Executive summary

A.  Introduction

In December 2005, at its eighty sixth session, IFAD's Executive Board requested the Office of Evaluation (OE) to undertake a Country Programme Evaluation (CPE) in Brazil in 2006/7. OE has only undertaken two project evaluations in Brazil in the past, and this is the first time the division conducted a CPE in the country.

Evaluation objectives, methodology and process. The main objective of the evaluation is to: (i) assess the performance and impact of IFAD operations; and (ii) generate findings and recommendations that would serve as building blocks for the preparation of the next Country Strategic Opportunities Programme (COSOP) for Brazil, a task that will be undertaken following the CPE by IFAD's Latin America and the Caribbean Division (PL). To achieve its objectives, the CPE assessed the quality and implementation of the COSOP, as well as the performance and impact of IFAD operations (including non-project activities¹) in the country.

A CPE preparatory mission took place in February 2007, which provided an opportunity to discuss the overall evaluation approach, methodology and process. The main CPE mission took place in April-May, which visited IFAD-funded project areas, held discussions with beneficiaries, project staff, state and federal government authorities, international organizations and others. As per usual practice, it is important to underline that PL prepared in July 2007 a self-evaluation of IFAD operations in Brazil as an input towards the CPE. Finally, a CPE national roundtable workshop was organised in Brazil by OE, in close collaboration with the Government of Brazil (GOB) and PL in November 2007. This learning workshop offered the opportunity to discuss the main results of the CPE and provide the basis for the preparation of the evaluation's Agreement at Completion Point² (ACP).

Economy and poverty situation³

Agriculture is an important source of exports and employment in Brazil (even though its share in Gross Domestic Product (GDP) is around 4.5 per cent). Family agriculture accounts for 85 per cent of farms, 30 per cent of the farming area, and employs some 14 million people in more than 4 million farms. In the North-East (NE), family agriculture is even more prominent (88 per cent of farms, 44 per cent of the farming area) and employs 7 million people. The agri-business complex has grown to almost 30 per cent of GDP and rural non-agricultural incomes and employment have also expanded. Rural poverty concentrates mainly in the NE, where poverty incidence was 30.6 per cent using the extreme poverty line and 76.3 per cent using the upper poverty but is also severe in the North, where corresponding figures are 22.1 per cent and 71.1 per cent.

Brazil's Gross National Income (GNI) per capita is US$4 730⁴, which situates it in the upper middle income country category according to the World Bank classification. Central government expenditure in 2006 was US$213 billion (20 per cent of GDP, up from 19 per cent in 2007). Agriculture received US$2.7 billion and "Agrarian organization", which is mostly land reform, US$1.4 billion. Rural Development (RD) policy in Brazil is distributed among different government entities at the federal and state level. At the federal level, the National Programme for the Strengthening of Family Agriculture (PRONAF) is the main programme in support to family farms with an allocation in 2007 budget of US$1.14 billion. In 2004 Brazil received US$285.1 million in Official Development Assistance (ODA), that is, less than 0.1 per cent of the country's GDP, an approximately US$1.6 per capita. The principal sources of multilateral development assistance are the World Bank and the Inter-American Development Bank (IDB). The World Bank annual disbursement in rural development in the NE was US$120 million compared to IFAD average annual disbursement of US$5 million for the CPE period.  

B.  IFAD Strategy and Operations in Brazil

The main strategic directions of the 1997 COSOP were the following: (i) undertaking policy dialogue; (ii) promoting access to land; (iii) support to the Government's smallholder sector policy and programme (the PRONAF); and (iv) focusing IFAD assistance to the NE region of the country. The COSOP included four "strategic choice of instrumentalities": (i) strategic partnership with the Federal Government; (ii) strengthening human resource development; (iii) building new approaches to deliver critical support services; and (iv) off-farm activities including microenterprise development. 

