Employment Generation Project (1996) - IOE
Employment Generation Project (1996)
Interim Evaluation
Project area
The project area comprises of Mahe, Praslin and La Digue islands. The topography is mostly mountainous with limited flat land. The soils are generally free of stones and are light to work. However, the sand fraction is over 80% and calcareous with little organic matter. Fertility is poor and sustainable agriculture requires extensive use of fertilisers and manure. The climate is tropical with two seasons, a dry south-east monsoon (July to October) and a moist north-east monsoon (November to June). The rainfall varies from 1 600 to 2 600 mm. Agriculture is mainly practised by the smallholders. They produce subsistence crops and rear livestock in their backyards or cultivate small plots of no more than 2 ha, producing mainly fruit and vegetables.
Conception et objectifs du projet
The target group comprises of the near landless, the landless and the unemployed, estimated to total 5 490 families. The near landless are defined as low-income families cultivating crops and/or raising limited livestock (poultry and pigs) on small plots or in backyards for subsistence and to generate additional family income. This group comprises of about 3 000 to 4 000 families. The landless group is defined as smallholders with an average plot size estimated at less than 0.5 ha. The third category, estimated at 1 400 people, comprises of the unemployed. Of these, about 32% are men and 68% women. Of the women, 92% are unskilled as against 58% for men. About 500 are female heads of households and single. An estimated 400 are men who are heads of households. These unemployed have no access to land. The Ministry of Employment and Social Affairs (MESA) provides the unemployed with cash for the upkeep of their households if part-time employment cannot be secured. Those that can secure part-time employment (street cleaning, garden maintenance, etc.) are paid a half-day's wage of SR 25. However, many of the female-headed households are unable to take advantage of these opportunities because of the lack of affordable child day-care and the rigidity of working hours. The income of the target group has been estimated to range from R 6 000 (USD 1 070) for those with part-time employment to a maximum of R 12 000 (USD 2 140).
The objectives of the Employment Generation Project (EGP) are to improve smallholder income and standards of living through increased agricultural productivity and promotion of income-generating activities. These objectives would be achieved through a strategy aimed at (i) restructuring the agricultural system to expand the smallholder sub-sector; (ii) introducing appropriate incentive policies and technology suitable for smallholders; (iii) institution building through training and technical assistance to support agriculture more effectively; (iv) providing support services, including credit, input supply and marketing; and (v) introduction of effective participation by project beneficiaries. Project components include: (a) Small Farm Development; (b) Input Storage and Distribution Improvement; (c) Extension Support and Research; (d) Income-Generating Activities; (e) Credit; (f) Fisheries Development; (g) Coconut Rehabilitation and Cinnamon Pilot Project; (h) Project Management; and (i) Marketing Management Information System.
Expected effects and assumptions
Several effects were expected as a result of the EGP intervention. These include annual incremental production of fruit and vegetable (estimated at 176.3 tonnes), as well as of honey and poultry. However, as far as marketing of the produce is concerned, it was assumed that marketing parastatals would play key roles in product assembling, processing, storage, and wholesaling. In particular, the Seychelles Marketing Board (SMB) was expected to play a major role in marketing. The private sector's involvement in marketing would be promoted by the EGP, as well as through organisation of women groups, training, marketing and credit. Overall, it was assumed that the number of farmers who would benefit directly from the project would be around 5 250 families, and that a positive impact on beneficiaries' agricultural productivity and income would be evident.
The Interim Evaluation Mission (IEM) of the EGP visited Seychelles from 25 November to 13 December 1996. The purpose of the mission was to evaluate the overall performance of the project in relation to stated objectives, targets, schedules and budgets, to identify the critical internal and external factors which have influenced implementation to date, as well as to make recommendations and draw lessons from IFAD's experience in Seychelles, which would serve as inputs in the preparation of IFAD's future strategy in Seychelles. The mission's itinerary included meetings with the officials of the Government of Seychelles (GOS) in Victoria, field visits on Mahe and Praslin islands, as well as interviews with beneficiaries, various collaborating institutions, implementing agencies and the project management team.
Economic and political framework
Seychelles' main economic activities are tourism and industrial fishing, followed by small-scale manufacturing, and to a much lesser extent by agriculture. Seychelles has made rapid economic and social progress since independence in 1976. GNP per capita has risen over six-fold from USD 870 in 1976 to almost USD 6000 in 1995. As of 1993, 18% of GDP came from industry, another 18% from tourism, with the government supplying another 13%, agriculture only 3% and other services 48%, including those from domestic services and private non-profit institutions. In the case of agriculture, it's share of GDP has dropped from 10% in the 1970s to a barely 3% today. In the 1940s, agriculture employed over three quarters of the labour force. As of 1995, agriculture employed only 6% of the labour force. In 1995, tourism generated around 15.4% of GDP, 60% of goods and services, and 19% of formal employment, whereas fishing, the second most important export, lagged far behind accounting for only 1% of GDP and about 8% of the exports of goods and services. In 1995, the public sector still employed about 60% of the formal labour force.
