World Bank Document · FY84 US$1 - Tk 24.08 FY85 US$1 - Tk 25.09 FY86 US$1 - Tk 27.08 FY87 US$1 -...

Douet of

The World Bank

FOR OFFICIAL USiE ONL Y

Report Nb. 11851

PROJECT COMPLETION REPORT

BANGLADESH

RURAL DEVELOPMENT II PROJECT(CREDIT 1384-BD)

MAY 14, 1993

Agriculture Operations DivisionCountry Department ISouth Asia Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EOUIVALENTS

At Appraisal (FY83) US$1 - Tk 23.00FY84 US$1 - Tk 24.08FY85 US$1 - Tk 25.09FY86 US$1 - Tk 27.08FY87 US$1 - Tk 30.85FY88 US$1 - Tk 31.21FY89 US$1 - Tk 32.18FY90 US$1 - Tk 32.94FY91 US$1 - Tk 35.63

At Completion (FY92) US$1 - Tk 38.14

WEIGHTS AND MEASURES

1 kilometer (km) - 0.62 mile (mi)1 hectare (ha) - 2.47 acre (ac)

1 metric ton (mton) - 2.205 pounds (lbs)

ABBREVIATIONS

BADC Bangladesh Agricultural Development CorporationBB Bangladesh Bank (Central Bank of Bangladesh)BRDB Bangladesh Rural Development BoardBSS Bittyaheen Samabaya Samity (Assetless Cooperative Society)DG Director GeneralDTW Deep TubewellGOB Government of BangladeshHYV High Yield VarietyIMP Irrigation Management ProgramKSS Krishi Samabaya Samity (Farmers' Cooperative Society)LGEB Local Government Engineering BureauLLP Low Lift PumpMIS Management Information Systemp/m person/monthp/d person/dayPP Project ProformaRCS Registrar of Cooperative SocietiesRMB World Bank Resident Mission in BangladeshRPP Rural Poor ProgramSB Sonali Bank (Government-Owned Commercial Bank)STW Shallow TubewellUCCA Upazila Central Cooperative AssociationURDO Upazila Rural Development OfficerUTDC Upazila Training and Development Center

FISCAL YER

July 1 to June 30

FOR,OFFICIAL USE ONLYTHE WORLD BANK

Washington, D.C. 20433U.S.A.

Office of Director-GenoralOperations Evaluation

May 14, 1993

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on BangladeshRural Development II Project (Credit 1384-BD)

Attached is a copy of the report entitled 'Project Completion Report on Bangladesh - RuralDevelopment II Project (Credit 1384-BD)" prepared by the South Asia Regional Office.

Only a third of the ambitious minor irrigation and crop production credit targets wereachieved due to continued subsidized public programs and weak credit delivery systems. On the otherhand, irrigation management support services were improved and a skill training and loan programtargeted to the rural poor yielded encouraging results. The project was restructured and the closingdate extended four times to allow full use of the credit but this did not yield decisive measures toimprove project management. A variety of institutional development actions achieved partial resultsbut failed to tackle the fundamental weaknesses of the Bangladesh Rural Development Board andof the rural cooperative system. Loan recoveries remained very low and cooperative autonomy didnot materialize.

Although the project did not achieve its objectives, it had a substantial effect on productionand incomes, and is likely to yield significant economic benefits. In contrast, institutionaldevelopment goals were not achieved, and most project-related initiatives are not sustainable.

Project shortcomings include complex design; optimistic targets; a top-down approach toproject preparation and implementation, and weak eligibility criteria. Bank appraisal was not rigorousand failed to identify the lack of borrower commitment to project objectives. Borrower performancewas weak.

The PCR is complete and informative. No audit is planned.

Attachment

This document has a restricted distrlbution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

FOR OFFICIAL USE ONLY


BANGLADESH

RURAL DEVELOPMENT II PROJECT(Credit No. 1384-BD)

TABLE OF CONTENTSPaze No,

PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .i

EVALUATION SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

PART I - PROJECT REVIEW FROM IDA'S PERSPECTIVEProject Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Project Objectives and Description ..... . . .. . . . . . . .. . . . 2Co-financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Project Design and Organization . . . . . . . . . . . . . . . . . . . . . . 2Project Implementation - General . . . . . . . . . . . . . . . . . . . . . 4Project Implementation - Individual Elements . . . . . . . . . . . . . . . 5Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Project Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . 12IDA Performance ....... .. .. .. ... .. .. .. .. .. .. . . 12Borrower Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Project Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Consulting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Project Documentation and Data . . . . . . . . . . . . . . . . . . . . . . 14

PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE . . . . . . . . . . . 15

PART III - STATISTICAL INFORMATIONRelated IDA Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Project Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Credit Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Project Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Incremental Credit ........................ . 19Minor Irrigation ......................... . 19Rural Poor Program (RPP) ..................... . 19Thana (Upazila) Civil Works . . . . . . . . . . . . . . . . . . . . . 20Cooperative/Institutional Training ..... . . . . .. . . . . . . 20Private Mechanics Program ....... .. .. ... .. .. .. . . 20Strengthening of BRDB . . . . . . . . . . . . . . . . . . . . . . . . 21Expansion of Irrigation Management Program (IMP) . . . . . . . . . . 21Technical Assistance (Consultancies) . .............. . 21Marketing Program ......................... . 22Strengthening of Audit ........ .. ... ... .. .. .. . 22Promotion of Cooperatives ..................... . 23

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Project Costs and Financing . .24Project Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Project Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Project Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Direct Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Economic Impact.. ...................... 26Financial Impact.. ...................... 26Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Status of Covenants ...................... ..... . 28Use of IDA Resources ................ ....... ... . 30

World Bank Staff Inputs ......... .. ... ... ... .. . 30

ANNEX 1Table 1: Financial and Economic Prices (mid-1991) . . . . . . . . . . . . . 31Table 2: Crop Parameters (per ha) and Cropping Pattern. . . . . . . . . . . 32Table 3: Farm Model A: New Shallow Tubewell (6 ha). . . . . . . . . . . . . 33Table 4: Farm Model B: New Deep Tubewell (19.5 ha). . . . . . . . . . . . . 33Table 5: Farm Model C: Application of IMP to Deep Tubewell. . . . . . . . . 34Table 6: Farm Model D: Application of IMP to Low Lift Pump. . . . . . . . . 34Table 7: Farm Model E: Application of IMP to Shallow Tubewell . . . . . . . 35Table 8: Farm Build up. . . . . . . . . . . . . . . . . . . . . . . . . . . 36Table 9: Re-calculation of Economic Benefits of RPP . . . . . . . . . . . . 36Table 10: Incremental Economic Costs and Benefits

and Re-calculation of the ERR. . . . . . . . . . . . . . . . .37

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BANGLADESH


PREFACE

This is the Project Completion Report (PCR) for the Second RuralDevelopment Project (RD-II) in Bangladesh, for which Credit 1384-BD in the amountof SDR 92.8 million (US$100 million) was approved on June 14, 1983. CIDA, ODAand UNDP provided grants of US$17.6 million, US$10.5 million, and US$1.6 million,respectively. The project was restructured in July 1989 and was closed onJune 30, 1991, three years behind schedule. The final disbursement was made onNovember 14, 1991. There were four Credit cancellations: one of SDR 20 million(US$26.1 million) in April 1987, another of SDR 4 million (US$5.1 million) inJuly 1989, and a third one of SDR 8 million (US$10.6 million) in June 1990. Theundisbursed balance of SDR 3.18 million (US$4.4 million) was finally cancelledin November 1991.

The Preface, Evaluation Summary, and Parts I and III of the PCR wereprepared by an FAO/CP mission!/ (which visited Bangladesh in March 1992) andwere revised by staff of the World Bank Resident Mission in Bangladesh. They arebased on the Staff Appraisal Report (SAR: Report No. 4348-BD), the President'sReport, the Project Agreement, the Development Credit Agreement, supervisionreports, progress reports, mid-term evaluation report, project files, workingpapers of consultants, discussions with officials and farmers, and field visitscarried out by the mission. On July 3, 1991, IDA requested the Borrower toprepare Part II by October 3, 1991. No response was received.

1/ J.M. Caballero (Team Leader), R. Zheng (FAO Trainee), M. Hossain(Institutions and Cooperatives Specialist, National Consultant), and B.A. Khan(Credit Specialist, Part-time National Consultant).

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BANGLADESH


EVALUATION SUMMARY

Objectives

i. The primary objective of the project was to strengthen and expandBangladesh's rural cooperative system (consisting of the first-tier villagefarmers' cooperatives (KSS) and rural poor cooperatives (BSS for men/MBSS forwomen) and their second-tier federations - the Upazilagl Central CooperativesAssociations (UCCA)) and to improve the capability and performance of itspromotional agency, the Bangladesh Rural Development Board (BRDB). Additionalobjectives were to: streamline procedures for UCCA purchase of irrigationequipment and credit distribution by Sonali Bank; diversify the activities of afew selected UCCAs into crop and input marketing; and to expand BRDB's Rural PoorProgram.

Implementation Experience

ii. The project was implemented between March 1984 and June 1991. BRDBwas the main Government of Bangladesh implementing agency. Implementation wasslow compared to the excessively optimistic targets in the SAR. Additionally,project implementation was hampered by inadequate implementation of minorirrigation policy, and by poor agricultural credit policies. The project'sinstitutional goals were affected by lack of strong support from the executingMinistry. Overall, the project had to be extended three times for a total ofthree years, and US$46.2 million of IDA credit had to be cancelled. Although theproject did not achieve its major objectives, it did improve the well-being ofthe cooperators.

iii. Implementation of the following components was successfully completedwithin the extended period: civil works, Irrigation Management Program (IMP),Rural Poor Program (RPP), training of private mechanics, strengthening of RCS'audit capabilities, and technical assistance. With some delays thecooperative/institutional training component was implemented according to theSAR, but attendance at training sessions and training quality were low.Achievements in the two larger components - the use of medium-term (MT) creditfor the purchase of minor irrigation equipment and the use of incremental short-term (ST) crop credit - were limited; only 37% of the shallow tubewells and noneof the low lift pumps targeted in the SAR were sold, and annual average ST creditdisbursements were only 33% of the target.

