Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 26023

IMPLEMENTATION COMPLETION REPORT(IDA-25040)

ON A

CREDIT

IN THE AMOUNT OF SDR 15.9 MILLION

TO THE

ARAB REPUBLIC OF EGYPT

FOR

MATRUH RESOURCE MANAGEMENT PROJECT

June 3, 2003

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective on June 2, 2003 (Floating Exchange Rate))

Currency Unit = Egyptian Pound (LE) and US$ LE 1.00 = US$ 167US$ 1.00 = LE 5.96

FISCAL YEARJuly 1 June 30

ABBREVIATIONS AND ACRONYMS

AWPB Annual Work Program and BudgetBCM Beneficiary Contract MonitoringCAP Community Action PlanCDD Community Driven DevelopmentEEAA Egyptian Environmental Affairs AgencyERR Economic Rate of ReturnFAO Food and Agriculture Organization of the United NationsFU Feed UnitGEF Global Environment FacilityGIS Geographic Information SystemGOE Government of EgyptGTZ Deutsche Gesellschaft fuer Technische Zusammenarbeit (German Agency for

Technical Cooperation)IAP International Advisory PanelICARDA International Center for Agricultural Research in Dryland AreasICR Implementation Completion ReportITA ICADRA Technical AssistanceIWD Integrated Watershed ManagementLC Local Community MALR Ministry of Agriculture and Land ReclamationMARC Matruh Adaptive Research CenterMETAP Mediterranean Technical Assistance ProgramM&E Monitoring and EvaluationMRMP Matruh Resource Management ProjectMTR Mid-Term ReviewNBE National Bank of EgyptNCC National Coordination CommitteeNGO Non-Governmental OrganizationPBDAC Principal Bank for Development and Agricultural CreditPCC Project Coordination CommitteePCU Project Coordination UnitQAE Quality at EntryQSA Quality of Supervision AssessmentSAR Staff Appraisal ReportSRMA Selected Range Management AreaSRSC Sub-regional Support Center

UNDP United Nations Development ProgramWB World BankWFP World Food ProgrammeWID Women in Development

Vice President: Jean-Louis SarbibCountry Manager/Director: Mahmood A. Ayub

Sector Manager/Director: Petros Aklilu/Letitia A. Obeng Task Team Leader/Task Manager: Marie-Helene Collion

EGYPT, ARAB REPUBLIC OFMATRUH RESOURCE MANAGEMENT

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 45. Major Factors Affecting Implementation and Outcome 96. Sustainability 107. Bank and Borrower Performance 118. Lessons Learned 139. Partner Comments 1510. Additional Information 16Annex 1. Key Performance Indicators/Log Frame Matrix 17Annex 2. Project Costs and Financing 18Annex 3. Economic Costs and Benefits 20Annex 4. Bank Inputs 31Annex 5. Ratings for Achievement of Objectives/Outputs of Components 33Annex 6. Ratings of Bank and Borrower Performance 34Annex 7. List of Supporting Documents 35Annex 8. Summary of GOE Completion Report 36

Project ID: P005153 Project Name: MATRUH RESOURCE MANAGEMENT

Team Leader: Ayat Soliman TL Unit: MNSREICR Type: Core ICR Report Date: June 3, 2003

1. Project Data

Name: MATRUH RESOURCE MANAGEMENT L/C/TF Number: IDA-25040Country/Department: ARAB REPUBLIC OF EGYPT Region: Middle East and North

Africa Region

Sector/subsector: Water supply (33%); Agricultural extension and research (33%); Micro- and SME finance (16%); General public administration sector (10%); General agriculture, fishing and forestry sector (8%)

Theme: Other environment and natural resources management (P); Rural services and infrastructure (P); Civic engagement, participation and community driven development (P); Other rural development (P); Gender (S)

KEY DATESOriginal Revised/Actual

PCD: 02/05/1991 Effective: 02/02/1994 02/02/1994Appraisal: 11/06/1992 MTR: 10/01/1997 10/01/1997; 11/01/2000Approval: 05/27/1993 Closing: 12/31/2001 12/31/2002

