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The World Bank

FOR OFFICIAL USE ONLY

Report No. 16358

IMPLEMENTATION COMPLETION REPORT

REPUBLIC OF UGANDA

SOUTH WEST REGION AGRICULTURAL REHABILITATION PROJECT(CREDIT 1869-UG)

March 4, 1997

Agriculture OperationsEastern and Southern AfricaAfrica Region

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

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CURRENCY EQUIVALENTS

At Appraisal: USh 60 = US$ IAt Completion: USh 1,000 = US$ I

ABBREVIATIONS AND ACRONYMS

AEP Agricultural Extension ProjectARTP Agricultural Research and Training ProjectASIP Agricultural Sector Investment ProgramCP FAO/World Bank Cooperative ProgramCS Credit SchemeDFI District Farm InstituteERR Economic Rate of ReturnGDP Gross Domestic ProductGOU Government of UgandaICR Implementation Completion ReportIDA International Development AssociationIFAD International Fund for Agricultural DevelopmentMAAIF Ministry of Agriculture, Animal Industry and FisheriesM&E Monitoring and EvaluationMOF Ministry of FinanceMOLG Ministry of Local GovernmentMTR Mid Term ReviewNARO National Agricultural Research OrganizationPCU Project Coordination UnitPY Project YearRFl Rural Financial Intermediary,RM Resident MissionSAR Staff Appraisal ReportSOF Special Operation FacilitySWUADA South West Uganda Agricultural Development AgencySWRARP South West Region Agricultural Rehabilitation ProjectTA Technical AssistanceUCB Uganda Commercial Bank

FISCAL YEAR OF BORROWER

Government of UgandaI July - 30 June

Vice President C. MadavoCountry Director J. AdamsTechnical Manager S. GangulyTask Team Leader T. Sharif

FOR OFFICIAL USE ONLY


REPUBLIC OF UGANDA

SOUTH WEST REGION AGRICULTURAL REHABILITATION PROJECT(Cr. 1869-UG)

CONTENTS

PREFACE ..............................................

EVALUATION SUMMARY ............................................ iiIntroduction ............................................ iiProject Objectives ............................................ iiImplementation Experience and Results ............................................ iiiFuture Operations and Key Lessons Learned ............................................ vi

PART I: PROJECT IMPLEMENTATION ASSESSMENT ............................................. 1

A. STATEMENT/EVALUATION OF OBJECTIVES .............................................1B. ACHIEVEMENT OF OBJECTIVES ............................................. 2C. MAJOR FACTORS AFFECTING THE PROJECT ........ 6....................................6D. PROJECT SUSTAINABILITY ............................................ 7E. BANK PERFORMANCE .... 8........................................8F. BORROWER PERFORMANCE ............................................ 9G. ASSESSMENT OF OUTCOME ............................................ 9H. FUTURE OPERATION ............................................ 10I. KEY LESSONS LEARNED ............................................ 10

PART II: STATISTICAL TABLES ............................................ 12

APPENDICESA. Aide MemoireB. Evaluation Summary of Government's Completion ReportMap IBRD No.20814

FAO Map No. 1FAO Map No. 2

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed without World Bank Authorization l


REPUBLIC OF UGANDA


PREFACE

1. This is the Implementation Completion Report (ICR) for the South West Region AgriculturalRehabilitation Project (SWRARP) in Uganda, for which Credit 1896-UG of SDR 7.6 million(US$10 million equivalent) was approved by the International Development Association (IDA) onFebruary 9, 1988 and made effective on August 26, 1988. The project was co-financed by theInternational Fund for Agricultural Development (IFAD) for which a Loan of SDR 9.1 million(US$ 12 million equivalent) was approved on February 23, 1988. In addition, a grant of US$0.3million was approved by IFAD from its Special Operation Facility (SOF). The project wasadministered by IDA.

2. The IDA Credit and IFAD Loans were closed on June 30, 1996, as compared with theoriginal closing date of June 30, 1994. Some 93 percent of the IDA Credit and 89 percent of theIFAD Loan were disbursed, with the last disbursement taking place in July 1996 after the processingof the final withdrawal application.

3. The ICR was prepared by staff of the FAO/World Bank Co-operative Program (CP) onbehalf of AFTAI/CD4 of the Africa Region. Contributions to the report were made by Taqi Sharif,Fred King, and Donna Criddle (AFTAI) and it was reviewed by Sushma Ganguly, TechnicalManager, AFTAI. The ICR is based on information obtained from the project files and on thefindings of an ICR mission' which visited Uganda in October 1996. The borrower prepared its ownassessment of the project performance. A copy of the Aide Memoire of the ImplementationCompletion Mission and of the evaluation summary of Government's Completion Report areattached as Appendices A and B, respectively.

Guy Evers (Mission Leader, Agronomist), Frances Maundrell (Agricultural Economist, Consultant) and ElHoussine Bartali (Civil Engineer, Consultant).

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REPUBLIC OF UGANDA


EVALUATION SUMMARY

Introduction

1. During the period 1980-1988, IDA supported the agricultural sector in Uganda by providingcredits which focused on sector reconstruction, agricultural development, sugar, and forestryrehabilitation. The South West Region Agricultural Rehabilitation Project (SWRARP) quicklyfollowed a similar Bank/IFAD funded Agricultural Development Project in Eastern Uganda, and wasintended to form part of a program to revitalize agriculture in Uganda in the aftermath of many yearsof internal disruption.

Project Objectives

2. At appraisal (1987), the Gross Domestic Product (GDP) per capita had fallen by 40 percentsince 1970, with the ravages of war and insecurity having had a serious, negative impact on the ruraleconomy. In the project area2, some 20 percent of the 2,700 km rural roads was considered to beimpassable and 40 percent was passable only in the dry season. Marketing, input distributionchannels, and agricultural support services had largely disintegrated. The project's objectives were toincrease food production, incomes, and living standards of small farmers in the region. The projectoriginally included the following components: (i) launching of an adaptive research program andreviving extension services; (ii) procurement and wholesale distribution of agricultural inputs; (iii)rehabilitation of 2,000 km of rural access roads; (iv) project management; and (v) monitoring andevaluation. Emphasis was given to rural road rehabilitation and input supply components, whichtogether represented about 80 percent of total project costs. The project was co-financed by theBank (US$10 million) and IFAD (US$12 million). A Special Operational Facility grant of US$0.3million from IFAD was to be provided for start-up costs.

3. After appraisal, IFAD introduced further proposals for Community Development which wereregarded as a separate component, although there was no change to IFAD's loan agreement. In 1992,a Pilot Credit Sub-component (under Community Development) was incorporated in an amendmentof the IFAD loan agreement and, in 1994, following a request from the Government of Uganda(GOU), a new component for the construction of Small Valley Dams was introduced under IFAD'sloan agreement.

4. The original project objectives and design were appropriate to the region's priority needs inthe late 1980s. As both the national and local economies revived, the project design was rightly

2 At appraisal, the project area consisted of four districts (Mbarara, Bushenyi, Kabale and Rukungiri); twoadditional districts were created during implementation within the same area: Kisoro and Ntungamo.

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adjusted from strict rehabilitation towards more long-term development objectives. The CommunityDevelopment component and Pilot Credit Sub-component were designed to strengthen efforts aimedat core project c'bjectives by providing direct support to small farmers through groups. However, theaddition of the Small Valley Dams component near the end of the project, diverted project effortsaway from core project objectives rather than contributing to them.

Implementation Experience and Results

5. Project costs are estimated at about US$26 million, or about 95 percent of Staff AppraisalReport (SAR) estimates. Investment costs were much lower than forecast (US$12.6 million asagainst US$19.3 million at appraisal) principally because of shortfalls in civil works, especiallyroads contracts and agricultural inputs. Recurrent costs were much higher than forecast (US$13.5million as against US$8.1 million), mainly due to greater expenditure on operating costs attributed tothe Project Coordination Unit (PCU), Technical Assistance (TA) and Overseas Training.

6. Project implementation was slow from credit effectiveness in August 1988 until the Mid-term Review (MTR) in 1992, with interventions limited to (a) adaptive research and extension inseven priority counties, (b) training, and (c) procurement and resale of some agricultural inputs.When project implementation took off in 19923, spreading over the entire region, GOU's EconomicRecovery Program and the associated liberalization program had led to a rapid improvement in theeconomic conditions in the project area. By this time, the private sector was active and had its ownaccess to foreign exchange, making the project's agricultural input supply component largelyunnecessary. The component nevertheless had a positive impact by supplying inputs when theywere sorely needed early in the project, as discussed below. At the MTR, agreements were reachedon financial control and reporting, deployment of feeder road units, tender for the main roads'contract, introduction of performance allowances, and finalization of the design of the creditcomponent.

7. The project contributed substantially to reviving agricultural research activities and restoringextension activities in the project area. Significant outcomes of this component, albeit limited tosome zones of the project area, are the release and wide adoption of superior Irish potatoes, and thedevelopment and adoption of improved banana husbandry practices which will require minimalpesticide applications to effectively limit weevil attacks, and increase yields by 20 to 30 percent. Thebenefits of using improved seeds would, however, need further demonstrating to farmers, while seedproduction capacity would need to increase to meet expected demand. In 1994, this component'sactivities were handed over to regular research and extension programs, each being supported by aseparate IDA-funded project (Credit 2446-UG and Credit 2424-UG). Rather than support extensionand research activities in a fragmented manner, the rationale of the new projects was to supportnational programs. This was a positive step, but the transfer of extension and research activitiesreportedly resulted in some dilution of activities, due especially to the decentralization policy(implementation of extension activities has been transferred to the districts) and budget reductions.

8. Despite shortcomings, and being overtaken by events, the Agricultural Input Supplycomponent had a positive impact by supplying inputs and facilitating the establishment of retailers inthe region by providing them with stocks at a time when business was brisk. Private suppliers of

/ The project picked up in 1992 due to changes in Ugandan staff and had improved markedly even before the mid-term review which took place in May 1992.

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agricultural and veterinary inputs now operate in centers throughout the region. Overall, the value ofitems handled (including basic tools, sprayers, chemicals, wheelbarrows and bicycles) amounted toUS$3.0 million, or 58 percent of SAR estimates. Expenditure on agricultural inputs was lower thanforecast because: (i) the size of early orders was reduced due to lack of storage capacity; (ii) delaysin procurement tended to have a domino effect which, together with difficulties in selling some stockitems, limited the number of purchases which could be completed; (iii) it proved unnecessary for theproject to import certain materials (e.g., construction materials and vehicles) which were readilyavailable in the project area; and (iv) by the time the last purchases took place in 1993, the privatesector was active and had its own access to foreign exchange.

9. The project's significant and most widespread economic impact has been generated by therural access road rehabilitation program. Although implemented from 1992 onwards in an alteredform4 , the component improved some 1,550 km of rural roads to dry-weather standards (comparedwith the rehabilitation of 2,000 km to all-weather standards, as originally conceived at appraisal). Itis estimated that around 175,000 rural families (about I million people), who live within easy reachof the roads have benefited from them. Surveys have confirmed that the opening up of previouslyimpassable roads has generated an increase in general economic activity and agricultural production,with the share of the project area in the Kampala/Entebbe cooking-banana market increasing from40 percent to 80 percent. Given adequate road maintenance, farmers in the project area will continueto benefit, through increased access to agricultural support services, easier transport and marketing.

10. Project Management was problematic in the first years of the project due to lack ofexperience of newly-appointed staff and high turnover of TA experts, which led to difficulties ininitiating and coordinating project activities. The combination of both infrastructure and agriculturalsupport components, totaling seven in all, under the PCU, which was located regionally in Mbarara,overstretched local management capacity. This led to liaison problems with the Ministry of LocalGovernment (MOLG) during the first half of the project. Rapid turnover of staff also contributed toearly implementation problems. Restructuring of the project and positive changes in senior projectmanagement in 1992, greatly improved project performance. Better collaboration with localauthorities also resulted in enhanced political and administrative support from districtadministrations, and the Inter-ministerial Coordinating Committee played an increasinglyeffective role.

11. Overall, the Monitoring and Evaluation Unit performance fell short of its objectives. Theunit carried out baseline, mid-term and final household surveys and thematic surveys which providevaluable information on project impact. However, due mainly to shortage of local staff (alreadyredeployed on account of decentralization), reluctance to utilize available TA, and financial resourceconstraints, the final household survey was simplified, and does not provide quantitative data onagricultural production which could be compared with the results of the 1989 baseline survey. Theunit did not carry out regular financial (cost) monitoring. Although recommended in the mid-termreview, low priority was given to the monitoring of agricultural activities, cropping surveys were not

4 / Equipment procured under the project for maintenance was used by district units for spot improvement of 1,060km from 1992. Road rehabilitation by contractors of 488 km took place between 1994 and 1996.

undertaken, and no analysis was carried out on the financial viability or impact on laborrequirements of the recommended crop packages and income generating activities.

12. The Community Development component, including the Pilot Credit Sub-component (PCS),has provided support to over 500 farmer groups and, through groups, to individuals, with some 65percent women members. The Groups identified by community development staff were also used aschannels for extension and seed production activities. The component has had a localized impact onincomes and nutrition through its promotion of diversified income-generating activities; but possiblyits greatest impact has been the fostering, through training, of local management capacity tomaintain simple books of account for Group activities, including for the PCS.

