Completion evaluation

Introduction

Background

The mountain areas in Albania cover 70 per cent of the country's territory and have a considerably higher incidence of poverty than the lowland coastal areas. Agriculture, livestock and agribusinesses are the main employment and income opportunity in these areas, but low productivity, small farm sizes, limited access to financial services, and weak market linkages are among the factors that have inhibited effective and sustainable growth and poverty reduction. The IFAD supported Mountain Areas Development Programme (MADP) was designed to improve the living standards of mountainous households using a multifaceted strategy, which included financial services, agricultural development and institutional strengthening.

Political and social context

The MADP was designed and implemented during a period of significant political, economic and social transformation in Albania. Still emerging from one of the most isolated communist regimes, Albania was in 1997 thrown into substantial violent civil unrest as a result of the collapse of the pyramid schemes.

One year later the Kosovo crisis began, culminating in the arrival of hundreds of thousands of refugees impacting negatively on the social and food security situation, especially in northern Albania. Ethnic inspired unrest later spread to another neighbouring country, Macedonia, and between 2001 and 2002 trade and travel links were severely disrupted as a consequence. This impacted negatively on the already precarious Albania's situation, especially in the northern areas. In addition, the considerable political instability and uncertainty following both parliamentary and local elections also proved disruptive to the civil service, as they often resulted in changes in staff, which also affected MADP (as it will be later discussed).

Economic and poverty situation

The economy of Albania has generally performed well with strong macro-economic growth since 1993 averaging between five and seven per cent annually although it suffered a substantial economic contraction in 1997 as a result of the collapse of the pyramid schemes.¹

Key drivers for achieving and maintaining these relatively high growth rates have included the rapid privatisation and trade liberalisations, a strong fiscal discipline and a relatively well educated labour force able to exploit the market opportunities that were opened in the post-communist period. Also, facilitating this benign outcome has been the establishment of a sound financial sector in the aftermath of the pyramid schemes crisis of 1997. Industry accounted for about 19 per cent of Gross Domestic Product (GDP) in 2006 down from an average of about 45 per cent in the late 1980s. The service sector is a smaller part of the economy than in most other post-communist countries in Eastern Europe. Agriculture's share of GDP has shrunk from about 33 to 23 per cent between 1996 and 2006, although around half the population derives a living primarily from agricultural production (EIU, 2007).

While strong economic growth has contributed to reduce poverty, Albania started from an extremely low base and still today remains one of the poorest countries in Europe with an estimated Gross National Income (GNI) per head of US$2,510 in 2005. According to a 2006 survey², an estimated 18.5 per cent of the population live below the national poverty line of US$2 a day and 3.5 per cent of the population live on an income of less than US$1 a day, the latter being classified as extreme poverty. These data show an improvement from the 2002 Living Standard Measurement Survey (LSMS)³, according to which aggregated level consumption poverty was estimated at around 25 per cent, whereas extreme poverty was five per cent. This substantial reduction in poverty has been accompanied by regional convergence in poverty trends, with a sharp reduction in the poorest region, the Mountain areas, and comparatively slower, but still significant reductions in poverty in the Coast and Central areas. However, rural poverty is still significantly higher than urban poverty, with three quarter of all the poor living in rural areas.

Evaluation objectives, methodology and process

The Office of Evaluation (OE) of the International Fund for Agricultural Development (IFAD) has undertaken a Completion Evaluation of the MADP. The objectives of the evaluation were to: (a) assess the performance and impact of the project; and (b) generate findings and recommendations that would serve as inputs for the design and implementation of future projects in Albania with similar characteristics. The evaluation was conducted in line with the IFAD Evaluation Policy and utilised OE's methodology for project evaluations. The methodology focused on four dimensions: (i) the performance of the project measured in terms of relevance, efficiency and effectiveness; (ii) the rural poverty reduction impact of the project; (iii) the performance of partners including IFAD, the Government of Albania (GoA), United Nations Office for Project Services (UNOPS), UK Department for International Development (DFID) and others concerned; and (iv) sustainability and innovation. The evaluation mission conducted field work in Albania in June 2007. The evaluation team examined data obtained from the programme management units, interviewed key informants, conducted focus group discussions with beneficiaries using standard questionnaires and guidelines, and visited sites to see various activities funded by the Mountain Areas Development Agency (MADA) and by the Mountain Areas Finance Fund (MAFF).

