Extract of Agreement at Completion Point

Introduction

This is the second country programme evaluation (CPE) undertaken by the Independent Office of Evaluation (IOE) of IFAD of the IFAD-Brazil partnership. The CPE covers IFAD operations in the country in the period 2008-2015. It includes an assessment of the 2008 IFAD country strategy for Brazil, eight IFAD-financed projects and programmes, grant-funded activities, non-lending activities (knowledge management, policy dialogue and partnership building), and South-South and Triangular Cooperation.

The three main objectives of the CPE were to: (i) assess the performance and impact of IFAD-supported operations in Brazil; (ii) generate a series of findings and recommendations to enhance the country programme’s overall development effectiveness; and (iii) provide insights to inform the preparation of the next COSOP for Brazil, to be prepared by IFAD and the Government for presentation to the IFAD Executive Board in April 2016.

The Agreement at Completion Point (ACP) reflects the understanding between the Government of Brazil and IFAD Management of the main Brazil CPE findings and recommendations. In particular, it comprises a summary of the main evaluation findings in Section B, whereas the ACP is contained in Section C. The ACP is a reflection of the Government’s and IFAD’s commitment to adopt and implement the CPE recommendations within specific timeframes.

The implementation of the recommendations agreed upon will be tracked through the President’s Report on the Implementation Status of Evaluation Recommendations and Management Actions, which is presented to the IFAD Executive Board on an annual basis by the Fund’s Management.

The ACP will be signed by the Government of Brazil (represented by the Secretary of International Affairs in the Ministry of Planning, Budget and Management) and IFAD Management (represented by the Associate Vice President of the Programme Management Department). IOE’s role is to facilitate the finalization of the ACP. The final ACP will be submitted to the Executive Board of IFAD as an annex of the new COSOP for Brazil. It will also be included in the final Brazil CPE report.

Main evaluation findings

The Government of Brazil and IFAD have developed a solid and strategic partnership over more than 35 years. IFAD is supporting the Government in promoting family farming and grass-roots development as a means to improve productivity, food security, nutrition and income. While clearly recognizing the importance of non-agricultural activities for wider sustainable and inclusive rural transformation, the evaluation finds that a better balance between agricultural and non-agricultural activities could be achieved moving forward. This would require placing more emphasis on agricultural value chain development including in areas such as water and land management, crop production and livestock development.

IFAD’s role in Brazil has been and will remain important, given the wide income inequalities that persist and the central role of family farming as an engine of agricultural production and productivity in the country. Moving forward, the partnership will need even more attention to non-lending activities (policy dialogue, knowledge management, and partnership-building) and South-South and Triangular Cooperation (SSTC) linked to IFAD’s investment activities, to enable Brazil to make further inroads in improving rural livelihoods.

Closed projects (i.e. the Dom Hélder Câmara I and Gente de Valor projects) have shown good results in terms of empowerment of beneficiaries and improvements in their capacities to influence resource allocation, gender mainstreaming, innovation and scaling up. They have helped improve water management, and crop and livestock production. In terms of geographic coverage, the focus on the north-east has been appropriate and the targeting of women and rural youth has been effective. A major achievement since 2008 has been the design and approval of six new projects that are all in their initial phases of implementation.

However, IFAD-funded projects have not devoted sufficient attention to the engagement of private sector actors, rural finance and market access, and there are concerns with operational efficiency and the sustainability of benefits. There have been start-up delays in all six new operations, needing concerted actions towards consolidating initiatives to ensure they achieve the desired results. With regard to targeting of IFAD financing, opportunities for working with indigenous peoples in partnership with FUNAI could be explored in the future, given IFAD’s strong track record of supporting indigenous peoples in Latin America and Asia.

Performance in non-lending activities has improved, but is still only moderately satisfactory. In line with the 2008 country strategy, IFAD took positive initiatives to strengthen knowledge management and introduce SSTC activities through grant funding. More is however needed in the future to leverage non-lending activities to support institutional and policy transformation.

Policy dialogue at the sub-national and regional levels has improved. For example, through REAF (the Mercosur Specialized Meeting on Family Farming), the Ministry of Agrarian Development and IFAD have managed to successfully bring to the table the priorities of Brazilian family famers, and included their representatives in the dialogue alongside government officials and other policy and decision makers.

Partnership with the Ministry of Planning, Budget and Management is very good. The same is true for the partnership with the Ministry of Agrarian Development, whose central mandate is to develop family farming for better food security in Brazil. However, partnership and dialogue with a wider range of federal agencies involved in agriculture and rural development are limited. Partnerships have been good with state governments, though involvement of municipalities deserves added attention. Partnerships with multilateral and bilateral agencies are limited. The same applies for partnership with FAO and WFP, which is a priority for the Government and IFAD, but so far has not been adequately developed.

The establishment of the IFAD Country Office  in mid-2011 has enabled IFAD to conduct more timely supervision and provide implementation support to projects, and to strengthen dialogue in the north-east. In fact, direct supervision and implementation support in all projects has been an important adjustment to IFAD’s operating model since the 2007 Brazil CPE. However, the location of the country programme manager for Brazil at IFAD headquarters in Rome is a factor that will need to be carefully considered, as it may be constraining further improvements in the overall effectiveness of IFAD-Brazil partnership.

