implementation completion and results...

Document of

The World Bank FOR OFFICIAL USE ONLY

Report No: ICR00004678

IMPLEMENTATION COMPLETION AND RESULTS REPORT

TF018039

ON A

SMALL GRANT

IN THE AMOUNT OF EUR3.385 MILLION

TO

MONTENEGRO

FOR A

EU/IPA AGRICULTURE AND RURAL DEVELOPMENT INSTITUTION BUILDING PROJECT

(P144994)

December 20, 2018

Agriculture Global Practice

Europe And Central Asia Region

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Regional Vice President: Cyril E Muller

Country Director: Linda Van Gelder

Senior Global Practice Director: Juergen Voegele

Practice Manager: Julian A. Lampietti

Task Team Leader(s): Jeren Kabayeva

ICR Main Contributor: Silvia Mauri

ABBREVIATIONS AND ACRONYMS

CAP Common Agricultural Policy (EU)

CPS Country Partnership Strategy

EC European Commission

EMP Environmental Management Plan

EU European Union

FM Financial Management

GAP Good Agricultural Practices

GDP Gross Domestic Product

GEF Global Environment Facility

GOM Grants Operational Manual

IBRD International Bank for Reconstruction and Development

IPA Instrument for Pre-Accession Assistance

IPARD Instrument for Pre-Accession Assistance for Rural Development

MARD Ministry of Agriculture and Rural Development

MIDAS Montenegro Institutional Development and Agriculture Strengthening

SfP Sector for Payment department

SfRD Sector for Rural Development department

TF Trust Fund

TABLE OF CONTENTS

DATA SHEET ....................................................................... ERROR! BOOKMARK NOT DEFINED.

I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 4

II. OUTCOME ...................................................................................................................... 7

III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 10

IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 10

V. LESSONS LEARNED AND RECOMMENDATIONS .............................................................. 11

ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 13

ANNEX 2. PROJECT COST BY COMPONENT ........................................................................... 21

ANNEX 3. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ...... 22

ANNEX 4. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 23

The World Bank EU/IPA AGRICULTURE AND RURAL DEVELOPMENT INSTITUTION BUILDING PROJECT (P144994)

Page 1 of 23

DATA SHEET

BASIC INFORMATION

Product Information

Project ID Project Name

P144994 EU/IPA AGRICULTURE AND RURAL DEVELOPMENT

INSTITUTION BUILDING PROJECT

Country Financing Instrument

Montenegro Investment Project Financing

Original EA Category Revised EA Category

Partial Assessment (B) Partial Assessment (B)

Organizations

Borrower Implementing Agency

Ministry of Finance Ministry of Agriculture and Rural Development

Project Development Objective (PDO) Original PDO

The objective of the Project is to increase the experience of Montenegrin authorities in administering rural development grants in accordance with the core rules of the European Union Instrument of Pre-accession Assistance for Rural Development and to improve the productivity of a targeted number of agriculture holdings.


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FINANCING

FINANCE_T BL

Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)

Donor Financing

TF-18039 4,171,884 4,171,884 3,831,083

Total 4,171,884 4,171,884 3,831,083

Total Project Cost 4,171,884 4,171,884 3,831,083

KEY DATES

Approval Effectiveness Original Closing Actual Closing

28-Oct-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017

RESTRUCTURING AND/OR ADDITIONAL FINANCING

Date(s) Amount Disbursed (US$M) Key Revisions

17-Oct-2017 3.02 Reallocation between Disbursement Categories

KEY RATINGS

Outcome Bank Performance M&E Quality

Highly Satisfactory Satisfactory Substantial

RATINGS OF PROJECT PERFORMANCE IN ISRs

No. Date ISR Archived DO Rating IP Rating Actual

Disbursements (US$M)

01 05-Mar-2015 Satisfactory Satisfactory 0.00

02 02-Nov-2015 Satisfactory Highly Satisfactory 0.33

03 25-Sep-2016 Satisfactory Highly Satisfactory 1.02

04 21-Jul-2017 Satisfactory Highly Satisfactory 2.23


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ADM STAFF

Role At Approval At ICR

Regional Vice President: Laura Tuck Cyril E Muller

Country Director: Ellen A. Goldstein Linda Van Gelder

Senior Global Practice Director: Juergen Voegele Juergen Voegele

Practice Manager: Dina Umali-Deininger Julian A. Lampietti

Task Team Leader(s): Maurizio Guadagni Jeren Kabayeva

ICR Contributing Author: Silvia Mauri


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I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES

Context

1. With its proximity to the European Union (EU), reliance on trade with EU members, and strategic geopolitical location, Montenegro expressed its interest in EU accession in the mid-2000s. Since then, the country advanced significantly in EU approximation, and was officially granted EU candidate country status on December 17, 2010. EU accession negotiations started on June 29, 2012. Agriculture is an important sector in the EU accession agenda of Montenegro. Agriculture and food production play an important role in the economy, contributing 12 percent of GDP (with the primary sector contributing 10 percent, and agro-food processing and fisheries contributing around two percent). The sector is also the largest economic activity in rural Montenegro; close to 50,000 families (roughly a quarter of the country’s population), with an average holding of 4.5 hectares, derive their income partly or entirely from agriculture. 2. To support candidate countries in preparing for EU accession, the EU provides significant funds under the Instrument of Pre-accession Assistance (IPA) for the public and private sector to harmonize reforms and upgrade to EU standards. Direct financial support to the agriculture and rural development sector is provided through the Instrument for Pre-Accession Assistance in Rural Development (IPARD), which is managed by the candidate country’s own institutions with the following objectives: (i) to provide assistance for implementing the Acquis Communautaire requirements concerning the EU Common Agricultural Policy (CAP); and (ii) to contribute to the sustainable adaptation of the agricultural sector and rural areas in the candidate country. Countries cannot access IPARD funds until the required Operating Structures are in place that comply with the EU’s requirements according to third-party accreditation, and the European Commission (EC) gives conferral of management of the funds. 3. Upon obtaining candidate country status, Montenegro worked intensively to prepare for the implementation of the IPARD Program. The Ministry of Agriculture and Rural Development (MARD) established the Sector for Payment (SfP) and the Sector for Rural Development (SfRD) as the required Operating Structures for managing IPARD funds to serve as the future Paying Agency and Managing Authority, respectively. It also prepared a Program for Agriculture and Rural Development of Montenegro under the 2007-2013 IPARD Program, and the IPARD 2 Program for 2014-2020. In line with EU requirements, these programs were conceived as multi-annual development programs for rural areas with the proposed measures to be implemented under IPARD allocations and rules. 4. The EU IPA envelope for 2012-13 included EUR10.5 million for Montenegro IPARD support, including EUR3.3 million within IPA 2012 and EUR7.2 million within IPA2013. Although Montenegro had made significant progress in developing its capacity towards meeting EU accreditation1 requirements, also with support of the Bank funded Montenegro Institutional Development and Agriculture Strengthening (MIDAS) project and EU funded twinning activities, including strengthening the two MARD departments in terms of staff and technical needs, and in preparing the national accreditation documentation, the accreditation steps were not completed in time to utilize the IPA allocation. 5. As the EU considered Montenegro not yet ready to manage the decentralized IPA 2012 funds for rural

1 now called Entrustment of budget implementation tasks


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development (EUR3.3 million), to avoid losing them, the Government requested the EC to transfer them back to direct management of the Commission and to use them, together with EUR0.5 million remaining from the IPA 2011 allocation, to set-up a Trust Fund to be administered by the Bank and extended to Montenegro to fund a project to continue the preparation toward IPARD implementation as started under MIDAS.

