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Implementation Completion Report (ICR) Review - Id National Program For Community Empowerment In Rural Areas


  
1. Project Data:   
ICR Review Date Posted:
06/10/2013   
Country:
Indonesia
PROJ ID:
P105002
Appraisal
Actual
Project Name:
Id National Program For Community Empowerment In Rural Areas
Project Costs(US $M)
 1,859.3  2,098.7
L/C Number:
C4385, L7505, L7666
Loan/Credit (US $M)
 231.2  519.5
Sector Board:
Social Development
Cofinancing (US $M)
 0  68.5
Cofinanciers:
IFAD
Board Approval Date
  05/20/2008
 
 
Closing Date
06/30/2011 12/31/2011
Sector(s):
Sub-national government administration (25%), Irrigation and drainage (20%), Water supply (20%), Roads and highways (20%), Primary education (15%)
Theme(s):
Decentralization (23% - P) Rural policies and institutions (22% - P) Participation and civic engagement (22% - P) Social safety nets (22% - P) Rural services and infrastructure (11% - S)
         
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Sabine Cornelius
Robert Mark Lacey Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
The project development objectives as stated in the Project Appraisal Document (PAD, p.5) are as follows: “villagers in PNPM-KDP [the National Program for Community Empowerment Kecamatan (sub-district) Development Project] locations benefit from improved socio-economic and local governance conditions.” The project is focused on rural areas and is designated by the acronym PNPM-Rural.

The project’s activities were a sub-set of the National Program for Community Empowerment [PNPM], the overall goal of which is to reduce poverty, and to empower Indonesia’s diverse rural and urban communities to actively participate in development.

The statement of objectives in the Financing Agreement varies from that in the PAD: “The objective of the Project is to contribute to the realization of the PNPM’s overall development goals, namely, to reduce poverty and improve local-level governance in rural areas in Indonesia through the provision of investment resources to support productive proposals developed by communities, using a participatory planning process.”

This ICR Review is based on the statement of objectives in the PAD, since it is more monitorable.

On April 14, 2009, the Board approved Additional Financing in the form of an IBRD loan of US$300 million. In essence, the statement of objectives used in the Project Paper (PP) for the Additional Financing (AF) loan remained unchanged compared to those in the PAD (the objectives in the main body of the PAD referred to “PNPM-KDP [Kecamatan Development Project] locations” whereas the Project Paper (p. 2) refers to “villagers in these rural locations”) (p. 2). The Additional Financing increased the target number of participating sub-districts from 2,000 to 4,000, and the geographic scope of the project was expanded to cover all rural sub-districts in Indonesia (ICR, p. 4). Since there was no essential change in the development objectives, this Review will not undertake a split evaluation.

The combined project funded by the original loan and credit plus the Additional Financing Loan is known as PNPM Rural 1 and 2.

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: 04/14/2009

c. Components:
The Project comprised four components:
1. Block grants to Kecamatan (Sub-districts) (US$1,633.6 million or about 88 percent of total Project Baseline Cost at appraisal and US$1,901.6 million at closure). The block grants, which were to be disbursed "directly from the Special Account to collective community accounts, without entering the inter-governmental transfer system” (PAD, p. 62), aimed to support; (i) investment grants (US$1,566.3 million or about 84% of total Project cost at appraisal) to finance small-scale economic and social infrastructure sub-projects developed through participatory community planning as well as the GenerasiSehatdan Cerdas [Healthy and Bright Generation] Conditional Cash Transfer (CCT) pilot program aimed at accelerating attainment of the Millennium Development Goals related to health and education; and (ii) sub-district planning grants to support development planning at the village and sub-district levels, particularly by training “a cadre of self-selected social and technical facilitators” of the planning process.

2. Facilitation and training (US$131.9 million or about 7 percent of total Project Baseline Cost at appraisal and US$116.9 million at closure) to finance salaries and operational expenses of social and technical facilitators who were to strengthen the capacity of local government institutions, in accordance with decentralization laws, by training technical staff of local government councils, including village and sub-district fora, village and sub-district executives and district parliaments.

3. Implementation Support and Technical Assistance (US$79.4 million or about 4 percent of total Project Baseline Cost at appraisal and US$71.9 million at closure) to finance technical assistance, field oversight, and local-level coordination to support project administration at the national, provincial and district levels.

4. Support for Project Management (US$14.2 million or about 0.8 percent of total Project Baseline Cost at appraisal and US$8.4 million at closure) to finance “several critical national-level activities needed to manage the national program” (PAD, p. 7). These included training and study tours for “key PMD staff” as well as electronic record keeping for the Directorate General of Village Community Empowerment (PMD), within the Ministry of Home Affairs (MOHA).

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Cost
At appraisal, the total Project cost was estimated at US$1,859.3 million, The Project was approved by the Board in May 2008 and became effective in July 2008. The Project scope was revised in 2009 to “support expansion of the PNPM-Rural Project from its current geographical coverage of 2,864 rural sub-districts (kecamatan) to approximately 4,371 total rural sub-districts in 2009” (the targets in the main body of the PP for AF, p. 1, are different from the (downward rounded) ones in the Results Framework of the PP for AF, p. 20). However, according to the PP for AF, the revised total Project cost remained the same at US$1,859.3 million. According to the ICR, the total actual Project cost, i.e. total of World Bank, Borrower (and IFAD) funding disbursed under the Project, amounted to US$2,098.7 million or 113 percent of the above appraisal estimate (ICR, p. 26).

Financing (see Table 1 below)
The ICR (p. 26) lists the estimated Project financing at appraisal (by funding source) and the actual/last estimate of Project financing (by funding source). The latter represents the total disbursements for both the Original and Additional Financing (by funding source). There are several errors and inconsistencies in the tables in the ICR (p. 26), such as the “Appraisal Estimate” column not adding up to the stated total amount (see Section 15 below). The combined project funded by the original loan and credit plus the Additional Financing Loan (column 4 in Table 1) is known as PNPM Rural 1 and 2.

