Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No.: 17256

IMPLEMENTATION COMPLETION REPORT

REPUBLIC OF ETHIOPIA

PEASANT AGRICULTURAL DEVELOPMENT PROJECT I(CREDIT 1956-ET)

DECEMBER 23,1997

Agriculture Technical Group 2Africa Regional Office

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit BirrUS$1.0 = 2.07 Birr (at appraisal, 1988)US$1 .0 = 6.51 Birr (at completion, 1997)

WEIGHTS AND MEASURES

Metric System

FISCAL YEAR OF BORROWER

July 8 - July 7

ABBREVIATIONS AND ACRONYMS

AIDB - Agricultural and Industrial Development BankAISE - Agricultural Input Supply EnterpriseAISCO - Agricultural Inputs Supply CorporationANRAB - Amhara National Regional Agricultural BureauANRS - Amhara National Regional StateCBE - Commercial Bank of EthiopiaDA - Development AgentsDCA - Development Credit AgreementDBE - Development Bank of EthiopiaERR - Economic Rate of ReturnFTSS - Farmers Training Service StationGOE - Government of EthiopiaICR - Implementation Completion ReportIDA - International Development AssociationMOA - Ministry of AgricultureMOA/FD - Ministry of Agriculture/Finance DepartmentPA - Producers AssociationPD - Person DaysPADEP - Peasant Agricultural Development ProjectPCMED - Project Coordination, Monitoring & Evaluation DepartmentPCU - Project Coordination UnitPIU - Project Implementation UnitPPD - Planning and Programming DepartmentRAB - Regional Agricultural BureauRTPC - Rural Technology Promotion CenterSOE - Statement of ExpenditureTGE - Transitional Government of Ethiopia

Vice President . Callisto MadavoDirector . Oey MeesookTechnical Manager : Joseph Baah-DwomohTask Team Leader . Bhagwanti Khushalani

FOR OFFICIAL USE ONLY

Table of Contents

PagePreface

Evaluation Summary .......................................................i

Part I: Project Implementation AssessmentIntroduction.1Project Objectives ....................................................... 1Achievement of Objectives ........................................................ 2Factors Affecting Project ....................................................... 7Project Sustainability ....................................................... 8Bank Performance ....................................................... 8Borrower Perfonnance ....................................................... 9Assessment of Outcome. 9Future Operations ....................................................... 10Key Lessons Learned ....................................................... 10

Part II: Statistical AnnexesTable 1: Summary of Assessments .12Table 2: Related Bank Loans and Credits .14Table 3: Project Timetable .15Table 4: Loan Disbursements: Cumulative Estimated and Actual .16Table 5: Key Indicators for Project Implementation .17Table 6: Key Indicators for Project Operation .20Table 7: Studies Included in Project .21Table 8A: Project Costs .................................................... 23Table 8B: Project Financing .................................................... 24Table 9: Economic Costs and Benefits ................................................... 25Table !0: Status of Legal Covenants .................................................... 26Table 11: Compliance with Operational Manual Statements ..................... 30Table 12: Bank Resources: Staff Inputs ................................................... 30Table 13: Bank Resources: Missions .................................................... 31

AppendicesAppendix A: Mission's Aide-memoireAppendix B: Economic AnalysisAppendix C: Maps

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

I

IMPLEMENTATION COMPLETION REPORTETHIOPIA

PEASANT AGRICULTURAL DEVELOPMENT PROJECT I[CREDIT 1956-ET]

Preface

1. This is the Implementation Completion Report (ICR) for the Peasant AgriculturalDevelopment Project I (PADEP I) for which Credit 1956-ET in the amount of SDR 66million (US$85.0 million equivalent) was approved by the International DevelopmentAssociation (IDA) on October 18, 1988 and made effective on April 14, 1989.

2. The Credit was closed on June 30, 1997, two years after the original closing date ofJune 30, 1995. The Credit disbursed SDR 60.6 million (US$82.4 million equivalent) as ofDecember 22, 1997. The disbursement account will be closed on December 31, 1997 afterwhich any undisbursed amount will be canceled.

3. The ICR was prepared by Ms. Bhagwanti Khushalani (AFTA2) and was reviewedby Messrs. Lorenzo Marchesini (Task Manager of the Project), Berhane Manna (AFMET),Yosef Woldemichael (consultant) and Joseph Baah-Dwomoh, Sector Manager, AFTA2.The Borrower provided their internal ICR.

4. Preparation of this ICR started during the joint Bank/Borrower implementationcompletion mission from October 6 to 23, 1997. It is based on material in the project file,field visits to project area and discussions with Government officials and projectbeneficiaries. The Borrower's staff from the Planning & Programming Department of theMinistry of Agriculture (PPD/MOA) and the Amhara National Regional AgriculturalBureau (ANRAB) participated in the completion mission. The views of officials of theMOA, Ministry of Economic Development and Cooperation (MEDAC) and ANRAB havebeen reflected in the aide-memoire (Appendix A). The Borrower has indicated that theyhave no comments on this Implementation Completion Report.

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IMPLEMENTATION COMPLETION REPORTETHIOPIA

PEASANT AGRICULTURAL DEVELOPMENT PROJECT I[CREDIT 1956-ET]

Evaluation Summary

Introduction

1. The Government of Ethiopia (GOE) and IDA entered into a policy dialogue in 1982to enable the peasant sector to increase the production and productivity of food grain. Thiswas supported by a number of studies financed under the ongoing Minimum PackageProgram (MPP) I & MPP II projects. Following an in-depth study on grain marketing andpricing issues, the GOE, in January 1988, announced policy changes which removedrestrictions on inter-regional grain trade and allowed farmers to sell their surplus grain inthe open market. Under this scenario, PADEP I was approved in October 1988 andbecame effective in April 1989. The project was extended by two years and closed on June30, 1997 [para 11.

Project Objectives

2. The primary objectives of the project were to increase the production of foodgrain,productivity and incomes of the peasant sector. In order to achieve these goals, the projectcomprised the following components: (i) strengthening of the Ministry of Agriculture'smanagement of sectoral services; (ii) expanding and strengthening the sectoral capacity todevelop and test technological improvements; (iii) strengthening the delivery of extensionservices, cooperative development, and watershed management services to farmers in theNorthwestern Zone; (iv) improving the supply and distribution of inputs, especially fertilizer;and (v) supporting the continuous analysis of pricing policy and management of grainreserves. Over seventy percent of project financing was allocated to the purchase of fertilizerand the rest to strengthening agricultural support services [para 21.

3. Project implementation was hampered during the civil strife from 1990 to 1991 and theproject activities were revised in 1992 giving more emphasis to economic recovery,reconstruction and re-orientation towards a market-oriented system. Accordingly, some of theactivities such as (i) support to Price Studies & Policy Institute (PSPI), (ii) construction of sixfertilizer stores for Agricultural Input Supply Enterprise (AISE), and (iii) technical assistancefor project coordination and agricultural information systems, which had become irrelevantdue to changed economic environment, were eliminated. These changes, however, did notaffect the overall project objective lpara 3 & 41.

4. The project activities were revised again in 1995 when the closing date of the projectwas extended, initially for one year with an option to extend by another year pendingsatisfactory performance during the first year. The proposed changes were consistent with theproject objectives and Government's policy on regionalization and decentralization. Itcontained a number of activities with particular emphasis on capacity building of the Regional

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Agricultural Bureau (RAB) and strengthening grassroots activities in the areas of women indevelopment, rural technology promotion, extension and cooperative development [para 51.

Implementation Experience and Results

5. Achievement of Objectives. In order to get a clear picture of achievements of projectobjectives, the total project period has been divided into two, one before the extension of theproject and the other after the extension. The first period (April 1989 to June 1995) wasaffected by the civil strife during 1990-1991. During this period, the project activities werelimited to procurement of fertilizer, vehicles, and office equipment. The delivery of servicesin the Northwestern Zone stalled and development activities at the grassroots levels could notbe implemented. With the formation of the Transitional Government of Ethiopia (TGE) in1992, peace was restored and project activities started moving again. During the period 1992-93, the project implementation suffered another set back following the restructuring, down-sizing of the MOA and the regionalization process in the country, resulting in frequent staffturnover and shortage of qualified staff at the regional/zonal levels. The projectimplementation was transferred to the Agricultural Bureau of the Amhara National RegionalState (ANRS - Region 3) in March 1993. In spite of these set backs, the achievements forsome of the activities during the first period were more than 50 percent of the target, and insome instances even 100 percent. The Agricultural Extension, Rural Technology Promotion,Field Trials, Cooperative Development and Agricultural Input Supplies performed quite well.Agricultural Input Supply Enterprise (AISE), whose role finished in 1995, achieved 100percent of the target for supply of fertilizer and 65 percent of the target for delivery of farmequipment lAnnex 2 in Appendix Al.

6. The second period (July 1995 to June 1997), was also marked by ups and downsmainly because of the weak institutional capacity, shortage of qualified staff and againrestructuring at the regional level. However, if the performance during this period isconsidered in absolute numbers, the project performed even better than the first period.Building of residences and offices for the Development Agents, and the number of workshopsheld under extension training exceeded initial targets. The Rural Technology Promotionwhich included establishment of Farmer Technical Service Stations (FTSSs), Field Trials andCrop Development activities performed exceptionally well. The activities which performedpoorly were farmers and fieldstaff training, and Rural Women in Development. Out ofplanned 259 microprojects, only 47 were implemented (18 percent) and training fordeveloping skills for rural women was only 16 percent. None of the targeted workshops wereheld. Their remaining activities were, therefore, merged with the Agricultural ExtensionDepartment in 1997 [Annex 3 in Appendix Al.

7. The main objective of the project was to increase crop production and productivity byensuring adequate and timely supply and distribution of fertilizer to the peasant sector. On thebasis of the data collected on the use of fertilizer supplied by the project, it is estimated thatthe incremental foodgrain production would be about 1.2 million metric tons during the sevenyears of the project (1989-1995). This is about 20 percent higher than the appraisal estimate.Thus the project did achieve its objective of increasing production of foodgrain, productivityand thereby incomes of the farmers [para 281.

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8. Improved Supply of Input: This was the single largest component of the projectamounting to more than 80 percent of the lending and its performance was highly satisfactory.The strategy of government's pullback from grassroots inputs distribution by providingfinancial and institutional support to the existing Agricultural Input Supply Company(AISCO) for setting up a cost effective and timely input supply and distribution system wasachieved. To this effect, the project procured and distributed 242,000 metric tons of fertilizer(100 percent of the target) and 3,250 sprayers (65 percent of the target) to farners throughAISE (formerly AISCO [para 101.

9. Agricultural Credit: The success of providing agricultural inputs to farmers largelydepended on the availability of short-term credit to the peasant sector. This was done byproviding institutional support to Development Bank of Ethiopia (DBE, formerly AIDB).However, both DBE and the Commercial Bank of Ethiopia (CBE) together providedproduction credit of Birr 136 million during the project period. Though we do not have theexact figures for the project area, the recovery rates for DBE and CBE at the national levelwere 84 and 98 percent respectively during the project period (1989-97). As a follow-up, theRegion is trying to provide production credit to the farmers through the Amhara Rural CreditService as well as other existing credit institutions [para 111.

10. Project Costs and Financing: Actual project costs were US$87.8 million comparedwith appraisal estimate of US$118.6 million. IDA credit disbursement as of October 31,1997 were US$82.4 million compared with the appraisal estimate of US$85.0 million. TheGovernment contribution was US$5.4 million which is 16 percent of the appraisal amountof US$33.6 million. It should, however, be noted that in Birr terms, the Governmentcontribution was 25.5 million but due to fluctuations in exchange rate, its dollar equivalentis very low. At the request of the Government, an extension of additional two months (upto December 31, 1997) has been granted to settle any outstanding expenditures incurredbefore the closing date of the project [para 191.

11. Bank Performance at appraisal and during implementation has been ratedsatisfactory. Supervision was fairly regular, except during the periods of unrest andrestructuring. There was no supervision mission after February 1992 until March 1994.This included the period of restructuring and had there been a mission fielded during thatperiod, it would have assisted in the project implementation. One of the reasons for notfielding such a mission could be the change of task managers. The Bank could, however,have insisted more on putting in place a monitoring and evaluation system to assess projectimpact. The Bank promptly treated withdrawal applications and replenished the SpecialAccounts. Concern was expressed by the Borrower at delays in disbursements andreplenishments. This was, however, not due to any slackness on the part of IDA but due todelays in preparation and submission of the Statements of Accounts (SOEs) by theBorrower [para 241.

12. Borrower Performance was generally satisfactory. Procurement was accomplished100 percent and all duties and taxes were paid. Policy reforms by the Government resultedin liberalizing the grain trade. All audit reports were submitted, except the last one which

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is due in December 1997. Legal covenants were followed satisfactorily. The SpecialAccount B of AISE was closed on time. However, counterpart funding was short ofrequirements and there were delays in releasing the allocated funds [para 19]. Statementsof Expenditures (SOEs) were not submitted by the Region on time due to insufficientqualified staff, incomplete records, and the remoteness of Zones and Woredas resulting inlate replenishment of IDA funds which delayed carrying out some of the project activities.There is an amount of approximately Birr 2.27 million advanced to the Region byMOA/FD for which documents have not yet been submitted by the Region. At the requestof the Borrower, IDA has granted additional two months for settling outstandingexpenditures incurred before June 30, 1997. [para 25].

13. Project Sustainability. The awareness which the project has generated among thefarmers on the importance and use of fertilizers, improved seed and farm implements,agricultural extension services, coupled with the availability of short-term credit to thefarmers, have significantly contributed in increasing production and productivity. This willgo a long way in the sustainability of the project. Strengthening support to MOA, RAB,AISE and DBE has built in enough institutional capacity to carry on the activities startedby the project. Further, Government's commitment of continued supply of adequate fundsand also incorporating many of the grassroots level activities in their normal program[Annex 4 & 5 in Appendix A] is another major factor for the sustainability of the project.Construction of houses and offices for the Development Agents (DAs), and increasedmobility of Subject Matter Specialists (SMSs) and DAs to farmers, have led to closercontact with farmers and enhanced improved input utilization. This is further strengthenedby the support given by the Rural Technology Promotion Centers (RTPCs) and FarmersTraining Service Stations (FTSSs) to the farmers (para 231.

