implementation completion and results report (icr) document · brasileira de pesquisa...

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: ICR00004939

IMPLEMENTATION COMPLETION AND RESULTS REPORT

ON LOAN IBRD (8124-BR)

IN THE TOTAL AMOUNT OF US$ 100.0 MILLION

TO THE

STATE OF CEARÁ

FOR THE

CEARÁ RURAL SUSTAINABLE DEVELOPMENT AND COMPETITIVENESS PROJECT October 30, 2019

Agriculture and Food Global Practice

Latin America and Caribbean Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 30, 2019)

Currency Unit = Brazilian Real (BRL)

BRL 1.00 = USD 0.244

USD 1.00 = BRL 3.918

FISCAL YEAR

July 1 - June 30

Regional Vice President: J. Humberto López

Country Director: Paloma Anos Casero

Regional Director: Anna Wellenstein

Practice Manager: Preeti S. Ahuja

Task Team Leader(s): Barbara Cristina Noronha Farinelli

ICR Main Contributor: Pablo R. Valdivia Zelaya

ABBREVIATIONS AND ACRONYMS ACACE Association for Agricultural Cooperation, State of Ceará (Associação do

Cooperação Agrícola do Estado do Ceará) ADELCO Association for Local Co-Development (Associação para

Desenvolvimento Local Co-Produzido) ATER Agricultural Technology and Rural Extension (Assistência Técnica e

Extensão Rural) BB Bank of Brazil (Banco do Brasil)

BNB Bank of Northeast Brazil (Banco do Nordeste)

CA Community Association

CAGECE State Water and Sanitation Company (Companhia de Água e Esgoto do Ceará)

CDD Community-Driven Development

CEDR State Rural Development Council (Conselho Estadual de Desenvolvimento Rural)

CENTEC State Technological Learning Institute (Centro de Ensino Técnico)

CETREDE Center for Training and Development (Centro de Treinamento e Desenvolvimento)

CMDS Municipal Sustainable Development Council (Conselho Municipal de Desenvolvimento Sustentável)

COGERH State Water Resources Management Company (Companhia de Gestão dos Recursos Hídricos do Ceará)

CONAB National Supply Company (Companhía Nacional de Abastecimento)

CONPAM Environmental Policies and Management Council (Conselho de Políticas de Gestão do Meio Ambiente)

CONTAG National Federation of Agricultural Workers (Confederação Nacional de Trabalhadores na Agricultura)

CPS Country Partnership Strategy

CTDRS Territorial Council for Rural Sustainable Development (Colegiado Territorial de Desenvolvimento Rural Sustentável)

EMATERCE Ceará State Rural Extension and Technical Assistance Company (Empresa de Assistência Técnica e Extensão Rural do Ceará)

EMBRAPA Brazilian Agricultural and Livestock Research Company (Empresa Brasileira de Pesquisa Agropecuária)

ESMF Environment and Social Management Framework

FECOP State Fund for Poverty Reduction (Fundo Estadual de Combate à Pobreza)

FUNASA National Health Foundation (Fundação Nacional da Saúde)

FUNCEME Ceará State Meteorology and Hydrological Resources Foundation (Fundação Cearense de Meteorología e Recursos Hídricos)

GEMOC Monitoring and Control Management Office (Gerência de Monitoramento e Controle)

HDI Human Development Index

IDESQ National Institute for Social Development and Professional

Qualification (Instituto Nacional de Desenvolvimento Social e Qualificação Profissional)

IICA Inter-American Institute for Agriculture Cooperation

AGROPOLOS Ceará AGROPOLOS Institute (Instituto AGROPOLOS do Ceará)

IPPF Indigeneous Peoples Planning Framework

IRR Internal Rate of Return

PA Productive Alliance

MDA Ministry of Agrarian Development (Ministério do Desenvolvimento Agrário)

MDS Ministry of Social Development (Ministério do Desenvolvimento Social e Combate à Fome)

NGO Non-governmental Organization

O&M Operation and Maintenance

PAM Municipal Water Plan (Plano de Águas Municipal)

PDRS Sustainable Rural Development Plan (Plano de Desenvolvimento Rural Sustentável)

PDO Project Development Objective

PO Producers´ Organization

PRONAF National Program to Strengthen Family Agriculture (Programa Nacional de Fortalecimento da Agricultura Familiar)

PTDRS Territorial Sustainable Rural Development Plan (Plano Territorial de Desenvolvimento Rural Sustentável)

SAAES Simplified Systems of Water Ssupply and Sanitary Sewage (Sistemas de Abastecimiento de Água e Esgotamento Sanitário Simplificado)

SAE Autonomous Water System (Sistema Autônomo de Água)

SDA Ceará State Secretariat of Agrarian Development (Secretaria do Desenvolvimento Agrário)

SEBRAE Brazilian Agency for Micro- and Small-Business Assistance (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas)

SIGAF Management System for Family Agriculture (Sistema de Gestão para Agricultura Familiar)

SIGPRO Project Information and Management System (Sistema de Informação e Gestão de Projetos)

SISAR Integrated Rural Water Supply and Sanitation System (Sistema Integrado de Saneamento Rural)

SOE Statement of Expenditure

SOHIDRA State Superintendent for Water Works (Superintendência de Obras Hídricas)

SOLSOCIAL Solutions in Social Consulting (Soluções em Consultoría Social LTDA)

SRH Ceará State Secretariat of Water Resources (Secretaria dos Recursos Hídricos do Ceará)

UGP Project Management Unit (Unidade de Gerenciamento do Projeto)

UGT Project Territorial Management Unit (Unidade de Gestão Territorial)

WSS Water and Sanitation Services

TABLE OF CONTENTS

DATA SHEET ........................................................................................................................... I

I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 1

A. CONTEXT AT APPRAISAL .........................................................................................................1

B. SIGNIFICANT CHANGES DURING IMPLEMENTATION ................................................................4

II. OUTCOME ...................................................................................................................... 7

A. RELEVANCE OF PDOs ..............................................................................................................7

B. ACHIEVEMENT OF PDOs (EFFICACY) ........................................................................................7

C. EFFICIENCY ........................................................................................................................... 14

E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 17

III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 19

A. KEY FACTORS DURING PREPARATION ................................................................................... 19

B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 20

IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 23

A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 23

B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 26

C. BANK PERFORMANCE ........................................................................................................... 28

D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 31

V. LESSONS AND RECOMMENDATIONS ............................................................................. 32

ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 34

ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 56

ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 59

ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 60

ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 74

ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 78

ANNEX 7. ADDITIONAL INFORMATION................................................................................. 79

ANNEX 8. EMATERCE SUSTAINABILITY PLAN (PORTUGUESE). ............................................... 82

ANNEX 9. MAPS ................................................................................................................... 90

The World Bank Ceara Rural Sustainable Development and Competitiveness (P121167)

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DATA SHEET

BASIC INFORMATION

Product Information

Project ID Project Name

P121167 Ceara Rural Sustainable Development and

Competitiveness

Country Financing Instrument

Brazil Investment Project Financing

Original EA Category Revised EA Category

Partial Assessment (B) Partial Assessment (B)

Organizations

Borrower Implementing Agency

State of Ceara Secretaria de Desenvolvimento Agrario

Project Development Objective (PDO) Original PDO

Project Development objective: The objectives of the Project are to: (i) improve the sustainability of rural production and rural income generation; and (ii) contribute to the Borrower’s efforts to universalize access to Water Services.


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FINANCING

Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)

World Bank Financing IBRD-81240

100,000,000 100,000,000 100,000,000

Total 100,000,000 100,000,000 100,000,000

Non-World Bank Financing 0 0 0

Borrower/Recipient 50,000,000 50,000,000 38,785,881

Total 50,000,000 50,000,000 38,785,881

Total Project Cost 150,000,000 150,000,000 138,785,881

KEY DATES

Approval Effectiveness MTR Review Original Closing Actual Closing

05-Apr-2012 06-Dec-2012 10-Nov-2014 31-Oct-2016 30-Apr-2019

RESTRUCTURING AND/OR ADDITIONAL FINANCING

Date(s) Amount Disbursed (US$M) Key Revisions

25-Apr-2014 10.00 Change in Results Framework Change in Components and Cost Reallocation between Disbursement Categories

11-Oct-2015 21.06 Change in Results Framework Change in Components and Cost Reallocation between Disbursement Categories Change in Legal Covenants Change in Institutional Arrangements

16-May-2016 57.17 Change in Loan Closing Date(s)

30-Apr-2018 87.62 Change in Results Framework Change in Loan Closing Date(s) Change in Implementation Schedule


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KEY RATINGS

Outcome Bank Performance M&E Quality

Moderately Satisfactory Moderately Satisfactory Modest

RATINGS OF PROJECT PERFORMANCE IN ISRs

No. Date ISR Archived DO Rating IP Rating Actual

Disbursements (US$M)

01 06-Jun-2012 Satisfactory Satisfactory 0

02 10-Jan-2013 Satisfactory Satisfactory 0

03 12-Nov-2013 Moderately Satisfactory Moderately Satisfactory 5.00

04 26-Apr-2014 Moderately Satisfactory Moderately Satisfactory 10.00

05 11-Oct-2014 Moderately Satisfactory Moderately Satisfactory 10.00

06 27-Feb-2015 Moderately

Unsatisfactory Moderately Unsatisfactory 15.06

07 03-Sep-2015 Moderately

Unsatisfactory Moderately Unsatisfactory 21.06

08 11-Jan-2016 Moderately Satisfactory Moderately Satisfactory 52.72

09 27-Jul-2016 Moderately Satisfactory Moderately Satisfactory 57.17

10 21-Dec-2016 Moderately Satisfactory Moderately Satisfactory 62.47

11 23-Jun-2017 Moderately Satisfactory Moderately Satisfactory 62.47






iv

SECTORS AND THEMES

Sectors

Major Sector/Sector (%)

Agriculture, Fishing and Forestry 48

Irrigation and Drainage 16

Other Agriculture, Fishing and Forestry 32

Public Administration 12

Sub-National Government 12

Water, Sanitation and Waste Management 40

Sanitation 20

Water Supply 20

Themes

Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 15

Enterprise Development 15

MSME Development 15

Finance 27

Financial Infrastructure and Access 15

MSME Finance 15

Finance for Development 12

Disaster Risk Finance 4

Agriculture Finance 8


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Urban and Rural Development 53

Rural Development 41

Rural Markets 8

Rural Infrastructure and service delivery 30

Land Administration and Management 3

Disaster Risk Management 12

Disaster Response and Recovery 4

Disaster Risk Reduction 4

Disaster Preparedness 4

Environment and Natural Resource Management 46

Climate change 40

Mitigation 14

Adaptation 26

Renewable Natural Resources Asset Management 6

Biodiversity 3

Landscape Management 3

ADM STAFF

Role At Approval At ICR

Regional Vice President: Hasan A. Tuluy J. Humberto Lopez

Country Director: Makhtar Diop Paloma Anos Casero

Director: Ede Jorge Ijjasz-Vasquez Anna Wellenstein

Practice Manager: Ethel Sennhauser Preeti S. Ahuja

Task Team Leader(s): Maria de Fatima de Sousa Amazonas, Diego Arias Carballo

Barbara Cristina Noronha Farinelli

ICR Contributing Author: Pablo R. Valdivia Zelaya


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I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES

A. CONTEXT AT APPRAISAL

1. Context and Sector Background. When the Ceará Rural Sustainable Development Project was appraised in 2011,

the Brazilian economy had made an early and strong recovery from the 2008 global financial crisis and several large-scale social programs had lifted tens of millions of people out of poverty. Even so, important challenges remained for Brazil to achieve its vision of joining the group of developed nations within a generation. To eradicate extreme poverty and reduce huge regional disparities, the Brazilian Government implemented the multisector “Brasil sem Miséria” program, focused on improving opportunities for vulnerable populations, especially those living in the Northeast region where 59 percent of the nation’s extreme poor resided at that time. In the northeast State of Ceará – the region’s third largest economy - -13 percent of the population was living below the regional extreme poverty line (around R$70 per month or US$1.50 per capita/day) and close to one-third were below the regional poverty line.

2. Small-scale producers in Ceará faced low productivity due to inadequate access to services, lack of technological innovation, the disconnect between technical assistance and farmers’ needs, and poor access to capital: physical, financial, human, managerial and social. Furthermore, extreme climatic conditions and weather variability in Ceará – one of the driest states in the Brazilian Northeast - had impacted severely and repeatedly on agriculture and food production. This situation, plus the fact that barely 17 percent and 20 percent respectively of the rural population had access to potable water supply and adequate basic sanitation (not to mention water for productive purposes), limited the growth of commercial agricultural activities, especially in the semi-arid Sertão Region of the State.

3. Government Strategy. The project coincided and aligned with the State´s Multi-year Development Plan (Plano

Plurianual 2012-2015, PPA) to increase territorial development and productivity. The PPA was built on the following elements: (i) Territorial approach and integration: federal- and state-level programs coordinated to boost economic and social inclusion; (ii) Climate-smart responses: farmers were encouraged to adopt new technologies to increase agricultural productivity and competitiveness while increasing the efficient use of water and reducing carbon emissions; (iii) Value chains and productive alliances: producers´ organizations were supported to participate in value chains not only to improve bargaining power in markets, but also to promote “win-win” market solutions, expand the uptake of technological innovation and reduce individual risks.

4. Rationale for Bank support. Durable, longstanding partnership between the Bank and the State of Ceará,

entailing regular dialogue on its overall lending program, state sector strategies and specific operations in multiple sectors, justified further Bank Support. Ceará was at the time among the Bank´s primary sub-national borrowers in the Northeast Region. The Bank had consistently supported the State´s community-driven Rural Poverty Reduction Program (known locally as Projeto Sao Jose, or PSJ) since 1993, and the State had a history of willingness to test innovations: market-based land reform, fair trade initiatives and integrated approaches to rural development. Further, the Bank saw the new operation (PSJ III) as the opportunity to exploit the social and participatory structures and networks created by those earlier operations by introducing a more market-oriented, transitional approach emphasizing sustainable production systems, farmer organization and commercialization.


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5. Higher-level objectives. The project responded directly to government´s higher objectives anchored in the World Bank Group´s Country Partnership Strategy (CPS) 2012-2015 (Report # 63731-BR). In agriculture and natural resources management, the project addressed two of the key challenges outlined: (i) exploiting opportunities for innovative and integrated approaches to climate smart agriculture, include economic growth targeting rural productivity; and (ii) addressing issues of competitiveness in Brazilian agriculture and natural resources management (NRM). The project also sustained its focus on two, still highly-relevant “pillars” of the previous CPS (2008-2011): contributing to an Equitable Brazil by targeting rural access to basic infrastructure and services (water supply and sanitation); and, to a Sustainable Brazil by promoting sustainable production systems, including by piloting incentives-based innovations and technologies.

6. The project also reflected – of necessity selectively - focal areas of the World Bank Group´s Agriculture Action

Plan 2010-2012: (i) raising agricultural productivity through increased adoption of new technology; (ii) linking farmers to markets, promoting value addition, and stronger producer organizations; (iii) reducing risk and vulnerability, improving data quality for decision-making, and upgrading drought preparedness plans; (iv) facilitating agricultural entry and exit and rural non-farm income generation by upgrading skills; and, (v) enhancing environmental services and climate-smart agriculture, including better rangeland, watershed and fishery management, and linking improved agricultural practices to environmental recovery and sustainability.

Theory of Change (Results Chain)

Project Development Objectives (PDOs)

7. The PDO (as per the Loan Agreement, and identical in the PAD) was to “improve the sustainability of rural production and rural income generation and contribute to the Borrower´s effort to universalize access to Water Services”.


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Key Expected Outcomes and Outcome Indicators

8. Key expected outcomes: The expected outcomes are not discussed in aggregate in the PAD (other than the PDO Results Indicators) but can be construed from the text. The project expected to demonstrate substantial improvement in the economic and environmental sustainability of organized smallholders’ productive practices, thereby increasing their productivity and revenue/income generation. In parallel, and at the explicit request of the State Government, the project also expected to greatly expand rural access to water and sanitation services, thereby supporting the State’s water services universalization strategy.

9. Outcome indicators: As stated in the PAD, the results indicators selected to measure PDO achievement were: i. An increase in the real revenue (inflation adjusted) of the beneficiary rural producers’ organizations

ii. The number of people in rural areas provided with access to improved water sources under the project iii. The number of people in rural areas with access to improved sanitation under the project iv. The increased number of beneficiary organizations participating in environmental recovery activities and

conservation of focus areas.

10. Target Beneficiaries: The project covered 13 of the State’s rural territories and targeted poor rural producers and especially small farmers, including quilombola communities, indigenous groups1, artisanal fishermen, and other traditional groups at different stages of social and economic sustainability. The project targeted around 18,000 producers including non-agricultural rural producers and planned to provide water and sanitation services (WSS2) to another 40,000 people (around 10,000 households) living in rural communities without access to those services. Beneficiaries would be represented by their community associations, cooperatives or other organizational groupings. Further, training would be provided to legally-constituted rural producers´ organizations, community associations, Municipal and Territorial Councils, NGOs, service providers, consultants and public servants involved in project management and implementation.

11. Components (PAD) The project had three components:

▪ Component 1. Economic Inclusion (US$ 70.0M of which US$46.69M IBRD financing and US$23.31M State counterpart3). This component promoted investments in rural economic inclusion in Ceará territory, though: (1) the provision of support to SDA for 1.1. preparation, implementation and supervision of business plans; 1.2. the construction of approximately five warehouse facilities4 for collecting, processing and distributing farm products; (2) the provision of support to Producer Organizations (PO) for the establishment of 2.1. Productive subprojects5; and 2.2. Environmental Services Subprojects based on eligible business plans; and

1 The project area comprised 12 ethnic groups and 22,000 people, all of whom were considered eligible for project interventions according to their expressed interest in participating. 2 The project defined water services as potable water services and basic sanitation services (e.g. septic tank and sanitation kits). 3 The PAD does not specify the expected beneficiary cost sharing contribution. Both State counterpart and Producer Organization´s expected contribution is described in the Project Operational Manual (POM), and it was limited to 20 percent of the total cost of each subproject (See table 5, page 29, POM 2012). 4 The average investment of warehouse facilities was around US$700,000. 5 Total average cost per production investment subproject was estimated at US$160,000, supporting production clusters,


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(3) the provision of support to SDA for the development of a state-wide disaster risk management policy, contingency plans and early warning systems for the prevention of natural disasters.

▪ Component 2. Water Services6 (US$ 50.0M, of which US$33.35M IBRD financing and US$16.65M State

counterpart). This component would support the Borrower´s efforts to universalize access to potable Water Services through: (1) the provision of support to 1.1. SDA for the preparation and implementation of engineering designs for selected potable water and basic sanitation infrastructure investment7; 1.2. CAGECE and SOHIDRA for the analysis of engineering designs and supervision of works for the implementation of selected potable water and basic sanitation infrastructure investments; (2) the provision of support to CAGECE and SOHIDRA for the scaling up of existing water distribution management systems models, including SISAR, and the development of pilot solutions for the sustainable operation and management of Water Services delivery and management in selected rural areas; and (3) the provision of support to Community Associations for the carrying out of Greywater Reuse Pilot Subprojects.

▪ Component 3. Institutional Strengthening and Project Management (USD23.3M, of which US$15.54M IBRD financing and US$7.79M State counterpart). This component financed: (i) the technical and administrative management of the Project; (ii) the necessary updates to SDA’s management information system, including the design, development and implementation of a monitoring and impact evaluation module to track progress on results indicators; (iii) the development and implementation of a training program for technicians, Project Beneficiaries and stakeholders; (iv) the development and implementation of a communication plan to disseminate information on the Project; (v) institutional strengthening of TCE-CE for the carrying out of audits under the Project.

B. SIGNIFICANT CHANGES DURING IMPLEMENTATION

Revised PDOs, PDO Indicators and Outcome Targets

12. The project was restructured four times between 2014 and 2018. While the PDO was not revised, a new PDO

indicator was added to the Results Framework by the 2018 Restructuring to capture project activities designed to improve the sustainability of rural production and income generation: “Producers organizations supported by the project that have a sustainable business initiative financed via subproject investments”. The restructuring of 2018 also: (i) reduced the final target for the PDO Indicator “Real revenue increase (inflation adjusted) of beneficiary producer organizations” from 20 percent to 5 percent, an estimate considered by the Bank and UGP to be a more realistic target given the delays affecting productive investments at that time; and (ii) clarified the definition of PDO terms “sustainability” and “universalize access”. The former term refers to the enhanced adoption of environmentally sustainable climate Smart technologies, diversification of production and

technology introduction (including irrigation), production and production processing, as well as insertion in local and regional markets. Beneficiaries were expected to contribute 20% of investment cost, with a maximum 10% of investment cost permissible in kind. 6 Water services in described in the PAD mean potable water services and basic sanitation services (e.g., septic tanks and sanitary kits). 7 Extension of Water Services included the preparation and implementation of engineering designs for water and basic sanitation infrastructure investments


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broadening of market opportunities to promote greater environmental and economic resilience. Whereas the term “universalized access” to water is based on the National Food Security Policy Directive (Decree No. 7,272/2010, Art. 3), which states that the State must act to promote universal access to quality water in sufficient quantity, with priority for families in situations of water insecurity and for the food production in family agriculture, fisheries and aquaculture.

Revised Components

13. While the restructurings did not change the overall project structure or broad thrust, several smaller activities

were dropped because of better alternatives, decreased priority and/or non-viability. Further, the scale of Component 2 was expanded to respond specifically to rural families´ demand for water services under severe drought conditions. Changes were as follows: ▪ Component 1: (i) Massive rural demand for water and sanitation under drought conditions resulted in the

Restructuring of 2014 downsizing Component 1 Economic Inclusion by reallocating US$17.0 million to Component 2 Water Services. The reallocation also caused targeted productive investments to be cut from 440 (or 18,000 targeted beneficiaries) to 280 (or an estimated 11,480 targeted beneficiaries); (ii) the Restructuring of 2015 eliminated environmental services subprojects (payment for environmental services or PES) under Part 1.b. (ii) of the Loan Agreement because this practice was still not regulated by State Law; and (iii) the Restructuring of 2018 modified activities in Part 1.a.(ii) of the Loan Agreement from construction of warehouse facilities (to collect, process and distribute farm products) to the financing of large-scale investments, as defined in the PAD8.

▪ Component 2: As a result of increased financing approved during the Restructuring of 2014, the targeted

number of new piped household water connections was increased from 10,000 (or 40,000 beneficiaries in the PAD) to 22,000 (or an estimated 88,000 beneficiaries).

Other Changes

14. Extensions of closing date: Restructuring in May 2016 and again in April 2018, extended the project closing date

by an aggregate 30 months to provide enough time to overcome management issues, and to cope with the complexity and protracted implementation of project investments under Components 1 and 2. With these extensions, the project also expanded investments into regions affected by the severe drought and permitted subproject completion and operational start-up. The just over four-year implementation period - based on which the project was designed and approved - was too short, neither commensurate with its level of difficulty nor comparable to similar projects in Brazil and the wider Latin America region where five to six years or longer, had been the norm in practice.

8 No reference was made to a reduced number of targeted beneficiaries. However, the PAD´s estimated 18,000 direct beneficiaries of 440 subprojects under Component 1 assumed an average of 41 direct beneficiaries per investment. Reduction to 280 thus implied a revised beneficiary target of 11,480 (calculated as 280 investments times 41 direct beneficiaries per investment), although in practice and using final data, average direct beneficiaries per productive investment were only 28 (calculated as 7,398 direct beneficiaries divided by 267 investments), i.e., producer organizations were smaller than estimated at appraisal.


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15. Intermediate Results Indicators: Restructuring in April 2018 also revised many Intermediate Results Indicators, detailed in the Comments Sections for each indicator in the Results Framework Matrix (Annex 1).Changes included: (i) dropping three indicators associated with training activities and aggregating them for clarity and meaning into “Total hours of technical assistance provided to producer organizations” and “Total hours of technical assistance provided to family production units” to reflect more accurately the Government´s effort to enhance farmer organizations´ and individual producers´ capacities through technical assistance; (ii) clarifying the wording, and adjusting the measurement and verification methods for several indicators for Components 1 and 2. For example, “Rural producer organizations adopting environmentally sustainable technologies” was revised to better reflect the measurement method described in the PAD, i.e., the number of rural producers selling products to institutional markets9.

16. Mid-term Review: Under the October 2015 Restructuring, and based on findings of the Mid Term Review (MTR - December 2014), the Bank and Borrower adopted the following changes: (i) simplified presentation of expenditures for disbursement and reallocation between categories of expenditures (this change was made retroactive to project effectiveness); (ii) inclusion of the State Court of Accounts (TCE-CE) as a partner project execution agency; and, (iii) restructuring of the original Project Management Unit (Portuguese acronym, UGP) to accelerate project implementation.

Rationale for Changes and Their Implications for the Original Theory of Change

17. Management and implementation changes were made to overcome delays and achieve PDO outcomes. The

functions and responsibilities of both the central and regional offices managed by the UGP were redesigned to improve their supervision capacity to deploy staff more efficiently and effectively, thereby accelerating project implementation. These changes did not have any implications for the original Theory of Change.

18. The justification for the main changes was as follows:

▪ Project funds were reallocated by the 2014 Restructuring because of Component 1 complexity and

implementation delays - which foreshadowed difficulty in achieving existing/appraisal targets - and the high demand for Component 2 water services from drought-affected rural families. The latter was evidenced by the large number of Expressions of Interest (EI) received from target groups during the January 2013 Call for Proposals.

