Philippines - Second Rural Development - Land Settlement Project

Document of The World Bank FOR O0FICIL USE ONLY MICRtO1ICHE COPY Report No. 10175 Report No. 10175-PH Type: (PCR) ALEGRE, I / X31755 / T9059/ OEDD1 PROJECT COMPLETION REPORT PHILIPPINES RURAL DEVELOPMENT II (LAND SETTLEMENT) PROJECT (LOAN 1421-PH) DECEMBER 16, 1991 Agriculture Operations Division Country Department II Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Unit - Peso Appraisal Year 1977 US$1.00 = 7.5 Intervening Years Average 1978 US$1.00 = 7.366 1979 US$1.00 = 7.378 1980 US$1r00 = 7.511 1981 US$1.00 = 7.9 1982 US$1.00 = 8.54 1983 US$1.00 = 11.113 1984 US$1.00 = 16.699 Completion Year 1985 US$1.00 = 18.6 ABBREVIATIONS AC - Advisory Committee ANTU - Area Management Units ASCs - Agricultural Service Centers BBR - Bureau of Barangay Roads BFD - Bureau of Forest Development CB - Central Bank CLA - Certificates of Land Allocation COA - Commission on Audit CPMU - Central Project Management Unit DAR - Department of Agrarian Reform (successor to MAR) IPCC - Inter-Agency Project Coordinating Committee IRRI - International Rice Research Institute MAR - Ministry of Agrarian Reform MOA - Ministry of Agriculture MOH - Ministry of Health MPWH - Ministry of Public Works and Highways NFAC - National Food and Agricultural council NFAC - National Food and Agricultural Council NIA - National Irrigation Administration NIA - National Irrigation Administration OCPC - Office of Compensation and Post Classifications PCR - Project Completion Report SAR - Staff Appraisal Report SN - Samahang Nayon TA - Technical assistance FISCAL YEAI January 1 to December 31  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Directi Cefefal Opeiatians Evaluatin December 16, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: t"roject Completion Report on PHILIPPINES - Rural Development II (Land Settlement) Project (Ln.1421-PH) Attached, for information, is a copy of a report entitled "Project Completion Report on the Philippines: Rural Development (Lend SettlAment) Project (Loan 1421-PH)" prepared by the Asia Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment I This document has a restricted distribution and may be used by recipients only in the perfomance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT PHILIPPINES RURAL DEVELOPMENT II (LAND SETTLEMENT) PROJECT (LOAN 1421,-PH) Table of Contents Page No. Preface D Sheet . . . . . . . . . . . . . . . . . . .i EasicData Sheet . . . . . . . . . . . . . . .ii Evaluation Summary . .............................................. vii ProjectCompletionReport .. ................... 1 Background * . * . . . . . . . * * a .1 Project Description . . . . . . . . . ..... e... 1 Project Implementation . . . . . . . . . . . . . . . . . . . . . 2 Project Costs . . . . . . e . . a . * v. . . . . a . . X 3 Project Financing . . . . . . . . . . . * . . . . . . . c . . 3 Procurement . . . . . . . . . . . . *. . . . . . . . 4 Operating Performatnce .f rm n e...........e. 4 Institutional Per formance .................... 10 Project Impact . . . . . . . . . . . . . . . . . . . . . . . . . 12 Annexes 1. Key Indicators . . . . . . . . . . . . . . . . . . . . . . . 17 2. Cost Estimates . . . . , . . . . . . . . . . . . . . . . . . . 18 3. Seasonal Credit Provided for Various Ctops by Rural Banlcs as at the end of 1985 . . . . .. a r.. . 19 4. Term Credit-Achievements . . . . . . . . . . . . . . . . . . . 20 Appendix Government's co ments .... . . . . . . . . 9 . . . . . . . . . 21 Maps IBRD 12483 12484 12485 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECT COMPLETION REPORT PHILIPPINES RURAL DEVELOPMENT II (LAND SETTLEMENT) PROJECT (LOAN 1421-PH) PREFACE This PCR reviews implementation of the Rural Development II (Land Settlement) Project, for which a US$15.0 million loan (total project cost of US$32.6 million) was approved on June 10, 1977. The project was to be implemented over a period of five years, with the original loan closing date being December 31, 1982. The closing date was later extended twice to December 31, 1985. US$1.96 million was canceled. A series of developments during the last year of implementation made it extremely difficult to obtain complete information on this projec-. These included the political events which ultimately led to the overthrow of the Government in 1986, the reorganization of the main agrarian reform coordinating and implementing agency, the dismantling of the project management unit before loan closing, and the neorly complete turnover of officials and staff familiar with the project following the change of Government. Many project records could neither be located nor reconstructed, despite the best efforts of current Department of Agrarian Reform (DAR) staff. This PCR was prepared by an FAO/CP mission on the basis of a visit to the Philippines in late 1988. Given the difficulties mentioned above, the PCR is based mainly on a review of the relevant Bank documents (appraisal report, loan agreement, project files and supervision reports), and of the FAO/CP mission's observations during its visit to Manila and the project sites. The Bank wishes to thank DAR and the other Government agencies involved, and the FAQ/CP, for their assistance in preparing this PCR. Following standard OED procedures, copies of the PCR were sent to the Government on September 25. Comments were received from a former official of the Central Bank who is now working with the Land Bank in the Philippines, an agency which was not directly involved in project implementation. These comments have been included in the report as an Appendix.  - iii - PROJECT- COM1PLEXION LEEP.RT PHILIPPINES RURAL D2-ELOPMENT It (LAND SETTLEMENT) PROJECT (.OAN 1421-PH) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as Z of expectation current estimate aggraisal estimate Project Cost (US$ million) 32.6 30.1 /a 92 Loan/amount (US$ million) 15.0 13.0 87 Date Board approval 05/17/77 Date effectiveness . 10/27/77 Date physical components completed 07/31/82 end-1985 Proportion then completed (Z) Closing date 12/31/82 12/31/85 Economic rate of return (Z) 28 lb Probably negative Financial rate of return (2) Institutional performance Unsatisfactory Agronomic performance Number of direct beneficiaries CUMULATIVE DISBURSEMENT _Y78 FY9 FY80 PY81 PY82 PY83 PY84 FYS5 1986 Appraisal Eatcmte (USSnil) 1.3 4.6 8.0 11.1 14.0 15.0 . - - Actual (US$nil) 0.1 0.8 1.9 5.5 9.1 11.4 12.3 12.7 13.0 Actual as 2 of estimate 8 17 24 23 65 76 - - Date of fial disbursement 06/30186 Cancellations: 1.96 mil Principal repsid to (no./day/yr.) (US$ million)  - iv - U15SIOND DA Mission Stage Date No. of Man-days Specializations Performance T7pe of of PFoiset Cycle (%olvr) Persons infildr represented /c Rating /d Trend J.E problems ldent./Prep 1975 Preappraisal 04/76 3 30 * Appraisal 06/76 4 * * Post-Appraisal (1) 08/76 2 42 * Post-Appraisal (2) 02/77 3 30 * Subtotal 102 Supervision 1 08/77 3 36 B/g ** ** n.a. Supervision 2 11177 1 6 2 ** ** n.a. Supervision 3 01/78 2 20 B/S 2 1 P Supervision 4 06/78 2 10 B/g 2 1 F/O Supervision 5 11/78 2 k B/g * * n.a. Supervision 6 01/79 1 4 ? *** *** n.a. Supervision 7 09/79 1 7 B ** ** n.a. Supervision 8 12/79 3 42 B/CIE *** n.a. Supervision 9 02/80 1 5 g n.a. Supervisiou 10 06/80 3 * E/g 2 1 P/H/T Supervision 11 01/81 4 60 B/D/E/F 2 1 M/F/T Supervision 12 06/81 2 30 8 * * Supervision 13 08/81 3 51 AE/RP 2 1 M/F/T Supervision 14 02/82 3 42 A/F/G 2 1 LA/F/T Supervision 15 09/82 1 9 A 2 2 M/P Supervision 16 07/83 1 10 A 2 1 F Supervision 17 02/84 1 10 A 2 2 F Supervision 18 10/84 1 9 A 2 2 F/O Supervision 19 05/85 2 14 A/E 2 - n.a. Supervision 20 10/85 1 * A ** ** n.a. Completion 1 10/87 1 Completion 2 11/88 6 Subtotal 365 Total 467 OTHER PROJECT DATA Borrower Government of Philippines Executing Agency Central Project Management Unit (Ministry of Agrarian Reform Fiscal year of borrower Calendar Name of currency (abbreviation) Peso (P) Appraisal year average 1977 US$1.00 - 7.5 Intervening years average US$1.00 - 10.222 Completion year average 1987 US$1.00 - 18.6  -v- TIME RECORDED Sta&es_of Prolect Cycle Staff Weeks LENP2 43.1 LENA 67.2 LENN 5.5 SPN 206.0 PCR 16.9 Total 338.7 * No data available. ** Only a Back-to-Office Report was prepared. No report on file. /a Mission estimate based on data provided by Department of Agrarian Reform, Central Bank and rural banks. Combined for three project areas. Les A - Agriculturalist; B - Agriculture/Organization/Management Specialist; C = Economist; D - Economist/Procurement Specialist; E - Rural Development Specialist; F - Project Officer/Marketing Specialist; G - Organization/Management Specialist 1d Performance Rating: 1 - Problem-free or Minor problems; 2 - Moderate problems; 3 - Major problems. ig- Trend: I - Improving; 2 - Stationary; 3 - Deteriorating. if Types of problems: F - Financial; M = Managerial; T - Technical; 0 - Other (SPN Report states tGsecurity situation in Agusan settlement curtailed work." La Specialization not known. ih PCR mission mounted by FAO.  - vii - PROJECT COMPLETION REPORT PHILIPPINES RURAL DEVELOPMENT II (LAND SETTLEMENT) PROJECT (LOAN 1421-PH) EVALUATION SUMMARY Objectives 1. This project aimed to assist the Government of the Philippines in the reformulation and implementation of its land settlement programs, administered by the Ministry of Agrarian Reform (MAR). It was the Bank's second rural development project in the Philippines, and the first operation to give primary emphasis to rainfed agriculture in mixed upland/lowland areas. Specifically, the project was designed: (a) to strengthen and support the technical capacity of MAR to plan and design land settlement programs more effectively; (b) to accelerate development in three of the older settlement areas through integrated programs to improve the living conditions and incomes of existing farmer families; and (c) through implementation in these three settlements, to test the collective impact of a number of the Government's programs of special relevance to the rural poor, including village road and small-scale irrigation programs, cooperative development and agricultural credit, agricultural extension, demonstration and farmer training systems, rural health and family planning services. The three settlement areas selected (Agusan del Sur, Bukidnon and Capiz) accotnted for about 10% of the aggregate area and about one-fifth of the population involved in MAR settlements at that time. The project was to be implemented over a five-year period, at a total cost of US$32.6 million; the Bank loan of US$15.0 million