Document of The World Bank Report No: ICR00003122 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2200) ON A GRANT IN THE AMOUNT OF SDR 25.7 MILLION (US$37.2 MILLION EQUIVALENT) TO THE REPUBLIC OF ZAMBIA FOR AN AGRICULTURAL DEVELOPMENT SUPPORT PROJECT November 6, 2014 Agriculture Global Practice (GFADR) Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective September 30, 2014) Currency Unit = Zambian Kwacha (ZMW) ZMW 6.23 = US$1 ZMW 1 = US$0.15848 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ABT Agribusiness and Trade ADSP Agricultural Development Support Project AFCS3 Zambia, Malawi and Zimbabwe Country Management Unit AfDB African Development Bank AFF Asian Fruit Fly AFRACA African Rural and Agricultural Credit Association AFRNs Agricultural Feeder Road Network AMIC Agricultural Market Information Centre APPSA Agricultural Productivity Program for Southern Africa ARAP Abbreviated Resettlement Action Plan ASEWU Agricultural Statistics and Early Warning Unit AWP Annual Work Plan BoZ Bank of Zambia CAS Country Assistance Strategy CDDCU Choma District Dairy Cooperative Union CDT Cotton Development Trust CGA Central Growers Association CMP Culvert Marker Post COMACO Community Markets for Conservation CPS Country Partnership Strategy CYMMIT International Maize and Wheat Improvement Center (Centro Internacional de Mejoramiento de Maíz y Trigo) DBZ Development Bank of Zambia DNA Deoxyribonucleic Acid DP Development Partner EDF Enterprise Development Fund EDP Enterprise Development Project EMP Environmental Management Plan EOP End of Project ERR Economic Rate of Return ESMF Environmental and Social Management Framework EU European Union FAO Food and Agriculture Organization of the United Nations FBP Full Business Plan FMU Financial Management Unit GDP Gross Domestic Product GFADR Agriculture Global Practice GRZ Government of the Republic of Zambia HIV/AIDS Human immunodeficiency virus infection / acquired immunodeficiency syndrome IAs Implementing Agencies IAPRI Indaba Agricultural Policy Research Institute IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDA International Development Association IDSP Irrigation Development and Support Project IFMIS Integrated Financial Management Information System IMCS Independent Management Consulting Services IPM Integrated Pest Management IRR Internal Rate of Return ISPM International Standard for Phytosanitary Measures ISR Implementation Status Report KMP Kilometer Marker Post KPI Key Performance Indicators KR Kwacha Rebased LDAHP Livestock Development and Animal Health Project MAL Ministry of Agriculture and Livestock MBOCS Mpongwe Bulima Organic Cooperative Society MDG Millennium Development Goals M&E Monitoring and Evaluation MG Matching Grants MGA Matching Grant Administrator MIIF Market Improvement and Innovation Facility MSc Master of Science MTR Mid-Term Review NCO National Coordination Office NPSC National Project Steering Committee NPV Net Present Value NRFA National Road Fund Agency OP Operational Policy OPRC Output and Performance-Based Road Contract PAU Policy Analysis Unit PCN Project Concept Note PDO Project Development Objective PHS Post-Harvest Survey PIMP Project Indicators Monitoring Plan PPF Project Preparation Fund PSU Procurement and Supplies Unit QC Quality Clinic RDA Road Development Agency RF Results Framework RPF Resettlement Policy Framework RRIF Rural Roads Improvement Facility SCCF Supply Chain Credit Facility SCCI Seed Control and Certification Institute SC-NPSC Sub-Committee: National Project Steering Committee SNDP Sixth National Development Plan SOP Standard Operating Procedure TCP Technical Cooperating Program TRP Technical Review Panel US$ United States Dollar USDA United States Development Agency VCT Voluntary Counselling and Testing ZARI Zambia Agricultural Research Institute ZEMA Zambia Environmental Management Authority ZMW Zambian Kwacha Senior Global Practice Director: Juergen Voegele Practice Manager: Tijan M. Sallah Project Team Leader: Indira Janaki Ekanayake ICR Team Leader: Indira Janaki Ekanayake ICR Primary Author: Malathi S. Jayawickrama REPUBLIC OF ZAMBIA AGRICULTURAL DEVELOPMENT SUPPORT PROJECT CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 4 3. Assessment of Outcomes ............................................................................................ 9 4. Assessment of Risk to Development Outcome......................................................... 19 5. Assessment of Bank and Borrower Performance ..................................................... 20 6. Lessons Learned ....................................................................................................... 22 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 23 Annex 1. Project Costs and Financing .......................................................................... 24 Annex 2. Outputs by Component ................................................................................. 25 Annex 3. Economic and Financial Analysis ................................................................. 44 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 47 Annex 5. Beneficiary Survey Results ........................................................................... 49 Annex 6. Stakeholder Workshop Report and Results................................................... 57 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 58 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 60 Annex 9. List of Supporting Documents ...................................................................... 61 MAP A. Basic Information Agricultural Country: Zambia Project Name: Development Support Program Project ID: P070063 L/C/TF Number(s): IDA-H2200 ICR Date: 11/06/2014 ICR Type: Core ICR Lending Instrument: SIM Borrower: GOVT OF ZAMBIA Original Total XDR 25.70M Disbursed Amount: XDR 24.45M Commitment: Revised Amount: XDR 24.45M Environmental Category: B Implementing Agencies: Ministry of Agriculture and Livestock Cofinanciers and Other External Partners: Road Development Agency (RDA) National Road Fund Agency B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/08/2004 Effectiveness: 09/12/2006 09/12/2006 09/30/2008 Appraisal: 12/05/2005 Restructuring(s): 11/26/2012 11/30/2013 Approval: 05/16/2006 Mid-term Review: 11/16/2009 11/09/2009 Closing: 06/30/2012 05/15/2014 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Low or Negligible Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Agricultural extension and research 11 11 Agro-industry, marketing, and trade 39 39 Central government administration 12 12 Rural and Inter-Urban Roads and Highways 38 38 Theme Code (as % of total Bank financing) Other Private Sector Development 17 17 Rural markets 33 33 Rural policies and institutions 17 17 Rural services and infrastructure 33 33 E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Gobind T. Nankani Country Director: Kundhavi Kadiresan Hartwig Schafer Practice Tijan M. Sallah Richard G. Scobey Manager/Manager: Project Team Leader: Indira Janaki Ekanayake Paavo Eliste ICR Team Leader: Indira Janaki Ekanayake ICR Primary Author: Malathi S. Jayawickrama F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The project development objective is to support increased commercialization of smallholder agriculture through improved productivity, quality and efficiency of value chains where smallholders participate. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Agricultural exports for target value chains (tons/year) Value quantitative or 65,164 80,000 116,119 Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is a 145% achievement of the target. achievement) Indicator 2 : Targeted commodities produced by smallholder households (tons/year) Value quantitative or 351,567 405,800 542,947 Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is a 133% achievement of the target. achievement) Indicator 3 : Smallholder households growing targeted crops (number) Value quantitative or 927,251 1,500,000 1,039,216 Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is a 69% achievement of the target. achievement) Average income per household in targeted areas: (i) Choma; (ii) Katete; and (iii) Indicator 4 : Chipata Value Choma: 5,120; Katete: Choma: 7,000; Choma: 26,501; quantitative or 2,937; Chipata: 3,837 Katete: 3,500; Katete: 11,773; Qualitative) (these were in 2009) Chipata: 4,500 Chipata: 27,425 Date achieved 06/30/2009 03/31/2014 05/15/2014 Comments This is a 378%, 336% and 609% achievement in the Choma, Katete and Chipata (incl. % districts respectively. achievement) Indicator 5 : Direct project beneficiaries (number), of which female (%) Value 103,502 with females at 65,000 with 128,265 with quantitative or 18% females at 38% females at 48% Qualitative) Date achieved 06/30/2009 06/30/2009 05/15/2014 Comments This is a 197% achievement for direct beneficiaries and 126% achievement for (incl. % female beneficiaries achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Technologies demonstrated by the project in the project areas (number) Value (quantitative 0 50 39 or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is a 78% achievement of the target achievement) Beneficiaries directly targeted through the MIIF matching grants (number) Indicator 2 : (2009) Value (quantitative 0 40,000 45,180 or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is a 113% achievement of the target achievement) Indicator 3 : Rural roads rehabilitated (Km) Value (quantitative 0 1,131 1,131 or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is 100% achievement of the target. achievement) Indicator 4 : Average vehicle traffic on improved roads (vehicles/day--vpd) (2007/8) Value 25% increase (i.e. (quantitative 52 194 vpd 65 vpd) or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments This is 273% achievement of the target. (incl. % achievement) Indicator 5 : Seed certified for sale by the seed testing laboratory in Choma (tons/year) Value 1,416 (2012) and (quantitative 0 12,000 1,054 (2013) or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is 20% achievement due to the fact that this activity began only in 2012. achievement) Seed of finger printed varieties made available on the Zambian seed market Indicator 6 : disaggregated by crops (tons/year) Value (quantitative 0 7,000 6,709 or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is a 96% achievement of the target. achievement) Enterprises/commercial smallholders receiving adequate food safety and Indicator 7 : phytosanitary services through ZARI (%) Value (quantitative Not Available 50% 67.9% or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is a 136% achievement of the target. achievement) Target smallholders and agribusinesses receiving accurate and relevant market Indicator 8 : information on time (%) Value (quantitative Not Available 50% 60.9% or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments (incl. % This is a 122% achievement of the target. achievement) Quality foundation cotton seeds produced, controlled and distributed by CDT Indicator 9 : (tons/year) Value (quantitative 21.9 68.9 60.9 or Qualitative) Date achieved 12/31/2005 06/30/2012 05/15/2014 Comments This is a 88% achievement of the target. These figures refer to CDT and (incl. % represents only pre-basic seed. achievement) G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/14/2006 Satisfactory Satisfactory 0.00 2 12/01/2006 Satisfactory Satisfactory 5.57 3 03/21/2007 Satisfactory Satisfactory 5.57 4 10/07/2007 Satisfactory Satisfactory 5.57 5 02/05/2008 Satisfactory Satisfactory 5.55 6 09/16/2008 Satisfactory Satisfactory 6.42 7 03/16/2009 Satisfactory Moderately Satisfactory 9.63 8 08/27/2009 Satisfactory Moderately Satisfactory 10.43 9 04/01/2010 Satisfactory Satisfactory 13.71 Moderately 10 09/13/2010 Moderately Satisfactory 13.06 Unsatisfactory 11 03/16/2011 Moderately Satisfactory Moderately Satisfactory 18.18 12 09/27/2011 Satisfactory Satisfactory 20.86 13 05/13/2012 Satisfactory Satisfactory 25.31 14 01/06/2013 Satisfactory Satisfactory 28.95 15 08/03/2013 Satisfactory Satisfactory 32.86 16 03/12/2014 Satisfactory Satisfactory 35.86 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Second order restructuring to 09/30/2008 N S S 6.42 extend project closing date. Second order restructuring to: extend closing date; reallocate funds among components and 11/26/2012 S S 28.95 subcomponents; make minor revisions to the results indicators; and update risk matrix using ORAF framework. Second order restructuring to reallocate funds to cover cost 11/30/2013 S S 33.77 overruns due to the extension of the project closing date. I. Disbursement Profile 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. In 2004, Zambia was one of the poorest countries in Sub-Saharan Africa, with an annual per capita income of US$440. Poverty was widespread in the rural areas; home to two-thirds of its 10.5 million population and 72 percent of the poor. The economy had been historically dependent on copper mining, but the decrease in world copper prices had resulted in economic decline of the relatively high standard of living of the 1970s. Structural reforms initiated in the 1990s had slowed this decline. Real annual Gross Domestic Product (GDP) growth, which had averaged -0.2 percent from 1991-98, recovered to average 4 percent over 1999-2003. The poverty headcount also improved from 78 percent in 1998 to 68 percent in 2004. Yet, this progress was not seen as sufficient to reach the poverty-related Millennium Development Goal (MDG) of halving poverty by 2015. 2. Agriculture had become the major driver of growth and a significant source of export revenue following the drop in copper earnings. Agriculture and agro- processing contributed over 40 percent of GDP and 12 percent of export earnings respectively. The sector employed about 67 percent of the labor force and supplied raw materials to agro-related industries, which accounted for 84 percent of manufacturing value-added. 3. The Government of the Republic of Zambia’s (GRZ) efforts to support smallholder agriculture prior to the 1990s had not achieved the expected results. Policies focused on subsidized inputs and outputs, price interventions, and support to agricultural parastatals had biased production incentives in favor of maize. Following reforms, GRZ reduced its role and budget in agriculture. This, however, led to a deterioration of public service delivery and hurt most smallholder farmers who depended on public services, and were ill-prepared to face the challenges of exploiting market opportunities that emerged with liberalization. With a reduced Government role, the private sector spearheaded the impressive growth in agriculture in that decade. Annual agricultural GDP growth during 1990-2000 averaged 3.9 percent; faster than the population growth of 2.5 percent. 4. Production systems that had emerged in Zambia since the mid-1990s were based on partnerships between smallholders and commercial farmers or agro- entrepreneurs. Most of the 800,000 smallholder households, who accounted for 80 percent of the cultivated area, were organized in some form of outgrower scheme arrangements, with the majority contracted by cotton companies. Cotton was undoubtedly the success story in smallholder commercialization. Tobacco was also an important smallholder crop, while other promising subsectors were emerging. Despite the relative success of outgrower schemes, Zambia’s commodity industries were facing many challenges in sustaining their productivity and competitiveness due to several factors. These included a distorted policy environment of subsidized inputs and outputs, the limited availability of term financing for capital investments, poor road access to high potential areas, weak services from relevant public sector institutions, and 1 exchange rate appreciation. The Agriculture Development Support Project (ADSP) was designed to specifically address these binding constraints and improve sector competitiveness. Agro-processing and marketing companies were viewed as being the main force behind growth in agriculture, and support was needed to improve the efficiency of existing and new outgrower operations and their export competitiveness. 5. GRZ requested the Bank to prepare ADSP for smallholder commercialization to contribute to the Country Assistance Strategy (CAS) pillar of promoting economic growth and export diversification. The Bank had considerable global experience in value chain development and smallholder commercialization, and development partners (DPs) supporting these areas in Zambia agreed to harmonize within a framework to reduce possible duplication and improve the development impact of their interventions. In addition, the sudden appreciation of the Kwacha had revealed the delicate comparative advantage of smallholder systems in Zambia, and the Bank was needed to address broader macroeconomic shocks to ensure that gains would not be reversed. ADSP, a multi-sector program with International Development Association (IDA) funding of US$37.2 million, was approved on May 16, 2006, with a projected project Closing Date of June 30, 2012. During the initial project implementation period, ADSP was the only IDA funded project in the agricultural sector. 1.2 Original Project Development Objectives (PDO) and Key Indicators 6. The PDO was to support increased commercialization of smallholder agriculture through improved productivity, quality and efficiency of value chains where smallholders participate. 1 7. The Key Performance Indicators (KPIs) were: (i) value of agricultural exports of target value chains; (ii) volume of commodities produced by target outgrower schemes; and (iii) increase in participating farmers’ incomes. 1.3 Revised PDO and Key Indicators, and reasons/justification 8. The PDO was not revised 2 during implementation. With respect to the KPIs, the mid-term review (MTR) noted that the National Coordination Office (NCO) faced issues in regularly updating the indicators due to unclear data collection methodology and analysis between the NCO and the project implementing agencies (IAs). The indicators were therefore revised to better link to the components and logically reflect the impact of ongoing activities specifically supported by the project. IAs were also expected to collect data more effectively and report on results in a timely manner, thereby providing intermediate evidence on attaining the PDO. The Results Framework (RF) was also updated to include the Bank’s mandatory core indicators on gender, roads, finance, and 1 This is the PDO as stated in the Financing Agreement (June 13, 2006), the Project Appraisal Document (PAD), and the Restructuring Paper (November 13, 2013). The PDO is worded differently in the PAD Data Sheet, Implementation Status Reports (ISRs), and in the Restructuring Paper Data Sheet but with no substantial difference. 2 ADSP had three instances of Level 2 (second order) restructurings. See Section 1.7. 2 agricultural technology, which were not required at the time of project appraisal. Detailed information on KPIs on measurement, contribution to segments of PDO, and attribution are provided in ICR Annex 2 Table 1 and text immediately thereafter. 9. The revised Key Performance Indicators (KPIs) were: (i) agricultural exports for target value chains (tons/year); (ii) targeted commodities produced by smallholder householders (tons/year); (iii) smallholder households growing targeted crops (number); (iv) average income per household in targeted areas; and (v) direct project beneficiaries (number), of which females (%). Improved value chain productivity, quality and efficiency were assessed using above KPIs in terms of increases in volumes and numbers. See details in Annex 2 Table 1. 1.4 Main Beneficiaries 10. ADSP was targeted to business-oriented smallholders or smallholder households. It was expected to directly benefit about 65,000 smallholder households who were already participating in organized supply chains. Other beneficiary groups included agribusinesses, large-scale estate and commercial farmers, input suppliers, processors, traders, and financial institutions that were part of the value chains. Selected departments in the Ministry were also to benefit institutionally through capacity strengthening. 1.5 Original Components 11. Component 1: Support to Farmers and Agribusiness Enterprises (SFAE, US$33.2 million), (comprised of IDA: US$30.8 million; Beneficiaries: US$2.4 million), aimed to increase the degree of smallholder commercialization by promoting the development of a network of well-functioning and competitive value chains. It had three sub-components: (a) Supply Chain Credit Facility, (SCCF, US$12.2 million), to provide a line of credit through participating financial intermediaries (PFIs) on a demand-driven basis, to support investments to improve the supply chains of existing and emerging contract farming systems; (b) Market Improvement and Innovation Facility (MIIF, US$6.0 million), to offer financial resources, on a matching grant (MG) basis, for the development of innovative business linkages between smallholders and other actors in agricultural value chains; and (c) Rural Roads Improvement Facility (RRIF, US$15.0 million), to support rehabilitation and maintenance of selected feeder and district roads in areas of high agricultural potential, using Output and Performance- based Road Contracts (OPRCs). 12. Component 2: Institutional Development (US$3.9 million), sought to improve the public sector’s capacity to provide core public services required to enhance smallholders’ access to markets, and their productivity and quality. It was to strengthen selected core services of the Ministry of Agriculture and Co-operatives (MACO) related to data and policy analysis, monitoring and evaluation (M&E), market information, seed certification and control, food safety and quality standards, and phytosanitary services. 13. Component 3: Project Management and Coordination (US$2.6 million). As project management largely relied on existing MACO structures, this aimed to 3 strengthen MACO’s implementation capacity by establishing the NCO within MACO, comprising of a National Coordinator, Safeguard Specialist, M&E Specialist and support staff. 1.6 Revised Components (not applicable) 1.7 Other significant changes 14. ADSP was restructured (Level 2) on September 30, 2008, to: extend the project closing date by 21 months to March 31, 2014; to accommodate implementation of the five-year OPRC; and to reallocate US$5.5 million of project funds from Category 3 (subloans under SCCF) to Category 1 (goods, works, consultant services and training) to cover higher than expected costs of civil works and consultant services. At project approval, the optimum contract period for OPRCs was not known. The engineering assessment of September 2007 had recommended OPRC contract duration of five years. 