AFRICAN DEVELOPMENT FUND

REPUBLIC OF MALAWI

NATIONAL LIVESTOCK DEVELOPMENT PROJECT

PROJECT COMPLETION REPORT

AGRICULTURE AND RURL DEVELOPMENT DEPARTMENT,

NORTH, EAST AND SOUTH REGIONS (ONAR)

November 2004

Table of Contents Page

Table of Content List of Table i List Annexes i List of Abbreviations ii Executive Summary iv Basic Data Sheet vi Retrospective Project Matrix (Logical Framework) xi 1. INTRODUCTION 1 2. PROJECT OBJECTIVES AND FORMULATION 2 2.1 Sector Goal and Project Objective 2 2.2 Project Formulation 2 2.3 Preparation, Appraisal, Negotiation and Approval 2 2.4 Project Description 2 3. PROJECT EXECUTION 3

3.1 Effectiveness and Start-up 3 3.2 Modifications 5

3.3 Implementation Schedule 10 3.4 Reporting 11 3.5 Procurement of Goods and Services 11 3.6 Financial Sources and Disbursement 12 4 PROJECT PERFORMANCE AND RESULTS 13 4.1 Operating Results 813 4.2 Institutional Performance 18

4.3 Fulfilment of Conditions/Covenants 19 4.4 Financial Performance 19 4.5 Economic Analysis 19

5 SOCIAL AND ENVIRONMENTAL IMPACT 20 5.1 Social Impact 20

5.2 Environnemental Impact 21

6 PROJECT SUSTAINABILITY 22 7 PERFORMANCE OF THE BANK AND BORROWER 22 7.1 Bank Performance 22 7.2 Performance of the Borrower 23 8 OVERALL PERFORMANCE AND RATING 23 9 CONCLUSION, LESSONS LEARNED AND RECOMMENDATIONS 24

9.1 Conclusion 24 9.2 Lessons Learned 24 9.3 Recommendations 24

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LIST OF TABLES

Table 1 Summary of items in project procurement list Table 2 Project financing Table 3 Loan Disbursement by Year Table 4 Project Disbursement by Year

LIST OF ANNEXES

Annex 1 Map of Malawi showing Project Area Annex 2 List of Procured Goods and Services Annex 3 Actual and Appraisal Project Costs and Financing Annex 4 Loan and Project Disbursement Annex 5 Project Financial and Economic Analyses Annex 6 Implementation Performance Rating. Annex 7 Recommendations and follow-up matrix Annex 8 Sources of information

This Report was prepared by Mr. L. Umar, Senior Livestock Expert and Mr. L. Gbéli, Senior Agricultural Economist following their mission to Malawi in July 2004. All queries should be directed to Mr. A. Beileh, Division Manager, ONAR.1 and the author.

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LIST OF ABBREVIATIONS

ADB African Development Bank ADD Agricultural Development Division ADF African Development Fund AI Artificial Insemination BCR Benefit Cost Ratio BOP Balance of Payment DAHI Department of Animal Health and Industry DAHLD Department of Animal Health and Livestock Development DEPSA Development Evaluation Project Services Authority ERR Economic Rate of Return FAO Food and Agriculture Organization FC Financial Controller FUA Funds Unit of Account GDP Gross Domestic Product GOM Government of Malawi ICB International Competitive Bidding IDEA Investment in Developing Export Agriculture Project IFDID International Finances and Development IRR Internal Rate of Return LOGS List of Goods and Services MKW Malawi Kwacha MoAIFS Ministry of Agriculture, Irrigation and Food Security MOFED Ministry of Finance and Economic Development MTR Mid-Term Review NARS National Agricultural Research Services NCB National Competitive Bidding NGO Non-Governmental Organization NLDP National Livestock Development Project NPV Net Present Value NSC National Steering Committee PCR Project Completion Report PM Project Manager PMU Project Management Unit PSC Project Steering Committee SOE Statement of Expenditures TA Technical Assistance UA Unit of Account VAs Veterinary Assistants

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EXECUTIVE SUMMARY 1. The Government of Malawi launched the National Livestock Development project (NLDP) in 1989, as part of the country’s economic and social development framework. It was envisaged that the project implementation would strengthen the smallholder private and commercialisation producers as well as the non-viable public entities within the livestock sector. It was also aimed at food security and income generation for poverty reduction. In addition, the project was to promote local production of livestock and livestock products, mainly poultry and cattle, thereby improving the Balance of Payment (BOP) and foreign exchange savings. The present report is based on the Borrower’s PCR, the available audit, quarterly and supervision reports and the findings of the Bank PCR field mission, which took place in July 2004. 2. Overall Project Objectives: The NLDP was aimed at contributing to food security improvement in Malawi, thereby saving foreign exchange and improving the country’s BOP. In order to achieve this objective, the project was to: (i) establish a poultry production and training base at Mikolongwe in Blantyre area, Choma in Mzuzu area and Bwemba around Lilongwe, with hatchery units, production units for eggs, chicks and chicken for the beneficiaries’ farm production units; (ii) provide the necessary support to the State-owned cattle production and training units at Mikolongwe and Dzalanyama Ranch; and (iii) establish the necessary infrastructure for the expansion of the livestock sub-sector. 3. Implementation: The project was appraised in October 1987, approved in January 1988, and it became effective in May 1990 and was completed in September 2002. The project achieved about 65% on physical implementation of project activities. The project was to be implemented within a period of five (5) years from January 1989 to December 1993. However, it was implemented over period of 12 year. There was delay in fulfilling some of the loan conditions; the project was suspended three times due to various management and financial irregularities detected during implementation. A Mid-Term Review (MTR) and project reformulation were carried out in 1995 and 1996 respectively to steer the project in the right direction to achieve its objectives. The project was completed in September 2002 with a slippage on completion of about 9 years. This was unsatisfactory. 4. Achievements: The NLDP achieved some of its objectives. The physical achievements of the project are: (i) the rehabilitation of the Mikolongwe Ranch, Mikolongwe hatchery and of the Artificial Insemination Centre with a completion rates of about 90 percent; (ii) very little achievement was made towards rehabilitation of the Mikolongwe training and demonstration centre. (iii) Partially rehabilitated and stabilised production of steers and breeding heifers at the Dzalanyama Ranch for cattle production (iii) provision of equipment, breeding stock, rehabilitated the three national poultry production centres of Mikolongwe (in the south), Choma (Mzuzu in the North) and Bwemba (in the central region) (v) constructed and rehabilitated various livestock infrastructure in the country and (vi) developed the capacity of the veterinary staff, livestock farmers through training and study tours. 5. Impact on development: The main project efforts towards improved food security status of the country, foreign exchange saving by reduced importation of animal products and national self-sufficiency in livestock products, was only partially achieved at the end of the implementation period. The performance of the project could have been improved had the Borrower demonstrated ownership of the project through fulfilling the loan conditions,

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respecting the loan covenants, respecting recommendations of Bank’s supervision missions and timely implementation of the project activities. 6. Loan utilisation: The total amount disbursed was UA 6.84 million, 62.33% of the approved amount of UA 10.98 million. There was an undisbursed balance of UA 4.14 million (37.67% of the approved loan). The balance was due to unimplemented activities, and the appreciation of the UA in relation to the Malawi Kwacha by more than 3,128 % from time of project appraisal (in 1987) to completion (in 2002). Loan utilization was unsatisfactory. 7. Counterpart Funding: The Government contribution was estimated at UA 0.78 million (10.24% of the actual total project cost). This was 57% of the appraisal target of UA 1.36. Despite the various fiscal constraints experienced by the Government of Malawi (GOM) it was able to meet the minimum Bank requirement of 10% contribution towards the implementation of the project. Therefore, the performance of the Borrower in this respect may be rated satisfactory. 8. Project cost: The total project cost was estimated at UA12.23 million at appraisal. There was no change in the total project cost during implementation but at reformulation some changes were made in costing of the components to meet the changes in activities deemed necessary to achieve the project objectives. 9. Project economic performance: The project was appraised with an expected economic performance of 14% of the ERR. However, this mission could not obtain from the borrower the necessary data to evaluate the total economic performance attributable to the project, therefore the ERR was not calculated. Instead, the NPV was estimated, as well as the Benefit/Cost ratio to show the gap between the outstanding benefits without the project, that is at appraisal and projected benefits and the current project output during the project life. 10. Cross-cutting Issues: The project was implemented using natural pastureland in protected rangeland although efficient fire management techniques such as firebreaks and optimal grazing conditions were not employed. The project management faced serious problems with forest fire, animal predation and drought. The organic waste from poultry litter and organic manure from cattle was not efficiently used as substitute for fertilizer for agriculture or for growing selected forage to be used during dry seasons. At project completion, the mission still noted that bush fire was such a big problem in the project area that getting feeds for the animals, especially during the dry season was very difficult. The Dzalanyama Ranch, which was supposed to be managed as natural reserve with natural grazing by the animals under the project, is currently under tremendous pressure from fuel wood poachers who are cutting the vegetation and predisposing the ranch to erosion and degradation. The optimal management cattle grazing with the combination of cultivation of selected forage grass and the natural pasture was never implemented. The mission was informed that the project was not granted permission to undertake any forage improvement program despite the loan agreement requirement. 11. The project was designed to improve living standards of beneficiaries through increase revenues, implying better health and education for them. Thus in providing livestock farmers with breeding stocks, they could consolidate and maintain a productive herds for production of meat, milk, manure, eggs, draught power, and generated incomes from sales of these livestock products; thereby creating jobs, and impacting on the welfare of vulnerable groups, such as, women, youth and people in precarious conditions. However, the Bank’s

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mission could not establish whether the project achieved any such outputs due to lack of proper records. 12. Sustainability and viability: The project, as initially designed could generate significant results capable of providing the incentive for growth and investment in the private sector. The step forward would have been to make a well-organized transition from the project to the development of private poultry and cattle production entities, with the proper management of the project production units and training and demonstration centres. To make this sustainable and viable the GOM is in the process of commercialisation of the production units with the hope of privatisation once the units become economically viable and attractive to private investors. 13. Conclusion and recommendation: The project was appraised when the agricultural sector investment was mainly focused on crop production at the expense of livestock development. It was also aimed at food security and income generation for poverty reduction. To redress this imbalance, and to make the livestock sector attractive for investment the GOM embanked on this project. The project has strengthened the smallholder private and commercial sector in Malawi. It has revived the public sector livestock, strengthened the livestock extension services by the provision of equipment, infrastructure and training of staff and farmers. By and large the project did attempt to address all the concerns at appraisal and attempted to solve the myriads of problems facing the livestock sector. It made significant achievement in providing the country with the necessary veterinary equipment, infrastructure and trained personnel in the sector. It has rehabilitated some livestock infrastructure and produced livestock (cattle and poultry) from the production centres toward increasing high quality breed of animals to the national herd. The Production centres strengthened by the project are still the only source of breeding stock in the country. This is commendable. The veterinary services delivery in the country was enhanced by the execution of the project. The project contributed to increased livestock numbers, increased available meat in the country, income to the producers and foreign exchange savings to the country. 14 Strong, independent and full-time project management is recommended in future project to avoid delays and ensure effective project implementation. Continuous support in the livestock sector is desirable in Malawi to address the issues of food security and income generation which are relevant today as at appraisal. The production units should be turned into commercial entities, self-sustaining and viable ventures if the benefits of this project are to be maximized and sustained. Another project linked to the benefits generated by the NLDP should be considered which would focus on smallholder livestock farmers.