Weaknesses in monitoring and evaluation (M&E) and results measurement have been a common problem across the portfolio, although there are some signs of improvement. M&E systems are inadequate to capture outcome- and impact-level data. The application of IFAD’s Results and Impact Management System has also posed a challenge at the project level. M&E of grant-funded activities, especially non-lending activities, has not been systematic; sharper and more easily measureable indicators as part of the country strategic opportunities programme results measurement framework would have facilitated the task.

Agreement at completion

The CPE makes an overarching recommendation that IFAD and the Government move forward to prepare a new COSOP for Brazil, which will build on the findings and recommendations of this CPE and provide the foundations of the main areas of intervention in the context of a renewed partnership and cooperation between the Fund and Brazil.

The CPE makes three overarching recommendations that should be included into the new COSOP: (i) focus and priorities of the country strategy and operations;

(ii) strengthen engagement in non-lending activities including South-South and Triangular Cooperation; and (iii) further adjustments to IFAD’s operating model for greater development effectiveness.

Recommendation 1: Focus and priorities of the country strategy and operations. The CPE recommends that the country strategy and projects devote more explicit attention to smallholder agricultural activities, which is at the core of IFAD’s mandate and comparative advantage, as a vehicle for improving incomes and rural livelihoods. This would include priority to agriculture and food production and productivity enhancements through investments in adaptive research and extension to address climate change issues, water resources management and irrigation development, value chain development with appropriate linkages to input and output markets, greater engagement of private sector actors (for instance, in value addition and agro-processing) and the promotion of financial inclusion of the poor. IFAD investments should continue to provide essential rural support services to promote family farming, but a better balance between agricultural and non-agricultural activities should also be pursued.

Opportunities for working in the north of the country – with a primary focus on indigenous people – on a pilot basis is worth exploring in the next COSOP and lending cycle. Similarly, opportunities of working in other uncovered states and regions of the non-semi-arid regions of the north-east may be considered, given the poverty profile of rural people who live there. The opportunities and challenges of possible expansion to geographic areas beyond the current states covered should be carefully studied.

The country strategy should be costed and include an estimate of all types of resources (for investments, grants, non-lending activities, South-South and Triangular Cooperation, and administrative resources) needed to achieve COSOP objectives. Its results measurement framework should include measurable indicators that can be tracked during implementation and evaluated periodically, including at completion. The COSOP should also clearly specify the time frame it will cover.

IFAD and Government response to CPE recommendation 1.On para. 17 above, while PMD recognizes that more attention should be devoted to the categorization and labelling of projects at design, the regional division and the Government of Brazil agree that smallholder agricultural activities have always been at the core of their joint country programme in Brazil, albeit through a diversified set of interventions, both agricultural and non-agricultural. IFAD's goal has evolved substantially since the Fund was established in 1977 to provide "financing primarily for projects and programmes specifically designed to introduce, expand or improve food production systems". Since IFAD's modus operandi started to be updated and shaped into strategic frameworks in 2001, its attention has been more focused on rural poverty reduction, from "enabling the rural poor to overcome their poverty" (SF 2002-06), to "achieve higher incomes and improved food security" (SF 2007-12) or to help "rural people overcome poverty and achieve food security through remunerative, sustainable and resilient livelihoods," In this context, IFAD and the Government will continue to invest and to find the most valuable balance in both agricultural and non-agricultural activities, at the programmatic as well as at the individual operations level.

On para. 18, the IFAD Management and the Government of Brazil endorse the recommendation to move beyond the semi-arid regions of the North-east, to include new states and territories where IFAD presence is requested and there is a clear potential comparative advantage in considering a new investment project, such as in the State of Maranhao or in the coastal biomes of Pernambuco. On the other hand, due to the vast extension of its territory and the Fund's limited experience outside the North-East, the opportunity to expand IFAD presence in the North of the country will be assessed, mainly through non-lending activities, under the new COSOP. Decisions will be subject to the availability of human and financial resources, and local demand for IFAD presence in the region.

The rationale for costing the country strategy is noted. However, currently, IFAD does not have a  specific methodology, guidelines or approach to undertake this task. Therefore, pending the development of such a methodology, guidelines or approach, it will not be possible to apply this specific CPE recommendation to the new Brazil COSOP.

Recommendation 2: Strengthen engagement in non-lending activities including South-South and Triangular Cooperation. Building on the good work done since 2008, IFAD should devote even more attention to non-lending activities, including South-South and Triangular Cooperation, in the future country programme.

This will require enhanced work in capturing project experiences and a more systematic way of disseminating lessons learned and good practices, also to strengthen IFAD’s visibility and brand. The lending programme would mainly be the basis for learning lessons and identifying good practices in promoting poverty reduction in remote rural areas. A programme of knowledge cooperation would include attention to documenting and sharing experiences and lessons from Brazil that can help towards scaling up success stories in the country and elsewhere, as well as proactively supporting activities and organizing events that will promote the transfer of IFAD’s accumulated knowledge, good practices, and lessons in smallholder agriculture and rural development from other countries to Brazil. With regard to the latter, one concrete area is indigenous peoples’ development, where IFAD’s rich experience in other countries could be of use in supporting the development of indigenous peoples in the north and north-east of the country.