15. On November 26, 2012, ADSP was restructured (Level 2) to reallocate US$6.55 million from the SCCF to other components, so as not to tie up limited resources. Also, the restructuring involved a change in implementation arrangements of one sub- component; amendment of the definition of operating and training costs; revision of the Results Framework (RF); and extension of the project closing date to May 15, 2014 to accommodate the closing out of all grant activities, especially the rural road contracts under RIIF as well as the matching grants under MIIF. The implementation arrangements were changed as the full responsibility for administering the MIIF was transferred from the MIIF Grant Administrator (MGA) to the NCO following the closure of the MGA contract. In November 2013, there was a third Level 2 restructuring to cover cost overruns under Category 2 (operating costs) arising out of the extension of the project. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 16. The ADSP project was informed by an in-depth analytics at entry, which resulted in the Zambia Smallholder Agricultural Commercial Strategy and also extensive field visits and consultations with smallholders and agribusinesses 3. ADSP included a Project 3 Under pinning documents included: World Bank Africa Region Working Paper Series No. 85, 2003, Alwang and Siegel, Poverty Reducing Potential of Smallholder Agriculture in Zambia: Opportunities and Constraints; World Bank, 2003, Zambia: The Challenge of Competitiveness and Diversification, Report No. 25388-ZA, Washington DC, January 2003; Disaster Management and Mitigation Unit, 2004, Impact assessment of Food security pack and its Effectiveness food security amongst Smallholder farmers; CSO, 2004, Living Conditions Monitoring Survey Report 2004, Central Statistics Office, republic of Zambia, Lusaka; FAO, 2005, Zambia: Agricultural Development Support project for Smallholder Commercialization, Working Paper 1: Value Chain Development. 4 Preparation Facility in 2002 and a Quality Clinic (QC) to help prepare and guide project design. The design reflected GRZ’s desire for a greater focus on smallholder agricultural commercialization as a means of reducing poverty and enhancing exports, by supporting the development of entire value chain systems. At entry, following risks were recognized as substantial: exchange rate volatility reducing competitiveness of agricultural exports, potential fund use for unintended purposes, and smallholder to agribusiness operators’ arrangements skewed in favor of agribusinesses. Key respective and effective mitigation measures adopted to address the issues were: coordinated development partners engagement with government on policy matters and an active high level inter-sector advisory group to advice on volatility risks and related budget support; adoption and implementation of an Integrated Financial Management Information System (IFMIS) within MAL to improve transparency of fund use and accountability; and capacity building and facilitation for smallholders to form groups and access project grant funds and build effective partnerships with agribusinesses along the value chains. 17. Project concept and design drew on Bank experience and lessons from Bank and DP agricultural development projects in Zambia. These included: (i) the key element of better access to credit; (ii) the need to align matching grants (MG) investments for supply chain development with industry needs; and (iii) the necessity for road rehabilitation design to include sufficient resources and practical arrangements for post-rehabilitation maintenance for several years by combining them in one contract. The DP-funded projects had also shown that funds for smallholder mobilization and capacity building should be channeled through industry associations, agribusinesses and farmer organizations in order to have a lasting impact. Finally, there was the need to clearly define and understand the role of DPs from the onset. In this respect, ADSP and African Development Bank (AfDB) agreed on a common harmonization framework to coordinate their support, with the Bank financing investments into feeder and district roads, value chain strengthening, and a line of credit, and AfDB focusing on capacity building of existing and new farmer groups, support to extension, the rural seed industry and livestock production. 18. The supply chain approach was a valid strategic entry point to address smallholder commercialization in Zambia, and the project had all the necessary elements to deal with the constraints facing smallholders. Project activities and the indicators reflected the PDO. ADSP, however, overlooked two key elements: (i) that several project concepts were new to Zambia (i.e., the OPRC and the ‘innovative’ feature of MIIF), and that both implementers and potential participants might need time to understand these activities; and (ii) that there could be a conflict of interest in assigning the Bank of Zambia (BoZ) to be the implementer and regulator of the SCCF. With respect to MIIF and OPRC, they were good concepts, and had ADSP’s design allowed for raising awareness of these innovative activities upfront, it might have been able to avoid initial delays in getting these key efforts off the ground. Varied implementation of sub-components contributed to lower than expected synergies and integration across sub-components. With respect to the potential conflict of interest, better due diligence during preparation as to the type of institution most suited to 5 manage the line of credit could have prevented major implementation delays and the cancellation of the SCCF, as described in Section 2.2. 2.2 Implementation 19. ADSP operated within the government structure and enjoyed commitment from senior leadership. It covered multiple sectors and involved institutions from inside and outside of the government system. The project utilized the total grant of US$37.2 million. The project cost was US$50 million, composed of the IDA grant of US$37.2 million (74.4 percent), Government counterpart contribution of US$7.1 million (14.2 percent), beneficiary contribution of US$3.1 million (6.2 percent) and a currency exchange gain of US$2.6 million (5.2 percent). The exchange gain was used to offset increases in project costs due to inflation and the longer implementation period, and to cover government activities designed to ensure continuity and sustainability of ADSP activities beyond the original closing date. 20. ADSP faced several challenges in implementation which were mitigated by project restructuring and reallocation. Project restructuring efforts positively contributed to the satisfactory implementation and project performance related efficiency gains by: allocating additional funds to quick disbursing activities and value chains, which were demand driven in a timely manner; improving the public sector institutional capacity to provide essential services related to value chain competitiveness; strengthening of project and MAL with a robust M&E system to monitor activities thereby improving fund use efficiency and Proactive restructurings over the implementation period (with two closing date extensions) therefore directly contributed to the achievement, largely of the PDO and is illustrated by satisfactory ratings in the outer years. Some of the challenges and lessons learnt described below helped MAL to improve its project designing and implementation capacity as reflected in three IDA funded full size projects in implementation in the portfolio (total IDA value of US$195 million). 21. The SCCF and restructuring. SCCF had not commenced any project-specific activity by November 2009 while ADSP had assumed the oversight obligations (Bank’s) with regard to previously closed Enterprise Development Project (EDP) and recovery of its funds under Enterprise Development Fund (EDF). At the MTR, stakeholders decided to reallocate SCCF funds to other IAs, leaving a balance of US$80,000 to help build capacity of the Apex Unit to continue with effective management of EDF and for other future lines of credit. On December 17, 2009, GRZ relocated the Apex Unit from BoZ to DBZ. Since then, DBZ has utilized the funds on capacity building activities including training staff in IT, financial planning and forecasting, project appraisal analysis and for provision of a computerized financial management system. DBZ now provides loans to many agricultural value chain activities (including with recovered funds of US$40 million from the EDP), and is thereby supporting commercialization of smallholder agriculture and contributing to the achievement of ADSP development objectives. 22. Overall, collaborative activities, especially under the MIIF, have strengthened public-private partnerships and contributed to positive outcomes. 6 Bank support not only strengthened project implementation, but also strengthened the ability of government systems in implementation. The government has witnessed the benefits of working effectively with the private sector, and the private sector has developed greater trust in public institutions. This has led to a desire to scale up many activities (as noted by the RDA and MIIF beneficiaries during the ICR mission). 23. Despite the challenges and even though the project experienced initial implementation delays, the project was successfully implemented over a period of 7.8 years, and contributed to significant achievement of the PDO, as described in Section 3.2. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 24. The project’s M&E system was built on existing country systems to minimize the need for parallel M&E frameworks. M&E implementation faced a number of issues and was rated moderately satisfactory in early 2008 (ISR #5, February 5, 2008). Although significant progress had been made in building an M&E system, including a Project Indicators Monitoring Plan (PIMP), the system was not able to effectively collect and generate the necessary information on a timely basis (see Section 1.3). 25. The MTR focused on improving the M&E system and the RF through a workshop that included building capacity and common understanding of the ADSP objectives, and on M&E issues between the IAs. The RF was revised to include realistic targets and a detailed M&E activity plan, and was adopted in the subsequent project restructuring (MTR Aide Memoire, November 9-25, 2009). Refer to section 1.3 and Annex 2 with further clarifications, on revised KPI at MTR. M&E of all activities improved and remained satisfactory. Overall, by project closure it had achieved considerable results beyond collecting information on indicators. For example, regular site-visits to MIIF grant recipients included technical assistance based on their progress. The M&E unit helped to disseminate program results through annual conferences where IAs and stakeholders showcased their results and shared experiences. In collaboration with the Road Development Agency (RDA), the M&E unit helped to design an impact assessment of the RRIF that included establishing a baseline in 2009 and a follow up assessment in 2012. 2.4 Safeguard and Fiduciary Compliance 26. ADSP was rated Environmental Category ‘B’ as it was expected to have limited environmental impact. The project prepared an Environmental and Social Management Framework (ESMF) to address the requirements of OP4.01 and OP4.09, and a Resettlement Policy Framework (RPF) to address potential land acquisition issues under OP4.12. The project also funded a full-time Safeguard Specialist for the NCO to support project IAs in fulfilling their safeguards responsibilities. ADSP maintained good progress in implementing the ESMF requirements. 27. A potential involuntary resettlement issue arose in February 2009, when some households had built their structures on roads in the Katete district, Eastern province that 7 were subject to rehabilitation works under the RIIF. An action plan, including the preparation of an Abbreviated Resettlement Action Plan (ARAP) was followed to resolve the issue. The final mission noted its satisfaction with the continuing attention given to address safeguards related to the RRIF and MIIF subprojects and activities under various IAs. 28. Financial Management (FM). Overall, FM remained in the satisfactory range. At the time of the MTR it was rated moderately satisfactory, mainly due to the incomplete computerization of ADSP’s accounting system, and late submission of audit reports. Audited financial statements for some years were also delayed; however, these reports were unqualified accompanied with a clean Management Letter. 29. ADSP helped to strengthen the capacity of the FM unit (FMU) to handle the incremental workload associated with implementation. Initially, FMU worked closely with the NCO to develop the Integrated Financial Management Information System (IFMIS) using Navision software. This system was expected to integrate activity-based budgeting, procurement, and results-based M&E. However, the system was not able to produce the reports as required. ADSP subsequently adopted an integrated FM system that is being successfuly used for public financial management that incorporates planning, budgeting, expenditure management and control, accounting, audit and reporting, thereby enhancing transparency and accountability of public resources. The project has successfully used country systems for management of donor funds in line with GRZ policy. 30. Procurement. ADSP supported the Procurement and Supplies Unit (PSU) in the Ministry to strengthen its capacity. Overall, the PSU followed sound procedures acceptable both to the Bank and government. The Bank carried out annual post procurement reviews in order to ensure that acceptable procurement standards such as efficiency, transparency and accountability were being observed. Although there were challenges in terms of delays, long procedures and inadequate capacity among personnel, most procurement resulted in good value for money. A specific bottleneck, however, was the low threshold for Director-level approval in agriculture projects in Zambia. 2.5 Post-completion Operation/Next Phase 31. Although there is no specific follow up operation, options have been identified for many of ADSP’s innovative aspects, and several activities have already commenced. The SCCF was integrated within the DBZ, DBZ’s capacity strengthened, and activities will be sustained through private sector participation in the EDF. The matching grant model has been adopted by other IDA funded projects within the Ministry such as the Irrigation Development and Support Project (IDSP), Livestock Development and Animal Health Project (LDAHP) and the Agricultural Productivity Program for Southern Africa (APPSA). ADSP-supported agribusinesses will have access to facilities under these projects. The OPRC will be scaled up through the rural road rehabilitation and maintenance project being designed under the RDA, with the concept adopted to rehabilitate and maintain some of 33,000 kilometers of rural roads in Zambia. 8 32. SCCI foresees sustaining its biotechnology laboratory operations through proceeds from providing finger printing services to clients. There is also scope for research support from APPSA. Both labs at SCCI—Choma and biotech are incorporated into the GRZ budget. ZARI anticipates collaboration with APPSA to support its research and pest surveillance activities. Surveillance work done under ADSP has also helped ZARI to present project proposals to examine the next set of issues related to crop losses from Asian Fruit Flies (AFF). ZARI has obtained funds from FAO under the Technical Cooperative Project (TCP) to continue this work, and is also receiving funds from the United States Department of Agriculture (USDA) to build on work done under ADSP. CDT plans to sustain its activities through own support realized from executing of its strategic business plan. CDT might also collaborate with IDSP to support the expansion of the irrigation infrastructure. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 33. Overall relevance of the project to the sector and national economy is substantial. ADSP’s key objectives which were set out to contribute to CAS pillar of promoting economic growth and export diversification continue to be relevant to the Bank’s current Country Partnership Strategy (CPS 2012-2016), and the Sixth National Development Plan (SNDP 2011-2015). The SNDP stresses investments in agriculture infrastructure and rural finance as a means of reducing poverty. The Plan emphasizes crop diversification, while also improving marketing systems, developing the value chain in agriculture production, and increasing productivity in farming to ensure national food security, employment and exports. 34. ADSP’s integrated supply chain approach, despite its design complexity given the number of original activities, new activities and value chains, implementation delays and issues with some of the IAs, provided a platform to overcome such weaknesses. In addition, its proactive restructuring to address implementation bottlenecks did not outweigh the high level of relevance. The integrated approach also included the many elements and synergies that were necessary to achieve its PDO of enhancing smallholder commercialization. Project implementation required working with all those agents in a chain by facilitating strategic partnerships to address bottlenecks along potentially profitable supply chains which at times affected smooth implementation progress as shown by ISR rating changes at various time. 3.2 Achievement of Project Development Objectives 35. This section presents level of achievement of and delivery of PDO segments by individual KPIs. The linkages through which ADSP interventions resulted in successful final outcomes are presented in Table 1 below. Annex 2 lists the definitions of all project indicators, outputs by component, and the intermediate outcomes achieved. As a sector wide project with a programmatic approach, using country systems to implement government’s broad program in the agriculture sector and not implementing ADSP as a 9 separate project, ADSP achieved significant and substantial institutional development of public sector institutions, and built strong private public partnerships in targeted value chains. The institutional development and strengthened service delivery to targeted value chains contributed greatly to the project’s final successful outcomes. 36. Given ADSP’s cohesive approach, one cannot separate which project outputs directly resulted in each outcome under the five KPIs. Rather, the outcomes are correlated and can be attributed to multiple activities and their synergies. For example, the key objective of rehabilitating feeder road networks was to improve access to markets and public facilities by rural farming communities. Average household incomes in these targeted catchment areas increased substantially (KPI #4). However, greater household production and marketable surpluses, aided by the MIIF, and key support services provided by the research institutes also contributed to this result. Table 1: Status of ADSP Key Performance Indicators at end-of-project (EOP) Project Development Objective Baseline MTR EOP EOP Target Key Performance Indicators 2005 2009 2013 Target achieved 1. Agricultural exports for target 65,164 44,686 116,119 80,000 145% value chains (tons/year) 2. Targeted commodities produced by 351,567 277,011 542,947 405,800 133% smallholder households (tons/year) 4 3. Smallholder households 927,251 1,000,549 1,039,216 1,500,000 69% growing targeted crops (number) 4. Average income (ZMW) per household in targeted areas: - 5,121 26,501 7,000 378% (i) Choma (ii) Katete - 2,937 11,772 3,500 336% (iii) Chipata - 3,837 27,425 4,500 609% 5. Direct project beneficiaries 0 103,502 128,265 65,000 197% (number), of which female (%) - 18% 48% 38% 126% KPI 1: Agricultural exports for target value chains (tons/year) 37. ADSP targeted value chains/commodities with high export potential: cotton, paprika, chili, soya beans, groundnuts, sunflower, honey and coffee. Zambia’s total exports of these products reached 116,119 tons/year in 2013. The largest increases were in cotton, sunflower and groundnuts (see Government ICR, p. 30 for a breakdown of annual exports by commodity from 2005 to 2013.) 38. Although the growth in national exports cannot be directly attributed to ADSP, several project outputs contributed to exports, including: MIIF sub-projects that were 4 Between 2005 and 2007, the fertilizer subsidy to maize was increased substantially, in terms of the number of beneficiaries reached and the size of the fertilizer package. As a result, maize output increased from 866,187 tons (2005) to 1,366,158 tons (2007), and the competing crop, cotton, experienced a decline in output from 170,000 tons (2005) to 70,000 tons (2007). The more accurate baseline for KPI #2 should therefore be 2007, when production was 197,368 tons (see Government ICR, Annex 5b on indicators). 10 able to successfully access export markets through innovation and supply chain strengthening (i.e., Ubuchi Capital Enterprises’ honey exports of 22,248 kgs. to Norway, Chankwakwa Limited’s exports of dried fruit to Denmark); plant quarantine services offered by ZARI, which enabled the issuance of phytosanitary certificates for export; and capacity strengthening of CDT that allowed CDT to increase the supply of pre-basic cotton seed to the industry. 5 Improved road networks also impacted this outcome, as they removed transport infrastructure constraints that limited expansion and efficiency of supply chains. Figure 1. Agricultural exports for target value chains (tons per year) 140000 120000 100000 80000 60000 40000 20000 0 2005 2007 2008 2009 2010 2011 2012 2013 Source: Government ICR, p. 30 and Central Statistical Office (CSO). MIIF and ZARI activities/outputs and their links to export growth: 39. The MIIF provided funds to promote innovative products and processes that enhanced competitiveness of agricultural production, and link smallholders to viable agribusinesses. The facility supported 28 enterprises along commodity value chains in cotton, paprika, chili, groundnuts, soybeans, dairy, poultry, aqua-culture, piggery, honey, cashew nuts, mushroom, local vegetables and fruits. This was also supporting GRZ policy on crop diversification. Overall, 39 different innovative technologies were introduced, either directly to smallholder farmers at the production stage, or further down the value chain as part of the processing chain of agricultural commodities. The total estimated number of beneficiaries under the sub-projects is 45,180 (in 9 provinces, 26 districts), of which 31,630 were direct beneficiaries (see Annex 2, Table 3-6). 