase in income has often been re-invested and/or used for purchasing household assets and financing the children's education. However, in cases of loan default some members are worse off as they lost their collateral. Lack of business and entrepreneurial skills is key reason for defaults. Savings services have allowed households to build up a capital to better withstand a food crisis or other emergency. 

AMSDP has impacted on the target group through various interventions. The support for producer/marketing groups has enabled producers to practice collective marketing, determine profitable prices and thereby enhance their bargaining power. Some groups have also entered into simple processing and some groups have been facilitated to engage in cultivation of "new" crops. Part of the target group benefited from the warehouse receipt system and some depositors improved their prices by more than 100 per cent. The infrastructure investments, in particular the feeder roads, had a major impact on prices and income. The increases in prices and incomes have in turn contributed to more investments in farm inputs, thus raising yields, and/or expansion of the cultivated area.

In the domain of "institutions and policies", the two programmes had a less remarkable impact. Their contribution to developing national regulatory frameworks and the capacity of central institutions was relatively limited. More noticeable impact was achieved at district level where the programmes facilitated the development of public-private partnerships and consultations. RFSP did facilitate an enhanced capacity of district cooperative officers and in some cases district councils now assign priority to rural finance more than they did before the cooperation with RFSP. AMSDP introduced the concept of outsourcing service provision to private and civil society organizations and the programme-supported districts are now familiar with handling the contractual processes. Some districts also benefited from support to rationalize local taxes and levies.

It should be highlighted that over the implementation period there has been an impressive improvement in the capacity of most district administrations. The education and skill levels of district staff are much superior today as compared to the situation when the programmes were initiated. Though resource constraints remain a challenge, the evaluation finds that most of the visited districts are capable implementers of support for rural finance and agricultural marketing.    

Issues of sustainability. While the two programmes have achieved positive results and impact, there are substantial and critical issues of sustainability, involving two sets of questions: (i) will the districts be able to continue the support that is required to make SACCOS, producer groups and other beneficiary groups commercially viable and self-sustainable and, in the case of AMSDP, will the districts have resources to maintain and sustain the investments in marketing infrastructure? And (ii) are the supported beneficiary groups (SACCOS, SACAs, producer/trader groups) commercially viable and self-sustainable, what is the likely mortality rate, and how should one deal with those that have no prospects of commercial viability?

As to the first set of questions, the evaluation found that many of the districts are committed to continuing support for rural finance and agricultural marketing using resources allocated for the District Agricultural Development Plans as well as other resources. However, it was also obvious that they would not have the resources to continue the same level of support provided while the two programmes were on-going. In the case of AMSDP, it is unlikely that districts will have the resources to contract private and civil society service providers for development of producer/trader groups. Development of grassroots institutions for rural finance and agricultural marketing has generally lower priority than education, health, agricultural extension, and social and economic infrastructure. The prospects of maintaining the infrastructure investments, in particular feeder roads, are generally better as this is within what the districts consider as their core mandate. 

As to the second set of questions, the situation is mixed. Several informal self-help groups as well as some of the RFSP-supported SACCOS may collapse or become dormant as they face problems of low repayment and management. However, some may be "saved" if there is a push and support for mergers and a departure from the perception that each ward should have its own SACCOS. Though RFSP has brought the SACCOS a long way in their institutional development, it is still only the minority which are completely self-sustainable. Many of the SACCOS need to increase their scale, and improve on management and repayment performance. Only few of the SACCOS meet the commonly used parameter of 95 per cent loan repayment.

However, given the importance of SACCOS in the local community, it is a possibility that there will be a political push to attempt to save them, in particular those in areas that are not covered by other financial services. Such political priority is not likely to be given to the much smaller producer/trader groups supported under AMSDP. According to self-assessment data, only 16 per cent of the groups have reached what is termed "the performing stage", i.e. they are commercially viable and completely self-sustaining. The remaining groups are at various stages of development and the mortality rate, in particular among those in the early stages, is likely to be high.

It is relevant to ask if major efforts should be invested in SACCOS and groups which are in trouble and have limited prospects of viability in the near future. SACCOS and producer groups are private businesses, and it is normal that governments and donors accept a certain mortality rate when facilitating private business development, in particular start-ups. The approach of the two programmes, which is inline with IFAD's targeting policy, has been to try to accommodate demand and local political priorities for support rather than a more business-like approach where support is limited to those with the best prospects of achieving commercial viability.

Given the above considerations, the sustainability of RFSP is assessed as moderately unsatisfactory. While for the AMSDP supported producer/trader groups which may have even more severe problems, sustainability is rated moderately satisfactory because by far the largest part of expenditure has been invested in marketing infrastructure for which the sustainability prospects are reasonable.

Innovative features and scaling up. In the context of local experiences and the IFAD programme in Tanzania, the two programmes do have certain innovative features. However, rather than their innovativeness per se, both programmes have provided a wealth of experiences and lessons that are useful for scaling up. Indeed, both programmes are often referred to as pilots and the Government's request for a follow-on programme is motivated by the desire to scale up the successful experiences. If speed and cost-efficiency shall be achieved in the scaling up phase, one would need practical what-to-do manuals, developed based on the experiences and lessons learnt. Academic discussion papers on what may have been learnt would not serve as an efficient tool for future implementers.

RFSP was IFAD's first attempt in Tanzania to apply a programmatic and holistic approach comprising support for macro, meso and micro levels. Another design innovation, in the context of IFAD's Tanzania programme, was that RFSP was designed using the Flexible Lending Mechanism. Compared to other development partners and programmes, RFSP has gone to very remote areas. This is emerging as an apparent challenge and strength of IFAD-funded programmes in Tanzania, effectively fulfilling its mandate of reaching out to the rural poor who are not served by others but with considerable challenges of achieving financial viability.

Strategies aimed at getting women to join SACCOS demonstrated innovativeness. For example, very poor women first joined a SACCOS through informal self-help groups such as a SACA. As their economic wellbeing and incomes improved, some of the women were able to join individually, either as owners buying shares or as members.

RFSP introduced subtle mechanisms to subject supported gMFIs into a sense of competition. Monthly reports on key performance indicators of the gMFIs were compiled, summarized into easily comprehendible tables and redistributed to the gMFIs. Both leaders and members of the gMFIs assessed and compared the position of their organization against the others in the report. Visited SACCOS members acknowledge that this was instrumental in pushing them to set higher standards and targets, e.g. for loan repayment and savings mobilisation.

AMSDP had two innovative elements: i) utilisation of private sector partners as the outreach mechanism for developing the capacity of beneficiary groups; and ii) involvement of beneficiary group representatives in marketing research and market information. The partner agencies were mostly locally-based business development service providers, NGOs, or private consultants and they were generally well received by the producer groups. The interventions delivered by partner agencies were assessed as valuable and many beneficiaries give credit to the partner agencies for the fact that they have reached a certain stage of development and empowerment. The best performing partner agencies effectively served as mobilizers, motivators, trainers, and mentors, and they were instrumental in getting the produce marketable. The evaluation visited a number of groups where one or two members were part of a marketing research team headed by AMSDP's marketing specialist, usually a local marketing expert contracted to assist and mentor the groups. This was an efficient and innovative way of engaging beneficiaries in identifying new potential rural markets and buyers and accessing the marketing information available.

A number of AMSDP interventions are being copied and replicated spontaneously without AMSDP support, including: (i) producer group formation and collective marketing (at times facilitated by AMSDP producer groups); and (ii) the Warehouse Receipt System for which communities have requested support through their members of parliament and/or the District Councils.

Performance of partners. For both programmes IFAD and government performance is assessed as moderately satisfactory. While the partners are responsible for a number of deficiencies in the programme designs, their performance during implementation was overall satisfactory. IFAD's support for implementation improved after establishment of country presence in 2004. An innovative and productive supervision modality was introduced in 2008, where programme coordinators and M&E staff participated in supervision of other IFAD-supported programmes in order to facilitate learning and peer review. RFSP and AMSDP were also supervised jointly by IFAD in 2009 to strengthen complementarity between the two. Until introduction of direct supervision, the United Nations Office for Project Services (UNOPS) performed satisfactorily as cooperating institution supervising implementation.

While the minor bilateral cofinanciers were relatively passive but delivered on their financial commitments, the cooperation in AMSDP with the African Development Bank as cofinancier had various challenges. The Bank had its own systems for monitoring, evaluation and reporting and has recently submitted its own Project Completion Report (in addition to the one prepared by the Programme Coordination Unit/Government of Tanzania). Though attempts were made at the end of the programme to introduce common and joint reporting and supervision, the Government was during most of the implementation period unduly burdened with having to comply with two different organizational reporting and supervision systems. In the spirit of the Paris Declaration, both organizations need to adapt in terms of coordination and harmonization.

Conclusions. Support for rural finance and agricultural marketing was and continues to be highly relevant to the context and in line with government and IFAD priorities. The current effort to merge support for the two areas into one programme is commendable given the opportunities for synergies and cost savings. The design of the new programme should avoid the deficiencies in the design of RFSP and AMSDP where certain parts were based on uncertain or too optimistic assumptions. Furthermore, the area coverage was too ambitious in relation to the available resource envelope, resulting in dilution of support and high transaction and delivery costs.

Both programmes delivered on most of their quantitative targets, made satisfactory contributions to most of their objectives and had a satisfactory impact on individual beneficiaries and beneficiary groups, in terms of improving incomes and food security and empowering beneficiaries, in particular women. However, many groups are still struggling to achieve commercial viability and become self-sustainable, and investment per beneficiary group was high and local governments do not have the resources to continue the programme levels of support.

Thus, the follow-on programme needs to give priority to consolidating the successful developments that were initiated by the two programmes. However, when doing so it needs to be recognized that the support is for facilitation of private business development hence a business-oriented approach, emphasising commercial viability, should be adopted. Furthermore, in an up-scaling phase, careful consideration needs to be given to reducing the delivery costs and investment per beneficiary.    

Recommendations. On the above background and considering preliminary proposals on the design of the follow-on programme (MIVARF), the evaluation offers four recommendations for consideration:

Recommendation 1

Scale up the positive experiences of RFSP and AMSDP and avoid support to organizations and activities with little potential for success

As highlighted in this report, there are many positive experiences from RFSP and AMSDP that MIVARF can build upon, scale up and consolidate. Many of these positive experiences may need to be refined and further developed but they do represent a valuable foundation for designing the future support. There are, however, also cases where the support did not produce the expected results and where it is unlikely that continued or different forms of support will produce acceptable results. Therefore, it is important not to continue the support "in order to save the organization". Certain levels of mortality are to be expected for the supported gMFIs, producer groups and agribusinesses. The design of MIVARF should attempt to define acceptable mortality rates (or targets/success indicators for survival) for the different target groups/enterprises.

Recommendation 2

In design, maintain the focus on improving access to financial and marketing services of the rural economically active poor but emphasize financial and commercial viability and sustainability in the support to the beneficiaries.

While focus should continue to be on the rural active poor, it needs to be emphasized in selection and support strategies that grassroots financial institutions as well as producer/trader/processing groups are market-based and that a good social rationale only is insufficient to ensure their survival. Financial and commercial viability must be at the forefront when deciding whom to support and how to do it.

Recommendation 3

Reduce delivery costs and investment per beneficiary, and improve cost-effectiveness

The high delivery costs and investment per beneficiary would not be acceptable in the scaling up phase. In RFSP and AMSDP, a major factor was the combination of operating largely in project mode and the ambitious area coverage, distributing relatively limited budgets over vast geographical areas and many districts. The consideration for the design of MIVARF is to scale up to national level coverage. This will multiply the challenges faced in RFSP and AMSDP unless MIVARF activities are mainstreamed into the local government planning and financial management system. Potentially, this could reduce delivery costs. However, while the district administrations remain the appropriate place for anchoring the field implementation, they will require substantial external hand-holding and support (from a PCU) in order to handle the business and value chain development activities. Such hand-holding is costly and will result in very high delivery costs if the investment per district is modest (because the MIVARF budget may be spread over many districts). 

The lessons and experiences of RFSP and AMSDP make it possible to avoid costly searches and experiments on how to do things. IFAD should facilitate the production of practical what-to-do manuals, developed based on the experiences and lessons learnt. Such manuals should inform district staff and other implementers about what to do and how to do it for different activity areas of the programme. In developing such manuals, it should be an overriding priority to reduce delivery and unit costs.    

Recommendation 4

Emphasize development of partnerships and linkages at all levels

There are many organizations and programmes that support the development of rural finance, agricultural marketing and value chains. Some address levels (e.g. investment finance for large agribusinesses) that are beyond the scope of IFAD's support but still important for development of the value chains, some may fill other gaps in the MIVARF support while some have a time horizon that goes beyond the completion date for MIVARF. For these and other reasons, it is important that the MIVARF develops operational partnerships with such programmes and organizations and also facilitates the MIVARF target districts to access such cooperation.

It is also important to eliminate the perception of "MIVARF groups" and instead promote an approach whereby producer groups and gMFIs that are supported by MIVARF are facilitated to access support and services from other organizations and programmes. From the start of MIVARF's support for a group, attention should be given to avoiding the development of "MIVARF-dependency" and to promoting self-reliance.


1/   In Tanzania, the acronym SACCOS is used for Savings and Credit Cooperative Societies, Ltd. both in the plural and singular forms, - thus one SACCOS and two SACCOS.

2/ However, when considering the entire AMSDP investment, and including all direct and indirect beneficiaries of the road and marketing infrastructure investments, the total AMSDP investment per beneficiary comes down to a level of US$20-30.

