There was a delay of 1.5 years in project completion. This can be attributed to the 13-month delay in mobilizing the service providers, which affected social mobilization and the award of subproject grants. Advanced contracting of the consultants during project design would have avoided startup delays.
Banks are heavily dependent on collateral, and rural property are not readily accepted by banks. Future agriculture value chain projects should include such a component to help farmers access formal finance.
Project areas were hit by extreme weather events such as hailstorms and high winds, which were not typical for those areas. The greenhouses were able to protect the project farmers’ crops when the crops of other farmers were wiped out completely. With climate change predictions forecasting increasing frequency of extreme weather events, developing insurance schemes along with promoting climate-resilient infrastructure and technology will be important to cover for losses and damages from extreme weather events.
While the project made it mandatory for agro-processors to get registered and follow government food standards, federalism has complicated the jurisdiction of the three tiers of government in developing an effective and coordinated quarantine and food quality control system. Future similar projects need to give greater attention to this, channeling lessons and good practices from other countries and ADB projects as appropriate.
The commodity-specific multi-stakeholder platforms established by the project brought together producers and processors along with other value chain actors. These need to be sustained and may be replicated as appropriate in other parts of Nepal as well as in other countries to accelerate the development of agricultural value chains that will be beneficial especially for small and medium farmers.
Limited availability of local inputs and technical know-how has affected the implementation and sustainability of this project. Specifically, farmers faced difficulties in acquiring certified seeds and materials for the construction of greenhouses, screen houses, and drip irrigation because of the limited number of input supply companies in Nepal. Operation and maintenance of plants and machinery also relied heavily on technical manpower imported from India. The experience highlights the critical need for focused public sector investments to help input supply businesses innovate and expand and build technical knowhow domestically to promote agriculture commercialization in Nepal.
Subprojects related to cold storage construction could not access the government’s intended customs duty subsidies for the agriculture sector because of ambiguous wording in the policy documents. An analytical and monitoring framework to assess the cost and benefit of each tax incentive needs to be developed to rationalize the tax incentive program. Especially for an economy that is just emerging from subsistence agriculture, it will be imperative for the public sector to continue to absorb some of the investment risks in agriculture, either through subsidies or through clearly defined and well-targeted tax incentives.
The outlay for agribusiness grant facility (AGF) established by the project rose by 52.7% during implementation. This resulted from a larger scale of agribusiness investments than anticipated, reflecting improved investor confidence during the post-insurgency period. Matching grants to the AGF from ADB, the government of Nepal, and the Netherlands Development Agency, SNV, further boosted investor confidence. For every $1 spent, the AGF leveraged $1.65 of private investment.
Nepal in 2010 remained a largely agrarian society: an estimated 80% of its population lived in the rural areas and around 66% engaged in agriculture, livestock, and forestry for their livelihood. Despite this, agriculture’s contribution to the country’s gross domestic product fell from 72% in 1975 to 35% in 2010. Weak supply chains, limited access to credit, poor infrastructure, underdeveloped market chains, and lack of services all contributed to low agriculture productivity, leading to low rural incomes and risk-averse decision making in farming. As a consequence, poverty incidence in the rural areas, at around 35%, was three times higher than the 10% urban poverty rate. Poverty rates in the districts of the former mid- and far-western development regions, where the civil conflict in 1996 to 2006 was particularly severe, were even higher at 40% on average. More than 65% of smallholder farmer households in these districts lived below the poverty line.
To help address the situation, the Asian Development Bank (ADB) approved in November 2010 a $20.1 million grant for the Raising Incomes of Small and Medium Farmers Project. The project sought to reduce the market and business risks for small and medium farmers diversifying to high value commodities (HVCs) by providing grants to (i) members of farmer groups or cooperatives with established market supply agreements for initial inputs and farm development; and (ii) postharvest enterprises for developing value chain infrastructure to support the market supply agreements. The project’s anticipated impact was an increase in the profitability of small and medium farmers in 10 project districts. Its expected outcome was increased production of HVCs by small and medium farmers, to be achieved through the following outputs: (i) HVC value chains in the mid-western development region and far-western development regions to supply markets, (ii) business plans for producing and adding value to HVCs in the project regions, and (iii) effective project management.