In addition to maintaining a close dialogue with the Ministry of Planning, Budget and Management and the Ministry of Agrarian Development, strengthening partnerships and policy dialogue with a wider range of federal agencies should be actively pursued. Concrete partnerships with multilateral and bilateral development organizations should be developed, for instance, in the areas of co-financing operations, knowledge-sharing, policy dialogue, scaling up and South-South and Triangular Cooperation. Greater engagement of private sector actors and academic and research institutions would also add value to the activities supported by IFAD in Brazil.

South-South and Triangular Cooperation should be a key objective in the new country strategy, in cooperation particularly with the Rome-based agencies dealing with food and agriculture and other development partners working in agriculture in the country. IFAD South-South and Triangular Cooperation activities should be anchored in the Fund’s investment operations and focussed on few topics, such as promotion of family farming, an area in which IFAD has gained quite a bit of experience in the past decade in Brazil. The COSOP should clearly articulate the specific objectives, focus and measures of success for South-South and Triangular Cooperation. All this will require strengthened M&E systems, both at the project level and the country level.

IFAD and Government response to CPE recommendation 2.IFAD agrees with this recommendation. However, Management would like to note that SSTC and non-lending activities have cost implications, which are particularly relevant under a zero-growth budget. Moreover, it should be noted that responsibilities and outcomes of SSTC activities often depend on government initiatives and partnerships, which IFAD will continue to identify and pursue.

Recommendation 3: Further adjustments to IFAD’s operating model for greater development effectiveness.Attention needs to be devoted to consolidating activities related to the six on-going operations to ensure desired results, which will required continued focus and support by the IFAD country team working on Brazil. Moreover, there is need for a better balance between lending and non-lending activities including enhanced national policy dialogue with federal agencies for scaling up impact and knowledge sharing.

In order to effectively realize the above, the CPE recommends the out-posting of the IFAD country programme manager to Brazil. The recommendation of out-posting the country programme manager is primarily aimed at enhancing the broader impact of the important IFAD-Brazil partnership in promoting better rural livelihoods, recognizing the possible cost implications this might have for the Fund.

Under the broader guidance of the country programme manager, the IFAD Country Office staff should continue to provide timely supervision and implementation support to IFAD investment operations. In addition to supervising its staff, the country programme manager would take the lead in high-level policy dialogue, identifying opportunities for strategic and institutional partnerships (especially beyond the project level), South-South and Triangular Cooperation, and knowledge sharing. The country programme manager would also devote time to enhancing IFAD’s visibility and brand.

Finally, the country programme manager should have exclusive responsibilities for Brazil, and not be concurrently responsible for other IFAD country programmes. The out-posting of the CPM would require a professional-level staff member at headquarters to be assigned on a part-time basis to the Brazil programme to follow-up on day-to-day operational matters requiring attention at headquarters.  

IFAD and Government response to CPE recommendation 3.IFAD and the Government fully agree on the need to consolidate and roll out the existing country programme on a priority basis. We also agree to seek a better balance between lending and non-lending activities, as permitted by (a) human and financial resources availability and (b) the possibility to leverage additional resources through co-financing. The new COSOP will include objectives that are realistic and achievable, taking into account the anticipated level of resources available.

On the proposal to out-post the CPM, Management endorses the importance of IFAD's  increased and strengthened country presence, at the pace and through the modalities established at the corporate level and approved by the Executive Board. In the case of Brazil, such endorsement is demonstrated by the presence of an in-country office (ICO) with three staff operating since 2011. Under the current budget and staffing constraints, and as part of the overall decentralization strategy, the recommendation to outpost the CPM to Brazil will be carefully assessed.

Nevertheless, even if no commitment to out-post the CPM can be made at this stage, there are immediate actions that will be taken in order to pursue the objective of the recommendation for enhancing the IFAD-Brazil partnership: the CPM will increase his time in Brasilia, while on mission in the country; hence his time share dedicated to policy work and partnership development, both with the federal government and with Brasilia-based national and international partners, will also increase. Moreover, options will be explored to identify a potential non-cost hosted physical space in Brasilia, to be used during the CPM's missions to the capital.

At HQ, the CPM will continue to play an important role in policy work, where the experience of a large middle-income country such as Brazil can be useful to a range of corporate policies and debates, knowledge management and identification of SSTC opportunities.

Other organizational arrangements, such as the recommendation to have an additional professional staff dedicated to Brazil at HQ, under an eventual CPM out-posting arrangement, would depend on the overall assessment of resources available at the Divisional level, which serves the needs of over 20 active borrowing countries.

Regarding the need for the CPM to have exclusive responsibility for Brazil, IFAD and the Government endorse the recommendation. This recommendation will be implemented by 2016, based on the relative size of Brazil's programme in the Latin America and Caribbean Region.