14. Assessment of Project Outcome. The overall outcome of the project is satisfactory.The two most important components of the project, (i) improved supply of inputs, whichaccounted for more than 80 percent of the project lending, and (ii) agricultural extension,amounting to 10 percent of the lending, were both highly satisfactory. On the basis of datacollected on the impact of the fertilizer in the project area, it would result in an estimatedaverage incremental production of about 1.2 million metric tons of foodgrain during theseven years of the project (1989-1995). This is about 20 percent higher than the appraisalestimate. Thus the project did achieve its objective of increasing production of foodgrain,productivity and thereby incomes of the farmers. Development activities performed at thegrassroots level, availability of fertilizer and production credit to the farmers, andstrengthening of the institutional capacity of MOA, RAB, AISE and DBE have positivelycontributed to the satisfactory outcome of the project. In spite of the problems of securityand the time spent in adjusting to the restructuring of the MOA, decentralization andregionalization of the government, the project achieved most of its targets [paras 28, 291.

Key Lessons Learned and Recommendations

15. The following are the major findings and key lessons learned:

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(a) While it is recognized that decentralization promotes project ownership andeffective management, sufficient capacity building should precede the transfer of projectactivities.

(b) Having a strong, well-staffed and motivated Coordination Unit with authoritywithin the regional administration is essential for effective monitoring and implementationof project activities.

(c) Preference of providing training to top cadres instead of those responsible forproject implementation at the lower levels does not provide the necessary know-how andstability during the life of the project.

(d) The extension of the project by one year at a time, instead of two years at astretch, created uncertainties which affected project implementation, including advanceplanning, procurement turn-around time, and timely replenishment of IDA funds.

(e) Training of financial and procurement management staff at all levels is criticalto the success and smooth operation of the project.

(f) Strengthening of the rural savings and credit institutions is essential forsustainability of providing credits to the farmers to buy the required inputs in time,resulting in increase in production and productivity.

(g) Setting up of appropriate procedures for submitting disbursement andreimbursement requests from Woredas to the Region and Region to the Central level wouldfacilitate timely submission of SOEs to IDA for obtaining replenishment of the SpecialAccount.

(h) Rural Technology Promotion Centers (RTPCs) established under the project arewell equipped and staffed. For their sustainable growth, contact with the farmers throughthe SCs alone is not enough. They should be encouraged to establish direct contact withthe farmers to promote their products.

(i) Cost recovery schemes should be an integral part of the FTSSs, and privatesector should be encouraged to provide similar services.

() The only solar pump established under the project is functioning well. Itgenerates electricity to provide water to about 400 households and their cattle from thegroundwell. The revenue generated from the nominal charges for usage of water by eachhousehold makes this activity self-sustainable. Such investments should be encouraged bythe Government for the direct and indirect benefits derived by the farmers.

(k) Policy reforms, such as liberalizing grain marketing and removing restrictionson inter-regional grain trade allowing farmers to sell their surplus grain on the open marketstimulated farmers to produce more. Such initiatives should be encouraged by the Bank.

IMPLEMENTATION COMPLETION REPORTETHIOPIA

PEASANT AGRICULTURAL DEVELOPMENT PROJECT I[CREDIT 1956-ET]

PART I: PROJECT IMPLEMENTATION ASSESSMENT

Introduction

1. The origin of PADEP dates back to 1982 when IDA and the Government ofEthiopia (GOE) entered into a long and intensive policy dialogue in order to agree onminimum reforms and policy measures that provide incentives to farmers to achieveincreases in grain production and productivity. This dialogue was supported by a numberof studies financed under the then ongoing projects (MPP I & MPP II). Following an in-depth internal study of the grain marketing and pricing issues, the Govermnent announced,effective January 1, 1988, policy changes which removed restriction on inter-regional graintrade and allowed farmers and traders to sell their surplus grain on the open market afterfulfilling their quotas. Under this scenario, PADEP I was appraised and approved inOctober 1988 for a credit of US$85.0 million and became effective on April 14, 1989. TheProject duration was initially for a period of seven years, however it was later extended fortwo more years. The Project closed on June 30, 1997. The proposed project executingagencies were Ministry of Agriculture (MOA), Agricultural Input Supply Enterprise(AISE, formerly AISCO) and Development Bank of Ethiopia (DBE, formerly AIDB).After the decentralization of the administrative structure in 1992, the implementation of theproject was transferred to the Regional Agricultural Bureau of the Amhara NationalRegional State (ANRS) in March 1993. T-he ANRS encompass the project area thatcovered the North-Western Agricultural Zone encompassing Gojam, Gonder and Metekelregions totaling to about 40 Woredas. As a result of the re-organization of theadministrative structure, thirty-nine of the project Woredas fell within the fiveadministrative zones (North and South Gonder, East and West Gojam and Awi, excludingMetekel) in Region 3, now part of the Amhara National Regional State (ANRS). Due tothe redefining of the Woreda boundaries again in 1995, the number of Woredas wereincreased to fifty-two.

Project Objectives

2. The primary objectives of the project were to increase the foodgrain production,productivity and income of the peasant sector. The strategy for achieving these goals was to:(a) improve efficiency in the management and delivery of agricultural services; (b) improvetechnology available to the farmers; and (c) support improvements in incentive framework forproducers while minimizing any adverse impacts on consumers. The project focusedexclusively on the peasant sector in the highlands and included five main components: (i)strengthening of the Ministry of Agriculture's management of sectoral services; (ii) expandingand strengthening the sectoral capacity to develop and test technological improvements; (iii)

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strengthening the delivery of extension services, cooperative development, and watershedmanagement services to farmers in the Northwestern Zone; (iv) improving the supply anddistribution of inputs, especially fertilizer; and (v) supporting the continuous analysis ofpricing policy and management of grain reserves. Over seventy percent of project financingwas allocated to the purchase of fertilizer and the rest to strengthening agricultural supportservices.

3. After the civil strife was over, the project activities were revised in the last quarter of1992 giving more emphasis to economic recovery, reconstruction and re-orientation ofinstitutions towards a market-oriented system. These included: (i) strengthening field supportfor the distribution and application of fertilizer, including procurement of fertilizer through theEthiopia Reconstruction & Recovery Project (ERRP), which was critical to rapid recovery inagricultural production; (ii) short-term training in various fields related to supportingimplementation of the new economic policy; and (iii) financing of small scale irrigation andwater conservation under the Bure Watershed Pilot.

4. These changes were still within the overall project objective of increasing agriculturalproduction and productivity. In order to provide resources to support these changes, some ofthe project activities were eliminated either because they were no longer relevant to thechanged project environment or their relative importance had declined. These activitiesincluded: (i) support to Price Studies & Policy Institute (PSPI) which had become obsoletedue to liberalization of trade in foodgrains and agricultural produce; (ii) construction of sixfertilizer stores for the AISE; and (iii) technical assistance for project coordination andagricultural information systems.

5. The project activities were revised again in 1995 when the closing date of the projectwas extended, initially for one year with an option to extend by another year pendingsatisfactory performance during the first year. The proposed changes did not affect the overallproject objectives and Government's policy on regionalization and decentralization andcontained a large number of activities with particular emphasis on: (i) capacity building of theRegional Agricultural Bureau (RAB) administration, both in terms of human resourcedevelopment and institutional strengthening; (ii) strengthening of the regional research andimprovement of the research/extension linkage; and (iii) grassroots activities in the areas ofwomen in development, field trials and crop development, rural technology promotion,extension and development of the cooperative sector.

Achievement of Objectives

6. In order to get a clear picture of achievements of project objectives, the total projectperiod has been divided into two periods, one before the extension of the project (period 1)and the other after the extension (period 2). Period 1 (April 1989 to June 1995) was affectedby the civil strife during 1990-1991. During this period, the project activities were limited toprocurement of fertilizer, vehicles, and office equipment. The delivery of services in theNorthwestern Zone stalled and development activities at the grassroots levels could not beimplemented. With the formation of the Transitional Government of Ethiopia (TGE) in 1992,peace was restored and the project activities started moving again. During the period 1992-93,

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the project implementation suffered another set back following the restructuring, down-sizingof the MOA and the regionalization process in the country, resulting in frequent staff turnoverand shortage of qualified staff at the regional/zonal levels. The project implementation wastransferred to the Agricultural Bureau of the ANRS (Region3) in March 1993. In spite ofthese set backs, the achievements for some of the activities were more than 50 .percent of thetarget, and in some instances even 100 percent. The Agricultural Extension, RuralTechnology Promotion, Field Trials, Cooperative Development and Agricultural InputSupplies performed quite well. AISE, whose role finished with respect to the project in 1995,achieved 100 percent of the target for supply of fertilizer and 65 percent of the target fordelivery of farm equipment.

7. Period 2 (July 1995 to June 1997), was also marked with ups and downs mainlybecause of the weak institutional capacity, shortage of qualified staff and again restructuring atthe regional level. However, if we consider the performance during this period in absolutenumbers, the project performed even better than the first period. Building of residences andoffices for the Development Agents, and the number of workshops held under extensiontraining exceeded initial targets. The Rural Technology Promotion which includedestablishment of Farner Technical Service Stations (FTSSs), Field Trials and CropDevelopment components performed exceptionally well. The activities which performedpoorly were farmers and fieldstaff training, and Rural Women in Development. Out ofplanned 259 microprojects, only 47 were implemented (18 percent) and training fordeveloping skills for rural women was only 16 percent. None of the targeted workshops wereheld. Their remaining activities were, therefore, merged with the Agricultural ExtensionDepartment of RAB in 1997.

8. The main objective of the project was to increase crop production and productivity byensuring adequate and timely supply and distribution of fertilizer to the peasant sector. On thebasis of the data collected on the use of fertilizer supplied by the project, it is estimated thatthe average incremental foodgrain production would be about 1.2 million metric tons duringthe seven years of the project (1989-1995). This is about 20 percent higher than the appraisalestimate. Thus the project did achieve its objective of increasing production of foodgrain,productivity and thereby incomes of the farmers.

9. Institutional Strengthening: Project Coordination, Monitoring & EvaluationDepartment (PCMED) of the MOA was responsible for implementation of the project, AISEfor handling the supply and distribution of the agricultural inputs, and DBE as well as CBE forfacilitating production credit to the peasant sector. In addition, Project Coordination Unit(PCU) established at NW Zone was coordinating activities of different zones in the Region.These institutions, including the three research stations, Adet, Sheno and Sirinka of theRegion, were strengthened by providing training, technical assistance, office and laboratoryequipment, and vehicles. 37 percent of the targeted local training and 66 percent of theoverseas training was provided during the project extension period of 1995-97. After therestructuring and regionalization in the country, the overall responsibility for theimplementation of the project was transferred to the Regional Agricultural Bureau (RAB) ofthe ANRS State in March 1993 and the PCU at Bahir Dar was dissolved. This called forfurther strengthening of the RAB as well as Zonal and Woreda agricultural offices. The

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monitoring of the project was undertaken by the Extension Division of the RAB till a ProjectImplementation Unit (PIU) was established at Bahir Dar during the project extension period(1995-97). Foreign procurement was still handled by MOA. The proposed position of themonitoring specialist in the PIU remained vacant due to non-availability of skilled andqualified local personnel. Even though the original organizational set-up was subject to anumber of restructuring processes and transfer of staff, the achievements of the projectactivities indicate that the performance of this component was satisfactory.

10. Improved Supply of Input: This was the single largest component of the projectamounting to more than 80 percent of the lending and its performance was highly satisfactory.The main objective of the project was to increase foodgrain production and productivity byensuring adequate and timely supply and distribution of fertilizer and other inputs to thepeasant sector. The strategy involving government's pullback from grassroots inputsdistribution and strengthening of the existing Agricultural Input Supply Company (AISCO) byway of providing financial and institutional support for setting up a cost effective and timelyinput supply and distribution system was achieved. To this effect, the project has financedprocurement and distribution of 242,000 metric tons of fertilizer (both DAP and Urea -achieved 100 percent of the target) and 3,250 knapsack sprayers (65 percent of the target) tofarmers through the Agricultural Input Supply Enterprise (AISE, formerly AISCO). Thefertilizer and other inputs were distributed to the farmers through the Service Cooperatives(SCs) and Peasant Associations (PAs). Construction of six stores with a capacity of 15,000MT was foreseen but was not implemented since their relative importance had declined due tochanged project environment and the funds for these were reallocated. The AISE completedits operation with IDA on June 30, 1995 and closed its Special Account B.

11. Agricultural Credit: The success of providing agricultural inputs to farmers largelydepended on the availability of short-term credit to the peasant sector. This was done throughproviding institutional support to Development Bank of Ethiopia (DBE, formerly AIDB).Production credit was incorporated in the project in such a way that it would be financed fromthe IDA credit allocated for fertilizer import, where this fund would be on-lent to DBE by theGovernment to finance fertilizer purchase by AISE. As the fertilizer was bought by AISE,credit was made available by DBE to the farmers through the Service Cooperatives (SCs).During the project period, DBE provided production credit of Birr 78.8 million. TheCommercial Bank of Ethiopia (CBE) was also involved in providing production credit andprovided Birr 57.3 million from 1993 to 1997. Though we do not have the exact figures forthe project area, the recovery rates for DBE and CBE at the national level were 84 and 98percent respectively during the project period (1989-97). As a follow-up, the Region is tryingto provide production credit to the farmers through the Amhara Rural Credit Service as well asother existing credit institutions.

12. Agricultural Extension: This was the second largest component (10 percent of thelending) and it performed satisfactorily. The focus of this component was the disseminationof usable technologies, upgrading of staff capability and subsequently improving the crophusbandry practices in the peasant sector. Accordingly about 46 percent of Woreda SMSs andDevelopment Agents (DAs) were provided training. Of the total field visits planned, 40percent were carried out between SMSs and DAs and 19 percent between DAs and Contact

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Farmers. The number of zonal and woreda workshops and construction of houses and officesfor DAs (financed by local resources) exceeded the targets. This helped farmers to be in closercontact with the DAs contributing to the dissemination of extension services.

