Microfinance for Marginal and Small Farmers Project

Transcription

1 Independent Office of Evaluation People's Republic of Bangladesh Microfinance for Marginal and Small Farmers Project PROJECT PERFORMANCE ASSESSMENT February 2014

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3 Independent Office of Evaluation People s Republic of Bangladesh Microfinance for Marginal and Small Farmers Project Project Performance Assessment February 2014 Report No BD Document of the International Fund for Agricultural Development

4 Photos of activities supported by the Microfinance for Marginal and Small Farmers Project Front cover: Members of the Char Shahpur Marginal Women Farmer Society, Shahpur village, Fulpur upazila, Mymensingh district. Back cover: A member of the Sohag Mohila Samity (group), Ghaturi Village, Muktagacha upazila, Mymensingh district, together with her relative (left); Farmers together with a Palli Karma-Sahayak Foundation staff (far left) at a demonstration plot for urea super granule (USG), Bindhara village, Panchbib upazila, Joypurhut district (right). IFAD/Fumiko Nakai This report is a product of staff of the Independent Office of Evaluation of IFAD and the findings and conclusions expressed herein do not necessarily reflect the views of its Member States or their representatives to its Executive Board. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of IFAD concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The designations developed and developing countries are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process. All rights reserved by the International Fund for Agricultural Development (IFAD)

5 Preface The Microfinance for Marginal and Small Farmers Project in Bangladesh was implemented from with the objectives of improving access to microfinance services by small and marginal farmers and increasing their agricultural production. Previously, microcredit services provided mainly through microfinance institutions (MFIs) had largely targeted the landless; poor farmers with small landholdings had little or no access to either MFI services or bank loans. The project was successful in introducing microcredit services targeted at small and marginal farmers, combined with technical support. The project introduced a lump-sum repayment modality that could better match the borrowers cash flows, in place of the weekly repayments normally practised with traditional Grameen-type microcredits. The project made a significant contribution to mainstreaming microlending for agricultural activities, with an option of lump-sum repayment, into the operations of MFIs as well as the apex institution providing funding to MFIs. The project was implemented with high efficiency and competency. Most loans extended with project support were used for productive purposes, and combined with technical support, the project contributed to improved agricultural production. While the inclusion of marketing and business development support in the project was appropriate, there could have been better integration and synergy of this element with microfinance services and technical capacity-building. This project performance assessment was conducted by Fumiko Nakai, Evaluation Officer and lead evaluator, with contributions from consultants Ranjani Krishnamurthy (gender and evaluation specialist) and Rafiqul Islam (microfinance specialist). Internal peer reviewers from the Independent Office of Evaluation of IFAD Cecile Berthaud and Oanh Nguyen, Evaluation Officers, and Ashwani Muthoo, Deputy Director provided comments on the draft report. Laure Vidaud, Evaluation Assistant, provided administrative support. The Independent Office of Evaluation is grateful to IFAD s Asia and the Pacific Division, the Government of the People s Republic of Bangladesh and in-country stakeholders and partners, in particular the Palli Karma-Sahayak Foundation, for their insightful inputs at various stages of the evaluation process and the support provided to the mission. Kees Tuinenburg Officer-in-Charge Independent Office of Evaluation of IFAD

6 A member of the Shahapur Marginal Women Farmer Group and her husband working together in their vegetable farm. Access to microcredit by the wife for vegetable production was also complemented by improved pest management supported by the project: the use of pheromone traps to replace chemical insecticide for some types of vegetables has contributed to cost savings, as well as healthier produce. Vegetable production is a popular activity in the Shahpur Village, Fulpur upazila, Mymensingh district. IFAD/M. A. Heider

7 Contents Currency equivalent and measures Abbreviations and acronyms Map of the project area Executive summary I. Objectives, methodology and process 1 II. The project 2 A. The project context 2 B. Project implementation 4 III. Review of findings 9 A. Project performance 9 B. Rural poverty impact 19 C. Other performance criteria 24 D. Performance of partners 27 E. Overall project achievement 28 IV. Conclusions and recommendations 29 A. Conclusions 29 B. Recommendations 30 ii ii iii iv Annexes I. Rating comparison 33 II. Basic project data 34 III. Terms of reference 35 IV. Methodological note on project performance assessments 40 V. Definition of the evaluation criteria used by IOE 44 VI. List of key persons met 45 VII. Bibliography 48 VIII. Note on approach and methodologies for surveys undertaken for assessing project results and impact 49 IX. PKSF s programme, seasonal loan and agricultural sector microcredit 54 X. List of partner organizations 57 XI. Priority technologies promoted under project 58 XII. Case studies: stories from the field 60

8 Currency equivalent and measures Currency equivalent Currency unit = Bangladeshi Taka (BDT/tk) US$1 = BDT (June 2004) US$1 = BDT (June 2011) Measures 1 acre = 100 decimals Abbreviations and acronyms APR ASM ATO AWD BDT COSOP DAE IFAD IOE LCC MFI MFMSFP MST MTR NGO PAB PCR PCRV PKSF PO PPA PPMS RIMS USG Asia and the Pacific Division (IFAD) agriculture sector microcredit assistant technical officer alternate wet and dry (irrigation) Bangladeshi Taka country strategic opportunities programme Department of Agricultural Extension International Fund for Agricultural Development Independent Office of Evaluation of IFAD Leaf colour chart microfinance institution Microfinance for Marginal and Small Farmers Project Maria Seed Treatment mid-term review non-governmental organization Practical Action Bangladesh project completion report project completion report validation Palli Karma-Sahayak Foundation partner organization project performance assessment Project Portfolio Management System Results and Impact Management System Urea super granule ii

9 Map of the project area iii

10 Executive summary 1. Background. In Bangladesh, following the establishment of the Grameen Bank in late 1970s and its growth, the microcredit sector had been well developed in particular with support from non-governmental organizations (NGOs) which act as microfinance institutions (MFIs). Influenced by the Grameen model, NGO-MFIs have adopted a similar service delivery modality based on a group approach and, with the aspiration to contribute to poverty reduction; their services primarily targeted the landless poor. However, there was also a high level of poverty amongst those with small landholdings (the so-called marginal and small farmers). The services by NGO-MFIs were not sufficiently catering to small and marginal farmers, and at the same time, poor farmers had limited access to credit for agricultural purposes from banks. 2. In the above context, the Microfinance for Marginal and Small Farmers Project was conceived to introduce an innovative approach to deliver financial services to the farming community, in partnership with Palli Karma-Sahayak Foundation (PKSF), which was established by the Government of Bangladesh in 1990 as a not-for-profit company and as the apex organization providing funds to MFIs. Covering 14 districts in north-west and north-central Bangladesh, the main project target group was small and marginal farm households. 3. Project implementation was built on the well-established system in Bangladesh of channeling microcredit funds to beneficiary groups organized by NGO-MFIs. Thirtyfive NGO-MFIs, or partner organizations (POs), were selected and participated in project implementation. The project also provided support to POs to develop their capacity in lending for agriculture and to link farmers to providers of technical services. Implemented over six years as envisaged, the actual project cost was US$29.81 million, almost 100 per cent of the initial estimate. 4. Assessment summary. The project s overall achievement was satisfactory. This was a well-designed project relevant to the country context, and to small and marginal farmers. These farmers may not have been the poorest, but a significant proportion of them were poor, and even those above the poverty line continue to run the risk of becoming poor again due to unexpected events. The project made important and innovative contributions to enhancing access to finance by marginal and small farmers, who had previously had little access to credit from either banks or NGO-MFIs. The project introduced a lump-sum repayment modality that could better match the borrowers cash flows, in place of the weekly repayments that had normally been practised with NGO-MFI microcredits. While the project was still under implementation, PKSF incorporated seasonal loan and agriculture sector microcredit products as part of their core programme, and restructured its lending policies to POs. This means that with PKSF being a major source of funding for most of the POs microcredit operations, NGO-MFIs have a sustainable source of funding for seasonal and agricultural lending, and they have also mainstreamed such loan products to serve rural populations. 5. At project completion, the membership supported under the project stood at 208,868 (84 per cent women), largely achieving the project target of 210,000, and over 80 per cent of the members were borrowing, with 1,717 million Bangladeshi Taka (BDT) (US$25 million) outstanding in loans. The proportion of seasonal lending (providing for lump-sum repayment instead of weekly instalments) increased steadily during the project. Loan recovery rate was sustained at a high level throughout the project period (98.36 per cent at project completion). 6. The delivery model through NGOs supported by their institutional strengthening, as well as combining credit provisions with technical capacity-building support for beneficiaries, was relevant and effective. Most loans extended with project support were used for productive purposes. Combined with technical support, the project iv

11 contributed to improved agricultural production. The technologies promoted were found to be useful, and contributed to yield increase and cost reduction. Important technical support training and veterinary services was provided in conjunction with a livestock insurance pilot scheme for beef fattening activities. 7. While the inclusion of marketing and business development support in the project was appropriate, there could have been better integration and synergy of this element with microfinance services and technical capacity-building. The combination of loans and technical support contributed to crop/livestock diversification to some extent, but the promotion of real profitable enterprises on- or off-farm was rather modest. 8. Good progress was made towards gender equality and women s empowerment through mobilizing women, microfinance interventions, and social development and technical training. 9. The prospect for sustainability is positive and assessed as satisfactory overall, including the sustainability of PKSF operations and its services to cater to small and marginal farmers, as well as the agricultural technologies promoted. Two issues require attention. First, a relatively high dropout rate in groups was experienced, which could compromise efficiency and sustainability as long as a group-based approach continues to be used. The high rates appears to have been caused by a couple of factors: graduation of some borrowers from microcredit, as well as an underlying factor that the major drive for people to join NGO-MFI groups is to access loans and/or training when there is project support. NGO-MFI operations are also focused on disbursing loans and they consider groups principally as a means for delivery of loans. Second, the combination of social mobilization, microfinance and technical support and training by NGO-MFIs with project support was effective, but the question remains how to enhance sustainability of these nonfinancial services. 10. The project was implemented with high efficiency and competency, benefiting from the experience of PKSF and POs and their prior working relations. This was the case in terms of the timeliness of implementation, appropriate PO selection based on an established system and working experience, an established progress reporting system from POs to PKSF, and PKSF s existing management information system. Effective handholding of POs and guidance by PKSF contributed to project success. POs previous presence in the area, and experience in microfinance, social development and to some extent agriculture, complemented project-supported activities and contributed to project success. 11. Recommendations. Provided below are some key recommendations for consideration by IFAD, the Government, PKSF and POs: Support for strengthening commercial orientation and business skills of borrowers. NGO-MFIs are not in a position to prescribe what kind of activities should be financed by microcredit, but along with credit and technical support, facilitative support should be provided for potential borrowers to better appreciate how to identify and invest in viable farming and off-farm enterprises, in addition to specific business skills development. Such support may not necessarily be provided by NGO-MFIs or PKSF. It would be important to pursue partnerships with appropriate organizations that are in a position to provide such services. Service delivery modality and products by NGO-MFIs. More emphasis should be placed on strengthening groups to be more than a means to access credit; it should or could also be an entry point (or a means) for other services, socio-economic empowerment of the poor or other collective activities. At the same time, consideration could be given to the context and in what manner mobilizing groups and using a group approach for v

12 individualized liabilities would still be appropriate. Demand-driven product development by NGO-MFIs not only credit but also other financial services such as savings, insurance and transfer should be given attention, and PKSF could also play a role in facilitating such a process. If the combination of microfinance services and technical support is a long-term strategy for NGO- MFIs to promote growth and profitability, and to enhance portfolio quality, then they may need to carefully review the efficiency of service provisions and find ways to incorporate the cost of technical support into core operations (i.e. financial services). Measuring results and impact. The surveys undertaken provided valuable information, but there were also questions on the methodologies used and hence on the reliability of some findings. The importance of carefully reflecting at the onset on key selected expected results and impact to be measured cannot be overemphasised. IFAD would have an important role in providing support at all stages including proposing the solid basis for monitoring and evaluation in project design reports, terms of reference for consulting services, reviewing proposed methodologies and draft reports. vi

13 People s Republic of Bangladesh Microfinance for Marginal and Small Farmers Project Project Performance Assessment I. Objectives, methodology and process 1. Background. The Independent Office of Evaluation of IFAD (IOE) undertakes two forms of project evaluations: project completion report validations (PCRVs) and project performance assessments (PPAs). PCRVs consist of a desk review of project completion reports (PCRs) and other supporting documents. PPAs, involving country visits, are undertaken on a number of selected projects 1 for which PCRVs have been conducted. In the above context, the Microfinance for Marginal and Small Farmers Project (MFMSFP) in Bangladesh was selected for a PPA. 2. Objectives and focus. The main objectives of the PPAs are to: (i) Provide an independent assessment of the overall results of projects; (ii) Generate lessons and recommendations for the design and implementation of ongoing and future operations within the country. Amongst others, this PPA focused on selected key issues that emerged in the PCRV, including sustainability, innovation and scaling up, women s empowerment and targeting. 3. Methodology. The PPA follows IFAD s Evaluation Policy, 2 Evaluation Manual 3 and Guidelines for PCRV/PPA. 4 It adopts a set of evaluation criteria (annex IV) and a six-point rating system (annex I, footnote a). 4. In the process of preparing the PCRV, a desk review of available documents was undertaken. These included key project-related documents, 5 as well as relevant Government strategies, IFAD policies and other reports. During the PPA mission s field work, primary data were collected to validate documented information and to allow for an independent assessment of project performance. As is normally the case with PPAs, given time and resource constraints, no quantitative survey was undertaken. Key data collection methods included individual interviews and group discussions with key stakeholders in project sites, Dhaka and Rome. 5. Data availability and limitations. A good amount of data was available. First, the project had a relatively well-established management information system (MIS), especially with regard to standard microfinance industry indicators, but also other project specific data (e.g. training activities). Second, the implementing agency undertook some studies during the project in efforts to document the experience and effects/impact of specific interventions. Third, a number of questionnaire-based surveys to assess results and impact, covering between 600-1,200 households, were undertaken at the start and at project completion. Thus, the conduct of the PPA benefited from relatively good data availability. Nonetheless, based on the review of survey reports, there were some areas where statistical rigour and reliability of data could be questioned (see annex VIII). One of the PPA mission s focus was, therefore, to obtain supporting (or non-supporting) evidence and indications for some findings from the impact surveys and other reports. 6. Process. The PCRV was prepared by IOE in April 2013 and the draft was shared and discussed with the responsible country programme manager in the Asia and 1 The selection criteria for PPA include: (i) Synergies with forthcoming or ongoing IOE evaluations (e.g. country programme evaluations); (ii) Novel approaches; (iii) Major information gaps in PCRs; (iv) Geographic balance See annex IV to this document for an extract from the guidelines, Methodological note on project performance assessments. 5 See annex VII for the bibliography. 1

14 the Pacific Division of IFAD (APR) prior to the PPA mission. The PPA mission 6 was undertaken from 19 to 30 May Meetings were held in Dhaka on May 2013 with the implementing agency, IFAD country programme officer, service providers and consultants that worked with the project. These were followed by field visits to four project districts (Naogaon, Joypurhat, Rajshahi and Mymensingh) 7 from 21 to 28 May 2013, accompanied by two staff members of the implementing agency who worked with the project. In the districts, the team had discussions with the management and staff members of the partner organizations (POs), i.e. microfinance institutions (MFIs), that operated in the area; 8 visited the villages where the POs provided project-supported services; and, interacted with direct beneficiaries (those in farmer groups assisted by POs under the project) and non-beneficiaries in the same communities, extension staff, and other service providers and stakeholders. At the end of the mission, two meetings were organized for the PPA team to share its preliminary findings: one with the representatives of some POs and another with the Ministry of Finance as a formal wrap-up meeting. A draft presentation and note on preliminary findings were reviewed and commented on by the IFAD country programme manager prior to the wrap-up meeting. 7. The draft PPA report was shared with APR and the Government of Bangladesh for review and comments, which have been incorporated in the final report. II. The project A. The project context 8. Context. Following the establishment of the Grameen Bank in the late 1970s the microcredit sector in Bangladesh was well developed, in particular through the support of non-governmental organizations (NGOs) which have acted as MFIs. When the Microcredit Regulatory Authority (MRA) was established by the Government in 2006 to supervise microfinance operations of NGO-MFIs, over 4,000 organizations applied for licences, indicating the magnitude and breadth of the NGO-MFI sector. 9 Influenced by the Grameen model, NGO-MFIs adopted similar service delivery based on a group approach (see box 1). 9. In Bangladesh, traditionally, poverty has been associated with landlessness. Many initiatives and programmes aimed at poverty reduction normally targeted those households with no land or very little land (the functionally landless ). Data used by the appraisal report showed, however, that there was also a high level of poverty amongst those with small landholdings (so-called marginal and small farmers 10 ). In the microfinance sector, NGO-MFI services were primarily targeted at the landless poor, and did not cater sufficiently to small and marginal farmers. At the same time, poor farmers had limited access to credit for agricultural purposes from banks. The project was conceived to introduce an innovative approach to deliver financial services to the farming community in partnership with Palli Karma-Sahayak Foundation (PKSF), which was established by the Government of Bangladesh in 1990 as a not-for-profit company and as the apex organization providing funds to MFIs. 10. The project. MFMSFP was a US$29.7 million project over a six-year period ( ), with the goal to provide improved livelihoods to 210,000 poor small 6 The mission consisted of Fumiko Nakai (Lead Evaluator, IOE), Ms Ranjani Krishnamurthy (Gender and evaluation specialist) and Mr Rafiqul Islam (Microfinance specialist). 7 The mission was also scheduled to visit Dinajpur district on May 2013, but was unable to do so because of the countrywide hartal (general strike) on 26 May Five POs visited in the field were: VERC, JAKAS, CARB, PMUK and GRAMAUS. Different POs covered different upazilas (subdistricts). 9 In 2011, 576 NGO-MFIs were licensed by the MRA. 10 The appraisal report indicated the incidence of poverty as 44 per cent amongst marginal farmers, 34 per cent of small farmers and 64 per cent of the landless. 2

15 and marginal farmer households. The objectives of the project 11 were to: (i) Enable marginal and small farmers and agroentrepreneurs (both men and women) to access and utilize viable microfinance services in order to invest in existing and new farm and off-farm enterprises; (ii) Increase agricultural production through access to information, the adoption of new technologies and linkages to markets; (iii) Develop and mainstream PKSF operational procedures for lending to farmers and related agroenterprises. Box 1 Key features of NGO-MFI based microcredit operations and PKSF funding in Bangladesh The group-based approach originated with the Grameen Bank. This typically would see poor women and men organize into groups (samities), normally of five members. Group meetings are conducted on a weekly basis with a credit officer from a NGO-MFI, at which time transactions take place (e.g. compulsory and voluntary savings, loan disbursements and repayments). NGO-MFIs would provide one-year loans (some MFIs recover the loans within weeks), which a borrower repays in equal weekly instalments along with interest. Once a borrower repays one loan s/he is qualified to receive another loan, normally a higher amount, within the overall loan ceiling. Loans are offered to the group with collective liability in case of default by any member, and with a weekly repayment schedule. However, in recent years, the use of individual liability loans is expanding while still maintaining the group structure.* In other words, groups are formed and they still meet as groups, but liability is individualized. This way, the group process still helps lenders lower their transaction costs, while possibly maintaining some elements of peer screening and monitoring. In the case of MFMSFP, groups also served as an entry point for training and other capacity-building activities, the group-based approach with individualized liability was used by the project s POs. No conventional collateral is required when borrowing. Compulsory savings (normally around 10 per cent of the loan amount) substitute as collateral. In the old Grameen model, group liability also served this purpose. Groups are either all men or all women; there are no mixed groups. PKSF is an apex financial institution which provides funding for its partner NGO- MFIs. It has a number of products for wholesale lending to POs and each product has its own terms and conditions, with specific ultimate target groups (e.g. marginal and small farmers, ultra poor, etc.; see also annex IX). Therefore, their portfolios are already determined when POs decide under which PKSF product they will access the line of credit. * Giné, X. and Dean S. Karlan Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups. 11. Project area and target group. Covering 14 districts in north-west and north-central Bangladesh, 12 the main project target group consisted of small and marginal farm households operating between 0.5 and 5 acres of land. The maximum ceiling of owned land for the target group was 2.5 acres, but those operating up to 5 acres, 11 These derive from the project design document, both the text and the logical framework which lists purpose for each corresponding component. In fact, different project-related documents use slightly different wordings for project objectives/purposes. For example, the Loan Agreement put project objectives as follows: (i) deliver sustainable demand driven microfinance services to poor farming communities; (ii) increase agricultural production through access to credit, information, adoption of new technologies and linkages to markets; and (iii) develop and mainstream the Lead Project Agency s [PKSF] and its POs operational procedures for lending to farmers and agroenterprises. These are largely in line with the appraisal report. The only notable difference is found in the manner in which the first objective was worded in the President s Report: establish viable MFIs to provide opportunities to 210,000 small and marginal farmer households to invest in on- and off-farm enterprises, which could be interpreted as focusing on establishing and strengthening financial service providers, rather than selecting MFIs according to certain criteria to provide services. 12 The fourteen selected districts were: 10 in the north-west (Rajshahi, Nawabganj, Pabna, Kurigram, Thakurgaon, Joypurhat, Nilpamari, Gaibandha, Naogaon and Dinajpur), and four in the north-central region (Netrakona, Mymensingh, Jamalpur and Sherpur). According to the appraisal report, the project area was selected on the basis of high levels of poverty and good agricultural potential, in addition to the consideration of avoiding overlap with other IFAD-financed projects at the same time. 3