Borrower/Implementing Agency: GOVERNMENT OF EGYPT/MIN. OF AG. & LAND RECLAMATIONOther Partners:

STAFF Current At AppraisalVice President: Jean-Louis Sarbib Caio K. Koch-WeserCountry Director: Mahmood A. Ayub Ram K. ChopraSector Manager: Petros Aklilu Ngozi Okonjo-IwealaTeam Leader at ICR: Marie-Helene Collion Bachir SouhlalICR Primary Author(s): Joseph G. Nagy (FAO/CP); Ayat

Soliman

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The project aims at implementing the Government's strategy for natural resource management in dryland areas. The main objectives of the project are: (i) to conserve the water, land and vegetation resources in the project area; and (ii) to alleviate poverty and improve the quality of life of the local Bedouin population by providing support for improved natural resource management practices, coupled with agricultural and non-agricultural development. This would be accomplished by utilizing the existing tribal structure and encouraging maximum participation of the local population.

The project objectives were clear and highly relevant to the country's development objectives in semi-arid regions of the country. The project was a pioneering effort for the Government of Egypt, being the first integrated natural resource management project involving local tribal populations in rain-fed areas. Similarly, it was one of the first efforts for the World Bank in the region focusing on key environmental and sustainability issues with strong community participation. The project is also consistent with the current country assistance strategy and overall lending objectives regarding poverty reduction, rural development, agricultural export promotion and addressing issues of water scarcity and management. The project had a considerable degree of complexity as a result of: (i) implementing five separate components that required an interaction in a large project area consisting of three different agro-ecological zones with strong community participation; and (ii) institutional and implementation arrangements being designed such that most of the activities to be implemented through the different technical departments and local authorities in the Governorate of Matruh, with the Project Coordination Unit (PCU) providing overall guidance and technical support, which required a high degree of inter-sectoral coordination. These factors were reflected in the identified risks to project implementation, namely on poor uptake of the participatory approach and limited institutional coordination.

3.2 Revised Objective:The original objectives remained the same throughout the project.

3.3 Original Components:The following project components were designed to achieve the desired project objectives:

(i) Water harvesting and watershed management, which would introduce several environmentally-sound water harvesting interventions (cisterns, reservoirs and small earth, stone and cemented dikes) and establish a Soil and Water Management Unit as part of the Matruh Resource Management Center, later renamed Matruh Adaptive Research Center (MARC).

(ii) Rangeland and grazing management, which would focus on the improvement and effective utilization of rangeland and vegetative cover. This includes supporting the planting of trees and shrubs on 12,000 feddans of communal lands as well as over-seeding some 2,000 feddans of deteriorated pasture lands.

(iii) Adaptive research, which would establish the MARC and test and disseminate relevant best-practice technologies designed to conserve the area's fragile natural resources and improve and sustain rural productivity. This demand-driven adaptive research would deal with range management and improvement, fodder plant establishment, animal husbandry, cereal (barley), fruit trees (figs, olives, and other promising species) and vegetable production.

(iv) Extension and training, which would provide funding for establishing an effective agricultural

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extension service, including a small multimedia unit, responsible for disseminating improved techniques, general extension messages and marketing information to farmers and herders. In addition, four Subregional Support Centers (SRSCs) would be established within the project area and staffed by relevant subject-matter specialists.

(v) Rural finance, which would give special attention to promoting on-farm income-generating activities targeted to small farmers, the landless, and rural women. The proposed pilot credit program would operate as a special loan fund administered on behalf of the Government by participating banks. The total number of estimated beneficiaries is to be 3,865 rural households and enterprises.

(vi) Project coordination unit (PCU), which would operate through existing governmental organizations in the Matruh Governorate, would assist with project planning, coordination, monitoring and financial control. The unit would include an M&E component to oversee the impact on local communities and agro-ecosystems.

