Malawi - Rural Development Program (NRDP) Projects

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9750 0<f r<, iNo-. t0!.t7 , -MAi T }y {-,c~: (JJ J"Kyo:;C X21.Yllhh-, / / 'I;/ TJ)EL)D1 PROJECT PERFORMANCE - DIT REPORT MALAWI KARONGA RURAL DEVELOPMENT PROJECT, PHASE II NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE I PROJECT NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE III PROJECT NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE IV PROJECT (LOAN 1286-T-MAI AND CREDITS 857-MAI, 1183-MAI AND 1343-MAI) JUNE 28, 1991 Operations Evaluation Department Ihis document has a restricted distribution and may be used by recipients only in the perfonnance of their officeial dudies. Its contents may not otherwise be disclosed witbout World Bank authorization.  CURRENCY EQUIVALENTS Malawi Kwacha/US dollar - averages 1966-71 0.833 1972-75 0.841 1976-79 0.869 1980 0.812 1981 0.895 1982 1.056 1983 1.175 1984 1.413 1985 1.719 1986 1.861 1987 2.209 1988 2.561 1989 2.822 ACRONYMS ADD Agricultur.l Development Division ADMARC Agricultur&j. Development and Marketing Corporation CIDA Canadian International Development Agency .iA Development Area DH Dedza Hills EDF European Development Fund EPA Extension Planning Area IDA International Development Association IFAD International Fund for Agricultural Development IRDP Integrated Rural Development Program KADD Karonga Agricultural Development Division KRDP Karonga Rural Development Project LADD Lilongwe Agricultural Development Division LLDP Lilongwe Land Development Program LNE Lilongwe North-East M&E Monitoring and Evaluation MOA Ministry of Agriculture MOF Ministry of Finance mOW Ministry of Works and Supplies MU Management Unit NARP National Agricultural Research Project NRDP National Rural Development Program OED Operations Evaluation Department PCR Project Completion Report PPAR Project Performance Audit Report RDP Rural Development Project SAL Structural Adjustment Lending TA Technical Assistant TO Technical Officer USAID United States Agency for International Development  FOR OFFICIL USE OLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office if Dgect(w.c"WaI Opffwm Z Eahjas June 28, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Performance Audit Report on Malawi Karonga Rural Development Project, Phase II; National Rural Development Program (NRDP) Phase I Projectt National Rural Development Program (NRDP) Phase III Project; National Rural Development Program (NRDP) Phase IV Project (Loan 1286-T-MAI and Credits 857-MAI. 1183-MAI and 1343-MAI) Attached, for information, is a copy of a report entitled "Project Performance Audit Report on Malawi Karonga Rural Development Project, Phase II; National Rural Development Program (NRDP) Phase I Project; National Rural Development Program (NRDP) Phase III Project; National Rural Development Program (NRDP) Phase IV Project (Loan 1286-T-MAI and Credits 857-MAI, 1183-MAI and 1343- MAI)" prepared by the Operations Evaluation Department. Attachment This document has a restricted distribution and may be used by rccipients only in the peorhance of their ofcial dutis. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OmCIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT &L&WI KARONGA RURAL DEVELOPMENT PROJECT, PHASE II NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE I PROJECT NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE III PROJECT NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE IV PROJECT (LOAN 1286-T-MAI and CREDITS 857-MAU. 1183-MAI and 1343-MUA) TABLE OF CONTENTS Page No. PREFACE.... ..........................i BASIC DATA SHEETS .T. . ...... .................. .ii EVALUATION SUMMARY ................. sIv PROJECT PERFORMANCE AUDIT I. INTRODUCTION ........... 1 II. PROJECT FORMULATION, OBJECTIVES AND DESIGN 2 III. IMPLEMENTATION .......... 8 Project Costs . . . . . . . . . . . 9 Physical Construction and Maintenance 9 Project Staffing and Organization . 13 Agricultural Extension, Credit and Farmer Coverage . . . . . . . 15 Input Availablity and Use . . . . . 18 Output Marketing ..... . e * * . 21 Research . . . . . . . . . . . . . 22 Land Registration . . . . . . . . . 24 Soil Conservation . . . . . . . . . 25 Burley Tobacco . .... . . ... 