6. The EU/IPA Agriculture and Rural Development Institution Building Project (funded by EU), or shortly the IPARD-like Project was a continuation of the ongoing MIDAS Project. Funded by the International Bank for Reconstruction and Development (IBRD) and the Global Environment Facility (GEF), the MIDAS was launched in July 2009 and has made important contributions to compliance with the IPARD requirements. The country’s authorities have put considerable efforts into setting up the required legal and institutional framework to meet EU pre-accession requirements. To this end, the MIDAS project has contributed towards (i) the establishment and capacity building of the Directorate for Rural Development (future Managing Authority) and preparation of the IPARD 2014-2020 Program and of the Code of Good Agricultural Practices; (ii) the establishment of the Sector for Payments (future Paying Agency), including setting up its infrastructure that meets accreditation’s requirements, and establishment of the Farm Registry and of the Reference Price Database; (iii) provision of grants to agriculture holdings to promote their development and modernization along with familiarization of both farmers and Montenegrin authorities with the IPARD rules and principles; and (iv) enhancing food safety through investments in the national reference laboratories (Veterinary Lab and Institute of Marine Biology), as well as building and equipping the first Border Inspection Post (BIP) in Bar and strengthening the sector’s legal and regulatory framework. 7. The IPARD-like Project followed the innovative approach adopted by MIDAS, providing IPARD-like grants to beneficiaries and gradually introducing the IPARD requirements, while involving the relevant institutions, i.e. SfRD, SfP, Advisory Service and Technical Bodies2, and introducing required procedures with a learning-by-doing approach. Based on the experience of MIDAS, the focus of the project was on building capacity at various levels, including Government agencies, beneficiaries and intermediaries.

Project Development Objectives (PDOs)

8. The Project Development Objective is to increase the experience of Montenegrin authorities in administering rural development grants in accordance with the core rules of EU Instrument of Pre-accession Assistance for Rural Development, and to improve the productivity of a targeted number of agriculture holdings.

Key Expected Outcomes and Outcome Indicators

9. The key expected outcomes and outcome indicators measuring the Project’s impact are:

Outcome 1: MARD/future Paying Agency capacity to disburse and track IPARD-like grants

Outcome Indicators:

2 An entity of the Government appointed for the verification of compliance with the national legislation. In case of Montenegro, appointed Technical Bodies include the Ministry of Sustainable and Tourism, Ministry of Labor and Social Affairs, the Ministry of Health, Agency for Environmental Protection, Authority for Food Safety, veterinary and Phytosanitary Administration, Directorate for Water, and Montorganica


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• Amount of IPARD-like grant funding disbursed;

• Number of agro-holdings accessing IPARD-like grants;

Outcome 2: MARD/future Managing Authority capacity to evaluate the impact if IPARD-like grants, in line with EU

IPARD requirements

Outcome Indicators:

• The Monitoring Committee is established and operating;

• One impact evaluation analysis completed;

Outcome 3: Increased production/yields in agriculture holding

• Increase in yield/production by agro-holdings receiving IPARD-like grants.

Components

Component 1: Implementation of a Grant Scheme based on Core IPARD Rules (total EUR4.11 million of which EUR3.09

EU Grant and EUR1.02 Government contribution). Under this component, the Sector for Payment set up in MARD for

the implementation of the future IPARD program provided funds to farmers and food processors in the dairy, meat and

fruit and vegetable sectors, based on the measures identified in the proposed IPARD Program.

The IPARD-like grants were demand-driven grants that provided the beneficiary with between 50-65 percent co-

financing of total eligible cost of each eligible investment and were required to follow a set of specific IPARD principles,

including pre-financing, administrative checks following the four-eye principles, on-spot verification before and after the

investments, and cross-compliance.

Details of the IPARD-like measures, such as specific activities to be financed, applicant selection criteria, and

administrative procedures for grants disbursement were detailed in a Grant Operational Manual (GOM) prepared by the

MARD and were in line with future EU requirements for IPARD accreditation. The GOM built on the previous GOM used

for the implementation of the MIDAS grants program.

Component 2: Technical Assistance to Support Implementation and Monitoring (total EUR0.44 million of which EUR0.30 EU Grant and EUR0.14 Government Contribution). This component funded all the activities necessary to support the implementation and monitoring of the Grant Scheme. Activities included support to the Monitoring Committee to implement monitoring arrangements, including upgrading the monitoring system, conducting a baseline and final surveys, and developing project public awareness and promotional materials, as well as coordination, monitoring and implementation of environmental and social safeguards. The activities implemented under this component were closely coordinated with the IPA 2011 Twinning Project “Strengthening Rural Development Program under IPARD” complementary to this project, including support to the monitoring system (monitoring committee meetings etc.), and the MIDAS project. The scope and definition of this TA support, defined in coordination with the MIDAS project and the Twinning Project, was also to be fine-tuned according to the progress made by the Montenegrin administration in implementing the action plan towards the conferral of management for IPA Component V (Rural Development).


