Background and introduction

The Independent Office of Evaluation of IFAD (IOE) undertook a country programme evaluation (CPE) in Viet Nam in 2010-2011. This was the second wide-ranging, strategic IFAD evaluation to be undertaken in Viet Nam. In 2000/2001, a country portfolio review and evaluation was undertaken jointly by IFAD's Asia and the Pacific Division (APR) and the then Office of Evaluation and Studies. The 2010-2011 CPE had two main objectives: (i) to evaluate the performance and impact of IFAD's operations in the country; and (ii) to generate lessons and recommendations to inform the next country strategic opportunities programme (COSOP) for Viet Nam.

The agreement at completion point (ACP) reflects the understanding between the Government of Viet Nam (represented by the Ministry of Planning and Investment) and IFAD Management (represented by the Programme Management Department) on the main evaluation findings (see section B below), as well as the commitment by IFAD and the Government of Viet Nam to adopt and implement the CPE recommendations within specific timeframes (see section C of this ACP). 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. In addition, this ACP will be submitted to the Executive Board of IFAD as an annex of the new COSOP for Viet Nam.

Main evaluation findings

The CPE considers the overall performance of the Viet Nam portfolio to be satisfactory, particularly in terms of support for decentralization, capacity-building, participatory planning, gender mainstreaming, small-scale infrastructure, development of savings and credit groups (SCGs), and improving rural livelihoods through production for markets. This support remains relevant, and should continue to form the essential building blocks of the country programme. There is still room for improvement, however, as the CPE found that IFAD-supported projects/programmes in Viet Nam have not invested enough in business development services, and that partnering with the small and medium-scale private sector, which could impart marketing skills and know-how to smallholders and ethnic minorities, has been limited to date. Improvement is also needed in terms of measuring results and establishing a standardized M&E system for the entire country programme.

The IFAD-Government programme has supported two mechanisms for the provision of microfinance. The first was the establishment of savings and credit groups, which have been reasonably successful in enabling members to manage and allocate small loans among themselves, mostly for livestock purchases and other means of increasing their income. The second involved the provision of credit through the banking system, but that mechanism has not been effective. The CPE considers that IFAD has not had a consolidated approach towards access to rural financial services to engage the Government or national financial institutions in tackling the challenges of providing access to rural credit.

Overall, the country programme has had a positive impact on household income and assets, mainly through increased levels of agricultural productivity and investments in livestock. Vocational training has been important for income diversification and for promoting non-farm employment for rural youth. The impact on gender equality and on the quality of women's lives and their empowerment is positive because funding was earmarked for programmes to assist poor rural women. The building up of the capacity of local institutions and policy support for sustainable use of land for production forestry is also judged to be positive. While projects have supported activities related to natural resources management, the environment and climate change, the CPE considers that the IFAD-Government approach to such problems is too ad hoc and project-based, and is not part of a systematic and strategic approach – especially in view of the enormous challenges the country is facing in this respect.

Since the establishment of the IFAD-Government partnership in 1993, the central government has provided strong support to the IFAD-assisted country programme and provincial governments continue to demonstrate solid ownership and commitment, and have promoted the effective participation of line departments in project implementation. However, in the past, the Government preferred for IFAD to finance projects covering non-contiguous provinces with different economic and social conditions, which created challenges to design and implementation and supervision. The CPE also noted that, compared with other middle income countries, Viet Nam provides less counterpart funding as a component of total project cost than other countries with similar economic status, covered by IFAD-funded operations.

IFAD's performance as a partner is well appreciated by the Government and other organizations. Direct supervision and implementation support is more effective as compared to supervision by co-operating institutions, and is appreciated by all local partners. The establishment of IFAD's country office including outposting from Rome to Hanoi of the IFAD country programme manager (CPM) for Viet Nam has been a positive step to strengthen dialogue and performance. While there has been some policy impact based on experience at the provincial levels, more efforts are required for linking the provincial implementation experience to policy dialogue at the national level.

This will however also require that the CPM and other staff in the country office are provided with the required resources, time and space to engage appropriately in national policy dialogue initiatives.