16 including the areas leased, rented or sharecropped, were also covered. 13 Furthermore, the project would also target small-scale agroentrepreneurs with business in the agricultural service sectors such as input supply, marketing and agroprocessing. 12. Project approach. The project was to build on the well-established system in Bangladesh of channeling microcredit funds to beneficiary groups organized by NGO-MFIs (see box 1). The project design indicated the likely need for financial services (credit, savings and insurance) to be tailored to meet the needs of small and marginal farmers; for example, adapting loan repayment schedules to take account of the seasonal nature of farm income. Instead of prescribing specific new financial products, it was left to POs to develop viable and sustainable services. The project was also to provide some support to POs to develop their capacity in lending for agriculture and to link farmers to providers of technical services. 13. Project components. As per design, the project consisted of the following three components: (i) (ii) (iii) Microfinance services (89.5 per cent of the project cost), including a credit fund, where the bulk of the funds was allocated, a disaster reserve fund, pilot lending against crop storage, and initial overhead costs for POs wishing to expand their operations; Capacity-building and market linkages (8 per cent of the total project cost), including agricultural extension services, group development support, PKSF services and marketing services; Project coordination and management (2.5 per cent of the total project cost). 14. Project financing. The total project cost was estimated at US$29.7 million, 14 with the Microfinance services component accounting for close to 90 per cent (table 1). PKSF financing (almost US$8 million) was to be mainly for additional resources for onlending (30 per cent of the credit funds disbursed to POs). 15. Implementation arrangements. PKSF had overall responsibility for project management, in accordance with the subsidiary loan and grant agreement signed with the Government. Amongst other tasks, PKSF was to select interested and capable NGO-MFIs as POs to provide microfinance services and technical support, and channel the credit funds to them, as well as work with other service providers, such as the Department of Agricultural Extension (DAE). B. Project implementation 16. Implemented over six years as envisaged, the actual project cost was US$29.81 million (table 1). The disbursement rate of the IFAD loan at loan closing stood at 97.3 per cent (US$20 million). 15 Thirty-five POs (NGOs-MFIs) 16 were selected by PKSF according to the set criteria and participated in project implementation. (See annex X for the list of the 35 POs). 17. Some adjustments were made during implementation, but these were not significant changes in the project design. One small activity not explicitly covered in the design but introduced in the course of implementation was a pilot scheme for livestock insurance. Another adjustment was in terms of creating a position of 13 The loan agreement defined the target group as follows: small and marginal farm households operating between 0.5 and 5.0 acres of land, small-scale agroentrepreneurs and, within these groups, households that are relatively poor or specially disadvantage (e.g., female headed, unemployed youth, tribals), thus making it more explicit about the project s aspiration to reach the poorer/poorest farm households within the category of marginal and small farmers. According to the appraisal report, each PO was expected to select appropriate criteria to target poorer households. 14 The project budget was revised at the mid-term review (US$30.25 million). This increase from the initial budget (approximately by US$0.5 million) was due to an increase of the IFAD loan portion in US dollars (US$), presumably due to fluctuation in the special drawing rights (SDR) US$ exchange rate. 15 The disbursement rate of 97.3 per cent was for the loan account in SDR. However, in US$ terms, the IFAD loan disbursed was very close to what was estimated at the appraisal stage. 16 The design envisaged 25 POs and this is what was done over most of the project period. Ten POs were added in the final year as per the recommendation by the supervision mission of May 2010 to enhance outreach. 4

17 assistant technical officer (ATO) in each PO, 17 in addition to that of technical officer, 18 recognizing the need for POs to have more in-house agricultural expertise. Table 1 Project financing: appraisal budget and actual (US$ million) Project appraisal budget Actual Component IFAD PKSF POs Total % IFAD PKSF POs Total % Microfinance services Capacity-building and market linkages Project coordination and management Total % of total Sources: Appraisal report; Project completion report. 18. Microfinance services. Under this component, there were four main activities: (i) Provision of microcredit; (ii) Disaster reserve fund; (iii) Pilot crop storage lending; (iv) Livestock insurance pilot scheme. The amount used (disbursed) for microcredit was about US$25.4 million, which was 85 per cent of the actual project cost. The implementation results for key indicators are provided in table 2 below. Table 2 Key indicators for project-supported microfinance operations Indicators Appraisal projection/target June 2011 Note Total No. of members With the estimated dropout of members (20% of the highest membership), the total number enrolled stands at (34% higher than the original target). No. of groups Lower average membership than initially envisaged. Women members % >80% 84% In entire PKSF operations, % of women members varied between 88.4 and over the project period. In , it was 91.96%. (PKSF Annual Report ) % borrowing members 85% 81% 85% of borrowers were women (as of June 2011) Savings mobilized NA BDT million Loans from PKSF to POs No. of POs Amount disbursed NA BDT million in financial year 2010/2011 Cumulative disbursed NA BDT million Cumulative recovered NA BDT million Outstanding NA % of amount disbursed Loans from POs to members Amount disbursed NA BDT million in financial year 2010/2011 Cumulative disbursed NA BDT million Cumulative recovered NA BDT million Outstanding NA BDT million Loan recovery rate >98% 98.36% Defined as % of the amount recovered out of the amount due during a given month. Outstanding loan per borrower (BDT) Loans outstanding / x 81% [no. of borrowers]. National average for MFIs is BDT Average loan size (BDT) BDT in the first year Sources: Project completion report; PKSF; Microcredit Regulatory Authority. 17 ATOs had diplomas rather than degrees in agriculture (as was the case for technical officers), and were good at providing hands-on field training to beneficiaries. 18 This position was called agriculturalist in the design, but supervision missions used technical officers. 5

18 19. As of June 2011, the membership supported under the project stood at 208,868 (84 per cent women). The membership recorded at the end of February 2011 was 234,684, larger than at project completion. Taking this as the highest number, and with 20 per cent dropout rates assumed by PKSF and PCR, it was estimated that the project reached 281,620 people. Even without adding dropout or with a more modest estimate, the project was largely successful in reaching the targeted number of beneficiaries (210,000). The project also achieved other outreach targets, such as the proportion of women members and proportion of borrowers. Figure 1 Project achievements by year (membership, lending and savings) Source: Palli Karma-Sahayak Foundation 20. Lending operations. During the project, a cumulative total of Bangladeshi Taka (BDT) 10,708 million (US$156 million) was disbursed as microcredit to the members and BDT 1,717 million (US$25 million) was outstanding in loans at completion. The proportion of seasonal lending increased steadily during the project life (see also section III.A on effectiveness). The loan recovery rate was sustained at a high level throughout the project period (98.36 per cent at project completion). 21. Savings. The members had accumulated savings of BDT million at project completion. Savings help POs in their lending operations and provide a degree of security against members collateral free loans. Savings accumulation is also a slow but steady way of achieving self-reliance. The average per capita savings and average credit amount are BDT 2,017 and 15,471 respectively. Per capita savings is only 13 per cent of the average loan amount, indicating that most of the savings is likely to be compulsory savings, which are required for the members to access loans (normally around 10 per cent of the amount borrowed). 22. Pilot crop storage lending. This pilot scheme was intended to enable farmers not necessarily limited to microcredit group members to get better prices for grain crops by selling later than immediately after the harvest, and at the same time, to access loans against the crops stored. The scheme involved the provision of low interest loans from PKSF to interested POs for constructing new stores or renovating existing ones, which was to be co-financed by POs. Against the target of 10 crop stores, only 3 (by three POs) were supported, mainly due to low PO interest in the initiative. This activity remained small, with the total amount of loans disbursed to POs being BDT 1.84 million (approximately US$27,000). Over four years, 155 farmers, mostly either relatively better off farmers or rice/paddy traders, stored 514 tons of paddy. The total cumulative amount of loans disbursed by POs against crop storage was BDT million. 23. Livestock insurance pilot scheme. This activity was not explicitly envisaged in the design but introduced in the course of implementation as a pilot starting in 6

19 2009/10. The scheme covered animals bought with project loans for beef fattening. POs provided the livestock insurance services based on a premium with technical support (veterinary services, training in beef fattening). As of June 2011, with the participation of seven POs, a total of 12,058 animals belonging to 11,860 farmers were covered by the scheme, and compensation for death had been paid for 58 animals. 24. Disaster reserve fund. The project helped establish a disaster reserve fund at the PO level to respond to natural calamities as declared by the Government, or to sickness or death of income-earning household members, negatively affecting the repayment capacity of the borrowers. The fund was generated by participating POs (1 per cent of their service charge income) and a matching contribution from the project. At project completion, BDT million (US$213,000) was accumulated in this fund. No POs utilized any money out of this fund, as no such calamity occurred during the project period. Deposit to the fund has continued. 25. Capacity-building and market linkages. Under this component, the project supported capacity-building of beneficiaries and service providers (agricultural extension services including PO staff), and also market linkages. It was intended to enhance the effectiveness of investments by borrowers financed through microfinance services, most of which were expected to be agriculture-related. 26. Beneficiary training. Beneficiary group training (provided by the POs by their own staff, or in collaboration with DAE or other service providers) was mainly in the following categories: crop-related, non-crop and social issues. Non-crop training included livestock rearing, fisheries, etc., while social issues covered matters such as family planning, education and gender issues. A total of 656,566 farmer trainings 19 were conducted (47 per cent of which was crop training, 26 per cent non-crop training and 27 per cent social issues). In addition to training, POs also organized a total of 8,113 demonstrations, 974 field days and 50 exposure visits by farmers. The project design referred to training in marketing and business management for 20 per cent of the group members, as part of group development support by POs and DAE, but in actual implementation training in this area was limited to that provided in the framework of the contracted services for market linkage support (see paragraphs 29-30). 27. Following the mid-term review (MTR), capacity-building and technical support under this component focused on a few prioritized agricultural technologies related to crop production. This meant more focus on these selected technologies for all forms of capacity-building activities (demonstration, training and field days). Training on other topics still continued, but on fewer topics and with less coverage, compared to earlier years when over 80 topics for crop training were covered by different POs. Inputs/materials required for the four out of five priority technologies were procured by PKSF and distributed to farmers through POs for use and demonstration (table 3). 19 A farmer training is defined as attendance by an individual at a training session. Training was normally a half-day event with a specific topic; topics were determined based on members demand. Major topics for crop training included rice, potato, maize and winter vegetable production; integrated pest management (IPM), seed storage; seed selection and preservation, fertilizer application, crop management, pest control and post-harvest technology, etc. 7

20 Table 3 Priority technologies promoted and demonstration activities Technology Leaf colour chart (LCC) Urea super granule (USG) Alternate wet and dry (AWD) irrigation Pheromone traps Maria seed treatment (MST) Source: Project completion report. Brief description For rice production and for efficient application of urea. Yield increase (+5-10%) and reduction in the use of urea (- 20%) expected. For rice production and to save urea fertilizer. Yield increase (+10-15%) and reduction in the use of urea (-35-50%) expected. Manual application labour intensive hence, the promotion of USG applicators. For rice production. Reduce the amount of water needed for (boro) rice production (up to -30%), hence gain cost savings (but relevant only to those farmers who own their own pumps, not those who pay a fixed price for water to pump owners). For vegetable production (although not all types). Reduce the use of pesticides. Cost savings and environmentally beneficial. Rice seed selection and preservation. Improve seed quality and increase yield. * 3,490 demonstration activities out of a total of 8,113. Demonstrations organized (No.)* Distributed (after MTR) LCCs USG applicators porous pipes traps 811 NA 28. Staff training. According to the PCR, during the project period a total of 6,352 PO staff (technical officers, ATOs, field organizers, mid-level officers and branch managers) had received training, and PO executive directors and credit coordinators had participated in 21 international study tours. Furthermore, 129 PKSF staff members had received training on project orientation. 29. Marketing services. Project support envisaged in the design to facilitate market linkages included the financing of six Farm-to-Market Resource Centres for three years, with each centre to have a business development officer as a local level facilitator. Producer groups were to be formed, including but not limited to producers who are borrowers from different project POs. 30. Through a competitive process, the NGO Practical Action Bangladesh (PAB) was selected to work for a three-year period with six project POs. The resource centres as such were never introduced, presumably overtaken by the proposal by PAB to work with six POs. 20 PAB and POs jointly identified 17 subsectors (such as maize, bitter gourd and beef fattening) with market potential, and undertook various activities to strengthen linkages between small-scale producers and various market actors. A total of over 3,600 farmers in 180 groups were supported with training, workshops and visits. Training included modern production technologies and product quality improvement. 31. Project coordination and management. PKSF was responsible for project implementation and management and performed the following tasks amongst others: (i) Select POs and disburse funds to POs (loans for onlending, and grants for training and other technical support); (ii) Assist POs and DAE to organize training for beneficiaries and staff members; (iii) Monitor PO performance; (iv) Maintain the management information system; (v) Monitor/assess the results and impact of the project; (vi) Procure goods and consultancy services financed by the project. PKSF has a standard approach to selecting POs. They also have a wellestablished system for getting reports monthly from POs, using standard indicators in an Excel form (e.g. number of members, borrowers, cumulative loan disbursement, amount of loans outstanding) that are consolidated into an Oracle- 20 The supervision mission in September-October 2007, prior to contracting of the PAB, noted that it was pleased to see that PAB had modified the activities that were proposed in the appraisal report taking account of its own experience in this field and expertise. 8

21 based database using a specialized software to convert data in Excel files, and analysed to monitor POs performance. 32. The project financed the positions of technical coordinator, training officer and monitoring officer, employed by PKSF for the project. Other PKSF administrative staff (e.g. accounts, procurement) was also involved in project management, which was part of PKSF s co-financing contribution to the project. Key points The project was intended to improve access to financial services by small and marginal farmers, who were not served or were underserved by NGOs-MFIs or banks. The project was implemented by PKSF, a not-for-profit apex organization providing funds to MFIs in collaboration with 35 POs (NGOs-MFIs) and other stakeholders. Most of the project budget was allocated for credit funds. The output targets were mostly achieved and the actual project cost was almost 100 per cent of the budget. III. Review of findings A. Project performance Relevance 33. The project objectives and design were consistent with Government strategies. Government development strategies 21 at design and during implementation all emphasized the importance of agricultural and rural development for poverty reduction, and the need for support for women, marginal and small farmers to improve their access to finance, technologies and services, as well as the promotion of micro, small and medium enterprises. Emphasizing the key role of microcredit in poverty reduction, government strategies recognized: (i) The important contributions by MFIs in developing the institutional capabilities, knowledge and skills of the poor; (ii) The importance of addressing the needs of different segments of clientele by microfinance services; (iii) A greater role of the private sector and NGOs in input supply and service provision. It was also noted 22 that formal banks did not offer a rural credit programme and that NGOs microcredit operations did not cater to agricultural lending at the time. 34. The project objectives and design were also in line with IFAD s strategic framework and country strategic opportunities programme (COSOPs 1999 and 2006). The 1999 COSOP for Bangladesh noted the importance of...improving the access of the poor, including small and marginal farmers, to financial and other services through appropriate institutional mechanisms..." and, " development of more innovative financial products to match the needs of the small and marginal farmers...". A country programme evaluation (CPE) for Bangladesh was conducted by IOE between late 2004 and 2005, 23 and its findings were fed into the 2006 COSOP. The CPE and 2006 COSOP confirmed the strategy and approach of MFMSFP, in terms of the support to develop financial services for marginal and small farmers through established financial institutions for sustainability. 35. The focus on small and marginal farmers who were underserved by then existing financial service providers was relevant to the needs of this particular segment of the rural poor in the project area. Also, the delivery model through NGOs supported by their institutional strengthening, as well as combining provision of 21 A National Strategy for Economic Growth, Poverty Reduction and Social Development (Interim Poverty Reduction Strategy Paper, 2003); Unlocking the Potential: National Strategy for Accelerating Poverty Reduction (Poverty Reduction Strategy Paper, 2005); and Moving Ahead: National Strategy for Accelerated Poverty Reduction II (2008). 22 Poverty reduction strategy paper, The main mission was undertaken in February 2005 and a national round table workshop was organized in July

22 credit provisions with capacity-building support for beneficiaries was highly relevant. While the inclusion of marketing and business development support in the project was appropriate, there could have been better integration and synergy of this element with microfinance services and technical capacity-building. 36. There were no significant changes made in the project design during implementation, but some adjustments were made based on the implementation experience and to adapt to the context. These included the introduction of a pilot scheme for livestock insurance, proposed addition of agricultural expertise in POs to supplement public extension services (by DAE), and the focus on fewer selected agricultural technologies for project support that were found to be highly relevant. Details on these are discussed in subsequent sections. 37. Based on the above, the PPA rating for relevance is 5 (satisfactory). Effectiveness 38. Objective 1: To enable marginal and small farmers and agroentrepreneurs to access and utilize viable microfinance services in order to invest in existing and new farm and off-farm enterprises. The main instrument for achieving the objective was the provision of credit funds by PKSF to selected POs, who would then on-lend to members of small and marginal farmer groups. Key data on outputs and outreach were provided earlier (table 2), which showed satisfactory achievements. The key questions then would be: whether the group members would have had less access to microcredit and the loan products that were made available without project support; and, whether microcredit extended with project support enabled the borrowers to invest in on- and off-farm enterprises. 39. On the first question, this is likely to be the case given that before the project carrying over the Grameen tradition NGO-MFI services focused more on the very poor and ultra-poor associated with the landless and the functionally landless. Furthermore, the introduction and promotion of seasonal lending was an important innovative aspect of the project. The project appraisal indicated that there was a significant demand by farmers for loans which would match more closely the seasonal cash flow from agriculture, while the normal practice of loan repayments in microcredit systems was equal weekly instalments. In order to address the issue of slower circulation of funds within POs when providing seasonal loans, lending from PKSF to POs was restructured prior to the mid-term point. At project completion, out of 35 POs, 19 disbursed at least 80 per cent of their total MFMSFP loans in through the seasonal repayment modality. The proportion of seasonal lending out of the total MFMSFP financed portfolio increased steadily during the life of the project; the November 2006 supervision mission reported 16 per cent, 39 per cent was reported at the MTR, and at project completion the figure had increased to 53 per cent. 40. The 2012 impact study of the project (Nielsen report) indicated that the proportion of borrowers taking loans with a seasonal repayment modality was significantly higher amongst project beneficiaries (44.48 per cent) than control group households (11.79 per cent) who were not part of the farmer groups of project POs, and if they had any access to microcredit, it was outside the project (figure 2). 24 On average, a member had 4.57 regular (weekly) repayment loans and 6.34 seasonal loans over the project period. 24 The responses on this particular question were obtained from 65 per cent of all control group respondents (300), whereas for project beneficiary respondents, 99.7 per cent of those interviewed (900) provided responses, as would have been expected. 10

23 Figure 2 Repayment of modality: most recent loan and preference: project beneficiaries versus Repayment control group modality: most recent loan and preference: project beneficiaires versus control group Repayment modality for most recent loan: project beneficiaries Preferred repayment modality: project beneficiaries 55.52% 44.48% Seasonal Weekly 41.81% 58.19% Seasonal Weekly Repayment modality for most recent loan: control group 88.21% 11.79% Seasonal Weekly 67.69% Preferred repayment modality: control group 32.31% Seasonal Weekly Source: Nielsen Company, Impact Study of of MFMSFP. 41. According to the survey, the preference for a seasonal repayment modality was higher amongst the project participants, but there was still a sizable proportion who preferred a weekly repayment modality (41.81 per cent). Indeed, the interviews with group members by the PPA mission also confirmed this; while some farmers clearly appreciated having an option of seasonal repayment, others felt that seasonal/lump sum payments might be risky and simply felt more comfortable and safer with weekly repayments. What was important for farmers was to have choices, depending on their needs (seasonality of investment activities, whether they had other sources of incomes or not, etc.). The fact that this choice 25 was made available under the project was a remarkable contribution. 42. On the second question of whether microcredit enabled the borrowers to invest in enterprises, according to the stated purposes by the borrowers, lending for crop production remained the highest throughout the project at between per cent; out of which over 80 per cent was for rice production, followed by livestock including poultry (but mostly for beef fattening) and horticulture (figure 3) There was also an option of dual loans, i.e., a combination of regular and seasonal repayment modalities at the same time, but still adhering to the loan amount ceiling in total. This was also found to be useful by some borrowers. 26 The number of loans by stated purpose is largely proportional to volume of loans by stated purpose, with the average loan size for most categories in the range of BDT 11,000-13,