13. Technological Improvements: This component aimed at increasing foodproduction through the development, promotion and use of appropriate agriculturaltechnologies and strengthening of the linkages between extension and research and itsperformance was satisfactory. Field trials were 71 percent of the target during 1989-95 and95 percent during 1995-97. Two Rural Technology Promotion Centers (RTPCs) at Jimmaand Bahir Dar which are fully operational, and 15 Farmer Technology Service Stations(FTSSs) were established at selected Service Cooperatives (100 percent of the target)during the project period. Due to shortage of manpower, only one solar pump, out of thetwo originally planned, was installed and is functioning effectively. Similarly, five biogasplants, out of the targeted nine, were installed and are functional.

14. Cooperative Development: This sub-component was marginally satisfactory. Theprincipal tasks under this sub-component were improving and strengthening the financialmanagement of the Service Cooperatives (SCs) by providing training in book-keeping,accounting, auditing and technical assistance to its committee members. To this effecttraining to cooperative accountants had been 58 percent of the target and that ofcooperative auditors 70 percent during the project period. Other training (book/store/shopkeepers, cooperative organizers and members) ranged from 15 to 51 percent. Sevencooperative organizers went for short-term overseas training. Reasons for this averageperformance were shortage of accountants and auditors at the zonal and woredas levels andtheir heavy workload in performing other regular activities.

15. Rural Women in Development: Performance of this sub-component wasunsatisfactory. It was targeted to improve the life of rural women and consequently theirincome through training, workshops and micro-projects like beekeeping, sheep and goatrearing, cattle fattening, vegetable growing, etc. To facilitate their movement mules andbicycles were purchased and given to the Development Agents and the Home Agents.However, the achievements of this component did not meet with the expected resultsmainly because of restructuring and again down sizing of the rural women affairs office atthe regional level, resulting in shortage of qualified personnel to carry out the activities.Consequently, the remaining activities under this sub-component were absorbed by theExtension Department of the RAB in 1997.

16. Procurement: Procurement was carried out by the MOA's Procurement andProperty Administration Section until the Region started to handle local shopping. Foreignprocurement was still handled by the MOA and at the close of the project, 100 percentforeign procurement was accomplished and made available to the end users. Fertilizer,vehicles, and office and laboratory equipment were the biggest lots procured by the project.Performance of foreign procurement has been satisfactory in spite of the lengthyprocedures of International Competitive Bidding (ICB) and shortage of local funds to clearthe goods on time. After restructuring, local procurement was done by the Region. To thiseffect, the Region procured 10 desk top computers (59 percent), improved seed and

6

fertilizer for trials (57 percent), mules (56 percent), and bicycles (28 percent). No officeequipment could be procured. This could be attributed to the Region not being too familiarwith the procurement procedures and some of the internal regional government regulations,e.g., requirement of three bidders, getting approval for purchases of more than Birr 50,000,etc.

17. Accounts and Audits: As per the Development Credit Agreement (DCA), twoSpecial Accounts A and B were opened. Account A was for the MOA and B for AISE.AISE's operation closed on June 30, 1995 and their Special Account B was also closed.Special Account A is still open. There is a balance of Birr 2.27 million for whichdocuments have not been submitted. The four month period granted by IDA to settle anyoutstanding expenditures incurred before the closing date of the project expired on October31, 1997. It has not been possible for MOA to receive all the expenditure documents fromthe Region due to shortage of accounting staff and remoteness of the Zones and Woredas.At the request of MOA, an extension of two more months has been granted (up toDecember 31, 1997) to settle these outstanding expenditures, after which the remainingbalance will be canceled.

18. As for the Audit Reports, these are all current for the MOA except for the last auditreport for the period 1996/97 which is due at the end of the year (December 31, 1997).Some delays were experienced due to MOA not receiving documents from the Region ontime and incomplete records or loss of some of the documents. In spite of theseimpediments, the performance in this regard has been satisfactory. All audit reports fromthe AISE were received, except the last one for the year 1994/95 which was due by January1996. The Borrower has agreed to send this report soon.

19. Project Costs and Financing: Project costs were US$87.8 million, 74 percent ofthe appraisal estimate of US$118.6 milliorn (Table 8A). IDA credit disbursements as ofDecember 22, 1997 were US$82.4 million, 96 percent of the appraisal amount of US$85.0million. Government's contribution was US$5.4 million which is 16 percent of theappraisal amount of US$33.6 million (Table 8B). It should, however, be noted that in Birrterms, the Government contribution was 25.5 million, but due to fluctuations in exchangerate (Birr 2.07 to the dollar at appraisal, and Birr 6.51 at the close of project), its dollarequivalent is very low. The GOE financing was low during 1989 to 1992/93 period,however, it picked up since 1993/94 ranging from Birr 3.8 to 6.8 million. Due toinsufficient absorptive capacity of the Region to fully utilize the committed funds, theGovernment was not able to allocate more than it did.

20. The Economic Rate of Return (ERR) could not be calculated due to non availabilityof data on indicators on development impact. However, since more than 80 percent of theproject lending was for import of fertilizer, an attempt has been made to assess possibleproject benefits on the basis of the incremental production for the three major grain crops,i.e., wheat, maize and teff, due to use of fertilizer provided by the project, assuming anaverage yield of 5 kg. of foodgrain per 1 kg. of fertilizer. The resulting ERR (1000%) istoo high to be meaningful (Appendix B).

7

Factors Affecting the Project

21. The factors that impacted positively on implementation and achievement of projectobjectives were:

(i) Sufficient fertilizer was imported and made available to the farmers at a timewhen Ethiopia was in financial difficulties during 1989-91 due to sharp decline of foreignexchange reserves and overall budget deficit. It would have been difficult for theGovernment to mobilize resources to finance this activity. However, IDA was able toprovide financial resources to procure fertilizer as well as strengthen AISE's capacity to setup a cost effective and timely input supply and distribution system. This contributed tothe country's grain production and increase in farmers' income; and

(ii) Institutional strengthening at the MOA and the Regional levels has built-inenough capacity which will help in sustaining project activities.

22. The major factors that adversely affected the project were:

(i) Security situation related to the civil strife during 1990-91 and restructuring ofMOA which led to the suspension of all grassroots level project activities, exceptprocurement of fertilizer, vehicles, and office equipment;

(ii) Decentralization and regionalization process in the country which hamperedfield activities during the 1992-93 transition period;

(iii) Disruption in the project activities due to the preoccupation of the newly esta-blished Region 3 with matters relating to restructuring and re-organization during 1993-94.

(iv) insufficient counterpart funding amounting to US$5.4 million, which is about16 percent of the appraisal amount of US$33.6 million (para 19);

(v) delays in procurement due to the Region's unfamiliarity with the procedures forlocal shopping, combined with some internal regional government regulations (para 16);

(vi) lack of training to the lower level personnel who actually perform the work,especially in the areas of procurement and finance;

(vii) delay in replenishment of IDA funds due to delayed submission of the SOEs,many of which are still pending (para 17);

(viii) delay in release of matching funds during the first quarter of the year,particularly for recurrent expenditures, from the Government due to the regulation that ifthe money allocated could not be used during the year, it will have to be re-deposited in thegovernment account and re-requested in the next year. This contributed to delay in manyof the project activities;

8

(ix) high turn-over of the staff resulting in losing some of the well-trained personnelboth at the MOA and regional levels (paras 13 to 15);

(x) unattractive salaries and benefits contributed to shortage of qualified and skilledproject staff available locally (para 9); and

(xi) dissolution of the Project Coordination Office and non-appointment of a full-timePIU Coordinator after it was re-established during the extension period (para 9).

Project Sustainability

23. The awareness which the project has generated among the farmers on theimportance and use of fertilizers, improved seed and farm implements, agriculturalextension services, coupled with availability of short-tern credit to the farmers throughDBE and CBE, have significantly contributed in increasing production and productivity.This will go a long way in the sustainability of the project. The institutional supportprovided to MOA, RAB, AISE and DBE has built in enough capacity to carry on theactivities started by the project. Further, Government's commitment to continued supplyof adequate funds is another factor for the sustainability of the project. This is evidentfrom the operational plans submitted by the Government for the next three years (Annex 4& 5, Appendix A) incorporating into their normal program most of the grassroots levelactivities such as agricultural extension, cooperative development, crop development, ruraltechnology and input supply. Construction of houses and offices for the DevelopmentAgents (DAs) and increased mobility of SMSs and DAs to farmers have led to closercontact with farmers and enhanced improved input utilization. Farmer Training ServiceStations (FTSSs) and Rural Technology Promotion Centers (RTPCs) established under theproject are well equipped and staffed. However, for sustainable growth of RTPCs, contactwith the farmers through the SCs alone is not enough. They should be encouraged toestablish direct contact with the farmers to promote their products.

Bank Performance

24. Bank performance at appraisal and during implementation has been ratedsatisfactory. Supervision was fairly regular, except during the periods of unrest. Therewas no supervision mission after February 1992 until March 1994. This included theperiod of restructuring and had there been a mission fielded during that period, it wouldhave assisted in the project implementation. One of the reasons for not fielding such amission could be the change of task managers. The Bank could, however, have insistedmore on putting in place a monitoring and evaluation system to assess project impact. TheBank promptly treated withdrawal applications and replenished the Special Accounts.Concern was expressed by the Borrower at delays in disbursements and replenishments.This was, however, not due to any slackness on the part of IDA but due to delays inpreparation and submission of the Statements of Accounts (SOEs) by the Borrower.

9

Borrower Performance

25. Borrower performance was generally satisfactory. Procurement was accomplished100 percent and all duties and taxes were paid. Policy reforms by the Government resultedin liberalizing the grain trade. However, counterpart funding was short of requirementsand there were delays in releasing the allocated funds (para 19). There is an amount ofapproximately Birr 2.27 million advanced to the Region by MOA/FD for which documentshave not yet been submitted by the Region. Out of this amount, approximately Birr800,000 were advanced to the Borrower from Special Account A in 1990/91 prior to thedevolution of powers to the Region which still remains unaccounted. Statements ofExpenditures (SOEs) were not submitted by the Region on time due to insufficientqualified staff, incomplete records, and the remoteness of Zones and Woredas resulting inlate replenishment of IDA funds which delayed in carrying out some of the projectactivities. The only records kept by the RAB are control accounts for advances receivedfrom MOA and released to the Zones. The Region should have imposed time limits for theZones and Woredas to submit their accounts so that the Region could submit these to theMOA on time. On several occasions the accountant of the PIU was compelled to offerassistance to the MOA/FD for a prolonged period of time which in turn jeopardized theaccountant's work at the duty station. At the request of the Borrower, IDA has grantedadditional two months for settling outstanding expenditures incurred before June 30, 1997,after which the accounts will be closed and any outstanding balance will be canceled.

26. The Special Account B of AISE was closed on time and AISE has successfullycompleted its operation with IDA on June 30, 1995. However, AISE's last audit report forthe year 1994/95 which was to be submitted by January 1996, has not yet been received byIDA and is expected soon.

27. The Project has been regular in submitting its audit reports and has followed up onthe legal covenants satisfactorily.

Assessment of Outcome

28. The overall outcome of the project is satisfactory. The two most importantcomponents of the project, i.e., Improved Supply of Inputs by AISE (para 10) whichaccounted for more than 80 percent of the project lending, and Extension Services (para12), amounting to 10 percent of the lending, were both highly satisfactory. There is agreater awareness among the farmers on the use of fertilizers, pesticides, improved seedsand farm implements. It was anticipated in the SAR that due to the expected increase inthe use of fertilizer from 125,000 tons in FY88 to 280,000 tons in the year 5 of the project,assuming an average response of 5 kgs. of cereal to 1 kg. of fertilizer, the project wouldgenerate additional cereal production of 775,000 metric tons (MT) on low side and1,045,000 MT on the high side. Though data on the direct impact of the project onproduction was not collected during the project period, estimates of total production dataprovided by the Amhara National Regional State (ANRS) in the project area (Annex 6,Appendix A) show an annual increase of between 350,000 to 450,000 MT of foodgrain.

10

While this cannot be attributed entirely to the project, the impact of the fertilizer in theproject area would result in an average incremental foodgrain production of about 1.2million metric tons during the seven years of the project (1989-1995). This is about 20percent higher than the appraisal estimate. Thus the project did achieve its objective ofincreasing the production of foodgrain, productivity and thereby incomes of the farmers.

29. Availability of credit to the farmers through DBE and CBE (para l1) hascontributed to the satisfactory performance of the project. Development activitiesperformed at the grassroots level have made a significant contribution in energizing themomentum of the peasant sector. The project has also played an important role instrengthening the institutional capacity which created sufficient grounds to effectively runsimilar future projects in the Region. Construction of houses and offices for theDevelopment Agents (DAs) and increased mobility of SMSs and DAs to farmers have ledto closer contact with farmers contributing to the dissemination of extension services. Inspite of the problems of security and the time spent in adjusting to the restructuring of theMOA, decentralization and regionalization of the government, the project achieved itsmost of its targets.

Future Operations

30. The operational plans for the period of next three years from 1997 to 1999submitted by the Government (annex 4 & 5, Appendix A) incorporating most of the projectactivities into their nornal program with an anticipated amount of financial allocation foreach activity, i.e., Agricultural Extension, Field Trials, Crop Development, CooperativeDevelopment, Institutional Strengthening, and Promotion of Rural Technology; reflect acommitment by the Borrower for continuation of the project activities. Ambasel, a privatecompany, will now be involved in importing and distributing agricultural inputs, inaddition to the other existing organizations. The Region is trying to provide credit throughthe Amhara Rural Credit Services as well as other existing credit institutions. Further,there are already two agricultural projects, i.e., National Fertilizer Project and NationalSeeds Project which have been approved in 1995. The Agriculture Research and TrainingProject has already been appraised and expected to be approved soon.

Key Lessons Learned and Recommendations

31. The following are the major findings and key lessons learned:

(a) While it is recognized that decentralization promotes project ownership andeffective management, sufficient capacity building should precede the transfer of projectactivities.

(b) Having a strong, well-staffed and motivated Coordination Unit with authoritywithin the regional administration is essential for effective monitoring and implementationof project activities.