3.4 Revised Components:During the 1997 Mid-Term Review (MTR), the rural finance component was cancelled from the project. No agreement could be reached with the participating banks to manage the line of credit. Among the reasons cited by the various financial institutions are the existence or emergence of alternative sources of micro-credit at more favorable terms in the area as well as problems of collateral among the target group. The funding allocated for the rural finance component was reallocated to other activities in need of financing, mainly the water harvesting and watershed management component. In addition, a small revolving fund was established as part of the women-in-development (WID) activities under the extension component (see Section 4.2 for details on WID activities under the project). The PCU became a fully autonomous implementing agency replacing the implementation through respective technical departments, as a means to address the problems experienced with coordination in the first years of the project resulting in slow initial implementation. As a result of the experience gained up to the MTR, several performance indicators were adjusted.

3.5 Quality at Entry:The project was prepared prior to the Bank's formal performance rating for Quality at Entry (QAE). However, the project's peer reviewers and Bank's management endorsed the project design and considered the quality at entry to be satisfactory. The ICR maintains this overall satisfactory rating, based on the following main points:

(i) The project's objectives were consistent with the Government's strategy of reform in the agricultural sector in the late 1980's and findings of the World Bank's Agricultural Sector Study of Egypt for the 1990's. The most relevant findings emphasized environmental sustainability and poverty alleviation. The project also responded to the priority investment areas included in the Environmental Action Plan prepared by the GOE in 1992. The project design built on activities and lessons learned of a number of other donor projects in the region that had been on-going at the time of appraisal, notably through WFP, GTZ and FAO/UNDP.

(ii) The project design was consistent with the stated development objectives. The design was innovative in many aspects, given its strong emphasis on local participation and community ownership in resource management. It was one of the first, Bank-wide, to implement such a community based participatory development approach and reflected many of the lessons learned in previous Bank-assisted projects regarding the need for greater beneficiary participation and support for decentralization of services.

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(iii) The project is also a pioneering effort in addressing natural resource management in rainfed areas with high incidence of poverty in a country context where irrigated agriculture has historically dominated applied research and development programs in the sector. The project has embarked on introducing multi-sectoral approaches to resource planning and management, and engaged the Ministry of Agriculture and Land Reclamation (MALR) to build capacity and knowledge beyond traditional agricultural development into integrated land use management, mobilization of social capital and inter-sectoral coordination.

(iv) Although the Bank's safeguards policies were not in effect at the time of project appraisal, the project has elements in its design to support environmental and social sustainability. An environmental assessment was conducted and environmental benefits were found to be positive. Key performance indicators were designed to monitor the improvements in the natural resource base (water conservation, soil erosion). Measures to address conservation and monitoring of biodiversity in the project area were not included, however, as it was assumed that planned interventions under the Mediterranean Environmental Technical Assistance Program (METAP) would cover these aspects. This did not materialize during the course of implementation.

The ICR also identifies two weaknesses that should be taken into consideration for future projects of the same complex and multi-sectoral nature:

(i) The first relates to the readiness for implementation of the proposed participatory approach. Given that this was the first such effort in the area, the implementation timeframe should have reflected the need for an initial build-up and preparatory period. This would be needed for staff skills, community organization, sensitization and trust relationship to be created, especially in view of the fact that implementation relied on civil servants with limited experience in the area or proposed approach. The poor uptake of the participatory planning process had been identified as a risk at appraisal, but the mitigation measures should have been further elaborated and reflected in the implementation plan for the different components.

(ii) Secondly, the challenges which were explored at length when designing the rural finance component were not translated into modalities for implementation that take into account the specificity the area and the community regarding credit. The agreement on details of credit delivery mechanisms were left to be finalized with the financing institutions during implementation. While the appraisal team proposed a modest credit line with subsidized interest rates, a more traditional credit component using commercial bank was favored by the Government and used in the final design. This proved very difficult to implement and led to cancellation of the component.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:ICR Rating: Satisfactory

The two main project development objectives are sustainable natural resource management and poverty alleviation, using the existing tribal structure and local participation. The ICR rates the achievements of the development objectives and the project outputs as satisfactory. Although in some cases, it may be too early to assess, most project achievements are likely to be sustained, and the net present value of economic flows are positive.