13. The PCS was, overall, a success in that it has played an important role in fosteringenterprise and demonstrating income-generating activities in rural areas. Against an originalallocation of US$ 414,000, a total of US$ 1.01 million was disbursed largely using reflows, as aresult of repayment rates exceeding 80 percent. The performance of the project team iscommendable considering the low repayment rates achieved under similar Credit schemes inother projects. It is also notable that the PCS was a program of Ugandan design, implemented bydetermined and concerted efforts of many different local authorities. While the administrativecosts of PCS were relatively high, it can nevertheless serve as a model for the future expansion ofCredit to farmers in the rural areas, given the present reluctance of commercial banks accreditedunder ongoing Credit programs to open rural branches and onlend to the farmers. Following aproposed GOU policy for lending to farmers, an NGO, the South West Uganda AgriculturalDevelopment Agency (SWUADA) was set up in early 1996 to, inter alia, provide credit tofarmers in the project area by registering as a rural financial intermediary (RFI), and receiveassistance for building its technical and managerial capacity. SWUADA had sought seed capitalmoney from GOU, but on account of delays in the implementation of the capacity buildingprogram envisaged under an ongoing credit program, no material progress has been made in thisregard.

14. The small valley dams/tanks component aimed first at rehabilitating existing and thenconstructing new, small valley dams and/or tanks. Its implementation performance has been lessthan satisfactory. Of the 15 potential sites considered, five were selected and engineeringdesigns were prepared, but one had to be dropped due to time and budget limitations. However,no cost-benefit or environmental impact studies were made, contractors could not meet theirdeadlines, and one of them failed to comply with the construction specifications. As of October1996, progress of work ranged from 61 percent to 93 percent toward completion of the fourdams. This component was adversely affected by time constraints and that the same projectstaff, supervision consultant and contractors also had to complete concurrently the rural roadcomponent.

15. Although the Bank's performance at appraisal was generally satisfactory, more attentionshould have been given to: (i) the capacity of local staff to implement a multi-sectoral project; (ii)the complexity of local tendering procedures; (iii) the estimates of the time required to establishlogistics for project implementation and inputs procurement; and (iv) the costing of the rural roadcomponent. From mid-1988 to mid-1996, there were a total of 15 supervision missions which soughtto address the key issues affecting the project's performance by taking these up with theGovernment, and directing their efforts towards facilitating project implementation. Continuity of

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task management in the latter half of the project, combined with participation of Resident Mission(RM) staff in supervision, as part of a team, contributed to achievement of project objectives. Inaddition, the support provided by the RM in screening of disbursement and procurement documentswas greatly appreciated by project management. Until around 1992, Borrower performance wasdeficient, especially due to poor project management, inadequate counterpart funding, and failure tocomply with the covenants on accounts and audit. From 1992, the above deficiencies were rectified,and the Borrower's performance and commitment to the project until completion werecommendable.

16. Sustainability issues relate principally to assuring continued road maintenance, seedproduction and credit. It is noteworthy that GOU has, out of its own resources, provided funding inFY97 to complete ongoing project activities, including funds for feeder roads' improvement andmaintenance. This is in line with GOU's development priorities. This funding, will, however, not beadequate to purchase additional roads maintenance equipment sufficient for the six districts. Thebenefits of using clean seeds, especially for potatoes, would need further demonstrating to farmers,and seed production capacity should substantially increase to meet expected demand, and thereforesustain production. The pilot credit operation could have been continued through SWUADA as anRFI if GOU had accepted the recommendation of the last supervision mission, whilst remainingwithin the framework of its proposed capacity building program for RFIs under existing creditprograms. Because of delays in the operationalization of the modalities agreed between GOU andthe Bank for providing credit to farmers through RFIs, including the capacity building of RFIs,project sustainability for the above activities is considered uncertain. Adaptive Research andExtension has been merged with national programs supported by IDA projects, and the sustainabilityof this component now relies on the performance of these two projects. Private sector arrangements,which appear in place throughout the region, have successfully taken over the supply of agriculturalinputs.

17. Combining with the Government's economic recovery program, SWRARP has thus made asignificant contribution to improving small farmer incomes and welfare. The SAR indicated that theEconomic Rate of Return (ERR), over a 20-year life, was expected to be in excess of 15 percent.Since continuing benefits will depend greatly on the level of road maintenance, and this is as yetuncertain, the project's ERR has been reworked over the period to the year 2000. The revised

5calculations show an ERR of about 17 percent . Designed as a rehabilitation, rather than adevelopment project, SWRARP has largely achieved its objectives and is rated satisfactory.

Future Operations and Key Lessons Learned

18. Although the IFAD and IDA co-financing credits were closed by mid-1996, SWRARPactivities will continue during FY97, solely under GOU financing. The operations to be undertakenby the project during FY97 include road rehabilitation and maintenance, completion of the smallvalley dams component, follow up of credit activities, and handing over project activities to theirrespective agencies by June 1997.

However, because the project's monitoring and evaluation section failed to measure key indicators adequatelyand because it is impossible to clearly separate the project's impact from other changes in the economicenvironment, the estimate is far from precise.

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19. Key lessons learned are as follows:

(a) The project recorded impressive achievements in activities such as the road spotimprovement program; the pilot credit scheme; and the community developmentscheme. This is largely the result of a strong commitment of the Government (atcentral and district levels), which provided the project management team withgood logistical support and allowances.

(b) Continuity of Bank staff for task management, particularly in the second half ofthe project, and close liaison with and involvement of Resident Mission staff insupervision, as part of a team, contributed to achieving project objectives.

(c) The setting up of a screening service in the Resident Mission, to initially reviewwithdrawal applications for disbursements and tender/bid documents for proposedprocurements, towards the end of the project, was greatly appreciated by projectmanagement.

(d) More attention needs to be devoted to devising satisfactory arrangements forprocurement and making contingency plans at appraisal. Where rapid start-up ofproject activities is expected to be crucial to the impact of the project (as in thecase of agricultural input supply and road rehabilitation components), the Bank'sappraisal team should include an experienced project manager who might, inaddition to defining implementation schedules, also set in motion the procurementprocess by arranging the preparation of draft tender documents.

(e) It is recognized that the addition of the Small Valley Dams component towards theend of the project was based on a decision at the highest level of Government.Generally, however, when borrowers and lenders agree to add a sizeablecomponent towards the end of the project, the Bank should make a full assessmentof the capacity of project management and of potential contractors to undertakethe additional works.

(f) In a project such as SWRARP, Technical Assistance was required to play a crucialrole. In order to limit the risks of excessive turnover of key TA staff, such as thefinancial controller, every effort should be made by Government to choosesuitable candidates for key technical assistance posts.

(g) The adaptive research program gave priority to the screening of exotic, newlyintroduced crop varieties. In addition to screening exotic crop varieties,consideration should be given to local varieties, to their improvement throughproper seed production, and to the possibility for their incorporation in localbreeding programs.

(h) To yield significant impact, the release of superior crop varieties should beaccompanied by sustainable seed production systems, especially simple, localfarmer-based seed production, as successfully experienced by the project forpotatoes.


REPUBLIC OF UGANDA


PART I: PROJECT IMPLEMENTATION ASSESSMENT

A. STATEMENT/EVALUATION OF OBJECTIVES

1. The South West Region Agricultural Rehabilitation Project (SWRARP) quickly followed asimilar Bank/IFAD-funded Agricultural Development Project in eastern Uganda and was intended toform part of a program to revitalize agriculture in Uganda in the aftermath of many years of internaldisruption. The project's objectives were to increase food production, incomes and living standardsof small farmers in 4 (later divided to become 6) districts6 of the Southwest. The SAR affirmed thatsmallholder farming families of the region were poor and should be potential beneficiaries of theproject. As formulated in the SAR, the project included the following components:

(a) Adaptive Research and Extension for rehabilitating two District Farm Institutes(DFI) and improving the facilities of research sub-stations; and for strengtheningadaptive research and extension through provision of vehicles, equipment, technicalassistance, training and operating costs.

(b) Agricultural Input Supply for the procurement and sale of small, priorityagricultural inputs; for the procurement of vehicles, material or equipment tostrengthen marketing infrastructure; and for establishing a warehouse at Mbarara.

(c) Rural Access Roads, including a program of rehabilitation and spot repairs on 2,000km of rural roads; and the provision of plant, equipment, incremental operating costsand in-service training for staff of the Ministry of Local Government (MOLG).

(d) Project Management to enable the Project Coordination Unit (PCU) to coordinateimplementation and administer a Community Development Fund.

(e) Monitoring and Evaluation (M&E) to bring together information on projectimplementation and evaluate impact.

2. During implementation, IFAD further elaborated proposals for Community Development inorder to give greater support to group formation and training. This was then regarded as a separatecomponent, although there was no change to IFAD's loan agreement. Farm credit was originallyintended to be provided through separate on-going programs, but when this proved to be unworkable

6 At appraisal, the project area consisted of four districts (Mbarara, Bushenyi, Kabale and Rukungiri); twoadditional districts were created during implementation within the same area: Kisoro and Ntungamo.

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for the assisted groups, a Pilot Credit Sub-component (under Community Development) wasincorporated into an amendment of the IFAD loan agreement in mid-1992. Following a requestfrom GOU at the highest level in 1994, an agreement was reached to include the construction of anumber of small valley dams within IFAD's loan agreement. Thus, the project finally implemented7 components.

3. At project appraisal, Gross Domestic Product (GDP) per capita had fallen by 40 percentsince 1970, and war and insecurity had devastated the rural economy. In the project area, some 20percent of the 2,700 km rural road network was considered to be impassable and 40 percent waspassable only in the dry season. Marketing, input distribution channels, and agricultural supportservices had largely disintegrated. Project design was thus directed mainly towards rehabilitation ofkey infrastructure (roads - 48 percent of project costs) and restoration of supply of agriculturalinputs (30 percent of project costs), with smaller allocations for the Adaptive Research andExtension component and community development.

4. The original project objectives and design were appropriate and responsive to the region'spriority needs in the late 1980s. However, the Economic Recovery Program launched in 1987 andthe associated Liberalization Program led to a rapid improvement in the economic conditions in theproject area. As both the national and local economies revived, project design was rightly adjustedfrom strict rehabilitation towards more long-term development objectives. The CommunityDevelopment component and Pilot Credit Sub-component were designed to strengthen efforts aimedat core project-objectives by providing direct support to small farmers through groups. Inclusion ofthe Small Valley Dam component extended the scope of the project to livestock sector development.Although this directed support to areas of the region which would otherwise have benefited onlymarginally from other project interventions, the addition of this component near the end of theproject appears to have diverted project efforts away from core project objectives rather thancontributing to them. The combination of both infrastructure and agricultural support components,totaling 7 in all, under a single Project Coordination Unit under the Ministry of Agriculture, AnimalIndustry and Fisheries (MAAIF), which was located regionally at Mbarara, overstretched localmanagement capacity. This led to liaison problems with the Ministry of Local Government(MOLG), which was implementing the Roads component, during the first half of the project period.

B. ACHIEVEMENT OF OBJECTIVES

5. Overview. The project became effective in August 1988, but implementation was slow untilthe MTR in 1992. Interventions were limited to adaptive research and extension (in 7 prioritycounties), (Map 1) training, and the procurement and resale of some agricultural inputs. From 1992,the project took off, with a substantial part of activities being achieved during the last three yearsbefore completion. As of 1993/94, the Adaptive Research and Extension Component was transferredto two other IDA-funded projects (para 22).

6. Adaptive Research and Extension. The adaptive research sub-component was designed toaddress small farmer needs, with emphasis on the region's major food crops. In 1989, researchpriorities were identified by the project, by conducting farmers' surveys, as lack of improvedvarieties, pests and diseases, declining soil fertility and inferior agricultural practices. The projectcarried out on-station and on-farm, trials, with major areas of emphasis being the introduction ofexotic germplasm, screening and release of promising varieties of Irish and sweet potatoes, beans,maize, wheat and short term upland rice. However, for these crops, little emphasis was given to

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improving seed quality of and/or regenerating suitable local varieties, and to improving cropmanagement. The project also improved local technologies for banana weevil control and soilconservation. The Extension Sub-component was intended to revive the extension services in theproject area. The project provided in-service training and logistic support and field allowances forstaff, and equipment for the DFIs located in Bushenyi and Kabale Districts. The project also enabledextension staff to train direct project beneficiaries (i.e., farmer groups) and other farmers, throughtheir regular activities. Some 470 farmer day courses were organized by the project, mainly at DFIs.However, the two DFIs have not yet been rehabilitated (now to be financed under another project,para 22), and appear to be largely under-utilized.

7. The project contributed substantially to reviving agricultural research activities and restoringextension services in the project area. The salient outcome of this component is the release and wideadoption of superior Irish potato varieties in Zone 1 (Map 1) and, in Zone 2, the development andadoption of improved banana husbandry practices requiring minimal pesticide applications andreported to effectively limit weevil attacks, while increasing yields'. The lack of seed productioncapacity and related development initiatives in the project area have generally limited the adoptionof the released improved varieties, except for Irish potatoes, for which the project supported seedproduction by contracting groups or individual farmers. The benefits of using clean seeds, and theneed to renew potato seed regularly has, however, to be further demonstrated to farmers and seedproduction capacity should substantially increase to meet expected demand.

8. Agricultural Input Supply. The SAR identified lack of inputs, and the scarcity of foreignexchange to procure them, as a key constraint to agricultural production in the region, and proposedthe importation of about US$5.6 million worth of inputs for wholesale distribution over 5 years(1989-1993). The total value of inputs procured between 1990 and 1993 was US$3.0 million,equivalent to 58 percent of SAR estimates. However, the Mbarara warehouse could not beconstructed in time to receive the first purchases, and it was never built, as alternative solutionsbecame available (renting storage space). Expenditure on agricultural inputs was lower than forecastbecause: (i) the size of early orders was reduced due to lack of storage capacity; (ii) delays inprocurement tended to have a domino effect which, together with difficulties in selling stocks,limited the number of purchases which could be completed; (iii) it proved unnecessary for theproject to import certain materials (e.g., construction materials and vehicles) which were readilyavailable in the project area; and (iv) by the time the last purchases took place in 1993, the privatesector was active and had its own access to foreign exchange. Despite these shortcomings, and beingovertaken by events, the Agricultural Input Supply Component did, nevertheless, have a positiveimpact by supplying inputs when they were sorely needed early in the project. It also facilitated theestablishment of retailers in the region by providing them with stocks at a time when business wasbrisk.

