Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-42780) ON A CREDIT

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1 Public Disclosure Authorized Document of The World Bank Report No: ICR Public Disclosure Authorized Public Disclosure Authorized IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-42780) ON A CREDIT IN THE AMOUNT OF SDR 57.8 MILLION (US$ 86.0 MILLION EQUIVALENT) TO THE GOVERNMENT OF KENYA FOR A WESTERN KENYA COMMUNITY DRIVEN DEVELOPMENT AND FLOOD MITIGATION PROJECT Public Disclosure Authorized Agriculture Global Practice Africa Region September 20, 2016

2 CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2016) Currency Unit = Kenya Shillings (KES) US$ 1.00 = KES US$ 1.00 = SDR 0.71 FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS ALRMP CAP CDD CDDC CIG EA EIA EMP ESMF FEW FM GIS GoK IDA ICR IIFARA Ksh MAT M&E MIS MTR NARIG Arid Lands Resource Management Project Community Action Plan Community-Driven Development Community-Driven Development Committee Common Interest Group Environmental Audit Environmental Impact Assessment Environment Management Plan Environmental and Social Management Framework Flood Early Warning Financial Management Geographic Information System Government of Kenya International Development Assistance Implementation Completion Report Independent Integrity, Fiduciary and Accountability Review Agency Kenya Shillings Mobile Advisory Team Monitoring and Evaluation Management Information System Mid Term Review National Agricultural and Rural Inclusive Growth ii

3 NGO Non-Governmental Organizations NPV Net Present Value NRM Natural Resources Management PAD Project Approval Document PDO Project Development Objective PICD Participatory Integrated Community Development PMC Project Management Committee RRI Rapid Results Initiative SAIC Social Accountability and Integrity Committee SLD Support to Local Development USD US Dollar VMG Vulnerable and Marginalized Group WKCDD/FM Western Kenya Community Driven Development and Flood Mitigation WRMA Water Resource Management Authority WRUA Water Resource Users Association YAP Youth Action Plan Vice President: Makhtar Diop Country Director: Diarietou Gaye Practice Manager: Dina Umali-Deininger Project Team Leader: Valens Mwumvaneza ICR Team Leader: Kevin Crockford ICR Lead Author: Pascal Sanginga iii

4 KENYA Western Kenya Community Driven Development and Flood Mitigation Project CONTENTS Data Sheet A. Basic Information v B. Key Dates v C. Ratings Summary v D. Sector and Theme Codes vi E. Bank Staff vi F. Results Framework Analysis vii G. Ratings of Project Performance in ISRs xiii H. Restructuring xiv I. Disbursement Graph xv 1. Project Context, Development Objectives and Design 1 2. Key Factors Affecting Implementation and Outcomes 6 3. Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners 26 Annex 1. Project Costs and Financing 28 Annex 2. Outputs by Component 30 Annex 3. Economic and Financial Analysis 45 Annex 4. Bank Lending and Implementation Support/Supervision Processes 53 Annex 5. Beneficiary Survey Results 55 Annex 6. Stakeholder Workshop Report and Results 58 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 63 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders 69 Annex 9. List of Supporting Documents 70 MAP iv

5 A. Basic Information Country: Kenya Project Name: Western Kenya CDD and Flood Mitigation Project Project ID: P L/C/TF Number(s): IDA-42780,TF ICR Date: 09/07/2016 ICR Type: Core ICR Lending Instrument: SIL Borrower: Original Total Commitment: Revised Amount: XDR 53.67M Environmental Category: B Implementing Agencies: Ministry of Devolution and Planning Cofinanciers and Other External Partners: B. Key Dates MINISTRY OF FINANCE XDR 57.80M Disbursed Amount: XDR 53.67M Process Date Process Original Date Revised / Actual Date(s) Concept Review: 05/11/2005 Effectiveness: 08/06/ /06/2007 Appraisal: 01/11/2007 Restructuring(s): 06/29/ /02/ /05/2015 Approval: 03/27/2007 Mid-term Review: 09/15/ /21/2012 Closing: 06/30/ /31/2016 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Moderately Unsatisfactory High Moderately Unsatisfactory Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Moderately Government: Unsatisfactory Unsatisfactory Quality of Supervision: Moderately Implementing Moderately Unsatisfactory Agency/Agencies: Unsatisfactory Overall Bank Performance: Moderately Unsatisfactory Overall Borrower Performance: Moderately Unsatisfactory v

6 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Performance any) Potential Problem Project at any time (Yes/No): Yes Problem Project at any time Yes (Yes/No): DO rating before Closing/Inactive status: Satisfactory Quality at Entry (QEA): Quality of Supervision (QSA): None None Rating D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 1 1 General agriculture, fishing and forestry sector General water, sanitation and flood protection sector Other social services Sub-national government administration Theme Code (as % of total Bank financing) Land administration and management Natural disaster management Other social protection and risk management Participation and civic engagement Water resource management E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Hartwig Schafer Country Director: Diarietou Gaye Colin Bruce Practice Manager/Manager: Dina Umali-Deininger Karen Mcconnell Brooks Project Team Leader: Valens Mwumvaneza Nyambura Githagui ICR Team Leader: ICR Primary Author: Kevin John Crockford Pascal Sanginga Jeehye Kim vi

7 F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of the project is to empower local communities to engage in wealth creating activities, lower the incidence of poverty and reduce the vulnerability of the poor to adverse outcomes associated with recurrent flooding. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Indicator Indicator 1 : Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Percentage increase in income of target households members of CIGs ( Direct beneficiaries) 1 Value quantitative or 0 25% 44% Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Indicator 2 : Insufficient evidence that the indicator was achieved. While there is qualitative evidence of increase of income for beneficiary households, the project collected income figures at the Common Interest Group (CIG) level rather than households (new) Proportion of households affected by floods Value quantitative or 27.8% 5% 0% Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Indicator 3 : Indicator was achieved, exceeding targets. No floods have occurred in the targeted areas in the last five years, despite increases in rainfall frequency and quantities, and flooding in other areas. (new indicator at MTR) Total number of people in the project target area benefiting 2 from project interventions (of which at least 34% are female) 1 New indicator introduced after the MTR in June A revamped result framework was introduced with substantial revisions of PDO indicators, intermediate outcomes, indicators and targets. The intermediate results indicators were increased from 22 to 27: 15 new indicators were introduced, 10 indicators were dropped and 8 indicators were revised. Only four original indicators were maintained 2 Benefits included access to improved infrastructure, livelihood, knowledge, information, skills, attitude change and confidence vii

8 Value quantitative or 0 2,000,000 1,071,000 Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Partially achieved. The target was over-ambitious and the reported achievement of 4.46 million overstated. Direct beneficiaries estimated at 1 million after correcting for multiple counting. The proportion of female beneficiaries was 54.5%. (new) (b) Intermediate Outcome Indicator(s) Indicator Indicator 1 : Baseline Value Original Target Values (from approval documents) Formally Revised Target Values Actual Value Achieved at Completion or Target Years Percent of community members actively participating in overall decision making (of which at least 34% are female) Value (quantitative 39.4% 70% 71% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Indicator 2 : Target has been fully achieved. Participatory Integrated Community Development (PICD) increased participation in decision making through the community institutions. Women's participation in decision-making was more than 60% (new indicator) Number of CDDCs managing development priorities identified in the CAPs and YAPs Value (quantitative or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Targets have been exceeded by 160%. A total of 631 CDDCs were established, and they developed and implemented 2,265 Community Action Plans (CAP) and 117 Youth Action Plans (YAP) (new indicator) Indicator 3 : Proportion of the most vulnerable community members participating in implementation of the project Value (quantitative 0 15% 23% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Targets were exceeded by 65%. Vulnerable and marginalized groups represented 23% membership of CIGs. Community institutions developed mechanisms to ensure the inclusion of people with disabilities, widows/widowers, and orphans. (new indicator) Proportion of the population of under 5 children who sleep under the ITNs within Indicator 4 : project intervention areas Value 31.9% 80% 70% 63% viii

9 (quantitative or Qualitative) Date achieved 06/29/ /30/ /30/ /30/2016 Comments (incl. % achievement) Achievements are moderately below project targets, and below the results of the 2015 Kenya Malaria Indicator Survey 3 that showed increases in net usage among under 5 children in malaria endemic areas of Kenya: from 42% in 2010 to 73% in (new) Indicator 5 : Proportion of the population of pregnant women who sleep under the ITNs within project intervention area Value (quantitative 33.5% 80% 70% 75% or Qualitative) Date achieved 06/29/ /30/ /30/ /30/2016 Comments (incl. % achievement) Targets have been achieved with a 5% increase, but are comparable to figures of the 2015 Kenya Malaria Indicator Survey on the use of ITN among pregnant women (50% in 2010 and 79% in (revised indicator) Indicator 6 : At least two Community Foundations established and operational in the project intervention area Value (quantitative or Qualitative) Date achieved 06/30/ /30/ /30/ /30/2016 Comments (incl. % achievement) The indicator was achieved. Ten Community Foundations were established but only 2 (Siaya & Busia) met their management and operations costs. (revised indicator) Indicator 7 : Number of men and women within the project intervention areas that are benefitting from the infrastructure SLD projects Value (quantitative 0 400,000 1,065,050 or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) The achievement of benefiting a total of 582,501 men and 671,226 women is overstated. This indicator was achieved even when limiting the number to those beneficiaries (436,000) participating in the 95 SLDs that are completed and operational. (new) Indicator 8 : Number of men and women within the project intervention areas that are benefiting from the value added livelihood SLD projects (at least 34% are female) Value (quantitative 0 100, ,015 or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % Achievements exceeded targets. The reported achievement of 645,015 people benefiting from 128 SLD projects on value addition, is overstated but still well above 3 National Malaria Control Programme (NMCP), Kenya National Bureau of Statistics (KNBS), and ICF ix

10 achievement) the baseline values of 100,000 people. (new indicator) Indicator 9 : Percent of SLD projects that have included CDDCs/communities in planning, implementation and monitoring Value (quantitative 0 80% 61% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Achievements are 21% below targets because government departments monopolized the identification, selection and planning of SLDs at the sub-county level, often with insufficient participation of the beneficiary communities. (new indicator) Indicator 10 : Percent of households adopting recommended soil and water conservation practices within the targeted micro-catchments. Value (quantitative 33.7% 80% 61% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Achievement: 76% of planned target - The reported achievement of over 200,000 people adopting soil conservation measures are impressive in the short period of effective project implementation. (revised indicator) Indicator 11 : Number of appropriate soil and water conservation projects undertaken. Value (quantitative or Qualitative) Date achieved 06/30/ /30/ /30/2016 Achievement at 239%: 1,117 NRM groups and 74 WRUAs planted over 10.7 million Comments tree seedlings, of which about 7.8 million survived. They rehabilitated 1,679 acres of (incl. % land and established 38 km of soil conservation structures. achievement) Indicator 12 : Percent reduction in the sediment load in the rivers in the targeted micro catchments. Value (quantitative 0 5% 23% or Qualitative) Date achieved 06/30/ /30/ /30/2016 Project exceeded targets by 460%: Sediment loads reduced from 180 tons/day in 2008 Comments to 139 tons/day in 2016 as the results of WRUAs micro-catchment protection activities, (incl. % and NRM activities. achievement) Indicator 13 : Number of MCAPs prepared, approved and financed in the targeted micro-catchments Value (quantitative or Qualitative) Date achieved 06/30/ /30/ /30/2016 Comments (incl. % achievement) Achievement significantly below targets. While 68 MCAPs were prepared only 15 (or 14% of the targets) were funded. The MTR recommended to focus on enhancing implementation of already developed MCAPs instead of developing new MCAPs. x

11 Indicator 14 : Percent completion of long-term multipurpose flood management option preparation up to but not including detailed design Value (quantitative 0 100% 100% or Qualitative) Date achieved 06/30/ /30/ /30/2016 Comments (incl. % achievement) Indicator 15 : Fully achieved. Detailed dyke studies which involved detailed assessment of the existing structures, including geotechnical, geomorphology, hydraulic modeling, historical hydrological and rainfall data etc. were successfully completed. Flood early warning system established and functional Value (quantitative or Qualitative) Date achieved 06/30/ /30/ /30/2016 Comments (incl. % achievement) Indicator 16 : Fully achieved. The Flood Early Warning System was innovative and highly impactful, complete with real time flood prediction equipment, production and dissemination of daily flood watch bulletins, and radio broadcast in local language. Number of policy advocacy forums conducted Value (quantitative or Qualitative) Date achieved 06/30/ /30/ /30/2016 Comments (incl. % achievement) Indicator 17 : Achievements above targets. Many policy engagement opportunities were not captured by the M&E and reporting systems. These include: presidential visits to the project sites, engagement with national leaders and county governments. Rate of compliance with environmental and social safeguards Value (quantitative 0 100% 99.8% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Fully achieved: 100% compliance with Environmental Impact Assessment & Environmental Audits: All the 3384 community livelihoods projects were screened for environmental compliance and 223 EIA EMPs conducted for SLD projects. (new indicator) Indicator 18 : Percent of community investment projects rated as satisfactory or above by participating communities Value (quantitative 0 80% 74% or Qualitative) Date achieved 06/29/ /30/ /30/2016 xi

12 Comments (incl. % achievement) Achieved. Data was collected from the household impact survey in Many activities and community investment projects were funded after the survey. Beneficiary assessment provides qualitative evidence of satisfactory assessment by communities. (new) Indicator 19 : Management Information System established, functioning and used to produce status reports at every level Value (quantitative or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Achieved. The MIS has an estimated 95% functionality but was only operationalized at 60%, limiting its effective use to collect information, produce reports and communication products at different levels. (new indicator) Indicator 20 : Proportion of IIFARA recommended actions that are implemented within the specified time Value (quantitative 0 80% 96% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) The project received regular FM, procurement and performance audit reports from IIFARA. However, serious GAC issues involving collusion, suspected fraudulent activities, and unsupported payments that were not picked up the reports (new indicator) Indicator 21 : Grievance Redress system established and complaints tracked, reviewed and resolved as per the GRM service standards Value (quantitative 0 90% 98% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Indicator 22 : Achieved. A total of 1,115 complaints were received and 1,082 of them resolved (97 %). Most of these complaints were related to lack of information (536) and dissatisfaction with service delivery (439). (new indicator) Proportion of Social Audits Committees functioning in the project intervention areas Value (quantitative 0 80% 98% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Achieved, exceeding targets: 618 SAICs out of 631 formed were functional. The SAICs played a critical active role in reporting cases of corruption, fraud and embezzlement of project funds. (new indicator) Percentage of sub projects including financial information updated and disclosed on Indicator 23 : mapping platform Value 0 100% 98% xii

13 (quantitative or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Achieved, 98% of expected target: 3793 community sub-projects were georeferenced and information available through an online GIS map. (new indicator) Indicator 24 : Proportion of timely and accurate financial management reports submitted by districts and PCU Value (quantitative 0 95% 96% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) FM reports were submitted. However, the project was rated as moderately unsatisfactory for FM, with serious issues of financial malpractices. There were major fiduciary weaknesses in the internal control systems in six out of 10 sub-counties. (new) Indicator 25 : Results based management and staff performance contract system in place and revised HR Manual implemented Value (quantitative or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Partially achieved. Result-based management was operational. Human Resources manual was developed but its implementation was not fully in line with best practices in HR and performance management. (new indicator) Indicator 26 : Staff meeting project implementation targets as included in the Quarterly Work Plans (in %) Value (quantitative 0 90% 98% or Qualitative) Date achieved 06/29/ /30/ /30/2016 Comments (incl. % achievement) Achieved. Regular staff meetings conducted at the regional coordination unit. (new indicator) G. Ratings of Project Performance in ISRs No. Date ISR Actual Disbursements DO IP Archived (USD millions) 1 11/29/2007 Satisfactory Satisfactory /26/2008 Satisfactory Satisfactory /30/2008 Satisfactory Satisfactory /16/2009 Satisfactory Satisfactory /28/2009 Moderately Satisfactory Moderately Satisfactory /23/2010 Moderately Unsatisfactory Moderately Unsatisfactory /30/2011 Moderately Unsatisfactory Moderately Unsatisfactory xiii

