Introduction

This is the second IFAD country programme evaluation (CPE) for Yemen since the Fund started its operations in the country in 1979 (the first CPE was conducted in 1992). The CPE had two main objectives: (i) assess the performance and impact of IFAD-financed operations; and (ii) generate a series of findings and recommendations that will help inform the forthcoming results-based country strategic opportunities programme (COSOP), which will be prepared by IFAD and the Government in 2013.

This Agreement at Completion Point (ACP) contains a summary of the main findings and recommendations from the CPE. As per the decision of the Executive Board, the ACP will be attached as an annex to the new Yemen COSOP, which is expected to be presented for Board considerations during 2013.

The ACP has been reached between the IFAD Management (represented by the Programme Management Department) and the Government of Yemen (represented by the Minister for Planning and International Cooperation), and reflects their understanding of the main findings from the CPE (see section B below) as well as their commitment to adopt and implement the recommendations contained in section C of the ACP within specified timeframes.

The main CPE findings

The results of the IFAD/Government of Yemen partnership over the last 17 years have been largely positive. IFAD has made a significant contribution to agriculture and rural development in Yemen and has gained a solid reputation for specialized expertise and country experience. The operations financed to date have covered some of the most remote areas.

Future IFAD/Government of Yemen cooperation will need to maintain attention to a changing context, with three major challenges now facing the country: vulnerability in the face of social, security and economic difficulties; severe water scarcity; and economic diversification beyond the declining oil sector. Yet another challenge relates to the rapidly growing population. On the other hand, the Government's key economic and governance reforms have generated a number of important opportunities.

The evaluation found that IFAD has been instrumental in promoting participatory development and in supporting social mobilization in rural areas. IFAD has also contributed to expanding beneficiaries' access to social services and helped increase agricultural productivity. Moreover, it has helped to empower women by providing them with economic opportunities and increasing their participation in community decision-making.

On the other hand, IFAD has had only limited success in enhancing poor rural households' access to financial services in a cost-effective and sustainable manner, and relatively few investments have been made in improving surface water management and in strengthening structures to support agricultural development. Few projects/programmes have focused on youth. These issues are now being directly addressed in the more recent IFAD-supported interventions  Notwithstanding recent improvements, the country portfolio has been affected by weak government performance mainly owing to its limited capacity.

Earlier IFAD–supported integrated area-based rural development projects (approved up to 2005), while producing positive results, spread limited resources too thinly resulting in low per capita allocations and in some cases piecemeal and fragmented subprojects that had only a marginal impact on households. Also IFAD focused somewhat disproportionately on social welfare and has not been accompanied by the level of support to economic activities that would improve incomes and alleviate rural poverty.

The more recent projects/programmes (approved after 2005) move away from the multisector rural development interventions, towards national programme approaches focusing on a single sector. They emphasize the economic orientation and contain important innovations in the way that the Fund will operate in Yemen.

In the EOP and FIP, the institutional arrangement for project management through a public-private partnership – the EOF– is expected to bring private-sector principles and speed to the management of public development funds. The new projects/programmes also take a private-sector approach to implementation inasmuch as they focus on strengthening selected value chains. The selection of high-value agricultural commodities and fisheries would also appear to be appropriate. Attention to the associated potential risks of this innovative approach – in terms of the relatively complex institutional arrangements of the EOF, for example – must continue through mitigation measures and regular monitoring.

The performance of the IFAD-supported programme in Yemen has demonstrated incremental gains over the period evaluated, including improvements in the performance of both IFAD and the Government of Yemen. The slow pace of project approval and implementation was a matter of concern for the earlier projects covered by this CPE. However, over the last five years, both the Government and IFAD have responded well to implementation challenges, including improved selection of project managers, more rapid loan disbursements, and, in 2009 the establishment of a comprehensive six-monthly IFAD/Government portfolio review.