Both quantitative and qualitative techniques have been adopted and the main findings presented in this report are the results of triangulation between different methods and sources. An important source has been the self-evaluation undertaken by the MADP, which has provided valuable analysis especially in relation to the more qualitative aspects of MADP's performance. The evaluation teams have some concerns about the integrity of some of the data sources (mostly from the Government of Albania), as will be discussed below.

The mountain areas development programme

Rationale

The MADP was designed to continue, strengthen and expand the activities of the two previous IFAD-funded projects: the North-eastern Districts Rural Development Project (NDRDP) and the Small-Scale Irrigation Rehabilitation Project (SSIRP), which were implemented in the poorest part of the mountain areas. The organization and management of MADP was designed to shift IFAD's support to mountain areas from the ad hoc spot application of area-based subsector projects to a long-term programmatic view of mountain areas development, to be based upon a rational and synergistic portfolio of investments.

Programme's key dates

MADP was approved by IFAD's Executive Board in December 1999, the loan agreement was signed in January 2000 and the programme became effective in July 2001. The actual start up of MADA's activities was further delayed due to several reasons, such as disagreement between IFAD and the Government of Albania on some of the staff appointments. MADA became operational only in May 2002 following the approval of its 2002 Annual Work Plan and Budget (AWPB) by the Agency's board of Directors. The Mid-Term Review (MTR) was conducted in October 2003. The project completion date was 30 September 2007, while the loan closing date is 31 March 2008.

MADP overall objective and components

The overall objective of MADP was to achieve a sustainable long term economic growth and development in the mountain areas of Albania, and to raise the standard of living of 37 500 mountain area-based households. The overall objective would be achieved by financing the following components: i) Programme Management: in order to ensure a systematic impact, the programme would establish an agency for MADA, which would be a small facility for programming, planning and fund management; ii) Rural Credit: through the establishment of a sustainable non-banking institution such as the Mountain Areas Finance Fund (MAFF), the programme would provide social and agricultural production credit on a sustainable basis to clients living and working in poor, marginal mountain areas; iii) Rural Infrastructure: this component would focus on the rehabilitation of small-scale irrigation schemes and construction of rural roads and village water supplies; iv) Agricultural Development has several subcomponents including: support to community management plans for pasture and forest land use; testing and vaccination of cattle and small ruminants; support to the private veterinary services; and provision of demand-driven extension services.

Financing

MADP's total programme cost was US$23.1million (See Table 1 in the main report). IFAD financed 59 per cent of total costs, through the provision of a highly concessional loan of US$13.2 million and grant of US$0.4 million. Albanian Government funded contribution was of US$2.9 million including foregone duties and taxes (12 per cent). The contributions of beneficiaries amounted approximately to US$1.2 million. The main co-financiers were: Department for International Development (DFID) that contributed US$1.9 million; the Netherlands Development Organisation (SNV) that agreed to co-finance US$0.4 million; the Italian Cooperation that provided US$1.0 million that was later supplemented with US $0.1 million⁴.

There were also supplementary funds, which had not been foreseen at the time of programme design. These included US$60,970 and US$40,500, which were secured from the World Bank-financed Agricultural Service Project (ASP) in Albania and from MADA beneficiaries.

These funds were used towards a joint MADA/ASP pilot initiative, namely the ‘joint competitive grant scheme'. Moreover, through it's Gender Mainstreaming Programme for Central and Eastern Europe and the Newly Independent States countries (CEN), IFAD provided a Technical Assistance Grant (TAG) of US$88,200 for the MAFF-initiated "Knowledge Generation and Skills Development Project for Rural Women and Youth".

MADP performance

Relevance

MADP has been mostly relevant and, perhaps more importantly, it has shown the flexibility to learn from experiences gained. It has adapted to changing circumstance and redesigned key interventions to increase its relevance.