14 8 11/18/2011 Moderately Unsatisfactory Moderately Satisfactory /10/2012 Moderately Unsatisfactory Moderately Satisfactory /15/2012 Moderately Satisfactory Satisfactory /24/2013 Moderately Satisfactory Moderately Satisfactory /27/2013 Moderately Satisfactory Moderately Satisfactory /17/2014 Moderately Satisfactory Moderately Satisfactory /01/2014 Satisfactory Satisfactory /12/2015 Satisfactory Satisfactory H. Restructuring (if any) Restructuring Date(s) Board Approved PDO Change ISR Ratings at Restructuring DO Amount Disbursed at Restructuring in USD millions 06/29/2012 N MU MS IP Reason for Restructuring & Key Changes Made Changes made to the institutional arrangements; adjustments and measures required due to the GAP and fiduciary challenges; changes to outcome and performance indicators; reallocation of credit in favor of civil works for flood management (subcomponent 2.3); reduction in allocation of grants for catchment management (sub-component 2.1); and 100% IDA financing. 10/02/2014 N MS MS /05/2015 S S Key changes include the transfer of sub-component 2.3 to another project and the indicator dropped; and the consequent reallocation of credit to increase the financing for catchment management (subcomponent 2.1); grants for CDD micro-projects (subcomponent 1.1); and goods & equipment for support to local development sub-projects (subcomponent 1.2). Extension of closing date by nine months to end March Following the ISR mission in August 2015, a draft ISR and revised ratings (MS and MU) was prepared in February However, this was not submitted and approved before project closure xiv

15 I. Disbursement Profile xv

16 1. PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN 1.1 Context at Appraisal Country and Sector Background: 1. Poverty rates in Kenya were among the highest in the developing world at the time of appraisal in 2007, with 46% of the country's population living below the poverty line. Rising income inequity - with exclusion reflecting stratification by class, gender, and region - was a serious concern. Kenya, at project appraisal had also one of the most degraded natural resource bases in the region. Nearly 70% of the population was living on 12% of total land area classified as medium to high potential for agriculture and livestock production. 2. Western Kenya, despite having better natural resource endowments, was identified as a poverty hotspot with about 55% (1.8 million people) of its rural population living below the poverty line (CBS, 2007), due to a combination of high population density, lack of economic opportunities and rapid degradation of natural resources. Western Kenya was the most flood prone region, due to a combination of geography, high rainfall, poor land use practices, deforestation and accumulation of silt in the lower sections of the Nzoia basins, the largest of the four sub-basins of Lake Victoria. 3. Agriculture provided the basis of livelihoods and was vital to the region s food security, poverty reduction and economic growth efforts. Key constraints limiting the transformation of agriculture were well known and documented in several government policies, strategies and program documents. The thrusts of Government of Kenya (GoK) poverty eradication strategies and agricultural development programs emphasized the need for more integrated, community-driven approaches that would put decision-making, knowledge, inputs and other resources into the hands of poor farmers in order to increase productivity, diversify production and livelihoods, link farmers to markets, and expand off-farm opportunities to generate wealth and reduce the incidence of poverty. 4. There were several cases of small community-based natural resources management, agricultural and rural development projects implemented by non-governmental organizations. But these projects were often small, isolated, fragmented, short-term initiatives that were not linked to Government programs. Existing government programs were top-down projects, often characterized by misuse of resources. The project was designed to promote participatory approaches for organizing and empowering local communities to benefit from development resources, and for scaling up successful community driven development initiatives. Rationale for Bank Involvement: 5. The project was fully consistent with the Bank s Country Assistance Strategy for Kenya which was endorsed in June The project was consistent with three of the main pillars of this strategy: (i) strengthening public sector management and accountability; (ii) reducing vulnerability and strengthening communities; and (iii) investing in people. 6. The project built upon lessons, experiences and successful approaches of previous Bank s funded projects such as the Arid Lands Resource Management Project) phases one and two, the Kenya HIV/AIDS Project, and the Western Kenya Integrated Ecosystem 1

17 Management Project. Lessons from these projects emphasized the need for intense community participation and capacity building at the local level, micro-catchment focus to concentrate interventions, strong social accountability mechanisms, and investment in livelihoods and income generating activities, and in community infrastructures and value addition. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 7. The PDO in the Project Appraisal Document (PAD) in 2007 stated that: The objective of the proposed project is to empower local communities of men and women to engage in sustainable and wealth creating livelihood activities and reduce their vulnerability to flooding. However, in the financing agreement, the PDO was stated as: the objective of the Project is to empower local communities to engage in wealth creating activities, lower the incidence of poverty and reduce the vulnerability of the poor to adverse outcomes associated with recurrent flooding. The restructuring following the Medium Term Review (MTR) of June 2012 decided that the original PDO in the PAD should be amended so that it is the same wording as the PDO in the financing agreement. 8. Progress toward achievement of this objective was to be measured through four indicators: (a) Number of men and women actively participating in decision making at community and district levels; (b) Percent of community and youth investment projects rated satisfactory or better by participating communities; (c) Percentage increase in real income of households in project intervention areas; and (d) Percentage reduction of financial cost induced by average annual flooding in the Budalang i flood plain. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 9. There was no change to the PDO as articulated in the financing agreement. The PDO indicators and the intermediate outcome indicators were revised at the MTR to ensure that the results, their indicators and targets were aligned to the PDO, and were measurable and achievable. The PDO indicators were revised as: (i) (ii) Percentage increase in income of target households members of Common Interest Groups (direct beneficiaries). This indicator refined and made more specific and measurable the previous PDO indicator percentage increase in real income of households in project intervention areas. Total number of people in the project target area benefiting from project interventions (of which at least 34% are female). This indicator combined two previous indicators: number of men and women actively participating in decision making at community and district levels and percent of community and youth investment projects rated satisfactory or better by participating communities. (iii) Proportion of households affected by floods. This simplified the previous indicator of percentage reduction of financial cost induced by average annual flooding in the Budalang i flood plain. 2

18 10. However, the revised indicators were not formulated to adequately measure achievement of the PDO. For example, percentage increase in income is not an explicit and specific measure of empowerment of local communities to engage in wealth creating activities. The number of people benefiting from the project does not measure reductions in the incidence of poverty. Similarly, the proportion of households affected by floods does not adequately measure reduction in the vulnerability of the poor to adverse outcomes associated with recurrent flooding. The intermediate results indicators were substantially reconfigured at the MTR: Only four of the original indicators were maintained, 15 new indicators were introduced, 10 indicators were dropped and eight indicators were revised. Table 1: Revised indicators and result framework restructuring Indicators Number of PAD indicators Number of PAD indicators Dropped Number of PAD Indicators Revised Number of PAD Indicators Continued Number of New Results Introduced Total No. of final Results PDO level Results Intermediate Results Total Main Beneficiaries 11. The interventions of the project were targeted to directly benefit a total of 2,000,000 men and women in the poorest communities who would improve their ability to plan, benefit from livelihood micro-projects and income generating activities, adoption of natural resources management technologies, and protection from floods. The primary direct beneficiaries of the project were men and women in the selected communities within ten sub counties of the five counties of Western Kenya: Siaya, Vihiga, Busia, Bungoma, and Kakamega. Targeted communities were randomly selected sub-locations based on poverty data, and spread evenly across administrative constituencies. The project targeted 480 sublocations at the design stage. This number was increased to a total of 631 communities after the Mid Term Review (MTR) in June Project beneficiaries include at least 34% women and 15% of the vulnerable and marginal groups (widows, people with disabilities, poorest households) and the unemployed youth. The project also aimed to protect pregnant women and children under the age of five years from malaria, by changing behaviors and promoting the use of insecticide treated nets. It was also expected that local government authorities would enhance their capacity to plan and support local development initiatives. The indirect beneficiaries were men and women in the sub-catchment and across the value chain who would benefit from community infrastructures and investment in catchment management. At the end of the project, at least 2.8 million men and women were reached by the project and benefited (directly or indirectly) from project activities, public infrastructures, training, information and knowledge. 3

19 1.5 Original Components (as approved) 13. The project had three major components: (i) Community Driven Development (CDD), (ii) Flood Mitigation; and (iii) Implementation Support. The components and their subcomponents are indicated below. Component 1: Community Driven Development (US$38.9million) 14. This component comprised: (i) Prioritized Investments and Capacity Building at Community Level and (ii) Local Level Development Support This component supported livelihoods-based micro-projects and interventions aimed at improving delivery of essential services to enable communities diversify their economic activities and access services. It was expected that the communities will be trained in Participatory Integrated Community Development (PICD) to build their capacity to select livelihood micro-projects and income generating activities from a wide range of potential viable enterprises such as farming, goat keeping, chicken rearing, craft making and services. Micro-grants were to be provided to common interest groups (CIGs) rather than individuals so as to spread the benefits and facilitate learning and collective action. Communities were required to contribute 30% of the cost in cash or in kind. Component 2: Flood Mitigation (US$31.3 million) 15. This component had four sub-components: (i) Catchment Management; (ii) Multi-purpose Flood Management; (iii) Flood Plain Management; and (iv) Flood Early Warning System. This component aimed at addressing the root causes of flooding in the region by: (a) improving management of the upper catchment through community-based natural resources management in the fragile upper catchments of the Nzoia; (b) exploring opportunities for flood management structures with multipurpose use in the middle catchment; (c) improving flood mitigation structures in the lower catchment, and (d) establishing an effective, community based flood early warning system, linking international and national information systems with local communities. Component 3: Implementation Support (US$15.8 million) 16. The objectives of this component were to facilitate identification and development of new opportunities for economic growth in the region, as well as development of M&E system for project outputs and outcomes. This component comprised: (i) Support to policy analysis, advocacy and local development; and (ii) Management, monitoring, and evaluation. 1.6 Revised Components 17. While the project retained the three main components and overall design, there were significant revisions to the sub-components and changes to the financing allocations at both the June 2012 restructuring and subsequently at the October 2014 restructuring. Component 2 was reduced in scope to only cover the Nzoia river basin and interventions in the Yala river basin were dropped at the June 2012 restructuring. This was to focus activities on the main catchment area and clarify what the project could realistically achieve with the agreed financing. The financial allocation for catchment management (sub-component 2.1) was reduced significantly in line with the decision to focus on the 10 core districts of Nzoia basin and to drop the six non-core districts. It was also decided to more than double the financial allocation for civil works to support the rehabilitation of approximately 20km of existing dykes for flood plain management (sub-component 2.3) in 4

20 Budalang i. This was to build on the successful flood plain work completed so far by the project, including the 1.3 km of river training. 18. As part of the October 2014 restructuring, activities under sub-component 2.2 (MultiPurpose Flood Management) were transferred to the Bank financed Kenya Water Security and Climate Resilience Project, given their high implementation cost. This was for implementation of the floodplain management plan and the designs already completed under WKCDD/FMP. It was also decided that the rehabilitation of dykes in the flood plain under sub-component 2.3 would be too costly for the project and could not be completed by the closing date. Dyke rehabilitation designs undertaken by the project were handed over to the Water Security and Climate Resilience Project, at the request of the GoK. The rehabilitation and strengthening of existing flood plain structures was therefore dropped from the Financing Agreement Par 6a and the indicator on the rehabilitation and maintenance of dykes (36 km at appraisal revised to 20 km at the 2012 restructuring) was removed. This, however, did not reduce total project cost. The restructuring made a reallocation of USD 0.5 million from Civil Works, USD 2.28 million from Training and Workshops, and USD 5.58 million from Consultants and Audit Services to increase the allocations for Catchment Management (sub-component 2.1) and for CDD Micro Projects (sub-component 1.1). There was also an increase in the allocation for goods and equipment to enhance SLD sub-projects (sub-component 1.2). By project closure, there had been a 50% reduction in the costs of Component 2 compared with the appraised allocation, i.e. from USD 31.3 million to USD 15.4 million. The latest project cost by component is shown in Annex 1 table (a), while table (c) summarizes the reallocations between financing categories. 1.7 Other significant changes 19. The project experienced three other major changes. The project was informally suspended for about 30 months from September 2009 to March 2012 following financial audit reports and subsequent financial management reviews by the Bank and audits by GoK. The MTR conducted in 2012 resulted in a major project restructuring. The main revisions included: (i) (ii) Reduction of the scope and geographic coverage of component 2 to concentrate resources in the 10 core districts (sub-counties) and focus catchment management interventions in the sub-catchments that are considered erosion hotspots along the Nzoia River. Changes in the institutional arrangements to align with the Kenya devolution structures under the new Constitution. This involved the establishment of county coordination units, a regional coordination unit, and renaming district as sub-county coordination units. (iii) Revisions of the result framework to better align with the PDO indicators and intermediate results, and specify measurable targets. (iv) IDA financing was increased to cover 100% on all categories, including taxes, following GoK s request to use unspent funds during the suspension period, avoid interruptions and delays in disbursement of funds, and speed up and scale up project activities within the remaining three years of the implementation period. 20. Finally, a nine month no-cost extension was granted in June 2015 to allow effective project completion. 5

21 2. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES 2.1 Project Preparation, Design and Quality at Entry 21. The preparation and design of the project were informed by comprehensive analyses of the poverty context, the development challenges, local and national institutional setting, and detailed and systematic studies and technical papers, economic and financial analyses by a multi-disciplinary team of national and international experts. The design documents provided adequate description of project implementation arrangements, procurement and financial management arrangements and a detailed analysis of risks and their mitigation strategies. However, the risk management strategies were not effective in preventing financial, procurement and fiduciary risks. 22. Project preparation and design considered several lessons from previous projects in Kenya, including the Arid Lands Resource Management Project, the Kenya HIV/AIDS Project, and the Western Kenya Integrated Ecosystem Management Project. These lessons include the need for intense local community involvement, a micro-catchment focus, empowerment of local government, and strong social accountability mechanisms. The design of the project also utilized lessons from successful community development initiatives that NGOs implemented on a very small scale, and lessons for scaling up community-based development through government interventions. 23. Design of the project took just over a year, with a mix of expertise in CDD, NRM, social and environmental safeguards, economics, social anthropology, water engineering and management from the Bank, Government ministries at national and local levels, nongovernmental organizations as well as private sector. The design was also supported by Monitoring and Evaluation (M&E) experts from Cornell University, USA. 24. The design attempted a holistic approach with distinct components for flood mitigation and CDD, which also included sub-components on NRM, support to local development, and malaria prevention activities that were all considered to be critical for poverty reduction in Western Kenya. However, project components and sub-components were largely disconnected and insufficiently described to help in implementation. For example, there was no clear link between the CIGs, SLD groups, NRM groups, malaria interventions and flood mitigation. The complex design also underestimated the risks, including the capacity and processes required to undertake CDD and the quality of sub-projects. Fiduciary and procurements risks were identified during design but the measures were not sufficient and required repeated strengthening during implementation. 25. The lack of a clear and simple theory of change and impact pathways at the design stage made the project complex and created implementation challenges. The PDO statement was complex, broad and overambitious. The PDO indicators were not specifically linked to the PDO statement and as a result they did not provide the appropriate measures of achievement of the PDO. The excessive number of intermediate outcome indicators led to a focus on implementation performance rather than progress towards achievement of outcomes and the overall development objectives. 6

