Philippines - National Fisheries Development Project

Documini The World FOR OMCAL L .. Rpt No. 9891 PROJECT COMPLETION REPORT PHILIPPINES NATIONAL FISHERIES DEVELOPMENT PROJECT (LOAN 2156-PH) SEPTEMBER 16, 1991 Agriculture Operations Division Country Department II Asia Regional Office 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.  CURRENCY rQUIVALENTS US$ 1 = P 8.10 (Appraisal, 1982) US$ 1 = P 11.10 (First Year, 1983) US$ 1 = P 21.00 (Final Year, 1989) FISCAL YEAR OF BORROWER January 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS BFAR = Bureau of Fisheries and Aquatic Resources CP = FAO/World Bank Cooperative Program DA = Department of Agriculture DENR = Department of Environment and Natural Resources FIDC = Fishery Industry Development Council GT = Gross Tonnage MAF = Ministry of Agriculture and Food (later re-named DA) MNR = Ministry of Natural Resources (later re-named DENR) PCR = Project Completion Report PFDA = Philippine Fishery Development Authority SAR = Staff Appraisal Report SEATI = Samar Sea - Ticao Pass Fisheries Development Corporation  FOR OFFxCIAW, VSEiE ONLY THf VVORLD BANK Wash rgton D C 204 3 3 Offce of Drectcw-Genetil Cpeatsnn5 Evalualitn September 16, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Repo-t on Philippines National Fisheries Development Project (Loan 2156-PH) Attached, for information, is a copy of a report entitled "Project Completion Report on Philippines - National Fisheries Development Project (Loan 2156-PH)" prepared by the Asia Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment 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.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT PHILIPPINES NATIONAL FISHERIES DEVELOPMENT PROJECT (LOAN 2156-PH) Table of Contents Page No. PREFACE ...... . . . .i EVALUATION SUMMARY ..ii PART I PROJECT REVIEW FROM BANK'S PERSPECTIVE .................... 1 1. Project Identity. . . 1 2. Background.. 1 3. Project Objectives and Description. . . . 2 4. Project Design and Organization . . . 3 5. Project Implementation.. . . 5 6. Project Results . . ...................... ................... 6 7. Sustainability . ........ 6 8. Bank Performance . . ................... I ..... 6 9. Borrower Performance.... 7 10. Project Relationships.... 7 11. Consulting Services .. ....................... .7 12. Project Documentation and Data ............................ 7 13. Lessons Learned ........................................... 8 PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE (Borrower's Report not Available) PART III STATISTICAL INFORMATION ................................... 9 1. Related Bank Loans ....... ......................... 9 2. Project Timetable ......................................... 10 3. Loan Disbursements ........................................ 11 4. Project Implementation .................................... 13 5. Project Costs and Financing .................... ..... 14 6. Project Results ........................................... 15 7. Status of Major Covenants ...... ........................... 16 8. Use of Bank Resources ...... ............................... 17 ANNEX: Report on Project Completion Mission Field Visit ............ 21 MAP: IBRD 15435 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.  PROJECT COMPLETION REPORT PHILIPPINES NATIONAL FISHERIES DEVELOPMENT PROJECT (LOAN 2156-PH) PREFACE This is the Project Completion Report (PCR) for the National Fisheries Development Project in the Philippines, for which Loan 2156-PH in the amount of US$22.4 million was approved on May 25, 1982. Effective November 12, 1986, the loan amount was reduced to US$2.1 million. The last disbursement was made on December 22, 1989 and the loan was closed as planned on December 31, 1989, at which time an undisbursed balance of US$0.2 million was cancelled. This PCR was prepared by the Agriculture Operations Division of the Asia Regional Office (Preface, Evaluation Summary, Parts I and III). Copies of an FAO-CP draft report were sent to the Borrower in late 1989, but no comments were received. The PCR is based on a draft report 'y an FAO/World Bank Cooperative Program Mission that visited the Philippines in April-May 1989, on the Staff Appraisal Report, the Loan and Project Agreements, supervision reports, correspondence between the Bank and the Borrower, a field visit to the project area, discussions with staff of the Bank and the borrower who have been associated with the project, and internal Bank memoranda.  - iii - PROJECT COMPLETION REPORT PHILIPPINES NATIONAL FISHERIES DEVELOPMENT PROJECT (LOAN 2156-PH) Evaluation Summarv Obiectives 1. The principal objectives of the project were to raise the incomes of artisanal fishermen in the adjacent Samar Sea and Ticao Pass areas of the Philippines, and to offer consumers an increased supply of better quality fish, which accounted for about 60 percent of all animal protein consumed in the country. This was to be achieved by implementation of: (a) an area development component, including construction of landing points and support facilities (ice plants, ice and chill storage, and carrier boats), incrementa'l working capital and input supplies for the target group in seven sites in the project area; and (b) an institutional development component, including staff training, equipment, studies and technical assistance to strengthen the operations of the main public sector fisheries agencies. The project was to be implemented over an eight-year period, at a total cost of US$37 million; the Bank loan in the amount of US$22.4 mil- lion was approved on May 25, 1982. Implementation Experience 2. Although the Bank loan closed on schedule, only a few of the ori- ginal project activities were actually carried out. Midway through the project period in November 1986, the entire area development component was dropped after only very limited implementation and expenditures, and the scope of the institutional development component was sharply reduced. 3. Area Development Component. This component was designed on the basis of two major assumptions which proved to be inaccurate: that fish resources in the project area were under-exploited, and that marketing arrangements and infrastructure used by artisanal fishermen were inade- quate. The first assumption was not based on proper fish resource surveys, a matter which had been of some concern to the FAO-CP preparation team and the Bank's appraisal mission. However, when this was raised by the Bank's Loan Committee, the staff replied that the project emphasis was on improv- ing marketing rather than increasing catches, and it was therefore decided to proceed. The feasibility of enforcing restrictions on commercial fish- ing was not seriously questioned, although existing laws and regulations on the subject were not being implemented at the time. In the event, far from being unde:2-exploited, there is now evidence that the project area was already belvx over-fished at the time the project was conceived, a situa- tion whic, :;as only worsened in the interim. On the issue of marketing arrangements, the project assumed that artisanal fishermen were handicapped by inadequate facilities, ice and cold storage; poor insulation of vessels; and heavy dependency on unscrupulous traders, resulting in excessively low prices. However, the completion mission observed that landing places are  - iv not neeessary since the traditional fishing vessels are built so that they car. aasily be hauled up on beaches; fishing trips rarely exceed more than a fovy hours, so that ice is not needed and poor insulation is irrelevant. Tho beaches are visited regularly and competition is extremely intense, wyhich ouggests that prices are not unreasonably low. 4. The Samar Sea-Ticao Fisheries Development Corporation (SEATI) was established to wanage and implement the area development component, as a rondition of loan negotiations; it was to be run like a private enterprisc, with the Government as majority shareholder. A private consulting firm selected to manage SEATI wvas to be paid for its management services and was also required tc invest equity in the Corporation. The organization and legal personality of SEATI are not described in detail in the SAR, and there appears to have been little discussion of these matters during loan negotiations. In any event, the Government decided to terminate the ser- vices of the first consulting firm retained to manage SEATI, when it proposed a major change in the project work plan after studying the project area more carefully. A second firm (RKM) was selected, but it too proposed changes ?-ter conducting a preliminary study of the project area and conc2udirng that the resources were being over-fished. specifically, the firm proposed the- the infrastructure for the landing points was no longer needed, but that "brush-parks" and artificial reefs should be established to address the over-fisn4ng problem, that the number of sites for fish landing and collection should be increased, ice carriers purchased and certain improved technologies introduced. 5. The Government and the Bank approved these changes early in 1984, bur there was very little implementation during the succeeding two years. The project suffered chronic funding delays, the combined result of the difficult fiscal situation facing the Philippines and possibly internal questioning within the Government as to the relative merits of the project. Also, from the start, the Office of Budget Management determined that project funds should be channelled through one of the fisheries agencies and released to SEATI as and when necessary, which limited the Corpora- tion's ability to function as flexibly as a private enterprise. On Novem- ber 12, 1986, loan proceeds allocated to the area development component were cancelled; slightly less than US$0.3 million had been spent (US$0.2 million for consultant services, US$0.1 million for equipment, materials and vessels, and nothing for civil works) out of an original allocation of US$12.1 million. 