Niger - Irrigation Rehabilitation Project

Document of The World Bank FM OmaAL USE ONLY RsktNo. 12980 PROJECT COMPLETION REPORT NIGER IRRIGATION REHABILITATION PROJECT (CREDIT 1618-NIR) APRIL 21, 1994 Agriculture Operations Division Country Department V Africa Regional Office This document has a restricted distribution and may be sud hv recpits only in t"e performance of their official duties. Its contents may mot otherwi e deslohsed without World ank autborization.  ABBREVIATIONS ADM Valley Ader Doutchi Maggia Valley (Vallee Ader Doutchi Maggia) BDRN Banque de Developpement Rural de la R6publique du Niger (National Bank of the Republic of Niger) CFD Caisse Francaise de D6veloppement (French Development Institution) (ex-CCCE, Caisse Centrale de Cooperation Economique) DCA Development Credit Agreement ERR Economic Rate of Return (Taux de croissance 6conomique) FAC Fonds d'Aide et de Coop6ration (French Aid and Cooperation Fund) FED Fonds Europeen de D6veloppement (European Development Fund) IDA International Development Association (Association Internationale pour le Developpement) INRAN Institut National de Recherche Agronomique du Niger (National Agronomic Research Institute) KfW Kreditanstalt fir Wiederaufbau (German Aid Agency) ONAHA Office National des Amenagements Hydro-Agricoles (Public Irrigation Agency) RINI Riz du Niger (Rice Marketing Parastatal Company) SOGREAH Societe Grenobloise d'Hydraulique Agricole (French Consulting Firm of Agricultural Hydraulics) UNC Union Nationale de Cooperatives (National Cooperative Union) CURRENCY EOUIVALENTS Currency Unit = CFA Franc (CFAF) US$1.00 = CFAF 295 FISCAL YEAR Government: January 1 - December 31 WEIGHTS AND MEASURES Metric System  FOR OFFICLAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation April 21, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Niger Irrigation Rehabilitation Project (Credit 1618-NIR) Attached is the Project Completion Report on Niger - Irrigation Rehabilitation Project (Credit 1618-NIR) prepared by the Africa Regional Office. No Part II was prepared by the Borrower. The project was cofinanced by CFD and KfW, and representatives of both agencies participated in the Project Completion mission. The project was intended to rehabilitate and improve the productivity of 16 irrigation perimeters totalling about 3,000 hectares, through physical improvements and strengthening of support institutions. Works were completed under budget and the physical targets were exceeded. Cropping intensity reached 200 percent and an average yield of 5 tons of rice per crop was achieved (30 percent above appraisal estimate). The re-estimated ERR was 37 percent, compared to the appraisal estimate of 18 percent. The institutional development impact of the project, on the other hand, is rated as negligible. Political turmoil and a deteriorating extemal environment resulted in delays in provision of counterpart funds and managerial changes in the implementing agency. As a result, its capacity to provide support services has been gravely weakened. The financial viability of farmer groups, responsible for management of individual perimeters and for primary marketing, has also been jeopardized. Hence, sustainability is rated as uncertain and the project outcome is rated as marginally satisfactory. The completion report provides an adequate account of project implementation. No audit is planned. 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 COMPLElON REPORT NIGER IRRIGATION REHABILITATION PROJEC (CREDIT 1618-NIR) Table of Contents Page No. PREFACE . ............................................. i EVALUATION SUMMARY. ii PART I - PROJECT REVIEW FROM BANK'S PERSPECTIVE .1 A. Project Identity .1 B. Project Background .1 C. Project Objectives and Description. 2 D. Project Results. 3 E. Project Sustainability. 8 F. Project Strengths and Weaknesses: Lessons Learned ................ 9 G. Conclusions: Summary of Lessons Learned ..................... 12 PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .... ...... 13 PART III - STATISTICAL INFORMATION ............................ 14 1. Related Bank Loans and IDA Credits .......... .. ............. 14 2. Project Timetable ...... ............. ................... 15 3. Cumulative Estimated and Actual Credit Disbursements ..... .. ....... 16 4. Project Costs and Financing ............. .. ................ 17 A. Project Costs ................................... 17 B. Project Financing ................................. 17 5. Status of Covenants .................................... 18 6. Use of Bank Resources .............. .. .................. 20 A. Staff Inputs ..................................... 20 B. Missions ...................................... 21 7. Ex-Post Economic Returns .............. .. ................. 23 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 NIGER IRRIGATION REHABILITATION PROJECT (CREDIT 1618-NIR) PREFACE This is the Project Completion Report (PCR) for the Irrigation Rehabilitation Project in Niger, for which Credit 1618-NIR in the amount of SDR 9.6 million was approved on June 25, 1985. The Credit was closed on December 31, 1991, one year behind schedule. The final disbursement was made on December 31, 1992, on an exceptional basis in order to permit payment for the final audit of the Project accounts. SDR 9.29 million of the Credit amount was disbursed and the undisbursed balance of about SDR 308,000 was cancelled. This represents only a partial cancellation of Cr. 1618-NIR as currently CFAF 103,936,525 (equivalent to about SDR 272,500) remains frozen at the defunct BDRN. Tlhe cancelled amount would change when the issue of the Special Account recovery is resolved. The PCR was prepared by the Agriculture Operations Division of the Sahel Department (Preface, Evaluation Summary, Parts I and III). In April 1992, the Bank requested the Borrower to prepare Part II, but no reply was received. This PCR is based, inter alia, on the Staff Appraisal Report; the Development Credit and Project Agreements; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda.   -iii- PROJECT COMPLETION REPORT NIGER IRGATION REHABILITATION PROJECT (CREDIT 1618 -NIR) EVALUATION SUMMARY PLJect Objectives L. The main objectives of the Project were to promote farmers' self-reliance in management of irrigation schemes in Niger in order to ensure the sustainability of investments, reduce Government's recurrent costs, increase production and increase farm incomes. The Project also aimed at developing an adequate institutional framework for future irrigation development by: (a) improving administrative and financial management of the public irrigation agency, the Office National des Ambnagements hydro- Agricoles (ONAHA) and strengthening its implementation capacity, and (b) transforming the rice marketing parastatal, Riz du Niger (RINI), into a more efficient and financially viable agency by providing financial and managerial assistance. ImDlementation ExDerience ii. The Project was appraised in November 1983. The Credit became effective in May 1986, after a delay of about four months from the planned effectiveness date. The long-time lag between appraisal and effectiveness was due largely to the length of time it had taken the Government to comply fully with the conditions for negotiations. The physical components were successfully implemented and the realized cropping intensity of 200% along the Niger Valley and rice yields of 5 t/ha per season in all the perimeters surpassed appraisal estimates (para. 9). The implementation experience with respect to the institutional component was mixed. During the first four years (1986-1990), the overall quality of project management and implementation performance of this component was satisfactory. During the last two years of the Project implementation period, however, both project management and performance of the institutional component began to deteriorate. Consequently, ONAHA's effectiveness in managing the Project declined precipitously (paras. 15-17); RINI's financial situation worsened, thereby undermining its capability to market surplus rice production (paras. 19-20); and the autonomy and financial viability of the cooperatives were seriously jeopardized (paras. 12-13). iii. Successful implementation of the physical components may be attributed largely to generalized successful adoption of adequate technological packages, including, improved cultural practices and strict adherence to the cropping calendar; easy accessibility of inputs and services through a well- managed cooperative credit program; substantial project preparation, appraisal and supervision efforts (para. 29); and effective donor coordination in the planning and execution of the annual work program and budget of ONAHA and annual multi-donor supervision missions (para. 36).  -iv- iv. Factors responsible for unsatisfactory institutional performance included weak Government commitment to the principles of cooperative autonomy and self-management (para. 13); sudden removal of the project director; and almost wholesale departure of the foreign technical assistance team; insufficient and incoherent Government commitment to this component as demonstrated by Government failure to provide the agreed state budgetary support to ONAHA for services of a public goods nature (paras. 16 and 32) and inability to release ONAHA and cooperative funds frozen at the defunct state development bank (BDRN); unfavorable macroeconomic policies (para. 20); and slippage in rice marketing reform. Results v. The Project successfully achieved its physical targets. All Project rehabilitation works have been achieved at a per hectare cost-underrun of 23 % compared to appraisal estimates and a cropping intensity of 200% was achieved in all the perimeters in the Niger Valley. The ex-post rice yields of 5 t/ha per season in all the rice perimeters almost doubled appraisal estimates and are among the highest in Africa and Asia. Irrigated area and crops also exceeded appraisal estimates by a large margin. The incremental production of food crops made possible by these achievements in turn have led to substantial improvements in the incomes and general welfare of the population in the Project area, thereby achieving a major project objective. The ex-post economic rate of return (ERR), estimated at 37% for the entire Project, more than doubled the ex-ante ERR of 18%. vi. With regards to the institutional objectives, implementation was mixed. During the first four years of Project implementation, the cooperatives demonstrated their willingness and potential to manage the resources put at their disposal as well as their on-farm activities. They organized input distribution and primary marketing, undertook regular maintenance of their irrigated farms, distributed credit among their members, contributed to ONAHA's operating costs for extension support and maintenance on electro-mechanical equipment and installations, and hired their own staff to manage their accounts and to assist with some of their operations. They achieved a 100% cost recovery rate with respect to credit and operation and maintenance costs during this period (para. 11). Since 1990, however, it became evident that these achievements were being seriously undermined by lack of Government commitment to the underlying principle of cooperative autonomy. Cost recovery rates began to decline precipitously and cooperative members in default on their loans went unsanctioned; the resulting free-rider syndrome precipitated a gradual erosion of interest and financial discipline among the members who would otherwise normally comply with their contractual obligations (para. 12). The objective of strengthening the public rice marketing agency, Riz du Niger (RINI) was only partially achieved. The overall quality of RINI's management improved as well as its capability to market the farmers' surplus rice and to process paddy for sale in the domestic market. This good performance could not be sustained, however. In 1990, RINI's financial situation began to deteriorate, forcing it to resort to borrowing from cooperative savings to finance primary marketing, and to close its three principal paddy processing plants in September 1991 (para. 18). vii. With regards to ONAHA, the Project has succeeded in building capacity in construction of new irrigation and rehabilitation works and in maintenance of irrigation systems. Its contributions to the strengthening of ONAHA's capability in executing these and other project activities in a cost-efficient and sustainable manner were, however, placed in jeopardy with the slippage in management performance encountered since early 1990 (paras. 14 and 15). As in the before-Project situation, ONAHA began to accumulate substantial budget deficits during the last two years of the Project, attributable in large part to the Government's inability to provide budget support to finance the non-incremental overhead costs  _v for ONAHA's public service functions, as provided for in the Development Credit Agreement. The results also indicate quite clearly that ONAHA could not have performed its tasks without substantial external funding. Project Sustainability viii. It has become clear during the implementation of this Project that the institutional determinants of sustainability should have been more carefully examined and incorporated from the outset in the Project design. The considerable progress made in the first four years towards establishing a sound basis for sustainability was severely undermined by the replacement of the first project director, who was very competent and effective, and the lack of Government commitment to project objectives. It would take a major restructuring of ONAHA to enable it to provide services at full cost to irrigation clients, including the public service, on a sustainable basis. Such restructuring was never envisaged in project design. Instead, the Bank assumed that ONAHA could be transformed into a viable and sustainable public irrigation agency simply by strengthening its preexisting structure through training and financing of its incremental staff and part of its operating expenses. Sustainability of the cooperative development strategy would require strong Government commitment and legislative action permitting empowerment of grassroots organizations; a strong training program on cooperative skills development, functional literacy and technical skills as well as a long-term commitment (20 years or more) to such institution- building objectives. The Credit closing date was extended by one year to permit implementation of the staff training program of ONAHA, and the Project had also commissioned a consultant study, financed by the Caisse FranSaise de Developpement (CFD-formerly known as the CCCE), on reform of ONAHA and the Cooperatives. The consultant report, which was submitted to the Government in December 1991, contains proposals of the measures which need to be put in place in order to ensure sustainability and efficient use of the potential in these two institutions (para. 24). The Government expects the cooperatives to assume full responsibility for primary marketing of paddy from the bankrupt rice parastatal, RINI. It is also discussing a consultant report on RINI, with a view to designing and implementing an action plan for privatization of RINI's paddy processing mills. The Bank should support meaningful reform of these key institutions (especially ONAHA and the irrigation cooperatives) in order to assure sustainability of project benefits and the substantial investments in these public perimeters. Findings and Lessons Learned ix. The overall performance of this Project is considered to be satisfactory, in large part, because it improved farm incomes and contributed significantly to alleviation of rural poverty. All of the Project's physical targets have been successfully achieved, which made it possible for the beneficiaries to obtain substantial incremental food crop production. Rural income and welfare has significantly improved as a result of the Project's direct and indirect employment effects and Niger's food security has also been enhanced. However, the strong performance of the institutional component experienced during the first four years of the Project could not be sustained during the remaining two years, primarily because changing circumstances, such as the deterioration in the institutional environment and Niger's macroeconomic situation, made it extremely difficult to implement this component according to plan. Sustainability of the Project's achievements would thus require long-term commitment to institution- building objectives in the subsector, including (a) continuation of support to a strong cooperative development program; (b) major restructuring of ONAHA, including substantial reductions in its work force (to a maximum of 100 staff) and operating costs, elimination of the force account contracting; and (c) improvements in rice marketing and pricing policies. The lessons to be learned relate primarily to  -vi- the design of the Project's institutional arrangements, and virtually all these could be applied in the design and implementation of other projects in the productive