The COSOP had a good presentation of the economic context and policies. It also articulated in a succinct manner priority areas for IFAD that would guide its operations in the country. However, it did not include an adequate institutional analysis, in particular a wide enough assessment of the opportunities and constraints of working with the Federal and/or State governments. Moreover, the COSOP was not updated for more than a decade, in spite of the evolution in key areas for agriculture and rural development in Brazil, such as the major Fome Zero programme launched by President Lula at the beginning of his first term in 2003. It is however fair to note that – as per the prevailing practice at the time (i.e., in the 1990s) – few resources were provided to Country Programme Managers (CPMs) for the development of COSOPs, which were perceived by IFAD's management as largely internal documents for guiding the development of IFAD's project pipeline.

In terms of its main ‘strategic thrusts' and ‘strategic choice of instrumentalities', the COSOP is in many ways consistent with the overarching priority areas of IFAD's 2002-2006 strategic framework⁵ and its policy during the 1997-2002 period. While its emphasis on productive assets and technology as well as financial assets is similar to the objectives in the strategic framework, the latter also focused on the promotion of market linkages, which was not sufficiently treated in the Brazil COSOP of 1997⁶. While the COSOP is consistent in some areas with the PL regional strategy of 2002, such as policy dialogue and agricultural production, it does not adequately address other key priority areas of the regional strategy, such as markets, partnerships, learning across regions and the development of new products, gender issues, and empowerment of the rural poor. The COSOP also did not devote any attention to working with indigenous peoples, an area in which PL has accumulated considerable experience throughout the Latin America Region.

In terms of operations, IFAD has funded six projects in Brazil for a total loan amount of US$142 million. In addition, around US$277 million have been provided in counterpart funds, bringing the overall portfolio costs to around US$419 million. All IFAD loans have been provided on ‘ordinary' lending terms (LT), and the average loan size has been US$23 million. The United Nations Office for Project Services (UNOPS) was cooperating institution in four projects, the World Bank in one, and the sixth one is directly supervised by IFAD.

Though Brazil has around 30 per cent of all the rural poor living in the Latin America and the Caribbean Region, it only received around 7 per cent of regional lending from IFAD in the period. More specifically, merely three new projects were approved after the COSOP was adopted in 1997 till today, for a total of US$80 million. On another issue, although Brazil was included in the Direct Supervision Pilot Programme, its exclusion from the important Field Presence Pilot Programme (FPPP) is a further manifestation of the inadequate attention provided by the Fund to the country. In fact, the recent OE evaluation (2007) on the FPPP concluded that country presence is an important factor in furthering IFAD's overall objectives in partner countries, especially but not only in terms of contributing to better implementation support, policy dialogue, partnership building and knowledge management.

C.  Performance and Results of IFAD Operations

Generally speaking, IFAD-funded projects have achieved good results in promoting water security leading to decreases in animal morality and increases in food security, enhancing agriculture development⁷ and natural resources management, as well as in building grass-roots institutions and involving non-governmental organizations (NGOs) in project activities. Off-farm activities took place in the form of support to traditional handicraft development and other artisanal activities. In general, IFAD supported operations have contributed to increasing incomes of the rural poor in the NE and facilitated their participation in rural development processes, including access to education, infrastructure (e.g., rural roads) and other support services, such as rural finance through the PRONAF and agricultural credit cooperatives. Some achievements in terms of empowerment of women may also be attributable to IFAD, for example, by providing women with identity documents and allowing them to participate in government-led development initiatives. For a variety of reasons, such as e.g. inappropriate choice of technology, the costs of some activities (e.g., construction of roads or cisterns) were higher than average, which in more recent projects were reduced by encouraging the wider involvement of contractors both from the private sector and NGOs.

Although there were some sporadic initiatives in recent years, the development of markets has not received systematic and explicit consideration in IFAD operations. Similarly, IFAD has not been able to provide a meaningful contribution to land reform issues, partly because of the complexity and highly political nature of the topic and the Government's own major involvement in land reform, thus limiting the opportunities and role a relatively small international agency like IFAD could play. Monitoring and evaluation systems at project level have been weak, which also raises the issue of weak linkages between IFAD loan and grant funded programmes. In this regard, for example, IFAD has for around ten years provided various grant funds to PREVAL⁸, a regional programme with the aim of strengthening monitoring and evaluation capacity in the Latin America Region, focusing especially but not only on IFAD-funded projects and programmes. There are also other examples indicating that linkages between grant and loan projects have not been particularly good⁹.

