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         Agribusiness Promotion

The Agribusiness Promotion Project (APP), supported by Credit 2419 - BI for US$3.1 million was approved in FY92 and closed at the Government’s request in FY97, almost two years ahead of schedule. An undisbursed balance of US$2.8 million was canceled. Parallel financing was provided by the Government of Belgium (US$0.1 million), the French Caisse Centrale de Coopération Economique (now Caisse Française de Développement—US$0.1 million), and the European Union (US$1.2 million), but these funds were not disbursed. The Project Completion Note (PCN) was prepared as a desk exercise by the Africa Regional Office in lieu of an Implementation Completion Report (ICR), because of the short period of implementation and low level of disbursements.

The project’s objectives were to increase and diversify agricultural exports and induce greater efficiency in agricultural production, processing and marketing, by supporting the Government’s efforts to privatize publicly held agro-industries and by assisting small private entrepreneurs to establish themselves and develop agri-businesses. The project included two components: privatization of publicly held agro-industries and assistance to small private entrepreneurs. The privatization component was to focus on four state enterprises and provide: (i) consulting services in investment banking; and (ii) training activities to prepare employees for privatization. The assistance to the private enterprises component was to create an Agri-business Development Fund (ADF).

The project did not achieve its objectives. Implementation started slowly, but only six months after loan effectiveness, the project was adversely affected by an attempted coup which destabilized Burundian society and promoted ethnic strife. Although preparatory studies for privatization were finalized for three of the four state enterprises, the privatization component was canceled in November 1995 because of the rapidly deteriorating socio-political environment. Bank concerns about the high cost of the ADF component and the lack of experience of the proposed ADF manager delayed signature of that contract, preventing it from becoming effective. But political events forced the suspension of the Bank’s Burundi portfolio in 1996 and the APP credit was closed prematurely on June 12, 1997.

OED endorses the PCN ratings of project outcome as highly unsatisfactory, sustainability as unlikely, and institutional development as negligible. OED does not rate Bank performance because the PCN provides too little information to make a sound judgment.

The PCN draws two lessons. First, an open dialogue must be maintained with Government and the cofinanciers that have an active interest in privatization, in order for privatization to proceed smoothly. Second, the scale of a project’s management structure should match the scope of project activities, and measurement systems to facilitate performance assessment and timely management decision-making should be incorporated.

The PCN is satisfactory, but could have been improved by including a review of the risk assessment carried out at appraisal since the deterioration of political events in Burundi followed closely on the heels of project approval.

No audit is planned.

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