The Challenges of Rural Poverty: l ~ h e Role of IFAD

1 Report of the Rapid External Assessment of the International Fund for ~gricultural Development (abridged)

Editor's Note: I am pleased to have been able to serve as a guest editor for this edition of Hunger Notes. It has given us a welcome opportunity to highlight the work of IFAD, and in particular, the Rapid Ex- ternal Assessment Report. This Report gives an excellent overview of what the institution hasdone, how the mandate of the Fund is needed now more than ever, and what lies ahead. It has also provided some very helpful recommendations of what the fiture direction of IFAD should be -- and we have already put in place a number of these suggestions.

I hope you will find this issue informative and an interesting opportunity to learn more about the work of IFAD. World Hunger Education Service has provided an excellent tool through Hunger Notes of in- forming the public andpolicy makers about the important issues relating to world hunger, poverty and its causes. I am delighted to have been associated with World Hunger Education Service over the years and as always, I look forward to the nexz issue of this important publication.

-- Vera P. Gathright, Representative to the Fund

I PREFACE Food and Poverty in the I 990s

If the International Fund for Agricultural Development has not created universal awareness of poverty in development, it has certainly contributed greatly to the way in which poverty issues are debated. There is more understanding of the actual and poten-

tial contribution of the poor to growth, of the need for investment rather than income uansfers to overcome poverty, and of the inevitability of targeting resources if they are to arrive in the hands of intended recipients. The recent rediscovery of rural poverty by other international financial in- stitutions only reinforces the potential of a sound and flexible organization that promotes innovation, mobilizes resources, and helps budget development and funding in the international community. Global demographic uends in the mid-1990s, how- ever, suggest that the Fund and the interna- tional community face a formidable challenge.

More people are born into the world, more are living in poverty, and more are going hungry. Moreover, population increases of 100 million a year, almost entirely in developing countries, will not ease until the second quarter of the 21st century. At that time, the world's population is forecast to be 9 billion, a 60 percent increase on today's figure. If food security is to become a reality, yields must increase faster in the 1990s than they did in the 1980s. That is a tall order. Despite a remarkable increase in per-capita food production in the 1980s of 13 percent, two-thirds of all developing countries wimessed stagnant or reduced food production.

Then, as now and in the future, most af- fected are the developing countries' poor. Unless there is timely and effective inter- vention, the 800 million people now without enough food will rise substantially. Most vulnerable are children. In 1990, more than 184 million preschoolers in develop- ing countries were underweight; 14 million

Mr. Fawzi Al-Sultnn, President

Infemntional FundJor

Agriculrural Development

Rome, 15 July 1994

Dear President.

I have the honour of subn~irring

lo you the Report oJlhe Raprd E.rtcr-

nu1 Assessmen! oJ IFAD, with !he

request that it be made available to

r h Governing Council in response

lo the terns oJResolutiori 8 I/XVII.

In doing so, I txpres.7 to you !he hope

of all menrbers of the assessment

team that the obsen~ations and

recommendarions conlnined in !he

Report will he of nssisrmrce in

clarxving the role of this 1mu.rua1

organization and stroigthenitig its

ability ro pursue with necessaq

vigour its imponmil Imk. 111 our

judgemen!, !he need for IFAD is

more pronounced now !hati a! !he

time it was created.

Each of us h found instrurrive

nndstinrularing ourparticiparion rn

!his asstmmertr. We tharrk yo14 a d

the Ch i tman of the G o v e r n ~ q

Council for the confidence that has

been expressed m us in rhe Jorni of

ourselecriort Jor this tmk.

We wish to add a7 well a nore of

sincere appreciation lo you and to

all members of IFAD Jor the rour-

leous and responwe ntatmer rri

whrh our requesrs Jor inJormcrtion

have been met amlour requirements

arrended to. Most imporrantly, we

note how grateful we are to those

ruralJanners in four conrmetus who

replied to our probing questions

with catuiour and &nip. It is to

!hem and !heir counrerpnrrs

worldwide that we rerpec~full,y ded-

cute t h s repon.

Yours sincerely.

Ivan L. Head. Chairman

Rapid ExfemalAssessment

I

Summer 1995 3

The Profile of the Rural Poor in Developing Countries (Percent cf Rural Population)

Region Smallholder Landless Nomadic E h i c Small and Internally Households farmer population pastoralist indigenous artisanal displaced refugee headed by population population population fishermen population women as

population percent of rural households 1988

Asia 2 4.5 5

Asia (excluding 51 20 2 2.4 7 5 14

Near East and 42 23 2 13 17

Total 114 52 24 6 7.3 4 6 12 developing countries

Leaat develqod I8 16 5 23 countries

.. Not available Source The State of World Rural Poverty

uffered eye damage from litamin-A deficiency. One ,illion people, mostly :hildren and women of eproductive age, have iron leficiency, which causes memia and leads to liminished learning :apacity, and to increased norbidity and mortality. Agricultural yields in many

leveloping countries are in- xeasing but less than what vill be required if the goal of bod security is to be real- zed. Deficiencies permeate he entire post-harvest food :hain - spoilage and infesta- ion in storage facilities, mritional deterioration in bod processing and prepara- ion (often due to the inade- quacy or absence of ppropriate technologies and :quipment), and poor dis- .ribution systems which linder food deliveries fiom ?reducers to markets, and From markets to consumers. While these problems are not peculiar to developing

countries, the costs to the poor are here most apparent and the consequences most tragic.

In the quest for food security, a factor as critical as any other is the inability of the poor to acquire food because of low incom- es and little opportunity for improvement. A chilling reality in most developing countries, more threatening to social stability than poverty itself, is the increas- ing disparity between those with the lowest incomes and those with the highest. These inequities seem only to have worsened over the decades, particularly in countries where agricultural policies concentrated on growth and efficiency.

groundwater and water for irrigation. No region of the South is unaffected by

poverty and hunger. Asia is home to the most impoverished and malnourished people. Africa, however, has most people at risk, as well as the lowest increases in yields of major food crops. In all regions, there must be urgent and effective assistance ap- propriate to local circumstances.

For many reasons (some ideological, others economic), the 1980s and, so far, the 1990s have witnessed a concentration of policy and practice shaped by the goals of growth and efficiency. Without effective

Another immediate effect of population growth is en- vironmental degradation. As people move deeper into forests or further up the mountains in search of land on which to produce food, their activities result in deforestation, soil erosion, and interference with natural watersheds. Moreover, this despoliation inevitably extends into the fertile lowlands - soil erosion and siltation, and reduced sources of

Food staples self-sufficiency by region, 1965-1967 and 1986-1988

Food sraples self-suficiency . ~-

ratio 1965-1967 1986-1988

Asia 96 97 Asia, excluding China and India 99 94 Sub-Saharan Africa 98 93 Near East and North Africa 92 76 Latin America and the Caribbean 112 93 Total - 1 14 countries 98 95 Least d e v e l o d counmes 100 95

Note: Food staples include: cereals, roots and tubers, and pulses. Self-sufficiency is defined as the ratio of domestic production to estimated domestic consumption. Source: The State of World Rural Poverly

4 Hunpr Notes

ompensating policies to achieve equity, he numbers of desperately poor people ave increased in absolute numbers, as well s in percentages of populations in all kveloping regions. The essential and ethi- a1 dynamism between growth and equity lave been gravely damaged and must be ddressed with vigour if future damage is lot to become self-perpetuating. Few kveloping countries, are pursuing effec- wely policies to reduce poverty in the short e m . In appropriate local form, such ~olicies must become the norm for all ounuies. Recent policy revisions in major ending institutions will hopefully en- ourage the formulation of necessary na- ional policies and priorities. One of the unexpected, and unwelcome, onsequences of the ending of the cold war rn been a reduction in volume of funds for bfficial development assistance. In most ~untries in the industrialized North, such ssistance as a percentage of GNP has leclined. The evidence is found in bilateral s well as in multilateral development as- istance programs. Particularly at risk are he "soft window" or concessional jrograrnrnes, as replenishment campaigns alter or stagnate. Longer-term activities ital to food security, including critically mportant investments in agricultural re- earch, are now in jeopardy. Hand in hand with declining investments

me fewer innovative interventions. Nhether the result of donor fatigue, of iustration at disappointing development rrogress, or simply as a withdrawal of the :thic of caring and sharing, the evidence is :lear-cut and the potential for disaster is

ominous. Just as the interface between the industrialized countries and the developing nations becomes increasingly the focus of attention for economic, environmental and demographic reasons, so too does the mutuality of vulnerability increase.