 

 

LANGUAGES: English

Poverty Reduction Project in Aftout South and Karakoro - Interim Evaluation

Mauritania  
September 2011

Introduction

Objectives and evaluation process. The interim evaluation of the Poverty Reduction Project in Aftout South and Karakoro (PASK) is intended, first, to fulfill the obligation of the International Fund for Agricultural Development (IFAD) to report to its members and partners on the results and impact achieved by the operations it finances; and second, to enable partners to draw lessons from this project to inform the preparation and implementation of other development interventions in the Islamic Republic of Mauritania. The evaluation encompasses five dimensions: performance by the project (relevance, effectiveness and efficiency); project impact on rural poverty; sustainability of results; innovations and their adoption by institutions for scaling-up purposes; and performance by IFAD and partners. Following a preparatory mission in August 2008, the main mission took place from 7 October to 3 November 2008. Three sources of information were employed: a review of available documentation, interviews with project participants and partners, and field observations in villages (in 7 of the 21 communes covered by the project). A wrap-up meeting was held at the mission's end, and a second meeting was organized in December 2008 at the Ministry of Urban and Land Use Planning (MHUAT) with all the partners to discuss the aide-mémoire resulting from the mission.

Country context. Mauritania covers a surface area of more than 1 million square kilometres, 75 per cent of which is arid or semi-arid land. It is divided into four distinct ecological areas: the Saharan, Sahelian, Senegal River valley and coastal areas. The population is very small compared to the country's size: although demographic growth doubled between 1974 and 2004, the total population is just 3 million, half of whom live in rural areas. With a gross national product per capita of US$952 in 2007, Mauritania is classified as a low-income country. Despite the progress made in recent years, human development levels remain low. According to the Human Development Report published by the United Nations Development Programme in 2009, Mauritania's human development index was 0.520, ranking it 154th of 177 countries.

IFAD's strategy and intervention in Mauritania. Since 1980, IFAD has financed 12 projects in Mauritania totaling US$268 million, close to 40 per cent of them funded in the form of IFAD loans (US$90 million). IFAD's actions focus on increasing food production and improving food self-sufficiency. The country strategic opportunities programme (COSOP) 2000-2004 was built upon four major thrusts: (i) transferring responsibilities to rural people, in particular those included in IFAD's target group; (ii) putting in place effective mechanisms to transfer resources to rural people to fund local development programmes that address their priorities; (iii) improving access to secure land tenure, capital and markets for rural poor people; and (iv) developing grass-roots organizations to build capacity for lobbying and for programme design and implementation. The new COSOP 2007-2012, approved in 2007, sets three strategic objectives: (i) strengthen the institutions of the rural poor using community-driven development approaches; (ii) promote sustainable rural financial services; and (iii) achieve sustainable agricultural development and food security.

The Poverty Reduction Project in Aftout South and Karakoro was designed for a seven-year period (2003-2009) and financed by an IFAD loan, a government contribution, and cofinancing in the form of a loan from the Organization of Petroleum Exporting Countries (OPEC). A preliminary proposal was put forward by the Government in September 2000. Project identification, formulation and appraisal by IFAD followed. The project was approved by IFAD's Executive Board in September 2001. At the outset, the project was placed under the oversight of the Human Rights, Poverty Reduction and Mainstreaming Commission, then, as of May 2007 – following the presidential election – under the Ministry for Decentralization and Land Use Planning and, in September 2008, in the MHUAT. These changes came about following the shuffling of responsibilities and restructuring of government institutions. The cooperating institution responsible for supervising the project on behalf of IFAD and the OPEC is the United Nations Office of Project Services (UNOPS). PASK covers an area of 25,600 square kilometres, encompassing 653 villages in 21 communes located in three contiguous districts: M'bout, in the Gorgol region (9 communes and 330 villages), Ould Yengé in the Guidimaka region (7 communes, 170 villages) and Kankossa in the Assaba region (5 communes, 153 villages). The beneficiaries account for most of the rural people living within the project area.

Objectives and components. PASK aims to contribute, within its area of intervention, to achieving the overall objectives of the Strategic Framework for Combating Poverty (CSLP), which are as follows: (i) halving rural poverty; (ii) providing universal access to basic social services; and (iii) supporting institutional development at the local level. PASK has four components: building local organizational and management capacity roughly (11.6 per cent of total cost); providing access and basic infrastructure (59.4 per cent); improving and diversifying incomes (11.1 per cent); and project coordination, management, and monitoring and evaluation (M&E) (17.6 per cent).

Performance

The results obtained on building local capacity relate mainly to: (i) achieving participatory local planning, centred around a mixed communal/village approach, which led to the preparation of participatory diagnostics, communal development plans (PDCs) and priority action plans (PAPs); the establishment and training of communal consultative committees (CCCs) and the training and equipment of 21 communal development agents; (ii) a major information, education and communication programme (IEC) covering health care, schooling for girls, family and women's rights, and citizenship, which reached more than 4,000 people after setting up more than 200 IEC poles; (iii) a continuing literacy programme that trained 287 literacy agents and reached 12,300 people; and (iv) training events for 292 women's cooperatives and 112 economic infrastructure management committees.

Most of the PAPs reflected strong demand for improving access in the region and building infrastructure. Results included: (i) preparation of a master plan for improving regional access; (ii) rehabilitation of critical points identified in the master plan, i.e. eight works projects to clear and build the M'Bout-Soufa stretch of road (circa 83 kilometres); (iii) rehabilitation and installation of community infrastructure : construction of 36 wells and 2 new boreholes, rehabilitation of 25 existing boreholes and reinforcement of the M'Bout dike; and (iv) establishment of a socio-economic infrastructure programme financed under the Heavily Indebted Poor Countries (HIPC) Initiative. This programme covers 12 municipalities, 6 multipurpose buildings, 14 health care centres, rehabilitation of 122 classrooms and construction of 102 new ones, construction of 152 latrines, 1 abattoir and 7 markets with multiple vendors' stalls.

Improving and diversifying incomes translated into: (i) support for women's market gardening cooperatives in the form of training for 460 new women, granting of limited quantities of inputs and agricultural implements – in the context of training and demonstration events held by specialized partner operators – and the supply of fencing to protect 42 hectares cultivated by the cooperatives; (ii) supply of fencing and barbed wire to protect flood-plain crops in dam basins and pastures against stray animals – some farmers were trained in integrated pest control, others in draft animal power; (iii) training of 55 veterinary assistants and equipping them with veterinary kits; and (iv) identification and support for 30 income-generating microprojects, benefiting mainly women and young people. An extensive training programme underpinned these activities, reaching 16,000 people under brushfire awareness campaigns, 12,000 women under firewood reduction awareness campaigns; 340 farmers in connection with integrated pest control; 252 women's market garden cooperatives (with 27,000 members) and 450 women outreach workers disseminating market gardening techniques and issues at village level.

Relevance. The PASK objectives and procedures, as defined in the project appraisal report, are in line with the development strategies adopted by the Government and IFAD at the time of project preparation. Subsequent revisions of the strategies of the Government (CSLP) and IFAD (COSOP) have further strengthened PASK's strategic mandate for poverty reduction. Unlike other projects, most of which are entirely community-or commune-based, PASK experimented with a participatory approach anchored at the community level in the form of participatory diagnostics and preparation of participatory community development plans, and at the communal level in the form of preparation of PDCs and PAPs. This mixed participatory approach was complemented by a social approach built around promoting consultation, community organization, capacity-building for individuals and organizations, and development of socio-economic services, and by a technical approach that called for improving physical capital and building competencies among stakeholders.

However, PASK presents design flaws that have limited the scope of its impact in certain respects: primarily imperfect advance knowledge of the assets and constraints of the area, and resource allocation that was not well adapted to either the geographic and socio-economic objectives selected or the specific constraints and challenges involved. Based on these considerations, project relevance is deemed moderately satisfactory.

Effectiveness. In terms of achieving specific objectives, project effectiveness levels are mixed:

Effectiveness was good on the objective of building local capacity for organization, management and promotion in the following areas: ownership by CCCs of PDCs and PAPs, the participatory planning process, consultation, partnerships and collective and individual capacity-building in local communities; setting up and training producer organizations; IEC actions on health care, nutrition and adult literacy; and involvement by village specialists trained as local service providers to benefit communities. In terms of weaknesses, however, the evaluation underscores the lack of proactiveness on the part of village development committees, associations and committees responsible for operating and maintaining socio-economic infrastructure (health care centres, water points, tracks, etc.).

Effectiveness was inadequate on establishing and consolidating building blocks for economic growth and improving access for rural communes. Although at the time of the evaluation the regional access programme had been achieved in part, the mission observed serious problems in the design and quality of some projects. In addition, the lack of competencies and professionalism on the part of specific enterprises and consulting firms hired, an economic juncture characterized by spiralling prices for building materials and the resulting problems for enterprises, the lack of involvement by regional public works departments, and the lack of monitoring and follow-up by the project team based in Nouakchott, undoubtedly exacerbated the situation. Project actions in the area of economic infrastructure were also modest: multi-stall markets were built but very little used owing to an impractical design, limited economic viability and poor building quality.

Effectiveness was considered good on the objective of improving living conditions through access to basic social infrastructure. This was apparent mainly in terms of infrastructure: a relatively large number of socio-economic education and health care establishments were built in response to strong local demand, in some cases exceeding the targets set by the project appraisal report. This good performance is attributable to the Government's firm determination to improve living conditions for people living in the project area and ability to mobilize funding in the context of the planned HIPC contribution. On the other hand, the socio-economic infrastructure programme had several weaknesses, such as: (i) the lack of involvement by and coordination with the technical services concerned, particularly in the case of water – which would have led to better targeting of studies on prospection and installation of potable water points and better links of project actions to the national strategy and programme to develop drinking water supply infrastructure in rural areas; (ii) inadequate training and monitoring of management committees for water points, associations of parents of students and health care centre management committees; and (iii) poor execution quality of work on specific buildings owing to problems with enterprises (delays, contract cancellations).

With respect to the objective of increasing and diversifying incomes for the most vulnerable groups, effectiveness was deemed unsatisfactory. The project carried out a number of activities to promote higher and more diversified incomes. However, these activities did not yield significant results either in the area as a whole or for the households concerned, mainly for the following reasons: (i) the activities were scattered and not part of a coherent and comprehensive programme of support for agriculture with solid links to sector policies underpinned by the technical services concerned; (ii) poor diversification and limited scope of activities undertaken at the village level meant that they were primarily demonstrative in nature; and (iii) poor farmer-herders living in recently established villages were not specifically targeted, although they were identified by the project appraisal report as one of the most vulnerable population segments warranting special attention. Support for income-generating activities saw a protracted delay when the underlying proximity financial services subcomponent was frozen. The first wave of income-generating activities funded by the project appears to have adopted an approach that was well adapted to the very challenging socio-economic context in the project area, although the rationale was social rather than economic in nature and benefits appear to have been quite modest.

In conclusion, taking into account the evaluation factors described above and considering the baseline situation in the project area, project effectiveness is rated moderately unsatisfactory overall.

Efficiency. This evaluation rates PASK's efficiency as moderately unsatisfactory for the following reasons: (i) project start-up delays (in particular, OPEC loan effectiveness), with a disbursement rate of about 77 per cent at the time of the evaluation; (ii) poor quality of road works despite considerable investment; and (iii) recurrent expenses mainly due to the de facto presence of the project team at Nouakchott (rather than in the project area). In economic terms, the project presents a low level of efficiency overall since the investments made did not generate a tangible increase in target population incomes, as mentioned in the section on effectiveness.

Rural poverty impact

Overall, PASK had a satisfactory impact on rural poverty, although it varied by area.

Household income and assets. Impact in this respect was rated moderately unsatisfactory. At this point, it is difficult to see an overall improvement of any scope that could be attributed directly to the project. Based on average observed yields for rainfed crops in Mauritania, the 25 per cent improvement cited should translate into additional income of Mauritanian Ouguiya (UM) 12,000 per hectare or UM 24,000 per household for an average surface area of 2 hectares/farmer for floodplain crops. Overall impact on the project area remains insufficient in that the 260 hectares of protected basins are expected to provide total additional income of UM 3,120,000. 1

which is very low, even compared to the cost of protection. It must be underscored however that the project had a considerable impact on temporary job creation on works projects for socio-economic infrastructure and projects to open up the project area, which were awarded to local enterprises and workers. According to the project monitoring and evaluation system, the payroll for implementing such infrastructure is approximately UM 240 million (US$971,670).

Farm production and food security. Impact in this area was unsatisfactory overall. The increase in production for market garden perimeters covered (42 hectares) is not easily quantifiable. However, it would appear that the support for women's cooperatives and technical training provided by specialized partner operators played a role in improving production. On average, each woman is benefiting from 12 to 35 kilos of vegetables over the agricultural year, which represents close to 25 per cent of average consumption for rural families in Mauritania. At the project level, the overall increase in farm production attributable to the project remains low: considering the area covered and the range of yields indicated, production did not exceed 80 tonnes. With respect to productivity, yields for gardens covered appear to have fallen significantly in year four. PASK training and provision of veterinary assistants favoured higher livestock productivity and food security. According to the M&E system, the veterinary assistants provided care for more than 43,000 head of livestock, 56 per cent cattle and 34 per cent sheep, thus contributing to an improvement in animal health and yields. With regard to food security, local observations show that market gardening activities led to a certain improvement in the quality of nutrition for the households concerned, mainly owing to the introduction of previously unknown crops such as lettuce and aubergine. Notwithstanding the foregoing, the results of the Results and Impact Management System (RIMS) survey conducted in the project area in 2006 confirmed that PASK had little impact on food security overall.

Capital and empowerment. Results in this area are highly satisfactory. Essentially, the project's impact consists of the social transformation of the environment at both a collective and an individual level. The project promoted more open attitudes and greater social integration of the various communities with their communes; strengthened community solidarity through support for grass-roots organizations and a more robust consultative process thanks to support provided to CCCs. The promotion of 112 management committees for socio-economic infrastructure is another important project achievement in terms of strengthening social capital. This improvement appears to be the result of the combined effects of building schools and IEC activities, which placed major emphasis on schooling for girls. This finding is confirmed by the effective presence of women in local decision-making bodies. Women account for more than 30 per cent of CCC members (including four chairpersons) and 45 per cent of infrastructure management committee members. In addition, women were highly involved in project implementation, accounting for 50 per cent of the outreach workers for multipurpose partner operators, 80 per cent of literacy workers and 98 of IEC pole personnel. Nevertheless, the project's social impact remains unsatisfactory owing to the failure to promote local consultative and planning structures for community development in support of CCCs set up in the context of institutional support for communes, on one hand, and the weakness of infrastructure management committees and lack of promotion and support for producer organizations outside of market gardening cooperatives, on the other.