9. Rural Access Road Rehabilitation. The initial objective was to rehabilitate and spot repair2,000 Iam, using contractors over a 3-year period, in order to permit year-round access. Substantialdelays were incurred in selecting consultants to identify the roads and sections to be rehabilitated,

7 It has been assumed that, for farmers living within easy reach of project roads, the rate of adoption of bananaand potato technologies is in the order of 30 percent, yield increases 20 to 30 percent, and area increases 10percent to 20 percent.

8 Including basic tools, sprayers, vegetables seeds, chemicals, wheelbarrows and bicycles.

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and to conduct the feasibility study (para 24). The consultants found that, because costs had beenunderestimated at appraisal and further road deterioration had taken place in the interim, the targetfor rehabilitation would have to be reduced from 2,000 km to around 500 km of first priority roads.Moreover, these roads could only be restored to dry weather status. The partial rehabilitation of firstpriority roads was undertaken by two contractors between mid-1994 and mid-1996, focusing mainlyon impassable sections. At project completion, 488 km of contract roads had been rehabilitated(Map 1).

10. The road maintenance plant and equipment were acquired in early 1992. This equipmentwas initially distributed in four units, one for each of the initial project districts. The equipmentincluded: motorgraders, wheel loaders, dump trucks, vibratory rollers, vehicles and assortedequipment for 4 mechanical workshops. The total cost amounted to about US$2.2 million. In orderto reduce the shortfall resulting from the target reduction and to speed-up progress, it was agreedbetween GOU and IDA in early 1992 to use the road maintenance equipment for spot improvementof 1,000 km of feeder roads. Although project equipment was used for work for which it was notoriginally intended, and therefore depreciated faster than anticipated, it contributed substantially tothe improvement of the rural road network in the project area. As of October 1996, some 1,060 kmof roads had been spot improved (Map 1). Despite the reduction in road standard and the reducedlength of roads improved (about 1,550 vs 2,000 km), the component appears to have substantiallyachieved its objectives.

11. Community Development. The objective of this component was to promote and traingroups, giving emphasis to women group members. The number of groups in the project area hadrisen from 218 in Project Year (PY) I to well over 500 by the end of the project, with some 65percent women members. Many received training in day and residential courses at DFIs throughwhich both technical and managerial skills were imparted. Over 70 groups have been assistedthrough grants for building materials, inputs and equipment. In addition, selected members of 15women's groups received grants of a heifer for zero-grazing, whose female descendants are in turnbeing donated to other group members. Beneficiary groups are, in general, spread throughout theregion although, from the mission's visits, it would appear that many of the heifers were donated tothe more prosperous members of groups near towns (Map 2).

12. Pilot Credit Scheme. The revolving credit fund (US$414,000) started in late 1993. Fundshave been lent to groups for on-lending to members, generally for 6 months, but sometimes up to a12-month term. Using reflows, 373 loans totaling US$ 1.01 million have been made to 241 groupsand around 3,000 to 4,000 individual group members, of whom more than 40 percent are women.Beneficiary groups have tended to be clustered in a small number of locations (Map 2). Most loanshave been used to finance labor for crop production, especially banana rehabilitation, but also fortrading, livestock enterprises, and other income-generating enterprises such as beekeeping andmushroom growing. The value of individual loans commonly ranges between US$100 and US$500with a maximum of US$1000. Interest rates have varied between 17 percent and 26 percent p.a. andwere generally positive in real terms. The pilot Credit Scheme (CS) must, overall, be considered asuccess in that it has played an important role in fostering enterprise and demonstrating income-generating activities in rural areas. The project team has also shown that it is possible to achieverepayment rates exceeding 80 percent, rarely achieved among small farmers in Uganda. It is notablethat this was a program of Ugandan design, implemented by determined and concerted efforts ofmany different local authorities. While the administrative costs of CS were relatively high, it cannevertheless serve as a model for the future provision of credit to farmers, given the present

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reluctance of commercial banks accredited under ongoing credit programs to open rural branchesand onlend to farmers.

13. Monitoring and Evaluation (M&E). Overall, the M&E unit performance fell short of itsobjectives. The unit carried out baseline, mid-term and final household surveys and thematic surveyswhich provide valuable information on project impact. However, due mainly to shortage of localstaff (already redeployed), reluctance to utilize available TA and financial resource constraints, thefinal household survey was simplified, and does not provide quantitative data on agriculturalproduction which could be compared with the results of the 1989 baseline survey. The unit did notcarry out regular financial (cost) monitoring. Although recommended in the mid-term review, lowpriority was given to the monitoring of agricultural activities, cropping surveys were not undertaken,and no analysis was carried out on the financial viability or impact on labor requirements of therecommended crop packages and income generating activities.

14. Small Valley Dams/Tank. This component aimed first at rehabilitating existing and thenconstructing new, small valley dams and/or tanks. The valley dams and tanks are intended to reducewater shortages for both livestock and human consumption and hence reduce nomadism. Of the 15potential sites considered, 4 valley dams and 1 valley tank were selected and engineering designswere prepared, but one had to be dropped due to time and budget limitations. However, no cost-benefit or environmental impact studies were made. Contractors could not meet the deadline, andone of them failed to comply with the construction specifications. As of October 1996, progress ofwork ranged from 61 percent to 93 percent toward completion. This component was adverselyaffected by the time constraint imposed by its late inclusion in the project relative to the closure ofthe project. This was exacerbated by the fact that the same project staff, supervision consultant andcontractors also had to complete concurrently the rural road component.

15. Financial and Economic Objectives. Actual project costs are estimated at about US$26million, or about 95 percent of SAR estimates (Part II, Table 8). Investment costs were lower thanforecast (US$12.6 million as against US$19.3 million at appraisal), principally because of shortfallsin civil works, especially roads contracts (55 percent of SAR estimates) and the agricultural inputscomponent (45 percent of SAR estimates). Recurrent costs were higher (US$13.5 million as againstUS$8.1 million), mainly due to greater expenditure on operating costs attributed to the PCU (US$3.2million as against US$0.2 million), Technical Assistance (US$4.0 million as against US$3.3 million)and Overseas Training (US$1.0 million as against less than US$ 0.1 million).

16. There were severe shortfalls in the Government's counterpart contribution up until 1992.Total counterpart contribution has, however, amounted to the equivalent of about US$3.9 million(compared to US$5.1 million at appraisal, including taxes) of which 40 percent was from theSpecial Inputs Fund, 14 percent from MAAIF, and 44 percent from MOLG (US$0.9 million USAIDcontribution and US$0.8 million MOLG budget). Had the input supply component beenimplemented earlier and in full, it would have generated significantly higher GOU revenues andcould have eased the shortage of counterpart funds in the project's early years.

17. The SAR indicated that the economic rate of return (ERR) of the adaptive research andextension and road components over a 20-year life was expected to be in excess of 15 percent.Benefits were estimated for transport cost savings and predicted yield increases over virtually the

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whole range of food crops. Project benefits have now been re-assessed9 based on: (i) the numbers offarmers living within easy reach of SWRARP improved roads (estimated at 175,000); (ii) estimateson yield and cropped area increases; and (iii) the benefits from income-generating activities,additional trade and employment, and transport cost savings. The revised calculations show an ERRof roughly 17 percent (see Part II, Table 9).

C. MAJOR FACTORS AFFECTING THE PROJECT

18. General. The project's implementation has coincided with a long period of peace andpolitical stability which allowed free movement of people and goods. The Economic RecoveryProgram launched in 1987, and the associated liberalization program, resulted in sustained GDPgrowth ranging from 3 percent to 8.5 percent per year, and led to a rapid improvement in economicconditions in the project area.

19. Project Management. During the first years, the lack of experience of newly-appointedstaff in project management led to difficulties in initiating and coordinating project activities. Rapidturnover of key TA staff (para 21) also contributed to the early implementation problems whichmight have been solved earlier, if GOU and the Bank had taken prompt, decisive action. Given theinitial difficulties of transport and telecommunication, the PCU in Mbarara was isolated fromMAAIF (Entebbe), and MOLG, the Ministry of Finance (MOF) and the Bank's office in Kampala.This resulted in substantial delays in project implementation, especially for roads (para 24).Restructuring of the project at the time of the MTR (May 1992) and positive changes in seniorproject management in 1992, greatly contributed to overall project achievements.

20. Counterpart Funding. At appraisal, assurances were given that Governnent would providesufficient local funds to support project execution. Counterpart funding was to have been boosted byuse of revenues from sales of agricultural inputs under the project. However, Government budgetaryallocations were not fulfilled and funds from input sales were not used until 1992 because of delays,misunderstandings and administrative problems. Demand for local funds for project execution in theearly years was much higher than anticipated because disbursements were held up by proceduralproblems associated with lack of proper accounting by project staff and the unfamiliarity of projectmanagement with Bank procedures.

21. Technical Assistance. Some 340 person-months of long and short term TA were financedunder the project. The main fields of assistance included civil engineering, financial control, inputsupply, adaptive research and extension. Due to failure to fulfill his mandate, the financial controllerhad to be replaced twice over less than three years, which contributed to the initial difficulties insetting up an acceptable financial system and in keeping proper accounts. Towards the end of theproject, Project Management considered that there was no need to use the available balance of 5person-months TA to support M&E activities. The absence of external assistance during that periodmay, however, have contributed to the problems reported on the last surveys carried out by the M&Eunit (para 13).

9~~~~~~~~~~~~~~~~~~~

9 However, because the project's M&E unit failed to measure key indicators adequately and because it isimpossible to clearly separate the project's impact from other changes in the economic environment, theestimate is far from precise.

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22. Transfer of Adaptive Research and Extension Activities. During 1993/94, followingMAAIF restructuring and the approval of an IDA-funded Agricultural Research and Training Project(ARTP) and an Agricultural Extension Project (AEP), project research and extension activities weretransferred to the then newly-created National Agricultural Research Organization (NARO) and toAEP, respectively. On-station/on-farm research has been pursued in the project area for Irishpotatoes, wheat, banana and agro-forestry/soil conservation (funded by NARO and donors). Thetransfer of extension activities to the districts, which assumed responsibility for implementation ofactivities following decentralization, and budgetary constraints has reportedly resulted in somedilution of activities, especially in respect to staff allowances and mobility.

23. Staff Versus Farmer Training. Although the Training budget in the SAR was limited, anambitious training program abroad was set-up for project staff and district extension staff. Theproject supported more than 40 short courses and 18 MSc degree courses, of which seven were inextension/education, four in agronomy/ crop protection and seven in economics/management. Thisled to rather significant short- to long-term absences of senior staff in charge of project andextension activities. Moreover, investment in staff training greatly exceeded those in farmer training,the latter suffering from the delays in restoring DFI capacity and, towards the end of the project, thelack of funds at the district extension offices.

24. Delays in the Rural Road Component. From the beginning of project implementation, thiscomponent suffered from chronic delays (para 7). The contract for road rehabilitation started in May1994, was delayed by almost four years, and was due to be completed by the end of the project (June1996). A number of factors contributed to the delays in appointing the consultant engineers, thesupervision engineers and the contractors. These include: (i) inadequate cost estimate at appraisalresulting in the need to modify the component activities, and having it endorsed by the relevantnational authorities and IDA; (ii) poor communication between the project in Mbarara, MAAIF inEntebbe, and MOLG and MOF in Kampala; (iii) unfamiliarity of project management with MOLGand IDA procedures, leading to the need to re-formulate proposals and tenders; (iv) lack ofcounterpart funds and/or delays in releasing them; and (v) limited capacity of available roadcontractors who were requested to complete work under pressure, and in some cases being alsocontracted for other project works (small valley dams). Initial delays also resulted in further roaddeterioration, which meant further adjustment to the component design and costing. In addition, onecontractor could not fulfill his contract, which was partially handed over to a second contractor. Inundertaking the additional work, the second contractor was obliged to subcontract to other localcontractors. Part of the additional work was undertaken by project management under force account.

D. PROJECT SUSTAINABILITY

25. Adaptive Research and Extension, one of the field components, has been merged withnational programs supported by IDA projects (ARTP and AEP). Therefore, the sustainability of thiscomponent relies on the performance of these two projects. In this respect, priority should be givento developing farmer-based seed production for both local and recently released varieties.Agricultural Input Supply was intended to be taken over by the private sector. This took placespontaneously during the course of the project and satisfactory private sector arrangements appear tobe in place. Private suppliers of agricultural and veterinary inputs operate in centers throughout theregion.

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26. Maintenance of roads rehabilitated by contractors and by the project is imperative, butonly a few roads have undergone routine maintenance so far. GOU now gives the highest priority toroad maintenance, and increased its budget allocation for rural roads almost four-fold in FY97.However, this is still below the country's requirements, and districts are not able to match MOLGallocations as is required. Road maintenance equipment purchased under the project for 4 districtunits has been spread over the 6 district units (see para 1). The Government is in the process ofprocuring additional equipment worth US$ 4 million for the whole country, of which some will befor the project area, but this will still not raise the districts' maintenance capabilities to the leveloriginally intended by the Bank. Other measures which would contribute to improved roadmaintenance, especially in Zone 1 (Map 1), include limiting land slide incidence by persuadingfarmers to adopt soil conservation practices, limiting axle loads of lorries, and rehabilitating trunkroads. The shortage of equipment and insufficient local funding may hamper the sustainability ofpart of the rehabilitation undertaken by the project.