▪ Change in the counterpart financing modality facilitated the borrower´s presentation of expenditures for disbursement. This restructuring moved from a pari-passu modality to 100% financing with proceeds of the Loan, while maintaining the level of counterpart funding.

▪ The elimination of environmental subprojects (Part 1.b (ii) of the Loan Agreement-Schedule) was unavoidable. It acknowledged that the financing of environmental subprojects linked to PES was not regulated by State Law at that time and raises the question of why it was included in project design.

▪ Involvement of the TCE/CE as a partner agency was a positive change which enhanced the project’s audit capacity. Furthermore, it allowed the project to strengthen TCE/CE institutional capacities.

9 For example, most project-supported rural producer organizations were “associations” which under Brazilian Law cannot perform profit-making activities. Therefore, to capture the increase in market access, the project had to assess individual rural producers accessing markets instead of their associations per se (beneficiaries of the project via their organizations). See 2018 Restructuring Paper, RES31721, footnote 1.


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▪ Dropping of some Intermediate Result Indicators and aggregation of others in 2018 was a rational effort to reflect project activities and strengthen indicator relevance and measurement (See Annex 1).

II. OUTCOME

A. RELEVANCE OF PDOs

Assessment of Relevance of PDOs and Rating 19. Relevance of the PDO to the World Bank Group Country Partnership Framework (CPF, FY18-23, Report No.

113259-BR) is High. At closing, the primary themes of the PDO remained in the mainstream of the new CPF, endorsed by the Executive Directors in July 2017. The report highlights two ongoing challenges which resonate with the PDO and in project activities: (i) creation of productive, decently-paid employment - dependent on increasing farmers’ productivity, improving their business environment and access to capital, and increasing their competitiveness; and (ii) fostering smarter management of natural resources and better mitigation of environmental pollution and natural risks: prominent action areas are water resources management, environmental management, and secure land and property rights. An explicit CPF Focus Area is “Inclusion and Sustainable Development” to “promote the socio-economic development of small rural producers and vulnerable groups”, with which the objectives and activities of the project were closely aligned.

20. The PDO also remained well-aligned to Brazil’s PPA 2016-2019 (Multi-year Development Plan) given the

project’s activities (see Theory of Change, Section I) consistent with the following PPA objectives: (i) expansion of technical assistance and rural extension services supporting small farmer innovation and sustainable production systems; (ii) improve weather and climate monitoring/forecasting systems; (iii) contribute to rural poverty reduction through the productive inclusion of family farmers; (iv) help to expand access of the rural poor to water for human consumption; (v) disseminate sustainable production systems linked to natural resource conservation; and (vi) promote the organization of family agriculture, its insertion in public/private markets, and sustainable energy use. The PDO at closing was also consistent with the State’s long-term Strategic Development Plan “Ceará 2050” especially through its strong focus on activities that generate income and on the provision of water supply. – Overall relevance of the PDO at closing is also rated High.

B. ACHIEVEMENT OF PDOs (EFFICACY)

Assessment of Achievement of Each Objective/Outcome

Summary of the project experience.

21. The project encountered many challenges, and this weighed on the implementation of investments. Despite

the constraints, under Component 1 some 267 productive subprojects were implemented - directly benefiting

close to 7,398 people (around 28 people per productive subproject). Most were operational by closing (197

productive subprojects), with 22 productive subprojects still awaiting at project closing items such as computers,

software and/or office furniture, and some requiring additional support (48 productive investments). The Bank


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and Borrower agreed on a Sustainability Plan10 – working through EMATERCE and other partners – to boost

subproject sustainability post-project, including by completing subprojects unfinished at closing. Importantly, the

new, follow-on project will complement this effort, accompanying PSJ III subproject progress and supporting

weaker investments to reach operational viability. Under Component 2, and to counter historically severe drought

conditions, the project connected water supply to 26,198 households (70,393 people) and installed 9,793

sanitation modules (around 39,662 people11).

22. The presentation below unpacks the PDO by theme and assembles the evidence for achievement using: PDO

and Intermediate Outcome Indicator results; a strong Borrower Completion Report (BCR, 2019) based on project

documentation and databases as well as stakeholder/beneficiary interviews; and, a water and sanitation services

perception survey of 120 beneficiary associations (sample with high statistical significance, 90% confidence

interval), 35 beneficiary families and 13 rural health agents. Further, a DIME (2019) impact evaluation study using

treatment and control groups showed inconclusive results primarily due to the newness of most investments at

the time of survey.

PDO Theme 1: Improve the sustainability of rural production (Substantial)

Objective Outcome: Producer Organizations supported by the project that have a sustainable business initiative

financed via subproject investments (78.2% of the targeted 280 investments and 82% of the 267 financed productive

investments). The 2018 Restructuring introduced a composite sustainability indicator that reflected management

capacity, market access, and production practices with six criteria as at closing: (i) Business Plans implemented and

operational; (ii) Minimum of 2 regular technical assistance visits per year; (iii) Functioning accounting system –

management system reports, balance sheets, spreadsheets; (iv) Operation and Maintenance Plan and reserve fund

for financed investments; (v) POs trained in sustainable production practices and management; and (vi) Sales to at

least one buyer12.

▪ Some 197 PO (70.4% of the targeted 280 investments) had complied fully by closing with the demanding slate of six criteria13. Nevertheless, there are 22 subprojects that are operational but are awaiting some administrative equipment support. Therefore, the ICR Team considers that the number of subprojects that achieved an operational status is 219 (or 78.2% of the targeted 280 investments and 82% of the 267 financed productive investments).

▪ All 267 Component 1 subprojects with potential to impact eco-systems in semi-arid areas were guided by agro-ecological production models with low environmental impact. Supporting the latter, mitigation measures were developed and adopted based on Caatinga (native scrub of the semi-arid) management plans and reducing the eco-system impact of activities such as sheep, goat and cattle raising.

10 Annex 9 shows the geographical distribution of subprojects funded under Component 1 and Component 2. 11 The number of people who benefited from sanitary modules was obtained by multiplying the number of households with sanitary modules by a constant per household equal to 4.05. 12 This was an exceptionally demanding set of requirements especially in the physical and social context. Many projects now use such grouped criteria as evidence of achievement of complex indicators but rarely require that all of them be met. 13 Criteria and results at closing: (i) Business Plans implemented and operational (197); (ii) Minimum of 2 regular technical assistance visits/year (254); (iii) Functioning accounting system – management system reports, balance sheets, spreadsheets (251); (iv) Operation and Maintenance Plan and reserve fund for financed investments (258); (v) POs trained in sustainable production practices and management (267); and, (vi) sales to at least one buyer (230), as at closing.


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▪ Some 15,460 beneficiaries (producers) of productive investments were “trained in business management and environmentally sustainable farming practices” (154.6% of target): (i) Business management practices (i.e., accounting, good manufacturing practices, environmental and sanitary licensing, others); (ii) Sustainable farming practices (i.e., fodder production, reforestation, waste management), and (iii) others listed in the bullet below.

▪ Similarly, the project financed around 92,970 hours of technical assistance to individual beneficiary family production units (132.8% of target) including: soil preparation, use and application of organic fertilizers and pesticides, seed storage and animal husbandry technologies.

▪ Project training and technical assistance created the conditions for 32 producer organizations (114.3% of target) to formally “adopt environmentally sustainable, climate smart technologies adapted to semi-arid conditions”. Practices and technologies adopted included: solar panels, more productive, resistant crop varieties adapted to semi-arid conditions, drip irrigation systems, technologies for sustainable agriculture, fisheries and livestock management, pasture improvement with less soil compaction, rotation of animal holding areas/corrals to reduce land clearing and loss of biodiversity, formation of reserves for feed cultivation (plantation of palms and soya for forage use); and, use of organic fertilizers14.

▪ Similarly, productive subprojects showed strong environmental proactivity. They complied with Bank-approved environmental safeguards provisions, participated where relevant in environmental recovery activities – primarily the plantation of drought resistant trees, shrubs and forage crops on farm lands and along watercourses - and obtained requisite environmental and sanitary licenses for agro-livestock and agro-industrial processing. Environmental recovery, embodied in the Intermediate Results Indicator “increased number of beneficiary organizations who participated in environmental recovery activities”, exceeded its targets, achieving 71 vs the targeted 25 beneficiary organizations (284%).

Objective Outcome: Increased number of beneficiary organizations participating in environmental recovery actions

and conservation15 (Exceeded: 284% of target). This indicator considered the number of subprojects whose

Management Plans and Environmental Reports registered tree and other seedling planting activities in officially-

designated recovery areas to recover and preserve fresh water sources and soils. In addition:

▪ Preparation of a State Early Warning System to mitigate and/or prevent climatic/natural disasters made important progress and will be the State’s front-line mechanism. The follow-on project will complete and consolidate this system. Oceanographic buoys and sensors acquired through international competitive procurement were being calibrated in the United States at closing. Nine sensors will be installed annually on each of the three buoys, with 27 sensors planned for end-2019 and another 27 in 2020. In addition, six agro-meteorological stations were acquired for installation and Municipal Agricultural Drought Plans were prepared for seven municipalities.

14 In Fish-farming: production in excavated tanks started to use geo-membranes in their construction to avoid loss of water, not pollute the environment, enable a better supply of water and facilitate its management; sub-products derived from fish processing activities are being composted; advances were made in the production of shrimp through tri-phasic systems, increasing the productive cycle which was previously 3 harvests/year and is now 6; in the production of oysters, beneficiaries are utilizing a purifier which filters and sterilizes the oysters. In Cassava: Productivity was tripled as a function of using more productive varieties and sustainable agro-livestock technologies, such as soil correction and organic fertilizers. In Cashew: Planting of cultivars BRS265 and CCP 76 (clones of cajueiro anao), allied with management techniques and organic fertilizer enabled higher productivity in dryland crops, and a tripling of yields in irrigated crops. Cashew subprojects were commercialized as an input to industrial caldeiras. 15 The term “increased” is inaccurate: the indicator measures the result against the target, not an increase over a baseline.


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PDO Theme 2: Improve rural income generation (High)

Objective Outcome: Real revenue increase (inflation adjusted) of the beneficiary rural producers’ organizations

23. The Bank and Borrower agreed in 2018 that the revenue indicator would be measured through the project’s economic and financial analysis. The UGP designed a questionnaire to collect data related to production and average annual commercialization prices. For production costs, the UGP adopted values from 2017 and 2018, and projected values for 2019, 2020 and 2021. The increase in real revenue was calculated for each of a representative (but not random) sample of 69 selected PO based on the data collected in 2017 and 2018. It should be noted that most subprojects produced more in 2018 compared to 2017 because of the better rainfall regime. The formula used by the UGP to calculate real revenue per year and per product was obtained by multiplying total production by the average price of 2017 and 2018. The UGP then summed the revenues of all subprojects and applied the following formula:

𝑅𝑒𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑖𝑛𝑐𝑟𝑒𝑎𝑠𝑒 =(𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 2018 − 𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 2017)

𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 2017𝑥100

24. While not based on random sampling due to the completion status of many subprojects at the time, the final

sample was strongly representative of the types of subprojects financed which: covered 14 value chains16; represented 23% of total investment value financed, 25% of all beneficiaries; and, covered 45% of the total geographic area of the project, all three calls for proposals and the diverse range of beneficiary PO17. Subprojects had to have had a minimum of one year of operation. All 69 subprojects were visited between February and March 2019 for validation purposes, PO leaders and beneficiaries were interviewed, and SIGPRO financial data on individual producers was applied as well as original data collected by the Management System for Family Farming (Acronym in Portuguese, SIGAF18. Entities’ accounting system). Data collected and entered in the Business Plans was also consulted. Results of the analysis were as follows: ▪ The increase in inflation-adjusted revenue of the 69 subprojects was 33% (exceeded 660% of the revised

target). Acknowledging that this is a notable result given the late reduction from 20% to 5% in 2018, the project Team clarified that the reduction to 5% was a conservative estimate based on a consensus between the Bank and Borrower in early 2018 prior to the Restructuring. It was agreed that the 20% target was unrealistic and that the operational experience of most completed subprojects by closing would be unlikely to produce results at this level. In practice, however, this did not turn out to be the case for the 69 subprojects sampled. The ICR Team acknowledges that the proposed PDO indicator was not ideal because a reduction in

16 Value chains: Apiculture – Honey Production; Handicraft; Poultry farming (caipira), Dairy milk; Cashew; Coconut; Fruticulture; Horticulture; Cassava production; Sheep and Goat farming; Aquaculture (fish farming), Food processing; Seed production; and Community Tourism. Annex 7, Table 3 shows total productive investments per value chain. 17 Of the 69 selected subprojects, beneficiary samples were as follows: FETRAECE: Federation of Agricultural Workers of Ceara (20); MST: Landless Rural Workers (20); Quilombolas – Maroon communities (5); Organized civil society – cooperatives and associations (24). Other groups included: Indigenous (3); Artisanal fishermen (4); and Communities affected by dams (2). 18 The SIGAF is a computer-based information system designed to help organized groups of beneficiaries have a better control of investments and share project-related information with both public and private entities.


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POs’ income flow could be experienced with an increase in revenue together with a more than proportional increase in expenses. Accordingly, the ICR Team recommends: (i) that the SDA conduct a follow-up analysis in 2-3 years based on random sampling of the full spectrum of PSJ III subprojects completed and operational as at end-April 2019. Such activity would also be consistent with PSJ IV’s undertaking to continue monitoring and supporting PSJ III beneficiaries; (ii) that the revenue indicator be measured in future operations using inter alia, the POs’ accounting systems data from adjusted business plans to obtain more accurate results, (iii) that the measurement methodology be carefully defined and agreed upstream; and (iv) that data input and quality be closely monitored throughout to ensure that the agreed measurement methodology remains valid/viable.

▪ Boosting their revenue prospects, some 68% of “rural producers supported by the project were selling their products to institutional and private markets” by closing (227% of target).19 Further, economic resilience was boosted for 230 beneficiary PO selling their product to at least one new buyer as a result of project technical and financial support.

▪ Emphasizing the professionalization of beneficiary small-scale agri-businesses, the project financed 49,448 hours of capacity building technical assistance to PO (110% of target). Some 258 rural POs developed an operation and maintenance (O&M) plan to ensure their operational continuity post-project; and, to track financial transactions (purchases, sales and liabilities) and improve decision-making, 251 POs implemented an accounting system using computer software or manual systems20. Business management skills are vital to the future growth and sustainable incomes of small-scale agri-businesses.

PDO Theme 3: “Contribute to the Borrower’s effort to universalize access to Water Services” (High)

Objective Outcome: New piped household water connections resulting from the project intervention

25. This objective was achieved, with the number of new piped household water connections substantially

exceeding the increased target (119% of revised target) of water insecure families. The indicator was measured using the Work Receipt Report and technical monitoring reports of SISAR, the Autonomous Water System (SAE) and the Simplified Water Supply and Sanitation System (SAES). ▪ Investments in Water and sanitation services (WSS) benefiting 110,05521 water insecure people, in addition

to important wellbeing effects (see PDO Theme 3), improved their potential to develop sustainable productive enterprises. The benefits of WSS went far beyond social wellbeing. Even though productive and WSS investments proceeded in parallel along sector lines – and to a great extent the groups targeted by Components 1 and 2 were different (the extent of overlap was not measured) - the practical implications show important intersection. Lack of potable water in Ceará has been shown to limit the growth of small farmers’ commercial food processing (i.e. value-added activity), as well as primary processing activities. Similarly, lack of basic sanitation systems constrains the commercial activities of smaller cooperatives and associations given

19 Most project-supported rural producer organizations were/are established as “associations”, which under Brazilian Law are not-for-profit organizations which cannot distribute profits to members. Therefore, the project assessed individual rural producers accessing markets to capture the increase in market access. 20 Despite the efforts made by PO to implement accounting systems, derived information was not fully exploited by the project as a solid evidence for indicators to measure progress. 21 Component 2 Water services benefited 110,055 beneficiaries, of which (i) 70,393 beneficiaries received piped water connections; (ii) 39,662 beneficiaries received sanitary modules.


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that sanitary and environmental certifications are essential to operate, compete in and market to both the private sector and public purchasing programs. The new, follow-on project intends to strengthen the operational and productive link between the investment and water components.

▪ The 211 water supply systems represent 26,198 residential connections of piped water (119% of target). The potential sustainability of this physical achievement is vouched in the indicator “number of beneficiaries trained to manage water supply systems” which achieved 101% of its target. Well over 1,000 expressions of interest were received of which 407 were eligible, subsequently ranked via a points system. The final 211 comprised just 19 from the Call for Expression of Interest, 133 already selected as eligible under the previous project (PSJ II) but never financed, as well as 59 from the Federal Government program Agua para Todos (Water for All)22. This experience demonstrated the massive unmet demand for rural water services in Ceara, and the scarcity of underground water availability that meant that many Expressions of Interest became unfeasible to implement.

▪ Selection of candidate proposals for financing involved several institutions including CAGECE and SOHIDRA, with proposals being validated by the State Rural Development Council and the Bank, based on pre-feasibility studies (water source capacity and electricity availability to run pumping systems).

▪ Importantly, supporting sustainability, 424 designated members of beneficiary communities – two per community – were trained to manage and make basic repairs to these systems. SISAR studied the feasibility of locating the maintenance and management of these investments in SAAs, taking into consideration number of families, distance from the headquarters/base and water quality. It was concluded that in some cases the larger systems (above 50 households) were helping cover the maintenance costs of the smaller ones (below 25 households).

▪ Pilot wastewater re-use schemes (15 pilots supporting 15 families, 115.4% of target) are fully functioning and showed high potential for expansion/replication.23 The BCR (2019) reports, based on extensive interviews, that the production of vegetables, fruits and legumes through agro-ecological management was initially intended for household consumption (as a contributing food security measure) but due to the water re-use pilots’ high productivity, beneficiary families began to commercialize or donate their excess production. Beneficiaries also reported improved/more nutritious diet, and reduced pollution of soils and springs due to re-used water being free of pathogens, i.e. with levels tested lower than national and international standards. The project also financed water re-use knowledge exchanges for technicians, local leaders and beneficiaries.

Objective Outcome: Number of people in rural areas with access to improved sanitation under the project.

▪ The project financed improved sanitation services for 39,662 people (101% of target) or 9,793 rural

households. The households who benefited from sanitary modules were selected based on poor conditions of existing toilets and without proper management of their effluents or no existence of toilets at all. The sanitary module financed by the project consists of a shelter with a toilet, a shower, a washbasin and, outside the house, a washing tank, an inspection box, a septic tank and a sink.

Other relevant information:

22 The 211 potable water services met strict technical criteria to be funded by the project, including but not limited to water availability and electric connectivity. 23 This indicator has important environmental and productive sustainability implications and the ICR has used it to further substantiate that theme of the PDO, as well as to demonstrate its significance to the PDO’s water services theme.


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26. The Bank’s Development Impact Evaluation unit (DIME) conducted an impact evaluation study of a

representative sample of subprojects from the 2nd Call for Proposals. The study considered the evolution of a series of economic and subproject management indicators from 2014 to 2019 and constructed two Treatment groups (productive investments plus technical assistance (TA), and TA only) and a Control group (no project support). The analysis covered three productive chains: Apiculture – honey production, sheep and goat farming, and technology adoption. Data was collected at three points: 2015, 2018 and 2019. DIME reported the following: ▪ Results of the study were inconclusive, primarily because the investments were too recent. For services

offered between 2014 and 2018, all three groups experienced a reduction except the variable “training related to production” which increased for the group which received project TA. For all three groups the variable “assistance with commercialization” showed contraction. The only significant impact was the probability of 20.3% that the TA Group got “production-related training”. In terms of changes in administrative practices, results were inconclusive. Regarding the adoption of accounting practices, all three groups had adopted them but this variable was not comparable, having been inserted only in 2018, and the analysis did not drill into whether the project modified organizations’ accounting dynamic. Furthermore, the results showed no statistically significant effects on revenues between Treatment groups and Control group.

27. Separately, a Perception Survey included in the BCR sought to determine the wellbeing impacts of water and

sanitation investments. Studies and encounters with beneficiaries underscored their high degree of satisfaction with access to WSS. The Perception Survey sampled three cohorts totaling 168 people of which 91 were men and 77 women: community leaders (statistically significant sample with 90% confidence); health agents; and some families benefiting from project-financed WSS (not statistically representative and only included to cross refer data). Key findings are reported below: ▪ Wellbeing impacts were evident from beneficiaries’ responses on water supply: 76% of association leaders

and families, and 74% of health agents used the water for household and personal hygiene and cooking; 97% of respondents reported changes stemming from water connection: continuous access to water, better quality of life, and time savings for other activities, the latter registering very high results – 98.3% for associations, 97% of families and 100% for health agents.

▪ Access to water reduced the costs of capturing/acquiring water: 61% of associations, 31.4% of families and 84.6% of health agents confirmed cost reductions.

▪ Beneficiaries reported specific health benefits of regular water connection/access: 78.3% of associations, 80% of families, and 100% of health agents, reported that health improved, entailing reduced incidence of diarrhea, allergies and vermin, reduced physical effort over prolonged periods (to carry water), and better personal and spatial hygiene.

▪ Beneficiaries of sanitation facilities reported many benefits. Some 95.3% of associations, 86.4% of families and 92.3% of health agents reported that sanitation facilities significantly altered family habits, promoted self-esteem, and improved health including reduced incidence of worms, diarrhea, infections and allergies.

▪ The economic benefits of water and sanitation were not reported but are likely to be positive. The economic value of sanitary and environmental certification for agricultural processing facilities, as well as the productive efficiencies of regular water and sanitation access were not studied nor flagged in an indicator. As already stated, the lack of such services represents a significant limitation on more complex agri-business activity, especially in the case of food processing.


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Justification of Overall Efficacy Rating

28. Overall Efficacy is conservatively rated Substantial, based on the following:

▪ The project achieved its three main objectives, with quantitative outcomes surpassing end targets in all but one case. Four of the five PDO Indicator targets were exceeded, and eleven of the 12 Intermediate Outcome targets. Achievement of PDO Theme I/Objective Outcome 1 is considered reasonable given: demanding criteria and requirement to comply with all six dimensions; implications of its late insertion in the Results Framework; and, as concluded by the BCR and supported by the ICR, their questionable suitability to the context and target population. Numbers of subprojects compliant under each of the six criteria were generally high.

▪ Supporting information and data show – despite delayed completion – that subprojects’ economic, financial and social prospects are promising. The strong causal connection to project-financed activities supports the Theory of Change.

▪ The Loan was fully disbursed by closing, and total direct and indirect beneficiaries reached by the project (117,453 people or 121% of expected24) far exceeded the PAD estimates (97,200 people).

▪ While the project was extended for a total of 30 months, its overall intervention period was in the mainstream of similar projects. The original time as designed was far too short.

▪ However, the mixed sustainability outlook tempers the rating to Substantial. The high level of achievement for the PDO and Intermediate Outcome Indicators needs to be balanced against the following concerns: (i) the completeness/quality of the indicators – despite efforts to improve them –in relation to the causal relationship between project outcomes and interventions; (ii) the revenue calculation methodology, which could be improved under similar future operations by applying an agreed, proven and widely acknowledged methodology, and using inter alia, producer organization accounting system data; and (iii) sustainability (see Section IV), despite State Government and World Bank undertakings to continue supporting PSJ III investments/producers under the new operation (see Section IV), for which financing is available.

C. EFFICIENCY

Assessment of Efficiency and Rating

29. The ICR replicated the PAD methodology to calculate PSJ III project efficiency. For Component 1, a

participatory assessment of financial and economic results was conducted on a subgroup of 69 participating organizations comprising 1,870 family farmers, selected as being broadly representative of the various types of value chains (VC), such as: dairy production, goat meat production, tubers, fruit (including cashew nut), bee keeping, fish farming, and handicrafts. In addition, the sample included diverse types of farmer groups

24 The project benefited 117,453 people, of which 7,398 people (direct beneficiaries) benefited from productive investments (Component 1) and 110,055 people benefited from water and sanitation services. The PAD expected 18,000 direct beneficiaries to benefit from productive investments and 79,200 people from water and sanitation services (of which 40,000 people were expected to be benefited from piped household water connections and 39,200 people from improved sanitation kits), totaling 97,200 people. The 2014 Restructuring reduced the number of Component 1 subprojects to 280 from 440 but did not re-estimate beneficiaries per subproject, which, using the appraisal rate of an average 41 members per Producer Organization (18,000 direct beneficiaries divided by 440 productive investments) would have reduced targeted beneficiaries to 11,480 people (41 members per PO times 280 productive investments). Further, the project restructuring in 2014 expected 127,200 beneficiaries to benefit from water connections (88,000 people) and improved sanitation kits (39,200 people).


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supported under Component 1. For Component 2, the analysis focused on the incremental number of beneficiary families, which was used to determine the economic benefits of increased access to improved water (reduced time spent fetching water), and to improved sanitation (reduced prevalence of water borne disease, and related reduction in Disability-Adjusted Life Years).

30. The analysis focused on incremental net benefits at market and social prices based on data collected from each of the sampled subprojects under the scenarios "with-project" and "without-project". Key indicators of financial performance included Net Present Value (NPV) over a 15-year period and Internal Rate of Return (IRR) for the same period. The financial analysis used a discount rate of 12 percent, which is the rate used at PAD stage.

