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Implementation Completion Report (ICR) Review - Agricultural Development And Credit Project-ii


  
1. Project Data:   
ICR Review Date Posted:
06/21/2013   
Country:
Azerbaijan
PROJ ID:
P090887
Appraisal
Actual
Project Name:
Agricultural Development And Credit Project-ii
Project Costs(US $M)
 52.67  56.11
L/C Number:
C4207, C4208
Loan/Credit (US $M)
 29.23  29.33
Sector Board:
Agriculture and Rural Development
Cofinancing (US $M)
   
Cofinanciers:
Board Approval Date
  06/27/2006
 
 
Closing Date
05/31/2011 02/29/2012
Sector(s):
Agro-industry (55%), Agro-industry marketing and trade (35%), Agricultural extension and research (10%)
Theme(s):
Rural non-farm income generation (33% - P) Rural markets (33% - P) Rural services and infrastructure (17% - S) Rural policies and institutions (17% - S)
         
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Ebru Karamete
Robert Mark Lacey Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
The Project was implemented under a three phased,10-year Adaptable Program Lending, of which this is the 2nd Phase. The objective of the overall 10 year Agricultural Development and Credit Program was to return Azerbaijan’s farming areas to former levels of productivity under a new system characterized by private family and group farms operating in private markets. The program aimed to support the nationwide development of: (i) an accessible, secure and unified system for registering real estate rights; (ii) a rural financial services network consisting of local financial intermediaries such as credit cooperatives and rural branches of commercial banks; (iii) mixed public and private advisory services for rural enterprises; and (iv) improved Government capacity to formulate appropriate policy responses to the impact of the anticipated build-up in oil revenues on the competitiveness of the rural economy. This program was designed in three phases and at the time of ICR, the third phase project was being prepared.

For this 2nd Phase Project, the project development objective stated in the Project Appraisal Document (PAD, p. 4) was:

"to further increase rural productivity and incomes by enhancing the access of farmers and small and medium rural enterprises to rural business and agricultural support services including financial, advisory and veterinary services and by stimulating market-oriented investments in rural areas".

The Financing Agreement (p. 6) statement of objectives was:


"to (a) enhance the access of farmers and small– and medium–size rural enterprises to rural business and agricultural support services, including financial, advisory and veterinary services; and (b) stimulate market-oriented investments in rural areas".

This Review uses the statement of objectives in the Financing Agreement as the benchmark for evaluation.

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

c. Components:
1. Agricultural Business Services (appraisal estimate US$ 37.65 million, actual US$ 37.5 million). This component aimed to support rural businesses to improve the linkages between their production and markets, and to enhance access to financial services by small and medium rural enterprises (including farmers), agro-processors, and other forms of agribusinesses, through: (a) capacity building in Project Financial Intermediaries in order to improve their lending skills and to promote new financial products; and (b) providing badly needed funds for lending to their clients. It included four subcomponents: (i) Financial Services for Small Agribusiness/Credit Unions; (ii) Financial Services for Medium Agribusinesses/Banks and Leasing Companies; (iii) Development of Efficient Rural Market Links; and (iv) Rural Business Advisory and Market Service.


2. Agricultural Support Services (appraisal estimate US$ 13.62 million, actual US$ 16.96 million). This component aimed to enable farmers to improve their productivity and quality of production by expanding the outreach of the advisory system, strengthening the provision of private veterinary services, and improving access to adapted technologies. It included three sub-components: (i) Information and Advisory Services, to build on the foundations established under the first project and further develop the advisory system to cover a wider geographical area using a similar approach; (ii) Veterinary Services, to enhance access to quality veterinary services throughout the country by expanding and strengthening the private Veterinary Field Unit system, supporting the privatization of the State Veterinary Service field services staff, strengthening the disease surveillance and preparedness systems, and implementing an agreed control program against at least two priority diseases; and (iii) Improved Access to Adapted Technologies, to provide one or two selected research institutes to improve their capacity to develop and demonstrate adapted technologies, focusing on variety improvement and crop husbandry.

3. Project Management (appraisal estimate US$ 1.40 million, actual US$ 1.70 million). The project aimed at supporting setting up and operation of Project Management Unit under the Ministry of Agriculture by building on the structures established under the first project.

