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Implementation Completion Report (ICR) Review - Savings And Credit Sector Strengthening And Rural Microfinance Capacity Building


  
1. Project Data:   
ICR Review Date Posted:
02/01/2013   
Country:
Mexico
PROJ ID:
P070108
Appraisal
Actual
Project Name:
Savings And Credit Sector Strengthening And Rural Microfinance Capacity Building
Project Costs(US $M)
 85.40  127.26
L/C Number:
L7132, L7500
Loan/Credit (US $M)
 64.60  77.59
Sector Board:
Agriculture and Rural Development
Cofinancing (US $M)
   
Cofinanciers:
Board Approval Date
  07/02/2002
 
 
Closing Date
12/01/2007 02/28/2011
Sector(s):
Banking (45%), Micro- and SME finance (45%), Other social services (10%)
Theme(s):
Rural markets (25% - P) Micro Small and Medium Enterprise support (25% - P) Regulation and competition policy (24% - P) Indigenous peoples (13% - S) Rural non-farm income generation (13% - S)
         
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Ebru Karamete
George T. K. Pitman Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
The Loan Agreement (p. 19) statement of the development objective is:

“to improve the financial stability and outreach capacity of Savings and Credit Institutions throughout Mexico, with emphasis on those serving in rural areas of the country, to thus contribute to the integration of low-income populations into the Mexican economy by increasing such populations’ access to financial services and consequently aid in the realization of such populations’ income generating potential."

The project development objective stated in the Project Appraisal Document (PAD, p. 3) is:

"to contribute to the integration of low-income people into the national economy and to the realization of their income generating potential by increasing their access to financial services. To this end, the project aims at improving the financial stability and outreach capacity of savings and credit institutions (Savings and Credit Institutions) nationwide and especially at expanding financial services in rural areas".

Both objectives state the same outcomes in slightly different ways. This Review uses the Loan Agreement as it is more monitorable.

An Additional Financing loan of US$21.00 million was included in January 2008, which focused on scaling-up activities related to improving outreach capacity of Savings and Credit Institutions in marginal rural areas with the target being increased to about 440,000 low income families (up from 60,000 families). There was no change in the project development objective.

b. Were the project objectives/key associated outcome targets revised during implementation?
Yes

If yes, did the Board approve the revised objectives/key associated outcome targets? Yes

Date of Board Approval: 01/17/2008

c. Components:
1 . Consolidation of the Savings and Credit Institutions Sector (appraisal estimate US$48.01 million, actual US$ 47.77 million).

    This component aimed to support the Government’s program to strengthen eligible savings and credit institutions, liquidate the ones which are not sustainable, improve the Savings and Credit Institutions sector infrastructure, and enhance sector supervision. The loan financed technical assistance and training to carry out these activities that included: (i) assessment of existing Savings and Credit Institutions, provision of technical assistance to eligible Savings and Credit Institutions and , liquidation of unviable ones; (ii) setting up of an intra-sectoral information platform to share information and with the regulatory body, (the National Banking and Securities Commission); (iii) training Savings and Credit Institutions; and (iv) training for the regulatory body and Federations.

2. Expanding Financial Services in Rural Areas (appraisal estimate US$ 26.18 million, actual US$26.46 million; the Additional Financing proposed to add US$ 58.60 million, the actual addition was US$48.84 million. Total actual cost was US$75.30 million).

    This component aimed to expand the supply of financial services in the marginal areas by building on the work initiated under the marginal areas programs. Specifically it aimed at (i) increasing outreach, ensuring financial sustainability and improving and diversifying financial services offered by existing intermediaries that serve the marginal areas via provision of technical assistance to Savings and Credit Institutions; (ii) providing training to the poorer segments of the population on basic principles of household finance, and participation in financial transactions, and introducing communities to formal institutions where they could set up formal savings accounts. This Component was to originally target selected communities in seven out of eight regions of central and southern Mexico participating in the Marginal Areas Program implemented by the Secretariat of Agriculture, Livestock, Rural Development, Fisheries and Alimentation with support of the World Bank. The scope of Component 2 was, however, expanded with the Additional Financing. Instead of being limited to selected communities in eight regions of central and southern Mexico as foreseen in the original design, its activities were also extended to marginal rural communities throughout the whole country. Activities under the project were carried out by international technical assistance providers under contract with the implementing agency.

