Liberia - Second Bong County Agricultural Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 105 73 PROJECT COMPLETION REPORT LIBERIA SECOND BONG COUNTY AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1447-LBR) APRIL 16, 1992 Agricultural Operations Division Country Department IV Africa Regional Office document has a restricted distribution and may be used bv recipients oniv in the performance of ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT 1/ Currency Unit - United States Dollar SDh1 - US$ 1.05928 WEIGHTS AND MEASURES 1 metric ton (mt) 2,204.6226 pounds (lbs) 0.9842 long ton (lg ton or 2,240 lbs) 1 hectare (ha) - 2.4711 acres (ac) 1 acre (ac) 0.4047 hectare (ha) 1 kilometer (km) - 0.6214 miles (mi) I mile (mi) 1.6093 kilometers (km) ABBREVIATIONS ACDB Agricultural and Cooperative Development Bank AfDB African Development Bank AfDF African Development Fund ADP Agricultural Development Project BCADP Bong County Agricultural Development Project CARI Central Agricultural Research Institute CDA Cooperative Development Agency CMEU Central Monitoring and Evaluation Unit CSU Cooperative Service Unit CSD Commercial Services Division DCS District Cooperative Society DPD Department of Planning and Development ERR Economic Rate of Return GDP Gross Domestic Product GOL Government of Liberia IDA International Development Association IFAD International Fund for Agricultural Development LCADP Lofa County Agricultural Development Project LPMC Liberian Produce Marketing Corporation MEU Monitoring and Evaluation Unit MOA Ministry of Agriculture MPW Ministry of Public Works MRD Ministry of Rural Development MIA Ministry of Internal Affairs PCR Project Completion Report SAR Staff Appraisal Report SSU Schistosomiasis Surveillance Unit SRSP Smallholder Rice Seed Project T&V Training and Visit WARDA West Africa Rice Development Association FISCAL YEAR July 1 -June 30 The official monetary unit is the Liberian dollar with a par value equal to the U.S. dollar. The U.S. dollar is legal tender in Liberia.  FOR OFFICIAL USE ONLY THE WORLD BANK Washington. D.C. 20433 U.S A. Office of Directo-General Opetatm Evaluatirn April 16, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on LIBERIA Second Bong County Agricultural Development Project (Credit 1447-LBR) Attached, for information, is a copy of a report entitled "Project Completion Report on Liberia - Second Bong County Agricultural Development Project (Credit 1447-LBR)" prepared by the Africa Regional Office. This project has not been audited 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 authorization.  - 1 - PROJECT COMPLETION REPORT LIBERIA SECOND BONG COUNTY AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1447-LBR) PREFACE This is the Project Completion Report (PCR) for the Bong County Agricultural Development Project II in Liberia, for which Credit 1447-LBR in the amount of SDR 6.4 million (US$6.7 million equivalent) was approved in March 1984. The Project was co-financed by the International Fund for Agricultural Development (IFAD), which provided a loan equivalent to about US$5.8 million, and the African Development Fund (AfDF) which provided a loan equivalent to about US$4 million. The Original Closing Date for the IDA Credit was December 31, 1988. Earlier a review by IDA and the Govern- ment officials in May 1987 had concluded that the Project (along with a few other on-going projects in Liberia) was not expected to achieve the desired development impact under the circumstances then prevailing in the country and that the Credit should be closed and the undisbursed balance be canceled. However, in order to honor withdrawal applications the Credit was kept open. The final disbursement was on October 31, 1988. An amount of SDR 2.89 million remained undisbursed and was canceled as of June 30, 1989 when the credit was closed. The PCR (Preface, Evaluation Summary, and Parts I and III) was prepared by the Africa Regional Office. The draft PCR was sent to AfDB and IFAD. AfDB's response did not have any substantive comments while IFAD did not comment. The Borrower was not sent Parts I and III; nor could it provide Part II since there is no functioning Government at present due to the ongoing civil war. Preparation of this PCR is based on the Staff Appraisal Report, the Credit Agreement, Supervision Reports, correspondence between the IDA and the Borrower, and internal IDA memoranda.  - iii - PROJECT COMPLETION REPORT LIBERIA SECOND BONG COUNTY AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1447-LBR) EVALUATION SUMMARY Obiectives 1. Consistent with Government strategy, the project objectives were to improve the welfare of poor farm families in the Bong County by increasing their productivity and income. The project objectives included: (a) increased production of food and cash crops; (b) development of the extension service and self-sustaining input supply, credit and marketing services; (c) merging of project and MOA activities, as part of the decentralization process in MOA to create a single more cost-effective extension service; and (d) strengthening existing nationwide agricultural support institutions which would assume a greater role at the end of the project. Implementation Experience 2. The project management and staff, most of whom were local and had experience from the earlier project, were generally qualified and motivat- ed. There were no basic deficiencies in the project's agronomic assump- tions. However, the quality of extension advice was poor, training activities were inadequate, and the project's financial management was weak. Also the Government lacked firm commitment to take politically difficult decisions and implement them. The execution of the project was unsatisfactory due to: (a) suspension of disbursements by donors owing to the Borrower's inability to meet its financial obligations to the financing institutions; (b) Government's financial difficulties, and general cash shortage in the country that hampered banking operations; and (c) dissatis- faction of farmers with inefficient central marketing arrangements of LPMC under which they were unable to receive adequate and timely payments for their produce. Development of cooperatives as a viable alternative to LPMC to provide input supply and marketing services did not progress satisfacto- rily due to financial and management difficulties and private traders/ agents were unable to break the monopoly of LPMC. Results 3. The unfavorable macro-economic situation, poor institutional environ- ment and the farmers' dissatisfaction with marketing arrangements, all of which surfaced within the two years of project implementation signalled that the project objectives were unlikely to be achieved. Physical works such as feeder roads and farm tracks construction and maintenance were  - iv - carried out in the first year of the project. The expansion of coffee planting and swamp rice was impressive in the first two years. Data for formal financial and economic analysis arc not available because of country conditions. The PCR mission was not able to visit the project follow'.ng credit closing on June 30, 1989, because of deteriorating political condi- tions that later became a civil war. The project is thus assessed as unlikely to achieve the results anticipated by the SAR, including the esti- mated economic rate of return (ERR) for the project of 22 percent. Since project achievements were substantially below targets, a reestimated rate of return would be very low. Sustainabilitv 4. The anticipated substantial improvements in the institutional arrangements for dealing with input delivery, credit and output marketing and application of improved technology for crop production in Bong county have not taken place and the project is thus not sustainable. Additional- ly, a conducive macro-economic environment and stable political conditions in the country were essential to achieve and sustain project objectives. Findings and Lessons Learned 5. Although the project execution period was only half of that planned, there are some clear and obvious lessons or findings among which are the following: (a) Credit arrangements which are vital to the success of a pro- ject should be completed early in the project cycle. (b) Good access to markets and remunerative producer prices are important incentives for farmers to increase production and adopt new technology. (c) Even if the agronomic premises of a project are sound, super- vision missions and project management must be aware of the need to constantly adapt and innovate to suit local conditions and agricultural practices. (d) Without political will and firmness of commitment on the part of the Government, project implementation is likely to encoun- ter major difficulties. (e) Conducive macro-economic and stable political conditions, together with good governance, are essential requirements for successful implementation of a project.  PROJECT COMPLETION REPORT LIBERIA SECOND BONG COUNTY AGRICULTURAL DEVELOPMENT PROJECT (CREDIT 1447-LBR) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity Project Name : Second Bong County Agricultural Development Project Credit Number : 1447-LBR RVP Unit : Africa Country : Liberia Sector : Agriculture Sub-Sector : Area Development 2. Background 2.1 In 1983, agriculture accounted for about 32 percent of Liberia's GDP and over 70 percent of employment. Land was not a constraint. Rice was the main staple and was largely grown in upland areas using traditional shifting cultivation. The growth in agriculture averaged 3.9 percent in 1974-79 but fell in 1980/81 due mainly to a decrease in world demand for forest products and natural rubber. 2.2 The government gave high priority to agriculture and rural development, seeking to: (a) expand participation of poor farming families in development; (b) increase farmer productivity and income; and (c) diversify and expand agriculture so that it becomes the principal base for self-sustaining development. As a result, public sector allocations for agriculture (excluding forestry) increased from about four percent of the development budget in 1970 to about 30 percent in 1982/83. 