At completion, the project achieved or overachieved most of its output and outcome targets. At appraisal, it was estimated that the project would result in 7,500 hectares (ha) under HVC production, generating 64,500 tons with a retail value of $31 million, farmgate value of $13.5 million, and gross margin to farmers of $9.5 million per annum. At completion, the project had facilitated 2,585 supply agreements through 878 farmers groups producing HVCs on 8,074 ha of additional land, which yielded 111,552 tons of HVCs with a farmgate value of $23.6 million and gross profit to farmers of $7.9 million. This resulted in farmers’ returns increasing by 239% on the same unit of land through switching from cereals to HVCs (target: 30% increased returns from HVCs). The project awarded 100 grants for post-harvest operations (target: 110) and 280 grants to disadvantaged groups and marginal farmers (DGMF) (target: 30 farmers groups and 90 DGMF). Similarly, 281 subprojects related to on-farm development were completed (target: 70), with participating farmers producing HVCs on additional 0.396 ha on average.
The subproject investments directly and indirectly benefited a total of 79,641 farmers and agro-entrepreneurs, 55% of whom were women. Women likewise comprised the overwhelming majority (5,825 or 87%) of the individual members of the 280 DGMFs that were assisted. Farmers groups and cooperatives of mukta kamaiya and haliya groups (freed bonded laborers) supported by the project enabled it to contribute to social inclusion, a critical goal for the country to recover from civil strife. A total of 10,573 Dalits (55% women); and 32,225 indigenous people (53% women) benefited from the project.
Women’s benefits from the project were facilitated by the successful implementation of the gender equality and social inclusion action plan, which overall resulted in greater access to economic opportunities and cash income increases (NRs121,619 annually) for disadvantaged and marginalized women farmers, 82% women representation in the executive committees of farmer groups and cooperatives, and recognition of women-leader farmers as local resource persons in agro-entrepreneurship. Participating women’s cash income is estimated to have increased by 74% compared to 2011 levels (target: 60%), thus contributing to household expenses, children’s school fees, medical purposes, and other essential needs.
Mostly successful attainment of the output and outcome targets enabled the project to overachieve its impact targets. An independent impact evaluation carried out by ADB in 2020 revealed that incomes of small and medium farmers in the project districts increased by 34% in real terms between 2014 and 2018 (target: 20% by 2020 over the 2011 baseline). The 239% value addition realized by farmers switching to HVCs was a far cry from the 15% HVC value added estimated at project appraisal. In addition, the project leveraged $21.79 million in private investments in the agriculture sector, generated 1.3 million labor-days of employment, and contributed to climate change adaptation through improved technology adoption.
The project had the Ministry of Agriculture and Livestock Development (previously named the Ministry of Agriculture and Cooperatives) as executing agency. A project management unit, established by the Department of Agriculture, acted as the primary implementing agency.
Designs prepared for the schools under this project can be prototypes for rehabilitating or constructing schools with community emergency shelters throughout the country. In fact, the Ministry of Education and Training is already using these designs for two secondary schools under a World Bank-financed project.
While the original and revised project design and monitoring frameworks were reasonable, the impact statement could have been nuanced to reflect the specific support provided to the education sector. The outcome and shelter-related output indicator should have been specific to the project schools to correlate with project inputs and overall objectives. The gender action plan (GAP) design could have included more quantitative indicators and activity targets for enhanced monitoring and evaluation. As GAP activities occurred later in the project cycle, baseline data could have been collected midway for refining the GAP targets during the midterm review. Regular GAP monitoring could have been strengthened, as this data would have further strengthened project management.
It is unclear why a covenant was necessary to ensure the use of single-source consultant recruitment. The method may not always save time, as the need to negotiate remuneration rates poses a significant risk of offsetting the time savings from bypassing advertising and shortlisting.
During project preparation, community consultations were held at each school, but testimonials indicate that some community members felt the final design did not fully consider their suggestions. Better feedback to communicate information about why certain design suggestions were not adopted could have addressed this problem. It could also have made the community feel more included and strengthened their ownership of the project. Based on project experience, community outreach activities in future similar interventions in Vanuatu should involve (i) separate consultation sessions for males and females, with workshops scheduled on days when women are not undertaking care or income-generating activities; (ii) consultations with local communities on strengthening project sustainability; (iii) awareness-raising activities to achieve a common understanding on the basis for final design criteria and special design features; and (iv) prioritized needs-based institutional capacity building at the local level for a stronger first response to disasters, especially in remote areas.
