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AFRICAN DEVELOPMENT BANK GROUP MADAGASCAR YOUNG RURAL ENTREPRENEURS (PROJER) PROJECT COMPLETION REPORT November 2008

Madagascar - Young Rural Entrepreneurs (PROJER ......MADAGASCAR YOUNG RURAL ENTREPRENEURS (PROJER) PROJECT COMPLETION REPORT November 2008 TABLE OF CONTENTS Pages Table of Contents,

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Page 1: Madagascar - Young Rural Entrepreneurs (PROJER ......MADAGASCAR YOUNG RURAL ENTREPRENEURS (PROJER) PROJECT COMPLETION REPORT November 2008 TABLE OF CONTENTS Pages Table of Contents,

AFRICAN DEVELOPMENT BANK GROUP

MADAGASCAR

YOUNG RURAL ENTREPRENEURS (PROJER)

PROJECT COMPLETION REPORT

November 2008

Page 2: Madagascar - Young Rural Entrepreneurs (PROJER ......MADAGASCAR YOUNG RURAL ENTREPRENEURS (PROJER) PROJECT COMPLETION REPORT November 2008 TABLE OF CONTENTS Pages Table of Contents,

TABLE OF CONTENTS Pages

Table of Contents, List of Tables, List of Annexes, Currencies and Units of Measure Acronyms and Abbreviations, Basic Project Data, Executive Summary Project Matrix ................................................................................................................i-xvi I. INTRODUCTION .................................................................................................. 1 II. PROJECT OBJECTIVE AND FORMULATION ................................................. 1

2.1 Project Sector Goal and Specific Objectives............................................... 1 2.2 Project Description ..................................................................................... 2 2.3 Project Origin and Formulation .................................................................. 2 2.4 Preparation, Appraisal, Negotiation and Approval .................................... 2

III. PROJECT IMPLEMENTATION .......................................................................... 3

3.1 Loan Effectiveness and Project Start-up ..................................................... 3 3.2 Modifications .............................................................................................. 3 3.3 Estimated and Actual Implementation Schedule ....................................... 4 3.4 Reporting ..................................................................................................... 4 3.5 Procurement ............................................................................................... 5 3.6 Financing Sources and Disbursements ....................................................... 6

IV. PROJECT PERFORMANCE ................................................................................. 7

4.1 Overall Evaluation ...................................................................................... 7 4.2 Operational Performance ............................................................................ 8 4.3 Institutional Performance ......................................................................... 11 4.4 Performance of Consultants, Contractors and Suppliers .......................... 12 4.5 Financial Performance .............................................................................. 13 4.6 Economic Performance ............................................................................ 13

V. SOCIAL AND ENVIRONMENTAL IMPACT................................................... 14

5.1 Social Impacts .......................................................................................... 14 5.2 Environmental Impacts ............................................................................ 14

VI. PROJECT VIABILITY AND SUSTAINABILITY ............................................ 14

6.1 Overall Assessment .................................................................................. 14 6.2 Risk Analysis............................................................................................. 15

VII. PERFORMANCE OF THE BANK AND THE BORROWER ........................... 15

7.1 Bank’s Performance ................................................................................. 15 7.2 Borrower’s Performance ......................................................................... 15

VIII. OVERALL PERFORMANCE AND RATING ................................................... 16 IX. CONCLUSIONS, LESSONS LEARNT AND RECOMMENDATIONS ........... 16

9.1 Conclusions ............................................................................................... 16 9.2 Lessons Learnt........................................................................................... 16 9.3 Recommendations ..................................................................................... 17

Page 3: Madagascar - Young Rural Entrepreneurs (PROJER ......MADAGASCAR YOUNG RURAL ENTREPRENEURS (PROJER) PROJECT COMPLETION REPORT November 2008 TABLE OF CONTENTS Pages Table of Contents,

LIST OF TABLES Page

Table 3.1 Estimated and Actual Implementation Schedules 4 Table 3.2 Approval Process for Certain Contracts 5 Table 3.3 Comparative Table of Project Costs by Financing Source 6 Table 3.4 Comparative Table of Project Costs by Component 6 Table 3.5 Comparative Table of the Project’s Overall Expenditure 7 Table 3.6 Comparative Table of the Project’s Disbursement Schedule 7 Table 3.7 Comparative Table of Disbursements by Expenditure Category 7 Table 4.1 Outcome of the Selection, Training and Installation of YRE 9 Table 4.2 YRE Performance Indicators 13

LIST OF ANNEXES No. of pages

Annex 1 Location Map 1 Annex 2 Key Project Milestones 1 Annex 3 Principal Project Physical Outputs 2 Annex 4 Annual Disbursements from the ADF Loan and the Entire Project 1 Annex 5 Estimated and Actual Project Implementation Schedule 1 Annex 6 Project Organization Chart 1 Annex 7 Project Economic and Financial Rates of Return 2 Annex 8 Performance Evaluation and Rating 2 Annex 9 Matrix of Recommendations and Follow-up Measures 1 Annex 10 Information Sources 1 Annex 11 Comments by the Borrower and Executing Agency 1 Annex 12 Annotated Photographs of Project Outputs 12 This report was written following a combined project supervision and completion mission to Madagascar from 28 October to 8 November 2007 by Messrs. Rafâa Marouki, Agro-Economist, Head of Mission, Willy Raparaoelina, Expert Analyst for the Private Sector, MGFO. Questions on this document should be referred to Mr. Chiji Ojukwu, Head of Unit OSAN.1 (Extension 2675) or Mr. Ali Abou Sabâa, Director OSAN (Extension 2037).

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CURRENCIES AND UNITS OF MEASURE Currency Unit: Ariary (MGA)

At Appraisal (1998)

At Completion (2007)

1 UA MGA 1 448.40 MGA 2 972.80

Annual Average Exchange Rate Trend

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 MGA/UA 1517.6 1646.4 1 758.80 1 839.0 1 655.60 1 672.00 2 865.80 2 938.80 3 090.60 2 972.80

These exchange rates correspond to the annual average of the said period

ACRONYMS AND ABBREVIATIONS ADF : African Development Fund ASC : Agricultural Services Centre AWPB : Annual Work Plan and Budget BOA : Bank Of Africa CCMER : Rural Entrepreneurs Mutual Guarantee Fund CMS : Computerized Management System DAM : Migration Support Department EOP : Emergency Operational Plan EPIC : Public Industrial and Commercial Establishment ERR : Economic Rate of Return FAO : Food and Agriculture Organization of the United Nations FO : Farmer Organization FOFIFA : National Centre for Applied Research on Rural Development GDP : Gross Domestic Product IGA : Income-Generating Activities LGS : List of Goods and Services LI : Labour Intensive MAEP : Ministry of Agriculture, Livestock and Fisheries MAP : Madagascar Action Plan MDG : Millennium Development Goals ME : Monitoring-Evaluation MFI : Micro-Finance Institution MGA : Madagascar Ariary MIS : Market Information System MUA : Millions Unit of Account NGO : Non-Governmental Organization NMS : National Micro-Finance Strategy ONE : National Environment Board PCR : Project Completion Report PEO : Private Economic Operator PIU : Project Implementation Unit PRDR : Regional Rural Development Plan PROJER : Young Rural Entrepreneurs Project PRSP : Poverty Reduction Strategy Paper PS : Professional Structures RF : Revolving Fund SMAD : Action in Development Military Service SMC : Steering and Monitoring Committee SWC : Soil and Water Conservation TA : Technical Assistance TSC : Training and Support Centre UA : Unit of Account WFP : World Food Programme YAE : Young Agricultural Entrepreneurs YRE : Young Rural Entrepreneurs

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BASIC PROJECT DATA 1. Country : Madagascar 2. Project : Young Rural Entrepreneurs Project (PROJER) 3. Loan Number : N° F/MAD/JEU-ENT-RUR/98/34- FAD N°2100150000551 4. Borrower : Malagasy Government 5. Guarantor : Malagasy Treasury 6. Beneficiary : Ministry of Agriculture, Livestock and Fisheries 7. Executing Agency : Project Implementation Unit

A. LOAN At Appraisal At Effectiveness Actual 1. Amount (UA million) 7.35 7.35 7.30 2. Interest Rate :

Repayment of principal in 80 consecutive half-yearly instalments, payable on

1st April and 1st October, at the rate of 1% per annum for the first 10 years and 3% per annum thereafter.

Service charge: 0.75%/annum on disbursed amount outstanding;

Commitment charge: 0.50%/annum on undisbursed amount with effect from

15/4/99 3. Repayment period 40 years 40 years 40 years 4. Grace period 10 years 10 years 10 years 5. Negotiation Date June 1998 6. Approval Date 12 November 1998 7. Signature Date 17 December 1998 8. Effectiveness Date 5 October 1999

B. PROJECT DATA (in UA million)

Total Cost At Appraisal At Completion

Financing Plan

Foreign Exchange

Local Currency

Total Foreign Exchange

Local Currency

Total

A. ADF/ADB 6.68 0.67 7.35 6.60 0.70 7.30 B. Government - 1.43 1.43 - 1.12 1.12 C WFP 0.43 0.43 0.001 0.001 D Beneficiaries 0.02 0.02 0.01 0.01

TOTAL 6.68 2.55 9.23 6.60 1.83 8.43 % of Total Cost 72.37% 27.63% 100 % 78.29 % 21.71 % 100 % Duty-free cost)

3. Effective date of first disbursement (FR) : 14/04/2000 4. Initial loan closure date : 30/11/2004 5. Effective date of last disbursement : 31/12/2007 6. Start-up of project implementation activities : 01/01/2000 7. Completion date of project implementation activities : 30/06/2007

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C. PERFORMANCE INDICATORS

1. Balance (in UA million) : 0.045 2. Cancellation (in UA million) : - 3. Time Overrun/underrun Slippage on Effectiveness : 6 months Slippage on Completion Date : 36 months Slippage on Last Disbursement : 36 months Number of Extensions of Last Disbursement : 3 4. Project Implementation

Status -

: Physical Implementation completed on 31/12/2007.

5. List of verifiable indicators in relation to initial allocations

(in UA)

Expenditure Categories

Initial Amount (Loan Agreement)

Revised Amount

Final Amount (At completion)

Disbursement Rate in relation to Initial Amount

A. Goods 1.34 0.93 0.97 72.4 % B. Works 2.43 3.06 3.12 128.4 % C. Services 2.83 1.97 2.27 80.4 % D. Personnel 0.47 0.55 0.57 121.2% E. Operation 0.10 0.22 0.19 190.0 % F. Others 0.18 0.62 0.18 100.0%

TOTAL 7.350 7.350 7.305 99.39 %

1. Borrower’s Performance : Satisfactory 2. Bank’s Performance : Satisfactory 3. Service Providers’ Performance : Unsatisfactory Fair Satisfactory

3.1 Goods IAPSO (UNDP) X MIARY TECH’LAB X CODIM X HENRI FRAISE X MADAUTO X TENEMA X SOCIMEX X SOMECA X TRIUMPH International Madagascar X Ets ANDRISOA X COMINOR X ASA HAZO X COGENAL X Ese RAKOTOMAVO X WELDOM SA X TED X DIGIT MG X AXIUS TECHNOLOGY X

3.2 Works AKAMA Group X STEC X ENGEMAFI X VONJY X MANAMBOLO X FANOMEZANA X FANOMEZANTSOA X KINGA X

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EGECOT – MIMOSA X ARATRA X MANAMBOLO X VONJY X CRAC X MADAHAZOTSARA X RAVELOJAONA PC X ARR X IRAIR X LEONG BTP X ERD X RATOEJANAHARY X MADAHAZOTSARA X AVISOA X Ese MANASOA X

3.3 Services TRANSTEC Ltd X RAKOTONDRANTSIMA Haingo X SOMEAH/SOGREAH X MAMOKATRA X EURA AUDIT international X ASA TARATRA X BOANERI X B.E ECR X ESPACE INGENIERIE X BRL X GAMA CONSULT X Martin RASOANAIVO X EVA Consulting X

7. Economic Rate of Return (%) APPRAISAL PCR 14. 6 6.3

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D. MISSIONS

Type of mission

No. of missions

Date of Mission No. of people

Composition of Mission Staff/days

Identification 1 December 97 X Investment Centre -FAO xx Preparation 1 December 97 X Investment Centre -FAO xx

Appraisal 1

8 to 24 May 1998 4 1 Agronomist Environmentalist Financial Analyst 1 Agro-economist

16 16 16 16

TOTAL 64 27 May - 8 June

2000 1 1 Agronomist 12

10 - 24 February 2001

2 1 Agronomist 1 Agro-economist

23 23

20 Oct.-9 Nov. 2001 3 Head of Unit 1 Agronomist 1 Agro-economist

20 20 20

18 Nov.-03 Dec 2002 2 1 Agronomist 1 Agro-economist

15 15

Supervision 13 22 June-11 July 03 1 1 Agro-economist 19 17-30 April 2004 2 1 Financier

1 Agronomist 14 14

25 Nov.-9 Dec 2004 2 1 Agro-economist 1 Agro-economist

14 14

9-18 Dec 2004 1 1 Financier 10 29 Sep.-12 Oct. 2005 (1) Director

Head of Unit 1 Financier 1 Agro-economist 1 Procurement Specialist 1 Disbursement Specialist

14 14 14 14 14 14

30 April-13 May 2006

4 (1) 1 Agro-economist 1 Agro-economist 1 Procurement Specialist 1 Disbursement Specialist

14 14 14 14

25 May - 7 June 2006 2 (1) 1 Financier 1 Agricultural Engineer

12 12

19 - 21 February 2007

4 1 Agronomist (MGFO) 1 Procurement Specialist 1 Disbursement Specialist 1 Infrastructure Specialist

3 3 3 3

16 to 30 May 2(1) 1 Agro-economist 1 Agronomist (MGFO)

14 14

TOTAL (437)