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II. OUTCOME

Assessment of Achievement of Each Objective/Outcome

Outcome 1: MARD/future Paying Agency capacity to disburse and track IPARD-like grants.

10. The intended outcome was fully achieved. Impressively, the IPARD-like Project was fully disbursed, the difference between the approved and disbursed amounts in the datasheet is due to an exchange rate. The implementation of the project’s main activity, namely the provision of IPARD-like grants, aligning MARD support to the agriculture sector through the measure 1 “Investments in physical assets of agricultural holdings” of IPARD Axis 1 “Measures for strengthening the competitiveness of agriculture”, progressed in a highly satisfactory manner throughout the project life. The SfP (future Paying Agency) launched two calls for the IPARD-like grants supporting investments in agriculture holdings with the IPARD complaint procedures as set out in the GOM. The calls received 734 applications, requesting a total investment amount of EUR26.9 million of which EUR12.7 million was envisaged for the grants support. About 64 percent of the applications received were found in compliance with the project requirements and approved after administrative review and on-spot controls. At project completion, 347 investments (against the target of 110 investments, PDO indicator) were completed, verified and paid for a total amount of about EUR5 million which contributed to a total investment in the sector of more than EUR10 million. The actually paid amount exceeded the budget originally allocated for grants (100 percent of disbursement was a target value, PDO indicator) under the project. Given the importance of this activity both in terms of investment in the sector, as well as capacity building of future IPARD beneficiaries, the Montenegro Government ensured availability of national funding to cover for the additional necessary amounts.

11. The most successful element of the IPARD-like Project and MIDAS has been the establishment of the system to provide grants modelled after the EU’s IPARD support scheme to agricultural holdings (i.e. producers) through MARD’s structures. This approach has served three purposes: (i) it has provided financial support for productivity improvements; (ii) it has supported the gradual adjustment of agricultural holdings to the EU financial and legal framework; and (iii) it has increased the capacity of Montenegro’s institutions to manage EU funded IPARD resources. These achievements contributed to Montenegro receiving the EU’s “Entrustment of budget implementation tasks for EU IPARD funds” in October 2017, both for Measure 1 (Investments in physical assets of agricultural holdings) and Measure 3 (Investments in physical assets concerning processing and marketing of agricultural and fishery products) of the IPARD II Program. This is an important achievement for Montenegro. Efforts of the country receiving the “Entrustment” translated into availability of IPARD funds to support the above-mentioned measures in the beginning of 2018. The estimated EU support envisaged for the five years of IPARD II is EUR39 million for all the measures, with about EUR30 million envisaged only for the implementation of the above-mentioned Measures 1 and 3.

Outcome 2: MARD/future Managing Authority capacity to evaluate the impact if IPARD-like grants, in line with EU

IPARD requirements.

12. Outcome 2 was successfully achieved. The Project supported the SfRD (future Managing Authority) in strengthening its capacity to fulfil the IPARD evaluation and reporting requirements that were part of its mandate. A


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Monitoring Committee with composition and terms of reference mimicking those required for the IPARD Sector Monitoring Committee (PDO indicator) was established and convened regularly during the project duration. It served as the forum for addressing main constraints encountered during the IPARD-like grants implementation and identifying the way forward to improve both the activities and the reporting requirements. Although with some delay, the project completed the required evaluation assignment, i.e. the Socio-economic Assessment of the IPARD-like 1 Project conducted by the independent consultant in October 2018. The Assessment provides a comprehensive overview of the feedback received from the sample of 158 grant beneficiaries, as well as from 87 unsuccessful applicants and 107 respondents from the general public. The feedback received was predominantly positive. Thus, 99.4% successful applicants, 87.5% of unsuccessful applicants and 73.8% respondents from the general public believe that the IPARD-like 1 Project had a positive impact on the improvement of the agricultural activity in Montenegro. On the other hand, the most common problems encountered by the grant applicants were high costs as well as the time needed to collect the documentation. The Assessment includes a range of recommendations based on the lessons learned from the implementation of the project that will be useful for the MARD to consider in designing its support programs in future.