Natural resources and the environment. PASK impact on natural resources and the environment was quite limited overall. Regrettably, the project was unable to implement the only activities that could have improved the environment, such as watershed development and reforestation through woody species development. Activities to raise awareness among villagers of the dangers of brushfire and the introduction of an alternative source of energy, i.e. bottled gas, seems to have had some positive effects. The specific contribution of PASK, however, cannot be accurately determined given the simultaneous interventions of a large number of players in the same area (two German Technical Cooperation Agency – GTZ – projects, local authorities, NGOs, etc.).

Institutions and policies. PASK support for communes effectively contributed to building the capacity of municipalities through the emergence of more dynamic communal institutions compared to other communes not having benefited from the project. PASK thus favoured the emergence of a citizenship culture. In addition, it created conditions for strengthening the national decentralization process through institutional support for communes, training for municipal elected officials, the establishment of CCCs and the recruitment of communal development agents. On the other hand, PASK implementation had no impact on building capacity among deconcentrated State departments, which remained on the margins of project activities. These relate mainly to farming, livestock, waterworks and public works. In short, the project impact was greatest in terms of human and social capital and community empowerment.

Sustainability and innovation

Sustainability. Since it would be premature to assess the sustainability of project achievement, given that the project had not yet been concluded at the time of writing this report, the evaluation has focused on seeking out and analysing favourable or unfavourable signs of sustainability. The new social dynamic oriented towards increased participation by rural communities, women and civil society in particular, is bound to continue and indeed has every chance of improving in the future. The achievements in terms of brushfire awareness and firewood reduction have some chance of lasting given the strong buy-in by the public authorities and local players. The proactive dynamics observed within communal structures (municipal councils and CCCs) and continuing capacity-building for them under the project are an important asset that could enhance the sustainability of project achievements. However, the project's impact on farm production and household incomes remains quite limited. In short, despite the existence of several positive factors, there are significant real risks to the sustainability of the project's primary results and impact unless appropriate measures are swiftly taken to attenuate them.

Innovation. PASK has had the merit of introducing two major innovations in the area: the first, an institutional innovation, has to do with employing a participatory approach that involves both community and communal levels; the second relates to promoting income-generating activities under the self-managed development fund concept, an initiative that is still incipient but has a good chance of expansion. In terms of scaling up, PASK implementation has opened the way for a large number of development projects financed by other donors in Aftout South and Karakoro (Equitable Regional Growth Development Project, Assaba Communes Support Project, GTZ projects, etc.), which is considered one of the country's poorest zones. PASK has therefore influenced decision-making by other donors and by the Government, as confirmed by governmental representatives during the evaluation.

Performance by partners

Government. Despite changes in several oversight agencies since project start-up, government support for the project has been constant. The ministries in charge of planning and budget have ensured good mobilization of HIPC funds for more than US$7 million, compared to US$6 million called for under the project appraisal report. In addition, the Government reacted quickly to the findings of the RIMS survey, setting up an emergency programme that was carried out in 2007. Nevertheless, it tolerated the de facto establishment of the project coordination and management unit in Nouakchott, that is a day's journey by road from the project area, despite the many recommendations made by UNOPS and IFAD in this regard, thus running counter to the loan agreement provisions and leading to poor effectiveness in monitoring activities. The Government and IFAD share responsibility for the low levels of relevance in project design and responsiveness up to the time of the mid-term review regarding delays in implementing planned activities. Regional and communal authorities have expressed strong and continuous interest in the project and have greatly facilitated and/or contributed to its implementation. The project team made commendable efforts towards good project implementation, despite the difficult context and weaknesses in some aspects of project design. The performance of the unit responsible for the income improvement and diversification component was constrained by instability within the team and vacancies in specific positions. The unit was not successful in carrying out the recommendations of the agricultural study and providing consistent content for the agricultural component. In short, in view of the foregoing, performance by the Government side as a whole was moderately unsatisfactory.

IFAD. IFAD's performance is deemed moderately satisfactory as a whole, particularly during the period leading up to the mid-term review. IFAD shares responsibility with the Government for the project design flaws. However, IFAD's performance has improved gradually since 2006, when a new portfolio manager was appointed and the mid-term review took place. UNOPS provided planning-based project supervision, often mobilizing the same teams, which translated into a gradual improvement in its knowledge of the project and, consequently, performance by the teams. The supervision missions generated a number of relevant suggestions and recommendations. OPEC made a significant contribution in the form of cofinancing for the regional access subcomponent and showed flexibility in agreeing to make the proposed changes to programme content in this regard, as well as specific amendments to the loan agreement and an extension at the behest of the Government, the project coordination and management unit and UNOPS. The multipurpose partner operators, which are responsible for conducting participatory planning and diagnostic processes and capacity-building for CCCs and grass-roots organizations, made quite a good effort despite the size of the area and severely limited access, and complied overall with their terms of reference. The specialized partner operators posted a mixed performance. Those responsible for implementing support for market gardening cooperatives performed relatively well and in compliance with their contracts with PASK.

Conclusions and recommendations

Overall assessment. This evaluation rates the project performance as moderately unsatisfactory overall. However, it is noted that the purpose of PASK, one of the first instruments for implementing the CSLP, was to improve conditions in Aftout South and Karakoro, an extensive and isolated area considered one of the country's poorest zones. The decision to finance PASK had an important effect on the other donors and the Government, leading to the development of other projects in this highly disadvantaged area. The continued allocation of consistent funding for the development of socio-economic infrastructure, particularly thanks to the Government's sound ability to mobilize significant funding (contribution under the HIPC Initiative), is also recognized. Weaknesses relate mainly to inadequate knowledge of the area's assets and constraints, inadequate allocation of resources (compared to the objectives set), poor performance by the project coordination and management unit owing to its inappropriate and unstable institutional anchoring, and very low levels of involvement by deconcentrated technical departments. The table below summarizes the scores assigned to the various evaluation criteria.

Summary of Ratings assigned to PASK and its Partners

Evaluation Criteria Ratings 2
Performance criteria  
Relevance 4
Effectiveness 3
Efficiency 3
Project performance 3
Rural poverty impact 4
Household income and assets 3
Agricultural productivity and food security 2
Social capital and empowerment 5
Natural resources and the environment 4
Institutions and policies 4
Other performance criteria  
Sustainability 3
Innovation 4
Overall project evaluation 3
Performance of partners  
Government 3
IFAD 4
UNOPS 4

Source: PASK Interim Evaluation.

Recommendations. Subject to the agreement of IFAD and the Government of Mauritania, and given the persistence of rural poverty in Aftout South and Karakoro and the commendable but incomplete efforts by PASK partners based on the mid-term review, this evaluation favours a second phase of the project. However, to ensure that such a second phase starts out on a sound foundation and achieves a significant impact on rural poverty within its intervention area, it is recommended that three conditions must be met:

Recommendation 1: Appropriate resources should be allocated for the design of a second project phase.

Recommendation 2: A better match is needed between objectives set and implementation modalities.

Recommendation 3: The project should be refocused on economic objectives – which are key to combating poverty – by sustainably optimizing the area's water and agro-pastoral potential and consolidating the experience in promoting income-generating activities launched during this first phase, while ensuring sound linkages with strategies for agricultural and livestock development and sustainable management of natural resources.


1/ Approximately US$15,000, at most.

2/ 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)

 

 

LANGUAGES: English, French

Rural Enterprises Project – Phase II

Ghana  
September 2011

Interim Evaluation

Introduction. The interim evaluation of the Ghana Rural Enterprises Project, Phase II (REP II) was conducted by the Independent Office of Evaluation of IFAD (IOE) in line with the provisions set out in the IFAD Evaluation Policy and IFAD Evaluation Manual. 1 The main objectives of the evaluation were to: (i) assess the performance and impact of IFAD operations through the REP II; and, (ii) generate a series of findings and recommendations that will contribute to formulating the forthcoming country strategic opportunities programme. The evaluation was conducted while project implementation was still active so performance was assessed based on current achievements as well as assessment of potential performance by project completion. Following a preparatory mission in May 2010, the main evaluation mission took place in July 2010 and included visits to 16 REP II-supported districts and five non-project districts.

Country and sector background. Ghana was one of the first countries in Africa to pursue economic reforms in the 1980s and, despite periods of economic volatility, has demonstrated positive economic growth. Gross domestic product has raised from 4.5 per cent in 2002 to 6.2 per cent in 2006. In 2007 and 2008, the Ghanaian economy was hit hard by the combination of a widening current account deficit and a contracting capital account. In 2009, the economy started to show signs of stabilization, but challenges on the macroeconomic front remain substantial. 2  The overarching goal of the most recent national Growth and Poverty Reduction Strategy (GPRS II 2005-2010) is to attain middle income status by the year 2015, within a decentralized democratic environment.

Ghana comprises ten regions and 170 districts with an estimated population of 21 million 3 and an annual population growth rate of 2.56 per cent in 2006. Agriculture provides the main source of livelihood for approximately 60 per cent of the population. The main food crops are roots and tubers, cereals and pulses. Importation of food crops such as rice and processed foods is high. Local agriculture suffers from use of low yield crop varieties, lack of irrigation and limited market linkages. Micro and small enterprises (MSEs) are thought to comprise around 80 per cent of the service and manufacturing sectors. There are a range of factors hindering the MSE growth, including: limited extension of infrastructure (electricity, roads, water, telecommunications), weak institutional arrangements, high cost of inputs due to importation and lack of rural finance.

Project background. The second phase of the REP II was designed in 2002, based on the learning from the preceding, successful REP I. The REP II Loan Agreement was signed in 2003. The overall goal of the REP II was to alleviate poverty and improve living conditions in the rural areas and especially increase the incomes of women and vulnerable groups through increased self- and wage employment. The REP II design involved four interrelated components: (i) Business Development Services through establishment and operation of business advisory centres (BAC) in each participating District Assembly; (ii) Technology Promotion and Support to Apprentices Training (TPSAT) through establishment of rural technology facilities (RTFs) in selected districts; (iii) Rural Financial Services (RFS) through continuation of the REP I Rural Enterprises Development Fund (REDF); and, (iv) Support to MSE Organizations and Partnership Building (Institutional Support). There was also a non-technical component for project management. The REP II project area aimed to include 53 districts across the ten regions in Ghana. The project interventions targeted the entrepreneurial poor through a demand-driven approach.

Implementation results. REP II commenced slowly, experiencing several changes within the executing agency, as well as issues and challenges pertaining to recruitment and procurement. However, since the mid-term review in 2007, results have shown an improving trend. The 2008 IFAD supervision mission noted that significant progress was being made in all components. Implementation has accelerated and performance is now commensurate with the project time elapsed (80 per cent at the time of evaluation) for most activities. The project is now active in 53 districts, providing direct support to BACs and RTFs. All of the targeted BACs have been established. In addition, also twelve RTFs have been established. At the time of this evaluation, the remaining six RTFs were in the process of being completed. Delays in establishment of the RTFs resulted from procurement bottlenecks with the African Development Bank (AfDB).

Despite the initial delays, training activities have exceeded targets for clients and apprentices trained at 115 per cent and 131 per cent of target respectively. The number of SMEs established has reached 71 per cent of target and 94 per cent of the targeted number of clients have been linked to larger commercial operations. On the other hand, there are some aspects where more serious issues have been faced in achieving the targeted results. Only 27 per cent of the targeted number of MSEs has accessed the available loan funds. It is likely that the bottlenecks in accessing credit have also contributed to lower than expected number of wage jobs created (57 per cent) and adoption rates from training (48 per cent of those trained). The BACs are already actively working to overcome barriers to credit access and increase conversion of training into business start-up, survival and employment generation. In addition, some positive initiatives have not yet been reflected in the project monitoring database. Therefore, results are likely to further improve by the end of the project.

Relevance. The project is rated as highly relevant to the national poverty reduction agenda, to IFAD's Strategic Framework (2007) and country strategy for Ghana and to the needs of the rural poor. The goal and objectives of REP II, which focus on rural poverty reduction through rural MSE development, are consistent with the Government's development objectives as stated in GPRS I and II. The REP II design supports GPRS II's emphasis on developing a market-driven agricultural sector and a vibrant private sector. At the local level, the project objectives are also consistent with the national decentralization agenda that aims to strengthen the capacity of local governance through encouraging District Assemblies 4 to take responsibility for local development and in generating resources through local taxes and fees. The evaluation mission found that the REP II activities were highly relevant to the District Assembly's priorities as outlined in their medium term development plans and to the needs of the clients in the participating districts.

Effectiveness. REP II has been effective in progressing towards attainment of the project objectives and goal. Given the proactive approaches of the Project Coordination and Monitoring Unit (PCMU), it is likely that the project targets will be met by the end of the project period. The BAC network has created a more enabling environment for MSEs and has effectively stimulated the establishment and expansion of MSEs. The activities of the BACs and the RTFs have assisted in developing a competitive rural MSE sector within participating districts. The project has been successful in reaching and exceeding the targeted coverage in terms of number of districts. The BACs within each district and the RTFs are strongly supported by the District Assemblies in terms of both commitment of resources and increasing interest in the activities.

Efficiency. Project efficiency is currently moderately satisfactory given the delays in RTF establishment, difficulties with the AfDB procurement processes and weak financial performance of the RTFs that have been established. On the other hand, the project has complied with the annual work plan, budgeting and financial management requirements. There has been a substantial shift in funds from the Business Development Services allocation to the TPSAT allocation. This was mainly due to the agreement between the Government and the AfDB to realign funds to support a facilities and equipment upgrade of the RTFs. Expenditure to June 30, 2010, including contracts under procurement, has already exceeded base costs. The overall funds available to the project have increased above the initial base costs due to the currency movement and redenomination. 

