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Implementation Completion Report (ICR) Review - Poverty Alleviation Fund

1. Project Data:   
ES Date Posted:
Project Name:
Poverty Alleviation Fund
Project Costs(US $M)
 107.0  110.0
Loan/Credit (US $M)
 90.0  90.0
Sector, Major Sect.:
Irrigation & drainage, Micro- and SME finance, Other social services, Roads & highways, Water supply,
Agriculture fishing and forestry; Finance; Health and other social services; Transportation; Water sanitation and flood protection
Cofinancing (US $M)
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
12/31/2004 12/31/2004
Prepared by: Reviewed by: Group Manager: Group:  
John R. Heath
Kris Hallberg Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives
Based on the Project Design Summary (Annex 1, Project Appraisal Document) there are four development objectives:

(i) Increase the incomes of the poor;
(ii) Empower the poor, particularly poor women;
(iii) Improve the infrastructure of poor communities; and
(iv) Strengthen the institutional capacity of the Pakistan Poverty Alleviation Fund (PPAF), its partners, and the communities it serves.

b. Components

(i) Microcredit (Expected cost, US$45.0 million; actual cost, US$45.0 million). Refers to loans made to partner organizations for on-lending to individuals and groups meeting the eligibility criteria of the PPAF; on-lending terms not to be below commercial rates.
(ii) Community Infrastructure (Expected cost, US$35.0 million; actual cost, US$39.0 million). Refers to demand-driven matching grants for small-scale infrastructure.
(iii) Capacity Building of Partner Organizations (Expected cost, US$14.0 million; actual cost, US$14.0 million). Refers to grants, on a declining basis, to help finance partners' operating costs and technical and managerial training.
(iv) Capacity Building of PPAF (Expected cost, US$3.0 million; actual cost, US$2.0 million). Refers to grants, on a declining basis, to finance running costs and staff training.
(v) Government Endowment of the PPAF (Expected cost, US$10.0 million; actual cost, US$10.0 million). Equity funding, paid over three years.

c. Comments on Project Cost, Financing and Dates

There were no significant changes in cost or schedule. Communities contributed 25 percent of the cost of the infrastructure component, rather than the 20 percent agreed in the loan covenant.

3. Achievement of Relevant Objectives:

(i) Increase incomes of the poor (Achieved). An independent assessment carried out by Gallup Pakistan obtained data from 1,800 representative households, finding that low-income households that had borrowed from PPAF were better off than comparable non-borrowers, the difference being statistically significant at the 95 percent confidence level.
(ii) Empower the poor (Achieved). No specific data on empowerment are presented but it may be inferred from the scale of outreach (7 million poor persons rather than the 2 million initially expected), the proportion of loans given to women (47 percent compared to the 45 percent target) and training coverage (101,000 persons trained, almost double the target) that empowerment, in the broad sense, is likely to have been substantial.
(iii) Improve community infrastructure (Achieved). The number of infrastructure subprojects completed was 5,289, compared to a forecast of about 3,000 completed. An assessment of 356 subprojects in four districts found that most investments were robust, low cost and sustainable with a benefit/cost ratio averaging 9.7 for Tharparker district, 6.5 for Badin, 6.1 for Turbat, and 8.6 for Khushab.
(iv) Strengthen institutional capacity (Achieved). Outreach to partner organizations has exceeded expectations , with the PPAF catering for 47 organizations in 94 districts, compared to 38 organizations in 79 districts. (There are 105 districts in the country). An assessment of the work of six large partner organizations found that they are prudent in their policy of credit approvals, disbursements, recoveries, loan loss provisions, and write-offs. The financial sustainability of PPAF and its partner organizations improved between the base year (FY00) and the completion year (FY04), based on various indicators of profitability, efficiency and liquidity that are fully reported in Annex 1 of the ICR.

4. Significant Outcomes/Impacts:

  • Based on an assessment of 18 infrastructure subprojects the ICR estimates an average rate of return of 31 percent: 38 percent for improvements to irrigation channels; 14 percent for simple drinking water supply schemes; and 29 percent for communications infrastructure. The ICR states that the average rate of return for comparable Bank-financed social fund projects with quantifiable benefits is 20 percent.
  • Rather than pushing for rapid disbursement and maximum outreach, the project concentrated on building institutional capacity and a sound system of monitoring and evaluation.
  • The project helped to nurture the shift from a culture where NGO partners expected to be grant-funded to one where they are capable of handling loans.
  • A trusting relationship was developed between the various partner organizations and the apex institution.

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

  • Borrowers were not able to obtain as much credit as they wanted: a survey of borrower households found that the mean value of the loan received was Rs. 9,138---53 percent of the desired amount (Rs. 17,136).
6. Ratings:ICROED ReviewReason for Disagreement/Comments
SatisfactoryHighly SatisfactoryThe project successfully incorporated a results-based monitoring framework and paid appropriate attention to nurturing institutional capacity.
Institutional Dev.:
ModestSubstantialSee comment in Section 4 above.
Bank Performance:
Borrower Perf.:
Quality of ICR:

7. Lessons of Broad Applicablity:

  • Projects that combine microcredit schemes with financing of small-scale infrastructure and training can successfully alleviate poverty.
  • Building the capacity of partner organizations responsible for on-lending requires a broad range of measures, including strategic reviews, recurrent analysis of weaknesses and threats, mandatory submission of business plans, targeted training, and systematic monitoring.
  • In projects of this nature it is vital to ensure that apex organizations are free from political pressures (e.g. to lend to the powerful) and that board members are not themselves eligible to receive loans from the project fund.
  • Key operational decisions can be delegated to local managers provided that there is a clearly-written and well-explained operational manual and procedures for ensuring transparency.

8. Audit Recommended?  Yes

          Why?  To assess whether, three to five years from now, the institutional framework has matured further.

9. Comments on Quality of ICR:

This ICR is a model of clarity and concision. The main text is only nine pages long yet (together with excellent annexes on performance indicators and economic and financial benefits) it succeeds in capturing all the information needed to evaluate the project.

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