Until 1993, Seychelles' development strategy had been influenced by the dominant role of the state in the economy, the importance of tourism and activities related to it, and by the country's heavy dependence on imports. The government owned and managed assets in key sectors of the economy. However, by the early 1990s the fragility and structural weaknesses of Seychelles' economy became increasingly apparent. The dominance of the public sector led to a situation of high public expenditure and to deficit financing from foreign grants/loans and local commercial banks. The financial imbalance and shortage of foreign exchange set the stage for a change in government policy, which was initiated following the constitutional referendum of 1993. The government radically changed it's development strategy from a state-driven to a market-oriented approach, promoting the private sector (with tax incentives and financial packages), diversifying the productive base of the economy (by encouraging fishing, industry, agriculture and a number of other financial and transhipment services) and focusing on export promotion. The GOS also adopted a less dominant role in agriculture. For instance, Government cooperatives, state farms, and some of the land previously used for coconut plantations were privatised. Now, GOS limits its role to providing support services to farmers. Moreover, regarding marketing and pricing, the role of the SMB has been reduced: farmers are now free to sell their produce locally at any price. Hence, it must be recognised that the EGP operated in a rapidly evolving macroeconomic and political environment, which could not have been anticipated at appraisal.
The Ministry of Agriculture and Marine Resources (MAMR) and other implementing agencies consider the main impacts related to EGP to be increased production and productivity in agriculture, reduction in agricultural imports, and renewed interest in agriculture, especially on the part of new and younger farmers. However, although it is difficult to quantify the role of EGP in contributing to these impacts, it may be stated that the EGP (in combination with the new market-oriented policies in agriculture) played a significant part in achieving these objectives.
Beneficiary participation and targeting
Young unemployed women have participated in the project through the Ministry of Employment and Social Affairs (MESA) income-generating activities (for instance, women employed in the crafts sub-project found their participation very useful), some of the less well-off farmers under the Blocker Schemes have benefited from the project through training and provision of infrastructure. Some relatively poor people have borrowed from the Seychelles Credit Union (SCU). The 1994 Mid-Term Review (MTR) held a workshop comprising of representatives from the concerned institutions, as well as beneficiaries from SCU and extension services, which strengthened project implementation. The overall participation of the intended target group and targeting of assistance to the disadvantaged was slow in the beginning, mainly due to exogenous factors, such as the shift in government policy from public to private sector. The more promising activities in this area took place during the later stages of implementation, as GOS and the concerned institutions recognised the need for active beneficiary involvement along with more focused targeting, and therefore reoriented their activities in order to promote a closer rapport with the rural population and EGP beneficiaries.
The following are some brief statistics on this subject: eighty people took loans through IFAD's line of credit from the SCU (33 percent of borrowers were women). The average loan size was SR 17 500, whereas the average annual income of the borrowers was roughly SR 32 000 (which is above the average annual income of the intended target group: SR 6 000 - 12 000). Thirty-two rural poor women participated in the crafts sub-project (a total of 60 participants were targeted). Twenty-five new bee-keepers were trained (out of a 100 targeted). Sixty-six of the 120 families were allocated land under the Blocker Schemes and more than 40 of these families had been granted access to irrigation. Fifty-three small farmers received training, and in all 21 project-related staff were provided local and overseas training.
Irrigation and drainage schemes (Small Farm Development): These consist of small dams, reservoirs, and pipes for distribution of water to farms at Amitie (Praslin), Anse Boileau and Port Glaud which have been completed and are operational. Farmers connected to irrigation facilities have benefited with increased output: at the end of 1995, production of vegetables increased by more than 200 percent from 1991, and, as for the output of fruits, a nearly 400 percent increase was registered over the same period. Many farmers have received training in fertilisation and have utilised the water pipes to apply both water and fertiliser to the crops efficiently, which have contributed to improving crop yield. Few farmers are still awaiting connection to water supply (especially at Anse Boileau and Amities) - the pending requests for water connections are likely to be granted within the first half of 1997. In all, so far 65 hectares (ha) of land are under irrigation, as against a target of 86 ha. The remaining 21 ha will also be under irrigation by the end of 1997. The establishment of an Irrigation, Drainage and Infrastructure Unit has ensured a basic framework for the operation and maintenance of the irrigation schemes.
Feeder roads (Small Farm Development): 1.8 km at Anse Boileau and 0.4 kilometre at Val d‘Endore of access roads have been constructed and rehabilitated. However, due to unexpected escalation of costs, the target of 3 km of road rehabilitation and construction could not be met.