Rural poverty impact. The project has reached the entrepreneurial poor. Overall, 62 per cent of project clients are women. The project impact assessment carried out in 2008 classified 57 per cent of respondents as entrepreneurial poor while 12 per cent were unemployed or under-employed. The remaining 31 per cent were more likely to be middle income, but with potential to create employment and other income generating potential for MSEs. Project clients interviewed stated benefits that had made a difference to their quality of life. Attribution of impact to project inputs is uneasy as there were other substantial contributions to impact such as improved infrastructure in some areas, but there is little doubt that the project has made a significant contribution to MSE development within each district.

Household income and assets improved as SME establishment and growth occurred. The evaluation noted a considerable upward shift in income levels. Assets purchased included improved buildings, transportation and increase in stock. Human and social capital and empowerment increased through skills development, participation in associations and through increased opportunities for market exposure as a result of higher income. Women particularly benefited through generating their own income. Food security and agricultural productivity was only moderately impacted on by the project, partly due to the nature of the project design. However, some agro-processing MSEs were supported. In food deficient households, food security was improved through increased income sources for the household. Institutions and policies have been influenced by REP II, facilitating the introduction of two policy initiatives in the local government system through the Ministry of Trade and Industry (MOTI) and Ministry of Local Government and Rural Development (MLGRD). First was the establishment of a sub-committee on MSE Promotion within the national District Assembly system and the second was the establishment of a new Department of Trade and Industry to facilitate the development and promotion of small-scale industries in the districts. The BACs have acted as a practical model that has been captured in policy change that will strengthen the MSE sector across the country.

Sustainability, innovation and gender. Sustainability of project impact is likely to be sustained. The commitment to the BACs by the District Assemblies is strong and would continue even without project support. The RTF model is less viable. The current mechanism is not financially viable and requires review to define the future strategy for ensuring that operational costs will be covered and for the RTFs to remain relevant to the needs of the districts. There have been a range of innovations in the project, from business level improvements to improved District Assembly systems. The focus on women has been continuous, with around 62 per cent of resources being invested in women's development, leading to positive achievement in both the livelihood and empowerment of women.

Performance of partners. The performance of partners has largely been satisfactory apart from the difficulties in financial management and procurement with AfDB in the first two years of the project. The United Nations Office for Project Services (UNOPS) performed a satisfactory role while it was supervising the project. The project is now directly supervised by IFAD. The project operated under an active and consultative group of partners that has been instrumental in both guiding operations and in facilitating policy initiatives to strengthen the SME sector at national and district levels.

Summary of overall performance. Overall project performance has reached satisfactory levels and in some cases has exceeded targets. The 53 District Assemblies directly engaged with the project have demonstrated their commitment to the BACs and RTFs. Project management achieved the core targets for the project despite serious challenges. The BACs are operating well and, despite some operational weaknesses, the RTF operations are leading to a range of local economic growth initiatives. The table below provides the ratings on all the evaluation criteria and on the performance of partners.

Evaluation Ratings Summary

Evaluation Criteria Project Evaluation Ratings
Core Performance Criteria

 

Relevance

 

6

 

Effectiveness

 

5

 

Efficiency

 

4

 

Project performance

 

5
Rural Poverty Impact 5
Household income and assets 5
Human and social capital and empowerment 5
Food security and agricultural productivity 4
Natural resources and the environment 4
Institutions and policies 6
Other Performance Criteria
Sustainability 4
Innovation and scaling up 5
Gender 5
Overall Project Achievement 5
Performance of Partners
IFAD 5
Government 5
Cooperating institution (UNOPS) 5
AfDB 4

Conclusions. Overall, the project is relevant to the Ghana context and has performed well. Despite a slow start, due to reasons beyond the project management control, it has achieved a satisfactory level of effectiveness and has been particularly efficient in terms of business service provision. The project has made a contribution to poverty reduction and MSE sector development within each district of operation. Such impact may not be as widespread in terms of the numbers of businesses and employees originally envisaged, but it has established a sustainable foundation for current and future poverty reduction approaches in the MSE sector. Furthermore, the project has stimulated widespread interest in MSE development and is acting as a major Government approach for national SME sector development.

Recommendations

  • There is substantial potential for a follow-on phase for REP II. The BACs should be consolidated within the current districts, maintaining the core programs and continuing to assess and support requirements for business growth. At the same time, gradual expansion nationwide would seem to be a viable approach. The BAC model has now been well-tested and should be replicable across all areas of the country. The future management of the RTFs should be considered with possibility of more private sector participation either directly or through the trade associations. The project may need to focus on the RTF Boards as a means to determine clearer functional arrangements for the RTFs. Alternatively, a more extensive analysis of costs, time and operational effectiveness is required to make clearer guidelines for RTFs' long term viability.
  • Poverty analysis. IFAD needs to consider whether the focus of its work should be in specific geographic areas to increase the inclusion of the poorest groups or focus on nationwide pro-poor institutional changes. This is important in consideration of the potential geographic spread if a follow-up phase is approved. The targeting aspect of the project has been realistic in terms of focusing on the entrepreneurial poor and, overall, in providing demand driven services. However, it is important that such services be established in a sustainable manner to ensure that MSE support will gradually penetrate further into the poorer areas of each district.
  • Value chain development. The IFAD country programme in Ghana could help to improve linkages between raw material supply and MSE sector growth. This could occur by creating a link between the District Department of Agriculture and the MSE sub-committee. The value chain links could be considered as part of a local economic planning process. The idea of targeting the growth-oriented MSEs to enable them to become growth poles for income and job creation would also bring about economies of scale in the sourcing of raw materials and markets for the MSEs.
  • Rural finance. Rural finance has been a key component of IFAD-financed interventions in Ghana in the last decade, yet lack of access to credit remains a major barrier to MSE establishment and growth. The experience of REP II shows that the bottlenecks in the rural finance system have to be effectively addressed to the benefit the entrepreneurial poor. There is a need to intensify rural savings, information and referral services to a range of appropriate rural financial institutions, as well as continue to link with other IFAD interventions in rural finance.
  • Sector development. A follow-on project should be embedded within the core institutional framework of the country to ensure sustainability. MSE sector development needs to occur at the district, regional and national levels within the Government institutional system. A possible third phase of REP should provide resources and support to build economic planning capability at the district level, with a view to increasing local revenue and long term commitment to financing the BACs and RTFs. IFAD needs to work with MLGRD and MOTI to identify economic potential for MSEs, possibly through linking economic development planning processes to the District Medium Term Development Plan.
  • The regional level of government plays an important coordination function in Ghana. REP II has not worked strongly at this level. There is potential to strengthen both the MSE sector and operations by integrating project monitoring and strategic regional MSE development at the regional level. IFAD and the Government have an opportunity to make a further major contribution to MSE development. The REP II approach can be adopted as a national program and the evolving design can become the main sector development approach. To this end, the capacity of the various national institutions involved in the implementation of project activities would have to be reviewed and assessed thoroughly to determine their ability to sustain these activities. Another opportunity to be pursued is the development of a Ghana MSE policy based on the learning and knowledge derived from REP implementation.
  • Trade associations. There is potential for IFAD and the Government to strengthen the local trade associations (LTAs) through investment in national and regional trade associations. The LTAs should be encouraged to strengthen the linkages with the regional association and hence at the national level. Trade associations' umbrella bodies, such as the Association of Small-Scale Industries and the Council for Indigenous Business Associations, could be assessed to determine the role that they can play in promoting MSE development. In the follow-on project, the Association of Ghana Industries, which is a strong umbrella body for medium and large scale enterprises, could work closely with the Association of Small-Scale Industries to build up its capacity.

 2/ World Bank, Country Assistance Strategy Progress Report, March 2010.

3/ Ghana Statistical Service, GLSS V, 2006.

4/ The local government system consists of a Regional Co-ordinating Council, a four-tier Metropolitan and a three-tier Municipal/District Assemblies Structure. The District Assemblies are either Metropolitan (population over 250,000), Municipal (population over 95,000) or District (population 75,000 and over). There are three Metropolitan Assemblies, four Municipal Assemblies and 103 District Assemblies.

 

LANGUAGES: English

Yarmouk Agricultural Resources Development Project

Jordan  
April 2011

Project Performance Assessment

Background. In 2010, the Independent Office of Evaluation of IFAD (IOE) undertook a pilot project performance assessment (PPA) of the IFAD-financed Yarmouk Agricultural Resources Development Project (YARDP) in the Hashemite Kingdom of Jordan. The PPA is a project-level evaluation conducted as a next step after a project completion report validation (PCRV). The PCRV consists of a desk review of the project completion report (PCR) and other available reports and documents. A PPA adds country visits in order to complement PCRV findings and fill in selected knowledge and information gaps. Both the PCRV and the PPA apply the evaluation criteria outlined in the IOE Evaluation Manual but they do so in a selective manner in view of the time and resources available. In particular, the PPA is generally not expected to undertake quantitative surveys. Rather, the PPA adds analysis based on interactions with country stakeholders, direct observations in the field and qualitative information drawn from interviews with beneficiaries and other key informants.

The project. The objective of the YARDP was to improve the food security and income levels of target farmers by arresting degradation and restoring soil fertility for sustainable use of land and water resources through: (i) technical and financial support for the target group to put soil and water conservation (SWC) measures in place and improve agricultural production; (ii) promotion and credit-funding of on- and off-farm enterprises; and (iii) strengthening the capacity of the agricultural directorates in the project area to provide the required technical support services and extension. Total project costs were estimated at US$28.1 million. Of these, IFAD loan was of US$10.1 million. A total of US$12.6 million was to be provided by the Arab Fund for Economic and Social Development (AFESD) but this never materialized. New cofinancing was mobilized from the Abu-Dhabi Fund and the Organization of Petroleum Exporting Countries Fund – US$5 million each. Total project cost at completion was 25.6 million. The initial years of implementation were characterized by a slow rate of loan disbursement caused by technical, policy and financial constraints including those following the removal of AFESD financing. At the original loan closing date (31 December 2006), total disbursement of IFAD loan was at 41 per cent. Thanks to a two-year extension, the IFAD loan was fully disbursed but this required the retroactive increase in the share of civil work expenditures eligible to be financed by IFAD loan from 15 to 40 per cent.

Relevance. The YARDP was aligned with the IFAD 2000 and 2007 country strategic opportunities programmes (COSOPs). Constraints were faced in the application of the proposed integrated ridge-to-valley approach. The Government of Jordan was not fully convinced of the value added of mobilization campaigns through NGOs that were conceived in project design as the instrument for ensuring broad-based participation. The fragmentation of land holdings, the high number of absentee farmers and the tenure arrangements in project area further increased the difficulties to apply the proposed approach. Because of these difficulties, the YARDP followed a pragmatic approach and supported the farmers that complied with the eligibility criteria and that could provide the financial contributions specified in the YARDP appraisal. No information is available on the socio-economic profile of YARDP beneficiaries of SWC initiatives. The only activity with an explicit social focus was the programme income-generating activities (IGA) loans targeted to women. All in all, the YARDP did not show a clear conceptual linkage between the characteristics of the disadvantaged rural population, as described in design, and project activities.

Effectiveness. The subsidized financing of on-farm SWC was the most important instrument mobilized by the YARDP for achieving its objective. In this sector, the most serious constraint was convincing farmers to invest in SWC in agriculture and dedicate more time and effort in agriculture activities. The project proved that with sufficient awareness and financial incentives, farmers were willing to invest their own resources in land development. Despite the good result achieved, the size of land under improved SWC practices was 56 per cent of the target (84 per cent compared to revised targets). The PPA confirmed the effectiveness of IGA loans for initiating or expanding micro enterprises often led by women. On the contrary, project investments in SWC did not result in an increased demand for credit as envisaged by YARDP designers. Despite the training programme sponsored by the YARDP, the quality of agricultural extension remained challenging.

Efficiency. The withdrawal of AFESD stalled project investments in early project years. As a result of the slow disbursement, the extension of the loan for two years inevitably increased expenditure on management and supervision. The YARDP efficiency performance benefited from the cost-saving capacity of project implementers. Total management costs were estimated at 16 per cent of the total cost, which is in line with the average of IFAD-financed operations. In the PCR, the economic internal rate of return (EIRR) is estimated at 20 per cent that favourably compares with the 17 per cent at appraisal. Although, this estimate could not be verified, the PPA confirmed that the resources invested under the project in orchards and SWC measures are likely to generate significant and enduring benefits to beneficiary farmers that will more than compensate the resources being invested.

Impact. The YARDP rural road rehabilitation programme (287 kilometres) positively affected the living standards of 13,000 households. Road construction caused an average financial saving in transportation for beneficiary households totalling JOD 105 per month and increased by 50 per cent the value of houses. Farmers benefiting from SWC measures reported an income increase of 20 per cent. The income generated by investments in IGAs was estimated between US$2,500 and US$4,200 per year. According to the project impact surveys, the average monthly income of YARDP beneficiaries increased from JOD 298 to JOD 392. The average contribution of farm income to total household income increased from 25 to 57 per cent.

Annual agricultural income increased from US$1,260 to US$3,780. It is however important to consider that the methods adopted in the project impact surveys did not explicitly capture the extent to which these results are attributable to the YARDP. The project made an effort for capacity building of rural women although this was not sufficient to address the lack of technical and business capabilities affecting smallholders in the project area. With regard to social capital, the project was expected to generate a significant impact on the development of groups. This objective clashed with the individualistic predisposition of highland farmers and the difficulties faced by the YARDP to undertake comprehensive participatory campaigns. In terms of agriculture development, the project provided incentives to farmers to shift from cereal crops to more productive land-use systems based on perennial fruit trees and olive trees. The on-farm water harvesting structures (cisterns and stone tree basins) had a positive impact on land productivity that increased by approximately 20 per cent.

The income increase had a positive effect on the capacity of beneficiary households to purchase food. The expansion of livestock production and dairy processing activities financed through IGA loans implied higher availability of food items within the households.

