Albania: Mountain Area Development Programme

Transcription

1 Albania: Mountain Area Development Programme Loan No. 26-AL Project Id Board Date 9 Dec 1999 Effectiveness Date 28 Jan 2001 Original Closing Date 1 Mar 2008 Final Closing Date 1 Mar 2008 Total Project Cost USD(M) USD 2.1 million IFAD loan USD (M) USD 1.7 million Cofinanciers (if any) DFID (Department for International Development, UK) and FFAM (Facility for Farmer's Access to Markets in the Balkan Areas - Italian grant of USD ) Implementing Agency Mountain Area Development Agency (MADA) & Mountain Area Finance Fund (MAFF) Principal Components The goal was to raise the standards of living of poor mountain area people through increased ag. production & productivity, better household food security, increased incomes from agricultural and related rural enterprises and improved infrastructure. Components included: (i) programme management (MADA); (ii) rural credit by creating a sustainable non-banking institution (MAFF); (iii) rural infrastructure; and (iv) agricultural development Project Performance Design Implementation Relevance Effectiveness Project design directly built on the experience and lessons learned of two predecessor projects. Nevertheless, design was overall inadequate and fundamentally restructured during the mid-term review (MTR), including the logframe. The concept was changed from a traditional project approach focused on the development of various sub-sectors to a process-oriented concept giving the necessary attention to private sector development. M&E was weak and did not allow to gather sufficient data to properly assess project impact in the various areas. The project was developed before adoption of the IFAD strategic framework. However, it included some innovative features such as the creation of two specialized agencies for project implementation, MADA and MAFF. The project suffered from poor implementation during the initial years, due to MADA's bureaucratic approach to development and lack of concern for establishing processes. The MTR undertook a thorough restructuring of the project affecting component design, methodology, approaches, outputs and outcomes putting greater emphasis on strategic investments for groups, SME development and creation of an enabling environment for ag. development. Strong emphasis was placed on private business development. Three development pillars were introduced, incl. a Strategic Investment Programme aiming to channel investments towards selected businesses. Also, appropriate participatory approaches were adopted and implemented throughout. This helped MADA to become a "facilitator" to rural development in the mountain area. Overall, project implementation has benefited from the very positive and deep economic, institutional and political changes that have occurred over the last decade and have impacted on the society and the economy. Implementation issues include: (i) M&E (outcomes and impact); (ii) private sector linkages; and (iii) regional gender balance. No substantial impact studies conducted. Given the depth of the political, economic and social changes the country underwent during the past decade, the decision to create two new institutions for the implementation of the project was highly relevant. The objectives, geographic targeting and component orientation were relevant to achieve equitable development in the rural Mountain areas. The primary focus of the project on agricultural and livestock production was highly relevant for the first implementation years. With the changing economy and new economic opportunities emerging, the gradual shift of support measures towards orchards and vineyards, tree crop, food processing etc. ensured continued relevance of the project to the needs of the rural poor. The project has been fairly effective in reaching the targets set, but few figures are available due to the weakness of the M&E system. Positive achievements are few but important to provide sustainable benefits to the rural poor: (i) creation of 2 sp. agencies for mountain area development with good prospects for sustainability for MADA, less for MAFF, (ii) development of business opportunities for mountain area farmers; (iii) successful advocacy work for mountain area development; (iv) creation of an effective credit institution at a time when the financial sector was poorly developed. The project has been less successful in developing: (a) irrigation and WUAs, (b) demand-driven extension services; (c) forestry and pasture 28

2 management; (d) farmer's organizations and their capacities; (e) research programmes responding to the need of the rural poor; and (f) sustainable public vaccination programmes. Efficiency Distribution of resources by MADA was rather inequitable. While the southern districts account for 8% of the target population (the northern districts 2%) they received 8% of the project's resources. Distribution of loans by MAFF was very balanced. These discrepancies were not justified and have affected overall effectiveness and efficiency of the project. In selected cases, investments were analysed ex-post. Benefits were high (IRR >100%) for nurseries, green houses and seed production and variable for irrigation schemes. Different missions pointed at weaknesses in the irrigation works performed by MADA. Standard costs for small scale gravity irrigation were higher than projected and on the high side