Agriculture, Farmers and Rural Areas Support Project (TNSP) in Ninh Thuan Province

Transcription

1 Agriculture, Farmers and Rural Areas Support Project (TNSP) in Ninh Thuan Province Supervision report Main report and appendices Mission Dates: 22 June - 2 July 2015 Document Date: 8-Sep 2015 Project No Report No: 3853-VN Asia and the Pacific Division Programme Management Department

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3 Contents A. Introduction 1 B. Overall assessment of TNSP Ninh Thuan implementation 1 C. Outputs and outcomes 3 D. TNSP Ninh Thuan implementation progress 11 E. Fiduciary aspects 14 F. Sustainability 16 G. Other 17 H. Conclusion 18 Appendices Appendix 1: Summary of project status and ratings 21 Appendix 2: Updated Logical Framework 25 Appendix 3: Summary of key actions taken within agreed timeframes 41 Appendix 4: Physical progress against AWPB and appraisal targets, including RIMS indicators 53 Appendix 5: Financial: Actual financial performance by financier; by component and disbursements by category 71 Appendix 6: Compliance with legal covenants: Status of implementation 73 Appendix 7: Knowledge management: Learning and Innovation 75 Appendix 8: Financial assessment template for the CBG scheme 77 i

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5 Abbreviations and Acronyms ADS Agribusiness Development Section ARD Agriculture and Rural Development AWPB Annual Work Plan and Budget BDS Business Development Services CBG Competitive Business Grant CDB Commune Development Board CDF Community Development Fund CEM Centre for Ethnic Minorities CG Collaborative Group CIG Common Interest Group CLA Component Lead Agency CPC Commune People s Committee DARD Department of Agriculture and Rural Development (Provincial level) CBG Competitive Business Grant CSG Competitive Small Grant CIETP Centre for Industrial Extension and Trade Promotion (under DOIT) DASU District Agribusiness Support Unit DOIT Department of Industry and Trade DOLISA Department of Labour, Invalids and Social Affairs DoNRE Department of Natural Resources and Environment DPC District People s Committee DPFS District Planning and Finance Section DPI Department of Planning and Investment DTCS District Trade and Commerce Section DTI Department of Trade and Industry FU Farmers' Union GAP Good Agriculture Practices GoV Government of Vietnam IA Implementing Agency IFAD International Fund For Agricultural Development M&E Monitoring and evaluation MARD Ministry of Agriculture and Rural Development MFI Microfinance Institution MoF Ministry of Finance MOP-SEDP Market-Oriented, Participatory, Socioeconomic Development Planning MPI Ministry of Planning and Investment NTP National Target Programme NTP-NRD National Target Program for New Rural Development ODA Official Development Assistance PPC Provincial People s Committee PCU Provincial Project Coordination Unit PSC Provincial Project Steering Committee PY Project Year SCG Savings and Credit Group TA Technical assistance TOR Terms of reference TOT Training of Trainers TWG Thematic Working Group VBARD Vietnam Bank for Agricultural & Rural Development VBSP Vietnam Bank for Social Policies VC Value Chain VCAP Value Chain Action Plan VDB Village Development Board WU Women's Union iii

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7 A. Introduction 1 1. The objective of the Agriculture, Farmers and Rural Areas Support Project (TNSP) is to sustainably improve livelihoods among ethnic minority and rural poor households in Tuyen Quang, Ninh Thuan and Gia Lai Provinces. The project became effective 25 February 2011 and is scheduled for completion on 31 March The total IFAD loan for this project is USD million (SDR million), of which USD million (SDR 8.38 million) is allocated for Ninh Thuan. The Government contribution for TNSP in Ninh Thuan is USD 3.28 million and the contribution of beneficiaries is USD 1.52 million. The total budget for Ninh Thuan is USD million. 2. The annual supervision mission for TNSP Ninh Thuan province took place between 22 June 2 July Its objectives were to: (i) review project implementation progress and issues in follow-up to the recommendations made by the MTR 2014; (ii) agree with the PCU and Provincial authorities on priorities and next steps for implementing the TNSP approach, while ensuring the achievement of the objectives of poverty reduction and sustainability of the introduced innovations; and (iii) ensure an exit strategy and up-scaling of project activities after its full closure in September The whole duration of the mission was spent in the field: at the province, district, commune and village levels. Meetings were held with the PCU, the provincial Implementing Agencies including DPI, DARD, DoIT, W and FU. Following this, visits were made to six communes in the districts of Ninh Phuoc, Bac Ai, Ninh Son and Ninh Hai. Meetings were held with the District Agribusiness Support Units (DASUs), Commune Development Boards (CDBs), Common Interest Groups (CIGs), Savings and Credit Groups (SCG), beneficiary households and private enterprises. The wrap-up meeting with the PSC was on 2 July The mission extends its appreciation to the Ninh Thuan PPC, provincial line agencies, DPCs, district agencies, DASUs, CDBs, CGs and private enterprises who met the mission. Special thanks are given for the hard work and assistance provided by the PCU Director and staff. B. Overall assessment of TNSP Ninh Thuan implementation 5. Overall implementation progress. Current implementation performance of the TNSP in Ninh Thuan is rated as satisfactory, considering the high quality of efforts by the new project management which was put to place following IFAD Country Office recommendation. However, the overall progress during the last four years has been slow thus the likelihood of achieving project development objectives is rated as moderately satisfactory. 6. Key achievements include: (i) Outputs. The TNSP in Ninh Thuan has developed eight pro-poor value chains including apple, grape, garlic, banana, cow, goat, sheep, and black pig, achieving increased productivity, quality and market connections of the smallholder production; MOP-SEDP planning mechanism is rolled out for all 27 project communes and 38 non-project communes/wards; 302 CIG are established and functioning with 3753 members (62% poor) and 114 CIGs have established direct business links with enterprises; Production planning training was delivered to 1755 CIG members, and direct material support was delivered to 197 CIGs through productive CDF, Value Chain models and CSG competition; 19 private sector enterprises are engaged to value chain upgrading through provincial and district level commodity workshops and initiation of the CBG coinvestment programme; The overall rural investment and business environment is strengthened through increased transparency and more efficient administrative mechanisms; 194 public infrastructure works were completed and put in use, including 52 km of roads, 19 km of irrigation canals, 6 bridges, 11 market buildings and storages, 3 water supply systems and 2 electricity lines, benefitting total 18,700 households including 50.4% poor and near-poor; Microfinance services delivered to 638 households (including 41% poor) in 48 saving and credit groups (SCGs) in 20 project 1 2 Mission composition: Mr. Sauli Hurri (Team Leader and Agribusiness Specialist), Mr. Nguyen Thanh Tung (IFAD CPO, Institutions/Microfinance Specialist); Dr. Nguyen Ngoc Quang (MOP-SEDP, Ethnic Minorities/M&E/Knowledge Management Specialist); Mr. Truong Cong Huu (Financial management Specialist);Mr. Phan Duy Toan (Infrastructure and Procurement Expert); and Ms Doan Phuong Lien (Interpreter). Important dates include: Project effectiveness: 25 February 2011 Project Completion: 31 March 2016 Loan closing date: 30 September