was approved on May 17, 1977. Implementation Experience 2. Project execution and coordination were entrusted to a Central Project Management Unit (CPMU), established in MAR and responsible to the Minister. The CPMU was represented at the field level by three Area Management Units (AMUs). The Agricultural Service Centers (ASCs), staffed by personnel from the Ministry of Agriculture (MOA), were established at each settlement to provide agricultural extension, farmer training, adaptive research and other services. The project had a very slow start due to initial delays on the part of the Government in approving budget allocations and staff recruitment, and prolonged preparatory works (surveys, aerial photography) for land allocation and titling. From 1980 the pace of implementation accelerated, and by late 1981 good progress was reported on land policy development and construction of roads and buildings. Agricultural and forestry development, irrigation and extension were also progressing. Nonetheless, the project closing date had to be extended twice to  - viii - December 1985, to allow for the complqtion of land allocation and other project activitiesV which in later project years were delayed by bad weather and disturbed peace and order conditions, particularly at Agusan del Sur. 3. Following completion of major civil works at the other two settlements, Bukidnon and Capiz, the AMUs were withdrawn and the Bank signalled its concern about a possible rapid deterioration of project services, as no suitable arrangements had been made for the handover of project facilities and activities. Meanwhile, the situation with regard t- peace and order iTI Agusan del Sur continued to deteriorate to the extent that settlers were reported to have abandoned their farm lots, at least temporarily, and project roads were reported to be impassable. The March 1984 supervision mission could not assess the extent of agricultural development because of problems of access and inadequate data. In October 1985, shortly before the final revised loan closing date, the CPMU was dismantled and no project records were kept for the last quarter of that year. With the overthrow of the Government in early 1986, there was a complete turnover of the top management and many of the technical staff of the Department of Agrarian Reform (DAR, successor to MAR) and other government agencies involved in the project. 4. The completion mission estimates that total project costs amounted to about US$30.1 million, over eight years (1978-85), or about 92% of appraisal estimates. The Bank disbursed US$13.1 million (44% of total costs), and the unutilized balance of nearly US$2 million was cancelled at loan closing. Procurement of goods and services essentially followed the procedures set out in the Loan Agreement, and presented no major implementation problems. 5. The project was designed with the objective of creating a replicable pattern of interagency cooperation for settlement development and strengthening MAR's capability to undertake coordination of such activities, perform specialist functions relating to land allocation and resettlement, and settlement planning. The project clearly failed in achieving this objective: MAR proved unable to handle coordination of the multi-agency project, and the centralized and top heavy planning and management through the CPMU deterred local participation at the provincial and barangay levels. This undermined the ability of the provincial advisory committees to obtain the cooperation of local authorities and line agencies. The performance of the main participating agencies (the Ministry of Public Works and Highways, MPWH; Ministry of Agriculture, MOA; Central Bank, CB, for the credit component through rural banks; Ministry of Health, MOH; the National Irrigation Administration, NIA; National Food and Agricultural Council, NFAC; and the International Rice Research Institute, IRRI) appears to have been mixed, although difficult to assess in the absence of proper records. The impression gained by the completion mission was that, at least in the initial years of the project, the response of these agencies to project needs was relatively satisfactory, but the degree of cooperation decreased rapidly as the CPMU assumed more direct responsibility and authority to execute by force account. Consequently, once the AMUs were withdrawn, there was a rapid rundown in the level of services, particularly the upkeep of project roads. Present DAR management and staff disclaim responsibility for the performance and results of the project.  - x -x 6. Project accounts and financial documentation appear to have been in good order until end-September 1985, beyond which no further reports were submitted. The different participating agencies maintained their own accounts. The budgeting system was cumbersome and often caused implementation delays. Quarterly progress reports on project activities and achievements were prepared and submitted to the Bank through the end of September 1985. No terminal report was prepared by CPMU, although an incomplete draft report was later prepared by DAR and provided to the completion mission as background information. 