Nevertheless, evidence is available of an increased number of households experiencing hungry seasons and a 4 per cent increase in acute malnutrition. These differences may be explained with the increase in price of food staples and other products. Unfortunately, no information is available on the extent to which these changes affected YARDP beneficiaries. At the same time, the characteristics of the survey methodology do not allow to draw any conclusion on the casual linkage between the YARDP and the above hunger and malnutrition facts. In terms of natural resources, productivity of land increased by 29 per cent in sites that benefited from on-farm SWC.

The greatest merit of the YARDP was indeed to increase the interest of farmers in land conservation that may generate important results in terms of environmental conservation and development. The patchiness of SWC measures and the fact that the integrated ridge-to-valley approach was not implemented reduced the net impact of the YARDP that is however positive.

The most important institutional change of the project was the establishment of the SWC units in the Agricultural Directorates of Irbid, Bani Kenanah and Ramtha. Despite the fact that the YARDP made an important effort for capacity building, the funds available were not adequate to generate visible changes in extension service.

The YARDP had also limited leverages on the technical capabilities and/or the institutional functioning of the Agricultural Credit Corporation (ACC) and the training programme for the ACC cadre was not implemented. The most important policy change was the decision from the Government of Jordan to continue the stream of activities initiated by the YARDP for two additional years.

Sustainability. The sustainability of micro enterprises supported with IGA loans is significantly exposed to market-related risks as confirmed by a publication by KariaNet 1 where it is noted that 39 per cent of the women that took a loan under the YARDP could not continue the implementation of the project because of marketing obstacles and the inability to market their products. Market-related risks include the highly volatile price of inputs, the difficulties in accessing storing facilities or alternative sale channels, the absence of instruments for coordination with buyers and for information sharing, the weakness of existing cooperatives. The sustainability of the off-farm SWC structures is meagre and the project did not devote significant efforts to the maintenance systems for off-farm SWC structures.

Innovation. The YARDP design included several innovative features but – as noted in the PCR – the project was not effective in mainstreaming such innovations. The communities targeted by the YARDP did not embrace the idea of a collective management of off-farm natural resources. The project however succeeded in promoting a new model for promoting SWC investments compared to past experiences based on a charitable approach.

With regard to the establishment of users' groups, its implementation became difficult because of the low emphasis on participatory approaches and the overall slow rate of implementation of off-farm investments. At the end, very few water groups were formed. The third innovation (establishment of a credit line with a focus on women for IGAs) was implemented but not in line with the modality described at design: instead of the NGO, it was the ACC that was responsible for the management of this credit line.

Scaling up. The PCR provides very limited information on the scaling up performance of the YARDP. Building on YARDP experience, the Ministry of Agriculture (MOA) has established a land development programme and a water harvesting programme; a programme for income generation (the Hakoora programme) was designed based on the demand for small-scale investments by women and poor rural households promoted by the YARDP. These were however not documented in the PCR or in any other document. IOE could not find evidence of a systematic approach for dissemination of YARDP experience aimed at scaling up. The intended strategy of the YARDP based on an integrated ridge-to-valley watershed management approach can be implemented at national scale if appropriate supporting conditions are in place. If so, the lessons learned of the YARDP and the difficulties faced in applying this approach could be very useful. The prospects of scaling up are inevitably affected by the fact that very few donors operate in the agricultural sector in Jordan.

Gender equality and women empowerment. The IGA loans were the activity of the YARDP with an explicit social connotation. In this, the project promoted a broad participation of women and achievements were above expectations. Women's lack of title to the land and of solid collateral had limited their chances of meeting eligibility criteria for credit. For this reason, the ACC required the formal involvement of a regular income earner in the household as guarantor. It can be argued that such model may not represent a genuine instrument of women empowerment as it required support and acceptance from the regular income earner of the family (that in most of the cases was the husband). Nevertheless, the evidence gathered during the PPA showed how IGA loans contributed to the economic and social empowerment of women. Many of the women borrowers interviewed during the PPA declared that the income gained in the activities financed by the loan became higher than the husband's salary. As a result, women increased their command over household financial resources and benefited from an increased influence in decision-making processes.

Performance of partners – IFAD. The lessons learned from previous development interventions were not effectively addressed in the YARDP design. The project continued to face problems in promoting beneficiaries' participation and the solution proposed (consisting in the recruitment of a specialized NGO) was not accepted by implementing partners. This undermined the application of the key innovative feature of the project. Overall, the quality of project design was affected by the fact that important elements of Yarmouk socio-economic structure (i.e. land fragmentation, individualistic predisposition of farmers, limited share of communal land) were not clearly incorporated in project implementation strategy. The very important role of IFAD during early implementation years should be recognized: the Fund actively and proactively engaged in supervision and performance monitoring. No mid-term review was undertaken but a project review was mounted in June 2006, around the original date of project completion.

Performance of partners - Government of Jordan. This PPA confirmed the positive appreciation of the PCR for the Government of Jordan's strong ownership of YARDP goal and objective. Throughout the implementation history of the YARDP, the Government of Jordan ensured the availability and the timely provision of counterpart funds. AFESD was removed from YARDP financing in line with an executive Government of Jordan's decision on the distribution of international financing among various projects. This decision stalled investments in resources development until the Government of Jordan obtained alternative financing. The programme management unit (PMU) established successful cooperation with the different governmental institutions partners involved in YARDP implementation. The PMU provided effective leadership in coordinating the wide range of activities included in the YARDP. The monitoring and evaluation (M&E) system put in place under the YARDP performed satisfactorily by ensuring the rigorous tracking of project outputs. The system could have been integrated with monitoring of expected outcomes at watershed level or with a continuous monitoring of the socio-economic status of beneficiaries. The ACC has been a very important partner for the YARDP as the activities implemented by the ACC absorbed more than 37 per cent of IFAD loan.

Performance of partners - cooperating institution. AFESD was removed from project financing but remained responsible for supervision of project fiduciary aspects. The appointment of the United Nations Office for Project Services (UNOPS) as cooperating institution in May 2006 resulted in a supervision process that devoted higher attention to the achievement of development objectives. IOE noted significant disconnects between UNOPS supervision ratings and those formulated by IFAD in the annual portfolio review processes. Such mismatch could be due to various factors but it may indicate the fact that the cooperating institution was not very effective in sharing with IFAD its concerns on project performance.

Conclusions. The implementation of the YARDP has been characterized by a very slow disbursement rate and it was only after enforcement of the recommendations of the IFAD project review that the full amount of resources available under the IFAD loans could be disbursed. The decision not to use the service of a specialized NGO for beneficiaries' mobilization combined with structural problems such as the high fragmentation of farm landholdings, the high number of absentee farmers and the complex tenure arrangements further impeded the application of the proposed ridge-to-valley approach. The YARDP implementers identified a more suitable approach based on the voluntary participation of individual farmers. The YARDP succeeded to promote farmers' own investments in agricultural land development and visible results were achieved in terms of expansion of olive orchards and improvement of land productivity. The performance of the YARDP in terms of off-farm SWC structure was significantly below expectations. The disbursement of agricultural loans was below targets. On the contrary, the IGA loans were very popular and positively impacted on household income, livelihoods diversification and expansion of agricultural businesses. These constituted an opportunity for enhancing the role of women in income generating activities and decision making in the household. The financial sustainability of micro and small enterprises is however at risk due to the high exposure to market-related risks.

Recommendation 1

Strategy for agricultural market development. The Government of Jordan should consider (whether in cooperation with IFAD, with other donors or through regular budget) the opportunity for a coherent programme of agricultural market development aimed at promoting the participation of smallholders as well as small processors in urban food markets. This would necessarily require the upgrading of available skills at farmers' level as well as the strengthening of tools for coordination and information sharing among all market actors.

Recommendation 2

Responsibility for monitoring of off-farm infrastructure. The Government of Jordan should determine clear responsibilities for maintenance of off-farm infrastructure. The Ministry of Water and Resources and Irrigation was involved in the design and construction supervision of the recharge dams and other off-farm SWC measures. However, the arrangements for supervision are currently very unclear. The MOA claimed that they would take care of any damages to these structures, but there was no clear-cut process of monitoring or of preventive maintenance. A clear attribution of monitoring responsibility to the Ministry of Water and Resources and Irrigation is therefore needed including with regard to the timing of site inspection, budget and human resources implications.

Recommendation 3

Review of the Results and Impact Management System (RIMS) pilot. The PPA recommends the undertaking of a review of the RIMS pilot surveys. Important knowledge gains could be generated by introducing a differentiation between the treatment and the control group. In projects where the RIMS is accompanied by tailored impact assessment surveys, IFAD and the concerned government should explore opportunities for cost-savings.


1 Knowledge Access in Rural Inter-connected Areas Network (KariaNet) is a pilot project financed by the International Fund for Agricultural Development (IFAD), the International Development Research Centre (IDRC) and IFAD-funded projects in the Middle East and North Africa. It aims to enhance networking among IFAD-funded rural and agricultural development projects in the region in order to improve knowledge sharing and information/experience exchange. See Karianet website.

 

 

LANGUAGES: English

Oudomxay Community Initiatives Support Project

Lao People's Democratic Republic  
April 2011

Completion Evaluation  

Evaluation objectives. A completion evaluation of the Oudomxay Community Initiatives Support Project (OCISP) was conducted in Lao People's Democratic Republic (PDR) in 2010. The main objectives of the evaluation were: (i) to assess the performance and impact of the project; and (ii) to generate findings and recommendations useful for ongoing and future agriculture and rural development projects and programmes in Lao PDR.

Project context. Lao PDR's performance with respect to poverty reduction has been impressive during the last decade. National and rural poverty rates have fallen; the Human Development Index has risen; primary school enrolment rates have risen and access to safe drinking water and basic sanitation has increased. Infant and maternal mortality rates have fallen. However, there is still substantial rural poverty, especially in the northern region where the OCISP was implemented. Shifting cultivation and opium production have been widely prevalent in the north, although it has been officially opium free since 2005 and shifting agriculture has been substantially reduced. Household food insecurity is still a problem, especially in the rainy season.

Project description. The project aimed to improve the livelihoods of some 11,700 poor households living in 149 remote villages in all seven districts of the northern province of Oudomxay. It had five components: community development; agricultural and natural resources management (ANRM); rural financial services (RFS); rural infrastructure; and institutional strengthening. Total project cost at approval was US$21.4 million, of which the IFAD loan was US$13.41 million; the Government contribution was US$3.67 million; Luxembourg co-financed US$1.77 million as a grant (for the RFS and institutional strengthening components) and World Food Programme (WFP) contributed Food for Work assistance equivalent to US$1.76 million (for construction and training activities).

The project was implemented by provincial and district planning offices, five line agencies and two mass organizations (the Lao Women's Union and the Lao Youth Union). A Project Coordination Unit, housed in the provincial Department of Planning and Investment, was responsible for overall project management, coordination and monitoring. Technical and policy guidance was provided by Provincial and District Steering Committees.

Project design and timeline. OCISP was formulated in March 2001 and appraised in October/November 2001 jointly with the Lao Government, the German Technical Cooperation, the United Nations Office on Drugs and Crime, Luxembourg Development and WFP. It was approved by the IFAD Executive Board in April 2002, signed in July and declared effective in September 2002. The project was completed in March 2010 and closed in September 2010.

Project Performance

A major change in the project context was an increase in trade with China and Vietnam and an inflow of foreign direct investment from these countries. In particular, there was rapid increase of commercial maize growing in the Province, driven by private investment in response to increased demand from China. This development offered an important new alternative to target farmers and increased cash availability in the villages, although some villages could not benefit because of unsuitable soils or climate. Other contextual changes included the rolling out of land use planning, village consolidation, and an increased focus on village clusters (kumbans) as a sub district level of planning. In 2008, the province was affected by climatic disasters and pests (rats), which produced rice shortages in some of the target villages.

The only major project design change was a redesign of the RFS component in 2004 due to the restructuring of the banking sector.

Overall, the project was managed well but implementation was uneven because of problems with the ANRM component and delays with the RFS component. It was implemented within the planned period and had high levels of disbursement. By July 2010, the project had reached 92 per cent disbursement overall.

Community development. This component consisted mainly of support to participatory village planning and beneficiary project monitoring, gender mainstreaming and a variety of general development activities. The community development teams successfully established village development plans, on the basis of which a workplan and budget was elaborated with service providers and updated annually. The Lao Women's Union carried out gender awareness training for villagers and project staff and the Lao Youth Union carried out awareness raising activities on drugs, HIV/AIDS and the environment. Other activities carried out by various line agencies included the installation of village speaker systems, certification of cultural villages, health and hygiene training and adult literacy classes.

Agriculture and natural resources management. This component got off to a slow start due to disorganisation, limited technical direction and delays in the arrival of the international technical advisors. Implementation picked up around the mid-term but it remained weak. The most significant activities were support to maize cultivation and the expansion of paddy rice cultivation through irrigation schemes in the lowlands. However, overall beneficiary coverage was limited; female participation was low; extension activities were too diverse, and focused on the lowlands rather than on the uplands where shifting cultivation had been practiced; and the adoption rates were low.

Rural finance services. Village Savings and Credit Schemes (VSCSs) were set up in 63 villages. The total start-up fund was 315,000 Euro. By 2010, these village funds had yielded 84,000 Euro in interest (returns over borrowing) and villagers also added 79,000 euro of their own savings. The total fund now amounts to 478,000 Euro. The 63 VSCSs had 4,700 members of which 97 per cent were women. The borrowing rate averaged 78 per cent of the total capital and the overall repayment rate was 96 per cent. Most loans were used for income generation: to buy maize seed, small animals or for small trading businesses. Progress with the development of secondary and tertiary credit associations was slower and they were still not fully functional at project end.

Rural infrastructure. This component performed extremely well, meeting or surpassing most of its output targets. About 422 km of rural roads were constructed or rehabilitated. This provided improved road access to 132 villages and 9,478 households. Village road maintenance committees were set up and trained by the project to conduct routine maintenance activities, using voluntary village labour and hand tools, but they were not able to carry out major repairs such as landslides. Over 60 per cent of households now have access to improved water via the construction/rehabilitation of 91 gravity-fed systems and a few boreholes and dug wells. Water user committees were set up and were fully functional by the end of the project. A total of 28 dormitories were constructed, providing accommodation for more than 3,000 pupils (of which 49 per cent were girls).