8 communes, which have accumulated VND million in savings and received VND billion in outstanding loans; (ii) Innovations. The private sector has been engaged in the value chain upgrading by TNSP Ninh Thuan, including coordinated delivery of input materials, enterprise-led extension services and contract-based purchase of CIG produce; Competitive grant schemes have been initiated to support farmer groups and rural enterprises. Already at the initial stage, these show high efficiency for poverty reduction and increased motivation of farmer groups to engage in production planning and market oriented agriculture. An initial batch of 35 CIGs have received a coinvestment grants and 10 private enterprises have been selected to receive co-investment support; (iii) Impact. Due to substantial efforts of all parties concerned, the rural business environment has steadily been improved through the project implementation period; The rate of households suffering from malnutrition has been significantly reduced within the project areas, from 47.6% in 2011 to 17.9% in 2014; Project efforts to upgrade farmer production and facilitate enterprise and farmer linkages have significantly increased the income generation opportunities of the poor households, however the current poverty reduction process in the communes is halted due to severe drought effecting the province. 7. As of 15 June 2015, the disbursement of loan funds by IFAD stands at USD 7.4 million. This is equal to 58% of the total IFAD financing. The mission understands that the project financial delivery has been seriously affected by recent new policies controlling ODA disbursement; and by the severe drought that has largely halted Ninh Thuan agricultural investments during early However, the disbursement under the new proactive project management is foreseen to improve greatly. The government has provided guidance to solve the ODA disbursement control issue, allowing implementation and financial delivery to continue, and also the drought has begun to ease and more rains are foreseen within the weeks and months to come. 8. The mission noted the following key challenges and issues for full achievement of objectives and sustainability of project results: (i) Project duration. The project has nine months of implementation before completion and still a large amount of activities to be completed, which is partly due to the severe drought in Ninh Thuan during Moreover the remaining time is limited for ensuring full-scale replication and sustainability of innovations under the market-based poverty reduction strategy. Longer time is required to build local capacities as this is the first IFAD project to the province. Therefore, an extension of the project duration is required and justified; (ii) Institutionalization of innovative approaches. As of now, the project's introduced market oriented poverty reduction instruments are implemented mostly only by the project staff, with limits the institutional sustainability of the these innovative approaches and also their immediate outreach to poor households. To increase sustainability and outreach, the relevant technical sections/staff under DPCs and CPCs should be directed to take lead in project implementation and institutionalization of the successful approaches. DPCs should be fully assigned with the coordinating role and made accountable for the overall project effectiveness at their respective districts. Training to district and commune staff should be conducted accordingly; (iii) High-land communes implementation. There are substantial differences in implementation efficiency between the more advanced low-land communes and the most rural difficult communes especially those in Bac Ai district. Number and quality of CIGs and SCGs is still low, CDF implementation requires strengthening and introduction of innovative instruments CSG and CBG has been slow. Recruitment of new staff to the difficult areas has initially shown signs of improved progress, however further intensive TA support is urgently required, along with cross-learning of experiences from high performing communes; (iv) Women's Development Fund. Establishment of new SCG groups, institutional development of the WDF, and disbursement of the allocated loan capital have been largely at halt during the previous implementation year. Urgent action is required for improvement; (v) Budget allocation. For acceleration of the project implementation and to ensure poverty reduction impact, it is necessary to review in detail the budget allocations for increased resources in well performing activities. 2

