Nepal - Rural Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6424 PROJECT PERFORMANCE AUDIT REPORT NEPAL RURAL DEVELOPMENT PROJECT (CREDIT 617-NEP) September 26, 1986 Operations Evaluation Department 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. WEIGHTS AND NEASURES 1 hectare (ha) = 2.47 acres 1 kilometer (km) = 0.62 miles I square kilometer (km2) = 0.39 square miles I kilogram = 2.2 pounds I metric ton = 2,205 pounds I liter = 1,057 US quarts COUNTRY EXCHANGE RATES Name of Currency (abbreviation): Nepalese Rupee (NRs) Currency Exchange Rate: - Appraisal Year Average 1976 US$1.00 = NRs 12.50 - Intervening Years Average 1977-83 US$1.00 - NRs 12.73 - Completion Year Average 1984 US$1.00 = NRs 15.65 Fiscal Year of Borrower: July 16 - July 15 FOR OFFICIAL USE ONLY THE WORLD BANK Washington. OC 20433 USA O1Ce Of OrctO-GeWaI Operatinm Evaluation September 26, 1986 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report: NEPAL Rural Development Project (Credit 617-NEP) Attached for information is a copy of a report entitled "Project Performance Audit Report - Nepal Rural Development Project (Credit 617-NEP)" prepared by the Operations Evaluation Department. 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 ABBREVIATIONS AA - Agricultural Assistint ADBN - Agricultural Development Bank of Nepal AIC - Agricultural Input Corporation CDO - Chief District Officer CP - FAO/World Bank Cooperative Program DADO - District Agricultural Development Officer DAP - District Administrative Plan DTO - District Technical Officer ERR - Economic Rate of Return FA0 - Food S Agriculture Organization GDP - Gross Domestic Product HMG - His Majesty's Government of Nepal IDA - International Development Association IDPD - Integrated Development Panchayat Design JT - Junior Technician JTA - Junior Technical Assistant LDO - Local Development Officer MPLD - Ministry of Panchayat and Local Development OED - Operations Evaluation Department PC - Project Coordinator PCC - Project Coordinating Committee PCR - Project Completion Report PPAM - Project Performance Audit Memorandum PPAR - Project Performance Audit Report RDI - Rasuwa/Nuwakot Rural Development Project RDII - Mahakali Hills Rural Development Project SAR - Staff Appraisal Report SEU - Socio-Economic Unit of the Project UNDP - United Nations Development Program 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 PERFORMANCE AUDIT REPORT NEPAL RUAAL DEVELOPMENT PROJECT (C.EDIT 617-NEP) TABLE OF CONTENTS Page No. Preface ............................................................ i Basic Data Sheet ................................................... ii Evaluation Summary ................................................. iii PROJECT PERFORMANCE AUDIT MEMORANDUM I. PROJECT BACKGROUND .......................................... 1 A. Country and Sectorial Context ............................ 1 B. Project Context, Objectives and Design ................... 2 Project Context .......................................... 2 Project Objectives ....................................... 3 Project Design ...................... 3 II. PROJECT IMPLEMENTATION AND OUTCOME .......................... 5 A. Project Implementation ................................... 5 B. Project Impact ........................................... 9 Short Term Impact . 9 Long Term Impact ........................................ 10 III. OUTSTANDING ISSUES .......................................... 12 Was the Project Design Acceptable? ..........:............ 12 Was the Bank Pr erly Advised? ........................... 13 Has the Bank Brtefited from the Lessons of the Project? .. 14 Can Rural Development Efforts Succeed in the Absence of Coordination Among Donors? ............................. 15 TABLE OF CONTENTS (Conttd) Page No. PROJECT COMPLETION REPORT I. Introduction .......19.... .......... .......... 19 II. Identification, Preparation and Appraisal ........... 20 III. Implementation ............................ 24 IV. Institutional Performance and Development ***************** 41 V. Project Impact ............................................ 44 VI. Economic Evaluation ..... ............................. 49 VII. Bank Performance .......................................... 49 VIII. Summary and Conclusions *********************************** 51 ANNEXES PROJECT PERFORMANCE AUDIT REPORT NEPAL RURAL DEVELOPMENT PROJECT (CREDIT 617-NEP) PREFACE This is a performance audit of the first rural development project financed by the Bank in Nepal. It was also the first project located in the Hill areas of the country. Credit 617-NEP, in the amount of US$8 million, was approved in Feburary 1976 and became effective in July of the same year. The closing date of December 31, 1981 was extended by two years and the credit was fully disbursed by May 21, 1984. The project was co-financed by a technical assistance grant of US$ 400,000 of UNDP. The audit report consists of an audit memorandum (PPAR) prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) of November 22, 1985 prepared by the South Asia Regional Office on the basis of a completion study prepared by the FAO/World Bank Cooperative Program. The audit memorandum is based on a visit to the project area in April 1986, a review of the appraisal report (959a-NEP) of February 2, 1976, the President's report (P-1760-NEP) of February 10, 1976, and the corresponding credit agreement. Correspondence with the Borrower, supervision reports and internal memoranda on project issues contained in relevant Bank files have also been consulted, and Bank staff associated with project appraisal, supervision and technical assistance have been interviewed. The PCR provides a good and detailed review of project implementation experience and the problems it encountered. Points discussed in the audit report are very similar to experience in many other multicomponent rural development projects around the world. The draft report was sent to the Borrower for comments on June 17, 1986. However, none have been received. The valuable insights and assistance provided by government staff in Kathmandu, the present coordinator of rural development activities in the project area and staff of the Bank office in Kathmandu are gratefully acknowledged. PROJECT PERFORMANCE AUDIT REPORT NEPAL RURAL DEVELOPMENT PROJECT (CREDIT 617-NEP) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as % of Estimate Current Estimate Appraisal Estimate Total Project Costs (US$ million) 10.89 l'.4. 123 Credit Amount (US$ million) 8.0 8.0 100 Cofinancing (UNDP) (US$ million) 0.4 0.4 100 Date of Board A,proval - 02/27'76 Signing (Credit Agreement Date) 04/30/76 Date of Effectiveness - 07/15/76 Date Physical Components Completed 09/81 12/31/83 Closing Date 12/31/81 12/31/83 Economic Rate of Return (M) 14 Unknown but margit.il or negative institutional Performance Adequate Poor A ronomic Perforaance Adequate Poor Number of Beneficiaries 191,000 50,000 (?) STAFF INPUT (staff weka) FY74 FY75 FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 Identification/Preparation 54.5 I2.7 - - - - = - - Appraisal 1.2 58.1 73.4 - - - - * - - - - Negotiation - - 12.) - - - - - - ~ * Supervision - - 3.0 20.3 15.8 8.3 27.0 6.9 9.3 14.6 17.1 1.3 SUBTOTAL 3T7 160. 87 Torf 70 T 27i 1 TT 9.3 14.6 17.1 1.3 CUMULATIVE DISBURSEMENTS FY77 FY78 FY79 FY80 FY81 FY82 PY83 FY84 Appraisal Estimate (US$ million) 0T3 T7T 3-9 3-9 fT$ 8.00 -_ = Actual (US$ million) 0.05 0.21 1.26 2.04 3.79 4.60 6.30 8.00 Actual as X of Appraisal Estimate 9 12 37 36 50 58 79 100 Date of Final Disbursement may 21, 1984 MISSION DATA Date No. of Specializations Performance Types of Mission (mo./yr) Persons Represented /a Rating /b Trend/c Probleas/d Supervision I 05/76 1 D */e * Supervision II 09/76 2 A,C 1 1 - Supervision 111 11/76 1 D * * * Supervision IV 02/77 4 A,B,C,G 2 2 0 Supervision V 11/77 3 A,G,I 2 1 X,T Supervision VI 04/78 1 G * * * Supervision VII 12/78 3 A,8,D 2 1 H Supervision VIII 11/79 1 P 2 1 T,0 Supervision IX 01/80 3 A,B,G 2 1 M.P Supervision X 11/80 1 B a a Supervision XI 02/81 1 A 2 2 F,M Supervision XII 02/82 1 B 2 2 F,M Super,ision XIII 06/82 1 B 2 1 F,M Supervision XIV 02/83 1 C 2 1 F OTHER PROJECT DATA Borrower His Majesty's Government of Nepal Executing Agency Follow-on Project Name Rasuwa-Navakot Rural Development Project - Phase 11 Credit Number Cre'it Amount (US$ million) 18.0 Date of Board Approval - A - Agriculture; B - Economist; C = Financial Analyst; D * Engineering; F - Forestry; G - Sociology; I * Organisation 6 Management; b I * Problem-free or minor problems; 2 - Moderate problems; and 3 * Major problems. 1 * improving; 2 * Stationary; and 3 * Deteriorating. F * Financial; K * Managerial; T - Technical; P - Political; 0 * Others. BTO/P?tll Report did not include completed Form 590. PROJECT PERFORMANCE AUDIT REPORT NEPAL RURAL DEVELOPMENT PROJECT (CREDIT 617-NEP) EVALUATION SUMMARY Introduction The Rural Development Project in the Rasuwa-Nuwakot districts was the first of its kind in Nepal, appraised by the Rural Development Division of the Bank early in 1975 and approved in 1976. It was also among the first rural development projects financed by the Bank following the poverty orientation strategy defined in Nairobi in September 1973. As such, it was a pioneering project which helped the government and the international commu- nity become aware of the scope and magnitude of the problems faced by hill farmers in Nepal. On the other hand, there was little past experience from which the project's design could have benefited. The project turned out to be complex, as influenced by the rural development philosophy of the Bank and Nepal government at that time, and the social and cottage industry components diluted efforts away from higher priority needs for which feasible solutions were known to exist. The project was also entrusted to a large number of agencies, which had little experience in the implementation of time-bound target oriented projects. Objectives The main objectives of the project, located in an area which did not produce more than half of its food requirements, and where natural resources (soils and forests) were being rapidly depleted, were to (a) raise crop yields by improved irrigation, inputs and support services; (b) improve livestock production within the grazing limitations of the project area; (c) halt the depletion of natural resources; and (d) improve the physical and social infrastructure of the area. The project also provided for administra- tive buildings and technical assistance. Project benefits were expected to reach 85% of the 29,000 families living in the district of Nuwakot, rela- tively more amenable to development, and the district of Rasuwa, of much more difficult access and lower potential. The project comprised about 19 different components, eight of which were production oriented and two aimed at protecting the area's natural resources. The project was expected to be completed within five years and generate an economic rate of return of 14%. - iv - Implementation Experience Emphasis in all production and social components was on the devel- opment of infrastructure rather than human resources. Efforts to improve rainfed agriculture were hampered, however, by the fact that the project area had no tradition of agricultural services. Medium scale irrigation schemes effectively reached about 25% of their objectives (800 ha planned, 470 ha built but only 200 ha operating any given year). Small hillside irrigation schemes performed even less satisfactorily, many require substantial repairs, and some were never completed even though Pauchayat laaders had received substantial advances on the estimated costs (see PPAM, paras. 17 and 22 and PCR, paras. 3.20 and 3.35 through 3.40). The livestock vaccination program has had some positive impact. This was not the case with parasite control. Many imported animals died before the project was completet'. The Trishuli cheese factory had to be completely rebuilt but has remained idle for lack of milk supply. Forestry and erosion control works have achieved limited results because of their small scope compared to the magnitude of the problem. Performance of the cooperatives has been varied. Loan recoveries were of the order of 60%. The Agricultural Development Bank performed satisfactorily. However, input supplies were lower than anticipated, particularly in farm implements and insecticides, where farmer demand did not materialize. Construction of infrastructure suffered from lack of supervision, poor construction and lack of maintenance. Many buildings have either not served their purpose or are not being optimally utilized. Some have already been destroyed for various reasons, not all because of poor construction. A notable exception is the footbridges, which were properly built and meet a clear and useful purpose. Cottage industries have also had mixed results. Over 50% of handloom credits have not been repaid. The poorest results were achieved in the health and education sectors. Most health posts were not built. The others and the schools have not been adequately staffed or equipped and serve no useful purpose. Several studies and surveys were either poorly done or, when correctly implemented, not seriously considered by government. Project supervision was on the whole satisfactory, although per- formance rating failed to reflect the rapid deterioration in project impl mentation around 1979. The Bank was not firm enough in ensuring project conditionality, particularly with respect to project management. Water charges were not collected in the poorly operating Batar area, where lift irrigation is practiced, and IDA was not presented with audits of project accounts until May 1986. Some procurement problems were encountered (PPAM, para. 11). Disbursements were slower than anticipated. Project completion had to be delayed by two years. The credit was fully disbursed five months after the extended project completion date. - v - Initial government commitment to the project and staff involvement were substantially reduced following the political developments which took place in 1979 and in later years, reducing the powers of local authorities and substantially hampering project implementation (PCR, paras. 3M3 through 3.5). Project Impact The project ht had limited impact outside irrigated areas. Some of the infrastructure has served little useful purpose, and much of it is rapidly deteriorating. Little institutional development has been achieved. Although some basic changes in agricultural practices were brought about, adoption of new technology by farmers has been considerably below the ambi- tious appraisal expectations. Data from various sources on production and income increases contradict each other and, therefore, cannot be utilized. On the other hand, what has been achieved has entailed considerable changes in farmer and government attitudes. This provides a favorable context for future development efforts. Project Sustainability The economic rate of return of the project cannot be established because the limited information that is available on quantifiable benefits is contradictory, but it is certainly below the 10% criterion of success, if not negative. The longer term impact of the project will depend on how much awareness it has created about the problems of hill farmers, and how much such an awareness will help subsequent projects achieve their goals. A follow-up project, the Rasuwa-Nuwakot Rural Development Project - Phase II, is presently being negotiated. Without it, even the few relatively succes- sful components of the project would not be sustainable. Though the first project has not achieved many of its objectives, it has shown that agri- cultural yields can be improved in the hills of Nepal with proper technical and political support. Lessons from the Project The Nepal project has suffered from key design errors which are also found in many other Bank-financed rural development projects (PPAM, para. 32), such as, too large an inver ment for the project area to absorb (PCR, para. 8.4); too many components, many of which were of doubtful feasibility (PCR, para. 8.1); emphasis on construction without sufficient consideration of staffing and maintenance requirements, or human resources development in general; reliance on many agencies of limited capacity; and too short a period to achieve the proposed developments. - vi - The project was prepared, appraised and implemented too hastily, at the expense of strengthening the institutions involved, obtaining farmer involvement and testing the proposed technologies. (PPAM, paras. 33 and 34; PCR, paras. 8.1 and 8.2). Yet the Bank had been advised against such haste by the FAO/CP, and against some of the key design errors, by an ex-volunteer in Nepal temporarily employed by the Bank (PPAM, para. 35). The second rural development project in Nepal (Mahakali Hills) was appraised too early in the cycle of the first project to benefit from its lessons (PPAM, para. 36). The second-phase project in Rasuwa-Nuwakot, now being negotiated, has drawn a number of lessons, by (a) putting more emphasis on the development of human resources; (b) aiming for civil works easier to maintain; (c) seeking better adapted production technologies; (d) totally excluding social components; (e) envisaging an eight-year period to complete the project; and (f) taking a stricter stand on audit procedures. The new project, however, still has a large number of components. Its effective administration will depend on the proper implementation of the decentralization measures recently undertaken by government (PPAM, paras. 36 through 41). Some of the weaknesses observed in the first project were attributable to a proliferation of rural development projects in Nepal, financed by a multitude of foreign donors. Lack of coordination among donors is hampering institutional and policy efforts and may continue to do so (PPAM, para. 42). Specific lessons from the project can be summarized as follows (PPAM, para. 43): (a) Including a large number of components in rural development projects overloads institutional capacity and detracts from key manageable issues; (b) rural development problems, such as those of Nepal, are too complex to be meaningfully approached through short-term interventions aiming for immediate economic results; (c) institution building cannot rely exclusively on infrastructure, and the development of human resources should not be neglected; (d) proposed production increases do not substantially materialize when they are not based on tested technical proposals; (e) the direct involvement of political bodies in project management reduces the commitment of professional staff; (f) frequent staff rotations detected by supervision missions provide signals of decreasing commitment; and (g) to be effective, monitoring units should be properly staffed and financed and integrated into management structures. - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM NEPAL RURAL DEVELOPMENT PROJECT (CREDIT 617-NEP) I. PROJECT BACKGROUND A. Country and Sectorial Context 1. Nepal is one of the poorest countries in the world, with a per capita income estimated at US$170 in 1983, notwithstanding three decades of development efforts, supported by growing foreign assistance, which has yet to bring significant improvement to most of the 16.3 million people living in Nepal. The GDP has grown at 3.2% per annum in real terms during the last ten years, only slightly faster than the population (growing at 2.7% per annum). The Nepalese population has a low life expectancy (46 years), high infant mortality (about 150 per thousand) and a low adult literacy rate (19 percent). There is, on the average, one physician for every 30,000 people, but this ratio is much lower in rural areas. 2. The country is divided into three main regions: the Terai, the Hills (up to 4,600 m) and the Himalayas. It is landlocked and, outside the flat Terai, sdffers from an extremely rugged terrain and a poor natural resource base. Public administration is weak, and economic management has not been able to keep up with expanding development programs depending on and generated by foreign aid. During the last three years, Nepal has faced serious budget and balance of payments problems.l/ 3. In 1982/83, agriculture accounted for 91% of employment but only 56% of the value added in Nepal. Agricultural production has been stagnating, and population pressure has entailed a serious degradation of the fragile hill environment. A combination of tree felling for firewood and intensive grazing has led to the destruction of almost three quarters of the original vegetation cover, and most of the remainder is in a stage of advanced degradation (PCR, para. 1.2). This is particularly the case in the Hills (or middle-mountain) areas, where more than half of the population lives on about 30% of the country's land area, These areas lack roads, markets and other basic requirements. Traditional farming is practiced there in the form of continuous and exhaustive cropping (mainly of cereals) on limited areas of terraced hillsides. The average calorie and protein intake of the local population is considerably below established norms. Thus, Nepal is faced with two somewhat contradictory priorities in its rural strategy: 1/ Nepal - Prospects for Economic Adjustment and Growth, Report No. 5867-NEP of December 12, 1985. - 2 - providing assistance to the hill and mountain populations, mainly for socio-political and humanitarian purposes, and developing the Terai, where a large part of the irrigation infrastructure and supporting services are located, in an effort to improve the country's balance of payments. B. Project Context, Objectives and Design Project Context 4. Various rural development efforts had been initiated by the Nepal government in the 1950s with aid f-om India and from the USA, based on the community development approach. These relatively small-scale efforts were reported to be costly and not particularly successful. The project reviewed in this report was the first rural development project financed by the Bank in Nepal2/. Its idea originated from a UNDP/FAO study started in 1966, of the protection and development. needs of the hill areas (PCR, para. 2.1). Formal identification of an investment project in the Trishuli watershed, comprising the Nuwakot and Rasuwa districts, was initiated by the FAO/CP in March 1974, very soon after President McNamara's Nairobi speech (see PCR, paras. 