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Implementation Completion Report (ICR) Review - Poor Rural Communities Development Project


  
1. Project Data:   
ICR Review Date Posted:
01/27/2014   
Country:
China
PROJ ID:
P071094
Appraisal
Actual
Project Name:
Poor Rural Communities Development Project
Project Costs(US $M)
 142.1  163.86
L/C Number:
L7310
Loan/Credit (US $M)
 100  99.71
Sector Board:
Agriculture and Rural Development
Cofinancing (US $M)
 32.45  37
Cofinanciers:
DFID
Board Approval Date
  06/21/2005
 
 
Closing Date
12/31/2010 06/30/2011
Sector(s):
General agriculture fishing and forestry sector (65%), Roads and highways (13%), Sub-national government administration (10%), General water sanitation and flood protection sector (6%), General education sector (6%)
Theme(s):
Participation and civic engagement (23% - P) Other rural development (22% - P) Rural services and infrastructure (22% - P) Indigenous peoples (22% - P) Education for all (11% - S)
         
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Rimma Dankova
Ridley Nelson Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:


    The project objective stated in the Project Appraisal Document (page 3) is:

    “to improve livelihoods security and achieve sustained participation of the poorest rural people in project design, implementation, and monitoring and evaluation in eighteen counties of the three project provinces”.

    The statement of the project objective in the Loan Agreement (page 21) is identical in substance:

    to assist the Borrower to: (i) improve the livelihood security of the poorest rural people in selected counties of the project provinces; and (ii) to achieve sustained participation of said poorest rural people in the project’s design, implementation, monitoring and evaluation”.

b. Were the project objectives/key associated outcome targets revised during implementation?
No

c. Components:
Sustainable Mountain Agriculture (Appraisal cost $21.6 million, Actual cost $22.3 million).
This was to provide project households in the 1,063 project villages support for reinforcing their food security, through: (i) provision of seed or seedlings, and small tools to be utilized by households to cultivate cash crops and tree crops; and (ii) extending the improved agricultural technology to households; (iv) provision of young animals and small tools for livestock production; and (ii) upgrading of animal housing facilities. The component was also to support improvements in agriculture-related services in the project communities, including agro-processing, packaging, transportation, and marketing. Technical support activities under the component included: (i) provision of agricultural training to farmers and to farmer technicians, including applied technology training; (ii) provision of support services to households, such as, agricultural extension, market development, veterinary, breeding, fodder establishment, crop management, and animal disease prevention; and (iii) provision of pick-up trucks and motorcycles, equipment, vaccines and seeds.

Basic Rural Infrastructure (Appraisal cost $12.9 million, Actual cost $16.1 million).
The component supported: (i) improvement in village access through construction and improvement of roads, tracks and paths; (ii) provision of potable water supplies for humans and livestock; (iii) construction of small water conservancy works (including irrigation and drainage) with associated land improvements; (iv) extension of rural electrification and communications networks; and (v) household energy and sanitation improvements. The infrastructure was to be limited to small-scale works that directly benefit the project communities which were to be involved in their prioritization, construction and maintenance through a rigorous community participation process.

Basic Education Infrastructure (Appraisal cost $1.8 million, Actual cost $2.6 million). The component supported strengthening livelihoods and wellbeing of the project area population by improving access to primary education for poor and vulnerable children and adult education and training. Specifically, the activities included: (i) rehabilitation of decrepit schools in poor and remote villages; (ii) training primary school teachers with innovative teaching methodologies; (iii) supporting the transformation of the village schools to be community learning centers; and (iv) providing training services to the adults in the project villages with a focus on functional literacy education and practical technical skills.

Basic Health (Appraisal cost $2.0 million, Actual cost $2.4 million). The component aimed to improve the health status of the population in the project area through improved access to basic health care. This included: (i) financial assistance to ensure the availability of basic health services to the poorest, including free maternal care and immunization, and inpatient care; (ii) strengthening of public health programs, including: maternal and child health care, immunizations for children, children’s nutrition and control of parasitosis, and health education for communities on basic health knowledge and HIV/AIDS; and (iii) improvement of basic health service capacities at the township and village levels through training for health workers, building village clinics and rehabilitating health facilities, provision of basic equipment and essential drugs; and adoption of clinical protocols, drug lists, and a mutual referral system.