27. Sustainability of small valley dams/tank will first depend on the contractor's performanceto complete the on-going works. It will also depend on the degree of organization of Water Users'Associations (WUAs) and how well they manage to raise funds from members and support fromlocal authorities to maintain/protect the site environment in general and the dam structure and relatedequipment in particular. However, WUAs have not yet demonstrated their capacity to manage theirnew assets.

28. The project was asked to terminate its credit activities from mid-February 1996, and onlyloan recovery activities have been pursued. Funds recovered are to be transferred by SWRARP tothe Bank of Uganda. In January 1996, the South West Uganda Agricultural Development Agency(SWUADA) was established as an NGO. Among its intended activities, SWUADA will providecredit to its members, along the lines of the project credit component. The last supervision missionrecommended in July 1996 that GOU consider giving some seed capital (Ush. 100 million) toSWUADA, and based on legal safeguards, consider it for inclusion in the Rural FinancialIntermediary (RFI) Capacity Building Program, proposed under the IDA-supported Cotton SubsectorDevelopment Project. In light of proposed GOU policy for providing credit to farmers through RFIs,SWUADA would become a financial intermediary between commercial banks and farmers. IfSWUADA is to successfully take over the credit scheme in a sustainable manner, it must: (i) reducethe cost of loan management and maintain high recovery rates (para 12); (ii) be registered as afinancial intermediary under the awaited new GOU policy; and (iii) receive assistance for buildingits technical and managerial capacity. On account of delays in the operationalization of the capacitybuilding program of RFIs, however, no progress has been made in this regard. In light of abovefactors, sustainability of all project activities is judged as uncertain at this stage.

E. BANK PERFORMANCE

29. Although the Bank's performance at appraisal was generally satisfactory, more attentionshould have been given to: (i) the capacity of local staff to implement a multi-sectoral project; (ii)the complexity of local tendering procedures; (iii) the estimates of the time required to establishlogistics for project implementation and input procurement; and (iv) the costing of the rural roadcomponent. From mid-1988 to mid-1996, there were a total of 15 supervision missions including themid-term review (1992). During the initial years, there was a relatively high turnover of Bank staffworking on the project, which had four task managers. Continuity of task management in the latterhalf, combined with involvement of Resident Mission (RM) staff in the supervision missions, as part

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of a team (the role of task manager was alternated between headquarter and resident mission staff fora year or so), contributed to the achievement of project objectives. The supervision missions soughtto address the key issues affecting the project's performance by taking these up with theGovernment, and directing their efforts towards facilitating project implementation. In particular, theBank's prompt action on agreeing on a variation order on road contracts in the last year was crucialto the progress of that component. The performance of the minor project components might,however, have been improved if the Bank had provided more technical supervision. The support ofthe Uganda RM was greatly appreciated by project management, especially the instigation of afinancial screening service for claims and, towards the end of the project, assistance withprocurement procedures.

30. Around 45% of all disbursements occurred during FY95 and FY96, corresponding to theproject extension periods. Although two extensions had already been approved, at the end of FY96,the project was operating at full steam to complete, under time pressure, the lately added smallvalley dam component and the rural road rehabilitation program. At the end of the project, it wasalso necessary to further support the pilot credit scheme until the new GOU policy on rural creditbecame effective. However, rather than considering an exceptional third extension (the credit wasnot exhausted), the Bank and IFAD decided to close the loans.

F. BORROWER PERFORMANCE

31. Borrower performance can broadly be divided into two periods. Until around 1992,Borrower performance was deficient, especially in that: (i) it appointed an inexperienced projectmanagement team which failed to initiate project activities; (ii) there was poor coordination betweenthe project team and the various institutions concerned (MAAIF, MOLG and MOF); (iii) it only met,and with delays, a marginal part of its counterpart funding commitment; and (iv) it did not complywith the covenants on accounts and audit. From 1992, the above deficiencies were graduallyrectified, and the Borrower's performance and commitment to the project, particularly followingagreements reached with the Bank's MTR mission on financial control and management,deployment of feeder road units, tender for main roads' contract, performance allowances, andfinalization of the design of the credit component, until completion were commendable. Inparticular, the project recorded major achievements under the following activities: (i) the rural roadspot improvement program; (ii) the pilot rural credit scheme; and (iii) the Community Developmentscheme. Better collaboration with local authorities also resulted in enhanced political andadministrative support from the district, and the Inter-ministerial Coordinating Committee played anincreasingly effective role.

G. ASSESSMENT OF OUTCOME

32. It is difficult to assess the impact of SWRARP alone in the project area because of theoverall economic changes during the period, complementary development interventions, andbecause of the shortage of data. Also, a large part of the road rehabilitation program has beencompleted only recently and some of its potential impact has not yet been realized. The missionbelieves, however, that the project's overall impact has been substantial and positive. Missionestimates suggest that at least 175,000 rural families, equivalent to around one million peoplebenefited from project activities. The road program has already generated an increase in generaleconomic activity and agricultural production through opening previously impassable roads to trafficand reducing transport costs. This has been verified by surveys showing increased traffic volumes

- 10-

on both feeder and trunk roads in the area. It is also supported by a survey carried out by a researchteam of NARO'0 claiming that, over the last 10 years, the share of the project area in theKampala/Entebbe cooking-banana market increased from 40 percent to 80 percent. Together withimproved access to markets, improvements in crop productivity resulting from the AdaptiveResearch and Extension component (especially of bananas and Irish potatoes) have boosted farmers'incomes and food availability almost region-wide. This has been confirmed in the final householdsurvey, measured by the increased number of assets acquired by project beneficiaries. TheCommunity Development and Credit component has had a more localized impact on income andnutrition through its promotion of diversified enterprises and by fostering local managementcapacity. It may, however, have had the effect of further concentrating, rather than spreading, thedistribution of resources in some rural communities.

H. FUTURE OPERATION

33. Although the IFAD Loan and IDA Credit were closed by mid-1996, SWRARP activities willcontinue during FY97, solely under GOU financing. This is commendable and reflects the GOU'sinterest in completing ongoing project activities. The Government's decision to extend its supportwas also made in the hope that a follow-on projectl proposal would be considered by the Bank andIFAD. Eventually, the proposal was not considered, as the Bank and IFAD are now moving towardsother lending instruments such as the Agriculture Sector Management Project and possibly anAgricultural Sector Investment Program (ASIP), rather than individual projects.

34. The operations to be undertaken by the project during FY97 concern mainly the following:(i) additional feeder road rehabilitation (spot improvement of 300 km), maintenance of project-rehabilitated roads, and follow-up of the work to be undertaken under the defects liability period forthe contract roads; (ii) completion of the small valley dam/tank component; and (iii) loan balancecollection (USh 350 million), credit group training, and provision of training and managerialassistance to SWUADA. Since the PCU is planned to be dismantled by June 1997, future operationswill also be directed towards handing over project activities to their respective agencies.

I. KEY LESSONS LEARNED

35. Key lessons learned are as follows:

(a) The project recorded impressive achievements in activities such as the road spotimprovement program; the pilot credit scheme; and the community developmentscheme. This is largely the result of a strong commitment of the Government (atboth central and local levels), which provided the project management team withgood logistical support and allowances.

Communication from the Banana-based Cropping Systems Research program of NARO.

t Project proposal for the South-Western Uganda Agricultural Development Project (SWUADP), prepared bythe Agricultural Planning Department of MAAIF (June 1996).

(b) Continuity of Bank staff for task management, particularly in the second half ofthe project, and close liaison with and involvement of Resident Mission staff insupervision, as part of a team, contributed to achieving project objectives.

(c) The setting up of a screening service in the Resident Mission, to initially reviewwithdrawal applications for disbursements and tender/bid documents for proposedprocurements, towards the end of the project, was greatly appreciated by projectmanagement.

(d) More attention needs to be devoted to devising satisfactory logisticalarrangements and making contingency plans at appraisal. Where rapid start-up ofproject activities is expected to be crucial to the impact of the project (as in thecase of agricultural input supply and road rehabilitation components), the Bank'sappraisal team should include an experienced project manager who might, inaddition defining implementation schedules, also set in motion the procurementprocess by arranging the preparation of draft tender documents.

(e) It is recognized that the addition of the Small Valley Dams component towards theend of the project was based on a decision at the highest level of Government.Generally, however, when borrowers and lenders agree to add a sizeablecomponent such as the Small Valley Dams component towards the end of theproject, the Bank should make a full assessment of the capacity of projectmanagement and of potential contractors to undertake the additional works.

(f) In a project such as SWRARP, Technical Assistance was required to play a crucialrole. In order to limit the risks of excessive turnover of key, expatriate TA staff,such as the financial controller, every effort should be made by Government tochoose suitable candidates for key technical assistance posts.

(g) The adaptive research program gave priority to the screening of exotic, newlyintroduced crop varieties. In addition to screening exotic crop varieties,consideration should be given to local varieties, to their improvement throughproper seed production, and to the possibility for their incorporation in localbreeding programs.

(h) To yield significant impact, the release of superior crop varieties should beaccompanied by sustainable seed production systems, especially simple, localfarmer-based seed production, as successfully experienced by the project forpotatoes..

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PART II: STATISTICAL TABLES

Table 1: Summary of Assessments

A. Achievement ofobjectives SubstaPtial a Negligible NotApplicableO) O~(1) (O)O

Macro policies Li ED [Sector policies Li i [ EFinancial objectives [z] Li Ei LiInstitutional development Ei Li EJ]

Physical objectives FI] Li LiPoverty reduction Li i L iGender issues Li Li LiOther social objectives L]i EDEnvironmental objectives Li i i E

Public sector management Li Li LiPrivate sector development Li 1?] Li LiOther (specify) Li i L L

B. Jroject shinnbiiLX Likldy Unlikely UncerainO) ~(I O~,)

C. Rnk sats&cW Satsn Deficient(1/) (1) (I)

Identification L LiPreparation assistance i [

Appra Li LiSupervision L [ L

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D. Borrower performance satisfacto= Satisfactory Deficien(1) (O) (1)

Preparation Z E ]

Implementation D T ECovenant compliance L] E1

Opeation (if applicable) [EI 7I

Ew HWihlvE. Assessmentofoutcome satisfa Satisfact Unsatisfactory uatbsa

D/ D/) )O [E O Ol

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Table 2: Related Bank Loans/Credits

Loan/Credit Title Purpose Year of StatusApproval

Preceding Operations0983-UG First Reconstruction Program 1980 Completed1252-UG Second Reconstruction Program 1982 Completed1474-UG Third Reconstruction Program 1984 Completed1328-UG Agricultural Rehabilitation 1983 Completed

Project1434-UG Second Technical Assistance 1983 Completed1539-UG Agricultural Development Project 1985 Completed1824-UG Forestry Rehabilitation 1987 Completed1893-UG Sugar Rehabilitation 1988 Completed

Following Effectiveness ofSWRARP2176-UG Livestock Services 1990 Ongoing2190-UG Agricultural Sector Adjustment 1990 Ongoing

Credit2362-UG Northern Reconstruction 1992 Ongoing2424-UG Agricultural Extension 1992 Ongoing2446-UG Agricultural Research & Training 1993 Ongoing2609-UG Cotton Subsector Development 1994 Ongoing2845-UG Agricultural Sector Management 1996 Awaiting

effectiveness

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Table 3: Project Timetable

Date actuaVSteps in project cycle Date planned Latest estimate

Identificationa/ Jan/Feb 1984Preparation"' March/April 1985Pre-appraisal Oct/Nov 1986Appraisal May/June 1987 May/June 1987Negotiations Nov. 1987 Nov 1987Board presentation Dec. 1987 Jan 1988Signing Feb 1988 Feb 1988Effectiveness May 1988 Aug 1988Project completion Dec. 1993 Feb 1996Credit closing June 1994 June 1996

a/ Carried out by IFAD.bI Carried out by the FAO Investment Center on behalf of IFAD.

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Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual(US$ million)1/

87/88 88/89 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97CumulativeSAR Estimate 0.8 3.6 8.1 13.3 18.0 21.1 22.3IDA 0.1 1.0 3.0 5.5 7.9 9.5 10.0IFAD2 ' 0.7 2.6 5.1 7.8 10.1 11.6 12.3

Actual3 'IDA 0 0 0.10 0.40 2.08 3.46 3.87 6.53 9.98 10.09IFAD 0 0 0.65 1.67 3.03 5.13 8.09 10.03 11.28 11.53SOF (Grant) 0.19 0.22 0.22 0.22 0.29 0.29 0.29 0.29

TOTAL 0.00 0.00 0.95 2.29 5.33 8.81 12.25 16.85 21.55 21.900% 0% 12% 17% 30% 42% 55% 76% 97% 98%

" Small discrepancies due to use of differing exchange rates and rounding.21 Including SOF Grant (USS 0.3 million).3/ Date of final disbursement: July 19, 1996.