2.2 through 2.4). Thus, the project was also one of the first formally poverty-oriented rural development projects financed by the Bank anywhere in the world. Notwithstanding the very complex project design (see following paras.), a final preparation nission was carried out by the CP already in October 1974. That mission encountered difficulties in presenting its findings to government and recommended to delay appraisal. Yet, the Bank, under a perceived pressure from government (PCR, para. 2.7), which had not otherwise participated in preparation or even cLarified its position on several issues raised by the CP missions, turned down the CP recommendation rather than oppose the pressure and proceeded with appraisal on January 5, 1975, only nine months after project identification had been initiated and two weeks after the date (December 23, 1974) on which the preparation report was issued by the FAO/CP (see PCR, paras. 2.7 and 8.1 through 8.3; also see PPAM para. 33). The project was presented to the Board on February 27, 1976. It became effective on July 15, 1976. The Bank has since approved (in 1979) another rural development project in the Mahakali Hills region of 2/ The project was, overall, the third agriculture project financed by the Bank in Nepal. Both of the previous two projects were located in the Terai area. The Birganj Irrigation Project (Credit 373-NEP, Audit Report No. 4267), approved in March 1973, was satisfactorily completed in December 1981. The Settlement Projet (Credit 505-NEP, Audit Report No. 4567), approved in June 1974, was closed in July 1582, without achieving its objectives. Half of the credit was cancelled after seven years of implementation. -3- Nepal3/ And is in the process of negotiating a follow-up project to the one under review in this report.4/ There are also many more ongoing rural development activities financed by various donors in Nepal, stressing the government's imple..ientation capacity beyond reasonable limits. Proj_ect Obj ectives 5. The main objectives of the project were to (a) raise crop yields by improved irrigation, inputs and support services (37% of project costs) in order to bring the project area close to self-sufficiency in feeding its population; (b) improve livestock production within the grazing limitations of the project area (5%); (c) halt the depletion of natural resources (wood, fodder and land) (13%); and (d) improve the physical and social infrastruc- ture of the area (27%). Another 18% of project costs were allocated for administration and technical assistance, including administrative buildings. Projects benefits were expected to reach, in one way or another, the totality of the 29,000 families or 191,000 people believed, at appraisal, to be living in the project area (actually, probably a much higher number, especially in Rasuwa), with 85% directly benefiting from the production-oriented compo- nents. Most of this population is found in the Nuwakot district, which, notwithstanding its extremely difficult terrain, has a lower average altitude than the Rasuwa district, higher rainfall (3,000 mm in south Nuwakot, compared to 900 mm in northern Rasuwa) and an all-weather road linking it to Kathmandu, whereas there were no motorable roads in Rasuwa until after the project was completed. The Rasuwa district was, in fact, so inaccessible, that few of the usual government functions tere ever performed there before the project started. The Langtang national park, covering a substantial part of the Rasuwa district, was essentially excluded from the project area. Project Design 6. The project, whose main lines were based on a District Administra- tion Plan prepared by government, originally comprised some 19 different components, the largest of which does not represent more than 13% of total project costs. Eight of these components were directly production-oriented. They comprised agricultural extension (five buildings, vehicles, staff salaries and 500 radios for group listening to agricultural programs), research (equipment and material for three existing small stations) and training (in-service and farmer); veterinary services and the acquisition of improved livestock; irrigation (570 ha of small run-of-the-river irrigation; 3/ Nepal, Second Rural Development Project - Mahakali Hills (Credit 939-NEP, for US$11 million). Progress in that project, which became effective in January 1980, is reported to be slow because of funding delays and staff limitations. The project area also suffered a major earthquake. 4/ Nepal, Rasuwa-Nuwakot Rural Development Project - Phase II Green Cover SAR No. 5834a-NEP dated December 27, 1985. improvement of 650 ha of hill terrace irrigation and their extension by another 150 ha; a 150 ha low-lift pump scheme in Nuwakot; 240 ha of pumped irrigation on the Batar plain; and the establishment of a district organization for irrigation); credit for agricultural inputs and the purchase of livestock; and the improvement of textile and paper cottage industries. Two components aimed at protecting the area's natural resources, through forestry development -- the planting of trees (1,050 ha for fuel and an equal area for fodder), improvement of 5,000 ha of existing forests and biological stabilization of another 470 ha, and the construction of check-dams and embanknents to control erosion and protect existing infrastructure. Five components were to provide infrastructure, including access facilities (46 km of dry weather tracks, 168 km of trails and 12 suspension footbridges), fifteen health posts, 100 water points, panchayat (i.e., village administra- tion) offices and 16 small warehouses. The remaining four components dealt with project management (project coordination and evaluation, technical assistance and a token US$ 50,000 for the development of cooperatives through which most credit would be channeled). 7. The construction of schools, envisaged during preparation, was dropped out at appraisal since many schools already built in the area remained unused for lack of teachers. Motor roads were not considered, even for Rasuwa, as there was no Institutional capability to later maintain them and as they were viewed as reducing the employment opportunities found in porterage. A number of small components were further added to the project during implementation at the request of government (see PCP, para. 3.2). One of them comprised the construction of four new schools and a hostel and the improvement of 219 existing schools. 8. Total project cost was estimated at US$ 10.9 million. IDA was to finance US$ 8 million, or 74% of the estimated cost. Some US$ 400,000 of technical assistance was financed by UNDP. Other costs were met by government. The preparation report had suggested a six-year implementation period. The appraisal report, which had increased the overall number of project components, reduced that period to five years and estimated the economic rate of return of the project at about 14%. 9. Seven ministries and three other agencies were responsible for the implementation of specific project components (see PCR, para. 2.11). Coordination was to be provided by a Project Coordinating Committee (PCC) bringing together officers from each ministry and agency involved. A project coordinator was to ensure liaison between ministries, agencies and the various district officers operating at the field level, prepare detailed implementation plans, supervise their execution and ensure compliance with IDA procedures (see PCR, para. 2.13). As political conditions evolved in Nepal, substantial changes occured in project management, first in 1979, later in 1980, and more recently in 1983, resulting in the disappearance of the PCC, lack of administrative continuity and decisions being taken without adequate awareness of field problems (see PCR, paras. 3.3 through 3.5). - 5 - II. PROJECT IMPLEMENTATION AND OUTCOME A. Project Implementation 10. Early project implemention, with the exception of the health and livestock components, was sstisfactory until 1979, although disbursc;aents were barely a third of appraioal expectations (see PCR, paras. 3.6 and 3.7 and basic data sheet). The subsequent changes in political climate and project administration resulted in decreased decentralization, a lack of cooperation from the line ministries, the dismissal of essential staff, difficult times for foreign consultants, loss of motivation of district staff (who had lost most of their previous authority), lack of monitoring and a substantial slowing down of project activities. It is interesting to note in the key project data sheet that, throughout this period when the project turned for the worse, supervision missions optimistically kept reporting moderate problems and an improving trend. Yet, it soon became necessary to extend the project implementation period two years, until the end of 1983. Even then, the bulk of the health component and part of the local development components remained unimplemented (see PCR, para. 3.10 and PPAM, paras. 15, 16 and 24). The overall number of supervision missions was low because of the inaccessibility of most of the project area during the monsoon, i.e., from May to September. Recommendations made by supervision missions were often not acted upon by government agencies, and, overall, IDA was not firm enough on requiring compliance with project covenants (PCR, paras. 7.2 through 7.4). 11. The project encountered a number of procurement problems. Beside the poor performance of many infrastructure contractors, the main one entailed the refusal of government to take delivery of 100 radios ordered for agricultural extension purposes but left waiting at the port of Calcutta for five years, by which time port storage charges proved to cost more than the original purchase price (see PCR, para. 3.51). New radios were not ordered, and, finally, none of the 500 radios originally intended to be purchased were acquired, apparently because agricultural extension broadcasts had not mean- while materialized. Other procurement problems related to the acquisition of machinery and equipment (PCR, para. 3.52). Recording of project performance was neglected once the PCC was disbanded, and information generated by various offi-es did not match (see PCR, para. 3.9). The Project Coordination Unit provided timely accounting, but IDA was not provided with audited state- ments for any of the project years (see PCR, para. 4.7). This situation has hampered the negotiations of the proposed follow-up project. Besides the covenant on project audits, the government dic' not comply, either, with levying adequate water charges and the maintenance of the various infrastruc- ture (see PCR, para 4.9). 12. The technical assistance component, co-financed by UNDP, proved to be very useful in starting up the project. However, some central government officials appear not to have appreciated the direct involvement of the first expatriate assistant coordinator in project implementation, especially at a - 6 - time when those government officials were aiming at reducing the authority of the project coordinator himself (see PCR, para. 3.53 and 3.54). Later, project advisors were asked to assist both the Rasawa-Nuwakot and the Mahakali projects, thus diluting their efforts and their direct involvement in project implementation. Overall, the Bank's involvement through expatriates in project activities #as much less than that of other donor- funded projects in Nepal or of Bank projects in some African countriee, such as Nigeria or Malawi.5/ While this may have resulted in slower implementa- tion, in the long term, the Bank's attitude in Nepal would probably have been justified if the development of local human resources had been simultaneously pursued. Contractors working on suspension bridges, tiacks and irrigation schemes of the Irrigation Department performed satisfactorily. Other contracted works, particularly buildings, water supply schemes and some terrace irrigation schemes were characterized by their poor quality. The PCR (para. 3.55) cites various works which collapsed or had to be abandoned. 13. Total project cost exceeded the appraisal estimate by about 23% due to inflation and expanded activities. However, at the same time, a number of components were not totally or adequately implemented. The credit was fully disbursed on May 21, 1984, but as much as 40% of it was disbursed only in the final year or so of the project, in 1983 and 1984, mainly because rf administrative delays (PCR, para. 3.58). 14. The project financed essentially the construction of physical facilities and acquisition of equipment. Limited efforts were made to otherwise strengthen project institutions. P.oject coordination suffered from the changing political situation ard frequent changes of its own structure. The numerous agencies performed unevenly, some adequately, and others unsatisfactorily (see PCR, paras. 4.1 through 4.5). 15. Progress in the various components of the project is described in detail in the PCR (paras. 3.11 through 3.50). The following aspects, discussed in the PCR, are worth highlighting: Commendable efforts to improve rainfed agriculture were hampered by the fact that the project area had no tradition for an organized delivery of agricultural services. There were no proven low cost extension messages to offer the farmers (PCR, para 3.15). Their training, beyond explaining the purpose of the project, has been too theoretical. Although some 700 extension staff are reported to have received training (albeit too theoretical and without proper field orientation), the ratio of extensionists to farm families remained at 1:2000, implying the availability of only 15 agents for 29,000 families. Little meaningful research was carried out, for lack of qualified staff or a clear program (PCR, paras. 3.11 through 3.17). 5/ See "Managing Agricultural Development in Nigeria," Project Profile No. 4, Rural Development Review, OED Report under preparation; see also, Malawi, Lilongwe Land Development Program, Phase III (Credit 550-MAI), PPAR No. 3414. - 7 - 16. About 470 ha out of 800 ha originally envisaged are equipped for irrigation in three medium scale schemes, but, because of irregular supply of energy and frequent damage to channels or pumps, less than 200 ha are irrigated each year. Water charges have not been collected in Batar, where this was a project condition, because of the technical problems which prevented the regular supply of pumped water. Low rates are levied in the other two, gravity irrigated, schemes of Gandhkar and Labdhu-Dhikare. Out of 51 hill irrigation schemes planned to cover a total area of 105 ha, 27 were reported to have been completed and operating and 19 were in various stages of construction at project completion, and work on five had been discon- tinued although 75% of the corresponding funds had already been advanced to the Panchayat authorities. Many completed schemes would require substantial repairs, because of poor design (particularly in the remote areas), construc- tion and maintenance (PCR, paras. 3.18 through 3.20). The difficulty of developing the proposed irrigation schemes can be better understood whe.i it is realized chat where simple irrigation possibilities existed, the farmers had already developed them without waiting for the project. 17. It is believed that the livestock vaccination program has helped reduce loss of animals. Parasite control was ineffective because of lack of follow-up treatment. Animal health suffered most, however, from serious feed and fodder deficits. Nearly 50% of the Jersey bulls and some 30% of the rams and improved billies that were distributed had died by the time the project was completed. Murrah bulls imported from India ap?ear to have met with greater success, but no systematic evaluation is available. The staff training center foreseen at appraisal was not established, and suffizient staff were not appointed (PCR, paras. 3.21 through 3.24). 18. The Trishuli cheese factory, which had to be completely rebuilt and was eventually completed in 1983, is idle because of a lack of milk supply resulting from collection problems and below-market prices the factory offers the farmers. The Gatlang cheese factory was reported to be satisfactorily operating at the time of project completion. By the time of the audit visit, however, the small hydro-electric unit financed by the project had been seriously damaged by a landslide and the electric line linking it to the building euphemistically called a "factory" had disappeared. No repairs or replacement were envisaged. The Satdobate factory also closed soon after it started operating, for lack of milk supply. The fourth factory, in Langtang, is reported to be operational (PCR, paras. 3.25 through 3.27). 19. The forestry component, though well planned, suffered from delays in the release of funds and the lack of community awareness and participation in planting, protecting and maintenance operations (PCR, para. 3.28). Construction of protection works around major infras':ructure was successfully accomplished. However, erosion control works through afforestation and sowing grass, though laudable, were limited with respect to the magnitude of the problem. Implemented at a larger scale, they would probably have been more effective than protection structures on steep slopes of young mountains subject to heavy monsoon rains. (PCR, para. 3.29). - 8 - 20. Performance of che 20 cooperatives established (out of 25 foreseen) was varied. While loan recoveries from their members averaged 60%, repayment by the cooperatives to the agricultural bank were below 50%. Somewhat better recovery rates were achieved on loans extended directly to farmers. These results, though unsatisfactory, are reported to be better than elsewhere in Nepal, and the Agricultural Development Bank has, overall, done a good job, particularly considering the difficulty of reaching most area villages. Loans extended for livestock purchases are reported to have been used for other purposes (PCR, paras. 3.30 through 3.32). 21. The input supply component saw the distribution of about 11,800 t of fertilizers and chemicals, some 800 t of paddy seeds and one ton of vegetable seeds, but because of low demand by farmers, the distribution of farm implements and insecticides was limited. Nine of the ten stores planned have been constructed. One of them collapsed due to poor construction. The others remained idle for years as the Agricultural Input Corporation was not interested in operating them. Farmers complained of untimely distribution of inputs, and some seeds distributed were of poor quality (PCR, para. 3.33). Improvements in marketing services have been minimal, and the four marketing "sheds" built by the project have served little purpose (PCR, para. 3.34). 22. Infrastructure development consisted of tracks and suspension bridges, successfully contracted out by the Local Development Department, and village water supply, trail improvement and construction of panchayat build- ings, contracted out by the village panchayats. The latter works suffered from lack of supervision, and payments were made even for works which were far from meeting specifications. Water supply schemes slightly ex aeded appraisal targets, but many of them are reported not to be functioning because of very poor construction and lack of maintenance. The eight suspen- sion bridges and 39 wooden bridges financed by the project were satisfac- torily built and have had a clearly positive impact on the region. The tracks and trails built or improved by the project are now in poor condition due to lack of regular maintenance. The panchayat buildings have been used for purposes other than those for which they had been intended. Most are of poor quality (PCR, paras. 3.35 through 3.40). In the village of Sikare Besi, of Rasuwa, the audit mission observed that road construction undertaken by the army after project completion has provoked land slides which have totally destroyed the health post built by the project and were expected to entail the destruction of two more project buildings.6/ 23. More than 500 people have been trained in various cottage industries, most of them being weavers. Credit was also provided for the purchase of hand looms and materials. Over half of the trainees are not 6/ The government has constructed an earth paved road from Trishuli to Daunche (the main town of Rasuwa, located at some 2,500 m of altitude) after the project was completed and notwithstanding the fears expressed by IDA about its maintenance. The army is now extending this road even further north, along very unstable hill slopes. - 9 - pracLicing their trade because of poor selection of the trainees, difficul- ties in raw material supply and, ia the case of weavers, end products which do not meet present fashion. Over 50% of hand loom credits have not been repaid. Construction of a paper factory (a component added later to the project) was started in 1977 and completed in 1983. The factory has not started producing, as the supply of raw material needa to be organized across four districts (PCR, paras. 