Community Capacity Building (Appraisal cost $2.5 million, Actual cost $1.8 million). This component was to promote project implementation effectiveness and sustainability through strengthening the grass roots capacity in managing community development. The activities were to: (i) improve basic production skills of the poor farm households; (ii) strengthen community leaders’ basic skills in administrative management, financial management, village-level planning, local dispute resolution, and small-scale infrastructure construction; (iii) strengthen the capacity of local communities in addressing needs of vulnerable groups, such as ethnic minorities and women, including special training for women; (iv) promote and strengthen community participation in the local decision-making, and establishment of farmer participatory monitoring groups; and (v) provide information and telecommunication facilities and resources for community centers.

Project Management and Monitoring (Appraisal cost $1.6 million, Actual cost $2.3 million). This component supported: (i) institutional strengthening of the provincial and local-level agencies involved in project implementation with respect to their capabilities in project design and implementation, procurement, accounting and monitoring and evaluation techniques; and (ii) development of a monitoring and information system to assess the project development impacts.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates

Project Cost:
The total project cost at closure was US$163.86 million, compared to the appraisal estimate of US$142.1 million due to the depreciation of the US dollar against the Chinese yuan during the first three years of project implementation. In order to adjust to the declining value of the US dollar, the scale of project activities was reduced to some degree during the 2008 Mid-Term Review. However the overall decrease in the scope of activities was minimized by obtaining additional counterpart funding.

Financing:
The Bank provided an IBRD loan in the amount of US$99.72 million and this was fully disbursed by project closure.

The Department for International Development (DFID) of the United Kingdom provided grant support to the project in the amount of US$37 million (the appraisal commitment was US$32.45 million).

Borrower Contribution:
The Government of China contributed US$64.64 million as against an appraisal estimate of US$42.6 million.

Dates:
The project preparation period was extended some 45 months from October 2001 to June 2005. The ICR states that most of this delay was caused by: a lengthy disagreement between the Bank and the government on the project location; differences over loan repayment by the beneficiaries; and the role of the central and provincial governments in project implementation (ICR, page 7).


3. Relevance of Objectives & Design:

a. Relevance of Objectives:
Substantial.

The project’s objectives were and remain highly relevant to the current national development priorities. The country has achieved great success in reducing the incidence of absolute poverty in the last decades. However China's rural poor still comprise a large share of global poverty. China’s rural poor are heavily concentrated in natural resource deficient mountainous areas of the central and western provinces where single sector poverty reduction measures have had limited development impact. To address the issues of poverty and inequality, China’s 12th Five-Year Plan for National Economic and Social Development (2011-2015) focuses on “inclusive growth” to ensure that the benefits of economic growth are spread to a greater proportion of Chinese citizens. The project objective to improve the livelihood security of the poorest rural people is highly relevant to the Plan’s development priorities to increase income, expand the government-funded social welfare and health care, and improve livelihoods as a means to boost consumption and GDP growth.

The project objectives are also fully consistent with the current Country Partnership Strategy (CPS) 2006-2010. The goal of Pillar 2 of the CPS is to “reduce poverty, inequality, and social exclusion.” The project directly supported the CPS Pillar 2 by targeting the poorest villages and most severely disadvantaged ethnic minority groups and lagging regions through a multi-sectoral package of assistance aiming at improved agricultural productivity, basic infrastructure, primary education, public health services and community capacity building. The project’s participatory approach was to greatly contribute to the goal of shifting from top-down poverty reduction programs to community driven development.

b. Relevance of Design:
Substantial.