An unfortunate consequence of shrinking budgets and disappearing sources of operat- ing capital is a natural inclination towards institutional and organizational competi- tiveness. At a time when cooperation and complementarity should be emphasized, prospects of coherence and collaboration threaten to fade. Whether in the fund-rais- ing quests of charitable non-government organizations, or in the competition for resources among the Bretton Woods and the United Nations agencies, weary tax- payers are witness to an inelegant display of competition. The publics in all countries are now seeking evidence of cost-effective- ness, of efficiencies, of honesty; they are demanding a dedication to goals of human dignity and self-effacing public sectors. The moment is ripe for progress towards those goals by all in the international com- munity.

The Rapid External Assessment The Terms of Reference for the assess-

ment may be described, inter a h , as direct- ing the external team to assess:

The extent to which, and the ways in which, the Fund is fulfilling its mandate to address rural poverty and hunger; The Fund's strengths and weak- nesses compared with other multi- lateral and bilateral institutions as-

Rural population below the poverty line in 114 developing countries, 1988

Population Rural popularion Toral Rural us percent of roral

sisting the poorest and the agricultural sector; The Fund's relative cost-effectiveness, in- cluding the ratio be- tween administrative costs and lending levels; The extent and na- ture of cooperation with other institu- tions, including the Fund's role in in- fluencing their policies and strategies.

As directed by Resolution 81lXVII of IFAD'S Govern- ing Council at its January 1994 meeting, the President in agreement with the Chair- man of the Governing Coun- cil appointed a team which reflected the Fund's three membership categories: Ali A. Attiga - Libya, Ivan L. Head - Canada, Martin En- rique Pineiro - Argentina. Appointed also were two special advisers to the team: Yves Rovani - France, and Djibril Sene - Senegal.

The team began its work in March 1994 with an ex- amination of the relevant documentation made avail-

Rural population below poverty line

As percent Region (millions) (millions) population Millions o f rural po~ulation Asia 2,713 2,019 74 633 3 1 Asia (excluding China and India) 812 567 70 262 46 Sub-Saharan Africa 462 337 73 204 60 Near East and North Africa 208 106 5 1 27 26 Latin America and the Caribbean 425 123 29 76 61 Total 114 countries 3.809 2,584 68 939 36 Least developed countries 46 1 368 80 253 69 Source: The State of Wo i ld Rural Pover ty

Summer 1995 5

The Rapid External Assessment Team

Ali Ahmed Attiga: Former

Jnt ted Nations Development

'rogramme AssistantAdministrator

md Director of Regional Arab

itates and Europe (1991-94) ;

;ecretary -General, Organization of

Lrab P e t r o l e u m Exportrng

Tountries (1973-87); former Mrnt-

,ter of Planning, Libya.

Ivao L. Head- (char): Professor )f Law and Political Science,

7niverstty of British Columbia:

brmer President, International

3evelopment Research Centre (01-

awaj; SpecialAssistanttothe Prime

Mnisterof Canada (1968-78).

Martin Enrique Pineiro: Former

3irector-General, Inter-Amencan

lnstilule for Coopera t ion on

4griculture (1986-94, Costa Rica);

Vndersecrerary forAgricullure, Ar-

rentina(1973-74); boardmemberof

fie International Food Policy Re-

rearch Institute (Washmgton, D.C.)

md of the Internalional Service for

Vational Agricultural Research 'The Hague).

Yves Rovani (special adviser):

Principal Advrser, Task Force on

Portfolio Managenrent, Inter-

4merican Development Bank

'1993); member, Tmk Force on

Project Quality, Afncan Develop-

ment Bank (1993-93); Vice Presi-

dent a n d D ~ r e c t o r - G e n e r a l ,

Operations Evaluation, World Bank

Group (1986-92).

Djibril Sene (special adviser): President, Commissron du Develop-

pement rural el de L'Hydraulique

de L'Assemblee Nationale, Senegal:

Ministre de 1"Enseignement super- ieur el & la recherche scientifique

(1981-83); Ministre du Developpe-

men! rural (1978-81).

able to the members and advisers. It gathered together initially in Rome in mid- April to determine its programme of work and schedule of field visits, and elected Ivan Head as chairman of the team. On this oc- casion meetings were also held with most members of the Executive Board. The report was concluded and delivered to the President of IFAD in midJuly for transla- tion and transmission to the Governing Council.

The projects visited in the field are listed at the end of the report . Extensive discus- sions were held with the management and staff of the Food and Agriculture Organiza- tion and the World Food Programme in Rome, the World Bank and the Inter- American Development Bank in Washington, the African Development Bank in Abidjan, the Asian Development Bank in Manila, and the Arab Fund for Economic and Social Development in Kuwait. Interviews were conducted with government ministers and senior officials in China, Egypt, Guatemala, Guinea, Jor- dan, Mali, Morocco, Paraguay, the Philip pines, and Uganda, and with the NGO representatives in several places. Field visits were made to 13 separate IFAD- funded projects, some of them spread over several sites, chosen to represent a reasonable range of the variety of activities in the Fund's project portfolio

Throughout this extensive process, and more particularly during the several weeks spent by the team at or near the Fund's headquarters, management and staff were accessible to respond to queries and were entirely forthcoming with data and records as requested.

I. PERPLEXING CHALLENGES

The most perplexing challenge facing the rapid assessment team was one not an- ticipated in its terms of reference -- to understand the nature of this paradoxical institution. Assessing the International Fund for Agricultural Development (its role, reputation, and record) is influenced

by one's perception of its character. Is it a financial or development institution? Or both?

Certainly, the Fund was created as a fman- cial institution. Its written constitution (the Articles of Agreement) anticipated that its primary, indeed predominant, role should be as a source of additional funds. The funds were to be employed for a single purpose - reducing rural poverty in developing countries through the support of agriculture and food-related projects. These projects, however, were to be designed, im- plemented, and supervised by others.

The Fund's founders assumed that an ad- ditional source of funds for this lofty pur- pose would strengthen the attention of other bodies to the widespread com- munities of rural poor, and would en- courage their involvement in addressing in more sophisticated fashion the complicated issues underlying rural poverty in so many developing countries. In the 1980s, how- ever, major international financial institu- tions unexpectedly shifted attention and resources to structural adjustment and the Fund was left as the principal multilateral financial institution addressing the problems of the hungry rural poor.

Not surprisingly, the Fund quickly real- ized that projects prepared by others and presented to it for funding did not adequate- ly address the peculiar and comprehensive needs of the rural poor. Quickly, too, thc Fund learned that international fmancial institutions were not prepared to bear the administrative costs of designing and su. pervising projects. These were passed on tc the Fund as service charges, which were no) insignificant in relation to the volume of ia funds available for lending.

Inexorably, the Fund moved more deep11 into project activity. To fill a continuinj void in attention given to rural poverty, i assumed a creative, leadership role. It un derstood, as others often did not, ha t rum development projects could not bc designed properly and implemented suc cessfully without the full participation o the poor, a major conceptual innovation

1

6 Hunger Notes

The Fund also took into account all the liverse elements of a rural community, in- :luding the absence of credit, appropriate ethnological know-how, and physical in- kastructure. The attention which the Fund ncreasingly gave to this multitude of ele- nents gained for it the admiration of the levelopment community. Less noticed, the Fund also broadened its

nandate, through interpretation and prac- :ice, from that of a funding institution :awards becoming a development agency. By the mid 1980s, the Fund was a hybrid: lot just a member of the UN family, but a hll fledged development institution. The ?roblem was that the Fund had become an momaly, a funding institution with inade- quate resources to be influential, let alone zffective - a development agency expressly prohibited by its constitution from super-

vising its own projects and so unable to learn from experience. Meanwhile, as the Fund's resources and project loans dec reased , the service charges of those or- ganizations with which the Fund was forced to deal i n c r e a s e d . The result: the "lean" in- s t i t u t i o n created in 1976 took on the ap- pearance of yet another bureaucratic ally expen-

Beneficiary of an IFAD loan in India who started a business making silk. sive or- ganization.

In the 1990s, these contradictory images of the Fund came into focus for two reasons. The first was the decreased volume of offi- cial development assistance funds on which the Fund relies as its sole source of capital. (Unlike the international financial institu- tions, it cannot raise funds in the world's capital markets.) The second reason was the "rediscovery" of rural poverty by the international community with a policy shift by the World Bank and other financial in- stitutions to embrace the development needs of the rural poor.