Concerning the first objective of conserving the natural resource base (water, land and vegetation), this has been achieved as follows: (i) construction of 1.2 million m3 of water storage facilities exceeding the

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appraisal target of 250,000 m3 by about five times. The Adoption and Impact Study (2001) indicated that 58% of total households surveyed in the project area benefited from project-supported water harvesting activities; 42% of which were from the poorest households with a per capita annual income of less than US$250; (ii) construction of earth, stone and cemented dikes that support irrigation and erosion control on 4,236 fd

, contributing to higher crop and rangeland yields; (iii) the development of an integrated watershed development planning system that has significantly decreased water erosion and increased crop and rangeland productivity and has provided a valuable knowledge base for the country and the region; (iv) the planting of shrubs on 18,224 fd and the over seeding of 4,710 fd of rangeland for grazing and for erosion control; and (v) education and awareness training of beneficiaries on sustainable resource management issues. Annex 1 presents key outcome and output performance indicators as compared to initial targets.

In terms of poverty alleviation and improving the livelihoods of the local Bedouin population, project outputs contributed to the achievement of this objective as follows: (i) construction of safe drinking water storage facilities resulted in agricultural and health benefits, and had an impact on decreasing women’s water carrying time and increased livestock productivity. The Adoption and Impact Study indicated that 56% of the sample reported an increase in income due to water harvesting activities; (ii) increased income from livestock through increased fodder availability and genetic improvement. M&E surveys show that of the total rangeland holders who benefited, 67% reported a reduction in their feed concentrate purchase by up to 25%, with beneficiaries equally distributed among small, medium and large farmers; (iii) increased income from adopting higher yielding barley varieties (see Table 1 below) and higher crop and horticultural yields from adopting recommended adaptive research/extension management practices; and (iv) increased incomes from on- and off-farm income generating activities, especially for women. Appraisal targets for farm income increases per household were estimated at 108% for small farms, 77% for medium farms and 67% for large farms. The results of the Adoption and Impact Study, while not directly comparable to appraisal figures, show that 58% of the total sample surveyed said that their income increased due to project interventions, of which half estimated an increase of about 25%. In terms of distribution by economic group, 46% of the respondents were small farmers, 69 % were medium farmers, and 77% were large farmers.

Table 1. Yield Projections at Appraisal and Actual Yields at ICR (kg/feddan)At Appraisal

a End of projectW/out project W/ project Actual

b

Barley 265 320 310Olives (improving existing orchards)

865 1,200 1,286

Figs (improving existing orchards) 1,200 2,700 1,823a

Memorandum of the President (MOP) (p. 27, Table 6.1)b As used in ICR ERR calculation, based on PCU/MARC monitoring data, Annex 3.

Despite the challenges in terms of the project complexity, geographic dispersion and specific social conditions, a further key outcome of the project was its ability to build a good foundation for local capacity in resource management through technical assistance, training and support for social organization, both for project and Government staff as well as community representatives and farmers at large. These impact extend beyond the quantifiable outputs, and ensure the sustainability of the infrastructure and services beyond the project life.

4.2 Outputs by components:Underlying the outputs of each of the components was the participatory approach, which was used in

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project planning and implementation. Although, for various reasons, the participatory approach as envisaged at appraisal was only partially implemented, there were some significant outcomes from pioneering the process. It has been shown that this approach can and has gained the trust and confidence of the Bedouin people. This has translated into a positive response to the adoption of MRMP project interventions that can be built on for future projects. The area was divided into 38 Local Communities (LC) based on geographic and social profiles. Each LC selected a number of representatives, or mandoubeen, and 38 Community Action Plans (CAPs) were prepared and implemented. The pressure to disburse funds following the initial delays caused the PCU to undertake activities planning and implementation using action contracts until CAPs were formulated, with predefined appraisal targets as guidance for expected outputs under each sub-component. While the development of the CAPs was largely a learning exercise, and has only been the basis for community-level activities in the last two years of the project, it has better defined the process for other development initiatives to follow.

Outputs by component were as follows:

(1) Water Harvesting and Watershed Management (Satisfactory)

Under the water harvesting sub-component, water storage structures were constructed to harvest rain water for household use, animal watering and limited supplemental irrigation. In response to high beneficiary demand, the project constructed 6,954 cisterns relative to the 800 envisaged at appraisal. The project also constructed 243 concrete reservoirs and in addition, 231 ancient Roman cisterns were rehabilitated. In total, the project constructed about 1.2 million m3 of water storage capacity that benefited about 6,000 households. The M&E survey indicated that the number of small farmers benefiting from project supported water harvesting activities was the highest (42%), however medium and large farmers also benefited and indicated a proportionately higher increase in income as a result of these interventions. If water harvesting by itself was a component, it would have been rated highly satisfactory.

