Zambia - Eastern Province Agricultural Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 8582 PROJECT COMPLETION REPORT ZAMBIA EASTERN PROVINCE AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2001-ZA) APRIL 30, 1990 Agriculture Operations Division Country Department VI Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Equivalent (Zambia Kwacha/US$) 1981 0.80 1982 1.20 1983 1.40 1984 2.00 1985 7.50 1986 7.20 1987 10.00 1988 10.00 ABBREVIATIONS ARPT Adaptive Research Planning Team CARO Chief Agricultural Research Officer DAO District Agricultural Officers DTT District Training Teams ECU Eastern Province Cooperative Un3in EPAD Eastern Province Agricultural Development Project GNP Gross National Product GRZ Government of Republic of Zambia IBRD International Bank for Reconstruction and Development IFAD International Fund and Agricultural Development LINTCO Lint Company of Zambia MAWD Ministry of Agriculture and W&.er Development PAO Provincial Agricultural Officer PCW Provincial Commissioner of Works PEMO Provincial Extension Management Officer PPS Provincial Permanent Secretary PS Permanent Secretary SAR Staff Appraisal Report SEC Supervision and Evaluation Committee SMS Subject Matters Specialist SPO Senior Planning Officer ZADB Zambia Agricultural Development Bank Fiscal Year January 1 - December 31  FOR OmFCUL us ONLY THE WORLD BANK Washington. O.C. 20433 USA. Olk. of Detm.Getweal 0pmateu. fvalwtsufl April 30, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on ZAMBIA Eastern Province Agricultural Development Project (Loan 2001-ZA) Attached, for information. is a copy of a report entitled "Project Completion Report on Zambia - Eastern Province Agricultural Development Project (Loan 2001-ZA)" prepared by the Africa Regional Office with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank autboriation.  FOR OFFICIUL USE ONLY ZAMBIA EASTERN PROVINCE AGRICULTURAL DEVELOPMKNT PROJECT (LN ZOO1-ZA) PROJECT COMPLETION REPORT TABLE OF CONTENTS PaRe Preface ..................................................... i Evaluation Summary ................................ ......... i PROJECT COMPLETION REPORT PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE ...... ...... 1 1. PROJECT BACKGROUND .................................... 1 Introduction .......................................... 1 Project Formulation and Objectives .................... 1 II. PROJECT IMPLEMENTATION ................................ 2 General ............................................... 2 Agricultural Research ................................. 3 Agricultural Extension ................................ 4 Agricultural Inputs Delivery .......................... 5 Agricultural Credit ................................... 6 Agricultural Processing ............................... 7 Tsetse Control ........................................ 7 Project Planning, Coordination, Monitoring and Evaluation .......................................... 7 III. PROJECT RESULTS ....................................... a General ............................................... 8 Agricultural Impact ................................... 8 Economic Impact ....................................... 9 Project Sustainability ................................ 9 Borrower's Performance ................................ 10 Bank Performance ...................................... 10 IV. CONCLUSIONS AND LESSONS LEARNED ....................... 11 Conclusio.'s ....... 11 Lessons Learned ....................................... 11 PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ....... 13 PART III: STATISTICAL INFORMATION ... # ...................... 17 ATTACHMENT 1. Comments from the International Fund for Agricultural Development ...................... 23 MAP - IBRD 14672 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 w;;hout World Bank authorization.  - i - PROJECT COMPLETION REPORT ZAMBIA EASTERN PROVINCE AGRICULTURAL DEVmLOPMENT PROJECT (LOAN 2001-2A) PREFACE This is the Project Cimpletion Report (PCR) for the Eastern Province Agricultural Development Project (EPAD) in Zambia for which Loan 2001-ZA in the amount of US$11.0 million was approved on May 21, 1981. The project was cofinanced by IFAD with a loan of US$10.6 million. The Bank and IFAD loans were closed on June 30, 1988 after a one-year extension, with undisbursed balances of US$4.4 million for the Bank loan and US$5.8 million for the IFAD loan. The PCR was jointly prepared by FAO/CP staff in consultation with IFAD (Parts I and III), the Borrower (Part II) and staff of the Africa Regional Office (Evaluation Summary). Annex 1 contains the comments on the PCR from IFAD, the cofinancier. Parts I and III of the PCR are based, inter alia, on a draft PCR prepared by the Government, the ,taff Appraisal Report, the Loan Agreement, supervision reports, correspondence between the Bank and the Borrower, internal Bank memoranda, and field discussions with project staff and relevant Government officials.  - ii - PROJECT COMPLETION REPORT ZAMBIA EASTERN PROVINCE AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2001-ZA) EVALUATION SUMMARY Obiective 1. The primary objective of the project was to increase production of the major crops in the Eastern P;ovince (para. 1.03). This was to be achieved trough improving research, extension, credit and input supply services. The project also sought to: (a) improve groundnut and cotton processing and storage; (b) strengthen institutional capability of the Eastern Cooperative Union (ECU) and Zambia Agricultural Development Bank (ZADB) through technical assistance; (c) strengthen the planning, monitoring and evaluation capability of the provincial office; and (d) eradicate tsetse fly in a seleL.ted area. The objectives were appropriate relative to the provincial development potential and needs. Implementation Experienc / 2. Project implementation was adversely affected mainly by five factors. First, the country-wide shortage of qualified staff resulted in frequent changes of key staff, especially at the middle and high levels, and long delay in releasing counterpart staff for training (para. 2.2). At the project completion date, most of the counterpart staff were either quite new or were away for training abroad. Second, the project suffered from inadequate and delayed release of local funds, reflecting country-wide budgetary constraints. This problem particularly affected availability of recurrent funds for supplies, vehicle operation and maintenance, and field travel allowances which are essential to ensure effectiveness of extension and research staff. The problem was exacerbated by suspension of disbursement of IBRD funds since May 1987. Third, considerable delays were experienced in the construction of staff houses and other civil works mainly due to lengthy and cumbersome procurement procedures of the Government (para. 2.03). Fourth, project implementation was significantly hampered by inadec'uate decentralization of authority from the headquarters in Lusaka to the provincial offices of the Ministry of Agriculture, ZADP and the Lint Comp=ny (LINTCO). Whereas the office of the Provincial Principal Secretary was responsible for implementing and coordinating project activities, any significant decisions had to be referred to the respective headquarters ir. Lusaka (para. 2.21). Fifth, uncertainties regarding Government policy prevented the implementation of the component relating to output marketing and input distribution (para. 2.13), while inappropriate price policy prevented implementation of the groundnut processing component (para. 2.18). 1/ IFAD has noted the need to separately appraise central institutions in area based projects - see para. 6 of IFAD's comments.  - iii - 3. Despite the above drawbacks, notable progress was made in carrying out a large number of on-farm research trials with emphasis on improved cultural practices (paras. 2.4-2.5); in strengthening research and extension links (para. 2.6); and in establishing a framework for the Training and Visit (T&V) system (para. 2.7); and in establishing and extension communication center (para. 2.11). After long delay, both ECU and ZADB managed to initiate and extend credit services to a sizable number of farmers (para. 2.17). An efficient way of processing cotton seed was introduced (para. 2.18). A workable monitoring and evaluation system was developed and integrated into the provincial office (para. 2.23). On the other hand, the tsetse fly eradication component had to be abandoned as it became clear that it could not achieve effective results in the absence of a comprehensive program to eradicate the fly in all areas (para. 2.19). Project Results 4. The project impact was expected to be reflected in increased crop production as a result of improved research, extension, and credit services. Indications suggest that, as a result of the project, a larger number of farmers started to use improved technological packages, especially for maize. The quality of marketed maize rose by nearly threefold during the project period (para. 3.4). However, the increased production was also due to several ot'.er factors outside the influence of the project, such as favorable producer prices, good weather conditions and ready availability of fertilizer at r-asonable cost. 5. The draft PCR in 1987 had reestimated an economic rate of return (ERR) for the extension component at 14 percent (compared with the SAR's ERR of 12 percent for the project) on the assumption that Government would continue to fund project services and that full development would be reached in year 12. Project management questioned the validity of this reestimation in 1988 since the Government had not providc t adequate funds after 1987. Consequently, the PCR concludes that reestimating the ERR for the project at this stage would be highly speculative, if not misleading (see PCR paras. 