Sierra Leone - Third Eastern Integrated Agricultural Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9244 PROJECT COMPLETION REPORT SIERRA LEONE EASTERN INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT III (CREDIT 1094-SL) DECEMBER 28, 1990 Agriculture Operations Division Country Department IV Africa Regional Office F This document has a restricted distribution and may be used by recipients only in the performunce of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Equivalents Name of Currency - Leone 1980 US$1.00 = 0.9528 1981 US$1.00 = 0.8639 1982 US$1.00 0.8078 '983 US$1.00 0.5958 1984 US$1.00 = 0.3984 1985 US$1.00 = 0.2114 1986 US$1.00 = 0.1191 Abbreviations ACRE - Adaptive Crop Research and Extension ASSP - Agriculture Sector Support Project BADEA- Banque Arabe pour le Development Economique en Afrique CARE - Cooperative American Relief Everywhere DOPC - Daru Oil Palm Company EIADP- Eastern Integrated Agricultural Development Project FFB - Fresh Fruit Bunch FFC - Farmers Finance Company FOB - Free on Board GDP - Gross Domestic Product GOSL - Government of Sierra Leone IADP - Integrated Agricultural Development Project IDA - International Development Association IFAD - International Fund for Agricultural Development IMF - International Monetary Fund M&E - Monitoring and Evaluation MAF - Ministry of Agriculture and Forestry MANR - Ministry of Agriculture and Natural Resources MDEP - Ministry of Development and Economic Planning MOW - Ministry of Works MNR - Ministry of Natural Resources MPP - Model Production Programme NUC - Njala University College PEMSU- Planning, Evaluation, and Monitoring Services Unit PESU - Project Evaluation and Services Unit PFP - Policy Framework Paper RMWA - Regional Mission in Western Africa (World Bank Office) RRRS - Rokupr Rice Research Station SAR - Staff Appraisal Report SLPMB- Sierra Leone Produce Marketing Board SMP - Seed Multiplication Project SMU - Seed Multiplication Unit T&V - Training and Visit UNDP - United Nations Development Programme Fiscal Year July 1 - June 30  FOR OMCAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Ot,ect Gr~al Operatmiw Evaluwtkm December 28, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Sierra Leone Eastern Integrated Agricultural Development Proiect III (Credit 1094-SL) Attached, for information, is a copy of a report entitled "Project Completion Report on Sierra Leone - Eastern Integrated Agricultural Development Project III (Credit 1094-SL)" prepared by the Africa Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restlicted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT SIERRA LEONE EASTERN INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT III (CREDIT 1094-SL) ------------------------------------------------------- TABLE OF CONTENTS Page No. Preface. i Evaluation Summary ........................................ iii PART I PROJECT REVIEW FROM BANK'S PERSPECTIVE Project Identity ............................. 1 Background ................................... 1 Project Objectives and Description ........... 4 Project Design and Organization .............. 5 Project Implementation ....................... 8 Project Results .............................. 10 Project Sustainability ....................... 12 Bank Performance ............................. 13 Borrower Performance ......................... 15 Project Relationship ......................... 15 Consulting Services .......................... 16 Project Documentation and Data ............... 16 PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ........ 18 PART III. STATISTICAL INFORMATION Related Bank Loans and/or Credits ............ 19 Project Timetable ............................ 20 Disbursements .---........... 20 Project Implementation ....................... 21 Project Costs and Financing .................. 22 Project Impact ............................... 23 Direct Benefits ...............--.--. 23 Economic Impact ...............--------. 24 Financial Impact ............... 25 Studies ...................-.------. 26 Status of Covenants ................... - -- 26 Use of Bank Resources ........................ 27 Staff Inputs ............---. 27 Missions .............. 27 Map of the Project Area This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  i PROJECT COMPLETION REPORT SIERRA LEONE EASTERN INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT III (CREDIT-1094 SL) PREFACE This is a Project Completion Report (PCR) for the Eastern Integrated Agricultural Development Project III (EIADP III) for which Credit 1094-SL in the amount of US$ 12.0 million was approved on January 13, 1981. The Credit closed on September 30, 1987 inclusive of a one year extension. As of September 1989, the credit had an undisbursed balance in the amount of US$ 2.97 million. 