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Implementation Completion Report (ICR) Review - Community-based Rural Land Development Project


  
1. Project Data:   
ICR Review Date Posted:
08/26/2013   
Country:
Malawi
PROJ ID:
P075247
Appraisal
Actual
Project Name:
Community-based Rural Land Development Project
Project Costs(US $M)
 29.8  38.5
L/C Number:
CH081
Loan/Credit (US $M)
 27.0  37.4
Sector Board:
Agriculture and Rural Development
Cofinancing (US $M)
   
Cofinanciers:
Board Approval Date
  04/13/2004
 
 
Closing Date
06/30/2009 09/30/2011
Sector(s):
General agriculture fishing and forestry sector (89%), Sub-national government administration (6%), Central government administration (5%)
Theme(s):
Land administration and management (33% - P) Rural markets (33% - P) Participation and civic engagement (17% - S) Decentralization (17% - S)
         
Prepared by: Reviewed by: ICR Review Coordinator: Group:
John R. Heath
Christopher D. Gerrard Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:

ORIGINAL

According to the Development Credit Agreement (p. 19),

"The objective of the Project is to increase the incomes of about fifteen thousand (15,000) poor rural families through the implementation of a decentralized, voluntary community-based land reform pilot program on Eligible Land in the Project Districts."

The statement of objectives in the Project Appraisal Document (p. 2) is not significantly different from the above.

The only outcome target was to increase the income of about 15,000 poor rural families.

REVISED

The project was restructured and the project development objective was amended to include agricultural productivity. The revised objective was:

"To increase the agricultural productivity and incomes of about 15,000 poor rural families through the implementation of a decentralized, voluntary community-based land reform program on eligible land in the Project districts" (Project Paper, p. 12).

The original outcome target of raising the incomes of 15,000 poor rural families remained unchanged; an additional target of increasing income to 11,000 kwacha per month per family was introduced.

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: 10/27/2009

c. Components:

(1) Land Acquisition and Farm Development Subprojects (Expected cost at appraisal, US$ 16.5 million; Actual cost by closing, US$16.4 million).* This involved acquisition and development of land by groups of beneficiaries. "Acquisition" comprises: "land sold by willing estate owners, transferred to communities by government, or donated by private individuals" (PAD, p. 2).

(2) Land Administration (Expected cost, US$3.0 million; Actual cost, US$6.5 million).* This involved developing the capacity of the Ministry of Lands, Physical Planning and Surveys (MOLPPS), nationally and locally, to help beneficiary groups buy and transfer land acquired under the project, covering training, equipment, vehicles and operating costs.

(3) Capacity Building (Expected cost, US$3.4 million; Actual cost, US$5.2 million).* This included: (i) publicizing the opportunities for land acquisition; (ii) establishing a land database, (iii) conducting participatory rural appraisals, farm assessments, and purchase negotiations, (iv) preparing farm development proposals, (v) assessing environmental impact; and (v) managing pests.

(4) Project Management, Monitoring and Evaluation (Expected cost, US$6.9 million; Actual cost, US$9.8 million).*

*Expected cost at appraisal refers to the initial estimate, before additional financing; the actual cost includes the additional financing.

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

Cost

At appraisal, the project cost was estimated as US$30.4 million. Additional financing of US$10.0 million was obtained in 2009. However, the web portal shows the combined IDA allocation for the Original project and for Additional Financing as US$37.4 million.

Actual component costs total US$37.9 million, compared to US$38.5 million for actual project costs: a project preparation facility of US$520,000 accounts for the difference.

The project was restructured on October 27, 2009, with formal revision of objectives and additional financing of US$10.0 million, . The operations web portal indicates that by the end of October 2009, US$27.0 million had been disbursed. Total disbursements by project end amounted to US$34.2 million (US$3.2 million was canceled).

Financing

Both the initial financing and the additional financing were IDA grants, not IDA credits. This was because the Bank decided that, given the absence of financial institutions willing to lend to small farmers in Malawi (PAD, p. 17), and given the poverty of the target population, it was not realistic to expect beneficiaries to finance the purchase of land with loans.