Table 1: Original, Revised and Actual Financing by Source of Financing (in US$ million)
column 1column 2column 3column 4column 5column 6
Source of FinancingOriginal Financing (PNPM-Rural 1)Additional Financing (PNPM-Rural 2)Original Financing plus Additional Financing Actual disbursement/
counterpart contribution
Actual disbursement/
counterpart contribution (column 5) as % of OF+AF (column 4)
IDA
190.0
0
190.0
182.2
97
IBRD
41.2
300.0
341.2
337.3
99
Borrower
1,626.1
-368.5
1,259.6
1,535.6
122% if compared to reduced counterpart contribution (column 5 as % of column 4), and 94% if compared to original counterpart contribution (column 5 as % of column 2)
IFAD
0
68.5
68.5
44.6
65
Total
1,859.3
0
0
2099.7
113

IBRD/IDA
In 2008, the Board approved financing in the amount of US$231.2 million (or about 12 percent of total Project cost), consisting of an IDA credit (US$190 million) and an IBRD loan (US$41.19 million). Additional IBRD Financing in the form of a US$300 million loan was sought and approved in 2009.

Other External Financing
PNPM-Rural cofinancing from IFAD in the amount of US$68.5 million equivalent was scheduled for 2009 (PAD, p. 26 and PP for AF, pp. 3 and 6). According to the ICR, "“in November 2008 The International Fund for Agricultural Development (IFAD) agreed with the [Government] to provide a loan of SDR 42.03 million plus a TA grant of SDR 0.25 million for a co-financing operation that is directly linked to PNPM-Rural 1&2, with the Bank named in the project financing agreement as “cooperating institution” to “administer” the loan and grant." Of this IFAD cofinancing, US$44.6 million had been disbursed by project closure. However, the closing date of the IFAD loan and grant is September, 2016. The PP for AF (p. 6) further mentioned that the PNPM Support Facility (a multi-donor Trust Fund administered by the World Bank), provided management and technical support, especially in the areas of monitoring and evaluation, supervision, pilot programs, financial management, policy guidance and coordination of donor support. At the time of Additional Financing approval, commitments of US$60 million had been made to this World Bank-administered Trust Fund by the Royal Embassy of the Netherlands, the Danish International Development Agency (DANIDA); the UK’s Department for International Development (DFID), and Australia (AusAID). However, this so-called PNPM Support Facility supports a variety of programs under the PNPM umbrella, and the Project Paper did not specify the support for this project.

Borrower Contribution
According to the PAD, the Borrower was to finance US$1,628.1 million (or about 88 percent of total Project cost), comprised of central, local government and beneficiary contributions.The counterpart contribution (comprising central and local governments’ as well as beneficiaries’ contributions) was reduced to US$1,259.6 million at the time of Additional Financing approval (see Table 1 above). The ICR did not explain why this was the case. According to Annex 1 of the ICR (p. 26), the actual Borrower contribution, comprised of central government, local government and beneficiary contributions, amounted to US$1,535.6,or about 122 percent of the reduced estimate, and about 94 percent of the original estimate.

Dates
A six month extension of the Project closing date from June 30, 2011 to December 31, 2011 was approved, together with the Additional Financing, in April 2009, in order “to allow for full disbursement of all funds and final reporting on project impact” (PP for AF, p. 1).


3. Relevance of Objectives & Design:

a. Relevance of Objectives:
Rating: High
According to the Progress Report (2011) for the 2009-2012 Country Partnership Strategy (CPS) for Indonesia, the PNMP was considered the “centerpiece of Bank engagement” and its long-term relationship with Indonesia, in collaboration with other development partners (p. 14). Similarly, the CPS Progress Report referred to the PNPM as the Government’s flagship poverty reduction program (p. 45) and one of the World Bank’s key instruments for assisting the Government in achieving reduced extreme poverty headcounts. (The latter was a country development goal under the CPS’ Core Engagement Area 3: Community Development and Social Protection [CPS Progress Report, p. 34]). Community Development and Social Protection was the third of five core areas of engagement of the World Bank Group in Indonesia.

b. Relevance of Design:
Rating: Substantial
The causal chain outlined in the PAD (p. 16) between project activities and the first part of the development objectives, i.e. improved socio-economic conditions, was convincing. Improved access to infrastructure and revenue generation were to be supported, for example, through the construction of roads that would: (i) provide access to previously isolated villages, improve access to markets, town centers, education and health facilities, and clean water supply; and (ii) increase business opportunities and employment for villagers. In addition, the Conditional Cash Transfer pilot activities under Component 1 aimed to improve utilization of health and education facilities further.

The causal chain between Project activities and the second part of the development objectives, i.e. improved local governance, was less clear. As recognized in the PAD (p. 41) good local governance encompasses “less easily quantifiable goals of empowerment, accountability, and active participation.” The PAD implicitly defined local governance as “responsible institutional structures that enable bottom-up planning and provide for development oversight at the local level” (PAD, p. 56). However, it did not specify a concrete set of activities, outputs and intermediate outcomes that could be expected to support this objective. As pointed out in the 2012 governance review (Woodhouse, A. (2012); Governance Review of PNPM Rural; Community Level Analysis; Jakarta: PNPM Support Facility), local governance is affected by: (i) social accountability mechanisms; (ii) financial management; (iii) facilitators; (iv) complaints-handling mechanisms; and (v) management information systems & reporting. Several of these elements were addressed in the Results Framework in the PAD, for example, quality of participation as a proxy for social accountability; local governance satisfaction, and audits. Nonetheless, the PAD did not contain a concrete set of activities that could be expected to lead to the attainment of the final intended outcome.


4. Achievement of Objectives (Efficacy) :

1: Villagers in PNPM-Rural locations benefit from improved socio-economic
conditions
Rating: Substantial

1.1. Improved Household Expenditure rates

Outputs
  • The project created mostly temporary employment of nearly 3.8 million workers in the labor-intensive construction of infrastructure sub-projects and provided access to basic social and infrastructure services, including roads, water supply, schools and health clinics financed through block grants under Component 1 (see Table 2 below).

Outcomes
  • Under the sub-heading of poverty alleviation, the ICR (p. 15) references a 2009/10 Impact Evaluation, which “showed increased per capita household consumption of about 9% on average in PNPM areas and consumption increases of 19% in the poorest 20% of the sub-districts.” It is not clear whether this cited Impact Evaluation was a follow up study to the referenced 2008 Baseline Study, which would have entailed interviewing the same households as the ones included in the 2008 Baseline Study. The 2008 study utilized a propensity score matching methodology to construct the counterfactual. The ICR does not report changes in per capita consumption in treatment locations compared to the control locations.
  • According to a 2011 PNPM publication (p. 2), for the period 2007-2009, which overlapped with the last phase of the PNPM’s predecessor, the Kecamatan (sub-district) Development Project, per capita consumption in PNPM locations increased by 5 percentage points compared to control locations and poor households in PNPM locations “were 2-3 percentage points more likely to move out of poverty in comparison to control areas” (PNPM Mandiri: What Works, What Doesn’t and What’s Next. Jakarta: PNPM Support Facility. Accessed on August 4, 2012).