As for knowledge management, good progress has been made in implementing the 2008 COSOP strategy. However, while the activities put emphasis on a broad range of learning themes, there has been little documentation regarding the benefits of different knowledge-sharing approaches promoted under the projects. With regard to partnerships, IFAD has established itself as a trustworthy and reliable partner at the central, provincial and local government levels, whereas IFAD has not yet been able to forge deeper partnerships in Viet Nam with key international financial institutions such as World Bank and the Asian Development Bank (ADB), which are both active in rural areas of the country and support nationwide programmes that complement a number of IFAD micro-level activities on the ground, and with bilateral donors and NGOs. Although there has been a gradual increase in private-sector involvement in project operations through value chain and enterprise development, and in support to rural services, partnerships with the private sector have been limited thus far.

Recommendations

The below recommendations have been agreed by the Government of Viet Nam and IFAD.

Recommendation 1:

A strengthened market-oriented approach. The programme's shift from an area-based multi-sector approach to supporting value chains has brought more benefits to vulnerable groups such as landless labourers, farmers with very limited land and unemployed youth. As the limited but evolving public-private partnerships developed thus far show potential for achieving better results on the ground, the CPE recommends that this approach be strengthened in the next COSOP. However, because the value chain approach is still relatively new and unknown in many of the areas covered by IFAD-funded operations, a thorough analysis of selected value chains (e.g. rice and coffee) will be needed before new small-scale agriculture interventions are designed for rural areas. Ways and means of bringing ethnic minorities into the development process, at different stages of the value chain, will also need to be explored. Moreover, given the somewhat limited investments in business development services and limited partnerships with the small- and medium-scale private sector, the CPE recommends that IFAD and the Government encourage the strategic engagement of the private sector in supporting this building block in the next COSOP.

Proposed follow up: Strategic Objective SO1 of the COSOP is ‘to accelerate the transition in the rural sector toward sustainable market led development in poor provinces and associated regions'. In order to achieve this, private sector will be a main proponent in partnership with the Government. SO 1 will carry out a number of activities to provide the enabling environment to promote pro-poor value chains and private sector engagement with smallholder farmers. Meanwhile SO 2 specifically ensures that it is women, ethnic minority households, where possible, that participate and gain from IFAD supported activities, including the following:

• Provincial, district and commune market oriented participatory socio-economic development, planning processes promoted to incorporate business ideas;
• Savings and credit schemes linked to financial markets developed for the target group;
• Investment in human capital (particularly ethnic minorities) through equal access to job skills, agricultural extension, markets opportunities etc.;
• Physical investments that improve women's access to basic rural infrastructure and services, such as water, energy, roads and transport;
• Literacy and numeracy programmes to allow ethnic minorities to understand their rights, negotiate effectively with government structures and representatives and participate in community based development activities. GACA comment: This issue will be integrated into the Government's support activities at provinces. It's not necessary to be developed as sub component of IFAD projects.

Deadline: During the entire COSOP period.

Responsible entities: Provincial Peoples' Committee of the selected provinces responsible for implementation; Central Government to provide policy advice and ensure timely implementation of this recommendation; and IFAD to work with the provincial authorities to design and monitor the recommendation.

Recommendation 2:

More comprehensive geographic coverage. The CPE recommends that the Government and IFAD should move towards a model that combines, for example, three to five contiguous provinces as part of a single IFAD-funded operation when possible. This would facilitate a move from current area-based development activities to a more thematic model covering wider geographic areas and more poor people, and allow IFAD to focus on issues such as forestry development in upland areas, environmental protection in coastal zones, and private-sector development in provinces with large ethnic minority populations.

Proposed follow-up: IFAD will work in the provinces belonging to a region, as there is more cross learning between the provinces through being more closely situated. As agro-ecological conditions are likely to be similar, it would facilitate project design. More importantly, the benefits of working with provinces from the same region is that the demand for products is likely to come from the same urban growth poles, making it easier to promote businesses that are sourcing from the project area and making investments. The project concept notes in the COSOP for future investments are identified in a regional manner.

Deadline: During the entire COSOP period.