3.41 through 3.44). An integrated duck, pig and fish farm was also added to the project and is showing promising results (PCR, para. 3.47). 24. Out of the 15 health posts envisaged at appraisal, none were built during the first five years, and there are now only turee posts completed and thre. under construction. They have had no impact on health services in the area, as sufficient medicines or competent staff are not available (PCR, para. 3.45). The schools financed by the project have been constructed but have made no significant impact on education, particularly in Rasuwa, which does not attract qualified teachers (PCR, para. 3.46). 25. The project has financed several studies and surveys. They were either poorly done (households surveys, milk surveys, project evaluation) or, when correctly implemented (cottage industry markets), not seriously considered by governmer.t. The cadastral survey has put the agricultural area at a higher figure (50,000 ha) than earlier estimates (PCR, paras. 3.48 through 3.50). More recent surveys conducted by Canadian assistance through remote sensing, provide lower estimates than the cadastral survey. B. Project Impact Short Term Impact 26. The Nepal Rural Development Project was prepared and implemented during a period when the Bank was convinced that poverty-oriented development would be acceptable to its member governments only if it provided rapid and measurable improvements in welfare, and that such quick improvements could be achieved through capital transfers with emphasis on infrastructure building, usually, as in the case of the Nepal project, with inadequate attention to the human factor of institutional and farmer development. Viewed from that angle, there is little substantiated evidence that the project has had significant immediate impact on its area or intended beneficiaries. Most of the infrastructure it has financed outside irrigated areas -- with the notable exception of foot bridges - has served little useful purpose or is rapidly deteriorating. Little institutional development can be observed, as maintenance capability has not been generated, extension agents have been poorly trained and are not operating in the area, and the teachers or health agents necessary to utilize the social infrastructure have not been available. 27. Farmers in general have not adopted the proposed erosion control measures because of the enormous pressure on land to produce food (PCR, para. 3.29) or understood the need to maintain the infrastructure made - 10 - available to them. On the contrary, the project may have made the farmers less self-dependant on such matters (PCR, para. 5.16). As a result, the expected positive environmental (erosion control, forestry development) results have not materialized. Farmer development has been only slightly more successful in terms of adoption of new technology. Improved potato and wi-eat seeds were quite successfully introduced in the early years of the project, but their supply was interrupted following the political changes in 1979. Less than 25% of farmers growing maize have used improved seeds. The proportion is even lower in the other, more widespread, crops such as paddy and wheat, or nil in the case of millet for which no local variety of improved seeds was available. Only 40% of paddy growers in the more de-eloped district of Nuwakot have used fertilizers, and then only 35% of the dose considered at appraisal (PCR, paras. 5.3 through 5.5). Considering that modern inputs were practically unknown in the project area when the project was initiated, these results, although below expectations, have, overall, favorably modified the cultural context of the area. They demonstrate that farmers are open to new ideas though the process of change is slower than the Bank originally assumed and very sensitive to political influences. 28. Data produced by various agencies concerning planted area and production increases suffer from large discrepancies and contradictions (partly due to climatic variations from one year to another) which forbid any meaningful impact evaluation (PCR, para. 5.6 through 5.12). It can only be assumed that existing irrigation areas have benefited from the increased availability of fertilizers and improved seeds (PCR, para. 5.13). The two medium-scale gravity irrigation schemes in the major river beds around Trishuli appear to be successfully operating notwithstanding channel maintenance problems, which prevent the regular irrigation of the total command area. The Batar Scheme, whose inclusion had been long debated at the time of appraisal, was not operating at the time of the audit mission due to lack of repairs of the pumping equipment. Informations obtained from a local eommercial bank indicate that agricultural activities in the Nuwakot district have decreased since the project was closed. Long Term Impact 29. There is no basis for carrying out a cost-benefit analysis of the project at a selc-contained operation, i.e., independant of any future complement to it (see PCR, paras. 6.2 and 6.4). Such an attempt would be hampered by the lack of reliable data and would show the project not to have been successful in terms of standard Bank criteria (ERR above 10%). The long term usefulness of the project has to be considered within the modified vision that the Bank is gradually developing concerning rural development, i.e., within the frame of a much longer period of intervention, possibly of the order of 15 to 20 years, with a sequence of operations in which institu- - 11 - tional and human development, supported by smaller scale infrastructure support, precede full-fledged investments in a given area.7/ 30. In a country like Nepal, which had only recently opened itself to the outside world, and particularly in the physically and politically difficult hill areas of the country, the Rural Development Project was necessarily of a pioneering nature. It can therefore be considered as a learning experience, which could not have been completed within a five-year period even though this was the Bank's opinion at the time of appraisal. The PCR points to the fact that the project has made the government and the international community aware of the severe problems faced by hill farmers and has set a precedent which has led to a proliferation of rural development projects by other donors (beyond the capacity of the Bank to control or of the country to handle) (PCR, para. 5.1). The PCR also states (same para.) that the project has created some fundamental institutional, technological and attitudinal conditions (such as increased government presence and farmer awareness) that provide a suitable framework for further gains in agriculture. Even though the first project has not achieved its ambitious objectives, it has shown that agricultural yields can be improved in the hills of Nepal with the proper technical and political support. It is obviously on these assumptions and observations and on the need to do more in the Nuwakot-Rasuwa area to ensure the sustainability of any results already achieved that the appraisal of the proposed follow-up project was based.8/ Optimism in the proposed project is also based on a recent fundamental change in institutional arrangements resulting from the Decentralization Act of 1982 and the Decentralization rules of 1984, which give the District Panchayats considerable planning and implementation autonomy (see green cover SAR, para. 2.16). Bank experience in other countries shows that rural development projects usually benefit from decentralized administration.9/ In the case of the Nepal hills, however, success would depend on the still doubtful capacity of the panchayat administrations to handle substantial investments and on whether a tendency to recentralize administration in Kathmandu would not develop again as it did in 1979. 31. Beside the question as to whether the attitude changes mentioned in the preceding patzgraph were substantial enough to warrant further optimism, a number of key issu,-q remain, from which the first project's lessons can be drawn. Wasn't the cost of learning too high, and were Bank priorities properly established (although, compared to some other Bank-financed rural 7/ See "Haiti - Rural Development Project in the Northern Department" (Credit 675-HA), PPAR No. 5775, for a discussion on the same subject. 8/ Nepal - Rasuwa-Nuwakot Rural Development Project - Phase II, Green Cover Appraisal Report dated December 27, 1985. 9/ "Institutional Set Up for Integrated Rural Development in Sri Lanka," Project Profile No. 3, Rural Development Review, OED Report under preparation. - 12 - development projects, particularly in Latin America, the cost of the Nepal project can be considered modest)? Did the Bank give proper weight to avail- able advice at the time of appraisal? Is it possible to go ahead with further rural development projects in Nepal without effective coordination with other international donors? These issues are discussed in the following section. III. OUTSTANDING ISSUES Was the Project Design Acceptable? 32. The Nepal project suffered from some key design errors which are also found in many other rural development projects financed by the Bank, as highlighted in recent annual reviews and the Rural Development Review under preparation by OED: (a) too large an investment compared to the limitations of the region, requiring a 40 times increase in the two districts' normal development budget (PCR, para. 8.4); (b) too many components not concentrat- ing on key priority needs (PCR, para. 8.1); (c) emphasis on the construction of facilities without enough consideration of how they would be staffed, maintained or utilized; (d) a top to bottom organization which neglected social and political constraints and did not sufficiently mobilize or develop human resources or encourage popular participation; (e) reliance on eleven different agencies, which had very little experience in implementing time- bound and target-oriented projects; and (f) too short a period (five years) within which to achieve the proposed developments. 33. The haste with which the project was prepared and appraised and the implicit haste in achieving measurable economic results is to blame for many of the design errors. In an area where reaching a single village requires days of walk, hasty preparation and appraisal led to (a) relying on essen- tially unreliable administrative sources of information rather than on solid field information (see PCR, para. 8.1); (b) doing away with a formal baseline survey which could have provided information on the conditions and aspira- tions of the people in the project area and generated some early popular involvement in project planning and implementation; and (c) proceeding with appraisal even though the government had failed to collect some basic data, the group established for that purpose had ceased to function and the preparation team had not been able to present its findings to government or clarify the latter's position on some key issues (PCR, para. 8.2). 34. The haste to achieve measurable economic results has entailed the project's emphasis on making facilities available before the means to properly operate them were developed. The SAR optimistically expected 85% of area farmers to benefit from proposed agricultural infrastructure, services and inputs, achieve substantial production increases by the seventh year and increase their income by half. Yet, little was known about local farmers, the area cropped or appropriate technologies. The capacity of institutions to perform was not questioned, and the time necessary for their strengthen- ing, achieving farmer involvement, testing the proposed technologies and - 13 - completing project preparation was not provided. Even so, it is hard to understand why the construction of health posts was financed, when the little available evidence indicated that the means to staff and supply them were not originally available, nor were they provided by the project. Worse, why was school construction, originally excluded from the project for very good reasons, reintroduced among project components after the project had been started? Was the Bank Properly Advised? 35. Since it is relatively easy to identify the errors and weaknesses of a project after the project has been completed, it is fair to ask whether the Bank had the means (or gave itself the means) to avoid such errors at the time the project was approved. The haste in preparing and approving the project is an indication of considerable pressure to lend, pressure which could not be submitted to the test of past experience, since the Bank at that time had little experience in integrated rural development activities. However, although such concrete and direct experience was lacking, the Bank had indications from at least two different sources that less haste could lead to a better project design. The first source was a Bank summer intern, who had previously worked as a volunteer in Nepal in the construction of suspension foot-bridges r-id was asked to comment on the project identifica- tion report. The intern's report,10/ dated October 17, 1974, called atten- tion to the lack of consideration of social, religious and political factors; to the fact that other than the training of agricultural assistants, the project would "be implemented in ways which will minimize the indirect and non-formal development of human resources;" that "investment in social infrastructure is by no means 'essential' just because it appears to be lacking in the area" so long as "trained personnel to staff and operate the schools and health posts might well not be in sufficient supply;" that the tendency of the project was to "pose solutions in terms of the responsibili- ties and activities of institutions whose administrative structures and budgets can presumably be adjusted to achieve the desired results;" and that governmint institutions "cannot and should not be relied upon as reliable sourcea of information about the rural economy nor of proposals for dealing with rural poverty." The report also depicted the limited impact of land reform; the need for more research into production incentives for tenant farmers; the disorganization, incompetence and misappropriations which had characterized rural savings schemes between 1964 and 1969 and the poor performance of cooperatives in terms of internal cooperation and credit repayment; the overabundance of rural school buildings but lack of appro- priate curricula; and the need to concentrate on preventive health campa.gns rather than extending poorly equipped and staffed facilities. The only substantial point in the report which was heeded by the Bank was a reminder that "roads extending onward and upward from Trisuli will be anything but a 10/ Internal Memorandum, "Evaluation of the Draft Report of the Nepal Trisuli Wateshed Rural Development Project Identification Mission," in project files. - 14 - further drain on the Road Department's maintenance budget." The report concluded that a new proposal should be developed, "more modest in size and in scope, (it) should assume the nature of a pilot project designed as much to research rural development methods as to ach'ieve economic returns (and) rely much more on local initiative and local leadership and in&titutions." There would be little to add today to these observations and recommenda- tions. The second recommendation for less haste came soon after, in November 1974, from the FAO/CP team returning from their difficult preparation mission (PPAM, para. 4), who called the Bank's attention on the fact that the govern- ment had not participated in project preparation, not been informed of the mission's findings and not yet had an opportunity to define their position with respect to key project issues. Has the Bank Benefited from the Lessons of the Project? 36. The second rural development project in Nepal (Mahakali Hills, see PPAM, para. 4) was prepared and appraised in 1978-79 at a time when the emerging down trend in the implementation of the first project could not yet be fully perceived by the Bank. The project design did not therefore benefit from the first project's experience. It had, again, a large number of components involving some 18 implementing agencies, which would have to operate in very remote areas with poor accessibility. 37. The draft SAR for the second phase project in Rasuwa-Nuwakot, which is presently in the process of negotiation, makes clear reference to the results achieved by the first project and draws useful conclusions as to the need to have simpler projects, with coordination requirements kept to a minimum and provided by qualified staff; with project components an integral part of the work program of the line ministries; but also with the participation of local level institutions in the construction, operation and maintenance of infrastructure. 38. Components wtich were relatively better implemented in the first project were given priority under the follow-up project, with a focus on directly productive components and or promoting farmer participation in maintenance of infrastructure (green cover SAR, para. 4.01). The project would be implemented over an eight year period.11/ The SAR claims the project to have only four major components (para. 2.26). However, a closer look (paras. 4.03 through 4.38) shows each major component to consist of a number of distinct sub-components, the total number of which is around 24. The major improvement consists in the deletion of the health, education and cottage industry activities. On the other hand, the construction or improvement of some 46 km of motorable tracks is envisaged. The project would finance the salaries of extension agents with the hope of thus reducing turnover. Cooperatives would no longer be the preferred channel for 11/ Even so, the follow-up project is analyzed in its SAR as a self-sufficient operation rather than as a component of a longer term development program such as described in para. 29 of this PPAM. - 15 - agricultural credit. Livestock and forestry development would be more aggressively pursued, with increased local involvement planned for in forestry. Many components would aim at rehabilitating works undertaken under the first project. 39. Notwithstanding the strong opposition voiced by one key government official to the role of expatriate technical assistance in project implementation, most others officials and local farmers appear to have appreciated their input to the management of the first project. The follow-up -roject provides for eight man-years of senior staff and consultants and 38 man-years of volunteer field workers. The major fields of senior involvement would be in planning and monitoring and in irrigation and other civil works. 40. In view of the difficulties in obtaining audit reports covering the activities of the first project, the submission of these reports has been made a condition of completion of negotiations of the second phase project. Audit reports prepared at such a late date will necessarily be less meaningful than if they had been prepared and submitted in a timely manner. However, looking to the future, the second phase project is seeking assurances of sound and improved accounting procedures and timely submission of independent audit reports. On this and other project conditions, the Bank will have to considerably improve its record of keeping government to its commitments. 41. The new project's organization is based on substantially different political premises than the first project, under the government's declared intention to decentralize developmental activities to the district level. The implications of this change are difficult to judge. How long these new rules would remain in force is also difficult to predict. Finally, farmer involvement in conservation and maintenance operations, which has been poor in the past, remains to be effectively promoted. There is no indication that sociological expertise has been sought for this purpose during project pre- paration or is being sought for its early phases of implementation. Can Rural Development Efforts Succeed in the Absence of Coordination Among Donors? 42. Many of the weaknesses observed in the implementation of the first project resulted from the limited institutional resources of Nepal; the need to disperse them among what is, at least institutionally, an excessive number of development activities; and an absence of clear rural development poli- cies. In Nepal, more than in many other countries, a very large number of foreign donors are active without the desirable level of coordination of their policies and activities, and government has not particularly encouraged such coordination. The absence of effective coordination with other donors hampers the establishment of sound economic and financial policies; increases the costs of training, overall planning and coordination; and deprives each donor, restricted to given sectors and areas, and also government, obliged to accommodate the requirements of each donor, from a global perspective of the - 16 - development process. All of this does not imply the assured failure of future projects but certainly establishes hurdles on their road to success. Fiw legislation on the administration of development projects is expected to ensure an institutional homogeneity which was lacking in the past among various projects. 