Completion

1

28 Oct.-10 Nov. 2

1 Agro-economist 1 Financier MGFO

14 14

TOTAL 28 (1) Joint Mission with another project E. DISBURSEMENTS

Amount at Appraisal Amount at Signature Actual Amount Disbursement Rate

7.35 MUA

7.350 MUA

7.305 MUA

99,39 %

Total amount disbursed (UA) : 7 304 837 Balance (UA) : 45 163 Undisbursed amount (UA) : 45 163 (being cancelled)

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Annual Disbursement of ADF Loan (in UA Million)

2000 2001 2002 2003 2004 2005 2006 2007 TOTAL

Estimated 2.09 1.91 1.28 1.05 1.02 7.350

Actual 0.14 0.24 0.11 0.49 0.84 2.02 1.43 2.03 7.305

% Disb. 1.96% 5.33% 6.88% 13.61% 25.00% 52.57% 72.04% 99.39% -

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F. LIST OF CONTRACTS (Amount in Ariary)

N° Designation/Contract Title Providers

Nationality

Approval Contract Amount Amount Paid from the Loan

Term of Performanc

e Observations

(amendment, delay, …)

1 Procurement of vehicles by IAPSO IAPSO (UNDP) UN 241 427 886.00 241 427 886.00

2 Procurement of computer and office automation equipment MIARY TECH’LAB Malagasy 06/04/01 61 681 752.00 51 401 460.00 25 days

3 Procurement of computer and office automation equipment CODIM Malagasy 06/04/01 61 903 416.00 51 586 180.00 25 days

4 Ambararatabe Centre Rehabilitation Works AKAMA Group Malagasy 13/08/01 25 012 418.40 20 843 682.00 90 days

5 Construction Works of the Project’s Office in NANISANA STEC Malagasy 13/08/01 27 745 392.00 21 433 315.40 90 days

6 Provision of technical assistance to PROJER TRANSTEC SA Belgian 02/01/2003 1 566 739 983.20 1 402 502 851.33 30 months Including Amendment n°1 : 53 930 850,00

7 Supply Ambatofotsy TSC with materials/equipment HENRI FRAISE Malagasy 10/11/2003 452 453 567.60 336 426 358.20 03 months

8 Supply Ambatofotsy TSC with materials/equipment MADAUTO Malagasy 19/11/2003 298 645 752.00 223 402 804.00 2.5 months

9 Supply Ambatofotsy TSC with materials/equipment TENEMA Malagasy 19/11/2003 222 784 800.40 103 416 508.80 2.5 months

10 Supply Ambatofotsy TSC with materials/equipment SOCIMEX Malagasy 19/11/2003 225 316 214.40 175 008 291.00 2,7 months

11 Supply Ambatofotsy TSC with materials/equipment SOMECA Malagasy 19/11/2003 15 877 548.00 10 546 286.60 2,5 months

12 Supply Ambatofotsy TSC materials/equipment TRIUMPH Int Madagascar Malagasy 19/11/2003 31 912 262.00 25 034 922.00 3 months

13 Preparation PD-DD-BD for the construction of Ambatofotsy TSV

RAKOTONDRANTSIMA Haingo Malagasy 02/12/02 31 230 000.00 26 025 000.00 60 days

14 Contracting for the entire project for the opening of a 150 km rural road (lot B) SOMEAH/SOGREAH Malagasy 28/01/2003 438 273 550.00 380 159 282.00 27.5 months

15 Plot parcelling/installation of impluvium (lot C) MAMOKATRA Malagasy 19/08/2004 286 110 000.00 158 027 585.69 26 months 16 Audit of PROJER Accounts Years 2000-2001-2002 EURA AUDIT international French 23/12/03 24 141 728.00 20 290 223.20 3 weeks 17 Const°, rehabilitation and extension Ambatofotsy TSC ENGEMAFI Malagasy 02/07/2004 200 804 209.68 150 603 157.20 120 days 18 Const°, rehabilitation and extension Ambatofotsy TSC VONJY Malagasy 16/07/2004 204 187 604.64 153 140 703.40 3 months 19 Const°, rehabilitation and extension Ambatofotsy TSC MANAMBOLO Malagasy 02/07/2004 243 557 220.24 152 590 454.20 3 months 20 Const°, rehabilitation and extension Ambatofotsy TSC FANOMEZANA Malagasy 11/10/2004 351 387 214.56 263 540 411.00 120 days 21 Const°, rehabilitation and extension Ambatofotsy TSC FANOMEZANTSOA Malagasy 11/10/2004 616 788 254.00 446 910 133.00 4 months 22 Const°, rehabilitation and extension Ambatofotsy TSC KINGA Malagasy 16/08/2004 256 532 179.20 192 399 135.00 4 months 23 Const°, rehabilitation and extension Ambatofotsy TSC EGECOT - MIMOSA Malagasy 02/07/2004 178 days Terminated 24 Const°, rehabilitation and extension Ambatofotsy TSC ARATRA Malagasy 16/08/2004 383 148 784.56 287 361 588.40 12 weeks

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N° Designation/Contract Title Providers

Nationality

Approval Contract Amount Amount Paid from the Loan

Term of Performanc

e Observations

(amendment, delay, …)

25 Const°, rehabilitation and extension Ambatofotsy TSC MANAMBOLO Malagasy 16/05/2004 243 557 220.20 182 667 911.80 4 months

26 Control and supervision of construction, rehabilitation and extension works of Ambatofotsy TSC ASA TARATRA Malagasy 19/08/2004 42 362 400.00 26 442 000.00 4 months

27 Control and supervision of construction, rehabilitation and extension works of Ambatofotsy TSC BOANERI Malagasy 16/07/2004 21 225 360.00 17 021 999.00 4 months

28 Control and supervision of construction, rehabilitation and extension works of Ambatofotsy TSC B.E ECR Malagasy 16/07/2004 91 389 079 76 637 355.00 4 months Including Amendment n°1 for a tax

inclusive amount of 1 21 225 079

29 Control and supervision of construction, rehabilitation and extension works of Ambatofotsy TSC ESPACE INGENIERIE Malagasy 16/07/2004 27 870 000.00 22 117 077.00 4 months

30 Construction, rehabilitation and extension works of Ambatofotsy TSC ENTREPRISE VONJY Malagasy 10/09/2004 266 164 786.56 189 642 410.00 4 months

31 Land Securement Consultant Service BRL Malagasy 23/05/2005 1 353 488 445.00 1 028 951 484.20 24 months

Including Amendment n°1 for a tax inclusive amount of 118.741.645 Ar

32 Audit of PROJER Accounts Year 2003 EURA AUDIT internatio. French 03/11/2004 33 269 755.20 24 783 396.00 2.5 weeks

33 Const°, rehabilitation and extension of Ambatofotsy TSC ENGEMAFI Malagasy 06/12/2004 345 210 631.44 245 962 574.20 120 days

34 Supplying building materials for the accommodation of YRE 1st and 2nd Group Ets ANDRISOA Malagasy 29/12/2004 81 600 000.00 44 166 816.00 1 months

35 Supplying building materials for the accommodation of YRE 1st and 2nd Group Entreprise COMINOR Malagasy 29/12/2004 87 927 000.00 65 645 250.00 1 months

36 Supplying building materials for the accommodation of YRE 1st and 2nd Group ASA HAZO Malagasy 29/12/2004 60 997 500.00 8 112 188.00 1 months

37 Rural Roads Rehabilitation Works CRAC Malagasy 30/12/2004 388 536 747.60 226 789 723.00 6 months 38 Rural Roads Rehabilitation Works ENGEMAFI Malagasy 30/12/2004 899 070 543.60 633 004 839.00 6 months 39 Rural Roads Rehabilitation Works MADAHAZOTSARA Malagasy 30/12/2004 520 653 258.80 284 242 105.00 6 months Terminated 40 Rural Roads Rehabilitation Works RAVELOJAONA PC Malagasy 30/12/2004 492 516 937.20 107 178 362.60 6 months Terminated 41 Rural Roads Rehabilitation Works ARR Malagasy 30/12/2004 464 425 031.00 341 732 952.00 6 months 42 Rural Roads Rehabilitation Works IRAIR Malagasy 30/12/2004 307 271 544.00 230 429 407.00 6 months 43 Rural Roads Rehabilitation Works LEONG BTP Malagasy 30/12/2004 658 134 228.00 490 481 402.00 6 months 44 Rural Roads Rehabilitation Works IRAIR Malagasy 30/12/2004 406 313 952.00 304 664 996.00 6 months 45 Rural Roads Rehabilitation Works ERD Malagasy 30/12/2004 353 757 585.60 265 318 189.20 6 months 46 Rural Roads Rehabilitation Works ENGEMAFI Malagasy 29/12/2004 594 603 672.00 6 months Terminated 47 Rural Roads Rehabilitation Works LEONG BTP Malagasy 30/12/2004 595 344 000.00 448 458 748.00 6 months 48 Rural Roads Rehabilitation Works RATOEJANAHARY Malagasy 30/12/2004 635 641 644.80 463 999 468.00 6 months

49 Study on/establishment of an MFI GAMA CONSULT Malagasy 19/10/2005 250 797 200.00 212 540 000.00 18 months

Including Amendment of 25 960 000 Ar including tax

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N° Designation/Contract Title Providers

Nationality

Approval Contract Amount Amount Paid from the Loan

Term of Performanc

e Observations

(amendment, delay, …)

50 Construction, rehabilitation and extension works of Ambatofotsy TSC MADAHAZOTSARA Malagasy 14/10/2005 351 404 000.00 206 886 214.00 3 months Terminated

51 Construction, rehabilitation and extension works of Ambatofotsy TSC AVISOA Malagasy 19/10/2005 126 076 268.10 18 387 682.00 3 months Terminated

52 Audit of PROJER Accounts Year2004/2005/2006 Martin RASOANAIVO Malagasy 14/10/2005 21 924 000.00 11 535 000.00 2months

53 Supplying building materials for the accommodation of YRE 3rd and 4th Group COGENAL Malagasy 04/01/2006 220 837 000.00 168 435 000.00 1 months

54 Supplying building materials for the accommodation of YRE 3rd and 4th Group COGENAL Malagasy 04/01/2006 211 463 283.00 161 285 554.00 1 months

55 Supplying building materials for the accommodation of YRE 3rd and 4th Group Ese RAKOTOMAVO Malagasy 04/01/2006 136 360 800.00 104 004 000.00 1 months

56 Supplying furniture and equipment for accommodation and training buildings of TSC WELDOM SA Malagasy 10/02/2006 19 831 717.20 13 601 838.00 2 months

57 Supplying furniture and equipment for accommodation and training buildings of TSC WELDOM SA Malagasy 10/02/2006 23 343 892.80 16 080 666.00 2 months

58 Supplying furniture and equipment for accommodation and training buildings of TSC Ese RAKOTOMAVO Malagasy 04/01/2006 31 283 275.00 23 860 125.00 28 days

59 Supplying furniture and equipment for accommodations and training buildings of TSC WELDOM SA Malagasy 10/02/2006 34 923 423.96 24165613.80 2 months

60 Preparation of the Migration Master Plan in Madagascar EVA Consulting Malagasy 12/05/2006 135 110 000.00 72 822 000.00 6 months

61 Social infrastructure construction works Ese KINGA Malagasy 17/05/2006 326 633 398.80 236 670 810.00 6 months 62 Social infrastructure construction works Ese FANOMEZANA Malagasy 17/05/2006 510 537 235.40 369 923 166.22 6 months 63 Social infrastructure construction works Ese MANASOA Malagasy 17/05/2006 402 754 468.20 262 329 527.47 6 months 64 Plot parcelling works Ese MANASOA Malagasy 18/09/06 404 470 450.20 279 011 649.78 4 months 65 Plot parcelling works Ese IRAIR Malagasy 14/08/06 1 117 900 642.60 852 636 081.00 4 months 66 Agricultural Implements MADAUTO Malagasy 12/06/07 231 887 700.00 3 months 67 Rural Roads 2nd tranche Ese FANOMEZANA Malagasy 16/02/07 1 001 737 087.40 758 449 624.54 6 months 68 Computer Equipment TED Malagasy 02/02/07 48 993 600.00 25 786 000 2 months 69 Computer Equipment DIGIT MG Malagasy 02/02/07 7 333 027.40 45 days 70 Computer Equipment AXIUS TECHNOLOGY Malagasy 02/02/07 18 360 800.00 3 months

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EXECUTIVE SUMMARY 1. Introduction This completion report concerns the Young Rural Entrepreneurs Project (PROJER) implemented from 2000 to 2007, with the financial support of ADF and the Malagasy Government. ADF disbursed UA 7.30 million of the estimated UA 7.35 million, while the Government disbursed UA 1.13 million of the estimated 1.43 million. 2. Objectives and Components 2.1 The project’s sector goal aimed to: i) improve food security conditions; and ii) increase rural incomes. Its specific objective was to promote agricultural production through the creation of 325 agricultural enterprises by providing training, equipment and technical advice to young entrepreneurs capable of playing a key-role in the regional development process.

2.2 To achieve these objectives, the project comprised 5 components, namely: A. Land Securement and Development, B. Rehabilitation and Development of Structures, C. Installation of, and Support to Young Rural Entrepreneurs (YRE), D. Support Measures and Rural Credit and E. Institutional Support and Project Management.