Outcome 3: Increased production/yield in agriculture holdings.

13. Outcome 3 was overachieved as compared to the indicator target. This was evident in the the Socio-Economic Assessment of the IPARD-like 1 Project, which included an analysis of impact of the grants program on successful applicants. The results indicated that grants improved agriculture practices as reflected through:

✓ Improved production conditions (25.8%),

✓ Reduced processing time / production process (25.3%),

✓ Increased production yield (22.1%) against the target value of 10% (PDO indicator),

✓ Reduced cost of engaging additional mechanization (14.4%).

14. Out of 347 successful applicants, only one farmer shared the opinion that the grant did not bring to improvements in agricultural practice. All other farmers indicated that IPARD Like 1 support contributed to the improvement of agricultural practice (99.4%). 75% of the surveyed grant beneficiaries said that there was an increase (on average 37%) in the volume of production in the primary activity, and 87.5% of the surveyed grant beneficiaries said there was an increase (on average 35%) in the volume of production in the secondary activity. The survey data analysis has also shown an increase in annual revenues due to an increase in the volume of production. In 2017, total annual revenues from the sale of agricultural products amounted to EUR11,154,470, while expenditures amounted to EUR9,552,193, indicating that revenues were higher by 20.5% than expenditures. This ratio was lower in 2016 and amounted to 12.2%. Further, based on direct inquiries on the external labour force in the period before and after the project, it was concluded there has been an increase in the number of externally engaged workers by 52.8%. 3

15. It is important to note that the grants served as a vehicle to help agricultural producers not only to get new equipment, have more cattle or more crops, but also have helped them achieve standards through compliance with EU requirements - be it from the food safety, animal health, environment protection aspects, thus improving the competitiveness of agricultural producers both domestically and abroad, and adding to the long-term sustainability of their businesses. The project activities also resulted in Montenegro receiving EU accreditation for Measure 1 (Investments in physical assets of agricultural holdings) and Measure 3 (Investments in physical assets concerning processing and marketing of agricultural and fishery products) of the IPARD II Program. This

3 Socio-Economic Assessment of the IPARD-like 1 Project


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allowed unlocking the EU IPARD grants allocation for Montenegro for these two measures in the amount of EUR39 million. This EU funding is complemented by the national contribution of EUR13 million and will be matched by an estimated private investments of about EUR 36 million (corresponding to between 50 and 65% depending on type of beneficiary).

Overall Outcome Rating

16. Overall, the outcome rating of the Project is Highly Satisfactory. In addition to full disbursement (EUR3.385 million) of allocated resources, the end results showed that all of the project's development objectives indicators were either fully or over achieved. It must be clarified that the datasheet on page 2 shows the actual disbursed amount less than the original amount, this is due to the difference in USD exchange rates at project approval and completion.

Other Outcomes and Impacts

17. The IPARD-like grants program leveraged private sector investments from the grant beneficiaries’ contribution of between 35-50 percent of the total sub-project investments. One of the requirements of IPARD implemented in the grants program was pre-financing by the beneficiary of the entire investment, as approved. Beneficiaries were reimbursed for the set amount (between 50 and 65 percent according to the criteria laid out in the GOM) upon completion of the investment, submission of payments requests and verification both administrative and on-spot of compliance with GOM rules and procedures. The pre-financing modality was a strong factor to ensure ownership and sustainability of the investments. 18. The project identified and addressed the two main bottlenecks encountered by agriculture holdings when intending to invest, namely the availability or lack of credit and the approval of building permits under current urban planning. These challenges were identified as two main constraints that made some of the grants program applicants withdraw from the program after they were awarded contracts. More details on these issues are provided below. 19. To address the availability of credit constraints, the MARD/SfP carried out an awareness campaign and meetings both with the Montenegro Investment Development Fund (IDF), a public credit institution, and commercial banks, presenting the special features of the grants program, documentation requirements, etc. As a result, the IDF introduced a special credit line for the IPARD-like grants, aligning the required documentation with the one required under the IPARD-like program. Unfortunately, the same results were not achieved with the commercial banks.