6. Institutional Development Com2onent. Preparation of this compo- nent assumed no major organizational changes for the main fisheries agen- cies, although for some years there had been rumors that they would be transferred from one ministry to another. Just before appraisal the Bank did become aware that a transfer was indeed likely, but there is no indica- tion in the record that this subject featured prominently in the appraisal discussions or loan negotiations. Implementation was later delayed because of the transfer and re-definition of the support requirements of the agen- cies; in 1986, when the area development component was terminated (para. 5), the loan amount allocated to institutional strengthening was reduced to US$1.5 million, from an original US$7.7 million.  P.esuxlts 7. The institttional development component eventually had some posi- tive impact. About two-thirds of the respective loan disbursements went toward the procurement of equipment and materials; the facilities provided were urgently needed and are no- in full use; consultants were retained to develop what Was reported to have been a useful training program for head- quarters staff, which served as the basis for expanded training activities; and 459 months of local fellowships were awarded after the Bank agreed that funds earmarked for study abroad could be used instead at local universi- ties. Nonetheless, many of the trainees either left the fishery agencies or were not placed in positions where their training could be used to the best advantage. A resource assessment study of small pelagics in the Philippines provides some useful information about the fisheries resource base. Sustainability 8. Since the area development component was never really implemented, it had no impact on fisheries activities in the project area during the period before related loan proceeds were cancelled, and its sustainability therefore is not an issue. However, all evidence indicates that if the component had proceeded as planned, it would not, today, be judged sustain- able. Substantiating the view that project interventions would have been irrelevant and not likely to be maintained, the completion mission observed that despite the failture to implement this, or any other major government schemes, fishermen in the area use relatively efficient methods and receive a reasonable price for their catch. Over-fishing is still a serious problem, although some out-migration from the area has helped. Findinps and Lessons Learned 9. (a) Fisheries projects generally, and those concerning artisanal fishing in particular, must be designed on the basis of well- founded technical information concerning basic fish resources, marketing practices, technology, etc. (b) The institutional framework for a project is as essential to its successful implementation and eventual sustainability as are economic, financial and technical considerations. In all cases, but particularly when new entities are being created, there needs to be a clear consensus among the Bank and all parties involved on the Government side about the nature (public/private orientation), objectives, organization, financ- ing and operating principles of the bodies. (c) There is no substitute for devoting adequate resources and time to careful project preparation and appraisal, and the failure to do so carries heavy risks. In this case, the results were not more wasteful only because of the fortuitous cancellation of the main project component before impi-mentation had really begun.  PROJECT COMPLETION REPORT PHILIPPINES NATIONAL FISHERIES DEVELOPMENT PROJECT (LOAN 2156-PH) PART I - PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity Project Name : National Fisheries Development Project Loan No. : 2156-PH RVP Unit : Asia Region (AS2AG) Country : Philippines Sector : Agriculture Subsector : Fisheries 2. Background 2.1 When the project was identified in 1979, Philippine annual fish production amounted to about 1.6 million m Lons and was valued at some US$1.3 billion, or approximately 5% of GNP. Per capita domestic fish consumption was estimated at a relatively high 34 kg, or 602 o;: all animal protein consumed in the Philippines. About 952 of the domestic catch, mainly low priced fish such as scads, sardines, perch, etc., supplied this internal market. In addition, about 27,000 tons, mostly In the form of canned sardines and makeral, were imported to help meet the national demand for fish. 2.2 In the late 1970s, there were an estimated 12,000 commercial fisherman operating about 2,100 vessels, and about 500,000 artisanal fisherman with about 250,000 vessels (60% without engines). Artisanal fisherman were defined as subsistence or small-scale producers who operated boats of less than 3 Gross Tons (GT), with or without engines, both in inland waters and within 3 km of the coast, and who produced only for the local market. They contributed 55Z-60Z of total annual marine fish supplies. 