22 2.2 Implementation 26. Post-election violence in Kenya during 2008 delayed the project inception phase. For at least six months, the newly recruited staff were not able to start any activities due to violence, insecurity and political instability in the country. The first set of community action plans were funded in October Further delays were caused by the informal project suspension 5 that lasted 30 months from September 2009 to June There was a high staff turnover as the project lost more than 50% of its field staff and critical technical staff such as the M&E coordinators (see details in 5.2.b). The newly recruited staff did not benefit from effective induction and the intensive training that was required to implement CDD. There were insufficient time and investments in community mobilization, facilitation and strengthening of common interest groups, financial viability of and sustainability of community institutions, networking and advocacy support for policy engagement. 27. However, the project had a committed professional technical staff. The PICD was effective in raising awareness and building community capacity to plan and manage their development initiatives. Communities were enthusiastic and made financial and in-kind contributions. Some communities continued with their activities during the suspension period. There was a very high interest from the political leadership of Western Kenya to ensure that the suspension was lifted and that the project achieved its objectives. There were frequent supervision missions and proactive technical support from the World Bank that comprised teams with the necessary expertise. 28. Following the lifting of the suspension in June 2012, the MTR was undertaken and a major restructuring took place as described in section 1.7 above. This was to strengthen the implementation arrangements (in line with the new Kenya Constitution); incorporate changes prompted by the Governance Action Plan and due to the fiduciary challenges encountered; reallocate finances in favor of the flood mitigation sub-components; and focus the catchment management interventions on the Nzoia river basin. 29. A key measure that aided implementation was the adoption of a Rapid Result Initiative (RRI) in The RRI was designed to provide impact funding or refinancing to successful CIG in order to accelerate the pace of implementation and achievement of project outputs. It was credited for success with community micro-projects. However, it became a race against time with considerable pressure to spend and meet spending targets in a short period of time. This compromised the quality of implementation and exposed staff to financial malpractices and corruption. The complex design of the project - with distinct and largely disconnected sub-components and activities - created implementation challenges. There was no clarity on implementation mechanisms for some activities such as malaria interventions, community foundations and multipurpose dam designs. The MTR added many new indicators, which were overwhelming for the M&E system and the team to collect data and report on regularly for the 27 Intermediate Outcome Indicators. It did 5 The Government of Kenya suspended project activities following allegations of corruption and audit that found material cases of financial malpractices. The Bank did not formally suspend the project although disbursement of funds and all procurements were suspended during that period. The Bank s implementation support missions continued during the suspension period 7

23 not leave much space and capacity for the M&E team to develop a credible data base and impact studies for the project. 30. By 2014, the project had made considerable progress in flood management and reducing the vulnerability of communities in the Budalang i flood plain. This was ascribed to a combination of structural interventions (e.g. 1.3 km of river training and construction of disaster evacuation center); early warning system and community disaster preparedness; and also the reduction of soil erosion through NRM activities in the Nzoia basin. A comprehensive assessment of existing dykes and their rehabilitation needs was undertaken. However, the estimated cost (US$ 53.4 million) and time required for rehabilitation of dykes in the flood plain was far beyond the resources available to the project. This subcomponent was therefore dropped during the 2014 restructuring and increased resources provided for the catchment management activities, the CDD micro-projects and the SLD sub-projects to enhance impact on livelihoods and the PDO outcomes. 31. A nine month no cost extension was approved in 2015 (from June 30, 2015 to March 31, 2016), but was not effectively used to complete project activities, including an impact assessment and setting up sustainability mechanisms and exit strategy. Instead, the project staff spent most of the time in investigations and in-depth reviews of financial management (FM), following new allegations of financial malpractices and fraud. The recurrence of financial malpractices caused severe shortcomings that negatively affected project performance and ratings. Planned procurements were put on hold, which resulted in some of the SLD projects not being completed and equipped. An external impact evaluation that was planned for the extension period was also not procured and undertaken. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 32. The project had an elaborate result framework, with detailed indicators, baseline values and targets. Evaluation experts from Cornell University and Bank s M&E experts were involved in setting up a robust M&E system, complete with quasi- experimental impact evaluation designs that would account for before and after differences, and with and without project impacts, with single and double difference comparisons. The design anticipated the recruitment of an experienced evaluation firm to ensure the independence and objectivity of the impact evaluation. The M&E system had data collection and reporting tools to track indicators at the household and CIG levels, and to link them to project intermediate outcomes and PDO indicators. A robust geographic information system (GIS) was introduced following the MTR to provide geo-referenced coordinates of project interventions, with details on the type of activities, budget and beneficiaries. 33. The restructuring at MTR revamped the result framework with substantial revisions of PDO indicators, intermediate outcome indicators and targets. The original PDO results indicators were revised and reduced to three broad indicators of income, number of beneficiaries and vulnerability to floods. Unfortunately, the MTR missed an opportunity to revise and simplify the PDO with specific and measurable indicators that clearly link outputs to outcomes and ultimately to the achievement of PDO. 34. The implementation and utilization of the M&E system had major shortcomings. There was a high turnover of project M&E coordinators. The use of M&E focused on project implementation performance and reporting at the activity and output levels. It failed to connect outputs to outcomes and results, and to connect and link the multiple project 8

24 interventions to results. Baseline and household impact studies lacked conceptual, methodological and analytical credibility, internal and external validity. The M&E system was limited to routine administrative reporting, rather than for informing decisions, making corrective action and communicating with project stakeholders. The GIS was not dynamic and did not allow updating of project interventions. 35. The emphasis on predetermined quantitative indicators was another weakness of the M&E system. There was no systematic process to capture and document qualitative and process outcomes of CDD, such as empowerment, social capital, gender dynamics, accountability and social development. The MTR would also have been an opportunity to include indicators other than household income that have been found elsewhere to be useful and measurable indicators of livelihood enhancement and empowerment. An end-line survey and impact evaluation was not undertaken as planned during the last year (due to the suspension of procurements) resulting in dependence on the M&E data to measure achievement of the PDO. 2.4 Safeguard and Fiduciary Compliance 36. Environmental and Social Safeguards: Western Kenya was classified as a Category B project whose interventions were not expected to cause any significant adverse environmental and social impacts. While the project was conceived and designed to have significant positive environment and social impacts, the sub-projects were expected to have potential risks of site-specific adverse environmental and social impacts. The following safeguards were triggered: Environmental Assessment (OP 4.01), Natural Habitats (OP 4.04), Forests (OP 4.36), Physical Cultural Resources (OP 4.1 l), Indigenous Peoples (OP 4. 10), Involuntary Resettlement (OP 4.12) and Projects on International Waterways (OP 7.5). In compliance with Bank requirements, an Environment and Social Management Framework, Resettlement Framework Paper and Indigenous Peoples Planning Framework were prepared to address the adverse environmental and social impacts. 37. The project achieved 100% compliance with environmental and social safeguards requirements, with environmental and social impact assessment conducted and environmental management plans developed for all infrastructure and value addition projects. All the 3384 community livelihoods projects were screened for environmental and social impacts and were in full compliance with the Bank guidelines. The project conducted two Annual Environmental Performance audits at the beginning of the project in 2008/2009 and toward the end in 2015/16 by a team of experts from Masinde Muliro University of Science and Technology. 38. Fiduciary Compliance: The project was rated as Unsatisfactory on FM. The project had been subjected to two in-depth FM and fiduciary reviews in August 2009 and in December The 2009 review revealed major breakdown of internal control systems, cases of suspected fraud and corruption, and ineligible expenditures amounting to Kshs.55 million (USD 800,000) in These triggered investigations by the World Bank Group Integrity Vice Presidency (INT). The key risks identified in 2009 consisted of noncompliance with Project FM and procurement procedures. There were material cases of fraud and corruption. The weaknesses were identified in grants (non-existent micro-projects, valuefor-money, and misappropriation of funds), staff allowances and per diems (overstated payments, insufficient supporting documents, fictitious trips etc.), workshops (non-existent 9

25 events, overstated participants, overstated payments etc.), training, operating costs and procurement. As a result of the review, the Project was suspended for a period of 30 months. A governance action plan (GAP) was developed by the GoK to strengthen the internal control systems. The plan recommended the recruitment of an independent integrated fiduciary and procurement agency, and the strengthening of the social accountability mechanisms. 39. Allegations of suspected fraud and corruption resurfaced in 2015, informed by the social accountability mechanisms. A second in-depth detailed expenditure and fiduciary review was conducted. It revealed systemic and pervasive material cases of FM weaknesses: (i) breakdown in systems of internal controls including an override of FM procedures by the Project management and fiduciary staff; (ii) procurement-related irregularities in civil works and equipment contracts with indications of conflict of interest, collusive and other irregular practices; (iii) misuse of community grants, including misappropriation of funds through irregular involvement of Project staff in disbursement and procurement at the community level; (iv) anomalies in operating costs, including unsupported/insufficiently supported expenditures, noncompliance with Bank and GoK procedures, and evidence of irregular payments; and (v) weak management oversight and lack of effective M&E systems. The 2015 review is being finalized and is expected to be ready (including on the scale of ineligible expenditures) by September It is important to note, however, that this project is not an isolated case of procurement fraud, embezzlement of funds and corruption. It rather reflects the general context and political economy of government and donor funded projects in Kenya. In fact, Government officials and NGOs recognized that WKCDD/FM was perhaps the only project implemented by the Government of Kenya that has ensured that more than 50% of the resources effectively reached local communities (Annex 6). The GoK has recognized that corruption is widespread and deeply rooted in government and has penetrated all levels of society. 41. A significant strength of this project is that cases of financial malpractices and procurement fraud were reported by the social accountability and integrity mechanisms established as part of the CDD process and strengthened following the MTR. These social accountability mechanisms and community institutions appear to have been more effective than the international financial and audit firms that had been regularly reviewing and had given the project clean audits. 2.5 Post-completion Operation/Next Phase 42. There was no provision for a second phase of WKCDD/FM. However, lessons and successful approaches from this project have significantly influenced the design of the National Agricultural and Rural Inclusive Growth project and the Climate Smart Agriculture project under development. 10

26 3. ASSESSMENT OF OUTCOMES 3.1 Relevance of Objectives, Design and Implementation Rating: Moderately Satisfactory 43. The objectives of this project continue to be highly relevant and well aligned with the GoK Vision 2030 s focus on investing in people, women, youth, and vulnerable communities. The design and the implementation of the project are also highly relevant to the devolution system of governance in the Constitution of Kenya. The objectives and design of the project continue to be relevant to the World Bank s Kenya Country Partnership Strategy for FY This includes being in line with several outcomes of the strategy: (i) greater agricultural productivity, (ii) improved social service delivery for vulnerable groups, particularly women, (iii) improved capacity to manage risks from climate change, and (iv) greater citizen feedback on the quality of service delivery. 44. The project was timely in the context of decentralization and devolution in Kenya. Lessons in the implementation of this project, particularly the PICD process and the social accountability and integrity mechanism, contribute to addressing the challenge of delivering a devolution dividend through greater citizen engagement, participation and decision-making at local level, transfer and management of resources to communities and improvement of transparency and accountability. 45. The project s design is still relevant to the livelihood needs and aspirations of the poor in Western Kenya, one of the poorest regions in the country. The flood mitigation component remains highly relevant given the increase in frequency and intensity of floods in Kenya, and the immense costs to lives and livelihoods, which are often borne by the poor and the vulnerable, women and children. 46. The design was informed by a good number of thematic studies and technical reports that provided contextual and background information. It was also aided by a comprehensive review of lessons and experience in piloting most of the project components through previous projects, which therefore provided a solid basis for scale-up. For example, the CDD component, community planning and CIG approaches had already been tested under the ALRMP project; cross-community and district level infrastructure planning approaches were being piloted under ALRMP; catchment management activities were being implemented through Lake Victoria North WRMA; a draft flood management strategy already existed for Lake Victoria and the flood early warning system was to be integrated with this strategy. The project implementation structure was based on the ALRMP where it was already proving to be successful. The implementation arrangements were adequately detailed, with the key risks identified and their mitigation strategies discussed. 3.2 Achievement of Project Development Objectives Rating: Moderately Unsatisfactory 47. The project development objective was to empower local communities to engage in wealth creating activities, lower the incidence of poverty and reduce the vulnerability of the poor to adverse outcomes associated with recurrent flooding. It was expected that the project would (i) increase the income of CIG members by 25%; (ii) reduce the proportion of 11

27 households affected by floods from 23% to 5%; and (iii) benefit 2,000,000 people (34% women). PDO Indicator 1: Percentage increase in income of target households members of common interest groups (direct beneficiaries) 48. The achievement of this indicator as a measure of both poverty reduction and wealth creating activities - reveals mixed results. There was qualitative evidence from the beneficiary assessments and field visits of an increase in peoples income. 49. The project provided grants for income generation and livelihood support to over 2,000 community micro-projects, reaching an estimated 1,000,000 men and women. A total of 414 Youth micro-projects were funded to benefit 13,743 young men and 15,291 young women. Community value addition investments such as milk collection and cooling centers, poultry and animal feeds provided additional income to households in the targeted communities. 50. Most CIGs and beneficiaries of WKCDD/FM interventions have developed and sustained a culture of savings through various forms, including table banking, savings and loans associations, mobile savings (MPesa), and formal links with micro-finance institutions and banks. Some of the more advanced CIGs were evolving toward registered communitybased organizations or business entities with their own active bank accounts, and attempting to access commercial loans and credits to expand their businesses and become more competitive. A commonly reported benefit of the project was its ability to provide regular income, small amount of cash income to women and poor households, through the sale of milk, eggs and chicken to the community and local market. The economic and financial analysis presented in Annex 3 also illustrated that the incremental net benefits at the crop and farm level were positive and that the introduction of livestock enterprises increased returns. 51. The beneficiary assessment (Annex 5) confirmed that livestock enterprises have generated numerous benefits that are spreading beyond the receiving households. The project reported that over 140,000 households benefited from livestock enterprises: 20,667 households received pregnant heifers, 12,143 households received dairy goats and 109,927 households had poultry enterprises. Many of these households have increased production of milk, eggs and manure. In addition to livestock acquisitions, WKCDD/FM invested in value addition infrastructures (artificial insemination, milk collection and cooling centers, feed manufacturing) that open up more opportunities for more households to benefit from livestock even more. The potential for dairy enterprises would be much larger if the related SLD investments are sustained and intensified. These could trigger a white revolution in Western Kenya similar to the dairy sector in Central Kenya. 52. However, it is not possible to provide quantitative evidence of the magnitude of increases in income for the beneficiary households and to establish a causal link between project interventions and the increase in income. The project reported an incremental increase of 44% in average monthly income for direct beneficiaries. However, income figures were collected at the CIG level rather than households. These figures were not differentiated by beneficiaries, project interventions and type of activities. Data on income was inconsistent and did not include key parameters such as yields, production, prices, consumption and costs, and was not adjusted for inflation. There was no impact evaluation conducted at the 12