2/ Upazila - lowest tier in the government's administrative unit.

iv

iv. Based on a mid-term review carried out in October 1987, which foundthat it was worth extending the closing date despite delay and unsatisfactoryimplementation of some components, the project was reformulated in early 1988 byan IDA supervision mission. The reformulation was approved by IDA in June 1988.It greatly reduced the MT and ST credit components, used some of the savings forthe purchase of deep tubewells, and expanded the RPP.

Proiect Results

v. While the project achieved the revised quantitative targets it was notsuccessful in strengthening the cooperative system. However, it succeeded inincreasing output and incomes through expanded and improved irrigation and off-farm activities (para 7.3), with a good overall economic return.

vi. Formation of new cooperatives under the two-tier system of primarysocieties and UCCAs was fast but at the expense of quality, for many newsocieties could not maintain the quality of operation necessary to qualify forproject inputs and few of the existing societies were upgraded. The autonomy ofUCCAs was not achieved.

vii. Crop output increased due to: (a) expanded cultivation of high yieldvariety (HYV) rice and wheat using the new irrigation facilities provided by theproject; (b) an increase of the command area and yields in the irrigation schemeswhere IMP was applied; and (c) higher yields due to more use of inputs allowedby the incremental ST credit. The impact was less than expected in the SARbecause of the shortfall in achieving the targets for purchase of irrigationequipment, ST credit and increase in the command area under IMP. Mainly becauseof this the re-estimated economic rate of return (ERR) for the overall projectis 47%,2/ compared with an SAR estimate of 79%.

viii. It is estimated that the annual farm income of the farmers benefitingfrom STW has increased by Tk 6,100 (US$160) per ha, which is 22% more thananticipated in the SAR on account of an improvement in the input-output priceratio. The off-farm income of the rural poor who received RPP loans is estimatedto increase by Tk 1,500 (about US$40), or only 45% of the SAR estimate, but thenumber of loans given was more than double the SAR target.

Sustainability

ix. The UCCAs are not financially viable institutions. Without furthersupport, the great majority of UCCAs cannot absorb the personnel formerly paidby the project, or continue the training and other services, and maintain andeventually replace project buildings and equipment. Additionally, the two-tiercooperative credit system supported by the project, which is crippled byextremely poor repayments, is not sustainable. Most KSSs are heavily indebtedto the UCCAs, which in turn are heavily indebted to the Sonali Bank, and thereis little hope that the debts will eventually be repaid to any significantextent.

i./ The re-estimation used 1990 price projections which gave highereconomic prices for paddy (11%) and wheat (23%) than those projected in the SAR.

v

x. On the other hand and more positively, the achievements in the saleof minor irrigation equipment are sustainable since the KSSs can generally self-manage the equipment supplied by RD-II. The achievements of the RPP component arebeing continued and expanded with the benefit of further assistance from theCanadian International Development Agency (CIDA), which is facilitated by thecomparatively high repayment rates of RPP credit.

Findings and Lessons Learned

xi. RD-II was thwarted by problems of design which can be identified withthe benefit of hindsight: the project was too complex and had ambitious targets.The project's approach was top-down, using cooperatives - without consulting them- as a channel to push through agricultural equipment and credit to farmers. Theloan eligibility criteria, aimed at installing credit discipline through peerpressure, were inappropriate when applied at the UCCA level. Many eligible KSSsand individual farmers found their access to credit cut off because their UCCAwas ineligible. This de-motivated those affected from repaying their earlierloans.

xii. There were, nonetheless, some strong points in project design. Thetechnical package chosen - minor irrigation plus HYV for paddy and wheat - provedto be profitable, and RPP has been a good vehicle to help the rural poor.

xiii. The main lessons to be learned from this project are that:

(a) implementing large, complex rural development projects involving manycomponents and agencies is a very difficult process;

(b) collective loan responsibility, which rests on group pressure toensure repayment, is unlikely to work outside a face-to-face societycontext, and can backfire, discouraging timely repayments of loans bythose individuals or primary societies who are denied fresh loans andthus penalized because of failure of others to meet their loanrepayment obligations;

(c) in undertaking certain elements of rural development strategy,imposition of government programs or expanding the cooperative networkfor the purpose of channelling production inputs and services areinconsistent with the spirit of cooperative autonomy; and

(d) strengthening participatory management is a requisite for managerialautonomy of the cooperatives.


BANGLADESH


PART I - PROJECT REVIEW FROM THE BANIKS PERSPECTIVE

1. Project Identity

Project Name : Rural Development II Project (RD-II)

Credit No. 1384-BD

RVP Unit South Asia

Country : Bangladesh

Sector : Agriculture

Sub-sector Rural Development

2. Background

2.1 RD-II was conceived during the implementation of the Government ofBangladesh's (GOB) Second Five-Year Plan (1985-90) as a more comprehensivefollow-up to Cr. 631-BD, which was a US$24.7 million project covering sevenupazilas in two districts. The Development Plan aimed at grain self-sufficiencyby 1985, irrigation expansion, and the introduction of a High Yield Variety (HYV)input package. Rural development policy to support the Plan was laid down injoint IDA/GOB reviews of cooperative development, minor irrigation andagricultural credit4/, which contained the policy framework agreed in the early1980s between GOB and IDA for RD-II and other IDA-assisted irrigation andagricultural projects.

2.2 Within the framework of the rural development policy, irrigationexpansion would be based on minor equipment, which would be sold by the privatesector, to exploit both surface and the very rich underground water resources,and would be supported with training, medium-term (MT) and short-term (ST) creditto buy the equipment, and an HYV input package. The joint review of thecooperative system concluded that the two-tier cooperative model based on the

i./ Bangladesh Integrated Rural Development: A Joint Review by the Governmentand the World Bank, October 1981; Bangladesh Minor Irrigation Sector: JointReview by the Government and the World Bank, December 1982; BangladeshAgricultural Credit Review, A Joint Review by the Government and the World Bank,August 1983.

2

Comilla experiment of the 1960s, which was also adopted by the RD-I project, haddemonstrated its potential role in increasing agricultural production andincomes. In pursuance of the recommendation of the review, and in order toprovide an institutional base for a national system of two-tier cooperatives,Bangladesh Rural Development Board (BRDB) was established in 1982 as anautonomous agency to implement the Government's Integrated Rural DevelopmentProgram.

3. Proiect Obiectives and Description

3.1 The primary objective of the project was to strengthen and expandBangladesh's rural cooperative system, consisting of the first-tier villagefarmers' cooperatives (KSS) and rural poor cooperatives (BSS for men/MBSS forwomen) and their second-tier federations - the Upazila Central CooperativesAssociation (UCCA) and to improve the capability and performance of itspromotional agency, BRDB. The project also aimed to: streamline procedures forUCCA purchase of irrigation equipment and credit distribution by Sonali Bank;diversify the activities of a few selected UCCAs into crop and input marketing;and to expand BRDB's Rural Poor Program (RPP). Components were: (a) provisionof medium-term credit to UCCA/KSS members for the purchase of irrigation andrelated equipment; (b) expansion of an on-going Irrigation Management Program(IMP); (c) provision of medium-term credit to UCCA/BSS/MBSS members for variousincome-generating activities; (d) provision of short-term credit to UCCA/KSSmembers for crop production; (e) implementation of a UCCA-based crop and inputmarketing program; (f) construction of upazila and UCCA facilities; (g)strengthening BRDB and the audit capacity of the Registrar of CooperativeSocieties (RCS) through improved staffing and provision of vehicles and officeequipment; (h) training of BRDB and RCS staff, of staff and members ofcooperatives, and of upazila irrigation teams, and construction of trainingfacilities; and (i) technical assistance (TA).

4. Co-financing

4.1 The project was to be financed by an IDA Credit of SDR 92.8 million,a UNDP Grant of US$1.6 million equivalent, a Canadian CIDA Grant ofUS$17.6 million equivalent, a United Kingdom ODA Grant of US$10.5 millionequivalent, and GOB, Sonali Bank, and beneficiary contributions of US$30 million,$12 million, and $6 million, respectively.

5. Proiect Desien and Organization

5.1 With some assistance from FAO/CP, GOB prepared the initial projectconcept. However, further preparation was required and this was merged withappraisal of the project, which was carried out in September-October 1982 bystaff of the World Bank's Resident Mission in Bangladesh (RMB).

3

5.2 The basic project concept was sound, but, with hindsight,the designsuffered from four shortcomings:

(a) Complex Design. RD-II was a large and complex project. Theproject budget was US$177 million, to be spent in four years tofinance the implementation of many diverse components involvingseveral foreign development partners and numerous implementingagencies. The development partners were noted above (para 4.1);the implementing agencies were: BRDB (the lead agency); the LocalGovernment Engineering Bureau (LGEB); RCS; and the BangladeshAgricultural Development Corporation (BADC).

(b) Optimistic Targets. RD-II was national in scope, covering 13 ofthe 20 greater districts, which was appropriate given theinstitution-building objective. However, the project hadexcessively optimistic targets, particularly for the creditcomponents. About 37% (approximately US$66 million) and 35%(US$62 million), respectively, of the total project cost wasallocated for short and medium-term credit. This was animpossible target to achieve in four years.