3. Savings and Credit Institutions Sector Studies, Information Dissemination & Monitoring (appraisal estimate US$ 5.69 million, actual US$ 2.65 million; the Additional Financing proposed to add US$ 0.60 million, the actual addition was US$0 million).

    This component aimed, through provision of consulting services, at understanding the constraints affecting the provision of financial services to low income clients, at monitoring and evaluating the effectiveness of policies and programs, and at developing financial innovations adapted to Mexico.

4. Project Management (appraisal estimate US$ 4.88 million, actual US$ 0.90 million; the Additional Financing proposed to add US$ 0.90 million, the actual addition was US$0 million).

    This was to support the project implementation team to carry out project management, and monitoring and evaluation activities.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Costs:
Total costs increased from the appraisal estimate of US$85.40 million to US$127.26 million because additional financing was added to the project to enable expansion of financial services from 7 regions to the whole country. A reallocation of funds took place on March 9, 2007, which assigned funds from the “Unallocated Category” to the remaining five expenditure categories. On October 11, 2007, a second and final reallocation was made to realign the amounts allocated across the five expenditure categories.

Financing:
The original Loan for US$64.50 million was fully disbursed. Additional financing of US$21.00 million was added in January 2008. By project closing, US$12.99 million had been disbursed and US$8.01 million was cancelled.
At appraisal it was expected that the Inter-American Development Bank would provide cofinancing of US$3.50 million; this did not happen.

Borrower Contribution:
The Borrower and in-country stake-holder contributions were considerably more than that anticipated at appraisal. It was expected that the Borrower would provided US$12.70 million. However, with the expansion of support for the rural financial services institutions to the whole country, the Borrower’s contribution increased to US$49.67 million. It was also expected at appraisal that local in-country sources would provide US$4.60 million. Actual contribution from the savings and credit institutions was US$13.32 million.

Dates:
On November 23, 2007, the original closing date of December 1, 2007 was extended to December 31, 2008 to enable processing of the Additional Financing that was approved on January 17, 2008 for a three-year period, with a closing date of February 28, 2011. To be concurrent with the Additional Financing Loan, on November 13, 2008, the closing date of the original loan was also extended to February 28, 2011.


3. Relevance of Objectives & Design:

a. Relevance of Objectives:
High
In early 2000, much of the Mexican population still lived in poverty and the lack of access to efficient financial services was affecting their ability to overcome poverty, especially in rural areas. In rural areas about half of the population lived in extreme poverty, and participation in the formal financial system was low. Savings and Credit Institutions played an important role in rural areas, as they had advantages compared to the formal banking sector: they were not affected by the 1994-95 financial crisis, and they were able to attract new membership and grow while the formal sector was shrinking. These institutions, however, lacked a legal and regulatory environment and reliable supervision. Several Savings and Credit Institutions failed, in some cases due to fraudulent activities, leaving clients with lost savings.

Project objectives were highly relevant to the government’s policy to strengthen the Savings and Credit sector. A new law was passed in 2001 to establish a supervisory framework for the Savings and Credit Institutions. The National Banking and Securities Commission became the regulatory and supervisory entity, and the National Bank for Savings and Financial Services (BANSEFI) became responsible from coordinating government’s programs, including developing an information system. The government combined these institutional reforms with a substantial public investment to strengthen the capacity of the Savings and Credit Institutions, and the agencies for supervision, and to deepen outreach in rural areas through this Project.

