Background and the core learning partnership

In 2008, the IFAD Office of Evaluation (OE) conducted an interim evaluation of the Qinling Mountain Area Poverty-Alleviation Project (QMAPAP) in China. The need for an evaluation was identified based on the request of the Government of China (GOC) for IFAD to consider financing a second phase of the project¹. The main objectives of the Interim Evaluation were to: (i) assess the performance and impact of the project; and (ii) generate a series of findings and recommendations to guide the Government and IFAD in eventually designing and financing a follow-on operation in the country.

The Core Learning Partnership (CLP) was established comprising IFAD, Government officials and partners to provide inputs throughout the evaluation process and to maximise the opportunities for learning from the evaluation. A final learning workshop on the evaluation was held on 1st June 2009 in Wuhan, chaired by a representative of the Foreign Capital Project Management Centre of State Council Leading Group Office of Poverty-Alleviation and Development². Thereafter a meeting was held with Ministry of Finance (MOF) officials in Beijing on 2nd June 2009. The objectives of these two activities were to take stock of the evaluation findings and to generate inputs for the preparation of this Agreement at Completion Point (ACP). The ACP reflects an understanding between the Government of China (represented by the Ministry of Finance) and IFAD (represented by the Asia and the Pacific Division) on the main evaluation findings and recommendations, including their commitment to adopt and implement the evaluation recommendations within specified timeframes. 

Main evaluation findings

Implementation progress. The Project's implementation results were in accordance with the targets established at appraisal, with most key objectives being met or exceeded. However, there were initial delays in loan effectiveness which created difficulties early on during project implementation. However, there were substantial improvements in overall project performance after the mid-term review (MTR) in 2005. 

Salient results achieved by the project

Agriculture development. Slope terracing, land levelling, and soil improvement have been carried out in most project villages. Irrigation facilities were improved through a total investment of US$19.8 million. The productivity of food crops was increased by approximately 20-50 per cent per household. The area under forest cover increased as both commercial tree crops as well as ecological trees² were planted.

Infrastructure development. Construction of infrastructure has been successful with most types of infrastructure attaining the intended targets. The new and improved roads and bridges reduced transport costs and increased access to markets. Irrigation and flood protection resulted in increased crop yields. Potable drinking water systems improved the quality of life of beneficiaries through substantially reduced time in carrying water and the associated health benefits.

Rural financial services. The project credit fund was channelled through the network of Rural Credit Cooperatives (RCCs) - which were the best option for rural lending at the time of design. An estimated 459,300 loans were disbursed by the time of the evaluation compared to the target of 572,000 (80 per cent accomplishment). This under achievement was partly due to the late commencement of credit activities, and partly caused by the reduced demand for small scale rural credit during the project period. The decrease in demand was caused by the fact that the project loan amounts were insufficient for many rural investment needs and because some villagers were gradually able to borrow from friends and relatives without paying interests. An overall loan repayment rate of 92 per cent has been estimated. The level of credit availability has increased in all areas and clients who joined RCCs during the project have largely remained as active clients.

Social development. Participation in the project was achieved through Village Implementation Groups (VIGs). VIGs supported the participation of beneficiaries in local governance and in identifying priority activities for investment. It was expected that part of these VIGs would remain active beyond the project period. The VIGs were instrumental in coordinating installation of infrastructure, training programmes and other activities. However, few VIGs remain active, in the same capacity as during the project period, because there are no longer any project activities to be implemented. In a few villages participatory planning continues, but most planning has reverted to the existing Village Committees⁴, rather than the project VIGs. With respect to gender development, the status of women within the household has increased. With project support, the Women's Federations at the local level were able to provide literacy, technical, and health training to woman. The project training was timely and contributed to women's empowerment as it coincided with the migration of men for labour out of the project area.  This provided women with enhanced roles on the farms and as decision makers in the villages. Thus, women who had been assisted by project training were more able to take advantage of knowledge learned in agricultural trainings and the opportunities that arose due to greater involvement in local decision-making. In addition, the project also contributed to local education in the form of scholarships to children of very poor households; and supported the village health, which significantly improved health services, such as post natal care.