43. Specific lessons drawn from the project by the regional staff 12/ can be summarized as follows: (a) Including a large number of components in rural development projects overloads institutional capacity and detracts from key manageable issues; (b) rural development problems, such as those of Nepal, are too complex to be meaningfully approached through short-term interventions aiming for immediate economic results; (c) institution building cannot rely exclusively on infrastructure, and the development of human resources should not be neglected; (d) proposed production increases do not substantially materialize when they are not based on tested technical proposals; (e) the direct involvement of political bodies in project management reduces the commitment of professional staff; (f) frequent staff rotations detected by supervision missions provide signals of decreasing commitment; and (g) to be effective, monitoring units should be properly staffed and financed and integrated into management structures. 12/ These points were discussed in the summary of the PCR, which, in line with existing procedures, is not reproduced in the PPAR. -17 - NEPAL RURAL DEVELOPMENT PROJECT (CREDIT 617-NEP) PROJECT COMPLETION REPORT !-"EMER 22, 1935 GENERAL AGRICULTURE DIVISION II SouTH ASIA PROJECTS DEPARTMENT - ,e- t4o.s eg - 19 - NEPAL RURAL DEVELOPMENT PROJECT (Credit 617-NEP) PROJECT COMPLETION AEPORT I. Introduction 1.1 The economy of Nepal is almost completely dependent on traditional agriculture, in which some 93% of the labor force is engaged. Most agricultural production is at a subsistence level and has not kept pace with the rapid population growth of the past two decades. The country is geographically divided into "Hills and Mountains", comprising the rugged flanks and foothills of the steeply dissected Himalayan range, and the "Terai", a narrow strip of deep, fertile, alluvial soils. The Nepalese people developed a national concentration in the rugged hills, ohich were, originally,'almost completly forested. Although drainage, irrigation, road development and agricultural advances have recently opened the rescurces of the Terai for downhill migration, some 8.5 million out of a national population of 15 million (i.e., 56%) still live in the mountains and hills. 1.2 The traditional methods of farming are continuous and exhaustive cropping of limited areas of terraced hillside. The excessively rugged terrain and the sparse road network impose a logistic isolation from chemical fertilizer inputs and hence productivity in the hills is precariously maintained from the inadequate supply of livestock manure and to some extent the supply of mineral nutrients from the forest lands. However, a combination of tree-felling for fuelvood and elimination of regeneration and seedling growth by intensive grazing has lead to the destruction of almost 3/4 of the original vegetative cover and most of the remainder is in a terminal stage of advanced degradation. This severe ecological imbalance has been reached throughout the greater part of the "middle mountains," the physiographic division which includes 30% of Nepal's land area and some 5 million people, most of whom are without any access to roads, organized markets, potable water and other basic amenities of life. 1.3 The IDA financed First Rural Development Project (RDI), Credit 617-NEP, covering the two hill districts of Rasuwa and Nuwakot in the Bagmati zone, was the first major project for promoting agriculture and developing essential socio-economic infrastructure outside the better endowed Terai and Kathmandu valley. This project aimed at assisting the development of the two hill districts of Rasuwa and Nuwakot by improving infrastructure and social services (improving communications facilities, village health services, cottage industries and drinking water facilities); protecting the hills; and increasing agricultural and live- stock production of about 29,000 families. RDI contained provision for the preparation of a follow-up project and thus a second IDA assisted Rural Development Project (RDII), Credit 939-NEP became effective in January 1980, covering three districts in the Mahakali Hills. - 20 - II. Identification, Preparation and Appraisal A. Project Origin 2.1 The project idea originated from a study carried out under a UNDP. AO project in the Trishuli watershed area. The study, which started in 1966, aimed at establishing the most suitible approach to the protec- tion and development of the hill areas. In June 1973, a discussion paper prepared by the FAO Country Representative/Senior Agricultural Adviser in consultation with HMC staff, indicated investment possibilities in a rural development project in the Trishuli watershed. This proposal was accepted by HM% which requested FAO/CP to carry out a project identification exer- cise. B. Project Identification 2.2 A CP mission visited Nepal in March/April 1974 and identified a rural development project covering almost the whole district of Nuwakot and parts of Dhading and Rasuwa districts. This mission prepared an identification report entitled "Trishuli Watershed Rural Development Project" in July 1974. The project's short-term aims were to improve productivity and incomes of farmers by providing a combination of techni- cal assistance, farm inputs, credit and irrigation water, while the long-term aim was to reduce the loss of cultivable land through erosion control. 2.3 The report presented detailed proposals for Nuwakot and Dhading districts as considerable background material was available for these two. However, proposals for Rasuwa were tentative because of lack of adequate data. In the Nuwakot and Dhading districts, project proposals included irrigation development of about 1,600 ha of land; erosion control by constructing check dams and reafforestation; river control by installing groynes; agricultural and livestock development by improving services and supply of inputs; road const-uction; village drinking water supply; con- struction of schools and health posts; and establishment of a unit for project implementation. Developm2nt proposals for Rasuwa district included construction of a cheese factory; measures to improve range management; improvement of tracks; and provision of drinking water supply, schools and health facilities. 2.4 The proposed project was to be implemented by a unit to be estab- lished under the Ministry of Food and Agriculture until the district offices were strengthened and adequately staffed. Total project costs were estimated at US$8.25 million including US$0.64 million for Rasuwa district. - 21 - C. Project Preparation 2.5 A second CP mission visited Nepal in October 1974 to assist in the final preparation of the project, together with a local working group which was established for this purpose at project identification. The working group had collected some of the data required but had ceased to function at the time the preparation mission visited the country. The CP continued its work, therefore, without the assistance of the group, and, following field visits to the project area, presented the Government with a position paper indicating modifications to the identification report and outlining issues that required clarification. 2.6 The major modifications proposed were: (i) extension of torrent control work to a few more valleys in Nuwakot, with additional feeder roads; (ii) construction of bridges; (iii) inclusion of training for extension staff and for panchayat personnel in the management of fodder and fuelwood plantations; (iv) distribution of improved buffalo and cattle bulls linked with improved veterinary services; (v) forage production and marketing facilities; and (vi) inclusion of a horticulture component. The preparation mission also raised issues for HMG clarification on the type of project management required since the Ministry of Agriculture held the view that the project implementation unit should be established under the Development Board Act; financing of social infrastructure, particularly construction of village drinking water supply and health posts; replicability of the project in other hill areas, considering the possible low economic rate of return and substartial operating costs to the project; and on the level of investment required for Rasuwa where invest- ment possibilities in agriculture are limited. 2.7 As the above modifications and issues were discussed, the Ministry of Agriculture suggested the inclusion of other areas adjacent to the Trishuli watershed, a proposal which was not accepted. The preparation mission, however, was not able to meet with the Planning Commission and other concerned ministries to obtain the general reaction of HMG to its proposals. Under these circumstances, it proposed postponing Bank appraisal scheduled for January 1975 to allow adequate time for Government to study the proposals, and CP suggested that two of its members visit Nepal to review final preparation proposals with Government. However, on account of a wish to meet HMG expectations of a quick appraisal of the project, it was decided to maintain the original schedule. It was also decided at that stage to present technical annexes only as an output of the preparation mission. Accordingly, the mission prepared 12 annexes, including four background annexes, and proposed a project to be imple- mented over six years in Nuwakot and Rasuwa districts. 2.8 Project proposals included irrigation development of about 1,700 ha of land; food crop development on this irrigated land, on 1,400 ha of traditionally irrigated area and on 7,300 ha of rainfed land through the - 22 - provision of improved seeds, fertilizer, pesticides, credit and extension service; livestock development through the provision of selected bulls, veterinary services and development of fodder and grass; soil erosion and river control; construction of about 64 km of road and improvement of 93 km of trails; the provision of technical assistance, staff training and studies; establishment of 12 cooperatives and construction of 1,250 tons of capacity storage; establishment of eight health posts and installation of 300 village drinking water facilities. The preparation mission did not make any proposal for the project organization and management (para 2.6). Total project costs were estimated at about US$12.2 million with a foreign exchange component of about 50%. Economic rates of return calculated for the project were estimated at 19% for the irrigation component and 8% for the project as a whole. D. Project Appraisal and Credit E fectiveness 2.9 The project was appraised by IDA in January/February 1975. After a subsequent short visit to Nepal in September 1975 by an IDA mission, an appraisal report (959a-NEP) dated February 2, 1976 was finalized. Project components included: -- Development of intensive agricultural extension through staff and farmer training, establishment of eight agricultural sub- centers, support for production of radio programs and distribution of 500 radios to farmers, and introduction of improved crop varieties; -- improvement of three agricultural research stations through the provision of equipment, materials and construction of buildings including a regional training center; -- irrigation development of about 600 ha gravity flow irrigation, improvement of about 600 ha of hill terrace irrigation and development of 110 ha pilot low lift pump, 240 ha of high lift irrigation and establishment of a district irrigation office; livestock development through improved animal health service, construction of a small cheese/butter plant and a livestock market, an exchange program for improved sires, and improved fodder resources by planting 2,500 ha of fodder trees, regeneration of 1,000 ha of fodder trees and protection of 5,000 ha of forest by fencing; -- improvement in availability of inputs through the provision of 16 warehouses, credit and establiuhment of 25 cooperatives; - 23 - - soil erosion control through check-dam and embankment construction in gullies and stream beds, planting trees on endangered slopes and establishing a divisional office for soil and water conservation; -- upgrading of 175 km of existing trails and construction of about 50 km of dry-weather tracks and 12 small suspension footbridges; -- improvement of health services by establishing 15 health posts, about 100 village drinking water supplies and provision of medicine and other supplies; -- improvement of cottage industry by strengthening district staff of the Cottage and Village Industries Department, providing credit for purchase of improved equipment for paper making and for purchase of 300 hand looms and materials, establishment of district shops and by establishing facilitiei at each sub-center for weaving and training farmers; - assistance to village and district panchayat by providing and equipping small offices at village and sub-center level and an administrative block at each district headquarters; and -- provision of technical assitance of 72 manmonths to be financed by UNDP and 30 manmonths by IDA. 2.10 In general, the project concept and development components included in the appraisal report were in line with those of the preparation mission. However, several important changes were introduced at appraisal, the main ones being the inclusion of the support to the cottage industry, construction of suspension footbridges, assistance to village and district panchayats, suppport to radio programs in extension and distribution of radios; and exclusion of the river control component. In addition, the number of cooperatives to be established and the length of trails to be improved were increased while the number of village drinking water supplies were reduced from 300 to 100. The project implementation period was also shortened by the appraisal mission from six to five years. 2.11 Implementation of specific project components was assigned at central Government level to che participating ministries and agencies involved. These were the Ministries of Food, Agriculture and Irrigation (agricultural extension, research, training, irrigation and livestock); Forests (reafforestation, regeneration and erosion control); Panchayat (project implementation, village water supplies, trails, small footbridges, fuel and fodder plantations); Health (health posts); Works and Transport (tracks, large suspension bridges); Land Reform (cooperatives); Industry (cottage industries) and three other agencies, i.e., the Agricultural Development Bank of Nepal, ADBN (farm credit), the Dairy Development - 24 - Corporation, DDC (butter and cheese plant) and the Agricultural Input Corporation, AIC (farm inputs). 2.12 Overall responsibility for coordination of project planning and implementation was vested in the Ministry of Panchayat and exercised by a newly established Project Coordinating Committee (PCC). The PCC, whose members were the officers in charge from the ministries and agencies which were to implement project components (para 2.11), was to be chaired by the Secretary of the Ministry of Panchayat. Its responsibilities included the setting of guidelines for project implementation, ensuring proper coordination among participating ministries and agencies and reviewing and monitoring the progress of the project. 2.13 At district level, project components were to be implemented under the newly introduced District Administration Plan (DAP). The DAP provided for the implementation of the project by local staff of participating ministries and agencies in coordination with the village and district panchayats and under the guidance of District Secretariat headed by the Chief District Officer (CDO). The development wing of the Secretariat, which was headed by a Panchayat Development Officer (PDO), was responsible for planning and implementation of programs by the district offices of the ministries and thus was expected to prepare annual district development plans with the participation of the people. A project coordinator (PC) was to ensure liaison between central ministries and agencies and districts. The responsibility of the PC included advising and assisting the District Secretariats; coordination with various ministries in developing detailed plans and implementation schedules within the framework of the project proposals; ensuring the timely presentation of the plans to PCC; monitoring the provision and use of project funds; and ensuring that procedures required by IDA for withdrawal of funds were complied with. The two CDOs and the PC were also members of the PCC, and the latter was the secretary of the PCC. 2.14 In spite of increase in the number of components at appraisal (para 2.10), project costs including contingencies dropped to about US$10.9 million mainly due to the October 1975 devaluation of the NRs from 10.56 to 12.50 to US$1.00. The foreign exchange component was estimated at 45% of total project costs. The credit, which was signed April 29, 1976, was for US$8 million and became effective July 15, 1976. III. Implementation A. Project Commencement 3.1 The project started on time. Some activities, such as the appointment of the PC, the establishment of the PCC and the basic project planning were actually carried out prior to credit effectiveness. As soon as the project became effective, the office of the PC was fully staffed and all - 25 - participating government departments were acquainted with the program. District development plans were also prepared. Funds were made available to the implementing departments and key staff appointed. Activities for undertaking the studies and survey and appointment of staff to the technical assistance posts were initiated. By the time the first IDA Supervision Mission visited Nepal in September 1976 (2 months after credit effectiveness) tendeis for procurement of equipment by ICB were under preparation, a format for the quarterly report had been finalized and the first application for reimbursement prepared. B. Changes in Project Design 3.2 There was no formal mid-term review of the project. However, during the course of project implementation some small components were added at the request of HMG. These included assistance to a pilot scheme for integrated pig/duck/fish development through the provision of equipment and buildings, support for two existing small scale cheese/butter factories, establishment of a further two factories and improvement of existing schools. 3.3 The main change, and which had far-reaching effects on project implementation, however, concerned project organization and management. In late 1979, the Ministry of Home Panchayat introduced the Integrated Development Panchayat Design (IDPD) to replace DAP. Contrary to the DAP provisions, the IDPD provided for the transfer of all project funds to the District Panchayats and for the staff of the line agencies to be responsible to the CDO and District Panchayats. In addition, it replaced the PCC by four committees. This arrangement was not to the satisfaction of the line ministries and project implementation started to suffer due to lack of active cooperation from the line ministries. 3.4 In mid-1980, HMG established a new Ministry of Panchayat and Local Development (MPLD) to be responsible for all integrated rural development projects. Responsibility for RDI was therefore transferred from the Ministry of Home Panchayat to MPLD. With the establishment of the new ministry, line ministries were again given the responsibility to budget, supervise and implement their respective components. However, a new administrative set-up for rural development was also introduced. This entailed the creation of four committees for the coordination of the project: Ministeridl committee, chaired by the Prime Minister; Secretaries Committee, chaired by the Minister MPLD; Heads of Departments Committee, chaired by the Secretary MPLD; and Zonal Committee, chaired by the Zonal Commissioner. Coordination at the district level was transferred to the District Council, chaired by the Chairman of District Panchayat. Under these arrangements, the CDO, who was responsible for all development activities in the district,' became responsible only for law and order. A new post of Local Development Officer (LDO) was created in each district under the MPLD to coordinate all - 26 - development activities in a district and act as Secretary to the District Panchayat. 3.5 As a result of the new arrangement, the PCC ceased to exist. The PC became a member and Vice Chairman of the Zonal Committee, which was more of a political committee than a technical one, although it has to approve the annual district plans after they have been scrutinized by the District Councils. The multiplicity of the coordinating committees has seriously affected project management: the absence of technical representation on the committees and the reduction in the authority of the PC resulted in decisions being taken in ignorance of field problems as well as in lack of follow-up actions, particularly on problem components. HMG introduced yet another change towards the end of 1983 whereby it abolished the four committees and established the Integrated Rural Development Board, whose members are secretaries of the ministries involved in project implementation. The Board, which is not yet fully operational, would have regulatory powers, and would meet every three months. It would have a secretariat headed by a coordinating additional secretary from the MPLD. C. Overall Implementation Experience 3.6 As mentioned in para 3.1, the project commenced on time and some preparatory works were started before credit effectiveness. During the first year, some project activities were slightly held back, because of the shortage of intermediate staff such as work supervisors and instructors of project staff, as well as delays in land acquisition and preparation of detailed plans. However, with the exception of the health and livestock components which were characterized by poor performance throughout the implementation period, overall implementation progressed satisfactorily up to 1979 although disbursement lagged behind (about 35% of appraisal estimated in 1979). 