Earth, stone and dyke structures were constructed for water harvesting and soil erosion prevention. Earth dykes supported 509 fd, stone dikes supported 2,707 fd and concrete dikes supported 167 fd for a total of 3,383 fd, somewhat less than was anticipated at appraisal. Concrete dikes proved to be too costly, difficult to construct and caused water distribution problems with neighbors, unless properly designed, while earth dikes were difficult to construct in areas with shallow soil profiles. Watershed management constructed earth dikes to support an area of 190 fd and stone dykes to support an area of 670 fd. The project reseeded 2,260 fd and planted 65 km of trees as windbreaks. Earth dikes proved not to be the best structures to build for the purpose and there were implementation delays. The introduction of integrated watershed development (IWD) planning for sustainable resource development within a watershed was a further achievement. Sixty-four watersheds were assessed and developed.

(2) Rangelands and Grazing Management (Satisfactory)

Rangeland improvements under the project consisted of planting fodder shrubs (mainly Acacia and Atriplex species) on private and communal lands and overseeding of rangeland. Actual improvements consisted of planting 9,047 fd of fodder shrubs on small areas, planting 6,226 fd of fodder shrubs on Selected Range Management Areas (SRMAs) and interplanting 2,951 fd of fodder shrubs with barley for a total of 18,224 fd (152% of MTR target). In addition, 2,450 feddan were overseeded with pallatable species. The incremental yield from improved rangeland is about 400 Feed Unit (FU)/fd, which increased fodder production by close to 9 million FUs, thereby reducing the feed gap by close to 20%. The M&E surveys indicate that 67% of beneficiaries surveyed have reported a reduction in their concentrate purchase by up to 25%. The project also collected and reproduced indigenous range species, conducted studies to improve

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germination and established a botanical garden. The establishment of SRMAs has been supported under parallel financing from the World Food Program (WFP) and has been flagged during the World Bank's supervision as a controversial approach to rangeland management. While SRMAs have been effective in increasing feed resources, they are costly, deal with individual farmers, and require a large land area, which only affluent farmers can supply. Replicability of such packages beyond the limited initial scale is thereby highly unlikely.

(3) Adaptive Research (Satisfactory)

The Matruh Adaptive Research Center MARC has been established and worked closely with extension for testing and dissemination. MARC consists of six research subunits, including a soil and water management unit, as well as a training center for project staff and beneficiaries. Constraints and best practices were identified partially through the participatory approach and also through the experience of the researchers and extension specialists. On-farm adaptive research was carried out on about 350 fd in farmer’s fields across three agro-ecological zones. The International Advisory Panel (IAP), consisting of four experts in soils and water, rangeland management, animal husbandry, and farming systems, were invaluable to the MARC, especially in the early stages.

A notable achievement was the selection of the improved barley variety Giza-126. The new variety coupled with improved cultural practices of two cross-cultivations and proper seed rate for barley has increased yields on demonstration fields by at least 15%. Surveys indicated that beneficiaries have adopted the technology on about 60% of the 94,800 fd annually sown to barley. Other farming system technologies such as crop rotation, crop mixtures, and fodder shrub interplanting attained a lower adoption rates. Adaptive research on olives and figs included improved pruning, manure application, biological pest control, better harvesting techniques and supplementary irrigation. Adaptive research was also carried out on virus tolerant fig and fig varieties suitable for drying. Through adaptive research and extension efforts olive yields have been improved by 153% and fig yields by 148% on demonstration plots. Adaptive research has also been conducted on improving melon, tomato, and mint production and the introduction of dates and new fruit crops such as jojoba. Livestock adaptive research focused on the low productivity of local breeds, improper feeding and fattening regimes, decreasing the use of purchased concentrates, and veterinary and health problems. A genetic improvement program was introduced. Recommendations were made on early weaning of lambs and the use of urea treated straw, olive pulp and barley-vetch mix to replace purchased concentrates decreasing feed costs. A mobile veterinary unit was instituted.