2.3 Bank Group lending for agricultural development in Liberia totalled US$60.7 million covering seven projects. These consisted of three county agricultural development projects including Bong (phase I), Rubber (loan and credit), Oil Palm and Forestry. Bank Group lending for agriculture supported the government's objective of increasing smallholder productivity and income through integrated development projects. The Second Bong County Agricultural Development Project (Bong II) was the Bank Group's eighth lending operation for agriculture. 2.4 The Second Bong County Agricultural Development Project was designed to consoli- date the experience and achievements of the First Bong County Agricultural Development Project (Credit 700-LBR). The Project Completion Report for the first project concludt I that given the complexities of transforming a largely subsistence-based agriculture and the weakness of national institutions, the project was successful. The project had made a good start on building up extension, input supply and credit services but further support was  required to develop the institutions involved. Lessons learned from the first project indicated the need to develop more appropriate planning and monitoring systems; improve selection procedures for roads, tree crops and swamp development; improve cost control procedures and strengthen and modify the cooperative system for input supply, credit and marketing. 3. Project Ob3ectives and Components (a) Qbjectives 3.1 The project objectives were: (i) improvement of small farmer incomes and increased production of food and cash crops; (ii) development of extension services and self-sustaining input supply, credit and marketing services; (iii) merging of project and MOA activities, as part of the decentralization process in MOA, to create a single, more cost effective extension service; and (iv) strengthening existing, nation-wide agricultural institutions which would play a greater role at the eild of the proposed project. (b) Components 3.2 These objectives were to be achieved by the following actions carried out under a four year program: (i) Crop and Farm Development - improving 5,500 ha of upland rice through seed exchange, developing 350 ha of swamps for rice and vegetables, planting 4,000 ha of new coffee and 330 ha of improved cassava; - providing inputs for bringing to maturity Phase I tree crop plantings; - strengthening agricultural extension, training and land planning servic- es, including introduction of the Training and Visit (T&V) system for agricultural extension; - providing planting material production facilities for coffee and cassa- va, and assisting agricultural research in key areas; (ii) Input Supply. Credit and Marketing Services - reorganizing and strengthening ACDB, the cooperatives, and CDA to provide improved input supply, credit and marketing services, includ- ing transfer of agricultural credit operations to ACDB; (iii) Roads and Workshop - m.aintaining the secondary (260 km) and feeder (440 km) road network and construction/rehabilitation of 110 km of feeder roads and 50 km of tree crop tracks;  -3 - (iv) Health Services ma;Ataining schistosomiasis surveillance, treatment of infected popula- tion and provision of 120 wells and 40 latrines; (v) Project Management and Administration. Monitoring and Evaluation. Techni- cal Assistance and Support to MOA - maintaining project management, monitoring and evaluation units; - providing technical ass. ;sce for ACDB credit operations, and consul- tancy assistance for monitoring and evaluation, cooperative develop- ment, introduction of T&V extension system, crop research and development, and planning and management of field operations; and - supporting MOA central planning services. 4. riect lesign and Organization 4.1 The Second Bong County agricultural project was designed drawing on the many lessons from the experience of the earlier project. A number of improvements in planning, monitoring and selection procedures were introduced; proposals were made for tighter control of operating costs; and input supply, credit and marketing arrangements took into account weaknesses in the cooperative system. It appeared that on the basis of investments in Phase I and availability of a trained and reasonably motivated staff, Phase II would be more effective in obtaining farmer response. The project would also provide continuity in support of key institutions. 