IFAD-assisted operations have contributed to introducing some location-specific innovations. These can be grouped in two categories: (i) those concerning the general approach to rural development, for example, a shift from a top-down to a bottom-up approach, including a demand-led system to select investments; and (ii) those related to technology and infrastructure focusing on low-cost, simple, easy to absorb technologies. However, the promotion of innovations has generally been ad-hoc, without due consideration for linkages with knowledge management, policy dialogue and partnership building, thus limiting the overall opportunities for upscaling and replicating successfully tested innovations promoted by IFAD.

Sustainability is fairly encouraging. Government is lending its weight behind the PRONAF and the participatory approaches promoted and involvement of communities in planning and implementation will contribute to ensuring the sustainability of benefits. For example, most water infrastructure works -with the possible exception of desalinization plants- are likely to be adequately maintained. The weakest aspect with respect to sustainability is the lack of institutional support for technical assistance, which may continue only as long as projects are providing resources to fund it.

Non-project activities (NPA) were marginal components of IFAD's programme in Brazil. Notwithstanding important recent initiatives at the sub-regional level, policy dialogue was limited, which is particularly of concern given that it was one of the four strategic directions in the COSOP. This may be partly explained by the fact that PL allocated few resources and efforts for undertaking policy dialogue on key topics, as well as a lack of a more permanent country presence which is crucial to engage effectively and proactively in policy dialogue. Having said that, there are some significant recent initiatives in promoting policy dialogue in Brazil, for example, through a grant funded programme to the Commission on Family Farming (REAF). Even though this initiative is too recent for a meaningful assessment by the CPE, it clearly shows great potential for IFAD's collaboration on policy dialogue at the sub-regional level.

IFAD established useful partnership with ministries and institutions both in the federal and state governments. It is particularly noteworthy that a good dialogue and cooperation exists between the Fund and the Ministry of Planning, Budget and Management in Brasilia, which is in fact the coordinating Ministry for IFAD and other international financial institutions. At the project level, there have been some efforts to establish links with agriculture research institutions and only recently have NGOs been involved in IFAD operations. Partnership with international financial institutions and United Nations organizations is particularly weak. IFAD-initiated and financed projects have managed to mobilize two dollars of national resources as counterpart funding for every dollar invested by the fund. However, no cofinancing from international financial institutions or other donor organizations was mobilized by IFAD in any of its operations in Brazil. Likewise, there is no engagement between IFAD and donors on policy issues or any systematic efforts for exchanging good practices and knowledge on rural poverty matters.

Although there have been some activities related to knowledge management, this area too cannot be considered a strength in the Brazil country programme. Even though some knowledge sharing events have taken place among projects, there have been few systematic efforts to document IFAD's experiences on a periodic basis in Brazil or to mobilize relevant learning and experiences from other countries in the region or elsewhere. Moreover, the potential of FIDAMERICA, as PL's central knowledge management instrument, has not so far been adequately exploited in Brazil.

The performance of partners. IFAD provided adequate support in terms of project design and implementation, even though its effort in non-project activities has been generally weak. Moreover, the Fund has effectively undertaken direct supervision in one project, which as per the evaluation by OE of the Direct Supervision Pilot Programme in 2004/5 concluded is an important ingredient for promoting IFAD's development effectiveness. Therefore, an option that PL could have pursued was to expand direct supervision in other recent projects in Brazil following the introduction in December 2006 of IFAD's policy on supervision and implementation support¹⁰. Another issue that is pointed out by the CPE was that the same CPM has been responsible for IFAD activities in Brazil for more than 20 years, which is a constraint in injecting new ideas and cross-fertilisation of experiences. Finally, the main cooperating institution (UNOPS) has performed its functions well, and government performance has generally also been satisfactory. The role and active participation of the Government in IFAD Governing Bodies needs also to be underlined¹¹. One issue the CPE feels has not been given sufficient consideration - by both IFAD and the Government - is in defining more explicitly the complementary roles and responsibilities state and federal governments should play in ensuring wider development results of IFAD-funded activities.