Families qualifying for grant assistance were given a package worth US$1,050 (PAD, p. 48). Notionally, US$350 was earmarked for land purchase, with the balance intended to cover shelter, amenities and start-up costs. Allocation between the notional expenditure categories was flexible but the total size of the package was fixed: if the family spent more than the expected amount acquiring land, they would have less remaining for the other items.

In October 2009, additional financing of US$10 million was secured. This covered increases in the cost of relocating 1,000 households (ensuring that the target of benefiting 15,000 households was met). It also increased funding of the Capacity Building component, strengthening land administration institutions.

Borrower Contribution

The actual Borrower contribution was US$1.1 million, rather than the US$1.5 million that had been expected. Communities contributed US$1.3 million, as estimated at appraisal.

Dates

In May 2009, the closing date was extended by six months to December 31, 2009, giving the time needed to prepare additional financing. When the additional financing was approved in October 2009, the closing date was extended for a second time to September 30, 2011.


3. Relevance of Objectives & Design:

a. Relevance of Objectives:

Agriculture contributed 36 percent of GDP, 85 percent of employment and 90 percent of foreign exchange earnings when this project was prepared, proportions that remained substantially the same at closing. Owing partly to the legacy of colonial and post-colonial estate formation, land was unevenly distributed and most farmers were unable to support their families with the income generated from their small plots: 60 percent of the 1.8 million smallholders cultivated less than one hectare of land. Small, overworked parcels lay next to idle land that was locked up in private or government-owned estates. Land distribution was particularly uneven in the south, where the original project's four districts are located. In this region, rural population density was higher than in most other parts of Africa.
Increasing poor people's access to land was at the heart of the government's poverty reduction strategy: the 2002 Poverty Reduction Strategy Paper argued that most Malawians depend on farmland for their living, noting that restricted land access is one of main causes of poverty. The same point was made in the FY07-10 Country Assistance Strategy, which was the most recent statement of Bank strategy for Malawi when the project closed. The FY07-10 CAS (p. 36) noted that small landholdings and degraded land reduced agricultural productivity, citing the Community-Based Rural Land Development Project as one of the instruments that the Bank was using to raise smallholder agricultural productivity. The original statement of the project development objective did not mention agricultural productivity; but, at restructuring, the revised PDO explicitly acknowledged that the project's aim was to boost productivity.

The relevance of objectives is rated substantial for the original project and high after the objectives were expanded to include increased productivity: by raising the bar to emphasize increased agricultural productivity the project's objectives were more in line with the FY07-10 Country Assistance Strategy,

b. Relevance of Design:

The project logic was as follows. To a large extent, rural people were poor because they lacked adequate access to land. Agricultural productivity was low because large estates were underused and small parcels were overworked and therefore subject to erosion and low soil fertility. The project would raise the incomes of poor farmers, first, by giving groups of small farmers grants to buy land; and, second, by providing the training and the inputs needed for farmers to develop commercially viable subprojects. Incomes would rise as a result of increased farm production and increased agricultural productivity by small farmers. Because the land given to small farmers would be provided voluntarily by large land owners (rather than expropriated), private investment in agriculture would not be discouraged, helping to maintain agricultural productivity. Project components made adequate provision for poor rural farmers to buy land and to farm it productively. A parallel, Bank-supported development policy operation (Fiscal Management and Accelerating Growth, introduced in 2004) complemented the Community-Based Rural Land Development Project, because it contained an agreement that government would introduce ground rents and land taxes, with a view to reducing land speculation and increasing the incentive for estate owners with idle land to sell up. However, even if these incentives were in place, the only land entering the market would probably be located in poorer, remoter areas, places where the absence of economic and social infrastructure could compromise the sustainability of farm development. This was a risk worth taking for a pilot of this pioneering nature.
Relevance of design is rated high for both the original and the revised project objectives: the package of components and activities provided by the project was necessary and sufficient both to increase agricultural production (original objective) and to raise agricultural productivity (revised objective).