3.7 The project was making progress because it succeeded in motivating district staff in development activities. The DAP, under whose framework the project was being implemented, enabled line ministries to work through their own district officers who were responsible for the execution and supervision of their respective components according to the directives given by their departments. Within the PCC, the heads of the line departments were fully informed about the field situation by the PC and the CDOs and made sure that matters agreed within the PCC were followed up in the field. In addition, the CDOs ensured that the district officers were implementing the program in accordance with district development plans, which were approved by the district panchayats and line ministries at monthly meetings with all the district officers. The poor performance of the health and livestock components was due to the lack of close follow-up by these line ministries. - 27 - 3.8 Following the introduction of the new administrative set-up in 1979, implementation performance deteriorated, as officials in the line ministries resented their reduced role under the IDPD. Their initial enthusiasm for the project and the level of their cooperation declined drastically and this attitude was reflected at the district level. Although with the establishment of the MPLD more responsibility was given back to the line ministries (para 3.4), this did not succeed in re-establishing the pre-1979 level of enthusiasm and performance, because of the diffusion of project coordination into four committees and the change of district level implementation away from the DAP framework. 3.9 From late 1979 onwards, therefore, the project took a turn for the worse due to improper planning, poor supervision and management, delays in the release of funds, frequent transfer of staff and decline in panchayst participation. Systematic recording of project performance was neglected and often the information kept by the line departments, the PC office and the district offices did not match. The coordinating ministry, MPLD, failed to carry out effective coordination. Project progress therefore slowed and reimbursement claims were being submitted late. The political climate which prevailed in 1979, the national referendum and the change of the *constitution which followed in 1980 and the general election in 1981 also adversely affected the progress of the project by diverting the attention of district authorities and staff away from development activities. 3.10 As the years passed, it was clear that the project could not be completed on schedule and it was found necessary to extend the completion until December 31, 1983. The extension enabled most of the implementing agencies to complete their programs. However, the bulk of the health component and part of the local development components remained incomplete even.after the credit closing date. While the organisational and administrative inadequacies and the uncertainties in the overall political environment were admittedly the primary reasons for unsatisfactory project implementation, IDA perhaps also has to share part of the responsibilities for having helped design and recommended a project which in retrospect proved to be too demanding and complex to be effectively supervised and implemented. D. Project Progress Agricultural Development 3.11 The project made a commendable effort for establishing an agricultural support services infrastructure in an area which had no tradition or history of an organized delivery system for such services. The project focussed essentially on increasing cereal production by improving agricultural research and the supply of inputs, irrigation water, credit and extension service. To a lesser extent, it also aimed at developing horticultural production by producing and distributing fruit plants and vegetable seeds. - 28 - Most of these activities were concentrated in the densely populated and more accessible district of Nuwakot. 3.12 Crop production. The main crops in the project area are paddy, maize, millet, wheat and potato, and the project directed its efforts towards these crops. Data on yields, production and area have not been systematically recorded by the project and thus available sources provide contradictory estimates (Annex 7, Tables 1 and 2). However, according to an Evaluation Study carried out by the project in 1982, production of the main five crops in 1976 and in 1981 were: Production of Major Crops (1976 and 1981) 1976 1981 % Increase --------Tons------- Paddy 17,300 23,190 34 Maize 12,450 14,320 15 Millet 10,760 12,260 14 Wheat 4,150 4,850 17 Potato 640 1,060 66 3.13 The above increases, although lower than appraisal estimates (Annex 7, Table 2) are attributable to the project's increased development activities, i.e., better supply of improved seeds, fertilizer and the intensification of extension service. It must be recognized, however, that in the absence of data for several consecutive years, no firm conclu- sions can be drawn from the above figures. The project also distributed about 116,500 fruit plants, mainly apples. The area under fruits is not known because of lack of survival data but is believed to be low. 3.14 Extension. The project established 12 service centers, of which 3 are on rented premises. Of these, 9 are in Nuwakot and 3 in Rasuwa dis- tricts. Under the overall supervision of the District Agricultural Development Officer (DADO), extension is the responsibility of an Assis- tant Agricultural Development Officer in each district. A Service Center covevs between 6 and 9 village panchayats and is headed by a Junior Tech- nician (T) assisted by two Junior Technical Assistants (JTA). The latter supervise the Agricultural Assistants (AA) who are located in each panchayL. village. Training of extension staff in the district is the responsibility of an Assistant Training Officer who is assisted by one JT and two JTAs. There are no Subject Matter Specialists within the exten- sion system although specialized services are available occassionally from research stations. 3.15 In spite of the aforementioned structure, the extension system did not develop a well established and disciplined program. Most of. the - 29 - service centers, in the absence of proper staffing and operating costs, failed to develop to be the nuclei of agricultural support services for the respective panchayats. There were no low cost proven extension mes- sages for farmers. The focus was to promote improved seeds and fertilizer use which were limited to accessible areas, principally those with irriga- tion facilities. Irnact on remote and rainfed areas was limited because the extension had little applicable technical advice to offer. The emphasis on theoretical training, the lack of experienced trainers and of an effective program as well as shortages of staff (average extension worker farming families' ratio 1:2000), their frequent transfer and the lack of supervision and technical backstopping of the field staff made the extension efforts even less effective. Additionally, it was not possible for the Agricultural Inputs Corporation (AIC) to ensure the provision of good quality seeds and fertilizers of the proper types in the required quantities in a timely fashion. (also see para. 3.33). 3.16 Research and training. The project supported three research stations at Kakani, TrishuLi and )hunche through the provision of equip- ment, buildings, farm improvements and technical support staff. Because of the project, these stations have stepped up the production, although in modest quantities, of cereal seeds in Kakani and fruit plants and vegetable seeds in the other two. Apart from the production of seeds and seedlings, however, they did not carry out any meaningful research on hill farming because of lack of qualified staff and of a clear program. As a result, the extension service did not have readily available technical packages to be disseminated to farmers. 3.17 The project constructed a regional training center at Trishuli which has been operational since 1977. In addition, two farmer training centers have been established by the project. About 1,400 people have been trained so far at the training centers, of which half were leader farmers and the other half extension staff. All the training centers are vastly underutilized and the quality and coverage of the programs leave much to be desired. Training has been useful in that it explained to farmers and agricultural staff the objectives of the project, discussed the main agricultural problems of the area and enhanced the use of improved seeds and fertilizers, both by the leader farmers and extension staff. However, it was not carried out by specialized personnel and tended to be too theoretical and without field orientation. For instance, training on pest control was not prepared or undertaken by an entomologist as there was none in the district agricultural offices. The main reason which reduced the effectiveness of training, however, was the frequency of staff transfer. Although the exact number of trrined staff who left the project is not known, it is widely believed that it would be well over 50%. Irrigation Development - 30 - 3.18 Responsibility for and implementation of medium scale irrigation schemes over 50 ha, was the responsibility of the Department of Irriga- tion. Smaller scale hill irrigation was the responsibility of Local Development of MPLD, implemented by the Panchayats under the supervision of the District Technical Officer (DTO), a post established at the start of the project. The Department of Irrigation prepared designs to develop 370 ha of lift irrigation in Batar, together with gravity irrigation of 100 ha in Cadkhar and 224 ha in Labdu/Dhikure. The Likhu and Simpra pumps, proposed during appraisal, were dropped subsequently during implementation on account of limited capacity of the Department of Irriga- tion as well as of doubtful economic viability. 3.19 The present area irrigible in the above three schemes is 200 ha in Labdu/Dhikure, 70 ha in Cadkhar and 200 ha in Batar. The area irrigated under the Batar scheme reaches 200 ha only if all the three pumps are operating. In reality, because of irregular supply of elec- tricity and frequent damage to -pumps caused by silt, the area irrigated in most years has been lover than 200 ha. Water Users' Associations, as envisaged in the SAR, were formed after considerable delays. However, the effectiveness of these Associations in ensuring proper water distribution, planning and implementing appropriate cropping programs and water rotation plans, maintenance of civil works, etc. are not yet known. HMG also has not paid serious attention to levying and collecting water charges in Batar irrigation area, alchough this was one of the covenants of the DCA. 3.20 Some 51 hill irrigation schemes were planned for construction under the project. Of these 27 were complete and in operation (9 in Rasuwa and 18 in Nuwakot), work on five was discontinued due to political and other problems (Panchayat leaders took 75% of estimates as advance but never completed the works) and another 19 were in various stages of con- struction at the time of project completion. The operational aspects of the completed schemes are not fully known but it is believed that a number of these would require substantial repairs/rehabilitation due to lack of maintenance. The hill irrigation schemes, which were implemented by the village panchayats under the assistance and supervision of the DTO staff, faced several difficulties. Technical assistance in the design of schemes and supervision of work, which were to be provided from the DTO, were not readily available because of lack of staff. As a result, many schemes, particularly those situated in remote areas, were poorly designed and lacked sufficient material for construction. Monitoring of the work carried out by the village panchayats was almost non-existent, leading to inefficiency and mismanagement. In addition, maintenance of completed schemes was not carried out as farmers held the view that this was the responsibility of the Government. All these factors contributed to the unsatisfactory performance of the program. Livestock and Dairy Development - 31 - 3.21 Livestock development. The development of livestock was the responsibility of the Department of Agriculture until December 1979 when this was transferred tco a newly created Livestock Development Department. The field services were not affected by this change as there were live- stock development/veterinary offices alreauy established in the same locations as those of the service centers and a district office had been opened at Trishuti. However, the training center foreseen at appraisal was not established and only 50% of the high and middle level and about 80% of the low level staff were appointed, most of the latter being tem- porary personnel. 3.22 The livestock development component concentrated primarily on providing veterinary services and the distribution of improved sires for upgrading local stock. Shortage of senior and middle technical staff (JT/JTA), inadeqt-ately qualified field staff (stockmen and livestock assistant), inadequate supplies of drugs and materials and insufficient travel budgets for field staff greatly reduced the effectiveness and coverage of the preventative and curative veterinary services. Under the Rinderpest and Haemarrhogic Septicaemea vaccination program 146,000 animals were vaccinated and about 139,000 drenched for internal parasite control. The project also distributed 77 Murrah buffalo bulls, 64 Jersey cross bulls, 111 rams and 74 improved billies (Annex 3). 3.23 While it is impossible to quantify results, it is believed that the vaccination program carried out under the project has helped farmers by reducing loss of their animals. However, the sporadic parasite control program was ineffective, since, with no follow-up treatment, animals became reinfected. In any case, it has become clear that animal health alone cannot lead to lasting development, without solving the serious feed and fodder deficit problem of the area. Likewise, upgrading of local stock by crossing with improved sires can have the desired effect only if the animals are sufficiently fed. However, project proposals for pasture and fodder plant development were implemented without proper planning and technical support, as a result of which they had made little irpact, if any. 3.24 The effects of the stock upgrading program cannot be fully deter- mined because technical supervision, monitoring and fol1ow-up of the activities were unsatisfactory. On the whole, neither the sires nor the offspring appear to have received adequate veterinary care and nutrition, thus resulting in high mortality as well as loss of genetic potential in the offspring. It is estimated that nearly 50% of the Jersey bulls and some 30% of the rams and improved billies that were distributed had died. However, the Murrah bulls appear to have had met with greater success and they were also in good demand from the people. 3.25 Dairy development. The appraisal proposed to establish a cheese and butter factory at Trisuli which would collect about 1,000 liters of - 32 - milk daily. During the second year of project imlementation, however, this component was expanded to include support of two existing small cheese factories at Langtang and Gosaikunda in Rasuwa district and another at Satdobate in Nuwakot. The two existing cheese factories were improved and are operating successfully. The two new small factories were com- pleted in 1981. However, while the Gatlang factory is operating success- fully, the Satdobate factory closed soon after it started operating because of lack of sufficient milk supply, and has not resumed operations since. However, it is believed that the Satdobate fActory could be 4 viable operation provided an efficient collection system and appropriate prices for raw milk was ensured. 3.26 The cheese factory in Trisuli faced serious difficulties, ini- tially with the construction of the building and later because of lack of adequate milk supply. Construction of the plant was found to be unsatis- factory and not to specification only when it was almost completed. Therefore, it was abandoned and new construction was started. In the meantime, machinery and equipment had arrived and had to be stored in the open for more than a year, awaiting completion of the new building. The reason for such an incidence is lack of close supervision by the executing agency, the Dairy Development Corporation, which relied completely on the district personnel without carrying out the necessary checks, and that of the Project Coordination Office as a whole for lack of appropriate monitoring. 3.27 The Trisuli cheese factory was eventually completed in 1983 and the plant was tried successfully. However, the plant, which has 1,000 liters of milk processing capacity, is idle because of lack of milk supply. Although studies carried out by the Dairy Development Corporation showed that milk supply would be sufficient for the factory, it could obtain only 100 liters per day during the season of abundant supply (June-July) in 1983. Collection during off-season is as low as 20-50 liters per day. The reason for such a low level of milk supply is essen- tially improper assessment of milk availability in the area. The area over which milk can be collected is limited, since the milk has to reach the factory within three hours after milking, or else needs to be chilled. However, chilling in large volume vats is not practical due to transport problems, and two chilling vats remain idle near the factory because an appropriate site could not be found. In addition, the price offered by the factory, NRs 0.65 per fat unit, is considered to be low by producers as they can sell it at a higher price in Trisuli town, generally diluting it with water. Forestry and Erosion Control 3.28 Forestry. The Forestry Department started tree plantation programmes during the second year of the project. Implementation was done - 33 - in a planned and systematic fashion. However, its achievements as com- pared to its targets fell short as a result of delays in the release of funds which had serious repercussions, given the short planting season. Achievements to date are a plantation of about 3,200 ha of fuelwood species, protection of 5,0!" ha of forest area and coverage of 700 ha under the Department's forest regeneration program. Average survival rates are estimated at about 50%. Community participation in planting and protection and maintenance of young saplings has been a major problem. 3.29 Erosion control. As foreseen at appraisal, a Divisional Office of the Department of Soil and Water Conservation was established at Trisuli to cover the two districts. The project constructed the office building and other facilities and provided staff. Construction of check dams, retaining walls, gabions for stabilizing gullies, embankments for protect- ing major infrastructure, viz, roads, irrigation canals, major trails and hydroelectric reservoirs have been successfully accomplished. However, works on controlling erosion through afforestation and sowing grass have been limited. This component was designed to protect the important infrastructures and hence not much attention was paid to the very dif- ferent task of training and motivating people to carry out soil conserva- tion practices on their farms. Cooperatives, Credit, Input Supply and Marketing Services 3.30 Cooperatives. A total of 20 primary cooperative societies, 16 in Nuwakot and 4 in Rasuwa, have been established as compared to 25 foreseen in the SAR. Total membership was estimated at 15,400 in 1982/83. The project assisted in the construction of two office buildings and 10 stores; one of the latter is still under construction. It also provided training for 20 managers, 20 salesmen/accountants and 460 cooperative members. 3.31 The main activi-ies undertaken by the cooperatives are the dis- tribution of loans, sales of inputs (mainly fertilizer) and consumer goods. Performance of the cooperative societies has been varied, with those located in accessible areas faring better. Loan recovery from members has averaged around 60% per year. However, due mainly to poor management, repayment by cooperatives to the Agricultural Development Bank of Nepal (ADBN) has been below 50%. As a result the bank has become unwilling to provide further loans thus making access to credit by cooperative members difficult. 3.32 Credit. The operations of the ADBN increased substantially under the project. According to ADBN, a total of NRs 38 million was provided directly to individual farmers and cooperatives as loans, although this figure ib put at NRs 31.4 million by the Project Coordination Office. Of this, NRs 14 million was short-term production credit and the remainder consisted of medium and long-term credit for livestock purchase,.farm - 34 - machinery, irrigation developmentg agro-forestry and horticulture develop- ment (Annex 5). About 80% of the loans were distributed in Nuwakot dis- trict. Overall recovery rate by ADBN has been estimated at about 60%. The credit program has been adversely affected by poor management of the cooperatives which has obliged ADBN to stop providing loans to those cooperatives which do not repay. Loans for livestock purchase, which are always difficult to supervise, are reported to have been used for other purposes. 