These, then, were the circumstances which fashioned the Fund and led to its current plight. They not only help explain the Fund's record but also help under- standing of its proper role and potential in rural development. Nothing that follows fully makes sense unless viewed against the

peculiar structure and his- tory of this unique organiza- tion.

The Issues At the conclusion of its

work, the rapid assessment team agreed unanimously to recommend without qualification the basic mis- sion of the Fund. In the course of its assessment, the team was drawn to several issues which it quickly iden- tified as salient to its under- standing of the way in which the Fund pursued its man- date. In the pages that follow, these issues are explored at length, and lead to specific recommendations. They are:

I) Regarding the Fund' s relationship with cooperat- ing institutions: manage- ment of its relationship and the choice of institutions;

2) Regarding the super- v i s ion of projec ts : con- straints in the Articles of Agreement; advantages gained by supervisory ex- perience; loan administra- tion;

3) Regarding project iden- t i f i ca t ion a n d d e s i g n : cooperation with other or- ganizations;

4) Regarding strategic policies: creation of policy and practice linkages for multiplier effects; 5) Regarding cost enective-

ness: the necessary com- plexity and small size 01 Fund projects; long-term cost benefits of Fund inter- ventions;

6)Regarding the know- ledge factor: collection,

Summer W95 7

nalysis, and dissemination; nformation systems; 7) Regarding the resource

lase: adequacy, predict- ~bility, sufficiency; 8) Regarding leadership

~otential: innovation and isk-taking; influence on ~thers .

II.THE FUND

The intention of the Fund's ounders was clear and im- ~ginative. It was to create an ,rganization that, in :ooperation with other es- ablished international or- pnizations, would promote md fund projects to improve 'ood security and the ivelihood and well-being of he world's rural poor. To its redit, the Fund has resolute- y pursued this spirit of its nandate, if not the letter. vloreover, its hybrid man- late (development and fund- ng) resulted in a novel nstitution and this unique- less, coupled with the

Fund's standing in the international com- munity, remains an extraordinarily power- ful tool for development.

The Fund was set up in 1976, following a resolution at the World Food Conference two years earlier. Its structure of gover- nance was (and still is) unique among inter- national financial institutions in that it allows for major participation by develop- ing countries. It has 157 member countries divided into three categories - 22 developed nations (OECD members), 12 OPEC states, and 123 developing countries -which have equal voting powers (600 votes each) in the Governing Council.

The Fund's resources are provided as grants by member countries; although OECD and OPEC members provide the bulk of the money, developing countries have also made substantial contributions. The initial funding in 1977 was $1.02 bil- lion, followed by replenishments in 1982 of $1.1 billion, in 1986 $488 million, and in 1990 $567 million.

The Fund's mandate laid down clearly the ways in which the Fund was to tackle

projects. In that way, its staff and ad- ministrative expenses would be kept to a minimum. The real world, however, proved a little less straightforward.

In its fmt couple of years (and reflecting its lack of experience), the Fund made financial contributions to projects designed by other major institutions. This changed quickly as it became clear that the problem, was not simply one of resources, but of resources accessible and relevant to the poor. Early project experience showed (perhaps not surprisingly) that projects not designed specifically to reach the poor would not do so.

The Fund recognized early that the poor are not a homogeneous group, but an ag- gregation of groups with different economic bases and different needs. Its tar- get beneficiaries were no longer the poor but poor dryland farmers, poor fishermen, and so on. It recognized, too, that sus- tainable development was improbable, if not impossible, without the participation of beneficiaries.

poverty and hunger. It would be es- Women's Relative Wage-Earning Status for sentially a cheque-writer, selecting 114 Developing Countries by Region, 1988 projects developed by other multi- Femalelmnle wage ratio

Estimates of the Number of Rural Women Living Below the Poverty Line in 114 Developing Countries, 1988

I Total number of rural women living below the povelty line (millions) 11 1) Asia (excluding China and India) I 153 11

Asia

11 Near Fast and North Africa I 18 11

374

11 Total 114 developing countries I 564 I I Latin Amonca and the Caribbean

- - I Last dtvttoped countries I 149 1

43

Source: The Rate of World Rurnl Poverty

II Asia (excluding China and India I OaS4 I Oed8 11

II Near Enst and 1 0.57 1 0 . n (1 North Africa I Sub-Saharan Africa

8 Hunger Notes

0.51 0.70

OECD countries

" I

0.84 5 I

The Fund was also among the frrst to understand that female poverty was a more x less constant and cross-cutting factor in rural poverty everywhere. Thus, it sought to ~onfrpnt the disadvantaged situation of Female producers, a problem encountered in most, if not all, countries. This was not a tlavour-of-the-month decision. It arose out ~f practical experience. Given that most of the poor are women, and that much food production (particularly in Africa) is in their hands, the Fund could not ignore women if it was to be successful in its mission. These early developments and innovative

thinking provided the concepts for the Fund's future operations - increasing em- phasis on targeting resources, on women in development, and on participation of beneficiaries; and institutional innovation to create the organizations capable of delivering resources in a manner consistent with the assets and possibilities of the target group. There was another factor which helped

shape the development of the Fund itself. In tbe 1980s, major institutions became in- creasingly involved in macro-economic support, which opened a breach between projects and programs offered for co- financing and the type of project the Fund considered necessary to reach the rural poor. The result was an increasing em- phasis by the Fund on designing its own projects. Indeed, it designed and initiated projects, which accounted for 90 percent of all projects under implementation in 1993.

The Fund's history is not uniform and linear. The general lines of development, however, correspond to the practical demands of the poor and the environment in which they operate. The Fund's ability to respond to practical challenges has been very much a reflection of its niche orienta- tion to the rural poor. A focus upon the poor is not, however, without its internal dilem- mas - not least among them the question of balancing support to the poor in marginal areas with support in higher potential areas. as well as the issue of the extent to which it

is possible to establish viable rural services entirely upon the poor without combination with medium scale producers.

Resource Mobilization The Fund's task is the

mobilization of additional

the production and inc generation among the rural poor -- as well as helping to create the policy and institu- tional environment affecting the yield of those resources. and of the resources that the poor themselves bring to their economic activities. Originally, resource mobilization simply meant passing the hat round the

shareholders. Because, however, the Fund has initiated so many of its projects, the term has also @me to mean those resources from other institutions which would not otherwise have been applied to the projects. In that sense, the Fund's role as a catalyst for mobilization of resources has been remarkable.

The total resources going to projects in which the Fund has participated is some $13.6 billion. Of this, the Fund has directly contributed $3.9 billion. Co-financing by international donors accounts for another $4.2 billion, and contributions from governments and beneficiaries for roughly $5.4 billion. In addition, the Fund has mo- bilized about $400 million in contributions to the Special Program for Sub-Saharan Afkican Countries Affected by Drought and Desertification -- [contributions] which themselves attracted co-Fic ing of $293 million for projects. On top of that, the Fund has been entrusted with the management of the Belgium Survival Fund Joint Program, which has f i i c e d $70 million of Fund- designed projects.

The Fund offers three types of loans. Highly conces- sional loans carry no interest but have an annual service chage of 0.75 percent and a maturity of 40 years with a 10-year grace period. Inter- mediate loans carry interest at half of the variable refer- ence interest rate (which is decided annually and is based on the variable ordi- nary rate of other interna- tional financial institutions). Repayment of intermediate loans is spread over 20 years with a grace period of 5 years. Finally, there are ordi- nary term loans, effectively at the variable reference in- terest rate, repayable over 15 to 18 years with 3 years' grace. The Fund limits its lending by type of loan: con- cessional loans at 67 % of total lending, in tennediate

Summer 1995 9

loans at 20 %, and ordinary loans at 13 percent.

Developing countries with per capita GNP of $805 or less at 1992 prices (or which qualify for World Bank soft loans) would normally be eligibIe for highly conces- sional loans. Those countries with per capita GNP be- tween $806 and $1,305 would usually be eligible for intermediate loans; only countries with GNP per capita of $l..3O6 or more [are eligible] for ordinary term loans.

Lending is based on a country's priorities and needs and its potential for agricultural development projects. What does that mean in practice? Of all financial commitments to projects under both regular and special programmes in 1978-1993, just under $1.4 billion (35.2%) went to Sub- Saharan Africa, another $1.33 billion (33.7%) to Asia and the Pacific, and $645 million (16.4%) to the Near East and North Africa, with the rest, $582 million, going to Latin America and the Caribbean.

Within countries, the Fund's lending has evolved away from large-scale physi- cal infrastructure (irrigation, transport and the like) towards farmer- and com- munity-managed develop- ment - - for example, small-scale irrigation sys- tems, water harvesting, and applied research -- within a responsive and locally sus- tained institutional frame-

work (such as local savings and credit schemes).