A reallocation of funds took place on September 6, 2010, which reassigned funds to the expenditure categories that needed more funding so that sufficient funding for the remaining activities was maintained. On May 30, 2011, a second and final reallocation was made to realign the amounts allocated across the expenditure categories.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project Costs:
Total project costs increased from US$ 52.67 million estimated at the time of appraisal to US$ 56.11 million at project closing. The fluctuation of SDR-US$ exchange rate was very favorable and this has increased the total amount of IDA credit in US dollar terms available for project use. Therefore, the total amount in SDR was disbursed without the need for any additional financing.

Financing:
By project closing, IDA Credit disbursements, at US$ 29.33 million exceeded slightly the original Credit of US$ 29.23 million. There was parallel financing in the form of a Japanese Policy and Human Resources Development Grant of US$ 1.61 million equivalent, of which US$ 1.33 million was disbursed. It was expected at appraisal that financial intermediaries in Azerbaijan would provide US$ 4.70 million, and that local in-country sources would provide a further US$ 9.56 million. Actual financing from these sources was US$ 4.6 million and $9.56 million respectively.

Borrower Contribution:
The Borrower provided US$ 15.86 million, 25% more than the appraisal estimate of US$ 12.60 million.

Dates:
On May 30, 2011, the original closing date of May 31, 2011 was extended to February 29, 2012 to enable completion of remaining project activities and to ensure an effective use of undisbursed credit funds.


3. Relevance of Objectives & Design:

a. Relevance of Objectives:
Rated: High
Project objectives were and still remain highly relevant.

Although in 2000s, oil and gas income in Azerbaijan was steadily increasing with significant prospects for GDP growth, a diversified development of the non-oil sector was crucial for generating jobs and equity and reducing poverty. Development of rural areas and the agricultural sector was a priority for Azerbaijan as it was the most important source of employment in the country. The agricultural sector was also very important for food security and reduction of rural poverty. Agriculture accounted for approximately 12.3% of GDP in 2004 - the largest economic sector in Azerbaijan after oil. Agriculture’s share of employment was 40 percent in 2004 and agro-industry (including textiles) represented over 50 percent of total manufacturing employment. With the privatization of farms and other reforms, small-scale agriculture had led the recovery of the whole sector. By 2003, overall agricultural output had increased by a total of 53% over 1995 levels, although it was still only 79% of the 1990 levels.

The State Program on Poverty Reduction and Economic Development of 2003 articulated the Government's strategy to promote more balanced, private sector led growth and reduce poverty. Agriculture remains a Government priority, not only in the context of food security but also to help increase employment and trade.

The Project Development Objective is consistent with the Bank’s Country Partnership Strategy (2011-2014) for Azerbaijan, particularly the sub-objective of “improved agriculture and irrigation services” and the goal of “increasing productivity and income levels of participating farmers under Bank Projects”.

b. Relevance of Design:
Rated: Substantial.

The overall results chain was logical, complete and relevant. The first sub-objective of enhancing access of farmers and small– and medium–size rural enterprises to rural business and agricultural support services, including financial, advisory and veterinary services, was clearly linked to the project activities. The project tried to achieve this sub-objective by providing funds to financial intermediaries and helping them to lend to their rural clients as well as providing them with capacity building to improve their rural lending skills. Component 2 of the project tried to expand outreach and quality of advisory services and private veterinary services. For the second sub-objective of stimulating market-oriented investments in rural areas, the project was to fund credits to farmers and medium enterprises in rural areas, and this could be expected to result in investments in livestock, crop, retail trade, and agro-processing sub-sectors.