The establishment of MADA and MAFF has been relevant as these are key institutions dedicated to reducing rural poverty in mountain areas. The programme objectives have been highly consistent with the needs of the rural poor who live in mountain areas, with the priorities of the GoA, with IFAD's 1998-2002 and 2002-2006 Strategic Frameworks and with IFAD's 1999 COSOP for Albania, which emphasised the need to move beyond time-bound project approaches towards a cogent and coherent programme for the development of marginal areas in Albania. In relation to the COSOP, it seems that MADP's original design and its 2003 MTR reorientation have informed both the 1999 and 2005 COSOPs for Albania rather than vice-versa, especially on modalities by which the overall poverty reduction strategy was to be implemented. Thus MADP has arguably also assisted in improving relevance of the Albania COSOP. Both COSOPs argued for channelling support through institutions that were permanent in structure and not through specific IFAD Project Implementation Units (PIUs). This design feature seemed highly relevant, as the experience with PIUs had generally proven unsustainable.

Over time, MADP has been able to make significant changes as signs emerged that some of the initial modalities were not optimally designed and were not in line with the evolving country's changing context. At project start, MADP's heavy reliance on collective actions and formation of associations did not prove to be appropriate to the Albanian context. Realising this, the 2003 MTR made efforts to restore the programme's relevance by increasing focus on fostering structural change in mountain areas and emphasising support to the private sector. The strategies for MADP activities and its institutions were further developed, in many cases revised and a strong focus was put on the new Institutional Building component. In addition, the Agricultural Development component was re-oriented (and renamed) as the Private Sector Development (PSD) component. The new approach for this component emphasized the commercial orientation of MADA and was intended to enable farmers and agribusinesses to fully exploit emerging opportunities. To this aim, Strategic Investment Plans (SIPs) were developed to strengthen the growth of strategic farming and agri-business activities with high profitability and potential for increased commercialisation. In relation to the provision of rural financial services, MAFF began gradually to emphasise loans to individuals and Small and Medium Enterprises (SME) with a much more direct incentive for productive and profitable investments, thus discarding the less relevant group-based approach. Since the MTR, the programme expanded its geographic targeting from poorer mountain areas to all mountain areas in the country, with a special emphasis on those activities with a high potential for increasing productivity and profitability.⁵

Effectiveness

In assessing MADP's effectiveness, an important consideration concerns the fact whether the interventions have actually taken place where the poor are located. MADP was designed to start in the south due to the presence of two previous IFAD-funded projects (Northern-eastern Districts Rural Development Project (NDRDP) and Small-Scale Irrigation Rehabilitation Project (SSIRP) located in Albania's northeast and centre-east areas, but then at the phasing out of these two projects, the MADP was supposed to move to the poorer northern mountain areas. However, after the closure of NDRDP and SSIRP projects, the investments and activity level of MADP remained largely concentrated in the relatively substantial richer southern mountain areas, allocating only around 16 per cent of investment funds (i.e. sourced from MADA) to northern ones. If MAFF funds are included too, the figure becomes 27 per cent, which is still a strong bias for southern mountain areas. There are poor people in the southern areas too, but the incidence and depth of poverty are significantly lower here and the programme could have been more effective in reaching poor people by taking a wider geographic coverage. The evaluation mission was unable to find technical evidence as to why MADA investment allocations were biased against the northern areas. Loan funds from MAFF, on the other hand, were essentially equally distributed between north and south.

MADP's effectiveness has been mixed but with an improving tendency throughout the programme period. MADP's programme objective was to improve the living standards of 37 500 poor mountain area households. According to MADP figures (2007) 56 488 households have received MADP services and their living standards have been raised accordingly. However, while living standards have generally increased rapidly during the programme period, the evaluation team would like to caution about drawing a too close causal relationship between MADP's interventions and this rise. Undoubtedly, MADP has played an important (and increasingly strategic) role, but there are some concerns about the degree to which necessary complementary actions by other actors (most notably the government's veterinary service and water user associations) have been sufficient to achieve the desired effectiveness. This especially concerns the interventions that started before 2003, most notably in the irrigation and vaccination sectors, which account for the majority of beneficiary households. The implicit assumption that these external actors would deliver the needed follow-up to MADP investments at times proved too optimistic and has in certain instances compromised effectiveness. In any case, exclusive focus on numbers may not capture important contributions from MADP both in terms of delivering tangible benefits to numerous households, but also in terms of piloting and demonstration activities especially within the private sector development and the credit sector, where MAFF has proven the viability of rural financial services and introduced new products. Other interventions concerning the rural infrastructure component and the vaccination activities have had more limited effectiveness and almost no-spill over effects and for all interventions the richer southern districts have been found to be the main beneficiaries.