(c) ToR-down Approach. The project design viewed the cooperativessimply as a channel to push through agricultural equipment andcredit to farmers. They were never consulted on whether theywished to participate. This top-down approach was inconsistentwith the spirit of cooperative society autonomy. Thecooperatives were widely perceived, even at the UCCA level, asmere extensions of the machinery of the Government. UCCAs wereencumbered with project staff appointed by BRDB. Selection ofSonali Bank (SB) as the banker for the project, as well as forthe UCCAs, was not a satisfactory arrangement, but UCCAs did nothave the freedom to take their business elsewhere.

(d) Loan Elizibilitv Criteria. Loan recovery performance at theindividual, KSS and UCCA levels was used to determine borrowingeligibility. This was part of an attempt to instill creditdiscipline through peer pressure. However, in practice thisturned out to have been a major mistake. Many eligible KSS andindividual farmers found their access to credit cut off becausetheir UCCA was ineligible. This destroyed the motivation ofthose affected to repay previous loans (para 7.9).

5.3 On the positive side, the right choice was made in putting irrigationat the center of KSS development since irrigation is quite profitable inBangladesh. This permitted a substantial economic return on the project in spiteof implementation shortcomings. The expansion of the Rural Poor Program (RPP)proved also to be a good choice, which has contributed to rural povertyalleviation. Finally, the classification of UCCA/KSS in A,B,C and D performancecategories was an interesting way of monitoring quality in the cooperativesystem.

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6. Proiect Implementation - General

6.1 Credit effectiveness was delayed for 3 months because of difficultiesin meeting the conditions. Project implementation was hampered due to inadequateGovernment support in terms of implementation of the privatization andagricultural credit policies. The project's institutional goals were affectedby lack of strong support from the executing Ministry.

6.2 Since the early 1980s, the Government's policy was that minorirrigation equipment, other than deep tubewells (DTW), would be supplied throughthe private sector. Subsidized sales and rentals through government agencies,which would undermine the policy, would cease. Unfortunately, the latter did nothappen until the late 1980s and private sector involvement in equipmentdistribution and servicing developed less well than anticipated. The Governmentalso intervened in the market, compelling the private dealers participating inthe project to sell at Government-administered prices. As a consequence, thefarmer suffered, since neither public nor private supply functioned adequately.During the life of the project the Government also imposed a ban on imports ofirrigation equipment and on fielding in many upazilas; this, too, impeded theproject.

6.3 Periodically, the Government instructed nationalized commercial banksto launch credit recovery drives. This had an adverse consequence in that banks,including the Sonali Bank, restricted credit disbursements, which starved goodcooperatives of loan funds to buy irrigation equipment and to finance otherfarming expenses. The Government's declaration to waive interest adverselyaffected credit discipline, as farmers refrained from repaying in the expectationof further credit relief measures. Interest was waived from short-term loans inOctober 1986 and 1988, and in April 1991, 90% of the interest due on medium-termloans and 100% of the principal and interest due on short-term loans of less thanTk 5,000 were also waived.

6.4 Frequent transfers of Director Generals (DG) of BRDB, and theGovernment's lack of interest in taking actions to make the UCCA autonomous,resulted in the failure of the project to meet the institutional objectives.During the original project period of four years, the DG was replaced more thateight times. In one instance, the DG was changed three times in one year. Inaddition, frequent changes in other top positions of BRDB made it impossible tocarry through policy reforms with regard to improvement in BRDB management,credit discipline, and building an autonomous cooperative system.

6.5 Prolect Reformulation. A mid-term review was carried out under theUNDP funded TA component of the project in October 1987. This was late butotherwise as programmed. The overall finding of this review was that while theproject had fallen well short of achieving its major objectives it had,nevertheless, improved the well-being of cooperators. Furthermore, it found thebasic project design sound and worth pursuing for an extended period; the mainquantitative shortcoming, in the credit components, was attributed, at least inpart, to excessively optimistic targets. Based on the recommendation of thisreview, the Government requested IDA to reformulate the project and to extend theCredit closing date. Detailed reformulation proposals were developed by an IDAsupervision mission in February 1988. In the reformulation the credit componentwas reduced and the unutilized funds were reallocated to the purchase of DTW

5

equipment; a pilot program to intensify homestead production by rural poor womenwas introduced; the RPP under RD-II was extended to three new districts, whileCIDA continued the support to the original areas under a bilateral agreement withGOB; and the TA component was extended. As part of the reformulation, GOB agreedto take specific action to increase cooperative society autonomy and improvecredit recovery. The Government's Project Proforma (PP) was revised accordingly.

7. Project Implementation - Individual Elements

7.1 Medium-Term Credit for Minor Irrigation (35% of project cost). Only11,021 STW and no LLP were sold of the original SAR targets of 30,000 STW and3,000 LLP. The poor STW sales performance was the result of: (a) over-optimistic targets referred to above; (b) sharp reductions in new creditdisbursements, also referred to above; (c) the saturation of the STW potentialin the more easily accessible areas; (d) difficulties with on-lending creditprocedures (para 7.9); and (e) Government-imposed restrictions on the operationsof the private sector (para 6.2). The private sector found it impossible to sellat full cost any LLP because of continued subsidized rental and sales programsby BADC. The Government, on the other hand, could not develop procedures tocompensate the private sector to enable them to sell LLP at subsidized prices.

7.2 Originally, this project did not provide for DTW development becauseof the existence of the parallel Second Deep Tubewells II Project, which wasitself geared solely to supplying cooperatives. However, as a result ofaccelerated groundwater development during 1987 and 1988, a shortage of DTWequipment developed as the IDA-assisted DTW-II project was coming to a close.The Government, therefore, requested IDA to include the provision of DTW in RD-II. This was agreed and US$33.1 million was allocated for the procurement ofabout 2,400 DTW. By June 1992 most of these had been sold. (Comments on creditrecovery and the operation of the Banking Plan are at paragraphs 7.8 and 7.9).

7.3 Irrigation Management Program (1% of project cost). RD-II expandedthe successful elements of IMP in RD-I in a more routine manner by focussing ontraining in irrigation management, funds for topographic surveys and loans forphysical works such as canal lining. It was oriented to KSS which already hadDTW or LLP, with the purpose of expanding the irrigation command area andincreasing yields through better water use. The program succeeded in meeting thequantitative targets with regard to the coverage of tubewells. After a slowbeginning an upazila irrigation manual was prepared, officers from the participa-ting institutions and the UCCA were trained at Bogra Rural Development Academyin the numbers targeted by the SAR, and the program was applied to 4,199 DTW and2,886 LLP against an SAR target of 4,400 DTW and 1,100 LLP.

7.4 The allocation for credit for canal improvement and for topographicsurveys was not disbursed. The major reasons for lack of demand for credit wereinadequate financial returns for individuals (as against economic returns tosociety) and the availability of grant funds provided by the Government to theupazilas for this purpose. Topographic surveys were not carried out due to thelack of coordination between BRDB, in charge of the organizational side ofIMP,and BADC, in charge of the engineering aspects. The program also did notreceive very strong support from BRDB headquarters and the Ministry.

6

7.5 Medium-Term Credit for Income Generating Activities (9% of projectcost). Generally known as the Rural Poor Program (RPP), this was an innovativeand successful component aimed at providing off-farm income earning opportunitiesto the landless by means of skills training and loans in 6 of the 13 greaterdistricts covered by the project. Poor men and women were organized in village-level primary cooperative societies - BSS for men and MBSS for women. The numberof loans under RPP reached 113,000 against a SAR target of 54,500. Loanrecoveries of 71% were much better than under irrigation and crop loans, butstill insufficient for a sustainable credit scheme. The training of privatemechanics, originally conceived as a separate RD-II component, was in factoperated as part of the RPP. This effective program trained 915 mechanics(against a target of 1,1005/) enabling them to make a good living whileproviding a much required service.

7.6 At the time of reformulation GOB requested CIDA, the cofinancier ofthe RPP, to continue to finance RPP in the six greater districts on a bilateralbasis after June 1988, the original Credit closing date. CIDA agreed to assistRPP for a further period of five years starting July 1988. In addition, thereformulation exercise programmed the organization of RPP activities in threeadditional districts. It also introduced a pilot homestead production programfor rural women in three upazilas for the extended project period. With theexception of some training of cooperators the RPP activities under the extendedRD-II did not progress much because of lack of managerial support from BRDBheadquarters. Under the homestead production program 150 rural women weretrained in intensive vegetable cultivation and poultry raising. Many of themeventually received loans.

7.7 Short-Term Credit for Crop Production (37% of project cost). Onaverage the annual disbursements of ST credit were only 33% of the SAR target.Causal factors were low irrigation equipment sales, ineligibility to borrowbecause of poor repayments, and the impact of the recovery drives referred toabove (para 6.3).

7.8 Credit Recovery. Credit recovery performance was very bad. At projectclosing recovery of short-term loans was only 20% compared to 29% in FY90 and 55%in FY89. The recovery performance of medium-term loans was worse. In FY91 itwas 14% compared to 18% in FY90 and 37% in FY89. Major reasons were a generalindiscipline in the financial sector, the perverse impact of the eligibilitycriteria (para 7.9), expectations of payment waivers by Government (para 6.3),and failure to act against defaulters on managing committees as required bycooperative rules.