4. Achievement of Objectives (Efficacy) :

(a) Enhance the access of farmers and small–and medium–size rural enterprises to rural business and agricultural support services, including financial, advisory and veterinary services. Substantial


Outputs:

  • The project supported technical assistance for legal and regulatory reform, training, updating the Management Information System, and expanding the Credit Union network.
  • The three project financial intermediaries issued a total of 116 sub-loans, to sectors including animal breeding, orchards, agro-processing, poultry farming, vegetable production, fish breeding and bee keeping. A complementary training program was designed for the intermediaries under the project, and covered training of about 90 loan officers and 60 branch managers in topics such as investment lending and leasing in agriculture, and new financial products. The project also helped the intermediaries to develop increased interest in agricultural lending.
  • Regional Advisory Centers were contracted and in total 736,302 farmers benefited from information and advisory services.
  • Networks of private veterinarians were expanded and trained by the project. The project added 30 new private veterinary units and they have been provided with training, facilities, equipment and medications.
  • The project supported a pilot program for the control of brucellosis in cattle and sheep to reduce the incidence of human brucellosis. It also supported a vaccination program that started in April 2009 in four regions, with initial vaccination of a total of 490,000 sheep and goats.
  • The project supported the modernization of the National Research Institute for Crop Husbandry and Crop Diversification. A collaborative demonstration program between the Institute and Regional Advisory Centers has been helping to transfer new agricultural technologies to farmers. New varieties and seeds have also been provided with the help of the Institute’s efforts.

Outcomes:

Improved outreach and financial performance of Credit Unions: 14,216 members in 55 Credit Unions accessed credit through Credit Unions, compared with 3,000 at the baseline, and exceeding the target of 10,000. However, it is reported by the ICR (p. 6) that poor quality of some Credit Unions’ lending portfolio was a concern, which put a severe strain on the Credit Implementing Agency. Credit Implementing Agency management needs to improve loan underwriting and collections in order not to jeopardize its future. Further institutional training of Credit Unions is also needed, as governance continues to be an issue in some of these Credit Unions.

Greater Outreach to rural areas by project financial intermediaries: the outstanding rural loan portfolio was 11.3 % of Agricultural GDP at completion compared to the baseline of 2.5% and the target of 8.4%. Through these loans 1,342 new jobs were created and the average income of the sub-borrowers has doubled.

Capacity and outreach of the information and advisory system enhanced: 438,720 farmers in five Phase I project regions received advisory services, a 58 % increase from the baseline compared to the target increase of 20 %. 264,630 farmers (69.5% of farm households) received advisory services in the five new project areas, exceeding the target of 50 % of farm households. Regional Advisory Centers were able to cover 20 % of their operating costs in the Phase I regions and 12 % in the new regions, on target in old regions and exceeding the target of 10 % in the new regions.

Expanded network of private veterinary units: A total of 55 Private Veterinary Units comprising some 160 veterinarians were fully operational at closing and all Veterinary Field Units were fully recovering their operational costs, exceeding the target of 75 %. According to the ICR (p.11), 85.8 % of the farmers used private veterinary services. The State Veterinary Services has requested the private veterinary unit program to be scaled-up country wide.

Improved disease surveillance & preparedness: The Brucellosis Control Program was implemented as a demonstration of the practical application national disease surveillance and control programs. However, no evidence was presented to show that brucellosis has been controlled effectively, as measured by the target indicator “a 25 % reduction in human cases”. According to the project team, the target of a 25% drop in human cases could not be achieved because it takes longer before a decrease in human cases can be observed. To measure the results of the vaccination program, the abortion rate in small ruminants was selected as a proxy indicator. This indicator shows a decrease of 60-70%.

The National Research Institute for Crop Husbandry and Crop Diversification was modernized with the help of the Project and the institute now has a consolidated research program for the period of 2010-2014, as well as upgraded facilities and additional equipment. 71% of farmers benefiting from the Project were satisfied with locally available seeds and seedling varieties; this exceeded the target of 35 % of farmers.

Some of the intermediate outcome targets could not be met. In terms of advisory services, the Market Information and Commercial Hub, that aimed to promote information and advisory services by developing market information system, was substantially delayed and its scope was scaled down due to cost estimation issues. However, by project completion, a system connected to mobile phones that provided price information on crops had been developed. Also, in terms of control of epizootic diseases, a vaccination program was carried out and the results on animals were reported; however, the targeted reduction in human cases could not be verified.