Impact. Almost all project villages have achieved substantial increases in real income. Improved agricultural practices have been introduced and agricultural productivity has increased. As a consequence, there is now sufficient food availability all year round. The number of households requiring Government food support has reduced substantially. The contribution of the project to improved living conditions is hard to be discerned accurately, but the villagers all expressed that project inputs have been important in achieving poverty reduction.

Project management. Project Leading Groups and Project Management Offices (PMOs) were established and operated effectively. The two provincial PMOs in two provinces operated reasonably well and were appropriate to maximise gains through capacity-building of local government at that level. In the early years of the project, the IFAD processes were cumbersome and not clearly understood by the PMOs. After MTR these issues were addressed: formats were streamlined and processing time reduced. There was a persistent weakness in the design and operation of the monitoring and evaluation (M&E) system, which created difficulties in data analysis and was a barrier to effective project management.

Major strengths. The project has been a relevant and timely intervention, playing an important role in the economic and social progress occurring in the project area. In particular, it was effective in enabling poor families to take advantage of wider opportunities. The project inputs were relevant and combined well with the policy and operational approaches of the GOC. The combined mix of the infrastructure, technical and social support was a major strength in achieving greater benefits than would have been possible for separate inputs. In addition, the cooperation between government officials in different sectors was a key factor in achieving successful implementation of integrated activities. This assisted in linking the project inputs and strengthening the support networks and supply of services to the villages.

Weaknesses identified. As noted in paragraph 9, the lack of an appropriate monitoring and evaluation system was a weakness that pervaded several aspects of project implementation. The context in the project area due to economic, social and policy changes dramatically altered the situation, which created more farming, market and social development opportunities for villagers. A better M&E system would have assisted the project to adapt to the changing context. The project was also weak in several aspects related to sustainability, particularly in terms of inadequate systems for maintenance of infrastructure, low level of sustained institutional development capacity at local level, and insufficient on-going technical support for agricultural improvements.

Recommendations

The following recommendations are strategic and operational issues to be considered in the design and implementation of future interventions in China.

Recommendation 1: Proceed with a follow-on project

The positive performance of the project demonstrates the value of this intervention. The continuing pockets of poverty in the project provinces suggest that there is a valid reason for proceeding with a follow-on project. A follow-on project should be considered with a continuing focus on areas of poverty. The design process should retain key elements such as: targeting the poorest households, participation of women and farmers in village planning processes, an integrated and specific package of interventions addressed to the needs of the villagers, and a project management process that strengthens local governance.

Partners involved: MOF, IFAD.

Recommendation 2: Increased flexibility in project design

There should be clear recognition of China's rapidly changing context in project design and implementation. It was identified by the evaluation that the project did not respond quickly enough to the changes that occurred during the project period: the design did not take into account the fact that women and elders now do most of the rural labour work; the increase in income from migrant employment was not adequately harnessed; credit activities were not sufficiently flexible to address household needs at each stage of development; also, the budget allocation per financing category was too rigid.

IFAD and the GOC should work together on identifying which aspects of project design must be compliant for the whole project period and which aspects can be subject to change in line with project conditions. For project management, the modular approach currently being developed by IFAD provides a good opportunity for projects to be more responsive. It would be more appropriate to consider design changes after each supervision mission rather than delaying until the mid term review. If changes to the Loan Agreement are required, the Government should make timely requests to IFAD.

In addition, specific consideration should be given to: i) periodically reviewing the definitions of poverty groups throughout the project life in order to respond to the changing situations of households; ii) assessing the availability of labour in the project area as the demand for migrant work in cities is likely to continue growing despite the fact that, in the short term, the world financial crisis is likely to reverse the flow of migration to rural areas; iii) supporting the changing role and greater prominence given to women; iv) supporting a mix of credit sources, such as  community development funds and small group lending for the lowest income groups, collective credit mechanisms for cooperative activities, and RCCs for larger enterprise loans.
Partners involved: IFAD, MOF, PMOs, Women's Federations, and other design partners in the specific design process such as RCCs.