1.2 Improved Access to economic and social infrastructure

Outputs of infrastructure investments
  • The project funded construction/rehabilitation of about 48,500 infrastructure “activities,” about 8,700 schools and nearly 3,500 health clinics. In addition, about 30,000 (existing) microcredit groups were funded (ICR, p. 15). Table 2 below provides a breakdown of completed sub-projects by sector (ICR, p. 28f.)

Table 2: Types of Sub-projects completed in 2008 and 2009
Type of Sub-project20082009Number of activities
Infrastructure (Total)21,14227,37548,517
Roads (units)11,59717,28628,883
Length of Roads (km)12,90018,10531,005
Bridges (units)1,1871,5532,740
Water Supply Systems (units)1,6742,2963,970
Public Sanitation / Ablution Blocks (units)6669061,572
Irrigation Systems (units)2,2963,3325,628
New Markets (units)228320548
Rehabilitation of Markets-5252
Electrification (villages)249458707
Dock / Jetties (units)114-114
Other Infrastructure (units)3,1311,1724,303
Green sub-projects (units) 282452734
Education
Schools (new construction and rehabilitation)3,4265,2888,714
Health
Health Clinics (new construction and rehabilitation)1,4212,0543,475
  • The utilization of rehabilitated and newly constructed health clinics was enabled by project-financed staff training, equipment, and sanitation and nutrition programs for health facilities (ICR, p. 29). The ICR does not state the number of incremental users of these health facilities as a result of Project investments.
  • School furniture, teaching materials, and a total of 342 scholarship “packets” were financed (ICR, p. 29).

Outcomes of infrastructure investments
  • Access to economic and social infrastructure improved significantly during the project’s lifetime, and the revised coverage target of 4,000 sub-districts was exceeded by almost 10 percent, based on the target of 2,600 in the Results Framework (ICR. p. 15). According to the 2011 PAD for PNPM 4 (p. 2), the PNPM-Rural 1 covered 2,600 Kecamatan (sub-districts) in 2008, and the PNPM-Rural 2 supported 4,258 sub-districts in 2009. The PNPM-Rural 1 and 2 combined (the project under review) thus achieved a significant increase in access compared to the 1,800 sub-districts covered by the last Project in the KDP series between 2005-2009.
  • The ICR noted that the outcomes “are not exclusively attributable to PNPM 1 and 2, but also to the successor and overlapping PNPM-Rural 3 loan,” which was implemented between mid-2010 and the end of 2012. However, the overlap appeared to be minimal, since by September 2010, i.e. when disbursements of PNPM-Rural3 began,98.5 % of the PNPM 1 and 2 loan and credit funds had already been disbursed (ICR, p. 9).
  • According to a 420 sub-project sample assessed during “an ongoing 2012 Technical Evaluation” nearly two-thirds of interviewed beneficiaries were reportedly highly satisfied “regarding functionality and utilization of infrastructure,” and about one-quarter of interviewed beneficiaries reported average satisfaction.
  • While the Project enabled a significant number of students to access education, it is not clear how 342 “packets” benefited more than 42,000 students, and how the latter “were able to complete nine years of basic education,” given the Project’s total “life time” of four years (ICR, p. 29).

Outputs of the Generasi (Healthy and Bright Generation) Conditional Cash Transfer
  • 340 schools were constructed or rehabilitated; financial support (transportation subsidies, scholarships, uniforms) was provided for more than 200,000 students; textbooks were distributed to 380,000 students; and financial support given for recruiting 2,600 contract teachers/assistants (ICR, p. 32).
  • Supplementary feeding and nutrition counseling was provided to nearly 830,000 mothers and infants; iron supplements supplied to about 270,000 pregnant mothers; 120,000 children were immunized; Vitamin A was given to more than 281,000 children; post-natal care was provided to 97,000 women, and stipends for 34,000 community health volunteers were disbursed (ICR, p. 32).

Outcomes of the Generasi (Healthy and Bright Generation) Conditional Cash Transfer
  • The Generasi Conditional Cash Transfer pilot program was intended to improve health and education indicators in 130 Kecamatan (sub-districts) in five provinces (ICR, p. 16). Table 3 shows that the pilot program achieved or exceeded its targets.

Table 3 Results of the Generasi Conditional Cash Transfer program
Health2005* baseline (%)2010 target (%)Actual (2010)
Immunization coverage for
12-23 month-olds
384848 (ICR, p. 16)*
Prenatal care visits566666 (ICR, p. 16)*
Deliveries assisted by trained professionals405050 (ICR, p. 16)*
Education
Increased primary school enrollment rates96.59791.5***
Increased junior high school enrollment rates577272% (ICR, p. 16)
*The ICR reports “increases of 10-11 [percentage points] in immunization coverage for 12-23 month-olds, in prenatal care visits, and in deliveries assisted by trained professionals relative to the baseline values” (ICR, p. 16).
** The ICR states an increase of “3.5 percentage points from the baseline value of 88%" (ICR, p. 6). This baseline value is inconsistent with the baseline value included in the PNPM-Generasi-related outcome indicators (ICR, p. 3).
  • Childhood malnutrition was reduced by 2.2 percentage points, and severe stunting of infants declined by 6.6 percentage points during the 30-month study period (ICR, p. 16).
  • The ICR does not comment on the linkages and potential synergies between the health and education activities carried out under the Generasi Conditional Cash Transfer and the investments in education and health facilities under the sub-project part of Component 1 of the project (see Table 2 above).

2. Villagers in PNPM-Rural locations benefit from improved local governance conditions.
Rating: Modest

Outputs
The sub-objective of villagers benefiting from improved local governance conditions was supported by the following outputs:
  • A total of nearly 31.3 million community members participated in sub-project planning, implementation and monitoring activities, 45 percent of whom were women, and 57 percent of whom were poor. The ICR notes that the community participation data may be overestimated due to potential double counting (ICR. p. 33).
  • A total of about 11,400 consultants and facilitators, representing about 90 percent of the intended number, were employed by the project in 2009. About 9,800 facilitators were deployed at sub-district level. The ICR does not mention whether the consultants and facilitators remained in place for the remainder of the project.
  • A total of 2,155 complaints of alleged misuse of funds and power were registered by community members, facilitators, the audit agency, NGOs, and the media in 2008-2009. A total of nearly 1,700 persons, more than 70 percent of whom were community members, were found culpable of wrongdoing; 76 percent of the diverted funds were recovered. The ICR does not mention complaints data for the remainder of the project.