Project objectives were relevant to the 2008 - 2013 Country Partnership Strategy, specifically the Pillars “Sustainable Growth” and “Promoting Social Inclusion and Reducing Poverty”. This included assistance to strengthen Mexico’s financial sector and provide targeted assistance to the rural poor, and it complemented past and ongoing Bank operations and analytical work in the financial and rural development sectors.

b. Relevance of Design:
Substantial
The project tackled a major constraint to development and poverty alleviation with clear components that clearly links project activities project development objective. Project design to provide technical assistance to build sustainable savings and credit services in rural areas and to strengthen the capacity of communities to mobilize and manage savings was relevant. Technical assistance and training to build demand through supporting the ability and skills of local communities to organize and manage savings programs and capitalization of funds was relevant also. Similarly, on the supply side, project technical assistance to enhance the capacity of savings and credit institutions to enable them to become incorporated into the new legal framework, and build information systems was relevant.


4. Achievement of Objectives (Efficacy) :

The project objective is: “to improve the financial stability and outreach capacity of Savings and Credit Institutions throughout Mexico, with emphasis on those serving in rural areas of the country, to thus contribute to the integration of low-income populations into the Mexican economy by increasing such populations’ access to financial services and consequently aid in the realization of such populations’ income generating potential."

This project objective has 4 sub-objectives: (a) improving the financial stability of savings and credit institutions nationwide; (b) improving the outreach capacity of savings and credit institutions nationwide; and (c) expanding financial services in rural areas; and (d) increasing access of low-income people to financial services to contribute to their integration of into the national economy and to the realization of their income generating potential. Achievement of these objectives is discussed below.

Attribution of all the reported outputs and outcomes to this project is difficult firstly because (as in many technical assistance projects) numerous macro and micro level factors play a role in achieving some of these objectives; therefore it is difficult to conclude that the results are exclusively due to the Project. Secondly, the results of the Phase II Project which was implemented in parallel with this Project, was also included under the achievements of this Project, and this created confusion about the real achievements particularly for the Consolidation of the Savings and Credit Institution Sector. It was stated by the Project Team that distinguishing between the results of these two projects was not possible.

(a) Improving the financial stability of savings and credit institutions: Substantial

Outputs:

  • In total 417 Savings and Credit Institutions were strengthened, restructured or liquidated, exceeding the original target of 385. At project closing 331 Savings and Credit Institutions were under the technical assistance program.
  • 376 action plans for Savings and Credit Institutions needing strengthening and restructuring were designed, exceeding the target of 308. Action plans resulted in accounting systems which conform to international standards, internal controls, improved governance, improved operational and financial indicators, management reporting, and regulatory reporting.
  • 100 Liquidation plans were formulated and began to be implemented for Savings and Credit Institutions which are unviable and cannot be merged with other institutions. This exceeded the target of 38 Savings and Credit Institutions.
  • The Savings and Credit Institutions information system was established. According to the ICR, the information system initially envisaged has been expanded into an integrated technology platform and this has been achieved through resources under this project and the follow-on Phase II project.
  • Usage of Savings and Credit Institutions Information system was achieved fully by 66 Savings and Credit Institutions and in a limited way by 286 Savings and Credit Institutions. This exceeded target of 100 Savings and Credit Institutions. According to the ICR, the platform offers a range of new financial services which has deepened financial inclusion and reduced transaction costs for users.
  • Partial cost recovery system is currently in place for the Savings and Credit Institutions information system. At appraisal, it was indicated that although a cost recovery program would be initiated, only actual experience would indicate whether these subsidies would be of a temporary or permanent nature. At present, Savings and Credit Institutions users pay a portion of the cost. The distribution of government transfers using the technology platform is a main source of income to cover operating costs of the technology platform.
  • 7,000 employees of 400 Savings and Credit Institutions were trained, exceeding the target of 800 employees. Training topics were finance, accounting, risk management, credit analysis and governance. This helped improve the Savings and Credit Institutions supervisory capacity of the regulatory agency.
  • The National Banking and Securities Commission (the regulatory authority), supervision system was put in place and was made operational. Also the regulatory agency has been significantly strengthened through training, exposure visits, and workshops and seminars to deepen knowledge about auxiliary supervision, deposit protection, early warning system, risk management, and other related aspects. The availability of project-trained and certified supervisors has enabled the supervisory authority to quickly adjust to the legal changes and to continue to maintain the existing high quality of sector supervision.
  • 121 Savings and Credit Institutions with satisfactory performance were authorized to operate and were affiliated with federations. This exceeded the original target of 21 and Additional Financing target of 80 Institutions.

