Extract of Agreement at Completion Point

Introduction

This is the first country programme evaluation (CPE) by the Independent Office of Evaluation of IFAD (IOE) in Zambia since the Fund started its operations in the country in 1981. The CPE had two main objectives: (i) assess the overall partnership between IFAD and Zambia in reducing rural poverty; and (ii) generate a series of findings and recommendations that will inform the definition of future cooperation between IFAD and the Government of Zambia as well as to assist in the implementation of ongoing operations and in the design of future IFAD-funded projects in Zambia.

Based on the analysis of cooperation during the period 1999-2013, the CPE aims at providing an overarching assessment of: (i) the performance and impact of programmes and projects supported by IFAD operations; (ii) the performance and results of IFAD's non-lending activities in Zambia: policy dialogue, knowledge management and partnership building; (iii) the relevance and effectiveness of IFAD's country strategic opportunities programmes (COSOPs) of 1997, 2004, and 2011; and (iv) overall management of the country programme. This Agreement at Completion Point (ACP) contains a summary of the main findings and recommendations from the CPE (see section B below).

The ACP has been reached between the IFAD management (represented by the Programme Management Department) and the Government of Zambia (represented by Ministry of Finance and Ministry of Agriculture and Livestock), and reflects their understanding of the main findings from the CPE as well as their commitment to adopt and implement the recommendations contained in section C of the ACP within specified timeframes.

It is noted that IOE does not sign the ACP, although it facilitated the process leading up to its conclusion. The implementation of the recommendations agreed upon will be tracked through the President's Report on the Implementation Status of Evaluation Recommendations and Management Actions, which is presented to the IFAD Executive Board on an annual basis by the Fund's Management.

This ACP will be included as an annex of the new COSOP for Zambia. In line with the decision in 2013, the Zambia CPE will be discussed in the IFAD Executive Board at the same time when the new Zambia COSOP will be considered by the Board. Moreover, IOE will prepare written comments on the new COSOP for consideration at the same Board session. The written comments will focus on the extent to which the main findings and recommendations from the Zambia CPE have been internalized in the new COSOP.

Main evaluation findings

Over the past 14 years covered by the CPE, IFAD has made a positive contribution to agriculture and rural development in Zambia. IFAD is a trusted partner in the country with a good reputation as the only agency with experience and exclusive focus in rural development in the poorer areas of Zambia.

IFAD supported interventions have contributed to increase production of beneficiary smallholder farmers, crop diversification, increased access to markets and the control of livestock diseases of national importance such as east coast fever (ECF) and contagious bovine pleuropneumonia (CBPP). Some poverty impact is being realized with respect to increases in rural household income and assets in project districts, as well as in relation to selected improvements in productivity, thereby enhancing food security. Enhanced access to rural financial services has led to substantial increases in household incomes of participants at the end of the cycles, when profits are distributed. The portfolio is also contributing to the build-up of social capital and empowerment of the beneficiary target groups, and in particular supporting IFAD's objective of promoting gender equality and women empowerment.

Investments in agribusiness and value chain development, one of IFAD's strategic objectives in Zambia, have been recognized as a valid approach for poverty reduction and agriculture sector development in the country and stand high in the government agenda. Despite progress, the value chain development potential has not yet fully realized. Investment in value chains is complex, requires a relatively high level of expertise, and involves a larger number of stakeholders (from primary production to consumption) compared to other investments.

Despite these important results, the full development effectiveness potential of the programme has not been fully realized for three main reasons. First, portfolio effectiveness and efficiency have been affected by substantial implementation delays associated to various issues, including severe procurement delays, weakness in financial management and project management, as well as problems related to institutional arrangements.

Second, in spite of clear intentions in the COSOPs covered by the CPE, there has been only limited success in developing a cohesive country programme. To date the programme has essentially comprised a number of separate projects and expected synergies between, for example, the Small Agribusiness Promotion Programme (SAPP) and the Smallholder Livestock Investment Project (SLIP) have not yet materialized. Also the various agriculture investments in the portfolio were supposed to be linked to the Rural Finance programme as a source of credit, but there were no integral mechanisms between the projects to operationalize the potential synergy.