3. Project Implementation 3.1 The Project was approved in November 1998, while the loan agreement was signed on 17/12/1998 and became effective on 5/10/1999. The project followed a similar FAO project which facilitated the installation of young agricultural entrepreneurs (YAE). The ADF loan’s disbursement rate is 99.39%, a balance of UA 45,163 having been cancelled. The loan closure date was extended three times and the project was implemented over an 8 year period instead of the estimated 5. At the beginning, between 2000 and 2003, the project’s implementation rate was low, due to several constraining external factors such as the 2002 socio-political crisis, the devaluation of the FMG, the damage caused by cyclones Elita and Gafilo, changes in oversight on three occasions, staff instability, and the change in the Bank's temporary headquarters. 3.2 It was only in 2004 that the project’s normal implementation conditions were effectively met. Despite this start-up delay, the project completed most of the planned actions from a quantitative standpoint. Indeed, land securement and development activities were carried out on 4 ranches covering a total of 83,500 ha compared to the appraisal estimate of 60,000 ha. The receptive facilities were put in place after the rehabilitation of a trainees' hall of residence, the construction of a Training and Support Centre (TSC), accommodation for the YRE and the project staff, and the development of a plot for agricultural testing. Four YRE groups totalling 226 YRE out of the 325 estimated at appraisal were installed and supported. Support measures were implemented with the building of 3 schools, 3 health centres, 8 stores, 8 wells, 2 control posts, the provision of construction equipment for the YRE’s accommodation and the opening of 121 km of rural roads. A cooperative-type rural credit system and a rural entrepreneurs' mutual guarantee fund (CCMER) were established. Finally, institutional support was provided through technical assistance services over a 3-year period and the conduct of a study for the design of a migration master plan.

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4. Project Performance The Project’s operational performance is considered fairly satisfactory. The project succeeded in building basic infrastructure of quality, albeit belatedly. Thus, its development did not completely meet the initial projections concerning the improvement of natural resources in the Mideast region. In fact, the project encountered problems concerning the withdrawal of trained YRE, a low rate of land development - the YRE use only 4 to 5 hectares out of the 12 ha assigned to them, with yields that are still low (30% to 50 % of estimated yields for a limited number of crops, essentially maize), and low credit recovery rates, of less than 15%. At the strategic level, the project is fully in line with the country's strategic objectives. At the institutional level, the PROJER facilitated the establishment of the TSC and the procurement of equipment for its services as well as the creation of a mutual credit fund (CCMER). However, the technical assistance started providing its service even though the productive components had not yet effectively kicked off. 5. Social and Environmental Impacts The outputs made it possible to reach out to a target group comprising 325 YRE, create a synergy with the local population as well as generate a public-private partnership (PPP) momentum with the intervention of about ten private economic operators (PEO) in the project. The project incorporated the environmental dimension, by developing environmentally-friendly cropping techniques (direct seeding, use of organic fertilizer …).

6. Sustainability The project registered success in the planning phase but the development is still incomplete. The economic rate of return at project completion (6.3%) is lower than the rate estimated at appraisal (14.6%). A consolidation phase is necessary to secure a return on the investments made and facilitate the emergence of a real regional growth pole. Besides, some activities should be pursued, particularly in the areas of land securement, the operationalization and maintenance of basic infrastructure, the institutionalization of the TSC in the new context of recent initiatives such as the Agricultural Services Centres (ASC), the ‘Agri-Business Centres’ (ABC) and Action in Development Military Service (SMAD). The growing involvement of private economic operators should make it possible to partly find solutions to these difficulties. These activities could be undertaken by the reduced staff of the project implementation unit which remained on the spot after the Bank's financing ended. 7. Performances of the Bank and the Borrower 7.1 The performances of the Bank and the Borrower are considered fairly satisfactory. On the Bank’s side, the estimates at appraisal in terms of production and forward-looking planning were overoptimistic and did not take into account some difficulties related to the institutional set up. In addition, it was noted that there were frequent changes at Task Manager level. The supervision missions were well spaced out but their recommendations were essentially focused on the physical implementation of the component, and conformity with the 1998 appraisal document. The establishment of a Permanent Representation in Antananarivo (MGFO) contributed to significantly improving the end-of-project situation. 7.2 The Borrower did not respond quickly enough to the difficulties encountered by the project during the first years (2000-2003) in which delays were accumulated without it contacting the Bank to propose corrective measures. However, after this period, measures were taken to stabilize the staff and try to make up for the initial delays in the construction of

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infrastructure and the installation of YRE. The Borrower contributed to the mobilization of counterpart funds and played its role efficiently in monitoring contracts and in works acceptance. 8. Conclusions, Lessons Learnt and Principal Recommendations

8.1 Conclusions

Despite the shortcomings observed and the constraints due to an unfavourable institutional environment from the outset, the project succeeded in achieving very encouraging results. It opened a new perspective for Public-Private Partnership (PPP), in the Mid-west region, based on the development of the existing infrastructure, providing local employment opportunities for the integration of young entrepreneurs in the regional economic process, encouraging a better distribution of the population to ease the congestion of the overpopulated areas of the high plateaus by promoting their installation in a region known for its low population density (less than 10 inhabitants per km2), and starting to tap the immense undeveloped land potential in the region estimated at more than 300,000 ha. However, the sustainability of the project’s outputs might be uncertain unless the actions undertaken to develop the land are pursued in the near future. In conclusion, the PROJER is still relevant and fully in line with the country’s strategic objectives (Madagascar Action Plan-MAP) and an effort must be made to enhance the facilities provided and ensure the sustainability of the achievements.

8.2 Lessons Learnt The project is interesting and rich in lessons, the principal ones of which are:

During the design and formulation phase, the objectives and estimated implementation schedule were overoptimistic and did not sufficiently take into account certain realities in the field, such as the social conditions of the environment, which require the close involvement of stakeholders (YRE, PEOs, farmers) in all phases of the project cycle;

During the project's implementation, the inadequacy of monitoring-

evaluation, the non-existence of a systemic vision and lack of responsiveness in the wake of the start-up difficulties encountered, led to significant delays and immediately created a catch-up logic (physical obligations) in the project ;

Even though the development of the land by young entrepreneurs started as

soon as the first group of YRE was installed, it was only at the end of the project that the conditions required for them to pursue their activities were met. A certain number of activities essentially in the field of land securement, credit, the role of the TSC and the YRE installation conditions have not been completed and should be pursued;

Since priority was given to the construction of basic infrastructure, the

actions related to the sustainability of activities by the YRE were relegated to a position of secondary importance. A rigorous selection of YRE should have been undertaken from the outset. The project should have laid emphasis one support to YRE, by proposing to them to further diversify their sources of income ;

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The development process and the evolution of the national situation are opening up new opportunities for the region. The project’s achievements could be lost unless strengthening and support measures are adopted and implemented in time. Besides, the maintenance of infrastructure is decisive in terms of profitability of farms and the sustainability of development actions.

8.3 Recommendations 8.3.1 Recommendations to the Borrower: The principal recommendations to the Borrower are to:

complete the activities initiated: i) ensure land securement on the basis of Title Deeds (TD) for YRE/YAE and Land Certificates (LC) for the other individual occupations. These measures will be facilitated by opening a land registration office in the region; ii) build the institutional capacities of the CCMER to ensure the sustainability of the credit component ; iii) strengthen the operation of the TSC, and consider the changes in its status and its role as the linchpin of the region’s development depending on the ongoing national process concerning agricultural extension/training; iv) improve the installation of YREs by finding a solution to the problems encountered in the construction of their houses using building materials provided by the project ;

Set up a monitoring system within the Project Implementation Unit (PIU),

thus facilitating the integrated monitoring of YRE/YAE/Farmer activities, improve the geographic information system (GIS) that has been established and strengthen land improvement;

build the capacities of YRE/YAE and establish a stratified Performance

Improvement Plan, by category of YRE, to consolidate their autonomy; Ensure further involvement of the private sector, by promoting the PPP,

with a view to creating a synergy with the activities of YRE/YAE and of farmers as well as the development of the infrastructure;

Coordinate similar initiatives and develop a framework of exchange in the

spirit of enhanced complementarity with similar initiatives (ASC, ABC, SMAD);

Strengthen in the longer term, the creation of micro-enterprises run by

young graduates, by developing proximity services that would facilitate the creation of a framework of complementary para-and-extra agricultural activities through the promotion of trade in all its regional, national and international aspects.

9.3.2 Recommendations to the Bank: The principal recommendations addressed to the Bank are:

Strengthen the conceptual innovation of projects with a view to integrating actions, ensuring concerted preparation with the actors and improving quality at entry;

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Improve the quality of supervision with adequate experts’ profiles, that will make it possible to carry out an effective analysis of risks to the project’s conduct and objectives, anticipate and provide appropriate responses to the problems encountered in the field;

Preserve flexibility to facilitate the project’s adaptation to the real context and the needs of actors to guarantee ownership and sustainability of the actions;

Promote strategic steering adopting a systemic approach and results-based management;

Support the PMU (training support, familiarization with the ADB rules and procedures , etc …) and facilitate access to project financial situations through the provision of a monthly disbursement statement to the PMUs (MGFO support, connection through the Bank’s web site, etc…) ;

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xvPROJECT MATRIX

OBJECTIVELY VERIFIABLE INDICATORS HIERARCHY OF OBJECTIVES

At Appraisal At Completion MEANS OF VERIFICATION ASSUMPTIONS AND

RISKS 1. SECTOR GOAL 1.1 Strengthen food security and increase

incomes in rural areas Creation of agricultural enterprises; increase total agricultural production by 16 000 tons per annum and increase revenues by up to FMG 4 million on average, per annum at full development.

266 YRE were installed. Additional production is still very low and less than 16 000 tons

1. Periodic reports 2. Periodic reports of regional development structures

Compliance with sectoral policies

2. PROJECT OBJECTIVES Promote the setting up of 325 agricultural enterprises by training young rural entrepreneurs (YRE) and providing them with equipment, technical and institutional support.

50 enterprises were set up during the 2nd year and 325 during the 5th year ;

Extension of populated areas; Diversification of activities and services in

the rural areas ; Financing in rural areas.

24 YRE were installed in 2001 and 266 YRE were installed in late 2007 (despite the difficulties encountered during the 2000/2003 period) Insufficient diversification of activities A credit system is established but the results are still timid

1 – reports of the Rural Investment Support Department on the results of the installation activities and the monitoring-evaluation exercises ; 2 – development of receptive areas ; 3 - trend, importance and nature of applications for installation ; 4 - number and nature of activities and services in the area ; 5- trend of: Rural financing amounts

- insecurity controlled. - Sustain soil fertility and control soil erosion - Integrating youths in the rural areas successful - Effective socioprofessional organizations; - Improved organization of the rural financing system

3. PROJECT OUTCOMES 3.1 Land Securement and

Development - Actions were undertaken to inform and sensitize the local populations and authorities on a rural space management plan. - Land was secured in the project area.

1.1 Information and sensitization meetings from the 1st year of the project

1.2 60 000 ha of land were demarcated and 20 000 ha were reserved for the project.

1.3 Land inventory actions were financed and farm registration procedures were established

1.1 Sensitization for a rural space management plan conducted with success 1.2 More than 83500 ha were demarcated 1.3 Land inventory conducted on 83500 ha The operations relative to land security were successfully carried out. The administrative phase for the issuance of title deeds has however registered some delay

- Monitoring-evaluation reports and reports of the Estates and Land Services Department. - Reports by NGO/Private operators involved in land securement. - Issuing title deeds - ADB supervision report

1. The Estates and Land Services Department and NGOs involved are efficient.

3.2 Rehab. and Development of Receptive Facilities. - The TSC is built, equipped and operational. - Accommodation for experts and the Head of the PIU were built - Accommodations for trainees were rehabilitated/built

2.1 Construction and equipment of a training and

support centre 2.2 Three (3) residences built 2.3 Accommodation for 100 trainees were built

2.1 Training and support centre built over a surface area of 2050 m2 is and well equipped ; 2.2 Three top- quality residences built for the staff (450 m2) 2.3 A trainees’ hall of residence to house 100 trainees is built and well equipped

-Reports MAEP, Ministries of Health and Education - DAIR Reports and Construction firm

2. The contracting procedures are not slows.

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xviOBJECTIVELY VERIFIABLE INDICATORS HIERARCHY OF OBJECTIVES

At Appraisal At Completion MEANS OF VERIFICATION ASSUMPTIONS AND

RISKS 3.3 Installation and support to YRE

- YRE were selected, trained and installed on the registered land - A socio- professional organization of YRE is set up - Land on the YRE sites were improved

3.1 Creation of 2 to 3 YRE establishment sites per annum 3.2 A socio- professional organization is set up 3.3Development on the 4 establishment sites

The YRE were installed, with some delay and a bit hastily

The socio-professional organization is not very operational and requires support and reinforcement ; Development on the 4 establishment sites

- Extension of space occupancy - Reports of firms in charge of selecting candidates - DAIR/PIU Reports - Reports bank supervision

3. The abandonment rate is low; a regular monitoring is carried out.

3.4 Support Measures and Rural Credit - Social infrastructure and stores were built - Rural roads were built - Rural credit adapted to YRE needs

4.1 Construction of three (3) schools and three (3) health centres, eight (8) stores, eight (8) wells, two (2) control posts and creation of various service activities. 4.2 Opening 150 Km of feeder roads. 4.3 Creation of a rural credit mutual fund.

All the social infrastructure was built in 2006/2007

121 Opening 121 Km of feeder roads. The Region should be responsible for their upkeep

- CEP activities report - Monitoring-evaluation report - Financing contracts of credit institutions - Reports credit institutions/CEP - Monitoring-Evaluation Reports

4. Management and recovery methods of credit institutions are efficient

3.5 Institutional support and project management. - Start-up of the project organization and management system - A steering and monitoring committee (COS) was set up - The CEP is set up

5.1 A control and management unit is created 5.2 Creation of a coordination committee as soon as the project starts. 5.3 A project implementation unit is set up on the project site in Ambatofotsy.

The coordination committee did not effectively play its role The PIU was the major decision-making organ The WFP did not discharge its mission and has withdrawn from the 2002 financing as it considers the YRE as a non-priority target group. A balance of 45 163 UA was cancelled

DAIR/PIU Reports - Inter-Ministerial orders - ADB supervision missions - Internal and external audit

5. The PIU will be autonomous in its management - The PIU is provided with a qualified staff

4. ACTIVITES RESOURCES (in UA million) RESOURCES (in UA million) 1.1 Secure and develop land, 1.2

Rehabilitate and develop the receptive facilities

1.3 Install and support the YRE 1.4

Implement support measures and put in place rural credit.