Land Surveys (Small Farm Development): Surveying had for a period of time caused a bottleneck in the development of the Blocker Schemes, mainly due to the lack of experienced technical staff within the Ministry of Community Development (MCD). But with EGP support and funds, which were used by MCD to contract private surveying companies, the task was expedited. Currently, the survey work in all the four Blocker Schemes has been completed.
Land Allocation (Small Farm Development): A land allocation committee oversees the land allocation process. As mentioned, a total of 66 new families were allocated plots. Moreover, 122 old farmers were authorised to stay on their existing farms. At the end of 1996, there were still 54 vacant plots to be allocated, while more than 100 applications for the land had been received. Generally, the "new farmers" in the scheme are the poor, unemployed, landless and the youths who seriously want a career in farming. The "existing farmers" are the original farmers who are on "matured" farms. The latter are farmers who already enjoy the fruits of their labour and are generally better-off and older. Due to the delays in survey work, there has been a backlog of applications for farm land. However, since the surveys have now been completed, the processing of the applications has resumed and allocation will soon be finalised. GOS assured the evaluation mission that the remaining plots would be allocated at latest by mid-1997 and the full target of land allocation under the project would be realised.
Lease Agreements (Small Farm Development): As per project design, land is on leasehold for a tenure of 5 years at a rental rate of SR 108 per acre. Long-term lease is conditional on continuous cultivation of the farmland. There has been a delay in the signing of Tenancy Agreements, mainly due to the many deliberations on the terms and conditions of the Agreement, particularly the rental rate. Agreement terms are now finalised.
Input Storage, Distribution and Markets: Activities envisaged at appraisal under this sub-component have been implemented successfully. As agreed, a central store has been constructed in Victoria for the repackaging of seeds, fertilisers, chemicals, pesticides and other agricultural inputs. Office and parking facilities have also been constructed. Moreover, one retail store has been renovated on Mahe as expected and office space at the extension office at Amities (Praslin) has been upgraded. Four chillers for seed storage and other store equipment have also been installed in the retail stores. The central and retail stores appear to contain sufficient supplies. Two vehicles were procured using earmarked EGP resources to support storage and distribution activities. A computerised Inventory Stock Control Management System has been installed in the main store, which is expected to improve efficiency in overall management of stocks and stores. In addition to the above infrastructure, the loan agreement was modified during implementation to allow for the construction of four small rural markets, two on Mahe, and one each on Praslin and La Digue (in June 1992, IFAD was advised that funding for the renovation of the other retail stores was no longer necessary since the Food and Agricultural Organisation of the United Nations - FAO - had provided grant funding for the purpose. GOS then requested IFAD to reallocate the funds for construction of the rural markets). On the whole, the construction of these markets has provided an increasing number of farmers and fishermen with the opportunity to display and sell their produce.
Extension Support Services: There are 6 extension officers and each officer provides advice to 80 registered farmers in 6 agricultural districts. Extension officers visit each farmer at least once a month, and in 1996, compost making, terracing and fertiliser application techniques made up the primary extension themes. Extension officers also meet amongst themselves once every fortnight to exchange experiences and discuss problems. Sometimes a technician or a subject matter specialist is invited to such sessions. All 6 extension officers have been provided with local and international training to upgrade their know-how and skills. Extension personnel organised seminars and workshops, and in all, more than 50 farmers were trained in a range of related subjects, including soil and water conservation, irrigation and drainage methods, as well as pesticides and chemicals application. Moreover, on-field trials and demonstrations were also held. In general, the technical assistance and training provided to the extension staff have tended to steadily improve the capability of the extension service, while strengthening its contact with farmers and improving communications with the research wing.
Research and Development: The Soil and Plant Diagnostic Laboratory has been functioning since February 1994. A vehicle purchased with EGP funds is being used for site visits. An Atomic Spectrometer for soil analysis has also been procured. Furthermore, all equipment and re-agents which were stolen or destroyed by vandalism have been replaced and the laboratory is now fully operational and well equipped. Technicians at the laboratories have been provided training in USA in computer simulation for crop growth and nutrient management. The MAMR is seriously reconsidering its policy of providing soil and plant analysis free of charge due to shortages of resources to purchase the reagents necessary to sustain the operations of the laboratory.
Coconut Rehabilitation and Cinnamon Pilot Project: Coconut (copra processing) and cinnamon rehabilitation pilot projects were to assist in the promotion of small enterprises among the rural poor. The rehabilitation of coconut trees is limited to 3 ha of coconut grove. Coconut rehabilitation is no longer a priority of the government, largely due to the negligible international demand for copra from Seychelles. However, following pressure from some environmentalist groups and the tourist industry (who fear the potential negative effects of the disappearance of coconut trees from the country's landscape), the government agreed to rehabilitate a few ha of coconut plantations. With regard to the cinnamon pilot project, EGP funds were used for the renovation of a cinnamon drying kiln, which is being operated profitably by a private company (who have leased the kiln from the Ministry of Industry), creating about 60 jobs in harvesting and drying cinnamon bark for export.