7.9 Operation of the Banking Plan. To improve credit operation proceduresfor the cooperatives, two Banking Plans were prepared by BRDB, Sonali Bank andBangladesh Bank; one for medium-term and short-term credit for UCCA/KSS, theother for the RPP. The Plans specified borrowing eligibility criteria at threelevels: individual, KSS and UCCA. These were intended to safeguard financialviability of the system. The criteria at the KSS and the UCCA level were

2/ The original SAR target was 2,300 in the 13 greater districts coveredby RD-II. When the program was confined to the 6 greater districts covered byRPP, the target was revised downwards to 1,100.

7

intended to create credit discipline through peer pressure. However, duringimplementation it was observed that the peer pressure did not materialize at theUCCA level, where the membership is widely dispersed and heterogeneous, unlikeat the KSS level, where the group typically is small. In effect, the eligibilitycriterion at the UCCA level did more harm than good, since many eligible KSS andindividual borrowers were refused credit when their UCCA was defaulting. Therewere instances when such individuals and KSS ceased to repay dues in frustrationbecause they were cut off from new credit. The Banking Plan was amended duringthe later part of the project period to allow eligible KSS under ineligible UCCAto receive loans.

7.10 Marketing (1% of project cost). This component consisted of loanfacilities for UCCA to build fertilizer and produce godowns and technicalassistance for crop and input marketing activities. The loan facilities were notused because the cooperatives were not able to generate enough business to needconstruction of godowns. Technical assistance from FAO/UNDP and availability ofST marketing credit from SB resulted in some UCCAs undertaking crop marketing insome years with reasonable financial success and good credit repayment rates.Participation was limited, but this has served to show that UCCAs can profitablyundertake crop marketing, although they face so many financial and managerialproblems that few are likely to venture into it without external support. Inputmarketing declined substantially during the project because the UCCAs were nottrained by the BRDB to compete with the private sector sale of fertilizer.

7.11 Construction of Facilities (7% of project cost). The physical targetswere substantially achieved within the allocated budget, although with delayswhich led to difficulties as the buildings were needed for the project. BRDB hadproblems claiming reimbursements because the Local Government Engineering Bureau(LGEB), which implemented this component, was not prompt in getting expensestatements from the upazilas. There was also a problem in that some buildingswere allocated to non-project officials.

7.12 Stren2theninx BRDB and the Audit Capacity of the RCS (4% of projectcost). The project proposed to strengthen BRDB by providing incremental staff,vehicles and equipment, and technical assistance to improve its organization andmanagement. Incremental staff were recruited and vehicles and equipment wereprocured, albeit with some delay. A number of studies were undertaken under theTA to improve the organizational structure and management systems of BRDB, butthere was no effort, on the part of senior management of BRDB or the Ministry,to act upon any of the recommendations. Major recommendations included:changing BRDB's organizational culture from a bureaucratic to a performance-oriented one; clarifying BRDB's objectives and priorities; and delegatingdecision-making to field officers. The Management Information System (MIS),established after a long delay, failed to produce satisfactory indicators ofperformance of BRDB. This was mainly because of the lack of vision of BRDBmanagement about the role of the organization; hence, ineffective guidance wasprovided to the TA team to design the MIS around management needs.

8

7.13 Project implementation suffered from low staff commitment and weakmorale because of the lack of career development opportunities and jobinstability. Uncertain of eventually being included in the revenue budgetW,many project officials devoted a good part of their effort, particularly in thelast years of implementation, to searching for fresh employment.

7.14 The component to strengthen RCS' audit capacity consisted ofincremental personnel, vehicles, equipment, training and technical assistance forthe audit wing of the RCS. The aims were to get rid of the backlog of KSS andUCCA audits, to keep up with the increased audit needs following the plannedexpansion in the number of societies, and to improve the quality of audit.Implementation by RCS was successful; the incremental staff were appointed, thevehicles and equipment were procured, and a new audit manual was prepared.Training, however, lagged behind, partly because the final version of the newaudit manual, on which it was to be based, was delayed. The main aims -- toclear the audit backlog and to devised new auditing methods -- were achieved.Indeed, it is remarkable that RCS managed to keep up with the UCCA/KSS/BSS auditneeds in spite of the big increase in the number of societies. On the otherhand, little progress was made in the quality of audit. ODA, which financed thiscomponent, has continued its support to RCS. The additional personnel recruitedunder the project have been absorbed into RCS' revenue budget.

7.15 Autonomy of the UCCA. The primary objective of the project was tostrengthen and expand the two-tier cooperative system (SAR para 3.01). Thecooperatives were meant to be autonomous, self-managed and financially viable.Little progress was made toward improving society autonomy and viability in theproject's early years. Therefore, during the extended project period BRDB agreedto take the following actions to increase autonomy of the UCCAs: (a) rescindofficial circulars that contradicted autonomy of the UCCAs; (b) survey of 14UCCAs to determine their financial viability; (c) training in business managementto selected UCCAs; and (d) withdraw BRDB staff posted in the UCCAS in phases.These actions were taken, but it is too soon to gauge their long-term effect.

7.16 Training (5% of project cost). This component, for the training ofBRDB and UCCA staff and KSS leaders, included the construction of trainingfacilities and provision of equipment, salaries of training staff, trainingmaterials and other operating costs. The civil works and the provision ofequipment were successfully implemented with some delay. However, on the whole,the impact of the training effort on the functioning of the cooperatives seemsto have been minimal. The quality of weekly courses programmed for KSS leaders(chairman, manager and "model farmer") was bad, and, as a result, attendance waslow and the training messages not passed on to members. Quite often, the qualityof upazila-level training was also disappointing. Training materials were notadequate; cooperation from other government agencies was weak; there was notenough curriculum guidance; and trainers were not always properly prepared. Theweakness of BRDB's Training Directorate and the lack of a clear allocation oftraining responsibility at the district and upazila levels are largely

i/ Bangladesh has two budgets. Development activity is funded under thedevelopment budget; the revenue budget funds the regular, recurrent activitiesof government. If, at the end of a development activity, staff are needed tocontinue routine operations, they must be absorbed into the revenue budget.

9

responsible for this, in spite of the merit of the technical assistance financedby ODA. During the last 18 months of the project, the TA team prepared atraining manual to equip BRDB's field staff to carry out participatory, needs-based, cooperative training, and to manage the training inputs provided by otheragencies, but it is too soon to say what impact this will have.

7.17 Technical Assistance (1% of project cost). TA was envisaged formarketing (UNDP/FAO), training (ODA), RPP (CIDA), monitoring and evaluation(UNDP/FAO), and audit (ODA). The consultancies programmed in these fields werecarried out and the quality was satisfactory. The studies programmed in the SAR,and some more, were competently produced and many recommendations were given.

7.18 Procurement. Except for some initial delays in the procurement ofvehicles and equipment, there was no major problem.

7.19 Proiect Costs. The estimated cost of the project at appraisal was US$176.98 million. The actual cost was US$ 93.81 million. (Part III, Section 5A).The decrease in cost is mainly due to depreciation of the Taka value againstdollar (US$1 is now equivalent to Tk 38.14 compared to Tk 23.0 at appraisal).Project cost is also less because the disbursement of incremental short-termcredit was far lower than estimated at appraisal (para 7.20).

7.20 Disbursements. IDA: After allowing an additional four months fordisbursement after Credit closing date to enable submission of disbursementclaims against eligible expenditures incurred before the Credit closing date, theCredit finally closed on November 14, 1991 with an undisbursed balance of SDR3.18 million. The total amount canceled from the original Credit was SDR 35.18million. ODA disbursed GBP equivalent 3.24 million at the time of Credit closingout of the total allocation of GBP equivalent 6.66 million. CIDA disbursed CADequivalent 11.88 million as of March 31, 1990 out of the total allocation of CADequivalent 20.08 million.

7.21 Co-financine. Relationship with the cofinanciers has been generallycordial, except CIDA. Soon after Credit negotiations, CIDA raised concerns aboutthe design of the Rural Poor Program. IDA revised the design as much as waspossible within the project scope negotiated with the government. Duringimplementation, CIDA expressed concern about the limited role of the cofinancierin discussing project implementation issues with the government. In 1986, a mid-term operational review, conducted by independent consultants, appointed by CIDA,found serious difficulties in the co-financing relationships with respect topolicy, strategy, operations and communications. Ultimately, CIDA decided notto extend the cofinancing arrangement after June 30, 1988 and signed a bilateralagreement with the government to finance a five year project.

7.22 Prolect Risks. The appraisal correctly predicted that the projectfaced no major, overall economic risk because of the high returns to investmentin irrigation. The risk of delay to the irrigation program was foreseen but thecauses were not. The delays were due to Government's failure to aggressivelypursue liberalization in equipment supply, not from slow response from theprivate dealers, and from failure to establish a sound, sustainable creditdelivery system. However, the risk of politics interfering with creditactivities, as happened, was correctly foreseen. The appraisal correctlyindicated that the institution building objective of the project would depend on

10

the performance of BRDB. Government's failure to use the available means,including the contributions from the project, to strengthen BRDB and the two-tiersystem, was not anticipated.

8. Proiect Results

8.1 The project, while it fell well short of achieving its majorobjectives, nevertheless improved the well-being of the cooperators in the two-tier cooperative system. The main quantitative shortfall in the MT creditcomponent for minor irrigation stemmed, at least in part, from the excessivelyoptimistic targets. While the project achieved the revised quantitative targets,it was not able to strengthen and develop a self-reliant two-tier cooperativesystem which could serve as a vehicle for rural development. However, itsucceeded in increasing output and incomes through expanded and improvedirrigation and off-farm activities, and has thus contributed to improving theeconomic life of beneficiary families.