7. Overall, the performance of consultants and contractors appears to have been unsatisfactory. The services of an external management spec.ialist to assist CPMU in project planning and implementation proved to be unsatisfa'tory; these were withdrawn and not replaced. A satisfactory feasibility study was carried out by an external firm for a follow-up project, and some of the results were incorporated in another Bank-financed transportation project (SRRIP). A local firm was employed to carry out an "evaluation design study" and produced a report which contained much data not directly pertaining to the project area, and lacking in specific and concrete conclusione. It did not serve as a basis for post-project evaluation. A number of project works, such as buildings for housing and other uses, small section of roads, etc., were also contracted out to local firms by CPMV. The overall performance of these contractors was unsatisfactory, both in terms of quality and timeliness. Proiect Results and Sustainability 8. Reliable information on project agricultural development and production results is not available, as no systematic efforts were made to obtain such data. Nonetheless, in the course of project implementation, there does appear to have been some shift in emphasis towards the development of perennial crops, both because of poor producer prices for sugarcane and abaca and the fact that credit was becoming easier to obtain on the basis of transitory land tenure documents issued under the project. It is estimated that a total of about 700 ha of tree crops were established (mainly rubber, followed by coffee with smaller areas of cacao). 9. A wide range of benefits were expected from the project, not only through imple'entation of its productive components, for which rates of return were calculated at appraisal (17% for Agusan, 31% for Bukidnon and 41% for Capiz, giving a combined ERR of 28%), but also through the development of infrastructure and social services. However, the many institutional, political and technical weaknesses of the project have resulted in an impact whicii is probably too small to justify the costs incurred. Although quantification i8 not possible due to the paucity of reliable data, the completion mission estimates that the actual project ERR is probably negative, and project sustainability is, at best, uncertain. Bank Performance 10. Project preparation was technically deficient; the Bank should have allowed more time for essential studies and analyses and should have insisted  x that more specialized inputs be made available, both to the Borrower's praparation team end its own preparation and appraisal missions~ The Bank carried out 19 supervision missions with good staff continuity. However, they included mainly general agriculturalists and only occasionally specialists in other fields. Very little specialized staff input was devoted to some of the most crucial and problematic aspects of the project, including land titling, civil works (particularly roads), irrigation and credit. While major issues were raised with the Government by the supervision missions, little pressure appears to have been exerted to ensure their actual resolution. Lessons Learned 11. Although it has not been possible to quantify the results of the project with any accuracy, it is quite apparent that they fell far short of those envisaged at appraisal. To a certain extent, this was due to a serious peace and order situation in the project areas and to a deteriorating economic and political situation nationwide. On the other hand, there were also flaws in the design, appraisal and supervision of the project. Lessons which may be drawn from project results include: (a) P-oject implementation commenced with the optimistic assumption that improved procedures would be put into effect for the issuance of land titles, or equivalent instruments, shortly after loan effectiveness (end-1977). The April 1982 Bank supervision mission reported that it seemed unlikely that completion of land allocation and titling could be accomplished before the second half of 1983 (i.e., five years after project effectiveness). This situation adversely affected the project throughout its implementation period. The lesson is that resolution of land tenure issues is8- essential Rrerecuisite to the successful agricultural deve_opment of settlement pro-jects. (b) Some 11 agencies were involved in the project at the national level. Project execution and its success was also dependent on close integration and coordination of these agencies at the provincial and local levels. This proved extremely difficult to achieve, due to institutional friction and political tensions. The lesson is that the difficulties and complexities of securing inter-ageny coordination and multi-disciplinarY prolects should not be underestimated. and the number of institutions involved in groject implementation should be keRt to a manageable level. (c) Work plans and major decisions for project activities were centralized in Manila and channelled through the CPMU. Although local participation in inter-agency committees was to be encouraged, these arrangements proved to be ineffective, mainly, due to the dominance of MAR, and the increasingly powerful role assumed by the CPIU. This resulted in lack of interest and cooperation on the part of the other