Agricultural Production: The IEM noted that EGP has successfully assisted in the overall development of the Blocker Schemes, specifically in terms of land allocation, provision of improved extension support and dissemination of knowledge about new technologies, input supply and distribution, research facilities, as well as the enhancement of the irrigation and drainage systems, and the rehabilitation and construction of access roads. These factors have contributed to agricultural production, which are reflected in the national agricultural figures of the Agricultural Planning Section of MAMR. The latter announced in 1996 that imports of fruits and vegetables have fallen from 60 percent to 40 percent. The incremental production mainly originated from the Blocker Schemes. Crops grown and marketed successfully include a wide range of vegetables and fruits, such as tomatoes, eggplant, capsicum, cucumber, pumpkins, cabbage, beans, sweet potatoes, pineapples, mangoes, water melons, etc.
Income Generating Activities (IGAs)
Bee-keeping: Bee-keeping activities began in 1992, but were discontinued after 1994 due to a change in the priorities of MAMR and because the latter was unable to provide adequate technical support to the bee-keepers. However, in all about 25 new bee-keepers were trained (target was to train 100), 2 bee-houses were constructed and only 47 (out of 1000 targeted) modern hives were distributed. Beneficiaries who used the new hives experienced a significant increase in honey production (the average yield of a hive increased from 5-9 kilograms per year since the beginning of the project till 1994). The benefits of this activity have been shared by all the participants and it seems no special emphasis was given to the IFAD target group. Following a survey undertaken by MAMR in 1995 on the subject of bee-keeping, the latter is perceived as an important activity (based on an increased local and international demand for good quality honey), and therefore the Ministry is trying to revive and promote the art of bee-keeping.
Crafts sub-project: This activity was conceived by the MESA, and the MTR endorsed EGP's involvement in the sub-project. Since October 1995 several unemployed women have been involved in the programme (implemented by MESA), which is intended to provide training to develop skills in cottage-industry type of activity, including sewing, soft toy making, embroidery, handicraft development, tailoring, etc. After graduating from the one year programme, women are expected to begin their own small enterprises with assistance from the Ministry. EGP has provided a pickup vehicle and placed an order for 28 sewing machines (as agreed at sub-project inception) to support the programme, which will extend beyond the closing of IFAD's loan.
So far, 32 ladies of the 60 targeted have participated in the training activities; the training sessions last a full day and are held once a week for a one year duration. The trainees are based in four districts and training space is provided in community centres provided by the district administrations. The current results of the training are very encouraging with some crafts being sold in local trade fairs, as well as in the Home Industries Shop in Victoria. At the end of the course, the sewing machines will be sold to the trainees and a revolving fund will be established with the proceeds to support other employment generation projects identified by MESA.
Agricultural Small-Scale Income Generating Activities: The appraisal report identified several possible agricultural IGAs, namely pig fattening, cattle fattening, and poultry production. However, with the exception of bee-keeping, achievements of this component have not been significant due to a conjunction of factors, including lack of technical assistance and unfavourable regulations. For instance, with regard to pig fattening, people wanting to undertake such an activity require a government permit, which are issued only after site visits have been undertaken by MAMR, MCD, and MOH personnel for approval. Moreover, slaughtering and marketing of pigs are done only by the SMB (private slaughtering is forbidden). These regulations are intended to safeguard public health and the environment, but nonetheless discourage the informal sector.
Credit: This component of the EGP had 2 different lines of credit, one to be provided through the Development Bank of Seychelles (DBS) for agricultural purposes and another through the Seychelles Credit Union (SCU) for off farm income generating activities.
The DBS, a parastatal institution whose interest rates are subsidised, never became active in the EGP, mainly because they were unwilling to relax their lending criteria (borrowers are required to make an equity contribution equivalent to 25% of the loan amount; strict collateral requirements; minimum loan size of SR 15 000). DBS insists on full control of its lending practices and approval process, and views MAMR approval of agricultural projects as a bottleneck in the loan processing stage. Due to these reasons, DBS has also refused a substantial sum for on-lending under African Development Bank's (AfDB) Integrated Agriculture Development Project (IADP).
With the support of an IFAD grant of USD 62 000 for credit, the SCU, a broad based co-operative bank, has provided 80 loans, totalling SRs. 1.4 million (roughly USD 304 000), which represents an average loan size of SR 17 500 per beneficiary. Since DBS did not participate in the project, SCU also provided loans for agricultural purposes, in addition to those for off farm income generating activities. Hence, of the 80 loans made, 25 were for agriculture, and out of the total SCU EGP loan portfolio, about 30 percent of the borrowers are women. Forty three loans were taken for establishing new ventures (12 of which were taken by women). The interest rate of SCU loans was 11 percent per annum, which was the same it charged its members for loans from its regular portfolio. However, in the agreement with the SCU there was no special provision to cover administrative costs associated with the management of IFAD's credit line. As a result, SCU found itself having to cover a large portion of such costs through its regular operations. As of December 1996, 75 percent of the loans have been repaid and SCU is making concrete efforts to improve this aspect of their operations. However, SCU's overall loan management appears sub standard; SCU only has 2 field officers who are responsible for loan appraisals and its capacity to monitor loans and follow up on repayments needs to improve. These issues contributed to limited SCU attention towards IFAD's target group, both in terms of credit delivery and follow-up support.