8.2 Strengthening of the Cooperative System. Many new UCCA/KSS/BSS werecreated, but the number of them in categories "A" and "B", i.e. with "acceptable"functioning standards and hence eligible for project inputs, was much smallerthan targeted and declined over time. Quantity was achieved at the expense ofquality. UCCAs are heavily indebted to SB and are not financially viable. KSSwere in turn heavily indebted to UCCA and on the whole unable to repay theirdebts even if they wished to do so. The only noticeable strong point is theaccumulation of KSS savings and shares which have become the main source ofincome of the UCCA. But, on the one hand, accumulated savings and shares are farfrom enough to cover the debts, and, on the other, they are not a reflection ofthe cooperative commitment of KSS members. In fact, members must save and payshares in order to obtain loans, and they see this building up of assets more asa tax than as part of their wealth. This is understandable since they find itdifficult to access their savings and rarely collect any interest or dividendincome.

8.3 Irritation Expansion. It is estimated that, at full development, theirrigated area will increase by some 106,300 ha: 67,000 ha on account of the newSTW; 14,700 ha from the 750 DTW sunk in the last year of the project, and 24,600ha from the application of IMP. This expansion of the irrigated area is only 35%of the 305,600 ha targeted at appraisal, but is nonetheless a rather impressivefigure; in retrospect, it is quite obvious that the SAR estimates were far toooptimistic. IMP had a significant positive impact at a moderate cost; itincreased command areas by an estimated five acres per cusec (against an SARtarget of eleven) in DTW schemes and three acres per cusec (against an SAR targetof seven) in LLP schemes, and increased HYV paddy yields between 10% and 20%.

8.4 ImRact on Farm Production and Employment. Crop output increased inthree ways as a result of the project: (a) from the production of HYV paddy orwheat during the dry season using the new STW and DTW; (b) from the increase inthe command area and yields of DTW and LLP where IMP was applied; and (c) fromhigher yields due to the purchase of inputs with the incremental ST credit. Theannual incremental production of paddy at full development is estimated by themission at some 393,700 tons and that of wheat at some 73,300 tons. Because ofthe change in the cropping pattern with irrigation, the production of oilseeds

11

and pulses is estimated to fall by a total of 11,700 tons each. The incrementalimpact on farm employment is estimated at 23 M p/d (against an SAR estimate of45 M p/d). Altogether, the incremental value of crop output at full developmentis estimated at Tk 2.7 billion (some US$59.0 million at the 1991 exchange rate),which is close to 50% of the SAR target7/. The impact of RD-II on agriculturalproduction is therefore important, though much less than expected in the SAR.

8.5 Economic Return. The economic rate of return (ERR) for directlyproduction-oriented activities has been re-estimated to be 47%, compared with anSAR estimate of 79%. The revised ERR remains impressive, especially for aproject with flaws in its design and considerable implementation difficulties.The reason is that the technological package promoted by the project, consistingof small irrigation plus HYV for paddy and wheat, is highly profitable. IMP isalso extremely profitable since, with a modest expense on organization andtraining, the command area is expanded and yields are increased. Also, theshortfalls on the targets for irrigation and ST crop credit were accompanied bya parallel reduction of project cost. An improvement of 11% and 23% in theeconomic prices of paddy and wheat also contributes to this acceptable re-estimated ERR. The RPP, though a successful component, contributes little to theERR because its aggregate impact on output and income is small compared to thatof irrigation.

8.6 Impact on Incomes. The new STW are estimated to increase net annualfarm income of beneficiary groups by Tk 36,700 i.e. Tk 6,100 per ha. This is 22%more than anticipated in the SAR, the reason being the improvement in prices.The increase of farm incomes in irrigation schemes due to IMP has been estimatedat Tk 84,000 for DTW and Tk 57,000 for LLP. These figures are, respectively, 62%and 72% of the corresponding SAR estimates8/, the shortfall being due to asmaller increase in command area than expected; yields increased more or less asexpected.

8.7 It has been estimated that the annual off-farm income of the ruralpoor benefiting from RPP increased by 15%, or around Tk 1,500, only 45% of theSAR projection. However, the number of beneficiaries was more than double theSAR estimate.

8.8 No analysis has been done of the impact of RD-II on incomedistribution. RPP must have had a positive impact, but there are doubtsconcerning irrigation in view of the evidence that the better-off farmers aremore involved in the purchase and management of irrigation equipment. Sincethese farmers are also more involved in the management of the KSS, they got mostof the benefit of training. Project implementation paid little attention to theincome distribution aspects of irrigation.

7/ The estimate of the value of output is in 1990 prices. For thecomparison with the SAR estimate, the latter was recalculated in 1990 prices.

§J All comparisons have been made in 1990 prices.

12

9. Project Sustainability

9.1 With few exceptions, the UCCA/KSSs of the two-tier cooperative system,which RD-II aimed to strengthen, are not self-sustainable, and the very poor loanrepayment rates have rendered the project's credit system unsustainable. Themajority of the UCCAs cannot absorb into their own budgets the BRDB personnelfinanced by the project and seconded as Upazila Rural Development Officers(URDO), Assistant Rural Development Officers (ARDO), or accountants, or tomaintain and replace project vehicles, equipment and facilities supplied to themby BRDB. Nor can they continue on their own the training and other activities(such as IMP) financed by RD-II and carried out with BRDB support. Finally, theyare very heavily indebted to Sonali Bank and are not likely to be able to repay.UCCAs survive today mostly on the spread between the interest rate they collectfrom SB (currently 13%) and the rate they pay to KSSs (currently 6%) for theshares and saving deposits that the latter have to make to receive loans (5% and20% of the value of the loan for MT and ST credit, respectively).

9.2 More positively, most of the KSSs benefitting from new irrigationequipment under the project are able to maintain and manage it without outsidesupport. On the other hand, in view of evidence that the command area in IMPirrigation schemes tends to decrease after the expansion in the initial years,the presumption is that IMP benefits are not fully sustainable.

10. IDA Performance

10.1 With 13 supervision missions, including a mid-term review mission, andactive involvement of the RMB, the project received sufficient attention fromIDA. Several evaluation studies of particular aspects were also carried out,which resulted in many recommendations.

10.2 Most of the problems faced during implementation were identified bythe supervision missions and solutions were proposed, but not always carried out,or not with the required timeliness. This was due to: (a) the managerialweakness of BRDB; (b) the absence of a separate RD-II management cell toimplement or monitor the implementation of the recommendations; and (c) GOBreluctance to implement the recommendations, even if agreed with the supervisionmissions, particularly if these had political consequences, as in the case of theeviction from office of defaulting co-op leaders and the initiation of legalaction against willful defaulters.

10.3 Various positive changes were made, however, at the insistence of thesupervision missions, such as: the sharing of civil works responsibility betweenthe LGEB and BRDB; the de-linking of the eligibility criteria for KSS from thatfor UCCA; and the surveying of 14 UCCAs to establish their financial viability,which led to some concrete action in three of them.

10.4 The main lessons to be learned from this project, which are equallyrelevant to IDA and GOB, are that:

(a) implementing large, complex rural development projects involvingmany components and agencies is a very difficult process;

13

(b) collective loan responsibility, which rests on group pressure toensure repayment, is unlikely to work outside a face-to-facesociety context, and can backfire, discouraging timely repaymentsof loans by those individuals or primary societies who are deniedfresh loans and thus penalized because of failure of others tomeet their loan repayment obligations;

(c) in undertaking certain elements of rural development strategy,imposition of Government programs or expanding the cooperationnetwork for the purpose of channelling production inputs andservices is inconsistent with the spirit of cooperative autonomy;

(d) strengthening of participatory management is a prerequisite formanagerial autonomy of the cooperatives.

11. Borrower Performance

11.1 On the whole, project management by GOB was weak. BRDB lacked thestrength and managerial capacity necessary to administer such a large and complexproject, and other projects were coming up from other agencies which furthertaxed this capacity. The cooperation of BADC and the Directorate of AgriculturalExtension in the implementation of IMP and some UCCA-level training activitieswas not always adequate. GOB showed little evidence of commitment towards theautonomy of UCCAs, and its late and lukewarm attempts to evict credit defaultersfrom cooperative office, in accordance with cooperative regulations, and to takelegal action against willful defaulters, weakened the two-tier credit systemsupported by RD-II. The political decisions to waive some of the dues onagricultural loans was also a big blow to the credibility and sustainability ofthe cooperative credit system. All this, together with project reformulation(para 6.5), led to the closing date being extended four times.

11.2 On the positive side, LGEB carried out its civil works assignmentsatisfactorily, and the management of the audit component by RCS was successful.

12. Proiect Relationships

12.1 Notwithstanding pressure by IDA to improve project implementation,IDA's relationship with GOB and the implementing agencies was satisfactorythroughout the project, with continuous dialogue between the implementingagencies, particularly BRDB and IDA. The presence of the RMB in Dhaka washelpful in this respect.

13. Consulting Services

13.1 Under the project's co-financing arrangements (see para 4.1),technical assistance was provided in the fields of training (ODA), audit (ODA),RPP (CIDA), marketing (FAO/UNDP) and monitoring and evaluation (FAO/UNDP). Someof the specific studies carried out were: a bench-mark survey of the RD-IIproject area, three studies of the IMP experience, an evaluation of the ST creditcomponent, three studies of the financial viability and performance of UCCA, an

14

evaluation of the impact of RPP, a review of the ODA component, and a mid-termevaluation review.

13.2 There was delay in recruiting the consultants but, once recruited,they performed competently and played an important role in organizing training,setting up the MIS, preparing new auditing procedures and organizing cropmarketing. The evaluation studies were useful to quantify and assessimplementation weaknesses or impact deficiencies and propose solutions, more thanto identify shortcomings. They also served to bring to the attention of COB ina documented and well argued manner some of the issues arising duringimplementation such as, for instance, lack of UCCA autonomy and low creditrecovery.