institutions in project implementation. The lesson is that in projects of this kind. maximum efforts are needed to find  xi - workable mechanisms to involve local authorities and the staff of line agencies in the process of project plannin, and implementaticon. Also, inter-agency coordinating committees are likely to be successful only if the members see them as providing a necessary forum for substantive decision making. Key appointments (e.g. area mainagers) from outside the region may not be helpful in this regard. Further, temporary institutions wholly dependent on project funding and contract staff, do not contribute to project sustainability. (d) Project design proved to be both overly optimistic and, for certain components, deficient on technical grounds. The potential for irrigation and forestry development, as well as for land development and soil cons-rvation, was seriously overestimated and was based more on speculation than on detailed field studies. Agricultural development proposals were also very weak and failed to make sufficient provision for perennial crops, in spite of the fact that the terrain at all sites was better suited to this form of development than to annual cropping. Project supervision for a number of major components (land titling, irrigation, etc.) was also insufficient, and the project faced continuous counterpart funding problems. The lesson is that poor project Preparation cannot easily be comRensated during suRervision, and therefore, greater attention must be given to ensuring the technical and social viability of projects at design stage, as well as to securing Government commitments to critical actions before loan approval.  PROJECT COMPLETION REPORT PHILIPPINES RURAL DEVELOPMENT II (LAND SETTLEMENT) PROJECT (LOAN 1421-PH) Background 1.01 In the mid-1970s, the Government of the Philippines requested the Bank to assist in the reformulation and implementation of its land settlement programs, administered by the Ministry of Agrarian Reform (MAR). The resulting project was the Bank's second rural development project in the Philippines, following the Mindoro Project (Loan 1102-PH of July 1975), and the first operation to give primary emphasis to the development of rainfed agriculture in mixed upland/lowland areas. Identification and preparation were initiated by the Government in 1975, and then assisted by several Bank missions. The project was appraised by the Bank in July 1976 and the staff appraisal report (SAR) was issued in April 1977. 1.02 The project was conceived and designed: (a) to strengthen and support the technical capacity of MAR to plan and design land settlement programs more effectively; (b) to accelerate development in three of the older settlement areas through integrated programs to improve the living conditions and incomes of existing farmer families; and (c) through implementation in these three settlements, to test the collective impact of a number of the Government's programs of special relevance to the rural poor, including village road and small-scale irrigation programs, cooperative development and agricultural credit, agricultural extension, demonstration and farmer training systems, rural health and family planning services. Detailed plans were prepared for the three settlement areas of Agusan del Sur (16,400 ha total, of which 5,000 ha cultivable) and Bukidnon (38,400 ha total, 6,000 ha cultivable) in Mindanao, and Capiz (25,000 ha total, 11,000 ha cultivable) in the Visayas, accounting for about 10% of the aggregate area and about one-fifth of the population involved in MAR settlements at that time. Proiect Descrition 1.03 The project comprised both program support (Part A) and implementation of settlement activities (Part B), as follows: (a) Part A. Program support to improve the design and implementation of the Philippines' national settlement program, including: (i) planning and technical studies; (ii) provision of management support, staff training and communication and transportation facilities for the CPMU, and staff training for MAR; and (iii) monitoring and evaluation studies. (b) Part B. The provision of infrastructure, agricultural development and other services in the three settlement areas, including: (i) road construction and improvement; (ii) irrigation and drainage;  - 2 - (iii) forestry development; (iv) other land development; (v) health facilities, including family planning and nutrition, and water supply; (vi) service buildings and facilities; (vii) construction and operation of an Agricultural Service Center (ASC) in each settlement area to provide agricultural extension, farmer training, adaptive research and other services; and (viii) marketing, cooperative development and credit services to settlers. 