Of the total grant of USD 62 000, a balance of USD 13 000 remained at the time of the IEM, and UNOPS recommended these funds be used for training of SCU staff and for the expansion of field support to loanees regarding credit management, which in turn would improve the use of loans and repayment rates. Finally, SCU has engaged a private auditing firm to prepare an independent audit report specific to their activities under the EGP project.
Marketing Management Information System: The project design provided for a marketing intelligence officer through UNDP assistance to initiate a market intelligence system to provide information to MAMR and farmers on production, imports, market and retail prices and availability of produce. The marketing information system has not been implemented because agreement with UNDP about financing this activity fell through. Hence, neither has training nor extension support been provided in produce marketing.
Project management, monitoring and evaluation
Project Management: A Project Management Unit (PMU) was set up with the requisite equipment. However, in the early implementation period the Project Manager (PM) was not allocated a deputy and secretarial support was provided only on a part-time basis. The PM was granted short-term international training (PM went to Israel to learn more about income generating activities and visited IFAD projects in Kenya to familiarise herself with IFAD project management and co-ordination arrangements, including preparation of annual work programme and budget, monitoring and evaluation, as well as the operational procedures of UNOPS). MAMR's accountant dealing with EGP accounts was provided overseas training in budgetary management. The same accountant was also trained in UNOPS operational procedures for loan processing and disbursements. During project execution, several technical working committees (by subject matter) were formed, which greatly assisted in co-ordination of project activities and helped focus implementation. EGP activities and performance gained much through the full-time supervision and follow-up on the part of the PM, who, as mentioned, in the initial project period was requested to dedicate time to other MAMR duties. Lastly, EGP sponsored several other international training courses/workshops for staff working in institutions/departments/ministries related to the project: a total of 21 staff were trained in the following activities: apiculture (1 person), monitoring and evaluation (1), finance (3), extension (6), research (5), soil laboratory technician (1), and phytosanitory technicians (4).
Monitoring and Evaluation: No formal Monitoring and Evaluation (M&E) system (or unit) was set-up in the project, as this was not envisaged during appraisal. However, monitoring and reporting was undertaken by the PM, and given the absence of formal data collection mechanisms, the task was performed fairly well. Early on in project implementation, UNOPS assisted project management in defining progress indicators for reporting purposes, but associated data was not collected in a systematic manner, largely due to lack of personnel in the PMU. A participatory MTR workshop conducted in 1994 was instrumental in refocusing project design and strengthening co-ordination amongst the implementing agencies. Furthermore, a good Baseline Survey was undertaken by MAMR in 1992, with special focus on the small farm development component.
The overall sustainability of EGP will depend largely on MAMR's ability to anticipate and respond to the evolving needs of the project's activities. With regard to the small farm development component, the EGP has made significant progress in defining the terms of lease agreements (of the lands) for small farmers, and the addition of a clause to the agreements will now enable farmers to renew the agreement after five years (provided conditions of tenancy have been met - that is, 80 percent of the land is used for agricultural purposes). This will encourage long-term farm investments and small farm productivity. The establishment of the Irrigation, Drainage and Infrastructure Unit will help in sustaining the operations of the irrigation schemes. Water fees charged to farmers are placed in a revolving fund for the maintenance of the irrigation infrastructure. GOS has preferred to control and manage the irrigation system as a public utility due to the lack of experienced farmers' organisations or private management. Moreover, the fees charged for lease of the lands are also used for the sustainability and upkeep of other MAMR services, such as extension. For crop research activities, the training of new technicians and MAMR's decision to introduce a user fee to meet part or full cost of research services will ensure future sustainability of this service. To promote the sustainability of the input distribution system, MAMR has decided to lease the distribution store at La Digue to a private operator on a trial basis, with a view to ultimately leasing out the remaining stores as well. The rural markets constructed are being sustained through rents that are charged to farmers who use the market facilities for selling their produce. The sustainability of the crafts programme will be ensured through a revolving fund that has been created by MESA: the equipment purchased through the EGP for the crafts programme will be sold off at the end of the training and the proceeds will be deposited into the revolving fund to support other similar employment generating projects. Finally, SCU's policy to suspend additional loans till 95% of outstanding loans have been recovered will enhance the sustainability of IFAD's line of credit.
