Extract of Agreement at Completion Point 

Interim evaluation

Introduction

In 2004, the Office of Evaluation of IFAD conducted an Interim Evaluation of the Rural Finance and Community Initiatives Project (RFCIP) in The Gambia. A reconnaissance mission was fielded in April 2004 and an approach paper discussed with partners in The Gambia and at IFAD in June 2004. A core learning partnership was formed comprising representatives of the Department of State for Agriculture (DOSA), the RFCIP Project Support Unit, the IFAD Regional Division for West and Central Africa and the Office of Evaluation of IFAD. The main evaluation mission took place in July 2004, preceded by a field survey. A draft evaluation report was distributed in November 2004. A final evaluation workshop was held in Banjul on 27 January 2005, to take stock of the evaluation findings and prepare the Agreement at Completion Point (ACP). The workshop was attended by the members of the core learning partnership and other stakeholders.

The ACP¹ illustrates the stakeholders' understanding of the evaluation, findings and recommendations, their proposal to implement them and their commitment to act upon them. OE facilitated the process and provided the key documents for discussion. The present ACP document contains a summary of the major findings (fully substantiated in the main report) and a set of recommendations that were agreed upon at the final workshop.

The main evaluation findings

Achievements. At project inception, the VISACA network comprised 37 VISACAs, 32 of which were operational. To date, a total of 62 VISACAs are operating throughout the country with the support of four NGOs service providers and a total membership of about 35,000 (40% women). The main thrust of the Agricultural Support component has been to assist kafos and producer groups in Lower River Division and Central River Division North and South in improved crop and livestock production techniques, through training programmes and the provision of essential services. Its major contribution to the improvement of extension services has been the training of 193 village auxiliaries in crop production and livestock husbandry. Under the Farmer Partnership Fund, the project has funded a total of 126 mini-projects for kafos, including the construction of cereal banks, 62 new wells as well as sheds, latrines and market stalls.

Weaknesses of VISACAs. IFAD has been supporting this approach since its first project in the country (the Jahally and Pacharr Smallholder Project) and the decision to further support VISACAs is clear while the reason for its choice as the only microfinance institution/methodology was not fully explained at the time of the appraisal, particularly as alternative group-lending techniques had already been tested and were reviewed as promising by the Appraisal Report itself. The design of RFCIP should have given closer consideration to options in rural microfinance apart from the VISACA model, especially to the group lending approach. Weaknesses that have emerged include limited savings mobilisations and outreach to very poor households within the same village, due to the collateral requirements for loans. In general, at the design and start-up phase, insufficient attention has been paid to the design of simple and appropriate financial services.

A number of elements seriously threaten the viability and sustainability of VISACAs and have not been so far adequately addressed. Then main symptoms can be identified in the deteriorating credit discipline and estimated operational self-sufficiency as low as 65%. The underlying factors explaining the unsustainable VISACA operations may be summarised as follows:

1. over-extended area coverage, leading to a rising default rate;
2. lack of capacity and commitment among and lack of an incentive-compatible system for management committees and cashiers;
3. over-reliance on the free services of NGO facilitators.

The first of these problems is due to an over-emphasis on size of membership partly provoked by Central Bank rating indicators and RFCIP physical targets, and partly by a general enthusiasm for rising aggregates among bankers, NGO facilitators and project officers. The NGOs generally failed to transfer the necessary knowledge and skills to management committees and cashiers. They were not adequately assessed at project start-up; most of the animators lack sufficient background in microfinance; and their remuneration was not linked to performance.

Little synergy between the rural finance and agriculture component. The original project justification was that of building upon the "social capital" existing in the project area and identified in the traditional ubiquitous village groups (the men and women's kafos), to support sustainable member-based microfinance institution and agricultural research and extension services. Unfortunately, the key assumptions on the synergies between the project components have not been adhered to both in the design and implementation. To give an example, only in 6-7 out of the 130 project sites the project components were executed in an integrated manner. The large majority of sites had either a VISACA or received one of the agriculture interventions. Given the distances between project sites and the very poor status of road and transportation infrastructure in rural Gambia, potential interaction between sites (say one with a VISACA and one with a vegetable garden) could not materialise due to the very high transaction costs.