4.2 The project was conceived as a high input/output enterprise, with the inputs being supplied on credit to farmers. It was recognized that the success of this project would depend on: (a) selection of areas of good potential and where farmer interests could be maintained; (b) devotion of greater attention to social factors; (c) a modified T&V extension system linking it to Cooperative Service Units (CSU) which are based on traditional farmer groups; and (d) employment of women home extension workers to help farmer's wives and female farmers. The project through CSU would promote higher participation of farmers in development activities and would seek to make them responsible for managing the develop- ment affairs. The marketing issue was identified early but was entrusted to the Liberian Produce Marketing Corporation (LPMC) which had chronic liquidity and management problems. LPMC was particularly inefficient in timely and adequate payment to farmers who began to lose their motivation to increase production and preferred to sell their produce to private traders, even at a loss. The cooperatives were also falling behind in their ability to take over the marketing function because of poor credit recovery and management. In hindsight, it would have been preferable to have brought in the private sector along with LPMC to handle marketing arrangements. That would also have provided experience to the private sector and assisted in their growth to progressively take over from LPMC.  -4 - S. Project Implementation 5.1 The implementation of the project began to suffer by the second year of the four-year program due to macroeconomic problems in the country that caused a cash crunch and the govermment's inability to keep up with its payments to donors that resulted in frequent suspension of disbursements. Farmers began to feel dissatisfied with LPMC for its late and inadequate payments for their produce and began to lose their incentive to produce beyosnd their subsistence needs. Marketing fall.re was one of the main reasons for the project's diffic0lties. Restructuring of LPMC was possibly not undertaken by the Government because it might have hampered the Government's questionable practice of diversion of funds from LPMC for other purposes. The Government would also not allow any buyer other than LPMC's licensed buying agents to purchase farmers' produce. There were no basic deficien- cies on the project's agronomic side, but the quality of the extension work was poor. The farmers were also reluctant to adopt any advice given to them because of difficuities in marketing their crops and getting a fair price for their output. The financial constraints also limited the availability of resources to supply purchased inputs such as fertilizer or tree seedlings ur to offer payment to laborers to assist farmers wit'. such tasks as swamp clearing. 5.2 By May 1986, the IDA supervision missions recognized the need for modifications to the project's strategy and improvements in its technology and structure. The Liberians were advised to devise measures to make the farmers less dependent on outside funding e.g. encouragement of self-help nurseries, muiching rather than fertilizer use and a farm size commensurate with the farmers' own labor resources. With regard to technological informa- tion provided to farmers, the IDA suggested that the standard of land preparation for coffee planting together with advice on shading, mulching, and pruning all needed greater attention. Timely training of extension agents and their close supervision by the project's technical staff, and rationalization of staff numbers, particularly relating to the commercial services staff, were also emphasized. 5.3 By the end of the second year, project costs reached US$12.4 million which was higher (by 7 percent) than the appraised estimate of US$11.6 million. The cost overrun can be attributed to vehicle operating costs (US$3.3 million against an estimate of US$2.1 million), farm inputs (US$2.2 million against an estimate of US$0.8 million) and general administrative costs (US$1.6 million against an estimate of US$ 1.0 million). There were savings in other items of expenditures which limited the overrun to 7 percent. With the replaceir nt of old vehicles and a revised budget, the project management expected to stay within ctJst estimates. Disbursements from IDA were lower (US$2.6 million) than estimated (US$3.7 million) which was due partly to the suspension of disbursements. Supplier's credits and Bank overdrafts were used to support the shortfall. 