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Table 5. Key Indicators for Project Implementation

PART l: Key ImplementationIndicators as per SAR

INDICATOR Unit Estimated Actual

FINANCIAL INDICATORSDisbursement by Donor

IDA Credit SDR M 7.6 7.1IFAD loan SDR M 9.1 7.8IFAD Special Operation Facility (grant) US$ M 0.3 0.3

alue of Agricultural inputs procured US $ M 5.6 3.alue of Sales versus Procured % 100 80

PHYSICAL INDICATORSStaff housing units constructed No 4 3Office units constructed:

SWRARP Mbarara Office Block m2 0 250DAO Rukungiri Office Block m2 80 80

Storage units constructedMbarara Warehouse m2 1500 0Kalengyere Store m2 60 60Rubare Store m2 80 60

Training units (DFIs) Renovated No 2 0

Training unit (DFIs) Re-equipped No 2 2

ehiclesStaff vehicles Procured No 30 42Staff Motorcycles Procured No 34 51Staff Bicycles Procured No 242 7

Rural Access Roads RehabilitationRehabilitation to Year Round Access Condition Km 2000 0Rehabilitation to dry weather conditions (contractors) Km 0 488Spot improvement by SWRARP Direct Labor Units Km 0 1060

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INDICATOR Unit Estimated Actual

Procurement of Road Maintenance Plants & EquipmentSWRARP Procured plants and Equipment:

Motorgraders 120 HP No 8 8Wheel loaders 80 HP No 4 4Dumptrucks 8 ton No 16 164WD pickups No 8 8Vibro roller No 4 4Motor cycles 125 cc No 4 4Bicycles No 40 0

ILO procured plants and Equipment:

Crane truck No 0 1Self loader No 0 1Water loader No 0 1Vibro roller No 0 5Dozer No 0 2Fuel bowser No 0 1

TECHNICAL ASSISTANCEProject Expediter Pers-M 3 3Financial Controller Pers-M 36 42Input Supply Manager Pers-M 36 46Adaptive Research Specialist Pers-M 36 42Extension & Training Specialist Pers-M 36 36Monitoring & Evaluation Advisor Pers-M 24 19Input Procurement Agent (contracted to UCB) Months 60 60Input Procurement Agent (intern. consulting firm) Pers-M 0 12Rural Road Inventory (intern. consulting firm, contract) Months 7 5Supervision of Feeder Roads (intern. consulting firm) Pers-M na 47Design of Project Buildings (intern. consulting firm) Pers-M 4 4

ADAPTIVE RESEARCH AND EXTENSION ACTIVITIESNumber of Extension Staff No 244 292Proportion of female extension staff % 10 14Number of trials established No 291Extension Packages produced No 5

gricultural Extension Training:Farmer training (day courses held until 1994) No 473Farmers Trained (until 1994) Pers-days - 16152

Technology Adoption Rate (over total farm population) % 8 n.a.

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Table 5. Key Indicators for Project Implementation

PART II: Modified Key Implementation Indicators

INDICATOR Unit Estimate Actual

TECHNICAL ASSISTANCEDesign of Credit sub-component Pers-M 6 6Expediter of Credit sub-component Pers-M 12 18Design of Small Valley Dam/Tank Component Pers-M na 2

TRAININGSkills acquired by District Extension Staff

MSc/MA degree No 0 10Diploma No 0 2Short Courses Abroad No 0 25

Skills acquired by Project StaffMSc/MA degree No 0 8Diploma No 0 2Short Course Abroad No 0 15

PILOT CREDIT SCHEMEAmount to be disbursed USh M 394 394Recovery Rate (excluding on-going phases IX-XI) % 100 76-100Number of Women % 30 43

SMALL VALLEY DAMS/TANKDam Rehabilitation No 1 1Dam Construction No 3 2Tank Construction No 1 1

Table 6: Key Indicators for Project Operation

L Key Operating Indicatorsin SAR/President's Report Estimated Actual

not applicable

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Table 7: Studies Included in the Project

|. Study Done By Purpose Status Impact1.1 Baseline and SWRARP establish a benchmark for monitoring conducted in 1990; final report as per M&E purposes

Household Surveys and evaluation (M&E), and design issued in 1992research & extension activities

1.2 Mid-term SWRARP monitoring and evaluation conducted and report issued in 1992 used for M&E and mid-term reviewHousehold Surveys

1.3 Final SWRARP project impact assessment conducted in 1995; report issued in limited due to methodology changes,Household Surveys 1996 qualitative information on project

impact2. Roads Inventory Study Consulting produce roads inventory and conducted from Dec 89 to April 90; re-design component; reduce SAR

Company prepare tender documents report submitted early 1991 target for contract rehabilitationfrom 2,000 to less than 500 km

3. Road Traffic Surveys SWRARP assess changes in traffic and seven surveys were carried out during identification of key feeder roads, andcommodities transported project implementation sources and outlets of commodities

4. Inputs-Market Surveys SWRARP accumulate market data on inputs, ten surveys conducted throughout better understanding of marketagric. produce and household goods project life; reports issued changes and project impact

5. Privatization of Consulting advise on methodology and timing for carried out and report issued in 1992 recommendations found inadequateInput Sales Company privatization

6. Cropping Surveys - collect quantitative data on crop not undertaken NILprod. for assessing project impact

7. Extension Staff Survey SWRARP assess extension staff resources two surveys, done in 1989 and 1992 adjustment of staff allocation andand status throughout the project training requirements

8. Beneficiary Contact SWRARP determine the diffusion of carried out and report issued in 1994 useful information on project impactSurvey extension messages on farmers' groups

9. Adaptive Research and SWRARP assess the impact of adaptive Done and report issued in 1995 limited indications on adoption ratesExtension Assessment research and extension activities of project-promoted technologies

10. Impact Assessment SWRARP assess the effect of credit on completed and report issued in 1995 identification of mechanisms forof Credit beneficiaries effective credit delivery

11. Valley Dam Consultant identify sites for valley dam/tank 13 sites surveyed and engineer tender document for valley dams/tankFeasibility Study rehabilitation or construction prepared for 5 sites construction/rehabilitation

Note: Studies No 1 to 7 as per SAR, and studies No 8 to 11 are additional.

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Table 8A: Project Costs (US$ million)

SAR ActualInvestment Costs Local Foreign Total Local Foreign Total

A. Civil Works 3.9 3.7 7.6 2.6 3.0 5.6B. Vehicles 0.1 2.1 2.2 0.2 2.5 2.7C. Equipment 0.1 0.5 0.6 0.5 0.5D. Agricultural Inputs 1.9 4.0 5.9 0.3 2.8 3.1DD. Community Development Fund/Credit' - - - 0.6 - 0.6Sub-total Base Investment Costs 6.0 10.3 16.3 3.7 8.8 12.5Physical Contingencies 0.8 1.2 2.0 - - -

Price Contingencies 0.4 0.6 1.0 - - -

Sub-Total (incL contingencies) 7.2 12.1 19.3 3.7 8.8 12.5

Recurrent Costs

AA. Operating Costs - Roads2 - - - 1.7 0.6 2.3A. Operating Costs -Vehicles 1.2 1.7 2.9 0.6 0.7 1.3B. Other Operating Costs 0.4 0.1 0.5 2.7 0.3 3.0C. Salaries and Allowances 0.7 - 0.7 1.9 - 1.9D. Technical Assistance 0.1 2.7 2.8 0.2 3.8 4.0DD. Overseas Training' - - - - 1.0 1.0

Sub-Total Base Recurrent Costs 2.4 4.5 6.9 7.1 6.4 13.5Physical Contingencies 0.2 0.5 0.7 - - -

Price Contingencies 0.2 0.3 0.5 - - -

Sub-Total (incl. contingencies) 2.8 5.3 8.1 7.1 6.4 13.5

TOTAL PROJECT COSTS 9.9 17.5 27.4 10.8 15.2 26.0

" Not included at appraisal.21 For spot improvements. At appraisal this was to have been done by civil work contract, and operating costs were for maintenance.

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Table 8B: Project Financing (US$ million)

SAR Actual

Local Foreign Total Local' Foreign TotallIDA

I. Civil WorksIA road rehabilitation 2.01 3.07 5.08 n.a.3 n.a. 5.08IB Other civil works 0.38 0.38 0.76 n.a. n.a. 0.51

II. Vehicles & Equipment 0.19 2.61 2.80 n.a. n.a. 3.61Consultancy (road supervision) - - - n.a. n.a. 0.89Unallocated 0.54 0.82 1.36 -

Total 3.12 6.88 10.00 n.a. n.a. 10.09

IFADIII Agricultural Inputs 1.25 3.96 5.21 n.a. n.a. 2.68IV. Operating Costs 0.16 1.88 2.04 n.a. n.a. 4.04V. Consultant Services, Studies & Training 0.09 2.58 2.67 n.a. n.a. 4.12

Credit - - - n.a. n.a. 0.41Valley Dams - - - n.a. n.a. 0.28Unallocated 0.79 1.29 2.08 -

Total 2.29 9.71 12.00 n.a. n.a. 11.53

SOFProject Start-up 0.06 0.24 0.30 n.a. n.a. 0.29

GOU2 4.09 1.01 5.1 n.a. n.a. 4.14of which:MAAIF Budget 0.79MOLG Budget 0.69USAID (through MOLG) 0.98Project Input Revenues 1.68

Project Total 9.57 17.83 27.40 n.a. n.a. 26.05

Values are not strictly comparable to SAR Costab values because:(a) Costab values include the tax elements of imported inputs. Taxes on imported inputs were neither

actually paid nor recorded in project accounts. Total costs including national taxes would behigher than the above figures.

(b) Costab includes local and foreign cost components for each item. Project accounts do not makeany such distinction. An actual breakdown is therefore not available.

2/ SAR included US$ 3 million taxes.3/ n.a.: data not available.

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Table 9: Economic Costs and Benefits

The SAR indicated that the economic rate of return (ERR) over a 20 year life, of theadaptive research and extension and road components was expected to be in excess of 15%.Benefits were estimated on transport cost savings and predicted yield increases over virtually thewhole range of food crops. Project benefits have now been re-assessed based on: (a) the numbers offarmers living within easy reach of SWRARP improved roads; (b) yield increases of 25% forbananas and potatoes by 20% of farmers in these areas; (c) area increases of 10% (bananas), 20%(potatoes) and 5% (other crops) on farms within easy reach of improved roads; (d) typical prices forproduce as observed over the project life in local market survey; and (e) an estimate of other benefitsfrom increased milk production and marketing, trade in other produce, additional employment andpassenger and other transport cost savings in total equivalent to 10% of estimated benefits from theabove annual crops and bananas. Since continuing benefits will depend greatly on the level of roadmaintenance, and this is as yet uncertain, the project's ERR has been reworked over the period to theyear 2000 (3 years after Government support to the project, as such, is due to stop, and a total of 12years). The annual value of incremental production for years 1997-2000 is estimated at US$ 6.7million for bananas, US$ 0.8 million for potatoes and US$ 2.1 million for other crops. The annualtotal net incremental benefit for the same years is estimated at US$ 8 million.

All project costs were included in the revised calculation, except for communitydevelopment, credit and valley dams (for which no direct benefits were included either) and overseastraining and monitoring and evaluation which produced no identifiable economic benefit. Therevised calculations show an ERR of about 17%. However, because the project's monitoring andevaluation unit failed to measure key indicators adequately and because it is impossible clearly toseparate the project's impact from other changes in the economic environment, the estimate is farfrom precise. Detailed assumptions and basis for the economic analysis are available in the projectfile.

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Table 10: Status of Legal Covenants

UgandaSWRARP

Original RevisedCovenant Present fulfillment fulfillment Description of

Agreement Section type status date date covenant Comments

C 1869 4.01 (b) I CD Continuous NA Borrower to haverecords and accounts Until the fourth year,audited and a certified the project facedcopy of the audit major difficulties toreport furnished to set up a financialIDA not later than six system and keepmonths after the end of proper accounts.the fiscal year Chronic delays in

submitting satisfactory4.01 (c) I CD Continuous NA Borrower to maintain audited SOE and

records of SOE, retain project accounts werethem for examination noted during the firstby IDA, and have half of the project.them audited annually After the MTRh the

project generallycomplied with the twocovenants

Status: C - Complied withCD - Compliance after DelayNC - Not Complied withSOON Compliance expected in Reasonably Short TimeNYD - Not Yet Due

Table 11: Compliance with Operational Manual Statements

Statement Number and Title I Describe and Comment on Lack of Compliance

No deviation from applicable Operational Manual Statements observed

H~~~~~~~~~~~~~~~~.

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Table 12: Bank Resources: Staff Inputs 1/

Stage of Planned Revised Actualproject cycle

Weeks US$ Weeks US$ Weeks US$

(000) (000) (000)

Preparation to na 1/ na na na na naappraisal

Appraisal na na na na na na

Negotiations through na na na na na naBoard approval

Supervision na na na na na na

Completion Report 2/ 2/ 2/

TOTAL 123.9 226.5 118.9 257.5

I/ Data on Bank Resources are not available prior to supervision of the project due to internal Bankreorganizations.

2/ Excluding FAO inputs, these figures are 5.0 weeks and US$ 10,500.