Three surveys were conducted to measure the project's achievements. The Completion Evaluation Survey was conducted in the first quarter of 2011 and covered economic indicators and productivity for 2010. Approximately 88.5 % of respondents were involved in all three surveys and the surveys included two control groups and five regions. Based on these surveys, the ICR also reported beneficial outcomes such as increased income and production marketed for participating farmers. Accordingly, the average net income of participating farmers increased in comparison with Baseline Survey period by nearly 40%. This exceeds the outcome target of 20%. Between 2008-2010 the net income from agricultural activities for the farmers who participated in the project activities increased by 18 %, whereas this increase was only 6.6 % for farmers who did not participate the project. Also, production marketed for cash by farmers who participated in the project increased in comparison with the baseline survey period by 27% (target 20%). The percentage of total production marketed for cash by participating farmers has increased from 60.1 in 2006 to 75.5 in 2008. In comparison, the farmers who did not participate the project marketed only 57.5% of their production for cash in 2010. (It should be noted that ICR did not provide information on whether participating and non-participating farmers were from the same regions.)

(b) Stimulate market-oriented investments in rural areas. Substantial
Outputs
  • The project helped build innovative approaches through the Competitive Grants Program that awarded small grants for introducing, testing and transferring new and improved technologies emphasizing improved market accessibility, storage and small-scale processing. The grants covered a range of improved technologies for production, storage, grading, packaging, labeling, small-scale processing and canning of different high-value products. 74 grants for improved technologies have been awarded.
  • Under the Agricultural Business Services Component, 46,000 loans were provided to members of credit unions to help investments in livestock, crop and retail/trade sub-sectors.
  • The project also supported the extension of 116 loans to medium-sized agribusinesses through commercial banks for animal breeding and dairy (29.6 % of total disbursement), orchards (25.5%), agro-processing (15.4%), vegetable production (10.9 %) and poultry farming (9.4 %).
Outcomes
The increased outreach and financial performance of Credit Unions discussed under objective (a) have helped to finance a significant increase in the volume of market-oriented investments in rural areas. Demand for loans continues to be very high, with Credit Union lending rising by 92% in nominal terms between December 2009 and September, 2011. Between 2006 and 2010, the agricultural sector increased its share of total national investments in fixed assets from 0.7% to 4.4% (ICR, page 49).

According to ICR (p. 13), 42 % of Completion Evaluation Survey (for details see section 4(a) above) respondents used credit obtained from the Credit Unions for crop seed, 35 % for crop inputs, 17 % for farm machinery and 23 % for transport equipment.

The ICR reported that Competitive Grant Program recipients were carrying out the technology transfer activities satisfactorily. Some 7000 entrepreneurs and farmers, out of which about 150 were rural business entities and other business groups, participated in technology transfer activities. However, the achievement of 74 grants was below the target of 90.

Program Objectives
The Project has achieved progress particularly towards the following two sub-objectives: a rural financial services network consisting of local financial intermediaries such as credit cooperatives and rural branches of commercial banks; and mixed public and private advisory services for rural enterprises. The ICR (page 50) reports “that in only 3 years the access to agricultural commercial long-term credit (5 to 7 years) in Azerbaijan has completely changed led by [program and project] interventions. This change has been instrumental for [agricultural] sector development, since 22% interest rates were upholding investments as very few legal activities can afford those huge costs."

5. Efficiency:

Efficiency is rated Substantial.


The economic rate of return (ERR) at appraisal was estimated at 16.0%, and the net present value (NPV) of the project’s net benefit stream, discounted at 12%, was US$ 4.1 million (the total percentage of project costs covered in this calculation was 55 %).

The evaluation at completion calculates the ERR as 20.5% and the NPV US$ 25.74 million (the total percentage of project costs covered in this calculation was 73 %). Results for individual components were:
ERR (%) NPV (US$ million)
Agricultural Advisory Services 18.5 8.3
Veterinary Services 34.8 3.7
Competitive Grants Program 33.3 4.1
Credit Line to Agri-Businesses 19.0 9.6


The appraisal estimations were based on strengthened advisory services and improved access to new adapted technologies; strengthened and expanded veterinary services; and models of likely sub-projects to be implemented under the Competitive Grant Scheme. The ICR followed the appraisal methodology, but assumptions on future yields were based on the findings from Completion Evaluation Survey. In addition, sub-projects actually supported under the Competitive Grant Program were analyzed. The agribusiness loans through commercial banks were also included, though they were not in the appraisal analysis.