1.5 Manage the project with the support of existing institutions

1.1 UA 0.55 million 1.2 UA 1.58 million 1.3 UA 0.88 million 1.4 UA 3.35 million 1.5 UA 2.87 million

1.1 UA 0.58 million 1.2 UA 2.04 million 1.3 UA 0.95 million 1.4 UA 2.60 million 1.5 UA 2.28 million

- List of Goods and Services - Government’s Investment Budget (PIP) - WFP Loan Agreement

- The financing requirements were met in accordance with the estimates - Disbursements will not be suspended

TOTAL MUA 9.23MUA TOTAL MUA 8.43

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I. INTRODUCTION 1.1 Madagascar covers a total surface area of 587 000 km2 and comprises 22 regions with a population estimated at 20 million inhabitants in 2007, increasing at an annual rate of about 2.6%. The population is unevenly distributed throughout the country, and almost half of it is concentrated in the High Plateaus (Centre) and on the East Coast. The poverty line is around MGA 198,000 per person and per annum, which is equivalent to 0.42 US $ per day, i.e. less than half a dollar per day. The country thus has one of the highest poverty rates in the world (close to 80% of poor Malagasy live in the rural areas. As a result of this high poverty rate, food insecurity is widespread. Six out of 10 people often lack food (quantity and quality)1. Despite undeniable potential, the poor performance of the sector is a major cause of rural poverty. Access to land represents a strong constraint which slows down the increase in agricultural productivity. The insecurity of the land tenure system restricts investments, sustains land disputes, limits access to credit, and affects the economic momentum at communal level. 1.2 The project was identified in 1996 as an alternative that would help upgrade an underutilized human resource (young graduates)2 and untapped natural resources particularly in the Middle-West where a land capital of about 300 000 ha has been abandoned. This idea, based on the logic of regional balance, recommends easing the congestion in the overpopulated areas of the high plateaus (Antananarivo, Antsirabe and Fianarantsoa) and occupying low density areas with immense agricultural potential with a view to creating a development pole to stimulate strong growth in the agricultural sector. 1.3 Pilot experiments concerning the installation of young farmers in the Midwest region between 1988 and 1998, conducted within the framework of the UNDP/FAO project, provided a lot of lessons and guidance to this initiative for the sustainable development of the Midwest (region with immense land potential and sparsely populated with a density not exceeding 10 inhabitants/km2). It was against this backdrop that an FAO mission formulated the project in 1997 and a mission fielded by the Bank appraised it in May 1998. The PROJER was approved by the Bank in September 1998. It is the Bank’s 19th agricultural operation in the country for a loan amount of UA 7.35 million (see details in Annex 2). 1.4 This completion report was prepared on the basis of the appraisal report, supervision reports, the Bank's disbursement statements, activity reports and the completion report prepared by the Government, as well as documents and data collected during the completion mission to the project site in November 2007.

II. PROJECT OBJECTIVE AND FORMULATION 2.1 Project Sector Goal and Specific Objectives 2.1.1 Sector Goal: The project aims to improve the food security conditions and increase income in rural areas by ensuring the intensification of production methods. 2.1.2 Specific objective: promote agricultural production through the creation of 325 agricultural enterprises by providing training, equipment and technical advice to young entrepreneurs capable of playing a key-role in the regional development process.

1 Chronic food insecurity affected 65.4% of the Malagasy population (66.6% of the rural population and 59.6% of the

urban population). Temporary food insecurity shows up during frequent natural disasters, particularly drought (in the south of the country) and hurricanes (in the East and North).

2 Strong growth of urban population of young graduates in search of jobs; concentrated essentially in the High Plateaux, and particularly in Antananarivo region.

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2.2 Project Description 2.2.1 To achieve the its objectives, the project comprised five components for implementation of the following activities :

A. Land Securement and Development: conduct mapping on a scale of 1/20 000, a land inventory of the installation area, preparation of a concerted land use management plan, preparation of parcelling plans, allotment and marking of plots over an area of 60 000 ha ;

B. Rehabilitation and Development of Receptive Facilities: Rehabilitation of

trainees’ halls of residence in Ambararatabe, construction of the training and support centre in Ambatofotsy, construction of accommodation for YRE and for the project’s staff, development of an application plot of 20 ha ;

C. Installation of, and Support to YRE: Installation of 100 YRE/annum, creation

of a socio-professional organization of YRE, improvement and development of land for the installation of YRE ;

D. Support Measures: creation of social infrastructure, opening 150 km of rural

roads, establishment of a rural cooperative credit system ; and E. Institutional support and project management. Compilation of a data base,

training DAM agents, preparation of a migration master plan. 2.2.2 The overall project cost, for a duration of 5 years (2000-2004), amounts to UA 9.23 million including an ADF contribution of UA 7.35 million in the form of a loan. 2.3 Project Origin and Formulation 2.3.1 PROJER’s basic concept is relevant and is based on the development of two available resources: i) an unemployed human resource concentrated on the High Plateaus (a growing youth population in search of jobs) and ii) an untapped natural resource, in an available but abandoned land potential, particularly in the Midwest in which over 300,000 ha are unexploited. This concept was developed in a UNDP/FAO pilot project for the installation of young farmers between 1988 and 19981 and which provided enough information for the initiation of the PROJER. 2.3.2 On the basis of the project’s formulation, the Government presented an official request in 1998 for the Bank’s financing.

2.4 Preparation, Appraisal, Negotiation and Approval 2.4.1 The project was prepared by the FAO Investment Centre in December 19972. The appraisal was carried out by the ADB Group in May 1998. The negotiations between the Malagasy Government and the ADB Group resulted in the approval of the loan in September 1998 and the signing of the 7.35 million UA loan agreement on 17/12/1998, i.e. three months after the approval (see annex for the project milestones).

1 MAG Project/88/014 2 Report dated January 1998

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III. PROJECT IMPLEMENTATION 3.1 Loan Effectiveness and Project Start-up 3.1.1 The loan became effective on 5/10/1999, i.e. almost 10 months after its signing on 17/12/1998. This exceeds the maximum period of 180 days required by the Bank, and is essentially due to the delays in the establishment of the PIU, the appointment of the project manager, the opening of a special account and the setting up of the Steering and Monitoring Committee (SMC). The 7 conditions precedent to loan effectiveness were: (i) undertake to onlend no later than 31 December 1999, a portion of the funds earmarked for line of credit, to a local financial institution acceptable to ADF; (ii) opening a special account for the project in a bank approved by the ADF; (iii) provide evidence of the abandonment of the land to be turned into reserves for the project; (iv) provide evidence of the establishment of the Project Implementation Unit (PIU); (v) provide evidence of the appointment of the head of the PIU; (vi) provide evidence of the creation of the Steering and Monitoring Committee (SMC); (vii) provide evidence that the loan agreement with the WFP has been signed, or that the latter has undertaken to finance the project. At the same time, the other conditions (Section 4.02: other conditions), were met: (i) ADF’s communication, by 31 December 2000 latest, of the agreement on the onlending of part of the loan earmarked for the microcredit line, concluded with an approved financial institution; (ii) submitting a schedule to ADF on the different privatization phases of the Training and Support Centre (TSC); and (iii) conclusion of a programme contract with TSC before the end of 2002. 3.1.2 The Bank organized a project launching workshop from 25 November to 2 December 1999. The loan’s first disbursement operation took place on 19 April 2000, i.e. more than 6 months after the loan became effective. This slippage was mainly due to the delay in setting up the PIU, lack of familiarity with ADB procedures, etc. 3.2 Modifications 3.2.1 The four main types of modifications were: i) strategic : The Migration Support Department (DAM) and the Steering and Monitoring Committee (SMC), with a key role in the project’s original design, were initially entrusted with the design, coordination and monitoring/evaluation of the project activities. The restructuring of the Ministries in 2002, followed by oversight changes at MAEP gradually led to the marginalization of the DAM which could never play its role effectively. Furthermore, the SMC was inactive (met only once between 1999 and 2003), and it was only in 2004 that it started assuming its responsibility effectively. This institutional change disrupted the project’s management and created uncertainties, and even institutional rivalries and jurisdictional disputes. To address this situation, the PIU asserted itself and has become the key project design and implementation organ. With the means and financial resources it obtains from the project, The PIU implemented the activities without any upstream budgeting or a regular outcome monitoring; ii) technical : (a) increase in the surface area of the secured land from 60,000 ha to 83,500 ha, (b) credit growth and operationality; iii) institutional : (a) : The installation of the PIU in Antananarivo was not initially planned but there were plans to establish it in the field (in Ambararatabe or Ambatofotsy) ; (b) changes in the oversight ministries (MATV from 1999 to 2003, and MAEP from 2003 to 2007), and ministers themselves (4 different ministers during the project’s lifespan ), iv) socio-economic: (a) the targeting went beyond the YRE and YAE to also cover the installation of private economic operators, (b) participation in the development of crops and plantations with high added value (jatropha, …)

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and soil conserving (direct seeding , …), v) financial : (a) the revision of its LGS on two occasions in April 2006 and June 2007 1 ; (b) the WFP’s withdrawal from the initial financing plan with effect from the first year because it considered the YRE as a non-priority target group. 3.2.2 Moreover, the project’s implementation was highly influenced by external factors and events, beyond the managers’ control. Similarly, the non-existence of a monitoring/evaluation unit which should have been set up at the DAM (as mentioned in the appraisal report) impacted negatively on implementation (proactive capacity and poor adaptation, lack of tools and support methodological approach). 3.3 Estimated and Actual Implementation Schedule 3.3.1 The initial implementation schedule predicted that the project would be implemented in five years, from 2000 to 2004. This period was greatly exceeded and the project was contractually completed in late 2007. This reveals a significant lag between the periods fixed for the project design and its implementation which led to a significant delay. This delay, estimated at 36 months, is not only due to internal factors (instability of the team, bureaucratic red tape, monitoring and visibility problem) but especially to an environment that was still highly restrictive (between 2000 and 2003) marked by several external factors impeding performance and the smooth launching of the project (coincidence with the 2002 sociopolitical crisis, the devaluation of the FMG, damage caused by Cyclones Elita and Gafilo, drought, changes in oversight on three occasions, the restructuring of the Ministry of Agriculture, the Bank’s temporary relocation …).

3.3.2 The Table below compares the estimated and actual implementation schedules

Table 3.1 Estimated and Actual Implementation Schedule

ACTIVITIES 2000 2001 2002 2003 2004 2005 2006 2007

Land securement Rehabilitation of Ambararatabe Hall of Residence Construction of Ambatofotsy TSC YRE Installations Rural Roads Social Infrastructure Technical Assistance

Estimated Actual

3.4 Reporting 3.4.1 As regards the annual reports, the PIU regularly submitted to the Bank 8 annual activity reports and 8 reports on the audit of accounts and expenses incurred from the loan resources, for the 2000- 2007 period, in accordance with the Bank’s requirements. The 13 missions fielded by the Bank resulted in aides-memoires.

1 No objection opinion : ONAR.2/FX/MAI/06/04/32 of 28/04/06 and OSAN.1/FX/MR/2007/06/010 of 11/06/07

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3.4.2 The activity reports prepared by PIU were supposed to be submitted on a quarterly basis and with effect from 2004, this frequency was adhered to. The quality of these reports was considered satisfactory despite the delays in the submission of some of them to the Bank. These reports, always submitted after the set deadline, made it possible to describe the project’s progress, identify shortcomings and certify the project's financial statements. 3.5 Procurement 3.5.1 The procurements financed from the ADB loan were made in accordance with the provisions of the appraisal report and on the basis of the Bank’s procedures, Decree 98 559 of 6 August 1998 regulating public procurement in Madagascar and Act 2004-009 of 26/07/04 governing the Public Procurement Code for contracts awarded during fiscal years previous to the latter’s enactment (attestation of audit reports). During the project’s implementation, 71 goods, works and services contracts in a global amount of 19.6 billion Ariary were concluded. Many contracts concerning works, in particular, were terminated essentially because of problems of qualification (7 contracts totalling 2 billion Ariary, i.e. 10.6 % of the overall amount of the contracts concluded, were terminated ). 3.5.2 There were long delays in the contract approval process as well as in the payment of contractors. This was particularly so for the approval of bid opening reports and contracts. This observation is reflected in this indicative status of contracts (as shown in table 3.2) :

Table 3.2 Approval Process for Certain Contracts

Contract Launching Date

ITB/RFP Date of

Instructions to Contractor

Duration (months)

Observations

Procurement of Vehicles June 2000 October 2001 17 Contradiction between the appraisal report (recommending the IAPSO method) and the loan agreement (stipulating national shopping in section 7.02 paragraph IV )

Technical Assistance March 2001 January 2003 22 Delay in the expenditure control approval under the 2002 Budget Act

TSC construction works (13 lots)

July 2003 May 2005 22 Price updating requested by the contractors

TSC Equipment (7 lots) August 2002 November 2003

15 Approval of bidding documents by CCM 26/11/2001

Land Securement (BRL) May 2004 May 2005 10 Delay in contract approval Rural Roads -2nd phase (4 lots)

January 2006 February 2007 13 Budget restrictions

Agricultural implements/equipment

February 2006 July 2007 17 Required to modify LGS

3.5.3 Indeed, the recruitment of technical assistance (TRANSTEC), approved by the Bank since December 2001, was seriously delayed in the Government’s signature circuit (one year between the signature of consultants/Project and the approval of the contract). This delay is essentially due to the CDE financial approval in accordance with Circular N108/PM/SGG of 09/10/02. As regards the procurement of vehicles, section 7 – paragraph IV of the loan agreement stipulates that ‘ vehicles will be procured on the basis of local shopping’, while the appraisal report mentions procurement through "other" United Nations procedures (IAPSO). Since the preparation was at an advanced stage for the IAPSO procedure of which ADB was in favour and through which the Government would obtain financial benefits, the oversight Ministry at the time had requested the Finance and Budget Ministry to adopt the IAPSO procedure that had already been initiated, authorize Expenditure Control to approve the contract between IAPSO and

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PROJER. The approval was delayed considerably by the expenditure controller because this method was not specified in the loan agreement. As regards the Construction of the TSC broken down into 13 lots, the Bank recommended the cancellation of the Invitation to Bid because the submission deadline was not complied with (35 days instead of 45). 3.6 Financing Sources and Disbursements 3.6.1 Financing Sources: The comparative table of the project’s overall cost shows a reduction in the project cost at completion from UA 9.23 million to UA 8.43 million. A cost reduction of MUA 0.8 was observed, i.e. about 8.6 % of the initial cost. 3.6.2 Thus, the financing plan at project completion compared with that at appraisal is as follows :

Table 3.3 Comparative Table of Project Costs by Financing Source (in UA million)

Overall Cost

At Appraisal At Completion

Financing Plan Foreign

ExchangeLocal

Currency Total Foreign

ExchangeLocal

Currency Total

A. ADF/ADB 6.68 0.67 7.35 6.60 0.70 7,30 B. Government - 1.43 1.43 - 1.12 1,12 C WFP 0.43 0.43 0.001 0,001 D Beneficiaries 0.02 0.02 0.01 0,01

TOTAL 6,68 2.55 9.23 6.60 1.83 8.43 % of Overall Cost 72,37% 27.63% 100 % 78.29 % 21.71 % 100 %

3.6.3 At loan closure on 31-12-2007, and following the settlement of payments, the project’s overall cost, excluding tax, amounts to UA 8.43 million, including UA 7.30 million from the loan and UA 1.13 million from the Malagasy budget. The actual expenditure by component compared to the appraisal estimates is presented in the table below (3.3).