11

(c) Preference of providing training to top cadres instead of those responsible forproject implementation at the lower levels does not provide the necessary know-how andstability during the life of the project.

(d) The extension of the project by one year at a time, instead of two years at astretch, created uncertainties which affected project implementation, including advanceplanning, procurement turn-around time, and timely replenishment of IDA funds.

(e) Training of financial and procurement management staff at all levels is criticalto the success and smooth operation of the project.

(f) Strengthening of the rural savings and credit institutions is essential forsustainability of providing credits to the farmers to buy the required inputs in time,resulting in increase in production and productivity.

(g) Setting up of appropriate procedures for submitting disbursement andreimbursement requests from Woredas to the Region and Region to the Central level wouldfacilitate timely submission of SOEs to IDA for obtaining replenishment of the SpecialAccount.

(h) Rural Technology Promotion Centers (RTPCs) established under the project arewell equipped and staffed. For their sustainable growth, contact with the farmers throughthe SCs alone is not enough. They should be encouraged to establish direct contact withthe farmers to promote their products.

(i) Cost recovery schemes should be an integral part of the FTSSs, and privatesector should be encouraged to provide similar services.

() The only solar pump established under the project is functioning well. Itgenerates electricity to provide water to about 400 households and their cattle from thegroundwell. The revenue generated from the nominal charges for usage of water by eachhousehold makes this activity self-sustainable. Such investments should be encouraged bythe Government for the direct and indirect benefits derived by the farmers.

(k) Policy reforms, such as liberalizing grain marketing and removing restrictionson inter-regional grain trade allowing farmers to sell their surplus grain on the open marketstimulated farmers to produce more. Such initiatives should be encouraged by the Bank.,

12

PART II: STATISTICAL ANNEXES

Table 1: Summary of Assessments

A. Achievement of Objectives Substantial Partial Negligible Notapplicable

Macro Policies 03 O O O

Sector Policies 0 0 O O

Financial Objectives O 0 1 O

Institutional Development 0 O Ol

Physical Objectives 0 0 Ol O

Poverty Reduction 0 0 0l 0

Gender Issues O 0 0 0Other Social Objectives 0 O 0Environmental Objectives O O 0 aPublic Sector Management E 0 O 0

Private Sector 0 E E EDevelopmentOther (specify) O l O O

B. Pr1ectSustainability Likely Unlikely Uncetain(1) '(1) (1)

C. Bank Performance Highly

satisfactory Satisfactoyr Deficiet

Identification O e E

Preparation Assistance 0 0 Ol

Appraisal E 03 O

Supervision O 0 El

13

HighlyD. Boffower Performance satisfactory Satisfactoyr Deficien

(1) (/) (V/)

Preparation O EO

Implementation O E

Covenant Compliance l O

Operation (if applicable) a 0 0

Highly HighlyE. Assessment of Outcome satisfuactoSatisfacory Unsatisfactorv unsatisfator

-~~~~ ~ ~~~~~~ (/ (/ (/ /

14

Table 2: Related Bank Loans/Credits

Year ofLoan/Credit Title Purpose Approval Status

Preceding Operations

1. Agricultural Minimum Increase crop production by 1973 CompletedPackage supplying modem inputs

2. Drought Rehabilitation Rehabilitation 1974

3. Revised Amibara Irrigation Develop irrigation for 1977increased food crop prod.

4. Grain Storage & Marketing Improve storage of food 1978crops and marketing

5. MPP II Increase crop production by 1981supply of modem inputs

6. Agricultural Research Support to Agric. Research 1985

7. Drought Recovery Program Rehabilitation 1985

8. Livestock IV Increase livestock develop- 1987 "ment by improving animalhealth & feed production.

9. Small-Scale Irrig. & Consv. Develop irrigation and 1987 "increase food production.

10. Emergency Recovery & Rehabilitation of post socia- 1992 "Reconstruction Program list economy including

agriculture

Following Operations

2. National Fertilizer Sector Increase crop production 1995 On goingDevelopment through fertilizer supply

3. National Seed Systems Increase crop production 1995Development through seed prod. & supply

4. Social Rehabilitation Fund Rural Infrastructure, incl. 1996 "small-scale irrigation

15

Table 3: Project Timetable

Date Actual /Steps in Project Cycle Date Planned Latest Estimate

Identification - Sept. 1982

Preparation January 1983 June 1983

Appraisal February 1985 May 1986Feb. 1988 (follow-up)June 1988 (completionof Appraisal)

Negotiations September 1988 September 1988

Board presentation October 1988 October 18, 1988

Signing November 1988 December 6, 1988

Effectiveness January 1989 April 14, 1989

Project completion June 30, 1995 June 30, 1997

Loan closing June 30, 1995 June 30, 1997

16

Table 4: Loan Disbursements: Cumulative, Estimated and Actual(US$ million)

Bank Fiscal FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98Year

Appraisal 0.0 29.30 19.00 20.00 9.00 4.00 3.7estimate

Cumulative 0.0 29.30 48.30 68.30 77.30 81.30 85.00

Actual (a) 2.76 21.82 21.45 29.01 5.45 1.46 0.22 0.10 0.18

Curnulative 2.76 24.58 46.03 75.04 80.49 81.95 82.17 82.27 82.45

Actual as 0 84 95 110 104 101 97 97 97% ofestimate

Date of final disbursement: (b)

(a) Credit was extended beyond the original closing date of June 30, 1995 by two years.(b) The above data is as of October 31, 1997. The final date of disbursement has been

extended to December 31, 1997.

17

Table 5: Key Indicators for Project Implementation

L Key ImplementationIndicators in SAR Estimated/Planned Actual

1. Institutional Strengthening

(i) Training

(a) Local Training Provide short and long term training 25 staff trained in M&E and 16 infor the staff of MOA. operating, printing, and editing.

(b) Overseas Training Provide short term overseas training 2 staff of MOA attended on M&Efor staff of MOA and AISE. workshop in Nairobi and 6 staff of

AISE on MIS and fertilizer.

(c) Agric. Extension Training Strengthen the capacity of the Six staff-months of TA was fnanced.extension section of the MOA at HQ.

(ii) Technical Assistance MOA to utilize 72 staff-months of 34 staff-months used by Proj. Coord.short and long term consultancies. M&E Dept.(PCMED) of MOA.

(iii) Publication of Extension Publish about 60 percent of the Procurement of the printing equip-Materials extension materials required by the ment completed and relevant training

MOA departments. and technical assistance provided.

2. North-Western Zone

(a) Agricultural Extension

(i) Each DA/Farm family ratio I to 1,300 1 to 900 - 1,000

(ii) DA residence/office Construct 419 residences and offices. 416 residences/offices constructed.

(iii) Local training (PD) Organize training totaling 28,794 13,095 PD was conducted.PD.

(iv) Workshops (No) Organize 1,188 workshops. 960 workshops organized.

(v) Technical assistance (MM) Appoint 36 man months of TA. 6 PM were used.

(vi) Field visits (PD) Organize 1,541,570 field visits. A total of 299,219 were organized.

(vii) Res./Extension Liaison Organize 8 RELC meetings. 8 meetings were held.Committee (RELC) Meetings (No)

18

Table 5: Continued

1. Key ImplementationIndicators in SAR Estimated Actual

(b) Rural Women in Development

(i) Micro Projects (Unit) Identify and implement 8 micro A total of 7 micro-projects identifiedprojects. and implemented.

(ii) Local training 69,095 PD of training in skills Provided 16,888 PD of training.development.

(iii) In-service training (No) Provide 2,108 in-service training . 457 in-service training provided.

(iv) Overseas training (No) N/S 2 were trained.

(v) Workshops (No) Organize 4,904 workshops. 892 workshops were organized.

(c) Field Trials and Crop Develop.

(i) Field trials (No) Conduct 1,139 field trials. 807 field trials were conducted.

(ii) Crop Development Construct 3 stores. 3 stores were constructed.

(d) Rural Technology Promotion Develop and promote small-scale 10 FTSSs were established and(RTP) agricultural implements and existing two RTP Centers were

machinery, establish 15 FTSSs. provided with equipment.

(e) Cooperative Development Provide training to Service Coop.(SC) A comprehensive national trainingmembers, i.e., Accountants/Auditors/ program was developed andand Book/Store Keepers, etc.. implemented by the MOA.

3. lmproved Input Supply

(a) Fertilizer (DAP & Urea) 242,000 MT of fertilizers to be 242,000 MT of fertilizers werefinanced by IDA over five years. procured and distributed.

(b) Hand Sprayers Import 5,000 hand sprayers including 3,250 hand sprayers were importedequipment and spare parts. and distributed.

4. Production Credit Funds provided under the proposed Br. 136 million was provided asIDA Credit for fertilizer purchases production credit.(Birr 143.5 million) would be on-lentfor production credit.

19

Table 5: Continued ____ __...-

1. Key ImplementationIndicators in SAR Estimated Actual

I1. Modified Indicators

Regional Agric. Bureau (RABW

1. Re-establishment of the Project Appoint a Project Coordinator, an Staff appointed, except monitoringImplementation Unit (PIU) accountant, a monitoring and specialist due to unavailability of

evaluation specialist, and a secretary. qualified local personnel.

2. Institutional strengthening

(a) local training (No.) Organize local training for 143 staff. 52 staff trained,

(b) overseas training (No.) Organize overseas training for 56 staff 37 staff trained.

(c) Technical assistance Provide 5 staffweeks of TA. Not implemented.

3. Agricultural Extension (No.)

(a) DA residence/office Construct 681 residences and offices. 751 residences & offices constructed

(b) overseas training SMSs Organize overseas training for 6 Not implemented.SMSs.

(c) On fann demonstration 2,206 on-farn demos conducted.Conduct 4,412 on-farm demos.

(d) Farmer field days(PD) 11,751 farmer field days conducted.Conduct 45,750 PD of field days

(e) Workshops(no) 874 workshops organized.Organize 709 workshops.

4. Rural Technology Promotion

(a) FTSSs (No) Establish 5 FTSSs. 5 FTSSs established.

(b) Biogas (Unit) Install 9 biogas plants. 5 biogas plants installed.

(c) Solar pumps (Unit) Install 2 solar pumps. I solar pump installed.

(d) Training (No) Conduct training for 7,340 farmers, A total of 2,259 farmers, DAs andDAs and Home Agents (HAs). HAs trained.

20

Table 5: ContinuedL Key Implementation

Indicators in SAR Estimated Actual

5. Cooperative Development Provide training to Service Coop.(SC) A comprehensive regional trainingmembers, i.e., Accountants/Auditors/ program was developed andand Book/Store Keepers, etc.. implemented by the RAB.

6. Field Trials and CropDevelopment

(a) Field trials (No) Conduct 116 field trails. 106 field trails conducted.

(b) Crop Development Nurseries Establish and operate 180 nurseries. 162 nurseries established.

(c) Farmer Field Days (PD) Organize 6,666 farmer field days. 3,131 farmer field days organized.

(d) Farmers training (PD) Provide 18,462 PD of training. 660 PD training was provided.

(e) Staff training (PD) Provide 3,642 PD of training. 330 PD staff training was provided.

7. Rural Women in DevelopmentIdentify and implement 259 micro- A total of 47 micro-projects

(a) Micro Projects (units) projects. identified and implemented.

(b) Local training (PD) 68,900 PD in skills development. 10,975 PD of training was provided.

(c) Workshops (no.) Organize 11 regional and zonal Not implemented.workshops to upgrade women's skill.

Table 6: Key Indicators for Project Operation

No specific key indicators for project operation were provided in the SAR.

21

Table 7: Studies

Purpose as Defined atStudy Appraisal/Redefined Status Impact of Study

1. Grain Marketing Review of agricultural Completed in Increase in farmgateand Pricing Issues prices and evaluate 1988 with PPF prices and removal of

implementation of grain funds. restrictions on inter-marketing and price regional grain tradereforms allowing farmers and

traders to sell theirsurplus grain in the openmarket.

2.. Electronic Data Review financial and Completed with Due to the period of civilProcessing (EDP) accounting procedures PPF funds. strife and laterSystems and Management restructuring and

Information System and regionalization activities,redesign/establish EDP impact is unknownsystem

3. Printing and Review MOA's capacity Completed in Printing equipmentEditorial Services to print and edit agricul- March 1990. procured and is being(EDP) tural extension and other installed. Provided

material training to 16 local staff.

4. Bure-Silala Soil Prepare outline of Service Coop. Nurseries for multi-Conservation and physical investment and Area Develop- purpose seedlings andWatershed land utilization and ment Plan and improved grasses wereManagement evaluate impact on crop/ proposal established, and physical

livestock production and prepared by NW and vegetative conserva-family incomes Zonal staff. tion measures were

implemented.

22

Table 7: Studies (continued)

Purpose as Defined atStudy Appraisal/Redefined Status Impact of Study

5. Fertilizer Sub- Review feasibility of Completed in National FertilizerSector Study. differential fertilizer 1992. Industry Agency (NFIA)

pricing, price stabiliza- was established whichtion, procurement, currently assessesstorage, distribution, fertilizer demand for thetransportation and use of country and establishestechnologies for efficient regulations.use of fertilizer.

6. Rural Technology Review potential for Various studies Improved technologicalPromotion and improving productivity and reviews packages were identified,Adaptive Research of land, labor and oxen were conducted tested by IAR and

by use of improved farm by IAR. utilized by farmers.implements. Alsoreview availablescientific and trialevidences/ activities ofAIR.

23

Table 8A: Project Costs

Appraisal Estimate Actual/Latest Estimate(US$M) (US$M)(a)

Local' Foreign Local ForeignItem Costs Costs Total Costs Costs Total

Management of Sectoral 4.6 3.5 8.2 1.1 2.9 4.0Services

Technical Improvements 1.4 2.9 4.3 0.3 1.5 1.8

Delivery of Services in the 9.0 3.2 12.2 2.6 5.3 7.9Northwestern Zone

Improved Supply of Inputs 18.7 74.7 93.4 1.3 72.7 74.0

Price Studies and Policy 0.3 0.3 0.6 0.03 0.05 0.08Institute

Total 34.0 84.6 118.6 5.4 82.4 87.8

Note: (a) Actual as at October 31, 1997.