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Table 13: Bank Resources: Missions

Pprfnrmn PsitingStage of project cycle Month/ Number Days Specialized Implementation Development Types of problems

IdentificationPreparation 3-4/85 7 23 A, CE, E, HE, LE, - -Pre-appraisal 10-11/86 5 20 A, CE, E, R/E - -Appraisal 5-6/87 6 20 A, IS, M&E - -Negotiations 1-2/88 2a/ 7 A, - -Supervision

2 7-8/89 3 17 Al CDd/ 3 2 CF, OS, PM, PR, T3 3/90 5 7 A, Ad/, CDd/ 3 2 CF, PM4 9-10/90 4 5 E, FA, PR, R/E 3 2 CF, PM, PR5 4/91 5 5 CD, E, FA,R/E 3 2 CF, PDI, PM, R/E,6 9/91 5 7 E, FA, PR, RD, R/E 3U 2 AFC, CF, PM, RD7 11/91 1 8cI FA, d/ AFC, RD8 2/92 1 22c/ FA e C/ AFC, RD9f/ 5/92 5 13 DI, FA, FA, PR, RD 2 2 AFC, FC, RD10 10-11/93 4 12 AI, CE, E, FA S S ,AFC, RD11 4-5/94 3 14 E, FA, RD S S PR, RD12 10/94 3 10 E, FA, RD S S CS, PDI, RD13 4/95 3 6 E, FA, RD S S PR14 12/95 2 14 FA, RD S S RD, VD15 6/96 2 14 FA, RD S S PR

Completion 10/96 3 14 A, E, CE - -

at A = AgTiculturist; CD Community Development; CE = Civil Engineer; DI = Disbursement; E = Economist; FA = Financial Analyst; IS = Institution Specialist; R/E = Research - Extension;PR = Procurement Specialist; RD = Roads Engineer; R/E = Research - Extension

b/ AFC = Accounts, Audit and Financial control ; CF = Counterpart funding ; CS = Credit scheme ; OS = Office space; PDI = Pricing and Distribution of InputsPM = Project Management; PR = Procurement ; RD = Feeder roads component; RTA = Recruitment of TA; T = Transport; VD = Valley dams.I = Non significant problems; 2 = Moderate problems; 3 = Major problems (appropriate actions are being taken to address those problems); S = Satisfactory.

d/ Funded by IFADNo form 590 preparedMidterm Review.


REPUBLIC OF UGANDA

SOUTH WEST REGION AGRICULTURAL REHABILITATION PROJECT(CR 1869-UG)

APPENDIX A

AIDE MEMOIRE

2


REPUBLIC OF UGANDA


APPENDIX A

AIDE MEMOIREIntroduction

1. A mission1 / from the FAO Investment Centre (FAO/IC)/World Bank (WB) CooperativeProgram visited Uganda from 7 to 21 October 1996 to prepare the Implementation Completion Report(ICR) for the above project. The mission held discussions with relevant officials from the Ministry ofFinance (MOF), the Ministry of Local Government (MOLG) and the Ministry of Agriculture, AnimalIndustry and Fisheries (MAAIF). The mission worked closely with the Senior Management and staff ofSWRARP. Field visits were made to the six project districtsl/ and discussions held with seniorRepresentatives of Local Governments, SWRARP, MAAIF, farmers and group leaders.

2. The mission is grateful to the SWRARP team, ministry officials and farmers for theirassistance in gathering the necessary information and organizing successful field visits. Preliminaryimpressions and findings are presented below, and are subject to modifications following further detailedanalysis.

Objectives, Components and Time-Frame

3. The project's objectives were to increase food production, incomes and living standards ofsmall farmers in the six districts of the South West of Uganda. Initially, at project appraisal (SAR),SWRARP included five components:

(a) Rural Access Roads (US$ 13.3 m) including (i) a program of rehabilitation and spot repairson 2,000 km of rural access roads; and (ii) provision of plant, equipment, incremental operating costs andin-service training for MOLG.

(b) Agricultural Input Supply (US$ 8.1 m) for (i) the procurement and sale of small, highvolume inputs; (ii) vehicles, material or equipment to strengthen marketing infrastructure; and (iii)establishment of staff and warehouse at Mbarara.

131 Mr Guy Evers, Mission Leader/Agronomist (FAO TCIR), Ms Frances Maundrell, Agricultural Economist(Consultant) and Mr El Houssine Bartali, Civil Engineer (Consultant).

4' At appraisal, the project area consisted of four districts (Mbarara, Bushenyi, Kabale and Rukungiri), and twodistricts were created during implementation within the same area: Kisoro and Ntungamo.

3

(c) Adaptive Research and Extension (US$ 3.9 m) for (i) rehabilitation of two District FarmInstitutes (DFI) and improvement of facilities at research sub-stations; and (ii) strengthening of adaptiveresearch and extension through provision of vehicles, equipment, technical assistance, training andoperating costs.

(d) Monitoring and Evaluation (M&E) (US$ 0.8 m) to bring together information on projectimplementation and evaluate impact.

(e) Project Management (US$1.3 m) to enable the Project Coordination Unit (PCU) tocoordinate implementation and administer a Community Development Fund.

4. The project was identified by IFAD in 1984, prepared by FAO/IC in 1985 and appraised byWB in 1987. The IDA Credit and IFAD loan became effective in 1988. A Mid-Term Review (MTR) waslaunched in 1992. There were eight Bank supervision missions before the MTR, and six afterwards. Theproject initial closing date was set at mid-1994, and was eventually extended to mid-1996.

Implementation Context and Evolving Project Design

5. By 1988, when SWRARP started, GDP per capita had fallen by 40 percent since 1970 and theravages of war and insecurity had reduced the rural economy to a parlous condition. Thus, project designwas directed mainly towards rehabilitation of key infrastructure (roads - 48 percent of project costs) andrestoration of supply of agricultural inputs (30 percent of project costs) with smaller allocations for adaptiveresearch, extension and community development. The SAR affirmed that all smallholder farming familiesof the region were poor and should be potential beneficiaries of the project. The Economic RecoveryProgram launched in 1987, and the associated liberalization program, led to a rapid improvement ineconomic conditions in the project area. The Government of Uganda (GOU) did, however, recognize that itsreadjustment policies were tending to result in growing disparities in incomes and later took steps to directassistance towards the poorest members of the community which were most seriously affected.

6. Project implementation was slow until 1992, with interventions limited to adaptive researchand extension in 7 priority counties and training, together with the procurement and resale of someagricultural inputs. Project management was restructured in the early 1990s and when projectimplementation took off in 1992, spreading to cover the entire region, the design of the project had beenreoriented towards a capacity-building and more long-term development approach, in keeping with thechanged economic and administrative context then prevailing. Thus, at the end of its life, the project hadchanged shape with the addition of two components and adjustment of funding allocations.

7. The SAR provided for a US$ 95,000 Community Development Fund, to be administeredunder the Project Management Unit and financed by IFAD. Subsequently, IFAD further elaboratedproposals for Community Development to give group formation and development greater prominence andappears to have regarded it as a separate component, although no direct change in the Loan Agreementresulted.

8. Small farmer credit, having been proposed on a number of occasions during the project cycle,was finally included in the form of a pilot credit subcomponent (under Community Development) in anamendment of the IFAD loan agreement in mid 1992. Originally allocated SDR 500,000 (apparently tocover operating costs as well as a US$500,000 credit fund), the final allocation - designated for a creditfund only - was fixed at SDR 300,000 (US$414,000) in June 1994.

4

9. Following a request from GOU in 1994, an agreement was reached to include the constructionof a number of valley dams within IFAD's funding. The last amendment of the IFAD Loan agreement(June 1994) thus included a new Category V for Valley Dams (SDR 380,000) which are now considered tobe the project's seventh component.

Project Costs and Financing

10. SWRARP provisionally estimates total project costs at US$ 25.1 million compared with theSAR estimate of US$27.4 million. Given the changes in project structure mentioned above and the lack ofproper books of account before 1992, it is not possible at this point to give a breakdown of costs bycomponent to compare with the estimates made at appraisal. To illustrate the application of funds, the tablebelow instead shows disbursements against the planned allocation of funds among categories ofexpenditure.

Loan/Grant and Category Loan Allocation Disbursement

1988 1994/96

IDA (Credit) (finally amended 1996) SDR million

Category I A - Civil Works (Roads) 3.85 3.85 3.46

Category I B - Civil Works (Other) 0.58 0.42 0.36

Category II - Vehicles & Equipment 2.12 2.82 2.62

Category III - Consultant Services - 0.51 0.61

Unallocated 1.05 -

TOTAL 7.60 7.60 7.06

IFAD Special Operation Fund (SOF, grant) 0.30 0.29

IFAD (loan) (finally amended 1994)

Category I - Agricultural Inputs 3.66 3.00 1.91(incl. Community Development Fund)

Category ll - Operating Costs 1.54 2.14 2.70

Category III - Consultancies, Training 2.31 3.28 3.10and Studies"l

Category IV - Credit - 0.30 0.25

Category V - Valley Dams - 0.38 0.19

Unallocated 1.59

TOTAL 9.10 9.10 8.15

5' In the SAR Implementation Volume overseas training was allocated US$ 75,000 among miscellaneousoperating costs of the Adaptive Research and Extension component. This was intended to fund short term studyby adaptive research staff. Quite early in the project a decision appears to have been made to devote considerablymore resources to overseas training. At the time no amendments were made to the structure or Loan agreements ofthe project to accommodate this decision, but in its Loan amendment of mid 1994, IFAD substantially increasedits allocation under Category III (Consultants, Training and Studies) mainly, apparently, to reflect sums alreadyspent and planned to be spent on this item.

5

11. Government counterpart contribution has amounted to the equivalent of about US$ 3.9 m ofwhich 42 percent from inputs revenues, 14 percent from MAAIF, and 44 percent from MOLG(US$ 0.9 million USAID contribution and US$0.8 million MOLG budget).

Implementation Experience

12. Rural Access Road Rehabilitation. The rural access roads network in the project area wasestimated at appraisal at 2,700 km of which 20 percent were impassable due to collapsed bridges andswamps and 40 percent were passable only in the dry season. The initial objectives were to rehabilitate andspot repair 2,000 km, using contractors over a 3 year period, in order to permit year round access, and tosupport MOLG's road maintenance program by the provision of equipment, training and operating costs.

13. Substantial delays were incurred in selecting an international consulting firm to identify theroads and sections to be rehabilitated and conducting the study. The consultants found that, because costshad been underestimated at appraisal and more deterioration had taken place in the interim, the target forrehabilitation would have to be reduced from the initial 2,000 km to only 488 km of first priority roads inorder to keep costs within the original funding allocation. Moreover, these 488 km could only be restoredto dry weather status. It was not until the end of 1993 that a supervising consultant was selected to reviewinitial design and supervise works.

14. The partial rehabilitation of first priority roads was undertaken by two contractors betweenmid-1994 and mid-1996, focusing mainly on impassable sections. One contracting firm which was engagedon contracts for other clients in Uganda, could not fulfil its contract, which was partially handed over to thesecond contractor. The delays by the first contractor entailed additional payments to the supervisingconsultant. In undertaking the additional work, the second contractor was obliged to subcontract to otherlocal contractors. As of October 1996, nearly 488 km of contract road rehabilitation have been completed.However, an estimated 5 km in Kisoro district was not completed by the second contractor, due to timeconstraints. In Ntungamo district, SWRARP direct labor units (under a sub-contract to the secondcontractor) are still in the process of installing about 60 percent of the required culverts, which weredelivered late. About half of the contract roads are still under the liability defects period which, for the lastworks, will expire in March 1997.

15. In order to reduce the shortfall in the road component resulting from the target reduction, andto speed progress, it was decided to use the project-funded road equipment and plant for spot improvementof 1,000 km of feeder roads. Equipment recovered from a former ILO road rehabilitation project was alsoused. As of October 1996, some 1020 km ol roads have been spot improved.

16. Staff training under the component consisted of on-the-job training for 6 projectlMOLGengineers with the consultant on road inventories and condition surveys; an MSc in road engineering in theUK for the Project Engineer, and local training for projectlMOLG staff in site management, record keeping,job costing and inventory control.

17. Agricultural Inputs. The SAR identified lack of inputs, and the scarcity of foreign exchangeto procure them, as a key constraint to agricultural production in the region and proposed the importation ofabout US$6.5 m worth of inputs for wholesale over 5 years (1989-1993), starting with US$1.1 m in 1989and rising to US$1.7 m in 1993. Midway in this program a study was to be conducted to determine if andhow the project's wholesale business should be privatized.

6

18. In fact, implementation of the component was delayed by non-availability of storage spaceand hitches in procurement procedures. The first two buys arrived over 1990, 1991 and early 1992 wheninputs were in short supply, but the consignments were limited in size (together US$1.12 m) and, becausethey were priced below prevailing prices in surrounding areas there was some leakage of inputs from theregion. By the time the third and fourth buys (together US$1.70 m) took place in 1993, the private sectorwas active and had its own access to foreign exchange. Large fluctuations in the exchange rate betweencontract and delivery of SWRARP consignments meant that turnover was slow and the project had to pricesome inputs at a loss in order to sell them. Materials for rehabilitation of marketing infrastructure were notimported because they were found to be available on the local market. The warehouse at Mbarara,proposed to be built and completed in time to receive the first buy, was never built and therecommendations of the privatization study were found to be too difficult to be implemented.

19. The total value of inputs procured under the project was US$2.85 million and the fundsgenerated by sales to date are USh 2.42 b, 68 percent of which has been ploughed back into the project asGOU counterpart funding. Had the input supply component been implemented in full, it would havegenerated significantly higher GOU revenues.

20. Despite its shortcomings, and being overtaken by events later on, the component didnevertheless have a positive impact by supplying inputs when they were sorely needed early in the projectand it facilitated the establishment of retailers in the region by providing them with stocks at a time whenbusiness was brisk.

21. Adaptive Research. This sub-component was designed to address small farmer needsthrough an adaptive research program with emphasis on the region's major food crops. In 1989, researchpriorities were identified through a project study as lack of improved varieties1/, pests and diseases, soilfertility, and agricultural practices. The major areas of emphasis have been the screening and release ofpromising varieties of Irish and sweet potatoes, beans, maize, wheat and short term upland rice,technologies for banana weevil control and soil conservation. The major outcome of these activities are: (i)the wide adoption of one Irish potato variety (Victoria); and (ii) the development and partial adoption ofimproved banana husbandry practices (sanitation, trapping, mulching and soil/water conservation) reportedto limit weevil attacks, while significantly increasing yields.