sectors of the economy. x. First, a top heavy approach to cooperative development (i.e., one centered around preexisting state structures) cannot lead to cooperative autonomy, in part because it perpetuates continuous state intervention in cooperative affairs and partly because it accentuates the common errors in group formation, such as, vague group objectives, non-definition of members' obligations, undefined responsibilities and absence of sanctions and accountability. A more imaginative strategy is to empower farmers and other economic agents to form independent economic interest groups or associations, thereby constituting an adequate framework for beneficiary participation in a project. Appropriate measures should be taken to insulate these groups from governmental control and influence. This approach has been incorporated in the design of the follow-up private irrigation project. xi. Second, the experience shows that a good project management is the key to satisfactory execution of a project. This can be achieved either through prior clear agreement with the Borrower on the terms and conditions for hiring and "firing" key project staff or through adequate safeguards against governmental interference in day-to-day project implementation. The Private Irrigation project currently under preparation is trying to achieve the above objective by creating a private project management agency that will be completely insulated from Government interference. xii. Third, the objective of providing adequate and sustainable institutional framework for implementing projects in countries with limited capacity are more likely to be achieved when it is pursued in the context of a longer-term commitment to institution-building than through a project of limited time frame. xiii. Fourth, a narrow focus on strengthening semi-autonomous project management units provides an unsound base for continuing project-financed activities after the reduction or withdrawal of donor support. The experience from this Project underscores the need to entrust management of similar operations to fully autonomous agencies and grass roots organizations. This lesson has also been adapted to the design of the private irrigation project. xiv. Fifth, Borrower commitment to Project objectives as well as ability to respect such commitments should be closely monitored during Project implementation. Any indication of wavering on this commitment should cause the Bank to call the Project into question, and to promptly take corrective measures as appropriate. xv. Sixth, the Bank should ensure: (a) consistency of approaches to Technical Assistance (TA) and if such inconsistencies should emerge during Project implementation, the Bank should act decisively to resolve these; and (b) that the terms of reference for TAs should include explicit statements requiring the TA program to contribute to training of local counterparts and other capacity-enhancing activities to facilitate transfer of know-how. c:\do\niger\pcr161 8\maintcxt  PROJECT COMIPLETION REPORT NIGER IRRIGATION REHABILITATION PROJECT (CREDIT 1618-NIR) PART I - PROJECT REVIEW FROM BANK'S PERSPECTIVE A. Project Identiy Name Irrigation Rehabilitation Project Credit Number 1618-NIR RVP Unit Africa V Country Niger Sector Agriculture B. Proiect Backeround Sector Background and Development Strategy 1. Less than 10% of Niger's 1.27 million km2 is suitable for crop cultivation. Even in the cultivable areas, highly variable and declining rainfall (only 11 % of the country receives more than 350 mm of rainfall) in addition to frequent drought cycles make rainfed agriculture an extremely risky enterprise. The contribution of the irrigation subsector to national agricultural production is limited, with irrigated lands representing less than I % of the total cultivated area. Food production, comprising 80- 85% of total agricultural production in any given year, has been in decline since the severe droughts of the 1970s. At the start of Project preparation in early 1982, the Government had already launched an agricultural sector strategy aimed at achieving food security through exploitation of the potential of rainfed and irrigated agriculture. In rainfed agriculture, the Government strategy has been to set up area "productivity projects" which aim at providing smallholder farmers with improved extension, input supply, credit and marketing. The performance of these projects was disappointing due to adverse weather conditions and lack of appropriate technical packages. 2. In irrigation, the Government's strategy was to develop about 1,000 ha of irrigated land annually through the creation of the Office National des Ananagements Hydro-Agricoles (ONAHA), which was to integrate and strengthen construction and management activities associated with irrigation schemes; to introduce a variety of crops other than rice; and to apply modem technology to the irrigation schemes, and improved methods to the rainfed holdings of Project participants. The importance of improving maintenance of irrigation schemes and full cost recovery was recognized at the Zinder Seminar held in November 1982, and self-management of these schemes by cooperatives was adopted as Government policy. The Bank supported this strategy with the Namarigoungou Irrigation Project (Cr. 851 NIR), which started in early 1980. The irrigation scheme allowed for full water control. It comprised a perimeter dike, two pumping stations for irrigation and drainage, complete irrigation and drainage systems, and land levelling. As such, it was an intensive, relatively sophisticated scheme which proved costly to construct and which incurred high operating and maintenance costs. Although this project was economically unprofitable (ERR of 3%) it contributed to significant increases in rice output  - 2 - and yields. It also provided useful lessons for future irrigation development, including: (a) the setting up of two well-functioning cooperatives; (b) the successful introduction of animal traction and foot- operated threshing machines; (c) a good record of cost recovery; and (d) effective seed multiplication at the on-farm level. 3. At the Government's request, IDA and the Caisse Francaise de Developpement (CFD) financed a comprehensive study of the rehabilitation of the irrigation subsector, with a view to designing a project which would draw from the lessons of the Namarigoungou Project, and provide further experience in particular with regard to cooperative self-management of irrigation schemes and the role of ONAHA in irrigation development and monitoring. The project was expected to provide Government and IDA with important information which would be most valuable for the preparation of future investment projects in the irrigation subsector. C. Project Objectives and Description Project Objectives 4. The principal Project objectives were: (a) to promote farmers' self-reliance in management of irrigation schemes, to ensure the sustainability of the irrigation schemes, and to increase production of paddy, cotton, sorghum and other crops, thus improving farm incomes; and (b) to develop an institutional framework for future irrigation development by ensuring extensive participation of cooperatives/farmers in operating and managing perimeters, setting up an efficient cost recovery mechanism, involving the private sector in maintaining pumping equipment, strengthening ONAHA, and reinforcing the rice parastatal's (RINI) rice processing and marketing capacity. 5. Specifically, the Project's objectives can be grouped under two main areas, namely, financial/technical and institutional. The technical objectives were the following: (a) rehabilitation of infrastructure and equipment on 16 perimeters; generalization of the practice of rice double cropping in the Project area of the Niger Valley; and increase in water availability for the dry season crops and extension of the useful life of the reservoirs in the Ader Doutchi Maggia (ADM) Valley; and (b) crop intensification, in order to raise the average paddy yield by about 1.2 t/ha/crop on the 2,200 hectares of rice perimeters to be rehabilitated, and to consolidate the performance of the Namarigoungou and Say perimeters (1,650 ha). From an institutional perspective the objectives were: (a) assistance to cooperatives to promote self-management on 18 perimeters; (b) strengthening ONAHA and of the public rice marketing and processing agency, the SocieS Riz du Niger (RINI). 