Efficiency

It is difficult to evaluate MADP's efficiency at aggregate level. At programme's appraisal, an Economic Rate of Return (EIRR) was estimated at 37 per cent, heavily relying on the three main investments in irrigation, vaccinations and agricultural extension. The reach, coverage and economic lifetime of these investments were overestimated during the design phase. The economic life of the single largest investment (in irrigation) was set at 20 years at appraisal: this is evidently an overestimation as many of the schemes are already disintegrating with virtual no institutionally sustainable structures to ensure their maintenance. Already in 2001 UNOPS Supervision Mission claimed a MADP's estimated EIRR of only 21 per cent stating that this reflected the level of sunk costs in existing irrigation structure and conservatively estimated incremental benefits. In 2003 this figures was revised further downwards as many of the investments were deemed unsustainable, whilst benefits from incremental marketed output were likely to have been overstated. It was argued that the EIRR, while impossible to be accurately assessed, was likely to be near zero or negative.

Also reducing efficiency has been the substantial implementation delay of nearly two years at programme start. This affected especially MADA, whereas MAFF generally had somewhat higher efficiency, especially after it started to phase out the group-based loans. Based on various estimates of the economic life-time of the infrastructure and coverage of the vaccination programme, the evaluation team has made calculations of the EIRR and would argue that efficiency could have been significantly higher.

Impact on rural poverty

At a component level, the impact of the vaccinations interventions and rural infrastructure is disappointingly low, especially when considering the amount of funds invested (79 per cent of MADA's total investments). While there is still some uncertainty as to the ultimate impact of the vaccination programmes, it is clear that these have not managed to bring major zoonotic diseases under control. As for the rural infrastructure, most of the investments have proven to be unsustainable and based on flawed design. In addition, the heavy reliance on collective action through e.g. Water User Associations (WUAs) for Operation and Maintenance (O&M) proved ill-suited to the Albanian – highly individualised – social context. Similarly, many of the forest and pasture management associations have failed to maintain impact after the cessation of IFAD/MADA support.

Conversely, most of the activities that were initiated after the 2003 MTR have demonstrated significant strategically impact, albeit still on relatively small scale. The Strategic Investment Plans (SIPs) have facilitated the introduction of crucial agricultural technologies and the increased emphasis on a broader range of actors in the value chains has proved successful in raising agricultural productivity and, most crucially, profitability. The rural credit component, implemented through MAFF, has impacted directly on the beneficiaries' access to financial services, as they are now able to increase investments and smooth consumption patterns thus reducing exposure to e.g. seasonal or unforeseen downturns in the economy. Moreover, after a somewhat misguided start, the component has helped restore a healthier and sustainable credit culture, by following a strict commercial approach in its lending to individuals and Small and Medium Enterprises (SMEs).

Sustainability

An important determining factor for sustainability seems to be the degree to which individuals, companies or small cohesive groups of individuals (socially and/or commercially) have a clear and direct incentive to continue the activity after support is withdrawn. Perhaps the most powerful incentive is the profit motive, which explains the significantly higher degree of sustainability of e.g. SIPs compared to other various donor-established user groups/associations, such as the WUAs and the forest and pasture management user associations. The economic sustainability of many irrigation schemes, which have accounted for a significant amount of investments, is also questionable due to the low value mix of crops being under irrigation. These are often not profitable, as the income they generate is not sufficient to cover the full cost of irrigation schemes, including depreciations. However, it is possible to take comfort in observations from the SIPs and interventions in which privately owned irrigation schemes have worked and continue to work post-project.

With regard to Fora, both at district and national levels, it seems that their political and social sustainability is also limited, as they are substantially dependent on the income and funding for activities from MADA. With the end of MADA funding, the level of Fora's activity has dropped substantially, with the result that many Fora have either turned largely dormant, or sought other donors' assistance for a variety of purposes and at times somewhat opportunistically without strong strategic guidance. The sustainability of support to private and public veterinary services is also uncertain and improvements are needed in all aspects of vaccine production in future campaigns to not jeopardise previous MADA efforts.