A ggregate Evaluation Ratings of IFAD-funded Projects
and Non-project Activities in Brazil

IFAD uses a scale of 1 to 6, where 1 represents the lower score and 6 the highest.

D.  Conclusions

In spite of the relatively limited resources invested by IFAD in Brazil (compared to the magnitude of government programmes contributing to rural poverty alleviation), the Fund has an important role to play in the country. However, given its upper middle income status, the requirements of Brazil are significantly different from the priorities of low income countries¹³. In fact, although the financial resources provided by IFAD are important, by and large Brazil's interest in engaging with the Fund appears to be largely motivated by the desire to acquire good innovative practices and knowledge on agriculture and rural development activities, as well as due to IFAD's flexibility and low transaction costs. In this regard, the financing of quality projects and programmes that focus in promoting innovative approaches will ensure that IFAD has an even stronger role to play in furthering Brazil's overall efforts towards rural poverty reduction.

Related to the aforementioned, IFAD can play a useful role also as a broker of knowledge, paying particular emphasis to capturing and sharing relevant lessons learned and good practices from its own operations in Brazil and elsewhere to the advantage of agriculture and rural development efforts in Brazil. Having said that, the evaluation found that IFAD has not provided adequate financial resources to Brazil in the last decade especially in comparison to the number of rural poor in the country. Moreover, IFAD excluded Brazil from the important FPPP, and recently did not consider expanding direct supervision and implementation support, in spite of good experiences in this area in the country.

While Brazil is an important country for IFAD where the Fund can play an important role in combating rural poverty, it is evident that IFAD is also important from the Brazilian perspective. That is, increasingly, IFAD is developing into the only international organization working in Brazil with an exclusive focus on rural poverty. This makes IFAD an important agency for Brazil, one which can promote and test - especially through grant-funded activities - innovative solutions to rural poverty reduction, which can then be upscaled and replicated by the Government or other donors. Additionally, IFAD offers a channel for Brazil to further strengthen its geo-political objectives of increasing becoming a premiere regional player, as well as a forum for raising attention to and generating support for its domestic priorities related to rural poverty alleviation.

The evaluation found that IFAD-funded operations have contributed to increasing incomes and improving livelihoods in the NE of the country, even though inadequate attention was assigned to market linkages by the projects under implementation¹⁴ and in supporting indigenous peoples¹⁵. Moreover, while working exclusively in the NE has been consistent with the objectives of the COSOP, rural poor people living in other parts of the country have not been able to benefit from IFAD support. Finally, IFAD objective of promoting land reform has not met with the success initially envisaged.

Finally, IFAD's performance in non-project activities has been weak, and limited resources were devoted to these aspects of the country programme. While IFAD has contributed to introducing some location-specific innovations at the project level, the promotion of innovations has not been an area that has received adequate attention, which is of core importance for IFAD in a large country like Brazil.

E.  Recommendations

Taking into account the fact that Brazil is an upper middle income country, the evaluation includes five main recommendations. These are:

• Strengthen innovation promotion, including knowledge management. Promoting innovative solutions in the area of agricultural technology and market access is central to IFAD's future strategy in Brazil. In particular, IFAD should establish wider partnership using grant funds and ensure that research results are more comprehensively included in IFAD operations. Resources need to be invested to systematically documenting good practices and lessons learned. IFAD should play a specific role in providing knowledge and experiences to Brazil from other countries and regions. A knowledge exchange programme should also be developed with Lusophone countries in Africa and elsewhere.

• Partnerships to support the IFAD country programme. It is important for IFAD to intensify its collaboration with relevant state governments and institutions for project design and implementation. Opportunities for direct lending to state governments should also be explored. At the same time, the Fund must devote sufficient attention to maintaining close dialogue and communication with the Federal Government on all aspects of the Fund's relations with the country. Finally, IFAD needs to support country-led donor coordination and aid harmonisation processes, as well as enhancing partnerships with multi-lateral and bi-lateral aid agencies.  