The design was consistent with the project objectives and its components and activities were logically interlinked into a results chain to achieve desired outcomes. The design tackled the issue of rural livelihood security through support to agricultural production (Component 1), rural infrastructure (Component 2), basic education (Component 3) and health (Component 4), and local level capacity building in the poorest, most remote, and most disadvantaged villages (Component 5). The proposed activities under Components 1 - 4 had a special emphasis on delivering appropriate production technologies, services and infrastructure to the village and household level. The community capacity building component was designed to have a complementary impact on all of these activities by strengthening management capacity and the participatory process at the local level. It promoted communities' participation in planning and management decisions at local level through strengthening the local capacity in administrative and financial management, establishing farmer participatory monitoring groups; and supporting the establishment of community information centers. The design supported ethnic minority people and gender equity, and people with disabilities.


4. Achievement of Objectives (Efficacy) :

Overall Objective: “to improve livelihoods security and achieve sustained participation of the poorest rural people in project design, implementation, and monitoring and evaluation”

Objective (a): to improve livelihood security: Substantial

Outputs:

    • The project delivered farmer training in agricultural and livestock practices 245,008 person times in Sichuan, 94,248 person times in Yunnan, 44,724 household times in Guangxi. Each participating project household has received technical training at least once. Women comprised 34-52% of the trainees.
    • Infrastructure management committees were set up in many project villages to manage ongoing operation and maintenance of public infrastructure (such as water supply, roads, and irrigation works). In Guangxi, 44,724 person times of training in infrastructure operation and management was provided, comprising about one-third of project infrastructure beneficiaries in the province.
    • 295 km of new off-grade standard roads were constructed and benefitted about 65,693 households. In Sichuan 18 km of village roads were constructed benefitting 879 households. The project also constructed 1,826 km of roads between villages benefiting approximately 134,694 households. 56 linear meters of bridges in Yunnan were constructed serving 800 households.
    • The project constructed 121 water storage ponds for irrigation, 299 km of new irrigation canals, rehabilitated 374 km of existing irrigation canals, and installed 5,538 water storage tanks. This improved irrigation facilities benefited approximately 95,412 households.
    • Terracing and improvement of low and medium yield land was undertaken in Yunnan and Sichuan. In Yunnan, 407 ha of new terraces were built, and 897 ha of low and medium yield land was improved. Smaller amounts of land was improved in Sichuan with 9.3 ha of terracing and 15.7 ha low and medium yield land improvement undertaken. In total, 64,738 households benefitted from this activity.
    • A total of 6,880 biogas systems were constructed in Yunnan and Sichuan providing energy for 8,880 households, while 2,202 households obtained fuel-efficient stoves in Sichuan. Electricity was supplied to some villages in Yunnan and Sichuan with the project installing 20 transformers and constructing 34 km of transmission lines benefitting about 10,400 households.
    • Other infrastructure activities undertaken include construction of 122 new houses and rehabilitation of 399 houses in Guangxi; development of 4,420 mu (295 ha) of improved grassland in Yunnan that benefitted 489 households; and construction of 10,793 square meters of village markets in Guangxi that benefitted 39,996 households.