1.04 Total project costs at appraisal were estimated at US$32.6 million, including a foreign exchange component of US$11.8 million (36%). The Bank loan was US$15.0 million. Implementation was planned for five years, and project execution and coordination were entrusted to a Central Project Management Unit (CPMU), established in MAR and responsible to the Minister. The CPNU was represented at the field level by three Area Management Units (AMU). The ASCs were staffed by personnel from the Ministry of Agriculture (MOA). The Loan Agreement was signed on June 10, 1977, and became effective on October 27, 1977. A subsidiary loan agreement was issued on March 7, 1978, setting out the on- lending conditions for US$0.9 million of the loan proceeds, from the Government to the Central Bank of the Philippines, for provision of credit to project settlers. Proiect Implementation 1.05 The project had a very slow start due to initial delays on the part of the Government in approving budget allocations and staff recruitment; by August 1978, no participating agency except MAR had received any funds. Prolonged preparatory works (surveys, aerial photography) for land allocation and titling were also a major cause of project delays. In 1979, supervision missions noted some progress, and from 1980 the pace of project implementation accelerated, leading to expressions of optimism by Bank staff that the project could catch up with physical targets within the original period (i.e, by December 1982). Following mid-1980, 1,400 certificates of land allocation (CLA) were issued to settlers, and processing of farm credit applications was initiated. 1.06 By September 1981, good progress was reported on land policy development and construction of roads and buildings. Agricultural and forestry developmertt, irrigation and extension were also progressing. Nonetheless, the project closing date had to be extended by one year, to December 1983, to allow for the completion of land allocation and other project activities. By October 1983, another extension of the closing date was considered necessary, this time for two years to December 1985, because of "exceptionally bad weather and disturbed peace and order conditions (particularly at Agusan del Sur) which resulted in very slow progress being made on the infrastructure component". 1.07 Following completion of major civil works in Bukidnon and Capiz, the ANUs were withdrawn and the Bank signalled its concern about a possible rapid deterioration of project services, as no suitable arrangements had been made for the handover of project facilities and activities. Meanwhile, the situation with regard to peace and order in Agusan del Sur continued to deteriorate to the extent that settlers were reported to have abandoned their farm lots, at least  - 3 - temporarily, and project roads were reported to be impassable. The March 1984 supervision mission could not assess the extent of agricultural development because of problems of access and inadequate data. In October 1985, shortly before the final revised loan closing date, the CPMU was dismantled and no project records were kept for the last quarter of that year. Prolect Costs 1.08 Due to the difficulty of recovering records after the dismantling of the CPMU, actual project expenditures have been reconstructed by the Department of Agrarian Reform (DAR successor to MAR) on the basis of "obligations" related to each Ministry, but without a precise allocation of the costs among components1' and/or settlement areas. After adding the counterpart portion of the credit component (Central Bank and rural bank contribut:.ons, as well as those of farmer borrowers),1/ the completion mission estimates that total project costs amounted to about US$30.1 million, over eight years (1978-1985), or about 92% of appraisal estimates (Annex 2). Project FinancinR 1.09 Relative to appraisal estimates, the financing of ptoject costs appears to have been as follows: Table 1: PROJECT FINANCING BY SOURCE Appraisal PCR Financial Source Estimates (Z) Estimates (Z) -US$ million)------------------- - IBRD 15.0 (46) 13.1 (44) - Local funds GOP 16.6 (51) 16.4 (54) Central Bank ) 0.4 (1) Rural banks ) 1.0 (3) 0.1 (0.05) Sub-borrowers ) 0.1 (0.05) Subtotal 17.6 (54) 17.0 (56) Total Project Costs 32.6 30.1 An undisbursed balance of nearly US$2 million was cancelled at loan closing. I Except for those clearly involving one agency, such as the health component under MOH or that of cooperative development and credit assistance under MA-BCOD. 21 Data provided to the completion mission by the Central Bank.  -4- 1.10 Loan proceeds were reallocated twice, at the Borrower's request. In 1981, US$2.7 million was shifted from the unallocated category to equipment, consultancies and training, staff and operating expenses. The second reallocation of loan proceeds was effected in 1983 to cover additional increases in the costs of civil works and staff salaries, through reductions in equipment, consultancies and training, and term credit. Procurement 1.11 There do not appear to have been any particular problems over procur4ment of goods and services for the project, which essentially followed the proceaures set out in the Loan Agreement. Operatine Performance 1.12 Settlement Program SuRgort (a) Policy Study. The main objective of this sub-component was to develop an acceptable framework for decision-making on the use of public lands. It was to include evaluation of competing uses, establishment of clear criteria for selection and designation of settlement areas, assessment of the long-term potential for agricultural development, and the formulation of a viable program for land management which would reconcile the competing interests of the various Ministries. After considerable difficulty, a study team was established, but