Table 3.4 Comparative Table of Project Costs by Component (in UA million)

COMPONENTS Estimated Costs At Appraisal Costs at Completion Difference A. Land Securement and Development 0.55 0.58 + 0.03 B. Rehabilitation and Develop. Receptive Facilities 1.58 2.04 + 0.46 C. Installation of, and Support to YRE 0.88 0.95 + 0.07 D. Support Measures and Rural Credit 3.35 2.60 - 0.75 E. Institutional Support and Project Management. 2.87 2.27 - 0.58

PROJECT TOTAL 9.23 8.43 - 0.78 3.6.4 Disbursements : Disbursements on the loan, scheduled over a 5 year period (from 2000 to 2004), at appraisal, were in reality released over 8 years from 2000 to 2007, due to the constraints mentioned in paragraph 3.3.1. Disbursements from the project’s special account were effected on the basis of 12 replenishments of the account (a total amount of MGA 3,130,957,653 was approved by the Bank against an overall request of MGA 3,726,339,667, i. e. an 84 % approval rate. Only 3 out of 12 DRF (Fund Replenishment Request) were fully approved –DRF n°49, DRF n°109 and DRF n°141). The expenditure schedule at completion compared to the one established at project appraisal is as follows:

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a) For the Entire Project

Table 3.5 Comparative Table of the Overall Project Expenditure Schedule (in UA million)

2000 2001 2002 2003 2004 2005 2006 2007 Total

Estimated 2.33 2.26 1.68 1.46 1.50 9.23 Actual 0.16 0.61 0.18 0.55 0.87 2.14 1.61 2.30 8.43

% Disb.1 1.73% 8.34% 10.29% 16.25% 25.67% 48.86% 66.41% 91.33% -

b) From ADF financing

Table 3.6 Comparative Table of the Loan Disbursement Schedule (in UA million)

2000 2001 2002 2003 2004 2005 2006 2007 Total

Estimated 2.09 2.91 1.28 1.05 1.02 7.35 Actual 0.14 0.24 0.11 0.49 0.84 2.02 1.43 2.03 7.305

% Disb2 1.96% 5.33% 6.88% 13.61% 25.00% 52.57% 72.04% 99.39% -

Table 3.7 Comparative Table of Disbursements by Expenditure Category (in UA)

Expenditure Categories Initial Amount (Loan Agreement)

Revised Amount Final Amount (At Completion)

Disbursement Rate in relation to Initial Amount

A. Goods 1.34 0.93 0.97 72.4 % B. Works 2.43 3.06 3.12 128.4 % C. Services 2.83 1.97 2.27 80.4 % D. Personnel 0.47 0.55 0.57 121.2% E. Operation 0.10 0.22 0.19 190.0 % F. Others 0.18 0.62 0.18 100.0%

TOTAL 7.350 7.350 7.305 99.39 % 3.6.5 According to the table, expenditure under the "Works" category, relative to components A ‘ Land Securement and Development’ and B ‘Rehabilitation and Development of Receptive Facilities’, followed by the ‘ Services’ category, received the highest proportion of the disbursements, because they represent almost 74 % of the global amount of the disbursed loan. IV. PROJECT PERFORMANCE 4.1 Overall Evaluation The project was implemented over 8 years instead of the estimated 5 and subsequently the loan closure date was extended on three occasions. The ADF loan’s disbursement rate was 99.39% and the process for the cancellation of the balance of UA 45 163 was initiated. In its initial years, the project was affected by many constraints, reflecting a highly restrictive environment. Indeed, between 2000 and 2003, the project was influenced by several factors the most serious of which were external, which seriously impacted on its launching and performance (coinciding with the 2002 sociopolitical crisis, devaluation of the FMG, damage caused by Cyclones Elita and Gafilo, drought, changes in oversight on three occasions, restructuring of the ministry, staff instability, the Bank’s temporary relocation, …). The delays observed were essentially due to these factors and it was only in late 2004 that the project got on the right track (the contracts initiated and the disbursement rate attest to it). The project outcomes

1 Cumulative disbursement rate in relation to the real loan amount. 2 Cumulative disbursement rate in relation to the real loan amount.

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were highly influenced later by quantitative-oriented management and a catch-up logic thereby fostering further physical improvements and outputs. Despite these constraints, the project is still extremely relevant from a strategic standpoint because it is the forerunner of the MAP and contributes immensely to the implementation of the strategic orientations (migration, land occupancy, private sector promotion, entrepreneurship, …). 4.2 Operational Performance 4.2.1 In spite of the above-mentioned constraints, the project succeeded in establishing a quality infrastructure that is well integrated into the region’s context thereby creating a special receptive space. The outputs focused more on the development dimension related to :

• A) land securement and development on 4 ranches with a total surface area of 83500 ha out of the estimated 60000 ha ;

• B) rehabilitation and development of receptive facilities (rehabilitation of the

trainees’ halls of residence in Ambararatabe ; construction of the TSC in Ambatofotsy ; construction of accommodation for YRE and the project’s staff; development of an applications plot) ;

• C) installation of, and support to YRE (training of 4 groups of young rural

entrepreneurs totalling 323 YRE and installation of 266 out of the anticipated 325 YRE) ;

• D) Adopting support measures and establishing rural credit (3 schools, 3 health

centres, 8 stores, 8 wells, 2 control posts, opening of 121 Km of rural roads) and creating a cooperative-type rural credit system for YRE/YAE ; and

• E) Institutional support and project management (putting in place technical

assistance over a 3- year period and the conduct of a study for the design of a migration master plan).

4.2.2 Apart from the failure to build animal breeding facilities (pig pen, henhouse, cowshed) and supplying drinking water to the TSC (contract terminated and could not be relaunched in time), the implementation rates for some activities exceeded 100 % (see the project’s physical outputs summarized in Annex 3). Overall, most of the project’s planned actions and infrastructure were completed and of high quality: in particular, land securement and the development of 4 ranches totalling 83500 ha, the rehabilitation and development of receptive facilities, installation of, and support to YRE, adoption of support measures and establishment of rural credit, and project management. Most of the infrastructure was successfully completed, albeit with some delay. However, the human resources development process which, according to the project’s operational logic, should have resulted in an improved development of the natural resources in the Bongolava region (Midwest) did not achieve the same degree of success in terms of outputs. The principal outputs are summarized below :

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Table 4.1

Outcome of the Selection, Training and Installation of YRE

YRE Group YRE 1 YRE 2 YRE 3 YRE 4 Total Year 2001 2003 2004 2005

Candidates 310 120 460 810 1700 Preselected after examination of applications

124

113

319

527

1083

Preselected after written tests

50 50 150 300 550

SELECTION

Recruited after individual interview

50 50 100 125 325

At start-up 50 50 99 124 323 TRAINING At completion 49 48 97 119 313 At start-up 45 48 92 119 304 INSTALLATION At completion 24 48 81 113 266

Source : PROJER PIU, 2007 4.2.3 The table shows that only 266 of the expected 325 youths expressed an interest in pursuing 2006-2007 agricultural season. On the basis of the realities in the field, an in-depth analysis enabled us to observe a development gradient and the existence of 4 categories of YRE:

(i) Category of successful YRE, reduced in number and not exceeding 6%, characterized by their continuing presence (YRE who have built their own houses on the site). This category exploits more than the improved surface area (between 5 and 12 ha) ;

(ii) Category of partially successful YRE (~41%), partially present and residing in

villages bordering the location and exploiting between 4 and 5 ha ;

(iii) Category of poor-performance YRE (~38%), whose presence is cyclical and seasonal exploiting between 3 and 5 ha ;

(iv) Category of non performing YRE (~15%), these are absentees and YRE who

abandoned their land. 4.2.4 The project concept is based on a sequential and interlinked approach characterized by the following logical sequence: (i) Design, (ii) Training, (iii) Installation and (iv) Development. The data show that while the project registered success in terms of design, it started losing its efficiency when it came to the training of YRE, and even more as regards their installation during which many difficulties emerged thereby impeding its development. The responsibility seems to be shared and is related to several factors which accumulated with the project’s progress in the absence of adequate visibility and responsiveness which can only be guaranteed through strategic steering of the project based on a systemic approach.

Sequence Design Training Installation Development Performance +++ ++ + -- 4.2.5 Thus, the project which kicked off with a reasonable and controllable number of YRE (50 for the first group) ended up having to manage a sizeable number of applications, training, installation and development activities which led to an expansion in the number of recruits, groups and levels of intervention, etc., sometimes creating requirements and new parameters which only complicated the situation (YRE demands, land disputes, natural disasters,…).

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4.2.6 The analysis of the strengths and weaknesses of the project and their projection in time in terms of potential (achievements) and risks in the project’s future are summarized below.

Key Project Strengths PROJER seems to be the forerunner of the major MAP orientations as regards rural development1 (land, food

security, green revolution component, …) and it is fully consistent with the MAP. PROJER is considered as a Regional and National MAP implementation tool ;

The project succeeded in establishing an integrated infrastructure (equipped Training and Support Centre, 3

schools, 3 basic health centres, 2 gendarmerie control posts, 121 Km road network, …) which turned the Midwest into a special regional pole. The participation of the private sector of this region is a good indicator;

Successful land securement operation during its initial part and need to pursue TD or LC issuance to facilitate

the development of 83,500 ha ; Establishment and equipment of the Training and Support Centre expected to exert its influence over the

region and provide agricultural services; Creating a financial institution providing cooperative-type credit to YRE (the organizational plan is tested and

the ‘ Rural Entrepreneurs’ Mutual Guarantee Fund-CCMER’ is legally constituted) ; Application of the PROJER concept by other departments : (i) SMAD Military-Operation for the installation

of young soldiers, (ii) Population and Family Planning Department, (iii) NGO-ASA. There are two other ongoing initiatives in the region based on the PROJER experience: (i) Ministry of Education and Scientific Research – Firavahana Centre and (ii) Private Sector - Bioflora Centre (oil spot effect) ;

Key Project Weaknesses Defective project steering and inadequate results during the initial years (particularly the first four years 2000-

2003) ; Despite the willingness of the project team, it lacked management capacity as well as a global and strategic

vision to facilitate the development of proactive capacity and operate on the basis of a systemic approach and not according to a linear approach with specific solutions. Indeed, in addition to defective prioritization and lack of effective programming tools, the linkage of the project’s logical sequences was not operational and consistent in the field. The search for short-term specific solutions in the absence of an interconnected strategic vision dominated the project’s steering and management style (EOP, formation of some thirty YRE associations, credit advance from PNM, …). The project was launched without prioritization and with a catch-up logic which banked on quantitative achievements (e.g. the 1st and 2nd YRE groups were handicapped and did not benefit from the support measures, …) ;

The extremely detrimental delays in the mobilization and management of funds particularly for the agricultural

campaigns. The project did have great success with its agricultural campaigns. Even though the first dimension relative to YRE upgrading seems to have been well managed, the same could not be said of the second dimension which concerns development (the parameters at play, the management approach and capacity are the root causes of these shortcomings) ;

The monitoring and evaluation process was not sufficiently consolidated with a subsequent lack of

traceability. Absence of an impact-based monitoring-evaluation system that will make it possible to remedy the situation and improve the project's performance;

The project did not succeed in building up accountability among the YRE (absence of YRE-YAE

cooperation). Besides, the relations with the project were sometimes dominated by conflictual relations (suspicious exchanges...);

In view of the delay, the project was immediately in a catch-up logic. The rush to achieve quantitative results

at the expense of quality dominated the process (under-estimation of the youths pre-installation sequence, the

1 In particular, Commitment 4 which is fully in keeping the PROJER objectives.

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immersion training a key sequence in the selection1 was reduced to one day at YRE 4, …) ; YRE installation problem culminated in the withdrawal of 47 trained YRE and the cyclical presence in the

field of 117 YRE. Only 6% of the operational 313 YRE are effectively installed on their farms (20 YRE have built their houses) ;

Low land development rate, problem of development of the assigned land potential (out of the allocated 12 ha

the YRE exploited only 4 to 5 ha, on average) with yields that are still poor (30 to 50 % of expected yields, depending on the crops) ;

The microcredit was not very functional and the line of credit stipulated in the memorandum of understanding,

signed between the Public Treasury and BOA, concerning an amount of UA 499 000 , was not put in place. The amounts granted to YRE were drawn from the PNM line. There are still several shortcomings in the credit mechanism, in particular the instability of the guarantee system, the operation of the CCMER (posting of permanent staff, payment of operating costs, …) and very low recovery rates (15%) ;

Key Project Benefits for the Future The bases of a regional growth pole already exist and are driven by land securement, proximity agricultural

services and the interest of operators, particularly those of the private sector (installation of some private operators and interest shown by others);

Emergence of a development dynamic consistent with the MAP orientations and regional planning,

decentralization, SME support and private sector promotion options, There is existing experience and know-how which can be enhanced, in the development of the

Design/Selection/Training /Installation of YRE/Development areas that will make it possible to develop and support the future of the TSC;

The institutional tools are in place (TSC, CCMER, Land Use Management Plan , …) and, just like the

infrastructure, they are an indisputable asset which needs to be consolidated; and Emergence of an employment process capable of absorbing unemployment at local level and attracting labour

from other regions.