26 Monitoring and Evaluation . . . . . 27 IV. PROJECT IMPACT . . . . . . . . . . 27 Macro-Economic Impact . . . . . . . 27 Distributional Impact . . . . . . . 33 Non-Quantifiable Impact . . . . . . 35 Input and Output Pricing Policies . 36 V. SUSTAINABILITY . . . . . . . . . . 40 VI. ISSUES AND LESSONS . . . . . . . . 47 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.  Issues . . . . . . . . . . . . . . 47 - The Evolution from Integrated Area to Policy-based Lending . . 47 - Nature of Beneficiaries . . 50 Lessons . . . . . . . . . . . . . . 51 - Cash Inputs in Subsistence Farming 51 - Land Registration . . . . . 52 Soil Conservation . . . . . 52 - Ex-Post Economic Rates of Return 52 -Output Pricing . . . . . . 52 - Coordination with Non-project Institutions . 53 ANNEXES 1. Economic Rate of Return Calculations . . . . . . 55 2. Production and Yield Data 61 Map - IBRD No. 20924R  - L - PROJECT PERFO)RMANCE AUDIT REPORT NALAWX KARONGA RURAL DEVELOPMENT PROJECT, PHASE II NATIONAL RUNRAL DEVELOPMENT PROGRAM (NRDP) PHASE I PROJECT RATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE III PROJECT NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE IV PROJECT (LOAN 1286-T-NUI and CREDITS 857-_Al. 1183-MAl and 1343-MAI) PREFACE This is the project Performance Audit Report (PPAR) of the Karonga Rural Development Project, Phase II, National Rural Development Program (NRDI) Phase I Project, National Rural Development Program (NRDP) Phase III Project, and National Rural Development Program (NRDP) Phase IV Project in Malawi. They involved respectively a Third Window loan of US$9.2 milliotn, and IDA credits of US$22 million, SDR 6.5 million (US$7.3 million) and SDR 9.8 million (US$10.6 million). The loan/credits were approved on June 30, 1976* November 28, 1978, October 13, 1981 and April 5, 1983 respectively. The full amount of the Karonga II loan was ditwbursed; cancellations on NRDP Phase I and III credits were respectively US$2.89 million and US$2.05 million. The Closing Dates were: Karonga II project December 31, 1981, National Rural Development I project June 30 1986, National Rural Development III project September 30, 1988 and National Rural Development IV project September 30 1990. Final disbursements were: Karonga II project February 17, 1982, National Rural Development I project October 22, 1986, National Rural Development III project May 31, 1989 and National Rural Development IV project March 22, 1991. The PPAR is based on the Project Completion Reports (PCRs)1/ of the first three projects, the Staff Appraisal and Presidert's Reports, the loan/credit documents and on a study of project files and discussions with Bank staff in Washington and Lilongwe. An OED mission visited Malawi in September/October 1990 and discusbed the projects with Ministry of Agriculture officials and with staff of the Lilongwe and Karonga Agricultural Development Divisions. The mission met with farmers and field staff personnel in the I/ Project Completion Reports: (i) Malawi: Second Karonga Rural Development Project Phase II (Loan 1286-T-MAI), Report No. 5340, November 28, 1984; (ii) Malawi: National Rural Development Program Phase I (Credit 857-MAI), Report No. 6797, June 2, 1987 and (iii} Malawi: National Rural Development Program (NRDP) - Phase III Project (Credit 1183-MAI), May 22, 1990. The Karonga II PCR was prepared by the Ministry of Agriculture and the Bank's Regional Mission in East Africa; the PCR for National Rural Development I was prepared by the Bank's Regional projects staff; the PCR for National Rural Development III was prepared partly by the Ministry of Agriculture and partly by the FAO/World Bank Cooperative Program.  - It - reepective project areas. The kind cooperation and valuable aesistance by all concerned in the preparation of this report ia gratefully acknowledged. The PCRs provide a full account and assesment of the projects experiences, including the performance of the Bank and the project executing *gencies. The PPAR elaborates on particular aspects such as project design, modificatioons during implementation, impact *nd austainability. The draft PPAR was sent to the Borrower for coments but none were received.  - lli - ZROJECT PERFORMANCE AUDIT REPORr SECOND KARONGA RUPAL DEVELOPMENT PROJECT _ ILAN 1286-T-UI9 ^tALC DATA MHET KEY PROJECT DATA Actual as Actual or Z of Appraisal Estimated kpW-1 Estimate Actual _ Total Project Costs (US$ million) 12.09 12.44 103 Loan Amount (US$ million) 9.2 9.2 100 Date Physical Components Completed 09/80 03/82 Houses 100 Roads 30 Boreholes 90 Markets 20 Health 100 Training Centers 100 Economic Rate of Return - NRDP 14S 141 - Lake Transport 18S 10S Institutional Performance PoorLs Performance VariableLb Fin acial Performance Poor/L Number of Direct Beneficiaries 11,000 farmereLd CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMEWNTS FY77 PY78 FY79 PY8 FY81 IY82 Appraisal Estimate (US$ M) 0.8 4.0 7.4 8.6 9.2 - Actual (US$ M) 0.5 3.5 6.9 8.0 8.9 9.2 Actual as 2 of Appraisal (Z) 62.5 87.5 93.2 93.0 96.7 100 Date of Final Disbursement: February 1982  - iv - PROJECT DATSt 9risiU PalI"^ Ryevlog Agtual Board Approval 06/15/76 Date of Loan Signing 06/24/76 Date of Effectiveness 08116876 Closing Date 03181 12131182 MrF INPUTS (STAFF WEKS) FY 2I 2_ 74 2U ii 2Z Z1 22 80 Al Al PA 4 85 Total Preappraisgal 5.1 .6 - 7.7 4.7 - - - - - - - - 18.2 Appraisal 23.9 21.2 - - 83.7 - - - - - - - - - 128.8 Negotiation .1 2.2 - - 4.0 - - - - - - - - - 6.4 Supervision .8 .3 - - .1 13.5 21.2 6.7 8.4 3.7 - 1.8 5.8 .3 62.6 Other - - .1 .4 6.8 - - - - - 7.3 Total 30.0 24.2 .1 8.1 99.4 13.5 21.2 6.7 8.4 3.7 - 1.8 5.8 .3 223.2 M'SSION DATh No. Staff- Speciali- Per- Types Date of weeks zations formance of Mission M/olvr) Petsons in field Reoresented Ratinx T2nd Problems La /f a Preparation 10/28/74 2 Preparation 01/22/75 1 Appraisal 10/04/75 5 aEon. Supervision 1 01/30/77 3 6 Bcon/Pub.H. 2 - TO Supervision 2 01/10(78 1 2 aeon. 2 2 TO Supervision 3 09/03/78 2 4 8con./Agron. 2' 2 PTO Supervision 4 09/20/78 2 6 Bngin./Kcon. 2 2 TO Supervision 5 08/01/79 1 2 Agronomy 2 1 T Supervision 6 05/09/80 2 2 4gr.Econ./Agro.2 2 FT Supervision 7 01/21/81 1 1 Agronomy 1 2 PT  - v - ,OER PROJECT DATA Borrower: Government of Malawi Executing Agencies: Ministry of Agriculture, Malavi Railways Fiscal Year of Borrowers April 1 - March 31 Name of Currency: Malawi vwach* (MH) Currency Exchange Rate Appraisa' Year Average (1975) US$1.00 - 0.90 MR Intervoning Year Average (1976-1981) US$1.00 - 0.84 HE Completion Year Average (1981) US$1.00 - 0.90 HK Follow-on Project: Name: National Rural Development Program (MRDP) Phase III Credit Numbers 1183-MAI Credit Amount (US$ million): 7.3 Date of Board Approvals 10/31/81 la Poor management and budget control in early project year for Karonga Rural Development Project. lb Variable due to variability of rainfall and of crop prices. Farmer profits unsatisfactory for cash crops, cotton and groundnuts. Farmers reacted favorably to crop price increase for maize and rice in particular. Insufficient development of extension messages. Le Excessive expenditures for operating costs in the first project years. The Ministry of Finance appropriated MH 1.5 million from the Credit Fund. Budget allocations generally satisfactory. Ld Some 11,000 farmers representing 28Z of the farming comunity were participating in the group credit schemes. le 1 - Problem-free or minor problems; 2 - moderate problemsg 3 - major problems. If 1 - improving; 2 - stationary, 3 - deteriorating. gA F - Financial; T - Technical; P - Political; 0 - Other.  - vi - PROJECT PERFORMANCE AUDIT REPORT MALAWI NATIONAL RURAL DEVELOPMENT PROGRAM - PHASE I (CREDIT 857-MA) KEY PROJECT DATA Actual as Actual or Z of Appraiwal Estimated Appraisal Estimate Actual Estimate Total Project Costs (US$ million) 66.0 n.a. - IDA/CIDA Financing (US$ million) 24.6 20.3 83 Credit Amount (US$ million) 22.0 19.1 87 Cancelled (US$ million) - 2.9 Date Physical Components Completed 03/31/82 03/31/85 Proportion Completed by above Date (S) Civil works 95 Roads 78 Bridges 100 Economic Rate of Return 43 marginal Number of Direct Beneficiaries (farm families) 104,000 295,000 CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS FY9 FY80 tJI FY82 FY83 FY84 FY85 FY86 Appraisal Estimate (US$ M) 1.7 4.3 8.7 13.1 17.5 22.0 - - Actual (US$ M) - 3.9 6.7 12.3 15.8 17.1 18.2 19.1 Actual as S of Appraisal (Z) - 91 77 94 90 77 83 87 Date of Final Disbursements October 22, 1986  - vii - nR0JMT DAI