40. Both direct and indirect beneficiaries ranging from farmers in outgrower schemes to agro-processors noted advances in production and export-related activities (during the ICR mission in August 2014). Beneficiaries were particularly grateful for services offered by ZARI. ADSP had enhanced ZARI’s capacity to comply with emerging Sanitary and Phytosanitary (SPS) requirements, and help agribusinesses take advantage of export opportunities. ZARI’s services provided to agribusinesses, smallholder and commercial farms, and to individuals included: issuance of phytosanitary certificates; fumigation inspections, nursery inspections, and tobacco premises inspections. 5 These enterprises presented export permits to the ICR team as examples of gaining access to export markets as a result of MIIF sub-projects and phytosanitary certification from ZARI. 11 41. ZARI successfully executed several activities in line with its mandate. Key surveys and surveillance activities to improve the quality and safety of Zambian products have enhanced production and trade. For example, as part of research and development, ADSP promoted production and quality improvement of the honey value chain through testing and confirming that Zambian honey is free of American Foul Brood (AFB) disease. This in turn has eliminated the need to irradiate the honey, and opened doors for honey exports to regional and international markets. In addition, the project helped to improve the plant quarantine services by enhancing staff capacity at ZARI, which issues phytosanitary certificates for export and plant import permits for a variety of products. ZARI also undertook surveillance activities in Fruit fly, Banana Bunchy Top Disease, and Coffee Pest and fumigation inspections, with the objective of controlling or suppressing the population of various predators in fruit and other agricultural products, in order to enhance fruit production and trade (ZARI Completion Report, 2013). ZARI regularly conducted border backstopping missions in provinces that have border towns to enforce SPS regulations of the laws of Zambia, provide quality assurance to traders, and to maintains a uniform working approach among inspectors in the borders to assure consistency in services delivered by PQPS. In addition, ZARI’s training activities benefitted staff members and smallholder farmers. Trainings focused on enlightening plant inspectors and other beneficiaries on the importance and application of the plant pest and diseases Acts, the application of the international standards for phytosanitary measures (ISPMs), pest risk analysis, disease identification and sampling methods. 42. MIIF enterprises in honey production followed innovations in rebranding and labeling, through better packaging materials from South Africa, penetrated tourist markets, and obtained export orders to several European countries. Outgrower schemes have grown in numbers and in products. For example, MIIF participants are now exporting mangoes in various processed forms (i.e., Chankwakwa’s outgrowers), including to Denmark as Fair Trade products. Phytosanitary certification for export has helped to improve traceability and open new markets in many fruit and vegetable products. 43. In 2013, a survey covering 94 ZARI clients assessed ZARI’s quality of services; utilization of services; and satisfaction with the services. The quality of issuance of SPS certificates was rated as good, 100 percent of the respondents used these services, and respondents of SPS certificates and fumigation inspections were satisfied with the services received (NIRAS Zambia, 2013, and ADSP Government ICR, p. 27). 44. With respect to KPIs 2 to 5, project activities contributed to the achievement of outcomes in multiple areas as presented below (see Annex 2 for KPI indicator definitions/purpose). Key Outcomes achieved under KPIs 2 to 5: • Zambia’s annual production of the targeted commodities increased from 351,567 tons in 2005 (or 197,368 tons in 2007) to 542,947 tons in 2013 (see the Government ICR, p. 31 for a breakdown of annual production by commodity from 2005 to 2013). 12 Groundnuts, sunflower and soya bean recorded the largest increases. Many of the beneficiaries under the 28 MIIF sub-projects participated in the groundnuts, honey, soya bean, cotton, and chili value chains and benefited from project support. • The number of smallholder households growing targeted commodities increased from the original baseline of 927,251 in 2005 to 1,039,216 in 2013. This was achieved in a diversified farming system excluding maize monocropping. • Annual average household income in the RRIF targeted districts (Choma, Katete and Chipata) increased four fold from ZMW 3,900 (2009) to ZMW 21,800 (2012). • Overall, the project reached out to 128,265 beneficiaries, thereby surpassing the original target of 65,000. About 48 percent of them were female beneficiaries. 6 45. Challenge to RRIF implementation was associated with under-pricing by the roads contractors due to a misunderstanding of the wording in the contract and the weak understanding of principles of the OPRC documents delayed implementation by the MTR, and placed all four roads contracts under increased implementation risk.. Funds were reallocated to finance contract amendments. Lags in mobilizing contractors for the large civil works also delayed the RRIF implementation, as contractors tended to hold back the start of mobilizing equipment in order to manage possible political risks (due to Presidential Elections in October 2009). The subsequent Government ban on advanced payments to contractors further slowed the mobilization process. 46. Despite all these setbacks during implementation the OPRC contract succeeded. The OPRC was an efficient and cost-effective approach, as a single contract also included practical procedures for post-rehabilitation maintenance of the roads for five years. See RIIF impacts below and details in Annex 5. Impact of improved roads on the wellbeing of rural communities: 47. Under the RRIF, ADSP sought to improve smallholder farmers’ access to input and produce markets and the competitiveness of their agricultural commodities by improving road networks in selected districts of Choma, Chongwe, Katete, Chipata and Lundazi, which were selected on the basis of their agricultural potential. The project successfully completed a total of 1,131 kilometers in all the five districts in Eastern and Southern Provinces. 7 48. Two socio-economic impact studies—a Baseline study 2009 and a Second-Phase study in 2012--surveyed the same sample of households to measure the impact of improved Agricultural Feeder Road Networks (AFRNs) on target communities in terms of agricultural production and commercialization, and improvements in general living conditions (IMCS Limited 2010 and IMCS Limited 2013). 6 See NIRAS, Zambia, July 2013 for beneficiaries by gender under the MIIF, ZARI and AMIC. 7 ADSP financed road works in Choma, Katete and Chipata districts. The European Union financed the work in Chongwe and Lundazi districts through Government budget support. ADSP financed all supervision contracts; both IDA and EU financed works contracts. 13 49. Access and mobility impacts significantly eased the movement of inputs, produce and the general public in the catchment areas. The road improvements contributed to reduced travel time from production areas to market centers, from input centers to production areas and in vehicle operation costs. There is evidence of increased business activities along the roads (Tuesday and Thursday markets). Overall, the 2013 study points to an improvement in the standard of living of households in the targeted areas. 50. Key impacts of road improvements and overall conclusions of the 2013 Survey: • Areas that were impassable and inaccessible opened up for economic and social activities, and public transport is now able to reach these areas. The volume of traffic increased signifcantly, by over 270 percent from 52 vehicles per day in 2007 to 194 vehicles per day in 2012. In Choma and Katete districts, there were major increases in the frequency of road usage in both Treatment (ADSP target areas) and Control roads, including in the rainy season in Chipata (also see Annex 2 on ADSP Intermediate Outcome Indicators); • Access to public facilities by the local population residing in the catchment areas improved, through stimulating construction and/or upgrading such infrastructure and reducing travel time than users previously faced. Access and use of public facilities are expected to improve further. General improvement are seen in all districts. In Choma district, primary schools were more accessible (100 percent in Treatment areas versus 93 percent in Control areas, from 57 percent and 71 percent recorded at the Baseline study; in treatment areas the response was significant). Health centers and agricultural depots are more accessible to larger proportions of the population in the Chipata district. This was also generally the case with the Treatment areas in Choma and Katete districts (IMCS, p. vi); • The use of labor-based rural roads construction and maintenance provided employment opportunities for the poor. Approximately 1,200 jobs were created during road rehabilitation and structure constructions in treatment areas; • With respect to agricultural production and sales, a number of factors influenced the farmers’ decision to increase the area under various crops, including improved land use by way of mechanization and higher market prices. Results varied by the three districts and by crop, but overall, average production by household and the average numbert of bags sold increased both in the Treatment and Control areas, with greater impact in treatment areas; • Greater proportions of households in both Control and Treatment areas surveyed in all three districts were linked and participated in the outgrower schemes during the 2011-2012 farming season (Control: from 13 at baseline to 47 percent, and Treatment: from 18 at baselineof to 49 percent respectively, the positive difference however was not statistically significant); • Crop production has increased in both Control and Treatment areas with larger impact in Treatment areas; • The overall improvement in the agricultural production activities of the sample population since 2009 could be attributed to increasing commercial integration of the smallholder farmers in the treatment areas. It may also indicate that improved road access conditions is enhancing agricultural market linkages; and 14 • Other improvements in the standard of living of smallholder farmers include: the number of households accessing protected boreholes rather than wells, proportion of households with toilet facilities, the quality of dwellings, and greater investments in household assets (radios, bicycles, TV sets and solar panels etc.), and spending on public transport and on food items). 51. The 2012 survey attempted to disaggregate the data by gender to establish conditions faced by women. This has enabled to establish a new baseline that should facilitate future monitoring of changes in greater detail in the ADSP target areas (IMCS, 2013, p. 102). Other project activities/outputs that contributed to these outcomes: 52. The MIIF contributed to all five KPIs, including increasing the numbers in outgrower schemes, production of targeted commodities, and exports, as mentioned above. 8 Results from the NIRAS Zambia 2013 assessmentshow that beneficiaries were satisfied with the services delivered by the MIIF. The MIIF contribution to outcomes far outways the general delay in commencing core activities under the MIIF, owing to the need to create awareness and sufficient preliminary capacity to enable major activities to begin. The MIIF in particular faced some challenges, as potential beneficiaries took time to understand the requirements of the facility, as ‘innovative’ practices had not been clearly defined at the time of the initial call for proposals. The initial call attracted 542 grant applications but only 30 were approved given the variety of weaknesses of the majority of such proposals. Some applicants also failed to provide their matching contributions. The OPRC, a new contractual approach was also not well understood by contractors, which affected the pace of work as described below. 53. Seed Control and Certification Institute (SCCI). ADSP supported SCCI to strengthen its capacity in seed testing and certification through the construction of a Biotech Laboratory at Chilanga district, formerly part of Lusaka, establishing a Seed Testing Laboratory in Choma district, and building capacity of SCCI Staff and smallholder farmers. In 2013, ADSP funded SCCI to go out in the districts to collect seed samples for testing. In the years before, that was funded by the government. The laboratory in Choma is part of the Government program to decentralize seed testing to reduce seed costs. Since it was ccommissioned in June 2012, the lab has provided seed testing services to 13 districts in the Southern Province, all of which used to take their seed samples to Chilanga for testing before ADSP support. Small-scale farmers have already experienced benefits from the Choma laboratory in terms of reduced transport and other costs from not having to take seeds to Lusaka (see Alinabena Consultancy and Trading, August 2014. p. 44). 54. A total of 11 different varieties of seed samples (maize, soya beans, beans, sun flower, Jatropha, cotton, okra, cowpeas, groundnuts, sorghum and pigeon peas) have been tested. To date the Choma lab has tested and certified for sale 1,812 tons of seed in 8 See Alinabena Consultancy and Trading, August 2014. p. 9–29 for characteristics on 12 MIIF sub- projects. Five of these value chains were included in the cost-benefit analysis in Section 3.3 and Annex 3. 15 2012 and 1,054 tons in 2013 in the Southern Province. The lab also carries out seed inspections to ensure the production of quality seeds in the province. The lab has inspected seed belonging to both seed companies such as Seed Co and smallholder seed growers. 55. Cotton Development Trust (CDT) supports the cotton industry, which is a very important sector in Zambia’s economy, and is the only institution in the country that is mandated to supply foundation cotton seed to the industry. For some time, supply had been far below demand. Support to CDT was therefore intended to strengthen the capacity of the institute to supply an increased amount of pre-basic seed to the industry. ADSP supported irrigation system infrastructure (wehre CDT was able to use the irrigation water on 80 hectares of land), the establishment of the Integrated Pest Management (IPM) Unit, and equipment, thereby increasing CDT’s pre-basic cotton seed production from 19.2 metric tons in 2005 to 60.9 metric tons in 2013 (see Annex 2, Figure 1). ADSP also supported training of CDT staff and smallholder producers, where the latter received training in advanced technologies associated with value addition, product development and quality improvement. 56. CDT’s IPM lab performed exceptionally well in collaborating with cotton ginners to provide training to farmers participating in cotton out-grower schemes on various sites across the country. Training sessions focused on land preparation, cotton planting, weed control, fertilizer application and early pest management (Annex 2 Table 8 gives the participation of smallholder farmers in training during the 2012/13 farming season, with the data disaggregated by gender). Average yield over the past 4 years for a model group has increased from 607 kg/ha in the 2008/09 season to 1,158 kg/ha in the 2012/13 season (Annex 2, Table 9). 57. Agricultural Market Information Centre (AMIC) and Agribusiness and Trade (ABT). ADSP also helped to upgrade the market information system to help improve the delivery of up-to-date and accurate market data to satisfy the needs of farmers, traders and processors through capacity building to facilitate agricultural trade and negotiations. AMIC carried out several programs/activities to help smallholder farmers improve their farming business as detailed in Annex 2. One area of focus was the marketing aspect. AMIC collects and disseminates agricultural market information using a number of channels including radio and bulletin. There is evidence of increased private sector participation in sponsoring the dissemination of market information, which is an important element for long-term sustainability. 58. Supply Chain Credit Facility (SCCF): DBZ and ADSP. Although the SCCF did not lend any of its funds to smallholders, ADSP helped DBZ by building capacity in staff to handle value chain financing. The total loan portfolio transferred from BoZ to DBZ amounted to over US$40 million in 2009 (see DBZ Completion Report for details on sub-borrowers and the sectors lent to). Sub-borrowers’ financing included agriculture projects operating in different parts of the country that were engaged in various farming activities and agro-processing, such as mixed farming, fishing, ranching and processing maize into mealie meal. Through the EDF, DBZ has been providing loans to many agricultural sector value chain activities. As of 31st December 2013, the 16 performance of the revolving fund was impressive and DBZ was supporting over 6,762 farmers with an average loan size of K1,700, thereby supporting commercialization of smallholder agriculture and therefore contributing to the achievement of the ADSP development objective. 3.3 Efficiency 59. The financial and economic net present value (NPV) and internal rate of return (IRR) analysis of ADSP included five key value chains: dairy (livestock subsector), soya beans (crop – grain legume sub sector), mushroom (fungi food/ forest product), and non- foods, tobacco and pre-basic cotton seed (CDT), which benefitted from RRIF, MIIF and Institutional development components. 9 The study also considered the inputs and outputs of all institutions under the Institutional Development component, the RDA for rural roads and visited 13 of the 30 MIIF sub-projects under the MIIF to ensure that program costs and benefits were measured to the extent possible. Final analysis did not include a detailed assessment of relatively minor value chains such as sunflowers, ground nuts and paprika from export volume and contribution to national economy points of view. The RIIF assessment was also incomplete and is not presented here but the impact results presented in the section above are used as project benefits, both quantitative and qualitative. There were also data limitations as detailed in the report, e.g., data unavailability and unwillingness to release information for some MIIF agri- enterprises, especially on the value of sales and their operational costs. The preliminary findings for the case study value chains provided IRR values above 50 percent, which were on the high side due to several factors. 10 However using proxy data for cost factoring, the Economic Rate of Return (ERR) ranges between 18 and 29.5 percent. The financial and economic NPV using a 12 percent discount factor were ZMW3.88 million and ZMW11.09 million respectively (see Annex 3). 60. Agricultural exports targeted by the project were as expected vulnerable to several macroeconomic factors, e.g., exchange rate differential on competitiveness factored in by both input and output pricing, copper prices and other global market volatilities particularly in the cotton sector, which were moderated through product diversification and value addition supported by MIIF and improved export related service delivery offered by SCCI, ZARI, CDT, MAL’s agribusiness and trade. The latter interventions through institutional strengthening contributed to efficiency gains. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 61. ADSP was relevant at the time of appraisal and continues to be relevant to date. Outcomes exceeded all but one target. In addition, the project has had an impact on the economic well-being of households, especially assessed under the RRIF, where 9 Cost Benefit Analysis of the Agricultural Development Support Programme, Alinabena Consultancy and Trading, August 2014. 10 This does not include data on costs of procurements that were done by NCO on behalf of the institutions directly from Lusaka, nor some operating costs from the value chains included in the calculations. 17 previously impassable and accessible areas have opened up for economic and social activities. There is better mobility and access not only to agricultural input and produce markets, but also to health facilities and to schools. More importantly, ADSP has indirectly enhanced private-public partnerships in agriculture related agri-enterprises. Government has worked closely with the private sector and has seen the benefits of such collaboration, while Zambia’s private sector has developed greater trust in public institutions in the agriculture sector. The project’s NPV is positive as indicated above. The overall satisfactory outcome rating is justified by including the impressive institutional development gains, including capacities built, and services provided-- made under the project—at the Cotton Development Trust, the SCCI, ZARI, etc.). Also, the impressive gains in the rural landscape through improved access to markets and services associated with rural roads improvement (refer to impact results) argues for this rating. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 62. Poverty and Gender Aspects. Although poverty levels were not measured explicitly, there is ample evidence of better standards of living, especially among the MIIF and RRIF beneficiaries (NIRAS, Zambia, 2013, IMCS, 2013, Cost-Benefit Analysis, 2014). ADSP has done well in terms of including women, especially within the MIIF. About 48 percent of the MIIF sub-project beneficiaries are female. A sample of MIIF sub-projects indicates that the mean income for female and male-headed households among the respondents did not differ significantly (NIRAS, Zambia, p. 44). Although there is no baseline breakdown by gender at project start-up, this same study reports demographic and household characteristics by gender, which should provide the basis for future analysis by gender. 