6. Proect Results 6.1 A review by IDA and the Government in May 1987 midway through the four year project concluded that most projects in the country were unlikely to achieve the desired development impact under circumstances prevailing in the country at that time, and that the credit should be allowed to lapse or close by December 31, 1987. However, the credit was left open until the original closing date of December 31, 1988 in order to honor claims for expenditures already incurred. At closing, 45 percent of the IDA credit remained undisbursed  and was canceled. Accordingly, the project was not expected to achieve the results anticipat- ed in the SAR, including the Economic Rate of Return (ERR) for the project, estimated at about 22 percent derived largely from the benefits which were expected from considerable sunk costs in buildings, feeder roads, manpower and training under the first phase of the project. The ERR calculated by the SAR on full costs of Phase I plus Phase II was 11.6 percent. The actual outcome is impossible to calculate in view of the premature ending of the project and the lack of reliable data. The project achieved only a modest share of its original targets (see below) and therefore a reestimated rate of return would be very low. 6.2 Feeder road and farm track construction and maintenance was carried out in the first year of the project. Actual feeder road and drm track construction was 20 percent and 29 percent of the full SAR estimates. Also, in the first two years new coffee planting and swamp rice expansion reached 52 perent and 99 percent of the total S 4R target. Upland rice expansion was 15 percent, against an ambitious target of 5500 ha. For vegetables, it was 29 percent against a modest target of 45 ha. Cassava cultivation increase during first two years was 6 percent of the SAR estimate, though it was very close to the SAR target for the relevant two years. Against an appraisal target of 112 Village Wells, no well was construct- ed. Ho%% ever, 25 percent of the target for construction of latrines was achieved. 6.3 The project was not able to improve the agronomic pra tices for coffee, which was the main crop targeted for expansion. Poor advice to farmers by project staff and inadequate training of extension staff were among the reasons for this failure. In 1985 the project management was still promoting new cocoa planting despite the omission of the crop from the SAR and wide-spread failure of earlier project cocoa plantings. IDA, however, subsequently successfully dissuaded project management from proceeding with this crop. The monitoring and evaluation unit was able to fulfill its monitoring function quite adequately but its performance in evaluating project impact was found to be much less satisfactory. In 1986 the project employed 154 agricultural staff and 64 commercial services staff servicing 1,100 ha of new crop plantings and advising on the maintenance of some of previously developed areas. This was a relatively staff-intensive operation which was not justified by the quality of advice given to farmers nor by the yields achieved. 7. Project Sustainability 7.1 The project was considered unsustainable under pre-project crop marketing conditions. In order to improve the prospects for project sustainability, the Government was required to remove LPMC's monopoly in agricultural trade and allow private enterprise to freely enter and compete in crop marketing and foreign trade in produce. The difficulty in creating and maintaining conditions for sustainability was already evident in the IDA/Government review in May 1987. Since the earlier conditions continued to prevail and suiosequent political events virtually destroyed any chance of a favorable turn of events, there are no grounds for expecting any sustainable results from the project. 8. Bank Performance 8.1 The project was beset by implementation problems, some of which were beyond its control, e.g. the country's macroeconomic problems that caused liquidity shortages and led to frequent suspension of disbursements by donors. By May 1987 IDA realized that the project  -6- would not be able to achieve Its objectives set out in the SAR. IDA had earlier recognized the failure of LPMC and co-operative marketing initiatives and required a thorough consultant study of LPMC, making it a condition for continuing disbursements. However, the Borrower's financial difficulties, exacerbated by insecure political conditions, heavily constrained efforts to gain impact with such efforts. IDA missions were quick to recognize the technical problems and took steps to reduce the planting targets when project staff tried to meet targets by encouraging planting on unsuitable soils rot recommended by the appraisal mission. 8.2 Having recognized the marketing problem, it would appear in hindsight that the private sector, though not well developed, should have been more involved, in conjunction with the cooperatives and LPMC, to assume input delivery and output marketing functions. The farmers were already selling their produce to private traders, because they could get qunck payment. Such an arrangement would have helped to improve the liquidity of coopera- tives and collection by ACDB while retaining farmers' interest in participating in the project. Again, in hindsight, it appears that it would have been more prudent for IDA to insist on the government's completion of the needed actions while the IDA still had the leverage. Perhaps the firmness of the government's commitment could have been tested by making prior implementation of certain critical elements in the early stage of the project cycle (e.g., restructuring of LPMC) as conditions of Board presentation. 