24

Table 8B: Project Financing

Appraisal Estimate Actual/Latest Estimate(US$M) (US$M)(a)

Local Foreign Local ForeignSource Costs Costs Total Costs Costs Total

IDA 0.4 84.6 85.0 0.0 82.4 82.4 (c)

Government 33.6 0.0 33.6 5.4 0.0 5.4 (b)

Total 34.0 84.6 118.6 5.4 82.4 87.8

Note: (a) Actual as at October 31, 1997.(b) Actual local funding of Birr 25.5 million is converted to US$ 5.4 million at the

annual average exchange rates of the respective years: 1989/92 - B 2.07, 1993 -B 4.09, 1994 B 5.10, 1995 - B 6.25, 1996 - Birr 6.32, and 1997 - B 6.51.

(c) Because of the exchange rate appreciation of SDR to the dollar, the appraisalequivalent estimate of IDA contribution was $89.9 million.

25Table 9: Economic Costs and Benefit(In US$ '000 Constant 1997 Prices)

Investment O&M Benefits Net Benefits

Year Fertilizer 1) Other Total 3) Total Total

Within Outside Total 2) Within All Within Outside All Within All

1989 14,215 1,846 16,062 470 14,686 16,532 0 28,462 9,962 38,423 13,776 21,891

1990 7,269 1,846 9,115 7,555 14,824 16,670 0 24,192 8,538 32,731 9,368 16.060

1991 23,423 1,846 25,269 273 23,696 25,542 0 24,192 8,538 32,731 496 7,189

1992 23,585 3,692 27,277 3,642 27,227 30,919 0 38,423 14,231 52,654 11,196 21,735

1993 0 0 0 2,825 2,825 2,825 0 38,423 14,231 52,654 35,598 49,829

1994 0 0 0 886 886 886 0 51,231 18,500 69,731 50,345 68,845

1995 0 0 0 638 638 638 0 45,538 17,077 62,615 44,901 61,978

1996 0 0 0 1,132 1,132 1,132 0 0 0 0 (1,132) -1,132

1997 0 0 0 1,002 1,002 1,002 0 0 0 0 (1,002) -1,002

Economic Rate of Return:- Within Project Area not

relevant- All not

relevant

Net Present Value:- Within Project Area (12%) 92,000 US$ '000

- All (12%) 137,000 US$ '000

Benefit Cost Ratio:-Within Project Area (12%) 2.48

-All (12%) 3.05

Note: 1) based on quantities imported as provided by AISE2) based on disbursements by IDA and GOE, excluding values attributed to fertilizer mentioned under 1)3) included under investment and discontinued after project closed.

26

Table 10: Status of Legal Covenants

Original RevisedAgree- Covenant Present Fulflllment Fulf0llmentment Section Type Status Date Date Description of Covenant Comments

Credit 302 (a) I C Without any limitation or restriction upon any AISCO and AIDB complied with1956 of its other obligations, the Borrower shall the agreement and successfully

cause AIDB and AISCO to perform in accor- completed their role on June 30,dance with the provisions of project agree- 1995.ment and shall take, or cause to be taken, allactions, including provision of funds, faci-lities, services and other resources necessaryor appropriate to enable AIDB and AISCOperform such obligations, and shall not takeor permit to be taken any action which wouldprevent or interfere with such performance.

3.06 3 C The Borrower shall take all measures neces- Requirement met out of fundingsary to ensure availability of sufficient funds from other donors to theto meet the foreign exchange requirements to Government.cover the cost of the availability of fertilizerwhich would not be financed out of theproceeds of the credit.

3.07 5 C Borrower shall, no later than December 31, Complied with.establish a Technical Assistance CoordinationCommittee under terms and conditions satis-factory to the Association, with Head of thePCMU as chairman. Other members shallinclude representatives from MOA, AISCOand other departments selected in consultationwith the Association.

27

Table 10: Continued

Original RevisedAgree- Covenant Present Fulfillment Fulfillmentment Section Type Status Date Date Description of Covenant Comments

4.01 1 CD Borrower to have its records, accounts and Complied with after delay. The(b) financial statements for each fiscal year last audit report to be submitted

audited by independent auditor acceptable to is not yet due.the Association and furnish to theAssociation as soon as available, but not laterthan six months after end of fiscal year.

4.01 1 C - - Ensure that Special Accounts are included in Complied with.(c) the annual audit referred to in (b) of this

section and that the report of such auditcontains a separate opinion by the auditors asto whether the statements of expendituresubmitted during the fiscal year together withprocedures and internal controls can be reliedupon to support the related withdrawals.

Sch. 5- 5 C Borrower to maintain during the project a Complied with.A (I) PCC with TOR and membership satisfactory

to the Association.

Sch. 5- 5 C Each department/agency involved in the Complied with.A (2) project to prepare work plan and furnish

consolidated action plan to Association byJune 30th.

28

Table 10: Continued

Original RevisedAgree- Covenan Present Fulfillment Fulfillmentment Section t Status Date Date Description of Covenant Comments

Type

Sch. 5- 5 CP Borrower and IDA exchange views based on Rural technology complied with.\ A (6) & study of rural technology, and Bure-Silala Bure-Silala not relevant as it(7) conservation and watershed mgmt and started to be implemented with

prepare action plans irrigation component of ESRDFproject.

Sch. 5- 5 C During first two years of implementation, Complied with.A (8) Borrower to carry out semi-annual implemen-

tation review; in successive years only annualimplementation review whereby Borrowershall cause AISCO and AIDB to prepare briefreports on their contribution to the project.PCC shall not later than one month beforecompleting such review contact the Associa-tion for comments on the consolidated report.

Sch. 5- 5 CP Borrower shall cause the National Research Complied with partially.B Liaison Committee to review existing

available information on fertilizer trials; causethe Zonal Extension Liaison Committee tocarry out a study to determine the level ofexisting technology available for main cropsin the North Western Zone.

29

Table 10: Continued

Original RevisedAgree- Covenan Present Fulfillment Fulfillmentment Section t Status Date Date Description of Covenant Comments

Type

Sch. 5- 5 C Borrower to implement Support Services Complied with.C Component with particular emphasis on ex-

tension and auditing of service cooperatives.

Sch. 5- 5 C Borrower to review AISCO's performance in Complied with.D the timely supply of fertilizer.

Sch. 5- 2 NC Price policy analysis of the Agriculture Not relevant anymore due toE Marketing Corporation (AMC) Government's price and market

policy reforms.

AISCO I CP AISCO have its records, accounts and Special Account closed to the4.01 (a) financial statements for each fiscal year satisfaction of IDA. All audit

audited by independent auditor acceptable to reports submitted except the lastthe Association and furnish to the one for the year 94/95 which is toAssociation as soon as available, but not later be submitted shortly.than six months after end of fiscal year.

Covenant types: Present Status;1. = Accounts/audits 8. = Indigenous people C = covenant complied with2. = Finan. performance/revenue generation from beneficiaries 9. = Monitoring, review, and reporting CP = complied with partially3. = Flow and utilization of project funds 10. = Project implementation not covered by categories 1-9 CD = complied with after delay4. = Counterpart funding 11. = Sectoral or cross-sectoral budgetary or other resource allocation NC = not complied with5. = Management aspects of the project or executing agency 12. = Sectoral or cross-sectoral policy/regulatory/institutional action6. = Environmental covenants 13. = Other7. = Involuntary resettlement

30

Table 11: Compliance with Operational Manual Statements

The Project complied with all applicable Bank Operational Manual Statements.

Table 12: Bank Resources: Staff Inputs

Stage of ActualProject Cycle Staffweeks US$(000)

Preparation to appraisal 289.8 596.3

Appraisal 186.9 348.9

Negotiations through Board approval 10.3 25.6

Supervision 192.5 506.9

Completion 4.2 15.4

Total 683.7 1493.1

31

Table 13: Bank Resources: MissionsETH: PADEP 1

Number Days Specialized Performance RatingStage of Month/ of in Staff Skills Implem- Develop-Project Cycle Year Persons Field Represented entation ment Types of

Status Objectives ProblemsThrough Appraisal 09/82 - 02/88 41 286 ab,c,d l

Appraisal through 04/88 - 05/88 9 30 a.b.c.d l

Board Approval l

Board through 11/88 2 26 ac l

effectivenessSupervision 1 10-11/89 8 25 ab,c,d,e I 1 Grain pricing and marketing

reformsSupervision 2 06-07/90 5 21 b.c.d,f 2 2 Admin. & lack of local funds.Supervision 3 01/92 3 12 c 2 2 Restart project activities after

the end of civil strife.Supervision 4 02-03/92 1 16 a - - Fertilizer proc. & disbursmnt.Supervision 5 03/94 2 4 c,e U U Poor performance of all

I____ _____ ____ _____ __________ ____ components except inputs.Supervision 6 04/95 5 27 b,c,d,g U U Inadequate regionally focused

activities.Supervision 7 06/95 1 3 c Special Accounts, IDA funds.Supervision 8 12/95 2 16 c,e S S PIU & recruitmnent M&E Splst.Supervision 9 04/96 4 15 b.c,e S S Extension of closing date.Supervision 10 10/96 2 14 c S S Procurement, PIU, financial.Supervision 9 05/97 1 4 c Procurement., Borrower's ICR.Completion 10/97 4 17 c,e _ = Evaluation for ICR preparation.

Key to Staff Skill

a = Agriculturist/Agronomist e = Operations/Res. Analystb = Financial Analyst f = Soil & Consv. Spslt.c = Economist g = Women in Developmentd = Extension Specialist.

Performance Rating: I = Highly Satisfactory 2 & S = Satisfactory 3 & U = Unsatisfactory

Appendix AETHIOPIA

PEASANT AGRICULTURAL DEVELOPMENT PROJECT 1(Credit 1956-ET)

IMPLEMENTATION COMPLETION REPORT

AIDE MEMOTIRE

1. A World Bank mission was conducted from October 6 to 23, 1997 for the preparationof the Implementation Completion Report (ICR) for the Peasant Agricultural DevelopmentProject 1 (PADEP 1). The Mission was led by Ms. Bhagwanti Khushalani (AgrcultureOperations, AFTA2) and comprised of Messrs. Lorenzo Marchesini (Ex-Task Manager,PADEP I), Berhane Manna (Operations Officer, AFMET), and Yoseph Woldemichael(Consultant). Assistance was provided to the mission by Ato Gebremedhin Belay, Head ofthe Planning and Programning Department of the Ministry of Agriculture (MOAtPPD) andhis staff comprising of Messrs. Sirak Alemu (Head, PF&E Division), Zena Estifanos (SoilStudies Expert) who also accompanied the mission for the field visits, Tesfaye Tilahun(Agricultural Economist) and Mulu HIMarian from the Finance Department. The missionhad discussions with the staff of Agricultural Input Supply Enterprise (AISE, previouslyknown as AISCO), National Development Bank of Ethiopia (DBE, previously known asAIDB), as well as with Dr. Belay Demissie, Head of Amhara National Regional AgricultureBureau (ANRAB: Region 3) and his staff in Bahir Dar. In addition to visits to some of theproject sites, the mission had discussions with a number of clients and project beneficiariesto elicit their views about the implementation of the project. A wrap-up meeting held inAddis Ababa on October 22, 1997, chaired by Ato Gebermedhin Belay, Head, MOA/PPD,and attended by the staff of MOA, MEDAC and Region 3 (see Annex 1), discussed theobservations of the mission. Their comments have been incorporated, as appropriate, in thisaide-memoire. The mission is grateful for the cooperation, courtesies and assistanceextended to it by the management and staff of the MOA/PPD, AISE and the Region and alsofor providing their draft Implementation Completion Reports.

2. This aide-memoire, which is subject to subsequent review and confirmation by theBank management, summarizes the mission's findings and conclusions, the agreementsreached with the Borrower and the follow-up actions required under the ICR process. It alsoassesses the objectives of the project and their achievements, identifies major factors thataffected project implementation, reviews the performance of the Bank and the Borrower, thesustainability of the Project and finally summarizes the key lessons learned.

Project Background

3. The origin of PADEP dates back to 1982 when IDA and the Govemment of Ethiopia(GOE) entered into a long and intensive policy dialogue in order to take actions and policymeasures to enable the peasant sector to achieve major increases in production andproductivity. This dialogue was supported by a number of studies financed under the thenongoing projects (MPP I & MPP II). Following an in-depth internal study of the grainmarketing and pricing issues, the Government announced, effective January 1, 1988, policv

2

changes which removed restriction on inter-regional grain trade and allowed farmers andtraders to sell their surplus grain either to merchants or on the open market after fulfillingtheir quotas. Under this scenario, PADEP 1 was appraised and approved in October 1988and became effective on April 14, 1989. The Project duration was initially for a period ofseven years, however it was later extended for two more years. The Project closed on June30, 1997. The proposed project executing agencies were MOA, AISE and DBE. After thedecentralization of the administrative structure in 1993, the implementation of the projectwas transferred to the Regional Agricultural Bureau of the Amhara National Regional State(ANRS) in March 1993. The project cost was estimated at US$118.6 million, with the IDAcredit amounting to US$85.0 million (SDR 66.0 million). The balance (equivalent to US$33.6 million) was to be provided by the Government. The project funds were reallocatedtwice, once following the civil strife after the period 1990-91, and the second time in 1995when the project was extended for a period of two years from July 1, 1995 to June 30, 1997.The project area covered the North-Western Agricultural Zone encompassing Gojam andGonder regions totaling to about 40 Woredas in five years. As a result of the re-organizationof the administrative structure in 1992, thirty-nine of the project Woredas fell within the fiveadministrative zones (North and South Gonder, East and West Gojam and Awi) in Region 3now part of the Amhara National Regional State (ANRS). Due to the redefining of theWoreda boundaries again in 1995, the number of Woredas were increased to fifty-two.

Project Objectives and Components

4. The primary objective of the Project was to increase the foodgrain production,productivity, and income of the peasant sector. The strategy for achieving these goals wasto: (a) improve efficiency in the management and delivery of agricultural services; (b)improve the technology available to farmers; (c) support further improvements in theincentive framework for producers while minimizing any adverse impacts on consumers.