Outcomes and Intermediate Outcomes:
    • From 2006 to 2010, project farmers’ per capita incomes increased by 12% per year, which is greater than that of non-project villages (9%), the national average for rural areas (9.2%), and all nationally designated poor counties (10%). During the same period, project farmers’ per capita consumption increased at 8.7% per year, which is greater than that of the national average (7.5%) and of all nationally designated poor counties (8.1%).
    • According to the ICR, food security in project villages improved with significant reductions in the percentage of households with less than 150 kg grain/capita/year in Sichuan (from 14.0% in 2002 to 4.8% in 2010, the target at appraisal was 1.5%) and Yunnan (from 13.4% in 2001 to 2.5% in 2010, with appraisal target of 2.6%).
    • The ICR reports a decline in poverty incidence over the project implementation period: in Sichuan, Yunnan and Guangxi provinces it declined from about 35% to 6%, 62% to 32% and 80% to 31%, respectively. Although the poverty incidence targets set at appraisal were not fully achieved, the reduction is considered significant. From 2006 to 2010, the incidence of poverty declined from 15.9% to 9.3% in the project area, registering a total reduction of 6.6 percentage points. This reduction in poverty incidence outperformed the national average of 1.8 percentage points over the same period (ICR, page 52).
    • The project improved living conditions by improving access to basic rural infrastructure to the following extent:
(a) Road access coverage was extended to 202,066 households (802,264 people). Village access roads accessible to tractors and light vehicles linked villages to existing rural road networks and therefore expanded their economic opportunities. The appraisal target on the length of constructed access roads was largely achieved: 100% of villages in the project area in Sichuan and Yunnan got access to existing rural road networks (up from 54% and 69%, respectively).
(b) The project solved drinking water problems for 120,154 households (480,000 people). The achieved reduction in the number of villages with drinking water problems exceeded its appraisal target by about 50% in Sichuan and 25% in Yunnan. In Guangxi, the percentage of households with access to running water increased from about 23% in 2007 to 47% in 2010; in Yunnan and Sichuan, it increased from 42% to 55% and 29% to 39% respectively.
(c) The ICR reports that the project extended supply of electricity to rural communities providing opportunity for small scale processing activities and improved livelihood security and income generation. It states that, by the end of the project, 98.8% of project villages had access to electricity however the baseline value is not reported.
    • The project supported the improvement of basic education infrastructure as follows. The establishment and operation of the Central Learning Centers was completed in all three project provinces. The implemented Free Education Pilot resulted in increased school enrollment and completion rates in the pilot villages and townships. Specifically, the sixth grade completion rate at school increased in both Sichuan and Yunnan at project completion: in Sichuan it raised from 81% to 97% and from 88% to 99% in Yunnan.The project also fully achieved the school enrolment target rate set at appraisal (99.4% in Sichuan and 99.6% in Yunnan). The ICR states that the Pilot benefited considerably the most disadvantaged groups, such as girls and ethnic minorities.
    • The project strengthened the capacity of the basic health care system and supported a variety of health services in the following ways. The ICR reports that in Sichuan it provided access to maternal and child health care services for 21,150 women and 22,578 children, modern deliveries for 21,085 infants, and 505,485 person/times of medical assistance. In Guangxi, the percentage of households receiving medical assistance increased from almost zero in 2004 to 70% in 2011. The ICR reports that in Yunnan, the implemented Cangyuan County’s HIV/AIDS prevention and treatment pilot set up an effective HIV/AIDS management and treatment in poor and remote ethnic minority areas.

Objective (b): to achieve sustained participation of the poorest rural people in project design, implementation, and monitoring and evaluation. Substantial

Outputs:
    • With respect to the involvement of remote communities in participatory planning and decision making, in Guangxi, 88% of the project’s villages participated in the project-related decisions, and 399 project implementation groups were set up across the poorest communities. 893 project implementation groups were set up in the poorest villages of the Yunnan province.
    • Participatory project implementation plans were prepared in all project villages prior to the start of implementation. Project activities were implemented in line with community priorities identified through the participatory planning process (ICR, page 19). Project communities also actively participated in the monitoring and final evaluation of project results.
    • As recorded in Good Practice Notes produced under the project, women’s participation was ensured in workshops on selecting priority project activities, discussions of implementation proposals for drinking water schemes, and in formulating approaches to management and maintenance of the proposed infrastructure.
    • The project set up and implemented an external monitoring system allowing for reflective learning on participation and supporting the quality of the participation approach. Village representatives participated in the checking and acceptance process to ensure that villager views were represented in the technical quality control over construction works.