28 end of the project. The household impact assessment survey conducted in 2014 reported that project beneficiaries increased their average monthly income from Ksh 6,011 to Ksh 15,869, a 263% increase. Their incomes were also 182 % higher than the nonbeneficiaries, whose average monthly income was estimated at Ksh 8,691. Unfortunately, these findings were neither credible nor plausible. As noted in 2.2. above, most project interventions were implemented in , and could not raise income to such magnitude in only one or two years. 53. The absence of an impact evaluation study at the end of the project and the shortcomings of the M&E system made it impossible to confirm the percentage increase in income. Measuring income is often challenging for projects of this nature. Other indicators would have been useful around change in livelihood choices, expenditures and consumption, skilled employment and empowerment. PDO Indicator 2: Proportion of households affected by floods 54. The project exceeded the target of reducing the proportion of households affected by floods from the baseline values of 25%. For about five years, despite the same amount and intensity of rainfall in the relevant catchments, flooding has not occurred in the floodplains of Nzoia River, while it continued in other areas. Previously, flooding was occurring annually and caused immense costs to human lives and livelihoods. For example, in 2008, the floods displaced about 21,000 people whose homes and farms were submerged and crops swept away. 55. WKCDD/FM interventions have significantly reduced the frequency of flooding in Budalang i flood plain. Flooding occurred on 3 rd December 2011 but did not cause any fatalities as the communities were warned early enough through the flood early warning system and community radio established by the Project. In other parts of Kenya, floods continued to cause damages. In 2013, the Kenya Flash Flooding Update 6 reported that at least 35 people died and 200,000 people were displaced from their homes as a result of flooding and inadequate flood mitigation measures. The rains in 2015 resulted in 112 deaths and affected approximately 240,726 people. 56. Three direct interventions of WKCDD/FM accounted for this success, in addition to the dyke rehabilitation and maintenance activities that were implemented by the Bank financed Kenya Water Security and Climate Resilience project. These were: (i) River Training: River training was completed on three sections of river Nzoia of total length 1.3 km to increase the discharge capacity of the river. Since completion of these flood protection structures only one flooding event happened on December 3, 2011, the last day of rainfall season. The dykes had held for the entire rainfall period, which had the highest amount of rainfall since (ii) Flood Early Warning Systems: The project developed and implemented an innovative and highly impactful flood early warning system that used state-of-the-art and real time flood prediction equipment to produce and disseminate daily flood watch bulletins, which are broadcast to rural communities in their local language by a community radio. 6 Opondo, D.O. (2013). Loss and damage from flooding in Budalangi District, Western Kenya. Loss and Damage in Vulnerable Countries Initiative, case study report. Bonn: United Nations University Institute for Environment and Human Security. 13

29 (iii) Catchment management: The adoption of soil and water conservation technologies for micro-catchment protection resulted into planting of 7.8 million surviving trees, rehabilitation of 1,679 acres of land, and establishment of 38 kilometers of soil conservation structures (terraces, grass strips and trash lines). Sediment load in the rivers in the targeted micro catchments reduced significantly (23% against a target of 5%) from 180 tons/day in 2008 to 139 tons/day in PDO Indicator 3: Total number of people in the project target area benefiting from project interventions (of which at least 34% are female) 57. The reported total number of people benefiting from WKCDD/FM project was 4,464,278 (from project progress and completion reports), exceeding the initial targets of 2 million by over 2.4 million people. It also exceeded the initial target of 34% or 680,000 women by over 1.7 million (2,432,979) to reach 54% of women. 58. The reported achievement of benefiting 4,464,278 people out of a total population of 5,176,586 7 people in Western Kenya is unrealistic, given the nature and effective duration of the project. This number of beneficiaries would exceed the total population of Nairobi, the capital city of Kenya, estimated at 3,138,369 people. It is doubtful that 9 out of every 10 people in Western Kenya benefited from the project. The project covered 631 sublocations in five counties, or 70.5 % of the 895 sub-locations in the region. A typical CIG had members, out of approximately 6,000 to 10,000 people per sub-location. At the time of the ICR, not all CIG members had received direct project benefits. 59. The determination of number of beneficiaries was based on an arbitrary factor of 7 that the project used as average household size. This number is above the average household size in rural Western Kenya. The Kenya 2009 population census and the 2014 Kenya Demographic and Health Survey indicate 4.5 average household size in Western Kenya. Project baseline survey report also indicated that 58% of project targeted households had less than five members. Correcting for average household size (from 7 to 4.5) would reduce the number of people reached from 4.5 million to about 2.8 million. 60. The project estimate of the number of beneficiaries was also based on the wide reach of NRM, SLD and training due to their characteristics as public goods. There were multiple counting and overlap of project beneficiaries. Most CIGs were involved in at least three project interventions: micro-projects, NRM and malaria interventions. They were also benefiting from the SLDs in their communities. Based on beneficiary interview and stakeholder assessment, the major project interventions that produced benefits was the community livelihood micro-projects. In addition, as shown in Figure 1 below, a large percentage of CIGs were formed in 2013 and 2014, just two to three years before project completion. More than 680 CIGs were formed in the last year of the project. Similarly, most SLD projects were funded in 2014, while NRM and malaria interventions peaked in 2015, the last year of the project. Reducing such overlaps, would put the total number of beneficiaries to a maximum of 1,071,000 people or 238,000 households. 7 Based on 2009 population census 14

30 Malaria NRM Projects WRUA Projects CIGs Figure 1: Project timelines and key interventions 61. The WKCDD/FM target of benefiting 2,000,000 people was ambitious compared to similar projects such as the Kenya Agricultural Productivity and Agribusiness project that targeted to reach 400,000 smallholder farmers (revised to 200,000 beneficiaries at MTR) and benefited 245,000 smallholder farmers at closure. Similarly, the National Agricultural and Rural Inclusive Growth (NARIG) project targets to reach 252,000 beneficiaries across 21 counties. The target of 2 million ought to be have been revised at MTR to be more realistic given the reduced period for project implementation following a 30 month suspension and inception delays. The ICR estimates the number of people reached by the project to about 2.8 million, but the number of actual beneficiaries could be about 1 million, which is below the initial target. 62. This indicator was also intended as a measure of empowering local communities and lowering the incidence of poverty. There was qualitative evidence (Annexes 2 and 5) that the broad-based CDD approach used in this project generated tangible benefits to hundred thousands of poor people in Western Kenya. Such benefits from the WKCDD/FM ranged from the acquisition of livestock assets, income generation activities, tree planting, participation in CIG, prevention of malaria, adoption of soil and water conservation technologies, and access to community infrastructures. Livestock play a key role in both pathways into and out of poverty 8. Most households that have escaped poverty in Western Kenya diversified their on-farm incomes through livestock, ranging from poultry and small ruminants to dairy animals. Key achievements of the project are illustrated in Table 2 below. 63. A significant outcome of WKCDD/FM project is in the area of social inclusion and community-based social protection. Most of the community institutions developed local mechanisms to ensure the inclusion of vulnerable and marginalized groups who comprised 23% membership of common interest groups. There were mechanisms for sharing the 8 P. Kristjanson, A. Krishna, M. Radeny, W. Nindo. Pathways out of Poverty in Western Kenya and the Role of Livestock 15

31 benefits (milk, chicken, goats, income, etc.) with people with disabilities, widows, and orphans. The project established Social Audit and Integrity committees, a nascent form of social accountability that could be strengthened as an effective mechanism for citizen engagement. These committees were effective whistle blowers that attracted attention on integrity and financial and procurement malpractices that the more expensive fiduciary audit firms could not unveil. The project implemented PICD approaches that facilitated the establishment and training of community-level institutions on various areas of participatory planning, community visioning, project management, monitoring and implementation. These community institutions were functioning and were playing an important and critical role in delivering services to local communities and representing their interests. Men and women in WKCDD/FM project area show more confidence, knowledge and capacity to plan and manage their local development. Table 2. Western Kenyan Community Driven Development and Flood Mitigation Project Achievements at a Glance 1,074,284 people benefited from community livelihood improvement and wealth creating activities. 140,000 households benefited from livestock enterprises: 20,667 from dairy cows, 12,143 from dairy goats and 109,927 from poultry enterprises. 54% women beneficiaries, improving gender relations, women s access to resources and assets, participation and leadership in rural institutions. 23% of project beneficiaries were members of vulnerable and marginalized households. 0% households affected by flooding in Bundalangí, despite high rainfalls and flooding in other areas. Sediment load in the rivers reduced significantly (23% against a target of 5%) from 180 tons/day in 2008 to 139 tons/day in community malaria interventions increased percentage of of pregnant women (75% ) and children under 5 years of age (63%) who slept under Insecticide Treated Nets 7,853,859 trees seedlings planted and surviving 320,198 people households adopted NRM innovations soil and water conservation structures 16

32 2,216 Common Interest Groups in 631 sub-locations in five counties 3.3 Efficiency Rating: Moderately Unsatisfactory 64. Project efficiency is a measure of how economically project resources are converted into results, and is therefore related directly to the economic and financial analysis. In the case of WKCDD/FM, project efficiency was measured by assessing: i) targets reached, ii) time taken for completion compared to time planned, iii) actual costs vs. those planned iv) actual cost of reaching each beneficiary and v) realization of economic outcomes estimated at appraisal. 65. Economic and financial analysis (Annex 3) revealed that the incremental net benefits at the crop and farm levels appear positive, even after labor costs are factored in. The introduction of livestock enterprises further increased returns. The Net Present Value (NPV) for dairy cows was estimated at USD 1,274, USD 2,500 for a herd up to four does kept in an enclosed pen. The financial internal rate of return was high for dairy goats, at 78%. For poultry, NPV was USD 141 but increased to USD 220 and the return on family labor is above the average daily wage (of Ksh 200) in the project area at Ksh 277. The financial analysis revealed an interesting pattern between the models, with a declining rate of return - across several indictors - as the distance to the market increases. 66. As noted above, the project exceeded its targets of reducing the proportion of households affected by floods. However, the project target of benefiting 2,000,000 people was ambitious and the reported achievements overstated. With uncertainties over the actual number of beneficiaries reached, it is difficult to estimate the actual cost of reaching each beneficiary. This cost is also dependent upon the type of intervention but varies from USD 900 for dairy cow and approximately USD 65 for crop production. The economic internal rate of return (EIRR) was calculated at 35% over a 20 year period with a social discount rate of 10%. In this sense, the project could be seen to offer value for money and as cost efficient. However, such variations in figures between planned and realized suggest some issue with forecasting, planning and method of estimation. While the project has undoubtedly had positive effects on the production parameters of the target communities and resulted in a number of key benefits for those supported, the results remain open to debate given the magnitude of change in levels of yield increase. In terms of time taken to completion, the project was suspended for about 30 months and extended by an additional nine months for closure. Given the long lead time during inception and setbacks due to suspension (of close to three years) the project has made good use of its time and worked to catch-up with its targets. 67. The 2012 restructuring more than doubled the financial allocation for civil works, largely to support the rehabilitation of 20km of existing dykes for flood plain management. However, the 2014 restructuring decided the drop this sub-component (other than the 1.3 km of river training already completed) without a significant reallocation from civil works. Efficiency in the use of financing for civil works both for SLD and flood mitigation infrastructure is therefore unclear. 17

33 68. In conclusion, the absence of empirical data on financial, economic, social and impact analysis, the shortcomings of the monitoring and evaluation system, the implementation challenges, and more importantly, the material cases of financial malpractices, fraud and corruption, the ICR concludes that the project did not meet the criteria for economic performance (spending less), efficiency (spending well), and effectiveness (spending wisely). 3.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory 69. Overall outcome is rated as moderately unsatisfactory, which is determined by the continuing substantial relevance of the project, modest efficacy in achieving the PDO and its intermediate outcome indicators, and modest efficiency. 70. This was a complex project that produced some interesting and highly valuable results, but also faced some significant shortcomings in its implementation. There were tangible benefits to communities that have improved livelihoods and that are providing pathways out of poverty. The flood mitigation interventions have saved lives and livelihoods in the Bundalang i plains, which is a hot spot for natural disasters. Over seven million trees were planted and will have long- lasting impacts in halting and reversing land degradation, and promoting sustainable use of natural resources. However, there were significant shortcomings in the achievement of project development objectives. These related to the complexity of the project design and its largely disconnected components; broad and ambitious PDO statement and indicators, absence of a theory of change and impact pathway; weak evidence base on magnitude of increase in income; ambitious targets and overstated number of beneficiaries; inefficient implementation and severe shortcomings in fiduciary and financial management. These negatively conclude that there were significant shortcomings in efficiently achieving the project development objectives. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 71. The project exceeded the targets of reaching 34% of women as a total of 54% of women were fully participating in the CIGs and other rural institutions. The project has improved rural women s access to resources and assets, increased their income and enhanced their participation and leadership in rural institutions. There was substantive qualitative evidence of enhancing gender equality and the economic empowerment of women (Box 1, Annex 2), with benefits to household food security and children s nutritional status. 72. A significant outcome of this project is in the area of social inclusion and community-based social protection. Most of the community institutions developed local mechanisms to ensure the inclusion of and sharing of the benefits (milk, chicken, goats, income, etc.) with vulnerable and marginalized groups: people with disabilities, widows/widowers, and orphans. They comprised 23% membership of common interest groups. WKCDD/FM also funded a total of 414 Youth micro-projects that benefited 13,743 young men and 15,291 young women. Such social inclusion and community-based social protection mechanisms provide lessons that can be scaled up and replicated in other projects and government initiatives. 18

34 73. WKCDD/FM has established Social Audit and Integrity committees, a nascent form of social accountability that could be strengthened as an effective mechanism for citizen engagement. These committees were effective whistle blowers that attracted attention on integrity and financial and procurement malpractices that the more expensive fiduciary audit firms could not uncover. (b) Institutional Change/Strengthening 74. The project equipped the Water Resources Management Authority with state-of-the- art laboratory and equipment for water analysis and sediment load monitoring. The project supported the Kenya Meteorological Services Department to monitor and produce daily flood warning bulletins that were widely distributed to key stakeholders with the government, international humanitarian organizations and broadcast to local communities in local language. The project also supported the Kenya Forest Service and county departments of agriculture and livestock in implementing their activities and action plans. 75. There is evidence from the stakeholder workshop and beneficiary assessment that the project has influenced the county governments in adopting CDD approaches in planning and implementing projects, and in scaling up successful interventions from the WKCDD/FM projects. Lessons from this project has also influenced the design of new projects on climate smart agriculture, and inclusive rural growth, as well as other government-led initiatives, programs and projects in different parts of the country. (c) Other Unintended Outcomes and Impacts (positive or negative) 76. Beneficiaries reported that the project s livestock interventions have contributed significantly to improving the nutritional status of children through regular consumption of milk and eggs, and diet diversification through income generated from the sale of milk, eggs and chicken and farm produce. Investments in livestock assets and women s economic empowerment provided credible pathways for improving the nutritional status of children and overall household welfare. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 77. The ICR mission used the Most Significant Change technique in conducting interviews, focus group discussions and beneficiary workshops with members of CIGs and key project stakeholders. Results (Annex 5) revealed that WKCDD/FM has had considerable impacts on household livelihood assets in terms of: (i) Physical capital: ownership of livestock assets (flock sizes have increased with improved breeds and grade animals); housing improvements ( replacing grass thatched housed with iron roofs, constructing with permanent building materials, cemented floors and walls); acquisition of household assets (furniture, beddings, farm tools, etc.); improvement of community infrastructures ( bridges, water supplies, processing facilities, production facilities, and motorbikes for youth in the community have eased transportation). (ii) Human capital: Investment in children s education (secondary and higher education); better nutrition for children through daily consumption of milk and eggs, and diet diversification through income; change in attitudes and perceptions (sense of pride, self-confidence and empowerment); and more knowledge and skills for planning and managing projects. 19