14. Proiect Documentation and Data

14.1 The SAR and legal agreements provided a satisfactory framework for theimplementation of the project by GOB. The covenants in the Development CreditAgreement (DCA) and Project Agreement (PA) were generally observed, although withsome delays. Main exceptions were the commitment to carry out an analysis of allUCCAs in operation for more than six years, and the obligation to cause UCCAswith a volume of credit of more than Tk 2 million to bear a proportion of thecost of BRDB seconded staff.

14.2 In spite of the fact that project implementation records weremaintained by BRDB, not all data relevant to the preparation of the ProjectCompletion Report were readily available. This was partly because of the lackof a separate RD-II monitoring and evaluation cell, which prevented the keepingof detailed records, and partly because the mission visited the country ninemonths after project completion. There was some discrepancy among differentsources of data, particularly between the credit records of BRDB and SB.

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BANGLADESH

RURAL DEVELOPMENT II PROJECT(Cr. 1384-BD)

PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE

(Borrower did not submit Part II.)

- 17 -


BANGLADESH

RURAL DEVELOPMENT II PROJECT(Credit 1384-BD)

PART III - STATISTICAL INFORMATION

1. Related IDA Credits

Title and Credit Number Purpose Approval Status

1. N.W. Tubewells Irrigation 1972 completedCr. 341-BD

2. Agricultural & Rural Training Training 1976 completedCr. 621-BD

3. Rural Development I Rural Development 1976 completedCr. 631-BD

4. Shallow Tubewell Irrigation 1977 completedCr. 724-BD

5. Agricultural Research Research 1978 completedCr. 828-BD

6. Low-lift Pumps Irrigation 1980 completedCr. 990-BD

7. 2nd Deep Tubewell Irrigation 1982 completedCr. 1287-BD

8. Agricultural Credit No.1 Agricultural Credit 1981 completedCr. 1147-BD

9. National Minor Irrigation Irrigation 1991 on-goingCr. 2246-BD

10. Shallow Tubewell & Low Lift Pump Irrigation 1991 on-goingIrrigation Project

Cr. 2253-BD

- 18 -

2. Project Timetable

Item Planned Date Revised Date Actual Date

Identification - - -

Preparation - - 04/81

Appraisal - - 10/82

Negotiation - - 05/82

Board Approval - - 06/14/83

Signature - 09/16/83

Effectiveness 12/15/83 03/16/84 03/16/84

Closing 06/30/88 12/30/8806/30/8906/30/9006/30/91 06/30/91

Completion 12/31/87 06/30/8812/30/8912/30/90 10/31/91

3. Credit Disbursements

(US$ Million)

FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92

Appraisal Estimate 9.0 45.0 68.0 88.0 100.0

Actual 3.59 11.09 17.20 20.05 25.02 31.0 41.02 65.04 69.15

Actual as % ofEstimate 39.9 24.6 25.3 22.8 25.0 31.0 41.0 65.0 69.0

Date of FinalDisbursement November 14, 1991

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4. Project ImplementationA. Incremental Credit

(Tk M)

........... Short-Term Credit .......... .............. Medium-Term Cedit .

ALocation . Disbursement / Recove .... Allocatin . . . Disbursement 1/ Rec RateSAR Rate 27 M(*)

Amount (%) SAR Revised Amount (%)rp

1984/85 160 499 312 64 137 38 28

1985/86 426 416 98 46 137 80 58 65

1986/87 882 350 40 66 137 30 22 8

1987/88 1,526 464 30 63 137 33 24 2

1988/89 1,526 326 21 79 100 13 13 28

1989/90 1,526 261 17 13 94 1 1 8

1990/91 1,526 193 13 10 54 10 18 4

Todal/Average 7,572 2,509 33 37 548 248 205 26 10t Source: Sonali Bank2/ Percentage of recovery against demand. Source: Sonali Bank.

B. Minor Irrigation

Saes of Equipment Unit SAR Target Revised (PP) Target S6 Actual V.

SIW No. 30,000 13,782 46 11,021 80

LLP No. 3,000 0 - 0 -

DTW No. 2,900 - - 2,400 75

1/ Source: BRDB/BADC

C. Rural Poor Program (RPP)

Unit SAR Target Actual 1/%

Society Formation 2/

- BSS formed No. 2,500 3,028 121

- MBSS formed No. 400 1,703 426

RPP Credit 2/

- No. of Loans No. 54,500 113,000 207

- Disbursement Tk million 177 187.6 106

- Repayment Rate % 71

l/ Up to July 1988 when RPP became a separate project.2/ SoUrce: CIDA's Canadian Resource Team.

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D. Thana (Upazila) Civil Works

. . Unit Cost (II000) Type of Building Unit SAR Target Rcvised (PP) Targ- % Actual 1 l % 2/ Act 1al l/

UCCA Offices No. 100 120 120 120 100 789 NA

Twin Quarters No. 200 200 100 200 100 973 890

UTDC Extension No. 20 23 115 22 96 1,719 1,670

UTDCs New No. - 27 - 27 100 - 3,534

1/ Source: Local Government Engineering Bureau.2/ Includes physical and price contingencies.

E. Cooperative/lnstitutional Training

Type of Trainee ......... Number of People Trained .

SAR Revised (PP) % Actual V, %Target Target

Ofilcers

- DD/PD/DPD 156 156 100 72 46

- URDO 89 89 100 89 100

- ARDO 389 389 100 294 76

- Accountant 189 189 100 127 67

- UCCA Dir. 1,200 1,200 100 500 42

KSS Leadership

- Manager 68,050 48,860 72 48,773 100

- "Model Farmer" 93,165 48,860 52 48,649 100

- Chairman 93,165 48,860 52 48,062 98

/ Source: BRDB.

F. Private Mechanics Program

SAR Target Revised (PP) Target 1/ % Actual 2/ %

No. of Mechanics Trained 2,300 1,100 48 915 83

1/ Revised target reflects a reduction from 13 to 6 districts.2/ Source: CIDA's Canadian Resource Team.

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G. Strengthening of BRDB

Recruitment of Officials SAR Target Revised (PP) Target % Actual V %

DPO 11 13 118 13 100

ARDO (RPP) 89 89 100 89 100

ARDO (IMP) 301 301 100 301 100

URDO 89 89 100 89 100

Accountants 89 89 100 89 100

/ Source: BRDB.

H. Expansion of Irrigation Management Program (IMP)

Type of Scheme Unit SAR Target Revised (PP) % Actual %Targ.

Application of IMP 1/

- DTW Schemes No. 4,400 4,636 105 4,199 90

- LLP Schemes No. 1,100 2,336 212 2,886 123

- STW Schemes No. - - - 621 -

Increase in Command Area 2/

- DTW Schemes Acres 20 (40%) NA. 10 (21%) 50

- LLP Schemes Acres 10 (25%) NA. 6 (17%) 60

1/ Source: BRDB.2/ Source: Final Evaluation Report of IMP (September 1988); 1 acre = 0.405 ha.

I. Technical Assistance (Consultancies)

RevisedTechnical Unit Donor SAR Target (PP) Target % Actual 1/ %

Assistance Fields

Marketing p/m FAO/UNDP 36 24 67 24 100

Training p/m ODA 48 572 1,192 514 90

RPP p/m CIDA 60 60 100 60 100

Accounts & Audit p/m ODA 24 56 233 50 89

M & E p/m FAO/UNDP 72 190 264 182 96

1/ Source: RCS for Accounts and Audit and BRDB for the rest.

- 22 -

J. Marketing Program

Unit SAR Target Revised % Actual %(PP)

Target

Construction of Infrastructure

Produce Godowns No. 10 NA. 0

Fertilizer Godowns No. 15 NA. 0Marketing Credit 1/ Tk M 0 NA. 17

Training of Officials 2/

Crop Marketing Persons NA. 700 648 93Fertilizer Marketing Persons NA. 438 338 77

Training of KSS Leaders 2/

Crop Marketing Persons NA. 64,700 60,741 94Fertilizer Marketing Persons NA. 1,057 920 87

1/ Source: Sonali Bank.2/ Source: BRDB.

K. Strengthening of Audit

Unit SAR Target Actual %Staff Appointment

Registrar Officers Persons 59 59 100Inspectors Persons 362 362 100Support Staff Persons 90 105 117

Audit Reports

UCCAs No. NA. 1,224

KSSs No. NA. 107,200

/ Source: Registrar of Cooperative Societies.

- 23 -

L. Promotion of Cooperatives

Type of Society 1984 1985 1986 1987 1988 1989 1990 1991Number of EligibleUCCAs 1/

SAR Target 301 301 301 301 301 301 301 301

Actual 196 193 203 208 239 230 271 268

% 65 64 67 69 79 76 90 89

Number of EligibleKSSs 1/

SAR Target 18,465 21,680 24,900 28,120 28,120 28,120 28,120 28,120

Actual 3,394 2,748 1,571 701 920 1,388 933 391

% 18 13 6 2 3 5 3 1

Number of EligibleBSSs 1/

SAR Target 300 400 1,025 1,830 2,500 2,500 2,500 2,500

Actual 2,781 2,098 785 316 313 287 658 788

% 927 524 76 17 13 11 26 32

/ Source: BRDB. Eligible societies are those in categories A and B according to a composite performanceindex which takes into account loan repayment, financial standing, accounting, statutory meetings, trainingactivities and member coverage. Only eligible societies qualify for project inputs.