1/ Since the suspension of disbursements to Sierra Leone in early 1987, no further supervision work was undertaken. No PCR for the project has been prepared by the Borrower. This PCR was prepared by Bank staff at Headquarters by the Agriculture Operations Division of the Africa Regional Office. Parts I and III were sent to the Borrower for comment with a request to provide a Review of the project from the Borrower's point of view, but none was received. Preparation of the PCR, started in the third quarter of FY90, is based, inter alia, on the Staff Appraisal Report, Development Credit Agreement, available supervision reports, correspondence between the Bank and the Borrower, and internal Bank memoranda. Disbursements to Sierra Leone remain suspended. 1/ Disbursements to Sierra Leone were suspended early 1987, but for certain expenditures such as those earlier contracted for consultancy services and training, disbursements were allowed to continue through September 1989.  PROJECT COMPLETION REPORT SIERRA LEONE EASTERN INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT III (CREDIT-1094 SL) EVALUATION SUMMARY 1. Objectives 1.01 With Sierra Leone's declining traditional exports, a rapidly rising budget deficit and food import bill, and wide income disparities, the Government, around the mid 1970s, proclaimed agriculture to be a priority sector in the country's economic development. New overall objectives for the sector were an ambitious 5.4 percent real growth, self- sufficiency in rice, improved nutrition, and increased production of major export crops. The selected vehicle for the development and growth of the agriculture sector was the integrated agricultural development project (IADP) approach. In Sierra Leone this approach tended to be narrow and area specific with little emphasis given to reducing sector inefficiency. Consequently, the IADPs focussed more on production activity and essential infrastructure and less on the policy and incentive framework within agriculture. 1.02 Project Objectives The broad aim of the Eastern Integrated Agricultural Development Project Phase III (EIADP III) was to increase production and incomes in the project area through greater access by farmers to extension, inputs and credit, and improved feeder roads and village wells. Since the project was preceded by two earlier phases, implementation in the third phase was to be carried out largely through existing institutions. No major changes were to be introduced in cropping patterns. Productivity increases were to be obtained through area and yield increases by use of high yielding varieties, more careful attention to recommended inputs, and better crop husbandry. The project was multipurpose and complex and had two primary objectives. The first was to increase food and export crop production and farm incomes by expanding the area under Phase II from 10,500 km2 to 15,350 km2 to cover almost the entire eastern region of Sierra Leone, and, the second, to promote upland crop development among farmers not reached under the earlier phases. Also included in the project was provision for the construction of village wells, feeder roads and chiefdom tracks, and institutional strengthening and training. 2, 2/ The chiefdom tracks referred to were crude access tracks established at the time local governments were headed by village/community Chiefs.  iv 2. Implementation Experience 2.01 Poor macro performance and lack of budgetary discipline were the main impediments to project performance. Implementation was marred by Sierra Leone's acute financial situation. The result was inadequate counterpart funding, and suspension of disbursements by financiers. Specific project-related factors affecting implementation were procurement irregularities and long delays in the application of procurement procedures which led to strainr in relationships with cofinanciers. There was little effective dialogue between the cofinanciers and few serious efforts at resolving substantive issues that inhibited successful implementation. The project faced frequent and severe shortages of quality seed for coffee and rice. The credit and input supply systems, too, were basically non- functional at project initiation because of weak financial and administrE-ive control. Poor and insufficient knowledge of the complex socio-economic environment and a growing labor constraint also made implementation difficult. There was an absence of a strong research component and technical packages were generally perceived by farmers to have been waak. In some cases this was due to insufficient testing at the farm level and in others due to the state of technological development, at the time, of the packages. This dampened the otherwise positive aspects of high farmer participation as indicated by the numbers of farmers that had been exposed to extension advice by the improving quality and competence of extension staff. 