Outcomes and Intermediate Outcomes:
    • The project sustained community participation and ownership in the implementation and monitoring and evaluation phases to ensure that priorities identified through the participatory planning were taken into account. The ICR reports (ICR, page 20) that during 2006-2010 the proportion of rural households participating in the selection of poverty reduction activities in project villages increased from 19.5% to 46.2% and the proportion of households participating in the identification of poverty reduction activities increased from 18.6% to 43.3%. Also, rural households‟ knowledge of the project within the three provinces’ project villages rose from 51.6% to 87.1%. In Guangxi, 88% of the project’s villages were directly involved with the project decision-making and 399 project implementation groups in the poorest natural villages (ICR, page 19).
    • According to the project monitoring and evaluation surveys, many villagers and, in particular, women became more confident about their productive and non-productive skills as a result of the project. Project communities learned the skills necessary to manage and supervise projects and, as a result, many project villages have been able to attract substantial follow-up investments because of the demonstrated capacity to plan and implement projects (ICR, page 21).
    • The project built the capacity of local project staff in the participatory approach and there appears to have been some extension beyond the project. The ICR reports that staff became increasingly aware of social inclusion issues, such as outreach to marginal groups, gender equality, and respect for cultural diversity and applied this knowledge to the project implementation. According to evidence collected by Module 2 of the project monitoring and evaluation system, participatory practices developed through the project were spreading within the provincial Poor Areas Development Office system. In the Guangxi province project practices were adopted in other agencies including county water bureaus and the Development and Reform Commission.
    • The project is reported to have effectively addressed women's preferences (including schools, village clinics, and drinking water) and gender –specific needs through the participatory process. The project fully achieved its targets on women's participation in the project planning, increasing it from zero to 51% in Sichuan and from 3 % to 45% in Yunnan. The percentage of women who received training was over 52% in Yunnan (over the performance target) and 34% in Sichuan (about 70% of the set target).

5. Efficiency:

Economic Rates of Return were estimated at appraisal and completion.The ICR reports that the efficiency analysis estimated ERRs of three major components: (a) Sustainable Mountain Agriculture,(b) Basic Rural Infrastructure, and (c) Basic Education. Investment in these three components accounted for about 85% of total project cost. Economic benefits of Basic Health, Community Capacity Building, and Project Management and Monitoring components were not quantified.

The component ERRs at project completion range from 22% for Basic Education to 29% for Basic Rural Infrastructure and 31% for the Sustainable Mountain Agriculture components (ICR, page 24). At appraisal, the estimated ERRs for the three components were 19%, 27% and 35% respectively (PAD, page 53). The overall ERR for the project is estimated to be 30%, which is the same as the estimate at appraisal.

Although the project closed 6 months later due to start-up delays, output targets were substantially achieved (see Section 4). The total project cost increased by 13% compared with that at appraisal but that was due to the declining value of the US dollar.

There were few operational deficiencies that would raise concerns about cost effectiveness.

There are some concerns about operation and maintenance of some investments that raise questions about sustainability. However, there are significant incentives to maintain community infrastructure given the evidence of the benefits it has provided and, on balance, Efficiency is rated Substantial.


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:
Yes
30%
85%
ICR estimate:
Yes
30%
85%

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

6. Outcome:

The project succeeded to a substantial degree in its objectives to improve livelihoods security and achieve sustained participation of the poorest rural people in project design, implementation, and monitoring and evaluation. With substantial relevance of objectives and design, substantial efficacy and efficiency with a substantial rate of return, outcome is rated as satisfactory.



      a. Outcome Rating: Satisfactory

7. Rationale for Risk to Development Outcome Rating:

Political commitment:The Government current ten-year (2011-2020) Rural Poverty Reduction and Development Plan recognizes rural poverty as a long-term national development challenge. In this Plan the government demonstrates its commitments to formulating and implementing strategic policies and efficient mechanisms that would optimize the roles and functions of central and local governments, extend support to vulnerable groups and continue funding poverty-reduction initiatives.

Institutional capacity to sustain the outcomes: Poor Areas Development Offices in project provinces were extensively involved in all aspects of the project design and implementation. This created capacity in the provincial governments to sustain and further advance the implementation of the project approaches to rural poverty reduction. The ICR (page 17) reports that province–wide implementation of the project approaches have been already advanced after project completion in Guangxi, Sichuan and Yunnan provinces. The project’s participatory approach has already been strengthened and expanded through the Community Driven Development component of the Sustainable Development in Poor Rural Areas Project which began implementation in 2010.