Institutional strengthening. The new project and district coordination units were established rapidly with a full complement of staff for all positions. A comprehensive M&E system was developed in the course of the third year of project implementation. The Provincial and District Steering Committees were set up and met regularly to monitor implementation progress. With support from Lux-Development an ample training programme was carried out covering general management, financial management, M&E and computer skills, supplemented by ongoing advice from national and international technical assistance staff.

Relevance. OCISP was highly relevant to the Lao Government's policies for poverty reduction and decentralisation. Its objectives were consistent with IFAD's regional and country strategies. It was also relevant to the needs of the rural poor as it targeted the poorest villages in priority poor districts of the country's second poorest province. The project approach of developing participatory processes in the villages and strengthening the capacity of project implementers to plan, manage and monitor service delivery to the villages was in line with government policy. However, there was an ambiguity in the design about whether the ultimate project goal and purpose was to be narrowly focused on ANRM objectives or more broadly focused on rural development. There was also some inconsistency in the treatment of cross-cutting objectives such as gender mainstreaming and capacity building. These ambiguities made for some loss of focus in project monitoring.

Effectiveness. OCISP was effective in meeting its objectives in four of the five components. It was particularly successful in meeting the institutional objectives, i.e. pro poor decentralised service delivery. Major successes were also achieved in terms of improving villagers' access to markets and services through the development of financial and physical infrastructure. However, there was very limited success in meeting the ANRM objectives.

Efficiency. Initially the project had problems in establishing efficient project and financial management. There were also problems of overstaffing and staff rotation; the mechanisms for outsourcing technical consultants did not prove to be satisfactory and an early attempt to set up a customised database for integrated project management and monitoring proved to be time consuming and costly. However, with close monitoring by supervision missions, a comprehensive analysis by the Mid-Term Review, and the ongoing provision of technical assistance advice and training, efficiency improved considerably. An analysis by the Project Completion Review showed that the economic internal rate of return increased to 12.2 per cent compared with 8.7 per cent at appraisal.

Rural Poverty Impact

The overall picture is that household incomes rose and poverty diminished in the target villages during the project period. Agricultural output increased, but only in some areas, on some types of land and specific types of crops. It increased through an extension of irrigated land and substitution of maize for rice, rather than through improved productivity. These positive effects were probably limited to households with access to valley bottom land, roads and markets. There were fewer improvements in the uplands, where rice output fell and food security may have deteriorated. On the other hand, access to urban centres, schooling, and safe water were increased through the investments in rural infrastructure, with positive impacts on health and education. There were limited negative effects on the environment. Villagers' empowerment increased through the support to their village institutions and participation in development planning. Women were empowered to participate in public meetings, their workload was reduced because of easier access to water and markets, and their personal well-being improved because of better health, hygiene and literacy. The capacity of government staff to provide pro-poor services significantly increased.

Sustainability and Innovation

Participatory village planning is probably sustainable because of continued government commitment and resources, although there is uncertainty over the effect of the proposed kumban plans as an intermediate layer of planning between the villages and the districts. The ANRM and RFS outcomes are not sustainable. The rural infrastructures are only partly sustainable as the current maintenance arrangements can only deal with minor repairs. Some institutional management capacities are sustainable because project staff will use them in their new jobs. There is a high level of government commitment to sustaining project activities and outcomes, but there are budget constraints.

Most of OCISP's innovations consisted of institutional processes that were adopted in Oudomxay province for the first time, such as working through government structures, the use of participatory processes, gender mainstreaming, and capacity building. These processes are now widely used and can no longer be considered innovative. Few innovative agricultural technologies were developed, despite the urgent need for them in the upland areas. There has been limited scaling up of project processes within wider government structures and there has been little investment in capturing the good practices developed in OCISP for wider adoption.

Performance of Partners

IFAD's performance as a project partner was generally satisfactory; there was good follow-up and flexibility in accepting supervision recommendations and there was particularly good support to the monitoring and evaluation system in the carrying out of the Results and Impact Management System (RIMS) surveys. However, IFAD's timeliness in responding to project queries or requests was sometimes slow. The Lao government considered IFAD to be a collaborative and flexible partner, although it did not participate much in donor fora at national level. UNOPS provided good supervision and implementation support to the project between 2002-2006 and there was a smooth handover to direct supervision by IFAD in 2007.

The Lao Government has strong ownership of the project, which has undoubtedly been helped by the fact that it was fully implemented within government. Initial problems with project procurement, financial management and staffing were resolved and full compliance with the requisite procedures was achieved by project end.

The collaboration with cofinanciers Lux Development and the World Food Programme was extremely good. This was illustrated by the fact that there was a single annual workplan and budget for all donor and government-financed activities. WFP stated that the cooperation between the government and all the donors was exemplary and a good model of cooperation for other projects. The Food for Work activities financed by WFP were particularly important in encouraging villagers' participation in the project, and the rural finance and institutional strengthening components financed by Lux-Development had significant impact in terms of increasing village access to savings and credit and in improving project management generally.

Conclusions

OCISP ratings for project performance and impact are moderately satisfactory, pulled down in each case by ANRM. In terms of rural poverty impact, there are good ratings for village empowerment and pro-poor service delivery; but lower ratings on the impact on agricultural productivity and food security. It has a low rating on innovation and is only moderately satisfactory in terms of sustainability. So the overall project achievement rating is 4 (moderately satisfactory).


Summary of Project Performance and Impact - Ratings*

Evaluation Criteria

OCISP Evaluation Ratings

A.  Core performance criteria

 

Relevance

5

Effectiveness

4

Efficiency

5

Average project performance

4.6

B.  Rural poverty impact

 

Household income and assets

4

Human and social capital and empowerment

5

Food security and agricultural productivity

2

Natural resources and the environment

4

Institutions and policies

5

Overall rural poverty impact

4

C.  Other performance criteria

 

Sustainability

4

Innovation, replication and scaling up

3

D.  Overall project achievement

4

E.  Partner performance

 

IFAD

4

Lao Government

5

Cooperating institutions

5

Cofinanciers

Not rated

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).

OCISP's main purpose was to improve the livelihoods of villagers living in remote, mountainous areas of Lao PDR where shifting cultivation and opium production had been reduced. The project was primarily designed with narrow focus on ANRM. But the design did not fully appreciate the difficulties of delivering this objective in a context with a poor, dispersed and largely illiterate population, an underdeveloped private sector and weak government capacity.

In the event, the project was helped by external forces, which expanded the cash economy through trade with neighbouring countries and provided new opportunities for many farmers to participate in the maize boom. Although the main driver for this boom was external, the project contributed to it through the expansion of the rural roads network, provision of seed and agricultural extension advice on maize growing and the mobilisation of funds through the VSCSs. But OCISP was unable to develop other economic alternatives to compensate for the decline in upland rice growing. The lesson here is that a narrowly defined ANRM project requires certain minimal market conditions and institutional capacity to be successful.

However, OCISP had broader objectives. It also aimed to change village institutions and culture, making them more participatory, more outward oriented, and more urbanised. This was a modernisation project as well as a poverty reduction one. The community development and rural infrastructure components expanded to encompass these broader objectives. The question is whether such objectives should have been reflected in the project goal and purpose at the outset, rather than the narrower economic one. Given the greater success and impact of some of these activities, compared with the ANRM ones, a broader goal was probably more appropriate at the time when the project was formulated.

OCISP was successful in building the capacity of the government agencies to fulfil their mandates and roles within the framework of the Lao Government's decentralisation policy. Training, technical assistance and guidance from supervision missions played an important part in this process, but the capacity was also built through learning by doing. OCISP acquired a reputation for successful implementation amongst government and donors. A public sector capacity building project on its own would not have achieved these results; it required the resources and experience of implementation for the built capacity to become embedded.

The challenge now is sustainability. New economic alternatives are still needed for the uplands, especially since maize cultivation is not sustainable in the medium term; the savings and credit schemes still require external support, and the rural infrastructure maintenance arrangements are still weak. The capacity of village and district level institutions to plan and manage service delivery will crucially depend on scarce government resources. There is a need to consolidate the work done to date and focus on the development of sustainable economic alternatives.

Recommendations

The main question is whether to extend the project to other non-target villages in the Province, focus on correcting the deficiencies of the current project in the existing target villages, or both. The argument in favour of consolidating within existing villages is that the enabling environment is now in place, but still weak. There is a case for extending to more remote areas because they are inhabited by extremely poor ethnic groups that have been underserved to date. The argument against replicating the project in its current form to the other villages in the province is that the government should be able to do this without further technical support and could draw on resources for it from other donors, NGOs or private sector operators.

Consolidate successful interventions in existing project villages. Consolidating project interventions in order to improve sustainability should include: (i) improving the capacity of villagers to manage their own VSCSs while continuing to strengthen and supervise the recently established district and provincial microfinance institutions; (ii) strengthening the Agricultural Technical Service Centres; and (iii) monitoring the maintenance of rural infrastructure, linking it to district services for major repairs and finding ways to increase the commitment of resources from government departments at all levels.

Focus on improving the ANRM component. The main consideration for any future project in Oudomxay must be to address the ANRM problem. Ultimately, any improvement in the livelihoods of villagers will depend on the development of sustainable economic alternatives. There are physical limits to the development of lowland rice production, land use planning policies have been limited to the amount of land available for upland agricultural production, and maize cultivation is not sustainable in the long run without measures to offset declining soil fertility. Any future ANRM strategy should focus more explicitly on the uplands and include: (i) agricultural intensification; (ii) agricultural diversification; (iii) increasing livestock productivity through forage planting; (iv) improved harvesting of non-timber forest products; (v) a value chain approach that will strengthen the links between farmers, transporters and traders; and (vi) participatory land and forest management and awareness raising on villagers' rights to use and manage natural resources.

Any new project that focused primarily on ANRM would have to address the deficiencies of the agricultural extension system, not only increasing resources and capacity building but also improving institutional management and commitment. The extension system also needs to be much more focused on innovation. Extension officers and researchers need to work together to identify problems and find solutions for upland agriculture and natural resource management. The new ANRM component should include a broader range of partnerships, including private sector operators, research institutions, the National Agricultural and Forestry Extension Service and training establishments. Government departments that have an interest in the sector could also be involved, such as the National Land Management Authority and the Ministry of Industry and Commerce. The primary responsibility for project management, coordination and decision-making should continue to be located in the provincial and district planning offices, with oversight from the local Steering Committees, but a mechanism for accessing advice from relevant national line ministries should also be established.

Incorporate more remote ethnic villages. Project activities should be extended to the more remote ethnic villages; however, the range of activities should be considered carefully. OCISP already found that it was difficult to work in these villages; transport was time consuming and there were few staff with knowledge of ethnic languages. Any future project should combine quick wins through the provision of rural infrastructure with a longer term goal to develop agriculture and natural resource management. The community development approach should be more narrowly focused on rural infrastructure and developing agricultural and natural resources, building local participatory capacities to interface with project implementers. The broad-based community development approach with a proliferation of implementers and activities may not be cost effective in the more remote areas.

Build knowledge management for wider scaling up. OCISP provided a good source of lesson learning that could be useful for other projects, government policy-makers and donors. However, little time or resources have been available to take advantage of this. A future project should systematically build in a fully-resourced knowledge management component, which analyses the lessons from OCISP and future project experiences, develops knowledge products, and organises dissemination activities with links to other projects, researchers, policy makers and beneficiaries.

 

 

 

 

LANGUAGES: English

Vegetable Oil Development Project

Uganda  
March 2011

Introduction

The project

The Vegetable Oil Development Project (VODP) was approved by the IFAD Executive Board in April 1997; it has had a number of extensions and is now due to complete on 31 December 2011 and close on 30 June 2012. The overall objective of the project is to increase household cash income among smallholders by revitalizing and increasing domestic vegetable oil production in partnership with the private sector. The project has three very different subprojects: (i) the introduction of commercial oil palm production on Bugala Island in Lake Victoria (ii) the development of traditional oilseeds in northern, eastern and mid-western districts of Uganda, and (iii) research and development (R&D) of essential oil crops, piloted in a variety of districts.

Implementation of the Oil Palm Subproject has been affected by a number of delays, as a result of which oil palm planting on smallholder farms only began in 2006 and harvesting of fresh fruit bunches (ffbs) – the principle source of income for farmers – had not yet begun at the time of this Evaluation. In contrast, the other two subprojects have been going for eleven years.

Originally, the total project cost was to be US$60 million, consisting of an IFAD loan of US$20 million, US$33.1 million of cofinancing from the private sector partner, US$3.8 million from the Government of Uganda and US$3.1 million from beneficiaries. However, due to an increase in the scale of the Oil Palm Subproject, the private investor and the Government increased their contributions to US$120 million and US$12 million respectively, bringing the total cost to about US$156 million.

Objectives and methodology of the evaluation

Objectives and process. The interim evaluation was undertaken by the IFAD Office of Evaluation (IOE), as a standard procedure in preparation for a possible follow-up phase of the project. Its objectives were: (i) to assess the performance and impact of the project; and (ii) to generate a series of findings and recommendations to guide a second phase of the project. The main Evaluation Mission was conducted from 2 February to 4 March 2009. The team visited the oil palm project area on Bugala Island, Kalangala district and six districts where traditional vegetable oilseeds and essential oil crops are being grown.  

Methodology. The evaluation follows new guidelines of IOE for project evaluations. It reports on implementation results and assesses project performance (relevance, effectiveness and efficiency); rural poverty impact (five impact domains); innovation and sustainability and the performance of implementing partners. Each of these evaluation criteria are rated on a six-point scale.1

The evaluation has drawn on project monitoring and evaluation (M&E) data, a Mid-Term Review, three Baseline Studies and one Impact Assessment Study. Two extra studies were commissioned in order to assess social impact in the traditional oilseeds area: a participatory rural appraisal (PRA) of household level impacts, and a macro-level analysis of poverty and vegetable oil consumption based on the Uganda National Household Survey data. 

