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Implementation Completion Report (ICR) Review - Agricultural Sector Investment

1. Project Data:   
Project ID:
Project Name:
Agricultural Sector Investment
Agriculture Adjustment, Agriculture
L/C Number:
Partners Involved:
Prepared By:
Ridley Nelson, OEDST
Reviewed By:
John Johnson
Group Manager:
Gregory Ingram
Date Posted:

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

Total Project Costs at appraisal - US$900m; Total Project Costs actual - US$206.9m; World Bank Loan Amount at appraisal - US$300m; World Bank Loan Amount actual by closing - US$64.4m; Cancellations: US$140m - 1/96; US$41.95 - 4/97; US$47.35 - 5/98; US$6.3m- 10/98 .Main objectives were: to increase sectoral efficiency and achieve sustainable agricultural growth and exports by: restructuring the incentive system, expanding public sector infrastructure and services, increasing availability of credit, and, strengthening the sector's institutional framework and project planning capabilities. There were three major components covering a very wide range of activities: (a) a sector policy reform program in the areas of: agricultural trade, agricultural pricing, agricultural marketing, agricultural credit, and, the legal and regulatory framework, especially land titling and tenancy; (b) a sector investment program to improve infrastructure, mainly in roads, irrigation, drainage, rural electrification, animal and plant health services, agricultural credit, land cadastre, and restructuring agricultural financial institutions; and, (c) institutional strengthening program to improve a number of sector institutions and increase cost recovery.

3. Achievement of Relevant Objectives:

The original objectives were unrealistic in number and scope and also with respect to Borrower capacity and Bank leverage . There was negligible achievement of physical objectives and very partial achievement of sector, financial, institutional, and public sector, objectives. As an indication of the extent of the reform agenda, it included the elimination of non-tariff barriers, phase-out all fertilizer subsidies, privatization of agricultural storage, removal of guaranteed prices, removal of a number of marketing board monopolies, and, elimination of interest rate subsidies on credit. Originally the project had been prepared as a quick disbursing sector adjustment loan (SECAL), but just prior to negotiations in 1991 oil prices rose significantly and it was decided that a quick disbursement operation was no longer appropriate. The SECAL was then hastily transformed into a part adjustment, part investment operation, retaining most of the reform elements. Initially, in implementation many of the reform agenda items were achieved, however, with the financial crisis of 1994, there was substantial back-sliding.

4. Significant Outcomes/Impacts:

Very few. With respect to physical achievements, training, diagnostic laboratories, rural cadastre maps, and rural electrification came within reach of SAR targets. Towards the end there was some better performance on added emergency earthquake components. With respect to institutional strengthening, there was very modest achievement beyond the training elements. With respect to reforms, there were a few achievements, such as the simplification and lowering of the tariff structure for agricultural products, removal of some marketing monopolies, and some rationalization of credit institutions, but the achievements in this area were very modest relative to the stated objectives, but also modest relative to what, at the outset, might have been more realistic objectives.

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

As indicated above, very few of the objectives were achieved. A main reason was that changes in Venezuela's financial situation resulted in changes in levels of borrower commitment and Bank leverage. As a result of the 1991 rise in oil prices, and the loss of incentives for a quick disbursing loan, there was a hasty cobbling together of a substantial investment component on top of the reform elements. On both the reform front and the physical investments front, project design was hugely ambitious relative to borrower capacity.
6. Ratings:ICROED ReviewReason for Disagreement/Comments
UnsatisfactoryHighly Unsatisfactory
    Major deficiencies in a number of areas. Both design and implementation were very disappointing.
Institutional Dev.:
Bank Performance:
Borrower Perf.:
DeficientHighly Unsatisfactory
    Serious back-sliding in reforms. Very poor performance on counterpart funds. Very slow and weak performance on implementation of physical components. 6 project managers in 6 years.
Quality of ICR:

7. Lessons of Broad Applicablity:

1. Particular care should be taken over timing and design when a project, at the last minute, is turned into something it was not originally intended to be. Under these circumstances linkages between objectives, instruments, and components can be easily lost. It is better to rethink the logical framework, ownership, capacities, and risks from the beginning when overall project concept changes so significantly.
2. In the absence of close involvement in preparation, ownership by participating institutions should be thoroughly assessed.
3. The Bank and Borrower should be ready to respond more quickly and decisively to restructure or cancel where late changes in project design imply a higher risk.

8. Audit Recommended?  No


9. Comments on Quality of ICR:

A very balanced thorough account of the problems exhibiting a clear understanding of the lessons.

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