2.3 Through the National Fisheries Development Project, the Government aimed to assist artisanal fishermen, who comprised one of the lowest income groups in the Philippines. Previous World Bank support had been channelled only to commercial fisherman (through Fisheries Projects I and II, Loans 891-PH and 1270-PH, respectively). It was recognized that earlier Government credit and extension programs for artisanal fisherman had been limited in scale and had run  -2- into problems: few loans were repaid, incremental catches were reported to be unmarketable and extension was hampered by lack of trained staff, transport and equipment. Nonetheless, a case was made for further assistance to artisanal fishermen on the grounds that rapid pupulation growth would increase the demand for protein and that there was under-exploitation of fish resources. 2.4 The Government and the Bank considered that artisanal fishermen incurred excessive losses due to poor market access, inadequate marketing facilities and lack of institutional support. The proposed Fisheries Education and Training Project (Loan 1786-PE), under appraisal at the time, was expected to be only partly helpful in addressing institutional problems, with complementary measures needed to establish sound administrative structures for the relevant institutions, provide additional staff training and supply essential transport and equipment. It was therefore reasoned that investment in marketing facilities, in areas where there were still under-exploited fish resources, together with training in marketing operations and other institutional support, would provide the necessary stimuli for development of the artisanal fisheries subsector. The National Fisheries Development Project was to be the first phase of a program of support, following a two-pronged approach: on the one hand, it was to be area specific, in that testing a new marketing strategy would be concentrated in the adjacent Samar Sea and Ticao Pass areas where resources were believed to be adequate and accessible to artisanal fisherman; at the same time, by strengthening fisheries institutions, the project was to have a national impact. 3. Projet Objectives and Description 3.1 The principal objectives of the project were to raise the incomes of artisanal fishermen in the Samar Sea and Ticao Pass areas and offer consumers an increased supply of better quality fish, by reducing fish marketing losses and strengthening the operations of the Bureau of Fisheries and Aquatic Resources (BFAR), the Philippine Fisheries Development Authority (PFDA) and the Fi,hery Industry Development Council (FIDC). 3.2 The project consisted of two components, as follows. (a) The area development component included the construction of landing points with supportive facilities (ice plants, ice and chill storage, and carrier boats), incremental working capital and input supplies for the target group in seven sites in the adjacent and depressed areas of Masbate/Ticao and Western Samar. (b) The institutional development component included staff training, equipment, studies and technical assistance, to strengthen BFAR, PFDA and FIDC. The project was to be implemented over an eight-year period, at a total cost of US$37 million, including a foreign exchange component of US$16.9 million (462 of total costs); the Bank loan was US$22.4 million.  - 3- 4. Project Design and Organization Project Design 4.1 The project was designed on the basis of two major assumptions which proved to be inaccurate: that fish resources in the project area were under- exploited, and that marketing arrangements and infrastructure used by artisanal fishermen were inadequate. 4.2 Availability of Fisheries Resources. The assumption during project preparation and appraisal that the intensity of fishing could be increased in the Samar Sea and Ticao Pass area was not baqed on adequate fish resource surveys. The related assumption that commercial fishing could be restrained through regulatory action in order to preserve existing resources for artisanal fishing was also unrealistic In the course of its field work, the completion mission observed overfishing in relation to sustainable yield, that the dividing line between artisanal and commercial fishing was far from clear, and that commercial activities were still quite prevalent in the project area (see Annex for details). The record indicates that the paucity of resource information was of concern to those designing the project: an FAO-CP Preparation Progress Report mentioned that resource information had been based only on catch data collected during interviews and that more substantial evidence was therefore necessary. The appraisal team also Leferred to the declining availabil'ty of sustainable fish resources in some coastal waters because of overfishing, and growing competition from commercial fishermen operating in those waters. Finally, the Bank's Loan Committee queried the resource issue and whether Board presentation of the project should not be deferred until adequate fish resource surveys were undertaken. The staff replied