Rwanda - Lake Kivu Coffee Improvement and Food Crop Project

Dokummt of The World Bank POR OFMICLAL USE ONLY kRt No. 12501 PROJECT COMPLETION REPORT RWANDA LAKE KIVU COFFEE IMPROVEMENT AND FOODCROP PROJECT (CREDIT 1126-lW) NOVEMBER 19, 1993 MICROGRAPHICS Report No: 12501 Type: PCR Agriculture Operations Division South-Central and Indian Ocean Department Africa Regional Office This document has a restricted distibution and may be usd bv reipient only in the performance of their official duties. Its contents may not otherwise be dislosed widthot World Bank authorization.  EXCHANGE RATES Unit: Rwanda Franc Year US$1.00 Equivalent 1980 - 92.84 1981 - 92.84 1982 - 92.84 1983 - 94.34 1984 - 100.17 1985 - 101.26 1986 - 87.64 1987 - 79.67 1988 - 76.45 1989 - 79.98 1990 - 82.60 WEIGHTS AND MEASURES 1 are (a) = 0.0247 acres 1 hectare (ha) = 2.47 acres i kilometer (kin) = 0.62 miles 1 square kilometer (ki) = 0.39 square mile 1 kilogram (kg) = 2.20 pounds 1 liter O = 0.26 US gallon 0.22 Imperial gallon 1 ton (t) = 2,204 pounds ACRONYMS IDA International Development Association ISAR Agricultural Research Institute of Rwanda (Institut des Sciences Agronomiques du Rwahda) OCIR-Cafe Agency for Industrial Crops of Rwanda (Office des Cultures Industrielles du Rwanda) PCR Project Completion Report PPF Project Preparation Facility FISCAL YEAR January 1 - December 31  FOR OMCZAL :Li ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Otff. of 4.ttGOiwentd Opow Evalunaon November 19, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRES1DENT SUBJECT: Project Completion Report on R-wanda Lake Kivu Coffee Imrnmovement and Foodcro2 Project {Credit 11 26-RW) Attached Is the Project Completion Report on Rwanda - Lake Kivu Coffee Improvement and Foodcrop Project (Credit 1 1 26-RW) prepared by the Africa Regional Office. The Borrower did not contribute a Part II for the report. The project did much to improve the organization and effectiveness of the extension service, but still fell short of truly successful institution building. No system was put in place to ensure adaptation of extension messages to respond to farmers' needs. Although the foodcrop component did poorly, and a processing component added during implementation soon became under-utilized, the project's coffee production benefits expanded rapidly and, by one estimate, far beyond expectations. An early draft of ths PCR, submitted to OED in June 1992, estimated an ERR of 20 percent, but this was before the country situation deteriorated sharply as a result of the disastrous effects of the civil war. The PCR was subsequently revised in March 1993, at our request, to reflect the Impact of the country situation on the project. The revised PCR does not reevaluate the ERR, reputedly because of the considerable uncertainties that exist on the long-term effects of the civil war on coffee production in the project area. While sustaining project benefits is thus uncertain, the apparently solid early gains of this project and the chance that supplies of vital inputs might be restored within the next year or so, leads to a rating of project performance as satisfactory. The Project Completion Report provides a good account ot project imple- mentation and of performance until late in 1992. No comments were received from the Borower, presumably because it had already submitted its own PCR. An audit is intended because of uncertainties attached to current assessments of performance and because of the importance of export crops like coffee to the Rwandan economy. Attachment TM document ha a r* tr dstribudon and may be used by recipiets only In the performance of thdr offical duties. Its contents may not othewise be disclosed without World Bank authoriStIon  FOR OFFICiAL USF ONLY RWANA PROJE1 COQMPLONNREPORT LAKE KMV COMFE IMPBOVENM NANDOEQMCROP E0gCT (CREDI 1126-RWU TABLE OF CONTENTS PREFACE . ..................................................... i EVALUATION SUMMARY ...........................................' i PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE .................... 1 Project Identity ............................................... 1 Project Background ............................................ 1 Project Objectivesa and Description .................................. 1 Project Design and Organization .................................... 2 Project Implementation .......................................... 3 implementation of Individual Project Conmponents ......................... 4 Project Results ............................................... 8 Bank Performance ............................................. 9 Borrower Performance ......................................... 10 Consultants' Performance ....................................... 10 Project Documentation ......................................... 10 PART It: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ............... 11 PART III: STATISTICAL DATA .. 