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Implementation Completion Report (ICR) Review - Agricultural And Rural Market Development Project (LIL)


  
1. Project Data:   
ES Date Posted:
09/10/2004   
PROJ ID:
P058038
Appraisal
Actual
Project Name:
Agricultural And Rural Market Development Project (LIL)
Project Costs(US $M)
 5.61  5.6
Country:
Rwanda
Loan/Credit (US $M)
 5.0  4.98
Sector, Major Sect.:
General agriculture fishing and forestry sector, Central government administration, Micro- and SME finance, Agricultural marketing and trade,
Agriculture fishing and forestry; Law and justice and public administration; Finance; Industry and trade
Cofinancing (US $M)
   
L/C Number:
C3270      
   
Board Approval (FY)
  0
Partners involved
 
Closing Date
06/30/2003 12/31/2003
         
Prepared by: Reviewed by: Group Manager: Group:  
John English
Fareed M. A. Hassan Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives
The project's main objective was to contribute to the revitalization of Rwanda's agricultural and rural economy by successfully identifying policies and institutional mechanisms: (a) to promote efficient, private sector based, local agricultural input distribution and output marketing systems in order;

(b) to raise modern farm input use among farmers and, thereby, the productivity of labor and, hence, levels of income in the rural sector.
The project's subsidiary objectives were to test alternative approaches to;
(i) facilitating access of farmers to credit for modern farm inputs;
(ii) providing technical advisory services on the use of modern farm inputs;
(iii) encouraging the emergence of a sustainable modern input import and distribution system; and
(iv) encouraging investments by private traders in marketing services in rural areas.

b. Components
The project had three components:
Promotion of input use and distribution systems (US$3.25 million - 60 percent of project cost). This included
(i) Farmer access to seasonal credit for modern farm inputs through, (a) a line of credit to private importers of modern farm inputs; (b) the creation of an Input Credit Insurance Facility (ICIF) to insure repayment defaults resulting from abnormal weather; (c) the establishment of a Small Farmer Input Credit Facility (SFICF) to promote farmer cooperative lending activities for poor farmers and farmer groups.
(ii) Advisory services for adoption of modern farm inputs and access to credit to be provided through specialized local organizations and producer groups;
(iii) Multiplication and distribution of improved seed using specialized local organizations and producer groups, through targeted technical training.
Support to local agricultural marketing systems (US$1.64 million - 31 percent of project cost). This included:
(i) strengthening of rural agricultural marketing poles through grants and institutional support to local communities for the improvement of basic marketing infrastructure;
(ii) support to private trader investment in marketing services by facilitating their access to, and management of, credit from local banks for investment in infrastructure and equipment; and
(iii) crop conservation, processing and marketing technologies through (a) training (using NGOs and other organizations) to promote improved crop conservation and marketing techniques among farmers, and (b) funding of R&D activities to develop, test and disseminate adapted crop processing technologies.
Technical support, monitoring, and evaluation (US$0.55 million - 9 percent of project cost) This component supported:
(i) work with local organizations and specialized NGOs to provide technical support to beneficiary groups;
(ii) management of project funds, including the handling of requests for funding from beneficiaries; and
(iii) organization of the updates of the baseline surveys and collection of other necesary information to closely monitor and evaluate the project's output and outcome.

c. Comments on Project Cost, Financing and Dates
The closing date was extended once, by six months (to 12/31/2003), to allow completion of planned activities. Total expenditure was almost exactly that planned, US$5.6 million. However, presumably because of fluctuations in the dollar value of the SDR, an undisbursed balance of close to US$400,000 at the time of preparation of the ICR.


3. Achievement of Relevant Objectives:

As a pilot operation, the project was carried out in 20 districts, representing about 25% of the total. The majority of its targets have been fully achieved, many substantially exceeded. The project has (i) successfully mobilized private operators to enter the modern input import sector, especially for fertilizers; (ii) succeeded in testing an innovative, farmer-led extension system; and (iii) provided incentives and institutional support to encourage investment by private traders in marketing services in rural areas.
However, the extent of the observed changes in the project areas that can be attributed to the project is not clear, as the monitoring and evaluation program does not appears to have included a control baseline in non-project areas, so no "with - without" comparison could be made, only before and after.