31. Comparing the incremental financial analysis at appraisal and completion for the four pre-identified VC, the

IRRs were generally more modest at completion (between 14%-50%), compared to what was anticipated, but the Switching Values for Costs and Benefits are solid, honey being the most sensitive. Many sub-projects still need to achieve their expected productivity or production levels, to ensure sustainable profitability.

Table 1. - Comparing incremental Financial Analysis at Appraisal and Completion (Component 1)

@12% d.r At appraisal At completion

VC INV (BRL) NPV (BRL) IRR SVC SVB INV (BRL) NPV (BRL) IRR SVC SVB

Fruit 207,334 1,002,334 75% 141% -46% 3,664,221 10,466,063 16% 50% -33%

Honey 304,576 703,307 48% 99% -22% 4,517,080 2,157,288 18% 15% -13%

Milk 609,213 1,750,020 47% 27% -30% 5,338,704 22,868,856 25% 44% -31%

Fish 329,828 710,861 48% 28% -18% 2,172,140 1,602,625 7% -12% 14% INV: Investment; NPV: Net Present Value; IRR: Internal Rate of Return; SVC: Switching Value for Costs (beyond which NPV < 0); SVB: idem Benefits

32. Using a social discount rate of 10 percent, consistent with appraisal, the overall economic rate (EIRR) of return for the project is 13.78 percent, with an economic NPV of BRL 58 million (or USD 15.1 million). The analysis also broke this result down by component. For Component 1, the result is break-even (i.e. the investment has been recouped), with an NPV of BRL 2.6 million (or USD 0.68 million), and an EIRR of 10.4 percent. For Component 2, the EIRR is 16.19 percent, with an economic NPV of BRL 55.6 million (or USD 14.5 million). Table 2: Economic NPV and IRR for the PSJ III, by Component and compared to Appraisal

@ 10% discount rate EIRR ENPV (BRL) ENPV (USD)

EIRR (appraisal)

Full project economic costs 13.78% 58 million 15.1 million n.a.

Comp 1 only (C 1 + 50% C3 econ costs) 10.40% 2.6 million 0.68 million n.a

Comp 1 only (benefits 1 yr earlier) 12.70% 16.7 million 4.3 million n.a.


Comp 2 only (C2 + 50% C3 econ costs) 16.19% 55.6 million 14.5 million 18%

33. The analysis revealed positive economic returns for PSJ III investments under Component 2 (improved access to water and sanitation). Improved access to water and sanitation services and related reduction in Disability-Adjusted Life Years (DALY), was converted to an economic benefit by using health economics parameters, as calculated for Ceará State and applying them to the cumulative annual number of beneficiaries under Component 2. The economic value of savings in time spent fetching water was calculated assuming that


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families (including working adults) previously spent up to two and a half hours daily on this task, and valuing part of this time using the shadow wage rate. A social discount rate of 10 percent was used, consistent with the economic analysis rate used at appraisal. For Component 1 (economic productive inclusion), however, the results are borderline, with an EIRR just above 10%. Nevertheless, most sub-projects had barely one season to operate and demonstrate results and they were affected by administrative and implementation inefficiencies; their level of maturity has yet to increase. Anticipating the benefits of Component 1 by one or two years yields an EIRR of 12.70 percent and 15.67 percent respectively (ENPV of BRL 16.7 million and BRL 32.2 million, respectively).

34. Overall, investments in the PSJ III were justified, given that they provide a higher return than the social discount rate used for the evaluation of public investments in Brazil. Given the important overall EIRR of 13.78 percent (for which there was no comparator at appraisal), the ICR is rating Efficiency as Modest. In the case of Component 1 investments, it is expected that additional years of maturation would be likely to elevate these returns substantially.

D. JUSTIFICATION OF OVERALL OUTCOME

RATING

35. Overall outcome is rated Moderately Satisfactory based on the following:

▪ High Relevance of the PDO because of its strong alignment with Bank strategy documents for Brazil, as

well as government´s development objectives and strategies.

▪ Substantial rating for Efficacy, balancing the high level of achievement for the PDO and Intermediate Outcome Indicators against certain concerns (already noted above): (i) the completeness/quality of the indicators in relation to the causal relationship between project outcomes and interventions; (ii) the appropriateness of the revenue increase indicator to assess PO´s income generation. In this regard, future operations should work with actual income data obtained from producer organization accounting system data that also forms the basis of the revenue calculation; (iii) the recent completion of many investments; and (iv)some aspects of sustainability (see Section IV) despite State and Bank undertakings to continue supporting PSJ III investments.

▪ Modest rating for Efficiency. Despite having a high EIRR (13.78 percent) and a high NPV (USD 15.1

million), the investment in Component 1 was at the break-even point. Further, there were start-up delays, inefficiencies during implementation and around 18 percent of all productive investments were not completed despite the project being extended by 30 months.

36. Split Assessment of Outcome:

Consistent with the ICR Guidelines, a split assessment of outcome ratings was conducted to compare results against the regular assessment presented above. The exercise was justified by the formal reduction in the target of productive sub-projects from 440 to 280 (or 63 percent of the total) during the 2014


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Restructuring25 thus, affecting the outcome. The results of the split exercise made no material difference to the Overall Outcome Rating proposed (MS) because the reduction in the target occurred at the early stage of the project, when the disbursement was 10 percent of the total disbursed amount. The split

assessment table with calculations is included in Annex 1, Appendix C.

E. OTHER OUTCOMES AND IMPACTS (IF ANY)

Gender

37. The project significantly enhanced women’s participation in project areas throughout the intervention period. ▪ Women held strategic, managerial positions in 155 subprojects (79% of the 197 total subprojects

implemented and fully operational at closing). Those positions included president, vice-president or board member, and represented 58% of the total 267 subprojects approved. Interviewed stakeholders stressed the importance of developing and implementing an agreed gender (and youth) intervention methodology. This should be differentiated from the one applied to more traditional groups because of the uneven playing field for presenting Business Plans to compete for funds.

▪ The Water Services component accounted for significant numbers of women (and youth) involved with the SISAR model. Out of the 930 communities served by SISAR, 33 women were working at SISAR Councils and 334 women were appointed as President of community associations affiliated to SISAR. An estimated 3,304 women are affiliated with SISAR and 26 of them work as water system operators, as a result of the project. Further, seven young people were registered as SISAR Councils, 33 are President of community associations affiliated to SISAR, 756 were affiliated with SISAR and 100 worked as operators.

▪ Component 2 water reuse pilot projects positively affected households led by women. As an example of this, a beneficiary from Umarizeiras Water Reuse Pilot Project in Itatira Municipality became widowed and responsible for guaranteeing the sustenance of her family during project implementation. The water reuse pilot, however, enabled her to produce a range of horticultural products that are now sold in her community. Monthly sales per month of around R$450 are used to cover her household expenses as well as part of the cost of her daughter´s college education in Fortaleza.

Institutional Strengthening

38. The project emphasized institutional capacity-building. Personnel from SDA and other project-related implementing institutions were beneficiaries of capacity building. The UGP staff and selected SDA staff strengthened their fiduciary monitoring planning and management capacity. Similarly, UGP technical staff were trained in methods for effectively transferring knowledge to project beneficiaries. Project-financed training courses in mental maps and Microsoft projects sought to improve decision-making processes, promote innovation, and upgrade project planning, budgeting and monitoring. Also, given initial problems reported on the maintenance of SISAR systems, the project financed training courses for Operators to improve the care of assets and establish a more robust fee for service system. This provides reassurance that sustainability is being taken

25 Although the target of the PDO Indicator “Real revenue increase (inflation adjusted) of the beneficiary rural producer´s organizations” was reduced during the 2018 Restructuring (from 20% to 5%), the project recorded a revenue increase that exceeded both targets. Therefore, the revised target does not trigger a split assessment.


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seriously. However, the BCR (2019) calls attention to the need for further improvement of the UGP management model to ensure smooth implementation of future projects. This includes proactive internal technical and operational dialogue between disparate components to permit joint resolution of problems and opportunities for innovation. The BCR also points to the need for more effective participation of key licensing authorities, as well as institutions serving special target groups.

39. Equally, the project committed to strengthening the PO. Producer Organizations were trained in agricultural production methods to increase productivity while reducing environmental impacts. Moreover, PO received training in group organization so that they could access and benefit from public policies, and consequently, increase the income of individual beneficiary members. However, it is not clear to what extent producers received marketing guidance, and as with similar projects in other states, this needs intensified attention e.g., agri-business marketing specialists in project teams and collaborating institutions, as producer organizations diversify beyond public purchasing programs. The UGP technical staff conducted seminars, courses and workshops prioritizing the participation of young people and women26. The UGP assisted producer organizations in completing the IP registration process with state institutions (i.e., the State Covenant System – SCONV/CE) to approve the disbursement of resources and streamline implementation. Although all PO were trained in how to register, many experienced difficulties in completing registration due to the lack of essential office equipment for managing investments (i.e., desktop computers), electricity and/or internet connectivity27. Given these restrictions, the UGP organized working groups to guide PO through the entire process and ensure their registration.

Mobilizing Private Sector Financing

40. The project required beneficiary contributions of up to 20% (or US$30 million) of the total cost of Component 1 funded subprojects, of which 10% in cash and 10% in kind. Due to the adverse climatic conditions experienced throughout the intervention period, the initial cash cost-sharing requirement was relaxed. This limited beneficiaries´ cash contribution to US$577.9K (or 2% of the initial cost-sharing requirement), and their involvement in environmental activities became their in-kind contribution. Annex 7, Table 1 shows project financing mobilized per source of funds.

Poverty Reduction and Shared Prosperity

41. The project encouraged PO to sell directly to both institutional and private clients – although institutional buyers predominated - developing not only closer relationships but also seeking to reduce the gap between prices paid to farmers (beneficiaries) and by final consumers. The above, plus the adoption of more efficient agricultural production systems, increased the revenues of selected PO by 33 percent, thus improving the chances of reducing poverty among project beneficiaries. Further, the implementation of water services and basic sanitation made an important contribution to poverty reduction by improving beneficiaries’ living conditions and increasing the time available to beneficiaries to conduct other activities. Moreover, the increased availability of water services can potentially reduce vulnerability and poverty given it may create new investment opportunities

26 Some of the training activities promoted among young people and women included: (i) Organization of Rural Women Workers with the objective of promoting productive organizations; (ii) Rural Education Course, focusing on participation, mobilization, training, social organization and sustainable development; (iii) Rural Youth Organization Course, aimed at fostering the support and strengthening their level of organization and participation; and (iv) Courses to reduce violence against women. 27 For further details see Aide Memoire, November 2016.


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and economic growth for beneficiaries. Access to water services and basic sanitation also reduces health risks (especially women, children and elderly people), enhancing labor productivity. Finally, the project piloted the use of greywater for home-based productive activities (e.g., vegetable gardens, tree crops and vermi-compost), acknowledging this as a relevant component in the livelihoods of the rural poor, and a climate-smart approach to water conservation.

Other Unintended Outcomes and Impacts

N/A

III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME

A. KEY FACTORS DURING PREPARATION

44. The following preparation factors had an important bearing on subsequent implementation:

▪ The PDO was clearly-stated and well-aligned with the State’s strategies for agriculture, inclusive economic growth and water access in drought-prone regions. However, project objectives were ambitious and implied a complex set of activities and expected outcomes to achieve the Theory of Change. The project period was unusually short, not consistent with the timeline of comparable projects in other states/countries.

▪ Project design was well-explained, its conceptual and operational logic was rational and technical strategy sound, but its inherent complexity – and institutional capacity gaps - were under-estimated. The project transitioned from the classic CDD model used in previous Bank-supported projects in Ceara to a more market-oriented model, which focused on commercial sales and income generation, and the productive sustainability of land and water resources28. The use of Business Plans with economic analysis was a distinct advance, as was the more structured approach to beneficiary selection, investment quality and technical support services. However, given the nature of the beneficiary pool, retention of certain social aspects of CDD was inevitable, thus the project could be considered a hybrid. The project’s multi-sector aspect and technical requirements implied significant dependence on consultant specialists and

28 The project under review introduced a modified version of the Productive Alliance (PA) mechanism already tested widely in other parts of Latin America. Thus, the project shifted from a focus on outputs and basic services (water, energy, rural roads and housing improvements) to the productive inclusion of family farmers. This entailed a more market-oriented, transitional approach introducing elements of competitiveness, technological change, commercial activity and sustainability (environmental recovery, protection of water sources, soil management and compliance with the Brazilian Forest Code). In a marked advance over CDD, subprojects were to be based on Business Plans with financial analysis, potential market diversification, and revenue improvement through value addition. Given the socio-economic characteristics of the target groups however, the project retained certain social/community-driven aspects of CDD depending on producers’ organizational readiness and capacity. It was also assumed that key social movements would be involved given the participation of ethnic groups and landless rural producers. The continued focus on water and sanitation were at the specific request of the State Government, concerned about the State’s extreme vulnerability to drought, water and sanitation as factors in rural poverty reduction and acknowledging as an indirect co-benefit the role of environmental and sanitary compliance in agricultural processing and marketing


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challenged the project’s executive institutions and the targeted beneficiaries. ▪ The project targeted an unusually heterogeneous set of beneficiaries under the “small farmer” rubric.29

These groups had distinct cultural and legal characteristics and landholding situations, as well as widely disparate capacity and organizational levels. The ICR questions whether some of these cohorts were an appropriate target for the market-oriented investment approach, even a transitional one. Experience shows that more professionalized PO with some assets tend to perform better under market-oriented projects, and that differentiated approaches may be indicated30. Further, the project preparation team lacked in-depth knowledge of PO capacity upstream. The above hindered the project-funded rural extension services’ ability to reduce knowledge and skills gaps, including management and marketing know-how, and EMATERCE’s implementation role was fairly marginal until 2017. The marketing function was, in general, not well-explained or project-facilitated.

▪ Inclusion of water and sanitation services was an essential element of design and addressed an urgent and generalized problem in rural Ceará. The project did not include large water investments for productive use but piloted the use of greywater for food production with the intention of subsequent replication/expansion. As designed and in practice, Components 1 and 2 did not intersect operationally and ran largely in parallel.

▪ The Results Framework was adequately-structured with indicators aligned to operational objectives. However, at appraisal, three of the four PDO Indicators (and subsequently four of five after the 2018 Restructuring) were technically outputs, and all indicators lacked a baseline. The BCR (2019) asserts that many indicators were overly sophisticated for the context, being more typical of international M&E standards than the situation on the ground in Ceará and not generated through a consultative process. Measurement methodologies for key indicators were also unclear and this persisted. The evaluation agenda was clear but crowded - more like a menu from which teams would select options. The monitoring plan was to build on systems already established under previous Bank rural operations.

▪ The risk analysis touched on likely challenges but was brief and incomplete. Risk ratings were under-stated and the customary PAD risk matrix was not used. The PAD linked the overall implementation risk of Moderate to the Bank’s long-term partnership and familiarity with the State. Overall risk would be mitigated by establishing a UGP within SDA (customary in Bank projects in Brazil and not a known risk mitigator per se), and through partnerships with relevant institutions/stakeholders, procurement packaging, design flexibility and advance preparation of an Operational Manual. Risks associated with design, diverse and vulnerable target populations, two-pronged multi-sector approach and technical sophistication were not mentioned.

▪ Readiness to implement was consistent with other similar projects, entailing a foundational period prior to the investment phase. Optimal readiness to implement would have been difficult to establish upstream. The Bank Team was aware of likely challenges in the initial years, and assumed that design flexibility, training and evolving experience with the requirements of the market-oriented model would see gradual acceleration of implementation after project effectiveness.

B. KEY FACTORS DURING IMPLEMENTATION Factors subject to government and / or implementing entities’ control:

29 Annex 7, Table 2 shows the number of productive investments divided up by beneficiary group. 30 See ICR: Sao Paulo: Sustainable Rural Development and Access to Markets Project, Report #ICR 4532, March 26, 2019.


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▪ Disparate management and technical capacities of PO and the demands of subproject processing delayed progress under Component 1. All three Calls for Proposals (CxP) demanded compliance with multiple elements including land title and prior consultation with the environmental and sanitary inspection bodies. Pre-feasibility studies were needed to demonstrate viability of the proposed business venture. The low percentage of Business Plans funded (31% of 870 proposals received from 2013 to 2015) is explained by the fact that: (i) no project support was provided to PO preparing these technical documents during the first CxP, resulting in many being of low technical quality; and, (ii) not until the second CxP did the project have a clear definition of the Business Plan model based on which the analysis would be carried out, and enough trained extension officers to assist PO in preparing the documentation needed for UGP approval.

▪ Project disbursement was also impacted, not only by slow physical progress but also because many PO were not familiar with project procedures or the use of information systems installed for each subproject to account for the use of transferred project resources. Further, the slow pace of financial resource transfers due to failure to comply with project requirements discouraged many beneficiaries from continuing with their group, thus leading to substantial rates of group dissolution.

▪ Some project activities were not clearly defined as part of an intervention strategy. The lack of a comprehensive diagnostic of Component 1 PO institutional capabilities led the project to conduct training programs focused mainly on increasing agricultural production and productivity. This missed the opportunity to introduce stronger messages/skills related to marketing and sales that could have further reduced farmers´ vulnerability and boosted sustainability. While this strategy improved productivity and expanded the replication of sustainable agricultural and manufacturing practices, capacity building in areas of marketing and sales needed more effort to reduce transaction costs, ensure repeat business and improve product quality based on market feedback.

▪ Deficient supervision capacity of the UGP and its Project Territorial Management Units (UGT) led to problems with contractors. This delayed the execution of works, particularly lower cost water systems because of lack of planning and management capacity. According to the Borrower Completion Report, works execution delays required extension of contracts and led to high levels of beneficiary dissatisfaction before investments became operational. Corrective measures were adopted by the UGP to improve planning and execution: the Government of Ceará replaced the project manager, the UGT were restructured (and then closed), and the project hired additional UGP staff to supervise contracts.

▪ Project design lacked a chronogram of project activities31. The failure to map each stage of the project and its needs made it difficult for teams, their collaborators and beneficiaries to have a clear notion of their responsibilities. The sequencing of tasks/activities was however, had been foreseen at appraisal as part of the project’s annual planning exercise. Essential foundational activities typical of all such projects – farmer mobilization/organization, information campaigns, calls for proposals, initial training – would set the stage for the investment phase. In practice, the project moved forward across a broad front simultaneously, with institutional teams and PO learning by doing, an onerous situation which contributed to delays.

▪ Closure of all UGT forced the UGP to centralize operations in Fortaleza. The communication mechanism established between UGT and UGP personnel was inefficient in the project’s early stages. This, plus the high cost of operation and maintenance of those regional units led the Project Coordinator and Bank team to redesign the UGP’s functions, responsibilities and staffing, concentrating project decision-

31 The lack of a chronogram of project activities was addressed in 2018 with details and rigorous action plans to boost subproject´s implementation


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making in the State capital. Mitigation measures were taken to ensure proximity to project beneficiaries, including: (i) strengthening cooperation agreements with partner agencies to provide logistical support to project technicians; and, (ii) drawing on existing infrastructure (i.e. EMATERCE and Instituto Agropolos for Component 1, and CAGECE regional offices for Component 2) as team bases in rural areas. The decision to centralize key project operations in Fortaleza entailed moderate cost savings. The estimated monthly cost to maintain the 14 UGT was R$ 32,830 (or R$393,960 per year). In the period from 2016 to closing, the project saved R$1.31 million32.

Factors subject to World Bank control

▪ Delays were caused by the adoption and migration of two business models used to assess the

feasibility of PO Business Plans. In 2015 the Bank proposed adoption of the software MakeMoney – used by other similar projects - to assist PO in the development and assessment of Business Plans. Since most of the personnel from the institutions hired to assist PO were unfamiliar with this software, training courses were conducted to strengthen their knowledge and skills. However, the Bank and the UGP realized in 2016 that certain features of MakeMoney were too complex, resulting in the project adopting yet another software (RuralInvest33) and financing a new round of training. This change was challenging and subsequently reflected in Business Plans of uneven quality. This situation, along with many Business Plans lacking clear marketing strategies and robust economic and financial analysis, caused low rates of subprojects selection only 31% of the 870 CxP received from 2013 to 2015 received financing.

▪ The decision to move ahead on a second phase investment project created challenges when the project required an intensive effort to complete and operationalize Component 1 subprojects. The Brazilian External Financing Commission (COFIEX) had approved USD 200 million for a follow-on operation in two phases. Given that only USD 100 million was agreed for the first phase (PSJ III), government sought and received the green light from SEAIN (Secretariat of International Affairs) to start preparing PSJ IV. Need to move ahead on the new operation while trying to complete the existing operation – created additional challenges. Other Bank measures:

▪ The Bank supported other important activities to achieve project objectives. These included: (i) sharing

knowledge and experience obtained from similar investments activities implemented in other regions of Brazil; (ii) linking the project to the SISAR system, developed by the State of Ceará as an essential element for the implementation and maintenance of WSS for rural communities with a density of 25 to 500 families; (iii) substituting environmental matching grants for beneficiaries’ labor force contributions equivalent to 10 percent of the total budgeted cost of the work. This further reduced adverse environmental impact of project-funded works through the adoption of climate change mitigation technologies, but also promoted ownership, and the involvement of the most vulnerable groups within

32 There is some disagreement as to whether this cost saving was as significant as presented, since all operations were centralized in Fortaleza entailing other compensating efforts – with associated costs - to ensure the project’s proximity to priority areas and populations. The UGP is adamant that this concern was not valid. 33 The World Bank and the Borrower have agreed to adopt the RuralInvest software since the early stage of the second phase project and to provide sufficient training courses to strengthen stakeholders’ capacities to prepare agricultural and rural development projects and business plans.


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communities, i.e., those otherwise unlikely to be selected by the project; (iv) restructuring the project, enabling the Government of Ceará to respond to the need to deliver WSS systems to vulnerable rural populations suffering the effects of extreme drought; and, (v) intensifying monitoring and supervision through action plans implemented by experienced Bank specialists.

Factors outside the control of government:

▪ Devaluation of the Brazilian Real demanded careful financial follow up. During the project lifecycle, the

Brazilian Real devalued against the dollar, moving from R$1.81 at approval (April 2012) to R$3.91 at closing (April 2019). Thus, costs budgeted for works required adjustments, delaying both the tendering and procurement process and initiation of works. Further, the Government of Ceará needed to provide more Brazilian reais to cover its agreed financial contribution committed under the Loan Agreement.

▪ Severe drought events affected both economic water service investments and inclusion investments. Between 2012 and 2016, the State of Ceará recorded five (05) consecutive years of drought, three of which were considered among the most severe climatic events recorded since 195134. This situation decreased water availability and raised water salinity levels, thus increasing the opportunity cost of water and allocating additional costs given the need to search for new sources of water and in many cases for communities to pay for trucked water (carros pipa). Agricultural production activities reported losses due to water shortages affecting cropping activities. In seven of eight regions of the State, the rainfall anomaly for the period February to May ranged from -25.1 percent in Litoral de Pecem to -54.5 percent in Jaguaribana.

IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME

A. QUALITY OF MONITORING AND EVALUATION (M&E)

M&E Design

42. The key features and shortcomings of M&E design were as follows:

▪ While the Theory of Change was not presented diagrammatically in the PAD, it was built on from the text.

The technical strategy was conceptually logical, as explained in the PAD and reflected the intent of the PDO. The PAD was clear on the project´s intended beneficiaries but these were not specified in the PDO.

▪ The project was to be monitored and evaluated through the existing Management Information System (MIS) and databases developed by SDA under previous Bank operations, complemented by the more advanced “Heritage System” used by the Federal and State Governments. The monitoring system was to be a flexible and realistic instrument for improving project implementation through the timely identification of problems. SDA, positioning itself for project implementation, had already developed an institutional arrangements and results framework to guide the design of a workflow, M&E system and an evaluation strategy.

34 The rainfall regime recorded in 2012 (-49.7 percent), 2013 (-39.3 percent), and 2016 (-45.2 percent) was among the top ten driest years recorded over the period 1951-2018.


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▪ The scope of the impact evaluation agenda was broad and thoughtfully designed but overly ambitious, especially for a 4.5-year project. It would “test various extension and technical assistance strategies – including extension services delivered by EMATERCE and by important social movements (Landless Farmers’ Movement and FETRACE) - to improve the quality of PO´s business proposals; promote the adoption of new technologies; improve PO´s social capital and ensure the sustainability of project investments”. Many additional and important background research activities were planned.

▪ The M&E framework and approach had several weaknesses. While the Results Framework indicators were adequately identified to monitor progress, and there was an effort to define their meaning (PAD Annex 1), certain flaws were apparent: (i) most PDO Indicators were outputs which, while linked substantively to the PDO, had limited capacity to capture deeper outcomes; (ii) impact evaluation of Component 2 Water Services was not implemented35; (iii) there were no baselines (and these were not subsequently developed); (iv) the wording of several PDO and Intermediate Outcome Indicators created confusion regarding their meaning, measurement/calculation method and the evidence required to assess progress.36 Also, as noted by the BCR, some indicators were too sophisticated for their context including the types of beneficiaries; (v) the M&E agenda – although it was reported regularly to the fiduciary specialists - did not mention fiduciary monitoring and reporting or annual progress reporting; and, (vi) the institutional arrangements and responsibility for M&E, including decentralized collection and input of data, were not specified in the PAD (but were later detailed in the Operational Manual).