Outcomes
The project did not bring about any notable changes in the way that local governments function, although according to the ICR, the establishment of the complaints mechanism and audits did advance "demand side" governance.
The ICR reports (p. 15) that while there is evidence of enhanced governance with regard to project activities, the impact on general village governance and development was low, and "there was limited impact on overall local governance in Indonesia" (ICR, P. 17).
With regard to project activities, the following results were achieved:
  • Corruption. According to the ICR, the complaints handling system, supplemented by increased random audits carried out by the (internal) National Government Audit Agency was "effective in uncovering fraud, diversion of funds, violation of procedures and abuse of authority...only 0.3% of total block grants are known to be affected by fraud and corruption. Of this amount, 57% has been recovered and returned to communities, and 43% remains under litigation" (ICR, p. 13) -- although, according to the Governance Review of the PNPM-Rural, the low rates of corruption under-reported the true extent of the problem (Woodhouse, p. 4). A “tougher regime of sanctions” resulted in 80 jail sentences, the dismissal of about 300 facilitators, and the suspension of disbursements in 3 percent of districts and 4 percent sub-districts. However, It is unclear why this sanctioning regime was only implemented in 2010, given that more than 90 percent of the IDA/IBRD proceeds had already been disbursed by the end of 2009 (ICR, p. 27).
  • Social accountability and transparency. According to the PNPM-Rural governance review (Woodhouse, 2012), the project had positive impacts on social accountability and transparency within the project but they did not spill over to the broader organizational culture, mainly due to the mixed quality of facilitation. The ICR suggests that a “tendency of requirement satisfaction” and “routine implementation” contributed to shortcomings in the effectiveness of facilitation as it may have led community members to simply follow PNPM procedures without embracing the underlying principles (ICR, p.38). In addition, shortcomings were observed in the quality of facilitator training and difficulty in filling facilitator position, due to a shortage of qualified facilitators (ICR, p. 8).
  • Participation. The block grant program’s community-driven development approach was based on community participation in sub-project planning and monitoring. The governance review (Woodhouse, 2012) concluded that participation rates were still high but the quality of participation was variable. Women and the poor were included in the process, yet the quality of their participation in decision-making “can still be improved” (ICR, p. 18

5. Efficiency:

Rating: Substantial The ICR assessed efficiency at closure based on four distinct aspects: (i) the economic rate of return (ERR) on infrastructure investments; (ii) the size of the income or consumption multiplier on PNPM block grant funds; (iii) the construction cost of PNPM sub-projects relative to estimated costs of local government procured construction of similar infrastructure items; and (iv) a technical evaluation of the quality of the infrastructure (ICR, p. 39).

Economic Rate of Return
No cost benefit analysis was carried out at appraisal, given that the PNPM used the same technical standards and designs as previous KDP operations, the economic analyses of which therefore provided a useful proxy measure of likely returns to PNPM for small-scale infrastructure projects (PAD, p. 84). The PAD referred to several economic analyses undertaken under the KDP, whose estimated weighted average ERRs varied from 51.4 percent for a sample of 113 sub-projects in 2004, to 60.1 percent for a sample of 41 KDP-1 sub-projects (PAD, p. 84).

A replication of the 2004/5 ERR study with a small sample of 48 infrastructure projects was carried out in 2012 (it is unclear how this sample was selected). The results suggest rates of return of between 35 and 75 percent for recent road/bridge, irrigation/drainage, or clean water supply sub-projects (ICR, p.16), which are comparable with the 2004/5 results, which indicated ERRs of between 39 and 68 percent for the same types of sub-projects (ICR, p. 39).

Income or Consumption Multiplier
A 2010 PNPM-Rural impact evaluation funded by the PNPM Support Facility concluded that the recorded 9 percent growth in per capita consumption rates among PNPM households versus 5.3 percent growth among matched household samples represents a significant return on project investment. According to the ICR, “using a conservative estimate of 5.3% growth from the matched household sample, the yearly impact is 3.3 times the amount of the block grants invested” (ICR, p. 17). Regarding the income multiplier from PNPM-Rural funds, the 2012 economic analysis replication suggests an average income multiplier of 1.3 for the same types of sub-projects. This is again broadly in line with the 2004/5 results that indicated an average income multiplier of 1.2” (ICR, p. 39). The ICR did not explain sufficiently how these figures were calculated.

Comparative Construction Cost
Regarding the costs of construction, the 2004/5 ERR study showed that the cost of community infrastructure sub-projects implemented under the PNPM-Rural’s predecessor project was 30 to 50 percent lower than those executed by local contractors. The 2012 ERR replication suggests cost savings for recently built PNPM-Rural sub-projects under this operation to be in the 35 to 40 percent range (ICR, p. 39).

Infrastructure Quality
The 2012 ERR replication found that 75 percent of the (relatively small) sub-project sample was rated as "good" or "excellent" compared to a 94 percent "good" or "excellent" quality rating obtained by the 2004/5 KDP study” (ICR, p. 39). A recent larger-scale technical evaluation of PNPM infrastructure (no reference provided in the ICR) rated about 68 percent of about 350 inspected sub-projects of "sufficient" construction quality and 27% “slightly below specifications” (ICR, p. 39).

