China - Qinba Mountains Poverty Reduction

 ICRR 12271 Report Number : ICRR12271 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 09/26/2005 PROJ ID : P003590 Appraisal Actual Project Name : Cn - Qinba Mountains Project Costs 360.0 388.9 Poverty Reduction US$M ) (US$M) Country : China Loan/ Loan US$M ) 30.0/150.0 /Credit (US$M) 177.0 Sector (s): Board: RDV - General Cofinancing agriculture fishing and US$M ) (US$M) forestry sector (62%), Other social services (17%), Central government administration (9%), General education sector (9%), General transportation sector (3%) L/C Number : CN028; L4187 Board Approval 97 FY ) (FY) Partners involved : None Closing Date 01/31/2004 12/31/2004 Prepared by : Reviewed by : Group Manager : Group : Lauren Kelly Christopher D. Gerrard Alain A. Barbu OEDSG 2. Project Objectives and Components a. Objectives According to the SAR, the principle objectives of the project were to : (a) Demonstrate the effectiveness of a focused multisectoral rural development project approach to poverty reduction; (b) facilitate a market-friendly increase in labor mobility from poor areas to better off rural and rapidly growing urban areas; (c) upgrade poverty monitoring at the national and local levels; and (d) significantly reduce absolute poverty in 26 of the very poorest counties in the Qinba mountains region. The project would also stabilize or even reverse upland environmental destruction through land and pasture improvement and soil conservation works, and encourage greater local community participation by enabling households to make key decisions during project design and implementation . According to the ICR: The project contained an additional objective of establishing a new micro-finance mechanism to provide credit services to poor households . This objective, while not explicitly included in the original statement of objectives, was included in the original Microfinance Component Description in the SAR (see no.5 below). The design of the Qinba Mountains Poverty Project is based on the design and partial implementation experience of the Southwest Poverty Reduction Project (SWPRP). b. Components Original Components According to the SAR, the project would comprise six components . The ICR lists seven (used here) since the ICR split the sixth component into two parts : project management and poverty monitoring activities . 1. Enhanced Rural Labor mobility (US$37m at appraisal, 46.1m actual or 125% of appraisal): Provide employment to about 155,000 upland laborers; provide testing ground for assisting the flow of rural laborers 2. Rural infrastructure (US$30.7m at appraisal, 70.6m actual = 230% of appraisal): Improve poor’s access to basic infrastructure. 3. Land and farmer development (US$149.6m at appraisal, 232.0m actual or 155% of appraisal): Create a substantial and sustainable increase in agricultural productivity and incomes . TVE ) development (US$47.3m at appraisal, 24.5m actual or 52% of appraisal): 4. Township and village enterprises (TVE) Provide credit for labor-intensive commercially viable agroprocessing, mineral, service and handicraft industries that had strong backward linkages to poor households and met environmental safeguards . 5. Micro -finance (US$3.2m at appraisal, 6.8m actual or 213% of appraisal): A "pilot" component to establish a sustainable financial system to provide working capital loans to micro -enterprises run by poor households . 6. Institution building and project management (US$7.8m at appraisal, 7.6m actual or 97% of appraisal): Enhance the capacities of the Leading Group for Poverty Reduction, the three provincial Poor Area Development Offices, and county and lower level Project Management Offices in planning, design, management and monitoring . 7. Poverty monitoring (US$2.0m at appraisal, 1.30m actual or 63% of appraisal): Upgrade existing poverty monitoring system, adapt it to Qinba region; baseline and surveys; process and analyze data; disseminate information . The description of the Qinba project in the SAR includes several references to two parallel education and health projects (Qinba Education Project and the Qinba Health Program ), although links to Qinba are not established . Revised Components The TVE component was revised during the mid -term review (2000). The component was significantly reduced -- from 17% of total project cost to around 6%. The funds released from the TVE component were used to augment the rural infrastructure and agricultural components . c. Comments on Project Cost, Financing and Dates The change in total project cost was modest, increasing by 8% from the $360m estimated cost at appraisal to the actual cost at closing of $ 389m. The amount of counterpart funds for the three provinces exceeded the appraisal targets. 3. Achievement of Relevant Objectives: (a) The Qinba project has partially demonstrated the effectiveness of a multisectoral rural development project approach to poverty reduction. While Qinba, as well as the SWPR project model, have fully demonstrated national policy influence (ICR p. 5), the ICR does not weigh in on the relative effectiveness of the 'scaled down' Qinba approach (minus social services). Since the model is being replicated /adapted across China's provinces and other client countries (Gansu and Inner Mongolia, Vietnam Northern Mountains ), OED would have expected a discussion of the beneficial outcomes (or challenges) associated with including fewer sectors . Meanwhile, the SAR lent considerable space to the expected overall contributions and expected benfits of the parralel health and education projects (pps.16-18, 26, 36-37, 57); health and education outcome and impact indicators were included in the Qinba performance monitoring plan (SAR p.51). The region's comments suggest that if the two parallel projects had not been implemented in the project areas, Qinba would have included health and education components in consideration of Project Management Office staff opinion that "Qinba should have expanded its scope to cover basic health and education activities " (ICR p.20). But the implementation of the basic health services component in the SWPR Project, while making a valuable contribution to basic health in the SWPR project area, did not establish a clear replicable model for upgrading basic health services on a sustainable basis for the rural absolute poor . (b) Qinba has achieved its objective of facilitating off -farm employment through mobility for 199,276 persons (133% of SAR output). According to the borrower's summary, this population set is comprised of persons from Sichuan (110,300) and Shaanxi (88,976); no explanation was provided for why Ningxia did not equally benefit from this component, particularly in consideration of the relative contributions that remittances play in this project . The region's comments suggest this issue is dealt with in project preparation documents, however OED could not find any discussion related to Hui participation, measures to reduce risk of rising inequality in the region associated with the gains from the project, and/or a discussion of reputational risk for the Bank (see OED's official memorandum). (c) Acknowledging that improvements were made in sampling methods, questionnaire design and training, OED views that the project achieved its Poverty Monitoring Objective, yet found little evidence in the ICR as to how the objective, developed under SWPRP, was adapted to the conditions of the Qinba mountain regions . The region's response does not provide any further details related to the objective ’s goals as outlined in the SAR nor does it respond to the question as to why only half the projected funds for this objective were spent . Also lacking is evidence of 'independence' since the region has asserted that t he Qinba Project has "one of the best independent monitoring and evaluation systems in all Bank -financed projects.