that the project emphasis was on improving marketing rather than increasing catches, and it was therefore decided to proceed. The feasibility of enforcing restrictions on commercial fishing was not seriously questioned, although existing laws and regulations on the subject were not being implemented at that time. It would appear that once the project concept had gained momentum, both in the Bank and the Government, the pressure to proceed with what appeared superficially to be an attractive poverty alleviation response to the low incomes of small fiphermen led to understatement of fundamental issues. In the event, early on during project implementation, b:)th independent consultant firms retained to manage the area development camponent concluded that the project area was overfished and that the project design needed to be completely revamped. Ultimately, the entire area development component had to be dropped from the project, after virtually no implementation (see Section 5 below). 4.3 Marketing of Catches by Artisanal Fishermen. Marketing of fish landed by artisanal fishermen was considered to be handicapped by inadequate landing facilities, ice and cold storage; poor insulat'on of vessels; and heavy dependency on unscrupulous traders, resulting in excessively low prices. However, the completion mission observed that landing places are not necessary since the traditional "bancas' used as fishing boats and carrier vessels are built so that they can easily be hauled up on beaches (see Annex). Fishing trips by these "bancas" rarely exceed three to four hours, and therefore ice is not needed and poor insulation is not relevant. The beaches are visited regularly by middlemen, with such intense competition that small carrier boats often purchase fish catches at sea from both artisanal and commercial fishermen before they are landed. In these circumstances, it is not likely that prices are  - 4 - unreasonably low. In summary, there was probably very little need for most of the equipment and infrastructure that was included in the project to 'solve" the marketing problems. Project Ozganization 4.4 The Staff Appraisal Report (SAR) is somewhat ambiguous in describing project management and execution machinery, but essentially the two project components, although inter-dependent, were to be administered separately: a public Corporation was established specifically to implement the area development component, and a Project Unit was created to carry out institutional strengthening activities. 4.5 Area Development Component. The Samar Sea-Ticao Fisheries Development (SEATI) Corporation was established as a condition for loan negotiations; it was to be run like a private enterprise, but with the Government (through PFDA) being the majority shareholder. Wh3le the intent to operate SEATI on a purely commercial basis was laudable, this was never achieved in practice. From the start, the Office of Budget Management determined that project funds should be channelled through PFDA and released to SEATI as and when PFDA deemed necessary, which limited SEATI's ability to function flexibly as would a private enterprise. The private con~ SIting firm selected to manage the Corporation was paid for its management services and was also required to invest equity in SEATI, but had no seat on the Board of Directors. The Chairman of the Board designated another Board member to serve as President of SEATI, but there was no clear delineation of the functions of the President and Manager, and this created numerous problems in the decision-making office. 4.6 Institutional Development. Component. Rumors that the main fisheries agencies in the Philippines would be transferred from the Ministry of Natural Resources to the Ministry of Agriculture (later known as the Department of Agriculture, DA) had been circulating for several years, and therefore were perhaps justifiably ignored during early project preparation. However, just before appraisal the Bank did become aware that such a transfer would indeed take place, but there is no indication in the record that this subject featured prominently in the appraisal discussions or loan negotiations. With the benefit of hindsight, it is evident that some delay would have been advisable, so that the support which the fisheries agencies needed could have been better defPned after their transfer. 4.7 In many respects this project was very poorly conceptualized and therefore doomed to fail from the start, whether administered by the Government or private enterprise (paras. 4.1-4.3). Nonetheless, the separation of the two components, the failure to examin2 thoroughly the organizational and legal features of SEATI and reach suitably detailed agreements beforehand, and the premature decision to proceed with appras -al and loan negotiations before clarifying the details of the planned transfer of the main fisheries agencies, certainly added to the implementation difficulties which the project later experienced.  - 5- 5. Project Implementation 5.1 Area Development Component. The first major implementation problem occurred very early on when the private consultant selected to manage SEATI proposed a major change in the project work plan, reportedly after studying the project area more carefully. Although SEATI had been established and the Manager selected before loan negotiations, the Manager's consultant firm had not yet made the required equity contribution. When the firm continued to delay payments and ask for different conditions, the Government terminated the contract and salected another firm, with the approval of the Bank. This firm, RKM Fisheries Enterprises, conducted a preliminary study of the project area and also concluded that the resources had been overfished and therefore the project design had to be changed. The firm proposed that the infrastructure at the landing points was no longer needed, but that "brush-parks" and artificial reefs should be established to address the overfishing problem, that the number of sites for fish landing and collection should be increased, ice carriers purchased and certain improved technologies introduced. The Government and the Bank approved these proposals in early 1984. 5.2 The completion mission was unable to locate any feasibility study to support the revised project proposal. Given that the fish resource position was clearly confused, it is not likely that RKM could have produced realistic catch estimates. Moreover, the cost-effectiveness of the proposed brush parks and artificial reefs had not been determined and, even if these structures would eventually have helped to stabilize fish resources, they would have done little at the time to improve the incomes and welfare of the artisanal fishermen who were supposed to be the principal project beneficiaries. Clearly the project should have been cancelled or fully reappraised at this stage, but the Bank and the Government chose instead to proceed. SEATI's operations, including the practice of recruiting local fishermen as workers, became quite controversial. Eventually, the Board asked SEATI for an analysis of catch results to determine whether the initial brush-parks and artificial reefs which SEATI claimed to have installed were proving effective. When this information was not forthcoming, in 1985 the Government ordered a review of SEATI's operations. The completion mission was also unable to find a report of the review, on the basis of which it was recommended that management of the SEATI should shift to the Government, since the Corporation was essentially development-oriented and not a commercial venture. This recommendation was rejected by both the new Government which came to office in 1986 and the Bank, and the balance of the loan allocated to the area development component was finally cancelled on November 12, 1986. Slightly less than US$0.3 million (US$0.2 million for consultant services and US$0.1 million for equipment/materials/vehicles and vessels) had been spent, out of an original allocation of US$12.1 million; no loan funds had been disbursed for civil works. 5.3 Institutional Development Component. Implementation of this component was delayed because of the transfer of BFAR and PFDA from the Ministry of Natural Resources to the Ministry of Agriculture and Food, the establishment of the FIDC per Executive Order No. 967 in June 30, 1984 and the subsequent transfer of its functions to the Office of the Secretary of Agriculture. In 1986, when the area development component was terminated (para. 5.2), the loan amount allocated to institutional strengthening was reduced to US$1.5 million, from an original US$7.7 million. disbursed.  -6- 6. Project Results 6.1 Since the area development component was never really implemented, it had no impact on fisheries activities in the project area during the period before related loan proceeds were cancelled. The ompletion mission observed that despite the failure to implement this project, or any other major government interventions, the fishermen in the area use relatively efficient methods and receive a reasonable price for their catch (see Annex). Over-fishing is still a serious problem, although some out-migration from the area has helped. The institutional development component eventually had some positive impact. About two-thirds of the respective loan disbursements went towards the procurement of equipment and materials; the facilities provided were urgently needed and are now in full use; consultants were retained to develop what was reported to have been a useful training program for headquarters staff, which served as the basis for expanded training activities; and 459 months of local fellowships were awarded (after the Bank agreed that funds earmarked for study abroad could be used instead at local universities). Nonetheless, many of the trainees either left the fishery agencies or were not placed in positions where their training could be used to the best advantage. A resource assessment study of small pelagics in the Philippines, financed partly under this project and partly under the Fisheries Training Project (Ln. 1786-PH), provides some useful information about the resource base and extent of over-fishing. 