Administrative efficiency
The shortcomings in the design and performance of the MIS system, coupled with the less than satisfactory performance of the National Management Consultant compromised the quality of field oversight and reporting (ICR, p. 23). In addition, administrative inefficiencies were caused by delays in filling Bank senior staff positions in the supervision team; procurement delays, particularly in contracting consultants responsible for overseeing implementation at the sub-national level; and in recruiting and training facilitators responsible for ensuring meaningful participation in project-supported communities (ICR, p. 23 and Section 11 below). The project did not experience any significant cost overruns. There were some procurement delays (see Section 8b). The project closed six months later than 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:
No
%
%
ICR estimate:
No
%
%

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

6. Outcome:

The project’s first sub-objective “villagers in PNPM-Rural locations benefit from improved socio-economic conditions” was achieved to a substantial extent, whereas the second sub-objective “villagers in PNPM-Rural locations benefit from improved local governance conditions” was attained to a modest extent. Efficiency, based on evidence of the economic rate of return on a sample of sub-projects analyzed in 2012, the multiplier effect of block grant funds, and the comparative costs of construction, while taking account of possible administrative sources of inefficiency, is assessed as substantial. The relevance of objectives is assessed as high and that of design substantial. Outcome is rated as moderately satisfactory.

a. Outcome Rating: Moderately Satisfactory

7. Rationale for Risk to Development Outcome Rating:

The PNPM-Rural program is considered well established as it is built on eight years of implementation experience gained and lessons learned under the KDP program process, “with lessons being captured, and more or less promptly incorporated, into the next cycle of investments” (ICR, p. 20).

The fact that a “2005 study found that 92% of works were still functioning nine months to one year after the completion” of infrastructure sub-projects (PAD, p. 13) suggests a moderate risk to the development outcome of similar investments made under the aegis of this project. It is worth noting that for revenue-generating facilities, such as water supply, markets, and irrigation, a village-level utility was set up to manage funds and operation and maintenance activities (ICR, p. 13). A 2012 Technical Evaluation cited in the ICR Data Sheet rated operation and maintenance as “sufficient” for 52 percent and “slightly below sufficient” for 43 percent of the 420 sub-projects assessed in 3 provinces (ICR Data Sheet, p. v).

The sustainability of road investments is less certain, given the limited financial and technical capacity at the village level for periodic road maintenance and the notion that “no formal institutional arrangements were made at the district level, nor were there any district level budget provisions for ongoing maintenance and repairs” (ICR, p. 13).

The slow progress in institutionalizing participatory processes in local governments’ operations and the before-mentioned constraints to good operation and maintenance performance of village committees pose a moderate risk to the development outcome. These risk factors were mitigated by high economic returns as well as significant community engagement and ownership of the investments.

There is a moderate risk to development outcome stemming from shortcomings in consultant and facilitator capacity. The ICR (p. 24) lists several implementation problems related to “the timely mobilization and training of enough capable consultants/facilitators, on-time and compliant procurement, good financial management.” These problems “proved elusive to improvement." The project team subsequently stated that the problems with facilitators had negative consequences on empowerment, given that they adversely affected the inclusion of vulnerable population segments.

a. Risk to Development Outcome Rating: Moderate

8. Assessment of Bank Performance:

a. Quality at entry:
The Bank’s preparation team built on the experience of the project’s predecessor program, the eight-year KDP series (1998-2009). While the ICR commends the preparation team on appropriately incorporating the lessons from the KDP (ICR, p. 20), it does not specifically address which of the key lessons identified in the PAD were addressed by the PNPM-Rural 1 and 2, including the importance of recruiting “gender-aware project staff or consultants [who] can have a significant impact on outcomes” (PAD. P. 23); and the need for improved poverty targeting within sub-districts and villages through “better facilitation” to reduce the ability of local elites to control the decision making process (PAD, P. 24).

The Project’s envisaged activities, outputs and outcomes were closely linked to its intended objectives. In terms of measuring efficacy, the results framework was appropriately designed, except for the fact that no PDO indicator had been included to measure the attainment of “improved local governance conditions”(see Section 10a below).

The PAD does not elaborate on the Project’s strategic relevance, i.e. how the PNPM-Rural 1 and 2 fit in with what the PAD calls “the bigger picture.” No reference was found to the PNPM’s Road Map, which outlined four PNPM program phases: (i) initial learning phase (years 1 and 2); (ii) self-reliance phase (years 3 and 4); (iii) sustainability phase (years 5 and 6); and (iv) exit strategy. The phase descriptions suggest that the PNPM-Rural 1 and 2’s scale up approach combined aspects of the first and second phase.

Economic and financial aspects were adequately addressed at the preparation stage, as evidenced by the envisaged (and achieved) increase in audit coverage from 4 percent to nearly 20 percent of all project-supported sub-districts (ICR, p. 22) as well as the intended utilization of different efficiency measures. Critical risks that could have adversely affected project outcomes were correctly identified, such as untimely counterpart contributions at central, local and community levels and inadequate fiduciary controls, and mitigation actions were proposed. However, the challenges of the rapid scale up were underestimated. These were further amplified by late budget release and procurement delays prevalent across public institutions in Indonesia (ICR, p. 21). Proposed mitigation actions proved to be inadequate (ICR, p. 20).

Quality-at-Entry Rating: Moderately Satisfactory

b. Quality of supervision:
The quality of Bank supervision was mixed. On the one hand, the ICR notes (p. 21) that the supervision team successfully mobilized funding to meet the financial requirements of the rapid scale up. This included mobilizing an additional US$300 million IBRD loan to support the full scale up and continuation of the program for another full year; leveraging a loan by IFAD; and persistence in pushing for earlier budget releases.

On the other hand, the ICR points to the following deficiencies, which must be viewed in light of the fact that this project had the benefit of the predecessor eight-year KDP series (1998-2009).

  • the follow through on implementation problems identified in supervision reports was insufficient (ICR, p. 21).
  • there were gaps in supervision during the first two years of implementation, due to delays in filling senior staff positions overseeing the task team (ICR, p. 21). This is significant given that 90 percent of IDA/IBRD credit and loan proceeds had been disbursed by the end of the second year, i.e. 2009. Despite the supervision team’s efforts, their success in helping the Project Management Unit to overcome implementation challenges was limited (ICR, p. 21).
  • the quality and candor of supervision reporting were inadequate, in that monitoring indicators were not updated on a regular basis (ICR, p. 21); and the project’s implementation progress and progress towards the project objectives were consistently rated as Satisfactory in the supervision reports (ICR Data Sheet, p. vi), despite the repeatedly quoted implementation problems;
  • there was a discrepancy between the supervision reports' "satisfactory" Development Objectives and Implementation Progress ratings and the finding of a mid-2010 Bank supervision mission, which “found serious problems, and suggested that implementation performance be rated “unsatisfactory” (ICR, p. 9). Among the issues previously identified during a 2009 supervision mission, and still to be addressed, was a shortage of technical and financial specialist facilitators, which “was of special concern because the implementation of PNPM-Rural 3 was just starting and a PNPM-Rural 4 loan was being discussed with the [Government]” (ICR, p. 9).
  • no restructuring took place following the critical assessments of the project’s performance during the 2009 mission, and reiterated in 2010. Such a restructuring would have served to refocus implementation on the intended objectives, since, as the ICR concludes (p. 43), program implementation and monitoring appeared to be mostly focused on the disbursement of funds and implementation of physical works rather than on community empowerment and institutionalization of participatory processes into local governments functions.
  • there were a number of significant fiduciary issues (see Section 11 below), some of which remained unresolved at project closure. The ICR is unclear concerning the degree of compliance with financial covenants, and there is no discussion of mandatory external audits. It is also silent on the Bank's financial management and procurement assessments during supervision, although the project team indicated these were in the satisfactory range. There is also insufficient evidence on safeguard compliance.