6. The Project was planned to cover 11 perimeters in the Niger Valley, totalling about 2,200 ha, and five in the ADM Valley, totalling about 850 ha. It was to be implemented over a five-year period, with ONAHA as the lead agency. Its financing of US$25.2 million was derived from four sources: Government and beneficiaries (11I%), IDA (37%), CFD (37%), and the Federal Republic of Germany, KfW (15%). Project Components 7. The total Project cost at appraisal of US$25.2 million was allocated among the six components in the following manner: rehabilitation works (38%); crop intensification, including promotion of animal traction (10%); assistance to cooperatives (13%); adaptive research and seed  - 3 - multiplication (2%); strengthening of ONAHA, including setting up a monitoring and evaluation unit (12%); strengthening of RINI (5%); and contingencies account for 15% of total costs. Under these components, the following items and activities were financed: (a) Rehabilitation works. In the Niger Valley, replacement of all diesel-driven pumping units with electric ones and repair of diesel pumps as back-ups in case of power failure and in the ADM Valley, rehabilitation of catchment dams; (b) Crop intensification. Agronomic packages for rice, including a simple seed multiplication scheme; upgrading application rates of fertilizer on rice to yield incremental value of production greater than the existing level; 2,000 pairs of draft animals, with matching equipment and 1,500 pedal threshers to provide one set of farm equipment for every 2 ha of irrigated rice perimeter; village extension workers at a ratio of one extension worker to about 200 ha; (c) Maintenance. Cost of private-sector subcontracting for the maintenance of pumping equipment by ONAHA, of heavy equipment used to maintain irrigation and drainage canals and dikes, and of creation of two brigades attached to the regional offices at Niamey and Tillabery; (d) Assistance to cooperatives. Functional literacy and numeracy program; cost of purchasing collective equipment and of applying recommended intensification packages, and of prefinancing collective charges for operating irrigation perimeters; (e) Adaptive research and foundation seeds production. Cost of subcontracting certain activities to the National Agricultural Research Institute (INRAN), including fertilizer trials on representative sites, screening of new rice varieties intended for future extension activities, and production of rice foundation seed to be multiplied by cooperatives; (f) Strengthening of ONAHA. Financing for incremental staff, office equipment, vehicles and operating expenses at ONAHA's headquarters, involving a new unit for coordination, monitoring, evaluation, financial planning, budgeting and budgetary control; (g) Strengthening of RINI. Cost of additional storage capacity, weighing equipment, technical assistance and an increase of RINI's permanent funds to purchase 3,000 t of paddy each season from its own resources, and a feasibility study of husk combustion as an alternative to diesel engines for the operation of rice mills. D. Project Results 8. Physical Progress. The Loan became effective May 1, 1986. During Project implementation there were no major delays in procurement and disbursement. However, rehabilitation works at Ibohamane Dam were delayed due to a contract default by the contractor GCnie Civil du Sahel; works began December 15, 1987, after 19 months of delay. And on the disbursement side, there was a suspension of disbursements against SOEs from August to December 1988 because of a delay in the preparation of the Project audit report. In addition, during implementation a complaint was lodged by the Bank, in vain, that the Project was top-heavy with technical assistants. Credit closing date was  - 4 - extended by one year to December 31, 1991, to complete certain Project activities, including implementation of the staff training program for ONAHA prepared by the consulting firm of BDPA- SCET AGRI in December 1990 and audit of Project accounts. 9. Technical/Financial Results. With regard to technical and financial objectives, the Project has performed satisfactorily. Rehabilitation works were fully completed, and actual rehabilitation costs averaged CFAF 586,000 per hectare (without technical assistance costs), which is about 23 % lower than appraisal estimates. The evolution of cultivated areas also increased modestly from 4,688 ha to 4,873 ha at full development. Although there were seasons of decline, cropping intensity stabilized at 200%, and double cropping is now a general practice in almost all perimeters. Paddy yields of 5 t/ha during the rainy and dry seasons are very high compared to the performance of irrigated rice in most irrigated areas in Africa and Asia. These achievements were made possible by generalized adoption of the intensification package introduced under this Project, better management of the perimeters and better organization of and extension support to production activities compared to the past. 10. Institution-buildingResults. Interestingly, the previous project in the irrigation subsector, the Namarigoungou Project, performed well institutionally but less-than-satisfactorily technically and financially. In the instance of the current Project, the converse was true. This is demonstrated by the mixed performance of the key institutions: namely, the cooperatives, ONAHA, and RINI. 11. Cooperatives. One clear achievement of the cooperative development component was that all the direct maintenance and operating costs for irrigation, including energy, maintenance of infrastructure and pumps, replacement of pumps and salaries of perimeter managers were borne by the cooperatives. Rate of cost recovery on these services and on credit was 100% during the first four years of the Project. Despite the difficulties encountered subsequent to the freezing of cooperative funds in the now defunct BDRN, the majority of the cooperatives maintained this exemplary rate of cost recovery as of Credit closing date. This demonstration of financial autonomy of the cooperatives represents successful replication of the lessons learned under the Namarigoungou Project (Cr. 851-NIR), whereby the cooperatives cum water users' associations used own-resources to auto-finance virtually all of their activities. Another important achievement was that a few cooperative officials have acquired valuable knowledge and experience on the principles of cooperative management, which should become useful in similar activities in the future. Furthermore, most of the cooperatives now have properly functioning accounting systems in place, staffed by accounting officers recruited and paid for by the cooperatives themselves. The generalized use of video programs on participation plus literacy training financed by the Project have contributed to improved motivation and awareness among a few cooperative societies. 12. However, the experience since early 1990 shows that some of the above successful achievements were fragile at best, and hence unsustainable. The first important reversal of these institutions' performance record became apparent during the latter part of 1990, with the sharp deterioration of the financial situation of a large number of cooperatives due primarily to the freezing of more than CFAF 600 million of cooperative funds in the State Development Bank (BDRN) and the lack of financial discipline. A few cooperative members began to default on cooperative loans. In sorne instances, defaulting members were not subject to any form of sanctions, thereby undermining the viability of the credit program and precipitating gradual erosion of member-confidence and interest in the cooperative organization. Other problems encountered by the cooperatives include (a) constant Government interference either through ONAHA or the National Cooperative Union (UNC), which severely limited their autonomy, (b) limited capacity to evaluate ONAHA's performance with respect to delivery of contracted services and, for the vast majority of the 20,000-member strong irrigation  - 5 - cooperatives, limited comprehension of the contractual arrangements between the Government and their organization; and (c) frequent uncertainties about rice marketing possibilities. The final multi-donor supervision mission of November 1991 noted an apparent lack of Government resolve to implement the recommendations of past missions for redressing the above problems, and admitted that the Project's primary objective of transforming the cooperatives into self-managed and fully autonomous structures was far from being achieved. 