7. Sustainability 7.1 The institutional development component has provided some assistance, mainly to BFAR, and therefore may indirectly yield some sustainable benefits, to the extent that other efforts are made to further strengthen that agency and to adequately fund its programs. Since the area development component was not implemented, its sustainability is not an issue. However, all evidence indicates that if this component had proceeded as planned, it would not, today, be judged sustainable. 8. Bank Performance 8.1 This project was very poorly prepared and appraised without properly addressing fundamental issues, despite the fact that some of these were actually raised by the FAO-CP and the Bank's appraisal mission and Loan Committee. In particular, knowledge of the fisheries resource base in the project area was wholly inadequate and resulting assumptions that overfishing was not a problem proved to be incorrect. SEATI was established too hastily, without reaching a clear consensus among all parties on the extent to which it should or would function as a private enterprise, or carefully considering the possible inherent contradiction between the obectives of maximizing artisanal fishermen's incomes on the one hand and realizing maximum profits for the Corporation on the other. The institutional development component was appraised and negotiated despite knowledge that the fisheries agencies would be transferred and that this might well change the kind of assistance that each would need. Supervision missions did detect the malfunctioning of the project and signalled the need for quick action, but without analyzing the underlying reasons. On the face of it, SEATI did not function well due to excessive government interference, but actually the basic rationale for the project was weak and at some stages the government was  reacting to an apparent deviation from original objectives, in the sense that the proposals for project revision put forward by the RKM consulting firm would not necessarily have improved the welfare of the artisanal fishermen. 9. Borrower Performance 9.1 The Government agencies involved in project identification and preparation also bear a major part of the responsibility for the development of a conceptually unsound project proposal. In retrospect, the Government's strict supervision of SEATI, although heavily criticized by the Bank missions and not consistent with the objective of permitting the entity to function on private sector principles, did nonetheless prove useful in detecting problems and preventing a greater outlay of expenditures. The decision to cancel the area development component was most certainly a sound one. Concerning the institutional development component, there are indications in the record that at least some part of the Government was aware of the planned transfer of the fisheries agencies; these intentions should either have been made clear to the Bank or the loan negotiations should have been postponed until the matter was clarified. The Office of Management and Budget should have been more closely involved early on during project preparation and appraisal, to avoid subsequent misunderstandings about the project's financial operations. The project suffered chronic funding delays, the combined result of the difficult fiscal situation facing the country, a cumbersome budgetary process, and possibly internal questioning within the Government about the relative merits of project activities. 10. Project Relationships 10.1 The Bank-Borrower relationship was good at all times throughout the project, even during supervision when opinions differed regarding SEATI's operations. The excellent relationships at the higher management levels of the Bank and Government may, however, have put too much pressure on the operational levels of both, leading them to ignore or understate issues of fundamental importance to the justification and design of the project. 11. Consulting Services 11.1 The consultants contracted to prepare the training program under the institutional development component performed their services in a timely and satisfactory manner. The consultant study, Assessment of Pelagic Fish Stocks, was competent. The performance of the consultants retained to manage SEATI was unsatisfactory, but both firms labored under the burden of a poorly conceived and designed project. 12. Project Documentation and Data 12.1 All documentation on this project which is available at FAO-CP and Bank headquarters and in Government offices was made available to the completion mission. However, several important items could not be located, including a feasibility study apparently prepared by the Go-erriment with FAO-CP assistance  - 8 - as part of project preparation; some of the studies which were reportedly carried out by the RKM consulting firm, including the study or analyses which led RKM, to propose _. major revision of the project strategy and content; and certified financial accounts of the operations of SEATI. 