63. Social Development. The project made efforts to integrate HIV/AIDs alleviation measures into its activities as part of the implementation of ESMF. Farmers participating in the MIIF in the high risk area of Kafue had access to mobile voluntary counseling and testing services (VCT). In addition, the roads contractors established facilities on their work sites to provide HIV/AIDs awareness creation sessions and emergency medical attention to the workers and immediate family. More serious cases were referred to the nearest Government health facilities. (b) Institutional Change/Strengthening 64. ADSP contributed to building long-term capacity in many areas. In particular, the project’s support to research institutes (ZARI, SCCI and CDT) has been very successful, not only in strengthening their capacity to implement mandated activities, but also in increasing their ability to attract additional funds to enhance and sustain their activities. Support to the Policy and Planning Department within the Ministry of Agriculture and Livestock (i.e., to the Agricultural Statistics and Early Warning Unit (ASEWU), M&E Unit and Policy Analysis Unit (PAU)) has enabled farmers to receive key information. The ASEWU has also set up a website, which is being populated with data. The M&E 18 Unit is now undertaking results-based M&E within the agricultural sector. The PAU has, however, faced some challenges, including weak staff capacity, and fell short of accomplishing all of the planned tasks. The Ministry has engaged Indaba Agricultural Policy Institute (IAPRI) to further strengthen capacity at PAU to ensure that more staff participates in the program. The AMIC program on disseminating market information has performed well, and should continue to attract interest and funding from the private sector particularly for the radio programs. (c) Other Unintended Outcomes and Impacts (positive or negative) 65. Positive: The seed control and certification lab at Choma and the associated activities are contributing to provincial development of Choma, which is the Southern provincial capital; and the Integrated Pest Management (IPM) lab at CDT has attracted many international ginners. In 2013, there were a total of 7 ginners, and now there are 11 including from other countries; competition has increased in ginning; IPM department is now equipped to continue its work, and is also attracting royalties for CDT bred cotton varieties. By supporting better quality seed, ADSP has also played a part in increasing the numbers of seed growers, who are seeing the benefits of using improved seed. 66. Rural feeder road improvements have resulted in satellite agricultural depots and collection points by the side of new roads and emergence of new village markets. Although the RRIF targeted only high agriculture potential areas, benefits cover a much larger area. The OPRCs were only for gravel roads, but now, through learning, OPRCs are being considered for tarred roads. Multi-sector collaboration has encouraged the development of links between agricultural and road investments. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 67. See Annex 5 for the results of the Second Phase of the Socio-Economic Impact Study. 4. Assessment of Risk to Development Outcome Rating: low 68. The institutional risk to development outcome is low. As described in Section 3.5(b) and in Annex 2, ADSP built institutional capacity at many stages of agricultural activity. This includes: strengthening MAL through the ASEWU and the M&E unit to deliver core public services required to enhance smallholder’s access to markets, and improve their productivity and quality; support to the Department of Agribusiness and Marketing, channeled via the AMIC and the ABT to help smallholder farmers to improve their farming businesses by obtaining up-to-date market information; and support to the research institutes—ZARI, SCCI and CDT—key institutions that carry out the critical element of research. Project beneficiaries are likely to receive additional support as described in Section 2.5, further reinforcing these local institutional structures. The main laboratories supported by ADSP also receive Government budget resources. Sustainability of the outcome of OPRC contracting approach in the RDA is 19 assured since the institution is planning to adopt this approach for national rural roads network and to this end has expressed an interest to formulate a project during the current CPS cycle. 69. The financial risk to development outcome is low. ADSP has strengthened collaboration among all players along agricultural value chains, and benefitted smallholders, agribusiness enterprises, large-scale estates and commercial farmers, input suppliers, traders and financial institutions. The enterprises involved in the project have worked towards the commercialization of smallholder farmers, and the MIIF has enabled its participants to reap financial benefits and scale up further. The two key financial institutions involved in ADSP--BoZ and DBZ-- have benefitted from substantial capacity building; with stronger systems now in place at BoZ in terms of the governance and control mechanisms; and DBZ following strict procedures to scrutinize borrowers under the EDF, and continuing to lend about 30 percent of their portfolio to agriculture. 70. The environmental risk to development outcome is low. The project has strengthened the overall environmental management system. This includes the ability to submit good Environmental Project Briefs to the Zambia Environmental Management Authority (ZEMA), educating the public about road signage, vegetation and erosion control, and HIV/AIDS awareness. Trainings have been successful, and substantial efforts have been made to enhance the monitoring of matching grants projects. 71. The social risk to development outcome is low. ADSP has benefited a substantial number of beneficiaries within a range of agricultural value chains. In addition, rural roads have improved access to social services such as schools and healthcare centers. Overall, increased productivity and incomes along the value chains will improve food security and the socioeconomic status of the poor. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 72. The comprehensive supply chain approach was a rational entry point to address smallholder commercialization in Zambia. Project targeted both the public sector selected institutions and the private sector was engaged and fully benefitted from this investment. The team also took into account many lessons in designing a good project, and the design was based on sound analytics with measurable outcome indicators that were well-linked to the PDO. Project design was innovative. Course corrections and three restructuring during implementation do not negate the implementation readiness issue the team overlooked (refer to Section 2.1). Therefore it can be argued that the quality at entry is satisfactory. 20 (b) Quality of Supervision Rating: Satisfactory 73. The Bank team worked closely with the client throughout implementation, including helping overcome some of the initial delays caused by lack of awareness of project participants, and to improve on project M&E and the RF during the MTR. In particular, the ADSP team worked diligently to address the issues related to BoZ and the SCCF, including taking on the responsibility of and succeeding in recuperating funds from the EDP (with no additional Bank supervision budget). The issues were resolved by working together with GRZ to relocate the credit facility within the DBZ, and by providing capacity strengthening to DBZ to administer the credit line and help to achieve the outcomes planned under ADSP. 74. Bank technical support during implementation was also commendable. During implementation, Bank Missions visited the Program and sub-activities in various districts and catchment areas. The mission objectives were to review: (a) implementation progress of all project activities; (b) financial management, procurement, and component and sub-project safeguards compliance; (c) M&E of all project activities and components; and (d) project coordination, management and communication. During the Missions, Bank technical staff met and held discussions with key stakeholders including the Ministry Administration, Implementing Agencies and also visited field activities to verify the progress of activities on the ground. The Mission findings and agreements were always documented in separate Aide Memoires. The Bank facilitated the MTR restructuring and helped bring the Program back on course. 75. The Bank carried out the necessary reviews in procurement and FM, and provided additional help to FMU to successfully adopt the integrated FM information system, and use country systems to manage donor funds. With respect to environmental safeguards, the Bank was proactive when faced with potential involuntary settlement issues under the RRIF in 2009. The team fielded a safeguards mission and worked with the client to prepare an ARAP and follow an action plan to avoid suspending the OPRC works and delaying road rehabilitation. The Bank team also collaborated closely with other sectors in this multi-sector operation, and worked with the EU to make the RRIF a success. Overall, Bank supervision was satisfactory. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 76. This rating reflects the ‘S’ rating for both Quality at Entry and Supervision. 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory 77. Government ownership of the project was high. GRZ collaborated well and supported the private sector in helping to achieve project outputs and outcomes. Government made its counterpart contributions to ADSP annually, to supplement IDA 21 resources. Government provided office accommodation to the National Coordination Office with sufficient space for seven professional staff. During the MTR, GRZ responded well to the implementation challenges the project had experienced and agreed on remedial actions to bring the operation back on course and to ensure successful completion. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 78. The NCO did an outstanding job in helping ADSP to achieve its development objectives. In particular, the NCO made great efforts to get the initially delayed sub- components off the ground. NCO support to MIIF sub-projects has been critical in helping these beneficiaries become successful participants in the value chain. With respect to M&E, the NCO/M&E Unit went beyond collecting information as detailed in Section 2.3, and assured that several high-quality surveys were done to capture ADSP’s impact. The RRIF implementer, RDA’s superior performance is reflected in the fulfilment of project KPIs. Similarly when the public sector institutions, SCCI and ZARI, other MAL departments and CDT are considered overall implementation performances are satisfactory and is justified through the level KPI achievements as well as qualitative outcomes. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 79. This rating reflects the ‘S’ rating for both Government and the Implementing Agency. 6. Lessons Learned 80. There are six major lessons learned from the project. 81. First, innovations in project design, which the ADSP had in the MIIF and RRIF components, should address capacity limitations upfront in order to assure implementation success. In general, projects of this type need to take into account country capacity in project implementation. In particular, when projects include ‘innovative’ activities, time needs to be set aside up-front for raising awareness among all potential project participants, i.e., implementers and beneficiaries. The MIIF was delayed, although it finally succeeded, because initially participants lacked an understanding of ‘innovative’ practices, and the RRIF was delayed as contractors had to learn the bidding documents and the terms of the multi-year contracting arrangement (i.e., the OPRCs) that included incentives for high quality rehabilitation since the contractor was also responsible for the road maintenance several years after the rehabilitation. 82. Second, the OPRC-type contract, where road rehabilitation design includes sufficient resources and practical arrangements for post-rehabilitation maintenance for several years, combined in one contract proved successful. At ADSP approval, the optimum contract period for OPRCs was not known. However, an engineering 22 assessment recommended duration of five years. This was subsequently successfully included in the OPRCs through a restructuring early in the project. 83. Third, the link between producers and markets is critical in a project that seeks to increase commercialization in agriculture. Smallholder farmers should not be looked at in isolation in such projects but must be viewed with integrating them to value chains to generate win-win partnerships. Channeling funds through industry organizations, agribusinesses and farmer organizations in viable value chains / commodities worked well in terms of ultimately reaching smallholder farmers, mobilizing them, building their capacity, and helping to integrate them into the value chains. Value chains get the supply volumes they need, and smallholders acquire improved technology, raise their productivity and quality, and improve their incomes. These winning partnerships also increase sustainability. 84. Fourth, strengthening government core functions can build private sector trust in government. Under the project, good collaboration between government/public institutions and the private sector was key. In the case of ADSP, all public and private sector entities worked closely and realized the benefits of cooperation. 85. Fifth, good continuous monitoring; periodic and regular evaluation; and quality impact assessments played an important role in learning from the project throughout implementation, and once it was completed. For example, the RDA Impact Study sampled the same households in three catchment areas in 2009 (baseline) and in 2012. The findings shed light on additional yet broader social impacts of the project, beyond agriculture, such as its positive impact on access to health and education services in the rural space, and also why the use of health facilities is still relatively low due to access constraints. These findings enable further learning, inquiry and possible follow-up (outside of the field of agriculture) to reduce rural poverty and improve the well-being of people in Zambia. 86. Lastly, flexibility and being opportunistic in implementation was key to the success of this project. The project adapted to the changing country environment. For example, when it was realized that the revolving fund for the Enterprise Development Project was robust to provide term finance to the agriculture value changes, the project did a course correction and reallocated the funds from the SCCF to other project priorities. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies (See Annex 7 for Borrower ICR.) (b) Cofinanciers (none) (c) Other partners and stakeholders (See Annex 5 for Beneficiary Survey.) 23 Annex 1. Project Costs and Financing (a) Project Cost by Category (in USD Million equivalent) Appraisal Actual/Latest Category Estimate % of Appraisal Estimate (SDR) (SDR) 1. Goods, Works, Consultants’ services 14,190,000 20,025,243.10 141 and Training 2. Operating costs 600,000 1,815,267.87 308 3. Sub loans under Part 1(a) 8,280,000 0.00 0 4. Matching grants under Part 1(b) 2,070,000 2,154,494.12 104 5. Refund of Project Preparation 560,000 368,970.75 65.9 Advance Exchange Rate fluctuations (Gains) - 87,472.11 - Total Amount Disbursed - 24,451,447.95 - Cancelled Amount - 1,248,552.05 - Total Grant Amount 25,700,000.00 25,700,000.00 100 (b) Financing Appraisal Actual/Latest Type of Estimate Estimate % of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 2.76 2.76 100.00 IDA Grant 37.24 37.496 100.795 24 Annex 2. Outputs by Component The ADSP Restructuring Paper of November 26, 2012 presents the definitions and the link of each indicator to the PDO segments (productivity, quality and efficiency) of the revised Results Framework (RF) as follows: Table 1: ADSP Revised Results Framework—Indicator definitions PDOs Outcome Indicators Use of Program Indicators Supporting Defined as volume of exports of targeted value chains Agricultural exports for increased target value chains expressed in tons per year. The commodities targeted by commercialization (tons/year) this indicator are cotton, paprika, soya beans, groundnuts of smallholder and sunflower which have high export potential. Data agriculture through generated by this indicator will help evaluate improved commercialization and product quality. Increasing trend productivity, would also demonstrate sector growth in exports. quality and Targeted commodities Annual volume expressed in metric tons of target efficiency of value produced by commodities produced by smallholder households. chains where smallholder households Increases in volumes and yields per ha data show smallholders (tons/year) productivity and efficiency in value chains targeted. participate Smallholder households Defined as annual change in the number of smallholder growing targeted crops households growing targeted commodities. This indicator (number) provides a means of assessing levels of participation in reliable production and marketing channels of various commodities targeted by the project. Average income per Defined as average income per household expressed in household in targeted ZMW per year. This indicator is a measure of areas (ZMW) commercialization especially when income is isolated along agriculture driven activities. Direct Project WB core indicator defined as number of direct Beneficiaries (number), beneficiaries targeted through different implementing of which female (%) agencies of the project. A measure of individuals linked to reliable market outlets. Indicator will also help assess project impact on gender participation. Component 1: Support to Farmers and Agribusiness Enterprises Market Technologies A WB core indicator; Defined as changes in practices. Improvement and demonstrated by the Indicator will help show impact of the project on the Innovation Facility project in the project generation of new but simple technologies/ innovations (MIIF) areas (number) that can easily be accessed/adopted and beneficial to smallholder producers. This indicator is also covering ZARI, SCCI and CDT activities. Beneficiaries directly Defined as number of beneficiaries directly targeted targeted through the through the MIIF matching grants; a new indicator. MIIF matching grants Indicator will help assess the impact of the facility on (number) beneficiaries and their absorptive capacity of matching grants and technology adoption. Rural Road Rural roads WB core indicator. Defined as physical work progress Improvement rehabilitated (Km) achieved expressed as number of kilometers completed. Facility (RRIF): Indicator will help assess the relevance of project investments in removing the transport infrastructure constraints that limit expansion and efficiency of supply chains. 25 Average vehicle traffic Defined as a count of the number of vehicles using the on improved roads roads at a specified period in the year. Indicator will help (vehicles/day) assess the relevance of project investments in removing the transport infrastructure constraints which limit expansion and efficiency of supply chains. Component 2: Institutional Development Seed Control and Seed certified for sale Defined as amount of seed certified by the laboratory for Certification by the seed testing agro-businesses and farmers every year. Indicator will Institute (SCCI) laboratory in Choma help assess volume of seed tested, controlled and distribute (tons/year) by SCCI in Southern province. Farmer database will show number of smallholder farmers reached by SCCI. Seed of finger printed Defined as amount of seed varieties finger printed by the varieties made available Chilanga SCCI biotechnology laboratory that are certified on the Zambian seed for sale to agro-businesses and farmers. Incremental levels market disaggregated are an indicator of increasing demand for the seed on the by crops (tons/year) market. Zambia Enterprises/commercial Defined as % of enterprises/commercial smallholders Agricultural smallholders receiving receiving adequate food safety and phytosanitary services Research Institute adequate food safety through ZARI every yea. Indicator will help assess both (ZARI) and phytosanitary the quality and capacity of ZARI to deliver food safety and services through ZARI phytosanitary services to clients. (%) Agricultural Target smallholders and Indicator measures the % of targeted smallholders and Marketing agribusinesses agribusinesses receiving accurate and relevant market Information Centre receiving accurate and information on time every year and will help assess the (AMIC) relevant market quality and capacity of AMIC to collect process and information on time disseminate relevant market information to clients on time. (%) Cotton Quality foundation Quantity of certified cotton seed produced annually by Development Trust cotton seeds produced, CDT and distributed to cotton ginners. Indicator will help (CDT) controlled and assess CDT capacity to produce and distribute foundation distributed by CDT cotton seeds and meet national demand. (tons/year) Table 2: Intermediate Result Indicators, End-of Project (EOP) Targets and Achievements by Component: Baseline MTR EOP 2013 EOP Intermediate Result Indicators, Component 1 2005 2009 Target 1 Volume of Bank support to DBZ (US$) 0 0 80,287 80,287 2 Technologies demonstrated by the project in the 0 18 39 50 project areas (number) 3 Beneficiaries directly targeted through the MIIF matching grants (number) (2009) 16,295 20,417 45,180 40,000 4 Rural roads rehabilitated (Km) 0 700 1,131 1,131 5 Average vehicle traffic on improved roads 52 vpd 102 vpd 194 vpd 25% (vehicles/day--vpd) (2007/8) (273% increase increase) Intermediate Result Indicators, Component 2 6 Seed certified for sale by the seed testing 0 0 1,416 2,200 laboratory in Choma (tons/year) (2012), (cumulati 1,054 ve for two (2013) years) 7 Seed of finger printed varieties made available NA NA 6,709 7,000 on the Zambian seed market disaggregated by (2013) 26 crops (tons/year) 8 Enterprises/commercial smallholders receiving NA NA 67.9% 50% adequate food safety and phytosanitary services through ZARI (%) 9 Target smallholders and agribusinesses receiving NA NA 89.2% 50% accurate and relevant market information on time (%) 10 Quality foundation cotton seeds produced, 21.96 53.4 60.9 68.9*(201 controlled and distributed by CDT (tons/year) 1) *The CDT figures represent only pre-basic seed. There were no estimates for the period 2012-14 as the project was expected to close in 2011, but was extended due to the OPRC. Component 1: Support to Farmers and Agribusiness Enterprises Supply Chain Credit Facility (SCCF) 1. The SCCF sought to provide a line of credit on a demand-driven basis to support investments aimed at improving the supply chains of existing and emerging farming systems. The facility targeted agro-enterprises, traders or nucleus and commercial farms working with smallholders, under out-grower schemes or other forms of contract farming. It was initially implemented by the Apex Unit under the BoZ through PFIs comprising commercial banks and other non-banking financial institutions. 