Recommendation 3:  Customized scale of operations per village

The total benefits were higher in villages where a multiple activities were implemented. Villages with greater capability in planning and lobbying for resources were more advanced than those with only limited project support. Moreover, within the same villages, some of the remote groups were not targeted by the project. So there is a risk that there will be a widening poverty gap in project villages which have large and remote village groups.

A clearer investment mechanism is required per village so that the greatest economies of scale and optimum benefits can be achieved. In project design, guidelines for an investment quota could be defined based on area, population, and potential.  The participatory decision making approach of the Village Development Plan (VDP) could be replicated but with greater analysis of feasibility and more stringent approval processes for any proposals that exceed the quota. Additional capacity-building for VIGs who are having difficulty in reaching the quota should be considered. Also, there should be a greater focus on participatory processes that involve a greater number of participants per village.

Partners involved: MOF, IFAD, Office of Poverty-Alleviation and Development, Women's Federations.

Recommendation 4: Support to employment generation as a design strategy

The greatest impact on income was from the increase in migration for employment opportunities. External employment opportunities were facilitated by increased access to infrastructures, financing, and education. It is likely that migration for improved employment opportunities will continue to be a major factor in rural areas for the near future, but long term changes may bring other changes and challenges.

Further analysis is required in terms of the characteristics and needs of migrant labour and the attitude of households towards external employment opportunities. This may result in consideration of special credit and training facilities to support migration, or organizational support for labour rights of rural immigrants. It is also worth to consider the impact on agriculture production and community resilience for those residents remaining in the village.

Partners involved: MOF, IFAD, Office of Poverty-Alleviation and Development.

Recommendation 5: Greater local mobilisation and capacity-building

The project did not have a strategic capacity-building approach. Training provided was adequate in general but was insufficient for PMO staff at field level and at the village level, particularly in project management and rural finance. VIGs greatly contributed to community capacity-building but the support for developing community organizations such as farmers associations or women's groups as proposed in the design did not occur. In most villages there was no training or orientation to establish a formal infrastructure maintenance mechanism, despite this being proposed in the original project design.

In the future intervention, more focus should be placed on investing in local organizations, leadership, and community activities. Establishing infrastructure operations and maintenance groups would enhance the sustainability of project investments in physical infrastructure and facilities. Initiating and supporting farmer producers and marketing organizations would provide an additional stimulus to the local economy. It would also align strongly with the current GOC policy towards strengthening farmers' organizations.

Partners involved: MOF, IFAD, Women's Federations, training organizations, local Governments.

Recommendation 6: Enhanced management information and analysis

The project Management Information System was weak. The monitoring carried out by the PMOs was consolidated rather than kept in a disaggregated form, which is needed for comparison and analysis. It is critical that data is collected in a way that allows data to be easily checked for accuracy. Improvements in the generation of quality data would be a valuable resource for the GOC and IFAD to gain deeper insights for strategic considerations, such as the attribution of project investments into a mix of project components, and more broadly, learning about key success factors for poverty reduction in China. Therefore, a fully functional system should be installed early in the project. To facilitate the operations, it should be simple and training should be provided so that the importance is understood.

Partners involved: IFAD, MOF.

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1/ In line with the Evaluation Policy, it is mandatory for OE to conduct an interim evaluation before IFAD can finance a subsequent phase of a project or programme.

2/ State Council Leading Group Office of Poverty-Alleviation and Development is the main policymaker at the Government level in poverty-alleviation and development.

3/ In China, ecological trees are trees for the purpose of improving the environment where there is no commercial gain.

4/ Village committees are the governing bodies at the village level.