22. Concerning legumes and cereals, the lack of seed production capacity and relateddevelopment initiatives in the project area, have limited the adoption of the released improved varieties. ForIrish potatoes, the project, in conjunction with Kalengyere research station, developed a seed productionstrategy through contracts with groups or individual farmers. The benefits of using clean seeds, and the needto renew potato seeds regularly should, however, be further demonstrated to farmers, and seed productioncapacity should be substantially increased to meet expected demand. In June 1994, following MAAIFrestructuring and the approval of an IDA-funded Agricultural Research and Training Project (ARTP),project research was transferred to the then newly created National Agricultural Research Organization(NARO). On-station/on-farm research is being pursued in the project area for Irish potatoes, wheat, bananaand agro-forestry/soil conservation (funded by NARO and donors).

23. Extension and Training. This sub-component was intended to revive the depleted extensionservices in the project area. In particular, the main objectives were to provide in-service training and logisticsupport for staff, ensure linkage with research, and restore the capacity of Bushenyi and Kachwekano DFIs

16/ The distinction between improved seeds and varieties was not made.

7

to provide farner and staff training, and equip each with a media-centre. In-service training, mobility andstaff allowances enabled extension staff to train project direct beneficiaries (i.e. farmer groups) and otherfarmers through their regular activities. The project released five technical packages for use by extension.Some project districts were used for testing the unified extension system with the training and visitapproach. During 1993/94, all extension activities were handed over to the IDA-funded AgriculturalExtension Project (AEP). Some 470 farmer day courses were organized by the project, mainly at DFIs.However, the two DFIs have not yet been rehabilitated (now to be financed under AEP), and appear to belargely under-utilized.

24. In addition to local training, an ambitious staff training program abroad was set-up, resultingin more than 40 short courses and 18 Msc degree courses, of which 7 were in extension/education, 4 inagronomy/crop protection and 7 in economics/ management. Consequently, investment on staff traininggreatly exceeded those in farmers training, the latter suffering from the delays in restoring DFI capacity, andthe lack of funds of the district extension offices.

25. Community Development. Implementation of the Community Development component wasadversely affected by inconsistency in its formulation and financing between the SAR, variousreformulations by IFAD and IFAD loan agreements. Fortunately, the project set about promoting andtraining groups with the resources available to it, giving emphasis to women group members. The numberof groups in the project area had risen from 218 in PY 1 to well over 500 by the end of the project withsome 65 percent women members. Many have received training in day and residential courses throughwhich both technical and administrative skills have been built. As a result, management capacity andconfidence, especially of group leaders, is now substantial.

26. Through the Community Development Fund (finally received in March 1993) and funds fromthe Special Operations Fund (received in 1994), over 70 groups have been assisted. Twenty-six receivedgrants of building materials and funds to employ technicians for completion of stores, otherwise largelybuilt with the groups' own efforts. Some of these 26 groups and around 50 others received inputs and/orequipment. In addition, selected members of 15 women's groups received grants of a heifer for zero-grazing whose female descendants are in turn being donated to other group members. Beneficiary groupsare in general spread throughout the region although, from the mission's visits, it would appear that many ofthe heifers were donated to the more prosperous members of groups near towns.

27. Credit. The credit fund was released in instalments of US$50,000 to US$90,000 from early1994 onwards and has been lent to groups for on-lending to members, generally for 6 months, butsometimes up to a 12 month term. With recycling, 373 loans have been made to 241 groups and around2700 individual group members of whom some 43 percent are women. Beneficiary groups have tended tobe clustered in a small number of locations in each district. Most loans have been used to finance labor forcrop production, especially banana rehabilitation, but also for trading, livestock enterprises, other incomegenerating enterprises such as beekeeping and mushroom growing, and even for land purchase. The valueof individual loans commonly ranges between US$100 and US$500, with a maximum of US$1000. Interestrates have varied between 17 percent and 26 percent.

28. SWRARP has achieved commendable recovery rates for its loans (until recently over 80percent ) by (a) frequent visits by credit officers to groups and where necessary to individual members (b)efforts of local authorities including LC and group leaders and (c) rewarding groups which repay promptlywith the offer of repeat and increased loans. The recovery rate is all the more remarkable because,according to SWRARP's own assessment, one third of Phase I and II beneficiaries interviewed claimed notto have made a profit from their loans. However, the pilot credit operation under SWRARP may not be

8

replicable in its current form because of the high costs of training and supervising groups and theirmembers. From its visits, the mission has also noted that credit recipients tend to be the most educated andcapable minority of group members and that the scheme may therefore tend to exacerbate rather thanmitigate rural income disparities. Nevertheless, it has played an important role in fostering enterprise anddemonstrating income generating activities in rural areas and it should be maintained on its present scale ifproper institutional arrangements can be put in place.

29. Valley Dams. This component aimed first to rehabilitate 8 existing dams and construct 3 newvalley dams and/or tanks. Of the 15 potential sites considered, 4 valley dams and one valley tank wereselected, but one had to be dropped due to time and budget limitations. The dams are located inRwemikoma (rehabilitation), Kantaganya-Engali (new), Nyarubungo-Katerera (new), all in Mbararadistrict, and Kibutamo (new valley tank) in Ntungamo district. The fifth dam in Mpangamushanju(Mbarara district) will now be proposed for construction under the Livestock Services Project.

30. As of October 1996, progress of work is: Rwemikoma (61 percent ), Kantaganya-Engali (76percent), Nyarubungo-Katerera (93 percent) and Kibutamo (92 percent). The supervision consultant shouldsee that the contractors complete all remaining work, particularly to ensure adequate embankment strengthand that spillways will function effectively (especially at Rwemikoma dam).

31. The valley dams and tanks are intended to reduce water shortages for both livestock andhumans and hence reduce nomadism. However, no cost-benefit nor environmental impact studies weremade. Both planning and construction appear to have been adversely affected by the time constraintimposed by the late inclusion of the component and relatively early closure of the project. The performanceof one contractor has been mediocre. Sustainability will basically depend on the degree of organization ofwater users' associations and how well they manage to raise funds from members and support from localauthorities to maintain/protect the site environment in general and the dam structure and related equipmentin particular.

32. Monitoring and Evaluation. The M&E unit carried out a baseline, mid-term and finalhousehold survey and 7 thematic surveys which provide valuable information on project impact. Duemainly to staff and resource constraints, the final household survey was, however, simplified (sample andquestionnaire), and does not provide quantitative data on agricultural production which could be comparedwith the results of the 1989 baseline survey. The unit did not carry out regular financial (cost) monitoring.Although recommended in the MTR, low priority was given to the monitoring of agricultural activities, andno analysis was carried out on the financial viability or impact on labor demand of the recommended croppackages and income generating activities (e.g., mushroom, poultry and heifer).

33. Management Support and Technical Assistance (TA). During the first years ofimplementation, there were difficulties in coordinating activities and managing the project. Adequate officeaccommodation was also not available until 1992. Restructuring of the project and changes in seniormanagement before the MTR greatly contributed to overall project achievements. Better collaboration withlocal authorities also resulted in enhanced political and administrative support from the districts and theInter-ministerial Coordinating Committee (ICC) played an increasingly effective role.

34. Some 350 man-months of long and short term TA were hired by the project. The main fieldsof assistance included civil engineering, project management, research and extension. Rapid turnover of keyTA staff at the beginning of the project contributed to the early implementation problems which might havebeen solved earlier, had GOU and the Bank taken prompter decisive action.

9

Lender and Borrower Performance

35. Both Borrowers and Lenders contributed to the problems which hampered the earlyimplementation of the project as well as to the resolution of the difficulties around the time of the Mid-Term Review. At appraisal, local tender procedures appear not to have been fully understood, and therewere over-optimistic estimations of the time required to establish logistics for project implementation andinput procurement (combined with the lack of contingency plans in case of delay). The lack of detailedimplementation guidelines for project management was also an important omission. During projectimplementation, lack of GOU counterpart funding, delays by participating institutions and projectmanagement problems (including failure to adhere to established GOU procedures) hindered progress.There were also procedural delays by the Bank. Bank supervision was helpful in highlighting and solvingproject issues with GOU authorities. In particular, the Bank's prompt action on agreeing a variation orderon roads contracts was crucial to the progress of the component. The performance of the minor projectcomponents might, however, have been improved if the Bank had provided more technical supervision.Both lenders exercised good understanding and flexibility in adapting financing arrangements to GOU andchanging project needs. The support of the Uganda WB office was greatly appreciated by projectmanagement - especially the institution of a financial screening service for claims and, towards the end ofthe project, assistance with procurement procedures.

Project Impact

36. It is impossible to quantify the impact SWRARP alone has had in the project area because ofthe large and very generalized economic changes over the period, complementary developmentinterventions, and because of the shortage of data. Also, a large part of the road rehabilitation program hasonly been completed very recently and some of its potential impact has perhaps not yet been realized. Themission believes, however, that SWRARP's overall impact has been substantial and positive. The roadprogram has already generated an increase in general economic activity and agricultural production throughopening previously impassable roads to traffic and reducing transport costs. This has been verified bysurveys showing increased traffic volumes on both feeder and trunk roads in the area. Together withimproved access to markets, improvements in productivity of bananas and Irish potatoes resulting from theAdaptive Research and Extension component have boosted incomes and food availability almost region-wide. The Community Development and Credit component has had a more localized impact on incomesand nutrition through its promotion of diversified enterprises and has established foci of local managementcapacity. It may, however, have had the effect of further concentrating, rather than spreading, thedistribution of resources in some rural communities.

Project Sustainability

37. Of the four field components of SWRARP, one - Adaptive Research and Extension - has beenmerged with national programs supported by WB projects (ARTP and AEP). This has reportedly resultedin some dilution of activities in the project area but is in line with prevailing Government and WB policy.Agricultural input supply was intended in the SAR to be taken over by the private sector. Although notentirely in line with the pattern of wholesale dealing or on the scale envisaged, this did, in fact, take placespontaneously during the course of the project and satisfactory private sector arrangements do appear to bein place: private suppliers of agricultural and veterinary inputs operate in centres throughout the region.

38. Maintenance of both contract and spot improved roads is imperative but only a few roadshave undergone routine maintenance so far. GOU now gives the highest priority to road maintenance andhas increased its budget allocation for rural roads almost four fold in FY97. However, this is still below the

10

country's requirements and districts are not able to match MOLG allocations as is required. Roadmaintenance equipment purchased under SWRARP for 4 districts has been spread over the 6 districts of theproject area. Government is in the process of procuring additional equipment worth US$ 4 m for the wholecountry, of which some will be for the project area, but this will still not raise the districts' maintenancecapabilities to the level originally intended by the Bank under the project. Other measures which wouldcontribute to road maintenance include persuading farmers not to cultivate their fields up to the road edges,limiting axle loads of lorries, and rehabilitating trunk roads.

39. The project was directed to terminate its credit activities from mid-February 1996, and onlyloan recovery activities have been pursued. Funds recovered are to be transferred by SWRARP to the Bankof Uganda. In January 1996, the South West Uganda Agricultural Development Agency (SWUADA) wasestablished as an NGO. It embraces the SWRARP districts and three other westem districts. Among itsintended activities, SWUADA will provide credit to its members, along the lines of the SWRARP creditcomponent. If SWUADA is to successfully take over the credit scheme, it must concentrate its efforts onthis undertaking in SWRARP districts only, and receive assistance for building its technical and managerialcapacity.

Future Operations

40. Although IFAD and IDA loans were closed by mid-1996, SWRARP activities will continueduring FY97, solely under GOU financing. This is commendable and reflects the GOU's interest incompleting project activities, such as feeder road rehabilitation and maintenance, and credit group training.The project is planned to be dismantled by mid-1997, and part of the future operations should be directedtowards handing over project activities to relevant organizations. The mission confirms that it discussed theFY97 project operations with the project management, of which an outline is attached to this AideMemoire.

Lessons Learned

41. When borrower and lenders agree to add a significant component at the end of the project(e.g. small valley dams), appropriate additional time should be given to (i) allow the preparation offeasibility studies including economic and environmental aspects; and (ii) avoid having to transfer projectstaff resources from other on-going activities. In these circumstances, it is especially important that onlycompetent contractors are engaged to undertake the work.

42. In addition to screening of new/exotic crop varieties, consideration should be given to localvarieties, especially to the reasons for their adaptation to prevailing farning systems, and to theirimprovement through proper seed production (and possibly mass selection), and better crop husbandrypractices.

43. To yield significant impact, the release of superior varieties should be accompanied withsustainable seed production systems.

44. More attention needs to be devoted to devising satisfactory logistical arrangements andcontingency plans at appraisal. Where rapid start-up of project activities is expected to be crucial to theimpact of the project, the appraisal team should include an experienced project administrator who might, inaddition to investigating conditions on the ground and defining implementation schedules, also set inmotion the procurement process by drawing up draft tender documents.

11

45. Project baseline and terminal surveys should be contracted out to external specialistorganizations, so as to allow project M&E units to concentrate on routine M&E activities, reduce overheadcosts, permit independent evaluation of project impact and build centres of technical excellence in theconduct and analysis of surveys and other forms of socio-economic investigation.

46. All avenues should be pursued to optimize the choice of candidates for key technicalassistance posts. It is often the practice to require companies to distinguish between their own staffmembers and contracted consultants in their bids. They might further be required to include, in individualCVs, the employment record of the candidates concerned and/or otherwise demonstrate how familiar theyare with the performance of the same. Perhaps penalty clauses for consultants should be tightened.