9 9. The mission therefore recommends the following prioritized activities: Agreed action Responsibility Agreed date Project duration: Due to the overambitious and in certain areas inappropriate design with missing instruments for private sector support and agribusiness engagement in the value chains, the project start up and the first years of implementation were slow. With IFAD assistance, such instruments are now in place, however these need to be still further rolled out, consolidated and mainstreamed in the provincial rural development strategy. Also, the implementation in 2015 has been delayed by severe drought and the government disbursement cap. Thus, the PPC, government central agencies and IFAD should consider a one year extension of the project completion date, and initiate processes for this purpose. PPC, GACA and IFAD Q3/2015 Institutionalization of innovative approaches. Relevant agencies at district and commune level to be engaged in project implementation and replication of the innovative approaches under government programming. DPCs assigned with coordination role and accountability of the overall project implementation. PPC/PSC to direct the stakeholders accordingly, and required trainings provided to the local staff. High-land communes implementation. Intensified support strategy is required for high-land districts and communes, including recruitment of qualified technical assistance, and cross-learning from high performance communes and districts. Women's Development Fund. The progress in development of SCGs and adequately functioning WDF fund requires urgent improvement and full attention by the WU and PCU. Budget allocation. PCU to review in detail the current budget allocations and submit proposed revisions to IFAD CO for increased resources in well performing activities. C. Outputs and outcomes PSC, PCU, DPCs, CPCs Through 2015 and PCU, DPCs July 2015 WU, PCU July 2015 PCU, IFAD By end of July 2015 Component 1: Institutional Strengthening for Implementation of Pro-Poor Initiatives in Tam Nong Overall assessment of the component is satisfactory. Subcomponent 1.1 Market Oriented Economic Management Capacity Building 10. The subcomponent is rated moderately satisfactory. DPI and DOIT are the agencies responsible for implementation of this sub-component s activities, which are to develop local governments capacity to apply principles of market orientation in planning and promotion for economic development. The DPI has conducted (i) trainings for 40 district staff on NTP-NRD implementation; (ii) ToT for 59 province and district staff to support commune- and village-level MOP- SEDP taskforces; and (iii) training on market orientation of MOP-SEDPs for 200 staff at all levels, based on a manual specifically developed for this purpose. The DOIT Centre for Industrial Extension and Trade Promotion (CIETP) (i) developed and implemented a market facilitation training program for 65 government staff at the provincial and district levels; (ii) organized a market oriented public management programme for 41 government staff at provincial and district levels; and (iii) supported district units in identification and engagement of value chain lead enterprises. 11. These institutional capacity building programmes are developed and implemented adequately, receiving positive feedback from the participants. However, the commune and district level MOP- SEDP task-forces still lack concrete skills in enterprise engagement and in financial analysis of value chains, agricultural commodities and potential farmer/enterprise investments. Agreed action Responsibility Agreed date DPI and CIETP to collaborate in organization of a local level training programme, with the aim to improve practical market development skills of the MOP-SEDP task forces. DPI and DOIT- CIETP, PCU July

10 Subcomponent 1.2 Institutionalization of Market-oriented, Results-based, Participatory Socioeconomic Development Planning 12. The subcomponent is rated satisfactory. To date, key achievements include: (i) the MOP-SEDP manual modified towards simplification and applicability; (ii) provincial workshop organized on MOP- SEDP orientation for all districts and communes/wards within the province; (iii) MOP-SEDP training conducted for 1900 officials at all levels in project and non-project communes; (iv) MOP-SEDP 2015 implemented in 27 project communes and 20 non-project communes; (iv) a provincial lesson-learnt workshop organized on MOP-SEDP as a basis for province wide MOP-SEDP implementation; and subsequently, (v) MOP-SEDP 2016 implemented in 27 project communes and 38 non-project communes/wards. 13. Regarding MOP-SEDP impact to the planning capacity of government agencies at all levels, the following results have been achieved: (i) Integration of MOP-SEDP into the government SEDP process in all project districts, and thus MOP-SEDP is introduced as an official planning process at both district and commune levels; (ii) In some districts including Bac Ai, Ninh Phuoc, and Ninh Son, the DPCs commit to use district budget for MOP-SEDP implementation after the project completion; (iii) In many project communes, various resources (e.g. 135, 30A, commune budget) have been successfully integrated to a comprehensive MOP-SEDP plan, increasing the overall effectiveness and efficiency of commune level investments; and finally, (iv) TNSP MOP-SEDP guidelines and manuals have been used by the DPI as key reference to contribute to the National Government (MPI) drafting of a new Decree to reform the SEDP process nation-wide. 14. The mission notes the following challenges in the process of province-wide institutionalization of MOP-SEDP: (i) As the MPI is currently drafting a new SEDP Decree, both DPI and PPC incline to hold the institutionalization process; (ii) Subsequently, budget for commune MOP-SEDP planning is yet to be committed, with the exception of some project DPCs; (iii) MOP-SEDP documents are still limited regarding market opportunities for the local commodities, and for available service providers to support the commodity development; and, (iv) In some project communes, MOP-SEDP is still considered as a project assignment rather than a long-term instrument for commune economic development planning. The mission, therefore, recommends the following: Agreed action Responsibility Agreed date DPI to clarify with MPI the drafting schedule of the new SEDP Decree. If the Decree will not be introduced before end of 2016, PPC to issue long term budget commitment for the MOP-SEDP rollout in all province communes, based on existing guidelines. DPI and PPC July 2015 DPI and the Project to disseminate information about MOP-SEDP to all non-project communes. DPI and PCU August 2015 Subcomponent 1.3 Developing and cooperating with private sector in agriculture and rural development 15. The subcomponent is rated satisfactory. The sub-component progress has improved significantly during the previous year. It is implemented (i) by the DPI for strengthening of business and investment environment, and (ii) by the DOIT-CIETP for engagement and support of agribusiness enterprises. 16. The DPI and it's led TWG-BER have continued to improve the provincial investment environment for rural development. The key results to date include: (i) Provincial Competitive Index (PCI) strategy and yearly PCI action plans issued and implemented; (ii) public private forum implemented with 65 enterprises to assess PCI strategy; (iii) four Decisions issued by PPC for improved mechanisms in development of agricultural production and markets; (iv) establishment and support to Economic Development Office (EDO) under DPI for provincial investment promotion; (v) establishment of one-stop-shop mechanism for business registrations, reducing business registration time to three days; (vi) establishment of a Ninh Thuan investment promotion website; (vii) business management training delivered to 50 SMEs; and subsequently, (viii) the improved business environment has contributed to an increase of 114.8% of private sector investment projects in the rural areas during the period (total 58 investments including 10 FDI), mainly concentrating on production and processing of agro-forestry and aquatic products. 4