Quality of Supervision Rating: Unsatisfactory

Overall Bank Performance Rating: Moderately Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
The ICR mentions the following aspects related to Government performance. On the one hand, it is noted that:

  • the project enjoyed a high degree of Government ownership, given that the PNPM-Rural was part and parcel of its flagship community-based poverty alleviation program. Government commitment was illustrated by significant financial contributions, including a local government contribution of “at least 25% [of the value of] PNPM block grants from the provincial and district budgets” (ICR, p. 22). The project team emphasized that village governments tended to contribute a substantial portion of their budgets to the Project.
  • the Government has remained highly committed to the PNPM approach, as evidenced by significant counterpart contributions for PNPM-Rural 1 and 2 as well as successor projects. At the respective appraisals, the Borrower committed to funding about 88 percent of the total estimated financing need for PNPM-Rural 1 and 2, and about 41 percent and 57 percent in the cases of PNPM-Rural 3 and 4, respectively (2010 PAD for PNPM 3, p. 42 and 2011 PAD for PNPM-Rural 4, p. v).
  • the Government reportedly maintained a good relationship with, and coordination among, foreign donors “as evidenced by the existence of eleven linked trust funds totaling US$24.5 million from four bilateral agencies” (ICR, p. 23).
  • the Government developed policy and associated regulations to firmly establish the PNPM within the government system (ICR, pp. 14 and 22).This statement was not backed by specific examples.
  • the Government’s audit agency (BPKP) increased the audit coverage from 4 percent at baseline to about 2 percent of all sub-districts at closing (ICR, p. 13).
    On the other hand, the ICR remarks that:
    • while the 2010 budgets were released on time, budgets were released late in 2008 and 2009 (ICR, p. 22).
    • administrative inefficiencies were caused by the government’s failure to anticipate the need for greater operational and institutional support and to provide adequate staffing during the PNPM-Rural scale up of the program (ICR, p. 22).

  • Government Performance Rating: Moderately Satisfactory

    b. Implementing Agency Performance:
    The ICR named the Directorate General of Community and Village Empowerment (PMD) in the Ministry of Home Affairs as the implementing agency. Day-to-day responsibility was in the hands of an already existing Project Management Unit at PMD. One national and seven regional management consultant firms were retained to assist the Unit. The value of these seven consultancies amounted to nearly US$18 million.
    The ICR observes that, on the one hand, the PMD’s performance included scaling up Indonesia’s flagship community empowerment program to national level in less than three years after its initial launch as well as “enhancing project outcomes through innovative initiatives and pilot programs” (ICR, p. 22). The project implemented nearly 49,000 infrastructure sub-projects in more than 50,000 villages located in about 4,000 sub-districts in a way that provided temporary employment to nearly 3.8 million local villagers, most of whom (71 percent) were considered poor, despite numerous implementation challenges.

    On the other hand, the ICR notes the following deficiencies which must be viewed in light of the fact that this project had the benefit of the predecessor eight-year KDP series (1998-2009):

    • the slow procurement of consultants, services and goods, including delays in completing critical consultant packages due to the PMD’s lack of procurement staff with sufficient knowledge in Bank procurement procedures. Moreover, the PMD chose not to use the services of a procurement advisor provided by the Bank in 2009 (ICR, p. 12). The ICR does not mention why this was the case.
    • the late recruitment and training of facilitators and failure to fill up to one-fifth of the large number of facilitator positions, particularly financial and technical specialist positions (ICR, p. 22), adversely affected financial management and exacerbated what the ICR (p. 22) calls the PMD’s “massive workload.” The national management consultant firm did not act upon corrective actions identified by supervision missions in a timely fashion. The ICR notes significant shortcomings in the National Management Consultant’s performance of its field oversight and reporting responsibilities as well as serious flaws in the design and performance of the Management Information System which adversely affected the monitoring and measuring of implementation progress and results (p. 22). The ICR does not discuss why the NMC consultancy was not cancelled due to the reported performance problems. The ICR indicates that financial management was negatively impacted by the lack of qualified facilitators and UPK [Sub-district Management Unit] staff, which, by September 2010, had reportedly resulted in a “less than satisfactory” performance of 30 percent of the UPK” (ICR, p. 12).
    • that due to the PMU staff’s heavy workload “complaints and corruption cases were not always dealt with promptly” despite strengthened arrangements for receiving complaints and curbing corruption (ICR, p 23).
    • a number of significant fiduciary issues (see Section 11 below), some of which remained unresolved at project closure. The ICR is unclear concerning the degree of compliance with financial covenants, and there is no discussion of mandatory external audits. It is also silent on the Bank's financial management and procurement assessments during implementation, although the project team indicated these were in the satisfactory range. There is also insufficient evidence on safeguard compliance.
    • As discussed in section 11, a “tougher regime of sanctions” resulted in 80 jail sentences, the dismissal of about 300 facilitators, and the suspension of disbursements in 3 percent of districts and 4 percent sub-districts. However, it is unclear why this sanctioning regime was only implemented in 2010, given that more than 90 percent of the IDA/IBRD proceeds had already been disbursed by the end of 2009 (ICR, p. 27).