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BASIC PROJECT DATA 1 Loan Number 2100150000670 (current)

F/CS/MLW/AGR(LD)/88/16 2 Borrower Malawi Government 3 Guarantor Ministry of Finance (MoF) 4 Beneficiary Ministry of Agriculture, Irrigation and Food

Security 5 Executing Agency Department of Animal Health and Livestock

Development (DAHLD) A. LOAN

N° DESIGNATIONS APPRAISAL ESTIMATE ACTUAL COST

Amount (in UA Million) 10.98 6.84

1. Service Charges (% per annum on amount disbursed and outstanding) 0.75 0.75

2. Grace Period (years) 10 10 3. Repayment (% of the loan amount

payable annually from the 11th through the 20th year)

1.00 1.00

4. Repayment (% of the loan amount payable annually after the 20th year)

3.00 3.00

5. Payment Period (years) 40 40 6. Loan Negotiation date December 1987 N/A 7. Loan Approval Date December 1987 18th January 1988 8. Loan signature Date March 1988 22nd February 1988 9. Date of Entry into Force September 1988 10th May 1990 10. Completion Date December 1992 30th September 200211. Date of Final Disbursement 30th June 1993 23rd January 2003 B. PROJECT DATA

------------ In UA million ------------ Appraisal Estimate Actual Cost

1. Project Cost and Financing F.E. L.C. Total % F.E. L.C. Total % ADF 8.42 2.56 10.98 89 5.30 1.54 6.84 89.8 GOE 0.00 1.36 1.36 11 0.00 0.78 0.78 10.2 Total 8.42 3.92 12.34 100 5.30 2.32 7.62 100 2. Date of First Disbursement: 04/09/1991

3. Deadline of Last Disbursement 30/06/1993

4. Actual Date of Last Disbursement 23/01/2003

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C. PERFORMANCE INDICATORS

1. Cost under-run UA 4.72 Million (38.00 %) 2. Time overruns:

• Slippage on effectiveness: • Slippage of completion Date: • Slippage of last disbursement: • No. of extensions of last disbursement:

29 months 9 years, 9 months 9 years, 7 months 2

3. Project Implementation status Completed 4. Institutional Performance Satisfactory 5. Contractor Performance Rather Satisfactory 6. Consultant Performance Rather Satisfactory 7. ERR = 14.6% at appraisal N/A D. BANK MISSIONS Mission Type Dates No. of persons Skill composition Person Days Identification Not available Not available Not available Preparation September 1987 Not available Not available Not availableAppraisal October 1987 2 Agric. Economist

Veterinary Officer 38

Launching Not available Not available Not available Not availableSupervision Not available 1 Livestock Expert Not availableSupervision Not available 1 Livestock Expert Not availableMTR May 1995 Not Available Not Available Not

Available Reformulation Mission

July 1996 2 Agricultural Economist Livestock Expert

Not Available

Supervision August 1996 1 Livestock Expert 10 Supervision November -

December 1997 1 Livestock Expert 18

Supervision August 1998 2 Livestock Expert Financial Analyst/Audit Expert

28

Supervision March-April 1999

2 Livestock Expert Financial Analyst

16

Supervision February 2000 1 Livestock Expert 11 Supervision October 2000 2 Livestock Expert

Disbursement Officer

14

Supervision May 2001 2 Livestock Expert Financial Analyst

14

Supervision December 2001 1 Livestock Expert 7 Supervision June 2002 2 Livestock Expert

Gender Expert 24

PCR August 2004 2 Livestock Expert Agric. Economist

28

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E. DISBURSEMENT Yearly Disbursements (UA Million)

As at Appraisal Actual (PCR) Year

Amount (%) Amount (%) 1989 4.16 35 0 0.00 1990 2.51 21 0 0.00 1991 2.02 17 0.46 4.17 1992 1.56 13 1.15 10.45 1993 1.67 14 1.18 10.77 1994 0.79 7.24 1995 0.57 5.22 1996 0.20 1.82 1997 0.05 0.43 1998 0 0.00 1999 0.71 6.46 2000 0.34 3.14 2001 0.24 2.19 2002 0.96 8.77 2003 0.18 1.68

Total 10.98 100 6.84 62.33

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F. CONTRACTORS AND CONSULTANTS

Approved Amount N° Date Nature Supplier C. Currency Amount

Disbursed Amount

Undisbursed Amount

Undisbursed. %

1 5/7/1995 Tractors & Farm Machinery LORNHO PLC GBP 61460 61,460.00 0.00%

2 None Veterinary Chemicals SUMITOMO CORPORATION JPY 47438300 - 47,438,300.0 100.00%

3 4/6/1994 CNT/92/08/003 RWA International Limited USD 668256.6 641,402.50 26,854.10 4.02%

4 18/11/1994 3912/05/94/1 FARMERS ORGANISATION LTD USD 158000 158,000.00 - 0.00%

5 7/3/1997 Motor Cycles STANSFIELD MOTORS LIMITED JPY 7930800 7,930,800.00 - 0.00%

6 9/11/1999 Motor Cycles and Vehicles UNDP/IAPSO MIDTERMOLEN JPY 40254624 40,254,624.00 - 0.00%

7 9/11/1999 Office Equipment UNDP/IAPSO MIDTERMOLEN USD 111905.33 111,905.33 - 0.00%

8 23/03/2000 Tractors & Farm Machinery I A P S O GBP 124828.6 124,828.60 - 0.00%

9 12/01/2000-15/07/2002 Training BUNDA COLLEGE OF

AGRICULTURE USD 45908.46 38,177.54 7,730.92 16.84%

10 22/06/2000 Training STAFF DEVELOPMENT INSTITUTE

MKW 816870 816,870.00 - 0.00%

11 30/10/2001 Training THE UNIVERSITY OF MALAWI MKW 195599.52 195,599.52 - 0.00%

12 30/10/2001-19/03/2002

BSc. Training for 3 Students at Bunda.

THE UNIVERSITY OF MALAWI MKW 8279999.74 809,349.48 7,470,650.26 90.23%

13 13/05/2002-28/06/2002

Veterinary Drugs & Chemicals

NORBROOK LABORATORIES LIMITED

USD 33620 33,620.00 - 0.00%

14 02/04/2002- Veterinary Drugs & FULLIMPUT 1254 cc USD 99869.85 99,869.85 - 0.00%

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13/05/2002 Chemicals

15 28/06/2002 Lab Equipment AFRICAN TECHNOLOGY cc USD 94676.43 18,926.29 75,750.14 80.01%

16 14/01/2002-28/06/2002 Nitrogen Plant

M/S STIRLING CRYOGENICS & REFRIGERATION

EUR 192820 192,820.00 - 0.00%

17 11/10/2002 Incubators AFRICAN TECHNOLOGY cc USD 187985.67 187,985.67 - 0.00%

18 8/10/2002 Vaccines AFRICAN TECHNOLOGY cc USD 80477.5 80,477.50 - 0.00%

19 24/10/2002 Fertilizers RAB PROCESSORS LIMITED USD 62160 62,160.00 - 0.00%

20 25/11/2002 Consultancy for Mzuzu Slaughterhouse Design

NORMAN & DAWBARN LTD. USD 102029 42,980.00 59,049.00 57.87%

21 14/01/2003 Audit GRAHAM CARR MKW 1237499.93 1,237,499.93 - 0.00%

22 14/01/2003 Incubators AFRICAN TECHNOLOGY cc USD 235180.3 235,026.13 154.17 0.07%

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National Livestock Development Project Retrospective Project Matrix (Logical Framework)

Narrative Summary Objectively Verifiable indicators Means of Verification Assumptions 1. Sector Goal Appraisal Target Actual Achievement Contribute to national self-

sufficiency in animal production

Welfare & income of small-holders in the sub-sector by PY5

Stagnant welfare & income of small-holders in the sub-sector in PY15

Government economic data profile

2. Project Objectives Appraisal Targets Actual Achievements 2.1 Increase productivity in the

livestock sub-sector 2.1

Productivity of cattle poultry increased by PY5

Stagnant productivity of cattle poultry increased by PY15

Ownership of project by beneficiaries & Government commitment to the project are achieved

3. Outputs Appraisal Targets Actual Achievements 3.1 Production of high quality

cattle for beef and milk production

3.1 Production 600 steers annually, maintenance of herd of 1000 dairy cows by PY3

Production of 450 steers annually, maintenance of herd of 250 dairy cows in PY15

3.2 Increase of poultry production 3.2 Maintenance of breeding stock of 6,500 birds by PY3

Maintenance of breeding stock of less than 3,500 birds in PY15

3.3 Training of small-holders in the sub-sector

3.3 Training of at least 50% of the beneficiaries by PY5

Training of 35% of the beneficiaries by PY15

3.4. Building of infrastructures Building of 1 slaughterhouse & upgrading of 4 Markets by PY5

Building of 0 slaughterhouse & upgrading of 0 Market by PY5

Project progress report and/or Borrower’s PCR and Project progress reports

There is a technical capacity to carry-out workload

4. Activities Appraisal resources provision (UA

millions)

Actual resource used (UA millions)

4.1 Develop Dzalanyama Ranch 4.1 Dzalanyama R Dev. 0.90 Dzalanyama R

Dev. 4.2 Develop Mikolongwe Dairy

Complex 4.2 Mikolongwe D

C Development 0.87Mikolongwe D C Development

Project progress report and/or Borrower’s PCR

Counterpart funds are mobilized on time

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Narrative Summary Objectively Verifiable indicators Means of Verification Assumptions 4.3 Expand poultry upgrading

program 4.3 Poultry

Upgradging Program

2.04Poultry Upgrading Program

4.4 Provide support to ADDs 4.4 Support to ADDs 5.44 Support to

ADDs

4.5 Develop livestock sector in the North

4.5 Development of livestock sector in the North 0.94

Development of livestock sector in the North

4.6 Provide project coordination 4.7 Project Management 0.11 Project

Management

4.7 Provide Technical Assistance 4.7 Technical Assistance 0.70 Technical

Assistance

4.8 Provide Training Training 1.33 166 Staff trained.

Total 12.34 Total 7.62 Project Financing Financing

Sources Appraisal

financing plan (UA millions)

Financing Achievements (UA millions)

ADF 10.98 6.84 GOM 1.36 0.78 Total 12.34 7.62

Project progress report and/or Borrower’s PCR

Counterpart funds are mobilized on time

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1. INTRODUCTION 1.1 Malawi’s economy is highly dependant on the agricultural sector, which contributes about 36% of GDP, 85% of exports earnings and 84% of total employment. Productivity in agricultural production, the country’s main economic activity, is low. As a result, the majority of the population, which is engaged in agriculture, does not generate sufficient income to lead a productive life. Poverty is widespread in the country and it is estimated that about 65.3% of the population live below the poverty line. Poverty is also more prevalent in rural areas where 66.5% of the population lives below the poverty line than in urban areas where the incidence of poverty is estimated at 54.9%. Regional and gender-based variations in the incidence of poverty do not appear to be significant. Thus, the incidence of poverty in the Southern Region is 68.1% compared to 62.8% in Central Region and 62.5% in the Northern Region. Also, the incidence of poverty among female-headed households is 28.6% while it is 26% amongst male-headed households. 1.2 Livestock sub-sector constitutes an important segment of the Malawi agriculture. It contributes about 7% of the total GDP and about 20% of the value of total agricultural production. Livestock activities are carried out by more than half of the 2 million smallholder families in Malawi. A small proportion of these practice intensive husbandry techniques while majority operate low input, low output management systems. Small ruminants and various types of livestock, particularly scavenging poultry, make a vital contribution to household food security. For all classes of livestock the level of husbandry, nutrition and health care are generally poor leading to low productivity and high mortality especially in the young stock. 1.3 Major investments in agriculture in 1980s were made in crop production at the expense of livestock development. The GOM observed that there was a lot of untapped potential in livestock sub-sector which was not being harnessed. Some of the features of the livestock sub-sector, which made it attractive for development, were the fact that livestock are owned largely, by smallholder-private producers and this means that an investment in the sub-sector would be an effective means of improving the incomes of the rural people. Furthermore a large number of innovative smallholder schemes have been developed through government and private initiatives. Examples include the dairy bulking groups, smallholder stallfeeder scheme for fattening steers, the village poultry upgrading programmes and the smallholder commercial eggs bulking group scheme. It was envisaged that support to these activities would yield rapid and high benefits to the livestock farmers in particular and the country in general. It was with these views in mind, and to overcome the technical constraints that impede further development of the productive potentials of the livestock sub-sector, and to consolidate the earlier benefits from the smallholder initiatives, that the GOM requested the financial assistance to finance the National Livestock Development Project (NLDP). 1.4 This Project Completion Report (PCR) presents a summary of the performance of the project. It is based on the findings of the Bank Group mission that visited Malawi from 25th June to 10th July 2004 and examination of a set of documents including the borrower’s PCR.

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2. PROJECT OBJECTIVES AND FORMULATION 2.1 Sector Goal and Project Objective: At appraisal the overall objective of the project was to provide the technical guidance and inputs required to support the Malawi Government’s efforts to develop and increase productivity within the livestock sub-sector in order to achieve national self sufficiency in nutritional animal protein through local production. The project was to contribute substantially to the improvement of the welfare and incomes of the smallholder private producers in the country. 2.2 Project Formulation: The project was appraised in September 1987 and approved by the Board of Directors in January 1988. The loan became effective in May 1990. The project was reformulated in July 1996 to correct managerial shortcomings which were detected during the project’s mid-term review and to take into account some changes that have occurred. The project was also reformulated to reflect the emerging trends in the livestock industry in the country. The reformulation included a revision of the List of Goods and Services (LOGS). The Bank did not approve the reformulated project as well as the revised LOGS at that time because of the inadequacies detected during the reformulation. As a result of this, disbursement was suspended on the project in September 1996. Some conditions were set down for the GOM to fulfill before disbursement could resume. It took the GOM about three (3) years to fulfill the conditions. The Bank approved the reformulated project and lifted the suspension on flow of funds in February 1999 after the set conditions were fulfilled. The implementation of the reformulated project as approved by the Bank was for three (3) years. 2.3 Preparation, Appraisal, Negotiation and Approval: In the 1980s agriculture employed over 85% of the labour in Malawi, earns 80% of the foreign exchange and contributed about 40% of the GDP. At that time investments favoured crop production at the expense of livestock development. To rectify this imbalance and to tap the high and untapped potential for livestock the GOM approached the Bank Group for financial assistance to develop the livestock sub-sector in Malawi. A mission by the FAO Investment Centre in October 1986 undertook an identification/preparation mission to Malawi. This was followed by ADB/FAO pre-appraisal mission in June 1987. The National Livestock Development Project (NLDP) was appraised in September 1987 and approved by the Bank Group Board of Directors in January 1988. 2.4 Project Description: The project had eight (8) components: (i) Development of Dzalanyama Ranch; (ii) Development of the Mikolongwe Dairy Complex; (iii) Expansion of the Black Australorp Village Poultry Upgrading Programme (at Mzuzu Hatchery, Bwemba Hatchery and Mikolongwe Hatchery); (iv) Institutional Support to the Livestock Extension/Field Services of the Agricultural Development Divisions (ADDs); (v) Development of the Livestock Sector in the Northern Region; (vi) Institutional Support to the Project Management Unit within the Department of Animal Health; (vii) Training; and (viii) Technical Assistance. 2.5 Dzalanyama Ranch: At appraisal it was envisaged that the ranch would maintain 2000 breeding cows and turn out 600 two-year old steers and 300 assorted animals annually to be sold to the stall feeders and smallholder farmers. The ranch would also provide breeding stock to other ranches in the country.