• Explore other geographical focus and targeting options. In addition to focus on the NE, the Fund should explore possibilities of expanding its geographic outreach to cover the rural poor living in the Northern areas of the country, which manifests similar levels of poverty and has progressed more slowly. In addition, in light of the wide experience of IFAD, and PL in particular, it is recommended for IFAD to identify specific opportunities for supporting indigenous peoples in the Amazon.

• Redefine priority areas of operations. IFAD should continue working in the provision of support services for small farmers in which it has accumulated experience and shown its capacity to innovate. A key new priority area should be further cooperation in the enhancement of market linkages, including promoting access to markets, development of market infrastructure and provision of market information. For this purpose, greater partnership with the private sector is also essential. IFAD should not engage in wider land reform matters, but rather focus on providing support to land reform settlement areas. Finally, the Fund should also contribute to further strengthening rural financial services at the grass-roots level, a crucial area for policy dialogue in which IFAD could support Brazil sharing the knowledge that has emerged from its worldwide experience on the topic; furthermore, through loans IFAD could cooperate in creating or strengthening microfinance entities capable of providing a variety of financial services including savings and non-agricultural loans. In addition, there are good opportunities to expand outreach to the rural poor through retail partnerships i.e. "correspondent banks ", which allow banks to use retail shops for providing remote financial services, e.g. deposits, order payments, at a much lower cost compared to opening a branch.

• IFAD's operating model. As a means to enhancing IFAD's development effectiveness, it is recommended that within the framework of its strategic and institutional vision for the region PL explores the possibility of out posting the CPM for Brazil starting from 2008. Moreover, the options for using Brazil as a sub-regional office covering the MERCOSUR countries (and others) should also be explored. On a related issue, starting from 2008, the evaluation recommends to bring under direct supervision and implementation support the two recently approved new projects in Brazil. Finally, it is important for IFAD to increase (within the overall framework of the Performance Based Allocation System) the level of resource allocated to Brazil and increase attention and resources to non-project activities.

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1/ Such as policy dialogue, partnership building and knowledge management.

2/ The ACP will reflect an agreement between the GOB and the IFAD management on the main findings of the evaluation, as well as the evaluation recommendations that they agree to adopt and implement.

3/ World Bank. World Development Report on line database and Economist Intelligence Unit.

4/ World Bank. World Development Report 2008. GNI per capita (Atlas method).

5/ The framework had three main objectives: human and social assets; productive assets and technology; and financial assets and markets. IFAD has since developed a new strategic framework for 2007-2010.

6/ The emphasis on the development of markets is also a key objective in the 2007-2010 IFAD strategic framework, and it was also an important element of IFAD's policy since its creation.

7/ For example, by the introduction of pest resistant varieties of cassava and pineapples.

8/ Programme for Strengthening the Regional Capacity for Monitoring and Evaluation of Rural Poverty Alleviation Projects in Latin America and the Caribbean.

9/ For example, the Brazil country programme has not benefited as much from FIDAMERICA, another grant IFAD funded programme covering PL region, as it could or should have.

10/ In April 2007, IFAD requested the Board to approve the transfer of responsibility - in ongoing projects - from concerned cooperating institutions to IFAD for direct supervision and implementation support in various projects across all regions. But, no projects funded by IFAD in Brazil were part of the proposal.

11/ For example, it may be useful to note that the former Secretary for International Affairs in the Ministry of Planning, Budget and Management served effectively in the recent past as the Chairman of IFAD's Governing Council. Brazil has also participated - as a member - actively in the deliberations of both the Executive Board and Evaluation Committee.

12/ These are the aggregate ratings for the three projects evaluated by the CPE. Ratings of individual projects may be seen in the main CPE report.

13/ The issue of middle income countries was the topic of a recent comprehensive evaluation by the Independent Evaluation Group of the World Bank, which also came to a similar conclusion.

14/ The newer loans designed during the period covered by this CPE – but not yet implemented – did consider market linkages.

15/ Support to indigenous peoples was not considered in the 1997 COSOP.