Outcomes:
    Savings and Credit Institutions now have strengthened management practices and homogeneous accounting systems, manuals, methodologies and tools that meet international standards. At project closing, due to postponement of the effective enforcement of a comprehensive regulatory framework for the Savings and Credit Institutions sector, only 99 Savings and Credit Institutions had been certified, and an additional 56 were either under consideration or ready for certification, satisfying all legal requisites. At appraisal it was estimated that there were 385 entities of which 240 (62%) were expected to be certified. Despite the fact that in terms of number institutions only 47 % of institutions were certified (155 out of 330), according to the ICR, the original target of 240 entities had been set to cover approximately 60 percent of total assets and total membership of the industry -- the actual 155 entities represent 77 percent of sector membership (6.7 million) and assets (MXN 77 billion), therefore achieving the intended target (page 11). The ICR also states that another 138 entities are almost ready for certification, accounting for an additional 8 percent of sector membership and 10 percent of sector assets (page 11). Savings and Credit Institutions sector infrastructure was set up with the help of a parallel Phase II Project that focused on information platform. Now the platform is used by the Savings and Credit Institutions reporting and it also provides financial services such as remittances and government transfers.

( b) Improving the outreach capacity of savings and credit institutions: Substantial

Outputs:

  • 620,884 new clients were served in marginal areas by the Savings and Credit Institutions, which exceeded the original target of 60,000, as well as Additional Financing target of 440,000.

Outcomes:
  • The project-assisted Savings and Credit Institutions have demonstrated growth between 2003-2010. The members served increased from 1.8 million to 7.2 million. Deposits, lending and assets grew at about 18 percent annually in real terms.
  • With the help of the Project, clients in marginal areas started to access financial services provided by the Savings and Credit Institutions.

(c) To contribute to the integration of low-income populations into the Mexican economy by increasing such populations’ access to financial services and consequently aid in the realization of such populations’ income generating potential. Modest

Outputs:

  • The number of new clients served in marginal areas was 620,884. This exceeded both the original target of 60,000, and the Additional Financing target of 440,000). Some 50% of new clients are women, meeting the gender target.
  • All 620,884 new members are located in rural areas, and this exceeds the target that 70% percent of new clients would live in rural areas.
  • 620,884 clients received financial education. This exceeded the target of 8,000 families. According to the ICR, at commencement of the project, the approach to the implementation of this initiative was modified to be non-selective, focusing on the entire targeted new membership rather than a limited number of 8,000 families. Household level financial education and dissemination of information on financial services and products offered by the Savings and Credit Institutions were a pre-requisite to new membership creation.

Outcomes:
  • With the help of the Project, over 620,000 clients in marginal areas were trained in financial matters and started to access safe and reliable financial services provided by the Savings and Credit Institutions.

The ICR (page iv) reports the target of "About 60,000 low-income families in marginal areas accessing financial services provided by Saving and Credit Institutions" was "exceeded.” It also states that "the term Saving and Credit Institutions” – Entidad de Ahorro y Crédito Popular – is used to denote diverse non-bank financial institutions that mostly serve middle- and low-income segments of the populations, including cooperatives, credit unions, popular savings and/or credit entities, and some other types of institutions” (page 1). However, the ICR does not state within the expanded geographic scope of the project how many or what share of these new clients in marginal or rural areas are classified as low-income or how low-income families’ income generating potential was affected. There is also no indicators of evidence on the project’s contribution to integration of low-income populations into the Mexican economy.

5. Efficiency:

Efficiency is rated Modest due to lack of evidence.