(4) Extension, Training and WID Program (Satisfactory)

Extension worked closely with MARC relying on similar research and demonstration sites and the interaction with farmers, building a good rapport and trust relationship. Successful adaptive research results were translated into practical applications and recommendations for farmer's use. The extension component also trained farmers and held field days and demonstrations. A multi-media unit was established to support the dissemination of extension and general awareness messages. Extension shares the credit with adaptive research for the success of the adoption of project interventions.

The Women in Development (WID) programme was not initially envisaged at appraisal and was introduced in 1996 to respond more systematically to the felt and expressed needs of the communities. The project responsiveness and measured impact in this regard is highly commendable and the sub-component outputs are rated highly satisfactory. Given that the component was introduced at a later stage and with limited funding, staff in the WID unit had to compete hard to obtain resources and office support. The major achievements of the programme have been in the areas of literacy education, establishment of small

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income-generating projects, home gardens, provision of hand pumps and gas stoves and training on handicrafts, improved nutrition, health and sanitation and environmental awareness. For example, 5,609 girls were given literacy education, 352 trained in carpet weaving, 1,478 home gardens established, about 1,500 women trained in the preparation of jam and preserving olives, and 584 trained in raising poultry. Social centers were constructed in 15 LCs and used primarily for literacy and girls’ education classes.

(5) Rural Finance (Unsatifactory).

The rural finance pilot program was cancelled at the MTR. Prolonged negotiations between the project and the locally-established banks, namely, Principal Bank for Development and Agricultural Credit (PBDAC) and National Bank of Egypt (NBE), did not lend to any agreement on terms and conditions for loans, nor on mechanisms for credit delivery. In addition, issues of accessibility in remote areas, lack of appropriate collateral in many cases, risks related to natural conditions of drought, existence of cheap, albeit limited, alternative funding mechanisms and the resistance of the population to the concept of interest due to religious convictions provided further difficulties for implementation of this component as envisaged. However, a small revolving fund was established for the WID programme and administered by the project. In total LE 260,000 were disbursed, and the recovery rate for this credit without interest was 98%.

(6) Project Management (Satisfactory)

With the change in management and the additional implementation autonomy granted to the Project Coordination Unit (PCU) structure at the time of the first MTR (1997), effective project implemention resumed. To ensure further decentralization and proximity to the beneficiaries, five sub-regional support centers (SRSCs) were also established. About 17,000 person days (p/d) of local training and over 1,500 p/d of overseas training were provided to project staff and beneficiaries. In terms of technical assistance, more than 4,500 p/d of international (mainly through ICARDA and the International Advisory Panel) and local TA consultancies were provided. The National Coordination Committee (NCC) and Project Coordination Committee (PCC) structures were meant to ensure full coordination with relevant GOE agencies and link the project more closely to other authorities in the area; however their role and effectiveness could have been enhanced.

(7) Monitoring and Evaluation (Unsatisfactory)

The M&E component established 37 databases for systematic monitoring of project activities in the local communities. It also utilized Geographic Information System (GIS) technology and satellite imaging following GTZ El Qasr project support to monitor changes in the project area. The project started focusing on monitoring and evaluation of impacts and resulting changes in socio-economic conditions only in the last three years. The adoption and impact of project interventions were evaluated using Beneficiary Contact Monitoring (BCM) studies involving Rapid Rural Appraisal, sample farm surveys, and case studies that were conducted between 1999 and 2001, as documented in the Adoption and Impact Study report (2001). It should be noted that impacts on women, particularly those not directly involved in project activities, were not fully measured, in view of the restrictions on mobility and outside interaction for female members of the household. This should have been addressed from the onset in the design and implementation of the field surveys. Also, environmental impacts including changes in range quality and improvements in species occurrence and diversity were not fully monitored.