As far as the two key institutions - MADA and MAFF - are concerned, MADA has become a more sustainable market-supporting centre of excellence for mountain areas development and the government is considering devolving substantially more legal authority to MADA; a clear indication that the institutional sustainability is improving. However, it will probably still need external funding for a number of years. In relation to MAFF, this was initially saddled with a high portfolio at risk primarily from the collective loans disbursed under the Village Credit Funds scheme (VCFs). Most of these VCFs proved unsustainable. This having been overcome, sustainability prospects appear bright provided MAFF is given the full ability to compete on equal terms with the growing competition in the financial sector. Privatisation will probably be the only long term sustainable solution.

Given the substantial initial focus on partly supply-driven approaches (especially in irrigation and rural road construction), sustainability has generally been jeopardised in many instances. However, this judgement does not do full justice to MADP's dynamics and to its successor programme the ‘Sustainable Development for Rural Mountainous Areas Programme' (SDRMA), which have seen clear sustainability improvements especially in relation to the specific priority interventions initiated after the 2003 MTR not least the strategic investment programmes and the re-oriented financial focus of MAFF.

Innovation, replicability, and scaling-up

The two major institutional innovative features of the MADP have been arguably the establishment of MADA and MAFF, as permanent locally embedded institutions.

MADA has become a market-supporting centre of excellence for mountain areas development and may eventually be developed into a regional development agency as seen in other European countries. This has clearly been an innovation in the Albanian context. MAFF is also an innovative feature, and it has produced innovative products such as flexible repayment regimes that have been well received among its customers.

At a component level, the introduction of SIPs was a major innovation within the programme, redirecting focus from supporting essentially economically doomed small-scale subsistence farmers, towards commercial farmers with a strong potential to up-scale. This is arguably also rather innovative in relation to IFAD's more traditional approach to poverty reduction, which tend to argue for continued support to small-scale farmers agricultural production. Obviously this does not entail that IFAD should refrain from working with the poor directly; the key point here is that the initial focus on promoting incremental improvements in the poorest farmers' agricultural production had virtually no sustainable impact and hence also no potential for up-scaling. However, in order to make a well balanced assessment of MADP's innovative features, it needs also to be highlighted that the programme's original design was initially based on some old-fashioned interventions, especially with regard to the infrastructure component that was using decade old designs for irrigation with no potential for up scaling.

Partner performance

IFAD played a crucial role in the design of MADP, drawing on the experiences of two previous IFAD funded projects. However, MADP design turned out to have some structural flaws that were partly based on unconvincing assumptions which had not been fully analysed by neither IFAD or by the Government of Albania. Later on, IFAD was instrumental in the much needed reorientation of the programme which took place after the MTR. IFAD strategically used MADP as a policy platform for advancing the dialogue on mountain areas development, which has catapulted the issue to the agenda of policy-makers and has ensured stronger government commitment. However, IFAD should have invested more resources in pledging a more balanced and pro-poor geographical orientation of activities and in ensuring stronger voice of the rural poorest in the advocacy activities.

Government of Albania

Has been the key domestic partner and has provided a generally enabling legislative framework e.g. for MAFF in the field of micro-financial regulation, but also for private sector development in general. Macro political changes seem at times to have impacted on the frequency and appointment of senior management positions, thus generating delays and some loss of institutional memory. In some instances, lack of complementary actions also contributed to reducing the programme's performance (in e.g. vaccinations) and the staff appointed by GoA did not always ensure proper pro-poor geographical targeting. Local governments have participated enthusiastically in the strategic development planning exercises piloted under the local area partnership sub-component.

UNOPS performance as the Cooperating Institution responsible for supervision was generally satisfactory, especially considering the relatively budget constraints under which it performed. Its supervision duties were managed with a reasonable degree of responsibility, proportionally to the allocated resources, alerting stakeholders to possible problems and providing part of the remedial resources such as technical inputs.