Neither the PAD nor the ICR included a quantified economic analysis, but instead they provided a qualitative assessment and discussion of expected benefits and project impact. The reason stated in the ICR is that the economic analysis of technical assistance interventions is particularly difficult to quantify due to problems of attribution, multiple-generation effects, and the lack of financial flows generated from project investments.

It is reported by the ICR (p.16) that for expanding financial services in rural areas (which represents 60 % of project costs) there has been three transaction cost savers, namely on remittances, government transfers and benefits from enhanced deposits and lower loan rates. A least-return (or break even) analysis found that it would be necessary to assume that at least 46% of the savings of new Savings and Credit Institutions members would need to be “re-invested” to generate an internal rate of return of 12% over a 15 year period. The ICR also used another way to look at the “minimum necessary” benefits to justify investment in rural area financial services and it found that the required “net economic productivity increase” per new member of Savings and Credit Institutions under Component 2 would have to amount to at least MXN 218 (about US$19) per year per family.

At the fiscal level, the main immediate impact of the project consists in investment costs associated with the project. Investment costs for Savings and Credit Institutions strengthening were significantly higher than expected. The ICR (P.15) argues that all activities and entities supported under the project are expected to be self-financing over time.

While the potential benefits of a solid, well operating Savings and Credit Institutions sector for the whole economy and for the poorer households are clear, the ICR does not provide adequate information on how the benefits have outweighed or will outweigh the costs over time, particularly for activities related to the consolidation of the savings and credit institutions sector. For expanding financial services in rural areas (Component 2), the ICR (p.31) reports that special efforts were made to improve cost efficiency that resulted in a reduction of over one third of the investment costs per new Savings and Credit Institutions member – they fell from Mexican Peso 2,000 to Mexican Peso 1,285 per member.

The project implementation benefited from very good teams in executing agencies that were adequately staffed by qualified and experienced personnel. All the key activities were sub-contracted by the executing agencies to experienced international technical assistance providers. The reliance on international technical assistance providers had a high cost but was effective in maintaining high quality and standards, although the ICR provides no comparative information on cost-effectiveness. While there was additional financing, the project closed in February 2011 instead of December 2007 as originally planned.

a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:


Rate Available?
Point Value
Coverage/Scope*
Appraisal:
%
%
ICR estimate:
%
%

* Refers to percent of total project cost for which ERR/FRR was calculated

6. Outcome:

The relevance of objectives is rated high and the relevance of design is rated substantial. Two of the three objectives were substantially achieved, whilst achievement of the third objective cannot be determined exactly for lack of relevant outcome evidence and its efficacy is rated modest. The efficiency of the project is rated modest due to the lack of evidence. The shortcomings in efficacy and efficiency together amount to moderate shortcomings.

a. Outcome Rating: Moderately Satisfactory

7. Rationale for Risk to Development Outcome Rating:

  • The financial viability and prospects for sustainability of individual Savings and Credit Institutions participating in the project have considerably improved as a result of technical assistance and training provided under the project to these entities and their federations.
  • The improved regulatory and supervision structure, assisted by Early Warning Systems and reporting has significantly reduced risks.
  • There is still some risk with financial cooperatives as the current capacity of cooperative federations and supervisory committee is still limited; and this is being targeted via a new follow-up Project. The follow up Project, which was approved by the board on December 01, 2011, is also planning to help upgrading of National Bank for Savings and Financial Services’ technology platform equipment.

    a. Risk to Development Outcome Rating: Moderate

8. Assessment of Bank Performance:

a. Quality at entry:
The Bank provided substantial technical support for project preparation, in the context of other ongoing operations and strong sector analytical work. With regard to consolidation of the Savings and Credit Institutions sector, a number of risks associated with the new legislation were discussed with government authorities during project preparation and steps were taken to mitigate these risks and/or establish monitoring devices during project implementation. A shortcoming reported in the ICR (p. 6), is that the project did not include any specific instrument for higher level policy dialogue and/or mitigation measures to ensure effective and timely enforcement of the new law. In addition, project funding for consolidation of the Savings and Credit Institutions component was not sufficient to achieve the required outcomes and this led to delayed implementation, particularly of component 2. It is stated by the ICR (p. 5) that “The TA effort under Component 1 was underestimated. It became clear during the first 18 months of implementation that the institutional change expected was unachievable within the 2 year time frame allowed by the law and agreed to in the Project. This would require more time and additional resources.” It is also noted that the sample diagnostic carried out at project preparation for the technical assistance component gave an estimation, and when the full diagnostic was completed during implantation, it became evident that more assistance would be demanded.