- 24 -

5. Proiect Costs and Financing

A. Project Costs

(US$ Million)

SAR Estimate Actual

Minor Irrigation Program 23220 38468 61688 15745 24627 40372Rural Poor Program 13900 2300 16200 8935 1370 10305Incremental ST Credit 35826 30512 66338 7988 3742 11730Marketing 391 87 478 221 49 270Civil Works 9130 4251 13381 9199 4531 13730Strengthening BRDB andAudit Capabilities 6043 1512 7555 11711 2746 14457Training 8043 826 8869 1116 13 1129TA 87 2348 2435 55 1765 1820

TA 9640 8030 176994 54970 38 9381

B. Project Financing

Planned Final

Source US$ Million Percent US$ Milo Percent

IDA 100.00 56 69.15 74CIDA 17.19 10 10.27 11ODA 10.48 6 5.14 5UNDP 1.61 1 1.26 1GOB 29.60 17 5.68 6Sonali Bank 12.06 7 131 2Beneficiary 5.99 3 1.00 1

TOTAL 1-76 931110

- 25 -

6. Project Results

A. Direct Benefits

Unit SAR Estimate PCR Estimate %

1. Expansion of Irrigated Area atFull Development

- From New STWs ha 206,550 66,980 1 32

- From Application of IMP ha 99,000 24,617 2/ 25

- from New DTWs 4/ ha - 14,684

2. Expansion of Crop Output atFull Development

- Paddy ton 788,648 393,717 3/ 50

- Wheat ton 169,844 73,333 3/ 43

- Oilseeds ton -27,076 -11,691 3/ 43

- Pulses ton -27,076 -11,691 3/ 43

3. Incremental Value of Outputat Full Development in1990 Prices Tk M 4,574 2,260 49

4. Generation of AdditionalOn-Farm Employment p/d M 45 23 51

1/ Command area per STW of 12 acres rather than 15 acres estimated at SAR, and 13,782 STWs sold ratherthan 30,000 estimated at SAR.

2/ Increase in command area of 10 acres per DTW rather than 20 acres estimated at SAR and 6 acresper LLP rather than 10 acres estimated at SAR; increase of 3 acres per STW (not considered in SAR).

3/ Assuming the same crop pattern, yields and cropping intensity as in SAR models.

4/ Originally not considered in the project.

- 26 -

B. Economic Impact

SAR Estimate PCR EstimateERR 79% 47 1/

Assumptions:1. Evaluation in 1990 constant prices.2. Project life = 21 years.3. SCF = 0.84. Economic value of hired unskilled labor = Tk 20/day.5. Economic value of family labor = Tk 15/day.6. Economic price of paddy = Tk 6.04/kg.7. Economic price of wheat = Tk 7.94/kg.8. Crop parameters and cropping pattern as in the SAR of RD-II.9. 1990 prices of inputs and outputs as in the SAR of the "STW and LLP Irrigation Project".10. Annual costs adjusted to 1990 prices using the MUV Index for FE costs and the Dhaka Cost of

Living Index for domestic costs.11. Expansion of irrigation command area and increase in yields in schemes where IMP was applied

obtained from IMP impact evaluation studies.12. Income increase of the rural poor from the application of RPP obtained from the socioeconomic

evaluation of RPP impact. It was assumed that: (1) 70% of the loanees have started successfuloff-farm activities which will last for the whole project's life; (2) 20% of these received credit twice;and (3) the imputed value of self-employed labor is 50% of income.

l/ See supporting Tables 1 to 10 in Annex 1.

C. Financial Impact(Tk)

SAR Estimate PCR Estimate %

1. Increase of Net Farm 30,082 1/ 36,700 122Income per IrrigationScheme in STW Schemesat Full Development in1990 Prices afterFinancing

2. Increase of Net Farm 137,400 84,000 62Income per Schemedue to IMP in DTWSchemes in 1990 Pricesafter Financing

3. Increase of Net Farm 78,800 57,000 72Income per Scheme dueto IMP in LLP Schemes in1990 Prices after Financing

4. Average Income Increase 3,310 V, 1,500 45of RPP Beneficiaries in1987 Prices 2/

1/ Price actualization to stated date using the rural consumer price index.2/ Weighted average of the various activities. PCR estimate based on 1987 evaluation study of socio-

economic impact of RPP.

- 27 -

D. Studies

Study Status Comment

Expansion and Impact of IMP Completed Two interim and one finalevaluation studies completed in1987 and 1988.

Impact of RPP Completed A study of socio-economicimpact completed in 1987.

Evaluation of Credit Program Completed Evaluation study of ST creditconducted in 1988. No study ofMT credit.

Fmancial viability and Completed Evaluation study of UCCAsperformance of done in 1987.UCCAs/KSSs/BSSs No study of KSS.

Study done in 1988 on theaccounting practices of UCCAsand primary societies.Study done in 1988 to deriverecommendations for assistingselected UCCAs to achieveautonomy.

- 28 -

7. Status of Covenants

Description of Covenant Sector Applicable Status Remarks

Open a special account in BB to DA 2.02 (b) Complieddeposit credit fund and makepayment as per provisions ofSchedule 5 of the agreement.

GOB to enter into Subsidiary Loan DCA 3.03 (a) CompliedAgreement with BB.

BB to enter into Participation DCA 3.03 (c) CompliedAgreement with SB for on-lendingto TCCA/KSS/BSS/MSS.

Borrower will make available DCA 3.04 (a) Compliedforeign exchange to private dealersfor importation of engines for minorirrigation equipment.

Establish & Maintain a District DCA 3.05 Complied But delayed.Coordination Committee in each ProjectDistrict by September 30, 1983.

Make adequate provision for the DCA 3.06 (a) Compliedinsurance of the imported goods tobe financed out of the Credit.

Goods and Service financed out of DCA 3.06 (b) Complied Sane prtbns wththe Credit to be used exclusively Upazila residentialfor the Project. quarters.

Land of TTDC to be made available DCA 3.08 Compliedto BRDB to carry out Part C of theProject.

Review and if necessary adjust the DCA 3.09 Compliedinterest rate level to make itconsistent with Joint AgriculturalCredit Review and meanwhile positivein real terms to ultimate borrowers.

Prepare and furnish a Banking Plan DCA 3.10 Compliedto implement Part A of the Project.

Maintain and operate the Project DCA 3.11 Complied Changed in revisedEngineering and Construction Unit DCA. LGEBwithin Borrower's PWD created under responsible forCr. 787-BD. Upazila facilities

and BRDB for theTIU, U)CA dlisand RDTI.

- 29 -

7. Status of Covenants (cont.)

Description of Covenant Sector Applicable Status Remarks

Issue promptly import licenses to DCA 3.12 Compliedthe suppliers of minor irrigationequipment to be financed under theCredit.

Open separate accounts reflecting DCA 4.01 (b) Compliedall expenditures on account of whichwithdrawals can be requested fromcredit a/c on the basis of statementof expenditures.

Provide annual audit reports not DCA 4.01 (c) Compliedlater than nine months after theend of each financial year.

Ensure that as from Dec. 31, 1983 DCA 4.02 Complied With old auditing systemaudit of all UCCA/KSS/BSS/MSS arecarried out in accordance withrevised manual. Furnish quarterlyprogress reports of audit ofUCCA/KSS/BSS/MSS.

Ensure that only those PA 2.07 CompliedUCCA/KSS/BSS/MSS meetingeligibility criteria participatein the Project.

Prepare and furnish by 9.30.83 PA 2.08 (a) CompliedProject implementation guidelines.

Prepare and furnish by 6.30.84 and PA 2.09 (a) Not A survey wasannually thereafter an analysis of Complied carried out ofthe financial performance of those 14 UCCAs after theUCCAs in project area operating for extension of theat least 6 years. Project.

Cause UCCA with volume of Credit PA 2.09 (b) Not Measures started tomore than Tk 2 M to bear a proportion Complied be taken in 3 UCCAsof cost of BRDB seconded staff. before the closing of

the Project.

30 -

8. Use of IDA Resources

A. World Bank Staff InRuts

Stagc of the Poject Month/Year Duat Numbero Speeiaatiom Perfommane 1pes ofPemoa Rpreted 1/ Ratin Statu prklmsV

Appraisal and 10/1982 30? 9 E,F,CrAMtSupervision Missions 10/1983 31 2 PA/I (1)

03/1984 11 6 M,E,Cr (2) d,p,r

09/1984 20 7 FA,IrMtT,P,Cr (2) f,d,p,r,mt03/1985 20? 7 " (2) H

09/1985 20 6 " (2) d,f,mt04/1986 67? 6 (3) mtst11/1986 20 8 T,M,Cr,lr,R (3) f,mt,im06/1987 45? 7 " (2) f,p,mt04/1988 20? 4 Mt,Cr,D,A (3) mt,im11/1988 15 4 Mt,Cr,D,P (3)09/1989 25 4 " (3)07/1990 21 1 Mt (2) p,mt,t02/1991 35 1 Mt (2) au,t,p,f,mt

1/ A-agronomy; Au-auditing; Cr.-credit; D-disbursement; E-economist;F-financing; I-industry; Im-impact; Ir-irrigation; M-monitoring; Mt-management;P-procurement; R-reporting; St-staffing; T-training;

2/ au-auditing; d-disbursemcnt; f-financing; mt-management; p-procurement;r-reporting; st-staffing; t-training;

ANNEX 1-31 - Page 1 of 7

Table 1

Financial and Economic Prices (mid-1991)(Taka)

Unit Financial Economic

Outputs

Tradditional Aman (paddy) Kg 5.36 6.04HYV Aman (paddy) Kg 5.36 6.04HYV Boro (paddy) Kg 5.36 6.04HYV Wheat Kg 4.82 7.94Oilseeds (mustard) Kg 12.06 13.08Pulses Kg 5.36 4.45