Key Project Risks for the Future Continue to operate with a linear and traditional approach focused on physical outputs, without identifying the

impact, without establishing a monitoring system and making the required adjustments, without capacity building, without stepping back to reflect in keeping with a systemic approach , …etc.

Slowness of procedures and administrative circuits, in general and in particular, for the land securement

operation jeopardizing the outcome of the immense efforts made by the project (mapping, plan, …) ; The fact that the two categories of YRE (group 2 and group 3) were not successful might ‘ demoralize’ the

YRE, tarnish the project’s image thereby generating a low level of commitment of young candidates for installation ;

Difficulties in maintaining the capital created by PROJER (TSC, roads, schools, CSB, agricultural

implements, …) which could undermine its sustainability ; A very strong presence of major private operators (on a large scale) could disorientate the project and distort

its original approach (place of YRE/YAE compromised).

4.3 Institutional Performance 4.3.1 A Project Implementation Unit (PIU) was set up to implement the project in accordance with the conditions precedent to the loan’s effectiveness (condition iv). This unit discharged its duties in terms of contracting, monitoring payments and the Project’s financial 1 It was initially held per 5 days with YRE 1 and ended up taking place in a single day for YRE4. It is a self-evaluation

sequence peculiar to the YRE and could be a source of early abandonment and enhanced selectivity.

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accounting, relations with the Bank and with the other services of the Administration, monitoring the works but it could not achieve results-based management, manage risks and anticipate problems. On the whole, the performances of the CEP are considered fairly satisfactory. 4.3.2 At the institutional level, the project generated the following three products: (i) Training and Support Centre (TSC); (ii) Rural Entrepreneurs’ Mutual Guarantee Fund (CCMER); and (iii) the Migration Master Plan (SDM). 4.3.3 For the TSC: It was created as the project’s key operational structure to support the installation of YRE (training and support, particularly the provision of mechanized services from the stock of equipment). Its support is crucial to facilitate access to services as well as the structuring and organization of YRE and FO groupings in a project disengagement perspective. 4.3.4 For the CCMER : The contract signed between the project and the Gamma Consult Firm, in October 2005, for a duration of 18 months facilitated the creation of a YRE micro-finance mechanism in the legal form of a Mutual Guarantee Fund. In July 2006, an MOU was signed between the MAEP and BOA (Bank of Africa), providing for the onlending of a credit fund of UA 499 000 to BOA for a duration of 5 years and, at the same time, a subsidiary agreement was signed between the Treasury and BOA, certifying the preceding agreement. To offset the constraints relative to the availability of mortgages (title deeds of YRE not yet available) the credit resources were provisionally drawn from the guarantee fund of the National Maize Programme (PNM) and the amount was subsequently reduced to UA 170,362, corresponding to the repayment of the first tranche made by the Bank of Africa (BoA). The second credit tranche was not disbursed because of the low recovery rate for the first tranche). 4.3.5 Concerning the SDM, the project resulted in the compilation of a data base and the preparation of a draft Migration Master Plan under a contract awarded to EVA Consulting. In this context, the project serves as a tool for the concretization of the migration policy (space and land management). 4.3.6 At the institutional level, the PROJER triggered changes in the Midwest region, and despite its shortcomings, it may be rightfully considered as a regional development catalyser. This consolidation would concern (i) the TSC services; (ii) the rural credit component, consolidation effort is required to finalize the creation of operating structures, particularly for the effective organizational and institutional establishment of the Rural Entrepreneurs’ Mutual Guarantee Fund. The operation of all the elements of the CCMER to ensure the sustainability of the system; and (iii) the Migration Master Plan to support the migration and decentralization policy. 4.4 Performance of Consultants, Contractors and Suppliers 4.4.1 Performance of Consultants : The performances of the TRANSTEC consulting firms, for technical assistance, and Gamma Consult, for the establishment of the CCMER are considered satisfactory. The performance of the EVA Consulting firm was considered unsatisfactory because it did not result in a Migration Master Plan (SDM) and, as a result, the validation workshop was not organized.

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4.4.2 Performance of Contractors: The enterprises essentially honoured their commitments satisfactorily except in the case of the following enterprises and contracts : EGECOT MIMOSA grouping for the rehabilitation and construction of the ESC (Lot n° 11 and 13) which was relaunched with AVISOA (Lot N°13); Madahazotsara Company (Lot N°11); ENGEMEFI Company (Lot N° 10 – rehabilitation feeder roads, contract terminated and not reactivated); Madahazotsara Company (2 contracts for the rehabilitation of feeder roads and the construction of ESC, terminated and not relaunched) and RAVELOJAONA PC Company (rehabilitation feeder roads). Apart from the defaulting ones, the performance of contractors was globally satisfactory. 4.4.3 Performance of Suppliers : The suppliers of different materials, vehicles, office equipment, office IT and other computer equipment intervening under the project provided their services in compliance with the bidding documents. They were all paid and their performance was considered satisfactory. 4.5 Financial Performance 266 of the initially estimated 325 YRE expressed an interest in pursuing the 2006-2007 season. On the basis of the realities in the field, and the observation of a development gradient, 4 categories of YRE reflecting the performance of the farms were identified.

Table 4.2 YRE Performance Indicators

Designation Successful YRE Partially successful YRE

Poor Performance

YRE

Non-performing YRE

Work force 20 129 117 47 % 6% 41% 38% 15%

Presence on farm Continuous presence on the site

Partial presence (bordering villages)

Cyclical and seasonal Land abandonment

Surface area exploited 5 – 12 ha 4 – 5 ha 3 – 5 ha - Gross margin /ha (‘000 Ar) 600 400 100 -

4.6 Economic Performance 4.6.1 Despite the increase in the overall developed area (an additional 23500 ha compared to n estimated 60,000 ha) the additional annual production remained low because of the development constraints encountered (small number of youths effectively installed, poor yields, undeveloped land potential, credit difficulties, …). 4.6.2 The economic rate of return was determined on the basis of the project’s net-of-tax investment costs, the integration of the net-of-tax production costs of the different project crops, the recurrent costs and economic revenue based on the economic prices of each of the crops. The economic rate of return thus calculated over a 30-year period (2000-2029) as at appraisal, is estimated at 6.3 % compared to14.6 % at appraisal. This difference is justified by the development problems encountered, delays in the installation of YRE and the performance of the YRE’s farms. The various sensitivity tests show that the project’s performance has been vulnerable so far: Test1 : Plus 10 % of production costs: 4.6% ; Test 2 : less 10 % of production: 3.5% ; Test 3 : Plus 10 % of investment costs and less 10% of production : 2.8%

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V. ENVIRONMENTAL AND SOCIAL IMPACTS 5.1 Social Impacts 5.1.1 In the absence of data from the project’s monitoring/evaluation system, social impacts are difficult to assess. However, the social infrastructure that has been created (schools, health centres, security centre, wells, storage areas, feeder roads.,) directly contribute to improving living conditions, security and providing access to basic social services. This also facilitates the integration of rural youths and interaction with the indigenous population. The project has also helped to establish not only land security, but also the safety of goods and people in a region where insecurity and a cattle stealing tradition are prevailing. 5.1.2 The integration of youths resulted in the creation of jobs for the indigenous population. This was reflected by the trend of workforce remuneration which doubled (the labour cost rose from MGA 2,000 per day to MGA 4,000 with the installation of YRE). In some areas, YRE went so far as to establish operating agreements with the indigenous people (land rental ...). The gender dimension is also present in this project, for almost 15 percent of YRE established are girls. 5.2 Environmental Impacts 5.2.1 The environmental impacts related to the introduction of new cropping systems by the YRE are limited because the areas used are relatively small (a few hundred hectares). On the other hand, there are risks concerning uncontrolled fires (bushfires), and lack of delimited contours (inappropriate cropping practices causing the degradation of water and soil resources and erosion). 5.2.2 The use of fertilizer is not very widespread and is mainly applied to ploughing (NPK and dolomite), to improve the soil and cannot significantly pollute ground water. On the other hand, pesticides are very seldom used but with the intensification of land use and the intervention of private operators, mitigation measures are necessary. VI. PROJECT VIABILITY AND SUSTAINABILITY 6.1 Overall Assessment 6.1.1 The project’s sustainability can be assessed through the relatively huge investments made, such as land securement, socio-economic infrastructure and the TSC. (i) investment in land securement is a fundamental achievement but it requires more comprehensive measures by creating a land title office in the region to ensure the transition to registration and the granting of land titles to beneficiaries, (ii) social infrastructure (schools, health centres, security centres, rural feeder roads.) must be accepted by the concerned administrations and operationalized by the assignment of adequate staff and the allocation of the necessary maintenance budget, (iii) the Ambatofotsy centre (TSC) raises the question of status and its future prospects, in addition to the obvious aspects of maintenance and improvement (water supply). In this context, the long-term privatization of technical support and operation functions of the TSC is envisaged with an expansion of its functions (Agricultural Services Centre or Agri-business Centre).

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6.1.2 Alongside the physical dimension, the sustainability of achievements must also be assessed in terms of commitment of YRE and other actors (OP). The performance of the YRE seems to pose constraints unless support and capacity building measures are taken in time to assume ownership of the outcomes and ensure the medium and long term development of their enterprises. 6.2 Risk Analysis 6.2.1 The indebtedness of the YRE, the low rate of loan recovery due in turn to the limited resources of the YRE to develop their land, the delay noted in the allocation of land titles to the YRE (last stage in security of tenure), the failure to strengthen the activities of the TSC and the CCMER, the rising dropout rate among the YRE, lack of maintenance of feeder roads. made by the Region; ... etc, are all risk factors for the development of the facilities created and sustainability of the project’s achievements. 6.2.2 The main finding is that the project has achieved its short-term quantitative goals related to development through the creation of high-quality infrastructure but failed to enhance this potential to make these investments profitable. These achievements will vanish in the long-run unless they are consolidated. VII. PERFORMANCE OF THE BANK AND THE BORROWER 7.1 Performance of the Bank The assessment of the project concerns in particular: (i) project quality at entry: the project concept is interesting but adopts a theoretical rationality. The project context was too restrictive to develop the project projections (ii) inadequate institutional arrangements and estimated schedule: the project appears to be ambitious and has an incompatible schedule and institutional proposal (the project provided for the disbursement of almost 30 percent of the loan in its first year), (iii) project supervision: Supervision missions have been evenly distributed and their recommendations mainly focused on the physical implementation of components, and compliance with the 1998 Appraisal Report; (iv) procurement and disbursement: deadlines relating to no-objection opinions and disbursements were sometimes restrictive (case of land securement, procurement of vehicles where the loan agreement and the Appraisal Report did not comply ), as well as the high turnover of task managers. The establishment of a Permanent Representation in Antananarivo (MGFO) has helped to significantly improve the situation. Overall, the mission considers that the performance of the Bank is fairly satisfactory. 7.2 Performance of the Borrower The Borrower did not show sufficient responsiveness to the difficulties encountered by the project during the early years (2000-2003) where delays accumulated without any request to the Bank proposing appropriate measures. The instability of the project on the institutional level marked by oversight changes, the absence of a coordination body, the inadequate foothold of the project in sustainable structures impacted on the project outcomes. Meanwhile, the Borrower provide assistance to some extent in mobilizing counterpart funds, but through its procurement boards and validation process, it created delays in the approval of documents (e.g. for technical assistance). It played an effective contract management role. In addition, it has shown rigour works acceptance and ensured

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contract settlement in accordance with the Bank’s procedures. The Borrower has satisfied his obligations despite certain shortcomings noted. Therefore, the performance of the borrower and the executing agency is considered fairly satisfactory. VIII. OVERALL PERFORMANCE AND RATING 8.1 The analysis presented above highlights the demands of the PROJER design, conceived in systemic terms by focusing on the key components and by creating synergies in their implementation to initiate a new socio-economic system of agricultural professionalization. This approach is interesting and coherent but it requires strategic management and strict enforcement insofar as it operates with interdependent elements, which may constantly challenge the progress if the necessary conditions precedent are not fulfilled and consolidated. This theoretical rationality is lost at the level of the implementation and the project was traditionally managed with obligations based on quantity and physical outputs. Consequently, many constraints emerged because of the failure to develop, during implementation, a strategic management and proactive capacity to meet the planned logical sequencing. Thus, the project has succeeded in respect of its design, but it began losing efficiency at the level of the training of YRE, even more so in respect of their installation where many problems arose and ended in with weaknesses at the development level. 8.2 The project has contributed to improving infrastructure in the region and initiated a still fragile development dynamic but failed to initiate a sustained and lasting enhancement of the facilities created. The consolidation of these achievements is necessary to improve the project performance to achieve the objectives set. IX. CONCLUSIONS, LESSONS LEARNT AND RECOMMENDATIONS 9.1 Conclusions Despite the shortcomings observed and the constraints due to an unfavourable institutional environment from the outset, the project succeeded in achieving very encouraging results. It opened a new perspective for Public-Private Partnership (PPP) in the Midwest region based on the development of existing infrastructure, providing local employment opportunities for the integration of young entrepreneurs in the regional economic process, encouraging a better distribution of the population to ease the congestion of the overpopulated areas of the high plateaus by promoting their installation in a region known for its low population density (less than 10 inhabitants per km2), and starting to tap the immense undeveloped land potential in the region estimated at more than 300,000 ha. However, the sustainability of the project’s outputs might be uncertain unless the actions to develop the land are pursued in the near future. In conclusion, the PROJER is still relevant and fully in line with the country’s strategic objectives (Madagascar Action Plan-MAP) and an effort must be made to enhance the facilities provided and ensure the sustainability of the achievements. 9.2 Lessons Learnt The project is interesting and rich in lessons, the principal ones of which are summarized as follows :

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During the design and formulation phase, the objectives and estimated

implementation schedule were overoptimistic and did not sufficiently take into account certain realities in the field, such as the social conditions of the environment, which require the close involvement of stakeholders (YRE, PEOs, farmers) in all phases of the project cycle;

During the project’s implementation, the inadequacy of

monitoring/evaluation, the non-existence of a systemic vision and lack of responsiveness in the wake of the start-up difficulties encountered, led to significant delays and immediately created a catch-up logic (physical obligations) in the project;

Even though the development of land by young entrepreneurs started as

soon as the first group of YRE was installed, it was only at the end of the project that the conditions required for them to pursue their activities were met. A certain number of activities essentially in the fields of land securement, credit, the role of the TSC and the YRE installation conditions have not been completed and should be pursued. The break between phase I and II may result in a loss of the achievements realized;

Since priority was given to the construction of basic infrastructure, the

actions related to the sustainability of activities by the YRE were relegated to a position of secondary importance. A rigorous selection of YREs should have been conducted from the outset. The project should have laid emphasis on support to YREs, by proposing that they further diversify their sources of income;

The development process and the evolution of the national situation are

opening up new opportunities for the region. The project’s achievements could be lost unless strengthening and support measures are implemented in time. Besides, the maintenance of infrastructure is decisive in terms of profitability of farms and the sustainability of development actions.

