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Implementation Completion Report (ICR) Review - Agricultural Sector Adjustment


  
1. Project Data:   
Project ID:
P001744
Project Name:
Agricultural Sector Adjustment
Country:
Mali
Sector:
Agriculture Adjustment, Agriculture
L/C Number:
C2163
Partners Involved:
Germany, the Netherlands, Switzerland
Prepared By:
Charles Derek Poate, OEDST
Reviewed By:
John R. Heath
Group Manager:
Roger H. Slade
Date Posted:
08/18/1998

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

The program was a hybrid adjustment/investment operation with a broad objective of sustainable agricultural growth with diversification. The specific objectives of the adjustment component, to be implemented over three years, were to: (i) improve the country's incentive system for cotton production and strengthen its competitiveness in international markets; (ii) consolidate the cereal market liberalization program to ensure adequate and efficient supply of cereals in all areas of Mali; (iii) support the Government's program of institutional reforms for ODRs to provide better public services in rural areas and reduce the drain on the public budget; and (iv) to increase transparency in the planning and priority setting of agricultural investments and ensure efficiency in the Public Investment Program for the agricultural sector.

The specific objectives of the investment component, to be implemented over six years, were to (i) increase agricultural production (especially cotton and cereals) in Southern Mali, through the development of a new area, the Bougouni region, and the promotion of improved farming techniques in the already developed Mali-Sud region; (ii) ensure sustainability of agricultural production through improved land management practices; (iii) diversify agricultural production, with particular attention to maize; and (iv) improve transparency and priority setting of the Malian Company for Textile Development (Compagnie Malienne pour le Développement des Textile, CMDT). To achieve these objectives the program was to finance rural roads, land management, extension, rural mechanization, livestock development, crop diversification and applied research.
The total project costs at appraisal were estimated at US$71.3 million, of which US$ 27.9 million for the adjustment component, US$34.5 million for the investment component and US$8.9 million for studies and a Floor Price Support Fund. Owing to a sevenfold increase in the government contribution from US$3.3 million to US21.6 million, actual costs are estimated at US$98.1 million. IDA contributed US$56.4 million. The Federal Republic of Germany, the Netherlands and Switzerland co-financed US$2.9 million, US$12.5 million and US$4.7 million, respectively.
The project was approved in FY91 and completed in FY98, eighteen months later than expected.


3. Achievement of Relevant Objectives:

The project's objectives were substantially achieved: cotton competitiveness was increased; cereal marketing was fully liberalized, institutional reforms of the rural development agencies (ODRs) were successfully completed, and sector investment planning improved; cotton and cereal production in southern Mali grew by 128 percent and 94 percent respectively during the project period, land management and farming practices improved, and transparency in priority setting for investment planning and co-ordination of rural development activities in Southern Mali improved with the introduction of an annually updated 5-year rolling program.

4. Significant Outcomes/Impacts:

The project facilitated significant reform of the agriculture sector and has set in place new arrangements that are unlikely to be reversed. Investment planning also substantially improved with the adoption of transparent, rolling plans, and crop diversification exceeded appraisal estimates.

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

Two major shortcomings were the government's failure to open up CMDT's capital to producers and the handling of cotton producer prices. Although a system of performance contracts was introduced to link producer prices offered by CMDT with world market prices, the pass-through was insufficient, especially after devaluation of the CFAF.
The appraisal process failed to specify key aspects of the project's objectives. Two of the adjustment component's five objectives (efficiency of investment programming and planning of agricultural investment) were neither very clearly defined nor financially supported by the project. Efficiency improvements expected from reforms of the rural development agencies were not specified and the production increases in cotton and cereals arose mainly from land expansion caused by an influx of settlers, rather than productivity gains from improved farming techniques.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
SatisfactorySatisfactory
Institutional Dev.:
PartialSubstantial
    ID is rated as substantial because the major failings, in the performance of CMDT regarding the pass-through of cotton pricing and opening of capital to producers is judged a deficiency on the part of government rather than CMDT.
Sustainability:
LikelyLikely
Bank Performance:
SatisfactorySatisfactory
Borrower Perf.:
SatisfactorySatisfactory
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

The sectoral reforms were successful through being linked to: (i) an agreed overall macro framework; (ii) a long-term sector development program; and (iii) complementary sectoral investments.

8. Audit Recommended?  Yes

          Why?  This was a large and complex project that combined sectoral reforms with specific investments through a hybrid credit. Further assessment of the efficiency gains in the rural development agencies, equitable working of the cotton price system, and constraints to yield enhancing technologies is merited.

9. Comments on Quality of ICR:

The ICR covers the issues satisfactorily.

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