Afghanistan - Agricultural and Rural Development Project

Document of The World Bank FOR OmaAL USE ONLY ReprtNo. 11872 PROJECT COMPLETION NOTE AFGHANISTAN AGRICULTURAL AND RURAL DEVELOPMENT PROJECT (CREDIT 928-AF) MAY 7, 1993 Agriculture Operations Division Country Department III South Asia Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Calendar 1978 February 22, 1979 US$1.00 = Afs. 40.24 Afs. 40.0 ABBREVIATIONS AgBank - Agricultural Development Bank of Afghanistan EMENA - Europe, Middle East and North Africa Region IDA - International Development Association FAD - International Fund for Agricultural Development UNDP - United Nations Development Program FISCAL YEAR March 21 to March 20  FOR OFFICLAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Offic, of Director-General Operations Evaluation May 7, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT Subject: Project Completion Note on Afghanistan Agricultural and Rural Development Project (Credit 928-AF) Attached is a copy of the report entitled "Project Completion Note on Afghanistan Agricultural and Rural Development Project (Credit 928-AF)" prepared by the South Asia Regional Office. The credit, signed in June 1979, never became effective. The Credit Agreement was terminated on January 1, 1982, when it became clear that lending would remain suspended because of country conditions. The Note provides a clear explanation of why the terminal date of credit effectiveness was extended four times: there were delays in meeting conditions of effectiveness, especially in signing project documents with cofinanciers, and then a suspension of disbursement in April 1980 due to country conditions. The Region's concern with reducing environmental degradation and improving productivity and income of small farmers in an area with a high level of absolute poverty was justified. However, the project's institutional complexity, inherent to the area development approach typical of the period, would probably have made implementation difficult. The project is not rated and will not be audited. 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.  I  PROJECT COMPLETION NOTE AFGHANISTAN Agricultural and Rural Development Project (Credit 928-AF) 1. This is a short Project Completion Note for the Afghanistan Agricultural and Rural Development Project (Cr. 928-AF). The loan was signed on June 25, 1979. The project was terminated on January 1, 1982 for failure to become effective. 2. In June 1979, IDA signed a credit of US$ 16.5 million (Cr. 928-AF) for the Agricultural and Rural Development Project, covering the provinces of Ghazni and Wardalk, to be carried out by the Borrower and the Agricultural Development Bank of Afghanistan (AgBank). Cofinancing was provided by the International Fund for Agricultural Development (IFAD; USS13 million equivalent, of which 0.5 million as a grant) and the United Nations Development Program (UNDP; US$1 million). The remaining US$8.5 million of total project cost were to be funded by the Borrower, Agbank, and beneficiaries. The Development Credit Agreement specified September 25, 1979, as the terminal date for credit effectiveness. 3. By September 25, 1979, some progress had been made towards meeting certain effectiveness conditions, but others presented problems. The two major problems were associated with the IFAD loan/grant and the appointment of key staff for the implementing agency. Since it was doubtful that all conditions could be met by November 30, the new date requested by the Borrower, IDA established December 28, 1979, as the new date by which the credit had to become effective (first extension). 4. Although the Borrower had made progress in meeting the conditions of effectiveness, it was clear by December 21, 1979, that not all could be fulfilled by December 28. One of the conditions still to be satisfied was signature of the IFAD loan/grant agreements-IFAD was authorized to sign when its management judged the project could be implemented. Another condition was signature of the UNDP project document. Status of project implementation and progress in meeting effectiveness conditions were to be reviewed by an IDA mission in January 1980. At that time, the possibilities for project implementation in light of the security situation in the project area were also to be assessed. In the circumstances, the terminal date for credit effectiveness was postponed to June 30, 1980 (second extension). 5. In April 1980, IDA suspended disbursements under all credits made to Afghanistan, since conditions in the country no longer permitted to conduct normal operations, including routine supervision of projects. As Cr. 928-AF was not yet effective, the question of suspension did not arise, but IDA was of the opinion that staff clearly would have to be able to visit the project area again before the credit could be declared effective. 6. In late June 1980, the Acting Vice President EMENA informed the Vice President Operations that if all the formal conditions of effectiveness had been satisfied, the Region could not declare the credit effective now. Some of the conditions had not yet been satisfied (completion of cofinancing arrangements by IFAD; signature of the UNDP project document; establishment of various project institutions and appointment of essential staff). In any case, the Region would wish to review the project concept again in the field, in view of the lapse of time since  - 2 - the credit was negotiated. This was not possible at the present time. The Acting Vice President EMENA therefore proposed to authorize the postponement of the terminal date for effectiveness to December 31, 1980. This would, essentially, be consistent with the Bank's action to suspend disbursements on all other credits while emphasizing to the Government that the funds remained committed, to be used for the projects when circumstances permit. The Borrower was informed of the new deadlines for effectiveness on July 1, 1980 (third extension). 7. In December 1980, IDA decided, in line with action taken regarding on-going projects, to extend the terminal date for credit effectiveness by one year, to December 31, 1981 (fourth extension). The length of additional time was determined by the need, in the event IDA recommenced operations in Afghanistan, to revisit the project before declaring that the credit could be considered effective. Failure of the credit to become effective within the year would necessitate reconsidering IDA's overall position, since reactivation of the project would increasingly become doubtful given changed circumstances. 8. In view of the unchanged country situation at the end of 1981, IDA felt there was no adequate basis for further postponement of the terminal date for effectiveness. The Borrower was therefore notified that the Development Credit Agreement stood terminated as of January 1, 1992, for failure to become effective by December 31, 1981 (cable of January 6, 1982).  -3- ANNEX Basic Information Project: Agricultural and Rural Development Project Estimated Project Cost: USS39.0 million Loan Amount: US$16.5 million Borrower: Democratic Republic of Afghanistan Implementing Agencies: Ministry of Agriculture, Rural Development Department Agricultural Development Bank of Afghanistan Beneficiaries: About 62,000 farm families, including 3,000-4,000 nomad and transhuman families. Onlending Terms: The Government would onlend the equivalent of $4.5 million to Agbank for 15 years including 5 years of grace, at an interest rate of 4.5 percent per annum. The Government would bear the foreign exchange risk. Project Appraisal: May 8, 1979 Board Presentation: June 7, 1979