M&E Implementation

43. The key features of M&E implementation were as follows: ▪ The UGP collected, analyzed and disseminated key data sets, produced annual progress reports, coordinated

planned studies and complied with fiduciary reporting requirements even though establishing and operationalizing the project MIS was protracted. At PAD, it was planned to update SDA´s Management Information System for project M&E. Nevertheless, delays in the delivery of agreed outputs led to cancellation of the contract of the winning consulting firm with the system only partially developed. Technical adjustments to this incomplete system enabled project technicians to gain remote access37 and periodically upload project information. The Bank could have done more to mentor the UGP in M&E concepts, methodologies and processes but the pressure to achieve investment momentum eroded consistent focus on such matters.

▪ The Bank and the Borrower responded flexibly to changing circumstances through four restructurings which, inter alia, changed quantitative targets to accord with two extensions of the closing date, adjusted the wording of indicators, added new indicators to adequately capture project activities and the intent of the PDO, and dropped some indicators due to declining relevance and other reasons. However, RF weaknesses persisted.

35 The Borrower indicated that it would have been difficult to carry out an impact evaluation study, which requires having communities as control groups with similar characteristics to compare them with the treatment group. 36 For example: “Pilot PES mechanism established and operational for sustainable land use practices” was dropped because it lacked any legal basis, i.e., both a project design and indicator validity issue; “25% of productive investments led by women” needed repeated discussion with the UGP regarding its measurement and meaning; and, “Participating rural producers’ organizations successfully accessing formal markets (PAA and PNAE)” which implied an assumption that small farmers would be more likely to market through such channels than private markets. This assumption was probably correct given that most POs were associations which have legal constraints on profit distribution. 37 For further details see Aide Memoire, March 2015.


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▪ There was a continuous Bank/Borrower dialogue on understanding/defining the methodology for monitoring progress towards the PDO, and the expected cause-effect (attribution) linkage between project interventions, intermediate outcomes and results. However, the measurement methodology for some indicators remained unclear throughout and at the PDO level, opportunities to deepen the outcome focus were missed (with the exception of the demanding new sustainability indicator). The reduction in the PDO revenue indicator target one year before closing is questionable but was a joint Bank/Borrower response to an acknowledged need and situation.

▪ The UGP coordinated delivery of a strong Borrower Completion Report reviewed by the Bank which provided important insights of value to this ICR and has become a model for other Brazilian states with Bank projects in the closing stages.

▪ The potential legacy value of an impact evaluation of Component 2 was missed. The DIME Impact Evaluation was to measure positive changes promoted among beneficiaries but did not include Component 2 WSS beneficiaries. To compensate, the Borrower Completion Report conducted a perception survey applied to a statistically representative sample of community leaders and other relevant parties at closing.

M&E Utilization

44. The key features of M&E Utilization were as follows: ▪ The project evaluated results against pre-established indicators. Similarly, monitoring data under-pinned

adjustments to activities, budgets and procurement plans. Nevertheless, SIGPRO – developed in 2016 – was not fully utilized by the UGP as the project management system intended at appraisal. Although several system modules were designed within SIGPRO to monitor the performance of the full subproject cycle including environmental activities, modules-related information was not systematically uploaded. The Borrower could have done more to promote the systematic use of SIGPRO as a project management system if the UGP had massively disseminated the User Manual among end-users, promoted training sessions on system features, and encouraged feedback among end-users to introduce adjustments and develop awareness of project M&E.

▪ The SIGPRO worked in parallel with other systems which ended up not being fully integrated by closing (ISR April 2014) due to technological issues. Therefore, M&E utilization was limited at times to reporting information on contract monitoring and project impact. For instance, controlling the provision of technical assistance was only possible through the continuous interaction with rural extension service firms and not through the implementation of an automatic progress reporting mechanism. Despite SIGPRO’s ongoing challenges, however, the Monitoring and Control Management Office (GEMOC) used the system as the UGP’s primary tool for project management and implementation progress reporting.

▪ The Borrower Completion Report was discussed with representatives of partner institutions. The feedback received by the UGP, the external consultant provided valuable insights which were addressed in the final draft BCR reviewed by the Bank. As noted, the BCR became a model for other Bank projects nearing closure.

▪ Project-generated data was utilized to support Bank fiduciary and operational supervision and reporting, disseminate progress and results, and derive lessons. Even though the overall management of M&E showed weaknesses in technology installation and uptake, and in institutional capacity to coordinate and manage the system, the data available for the ICR and quality of analytical products facilitated the final assessment of performance and achievements. As mentioned, more frequent and systematic support was needed from the Bank to build M&E capacity and confidence in relevant institutions.


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Justification of Overall Rating of Quality of M&E

45. Quality of M&E is rated Modest, balancing positive and negative factors: ▪ The M&E approach and deliverables were comprehensive but in the case of the two major project investment

streams, overly ambitious for the client and the context. ▪ Satisfactory monitoring and reporting of indicator progress – considering the need for periodic clarifications -

and of fiduciary elements: FM, Procurement and Safeguards. ▪ Prudent and responsive use of restructuring to inter alia, improve the measurement, relevance, scale and/or

type of RF indicators, but persistent shortcomings which were not fully resolved, and which complicated the assessment of outcomes for the ICR.

▪ Generally satisfactory design and management of evaluation studies and surveys – including a high quality BCR - bearing in mind the methodological implications of late completion of Component 1 subprojects. Omission of the Bank´s Development Impact Evaluation unit (DIME) of formal impact evaluation of the Component 2 WSS investments was a missed opportunity. Further, the early stage of productive investments led to inconclusive results in the impact evaluation study.

▪ Persistent, capacity-related weaknesses in specific aspects of the UGP´s management of M&E, a situation where the Bank might have provided more systematic support; i.e., regular training and mentoring.

B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE Environmental safeguards compliance:

46. The project triggered Environmental Assessment (OP/BP 4.01), Natural Habitats (OP/BP 4.04), Forests

(OP/BP 4.36), Pest Management (OP/BP 4.09), Physical Cultural Resources (OP/BP 4.11) and Safety of Dams (OP/BP 4.37). Environmental risks were considered low because project interventions comprised mainly small-scale infrastructure, and productive investments - given their size - were expected to cause positive or neutral impacts. Performance was as follow: ▪ Close technical collaboration between the Bank and the Client to devise and adjust environmental

assessment tools for all investments. Disbursements for project investments (PI) was initiated following approval of the environmental license given by SEMACE.

▪ PO and community associations were trained to understand and adopt climate smart agricultural technology, respectively, thereby reducing potentially negative effects generated by investments. Integrated pest management and forest management/conservation techniques were embedded in technology messages.

▪ An Environmental Coordinator and expert team in the UGP supported the implementation of mitigation measures described in subprojects’ Environmental Profile records (“Fichas Ambientais”).

▪ Environmental in-kind contributions from beneficiaries were promoted by the Borrower to create ownership of the project’s environmental goals. Intensive discussions were facilitated leading to consensus/agreement on meaningful impact mitigation activities beneficiaries needed to take given the circumstances/investment.

▪ No situations arose to trigger physical cultural resources or dam safety and these safeguards were assessed by the Bank specialist as being in compliance.

Social safeguards compliance


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47. Overall compliance with social safeguards was Satisfactory and social risk was Low. The project triggered

Indigenous Peoples (OP/BP 4.10) and Involuntary Resettlement (OP/BP 4.12). Performance and compliance were as follows: ▪ The project prepared and disseminated38 the Indigenous Peoples Planning Frameworks (IPPF) and

the Resettlement Policy Frameworks (RPF). During project preparation, public consultations39 were held, and several actions were carried out by the PIU during the implementation to engage the movements that represent indigenous peoples in Ceará. The Indigenous People Strategy targeted 485 families distributed in three indigenous groups, eleven traditional quilombola communities and six vulnerable groups, who benefited from productive investments.

▪ Project-related activities that required land acquisition did not result in adverse impacts associated with involuntary resettlement. In all cases where the project financed the construction of small structures on private land, the Bank reviewed voluntary authorizations signed by the producers for these structures, enabling the project to carry out investments.

▪ The UGP expanded the Social Management team conducting training sessions to include UGP technical staff thereby improving assistance to vulnerable groups (including indigenous communities, women, quilombolas and artisanal fishermen).

▪ The project established a multilevel feedback and GRM. The GRM mechanism relied on a network comprised by the General Ombudsman Office and Sectorial Ombudsman Offices, and a web-based portal (Ceará Transparente). Further, there were focal points on each region attended by the project to addressed projection information requests and complaints40.

▪ The project made commendable efforts to empower women to pursue gender equity in all investments. Component 3 – Institutional Strengthening and Management Support - financed training courses, seminars and workshops, prioritizing the participation of women (and youth)41.

Fiduciary Compliance.

48. Financial Management and audit: The Borrower had demonstrated best-practice in managing funds transfers to local organizations under previous projects and received training in optimal FM practices for PSJ III. Payments were made by the State Treasury through S2GPR42 after expenditures had been incurred and properly documented. Although training in financial management was delivered to PO and community associations, the implementation of activities, procurement and contracts delayed. To resolve this, the UGP hired personnel with specialized FM capacity, and designed and implemented SIGPRO to monitor fiduciary compliance and other functions, while project transactions were reconciled using the SIGAF system. The implementation of action plans and the Bank’s close monitoring enabled FM arrangements to adhere to

38 Disseminated materials is available at www.sda.ce.gov.br 39 Consultations continued during implementation. These consultations were attended by councils and representatives of civil society, non-governmental organizations, academia, and particularly by local community leaders from indigenous, quilombola and traditional communities. 40 The Ombudsman channel was limited to a total of 47 complaints registered through project lifetime. 41 The course called Organization of Rural Working Women aimed to promote the union and productive organization, and actions to prevent violence against women. 42 The S2GPR is the system where committed expenses and payment expenses are made. Expenses related to maintenance and final costing activities, as well as those of investment projects, before being recorded in S2GPR, must be recorded in SIAP.

http://www.sda.ce.gov.br/


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the standards required by the Bank, thereby maintaining the FM performance rating as Moderately Satisfactory.

49. Disbursement: The rate of disbursement was modest from effectiveness in December 2012 until October 2015, with modest pace of disbursement from 2016 – 2017 and considerable improvement registered starting in 2018. Previous sections discussed the multiple factors affecting disbursement agility, and which also prompted the Borrower´s request for extension of the closing date. The uneven flow of funds penalized the implementation of project investments and acted as a disincentive to the involvement of a greater number of the PO initially selected through the CxP mechanism.

50. Procurement: There were persistent issues related to the application of Bank policies and procedures for bidding processes, obliging the Bank to keep a Moderately Satisfactory rating for most of the project lifecycle43. While procurement transactions and document quality were overall found to be of reasonable quality during implementation, there were several challenges which adversely affected the procurement function both in SDA and in involved subprojects. Many shortcomings were associated with delays in contracting due to lack of technical capacity in the UGP and PO, and delayed decision-making from SDA’s side in identifying and giving priority to procurement activities under Component 1. Further, the Borrower followed a bureaucratic and complex internal flow, contributing to delays and affecting project pace. In addition, the effects of currency devaluation required the re-costing of contracts and caused further delays. In addition to the mentoring and training provided by the Bank, the Borrower hired consulting firms to assist subprojects in accelerating procurement processing.

51. Governance: There were no allegations of fraud and corruption during the project lifetime requiring an INT investigation. Further, the project had a Grievance Redress Mechanism (GRM) in place, utilizing an ombudsman service with telephone number free of charge to communities, and enabling people affected by the project to access all project reports, documents and other related information. The GRM was used to receive and process complaints over the project intervention period. Calls were monitored and the Project Coordinator delegated the response process to the qualified responsible unit for resolution.

52. Project Costs: By June 2016, total project cost was US$138.78 million because the Borrower contribution was US$11.22 million below the total expected value (US$50 million in total). The project cost categories that were more affected included: (i) training, which was 11% of expected value; (ii) Goods, works, non-consulting services and consultancy was 67% of expected value; and, (iii) Goods, works, non-consulting services and consultancy for subprojects was 73% of expected value. Further, beneficiaries’ contribution to Component 1 was just US$578,000 (not quantified in the PAD).

C. BANK PERFORMANCE

Quality at Entry

43 Several Procurement Supervision Missions carried out by the Bank revealed some inconsistencies in project procurement implementation. This situation revealed the need for the UGP staff to continue improving their capacity on procurement processes and contract management.


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53. Key elements for assessing the project´s Quality at Entry – with additional relevant factors raised in Section III A - are as follows: ▪ The Bank promoted the implementation of a transitional, more market-oriented project to improve the

productive sustainability and wellbeing of small farmers and vulnerable groups in rural Ceará. The project was strategically relevant (see Sections I and II) and the approach – while still maintaining some residual features of CDD - was in the mainstream of the Bank’s burgeoning rural development methodology of that time. However, while the Bank provided appropriate assistance to the Borrower to prepare the project, the approach under Component 1 was overly sophisticated for a beneficiary target population which required differentiated approaches. The inclusion of a large WSS component worked in parallel with productive investments, adding complexity to project management.

▪ The project was meant to respond to the demands of beneficiaries but failed to specify/define intervention strategies tailored to distinct vulnerable groups. Although these groups benefited from investments, their uneven technical and organizational capacities and aptitudes placed them in practice on an unequal footing when competing for funds against other groups. Further, the project could have benefited from youth-specific interventions aimed at encouraging entrepreneurship and a defined gender action plan.

▪ Project design was highly ambitious in asking PO to lead investment registration, licensing and financial reporting through existing computer-based systems and mechanisms. Nevertheless, the project failed to assess the technical capabilities of PO upstream (say, on a sample basis), entailing significant delays in downstream execution. Resolving this situation took intense effort and inter-institutional coordination to make headway. Further, structural restrictions not known at the time of appraisal (e.g. lack of internet connectivity or access to energy) prevented/delayed beneficiary groups under Component 1 from completing their environmental licensing approval after effectiveness.

▪ Environmental conservation and desertification mitigation measures were a strong feature of the project even though interventions were of small-scale and were not expected to cause significant environmental impacts. The selection of investments was consistent with national, state, and local legislation concerning the Brazilian Forest Code, natural habitats and protected areas, and World Bank safeguard policies.

▪ The establishment of 13 Project Implementation Units (Portuguese acronym, UGT) were designed with the aim of ensuring local coordination and integration between institutions and stakeholders. However, the project did not assess whether there existed professionals in each UGT who met the minimum requirements to fill the technical and administrative positions needed for comprehensive project execution.

▪ The M&E framework albeit comprehensive showed some design and implementation limitations. The wording of some indicators was somewhat unclear at appraisal, leading to the need to adjust the measurement methodology to report progress.

Quality of Supervision

▪ Key elements of the project´s quality of supervision show a mixed picture: ▪ The Bank provided effective support to implementation. Supervision missions, which were regularly scheduled,

typically included all required specialists who provided timely guidance when needed. The Bank team members,


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comprising appropriate areas of expertise44, developed Action Plans to ensure that Bank technical, operational and

fiduciary standards were applied. However, even though the Bank Team consistently included agribusiness

specialists, inadequate attention was dedicated to subproject marketing aspects consistent with/supporting the

new market-oriented approach.

▪ Action Plans improved subprojects implementation in 2018 because of the combined effort made by the

UGP and the Bank. This situation led to the approval of an additional project closing date extension, and to

an accelerated regularization process of environmental licensing and procurement related-activities.

▪ Bank procurement specialists provided timely and informed advice to the UGP staff to avoid or mitigate any

potential misinterpretation of procurement processes. In addition, the Bank team provided prompt

recommendations when procurement implementation faced difficulties. The procurement mechanism agreed with

the Borrower was built around the participation of PO and community associations. In practice however, this

mechanism proved to be problematic due to the low capacity of those groups.

▪ Repeated restructuring sought to ensure the achievement of project objectives. The Bank team made pragmatic

adjustments to project design elements to adjust the project to its context and realities. Extensions totaling 30

months were essential, compensating not only for a slower than anticipated rate of implementation/disbursement

but to a flaw in project design which allocated inadequate time for implementation.

▪ The Bank promoted discussions with SDA and EMATERCE to develop a plan to ensure the provision of technical

assistance to 48 subprojects assessed by the UGP as fragile. Further, the eligibility and prioritization criteria

defined in the PAD for the new, second phase project (PSJ IV) create the opportunity for the entire 267 PSJ III

investments to receive market access and other strengthening support to boost their operational sustainability.

▪ Bank project management changed three times, but the transitions were smooth. The final Task Team Leader

had been a team member for over three years before being appointed and was therefore familiar with the project.

▪ The Bank trained and guided the UGP in financial and administrative aspects and promoted the adoption of a

work program for regular supervision, which generated continuous improvement over time in project

effectiveness and efficiency. The Bank fostered the establishment of inter-institutional agreements and the

strengthening of arrangement to facilitate for example, the granting of environmental licenses.

▪ The process adopted by the project to generate and enhance capacities among the UGP technical staff and PO

on the use of the computer-based business preparation software was not adequately designed. Training sessions

should have been adapted to beneficiaries´ technical capabilities, characterized by low levels of technology

adoption and still in transition to a more business-oriented, agricultural production system. It was agreed that such

plans including cost-benefit analysis were essential to move POs forward, the search for an alternative Business

Plan model necessitated by this situation caused significant delays in the implementation of productive subprojects.

Justification of Overall Rating of Bank Performance

54. The Bank´s overall performance is rated Moderately Satisfactory. Shortcomings during the preparation and appraisal phase affected Quality at Entry of the operation, primarily in the overall level of ambition which had significant downstream implications. This is balanced by a strong supervision performance – with minor shortcomings - responsive to challenges and changing circumstances. The focus on development impact was

44 Bank team members included specialists in: anthropology; financial management and procurement; environmental and social safeguards; agricultural economics; rural development; operations analysis; water resources; irrigation; and disaster risk management.


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consistent at the operational level throughout but as a direct result, unevenly focused on the specialized technical aspects of M&E performance and mentoring.

D. RISK TO DEVELOPMENT OUTCOME

55. Risk to development outcome is rated Substantial due to financial, technical and environmental issues. These features are discussed below as well as the factors believed likely to act as a counter-weight:

▪ The policy environment in the State of Ceará - and at the federal level - supporting sustainable, small farmer economic inclusion remains robust. This implies that PO are likely to continue to receive incentives for improving/upgrading their productive practices and engaging in climate-smart agricultural activities depending on state budgets. This has prompted development of a follow-on Bank-funded project under SDA which convenes other agencies and will foster closer intersection between the productive inclusion and water sectors. Further, Producer Organizations have a vested interest in their own sustainability built on seeing their incomes improve through the application in an organized way of improved water and soil technologies, and basic, sound business practices.

▪ The legal framework pertaining to producer associations is preventing them from diversifying access to new markets. Currently, they are legally restricted to selling to programs that have traditionally benefited family farmers (e.g. PAA and PNAE). As a result, current national budget restrictions constitute the main risk faced by this type of legally organized group of producers – a majority under PSJ III - as budget allocations to public purchasing programs have contracted. This situation is forcing all producer associations to either work in collaboration with cooperatives – whose legal identity permits greater financial leeway - or to modify their legal status and become a cooperative. Information on the extent to which this is already occurring, and the processes involved in making such a shift were not available to the ICR team. – During implementation, the project could have promoted the creation of Union of Cooperatives (Central de Cooperativas) to help productive investments diversify markets and facilitate access to credit, thus increasing project impact.

▪ The Ceará State Rural Extension and Technical Assistance Company (EMATERCE) – along with the Bank under PSJ IV complementary arrangements - is committed to further supporting PSJ III productive investment subprojects. This support acknowledges that many subprojects were completed late in the project period, and that some were still seeking to comply with the six sustainability criteria for achievement of the relevant PDO Indicator. These support initiatives, discussed and agreed between the Bank and Borrower, are expected to improve the quality and sustainability of all 267 investments with special focus on 48 subprojects assessed by the UGP as higher risk.45. Overall, additional support will be focused on management, production planning, marketing and organization.

▪ Continued implementation of environmental activities may be challenging. Ceará is in a drought-prone region. The State Government needs to support organized beneficiaries to invest in climate mitigation and adaptation measures to reduce vulnerability and improve their capacity to recover from shocks. To support this objective, the project financed the development of seven municipal agricultural drought plans, three municipal desertification mitigation plans, and assisted in the formation of municipal committees as plan

45 Annex 8 describes EMATERCE proposed sustainability plan for continued technical and managerial assistance to 267 subprojects financed under Component 1.


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executors. The new PSJ IV will also promote the adoption of climate-smart agriculture practices and technologies, and the expansion of water supply for agriculture and human consumption to raise agricultural productivity and reduce rural communities´ climate vulnerability.

▪ Water Service investments work under a community-based service model, supported by federations and the state water supply company (CAGECE) which provide on-going technical and financial assistance. The operational sustainability of this model relies on the active participation of stakeholders. Further, the financing of the costs defines how and into what percentage the tariff structure is distributed. The tariffs are designed to recover operational costs, labor costs for SISAR technical assistance agents, maintenance costs, and short-life-span assets.

V. LESSONS AND RECOMMENDATIONS

• Economic inclusion projects using variants of the market-oriented model need realistic assessment

of their target beneficiaries, the capacity of supporting institutions and the operational context.

Such projects need rigorous selection criteria – possibly entailing a “winners” strategy – technical

expertise which hones in on building the organizational and business skills (and social cohesion)

needed for PO growth and survival, as well as programmed, tailored interventions that equalize to

the extent possible, access to project opportunities and potential to succeed. Agri-business marketing

expertise in both the Bank and Borrower teams is essential. The ICR recommends that similar projects

dedicate preparation resources to analytics which position such projects to launch and execute more

efficiently, i.e., based on better knowledge and data, and that mechanisms for promoting

sustainability be a continuous focus.

• Projects would benefit from institutional and operational planning which fosters stronger

intersection/linkages between the economic inclusion/productivity and water services streams.

Inclusion of WSS activities in such projects is fully justified – depending on the context - and should

be presented (and measured) not only in wellbeing terms, but as a catalyst to rural economic

activities. Further, greywater piloting proved to be an efficient water use maximization technology,

leading to the development of economic horticultural production. Given beneficiaries’ positive

response to greywater/reuse activities – dependent in the case of horticulture on aptitude - their

scaling up under similar projects in Brazil and elsewhere can represent a major step in rural risk

management. These two types of investments could also potentially be integrated into municipal

development plans and municipal integrated risk management plans.

• Design of the M&E framework and agenda needs focused attention on all key themes of the PDO.

Beneficiary income/revenue goals tend to overshadow other highly important elements – in this case

the impact of WSS investments on wellbeing, economic activity and climate risk sustainability and

management. Related to this, PDO Indicators – and their supporting Intermediate Results Indicators

- need to capture the breadth and depth of expected outcomes, be unambiguous and measurable,

set reasonable targets, and reflect contextual realities which might entail participatory design. While

restructuring is an option in circumstances where an indicator loses relevance a sound strategy for

upstream design of M&E can avoid repeated efforts to re-design and calibrate the RF, and

disagreement over measurement methodology.


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• Alternative, lower cost and more efficient technical solutions are needed for the operation of water

supply investments. New operations should be particularly careful in the review of feasibility studies,

especially in terms of water source sustainability (higher exceedance probability to avoid interruption

or decline in the quality of rural water supply), and the engineering design of new investments in

water systems for improving efficiency and lowering costs (e.g. using solar panels). Social outreach

and capacity building of beneficiary communities for operational management and maintenance of

WSS systems during and after the execution of works need systematic attention to ensure that

communities commit to the SISAR scheme, Ceará’s tested and widely replicated water management

mechanism.

• Extreme weather events can adversely affect project implementation in vulnerable areas such as

northeastern Brazil and foreshadow the permanent impacts of such events post-project. While the

project successfully trained beneficiary PO in climate-smart technologies and fostered their adoption

at levels far exceeding targets, intensification of efforts to achieve adoption will have long-term

environmental pay-offs in increased productivity, climate change mitigation, and reduced

environmental impacts. The ICR recommends that similar projects strive for maximum adoption

within the intervention period, an effort where ambitious goals - backed by appropriate expertise in

the quantity and geographic dispersion needed to reach beneficiary PO – are desirable.

• The project encouraged institutions in Ceará to work in close coordination. This avoided duplication

of efforts and stressed the relevance of the contributions of those institutions to the achievement of

project objectives. As stated in the 2018 Restructuring, for instance, EMATERCE´s involvement in the

supervision of Component 1 works and the bidding process contributed to implementation progress

and the quality of productive subprojects. The project also aligned the efforts of public institutions

(i.e., SEMACE, CGE) in Ceará with the objectives of the project, reducing bureaucratic approval

processes needed to obtain essential environmental licenses and permits, and the implementation

of auditing processes.

.