Country background

The main background factors of relevance to the VODP project are: agriculture's diversity and changing role in the economy; its vulnerability to climatic shocks, insurgency and insecurity in parts of the project area, and the existence of a generally favourable policy environment. Uganda has achieved high rates of growth since the 1990s with large inflows of foreign direct investment and development assistance. Throughout this period, the policy environment has been stable and has favoured agricultural modernisation and poverty reduction. Particular emphasis has been placed on import-substituting subsectors such as vegetable oils.

Uganda's population is predominantly rural (87% in 2002) and agriculture provides their main source of livelihood. Ugandan agriculture is dominated by small scale farming – primarily food crops – and has become increasingly integrated into the market. Traditional export crops (coffee, cotton, tea, tobacco) have declined because of disease or fluctuating world prices, and are being replaced by non-traditional exports such as fish, maize and cut flowers.

There are large regional variations in the prospects for agricultural growth and poverty reduction in Uganda. The northern region, where VODP's work with traditional oilseeds has been focused, has less fertile soils, less rainfall and more erratic weather leading to recurrent drought and floods. In addition, the region has been affected by a twenty-year insurgency led by the Lord's Resistance Army (which has only recently subsided) and periodic banditry and cattle rustling by Karamojong herders in the north east. As a result of its impressive growth and strong pro poor policies, poverty declined from 56% in 1992 to 31% in 2005.  However, poverty reduction has been much slower in the northern region.

Project performance

Design features

The project adopted a broad, value chain approach to the vegetable oil subsector that meant working with a variety of vegetable oil crops, stakeholders, institutional levels, and geographical areas. It required coordination with many public and private institutions at national, district and local levels.

The three subprojects have very different objectives, modes of implementation, geographic areas and supporting institutions. The oil palm subproject aims to establish a new industry from scratch with heavy dependence on a single private sector partner. It operates in a small geographic area, with new forms of land use and a plantation/smallholder mode of production. When fully implemented, it may reach 1,000 beneficiaries. The Traditional Oilseeds Subproject aims to expand smallholder production and processing of existing oilseed crops. It works in an extensive, agro-ecologically diverse region, with a variety of implementing partners, using traditional research/extension methods, and has more tenuous links to the private sector. It currently has over 200,000 beneficiaries. The Essential Oils Subproject aims to explore the potential for production of little known essential oils. It is a small-scale, experimental, and research-oriented initiative and is piloted in a variety of geographic areas. To date, there are some 1,000 beneficiaries.

There were major changes to the design of the Oil Palm Subproject following negotiations with the private investor (BIDCO/OPUL).2 The main changes were that the nucleus estate was to be expanded from 1,000 ha to 6,500 ha, which together with the 3,500 ha intended for smallholders and outgrowers would give 10,000 ha of oil palm on the island instead of 4,500 ha. Second, the intention to use degazetted public land for the nucleus estate was dropped, so land had to be purchased from private owners. Third, the pace of subproject development was accelerated so that targets would be reached within four rather than eight years.

Project implementation

Factors affecting implementation results. The main problems for the Oil Palm Subproject were a five-year delay in finalising negotiations with BIDCO and a further two-year delay in establishing the key institution for mobilising smallholder participation in the project, the Kalangala Oil Palm Growers Trust (KOPGT). In addition, the project encountered substantial public opposition arising from complaints about proposed tax concessions and concerns about the environmental effects of oil palm plantation on the island. A third factor was difficulty in acquiring sufficient land on the island for the expanded nucleus estate.

As far as the traditional oilseeds and essential oils subprojects are concerned, the main factors affecting implementation were exposure to insurgency, drought and floods. Latterly, the Traditional Oilseeds Subproject was also affected by the sub-division of the districts in 2005-06 and the re-organization of agricultural extension services, both of which debilitated the District Agricultural Offices (DAOs) – a key implementing partner for the project. The emergence of competing alternatives to the VODP-supported products and activities also undermined their attractiveness to farmers.

Implementation results. For the Oil Palm Subproject, the nucleus estate stood at 92% of the target establishment by early 2009. Some 6,000 ha of plantable land had been given to OPUL and 5,600 ha had been planted with oil palm. Plantation infrastructure and a workforce of about 1,500 were in place. The oil extraction mill on the island was still under construction. The refinery at Jinja was already operating on the basis of imported crude palm oil.

KOPGT became operational in June 2006 and has performed an important role in organising farmers' participation in the project, providing loans for plantation establishment and extension advice, and generally mediating the interests of the farmers, OPUL and the Government. However, the pace of smallholder mobilisation is far below target. Only 66% of the expected 3,500 ha has been registered and surveyed for planting and only 33% has been planted. In particular, the target for outgrowers is much below that of the smallholders.3

Due to the controversy surrounding the potential environmental impact of the oil palm subproject, a detailed environmental management plan was put in place and has been monitored closely. Oil palm research activities have taken place as planned but could have been better implemented. The Government complied with its commitments to provide or improve key public infrastructure, including a new ferry, which has greatly increased commercial activity on the island.

The Traditional Oilseeds Subproject was remarkably successful in promoting sunflower growing across a wide geographic area, which stimulated growth in input dealing and milling. The number of beneficiaries supported by VODP expanded from about 5,000 in 1998/99 to 206,000 in 2007/08, amongst whom 39% were women. Shortages of oilseeds were somewhat eased by the testing and release of new varieties by the research institutes and by the process of seed multiplication and distribution by the Uganda Oil Seeds Producers and Processors Association (UOSPA). Farmers' reluctance to grow sunflower because of concerns about reduced soil fertility and lack of market demand were overcome through general extension and support provided by the DAOs. The area planted with VODP support rose from some 2,000 ha in 1998/99 to 81,500 in 2007/08. Moreover, the yields per ha planted also increased.

Despite this impressive performance, the Evaluation has raised two concerns. First, seed shortage continues to be a problem, a situation that could have been affected by the project's initial policy of free seed distribution and slow progress by the research institutes with the development of local open-pollinated varieties of sunflower seed. Second, there appears to have been a decline in extension activity in recent years despite a continuing need for services, possibly because of institutional changes in the DAO offices.

Substantial progress was made in screening and identifying potential essential oil crops and piloting commercial development on farmers' land. The most successful crop was citronella, which is now grown, processed and sold by almost 800 farmers. However, bottlenecks emerged in the distilling and marketing processes that would impede large scale production at the present time.

Relevance, effectiveness and efficiency

Relevance. The project has high policy relevance to the Government of Uganda and IFAD, high relevance to the private sector (directly in the case of oil palm and indirectly in that of traditional oilseeds), and high relevance to the needs of the rural poor (especially in the poorer, war-torn northern region). The broad subsectoral approach raised the political and economic profile of the vegetable oil subsector and promoted knowledge synergies between the various subprojects. However, it implied a formidable task of coordination that might not have been possible had the Oil Palm Subproject not been delayed for many years. The task of planning, implementation and monitoring of the three subprojects would have been considerably eased with a clearer project structure and better specification of indicators and targets.

Effectiveness. The effectiveness of the Oil Palm Subproject has been greatest where it has been under the control of the private sector partner, i.e. on the nucleus estate and the refinery, but less effective in meeting the targets for smallholder and outgrower plantings. On the other hand, positive results have been obtained with regard to the establishment of KOPGT and the environmental monitoring system. 

The Traditional Oilseeds Subproject has been remarkably effective, despite intermittent problems of insurgency and bad weather. The number of beneficiaries far exceeds the original target of 60,000 households and the increase in the area planted with sunflower has been spectacular, despite fluctuations during some years. The project realized significant achievements in all its outputs and it had a catalytic role in encouraging oilseed production, processing and milling by other actors. These achievements could have been even greater with more applied research on soil fertility and new sunflower varieties, more encouragement of private seed suppliers, and a more sustained and deepened extension effort in recent years. Notwithstanding these reservations, the effectiveness of this subproject is outstanding.

The Essential Oils Subproject achieved its aim of verifying the potential for a range of essential oil crops in terms of their oil content, yield, vulnerability to disease, agronomy and commercial prospects. The scope for expanding cultivation of some of these crops was identified provided that certain bottlenecks are addressed. The subproject has demonstrated that under the right conditions, some of these high value crops could offer impressive returns to farmers in poor agro-ecological conditions.

Overall, the outstanding performance of the Traditional Oilseeds Subproject outweighs the delayed effectiveness of the Oil Palm Subproject and the small-scale results of the Essential Oils Subproject.

Efficiency. The cost per beneficiary varies greatly between subprojects due to the different scale of the investment overheads, the implementation strategy adopted and the speed of beneficiary participation. The costs per beneficiary for the different subprojects are:   US$7,923 (oil palm), US$37 (traditional oilseeds) and US$575 (essential oils). In general, project efficiency has been affected by the delay in the Oil Palm Subproject, the splitting of the districts in the traditional oilseeds area and delays in procurement. However, these inefficiencies have been somewhat offset by the efficiency of the small project management unit.

Project impact

Rural poverty impact

Oil palm subproject. The anticipated impact on the incomes of participating farmers is yet to be realized since harvesting of the ffbs will only commence in later this year (2009). So far, the main impacts have consisted of changes in land use and the introduction of a new crop, farmers' improved land rights, access to KOPGT loans, and empowerment through their newly formed unit and block committees and membership of KOPGT. Nucleus estate workers have benefited from employment, wages, housing, subsidized food, free health case and social security.

There have been some wider indirect effects of the project – both positive and negative – although it is difficult to assess their extent.  Moreover, they are the product of other changes which were already going on in the island due to the growth of fishing. Positive impacts have included an increase in population, improved transport, utilities, increased business, tourism and trade, better access to financial and government services, and increased investment in housing. Negative impacts include increased pressure on education and health services, reduced access to forest resources, increased road hazards, and anti-social behaviour associated with the nucleus estate workers. Overall, the positive impacts outweigh the negative ones but in any case, the effects seem to be small.

Traditional oilseeds subproject. The Traditional Oilseeds Subproject has had substantial rural poverty impact on all the impact domains. Farmers have been able to add to their household and farm assets and invest in human capital. Agricultural production and food security have improved and their capacity to manage their own economic affairs has improved through farmer organization. Environmental impacts are negligible in the short run. The various implementing partners are now giving vegetable oil crops higher priority. Other actors in the sunflower value chain have benefited indirectly, thereby improving overall market efficiency and linkage.

Essential oils subproject. Impacts on participating farmers are not expected to be widespread at this early stage of development. However, the citronella farmers have realized similar benefits to the oilseed farmers, with visible improvements in housing, farm investments and empowerment through local groups and links to broader producer organizations. There are, however, some concerns about the environmental impact of the distilleries.

Goal level impacts. The goals of the project were to increase: national production of vegetable oil crops (sunflower in particular), domestic vegetable oil consumption; import substitution of vegetable oils, and rural poverty reduction.4 The macro-analysis showed that there was a general increase in sunflower production during the project period and an increase in household consumption of cooking oil, particularly in the VODP districts. There was evidence of improvements in living standards in the VODP districts, but the poverty headcount figure (proportion of households below the poverty line) actually increased because of wider contextual factors such as adverse weather and insecurity. VODP's contribution to poverty reduction was therefore likely to have been quite locally-specific. Because of data deficiencies it was not possible to assess the extent of domestic demand, production and import substitution of vegetable oils in Uganda.

Innovation and sustainability

Innovation. The Oil Palm Subproject is the first major PPP in Uganda and is also the first for IFAD. It has pioneered new forms of cooperation between the private sector, local and national government and farmer organizations. The PPP brought a major new investor to the country. Although the plantation mode of production is widely practiced in other countries, it is new to Uganda. The structure and functions of KOPGT are also very innovative, particularly the mechanisms for protecting farmers' interests vis-à-vis the nucleus estate.

The type of project intervention in the Traditional Oilseeds Subproject drew on tried and tested approaches to increasing agricultural production through improved seed supply, farmer extension and cottage processing. A particular innovation was the incorporation of a component on the development of food standards. Also novel – at least to Uganda – was situating these activities within a more integrated subsectoral approach. The subproject's main strength was in replicating and scaling up the approach to a large geographical area. Its ability to do this rested primarily on the strategy of working through local government structures that had the mandate, if not the resources, to cover a large number of districts. Further up scaling is now in the hands of the private sector.

The development of niche markets of high value essential oil crops for poor farmers was very innovative. There is little cultivation of essential oil crops in Uganda and most essential oils used by industry are imported. Specialised knowledge and contacts with international markets are only now being developed as a result of the project.

Sustainability. The overall sustainability of the Oil Palm Subproject depends on that of the private investor, on whom the harvesting, processing and eventual sale of the palm oil depends. Its commitment and sustainability are underpinned by the heavy financial investment so far incurred (some US$75 million), supported by well-functioning forward market linkages already established on the basis of the sale of refined (imported) crude palm oil.  The sustainability of outgrower and smallholder participation in the project will hinge on the level of benefits realized through the ffb harvests and there is every prospect that the harvests will be successful. However, their participation will also require continued extension advice to smallholders and improved trust and cooperation between outgrowers and OPUL.  The sustainability of the subproject also depends on a continued future for KOPGT, which is currently not financially sustainable without donor funding.

The sustainability of the Traditional Oilseed Subproject's main output – sunflower production – hinges on the efficiency of the value chain, which will ensure a continuing demand for the product at reasonable levels of profitability for all stakeholders. These efficiencies have improved during the project period, not least because of the increased output from farmers, although some weaknesses remain. Nevertheless, sunflower production is likely to be sustainable into the medium term. In the longer term, however, declining soil fertility may threaten its sustainability.

The sustainability of the work on essential oil crops depends on converting the knowledge generated by the research into commercial opportunities for farmers. Crops such as citronella are suitable for development and the farmers are keen to pursue these opportunities. However, the distilling process does not appear to be environmentally sustainable and although a potential market has been identified, regular orders have not yet been established. Currently the subproject depends on a single implementing partner, whose funding is totally reliant on external funding and is precarious.