In terms of project type, most resources now go into agricultural develop- ment (46% of the total in 1993), followed by credit (26.1 %), rural develop- ment (16.5%), extension and training (8.1 %), fisheries (1.7%), and ir- rigation (1.6%). Recent- ly , there has been increased financing of land improvements (usually involving en- vironmental protection measures), rural develop- ment funds for small- scale community initia-

tives; and local institu- tional strengthening, such as the formation of beneficiary groups, in- cluding cooperatives. Underlying these chan- ges in investment priorities is a refinement, based on Fund ex- perience, of ways to channel assistance to the poorest rural populations as set out in the Fund's mandate.

III.THE ASSESSMENT

Small flock of breeding sheep In Jordan belonging to a beneficmy ot

thc Cooperative Development of Rainfed Agriculture Project, which

lntrtxiuced appropriate land-use planning systems, diffused proven tcch-

nology. and provided credit and supporting services to some 7500 f a m

families (37,500 pople) engaged in crop, livestock and orchard develop ment. IFAD's S10 million loan on intermediate terms covered slightlj

more than 113 of the total budget. Administered by the Jordar

Cooperative Organization. the project was cxpected to increase mea'

and milk productiori by 3,000 tons and wool by 22 tons.

Is the Fund reaching the rural poor, inz- proving their productivity, livelihood, and well-being? Is it a catalyst for co financing and are its projects sustainable and replicable? And is it contributing to the knowledge and understanding of rural poverty?

These were, broadly, the questions facing the rapid assessment team.

To answer them, the team met many

interviewed were many staff and senior of. ficials from development agencies anc NGOs, all of which spawned a broad rangc of views about theFund and its contributior to development. Beneficiaries, countrj authorities, and senior officials of develop ment agencies and NGOs were unanimou! in their support and expectations. At thc staff level, however, reactions were mixed reflecting differences in familiarity with tht Fund and its objectives, particularly wid regard to Fund-initiated projects (witl which few, incidentally, had been as sociated). Even so, there were plenty o - - f

people: beneficiaries, managers, and local valid and constructive criticisms, of which officials (both elected and appointed) of 13 the Fund should take note. Fund projects visited in 10 countries. Also

10 Hunger Notes

Reaching the Rural Poor Because the impact of the Fund's projects

on beneficiaries is a key indicator of its performance, members of the assessment team made special efforts to meet with ad- boc representatives of these goups in all field visits. While it may be expected that beneficiaries would favour any form of material assistance, the team was struck by the strength and uniformity of their positive comments about the Fund.

In all countries visited in four regions (Africa, Asia, Latin America, and the Mid- dle East), beneficiaries expressed the im- pact of the Fund's projects in terms of:

a significant increase in food production and income levels; better understanding of the impor- tance and use of modern methods and technologies in crop produc- tion and animal husbandry; a better sense of their role in com- munity participation in project im- plementation and ownership; and a general commitment to sus- tainability of the positive impact of the project after completion.

The team regarded as a positive sign the evidence of farmers' rising expectations in the form of comments about their need for further. support and their declared inten- tions to draw these demands to the attention of local government authorities.

Some beneficiaries were also aware of their own shortcomings. Many Asian farmers, for instance, recognized their production deficiencies and the absence of useful technical knowledge (before the Fund's projects). These farmers were alive to their circumstances and capable of judg- ing the worth of the Fund's projects in their region. The value of that assistance could be measured simply -- in increased yields.

Theoretical solutions and inappropriate technologies are quickly identified as such by subsistence fanners and, with equal speed, discarded. In both China and the Philippines, fanners acknowledged the benefits from Fund projects. It was clear to

the team that these benefits were the result of project design and implementation, in which farmer participation focused the ef- forts and shaped the response.

In one Chinese village, the transformation occasioned by the Fund was staggering. In 18 months, farmers, whose lives had been spent in cultivating rain-fed coarse grains, had learned to manage irrigated land and grow rice successfully. In the same short time, these farmers, who had no under- standing of the concept of credit, now un- derstood the difference between capital and income, and the principles of interest and loan servicing. They understood, too, the dangers of indebtedness, as well as the ad- vantages of credit.

There are plenty more examples of Fund successes in participatory development in other parts of the world. The Segou Village Development Fund project in Mali, for in- stance, has shown exceptional results in the village of Dlaba, also visited by a member of the assessment team. The villagers repaid 95 percent of their short-term and 90 percent of their medium-term debt, built a literacy centre and a store; they bought 43 tonnes of millet for resale. The project has also trained two literacy teachers, a vil- lage midwife, an hygienistlfirst-aid worker, and a veterinary fist-aider. Vil- lagers also bought (from their own in- come) a television and a generating set.

Based on these field observations, documentary evidence, and discussions

in agrarian reform and development. At f is t , the Fund was exploring ways of identifying small farmers, landless farm workers and the rural poor in general. With time (and the support and cooperation of borrow- ing countries), the Fund began to interact with these groups and, then, involve them in the preparation and implementation of develop- ment projects. Such an a p proach was not easy.

Success depended on the socio-political circumstan- ces of each country, as well as each target group and its location, and often fun- damental shifts in basic values. It is still a slow and costly process. Nowhere was the difficulty of reaching the poor (physically, as well as institutionally) more evident than in Guatemala. Com- munities visited were almost

with development specialists, the Fund's record in participatory development is en- couraging. In its early days, of course, the Fund was not in a posi- tion to meet the chal- lenge of this kind of development. It was a new institution in an un- explored area. It relied on projects prepared and designed by other institutions experienced IFAD's role: Releasing the potential of the

poorest farmers

Summer 1995 11

inaccessible, at the tail-end of long dusty roads improved in part by villagers, or- ganized and funded through the project. Like some of their counterparts in China, these "fanners" too had never received credit before but were slowly increasing production and improving their homes.

But money alone is not enough. Without active parucipation of beneficiaries and a sense by them of project ownership, no amount of investment will ensure sus- tainable development. There is plenty of evidence that the Fund is reaching would- be beneficiaries but any rational assessment of the Fund' s activities should not stop there. It must also include its institutional potential for even greater effectiveness in fulfilling its mandate.

In all cases, where project benefits were concrete and equitable among beneficiary groups, the motivation for greater participa- tion of target groups was stronger. An es- sential ingredient for success is the consistent support and commitment of na- tional authorities and local leaders. Another is the Fund's capacity to monitor and super- vise the implementation of its projects. It is, however, clear that, under existing legal and administrative arrangements, the Fund is unable to perform its monitoring and supervision functions. This is a vital area for reform, if the Fund's experience is to be retained and used for sustainable impact on beneficiaries.

Global Impact on Food Security and Rural Poverty

Observations in the field, as well as writ- ten material, provide evidence of the rela- tive success of the Fund's projects in reaching the poor and helping them to in- crease agricultural production and incomes. This, however, is insufficient to have much influence globally, given the small size of the Fund and the limited number of projects that it is able to implement. It is for these reasons that the concepts of sustainability of projects (when the Fund ceases to be involved) and replicability in a substantial

way by other institutions and govern- ments assume such importance.

In general, the Fund's projects incor- porate credit, technical assistance, community development and some in- frastructure work in relatively com- plex project design, which try to respond to real-world problems of rural development. Experience indi- cates that well-selected local managers are quire capable of running the show, given adequate operating resources and facilities. Organization, leadership and literacy functions per- formed on behalf of village associa- tions and the provision of technical extension services can take a long time, but villagers are capable of providing long- term continuity. The credit function can also be perpetuated provided that a careful assessment is made of the creditworthiness of the farmers and that repayment rates are high. This can be achieved by working through community and local organizations which provide the institutional and social fabric for continuity. A more ~ f i c u l t situa- tion exists in relation to basic infrastructure (tracks, roads, bridges, water management) and ensuring environmental management (soil and water conservation, reforesting), where long-term continuity without direct government support seems unattainable.

The assessment team feels that Fund staff is fully aware of these issues and the rela- tively high cost of rural development projects both in relation to the number of beneficiaries reached and to the potential production increases. The team suggests that there is a need for permanent evalua- tion and innovative thinking directed at im- proving the sustainability of projects.