11 17. The DOIT-CIETP has further strengthened its support to agricultural enterprises. Key results include: (i) PPP forum organized to support the TNSP identification of key value chains and suitable upgrading strategies; (ii) in collaboration with DASUs, 13 commodity meetings held with businesses to form joint production models with CIGs, resulting in improved market access by more than 500 farmer households in corn, rice, grape, apple, goat, sheep and beef commodities; (iii) multi-province market research and 14 trade promotion sessions deployed in Thai Binh, Tra Vinh, Kon Tum, Da Nang, Ho Chi Minh City, Hanoi, Dak Lak, Ba Ria-Vung Tau, Can Tho and Binh Dinh. Connection established with 64 agencies, enterprises, wholesale markets and supermarkets. Initial 12 MOUs and 10 contracts signed to provide Ninh Thuan apple, grape, garlic, goat and sheep products to these markets; (iv) market opportunity and market information leaflets developed, regularly updated and distributed to beneficiary households in total copies; and (v) business planning/marketing training and follow-up refresher delivered to 51 enterprises, which partially contributed to the launch of CBG investments as described below at The work by both DPI and CIETP is considered satisfactory at this stage, however the agricultural private sector development task is still at its initial stages in Ninh Thuan. (i) The local enterprises have no access to sufficient volume nor quality of agricultural raw material; (ii) these enterprises are small and have limited capital to invest and upgrade their production; and (iii) thus the quality and quantity of processed products is often insufficient to markets outside the province. Further consistent support to enabling business environment and development of farmer-enterprise linkages are critical to development of agricultural sector in the province. The mission agreed on two focus areas for the project activities in this regard: Agreed action Responsibility Agreed date Further promote Ninh Thuan agricultural production opportunities to DPI, EDO potential investors and buyers. Continue organizing local level commodity workshops between businesses, local authorities and farmers about potential contract farming arrangements and supplier-cig establishment. CIETP, DASUs, CDBs Component 2: Pro-poor value chain development Overall assessment of the component is moderately satisfactory. Subcomponent 2.1 Identification and prioritization of pro-poor value chains 19. The subcomponent is rated moderately satisfactory. Achievements to date include (i) establishment and capacity building for the Value Chain Working Group to coordinate value chain selection, development and implementation; (ii) training on value chain analysis and value chain planning for 343 provincial, district and commune staff. These trained staff play key role in facilitation of MOP-SEDP implementation, CIG establishment, CBG and CSG implementation; (iii) identification and selection of 8 strategic value chains (apple, grape, garlic, banana, cow, goat, sheep, and black pig). These value chains were approved by PPC in late 2013; (iv) guidance on implementation of the 8 value chains was disseminated to DASUs and CDBs, and subsequently, a number of value chains including apple, goat, grape are in good progress of replication through CBG and CSG; (v) additionally, 2 potential value chains (beans, corn) were identified, analysed, and selected as important value chains for the poorest target groups in Bac Ai district; and (vi) a value chain impact assessment was conducted in May 2015 to measure pro-poor income generation in the communes. 20. Despite good progress, the mission notes following challenges: (i) coordination among agencies is still weak for value chain assessment and systematic commodity upgrading strategy, particularly between DARD and DOIT-CIETP; (ii) some value chains including garlic, grape, and breeding cow seem not to be appropriate to the poor because of either high input investment or low economic return; (iii) some potential value chains including maize, beans, oyster and onion are not yet comprehensively analysed, and value chain action plans are yet to developed for these value chains; (iv) the recent consultancy for value chain impact assessment was not successful in capturing the household nor enterprise level impact; and (v) a number of government staff involved in VC upgrading, especially at district and commune levels, still need further training in value chain analysis and planning in order to sustain the approach beyond project completion. The mission recommends the following: 5