4. Achievement of Objectives (Efficacy) :

ORIGINAL OBJECTIVE: Increase the incomes of poor rural families (Rating: High).

Incomes

When the project was appraised no baseline was estimated and no target was set for the amount of income increase expected. The only target was the number of poor rural families to benefit from income gains (15,000).

Project monitoring reports showed that performance against output targets was consistent with the outcome of increasing the income of poor rural families. The number of farm families established on land acquired through the project was 15,142 (just above the target). The number of these families given title to the land was 14,725.

These findings were independently supported by evidence from three separate surveys (including two formal impact evaluations, one sponsored by IEG). The two impact evaluations controlled for selection bias and made robust use of controls to estimate the difference made by the project, both showing that farm income increased more for beneficiaries than non-beneficiaries, by a sizeable magnitude, and in a statistically significant way.

REVISED OBJECTIVE: Increase the agricultural productivity and incomes of poor rural families (Rating: Substantial).

Incomes

When the project was restructured a 2008 baseline and a target were specified. Project monitoring reports show that by closing monthly incomes averaged MKw 30,500 per family, almost three times higher than the target of MKw 11,330. The baseline income in the communities where the beneficiaries originated was MKw 4,530. The results of the impact evaluations reported in the previous section were consistent with these findings.

Agricultural Productivity

Project monitoring reports used crop yields as the measure of agricultural productivity. Maize yields increased from the 2008 baseline of 450 kg/ha in the settlement area to reach 1,800 kg/ha by closing, exceeding the target of 1,500 kg/ha. The increase in tobacco yields fell somewhat short of expectations, rising from the 2008 baseline of 300 kg/ha in the settlement area to 800 kg/ha by closing (the target was 1,000 kg/ha). The impact of the project on agricultural productivity might have been greater if there had been a viable agricultural extension service to draw on: the government service was run down and could not be relied upon. The project dealt with this constraint by recruiting five temporary agricultural technicians, who advised beneficiaries about yield-enhancing farm techniques and diversification into higher-yielding crops.

The rating is based on the following considerations. The income part of the revised objective was met. With respect to productivity, on the one hand, the evidence of sustained yield increase and of diversification into more profitable crops is still limited, and one of the expected avenues for productivity increases (contract farming) has not yet lived up to expectations. On the other hand, average yields obtained before project closing were still higher relative to the period before settlement when estate land was largely idle.


5. Efficiency:

The economic rate of return analysis was based on conservative assumptions about the proportion of beneficiaries that would add cash crops to staple cultivation, about crop yield increases and about the "without project" income of beneficiaries. Assuming that only 20 percent of beneficiaries cultivated cash crops, the economic rate of return was re-estimated at 20 percent, above the rate of 15 percent forecast at appraisal. This rate of return does not include certain plausible benefits that were difficult to quantify: particularly the land improvements and asset accumulation that may flow from increased security of tenure and the reduction in social tensions resulting from the project.

The actual cost per beneficiary family of the project’s land acquisition and farm development component was US$1,083, 12 percent more than the appraisal estimate. The project directly benefited 15,142 families, slightly more than the appraisal forecast of 15,000. Taking project costs as a whole, the actual cost per family was US$2,543 or 28 percent more than the appraisal estimate. This reflects the larger-than-expected overhead costs arising from capacity building and project management: in particular, vehicle running expenses, per diems and other travel expenses were twice as high as initially estimated. On the other hand, the component that financed land titling and registration was only 1 percent more than initial estimates.

For M&E specifically, there was a highly efficient use of project resources. Given that this was a pilot project, M&E was vital for generating the data needed to determine the merits of scaling-up land redistribution. Actual spending on M&E was US$417,796, or just 49 percent of the planned budget. Yet the quantity and quality of the outputs—the baseline survey and three follow-ups, plus monitoring reports each quarter—was substantial. Scaling up was not an objective of this pilot project but if it does ultimately happen it is reasonable to assume that overheads would be spread, reducing the total project cost per family benefited.

Efficiency is rated substantial, against both the original and the revised objective.