The communities participated in a number of contexts from WUAs to forest and pasture user associations, to Fora development with reasonable dedication, at least as long as they derived direct programme benefits. However, very few honoured the commitment to continuously provide user/community contributions and all displayed challenges in operation and maintenance. Also many ‘community leaders' made their request for irrigation rehabilitation not on the basis of the whole community's needs and aspirations, but often following political and personal preferences and priorities.

DFID has been mainly involved in providing technical assistance to a number of activities, including overall programme management, SIPs and local partnership initiatives. Concerns have been voiced about the degree of local involvement, capacity development and ownership of some products.

The Italian Cooperation has primarily provided funds in a timely manner and thanks to its financial support a number of workshops were held at the district, regional and national level with a wide range of stakeholders. In MADP's initial phase, the Dutch SNV provided TA to the forest and pasture management associations; these inputs have been appreciated as they facilitated the implementation of important activities such as the private sector development activities and tree planting.

Conclusions

The context in which MADP was initially designed and implemented deserves special attention. The severe political and economic disruption caused by the collapse of the pyramid schemes in 1997, the Kosovo crisis in 1998-99 and the trade disruption caused by the Macedonian crisis in 2001-02, clearly instilled a sense of urgency (and possibly emergency) among all stakeholders, which reduced focus on long-term sustainability issues and diverted the attention from the need to foster structural change in the mountain areas.

In addition to the two years delay in project start due to disagreements on senior staff appointments, there was also considerable project inertia with many modalities and concepts being somewhat inherited from previous projects, such as the adoption of group - based associations and activities that proved not to be suited to the Albanian context.

This led to the design of interventions with only limited impact and sustainability, often being supply- driven and with poor monitoring and supervision (e.g. vaccinations and irrigation). Combined with a partly misguided approach towards poverty reduction and too heavy emphasis on utilising discredited implementation modalities, the project performance in the first years was unsatisfactory.

To the credit of IFAD, UNOPS and GoA, during the MTR remedial actions and strategic reorientations were proposed in order to restore relevance and improve MADP's impact and sustainability. Emphasis was put on supporting the private sector and encouraging already emerging developments of land consolidation and commercialisation. Empirically, this has proven the only relevant growth strategy for mountainous areas. The alternative of promoting incremental improvements in the poorest agricultural production techniques on very small plots turned to be irrelevant as it has not been able to yield any substantial and sustainable impact on poverty reduction, but rather has further delayed an inevitable rural transformation process towards a higher degree of commercialisation and higher productivity. This strategic shift has successively promoted and increased relevance and looks set to be continued in the ongoing successor programme ‘Sustainable Development for Rural Mountainous Areas programme' (SDRMA), which is also supported by IFAD.

 The single largest achievement of MADP is arguably the establishment of the two core institutions of MADA and MAFF. They have proven relevant as key institutions dedicated to advancing the course of mountain areas in general and the poor living there in particular. They have also assisted in raising the profile of the mountain areas on the policy agenda.

The general knowledge of the specific needs and problems, but also opportunities and investment potentials, of these areas is now significantly enhanced among the public and policy-makers. However, both institutions could have performed even better had they been subject to less political interference and more robust impact evaluation.

MADP Performance Rating6
Relevance	5
Effectiveness	3
Efficiency	3
Project Performance7:	4
Rural Poverty Impact	4
Sustainability	3
Innovation	4
Overall MADP Achievement8	4
Partners Performance:
IFAD	4
Government of Albania	3
UNOPS	5

In light of the above, MADP's overall achievement has been rated as moderately satisfactory (4). While initial performance was not fully satisfactory, the programme, especially after the Mid-term Review, has made continuous attempts to improve its performance, most often with considerable success. Performance has thus improved over time and MADP has increasingly supported and benefited from the economic revival in the mountain areas that has occurred during the programme period.

Recommendations

Accelerate the strategic shift supporting a private sector led structural transformation

This should form the backbone of the mountain areas growth and poverty reduction strategy and all partners should remain clear that this process will produce both winners and short-term losers. In the agricultural sector this will entail support to land concentration, to commercialisation and industrialisation, a process that is likely to temporarily marginalise the least resourced farmers as they cannot meet the increasingly demanding standards of modern agriculture. This process is likely to be intensified as Albania seeks European Union (EU) approximation to food safety standards (in particular Sanitary and Phytosanitary Measures (SPS) and Hazard Analysis Critical Control Point (HACCP)), which in turn will force farmers to meet quantity, quality, timeliness and traceability requirements of new supply chains. Small scale, under-capitalised and often under-educated farmers have only limited prospects in this scenario, even with IFAD assistance.