While IFAD's performance was less than optimal in the earlier interventions covered by the CPE, the Fund has improved its country programme management in Yemen over the last five years. The establishment of a country office in Sana'a in 2007, led by a national country programme officer (CPO), has contributed to IFAD's development effectiveness in Yemen both by providing adequate and timely support to supervision and by building up a strong relationship with the Government. Partnership arrangements were also improved in the projects/programmes approved during the second half of the last decade. On the other hand, in view of a clearly challenging country context, IFAD could do more in the future to respond to conflict circumstances in some parts of the country, including mobilizing specialized expertise when needed.

IFAD's role as the Government's leading rural development partner makes it well placed to continue its engagement in policy dialogue with the government, and to advocate more strongly for rural poverty alleviation issues in the country, including closer cooperation with other donors on the ground beyond the various partnerships already established. The opportunity for IFAD to engage even more actively and effectively in policy dialogue has not been fully exploited.

Agreement at completion point

This section addresses each of the recommendations prepared by IOE which are contained in the CPE report.

Recommendation 1: "Development approach. IFAD should continue to support social mobilization in the country's rural areas and strengthen the social and economic institutions of the poor to plan and manage their own development. This successful feature of IFAD's strategy in Yemen is highly appreciated both by the Government and by other partners in the country. However, while this aspect of IFAD's work is essential for the country's agriculture and rural development, it is not sufficient to sustainably alleviate rural poverty. Therefore the next COSOP will need to emphasize the expected economic orientations of interventions and support the creation of economic opportunities for the rural poor. This is already reflected in the strategic orientation and priorities of the EOP and FIP. The CPE also recommends that more attention be paid to gender and youth as cross-cutting themes of the next country strategy. As women's seriously disadvantaged position remains a key challenge to the country's human development, IFAD should accord priority to promoting gender equity and women's empowerment across its entire Yemen portfolio, particularly with regard to addressing constraints to women's access to capital, land, knowledge and technologies, and strengthening their role in decision making. The Fund should continue to deploy women staff; strengthen project management's commitment to gender issues; ensure adequate levels of funding for gender-specific activities; and place greater emphasis on youth programmes (e.g. vocational training, access to microcredit, and support to microenterprises) as a way of tackling high youth unemployment." (CPR paras 350-351).

Implementation measures and deadline: the recommended development approach (social mobilisation and creation of economic opportunities for the rural poor) and focus on gender equity constitute integral pillars of the country programme since 2009, as reflected in the projects designed since 2009 (EOP, FIP, YemenInvest) and in the ICO. These aspects will be confirmed in the new COSOP to be designed in 2013.

Entities responsible for implementation: Government and IFAD

Recommendation 2: "Subsector focus. The next COSOP for Yemen should concentrate on a more manageable range of subsectors. The CPE recommends that IFAD should continue to back rural finance by exploring two strategies: providing support for newly-created MFIs; and promoting the development of SCAs. It also stresses the importance (in view of the erosion of scarce fertile soil and rapid depletion of water resources, aggravated by the effects of climate change) of greater investments in anti-erosion activities and water harvesting in rainfed areas, including terrace rehabilitation, upstream wadi protection and rehabilitation/ construction of water reservoirs for livestock consumption, domestic use and complementary irrigation. IFAD should also dedicate further effort to improve the efficiency of irrigation systems in order to boost agricultural productivity and minimize water losses. It should also continue to support water users' associations with regard to operation and maintenance. In terms of productive activities, IFAD should continue its support to developing the value chain for: (i) high-value commodities (e.g. coffee, honey, horticultural products) with the engagement of the private sector; and (ii) fisheries. Both sectors offer significant potential for poverty reduction and economic growth and, in the case of high-value crops, present alternatives to small farmers presently engaged in growing qat. Investments in fisheries should be also supported by sustainable fishery resources management." (CPE para 352).

Implementation measures and deadline: the recommended subsector focus, support for MFIs, irrigation water use efficiency, waters' users associations, and investment in high value commodities have been core elements of the country programme since 2009, while SCAs have been under implementation since 2005. Sustainable fishery resource management is one of the two components of FIP, which was designed in 2009/2010. These elements will be confirmed in the new COSOP to be designed in 2013.

