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Implementation Completion Report (ICR) Review - Office du Niger Consolidation Project


  
1. Project Data:   
Project ID:
P001718
Project Name:
Office du Niger Consolidation Project
Country:
Mali
Sector:
Irrigation & Drainage, Agriculture
L/C Number:
C1906; CA035
Partners Involved:
Governments of Germany, Netherlands, France, USAID
Prepared By:
Robert C. Varley, OEDST
Reviewed By:
George T. K. Pitman
Group Manager:
Gregory K. Ingram
Date Posted:
06/30/1999

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

The broad objective was to reduce poverty, increase agricultural production and reduce government subsidies and support for agriculture by providing strong incentives to farmers to increase production, improving the efficiency of irrigation management and creating mechanisms for sustainable irrigation development. This was to be achieved thorough reform of the irrigation agency (Office du Niger or ON), rehabilitation and modernization of irrigation canals/structures, and agricultural policy reforms (rice price/market liberalization and land tenure.) Sub-objectives were to: (i) divest ON's commercial activities to strengthen and narrow its focus on infrastructure management and agricultural services; (ii) forge stronger ON/GOM (Government of Mali) partnerships though performance contracts, training and improved financial management; and (iii) rehabilitate and modernize irrigation networks and perimeters and increase farmer involvement in water fee determination and management of maintenance.


Source of Finance: $million Appraisal Estimate Actual/Latest IDA 48.8 48.8
Government of Germany 19.0 28.9
French Aid Agency 2.4 34.8
Government of Netherlands 1.3 87.2
GOM 4.1 16.1


3. Achievement of Relevant Objectives:

i. Liberalization of the rice trade and markets have been achieved and sustained;
ii. The ON was restructured, its financial health restored and the investment program successfully implemented;
iii. Reduction in milling costs saved GOM $1.6 million/annum and reduced milling costs to farmers/consumers by $6 million/annum;
iv. Rice production increased from 98,000 to 271,000 tons;
v. Water fee collection rate increased from 60% to 97%;
vi. Increased production of non-rice crops such as onions (71,000 tons), garlic (800 tons) and pepper (600 tons);
vii. Real per capita income increased by $70/annum and production exceeded targeted level by 37%;
viii. 57 km of canals and main drains were rehabilitated and modernized.

4. Significant Outcomes/Impacts:

i. The success of the project led other donors to finance even more perimeters in successive tranches - the Bank's investment leveraged 250% more investment from other donors;
iii. Yields increased from 1.8 to 5.5 MT/ha while the ex-post ERR was 30%, compared to 16% at appraisal;
iv. GOM was able to push through difficult institutional reforms involving divestiture and staff layoffs;
v. Participation was strengthened through farmer membership on management committees and overseeing performance contracts;
vi. The project transferred credit responsibility from ON to the State Agricultural Bank and stimulated private investment in farm infrastructure. Credit was initially used for equipment, oxen and fertilizer, with repayment rates of over 95% ;
vii. Water fees are retained in the areas where they are collected; at least 50% are used for maintenance while only 10-12% are transmitted to Head Office for general use.

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

i. No capital cost-recovery despite a 20% target. Primary infrastructure maintenance is still funded entirely by GOM.
ii. The promised focus of ON on delivery of agricultural services, improved resource management, agricultural training and extension either did not materialize, or was not sustainable;
iii. Programs to promote village associations through training in functional literacy, book keeping, input purchase and output marketing strategies were not executed;
iv. Real cost-recovery of O&M costs declined by 14% but was offset by ON's reduction in operating cost (fee declined from 18% to 6% of rice crop value);
v. Despite an increased farmer role in negotiation, fees are still fixed by order of government;
vi. GOM's recent deferment of a water fee increase because of election considerations (1997/98) is a threat to increased cost recovery in the future.
vii. Natural resource management was only partially successful - 40% of the area still requires soil mapping, volumetric management of water is still rudimentary but is needed to enable volume based water billing that will lead to increased water use efficiency, and environmental monitoring (water quality, health, drainage) and maintenance (tree planting, crop diversification, pasture regeneration) received little attention.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
SatisfactorySatisfactory
Institutional Dev.:
SubstantialSubstantial
Sustainability:
LikelyLikely
Bank Performance:
Highly SatisfactorySatisfactory
    Lack of consideration of alternatives and involvement of beneficiaries in design; no explanation for partial achievement of environmental objectives, little social/ stakeholder analysis.
Borrower Perf.:
SatisfactorySatisfactory
Quality of ICR:
Exemplary

7. Lessons of Broad Applicablity:

i. Sector reforms require a conducive macroeconomic framework including realistic currency valuation and liberal trade policy;
ii. Complementary sectoral investments and policy reforms are required in order to have a major impact;
iii. A well coordinated multi-donor effort is essential for high impact investments which utilize potential synergy and complementarity within and between sectors;
iv. Farmer empowerment is essential for water-fee recovery and sustainability, and the fee setting mechanism should be an independent and transparent process, based on clear needs and free from government interference;
v. Greater transparency in land management increases farmers' land security, even in the absence of land titles;
vi. Institutional reforms should be headed by an independent agency outside the concerned ministries/agencies;
vii. The design of canals has to be adapted to the maintenance regime utilized;
viii. Farmer involvement in digging tertiaries requires organization and monitoring by a consulting company to ensure quality.

8. Audit Recommended?  Yes

          Why?  The project appears to have been successful in overcoming institutional problems which have been identified as key constraints to the improvement of O&M performance in other countries. The ON is described as having become transformed from a bloated bureaucracy to a lean and efficient organization accountable to both users and government. Lessons learned need to be confirmed and more widely disseminated. The relative role of the devaluation/price liberalization on the demand side and the institutional reform/ physical rehabilitation on the supply side, need to be assessed.

9. Comments on Quality of ICR:

Exemplary - a concise, comprehensive and well written report which contains good supporting annexes.

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