Infrastructure investments based on build-back-better principles and capacity development support provided by this project contributed to strengthening disaster resilience at the local level. The post-completion review found that increasing school enrolment numbers can help to channel sufficient funds to facilities’ operation and maintenance. In addition, future projects can help improve schools’ operational sustainability through measures such as combining schools for administrative efficiencies and exploring opportunities for schools to generate additional revenue. There is also need for a national strategy and operational plan to strengthen the disaster resilience of school assets, including a holistic assessment of other school infrastructure needs.
In March 2015, Tropical Cyclone Pam struck Vanuatu, causing one of the worst disasters in its history. Total economic damage and losses were estimated at 64.1% of the country’s gross domestic product. The Post-Disaster Needs Assessment completed by the government and development partners concluded that Tafea and Shefa provinces were most affected, with the social sector sustaining significant damage. The education sector’s estimated medium to long-term recovery needs totaled $62.30 million, in response to which the Asian Development Bank (ADB) approved in November 2015 a $5 million grant from the Japan Fund for Poverty Reduction it administers for the Cyclone Pam School Reconstruction Project.
The project was designed to support recovery and rehabilitation efforts in the education sector, focusing on the reconstruction of junior secondary schools (JSSs) in the Tafea province. It followed a two-pronged build-back-better approach that involved (i) constructing and rebuilding school infrastructure to withstand future disasters and provide community emergency shelters during disasters; and (ii) building local disaster resilience capacity by training the community, students, school administrators, and provincial education officers.
The project’s anticipated impact was accelerated social recovery in Vanuatu’s cyclone-affected provinces. Its expected outcome was critical education services resumed with disaster-resilient infrastructure. This was to be achieved through two outputs: (i) rebuilding and/or upgrading of schools, and (ii) capacity strengthening of communities and the Ministry of Education and Training (MOET) management in disaster risk reduction and disaster preparedness. During implementation, a minor change in scope was implemented to focus the project on Tanna Island, the largest of five islands in Tafea Province that accounts for 88% of the province’s population.
At completion, the project achieved all its five output targets. It rebuilt and/or retrofitted existing buildings as well as constructed new ones in four JSSs to make them more disaster-resilient and to enable some to function as emergency shelters. The overall functionality of these schools was further improved through furniture provisions such as bunk beds, mattresses, dining tables and chairs, library shelves, science lab benches and stools, teachers’ tables, and student desks. As per projections from the project’s economic analysis, the four project-supported schools can provide shelter to about 24.3% of the population (1,086 persons) within a three-kilometer radius.
Because of the robust technical review procedure established by the project management unit facilities delivered were responsive to gender needs and the needs of the differently abled while meeting national disaster resilience standards. The various capacity development workshops on (i) disaster risk management, including cyclone simulation exercises for schools and communities; (ii) sexual and reproductive health; and (iii) hygiene awareness complemented the build-back-better approach and were appreciated by female students. The inclusion of provincial education office staff in these workshops helped build local-level capacity in disaster resilience.
Delivery of all the output targets enabled the project to achieve its expected outcome. Discontinuity in schooling was minimized and the outcome target of increasing island-wide student enrolment at JSSs for both boys and girls to at least 60% of the pre-cyclone level was exceeded. As of August 2020, JSS enrollees in Tanna totaled 2,196 boys and girls, representing 173.6% of the revised enrollment target and exceeding the original target by 4.6%.
For the four schools upgraded with project support, student enrolment increased from 451 in 2015 to 634 in 2020 (44% female). According to the MOET, this figure indicates that enrolments in the four project JSSs had returned to levels before Tropical Cyclone Pam and education services have fully resumed with disaster-resilient infrastructure. Overall, the project has thus likewise achieved its intended impact of contributing the post-Cyclone Pam social recovery of Vanuatu. The Ministry of Finance and Economic Management was the executing agency and the MOET, the implementing agency.