3.5 - 3.7). Sustainability 6. Sustainability of the project activities is doubtful due to budgetary and manpower constraints, particularly to ensure continuation of the T&V system and field research trials and to maintain real value of the credit fund. Already the Government is finding it difficult tQ,provide enough financial resources for extension services (para. 3.8). 'Up to completion time, the project remained heavily dependent on expatriate staff whose departure has left a gap that will take several years to fill with qualified and experienced local staff. Findings and Lessons Learned 7. There are three main categories of findings and lessons to be learned from this project (para. 4.2). First, project design and 2/ IFAD has noted that funds were included under another project for the extension service (see para. 5 of IFAD9s comments)0  - iv - implementation plan should have reflected constraints arising from the shortages of local funds and qualified manpower and should have included a firm schedule for the training of the key counterpart staff. Second, country-wide issues, such as the cumbersome procurement procedures, should have been addressed through lending operations with leverage at the national level. Third, project implementation responsibility should have been complemented with sufficient authority at the provincial level.   PROJECT COMPLETION REPORT ZAMBIA EASTERN PROVINCE AGRICULTURAL DEVELOPMENT PROJECT (LOAN 2001-ZA) PART I PROJECT REVIEW FROM BANK'S PERSPECTrvE PROJECT IDENTITY Project Name I Eastern Province Agricultural Development Project Loan Number I 2001-ZA RVP Unit Africa Country X Zambia Sector I Agriculture Subsector s Area Development/Rural Development I. PROJECT BACKCRODND rnlroductn 1.1 The Eastern Province Agricultural Development Protect (EPAD) was identified by a Bank mission in 1978 and prepared by the Ministry of Agriculture and Water Development (MAWD) with Bank's assistance. It was appraised in August and September 1979, but had to be re-appraised in November 1980 to 2ake account of the changes introduced by the Government of Zambia (GRZ) in the structure of marketing, input delivery and public service salaries after appraisal. The project, to be implemented over a five and a half years, was estimated to cost USS 28.1 million and was co-financed by rBRD and IFAD, who provided loans for USS 11.0 million and SQR 9.0 million, respectively. The project became effective in June 1982 and the loans were expected to be closed on 30 June 1987. GRZ prepared a project completion report, which was finalized in November 1987. In the meantime. however, the closing date was extended to 30 June 1988. This teport is based on the completion report prepared by GRZ and on additional information collected in the field to cover the extension period. Proiet Formulation and O C,i-ve 1.2 The project was formulated during a period when Zambia's economy was declining as the result of depressed copper priceq which led to faliing GNP, GRZ revenues and export earning. In order to make up for the loss in the mining sector, GRZ accorded high priority to agriculture and rural development by increasing substantially the sector's share in the development budget. Recognizing the importance of the smallholder sub- sector, GRZ decided to accord priority to investment in broad-based regional agricultural and rural development projects. EPAD was the first of such projects; similar projects have since been financed in other provinces. 1.3 The objectives of the project were to increase agricultural production and incomes of small farmers in the Eastern Province by providing improved agricultural services. The project was to achieve its objectives by financing: a) agricultural research, including additional staff, equipment, housing, transport and operating costs for expanded research programmes; b) agricultural extension including a re-organization of the extension service along the lines of the Training and Visit System; c) agricultural input delivery comprising constr-ction of input storaqe and purchase of inputs; d) agricultural credit including the funding of incremental credit to farmers and technical assistance to improve credit operations; e) agricultural processing, through the provision of groundnut shellers, construction of an insecticide packing plant and infrastructural improvement of a2 cotton ginnery: f) tsetse control consisting of spraying an area of 1700 km in the province: and 9) project planning, coordination, monitoring and evaluation including the strengthening of the provincial services through technical assistance and funding incremental costs.  - 2 - 1.4 Overall responsibility for projAet planninq, budgeting. monitoring and reporring wag acsinned to the Provincial Permanent Secretary (PPS) whose office was to be strengthened through the provision of a Senior Planninq1 Officer (SPO) and Senior Finance Officer (SFO) with their respective support staff. The PPS was to be assisted by a Supervisory and Evaluation Committee (SEC), to be established within the MAWD, whose functions would be to review, coordinate and approve the budgets and workplans prepared at the province. Members of the SEC were to be the Permanent Secretary (PS) of MAWD as chairman; the PS of tte Ministry of Finance and National Commission for Development Planning; MAWD's Directors of Agriculture, of Veterinary Services, Tsetse Contiol and Planning; General Managers of the Eastern Province Co-operative Union (ECU), Lint Company of Zambia (LINTCO) and Zambia Agricultural Development Bank (ZADS). The project was to be implemented through the existing line agencies. Responsibilities for implementation were therefore ascribed to the Chief Agricultural Research Officer (CAROj in MAWD for the research component; the Provincial Agricultural Officer (PAO) assisted by a Provincial Extension Management Officer (PEMO) for agricultural extension: the provincial Tsetse Control Officer for spraying the designated areas; and the General Managers of ECU, ZADB and LINTCO for implementing the components regardinq input storage and supply, credit and agricultural processing. 1.5 In 1977, GRZ had conceived the project as a means of raising the production of seed cotton by smallholders in the Eastern Province. During preparation it was rightly realized that a project focused only on cotton development would subject farmers to risks of failure, particularly as a result of adverse prices, which would eventually oblige them to switch to other crops. The concept of supporting the entire crop production sector under the project was therefore sound. However, in the process of formulation, the project was complicated by the inclusion of too many components and institutions which made project management and coordinatien cumbersome (paras 2.20 - 2.23). II. PROJECT IMPLEMENTATION Gonaral 2.1 Although the IBRD loan was signed in November 1981, GRZ had difficulty meeting the conditions for loan effectiveness, which included the execution of a subsidiary loan agreement with LTNTCO and a financing agreement with ECU, appointment of three specialists (SPO, SFO and PEMO) and the establishment of a project advance account. The delays resulted due to the tranifer of a number of senior officials in the province and in Lusaka who were familiar with the project. The new officials took some time to understand the project and its start-up needs. Specific and coordinated actions needed to initiate project implementation were therefore delayed inspite of the availability of a Project Preparation Facility (PPF) advanced by the Bank for this purpose, much before the signing of the loan. Project implementation was also adversely affected by lack of local funds and lengthy procurement procedures. The project was extended by one year to enable it to achieve its planned objectives. However, this extension was of little benefit since the Bank suspended disbursements to all the projects financed in Zambia in May 1987, which is still in effect. The salient features of project implementation are summarized below.  -3 Acricultural Research 2.2 The project aimed at supporting and expanding the existing programme of agricultural research relevant to small farmers and consisted of grain legume research, groundnut aqronomy and farming systems adaptive research. Provisions for major improvements were made to Msekera researcn station, where the bulk of the research activities were centered, as well as some improvement in Masumba sub-station and support to a national programme in Mount Makulu. The project provided five expatriate consultants in 1982 who were stationed at Msekera, to carry out the research programmes and to transfer skills to their counterpart staff through on-the-job traininq. Because of the shortage of academ-.cally qualified staff. GRZ was to recruit staff with B.Sc. degree who would be sent for further education under bilatf arrangements, early enough so that they would return to work while the *.sultants were still with the project. No provision was therefore made undcr the project for formal training of Zambian research staff. However, due to bureaucratic delays, the staff were sent for their overseas education only in 1985 and 1986. and at project completion only two were back and four were still under training. The consultants had therefore to work for much of the time without qualixfied counterpart staff, thus jeopardizing the intended transfer of skills and smooth handing over of research work to the staff who would continue the work. The sbsence of a detailed proqramme specifying when staff would undergo their training and return to work. zan be considered as a deficiency in project design in t,hat bureaucratic delays could have been anticipated at project appraisal.