There is a broad agreement both within the Department of State for Agriculture and among concerned observers that the extension services are resource-constrained and under-staffed, a problem which seriously affects staff motivation, perhaps as a continuing result of the retrenchment measures undertaken at the time of the Economic Recovery Programme (1985). The recruitment and training of Village Auxiliaries (VAs) was therefore among the most important initiatives taken by the RFCIP. In order for this initiative to be replicated countrywide, certain important refinements are necessary.

It was also noted that the choice of agricultural sites and activities to be implemented was not supported by a consistent set of targeting criteria and not assisted by a coherent strategy encompassing the provision of inputs, the (partial) processing of the produce and the linkages with output markets. Thus, the agricultural and group-based interventions were disconnected activities, failing to make a significant impact on household income, as suggested by the preliminary evaluation survey.

M&E and Control Systems. The Project Support Unit (PSU) underwent a number of changes throughout implementation. Most notably, the role of M&E Officer was dismissed halfway through the life of the project, and the M&E function reassigned to the Rural Finance and the Agricultural Development Officers respectively. Considerable resources were devoted to M&E, both at the initial stage of the project and during implementation. Despite these provisions, the M&E component did not achieve its primary objective that is the collection and analysis of the information necessary for tracking progress and impact, enabling decision-makers to diagnose and resolve problems. Participatory M&E was introduced in the project in December 2003 stemming from a recommendation formulated by the Supervision Mission of August that year. Despite the efforts, it was noted that the system is far from being fully operational. Data gathered at field level is not submitted to the PSU on time and the MIS database has not yet been complemented with modules to cater for the management of the PM&E information.

Direct supervision. RFCIP was part of the Direct Supervision Pilot Programme approved by the Executive Board of IFAD in 1997 and including 15 projects. Supervision Missions have been carried out regularly and reports produced promptly, however, limitations in the responsiveness to implementation issues have been noticed. Only the last two (of nine) missions included a microfinance expert, in spite of the importance of the microfinance component; the ratings awarded to the project (following the UNOPS practice) have been positive (1s and 2s on a scale of 4) almost without exception. The problem of the very weak synergies between the project components has never been adequately highlighted. By the same token, an analysis of the financial difficulties of VISACAs appeared too late in the Supervision process. This has happened in spite of early warning signals (for example the implementation support mission fielded in 2001 had pointed the finger at weaknesses in the VISACAs and their supporting networks). In sum, a number of serious shortcomings (both in design and implementation) were not timely and adequately identified and rectified. The high turnover of CPMs has certainly represented a constraint in the effectiveness of supervision but so has the lack of adequate expertise in key project design areas.

The field level activities of the RFCIP, and the communication between the centre and the field, suffered from the poor state of the main roads and inter-village tracks, the unreliability of telephone and internet communications and the lack or uncertainty of the power supply. These infrastructural constraints were not considered at the time of project appraisal.

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Recommendations agreed upon by all partners

The strategy level

Rethinking objectives, processes and components

Should IFAD decide to fund future projects/programmes in The Gambia, the first recommendation of the evaluation is that of a "radical rethink", rather than attempting to build on the current "fragile foundations". IFAD should reflect on the choice of the partner agencies in the country, in view of the specific skills and experience required for rural finance. Synergies between components must be built in the design and not left to the implementation. More coherent focus on a narrower set of intervention is also recommended, lest the project rationale is diluted or lost during the execution phase. There are two additional crucial elements to be considered: (i) the need to engage in a continuous and long-term process of support to sectoral policy and regulation, (ii) the importance of learning from performing practices supported by other agencies (e.g. donors and NGOs), which may become partners of IFAD.