The replicability (or at least imitation) of the Fund's projects in combatting poverty is crucial to the overall success of the Fund's work. Replicability also means the Fund's achievements can be used (and so multiplied) in some of its other projects, as well as those of other institutions. The results in Mali of work with village associa- tions, for instance, are being used in other

projects in Mali and else- where, particularly in Guinea. In many cases, though, these projects must be adapted to the local con- text, as when, for example, functional literacy in Guinea used harmonized Arabic characters instead of Latin characters. Another example is the Segou project in Mali, where the difficulties for some villagers in repaying loans has encouraged the authorities to be more cautious in other areas of Mali. Other neighboring countries are dso learning from the Segou experience. Conversely, the experience of other financing institu- tions or NGOs has also been used by the Fund in the im- plementation of the project.

Interactive exchanges of experience between the Fund and other financing in- stitutions or development agencies need to be or- ganized in the framework of a strategy, formalized and underpinned by well-docu- mented evidence and data bases.

Summer 1995 13

,eadership and nfluence Those who drafted the

;und's mandate believed hat the rural poor were a jotential source of wealth :eneration. Successfully iesigning projects that ,elieve poverty, enhance 'ood security, and equitably iistribute benefits means hat the Fund must be fired with imagination and with iynamism. It must be seen as 1 leader, influencing other nstitutions -- public and ~rivate, national and interna- ional -- whose involvement s critical. The extent and nature of

hat influence varies greatly. 'ersonal observations of the issessment team revealed hat those governments which were serious about quity issues not only paid ~ e e d to the Fund's advice but were positively influenced >y the Fund's approach to levelopment. Witness the West Beheira project in zgypt. The aim of the project was

.o provide a sustainable livelihood for farm workers m reclaimed public land. Water logging, maintenance >f physical infrastructure md equipment, and issues of land tenure and management were the biggest problems. Not only have the project's 3bjectives been achieved but, more significantly, it has influenced public policy on land tenure on other land set- tlement projects in the West Beheira region.

In fact , a l l country authorities supported the

Fund's contribu- tion. Said one minister of agriculture, "The most important projects in my portfolio are the projects funded by IFAD." Officials of at least three countries stressed that the Fund had helped focus their attention on the poor living off marginal dryland agriculture. One of them also ac- knowledged that this was, in turn, helping the African women selling farina in the market. g o v e r n m e n t ' s policy of reducing regional disparities in favour of the poor. Said another, "Without the Fund, we would not have been able to mobilize cofinanc- ing ."

In several countries, officials also com- mented on the contribution of the Fund in strengthening local administrative struc- tures and agricultural services responsible for managing and supporting development projects in those areas. In some cases, the assessment team also observed that the par- ticipation approach adopted by the Fund had helped introduce a dialogue and better relationships between beneficiaries and local authorities, both appointed and elected.

In both China and the Philippines, which have distinctive and different policies toward equity issues and poverty relief, there was widespread officlal recognition of the value of the Fund's intervention. In China, the government's attitude, as voiced by the Deputy Minister of Agriculture, was one of unbridled enthusiasm. Particularly appealing was the simplicity of the loan approval process (compared with the more demanding requirements of the World

Bank and the Asian Development Bank) Especially appreciated, however, was thc project design practice which engage( beneficiaries and which built in feature! leading to project sustainability.

An official associated with the implemen tation of a Fund project completed severa years earlier travelled to Beijing on tht occasion of the team visit. He used to bc manager of the project but is now manage of the project outcome. "This is the mos important assignment of my entire career,' he said. "My task is to ensure that thc benefits of the project continue to be en joyed by the farm families in my region."

In the Philippines, a country with a for midable load of foreign debt, there is ru aversion to any development project if it i dependent on loans and not grants. Equally there is little enthusiasm in the nationa implementing agency for any proposal tha is notheavily slanted towards capital-inten sive activities. Even so, much appreciatio~ was expressed for the Fund as a credibl~ alternative to World Bank assistance. Sail the Deputy Minister of Agriculture, "I wis there were more IFADs." Such appreciatio

- -

14 Hunger Notes

md enthusiasm for the Fund was com- nonplace among government officials. "A bell-ringer" -- "The conscience of the

nternational community" -- "Innovative" -- 'Professional" : these were among the Zund's qualities in its middle years which nade it a pathfinder and won it praise in the :yes of international institutions.

"The Fund stayed the course," said one World Bank Vice President, refemng to the Fund's maintained focus on the rural poor ~t a time when the international financial :ornmunity had shifted its attention to other jevelopment issues. On a number of occasions, however, the

asessment team was told that the Fund had now run out of steam. The Fund was no longer fertilizing, no longer showing the way. At the staff level of international hnancial institutions, views ranged from the very positive to the strident and nega- tive: "There is no need for the Fund any longer; we can do it." Even so, these offi- cials and staff offered much food for thought on future cooperation with the Fund.

Strategic alliances, for instance, are al- ready under consideration by the Food and Agriculture Organization of the U.N. So are new cooperative arrangements with the hter-American Development Bank. There was value, too, many thought, in the Fund supervising some of its projects, if only to cajole and pressure cooperating institutions into effective supervision of projects. There should also be more high-impact publica- tions by the Fund, more sharing of its ex- perience and know-how.

The NGO community, broadly speaking, was supportive of the Fund as one of the few international organizations that consistent- ly endeavours to harness the strengths of grass-roots organizations.

The big problem for the Fund is that the world is a tougher place in which to be fresh and innovative. Fifteen years ago, few in- ternational agencies were in the business of poverty relief. Today, all are. The challenge for the Fund is to demonstrate leadership through innovative and imaginative con-

cepts and policies. The real danger is not that the Fund's role is being challenged by all and sundry but that it is likely to be enveloped by other larger organizations if it does not consciously strive to remain distinctive.

"The Ways in Which. . ." The commitment of the Fund to its man-

date is reflected in the ways in which it conducts its operations : first, as it developed its own approaches and projects to focus lending on the rural poor; second, as it tried to make the best of the require- ment that the supervision of all its projects should be entrusted to cooperating institu- tions; and third, as it supported, comple- mented and in some ways circumvented this requirement to ensure that its projects would achieve the intended results.

"There are as many IFADS as there are project controller."

This observation made in jest by a senior agriculture manager of a cooperating in- stitution bears some truth. It illustrates the extensive delegation enjoyed by project controllers and the role that the best of them have played in the innovative approaches of the Fund in mobilizing ideas and support from others as well as cofinancing. It is also a comment on the artisanal approach of the

Fund, the paucity of operational guidelines, the weakness of management, and the resulting diversity of practices and the confusion surrounding its role. There is little planning and programming, except as associated with replenishment exercises and their uncertain outcomes. Until this year, the only operational guidelines were the lending policies and criteria issued in 1978. There are no descriptions of or- ganizational functions, no policies to en- courage the rotation of managers and staff, and only sparse efforts to ensure that the rich experience gained in the various parts of the Fund is systematically shared across the Fund's regions and internationally. Until recently, budgeting was not a management tool.

Things are changing. The President 's guidelines streamlining the project development phase were is- sued on January 7, 1994. Steps have been taken to strengthen management. Relations with cooperating institutions, so critical for project implementation, have been evaluated and new proposals have been formu- lated for Board considera- tion concerning the respective roles of the Fund and cooperating institutions in project supervision. Strategic alliances are being built with the F A 0 and others to provide a framework for fruitful cooperation in project development, implementa- tion and cofinancing. Modules are being prepared to facilitate the replicability of pre-tested technical pack- ages, modalities of beneficiary participation and association, or project management. Networks and data bases are being built to improve access of staff to the information needed to sup- port their work. Budget ef- fectiveness and transparency have been improved and the 1994 administrative budget has been cut.

Project Development The laudable aims of the

new operational procedures on project development are to focus on the ultimate beneficiaries, on the design of investments to serve them. and on the results to be achieved; to shorten the project development phase:

Summer 1995 15

Integrated Rural Development Project in Paraguay: An agricultural extension worker from the project is lecturing

bmners about different seasons when vegetable plmting is more convenient.

and to reduce costs, freeing ,taff time for following up on lroject implementation. 'roject development and im- ~lementation are to be linked )y a flexible design allowing 'or timely adjustments luring implementation, and 1 systematic feedback of les- ;ons arising from super- {ision and evaluation. 'roject development appears ell conceived and cost ef- 'ective. It is expected to ihorten the development ~hase to between 18 and 24 nonths, and to reduce costs ?y roughly 20 percent to &out $450,000. It remains, however, to be tested in ac-

tual practice. Some aspects, however, merit emphasis.