3.33 Input supply and marketing services. The Agricultural Input Corporation (AIC) and the DADO offices have stepped up the supply of inputs under the project. About 800 tons of improved cereal seeds, and about one ton of vegetable seeds have been supplied by AIC and the DADO offices in the project area (Annexes 3 and 4). In addition, AIC dis- tributed about 11,800 tons of chemical fertilizer and agro-chemicals worth NRs 1.93 million. Because of low demand by farmers, the distribution of farm implements and insecticides has been limited. Of the 10 stores planned by AIC for construction, 8 in Nuwakot and 2 in Rasuwa, only 9 have been constructed. One of the stores in Nuwakot collapsed due to poor construction work. The completed stores, however, were idle for years as AIC was not interested in operating them (lack of staff and "inap- propriate" location). AIC locates its stores in strategic points for bulk handling and therefore has given some of its stores located in remote areas to the cooperatives. Although AIC serviced the area better by increasing its supplies, cooperatives and farmers complained of untimely distribution of inputs by AIC. It was also observed that some seeds distributed were of poor quality. 3.34 In order to improve agricultural produce (particularly perish- ables) marketing infrastructure and services, the project established a marketing office in Nuwakot for providing transport subsidies, temporary storage facilities, market intelligence and organizing rural primary markets (bazaars). One livestock marketing shed at Bidur and produce marketing sheds at Dhunche, Chowgadah and Ranipawa were also constructed. However, the contribution of the Nuwakot office in improving marketing services is minimal since it is ill-equipped to deal with cereal marketing and in any case the cooperatives, the National Food Corporation and private merchants are already carrying out these operations. The market sheds are also sparingly used and serve very little purpose. Infrastruct6re Development 3.35 The infrastructure development component consisted of construction of village water supply, suspension and wooden foot bridges, tracks and trail improvement, and panchayat buildings for community activities. Responsibility for implementation was with the Local Development Depart- ment (LDD) which operated through its DTO. Under an agreement signed between the panchayats and the LDD, construction for water supply schemes, - 35 - hill irrigation, panchayat buildings and improvement of trails was carried out directly by village panchayats. The LDD provided the panchayats with PVC pipes and technical supervision. The construction of tracks and suspension bridges was implemented by LDD through contractors. 3.36 Overall, the quality of work carried out by LDD through contrac- tors was better than that accomplished by the village panchayats. The works carried out by panchayats suffered because of lack of supervision. The agreement signed between the LDD and the panchayats provided for payment to be made in three installments. An initial 25% of the total cost of the scheme was given to the panchayats to start work. After the DTO office positive supervision result, subsequent payments of the remair- ing 50% and 25% were made. However, because of shortage of staff, the I office was not able to accomplish its tasks in all schemes and thus pay- ments were made for very poor works as well. In some cases, it was dif- ficult for the technical staff, particularly the junior personnel, to enforce the desired quality of work by the local panchayats which are elected bodies and not civil servants. 3.37 Village water supply. Out of 133 schemes started, 105 are reported completed. Appraisal target was for 100. There are no details on the status of the completed schemes. However, the district offices reported that many of them are not functioning because they have been damaged by people or have lacked maintenance. Of the incomplete schemes many are labeled 90% completed. In some cases, only pipe joining parts are missing. The quality of work was generally poor. The polythene pipes are not laid down properly and are subject to damages by people and animals. 3.38 Suspension bridges. The : oject constructed 8 suspension bridges and about 39 wooden footbridges. This compares favorably with the SAR proposi1 which called for the construction of 12 suspension bridges only. The quality of work was satisfactory and the bridges have made a positive impact by making some remote areas more accessible. 3.39 Tracks and trails. The SAR proposed the construction of 46 km of tracks and improvement of 168 km of trails, but the project constructed about 25 km of tracks and improved about 400 km of trails. Because of lack of regular maintenance, the tracks constructed by the project and the improved trails are now in poor condition. 3.40 Panchayat buildings. The project has constructed 27 village panchayat buildings, three sub-center offices, two district assembly halls and one district rest house. The construction of these buildings was expected to have facilitated copmunity activities in the project area. However, in most cases this has not happened since the buildings serve merely as offices for panchayat leaders, and in some cases as living qurrters for the Panchayat officials. - 36 - Cottage Industry 3.41 According to the SAR, the cottage industry program aimed increasing family income through training of 300 weavers, provision of credit for the purchase of hand looms and raw materials, and marketing of production. The Department of Cottage and Village Industry was respon- sible for implementing the program, except for the supply of material and marketing which was carried out by the Department of Cottage Industry Emporium. Since 1983, the implementation responsibility of the Department of Cottage and Village Industry has been transferred to the Board of Cottage Industry. 3.42 Training. The project has trained about 285 weavers, most of whom were provided with hand looms on credit. During project implementation, the scope of the training was expanded as shown below: People Trained Under the Cottage Industry Development Program Type of Training No. of People Weaving 285 Cobbling 41 Carpent-y 60 Bee keeping 58 Blackamith 41 Tailoring 53 Hosiery 30 Of the people trained, particularly weavers, over 50% are not practising their trade. The reasons for this situation include poor selection of trainees, difficulties of arranging reliable raw material supply and marketing problems, as patterns are old-fashioned and not in keeping with current tastes, which has made the economics of weaving very low. Selec- tion of trainees was not based on the likelihood that a trainee would continue the acquired trade. As a result, many trainees participated in training program for the sake of obtaining the stipend provided by the project during the training program. As most of the weavers are not carrying out weaving, over 80% have not repaid the credit on handlooms. 3.43 Emporium and sub-centers. One emporium building and seven sub-centers and an office building have been constructed by the project. An additional sub-center is operational on rented premises. So far, the support provided by the emporium to weavers in terms of supplying adequate raw material and marketing has been unsatisfactory. Likewise, the sub-centers have not iucceeded in advising farmers on the type and quality of work they should produce in line with market demands. - 37 - 3.44 Paper factory. During implementation, the establishment of a paper factory was added to the cottage industry component. The factory was to use rushes grown in Nuwakot district, as its raw material. The capacity of the factory is 50 tons of raw material input per year with 40% recovery of paper. Construction of the factory started in 1977/78. However, the slow progress in construction of the small factory building, difficulty in procuring machinery with appropriate specifications and problems with the supply of electricity delayed the completion of the factory to 1983 when it was successfully tried. However, the factory will not start production until the supply of raw material is organized, which is grown at altitudes between 6,000 and 10,000 ft. ast. The raw material, which was expected to be collected within Nuw&kot district, is not avail- able in sufficient quantity and thus needs to be supplemented from adjacent districts, Dhading, Rasuwa and Kathmandu valley on contract. Health Services 3.45 The project aimed at improving health services by construccing 15 health posts, supply of material and medicines as well as staff. From the outset, this program faced difficulties in that it was not possible to construct even one health post in the first five years of the project. At present, there are only three health posts completed and three are still under construction. The reasons for such slow costruction are attributable to the lack of attention and supervision by the Ministry of Health. The latter limited itself to awarding contracts for the construc- tion of health posts to the panchayats and expected supervision of works to be undertaken by the DTO which was already fully occupied. No monitor- ing was carried out by the implementing agency. In any case, the con- struction of the new health posts alone without improved overall manage- ment, provision of sufficient quantities of medicines and adequate field staff would not have made much difference to the quality and coverage of health services as they existed in the project areas. Education 3.46 The education component was added during the third year of project implementation. Project activities were limited to providing physical facilities. The project constructed four schools, one hostel and improved some 220 schools by supplying furniture and repairing school buildings. The component was implemented satisfactorily. Improvements in physical facilities, while important, perhaps has not made a significant impact on the quality of education,in the absence of improvements in curriculum, teaching methods, and teachers' qualifications, particularly in Rasuwa district which does not attract qualified teachers because of its remote- nez7 - 38 - Integrated Duck/Pig/Fish Farm 3.47 This component was added during the fifth year of project implementation and consisted of supporting an existing fish farm in Trisuli to carry out pilot scale integrated duck/pig/fish farming. The project constructed three duck houses, two pig houses, an incubator and a brooder house, repaired existing fish tanks and purchased an incubator, furniture and pig and poultry feed. The component is implemented by the Department of Agriculture. Preliminary results have shown that the intro- duction of duck and pig farming has increased the fish catch from the ponds of the farm. In addition sales of eggs, ducklings and pigs are showing promising results. Studies and Surveys 3.48 Several studies and surveys were carried out under the project. These include: household baseline survey, cadastral survey, market and product survey of cottage industries, milk availability survey for the Trisuli cheese/butter factory and project evaluation study. In addition, the socio-economic unit of the project prepared crop reports and some limited project impact studies. 3.49 The household baseline survey, which was expected to become the basis for subsequent project evaluation started late and the final report was not ready until January 1978. The evaluation study itself, which was carried out by local consultants, commenced in 1981 and was completed in June 1982 after 8 months of work. The'study could not make useful com- parisons on a household basis because the returns of individual households interviewed in the first round were not available. The evaluation study therefore undertook its own survey hoping to obtain meaningful retrospec- tive information on changes in agronomic techniques and yields, in spite of the limitations entailed in recalling activities of five years ago. Overall, the study was undertaken diligently and looked at project activities critically. The evaluation study attempted an economic analysis of the project although data on the key parameters (viz. changes in yields, total cropped area, irrigated and rainfed areas) were not available. Yield estimates were based on the limited sample survey car- ried out by the evaluation study which did not differentiate between rainfed and irrigated crops. The 4% economic rate of return calculated by the study on the agricultural development component is, therefore, not particularly meaningful. 3.50 The survey of cottage industry markets and products is a well done study. However, HMG did not seriously consider the implementation of the recommendations for improving the marketing situation for woven materials. The milk survey undertaken by the Dairy Development Corporation did not provide project management with an adequate or full picture of the supply - 39 - of milk around the site of the Trisuli cheese/butter factory, or the nature of the local market (para 3.27). The cadastral survey was com- pleted in :979 as foreseen during appraisal. The survey puts the agricul- tural area at about 50,000 ha which is the highest figure as compared to all previous estimates including the appraisal report (see Annex 7, Table 2). E. Procurement 3.51 Prrcurement was the responsibility of both the PC's office and the implementi=g agencies. The project had faced difficulties in procurement undei: ICB in three cases, i.e. radios to be distributed to farmers, and machinery and equipment both for the Trisuli cheese/butter factory and for the paper factory. The project made an agreement to procure 100 radios under ICB. However, after the order was put it was found necessary to ascertain the place where the radios were manufactured and this entailed lengthy correspondence with the manufacturer. In the meantime the radios arrived in Calcutta. Since the project management was late in following up the order, it became difficult to trace them in the port. This was done eventually but as the port charges for about five years of storage exceeded their original purchase price, the sets were never taken delivery of. 3.52 With regard to the machinery and equipment for the Trisuli cheese/butter factory the difficulties consisted in not being able to stop the arriva: of the equipment until the new factory building was con- structed i= order to avoid improper storage and idleness of the equipment (para 3.26). As a result of the adverse circumstances, the project had to bear the cast of the rehabilitation of the machinery and equipment items before they were installed in the new factory building. The problem with the procurement of machinery and equipment for the paper factory was that some of the items delivered were not according to specification. There- fore they had to Le sent back to the manufacturer to be replaced by appropriate ones. This contributed to the delay in the start of factory operations. F. Technical Assistance, Contractors and Consultants Technical Assistance 3.53 The project provided 9 manyears of technical assistance, funded by UNDP. Three expatriates for a period of about 3 years each were recruited: a socio-economist to carry out a baseline survey, an irriga- tion engineer to assist the DTO in technical planning and implementation of gravity and lift irrigation and an assistant project coordinator to assist in developing procedures in project implementation, monitoring and the administration of UNDP funds for the procurement of equipment and for training. UNDP also financed a socio-economic unit to assist the - 40 - activities of the socio-economist in carrying out the baseline survey and other studies, such as crop cutting surveys (para 4.6). The services of the socio-economist were not required after the finalization of the household survey in January 1978. However, with the start of the Mahakali Rural Development Project in 1980, the UNDP technical assistance component was extended and an expatriate socio-economist was recruited to plan and implement the monitoring and evaluation of both the Rasuwa/Nuwakot and Mahakali Rural Development Projects. Likewise, the assistant coordinator and the irrigation engineer were appointed to assist with the two projects. 3.54 The technical assistance component proved to be very useful par- ticularly in the early years of project implementation in districts where development activities were at a low level and the magnitude of projects was comparatively large. The socio-economist successfully carried out the household baseline survey, although it was completed with some delay and, as a result of poor record-keeping, most of the survey documents were lost, reducing its practical usefulness. The services of the irrigation cAgineer were useful in assisting the DTO in planning and implementation of irrigation schemes; he also made a lasting contribution by preparing a manual for designing hill irrigation schemes. Likewise, the assistant project coordinator's services were valuable in helping the different implementing agencies to coordinate their activities which supplemented the PC's efforts, although according to some, the assistant coordinator assumed direct responsibility for solving administrative, financial and other implementation problems to an extent that was beyond his terms of reference and which took away initiatives from the PC and encouraged him to be overly dependent on the TA staff. After the third year of project implementation, however, the contribution of the assistant coordinator started to diminish as some government officials, particularly the MPLD, did not fully appreciate his role. The role of an assistant coordinator in a project where the PC himself had limited authority was not an easy role to play. Contractors 3.55 In general works carried out by contractors under the implementa- tion responsibility of the DTO or the Department of Irrigation, such as tracks, suspension bridges and minor irrigation schemes have been satis- factory. In contrast, contractors' civil works implemented by other agencies, particularly buildings, (including those supervised by DTO), were characterized by poor quality of work. Panchayat Pradhans as con- tractors were found to be most unsatisfactory and not amenable to any guidance or supervision by the DTO staff. The two extreme examples are a godown which collapsed in Nuwakot and the cheese/butter factory building in Trisuli which was abandoned because it was built to incorrect specification. A number of project buildings constructed by contractors and panchayats, particularly those in Rasuwa district have developed - 41 - cracks in the walls and plaster has fallen off. The structure of some drinking water stands is disintegrating because of improper cement mix and a number of hill irrigation channels have been poorly constructed. Such indifferent works are essentially due to lack of close supervision neces- sary to make the contractors comply with the terms of their contracts, but it must be acknowledged that the relatively small size and scattered construction of the sub-projects throughout rather inaccessible areas makes regular and effective supervision difficult and costly. Consultants 3.56 The project employed consultants to undertake studies and these were accomplished successfully. The output of the consultants, who car- ried out the market and product survey of cottage industries, has been good as was that of the consultants who carried out the evaluation study, although the latter cast some doubt on its output by venturing into an economic analysis of the project without a solid basis. G. Costs 3.57 Total project expenditures were about NRs 169.5 million or US$ 13.4 million, which may be compared with the appraisal estimate of NRs 136 million or US$ 10.9 million. The increase in project costs is due prin- cipally to the expanded scope of the project through the addition of components; a larger volume of credit; increase in infrastructure and local development activities (Annex 1, Table 2), and inflation, as implementation was delayed. H. Disbursement 3.58 The credit of US$ 8.0 million was fully disbursed on May 21, 1984. It general, disbursement applications were made with a considerable delay, as the implementing agencies were slow in submitting their expenditure accounts. In the last year of project implementation, however, disburse- ment improved substantially as the result of the Comptroller General's. strong stand which entailed the linkage of fund release to satisfactory submission of reimbursement requests by implementing agencies. Because of this, disbursement in 1983 and part of 1984 alone amounted to about 40% of the total. IV. Institutional Performance and Development 4.1 Although the appraisal report did not explicitly state institution strengthening as being one of the project's main objectives, the nature of the activities funded was expected to have significant impact on the existing institations in the project area. However, the support provided by the project consisted essentially of physical facilities and equipment; measures aimed at improving the technical competence and implementation - 42 - capacity of the executing agencies were limited. Technical assistance was only provided in the form of an assistant coordinator, an irrigation engineer and a socio-economist, whose impact was also shortlived because competent counterpart staff were lacking. The limited training programs offered by the project were geared towards middle and lower level staff and farmers, with inadequate provision both for securing trainers and for the training of higher level staff. 