Third, the targeting strategy described in the COSOPs is still too broad and could lead to programme benefits being captured by better-off farmers, an issue of particular relevance to Zambia as an emerging middle-income country (MIC), with strong economic growth, but overall limited and unequally distributed results on poverty reduction. Emphasis on group formation and self-targeting, while useful, has not always ensured focus on the poor smallholder farmers. Having a broad coverage is desirable for maximizing out-reach, but tends to compound implementation issues given limited public capacity in staffing and equipment and fails to maximize impact under circumstances of limited resources.

Weak prospects for sustainability in most IFAD-supported projects in Zambia represent a key issue of concern. Sustainability of benefits from infrastructure investments in roads and markets is unlikely because of the lack of mechanisms and sources of financing for maintenance within the districts. It is also not clear that the current disease control gains under SLIP would be sustainable because of the absence of an adequate cost recovery strategy and limited budgetary allocation. Moreover, in both SAPP and in the Smallholder Production Promotion Programme (S3P), the lack of a clear link to credit and the absence of direct technical support for business development pose significant risk to sustainability. 
Environment and sustainable management of natural resources offer opportunities for further collaboration. Despite being richly endowed, Zambia -as many other natural resource rich countries- has not been able to translate natural resource rents into broad based development and poverty reduction. Environmental degradation, including deforestation and the effects of climate change poses significant constraints to key growth sectors such as agriculture and tourism.

While relatively in its infancy, IFAD's non-lending activities in Zambia are likely to have positive effects. In terms of policy engagement, some successes have been recorded in the context of getting the rural finance and agriculture policies developed, and IFAD has also actively participated in policy dialogue through the Agriculture Cooperating Partners Group and the United Nations Country Team. Moreover, the Fund's support has contributed to raising awareness and capacity in the approach of "agriculture as a business" in the country. Beyond maintaining a solid partnership with government, IFAD's partnership with other development partners has been largely consultative. The co-financing effort has been weak, although some prospects have emerged in the two most recent operations. Collaboration with the private sector is incipient, but is constrained by an unclear policy approach to private sector engagement by the government.

Performance of both IFAD and the government has improved in the recent years. However, despite a good level of ownership, and recent important initiatives, the government has not yet been able to provide adequate policy guidance and carry out its coordinating functions.

Moving forward, opportunities for strengthening and consolidating the partnership between IFAD and the GRZ are likely to be facilitated by the recent out-posting of the Country Programme Manager as IFAD Country Director in Zambia. Zambia's new status as a MIC will require, in line with IFAD's strategy for engagement with MICs, and new level of partnership, including a more responsive and customized programme in response to country needs and within IFAD mandate.

Agreement at completion point

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

Recommendation 1: Strengthen programme cohesiveness

1. Despite clear intentions, especially in the last COSOP, to create a synergistic programme across the portfolio, coherence between projects has not so far been optimized. To enhance the overall impact of the programme, IFAD would need to dedicate special attention and effort to developing a cohesive country programme in which the various interventions create synergies and support one another. Adequate mechanisms for effective coordination and communication need to be in place along the various stages of the programme cycle, including COSOP preparation, projects design, start up and during implementation. In addition, it is important to ensure there is clarity about the projects profile, objectives and various roles and responsibilities among various stakeholders which enables a concerted effort.
2. Proposed follow up: Since the strengthening of IFAD‘s presence in country and the out-posting of the Country Director, efforts have been made to bring the different ongoing programmes together and develop coherence between them. Also, a greater engagement between the ICO and the GRZ is ongoing. Work has been initiated to create synergies between the Fund's supported investments, better coordination and communication. In fact work has already started in harmonizing the country portfolio consisting of S3P, SLIP, SAPP, RUFEP (entered into force on 22nd July 2014) and Enhanced-Smallholder Livestock Investment Programme-E-SLIP (to be submitted to the IFAD Executive Board of September 2014). Each programme is to fully exploit its comparative advantages in the core areas of: (i) rainfed agriculture and good agricultural practices (S3P); (ii) livestock disease control and livestock productivity enhancement (SLIP and E-SLIP); (iii) market and value chain linkages (SAPP); and (iv) rural finance services (RUFEP). A portfolio Realignment Paper will be jointly prepared by the ICO and GRZ during the course of fiscal year 2015.
3. Deadline date for implementation: 31st December 2015
4. Entities responsible for implementation: The Ministry of Finance (MOF), the Ministry of Agriculture and Livestock (MAL), and IFAD