A Programme Approach Besides the project selection process,

suitably shortened by the new procedures, the Fund needs to introduce a programming or strategic outlook approach. This would allow more realistic though ambitious ob- jectives of sustainability, replicability and impact on rural poverty to be sought than is possible on the basis of projects planned and designed singly. It would allow the demonsuation effects of new technologies, modalities of participation and association to eventually bridge the gap between the somewhat isolated projects of the Fund and the large-scale, sector-wide operations of large development lenders. Indeed, and for more advanced programmes, the Fund

could examine with such lenders and the country which expectations the programme should aim to meet in order to achieve large-scale replication. If the Fund's aim is to have a significant multiplier effect, then potential replicability would need to be one of the criteria for selecting and formulating projects.

Strengthening Intelligence Gathering

Because of the pioneering nature of the projects that it initiates, the Fund needs to access the full range of technologies and experiences from aU sources, national and international, formal and informal, that could help enhance the formulation of its projects. The assessment team believes that the Fund must become an international

16 Hunger Notes

:learing centre for knowledge about rural overty . The Fund indicates that it has taken steps

o enhance its access to information. It is low able to link up directly or through liskettes with a wide range of statistical, echnical and qualitative information from ! number of sources, including IDRC's In- emational Development Research Infor- nation System, the FAO-Agrostat, :G-NET, and so on. These networks need o be expanded. The Fund has also taken steps to build up

ts own project technical database and draw rom its experience. A recent initiative, eferred to in the President's guidelines, nvolves the preparation by the Operations Iepartment of modules of tested tech- ologies, modalities of beneficiaries' par- icipation and association and other :xperiences capable of being replicated in be design of the Fund's projects.

;athering, Analyzing, Comparing m d Sharing Experience As to the Fund's own experience, there are

ules that require that country experience be ,ystematically applied in new operations. +mhermore, the Fund is probably unique unongst international financial institutions n ensuring that an interim evaluation be :onducted before processing a second bhase project. Its experience, however, loes not seem to flow across borders or, at east, across regional borders within the :und's own operational structure. The ,rime reason is that it has not systematically lnalyzed and compared the growing stock )fits rich experience to make it available in isable form to its own staff and to the nternational community. As suggested later (the evaluation func-

ion), there is need to expand the evaluation Irogramme of rigorous comparative nalyses, in form of thematic studies or )her dissemination instruments based on roject evaluations. These analyses of the %rid's experience are needed to enhance .he quality of its operational policies, ;uidelines, and projects.

Strengthening Project Quality Project processing eliminates some com-

mittee reviews and substitutes collabora- tion andquality enhancement for the checks and balances that prevailed previously. It places, however, squarely on the project controller and regional division the respon- sibility and accountability for project quality, which is good. The experience of project controllers and the capacity of line management for quality control are, how-. ever, even more critical for project success. There is a pressing need to ensure consis- tency of operational policy and practice and to strengthen the advice and support func- tions within the operations department. In this regard, the Fund could also examine the possibility of the FA0 making available, from its broad range of skills, senior experts to participate in the Fund's own operational advice and support teams.

Flexibility built into project design to allow adjustment during the implementa- tion phase is an excellent innovation. It recognizes uncertainties associated with all projects and can help control project risks and maintain objectives and impact in focus. Two possible drawbacks: First, flexible design should not turn into incom- plete appraisal - that is the postponement to implementation of those issues already known but inadequately analyzed and ad- dressed at the formulation and appraisal stages. That risk can be significant if loan approvals, not project impact, are the in- stitutional goal. Moreover, adjusting project and participatory mechanisms as and when needed requires closer super- vision than the Fund is able to provide in most cases.

As a further means of enhancing project quality, the Fund needs to implement the logical framework approach provided for in its guidelines. This requires a clear defini- tion of objectives, of the main variables and assumptions on which project success hin- ges, of the means by which project com- ponents will be implemented, and of the allocation of responsibilities for im- plementing them. It offers the necessary

scope for beneficiary par- ticipation. It can help en- hance the quality of appraisal reports which more often than not are richer in data than information and weak on risk assessment and realism about implementa- tion time and costs. Firming up the log frame design in connection with the start-up mission - which requires in- volvement of all project par- ticipants - would help focus monitoring and evaluation systems and contribute to ef- fective project implementa- tion. These benefits can only be achieved if careful and deliberate thinking is ap- plied. The approach requires that project controllers be given both the time and coaching from experts.

Implementation and Supervision

The team has reviewed the thematic study on relations with cooperating institu- tions, much of which con- cerns implementation and supervision, as well as management's proposals to the Board largely based on the study's conclusion con- cerning the role of the Fund in the supervision of its projects. The study is well documented and its analyses are convincing. The teams' observations, based on more anecdotal evidence, general- ly support its conclusions pertaining to the supervision of Fund initiated projects, which were the primary focus of its field visits. None of the projects visited raised questions about country and

Summer 1995 17

(Continuedfrom page 17) ocal ownership and responsibility for nanagement; and none were dependent on :xpatriate support of management. Project iesign was in some cases complex, requir- ng coordination of components executed )y different authorities, though the delays ncurred as a result did not jeopardue the xojects' purposes. In all cases, the projects :ontributed to the strengthening of local nanagement capacity and technical exper- ise. Loan administration and supervision by

:ooperating institutions varied significant- y in intensity and frequency of missions, :onsistent with the findings of the thematic itudy. There was one case where the moperating institutions did an excellentjob ~y all accounts. This was ascribed to the pality of the individual assigned by the :ooperating institutions. This case, which is lot unique, suggests that the Fund might equest a say in the selection of staff or :onsultants supervising its projects. Possibly the most striking observation

was the extent of the Fund's own presence ind role throughout the implementation ~hase. In one particularly telling case, the :ooperating institutions arranged for the nid-tern review to be staffed with Fund .egular consultants and staff. In that same :ase, the project controller visited the xoject on the occasion of missions for ~ther purposes, and was in regular contact with country and project authorities by ?hone. While this was highly appreciated 9y the country, it is not necessarily to the liking of cooperating institutions. One qoted that project controllers would give 3irect clearance of matters delegated to the :ooperating institutions, interpreting exces- sive provisions in loan agreements more liberally than the cooperating institutions would feel empowered to do. The monitoring and evaluative systems

put in place by the Fund in each of its projects, the mid-term and interim evalua- tions, also contribute to help the Fund keep generally abreast of its projects. The timing of the Fund's visits, however, does not necessarily relate to the supervision needs

of projects. The most serious need is for the close monitoring of beneficiary participa- tion, particularly in the early stages of im- plementation where the requirements for project adjustment or reformation may be greatest. It is odd, to say the least, that the Fund should be denied the opportunity to learn first hand from its projects' im- plementation and beneficiaries' reactions.

The fact that the Fund cares for the im- plementation of its projects is also demonstrated by its annual review of its project portfolio. The document is certainly useful in regard to issues of loan ad- ministration and disbursement, including delays in effectiveness, extension of clos- ing dates, supervision, cancellations, and so on. The elaborate presentation, however, hides the poor quality of the data on project performance. In this regard, the thematic study is explicit about the inconsistent quality and timing of reporting on the physical progress of projects by borrowers and cooperating institutions. How then can the health of the active portfolio be mean- ingfully assessed? How can judgments be made on the performance of completed projects based on the notoriously poor and late completion reports of most cooperating institutions? There is need, as suggested by the thematic study, to upgrade the quality of information supplied to the Fund. There may be also a need to reexamine the way in which project controllers and their line managers can be more involved. The Fund needs a better management tool; it also needs more effective means for accounting for its performance.

Present arrangements for supervision are clearly unsatisfactory. They do not enable the Fund to answer satisfactorily to its Governing Council for the performance of its projects. And they do not permit it to listen and learn from its beneficiaries, or to test and adjust the projects it initiates, as needed to ensure their satisfactory out- come. There is scope for building more effective relations with a smaller number of cooperating institutions regarding loan ad- ministration and project supervision. These

cooperating institutions could be selected on the basis of their ability to understand and contribute to the Fund's mandate and their potential strength in field-level ac- tivities. This would allow for the Fund' s greater involve- ment in supervision than could be performed cost ef- fectively from headquarters. There is also scope for im- proving methodologies for tracking and evaluating projects.

Monitoring (including an evaluation component) is a salient function within the implementation process, and is the responsibility of local authorities. The monitoring part helps project manage- ment and reduces its depend- ence on supervision. The evaluation part involves socio-economic surveys, the tracking of beneficiary im- pact, as well as reflection and distance. The Fund has registered moderate succes- ses with this approach, more so than others in the interna- tional community. Respon- sibilities for putting the systems in place, ensuring that there is local capacity to operate them, and supervis- ing progress should be clarified and corresponding resources should be allo- cated for the purpose.