Quality-at-Entry Rating: Moderately Satisfactory

b. Quality of supervision:
The Bank supervision missions provided hands-on and pragmatic support to project implementation, helping solve issues as they arose in a flexible way, while maintaining good dialogue with implementation agencies. All of the missions were well-staffed, having a banking sector technology expert and a social specialist, and they were led by a rural financial sector policy specialist. In recognition of the inadequate financing of the technical assistance needed to support capacity-building of Savings and Credit Institution and development of information systems, a Phase II project was conceived at an opportune time, and an additional loan for this project was prepared to scale-up the financial inclusion component. There was a strong focus on assistance to the client on the technical issues of the technology platform, on monitoring and evaluation, and safeguard and fiduciary compliance. After the postponement of the deadline for certification, and changes in the law in August 2009, Bank supervision could have reduced the target for the number of certified Savings and Credit Institutions.

Quality of Supervision Rating: Satisfactory

Overall Bank Performance Rating: Moderately Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
Government commitment was strong from the start of the project and continued thereafter. Passage of the new law showed the government’s determination to overhaul the Savings and Credit Institutions sector, and adequate budgetary allocations were made to implementing agencies throughout the project implementation period. However, political will to effectively enforce the law dwindled over the years in the course of project implementation, and the introduction of a new parallel law affected the project implementation performance. A result of postponing of the deadline for certification was that the sector lost the incentive to comply with the new law and to request technical assistance to comply.

Government Performance Rating: Moderately Satisfactory

b. Implementing Agency Performance:
The National Bank for Savings and Financial Services and Secretariat of Agriculture, Livestock Rural Development Fisheries and Alimentation, provided excellent leadership and direction to the project. The teams were adequately staffed, committed and effective. They achieved excellent collaboration between the two different institutions.

Implementing Agency Performance Rating: Highly Satisfactory

Overall Borrower Performance Rating: Moderately Satisfactory

10. M&E Design, Implementation, & Utilization:

a. M&E Design:
In general Monitoring and Evaluation System was adequate and most key outcome and output indicators were measurable and monitorable. Also, the institutional set up and the management for the Monitoring and Evaluation were sound. The original project results matrix, however, had a weakness: it focused on outputs rather than outcomes. Also, the sub-objectives were not clearly defined. For example in results framework of the Project Appraisal Document the sub-objective 3 “Studies, monitoring and evaluation carried out and sector information disseminated” is not an outcome, it is rather an activity. Therefore, there was a difficulty in monitoring sub-objectives.

b. M&E Implementation:
Data to monitor performance indicators for implementation of Component 1 were regularly collected by the Technical Assistance service providers and reported to National Bank for Savings and Financial Services as part of their contracts. The National Bank for Savings and Financial Services also regularly did an evaluation of the size of the Savings and Credit Institutions sector, based on information provided by the Federations and consultants’ reports. Similarly, detailed monitoring data on the progress of implementation of Component 2 were regularly collected and reported by Technical Assistance service providers. Component 2, implemented by Secretariat of Agriculture and Rural Development, developed a comprehensive database to record, evaluate and make decisions on the evolution of Component 2. As part of Component 3, National Bank for Savings and Financial Services and Secretariat of Agriculture and Rural Development collaborated in carrying out a detailed household survey (four rounds), with follow-up of a sample of households and communities from 2003 till 2007. Several studies were carried out focused on a range of aspects, notable being those relating to institutional efficiencies, rural area credit bureaus, perceptions of recipients of remittances and government transfer payments, correspondent banking, National Bank for Savings and Financial Services’ future strategic direction, development of rural population needs-oriented financial services and products.

a. M&E Utilization:
All of these initiatives helped in determining the manner in which the rural population was supported by the Savings and Credit Institutions sector. There is no information in the ICR on how the results were used by the decision-makers.