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ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS

A. RESULTS INDICATORS A.1 PDO Indicators

Objective/Outcome: To improve the sustainability of rural production and rural income generation

Indicator Name Unit of Measure Baseline Original Target Formally Revised

Target

Actual Achieved at Completion

Real Revenue increase (inflation adjusted) of the beneficiary rural producers’ organizations

Percentage 0.00 20.00 5.00 33.00

31-Jul-2012 31-Oct-2016 30-Apr-2018 30-Apr-2019

Comments (achievements against targets):

Exceeded: 660% of revised target

The Bank and Borrower agreed that this indicator would be measured through the project's economic and financial analysis process and using the same sample. Data on production and average annual commercialization prices were collected using a questionnaire, complemented by data entered by each producer organization into the SIGPRO system and other sources. The revenue data was collected via SIGAF (entities' accounting system) from those organizations whose investment sub-projects had been operational for at least 1 year. The increase in real


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revenue was calculated for each of a representative (but not random) sample of 69 selected PO based on data collected in 2017 and 2018. Note that most sub-projects produced more in 2018 compared to 2017 due to the better rainfall regime. The formula used by the UGP to calculate real revenue per year per product was obtained by multiplying total production by the average price. The UGP then summed the revenues of all sub-projects and applied the formula shown in Section 2 B of the Main Text. While not based on random sampling due to the completion and operational status of many sub-projects at the time, the final sample was strongly representative of the types of sub-projects which: covered 14 value chains; represented 23% of total investment value financed, and 25% of all beneficiaries; and, covered 45% of the total geographic area of the project, all 3 Calls for Proposals and the diverse range of beneficiary PO. All 69 subprojects were visited between February and March 2019 for validation purposes, PO leaders and beneficiaries were interviewed, SIGPRO financial data on individual producers was applied as well as original data collected by the SIGAF (entities' accounting system). Data collected and entered in the Business Plans was also consulted. The April 2018 Restructuring reduced the target from 20% to 5% based on: implementation delays affecting the Component 1 productive investments under approved Business Plans; and, the incremental revenue generation likely/possible by project closing given the limited operational period for those sub-projects already completed. The Bank and Borrower/UGP agreed on a conservative estimate which seemed reasonable/realistic at that time. In the short run, a more modest increment in revenue was expected, in particular for PO already commercializing their product and that with the project, would have their production and sale leveraged. Other organizations were believed to need a longer time to consolidate. Also, a supporting, output-based PDO Indicator was added to provide evidence on production and income generation sustainability within the project time-frame ("Project-supported PO that have a sustainable business initiative financed via sub-project investments" with six criteria for achievement. See 3rd PDO Indicator: Producers Organizations supported by the project that have a sustainable business initiative, financed via subproject investments).


Target



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Increased number of beneficiary organizations participating in environment recovery activities and conservation

Number 0.00 25.00 71.00

31-Jul-2012 31-Oct-2016 30-Apr-2019


Exceeded: 284% of target

This indicator considers the number of sub-projects whose Management Plans and Environmental Reports registered tree/other seedling planting activities designed to recover degraded areas designated by the Environmental Management Agency (ASGAM) of the Ceara Water Resources Management Company (COGERH).


Target


Producers Organizations supported by the project that have a sustainable business initiative, financed via subproject investments

Percentage 0.00 80.00 78.20

30-Apr-2018 30-Apr-2018 30-Apr-2019



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Substantial: 97.75% of target

This indicator was added by the April 2018 Restructuring and is measured against compliance with all six of the criteria listed below, six months after conclusion of sub-project financing. Some 80% of the targeted 280 investment sub-projects (224 sub-projects) were expected to comply with all six. The targeted number of business initiatives was reduced from 440 to 280 due to extreme drought requiring intensification of project water services activities under Component 2 and the reallocation of resources from Component 1 to cover this. The "actual value" reported above represents the ratio of 197 sub-projects meeting all 6 criteria and 22 subprojects that are operational and awaiting some administrative equipment support (computers, software, office equipment etc), to the target of 280, or 78.2% (212/280 subprojects). Some 48 sub-projects were assessed by the UGP as having substantial likelihood of not meeting all these criteria due to certain challenges/features - level of organization, cohesiveness, capacity - and needed more intensive assistance. The 2018 Restructuring introduced this new indicator to capture project activities meant to improve the sustainability of rural production and income generation. The six criteria with level of achievement were: (i) Business Plans implemented and operational. Measured via SIGPRO, which describes sub-project categories - 197; (ii) Regular technical assistance visits (min. 2 per year) - 254. Measured via SIGPRO, with information uploaded by the Agricultural Technology and Rural Extension Service (ATER); (iii) Functioning accounting system - 251. Measured based on the accounting and financial system reports required from and submitted by each PO. To meet this requirement, each PO had to present one of the following: balance sheets, management system reports or spreadsheets; (iv) Operation and Maintenance Plan and reserve fund for financed investments - 258. Verified via approval of a meeting minute in which this topic and next steps were discussed; (v) Producer Organizations trained in sustainable production practices and management - 267. Measured through the list of participants who attended training sessions; and, (vi) Sales to at least one buyer - 230. To meet this requirement, each sub-project had to present the following evidence: copies of invoices, contracts with the municipality/city hall; or, declaration of participation in commercial fairs.

Objective/Outcome: To contribute to the Borrower’s efforts to universalize access to Water Services.


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Target


New piped household water connections that are resulting from the project intervention

Number 0.00 10000.00 22000.00 26198.00

31-Jul-2012 31-Oct-2016 31-Oct-2016 30-Apr-2019



This indicator was measured from the Work Receipt Reports and technical monitoring reports delivered by the Integrated Rural Water Supply and Sanitation System (SISAR), the Autonomous Water System (SAE) and the Simplified Water Supply and Sanitation System (SAES). The original target value was revised by the 2014 Restructuring in response to the increased demand of rural families for access to water due to extreme drought. This restructuring inter alia, reallocated funds from Component 1 to 2 (and reduced the expected number of investment sub-projects accordingly under Component 1). A piped household water connection is defined as a connection which provides piped water to the consumer through either a house or yard connection. Thus, these do not include standpipes, protected wells, boreholes, protected springs, piped water provided by tanker trucks or vendors, unprotected wells, unprotected springs, rivers, ponds and other surface water bodies, or bottled water.


Target


Number of people in rural Number 0.00 39200.00 39662.00


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areas with access to “Improved Sanitation” under the project

31-Jul-2012 31-Oct-2016 30-Apr-2019



This indicator was measured based on the Work Receipt Reports and technical monitoring reports delivered by SISAR, SAE and SAES (see above under water supply). The number of improved sanitation modules installed by the project was multiplied by 4.5, which is a fixed value representing the average number of people per household.

A.2 Intermediate Results Indicators

Component: Componenet 1. Economic Inclusion


Target


Productive investments implemented and operational

Number 0.00 440.00 280.00 197.00

31-Jul-2012 31-Oct-2016 31-Oct-2016 30-Apr-2019

25% of productive Number 0.00 110.00 70.00 155.00


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investments led by women 31-Jul-2012 31-Oct-2016 30-Apr-2019


Substantial: 70.25% of target

This indicator was measured through the SIGPRO and counts the number of Component 1 investment sub-projects fully implemented and in operation at closing. Another 22 sub-projects were awaiting administrative equipment (office equipment, computer, software etc) but were otherwise operational, and 48 sub-projects needed more intensive attention to complete. The UGP agreed with the Bank on a post-project plan for completing unfinished sub-projects, with EMATERCE support. The original target value of 440 sub-projects was reduced to 280 in 2014 due to a reallocation of Component 1 funds to Component 2 to increase water supply investments in response to drought-driven demand from rural families.

Note: The sub-indicator for gender does not have its own Comments section.

Exceeded: 221% of target. The related, subsidiary indicator "25% of productive investments led by women" was based on the number of productive sub-projects completed. The original target of 110 was based on a target of 440 productive sub-projects but was adjusted to 70 in 2014 when the sub-project target was reduced to 280. The indicator considers the number of sub-projects where women held/hold strategic/managerial positions: president, vice-president and/or board member of their PO. Information was obtained via questionnaires.


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Target


Rural producers supported by the Project selling products to institutional and private markets

Percentage 0.00 40.00 30.00 68.00

31-Jul-2012 31-Oct-2016 30-Apr-2018 30-Apr-2019



The wording of this indicator (and the target) was revised by the 2018 Restructuring to better reflect the measurement methods described in the PAD. The number of producers who accessed at least one new market/buyer was 5,031 people, accounted through SIGPRO data. The original indicator wording was: "Participating rural producer organizations successfully accessing formal markets (e.g., PAA and PNAE). Most project-supported rural producer organizations were/are established as "associations", which under Brazilian law (Brazilian Civil Code, Art. No. 53) are not-for-profit organizations which cannot distribute profits to members. Therefore, the project assessed individual rural producers accessing markets (instead of associations) to capture the increase in market access. Note that UGP data did not dis-aggregate by public/private.


Target



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Rural producer organizations supported by the Project adopting environmentally sustainable technologies (eg. solar panels, drip irrigation systems)

Number 0.00 44.00 28.00 32.00

31-Jul-2012 31-Oct-2016 30-Apr-2019 30-Apr-2019


Exceeded: 114.3% of target

The wording of this indicator was revised by the 2018 Restructuring. The original wording was: "Improving efficiency in agricultural production through access to environmentally sustainable technologies". Given the unclear methodology for estimating the term "improved efficiency" in this case, the UGP requested revision to better reflect the measurement methods described in the PAD and actual project activities. The end-target date was changed to align with the new closing date.

This indicator considers all project-supported POs registered in SIGPRO that adopted sustainable production technologies suited to semi-arid conditions, for example: (i) Fish Farming: Fish tanks adopted/using Geo-membrane technology to avoid water loss, avoid environmental pollution and increase water availability and facilitate its management; use of fish processing byproducts to produce compost; advances in shrimp production using tri-phasic system increasing productive cycles from 3 to 6 per year; and, in oyster production use of purification technology to filter and sterilize the oysters; (ii) Manioc production: productivity was tripled by using more productive varieties, and through sustainable practices such as soil correction and organic fertilizers; (iii) Cashew: Planting of the BRS 265 and CCP 76 cultivars (clones of early producing cajueiro-anao) allied with management techniques and organic fertilizers increased productivity in dry-season crops, tripling productivity where irrigation was present; and marketing cashew byproducts as an input for caldeiras in agro-industry; (iv) Sheep and Goats: division of grazing areas to improve pasture and reduce soil compaction; rotation of pens (reducing de-forestation and loss of biodiversity),


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and formation of reserves for production of animal feed (planting of forage palms and sorghum forage); (v) implementation of 25 drip irrigation system sub-projects to reduce demand for water; and (vi) acquisition of solar panels to reduce energy consumption in agro-livestock activities.


Target


Beneficiaries trained in business management and environmentally sustainable practices

Number 0.00 440.00 10000.00 15460.00

31-Jul-2012 25-Apr-2019 30-Apr-2019 25-Apr-2019



This indicator was adjusted twice. In 2014, the target of 440 was adjusted to 280 (but retaining the original wording: "Beneficiary organizations trained in business management"). In 2018 the wording was adjusted to that shown in the heading and the target was set at 10,000. The indicator was revised to capture the total number of individual beneficiaries trained in business management and environmentally sustainable practices and technologies. The end target date was changed to align with the new closing date.


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Target


Total hours of technical assistance provided to family production units

Hours 0.00 70000.00 92970.00

30-Apr-2018 30-Apr-2019 30-Apr-2019



This was a new indicator added in 2018 to capture the project's emphasis on and efforts in technical assistance activities to enhance the capacity of family farmers.


Target


Total hours of technical assistance provided to producer organizations

Hours 0.00 45000.00 49448.00

30-Apr-2018 30-Apr-2019 30-Apr-2019




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This was a new indicator added in 2018 to capture the project's emphasis on and efforts in technical assistance activities to build the capacity of Producer Organizations.

Component: Component 2. Water Services


Target


Basic sanitation investments implemented and sustainably operated.

Number 0.00 140.00 210.00 211.00

31-Jul-2012 31-Oct-2016 31-Oct-2016 30-Apr-2019


Achieved: 100% of target

The target was increased by the 2014 Restructuring due to the larger amount of funds in Component 2 resulting from the reallocation from Component 1. This indicator considers the number of project-financed sanitation investments managed by SISAR and SAE and operated sustainably.


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Target


Water reuse pilot projects implemented with project support.

Number 0.00 13.00 15.00

31-Jul-2012 31-Oct-2016 30-Apr-2019



This indicator considers the number of water re-use pilots installed in rural households that already have water services and sanitation systems funded by the project. Data collection was conducted using water re-use Pilot Impact Reports.


Target


Beneficiaries trained in water services systems management

Number 0.00 280.00 420.00 424.00

31-Jul-2012 31-Oct-2016 30-Apr-2019 30-Apr-2019




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The original wording of this indicator was: "Potable water supply systems and basic sanitation management training provided to water services managers" with a target of 280. The UGP requested revision of the wording and target in the 2018 Restructuring to better reflect the measurement methods described in the PAD for training activities under Component 2. However, the indicator could have been improved as it suggests individual beneficiaries of WSS and only a small percentage of them - actual individual WSS beneficiaries far outnumbered the target shown - rather than water services managers (as in original wording). End target date was also changed to align with new closing date.

Component: Componenet 3 Institutional Strengthening


Target


Training being provided to governmental staff and strategic partners according to the Project Capacity Building Plan (number of training sessions/courses).

Number 0.00 80.00 114.00

31-Jul-2012 31-Oct-2016 30-Apr-2019




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The end target date was aligned to the new (2018 Restructuring) closing date. NOTE: Three Intermediate Outcome Indicators were dropped after being reassessed and aggregated for clarity purposes. Indicators dropped were: (i) Number of participants (target 3200); (ii) Training for project beneficiaries to encourage adoption of environmentally sustainable practices; and (iii) Number of participants in training courses provided by the project.


Target


Project results and lessons learned disseminated.

Number 0.00 15.00 8.00 24.00

31-Jul-2012 31-Oct-2016 30-Apr-2019 30-Apr-2019




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B. KEY OUTPUTS BY COMPONENT

Objective/Outcome 1. Improve the sustainability of rural production

Outcome Indicators

1. Increased number of beneficiary organizations participating in environment recovery activities and conservation. Target: 25 / Result 71 (Exceeded: 284% of target).

2. Producer organizations supported by the project that have a sustainable business initiative financed via subproject investments. Target 80 percent / Result: 70 percent (Exceeded: 110% of target).

Intermediate Results Indicators

1. Productive investments implemented and operational. Target: 280 / Result: 197 (70.25% of target)

2. Rural producer organizations supported by the project adopting environmentally sustainable technologies. Target: 28 / Result: 32 (Exceeded: 227% of target).

3. Beneficiaries trained in business management and environmentally sustainable practices. Target: 10,000 / Results: 15,460 (Exceeded: 154.6% of target)

4. Total hours of technical assistance provided to family production units. Target: 70,000 / Results: 92,970 (Exceeded: 132.8% of target)

5. Total hours of technical assistance provided to producer organizations. Target: 45,000 / Result: 49,448 (Exceeded: 110% of target)

Key Outputs by Component (linked to the achievement of the Objective/Outcome 1)

1. Number of Business Plans Developed. No target / Result: 267 approved of 335 that were drafted.

2. Number of structuring projects. No target / Result: 5


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implemented and in operation. Included: (i) Nova Canaa Milk Processing Plant; (ii) Meat slaughtering and processing unit (sheep) – Assentamento Palestina; (iii) Cashew nut processing unit – Assentamento Luis Carlos; (iv) Cassava Agro-industry Lagoa do Mineiro; and (v) Honey Warehouse in Massape / Mobasa-CE.

3. Number of transfers of knowledge (intercâmbios). No target / Result: 14

4. Number of workshops. No target / Result: 5 5. Number of caravans. No Target / Result: 8 6. Number of field events. No target / Result: 11 7. Number of structuring projects. No target / Result: 5 implemented

and in operation. Included: (i) Nova Canaa Milk Processing Plant; (ii) Meat slaughtering and processing unit (sheep) – Assentamento Palestina; (iii) Cashew nut processing unit – Assentamento Luis Carlos; (iv) Cassava Agro-industry Lagoa do Mineiro; and (v) Honey Warehouse in Massape / Mobasa-CE.

8. Number of oceanographic buoys. No target / Result: 54 9. Number of sensors for oceanographic buoys. No target / Result: 54

(nine sensors installed per year, ending in 2020). 10. Number of agrometeorological weather stations installed. No

target / Result: 6 11. Number of municipal agricultural drought plans. No target /

Result: 7 12. Number of irrigation projects implemented. No target / Result: 25 13. Number of solar panels purchased by the project. No target /

Result: 13. ✓

14. Number of training courses delivered. No target / Result: 1,168 15. Number of seminars delivered. No target / Result: 75 16. Number of technical missions. No target / Result: 28 17. Number of transfers of knowledge (intercâmbios). No target /


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Result: 14 18. Number of workshops. No target / Result: 5 19. Number of caravans. No Target / Result: 8 20. Number of field events. No target / Result: 11 21. Number of calls for proposals (chamadas). Target: 3 / Result: 3 22. Impact Evaluation Study. Target Yes / Result: Yes. 23. Number of irrigation projects implemented. No target / Result: 25 24. Number of solar panels purchased by the project. No target /

Result: 13. 25. Number of soil maps. No target / Result: 05. Included:

Mesorregiões Geográficas do Noroeste Cearense, Norte Cearense, Sertões Cearenses, Região Metropolitana de Fortaleza, Jaguaribe e Centro Sul Cearense

26. Soil identification survey at 1: 100,000. Target Yes / Result: Yes.

Objective/Outcome 2. Improve rural income generation

Outcome Indicators 1. Real revenue increase (inflation adjusted) of the beneficiary rural producers´ organizations. Target: 5 percent / Result: 33 percent (Exceeded: 660% of target).

Intermediate Results Indicators 1. Rural producers supported by the project selling products to

institutional and private markets. Target: 30 / Result: 68 (Exceeded: 227% of target).


1. Number of sanitary and environmental certifications. No target / Result: 267

2. Number of Operation and Maintenance (O&M) plans. No target / Result: 258

3. Number of accounting systems implemented. No target / Result: 251

4. Number of Financial analyses completed. Target Yes / Result Yes (100%)


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Objective/Outcome 3. Contribute to the Borrower´s effort to universalize access to Water Services

Outcome Indicators

1. New piped household water connections resulting from the project intervention. Target: 22,000 / Result: 26,198 (Exceeded: 119% of target). 2. Number of people in rural areas with access to “improved sanitation” under the project. Target: 39,200 / Result: 39,617 (Exceeded: 101% of target).

Intermediate Results Indicators

1. Basic sanitation investments implemented and sustainably operated. Target: 210 / Result: 211 (Exceeded: 100.4%).

2. Water reuse pilot projects implemented with project support. Target: 13 / Result: 15 (Exceeded: 115.4% of target)

3. Beneficiaries trained in water services systems management. Target: 420 / Result: 424 (Exceeded: 101% of target)

4. Training being provided to governmental staff and strategic partners according to the project capacity building plan (number of training sessions / course). Target: 80 / Result: 114. (Exceeded: 142.5% of target)


1. Number of seminars to disseminate and guide rural population how to apply to the selection process. No target / Result: 13 seminars.

2. Number of expressions of interest eligible. No target / Result: 407 3. Number of MI procedures (trámites MI). No target / Result: 1,032 4. Number of validation analyses (Conselho Estadual de

Desenvolvimento Rural and the Bank) executed. No target / Result: 262 (in 68 municipalities)

5. Number of wells drilled (Response to drought). No target / Result: 57

6. Number of Jar Tests purchased and installed. No target / Result: 2


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7. Number of ultrasonic flow meters purchased and installed. No target / Result: 2

8. Number of well level gauges purchased and installed. No target / Result: 8

9. Number of macro meters purchased and installed. No target / Result: 212

10. Number of solar panel kits purchased and installed. No target / Result: 2

11. Number of drip irrigation systems kits purchased and installed. No target / Result: 16

12. Number of solar panels purchased and installed. No target / Result: 15

13. Perception survey. Target Yes / Resulted: Yes 14. SAAS´ maintenance feasibility study. Target Yes / Result: Yes 15. Number of knowledge exchange experiences in water reuse

systems. No target / Result: 04. Included: (ATOS - Rio Grande do Norte; Bioágua Escola - Iguatu/CE; Articulação Semiárido Brasileiro (ASA) através do Centro de Estudos do Trabalho e de Assessoria ao Trabalhador (CETRA) – Trairi/CE; Associação Caatinga e Caritas Diocesana de Crateús - Crateús e Novo Oriente e Caritas de Limoeiro do Norte – Potiretama.


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C. SPLIT ASSESSMENT OF OUTCOME

The table below shows the project outcome when the split rating formula described in the ICR Guidelines Appendix I is applied.

Table 1: Split Assessment of Outcome ITEM Before Restructuring

(Effectiveness to April 30, 2018)

After Restructuring (May 1, 2018 to October 31,

2019)

RELEVANCE OF PDO HIGH

EFFICACY (PDO) MODEST46 SUBSTANTIAL

Producer Organizations supported by the project that have a sustainable business initiative financed via subproject investments (%)47

N/A (New Indicator Added in 2018)

Substantial (97.75%)

Real Revenue Increase (inflation adjusted) of the beneficiary rural producers’ organizations (%)

Negligible48 High (660%)49

Increased number of beneficiary organizations participating in environmental recovery activities and conservation (#)

Substantial (108%) High (284%)

New, piped household water connections resulting from the project intervention (#)

Substantial50 High (119%)

Number of people in rural areas with access to Substantial51 Substantial (101%)

46 Efficacy is conservatively rated Modest because of the Negligible rating for arguably the Key PDO Indicator of the four existing pre-Restructuring in 2018. 47 This PDO Indicator was incorporated in the RF by the 2018 Restructuring and measured achievement on six requirements (also monitored individually as Intermediate Outcomes). See Annex 1 Results Framework and Key Outputs. 48 It was always intended that this indicator be measured at closing and thus no interim estimation of revenue benefits was made at the time of restructuring. Some 115 (41%) of the end-target of 280 subprojects (revised in 2014) were implemented and operational by April 30, 2018, the revised closing date, but had insufficient operational experience on which to estimate revenues. A “negligible” rating is used given likely revenues if they had been estimated at that point, but this is not a data-driven conclusion. See ISR # 13 and Restructuring Paper RES31721. 49 Although the indictor exceeded of target, the ICR Team considers that it is not appropriate indicator as a PO could experience a reduction of income flow even in cases when there is an increase in revenue. 50 At this date, beneficiaries of completed water connections were 15,885 (vs target of 22,000), but there were over 10,000 additional beneficiaries with water connections in the final stages of completion, as evidenced by the final tally at closing (26,198). 51 At this date, beneficiaries of sanitation modules were 33,437 (vs target 39,200), but there were over 6,000 additional beneficiaries with sanitation systems pending completion, as evidenced by the final tally at closing (39,662).


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“Improved Sanitation” under the project (#)

EFFICIENCY MODEST

1. Outcome ratings Moderately Unsatisfactory Moderately Satisfactory

2. Numerical value of Outcome Ratings* 3.0 4.0

3. Disbursement USD 10.0 million USD 90.0 million

4. Share of Disbursement 10% (0.10) 90% (0.90)

5. Weighted value of the Outcome Rating (Row 2 x Row 4)

0.3 = 3 x 0.10 3.6 = 4 x 0.90

6. Final Outcome Rating applying a split assessment

MODERATELY SATISFACTORY (0.3+3.6 = 3.9. Rounding it to 4.0)

*NOTE: Highly Unsatisfactory = 1.0; Unsatisfactory = 2.0; Moderately Unsatisfactory = 3.0; Moderately Satisfactory = 4.0; Satisfactory = 5.0; and Highly Satisfactory = 6.0


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ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION

A. TASK TEAM MEMBERS

Name Role

Preparation

Supervision/ICR

Barbara Cristina Noronha Farinelli Task Team Leader

Danilo Pereira de Carvalho Procurement Specialist

Susana Amaral Financial Management Specialist

Alberto Coelho Gomes Costa Social Specialist

Clarisse Torrens Borges Dall Acqua Environmental Specialist

Abdoulaye Sy Team Member

Caitlin Janelle Whittemore Team Member

Daniella Ziller Arruda Karagiannis Team Member

Diego Arias Carballo Team Member

Edward William Bresnyan Team Member

Erick C. M. Fernandes Team Member

Erwin De Nys Team Member

José Joaquin Toro Landivar Team Member

Juliana Medeiros Paiva Team Member

Juliana Menezes Garrido Team Member

Luciano Wuerzius Team Member

Maria de Fatima de Sousa Amazonas Team Member

Mariana Margarita Montiel Counsel

Michele Martins Team Member

Miguel-Santiago da Silva Oliveira Team Member

Pablo R. Valdivia Zelaya Team Member

Paula Pedreira de Freitas de Oliveir Team Member


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Wanessa De Matos Firmino Silva Team Member

B. EXTENDED TEAM

Anna F. Roumani Consultant

Ditmar Zimath Cordinator of the Executive Secretariat from the State Secr

Jean Risopoulos Economist

Jose Nelson Martins Secretary

Katia Medeiros-Dubois Environmental Safeguards Specialist

Luis Loyola Irrigation Specialist

Marilin Renfelth Social Safeguards Specialist

Mario Castejon Agr. Economist

Wilson Rocha WSS Specialist

C. STAFF TIME AND COST

Stage of Project Cycle Staff Time and Cost

No. of staff weeks US$ (including travel and consultant costs)

Preparation

FY11 23.991 125,573.11

FY12 21.622 137,247.07

FY13 .402 3,491.70

Total 46.02 266,311.88

Supervision/ICR

FY12 0 974.47

FY13 18.603 114,962.37

FY14 25.262 140,172.20

FY15 27.406 153,394.68

FY16 15.801 82,524.69

FY17 27.086 118,628.01

FY18 15.057 91,171.36


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FY19 28.077 116,387.86

FY20 2.577 12,642.06

Total 159.87 830,857.70


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ANNEX 3. PROJECT COST BY COMPONENT

Components Amount at Approval

(US$M) Actual at Project Closing (US$M)52

Percentage of Approval (US$M)

1. Economic inclusion: would finance productive investments through business plans proposed, developed and implemented by participat ing rural producers organizations

45.50 39.45 86.70

2. Water Services: would support the State#s efforts to ensure universal access to potable water and basic sanitation services in ru ral areas

74.50 74.12 99.50

3. Institutional Strengthening: would support training and technical assistance activities to strengthen stakeholders and public fu nctions that are critical to ensure the project sustainability

29.75 24.96 83.90

Total 150.00 138.78 92.52

52 Total project cost (as with the PAD) does not include the beneficiary contribution, shown in Annex 7 Table 1.


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ANNEX 4. EFFICIENCY ANALYSIS

Background

The Ceará Rural Sustainable Development and Competitiveness Project (RSDC) has two main components. The first one focuses on Rural Economic Inclusion, implemented through productive investment sub-projects with family farmers, organized in associations and cooperatives, and the second component focuses on improved access to water and sanitation for rural communities and families. Component 1 financed approximately 267 productive sub-projects between 2016 and 2019, in ninety-six municipalities53, under three separate call for proposals (Table 1). These included investments in approximately eleven different value chains (VC) including milk production, goat meat production, tubers, fruit (including cashew nut, coconut), bee keeping, fish farming, and handicrafts. Total investment provided by the project under Component 1 sub-projects was 108.9 million Brazilian Reais (approx. 28 million USD54). These sub-projects reached 7,398 direct beneficiaries through investments in producer associations, less than half what had been expected at appraisal. In terms of employment, approximately 420 direct additional jobs were created, mainly in agro-industries benefited by the project. Indirect jobs created through these investments were not estimated.