Responsible entities: Ministry of Planning and Investment and IFAD.

Recommendation 3:

A more favourable credit environment for smallholders. Microfinance and the role of the banking system are features of the current programme that will need to be strengthened to support the market integration approach. Current solutions mainly involve funding subsistence-level production. Overall, the programme has had a very limited impact on bank operations and lending policies for supporting farmers and the rural poor. The CPE recommends that IFAD should make every effort to address this major gap in rural finance in any future policy dialogue with the Government.

Proposed follow-up: IFAD will consolidate lessons learnt options in relation to the institutions that we are working with, which include Women's' Union, Viet Nam Bank for Social Policy, and AgriBank. In the next COSOP, IFAD would focus on what has worked, i.e. providing access to rural financial services for smallholders through building the Women's Union and up scaling the model of Women's Saving and Credit Groups in line with regulations of Government and IFAD. IFAD through its Hanoi office would pursue active discussion with the Women's' Union, Viet Nam Bank for Social Policy, and AgriBank.

Deadline: During the COSOP period.

Responsible entities: IFAD to facilitate more dialogue with banks with regards to access to rural financial services, and Ministry of Planning and Investment.

Recommendation 4:

A more strategic knowledge management programme. There is a growing realization –particularly as Viet Nam moves further into middle-income country status – that IFAD's knowledge, and its ability to impart that knowledge on a wide scale, will be a significant aspect of its future contribution to Viet Nam's development. Efforts as a result of the 2008 COSOP knowledge management component were a step in the right direction, and IFAD should build on those efforts in the years ahead. With regard to the next COSOP, IFAD will need to concentrate on its non-lending activities and grant capacity in order to fill specific knowledge gaps, such as the need for a holistic approach to the development of ethnic minorities in upland areas, better understanding of youth migration and opportunities for rural youth, etc. The CPE also recommends that knowledge-sharing be strengthened by establishing a standardized, countrywide M&E system, which would make it possible to follow up progress in implementing the results-based COSOP and fine-tune the evolving country strategy.

Proposed follow-up: DEPOCEN, a local partner, IFPRI and IFAD HQ are working to put together a standardized country wide M&E system, and to improve the impact assessment of project activities. With regards to grants, these need to support the future pipeline and specific investments. Possible areas for grant financing include: (i) technical assistance to the National Targeted Programme for New Rural Development (NTP-NRD) and the National Targeted Programme for Response to Climate Change (NTP-RCC) for support in implementing specific areas including public-private partnerships, pro-poor value chains, climate change adaptation research and capacity building, etc., (ii) working with the national research institutions on policy analysis and, (iii) building the capacity of the Government Aid Coordination Agencies (GACA) to design new projects and monitor project performance. Specific themes that would be looked into are a holistic approach to the development of ethnic minorities in upland areas, migration from rural areas and opportunities for rural youth.

Deadline: During the entire COSOP period.

Responsible entities: IFAD to identify grants needs to support the future pipeline and specific investments and Ministry of Planning and Investment to ensure better M&E and support the grant activities listed above.

Recommendation 5:

Strengthening partnerships. IFAD will need to re-think its approach to partnerships with the private sector and donor community in Viet Nam. It is recommended that IFAD should continue to participate in the One UN Initiative, albeit in a selective manner, with regard to agenda items commensurate with its resources and comparative advantage. On the other hand, enhanced partnering with AsDB, World Bank, IFC, major bilateral donors and NGOs could contribute to more effective synergies and/or to the scaling up of successful models supported by IFAD over the last 18 years. The analytic capacity of the larger international financial institutions and their role in supporting the Government's donor coordination mechanisms could provide significant leverage, both for IFAD's lending programme and for its non-lending activities.