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
15%
100%
ICR estimate:
Yes
20%
100%

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

6. Outcome:

The project's objectives were consistent with Bank and Borrower commitments to reduce rural poverty and the results chain made allowance for the actions needed if the incomes and productivity of project beneficiaries were to rise. The income objective was fully met and the productivity objective was substantially met. Based on the rate of economic return and the evidence of cost effectiveness (cost per beneficiary, M&E cost) efficiency was rated substantial. Since achievement of both the original and the revised objectives was rated satisfactory, the formula for rating restructured projects also yields an overall outcome rating of satisfactory.


a. Outcome Rating: Satisfactory

7. Rationale for Risk to Development Outcome Rating:

There is some risk that beneficiaries resettled under this pilot project may fail to thrive, compromising the objective of increased agricultural productivity. First, access to fertilizer, technical assistance and credit remains limited, despite the government's large investment in fertilizer subsidies. Second, the areas of resettlement posed problems that may cause beneficiaries to return to the areas they came from. "Project beneficiaries have been resettled in remote areas on former private estates...households are far from basic social services but also far from reliable markets and formal or informal social support networks" (ICR, p. 20). As of 2008--1-3 years after they were resettled--only 10 percent of those resettled had abandoned the parcels allotted to them under the project; but this low drop out rate may increase as time passes. Although scale-up and replication was not mentioned in either the original or the revised project development objective, the PAD makes it clear that this is what would be expected if the pilot's results met expectations (as it did). Since the project's closing, no steps have yet been taken to scale up or replicate. Malawi’s latest Growth and Development Strategy (2012-16) does not give priority to land redistribution. However, two developments suggest that there may still be some scope for building on the project's achievements. First, the Land Bill was passed in 2013 supports the approach taken by the project by empowering village committees--not just the chiefs--to participate in land reallocation. Second, the Malawi Country Assistance Strategy, approved in January 2013, makes provision that the next agricultural operation (ASWAp-SP - Phase 2, planned for FY15) would include "investments in land issues, especially in improving land administration and facilitating land redistribution to smallholders through targeted actions based on the impact evaluation of the Community-Based Rural Land Development Project" ( see section 83, page 31 of the CAS).


a. Risk to Development Outcome Rating: Significant

8. Assessment of Bank Performance:

a. Quality at entry:

The project's objectives were relevant to tackling rural poverty and the design was well-founded, based on a realistic appraisal of the difficulties entailed by land reform, and informed by experience in other countries that have implemented the willing buyer, willing seller model (notably, Brazil). Project preparation took two years; but time was needed to reach agreement with government. There was good coordination with a broader development policy operation whose actions would help to create incentives for estate owners to sell to poor rural families. Given the pilot status of the operation, it made sense to rely on an established institution--the Malawi Social Action Fund--to provide community infrastructure. One shortfall was the over-estimate of the land that was likely to be put up for sale; a more thorough survey of land availability should have been made during project preparation.

Quality-at-Entry Rating: Satisfactory

b. Quality of supervision:

Supervision missions were regular and well-staffed with good backup from the country office. The Bank was quick to respond to problems, and to negotiate Additional Financing when this proved necessary. Once the severe limitations on easy access to safe water became apparent, the project team was quick to amend the disbursement rules: the first tranche of the resettlement grant was raised from 40 percent to 60 percent of the total, giving beneficiaries the means they needed to finance the digging of wells and the drilling of boreholes. The Bank pushed for the impact evaluations needed to reliably assess the difference made by the project, and took care to ensure that the project's impact on land price changes was closely monitored. Supervision missions checked compliance with environmental safeguards.