Weak technical capacity in managing the community infrastructure: A significant concern in sustaining the project outcomes is the community’s technical capacity to manage the small-scale infrastructure developed under the project in order to improve access to basic services. To ensure sound operation and maintenance of infrastructure, county Project Management Offices and the relevant township line bureaus will need to ensure that: (a) all villages have in place suitable management and maintenance systems, (b) further infrastructure operation and maintenance training is provided to villagers where required, and (c) ongoing line bureau support is provided when required in the post-project period. The ICR is not clear to what extent mechanisms were put in place to ensure the continuation of technical support to the communities after project completion.

Inadequate funding threat: For the Basic Education, Basic Health, and Community Capacity Building components, the biggest challenge during post-completion is the availability of financial resources to sustain the operation of teaching points and remote schools, health clinics and health services delivery, and the Community learning Centers. It will be essential that financial support for basic education, basic health, and community capacity building is recognized by local authorities and provincial governments as a top priority for poverty reduction and community development.

The functionality and useful life of community infrastructure created under the project will depend on adequate operation and maintenance of these assets. The ICR contains no explanation how the cost of operation and maintenance of these assets will be financed although the level of benefits would suggest a significant incentive for community maintenance.

a. Risk to Development Outcome Rating: Significant

8. Assessment of Bank Performance:

a. Quality at entry:

Technical preparation was thorough and benefitted from a major study of rural poverty in China and the experience of the earlier Southwest and Qinba Mountains Poverty Reduction projects in China.

The preparation period was however very long, extending to about 45 months from October 2001 to June 2005. The ICR reports that preparation delay was caused by a lengthy disagreement between the Bank and the government on the project location, role of the central and provincial governments, and loan repayment by the beneficiaries. Specifically, the Bank insisted on locating the project in the poorest provinces and counties and a significant role of the central government in project management. The Bank also disagreed with the government's requirement that the project beneficiaries repay the loan which led to a reduction of public goods investments to favor agricultural production schemes. A compromise solution was eventually agreed upon, reducing the role of the central Leadership Group on Poverty Reduction in project implementation and requiring the project beneficiaries to repay the loan. The shift towards agricultural production compromised the expressed preferences of beneficiaries to improve access to basic public infrastructure, education and health.

This compromise increased the risks of not achieving the intended outcomes. To mitigate that, a number of measures were identified at preparation. This included capping of cumulative investment in the Sustainable Mountain Agriculture component, extended dialogue with the government, close monitoring of timely availability of counterpart funds, and measures to ensure mainstreamed beneficiaries participation throughout project implementation. A Central Liaison Group was established at the central level to share responsibility for project management with less experienced provincial and local governments.

While the delay in preparation was long, it is questionable whether this should be considered a Quality at Entry fault. One alternative counterfactual would have been an unresolved stand-off between the Bank and the borrower leading to no compromise and in due course, and after significant Bank and borrower preparation expenditure, no project. Another would have been a clear understanding on the part of the Bank or borrower from the outset that the gap in perceptions could not be closed, leading to no project but little preparatory expenditure by either party. Another would have been a long stand-off with compromise coming only from one side, either the Bank or borrower. IEG is inclined to the view that the scenario that played out in this case with the delay and eventually a compromise project supporting agricultural productivity and infrastructure, albeit not as well sequenced between the two elements as it might have been, was better than these alternatives although possibly not fully meeting the beneficiaries optimal profile of priorities. In the event, a large number of poor beneficiaries benefitted from the compromise project that appears to have used project resources quite efficiently. Quality at Entry is rated Satisfactory.

Quality-at-Entry Rating: Satisfactory

b. Quality of supervision:

Supervision was adequately resourced, well staffed and soundly reported. There were twelve supervision missions (about two supervision missions per year) that facilitated the smooth implementation and satisfactory outcomes of the project activities. A detailed Mid-Term Review was completed in 2008 followed by the 2008 QAG review of the project. There were some shortfalls in supervision of financial management and procurement in the initial implementation period from 2006-2008 when the implementation rating dropped to moderately satisfactory. However the supervision team reacted promptly to the identified concerns and continued to demonstrate proactive approach in accelerating project implementation progress.