4.2 In addition to the above-mentioned deficiency in institution strengthening efforts, the administrative structure was such that project staff who obtained training and gained some experience were frequently transferred away from the project districts, while many were recruited on a temporary basis. Furthermore, the changes introduced in project coordination and management (see paras 3.3 - 3.5) hindered the smooth operations of the implementing agencies and reduced the enthusiasm which was so evident at the outset of the project. All these factors were not conducive to healthy institutional development. Project Coordination and Management 4.3 The overall performance of the PCC in coordinating and managing the project was generally satisfactory, at least during the first few years (see para 4.5) and this enabled the early planning and start-up of project implementation. The implementation of the project under the DAP within the overall responsibility of the PCC ensured the participation of district officials and local people and the PC, as the member secretary of the PCC, maintained close linkage between the district and the line departments in the center. After the substitution of the PCC by four other committees, however, project coordination and management deteriorated. The MPLD, as the ministry responsible for the overall coordination, failed to accomplish its tasks as it suffered from generally inadequate knowledge of field situations and was not sufficiently forceful in resolving problems faced by the project. The MPLD's record in respect of follow-up of numerous actions called for by IDA supervision missions in solving difficulties encountered by the project was also not adequately satisfactory. Implementing Agencies 4.4 The performance of the implementing agencies varied widely. Taking into account the numerous difficulties encountered, the performance of the Departments of Agriculture, Forestry, Soil Conservation, Livestock and Irrigation can be considered adequate. However, the record of the Dairy Development Corporation in establishing cheese/butter factories, and that of MPLD in developing trails, hill irrigation and village water supply were below expectations. Likewise, the operations of the training program conducted by the Cottage Industries Department and the performance - 43 - of the Ministry of Health in establishing health posts were unsatisfactory (see Chapter III). Project Coordinator Office 4.5 The performance of the Project Coordinator's Office was satisfac- tory up to the time the PCC was operational. Both the PC and his assis- tant were active in assisting the implementing agencies in planning and executing the project as well as in coordinating development activities. After the change in project management, and concentration of decision making at the office of the Joint Secretary, Coordination Division, MPLD, however, the PC's authority was reduced and his office was confined to carrying out routine work such as compiling quarterly reports, keeping overall project accounts and submitting withdrawal applications to IDA. Actions such as removal of the PC at the time he was in the field with an IDA supervision mission (January 1980) further eroded the stature, credibility and importance of this position. This office also suffered from frequent staff transfers, including the PCs themselves (there was four different individuals during the implementation period). This adver- sely affected the office by hindering continuity in its management which is reflected in its poor recording and documentation of project activities. Socio-Economic Unit 4.6 The Socio-Economic Unit was funded by UNDP as part of the techni- cal assistance component and was supervised by the socio-economist. It was established to carry out the household baseline survey as well as other specific surveys related to project activities. The Unit success- fully conducted the baseline survey, carried out some analyses of the project's agricultural impact, completed several crop surveys, initiated an inventory of project works and compiled population data to be used for a baseline survey in the Mahakali Rural Development Project area. The Unit was not successful, however, in monitoring project progress and in alerting management about existing and forthcoming problems and more importantly in creating an effective institutional base within HMG for project monitoring and evaluation studies. Accounting and Reporting 4.7 The PCO was generally on time in providing to IDA annual account- ing statements, as received from the implementing agencies. However, IDA was not provided with audited statements for any of the project years, although according to HMG/N all project expenditures were regularly audited, albeit with some delays, as part of the overall annual audit of the implementing agencies' expenditures. In this connection, it may be noted that non-submission of audited accounts was not unique to this project alone, for the majority of IDA and other donor financed projects -44 - are also substantially in arrears. Within the current accounting prac- tices, expenditure classification for budget and the audit proceedures, there are some practical problems in the compilation of consolidated audit reports for project expenditure, particularly when a multiplicity of implementing agencies are involved. 4.8 The PC received regular progress reports from the implementing agencies and these were compiled into quarterly progress reports, which were sent to the concerned government agencies and to IDA. The progress reports are "haracterized by presentation of physical progress and contain only scanty information on expenditures. The MPLD, however, reported the progress of the infrastructural activities mainly in percentages of expen- ditures incurred, which did not provide an accurate picture of physical progress. Compliance With Covenants 4.9 HMG complied with most of the covenants, but after delays and several reminders by IDA. However, it failed to comply with covenants regarding the levying of water charges for Batar irrigation scheme, and auditing of accounts each fiscal year of implementing agencies (para 4.7). The change in project coordination mechanism from one PCC to several coordinating committees was made without the required consultation with IDA. More importantly, HMG did not comply with the covenant which called for adequate maintenance and repair of project buildings, tracks, trails and other infrastructure after construction. 4.10 The complexity of project design, and its large number of com- ponents was reflected in a large number of legal covenants. Apart from suggesting that project design should be simpler, it raises the question as to whether all the covenants were really necessary and relevant to the project's objectives. V. Project Impact Overall 5.1 The most significant effect of the project has been that it has made people, both in the area and the Government as well as in the inter- national community, very much aware of the severe problems being faced by hill farmers living in isolated areas of Nepal. It can be fairly claimed that the project, although not successful in all its components, set a precedent which has led to the subsequent commitment of very large amounts of funds for similar activities elsewhere in the hills. Indeed, the resulting proliferation of rural development projects, and the heavy institutional demands which this created, may be one of the main caases of the problems which led this first project to fall stort of its targets. It must also be acknowledged that, right from the design stage, the - 45 - pioneering nature of the project was evident to all associated with its preparation and appraisal and the inherent risks of some elements failing was recognized. Considering the novelty brought about by the project in integrating the activities of numerous implementing agencies with the consequent difficulties in coordination, and taking into account the changes of administrative arrangements made during project implementation, the delays in project implementation and poor performance of some of the components are understandable. Despite some of the apparent non-achievements (mostly relating to the social services sector) of RDI, the project nevertheless met many of its broad objectives, particularly in respect of the agricultural sector, rural infrastructure, some others, and more importantly, has created some fundamental institutional, technologi- cal and attitudinal conditions that provide a suitable framework for achieving further gains in agricultural production, rural income and rural welfare in the two districts. There is, however, a danger that the accu mulated experience and project achievements might be wasted due to lack of HMG finances not only for promoting further development through additional capital investments but also for maintaining the services and facilities at the required levels. Technological Change 5.2 The agricultural production goal was to achieve increased food crop production through the wider use of improved seeds and of chemical fertilizers for traditional cereal crops including paddy, maize, wheat and to a lesser extent millet. Use of improved potato seed was also included for high altitude areas. In addition, development of numerous small irrigation schemes in the selected area was to bring significant increase in overall crop production. In this context, agricultural research and extension services were to play an important role in promoting use of these farm inputs. 5.3 Very littlr information has been collected on achievement of the technical targets. Performance recorded on use of the farm inputs and extension training indicates fairly satisfactory achievements compared to the intended goals (see Annexes 3,4 and 6). However, a sample household survey conducted by the Project Evaluation Team (DRCC) shows that the level of adoption of improved seed in any crop did not exceed 35%. Use of improved maize ranked the highest (34% in Rasuwa and 20% in Nuwakot) and then wheat, paddy and potato. There were no farmers using improved mil- let. The appraisal target was to cover 60% of all project farmers. Not- withstanding the above, significant changes in cropping patterns, crop yields and cropping intensity have taken place in the newly irrigated areas. There has been 2-3 fold increase in the area under wheat and areas under vegetables, chillies and groundnut also substantially increased. 5.4 Use of chemical fertilizers has increased but is still at a low level. The highest percentage of farmers applying fertilizer is.40% on -46 - paddy in Nuwakot. Average application rate on paddy sas about 70 kg/ha, which is far below tr.e appraisal estimate of about 20C kg/ha in commercial fertilizers. 5.5 The DRCC study indicates that more farmers learnt about use of these inputs through friends or other villages than through the extension agents. With regard to agricultural extension, the sLrvey discloses that only about 20% of surveyed households were visited by the extension agents annually. This is understandable in view of the staf-ing shortages ond other inadequacies in the Department of Agriculture (zaras 3.14-3.15). Crop Production 5.6 The appraisal report envisaged overall foodgrain production increase by about 15,600 tons and potatoes and vegetat-es by 2,000 tons by Year 7 of the project (1982/83). Approximately 50% o the increase of foodgrain production was to come from the irrigation ievelopment com- ponent. Based on available data, it is impossible to make any realistic evaluation on the agricultural impact, because of the paucity of reliable data due to the large discrepancies and contradictions. For instance, total cultivated are estimated at appraisal was estima:ed at 17,050 ha, whereas the subsequent cadastral survey identified 52,620 ha including about 3,000 ha of pasture land. 5.7 To overcome the above problem, the Project Eva:uation Team made an attempt in 1981 to adjust this discrepancy using its oun interpretation of the cadastral survey result, and estimated the total cultivated area at 33,200 ha. Based on this area, the overall productiot increase of foodgrain due to the project (1981/82) was estimated by the team at about 10,000 tons (Annex 7, Table 2). The estimated increme=tal output was therefore about 6,000 tons less than that expected at appraisal. 5.8 To supplement the above Project Evaluation Report, the Project Socio-Economic Unit (SEU) made another attempt to assess the project impact, and came up with an estimate of total cultivated area of 49,560 ha. The increase in foodgrain production was estimated at 29,700 tons (see Annex 7, Table 2), or nearly three times the Evaluation Team estimates. 5.9 Since the above studies do not provide data on a year-by-year basis, official crop statistics for the two project districts covering 13 years, 1970/71 to 1982/83, were collected from Statistics Division, Department of Agricultural Marketing Services, MOA. !he past eight years' annual crop statistics on major crops are summarized in Annex 7, Table 1. For comparison with Evaluation Team and SEU estimates, crop statistics in 1976/77 and 1981/82 are also given in Annex 7, Table 2. As can be seen from these tables, the corresponding foodgrain production increase is only 440 tons. Crop statistics for 1982/83 show a sharp icrease in paddy - 47 - production reflecting a possibly unrealistically high estimate of tiae increase in paddy cropped area. 5.10 Figures on annual total cultivated area are not available from the Statistics Division. However, judging from the annual total cropped area of major crops, and the sudden increase in paddy cropped area from 1981/82 onwards, it appears that some adjustments were made in crop statistics from 1981/82 in order to align them with the cadastral survey. It is therefore doubtful that the comparison of crop statistics between the pre-project (1975/76) and the period during project implementation (1976-1982/83) has any value. 5.11 In addition to the above, similar crop statistics compiled by the two project DADOs were also collected. The data provided are incomplete but the cropped area is extremely small compared with any other estimates mentioned above and crop yields quoted are unrealistically high. Accord- ing to DADO data, the incremental output over the past seven years is as high as 39,000 tons in Nuwakot District alone. 5.12 Discrepancies among the above estimates are attributed to lack of reliable statistics, particularly on cropped area and crop yields. In the abser z of these data, a further attempt to reevaluate the impact on agricultural production would have no value. 5.13 Although the overall crop output appears not to have achieved the expected goal, it should be noted that there is prima facie evidence that the existing irrigation areas have benefitted from the project, par- ticularly from the increased availability of chemical fertilizers and improved seed. However, it is not possible to quantify production because there are no separate statistics for the rainfed and irrigated lands. 5.14 Two small scale gravity irrigation schemes (Cadkhar and Labdu-Dhikure- Sera Schemes) implemented by the project have been visibly successful. They are presently providing irrigation for about 300 ha in total. It is reported that cropping intensity in each scheme has increased by about 65%, and foodgrain production has doubled compared to the pre-project situatiot. In spite of the difficulties faced by the Batar Irrigation Scheme,in the distribution of water, caused by irregularities in the supply of electricity, equipment maintenance and repair problems, the scheme has made a positive impact on about 200 ha of irrigated land. However, the hill terrace irrigation program is believed to have made lesser impact on crop production because of inadequacies in the provision of farm imparts and advisory services. 5.15 Expected agricultural production, other than the above crop development, quantified at appraisal, included increased milk production from improved supply of fodder, and the reduction of livestock losses through improved veterinary services. Increase in crop production was - 48 - also expected to come from better soil erosion control practices. The impact of these activities is not possible to assess due to tack of basic data, but has probably not been very significant. Social Impact 5.16 Tracks, trails and bridges: Total length of tracks constructed has been less than SAR expectation but there has been some impressive performance in improvement of trails and construction of suspension bridges. Due to insufficient data, however, it is very difficult to evaluate whether selections of trails for improvement and bridge sites were done satisfactorily in relation to the project activities and whether the rural roads component has increased access to remote areas of the project. The suspension bridges constructed by the project have made a positive impact in the project area by connecting villages located on opposite banks of rivers. However, the impact of the tracks and trails component seems to be less permanent than intended because of poor main- tenance. It is also believed that project involvement in minor tracks/trails improvement (and to small extent in small hill terrace irrigation) had some undesireable effects as it replaced traditional local efforts and inputs in these activities. 5.17 Village water supply: The reported achievement of numbers of completed water supply schemes is impressive. The actual effect of each completed scheme on the expected beneficiaries has been variable. There have been some successful schemes but a number of the completed ones appear to be facing problems due to poor construction and lack of proper maintenance. 5.18 Cottage industry: The cottage industry component, which was to promote the local weaving industry, appears to have made little impact. The reasons for this are inappropriate selection of trainees, the low financial attractiveness of weaving, inadequate supply of raw material and poor marketing arrangements. Regrettably, HMG/N did not pay much atten- tion to taking steps for the removal of the sector development con- straints, as identified by the project funded study (para 3.50) 5.19 Health services: The number of health posts constructed by the project was three compared to fifteen foreseen at appraisal; thus project impact from the point of view of construction of health posts has been minimal. However, judging from the status of the existing health posts which are characterized by inadequate supply of material and medicines and lack of qualified personnel, provision of additional health posts alone would have made little impact on the health conditions of the people. 5.20 Education: An impressive achievement in provision of school facilities, furniture and repairs has been reported. It is doubtful, however, that the above physical improvements made any significant impact - 49 - on the quality of education in remote rural areas of the project districts because of lack of appropriate programs and qualified teachers. VI. Economic Evaluation 6.1 RDI represented essentially the only major development activity in the two districts in the past seven years. A good many of the economic and social improvements in these areas can therefore be attributed jus- tifiably to this project. However, few of the benefits lend themselves to rigorous analysis because of lack of data, and some are difficult to quantify (see Chapter V). 6.2 Given the above, there is no basis for carrying out an updated economic analysis of the project. An attempt to do this would only be misleading one way or the other. In fact, two separate economic analyses undertaken for the project arrived at contradictory results. While the evaluation study, which assumed a total cultivated area of about 33,200 ha and increase in annual cereal production of about 10,000 ha in 1981/82, calculated an economic rate of return of 4% for the agricultural develop- ment component; the socio-economic unit assessed an economic rate of return of 21% assuming a total cropped area of about 49,600 ha and an annual cereal production increase of 29,700 tons in 1981/82. Both analyses have based their yield assumptions on guesses, as annual records on yields for the relevant areas were not avaiable. In addition, both analyses failed to differentiate yields attained in the irrigated and raifed areas. 6.3 The socio-economic unit also undertook separate economic analysis for the two relatively successful but unrepresentative Labdu-Dhikure-Sera and Gadkhar irrigation schemes (total area 300 ha). The results were economic rates of return of 25% and 27% respectively. 