35 (iii) Social capital: enhanced social cohesion, collective action and planning, resolution of disputes; emergence of community-based organizations; social inclusion and social protection for the vulnerable and marginalized people; increased exposure and recognition; and more links with other development organizations that were providing additional services and investments. (iv) Financial Capital: more and regular income from the sale of animal products (poultry, milk, and animals), tree seedlings, motorbike transport services, and other project supported income generating activities; more savings through CIGs, table banking, revolving funds, mobile financial services (MPesa); and increased market linkages with the off-takers for milk (Brookside dairy), and poultry slaughter houses. (v) Natural Capital: tree planting, river bank and spring protection; adoption of sustainable land management practices (terracing, agroforestry, tree planting, erosion control); and protection against flooding. 78. Government officials and non-governmental agencies recognized several examples of positive change that can be attributed to the project. In their assessment (Annex 6), WKCDD/FM performance and achievements were: (i) Highly satisfactory for flood management: the project exceeded targets. No floods have occurred in Bundalang i in the last 5 years, yet floods have occurred in other areas; (ii) Satisfactory for community livelihood and income generating activities: Community livelihood micro-projects on dairy cows, dairy goats, poultry and NRM were the most successful and generating tangible economic benefits to farmers, improving household food security and nutrition; and (iii) Moderately satisfactory for NRM activities: WKCDD/FM has supported the planting of trees and reforestation of many areas, and will have long lasting impacts in the communities. (iv) Moderately unsatisfactory for support to local development activities: Many SLD projects were poorly designed, and lacked feasibility studies and business plans. SLD projects were selected with no stakeholder involvement and community participation. Many SLD projects were not completed or operational at the time of the ICR. 9 (v) Moderately unsatisfactory for malaria interventions: There was no collaboration with the Ministry of Health, which limited the project s capacity to implement and monitor malaria interventions. (vi) Moderately unsatisfactory for project management and implementation support: There were multiple cases of financial malpractices and fraud. Lack of stakeholder involvement in the implementation, monitoring and evaluation; absence of an effective communication and outreach strategy, no effective exit strategy and sustainability plans. 9 At the time of ICR, only 41% of the SLDs (95 out of the 230) were completed and operational. In addition, most completed value addition projects lacked sufficient raw materials to function optimally. For example, only 27% of milk collection and cooling centers were functioning optimally, the animal feeds production lacked raw materials. Most food processing plants did not pass the certification standards from the Kenya Bureau of Standards. 20

36 4. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME Rating: High 79. There are high risks that the expected development outcomes related to lowering poverty incidence, creating wealth and reducing vulnerabilities of the poor will not be maintained or realized. First, CDD projects often benefit from a second phase to consolidate results, scale up success, and move to more empowering and transformative path. There was not a second phase envisaged for WKCDD/FM after the maximum period of eight years for normal Bank operations. Financial malpractices, fraud, corruption and integrity issues prevented the consideration of a second phase that would strengthen CIGs and link them to markets, financial services, and transform them into business opportunities and enterprises. Although the new NARIG project will address these emerging challenges, it is not a continuation or a second phase of WKCDD/FM. 80. Second, although the devolution context in Kenya would provide a favorable environment and political capital to continue with WKCDD/FM interventions, there were no mechanisms in place to promote government ownership and commitment to maintain and continue supporting project investments. Some county governments have demonstrated willingness to continue strengthening and community micro-projects (particularly livestock) and value addition activities, although budgetary constraints might become an impediment in many cases. The necessary arrangements to ensure that the project activities and assets were handed over to county and sub-county governments were not completed at the time of the ICR. 81. Third, there are moderate risks that communities will not maintain and continue with the micro-projects and income generating activities. A number of CIGs have started forming community-based organizations to enhance their access to services and attract support from non-governmental organizations and local government. Many CIGs are reinvesting and scaling up their activities, spreading benefits to non- community members and to vulnerable households. Livestock enterprises and NRM interventions are likely to continue and to generate long lasting impacts beyond project s life. However, well known constraints such as inefficiencies in public extension services, access to markets, access to credits and financial services, will continue to be major bottlenecks for the sustainability and scaling up of community micro-projects. 82. Fourth, there is a high risk that many of the infrastructure and value addition projects will not be maintained and continue to generate benefits beyond the life of this project. Many were not completed and lacked essential components and equipment to make them operational. There was no systematic process to integrate these infrastructures into the county development programs, or to hand them over to the communities or private sector to ensure their operation and maintenance. The absence of feasibility studies and detailed business plans, the lack of private sector participation, and the low financial viability reinforce these uncertainties. 83. Fifth, the development impacts of flood mitigation and NRM are likely to be maintained and continued beyond WKCDD/FM life. Partnership with the Kenyan Meteorological Services Department is likely to ensure continuity of the flood early warning systems and functioning of the Bunyala community radio. However, the absence of formal handing 21

37 over and budgetary constraints might become an impediment to ensure maintenance of flood defence works. 5. ASSESSMENT OF BANK AND BORROWER PERFORMANCE 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 84. The identification, preparation and appraisal of the project produced a quality proposal that was positively reviewed and funded by the Bank. The project was highly relevant to the GoK development priorities and the Bank s Country Assistance Strategy for Kenya. The design missions were conducted by multi-disciplinary teams of experts in relevant areas who consulted widely to ensure that project s objectives, results and approaches were consistent with the priorities, aspirations and needs of local communities in Western Kenya. 85. However, there were significant weaknesses in project design. These include: broad and ambitious PDO and its indicators, absence of an impact pathway linking outputs to intermediate outcomes and the PDO, and complex project design with project components and sub-components that were not clearly linked and sufficiently described to aid effective implementation. Instead, the different components and sub-components functioned as a collection of three separate projects (CDD, SLD and Flood mitigation) rather than as an integrated and holistic project. (b) Quality of Supervision Rating: Moderately Unsatisfactory 86. The Bank s team conducted more frequent, proactive, intensive and extensive implementation supervision missions than usual. The project was managed by a passionate and highly committed Task Team Leader who was based in Kenya. The supervision missions enlisted diverse expertise to address the relevant technical aspects, safeguards of the projects and emerging issues. These missions were effective in providing technical support in developing project operation manuals on PICD, establishment of the social accountability and integrity systems, and development of a robust monitoring and evaluation system with geo-referencing and mapping of project interventions. The Bank facilitated a learning visit to India on successful livelihood and CDD approaches. 87. The Rapid Result Initiative, introduced by the Bank, was credited for many of the successes and performance of the CDD component. The supervision missions produced detailed aide-memoires with specific recommendations and guidance to implement the agreed action plans, which were reviewed in subsequent implementation support missions. There has been proactive action throughout the project period and more intensive FM reviews undertaken than is usual. But their effectiveness was constrained by the national context of financial malpractices, fraud and corruption in Government departments. 88. While supervision by the Bank was effective and satisfactory in many other areas, there were moderate shortcomings in the proactive identification and resolution of project weaknesses and challenges. Kew weaknesses were in the areas of (i) technical and feasibility studies and business plans for SLD projects, (ii) methodological and analytical 22

38 rigor for baseline and household impact evaluation studies, (iii) absence of economic and financial analyses following the selection of community enterprises and SLD after the MTR, (iv) more critical review of project targets, reported achievements and impact pathways, (v) consistency in ratings, and (vi) effective and timely communication on critical decisions such as suspension, project closure, FM reviews, and performance ratings. It is also questioned why the project was not formally suspended due to the widespread malpractices. The MTR was also not taken as an opportunity to refine the PDO. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 89. There were significant shortcomings in project design and in Bank s supervision, particularly the complex design of the project and disconnected project sub-components, and the failure to identify, prevent and take timely action to resolve project implementation weaknesses. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory 90. The Government was highly committed in supporting the design and the implementation of this project, and provided the necessary support and institutional framework in readiness for implementation. The Government took proactive steps to address governance, financial management and accountability issues by establishing and implementing a Governance Action Plan. This plan aimed to strengthen compliance, monitoring systems, and finance management oversight. The National Treasury provided a team of 25 internal auditors to complement the work of the Bank FM team on the audit. 91. The Government procurement and FM system caused frequent and long delays (8 months) in the transfer of funds and procurement of project goods, despite specific recommendations contained in several Aide-Memoires. The absence of an independent and functional multi-stakeholder project steering committee at the national (or regional level) limited the government s ability to provide adequate oversight. There were no mechanisms for integrating WKCDD/FM into country development plans and priorities, and clear direction for project s closure and handing over of project assets. Government communication protocols limited project s ability to communicate more effectively and to reach more stakeholders. 92. More importantly, the Government inability to prevent and sanction corruption, procurement fraud and embezzlement of funds and lack of accountability encouraged recurrence of financial malpractices that caused significant losses and negatively affected project implementation performance and the achievement of PDO. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory 93. The project was implemented by the by the State Department of Special Programmes in the Ministry of Devolution and Planning, Office of the President. The project operated through a national coordination unit in Nairobi, a regional coordination team in Kakamega, Western Kenya and coordination offices in the five counties and ten sub-counties. 23

39 94. The performance of the Implementing Agency was mixed. On one hand, there were detailed operation manuals and project documents for various components. The project established a comprehensive MIS that included innovative tools to geo-reference all project activities and interventions, budgets, status and key contacts. The project was well staffed by committed and competent technical professionals, particularly in the regional coordination unit. On the other hand; project staffing was biased toward administration and finance (79 out of 123) to the expense of technical areas (Annex 2). A major gap in project staffing was the absence of staff with rural infrastructure engineering expertise to coordinate the support to local development sub-component, supervise and ensure quality of proposal reviews, design and implementation of civil works. There was also a very high staff turnover, following project s suspension in The Implementing Agency used CDD mechanistically and in ways that did not allow adequate time and resources to drive a transformative process of social change. The project lacked sufficient investments in community mobilization and capacity building of local communities. The CIGs were too large ( members) to allow greater social cohesion, effective participation and sharing of benefits. This group approach did not learn from experience from other countries (e.g. India but also other countries like Rwanda) of having smaller groups that are then aggregated into higher level organizations and federations to enable more effective procurement of inputs and access to markets. A deeper CDD approach would deliver quality benefits and strengthen the understanding of the conditions and the mechanisms for scaling up successes. 96. A severe shortcoming was the recurrence of material cases of financial malpractices involving project staff as noted in section 2.4. Despite high level of disbursements, FM reviews noted that project funds were not utilized efficiently and effectively. There were cases of manipulation of records and reports as project financial reports materially differed from records and documents (up to 30% of payments were not supported). (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory 97. These were significant shortcomings in both the Government and the implementing agency performance. The Government caused frequent and long delays in release and transfer of funds, and in procurement of project goods and services. The recurrence of financial malpractices, fraud and corruption led to a 30 month informal suspension, high staff turnover and non-funding of project impact evaluation that would have provided credible evidence on project achievement of development objectives and outcomes. 6. LESSONS LEARNED 98. There are seven lessons from this project that have wider applications in informing the design, implementation and evaluation of development projects in Kenya and beyond. 99. First, the project provides considerable evidence that a broad-based CDD initiative is highly relevant to the needs and aspirations of poor rural communities. CDD is an effective approach to bring quality benefits to a large number of people, over a wide geographic area, quickly and sustainably. Three WKCDD/FM interventions would have lasting impacts and would benefit more people beyond the project areas: (i) the introduction of livestock (dairy cows, dairy goats, and poultry) and associated investments provided 24

40 important pathways out of poverty and has the potential to trigger a white revolution similar to the successful dairy sector in Central Kenya; (ii) tree planting (about eight million trees planted) and associated soil and water conservation practices will have long lasting impacts in reversing land degradation and promoting sustainable use of natural resources, and (iii) flood mitigation and early warning systems have saved lives and livelihoods, and would be able to prevent floods for many years, and can be replicated in other areas. In addition to delivering immediate tangible benefits to about one million of people, the livelihood and environmental impacts would be more dramatic and transformative if the project s interventions and development outcomes are sustained Second, the project has demonstrated the benefits of empowering communities to plan development interventions and manage the implementation of local initiatives for income generation, food security and sustainable land management. There were high levels of success for community livelihood micro-projects, while the SLD subcomponent faced significant challenges. The latter did not utilize participatory processes to involve communities in the identification, selection, planning and implementation of infrastructure and value addition investments. They were also subject to corruption, misuse of resources and elite and political capture. It is interesting to note that cases of financial malpractices were uncovered by the community social accountability and integrity mechanisms established by the project. While in their infancy, such mechanisms provide successful examples of citizen engagement in ensuring good governance, better delivery of services, accountability, transparency and integrity Third, design of CDD projects, while taking a holistic and integrated approach, needs to be guided by an explicit theory of change and impact pathways that reduce complexities into manageable components that are clearly aligned to a specific and clear development objective. It is possible in CDD projects to simplify complexities by identifying key leverage points and a set of enablers that need to be activated to achieve more realistic and less ambitious outcomes within a limited period of time. Designing projects with medium time frames to produce early outcomes that can then be scaled up in subsequent phases seem more realistic, than longer timeframes that tend to result in delayed implementation Fourth, the project developed a number of useful tools that can be scaled up in other projects, sectors and countries. The geo-referencing and detailed mapping of project investments and activities is an effective tool for managing, monitoring, reporting, and communicating project activities and achievements. Similarly, the flood early warning system has wider relevance and applications beyond Western Kenya, and can be used for other areas of disaster preparedness and management, climate change resilience, conflict management, etc. The two systems can be improved by integrating modern and dynamic information and communication technologies to ensure their functionality, regular updating, reporting and outreach Fifth, the design and implementation of this project demonstrate the challenge of balancing depth and breadth, selecting between deeper approaches and consolidation in a smaller number of communities to deliver quality benefits, and the thin spread approach across a large number of communities to reach more people which seemed to characterize this project. There were political and other reasons for spreading WKCDD/FM to all administrative and political constituencies to the expense of quality, greater and more sustainable impact. The MTR missed the opportunity to review project targets, deepen the 25

41 CDD process and include more qualitative indicators and process outcomes. The Rapid Results Initiative that would have allowed deeper engagement, produced mixed results. On one hand, it allowed to provide more resources to CIG and to deepen benefits to members; and on the other hand, it imposed major strains to project staff in a race against time. This resulted in weakening the participatory processes to achieve results quickly Sixth, one of the significant shortcomings of WKCDD/FM was its weak evidence base. Baseline and impact studies lacked methodological and analytical robustness to provide credible evidence. While the design of the M&E system was robust, its implementation was limited to performance measurement and reporting at the activity and output levels, but failed to connect outputs to outcomes and results, and linking the multiple project interventions to results. It did not capture process outcomes and qualitative impacts that are more appropriate for CDD interventions. Technical feasibility studies and thematic studies were not conducted for community infrastructure and value addition projects. Economic and financial analyses were not updated after the selection of microprojects and enterprises, and at the MTR that was a major restructuring. There was no impact evaluation at the end of the project. These weaknesses, common to many development projects, could be minimized by forging effective partnerships with reputable program evaluation organizations, research centers and universities Seventh, and finally, market access was a cross-cutting challenge across CIGs as they increased production. Economic and financial analysis revealed a clear pattern between farm models, with a declining rate of return as the distance to the market increased. The ICR found that a number of CIGs were evolving toward business entities, and attempting to create market linkages and links with financial service providers. The results lend credence to the importance of addressing market linkages and inclusive value chains in designing and implementing CDD projects. WKCDD/FM has contributed to establishing a strong foundation to move small-scale farmers up the value chain and engage in wealth creating activities that would create the conditions for rural transformation in Western Kenya. 7. COMMENTS ON ISSUES RAISED BY BORROWER, IMPLEMENTING AGENCIES AND PARTNERS (a) Borrower/implementing agencies 106. Comments received from the borrower on the draft ICR report are included in Annex 7. The Borrower recognized gaps in project design and MTR restructuring, and the challenges of implementing a complex CDD project in a new context. The Borrower s comments largely relate to the results framework assessment. In particular, the project team questioned the ICR justification for reducing the number of persons benefiting from the project from the reported 4.46 million, given the public good nature of many project interventions (SLD, NRM, training, and flood mitigation). However, the overall ICR assessment on this PDO indicator was not changed because of: Multiple counting: Members of CIG were also beneficiaries of SLDs, NRM and malaria activities, which were implemented in the target communities. The M&E system was not designed to filter multiple counting and capture spill overs to non- CIG members within and outside the target communities. A considerable number of SLD sub-projects were not completed or faced operational and management 26