In general, the actual or potential benefits from traditional oilseeds and oil palm are sustainable. However, there are doubts about the financial sustainability of KOPGT on which the sustainability of smallholder oil palm production will still depend in the short run. There are also doubts about the long run sustainability of sunflower production, and the R&D of essential oil crops is not currently sustainable without external funding.

Partner performance

IFAD. IFAD's performance in developing and supporting the project, especially during the difficult times, was highly appreciated by the Government. IFAD helped to strengthen the pro poor focus of the project at various stages in its development; it strengthened project implementation through increased involvement in the supervision process and by providing extra staff training on gender mainstreaming and M&E. The project has also benefited from in-country support from the IFAD Field Presence Officer.

Government of Uganda. There is strong ownership of and commitment to the project at all levels of government, especially for the Oil Palm Subproject.  Despite the opposition of vested interests and adverse publicity, senior officials have played a major role in pushing the project forward. The performance of the PCO has been highly commendable given the task of coordinating three subprojects with a small staff. However, the Government procedures have caused delays in project implementation and procurement, which reduced its overall effectiveness and efficiency.

Cooperating institutions. The World Bank was strongly involved in the design of the project and was cooperating institution from the start until August 2004.5 It played a key role in facilitating negotiations between the Government and the private investor. UNOPS took over in September 2004 and fulfilled its supervisory role effectively. Both institutions made important contributions to project supervision, although they focused primarily on the Oil Palm Subproject and gave very little attention to the Essential Oils Subproject.

Private sector partner (BIDCO, OPUL). The private sector partner has demonstrated high commitment to the realisation of the Oil Palm Subproject and extraordinary patience with the Government over the negotiation of the agreement and the slow pace of land acquisition. Its commitment is reflected in the size of the investment to date and the speed of its implementation. On Bugala Island, OPUL has shown flexibility in adjusting to local conditions and has developed excellent relations with KOPGT and the local government.

Conclusions and recommendations 6

Conclusions

VODP is a high profile project because of the novelty of the PPP, the extent of leveraged private sector financing, and the political controversies involved with the oil palm sub project. It is a highly innovative project which provides important lessons from all three subprojects regarding: the advantages and challenges of a PPP (oil palm); the potential for replication and scaling up traditional smallholder development through a value chain approach (oilseeds); and the challenges of developing niche markets for little known crops (essential oils). The project has had a synergistic effect in promoting sunflower cultivation and processing, which is evidenced not only by the large number of beneficiaries involved but also by the expansion in industrial milling and sales of vegetable oil.

At this point it is difficult to assess the achievements in the oil palm sub sector due to the long delays in start up. Thus, the potential achievements in the Oil Palm Subproject need to be assessed cautiously as they are still to be realized. While the model is innovative and supports an equitable relationship between smallholder and the private sector and the benefits to smallholder farmers are expected to be substantial, only a small number of them are currently participating. Knowledge about the requirements for developing niche markets in essential oils has grown considerably, but the impact on farmers is still small. Despite the many challenges faced and the underestimation and poor management of project risks (related to land and the environment), the level of commitment to the project by sponsors, investors, managers and implementers is strong. There has been strong cooperation and partnership in all subprojects and at all levels.

Oil palm. The Oil Palm Subproject is now well underway and the private investor has proved to be an exceptionally good partner. The nucleus estate is 92 per cent established and the first harvests of ffbs on the nucleus estate and smallholder/outgrower land are expected by early 2010. The low participation of outgrowers and smallholders remains a concern, but the expectation is that the numbers will increase once farmers realise cash benefits from the harvest. With two years of harvesting before project completion, it is possible that the target numbers of smallholders and outgrowers will be achieved. The decision to expand the nucleus estate six-fold had serious implications for its implementation. It affected the pace and cost of implementation and provoked public concerns about possible effects on the environment. These concerns provided fodder for vested interests opposed to the project, which in turn undermined potential support amongst landowners and farmers on the island. With the benefit of hindsight, the project should have explored the implications of the nucleus estate expansion earlier and in greater depth, anticipated potential land shortages and concerns by environmentalists, and proactively addressed these problems.

KOPGT. Starting from scratch, KOPGT has developed into an effective organization, providing a range of services including farmer organization, extension and loan administration. The current system is working well, with mutually reinforcing links between farmer organization, extension and credit. The financing system has been adapted to the special circumstances on the island and seems to be working well. It remains to be seen whether these loans can be recovered efficiently and the situation will need to be closely monitored after the first harvest. KOPGT will need to ensure that its accounting system can record all transactions in real time and provide individual accounting to farmers. In the short term there is a need to consolidate the gains made in establishing KOPGT and to further strengthen it. In particular, KOPGT, as a multifunctional organization will need to expand its learning, and improve its agronomic technical skills to help farmers. In addition, KOPGT will need to do this without increasing its overall cost, thus improving its operational efficiency. However, the main remaining concern is its financial sustainability, which needs to be addressed urgently.

Traditional oilseeds. There has been strong achievement with traditional oilseeds particularly given the difficulties faced due to insurgency and intemperate weather in the project area. Performance could have been even better with some small improvements. The research stations could have released improved sunflower open pollinated varieties earlier and the link between the research stations, on-farm trials and the extension work could have been stronger; the phasing out of free seed and collaboration with private seed suppliers could have been introduced earlier; higher-output oil pressing machines could have been sourced to maintain interest in cottage processing; and the extension work could have been deepened with more attention to soil fertility as well as broadened as the project progressed.

The two main lessons from this subproject are: First an integrated value chain approach – even if only partially integrated as in this case – increases the effectiveness of any one part of the chain as well as the overall set of linkages, thereby increasing profitability to all the actors. The improvements in seed distribution and the opportunities for value addition encouraged farmers to increase their area under sunflower, which in turn stimulated more traders and millers to enter the subsector and improved market conditions generally. Second, working through the DAOs enormously scaled up project implementation and increased the number of beneficiaries. Working through UOSPA facilitated linkages to other private sector operators, especially the millers.

The NARO research institutes have fulfilled their obligations under the memorandum of understanding, but have had some challenges. The main problems were lack of sufficient financial and human resources, weak staff capacity and the low priority given to vegetable oil crops. The lesson here is that financial injections into weak research institutions are unlikely to be sustainable without assured future funding. The performance of UNBS in developing food standards for vegetable oilseeds and promoting awareness of the importance of these standards amongst producers and processors is commendable. UNBS would benefit from further resources to strengthen its work on inspection and compliance.

Subsectoral advocacy. The role envisaged for VODC in supporting the subsector outside of VODP was enlightened, if premature at the time, but raised conflicts of interest. This role has largely been taken over by OSSUP. The latter organization has wider representation than VODC and draws on considerable enthusiasm and energy from its participants. It is working towards defined objectives and targets, and is developing priorities for advocacy and policy dialogue.

Essential oils. Considerable advances were made in the R&D of different essential oil crops – which was the major objective of the project – but the piloting of processing and marketing of these crops showed that there are bottlenecks in the value chain that would need to be overcome before any commercial development could take place. Apparently there are opportunities for essential oil production in Uganda; there is a demand from industrialists (depending on quality, price, volume and regularity of supply etc.); and these high value crops could offer good returns for farmers in areas where there are few other alternatives. The main lessons from this subproject are that while R&D of new agricultural crops is necessary, it is expensive, and once trials have been undertaken on farmers' land it is difficult to manage their expectations regarding further development. Before launching into larger scale production it is important to research the downstream linkages in order to ensure that the potential profitability of the crop can be realized. However, such market research requires specific competences and dedicated resources, and cannot be grafted on to the existing responsibilities of researchers or project staff.

Recommendations

Follow on project. It is recommended that IFAD and the Government proceed with a follow on project. Based on the above findings, the evaluation has the following recommendations for consideration when designing the follow on project:

Oil palm. A second phase should continue and extend the partnership with OPUL through the replication of the nucleus estate and smallholder oil palm model on Buvuma Island, and continued consolidation and expansion in Kalangala District to some outlying islands. The lessons learned from the current phase about the commercial potential for vegetable oil, the importance of adequate opportunities for securing land, effective environmental management and addressing farmers' incentives and constraints should be incorporated into the design of the second phase. This should include a full social and environmental impact assessment, a new environmental management plan with emphasis on communications, and activities to promote livelihood enhancement in the oil palm communities.

KOPGT.  The Government of Uganda and IFAD should give priority to ensuring the long term financial sustainability of KOPGT by 2016. The Trust should be fully assessed by type of task in order to ensure full cost recovery for services provided as well as the sustainability of financing operations. A medium term plan should be developed to indicate the long term scope of extension and financial services and how these can be provided on a sustainable basis. The plan should clarify the relationship between KOPGT and the Kalangala oil palm growers association.

Traditional oilseeds. IFAD and the Government of Uganda should consider carefully the need for a second phase. Its focus should be on helping smallholder farmers to supply crushing material (both sunflower and soybean) to millers. The programme should address concerns about declining soil fertility and farmer training should be provided in the use of fertilizers and other agro-chemicals, conservation agriculture and other related activities. There should be support for mechanization and value addition activities, as well as post harvest handling and group marketing. IFAD and the Government should continue to support the development of food standards and codes of practice for the vegetable oils subsector through UNBS. In the second phase, there should be a stronger focus on promoting direct commercial relations between farmers and private sector actors to promote the long term sustainability of oilseeds development. If IFAD and the Government consider that it is necessary to expand this component into the ex-lords resistance army areas further north because of the extent of poverty and the opportunities for successful development of oilseed production, the follow-on project should take account of the need for special skills in post-conflict work and coordination with other donors and NGOs working in this region.

Subsectoral advocacy. IFAD/Government of Uganda should build upon the experience being developed by OSSUP so that it can expand its work in promoting information exchange and coordination amongst the different value chain actors, and developing policy dialogue to promote the subsector. IFAD should provide a grant to Netherlands development organization to support OSSUP. Through this support, OSSUP should be able to maintain and expand an institutional and knowledge management framework that is capable of promoting the sustainable development of Uganda's vegetable oils subsector.

Essential oils. IFAD and the Government of Uganda should support the further development of speciality and niche market essential oils in order to realize value from the research investments made to date. The programme should work with all stakeholders in the value chain to support the creation of commercially viable business opportunities and the development of market linkages. A comprehensive value chain analysis could be undertaken, focusing on bottlenecks in distilling and marketing and the mitigation of environmental damage arising from fuel wood use in distilling. A greater range of implementing partners could be involved, including private organizations or NGOs with expertise in industrial processing and marketing. Such support could be made through a stand-alone grant financed by IFAD to the organizations identified to put this activity on a sustainable basis.


1/ The rating scale is as follows: 6 (highly satisfactory); 5 (satisfactory); 4 (moderately satisfactory); 3 (moderately unsatisfactory); 2 (unsatisfactory) and 1 (highly unsatisfactory).

2/ BIDCO (BIDCO Oil Refineries Ltd (Kenya) is the main project partner. Its subsidiary OPUL (Oil Palm Uganda Ltd. was created to manage the nucleus estate on Bugala Island).

3/ Outgrowers land is managed in consolidated blocks by OPUL; smallholders grow and manage the oil palm plots on their own land, hence their plots are smaller and more scattered.

4/ Since there are many influences on these aggregate processes besides that of the VODP, it is not possible to attribute any changes to the project alone.

5/ The World Bank withdrew as cooperating institution because it feared that the expanded oil palm project would not comply with its internal forestry safeguards policies.

6/ These conclusions and recommendations are a summary of the main conclusions and recommendations found in the full report.

 

 

LANGUAGES: English

Vegetable Oil Development Project

Uganda  
March 2011

Interim evaluation

The overall goal of the Vegetable Oil Development Project (VODP) is to increase household cash income of smallholders by revitalizing and increasing domestic vegetable oil production, in partnership with the private sector.

The project is structured around three different subprojects:

  • introduction of commercial oil palm production on Bugala Island in Lake Victoria;
  • development of traditional oilseeds in northern, eastern and mid-western districts of Uganda; and
  • research and development (R&D) of essential oil crops piloted in a variety of districts.

Total project costs were originally estimated at US$60 million, consisting of an IFAD loan of US$20 million, US$33.1 million in cofinancing from the private-sector partner, and contributions of US$3.8 million and US$3.1 million from the Government and the beneficiaries, respectively.

However, because of an increase in the scale of the oil palm subproject, the private investor and the Government increased their contributions to US$120 million and US$12 million, respectively, thereby bringing total project costs to about US$156 million.

The changes in private sector partner and the scale of the oil palm subproject had several implications and delayed project execution and resulted in an extension of the implementation period. 

LANGUAGES: English

République du Bénin: Évaluation finale du Programme de développement de la culture des racines et tubercules

Benin  
December 2010

L’objectif général du Programme de développement de la culture des racines et tubercules au Bénin était de contribuer durablement à la lutte contre la pauvreté à travers :

  • la diversification et l’augmentation des revenus ;
  • l’amélioration des conditions de vie des ménages ruraux ayant peu de terres ou des terres difficilement exploitables, et où les femmes rurales sont les plus vulnérables.

Pour cela, le programme devait contribuer à la rationalisation des activités de production, de transformation et de commercialisation des racines et tubercules dans les zones favorables à leur culture et touchées par la pauvreté.

Dans l’ensemble, les objectifs du programme étaient pertinents et alignés aux stratégies et politiques du Gouvernement et du FIDA, et l’attention portée à la promotion des racines et tubercules comme cultures de rente était justifiée. Les points forts du programme résidaient dans son caractère innovant, son approche participative et pratique et la prise en compte des femmes.

Plus particulièrement, le programme a contribué au développement d’innovations techniques au niveau des institutions de recherche et a promu leur diffusion au niveau des villages d’intervention, contribuant ainsi à une hausse des rendements des racines et tubercules.

Ainsi, profitant de la hausse des prix des dernières années et d’un écoulement relativement facile des produits, les revenus et les avoirs des hommes et des femmes membres de groupements ont augmenté.  

LANGUAGES: French