24 Figure 3 Stated purpose of loans (in volume, against the total amount disbursed as at June 2011) Source: Project completion report; PKSF MIS. 43. Recognizing that borrowers could use the loans for purposes other than those stated in their loan applications, the Nielsen study at project completion interviewed beneficiaries on how they actually used their most recent loan. Fourteen per cent was for consumption purposes, but still, a sufficiently high proportion (about 86 per cent of responses) was for productive activities (e.g. 80 per cent for agriculture). Based on available information, as indicated in the PCR, borrowing for establishing new enterprises per se (especially off-farm) was rather limited: a large proportion of loans was taken for rice production, presumably predominantly for home consumption. However, microcredit supported diversification of crop/livestock production; for example, beef fattening was clearly a popular activity the farmers knew could be profitable. 44. Over the project period, the average loan size increased from BDT 7,486 in the first year to BDT 15,471 in the final year, indicating an increase above the inflation rate (ranging around 7-9 per cent per annum). This would be an indication that borrowers took loans of progressively increasing amounts for diversified or growing productive activities a tendency confirmed by the PPA mission. All or most members had access to loans, but some members met during the PPA spoke of inadequate amounts relative to the requirements for production, due to ceilings imposed by POs. In the case of female farmers heading households, it was also likely that labour costs were higher, as they depend more on hired labour than men. 45. The livestock insurance and crop storage pilot schemes both generated valuable experience and lessons. Livestock insurance, which was piloted in the last two years of the project, demonstrated an increase in uptake by farmers, 27 clearly indicating its popularity and high relevance, especially in terms of improving farmers access to veterinary services which was part of the package. Further work is needed to refine the operational modalities to enhance the scheme s viability (i.e. taking into consideration when pricing the full cost of running the scheme and risk elements) and risk management (e.g. disasters, fraudulent claims). There is also scope for considering extending such a scheme to cover dairy animals (now available only for beef fattening), for which there seemed to be a demand by farmers. The crop storage pilot scheme indicated that at the moment it was difficult to be viable, due to instability in market prices for paddy and other cereals. 27 There was a significant increase between 2009/10 (1,027 farmers/members) and 2010/11 (10,833 farmers/members). 12

25 46. In summary, the first objective was largely achieved in terms of enabling marginal and small farmers to access and utilize microfinance services. This was mainly for financing existing farming activities with low commercial orientation (i.e. rice) and to some extent agricultural diversification. At the same time, borrowing by agroentrepreneurs, or for establishing new profitable enterprises per se (especially off-farm), was relatively limited (paragraph 42). As one aspect of the viability of microfinance services, the loan recovery rate under the project was maintained at a high level throughout the project period. More discussion on the issue of viability will be provided later (section on sustainability). 47. Objective 2: To increase agricultural production through access to information, the adoption of new technologies and linkages to markets. The project provided capacity-building support for agricultural extension service providers (DAE, POs) and beneficiaries (i.e. training, demonstration and field days). The main activities and outputs were outlined in the earlier section. The Nielsen report (2012) provided indications about how these activities were perceived by the participants and the adoption level. The assessment by participants was positive overall; the majority of them found the training and technologies very useful (tables 4 and 5). Furthermore, the adoption level, according to the survey, was also generally encouraging. Table 4 Beneficiary perception of training activities by overall category Crop training Non-crop training M=men; F=women M F M F No. of responses* % of total response Training very useful (% of responses) Practiced (% of responses) Source: Nielsen Company, Impact study of MFMSFP. * The total number of interview respondents was 900: 747 women and 153 men. 48. With specific reference to the five priority technologies promoted (all crop-related), most respondents who received training (over 90 per cent for all technologies) found the technology useful (table 5). Adoption rates varied between 50 per cent (Alternate wet and dry irrigation - AWD) and 77 per cent (Maria seed treatment - MST) of the respondents. 28 Most of these adopters reported yield increases and reduction in production costs to varying degrees. As per the PCR, the use of Leaf colour chart (LCC) could lead to a 5-8 per cent yield increase, the urea super granule (USG) to a 10 per cent yield increase, and the pheromone trap, to a modest yield increase. 28 Investigations in the field by the mission revealed several factors influencing adoption. Seed preservation (for which MST is used) and vegetable cultivation (for which pheromone trap is used) are women s activities, and women were more easily able to adopt these technologies after training. LCC entails going often to the field, which is difficult for women. AWD is relevant mainly in areas prone to flooding and not where deep tube wells are used. The spread of USG was constrained by the fact that it is relevant mainly in clay-like soil, and requires machines for production and application. 13

26 Table 5 Beneficiary perception of training activities priority technologies promoted Priority technology Urea Super Granule Leaf Colour Chart Alternate Wet and Dry Pheromone Trap Maria Seed Treatment M=men; F=women M F M F M F M F M F No. of responses to this question* % response of total interviewed Concept Very useful (%) Practiced and continued (%) Big increase in yield (%) Small increase in yield (%) Big decrease in cost (%) Small decrease in cost Source: Nielsen Company, Impact study of MFMSFP. * The total number of interview respondents was 900: 153 men and 747 women. 49. The Nielsen report provides information on the changes in agricultural production and productivity for project beneficiaries (table 6). The survey results indicate only modest increases in yields, but it also shows crop diversification (i.e. more people engaged in non-rice farming), although it is difficult to get a sense of the extent to which the project contributed to these factors. There is also a question on how the vegetable or fruit yields (which would include different types) could be comparable. Table 6 Yield of different crops of intervention households (tons per hectare) Cropping seasons* Boro Kharif I Kharif II Before After Before After Before After Average N Average N Average N Average N Average N Average N Rice Maize Wheat Potato Fruits Vegetables * The boro season spans November to May for rice and other crops mainly grown under irrigated conditions. Kharif I begins mid-march and ends mid-september and Kharif II begins mid-march and ends mid-january (Gumma et al., 2012, Rice Cropping Patterns in Bangladesh, International Rice Research Institute, Philippines, Department of Agriculture, Table 10.05: Crop Season in Bangladesh and Seed Rate of Important Crops, N indicates the number of respondents who provided data (out of 900). Source: Nielsen Company, Impact study of MFMSFP. 50. Despite the modest yield increase reported by the survey in table 6, the perception of group members who received training and were exposed to various technologies 14

27 was very positive overall in terms of their relevance, and responses to yield increases and cost reduction (Table 5). This picture was confirmed by the PPA mission through its interaction with group members. In fact, increasing agricultural production should be interpreted broadly as increasing returns to agricultural production beyond crop/livestock yields per se. For example, amongst the priority technologies promoted, the popularity of pheromone traps to replace spraying of insect pests was obvious in the vegetable growing areas (especially gourds). The farmers were satisfied with reduction in pesticide use and associated costs, and also for health reasons. 51. Furthermore, even with a modest yield increase, combined with production cost reduction, increased cultivated land and cropping intensity, the increase in agricultural outputs and returns could be significant. The Nielsen report noted an average of 23 per cent increase in cultivated land (own and leased/sharecropped) by the project participants. Indeed, the increase in the average areas leased was more notable, i.e. 56 per cent. The cropping intensity 29 of the intervention households increased from 178 to 186 per cent. Discussions by the mission in eight villages also suggested diversification of crops and livelihoods by members (see case studies in annex XII). It is reasonable to conclude that improved access to microcredit with an option of seasonal repayments, along with the training given, helped expand access to inputs, land under cultivation, cropping intensity and improved agricultural production. 52. Apart from crop production, the project contributed to improved livestock production through training activities, as well as (though on a more modest scale) the linkage of loans for purchase of cattle for fattening with basic veterinary prophylactic measures and insurance. Some farmers met by the mission have been able to secure a per cent increase in initial investment of BDT 25,000 to 30,000 after deducting costs (see case study C in annex XII). 53. For market linkages support through the NGO PAB, it was reported 30 that most of the output and outcome targets that were set out in the proposal were met; for example, 3,600 beneficiaries against the target of 3,600, production volume increase of 33 per cent against the target of 30 per cent, and income increase of 50 per cent against the target of 40 per cent. However, the reliability of some figures (e.g., production increase, income increase) is a question, since this report was based on discussions with focus groups and key informants. Moreover, based on the PCR and interaction with PKSF, this specific support was not perceived as particularly effective or successful on the whole, 31 although there were some cases with encouraging results 32 (e.g. linking milk producers to a sweet shop in Dhaka that established a small rudimentary processing unit in the vicinity 33 ). Key constraining factors seemed to include limited availability of good quality inputs, as well as production on too small a scale (e.g. sweet corn, strawberry). 54. In summary, the project was reasonably effective in increasing agricultural production (and perhaps more importantly, returns to production) for the borrowing farmers, even with a modest yield improvement, due to various factors 29 The fraction of the cultivated area that is harvested is referred to as cropping intensity. Cropping intensity may exceed 100 per cent where more than one crop cycle is permitted each year on the same area (description of cropping intensity by FAO). 30 Evaluation Report on Facilitation of Marketing Services Project under MFMSFP, December Report prepared by MATRIX for Practical Action Bangladesh. 31 The PCR noted the difficulties encountered in getting partnerships between NGOs (the service provider for marketing services and some POs) to work at the field level; in particular, a rather unclear division of responsibility between organizations, as well as a limited scale of operations and time duration spent on each subsector. 32 According to the PCR, brinjal, tomato, yard long bean, bottle gourd and kachur lati did relatively well, but groundnut seed, turmeric, bitter gourd, maize and tilapia were not successful. 33 Now with an assured market, one milk collector collects milk from farmers in the village and delivers it to the processing unit some kilometres away. The prices are fixed and agreed, but the collector needs to do a simple check of the quality (mainly fat content). The farmers are happy since before they had to travel a distance to sell the milk and the prices were not predictable. 15

28 such as cost reduction, increase in cropping intensity and increase in cultivated areas. The contribution of improved market linkages to increased production was rather limited compared to those from improved access to information and adoption of new technologies. This may also be related to the fact that the majority of priority technologies were for rice production predominantly intended for home consumption. 55. Objective 3: To develop and mainstream PKSF operational procedures for lending to farmers and related agroenterprises. 34 For both PKSF and POs, the development and mainstreaming of operational procedures for lending for agricultural purposes were achieved as indicated by an increase in agricultural and seasonal lending, as well as their indication to retain in-house agricultural expertise at project completion. While the MFMSFP was still under implementation, PKSF incorporated seasonal loan and agriculture sector microcredit (ASM) products as part of their core programme, in 2006 and 2008 respectively 35 (see annex IX). PKSF restructured its lending policies to POs, by issuing ASM for 14 months and seasonal loan for 10 months. Changes were also made in lending terms from PO to borrowers. 56. The project demonstrated the benefit of integrating lending with technological support. The majority of POs have mainstreamed this mechanism in their lending operations, as well as retaining technical staff. See also the section on sustainability. 57. Targeting. The project was to adopt the following three-stage approach for targeting: land ownership size/operational landholding size; main occupation being agriculture; and poverty level. As for the land size, the eligible farmers were those operating between 0.5 and 2.5 acres of owned land, or between 1 and 5 acres of land, including areas leased or sharecropped. 58. With regard to application of the criteria for land size (owned/operated), the Results and Impact Management System (RIMS) survey in 2011 indicated that 50.3 per cent owned between acres (so-called functionally landless ), but did not provide data on operational landholding. The Nielsen report, while not containing an analysis of proportion of members across different categories of landholding, indicated the average cultivable land operated by project participants as 1.5 acres (including 0.38 acre leased) before project support and 1.85 acres (including 0.59 acre leased) after the project. Based on these average figures and PPA mission observations, it can be said that the project was effective in targeting marginal and small farmers With respect to the poverty criterion for targeting, the appraisal report provided examples of nine indicators that could be used as follows: female-headed households, adolescent girls, unemployed young people, tribal households, sharecropper, seller of wage labour, owning only one or two cattle, producing less than nine months of food for households and suffering a period of food shortage. Each PO was to fine tune these criteria. The project adopted a practical approach: a potential member was considered eligible as long as s/he met at least one of the nine poverty indicators (provided as examples in the appraisal report), in addition to meeting the other two project criteria (land size and main occupation). POs were requested to prepare checklists to show that their members were those actually targeted by the project. It is hard to say whether having POs check against the nine poverty indicators beyond the other two criteria was practical (and added 34 The President s Report only refers to PKSF operational procedures, whereas the loan agreement also refers to those of POs. 35 There are some overlaps between seasonal loan and ASM as both can finance agriculture-related activities and allow seasonal repayment modality. The seasonal loan can also finance non-agricultural Income-generating activities. 36 The PCR mission reported that based on the six groups visited, 10 per cent of group members owned more than 2.5 acres of land (up to 5 acres), while 13 per cent were farming under 0.5 acres. 16

29 value). Most likely it served as a good reminder to POs as to what kind of people should be targeted. 60. Overall, project participants were largely from the intended target group. PKSF, with support from IFAD supervision missions, provided effective guidance to POs. All these POs have different mandates and operational focus (e.g. agriculture, social development, etc.). Thus, getting the POs to understand the objectives and target group of the project required strong guidance and coordination by PKSF. Through the use of checklists, PKSF monitored the type of group members supported by POs and provided guidance in case of any perceived divergence from project intention. This was necessary since a number of POs were used to operating a microcredit programme targeted at the landless and the poorest not small and marginal farmers. 61. Overall assessment. In summary, based on achievements against objectives and outreach, the effectiveness is rated as 5 (satisfactory). Efficiency 62. Efficiency is a measure of how economically resources and inputs (funds, expertise, time, etc.) are converted into results. Here, this criterion will be looked at in terms of timeliness and process, cost of providing project services and benefits generated. 63. Timeliness of loan effectiveness and implementation. The loan for MFMSFP was declared effective 6.9 months after IFAD Board approval, upon the fulfilment of the effectiveness conditions. 37 This is notably shorter than the IFAD average (12.1 months) and the average for the Asia and the Pacific Region (8.8 months). 38 The pace of IFAD loan disbursement was rated satisfactory consistently throughout the project. 39 The project was completed on time with the IFAD loan disbursement rate at 97 per cent at loan closing. 64. Working through PKSF and its POs contributed to efficiency in project service delivery. This allowed PKSF to build on its existing partnerships with POs and to avoid spending time and resources required for preparatory activities. In general, many projects suffer from slow start-up, but in this project the pace of implementation appeared to have been satisfactory from the onset, including in terms of the timely selection of POs and upazilas (subdistricts), group mobilization and training activities. For example, about months after loan effectiveness, the project already recorded 41,285 members in 2,361 groups 40 with 25 POs (i.e. close to 20 per cent of the target of 210,000). An area that had some delays initially was that of working with DAE. 41 With support from supervision missions, PKSF and POs tried to address this issue, which led to a practical adjustment involving the increased role of POs in technical support. 65. Fiduciary and administrative aspects of project management were also carried out by PKSF in an efficient manner, including the management of all project-related accounts, the preparation and signing of withdrawal applications, and procurement in accordance with IFAD procurement guidelines. There was no direct involvement of the Ministry of Finance in these aspects of the project, thus avoiding potential bureaucratic delays. Where the Ministry of Finance had a key role to play, such as 37 The effectiveness conditions included: appointment of project staff; opening of the Special and Project Accounts; Government s delegation of authority to PKSF for operating the Special Account; the signing of the Subsidiary Loan and Grant Agreement between the Government and PKSF; and, ratification and a favourable legal opinion. 38 Project Portfolio Management System (PPMS). Data based on all projects up to April Project status reports. The rating was consistently 5 (satisfactory) or 6 (highly satisfactory). 40 The progress as of August 2006 (MFMSFP supervision report, 30 October 10 November 2006). 41 DAE was expected to provide most of the necessary technical training. It took a long time to get the memorandum of understanding finalized and signed. Even after the delayed signing in July 2006, 13 months after loan effectiveness, the activities did not take off as expected since DAE indicated that they could not channel project funds to their field offices without some type of project administrative unit at headquarters, which would have meant additional overhead costs and an inefficient use of project funds. The memorandum of understanding was amended in March 2007 to make POs responsible for providing these services with the cooperation of DAE and other service providers. 17

30 submitting requests for loan amendments, this was also done in a timely fashion. Thus, the arrangements took advantage of a well-established system (e.g. financial management, procurement), and the personnel of PKSF contributing to timely and efficient implementation. 66. Another process issue was that of the services offered by NGO-MFIs. Group members met by the PPA mission said that they received loans within a week of application, which helped to buy and apply production inputs on time. 67. Costs. The actual cost for the project management component was 2 per cent of the total project cost and 2.2 per cent of the IFAD loan disbursed, which is extremely low compared to other projects. 42 It is true that projects with a large proportion of funds allocated for credit lines tend to have relatively low project administration costs. Even so, the figure in this project is very low, indicating high efficiency. 68. Out of the total actual project cost (US$29.81 million), US$25.83 million (86.6 per cent) was for onlending, with the bulk of this amount for microcredit funds (US$25.4 million) and the remainder used for the disaster reserve fund and crop storage pilot scheme. The balance was used for technical support and project management/overheads. The PCR also noted relatively low costs for training provision. With the bulk of the funds being for onlending to be recycled, the cost associated with project management and service provisions (including capacitybuilding activities) can be considered as US$3.99 million. Using a 20 per cent of dropout rate during the project period with the number of beneficiaries maintained at 281,620, this results in the cost of project services as US$14.20 per project participant. If the dropout rate is lowered to 10 per cent, it would be US$ Either way, these figures are considered very low. 69. Benefits. At appraisal, an economic analysis was not carried out since the likely uptake of loans for different farm and off-farm enterprises could not be predicted with any certainty and other benefit streams were also difficult to quantify. The appraisal report provided potential crop and livestock enterprise budgets and farm models, as well as non-farm enterprise models, indicating the likelihood of their financial viability. The rationale was that with improved access to finance (enabling timely purchase of inputs), technologies and extension support, farmers would be able to intensify their existing crop and livestock farming system and/or diversify into new enterprises. 70. It was considered that incremental returns to microcredit borrowers would be one of the main benefit streams. In this regard, the PCR contained information on profitability of selected enterprises and technologies, based on updating and validation of monitoring and evaluation (M&E) data and a detailed study undertaken by PKSF. The PCR provided: (i) Comparison of estimated crop yields and net income change at appraisal projection and those based on data collected (by PKSF) for key selected crops (showing both positive and negative changes depending on crops, but some questions on the validity of conclusions 44 ); (ii) Net 42 While it is not documented, the benchmark for the proportion of project management cost against total project costs used at IFAD is 10%. The PPA for a similar project with the same implementing agency PKSF (Microfinance and Technical Support Project, MFTSP) reported actual project management to be much higher at 15 per cent. Reviewing the cost structure, it is noted that this was because the support for POs (e.g. PO technical staff salaries) was budgeted under the Project Implementation Support component, whereas under MFMSFP, such support was budgeted under the first two technical components. Thus, in the case of the previous MFTSP, the cost of the Project Implementation Support component included those that would not be strictly considered as project management. In both projects, PO technical staff salaries were to be phased out in the later part of the project and taken up by POs; hence, they would not be considered as project management costs. 43 This is lower than what was computed in a similar manner for the sister project Microfinance and Technical Support Project (US$21.20). IFAD Project performance assessment report, For example, the report presents a comparison between net incomes estimated at project end based on actual data collected, with net incomes estimated at appraisal in nominal terms, thus not taking into consideration any discounting factor. Also, data presented are limited to an increase in net income per production unit per production cycle, and it does not take into account farm models. 18

31 income change in beef fattening using livestock insurance services (about 17 per cent); (iii) Net income change based on adoption of the five technologies promoted (between per cent). 71. According to the available data, the largest share of loans taken was used for rice production, which tends to be for home consumption and is something farmers assume has to be grown if s/he has some cultivable land. For those households that could not produce enough to last for the entire season, increased rice production saved money which would have been spent to buy additional rice. For those households with surplus through increased production, selling some rice would have also been an option. However, returns could have been bigger if there had been more uptake of other more profitable enterprises. 72. The other potential benefits, although difficult to quantify, would include increased returns to POs (NGO-MFIs) from diversified loan products (seasonal/agricultural) and clientele (marginal and small farmers). Perhaps more importantly, the promotion and demonstration of agricultural and seasonal lending operations, and the increased availability of funding in this regard by PKSF (i.e. seasonal loan and ASM products), have had and will continue to have significant benefits beyond the project. 73. Overall assessment. Based on the above, efficiency is rated as 5 (satisfactory). B. Rural poverty impact 74. This section largely draws from RIMS surveys in 2006 and 2011 and the impact study of 2011 ( Nielsen report ). While they provided useful information, there were some areas where the reliability of data could be questionable (see annex VIII). Hence, one of the PPA mission s focus in the field was to obtain supporting (or non-supporting) evidence or indications for some findings from the impact surveys and other reports. From the mission s inquiry in the field, borrowing from multiple NGO-MFIs, which could have influenced the assessment of project impact, appeared not to be an issue; the impression was that normally NGO-MFIs would have work territories and that different organizations would generally not operate in the same village. 75. Household incomes and assets. Income and expenditure. The data on household incomes are given in the Nielsen report, which indicated that the income of member households went up from BDT 111,692 to 181,566 per annum, which is a 63 per cent increase in nominal terms, while household expenditure increased from BDT 100,028 to 152,556 per annum (53 per cent increase). These figures would indicate a net increase of BDT 29,010 per annum, but it should be cautioned that there are some questions on the reliability of such data and analysis. 45 Nonetheless, based on the mission interaction with project beneficiaries, and given the fact that borrowers typically take loans 46 of progressively increasing amounts, and taking into consideration some evidence of increased returns for agricultural activities (i.e. yield increase and cost reduction), it is reasonable to believe that the project contributed to an increase in household income (also see case study A in annex XII). Increased rice production, for which a large proportion of loans was taken, contributed to saving money (which would have been spent by farmers on buying rice to supplement production), or creating or increasing a surplus to sell. 76. Household assets. Some information on household assets was available both in the Nielsen report and the RIMS reports, but they were inconsistent (see annex VIII). 45 The questionnaire requested respondents to indicate annual incomes by different sources (e.g. crop farming, vegetable farming, poultry, day labourer, etc.) and expenditures by items (e.g. food, clothes, education, etc.). The before data were presumably taken from the household member profiles of those interviewed, which were kept by POs. When comparing data by the same respondents, while it is likely that the responses were provided following the same standards and understanding, it is questionable if many people are in a position to provide close to accurate information such as annual income and expenditures with breakdowns. 46 The Nielsen report indicated that on average a member took 4.56 regular loans and 6.34 seasonal loans. 19