5. The Project included the following components:

(a) Strengthening of the MOA's management of sectoral services:(i) project coordination, monitoring and evaluation,(ii) financial control,(iii) production of extension materials, and(iv) extension and cooperative development;

(b) Expansion of the sectoral capacity to test technological improvement:(i) national field trials, and(ii) rral technology promotion;

(c) Support for the delivery of services in the Northwestern Zone:(i) extension services,(ii) cooperative development, and(iii) soil conservation and watershed management;

3

(d) Improved input supply:(i) increased farm inputs,(ii) improved delivery by AISCO (now AISE), and

(iii) better credit support from the AIDB (now DBE); and

(e) Support for continuous pricing policy analysis and grain reserve management.

Above seventy percent of project financing was allocated to the purchase of fertilizer and therest to strengthening agricultural support services.

6. After the civil strife was over in 1990-91, the project activities were revised in the lastquarter of 1992 to give emphasis to economic recovery, reconstruction and re-orientationtowards a market-oriented system. These included:

(i) strengthening field support for the distribution and application of fertilizerwhich was critical to a rapid recovery in agricultural production;

(ii) short-term training in various areas related to supporting implementation of thenew economic policy area; and

(iii) financing of small scale irrigation and water conservation under the BureWatershed Pilot.

7. These changes were still within the overall project objective of increasingagricultural production and productivity. In order to provide resources to support thesechanges, some of the project activities were eliminated either because they were no longerrelevant to the changed project environment or their relative importance had declined. Theseactivities included:

(i) construction of six fertilizer stores for the AISE;(ii) support to Price Studies & Policy Institute (PSPI) which had become obsolete

due to liberalization of trade in foodgrains and agricultural produce; and(iii) technical assistance for project coordination and agricultural information

systems.

8. The Project components were revised in 1995 when the project was extended for twoyears from July 1995 to June 1997. The proposed changes were consistent with theGovernment's policy on regionalization and decentralization and contained a large numberof activities with particular emphasis on:

(i) capacity building of the Regional Agricultural Bureau (RAB) administration,both in terms of human resource development and institutional strengthening;

(ii) strengthening of the regional research and improvement of the research/extension linkage; and

(iii) grassroots activities in the areas of women in development, field trials and cropdevelopment, rural technology promotion, extension and the development ofthe cooperative sector.

4

Achievement of Project Objectives

9. In order to get a clearer picture of achievements of project objectives, the total projectperiod of nine years has been divided into two, one before the extension of the project(period 1) and the other after the extension (period 2). The achievements during these twoperiods have been summarized in Annexes 2 and 3 respectively. Period 1 comprising ofseven years was marred by the civil strife during 1990-1991. During these years the projectactivities were limited to procurement of fertilizer, vehicles, and office equipment. Thedelivery of services in the Northwestern Zone stalled and development objectives at thegrassroots level could not be met. Further, project implementation suffered during 1993-94following the restructuring, down-sizing of the MOA and regionalization process in thecountry resulting in staff turnover and lack of qualified staff at the regional/zonal levelsunder the new administrative structure. In spite of these constraints, the achievements (seeAnnex 2), were more than 50 percent of the target, and in some instances even 100 percent.The Agricultural Extension, Rural Technology Promotion, Field Trials, CooperativeDevelopment and Agricultural Input Supplies performed quite well. ASIE, whose rolefinished in 1995, achieved 100 percent of the target for supply of fertilizer and 65 percent ofthe target for delivery of farm equipment.

10. Period 2, which is the extension period of the project for two years, was marked withups and downs mainly because of the lack of institutional capacity at the regional level.However, it is encouraging to note that the project achieved most of its targets in asatisfactory manner (see Annex 3). Some of the achievements even exceeded the targets, asin the case of building of residences and offices for the Development Agents, and the numberof workshops held under extension training. If we consider the performance in Period 2 inabsolute numbers, the project performed even better than Period 1. The Rural TechnologyPromotion which included establishment of Farmer Technical Service Stations (FTSSs),Field Trials and Crop Development components performed exceptionally well. Thecomponents which performed poorly were farmers and fieldstaff training, and Rural Womenin Development. The latter could be attributed to shortage of qualified staff andrestructuring. The achievement of microprojects during this period was only 11 percent andthe local training was only 20 percent. None of the targeted workshops were held. Theiractivities were merged with the Agricultural Extension Department in 1997.

Factors Affecting Project Performance

11. Some of the positive factors of project implementation include:

(i) Sufficient fertilizer was imported and made available to the farmers at a timewhen Ethiopia was in financial difficulties during 1989-91 due to sharp decline of foreignexchange reserves and overall budget deficit. This was done by providing financialresources to AISE and strengthening its capacity for setting up a cost effective and timelyinput supply and distribution system. This contributed to the country's production,especially the grain supply and farners' income; and

5

(ii) Institutional strengthening within MOA and at Regional level have put inplace a framework which will help in sustaining project activities.

12. The major factors that adversely affected the Project during the two Periods were:

(i) Security situation related to the civil strife during 1990-91 and restructuring ofMOA which led to the suspension of all grassroot project activities, except procurementof fertilizer, vehicles, office equipment;

(ii) Decentralization and regionalization process in the country which hamperedfield activities during the 1993-94 transition period;

(iii) Disruption in the project activities due to the.preoccupation of the newlyestablished Region 3 with matters relating to restructuring and re-organization during1994-95; and

(iv) Apart from the external constraints, some of the internal factors affecting theproject implementation were:

(a) insufficient counterpart funding amounting to US$5.4 million, which is about16 percent of the amount (US$33.6 million) committed at appraisal;

(b) delays in procurement due to Region not being too familiar with theprocedures, especially for local shopping. This was also due to some internal regionalgovernment procedures, e.g., requirement of three bidders, getting approval for purchasesof more than Birr 50,000, which should not have been the case (Period 2);

(c) lack of training at the lower level personnel who actually perform the work,especially in the areas of procurement and finance;

(d) delay in replenishment of IDA funds due to delayed submission of the SOEs,many of which are still pending, resulting in an outstanding amount of more than Birr 3million;

(e) delay in release of matching funds during the first quarter of the year,particularly for recurrent expenditures, from the Government due to the regulation that ifthe money allocated could not be used during the year, it will have to be re-deposited inthe government account and re-requested in the next year. This contributed to delay inmany of the project activities (Period 1);

(f) high turn-over of the staff resulting in losing some of the well-trainedpersonnel both at the MOA and regional levels;

(g) lack of qualified and skilled project staff available locally; one of the reasonscould be unattractive salaries and benefits;

6

(h) dissolution of the Project Coordination Office and non-appointment of a full-time PIU Coordinator after it was re-established during the extension period; and

(i) weak research and extension linkages (Period 1).

Project Outcome and Sustainability

13. Considering the achievements summarized in Annexes 2 and 3, the overalloutcome of the project is satisfactory. The objectives of increasing the foodgrainproduction, productivity and income of the peasant sector have been achieved due toadequate and timely supply of improved agricultural inputs (fertilizer, pesticides andsprayers), in addition to other factors. The farmers are now knowledgeable andexperienced in the use of fertilizers. Availability of credit on easy terms to the farmersthrough DBE and CBE is another factor contributing to the achievement of theseobjectives and the sustainability of the project. In spite of the problems of security during1990-91, and the time spent in adjusting to the restructuring of the MOA, decentralizationand regionalization of the government, the project achieved its target in most of theimportant components.

14. The framework set up by strengthening the institutional support at MOA, RAB,AISE and NDB has built in considerable capacity to carry on the activities started by theproject. Further, the commitment of the Government in continued supply of adequatefunds is another major factor for the sustainability of the project. This is also evidentfrom the operational plans for the next three years (Annexes 4 & 5) incorporating most ofthe project activities into their normal program. Construction of houses and offices forthe Development Agents (DAs) will establish them in closer contact with the farmers.

Bank and Borrower Performance

15. Bank performance at appraisal and during implementation has been ratedsatisfactory. Supervision was fairly regular, except during the periods of unrest andrestructuring. The Bank promptly treated withdrawal applications and replenished theSpecial Accounts. Concem was expressed at delays in disbursements and replenish-ment. This was, however, not due to any slackness on the part of IDA but due to delaysin preparation and submission of the Statements of Accounts (SOEs) by the Borrower.The Bank granted extension of the project beyond the closing date of June 30, 1995,initially for a period of one year, and upon satisfactory performance for the second year,to enable the implementation of the outstanding programs.

16. Borrower performance was generally satisfactory. Counterpart funding was shortof requirements and there were delays in releasing the allocated funds. Statements ofAccounts (SOEs) were not submitted in time resulting in late replenishment of IDAfunds. This was mainly due to the fact that the Region did not submit their accounts intime and many of the outstanding balances were not cleared. There is an amount ofapproximately Birr 3 million advanced to the Region by MOA/FD for which accountshave not yet been submitted by the Region. This is because the Region does not have

7

sufficient qualified staff to handle these accounts, resulting in incomplete records. Theonly records kept by the RAB are control accounts for advances received from MOA andreleased to the Zones. It was also noticed by the ICR mission that there are no time limitsimposed by the Region for the Zones and Woredas to submit their accounts, hence theseare not received on time by the Region to be passed on to the MOA. On several occasionsthe accountant of the PIU was compelled to offer assistance to the MOA/FD for aprolonged period of time which in turn jeopardized the accountant's work at the dutystation. No agreement has yet been reached on an unaccounted balance of approximatelyBirr 800,000 relating to the advances made from the Special Account A by the Borrowerto the Project prior to the devolution of powers to the Region. The mission pointed outthat since the project closed on June 30, 1997, and that IDA allows an additional fourmonths to settle any outstanding balance for the expenses incurred before the closing dateof the project, which incidentally is October 31, 1997, the project has very little time tosend their requests, after which the IDA accounts will be closed and any outstandingbalance will be canceled. The Borrower requested that the period for settlement ofoutstanding expenses be extended by about two months. To this effect, the missioninformed the Borrower that an official letter be sent before October 31, 1997 to enablethem to discuss the matter with the IDA management.

17. The Special Account B of AISE was closed to the complete satisfaction of IDAand, as stipulated in the Development Credit Agreement, they have successfullycompleted their operation with IDA on June 30, 1995. However, AISE's last audit reportfor the year 1994/95 which was to be submitted by June 30, 1996, has not yet beenreceived by IDA, even though AISE has promised, on several occasions, to be sending itsoon. The mission requested and the Borrower agreed to submit this report by December15, 1997.

18. The Project has been regular in submitting its audit reports and has followed upon the legal covenants satisfactorily.

Future Operations

19. The operational plans for the period of next three years from 1997 to 1999 areattached to this aide-memoire (Annex 4 & 5). They reflect a commitment to complete theoutstanding tasks and continuation of the project activities after the closing of the project.These activities include Agricultural Extension, Field Trials, Crop Development,Cooperative Development, Institutional Strengthening, and Promotion of RuralTechnology.

Key Lessons Learned and Recommendations

20. The key lessons leamed include:

(a) Although decentralization promotes project ownership and effectivemanagement, capacity building should precede the control of management and transfer ofproject activities, which was not perceived.

8

(b) The peasant sector in the project area has benefited from the policy reformsand liberalization of market economy which removed the impediments such as grainquotas and allowed farmers to sell their surplus grain in the open market.

(c) Credit availability to the farmers through financial institutions enables them tobuy the required inputs in time for the cropping seasons, resulting in increase inproduction and productivity.

(d) The extension of the project in two installments created some difficulties inthe implementation of project, such as advance planning of project activities, procure-ment, recovery and replenishment of IDA funds resulting in shortage of resources.

(e) The need to provide training to financial and procurement management staff atall levels is critical to the success and smooth operation of the Project.

(f) Setting up of time limits for submission of expenditure documents by theZonal and Woreda offices to the Region should instituted so that these documents couldbe submitted on time to the central finance department. This would facilitate the FinanceDepartment to submit the SOEs to IDA for obtaining replenishment of the SpecialAccount on time.

(g) Rural Technology Centers established under the project are well equipped andstaffed. However, they could not produce more since the Service Cooperatives were notable to promote their products sufficiently. Thus establishing direct contact by the RuralTechnology Centers with the farmers themselves would promote their products whichwill be essential in providing sustainability to these Centers.

(h) The only solar pump established under the project is functioning well. Itgenerates electricity to provide water to about 400 households and their cattle from thegroundwell. The revenue generated from the nominal charges for usage of water by eachhousehold makes this activity self-sustainable. However, this pump is operated only forabout two hours in a day. More usage of this energy should be made for other purposesin the area and the solar pumps should be well-fenced and guarded so that onlyauthorized personnel could get access to it for its maintenance and operation. Suchinvestments should be encouraged by the Government for the direct and indirect benefitsderived by the farmers.

(i) Monitoring of projects and assigning a full-time project coordinator areessential for effective implementation of the project.

9

Next Actions

21. The following are the proposals for the delivery of the ICR:

October 30, 1997 Receive Borrower's Final ICROctober 30, 1997 Send aide-memoire to the BorrowerNovember 30, 1997 Send final draft ICR to the BorrowerDecember 15, 1997 Receive Borrower's commentsDecember 30, 1997 Send final ICR to the Borrower

Annexes:

Annex 1: List of Participants in the Wrap-up MeetingAnnex 2: Achievement for the period 1989-1995Annex 3: Achievement for the period 1995-1997Annex 4: Operational Plan for the period 1997-99 for the Region.Annex 5: Operational Plan for the period 1997-99 for the MOA.