Given that the project was implemented during a period of rapid macro-economic and political evolution, it is concluded that the overall performance of the project has been fairly satisfactory. With specific regard to disbursements and physical implementation, the project did indeed do very well. At the time of the IEM, around 96 percent of IFAD loan funds had been used. Most of the construction and/or rehabilitation of infrastructure has been achieved, and procurement of equipment and other goods was undertaken in a timely manner. Technical assistance and training was provided both to beneficiaries and to project personnel, equipping them with additional expertise. However, from a purely developmental perspective the project could have achieved more, and with the exception of the crafts sub-project, it appears that no special attention was given to IFAD's target group; a large proportion of benefits seems to have gone to people whose incomes were above the level of the intended target group. This was due to a combination of factors, including: lack of technical support from MAMR (particularly in the case of extension services); a severe shortage of staff at the Seychelles Credit Union capable of identifying IFAD's target group for credit purposes, as well as monitoring the loans to ensure that they are being used for the intended purposes; and the absence of a referral system to direct the potential beneficiaries to SCU. For the success of future projects, more emphasis should be laid on targeting and beneficiary participation. In addition, the establishment of a formal M&E system would greatly assist in project implementation. A realistic assessment/evaluation of the capabilities of the proposed institutions needs to be undertaken prior to their involvement in IFAD operations.
General
In view of the high costs for loan formulation and administration in relation to loan/project size in Seychelles, IFAD and GOS could consider ways to reduce these costs when defining a future co-operation framework. One possibility is to embark on interventions that would attract sufficient cofinancing, either from bilateral or multilateral sources, coupled with an arrangement where joint project preparation and appraisals could be conducted. As far as IFAD is concerned, this would reduce the ratio of funds used for project formulation to funds used directly for project implementation and investment. Such arrangements may require a higher degree of flexibility on IFAD's part, but the Fund should not compromise on its focus and mandate towards poverty alleviation and rural development. Related to this suggestion is for IFAD to cofinance projects or components of projects from the pipeline of other donors, those which broadly match IFAD's type of lending.
IFAD's new strategy in Seychelles must be in harmony with the government's priorities, taking into account the uniqueness of the country's economic framework and poverty profile (where income per capita is relatively high, agriculture has limited scope due to restricted availability of arable land, and where the rural poor are not full-time farmers). Moreover, with the AfDB's IADP presently under implementation, it would appear that typical agricultural development interventions such as the EGP would duplicate ongoing efforts, bypassing majority of the rural poor. Hence, when selecting future investment activities, IFAD must ensure that the areas targeted would complement the overall development strategy of the country, and that sufficient incentives are apparent to the beneficiaries to keep them committed to project activities. Based on EGP's experience, an area where IFAD's potential involvement would of value-added is in the development and support of micro-enterprises.
As an island economy, Seychelles suffers from both geographical and structural constraints which include: (i) a very small market size making it difficult for them to benefit from economies of scale; (ii) limited accessibility to international capital markets, especially for projects/activities aimed at tackling poverty at grassroots level; (iii) a heavy reliance on the foreign exchange gained from tourism and fisheries; and (iv) the country's remote geographic location. Moreover, the rate of economic growth has been declining over the past several years. These are some of the main factors which contribute to making the country highly vulnerable to external financial shocks. Hence, the IEM supports GOS's request for IFAD to consider lowering the interest rate of future loans, from ordinary to intermediate terms.
Small Farm Development
The mission recommends that MAMR undertake a feasibility study in marketing of agricultural products, especially fruits and vegetables. Such a study would provide MAMR and the government with data and analysis of the potential of marketing fruits and vegetables, help identify local, regional and extra-regional markets and give indication of prices, extent of demand, quality requirements, packaging, labelling, as well as reliability of steady supply. Transport facilities and associated requirements should also be reviewed. On the agriculture production side, such a feasibility study could assist in developing market-oriented policies and strategies both for commercial and smallholder farmers, as well as focus extension services towards those markets that are identified and pursued.
It is recommended that the GOS organise a special workshop for farmers to disseminate knowledge and information about the best practices for environmental conservation, as well as the detrimental consequences of poor environment management on agricultural production in general. During such a workshop it is important to include subjects such as water management and soil conservation (which is being practised only sporadically), as well as integrated pest management (which could be combined with information on traditional techniques as alternatives to pesticides and chemicals). Optimal management and disposal of agricultural residue may be an important subject to cover.
Extension
It is recommended that extension officers be provided with additional on-the-job training in non-traditional extension areas, such as book and record-keeping, small-scale agro-processing, marketing, farm economics, and other such areas. This would be useful to the target group, who would benefit from advice in areas that are important for overall agriculture and farm management. The provision of such technical advice to farmers would enable the latter to assess the profitability of various farm activities and would lead to overall better allocation and management of scarce resources.