20. With regard to obtaining of required building permits according to the urban plans, the SfP and MARD held numerous meetings with the various parties involved in the issuing of building permits to discuss the main issues, which were identified to be: (i) absence of spatial plans, which was the responsibility of the relevant municipality, and (ii) amendments to the Law on agriculture land and issuing of additional sublegal acts specifying types of facilities / buildings, which could be built on agricultural land. Based on that legal documentation, building permits on all agricultural areas could be obtained. MARD/SfP continue to work on these issues. MARD prepared a study financed by the MIDAS Project that focused on agricultural land use and its regulatory aspects. Further to the completion of the study, a new Law on Agricultural Land is being prepared by MARD. It is expected that some of the issues related to building on agricultural land can be resolved via this new law.


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III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME

21. A number of key factors positively affected the project implementation and outcomes. The project benefitted from the experience gained during the implementation of the MIDAS project, as well as from the Bank experience in the region. The IPARD-like Project was a continuation of the MIDAS Project and built on the institutional capacity and infrastructure established under MIDAS. The IPARD-like Project followed the innovative approach adopted by MIDAS, providing IPARD-like grants to beneficiaries, gradually introducing the IPARD requirements, while involving the relevant institutions and introducing required procedures through “a learning-by-doing” approach. In other countries of the Western Balkans region the efforts made to strengthen the administration were focused on achieving accreditation. But this approach proved to be insufficient to attract the IPARD funding when it became available due to lack of capacity of the Government, beneficiaries to fulfil the demanding IPARD requirements both in terms preparing the applications and implementing and administering the grants. Based on the experience of MIDAS, the focus of the grant program in Montenegro was to continue to build capacity at various levels (potential beneficiaries, banking and private sectors, etc.), and not only at the level of the Government agencies.

22. Further, project performance was positively impacted by the MARD readiness for implementation. The full commitment and strong sense of ownership of the MARD and the Project Management Team, and their readiness towards implementation was demonstrated from the project onset as the effectiveness conditions were met in a little over one month from signing of the Grant Agreement. In parallel, both SfP and SfRD, as supported by the PMT, prepared the GOM as well as the grants awareness program, that allowed project activities to be launched few days after declaration of grant effectiveness.

23. The project was restructured in October 2017 to allow for full absorption of the grant funds. During implementation it became clear that while the resources under Component 1 allocated to the grant program for agriculture holdings would be fully disbursed, the resources allocated for goods, non-consulting services and consultant’s services, training and operating costs under Component 2 would remain substantially underused. This was due to the fact that the technical assistance to support implementation and monitoring was provided as part of the overall MIDAS project since it supported the development of the systems to build capacity to approximate IPARD structures. The demand for grant support remained consistently high during the entire project life and to avoid losing funds at the closure of the Grant, the Government requested that a portion of the resources be reallocated to the grant scheme. Following approval of this restructuring, EUR300,000 was re-allocated from Component 2 to Component 1.

IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME

24. Bank performance was Satisfactory. Project design was adequate and responded to the needs of the MARD. It provided the necessary means to strengthen the capacity of the Sector for Payment and Sector for Rural Development in implementing IPARD rules. It also provides the procedures for the provision of grants and provision of knowledge and experience required to finalize the accreditation package. At the same time, it continued to strengthen the capacity of beneficiaries in preparing applications for the IPARD grants program, introducing cross-compliance requirements, including those laid out in the Code of Good Agriculture Practices. As demonstrated by the fact that Montenegro received EU accreditation to implement two IPARD measures, it is evident that the IPARD-like grant program was highly relevant to support the country priorities, and that the activities supported have


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produced the best results. The Bank team provided immediate support on technical aspects, which contributed to completing of all activities within the Grant closing date.

25. The Project complied with all fiduciary, safeguard and legal requirements throughout implementation. It implemented a grievance redress and complaints mechanism building on the existing experience of the MIDAS Project. This mechanism increased accountability, transparency and responsiveness to beneficiaries, and increased stakeholders’ engagement in the project. Guidelines on handling of complaints were detailed in the GOM, including composition and role of the evaluation and complaints commissions; and disclosure requirements stating that all complaints handling procedures and information would be posted on the Project website to ensure a full transparency of the process. The MARD/SfP had a good track record in registering, monitoring, and reporting all complaints received.