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2.6 Mikolongwe Dairy Farm Complex: Mikolongwe Dairy Complex, which is made of Chisombezi, Chikowa and Thuchila farms when fully developed, serves as dairy cattle breeding centre. It is expected to have 1000 breeding cows and produce 400 crossbred heifers per year for sale to the smallholder dairy farmers. It is also to serve as a training centre for the training of extension staff and smallholder farmers. 2.7 Expansion of the Black Australorp (BA) Village Poultry Upgrading Programme: The aim of this component was to modernize the breeding and hatchery facility at Mikolongwe farm (in the Southern Region) and to establish breeding and hatchery facilities at Bwemba (Central Region) and at Choma (Northern Region). This is to increase the chick production from 200,000 per year at the time of appraisal to 580,000 per year when the facilities are fully established and operational. At full capacity the breeder farms are expected to have 2,000 breeders in Mikolongwe, 3,000 in Bwemba and 1,500 in Choma. The farms would produce 6-weeks old chicks for sale to the smallholder farmers in the country. The Black Australorp (BA) Village Poultry Programme is a laudable component of the project which is believed to be very suitable for smallholder rural poultry producer. The need to provide smallholder rural farmers with high quality, high performing poultry stock to increase the national stock and increase the income and nutritional status of the rural populace is as relevant today as it was at the time of project appraisal in 1987. 2.8 Support to the ADDs: This component was aimed at improving the efficiency of the field staff by providing them with the required inputs and support to carry out the field activities like extension and support services. 2.9 Development of Livestock Sector in the Northern Region: This component involved the construction of a municipal Slaughterhouse with cold room facilities for 30 large animals per day, provision of refrigerated trucks, vehicles and motorcycles. Cattle markets were to be upgraded and cattle routes and dip tanks to be rehabilitated. 2.10 Support to the Project Management Unit: At appraisal this component was planned to be supported through the provision of consultancies, vehicles, computers and equipment and training. The Project Steering Committee (PSC), which was one of the loan conditions was set up and the project was audited regularly up to its closure in September 2002 2.11 Training Assistance: The project was to provide training opportunities for national personnel in different aspects of animal production, animal nutrition, husbandry and disease control. Special training assistance to extension staff and farmers was envisaged at appraisal. 2.12 Technical Assistance: The activities earmarked under this component have been fully implemented. These include the recruitment of Dzalanyama Ranch Farm Manager, an expert in beef cattle breeding and a dairy husbandry and production expert for Mikolongwe Ranch Dairy Complex. 3 PROJECT EXECUTION 3.1 Effectiveness and Start-up: Although the loan conditions were generally easy to accomplished, it took the GOM two and a half (2 ½) years to meet. The loan finally became effective on 10th May 1990. First Disbursement was made to the project on15th July 1990. The initial planned project completion date at appraisal was December 1993. By the time first disbursement was made, the project had lost half of its implementation period of five years

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beginning September 1988. This was a serious slippage on the side of the Borrower which could have been averted. Prior to first disbursement the Borrower should have fulfilled the following conditions:

A. The conditions precedent to first disbursement were as follows Prior to first disbursement the Borrower shall have:

• given an undertaking that it would make regularly adequate allocation in its annual budget to finance its share of the cost of the project as set out in the finance plan;

• given an undertaking that it would assume the responsibility to meet all cost

overruns of the project;

• given an undertaking not to use the proceeds of the loan for the payment of the various duties and taxes relating to goods and services required for the execution of the project:

• set up a project steering committee, whose composition shall be acceptable to the

Fund, to provide policy guidance and be responsible for overall project coordination;

• satisfied the Fund that it has taken appropriate steps, having regard to the

multipurpose nature of the Dzalanyama ranch, to define clearly the respective roles and functions of the two Government ministries concerned with that ranch;

• given an undertaking that, upon completion of construction of the slaughter house

and cold storage facilities at Mzuzu would be managed on a commercial basis

• satisfied the Fund that the UNDP/FAO project designed to strengthen the veterinary and field services has been duly declared effective;

• Satisfied the Fund that it has appointed a Financial Controller, Administrative

officer and a Secretary having qualification and experience acceptable to the Fund

• submitted final proposals to the Fund for the recruitment of the technical assistance personnel

B. Other conditions:

• Upon completion of the then on-going livestock sub-sector study, communicate to

the fund the finding of the study and, in consultation with the Fund, determine its future policy in the sub-sector

• Satisfied the Fund that adequate steps have been taken to eliminate existing constraints in the production of industrial livestock feed

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• Submitted to the Fund a detail training programme, indicating its training requirement for the sub-sector and the courses for which alternative funding sources are available

• Ensured that issue of veterinary drugs to be procured under the loan was on a cost recovery basis

3.2 Modifications: 3.2.1 The appraisal of the project in October 1987 took place when most of the economic activities were state controlled. By 1996 the country had adopted structural adjustment measures, including changes in policies and institutions aimed at increased economic liberalisation. In addition, the country experienced bouts of severe drought which increased both the vulnerability and importance of livestock to farmers and to the country at large, for the provision of food and cash when crops have failed. The project's Mid-Term Review carried out in 1995 recommended that the project be reformulated to take into account the changed circumstances thereby facilitating the attainment of the project's objective. 3.2.2 The reformulation of the project in 1996 also involved a revision of the project's list of goods and services. It took into account activities which had already been completed, re-costed the remaining activities, and added some activities which, though not envisaged at appraisal, were now deemed essential for the attainment of the project objective. Similarly the reformulated project retained the national coverage, the number of components (eight), and the total project cost. 3.2.3 The reformulated project was to have been implemented during the ensuing three years, 1996/97 to 1998/99. However, because of serious shortcomings in project management which came to light during reformulation, the Bank decided to suspend the flow of project funds until Government met a set of pre-conditions necessary to ascertain project success. The conditions were met and the project was implemented over the period 1998/99 to 2001/02. 3.2.4 At the time the flow of project funds was suspended, total disbursement was UA4.15 million and total commitments amounted to UA4.23 million leaving an uncommitted loan balance of about UA6.75 million. The project reformulation involved the reallocation of this uncommitted loan balance to the project expenditure items as listed in Table 1.

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Table 1: Project Loan Reallocations by Categories of Expenditure (UA million)

Category of Expenditure

Appraisal Estimate

Committed Amounts

Reformulated Estimate

Dzalanyama Ranch 0.875 0.778 0.531

Mikolongwe Farm 0.921 0.394 1.691

Bwemba Hatchery 1.271 0.525 0.615

Mzuzu Hatchery 1.004 0.492 0.488

Mikolongwe Hatchery 0.101 0.101 0.526Support to ADDs 4.274 0.648 0.824

Assistance to North 0.986 0.139 0.431

Project Management 0.064 0.114 0.307

Training 0.930 0.482 1.245

Technical Assistance 0.553 0.553 0.095

TOTAL 10.979 4.226 6.753 3.2.5 Changes by Component (i) Development of the Dzalanyama Ranch: 3.2.6 At reformulation this component’s appraised activities were about 90% completed and the component had almost attained its appraisal targets. As planned, a land area of 30,000 ha was acquired from a forest reserve and developed for the project. The farm was holding a herd of 1,400 breeding cows, 778 heifer calves and 693 bulls and steers. Its levels of production and sales have surpassed the appraisal targets of 600 steers and 400 tons of beef annually. It had started earning revenue enabling it to meet its operational expenses, hence stand on its own. However, some important capital items necessary for farm operations, which were not provided for at appraisal, were required. These include: additional farm machinery; transport and office equipment, including a computer, printer and photocopier, to assist in maintenance of the ranch's accounts; and some civil works and water reticulation aimed at ensuring the component’s sustainability. Altogether the development costs envisaged under this component under the reformulated project was UA0.531 million. 3.2.7 To counter the effects of recurring drought on the livestock on the ranch, 8 earth dams were to be constructed at an estimated cost of UA 61, 500, to conserve water for the animals. This was not accomplished during the project implementation. In addition, to ensure proper maintenance of ranch accounts, the Government was to provide a qualified accountant to be paid by revenue from the ranch. The Government only provided an account clerk. The running costs, estimated at UA 202,423.00 for the reformulated project’s implementation period, was to be met from the ranch’s income. However, the ranch did not have accumulated reserve funds of its own, (as all incomes from the ranch or any government source has to be credited to the Treasury), the project provided funds for the initial running costs until the government policy on revenues

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could be reviewed. To date the government only allows partial use of the revenue generated from the farm. ii) The Development of Mikolongwe Dairy Farm Complex: 3.2.8 The objective of this component was to produce crossbred heifers for sale to smallholder farmers. The farm was to be developed into an efficient dairy cattle breeding station and then sold to private operators when it became self-financing. 3.2.9 As appraised, at full development, the component Dairy Complex would have 1,000 breeding cows and supply 400 heifers annually. At this stage the complex would have been self-supporting and ready to be sold to the private sector. However by the time of reformulation, the complex had only 376 breeding cows, 509 dairy heifers and heifer calves. In addition, it had 215 steers, 49 bull calves and 2 bulls. 3.2.10 It was seriously contemplated during the reformulation that since as a result of market liberalisation, private commercial farms were producing heifers for sale, this component should be terminated. The reformulation mission, however, observed that the private commercial heifer producers only produced pure breeds which are not suitable for most small livestock farmers. In addition, the project has put in place and rehabilitated much infrastructure whose benefits would not be achieved if the component was abandoned. It was also felt that since modalities for privatising the complex have not been worked out, disposing the large number of stock held in the complex would pose a major problem. 3.2.11 It was, therefore, agreed that the component continue as designed but reformulated to involve the farmers in the breeding programme. At the end of the project financing period, the component was to be turned over to the farmers. To facilitate this, additional farm machinery, office and transport equipment were to be procured and some essential civil works undertaken at an estimated cost of UA 0.4 million 3.2.12 To prepare farmers for the ultimate take over of the production of crossbred heifers on their own, the project was to sensitize the farmers, instructing them on breeding technologies. Project funds were to be used to develop the Mikolongwe farm proper into a dairy demonstration farm and a farmer training centre. At the same time, funds were to be utilized to support the Artificial Insemination (AI) programme. This was to provide liquid nitrogen gas, transport and storage facilities, office equipment, building rehabilitation and bulls for semen. This was to hasten the cross breeding process to be implemented by the farmers. The Government was to also provide the farm, at its own cost, with a qualified accountant to prepare and maintain the records of the farm. An estimated sum of UA1.23 million was earmarked for those activities. 3.2.13 To empower smallholders in improving the livestock productivity and increase production it was envisaged that smallholders would be trained in livestock breeding techniques and dairy technology. Toward this, the training centre and the dairy demonstration farm were to be reactivated. Staff and farmers would receive training at the centre.