9. Borrower's Performance 9.1 The Government had recognized the importance of the development of agriculture and the small farmer. This was evidenced by its strategy and involvement during project preparation. However, the Government was plagued by macroeconomic problems resulting in cash shortage in the country and the suspension of disbursements oy the donors due to the inability of the Government to meet its payment obligations (on earlier credits). A serious constraint faced by the project was the poor marketing performance of LPMC with its weak finances exacerbated by physical shortage of cash. The Government was slow to recognize the need to reform LPMC, for which a study was eventually carried out. It did not have any firm commitment to restructure LPMC, nor did it put its political will behind LPMC and its effective functioning. The Government also did not pay much attention to IDA's suggestion to encourage the private sector to play a wider role in marketing of crops in parallel with LPMC. 9.2 The project management was generally good and the staff were well-motivated. However, a February 1985 supervision mission found the project's Finance Division's performance unsatisfactory and both the manager and his deputy not exercising sufficient control. It was reported that account particulars were not properly kept and could not be shown to the mission. Also cash from seed rice sales was not deposited in a bank but kpt as petty cash. The training section was under-staffed and was not able to meet the tr-.. ing needs of both staff and farmers. In fairness it should be mentioned that there was a lack coordination between IDA and ADF supervision missions. This was noticed by the Govern- ment which had expressed its concern, quite early in the project's execution period (May 1985), about the project apparently receiving conflicting messages. The Government had also pointed out the need for maintaining continuity of IDA supervision staff, particularly  agriculturalists. These points were well taken, and IDA and ADF subsequently arranged to have joint supervision missions. 10. Consulting Services 10.1 Studies by consultants under the project on marketing and cooperatives were of acceptable quality. The consultants also provided valuable assistance to the project manage- ment in project implementation, including training of local staff. A good relationship existed between the consultants, project management and the Borrower. 11. Project Documentation and Data 11.1 The documentation for the project was adequate. The Loan and Credit Agreements were quite adequate for achieving project objectives. The staff appraisal report provided a useful framework for review of project implementation. 12. Findings and Lessons Learned 12.1 Although the project execution period was only half of that planned, there are some clear and obvious lessons or findings amongst which are the following: (a) Credit arrangements that are vital to the success of a project should be completed early in the project cycle. (b) Good access to markets and remunerative producer prices are important incentives to encourage farmers to increase production and adopt new technol- ogy. (c) Even if the agronomic premises of a project are sound, supervision missions and project management must be aware of the need to constantly adapt and innovate to suit local conditions and agricultural practices. (d) Without political will and firmness of commitment on the part of the Govern- ment, project implementation is likely to encounter major difficulties. (e) Conducive macroeconomic and stable political conditions, together with good governance, are essential requirements for successful implementation of a project.  -9 - PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE (No comments were received.) i, :.  - 2.2 - IPART II: STATISTICAL INFORMATION 1. Related Bank Loans or Credits LOAN/CREDIT TITLE PURPOSE YEAR OF APPROVAL STATUS A. Cr. 700.LBR To increase production December 29, 1977 Completed 12/83 Agricultural of smaliholder rico, Development (Bong) coffee and cocoa in Project Upper Bong. B. Cr. 577.LBR To increase production. August 1, 1975 Completed 6/82 Loft County Agricultural Development Project 2. rTinmetable DATE DT FLANNED ACTUAL Identification 1/ 6/81 6/81 Preparation 3/82 3/82 Appraisal 2/83 2/83 Credit Negotiations 11/83 11/83 Board Approval 3/84 3/84 Credit Signaturc 4/84 4/84 Credit Effectivenes 10/84 10/84 Completion 6/88 6/87 Credit Closing 12188 12/88 As a follow-up to the First Bong County Agricultural Development Project, the project was prepared by the Bank's Reg onal Mission for West Africa in collaboration with the management of the First Bong County Agricultural Development Project. The Project incorporated lessons learned from the first phase Bong County Agricultural Development Project financed by IDA Credit 700-LBR.  - 13 - S. Proiect Cost and Financina A. Total Prolect Cost (US$000) Actual til Actual as % Annrabal Estimnate C