There were relatively few operational and administrative inefficiencies. The project closing date was extended for nine months (the original closing date of May 31, 2011 was extended to February 29, 2012) to complete remaining project activities as well as to build as many activities as possible to help prepare for the third phase project. There were delays initially in the rural finance activities of the Agribusiness Service Component as the Ministry of Finance did not approve key documents and agreements on time. The Establishment of Market Information and Commercial Hub was seriously delayed due to miscalculation of its budget, and the activities had to be scaled down. Development of private veterinary services was also jeopardized due to the Government’s reluctance to reduce the very high licensing fees. The issue had to be discussed with the Ministry of Agriculture, Cabinet of Ministers, and finally the Prime Minister’s Office, after which fees were finally reduced to what the Bank considered acceptable levels.

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
16%
55%
ICR estimate:
Yes
20.5%
73%

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

6. Outcome:

The relevance of objectives was high and relevance of design substantial. Both objectives are rated substantial, as also efficiency (See Sections 3-5 above).


a. Outcome Rating: Satisfactory

7. Rationale for Risk to Development Outcome Rating:

Institutional risk is moderate: although institutional capacity would be expected to be further strengthened through the APL’s phase 3 project, which is currently being appraised. Financial sustainability of the extension, information and advisory services needs to be further addressed by the Cabinet of Ministers and Ministry of Finance. There is a need for timely decisions to ensure that the Regional Advisory Committees are maintained and to change the veterinary law to allow private vets to provide public sector services such as vaccinations and blood testing currently provided only by public vets.

A moderate risk is also posed by the poor repayment rate of some Credit Unions which could be mitigated through improving the Credit Implementing Agency’s loan underwriting procedures as well as its monitoring of Credit Unions. Also, a strategy is still to be developed by the Government regarding on-lending mechanisms to be applied after program closure.

The environmental risk is low, as pointed out in the ICR (p. 18) that an adequate environmental management system is in place.

Social risk is low as incomes and productivity of farming households have increased as a result of the project (based on achievement of outcomes shown on page 9 of ICR).

a. Risk to Development Outcome Rating: Moderate

8. Assessment of Bank Performance:

a. Quality at entry:
The overall use of a three Phase Adaptable Program Lending approach with flexibility to support long-term development goals was appropriate.

The Bank provided substantial technical support for project preparation, in the context of building on the activities, achievements and lessons from phase 1 project. The main lessons were: (i) the need to promote a wider outreach and to enhance the capacity of participating financial institutions while offering a wider range of financial products; (ii) the need to strengthen linkages between producers and processors, as weak links remained an impediment to agricultural growth; (iii) while advisory services offered under the phase 1 project had enhanced productivity and incomes, it was necessary to create a sustainable national network with an increased focus on business development; (iv) although farmers were willing to pay for private services, private veterinary services needed more income-generating opportunities in order to become self-sufficient; and (v) that while the Competitive Grants Scheme generated high interest, the functional linkages between the research and advisory systems and with producers and rural entrepreneurs needed to be better more sharply defined and improved.

Potential risks were identified and appropriate risk mitigation measures were adopted. In general project inputs and funding needs were identified adequately with the exception of Market Information Commercial Hub, where cost miscalculations led to delays and the eventual scaling down of activities.

M&E design was adequate, although there were no triggers for the third phase of the APL program. The ICR reports that an Environmental Management Plan was prepared and disclosed in April 2006, prior to project appraisal.

Quality-at-Entry Rating: Satisfactory

b. Quality of supervision:
The Bank team provided continuous, proactive guidance during supervision. Teams included the relevant specialists on various activities. Project Aide Memoirs and Implementation Status Reports were comprehensive and candid in terms of implementation progress, ratings and safeguards. The team engaged closely with the Project Management Unit in several difficult procurement cases in order to come up with a workable action plan to resolve issues. However, as reported in the ICR (p.19), the slow approval process for the Competitive Grants Program could have been accelerated if the Bank had been more proactive in providing the Project Management Unit with appropriate training on how to evaluate proposals. Also, at the mid-term review, it was found that implementation of environmental safeguards showed key shortcomings. The rating for environmental safeguards was downgraded to Moderately Unsatisfactory. The subsequent compliance with environmental safeguards, and compliance with OP 4.09 (pest management) was not reported in the ICR.