for rehabilitation works. Standard costs for road rehabilitation were within the acceptable limits. Operating expenses of MADA have been within projected costs and acceptable limits. With a high ratio of operating expenses over the loan portfolio and high costs per borrower, MAFF is operating well below its potential and is not considered efficient. Funds were reallocated twice to increase the resources available for credit (200% increase) and operating expenses (2% increase). Partner Performance IFAD Cooperating Institution Government NGO/Other Cofinancier(s) IFAD was very supportive and pro-active throughout. At MTR, it adequately corrected the weaknesses of the original project design and adapted it to the rapidly changing political, institutional and economic environment in Albania. IFAD was particularly efficient in preparing and leading the MTR, which allowed full recognition and endorsement of the necessary changes by MADA staff. Such profound changes in the project's concept and approach would not have been possible without IFAD strong leadership behind. Throughout implementation, IFAD concerns to search for sustainable solutions for the poor in marginal areas always helped to refocus the attention of implementation partners on the right issues. IFAD was responsible for the creation of national fora and always provided adequate technical support. Too little emphasis was however placed on rural finance. The necessary transformation of MAFF was to be done by bringing in a competent outside partner as main investor of MAFF. This partner withdrew in the last minute leaving MAFF with no appropriate support to make the necessary transition. Still, IFAD performance can be considered as highly satisfactory. UNOPS (UN Office for Project Services) provided its standard services in standard quality. Only three supervision missions have been carried out which corresponds to an average of one every two years. Reporting was focused on physical targets. UNOPS provided a financial expert in 2 out of supervision missions, but supervision work was focused on loan disbursement, recovery, quality of the portfolio, and formal aspects of lending. Little attention was given to the need to support transformation of MAFF to become a proper commercial bank but issues related to this might have gone far beyond the mandate and capacity of a supervision mission. Overall, most relevant issues have been brought up by UNOPS and UNOPS has been active in introducing a programmatic approach even before MTR. UNOPS performance was fully satisfactory. Government played only a secondary role, as project implementation was entrusted to 2 specialized autonomous agencies. Government complied with most of its obligations (provision of counterpart funds, establishing a framework for private sector development, defining legal status of MAFF, facilitating licensing and registration, etc.). However, appointments and transfers of Government staff to MADA have been rather frequent and this negatively affected and delayed programming of activities. FERT, an association of farmers for international cooperation in France has provided valuable support to producer organizations and individual farmers in three southern districts (provision of certified seeds, planting material for fruit trees, training in production, harvesting, marketing etc.). It also provided support to a local partner NGO (ADAD) which has taken over the provision of support services to farmers in the southern districts. SNV (Netherlands development agency) provided support in the area of capacity building of local governments and communes until MTR. This was done with the required technical expertise and in line with the agreement. DFID has financed the costs of a long-term technical adviser. This TA provided excellent support in strengthening the capacities of local governments and communities. DFID's financial contribution altogether exceeded the initial amount. FFAM support in conjunction with additional technical assistance from DFID, was instrumental in establishing the Sector Investment Programme (SIP) after the restructuring of the project

3 Combined Partner Satisfactory (not assessed in the PCR). Performance Rural Poverty Impact Physical Assets Impact on physical assets has been stronger for people involved in the SIPs. They have generally gained access to machinery, land and buildings, sometimes also to seedlings and water points for livestock. Access to water was limited, as a number of irrigation schemes had only limited technical capacity, collapsed or were abandoned by farmers. Increased vaccination rates contributed to reducing mortality and morbidity among animals. Beneficiaries' access to physical assets was also improved thanks to the loans provided by MAFF individuals (small traders and specialist producers) received loans from MAFF which were partly used to purchase productive goods and services and hence to increase household's physical assets. Financial Assets The banking sector underwent important changes over the past decade which have been fully internalized by the project. Most financial institutions have been newly created or privatized and all have shifted towards commercial lending to individuals. MAFF was created at a time when trust and confidence into financial services had disappeared and FS were quasi inexistent. MAFF has filled this gap and provided access to financial services. An