Addis AbabaOctober 23, 1997

Annex 1: List of Participants at the Wrp-up Meeting of the ProjectImplementation Completion Mission on October 22, 1997

Name Institution Position

1. Mr. Ghebremedhin Belay Planning and Programming Head of the DepartmentDepartment (PPD), Ministry ofAgriculture (MOA)

2. Mr. Sirak Alemu PPD/MOA Head, Project Financing andEvaluation Division

3. Mr. Zena Estifano PPD/MOA Soil Studies Expert

4. Mr. Habtamu Segahu Regional Bureau of Agnrculture, Coordinator, ProjectAmhara Northern Region State Implementation Unit (PIU)

S. Mr. Getachew Bekure Ministry of Economic Develop- Teamn Leaderment and Cooperation (MEDAC)

6. Mr. Kifle Asfaw MEDAC Expert

7. Ms. Bhagwanti Khushalani AFTA2- The World Bank Mission Leader

8. Mr. Berhane Manna AFMET- Resident Mission Mission Member

9. Mr. Yoseph Woldemichael Consultant Mission Member

Annex 2: Achievements of the Peasant Agricultural Development Project I (1989/90 - 1994/95)

Acheivement

Item Target* Quantity Percent Remarks

Institutional StrengtheninggTraining (No.)-Local NS 25 - Targets not available or-Overseas NS 15 - not specified.Technical Assistance 72 34 47

Agricultural Extension- Residences/Offices for Das (No.) 419 416 99- Local Training (PD) 28,794 13,095 46 (SMSs and DAs)- Field Visits (PD) 1,541,570 299,219 19 Low performance due to- Workshops (No.) 1188 960 81 civil strife during 1990-- Technical Assistance (mm) 36 6 16 1991 and restructuring in

- Res. Ext.Link.Com.(RELC) meeting (No.) 8 8 100 1992-93.

Rural Women in Development- Micro Projects (No.) 8 7 88- Training

- Local (PD) 69,095 16,888 24 Low performance due to- In-Service Tmg. (No.) 2,108 457 22 civil war during 1990-91- Overseas (No.) NS 2 - and restructuring in

- Workshops (PD) 4,904 892 18 1992-93.

Rural Technology Promotion (No.)- Farmer Trng.Serv.Sta.(FTSSs) 15 10 67- Const.of Rural Tech. Prom. Cent.(RTPC) 2 2 100- RTPC Equipment 2 2 100

Field Trials & Crop Dev. (No.)-Field Trials 1,139 807 71- Crop Development (Store Construc.) 3 3 ioo

Cooperative Development- Training

-Accountants (No.) 40 25 62-Auditors (PD) 3,880 4,658 120

- Techical Assistance NS 6 -

-Accountants (PD) 3,220 2,160 67-Book/Store Keepers 67,256 14,887 22-SC Members (PD) 7,637 24,257 51-SC Auditing (No.) 2,067 559 27

Agric. Input Supply (AISCO)- Fertilizer - DAP & Urea (MT) 242,000 242,000 100- Sprayers (No.) 5,000 3,250 65-Training (Overseas) NS 6 -

- Credit to Farners (AIDB) (Mil.NYr.) 35 49 140

Funding (USSm)- IDA 85.0 82.4- Government 33.6 5.4Total 118.6 87.8

* Annex 3: Achievements of the Peasant Agricultural Development Project 1 (1995/96 - 1996/97)

Acheivement

Item Target* Quantity Percent Remarks

Institutional Strengtheningg- Technical Assistance (TA) 5 0 0 Unavailability of qualified- Training (No.) local consultants.

-Local 143 52 36 No TA for training recruited-Overseas 59 37 63 11 Adet, 2 Sirinka, I Sheno.

- Adet Research Center Provided 2 tractors, I thre-sher, I pickup and Lab.Eqp.

Agricultural Extension- Residences/Offices for DAs (No.) 681 751 110 High emphasis by Govt.- On-Farm Demonstrations (No.) 4,412 2,206 50- Training (PD)

- Overseas (No.) 6 0 0- Local/Farmer Fielddays (PD) 45,750 11,751 26- Workshops (No.) 709 874 123

-Crediti to Farrners (DBE&CBE) (Mil.Yr) NS .87 -

Rural Women in Development 259 47 18 Restructuring and merging- Micro Projects (No.) 68,900 10,975 16 of activities with extension.- Local Training(PD) 11 0 0- Workshops (No.)

Rural Technology Promotion 5 5 100- Farmer Tech.Serv.Sta.(FTSSs) (No.)- Pilot Projects (No.) 9 5 56

- Biogas 2 1 50-Solar Pumps

- Training (PD) 6,490 1,899 29-Farmers 850 360 42- DAs & Home Agents

Field Trials & Crop Dev. 116 110 95- Field Trials (No.) 180 162 90- Crop Development (No.)- Training (PD) 6,666 3,430 51

- Fanner fielddays . 18,464 660 4- Farmers Training 3,640 330 9- Fieldstaff Training

Cooperative Development Transfer of Coop.Dev.Dept.- Local Technical Assistance (No.) 950 514 54 from RAB to newly establi-

-Accounting 1150 221 19 shed institute within the-Auditing region.

- Training (PD) 30,300 8,956 30-Coop. Executives 22,840 3,117 14-Coop. Book/Shop/Storekeepers 2,116 1,072 51-Coop. Organizers 4,958 752 15- Coop. Auditors/Account/Mark.Cred.

Funding (USSm)- IDA 85.0 82.4- Government 33.6 5.4Total 118.6 87.8

Operational Plan for the Continuation of some of the prominant activities ofPADEP I Projection ( 997/98- 1999/2000) RAB)

1997198 1998199 1999/2000 Total

3 Activity Unit Physical Budget ETB Physical Budgel ETB Physical Budget ETB Physical Budget ETBplan Plan Plan Plan

1. Agricultural Extension* DAS Ofrices* DAS Residences No. 256 2155100 338 287J4I00() 450 3846800 1044 8876000* Mule Procurement No. 256 3114800 369 4342400 494 5858400 1228 13315600* Workshops No. 217 278200 345 440700 470 604100 1032 1323000

_No. 1216 8062080 1216 8062080 1216 8062080 3648 241862402. Field trials & Crop Devt* Houticultuic trial* ljrigation trial No. 17 1360000 19 152000 19 152000 55 440000* Hosticulture Nurserv No. 14 140000 15 150000 15 150000 44 440000* Roat crop Nursczy No. 26 200000 27 270000 27 270000 80 614000

Ro0t a., Nas No. 19 114000 20 120000 20 120000 59 354000* .5 ha. trial No. 21 63000 21 63000( 21 63000 63 189000

* 2.5 he. rce ftial No. 4 32000 4 32000 4 32000 12 96000* cofee Nursay No. 8 80000 8 80000 8 80000 24 240000* Coton trial No. 1 4000 1 4000 1 4000 3 12000

3. Cooperative DeMt.* Coop. accounting* Coop. auditing MD 1105 22100 1658 33000 1105 22100 3868 77200* TrM1) ; 1512 37800 2268 56000 1512 37800 5292 131600

* Coop. Executives MD 850 17000 1275 25500 850 17000 2975 59500.Coop torekeepers MD 510 10200 765 15200 510 10200 1785 35600

* Coop. storekeepen MD 170 3400 255 5100 170 3400 395 11900* CODP. Organier MD 168 4200 255 6410 168 4200 58s 14800* Coop. Auditors MD 116 2900 174 4,100 116 2900 406 10200

Sourc: RAB/ANRS, October 1997

PI.

Proposal for continuation of Institutional strengthening of MOA Sectoral Services AgriculturalExtension Department's Media support for next 3 years

Activity Annual Budget (US$000) to be financed by Donor and Government

1997/98 1998/99 1999/2000 Total

1. Equipment 2923.7 2923.7

2. Mobile Cinema Unit 929.4 929.4

3. Seminar Rooms Construction 50.0 50.0 64.2 164.2

4. Lab. rooms construction 285.0 285.0 286.4 856.4

5. Trainings 120.0 120.0 60.0 '240.0

6. Techn. Assistance 160.0 160.0 160.0 480.0

7. Staffing 126.0 126.3 127.5 380.1

8. Operational costs 646.3 66.3 73.3 785.9

Total 5240.7 747.6 771.4 6759.7

. . in~~~~~~~

Estimates of average production of Three major cereal crops grown by all farmers in the PADEP IProject Zones in the Amhara National Regional State (ANRS)

1992/93 1993/94 1994/95 1995/96

Crops Area Yield Prod. Area Yield Prod. Area Yield Prod. Area Vield Prod.

(ha) (QI/ba) (Qt) (be) (Qt/ba) (Qt) (ha) (Qtlba) (ha) (ha) (Qt/ha) (ha)

Wheat 211,940 10.5 2,219,400 229,531 9.2 2,104,947 238,213 12.1 2,882,727 248,153 11.7 2,901,181

Teff 720,480 7.0 5,045,880- 744,986 7.5 5,547,137 764,235 9.9 7,542,346 746,086 8.0 5,952,696

Maize 219,880 16.0 3,518.080 222,101 16.3 3,628,533 222,976 20.7 4,613,860 235,767 20.0 4,715,340

Total 1,152,30 - 10,753,3 1,19,618 11,280,617 1,225,424 * 15,038,928 1,230,00 - 13,S69,217

Appendix B

IMPLEMENTATION COMPLETION REPORT

ETHIOPIA

PEASANT AGRICULTURE DEVELOPMENT PROJECT

(CR. 1956-ET)

NOTE ON ECONOMIC ANALYSIS

General

1. The ICR Mission has no doubt that the Project's main objective -- to increaseproduction, productivity and incomes of the smalIholders or peasant farmers -- has beenmet fully during the initial five project years as a result of the satisfactory implementationof the Inputs Supply Component, under which substantial amounts of fertilizer wereimported and distributed by the Agricultural Inputs Supply Corporation (AISCO).

2. However, the contribution by other components towards the Project's mainobjective is less evident, and the performance review is in this context severely hamperedby; (i) a lack of indicators on development impact; and (ii) the structural changes ininstitutional environment which occurred during implementation. In this context it hasbeen particularly disappointing to note that the technical assistance, identified at appraisalto set up a monitoring and evaluation system for the project, was not recruited. Alsorestructuring/down-sizing of the Ministry of Agriculture (MOA) at central (Addis Ababa)level and the regionalization (devolution of powers to regional administrations, includingAmhara National Regional State Bureau of Agriculture or RAB/ANRSBA) led to loss ofinstitutional memory of the project. The rather sophisticated approach presented in theSAR (in which growth rates for crop yields were set as a function of fertilizer, extension,institutional strengthening etc.) was not used due to non-availability of data, except forthat part of incremental production directly related to fertilizer supplied by the Project.

Project Benefits

3. The economic analysis has, due to the above mentioned constraints, beenperformed on the basis of solely the benefits deriving from the incremental foodgrainproduction due to fertilizer supplied under the Project. The incremental foodgrainproduction is'estimated based on the actual distribution of fertilizer, assuming an average

2

yield increase of 5 kilograms of foodgrains per kilogram of fertilizer. The value of thisratio is not a result of any monitoring or evaluation activities. It is recalled that: (i) themonotoring and evaluation system, for technical assistance was foreseen in the SAR andnever got implemented; and (ii) repeated requests for recruiting a monitoring andevaluation specialist within the PIU, agreed upon at the time of extension of the project,were not followed-up by the Borrower. Therefore, the ratio of incremental foodgrains perunit of fertilizer has been set for this analysis on the basis of findings presented during anFAO/Fertilizer Input Unit sponsored workshop held in 1994 in Addis Abeba whichfocussed on fertilizer impact analysis on Ethiopian agriculture with particular reference toGojam and Gonder areas. On the basis of the presented findings it is estimated thatincremental foodgrains production, resulting from fertilizer supplied by the project,would amount to about 1.2 million metric tons of foodgrains; of these 135 thousandmetric tons (MT) in 1989, 115 thousand MT each in 1990 and 1991, 185 housand MTeach in 1992 and 1993, 245 thousand MT in 1994 and 220 thousand MT in 1995.Estimated incremental foodgrains production due solely to project imported fertilizer isshown, within/outside the North-western Zone (Region 3) in Table 1, below.

Table 1 Incremental Foodgrains Production due to Fertilizer(metric tons '000)

Year Within Outside TotalNorth-westem Zone North-western Zone

19S9 100 35 1351990 85 30 1151991 85 30 1151992 135 so 1851993 135 50 1851994 180 65 2451995 f2Q

Toall 880 320 1,200

Value of Incremental Production

4. The incremental production of foodgrains has been valued in economic terms byallowing for an average (weighted) farmgate import parity price (in constant 1997 USdollars). Details on the valuation of foodgrains are shown in Table 3 of the Annex.

5. The applied weighted average farmgate import parity price for foodgrains isderived by considering the average annual production of maize, wheat and teff during thereview period. Farngate import parity prices are summarized, along with incrementalvalue of production due to project induced fertilizer use, in Table 2.

3

Table 2 Value of Incremental Foodgrains Production due to Fertilizer(US$ '000, 1997 constant prices)

Year Within Outside TotalNorth-Western Zone North-Western Zone

1989 28,462 9,962 38,4231990 24,192 8,538 32,7311991 24,192 8,538 32,7311992 38,423 14,231 52,6541993 38,423 14,231 52,6541994 51,231 18,500 69,7311995 45,538 17,077 62,615

Project Costs

6. The total project costs in nominal terms (equivalent to US$ 87.839 million) arethe sum of disbursements by IDA (US$ 82.45 million, of which US$ 69.615 million forfertilizer imports) and contributions by the GOE (Birr 25.528 million). These costs areused as the basis for the calculation of economic project costs, whereby corrections aremade to reflect transfer payments such as taxes and duties, as well as subsidies. Theeconomic costs are expressed in constant 1997 US dollar equivalent by accounting for theimpact of domestic/international inflation. Prevailing exchange rates were used to convertthe local contributions into US$ equivalent and (farmgate) import parity prices foreconomic valuation of fertilizers (DAP and urea). Economic costs are shown in Table 3.

Table 3 Economic Costs of the Project(US$ '000, 1997 constant prices)

Year Govenmment of IDA TotalEthiopia

1989 236 16,296 16,5321990 1,531 15,139 16,6701991 234 25,308 25,5421992 74 30,845 30,9191993 645 2,180 2,8251994 556 330 8861995 458 ISO 6381996 1,132 0 1,1321997 722 280 1,002

4

Economic Cash-flow and Indicators

7. Table 4, below, details the economic costs of the project, its direct benefits andthe net cash-flow. The economic costs are shown separately for the global project and theNorth -western Zone. It can be depicted from table 4 that: (i) the net cash-flow is positivethroughout the period 1989 to 1995, and negative only in 1996 and 1997; (ii) the negativevalues for net benefits are occurring during years in which no fertilizer was distributed bythe project; and (iii) the negative net cash flows are irrelevant when compared to theconsistent surpluses generated by fertilizer in earlier project years.