4.3 Net Present Value/Economic rate of return:The economic rate of return (ERR) is estimated at 13.0% compared to 12.1% estimated at appraisal. This confirms the satisfactory economic performance of the project. Detailed information on the analysis and

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assumptions is given in Annex 3. The ERR is believed to be underestimated, since the non-quantifiable factors such as a positive environmental and beneficiary health impacts are not reflected in the ERR estimation. The ERR is not overly sensitive to changes in the benefit stream. When benefits are reduced by 10% and 20%, the ERR falls to 11.7% and 10.3%, respectively.

4.4 Financial rate of return:Not applicable.

4.5 Institutional development impact:Institutional development impact in the context of this project can be divided into improvements in the ability of: (i) relevant Government institutions; and (ii) beneficiary communities in the target area, to make more efficient use of the available human, financial and natural resources. In terms of Government institutions, the project has improved the capacity of a cadre of staff capable of addressing natural resource management issues in an integrated fashion in dryland areas, the first for the country. Most of the project staff were seconded from the Ministry of Agriculture and affiliated research institutions, and hence this capacity will be retained and utilized within the institutional structure. Also, the project provided an adaptive research structure which will serve in the long term in the expanded areas of watershed management and dryland farming.

In terms of the improvements on the part of beneficiary abilities, the project has strengthened the capacity of communities to manage their own development, prioritize their development needs, and establish formal links with outside and government agencies. While the present impact may be modest, given that the process has only been functioning fully in the last three years of the project, real concrete steps have been taken in community capacity building that were adopted and built-on by the follow-on project. This includes training of community members in maintenance of water harvesting structures, agricultural extension and involvement of community members in literacy classes both as recipients but also as tutors. The process of communities organizing themselves and selecting community representatives is an important step in terms of self-organization towards possibly becoming legally recognized entities that can be responsible for implementing development plans at their levels. Institutional development impact is therefore viewed as substantial.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:The main factor outside the control of the government and implementing agency is the harsh weather conditions and drought. Although this fact was known at the outset, the weather during the eight years of the project was particularly harsh – 4 of the 8 years were characterized as having below average rainfall. The years 1999 to 2002 were all characterized as poor agricultural years yet there was a significant increase in agricultural productivity and adoption of project interventions. There may have been better project outcomes and resulting ERR had the weather patterns been more within the average or positive range for the area.

5.2 Factors generally subject to government control:Only 19% of project funds were disbursed by the fourth year. At the start of the project, the major responsibility with implementation of technical activities was with the respective technical departments of the Governorate of Matruh and other national authorities. Although the PCU provided overall guidance, the PCU could not fully direct the management of the project because it had no authority over the implementing agencies. Government intervention half way through the project helped to transform the PCU into an autonomous implementing agency and speed up implementation.

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5.3 Factors generally subject to implementing agency control:Significant delays were experienced with the implementation of the participatory approach and the preparations of the Community Action Plans (CAPs) because of lack of relevant staff skills. The project document proposed that a pilot of two CAPs be undertaken first with international technical assistance to enable the staff to be trained before the remaining CAPs were prepared. Due to pressures to disburse funds, project management omitted the pilot phase and concentrated on the implementation of physical interventions such as water harvesting without full participatory planning. The preparation of the CAPs were thus delayed and only started in 1996. Implementation of the watershed management component was delayed due to the delay in obtaining technical assistance which was subsequently resolved by engaging ICARDA.

5.4 Costs and financing:The project was appraised in November 1992 and became effective on February 2, 1994. A seven-year implementation period was envisaged with a closing date of December 31, 2001. The total estimated project cost including physical and price contingencies was US$29.54 million. The financing plan indicated that IDA would provide US$22.0 million (74.6%), the Government US$5.1 million (17.3%) and beneficiaries US$2.4 million (8.1%). The project was given a one-year extension and closed on December 31, 2002. The final cost of the project is estimated at US$33 million. IDA provided US$21.9 million (66.5%), the Government US$5.7 million (17.3%) and beneficiaries US$5.3 million (16.3%). Beneficiaries contributed 2.2 times more than the appraisal cost estimates and this is due mainly to the actual construction of 6,954 cisterns relative to the anticipated 800 cisterns at appraisal. An independent survey of cistern construction costs for purposes of preparation of MRMP II indicated that market rates on construction cost figure for cisterns were lower than the estimate used by the project. This may have contributed to the increased demand on cisterns and the overall cost of the sub-component. It was proposed to use a bidding process with local contractors in the first year of implementation of the Second Matruh Resource Management Project (MRMP II) to ensure that a fair market price is used for possible subsequent construction by beneficiaries.

