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Sudan: Southern Kassala Agricultural Project (Credit 1961-SU)

The Sudan Southern Kassala Agricultural project, supported by Credit 1961-SU for US$20.0 million, was approved in FY89. The United Nations High Commissioner for Refugees (UNHCR) was to cofinance the project with a grant of US$10.0 million. However, after disbursing US$459,000, UNHCR withdrew from the project because further funds were not available. Following suspension of disbursements to Sudan on country grounds in 1993, the credit was closed 17 months early in April 1994 and US$14.4 million was canceled. The draft Implementation Completion Report (ICR) was prepared by the Food and Agriculture Organization/World Bank Cooperative Programme and finalized by the Africa Regional Office. As operations in Sudan were suspended, comments on the ICR were not sought from government. The ICR notes that UNHCR comments are reflected in the final report.

The main objectives of this area development project were to address declining productivity and environmental degradation in southern Kassala Province, a semi-arid area where much of Sudan's coarse foodgrains are grown mainly by large scale mechanized farming, but also by smallholders_ including refugees from Eritrea. The Bank and UNHCR saw the project as a pilot for similar cooperation in Africa, whereby UNHCR could broaden its customary relief role by addressing the economic needs of refugees and helping to develop refugee impacted areas. The project concept was based on govemment's 1986 strategy for rainfed agriculture, which was prepared with IDA assistance. Components of the project were to strengthen agricultural services and develop technical packages for smallholders; reforest degraded areas; provide for studies of land use and other topics; improve rural water supplies, with full cost recovery; improve rural roads; and provide technical assistance.

Only a small part of the project was implemented, since effective activities were limited to two years as a result of UNHCR's financing problem and the later suspension of disbursements to Sudan. When UNHCR withdrew the project was restructured: most components were reduced in scale pro rata and some were dropped (details are incomplete in the ICR). Project outlays were only 24 percent of appraisal estimates, but over half of this was for project management, while development expenditure was less than a tenth of planned levels.

Implementation was uneven by components. Reforestation achieved most at 59 percent of the planting target, but survival rates are not given in the ICR. The Training and Visit Extension Service was scaled back because of high recurrent costs, but extension and research staff were posted to the area for the first time. Improved seed achieved good results, but only a tenth of area farmers participated and the system's environmental problems have not been resolved. The Kassala part of Dinder game park was demarcated as forest reserve, but the impact of this measure is not reported. Other activities had few results, or they were not pursued at all, largely for lack of local funds. The ICR re-estimated the economic rate of return (ERR) at 24.3 percent compared with 32 percent at appraisal. However, the analysis is conceptually flawed and the ERR would fall sharply if correctly estimated.

The Operations Evaluation Department (OED) rates the outcome of the project as unsatisfactory, compared with the ICR's rating of satisfactory. Institutional development is rated as moderate (substantial in the ICR) and sustainability as unlikely (likely in the ICR), especially since there was little institutional investment and environmental problems remain. Bank performance is rated by OED as unsatisfactory on balance, compared with satisfactory in the ICR. Cofinancing was not assured at approval, such that costly delays resulted, and despite ambitious objectives the project design was weak especially on environmental aspects. This latter flaw was not recognized during supervision, and reformulation of the project after UNHCR withdrew was inadequate.

The main lessons learned are that projects with environmental objectives must be based on a comprehensive understanding of complex natural resource systems; that environmental objectives need to be realistic, and that cofinancing needs to be assured before project approval.

The ICR is unsatisfactory, especially in not detailing the scope of the reformulated project, not identifying and discussing the weaknesses of the environmental design, and in presenting a flawed ERR analysis. No audit is planned.

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