Entities responsible for implementation: Government and IFAD

Recommendation 3: "Geographic focus. IFAD should continue to concentrate its activities in places where the incidence of poverty is highest (western and coastal areas), while also taking advantage of potential economic opportunities. This would include rainfed areas, irrigated land devoted to high-value commodities, and the coastal regions. While national-scale programmes would be a move in the right direction, a realistic indication should be given of the number of settlements to be covered by future projects/programmes". (CPE para 353).

Implementation measures and deadline: the recommended focus on poor areas has been a hallmark of IFAD operations in Yemen since 1979. Areas with economic opportunities, rainfed areas, and irrigated areas with high-value commodities have been targeted by the country programme since 2009. Coastal regions have been targeted throughout IFAD's operations in Yemen. The number of settlements to be covered is defined in each design report since 2009 (EOP, FIP, YemenInvest). These target areas will be confirmed in the new COSOP to be designed in 2013.

Entities responsible for implementation: Government and IFAD

Recommendation 4: "More prominent consideration of country context challenges in future strategy. The CPE recommends that, in the context of its discussions with the Government on the next COSOP for Yemen, IFAD should have an ongoing assessment of its strategic direction in light of the current unstable political situation and the wide range of social, economic and security challenges facing the country. This would include various scenario settings and risk analysis. Consideration should be given inter alia to the adequacy of IFAD's operating model to respond to these challenges. For example, it is  essential to mobilize experts in design, supervision and implementation who are experienced in peace-building and tribal affairs and accustomed to working in conflict areas. Moreover, IFAD should give enhanced attention to supervision and implementation support for all ongoing projects/programmes in Yemen. This may incur additional budgetary allocations. This recommendation is particularly relevant to the new interventions, which are introducing highly innovative approaches as yet untested in Yemen. The enhanced attention to supervision should include inter alia the careful monitoring of work programmes, phasing of activities and periodic assessments of progress against key milestones. IFAD should also consider developing a contingency plan in the event of any severe disruption in the country's social, security or economic conditions." (CPE paras 354-355).

Implementation measures and deadline: Assessment of strategic direction and business continuity to mitigate risk has been ongoing since the conflict commenced in early 2011; the operating model in Yemen was changed accordingly and is well documented. It includes tightened fiduciary controls through the ICO and consultants; an intensified country portfolio performance review process with Government; an off-site portfolio review process with project directors, financial managers, procurement officers, M&E officers and Government officials (MOPIC, MOF, MAI); and continuous localised supervision and support activities led by the ICO. The intensity of supervision is the maximum possible within current budgetary constraints and the security context. Monitoring of work programmes, phasing of activities and assessments of progress against milestones constitute statutory elements of direct supervision in PMD's business model. These elements will be reflected in the COSOP to be designed in 2013.

Entities responsible for implementation: Government and IFAD

Recommendation 5: "Strengthened partnerships and coordination. With the aim of achieving greater cohesion of programmes and competencies on the ground, IFAD will need to step up efforts with regard to mobilizing rural development partners and ensuring closer collaboration with other donors in Yemen. The Fund could achieve more by cooperating more closely with other donors operating in the country, such as UNDP and bilateral agencies. IFAD should also seek to ensure the presence of complimentary programmes in the same locations, including co-financing, which would have the advantage of making it possible to share responsibilities and avoid it straying too far from its core mandate. This could be achieved by improving IFAD advocacy and ensuring that, at early stages of project/programme design, it engages in discussion to identify areas of complementarity and possible cofinancing. The last three interventions approved have already led to significant improvements in this regard; close to US$60 million in cofinancing has been secured from IDA/World Bank, Islamic Development Fund, EU and local financing institutions" (CPE para 356).

Implementation measures and deadlines: Partnerships have been substantially strengthened under the country programme since 2009. Substantial cofinancing resources have been mobilised over the past four years from the World Bank, the Islamic Development Bank, the European Union, the Government, the domestic private sector and beneficiaries. This trend will be reflected in the new COSOP to be designed in 2013.