The Institutional Evaluation Function

Evaluation staff are part of the teams providing advice to project controllers throughout the projecl development process; in thc project implementatior

Summer 1995 19

~hase , special evaluation nissions are undertaken to lelp enhance the quality of ~ r o j e c t monitoring and :valuation systems. Mid- e m evaluations (sometimes :ombined with mid-term .eviews of coopcrating in- ctitutions) are conducted ;electively to recommend mprovements in project per- 'ormance. Interim evalua- ions are carried out, when Iecessary to lay the basis for In eventual second phase voject. Following project :ompletion, evaluations are :arried out selectively up to .wo years after the closing kite, and ex-post evaluations some years later when a bet- ter assessment of the project's worth and impact has become feasible. Other evaluations consist

~f country portfolio evalua- tions and thematic studies based primarily on the com- parative analysis of project evaluations. Together, they can help assess the develop ment effectiveness of the Fund from two equally im- portant complementary perspectives. They can also generate experience of broader value and applica- tion than single project evaluations.

Internationally, the assess- ment team finds that the Fund also has its evaluation niche. It has contributed new thinking on participatory ap- proaches to evaluation of rural poverty and related en- vironmental issues. It has also initiated common a p proaches to the evaluation of experiences of muhlal inter-

est. These activities have contribuled to the Fund's widely recognized intellectual leadership in this area. I t lacks, however. the capacity for follow-up action.

Suggesiions for improvement would in- clude:

a more active program of thematic studies, drawing on the growing stock of project evaluations and, in due course, of country portfolio evaluations; increased dissemination to external audiences; more attention to the impact of evaluation experience on policy, formulating guidelines, and opera- tions; and learning more systematically from the evaluation experience of others, including bilateral donors.

Such strengthening requires upgrading of the evaluation function, as well as more staff. It also requires direct reporting to the President of the Fund and to the Board.

Staff Competence and Commitment The assessment team found staff dedica-

tion to the Fund's purposes to be generally high. The team was able to form judgments on the competence of a smaller number of professionals, principally some project controllers and the evaluation staff who supported the team's work. The team's view is that the competence of those seen through the eyes of country officials and, in some cases, cooperating institutions, was generally high to excellent. "First class", said one. The external perception of the professional standmg of project controllers, however, is not uniformly high, though higher than staff less directly involved in field work.

The main impressions left with the team are that project controllers and evaluation staff are overworked and over-traveled which suggests an inappropriate distribu- tion of resources and, in particular, of posi- tions, which are much more constrained than resources, and that project controllers,

as well as operations managers, do not rotate assignments. There is value to con- tinuity. The downside risk, however, is the creation of fiefdoms hampering the free flow of experience and the development of reasonably uniform practice throughout the organization.

The standards of performance needed to achieve excellence more consistently are already in house. What the Fund must do is to develop personnel policies, including rotation policies, supporting this goal and carry out some reengineering of its or- ganization and budget to ensure better resource allocation.

How Cost Effective? Cost comparisons are inadequate

measures of the Fund's cost effectiveness . Such comparisons amongst the larger inter- national financial institutions have been at- tempted over the years but have produced more questions than answers. Differences in countries, country portfolios and in- dividual projects, as well as in location, staffing, and so on, far outweigh the similarities needed to develop useful ex- perience. Even so, the Fund's aggregate cost figures do not compare unfavorably with other funding institutions. True, ad- ministrative costs as a percentage of lend- ing are considerably higher than for other financial institutions. If, however, those costs are defined on the basis of the number of projects, the Fund's figures are lower than those of the World Bank, and the Inter- American and Asian Development Banks. (Admittedly, the Fund's average loans are smaller, $1 3.2 million, compared with $97.7 million for the World Bank, $87.2 million for the IDB, and $78.5 million fox the Asian Bank.) Moreover, personnel costs per project are lower for the Fund than the other three institutions. This results from less use of permanent Fund staff and a lower salary structure. Low personnel costs per project, however, are not necessarily a good thing. Sufficient staff time is neces- sary for good project development and the compensation package must be of a kind

20 Hunger Notes

Jahaly and Pacharr Smallholder Project in the Gambia: IFAD financed irrigation and improved rice cultivation on 1,400 hectares of the Jahaly and Pacharr swamps along the banks of the lower Gambia River. At the first harvest, yields increased from one ton per hectare to five or

six tons, a gain expected to be sustained. But land improvements were only one part of the project. Two thousand women. traditionally the major

rice growers, received land credit for seed and fertilizer, pedal-threshers for harvest, and ox-carts to take the rice to market. Beneficiaries of the

project include 3.113 farm families in 40 villages. The project also reduces the $7 million Gambia previously spent annually on rice impom.

IFAD's loan was S4.7 million; cofinancers included the African Development Fund ($5.1 million), Germany ($2.6 million), the Netherlands ($2.5

million), and the Unlted Nations World Food Programme (S 0.4). million).

which attracts andmotivates the best people n the field. Comparing the Fund's substantially in-

reasing costs over timereveaIsmuch about he expanding role of the Fund in initiating, leveloping, and supervising projects. bese costs, however, also reflect different mctices of cooperating institutions for :barging the Fund for services. For ex- unple, the FA0 charges less than full costs. b e Inter-American Development Bank, on he other hand, charges nothing for super-

vising Fund projects but the World Bank charges full costs for its services.

Developing projects which serve the poor is costly, because they are small scale, pioneering, and complex. Decisions of whether the higher costs are worth incur- ring should be taken in light not only of immediate benefits to the poor from the project but those accruing from its replica- tion elsewhere or on a larger scale at lower design and implementation costs. The Fund has launched initiatives to streamline project development and supervision, and

to improve budgeting effec- tiveness. Along with closer cooperation with others in the international community, this is the right thing to do.

Cooperation with Other International Institutions

The Fund's mandate calls for close collaboration with other international institu- tions. This is especially im-

Summer 1995 21

3ortant in relation to zofinancing and project dentification, project reparation, loan administra- ion and project supervision. 4n example of collaboration *t its finest is the involve- nent of the resources of the World Food Programme for inclusion within projects of highly effective food-for- work programmes. The team has already described how it sees possible additional col- laboration with international wganizations along the project cycle and made specific proposals in relation to the so-called cooperating institutions. It emphasizes here the importance of strategic, as well as opera- tional, cooperation among the three Rome-based food xganizations and welcomes the recent strengthening of links.

Now, the team would like to go a step further and stress the need for the Fund to build a flexible but systematic net- work of institutional relationships that will give it access to the work and exper- tise of a wider variety of or- ganizations, for example, universities interested in the problems of food and the rural poor, the CGIAR re- search centres, and the UN regional Commissions and other non-UN regional or- ganizations. All these could help the Fund to develop in- novative project ideas but could also become instru- ments for the dissemination and wider utilization of the Fund's work and experience.

IV.THE FUND IN THE FUTURE

The concerns which led the international community to create the Fund in 1976 - rural poverty and food security - remain today and will continue into the foreseeable future. An institution dedicated exclusively to these concerns appeals to the team as being of immense value and it endorses without qualification the basic mission of the Fund.

The following recommendations are made with the intention of strengthening the role of the Fund and making more ef- fective its contribution, at the same time supporting the intention of its founders that the Fund remain modest in size and primari- ly catalytic in its functions. Indeed, the major strength of the Fund is its potential for influence on others in the international community.

Recommendations

1. Cooperating Institutions: The Fund's Articles of Agreement wisely

anticipated an intimate and synergistic relationship with a range of "cooperating institutions". The team recommends that this cooperation continue, but suggests strongly that the Fund assumes more responsibility for the management of these relationships, holding cooperating institu- tions accountable for their role in loan ad- ministration and supervision of projects. It follows that considerable care should be taken in the selection of these institutions in order to magnify the benefits of their ex- perience (including their intelligence about poverty-related conditions in project countries) and their demonstrated record of cost-effectiveness and understanding of the problems central to the Fund's mandate.

2. Supervision of Projects: The Fund is denied by its Articles of

Agreement the right to supervise the im- plementation of projects. This means that the Fund cannot ensure that these projects are effectively supervised, nor can it gain

first-hand experience about the mission it was created to perform - the alleviation of rural poverty.

The team, therefore, recommends that Ar- ticle 7(2) be amended to give to the Fund the option to administer loans and supervise projects, but only for projects which are of an innovative or exceptional nature. The team cautions that supervision should not be seen as nonnative, to be pursued in all (or even most) cases. Were this to happen, the Fund could lose, not gain, influence on other institutions and would be in danger of transforming itself into a fully operational institution to the ultimate disadvantage of its catalytic and leadership role in the inter- national community.