2. Initially, the facility was expected to disburse US$12.2 million, representing 32.8 percent of the total project allocation. However, as described in Section 2 of the ICR, the Apex Unit did not lend any of these funds. 3. Significant irregularities within the BoZ’s Apex Unit led to delays in disbursing the SCCF, and eventual cancellation of the sub-component. In late 2007, the ADSP mission uncovered irregularities within the BoZ’s Apex Unit—a creation of a previous IDA operation—the EDP. These issues made the Unit unfit to manage the SCCF under the Bank’s policies (OP 8.30) that govern line of credit operations. BoZ agreed on steps to remedy the situation and put appropriate control mechanisms in place to safeguard the project funds. Some milestones were achieved but with no tangible outcomes. The Development Bank of Zambia (DBZ) and ADSP 4. Apart from benefitting from the World Bank’s Fund under Enterprise Development Project (EDP), DBZ has also benefitted from capacity building under the ADSP SCCF component. In 2011, DBZ was allocated US$80,000 for training to build capacity in staff to be able to handle the SCCF that was meant to contribute towards agricultural value chain production in the country and also equip staff to handle the IT software. The staff has been trained in IT, Value Chain Financing (conference organized by African Rural and Agricultural Credit Association (AFRACA), Financial Modeling, Investment Appraisal of agricultural projects and General project appraisal and Risk Management. A group of 17 staff was trained in February 2014. DBZ spent an amount of US$80,287. The trained project officers have greatly improved on their performance, and are now able to work with minimal supervision. There are few errors in the loan 27 appraisal process, thus minimizing the risk of the Bank losing money. Some have come up with innovative ways on how to appraise and monitor projects as a result of the training they have received. 5. The total loan portfolio transferred from BoZ to DBZ amounted to over US$40 million in 2009 (see DBZ Completion Report for details on sub-borrowers and the sectors lent to). Sub-borrowers’ financing included agriculture projects operating in different parts of the country that were engaged in various farming activities and agro- processing, such as mixed farming, fishing, ranching and processing maize into mealie meal. 6. Through the EDF, DBZ has been providing loans to many agricultural sector value chain activities. As of 31st December 2013, the performance of the revolving fund was impressive and DBZ was supporting over 6,762 farmers with an average loan size of K1,700, thereby supporting commercialization of smallholder agriculture and therefore contributing to the achievement of the ADSP development objective. Market Improvement and Innovation Facility (MIIF) 7. The MIIF aimed to provide financial resources on a matching grant basis for the development of innovative business linkages between smallholder producers and other actors in selected agricultural value chains. It was to help smallholder farmers and other smallholder producers to evolve into successful entrepreneurs by linking them to viable agribusinesses. The aim of the facility was to commercialize smallholder agriculture in the Zambian agricultural value chain, by: (i) providing resources for knowledge-based services and capital investments in innovative marketing, technical and managerial interventions that benefit smallholder farmers by increasing productivity, and improving quality and efficiency in the agricultural value chains; and (ii) promoting innovative business linkages, technologies and market based solutions for various actors in the agricultural value chains, and thereby improving the growth and competitiveness of agribusinesses and smallholder farmers. See figure below on MIIF value chain approach. 28 Achieving a sustainable, diversified and export-oriented economy that responds to market demand - a value chain approach Rural Roads Improvement Facility (RIFF) Infrastructure 1300 km of rehabilitated rural roads- Improved access of thereby reducing travel time and transport smallholder cost and increase business activities along farmer’s to input roads and produce markets Upgrade Market Improvement and Innovation & Facility (MIFF) Matching grants for Increased innovative approaches to linking ADSP: Private Sector Deepening innovative smallholders to the agric. value chain business linkages To increase between - New products, technologies, processes commercialization of smallholders and - New markets other actors in the - New partnership arrangements of smallholder value chain - New geographic location agriculture Agricultural through … Capacity building of public institutions Public Sector Value Improved capacity Improved services enabling and facilitating of the public sector increased commercialization of smallholder to provide core agriculture at the Chains public services - Policy and Planning Department of MAL - Agribusiness and Marketing Department (MAL) - Public Research Institutes (i.e. CDT, SCCI, ZARI) 8. The facility provided ‘seed’ money for promoting the introduction of new products or processes that improved the competitiveness of agricultural production by smallholder farmers. The grant considered three main categories or windows: extension and technology development; studies and pilots; and capacity building for Associations, Cooperatives and Farmer Groups. Table 3 below shows the three funding categories with their respective minimum and maximum amount considered in the matching grant process. Table 3: MIIF Matching Grant Funding contributions by source and window Categories of Matching Grant Activities Funding Source (%) Total Sub Project Budget: US $ MIIF Beneficiary* Minimum Maximum Extension & Technology Development 50 50 15,000 600,000 Studies and Pilots 60 40 5,000 150,000 Capacity support to Associations, Cooperatives, 75 25 5,000 150,000 Farmer Groups * Beneficiaries’ contributions were only monetary in terms of cash or cash deposits. Non-financial or in- kind contributions were not considered under MIIF. Grant Management and Selection Process 29 9. The MIIF was designed to be administered by an independent Non-Governmental Organization (NGO) with experience in managing grants especially involving agricultural sector enterprises. The management contract was awarded to Africare, an international NGO dedicated to improving the quality of life in Africa. The contract with ADSP commenced in November 2007 and expired in December 2011 when the Ministry took over the management of the facility. In awarding the grant, MIIF considered proposals from legally registered agribusiness, quasi-government actors/stakeholders in the agricultural value chains, and legitimate rural farming groups in Zambia. 10. The grant selection process comprised of multiple screening and technical review stages before a sub-project was selected and approved by the National Project Steering Committee (NPSC). The NPSC was a multi-sectoral body composed of agricultural policy makers, technical experts and representatives from the private sector. The duration of the application and approval process ranged from 6 to 8 weeks upon receipt of an application. Grant applicants were required to prepare a Project Concept Note (PCN), which was reviewed by the sub-committee of the National Project Steering Committee (SC-NPSC). Full Business Proposals (FBPs) were only prepared upon approval of the PCN, and at this point the MIIF team conducted a field appraisal to verify the merits of the proposal. The final approval of the FBPs and the grant award was carried out by the NPSC based on the evaluations and recommendations submitted by an independent Technical Review Panel (TRP). Outputs of MIIF 11. Assessment of the grant facility shows that MIIF funded sub-projects was selected based on their merits as assessed by a set of criteria. As it was a demand led facility, proposals did not have a commodity or a geographical focus. The sub-projects were spread across Zambia, and comprised a wide range of value chains, including staple food crops, high value cash crops, dairy, livestock and fisheries. 12. Of the 30 applications passed, 28 sub-projects were funded under the MIIF, with a total value of US$3.408 million in matching grants. Two of them withdrew due to various challenges (see Government ICR, Annex 4 for MIIF information by sub-project, value chain, catchment area etc.). The successful applicants were able to provide their contributions. Table 5 indicates that for the 28 sub-projects, the largest funding share was approved to the extension and technology support window (79 percent), followed by capacity building support (12 percent) and studies and pilots (9 percent). 30 Table 4: MIIF Key Results Indicators to May, 2014 % Cumulative EOP Achiev No Indicator Name Actual Remarks Target ement May 2014 Actual approved was 30 1 Number of sub-projects 40 28 70% agribusinesses while 2 withdrew with no grants disbursed. Total include 31,630 direct and 2 Number of beneficiaries 40,000 45,180 113% 13,550 indirect beneficiaries. 48 % are female beneficiaries. Number of Technologies Each sub-project demonstrated at 3 50 39 78% adopted least one technology. Matching Grant Actual allocation increased 4 3,375,000 3,407,965 107 % Commitments (US$) because of exchange gain. Except for 2 sub-projects, all Total Matching Grant 5 3,375,000 3,407,965 101 % others have to date received their Disbursements (US$) matching grants. Two Sub-projects did not manage to raise their full contributions (Western Cashew nut Company & Beneficiary’s Contribution 6 2,857,143 3,052,280 107 % Sunline Investments). (US$) Beneficiaries contributed at least 47% of the total sub-projects’ cost*. Average Household Survey involved a sample of MIIF 7 N/A ZMW17,905 N/A Income households (NIRAS, Zambia) * Total Sub Project Cost was US$ 6,460,245. Baseline values in 2007 were zero for all indicators. Table 5: Matching Grant Status by window Window Capacity Building Total Extension & support to Item Studies and Technology Associations, Pilots Development Cooperatives, Farmer Groups Applications received 282 35 225 542 Applications approved 21 3 4 28 Beneficiaries withdrawn 2 0 0 2 Approved funding (US$) 2,651,802 320,000 389,152 3,360,954 Disbursed Grant (US$) 2,698,813 320,000 389,152 3,407,965 Beneficiary Contribution 2,709,229 213,333 129,718 3,052,280 (US$) 13. The subproject database consists of subproject specific data such as type of grantee, amount of co-financing, total subproject value, beneficiary details disaggregated by gender, value chain intervention, innovations and key outcomes. Subproject specific value chain mapping is provided in table 6. 14. Overall, 39 different beneficiary innovative technologies were introduced, either directly to smallholder farmers at the production stage, or further down the value chain as part of the processing chain of agricultural commodities. The numbers under the three windows are 27, 6 and 6 respectively. Among the most prominent technologies are the ones for the production and 31 processing of dairy products, Aflatoxin management in groundnuts, processing of Jatropha into biodiesel, soya bean production and processing, production of high quality organic honey, cage fish farming, modern fish hatchery, and tobacco curing with high efficiency use of fire-wood. Table 6: Value Chain Mapping of MIIF supported interventions Value Chain Intervention Commodity Value Innovation Base Chain Productivity Intervention Marketing Intervention Linking poultry out grower model to Poultry sustainable markets Cooperative owned processing of Dairy milk into various dairy products Production & processing of Jatropha Jatropha into biodiesel Cotton Cooperative owned cotton ginning & pressing plant Production and processing of Groundnuts Aflatoxin ‘Free’ Groundnuts for export Soya bean production & processing; Soya production & promotion of Soya drink Out grower production of Hass Avocado Avocado for export Production of high quality Honey for Honey local and exports Tobacco curing with high fire-wood Tobacco utilization efficiency Irrigation technologies for outgrower High value high value crop; commercial organic crops HVC production for export Indigenous Vegetable soup & muffin mix production; Mushroom Vegetables production & export; organized paprika export marketing Cage Fish farming out-grower model; fish production ponds linked to out- Aquaculture grower scheme; modern Fish Hatchery Fisheries Buka fish processing and canning Cashew nuts Cashew nut production & processing for new markets Chili Production of chili flavored with local Myuumbu tuber Mango Commercial drying & processing of Mangos Promotion of Herbicides for increased productivity; rural input Herbicides & distribution system to local agro- fertilizer agents; commercial production of Bio- Fertilizers 32 15. The majority of the sub- projects are located in the central and eastern part of the country (Government ICR, August 2014). Although the sub-projects were selected based on their merit and geographical location did not play a role, most sub-projects are in close proximity to the capital city Lusaka. Lusaka is the country’s main business center and companies tend to have their headquarters close to Lusaka to minimize transaction costs. Even though some businesses have established branches throughout the country, they tend to have their processing plants, distribution and marketing units in the Lusaka area. 16. Table 7 shows the number of beneficiaries classified according to the funding categories. The total estimated number of beneficiaries under the sub-projects is approximately 45,180 of which 31,630 are direct beneficiaries and 13,550 are indirect beneficiaries. Table 7: MIIF Technologies and Beneficiaries Number of Number of in Technologies Total beneficiaries Window direct direct demonstrated linked beneficiaries beneficiaries Ext and Tech Development 27 24,357 11,930 36,287 Studies and Pilots 6 4,744 680 5,424 Support to Farmer 6 2,529 940 3,469 Organizations Total 39 31,630 13,550 45,180 Results from the baseline report (NIRAS Zambia 2012) show that beneficiaries were satisfied with the services delivered by the MIIF. Rural Roads Improvement Facility (RRIF) 17. Under the Rural Roads Improvement Facility (RRIF) sub-component, ADSP sought to improve smallholder farmers’ access to input and produce markets and the competitiveness of their agricultural commodities by, among other things, improving road networks in selected districts of Choma, Chongwe, Katete, Chipata and Lundazi. These were identified and selected on the basis of their agricultural potential. A total of 1,131 kilometers were targeted in all the five districts. ADSP worked in collaboration with the Road Development Agency (RDA) under this facility to implement Output and Performance based Road Contracts (OPRC) in the targeted five districts and three provinces of Zambia. Road works in Choma, Katete and Chipata were financed through the proceeds of the ADSP while works in Chongwe and Lundazi districts were financed through the support of the European Union through Government budget support. All supervision contracts were financed by ADSP. 18. The OPRCs are medium to long-term contracts with distinct features. They are output-based as the output is measured and payments are based on quantities of work done. They are performance-based as the assessment is focused on service level and payment is paid per kilometer compliant with service levels. The Consultant or supervisor verifies service levels and instructs emergency repairs as required. For purposes of this Program, service level indicators included accessibility, travel speed, ride quality (potholes, deformation, corrugations, rutting) and durability (drainage, 33 vegetation, road level, road width and shoulder level). In practice, the OPRC process involved three main steps: • Step 1:Rehabilitation Works - Rehabilitate/Improve to achieve required service levels (output based); • Step 2:Maintenance Works - Maintain service level over time (performance based or mix of output and performance based); and • Step 3: Hand back to client in a specific condition. 19. The works contracts were divided into four packages, namely; Package 1: Choma OPRC (246km), Package 2: Chongwe OPRC (185km), Package 3: Katete/Chipata OPRC (391 km) and Package 4: Lundazi OPRC (309 km) (See Government ICR, p. 19 for OPRC status). Results of the Rural Road Improvement Facility 20. ADSP has successfully implemented a rural road contracting method OPRC, an efficient and cost-effective approach to supporting increased commercialization of smallholder farmers. The contractors were retained on site for a period of five years to provide access and motorable road services to the rural communities and to maintain the network of roads to acceptable service standards. 21. The facility successfully applied to rehabilitate and improve 1,131 kilometers of rural roads spread in three Provinces and five Districts of Zambia representing 3.4 percent of 33,000 kilometers which represent the core gravel road network in the country. Other structures included culverts and water drifts. Following the completion of improvement works in the first phase, maintenance activities continued to be implemented over the remaining life of the program. These included vegetation and erosion control, drainage management, clearing structures and emergency works. 22. All roads were provided with road signage to enhance road safety. This included Kilometer Maker Posts (KMP), Culvert Maker Posts (CMP), signs for bridges and curves and other signs deemed necessary for road safety. The public were also educated about taking good care of the road signage for its own good. Road humps were placed along critical settlements such as schools, rural health centers and villages. Workers on site were provided with safety clothing to comply with safety requirements at work places. As part of maintenance, the contractors reinstated most borrow pits in line with the Environmental Management Plan (EMP) in the Environmental Project Briefs (EPBs). The contractors carried out HIV/Aids awareness campaigns once every two months and Voluntary Counseling and Testing (VCT) once every three months during the duration of the contract period. These campaigns were targeted at providing vital health related information to workers in the contractor’s work force and members of the community living along the rehabilitated roads. OPRC Impact Assessment 23. In May 2012, RDA, acting on behalf of ADSP, commissioned IMCS Limited to 34 conduct the second phase of the socio-economic impact study (IMCS Limited, 2013). The specific objective of this study was to collect social and economic data that could be used to measure the impact of improved roads on the wellbeing of rural communities following execution of OPRCs under the RRIF. 24. The study used panel data, i.e. involved the execution of a survey on the households previously covered by the Baseline study of 2009 (IMCS Limited, 2010). This was in order to establish the changes that have occurred amongst the target population in terms of agricultural production and commercialization and, improvements in general living conditions and based on the same sample of households. 25. Some of the immediate impacts resulting from road improvements include access and mobility impacts, which have significantly eased the movement of inputs, produce and the general public in the catchment areas. These road improvements have resulted in reduction in travel time from production areas to market centers, from input centers to production areas and reduction in vehicle operation costs. There is evidence of increased business activities along the roads (Tuesday and Thursday markets). These changes have resulted in the improvement of the standard of living of households in the targeted areas. 26. The volume of traffic has increased by over 270 percent from 52 vehicles per day in 2007 to 194 vehicles per day in 2012. Average household income has also grown by four fold from ZMW3,900 per year in 2009 during the baseline period to ZMW21,800 per year in 2012. Approximately 1,200 jobs were created during road rehabilitation and structure constructions. 27. Notable challenges that were experienced include the fact that OPRC/OPBC was not well understood by contractors. This affected the pace of work. In some instances contracts were grossly underpriced, and were difficult to terminate mid-stream. The geographical spread of contracts also posed a challenge from the point of view of supervision. Component 2: Institutional Development 28. ADSP provided support to departments within the Ministry of Agriculture and Livestock to improve the capacity of the public sector to provide core public services required to support enhanced smallholders’ access to markets and improve their productivity and product quality. Research Institutes 29. As a critical element in supporting commercialization of smallholder agriculture, ADSP supported research activities at three research institutions. These were the Seed Control and Certification Institute (SCCI), Zambia Agricultural Research Institute (ZARI), and the Cotton Development Trust (CDT). 35 Seed Control and Certification Institute (SCCI) 30. ADSP supported the establishment and operation of a (genetic) finger printing bio-technology laboratory at the SCCI in Chilanga and the establishment of a seed testing laboratory in Choma. The biotechnology laboratory aimed to build the capacity of the SCCI to distinguish varieties genetically, as opposed to visual methods that were being used prior to ADSP. The establishment of the Choma Seed Testing Laboratory sought to localize seed testing services to enhance seed producers’ access to such services. 