personality and policy clashes made progress extremely slow. MAR was mainly interested in the narrower issue of how to improve the operations of its existing settlement program. Finally, real progress appeared to have been made as a result of an inter-agency "Workshop on Public Land Policy" sponsored by MAR in August 1981. Critical issues were identified and a series of recommendations were put forward for Government action. A paper was prepared and submitted to a special Cabinet Committee for considera- tion but no guidelines were issued, and with the winding-down of the project through 1983-85, no further action was taken on this study. (b) Feasibility Studies. Feasibility studies by local and international consultants, for further settlement in existing and/or new areas were to be undertaken to support a follow-up rural development project. They were initiated by a joint international/counterpart team in 1980 after area identification in 1979, and included aerial photography interpretation and proposals for infrastructure, agriculture and social services development. Full studies were completed on three areas and a partial study on a fourth area. Surigao del Sur was dropped from the proposed follow-up project as a result of competing mining interests. The three completed studies were in (i) Wau-Banisilan in Lanao del Sur, Region 12; (ii) Kabankalan in Negros Occidental, Region 6; and (iii) Sultan Kudarat in Cotabato/Davao, Region 12. These studies were eventually used as the basis for a World Bank-funded Small Rural Roads  -5- Integrated Project (SRRIP), rather than for further integrated rural (settlement) development. (c) Management Support. A Central Project Management Unit (CPHU) was created within MAR, reporting directly to the Minister, and with planning, budgetary, financial and supervisory responsibilities. Short-term contract area managers were appointed to head the AMUs in each of the three settlement areas, to coordinate the work of the various functional units dealing with each aspect of settlement development. At the national level an Inter-Agency Project Coordinating Committee (IPCC) was established, comprising senior staff of the 11 agencies expected to be involved in implementation. A notable absentee on this committee was a representative from the Bureau of Lands. At the regional level an Advisory Committee (AC), with line agency representation, was established to advise the area manager. Strict adherence to general guidelines and procedural requirements by the Office of Compensation and Post Classifications (OCPC) created considerable problems for the funding and staffing of the CPMU, which were not fully resolved until 1980. The CPMU, although initially effective and with strong Ministerial backing, became isolated within MAR. The AMUs tended to work on their own and did not involve the local line agencies sufficiently. The IPCC, although active, did not fulfil its coordinating function or exercise sufficient influence over the CPMU, particularly on forward planning and budgetary control. At the regional level, the ACs did r.ot function; the AMUs implemented most sub-components directly, and latterly, on force account. (d) Technical Assistance and Staff Training. The main TA input into project management was the appointment of an internationally recruited advisor with experience in settlement development. However, the incumbent took little initiative in developing work formats and management procedures, and the appointment was terminated after one year. The major consultancy for the feasibility studies was satisfactory, particularly in its involvement with the counterpart team. The consultancy/training input to the Policy Study was less than satisfactory. 1.13 Settlement Infrastructure. The provision of infrastructure for the three settlements was the largest project component (US$9.9 million). It consisted of the construction/upgrading of different categories of roads, communa. irrigation systems, potable village water supplies, and buildings for agricultural services, health services and staff housing. Data on civil works achievements were available only through June 1985. 1.14 Road construction did not get underway until lat-a 1978, due to delays in the release of funds to the Ministry of Public Works and Highways (MPWH) and the late procurement of project-funded equipment. Implementation was largely by  - 6 - force account, through MPWH and the Bureau of Barangay Roads (BBR). BBR teams were allotted to each settlement area for village road construction and maintenance. Many difficulties were experienced in the initial stages of construction due to the inexperience of BBR staff in dealing with the high rainfall conditions of the settlement areas, particularly Agusan del Sur (BBR, at the time, was a relatively new sub-agency of the MPWH). Several sections of the roads (20-50 km) were awarded by the project management to Manila-based domestic contractors whose quality of work, according to local officials, left much to be desired. Some 1,500 meters of bridges were constructed, as planned at appraisal, but the quality of construction was apparently poor, some having collapsed or been swept away by floods within three years of construction. Of the planned 876 meters of culverts, only 