Credit
As recommended in supervision missions, SCU should continue to focus on establishing a sound framework for loan recovery before beginning additional disbursements. Loan recovery provisions should include training of borrowers in loan management, recovery of outstanding loans and a temporary halt to additional lending until approximately 95 percent of the credit line has been recovered. This would also ensure that additional lending would be better targeted, more closely meeting the lending objectives of the EGP line of credit.
Future IFAD projects should include detailed provisions for monitoring disbursement of loans to the target group. These monitoring provisions should be clearly stated in the loan agreement. Where required, institutional support (including training) should be provided to the lending institutions and collaborating institutions such as MAMR to strengthen their capacity to identify the target group for credit and to appraise, monitor and manage loans. This kind of training should take place early in project implementation.
Income Generating Activities
Because of the prior investments made as well as the potential and current demand for bee-keeping, MAMR should consider placing renewed emphasis on this activity. It is recommended that MAMR promptly either: i) appoint the skilled bee-keeping technician (currently part of the Ministry's overall extension force) to provide training to other extension staff so that they can cater to the need for bee-keeping advice and promote the activity; or ii) appoint a new part-time person with the requisite know-how to fulfil this role.
Once the people participating in the crafts sub-project have concluded their training and are equipped with the appropriate skills, MESA should ensure that appropriate and timely support is provided to them for initiating and developing small enterprises. This should include provision for additional advice and support on marketing, procurement and maintenance of equipment and business planning, among other things.
Monitoring and Evaluation
It is recommended that future IFAD-assisted projects and programmes in Seychelles include an M&E system that would be set up at project inception with appropriate technical assistance. Such a system would not only ensure continuity of flow of information for implementation purposes and management decision-making, but also assist in the monitoring of beneficiary participation with a focus on gender issues. The M&E system would also be of high value for eventual impact evaluations. Moreover, a participatory approach should be adopted to M&E, whereby the beneficiaries are consulted in M&E design, data collection and evaluation; this would help project management to stay attuned to the beneficiaries' needs and perceptions.
Participation
Future project design activities should include a participatory project preparation process to build consensus on core design issues, to ensure proper targeting, and understanding of IFAD's specificity, and donor co-ordination. A participatory project design workshop could be undertaken which would include analysis of opportunities and gaps related to potential areas of interventions as well as joint planning of interventions to address these gaps. More specifically, a future project could also include provisions for: (i) a participatory project start-up workshop to bring together key stakeholders to jointly plan and co-ordinate detailed work plans for implementation; (ii) annual planning and review workshops to strengthen co-ordination among concerned implementing agencies; (iii) training MAMR extension staff in participatory rural appraisal (PRA) techniques to strengthen their capacity to involve farmers in agricultural group formation, as well as in planning and implementing agricultural activities; and (iv) strengthening the Farmers' Association so that the latter can help to organise farmers in group based activities.
Potential Thrusts for Future IFAD Lending
During the IEM several thrusts for future IFAD investment were suggested by MAMR and the Ministry of Foreign Affairs, Planning and Environment (MFAPE). These tended to confirm the findings of the IFAD Country Strategy and Opportunities Paper (COSOP) of December 1995:
Strengthening Agricultural Extension: Several proposals were received during the mission to strengthen extension services. These included: i) restructuring of extension services through the introduction of "agricultural assistants" to better link extension services to full-time farmers and "backyard" agriculturists; ii) developing MAMR human resources through Bachelors level training in agriculture and agricultural certificate courses; iii) strengthening the Soil Fertility Management Unit; and iv) promotion of tropical fruit cultivation on household plots.
Small Scale Agro-Processing and Marketing: The mission spoke with several individuals and government officials about the potential for small-scale agro-processing for local consumption and the tourist market. Business concepts covered vegetable and fruit processing, juice production, spices and honey. IFAD might address constraints related to lack of marketing and packaging know-how, reduction of post-harvest loss, provision of technical advice on quality control, and access to appropriate small-scale processing technologies.
Strengthening Artisanal Fisheries: There are about 1000 fishermen engaged in artisanal fisheries. On the whole, these fishermen fall within IFAD's target group with high daily and seasonal variability in catches ranging from SRs 1,500-4,000 per month. Activities in this area could include institutional strengthening for the Seychelles Fishing Authority (SFA), training programs for fishermen and unemployed youth in new fishing techniques, small business management, boat building and fish processing. Credit could be provided for fishing equipment and other related activities.