32 Land area (in decimal) The levels of ownership of certain assets shown in these reports were indeed quite different (e.g. bicycles). The Nielsen report, presumably comparing the before and after situations of the same respondents, showed insignificant changes in assets ownership, whereas RIMS results showed remarkable to modest improvement. The reasons for such notably different pictures are not clear and this has raised questions on the accuracy and reliability of the survey findings. Therefore, it has been impossible to draw reliable conclusions on changes in household assets based on these surveys. 77. The surveys also looked at change in housing conditions. The Nielsen report indicated an increased percentage of respondents with improved housing conditions, including an increase in those with cement floors (5.22 to 9.78 per cent) and cement walls (8.67 to per cent), and a decrease in those with a straw/thatched roof (6.33 to 1.33 per cent). RIMS contained a similar question and here the results were comparable to those of the Nielsen report: households with a cement floor increased from 4.9 (2006 baseline) to 8.0 per cent. 78. Land assets. Also reported in the Nielsen report was an increase in their own cultivable land from to decimals, and in leased land from to decimals (100 decimals = 1 acre). Combined, the average land area operated/cultivated by the project participants increased from 1.51 to 1.85 decimals (i.e per cent increase). There was also less tendency to mortgage land to moneylenders than before (see box 2). Figure 4 Change in access to land: project participants before and after Leased land Own cultivated land 0 Before Source: Nielsen Company, Impact study of MFMSFP. Box 2 Coping with vulnerability After Four women of Char Shahapur Women and Marginal Farmer s Group reported that in the early stage of group formation there was a tendency to mortgage land, sell livestock or borrow from a moneylender when faced with an emergency like an accident, ill health of a husband or death of cattle purchased through a loan. Now livelihoods have diversified, and they feel less vulnerable to shocks. Apart from crop cultivation and vegetable cultivation, some have added beef fattening, dairy, rice trading through taking loans. With the help of the loan, they grow more diverse crops and vegetables than before. When necessary, they also roll beedis. * Beedis are country cigarettes. This is not something introduced by the project. 79. Savings. The Nielsen report indicated a 58 per cent increase in the average savings of respondents (from BDT 7,673 to 12,128). It was not clear whether this was due to increased income or to the requirement of more compulsory savings for repeat borrowers to access increasing amounts of loans. According to the PCR, saving per member with POs was US$29 (about BDT 2,000), but many members were reported to have fixed deposit savings accounts with commercial banks and saved between US$ (at the time of the PCR mission). The PPA mission met members who had savings with a bank. 20

33 80. In summary, the impact domain of household incomes and assets is rated as 5 (satisfactory). It should, however, be noted that this increase in household income is normally a slow process that takes place over time. Typically, borrowers start with a very small loan (as little as BDT 5,000), the amount grows progressively and their small economic activities get diversified. 81. Human and social capital and empowerment. At the end of the project, 14,289 groups had been formed. Various training (crop, non-crop, social development) served to strengthen the capacity of group members in respective areas. The Nielsen report indicated that the relevance and quality of various training activities were in general assessed as very high by beneficiaries (see tables 4 and 5). A high proportion of participants of crop, non-crop and social development training also said that they were practicing what was learned, although the figures were slightly lower for the five priority technologies, probably because they also required access to inputs/materials and not all interested members had easy access. Furthermore, regarding specific agricultural technologies, many beneficiaries who received training reported having disseminated the technologies to others. The PPA mission s discussions in the villages visited confirmed this positive picture. 82. Social development training covered issues such as sanitation, child health, education, child marriage and women s rights. Interestingly, this training was imparted to both women and men members. As per the Nielsen s report, between 77 per cent of men and 88 per cent of women respondents found the social development training useful, and between 91 per cent of men and 96 per cent of women reported applying lessons from the training. 83. Sanitation is another area where the two surveys (Nielsen and RIMS) provided inconsistent pictures. 47 However, in the villages the PPA mission visited, there was an indication that the sanitation situation had improved. While the project supported some social issues training, sanitation was not an area the project was expected to have direct influence on in any case. Nonetheless, it was found that project support made some contributions in this respect when microcredit and training was channelled through POs (not all, but some) that had sanitation and social development aspects integrated into their operations The PPA rates the project performance on human and social capital and empowerment as 5 (satisfactory). 85. Food security and agricultural productivity. The issue of agricultural productivity was discussed earlier (paragraphs 47-54). Food security is another area where the data from the RIMS and Nielsen report were inconsistent. RIMS noted an increase in percentage of respondents reporting food shortages (from 22 to 50 per cent). This big jump was puzzling, especially in the absence of any calamity in the project area during the project period. The same report commented that it was not possible to compare the data gathered in 2006 and 2011 because the wording used for the question concerned in two surveys was different. 49 The Nielsen study also covered a question on food security. The question was 47 On the one hand, the RIMS baseline and follow-up surveys indicated that the proportion of households with access to adequate sanitation facility decreased from 63 to 59 per cent; improved pit latrine, pour flush latrine and flush toilet were considered to be adequate sanitation facility. On the other hand, the Nielsen report indicated general improvement in sanitation facilities of members. The report indicates a significant decrease in the percentage of households with open pit latrines (from 27 to 6 per cent), and increases in those with pit latrines with some improvements made. Also, the RIMS survey indicated 53 per cent of the households had VIP latrines in 2011 a completely different figure from 2.3% in 2011 in the Nielsen report. It is also possible that the interpretation of improved latrines or VIP latrines differed between the surveys or between the respondents. 48 One PO, for example, insisted that having adequate sanitation facilities was necessary for group membership. 49 Data on food shortages were collected asking questions with different wordings between the baseline survey and the follow-up survey. This precludes examining changes in levels of hunger, comparing the data of the two surveys. 21

34 comparable to those under RIMS, 50 and yet the findings were unexplainably different. It is possible that such a discrepancy could have been caused by different ways of putting similar questions into Bengali, and/or interpretation by enumerators and/or respondents. The Nielsen report provided a comparison between project participants and the control group (table 7), indicating a better food security situation for the former. In terms of child malnutrition, RIMS surveys showed improvements (figure 5), 51 which was contradictory to the worsening food security situation reported in the same survey. A measurement-based anthropometric survey for child malnutrition might be considered to generate more credible data on which to base findings. Table 7 Food security perceived (% of respondents) Indicators Project participants (No.=900) Control group (No.=300) Experience food shortage whole year Experience food shortage sometime during the year Not too much extra food Having additional food Source: Nielsen Company, Impact study of MFMSFP. Figure 5 Changes in child malnutrition (0-59 months) status Source: Mitra and Associates, Baseline RIMS (2006) and impact (2011) surveys. 86. The PPA mission got an indication in the field that food security improved, but like other impact domains the extent of improvements varied depending on the initial assets and skills, number of times and amount of loans taken, and adoption of technical inputs, amongst others. Improved food security was based on increased production of staple food (rice) or more diverse products (vegetables, fruits, livestock or fish) for home consumption (or sale, if there was a surplus), and increased income from on- or off-farm productive activities. While it was impossible to establish exactly to what extent the project helped improve food security, the following findings noted in earlier sections point to likely project contributions in this domain: increase in cultivable land, increased cropping intensity, diversification of livelihoods (on- and off-farm), reasonable adoption rate of improved 50 The question in RIMS is as follows: In the last 12 months, did your household experience a hungry season? (The hungry season means the number of months a household does not have enough food because their own stores are depleted and they do not have money to buy food). The Nielsen study asked Did you feel food shortage in the year? 51 The 2006 survey covered 599 children aged 0-59 months and the 2011 survey covered 485 children. 22

35 technologies and increased crop yield. Overall, the project is rated as 5 (satisfactory) with regard to food security and agricultural productivity. 87. Natural resources and the environment. No significant impact on the environment was expected in the project design and there was no project intervention explicitly relating to this area. Nevertheless, overall it turned out that the project had some positive impact on natural resources and the environment. The two fertilizer-related technologies that were promoted (USG and LCC) contributed to the reduction in use of urea fertilizer by farmers. Pheromone traps served to reduce the use of chemical insecticides, and the AWD technology reduced excess groundwater pumping. Further, to adapt to climate change (rains coming later) the project introduced a short duration rice variety. Overall, the performance of this project with respect to natural resources and the environment is rated as 4 (moderately satisfactory), given that an emphasis on these priority technologies was introduced at MTR. 88. Institutions and policies. The major contribution that the project made in influencing institutions and policies is with respect to facilitating the mainstreaming of seasonal and agricultural lending to farmers in MFIs and the apex organization. PKSF now has seasonal loan and ASM as part of the core programme and the lending under these windows (from PKSF to POs and from POs to members) has been steadily increasing (see annex IX). The project demonstrated that small and marginal farmers could be creditworthy for MFI lending and that MFIs could be a viable alternative to rural bank branches (which largely remain inaccessible to farmers) and moneylenders. PKSF is also establishing agriculture and livestock cells or units, which now appear in their organogram. 89. Another aspect the project contributed to was promoting a pluralistic approach to agricultural extension, duly recognizing the valuable role NGOs (MFIs/POs) could play. Many POs, 52 seeing the benefit of providing technical services combined with microcredit operations, have mainstreamed the positions of agricultural technical staff. 90. The pilot scheme for livestock insurance was positive and generated encouraging lessons for PKSF and POs; support for this has continued under another project with PKSF, financed by the Asian Development Bank. 91. The project is rated 5 (satisfactory) with regard to the impact on institutions and policies. 92. Overall assessment. The project is rated satisfactory (5) for overall rural poverty impact, given satisfactory performance in various impact domains. Box 3 provides a note on women members perception of the project s contribution to poverty reduction. 52 Just over 60 per cent of the 18 POs from which information was obtained continue to have the position of TOs. 23

36 Box 3 Women members perceptions of project contribution to poverty reduction The wealth-ranking exercise was carried out with 11 members of a group in Hazigovindpur village in the Naogaon district to gain understanding of poor women s perception on poverty and the project s contribution. It revealed that women defined poverty based on landholding, livestock, food security and presence/absence of furniture. The poorest were seen as landless or near landless, did not own any livestock, were food insecure for three months or more, and did not have any furniture. Of the 11 women members present, 4 considered themselves very poor, 6 poor and 1 moderate. All of them reported improvements in their household s performance on the four indicators, but mainly within the same economic category (e.g. upper end of poor to lower end). However, 3 out of 11 reported moving one step up or two steps up, with one of them not considering herself poor anymore. All three had taken loans for enterprises such as poultry and rice trading, in addition to livestock or crop loans. They had also taken higher amounts of loans. While a detailed wealth ranking was not done in other villages visited by the mission, 7 out of 10 members of a men s group (seven years old) in another village reported moving out of poverty, with only the recently joined members reporting as living in poverty. A question may be raised whether microcredit targeted at poor farmers should continue to go to those who have moved out of poverty. However, some of them continue to be vulnerable to slipping back into poverty e.g. in the case of a husband s death, accident or disease, death of animals, etc. Source: PPA mission. C. Other performance criteria Sustainability 93. The seasonal loan and ASM products have been mainstreamed into the core programme of PKSF. This means that POs not only those 35 that worked with MFMSFP, but also all other PKSF POs have a sustainable source of funding for seasonal and agricultural lending, and they have also mainstreamed such loan products to serve rural populations (also see paragraphs 39 and 99). Currently, PKSF is a major source of funding for most of the POs microcredit operations The other aspect of sustainability concerns the institutions involved, namely PKSF and the POs, although the project would not have had much influence apart from selecting PO with sound operations. Operational self-sufficiency (OSS) of PKSF in 2005/06 was 92.04; this rose to in 2010/11 and to in 2011/ As for the POs, out of the sampled 28 project POs, 64 per cent of them had OSS above 100 per cent. It should be noted that the credit funds extended under the project were a relatively minor 55 proportion of overall PKSF funding to all the project s POs: e.g. 7 and 16 per cent in 2009/10 and 2010/11, respectively. This indicates that while POs operations supported under MFMSFP were likely to have made a valuable contribution to portfolio diversification and profitability, institutional sustainability of POs would vary largely on factors beyond project control (e.g. governance, access to other sources of funding). In this project, the fact that access by small and marginal farmers to agricultural and seasonal lending improved in the microfinance service delivery system as a whole, and that this is likely to continue, would be more relevant to sustainability than sustainability of each participating PO as such. 95. Another issue is whether agricultural technical support provided by POs under the project would be sustained at the same level. This concerns institutionalization of the positions of agricultural technical staff (technical officers and ATOs) established 53 Of the 28 POs sampled under the project, more than 90 per cent sourced between 30 and 70 per cent of their funds from PKSF in 2010/11 (Microcredit Regulatory Authority, NGO-MFIs in Bangladesh Volume VIII, June 2011). 54 PKSF Annual Report In addition to those under MFMSFP, credit funds were made available under PKSF s core programmes (or windows ). See also annex IV. 24

37 under the project; in this regard, the current picture is hopeful but also mixed. 56 As well, POs also face difficulties in providing dedicated extension activities without external funding. So even where POs still have agricultural technical staff, the level of training support and advisory services has been scaled back. If the combination of microfinance services and technical support is a long-term strategy for NGO- MFIs to promote growth and profitability, and enhance the portfolio quality, then they may need to carefully review the efficiency of financial service provisions and find ways to incorporate the cost of technical support into core operations The sustainability of groups depends on POs sustainability, the services they can offer (financial, technical and other areas), and group cohesion. POs sustainability also depends on the sustainability of groups. The dropout rate was estimated at 20 per cent. There seem to be two main reasons for dropping out: first, not requiring loans any more, and second, poverty. The mission also observed that there is high member mobility, with the same members going in and out. There are likely to be cases where some borrowers graduate to higher amount of loans (e.g. enterprise loans 58 ), as well as cases where people join groups only to access microcredit and/or training, which could compromise efficiency and sustainability as long as the group-based approach continues to be used. 97. As for the technologies promoted by the project, there are good prospects for most of them, given demonstrated positive impact on net income and interest by farmers. Detailed descriptions of the technologies and good analysis of their benefits and challenges have been provided (e.g. access to required materials/inputs, labour requirements, etc.). 59 The overall picture is that all five technologies, simple and low-cost, present good potential for adoption by farmers and increase in returns, but they would need some follow-up to further enhance sustainability. What is important is that experiences have been critically reflected upon, and how to overcome challenges has been identified. As mentioned earlier, these technologies are also environmentally sustainable, contributing to reduced use of agrochemicals. 98. The project is rated as 5 (satisfactory) for sustainability. Innovation and scaling up 99. The introduction and promotion of seasonal lending (provision of lump-sum repayment) was an important innovative aspect of the project. This had been tried by other MFIs without much success, as it proved difficult to ensure reliable repayment of relatively large lump sums rather than the normal small weekly amounts. According to the PCR, PKSF was somewhat reluctant initially, but came to recognize that repayment rates were generally very good, as well as the great financial advantage of allowing larger loans to be disbursed at no additional cost to the PO or PKSF. The proportion of seasonal lending under the project increased steadily (53 per cent in volume at completion). During the project, PKSF introduced seasonal loan and ASM as mainstreamed products and their shares also increased steadily (see annex IX). It was indicated that many project POs budgeted 50 per cent of their lending for seasonal loans. At present, 143 POs of PKSF are accessing seasonal loan funding, introduced in The success of seasonal loan and its utilization for agriculture encouraged PKSF and POs to introduce ASM as a separate loan product in At present, 93 POs are accessing ASM funds. Targeting the 56 Just over 60 per cent of the 18 POs from which the information was obtained continue to have the position of technical officers; about half of those POs finance the positions with core funding, and for the others, by another project. Over 20 per cent of the POs that responded said they do not have the positions anymore and there is no plan to recruit. One PO indicated that out of 10 ATOs they had under the project, 9 resigned and they have no plans to recruit. For some POs, the phased financing by the project for the technical officer /ATO positions over the project period may have facilitated the eventual full financing of the positions. 57 This however cannot be done by increasing interest rates, due to the capping of interest rate by MRA. An alternative may be charging some fees, although the beneficiaries/borrowers may not easily accept this. 58 PKSF s microenterprise programme has a much higher loan ceiling. 59 PCR Working Paper 4, Crop Technologies. 25

38 marginal and small farmers with little access to banks and NGO/MFIs was an innovative step for the POs, who used to disburse microcredit solely or mainly for the landless. The project introduced a lump-sum repayment system, matching the borrowers cash flows, with options for repaying either in weekly instalments or as a lump sum, or a combination of the two. During the project dual loans before full repayment of the first loan were introduced as a new step The project experience also demonstrated that in-house agricultural expertise at POs, who can provide practical hands-on support to farmer borrowers, could be highly effective and necessary in operating agricultural lending portfolios effectively. The sustainability of POs role in technical support provision was also discussed earlier (section on sustainability) Another important innovation with scaling up potential was the incorporation of livestock insurance into PO lending portfolios. Although the activity was implemented only in the last two years, the project contributed to initiating the work in this important area, and it generated encouraging lessons. Further work is needed to refine the operational modalities to enhance scheme viability and risk management, and support in this regard is being continued under another project with PKSF, financed by the Asian Development Bank. Extending livestock insurance to dairy animals is a demand from the community The extent to which priority technologies promoted by the project were new or innovative in a purely technological sense varied. Some had been known in the country for a while, but had not been taken up sufficiently for a number of reasons, and some were fairly new (e.g. pheromone traps). However, they were and perhaps still are relatively new to the MFMSFP farmers and over per cent of them trained found the technology useful (albeit adoption rates varied). The Nielsen report showed non-exposure (e.g. pheromone trap, AWD) or lower exposure (USG, MST and LCC) to the technologies by the control group, compared to project participants On innovation and scaling up, the project is rated 5 (satisfactory). Gender equality and women s empowerment 104. Against the target of 80 per cent, 84 per cent of the members were women at project completion. This is comparable to an overall pattern of a very high percentage of women clients in microfinance globally and in Bangladesh. 60 Women accessed credit almost the same number of times as men, with women taking on average 11 loans and men 12 loans (Nielsen, 2012). Frequently a question is posed as to whether access to microcredit by women actually empowers them, or whether women simply channel the loans received to husbands. Worldwide, there have also been reports that elevating the economic position of women could lead to a threat to masculinity and at times domestic violence. However, PPA mission findings were very positive on both counts There is no doubt that, like other microcredit operations, the project gave women space to come out of their house, meet other women, access credit and knowledge, and discuss their problems with each other. It is found that women s involvement in decision-making, access to markets, and control over loans, income and assets was higher in the case of vegetable, fisheries and livestock loans, than crop loans (see case studies in annex XII). Though crop loans constituted the majority of loans (61 per cent), the fact that men had to approach wives for accessing loans enhanced the respect women commanded in the household. 61 New skills acquired, such as improved rice seed preservation (MST) and the use of pheromone traps 60 It is normally reported that in Bangladesh, the majority of microcredit borrowers (in the range of 90 per cent) are women. 61 Also see annex V to the appraisal report on the Role of Rural Women in Agriculture and Related Rural Livelihoods. 26