Table 1: Main Characteristics of Component 1 Subprojects

Category Sub-category Component 1 Ex-ante Assumptions

Number of investments Productive sub-projects 267 445

Value of investments Expressed in million Brazilian Reais (BRL) 108.9 BRL 28 m USD

70 m USD

Number of farmers Family agriculture - beneficiaries 7,398 18,200 Number of jobs Mainly in agro-industries 420 ?? Geographical coverage Municipalities 96 ?? Number of Value Chains

Honey, milk, fruits, cashew, cassava, fish, handicraft, industrial kitchen, tourism

14 4

Type of beneficiary Federation of agricultural workers, landless farmers (MST), affected by dams, artisanal fisheries, Organized Civil Society, Maroon communities, indigenous group communities

7 n.a.

Call for Proposals 1st, 2nd, 3rd 3 n.a.

Source: RSDC/PSJ III database, 30 April 2019 and subsequent communications, July 2019

53 Out of a total of 185 Municipalities in the State of Ceará. These Municipalities cover all the agro-ecological regions of the state, including coastal areas, mountainous and dry inland region, as well as the fertile southern belt. 54 The exchange rate at the end of June 2019 was 3.84 BRL/USD (Central Bank of Brazil website - https://www.bcb.gov.br/)

https://www.bcb.gov.br/


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Component 2 (improved access to water and sanitation services) supported a total of 211 communities in 85 Municipalities, representing 26,198 households with water supply system connections, and 9,793 households with improved domestic sanitation, totaling 35,991 of direct beneficiaries. Considering both components, the overall number of direct beneficiaries totals 43,38955. Assuming that project benefits in Component 2 also accrue to other family members, estimated to be 4.05 per household, the overall number of direct and indirect beneficiaries of the project is estimated at around 153,162 people. Methodology

A cost-benefit analysis of Component 1 was carried out based on a sample selection of sixty-nine sub-projects (just over 25% of total sub-projects financed). These sub-projects were selected as being representative of the various enterprises supported under Component one, and include the following VC: honey production and beekeeping, dairy cows and milk production, goat rearing and meat production, fruit production and processing, cashew nut production and processing, cassava production and processing, fish farming, handicrafts, coconut production and free range chicken production (Table 2). These sub-projects were selected to be broadly representative in terms of investment value (23%), number of beneficiaries (25%) and geographical coverage (45%). They were also selected to cover all three calls for proposals, as well as the various types of main beneficiary organizations. The detailed list of selected subprojects is provided in Appendix 1, along with their main financial performance indicators, including internal rate of return, net present value and benefit cost ratio, switching values, and Investment as well as NPV per capita, both under a “without project” and a “with project” scenarios. Table 2: Sample of Component 1 Productive Investment Sub-projects

Category Sub-category Comp. 1 Sample Share %

Number of productive Investment sub-projects 267 69 25.8%

Value of investment Expressed in million Brazilian Reais (BRL) 108.9 24.7 22.68%

Number of farmers Family agriculture - beneficiaries 7398 1870 25.27% Geographical coverage

Municipalities 96 43 44.8%

By Value Chain56 Honey 63 14 22.22%

Handicraft 3 1 33.33%

Free range Chicken 8 3 37.50%

Cow Milk 38 17 44.74%

Cashew 26 5 19.23%

55 The total number of direct beneficiaries is 43,389 people, of which 7,398 people benefited from productive investments, 26,198 people benefited from piped water connections and 9,793 people benefited from improved sanitation modules. 56 An additional four projects including one food marketing, two tree-nursery, and one tourism were not included in the sample.


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Coconut 6 1 16.67%

Fruits 31 10 32.26%

Cassava 23 7 30.43%

Goat meat 53 5 9.43%

Fish farming 8 3 37.50%

Industrial kitchen 4 3 75%

By type of beneficiary57

FETRAECE – Federation of agricultural workers

65 20 30.77%

MST - Landless farmer movement 96 20 20.83%

Quilombolas – Maroon communities 10 5 50%

Organized civil society (cooperatives, associations)

45 24 53.33%

By Call for Proposal58 1st/2nd/3rd 39/48/166 12/12/45 31/25/27%

Source: RSDC/PSJ III database, 30 April 2019 and subsequent communications, July 2019

For Component 2, the analysis focuses on the incremental number of beneficiary individuals and families,

which is used to determine the economic benefits of increased access to improved water (reduced time

spent fetching water, for families), and to improved sanitation (reduced prevalence of water borne

disease, and related reduction in Disability-Adjusted Life Years, for individuals). In both cases, the analysis

at completion point will attempt to compare with the situation at appraisal stage, where possible.

Data generation and analysis

Because of the delays in implementing Component 1, the challenge of carrying out an incremental cost benefit analysis at completion resides in being able to capture the returns to the investments at sub-project level. This led the project team to select a sample of 69 productive subprojects where the investment had been concluded (or was about to be concluded), and where at least one productive cycle could take place in the second half of 2018 (adding to the one from 2017, where possible), to report real production, sale and income figures. This meant that, while sample sub-projects were selected to be broadly representative of Component 1 sub-projects, they were not selected randomly. The business plans (BP) originally prepared by the beneficiary groups, and revised with the help of the UGP, contain both “without project” and “with project” situations. They provide a fifteen-year forecast and allow calculation of the Financial Net Present Value (NPV) and Internal Rate of Return (IRR) under various scenarios. For the purpose of this analysis, the base scenario has been used in each case. These BP are quite comprehensive and include labour costs as well as working capital requirements. The Project Implementation Unit (Portuguese acronym, UGP) conducted fieldwork between February and April 2019, and visited all 69 selected sub-projects. The objective was to update the business plans of the beneficiary groups, document actual annual production, sales and income figures, compared to planned

57 Other categories include Indigenous communities (3), artisanal fishing communities (4), and communities affected by dams (2) 58 The last call, held in 2017, was aimed at organized farmer groups, including organizations from the social movements, such as the landless farmers (MST), and the Federation of Agricultural Workers from the State of Ceará (FETRAECE).


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figures from the business plan, and update on this basis the projections for subsequent years. The updated business plans, revised to contain actual output for the 2017 and 2018 (in some cases only 2018), form the basis for the incremental cost-benefit analysis of this ICRR. The analysis in the ICRR focuses on incremental net benefits at market and social prices based on data collected from each of the subprojects under the scenarios "with project" and "without project". Key indicators of economic and financial performance include Net Present Value (NPV) over a 15-year period, Internal Rate of Return (same period), cost-benefit ratio and switching values. The analysis uses a discount rate of 12 %, which is what was used in the PAD59. Unskilled labor was valued based on wages publicly reported for daily employment in rural areas, which varied between 35 and 50 BRL/day. While the RSDC project started in 2013, the first sub-projects to be financed only got underway in 2016, and the latest are currently being finalized, even after closure of the operation. This means that most sub-projects have not yet achieved their inherent productive potential at the time of data collection, and this may affect the financial viability in some cases. This analysis assumes that the selected subprojects are broadly representative of the list of productive investment financed by the project. However, these were not selected at random, with a bias to select subprojects where the investment stage had been concluded, so as to be able to measure some return on the investment. It is estimated that only 191 (out of 267) subprojects were fully or partially operational, while 76 subprojects were not yet operational at project closure. To account for this bias, a correction factor has been applied to the aggregated benefits in the economic analysis section. The failure rate used in the analysis (18%) is calculated on the basis of the 48 sub-projects not expected to be implemented successfully, because they had a disbursement rate of less than 75% at project closure, and were rated as low on group cohesion, operational capacity and performance. This sub-set represents 1,031 beneficiaries and BRL 10 million investment. 80% of this sub-group originates from the 3rd Call for Proposal, aimed at grass-roots organizations, promoted by the MST farmer movement (30 out of 48). Results of Financial analysis

The main results achieved in terms of financial performance have been aggregated by VC and are highlighted in Table 3 (without-project situation), and Table 4 (with-project situation). More details on financial performance indicators for individual sub-projects can be found in Appendix 1.

59 PAD (2012), p. 65. The opportunity cost of capital is currently slightly lower than that, with the Central Bank of Brazil deposit rate (SELIC) being around 6-7% per annum (https://www.bcb.gov.br/). However, this same rate reached 11% in 2013 and 14% in 2014-2015 period, before falling in the third quarter of 2016 to reach its current level during the second quarter of 2018.



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Table 3. –Sub-projects Financial Performance – Without-project Situation

Table 4. –Sub-projects financial performance – with project situation

The financial cost benefit analysis shows substantial variation between VC, with IRR ranging from 3% to 39%, in a “without-project” scenario, and from 4% to 38% in a “with-project” scenario. Best performing value chains in a without-project scenario include goats, milk, and fruits, while under-performing value chains include handicrafts, fish farming, cassava and apiculture, which generate negative NPV. In a with-project scenario, the best performing value chains are milk, fruits, cashew, honey, goat, and cassava, while three fail to produce a positive NPV (handicrafts, fish farming, coconut). Sensitivity analysis: The Benefit – Cost ratio varies accordingly, from 0.63 (handicraft) to 1.91 (goat) in a without project situation. The range goes from 0.31 (failed) to 1.45/8 (milk and goat), in a with-project situation. In general, switching values are quite robust for both revenues and costs in a with-project scenario, less so for a without-project scenario. Many sub-projects still need to achieve their expected productivity or production levels, to ensure profitability. In a without-project scenario, average monthly wages range from under 100 BRL/month (less than minimum wage) to more than 1,000 BRL/month, and an average of 800 BRL/month across value chains.

Entreprise models (without

project) @ 12% d.r.

Investment

(BRL) # Benef. NPV FIRR B/C SV Costs

SV

Benefits

Invest.

(R$) / ben

Invest.

(USD) / ben

NPV

(R$)/ben

NPV

(USD)/ben

Av.

Monthly

Wage

Apiculture - Honey production 1,620,559 442 -164,181 10% 0.99 -0.67% 0.68% 3,666 955 -371 -97 761

Handicraft 33,164 12 -26,151 -6% 0.63 -37.41% 59.77% 2,764 720 -2,179 -568 36

Chicken 65,583 46 104,642 39% 1.52 51.55% -34.02% 1,426 371 2,275 592 87

Milk 6,069,590 337 4,007,490 25% 1.29 29.44% -22.74% 18,011 4,690 11,892 3097 664

Cashew 2,780,704 259 489,345 15% 1.20 20.15% -16.77% 10,736 2,796 1,889 492 4,322

Coconut 73,700 18 75,063 28% 1.79 78.97% -44.12% 4,094 1,066 4,170 1086 127

Fruits 2,515,989 438 3,502,353 35% 1.21 20.63% -17.10% 5,744 1,496 7,996 2082 651

Cassava 584,436 119 -212,023 3% 0.93 -7.12% 7.66% 4,911 1,279 -1,782 -464 387

Goat and Sheep 976,036 98 1,360,667 35% 1.91 91.27% -47.72% 9,960 2,594 13,884 3616 359

Fish Farming 1,404,109 49 -870,305 -1% 0.92 -7.65% 8.28% 28,655 7,462 -17,761 -4625 1,227

Industrial kitchen 90,758 52 -33,868 4% 0.91 -9.09% 10.00% 1,745 455 -651 -170 51

Total 16,214,630 1,870 Average 8,671 2,258 788.30

Entreprise models (with

project) @ 12% d.r.

Investment

(BRL) # benef. NPV FIRR B/C SV Costs

SV

Benefits

Invest.

(R$) / ben

Invest.

(USD) / ben

NPV

(R$)/ben

NPV

(USD)/ben

Av.

monthly

wage

Apiculture - Honey production 6,137,639 442 1,993,108 16% 1.05 5.11% -4.86% 13,886 3,616 4,509 1174 1,499

Handicraft 243,175 12 (230,932) -11% 0.31 -68.93% 221.85% 20,265 5,277 -19,244 -5012 108

Chicken 425,426 46 97,028 16% 1.15 14.88% -12.95% 9,248 2,408 2,109 549 241

Milk 11,408,295 337 9,113,938 25% 1.48 48.40% -32.61% 33,853 8,816 27,044 7043 1,450

Cashew 5,635,180 259 2,621,866 18% 1.25 24.71% -19.81% 21,757 5,666 10,123 2636 8,355

Coconut 5,635,180 18 (270,423) -3% 0.64 -35.57% 55.20% 313,066 81,527 -15,024 -3912 275

Fruits 6,180,210 438 4,526,905 22% 1.16 15.72% -13.59% 14,110 3,674 10,335 2692 1,381

Cassava 1,266,056 119 826,151 22% 1.18 17.58% -14.95% 10,639 2,771 6,942 1808 648

Goat and Sheep 2,210,456 98 1,281,481 21% 1.45 45.26% -31.16% 22,556 5,874 13,076 3405 603

Fish Farming 1,398,838 49 (1,521,837) 4% 0.91 -9.15% 10.07% 28,548 7,434 -31,058 -8088 2,222

Industrial kitchen 402,164 52 478,307 38% 1.32 31.84% -24.15% 7,734 2,014 9,198 2395 163

Total 40,942,621 1,870 Average 21,894 5,702 1,540


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This approximately doubles to 1,500 BRL/month in a with-project scenario. In any case, these figures are higher than the average monthly wages estimated to be 262 BRL/month on average at the appraisal stage. Finally, with the aim of comparing the ex-ante situation, Table 5 illustrates, for the four pre-identified VC at appraisal stage, the expected results at appraisal, as well as the results achieved at completion. The forecast regarding which VC would be most profitable was by and large correct, with the highest returns going to Milk, and then Fruits, with honey offering better returns at completion than anticipated, and fish production offering negative returns, with IRR lower than the discount rate. IRR rates are in general more modest at completion (between 14%-50%), compared to what was anticipated, but the Switching Values for Costs and Benefits are solid, honey being the most sensitive one, yielding a NPV of zero should costs increase by 15% or benefits decrease by 13%. Table 5. - Comparing incremental financial analysis at appraisal and completion (component 1)

@12% d.r

At appraisal At completion

VC INV (BRL)

NPV (NPV)

IRR SVC SVB INV (BRL) NPV (BRL) IRR SVC SVB

Fruit 207,334 1,002,334 75%

141% -46% 3,664,221 10,466,063

16% 50% -33%

Honey 304,576 703,307 48%

99% -22% 4,517,080 2,157,288 18% 15% -13%

Milk 609,213 1,750,020 47%

27% -30% 5,338,704 22,868,856

25% 44% -31%

Fish 329,828 710,861 48%

28% -18% 2,172,140 1,602,625 7% -12% 14%

INV: Investment; NPV: Net Present Value; IRR: Internal Rate of Return; SVC: Switching Value for Costs (beyond which NPV < 0); SVB: idem Benefits Observations related to administrative efficiency

This section builds on findings from various supervision missions, including the last mission that took place during the last week of April 2019. Due to delays in implementation, and to the decentralized procurement approach pursued in the project, where each farmer organization is responsible for procuring what is in its business plan, several years can pass between the preparation of a sub-project, its financing, and its implementation, including procurement of works, goods and services. Because of domestic inflation, the budget may not be sufficient to finalize all activities, or budget adjustments are required (additional financing (aditivo). In several cases, works ended up consuming a larger share of the budget, or works get partially done. Closer engagement between project managers, procurement staff and beneficiary groups is required, to ensure best value for money and that relevant specifications are prepared and adjusted. However, these aspects and delays are all captured in the economic analysis. Economic analysis

The economic benefits of the RSDC project were assessed based on the economic benefits of increased access to water and sanitation services (Component 2). The methodology used at appraisal stage was replicated at completion stage, by quantifying and valuing economic benefits including: (i) reduced prevalence of waterborne diseases; and (ii) savings in time used for water collection.


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Improved access to water and sanitation and related reduction in Disability-Adjusted Life Years (DALY), was converted to an economic benefit by using health economics parameters, as calculated for Ceará State and applying them to cumulative annual number of beneficiaries under Component 2. The economic value of savings in time spent fetching water was calculated assuming that families (including working adults) would previously spend up to two and a half hours daily on this task, and valuing part of this time using the shadow wage rate. A social discount rate of 10 percent was used, which is consistent with the economic analysis rate used at appraisal. Regarding Component 1, financial (or market) prices were converted to economic (or social) prices, based on certain conversion factors reflecting economic parameters60. The values of production, sales, and annualized costs in scenarios "with" and "without" project were determined considering constant prices (prices collected during fieldwork). Net benefit streams for each sub-project were aggregated and scaled up by a factor reflecting the ratio between the total amounts invested in sampled subprojects, over the total amount invested for income generating sub-projects61. The failure rate within the universe of sub-projects, estimated to be approximately 18%, is subsequently applied. The PCU provided the annual disbursement breakdown (amounts disbursed in USD, per year), for both Government and WB financing. Project economic costs are net of taxes, which were estimated to be 21% (taxes such as ICMS (equivalent to VAT), PIS, and CONFINS). Annual project economic costs were converted from US dollars to Brazilian Reais at the average exchange rate, for each year (Brazil Central Bank). Recurrent costs, which are kept constant in the analysis, were assessed to be equivalent to one third of average annual Component 3 disbursements. Table 6: Economic NPV and IRR for the RSDC project, by component, and compared to appraisal

@ 10% discount rate EIRR ENPV (BRL) ENPV (USD)

EIRR (appraisal)

Full project economic costs 13.78% 58 million 15.1 million n.a.

Comp 1 only (C 1 + 50% C3 econ costs) 10.40% 2.6 million 0.68 million n.a



Comp 2 only (C2 + 50% C3 econ costs) 16.19% 55.6 million 14.5 million 18%

Based on the above, the overall Economic Rate of Return for the project is 13.78 percent, with an economic NPV of BRL 58 million ( USD 15.1 million)62. The analysis also breaks down this result by component. For Component 1, the result is break even (i.e. the investment has been recouped), with an NPV of BRL 2.6 million (USD 0.68 million), and an IRR of 10.4%. For Component 2, the EIRR is 16.19%, with an ENPV of 55.6 million BRL (USD 14.5 million). More details on the economic benefit stream can be found in Tables 7, 8 and 9 below and in Appendix 2.

60 Conversion factors: Standard Conversion Factor 0.965; Shadow wage rate unskilled labor: 0.913 (long term unemployment rate of 12%), conversion factor for goods and services: 0.957 61 Scaling up factor of 4.41, the ratio of investment in sample sub-projects and investment in all Component 1 sub-projects 62 converted using exchange rate at 30 June 2019 (https://www.bcb.gov.br/)



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The analysis reveals positive economic returns for the PRSC project’s investments under Component 2 (improved access to water and sanitation). However, given the high share of disbursements that went into this component, the efficiency analysis at component level is quite sensitive to the wage rate used, or the number of hours spent fetching water one assumes were saved with the investment. The NPV becomes negative, with less than 1.78 h/day/family in time savings, or with a wage inferior to 32 BRL/day. For Component 1 (economic productive inclusion), the results are positive, with an EIRR just over 10%. These results are on the lower side, compared to economic and financial returns reported in similar projects implemented in the LAC region63. However, this can be explained by the fact that most sub-projects barely had one season to operate and demonstrate results, and that their level of maturity has yet to increase. Indeed, this is confirmed by anticipating the benefits of Component 1 by one or two years, which would yield an IRR of 12.70% and 15.67% respectively. Thus, current results are not reflective of their underlying potential, and it would be necessary to repeat the analysis in two-three years’ time, with the same sample, to get a fuller picture of the efficiency of this component. Overall, investments in the RSDC project were justified, given a higher return than the social discount rate used for public investments in Brazil, with an EIRR of 13.78% and ENPV of BRL 58 million (USD 15.1 million). Table 7: Overall economic analysis parameters

63http://documents.worldbank.org/curated/en/702681480494322907/pdf/110615-WP-LinkingFarmerstoMarketsthroughProductiveAlliances-PUBLIC-ABSTRACT-SENT.pdf


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Table 8: Component 1 economic analysis parameters

Year

Total

Incremental

benefits

Total Economic

costs -

Investments

C3 Economic

costs -

recurrent

Total Net

benefit stream

2013 - 26,587,928 (26,587,928)

2014 3,726,081 18,770,075 (15,043,994)

2015 5,457,746 105,408,573 (99,950,827)

2016 17,333,639 30,281,594 (12,947,955)

2017 23,268,921 27,836,346 (4,567,425)

2018 27,682,513 114,684,548 (87,002,035)

2019 41,427,617 33,340,568 8,087,049

2020 65,703,162 2,652,400 63,050,762

2021 66,892,177 2,652,400 64,239,777

2022 68,857,878 2,652,400 66,205,478

2023 67,020,941 2,652,400 64,368,542

2024 67,012,997 2,652,400 64,360,597

2025 67,165,541 2,652,400 64,513,141

2026 66,769,614 2,652,400 64,117,214

2027 67,040,377 2,652,400 64,387,977

2028 66,492,711 2,652,400 63,840,311

2029 65,555,929 2,652,400 62,903,529

2030 67,557,190 2,652,400 64,904,790

2031 77,802,493 2,652,400 75,150,093

NPV @ 10% (BRL) 58,197,366

NPV@ 10% (USD) 15,155,564

EIRR 13.78%


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Year

C1

Incremental

benefits

C1 + 50% C3

Economic costs -

Investments

50% C3

Economic costs

- recurrent

C1 Net benefit

stream

2013 - 3,663,909 (3,663,909)

2014 - 1,976,267 (1,976,267)

2015 - 43,723,182 (43,723,182)

2016 - 18,690,695 (18,690,695)

2017 433,367 8,158,576 (7,725,210)

2018 1,208,083 52,748,458 (51,540,375)

2019 8,511,257 11,536,576 (3,025,319)

2020 24,941,647 1,326,200 23,615,447

2021 26,130,661 1,326,200 24,804,461

2022 28,096,363 1,326,200 26,770,163

2023 26,259,426 1,326,200 24,933,226

2024 26,251,482 1,326,200 24,925,282

2025 26,404,025 1,326,200 25,077,825

2026 26,008,099 1,326,200 24,681,899

2027 26,278,861 1,326,200 24,952,661

2028 25,731,195 1,326,200 24,404,995

2029 24,794,413 1,326,200 23,468,213

2030 26,795,674 1,326,200 25,469,474

2031 37,040,978 1,326,200 35,714,778

NPV @ 10% (BRL) 2,627,866

NPV@ 10% (USD) 684,340

EIRR 10.40%


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Table 9: Component 2 economic analysis parameters

Year

C2

Incremental

benefits

C2 + 50% C3

Economic costs -

Investments

50% C3

Economic costs

- recurrent

C2 Net benefit

stream

2013 - 22,924,019 (22,924,019)

2014 3,726,081 16,793,808 (13,067,727)

2015 5,457,746 61,685,391 (56,227,645)

2016 17,333,639 11,590,899 5,742,740

2017 22,835,554 19,677,769 3,157,785

2018 26,474,429 61,936,089 (35,461,660)

2019 32,916,359 21,803,992 11,112,368

2020 40,761,515 1,326,200 39,435,315

2021 40,761,515 1,326,200 39,435,315

2022 40,761,515 1,326,200 39,435,315

2023 40,761,515 1,326,200 39,435,315

2024 40,761,515 1,326,200 39,435,315

2025 40,761,515 1,326,200 39,435,315

2026 40,761,515 1,326,200 39,435,315

2027 40,761,515 1,326,200 39,435,315

2028 40,761,515 1,326,200 39,435,315

2029 40,761,515 1,326,200 39,435,315

2030 40,761,515 1,326,200 39,435,315

2031 40,761,515 1,326,200 39,435,315

NPV @ 10% (BRL) 55,569,501

NPV@ 10% (USD) 14,471,224

EIRR 16.19%


Page 71 of 91

APPENDIX 1 – DETAILED FINANCIAL ANALYSIS - LIST OF SUBPROJECTS COMPOSING THE SAMPLE

#Organizacoes da Producao Familiar (OPF) Municipio CADEIA PRODUTIVA

INVESTIMENTO

(BRL)# BENEFICIARIOS # CONTRATADOS

VPL (R$) sem TIR (%) B/C

RENDA

MÉDIA

MENSAL VPL (R$) com TIR (%) B/C

RENDA

MÉDIA

MENSAL

1 Associação Comunitária dos Remanescentes de Quilombo do Córrego de Iús Acarau Avicultura Caipira 162,310 11 0 53,972.54 37.58 1.57 129.97 51,753.73 16.45 1.20 327.81