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(iii) The Black Australorp Village Poultry Upgrading Programme 3.2.14 The objective of this programme was to increase the production of the Black Australorp birds by modernizing Mikolongwe poultry farm in the Southern Region and establishing similar facilities at the Bwemba poultry station in the Central Region and at Mzuzu in the Northern Region. Six-week old grower chicks would be sold to smallholder farmers in the rural areas where other improved breeds have failed to perform well in poultry production. However, while project funds had been allocated to enable the project acquire quality equipment, the Borrower procured low quality equipment fabricated by local artisans. The reformulation mission also observed that appraisal funding for the modernization of the Mikolongwe hatchery was inadequate as funds were only provided for the procurement of a feed mill, poultry crates and miscellaneous poultry equipment. As at the time of reformulation the planned activities at appraisal in this component were assessed at about 85% completed. 3.2.15 The Black Australorp (BA) Village Poultry Programme was a laudable component of the project which was believed to be very suitable for smallholder rural poultry producer. The need to provide smallholder rural farmers with high quality, high performing poultry stock to increase the national stock and increase the income and nutritional status of the rural populace was very important to the GOM towards its efforts in poverty reduction and improved nutrition of the rural population. The appraised activities, which were yet to be implemented, included the acquisition of replacement quality poultry rearing equipment, office equipment, including a computer, printer and photocopier, to be provided for each hatchery to assist in accounting system. Additional poultry attendant houses, additional boreholes, and water tanks were to be constructed, and water piping was to be laid down at the Bwemba and Mzuzu hatcheries. To sustain the programme after the project financing phase, farmers would slowly take over the Black Australorp breeding programme. To this end, farmers were to be trained in breeding technologies, including in poultry brooding, rearing and management and in techniques for poultry feed compounding. Project funds were provided to procure 12 mini paraffin incubators for farmers, 4 around Bwemba hatchery, 4 around Mzuzu and 4 around Mikolongwe. In addition, to start farmers off on this activity poultry health and production packages were be provided to farmers groups on full cost recovery basis. 3.2.16 As at the time of appraisal, most of the facilities at the Mikolongwe hatchery were in good working order, minimal funds were allocated under this sub-component. At reformulation, more than ten years later, most of the buildings, equipment and the electricity system have been run down. The hatchery is small and, together with the incubator, were old resulting in high poultry production losses. Project funds were provided to procure new equipment, rewire the electricity and rehabilitate the water system. The hatchery in Mzuzu was badly designed and is a health hazard to the chicks being hatched. At the same time, the standby generator bought for Bwemba hatchery was too small, consequently, it was transferred to Mzuzu to be used together with that bought for the Mzuzu hatchery which was equally small, but was not installed. Project funds were, therefore, provided to modify the hatchery and to install the standby generators. 3.2.17 All together, the project’s reformulated activities under the poultry development component are estimated to cost UA1.58 million. In addition, as all the poultry production units do not have proper accounting systems, the Government was to provide, at its own cost, an accountant for each of the units, to prepare and maintain proper accounting records.

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(iv) Institutional Support to the Livestock Extension/Field Services of the Agricultural Development Divisions (ADDs):

3.2.18 This component included provision of transport facilities, vaccines and veterinary drugs and cooling system for the vaccines, as well as rehabilitation of dip tanks in all the ADDs. As appraised, this was the largest component, accounting for about 43% of the total project cost. However, very little was achieved as at the time of reformulation. The implementation level at reformulation was estimated at about 20%. This comprised procurement of equipment, vehicles and rehabilitation of half of the dip tanks planned. Very little of the veterinary drugs, vaccines and chemicals provided for were procured, and the basic equipment for Veterinary Assistants (VAs) were not procured. Because of the low implementation rate, funds provided under this component were not likely to be fully utilized by the close of the project, even under the extension period proposed for the reformulated project. Furthermore, the Agricultural Services Project which was partly funded by the ADB also provided for basic equipment for the VAs so that some of the NLDP funds originally assigned to this activity would be available to fund other activities. Out of the UA 4.22 million allocated to this component, total commitments amount at reformulation was UA0.65 million. The reformulated component activities were revised to cost UA 1.04 million leaving UA2.59 million of the uncommitted amount for reallocation to other project activities. Funds were provided for procurement of VAs' basic equipment, veterinary drugs, vaccines and chemicals, to strengthen the extension services. To this end vehicles were also procured for those Rural Development Programmes (RDPs) which have no vehicles, as well as for the Chief Veterinary Officer (CVO) and his deputy who are in charge of extension services and for the overall supervision of the project. Funds were also reallocated for procurement of solar operated refrigerators for storage of vaccines in areas without electricity. Financial support was also provided to the Central Veterinary Laboratory and regional laboratories, to acquire chemicals and reagents to provide essential services to livestock farmers. (v) Development of the Livestock Sector in the Northern Region: 3.2.19 Under this component, funds were allocated for the construction of a municipal slaughterhouse, procurement of refrigerated trucks for transportation of slaughtered carcasses, upgrading of market infrastructure through the provision of weigh bridges. Funding was also provided for the modernization of drinking points and holding yards for livestock, and for the rehabilitation of trek routes, construction of drinking points, and for the construction and rehabilitation of dip tanks. Following the Government policy decision not to construct any more dip tanks, funds hitherto allocated for the construction of dip tanks were to be reallocated to the establishment of veterinary service stations. These consist of a VA’s house, an office and a treatment crush. Three Veterinary Service Centres were to be provided in Karonga ADD and five in Mzuzu ADD. In the reformulated project, the sum of UA0.43 million was allocated to this component. (vi) Institutional Support to the Project Management Unit in the Department of

Animal Health and Industry (DAHI): 3.2.20 This component involved strengthening DAHI's overall support capability to the livestock development through provision of additional technical professional staff and consultancy services, office equipment and a vehicle. Under the reformulated project a full time Project Manager and a Financial Controller were to be recruited. The Project Manager (PM) was

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responsible for the implementation of all the components of the project with the assistance of the staff on the ground. The position of Financial Controller (FC), which was provided for at appraisal but was hitherto never been filled, was to be filled. These officers, under the reformulated project, were paid from project funds. In addition, funds were reallocated to meet the project's administrative costs, procurement of a fax machine, and of the procurement of vehicles for the Project Manager and for the Financial Controller as well as furniture and equipment for the offices of the Project Manager and of the Financial Controller. The MTR and the reformulation missions’ findings indicated that the project accounting system was poor. To rectify this problem, the Bank financed a consultant to set up an appropriate accounting system for the project. In all, under the reformulated project, a sum of UA 0.3 million was allocated to carry out the activities under this component. (vii) Training: 3.2.21 As at the time of the project reformulation only 50% of this component was implemented. In the light of the project's adjustments the training provided for under the component was modified to respond to the needs of the farmers and staff under the reformulated project. A total of 24 fellowships were provided for the national personnel on aspects of animal production and disease control. Funds were also provided for training extension staff and farmers in the form of study tours. In addition, training of farmers and front line staff was carried out with emphasis on production, animal health and marketing of livestock and livestock products. To this end, more funds were provided for this component to finance short courses, in-service training, workshops and seminars for the front line staff and farmers. Funds were also provided for training of the senior staff in management. A total of UA 1.24 million was allocated to this component under the reformulated project. (viii) Technical Assistance: 3.2.22 The long-term technical assistants were recruited as planned. These include the recruitment of Dzalanyama Ranch Farm Manager, an expert in beef cattle breeding and a dairy husbandry and production expert for Mikolongwe Ranch Dairy Complex. This component was completed and the reformulation team did not recommended new activities. 3.3 Implementation Schedule The project was to be implemented over a period of five years from 1988 to 1993. The implementation of the project was entrusted to DAHI and the PSC to give it policy guidance and inter-ministerial coordination. . Lack of full-time project management hindered the rapid implementation of the project. At reformulation a full-time PMU was proposed and recruited. The delayed take-off of the project and the various suspensions experienced by the project during its implementation period led to prolonged slippage in the implementation period of about nine (9) years. The project was actually implemented over a period of six years. The MTR and the reformulation of the project attempted to align the project to realities of the day and steered the project towards achieving its desired objectives. The planned and actual implementation schedule is presented in Table 2 below:

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Table 2: Implementation Schedule: Appraisal Vs Actual

N° Description Planned Actual 1. Board Approval December 1987 18th January 1988 2. Loan Signature March 1988 22nd February 1988 3. Project Beginning September 1988 10th May 1990 4. Establishment of the PMU September 1988 NA 5. MTR NA May 1995 6. Reformulation NA July 1996 7. Project Completion December 1992 September 2002 3.4 Reporting: One Mid-Term Review (MTR) report and one project Reformulation Report were done. Several quarterly Progress reports (QPR) were submitted to the Bank during the implementation period. The reports were not submitted on time but gave an indication of the implementation plans and achievements. The project was regularly audited especially after the reformulation when funds were allocated for the recruitment of an independent auditor recruited internationally. The project was supervised at least once a year and the missions were helpful in detecting the need for both an MTR and reformulation of the project which guided the project to completion. 3.5 Procurement of Goods and Services 3.5.1 Procurement of goods, works and services under the loan was carried-out in accordance with the Bank’s rules and procedure for procurement of goods and works. International Competitive Bidding (ICB) was used for the procurement of motor vehicles and motorcycles, farm machinery and equipment, veterinary drugs, chemicals, reagents and acaricides. Animal feeds, additives and premixes were procured through National Competitive Bidding (NCB). The planned mode for the execution of the civil works was NCB although most of the civil works were not executed. Staff training was carried out in member countries of the Bank Group and locally in the identified suitable institutions. The short-term consultants were recruited through a short-list. The detailed description of goods and services procured under the project is presented in Basic Data item (F). A summary of the procurement arrangement that was envisaged at appraisal and the actual mode used during implementation is provided in Table 3 below.

Table 3. Summary of Procurement Methods used by the Project. Item Description Mode of Procurement at

Appraisal

Actual Mode used during Implementation

Vehicles and motorcycles, farm machinery & equipment, veterinary drugs, chemicals, reagents and acaricides

ICB

ICB

Animal feeds, additives and premixes NCB NCB

Civil works NCB NCB Short-term consultants Short-list (SL) SL Operating Costs Local Shopping (LS) LS

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3.5.2 The weakness concerning the procurement of goods and services pertained to the lack of capacity and training on procurement procedures especially during the first phase of the project (before reformulation). Subsequent training of project staff by the Bank helped in improving the procurement process. In addition, no records were kept by the project on the procurement implementation efficiency (approval date, expected date of commencement, effective date of commencement, slippage in contract commencement, expected duration, effective duration, duration overlapping, contract cost, actual contract amount, cost over-run/under-run, and reason for changes). It was therefore hard to establish whether procurement of goods and services was efficiently carried-out. The project procurement implementation may be rated moderately acceptable. 3.6 Financial Sources and Disbursement 3.6.1 Financial Resources: The total project cost was estimated at UA 12.34 million as shown in Table 4. The ADF financed 100 percent of the foreign exchange costs associated with the project’s total expenditures, which was 68 percent of the total project cost and 77 percent of the ADF financing. The loan was also to cover 65 percent of the local costs associated with the project’s total expenditures, 23 percent of the total ADF financing, and 21 percent of the total project cost. The GOM’s contribution of 11 percent of the total project cost was for financing local costs, including operation and maintenance, local salaries, wages and allowances.

Table 4: Project financing (in UA Million)

Appraisal Estimate Actual Cost Financing Source F.E. L.C. Total % F.E. L.C. Total %

ADF 8.42 2.56 10.98 89 5.30 1.54 6.84 89.8 GOM 0.00 1.36 1.36 11 0.00 0.78 0.78 10.2 Total 8.42 3.92 12.34 100 5.30 2.32 7.62 100

% Of Total

68 32 100 70 30 100 NA

NA: Not Applicable 3.6.2 Disbursement: The first disbursement of the loan proceeds was in September 1991, according to the current project implementation record. The last disbursement deadline was in January 2003. The loan funds were disbursed by direct payment to the contractors, suppliers and consultants while funds for operating costs were disbursed through the project’s special account. The project was suspended in 1993, before the expected deadline for final disbursement and reformulated in 1995, and suspended again in 1996, and then in 2001, this was a great disruption in project implementation and the disbursement process. Thus, the project disbursement was extended until January 2003. At the end of the last disbursement deadline, the total amount disbursed was UA6.84 million as indicated in Table 4 above. Thus, the total disbursement rate of the loan stood at 62%, leaving a balance of UA 4.72 million. On the basis that all disbursement claims had been settled, the balance was cancelled upon Government request. Out of the estimated Government contribution of UA 1.36 million, the amount of UA0.78 million was released in cash reflecting a rate of 58 percent. Although the project took more than twelve (12) years to be implemented instead of five (5), with three (3) extensions of the disbursement deadline, it did not improve project performance on disbursement, which stood at 62 % of the ADF loan.

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3.6.3 The main reasons for delays in disbursement and low rate at completion were: (i) lack of capacity of the PMU; (ii) The three (3) suspensions the project was subjected to; (iii) the low performance of the project in completing project planned activities and (iv) the devaluation of the Malawi Kwacha. Details of disbursement schedule per year for the ADF loan are presented under basic data item (E) and in Table 5. below. The effective disbursement period for this project was only six years. This could have been enhanced had the project not experienced several suspensions. Therefore, the overall loan disbursement was satisfactory.