39 (for brinjal and cocurbits), reduced expenditures and enhanced income, raising their status in the household and community Women reported that they did not have any problems collecting money for repayment from their husbands in the case of crop loans. Around 50 per cent of the women met by the PPA mission stated that their husbands gave the entire amount from sale of crops to them. With increases in production and income in their hands, women first invested in better food for household members. Improved sanitation was another investment. Women reported better health for themselves, their daughters and other family members due to improved access to food, nutrition and sanitation, as well as the ability to access health care Access to land by women on their own right seemed very low: for example, the Nielsen report indicated the average size of land ownership by men to be decimals, compared to that by women which stood at 7.23 decimals. However, interestingly, the same report indicated a marked improvement in access to land by women (own or leased) than for men (33 per cent compared to 19 per cent for men). Joint access also increased by 21 per cent. The PPA mission indicated that the gender sensitivity of POs, the nature of assets, as well as whether a woman was a leader or member, could make a difference to ownership of assets by women Discussions with five women s groups by the mission revealed that the workload of women had increased due to expansion and diversification of livelihood activities, and so had the workload of adolescent girls (e.g. housework). The workload of men had increased too, and that of adolescent boys (e.g. driving power litter). However, the children were never pulled out of school or asked to skip school. The women and men did not grudge the increase in workload and felt that now they were fully employed. Nevertheless, introduction of a few labour reducing technologies, like improved stoves, could have been considered The division of labour between women and men has loosened somewhat, with husbands helping in housework when women members attend meetings, spot training, or go to the branch office. In the villages visited, women do not use the power tiller, plough the fields, transplant or harvest paddy, but they dominate post-harvest processing. Post-harvest processing is an area where the project could have intervened more (i.e. apart from seed preservation); for example, common drying yards, rice flour mills, 63 rice oil extraction, etc For fostering women s empowerment, as well as increasing food production, it seems important to train not only women members (84 per cent), but also spouses. PKSF estimates around per cent of women members spouses have been trained on crop training and social development, and that this activity could have been extended with a budget line Overall, on gender equality and women s empowerment, the project is rated as 5 (satisfactory). D. Performance of partners 112. IFAD. The project was well-designed. In the project design process, formal technical review (then Technical Review Committee) commended the high quality of the formulation report and the active internal consultation process (then Project Development Team). After assuming direct supervision, IFAD fielded supervision missions annually, as well as the MTR, most of which had country programme manager (or field presence officer) participation. The PCR noted that having local experts in supervision missions was valued by PKSF, as this allowed further 62 The three case studies in annex XII deal with group leaders, who had more assets than most members met by the mission. 63 See Paris et al, 2011, Participatory Evaluation of a Rice Flour Mill by Poor Rural Women: Lessons from Bangladesh, Gender Technology and Development :

40 consultations on technical matters. The MTR and supervision missions provided useful suggestions. They facilitated important adjustments to enhance project effectiveness, without any significant change in the design There were a couple of key members of IFAD (and UNOPS 64 ) missions who were involved (mostly, if not entirely) throughout the project period from the design stage. Indeed, one of the three PCR mission members was involved in both the design and supervision missions, and the other member of the PCR mission was also part of the supervision missions. That said, the PCR was found to be sufficiently candid and critical, not necessarily compromising objectivity. These key mission members were likely to be instrumental in advising on the course of the project implementation. Overall, IFAD s performance is rated as 5 (satisfactory) Government. The Government of Bangladesh had overarching responsibility for the project, represented by the Ministry of Finance as the Borrower. PKSF was appointed as the lead project agency responsible for project implementation, thus the Government s role was more facilitative than being directly responsible. The Ministry of Finance channelled the IFAD loan funds to PKSF for onlending to POs and other activities based on a subsidiary loan and grant agreement, reviewed and approved annual workplan and budgets, organized and chaired coordination meetings, and chaired wrap-up meetings of supervision missions. The ministry was supportive and facilitated smooth project implementation In line with the loan agreement, project personnel was promptly recruited by PKSF and functioned well throughout the project. All historical project status reports showed that the quality of project management performance and the M&E system were consistently rated satisfactory. Project staff at PKSF regularly conducted field visits to the project area, developed good relations with POs, and provided valuable oversight and guidance to the POs continuously. PKSF was instrumental in encouraging the expansion of seasonal loan, an increase in the number of POs, introduction of the livestock insurance pilot scheme, recruitment of ATOs and a focus on a limited number of production technologies DAE, a government department, was one of the key service providers. As has been documented, collaboration with DAE for agricultural training provision faced challenges; for example, delays in signing the memorandum of understanding resulted in a slower implementation of this component in the initial period, as well as difficulties in getting DAE staff to effectively deliver training, 65 although the PCR reported some improvements by project completion Given the strong performance of the PKSF and enabling support by the Ministry of Finance, the performance of the Government is rated 5 (satisfactory). E. Overall project achievement 118. This was a well-designed project relevant to the country context and to small and marginal farmers. Small and marginal farmers may not be the poorest of the poor, but a significant proportion of them are, and even those who may be above the poverty line have a high risk of becoming poor again easily due to unexpected event. The project was implemented effectively and efficiently, with some appropriate adjustments, resulting in positive impacts on the livelihood of the target group. The PPA s rating for the project s overall achievement is 5 (satisfactory). 64 United Nations Office for Project Services. 65 For example, the 2008 MTR noted some instances of DAE staff cancelling agreed training sessions at short notice and reducing training session duration. 28

41 Key points The relevance, effectiveness and efficiency of the project and all impact domains are rated satisfactory. Multiple loans increasing in size, when managed well, combined with capacitybuilding, contributed to the gradual and steady improvement of livelihoods of group members. Sustainability, innovation and scaling up, and gender equality and women s empowerment are also all assessed satisfactory. The performance of IFAD and the Government is assessed satisfactory. IV. Conclusions and recommendations A. Conclusions 119. The project implementation benefited from the experience of PKSF, POs and their prior working relations (paragraphs 64-65, 115), in terms of: the timeliness of implementation; appropriate PO selection based on the established system and work experience; established progress reporting system from POs to PKSF (PKSF s existing MIS). Effective handholding of POs and guidance by PKSF contributed to project success. POs previous presence in the area, and experience in microfinance, social development and to some extent agriculture, complemented project-supported activities and contributed to project success Successful promotion of a seasonal repayment modality for microcredit by POs was one of the important innovations and project achievements (paragraphs 39-41, 55, 88, 93, 99). Not all marginal and small farmers prefer taking loans with a seasonal repayment modality, but many do prefer or need it (figure 2 earlier). The project contributed to making these options and relevant products available to borrowers. During the project, PKSF, in close collaboration with some POs which work mainly in agricultural development, actively promoted this lending modality and promoted exchange of experience and lessons Combined with technical support, the project contributed to improved agricultural production (paragraphs 47-52, 54, 100). Focusing on a small number of priority technologies for extension support turned out to be effective. The technologies were found to be useful and contributed to yield increase and cost reduction. Important technical support training and veterinary services was provided in conjunction with the livestock insurance pilot scheme for beef fattening activities Most loans were used for productive purposes. They also contributed to crop/livestock diversification, but the promotion of real profitable enterprises on- or off-farm was rather modest (paragraphs 35, 42-43, 54, 71). A majority of the loans were for agricultural production activities. Loans for micro agroenterprise and post-harvest activities were only a small proportion of the loan portfolio. Amongst agricultural production activities financed, a large proportion was for rice growing. For many marginal and small farmers, rice is something they feel they have to grow if they have land in order to have food at home, but they do not consider it for business activities. This may also be related to the fact that technical support provided under the project focused on the production side (rice, amongst others), but less in terms of support for enterprise development and business skills development Combination of social mobilization, microfinance, technical support and training under the project was effective, but the question remains how to enhance sustainability of non-financial services (paragraphs 47-48, 95). While quite a number of POs are still retaining the technical officer/ato positions, some have not and would not bring them back without project funding. Even those 29

42 POs with technical officers/atos find it difficult to provide training and extension services at the same level without external funding A relatively high dropout rate in groups was experienced. In addition to graduation of some borrowers from microcredit, this also seems to be influenced by the fact that the major drive for people to join NGO-MFI groups is to access loans and/or training when there is project support (paragraph 96). NGO-MFIs operations are also focused on disbursing loans and they consider groups principally as a means for delivery loans. This creditfocused/driven operating model contrasts with experience in some other countries where saving mobilisation and products are given more attention, including those informal member-based financial institutions starting with savings and internal lending Good progress was made towards gender equality and women s empowerment through mobilizing women, microfinance interventions, social development and technical training (paragraphs ). The issues of labour reducing technologies and post-harvest enterprises deserve more attention. Expanding spousal training, in particular on social development, would also be useful. B. Recommendations 126. Provided below are some key recommendations for consideration by IFAD, the Government, PKSF and POs Support for strengthening commercial orientation and business skills of borrowers (paragraph 122). NGO-MFIs are not in a position to prescribe what kind of activities should be financed by microcredit, but along with credit and technical support, facilitative support should be provided for potential borrowers to better appreciate how to identify and invest in viable farming and off-farm enterprises, in addition to specific business skills development. Such support may not necessarily be provided by NGO-MFIs or PKSF. It would be important to pursue partnerships with appropriate organizations that are in a position to provide such services (and other complementary and relevant services like market information) Service delivery modality and products by NGO-MFIs (paragraphs ). When investment is made in group development and capacity-building, a relatively high dropout of members could be wasteful. More emphasis should be placed on strengthening groups to be more than a means to access credit; it should or could also be an entry point (or a means) for other services, socio-economic empowerment of the poor or other collective activities. At the same time, consideration could be given to the context and in what manner mobilizing groups and using a group approach for individualized liabilities would still be appropriate Demand-driven product development by NGO-MFIs not only credit but also other financial services such as savings, insurance and transfer should be given attention, and PKSF could also play a role in facilitating such a process, as it did with regard to seasonal lending, livestock insurance and crop storage pilot schemes under the project. For example, insurance products could be broadened (e.g. livestock insurance extended to dairy animals in addition to animals for beef fattening, as well as other types of micro insurance) If the combination of microfinance services and technical support is a long-term strategy for NGO-MFIs to promote growth and profitability, and to enhance portfolio quality, then they may need to carefully review the efficiency of service provisions and find ways to incorporate the cost of technical support into core operations (i.e. financial services) Measuring results and impact (annex VIII). The surveys undertaken provided valuable information, but there were also questions on the methodologies used and 30

43 hence on the reliability of some findings. The importance of carefully reflecting at the onset on key selected expected results and impact to be measured cannot be overemphasized. What is suggested in project design reports (logical framework, indicators, etc.) normally carries significant weight, and therefore quality control at this stage needs attention. IFAD should provide support at all stages including proposing a solid basis for monitoring and evaluation in project design reports, terms of reference for consulting services, consultant selection process, reviewing proposed methodologies and draft reports. In this regard, IFAD may also wish to consider strengthening the country programme managers capacity in the relevant areas. 31

44 A member of the Sohag Mohila Samity (group) engaged in basket making, Ghaturi Village, Muktagacha upazila, Mymensingh district. IFAD/Fumiko Nakai 32

45 Annex I Rating comparison Criteria IFAD-PMD rating a PPA rating a Rating disconnect Project performance Relevance 4 b 5 +1 Effectiveness Efficiency Project performance c Rural poverty impact Household income and assets Human and social capital and empowerment Food security and agricultural productivity Natural resources environment and climate change Institutions and policies Rural poverty impact d Other performance criteria Sustainability Innovation and scaling up 4.5 e Gender equality and women s empowerment Overall project achievement f Performance of partners g IFAD Government Average net disconnect a Rating scale: 1 = highly unsatisfactory; 2 = unsatisfactory; 3 = moderately unsatisfactory; 4 = moderately satisfactory; 5 = satisfactory; 6 = highly satisfactory. b The description given by the Programme Management Department (PMD) is very positive and would support the rating higher than 5. c Arithmetic average of ratings for relevance, effectiveness and efficiency. d This is not an average of ratings of individual impact domains. e The PMD rating is provided separately for Innovation (5) and Replicability and Scaling up (4). Hence, the average is taken. f This is not an average of ratings of individual evaluation criteria but an overarching assessment of the project, drawing upon the rating for relevance, effectiveness, efficiency, rural poverty impact, sustainability, innovation and scaling up, and gender. g The rating for partners performance is not a component of the overall assessment ratings. Ratings of the PCR document quality Ratings of the PCR document quality PMD rating IOE PCRV rating Net disconnect Scope Quality (methods, data, participatory process) Lessons Candour Overall rating PCR document NA 5 NA Rating scale: 1 = highly unsatisfactory; 2 = unsatisfactory; 3 = moderately unsatisfactory; 4 = moderately satisfactory; 5 = satisfactory; 6 = highly satisfactory; NA = not applicable. Scope: The PCR fully covers all elements outlined in the IFAD guidelines for project completion reports. In addition, it also includes five working papers on specific topics which provide detailed information and analysis. The description in the PMD assessment is also positive and would support the rating of 5 instead of 4 as was provided. Quality: The PCR is well written, informative and analytical. This is in large part a reflection of the investment made by IFAD in the preparation of the PCR by fielding a three-person mission for three weeks that reviewed, consolidated and analysed available data and information, and undertook field validation and stakeholder consultations. At the same time, the PCR process also benefited from comprehensive data sets compiled by PKSF. Available data were reviewed, validated and/or updated by the PCR mission. This included data from the impact studies, for which some questions were raised on reliability. Lessons: The report is analytical and draws a number of lessons. It also shows that lessons were learned continuously and some already reflected in the implementation. This is another criteria for which the description in the PMD assessment was so positive that it is not clear why the rating of 4 was provided and not 5. Candour: The report is candid in describing the challenges and what did not work well (and why). 33

46 Annex II Basic project data Region Asia and the Pacific Approval (US$ m) Actual (US$ m) Total project costs Country Bangladesh IFAD loan and percentage of total % % Loan number 644-BD Borrower/Government 0 0 Type of project (subsector) Credit and financial services Palli Karma-Sahayak Foundation % % Financing type IFAD exclusive Partner organizations % % Lending terms * Highly concessional Cofinancier 3 Date of approval 2 December 2004 Cofinancier 4 Date of loan signature Date of effectiveness 7 February 2005 Beneficiaries 29 June 2005 Other sources: Loan amendments Loan closure extensions Country programme managers Regional director(s) Project completion report reviewer Project completion report quality control panel 2 Number of beneficiaries 0 Nigel Brett Thomas Rath Loan closing date (Households) 31 December (Households) 31 December 2011 T. Elhaut Mid-term review October 2008 Fumiko Nakai Cecile Berthaud Oanh Nguyen Source: President s Report, PCR, PPMS, LGS. IFAD loan disbursement at project completion (%) Date of project completion report 97.03% February 2012 * There are four types of lending terms: (i) special loans on highly concessional terms, free of interest but bearing a service charge of three fourths of one per cent (0.75%) per annum and having a maturity period of 40 years, including a grace period of 10 years; (ii) loans on hardened terms, bearing a service charge of three fourths of one per cent (0.75%) per annum and having a maturity period of 20 years, including a grace period of 10 years; (iii) loans on intermediate terms, with a rate of interest per annum equivalent to 50% of the variable reference interest rate and a maturity period of 20 years, including a grace period of 5 years; (iv) loans on ordinary terms, with a rate of interest per annum equivalent to one hundred per cent (100%) of the variable reference interest rate, and a maturity period of years, including a grace period of three years. 34

47 Annex III Terms of reference I. Background 1. The Independent Office of Evaluation of IFAD (IOE) will undertake a project performance assessment (PPA) of the Microfinance for Marginal and Small Farmers Project (MFMSFP) in Bangladesh in In general terms, PPAs are project-level evaluations aiming at: (i) Providing an independent assessment of the overall results of projects; (ii) Generating findings and recommendations for the design and implementation of ongoing and future operations within the country. A PPA is conducted as a next step following a project completion report validation (PCRV), with the aim of providing additional evidence on project achievements and validating the conclusions of the project completion report (PCR). Both PCRVs and PPAs are conducted by IOE. PCRVs essentially consist of independent desk reviews of PCRs, and other available and relevant project documentation. A PPA includes a country visit to complement the PCRV findings, and to fill any knowledge and information gaps identified in the PCRV. 2. MFMSFP has been selected for a PPA in view of the preliminary findings from the PCRV desk review, and in view of the scope for drawing interesting lessons on microfinance operations in the country and for IFAD support in the sector overall. 3. Country context. 1 Bangladesh has managed to accelerate overall GDP growth by one percentage point on average every decade from 3 per cent in the 1970s to 6 per cent in the last 10 years. Thanks to declining population growth, the acceleration in per capita GDP growth was even higher 1.7 percentage points every decade. Acceleration of growth also helped 15 million people leave absolute poverty behind in the past three decades. The country s remarkably steady growth was possible due to a number of factors including population control, financial deepening, macroeconomic stability and openness in the economy. Building on its social-economic progress so far, Bangladesh now aims to become a middle-income country (MIC) by 2021 to mark its 50 th year of independence. 4. Despite favourable macro-level economic indicators, the country still remains as a low-income country with substantial poverty. 2 At least 45 million people in Bangladesh, almost one third of the population, live below the poverty line, and a significant proportion of them live in extreme poverty. The poverty rate is highest in rural areas, at 36 per cent, compared with 28 per cent in urban centres. Many people have an inadequate diet and suffer from periods of food shortage. Half of all rural children are chronically malnourished and 14 per cent suffer from acute malnutrition. Most of Bangladesh's labourers are engaged in informal, low-income jobs with limited productivity. Although agriculture now accounts for less than 20 per cent of GDP, the farm sector still employs about 44 per cent of the labour force. 5. A summary of project description. MFMSFP was a US$29.7 million project over a six-year period (June 2005-June 2011) with the goal to provide improved livelihoods to 210,000 poor small and marginal farmer households. The project was conceived to introduce an innovative approach to deliver financial services to small and marginal farmers, who accounted for the bulk of Bangladesh farmers and were largely bypassed by then available financial services, in particular, credit for agricultural purposes both from banks and from NGO/microfinance institutions (MFIs) The paragraph is largely based on IFAD Rural Poverty Portal: Bangladesh. 35

48 Annex III 6. The purposes of the project 3 were to: (i) Establish viable MFIs to provide opportunities to 210,000 small and marginal farmer households to invest in onand off-farm enterprises; (ii) Increase agricultural production through access to information, the adoption of new technologies and linkages to markets; (iii) Develop and mainstream operational procedures of the implementing agency (apex financial institution) for lending to farmers and related agroenterprises. Covering 14 districts in north-west and north-central Bangladesh, 4 the project target group was defined as small and marginal farm households operating between 0.5 and 5.0 acres of land, small-scale agroentrepreneurs and, within these groups, households that are relatively poor or specifically disadvantaged. 5 The project area was selected on the basis of high levels of poverty and good agricultural potential, in addition to the consideration of avoiding overlap with other IFAD-financed projects at the same time. 7. As per design, the project consisted of the following three components: (iv) (v) (vi) Microfinance services (89.5 per cent of the project cost), including: (a) a credit fund, where a bulk of the funds was allocated (94 per cent of the component cost and 84 per cent of the total project cost); (b) a disaster reserve fund; (c) pilot lending against crop storage; and (d) initial overhead costs for POs wishing to expand their operations; Capacity-building and market linkages (8 per cent of the total project cost), including: (a) agricultural extension services; (b) group development support; (c) PKSF services; and (d) marketing services. Project coordination and management (2.5 per cent of the total project cost). 8. The responsibilities for project implementation rested with PKSF, which had been established by the Government of Bangladesh in 1990 as a not-for-profit company and as the apex organization providing funds to MFIs. II. Scope and methodology 9. The PPA exercise will be undertaken in accordance with IFAD s Evaluation Policy, 6 Evaluation Manual 7 and Guidelines for PCRV/PPA Scope. In view of the time and resources available, the PPA is generally not expected to undertake quantitative surveys or to examine the full spectrum of project activities, achievements and drawbacks. Rather, it will focus on selected key issues. The PPA will take account of the preliminary findings of the PCRV based on a desk review and interviews at IFAD headquarters. During the PPA mission, additional evidence and data will be collected to verify available information and conduct an independent assessment of performance and results. 11. Evaluation criteria. In line with the evaluation criteria outlined in IOE s Evaluation Manual (2009), added evaluation criteria (2010) 9 and Guidelines for PCRV and PPA (January 2012), the key evaluation criteria applied in this PPA will include: (a) Relevance, which is assessed both in terms of alignment of project objectives with country and IFAD policies for agriculture and rural development and the needs of the rural poor, as well as project design features geared to the achievement of project objectives. 3 President s Report, MFMSFP (December 2004). 4 The fourteen selected districts are: 10 in the northwest (Rajshahi, Nawabganj, Pabna, Kurigram Thakurgaon, Joypurhat, Nilpamari, Gaibandha, Naogaon and Dinajpur), and four in the north-central region (Netrakona, Mymensingh, Jamalpur and Sherpur). 5 The project loan agreement See annex IV for an extract from the guidelines, Methodological Note on Project Performance. 9 Gender, climate change and scaling up. See annex II of the document found on the following link: 36