42 challenges. The direct benefits and nature of benefits of NRM activities were not captured by the M&E system. Time lag to impact: Most project activities (SLD, NRM CIGs) were funded in 2014 and 2015, a maximum of two years before the end of the project. There will be some time lag to produce impacts and for these to be sustained. There was also no way to estimate benefits beyond the target communities and the number of actual beneficiaries. Weak evidence base: The absence of an end of project impact assessment, and the weakness of the M&E system to go beyond activities and outputs, made it difficult to provide strong evidence to back project achievement. (b) Cofinanciers None required (c) Other partners and stakeholders None required 27

43 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Estimate Actual/Latest Estimate Components (USD millions) (USD millions) Percentage of Appraisal Component 1: Community Driven development Component 2: Flood management Component 3: Project Implementation Support Total Baseline Cost Physical Contingencies Price Contingencies Total Project Costs Front-end fee PPF Total Financing Required (b) Financing Source of Funds Type of Cofinancing Appraisal Estimate (USD millions) Actual/Latest Estimate (USD millions) Borrower Local Communities International Development Association (IDA) Percentage of Appraisal 10 The latest estimates were provided by the project following project closure. However, IFRs are still pending clearance and will affect the final costs by component. 28

44 (c) Reallocations of IDA credit at the 2012 and 2014 restructuring Category Original allocation XDR (% financed) 2012 Reallocation (% financed) 2014 reallocation (100 % financed) Latest available disbursement 1. Civil Works 6,000,000 (80%) 13,750,000 (100%) 13,414,000 11,170, Good and equipment 5,700,000 (100% 5,730,000 (100%) 6,255,400 4,280,000 foreign 80% local) 3. (a) grants for micro-projects (i) CDD micro-projects (ii) Community Foundation (iii) Youth micro-projects (iv) Malaria micro-projects 7,100,000 (100%) 200,000 (100%) 500,000 (100%) 1,210,000 (100%) 7,140,000 (100%) 200,000 (100%) 500,000 (100%) 1,210,000 (100%) 8,994, , ,000 1,210,000 7,990, ,000 1,200,000 (b) catchment management microprojects 9,200,000 (100%) 4,700,000 (100%) 6,716,000 5,850, Consultants services and audit 7,300,000 (100%) 7,340,000 (100%) 3,806,000 3,570, Training and workshops 6,000,000 (100%) 6,040,000 (100%) 4,506,100 4,430, Incremental Operating Costs: (a) vehicle operations maintenance 1,500,000 (90%) 1,510,000 (100%) 2,047,600 1,310,000 and insurance (b) Other operations and 7,100,000 (60-90%) 6,679,450 (100%) 10,149,900 9,330,000 maintenance 7. Refund of Project Preparation 330, Advance 8. Unallocated 5,670,000 TOTAL AMOUNT 57,800,000 57,800,000 57,800,000 49,520,000 Comments: Increased funds for category 1 - With dropping of component Total final civil works for dykes 2.3, unused funds from disbursement (component 2.3) - from category 4 and 5 used to SDR unallocated category and from a increase allocation for goods million. Final reduced allocation to category & equipment (largely for IFRs awaiting 3(b) catchment management component 1.2); increase approval (component 2.1). Also increased funds for catchment allocations for operating costs to management (comp. 2.1) and support governance action plan. strengthen CDD microprojects IDA finance now 100% (comp. 1.1) 29

45 Annex 2. Outputs by Component Western Kenya Community Driven Development and Flood Mitigation (WKCDD/FM) Project aimed at empowering local communities to engage in wealth creating livelihood activities, lower the incidence of poverty and reduce their vulnerability to adverse outcomes associated with flooding. It was expected that (i) the project would benefit 2,000,000 people in the target areas, of which 34% women; (ii) increase beneficiary s income by 25%; and (iii) reduce the proportion of households affected by floods to 5% from the initial 25%. To achieve these objectives, the project had three major components: (i) Community Driven Development, (ii) Flood Mitigation; and (iii) Implementation Support. The key achievements of the project can be summarized in the poster below. Figure 1: Key achievements of WKCDD/FM at a glance Component 1: Community Driven Development (US$43.6 million funded by International Development Association [IDA]) The objective of this component was to empower rural communities to manage their own development in a sustainable and socially inclusive manner. The component consisted of two sub-components: (i) Prioritized Investments and Capacity Building at Community Level and (ii) Local Level Development Support 30

46 Subcomponent 1.1: Prioritized Investments and Capacity Building This component supported livelihood-based micro-projects and interventions aimed at improving delivery of essential services to enable communities diversify their economic activities and access services. It was expected that the communities will be trained in Participatory Integrated Community Development (PICD) to build their capacity to select livelihood micro-projects and income generating activities from a wide range of potential viable enterprises such as farming, goat keeping, chicken rearing, craft making and services. Micro-grants were provided to common interest groups (CIGs) rather than individuals so as to spread the benefits and facilitate learning and collective action. Communities were required to make cash or in kind contributions. This sub-component supported community micro-projects, with an average value of US$15,000 each. The key outputs of this sub-component were largely achieved, considerably exceeding baseline targets. They include: (i) Poverty targeting: The Project covered 631 sub-locations in five counties (Bungoma, Busia, Kakamega, Siaya and Vihiga) in Western Kenya. The original number of target communities for CDD interventions was 480 and but this was increased to 631 sublocations after Medium Term Review (MTR) in June This new target was achieved. This represented 70.5 % of the 895 sub-locations in the region. The targeted sub-locations were selected based on poverty indices as determined by the small areas poverty mapping by Kenya National Bureau of Statistics. A sub-location is the lowest administrative unit, made of several villages, with a total population of approximately 6,000 to 10,000 people. (ii) Micro-project grants: The project provided grants to 2,231 community micro-projects, reaching an estimated 532,716 men and 671,777 women. Project stakeholders, local communities, government officers and non-governmental organizations perceived WKCDD/FM as highly relevant and effective in demonstrating that transferring funds and decision making authority directly to the communities is effective and generate benefits to the communities. A total of 414 Youth micro-projects were funded to benefit 13,743 young men and 15,291 young women, including 8,629 young people from vulnerable and marginalized groups (VMGs). (iii) Community capacity building: The project implemented PICD approaches that facilitated the establishment and training of community-level institutions on various areas of participatory planning, community visioning, project management, monitoring and implementation. These include 631 Community Driven Development Committees (CDDC); 2,274 Common Interest Groups (CIG) and 2,149 Project Management Committees (PMC). The project trained 380 Pool Mobile Advisory Teams (MAT) selected from the communities as local facilitators to implement the PICD process and provide project implementation support at the community level. As a result of the PICD training, 2,265 Community Action Plans (CAP) and 117 Youth Action Plans (YAP) were developed, funded and implemented. (iv) Citizen engagement and social accountability: Project results indicate that community participation in decision making increased from 39.4% at baseline to 71% at the end of the project. This was facilitated by the different CDDCs, PMCs and CIGs established through the PICD process and supported by the Pool MATs. These community 31

47 (v) institutions were functioning and were playing an important and critical role in delivering services to local communities and representing their interests. Men and women in WKCDD/FM project area show more confidence, knowledge and capacity to plan and manage their local development. Building livelihood assets: About 20,667 households from 288 CIGs have benefited from 8,102 dairy cows (5854 supplied by the project and the remaining are offspring). The number of dairy goats has increased from 6,378 to 10,697 benefiting 12,143 households. Poultry flock size increased from 119,070 to 523,569 benefiting 109, 227 households. Beneficiary assessment (Annex 3) confirmed livestock enterprises have generated numerous benefits that are spreading beyond the receiving households. The project reported that over 140,000 households benefited from livestock enterprises: 20,667 households received pregnant heifers, 12,143 households received dairy goats and 109,927 households had poultry enterprises. Many of these households have increased production of milk, eggs and manure. Livestock play a key role in both pathways into and out of poverty 11. Most households that have escaped poverty in Western Kenya diversified their on-farm incomes through livestock, ranging from poultry and small ruminants to dairy animals. Given that the cost of large animals is typically beyond the means of the poorest households, projects that invest in building livestock assets help poor households lift themselves out of poverty. In addition to livestock acquisitions, WKCDD/FM invested in value addition infrastructures (artificial insemination, milk collection and cooling centers, feed manufacturing) that open up more opportunities for more households to benefit from livestock even more. The potential for dairy enterprises would be much larger if the related SLD investments are sustained and intensified. These could trigger a white revolution in Western Kenya similar to the dairy sector in Central Kenya. (vi) Building social capital: PICD and other technical training provided by the project were effective in transforming the community members mind-set and building a strong sense of ownership. Many community social institutions have been strengthened with effective governance mechanisms and capacity to establish linkages and negotiate with government, research institutions, private sector and other communities to complement their investments and activities beyond the support provided by WKCDD/FM project. Approximately 23% of the CDDC have received funding from county government to scale up their initiatives. About 21% of community action plans have been implemented by other agencies on areas not supported by the project. (vii) Social inclusion and social protection: A significant outcome of WKCDD/FM project is in the area of social inclusion and community-based social protection. Most of the community institutions developed local mechanisms to ensure the inclusion of vulnerable and marginalized groups who comprised 23% membership of common interest groups. There were mechanisms for sharing the benefits (milk, chicken, goats, income, etc.) with people with disabilities, widows, and orphans. They It is reported that the project has reached members of vulnerable and marginalized groups, who have benefited from a variety of project interventions. Lessons and best practices from this project can be scaled up and replicated in other projects and government initiatives. 11 P. Kristjanson, A. Krishna, M. Radeny, W. Nindo. Pathways out of Poverty in Western Kenya and the Role of Livestock 32

48 (viii) Malaria Interventions: The implementation of malaria interventions was slow to start given the difficulties in collaboration with the Ministry of Health. At MTR, it was recommended to focus resources on community capacity building through information and communication support for behavior change given its potential for achieving faster impact. The project provided financial resources to local communities to conduct information, communication and behavior change campaigns for malaria prevention and use of ITN. The funds were used to acquire branded T-shirts, caps, umbrellas, clothing, tents and chairs that were printed with messages to promote the use of insecticides treated nets. At project s end, a total of 128 malaria intervention teams were trained to support the implementation of 414 community malaria interventions that benefited a total of 117, 215 men and 159,176 women. Project results indicate that the proportion of the population of under five children who slept under ITNs increased from 31.9% to 63% at the end of the project. Similarly, the proportion of pregnant women who slept under ITNs increased from 33.5% to 75% at the end of the project. While these increases are impressive achievements, they are comparable to the results of the 2015 Kenya Malaria Indicator Survey 12 that showed increases in net usage among pregnant women and under 5 children over time in malaria endemic areas of Kenya. The use of ITN among pregnant women was 50 percent in 2010 compared with 79 percent in The percentage of children who slept under ITN increased from 42% in 2010 to 73% in (ix) Women economic empowerment. The project reached 54% of women who were fully participating in the CIGs and other rural institutions, exceeding the target of 34%. There was substantive qualitative evidence of enhancing gender equality and the economic empowerment of women, improvement in rural women s access to resources and assets, participation and leadership in rural institutions, and increase in income as illustrated in Box 1 below. (x) Social accountability: The project has established Social Audit and Integrity committees, a nascent form of social accountability that could be strengthened as an effective mechanism for citizen engagement. These committees were effective whistle blowers that attracted attention on integrity and financial and procurement malpractices that the more expensive fiduciary audit firms could not unveil. The events and activities undertaken to promote social accountability in the project included complaint handling and redress in the target communities by SAICs, release of grant cheques in public meetings, disclosure of project information on notice boards and sign posts in the project office, national government offices and in target communities and geo-referencing and mapping of funded projects. 12 National Malaria Control Programme (NMCP), Kenya National Bureau of Statistics (KNBS), and ICF International Kenya Malaria Indicator Survey Nairobi, Kenya, and Rockville, Maryland, USA: NMCP, KNBS, and ICF International. 33

49 Box 1: Women Economic Empowerment in WKCDD/FM project Margaret Aluwale, a 42 years old married woman with six children and a retiree husband, is a member of the Ebutanyi Common Interest Group. This group of 200 members (130 women and 70 men) was established in 2012 by WKCDD/FM project following training in Participatory Integrated Community Development. The group formed a CIG that received 49 dairy goats, Ksh 500,000 for planting fodder trees and implementing other natural resources management activities, and a grant of Ksh 300,000 for malaria awareness and promotion of the use of lasting insecticide treated nets. The CIG received a second Impact funding to purchase 81 additional dairy goats. The CIG now has 317 dairy goats, including 187 kids. The CIG is registered with the Dairy Goat Association of Kenya which provides veterinary services, registration and record keeping of pedigrees, training on dairy goat management, cross breeding, and marketing services. Their group has received several awards and has attracted other development organizations including One Acre Fund the International Centre for Insect Pathology and Ecology, Rural Outreach Programme, and County government that provide various services and training on crop and animal husbandry practices. Margaret is one of the first beneficiaries of dairy goats. She now owns 6 dairy goats, after passing on three goats to other community members. Her three goats are lactating and produce 2-3 liters of milk every day. In addition to daily consumption of milk by her children, she sells about 1.2 liters of milk to her neighbours at Ksh 100. The money (about Ksh 3000 per month) is saved in her M-Pesa account. Part of this money is used for household expenses and children school needs. She also pays Ksh 400 as monthly contribution to group savings, and Ksh 200 for veterinary services to keep her goat healthy and increase milk production. The remaining part is shared with her husband, in exchange for his cooperation in the management and feeding of the goats, and helping with other chores. The goats keep her husband busy rather than being idle. The husband has mobilized some men to expand housing for the goats. The most significant change has been her ability to pay for college education for her daughter. She has also sold two goats for Ksh 30,000 through the Dairy Goat Association of Kenya. The money was used to pay for school fees for her daughter who is now attending college. Her goats are her bank account as she is able to sell two goats every year for Ksh 30,000 to pay for her six daughter college education and education expenses for her other six children. Her household health has improved significantly. Her family members have daily access to milk which is believed to provide numerous health benefits and boost the immune system. The sale of milk provides her with regular amount of money under her control, that she uses to purchase food and pay for other household needs, and small household assets. Her plan is to buy dairy cows, a sign of achievement in the Luhya culture, but also a stable source of regular income. She feels more confident and empowered: She is respected in her community, she sees herself as a change agent who has contributed to the change of attitude towards consumption of goat milk., She has acquired more knowledge on farming and animal husbandry and is frequently as a resource person to train other farmers in the community. She is proud to be a member of a group that cares for the vulnerable in the community: people with disabilities, widows and orphans. The CIG has constructed a house for a disabled person and renovated two houses for two widows who have regained their dignity and are now able to generate small amount of money for their daily needs. Subcomponent 1.2. Support to Local Level Development This sub-component aimed at enhancing the capacity of local authorities to plan and implement investments in community infrastructures in order to diversify and add value to community economic activities, and facilitate access to essential services. WKCDD/FM funded two categories of SLD projects: community infrastructures and value addition projects. Infrastructure services or public goods SLDs included foot bridges, domestic water supply, small-scale irrigation schemes, artisanal production workshops, workshops for people with disabilities, youth training centers, open markets, market stalls, etc. WKCDD/FM funded