estimated individuals (corresponding to % of district population) were given loans, most of which would not have been able to borrow from other sources before. It was pointed out, however, that if MAFF does not embark into a restructuring process its market is likely to shrink in the medium term (presently, MAFF lending accounts for less than 1% of total loans outstanding in the country). Finally, SIPs and other project supported interventions (crop & livestock production, irrigation) have contributed to generating income and employment. Food Security Food security has substantially improved since the project started. At the time of appraisal, food security was rather precarious. At present food security is no longer an issue of concern. It is not clear, however, to what extent this improvement can be fully attributed to the project. Environment The efforts to improve pasture management have made a small contribution to the protection and rehabilitation of natural resources and the environment. Crop and livestock production did not seem to run contrary to environmental norms and concerns. The use of chemical inputs was low and largely below the levels in Central Europe. The NGOs involved in horticulture projects have included environmental issues in their sensitization / training programme. Overall the project had a moderately positive impact on the environment. Human Assets Implementation of the SIP has helped many beneficiaries (farmers, entrepreneurs, etc.) to improve their general knowledge about common issues (irrigation, production, self-organization, group management, environmental issues, marketing, etc.) and to take critical decisions about when and what to produce, sell, how to preserve and process etc. The analysis provided in the PCR is weak but it can be assumed that the achievements of the project have had a satisfactory Social Capital and Empowerment Ag. Productivity Institutions and Services impact on human assets of the rural poor. Investments in social capital were made predominantly through WUAs, Village Credit Funds (VCF) and Mountain Fora. WUAs were largely dysfunctional which ultimately led to the underperformance and collapse of the schemes. Among the identified causes there are: weaknesses of the approaches, methods, partners, insufficient training of members, inadequate incentive systems etc. The Mountain Fora represent a highly innovative and solid approach. It is however too early to assess their contribution to social capital building and empowerment. VCF have almost disappeared from the landscape due to the transition of the financial sector. Their contribution to building social capital and empowerment was irrelevant. Impact on social capital and empowerment is therefore considered as modest. It is not clear whether the use of agricultural inputs has generally increased in the project area as a result of project interventions. This is likely to be the case in the southern districts, where crops are produced for the markets, although less in the northern districts where subsistence agriculture prevails. The contribution of small scale irrigation has been poor. There is no evidence on average yield increases on irrigated plots. Impact studies based on smaller samples have shown yield increase for wheat, maize, alfalfa and potatoes. These increases were between 26% and 61% (with high variations between districts) and achieved over a period of years. Productivity increase in livestock (due to improved vaccination rate) led to substantial increases of incomes. Given the absence of a conclusive picture, impact on agricultural productivity of the poor is rated moderate. MADA and MAFF have been established as solid and properly functioning institutions and manage to deliver tangible benefits to the target group. MADA has been acknowledged by Government as the core agency for Mountain area 0

4 development. Chances for sustainability are high. MAFF has acquired a legal status as non-bank financial institution and is presently firmly established and operating in a niche. It needs, however, to complete its transition to improve its chances for sustainability. The advocacy work of the Mountain Fora is likely to attract development attention and public funds for the Mountain areas. It remains uncertain, however, whether this development will be focused on the poorest and most vulnerable parts of the mountain area population. WUAs created before MTR did not go through the necessary ownership building process and are weakly managed (duties & responsibilities not clearly established and recognized). Markets Project interventions have had a direct impact on the beneficiaries' access to input and output markets. The SIPs provided market access to many small scale farmers participating in the value-chains identified. Two flagship operations include vineyards and orchards. Through the SIPs and the collaboration with solid technical partners farmers gained access to improved seeds and planting material. Some, with the help of MAFF, also rented or constructed storage facilities. Many MAFF loans allowed farmers to purchase inputs and send their produce to the market. Road rehabilitation works funded by the project have also contributed to creating or improving access to markets. Rural Poverty Impact M&E was weak and did not allow an in-depth assessment of project impact in the different areas. Altogether, the project was able