Summary recommendations:

• Radical rethink of project concept and due reflection on the choice of partner agencies in the country; further interventions should take account of national development and poverty reduction strategies (PRSP).
• Three alternative options received support from the various stakeholders: (i) a stand-alone microfinance sectoral programme; (ii) microfinance twinned with agricultural support but with a genuine synergy in targeting and implementation and matching geographical areas for main components; (iii) microfinance backed by infrastructural investments.
• Clearer articulation of project/programme objectives and synergy of components in the inception/formulation papers;
• Thorough consultation with partners in the country and analysis of "good practices" that could be taken on board;
• In the rural finance sector, devise a long-term process to support regulatory and supervising bodies (including the Central Bank and the Microfinance Promotion Centre) and cooperate to revise/update rural finance policy documents; a microfinance policy study should be conducted to enhance the regulatory framework.
• The utilisation of performance-based Memoranda of Understanding with partners, including NGO service providers.

Suggested timing: Reflect on first five at project inception, further refine at formulation and appraisal (with more detailed plan and deadlines). Last point to be taken up at project start-up.

Partners involved: IFAD, DOSA, DOSFEA, CBG, Microfinance Promotion Centre and other donors.

Rural finance

Alternative approaches to rural finance and better focus on microfinance technology

At the formulation/appraisal phase, there has been insufficient emphasis on the design of financial services for poor clients. The exclusive focus on VISACAs was not adequately explained as the group lending approach had already met with a fair degree of success in The Gambia at the time of the appraisal. A more programmatic/sectoral approach seems justified, to better learn from alternative methodologies and to progressively increase outreach to poorer households in a sustainable manner (i.e., controlling loan delinquency). The creation of or linkages with microfinance hubs and centres of expertise should be encouraged. It is also appropriate that more (but not exclusive) emphasis should be on women's kafos, both because they appear generally more dynamic than their counterparts among the men but also because it is the women who tend to be excluded from access to loans under the present system.

Summary recommendations:

• Adopt a more programmatic/sectoral approach, inter alia, supporting a centre of expertise in microfinance good practices
• Key actors in microfinance, not only VISACAs, should be supported; the group lending approach should be promoted alongside the development and expansion of the VISACA concept;
• access to credit for groups should be dependent on the establishment of a savings discipline;
• loan guarantees can take the form of peer pressure, collective group guarantees or other innovative approaches as long as the poor are not excluded.

Suggested timing: To be considered at inception/formulation, further refined at appraisal

Partners involved: IFAD, DOSFEA, CBG, Microfinance Promotion Centre, microfinance service providers, other donors.

Future strategies for VISACA sustainability ("sink or swim")

Distorting signals from the Central Bank rating system can be remedied by a revision of the same and diminishing emphasis for membership targets in project documents. The lack of capacity and commitment in management committees may be addressed by courses in basic literacy, book-keeping and loan administration and by insisting on a healthy turnover of personnel on the committee. In any future rural finance programme, the contractual involvement of service providers should specify goals to be achieved within a certain period and the VISACAs should progressively contribute to their fees so that by the end of a given number of years the cost of service provision would be entirely borne by the VISACA itself. At that time, external support should be removed and the VISACA should be allowed to ‘sink or swim'.² Within individual VISACAs, incentives are essential if the services of committed managers and competent cashiers are to be found and kept and, as with the service provision, they must be treated as part of the VISACAs operational costs. Finally, the creation of zonal networks of VISACAs, with apex bodies and technical services providers has good grounds but should not precede the strengthening of individual VISACAs.

Summary recommendations:

• Central Bank to continue supervisory role of VISACA for the time being (alternative proposals to be studied); membership criterion for ratings to be reviewed³;
• more intensive training for VISACA management committees and cashiers as well as for technical service providers;
• stronger incentives for loan repayment, for example interest rebates;
• exit strategy, deadlines and performance incentives for service providers to be included in project design and then built into the relevant contractual agreements;
• cost of service provision and remuneration for committees and cashiers to be progressively borne by VISACAs;
• termination of support for under-performing VISACAs after a predetermined period of external assistance;
• creation of zonal networks of VISACA to proceed concurrently with the strengthening of individual VISACAs; institutionalization strategy to be outlined at project design stage;
• review of current terms and conditions of VISACA loans and savings; savings mobilisation to be a central plank of VISACA operations, with limited reliance on external funds.

Suggested timing: To be considered at inception/formulation. Draft time plan at formulation/appraisal, to be refined at project start-up workshop. Need of continuous monitoring during implementation.