2 Associação Comunitária dos Trabalhadores Rurais e Agricultoras Familiares de Paratibe Ibiapina Cozinha Industrial 180,277 14 0 68,497.04 42.82 1.31 139.37 9,483.07 13.00 1.02 213.97

3 Associação Centro Comunitário João XXIII Senador Pompeu Apicultura 311,366 4 0 5,807.55 12.75 1.03 602.09 -221,134.65 0.23 0.80 2,221.60

4 Associação Coletiva do Assentamento Lenin Paz II Ibaretama Bovinocultura 255,727 9 2 -37,057.61 6.97 0.93 420.15 397,571.18 28.69 1.63 1,353.31

5 Associação Comunitária das Mulheres de Curralinho Ocara Artesanato 243,175 12 0 -27,362.18 -3.15 0.65 36.07 -245,926.42 -7.49 0.34 107.66

6 Associação Comunitária de Cajazeiras - ASCAC Aracati Fruticultura 832,869 14 14 1,006,164.91 38.73 1.40 1,976.87 3,486,365.61 40.71 1.82 5,136.29

7 Associação Comunitária do Assentamento Córrego das Aroeiras – ACACA Amontada Mandiocultura 304,498 46 0 11,309.84 13.21 1.01 237.21 292,738.77 23.96 1.20 370.78

8 Cooperativa de Pesca, Agricultura e Aquicultura Marinha de Icapuí Ltda - COOPAMI Icapui Psicultura (Aquicultura) 1,325,020 20 4 272,081.03 16.52 1.05 1,481.31 361,139.27 15.51 1.05 2,174.42

9 Associação dos Apicultores do Município de Paramoti – APIC Paramoti Apicultura 376,055 18 3 -10,282.03 10.91 1.00 1,715.08 263,745.31 19.33 1.08 2,382.84

10 Associação dos Pequenos Produtores Rurais de Nossa Conquista Tira-Teima Monsenhor Tabosa Apicultura 114,943 9 0 2,492.53 14.09 1.02 214.31 -88,723.97 -1.10 0.80 540.59

11 Associação Comunitária dos Apicultores de Poranga – ASAP Poranga Apicultura 345,570 16 2 -54,811.71 4.40 0.96 765.76 72,737.03 12.58 1.03 1,418.96

12 Associação dos Apicultores do Sertão de Beberibe – AASB Beberibe Apicultura 587,311 36 3 -125,522.49 3.81 0.97 1,267.88 405,675.51 20.09 1.07 1,998.76

13 Associação de Apicultores de Ararendá e Região - AAPIAR Ararenda Apicultura 424,227 35 3 -9,846.12 10.67 0.99 440.80 78,422.59 14.28 1.03 935.05

14 Associação dos Apicultores de Icó – AAPI Ico Apicultura 434,261 36 0 695.43 12.08 1.00 477.11 2,609.65 12.07 1.00 835.89

15 Associação dos Apicultores de Pedra Branca Pedra Blanca Apicultura 812,033 80 4 289,543.55 29.14 1.09 569.69 304,450.24 16.52 1.06 824.55

16 Associação dos Apicultores do Município de Graça – AAMG Graca Apicultura 273,373 16 0 44,925.07 22.78 1.15 295.90 -110,778.20 6.53 0.87 540.52

17 Associação dos Apicultores do Município de Parambu – PARAMEL Parambu Apicultura 891,914 80 5 311,407.07 22.81 1.04 1,178.37 1,276,306.61 26.66 1.14 1,578.44

18 Associação dos Moradores de Maracajá - AMM Paramoti Apicultura 291,421 10 0 -8,098.82 6.18 0.95 366.52 106,647.57 14.10 1.07 3,688.93

19 Associação Somel dos Apicultores de Jaguaribe Jaguaribe Apicultura 306,687 18 2 -4,327.15 9.46 1.00 1,176.66 78,671.03 12.79 1.03 1,597.99

20 Associação Taboense dos Apicultores - ATA Monsenhor Tabosa Apicultura 535,467 50 4 83,158.66 20.50 1.05 406.63 136,170.35 14.93 1.04 840.99

21 Cooperativa Agrícola Mista dos Pequenos Produtores de Parambu - COAMPPP Parambu Apicultura 433,010 34 5 311,407.07 22.81 1.04 1,178.37 1,276,306.61 26.66 1.14 1,578.44

22 Associação Comunitária dos Moradores do Cajueiro Encarnado Itarema Mandiocultura 149,713 8 0 -158,224.90 - 0.79 834.60 190,176.72 23.81 1.20 1,844.21

23 Associação Comunitária do Assentamento Ramada Croatá I Itapipoca Mandiocultura 217,433 29 0 -68,790.89 0.85 0.92 269.51 487,465.32 39.27 1.15 501.87

24 Associação dos Moradores do Assentamento da Santa Fé Trairi Mandiocultura 133,978 20 0 -41,280.90 -0.21 0.82 190.80 13,011.49 13.27 1.02 260.00

25 Associação dos Pequenos Agricultores do Imóvel Timbaúba Itapipoca Mandiocultura 246,528 8 0 5,196.79 13.98 1.02 449.34 -107,537.04 4.29 0.80 647.37

26 Associação dos Trabalhadores Livres de Capelão Mulungu Tululu Mandiocultura 213,906 8 0 21,891.25 24.81 1.07 340.20 56,293.47 20.38 1.08 263.80

27 Associação dos Trabalhadores(as) Rurais do Assentamento 02 de Maio Tamboril Ovinocaprinocultura 407,806 19 0 318,171.96 32.16 1.81 419.07 714,992.31 32.53 2.19 866.10

28 Associação Agro Comunitária dos Moradores do Sítio Aroeiras Mauriti Ovinocaprinocultura 428,875 8 0 55,173.92 23.72 1.42 255.20 -288,272.24 -1.87 0.50 414.75

29 Associação Comunitária Nova Conquista Amontada Ovinocaprinocultura 216,649 10 0 122,983.76 26.04 1.52 383.54 245,438.13 26.11 1.74 699.74

30 Associação Comunitária São Pedro de Alegre - ACSPA Itatira Ovinocaprinocultura 402,728 15 0 238,810.43 33.76 1.95 381.77 188,570.69 18.96 1.33 621.17

31 Associação Geradora de União e Imenso Amor – AGUIA. Monsenhor Tabosa Ovinocaprinocultura 754,398 46 0 825,754.83 44.02 2.27 354.67 603,003.04 24.05 1.56 412.11

32 Cooperativa Agroindustrial Zé Lourenço Ltda - COPAZEL Chorozinho Cajucultura 1,924,761 45 36 1,873.84 12.03 1.00 808.74 663,143.17 16.25 1.09 1,913.61

33 Associação Comunitária Ribeirinha de Barreira Quixere Fruticultura 775,257 25 6 477,197.64 29.75 1.22 924.75 921,316.59 26.37 1.21 2,042.72

34 Associação Comunitária Nossa Senhora da Conceição Meruoca Cocoicultura 403,132 18 4 84,070.90 28.46 1.78 126.72 -264,064.50 0.27 0.69 275.42


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#

Organizacoes da Producao Familiar (OPF) CADEIA PRODUTIVAINVESTIMENTO

(BRL)# BENEFICIARIOS

NÚMERO DE

CONTRATADOSVPL (R$) w/o TIR (%) B/C

RENDA

MÉDIA

MENSAL VPL (R$) w TIR (%) B/C

RENDA

MÉDIA

MENSAL

35 Associação de Produtores de Leite e Agropecuaristas de Pindoretama - APLAP Pindoretama Fruticultura 602,091 30 7 169,730.17 25.16 1.31 237.36 125,571.89 14.38 1.04 837.56

36 Associação Comunitária dos Pequenos Produtores Rurais do Conjunto Posto Agrícola – ACCPAIco Fruticultura 1,170,352 33 32 316,796.57 23.27 1.13 613.16 249,931.58 12.92 1.06 1,182.38

37 Associação Comunitária de Lagoa do Serrote Santana do Acarau Fruticultura 153,792 13 34 106,948.43 29.28 1.17 417.58 414,928.17 31.13 1.48 910.01

38 Associação Comunitária Menino Jesus de Praga - ACMJP Maracanau Fruticultura 640,284 30 5 747,927.15 66.26 1.45 788.77 253,884.69 17.81 1.08 1,030.30

39 Associação do Centro Social de Bom Princípio Deputado Irapuan Pinheiro Fruticultura 356,044 17 21 -7,561.71 9.17 0.99 276.56 370,558.22 21.03 1.31 811.42

40 Associação dos Pequenos Produtores Rurais da Fazenda Juá Caninde Fruticultura 222,790 6 0 32,024.58 25.41 1.15 321.04 -36,894.38 7.49 0.94 744.17

41 Associação dos Produtores do Vale do São Bento Quixeramobim Fruticultura 842,534 43 9 1,016,395.84 45.88 1.39 759.97 452,428.58 20.86 1.10 896.86

42 Cooperativa Agroecológica da Agricultura Familiar do Caminho de Assis - COOPERFAM Maranguape Fruticultura 584,197 227 11 554,897.83 38.21 1.09 193.51 77,985.68 14.02 1.01 217.63

43 Associação da Comunidade Remanescente de Quilombo de Serra do Juá - ACRQSJ Caucaia Cozinha Industrial 83,631 9 0 -74,763.62 - 0.40 7.42 -43,743.95 5.57 0.89 248.78

44 Associação dos Moradores Quilombolas de Coité (AMORQUILOMBOLA) Ipueiras Cozinha Industrial 138,256 29 0 -32,018.97 -13.57 0.64 6.34 -185,780.17 -7.05 0.43 26.80

45 Associação Comunitária dos Assentados Zumbi dos Palmares Lagoa do Mato - ACAZUMP Aracati Cajucultura 355,842 22 0 213,242.71 28.78 1.40 258.90 252,727.76 22.61 1.37 382.21

46 Associação Comunitária Resistência Chico Mendes II Russas Cajucultura 138,437 8 0 -59,425.70 -7.92 0.21 20.91 8,523.31 12.70 1.04 359.74

47 Associação do Conselho Popular dos Trabalhadores e Trabalhadoras Rurais do Assentamento Luiz Carlos Russas Cajucultura 115,931 6 0 -78,041.49 -10.70 0.12 29.08 28,656.15 14.67 1.19 461.32

48 Cooperativa Agroindustrial do Che Guevara - COPAC Ocara Cajucultura 1,499,380 58 38 138,722.50 13.95 1.03 932.63 1,825,274.02 24.57 1.16 1,814.31

49 Associação dos Bovinocultores de Leite do Distrito do Cruzeirinho (ABOVILC) Ico Bovinocultura 1,242,963 20 11 1,338,546.23 40.39 1.64 1,654.69 1,836,508.55 33.86 1.65 2,327.52

50 Associação Comunitária dos Moradores do Sítio Extrema e Mãe Luzia Ico Bovinocultura 588,782 18 6 168,847.32 26.90 1.28 362.95 2,876.78 12.07 1.00 598.43

51 Associação Comunitária de Moradores dos Sítios Forquilha e Mandacaru Ico Bovinocultura 723,825 14 6 276,158.23 24.03 1.31 751.34 -200,699.54 7.55 0.88 767.60

52 Associação Comunitária de Várzea Redonda Quixeramobim Bovinocultura 2,380,463 72 24 1,388,999.16 24.85 1.17 738.48 2,494,551.51 25.88 1.26 1,156.08

53 Associação Comunitária do Assentamento Santa Eliza Rancho Quixeramobim Bovinocultura 397,761 15 3 83,569.91 18.38 1.09 496.11 71,442.70 14.62 1.05 916.51

54 Associação Comunitária do Sítio Morada Nova Pedra Blanca Bovinocultura 667,338 17 7 910,078.88 52.77 1.69 1,263.33 1,103,748.12 33.26 1.56 1,729.98

55 Associação Comunitária Imóvel Monte Castelo Quixeramobim Bovinocultura 167,149 8 2 -24,442.86 6.82 0.94 366.40 199,371.90 25.52 1.29 1,066.01

56 Associação do Assentamento Conquista da Liberdade Quixeramobim Bovinocultura 727,684 30 8 872,019.11 43.43 1.18 646.11 1,763,590.20 42.67 1.59 1,206.59

57 Associação do Assentamento Nova Ladeira Quixeramobim Bovinocultura 289,328 21 1 -26,065.69 5.29 0.92 95.73 -367,692.87 -14.07 0.66 309.76

58 Associação dos Assentados e Assentadas do Crisantemo Quixeramobim Bovinocultura 428,184 11 4 255,895.91 26.46 1.20 1,097.00 1,837,739.53 52.65 2.00 3,327.46

59 Associação dos Produtores e Produtoras do Amazonas Quixeramobim Bovinocultura 298,306 18 3 -98,814.05 -11.35 0.81 134.61 193,729.75 19.93 1.22 558.78

60 Associação dos Trabalhadores da Comunidade Camará Quixeramobim Bovinocultura 451,740 20 2 -215,747.37 -10.60 0.61 118.79 13,722.80 12.42 1.01 461.65

61 Associação dos Trabalhadores e Trabalhadoras do Tapajós Quixeramobim Bovinocultura 311,511 13 3 73,631.01 20.08 1.14 412.53 519,442.50 31.77 1.62 1,156.46

62 Associação dos Trabalhadores e Trabalhadoras da Lagoa do Sal Quixeramobim Bovinocultura 354,699 15 2 -232,625.22 - 0.70 160.44 127,677.61 15.56 1.12 737.77

63 Associação dos Remanescentes Quilombolas de Caiçara de Baixo. Cruz Avicultura Caipira 123,132 10 0 49,024.40 50.50 1.67 113.87 45,514.42 17.04 1.20 284.67

64 Associação Remanescentes de Quilombo de São Jerônimo e Adjacências (ARQSJA) Quiterianopolis Avicultura Caipira 139,985 25 0 15,343.33 28.86 1.26 18.28 20,584.88 13.96 1.08 111.89

65 Associação dos Moradores de Berimbau Icapui Psicultura (Aquicultura) 1,097,637 12 32 -299,392.56 -8.05 0.90 1,542.77 792,828.01 19.89 1.14 3,765.64

66 Associação de Aquicultores do Açude Rosário - AAQUIAR Lavras de Mangabeira Psicultura (Aquicultura) 1,153,592 17 22 -435,191.01 -8.99 0.90 655.89 -1,428,274.48 -18.33 0.76 726.98

67 Associação Comunitária de Moradores do Fogareiro em Busca da Água Viva Quixeramobim Bovinocultura 1,408,329 18 6 1,516,020.75 44.88 1.39 1,948.21 412,517.78 20.78 1.07 3,963.55

68 Central de Cooperativas Copacaju Ltda Pacajus Cajucultura 1,600,830 120 15 535,070.97 24.32 1.05 23,879.77 313,244.02 14.61 1.01 45,199.61

69 Cooperativa Agroindustrial dos Pequenos Produtores do Sítio Malhada Crato Bovinocultura 714,505 18 11 -32,891.98 2.82 0.99 619.36 328,769.67 18.83 1.05 3,006.45


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APPENDIX 2 – NET ECONOMIC BENEFIT STREAM

Economic net benefit stream

QTY Component 1 Subproject Cash flow 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

14 Honey production - Apicultura (4,517,080) (177,336) (210,955) 833,549 1,194,690 1,538,340 1,575,210 1,597,902 1,448,578 1,461,709 1,742,996 1,437,319 1,594,988 1,492,744 1,460,564 2,659,018

1 Handicraft - Artesanata (210,011) (4,808) (5,504) (4,366) (1,929) (3,380) (2,570) (7,140) (4,070) (2,440) (5,520) (1,990) (4,270) (1,990) (7,270) 64,592

3 Free range chicken - avicultura capira (359,843) (5,593) (12,161) 56,802 71,874 70,536 66,561 71,673 64,498 71,673 70,536 71,673 71,673 71,673 71,673 192,852

17 Milk production - Bovinocultura leite (5,338,704) 127,681 871,436 991,598 1,992,729 1,958,271 2,019,153 2,018,414 1,756,483 2,024,132 1,798,587 2,037,308 1,756,389 1,950,020 2,034,304 2,858,690

6 Cashew production - cajuicultura (2,854,476) (90,750) (12,758) (59,141) 1,208,174 1,247,881 1,290,613 1,206,816 1,204,528 1,210,511 1,271,988 1,210,860 1,101,158 1,210,860 1,206,816 1,500,099

1 Coconut production - Cocoicultura (329,432) (11,042) (11,042) 251 (1,354) (22,972) (972) (972) (972) (972) (43,932) (972) (1,682) (972) (972) 53,884

10 Fruit production - fruticultura (3,664,221) (65,541) (154,227) (26,222) 1,061,685 1,177,498 1,181,824 1,159,622 1,218,941 1,148,644 1,323,612 1,144,056 1,234,783 1,144,056 1,159,622 1,837,231

6 Cassava production - mandiocultura (681,620) 19,219 93,930 302,151 350,648 361,469 361,661 360,637 360,848 360,656 372,344 360,656 360,748 360,729 360,848 376,828

5 Goat and Sheep Meat - Ovinocaprinocultura (1,234,420) (26,120) (27,909) 61,436 266,835 266,279 275,323 276,885 319,732 271,311 261,258 269,085 269,953 269,085 272,027 (7,225)

3 Fish farming - piscicultura 2,172,140 115,739 (319,016) 3,674 418,467 274,109 748,445 347,309 535,199 384,235 95,472 369,634 392,901 2,569 477,130 271,039

3 Industrial kitchen - cozinha industrial (311,406) 234,991 112,805 127,153 139,737 153,000 33,946 24,482 149,729 165,022 100,760 163,221 137,057 163,221 164,972 145,511

69

Component 2 benefit streamsImproved access to sanitation 298,914 437,832 1,390,541 1,831,917 2,123,835 2,640,620 3,269,976 3,269,976 3,269,976 3,269,976 3,269,976 3,269,976 3,269,976 3,269,976 3,269,976 3,269,976 3,269,976 3,269,976

Improved access to water 3,427,167 5,019,914 15,943,097 21,003,638 24,350,594 30,275,739 37,491,540 37,491,540 37,491,540 37,491,540 37,491,540 37,491,540 37,491,540 37,491,540 37,491,540 37,491,540 37,491,540 37,491,540

OVERALL PROJECT ANALYSIS 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Total incremental economic benefits for Comp 1 (sample subprojects) in BRL 116,441 324,599 2,286,884 6,701,556 7,021,031 7,549,194 7,055,629 7,053,494 7,094,481 6,988,100 7,060,851 6,913,699 6,661,996 7,199,713 9,952,518

Total incremental economic benefits for Comp 1 (all subprojects) in BRL 433,367 1,208,083 8,511,257 24,941,647 26,130,661 28,096,363 26,259,426 26,251,482 26,404,025 26,008,099 26,278,861 25,731,195 24,794,413 26,795,674 37,040,978

Total economic benefits for Comp 2 in BRL - 3,726,081 5,457,746 17,333,639 22,835,554 26,474,429 32,916,359 40,761,515 40,761,515 40,761,515 40,761,515 40,761,515 40,761,515 40,761,515 40,761,515 40,761,515 40,761,515 40,761,515 40,761,515

Total economic benefits estimates in BRL - 3,726,081 5,457,746 17,333,639 23,268,921 27,682,513 41,427,617 65,703,162 66,892,177 68,857,878 67,020,941 67,012,997 67,165,541 66,769,614 67,040,377 66,492,711 65,555,929 67,557,190 77,802,493

Total Project economic costs in BRL (all costs) 26,587,928 18,770,075 105,408,573 30,281,594 27,836,346 114,684,548 33,340,568 2,652,400 2,652,400 2,652,400 2,652,400 2,652,400 2,652,400 2,652,400 2,652,400 2,652,400 2,652,400 2,652,400 2,652,400

Incremental net benefit stream in BRL (26,587,928) (15,043,994) (99,950,827) (12,947,955) (4,567,425) (87,002,035) 8,087,049 63,050,762 64,239,777 66,205,478 64,368,542 64,360,597 64,513,141 64,117,214 64,387,977 63,840,311 62,903,529 64,904,790 75,150,093

Economic NPV @ 12% (BRL) 58,197,366

Economic NPV @ 12% (USD) 15,155,564 Exchange rate USD 3.84 Scaling up factor 4.54 454%

Economic IRR 13.78% Discount rate 10% Failure rate 18% 82%


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ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS

Executive Summary of Borrower Completion Report

Abstract

Output Title: Output 4: Final Evaluation Report of Ceará Rural Sustainable Development and Competitiveness Project (PDRS) – Projeto São José III.

Output Summary: Final Evaluation Report of Projeto São José III, as defined in TORs Nº 154/2018. This report reflects suggestions and eventual rectifications that may arise from submitting the Preliminary Evaluation Report (Output 3) to the Project Management Unit (UGP), as well as additional inputs gathered from project stakeholder interviews and workshops.

What is the primary purpose of this Output? Introduce the Final Evaluation Report of Ceará Rural Sustainable Development and Competitiveness Project (PDRS) - Projeto São José III.

What issues should the Output address? Furnish the Project Evaluation in line with the Consultant's opinion pursuant to TORs Nº 154/2018, built on interviews, field trips, workshops, conversation rounds, workshops and project desk review. Upon reviewing the project scope, challenges, opportunities, impacts and sustainability, this Output is to provide insightful information that would allow the State, managers, decision makers and beneficiaries to subsidize their strategies aimed at preserving investments made and planning coming phases of Projeto São José III.

How were issues successfully addressed, and goals achieved? The Project sought to achieve two main objectives: economic inclusion of poor rural families and universal access to water supply and sanitation for poor rural families in semi-arid areas of Ceará, by implementing activities across three Components: 1) Economic Inclusion; 2) Access to potable water and basic sanitation services in rural areas; and 3) Institutional Strengthening and Management Support. Economic inclusion included financing, technical assistance and training delivered to rural producer organizations. Universal access to rural water and basic sanitation services was achieved through new piped household water connections and improved sanitation modules for rural families. The Institutional Strengthening and Management Support was implemented through partnerships with collaborating institutional stakeholders, capacity building and development of instruments and systems for implementing and monitoring the Project. A stakeholder event was held on June 27, 2019, to discuss the preliminary project evaluation outcomes (Output 3). Additional interviews with project stakeholders and field technicians helped complement the information presented here.

Which outcomes were the most relevant? The most relevant outcomes were the implementation of 267 economic inclusion subprojects involving 7,398 farmers (heads of household) and their organizations, providing them with infrastructure and capabilities that potentially would facilitate their market inclusion and income generation. The project also contributed to ensure access to safe water, benefiting 26,198 families in 210 rural communities and improved household sanitation modules reaching out 39,617 families. In addition, as a complementary and innovative action, 15 water reuse pilot projects were implemented and tested, whose results proved their feasibility in semi-arid


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communities of Ceara with access to water supply. The project made investments following sustainable production guidelines, including land reclamation actions in compliance with social and environmental safeguards, fostering the involvement of diverse arrays of stakeholders, e.g. those traditionally excluded from investment projects such as quilombolas, indigenous peoples, women and others, and also social movements and different social representations. In terms of the project’s end targets, in the context of productive economic inclusion, preliminary analyses sampling 69 investments implemented and in progress reported a 33% real revenue increase between 2017 and 2018, as well as the effective implementation of 267 subprojects, including 197 under on-going operations as at June 14, 2019, which have adopted with varying degrees, sustainable project management instruments. Concerning access to water and sanitation, perception surveys conducted among community leaders, beneficiary families and health workers show high satisfaction with these delivery services, reporting improved health and well-being as a result of the project interventions.

How to leverage the Output? It should become a reference for informed decision-making regarding investments made and the foundation underpinning future phases of Projeto São José III or similar policies in other regions.

INTRODUCTION

This report overviews the results of the Final Evaluation of the Ceará Rural Sustainable Development and Competitiveness Project (PDRS) – Projeto São José III, in line with TORs Nº 154/2018, intended to:

Evaluate the implementation of the Ceará Rural Sustainable Development and Competitiveness Project (PDRS - Projeto São José III) considering its relevance, performance, management arrangements and successes. Furthermore, scrutinize the potential impacts of project activities on beneficiaries and outcome sustainability, including its contribution to capacity building from outset to final implementation” (Ceará, 2019a).

The evaluation process was based on four key Outputsi: Output 1 - Work plan, work methodology, interview preparation roadmap, database structure and guiding questions; Output 2 - Systematization of interview outcomes; Output 3 - Project evaluation - preliminary activity report based on the work plan, expected outcomes and outputs; and Output 4 (ongoing) - Final evaluation of Ceará Rural Sustainable Development and Competitiveness Project (PDRS / Projeto São José III). This report and its appendices refer to Output 4; the following pages summarize outcomes from previous outputs, complemented by additional stakeholder interviews and workshops. In addition to the report endnotes describing report information, appendices would have more specific data that would delve into or clarify aspects abridged in the main text. The following are herewith attached: i) Projeto São José III Beneficiaries; ii) Photograph Appendix; iii) Stakeholders Workshop Report; iv) EMATERCE Interview; v) Evaluation Data Files (database).