Recommendation 2: Sharpen poverty and geographic focus

1. Both the poverty and the geographic focus need to be refined in the next COSOP in order to recognize the country's emerging MIC status and to reflect the requirement not to exclude poor smallholder farmers from the on-going economic transition and transformation. The COSOP may need to explore a targeting strategy based on a combination of income criteria and geography. First, the self-targeting approach needs to be balanced with a stronger focus on the poverty gap, so as not to exclude the extremely poor smallholder farmers who are capable. Second, there may be the need to seek deeper engagement in a limited set of geographic areas so that IFAD's limited resources are not spread thinly thereby reducing potential impact.
2. Proposed follow up: Both GRZ and IFAD have agreed to extend the period of the current COSOP from 2015 to 2018. The 2013 Mid-term Review of the current COSOP reconfirmed the validity of the COSOP and afforded an opportunity to align the COSOP with the GRZ National Agricultural Investment Programme (NAIP) launched in 2013 and goes for 2014-2018. During the COSOP extension exercise, a sharpening of the poverty and geographic focus will be considered while taking into consideration the efforts of the realignment of the portfolio. The targeting strategy will be refined to include other criteria in addition to food security such as income in order to ensure that the rural poor and extremely poor populations are not left behind and sliding into deeper poverty as is the case in other MICs in Africa.
3. Deadline date for implementation: End of 2015
4. Entities responsible for implementation: The GRZ (MOF, MAL) and IFAD

Recommendation 3: Support the development of Government capacity

1. To deal with limited government capacity that accounts for implementation delays, IFAD may need to adequately factor into its project intervention process, the time and capacity building requirements for project implementation. IFAD may also need to support the Government to establish an enabling policy and institutional environment for agriculture and rural development, which is as much important as increasing investment into the sector. Finally, IFAD may need to provide greater support for capacity development of all stakeholders, including IFAD project staff, to increase their understanding of requirements for successful implementation processes, and ensuring the need for transparency and compliance with government procedures.
2. Proposed follow up: Many initiatives are ongoing to support the Government to enhance its capacity to provide procurement and financial management to programmes under implementation. Current support is being provided by S3P, SAPP and SLIP to enhance the capacity of the MAL-Procurement and Supply Unit through provision of training to staff, office refurbishing and equipment. Also, MAL has adopted the establishment of monthly top management meetings between IFAD Programmes and Key-Departments involved with implementation. Programmes are being requested to share monthly, three-monthly and six-monthly workplans aimed at accelerating procurement and disbursement rates to be reviewed at the MAL meetings. Also, a more realistic planning of AWPBs is actively promoted by the ICO; building in the necessary time and capacity building to ensure delivery on agreed implementation milestones as AWPBs become more result oriented management tools. Lastly, more efforts will be undertaken by the ICO in supporting capacity building of GRZ Stakeholders-inclusive of project staff to ensure successful implementation with transparency and a greater compliance with Government procedures. Work is ongoing.
3. Increasingly, the ICO and the GRZ are involved in supporting further an enabling policy and institutional environment for agriculture and rural development. The RFP (now closed) supported GRZ in the drafting of the rural finance policy and strategy. RUFEP will further support the GRZ in the development of other policies relevant to accessing financial services in the rural sector such as mobile banking, agency banking, equity funding and development of new financial products etc. SAPP has initiated support to MAL in the establishment of an agribusiness development framework. SLIP initiated policy discussion with MAL and the Veterinary Council in redefining the space for public and private sector in the provision of animal health services. This policy dialogue will be further enhanced during E-SLIP implementation. S3P is supporting policy reviews and consultations and establishing an enabling environment that will support smallholder productivity growth. More can be achieved as the portfolio evolves.
4. Deadline date for implementation: Ongoing-progress will be reported annually in supervision reports
5. Entities responsible for implementation: The GRZ (MOF, MAL and Implementation Agencies) and IFAD