12 Table 1: Agriculture-Related IDA Credits ............................. 12 Table 2: Project TImetable ...................................... 13 Table 3: Project Costs and Financing ............................... 14 Table 4: Credit Disbursements ................................... 15 Table 5: Project Results ........................................ 17 Table 6: Status of Covenants ..................................... 22 Table 7: Use of Bank Resources .................................. 25 Table 8: Farm Model ......................................... 27 Maps: IBRD 15210 IBRD 15211R This document has a restriczed 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.  RWANDA PROJECT COMPLEION REPORT LAKE KIVU COFFEE IMPROVEMENT AND FOODCROP PROJECT aCREDfl 1126i-W PREFACE This is the Project Completion Report for the Lake Kivu Coffee Improvement and Foodcrop Project for which Credit 1126-RW, in the amount of US$15.0 million, was approved on March 31, 1981. The Credit was closed on December 31, 1988, two years behind schedule. The last disbursement was on November 22, 1988; the credit was filly disbursed. The report was prepared by the Agricultural Operations Division of the South-Central and Indian Ocean Departnent (Preface, Evaluation Summary, Parts I and III). This report is based, inter alia, on the Staff Appraisal Report, the Development Credit Agreement, supervision reports, correspondence, and a project completion report prepared by the executing agency. The report was sent to the Borrower with a request to prepare Part II. No comments were received.  i$$. RWANDA PROJECT COMPLETION REPORT LAKE KIVU COFFEE IMPROVEMENT AND FOODCRCP PROJECT (CREDIT 1 126- EVALUATION SUMMARY ect Backgromnd 1. Rwanda Is one of fte smallest, but most densely populated countries in Africa. In 1980, at the time of project design, the population was estimated at 4.8 million, growing at an annual rate of 2.9%. Population density varied widely, between 328 inhabitants per km2 in the Butare prefecture to 87 inhabitants per lkm2 in the savannah areas. Land pressures had already resulted in excessive clearance of forests and over-utilization of the soil. Other natural resources being limited, agriculture was the most important sector of the economy. Increasing agricultural productivity was a key priority of the Second Five Year Plan (1977-1981). Agricultural research had demonstrated that yields could be increased by using improved inputs and different production technologies. Progress in introducing these new technologies had been limited, primarily because the extension service was not trained and equipped for the task. Proiect Objectives and Descrintion 2. The main objectives of the project were to build up an effective extension service, which would assist farmers in increasing foodcrop and coffee production using field-tested techniques and help OCIR- Cafe, the implementing Agency, improve its financial management. In order to achieve these objectives, the project included: (a) strengthening of OCIR-Cafe's financial managament; (b) improvement of extension services under the direction of OCIR-CafE; (c) promotion of improved methods of plantation maintenance, coffee nursery organization and pest control, distribution of improved seed varieties, intercropping of banana plantations to increase food production and a program to improve soil .ertility; (d) improvement of 120 existing hand pulping machines and establishment of 130 new ones; (e) constuction of two landing points on Lake Kivu, of bridges and culverts and minor improvements to three existing landing points; (t) strengthening of crop related research, studies and trials; and (g) services of four internationally recruited specialists and of short-term consultants. At appraisal, total project costs were estimated at US$16.6 million, of which the Government of Rwanda was to contribute US$1.0 million, Swiss Aid US$0.6 million (for two extension specialists) and IDA US$15.0 million. Poecti DImpementation- 3. Implementation started in 1981 under PPF financing. Most of the project activities progressed slowly, because of cumbersome procurement procedures and delays in obtaining counterpart funds and replenishment of the Special Account. As a result, the credit was closed on December 31, 1988, a de)ay of three years. Several changes were made in project design during implementation: (i) the project area was realigned in 1982, primarily to avoid duplication between the project and a donor financed agricultural services project in Kibuye; (ii) the project area was divided into four zones (Cyangugu, Kibogora, Kibuye and Gisenyi) in 1984; activities in these four zones were decentralized and the zones were given financial and administrative autonomy, which permitted a betwer follow-up of field activities; the latter change prompted Swiss Aid to withdraw its support from the project; (iii) subsequent to a 1983 coffee sub-sector review by