13. Lessons Learned (a) Fisheries projects generally, and those concerning artisanal fishing in particular, must be designed on the basis of well-founded technical information concerning basic fish resources, marketing practices, technology, etc. (b) The institutional framework for a project is as essential to its successful implementation and eventual sustainability as are economic, financial and technical considerations. In all cases, but particularly when new entities are being created, there needs to be a clear concensus among the Bank and all parties involved on the Government side about the nature (public/private orientation), objectives, organization, financing and operating principles of the bodies. (c) There is no substitute for devoting adequate resources and time to careful project preparation and appraisal, and the failure to do so carries heavy risks. In this case, the results were not more wasteful only because of the fortuitous cancellation of the main project component before implementation had really begun.  PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE (Borrower's Report not Available)  - 11 - 1. Related Bank Loans i Year of Loan Title Purpose and Loan Amount Approval Status Comments 1. Fisheries I Improve national fish FY 1973 Completed PCR issued (Loan 891-PH) production through 07/22/80. improvement of capture and culture fisheries (US$11.6 M) 2. Fisheries II Same as Fisheries I FY 1976 Completed PCR issued (Loan 1270-PH) above. (US$12.0 M) 10/12/82. 3. Fisheries Strengthen the FY 1979 Completed PCR issued Training development of 03/19/90. (Loan 1786-PH) technology and human resources. 4. Third Same as in Project FY 1981 Completed PCR issued Livestock and Loans 891-PH and 1270- 09/26/88. Fisheries Credit PH, and increase in (1894-PH) meat production.  _ 12 9 2. PROJECT TIMETABLE ITEM DATE PLANNED DATE ACTUAL DATE T-o-R Identification (WB/FAO) July 1979 06/22/79 Identification (FAO) Oct. 1979 09/14/79 Identification/ Jan. 1980 11/08/79 Preparation (FAO) Project Brief (FAO) Nov. 21, 1979 -- Preappraisal June 1980 05/29/80 Appraisal Sept. 1980 09/23/80 Post-Appraisal May 1981 05/22/81 Loan Negotiations Oct. 1981 Apr. 5, 1982 -- Mar. 1982 * Board Approval May 25, 1982 Loan Signature - Sept. 18, 1982 Loan Effectiveness Dec. 12, 1982 March 16, 1983 Partial Loan Cancellation Nov. 12, 1986 Loan Closing Dec. 31, 1989 Dec. 31, 1989 Project Completion Dec. 31, 1988 Dec. 31, 1989 D Deferred repeatedly during this period. Comments. The following issues were raised at the different stages of project cycle: A. Identification - organization and management of marketing facilities. The success of the proposed marketing facilities would be dependent on the quality of the management and the organization within which they would operate. Government wished to include the private sector to the extent possible, and envisaged some form of purchase/leasing/management contract/joint venture basis, invoLving the PFDA only to the extent necessary. Agreement on the ownership and commercial operation of the facilities was cited as a prerequisite for further project preparation. B. Preparation Assistance - Allocation of resources to artisanal fishermen. Unless Government excluded large commerciat vessels from fishing grounds reserved for artisanal fishermen, it was felt that project support would be unsuccessful. Enforcement would be difficult and would need to involve local groups. - Economic rate of return. The increased output from artisanal fishing resulting from the project would be possible because of regulations limiting commercial fisheries intrusion. This increase, coupled with reduced marketing losses, would provide a satisfactory ERR if compared with current levels of artisanal output, but a poor return assumning that without the project commercial fishing would increase to fully utilize the resources. The social rate of return would, however, be satisfactory if factors such as income distribution and employment generation were weighted adequately, because of the poverty of the beneficiaries. - Institutional problems. The fisheries groups within MNR had an unsatisfactory record of achievement, and would be ill- equipped to handle expanded functions without the support, including new equipment and facilities, recurrent cost financing, and changes in organization and staffing procedures. C. Appraisal. No new issues were raised.  3. LOAN DISBURSEMENTS A. Culmulative Estimaced and Actual Disbursements (USS Mitl ions) FY83 FY84 FYU5 FY86 FY87 FY87 FY88 FY89 FY90 FY90 FY90 12/31 06/30 09/30 12/31 01/90 Appraisal Estimate 1.10 3.50 7.80 13.00 15.00 16.90 20.60 22.30 22.40 - Revised Estimate - - - - 1.00 2.10 2.10 2.10 2.10 2.10 Actual 0.330 0.37 0.57 1.00 1.10 1.10 1.31 1.82 1.83 1.89 Actual as X of APR/ Revised Estimate 30 11 7 8 110 52 62 87 87 90 Amount Cancelled (20.30)