The Projeto São José III was a ground-breaking initiative focused on the economic inclusion of rural families, complementing the rural poverty reduction policies deployed in previous phases and keeping the Brazilian State of Ceará’s commitment towards the universal access to potable water in rural communities located in semi-arid areas. These actions occurred concurrently with one of the worst droughts to hit the state in the last 100 years, which highlights the magnitude of the challenges faced and the relevance of actions taken. This report seeks to reflect and analyze the project’s scope, challenges and opportunities, impacts and sustainability, and provide insightful information that would allow the State,


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managers, decision makers and beneficiaries to subsidize their strategies aimed at preserving investments made and planning coming phases of Projeto São José III.

Fortaleza, July 19, 2019

EXECUTIVE SUMMARY

I – CONTEXT

The state of Ceará has an area of 148,825.60 square kilometers, and is ranked 4th in the Northeast Region of Brazil per area size. Most of its territory is situated in the semi-arid region in northeastern Brazil, which contributes to its being ranked among the driest states nationwide (Zanella, 2005; Moro et al., 2015). The State of Ceará is also characterized by a high variability of the rainfall regime, where most of annual rainfall occurs between February and May, with scarce rainfall events during remaining months, while some regions report no rainfall events at all.

With predominantly family-based agricultural activities, the success of rain-fed crops is dependent on the regularity and amount of rainfall. Family farming differs in terms of potentialities and constraints associated with income-generating activities and skills, capacity building, and specific demands for technical assistance and agricultural extension. Production is predominantly for self-consumption, with poor market integration, except for the sale of surplus farm products, thus featuring an eminently post-peasant mode of production. Posing the need for family farming technologies and a greater share of investments, rural credit and technical assistance are pinpointed as the elements capable of furthering this activity. In addition to these characteristics largely affecting agriculture, extreme weather and water scarcity, particularly in semi-arid regions pose challenges for public authorities and civil society in terms of major water supply issues and inadequate basic rural sanitation.

To address these challenges, the State of Ceará has been developing public policies that, on the one hand, aim to reduce rural poverty and, on the other hand, seek to cope with water scarcity and low rural sanitation coverage. With that in mind, the State, with the support of the International Bank for Reconstruction and Development (IBRD), has been implementing actively a number of programs conceived to build sustainable solutions. This strategic partnership is highly relevant to the State's sustainable development goals in view of IBRD's two overarching goals: end extreme poverty and promote shared prosperity. In 1995, Ceará, in partnership with the Bank, reformulated the Northeast Rural Development Project (NRDP/PAPP), creating the Ceará Rural Poverty Reduction Project (CRPR), known as Projeto São Jose I - PSJ I (1996 - 2000), financed by non-reimbursable grants and beneficiary counterpart funds (Khan, 2005). In 2002, a new Loan Agreement was signed between the State of Ceará and IBRD, launching the Projeto São José II (PSJ II), intended to increase the quality of life of rural populations through non-reimbursable grants for small productive and social infrastructure investments demanded by family groups through their community organizations. PSJ II earmarked investments for agricultural mechanization, rural electrification and water supply subprojects. Total project costs included $ 37.5 million financed by IBRD and $ 12.0 million from the State Government.

B. Borrower´s Comments on the Bank´s ICR The Bank’s ICR was reviewed by the Borrower, comments were discussed during a VC on the 18th of


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October and incorporated where relevant in the final draft. However, the Borrower’s letter was not received in time for inclusion in the ICR before Board delivery. The letter will be archived in WB Docs upon receipt.


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ANNEX 6. SUPPORTING DOCUMENTS

▪ Project Appraisal Document. Report No. 66407-BR ▪ Loan Agreement, Loan Number 8124-BR ▪ Implementation Supervision Reports (ISR), 2012-2019 ▪ Supervision Aide Memoires ▪ Restructuring Papers (2014, 2015, 2016 and 2018) ▪ Social and Environmental Safeguards reports

o RELATORIO FINAL AREA SOCIAL 16 05 2019 - VERSÃO FINAL o Relatório de Avaliação de Impacto Socioambiental.

▪ Borrower Completion Report ▪ Informações Adicionais para Subsidiar o Relatório Final do PSJ III - 19_07_19

o Item 1. Analise do Trabalho de Acompanhamento as Unidades de Reuso em 2016 do Projeto SÃO JOSÉ - III

o Item 2 - Lista das entidades lideradas por mulheres o Item 3 - Relatorio_Geral_Modulos_Sanitarios_Sao_Jose_III_maio_2017 o Item 3 - Resumo do Custo de Esgotaqmento até Dezembro -2016 o Item 3 - Solos de Embasamento Sedimentar o Anexo - Parecer Técnico Sensores para Boias Oceanograficas- Mar2019 o Avaliação da Quadra Chuvosa de 2015, 2016, 2017 e 2018 o A seca plurianual de 2010-2017 no Nordeste e seus impactos o FUNCEME - Ações Estratégicas Realizadas em Parceria com a FUNCEME o Relatórios SAAES o Resumo da Situação de Abastecimento das Localidades dos SISAR’s o Monitoramento do Projeto de Sistemas de Reúso de Águas Cinzas, 2016 o Lista de subprojetos – ranking o Cartilha 1 Educação ambiental o Cartilha 2 Módulos sanitários o Cartilha 4 Reuso final

▪ Manual SIGAF ▪ Relatório da Linha de Base (DIME) ▪ Project Impact Evaluation Report (DIME), written by Erick Baumgartner, 2019. ▪ Relatório de Avaliação de Meio Termo (2015) ▪ Relatórios de Progresso, 2013-2018 ▪ Roteiro avaliação, 2019 ▪ Relatórios de Auditoria anual. ▪ Análise do Trabalho de Acompanhamento Técnico dos Sistemas de Reuso de Águas Cinzas

Implantados Pelo Projeto São José III *2016, 2017, 2018, 2019) ▪ Análise do Trabalho de Acompanhamento dos Módulos Sanitários Implantados Pelo Projeto São

José – III ▪ Manual de Operações do Projecto (MOP), 2019.


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ANNEX 7. ADDITIONAL INFORMATION

Table 1. Project Cost Mobilized per Source of Funds (Date: 28 June 2019)

Description (Source)

2013 2014 2015 2016 2017 2018 2019 Total (US$)

The World Bank (US$)

10,250,000

5,058,638.50

37,665,127.15

9,748,486.54

8,194,688.42

29,083,059.39

- 100,000,000.00

Ceará State (US$)

5,581,298.66

5,095,031.69

2,283,547.49

1,266,206.40

2,851,042.12

10,689,629.21

11,019,125.46

38,785,881.03

Beneficiaries Contribution (US$)

- - - 289.25 47,236.88 463,126.17

67,279.59 577,931.89

Subtotal (US$)

15,831,298.66

10,153,670.19

39,948,674.64

11,014,982.19

11,092,967.42

40,235,814.77

11,086,405.05

139,363,812.92


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Table 2. Number of Productive Investments per Beneficiary Group.

Beneficiary Group No. of Productive Investments Implemented

No. of Productive Investments Implemented & in Operation

No. of Productive Investments Implemented

FETRAECE 65 43 22

Indigenous 3 1 2

Communities affected by dams (MAB)

2 1 1

MST 96 83 13

Artisan fishermen 4 2 2

Quilombolas 11 8 3

Organized Civil Society 86 59 27

Total 267 197 70


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Table 3. Productive Investments per Value Chain (BRL)

Value Chain Total Investment (BRL)

Avg. Investment (BRL)

Apiculture – Honey Production

8,948,097.63

223,702.44

Handicraft 321,661.33

107,220.44

Poultry farming (caipira) 374,168.68

93,542.17

Dairy milk 7,824,243.78

223,549.82

Cashew 4,617,803.33

288,612.71

Coconut 478,316.54

119,579.14

Fruticulture 4,869,377.43

256,283.02

Horticulture 671,473.96

167,868.49

Cassava production 1,688,705.39

105,544.09

Sheep and Goat farming 3,942,263.66

91,680.55

Aquiculture (fish farming) 2,624,378.32

524,875.66

Food processing 371,076.85

92,769.21

Seed production 79,500.00

79,500.00

Community Tourism 359,488.31

359,488.31

Total 37,170,555.21

195,301.15


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ANNEX 8. EMATERCE SUSTAINABILITY PLAN (Portuguese). 1. Introduction

O Projeto São José III do governo do Estado do Ceará, coordenado pela Secretaria do Desenvolvimento Agrário – SDA, e financiado pelo Banco Mundial – BIRD tem se constituído, com certeza, na mais importante inversão de recursos para o desenvolvimento rural sustentável e solidário para as famílias rurais, notadamente aquelas caracterizadas como sendo da agricultura familiar.

O referido projeto apoia ações de água e saneamento, projetos produtivos econômicos e de desenvolvimento institucional. O Projeto São José III conseguiu muitos avanços nessa sua atual edição, porém o contrato com o Banco Mundial e o Governo do Estado foi finalizado agora no dia 30 de abril próximo passado.

É lógico e esperado que um projeto desta dimensão encontraria problemas de diversas ordens na sua implementação. Destacam-se entre os principais: despreparo e gestão precária das comunidades beneficiadas, problemas burocráticos, licitações, capacidade técnica das empresas contratadas, dificuldades de entrega de máquinas e equipamentos pelos fornecedores, dentre outros. O fato é que, em virtude dos problemas acima apontados, dos 267, 48 projetos se encontram com alto risco de insucesso e 219 apresentam boa probabilidade de sucesso. Desta forma, as ações de sustentabilidade serão realizadas em 2 (duas) fases:

A Ematerce participou do PSJ III, dando importante contribuição atuando na fiscalização do projeto. Ao todo, elegeu 62 fiscais para essa atividade, que, para ela, se constituía em uma atividade nova e não pertinente ao seu escopo operacional. Contudo, como uma empresa do Estado não podia negar esse apoio e, afinal, se constituiu de grande importância para a agilização dos projetos e, por que não dizer, um belo aprendizado na sua matriz de trabalho. Isso credenciou a empresa junto aos responsáveis pela coordenação e financiamento do projeto, ao ponto de hoje a empresa estar credenciada a relevante papel na próxima etapa do projeto, o São José III – Segunda Fase.

Em vista disso a empresa foi mais uma vez solicitada para o apoio, assessoria e assistência técnica e gerencial a esses 267 projetos.

1st Phase

Focus on 48 subprojects at

high risk of failure

2019 (June- December)

2nd Phase

Focus on 267 subprojects

(48 + 219 remaining of the PSJIII portfolio)

2020

(January-December)


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2. Subproject Selection

First Phase

Os 48 projetos com risco de insucesso foram selecionados baseados em conceitos claros para cada indicador da matriz construída durante a última missão do Banco mundial no final de abril. Após isso, ouviram-se os gerentes de projetos das cadeias produtivas como forma de se atualizar a matriz construída. O resultado desse trabalho foi utilizado na oficina com os gerentes de projetos, fiscais e outros técnicos da Ematerce, como forma de se conhecer melhor todos os detalhes e, a partir daí, se construir a estratégia mais adequada. Foram divididas equipes em grupos de interesse e cadeias produtivas durante a oficina para que se tivesse oportunidade de que os técnicos saíssem da oficina com o maior detalhamento possível de cada projeto.

As cadeias produtivas estão assim divididas:

• 33 projetos de ovinocaprinocultura;

• 08 projetos de agricultura familiar com aporte tecnológico (Artesanato, Cajucultura, Mandiocultura, Horticultura e Olericultura);

• 01 projeto de avicultura;

• 05 projetos de bovinocultura de leite.

• Encontram-se distribuídos em 14 regiões administrativas da Ematerce e 27 municípios. Foram acompanhados por 23 fiscais da Empresa durante as suas implantações.

Second Phase

Os 219 projetos remanescentes (do total de 267 projetos em carteira) estão distribuídos nas diversas cadeias produtivas apoiadas pelo projeto e se encontram em estágio avançado de implementação e operação. Todos estes grupos possuem gestão organizacional, produtiva, empoderamento do projeto e experiência de nível satisfatório quando comparados com o grupo vulnerável.


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Portanto a atenção maior em 2019 será focada no grupo vulnerável e, em 2020, os 219 projetos se incorporarão a 48 projetos, perfazendo ao todo 267 projetos, aos trabalhos de ATER com vistas as suas conclusões.

3. Strategy for Activities É pensamento se envolver nesse trabalho o maior número possível de técnicos da Ematerce que exerceram o papel de fiscais desses projetos. Entretanto, para se evitar sobrecargas a alguns desses fiscais, pelo elevado número de projetos e que também desempenham outras funções na Ematerce, inclusive cargos em comissão serão envolvidos outros técnicos na execução. Cada técnico ficará responsável por um ou mais projetos. Deverá, a partir das informações recebidas, definir sua metodologia de trabalho. Via de regra, os 48 projetos deverão ter assistência semanal, pelo menos nos três primeiros meses e, a partir daí, se poderá passar essa frequência para quinzenal, à medida em que o projeto vá se consolidando. Para a programação de 2020, isto é, assistência técnica e gerencial aos 267 projetos, está decidido pela diretoria da empresa que farão parte do contrato de resultados de cada técnico e unidade operacional da Ematerce e terão prioridade de atuação. Ainda em relação aos 48 projetos de maior vulnerabilidade, os principais pontos a serem abordados referem-se aos discriminados na planilha matriz de cada projeto. Identificar os motivos para o baixo nível de desenvolvimento do projeto e de pagamento e baixa expectativa de sustentabilidade do projeto Para tanto, deverá se levar em conta os seguintes pontos chaves:

CADEIA PRODUTIVA Nº PROJETOSAgricultura Familiar Com Aporte Tecnológico - Artesanato 1

Agricultura Familiar Com Aporte Tecnológico - Cajucultura 24Agricultura Familiar Com Aporte Tecnológico - Carnaúba 1

Agricultura Familiar Com Aporte Tecnológico – Cocoicultura 5Agricultura Familiar Com Aporte Tecnológico - Comercialização 2Agricultura Familiar Com Aporte Tecnológico - Frut icultura 28

Agricultura Familiar Com Aporte Tecnológico – Hort icultura 5Agricultura Familiar Com Aporte Tecnológico - Mandiocultura 19Agricultura Familiar Com Aporte Tecnológico - Produção de Alimentos 2

Agricultura Familiar Com Aporte Tecnológico - Sementes 2Apicultura 64Avicultura 5Bovinocultura de Leite 32

Carcinicultura 1

Ovinocaprinocultura 20

Piscicultura 8TOTAL GERAL 219


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➢ Nível organizacional e de gestão da comunidade beneficiária; ➢ Empoderamento da comunidade em relação ao projeto; ➢ Dificuldades encontradas que entravaram a plena execução do projeto; ➢ Principais motivos apontados para a não conclusão do projeto; ➢ Modo como se deu a ATER contratada para o projeto; ➢ Necessidades adicionais para a implantação do projeto; ➢ Como superar os problemas existentes de modo a viabilizar o projeto; ➢ Necessidade de capacitação em áreas problemas identificadas durante o desenvolvimento do

Plano de Sustentabilidade.

Para o ano de 2020, em relação aos 219 projetos que serão adicionais aos 48 e, portanto, para o total dos 267 projetos, a estratégia será de ATER nos aspectos produtivos e gerenciais, de forma que se consolidem, se emancipem e se constituam verdadeiramente a grande saída para essas comunidades, de geração de ocupação e renda.

4. Methodology for Activities

A concessão do Projeto São José está condicionada à organização da comunidade em associações e/ou cooperativas responsáveis pela execução, manutenção e gestão. A intenção, neste caso, centra-se nas possibilidades de que a organização comunitária, com suas parcerias, venha ampliar as chances para que se efetive a geração de capital social, a melhoria das condições econômicas e, consequentemente, o empoderamento dos beneficiários. No entanto, na maioria das experiências com projetos desta natureza, tem-se percebido inúmeras fragilidades que as deixam susceptíveis a variáveis que prejudicam a sua sustentabilidade.

Frente a este cenário, o papel institucional é muito importante no processo. Daí indagarmos qual seria a mais adequada abordagem a ser delineada, de modo a promover o fortalecimento dos empreendimentos acessados pelo PSJ? Nesse sentido, talvez seja conveniente rever algumas questões, entre tantas, e conhecer, de fato, a realidade em que o projeto está inserida, com a identificação do planejamento e a vivência de gestão até então praticada. É também primordial identificar o grau de participação dos sócios e sócias e perceber o sentimento de pertencimento deles e delas para com o projeto. De posse das questões sistematizadas pelo estudo da realidade, surge o momento de se construir coletivamente o processo de gestão de modo a enxergar todas as dimensões (organizacional, de pessoas, financeira e econômica, processos produtivos, gerencial, comercial e socioambiental). Teremos, com isso, elementos básicos para a formatação do plano de atividades. Entre tantas formas de ação possíveis de serem adotadas, dever-se-á ampliar as capacidades de governança, empoderamento dos beneficiários e a própria sustentabilidade dos empreendimentos produtivos:

•Trazer a visão sistêmica para o projeto;

•Garantir que todas as pessoas envolvidas tenham clareza dos papéis, atribuições e metodologia do trabalho;

•Por se constituir em uma gestão das mudanças, requer construir acordos, pois terá momentos de abandonar práticas gerenciais até então adotadas, que não foram suficientes para melhorar o desempenho econômico, a motivação dos associados e ampliar as habilidades;

•Escolher ferramentas e dinâmicas de trabalho que propiciem a verdadeira participação, com perspectiva


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de gênero, geração e etnia;

•Repensar outros modos de intervir que não insistam em separar o inseparável, pois todas as dimensões são abertas para a participação de homem, mulher, adultos jovens, idosos; é um processo de desconstrução possível;

•Juntar (misturar) saberes e fazeres que poderão ajudar na direção.

É provável que se encontrem os mais diversos tipos de problemas relacionados aos pontos-chaves apontados. É possível, inclusive, que se encontre mais

de um tipo de problema por empreendimento. Desse modo, pretende-se trabalhar seguindo-se os passos mais adequados para se conseguir os resultados da ação das equipes de extensionistas envolvidas em cada empreendimento. Para tanto se fará, via de regra, a adoção da seguinte linha metodológica pelas equipes:

➢ Conhecer as diversas informações já existentes em cada projeto, Planos de trabalho, aditivos aos planos de trabalho, aportes financeiros recebidos, recursos aplicados, recursos em caixa, bloqueio existentes, pendências impeditivas ao desempenho, relatórios de gestão, relatórios de ATER, relatórios de fiscalização, Situação atual no E – Parceria e no Sig Pro, dentre outros;

➢ Nesse aspecto, a elaboração de um Diagnóstico Rural Participativo – DRP se torna o melhor caminho para o início das ações de ATER. O Referido diagnóstico permitirá identificar com mais qualidade e produtividade as deficiências e potencialidades do projeto;

➢ O DRP proporcionará ainda a possibilidade de inserir os beneficiários em novas políticas públicas, ensejando a essas melhorias de produção e produtividade, definição das demandas de capacitações específicas, nos aspectos tecnológicos e gerenciais;

➢ Intensa articulação das equipes definidas para cada empreendimento, com os gerentes de projetos, para a sedimentação do status atual do projeto;

➢ Reunião da equipe de ATER e gerentes de projetos com as lideranças dos projetos. Esse momento poderá se dar de modo individualizado por projeto ou de modo coletivo, com mais de um projeto, desde que guardem similitude com as cadeias produtivas;

➢ Reunião específica em cada projeto, envolvendo as equipes de extensão e gerentes de projetos sempre que possível e todos os beneficiários do projeto. Nessa ocasião, terão que ser levantados os pontos fracos, pontos fortes, ameaças e oportunidades. Se constituirá um primeiro grande momento para se sentir o empoderamento dos beneficiários quanto ao seu projeto, aflorar no grupo o sentimento de pertencimento e a definição de quem somos, o que queremos e onde queremos chegar e, assim, se resgatar a credibilidade no desenvolvimento do projeto;

➢ Considera-se fundamental o amplo envolvimento dos membros, família beneficiária (homens, mulheres e jovens). Trata-se de uma estratégia de desconstruir o “status quo” ainda vigente na cabeça dos técnicos e beneficiários, que costumam departamentalizar o econômico (homens), social (mulheres) e alienação do processo (jovens), quando se sabe que o processo de desenvolvimento é único – social e econômico;

➢ Será importante também, a cada momento propício e adequado, o envolvimento de possíveis e potenciais parceiros para o pleno desenvolvimento e maturação do projeto, inclusive a abertura para outros beneficiários que possam utilizar a infraestrutura, objetivando aumentar a escala de negócios do projeto, bem como agregar valor à sua produção. A ideia é de que esse projeto deixe de ser uma unidade fechada em si mesma para se tornar uma opção de desenvolvimento do município;


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➢ É imprescindível, portanto, como ponto essencial, a conclusão de todas as obras do projeto, recebimento e instalação das máquinas e equipamentos, sem os quais o projeto não poderá ser iniciado;

➢ Como se vê, torna-se necessário, de início, uma frequência de ATER mais efetiva e sistemática. Para isso, se está programando nos três primeiros meses uma frequência semanal a cada projeto e, à medida em que este for se consolidando, ela poderá se tornar quinzenal e/ou mensal, a depender do avanço em que for se encontrando;

➢ Também deverão ser realizados intercâmbios técnicos, missões técnicas, visitas dos beneficiários dos projetos a empreendimentos similares que atingiram maior grau de desenvolvimento e maturação e estão em franco estágio de desenvolvimento. Essa troca de saberes concorrerá por certo para motivar e empoderar os beneficiários para que, com isso, alcancem o maior e melhor sentimento de pertencimento possível;

➢ Serão trabalhadas também, em articulação com a UGP/PSJ, as demandas relativas às questões de licença ambiental, certificação e cadastro do projeto perante a SFA/MAPA/CE ou ADAGRI; energia elétrica e/ou alternativa, cooperativismo, mercado institucional e convencional, participação em feiras e eventos;

➢ Para cada projeto e/ou grupo de projetos, será definido a equipe de extensão que irá trabalhar com os beneficiários;

➢ Um dos aspectos mais importantes a ser considerado pela ATER e beneficiários é a de se cristalizar que o projeto é um negócio e que, portanto, terá receitas e despesas e que, para sua manutenção e incremento de melhoria da qualidade de vida dos beneficiários, terá de gerar ocupação e renda, fatores sem os quais não se sustentará e viabilizará. Desse modo, questões relacionadas a fomentar entre esses beneficiários o empreendedorismo serão vitais ao processo de desenvolvimento do projeto;

➢ Tornar-se-á necessário, em alguns casos, a contratação de consultorias específicas em temas e áreas em que a Ematerce não tem a expertise necessária, principalmente nas áreas de cooperativismo e mercado.

➢ Por fim, para cada empreendimento será construído um Plano de Trabalho (Plano de Sustentabilidade), com objetivos, metas e prazos que definam claramente o que é o projeto, e onde ele deverá chegar.

➢ Nas áreas de mercado e comercialização questões importantes serão consideradas, orientadas, acompanhadas e cobradas para se avaliar o desempenho e maturação do projeto:

• Organização e funcionamento do Sistema Contábil;

• Plano de manutenção, operação do Fundo de Reserva;

• Comprovação de vendas para novos compradores;

• Beneficiários apoiados pelo projeto vendendo produtos para os mercados institucionais e privados;

• Identificação do nível de operação do projeto em relação à sua capacidade dimensionada;

• Produtos certificados ofertados pelo projeto;

• inserir os produtores em cooperativas existentes ou similares para a compra e venda em conjunto, desenvolvendo o associativismo;

• incentivar e difundir outras formas de comercialização diferentes das compras governamentais, tais como feiras da agricultura familiar, feiras agroecológicas.


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5. Monitoring and Supervision A Ematerce utilizará como mecanismo de acompanhamento e monitoria o Sistema Sig Pro da UGP do Projeto São José. Para tanto, os técnicos executores serão capacitados e receberão suas respectivas senhas para acessar esse sistema e postar as ações e resultados obtidos.

OPERATIONAL TIMETABLE: SUSTAINABILITY PLANS, PSJ III SUBPROJECTS

Year 2019

Activities Jun Jul Aug Sept Oct Nov Dec

Reuniões de integração gerentes de projetos x Ematerce, senhas e logins.

Reuniões de reconhecimento dos projetos nas comunidades.

Elaboração do diagnóstico rural participativo do projeto - DRP.

Construção do plano de sustentabilidade – definição de objetivos metas e indicadores de resultados.

Ater, capacitações, consultorias, parcerias.

Acompanhamento, monitoria e avaliação e resultados parciais.

Year 2020

Activities Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Acompanhamento, monitoria e avaliação e resultados parciais e finais dos 48 projetos vulneráveis.

Reuniões de integração gerentes de projetos x Ematerce, senhas e logins (219 projetos).

Reuniões de reconhecimento dos projetos nas comunidades (219 projetos).

Elaboração do diagnóstico rural participativo do projeto - DRP (219 projetos).

Construção do plano de sustentabilidade –


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definição de objetivos metas e indicadores de resultados (219 projetos).

Ater, capacitações, consultorias, parcerias (267 projetos).

Acompanhamento, monitoria e avaliação, resultados parciais e finais (267 projetos).

Source: Ceará (2019f)


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ANNEX 9. MAPS

Map 1. Location of Component 1 investments funded by the project.


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Map 2. Location of Component 2 investments funded by the project.

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