Quality of Supervision Rating: Moderately Unsatisfactory

Overall Bank Performance Rating: Moderately Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
The Government engaged closely in project identification and preparation, and actively discussed the contents of each component and their costs. However, the commitment was not always sufficient to overcome administrative inertia, and there were delays in the approval of some key project documents under Component 1, which impeded laying the foundation for good implementation. Another issue was the introduction of a very high fee for licensing private veterinarians, which jeopardized the project’s efforts to establish private veterinary services. This issue took time to resolve, and involved the Bank having to finally take the matter up with the Prime Minister’s Office.

Government Performance Rating: Moderately Satisfactory

b. Implementing Agency Performance:
The State Agency for Agricultural Credits within the Ministry of Agriculture was responsible for the implementation of the project. In general, the Project Management Unit, housed in the Ministry, was proactive and carried out their duties in an efficient and timely way. Having experience on previous Bank Projects, the Unit managed financial, accounting and reporting systems in a way that provided adequate and timely information for implementation and review. Implementing agency performance was enhanced by the establishment of strong sub-units within the Project Management Unit, notably the Information Advisory Committee and the Competitive Grants Project Secretariat, which were effectively given independence and responsibility to carry out their programs.

Implementing Agency Performance Rating: Satisfactory

Overall Borrower Performance Rating: Moderately Satisfactory

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

a. M&E Design:
Key outcome and output indicators were relevant, measurable and monitorable. However, the design did not include triggers for the next phase of Adaptable Program Lending. The design included essential outcome evaluation surveys. A Baseline Survey was carried out in 2006 and established information for the output and outcome indicators. The effectiveness of the Monitoring and Evaluation system was substantially enhanced by internal Monitoring and Evaluation programs built into several of the components, rather than relying on a project Monitoring and Evaluation unit alone.

b. M&E Implementation:
The Project Management Unit provided regular monitoring of project implementation, and the quarterly Progress Reports reflected the status of implementation based on the performance indicators under each component. For the advisory services, Competitive Grant Program and Veterinary Services, most of the Monitoring and Evaluation was carried out by the units responsible rather than by the Project Management Unit’s Monitoring and Evaluation Unit, which was primarily a receiver of information. An Interim Evaluation Survey was carried out in 2008, and a final Completion Evaluation Survey in 2011 collected information on the same impact indicators as at the design stage, and covered most (88.5%) of the same groups and households [see section 4(a)].

a. M&E Utilization:
The ICR reports (p.7) that Monitoring and Evaluation information was utilized both to track progress and problems and to serve as a management tool -- for example, in tracking changes in loan portfolio quality ratios of the Credit Implementing Agency, drafting relevant training materials for Credit Unions, assessing the demand for project-sponsored veterinary services, farmer satisfaction levels, and on how to expand the brucellosis program. The Completion Evaluation Survey, which covered five regions where project activities commenced in 2006/07 and three regions where project activities started in 2008/09, serves as a baseline for continued project activities under the Phase 3 Project.

M&E Quality Rating: Substantial

11. Other Issues:

a. Safeguards:
The Project was assigned the environmental category “F” (Financial Intermediary). Two safeguard policies were triggered (PAD, page 19) – Environmental Assessment (OP 4.01) and Pest Management (OP 4.09).

Environment
The ICR reports that an Environmental Management Plan was prepared and disclosed in April 2006, prior to project appraisal. At the mid-term review, it was found that implementation of environmental safeguards showed key shortcomings. Due to inconsistencies between the Rural Investment Guidelines under Agricultural Business Services Component and the Environmental Management Plan, many agribusiness sub-projects financed through the participating commercial banks were under-categorized, and consequently, were not properly treated in terms of environmental impact mitigation. According to the ICR p. 7 "…The Bank downgraded Environmental Safeguards to moderately unsatisfactory at the Mid Term Review (MTR) and agreed on an action plan with the Project Monitoring Unit (PIU) to improve the environmental management system. Actions to be taken included: amendments to Environmental Management Plan (EMP) to provide a clearer determination of sub-projects categories; amendments to the environmental section of the Rural Investment Guidelines (RIG) to bring it in line with the EMP; the preparation of sample sub-project EMPs for the activities typically financed under the credit line to medium agribusiness in order to strengthen the capacity of Participating Financial Institutions (PFIs) in environmental screening and monitoring of subprojects; and more close on-site monitoring of selected sub-projects financed through both bank credits, Credit Unions, Borrowers Groups and Competitive Grant Scheme (CGS), to be undertaken by the PMU Environmental Specialist. These actions were completed following the MTR."