49 Annex III (b) (c) (d) (e) (f) (g) (h) Effectiveness, which measures the extent to which the project s immediate objectives were achieved, or are expected to be achieved, taking into account their relative importance. Efficiency, which indicates how economically resources/inputs are converted into results. Rural poverty impact, which is defined as the changes that have occurred or are expected to occur in the lives of the rural poor (whether positive or negative, direct or indirect, intended or unintended) as a results of development interventions. Five impact domains are employed to generate a composite indication of rural poverty impact: household income and assets; human and social capital and empowerment; food security and agricultural productivity; natural resources, environment and climate change; and institutions and policies. Sustainability, indicating the likely continuation of net benefits from a development intervention beyond the phase of external funding support. It also includes an assessment of the likelihood that actual and anticipated results will be resilient to risks beyond the project s life. Innovation and scaling up, assessing the extent to which IFAD development interventions have introduced innovative approaches to rural poverty reduction and the extent to which these interventions have been (or are likely to be) replicated and scaled up by government, private sector and other agencies. Gender equality and women s empowerment. This criterion is related to the relevance of design in terms of gender equality and women s empowerment, the level of resources committed, and changes promoted by the project. Performance of partners, including the performance of IFAD and the Government, will be assessed on an individual basis, with a view to the partners expected role and responsibility in the project life cycle. 12. Data collection. The PPA will be built on the initial findings of the PCRV. For further information, interviews will be conducted both at IFAD headquarters and in Bangladesh. During the in-country work, additional primary and secondary data will be collected in order to reach an independent assessment of performance and results. Data collection methods will mostly include qualitative participatory techniques. The methods deployed will consist of individual and group interviews with project stakeholders, beneficiaries and other key informants and resource persons, and direct observations. The PPA will also make use where applicable of additional data available through the programme s monitoring and evaluation (M&E) system. Triangulation will be applied to verify findings emerging from different information sources. 13. Stakeholders participation. In compliance with the IOE Evaluation Policy, the main project stakeholders will be involved throughout the PPA. This will ensure that the key concerns of the stakeholders are taken into account, that the evaluators fully understand the context in which the programme was implemented, and that opportunities and constraints faced by the implementing institutions are identified. Regular interaction and communication will be established with the Asia & the Pacific Division (APR) of IFAD and with the Government. Formal and informal opportunities will be explored during the process for the purpose of discussing findings, lessons and recommendations. 37

50 Annex III III. Evaluation process 14. Following the PCRV based on desk review, the PPA will involve the following steps: Country work. The PPA mission is scheduled for May It will interact with the project implementing agency (PKSF), POs, relevant Government officials, service providers, beneficiaries and key informants. At the end of the mission, a wrap-up meeting will be held in Dhaka to summarize the preliminary findings and discuss key strategic and operational issues. Report drafting and peer review. After the field visit, a draft PPA report will be prepared and submitted to IOE internal peer review for quality assurance. Comments by APR and the Government. The PPA report will be shared with APR and thereafter with the Government for comment. IOE will finalize the report following receipt of the Government s comments and prepare the audit trail. Communication and dissemination. The final report will be disseminated among key stakeholders and the evaluation report published by IOE, both online and in print. IV. Key issues for investigation 15. Based on desk review, a number of issues which would benefit from the PPA mission have been identified. These issues are proposed below but may be adjusted in the process based on the APR comments on the draft PCRV or emerging issues based on additional information: (a) (b) (c) (d) Sustainability. The PCR showed impressive increase of seasonal and agricultural lending by PKSF and its POs with project support, and indicated this lending has been mainstreamed into their operations. It would be worthwhile obtaining updated information on this aspect, such as analysis of post-project portfolios of selected POs and PKSF, typologies of clientele (farmer groups or other groups), any relevant change in financial products, and staffing situation with regard to in-house agricultural expertise. Lastly, the PPA may look into institutional sustainability of some selected POs. Scaling up. The PPA will assess the key innovations promoted by the project, and how and to what extent they have been or are likely to be scaled up by the Government, PKSF or other partners. Women s empowerment. The project had a large proportion of beneficiaries as women members and borrowers. The PPA will assess whether, how and to what extent the project may have contributed to gender mainstreaming and women s empowerment. This may include increased control by women over credit, assets, income, marketing and decisionmaking, as well as assessing any impact on the workload of women. Reference may be made also to the Country Case Study undertaken in 2010 as part of the Corporate Level Evaluation on IFAD s Efforts and Achievements in Gender Equality and Women s Empowerment, which covered another microfinance project in Bangladesh closed in Targeting. The project targeted farmers owning between 0.5 and 2.5 acres of land, or double these amounts if tenanted land was included. Based on the available data, the PCR was of the view that it was safe to conclude that the vast majority of households fell within the intended target group, whereas inclusion of some non-target households was sometimes necessary to form viable groups. The PCR also reported that in some districts it was difficult to find sufficient marginal and small farmers, with a significant number being coved by other programmes. The PPA will assess the relevance and 38

51 Annex III (e) (f) effectiveness of a three-stage targeting system outlined in the Appraisal Report, also in terms of making the project inclusive. Relevance of PO services to the target group. The PPA will also seek to assess the possible needs for other types of financial services (e.g. consumption loans, micro insurance) by the farmer group members, and if and to what extent POs have been able to (or should) respond to them. Market linkage. The PPA will assess the extent of effectiveness of the market linkage subcomponent and draw lessons on project support in this area. V. Evaluation team 16. Ms Fumiko Nakai, IOE Evaluation Officer has been designated as lead evaluator for this PPA and will be responsible for delivering the final report. She will be assisted by Ms Ranjani K. Murthy (gender and evaluation specialist, IOE consultant) and Mr Rafiqul Islam (microfinance specialist, IOE consultant). Both consultants will participate in the PPA mission. 10 Ms Laure Vidaud, IOE Evaluation Assistant, will provide research and administrative support. VI. Background documents 17. The key background documents for the exercise will include the following: General IFAD (2009). Evaluation Manual (methodology and processes). IOE (2012). Guidelines for the PCRV and PPA. IFAD (2011). Evaluation Policy. Various IFAD policies and strategies, in particular, rural finance, targeting, gender equity and women empowerment. IFAD documents country and project specific: Bangladesh: Country strategic opportunities programme 1999 & Project completion report validation (2013). MFMSFP Appraisal report (2005). MFMSFP President s report (2005). Project loan agreement (2005) and amendments (2008 & 2009). Supervision mission aide memoire and reports (March 2011, May 2010, October 2009, September-October 2007). Mid-term review aide memoire (2008). MFMSFP Project completion report (main report and annexes; working papers) (2012). Project status reports. Nielsen Company Bangladesh Ltd for PKSF. Report on impact study of MFMSFP (2012). Md Akteruzzaman (Department of Agricultural Economics, Bangladesh Agricultural University). Baseline study on MFMSFP under PKSF (2006). Mitra and Associates for PKSF. Impact survey for MFMSFP (2011). Mitra and Associates for PKSF. Baseline RIMS survey (2006). UNOPS. Bangladesh MFMSFP supervision mission reports (November 2006, December 2005). Other IOE (2010). Corporate Level Evaluation: IFAD s Efforts and Achievements in Gender Equality and Women s Empowerment Country Working Paper: Bangladesh. IOE (2012). Bangladesh: Microfinance and Technical Support Project Project Performance Assessment. 10 The TORs for the PPA mission with specific responsibilities of each mission member are also prepared, supplementing the overall PPA TORs. 39

52 Annex IV Methodological note on project performance assessments A. What is a project performance assessment? 1 1. The project performance assessment (PPA) conducted by the Independent Office of Evaluation of IFAD (IOE) entails one mission of 7-10 days 2 and two mission members. 3 PPAs are conducted on a sample of projects for which project completion reports have been validated by IOE, and take account of the following criteria (not mutually exclusive): (i) synergies with forthcoming or ongoing IOE evaluations (e.g. country programme or corporate-level evaluations); (ii) major information gaps in project completion reports (PCRs); (iii) novel approaches; and (iv) geographic balance. 2. The objectives of the PPA are to: assess the results and impact of the project under consideration; and, generate findings and recommendations for the design and implementation of ongoing and future operations in the country involved. When the PPA is to be used as an input for a country programme evaluation, this should be reflected at the beginning of the report. The PPA is based on the project completion report validation (PCRV) results, further desk review, interviews at IFAD headquarters, and a dedicated mission to the country, to include meetings in the capital city and field visits. The scope of the PPA is set out in the respective terms of reference. B. Preparing a PPA 3. Based on the results of the PCRV, IOE prepares brief terms of reference (ToR) for the PPA in order to sharpen the focus of the exercise. 4 As in the case of PCRVs, PPAs do not attempt to respond to each and every question contained in the Evaluation Manual. Instead, they concentrate on the most salient facets of the criteria calling for PPA analysis, especially those not adequately explained in the PCRV. 4. When preparing a PPA, the emphasis placed on each evaluation criterion will depend both on the PCRV assessment and on findings that emerge during the PPA process. When a criterion or issue is not identified as problematic or in need of further investigation, and no additional information or evidence emerges during the PPA process, the PPA report will re-elaborate the PCRV findings. Scope of the PPA PCRV assessment PPA ToR: Emphasis on selected criteria and issues are defined PPA process PPA report considers all criteria but emphasizes selected criteria and issues 1 Extract from the PCRV and PPA Guidelines. 2 PPAs are to be conducted within a budget ceiling of US$25, Typically, a PPA mission would be conducted by an IOE staff member with the support of a consultant (international or national). An additional (national) consultant may be recruited if required and feasible within the evaluation budget. 4 Rather than an approach paper, IOE prepares terms of reference for PPAs. These terms of reference ensure coverage of information gaps, areas of focus identified through PCRVs and comments by the country programme manager, and will concentrate the PPA on those areas. The terms of reference will be included as an annex to the PPA. 40

53 Annex IV C. Evaluation criteria 5. The PPA is well suited to provide an informed summary assessment of project relevance. This includes assessing the relevance of project objectives and of design. While, at the design stage, project logical frameworks are sometimes succinct and sketchy, they do contain a number of (tacit) assumptions on mechanisms and processes expected to generate the final results. At the postcompletion phase, and with the benefit of hindsight, it will be clearer to the evaluators which of these assumptions have proved to be realistic, and which did not hold up during implementation and why. 6. For example, the PPA of a project with a major agricultural marketing component may consider whether the project framework incorporated key information on the value chain. Did it investigate issues relating to input and output markets (distance, information, monopolistic power)? Did it make realistic assumptions on post-harvest conservation and losses? In such cases, staff responsible for the PPA will not be expected to conduct extensive market analyses, but might consider the different steps (e.g. production, processing, transportation, distribution, retail) involved and conduct interviews with selected actors along the value chain. 7. An assessment of effectiveness, the extent to which a project s overall objectives have been achieved, should be preferably made at project completion, when the components are expected to have been executed and all resources fully utilized. The PPA considers the overall objectives 5 set out in the final project design document and as modified during implementation. At the same time, it should be flexible enough to capture good performance or underperformance in areas that were not defined as an objective in the initial design but emerged during the course of implementation. 8. The PPA mission may interview farmers regarding an extension component, the objective of which was to diffuse a certain agricultural practice (say, adoption of a soil nutrient conservation technique). The purpose here would be to understand whether the farmers found it useful, to what extent they applied it and their perception of the results obtained. The PPA may look into reasons for the farmers interest in new techniques, and into adoption rates. For example, was the extension message delivered through lectures? Did extension agents use audiovisual tools? Did extension agents engage farmers in interactive and participatory modules? These type of questions help illustrate why certain initiatives have been conducive (or not conducive) to obtaining the desired results. 9. The Evaluation Manual suggests methods for assessing efficiency, such as calculating the economic internal rate of return (EIRR), 6 estimating unit costs and comparing them with standards (cost-effectiveness approach), or addressing managerial aspects of efficiency (timely delivery of activities, respect of budget provisions). The documentation used in preparing the PCRV should normally provide sufficient evidence of delays and cost overruns and make it possible to explain why they happened. 10. As far as rural poverty impact is concerned, the following domains are contemplated in the Evaluation Manual: (a) household income and assets; (b) human and social capital and empowerment; (c) food security and agricultural 5 Overall objectives will be considered as a reference for assessing effectiveness. However, these are not always stated clearly or consistent throughout the documentation. The assessment may be made by component if objectives are defined by components; however the evaluation will try to establish a correspondence between the overall objectives and outputs. 6 Calculating an EIRR may be challenging for a PPA as it is time consuming and the required high quality data are often not available. The PPA may help verify whether some of the crucial assumptions for EIRR calculation are consistent with field observations. The mission may also help shed light on the cost-effectiveness aspects of efficiency, for example whether, in an irrigation project, a simple upgrade of traditional seasonal flood water canalization systems might have been an option, rather than investing in a complex irrigation system, when access to markets is seriously constrained. 41

54 Annex IV productivity; (d) natural resources, the environment and climate change; 7 and (e) institutions and policies. As shown in past evaluations, IFAD-funded projects generally collect very little data on household or community-level impact indicators. Even when impact data are available, both their quality and the methodological rigour of impact assessments are still questionable. For example, although data report significant increases in household assets, these may be due to exogenous factors (e.g. falling prices of certain commodities; a general economic upturn; households receiving remittances), and not to the project. 11. PPAs may help address the attribution issue (i.e. establishing to what extent certain results are due to a development intervention rather than to exogenous factors) by: (i) following the logical chain of the project, identifying key hypotheses and reassessing the plausibility chain; and (ii) conducting interviews with non-beneficiaries sharing key characteristics (e.g. socio-economic status, livelihood, farming system), which would give the mission an idea of what would have happened without the project (counterfactual) When sufficient resources are available, simple data collection exercises (minisurveys) may be conducted by a local consultant prior to the PPA mission. 9 Another non-mutually exclusive option is to spot-check typical data ranges or patterns described in the PCR by means of case studies (e.g. do PCR claims regarding increases in average food-secure months fall within the typical ranges recorded in the field?). It is to be noted that, while data collected by a PPA mission may not be representative in a statistical sense, such data often provide useful reference points and insights. It is important to exercise care in selecting sites for interviews in order to avoid blatant cases of non-beneficiaries profiting from the project.). Sites for field visits are selected by IOE in consultation with the government concerned. Government staff may also accompany the PPA mission on these visits. 13. The typical timing of the PPA (1-2 years after project closure) may be useful for identifying factors that enhance or threaten the sustainability of benefits. By that stage, the project management unit may have been disbanded and some of the support activities (technical, financial, organizational) terminated, unless a second phase is going forward or other funding has become available. Typical factors of sustainability (political support, availability of budgetary resources for maintenance, technical capacity, commitment, ownership by the beneficiaries, environmental resilience) can be better understood at the ex post stage. 14. The PPA also concentrates on IFAD s role with regard to the promotion of innovations and scaling up. For example, it might be observed that some innovations are easily scaled up at low cost (e.g. simple but improved cattlerearing practices that can be disseminated with limited funding). In other cases, scaling up may involve risks: consider the case of a high-yield crop variety for which market demand is static. Broad adoption of the variety may be beneficial in terms of ensuring food security, but may also depress market prices and thereby reduce sale revenues for many households unless there are other, complementary activities for the processing of raw products. 15. The PPA addresses gender equality and women s empowerment, a criterion recently introduced into IFAD s evaluation methodology. This relates to the emphasis placed on gender issues: whether it has been followed up during 7 Climate change criterion will be addressed if and when pertinent in the context of the project, as most completed projects evaluated did not integrate this issue into the project design. 8 See also the discussion of attribution issues in the section on PCRVs. 9 If the PPA is conducted in the context of a country programme evaluation, then the PPA can piggy-back on the country programme evaluation and dedicate more resources to primary data collection. 42

55 Annex IV implementation, including the monitoring of gender-related indicators; and the results achieved. 16. Information from the PCRV may be often sufficient to assess the performance of partners, namely, IFAD and the Government. The PPA mission may provide further insights, such as on IFAD s responsiveness, if relevant, to implementation issues or problems of coordination among the project implementation unit and local and central governments. The PPA does not assess the performance of cooperating institutions, which now has little or no learning value for IFAD. 17. Having completed the analysis, the PPA provides its own ratings in accordance with the evaluation criteria and compares them with PMD s ratings. PPA ratings are final for evaluation reporting purposes. The PPA also rates the quality of the PCR document. 18. The PPA formulates short conclusions: a storyline of the main findings. Thereafter, a few key recommendations are presented with a view to following up projects, or other interventions with a similar focus or components in different areas of the country Practices differ among multilateral development banks, including recommendations in PPAs. At the World Bank, there are no recommendations but lessons learned are presented in a typical PPA. On the other hand, PPAs prepared by Asian Development Bank include issues and lessons as well as follow-up actions although the latter tend to take the form of either generic technical guidelines for a future (hypothetical) intervention in the same sector or for an ongoing follow-up project (at Asian Development Bank, PPAs are undertaken at least three years after project closure). 43

56 Annex V Definition of the evaluation criteria used by IOE Criteria Project performance Relevance Effectiveness Efficiency Rural poverty impact b Household income and assets Human and social capital and empowerment Food security and agricultural productivity Natural resources, the environment and climate change Institutions and policies Other performance criteria Sustainability Innovation and scaling up Gender equality and women s empowerment Overall project achievement Performance of partners IFAD Government Definition a The extent to which the objectives of a development intervention are consistent with beneficiaries requirements, country needs, institutional priorities and partner and donor policies. It also entails an assessment of project design in achieving its objectives. The extent to which the development intervention s objectives were achieved, or are expected to be achieved, taking into account their relative importance. A measure of how economically resources/inputs (funds, expertise, time, etc.) are converted into results. Impact is defined as the changes that have occurred or are expected to occur in the lives of the rural poor (whether positive or negative, direct or indirect, intended or unintended) as a result of development interventions. Household income provides a means of assessing the flow of economic benefits accruing to an individual or group, whereas assets relate to a stock of accumulated items of economic value. Human and social capital and empowerment include an assessment of the changes that have occurred in the empowerment of individuals, the quality of grassroots organizations and institutions, and the poor s individual and collective capacity. Changes in food security relate to availability, access to food and stability of access, whereas changes in agricultural productivity are measured in terms of yields. The focus on natural resources and the environment involves assessing the extent to which a project contributes to changes in the protection, rehabilitation or depletion of natural resources and the environment as well as in mitigating the negative impact of climate change or promoting adaptation measures. The criterion relating to institutions and policies is designed to assess changes in the quality and performance of institutions, policies and the regulatory framework that influence the lives of the poor. The likely continuation of net benefits from a development intervention beyond the phase of external funding support. It also includes an assessment of the likelihood that actual and anticipated results will be resilient to risks beyond the project s life. The extent to which IFAD development interventions have: (i) introduced innovative approaches to rural poverty reduction; and (ii) the extent to which these interventions have been (or are likely to be) replicated and scaled up by government authorities, donor organizations, the private sector and other agencies. The criterion assesses the efforts made to promote gender equality and women s empowerment in the design, implementation, supervision and implementation support, and evaluation of IFAD-assisted projects. This provides an overarching assessment of the project, drawing upon the analysis made under the various evaluation criteria cited above. This criterion assesses the contribution of partners to project design, execution, monitoring and reporting, supervision and implementation support, and evaluation. It also assesses the performance of individual partners against their expected role and responsibilities in the project life cycle. a These definitions have been taken from the OECD/DAC Glossary of Key Terms in Evaluation and Results-Based Management and from the IFAD Evaluation Manual (2009). b The IFAD Evaluation Manual also deals with the lack of intervention, that is, no specific intervention may have been foreseen or intended with respect to one or more of the five impact domains. In spite of this, if positive or negative changes are detected and can be attributed in whole or in part to the project, a rating should be assigned to the particular impact domain. On the other hand, if no changes are detected and no intervention was foreseen or intended, then no rating (or the mention not applicable ) is assigned. 44

57 Annex VI List of key persons met Dhaka Golam Touhid, Deputy Managing Director, PKSF Md Ashraf Ali, Deputy Project Coordinator (LIFT) (former MFMSFP Technical Coordinator), PKSF Dr M. A. Haider, Training Officer (MFMSFP), PKSF Tanvir Sultana, Manager (Operations), PKSF Gokul Chandra Biswas, Assistant General Manager, Operations (FEDEC Manager), PKSF Md Habibur Rahman, Manager (Operations) (FEDEC), PKSF Md Habibullah, Assistant General Manager (MIS), PKSF Sabbir Ahmed, General Manager (Finance & Accounts), PKSF Sudhir Kumar Das, Deputy Manager (Finance & Accounts), PKSF Shagufta Shameem, Officer (Finance & Accounts) (formerly for Microfinance and Technical Support Project - MFTSP), PKSF Ripon Kumar Aich, Accountant (formally for MFMSFP), PKSF Waliul Mustasim Matin, Associate Director, Client Service, Consumer Research, Nielsen (consulting firm, impact survey) S. Fuad Pasha, Director (Operations), Mitra and Associates (consulting firm, RIMS survey) Abdur Rob, Team Leader (Markets & Livelihoods Programme), Practical Action Bangladesh Mirza Kholil Zibran, Project Manager, Practical Action Bangladesh GM Hashibul Alam, Country Programme Officer, IFAD Bangladesh Country Office Field Naogaon District Mostafizur Rahman, Programme Officer, Mohonpur & Manda Area, Village Education Research Centre (VERC) Golam Moula, Assistant Coordinator, Mohonpur Area, Mohonpur, VERC Dewan Amdadul Haque, Lecturer, Balihar College, Manda, VERC Md Lutfor Rahman, Branch Manager, Shatihat Branch, Manda, VERC Md Abdulkarim, Accountant, Panjarbhanga Branch, Manda, VERC Md Mahfuzol Alam, Accountant, Manda Branch, Manda, VERC Most Najema Khatun, Branch Manager, Manda Branch, Manda, VERC Md Waliul Islam, Branch Manager, Kasharhat Branch, Mohonpur, VERC Md Abu Zafar, Branch Manager, Panjarbhanga Branch, Manda, VERC Md Shakawat Hossain, Branch Manager, Deluabari Branch, Manda, VERC Abul Kalam Azad, Accountant, Deluabari Branch, Manda, VERC Joypurhat District Md Nurul Amin, Executive Director, JAKAS Foundation Md Abul Bashar, Deputy Executive Director, JAKAS Foundation Md Rafiqul Islam, Assistant Director, JAKAS Foundation Md Abu Hossen, U.A.O, JAKAS Foundation Md Abdul Oydud, U.A.O, JAKAS Foundation Md. Aftab Ali, Coordinator (M&E), JAKAS Foundation Md Khurshid Alam, Coordinator (Finance and Administration), JAKAS Foundation Md Obaidul Islam, Coordinator (Agriculture), JAKAS Foundation 45