50 SLD on infrastructure and public goods benefiting a total of 582,501 men and 671,226 women, well above the target of 400,000 people. Figure 2: WKCDD/FM investments in rural infrastructure projects Value addition infrastructures included milk collection and cooling units, animal feed production units, food processing lines, poultry production and chick hatcheries, modern slaughter house, coffee processing infrastructures, etc. WKCDD/FM supported 128 SLD projects that benefited a total of 645,015 people (338,432 women and 306,583 women, well beyond the baseline values of 100,000 people. Figure 3: WKCDD/FM investments in value addition infrastructures 35

51 The implementation of this sub-component faced several challenges. Contrary to WKCDD/FM approach of community-driven development, the identification, selection and planning of SLDs were done by the sub-county and county steering committees, often with no active participation of the beneficiary communities. There were no appropriate mechanisms to link investments with county development plans and on-going initiatives. Only 61% of SLD projects included CDDCs/communities in planning, implementation and monitoring. This was well below the target of 80%. The funding and implementation of SLD projects suffered from government bureaucratic and procurement procedures which often lacked integrity and transparency. They were material cases of embezzlement, fraud and corruption. At the time of ICR, only 95 out of the 230 SLDs were completed and operational, 55 were completed but not functional, 59 were ongoing and two have not commenced. In addition, most completed value addition projects lacked sufficient raw materials to function optimally. For example, only 27% of milk collection and cooling centers were functioning optimally, the animal feeds production lacked raw materials, and most food processing plants did not pass the certification standards from the Kenya Bureau of Standards. A significant weakness in the identification, selection and implementation of SLD projects was the lack of feasibility studies and detailed business plans. Most SLD did not have As-Build Drawings and Operation and Maintenance manuals. The absence of qualified engineers and technical staff in the project coordination units was another major weakness. Another significant weakness was the lack of crowding and convergence of SLD projects. These were fragmented and dispersed, lacking economies of scope and scale. They were not linked to specific value chains or existing investments by public or private sector businesses. Component 2: Flood Mitigation (US$15.4 million funded by IDA) A key objective of WKCDD/FM was to reduce rural communities vulnerability to adverse outcomes associated with recurrent flooding. This component aimed at addressing the root causes of flooding in the region by: (a) improving management of the upper catchment through community-based natural resources management in the fragile upper catchments of the Nzoia; (b) exploring opportunities for flood management structures with multipurpose use in the middle catchment; (c) improving flood mitigation structures in the lower catchment, and (d) establishing an effective, community based flood early warning system, linking international and national information systems with local communities. The project exceeded the target of reducing the proportion of households affected by floods to 5% from the baseline values of 25%. Previously, flooding was occurring annually and caused immense costs to human lives and livelihoods. For example, in 2008, the floods displaced about 21,000 people whose homes and farms were submerged and crops and livestock swept away. Flooding occurred on 3 rd Dec 2011 but did not cause any fatalities in Bundalang i plains as communities were warned early enough though flood early warning system and community radio established by the Project. In other parts of Kenya, floods continued to cause damages. In 2013, the Kenya Flash Flooding Update reported that at least 35 people died and 200,000 people were displaced from their homes as a result of flooding and inadequate flood mitigation 36

52 measures. The 2015 rains resulted in 112 deaths and affected approximately 240,726 people 13. WKCDD/FM direct interventions have significantly reduced the frequency of flooding in Budalang i flood plain, and will have far reaching impacts as floods in the region are expected to increase in frequency and intensity. At the end of the project, it was reported that despite same amount and intensity of rainfall in the relevant catchments, flooding have not occurred in the floodplains of Nzoia River, while it continued in other areas. This was a stellar success of WKCDD/FM that will have far reaching impacts. Such results can be scaled up beyond the project areas and beyond Kenya as floods in the region are expected to increase in frequency and intensity. Sub-component 2.1. Catchment management The project supported various NRM interventions for micro-catchment protection, including: construction of soil and water conservation structures (terraces, trash lines and grass strips); river banks protection; springs protection; agroforestry; tree planting; tree nursery establishment and management, and agroforestry. The project funded 1,117 NRM activities and trained 1,105 groups that raised and planted 10,709,371 tree seedlings, of which about 7.8 million survived. These groups also rehabilitated 1, 679 acres of land, well below the target of over 30,000 acres. They established 38 kms of soil conservation structures (terraces, grass strips and trash lines) with an overall 40% achievement compared to the baseline targets. Through support to the Water Resource Management Authority, 74 Water Resources User Associations (WRUAs) out of 106 targeted, were established in selected project sites considered as hot spots for erosion and land degradation. These WRUAs involved about 1,148,770 people (529,613 men and 610,333 women) who implemented various activities to protect 279 springs (out of 400 targeted) and improve access to quality and quantity of water for domestic use. The WRUAs also implemented micro-catchment protection activities that resulted in a significant reduction of sediment load in the rivers in the targeted micro catchments. Sediment loads reduced by 23% against a target of 5% from 180 tons/day in 2008 to 139 tons/day in Sub-component 2.2. Multi-purpose flood management At the recommendation of the Government of Kenya, the rehabilitation of 36kms of dykes to improve flood management structures in the lower catchment and the design of multi-purpose dams in the middle catchment were handed over to the Water Security and Climate Resilience project. The only activity implemented with WKCDD/FM training was river training. This activity was completed on three sections of river Nzoia of total length 1.3 km to increase the discharge capacity of the river. WKCDD also funded the rehabilitation and repairs of breached dyke sections at Makunda and Mukhobola in Since completion of these flood protection structures only one flooding event happened on December 3, 2011, the last day of rainfall season. The dykes had held for the entire rainfall period, which had the highest amount of rainfall since Opondo, D.O. (2013). Loss and damage from flooding in Budalangi District, Western Kenya. Loss and Damage in Vulnerable Countries Initiative, case study report. Bonn: United Nations University Institute for Environment and Human Security. 37

53 Sub-component 2.3. Flood Early Warning Systems The project developed and implemented an innovative and highly impactful flood early warning system. The system is complete with the installation of state-of-the art flood prediction equipment, production and dissemination of daily flood bulletins to a large number of influential stakeholders. The system also uses a community radio to relay information to rural communities in their local language. WKCDD/FM collaborated with the Kenya Meteorological Services Department to establish and implement the flood early warning, and to produced and disseminate daily flood update bulletins. These bulletins are used by various stakeholders, including the County Disaster Management Committee, government departments and humanitarian agencies to make informed decisions on flood disaster preparedness and response. The Kenya Meteorological Services Department received funding from WKCDD/FM to establish and run a community radio (Bulala FM) to broadcast flood update bulletins in local language. Considering that only 63% of rural households owned a radio, WKCDD/FM distributed 300 manually rechargeable radios to poor households and community groups to ensure that the daily flood updates reach vulnerable households and the entire community. In order to build disaster-resilient communities, WKCDD/FM formed a community based Disaster Risk Reduction Extension Service Provider group comprising of 40 members. Members of this group were supported to undertake a learning visit to India on experiences with community-based disaster risk management. This group conducted a participatory hazard and vulnerability mapping of the flood plain area, and developed strategies for rapid response in case of floods. The Group has networked with international humanitarian organizations such as the United Nation Office for the Coordination for Humanitarian Affairs, World Vision, Map Action that have used them as trainers of trainers in other communities. Component 3: Implementation Support (US$17.4 million funded by IDA) The objectives of this component were to facilitate identification and development of new opportunities for economic growth in the region, as well as development of M&E system for project outputs and outcomes. This component comprised: (i) Support to policy analysis, advocacy and local development (US$1.1 million funded by IDA); and (ii) Management, monitoring, and evaluation (US$14.7 million funded by IDA) Sub-Component 3.1: Support to policy analysis, advocacy and local development The sub-component was designed to support policy advocacy, engagement with civil society organizations, action research and market assessments for the identification and development of new opportunities for livelihood improvement and economic growth. The achievements of this component were below targets. The project did not invest in action research, market assessments and other thematic studies to inform the identification and development of new opportunities for livelihood improvement and economic growth. Baseline and household impact studies lacked the necessary rigor to generate credible findings to inform project decisions and interventions. The project did not fully utilize existing studies, publications and knowledge from research organizations and universities such as the Kenya Agriculture and Livestock Research Organisation, Maseno University and Masinde Muliro University of Science and Technology that are all present in Western Kenya. Students 38

54 from Maseno University were involved for short term attachment to support CIGs and CDDCs in record keeping and enterprise management. The project did not provide adequate resources for the development and implementation of a proactive communication strategy. The project website was not dynamic and updated regularly. There was no system to generate information, consolidate and share project outcome stories in a robust and consistent manner. The project missed opportunities to fully utilize social media platforms to disseminate project achievements to various stakeholders groups beyond the target communities. These include YouTube account for posting short videos, facebook pages, twitter and interactive websites. It is reported that the project conducted three fora with civil society organizations, and held 18 meetings with project stakeholders out of the 24 planned. However, many policy engagement opportunities were not captured by the monitoring and evaluation systems and were not therefore reported. These include: presidential visits to the project sites, engagement with national leaders (Senators, Members of Parliament, Ministers) and county governments visits. Sub-component 3.2. Management, monitoring, and evaluation (US$14.7 million funded by IDA) This Sub-Component focuses on establishment and running of key coordination mechanisms that include management and institutional structures, capacity building (staffing, equipment) and establishment of a sound Monitoring and Evaluation System. The project had a total of 123 staff (Figure 4). However, project staffing was dominated by administrative support staff in the various units (53). These include 16 administrative staff based in the National Project Coordination Unit in Nairobi. The regional coordination Unit was established after the Medium Term Review in It was composed of 10 technical and administrative staff. Project technical field staff comprised 6 thematic coordinators (CDD, SLD, NRM, M&E, Information, Education and Communication, and Data analyst), 7 county and subcounty coordinators and 30 lead Mobile Advisory Teams. With the introduction of devolution, one level of project management was introduced (county office) leading to many district coordinators (sub-county) to double as county coordinators to perform administrative and management functions, without the required capacity and training. Figure 4: Project staffing composition and profile 39

55 An important gap in project staffing was the relative absence of staff with rural infrastructure engineering expertise to coordinate the support to local development sub-component, supervise and ensure quality of proposal reviews, design and implementation of civil works. As a result, many projects are of low standards and face operational and management problems. Most staff were social workers and lacked technical expertise to supervise project implementation. Many lacked effective facilitation skills and community development experience, and became quickly compromised with integrity and financial malpractices. The new recruited staff did not benefit from effective induction and intensive training that was required to implement CDD. The project suffered from a very high staff turnover, following the suspension in 2009 and the restructuring of the project in Project Management and Implementation Table 2 below shows timelines for project implementation. Most project activities occurred in years 6 and 7 of the project ( ) after the lifting of the suspension and the MTR in June There were delays in the project inception phase due to post-election violence, insecurity and political instability that prevented the newly recruited staff to work in rural communities. The first set of CDCs were established in October 2008 through Further delays were caused by the informal project suspension that lasted about 30 months from September 2009 to June The Government of Kenya suspended project activities following allegations of corruption and audit that found material cases of financial malpractices. The Bank did not formally suspend the project although disbursement of funds and all procurements were suspended during that period. Most project staff were dismissed or left, activities were suspended and some CIGs formed collapsed. Table 2 shows that most CIGs were formed were in 2013 and 2014, three to two years before project completion. More than 680 CIGs were formed in the last year of the project. Similarly, most SLD projects were funded in 2014, while NRM and malaria interventions peaked in 2015, the last year of the project. The selection of investment and income generating activities was rushed and did not allow for more technical support in term of understanding of costs and benefits, entrepreneurship and technical skills, and linkages to market and technical support. Table 2: Timelines for project interventions Year Year Year Year Year ) Year Year Year Extension 2015* Total 2016 PICD Training CAP funded YAP funded Malaria interventions

56 CIGs Supported SLD projects NRM Projects WRUA Projects *Up scaling or second/third tranche grants disbursement Several factors affected the effective implementation and the outcomes of the project. These include: Figure 5: Project timelines and key events (i) Post-Election Violence: The inception phase was affected by post-election violence that erupted in Kenya following the disputed presidential elections of Most project field staff did not take up their positions until March 2008, due to violence, insecurity and political instability. The Mont Elgon region was more volatile. The first training event on participatory integrated community development (PICD) tools and approaches was organized in May The first set of community action plans were developed in June 2008 and funded in October (ii) Project Suspension: One year later, in September 2009, the Government of Kenya suspended the project for about 30 months, following an audit that confirmed material cases of financial and fiduciary malpractices. The implicated project staff were dismissed, while others left during the long suspension period. At the time of ICR, only two people from the initial cohort were still in the coordination team. A number of the 41

57 first generation community interest groups collapsed. However, many continued with their activities and survived the suspension. (iii)2012. Mid-term Review: Following the lifting of the suspension, a major restructuring took place at the MTR, as described in section 1.7. A revamped result framework was introduced with substantial revisions of PDO indicators, intermediate outcomes, indicators and targets. The MTR also expanded social accountability mechanisms. (iv) Rapid Results Initiative: To regain the momentum lost during the suspension period, the project adopted a Rapid Result Initiative in While this initiative was credited for most of the project achievements, it became a race against time with considerable pressure to spend and meet spending targets in a short period of time. This compromised the quality of implementation and encourage corruption, procurement fraud and embezzlement of project funds. (v) Project extension: A nine month no cost extension was approved in 2015 (from June 30, 2015 to March 31, 2016) to complete project activities and conduct impact assessment. However, new allegations of financial malpractices and fraud emerged, leading to more investigations and in-depth reviews of financial management, that preoccupied project staff instead of implementing project exit strategies. Funding was suspended, and the impact assessment and thematic studies were not conducted. (vi) Project closure and exit strategy: Recommendations to put in place sustainability measures and effective handing over of project to local government were not implemented, partly due to the investigations and financial reviews that consumed project coordination time. Monitoring and Evaluation The project had an elaborate result framework, with detailed indicators, baseline values and targets. The project design provided for a robust monitoring and evaluation framework, complete with evaluation designs that would account for before and after differences, and with and without project impacts, with single and double difference comparisons. The design anticipated the recruitment of an experienced evaluation firm to ensure the independence and objectivity of the impact evaluation. The M&E system had data collection and reporting to track indicators at the household and CIG levels, and that were linked to project intermediate outcomes and PDO indicators. The restructuring at MTR resulted into substantive changes of the result framework to make it more specific based on baseline survey results and project context. The original five PDO results indicators were revised and consolidated into three broad indicators related to income, number of beneficiaries and proportion of households affected by floods. The intermediate results indicators were increased from 22 to 27: 15 new indicators were introduced, 10 indicators were dropped and 8 indicators were revised. Only four original indicators were maintained. Evaluation experts from Cornell University and Bank s M&E experts were involved in setting up a robust M&E system that included GIS tools for geo-referencing and mapping project interventions. Table 3: Result Framework Restructuring Indicators PDO level Results No. of Results Project Design Number of Results Dropped Number of Results Revised 42 Number of Results Continued Number of New Results Introduced Total No. of Current Results

58 Intermediate Results Total Sub-Component Total However, the revised indicators were not formulated to adequately measure achievement of the PDO. For example, percentage increase in income is not an explicit and specific measure of empowerment of local communities to engage in wealth creating activities, or reduction of incidence of poverty. The number of people benefiting from the project does not measure reduction in the incidence of poverty. Similarly, the proportion of households affected by floods does not adequately measure reduction in the vulnerability of the poor to adverse outcomes associated with recurrent flooding. The project has been very successful in geo-referencing all investments under the Project. A total of 3793 Community sub-projects were georeferenced (see map at 9e6) Figure 6: GIS map of project locations 43