Quality of Supervision Rating: Satisfactory

Overall Bank Performance Rating: Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:

The ICR reports that, overall, the Government demonstrated strong commitment to the project. However its decision to shift the project implementation responsibilities from the Central Leadership Group on Poverty Reduction to the less experienced provincial Development and Reform Commissions (DRC) and Poor Areas Development Offices (PADO) and eliminate the central government financial support increased difficulties in project implementation. The absence of strong central leadership caused delays with availability of start-up and counterpart funding. The sharing of project responsibility between the PADO and DRC often led to confusion over the project control and weakened the chain of command, particularly in Guangxi.

Government Performance Rating: Moderately Satisfactory

b. Implementing Agency Performance:

The project was implemented by the provincial Development and Reform Commissions (DRC) and Poor Areas Development Offices (PADO) with the support of the Central Liaison Group.

According to the ICR (page 33), the implementing agencies successfully implemented the complex project despite the challenges caused by the low level of support and guidance from the central government and the initial lack of start-up counterpart financing.

Though constrained by the imposed limitations on its role in project management, the Central Liaison Group (CLG) established at the central level was able to provide consistent leadership to the DRCs and PADOs. By project completion, the PADOs and DRCs demonstrated productive collaboration in achieving intended project outcomes. With consistent support of the Bank/DFID supervision team, each project issue was identified, carefully examined and satisfactorily resolved.The provincial and county Project Management Offices were enabled to overcome the initial implementation problems in the first two years of project implementation.

The legal covenant requiring that the expenditure on the Sustainable Mountain Agriculture should not exceed half of total cumulative project expenditure in each province was not complied with in Sichuan and Guangxi for several years of project implementation. However corrective measures were identified and undertaken by the implementing agencies bringing the project in full compliance with the legal covenants by 2010.

Implementing Agency Performance Rating: Satisfactory

Overall Borrower Performance Rating: Moderately Satisfactory

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

a. M&E Design:

The project had an M&E system consisting of two parts: the internal physical monitoring and information system and the independent impact assessment. The internal physical monitoring and information system was based on the M&E experience of the World Bank Southwest Poverty Reduction Project. It monitored disbursement and recovery of project funds and physical progress of the project. The external independent impact assessment system monitored the project's participatory approach and its impact on poverty.

The project M&E comprised annual quantitative surveys conducted by the National Statistic’s Bureau (NSB). Qualitative surveys on the project progress and outcomes were conducted by an independent evaluation company ITAD. Participatory assessments by local communities were undertaken to track poverty impacts and provide feedbacks on beneficiary satisfaction with project performance.

The original project Design Summary (Annex 1 of the Project Appraisal Document) included more than 50 Key Performance Indicators many of which proved to be difficult or impossible to quantify.

The ICR (page 16) states that the design of the environmental monitoring scheme required by the Environmental Management Plan was not practical or technically sound. Some proposed environmental indicators (such as surface water quality and soil erosion) could not be attributed entirely to the project activities. Monitoring of such indicators as soil fertility, contamination and pesticide residues in agricultural products was found to be unrealistic in remote and poor areas due to the level of testing capacity required.

b. M&E Implementation:

Instead of 50 original Key Performance Indicators (KPI) as suggested in the PAD, Schedule 7 of the Loan Agreement specified a more practical list of 14 KPIs for each of the project provinces that were monitored and reported during implementation.

DFID’s grant funding for the M&E system was confirmed only after project negotiations, and this resulted in a delay of the baseline survey work. The NSB quantitative surveys and the ITAD qualitative surveys were undertaken annually during project implementation. The ICR (page 15) reports that the NSB quantitative surveys provided the rigorous and credible data for project evaluation.The DFID-funded participation specialist worked closely with the project team to ensure sound monitoring and evaluation of impacts of the project’s participatory approach.

Project environmental monitoring required by the Environmental Management Plan was not fully implemented due to the shortfalls in the environmental monitoring design. Some indicators required by the Plan and used in project reporting were monitored by the existing monitoring networks.

a. M&E Utilization:

The generated M&E data were used in project Implementation Supervision Reports for tracking the project progress and in the ICR for assessing the project performance. Evidence of use of the M&E data outside Bank supervision was not. presented in the ICR.