Table 5: Loan Disbursement by Year (in UA Million)

FISCAL YEARS TOTALLoan Disbursement

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Appraisal plan 3.83 2.31 1.86 1.44 1.54 10.98

Actual Disbursement 0 0 0.46 1.15 1.18 0.79 0.57 0.20 0.05 0.0 0.71 0.34 0.24 0.96 0.18 6.84

% Annual Disbursement 0 0 4.17 10.45 10.77 7.24 5.22 1.82 0.43 0.0 6.46 3.14 2.19 8.77 1.6862.33%

Cumulative Disbursement % 0 0 4.17 14.61 25.39 32.62 37.8439.6640.0940.0946.5649.6951.8860.6562.3362.33%

Table 6: Project Disbursement by Year (in UA Millions)

FISCAL YEARS TOTALProject Disbursement

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Appraisal plan 4.07 2.52 2.11 1.74 1.90 12.34

Actual ADF Disbursement 0 0 0.46 1.15 1.18 0.79 0.57 0.20 0.05 0.0 0.71 0.34 0.24 0.96 0.18 6.84

Actual GOM Contribution Schedule N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.78

Actual Project Disbursement 0 0 0.46 1.15 1.18 0.79 0.57 0.20 0.05 0.0 0.71 0.34 0.24 0.96 0.18 7.62

% Annual Disbursement 0 0 4.17 10.45 10.77 7.24 5.22 1.82 0.43 0.0 6.46 3.14 2.19 8.77 1.6861.75%

Cumulative Disbursement % 0 0 4.17 14.61 25.39 32.62 37.8439.6640.0940.0946.5649.6951.8860.6561.7561.75%

4 PROJECT PERFORMANCE AND RESULTS 4.1 Operating Results 4.1.1 Overall Assessment: The sector goal of the project was to contribute to improvement in food security and thereby foreign exchange savings in Malawi. The overall assessment of the project performance is satisfactory. The project to date is the only source of high quality hybrid animals in the country. It is also the major producer and supplier of day old chicks in the country. It is also pertinent to note that the breed of chicks sold are very adapted to the free-range husbandry system of the rural areas. It is popularly called “Mikolongwe chicken” nationwide. The implementation of the project has contributed to increased and stabilized

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national livestock population, rehabilitated livestock infrastructures and introducing measures to improve livestock production and increasing livestock numbers and the supply of animal protein. This has implied increased income to the smallholder producers and increase protein production and intake in the country. The detailed achievement by component is as follows: 4.1.2 Cattle Development Program: 4.1.3 The implementation of the cattle development activities was undertaken at the Dzalanyama Ranch, in the Mikolongwe Dairy Complex and through the livestock sector support in the Northern Region. Project performance in implementing these activities can be reflected as follows: 4.1.4 Development of the Dzalanyama Ranch: At project completion there were only a herd of 1074 breeding cows out of 2,000 projected at appraisal. This represents a performance rate of 53.70 percent. This ranch could only produce 189 steers at project completion per annum, representing 15.75 percent of its appraisal target of 600 two-year old steers per annum. The situation was much better at reformulation (1996) when the achievement of more than 600 steers was attained. Project performance related to annually sale of assorted animals stood at about 153 instead of 300 heads, corresponding to about 51%. Out of the projected 100 tons of incremental beef production per annum only 67.50 tons was achieved representing 67.50%. Therefore, it could be deduced that the project may be rated satisfactory. The project performance could have been greatly increased had the problem of initial poor management been tackled, including the problem of poor health and husbandry practices resulting in poor feeding, low calving rate of 57 percent instead of 60 percent, high mortality rate of 5 to 10 percent, instead of 2-5 percent, and poor breeding schemes on the ranch.

Project Performance Status with respect to the Development of the Dzalanyama Ranch

Performance indicators

Appraisal Objectives

Achievement at

Reformulation

Achievement at

Completion

Performance (%)

Counter-performance

(%) Herd of breeding cows (units)

2000 1,400 1,074 53.70 -23.29

Number of 2-year Old Steers Turned out p.a.

600 600 189 15.75 -84.25

Number of Assorted Animals Sold p.a.

300 1,780 153 51.02 -91.39

4.1.5 The Mikolongwe Dairy Complex Development: At project completion the appraisal objective of 1,000 breeding cows has not been achieved as a result of project implementation. The Mikolongwe complex was expected to maintain a herd of 1,000 breeding cows and produce 400 crossbred heifers per year for sale to the smallholder dairy farmers. It was also to serve as a training centre for the training of extension staff and smallholder farmers. There were 955 animals at the time of the Bank’s completion mission,

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including 360 breeding cows, 348 heifers, 39 heifer calves 60 bull calves, 139 steers, and 9 bulls. This component was completed with a 36 percent achievement in terms of breeding cows. This performance could have even been better, if the complex was operated on a commercial basis. There was no record of beneficiaries training and the Bank’s completion mission cannot ascertain on the basis of mission findings that there had been a significant number of beneficiaries training. In addition, there was an acute recurrent water shortage due to breakdown of water pumps and lack of water reticulation due to failure by the project to carryout implementation of the required civil works envisaged as key investment for the optimal operation of the complex. On the basis of this assessment the component performance with respect to the development of the Mikolongwe Dairy complex can be rated fair. In addition the artificial insemination (AI) unit was provided with new Liquid Nitrogen plant installed at project completion in September 2002. The project also acquired two high-value breed bulls for the center to boost semen production. During the Bank’s completion mission, the center was functional and in good working conditions. The mission also noted that the center was providing semen to most of the dairy farmers, although some private firms were also active in the area with higher market prices. However, the center was not run as a profit-oriented activity so as to fully achieve its operational potential. All operation costs including staff and operational resources had to be provided by Headquarters, which undermined the full operational capacity of the center. 4.1.6 Support to the livestock sector in the Northern region: As already stated above, the implementation of this component was expected to complete: (i) the construction of a municipal slaughter house, equipped with refrigerated trucks for transportation of slaughtered carcasses, (ii) the rehabilitation and upgrade of market infrastructure by providing weigh bridges, modernized drinking points and yards for livestock, and (iii) the rehabilitation of cattle routes, construction of drinking points, and for the construction and the establishment of veterinary service stations, in replacement of dip tanks rehabilitation, following the Government decision not to construct anymore dip tanks. As a result of project implementation performance, the construction of the slaughterhouse and all the other civil works were not accomplished during the project because the drawings, bill of quantities were prepared and tendered late and the tendering process could not be completed before project completion. The project, under this component procured vehicles, trucks, cool boxes, refrigerators, deep freezers, drugs and vaccines in order to support the improvement in the efficiency of the field staff by providing them with the required inputs and support to carry out the field activities like extension and support services. The project had also rehabilitated several dip tanks in the various ADDs. Therefore the performance of the sub-component regarding the support to the livestock sector in the Northern region may be rated satisfactory. 4.1.7 Poultry Upgrading Program: The objective of this program was to increase the production of the Black Australorp birds by modernizing Mikolongwe poultry farm and establishing similar facilities at Bwemba and Choma. Six-week old grower chicks would be sold to smallholder farmers in the rural areas where other improved breeds have failed to perform well in poultry production. As at the time of reformulation the planned activities at appraisal in this component were assessed at about 85% completed. Upon project completion farmers were expected to take over the Black Australorp breeding program. Project provided all necessary equipment to start farmers off on this activity by providing poultry health and production packages to farmer groups on full cost recovery basis. As at the time of appraisal, most of the facilities at the Mikolongwe hatchery were in good working order, however, at reformulation, more than ten years later, most of the buildings, equipment and the electricity system have been run down. Resources were provided to procure new equipment and rehabilitate electricity and

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the water systems. All necessary arrangements were made with transfer of equipment from other project sites to Choma and Bwemba hatcheries and/or acquisition of new equipment with the adequate resources for the latter hatcheries. 4.1.8 The capacity of the Mikolongwe hatchery is 3,500 hens and 500 cocks and can produce 8,000 day-old chicks per week. At the time of the Bank’s completion mission, there were only 1,048 breeders on the farm representing 26.20 percent of the appraisal target. New set of incubator and hatcher was procured for this unit with a capacity of 33,000 eggs and 11,000 chicks respectively to replace the old ones. This is now in place but is operated at only 10% capacity, because there are technical problems in operating them, implying that equipment suppliers have to intervene to secure their operation. Although the adequate human resources were appointed at the unit, it was operating below required standards, because of lack of the necessary operating materials. 4.1.9 At project completion, the Bwemba hatchery had 950 breeders producing 350 eggs per day (36 percent production) over an appraisal target of 3000 breeders, which reflects a 31.67 percent achievement. The hatchery has a capacity of 33,000 eggs. However, it now only produces 3,000 eggs set (9.09 percent of the capacity) and hatching on the average of about 1,500. Fertility and hatchability are less than 50%. This production levels are neither technically nor commercially acceptable and are not viable. The Bank’s completion mission was informed that there is great demand for the products from the farm for both fertile eggs and chicks, but this could not be substantiated by figures. It was also understood that there is lack of awareness of the availability of the products by those to whom they were intended – the rural farmers. The linkage between supply and demand, i.e. production centers and the farmers is very weak. 4.1.10 The Choma Hatchery is not doing any better, as the Bank’s completion mission found that there are only 869 breeders (766 hens and 103 cocks), against 1500 targeted at appraisal, and producing 386 eggs per day representing 48 percent of egg production. On the basis of previously presented performance results in this report, it is known that the hatchery operates only at 35 percent capacity. The Choma hatchery is not operating at full potential. Not only the centers do not operate at optimal capacity, but also, their performance, regarding breeding ratios, hatchability, fertility and mortality, is not optimized. The major constraints are that the hatchery is not operated on commercial basis. Until the issue, of operating these production centers on commercial basis is addressed, the full potentials of the centers will never be optimized. Therefore the performance of the poultry-upgrading program may be rated unsatisfactory. 4.1.11 Support to ADDs: This was the largest component accounting for about 43% of the total project cost. However, at project reformulation, the implementation level was estimated at about 20%. The component was designed to include the procurement of equipment, vehicles, rehabilitation of half of the dip tanks planned, veterinary drugs, vaccines and chemicals. Through this component, the project contributed at improving the efficiency of the field staff by providing them with the required inputs and support to carry out the field activities, vehicles, trucks, cool boxes, refrigerators, deep freezers, drugs and vaccines, and the rehabilitation of several dip tanks in the various ADDs. However, during the Bank’s completion mission, there was no strong signal that the ADDs are as active as one would have expected in light of the amount invested. This component may be rated rather satisfactory.

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4.1.12 Project Management: This component involved strengthening DAHI's capacity through provision of technical support to professional staff, consultancy services, office equipment and vehicles. Due to low performance, the project recruited a full-time Project Manager and a Financial Controller through short-list. This was supposed to boost up project implementation. Yet, at project completion, very little was achieved in the project technical and financial management. The Project Steering Committee (PSC) set up to give adequate guidance and take necessary action to for successful implementation of the project did not perform satisfactorily. At the end of project, implementation and performance related data were poorly maintained, making assessment of the project impact difficult. When asked to fill the technical and financial performance table, the borrower failed to respond to the request due to lack of information. The Borrower’s PCR was not prepared according to the required Bank format. The project was audited on a regular basis until disbursement deadline in January 2003. Inspite of regular training and support provided by the project to the PMU, its overall performance towards achieving the project objectives is unsatisfactory.

4.1.13 Training: Training as a means (service) of implementing project components was assessed in accordance with project design. A total of 166 project staff and national personnel were trained in animal production and disease control, field extension, financial and accounting management, staff development, information technology, administration and secretarial management. In addition, training was organized for farmers in the form of study tours. As at the time of project reformulation 50 percent of the planned training activities were carried-out. Furthermore, the training program was redesigned to focus on the needs of beneficiary farmers and staff, with emphasis on production, animal health and marketing of livestock. To this end, the project provided short courses, in-service training, workshops and seminars for the front line staff and farmers. The training program benefited: (i) Six (6) staff for MSc, with two (2) in Animal Science, one (1) in Animal Production and three (3) in Agricultural Economics and Agriculture Management; (ii) fourteen (14) staff for BSc in Animal Production, of which two (2) were undergoing their academic programs at the time of the Bank’s Appraisal mission; (iii) Seventeen (17) staff in computer training skills; (iv) Five (5) project staff in Financial Management and Accounting, with three (3) more in progress; (v) Thirty-four (34) Technical Assistants in poultry production course ; (vi) Eleven (11) candidates in meat inspection training; (vi) Two (2) staff in artificial insemination in Tanzania; (vii) Ten (10) staff in Animal Production training; (viii) One (1) project staff in Information Technology training; (ix) Two (2) secretaries and one (1) human resource officer in staff development; (x) One (1) officer in Laboratory Technology; (xi) thirty-six (36) ADD staff in pregnancy diagnosis; (xii) 22 in feed formulation; (xiii) One (1) project staff in Rural Milk Processing; and (xiv) two (2) staff in Secretarial Management and three (3) in secretarial upgrading courses. Despite this output, the National Livestock Development Project suffered from lack of capacity, due to high turnover, promotions and transfers of staff. The Borrower defended its case by indicating that one of the objectives of the project was to develop the national capacity of not only the project but also the livestock sector in the country as a whole. The project trained staff that were then deployed to areas of need as per necessity. In this respect the project has achieved its set objective and could be rated as satisfactory.