31. Implementation of planned activities at SCCI has been on course except for the construction of the seed store and screen house that were delayed due to procurement processes. They are under construction as both of the facilities are important in supporting operations at the biotechnology laboratory. Both the Biotechnology laboratory at Chilanga and the Seed Testing laboratory in Choma have since been established and are operational. Following the establishment of the biotechnology laboratory in Chilanga, three members of staff were trained in biotechnology and laboratory management. The laboratory has since commenced DNA extraction and has to date extracted DNA for 29 genotypes and developed Standard Operating Procedures (SOP). SOPs are part of the quality assurance management strategies. As part of sustainability, SCCI has signed an MOU with CIMMYT to collaborate in operationalizing the biotechnology laboratory. 32. Both the Chilanga biotechnology laboratory and the Choma seed testing laboratory have a full complement of trained staff following completion of the graduate level training and other practical trainings undertaken in 2012. In addition, a member of staff recently returned from M.Sc. degree studies in the Netherlands where he pursued biotechnology and trained as a molecular scientist, and is strengthening further molecular testing at the SCCI biotechnology laboratory. SCCI members of staff have also received hands-on practical training at the International Maize and Wheat Improvement Center (CIMMYT) Molecular laboratory in Nairobi, Kenya. 33. The Seed Testing laboratory in Choma was commissioned in June 2012 and to date has tested over 1,416 tons of seed in Southern Province. The seed testing laboratory also carries out seed inspections to ensure the production of quality seeds in the province. Since establishment, the laboratory has inspected seed belonging to both seed companies such as Seed Co and smallholder seed growers, both male and female. Table 8: Choma Seed Testing laboratory performance Year Variety of No. of Quantit No of Test cost Results (Samples) Passed seed seed tested Samples y tested Tests (Income Passed Failed Qty Unit cost Total value tested (tons) per realised (tons) (ZMK) sample by SCCI (ZMK) 2010/11 Maize 4 0.52 2 240.00 4 0 0.52 K50/5kg 5,200.00 Sub total 4 0.52 2 240.00 4 0 0.52 5,200.00 36 2011/12 Returned 135 948.145 1 4,050.00 128 7 942.125 K150/10kg 14,131,875.0 maize 11 0 New Maize 12 81 30.235 2 4,860.00 81 0 30.235 K50/5kg 302,350 S/beans 6 158.8 2 360.00 6 0 158.8 K100/10kg 1,588,000 Beans 3 0.32 2 180.00 2 1 0.3 K50/5kg 3,000 S/flower 2 0.2 2 120.00 2 0 0.2 K40/5kg 1,600 Jatropha 1 0.2 1 30.00 0 1 0 n/a n/a Cotton 35 6.79 2 2,100.00 35 0 6.79 66,406.20 Okra 1 0.1 2 60.00 1 0 0.1 K8/25g 32,000.00 Cowpeas 9 0.72 2 540.00 9 0 0.72 K8/kg 5,760.00 G/nuts 2 0.035 2 120.00 1 1 0.02 K10/kg 200.00 Sub-total 275 1,145.55 12,420.00 265 10 1,139.29 16,131,191.2 0 2012/13 Returned 173 390.5 1 5,190.00 158 15 377.3 175/10kg 6,602,750.00 maize New maize 73 65.1 2 4,380.00 73 0 65.1 K50/5kg 651,000.00 G/nuts 4 2.7 2 240.00 4 0 2.7 K10/kg 27,000.00 Cowpeas 8 3.5 2 480.00 6 2 2.7 K8/kg 21,600.00 S/beans 1 0.75 2 60.00 1 0 0.75 K100/10kg 7,500.00 Sorghum 1 3.5 2 60.00 1 0 3.5 K70/50kg 4,900.00 Okra 1 0.2 2 60.00 1 0 0.2 K8/25g 64,000.00 Cotton 25 587.7 2 1,500.00 25 0 587.7 5,747,706.00 Jatropha 1 0.2 1 30.00 0 1 0 n/a n/a Pigeon pea 13 1 1 30.00 1 0 n/a n/a Sub-total 288 1,053.95 12,030.00 270 18 1,039.95 13,126,456.0 0 Overall 567 2,200.22 24,690.00 539 28 2,179,76 29,262,847.2 total 0 Source: Alinabena Consulting on Cost-Benefit Analysis Report, 2014. Zambia Agricultural Research Institute (ZARI) 34. ADSP support to ZARI aimed to strengthen the capacity of the institute to comply with emerging Sanitary and Phytosanitary (SPS) requirements, to help Zambian agribusinesses take advantage of export opportunities. Some of the ZARI services that benefited from ADSP support include: issuance of phytosanitary certificates; fumigation inspections, nursery inspections, tobacco nursery inspections, and tobacco premises inspections. These services are provided to agribusinesses, smallholder farmer organizations, commercial farms and individuals. 35. ZARI has implemented several activities in line with its mandate. ZARI undertook important surveys and surveillance activities to improve the quality and safety of local products in order to enhance production and trade. Surveys conducted include American Foulbrood (AFB) on honey, Fruit fly, Banana Bunchy Top Disease, and Coffee Pest and fumigation inspections. The objective of surveillance activities was to control or suppress the population of various predators in fruit and other agricultural products in order to enhance fruit production and trade (ZARI Completion Report, 2013). 11 These are hybrid maize samples returned unsold by seed companies from the previous season, which only needs to be tested for germination. 12 These are maize samples from small scale farmers (SSF) which are not sold on commercial basis through seed companies since it is open pollinated seed but it is sold within the community on cash basis at K50/5kg or exchanged using a barter system with other food crops. 13 No quantity was disclosed by the farmer as it was not grown for sale hence only subjected to germination test. 37 ZARI regularly undertook border backstopping missions in provinces that had border towns to enforce sanitary and phytosanitary regulations of the laws of Zambia, provide quality assurance to traders through border officers training and to maintain a uniform working approach among inspectors in the borders so that there is consistency in services delivered by PQPS. 36. In addition, ZARI undertook many capacity building activities in which over 150 members of staff and about 402 smallholder farmers were trained. Some beneficiaries include Plant Health Inspectors (PHI), who are critical in providing core public services required to enhance smallholders’ access to markets, and to improve their productivity and quality. The main objectives of the training have been to enlighten plant inspectors and other beneficiaries on the importance and application of the plant pest and diseases Act Cap 233 and the noxious weeds Act 231, the application of the international standards for phytosanitary measures (ISPMs), pest risk analysis, disease identification, inspections and sampling methods. 37. In 2013, a survey covering 94 clients who receive services from ZARI was conducted by an independent consultant, NIRAS Zambia to assess the: i) quality of services; ii) utilization of services; and iii) beneficiary satisfaction of the services rendered by ZARI. A summary of key results (NIRAS Zambia, 2013) are indicated below: 38. Quality of services - Respondents rated the quality of issuance of phytosanitary certificates and fumigation inspection services as good with an average score of 76.2 percent relating to the service delivery. Respondents rated nursery, tobacco nursery and tobacco premises inspections as fair with average scores of 62.7 percent for all indicators relating to these services. 39. Utilization of services - All respondents (100 percent) of phytosanitary certificates, tobacco nursery, tobacco premises and fumigation inspections felt that ZARI services had met their business needs. Only 31 percent of respondents of nursery inspections felt that ZARI services did not meet their business needs. 40. Beneficiary satisfaction - Respondents of phytosanitary certificates and fumigation inspections were satisfied with the services having scored an average of 76 percent, while nursery inspections, tobacco nursery and tobacco premises inspections were rated as fair by respondents with an average score of 59.7 percent. 41. These results demonstrate that ZARI clients represented by agribusinesses, smallholder farmer organizations, commercial farms and individuals have been satisfied with the services delivered by ZARI and that the services had met their business needs. However, there is need to improve service delivery in the area of inspections. ZARI should consider adopting the assessment framework used in this study to measure quality of services for future assessments. In addition, ZARI should consider the results of these surveys in their annual review and planning meetings and include suggestions from beneficiaries in its annual work plans and budgets. 38 Cotton Development Trust (CDT) 42. The cotton industry is a very important sector in Zambia’s economy. The CDT is the only institution in the country that is mandated to supply foundation cotton seed to the industry. For some time, supply has been far below demand. Support to CDT was therefore intended to strengthen the capacity of the CDT to supply an increased amount of pre-basic seed to the cotton industry. To achieve this goal, the Project supported: (i) the construction of a weir and installation of an irrigation system; (ii) establishment of the Integrated Pest Management (IPM) Unit; (iii) procurement of farm equipment and motor vehicles; and (iv) construction of the seed storage shed and IPM Laboratory. Following equipping of CDT with the infrastructure, pre-basic cotton seed production has increased by over 240 percent from a baseline of about 20 tons in 2005 to 60.9 tons in 2013 (Figure 1). 43. CDT effectively utilized the supplementary irrigation water on 80 hectares of land to achieve this level of performance. CDT also trained over 50 staff and over 1,000 farmers since the start of ADSP. However, the Trust experienced management and leadership challenges that resulted in the decline of production during the 2010/11 season. 44. The IPM laboratory was completed in December 2012 and the IPM team moved into the new building in February 2013. Currently the laboratory is not utilized to full capacity due to inadequate appropriate laboratory equipment. Hence it is being used for conducting various entomological research activities in cotton, conducting IPM training sessions for smallholder farmers and technical staff, storage of field samples in a safe and confined environment, increasing the visibility of the research unit to its stakeholders, testing for the resistance of cotton pests to pesticides, and for determining the effects of climate change on cotton pests. Figure 1: CDT pre-basic cotton seed production 80 60 40 M/tons 20 0 2005 2007 2008 2009 2010 2011 2012 2013 45. The IPM has performed exceptionally well in collaborating with cotton ginners to provide training to farmers participating in cotton out-grower schemes on various sites across the country. Training sessions have focused on land preparation, cotton planting, weed control, fertilizer application and early pest management. Other training sessions focused on proper management of field harvest and determining the cost of production. Table 8 shows the participation of smallholder farmers in training during the 2012/13 farming season. 39 Table 9: Farmer training in 2012/13 farming season Site First Training Second Training Nov 2012 – Jan 2013 March –April 2013 Male Female Male Female Magoye 15 12 15 13 Mumbwa (Nangoma A) 26 8 21 16 Mumbwa (Nangoma B) 15 12 25 18 Sinazeze 21 9 23 6 Pemba 47 12 62 4 Monzwe 26 6 14 8 Chipata 60 9 41 9 Petauke 31 9 17 5 241 77 218 79 Sub-total 318 297 GRAND TOTAL 615 46. The IPM Unit has worked with 37 smallholder farmers under the model group. Table 10 below shows that average yield has increased from 607kg/ha in the 2008/09 season to 1,158kg/ha in the 2012/13 season. The table summarizes the performance of the IPM model group since 2008 to the close of ADSP. 47. ADSP also supported CDT to renovate its library to reconvert it back to its core library function. The renovation works included fixing the roof, sockets and painting of the walls. After the renovations all the books have been arranged properly according to their topics. At present, CDT is still receiving collections of books that can be used to add to the existing stock of books in the library. Table 10: Performance of the IPM model group for the last 4 years Year Total hectares (ha) Total yield (kg/ha) Average yield (kg/ha) 2008/09 farming season 19.1 11, 596 607 2009/10 farming season - - - 2010/11 farming season 47.5 30,107 634 2011/12 farming season 45.5 36, 650 805 2012/13 farming season 42.0 48,643 1,158 Policy and Planning Department 48. The Program supported three Units under the Policy and Planning Department (PPD). These were the Agricultural Statistics and Early Warning Unit (ASEWU), the Monitoring and Evaluation (M&E) Unit, and the Policy Analysis Unit (PAU). Agricultural Statistics and Early Warning Unit (ASEWU) 49. The Unit’s mandate was to provide timely and early warning information on food security and other important agricultural statistics. The mandate included maintenance of an agricultural database, Country Stat Zambia and the Ministry Website, and 40 dissemination of information through reports and publications. The ADSP supported strengthening of ASEWU’s capacity to perform these functions. 50. The Unit prepared an Early Warning Extension Training Manual as one of its outputs. This is being used by extension staff in the field to provide early warning information to the farming community such as on epidemics, weather patterns and possible disasters. The Unit also developed 12 Gross Margin Models (Financial Models) to equip smallholder farmers, investors and decision makers with capacity to make evidence based investment choices. The models focus on selected crops such as Maize, Mixed beans, Soya beans, Paprika, Tobacco (Barley & Virginia), Cotton, Sunflower, Groundnuts, and Vegetables (Tomatoes, Rape and Cabbage). These crops are very important to smallholder farmers both as staple food crops and cash crops. 51. The Unit also developed models focused on selected Livestock such as Beef, Dairy, Goats, Pigs and Poultry. The models now include honey, which is a popular smallholder commodity in North-Western, Central and Western Provinces. Other variables that have since been included are: input market prices surveyed at district centers, market prices of crops and livestock products, commonly used crop and livestock chemicals, labor costs based on household composition, household expenditure and food consumption. The models are more user-friendly due to their focus on farm households. 52. The Unit has, through an external consultant facilitated the development of the Ministry Website which is operational but still being populated with data and information. The site address is: http://www.agriculture.gov.zm. In 2012, the Unit undertook a special crops survey to collect data on crops such as coffee, tea, sugar cane, pineapples, and cashew nuts, which by nature of their distribution presents a challenge to be covered during the regular Post Harvest Survey (PHS). The results have helped fill the data gap associated with these high value crops in the results framework. Monitoring and Evaluation Unit (M&E) 53. Support to the M&E Unit aimed to strengthen the capacity of the Unit to undertake results based M&E in the agricultural sector. An earlier activity that was implemented was the development of database on agribusinesses interacting with smallholder farmers. This activity was subsequently considered a non-core activity for the Unit and the database was handed over to the Agribusiness and Marketing Department of the Ministry as the appropriate department to host the database. 54. With regard to strengthening of the Ministry M&E System, the Unit is responsible for providing leadership to the review process. The Project supported the training of two staff in results-based M&E as part of capacity building. The M&E review process is currently supported by the Smallholder Agricultural Productivity Project, while the ADSP continues to actively participate in the process as a member of the Technical Working Group. All activities have therefore been fully implemented and completed. 41 Policy Analysis Unit (PAU) 55. The Policy Analysis Unit (PAU) was to undertake analysis and production of policy papers including analytical work on a range of issues concerning agricultural sector policy. The Unit was expected to undertake seven policy studies and preparation of the ADSP Communications Strategy by the end of the project. However, the PAU faced several challenges including weak staff capacity and lengthy procurement processes that resulted in delays and non-accomplishment of the planned tasks. The PAU produced only two policy studies and policy briefs, representing 28.6 percent achievement. The two policy studies were: (i) impact of HIV/AIDS on out-grower schemes; and (ii) impact of informal crossborder maize trade. As part of capacity building, three PAU staff members received training in policy analysis and research methodology. In the final stages of ADSP, the Ministry engaged a private firm to help further build capacity of PAU staff in policy research, methodology and analysis, and also to ensure that more staff participated in the program. A final policy study is expected as part of this capacity building final effort. Agribusiness and Marketing Department 56. Support to the Department of Agribusiness and Marketing was channeled through the Agricultural Market Information Centre (AMIC) and Agribusiness and Trade (ABT). AMIC sought to upgrade the market information system to help improve the delivery of up-to-date and accurate market data to satisfy the needs of farmers, traders and processors. ABT support was to build capacity to facilitate agricultural trade and negotiations. 57. AMIC carries out programs/activities that help smallholder farmers improve their farming business. One area of focus is the marketing aspect. AMIC collects and disseminates agricultural market information using a number of channels including radio and bulletin. ADSP support commenced with a needs assessment that was carried out by an international consultant. The assessment established three aspects. These were the need for: (i) AMIC to build capacity in staff to improve information management; (ii) AMIC to use other media such as local radio to disseminate market information to smallholder farmers and the general public; and (iii) the need for AMIC to engage private sector to participate in disseminating market information. 58. In response to these recommendations, AMIC implemented a capacity building strategy that included procurement of equipment and training of staff at Headquarters, Provinces and Districts in market information management. Over 100 staff in Southern and Eastern Provinces were trained in FAO-Agrimart database management. With regard to improving the dissemination of market information, AMIC implemented a pilot program to partner with Community Radio Stations that was successfully launched in Southern Province in 2010, and was rolled out in 2012 to the Eastern province. A total of six community radio stations are now working with AMIC. There is also evidence of increased private sector participation in sponsoring the dissemination of market information, which is an important element for long-term sustainability. 42 59. An assessment of the performance of community radio program in various districts shows that the program has made considerable progress in disseminating market information using local radio stations despite challenges experienced in some districts. In 2013, a survey was conducted by an independent consultant, NIRAS Zambia, of 20 Agribusinesses, 9 Farmer Organizations and 376 individual farmers who received AMIC radio programs to assess: (i) the quality of services; (ii) the utilization of services; and (iii) beneficiary satisfaction of the services delivered by AMIC. A summary of key results (NIRAS Zambia, 2013) showed that beneficiaries were satisfied with the services delivered by AMIC although a few areas of improvement were identified (see ADSP ICR, NCO, Lusaka, July 2014, p. 24). 60. With regard to ABT, a collaborative effort with ZARI was arranged to construct modern border facilities at three border posts, namely, Chanida (Eastern Province), Chiyengi (North-Western Province) and Kasasha (Northern Province). This activity was dropped because of inadequate funds. However, ABT has been able to establish a trade database using an external consultant. The database will store all agricultural trade related information and has been designed to be robust enough to be updated regularly. Component 3: Project Management and Coordination 61. The Project Management and Coordination structure was composed of the National Project Steering Committee (NPSC) and the National Coordination Office (NCO). The NPSC considered and approved Annual Work Plans and Budgets (AWPB), provided guidance on project implementation and resolved any issues of policy nature. The Committee considered and approved all sub-projects under the MIIF. The Committee was composed of eleven multi-sector members including the implementing Ministry, Ministry of Finance and National Planning, Ministry of Lands, Natural Resources and Environmental Protection, Ministry of Transport, Works, Supply and Communications, Road Development Agency, National Road Fund Agency, Bank of Zambia, Development Bank of Zambia and the Zambia National Farmers Union. The National Project Coordinator was secretariat to the Committee. The NPSC was scheduled to meet every quarter. The Committe performed well in discharging its functions. However, members were high profile executives and usually proved a challenge to mobilize for an event. 62. The NCO was responsible for the day-today management and coordination of Program activities. The core team was composed of five professional staff including the National Project Coordinator, Project Accountant, M&E Specialist, Safeguard Specialist, and Project Assistant. This core team was assisted by two support staff, namely Project Driver and Office Assistant. Later, the team was beefed up by the services of an Agribusiness Specialist and the MIIF Field Coordinator, when the Ministry took over the management of the MIIF in 2012. They were hired by the Ministry to manage the MIIF sub-component within the NCO. The NCO promoted project financial facilities to the members of the public through sensitization meetings, workshops, training events, annual conferences and through the distribution of reports and brochures. The NCO actively participated in the International Trade Fairs, and Zambia Agricultural and Commercial Shows in order to enhance its visibility. 