The ICR continued "The final mission in March 2011 found that the environmental management and monitoring system for the credit line to medium agribusinesses was fully operational, and the revised RIGs were being followed. The PMU environmental specialist was also assisting PFIs and applicants throughout the cycle of implementing sub-projects. Under the CGS and the credit lines to Credit Unions, Borrowers Groups, environmental management was proceeding satisfactorily. Environmental management capacity of PFIs, Credit Implementing Agency (CIA) and CGS has been enforced by a series of training sessions delivered in 2009-2011. No major issues were reported as a result of monitoring visits."

Pest Management
The ICR does not report on compliance with OP 4.09. However, the PAD (page iii) states that “The project will trigger OP 4.09 in a limited fashion as on-lending may be used by small and mid-sized sub-borrowers to finance agricultural inputs. On-lending for pesticides is subject to screening against an authorized list of pest control products approved for financing, as described in the Environmental Management Plan.”

b. Fiduciary Compliance:
The Project’s financial management system was rated satisfactory in supervision reports throughout implementation. The Project Management Unit had the necessary experience and capacity to implement the Project. The Unit maintained accurate accounting records of the project, and quarterly and annual external audit reports were submitted on time and were acceptable to the Bank.

Procurement was also carried out in compliance with the Bank’s procedures. At the beginning, there was a case of mis-procurement in relation to the Information Advisory Services sub-component, as the Project Management Unit signed contracts without the Bank’s no objection, but this was resolved. The project carried out three post review missions. No major issues were identified.

c. Unintended Impacts (positive or negative):

d. Other:



12. Ratings:

ICR
IEG Review
Reason for Disagreement/Comments
Outcome:
Satisfactory
Satisfactory
 
Risk to Development Outcome:
Moderate
Moderate
 
Bank Performance:
Satisfactory
Moderately Satisfactory
The approval process for the Competitive Grants Program could have been accelerated if the Bank had been more proactive in providing the Project Management Unit with appropriate training on how to evaluate proposals. Quality of supervision is rated as Moderately Unsatisfactory. The rating for environmental safeguards at the time of the mid-term review was downgraded to Moderately Unsatisfactory. The subsequent compliance with environmental safeguards, and compliance with OP 4.09 (pest management) was not reported in the ICR. The harmonized evaluation criteria result in the moderately satisfactory overall Bank Performance rating.  
Borrower Performance:
Moderately Satisfactory
Moderately Satisfactory
 
Quality of ICR:
 
Satisfactory
 
NOTES:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

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

1. Public-private partnerships may work well in modernizing agricultural research institutes. Specifically, the project demonstrated that collaboration between public and private sectors was important in modernizing the National Research Institute for Crops and developing a consolidated research plan.

2. Rapid reaction to evolving needs and flexibility enabling the inclusion of new activities within the scope of the project objectives is important for successful implementation (The case of the National Animal Disease Information System, which was included later to scale up the system established under the Avian Influenza Project).

3. Sectoral reforms may necessitate longer term commitment by the stakeholders and by the World Bank. This was very evident, for example, in establishing a sustainable advisory system.

4. A strong control and Monitoring & Evaluation system as well as clear performance targets for the private sector are essential elements in maintaining quality of services.

14. Assessment Recommended?

No

15. Comments on Quality of ICR:

The ICR is clear, well-argued, and is overall rated 'satisfactory,' but marginally so. An important shortcoming is the lack of full reporting on compliance -- at the mid-term review, compliance with the environmental safeguard was rated Moderately Unsatisfactory. The subsequent compliance with the environmental safeguards, and compliance with OP 4.09 (pest management) was not reported in the ICR.

a. Quality of ICR Rating: Satisfactory

(ICRR-Rev6INV-Jun-2011)
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