Entities responsible for implementation: Government and IFAD

Recommendation 6: "IFAD's role in strengthening government performance. Despite some recent improvements, the poor overall level of government performance, as well as that of underdeveloped rural institutions needed to leverage policy-making and resource allocation in favour of the rural poor, means that IFAD will need to pay particular attention to institutional development. This should include action, at the central and governorate levels, to strengthen capacity to plan and implement rural development, and to provide training to improve technical capacity. Greater support to, and involvement of, groups of private-sector farmers will be needed in order to obtain better results." (CPE para 357).

Implementation measures and deadlines: Government performance has improved substantially over the past few years, as evidenced by high loan/grant disbursement levels, robust project physical performance, and growth in benefits and beneficiaries. The country programme has extensively engaged in strengthening Government capacities since 2009. Activities include capacity building projects with MOPIC (aid coordination) and MOF (loan and grant management), and establishment of the country portfolio performance review process. The organisation of private sector farmers into producers' associations was introduced into the country programme in 2009. These elements will be confirmed in the new COSOP to be designed in 2013.

Entities responsible for implementation: Government and IFAD

Recommendation 7: "Policy dialogue. IFAD should take advantage of its privileged position as the Government of Yemen's main development partner in rural poverty alleviation, and take a more prominent role in policy dialogue on key rural development issues. Such dialogue could cover the questions of subsidized diesel fuel for agriculture (often the biggest driver of water depletion, as it effectively lowers extraction costs and therefore farmers have no incentive to save water); equity improvement in spate irrigation; and rural finance. Policy dialogue on rural finance might, for example, involve the Government's policy, financial and supervisory framework to support the growth and sustainability of fledgling SCAs. IFAD should also continue – by participating in the appropriate UN group – to assist the Government in developing a comprehensive long-term vision on qat that would address both supply and demand. The larger weight carried by IFAD as a result of working more closely with other donors would also contribute to more effective policy dialogue (on qat and other issues)". (CPE para 358).

Implementation measures and deadlines: IFAD has had substantial policy influence in Yemen over the years. The ICO and HQ are heavily engaged in policy dialogue with Government, focusing on emerging lessons from operational experiences, particularly on the policy and institutional space for rural economic opportunities and employment creation. IFAD is not positioned to influence Government in areas in which it is not investing, such as fuel costs for groundwater extraction or spate irrigation. IFAD participates in relevant UN-Government forums dealing with policy aspects, such as the Consultative Group and the UN country team. These elements will be confirmed in the design of the new COSOP in 2013.

Entities responsible for implementation: Government and IFAD

Recommendation 8: "Country programme management (see paragraphs 346, 348). The CPE acknowledges IFAD's efforts to strengthen country management, including the active role played by the new country team and a country presence in Sana' headed by a CPO. Notwithstanding the foregoing, the CPE recommends that IFAD should consider strengthening its country presence to enable it both to participate more actively in policy dialogue with the Government and to strengthen its partnerships with other donors – two important areas for IFAD activities in Yemen. In addition to the contribution that the CPO makes to strengthening the partnership with government, the CPM's essential role in policy dialogue will need to be acknowledged and reflected as part of its specific objectives in the country." (CPE para 358).

Implementation measures and deadlines: The recommended strengthening of the ICO is dependent on budgetary allocations and divisional cost efficiency analysis. Partnerships and cofinancing are highly developed, as indicated earlier. The CPM's role in policy dialogue is reflected in the specific objectives of the assignment, and the results documented. These elements will be considered during the design of the new COSOP in 2013.

Entities Responsible for Implementation: Government and IFAD

Comments by the Independent Office of Evaluation

This section is optional. If either IFAD Management and/or the government have expressed disagreement on any of the findings and/or on one or more of the recommendations, fully or partially, deriving from the evaluation, IOE will add a further section to the ACP. In this section, IOE will provide its final views on the disagreement of IFAD Management and/or the government on any of the finding(s) or recommendation(s) (or parts of recommendations), and share the final ACP with the Evaluation Committee for its consideration (see paragraphs 11-13).

 

Signed by:

Dr Mohammed Al-Saadi
Minister for Planning and International Cooperation
Government of Yemen

24.11.2012

 

Mr Kevin Cleaver
Associate Vice President, Programmes
IFAD

08.11.2012