43 Annex 3. Economic and Financial Analysis 63. Five value chains have been included in the calculation of the ADSP financial and economic NPV and IRR. 14 These are Dairy, based on the activities at Choma District Dairy Cooperative Union (CDDCU), Mushroom, based on the operations of Mpongwe Bulima Organic Cooperative Society (MBOCS), Pre-basic seed cotton, based on the activities at the Cotton Development Trust (CDT), Tobacco, based on the operations of the Central Growers’ Association (CGA), and Soya beans, based on the processing of soya beans into ‘Yummy soya’ by COMACO. These value chains benefitted from project interventions through MIIF, RRIF and Institutional development components. The study included field data collection and desk reviews of all project documents related to ensure that ADSP program benefits were measured to the extent possible. Final analysis also did not include a detailed assessment of relatively minor value chain crops such as sun flower, ground nuts and paprika, given their low ranking in terms of export volumes and relative contribution to national economy. Analysis was based on following assumptions and therefore is limited within those restrictions. Some data challenges were faced during this assessment and are indicated below. Assumptions • The calculations are done at enterprise level for CDDCU, MBOCS, CGA and COMACO, which were supported under the MIIF sub-component and at institutional level for the CDT, which was supported under institutional development sub- component. No farm level models have been developed since there was no support directly to the farmers but to their association at aggregate level. • The “before the project intervention” scenario was assumed to be zero such that only the costs and benefits that took place during the project period are included in the calculations of the NPV and IRR. • In the financial analysis, the following assumptions were made: o Since the enterprises are in business, the actual costs and benefits provided by the enterprises were considered to be valued at market prices such that no adjustments were made to the values; o It was assumed that each enterprise paid 15 percent income tax and 16 percent value addition tax to the Zambia Revenue Authority (ZRA) such that those were factored in the calculations as a cost to the enterprises; i.e., the net incremental benefit after financing and taxes was used in the calculations of the NPV and the IRR; o No other direct transfer payments (direct subsidies, credit transactions including loans, receipts, repayments of principal and interest, accounts payable and accounts receivable) were included the financial accounts since they were not applicable to the sampled value chains; o The price used for labor was the price actually paid; and o No land cost was included in the analysis as each enterprise already had the land and no additional investments were made. • 2009 constant prices and not current prices were used in the financial analysis. 14 Cost benefit Analysis of the Agriculture Development Support Program (Draft Report), Bethel Nakaponda, Alinabena consultancy and Trading, August 2014. 44 • In the economic analysis, the direct transfer payments (taxes only in this case) were removed from financial accounts when coming up with economic costs, i.e., the net incremental benefit after financing and not the net incremental benefit after financing and taxes was used in the calculations of the NPV and the IRR. • No adjustments were made to the financial figures to get the economic figures because only market prices were used. Financial Incremental Net Benefit The detailed calculations for Financial Inflows, Financial Outflows, Financial Incremental Net Benefits before Financing, Financial Incremental Net Benefits after Financing, Taxes, and Financial Incremental Net Benefits after Financing and Taxes are provided in the attached Excel Sheet and summarized as follows: Summary of Calculation of Financial Incremental Net Benefits Description At Current Prices (ZMW) At Constant 2009 Prices (ZMW) Financial inflows 24,070,751.51 28,047,033.48 Financial Outflows 10,708,257.22 11,664,008.41 Financial Net benefits before financing 13,362,494.29 16,383,025.02 Total Financing 3,137,673.42 3,492,667.84 Financial Net benefits after financing 16,500,167.71 19,875,692.90 Total Taxes 12,374,492.06 14,699,595.73 Financial Net benefits after financing 4,12,670.65 5,176,097.17 and taxes Economic Incremental Net Benefits Direct transfer payments (taxes, direct subsidies, credit transactions including loans, receipts, repayments of principal and interest, accounts payable and accounts receivable are removed from financial accounts when coming up with economic costs. Summary of Calculation of Financial net Incremental Benefits Description At Current Prices (ZMW) At Constant 2009 Prices (ZMW) Economic Inflows 24,070,751.51 28,047,033.48 Economic Outflows 10,708,257.22 11,664,008.41 Economic Incremental Net benefits 13,362,494.29 16,383,025.02 before financing Summary of Financial and Economic NPV • At 21% cost of CDT irrigation and farm equipment, Financial NPV before financing = 8,967,879.38; • At 21% cost of CDT irrigation and farm equipment, Financial NPV after financing = 10,392,119.47; • At 21% cost of CDT irrigation and farm equipment, financial NPV after financing and taxes = 2,208,079.24; • At 21% cost of CDT irrigation and farm equipment, Economic NPV = 8,967,879.38. Summary of Financial and Economic IRR The analysis indicates that the Financial IRR calculated based on the incremental net benefit after financing and taxes (which represents the financial return to equity after taxes) is below 50% but above 45% i.e., it is between 45 percent and 50 percent. The analysis indicates that the Economic IRR calculated based on the incremental net benefit before financing is above 50%. 45 See footnote below on some of the missing data. 15 However using proxy data for cost factoring, the ERR values were changed to a range between 18 and 29.5 percent. The data included for each of the value chain used for this analysis is indicated in the excel sheets attached to the original analysis report 16. 15 Other Considerations: Missing and proxy data. The IRR calculations were done without some operating costs from the value chains included in the calculations as follows: (i) CDDCU: Production (Processing) costs including ingredients required, labor costs, electricity costs, equipment maintenance and replacement costs, processing loss); Selling costs including fuel costs, sales man’s costs, vehicle replacement costs, vehicle maintenance and repairs costs, loading and off-loading costs); Administrative costs (stationery, printing, communication); Dividends paid to members; (ii) CGA: Operational costs (motor bikes running costs and other transport costs, etc.) and Administrative costs (salaries, stationery, printing, communication costs, etc.). 16 Cost Benefit Analysis of the Agricultural Development Support Programme, Bethel Nakaponda, Alinabena Consultancy and Trading, August 2014. 46 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Paavo Eliste Senior Economist EASER Co-Team lead Meseret Kebede Program Assistant LEGES Team assistance Alex Mwanakasale Sr Agricultural Spec. AFTA3 Technical specialist Tijan M. Sallah Sector Manager AFTA3 Co-Team lead Supervision/ICR Andrew Osei Asibey Senior Monitoring & Evaluation AFTDE M&E and results Mary C.K. Bitekerezo Senior Social Development Spec EASDE Social safeguards AFTWR- John A. Boyle Consultant Technical specialist HIS Sipiwe Janet Chihame Program Assistant AFCS3 Team assistance Fenwick M. Chitalu Financial Management Specialist AFTME FM Indira Janaki Ekanayake Senior Agriculture Economist GFADR Team Lead Team Lead/ Paavo Eliste Senior Economist EASER Technical Petrus Benjamin Gericke Lead Transport Specialist AFTTR Transport/ Roads Environmental Lungiswa Thandiwe Gxaba Consultant AFTA2 specialist Wedex Ilunga Senior Procurement Specialist AFTPE Procurement Malathi S. Jayawickrama Senior Operations Officer (ICR TTL) ECSSD Team member Meseret Kebede Program Assistant LEGES Team assistance Jutta Ursula Kern Senior Country Officer LCC1A M&E Paul Jonathan Martin Sector Leader AFTSN Sector Lead Marjorie Mpundu Senior Counsel LEGES Legal Hellen Mungaila Program Assistant AFCS3 Team assistance Alex Mwanakasale Sr Agricultural Spec. AFTA3 Technical specialist Pedro Olinto Senior Economist PRMPR Economist Jonathan David Pavluk Senior Counsel LEGOP Legal M&E; Technical Riikka Rajalahti Sr Agricultural Spec. AFTA2 specialist Tijan M. Sallah Sector Manager AFTA3 Manager Mohammed Taqi Sharif Consultant AFTA1 M&E Ahmet I. Soylemezoglu Consultant MNSED Finance Kutemba Kambole Program Assistant AFTA3 Team assistance 47 (b) Staff Time and Cost by Stage of Project Cycle and Financial year Staff Time and Cost (Bank Budget Only) Stage of Project Cycle / Financial USD (including travel and year Labor (USD) consultant costs) Lending (2001/02) 10,406.63 11,813.80 (2002/03) 30,221.52 106,703.81 (2003/04 88,623.01 117,768.84 (2004/05) 56,939.08 258,369.18 (2005/06) 182,494.00 472,677.17 Total: 368,684.24 967,332.80 Supervision FY00 (2006/07) 30,221.52 106,703.81 FY01 (2007/08) 197,974.74 343,712.65 FY02 (2008/09) 169,572.44 330,307.65 FY03 (2009/10) 135,061.58 298,910.71 FY04 (2010/11) 141,709.09 279,987.60 FY05 (2011/12) 111,752.31 159,701.13 FY06 (2012/13) 111,367.82 126,667.03 FY07 (2013/14) 96,181.29 134,247.07 FY08 (2014/15) 97,840.38 120,844.55 Supervision/ICR FY08 (2014/15) 8,837.96 20,645.33 Total: 1,100,519.13 1,921,727.53 Note: 1. Supervision costs of ADSP includes supervision and oversight of the Enterprise Development Fund (EDF) and Apex Unit that was transferred from Bank of Zambia to the Development Bank of Zambia (DBZ), both of which was done under SCCF sub-component. 2. The supervision period costs also include project idea development costs of three full size IDA projects in the current Zambia portfolio, prior to entering the pipeline and activation of the respective Project preparation BB. Projects are: Irrigation Development and Support Project, Animal Health and Livestock Development Project; and Regional Agricultural Productivity Program for Southern Africa. 48 Annex 5. Beneficiary Survey Results INTRODUCTION 17 1. In May 2012, the Roads Development Agency (RDA), acting on behalf of the World Bank funded, Agricultural Development Support Programme (ADSP) commissioned IMCS Limited to conduct the second phase of the socio-economic impact study. The objectives of this study was to collect social and economic data that can be used to measure the impact of improved Agricultural Feeder Road Networks (AFRNs) executed under the ADSP’s Rural Roads Improvement Facility (RRIF) on the rural communities. 2. The study used “panel” data, i.e., involved the execution of a survey on the households previously covered by the Baseline study of 2009. This was in order to establish the changes that have occurred amongst the target population in terms of agricultural production and commercialisation and, improvements in general living conditions. The Impact Assessment Framework (IAF) developed after the Baseline study covered the following: a. Process impacts, related to income generating opportunities resulting from road rehabilitation. b. Access impacts of providing the road infrastructure. c. Mobilisation input, impacts on transport service, growth in traffic volume etc. 3. The 2012 survey instrument was refined after full consultation with the ADSP coordination and World Bank technical team. This was intended core IAF aspects and to facilitate gender disaggregation to provide a more structured base for wider analytical use of the data captured by each of the key stakeholders. This also means that some of the 2012 data variables cannot be directly compared to the 2009 Baseline study. 4. The data collection was conducted between August and November 2012. A preliminary report of the main findings was presented to the stakeholders, i.e., ADSP, RDA and World Bank at a special interactive session held in December 2012. Following this initial presentation, more detailed analysis was conducted in order to incorporate the comments received and consolidation of data. A full draft report was presented to the RDA, ADSP and the World Bank in April 2013. 5. Following the presentation of the draft report, each of the respective stakeholders provided detailed comments for incorporation in the final report. This report therefore has incorporated the comments received and consolidates all aspects of the socio-economic study necessary to inform the IAF as defined in the Terms of Reference (TOR), reproduced at Annex A. The remainder of this chapter provides a summary of the survey results. KEY FINDINGS OF THE STUDY Survey Sample Covered 6. Due to the changes in the designation of Standard Enumeration Areas (SEAs) after the 2010 National Population census, challenges were faced in being able to locate all the households previously covered by the Baseline study. In other instances, household had either relocated or, preferred not to participate in the data collection exercise. 17 Second Phase of the Socio Economic Impact Study under the Agriculture Development Support Program (ADSP), Final Report, IMCS Limited, July 2013. 49 7. This challenge was particularly acute in Choma district of Southern province where only 52% of the Treatment sample and 74% of the Control sample were covered by the 2012 survey. The summary breakdown of the 2012 survey sample covered compared to the Baseline is shown below. HOUSEHOLDS COVERED DISTRICT TREATMENT CONTROL Baseline 2012 Variance Baseline 2012 Variance Chipata 339 283 -56 340 383 -57 Choma 816 426 -390 720 531 -189 Katete 461 386 -75 460 350 -110 Total 1,616 1,095 -521 1,520 1,164 -356 8. Against a target of 3,136 households, the 2012 survey covered a total of 2,347, i.e., 75% of the target population. Data that could however support meaningful and consistent analysis was collected from 2,259 households. This number of households has formed the basis for the analytical work undertaken and comparisons with the Baseline study. Demographic Characteristics 9. The main difference between the Baseline study and the 2012 survey is the reduced sample population covered. The 2012 survey report is based on data covering a total of 2,259 households as against 3,136 used in the Baseline study. The factors accounting for this situation are elaborated in the report. More significantly were the lower than anticipated outturn for Choma district, i.e., only 74% of the target sample were covered (involving a reduction by 48% from the Treatment sample and 26% from the Control sample). This clearly caused some distortion in the comparability of the two study periods. 10. Outside of the reduced sample, the 2012 survey disaggregated the population by gender, enabling the capture of additional data on female headed households. This indicated that female heads of households were around 22-25% in both the Treatment and Control areas of Chipata and Katete districts as against 20-22% recorded by the Baseline study. For Choma district, female headed households were around15% in both Treatment and Control areas as against 16% recorded by the Baseline study. Other notable characteristics included the following: i. The average household size reduced from 6.4 recorded during the Baseline to 6.2 in Treatment areas. Conversely, in the Control areas, the average household size increased from 5.9 to 6.5 as recorded by the 2012 survey. Again, the drop in the survey panel may account for this sharp reduction; ii. The majority of the heads of HHs were in the 31-40 age bracket similar to the patterns noted by the Baseline study. The heads of HHs in the 20-30 age bracket were around 11% as against the Baseline of 16%. Those above 60 years old accounted for about 18% as against 16% recorded by the Baseline study; iii. Amongst the female heads of HHs, the majority (i.e. 34% of Treatment sample and 37% of Control sample) were over 61 years old. Those in the 41-50 age bracket accounted for about 23% (Control) and 19% (Treatment). Those below 30 years accounted for around 6%; iv. About 59% of the female heads of HHs (in both Treatment and Control areas) were widowed whilst, around 22-24% were divorced or separated, less than 3% had never been married whilst, around 10% were in polygamous marriages. 50 v. Around 60% of both the Control and Treatment sample had only attained primary education. Those with secondary education accounted for about 24% of the Control sample and 21% of the Treatment sample. vi. Around 16% of the Control sample and about 18% of the Treatment sample had never entered school. This is slighly lower than the Baseline position where those with no education accounted for 21% of the Control sampe and 18% of the Treatment sample. vii. Amongst the male headed HHs, around 60% of the Control and 59% of the Treatment sample only had primary education level attainments. About 28% of the Treatment sample (and 13% of the Control sample) had never entered school. 11. The Baseline study did not provide sufficient data relating to demographics of the sampled areas to the extent covered by the 2012 survey. As a result it is not practicable to carry out a wider variety of direct comparisons between the two study periods. Status of Treatment and Control Roads 12. A key objective of rehabilitating road networks under the ADSP is to improve access to markets and public facilities by the rural farming communities. With respect to the impact of the road rehabilitation on the communities, reliance was placed on the recording of observations made by key informants representing the main users of the roads from within each respective community, i.e., directly affected by access conditions. This information was further collaborated with RDA road rehabilitation 2011 status reports and classified traffic count annual reports for 2011 covering the respective Treatment roads. Since the Baseline study, a number of Treatment roads have undergone rehabilitation thereby improving access conditions for the local communities. Although the RDA status reports shows that all the rehabilitation works have now been completed, the responses from the key informant in the SEAs covered by the study indicated that, there are some roads that are reported to be under rehabilitation in the Treatment areas, such as: A1 (D128)– Mwami (Feni) and the A7 – Topeka – Rukuzye roads in Chipata district; and B2 (U2) Kalomo/Dundemwezi road in Choma district; and, the A1 (U29) Chiwengela/Chinzule road in Katete district. 13. Whilst the RDA status reports indicate that nearly all Treatment roads had been fully rehabilitated, the perception of the users (represented by key informant anecdotal assessments) gave a different picture. The resulting road access conditions remained varied in some areas, indicating that, although “work in progress” was visible, there were however still some roads that were reported to be in poor condition. The table below shows that there about 62% of the roads had been subject of significant rehabilitation works on the roads in both treatment and control areas of the study. 14. What the below summary status indicates are from key informant perspectives. This would suggest incomplete road works or more rapid deterioration of those officially recorded as having been fully rehabilitated. 15. The assessment of frequency of road usage by motor vehicles also indicated mixed results when compared to the Baseline period. In Chipata district, fewer motor vehicles were recorded by the 2012 study as using the roads in the Treatment areas as against the Baseline period. The RDA study for Chipata for this period reported increased volume of vehicles during 51 this period. In the case of Control roads, there was a notable increase in usage by motor vehicles in the rain season from the Baseline situation. Status of Roads in the study Standard Enumeration Areas (SEAs) reported to Rehabilitated TREATMENT CONTROL DISTRICT Total No. of No. Roads Total No. of No. Road % % Roads Worked Roads Worked Chipata 17 9 53 14 4 29 Choma 28 18 64 31 21 67 Katete 22 15 68 17 13 76 Total 67 42 62 62 38 61 16. In Choma and Katete districts, there were major increases in the frequency of road usage in both Treatment and Control roads. The volume and type of traffic was, apart from the status of the roads also dependent on economic activities, such as maize marketing, fertilizer distribution as well as location of the agriculture depots. (The comparative analysis between the two periods is presented in the full table on page v of the Survey.) It should be noted that the data was compiled from key informant estimates based on their observations, i.e., was not based on fully fledged traffic counts and calculations of travel time. Access to Public Facilities 17. The assessment of access to public facilities (measured by the proximity to the population, i.e. within walking distances) indicated a general improvement in all districts from the position recorded during the Baseline study. In Chipata district, primary schools are more accessible (e.g. 100% for primary schools in Treatment areas and 93% in Control areas from 57% and 71% recorded by the Baseline study, respectively). Even health centres and agricultural depots are more accessible to larger proportions of the population in Chipata district. This was also generally the case with the Treatment areas in Choma and Katete districts. 18. With respect to utilisation of public facilities by the local population, the 2012 study captured additional segments of data than was included in the survey instruments used during the Baseline study. For example, gender disaggregation was incorporated in the 2012 study. Overall, access to educational facilities (especially primary schools) had increased appreciably in all the 3 districts. The proportions of local community members visiting health facilities however remained low largely due to two main factors, namely: • A number of health clinics accessible to the communities tend to be located at least 2 Kms away. For those located outside communities, most are located at least 5 Kms away. In the case of hospitals, these are mostly located away from communities involving average distances in excess of 14 Kms for Chipata district and over 40 Kms in the cases of Choma and Katete districts; and, • Access to public health facilities involve having the money to pay for transport and medicines by users. This encourages local community members to use the services of traditional healers and to self-medicate, i.e., simply purchasing medicines from local grocery shop and chemists. 19. The proportions reported as having visited health facilitates in the last 12 months were very low, i.e., around 20% in the Treatment areas of Chipata and Choma that visited health clinics. Overall, health facilities are still being used by relatively fewer proportions of the population (i.e. less than 25%) in both Treatment and Control areas across all districts. Social Well Being 52 20. The 2012 survey established that there have been notable improvements in the quality of life amongst the population in all the 3 districts in both Treatment and Control areas. This was more evident in the treatment areas. 