Inputs

Seed Traditional Aman Kg 7.04 7.55Seed HYV Aman Kg 7.04 7.55Seed HYV Boro Kg 7.04 7.55Seed HYV Wheat Kg 6.7 9.93Seed Oilseeds Kg 15.08 16.35Seed Pulses Kg 6.7 5.36Ferilizer Urea Kg 5 5.25Fertilizer TSP Kg 4.75 10.47Fertilizer MP Kg 4 7.6Pesticides Kg/It 300 390Draught Power pair/day 45 45Hired Labour person/day 25 20Family Labour person/day 15

Irrigation Costs

Investment in STW Unit 35000 43750Investment in DTW Unit 61000 76250Irrigation 0 & M - STW l.s./year 16000 16000Irrigation 0 & M - DTW l.s./year 13500 13500

Table 2

Crop Parameters (per ha) and Cropping Pattern

Without Project With Project

Unit Trad. Aman Oilseeds Pulses HYV Aman HYV Boro HYV WheatYields

New Irrigation Kg 1850 550 550 3200 3000 2300IMP Application Kg 1850 550 550 3500 3600 2300

Input Use

Seed Kg 50 20 20 40 40 100Pesticides Kg/it 0.6 0 0 4 4 2Fertilizer- Urea Kg 80 0 0 180 180 90Fertilizer - TSP Kg 15 0 0 62 62 50Fertilizer - MP Kg 0 0 0 25 25 25Draught Power pair/day 40 40 30 50 50 50Family Labour person/da 100 62 74 160 160 74Hired Labour person/da 50 25 0 85 75 50

Unirrigated IrrigatedCropping Pattern ................. Cropping Intensity (%) .

Trad. Aman 100 0HYV Aman 0 100HYV Boro 0 50HYV Wheat 0 30Oilseeds 20 0Pulses 20 0

- 33 ANNNEX 1Page 3 of 7

Table 3

Farm Model A: New Shallow Tubewell (6 ha)

Project Year - Future With ProjectWithout ---------------------- -------------

Area/investments Project 1 2 3 4 - 10 11 12 - 21

Crop Area (in ha)

Traditional Aman 6.0 6.0 3.0 1.5 0.0 0.0 0.0HYV Aman 0.0 0.0 3.0 4.5 6.0 6.0 6.0HYV Boro 0.0 0.0 1.5 2.2 3.0 3.0 3.0HYV Wheat 0.0 0.0 0.9 1.4 1.8 1.8 1.8Oilseeds 1.2 1.2 0.6 0.3 0.0 0.0 0.0Pulses 1.2 1.2 0.6 0.3 0.0 0.0 0.0

Total 8.4 8.4 9.6 10.2 10.8 10.8 10.8

Cropping Intensity (5) 140.0 140.0 160.0 170.0 180.0 180.0 180.0

Farm Investments (in TK)

STW Investment Cost 0.0 43750.0 0.0 0.0 0.0 43750.0 0.0STW 0 & M 0.0 0.0 16000.0 16000.0 16000.0 16000.0 16000.0

Table 4

Farm Model B: New Deep Tubewell (19.5 ha)

Project Year - Future With ProjectWithout …-----------

Area/Investments Project 1 2 3 4 - 10 11 12 - 21

Crop Area (in ha)

Traditional Aman 19.5 19.5 9.8 4.9 0.0 0.0 0.0HYV Aman 0.0 0.0 9.8 14.6 19.5 19.5 19.5HYV Boro 0.0 0.0 4.9 7.3 9.8 9.8 9.8HYV Wheat 0.0 0.0 2.9 4.4 5.9 5.9 5.9Oilseeds 3.9 3.9 2.0 1.0 0.0 0.0 0.0Pulses 3.9 3.9 2.0 2.0 1.0 0.0 0.0

Total 27.3 27.3 31.2 33.2 35.1 35.1 35.1

Cropping Intensity (5) 140.0 140.0 160.0 170.0 180.0 180.0 180.0

Farm Investments (in TK)

STW Investment Cost 0.0 76250.0 0.0 0.0 0.0 28750.0 0.0STW 0 & M 0.0 0.0 13500.0 13500.0 13500.0 13500.0 13500.0

ANNEX 1- 34 - Page 4 of 7

Table 5

Farm Model C: Application of IMP to Deep Tubewell 1/

Project Year - With ProjectWithout -------------------------

Area Project 1 2 - 21

Crop Area (in ha)

Traditional Aman 4.0 2.0 0.0HYV Aman 19.5 21.5 23.5HYV Boro 9.8 10.8 11.8HYV Wheat 5.8 6.4 7.0Oilseeds 0.8 0.4 0.0Pulses 0.8 0.4 0.0

Total 40.7 41.5 42.3

Cropping Intensity (%) 173.0 177.0 180.0

1/ Irrigation expands from 19.5 to 23.5 ha in two years without further farm investments.

Table 6

Farm Model D: Application of IMP to Low Lift Pump 1/


Area Project 1 2-21

Crop Area (in ha)


Total 29.6 30.1 30.6



ANNEX 1- 35 - Page 5 of 7

Table 7

Farm Model E: Application of IMP to Shallow Tubewell 1/


Project 1 2 - 21

Crop Area (in Ha)


Total 10.4 10.6 10.8



ANNEX 1- 36- Page 6 of 7

Table 8

Farm Build up

Type of Farm PY 1 PY2 PY3 PY4 PY5 PY6 PY7 TOTAL

Model A 3837 3399 767 1425 1096 269 228 11021Model B 753 753Model C 433 737 808 595 513 920 193 4199Model D 341 419 696 485 391 327 221 2880Model E 32 132 84 48 325 621

Table 9

Re-calculation of Economic Benefits of RPP

Item PY 1 PY2 PY3 PY4+

Number of Loans (in 1000) 41.0 63.0 95.0 118.0

Number of Loanees (in 000) 1/ 32.8 50.4 76.0 94.4

No. of Successful Enter- 24.6 37.8 57.0 70.8prises (in 000) 21

Gross Income (in Tk M) 3/ 36.9 56.7 85.5 106.2

Gross Income Adjustedto 1990 Prices (in Tk M) 4/ 30.7 49.3 85.5 114.2

Net Income (in Tk M) 5/ 15.4 24.7 42.8 57.1

Economic Benefit (in Tk M) 6/ 12.3 19.7 34.2 45.7

1/ 80% of the number of loans; the other 20% are assumed to have receivedcredit more than once. 2/ 70% of the loanees. 3/ Average annual income ofTk 1,500 (1987 prices) according to impact study. 4/ Using the rural consumerprice index. 5/ 50% of the income is assumed as imputed cost ofself-employed labour. 6/ Net income e SCF of 0.8.

- 37 -

ANNEX 1Page 7 of 7

Table 1 0

Incremental Economic Costs and Benefitsand Recalculation of the ERR

(Taka million)

Total NetIncremental Incremental Incremental IncrementalEconomic Farm Economic RPP Economic Economic

Year Cost Benefits Benefits Benefits

1 482.0 -231.0 12.2 -700.82 236.0 -67.0 19.7 -283.33 268.0 336.0 34.2 102.24 167.0 577.0 45.7 455.75 133.0 796.0 45.7 708.76 79.0 1006.0 45.7 972.77 66.0 1132.0 45.7 1111.78 40.0 1330.0 45.7 1335.79 40.0 1376.0 45.7 1381.710 40.0 1418.0 45.7 1423.711 40.0 1250.0 45.7 1255.712 40.0 1270.0 45.7 1275.713 40.0 1385.0 45.7 1390.714 40.0 1356.0 45.7 1361.715 40.0 1370.0 45.7 1375.716 40.0 1406.0 45.7 1411.717 40.0 1391.0 45.7 1396.718 40.0 1418.0 45.7 1423.719 40.0 1418.0 45.7 1423.720 40.0 1418.0 45.7 1423.721 40.0 1418.0 45.7 1423.7

ERR 46.6%

IBRD 17Q4_ ~ .J0 BANGLADH9- 92 MARCH 1983

, . ~~~~~~~BANGLADESH

lr . t. RURAL DEVELOPMENT 1I PROJECTPROJECT AREAS AND TRAINING FACILITIES

( r Gouhow, J RURAL DEVELOPMENT I AREAS TRAINING FACILITIES: ROADS

26. ) hku goo FLOOOGRAIN U MARKETING AREAS ( B.A R.D - RAILWAYS 26-

FAO FERTILIZER MARKETING AREAS R.D.A. RIVERS

ActRos,h-, I. aL ?\t } ~ 1 \ \n ; . . 4 CHTP * T.T.U. DISTRICT BOUNDARIES

NWRP AREA IADB) R.D.T.I. INTERNATIONALNAROF AREA II ~~~~~~~~~~BOUNDARIES

. @\ 0 / ffi ~~~~~~~~~SWRDP AREA DIFADI

> t-\ t- E ~~~~~~~~~~NIRDP AREA IDANIDAI

-254 C h ' R. i 25'-

S o S,1khor

3~ ~~~~~~~~~~~~~~~~~~~~~~~CE.nV I 232

I BARISAL i J

24's puL ha24 tHae t \ \*..

)orene aneewenleorere} PAT UAKHALI z ) CHITTAGON N D I

23' he Ot,f1Var* 2- _-,

CJ'pyao,a f h efnffl

Dart U w*&p w O dP , ,dhe .j

SL~ ~ ~ ~ ~ ~ ~~~~~~~~~~U Nt KHALIses

DI,kCA.

I N D I A >

BANGLADESH\

o 25 50 75 MILES MA

o 50 100 KILOMETERS

SRI LANKA 9

90- 9 92-

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