4.1.14 Technical Assistance: The performance of activities regarding Technical Assistance was also assessed in accordance with project design. Long-term technical assistants, including the recruitment of Dzalanyama Ranch Farm Manager, an expert in beef cattle breeding and a dairy husbandry and production expert for Mikolongwe Ranch Dairy Complex, were procured as planned. Despite this achievement, the Bank’s completion mission noted very little impact of the TA because they left before reformulation and the

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project was suspended after their departure for about three years. In addition, although funds were provided for short-term consultancy services, these services were not procured. Therefore, the activity of technical assistance, although implemented as designed, did not have any positive impact on project implementation. 4.2 Institutional Performance 4.2.1 Organization and Management: The Project Management was not efficient in implementing the project. Several changes occurred during project implementation. The Project Management was changed from the DAHI to an independent unit. The project was suspended three times during its implementation and redesigned. From project start in May 1990 to its completion in September 2002, the project experienced an unexpectedly low disbursement of 62 percent due to lack of capacity and institutional instability. As a result of this poor performance, the project suffered over nine (9) years delay. The contracted PMU staff left at the end of their contracts resulting in an institutional gap. Consequently, the new project management, who were the counterpart team of the Bank’s completion mission, could not provide all the required information to adequately assess project performance at completion. Project files were transferred to the DAHLD without preparing a fully documented implementation completion report with detailed information on technical implementation records, financial management (records on the statement of expenditures), procurement information (with all critical dates of processing and corresponding amounts), disbursement, and project operational outputs. Thus, most of the institutional memory was lost with the departure of senior staff that had built substantial capacity and experience during project implementation. In view of those constraints, it was almost impossible to adequately trace project implementation records. The effective operational outputs do not exist anywhere, and livestock production operations and standards were not adequately recorded and therefore, could not be improved and updated. As a result, it was difficult to build the Farm Management Model for production based on the current performance. The institutional performance would have been improved had the transition between the contracted staff of the PMU and the Government staff taken place more smoothly over a period to familiarize the new team on the activities of the project. 4.2.2 Staffing, Training and Incentives: The project implementation team consisted of management and technical staff. In addition, the turnover at the project manager level was very high because of institutional instability. At the time of the completion mission, the Bank’s mission met with one of the PMU members who was involved in project management, but because of the time lag between his departure from the project to the time of the PCR his inputs were not helpful in assessing the impact of the project. During appraisal and project reformulation, provision was made for a very important training program, which was implemented as indicated above. The project has therefore trained a critical mass of human resources to carryout livestock development actions in the future. This is satisfactory 4.2.3 Performance of Consultants Suppliers and Contractors: The Project engaged the services of several contractors and consultants to provide: (i) tractors and farm machinery and equipment; (ii) veterinary drugs, vaccines and chemicals; (iii) vehicles and office equipment; (iv) training, audit and consultancies; (v) construction of the nitrogen plant; (vi) fertilizers; and (vii) incubators and hatchers. According to project reports, the TA team accomplished its contractual obligations. However, some contractual problems were mentioned to the Bank’s completion mission, especially regarding the incubators and hatchers at Mikolongwe, which were not functioning adequately and actions to resolve the problem were still not

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implemented when the mission visited the complex. Another problem related to contractors was the supply of 31 mini-incubators for farmers, which had not been distributed due to failure to include the supply of power generators to run the units. As at time of the Bank’s completion mission, the incubators were stored in a warehouse without any immediate solution being envisaged to put them to use. However, this shortcoming cannot be attributed to the supplier, but rather to the project implementation unit, which failed to properly mount the bidding package. Therefore, overall performance of consultants, Suppliers, and contractors is satisfactory. 4.3 Fulfillment of Conditions/Covenants 4.3.1 The delayed fulfillment of loan conditions prior to first disbursement resulted in 27 months slippage in commencing project activities. The loan was approved in January 1988 and signed in February 1989. First disbursement was projected for September1988, but actually occurred only in April 1991. 4.3.2 Conditions prior to first disbursement: The Conditions that were to be met before first disbursement were 13, as indicated above. The delay in implementing conditions prior to first disbursement significantly contributed to the delay in the project implementation timetable. Yet these conditions as stated above, were not difficult to meet. The Borrower just failed to follow-up on actions to be taken to fulfill the conditions. 4.4 Financial Performance The assessment of the financial performance of the project at completion was done on the basis of calculation of the NPV and the BCR. The Internal Rate of Return (IRR) could not be adequately generated, because the project failed to produce the expected benefits (revenue generated from sales of steers, beef, Day-old chicks, eggs, semen for the AI and liquid nitrogen). The analysis also assessed the impact on typical dairy farms and poultry production units and covered a project life of 25 years, corresponding to the optimal management period of a the livestock production units involved in the project. All computed financial values were discounted on the basis of an Opportunity Cost of Capital of 12 percent in Malawi. On the basis of the above-stated assumptions, the analysis showed that a typical dairy farm generates a net margin of MKW 550 per annum, whereas a poultry unit gives rise to a net return of MWK 378. The overall project’s achievement generates a net NPV of –557.93 million and a BCR of 0.07. This shows that although farm production unit are financial viable with the project, the financial performance at completion may be rated unsatisfactory, because the NPV turned out to be negative or less than zero, but also the BCR less than one and negligible (close to zero). The detailed financial performance of each project production unit is summarized on page 1 of annex 5. 4.5 Economic Performance The economic performance of the project at completion was determined on the basis of prices prevailing at competitors’ rates at farm gate for all livestock products and inputs. All prices were also adjusted for distortions due to foreign exchange premium (estimated to be 0.25 or standard conversion factor of 0.80). The analysis was also carried-out on the basis of 25-year project life. On the basis of the above-stated assumptions, the analysis showed a NPV of –514.49 million and a BCR of 0.09. The computation of ERR generated unfeasible values and therefore, was not accounted for in the analysis. These values in the computation

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of the project worth demonstrate that the project economic performance at completion may be rated unsatisfactory, because the NPV turned out to be negative or less than zero, but also the BCR less than one. The detailed economic performance of the project is summarized on page 2 of annex 5. 5. SOCIAL AND ENVIRONMENTAL IMPACTS 5.1 Social Impact 5.1.1. Impact on Poverty Reduction: The project has the potential of effectively contributing to poverty reduction of the village farmer involved in chicken rearing and dairy cattle raising activities in the project area through: (i) facilities offered to farmers, especially a very good proportion of female farmer groups, in getting high quality semen and day-old chicks at a reasonable price, thereby generating stable revenues from their farms, (ii) equipment and infrastructure provided by the project can be used to bring self-sufficiency in the livestock sector, and (iii) revenues generated by farmers can enable them to meet the cost of educating their children, especially the girls, in remote locations such as those in the project area, (iv) improved dietary standards enjoyed by the farm families coupled with abundant income generating activities, have the potential of improving of the quality of life in the project area. 5.1.2. The contribution to poverty reduction through generation of stable revenues pertained to: (i) the creation of 1,500 jobs provided to local farmers by the project, with at least 40 percent of the jobs held by women; and (ii) the emergence of petite trading activities, such as, bakeries, barbershops, small clothing shops and miscellaneous shops, curbing the migration of youth to towns, a better health and an expanding population with a better livelihood. In addition, weekly open markets have the potentials of being more and more active, because the project beneficiaries would have more to offer from their farms and to buy from other communities from the revenues generated out of their products. The investments of the project will improve the standard of living and incomes in the project area, particularly by reducing women’s household tasks and making the project area and neighbouring localities more accessible to Mzuzu. Mzuzu is the main urban centre of the region, where populations can get access to hospitals, schools, banks, major shopping centres and many other facilities, because they can afford to travel, as a result of the project impact. 5.1.3 Impact on food security: It is difficult to accurately quantify the contribution of the project to food security in the country as it is indirectly achieved. As indicated earlier, the major objective of the project was to increase the production of animal products. The achievement of the project objective is expected to reduce import of animal products and increase local sale and production, which in turn would increase the Government’s capacity to implement its food security program, including the possibility of importing more food, which is not locally available. 5.1.4 Impact on the overall economy of Malawi: The expected average annual cash flow from the project out of sales of animal products is estimated at more than Mkw386 Million (about UA2.57 Million). This achievement was also expected to have spillover effects on the overall economy of Malawi. The project area being located in the capital city as well as in remote places like Dzalanyama, Mikolongwe and Choma, the benefits generated by the project such as staff salaries, improved living conditions, increased economic activities in the

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project area, would also contribute to equitable income distribution throughout the country. However, this achievement could not be maintained in the long-run, because of poor performance in the project’s performance. In view of this achievement, the project’s impact on the overall economy of the country is deemed unsatisfactory. 5.1.5 Impact on women: As mentioned earlier, it was reported that many women participated in project activities as staff, farmers, housewives, salespersons, etc. The percentage of females who would potentially benefit from the project was estimated to be at least 40% of all beneficiaries, on the basis farmer associations’ membership. Therefore, the project’s impact on women is rated satisfactory. 5.2 Environmental Impact 5.2.1 The project was initially designed to be implemented in accordance with the Bank’s environmental policies and guideline and the international standards on environmental protection. The nature and design of the project even provided suitable conditions for such environmental benefits as, (i) oxygen relief and absorption of carbon dioxide (CO2), (ii) soil protection from erosion, (iv) soil fertility improvement, (v) establishment of a suitable habitat of expansion of the flora and the fauna, and (vi) possible eco-tourism benefits. 5.2.2. The project was effectively implemented in line with benefits from oxygen relief resulting from the natural grazing option of the project, where the pastureland was the forest reserve on which the Dzalanyama ranch was established. The forest reserve is known to perform all natural forest functions through provision of permanent forest environment, oxygen (O2) emission and carbon dioxide (CO2) absorption. It thus served as a natural green cover regulating the oxygen relief and the absorption of the carbon dioxide. The cattle also released organic manure, which reinforced the green cover by improving the soil fertility. In addition to the permanent green cover provided by the forest reserve, the project was expected to improve the quality of grass under the trees by growing high-quality forage in open spaces inside the ranch, which was expected to restore the green cover in these spaces where it was lost under severe weather conditions. The improvement of soil fertility with the supply of organic manure would foster an environmentally balanced set-up whereby the cattle fed itself from grass under the forest trees, then transform the off-take to restore it to the forest. The forest reserve, all together with the improved grass, was expected to improve and secure soil protection; thereby reduce soil erosion and contribute to reduction in the soil decay rate. The improvement of the quality of the forest would foster the expansion of a variety of tree species, provide an optimal shading and regulate temperature; thereby foster adequate weather condition for the expansion of the flora and fauna. As at the time of the Bank’s completion mission, it was noted that wild animal population, especially hyenas, was very high. 5.2.3 The project was implemented in compliance with the initial design for natural grazing in the forest reserve at Dzalanyama. However, it failed to implement all recommended project actions retained at appraisal. The sufficient quantity and quality forage production was not achieved, bush fire was recurrent in some project sites and firewood off-takes from the forest reserve by the population in the neighbouring localities was so acute during the Bank’s completion mission that if no corrective measures is taken in the near future, the forest reserve is bound to disappear. One of the measures to take would be to provide security for the reserve to prevent any sort of actions causing depletion of the natural resources. The Borrower should then provide alternatives to population for firewood. In addition, most of the project sites require fencing and better management of the farms as planned during appraisal.