This program’s results framework and targets were closely aligned with PLN’s key performance indicators (KPIs), which were based on PLN’s RUPTL, 2015–2024 and Indonesia’s National Medium-Term Development Plan (RPJMN), 2015–2019. PLN has established KPIs in its corporate plan and has regularly reflected these in its annual reports. The close alignment between the PLN’s KPIs and the program’s results framework and targets encouraged the PLN to achieve the DLI targets. Power utility companies in other countries would benefit from similar arrangements that are beneficial for the attainment of both the program and corporate performance targets.
completion, six of the seven safeguard PAPs were achieved. The implementation of the safeguard PAPs has improved the capacity of PLN, especially at the unit level, to manage environmental and social impacts. By excluding 190 circuit-kilometer (ckm) of medium-voltage lines in the indigenous peoples’ area and 428.19 ckm of medium-voltage lines and 284.98 ckm low-voltage lines in the key biodiversity areas, the PAPs minimized the risks to ADB safeguards compliance. But the exclusion also eliminated indigenous peoples’ access to program benefits. In the upcoming review of ADB’s Safeguard Policy Statement, the provisions for this modality could consider how significant risks associated with government-funded programs could be better addressed.
The RBL modality tested in Indonesia through this program came out successful and easier to implement with lower transaction costs. It was flexible enough and allowed the PLN to select investments based on its changing requirements even during program implementation. Therefore, it is well suited to large power systems where demand and the technology available can change within a short time. By focusing on aggregate outputs and result areas as opposed to monitoring each contract, the program was able to support PLN in an effective programmatic manner.
Monitoring the progress against targets of PLN’s broader Sumatra program, which the RBL supported, was not considered part of the RBL administration responsibility. Therefore, the threats posed by the lack of financing for the broader program and the subsequent removal of some of its major components were not sufficiently tracked down and addressed under the RBL. It is important for future RBL programs to include in their monitoring all associated interventions that could have an impact on their implementation to enable necessary actions to be taken promptly to address deficiencies and/or avoid negative unintended consequences.
Some of the DLI targets and baselines set during program preparation were found to be conservative or inconsistent. Adjustments were made during implementation to make them more realistic. The target on energy sales was significantly affected by external factors beyond PLN’s control, including lower economic growth than anticipated under the PLN’s Power Supply Business Plan (RUPTL), energy subsidy removal, and the changing costumer consumption behavior. The experience has highlighted the importance of (i) setting DLIs that are within program control and not vulnerable to external factors, (ii) setting ambitious but achievable targets based on historic trends and EA/IA capacity, and (iii) having enough flexibility to adjust to changes in the external environment.
Through the Indonesia Resident Mission, ADB ensured that lessons learned from program implementation were used in the design of PLN subsequent RBL programs. Building on the program’s success in improving warehouse and waste management in Sumatra, ADB and the PLN transitioned this PAP into a DLI in the RBL programs for Sulawesi and Nusa Tenggara and Kalimantan, Maluku, and Papua. Adjusting DLI targets and verification protocols as needed is also a lesson learned that found useful application in subsequent programs.
By using disbursement-linked indicators (DLIs), non-DLI targets, and program action plans (PAPs) under the results-based lending (RBL) modality, the program successfully instituted mechanisms that strengthened the capacity and encouraged performance improvements from Indonesia’s State Electricity Company, PLN (Perusahaan Listrik Negara), in both technical and administrative areas. Improvements spanned: (i) the procurement monitoring system, where inconsistencies in reporting were identified and addressed through regular procurement monitoring; (ii) the planning and implementation capacity of PLN, which (a) made the preparation of subsequent RBL programs easier, (b) enhanced coordination among PLN divisions, and (c) enhanced PLN’s ability to continue to access debt capital markets and the bank debt market (PLN has supportive relationships with banks and investors so has access to multiple channels of commercial financing); (iii) PLN’s processes for the recording, collection, calculation, and reporting of data used to measure and track the DLIs and non-DLIs, particularly the management reporting information system and its primary sources of data; and (iv) warehouse and waste management. Because of the stronger evaluation culture developed by the RBL, the program also helped PLN recognize the need to update its internal regulations on the disposal of Non-Operating Fixed Assets (ATTB), particularly transformers, to speed up safe disposal.