Recommendation 4: Promote greater involvement of the private sector

1. To support the strong private sector interest and government commitment to engage all players in the agricultural sector, including the private sector and civil society, IFAD and the government should consider using existing instruments (both lending and non-lending activities) to ensure an adequate enabling environment for public-private partnerships. This includes discussing in the next COSOP, and in the current operations, the most appropriate and effective respective roles and responsibilities of government and private sector; approaches to promote and elicit support from the private sector; as well as the potential risk to all parties.
2. Proposed follow up: Through the Department of Agribusiness and Marketing of MAL (ABM), SAPP is supporting development of an Agribusiness Model for Zambia, with participation of all key agribusiness stakeholders. This will define the expected functions and roles of different stakeholders. This model will be finalized during the course of 2015. In addition, the programmes (SAPP, S3P and RUFEP) are promoting and facilitating Public-Private-Producer partnerships through the Matching Grants, and encouraging significant contributions from the private sector. S3P will be piloting the pluralistic extension services aimed at expanding the private sector participation in the provision of agricultural extension services. Experience so far gained in the ongoing PPPPs will inform the extended COSOP in 2015.
3. Deadline date for implementation: Ongoing
4. Entities responsible for implementation: The MAL (Department of Agribusiness and Marketing and Departments of Agriculture and Livestock) and IFAD

Recommendation 5: Strengthen efforts to ensure sustainability

1. Strengthening sustainability would require combination of efforts in various areas. First, it will be necessary to improve mechanisms for sustainability in the projects. Second, IFAD needs to pay more attention to ensure public commitment in terms of future financial obligations through focused policy engagement as well as improving knowledge management activities aimed at better visibility and communication of results. Third, possibilities for public/private collaboration should be explored to funding certain aspects of the programme, such as a sustained vaccination effort in order to eradicate CBPP.
2. Proposed follow up: All designs are spearheaded by Government-appointed Project Design Groups that ensure ownership throughout programme implementation when they transform into Technical Advisory Groups. Effort has been made in ensuring that sustainability is inherent in all programme designs recently. RUFEP and E-SLIP designs had factored in lessons learned from RFP and SLIP consolidated key activities to ensure sustainability. For instance under RUFEP consolidation of community-based financial institutions (CBFIs) and their linkages to formal financial institutions to ensure their long term sustainability. E-SLIP has built in an adequate cost recovery strategy for east coast fever (ECF) and in order to eradicate CBPP a concentrated and sustained vaccination programme along with a strict cattle movement control in the primary risk areas has been fully developed and funded. Furthermore E-SLIP will be supporting the MAL in the preparation of the policy and strategy for the provision of animal health services through Public-Private collaboration. Other initiatives supported by the programmes to strengthen sustainability include inter alia: the use of existing partnerships with the private sector, NGOs, community organizations and decentralized government institutions for the service delivery with an aim of enhancing the capacity of these institutions to implement the programmes in a sustainable manner. Provision has also been made for progressive increments in GRZ/beneficiary/private sector contributions to replace IFAD financing as the programme matures. Knowledge management and sharing is increasingly being embraced by direct programme stakeholders and target beneficiaries.
3. Deadline date for implementation: Ongoing
   Entities responsible for implementation: The GRZ (MOF, MAL and Implementation Agencies) and IFAD

Recommendation 6: Strengthen support to value chains, including opening-up to new partners

1. In view of their strategic importance, as well as challenges still remaining, going forward, IFAD should consider strengthening support to its ongoing interventions in the area of value chain development. This move would require three main approaches: First, IFAD would need to dedicate substantial effort to attract and educate the rural private sector on value chain development because of the complexity of value chains and the important role that private sector could play. Second, in addition to the private sector, IFAD would need to build strong partnership with government and other development partners because the technology and resource (market access and financial) requirement for value chain development could be beyond the scope of a single provider. Finally, IFAD would need to strengthen its monitoring and evaluation (M&E) tools to cover the impact of value chain development on the smallholder poor farmer. This will go beyond assessing programme performance and impact to include establishing an effective learning tool.
2. Proposed follow up: Firstly, the programmes are promoting models where private sector entities work with smallholder farmers in different areas of value chain development, and increasingly bringing government to facilitate the linkages. Secondly, an on-going re-orientation of Programmes under the IFAD portfolio, to ensure that individual programmes become service providers and/or service recipients in order to create demand for services and products of other programmes. Thirdly, SAPP is supporting sector-wide M&E and Learning which has so far involved the European Union, USAID, Embassy of Finland and Embassy of Sweden. Under this support, all sector players, including programmes and projects under MAL, will be reporting on specific indicators to the MAL M&E. Further, ICO has facilitated the development of a framework for the National Agricultural Information Services (NAIS) of MAL in which the latter will play a key role in the capturing and dissemination of activities supported by IFAD programmes and will be supported to expand its coverage to other donor funded programmes. Fourthly, SAPP is building the capacity of the Department of Agribusiness and Marketing in Value Chain approaches.
3. Deadline date for implementation: On-going
   Entities responsible for implementation: MAL Department of Policy and Planning, the Department of Agribusiness and Marketing and IFAD