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6. PROJECT SUSTAINABILITY 6.1 Institutional sustainability: As mentioned before, the project was implemented with the following major changes: (i) the project management was changed from an integrated section of the DAHI to an independent project implementation unit, because the previous setup prevented the PMU from delivering. This contributed to delay in the implementation of the project, resulting in a very low disbursement rate, as the first disbursement occurred only 27 months after project approval; (ii) It was suspended three times and was reformulated to provide the adequate conditions for project efficient implementation, but the project continued to suffer from lack of capacity and never gained momentum to deliver the required outputs on time; and (iii) the project dragged on with more than nine (9) years delay in implementation, resulting in the depreciation of the equipment, tractors, farm machinery and vehicles, with no immediate action for renewal. This resulted in poor follow-up and caused the loss of technical implementation and financial management records. As a result, the institutional memory of the project was very limited at time of the Bank’s project completion mission. These developments led to difficulties in tracing project implementation records. For instance, the mission could not obtain detailed figures on the operational outputs, such as financial management information with respect to project implementation and farm management. This shortfall prevented the mission from conducting a thorough assessment of the project performance. The current institutional status shows that there was need for capacity building in project cycle and management. At project completion, the existing human and institutional capacities were inadequate to ensure a sound and sustainable livestock development program on the basis of the existing physical investment resulting from the project. The feed mills, the nitrogen plant, the hatchers and incubators that have acquired under the project can still be operated in profitable manner, provided all production units are run on a commercial basis. Beneficiary farmers that were expected to take-over the operation of the production were not adequately involved through training, visits and sensitization, to get the necessary information and skills for undertaking these activities. 6.2 Overall Sustainability: Apart from the institutional instability that occurred during the project implementation period, the project still has the basic equipment and infrastructure to restore efficiency in the operations of the livestock production units. Most of the above-cited equipment is in good working condition given that some of them were procured at the end of the project. The Bank’s completion mission noted that the Bwemba hatchery is rearing chickens belonging to a Non Governmental Organization (NGO) and the same staff who are not performing under the project are excellent with the task sub-contracted to them by the NGO. With the NGO project, the Bwemba hatchery had the best ratios on fertility, hatchability and mortality. Therefore, the management of these units can be sustainable if adequate measures are taken on their current operations (see section 9.3 on recommendations) to maintain the project achievements in the long run. Consequently, the project’s sustainability can be better achieved with less institutional instability and better operational decision-making. 7 PERFORMANCE OF THE BANK AND BORROWER 7.1 Bank Performance The Bank’s role under the project included undertaking field supervisions with the aim of ensuring fulfillment of loan conditions, guiding project implementation, and submission of

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reports by the Borrower. The Bank supervised the project on a regular basis. In all, a total of 18 supervision missions were undertaken and on the basis of the available records, all loan conditions precedent to disbursement, other conditions and undertakings, were fulfilled. The Bank also performed well in delivering an audit mission as part of project supervision activities. At appraisal the components were too many and some of them should have been categories of expenditure, such as training and technical assistance, which are part of the service category. However, the loan was disbursed in accordance with the disbursement guidelines and on the basis of the borrower’s applications for disbursement, which were timely processed. Overall performance of the Bank is rated satisfactory (Annex 7). 7.2 Performance of the Borrower 7.2.1. The project was completed more than nine (9) years beyond schedule and all of its outputs were transmitted to the DAHLD at completion of the operation. The mission could not get access to all detailed information on the project implementation. The project was suspended three (3) times and reformulated as a result of, among other things, project poor performance and misuse of project resources. Although the Government authorities claimed that project counter-performance was due to the first project implementation unit, it is clear that it was the Government’s responsibility to demonstrate ownership and ensure judicious use of available staff and resources to implement the project. 7.2.2. Reports, including work-plans, budgets, quarterly reports and audit reports were submitted, although after some delays. The team constituted to prepare the Borrower’s PCR was set up after the recruited project management team was dismantled and had very little knowledge of the project. The Borrower PCR was not done according to the suggested Bank format for Borrower’s PCR, which resulted in critical gaps in the information provided especially on the financial management. The information on the project financial management was not available from the Borrower. Therefore, the mission could not assess how smoothly the project counterpart funds were mobilized. In addition, the mission could not ascertain whether technical supervision by government authorities was undertaken in accordance with the loan agreement. As a result, the project could not achieve some of its objectives on time. The overall performance of the Borrower in implementing the project is deemed unsatisfactory. 8. OVERALL PERFORMANCE AND RATING In accordance with the project outcome ratings (Annex 9) as stipulated in the Bank’s Operations Manual (OM 900 Annex 2 A), the overall assessment of project performance is 2 (1.6 points rounded to 2) out of 4 maximum. Although the necessary equipment was procured, the project was not implement adequately to generate the required outputs and thereby attain the targeted objective of livestock development in Malawi. However, the basic equipment provided by the project is still in good working condition. Therefore, corrective actions should be taken to generate the targeted outputs and ensure sustainability.

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9. CONCLUSION, LESSONS AND RECOMMENDATIONS 9.1 Conclusion 9.1.1 The project was appraised when the agricultural sector investment was mainly focused on crop production at the expense of livestock development. To redress this imbalance, and to make the livestock sector attractive for investment the GOM embarked on this project. The project was supposed to strengthen the smallholders and promote commercialisation of the non-viable public entities within the livestock sector. It was also aimed at food security and income generation for poverty reduction. By and large the project did attempt to address all the concerns at appraisal and attempted to solve the myriads of problems facing the livestock sector. It made significant achievements in providing the country with the necessary veterinary equipment, infrastructure and trained personnel in the sector. It has rehabilitated some livestock infrastructure and increase the availability of high quality breeds of animals to the national herd. The Production centres strengthened by the project are still the only source of breeding stock in the country. This is commendable. The veterinary services delivery in the country was enhanced by the execution of the project. This has resulted in increased livestock numbers, increased availability of meat in the country, increased producer incomes and foreign exchange savings to the country. 9.1.2 The private sector livestock sector in Malawi is still underdeveloped. But the continuous active involvement of the public sector in areas best suited for private operators is not sustainable. Therefore, the mission finds the on-going efforts by the GOM to commercialise/privatise the production centres to produce as economically viable entities as necessary. 9.2 Lessons Learned The major lessons learned from the implementation of the National Livestock Development Project include: o The project was implemented over a period estimated to be too long, and yet it failed to

produce the expected results. Therefore the duration of any project should not exceed seven (7) years.

o The project design was good and meant to address the development goals of the country

in the livestock sector. The reformulation of the project in 1996 was to address the socio-economic and management changes that took place after appraisal and to steer the project in the right direction to achieve its objectives.

o The project management envisaged at appraisal was to use the mainstream staff of

DAHLD for running the day-to-day affairs of the project and its implementation. This arrangement did not work because the staff time was shared between project activities and the daily civil service routines. This led to serious delay in the project implementation, lack of accountability and adherence to rules of procedure for project implementation. It was only after an independent and full-time PMU was established that progress was made in the project implementation.

o The start up of the project took nearly two and a half years. Although the loan conditions

were simple to accomplish the GOM delayed the fulfillment of the conditions and

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therefore delayed the project take-off. In the future the GOM should ensure that conditions for takeoff of the project are fulfilled promptly to avoid delay in project implementation.

o Contrary to the loan conditions and loan agreement the GOM privatized part of the

developed land with the input procured with project funds. This resulted in suspension of the project for 3 years before the GOM could rectify the problem. Adhering to project’s covenants agreed between the Bank and the GOM are essential in meeting the project set goals and objectives. This breach of agreement should be avoided to prevent derailment of project implementation and achievement of project goals.

o Lack of a full-time independent PMU led to gross financial mismanagement and poor

accountability, which led to misuse of project funds in the special account. This, coupled with the privatization of the project land resulted in project suspension. This could have been averted.

o There were prolonged delays in procurement of project goods and services. This was

initially attributed to lack of experience/knowledge on procurement procedures of the Bank. Training of the PMU during the early stages of the project implementation in the project would have improved procurement activities.

o The project production units were to be developed by the project and then

privatised/commercialised. This has not happened. The GOM has not been able to set up mechanism to achieve this. This is a great draw back in the project. The production units are to-date producing below financial and economic management standards, and this is not sustainable. The viability of the activities in the near future is questionable. In the future projects should, as part of the sustainability mechanisms, make provisions for financing a study to come up with an institutional framework based on the full cost recovery operations and optimization of the production system, enabling it to satisfactorily meet growing demand for animal protein in the country. The mission was informed that the proposal to run the production units on a commercial basis has been presented by DAHLD to the GOM. The government is yet to give its final approval of the proposal.

o Various training packages were designed for all levels of project staff. Inspite of

achieving most of the training programmes earmarked in the project, productivity and record keeping in the production units is still limited. Some of the major reasons are limited capacity and the high turnover of project staff and staff movement. To prevent this in the future project staff should be identified and made to remain within the project to completion.

o It is also recommended that more capacity building actions on farm management and

project cycle management be undertaken so as to improve project management and maintain and sustain project achievements over time.

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9.3 Recommendations The major recommendations are noted below: 9.3.1 To the Bank

i. The technical performance of the project is attributed to the high quality of project design, monitoring and evaluation, technical staff, including Bank’s technical supervision missions. This is a commendable achievement.

ii. The Bank should ensure fewer loan conditions in the appraisal document by assisting

the Borrowers to meet the conditions during initial project preparation to avoid delays once the project is approved for implementation.

iii. Training of project staff in Bank’s procedures would greatly speed up project

implementation and ensure that set objectives are achieved on time. iv. To improve project supervision, the Bank’s operations management tool, the SAP,

should be formatted in line with the Operations Manual for PCRs (OM 900), so that project completion reports can automatically be generated at completion, if projects have been regularly supervised.

v. The Bank should make sure project duration do not exceed seven (7) years, due

requirements for efficiency in the project performance. 9.3.2 To the Government of Malawi

• A strong project management unit is essential for effective project implementation and staff that are trained for the project should not be removed from the project without an adequate replacement in order to avoid disruption in project activities and enhance optimal pace in project implementation.

• All projects should be managed in accordance with financial and accounting

operations manual elaborated by the project management unit.

• The establishment of an independent PMU after reformulation greatly enhanced the efficiency of project implementation. This should have been realized at the beginning. Considering the workload of Government staff, additional project work tends to be jeopardized. In the future full time project staff detached from the mainstream civil service routines would ensure effective and timely project implementation.

• The Government should ensure that it generates and maintains detailed project

implementation records, no matter the changes that occur during project implementation.

• The Government should continue to support operations that would enable it to save

foreign exchange in the agricultural sector.

• Although the project failed to deliver the required outputs during its implementation, the Government has at its disposal the necessary basic equipment to restore project

27

implementation efficiency, if immediate corrective measures are taken on the management of the production units. It is recommended for instance to run the production unit on self-sustaining basis and as profit-oriented entities.

• Another project linked to the benefits generated by the NLDP should be considered

which would focus on smallholder livestock farmers.

Annex I 1 of 1

Map of the Project Area

MALAWI: NATIONAL LIVESTOCK DEVELOPMENT PROJECT PROJECT AREAS MAP

MIKOLONGWE DAIRY COMPEX

Mikolongwe Farm Complex

Choma Hatchery

Bwemba Hatchery

Dzalanyama Ranch

Annex 2 1 of 1

List of Procured Good and Services

List of Procured Goods and Services

Amount N° Date Nature Currency Amount

1 5/7/1995 Tractors & Farm Machinery GBP 61,460.00

2 4/6/1994 CNT/92/08/003 USD 641,402.50

3 18/11/1994 3912/05/94/1 USD 158,000.00

4 7/3/1997 Motor Cycles JPY 7,930,800.00

5 9/11/1999 Motor Cycles and Vehicles JPY 40,254,624.00

6 9/11/1999 Office Equipment USD 111,905.33

7 23/03/2000 Tractors & Farm Machinery GBP 124,828.60

8 12/01/2000-15/07/2002 Training USD 38,177.54

9 22/06/2000 Training MKW 816,870.00

10 30/10/2001 Training MKW 195,599.52

11 30/10/2001-19/03/2002

B.Sc. Training for 3 Students at Bunda. MKW 809,349.48

12 13/05/2002-28/06/2002 Veterinary Drugs & Chemicals USD 33,620.00

13 02/04/2002-13/05/2002 Veterinary Drugs & Chemicals USD 99,869.85

14 28/06/2002 Lab Equipment USD 18,926.29

15 14/01/2002-28/06/2002 Nitrogen Plant EUR 192,820.00

16 11/10/2002 Incubators USD 187,985.67

17 8/10/2002 Vaccines USD 80,477.50

18 24/10/2002 Fertilizers USD 62,160.00

19 25/11/2002 Consultancy for Mzuzu Slaughterhouse Design USD 42,980.00

20 14/01/2003 Audit MKW 1,237,499.93

21 14/01/2003 Incubators USD 235,026.13

ANNEX 3 Page 1 of 1

Actual and Appraisal Costs / Actual and Appraisal Financing

Actual and Appraisal Project Costs (‘000 UA)

COMPONENTS (As designated in the Appraisal Report)

Appraisal Costs Estimates

Actual Costs Changes

Dzalanyama R Dev. 0.90 Mikolongwe D C Development 0.87 Poultry Upgrade Program 2.04 Support to ADDs 5.44 Development of livestock sector in the North 0.94

Project Management 0.11 Technical Assistance 0.70 Training 1.33 Total 12.34 7.62 -38.25

Actual and Appraisal Project financing (in UA Million)

Appraisal Estimate Actual Cost Financing Source F.E. L.C. Total % F.E. L.C. Total %

ADF 8.42 2.56 10.98 89 5.30 1.54 6.84 89.8 GOM 0.00 1.36 1.36 11 0.00 0.78 0.78 10.2 Total 8.42 3.92 12.34 100 5.30 2.32 7.62 100 % of Total 68 32 100 70 30 100 NA

NA: Not Applicable

ANNEX 4 1 of 1

Actual and Appraisal Project and Disbursement

Table 3: Loan Disbursement by Year (in UA Million)

FISCAL YEARS TOTAL Loan Disbursement 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Appraisal plan 3.83 2.31 1.86 1.44 1.54 10.98

Actual Disbursement 0 0 0.46 1.15 1.18 0.79 0.57 0.20 0.05 0.0 0.71 0.34 0.24 0.96 0.18 6.84