Increase the poorest labour market mobility enabling them to exploit emerging non-agricultural opportunities

Perhaps too often, IFAD (both in Albania) has attempted to improve existing, mostly agriculture-based livelihoods of the poorest. Thus initial emphasis in MADA was to improve - marginally – the productivity of small-scale farmers by e.g. irrigation. As argued above such a strategy is likely to only delay an inevitable process. Instead, more efforts should be made to complement the above mentioned private sector led growth strategy with targeted efforts aimed at improving the poorest people's skills and competencies, enabling them to take advantage of the new opportunities emerging in both rural and non-rural settings. Retraining, vocational education and targeted courses could form part of such a complementary strategy.

Increase the voice of the poor mountain people in policy making and allocations of importance to them

At the moment the key vehicles for promoting voice and accountability - the Fora - are not representing the rural poor, and broadening Fora membership may undermine cohesiveness and sustainability. Going forward IFAD and MADA may need to devote more resources in analysing how to better ensure the representation of the poor in advocacy efforts.

Prioritise districts with higher than average poverty rates

It is not appropriate that MADA has focussed efforts on relatively less poor areas, leaving out more deserving ones. This needs to be corrected and will have to entail more investment in northern mountain areas. IFAD should closely monitor spatial disbursement patterns and not allow a repetition to occur.

Make a clear, sequenced and time specific privatisation plan for MAFF

While there was an argument for using public funds (IFAD and government) for reaching poor mountain households when the programme started, this argument is now starting to lose validity. Commercial banks are partly taking their cue from MAFF by investing heavily in mountain areas, and MAFF should be given the full operational and management freedom needed to remain competitive that only a full privatisation can offer.

Ensure more realistic analysis of incentives and political economy issues in the design of similar programmes

The MADP experience testifies to the need to critically analyse both economic and political incentives of all stakeholders (including possible losers) especially when designing interventions based on collective approach, be it credit, infrastructure or natural resource management. Initially MADP was institutional naive in its assumptions.

The MADP experiences also suggest that there are significant dangers in following donor fashions as the evidence from irrigation, forest management and micro-credit testifies. Too often such approaches have been used as a blue-print that have had relevance in another context, but not in Albania. Interventions relying on the establishment of new groups and associations need to be carefully evaluated, utilising both insight from the political economy of collective action and more simple incentive analysis.

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1/ The highly leveraged and ultimately unsustainable pyramid investment schemes are estimated to have resulted in the loss of some US$1.2 billion in people's savings and triggered a crisis that brought the country to the brink of civil war.

2/ See Albania's Institute of Statistics (INSTAT) and the World Bank on ‘Trends in Poverty and Inequality', 2006.

3/ This survey found that rural poverty was significantly higher than urban poverty, by a factor of at least ten percentage points. Moreover, the northern part of the Mountain region (the North and the North-east agroecological area) had the worst poverty outcomes among the country's four regions (Tirana, Coastal, Central and Mountain). Almost one-half of the population in this area was poor and one in five could not meet basic food needs. Poverty also had a strong gender dimension as the transition period has had a disproportionately negative impact on women's economic and political status.

4/ The US$1.0 million and US$0.1m from the Italian Cooperation were financed through a programme called Facility for Farmers' Access to Markets (FFAM) in the Balkan Area.

5/ This also proved consistent with IFAD's ‘Targeting Policy' of September 2006.

6/ The ratings are based on the OE's six-point rating system: Highly Satisfactory (6); Satisfactory (5); Moderately Satisfactory (4); Moderately Unsatisfactory (3); Unsatisfactory (2); Highly Unsatisfactory (1).

7/ As per OE's Methodology, the Project Performance rating is the arithmetical average of Relevance, Effectiveness and Efficiency.

8/ As per OE's Methodology, the Overall Project Achievement is a composite assessment of the six evaluation criteria: relevance; effectiveness; efficiency; rural poverty impact; innovation and sustainability.