12 Agreed action Responsibility Agreed date Organize refresher training for district and commune staff on value chain analysis and practical upgrading tools, and conduct local level value chain action plans for potential value chains PCU, DASUs, CDBs July 2015 Conduct a comprehensive value chain impact assessment to (i) assess improvement in economic situation of each VC actor; and (ii) propose replication and institutionalization of most effective methods for rural development and poverty reduction. Subcomponent 2.2 Value Chain Support DARD/PCU August Subcomponent rated moderately satisfactory. Implementation progress is significant under this sub-component, in supporting the selected eight key value chains. Regarding capacity building, the key results to date include: (i) training for 253 extension workers and plant protection officers at all levels on agricultural extension knowledge and skills; (ii) training for 520 commune extension workers on production, marketing and trade in the prioritized value chains; (iii) training for 335 village and commune veterinary officers on clinical diagnosis, quarantine and veterinary work; (iv) training for 15 district and commune extension workers and veterinary officers on artificial insemination; and subsequently, six districts received investment for veterinary service and artificial insemination stations, 850 semen doses are delivered to date and 552 cows are pregnant; (v) eight enterprise-tofarmer training courses organized for 280 CIG members; and (vi) 400 materials sets on agricultural production and market connection have been disseminated to farmers. Regarding physical support, the key achievements include (i) Development of five apple VIETGAP models covering 38.1 hectares with participation of 210 households. Productivity increased by 1.4% % and income increased by 12.5% -15.8%; (ii) Implementation of two grape VIETGAP models covering 2.6 hectares with participation of eight households. Productivity increased about 0.5 tonnes/ha; (iii) Development of six livestock raising models including three cattle fattening, two goat and sheep fattening, and one black pig raising model; and (iv) implementation of ten demonstration models on animal feed processing and food preservation for livestock during dry season. Both capacity building and material supports have positively contributed to (i) awareness and behaviour of farmers in safe production and commercial orientation; and (ii) increased productivity, hence increased income of farmer households. 22. However, the mission notes the following challenges: (i) Replication of the models still limited to small scale. This is partly due to lacking mechanism of transferring the models and techniques from DARD to the users (enterprise, farmers) and their investment; and (ii) The enterprise-led and farmerled extension services are still modest and lacking long term development vision and concrete action plan for implementation and institutionalization. 23. Value chain related issues and recommended solutions are also discussed in subcomponents 2.1, 2.3, 3.2, and 3.3. In addition, the mission recommends following agreed actions: Agreed action Responsibility Agreed date Hand over the existing models to districts and communes, and develop an action plan for private sector (farmer and enterprise) replication. IFAD template for model identification and replication available for reference. PCU, DARD, DPC and DASU July 2015 Increase the amount of enterprise-led and farmer-led extension services in the process of CIG development, CBG and CSG implementation. Subcomponent 2.3 Promotion of Pro-Poor Agribusiness Initiatives PCU, DPC and DASU July The subcomponent is rated moderately satisfactory. The TNSP has initiated two grant schemes: (i) Competitive Small Grants (CSG) to provide small production investments for groups of farmer households, and (ii) Competitive Business Grants (CBG) to co-finance medium-sized, pro-poor agribusiness investments in order to enhance market participation of poor farming households. A manual has been developed and approved for both schemes, based upon international principles for grant-making with a pro-poor market orientation. 25. The CSG fund achievements are as follows: (i) The operational manual was approved by the PPC in September 2013 and the first competition round was announced in all six project districts in 6

13 May 2014; (ii) Total 1755 households (including 1524 poor and near-poor) in the project districts were trained in production and business planning for CSG preparation; (iii) With continued support by DASUs, CDBs and a consultancy group, 67 CIGs developed and submitted investment proposals to the CSG competition; (iii) Through DPC-led competition process, 35 proposals were considered satisfactory quality and got selected for co-financing; (iv) Total investment amounts to 4.57 billion VND, of which 3.35 billion VND by the project and 1.21 billion VND by the CIGs; (v) The granted CSG co-financing supports the upgrading of value chains goat, sheep, cattle, chicken, apple, onion, banana and handicrafts; (vi) Beneficiary households among the 35 CIGs consist of 366 households among which 265 (72%) poor/near-poor households; (vii) All selected investment proposals include description of a sustainable market link and a revolving fund mechanism; (viii) 100% of the participating households have reported effective implementation of the funds, and 60% have achieved increased income levels which is a higher impact than that by other support mechanisms; (ix) A comprehensive CSG roadmap with detailed work-plan and specific district allocations has been developed by the PCU, with the aim to initiate all remaining CSG co-investments by end of Due to inadequate project design and limited capacities to implement a co-investment scheme with farmer households, the CSG preparation and implementation process was initiated late. This has led to some issues: (i) The CIG capacities are still low for business and investment planning, especially in the upland district Bac Ai; (ii) Institutional support mechanism for CIG production and business planning is still weak; (iii) Although remaining time is limited, co-investments worth about 9 billion VND are yet to be selected and implemented; (iv) Outreach of the CSG in many communes is limited to CIGs which already receive support through the CDF, and the overall outreach is still especially limited in Bac Ai district. Agreed action Responsibility Agreed date Coordinated by DPCs, engage local FU, WU and/or CDB staff together with DASUs and intensive TA support for CIG business planning. Aim at sufficient skills of existing and new CIGs to develop investment proposals. DPCs, DASUs, FU, WU, CDBs, PCU July-September 2015 Assess the financial viability and poverty reduction impact of the existing 35 co-investments, and use the best examples as models for replication. DASUs to organize further competition rounds to initiate all remaining CSG grants by the end of Ensure sufficient outreach of project CIG support by (i) including new groups to CSG scheme (not yet supported by CDF), (ii) CSG grants should not be always maximum total amount but equivalent to maximum 10 million VND per HH; (iii) inclusion of off-farm investments as eligible CSG co-investments; and (iv) more TA for Bac Ai. PCU DASUs 2015 PCU, DASUs, CDBs. July-September 2015 By September The CBG fund has progressed as follows: (i) Operational manual was approved by the PPC in September 2014; (ii) The DOIT Industrial Extension and Trade Promotion Centre IETPC was engaged to coordinate the overall CBG progress and to support the enterprises in co-investment proposal development; (iii) CBG Selection Board with membership from province level and districts has been established and informed about the CBG process and technical details; (iv) Enterprises were broadly informed at province and district levels about the CBG opportunity, eligibility and requirements, and interested enterprises received training and technical assistance for business planning; (v) The first competition round was implemented in 2014, resulting in co-financing of three agribusiness investments in the value chains sheep, goat, apples and grapes. Total value of these three investments is VND 4.6 billion including VND 2.1 billion by the project; (vi) The second competition round has been implemented during Seven proposals were selected for co-financing in value chains of apple, sugarcane, banana, cattle and pig. Total value of these coming co-investments is VND 10.3 billion including VND 4.8 billion by the project; (vii) As result of the CBG investments, 548 farmer households (about 50% poor) will have direct link to an enterprise providing them with technical assistance and access to improved input/output markets. Income levels are very likely to increase, and poverty reduction impact is to be verified by financial evaluation of the scheme; and finally (ix) Ninh Thuan institutional capacity to engage private sector into rural and agricultural development has been improved significantly. 7