6.4 A further attempt to calculate an economic rate of return, in the absence of basic data, would not result in any meaningful conclusion. VII. Bank Performance Project Design and Appraisal 7.1 Before the project period, it was clear that the development experience and the implementation capacity of institutions in the two districts was extremely limited, a fact which must have been evident to the appraisal mission. Nevertheless, a number of factors such as the introduction of the DAP and the apparent commitment of the MG to improve the conditions in the hills through comprehensive RD projects obviously led the appraisal mission to recommend a somewhat complex project. Their confidence in the capacity of these institutions appeared to be justified by the strong performance of the project in its first year and it would - 50 - indeed be fair to say that had RMG made a sustained and genuine effort to make the project work, much more of this apparently complex project could have been achieved. As the project grew, and in the face of other rural development projects' demand on the institutional resources, implementa- tion of the components became increasingly difficult for many of the agencies concerned. Consequently, supervision standards fell, funds became scarce, staff were frequently transferred from the project area and implementation slowed down. The management changes which plagued the project from its third year, as well as the ineffectiveness of the MPLD in providing leadership and problem resolution - matters which could not possibly have been anticipated at appraisal -- merely exacerbated the situation. IDA Supervision 7.2 From the start-up to completion, the Bank sent eleven full super- vision missions and a few other one-man missions which reviewed specific components, such as credit, irrigation, health services and forestry (for a grand total of some 853 supervision mandays in field). Considering the seven-year implementation period and the difficulties that the project was facing, the number of supervision missions is low. The one reason for the reduced number of these mission was the inaccessibility of the greater part of the project area during the monsoon, May to September. 7.3 Supervision has been generally adequate, and in most instances fairly intensive. The composition of the last three missions tended to exclude agriculturists (see basic data sheet), perhaps because during those missions the review of management and operational aspects were more crucial. The supervision missions identified the problems facing the project in a timely manner and suggested means of overcoming them to HMG. The requests were, however, often not acted upon by MPLD when it took over as a coordinating ministry. 7.4 The Bank accomodated HMG requests for additional components, such as the education component (para 3.46), the cheese factory in Satdobate (para 3.25) and the integrated duck/pig/fish farm (para 3.47). Given the pilot nature of the project and the small amount of additional incremental investments involved, this attitude of the Bank was perhaps justified. However, the Bank was unable to convince HMG/N to review its decision and IDA then did not take remedial measures when HMG unilaterally ctanged the PCC and started to implement the project away from the DAP without the Bank's agreement and in violation of the major covenants of the DCA. Likewise, the Bank did not take positive actions when there were infrac- tions in respect of some other covenants also. It should, nevertheless, be noted that these infractions were promptly brought to the notice of the HMG by supervision missions and through communications from headquarters. Some of HMG's actions on the institutional aspects related to a sig- nificant area of emerging Government policy relating not just in - 51 - Rasuwa-Nuwakot, thereby making remedial action by IDA even more delicate and difficult. VIII. Conclusions Project Approach and Design 8.1 The designers of the project thus had the difficult task of putting together an integrated rural development project based on judgements and impressions rather than on solid information and convincing evidence. To compensate for the deficiency in background information, a larger input of expertise was made available for field work during identification, preparation and appraisal of the project (about 570 mandays). Although this permitted the several missions which visited the project area to appreciate better the existing conditions and area potential, the extent to which outsiders could really understand a particularly complex situa- tion in the course of such short visits could only be limited. 8.2 A formal baseline survey could have perhaps assisted the project designers in obtaining a clearer picture about the technical competence and implementation capacity of institutions on the one hand, and about the conditions and aspirations of the people in the project area on the other. As an alternative, at the suggestion of the CP identification mission, a local working group was established by HMG to collect some basic data and to work with the forthcoming preparation mission. However, when the latter arrived in Nepal, the group had ceased to function after some background information on the project area had been collected. Prepara- tion work was therefore carried out without much input from HMG and the latter had not clarified its position on several issues raised by the preparation mission (para 2.6) before project appraisal. 8.3 Under these circumstances, appraisal of the project should probably have been deferred until HMG had fully discussed the project concept and agreed on its components. Unfortunately, this was not done. The conse- quence was that the appraisal mission found itself involved in preparing some aspects of the project and appraising it at the same time. This delayed the appraisal process, thereby defeating the very reason for haste since the final appraisal report was not completed until one year after the mission's visit to Nepal. In the course of appraisal several com- ponents were added on which no preparatory work had been done. 8.4 Before appraisal the development budget for the two districts was about US$50,000 per year. As appaised it was proposed that the project should increase this by 30 times, in the first year, and by over 40 times in each of the following four years. The underlying assumption was that, if the implementing institutions were given the opportunity and sufficient funds, they would respond quickly, strengthening their implementation capacity. - 52 - Proiect Organisation and Implementation 8.5 The appreciable initial progress made by the project is attributable to the successful role played by the PCC in motivating dis- trict staff. Implementation of the project under the DAP enabled line departments to work through their own district officers, who were respon- sible for the execution and supervision of their respective components according to the directives given by their departments. The PCC, whose members were the heads of implementing departments, was fully informed about the situation in the field and made sure that matters agreed within the PCC were folloved ir the field. In addition, the PC and the two CDOs supplemented the departmental flow of information to the PCC. The CDOs also secured the adherence of project implementation to the district development plans by district officers. 8.6 .Following the new arrangement for project coordination and manage- ment, however, the initial enthusiasm by the line departments declined drastically and this was reflected at the district level. The project therefore took a turn fir the worse due to improper short-term planning, poor supervision and management, delays in the release of funds, frequent staff transfer and decline in panchayat participation. Systematic record- ing of project perfornance was neglected and often the information base kept by the different units of the project did not match. Th Next Phase 8.7 The problems of rural development are far too complex and deep rooted to expect isolated or relatively short-term intervention to make a fully significant and sustainable impact. This is even more applicable in respect of the Hills of Nepal where intensive and sustained efforts will be required for correcting decades of land misuse and agro-ecological imbalances. While all rural development projects in the country have experienced a number of shortfalls, they have been seen by government as important means to try to augment food production, correct regional imbalances, and improve the economic and social conditions in rural areas. Also, resolution of some of the basic ecological and land use issues is not amenable to simple solution and various facets of the issues must be confronted simultaneously. Moreover, in order to consolidate first phase investments and enhance the benefits from them, further investments would be required for completing/rehabilitating some of the physical infrastruc- ture including irrigation schemes, roads, bridges and buildings and for making all facilities more fully operational through appropriate staffing, operation and maintenance. MG/N has prepared a second phase of the project, which was recently appraised by the Bank. ANNEX i Table 1 RRAL M E P» T (crT i-P PROJPXcT 00MPIA?10Nf UUEJRT Annual Prøjeot Duenturos (NR. '000) 1976/77 19778 1978ff 197980 1980/81 1981 8283 19ZZ3 fbU Agrioultural development 575 3,334 3,830 3,545 3,234 3,217 3,026 747 21,54 Uvetook developmeant - 73 2,993 2,671 1,556 2,9107 3,011 177 12,5 Irriation døv*lopment - 199 1,412 3,001 962 0 351 - 6,4 Porera,g dsvelopent 122 1,127 982 1,108 1,059 1,904 775 le 7,0 O'rdi 4/ 1,648 2,600 843 3,640 6,581 6,d20 8,107 1,60m 31,d ros0io~oontrol 323 1,692 1,604. 1,528 1,023 982 928 67 8,1 &nfrautauoture a local developaetj 151 6,478 1,908 6,513 9,169 12,930 1,075 498 d8,7 Nealth ervloes - 811 - - - 64 60 94 1,0: hld~ation servine - - 81 466 295 971 783 - ' p,5 Cooperativa development 86 - - 526 30 916 901 1 e 2,7 Cottag iudumtry improvement 202 1,035 1,490 1,541 2,619 2,032 19237 79 * 10,2 Varehouse oonmtruation 3f - 374 - -- Pamohat døvolopea*n 55 1,003 1,174 610 1,640 - - . 4,s1 Projeot ooordi"ator oftice 421 2,353 472 408 362 413 523 107 Teohnial amata lance }/ -, * -.i5 Total 3,583 219,09 16,789 25,557 28,840 32,436 30,777 3,398 16,d m s Projeot Coordinator Offioe. Include. the oontraotiom anit de"lopment of traok, tralle, bridge, drinking vater supply ad bill irrgati. . Reter* to thoe øonstruoted un*er AO only. efere only to WDP as6.tamoe. Other coMsulting services are inaluded uner expen*itures of the roje» t .eositnato. office. roma 1980 oanwar4e thb* UDP assistanoe oovored the %~abkali wnd the Ran~,r Neakt .~ural Demvlowet Prøjeote uhioh ~ake apportioning ooto to oaoh projeot diftioult. Ih. teonioal aemitemoe coste are therefor estinten oly. . j/ Aooolding to At= total loan providea S NR38 illio. - 54 - RA' '..PE O PRC. tCRI? 6I.INP1 Comariser hetwee. Atraisal Cos* tstes and Aetua:. Zmnd.turs Appraxsa st~*ate Actuaal Enpendltures ' Mt'000 US'000 1tS*00' 0u8'000 Aq,cultura developmft 15.008 1,201 21,50, !.vesTock 4eeopmnt 6,083 48t *2.58 999 Urgation dovelopent 15.040 31 1.203 i" 6.405 1/ 526 2- Forestry developmnt 5,258 42- t,095 56 credit 1i1251 900 31,439 2,447 troson control 10.572 846 ,4.4 656 ltfrastruc.ure and locaZ Gevalopment 23,628 1,890 48.722 1831 5ea1th semees ma 5,829 466 1-,029 81 aducation services • • • 2,596 203 Cooperatve developmen. 599 47S0 2i6 Cottage andustry maproven: '.456 117 • 0.235 821 Mareouse construction 1,275 102 374 l/ 30 ' Panchayat deve.opmn: 5,241 419 4,482 371 Project coordination of:ace 5.671 453 5,059 6/ 404 . Techacal assistance 2 7,500 600 7,000 560 Preect evaluation 966 77 - Physical contingencaes 5,047 404 - • Prace contingencies 15.558 1,245 • 135,985 10.879 169,459 13.424 1/ Average annual exchange rates used ar* vS81.00 to fl812.50 for 1976-77: MU!12.36 for 19177-78: 18812.00 for tm. periot 1978/79 tc 1980/81: 1812.96 for 1981/82: 1.3.86 for 1982/83: and IotS15.65 for 1983/84. 2/ acludes cost 1o: the development of hU,11 irrgation. / Zxcludes Costs for b-II rägation, whc are swn vathan the infrastrucure a local dvelopmen compoann.. 4/ This componnt a inu6ed during prC)*ct mplementatlan. 5/ Part of the warehouses are constructed y ooperatives and thmir costs are ancludet vathan =e coopera:wve development Coponen:. 1 Includes costa on consultants and atutåes. 2/ Refter to the DP inan:zel techacal assastance otly. - 55 - AN0ZX i Table 3 RURAL EVEL0PM? fT Pt07T (CED? 617.4NEP) PROJECT C0MZPR.W 1PRT R.sbursement of Credit IDA Pigscal Tear .maisa.Estimie Actua j~~j COmulaative _____ Cumulative 1977 530 530 47 47 1978 1,220 1,750 162 209 1979 1, 690 3,440 1,049 1,258 1980 2,200 5,640 785·. 2,043 1981 1,910 7,550 1,744 3,787 1982 450 8,000 816. 4,603 1983 - - 1,694 6,297 194 - 1,703 8,000 #RRhY.LN EE0fff03POJEC (CREDIT? 611-NEP') mRoJEC CONMIr0N RE~'Of Achiovement of 1tgeical Motte Unit BAR Actual o1t SAS Acaut 1. Agrlculture aU Liventock 111. Input Supply ami Narket Servicen 1. Dintriet Agri. RQ Office/otore no. 2 2 1. Smll varehone~ po. 16 9 2. Agri. Bub-Contro * 8 9 4 2. Pre~b rodtw* Pakettng, Office/ I i 3. ReonnI Training Centro l I Store 4. Fnrm»r Trating Centre 2 2 3. Colleoting Centren (Pskting) 6 6 ø. Improvement of 3 Seearrb Statlonn ' 3 3 4. Apple Goown i - 6. Animnl ffe~drl IQ Otfia*/stor* i * 5. Co-opv. Office ldin -3/ P 7. Animel ealtb 'ønte * 7 6. Co-op. VUreho~se -. - f m 8. Livetock Phrketing Office/ i ".a. IT. Pair 9. Inelbtor/iroodii ione j/ - I I. Trisult chem~e Pantoty No. I I 10 Pigb/æckllone g g - 2. Iprove~entoSmalCeee e - smi Pactoriea i u fl. Irrigation 3. ettaI1uaønT of 2 smail Cheese - g ftetorie 1/ 1. (ravity Irrigtion V. Foreøtry Mhikure/aix1u/Sora sheme ha 168 200 Gamkar Sohemæ • 120 100 . Forestry Offien Puilding No. 1 . / 1.kka amtol* * 18 - 2. Mareery rtablioument * I - Smell Sohemn# 10 - 2 ). Fodder Tre* Plantetion ha 1,055 - 2. nilt Terranes 4. 1el-wood Plntation 1,05 3,962 j/- Iproveent of Terraeso * 800 - 5. Forent Regeneratton 1,000 6653 New. ff111 Terraoem * 150 - 2 6. Forest Protention * 12,tWI 4,I>J 3. Ihiurs 1'np Bobn. ' 108 - 4. River De4 Sobene 300 - 2/ 5. atar Plnin heap Bcheme ' ' 240 150 fAded componente. D2 ata on ~ereage achieved ts not available. It is reported that 51 bill Irrigation sohenu. eiere implemented sml 21 of theie have been ooPeIeti. Dataø btatned fem Forentry Dept. TN. Vats from Dietriot Forestry Offine contralots the ahove figure seignficantly. Additional thre are gn rented premtes. Not spoiMed in gA. hPAL RUOAL DWV~IO !NT nwOECT (CREDIT 61-NEp) PrOwEcT CONP~IEfM0 REIRT Aokhievement of Ikyeical Workce j . Antual Uhit SA c Aetia TI. soil Conervatios X. Cottage Industrieg 1. Offiae Dullding, store, *to. No. P 8 1. OffICe Building "o. 2. omd Protection ku - 44 2. ~eperitm 3. Reervoir Proteation No. - - 3. Cottage Ilndstries Sub-Centre fl - 9/ 4. oad Construotion 4 - 4. %aper Pietory 1 n -19 ~ 5. Irrgntiom Canal rton%lø n - ni- t. ge nealth Servicto 6. Tralil Impsvement n - 12 1. Afforenta§ion ha 470 525 1. Realth Ibete No. m5 3 8. Nureøry Fatabllsbent NO. 4 4 XII. mtusilon 5/ VII. Traks Tralis and ~ ot-Brdgef 1. Con.truction of SchooIe No. --4 1. Tak Constru~tion km 46 25 2. Costructo of No o. - 2. Tra l Iprement km 168 41 trall af 3. Improvement of Soboo1" - 29 3. stepennfon øridge Re. 12 8 4. Temporary Bridge Coponent - 39 VilT. Tillate Vater Somples 1. brinking Mater nehemes No. 100 105>/ l. b2snhmmet Deveopment 1. Tillag. snotayagt nIldings No. 58 27 2. Sub-Centre Offioes * a 3 4/ 3. Distriot hsembly etl' '2' 2 4. Mitriot Reet ffen " 2 I /t that not epoolfied in SAn. 2 nth of trall iprved 1e not avallable. Rugb etmateg pt the løntIh of tralle aprovd et nbout #M0 km. Do. sf completet *oheme reported by rI~bi"ote Nnntayat ofirce. neord kept at Coord,isntr' ofrie. "funakøt Dietriot only. N% data avallable for Omewa biatrint. / Amded componnt. There s one addltional wub-oentre sn rented premtss. URAi EVEROD10U? 51§0SIT (cRBBAT 617-iPEP) hevemen‡ of CropeBSU sl Mestek Developumn .at 1916hi 191/18 1978/19 1919/6 1908/I8 198/2 o982/83 Total 8_AR Antasi 3smrove4 Seed Disriubstion 62 *A0 ffices j/ I'.4dy toft - 12.7 8.3 4.0 - 0.3 130.0 (110.4 165.) ... - - 4.3 31. 0.,5 12.4 2.1 ,,,.4 (145.9 2.4 Nållet - - - - - - - (28.1 - "hen t.5 13.1 27.5 18.0 5.8 1.5 53.9 (150.0 18.3 sotatoes ". - 218.0 360.0 451.1 -2/ -f 16.fi (624.0) .. Vegetble Seed i tree -istr hio n irticulture rmti »plnnm n. 12,2*) 18,360 24,700 8,010 14,010 19,600 19,46(- 16,460 veu#etable oeed kg 200 139 186 45 51 45 2 54 MUe~teok Dtirtbetiom by 8"gite$ Hvestock Dervin!! M/,.© wltIuffalo) No. - - 16 6 14 20 pi (55 11 (%11l ( 9tl) " - - 21. 14 9 7 1 (1W 64 11tti,* - - 1 15 22 10 20 (140 4 Coeks • - ~ ~ - - - - (1,3 - bhr e - - 34 35 12 10 20 -il Chicke - - - 200 - 1,350 8,o 9,120 Vtertæ, Servjr . 2/ Uv~et~ek vaotWmted n. 16,160 42,310 28,660 10,190 2ý,720 8,250 16,010 (12195, ) 145,620 Livtatock east»ated 1 130 230 160 200 300 330 590 2,020 Artittotal iwSemliation - - - 4 4 112 . 120 trooktt ontmel * 10,820 25,100 18,410 1,890w 13,290 28,450 30,100 (989,n) 139,2(0 entak c~piled by Pt'Ieøt Coordi,tor,* Offloe. Pige geoted are omtredtoto7. Date frer Trinll Iortioalture fri. not spenified i saU Ibta r r iøMtrio Vterimry Offier. Dat sopplio biy Dept. e L4vegtock, MTt i. innompletø MI contradiate the above data. RURAL DEVELOPMNT PROJBCm (CREDIT 617-1EP) PROJECT COMPLTION REFORT Sales of Farm Inputs by Agricultural Input Corporation nit 1976/TT 1911/18 1978/79 1979/PQ 190/81 198t/B2 1982/8) Total SAR Ata Seed paddy Ton 1.0 8.6 0.3 - - 0.2 0.7 (50.2) 1o.0 Maise 3.6 10.7 3.9 9.5 5.0 2.7 3.6 (34.9) 39.0 Millet * - - - - - - - (7*9) - Wheat 6.8 12.2 12.7 18.5 10.5 42.3 8.6 (43.2) 11M.6 Potatoes - - - - - - - (143.0) - Vegetables kg - - - - 63.0 95.0 60.0 (-) j 218.0 Pertilisers . Amoniuu Sulphate Ton 243.6 348.2 424.3 136.4 328.2 398.0 325.4 (-) j 2,204.1 Urea * 362.0 689.1 638.7 933.5 998.3 1,283.0 1,694.1 (-) j/ 6,598.7 Complex 248.8 317.9 269.9 347.4 453.3 506.7 704.4 (-) j 2,848.4 XCI 23.6 27.6 2.8 2.3 3.8 20.9 3.7 (-) 1/ 84.7 DAP i - - - - - 6.5 12.5 t9(-) 9.0 Agro-Cheaioale SRS000 28.6 39.7 19.3 28.8 25.6 24.9 26.4 (-) jj 193.3 Bources Agrioultural input Corporation, Rasuwa anid Iuwakot offices. jj Not specified to 8AR. awar, RURAL DERWMT PROSEUP (CMDr 6t-uEP) PRGEUP COMPIMTOl REIMRT Loan Povided b s i Purpose 1976/77 1917/8 1970/&9 1979/ao 19OD/81 1981/82 1982/83 93/4 Total 0.................. ................(n*o).................. i. Cereal and Cash-Crop 595 262 It917 2g565 2,925 4,607 989 215 14,05 Production 2. Farm Mechanisation 355 586 256 245 35o 865 325 103 3,90 and Irrigation 3. Itultrys Fishery arul 600 967 1,315 1,660 1,065 1,500 1,482 868 9,457 o Livestock 4. Agro-Industry, Market- 290 455 950 1,270 900 1,16D 2,355 993 8.373 Ing and Warehouse 5. Horticulture Develop- 155 440 6o5 695 295 370 46 361 2,967 ment - - - - - - - -" - Total 1,995 2,710 5,043 6,435 5,535 8,502 5,197 2,540 31,957 Gom" fnM mi Sources AlWN. if Eroept for cereal arnt cash crop production, all others are medium and long-term loans. - 個 織―寫―_＿訐＿__＿一亡 〕’!！·！！〕―〕〕‘劃〕矓〕！! 森蘿訌香二︰俗覓g江奮。重了藝i二 11矓i計麥；彎呈 勺嗎，kl,＿登．‘爭 •嗚．萬勵曾屆勵舅甲巒！ ．才．霄名4不名彎洛 角二••．，間戶•哺•j ．尸：，留一 呈鬍－二 !！一l量；·，···一l莖爆 ：可＿_& ！盡··…喜4··…匡 計：，鳥一悶變雙 蒙＿，待．_ ·！&‘∥’望對！&l-!I &”、’舞槳！&}!l&, ’。：I一鈐紛計房【‘馬l &．方．不一―！憑 “→紼雌廈滲總 ，口， 月口 C輪縱碧：二。隨 &,”添汗；騷 馴卹細． ……，絆諍‘喜 個戶馴d ,,,,&,,,,!,!,&!, .,_&_＿寥寥a界不蔆言雙奢纏―C &&&’一二一胛妒皿訌吁， NEPAL RIMAL DEVEW"MT PROMT (CREDIT 617-NEP) PROJECT COMPLETION REPORT Cropeed. Area, Yields an] Production of Major Crops in Rasuwa/ akot District (1 15/76-1982103) -1975116 1976/71 19171TO 1278/79 1972102 1900/61 1981/02 126?LB1 Project year# 0 1 2 3 4 5 6 7 Paddy 1. Cropped area (be) It200 79220 7g2OO 7030 79t30 79250 109010 15(,120 2. Yield (tonsAa) 2.5 2.5 2-5 2.6 2.6 2.4 1.7 1.3 3. Production (tons) 17000 179930 l7t930 18070 18690 179130 17090 24,950 Raise 1. Cropped area (ba.) 99120 90130 9,,120 90000 80600 8j620 SP700 80900 2. yield (tons/laa) 1.6 1.7 1.4 1.4 0.9 1-5 1.6 1.1 3, Production (tons) 14,840 159520 129410 12t550 7030 12te4f) 11 640 9V910 millet 1. Cropped area (ha) 39330 29300 29300 21280 2t28O 29260 2*260 2*620 2, Yield (torw/6) 1.2 1.7 1.3 1.3 IA 1.0 1.0 110 3. Production (tons) 39930 31900 3toeo M60 29410 29210 2r210 2e78') Wheat 1, Cropped area (ba) 2010 2g480 2t5OO 2t520 2v570 4t6lo 49610 69500 2, Yield (tons/ha) 1.2 1.1 1.2 1.2 1.2 1.2 1.6 1.2 3. Production (toft) 2080 29650 2g89O 2g960 3050 59550 7,200 TOTOO Potatoes 1, Cro area (ha) 19200 If230 19250 If200 19200 1050 19550 t,070 2, Yield (tons/ba) 5.0 5,0 5.6 5.6 5.8 6.3 7.5 TA 3, Production (tons) 69000 69150 6gq8D 60600 6j950 9030 ilv630 79920 Sources Statistics Divisiong Department of Agricultural Marketing Bervicest MOA. jj Rounded figures. ffrpAL UAL D'i191Eg 1lgm? (CUDIT 611-EP) I'ROJECT COMIKlA1 REf'ofr Comparieon or Incremental Cr~pped Aaa ani Crop- rodntion by Different n timtee Cro____A______o___EU_ Official Crop stitftle ruff Z) increase 19J6/11 1981/82 incraise 1916/1g 1971/0 Inerenre 1916/11 19831/2 Ineree* Project j/ crpn Krea (ha) l,: I 4,020 920 15,020 15,910 890 18,980 25,540 6,560 7,220 10,010 2 mW ~ution (tonm) 1,620 24,0m 8,460 l7,300 23,190 5,890 37,65Ö 54,060 16,410 17,90 11,390 <50I) crop (ha 9,200 9,040 (160) 15,630 16,650 1,000 3l,390 23,260 $,8o 9, 8,100 (0 16,2 21,4'x 5,290 12,450 14,1p0 1,870 70,901 In,8w ,nw 15,50 s),6* (,0 Hillet rpd ( 3,200 3,2 10 13,220 13,680 O6n 16,5 20,160 3,5tkl 2, 1» 2,260 (4 Pgaffition (tonl 4,6o0 4,8~ 240 10,760 12,260 1,5I0 18,800 24,820 6,02(0 3,900 2,210 (,., CrOPpe are* (hej 2,inm 2,310 21b 7,220 8,40 1,180 8,940 12,960 4,0211 2,4% 4,610 2,130 POtion (afni) 2,160 3,170 1,610 4,9150 4,850 7o0 8,940 f4,210 5,130 2,650 1,20 4,550 Total Fodarain Cropped aréa (ha) 21,4fl 22,6 0 000 51,9110 54,64 1 65,890 Ot,920 16 Oyl 21930 25,5 im rodnction (tons 38,501 54,1) I5.3W 44,660 54,620 Iffi 94,320 123,980 ( 4 ,000 0,4* 44 Iotatoes Croppd arm. (ha 00 83 30 460 610 210 252 1,050 f0<) 1,23 1,550 120 Produton (tos4 3,350 3,790 3119 60 ,0(0 40 1,3(n 7,3> 5,90 6, 5 11,6n ,Dr Total cutivateit area (ha) 17.00 n.a. n. n.a. 33,190 a. n.a. 49,560 n n.m. n.a. *.a. ¥P ith projeot at tll developent (1982/83). Statt Appatpal ort. / ojest vealuattim Stift. 2/ Sooto-En.oloe V,it.  2 4 846 88* CHINA CHINA NEPAL ' AREA oMAP -IV Kathmandu -INDIA R A S uA D H A D NG $ l N DL P A L C H O K NEPA RURAL DEVEL ENT PROJECT RASUWA/NUWAhK-T DISTRICTS Project Districts Roads o Selected Towns District Boundaries ---- International Boundaries O E1 - KILOMETERS 0 5 10 To X61h,mandumo