(Kampala, 21 October 1996)


REPUBLIC OF UGANDA


APPENDIX B

EVALUATION SUMMARY OF GOVERNMENT'S COMPLETION REPORT

REPUBLIC OF UGANDASOUTH WEST REGION AGRICULTURAL DEVELOPMENT PROJECT

IFAD LOAN SRS-010 UG - IDA CREDIT 1869-UGPROJECT COMPLETION REPORT

EVALUATION SUMMARY

Project Objectives:-

The objectives of the South West Region Agricultural Rehabilitation Project(SWRARP) were to increase food production, farm incomes and standards of living ofsmall farmers in the region. The objectives were to be achieved by the provision ofbasic farm inputs, support for adaptive research and extension and relevant institutionsand rehabilitation-of rural feeder roads.

The revitalization of small scale agricultural production was viewed as a means ofboosting production to ensure food security, generate marketable surpluses andincrease per capita income.

The main constraints were lack of inputs, inefficient or weak agricultural research andextension services and lack of access, or very high transport costs which prohibitedaccess, to produce markets. The Project Strategy was therefore to achieve the aboveobjectives through the provision of inputs, adoption of improved technologies fromadaptive research, through extension and rehabilitation and spot improvement offeeder roads. Four economically disadvantaged districts, which later increased to six,with redemarcation of district boundaries, were targeted.

Implementation Experience

The Loan and Credit became effective in August 1988, however, the project took off ayear later in September 1989 when all counter part and TA staff were in post. Thistime lost, coupled with unsatisfactory performance of some TAs, delays inprocurement and inadequacy of counterpart funds up to mid 1992, led to the closingdate of the project being extended twice, involving a total of 20 months. The projectclosed at the end of February 1996. It is estimated to have cost US $ 23.445 millionwhich is less than the appraisal estimate of US $ 27.4 million. Of this GOUcontribution is US $ 4.74 million equivalent.

The procurement of inputs was considerably delayed due to an inappropriateprocurement arrangement which bypassed CTB, inadequate knowledge of ICBprocedures by UCB and project staff, lengthy and bureaucratic delays in approvinglists of items to be procured as well as delays in approving and award of tenders. The

2

above constraints were inherited by the Input Supply Unit after the contract with UCBterminated in June 1993. As a result a US $ 1.0 million order of Inputs initiated in1992 was cancelled, as it was caught by the February 1996 deadline. This left thesame amount unspent. The project incurred losses and low sales due to foreignsuppliers who on some occasions delivered goods differing from those specified bothin quality, quantity and physical specifications. This was occasioned by aninternational firm contracted by GOU to carry out preshipment inspection, renderingservices in an unsatisfactory manner.

The adaptive research on-station activities were limited to 2 sites namely, a researchstation and a research farm, excluding 2 sites at the 2 DFIs. This was due toinsufficient counterpart funds. On-farm trials were carried out on ,selected contactfarmers holdings in seven priority counties throughout the region. There was a shiftfrom contact farmers to contact groups after Midterm Review to facilitate fasteradoption. A store was erected at each of the research institutions.

Institutional capacity building was supported by staff training abroad and within thecountry. This was in the form of short courses and study tours and longterm coursesleading to M.Sc degrees. A total of 40 short courses were attended and 17 staffreceived higher degrees. The project also assisted with transport, operating funds andoffice equipment for extension related activities. A media resource centre forproduction of extension messages, transport, classroom and dormitory furniture wereprovided at each of the 2 DFIs. Each District acquired a road maintenance Unit madeof up road equipment.

The project was restructured in 1991 to introduce a women organisation unit andcredit scheme and a Dam/Valley tank component in 1994. Under the project's WomenOrganisation Unit, female extension staff were accorded transport and demonstrationequipment for teaching women. The Credit Scheme has generated keen interest andthere is greater demand for loans than can be met.

Project Results and Impact

The overall impact of the project can be assessed through various impact studies aswell as the baseline, midterm and terminal household surveys. The aim of the projectwas to increase food production, marketed surpluses, incomes and standards of living.It is evident that the project has contributed positively to agricultural growth in thearea of food crop production and marketing. Through -a revitalized and motivatedextension service farmers have been trained in improved husbandry practices for irishpotato , banana and wheat production. Adaptive Research has replaced low yieldingvarieties of potatoes with yields of 2 - 8 tons per hactare, with improved ones yielding15 - 30 tons per hectare. Three new varieties viz Kisoro, Kabale and Victoria havebean released by the National Variety Release Committee and adoption rates are very

3

high. However demand for improved seed is still very high and distributionproblematic, largely depending on individual initiatives. The sustainability of thisimpact depends on research releasing improved seed every 3 - 4 years.

The banana weevil which was threatening to wipe out the industry has been broughtunder control using cultural methods - which is a low cost sustainable approach.Improved varieties of wheat were released to farmers. However, wheat production isconstrained by inappropriate largely monopolistic marketing. The market is notguaranteed and therefore unreliable and prices very low.

Upland rice was introduced in Rukungiri where adoption has been very high and 60tons are produced in one subcounty of Nyamirama per year. Further expansion ofproduction is hampered by lack of mechanised milling facilities.

Input Supplies have supplemented improved varieties and husbandry to step upproduction, arising from, increased yields per unit area (ie productivity) as well asincreased acreage. Inputs are widely available and prices more stable compared to thepreproject situation. Ownership of hand tools by households has increased as well asuse of chemical inputs.

In terms of capacity building, the institutions associated with the project havebenefitted from the training programme, transport and furniture and equipmentprovided by the project. The project, however did not carry out any Civil Works onthe DFIs other than demolishing one dormitory and making bills of quantities andtechnical drawings for the dormitory and other works at both DFIs.

Inspite of road rehabilitation starting rather late, evidence from traffic surveysreveals a sudden increase in traffic (most of it lorries and pickups), reduction invehicle operating costs and average journey times. A lot of produce is finding its wayto markets and producer prices have generally improved. Ownership of bicycles, amajor means of transport has greatly increased as well as bicycle traffic.

At grassroot level, about 500 groups were mobilised and trained and many areengaged in income generating activities. On the impact of credit, informationavailable from beneficiaries reveals that their incomes have improved as a result ofwhich they are sending their children to school and their purchasing power hasgenerally improved. Overall, the households produce and sell more and are morefood secure than previously. Family nutrition has also largely improved throughtraining offered to women's' groups and incorporation of milk in diet, which is fromzerograzed heifers.

Livestock ownership is an important indicator of wealth and as such it is one of theproxy indicators of income. The terminal household survey reveals that the number of

4

and 1995. The surveys reveal that households on the whole consume more meat, ownmore radios and time pieces than in 1990.

On standards of living, there is evidence that households own and live in more metalroofed houses than when the project started.

Based on the above performance and impact, it is in order to state that the project hasperformed quite satisfactorily in pursuit of its objectives. However it is not possible tosay how much of the impact can be attributed to SWRARP as other projects wereimplemented concurrently with SWRARP.. These include a highway roads project, anILO/UNCDF funded feeder road project and South West Integrated (Health andWater) Project (SWIP), and Credit schemes (Entandikwa, PAP, NGOs). Other thanthe Impact from agricultural components (adaptive research, extension and inputsupply) where SWRARP was the sole or main actor, the impact accruing fromimproved transportation, community group mobilization and credit is attributed to allthe players, not SWRARP alone.

Sustainability:

The main risk to the sustainability of activities supported by SWRARP is the shortageand/or untimely release of funds by the successor organisations to implementors. Thisis true of research and extension. Feeder Road maintenance is largely theresponsibility of District Administration. Judging from the amount of resourcesallocated to roads by districts under decentralization, certainly roads are not given thepriority they deserve and are likely to deteriorate once again. However, some feederroads will be maintained under the ADB-funded project in the short run. Input supplyis being carried on by the private sector although there is need for government toinstitute regulatory and quality controls. On credit, farmers groups have formed anagency (SWUADA) to act as a rural financial intermediary under the new nationalcredit policy. However, there is uncertainty as to whether banks in the project area arewilling to take on the role of Participating Commercial Banks (PCBs).

Findings and Lessons Learnt

The main findings and lessons learnt from implementing this project are of a designand operational nature.

5

Design Considerations:

(i) Induction Prior to Implementation Commencement

A workshop should be held at the start of the project involving all key projectpersonnel to be involved in the implementation and donor personnel who supervisethe project. The main purpose of the workshop should be to ensure that:

(a) all staff understand the roles of each component of the project to minimisedigression and possible role conflicts;

(b) all staff understand the legal requirements of the project including assembly ofdata for purposes of monitoring and evaluating the project during and afterimplementation; and

(c) everybody understands the financial implication of strictly adhering to theapproved work programmes and budgets.

(ii) Flexibility of Project design

Project design can be influenced by changes in government policies and modificationof strategy to better realise objectives. It is therefore important that sufficientflexibility be inbuilt at design stage to allow for later changes.

(iii) Proper Scheduling of Civil Works

In integrated projects where" civil works such as roads, buildings, water reservoirs areto be constructed to facilitate other project activities, it is crucial that they start aheadof other activities so as not to delay them. This will enhance maximisation ofbeneficial impact on beneficiaries. -

(iv) Women tailored programmes

An important lesson from SWRARP is that women have a big role to play indevelopment provided programmes are tailored to meet their needs.

(v) Cross Project Transfer of Activities

Experience has shown that activities initiated under one project should be completedby the same project as they risk suffering from further delays if transferred to anotherproject or not be implemented at all.

6

(vii) Role of Local leaders

Local leaders namely LC Officials and Chiefs can play an important role in projectimplementation if sensitised. Their good will in mobilising beneficiaries andenforcing bye-laws and regulations can make the difference between a successful anddisastrous project. This is especially so in recovery of loans in a credit scheme.

(viii) After sales service

It is important that in future projects of a similar nature, involving procurement ofplant/equipment under ICB, the firms or their agent should be evaluated for theirability to offer sound after-sales services.

(ix) Capacity considerations in Contract award

The capacity of some contractors, notably the local ones may not stand up to themagnitude of work in major civil works. As such, selection should be guided by thecontractors capacity to undertake the works.

(x) Road maintenance to avoid economic wastage

Road rehabilitation is a very costly venture which should be entered into only ifmaintenance is guaranteed.

(xi) Credit Sustainability

The failure of UCB to renew its agency agreement with SWRARP on cost groundsand Cooperative's Bank refusal to participate as PCB may be signal that they are notready to participate in the new credit delivery mechanism. It is important that GOUdoes not leave rural people without proper alternative credit sources as arrangementare put in place.

May 1996

IBRD 20814

UGANDA \ 33 ZSOUTHWEST REGION - / D

AGRICULTURAL REHABILITATION PROJECTPROJECT AREA _ \i

ta 7 & a/ KoobonaJ

Project Area / MOYD KITGUM / N)

Mcor Roods J Ž rwORaIlrods ' |K/IA TGUMK

3- R.vers K AR Co( i KOTIDO

6D Orst,rct CopItals

-Dstrjct Boundor.es \-Internatjonal Boundar,es - / MOROTO'\, m

0 25 50 75 jo0 KILOMETERS g.tt(\/ MOROTO

-2- 0 20 40 60 tlE5 ,S/LY / 4 APAC \ - 2-

f jKAPCH A >/SOROT

BU''"'IB' O MUt7ENDE A ekrulojo9te °Ig$ R"RMI jZ I.

/ 8~~~AeIe~0 N.j goA

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L~ ~~~~~~~~~~~~~~~~~~~COt U 9870N gai

JA~~~~(

m I I ~ ~ I

KA SE~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

31' (l~~l,TX, SUD~~~~~~~~~~~~~~~3 ANB

oke ETHI~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~OCPOIRA

UGANDASouth West Agricultural Rehabilitation Project

Map 1. AGRO-ECOLOGICAL ZONES AND RURAL ROADS

I a k c -- -- - - - - ---

J, k~~~~~~~~~~~~~~~~

E d it a, d ^ / B A R

V B U S H E N Y I / _ > _ < ,

X p; - S- o'I S S (wf { \~~~~I-

- Ntu~ngam-

o | -'- 1 >_ > \ \ NTUNCGAMO \

I o_s \ X a o ~TANZANIAlKISRdQ°9x_ /A A L E A

- SWRARP Contract RoadsAgro-Ecological Zones/ - SWRARP Direct Labor RoadsProcduction Systems UNDP/UNCDF/ILO Roads

. .] Temperate crop zone - - - International boundary- 1 - - Distnct boundary

RWANDA ] r 2 X Mixed tarrningl Matoke zone Q District capitalRWANDA ~~~~~~~~~~~~~~~~~~~~~~~~~~~Thunk roadsN 3 ] Seemi-arid rangelands zone -------- -- No project teeder roads

0 20Km ATCIl 1 96-258/UGPROJG

UGANDASouth West Agricultural Rehabilitation Project

Map 2. PRIORITY COUNTIES AND FORMER GROUP ACTIVITIES

E d/v a t-d C Groups

~~~~~~~~~~~~~~~~~~~~~~~~Pirt Counties kl

<4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ----------- ;R

_ -KlsoCrt 4, - i > J _ ~~~~~~~~~~International boundary

r~~~~~~~~~~~~~~~~~~~~ - -sur; R-FA District boundaryX~~~~~~~~~~~~RAD 1L0 District caprtal

t 1 1 ~~~~~~~~~~~~~- Trunk roads

/ ~~~~~~~~~~~~~~~~~~~~SWRARP and ILO roads

J ~~N Grant Assisted Community Groups

\ * ~~~~~~~~~~~~~~~~~~Credit GroupsIIPriority Counties

0 20 Km

TC111 96-259/UGPRCOUN

IMAGING

Report No.: 16358Type: ICR

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