In addition to the above-mentioned areas, judging from the results of the IEM and also taking into account the findings and conclusions of the COSOP, the evaluation mission is of the opinion that IFAD's involvement in income generating activities would also be a viable alternative. This would very much be in line with the government's current priority to support employment generating activities as a response to rising unemployment rates, which have grown from 7 to 10 percent from 1993 to 1995 (this is largely attributed to a decline in the growth rate of the economy). Access to compulsory education means that a large number of students are on the job market every year. In addition, numerous youths drop out of school every year, and although they do not possess any specific training or skills, they are in search of employment. Furthermore, nearly 50 percent of households are headed by women who also seek jobs. Many of them simply cannot afford the transaction costs (for transport, day-care for children, clothes) which would enable them to be employed far from their homes. Hence, also taking into account the initial success of MESA initiated crafts sub-project, IFAD's support in this area would reinforce GOS's efforts in reducing unemployment and raising incomes through employment generation activities, which includes the promotion and support of micro-enterprises and cottage industries.
When planning future activities, IFAD should take stock of it's previous experience in Seychelles with regard to targeting. It is important to have an accurate picture of the target group. In the case of the EGP the following issues were dominant: i) the target group definition was not transparent to project implementors; ii) its evolving needs were not perceived; iii) mechanisms for beneficiary participation were inadequate; and iv) the limited capability of the involved institutions. It is critical to ensure that such issues are addressed right from the beginning of the project to support proper targeting and beneficiary participation. During formulation, a survey of the potential target group should be conducted to ascertain their characteristics and needs. Surveys may also be conducted during the course of implementation to assess their evolving needs. In order to improve beneficiary participation, social and community organisations should be involved in the project as they provide a useful link between project management and the beneficiaries. For instance, in Seychelles the Farmers' Association, which was recently re-established, can play a significant role in this regard. In addition, targeting becomes easier when group-based approaches (for instance farmer groups, fishermen groups, etc.) are adopted. Although Seychelles' farmers do not have a culture of operating in groups (as compared to their peers in mainland Africa), they are slowly appreciating the usefulness of group-based activities. It would be unwise for IFAD to further invest in development projects whose broad objectives are to increase the incomes of the poor, without addressing the fundamental issues that would make such an intervention truly successful. Therefore, in the Seychelles context, to guarantee effective targeting certain issues need to be focused upon, including institutional strengthening, particularly through the provision of financial services as well as skills through training and upgrading. Targeting of EGP suffered precisely due to the lack of such essential services.
In a small country like Seychelles, it is even more important to carefully assess the capabilities of potential implementing agencies, particularly in terms of their resources and personnel, as well as their commitment to and understanding of IFAD's mandate. In the EGP, the generally limited capacity of the project implementing institutions was a cause for much concern (for instance, simply due to lack of staff the SCU could not pay much attention to IFAD's line of credit, thus leading to loans being allocated to candidates who did not meet IFAD's target group criteria of income). Moreover, the large number of components in the EGP has also led to difficulties in coordination amongst the institutions involved in the project. Hence, in countries with limited implementation experience and expertise of both government and the private sector to execute ambitious projects, IFAD should carefully consider the number of components (in a project) to finance. Too many components may cause implementation and organisational deficiencies, as well as lead to over-emphasis on the project's physical and financial progress at the expense of the desired socio-economic impact of the project.
The economic and political environment within which projects operate are of utmost importance. The EGP was designed at a time when Seychelles' economy was being driven by the government sector and the transition to market-oriented economic policy that took place during the course of the EGP demanded refocusing of project objectives and activities. This evolution in the operating environment certainly contributed to some missed opportunities, especially with regard to targeting, and hence, the final impact of the EGP. For projects to be successful in achieving their socio-economic objectives, the need for a stable economic framework and political setting cannot be overstated. However, since it is difficult to anticipate such changes at appraisal, IFAD projects should be designed to ensure maximum flexibility to respond to the changing needs in the operating environment.
Concerning credit there are several lessons to be learned from EGP's experience with DBS and SCU. Firstly, credit institutions need to be selected carefully and with a clear and realistic understanding of their commitment to operating IFAD's lines of credit. In the case of the DBS, the latter withdrew from the project after the loan agreement was signed, which prompted the need for loan amendments and reorienting implementation and project objectives. Secondly, the overall institutional capacity and experience of credit agencies need to be very thoroughly assessed prior to involving them in IFAD credit operations. In the case of EGP, SCU had inadequate institutional capacity to reach the target group and in particular to identify, screen, and supervise eligible borrowers who met the target group criteria. Finally, issues related to credit recovery should be anticipated in project design, which should include realistic plans for credit recovery.
The absence of a formal M&E system reduces the effectiveness of project management. M&E systems help clarify project objectives and assist in focusing project activities to the defined target group. Moreover, data collected during routine monitoring exercises can provide a constant insight into the constraints of the target population, and by involving the latter in participatory monitoring a sense of ownership in the project may be instilled, an element vital for final project success. In the EGP, the lack of an M&E system led to deficiencies in participation, as well as added to the difficulties in project management and its decision-making capabilities. All future projects/programmes need well-designed and implemented M&E systems, which ought to be made operational as early on in implementation as possible.