59 However, due to high turnover of project M&E coordinators, there were major shortcomings in the implementation and utilization of the M&E system. The M&E system was limited to routine administrative reporting, rather than for informing decisions, making corrective action and communicating with project stakeholders. Baseline and household impact studies lacked rigour and credibility in their design, data collection, data analysis and interpretation of findings. There was no external validation of findings. The M&E system put more emphasis on predetermined quantitative indicators. There was no systematic process to capture and document qualitative and process outcomes of CDD, such as empowerment, social capital, gender dynamics, accountability and social development. WKCDD/FM established complaint handling mechanisms in 78 communities. A total of 1,115 complaints were received and 1,082 of them resolved (97 %). Most of these complaints were related to lack of information (536), dissatisfaction with service delivery (439). However, there were 140 complaints related to corruption and integrity. The project achieved a 100% disclosure of 630 CAPs, 138 YAPs and 68 Micro-catchment action plans Environmental and Social Safeguards There was a high level of compliance with environmental and social safeguards requirements. The project conducted a total of 223 environmental impact assessment (EIA) and environmental management plans (EMP) out of the 225 recommended for SLD projects. The screening and assessment of subprojects for environmental and social impacts was satisfactory and in full compliance with the Bank guidelines. WKCDD/FM had been classified as category B. The following safeguards were triggered: Environmental Assessment (OP 4.01), Natural Habitats (OP 4.04), Forests (OP 4.36), Physical Cultural Resources (OP 4.1 l), Indigenous Peoples (OP 4. 10), Involuntary Resettlement (OP 4.12) and Projects on International Waterways (OP 7.5). All the approved micro-projects were screened for environmental and social risks. In total, 2,037 CDD micro-projects, 1117 NRM Projects and 230 SLD Projects have been screened. The project achieved 100% compliance with EIA & environmental audits by conducting all the 8 recommended EIA, and screened all the 3384 community livelihoods projects for environmental compliance. The project conducted two Annual Environmental Performance audit at the beginning of the project in 2008/2009 and toward the end in 2015/16 by a team of experts from Masinde Muliro University of Science and Technology to assess Project compliance to environmental and social safeguards. 44

60 Annex 3. Economic and Financial Analysis This Annex assesses the efficiency of the Western Kenya Community Driven Development and Flood Mitigation Project (WKCDD/FM) by providing an ex-post Economic and Financial Analysis (EFA) of related investments for 2,000,000 primary beneficiaries, across 631 communities. The EFA aims to determine whether arrangements for cost recovery are equitable and cost efficient, both for on-farm and off-farm investments of the project related to natural resource management and agricultural productivity improvements and improved access to markets and financial resources, while considering changes to the project during implementation. A key indicator to determine efficiency is the Economic Internal Rate of Return (EIRR) and Net Present Value NPV) at crop, farm, project and program level. The analysis is carried out in three stages: (i) grouping of representative farm and enterprise models (financial); (ii) economic analysis at the Project level (all models); and (iii) sensitivity analysis to test the sustainability of results. The Project at appraisal highlighted environmental pressures on a degrading resource base as a primary concern, acting as a starting point for upstream investment activities in micro catchment areas that complemented downstream activities in livelihood development at community level, especially with regards to flood mitigation in the Nzoia and Yala River Basins. Community driven investments would in turn, it was assumed, offer a broad based approach to investments in communities for resilient and sustainable management of livelihood and income generating activities. Data Sources and General Assumptions. Sources: The data used in this analysis have been collected from various sources, including and in particular the PCU, field visit observations, stakeholder workshops, farmer beneficiary interviews and a two-day workshop with all 10 county and sub-county field coordinators; held in Busia and Bungoma. No endline survey or impact survey was conducted for the ICRR to benefit from possible survey data, prior to the mission. Exchange Rate: The official exchange rate used in the analysis is KSH = USD 1.00 (average rate for May 2016). Home Consumption. Most of the increased production in the with-project situation is marketed through commercial channels. However, a considerable portion of the increased production is consumed by the farm family itself. Even though home consumed production contributes to program objectives in terms of improved nutrition at the household level, in the financial analysis it has been conservatively assumed that home consumed quantities of production are deducted from the quantities sold. In the economic analysis, the home-consumed production has been included in the benefits calculations, given the assumption that home consumption would increase national income just as much as if it had been sold in the market. Prices: Input and output prices are also in constant terms of Financial prices were collected during the field visit in May 2016 and their shadow economic values were calculated by using a standard conversion factor. The prices used in the financial analysis represent estimates of the average seasonal prices of commodities, which are within the same range in all counties. Where appropriate price variations are used to reflect differences in production. 45

61 Cost of labour: The average wage for agricultural unskilled labour in the Project area is KSH 200 per day. Given the significant unemployment rate (40%) in these rural areas, the economic value (shadow-price) of labour is estimated using a conversion factor of 0.6. Labour is provided partly by the family and partly as hired temporary or seasonal labour. Valuation of Family Labour. In order to make sure farmers are able to cover the cost of incremental labour needed in the with-project activities (if they are unable to work for the reasons of health or lack of family members and therefore they ll need to use hired labour), the farm investment analysis (through crop and activity budgets) includes the value of family labour estimated at its opportunity cost (the benefit the family must forgo to participate in the program). For the purpose of the analysis, the cost of family labour is taken to be what the family could earn in its next most remunerative alternative without the program (the standard salary for agricultural unskilled labour). Program Area. The program area covers a total of 10 counties in the western province of Kenya. Post-Investment No endline assessment or impact survey was conducted prior to the ICR mission. While it is in no way a statistical model, the economic models take average prices and production models common in the target area as a means to define and capture income and cost streams that relate to specific crops and enterprises. Key indicators to this end are the Net Present Value, Internal Rate of Return, the Benefit Cost Ratio and Switching Values. In general, the data needs to be viewed with caution and can only be seen as indicative when comparing the financial results among various crops and livestock activities due to the small sample size and the fact that different persons with social development backgrounds collected the data when in the field. (i) CDD Micro Projects. The financial analysis at appraisal was linked closely with NRM activities to underpin the importance of sustaining the natural resource base at the smallscale farm level. To this end woodlots, medicinal plants and indigenous vegetables were selected as exemplary activities with intercropping of trees for medicinal plants to climb and prosper. However, delays in the project and time taken for maturity of trees have meant that such benefits were not readily captured by the project during implementation. The demand-driven nature of the CDD activities led to the selection of a more diverse range of activities by communities in the targeted areas. Not all overlapped with those identified at appraisal, only one: black knightshade. The methodology used to guide the selection of activities at appraisal was not adopted during implementation, with no data collection on production related activities. Project Coordinators admitted to not having seen a crop budget before the ICR mission. The absence and lack of influence of financial analysis on the choice of crops by communities and types of intervention by the project teams is a strong possibility. What is clear is that no financial analysis of financial returns was used to guide communities on the selection of investments. (ii) Community Interest Groups. The CIG was an important entity in organizing communities to receive and manage resources of the CDD Micro Projects. Grants of up to USD 15,000 were made available to CIGs, of which a proportion was used for nonproductive purposes. Counterpart contributions of circa 30% were secured from communities for livelihood activities and 10% for NRM activities. CIGs were 46

62 instrumental at organizing communities to sustainably engage in collective economic activities, in for instance dairy goats, while maintaining group discipline and cohesion. Some groups moved to offer other services to group members such as table banking. In total 2,216 CIGs were formed as a result of the project, some with up to 600 members. Financial Analysis. In collaboration with project and field teams the mission identified 10 illustrative crop models as the most common activities among communities to capture as many of the benefits as possible at the farm level. A range of fruit and local vegetable were selected for financial analysis, including: banana, beans, black knightshade, coffee, cassava, kale, mango, rice, sweet potato and tomato. While these are exemplary samples, they no way capture all of the activities selected by target communities. The analysis covers a limited number of farmers benefiting from CDD led investments in crop and livestock production, given time and resource constraints. (i) Beans. The common bean is both a dietary supplement with often a readily accessible local market for sale of the produce. For common beans the NPV is USD 2,713, the BCR is 2.96, and switching values are -66% for benefits and 196% for costs. (ii) Black Knightshade and Kale. Collectively these green leaved vegetables are an important dietary supplement, while offering short maturity periods and high economic returns to local farmers. Limitations of how much can comprise of the diet often means it is grown on the fringes of arable land in farm holdings. For black knightshade the NPV is USD 1,524, the BCR is 2.46, and switching values are -59% for benefits and 146% for production costs. For kale the NPV is USD 7,196, the BCR is 6.62, and switching values are -85% for benefits and 562% for production costs. (iii) Cassava. Able to grow on the most marginal of lands, cassava is widely grown within Kenya, is a huge source of carbohydrates, and is a staple part of the diet. The model reflects the increased use of organic manure from livestock within the project area, contributing to a three-fold increase in yields. While the amount of inputs has increased, yields see a dramatic increase with improvements in the return on family labour, given the use of organic manure from the homestead, along with overall income. The NPV for cassava is USD 1,193, the BCR is 1.33, and switching values are -25 for benefits and 33% for production costs. (iv) Coffee. The Mount Elgon region is well suited to the growth of coffee, with its consistent low highs in temperature of circa 19 o C even in the summer and high annual precipitation rates of 1,000 mm. Selected as a cash crop for its prominence in the Mount Elgon area, coffee offers an opportunity for communities in upper catchment areas to engage in a fully commercial crop activity. For coffee the NPV is USD 955, the BCR is 1.36, and switching values are -26% for benefits and 36% for production costs. (v) Maize. While maize is a traditional low input, low output crop improvement in land preparation, optimum seeding time, weed control and appropriate seeding rate have helped to improve the output of the crop, returning a positive financial return on family labour, increasing from USD per acre to USD 3.24 per acre, while incremental net benefit is USD 81 per acre and a positive benefit cost ratio of The model does not include organic manure costs or family labour to reflect the fact that no funds are actually traded for these goods or services. If these were priced in as a traded good or service then there is little chance of a positive return. In short, the model is reliant on an element of 47

63 self-sacrifice by family members to achieve such a return. For maize the NPV is USD 249 and switching values are -9% for benefits and 9% for costs. (vi) Mango. The existing mango model reflects the increased interest in soft fruits and improvements in production as a result of improved combat against disease. For mango financial NPV is USD 1,243, the BCR is 1.31, and switching values are -24% for benefits and 31% for production costs. (vii) Rice. Rainfed paddy farming in Western Kenya yields two crops a year. The main product is rice with bran and husk as a by-product. The paddy form is sold at 60 KSH per kilo in paddy form, rice at KSH 117 per kilo and rice bran and husk at 10 KSH per kilo. Certain questions were raised during the mission on how competitive Western Kenya is at raising rice, given distance to markets, low yields compared to other tropical climates and difficulty selling at target price. These factors are captured somewhat in Farm Model D. The financial NPV for rice is USD 916, the BCR is 2.16, and switching values are - 54% for benefits and 116% for production costs. (viii) Sweet Potato. The introduction of fertilizer is said to have a four-fold increase in yields. For sweet potato the NPV is USD 3,532, the BCR is 3.25, and the switching values are - 69% for benefits and 225% for production costs. (ix) Tissue Culture Banana. Widely grown within a favorable climate, a good source of carbohydrate and a readily available market makes banana a favorite fruit crop among local communities. As a tree crop it has little input and labour needs once in full development and is less perishable when compared with other more capital intensive cash crops, and for this reason is preferred over other fruits, such as tomato. (x) Some very positive financial results occur as a result of farmers preference in Western Kenya province for tissue culture banana, due at large to the benefits of bacteria and fungi free plants that are able to reduce the cost of controlling disease. The Ugandan Green and Williams variety are particularly popular because of their resilience to anthracnose disease, while allowing also for quicker growth of plantlets from a single shoot compared to suckers from a single banana plant. For banana the NPV is USD 5,467, the BCR is 6.91, and switching values are -86% for benefits and 591% for costs. (xi) Tomato. Although tomato might appear to have high financial returns, the tropical climate makes it vulnerable to disease, if one also adds the capital intensive nature of the crop it is easy to see why local farmers have a less than favorable outlook towards it. For tomato the NPV is USD 31,860, the BCR is 8.74, and switching values are -89% for benefits and 774% for costs. 48

64 Livestock Models (i) Dairy Cow Livestock. Various service providers - including the PCU, INGOS/NGOs and government offices - assisted with the organization and distribution of dairy cows to CIGs, to ensure the appropriate feed, care/vaccination, shelter and survival conditions were available before the delivery of the animals. In total 5,687 pregnant dairy cows were distributed by the Project, not including the 419 oxen as draught animal used to plough fields. This can be considered a considerable achievement given the procurement and logistical undertaking of such a number of cows in the short space of time, after the project s suspension. (ii) The financial model reflects the CIGs procedures that involve the redistribution of pregnant heifers offspring to other community members for three lactations before any future births are held by the host family. Host families are selected on the basis of having the capacity to care for the livestock for such a period without needing to sell the livestock asset. The NPV is USD 1,274, the BCR is 1.07, and switching values are -7% for benefits and 7% for production costs. (iii)on a longer term basis however the question of space and access to sustainable sources of fodder, when kept in pounds without grazing, will likely be raised from an environmental and economic perspective, given the limited grazing opportunities in the area. The issue of marketing increasing quantities of milk will also require further planning and action. (iv) Dairy Goat Livestock. Initially, a total of 5,631 pregnant dairy goats were distributed to CIGs within the Project target area, which has increased overtime with new births. Some households now manage up to six goats within their shelter. The selection of beneficiaries, purchasing and distribution and the organization of are no easy feat for so many livestock, given the short timeframe in which they were achieved, after suspension of the Project activities. The financial return on a goat herd is dependent upon the model adopted to make the calculation. A number of possibilities exist, including dynamic or equilibrium meaning either an increase in herd size or stable numbers. The model used is semi-dynamic to reflect the displacement of local breeds with the pure bred goat introduced by the Project. The NPV for a herd up to four does kept in an enclosed pen is USD 2,500, the FIRR is 78%, the BCR is 1.06, and switching values are -6% for benefits and 6% for costs of production. 49

65 (v) Poultry Livestock. As with other livestock interventions, CIGs and their members were provided assistance with preparing the ground for the receipt of livestock. In the case of poultry it involved items as simple as iron sheets, nails, chicken wire, vaccines, wood and 90 kg of feed. Ten brooding hens are provided to each recipient household, with offspring then passed onto neighbors for rearing, as well as broiler chicken, eggs for sale and brooding hen. For poultry the financial NPV is USD 141, the BCR is 1.34, and the switching values are -26% for benefits and 34% for costs. After financing the NPV increases to USD 220 and the return on family labour is above the average daily wage (of KSH 200) in the project area at KSH 277. Farm Models. The financial analysis developed four farm models to capture and reflect the benefits of the Project, defining them by their distance to market, as: close to market, intermediate access to market, far away from market and rainfed. An interesting pattern exists between the models, with a declining rate of return - across several indictors - as the distance of each model to the market increases. The results add weight to the question on whether the Project was able to address the gap between those with less access to markets and less resources compared to those closer to the market. NRM. A reputed 11 million trees were planted under NRM activities of the Project, a significant number by any standards. Although these numbers remain unverified, they do however suggest a significant long term benefit from tree planting in the project area that should contribute to improved green coverage, reduced surface runoff and the prevention of soil erosion, as well as improved carbon sequestration and earnings potential of communities. 50