9.3 Recommendations 9.3.1 Recommendations to the Borrower: The principal recommendations to the Borrower are to :

Complete the activities imitated: i) ensure land securement on the basis of Title Deeds (TD) for YRE/YAE and Land Certificates (LC) for other individual occupations. These measures will be facilitated by the opening of a land registration office in the region ii) build the institutional capacities of the CCMER so as to ensure the sustainability of the credit component iii) strengthen the operation of the TSC, and consider the changes in its status and its role as the linchpin of the region’s development depending on the ongoing national process concerning agricultural extension/training iv) improve the installation of YREs by finding a solution to the problems encountered in the construction of their houses and using building materials provided by the project;

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18

Set up a monitoring system within the MAEP and PIU, thus facilitating the

integrated monitoring of the activities of YRE/YAE/farmer activities, improve the geographic information system (GIS) that has been established and strengthen land improvement;

Build the capacities of YRE/YAE and establish a stratified Performance

Improvement Plan, by category of YRE, to consolidate their autonomy; Ensure further involvement of the private sector, by promoting the PPP

with a view to creating a synergy with the activities of YRE/YAE and of farmers as well as the development of the infrastructure;

Coordinate similar initiatives and develop a framework of exchange in the

spirit of enhanced complementarity with similar initiatives (ASC, ABC, SMAD);

Strengthen in the longer term, the creation of micro-enterprises run by

young graduates, by developing proximity services that would facilitate the creation of a network of complementary para-and-extra agricultural activities through the promotion of trade in all its regional, national and international aspects;

9.3.2 Recommendations to the Bank: The principal recommendations addressed to the Bank are:

Strengthen the conceptual innovation of projects with a view to integrating

actions, ensuring concerted preparation with the actors and improving quality at entry ;

Improve the quality of supervision with adequate experts’ profiles, that

will make it possible to carry out an effective analysis of risks to the project’s conduct and objectives, anticipate and provide appropriate responses to the problems encountered in the field ;

Preserve flexibility to facilitate the project’s improved adaptation to the

real context and the needs of actors to guarantee the ownership and sustainability of the actions ;

Promote strategic steering adopting a systemic approach and results-based

management; and

Support the PMU (training support, familiarization with the ADB rules and procedures , etc …) and facilitate access to project financial situations through the provision of a monthly disbursement statement to the PMUs (MGFO support, connection through the Bank’s web site, etc…) ;

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ANNEXES

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Annex 1

Page 1 of 1 MADAGASCAR

YOUNG RURAL ENTREPRENEURS PROJECT "PROJER”

Map of Madagascar with Project Area

This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

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Key PROJER Milestones

- September 1998 : Approval of the project by the Board of Directors of the African Development Fund (ADF) - 17 December 1998: Signing of the Loan Agreement. - 5 October 1999 Effectiveness Date - 25 November to 02 December 1999: Project Launching Workshop. - 28 January 2000: First Meeting of the Steering and Monitoring Committee (COS). - 19 April 2000: First disbursement from the special account. - 27 May to 8 June 2000: First monitoring mission. - 10 to 24 February 2001: First supervision mission. - 20 October to 9 November 2001: Second supervision mission. - 11 September 2002: Relocation of the PIU to Nanisana. - July 2002 : Disbursements suspended - 18 November to 3 December 2002: Third supervision mission. - 27 January 2003: Assumption of duties of the technical assistance - 18 March 2003 : Validation meeting of the project’s 2003 AWP - 22 June to 11 July 2003: Fourth supervision mission. - September 2003 : Disbursement resumes - 17 April to 30 April 2004: Fifth supervision mission. - 19 May 2004 : Presentation of the project’s 2004 AWP - 27 May 2004 : Validation meeting of the project’s 2004 AWP - 28 May 2004: Order relative to the abrogation of the appointment of the CEP Director. - 3 September 2004: NOO of the ADB for the appointment of the new PROJER Director. - 13 October 2004: Letter of suspension of the disbursement from the project’s special account. - 24 November 2004: request for the extension of the project disbursement deadline. - 25 November to 18 December 2004 : sixth ADB supervision missions - …2005 : establishment of an ADB Permanent Representation in Antananarivo - 12 to 20 March 2005 : mission of the Malagasy delegation to ADB headquarters - 18 September 2005 : transfer of Ambararatabe TSC to Ambatofotsy - 29 September to 12 October 2005 : mission for the improvement of the ADB agricultural sector portfolio

performance - 24 November 2005 : amendment of the TA contract extension - 16 December 2005 : approval of the TA contract extension amendment - May – June 2006 : seventh ADB supervision mission - February 2007 : MGFO supervision mission to Ambatofotsy Tsiroanomandidy - March 2007: visit of the ADB Executive Director for the 30th anniversary of ADB/MADAGASCAR cooperation.

Annex 2 Page 1 of 1

MADAGASCAR

YOUNG RURAL ENTREPRENEURS PROJECT “PROJER” Key PROJER Milestones

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Annex 3 Page 1 of 2

TABLE OF PROJECT OUTPUTS BY COMPONENT

Components Estimates Outputs (%) A. LAND SECUREMENT AND

DEVELOPMENT: - Conduct of mapping on a scale of

1/20 000 from an aerial coverage - Land inventory of the installation

area - The preparation of a concerted

land use management plan - The preparation of the plots’

parcelling plans - allotment and marking of plots

64 000 ha coverage On 4 ranches of 64 000 ha Development and management map of 4 ranches (64 000 ha) Plan of the 4 Ranches (64 000 ha) 325 YRE 100 YRE

Aerial photography coverage of about 84000 ha (the 4 ranches) 4 ranches of 83 500 ha Development and management map of 4 ranches (83 500 ha) Plan of the 4 Ranches (83 500 ha) 325 YRE 79 YRE

131 % 131% 131% 131% 100% 79%

After precise calculations, the total surface area of the operating area (the four ranches) turned out to be 83 500 ha instead of 64 000 ha. Photo validation, photo plans, field survey and demarcation of 445 plots, i.e. about 5000 ha Submission of all the pre-cadastral documents for all occupants Identification of land reserves

B. REHABILITATION AND DEVELOPMENT OF RECEPTIVE FACILITIES

- Rehabilitation of the Ambararatabe TSC

- Construction and rehabilitation

works of the Ambatofotsy Training Centre (development of an application site of 20 ha)

- Construction of a new TSC of

2 447 m2 - Rehabilitation and extension of

building of Ranch 3 of the Omby State Farm

- Construction of 1,100 m2 of

accommodation for YRE candidates to be trained.

- New villas covering a surface area of 450 m2

Accommodation for 38 people, 1 training room, 1 office 20 ha 2 447 m2 2 336m2 1 100 m2 3

Accommodation for 38 people, 1 training room, 1 office 20 ha 2047 m2 2 336 m2 1 100 m2 3

100% 100% 84% 100% 100% 100%

- Fitting out and extension of office - Completing the infrastructure by

purchasing : • A generator • 1 water supply system

1 2 1

1 2 0

100% 100% -

Remaining 400 m2 concern the construction works of the animal breeding buildings, the contract (n°13 :FAD/MAEP/PROJER) of which was terminated

C. INSTALLATION OF, AND SUPPORT TO YRE

- Installation of young rural

325

313

96%

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Annex 3 Page 2 of 2

Components Estimates Outputs (%) entrepreneurs (YRE)

- Creation of a YRE

socioprofessional organization - Improvement and development of

land for the establishment of the YRE

1 1 625ha

1 1 625ha

100%

100%

Including 207 youths have embarked on the 2006-2007 agricultural season D. SUPPORT MEASURES AND

RURAL CREDIT : - Creation of social infrastructure :

• Schools • Health centres • Stores • Wells • Security Control Posts

- Establishment of a cooperative-type rural credit system

3 - 6 - 12 - 8 - 2 - 150 km - 1

- 3 - 3 - 8 - 8 - 2 - 121 km - 1

- 100% - 50% - 67% - 100% - 100% - 81% - 100%

E. INSTITUTIONAL SUPPORT

AND PROJECT MANAGEMENT.

- Compilation of the data base - Establishing a Migration Master

Plan

1 1

1 1

100% -

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Annex 4 Page 1 of 1

MADAGASCAR

YOUNG RURAL ENTREPRENEURS PROJECT “PROJER”

Annual Disbursements: ADF Loan and the Entire Project

Annual Disbursement on ADF Financing (in UA million)

2000 2001 2002 2003 2004 2005 2006 2007 Total

Estimated 2.09 1.91 1.28 1.05 1.02 7.350 Actual 0.14 0.24 0.11 0.49 0.84 2.02 1.43 2.03 7.305

% Disb10 1.96% 5.33% 6.88% 13.61% 25.00% 52.57% 72.04% 99.39% -

100

14,00

26,00

0

20

40

60

80

100

2000 2001 2002 2003 2004 2005 2006 2007

Est: Disb:Act: Disb

Annual Disbursement of Entire Project

(in UA million)

2000 2001 2002 2003 2004 2005 2006 2007 Total Estimated 2.33 2.26 1.68 1.46 1.50 9.23

Actual 0.16 0.61 0.18 0.55 0.87 2.14 1.61 2.30 8.43 % Disb.11 1.73% 8.34% 10.29% 16.25% 25.67% 48.86% 66.41% 91.33% -

25,25

1,73

49,73

8,34

67,93

10,29

83,75

16,25

1000

25,67

48,86

66,41

91,33

0

20

40

60

80

100

2000 2001 2002 2003 2004 2005 2006 2007

Est DisbActl Disb.

10 Accumulated disbursement rate in relation to the real loan amount. 11 Accumulated disbursement rate in relation to the real loan amount.

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Annex 5 Page 1 of 1

MADAGASCAR

YOUNG RURAL ENTREPRENEURS PROJECT “PROJER”

Estimated and Actual Project Implementation Schedule

TIME CHART-ESTIMATES/ACTUAL

Activities Year 2000 Year 2001 Year 2002 Year 2003 Year 2004 Year 2005 Year 2006 Year 2007

Land securement

Rehabilitation Ambararatabe

Construction Ambatofotsy YRE Installations Rural Roads Social Infrastructure

Technical Assistance

Estimates Actual

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Annex 6 Page 1 of 1

Project’s organizational chart

MAEP

GS-PRMP

Coordinator DGR/DDP

COS

- DSI - DAOP - DFB - DDSF - DIRAGRI - DRDR

DCEP

Mr Jafetra RANDRIAMANANTSOA

Project Monitoring Committee

Secretariat Mrs Vero RASOARIMANANA

SAC Mr. Victor RAMANANTSOA

Accountant Mrs. Hanta ANDRIANARIMANANA

AA

Mr Nomenjanahary RAMARCEL R.

DF/DAT

Mrs Sahondra RAMANANTSOA

TSC - Monitoring and Evaluation of YRE works Mr. Armand RANDRIANANDRASANA Mr Isidore RAKOTOSALAMA - DT - DPM Mr Lanto ANDRIANTSOA

LEGEND MAEP : Ministry of Agriculture, Livestock Production and Fisheries GS : General Secretariat PRMP : Person in charge of Government Procurement SMC : Steering and Monitoring Committee DGR : Rural Engineering Department DDP : Partnership Development Department DSI : Information Systems Department DAOP : Producers’ Organization Support Department DFB : Director of Finance and the Budget

DIRAGRI : Department of Agriculture DRDR : Regional Development Department DCEP : Director of the PROJER Implementation Unit SAC : Administration and Accounting Service AA : Administrative Assistant DF : Training Department DAT : Technical Support Department DE : Operations Department DT : Technical Department DPM : Equipment Pool Department

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Annex 7 Page 1 of 2

CALCULATION OF THE ECONOMIC RATE OF RETURN

ANALYSIS ASSSUMPTION

The analysis of the project rate of return was essentially based on the following assumptions:

- The economic analysis was carried out over a 30-year period; - The project’s economic investment and operating costs were derived from the costs obtained

after the removal of taxes and other duties (customs duties, ......); - The costs of ordinary labour were estimated by taking into account the relatively high

unemployment and under-employment rates in the project area. - Only tangible benefits directly linked to agriculture were taken into account in the analysis

represented by the additional productions (plant production) ; - The economic prices were applied by transforming the financial prices into economic prices by

using the import and export parity prices for tradable products. For locally traded products, the financial prices were corrected by applying conversion factors (CF) to eliminate the distortions;

- The opportunity cost of capital (OCC) adopted for the sensitivity analysis is 12 %.