Sumatra, targeted to become Indonesia’s next industrial center after Java, still experienced blackouts in 2014. In addition, 9 million of its 54 million people were still without access to electricity. The broader program for Sumatra for 2015-2019 of the state electricity company, the Perusahaan Listrik Negara (PLN), addressed these challenges by developing Sumatra’s transmission backbone system and interconnecting the Sumatra and Java–Bali grids. The Electricity Grid Strengthening—Sumatra Program, the first ever energy sector program financed by the Asian Development Bank (ADB) through the results-based lending (RBL) modality, supported the broader PLN Sumatra program. The RBL program was approved in December 2015 for a loan to the PLN of $600 million ($575 million from ADB’s ordinary capital resources and $25 million from the ADB-administered ASEAN Infrastructure Fund). It was also the first in a series of investment programs that adopted a programmatic approach to improve the reliability and stability of Indonesia’s electricity grid.
The program built on ADB’s extensive experience in the country’s energy sector since 1971, which provided the basis for initiating larger, flexible, and programmatic energy sector financing with a focus on results. The RBL modality was adopted as it was deemed most appropriate to support electricity grid strengthening that involves many relatively small-scale and discrete activities and expenditures with numerous individual contracts. The program’s envisaged impact was quality of life of Indonesian society enhanced by the sustainable use of electricity as a key driver of increased economic activity. Its expected outcome was adequacy and reliability of power supply achieved for Sumatra, and its intended outputs were (i) existing transmission system strengthened and expanded; (ii) existing distribution system strengthened and expanded; and (iii) performance management and implementation improved. The planned outputs were designated as the three result areas that linked up at the outcome level. Each result area had corresponding disbursement-linked indicators (DLIs) and/or non-DLIs, and program action plans (PAPs).
At completion, the program substantially achieved its intended outcome and outputs. Five of the six DLIs were achieved and exceeded the targets. Overachieved DLIs included the annual growth rate in customers, reduction in the number of medium voltage feeder permanent interruptions, cumulative length of 150 kilovolt (kV) transmission lines reconductored, additional transformers installed, and additional length of medium-voltage distribution lines constructed. The target on residential sales growth was only partially achieved because of the lower economic growth than assumed under the PLN’s Power Supply Business Plan (RUPTL), the removal of energy subsidy, and the changing customer consumption behavior. One of the three non-DLIs was overachieved (timely completion of distribution system contracts); one was partially achieved (PLN competency certified staff); and one was not achieved (reduction in customer complaints). Furthermore, through the PAP, which consisted of 26 actions agreed upon by the PLN and ADB, the program had a transformative effect on PLN’s institutional capacity, particularly on warehouse and waste management. It also enabled the upgrade or updating of PLN’s standard on oil retention facilities, financial management, and procurement monitoring system and other databases.
The expansion and strengthening of power transmission and distribution networks achieved under the program contributed to adequate and reliable electricity supply to a wider consumer base in Sumatra. By program’s end, electrification rate rose from 88.21% in 2015 to 99.26% in 2019. This has enhanced the quality of life and boosted the economic development of the region. The program had the PLN both as borrower (guaranteed by the government) and executing agency. PLN implemented the program through its regional division at PLN headquarters and regional main units responsible for the Sumatra electricity grid.
Various trainings were given to the executing and implementing agencies in water supply and wastewater treatment operations. Aside from training, emphasis on developing the institutions, such as review of the overall organization structures and terms of reference of management and staff, would be helpful in further strengthening the EA and IAs. The creation of the Tianjin Water Affairs Bureau can be regarded as a first step in overseeing the continued development of water-related IAs to focus efforts in building capacity in operational areas needed for the city’s development. Furthermore, it is also acknowledged that the commercialization of operations, through TCEPC involvement, is also another step in institutional strengthening.
Sewerage construction needs to be fully addressed in the early stage of the project, particularly as it affects the implementation of wastewater treatment operations. Further to this, when the two are implemented by different funding institutions, the need for inter-donor coordination is essential to ensure that project operations and targeted completion are not compromised.