Partners involved: IFAD, DOSFEA, CBG, Microfinance Promotion Centre, microfinance service providers, other donors.

Support to agriculture

Agricultural extension

There is a need to improve motivation and strengthen extension service. One rather than two auxiliaries should be recruited for each village, as there is no need to carry over the crop/livestock (DAS/DLS) distinction into the auxiliary system. Villagers can recompense their volunteer extensionists in kind or by offering their labour on the VAs' own land, and VAs should able to charge modest fees when offering their services to farmers outside their own villages. These provisions need to be settled by the communities themselves with initial guidance from project or government where necessary. Efforts to empower VAs to administer vaccinations for small ruminants and poultry should continue, in collaboration with the DLS. It should be borne in mind that such vaccinations are routinely carried out by farmers themselves in many countries around the world, once the appropriate training has been provided.
Summary recommendations:

• motivate and strengthen extension services through performance-based incentives (training, mobility, allowances, promotion);
• countrywide replication of the Village Auxiliary system;
• recruitment of a single VA per village; training in crop production and animal husbandry; provision to VAs of necessary inputs; remuneration in kind or labour, to be determined and provided by the communities; duties to include vaccination of small ruminants and poultry;
• assist extension agents and VAs familiarise themselves with new technologies through networking, visits and internet access.
• continue support for research in on-farm testing and dissemination of new technologies.

Suggested timing: To be reviewed at inception/formulation, details on remunerations of VAs to be decided by communities themselves.

Partners involved: IFAD, DOSA (DAS, DLS), and other donors.

Training for diversification, processing and marketing.

Elaborate PRA exercises are not necessary to identify what training is desired by particular villages and what markets exist for the end product. Up-to-date marketing information can be sought from the private sector. Farmers should be put in touch with hotels and other tourist outlets for the sale of fresh fruit and vegetables. Where there are few or no markets for fresh produce, simple processing methods for tomatoes (sauces and purees), fruit (dried fruit and fruit juices) and vegetables can be propagated.⁴ Other training programmes, for which there appears to be a local demand, include tie-and-dye, mushroom growing, pottery making, but it must be emphasised that these should only be provided where the right conditions exist (for example deposits of suitable clay) and where suitable markets can be identified.

Summary recommendations:

• training programmes to be determined through consultation with communities;
• emphasis on simple processing techniques where markets for fresh produce do not exist;
• training to match local resources and market opportunities;
• private sector as well as government agencies such as DOP to be involved in providing market information;
• producers to be put in contact with hotels and tourism outlets;
• findings of previous PRA exercises and rural surveys to be made available at convenient locations.

Suggested timing: To be considered at inception/formulation. Participatory implementation process to be revised at project start-up and monitored/reviewed twice a year during implementation.

Partners involved: IFAD, DOSA, other donors, private sector companies.

Implementation support

Management, M&E and project supervision

The central M&E system represents a continual process of monitoring and reporting designed to reach the appropriate levels and to be utilised as a basis for the diagnosis of problems and the making of decisions. Participatory M&E is only one of the tools by which beneficiaries can come to an understanding of the costs and benefits of the activities in which they are involved. The results of this community-level accounting are one source of information to be fed into the project M&E system. Thus the M&E Officer within the PSU is the key figure in providing the basis for management decisions. It is part of his or her job to be critical of the operation of the components when appropriate.

There appears to be a shortage of qualified personnel to undertake the responsibilities of project M&E in The Gambia. Thus a brief term of international TA, with very specific objectives, is likely to be necessary at the onset. This should include the preparation of a summary of the functions and purpose of M&E to be drawn from the IFAD handbook. But arrangements for continuous support (e.g. training) should be made with local institutions (for example the University of The Gambia) and regional IFAD networks. The same institutions and networks may help identify and train business graduates in the basic techniques of M&E.

Whether conducted directly or contracted to a cooperating institution, supervision is a crucial function to support implementation, as well as to monitor and sanction major deviations from the project rationale. In general it is fundamental that the main expertise areas be covered in all supervision missions, particularly the initial ones. In case of direct supervision by IFAD, excessive turnover of CPMs should be avoided and CPMs should ensure adequate (and not sporadic) participation in the field through and between missions.