13. Unsatisfactory performance of the cooperatives component in the last two years of the project may in large part be explained by insufficient Government commitment to the principles of cooperative autonomy and self-management, which were the key building blocks of this component. To begin with, the institutional structure of the cooperatives consisted not of indigenous grassroots associations set up by their own members but quasi-governmental creations incorporated into a centralized hierarchical organization, the National Cooperative Union (UNC). The Cooperative Statute which was designed to decentralize and transfer full autonomy to rural organizations was never enforced. It is evident that cooperative self-management could not be effectively promoted under such an institutional environment. Second, the Government pursued certain policies which were prejudicial to cooperative autonomy. These policies included (a) the exemption of transit rice from the tariff on imported rice which was imposed on rice destined for the domestic market; (b) lowering rice producer prices in order to protect RINI; (c) freezing of cooperative funds, estimated at CFAF 620 million, in the BDRN; (d) ad- hoc approach to setting levels of rice producer prices; and (e) undue pressure to use cooperative savings, on loan to RINI, to finance primary marketing. Finally, ONAHA was entrusted with providing management and accountancy training to cooperative officials, coordination of the literacy and numeracy programs for cooperative members as well as ensuring enforcement of contracts and statutes while at the same time responsible for overall management of the public irrigation schemes. 14. ONAHA. The Project and ONAHA were well managed during much of the implementation period. A strong team of technical assistants was responsible for executing the studies, for supervising the rehabilitation works, for reorganizing the financial and accounting management system of ONAHA, and for establishing a strong monitoring and evaluation system. Except for a few design problems on a limited number of irrigation and drainage canals, rehabilitation works were generally of excellent quality, permitting year-round exploitation of the rehabilitated perimeters. Similarly, the electro-mechanical maintenance brigade provided systematic maintenance services to keep the pumping stations in good working conditions at all times. On the other hand, the brigade responsible for maintenance on irrigation works and systems performed unsatisfactorily in maintenance of many of the perimeters. Although flawed in certain respects, especially in terms of resource and supervisory input, ONAHA's support to the cooperatives was critical in ensuring cooperative involvement in Project activities. The impact of this support on cooperative autonomy was positive despite state intrusion in cooperative affairs, which to a great extent stifled the development of self-management capacity within the cooperative organization. A major contributing factor to good management performance, albeit only for the first four years of the Project, was the substantial input of long-term technical assistant and strong and effective leadership provided by the first director of the Project, who was removed by the Government in 1990 without prior consultation with the project's financiers. 15. These achievements notwithstanding, the principal Project objective of strengthening ONAHA in order to execute its lead role in providing technical support to the perimeters efficiently and in a sustainable manner has not been achieved. Failure to realize this goal derived largely from the deterioration in ONAHA's finances since 1990, but other factors related to inadequate Government commitment and institutional weaknesses within ONAHA itself have greatly contributed as well.  - 6 - 16. Starting from fiscal year 1989/90, ONAHA's financial and accounting situation began to worsen. Operating losses that year alone amounted to CFAF 544 million. By Credit closing date in December 1990, ONAHA was in as deep a financial crisis as it was during the before-Project period. This situation stems largely from the Government's inability to provide the expected annual budget support to finance part of the recurrent costs and the non-incremental overhead costs for services rendered on behalf of the State (under ONAHA's public service functions). Unjustified increases in ONAHA's staff, which sharply increased this agency's rising operating costs for each of its functions, also contributed to the chronic financial problems. In addition, the quality of services in support of maintenance of irrigation perimeters and cooperatives development began to deteriorate around the same period as did ONAHA's effectiveness in overall Project management. This slippage in performance may be attributed to the following reasons. First, ONAHA was simply overwhelmed by the enormous scope of its mission. It had primary responsibility for executing the Government's subsector development strategy; managing and supervising activities in 12,000 ha of irrigation perimeters (total investment costs in the public irrigation schemes is estimated at CFAF 60 billion) ranging from a minimum size of 50 ha to a maximum of 2,500 ha, with 75% of the perimeters averaging 100 ha in area; coordinating all donor interventions in subsector activities; and acting as implementing agency of this Project. Given Niger's low absorptive capacity, and the grossly inadequate skilled manpower within ONAHA, it was virtually impossible to properly execute this mission without heavy dependence on technical assistance. Wholesale withdrawal of the expatriate support towards the Project completion date created a vacuum that could not be filled by Nigeriens, as little attention and resources were devoted to training of staff. It also exposed the fragility of ONAHA's management. The Bank had consistently objected to the large Technical Assistance support unilaterally deployed by other donors, especially the European Development Fund on the grounds that it was unnecessary and inimical to capacity-building. These objections, however, fell on deaf ears. Subsequent slippage in the quality of project management especially after the withdrawal of the Technical Assistance Team, confirmed the Bank's worst fears. The Bank should in future ensure that the Technical Assistants in Bank-financed projects be required to contribute to training of local counterparts and capacity-building in general. In addition, the Bank should respond strongly to parallel activities under bilateral arrangements which are potentially detrimental to the achievement of project objectives. Such a response should include suspension of disbursements on the concerned component. 17. The process of democratic change which precipitated these events resulted in temporary paralysis of the public administration. The Project director was removed following a cabinet reshuffle during this period. One outcome of this decision was the absence of effective leadership and the resulting lack of work discipline among the ONAHA staff. Another was the gradual erosion of donor confidence in the Government's commitment to the Project. 18. RINI. The main Project objective here was to make RINI operate efficiently and financially viable in primary marketing and processing of the incremental paddy production of the irrigation cooperatives. After some initial improvements in management performance, thanks to expatriate managerial assistance, RINI also began to encounter serious financial difficulties after the first two years of Project execution. The Government's previous attempts to ensure its viability through protection, including imposition of rice import quotas (prelevement obligatoire) and implicit producer taxation policy, with the appropriated revenues going mainly as subsidies to RINI, failed to have their intended effects. It became apparent by the Project completion date that the above objective was not successfully achieved, with the notable exception of the overall quality of management, which has greatly improved compared to the before-Project situation.  - 7 - 19. As its finances worsened with effect from mid-1989, RINI began to find it increasingly difficult to finance even its minimum marketing obligations of 3,000 t of paddy from its own resources. Commercial banks refused to provide the necessary finance for the 1990/91 campaign due to RINI's low credit rating, forcing RINI to borrow from the cooperatives some CFAF 250 million to fund its primary marketing activities for this period. By September 1991, RINI's deteriorating financial situation combined with the perennial problem of paddy processing capacity under-utilization and rising processing costs (prLx de revient) to force the closure of its principal paddy processing plants in Tillabery, Niamey and Kollo. 