% Annual Disbursement 0 0 4.17 10.45 10.77 7.24 5.22 1.82 0.43 0.0 6.46 3.14 2.19 8.77 1.68 62.33% Cumulative Disbursement % 0 0 4.17 14.61 25.39 32.62 37.84 39.66 40.09 40.09 46.56 49.69 51.88 60.65 62.33 62.33%

Table 4: Project Disbursement by Year (in UA Millions)

FISCAL YEARS TOTAL Project Disbursement 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Appraisal plan 4.07 2.52 2.11 1.74 1.90 12.34

Actual ADF Disbursement 0 0 0.46 1.15 1.18 0.79 0.57 0.20 0.05 0.0 0.71 0.34 0.24 0.96 0.18 6.84

Actual GOM Contribution Schedule N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.78

Actual Project Disbursement 0 0 0.46 1.15 1.18 0.79 0.57 0.20 0.05 0.0 0.71 0.34 0.24 0.96 0.18 7.62

% Annual Disbursement 0 0 4.17 10.45 10.77 7.24 5.22 1.82 0.43 0.0 6.46 3.14 2.19 8.77 1.68 61.75% Cumulative Disbursement % 0 0 4.17 14.61 25.39 32.62 37.84 39.66 40.09 40.09 46.56 49.69 51.88 60.65 61.75 61.75%

ANNEX 5 1 of 3

Project Financial and Economic Analysis

MALAWI

National Livestock Development Project (NLPDP)

Project Financial and Economic Analyses

Financial Analysis

N° Year

Actual Project

Cost (Million

UA)

Actual Project

Cost (Million Mkw)

Livestock Production

Cost (Million Mkw)

Total Cost (Million Mkw)

Total Production

Value (Million Mkw)

Cash Flow

Discount Factor (@

12% OCC)

Dicounted Cash Flow

Dicounted Total Cost

Dicounted Total

Production Value

1 1989 0 0 0 0 0 0 1 0 0 02 1990 0 0 0 0 0 0 0.8929 0 0 03 1991 0.46 73.23 0 73.23 0 -73.23 0.7972 -58.38 58.38 04 1992 1.15 183.07 0 183.07 0 -183.07 0.7118 -130.30 130.30 05 1993 1.18 187.84 0 187.84 0 -187.84 0.6355 -119.38 119.38 06 1994 0.79 125.76 0 125.76 0 -125.76 0.5674 -71.36 71.36 07 1995 0.57 90.74 0 90.74 0 -90.74 0.5066 -45.97 45.97 08 1996 0.2 31.84 0 31.84 0 -31.84 0.4523 -14.40 14.40 09 1997 0.05 7.96 0 7.96 0 -7.96 0.4039 -3.21 3.21 0

10 1998 0 0 0 0 0 0 0.3606 0 0 011 1999 0.71 113.02 23.32 136.35 18.32 -118.03 0.3220 -38.00 43.90 5.9012 2000 0.34 54.12 23.32 77.45 18.32 -59.13 0.2875 -17.00 22.26 5.2713 2001 0.24 38.21 23.32 61.53 18.32 -43.21 0.2567 -11.09 15.79 4.7014 2002 0.96 152.82 23.32 176.14 18.32 -157.82 0.2292 -36.17 40.37 4.2015 2003 0.18 28.65 23.32 51.98 18.32 -33.66 0.2046 -6.89 10.64 3.7516 2004 0 23.32 23.32 18.32 -5.00 0.1827 -0.91 4.26 3.3517 2005 0 23.32 23.32 18.32 -5.00 0.1631 -0.82 3.80 2.9918 2006 0 23.32 23.32 18.32 -5.00 0.1456 -0.73 3.40 2.6719 2007 0 23.32 23.32 18.32 -5.00 0.1300 -0.65 3.03 2.38

Annex 5 2 of 3

Financial and Economic Analysis

20 2008 0 23.32 23.32 18.32 -5.00 0.1161 -0.58 2.71 2.1321 2009 0 23.32 23.32 18.32 -5.00 0.1037 -0.52 2.42 1.9022 2010 0 23.32 23.32 18.32 -5.00 0.0926 -0.46 2.16 1.7023 2011 0 23.32 23.32 18.32 -5.00 0.0826 -0.41 1.93 1.5124 2012 0 23.32 23.32 18.32 -5.00 0.0738 -0.37 1.72 1.3525 2013 0 23.32 23.32 18.32 -5.00 0.0659 -0.33 1.54 1.21

TOTAL 6.83 1087.26 349.82 1437.08 274.80 -1162.28 8.78 -557.93 602.92 45.00NPV -557.93

B/C Ratio 0.07 IRR N/A

Economic Analysis

N° Year

Actual Project Cost

(Million UA)

Actual Project Cost

(Million Mkw)

Livestock Production

Cost (Million Mkw)

Total Cost (Million Mkw)

Total Production

Value (Million Mkw)

Cash Flow Discount

Factor (@ 12% OCC)

Dicounted Cash Flow

Dicounted Total Cost

Dicounted Total

Production Value

1 1989 0 0 0 0 0 0 1 0 0 02 1990 0 0 0 0 0 0 0.8929 0 0 03 1991 0.44 69.57 0 69.57 0 -69.57 0.7972 -55.46 55.46 04 1992 1.09 173.91 0 173.91 0 -173.91 0.7118 -123.79 123.79 05 1993 1.12 178.45 0 178.45 0 -178.45 0.6355 -113.41 113.41 06 1994 0.75 119.47 0 119.47 0 -119.47 0.5674 -67.79 67.79 07 1995 0.54 86.20 0 86.20 0 -86.20 0.5066 -43.67 43.67 08 1996 0.19 30.25 0 30.25 0 -30.25 0.4523 -13.68 13.68 09 1997 0.05 7.56 0 7.56 0 -7.56 0.4039 -3.05 3.05 0

10 1998 0 0 0 0 0 0 0.3606 0 0 011 1999 0.67 107.37 20.26 127.63 21.83 -105.80 0.3220 -34.06 41.09 7.0312 2000 0.32 51.42 20.26 71.67 21.83 -49.84 0.2875 -14.33 20.60 6.28

Annex 5 3 of 3

Financial and Economic Analysis

13 2001 0.23 36.30 20.26 56.55 21.83 -34.72 0.2567 -8.91 14.52 5.6014 2002 0.91 145.18 20.26 165.44 21.83 -143.60 0.2292 -32.91 37.91 5.0015 2003 0.17 27.22 20.26 47.48 21.83 -25.65 0.2046 -5.25 9.71 4.4716 2004 0 20.26 20.26 21.83 1.58 0.1827 0.29 3.70 3.9917 2005 0 20.26 20.26 21.83 1.58 0.1631 0.26 3.30 3.5618 2006 0 20.26 20.26 21.83 1.58 0.1456 0.23 2.95 3.1819 2007 0 20.26 20.26 21.83 1.58 0.1300 0.20 2.63 2.8420 2008 0 20.26 20.26 21.83 1.58 0.1161 0.18 2.35 2.5321 2009 0 20.26 20.26 21.83 1.58 0.1037 0.16 2.10 2.2622 2010 0 20.26 20.26 21.83 1.58 0.0926 0.15 1.87 2.0223 2011 0 20.26 20.26 21.83 1.58 0.0826 0.13 1.67 1.8024 2012 0 20.26 20.26 21.83 1.58 0.0738 0.12 1.49 1.6125 2013 0 20.26 20.26 21.83 1.58 0.0659 0.10 1.33 1.44

TOTAL 6.49 1032.90 303.85 1336.75 327.49 -1009.25 8.78 -514.49 568.12 53.62NPV -514.49

B/C Ratio 0.09 ERR N/A

ANNEX 6 1 of 3

Project Implementation Performance

IMPLEMENTATION PERFORMANCE RATING.

FORM IP 1 INPLEMENTATION PERFORMANCE

Component Indicators Score

(1 to 4) Remarks

1. Adherence to Time Schedule 1 Sticking to the schedule was one of the project weaknesses

2. Adherence to Cost Schedule 2 Project estimated cost covered the actual costs, but it was over-estimated

3. Compliance with Covenants 2 4. Adequacy of Monitoring & Evaluation and Reporting 1 No standards were set

at appraisal for comparison at completion

5. Satisfactory Operations (if applicable) 1.5 TOTAL 7.5 Overall Assessment of Implementation Performance

1.5 Category S (Satisfactory)

BANK PERFORMANCE RATING.

FORM BP 1

BANK PERFORMANCE Component Indicators Score

(1 to 4) Remarks

1. At Identification 3 Identification from Livestock sector strategy

2. At Preparation of Project 2 Average preparation 3. At Appraisal 2 Rather Good Appraisal 4. At Supervision 1.5 Was regular, but did not

address key issues TOTAL 8.5 Overall Assessment of Bank Performance

2.13 Category S (Satisfactory)

ANNEX 6 2 of 3

Project Implementation Performance

FORM PO 1

PROJECT OUTCOME No Component Indicators Score

(1 to 4) Remarks

1 Relevance and Achievement of Objectives Relevant, but objectives not attained

i) Macro-economic Policy 3 In accordance with policy

ii) Sector Policy 3 In accordance with policy

iii) Fiscal Policy 3 In accordance with policy

iv) Financial 1 Potential exist, but not attained

v) Poverty Alleviation, Social and Gender 1.5 Potential exist, but not attained

vi) Private Sector Development 1.5 Potential exist, but not attained

vii) Environment 1.5 Good set-up, but inadequate implementation

2 Institutional Development

i) Institutional Framework including Restructuring. 1 Potential exist,

but not attained

ii) Financial and Management Information Systems including Audit Systems 1

Project audited but detailed financial information not available at completion

iii) Transfer of Technology

1

Veterinary Equipment and Infrastructure enabled limited transfers

iv) Staffing by qualified persons including turn-over, training and counterpart staff 1.5

Many trained, but there was high turnover of staff and some staff were not used in project for implementation.

ANNEX 6 3 of 3

Project Implementation Performance

3

Sustainability

1.5 Sustainable if necessary changes in management and execution are put in place.

i) Continued Borrower Commitment 2 Borrower is still committed

ii) Environmental Policy 1.5 Potential exist, but not attained

iii) Institutional Framework 1.5 Potential exist, but not attained

iv) Technical Viability and Staffing 1.5 Potential exist, but not attained

v) Financial Viability including Cost Recovery Systems. 1 Potential exist,

but not attained

vi) Economic Viability 1 Potential exist, but not attained

vii) Environmental Viability 1 Potential exist, but not attained

viii) O&M Facilitation (availability of recurrent funding, foreign exchange, spare parts, workshop facilities etc.)

1 Production units depend on Headquarters

4

Economic Internal Rate of Return - N/A

TOTAL 31.0 Overall Assessment of Outcome 1.6 (Unsatisfactory)

ANNEX 7 1 of 1

Recommendations and Follow-up Matrix

RECOMMENDATIONS AND FOLLOW-UP MATRIX

Main Findings and Conclusions

Lessons Learned/ Recommendations

Follow-up Actions Responsibility

Formulation and Project Rationale

The project design was good and meant to address the development goals of the country in the livestock sector. The project was well conceptualised.

The project was reformulated in 1996 to address the socio-economic and management changes that took place after appraisal and to steer the project in the right direction to achieve its objectives.

GOM/ADF

Project Implementation

The project management envisaged at appraisal was to use the mainstream staff of DAHLD for running the day-to day affairs of the project and its implementation. This arrangement did not work because the staff time was shared between project activities and the daily civil service routines. This led to serious delay in the project implementation, lack of accountability and adherence to rules of procedure for project implementation.

Management Stability in projects should always be ensured. Full-time PMU was established.

GOM.

Compliance with Loan Conditions and Covenants

All Bank conditions were complied with. Implementation was delayed (27 months by time taken to fulfill conditions prior to first disbursement). The Bank should ensure fewer loan conditions in the appraisal document by assisting the Borrowers to meet the conditions during initial project preparation to avoid delays once the project is approved for implementation.

None

GOM/ADF

Performance Evaluation and

The technical performance of the project is attributed

ANNEX 6 2 of 3

Project Implementation Performance

Project Outcome

to the high quality of project design, monitoring and evaluation, technical staff, including Bank’s technical supervision missions.

The Borrower should show more ownership of project and improve on project monitoring.

GOM/ADF-

Sustainability

The viability of the activities in the near future is seriously questionable. Project sustainability is also doubtful unless urgent majors are put in place

The proposal to run the production units on commercial basis has been presented to the GOM by DAHLD. The government is yet to give its final approval of the proposal. Another project linked to the benefits generated by the NLDP should be considered which would focus on smallholder livestock farmers.

GOM

ANNEX 8 1 of 1

Source of Information

SOURCES OF INFORMATION

1. Government Project Completion Report 2. Project Appraisal Report

3. Project Files and Records 4. Field Interviews with Project Staff and the Ministry of Finance 5. Discussions with staff of MoAIFS who prepared Borrower’s PCR. ° 6. Discussion with professional resource persons.