For all projects (those supervised by the Fund and those by other institutions) the Fund should rationalize loan administration at the field level. This should be done through the delegation of authority or con- tracting out. The aim should be to reduce administrative costs and increase efficiency of project administration. It follows that there will be an increase in benefits avail- able to the Fund if it cooperates more ex- tensively with institutions which have an effective field presence in the form of country offices.

3. Identification and Designof Projects: The Fund should continue the practice of

recent years, identifying and designing projects which it intends to finance. It should also endeavour to appraise critically the design of projects of other institutions which it is asked to co-finance. Only by so doing can the Fund be confident that all the criteria it deems important are satisfactorily met, including beneficiary involvement and the long-term sustainability of projects.

This identification and design process, moreover, can be strengthened through a greater use of the more extensive knowledge of technical-assistance or- ganizations and, therefore, of using those organizations more fully in the process.

(Continued on page 24)

22 Hunger Notes

(Continuedfrom page 22)

4. Strategic Policies and Associations: In project design, the Fund should try al- ways to choose practices susceptible to replication, as well as consistently drawing on its own and others' experience. With the increasingly open climate for inter-institu- tional cooperation, moreover, the Fund should begin to devise strategic policies that set project activity in systematic fashion within a broad counrry and inter-or- ganizational context. The absence of strategic concepts, associated with an in- ability to strike mutually beneficial relationships with the big funding and developmental organizations, is a major shortcoming. If multiplier effects are to be achieved in national programmes to combat rural poverty, the creation of policy and practice linkages must begin well upstream, and not depend on post-project hap- penstance.

5. Cost Effectiveness: The Fund's administrative costs at fust

glance appear to be higher than those of other international financial institutions when lending levels are compared. The cost of developing projects for the rural poor is inherently high, however, if only because of their small scale pioneering nature, and complexity. Whether that cost is worth in- curring should be decided in light of the benefits to the poor - not only those from the immediate project but those from its replication elsewhere or on a larger scale at lower design and implementation costs. The Fund has recently launched initiatives to streamline its project development and supervision processes and to improve the effectiveness of its budgeting. These steps, combined with closer association with other members of the international com- munity, should be adequate to contain any excesses.

6. A Knowledge Organization: To date, the Fund has fallen short in using

consistently and effectively experience

from its own operations and those of other development organizations, as well as the critically important experience of national govenunents. If the Fund is to gain and mainfain a reputation as a most knowledge- able actor in rural poverty (appropriate for the only institution with such an exclusive mandate), it must adopt new concepts. It must accept that aknowledge function is its comparative advantage.

Knowledge is not just experience, and is certainly more than anecdotal accounts or project-specific files. Each project - in the entirety of the project cycle - must be sub- ject to systematic, and often comparative, analysis of an intellectually rigorous nature. Envisaged is much more than the present mid-term and project completion evalua- tions.

The evaluation process must be more ex- tensive, permitting corrections and innova- tions not simply within the project but for the benefit of future Fund projects and for the activities of other national and interna- tional institutions. This means much more than individual analytic skills. (These now exist in the Fund and are of high quality.) It means an analytic institutional competence in its full dimensions - including a capacity for intelligence gathering, database crea- tion and interrogation, and information dis- semination. In all these areas, the Fund is woefully weak, thus limiting not only its own influence but, more important, deny- ing to the entire development community a fully described and thoroughly analyzed account of its rich and innovative ex- perience.

The Fund needs to be more transparent, its accountability more factual. Its experience must be analyzed (country by country, across countries, project by project, and issue by issue) if lessons of any lasting value are to be drawn. It must also ensure that those lessons are used in forming policy and guidelines, as well as in projects Moreover, the Fund must share its ex- perience widely and be enriched by the experience of others. To do this, it shoulc expand its programme of comparative

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24 Hunger Notes

evaluation studies, conducted with rigour and independence of judgment. To enhance this effectiveness and the institution's credibility, the evaluation function needs to be upgraded and it should report to the President and the Board. The assessment team sees the Fund

emerging as a "knowledge organization" - a knowledge creator (projects and studious analysis of results); a knowledge storehouse (databases of its own and links to others); and a knowledge disseminator (through dedicated activities, conferences, and publications). Such evolution is crucial because, whatever the otherwise enhance- ment of its own effectiveness, whatever its financial resources, the Fund alone will never eradicate rural poverty worldwide or even greatly diminish it. Its contribution will be measured by its leadership stature and by its influence arising from pioneering activities. The Fund must see itself, as 3thers think of it, as more than an innovator. [t bears the responsibility, and has the potential, to be the world's leading repository of information on rural develop- ment, and the world's most influential ad- viser in this challenging, complex activity. This will require a major change in the corporate culture of the Fund, a significant increase in human and financial resources, and a sweeping redesign and modernization of its wholly inadequate information sys- tems. These tasks demand the highest priority.

7. The Resource Base: The Fund must have a resource base of a

size that permits an adequate and predict- able draw down of funds. It cannot be ef- fective if the endemic and chronic budgetary uncertainties of recent years remain. The consequences are evident in the planning process, in the morale of staff, and in the ability of the Fund to exercise leadership in the international community. It has the reputation of a malnourished in- stitution.

As well as predictability and adequacy, however, there is still another resource fac-

tor which is worthy of comment - "suf- ficiency ". Rural poverty is a complex and widespread phenomenon. To deal with it effectively requires multi-faceted interven- tions on an appropriate scale. For these to influence national policymakers and in- stitutional practices, they must not be inter- mittent and infrequent. What is called for, therefore, is a reasonably-sized, critical mass of resources sufficient to be regarded by all outsiders as evidence of a serious commitment. The team does not possess the competence to determine the most desirable size of such a resource base. It believes, however, that some augmentation is necessary.

8. The Fund as Leader: The Fund's strength is in its focus and in

the quality of its work. In both directionand function, it must reassert its leadership by engaging in innovative and pioneering ac- tivities, by assuming the risks that are in- herent in such activities. Through the wise use of additional resources and more con- stitutional authority, and most particularly through the enhancement and utilization of its knowledge function, the Fund can (and should) become the foremost agent for coherent and rational activity in rural poverty diminishment. In so doing, it will assure continued attention to the plight of the rural poor on the part of much larger organizations, will encourage the invest- ment of increasingly larger sources of money in poverty projects, and will make available to governments and organizations alike the considered and weighted ex- perience of its own activities in this chal- lenging sector.

The rapid assessment team concludes by stating its conviction that the Fund has the potential to be an institution not simply of immense and increasing influence but of extensive and constructive change. The principal beneficiaries in each instance will be those who inspired the Fund's crea- tion, the ruralpoor, in their legitimate quest for food security and human dignity.

Summer 1995 25

Proiects visited bv the Rapid External Assessment Team

China: Shanxi Inte- grated Agricultural Development

Objectives: Increase pro- ductive capacity of land, diversify agricultural ac- tivities, and introduce en- vironmental conservation measures in south-eastem Shanxi province.

Egypt: West Beheira Set- tlement

Objectives: Benefit reset- tled farmers by financing the rehabilitation and drainage of the area, create additional infrastructure and housing for recent settlers, support the development of institu- tions and services needed to raise agricultural production.

Egypt: Fayoum Agricul- tural Development

Objectives: Increase food self-sufficiency and generate foreign exchange through extension services, im- proved water management practices, animal health and nutrition, farm machinery demonstration, and access to credit.

Egypt: Newlands Agri- cultural Services

Objectives: Assist small farmers to establish sus- tainable, profitable farming systems with optimal water usage.

Guatemala: Zacapa Chiquimula Smallholders' Rural Development

Objectives: Increase the income and irn- prove the diet of 5,200 peasant farmers living in absolute poverty through targeted production and manufacturing support, in- creased access to credit, and promotion of basic grains production.

Guinea: Fouta Djallon Agricultural Rehabilitation

Objectives: Increase incomes and crop production of small farmers through ap- plied research, soil conservation, integra- tion of agricultural and livestock activities, road construction, credit extension, and promotion of village associations.

Jordan: Cooperative Development of Rainfed Agriculture

Objectives: Improve production and raise incomes in rainfed farming areas by in- creasing domestic production of basic foodstuffs, introducing appropriate land- use planning systems, providing credit and support services, and the diffusion of a p propriate technology packages.

Ma1i:Village Development Fund Programme, Phase I1

Objectives: Expand