14 28. The CBG scheme was initiated late due to an inadequate design document. This has resulted in some issues that need project attention: (i) Involved enterprises still have information gaps regarding CBG operations including full details of business/investment plan, grant agreement, financial flows of the fund, and opportunity to leverage additional bank financing; (ii) Financial evaluations of the co-investments still lack detailed description of poverty reduction impact and sustainability, and the staff at PCU and IETPC have limited skills and instruments for such evaluation; (iii) Engagement of enterprises to co-invest in the most difficult high-land district Bac Ai is not yet successful despite efforts by both Province and District level staff. Agreed action Responsibility Agreed date Organize workshops and mobilize continued technical assistance to PCU, IETPC Through 2015 assist the CBG enterprises in the Fund operations as described above; Simplify the CBG operational processes as required. PCU and IETPC staff to use simple financial assessment tools to PCU, IETPC, July 2015 ensure adequate farm level impact of the co-investments, and IFAD CO to provide with training accordingly. IFAD CO Competent technical assistance engaged for (i) implementation PCU, IETPC support,(ii) financial assessment and documentation of the CBG scheme, in terms of poverty reduction efficiency and sustainability. Engagement of 1-2 enterprises to co-invest in Bac Ai district should be promoted as far as possible. PCU, IETPC 2015 Subcomponent 2.4 Improving Access to Financial Services 29. The subcomponent is rated as moderately satisfactory. So far the WU has established and delivered microfinance services to 638 households (including 41% poor) in 48 saving and credit groups (SCGs) in 20 project communes. Total amount of all outstanding loans stands at VND billion, meaning that the average loan size is VND million which is assessed appropriate for social targeting objective. The SCGs have mobilized VND million as compulsory savings by the members (VND 20,000 per month). Borrowers pay both the compulsory savings and the interest charges of their loans monthly, which are rotated for loans to other members. So far VND billion has been returned to WU and rotated for loans to SCG members. The WU also made efforts in building SCG management capacities through participation in the learning route on social fund development in Quang Binh province in July The WU recently organized a learning visit for both provincial and district staff to the Women s Development Fund (WDF) in Ben Tre province. With technical assistance by consultant from WDF in Quang Binh the WU has prepared and submitted application to PPC for establishment of a WDF in Ninh Thuan province. However, since Ninh Thuan has suffered draught and the government policy on ODA control limited funds disbursement, the committed VND 9 billion for WU for development of new SCGs has not been used and no SCG has been reported as newly established during The mission found the following issues which should be addressed by the WU: (i) Establishment of new SCGs should be significantly accelerated since so far the financial delivery of this subcomponent has achieved only 31.4% of its target. Establishment of new SCGs should not be delayed as result of draught since the members could use the loan for non-affected purposes such as pigs, poultry, household business, etc. It is also suggested that the SCGs should start with group saving activities prior to receiving loan services; (ii) Modification of the SCG manual. For establishment of WDF, a new manual should be soon elaborated by technical assistance considering the current constraints such as: the member savings are collected to the provincial WU and not immediately rotated as loans to members of the same group; products are not diversified to suit different clients; objective of 40% poor household participation in SCG seems too high for many communes with low poverty rates; (iii) Delayed WDF establishment and recruitment of its professional staff. Recruitment process for WDF fulltime professional staff including a capable manager (costs initially to be covered by the project) has not been started. So far only one fulltime staff works for management of SCG activities at the provincial WU. District level WU has not been mobilized to operate the SCG activities, and development of district branches of WDF is not yet planned; (iv) Awareness of target communities and involved staff on advantages of microfinance services is limited due to lack of a communication and social mobilization programme. 8