26. There are no risks to the development outcome. The sustainability of the development outcome is assured by the fact that Montenegro received the EC Entrustment of Budget Implementation Tasks (former Accreditation) for the measures 1 - Investments in physical assets of agricultural holdings and 3 - Investments in physical assets concerning processing and marketing of agricultural and fishery products of the IPARD II Program. This translated in receiving EUR 39 million from the EU for full implementation of the above-mentioned measures that were piloted under the grant.

V. LESSONS LEARNED AND RECOMMENDATIONS

27. Implementation commitment and readiness are key for success. Government commitment was ensured both at the policy and the technical level given the relevance of the EU accession agenda for Montenegro and the specific development objectives to be met through the grant support in the agriculture sector. The Project Management Team, which already gained solid experience within the course of implementation of the MIDAS Project, ensured prompt completion of the conditions for Grant effectiveness, and project activities were ready to be immediately launched. 28. The project’s quality at entry, the continuity of the Bank technical team throughout implementation, and close implementation support through the Bank team helped ensure smooth project implementation. Quality at entry: the adequacy and relevance of project design built on the experience gained during the implementation of the MIDAS Project. The IPARD-like Project replicated both the activities and implementation modalities and introduced IPARD requirements gradually into a well-tested project implementation mechanism. Thus, the project successfully expanded and strengthened the capacity of both institutions and beneficiaries. Close implementation support allowed prompt resolution of any problems that emerged during implementation. With regard to the specific activities, the MARD implemented and benefitted from well-coordinated efforts from the EU and the Bank, which resulted in the establishment and implementation of this Trust Fund. 29. A step-wise approach is crucial when introducing IPARD. With regard to the specific Grant activities supporting Montenegro as a candidate country in preparation for EU accession, the project developed the capacities of both of institutions and of farmer communities to be able to absorb IPARD funds once they become available. The main lessons of this experience are: (i) a gradual introduction of IPARD requirements is the best approach to gain trust among potential beneficiaries; and (ii) the “learning-by-doing” approach contributes to building capacity and confidence among beneficiaries and institutions.


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30. Finally, citizen engagement, a targeted communication campaign, and a grievance mechanisms system were essential to generate social inclusion. The project envisaged the targeted public awareness campaigns to ensure adequate consultations take place with beneficiaries. For example, each grant was preceded with awareness meetings in 20 municipalities. In May 2017, the Phase II Review of the Grievance Redress Mechanisms (GRM) and Citizen Engagement (CE) Mechanisms for the WB-supported projects under implementation in Montenegro was carried out and findings were extremely positive for both IPARD-like Project and MIDAS. Both projects maintained well-functioning complaints handling mechanism and beneficiary feedback surveys. All procedures related to complaints handling and relevant information on both projects was posted on the MIDAS website: www.midas.co.me to ensure full transparency.

31. Based on the survey findings, one of the key bottlenecks for agricultural producers to apply for the IPARD-like grants was accessing to finance. While it is evident that further strengthening of the agricultural sector can not be achieved with funding provided only from the IDF, the commercial banks continue to remain risk-averse. The MARD will need to continue to reach out to the commercial banks to inform them about the ongoing IPARD-like or IPARD activities to increase their interest to participate in these programs in future.

32. Finally, good cooperation and coordination with the International Financial Institutions and with EU Delegation, in particular, established under the IPARD-like 1 Project, resulted in continuation of this successful partnership through the IPARD-like 2 Project.