Quality of Supervision Rating: Satisfactory

Overall Bank Performance Rating: Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:

Government commitment to strengthening land rights was manifest in Cabinet approval of the Malawi National Land Policy in January 2002. Although this did not formalize the land redistribution process that was the subject of the pilot operation, it was a necessary first step, because it provided a framework for decentralized land administration and the development of land markets. As a further earnest of its intentions, the government agreed to make available 4,000 ha for redistribution, taken from estates under its control. When it turned out that much of this land had been occupied by squatters anticipating redistribution (rendering it ineligible for inclusion in the project), the government agreed to an offsetting increase in counterpart funding, with an additional MKw80 million to be disbursed between 2008 and 2010. The Ministry of Lands participated fully in project preparation and in the supervision missions. However, it was slow to resolve recruitment delays and other implementation hitches. In January 2008, the Bank had to urge government to finalize renewal of project staff contracts: most of the staff had been working without contracts since June 2007. In addition, there were delays in issuing group titles to the newly-settled beneficiaries, owing to capacity shortfalls in the Survey Department. When the project was prepared the government had stated its intention to obtain Parliament’s clearance for preparation of a comprehensive Land Bill that would include a provision for voluntary redistribution. Work began on the bill but it had not been submitted to Parliament by project closing. (The bill was finally passed in June 2013.) In other respects also, there was little progress on land policy reform. The government introduced a moratorium on collecting land rent from leased estates in July 2006, and did not introduce the expected tax on freehold land—measures likely to reduce the supply of (idle) land offered for sale. With support from the project, a new land rent formula was developed and, at project closing, was being applied to all leased land, thus superseding the moratorium. Nevertheless, the government’s temporizing over the needed policy reforms substantially weakened the case for scale up.

Government Performance Rating: Moderately Satisfactory

b. Implementing Agency Performance:

The staff of the Project Management Unit (which was housed in the Ministry of Lands, Housing and Urban Development) adhered closely to implementation guidelines, worked well with the Bank and the government, supervised impact evaluations effectively, provided sound financial management and filed regular monitoring reports. However, there were delays in setting up the management information system and technical capacity for monitoring and evaluation was limited. Delays were reduced when the project management unit moved from Lilongwe to Blantyre in May 2006. Bringing staff closer to the project area helped speed up decision-making.

Implementing Agency Performance Rating: Satisfactory

Overall Borrower Performance Rating: Moderately Satisfactory

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

a. M&E Design:

Given the pilot nature of this operation and the need to build a case for eventual scaling up, it was essential to prepare for an impact evaluation at the outset. The appraisal document made clear the commitment to designing a panel study that would create a credible counterfactual and allow for rigorous measurement of the difference made by the project. It was envisaged that evaluation would be carried out annually, starting with a baseline survey, which would be implemented as soon as the grant was made effective. Data would be collected from representative sample surveys of beneficiaries and non-beneficiaries. A management information system would be established to keep track of project inputs and outputs. Qualitative data would be supplied by civil society organizations, using beneficiary assessments and participatory rural appraisals. Allowance was also made for a land market database that would be used to track trends in land prices and the number of hectares offered for sale. There were two design shortfalls. First, the designers of the project opted to place M&E in the hands of a stand-alone project management unit whose staff lacked the relevant expertise. Second, by the time the project grant became effective, the design of the management information system and the broader monitoring and evaluation effort had still not been fully specified. This contributed to subsequent implementation delays.

b. M&E Implementation:

There was a slow start to reporting on project inputs and outputs. The management information system was still not in place two years after startup, impeding the flow of information from the field to the project management unit. On the other hand, although there were delays and some gaps in executing the surveys and building the panel, a solid basis was laid for impact evaluation. The baseline survey was administered in 2006, after the (later than expected) relocation of the first beneficiary groups. Follow-up surveys were conducted in 2007, 2008 and 2009. Careful thought was given to the design of the panel and, in particular, the specification of three separate control groups—non-beneficiary households from the same villages of origin as the beneficiaries, non-beneficiary households in the villages of destination of beneficiaries, and non-beneficiary households in similar areas of neighboring districts. Comparisons were based on double-difference analysis, with propensity score matching.

a. M&E Utilization:

The results of the impact evaluation were solid and well written up, and provided a sufficient foundation on which the government and the Bank could base a judgment about the merits of scale-up. At closing, the project database and management information system were handed over to the Ministry of Lands, Housing and Urban Development. These could be used for follow-up enquiries as needed.