    Implementing Agency Performance Rating: Unsatisfactory

    Overall Borrower Performance Rating: Moderately Satisfactory

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

    a. M&E Design:
    The Program Management Unit located in the Ministry of Home Affairs was responsible for overseeing M&E activities. Monitoring was to consist of internal monitoring by participating communities and consultants, and external monitoring by auditors, through complaints, and by independent provincial NGOs. A Management Information System containing data related to process, outputs and outcomes was to be maintained by the Project Management Unit. Evaluation activities, to be funded by the project as well as other sources (ICR, p. 10) were to include impact evaluations, thematic evaluations and technical studies (PAD, p. 12). According to the PAD (pp. 11f.), “the PNPM-Rural has one of the most comprehensive M&E systems in the Bank’s and Government’s portfolio, prepared in accordance with the M&E guidelines for the PNPM umbrella (PAD, p. 13)). The project’s M&E function was expected to be enhanced through assessments of various aspects of Project performance, including impact, efficiency, governance, targeting by the PNPM Support Facility (see Section 2d above).Baseline data was adequate, given that an impact evaluation survey had been conducted in 2007 for the Kecamatan (sub-district) Development Project.

    The ICR, however, notes that the MIS system “did not have a very robust design and became quickly overwhelmed by the rapid scaling up of the project scope (ICR, p.11).” This is a significant finding, given that the PAD emphasized the importance of upgrading the MIS system to remedy shortcomings of the PNPM-Rural’s predecessor, the Kecamatan (sub-district) Development Project, and to accommodate the expanded project scope (PAD, p. 113).

    b. M&E Implementation:
    The ICR reports that the complaints handling system in conjunction with random audits carried out by the National Government Audit Agency, was effective in uncovering fraud, diversion of funds, violation of procedures and abuse of authority” (ICR, p. 13) -- although, according to the Governance Review of the PNPM-Rural, these low rates of corruption under-reported the true extent of the problem (Woodhouse, p. 4).

    The ICR mentions that a “considerable number of monitoring and impact evaluation studies were carried out and brought valuable insight and findings for improving design and implementation” (ICR, p. 21). The ICR references a PNPM-Rural Impact Evaluation, a PNPM-Generasi (Healthy and Bright Generation) Impact Evaluation, and a 2012 Technical Evaluation.

    A 2010 Bank supervision found that the MIS was “not functioning properly, and that reporting was unreliable, late and often useless” (ICR, p. 11). The ICR further reveals that “key staff positions were still empty, required equipment was not available or was not being used. As a result, monitoring quality had declined over the course of the project and reliable monitoring results were often not available. Direct field supervision by the implementing agency was also less frequent than necessary and not well planned nor risk-based” (ICR, p. 11).

    a. M&E Utilization:
    The ICR reports (p. 13) that data collected through complaints handling and audit sampling was utilized to strengthen complaints handling and policing and sanctioning of corrupt practices.

    No information is provided on the extent to which M&E data was used to inform decision-making and resource allocation.

    Data was not utilized to restructure the project in a way that would have aligned the pace and scope of the intended expansion with the constrained implementation and M&E capacity at national and sub-national levels.

    M&E Quality Rating: Modest

    11. Other Issues:

    a. Safeguards:
    The Project was classified as Category “B” for purposes of Environmental Assessment. Three safeguards policies -- OP 4.01 (Environmental Assessment), OP 4.12 (Involuntary Resettlement), and OP 4.10 (Indigenous Peoples) -- were triggered.

    Environment.
    In light of the small scale of the investments (there were about 50,000 infrastructure sub-projects with an average cost of US$7,500 to US$ 15,000, according to the project team), the environmental checklist procedure adopted under the KDP was utilized during sub-project identification, design and implementation. As noted in the ICR, this checklist was supplemented by a negative list of certain types of sub-projects that could have serious negative impacts on the environment (p. 11). The PAD noted that “with block grants doubling in size there is some potential for increased impacts should more villages cooperate on large[r] investments” (PAD, p. 94) While reportedly “most of the issues had their origin in apparent failures to follow best civil engineering practice” which were to be addressed through “continued training and supervision of engineering staff providing technical advice to participating Kabupatens (regency/district) (PAD, p. 94), the ICR does not mention to what extent the Kabupaten engineering consultants responsible for reviewing all infrastructure designs of PNPM projects were able to ensure adherence to technical standards, which included “considerations on environmental effects” (PAD, p. 91).

    The ICR points out that a “May 2008 supervision [mission] reported that there were no serious safeguards issues but there are no environmental reports available for this project” (ICR, p. 11). The meaning of this statement is unclear, given that the project became effective in July 2008. A September 2010 mission reportedly found that “supervision of safeguards had been greatly increased and improved over the last six months” and that no “serious of systematic problems” had been observed (ICR, p. 11). The ICR does not comment on the quality of safeguard supervision activities conducted between May 2008 and March 2010. It was noted that the Bank’s supervision team did not include an environmental safeguards specialist. Furthermore, the ICR does not comment on safeguards compliance in relation to Papua, which presented a special challenge in light of the island’s “unique physical and cultural conditions (PAD, p. 26).The ICR does not state whether OP 4.01 was complied with. According to the project team, no environmental safeguards issues arose during the Project’s lifetime.

    Social Safeguards.
    The PAD noted (p. 26) that “no significant adverse impacts from land acquisition or involuntary resettlement have ever been reported from a KDP subproject,” and few social safeguards issues were anticipated to occur under the project. The ICR notes that little social safeguards supervision was provided during the early stages of implementation. A September 2010 supervision mission identified shortcomings in safeguards related record keeping, notably on land acquisition and “voluntary” land donations related to sub-projects (ICR, p. 12). While, according to the ICR (p. 12), safeguards supervision improved “later on during project implementation” this statement is not backed by concrete examples. The ICR does not state whether the safeguard policy was complied with. According to the project team, no social safeguards issues arose during the Project’s lifetime.

    b. Fiduciary Compliance:
    Procurement.
    The large number and geographically dispersed nature of the contracts (approximately 40,000 contracts annually, ranging from US$ 5,000 to 37,000 per contract), weak procurement capacity at the village level, and broader governance issues posed a challenge in terms of compliance with procurement guidelines (ICR, p. 12). While the ICR reports that efforts were made to strengthen procurement procedures and oversight arrangements, mostly in the form of revised procurement and internal audit procedures at village, district and provincial levels, it does not comment on the effectiveness of these procedural changes.

    The ICR notes that the PMD chose not to use the services of a procurement advisor as suggested by the Bank’s supervision team in 2009 to enhance the PMU’s contract processing capacity, which were attributable to “English-language Bank documents” and “the heavy workload of PMD” (ICR, p. 12).

    There were no reported cases of misprocurement.