21. Proportionately, more households improved the quality of their dwellings, e.g., using iron sheets for roofing instead of thatch; increased use of burnt bricks for walls; using cement build concrete floors of houses; and, using standard doors, as shown below. i. More households are drawing water from communal boreholes rather than wells (i.e., boreholes tend to be less contaminated and can hold water in dry periods of the year better than wells which are never dug as deep). On the other hand, more households were drinking untreated water probably due to increased use of boreholes which are considered less contaminated than wells. ii. The proportion of households with toilets also increased from the levels recorded during the Baseline study, especially in Katete district. The majority of the households are however still dependent on single pit latrines. iii. Firewood remains (by far) the main source of energy for cooking across all districts with little change from the Baseline period. In the case of lighting, households no longer depend on kerosene (around 79 – 85% during the Baseline relied on kerosene) but use modern Chinese made lamps (80 – 82%) for lighting. Ownership of Non-Farming Assets 22. There was a notable increase in the proportion of households investing in household assets, such as: mobile phones, radios, bicycles, hammer mills, television sets and solar panels than the case recorded during the Baseline study. The comparative analysis for the two study periods covering selected households assets is presented in the Survey page viii). i. An increased number of households are spending more money on public transport, toiletries, batteries, vehicle/oxcart repairs and fuel than previously recorded. Expenditure on education, clothing and household wares tended to dominate the items where larger amounts of money were concentrated. ii. There has been substantial increase in the amount of money expended on food items than the case recorded during the Baseline study. When monetised (as most basic items are produced by the households rather than purchased), more households were consuming an increased range of food items with such as: meat, poultry and fish. 23. Improved livelihoods can be attributed to increased access to incomes used to finance costs of food and non-food items. This is also a likely consequence of improved linkages between settlements and sources of goods and services, i.e. both for marketing produce and better distribution of consumption items. This also means that the sources of income become an important factor in the improvements recorded to the quality of living standards. Economic Well Being 24. The 2012 survey established that there have been notable improvements in the economic wellbeing of the study population in comparison to the Baseline situation. Households own a greater proportion of tangible assets and mechanization of agricultural farming practices is increasing. This is also demonstrated by the higher yields being achieved with little expansion of field crop areas cultivated. 53 i. Proportionately, more households were recorded as engaging in other non-farm business activities during the 2012 survey than the Baseline. Amongst the Control sample, the proportion engaging in trading and other business activities increased from 14% to 25% between the two study periods. In the case of the Treatment sample, the increase was much lower, i.e., from 20% to 22%. ii. Amongst the HHs engaged in non-farm business activities, the main activities were: market vending; local brewing and selling of alcohol; firewood/charcoal production and retail-trading (i.e., 14% in Treatment areas and 11-26% in Control areas). iii. A separate analysis carried out of female heads of HHs engaged in non-farm business activities indicated the following: - Within the Control sample, about 59% of the total female respondents were engaged in business activities (i.e., Chipata: 30%; Choma: 56%; and Katete: 31%). The female headed households engaged in business within the Treatment sample was 19% (i.e., Chipata: 24%; Choma: 21%; and Katete: 15%). - Amongst the Control population, women were mostly engaged in local brewing and selling of alcohol, market vending, running retail shops and tailoring. Local brewing and selling of alcohol had proportionately higher numbers of female participants in Chipata (28%) and Katete (30.8%) districts. In Choma district only 2.3% were engaged in brewing and selling of alcohol whilst, about 21.4% were earning incomes from market vending. Running retail shops also accounted for about 29% of women engaged in business from Chipata district. Within the Treatment sample, the most common business activities were brewing of alcohol, market vending, running retail shops and weaving. In Chipata district, the proportions engaged in brewing alcohol, market vending, retail trading and tailoring were evenly spread. For Choma district, weaving was the main activity (i.e., 23%), followed by running of retail shops, livestock trading and market vending (each accounting for about 15.4%). Notably, only in Choma district was women engaged in livestock trading. iv. Rural households tend to seek short-term wage earning opportunities between farming seasons to supplement cash incomes. v. Contractual piece work (e.g. cleaning bushes, digging trenches) was the most dominant source of wage income, i.e. accounting for more than 60% in Katete district, around 51% in Choma district and 44% in Chipata district within the Treatment population. vi. Outside of contractual piece work, the next dominant activities were livestock trading especially in Chipata and Katete districts and, short-term employment with the government. During the Baseline study livestock trading was not significant and therefore not captured separately. vii. Engagement in construction activities, such as being field hands in road construction projects was not (relatively) a major source of wage incomes. During the Baseline about 6% were engaged in such construction activities. At the time of the 2012 survey, apart from the population in the Control areas of Chipata district where the proportion was about 6%, this accounted for less than 3% of those engaged in wage employment. 54 viii. During the Baseline study, average annual earnings from construction, wholesale/retail trading, working in smallholder and commercial farms were between K450.00 and K800.00. In the 2012 survey, average earnings amongst the population engaged in wage employment in Chipata district was much higher than the Baseline, i.e. earnings from contractual piece work and construction being higher than K1 thousand. ix. During the survey, respondents were asked to indicate if they had received cash gifts in the last 12 months only amounts in excess of K20.00 were recorded. Overall, an increased proportion of households received cash gifts than the situation recorded during the Baseline. x. During the Baseline study, there were no cash gifts recorded from the government and NGOs. During the 2012 survey however, social cash transfer programmes had become more wide spread targeting vulnerable households. xi. The cash gift represented relatively small amounts received which are only likely to act as supplementation to other sources of livelihoods for the recipients. xii. Generally more than 90% of the respondents across all the 3 districts rely on farming (i.e. are self employed) as their main occupation and source of livelihoods. The next major occupation was salaried/wage employment in the public sector, i.e. accounting for 3% of Control sample in Chipata and Choma districts and 1.3% in Katete (Control sample) and Choma Treatment sample. In Chipata district, about 5% of the Control sample reported that they were too old to work (about 2% of Treatment sample and similar propotion for Katete district’s total sample population). xiii. These trends are consistent with the situation recorded during the Baseline study where between 93% and 100% of the sampled population (both Treatment and Control) were wholly dependent on subsistence agriculture. A key difference between the two periods was the proportionately larger number engaged in salaried employement, i.e. around 3%. xiv. For the female headed HHs, around 93% were engaged in subsistence agriculture whilst, between 5% and 7% reported that they were disabled or too old to work. Only about 0.5% of both the Control and Treatment sample were engaged in salaried employment whilst, less than 1% of the Control sample were self employed in the non-agro sector (e.g. trading). The situation relating to the female headed HHs would also indicate that those who are able to work are fully engaged in agricutlure with very limited choices of alternative sources of livelihoods. Agricultural Production and Sales i. Agricultural activities undertaken by smallholder farmers are in three broad main categories, namely: • Producing their own outputs that they consume domestically (for food security) and the surplus that they market, • Consolidating output through a cooperative society that then markets the crop and organises the sharing of the sales proceeds; and, • Operating under Outgrower schemes. ii. As against the Baseline findings, greater proportions of the households in both Control areas (i.e. 47% from 13%) and, Treatment areas (i.e. 49% from 18%) across the SEAs 55 surveyed in the three districts, were linked and participated in the Outgrower schemes during the 2011 – 2012 farming season. Proportion of Farmers Belonging to Outgrower Schemes (%) CONTROL TREATMENT DISTRICT Baseline 2012 Baseline 2012 Chipata 9 39 18 48 Choma 1 27 1 21 Katete 29 82 36 78 Total 13 47 18 49 iii. There was a general increase in the proportion of farmers growing major crops than the case reported during the Baseline. (see Charts 1 and 2 in Survey, page xii for a comparative analysis for Treatment and Control areas, respectively.). iv. The average number of bags sold per household increased from the Baseline conditions, as shown in Chart 3 of the Survey (page xiii). v. There were notable improvements in the average earnings of households from crops sales as show in Chart 4 of the Survey (page xiii). vi. There was an overall improvement in the agricultural production activities of the survey sample population from the position recorded by the Baseline study. This could be attributed to increasing commercial integration of the small holder farmers. It may also indicate that improved road access conditions are enhancing agricultural market linkages. OVERALL CONCLUSIONS i. There were also notable improvements in the quantities of crops grown and, earnings generated from crop sales. The dependency on agricultural incomes also increased from the Baseline situation. Increasing proportions of households are relying less on wage employment, carrying out non-farm business activities and receiving gifts from relatives. There has however been a new phenomenon of social cash transfers from government and NGOs, especially to households in the Treatment areas which was not the case at the time of Baseline study. ii. The improvements highlighted above are more notable amongst the households in the Treatment areas. This would also indicate that whilst the pace of improving road access conditions has been slow, the impact of progress is filtering to households, i.e. influencing living standards, market access and level of agricultural commercialization. iii. The 2012 survey tried to disaggregate the data captured by gender, in order to establish the conditions faced by women. This approach has enabled the establishment of new baseline conditions which should facilitate future monitoring of changes in greater detail. The 2012 survey however has established that women form an important economic unit both in households that they head and their role in agricultural production and sales activities. 56 Annex 6. Stakeholder Workshop Report and Results The fourth edition of the ADSP Annual Conference for 2013 was held from 2nd -3rd December 2013 at Cresta View Hotel in Lusaka under the theme “Smallholder Agriculture Commercialization: Exhibiting ADSP Achievements”. The event was attended by 56 participants drawn from Implementing Agencies, Government Officials, Cooperating Partners, Private sector beneficiaries, the World Bank and members from the media. The purpose of the Conference was to share results, progress achieved, experiences and exhibit products attained from implementation processes harnessed over the past seven years and gather stakeholder views about the project contributions. The Conference was unique in the sense that: • It was the Last Edition in the series, which started four years ago, • It was aimed at discussing Results, Experiences and Lessons and • Senior Dignitaries had also been invited to grace the occasion. The Conference was officially opened by the Honourable Minister of Agriculture and Livestock, who was represented by the Deputy Minister, Hon. Luxon Kazabu. The World Bank was represented by Dr. Kundhavi Kadiresan, Country Director – Zambia, Malawi and Zimbabwe. In her opening remarks, the Country Director stressed that the ADSP was a successful project supported by the Bank. She mentioned that the project was rated satisfactory by the Bank and that the project had recorded good gender balance among its beneficiaries as over 38% were women. She was encouraged by value added products from private sector beneficiaries. She encouraged efforts by Zambia to go beyond food security and focus on commercialization. In his opening remarks, the Honorable Minister paid tribute to the World Bank for being a supportive partner in financing and supporting the implementation of the Agricultural Development Support Project, which was advancing commercialization and diversification of smallholder agriculture and linking to sustainable markets. The Minister requested the Bank to further consider expanding such grant facilities for more processing and value adding activities in the sector. He also paid tribute to various agencies that had been involved in the implementation of the project. The Conference was characterized by excitement as ADSP implementing agencies made presentations of their implementation results and achievements while private sector beneficiaries exhibited their value added products and released them for sale. The conference ended with a resolution that the ADSP-NCO should ensure that sustainable strategies were prepared for the various sub-components before the closure of the Project in 2014 and prior to project closure. The project NCO also agreed to share project results with all sector stakeholders using established ministry communication channels. Key lessons learnt include the following: i) that smallholder farmers are able to produce quality products when there is a sustainable market with good market and pricing i.e., Mpongwe Bulima Cooperative; ii) that well organized processing and marketing agribusiness interventions clearly empower general ‘small-scale farmers’ to viable smallholder commercial farmers; iii) that MIIF matching grants enabled agribusiness to also secure loans from commercial banks and this enabled them to double their capital resource; and iv) that MIIF grants assisted the agribusiness to develop private sector extension services that targeted specific commodities. 57 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR EXECUTIVE SUMMARY (of BORROWER’S ICR) 1. The Ministry of Agriculture and Livestock (MAL), with financial support from the International Development Association (IDA) of the World Bank has since October 2006 implemented the Agricultural Development Support Program (ADSP). The IDA support was in the form of a Sector Investment Grant amounting to US$37.2 million. The Program has been implemented for a period of 7.8 years and was closed on 15th May 2014. The Program was a multi-sector operation involving institutions both inside and outside of the Government system. 2. At the end of the implementation period, it is evident that the Program has been successfully implemented and completed activities have led to significant achievement of the PDO and results. Total grant amounting to US$37.2 million has been fully utilized on project activities. The total Program cost was however US$ 50 million. This was composed of IDA grant of US$37.2 million (74.4%), Government counterpart contribution of US$7.1 million (14.2%), beneficiary contribution of US$3.1 million (6.2%) and a currency exchange gain of US$2.6 million (5.2%). 3. Key performance indicators show that the program has reached out to 128,265 beneficiaries, thereby surpassing the original target of 65,000 beneficiaries. Over 48% are female beneficiaries far more than 38% that was targeted to the end of the Program. The Program has increased the number of smallholder households growing targeted commodities from the original baseline of 927,251 in 2005 to 1,039,216 in 2013. This has been achieved in a diversified farming system without maize. The Program has supported 28 innovative agribusiness enterprises promoting smallholder commercialization along commodity value chains. In 2013 annual average income among beneficiaries in the catchment areas was ZMW17,905 per household. 4. The Program has successfully completed OPRC works associated with improvement of rural roads covering a distance of 1,131 kilometers in priority districts of Choma, Chongwe, Chipata, Katete and Lundazi with high agricultural potential as part of smallholder agriculture commercialization. The roads are currently under maintenance and have stimulated various economic activities along the improved road catchment areas. In those priority districts, a recently concluded impact assessment survey has indicated that average household income had grown from ZMW3,900 in 2009 to ZMW21,800 in 2012 and the volume of traffic has increased from 52 vehicles per day in 2007 to 194 vehicles per day in 2012. The facility created 1,200 jobs during the rehabilitation phase. 5. As part of institutional development, the Program has helped SCCI decentralize seed testing services to the Southern Province by establishing a seed testing laboratory in Choma that has since 2012 tested over 2,200 metric tons of seed. In addition the Program has strengthened the capacity of the CDT to supply increased pre-basic cotton seed to the cotton industry by providing irrigation system infrastructure and other farm equipment, thereby increasing the pre- basic cotton seed production from 19.2 metric tons in 2005 to 60.9 metric tons in 2013. 6. The Program, as part of capacity building, has trained a total of 12,119 people in various skills. Of these, 241 (2%) were members of staff and 11,958 (98%) were smallholder producers. Smallholder producers have been trained in advanced technologies associated with value addtion, product development and quality improvement. 58 7. The ADSP has demonstrated many innovative aspects. The Program has successfully supported Agribusiness enterises promoting agricultural commercialization along key commodity value chains with a demonstration of beneficiary innovative technologies. The commodities include cotton, paprika, chili, groundnuts, soyabeans, dairy, poultry, aqua-culture, piggery, honey, cashew nuts, mushroom, local vegetables and fruits. This is also supporting Government policy on crop diversification. 8. The ADSP has successfully implemented a rural road contracting method using Output and Performance Based Road Contracts (OPRC), an efficient and cost-effective approach to supporting increased commercialization of smallholder farmers by retaining contractors on site to maintain the network of roads to acceptable service standards. In the case of the ADSP the contractors were on site for a period of five (5) years to provide access and motorable road services to the rural communities. 9. As part of Research and Development, the ADSP has promoted the honey value chain production and quality improvement by testing and confirming that Zambia honey is free of American Foul Brood disease, thereby eliminating the need to irradiate the honey and opening doors for honey exports to the regional and international markets. In addition, the ADSP has helped improve the plant quarantine services by enhancing staff capacity at ZARI which issues phytosanitary certificates for export and plant import permits for a variety of products. The Program has also empowered SCCI to monitor seed quality standards by establishing a biotechnology laboratory facility at Chilanga with state of the art equipment. 10. In project management, the ADSP has successfully been implemented using Government systems. The Program adopted IFMIS, an integrated financial management information system that is used for public financial management that incorporates planning, budgeting, expenditure management and control, accounting, audit and reporting thereby enhancing trasnparency and accountability of public resources. The Program has also successfully used country systems for management of donor funds. 59 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders (Not Applicable) 60 Annex 9. List of Supporting Documents World Bank Documents ADSP Aide Memoires of Implementation Support Missions, 2006 to 2014. ADSP Financing Agreement, Republic of Zambia and International Development Association, June 13, 2006. ADSP Implementation Status and Results (ISR) Reports, 2006 to 2014. ADSP Project Appraisal Document (PAD), April 20, 2006. ADSP Project Information Document (PID), March 30, 2006. ADSP Restructuring Paper, October 12, 2012 (draft), November 13, 2013. OPCS: Implementation Completion and Results Report Guidelines, August 2006 (updated 11/10/2010). Zambia Country Assistance Strategy, 2008-12, November 15, 2011. Other Documents ADSP Draft Implementation Completion Report, National Coordination Office, Lusaka, July 31, 2014. Baseline for Indicators Related to Direct Beneficiaries; MIIF, Sub-Grant; Beneficiary Household Incomes; and ZARI and AMIC Quality of Services, Final Report, Volume I, Ministry of Agriculture and Livestock, ADSP Project, July 31, 2013. Baseline for Indicators Related to Direct Beneficiaries; MIIF, Sub-Grant; Beneficiary Household Incomes; and ZARI and AMIC Quality of Services, Final Report, Volume 2, Annexes, Ministry of Agriculture and Livestock, ADSP Project, July 31, 2013. Cost Benefit Analysis of the Agricultural Development Support Programme, Bethel Nakaponda, Alinabena Consultancy and Trading, August 2014. Development Bank of Zambia, Completion Report on ASDP, December 12, 2013. Inception Report for Mapping of Agricultural Development Support Project (ADSP) Activities, Oscar Daka, April 2014. Second Phase of the Socio Economic Impact Study under the Agriculture Development Support Program (ADSP), Final Report, IMCS Limited, July 2013. 61 MAP 62