Proposed follow-up: The IFAD office would focus on identifying, developing partnerships with the private sector, and linking business opportunities with the project provinces. At the provincial level, projects would develop the enabling environment for engaging the private sector. With regards to the partnership with the Delivery as One Initiative in Viet Nam (formal ONE UN in Viet Nam), we will maintain relationships with select UN Agencies of relevance to the strategic objectives of IFAD programming.¹ With regards to partnerships with International Finance Institutions, opportunities for joint and cofinancing would be pursued with the World Bank and with the Asia Development Bank, among others. Partnerships would be sought with bilateral development partners in the context of promoting innovation in the IFAD supported projects. IFAD would actively engage with NGOs through participating in the NGO working groups at the central level and where possible on the ground in IFAD supported project areas. National research institutions would be important partners in knowledge management and policy dialogue.

Deadline: During the COSOP.

Responsible entities: MPI and IFAD to promote partnerships.

Recommendation 6:

Increased counterpart funding from the Government. It is recommended that, during formulation of the next COSOP, IFAD should reach agreement with the Government on increased levels of counterpart funding, especially in view of the country's middle-income country status and numbers of poor rural people. The COSOP might also include broad criteria for determining the proportion of such counterpart funding (e.g. minimum percentage of total projects costs) in future IFAD-supported projects in Viet Nam. The CPE recognizes, however, that counterpart funding is a matter for IFAD Management to consider at the global level, including the establishment of related guidelines (currently missing).

Proposed follow-up: The most effective way to increase counterpart financing would be met through the budgets of the national targeted programmes at the provincial level. During the design of future IFAD supported interventions, we would ensure closer planning with the provincial governments to ensure integration of our activities into the implementation of the Government programmes, provincial budgets, aligning objectives, so that the level of counterpart financing would increase.

Deadline: During the COSOP.

Responsible entities: MPI, Provincial governments and IFAD.

Recommendation 7:

A strategic approach to the conservation of natural resources and response to the impact of climate change. IFAD should scale up its involvement in issues relating to the environment, natural resources management and climate change. While it is true that other donors are heavily engaged in these areas, IFAD is in a unique position to explore the impact of potential environmental damage and the effects of climate change on the rural poor. It is also well placed to introduce measures against erosion or salt water intrusion or in support of forest cover rehabilitation. This should be an important feature of the next COSOP and, possibly, one of the key pillars of IFAD's future engagement in Viet Nam. While these issues are largely peripheral to current programme design in Viet Nam, and are not commensurate with the priority given to such concerns, they are important features of Government policy and programmes. IFAD could well make a valuable contribution to developing local-level approaches that support the efforts of both the Government and the international community.

Proposed follow-up:, Efforts would be focused on supporting farmers' adaptation through appropriate extension and research by provincial and national research networks, strengthening both climate change technology transfer and the scaling up of autonomous adaptation undertaken by smallholder farmers, raising provincial staff awareness of climate change risk and integrating climate proofing tools into lower level planning processes, supporting the development and improvement of provincial action plans for addressing climate change risks, ensuring the incorporation of climate change factors into the provincial SEDP, and feeding these lessons to national level policies for response to climate change.

Deadline: During the COSOP.

Responsible entities: Provincial Peoples' Committees at all levels, MARD, MONRE and IFAD.

Recommendation 8:

A strengthened IFAD country office. The CPE believes that IFAD's country office in Viet Nam has made an important contribution to the overall success of its country programme. The establishment of a country office with sufficient capacity to support project preparation, implementation and supervision has been broadly successful and should be maintained. Looking forward, policy dialogue at the central level and the scaling up of successful innovations will need to be more systematic, anchored in IFAD's operational field experience, and in line with the structures and processes of the Hanoi Core Statement. IFAD will need to provide its country office with clear guidelines on prioritizing this agenda, in line with IFAD's new business model and an enabling work environment, i.e. appropriate human and financial resources.

Proposed follow-up: With regards to policy, there have been efforts to learn lessons emanating out of the projects, and provide feedback to the national level Ministries. We will step up our efforts for policy dialogue at the national level with the National Assembly, and at the provincial level with the Provincial Peoples' Councils. Systematic learning processes would need to be put in place through the M&E system, and knowledge products developed to ensure that our target group is reached. To ensure that this is possible, the country office would hire a KM officer, and the CPM would dedicate more time to the policy dialogue at the central level.

Deadline: During the COSOP.

Responsible entities: IFAD.

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