20. The reasons for poor performance of the RINI component have to do with unfavorable macroeconomic environment as well as insufficient Government commitment. The former is with respect to trade and fiscal policies which adversely affected producer incentives, such as depressed producer prices through producer pricing and taxation policy; exemption of transit rice from the tariff levied on import rice destined for the local market; and lack of a coherent rice producer price policy and automatic tax adjustment mechanism to protect domestic rice production from the violent fluctuations in international rice prices. The latter relates to Government insensitivity to the rice sector's difficulties and inability to implement the measures recommended by previous multi-donor supervision missions intended to improve the incentive structure of the rice subsector and to lay the basis for sustainability of the substantial public investments in large-scale irrigation development. 21. Welfare mp.act. The direct benefits of this Project, in terms of incremental crop production, increased incomes, and enhanced food security, surpassed the appraisal estimates by far. Average rice yields of 5.2 t/ha/season at full development, using only 5% more area than anticipated, exceed the estimate at appraisal by 135%. Appraisal estimates of millet yields of about 1.6 t/ha were exceeded by about 104%. Average sorghum yields of 1.6 t/ha represent about 99% of the appraisal estimates. The value of the incremental production of rice at full development of CFAF 1.5 billion was significantly higher than the appraisal estimate of CFAF 952 million, the former exceeding the latter by 57%. The impact of these results on rural welfare are two-fold. First, Niger saved CFAF 1.5 billion in foreign exchange by producing 23,772 t more rice (or approximately 50% of annual rice imports) through import substitution production. Second, the generalized adoption of the crop intensification package under more secured conditions helped reduce the country's dependence on food imports, relatively stabilized food production and increased per capita food availability. In terms of farmer incomes, the Project has generated direct benefits for 20,000 farm households or 80,000 people in the Project areas. Direct employment for additional labor has been generated, through the Project-financed agro-processing and other village micro-enterprise activities. In several rural families have benefitted from the indirect employment generated by the Project due to increased demand for marketing, transportation, processing and equipment repairs and servicing. These employment effects significantly alleviated high rural unemployment and underemployment as well as substantially reduced rural poverty. Total value added, estimated at CFAF 4.25 billion, was more than double appraisal estimates of CFAF 1.97 billion. 22. The estimated ex-post economic rate of return (ERR) of 37% is significantly higher than the ex-ante ERR of 18% for the entire Project, primarily as a result of substantially higher crop yields than projected and the generalized practice of double cropping.  - 8 - E. Project Sustainability 23. It has become clear during the implementation of this Project that the institutional determinants of sustainability should have been more carefully examined and incorporated from the outset in the Project design. The considerable progress made in the first four years towards establishing a sound basis for sustainability was severely undermined by the replacement of the first project director, who was very competent and effective, and the lack of Government commitment to project objectives. In addition, the Bank may have been optimistic in expecting achievement of these objectives in only 5 years. Experience has shown that it would take a much longer period of sustained support to institution-building in order to realize such complex institutional goals. The Credit closing date was extended by one year to December 31, 1991, to complete activities designed to improve the institutional environment for Project sustainability, including training of ONAHA staff and cooperative managers to assume responsibilities of technical assistance once the Project closed and to audit the accounts of the cooperatives. However, these measures fell far too short to provide an adequate institutional framework for sustainability. The underlying reason is that the entire approach to institution-building was top heavy, with a narrow focus on strengthening rather than restructuring the public service agencies in the subsector. ONAHA's persistent chronic financial difficulties, partly caused by lack of counterpart financing, coupled with heavy reliance on technical assistance, confirm that entrusting implementation of such a complex project to an overstaffed enclave project management structure is also not viable as it isolates this unit from key governmental services and makes it almost totally dependent on external financial and skilled manpower resources. In addition, sustainability of the irrigation schemes was heavily dependent on maintaining cooperative self-reliance and autonomy in operating and managing these schemes. The lack of success in maintaining the earlier (1986-90) satisfactory, albeit slow, progress towards achieving this principal Project objective illustrates a case of missed opportunity to fully exploit the cooperatives' potential to properly utilize the resources put at their disposal and for self-management. Realizing this potential would require strong Government commitment and legislative action on empowerment of grassroots organizations as well as a strong independently administered training program on cooperative skills development, functional literacy and numeracy and technical skills development. 24. Several measures have been taken to ensure sustainability of the activities that have been financed under this Project. First, the Government has recently shifted its approach to irrigation development from large-scale public schemes to one based on promotion of privately-owned and managed small-scale schemes, using simple, low-cost technologies. The Bank is supporting this strategy through the Private Irrigation Project, which is under preparation. Second, the Project commissioned a consultant study, with CFD financing, on reform of ONAHA and the Cooperative organization. The consultant report, which was submitted to the Government in December 1991, contained proposals of certain measures that would ensure sustainability and efficient use of the potential in these two institutions, including (a) clear definition of the obligations and responsibilities of both ONAHA and the cooperatives for operating and managing the public investments put at their disposal, providing adequate means to carry out their respective tasks and enforcing accountability and credible sanctions; (b) setting a timetable for transferring responsibility of management of the perimeters to a restructured irrigation cooperative organization; (c) clear legal and operational separation of ONAHA's public service functions from its commercial functions; and (d) reduction of ONAHA's staff and operating expenses. Third, the Government is committed to privatization of RINI, and has recently undertaken a consultant study, with financing of the European Development Fund (FED), on how to proceed with implementation of this stated policy. The findings of this study will be discussed with the Bank.  - 9 - F. Project Strengths and Weaknesses : Lessons Learned 25. This part of the report first reviews the design and implementation of the main components of the Project and then examines lessons learned. Because of its importance, the joint Government-multidonor annual Project supervision mission is briefly examined as a component. The Project Design and ImpIementation Prooess 26. The Project Design Process. Project design benefitted from substantial preparation, consisting of a joint Bank-CFD-financed comprehensive study on the rehabilitation of the irrigation subsector, starting in February 1982. This study was carried out by the consulting firm SOGREAH/Louis Berger and Helios, and included (a) a thorough analysis of the subsector and identification of technical, institutional and sociological constraints on performance; (b) a topographic survey of the existing irrigation and drainage networks, retention dams and flood control works, preparation of engineering designs for the bidding and construction stage, and guidelines for institution-building; (c) a feasibility study for the proposed Project, which was followed by a Bank appraisal mission in November/December 1983; and (d) additional field engineering studies and the preparation of bidding documents immediately following appraisal. The study's findings were reviewed in the Bank and discussed with the Government during several preparation missions. Project design also drew from lessons learned from the first Bank- financed Irrigation Project (Cr. 851-NIR), including appropriate technical package; improved crop husbandry; applied research; the principles of cooperative autonomy and self-management and full cost recovery; and introduction of animal traction and seed multiplication program. 