58 Annex VI A.K.M. Nazmul Huda, Assistant Coordinator (Audit), JAKAS Foundation Md Siddiqul Bashar, Union Coordinator (ENRICH), JAKAS Foundation Jakia Sultana, Training Officer, JAKAS Foundation Md Mamunur Rashid, Senior Accounts Officer, JAKAS Foundation Md Ashraful Alam, IT Officer, JAKAS Foundation Md Masudur Rahman, MIS Assistant, JAKAS Foundation Syeda Dilruba Pervin, Junior MIS Officer, JAKAS Foundation Md Moftafizur Rahman, MIS Assistant, JAKAS Foundation Abu Hossain, Upazila Agriculture Officer, Akkelpur upazila, Department of Agricultural Extension Shamsul Wadud, Upazila Agriculture Officer, Panchbibi upazila, Department of Agricultural Extension Mizanur Rahman, Manager, Pachibibi processing point, Jaipur Sweets Rajshahi District Md Abdur Raquib, Chief Executive Officer, Centre for Action Research-Barind (CARB) Nahid Parvin, Director (Admin), CARB Md Bablul Karim, Co-ordinator (General), CARB Md Shohel Ran, Co-ordinator (Microfinance), CARB Md. Rabiul Islam, Area Manager, Godagari Area, CARB Mymensingh District Md Saleh bin Sums, Director (Microfinance), PADAKHEP Manabik Unnayan Kendra (PMUK) Md Nazrul Islam Kham, Zonal Manager, Mymensingh Zone, PMUK Md Abdul Khaleque, Executive Director, Grameen Manobic Unnayan Sangstha (GRAMAUS) Nasimul, Accountant, GRAMAUS Azizul Haque, Upazila Coordinator, GRAMAUS Khosh Nahar, Field Officer, GRAMAUS Salina, Field Officer, GRAMAUS Osman, Field Officer, GRAMAUS Taufiqul, Assistant Technical Officer, GRAMAUS Habibur Rahman Branch Manager, GRAMAUS Md Mosarraf Hossain, Branch Manager, GRAMAUS Md Abdul Jalil, Branch Manager, GRAMAUS Md Abdul Kader, Branch Manager, GRAMAUS Debesh Chandra Roy, Branch Manager, GRAMAUS Md Alodus Sobhan, Upazila Coordinator, GRAMAUS Md Monirul Islam, Upazila Coordinator, GRAMAUS Md Helal Uddin, Field Officer, GRAMAUS Md Omit Hasan, Field Officer, GRAMAUS Md Abdul Mannan, Field Officer, GRAMAUS Md Deluar Hossain, Field Officer, GRAMAUS Md Saiful, Field Officer, GRAMAUS A.F. Shoyaeb Ahmed, Regional Coordinator, GRAMAUS Md Mafidul Islam, Upazila Agriculture Officer, Dept. of Agricultural Extension Shah Mohammad Misbah Uddin, Dept. of Agricultural Extension 46

59 Annex VI Farmer groups and villages visited Pashpalata Women Group, Hazi Gobindapur, Manda, Naogaon, VERC Jamun Women Group, Ramnagor, Manda, Naogaon, VERC Atapur Male Samity Group, Atapur, Panchbibi, Joypurhat, JAKAS Bakila Male Samity Group, Bakila, Panchbibi, Joypurhat, JAKAS Khudra Sheila Male Group, Lahaboria, Godagari, Rajshahi, CARB Sohag Mohila Samity, Ghaturi, Muktagacha, Mymensingh, PMUK Shahpur Marginal Women Farmer Group, Shahpur, Fulpur, Mymensingh, GRAMAUS Char Shahpur Marginal Women Farmer, Shahpur, Fulpur, Meymensingh, GRAMAUS Participants: End of mission meeting with POs in Dhaka, 30 May 2013 Shaikh A. Halim, Executive Director, VERC Abul Haseeb Khan, Director, Resource Integration Centre (RIC) Gazi Md Salahuddin, Deputy General Manager (Micro Finance Department), RIC Iqbal Ahammed, Executive Director, PMUK Md Abdul Khaleque, Executive Director, GRAMAUS Golam Touhid, Deputy Managing Director (Operations), PKSF Md Ashraf Ali, Deputy Project Coordinator (LIFT) (former MFMSFP Technical Coordinator), PKSF Dr M. A. Haider, Training Officer (MFMSFP), PKSF Ranjani Krishnamurthy, IFAD consultant / mission member, IFAD Rafiqul Islam, IFAD consultant / mission member, IFAD Fumiko Nakai, Evaluation Officer, IFAD Participants: Wrap-up meeting at Ministry of Finance, Dhaka, 30 May 2013 Dr M. Aslam Alam, Secretary, Bank and Financial Institutions Division, Ministry of Finance Mr Amalendu Mukherjee, Additional Secretary, Bank and Financial Institutions Division, Ministry of Finance Mr Arjit Chowdhury, Joint Secretary, Bank and Financial Institutions Division, Ministry of Finance Newaz Hossain Chowdhury, Senior Assistant Secretary, Bank and Financial Institutions Division, Ministry of Finance Golam Touhid, Deputy Managing Director (Operations), PKSF Md Ashraf Ali, Deputy Project Coordinator (LIFT) (former MFMSFP Technical Coordinator), PKSF Dr M. A. Haider, Training Officer (MFMSFP), PKSF Ranjani Krishnamurthy, IFAD consultant / mission member, IFAD Rafiqul Islam, IFAD consultant / mission member, IFAD Fumiko Nakai, Evaluation Officer, IFAD 47

60 Annex VII Bibliography Bangladesh Bureau of Statistics, the World Food Programme and the World Bank. Updating Poverty Maps of Bangladesh. Government of Bangladesh A National Strategy for Economic Growth, Poverty Reduction and Social Development (Interim poverty reduction strategy paper) Unlocking the Potential: National Strategy for Accelerating Poverty Reduction (Poverty reduction strategy paper) Moving Ahead: National Strategy for Accelerated Poverty Reduction II. International Fund for Agricultural Development (IFAD) and Bangladesh: Country strategic opportunities programme President s Report (for December 2004 Executive Board) Technical review committee issues paper (18 June 2004) Design Report Appraisal (Main report, appendices and annexes: Implementation edition) , 2008 and Project loan agreement and amendments. IFAD Supervision mission aide memoire and reports (September-October 2007, October 2009, May 2010 and March 2011) Mid-term review aide memoire Project completion report (Main Report, annexes and working papers).. Project status reports. Md Akteruzzaman Baseline study on Microfinance for Marginal and Small Farmers Project under PKSF. Mitra and Associates Baseline results and impact management system survey Impact survey for MFMSF project (RIMS). Nielsen Company Bangladesh Ltd Report on Impact Study of Microfinance for Marginal and Small Farmers Project. United Nations Office for Project Services (UNOPS) and Bangladesh Microfinance for Marginal and Small Farmers Project: Supervision mission reports (December 2005 and November 2006). 48

61 Annex VIII Note on approach and methodologies for surveys undertaken for assessing project results and impact 1. A number of surveys and studies were undertaken during the project period in an effort to assess the outcomes and impact of the project support. A summary of each of the key surveys is provided below. Baseline study (Prof Akteruzzaman, Bangladesh Agricultural University, October 2006) 2. This covered a sample of 600 respondents from all 14 project districts. The respondents were selected from 120 groups supported by the POs under the project at the time: 19 male groups (16%) and 101 female groups. From each group, five members were interviewed. The household interviews were conducted between January and June Farmer groups from 24 out of 25 POs at the time were covered. The report did not include a questionnaire used as part of the document, but the Household Profile Baseline form proposed in the Appraisal Report was used. 3. The report provided information on the main sources of income, income levels, landholding, livestock and household assets, sanitary conditions, food security, women s mobility, etc. The average size of cultivated land per household was reported as 1.58 acres, which fit the project target group. RIMS survey (Mitra and Associates, 2006) 4. The survey involved a sample of 1,200 households selected from the Microfinance for Marginal and Small Farmers Project (MFMSFP) farmer groups (60 groups). Twenty households were selected from each group. For a group of less than 20 households, additional households were interviewed from a neighbouring group to complete the quota of 20 interviews. The questionnaire for this survey was almost identical to the IFAD RIMS impact survey standard questionnaire. 5. According to the report, the sampling framework was based on the lists of groups provided by POs, but it did not indicate whether some geographical consideration (clustering) was incorporated in sampling or not. 6. The anthropometric survey, as part of the RIMS survey, covered 699 children aged 0-59 months. RIMS impact survey (Mitra and Associates, 2011) 7. The survey involved a sample of 900 households selected from MFMSFP farmer groups. The report indicated that the first 45 upazilas were randomly selected from 112 upazilas covered under the project, with one group selected in each upazila. This geographical clustering was not done in Like the former survey, 20 households were selected in each group. For a group of less than 20 households, additional households were interviewed from a neighbouring group to complete the quota of 20 interviews. 8. The report does not make any reference to consideration of the age of groups (or duration of membership); hence, most likely the sample had people with different lengths of membership. 9. The IFAD RIMS impact survey standard questionnaire served as a basis, but compared to the survey in 2006, the questionnaire for this survey added many more questions (e.g. questions on diet, hungry season months, additional questions on landownership, livestock ownership, sources of household incomes, monthly household expenditures, etc.), some overlapping with each other. 10. The anthropometric survey, as part of the RIMS impact survey, covered 485 children aged 0-59 months. 49

62 Annex VIII Impact study of MFMSFP (Nielsen Company Bangladesh Ltd., 2012) 11. A sample of 1,200 households, including 300 households as a control group. Project participants (called intervention group/households ) were expected to have been active members of the project farmer group for three or more years. From the sampled 300 groups of 25 POs in nine districts, three members each were interviewed (3 x 300 = 900 respondents). Hence, the survey covered many more groups, possibly with more varied profiles, compared to the RIMS surveys. For the control group, 300 respondents were selected on the basis of the ratio of project group members using a participatory mapping, group discussions, focus group discussion and wealth ranking exercise from the sampled households. It was ensured that they belong to same socio-economic conditions like small and marginal members of the MFMSF project. Seventeen per cent of the groups interviewed were male groups (for both the project and control groups). 12. The survey covered a very wide range of topics and questions, including many relating to project support for training. The questionnaire was extremely long, with a total of probably around questions. 13. According to the report, the data on household baseline profile forms completed by the same members at the time of joining (and kept by POs) served as baseline data and for some parameters, the report provided the information on the situation before and after. The report also presented data comparing intervention groups and control groups. Key questions and issues 14. Overlapping questions between surveys and inconsistent picture on impact: In theory, RIMS surveys are to provide information on the mandatory indicators at impact level as required by IFAD. Normally survey questionnaires are based on the standard questionnaire developed by IFAD, while the 2011 RIMS survey questionnaire was expanded with additional questions. Projects often find the need to conduct other baseline and impact surveys which include indicators that are specific to respective projects. In this case, for example, two impact surveys were conducted (RIMS 2011 and Nielsen). Some questions were overlapping (e.g. assets, food security, etc.). It might have been better to have one combined survey. Or if both had to be done with similar questions, it would have been reassuring if the picture given was more or less consistent. While the survey questions and issues were not always comparable, in some cases even where there were similarities on these basics, the results were inconsistent between the surveys. 15. One example of such inconsistencies was sanitation, although it is recognized that the extent of project contribution is difficult to establish. On the one hand, the RIMS baseline and follow-up surveys indicated that the proportion of households with access to adequate sanitation facility (improved pit latrine, pour flush latrine and flush toilet) decreased from 63 to 59 per cent. On the other hand, the Nielsen survey indicated general improvement in sanitation facilities of members. The report indicated a significant decrease in the percentage of households with open pit latrines (from 27 to 6 per cent), and increases in those with pit latrines with some improvements made. But the percentage of those with ventilated improved pit latrines (so called VIP latrines) decreased from 3.3 to 2.3 per cent. This is puzzling since the before and after data were supposed to have come from the same respondents, and this would indicate about 9-10 households lost VIP latrines. Also, the RIMS survey indicated 53 per cent of the households had VIP latrines in 2011 a completely different figure. It is also possible that the interpretation of improved latrines or VIP latrines differed between the surveys or between the respondents. 16. Another example was that of assets. The levels of ownership of certain assets shown in these reports were indeed quite different. For example, the percentage of 50

63 Annex VIII members who owned bicycle was indicated as 40 per cent (2006) and 38 per cent (2011) in RIMS, and 11 per cent both before and after according to Nielsen. The Nielsen report, presumably comparing the before and after situation of the same respondents, showed insignificant changes in assets ownership, whereas RIMS results showed remarkable to modest improvement. The reasons for such notably different pictures were not clear, and this has raised questions on the accuracy and reliability of the survey findings. In fact, the figures in the Nielsen report were seemingly too low, based on available data and the mission s observations, 1 for all types of assets. Therefore, it was impossible to draw reliable conclusions on changes in household assets based on these surveys. Ownership of selected assets reported in two surveys (% of the respondents) showing inconsistent figures 2006 RIMS (1,200 HHs) 2011 RIMS (900 HHs) Asset Nielsen before (900 HHs)* Nielsen after 2011 (900 HHs) Radio TV Refrigerator Fan Bicycle Motorbike Mobile phone Sewing machine Power tiller Sprayer Weeder * Data based on the household member profiles for the same members interviewed in Both surveys had questions on food security with somewhat different wording as follows: Respondents were asked to choose one amongst the following: experience food shortage in the whole year, experience food shortage sometimes of the year, not too much extra/less food, having additional food (Nielsen) In the last 12 months, did your household experience a hungry season? (RIMS 2006 and 2011) 18. In the Nielsen report, 91 per cent of the respondent either had additional food or not too much extra/less food, whereas in the RIMS survey, 50 per cent of the respondent experienced a hungry season in the last 12 months. The wording may not be entirely the same, but the overall picture is quite different. 19. Presentation of implausible data: In comparison with the 2006 survey, an increase was recorded (from 22 to 50 per cent) in respondents reporting food shortages. Even if the project had not made any positive contribution, without any notable shocks (e.g. natural disasters) experienced in the project area during the project period, this drastically worsening food security situation does not make sense. The 2011 report noted that data on food shortages were collected asking questions with different wordings between the baseline survey and the follow-up survey. This precludes examining changes in levels of hunger, comparing the data of the two surveys. The question concerned was identical in English, but apparently 1 A survey conducted for a USAID programme contains some comparable data on household assets in rural areas. 51

64 Annex VIII translated slightly differently in Bengali. In what way slight differences in the Bengali language could have caused such big difference was not clear. In any case, this also raised a question of the quality of survey design and management, especially because both surveys were undertaken by the same company. 20. Another example is the ownership of mobile phones, which was shown in the Nielsen report as 6 per cent before and 7 per cent after. Available data seem to indicate that the ownership of mobile phones in rural areas in Bangladesh is much higher. For example, in a survey covering 6,500 households conducted for a USAID programme (2013), 2 the percentage of rural households in the poorest quintile owning a mobile phone is 49.6 per cent. This is largely in line with information obtained by the PPA mission from two women s groups that 50 per cent of women members now had their own mobile phones, which was not the case at the time of group commencement. 21. Appropriateness of questionnaire and questions: The Nielsen survey questionnaire was extremely long with questions. It would have been a time-consuming and tiring exercise for respondents, and it may also have reduced the likelihood of getting credible responses. It is also doubtful whether one could expect reasonably reliable responses for some questions, for example, annual incomes or expenditures. The respondents were asked to provide information on annual household incomes for each of the different enterprises, such as farming (crop, vegetable and fruit separately), poultry, livestock, day labour, fishing, trade/business, etc. On the expenditure side, similarly, the respondents were asked to provide information on their annual expenditures, total and breakdown for each of the different items, such as food, clothing, health, education, festivals, loan instalments, etc. It seems rather implausible that most, if not all, respondents would provide reliable information on such a range of factors. 22. That said, the advantage of the Nielsen survey and approach may have been having the same households for comparison (baseline). Any margin of error should be more comparable than if the surveys had compared before and after using an entirely different set of samples. The PPA was not able to verify, however, the accuracy in tracking down and entering the baseline data of the same households sampled for the 2011 survey. 23. Sampling methodology can the results be generalized to the population?: The RIMS surveys sampled 20 members from each group (60 groups in 2006 and 45 groups in 2011), where possible in other words, most of the group members, since the average group membership was 15. In the field, it was observed that groups could be quite different depending on the characteristics and focus of POs. Taking most of the group members from fewer groups may have provided a less representative picture. 24. In the 2011 RIMS survey, the sampling did not seem to take account of the years of membership (i.e. the sample could have included those people who had been in the group for 5 or more years, as well as those who had been in the group less than a year. 25. The Nielsen survey had a control group of 300 households, reportedly sampled from those with the same socio-economic conditions like small and marginal members of the MFMSF project on the basis of the ratio of project group members using a participatory mapping, group discussions, focus group discussion and wealth ranking exercise from the sampled households. Apart from the question on whether those households sampled actually had comparable socioeconomic conditions, another issue to consider is whether such control groups would actually provide the counterfactual. It is possible that there were some

65 Annex VIII underlying differences in attitudes between those who joined groups (e.g. more entrepreneurial) and those who did not (e.g. risk averse). 26. Quantitative survey not sufficient to provide comprehensive picture: The above surveys were undertaken only using questionnaires and there was no qualitative survey method that looked into the stories behind the quantitative data. Overall comments and lessons 27. Notable efforts have been made for assessing results and impact of the project. The surveys undertaken do provide valuable information, but questions have been raised on the methodologies used and hence on the reliability of some findings. Some lessons include the following: The importance of carefully reflecting on and agreeing on what expected results and impact should be measured at the design stage and onset cannot be overemphasized. In this regard, what is suggested in project design reports (logical framework, indicators, etc.) would normally carry significant weight (i.e. implementing agencies or project management units would consider as the draft to be used), and therefore, quality control at this stage needs attention. In relation to the above, for questionnaires it is also key to have focused questions that are carefully formulated and tested. Qualitative methods should be combined with quantitative surveys. IFAD should provide support at all stages including providing proposed basis for monitoring and evaluation in project design reports, terms of reference for consulting services, consultant selection process, reviewing proposed methodologies and draft reports. 53

66 BDT million Annex IX PKSF s programme, seasonal loan and agricultural sector microcredit 1. The Palli Karma-Sahayak Foundation (PKSF) was established by the Government of Bangladesh in 1990 as a not-for-profit company and as the apex organization providing funds to microfinance institutions (MFIs), or partner organizations (POs). Currently PKSF has the following six core programmes : Rural microcredit (RMC) Urban microcredit (UMC) Microenterprise programme (MEP) Ultra poor programme (UP) Agriculture sector microcredit (ASM) Seasonal loan (SL) 2. PKSF also channels credit funds that are made available through various projects. The purposes and the target group may overlap between core programme funding and project funding. At times, a certain product is introduced under a project and then mainstreamed into the core programme. Each core programme and also project funding would have certain target groups and eligibility criteria. The POs are expected to follow the objectives and guidelines (e.g. application of eligibility criteria) for each product/programme against which they borrow from PKSF. 3. The data show that PKSF lending to POs, in the amount and proportion, has been steadily increasing under ASM, SL and ME, whereas the proportion of funding for UP, UMC and RMC has been decreasing. Total PKSF funding to all its partner organizations by programmes (2007/ /12) Other ME UP UMC RMC SL ASM MF / / / / /12 MF: Credit funds made available under the Microfinance for Marginal and Small Farmers Project. 4. ASM and SL were incorporated into the PKSF s core operations in 2008 and 2006 respectively, while the MFMSFP was still under implementation. The distinction between these two was not really clear-cut. See table below for comparison. 54