CALCULATION OF THE ECONOMIC RATE OF RETURN(in Ar)

ERR: 6,3%Year Investments / Replacements / Production Economic ECONOMIC

Maintenance Cost Revenue CASH FLOW 2000 261 549 0 0 0 261 549 2001 391 012 0 0 0 391 012 2002 188 449 0 0 0 188 449 2003 826 478 0 0 0 826 478 2004 2 398 216 0 0 0 2 291 061 2005 3 928 300 0 0 0 3 709 227 2006 4 423 257 0 169929 277084 3 968 442 2007 4 947 328 250 000 347410 566483 4 452 004 2008 0 250 000 721 254 1 176 069 568 722 2009 0 250 000 1 181 951 1 927 275 685 682 2010 0 250 000 1 310 941 2 129 663 802 643 2011 0 250 000 1 498 218 2 433 900 919 602 2012 0 250 000 1 685 495 2 738 138 1 036 563 2013 0 250 000 1 872 773 3 042 375 1 153 523 2014 0 250 000 2 060 050 3 346 613 1 270 484 2015 0 250 000 2 247 327 3 650 850 1 387 443 2016 0 250 000 2 434 604 3 955 088 1 504 4042017 0 250 000 2 621 882 4 259 325 1 621 364 2018 0 250 000 2 809 159 4 563 563 1 738 325 2019 0 250 000 2 996 436 4 867 800 1 855 284 2020 0 250 000 3 183 713 5 172 038 1 972 245 2021 0 250 000 3 370 991 5 476 275 2 089 205 2022 0 250 000 3 558 268 5 780 513 2 206 166 2023 0 250 000 3 745 545 6 084 750 2 323 125 2024 0 250 000 3 932 822 6 388 988 2 440 086 2025 0 250 000 4 120 100 6 693 225 2 557 046 2026 0 250 000 4 307 377 6 997 463 2 674 007 2027 0 250 000 4 494 654 7 301 700 2 790 966 2028 0 250 000 4 681 931 7 605 938 2 907 927 2029 0 250 000 4 869 209 7 910 175 3 024 887

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Annex 7 Page 2 of 2

SENSITIVITY TESTS

The project’s rate of return was tested by taking 3voptions into consideration :

Plus 10 % of production costs: 4,6 % Less : 3,5 %

Plus 10 % of investment costs and less 10 % of production : 2,8 %

The ERR calculations show that a 10% increase in production costs confirmed the unprofitability of the project with its ERR of 4.6%. However, the 10% reduction of profits brought the ERR down to 3.5 %. Moreover, a 10% reduction of profits combined with a 10% increase in investment costs again show a fragile ERR (2.8 %), well below the opportunity cost of capital (OCC) making the project risky unless measures are taken to consolidate and improve the development of the potential and the infrastructure put in place. The profits due to the post-consolidation project results are significant and may have positive impacts on the regional and national economy.

In conclusion, the ERR is affected by fluctuations in costs and profits and continue to be low because it is well below the OCC.

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Annex 8 Page 1 of 2

MADAGASCAR

YOUNG RURAL ENTREPRENEURS PROJECT “PROJER”

Performance Evaluation and Rating

Implementation Performance

Component Indicators Rating (1 to 4)

Remarks

1. Adherence to Implementation schedule

1.0 The project was completed with a 36-month overrun on the estimated schedule due to natural conditions and the socio-political crisis at project start-up.

2. Adherence to Cost Schedule 2.0 The project’s overall cost at completion is adhered to overall compared to the estimated cost at appraisal. The cancelled balance of the loan amounts to UA 45,163 (i.e. 0.61 % of the loan amount).

< 3.0 All the loan conditions were fulfilled. The Bank’s procurement rules were complied with and respected.

4. Adequacy of Monitoring and Evaluation and Reporting

1,5 The project’s technical management is considered satisfactory. The project’s activity report and audit report were submitted to the Bank. The monitoring was ineffective.

5. Satisfactory Operations 1.5 Quality infrastructure was built but its operation is jeopardized by the low level of development .

Total 8.0 Overall Assessment of Implementation Performance

1.6 The project’s implementation performance is fairly satisfactory

Performance of the Fund

Component Indicators Rating

(1 to 4) Remarks

1. Identification 1.5 ADF limited itself to the FAO project identification mission in 1999. 2. Preparation 1.5 ADF limited itself to the FAO project preparation mission in 1999. 3. Appraisal 2.0 The appraisal report considered almost all the technical, economic,

financial, social and environmental aspects linked to the project’s implementation. However, the appraisal is optimistic as regards cost estimation, disbursements (UA 2.09 million during the first year 2000, almost 30 % of the loan amount), the schedule and implementation period as well as proposals for the project’s organization (unrealistic).

4. During Supervisions 2.0 13 supervision missions were undertaken, which made it possible to raise some problems related to the project’s implementation. The absence of the mid-term review mission is worth noting.

Total 7.0 Overall Assessment of the Bank’s Performance

1.75 The Fund’s overall performance is fairly satisfactory.

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Annex 8 Page 2 of 2

Project Outcome

Component Indicators Rating

(1 to 4) REMARKS

1. Relevance and Achievement of Objectives

i) Macroeconomic Policy 3.5 The project contributes to the socioeconomic development and achievement of the poverty reduction objective, policy on migration and youth installation, development of abandoned land, creation of jobs, revenue improvement.

ii) Sector Policy 3.0 The project significantly contributes to the development of the agricultural sector (food security, land policy, private sector, …)

iii) Physical Outputs 3.0 Apart from the drinking water for the TSC and the three stables, the entire project was implemented with quality and the physical objectives were achieved.

iv) Financial Component 2 The project’s final cost is less than the estimated cost at appraisal and the rate disbursement rate for the ADF loan is 99.39 %.

v) Poverty Reduction, Social Impact and Gender

2 The project has a very positive impact on poverty reduction and the population’s social conditions, particularly those of young girls and rural women.

vi) Environment 1.5 Not many mitigation measures were taken into account during the project design vii) Private Sector Development 2.0 The project concluded contracts with many private companies during the

implementation, and it encouraged the development and installation of private companies (PO, …).

2. Institutional Development i) Institutional Framework 2.0 The project encouraged the emergence of TSC, CCMER and the Migration

Master Plan which is in line with the State’s disengagement policy and the professionalization of the agricultural sector.

ii) Financial and Management Information Systems including Audit Systems

2 The Borrower held separate accounts for the project and the audits of the expenditures incurred from the loan were conducted, but these audits were submitted to the Bank with delays of between 1 to 8 months. The Bank did not regularly provide the Borrower with financial statements. The Bank suspended disbursements following ineligible expenditure not repaid in time.

iii) Transfer of Technology 2.5 An applications plot is established next to the TSC to test a technological package (animal breeding, irrigation, …etc).

iv) Staffing by Qualified Persons (including turnover) training and counterpart staff

1.5 The project was provided with fairly adequate staffing but some posts were not filled (ES)

3. Sustainability i) Continued Commitment of the

Borrower 1.5 The Borrower should assumer its responsibility as regards the installation of the

land registry office and the issuance of title deeds to YRE. ii) Environmental Policy 2 The framework exists and its application should facilitate environmental

protection. The installation of an environmental monitoring system is necessary (protecting the watersheds).

iii) Institutional Framework 2 The project fits into the existing organization and collaborates with regional partners There is need for the development of the TSC, CCMER and Migration Master Plan to consolidate these institutional products of the project.

iv) Technical Viability and Staffing 1.0 The PIU and YRE-YRA do not have the necessary resources to ensure the operation and maintenance of infrastructure. It is necessary to provide support to YRE in order to build their capacities which constitute a guarantee of the project’s viability.

v) Financial Viability including Cost Recovery Systems

0.5 The revenues earned by YRE are still insignificant and credit recovery is very low (15 %). This raises the issue of the YRE’s indebtedness and thus impedes the development and promotion of services.

vi) Economic Viability 1.5 The project is a factor conducive to regional and national development but requires an enhanced consolidation for development in terms of production, marketing and economic benefits.

vii) Environmental Viability 2.0 The infrastructure that has been created requires structures for environmental protection (soil and water conservation at the level of the watersheds).

viii) Operation and Maintenance Facilitation (availability of recurrent funding, foreign exchange, spare parts, etc.)

1.0 The YRE are faced with high expenses due to the production cost, which sometimes represents a constraint to reserve sufficient funds for upkeep and maintenance activities.

4. Economic Rate of Return 1.0 The project’s economic internal rate of return at completion is 6.3%. The project’s positive economic benefits are not yet tangible at completion..

TOTAL 37.5 Overall Assessment of Outcome 1.87 The project’s overall assessment is fairly satisfactory. .

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Annex 9

Page 1 of 1 MADAGASCAR

YOUNG RURAL ENTREPRENEURS PROJECT “PROJER”

MATRIX OF RECOMMENDATIONS AND FOLLOW-UP MEASURES

Recommendation

Points Findings Recommendation and Responsibilities

Project Design

• Project Consistency The project is perfectly in line with the Government’s strategic orientations A Governmental strategy exists, as well as a clear vision (MAP)

The Government should develop the strengths of PROJER and consolidate its achievements to create the necessary synergies with the strategic orientations.

• Project Preparation The preparation was carried out by FAO which recommended an unrealistic approach

The identification and preparation should stem from a need expressed by the actors themselves.

• Appraisal The Bank conducted an appraisal of the Government’s proposals

The evaluation should be participatory and take into account the needs of stakeholders with the updating of microeconomic options and the local constraints.

• Implementation There was a 36- month overrun due to the very optimistic scheduling

Consider all the cross-cutting issues to avoid delays that alter the basic data of the appraisal

Technical Implementation

• Technical Outputs of the project

A quality infrastructure was very satisfactorily provided but with some delay in the works and the risk of not putting it to optimum use in time.

Build on the current project's lessons to gain time on the future consolidation actions and the design of a new phase focused on the development of the achievements realized

Financial Implementation

• Project Cost was reduced compared to the estimate at appraisal

Compile a good data base from the lessons drawn from this project to ensure enhanced efficiency in future operations.

• Financial Implementation Even though the financial management is thought to be compliant with a transparent management mechanism, it does not provide a management chart showing duty-free and tax included amounts. Difficulties to harmonization of the financial positions due to the fact that the financial statements were not regularly provided by the Bank. .

The project’s implementation unit should keep a clear management chart of all the operations per financing source, foreign exchange and local currency, and duty-free and tax included amounts. The Bank should regularly provide the PMU with updated financial statements.

• Annual Audits of the Project

Audit reports irregularly submitted with a delay of between 1 to 8 months.

The Borrower is required to submit these reports to the Bank on a regular basis.

• Disbursement The monitoring of disbursements was satisfactorily conducted, but the Borrower raised the issue of long delays observed in payment and replenishment of the special account. .

Improve the Bank’s response time to the Borrower’s requests. Involve auditors in giving a prior view on the requests for the replenishment of the special account.

Sustainability • Development and

Sustainability of the Project’s Achievements

Problems observed : development option not clear, post-production phase defective, indebtedness of YRE, limited capacities of YRE to fulfil their mandate. .

Clarify the development option, enhance the value of products of the area, consolidate the post- production phase, resolve the YRE indebtedness problem, build their capacities in terms of support, technical knowledge, credit management and maintenance of infrastructure. Enhance the operation of the CCMER, develop the status of TSC and turn it into an Agricultural Services Centre or an Agri-business Centre.

General Measures • How to capitalize on the

achievements The project was implemented in a fairly satisfactory manner with significant lessons that can be useful to future operators.

Capitalize on the achievements in terms of project design, implementation and management to develop the expertise acquired with the project.

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Annex 10 Page 1 of 1

MADAGASCAR

YOUNG RURAL ENTREPRENEURS PROJECT “PROJER”

INFORMATION SOURCES

TYPE OF INFORMATION SOURCES : Technical Implementation • Works Status Activity Reports of the Project Implementation Unit Outcome of field visits and working sessions of the project completion

mission • General Information Reports of the Project Implementation Unit Outcome of field visits and working sessions of the project completion

mission Reports of the Bank’s supervision mission Financial Data • Trend of Project Costs The Bank's Appraisal Report and Report of the Project Implementation Unit –

the Bank’s Disbursement service • List of Contracts Report of the Project Implementation Unit Audit reports • Disbursement The Bank’s Disbursement Report • Audits The Borrower’s Audit Report Economic and Financial Analysis • Prices Outcome of field visits and working sessions of the project completion

mission, data collected by MGFO • Technical Operating Data Outcome of field visits and working sessions of the project completion

mission, reports of the Technical Ministries concerned The Bank’s Appraisal Report Report of the Project’s Technical Assistance Social and Environmental Impact Outcome of field visits and working sessions of the project completion

mission and Appraisal report Report of the Project’s Technical Assistance

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Annex 11 Page 1 of 1

MADAGASCAR

YOUNG RURAL ENTREPRENEURS PROJECT “PROJER”

OBSERVATIONS OF THE BORROWER AND EXECUTING AGENCY

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Annex 12 Page 1 of 2

ILLUSTRATION OF PROJER ACCOMPLISHMENTS

ANNOTATED PHOTOGRAPHS

Training and Support Centre set up by the Project Training and Support Centre set up by the Project

Bridge and feeder roads built under PROJER Bridge and feeder roads built under PROJER

Building feeder roads under the PROJER Building feeder roads under the PROJER

Page 54: Madagascar - Young Rural Entrepreneurs (PROJER ......MADAGASCAR YOUNG RURAL ENTREPRENEURS (PROJER) PROJECT COMPLETION REPORT November 2008 TABLE OF CONTENTS Pages Table of Contents,

Annex 12 Page 2 of 2

ILLUSTRATION OF PROJER ACCOMPLISHMENTS

Annotated Photos

YRE Class in training course Development-improvement of plots for the installation of YRE

Improvement of plots for the installation of YRE Land potential to be developed

Land potential to be developed Land potential to be developed during the second phase