2.02 In spite of numerous drawbacks, it may be said that project implementation, supported by generally good project management and organization, was flexible. With disbursements suspended on different occasions, activities were brought almost to a complete stand-still in the later project years. By this time, the project was forced to resort to commercial bank overdrafts even to pay its regular wage bill. Steps were thpn taken to deal with the dire situation by scaling down project activities, stepping-up efforts at integrating the remaining activities into the respective regional Ministry of Agriculture and Natural Resources (MANR) structure, and transferring the tree crops component to the Agricultural Sector Support Project (ASSP). 3. Results 3.01 The overall result for the EIADP III is that there were serious shortfalls in physical targets, limited progress in institutional strengthening, and weak and ineffective agricultural research. However, the project was able to reach, more in terms of increasing awareness of improved packages rather than their sustained use, a large number of farmers through agricultural support services, primarily through extension messages. The magnitude of farmers exposed to these messages came close to, or surpassed, the target set at appraisal. Yet, general shortfalls in physical targets resulted. The number of farmers that actually adopted the improved packages fully, or on a sustained basis, were, thus, significantly lower. Apart from the country's serious financial situations, this was in large part due to shortages of quality seedlings, lack of mobility, and difficulty in obtaining credit and inputs. These results highlight the importance of good coordination between extension and input supply. In the absence of this, extension itself, no matter how efficient, cannot be  v effective in raising yields and net incomes of farmers on a sustained basis. 3.02 The broad result of the project was reflected in specific shortfalls and achievements. Except for the new planting of cocoa, and the consolidation of developed swamps for rice cultivation, the SAR physical targets for crop production were not achieved. There were also large shortfalls in the village wells and roads programs. In comparison, performance was slightly better on the institutional side in the areas of extension and on-the-job training at junior levels. The modified Training and Visit (T&V) extension system was successful to the extent that it was able to motivate a large number of farmers to participate in the project. However, continued participation and full and sustained adoption of improved practices was inhibited more by an inadequacy and irregularity in the supply of inputs, especially seedlings, and less to the competence and efforts of the extension staff. An extension program which had been innovatively designed for women, and one which was locally acceptable, proved to be popular. The Farmers' Finance Company (FFC), whose financial viability had deteriorated sharply over the years, was given the responibility for providing services for input supply and credit. Due to the project initiative, FFC's performance improved substantially, even though its financial viability, without continued future financial assistance from government, remained in question. FFC's record of loan recovery which had been extremely weak in the past was strengthened through effective new procedures for lending and monitoring including stiff action against defaulters. Daru Oil Palm Company (DOPC) had some success with the outgrower program= and with its mill operations. This was a result of the agreement with th'e Government of Sierra Leone (GOSL) for higher prices for fresh fruit bunch (FFB) and palm oil, as well as the installation of a new boiler at the DOPC mill. There was some progress in monitoring and evaluation (M&E) capability, albeit small. The targets for village wells and roads had to be scaled down. The decisions to do so were pragmatic and were in response to issues related to cost-effectiveness for the wells program and insufficient funds for operation and maintenance in the case of feeder roads. 4. Sustainability 4.01 A time lapse since project closing of almost three years, with no communication on project developments per se, makes it difficult to assess the project's ultimate impact. This is particularly so since Sierra Leone's financial and economic situation has remained critical. In the absence of a PCR mission subsequent to project closing, a detailed evaluation of the extent to which project performance had deteriorated under the country's serious funding circumstances, and the resilience, if any, of the project, cannot be adequately addressed. Given the country's continused financial difficulties and on the basis of accounts given by Bank staff that recently visited selected project areas in connection with the Policy Framework Paper (PFP), it is unlikely that the project is sustainable. 