to reverse the situation that prevailed at the beginning of project implementation where project interventions were perceived as something done by the Government. At the end of project implementation, beneficiaries recognized their role in the development process. While rural poverty is more pronounced in the northern region, 8% of the funds went to the southern districts. It can therefore be assumed that the project's impact was stronger in the southern region than in the northern region. Given the unbalance in the funding of the two regions and the shift of resources towards the better-off southern districts, overall rural poverty impact is assessed as moderate. Overarching Factors Innovation Replicability and Scaling-up Innovation, Replicability and Scaling-up Sustainability and Ownership The project's main innovations include: (i) creation of a new institution in charge of mountain area development, (ii) creation of a specialized financial institution to provide credit to entrepreneurs in rural areas, and (iii) the creation of the Mountain Fora. At local level, the project has recognized the pull-effect of joint initiatives of community leaders, private sector and dedicated individuals to mobilize the rural populations and introduce innovations. Overall, the project has been fairly innovative. MADA and the Mountain Fora have a high potential for replication and scaling up. Specialized institutions in charge of development are an option when the development of a specific region is clearly underfunded and responsibilities at Government level not clearly defined or overlapping and when there is a high potential to increase efficiency of interventions and to conduct complex development processes, such as value chain development. The Mountain Fora show a high potential for scaling up. The approach so far has been very successful and should be replicated in regions where the population shows strong commitment to its own development, when there is room for advocacy and responsiveness to demands by the public administration, when leadership by individuals is positively perceived etc. These conditions are fulfilled in many regions in the Balkan. The potential for replication is therefore high. At the level of enterprises, the dynamic processes initiated under the SIPs will most likely continue to benefit farmers and entrepreneurs. As regards WUAs, some have already disappeared, some will stop operating soon while others will continue to exist, depending on their level of functionality. The Mountain Fora are working well and will most probably continue to exist. They have been built on a solid and recognised concept and need little financial support to be operational. MADA is officially recognized by GoA as the agency responsible for the development of the mountain regions and is to be developed into a national agency for regional development under the new IFAD Programme for Sustainable Development in Rural Mountain Areas. MAFF was originally created as a specialized financial institution owned by Government. Under the new IFAD programme, MAFF will be privatized and will continue to provide financial services for the rural mountain areas. Sustainability of MAFF will depend on its ability to offer competitive services (diversification of products, lower interest rates, more visibility, identification of collateral substitutes to enable the poor to access, decentralization to rural areas, etc.). 1

5 Targeting In line with the new approach adopted in due course, the project's targeting strategy moved away from direct targeting of poor households towards indirect targeting through the creation of appropriate frameworks for agricultural and rural development, support to institutions in charge of mountain area development and support to institutions with high potential for growth, giving smallholders access to new market opportunities. It is not clear, however, what strategies and tools the project has used to target the poorest and most vulnerable. Gender Gender aspects were taken more seriously into account after the mid-term review/ MTR with the implementation of training programmes for female entrepreneurs, sensitization to increase the number of female borrowers from MAFF, vocational training and technology transfer programmes for women and the youth, and gender specific M&E data collection. In line with the limits set by local tradition and culture, women in the southern region responded better than in the northern region. Overall Performance Estimated number of beneficiaries PCR Quality Scope The project succeeded in bringing development of the mountain area region into the forefront of development concerns and in providing support to the development of financial services and small scale business in rural areas. Beneficiary outreach is estimated at farm families against a target of 600. This figure is however only indicative as it includes some double counting which could not be corrected at completion and excludes beneficiaries of public infrastructure for which no data are available. The PCR outline was respected but annexes are incomplete: Annex VI (financial & economic analysis) and Annex VII (Impact on the environment) are missing. Also, it appears that no stakeholder workshop was held at project completion. Quality Comprehensive report with an objective analysis of causes and effects. Lessons The PCR draws a number of relevant lessons. 2