27. The Implementation Process. ONAHA was responsible for the implementation of the Project. The agency consisted of three regional offices (Niamey, Tillabery and Tahoua), under the directorship of the General Manager of ONAHA. It was responsible for implementing the physical rehabilitation of the irrigation perimeters and for carrying out crop development activities (support to extension, crop management, monitoring and evaluation). Adaptive research and the production of foundation seeds were subcontracted out to the research institute, INRAN. Government was expected to finance, through quarterly budget payments (at the beginning of each quarter), ONAHA's overhead expenditures for the above services (designated as ONAHA's public service functions) as these costs were not recoverable from the beneficiaries nor covered by external financing (para. 4.02, DCA). Non-respect of this commitment was the principal cause of ONAHA's chronic financial difficulties, especially during the last two years of the project implementation period. 28. Owing to the sector's limited absorptive capacity, the Project financed the services of a limited number of expatriate staff to assist the national director with day-to-day Project implementation. Although the Project recruited only eight long-term technical assistance personnel plus two short-term expatriate consultants, the number of expatriates involved with implementation substantially increased, over the Bank's objection, to about 33 in 1989/90. These were funded under various bilateral agreements between the Borrower and other donors (FED, FAC and KfW). The input of the long-term expatriate staff proved indispensable for proper execution of the Project. However, little was done in terms of staff training and capacity building to facilitate a transfer of know-how and management responsibilities, thereby leading to serious slippage in implementation performance, especially after the sudden departure of most of the expatriate staff towards the Credit closing date. 29. The Technical Coa=onent. Engineering designs based on sound criteria and adapted to expected Project performance were available for all works to be constructed. Bidding documents for  - 10 - these works were evaluated in order to minimize the risks of cost-overruns. The physical works were implemented over a two-year period with a short start-up delay. Systematic supervision of these works made it possible to identify a few design problems on irrigation and drainage canals during implementation. As follow-up, the Project financed a consultant study and supplementary construction works in 1991 to redress these design problems (in Daikena, Ndounga II and Libore). With the exception of these original design problems, the civil engineering and maintenance works have generally been of excellent quality, permitting year-round cropping on the rehabilitated perimeters. A useful feature of the Project which greatly facilitated implementation was the option of doing rehabilitation works on the conveyance and drainage systems on Force Account, and a special unit headed by two expatriate staff was created to manage it. The initial success in using this method deteriorated as a result of the general decline in the overall quality of Project management which became evident around 1989/90. Adequate supervision from the monitoring and evaluation unit, which was headed by an expatriate plus a support staff of two expatriates and a team of local staff, accounts for satisfactory implementation performance. The semi-annual progress reports which this unit prepared have been used as input in preparation of the annual multi-donor supervision missions which the Bank organized. These missions have served an extremely useful role in early identification of implementation problems and in mobilizing donor consensus around the remedial actions and on subsector policy issues in general. 30. Institutional Comaonent. The approach to institution-building was top heavy because of its narrow focus on strengthening public sector management, including management of the cooperative development component. Implementation of this component did not proceed as satisfactorily as that of the technical component. Many of the reasons for this poor performance record had actually been identified during the preparation phase as possible implementation constraints, but were inadequately dealt with in the design stage. The failure to do so may perhaps be attributed to optimism on the Bank's part about the extent of the Borrower's commitment to the Project's institutional objectives or to lack of an imaginative institutional development strategy. This component consisted of (a) strengthening ONAHA to perform its role as lead executing agency, (b) promoting cooperative autonomy and the principle of cooperative self-management, and (c) strengthening RINI to enable it to market the incremental rice production. 31. ONAHA had already acquired the necessary technical skills in civil works construction as well as in support activities for agricultural production, through the Bank-KfW-financed Namarigoungou Project (Cr. 851-NIR) and in fact properly executed its mission during the first four years of the Project. Good performance up to this period may be explained by the effective leadership role played by the first Project director and the technical assistance input in both administration and financial management. Since 1990, however, ONAHA began to encounter the same kind of problems which various Bank preparation missions had identified, such as chronic financial difficulties; inadequate financial structure; irregular and insufficient Government budget support; weak internal control over administrative and personnel procedures; and a bloated work force. Also since this period, revenues from the commercial services provided by the two maintenance brigades declined, and no corresponding effort was made to reduce rising operating costs. This situation was exacerbated by the freezing of an estimated CFAF 104 million of ONAHA's funds in the failed BDRN, which the Government has not been able to recover as of the Credit closing date. Consequently, ONAHA was unable to deliver on its annual contractual obligations to the cooperatives, resulting in significant decline in the quality of maintenance services on many perimeters. For instance, in the 1990/91 fiscal year ONAHA was able to execute only 17.8% of the contracted maintenance works on the 45 irrigation perimeters under its responsibility and as low as only 2% on the perimeters in the Tillabery regional center. The execution rate in the preceding fiscal year was only slightly better at 20%.  - 11 - 32. The deterioration in ONAHA's financial situation is due mainly to the Government's inability to provide budget support to finance part of the agency's operating costs for public services rendered on behalf of the Government. The level of this support began to fall gradually from CFAF 302.5 million in 1984, to CFAF 180 million in 1986 (year of Project's effectiveness), and then to only CFAF 78 million in 1990. While the Government's budgetary support was declining, Government pressure to recruit more staff for ONAHA was increasing, resulting in additional recruitment of about 100 staff compared to the appraisal estimate. Supervision missions had recommended sharp reductions in personnel and the design and adoption of a Contrat-Plan for ONAHA's public service functions (which should contain a clear definition of these functions, measures to increase productivity and improve institutional and management performance and performance indicators) in order to redress the above problems. As with most other supervision mission recommendations, these were never implemented. 