Recommendation 7: Build farmers institutional capacity

1. The focus on value chain development and private sector promotion requires that IFAD pays more attention to building farmers capacity. This may require greater effort on the part of IFAD to organize the smallholder farmers into groups, and to build their institutional capacity so that they can benefit more directly from the development of agri-business, including developing commercial skills such as negotiation and marketing and improving the management of their businesses. The high unit costs of reaching smallholder farmers in low population-density rural areas, and the need for them to share risk and benefits from products and financial agglomeration, also dictates that they must be organized. Moreover, IFAD would need to support enhanced information flow and invest in training to understand and evaluate markets, along with the tools (technology, infrastructure, and finance) to access these markets.
2. Proposed follow up: In line with Government policy, the design and implementation of the programmes under the current Country Portfolio recognize farmer/beneficiaries' groups as an entry point of intervention given the high unit costs of reaching individual smallholder farmers not only in low-population density but high-population density rural areas. Under the on-going SAPP and S3P, grants are being provided to farmer groups to finance infrastructure and equipment that are aimed at enhancing the productivity, production and marketing (through bulking) capacities of smallholder farmers. Associated with these grants, there is agribusiness training of smallholder farmers through farmer groups. The training is aimed at equipping farmers with knowledge of markets to enable them to understand and appreciate market dynamics. Specifically under the SAPP and S3P, resources have been dedicated to systematically assess and build the institutional and development capacities of farmer organizations in order that they may effectively provide a wide-range of production and marketing, including flow of market information, services to their members. Deliberate efforts will be made to report on specific farmer institutional capacity interventions by the Country Portfolio. 
3. Deadline date for implementation: On-going
   Entities responsible for implementation: MOF, MAL and IFAD

Recommendation 8: Strengthen environmental mainstreaming, with particular attention to climate change

1. Although the effect of climate change has been felt in the intensity of periodic droughts in Zambia, its impact on the rural smallholder economy has not been sufficiently addressed. This may require the assessment and mitigation mechanism for traditional price and yield risks facing the smallholder farmer to be strengthened. Innovations that reduce transaction costs and spread risks more effectively, such as "index-based" insurance and commodity price hedging, ought to be adopted more widely than seem to be the current practice in Zambia. In particular, index-based insurance offers a credible promise to extend catastrophic weather-related insurance to smallholder producers, substituting for fiscally burdensome and distortionary means of responding to natural disasters, such as drought and livestock diseases. By promoting partnership with other development partners, IFAD could support the Government in the design and testing of mechanisms to deal with the above mentioned risks in rural areas.
2. Proposed follow up: Programmes under the current Country Portfolio have specific interventions aimed at weather risk mitigations. The S3P, for example, is promoting conservation agriculture as one of the means to reduce the vulnerability of farmers to weather variations. The RUFEP has a grant window on rural finance equity and innovations that could be accessed to introduce such agricultural insurance services such as weather index-based insurance (WII). The country portfolio, under the S3P whose objective includes reduction of farmers' vulnerability arising from weather variations, will initiate a study on the assessment and applicability of WII in Zambia. The setting up of the WII will be undertaken by RUFEP. Further to strengthen environmental mainstreaming, with particular attention to climate change adaptation Zambia is earmarked to access ASAP (Adaptation for Smallholder Agriculture Programme) funding in 2016 and probably a grant from the Global Environmental Facility. There is a need to prepare project proposal to this effect.     
3. Deadline date for implementation: Assessment and Applicability of WII in Zambia by end 2015. Preparation and submission of proposals to access ASAP and possibly GEF resources by end of 2016
   Entities responsible for implementation: MOF, MAL, Ministry of Lands, Natural Resources and Environmental Protection, ICO.

 

Signed by:

For the Government of Zambia: 
Julius J. Shawa
Permanent Secretary
 Ministry of Agriculture and Livestock

For IFAD:
Mr John McIntire
Associate Vice President, Programme Department 

Date:  July 2014