Table 4 Economic Costs, Benefits and Net Cash-flow of the Project(US$ '000, 1997 constant prices)

Year Project Project Benefits Benefits Net NetCosts Costs from from Benefits Benefits

Inclusive Inclusive All N-W Zone All N-W ZoneAll N-W Zone 1) Fertilizer Fertilizer Fertilizer Fertilizer

Fertilizer Fertilizer

(1) (2) (3) (4) (5=(3)-(1) (6)=(3)-(2)

1989 16,532 14,686 38,432 28,462 21,891 13,7761990 16,670 14,824 32,731 24,192 16,060 9,3681991 25,542 23,696 32,731 24,192 7,189 4961992 30,919 27,227 52,654 38,423 21,735 11,1961993 2,825 2,825 52,654 38,423 49,829 35,5981994 886 886 69,731 51,231 68,845 50,3451995 638 638 62,615 45,538 61,978 44,9011996 1,132 1,132 0 0 -1,132 -1,1321997 1,002 1,002 0 0 -1,002 -1,002

note: 1) N-W Zone Norh-weswn Zone (Region 3)

8. In concurrence with the findings of the appraisal mission it is found that theeconomic rate of return (ERR) is extremely high (about 1,000%) when the returns fromfertilizer are considered and in any case far above the generally applied cut-off rate foreconomic feasibility (set for Ethiopia in the range of 10 to 12%). The cash flow analysisreveals that the net present value (NPV) is (discounted at 12%) about US$ 92 million inthe North-western Zone and about US$ 137 million when one considers the entire amountof fertilizer imported and distributed. Similarly the benefit - cost ratio is about 2.5 for theNorth-Western Zone and about 3.0 when the impact of all fertilizer imported anddistributed is considered. It is therefore concluded that the economic impact of the projecthas been significant, even more so as additional benefits deriving from components otherthan Inputs Supply (such as Capacity Building, Agricultural Services) were not included.

Table 1ETHIOPIA

PADEP Inmplementation Completion Report

Fertilizer (MT) Supplied by the Project and Distributed Witbin and Outside the Project Area

19Bi3 1990 1991 1992 1993 1994 1995 All

DAP Urea DAP Urea OAP Urea DAP Urea DAP Urea DAP Urea DAP Urea DAP Ura All

Easl Gojamn 17,000 500 6.700 1.252 6,917 701 9,898 1,662 9,105 1,262 12,687 2,863 8,712 2,069 71.019 10,309 81,328

Whs2 Goparn 930 357 8.3B1 262 8.048 10 11,785 234 11,107 100 15,613 189 16,191 691 72,055 1,843 73,898

Sub-total Gojeam 17,930 857 15,081 1.514 14,965 711 21,613 1,896 20,212 1.362 28,300 3,052 24,903 2,760 143,074 9,392 152,466

95%. 5% 91% 9/. 95% 5% 9r2. 8% 94% 6% 90%. 10% 90% I0% 94% 6% 88%

North Gondar 800 200 123 38 588 0 919 196 3,231 359 1,286 619 1,074 424 8,021 1,836 9,857

South Gondar 241 130 500 62 432 0 1,703 714 1,879 207 2,098 512 2,385 341 9.238 1,966 11,204

Sub-lotal Gondar 1,041 330 623 100 1,020 0 2,622 910 5,110 366 3,384 1,131 3,459 765 17,259 3,802 2i,061

76% 24% 86% 14% 1001% 01% 74% 26% 90%. I0%. 75% 25% 82% 18% 82. I8W% 12%.

Total Mthin Project Area 28,972 2 ,87 25,704 1,614 25,985 711 24,305 2,806 25,322 2,928 31,684 4,183 28,362 3,525 160,333 13,194 173,527

Tou Within Projec Area, Rounded 20,000 17,000 17,000 27,0Do 27,000 36,0D0 32,000 176,000

rotal Outside Proj ctArea, Rounded 7,000 | 6,000 6,000 | O,0000 10,000 13,000 12,000 66,000

rout Provided by th Project, Rounded 27,000 23,000 23,000 | 37,000 37,000 49,000 44,000 242,000

'._ ~ ~ I I~ -1r1 1 1r l I ==' I Note: Todl IsWorled wilh fnda of PADEP I was 242.000 MT. hweer. d di lence between 242.000 MT an 176.000 MT - or approx 66,000 MT - was dstibued

to oiir palt of Vt counby - pe ageemet reacted under ERMP (aid UrefoWrek aIndced aa et rpp outlsie Ve poect )

Table 2ETHIOPIA

PADEP I

Impkmentation ComWietion RcportEstimated Incremcntal Foodgrains Producdon Within and Outside the Project Area Dut to Fertilizer

(values In constant prices of 1997)

1989 19o 1991 1992 1993 1994 1995 Ail

Foodgrains Foodgains Foodgrains Foodgrains Foodgrains Foodgrains Food sina Foodgrains

Total in MT Incremental 135,000 115,000 I 15.000 185,000 15,000 245,000 220,000 1,200.000-Wthin Proje Area 100,000 85S000 85,000 135,000 135.000 180,000 160,000 880,000- Outside Projed Arm 35.000 30.000 30,000 50,000 50,000 65,000 60,000 320,000

Total Equivaent in USS 000 38,423 32,731 32,731 52,654 52,654 69,731 62,615 341.538-WIhin Project Area 28,462 24,192 24,192 38,423 38,423 51,231 45,538 250,462

- Outside Project Area 9,962 8,538 S,538 14.231 14,231 IS,500 17,077 91,077

Note: 1 kilograrnmotfftlizer * 5 k bgrunes odf"grna

1 kilogun of toodiran - 1.85 Ebr. weighted emnonmc (langte) vae, constant pce 1997

I US$ is equlvaient t 65 8i

Avera application based on staistc on feauezer suppty and culbvated area wheat maize and tett, pmvided by MOAIPPD

Table 3ETH10PADEP I

Implementation Completion ReportEconomic Price of Major Foodgrains

(values in constant prices of 1997)

unit Wheat Maize Teff(Tradable) (Tradable) (Non-Tradable)

FOB Price US$/MT 185 150

Ocean Fright and US$IMT 60 60

Insurance

CIF Pri&o US$JMT 245 210

CIF Price Birr/MT 1,593 1,365 _

Port Handling and Birr/MT 35 35 Clearance

Transport Assab - Bini/MT 270 270Regional Stores

Loading/Unloading BirrnMT 100 100and Transport to

W oredas _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Econornic price at Birr/MT 1,998 1,770WoredaTransport to Farm Bin/IMT 50 50Storage Losses Biff/MT 200 180

Farm-gate Price Birr/MT 1,748 1,540- rounded Biff/MT 1,700 1,500 2,000- rounded US$/MT 262 231 308

Average Cultivated HA 232,000 [ 223,000 J 744,000

Note: average area is based on 1992/93 - 1995/96 statistics

Table 4ETHIOPIAPADEP I

lmplementation Completion ReportEconomic Price of Fertilizers

(values in constant prices of 1997)

unit DAP Urea MOP

FOB Price US$/MT 210 190 119

Ooean Fright and US$1MT 60 60 60

InsuranceCIF Price US$/MT 270 250 179

CIF Price Biff/MT 1,755 1,625 1,164

Pod Handling and BirrnMT 35 35 35

ClearanceTransport Assab - BirriMT 270 270 270

Regional StoresLoading/Unloading Binr/MT 110 110 110

and Transport to

Woredas .

Economic price at Birr/MT 2,170 2,040 1,579

Woreda

Transport to Farm BirrIMT s0 50 50

Farm-gate Price Bin/MT 2,120 .1u9!tO9x

- rounded Binr/MT 2,100 2,000 1,500

______ __II_

Table 5

EIHQPADEJ!

Implementation Completion Report

Imports of Fertilizer by Year(MT)

Imports | Consumption |

DAP Urea Total DAP Urea Totalannual cumulativ annual cumulative annual cumulativ annual cumulativ annual cumulativ annual cumulative

1989 44,000 44,000 6,000 6,000 50,000 50,000 26,000 26,000 1,000 1,000 27,000 27,0001990 22,500 66,500 6,000 12,000 28,500 73,500 21,000 47,000 3,000 4,000 24,000 51,0001991 72,500 139,000 6,000 18,000 78,500 157,000 22,000 69,000 1,000 5,000 23,000 74,0001992 73,000 212,000 12,000 30,000 85,000 242,000 33,000 102,000 4,000 9,000 37,000 II 1,0001993 0 212,000 0 30,000 0 242,000 34,000 136,000 3,000 12,000 37,000 148,000

1994 0 212,000 0 30,000 0 242,000 43,000 179,000 6,000 18,000 49,000 197,000

1995 0 212,000 0 30,000 0 242,000 40,000 219,000 5,000 23,000 45,000 242,000

1996 0 212,000 0 30,000 0 242,000 0 219,000 0 23,000 0 242,000

1997 0 212,000 0 30,000 0 242,000 0 219,000 0 23,000 0 242,000

Table 6ETHIOPIArADE? I

Inmulementation Completioon ReportEconomic Cost of Fertilizer Distributed by the Project

(values in constant prices of 1997, USS)

1989 1990 19911 1992 1993 114 19 TotalDAP Urea DAP Ursa DAP Urea DAP Ure DAP Urea DAP Urea DAP Urs DAP Urea AM

FwzeeIzr in MT:

-ftin Projec Area rounded 19,000 1,000 16.000 2,000 16,000 1,000 24,000 3,000 25,000 2,000 32,000 4,000 28.000 4,000 160,000 16.000 176,000- Outside Pmjet Area ounded 7,000 0 5,000 1,000 6,000 0 9,000 1,000 9,000 1,000 11,000 2,000 11,000 1,000 59,000 7,000 66,000Totl FeElkler 26,000 1,000 21,000 3.000 22.000 1,000 33,000 4,000 34,000 3,000 43,000 6,000 39,000 5,000 219.000 23,000 242.000

Import Padty Prie USSIMT 323 308 323 308 323 30S 323 308 323 308 323 30S 323 308 323 308 -

Tota CostFdfkzer USS 000 8.400 308 6.785 923 7.10 308 10.662 1,231 10,985 923 13.92 1,846 12,600 1.538 70,754 7,077 77,831-ToalRouaded 8,710 7_700 7,400 11,900 11,900 15,700 14,100 77.800- WIn PrjW Area Rounded 6,450 5.800 5.500 8,700 * 8,700 11,600 10.300 56.600-Outside Poject Are Runded 2,260 1.900 1 ,900 3,200 3,200 4,200 3,900 21,200

__ l L L L L L

Table 7ETHIQPIAPADEP I

Implementation Completion ReportProject Costs

Current P.ces Constant Prices 1997

Year GOE IDA Total GOE IDA Total

Total Total Induding Only Project Costs Total Total Total Project Costs

4) All Fertilizer 3) Fertilizer I Exd. Fort Exd. rt Ind. Fert. Exd. Fert. Ind. Fert.Birr '000 uSS 000 USS '000 _ USS 000 fir '000 USS '000 USS V000 USS'000

1989 452 16,490 16,256 16,708 452 489 236 234 16,296 470 16,5321990 2,956 15,100 9,076 16,528 7,452 3,169 1,531 6,024 15,139 7,555 16,670

1991 456 15,090 15,051 15,310 259 484 234 39 25,308 273 25,5421992 289 32,800 29,232 32,871 3,639 304 74 3,568 30,845 3,642 30,919

1993 3,169 2,180 0 2,800 2,800 3,298- 645 2,180 2,180 2,825 2,8251994 3,373 330 0 870 870 3,475 556 330 330 886 886

1995 2,835 180 0 629 629 2,892 458 180 180 638 638

1996 7,298 0 0 1,121 1,121 7,371 1,132 0 0 1,132 1,1321997 4,700 280 0 1,002 1,002 4,700 722 280 280 1,002 1,002

Total 25,528 82,450 69,615 87,839 18,224 26,182 5,589 12,835 90,558 18,424 96,14784%

Note: 1) as per information received from AISCE (previously Agricultural Inputs Supply Corporatbon or AISCO)

2) economic value based on the unit values presented in the table: Economic Price of Fertilizer3) includes fertilizer distributed within, as well as fertilizer distributed outside the project area (World Bank Integrated Controbers System)

4) according to the Ministry of Agriculture, MOA/PPD, Addis Ababa

Table 8ETHIOPIA

PADEP-Implementation Completion Repot

Economic Cash Flow Analysis(USS '000, constant 1997 prices)

Investment O&M Benefits Net Benefits

Year Fertilizer 1) Other Total 3) Total Total

Within Outside Total 2) Within All Within Outside All Within All

1989 14,215 1,846 16,062 470 14,686 16,532 0 28,462 9,962 38,423 13,776 21,891

1990 7,269 1,846 9,115 7,555 14,824 16,670 0 24,192 8,538 32,731 9,368 16,060

1991 23,423 1,846 25,269 273 23,696 25,542 0 24,192 8,538 32,731 496 7,189

1992 23,585 3,692 27,277 3,642 27,227 30,919 0 38,423 14,231 52,654 11,196 21,735

1993 0 0 0 2,825 2,825 2,825 0 38,423 14,231 52,654 35,598 49,829

1994 0 0 0 886 886 886 0 51,231 18,500 69,731 50,345 68,845

1995 0 0 0 638 638 638 0 45,538 17,077 62,615 44,901 6r,978

1996 0 0 0 1,132 1,132 1,132 0 0 0 0 (1,132) -1,132

1997 0 0 0 1,002 i,002 1,002 0 0 0 0 (1,002) -1,002

l l I nmaS'w' I. I I I

K ,,~~KI

Note: 1) bsed on quantuit bowed as provided by AISE

2) basd on dmburaemeb by IDA nd GOE, excluding values attributed to fertilizer mentioned under 1)

3) mcidd under heves*me and discontinued after project closed

Appendix C

NORTH - WESTERN ETHIlOP IAAOMINISTRATIVE DIVISIONS

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