4.02 Bank staff report that the Bank-supported IADPs are viewed by the Borrower and farmers as having been a failure with little impact on agricultural production. The financial implications remain serious to this  vi day and the MANR appears to be basically non-functional. The planned integration of IADPs into the MANR regional structures has not worked in practice. Technical and managerial staff of the IADPs are said to have been "rejectedw by their colleagues in MANR on account of resentment at their having been better renumerated, trained and better equipped during their assignments to the IADPs. The financial situation within MANR has worsened with its budget devoted almost entirely to financing staff salaries. The problem of sector inefficiency due to distorted policies remains severe and is yet to be tackled. In retrospect, had the project paid adequate attention tc the question of economic incentives in a comprehensive manner, project and sector performance would both have benefitted in the long-run. 5. Findings and Lessons Learned 5.01 The overall lesson is that the project did not have the anticipated impact on the Region's agricultural development, inter alia, due to the Borrower's weak economic management and financial crisis. It is unrealistic to assume project success in a macro environment that is highly unstable and prone to perpetuate existing distortions in relative factor and product prices. At the project level, the main lesson to be learned is that given a serious financial constraint and weak institutions, it would be prudent to favor simplicity in project design. Less ambitious projects with complex designs in a country and sector saddled with serious macro and findncial constraints, and aggravated by limited absorptive capacity and poor or non-existing infrastructure, are likely to be far more successful in achieving their objectives and contributing to longer term development and growth. This is particularly true in instances where the record of macroeconomic management has been poor and where it has continued to rapidly deteriorate. 5.02 Other lessons for relevant projects include: (i) the importance of understanding and reducing the economic cost associated with maintaining a policy and incentive framework that is clearly seen to be detrimental to project success and sector efficiency; (ii) the need to carefully assess all risks, political, macro and sector related, that could jeopardize project success, and not only those that are obviously project-specific; (iii) the benefit of maximizing the number of staff trained through courses and on-the-job training so that training continues to be consolidated and disseminated long after the project has closed; (iv) in matters that are expected to become fairly routine, the need to ensure progressively reduced dependence of indigenous staff on teaching and demonstration by experts financed under the project; (v) the importance of preparing initial assessments for the demand and supply of essential inputs, and contingency plans should the situation alter, particularly with respect to shortfalls in supply; (vi) the merit in adapting proven techriques to the country's socioeconomic conditions as was done, for instance, in the project by modifying the T&V approach, rather than merely replicating programs that had been implemented elsewhere. 5.C3 A noteworthy feature of the project was the remarkable keenness sh.)wn by farmers and women for participating in the project. The fruits of this endeavor did not, however, come up to their expectations given the shortages of seed and credit. In any case, high farmer participation even  vii without problems of credit and input supply need not imply sustained growth if the incentive framework and benefit cost ratios are not conducive and sufficiently attractive to farmers. Future projects should ensure that farmers and women do not become discouraged by project initiatives designed to promote their economic well-being, by paying greater attention to sector distortions with a view to correcting them. This is critical since an enabling macro environment is a necessary but not sufficient condition for sector and project success. Sector policy reforms are essential for correcting distortions in the policy and incentive framework, and, in so doing, creating an environment that is conducive to maximizing project economic benefits and success.  PROJECT COMPLETION REPORT SIERRA LEONE EASlERN INTEGRATED AGRICULTURAL DEVELOPMENT PROJECT III (CREDIT 1094-SL) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity Name Eastern Integrated Agricultural Development Project III Credit Number 1094-SL RVP Unit Africa Region Country Sierra Leone Sector Agriculture 2. BacSground 2.01. Sierra Leone with a total area of 72,000 km2 has an estimated population of 3.9 million, as of mid-1989, growing at an annual average rate of 2.3 percent. Its per capita income in 1988/89 was estimated at SDR 160, fifty percent lower in real terms compared to 1979!80. The country has good soil and climatic conditions and is also rich in minerals. It is strongly dualistic with a small modern mining sector