M&E Quality Rating: Substantial

11. Other Issues:

a. Safeguards:

This was a Category B project, calling for a partial environmental assessment. The relevant safeguard policies were Environmental Assessment (OP 4.01) and Pest Management (OP 4.09). The ICR reports no safeguard violations. An Environmental Management Plan was prepared, which included arrangements for integrated pest management. The identification of properties for acquisition under the project followed the environmental and social guidelines set out in project operating manuals.

b. Fiduciary Compliance:

The operational policies on Financial Management (OP/BP 10.02), Procurement (OP/BP 11.00), and Disbursement (OP/BP 12.00) were complied with. Audit reports were submitted slightly late but were always unqualified. There were some procurement delays but the rating for this was moderately satisfactory or satisfactory throughout implementation. Problems with community procurement were fixed through training, closer supervision and technical audits.

c. Unintended Impacts (positive or negative):

Positive. Because project rules specified that debts had to be cleared before properties could be sold, the project helped recover more than US$1 million in land rent owed to the government and in outstanding commercial bank loans.

Negative. The project led to a doubling of land prices during the first three years of implementation. A land market study commissioned by the project recommended adding two districts to the original four to increase the potential supply of land and ease pressure on prices.

d. Other:



12. Ratings:

ICR
IEG Review
Reason for Disagreement/Comments
Outcome:
Satisfactory
Satisfactory
 
Risk to Development Outcome:
Moderate
Significant
Although, by project close, only 10 percent of those resettled had abandoned the parcels allotted to them, the remoteness of the resettlement areas from markets and services may increase the rate of abandonment as time passes. Access to the inputs needed to sustain productivity increases remains limited.  
Bank Performance:
Satisfactory
Satisfactory
 
Borrower Performance:
Satisfactory
Moderately Satisfactory
Government was slow to implement policy measures and other actions needed to support the willing buyer, willing seller model of land reform that this project was piloting. 
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:

IEG derives the following four lessons:
  • The willing seller, willing buyer approach to land reform will not work in the absence of supporting legislation and policy reforms that create adequate incentives for the owners of large estates to sell off their land: bottlenecks in the supply of land to the market reduce the scope for accommodating would-be buyers, and the availability of project funds to facilitate land purchase exerts an upward pressure on land prices, given the shortfall in delivery of property to the market.
  • The land that is made available for sale under such a project tends to be of low productive potential and to be sited at a distance from markets and services, limiting the scope for boosting the agricultural productivity and incomes of farmers who acquire land.
  • Land redistribution is but one component of a successful land reform project. Land purchase is but a small component of willing buyer, willing seller land reform: the resettlement package needs to make adequate provision for the technical assistance, farm inputs and coverage of the relocation and set-up costs needed for beneficiaries to prosper; another, even larger, challenge is to ensure that the resettlement of beneficiaries goes hand in hand with the provision of community infrastructure—schools, health posts, and roads—in the typically remote locations where land is most likely to be offered for sale.
  • Land redistribution can raise the incomes of poor households by increasing the amount of land farmed, and it may generate a one-off boost in productivity by bringing idle land into use; further increases in agricultural productivity may be harder to realize. In this project the initial package of complementary inputs jolted productivity upward but yields fell back once the package was exhausted—although productivity was still higher relative to before the project. Improvement to agricultural extension services (beyond the scope of this pilot operation) will be needed to increase yields and encourage crop diversification in resettlement areas.

14. Assessment Recommended?

Yes
Why?
To contribute to a synthesis of lessons learned from IEG assessments of land administration and land redistribution projects--none of these IEG assessments had previously examined African cases. IEG visited Malawi to assess the Malawi project in August 2012 and issued a Project Performance Assessment Report in June 2013.

15. Comments on Quality of ICR:


The ICR thoroughly examines the design rationale for this pilot project and presents a wealth of good evidence about the results of the project. It is candid about the problems associated with the remoteness of the resettlement locations and the initial underestimate of the need to make provision in the project for drinking water supply. The ICR includes a detailed discussion of the learning from the project.

a. Quality of ICR Rating: Satisfactory

(ICRR-Rev6INV-Jun-2011)
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