33. As of the Credit closing date, the outstanding balance in the Special Account of this Credit, which remains frozen in the former state development bank (BDRN), is CFAF 103,936,525, equivalent to SDR 271,984.65. Total IDA administered funds frozen at this Bank amounted to CFAF 810,753,333. The balance of the Credit of SDR 308,379.73 has been cancelled pending the recovery of the Special Account. The Bank and other donors are currently discussing with Government a workable arrangement for obtaining funds from the recoveries of this bank's bad debts to repay the development institutions whose funds remain blocked at the BDRN. The Bank is monitoring the Government's debt recovery efforts and has periodically received statements of the accounts of the frozen funds. 34. The key implementation problem of RINI may be traced to the issue of its financial viability, which was raised during various preparation missions. The conclusion of these missions was that RINI was not financially viable and that if its chronic financial problems were not resolved by appraisal time, it should be left to collapse. As a substitute, the Project would assist the cooperatives to conduct primary marketing and would finance small-scale hullers for rice processing. Under strong farmer-pressure owing to their concern for guaranteed producer prices and an assured marketing outlet, the Government convinced the Bank to include support to RINI in the Project design. The CFD and KfW assisted the Government to expunge RINI's debts and to regularize its financial situation before Project start-up. In retrospect, the option recommended by the preparation mission would have served better the objective of cooperative autonomy and efficiency. 35. The cooperative training subcomponent was subcontracted to the Ministries of Education and Planning, but ONAHA was responsible for overall coordination and supervision. It should be borne in mind that Bank preparation missions had advised that training of cooperative managers and members should not be entrusted to ONAHA or any Government services on the grounds that such an option would not enable the cooperatives to progressively assume their responsibilities and would perpetuate the role of Government or ONAHA in cooperative management, as has been borne out by the implementation experience (i.e., systematic Government interference in cooperative affairs either through ONAHA or the National Cooperative Movement). Furthermore, ONAHA did not show sufficient interest in cooperative training or in proper supervision of this component. Thus, although the Government had assured the Bank of its commitment to cooperative autonomy, and in fact produced legal documents on the contractual arrangements with cooperatives to satisfy disbursement conditions, it continued its dirigist policies, thereby undermining the effective implementation of this important component. 36. Project Supervision. Project supervision was done annually by a multi-donor mission consisting of the Bank, the CFD and KfW. These missions reviewed in detail the bi-annual reports of  - 12 - implementation performance, conduct field visits of the perimeters and evaluated ONAHA's performance on execution of the annual work program and budget. A unique feature of the supervision missions was that each of the participating donor agencies were represented by the same individuals, which enhanced institutional memory and greatly facilitated coordination and consensus-building around formulation of the annual work program and budget, performance indicators, key implementation issues and the Government's subsector policies. In addition, the adoption of an annual implementation schedule and budget during such missions was found to substantially reduce the task manager's time input in routine supervision work. G. Conclusions: Summary of Lessons Learned 37. The overall performance of this Project is considered to be satisfactory, in large part, because it improved farm incomes and contributed significantly to alleviation of rural poverty. All of the Project's physical targets have been successfully achieved, which made it possible for the beneficiaries to obtain substantial incremental food crop production. Rural income and welfare has significantly improved as a result of the Project's direct and indirect employment effects and Niger's food security has also been enhanced. However, the strong performance of the institutional component experienced during the first four years of the Project could not be sustained during the remaining two years, primarily because changing circumstances, such as the deterioration in the institutional environment and Niger's macroeconomic situation, made it extremely difficult to implement this component according to plan. Sustainability of the Project's achievements would thus require long-term commitment to institution- building objectives in the subsector, including (a) continuation of support to a strong cooperative development program; (b) major restructuring of ONAHA, including substantial reductions in its work force (to a maximum of 100 staff) and operating costs, elimination of the force account contracting; and (c) improvements in rice marketing and pricing policies. The lessons to be learned relate primarily to the design of the Project's institutional arrangements, and virtually all these could be applied in the design and implementation of other projects in the productive sectors of the economy. 38. First, a top heavy approach to cooperative development (i.e., one centered around preexisting state structures) cannot lead to cooperative autonomy, in part because it perpetuates continuous state intervention in cooperative affairs and partly because it accentuates the common errors in group formation, such as, vague group objectives, non-definition of members' obligations, undefined responsibilities and absence of sanctions and accountability. A more imaginative strategy is to empower farmers and other economic agents to form independent economic interest groups or associations, thereby constituting an adequate framework for beneficiary participation in a project. Appropriate measures should be taken to insulate these groups from governmental control and influence. This approach has been incorporated in the design of the follow-up private irrigation project. 39. Second, the experience shows that a good project management is the key to satisfactory execution of a project. This can be achieved either through prior clear agreement with the Borrower on the terms and conditions for hiring and "firing" key project staff or through adequate safeguards against governmental interference in day-to-day project implementation. The Private Irrigation project currently under preparation is trying to achieve the above objective by creating a private project management agency that will be completely insulated from Government interference. 40. Third, the objective of providing adequate and sustainable institutional framework for implementing projects in countries with limited capacity are more likely to be achieved when it is pursued  - 13 - in the context of a longer-term commitment to institution-building than through a project of limited time frame. 41. Fourth, a narrow focus on strengthening semi-autonomous project management units provides an unsound base for continuing project-financed activities after the reduction or withdrawal of donor support. The experience from this Project underscores the need to entrust management of similar operations to fully autonomous agencies and grass roots organizations. This lesson has also been adapted to the design of the private irrigation project. 42. Fifth, Borrower commitment to Project objectives as well as ability to respect such commitments should be closely monitored during Project implementation. Any indication of wavering on this commitment should cause the Bank to call the Project into question, and to promptly take corrective measures as appropriate. 43. Sixth, the Bank should ensure: (a) consistency of approaches to Technical Assistance (TA) and if such inconsistencies should emerge during Project implementation, the Bank should act decisively to resolve these; and (b) that the terms of reference for TAs should include explicit statements requiring the TA program to contribute to training of local counterparts and other capacity-enhancing activities to facilitate transfer of know-how. PART II - PROJECT REVIEW FROM 'IHE BORROWER'S PERSPECTIVE 44. The Bank has requested the Borrower to prepare Part II of the draft PCR. A reply has not been received. c: \do\niger\pcr 16 8\6maintext  - 14 - PART In - STATISTICAL INFORMATION 1. Related Bank Loans and IDA Credits Credit N