15 31. In view of the above the mission recommends the following activities be prioritized by the WU: Agreed action Responsibility Agreed date Review the past experience and develop a new strategy for mobilization of poor households. WU to launch a communication and social mobilization programme on advantages of SCGs and microfinance services, with aim to develop 400 new SCGs which should be in the poorer districts and communes. Lead: WU, Support: PCU July 2015 Develop a new manual for SCGs under WDF by assistance of national consultants. For the new manual, consider (i) change of target of 40% poor households participation to 60% of poor and near-poor inclusion; (ii) increase amount of compulsory savings and add voluntary saving; (iii) define appropriate interest rates; and (iv) establish mechanism for on-lending of group savings within the SCG. Issue Decision on establishment of WDF and its operational structure of headquarters at the provincial level and district branches; Recruit fulltime WDF manager and credit/accounting staff; Delegate loan approval and management authority to the district branches. Project to support the capacity of the WDF including a software-based accounting system and professional training programmes for involved staff at all levels. Lead: WU, Support: PCU Lead: PPC Support: WU, PCU Lead: WU, Support: PCU July 2015 July 2015 July 2015 Component 3: Commune Market-oriented Socio-economic Development Planning and Implementation Overall assessment of the component is satisfactory. Subcomponent 3.1 Commune s Planning Capacities for MOP-SEDP 32. The subcomponent is rated satisfactory. Main results of this subcomponent include: (i) MOP- SEDP training for 1600 commune officials in both project and non project communes; (ii) implementation of MOP-SEDP 2015 and 2016 for 27 project communes and 20 non-project communes; (iii) introductory implementation of MOP-SEDP 2016 for 18 additional non-project communes/wards in urban areas; (iv) about households participated in MOP-SEDP process, among which 37% poor and 53% women; and (v) 72.3% of surveyed households in project communes were satisfied with the MOP-SEDP planning, and 48.7% of surveyed households in project communes confirmed that MOP-SEDP, and subsequently CDF activities, have positively contributed to their livelihood improvement. 33. In view of effectiveness and sustainability, the mission notes the following challenges in the MOP-SEDP implementation: (i) Current MOP-SEDP implementation was still mainly guided by the project staff at district and commune levels. Project completion will thus will result in capacity gaps for MOP-SEDP implementation when staff move to other positions; (ii) Turnover of commune leaders and staff, especially after the recent Party meetings, causes capacity gaps and requirement of additional MOP-SEDP refresher trainings; (iii) In many non-project communes, staff still finds the MOP-SEDP process to be complex and irrelevant due to insufficient information and guidance by the DPI. The mission recommends the following actions: Agreed action Responsibility Agreed date DPI to further streamline MOP-SEDP into government planning process. DPI/PCU/ provincial and district MOP-SEDP TWG July 2015 Assign district Finance and Planning Unit and commune CPC to take lead in MOP-SEDP implementation. DPCs July 2015 Conduct continuous training courses on MOP-SEDP process for district, commune and village staff in both project and non-project communes. DPI/ provincial and district MOP-SEDP TWG July 2015 Organize field/cross learning between non-project and project communes to exchange experiences toward improvement of MOP-SEDP implementation. Subcomponent 3.2 Engaging the Poor in Value Chains DPI/ provincial and district MOP-SEDP TWG, CDBs July The subcomponent is rated moderately satisfactory. To date, achievements include: (i) 302 CIG are established and functioning, with 3753 members including1288 women, 1690 ethnic minority, and 2316 poor and near-poor members (62%); (ii) All groups have developed group regulations and 9

16 mobilised initial savings to lend out to most disadvantaged members; (iii) 52 training courses on production and business planning have been organised with participation of 1755 members; (iv) 99 lead farmers have been identified and provided with ToT, to later train CIGs in business/production planning; (v) 172 CIGs received direct input material support, including 116 CIGs through commune CDF and 56 CIGs through DARD implemented sub-component 2.2; (vi) 35 CIGs received co-financing by CSG fund; (vii) In a recent CIG classification exercise, 114 CIGs (38%) have been classified as "have market connection with traders and SMEs within the province". It is foreseen that with the initiation of 7 new CBG enterprise co-investments, number of market connection CIGs will be increased. 35. Although CIG development is progressing well, the mission notes the following challenges: (i) many CIGs, particularly in high-land districts, are still weak in group management; (ii) business linkages between CIGs and enterprises/traders are still limited, both in terms of purchasing inputs and selling outputs. This is partially caused by the excessive establishment of cow breeding CIGs with no market links; (iii) the CIG development and facilitation is still implemented by the project; no key agency has been identified to involve in this process and continue it beyond project completion, risking sustainability of the CIG process. The mission recommends the following agreed actions: Agreed action Responsibility Agreed date Identify and engage a suitable agency or agencies to support CIG establishment and development. Conduct necessary capacity building for the selected agency and gradually hand over the CIG development and support task. PCU/DASU July 2015 Consolidate existing CIGs thorough intensive training in production/business planning skills. Consider engaging the above selected agency and the 99 lead farmers for such training to ensure sustainability of the practice. Continue setting up new CIGs to increase both poverty reduction coverage and possibility of viable business linkages. New CIGs should be identified in coordination with enterprises/traders, to serve their needs of supply chain coordination. The CSG fund should be considered as a motivation for farmers to establish CIGs and apply to the fund. Subcomponent 3.3 Community Development Fund PCU/DASU July 2015 PCU/DASU/CPC June The subcomponent is rated moderately satisfactory. Main results of this subcomponent include: (i) By June 2015, 194 public infrastructure works including 73 roads (52 km), 6 bridges, 44 irrigation canals (19 km), 11 market buildings and storages for agriculture products, 3 water supply systems, and 2 electricity lines were completed and put to use. Total 18,700 households benefit from these investments, including 9,420 (50.4%) poor and near-poor and 9,620 ethnic minority households; (ii) Regarding production support, the project invested in 46 drying yards (51000 m2), 15 biogas tanks, 1 rice harvesting machine, 4 corn threshing machines, 1,077 breeding cows, 206 goats, 265 lambs, 196 tons of sugarcane seedlings, 6,400 banana seedlings, 15,000 grape seedlings and 4,400 chics. These investments benefited total 2,500 households; (iii) trainings on agricultural technique and business/production planning, trainings on vocational skills, and farmer group study tours were organized for total 19,106 farmers, and additional Farmer Field School trainings were conducted for 6,004 farmers; (iv) the CDF manual was updated; (v) force account method was applied for 16 small infrastructure works, creating local employment; (vi) standard designs were applied for 38 out of total 74 works under the AWPB 2014, and 29 out of total 51 works under the AWPB 2015, saving costs and time of CDF implementation; (vii) following recommendations by the MTR, about 81% of CDF production infrastructure investment in 2015 was planned to support CIGs directly; and additional CDF investment of VND 23,1 billion was allocated for 29 productive infrastructure works in well performing project communes. 37. However, there are still challenges and constraints for implementation of this subcomponent: (i) Liquidation of completed CDF works is slow. By June 2015, liquidation dossiers of 38 out of total 74 CDF works under the AWPB 2014 are yet to be appraised and approved; (ii) Guidelines for implementation of CDF revolving funds (drafted by PCU in April 2015) for breeding livestock, seedlings and other agricultural inputs supported to CIGs are yet to be implemented by DASUs/CDBs to strengthen CIG s sustainable operations; (iii) Some CDBs still have limited capacity as investment owners. 10