4. Significant Outcomes/Impacts:

Almost all the project targets related to the use of modern inputs and the increase in output of crop and livestock products were greatly exceeded. Based on surveys of participating farmers, these include an increase of about 750% in use of fertilizers (target 75%) by participating farmers, compared to the baseline level; increases in excess of 750% in crop outputs (75%); an increase of 150% in imported fertilizer (100%); 100% of participating farmers received training in the use of purchased inputs (90%); a near tenfold increase in the amounts of crop products marketed (50%). [It should be noted, however, that the ICR provides no control, i.e., no data is provided for changes in the rest of the country. It might be that similar increases were seen there as well.] Also, evidence indicating that the increase in income for farmers benefitting from the project outperformed the 'benchmark', consisting of the overall agriculture sector or any control group is missing.
About 64% (US$1.28 million) of the line of credit created for traders had been lent out and repaid before the original closing date. Given the size of the increase in imports, it was decided that traders had access to adequate capital and the balance of the amount allocated (US$2 million) was transferred to the SFICF. There was no business for the Input Credit Insurance Facility as most sales were made on a cash basis, and it was decided to also transfer the US$100,000 set aside for this facility to the SFICF. The SFICF was disbursed to create revolving funds operated through the widespread cooperative banks ( in the Union des Banques Populaires network). These funds were disbursed steadily for input purchase, but the ICR does not report on the repayment performance for these funds.
Extension activities promoted by the project have largely been carried out by specialized local organizations (SLOs), in support of about 1,000 farmers associations. The ICR reports a high rate of uptake of the technologies being promoted and that farmers have agreed that they should have an option to pay the SLO for the services provided.

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


Performance of the elements of the support to local agricultural systems is less clearly reported, but appears to have been less satisfactory. It is reported that 15 local markets (3 for livestock) had been constructed, compared to the initial target of 21. Data is not provided on the extent of use of the markets, but comments in the report of the stakeholder's workshop held at completion, and in the Borrowers ICR, indicate problems with some of them. The Borrower's ICR indicates that, although local users were supposed to make a contribution towards them (which could be in kind), few contributions have been forthcoming. At the workshops concerns were raised that some were poorly located, or on sites that were too confined, farmers' and traders' views were not adequately taken into account in designing the facilities (so that, for example, there was inadequate hard standing or protection from rain, or lock-up facilities at some of them) and that there are irregularities in their operation.
The ICR indicates substantial increases in incomes from the monitored activities. However, it is not clear how great a contribution these made to total incomes of beneficciary households. Also, it is not clear to what extent the observed changes in the project areas can be attributed to the project's activities. This is because the monitoring and evaluation program does not appear to have included a control baseline in non-project areas, so no "with - without" comparison could be made, only "before and after".

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
SatisfactorySatisfactory
Institutional Dev.:
HighSubstantial ICR text indicates "substantial" rating.
Sustainability:
LikelyLikely
Bank Performance:
SatisfactorySatisfactory
Borrower Perf.:
SatisfactorySatisfactory
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

The ICR details a lengthy list of very project specific lessons from the review. One that is of broader application is that it is possible, in a country like Rwanda, to develop a viable, privately operated and sustainable input supply system, under the right set of policies, incentives and institutional mechanisms.

8. Audit Recommended?  Yes

          Why?  The project should be assessed together with the ongoing follow-on Rural Sector Support Project. In particular the assessment should focus on the impact of the projects on farm incomes, and on whether the initial LIL (and its monitoring and evaluation schema) have provided an adequate pilot for the full-scale project.

9. Comments on Quality of ICR:

The ICR provides a satisfactory review of project implementation and performance. Its review of the achievement of project targets would have been enhanced by an adequate control, to show that the performance in the pilot areas was not matched in non-pilot areas. While the changes seen in the pilot areas was dramatic, the lack of control data does leave the reader somewhat uncertain as to what the impact of the project measures was in causing them.

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