M&E Quality Rating: Modest

11. Other Issues:

a. Safeguards:

The project was environmental category “B”. The project triggered the Environmental Assessment (OP4.01), Indigenous People (OD 4.20) and Involuntary Resettlement (OP4.12) safeguards.

The adverse impacts of activities under the Rural Infrastructure Component mostly occurred during the construction period and were of a temporary nature. They were addressed through implementation of the Environmental Management Plan. The potential long-term environmental adverse impacts under the Sustainable Agriculture component could have been better addressed through more extensive farmers’ training on environmentally friendly agronomic practices.

The ICR (page 16) states that the project affected persons (PAPs) were satisfied with the land acquisition arrangements. All land acquisition was generally done in accordance with Chinese regulations and Bank policies and with participation of the affected communities. It is noted however that agreement on land acquisition in writing was not always timely in reaching the PAPs and compensation standards needed to be more adequately explained to the PAPs.

b. Fiduciary Compliance:

The 2008 QAG review of the project found that the Bank’s supervision of project financial management and procurement was inadequate. The frequency of financial management and procurement review increased during 2009-11, with financial management and procurement staff joining the regular supervision missions.

The final supervision mission found there were some procurement actions which were not fully in line with World Bank procedures. Also, payment records and related financial documents were not kept together with the procurement documents and the payments schedule under the contracts was not always followed. Shortcomings in project financial management such as delays with availability of funds at local level and slow disbursement review procedures, although not significant, had a negative impact on project implementation.

The ICR does not indicate whether external audits were unqualified. It was confirmed to IEG during the ICR Review interview that there were no qualified audit reports for this project.

c. Unintended Impacts (positive or negative):

d. Other:



12. Ratings:

ICR
IEG Review
Reason for Disagreement/Comments
Outcome:
Satisfactory
Satisfactory
 
Risk to Development Outcome:
Moderate
Significant
Significant uncertainty about continued technical support to project communities and financing of operation and maintenance cost after project completion  
Bank Performance:
Satisfactory
Satisfactory
 
Borrower Performance:
Satisfactory
Moderately Satisfactory
The absence of strong central leadership led to delays with availability of counterpart funding. Unclear project responsibilities among provincial government offices weakened the project control.  
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 following lessons are taken from the ICR with some adaptation:
    • Substantial levels of participation can be achieved on a large scale in government-led projects. This requires sufficient attention to capacity building and learning from practice. Documentation of participation practice, process and outcomes from the project start is critical for scaling-up the experiences.
    • In sequencing activities in community-oriented projects, early completion of infrastructure works is important for obtaining the full benefit from a project. Earlier completion of project village roads in this project would have facilitated project work on agriculture, education, health and community capacity building activities and would have improved the effectiveness of those investments.
    • Based on testing a private company–household model as a poverty reduction mechanism, the lesson learnt is that successful partnership with the private sector in poverty reduction projects requires four key elements: (i) the presence of stable and profitable companies in the poor areas with secure markets for products; (ii) identified product raw materials and inputs that can be produced profitably by poor farmers; (iii) the establishment of fair and equitable working relationships and contracts between the companies and households; and (iv) willingess of the companies to provide farmers with technical support and training .
    • Assistance to people with disabilities should be mainstreamed as an integral part of poverty reduction and development strategies and projects. Poverty and disability are interconnected. Those who live in poverty are more likely to acquire a disability and those who have a disability are more likely to become impoverished. Disability limits access to education and employment, and leads to economic and social exclusion. An integrated approach is required, linking prevention and rehabilitation with empowerment strategies and changes in attitudes.

14. Assessment Recommended?

No

15. Comments on Quality of ICR:

The quality of the ICR is satisfactory. Overall, the provided information and analysis represents a clear account of the projects achievements and weaknesses. Annex 2 is well written and provides a useful concise summary of implementation difficulties and accomplishments by component. One modest shortcoming of the ICR is that the suggested rating of the risk to development outcomes was not sufficiently substantiated.

a. Quality of ICR Rating: Satisfactory

(ICRR-Rev6INV-Jun-2011)
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