M&E Quality Rating: Modest

11. Other Issues:

a. Safeguards:
The project was designed as a technical assistance operation and was correspondingly classified environmental Category ‘C’ under OP4.01 Environmental Assessment. Only one safeguard was triggered, the Indigenous Peoples safeguard policy (OP 4.10). As identified during project preparation, indigenous populations of various ethnic groups represented a high percentage of the rural populations in the marginal areas included in the project. In accordance with the earlier OP 4.20, an Indigenous Peoples Development Plan was prepared for each region on the basis of a social analysis. Two of these initial Indigenous Peoples’ studies carried out during project preparation were the basis of the finalized Social Development Model proposed in the project. The ICR reports that compliance was found to be satisfactory (ICR p.9).

b. Fiduciary Compliance:
According to the ICR, the ratings for both financial management and procurement were satisfactory. No major fiduciary issues requiring government or Bank attention emerged throughout the project implementation period, as corroborated by audit reports and procurement post-reviews. On the procurement side, there were some issues with a main supplier for the technology platform, which were satisfactorily resolved. Bank missions also recommended some improvements to the Financial Monitoring Reports that were successfully implemented.

c. Unintended Impacts (positive or negative):

d. Other:



12. Ratings:

ICR
IEG Review
Reason for Disagreement/Comments
Outcome:
Satisfactory
Moderately Satisfactory
The shortcomings in the achievement of the third objective and in efficiency together amount to moderate shortcomings.  
Risk to Development Outcome:
Moderate
Moderate
 
Bank Performance:
Satisfactory
Moderately Satisfactory
Quality-at-entry was Moderately Satisfactory due to underestimation of the time and costs needed to support capacity-building of savings and credit institutions and development of information systems. 
Borrower Performance:
Satisfactory
Moderately Satisfactory
No disagreement -- the ICR would also have had a moderately satisfactory rating had it applied the harmonized evaluation criteria correctly.  
Quality of ICR:
 
Satisfactory
 
NOTES:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

13. Lessons:
The Implementation Completion Report offers a number of lessons of which the following are the most important (with some reformulation of language):

1. Building institutional capacity takes time. In designing a technical assistance effort focused on sector entity improvement, it is necessary to plan a medium-to long term initiative.

2. Sector reform needs well specified milestones. For effective policy implementation, specific provisions or instruments for high level policy dialogue with government authorities and/or mitigation measures in case of delayed or inadequate implementation are needed.

3. Awareness raising and assistance at the community level is essential to improve access to rural financial services. In order to reach low-income households where literacy rates are low and functional literacy is practically nonexistent, efforts need to be made in the area of social intermediation.

4. The information platform that is used for reporting purposes and also to provide services to customers such as remittances and government transfers is a public good and needs support.. This is an essential requirement to bring the sector entities together as an interconnected network of rural financial intermediaries.

14. Assessment Recommended?

Yes
Why?
To verify project ratings and to gain an understanding of the project’s contribution to increasing the integration of low-income people into the national economy and to the realization of their income generating potential.

15. Comments on Quality of ICR:

The Implementation Completion Report is clear and generally well argued. The lessons are particularly well formulated. However, no attempt was made to partition the achievements under component 1 of this Phase I project from those achievements of the parallel Phase II project. Another issue was that very limited information was presented on cost-benefit analysis especially for Component 1. Also, it would be beneficial to show some results of the studies that were carried out under Component 3 to inform on how project affected beneficiary income/welfare in rural areas, and how many low-income people benefited.

a. Quality of ICR Rating: Satisfactory

(ICRR-Rev6INV-Jun-2011)
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