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Implementation Completion Report (ICR) Review - Emergency Farm Reconstruction


  
1. Project Data:   
Project ID:
P044394
Project Name:
Emergency Farm Reconstruction
Country:
Bosnia-Herzegovina
Sector:
Agriculture Adjustment, Agriculture
L/C Number:
Partners Involved:
Prepared By:
Charles Derek Poate, OEDST
Reviewed By:
Anthony J. Blackwood
Group Manager:
Roger Slade
Date Posted:
08/06/1998

2. Project Objectives, Financing, Costs, and Components:

Project objectiveswere to jump-start agricultural production, improve food security, and create employment and income for the war-affected rural population, including displaced persons. The project was aimed primarily at the private farm sector, with priority given to full-time farmers.

The project included four components: (i) import of farm mechanization equipment, (ii) import and domestic transfer of livestock, (iii) rebuilding and strengthening of animal health services, and (iv) implementation support for the project. The project was designed in a modular form that could be adjusted according to available financing resources, with appraisal target costs of US$50.4 million. Final project cost amounted to US$41.5 million, due to shortfalls in co-financing. Financing was as follows: World Bank US$20.0 million (from theTrust Fund for Bosnia on IDA terms), with cofinancing from IFAD US$7.4 million, European Union US$6.3 million, The Netherlands US$2.2 million, Germany US$1.1 million, Qatar US$1.0 million, Saudi Fund US$1.0 million. The Trust Fund account was closed two months ahead of schedule in April 1998.


3. Achievement of Relevant Objectives:

The project achieved most of its major objectives. Farm machinery was procured as planned and distributed to farmers on credit by the PIU. Most was operational by the end of 1997 and is generating significant benefits. Financial rates of return (FRR) are reestimated to be between 16 and 24 percent. Under the livestock component 6,187 pregnant heifers and 1,372 goats were distributed on a credit basis, and 5,000 sheep were grant financed by the government. The goat component largely failed as imported animals suffered high mortality and abortion rates. The FRR for milk production is estimated to be 51 percent. Animal health services have been restored to normal operation, and an efficient Project Management Unit (PIU) and four Regional Implementation Units (RIU) were established.

4. Significant Outcomes/Impacts:

(i) The project has generated direct benefits in the form of more effective use of farm labor, increased incomes and increased on-farm consumption. Estimated project-related production in 1997 amounted to about 55,000 tons of farm produce and 17 million litres of milk. Benefits have reached approximately 11,500 rural households.
(ii) Institutional development achievements of the project include improvements in animal health services, the creation of a sustainable project management and implementation capacity, and support to the emerging private farm machinery service sector.
(iii) The PIU, RIUs and Resident Bank mission contributed significantly to project success through flexible, pragmatic and efficient responses to changing and complex circumstances. All components were implemented ahead of schedule.

5. Significant Shortcomings (include non-compliance with safeguard features):

(i) The project has a poor loan recovery record. Reasons for this include the low level of farm incomes, farmers lack of experience with formal credit, and rumors that credits will be written off. In addition the participating bank is not carrying the lending risk and did not participate in client selection.
(ii) Despite specific selection criteria, some farmers selected for the project had little or no experience with cattle or machinery, or lacked necessary resources for keeping animals. These included displaced persons.
(iii) Participation of beneficiaries in selection of livestock and machinery was limited. About 20 percent have subsequently expressed disatisfaction with the types of machinery purchased.
(iv) Whilst the sustainability of the machinery component is likely, sustainability of the project overall is rated as uncertain given the general instability in the agricultural sector and Bosnia/Herzegovina as a whole; problems with poor feeding and animal husbandry; and low loan recovery rates which are adversely affecting the funds available for recycling.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
SatisfactorySatisfactory
Institutional Dev.:
SubstantialSubstantial
Sustainability:
UncertainUncertain
Bank Performance:
SatisfactorySatisfactory
Borrower Perf.:
SatisfactorySatisfactory
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

(i) Emergency reconstruction projects should be simple so that implementation can be rapid.
(ii) Those who do not qualify for agricultural production assistance should be given alternative assistance, rather than create failing agricultural units.
(iii) Even in emergency situations, beneficiaries should participate in specification of goods and services to be procured.
(iv) Cost recovery is feasible and desirable even in emergency projects, but financial institutions handling credit should participate more fully in design.
(v) Delegation of project supervision to a Bank team located in a field office is highly desirable for effective and efficient implementation.

8. Audit Recommended?  Yes

          Why?  Yes (medium priority), to further investigate the innovative nature of the flexible implementation arrangements and assess sustainability prospects.

9. Comments on Quality of ICR:

The ICR is satisfactory in most respects. The contribution of the borrower is notable for its comprehensiveness and its analysis of the experience of dealing with a large number of different donors. Given the substantial contribution to the project by co-financiers, lack of input or comment by co-financiers is a serious omission.

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