    Financial Management (FM).
    The ICR indicates that financial management was negatively impacted by the lack of qualified facilitators and UPK [Sub-district Management Unit] staff, which, by September 2010, had reportedly resulted in a “less than satisfactory” performance of 30 percent of the UPK” (ICR, p. 12).

    The ICR further notes that the increase in audit coverage of sub-districts by the central government audit agency (BPKP) helped to improve accountability at the community level (ICR, p.12). A total of 1,335 audit findings were reportedly issued in reference to FY 2008 and 2009 project activities, identifying a variety of problems related to inappropriate handing of funds as well as interventions by village elites (ICR, p. 12). 54 percent of these findings had reportedly been resolved at the time of writing the ICR. In 2011, on-site audits were reportedly undertaken of 2010 activities in about 20 percent of all sub-districts. The ICR does not comment on the result of these internal audits performed by BPKP. In addition, the ICR does not discuss whether the mandatory annual external audits were performed, whether there were any issues, and if so, whether these were addressed prior to the closing date.

    The ICR does not specify the extent to which the project’s financial covenants were complied with.

    Complaints handling and anti-corruption action plan. According to the ICR, the complaints handling system, supplemented by increased random audits carried out by the (internal) National Government Audit Agency was "effective in uncovering fraud, diversion of funds, violation of procedures and abuse of authority...only 0.3% of total block grants are known to be affected by fraud and corruption. Of this amount, 57% has been recovered and returned to communities, and 43% remains under litigation" (ICR, p. 13) -- although, according to the Governance Review of the PNPM-Rural, the low rates of corruption under-reported the true extent of the problem (Woodhouse, p. 4). A “tougher regime of sanctions” resulted in 80 jail sentences, the dismissal of about 300 facilitators, and the suspension of disbursements in 3 percent of districts and 4 percent of sub-districts. However, it is unclear why this sanctioning regime was only implemented in 2010, given that more than 90 percent of the IDA/IBRD proceeds had already been disbursed by the end of 2009 (ICR, p. 27).

    The project team indicated the project's financial management and procurement were in the satisfactory range.

    c. Unintended Impacts (positive or negative):
    The ICR states that trained technical facilitators in the two Papua provinces left the PNMP program to seek other opportunities, thereby contributing to the widening of the project's capacity-building impact.

    d. Other:
    ---



    12. Ratings:

    ICR
    IEG Review
    Reason for Disagreement/Comments
    Outcome:
    Satisfactory
    Moderately Satisfactory
    Efficacy is rated substantial in regards to the project’s first sub-objective and modest in the case of the second sub-objective. Efficiency was assessed as substantial, and relevance of objectives was assessed as high and that of design substantial. The Outcome is therefore rated as moderately satisfactory. 
    Risk to Development Outcome:
    Moderate
    Moderate
     
    Bank Performance:
    Moderately Satisfactory
    Moderately Satisfactory
    . 
    Borrower Performance:
    Moderately Satisfactory
    Moderately Satisfactory
     
    Quality of ICR:
     
    Unsatisfactory
     
    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 of language:
    • Well evaluated projects can attract bilateral donors through linked trust funds, such as the PNPM Support Facility to support innovative initiatives, pilot programs, implementation support and program evaluation.
    • Rapid and large scaling up of a program’s operation can exceed institutional capacity, which, in turn, can cause serious problems with data collection and the management and capacity of the MIS. Such challenges should be anticipated and addressed in project design.
    • Several system problem areas common to community-driven operations, such as shortcomings in the mobilization and training of a sufficient number of qualified consultants/ facilitators, delayed and incompliant procurement, and weak financial management including issues of corruption, even if correctly identified, may be difficult to address ex-post. With regard to procurement, simpler and faster procurement procedures, which are reportedly being used in the PNPM-Rural 4 Project, may be more appropriate.
    • Well-conceived and targeted evaluations can provide solid evidence of what works and what doesn’t work in the implementation of a program such as PNPM and provide policy recommendations to improve implementation and the design of successor operations.

    14. Assessment Recommended?

    Yes
    Why?
    Project Performance Audit Reports (PPARs) are recommended for the full series of PNPM projects (once completed) to assess in more depth design and implementation problems and achievement of the overarching empowerment and poverty reduction goals as well as local governance and fiduciary problems in relation to the Program. The PPAR would yield important lessons for avoiding similar “system problems,” in operations of similar magnitude elsewhere.

    15. Comments on Quality of ICR:

    ICR Quality is rated Unsatisfactory for the following main reasons: 1. Fiduciary Compliance. While the ICR discusses fiduciary issues in some detail (a tougher regime of sanctions resulting in 80 jail sentences and the dismissal of about 300 facilitators; financial management being negatively impacted by the lack of qualified facilitators and UPK staff; identification of a variety of problems related to inappropriate handling of funds as well as interventions by village elites, etc), the ICR does not comment on the result of the internal audits performed by BPKP, nor does not discuss whether the mandatory annual external audits were performed, whether there were any issues, and if so, whether and how these were addressed prior to the closing date. Finally, and, most importantly, the ICR does not contain an explicit statement of the compliance of this project with the Bank's fiduciary policies. Given the governance challenges faced by Indonesia and the particular fiduciary risks that CDD projects typically pose, the lack of reporting on this dimension in the ICR is a major shortcoming.

    2. Evidence on Intended Outcomes. The ICR is generally candid about data shortages, but given that this was a follow-on project, the ICR could have done a better job of compiling outcome evidence on improved socio-economic and local governance conditions. Several statements are not backed by evidence, for instance, "governance has improved, especially through the consistent use of participatory planning processes." As the PAD recognized, good local governance encompasses “less easily quantifiable goals of empowerment, accountability, and active participation (p. 41),” and it referred to “responsible institutional structures that enable bottom-up planning and provide for development oversight at the local level” (PAD, p. 56). It would have been useful if the ICR could have carefully presented and discussed the evidence on these issues.

    3. Other. (i) there is no explicit statement that safeguards policies were complied with; (ii) the information regarding the number of micro-credit groups is different on different pages of the ICR – on page 15, it is stated that 30,000 microcredit groups received funding, whereas, on page 29, the figure was 52,004 (the project team subsequently clarified that page 15 reports a yearly number while page 20 reports a cumulative number).

    a. Quality of ICR Rating: Unsatisfactory

    (ICRR-Rev6INV-Jun-2011)
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