67 Annex IX Comparison of PKSF s seasonal loan and agriculture sector microcredit programmes PKSF s core programme since Background Objectives Scope/coverage Geographical area Eligibility/target group Additional points on operations Repayment period (PO to PKSF) Service charge for POs Loan size (to members) Duration (beneficiary to PO) Repayment modality Service charge Other Seasonal Loan (SL) Agriculture Sector Microcredit (ASM) PKSF observed that a large portion of rural microcredit was invested in different seasonal activities. Based on seasonal demands and opportunities of investment and with the interest of POs. To increase family income and better meet livelihoods of rural people that demand access to fund during seasonal cash-flow shortage. Farming (rice, vegetables, fish, livestock production); Diversified agricultural IGAs; Modern production technologies technical knowledge; Investment in non-crop productive activities, e.g. handloom, fishery, honey, cane & bamboo products. Not specified. All MC borrowers. If SL is for crop/livestock/fish, etc., s/he would have such experience and owned/leased land or fish cultures. SL borrowers selected from existing microcredit (MC) group. No new group will be formed, unless the number of SL borrowers in RMC/UMC increase to a certain level. SL borrowers are to attend weekly meeting and deposit savings as MC borrowers. A borrower can take SL in addition to MC, but is not allowed take more than two loans at a time. Single or multiple instalments by 10 months as per loan agreement. MFMSFP and SL resulted in increased demand for credit for marginal and small farmers. Increased interest of POs for operating agricultural credit. To provide microcredit support to agricultural production systems of marginal and small farm families to improve their farming skill by feeding new information and knowledge. To promote modern and improved agricultural production technologies to the targeted farm families so that they can upgrade socioeconomic conditions by producing more food per unit area Food crops, livestock, chicken/duck, fruit trees, vegetable, agroforestry, fishery and specialized agricultural activities (sericulture, beekeeping, mushroom, salt, nursery). Also processing of agricultural products. Purchase of agriculture equipment (power tiller, etc.) Areas with agricultural potential and gradually to be extended to the country using interested POs of the area. [However, the areas with agricultural potential were not defined in the policy.] Marginal and small farmers who are directly linked with farming. Also poor households with specialized agricultural activities (sericulture, mushroom, nursery, beehive) A separate credit group to be formed for ASM. Group meetings and deposit intervals not prescribed. A borrower can take two ASM loans at a time. 14 months. POs are allowed to use loan/grant of other sources to the ASM after getting prior permission from PKSF. 5.5%-8% per annum under declining/reducing 5.5%-8% per annum under declining/reducing balance method. balance method < Tk 50,000. Two SL at the same time possible, but total outstanding to be within Tk 50,000. not exceeding Tk 50, months maximum. 12 months maximum. Weekly/fortnightly/monthly or single instalment. Single instalment preferred to avoid complexity. 2% per month under declining balance method. < Tk 50,000 at a given time. Two ASM loans possible, but the loan ceiling Weekly/fortnightly/monthly or single instalment by 12 th month. Single instalment preferred to avoid complexity. Maximum 2% service charge per month under declining balance. ASM could also cover institutional development. 55

68 Annex IX In summary: SL can cover non-agricultural enterprises, as well agricultural enterprises. One of the most popular agricultural enterprises financed under SL is beef fattening. The size of landholding (or cultivation) is one of the key eligibility criteria for ASM. Crop loans are normally under ASM. SL was conceived as an additional product for microcredit (urban and rural) borrowers. Both ASM and SL present an option of a seasonal repayment modality (not necessarily weekly payment). 56

69 Annex X List of partner organizations Name of the PO Total number of members (June 2011) Male Female Total Loans outstanding to members (June 2011) BDT million 1 Jagorani Chakra Foundation (JCF)* RDRS-Bangladesh Thengamara Mohila Sabuj Sangha (TMSS) 148 2, Society for Social Service (SSS) Padokkhep Manobik Unnayan Kendra (PMUK) Dabi Mowlik Unnayan Sangstha* Resource Integration Centre (RIC) Eco Social Development Organization (ESDO) Uttara Development Programme Society* 0 4, Bangladesh Association for Social Advancement (BASA)* 11 Peoples Oriented Programme Implementation (POPI) Dushta Shastha Kendra (DSK) Sabolambi Unnayan Samity (SUS) Al Falah Am Unnayan Sangstha Grameen Manobik Unnayan Sangstha (GRAMAUS) MBSK* Programms for Community Development (PCD) GRAMEEN Krishi foundation (GKF)* Ananna Samaj Kallayan Sangstha Village Education Resource Centre (VERC) Samaj Kallayan Sangstha Krisiza Banayan Biz Utpadan O Unnayan Sangstha (ASPADA) 23 Participatory Development Initiatives of the Masses (PDIM) , Jatiya Kallayan Sangstha (JAKAS) Joypurhat Rural Development Movement (JRDM) Gram Unnayan Karma (GUK) BEDO Self Helf and Rehabilitation Programme (SHARP) Bangladesh Extension Education Services (BEES) Centre for Action Research Barind (CARB) ASO* Shataful Bangladesh* Mousumi* Proyas* Shapla Gram Unnayan Sangstha* TOTAL * POs who joined the project in

70 Annex XI Priority technologies promoted under project 1. Leaf colour chart (LCC). LCC is an easy-to-use inexpensive high quality plastic made, ruler shaped diagnostic tool. This tool is used for efficient urea (nitrogenous fertilizer) application in rice fields by monitoring the relative greenness of a rice leaf. LCC contains four colour shaded strips, starting with yellowish green to dark green, indicating low to high nitrogen content in the rice plant. These strips are fabricated with veins resembling rice leaves. Using this tool, farmers can easily top dress the needed amount of urea, comparing rice leaf colour with LCC colour strips. So it helps to avoid overuse of fertilizers and thus reduce the cost of urea. To disseminate this technology 25,000 LCC were imported from the Philippines with the assistance of International Rice Research Institute (IRRI) and distributed to the beneficiaries; the technology has also been exhibited in 1,057 demonstrations in the project area. According to POs progress report, it was found that around 29,815 farmers of 25 POs had used the technology by June The PCR reported that the use of the technology resulted in a reduction in the quantity of urea applied by about 20 per cent, as well as an increase in grain yield by 8 per cent. 2. Urea super granule (USG). USG is a granular form of urea, approximately 1.5 cm in diameter, made by compressing normal urea prills with the help of a briquette machine. USG is placed near the centre of four rice hills at a depth of 5-6 cm. By burying the urea, nitrogen is released more slowly than when spread on the soil surface, thus more can be absorbed by plants before it oxidizes. This contributes to a reduction in the amount of urea needed (30 per cent), as well as an increase in yield (10 per cent) due to an optimal application. In the past there were two main constraints to adoption of the technology. First, USG was not widely available, as it had to be produced from standard prills of urea (small pellets) using a special briquetting machine, which was not widely available. Second, the application of USG in the field manually was very labour intensive. In relation to this, the project introduced 400 applicator machines 1 to project POs. Training was provided to 9,514 beneficiaries and 890 demonstrations were organized for farmers. As of June 2011, around 47,228 farmers from 25 POs had used the technology. 3. Alternate wet and dry (AWD) irrigation system. AWD is a simple water-saving technology used to determine when irrigation water should be applied in the rice field. A plastic (PVC) or bamboo pipe of 25 cm long and 10 cm in diameter, of which the lower portion (15 cm) is porous, is inserted in the soil to observe the water level of the root zone of rice and determine when the rice field should be irrigated. This method can save 20 to 25 per cent of water compared to traditional methods. The project, in collaboration with Rural Development Academy (RDA) and Bangladesh Rice Research Institute (BRRI), distributed 32,600 porous pipes to the beneficiaries. By June 2011, 10,302 farmers had used the porous pipe for irrigation purposes and 271 demonstrations had been made. A study showed this technology increased grain yield by 4 per cent and reduced water use by 45 per cent, thus reducing boro rice production costs by 10 per cent over traditional irrigation methods. 4. While the technology can be useful in some cases, there are also the following limitations. First, it is suitable and relevant only in areas dependent on pumped water. Second, since farmers usually pay a fixed price for water to pump owners each season instead of paying according to the amount of water used, this technology is relevant only for those farmers who own pumps. 1 The project has distributed machines developed from a prototype developed by the engineering department of the Bangladesh Agricultural Research Institute (BARI). These are relatively simple machines that can be made by small engineering companies found in most large towns. 58

71 Annex XI 5. Seed production and preservation. To improve the quality of rice seeds for planting, the project supported farmer training to introduce the Maria Model a technology to produce and preserve seeds, promoted by RDA. RDA developed this farmer-friendly model, including modern seed production technology along with indigenous farmer practices. Training, exposure visits and demonstrations were made to adapt this technology at the farmers level. By June 2011, the project had arranged training for 41,947 beneficiaries and 811 demonstrations on seed production and preservation following the Maria Model; a total of 24,534 farmers of 25 POs stored rice seed using this technology. 6. Pheromone trap. This is a simple device used as an environmentally-friendly and low-cost substitute for insecticide. A rectangular or round clear plastic container with a 3-litre capacity, 22 cm tall, is used as a pheromone device, which is called a water-through trap. A triangular hole is cut in any two opposite sides, starting 3-4 cm from the bottom. Soapy water of 3-4 cm height is maintained inside the trap throughout the season. The pheromone lure (female sex pheromone) is hung through the center of the lid inside the trap in such a way that it is 2-3 cm above the surface of the soapy water, and traps placed in insect-infested crop (eggplant or cucurbits) fields just above the crop canopy. The female pheromone attracts the male insects, and they are captured in the soapy water of the trap and die. Insect mating is thus interrupted, and the insect population decreases and is controlled even it is pesticide-resistant. By June 2011, 28,000 traps had been distributed to the beneficiaries and 461 demonstrations organized in the field using the pheromone trap; around 1,435 farmers used the technology. 7. It was observed that farmers who used the pheromone trap in their eggplant plots to control fruit and shoot borer, and in cucurbits to control fruit fly, saved up to 50 per cent in costs for insecticide and increased production by 25 per cent (estimated) for the same area of land. 59

72 Annex XII Case studies: stories from the field A. Case of Rohima Khatun Thirty-year-old Rohima Khatun is the leader of Suhaad Mahila Samiti in Gatteri village in Mymensingh district. She lives with her father-in-law, husband and two children. She is one of the few women to have studied up to high school in her village. When three pictures were drawn of a sad, moderate and happy face, and she was asked to choose a picture which represented how she felt, she chose a happy face. She observed that she was sad before joining the group and benefiting from the project. She and her husband were landless, but her father-in-law, who stayed with them, owned four acres of land. They, however, owned an ox and 20 ducks when she joined the group. Before joining the group, she could not cultivate all the land as they did not have access to microcredit for purchase of inputs. Her husband was working at that time as a medical representative earning 3,000 Taka per month. After joining the group in 2005, she took eight loans with the first loan being for BDT 10,000 and the last for 40,000. The purpose of taking loans ranged from purchase of inputs, purchase of a cow (new activity) and for fishery cultures (new activity). She manages the activities along with her father-in-law. Her husband travels. Part of the four acres of land is in a low-lying area and part in an area which is at medium levels. Her father-in-law and she grow rice in the low-lying area. She got the idea of diversification of livelihood and crop intensification from the crop and non-crop training she received. While earlier they would have sowed paddy only once, now they sow twice. In the medium-lying land they have grown potato, onion and chili. They have access to a deep tube well. After receiving training, she has adopted the urea super granule (USG) and claims a reduction in expenditure and a slight increase in yield. She preserves seed using the Maria seed preservation technology. Rohima Khatun is pleased that her cow has given birth to three calves over the years. It is, however, not insured. She and her father-in-law have moved from catch fishery to culture fishery (they put in spawn as well as feed the fish). Her farm and other income, according to her, has roughly increased by 50 per cent and expenses by per cent (inputs and labour costs). Her husband s salary has increased from BDT 3,000 to 12,000. Thus, if she is happy now, the project is one of the contributing factors. Speaking on issues of women s empowerment, Rohima Khatun observed that decisions were taken jointly by her and her father-in-law. Marketing of crops was done by him, but he gave her the cash. Marketing of vegetables was her responsibility, as was selling fish. She has opened her own bank account in Islamic Bank. She and her husband have built their own house (cement floor and wall, tin roofing, three rooms), in her husband s name. Relatives live in the old house (earthen floor, tin wall, tin roofing, two rooms). The sanitation conditions in her house have improved. She and her husband have upgraded their toilet from an open pit latrine to a pit latrine with slab and water seal. All family members eat healthier now, with an increase in consumption of eggs, fish, chicken and fruits. There is no gender difference in distribution of food. The children are both studying. She has been lucky that none of her livestock have died, fisheries collapsed or crops failed. There have been seven years free of drought and floods. Her diversified livelihood base will definitely reduce her vulnerability to one activity failing. She claims she has shared lessons learned to seven others. Looking into the future, she wants to buy property in a town as its value is appreciating! B. Case of Joshna Thirty-five-year-old Joshna is the leader of the group Char Shahapur Women Marginal and Small Farmer s group and resides in Shahapur village, Mymensingh district. She is married to Atur Mia, and lives with her three children, Shajib, Beauty and Sharif. 60

73 Annex XII Joshna has not been to government school, but has learnt to read and write Arabic from the priest in her village of birth. She joined the group as a member in The group was formed under the Smallholder Agricultural Improvement Project supported by IFAD. At that time, her household owned 8 decimals of homestead and 28.5 decimals of agricultural land (all in her husband s name). Another 1.42 acres belonged to her fatherin-law was jointly cultivated by her husband and his two brothers. They also had 10 poultry. Her then one-room house was made of jute stick wall and roof, and earthen flooring. She and her family members used a pit latrine. So far she has taken 13 loans, with the first loan being for 5,000 taka and the last loan being for 50,000 taka. All decisions on loans were taken jointly. Three loans were seasonal and the rest were regular ones. Details of loans are given in the table below. Year Loan amt (BDT) Loan purpose Profit/loss Gender issues Vegetables Peanut Vegetables Peanut Made a profit Made a profit Vegetables -Made a profit -Employed labourers -Paid labourers 50 taka/day Managed jointly Managed jointly Managed jointly Rice business Made a small profit Managed by husband Calf Loss, it died Took up beedi rolling to make up for loss earned 30 taka per day Cow Profitable: 2.5 to 4 litres per day at 25 taka per litre more cow Profitable: 7 to 10 litres per day from two cows at 25 taka per litre Sent milk to market through daughter and collected money Beedi rolling continued Husband met with accident in rice mill, could not work She does livestock rearing, agriculture, beedi rolling and working in the NGO BRAC as a health worker Vegetables Profitable Continues with 4 activities Land lease 95 decimals No lease agreement Shallow tube well and leasing 66.5 decimals of additional land No lease agreement Purchased 66.5 decimals of land Loan not enough for purchase of land; sold two cows Building of house: 9.5 decimal of land costing 90,000 taka Sold her old house which is far away and mortgaged land for taka Release her mortgaged land Profitable Profitable Profitable Two cows sold for 120,000 taka Improvement from one-room thatched house to two-room tin house Improvement in vegetable production and trading Same as above Stops beedi work, as her condition has improved 9.5 decimals is owned by her; 57 decimals by her husband. Land and house is owned by her Joshna recalls that in 2001, she had to borrow from others to make ends meet. She faced food shortages for around two months a year then. They cultivated 76 decimals of land. Paddy was cultivated once and vegetables twice a year. They produced mounds of rice a year (valued at that time at taka per mound), which was kept 61

74 Annex XII for their own consumption. Poultry was similarly used for consumption. The household earned 4000 Taka per year from vegetable cultivation after expenses. The income earned by her husband from working in the mill was BDT per week. Her expenses for cultivation of rice was BDT 700 per annum. Her household s average monthly income was thus BDT 1,675 per month in Now they cultivate 1.42 acres of land. She and her husband earn BDT 50,000-60,000 per year from vegetable cultivation. They cultivate paddy twice and produce mounds of paddy per year valued at BDT 550 per mound. They netted a profit of BDT 2,500 from paddy sales (after deducting expenses). She earns BDT 1, per month from BRAC. Thus on the whole, Joshna s household s monthly earnings were BDT 60,422 per month. She and her husband have upgraded their toilet from open pit to pit latrine with slab and water seal. Her three children (one girl and two sons) go to school, and she intends educating them. Joshna also intends standing for the next Union Parishad elections. C. Case of Maleka Maleka is the group leader of Shahpur NO 22 Marginal Farmer s group in Shahpur East Para, Shahpur village, Mymensingh district. Her group was formed in 1995 under the Smallholder Agricultural Improvement Project and was absorbed under the MFMSF project. Maleka considered herself poor at the time of joining the project. At that time Maleka s husband, Nizamur Rahman, owned 50 decimals (or half an acre of land). They were growing paddy and banana. The household faced food shortage for two months a year, with the adults cutting back consumption of food, and the three children being fed fully. They were living in a one-room house, which had a thatched roof and tin walls. They used an open pit for sanitation. Her first daughter s education was stopped at class 5 in order to help her with household chores. Since joining the group she had taken around 18 loans as of Important loans were for leasing land, purchase of land, purchase of inputs, beef fattening and purchase of a power tiller. The beef fattening loan was a seasonal loan, with the rest being regular loans. She has insured her cattle (beef fattening), and taken part in crop training, noncrop training, demonstrations and training on the five technologies. She and her husband use USG, Maria seed preservation, porous pipe and pheromone trap. The pheromone trap and Maria seed preservation are her responsibility, while her husband manages the other two technologies. The use of urea had come down from 450 kg per acre of land to 300 per acre, generating a net saving of BDT 2,700. Through less utilization of pesticides, they saved BDT 1,500-2,000 per acre, thanks to pheromone traps. She and her husband have expanded their ownership of land from half an acre of land to 1.14 acres of land, of which 0.29 acres is owned by Maleka. They have leased 1.52 acres. On 1.09 acres, they grow vegetables: brinjal, cucurbit, pumpkin, tomato and potato. On 0.42 acres they grow mango, drumstick, litchi, lemon and beetlenut. The vegetables are marketed through middlemen who come to the door, and hence money is handled by Maleka. Fruits are not sold; they barter if necessary. On one acre they grow paddy. If the rice trader comes to her home, she handles the marketing (using a mobile to consult her husband). She keeps the required amount for home consumption. If the trader does not come, her husband sells the paddy. The rest of the land (0.15 acres) has been mortgaged to supplement the loan taken to purchase a power tiller. The income and expenditure from agriculture activities, sale of one cow (beef fattening), chicken and eggs, pigeons and operation of power tiller are listed in the table below. 62

75 Annex XII Activity Income Expenditure Profit Vegetables Rice (plus consumption) Fruits Not sold Sale of cow Chicken Power tiller Total Maleka now considers her household to have graduated out of poverty and be moderately off. They live in a four-room house with earthen floor, but cement walls and tin roof. There are no more months of food shortages, and there is more consumption of meat, fish, eggs, vegetables and fruits. Her husband has stopped engaging in wage labour. She regrets not having educated her first daughter, but is educating her second one and her son. They have upgraded their toilet from open pit latrine to one comprising of a pit latrine with slab and water seal. D. Case of a men s group, Atapur village, Joyporhat district JAKAS Foundation formed a male youth group in Atapur village in the year There were 30 members when the group began, of whom three dropped out stating that they no longer needed credit. A focus group discussion was held with nine members of this group to understand membership profile, access to credit, utilization of credit, access to training and impact of interventions under the project. A profile of the landholding of members, along with details on the number and amount of loans taken by each, is given in the table below. Name of member Land owned by member (acres) No of loans taken Average loan amount (BDT) Other comments 1 Abdul Rahim New member 2 Shajar Ali New member 3 Dudania Made use of storage 4 Md Abdul Hamid Demonstration 5 MdMutaHurHussain Made use of storage Adopted USG 6 AyupHussain New member 7 ManharHussain New member Vegetable cultivation Adopted pheromone trap 8 Majidul Islam Adopted USG 9 Sultan Mahmud Made use of storage Adopted USG Focus group discussions with the farmers revealed that earlier they were cultivating per cent of their agriculture land for lack of access to credit. Now with access to credit, they were able to cultivate the entire land that they owned. Eight out of the nine farmers reported cultivating only rice before joining the group. After the training received (and exposure through demonstration), they started adopting multicropping system, growing rice, mustard, potato and vegetables. Further, they 63

76 Annex XII adopted high-yielding varieties of rice and potato. Five out of nine had attended the training on the five technologies given through the project; the remaining four were new members. Of the five, three had adopted USG, one had adopted the pheromone trap and all had adopted LCC. Porous pipe was felt to be inappropriate for the area. While the new members had not received training, they learnt from the old members. In addition to agriculture, all nine farmers had adopted beef fattening after receiving training on the same. Three of the members small farmers and old members had made use of JAKAS storage facilities, and found the services useful. 1 Reporting on the yields per bigha (33 decimals in this area), the members of the group observed that it had gone up as per details given in the figure below Rice Potato Mustard Now Before 1 Time was not adequate to explore the cost-benefit of storage. 64

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