IDA, Government and IDA agreed to rehabilitate the Nkora washing station  iv in order to inprove the quality of Rwande coffee; (iv) the liaison office in Kigali was transferred to Kibuye in 1984; and (v) the Joint implementation of the research component by OCIR-Cafe and the Agricultural Research Instute of Rwanda (ISAR) was discontinued in 1987, when all research responsibiLities were transferred to ISAR. Projou Results 4. The project exceeded objectives for coffee production. Esimates of the project's impact on food crop production vary widely. According to project staff, production increases IV ',e been close to appas estimates, while some Bank staff feel increases have been only marginal. Unfortunately, the baseline survey plannd for 1981 w&s never carried out. All data in the report come from a 1986 survey. A 1987 supervision mission estimated that coffee production was expected to increase over time by as much as 55% as a result of the project. The extension service was successful in convincing farmers t adopt a lage number of recommendaions related to plant care, soil improvement and erosion control. In fact, erosion control measues implemented far exceeded appraisal targets. The planting of trees also was adtd by many farmers, once the extension service was able to provide adequate supplies of the popular varieties. The research actvities were a failure. The studies that were carried out under the project led to the rehabilitation of the Nkora coffee factory and as input into the Agricultural Sewvices Project (Cr. 2026-RW). S. Production results for coffee are not exe to be sustainable in the long-run because of the effects of a prolonged civil war on the availability of inputs (especially pesticides) and the financial drain posed by a system of adminstered coffee prices, that are presenty set above world market levels. Foodcrop production increases, especially for cassava and sweet potatoes are expeaed to be sustainable. in terms of instituton building, the project results are mixed. A system of cost recovery existed prior to the project and the extension service in the project area was reorganized in order to match existing adminisave strues. No system was put in place, however, to ensure that the extion service would be able to adapt existing messages to respond to farmers' needs. This matter is now being addresse under the Agricultal Services Project (Cr. 2026-RW). 6. The project had a positive impact on farm household income. Based on the 1986 survey, income in constant terms matched appraisa estmates for families living in coffee growing areas; however, income of farm families living in high altitude areas has not changed. The latter group was, however, small. The increase in farm household income was in part the result of above world market firmgate prices for coffee. As these prices are not sustainable in light of the country's economy, they will need to be adjusted downward in real terms, thus reducing project gains. 7. At appraisal, the economic rate of retum was estmated at 21.6%. Ihis was based on the incrementl production of coffee and food crops. The project completion report prepared by the Borrower imatd the rate of return at 46% based on inmental coffee production only with relatively high coffee prices. Since considerable uncerainties exist about the macro-economic policies and the impact of the armed incursion on coffee production, and no reliable data are available on food crops production, the economic rate of retrn cannot be estimated. LgwsD Leaed 8. Ihe following lessons can be drawn from the implementation of this project: (a) In extemion projects it is of vial importance that proven production packages can be developed early on in the projecl. In this project, no adequate food crop production package could be developed, despite the impression that such technology was already available at project preparation.  v (b) The division of responsibilities between the research and extension services needs to be clearly defined prior to project start-up. The capacity of the research organization to carry out its responsibilities should also be evaluated during project preparation. (c) Market outlets for production should be found prior to making decisions on research and extension of production techniques. In the case of this project, farmers did not respond as expected to the increased availability of sweet potato and cassava cuttings because the markets for surplus production did not exist. (d) Extension has to be demand driven in order to succeed. In this project, the initial reaction of the executing agency was to satisfy appraisal targets, rather than meet farmers' demands (coffee tree planting, seeds and tree production, and erosion control measures), which delayed getting the farmer to adopt the extension message and required more intensive supervision by Bank staff.  WAN1DA LAKE KIVU COFFEE IMPROVEMENT AND FOODCROP PR.OJECT (CRED1