74 meters were installed. Drinking water installations were provided to the villagers through tapping of natural springs and artesian wells, with water being conducted through plastic pipes to village water tanks for communal use. The achievements for this activity were in excess of appraisal targets (49 v. 33). The number of water-sealed toilets installed as 65% of the appraisal estimate (2,100 vs. 3,250), with none in the Capiz settlement due to unavailability of water. Buildings for the health centers (17) and agricultural service centers (3) were on target, but staff housing (194) and multi-purpose buildings (52) fell short of targets (30% and 69%, respectively) because of problems with contractors over construction schedules and the quality of work. 1.15 Accomplishments for the irrigation component (3,550 ha communal and 1,450 ha mini-irrigation) were extremely disappointing. The systems (1,400 ha communal and 500 ha milni-irrigation) env .saged for the Agusan del Sur settlement, a high rainfall area, were dropped altogether due to drainage problems. The Capiz settlement was subjected to several surveys and studies for reliable water sources, which yielded no results; therefore no development took place, except for 36 ha of mini-irrigation. Only in the Bukidnon settlement were two communal sites developed (at Kalilangan and Dagumbaan) for a total of 1,481 ha by end- 1984, with an additional area of 639 ha planned for 1985. The status of work on the latter could not be checked by the PCR mission, but discussions indicated that only 820 ha were actually being irrigated due to water shortage at Kalilangan (340 ha irrigated) and the need for additional work at Dagumbaan (480 ha irrigated). 1.16 In physical terms, most of the project targets for roads and bridges were completed by the end of 1984, with minor balances left for completion in 1985. The data on achievements reported by the CPMU for 1985 and those submitted by DAR to the mission in 1988 were not entirely consistent, but it appears certain that very little was achieved in 1985. The data on overall project accomplishments, including civil works, are presented in Annex 1. 1.17 Settlement Services (a) Laad Titling and Allocation. The three settlement areas had been long established before the project, but many of the settlers still operated under a usufruct system and few (2,364) had received title to the lands which they occupied. The absence of secure land title  -7- impeded development because it prevented access to institutional credit, thereby creating a barrier to investment in fixed assets. Under the project, land allocations were to be introduced to reflect income instead of farm size criteria. Rapid procedures for the issuance of Certificates of Land Allocation (CLA) were to be developed, and wider discretionary powers given to project land allocation officers. Representative land committees were to be set up in each settlement area to work with land allocation units and to ensure that local views were taken into account. Unofficial realignment of plots into more economic units had already been initiated, but the project commissioned further aerial photography and re-survey in 1979 to locate actual farm plots. At the urging of project management and Bank supervision missions, the Deputy Minister of MAR issued a Memorandum in July 1980 which detailed simplified procedures, within existing land laws, for speeding up the issuance of CLAs. The CPMU was empowered to process the documentation at land settlement offices in the settlement areas. Initial progress was rapid, as only applications from those settlers cultivating plots with no significant boundary anomalies were processed. As agreed with the Central Bank, CLAs were recognized transitory documents for credit purposes. Since the work of the local firms contracted in 1979 had proven to be inaccurate full title issuance was to come only later, after a reliable cadastral re-survey could be completed. Final achievements reported by the CPMU as of June 30, 1985 were 8,863 CLAs issued,3/ of which 2,608 had received a definitive land title.!' However, records were not accurately maintained, and with the reorganization of the Ministry of Agrarian Reform into the Department of Agrarian Reform and the assumption by DAR of responsibility for the settlement areas upon project completion, doubt was cast on the validity of the CLAs issued under the project. At the time of the PCR mission in late 1988, DAR considered that a complete re-survey would have to be undertaken and each CLA examined before final clearance, applying the original complex pre-project bureaucratic procedures. (b) Land Development and Soil Conservation. The project sought to protect seriously eroded lands in the Bukidnon settlement area. Large transverse bunds were to be constructed giving protection to some 8,000 ha, and on-farm protection was to be encouraged through demonstration of erosion control methods. However, in 1981 this activity was taken over by an Asian Development Bank-financed Watershed Development Project to be implemented in the same area. Soil erosion problems were taken up by the ASC through on-farm demonstration of contour planting and intercropping, but the work Including the 2,364 issued pre-project.