17 Agreed action Responsibility Agreed date Speed up preparation, appraisal and approval of liquidation dossiers for completed CDF works. CDBs, DASUs, PCU July 2015 Apply revolving fund mechanisms for breeding livestock, seedlings, and other agricultural inputs supported to CIGs using CDF productive infrastructure fund. Agreements on revolving fund mechanisms to be signed between CIG representatives and CDBs prior to disbursement. PCU, DASUs, CDBs, CIGs July 2015 D. TNSP Ninh Thuan implementation progress 38. Project Management Performance. Rated as moderately satisfactory. After critical evaluation by the MTR 2014, the Project Steering Committee and the IFAD Country Office have invested significant efforts to improve the project management capacity of the TNSP Ninh Thuan. The IFAD Country Office fielded a support mission to identify key issues in implementation progress and to find solutions for improvement. As result, new Project Director and head of Strategic Division were appointed along with two new technical staff at the PCU, three Deputy Heads were changed at the DASUs, and 27 fulltime implementation support officers were recruited at the CDBs. Regular meetings between PCU and lead component agencies, co-implementing agencies, DPCs and CDBs have been organized to accelerate the project implementation. In addition, the PCU has hired qualified national consultancy services to assist the project in management capacity building. Therefore, the mission notes a comprehensive improvement in the project management performance, particularly in strengthening of the coordination among co-implementing agencies and district/ commune authorities. 39. However, the province suffers from critical draught and project delivery was affected by the recent government policy on control of ODA disbursement. For the remaining period in order to improve both dynamics and quality of the project management performance the following issues should be critically addressed: (i) Focus on more difficult areas: in poorest districts namely Bac Ai, Thuan Bac and Ninh Son the capacities of the CDBs and DASUs need locally-based technical assistance as well as frequent supervision and implementation support for application of innovative instruments such as MOP-SEDP, CIG, CSG, CBG, CDF and SCG; (ii) Integration/ coordination/ decentralization: It is yet to be clarified, which unit is overall responsible for coordination/integration of services provided by the provincial agencies and the decentralized resources such as CSG and CDF. At the district level, most of the project activities are managed by DASU staff and separately by some involved line agencies. In particular, the district-level FU and WU have not been assigned to implement the community-based activities such as SCG and CIG development facilitation. Therefore the DPCs should be made accountable for the overall project performance at the local level, the WU for SCG development, and local FU units engaged to support CIG development. These should be clearly agreed upon and disseminated by a PPC/PSC decision; (iii) Knowledge management tools such as learning route have not been used as instruments to raise interest/participation or to develop capacities of target groups in project activities; number of the CIGs/SCGs is yet modest and therefore the number of poor/near poor households benefiting from the project remains insufficient compared to targets; sharing experiences between DASUs and CDBs is not yet promoted; farmer-to-farmer communication and extension approach has not been used; (iv) Staff professional skills: project staff still have limited skills in social mobilization and communication; skills for application of value chain approach is still limited among staff at district line agencies and the CPCs. In view of above, the mission recommends priority actions as follows: Agreed action Responsibility Agreed date Strengthened support for Bac Ai, Thuan Bac and Ninh Son districts: PCU to convene regular supervision missions and to recruit PCU July 2015 technical assistance directly based in the districts. Integration/coordination/decentralization: PPC/PSC to issue and communicate a Decision on the role and accountability of the DPCs for the overall project performance, WU accountability for SCG development, and engagement of FU in CIG development in the districts PPC/PSC July 2015 and communes. Knowledge management: organize learning routes for poor ethnic minority groups to successful implementation sites; facilitate learning workshops and networks among project management staff at districts and communes. PCU July