.

http://www.midas.co.me/


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ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS

A. RESULTS INDICATORS A.1 PDO Indicators

Objective/Outcome: MARD/future Paying Agency capacity to disburse and track IPARD-like grants

Indicator Name Unit of Measure

Baseline Original Target Formally Revised

Target

Actual Achieved at Completion

Amount of grant funding disbursed

Percentage 0.00 75.00 75.00 100.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017

Comments (achievements against targets):



Target


Number of grants successfully completed

Number 0.00 110.00 110.00 347.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017



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Objective/Outcome: MARD/future Managing Authority capacity to evaluate the impact of the IPARD-like grant, in line with EU IPARD requirements



Target


The Monitoring Committee is established and operating

Number 0.00 1.00 1.00 1.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017




Target


Impact evaluation analysis completed

Number 0.00 1.00 1.00 1.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 29-Oct-2018

Comments (achievements against targets): The impact evaluation analysis was completed albeit with delays, i.e. not project closing

Objective/Outcome: Increase production/yields in agriculture holdings receiving grant funding



Target


Increase in yield/production by agro-holdings receiving grant funding (target 10 percent)

Percentage 0.00 10.00 10.00 22.10

04-Dec-2014 04-Dec-2014 31-Dec-2017 30-May-2017



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A.2 Intermediate Results Indicators



Target


Number of Grant applications approved

Number 0.00 130.00 130.00 471.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017




Target


Amount of grant funding awarded

Percentage 0.00 95.00 95.00 100.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017




Target


Targeted clients satisfied with Percentage 0.00 75.00 75.00 86.80


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agricultural services (percentage)

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017




Target


Number of meetings undertaken by the Monitoring Committee

Number 0.00 5.00 5.00 6.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017




Target


Number of monitoring reports produced by the Monitoring Committee/Sector for Rural Development

Number 0.00 5.00 5.00 6.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017



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Target


Number of agricultural organizations and rural population targeted by public awareness of the IPARD-core measures

Number 0.00 2000.00 2000.00 3521.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017




Target


Number of promotional events implemented and promotional materials disseminated

Number 0.00 35.00 35.00 57.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017




Target


Client days of training provided (number)

Number 0.00 2000.00 2000.00 3000.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017


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Client days of training provided - Female (number)

Number 0.00 800.00 800.00 600.00

04-Dec-2014 04-Dec-2014 31-Dec-2017 31-Dec-2017



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B. ORGANIZATION OF THE ASSESSMENT OF THE PDO

Objective/Outcome 1: MARD/future Paying Agency capacity to disburse and track IPARD-like grants

Outcome Indicators 1. Amount of IPARD-like grant funding disbursed 2. Number of agro-holdings accessing IPARD-like grants

Intermediate Results Indicators 1. Number of grant applications approved 2. Amount of grant funding awarded 3. Target clients satisfied with agricultural services

Key Outputs by Component (linked to the achievement of the Objective/Outcome 1)

1. 471 grant applications approved (but only 347 investments were completed following the rigorous IPARD-like review process of the grants) 2. 100% of available grant funding awarded 3. 86.8% of target clients satisfied

Objective/Outcome 2: MARD/future Managing Authority capacity to evaluate the impact if IPARD-like grants, in line with EU IPARD requirements

Outcome Indicators 1. The Monitoring Committee is established and operating 2. One impact evaluation analysis completed

Intermediate Results Indicators

1. Number of meetings undertaken by the Monitoring Committee 2. Number of monitoring reports produced by the Monitoring Committee/Sector for Rural Development


1. 6 meetings, once every 6 months during the project life as required 2. 6 monitoring reports 3. Impact analysis completed


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Objective/Outcome 3: Increase production/yields in agriculture holding

Outcome Indicators 1. Increase in yield/production by agro-holdings receiving IPARD-like grants


1. 22.1% increase in yield/production among the agriculture holdings that have received IPARD-like grants


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. .

ANNEX 2. PROJECT COST BY COMPONENT

Components Amount at Approval

(EUR) Actual at Project

Closing (EUR) Percentage of Approval

Implementation of a Grant Scheme based on Core IPARD rules

4.11 4.46 109%

Technical Assistance to suport Implementation and Monitoring

0.44 .09 21%

Total 4.55 4.55 100.00


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ANNEX 3. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS

Draft ICR was sent to Ministry of Agriculture and Rural Development and EU Delegation on December 12, 2018. The comments of the EU Delegation were received informally and mostly of editorial nature. The team took them in consideration. The Ministry team confirmed with an email that they have no comments to the draft ICR.


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ANNEX 4. SUPPORTING DOCUMENTS (IF ANY)

implementation completion and results...

Documents