Summary recommendations:

• the M&E function is crucial and no curtailment of this function should be permitted;
• due emphasis must also be given to essential management functions such as smooth accounting, disbursement and procurement procedures, and to effective auditing;
• the M&E Officer should enjoy a degree of autonomy within the management unit, although the extent of this autonomy needs to be determined jointly by the PMU;
• participatory M&E should be promoted as a tool for cost-benefit analysis by the beneficiaries but should not be regarded as a substitute for a centralised system; training of extensionists and beneficiaries should be provided to enhance effective participatory monitoring;
• the training of project M&E Officers in the relevant departments of the University of The Gambia might be directly funded by IFAD and other international donors, with appropriate linkages with regional support networks;
• the composition of supervision missions should ensure adequate coverage of expertise areas from the beginning;
• in case of direct supervision, CPMs turnover should be minimised and their participation in the field activities should increase;
• the Mid-term Review should be a rigorous exercise, even if it leads to radical re-orientation of the project;
• staff continuity at all levels is desirable during project implementation.

Suggested timing: To be considered at inception/formulation. M&E support needs to continue through project life span.

Partners involved: IFAD, DOSA.

Project communications

The IE mission proposes two separate measures to be taken as part of any future rural finance or agricultural support project. First that there should be some initial investment in road improvement. The extent and nature of this should be a matter for discussion with the relevant government departments and other donors and clearly would need to match the existing plans of government and donor agencies. However, given the geographical shape of the country, the upgrading of secondary roads and tracks would be futile without improvements to the main east-west arteries. IFAD normally avoids major road building projects: perhaps this could be undertaken in collaboration with the World Bank or other international organizations with experience in this field.

For agricultural and rural finance projects, it makes no sense for the PSU or PMU to be based in Banjul or Bakau. A liaison desk located in the relevant ministries would be sufficient. The project managers require easy and regular contact with activities in the field and with the farmers and their households who constitute the intended beneficiaries of the project. Management functions such as M&E would be considerably enhanced.

The second measure would be the relocation of the Project Management Unit to the central provinces.⁵ Here investments in the telecommunications systems would be essential to ensure reasonable telephone and internet links with the capital and other field offices.

Summary recommendations:

• collaborative investments involving the Government, the donors and other development partners in the upgrading of roads and telecommunications;
• a strong and dynamic project steering committee must be put in place to effectively guide project implementation;
• the relocation of the project management unit in the central provinces is a desirable goal but requires prior infrastructural investments in main and subsidiary field offices and training headquarters;
• such a move should form part of the wider measures of decentralisation being pursued by DOSA.

Suggested timing: To be considered at inception/formulation.

Partners involved: IFAD, DOSA, DOSFEA,

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1/ This agreement reflects an understanding among the key partners to adopt and implement recommendations stemming from the evaluation. The agreement was formulated in consultation with the members of the Core Learning partnership. The CLP members that attended the workshop were Ms. Fatou Kuyateh, Permanent Secretary, DOSA; Mr. Ebrima Camara, Deputy PS, DOSA; Mr. Leopold Sarr, Country Programme Manager for The Gambia, IFAD and Mr. Basiru Jobe, Project Coordinator, RFCIP. The workshop was also attended by the following IFAD-OE representative who made presentations on the main evaluation findings: Mr. Fabrizio Felloni, Lead Evaluator and Prof. Roger Norman, Consultant, Evaluation Mission Leader. OE facilitated the process. A complete list of participants is provided in the appendices to the main report.
2/ In the Credit Union network overseen by the National Association of Cooperative Credit Unions poorly performing unions are disaffiliated.
3/ In the original formulation it was recommended that membership criterion be taken out. During the workshop discussion it was instead suggested that the ‘weight' of membership may be reviewed but not completely removed.
4/ A start has been made by RFCIP in this direction with the processing of cassava for chips and gari.
5/ One example, to be considered along with others is the NARI compound at Sapu (CRD)