6. Sustainability

6.1 Rationale for sustainability rating:ICR rating: Likely

The project benefits and initiatives are likely to be sustained. Overall, this assessment is based on the following considerations:

In view of the remoteness, low population density and scale of interventions in the project area, lbeneficiary ownership and active participation becomes a more crucial factor in deciding long term sustainability. As a result of the project approach in terms of community participation and beneficiary contribution to the investment cost of various sub-projects, a strong sense of ownership has been developed by the beneficiaries. Increased agricultural productivity, incomes, food security and positive health impacts has provided added incentive for them to maintain the constructed infrastructure. This is manifested in continued coverage of operation and maintenance cost of water harvesting structures and on-farm interventions by individual farmers, as well as continued support for community-level initiatives and social services from their own resources. One such example is the continuation of community school initiatives, whereby communities have, after the project support ended, established a system of collecting monthly teacher's remuneration and contacting the local official school system to regularly obtain textbooks and basic educational material.

In ensuring long-term sustainability of the achieved development efforts in the area, and realizing that l

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longer timeframes are required to achieve the full extent of implementation of participatory and integrated resource management approaches, the Government has decided to embark on a second phase of the project. MRMP II has been approved by the Bank Board in March 2003 and will further contribute to increased sustainability through its emphasis on capacity building of beneficiaries and administrative, scientific and support staff. The Government has shown its commitment by providing funding to the PCU, MARC and other MRMP I project components to bridge the funding gap between MRMP I and the start-up of MRMP II and has also committed counterpart funding for the implementation of MRMP II.

MRMP II has incorporated features that ensure sustainability of the various technical components and linitiated activities. Emphasis will be placed on better linkages with relevant departments and agencies at the Governorate level in the interest of post-project sustainability. In particular, the sustainability of MARC as a full research structure has been discussed in detail with the Government. The Government has expressed its support for continuing the funding of the center and linking it to a local or regional research institution. In addition, MRMP II has opted for providing research sub-project based funding, instead of bulk funding of the center cost, as a step for MARC to enhance its self-financing capabilities.

The overall policy framework of the Government in this sector provides the necessary enabling lenvironment for initiated activities to be sustained. The Government has an overall commitment to ensuring sustainable economic development, natural resource management, and poverty alleviation in the region as expressed in their “Vision 2017” document. In addition, the Government is providing incentive frameworks that promote private sector investments, including for niche markets and agricultural export promotion. This will facilitate addressing the existing issues of marketing and competitiveness under MRMP II to ensure that the attained benefits from natural resource conservation are maintained and maximized.

No major risks to sustainability are evident, but political will and commitment to continuing the limplementation of the selected approach is imperative. Emphasis should be placed by MALR on ensuring that relevant key decision makers in other agencies are educated on the benefits of the participatory approach and that lessons learned are systematically integrated into development plans for the area and other similar regions.

6.2 Transition arrangement to regular operations:The Government has initiated the second phase of the project (MRMP II) as a transitional phase that will move the project further to integration within existing structures. The PCU staff, many of whom are seconded, will likely be absorbed into existing ministries or other institutions in the area over the long term. It is unlikely the government will increase its presence in the project area beyond what exists given its remoteness and sparse population. Emphasis should and will be placed on creating effective interfaces between the local communities and existing Government agencies, as well as building the needed capacities on both sides to ensure that technical support is maintained and communities are gradually fully empowered to assume greater responsibility for planning and implementation of development efforts. MRMP II has taken steps to streamline adaptive research and extension efforts so that they match what can be more readily absorbed by the government.

7. Bank and Borrower Performance

Bank7.1 Lending:Bank performance during project identification is judged as highly satisfactory. The project concept was

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commended for its innovative design, and it was considered the first such type for the country and the region to focus on key environmental and sustainability issues while attempting to fully involve the local tribal population. It was consistent with the CAS objectives of sustainable resource management, promotion of rural employment, poverty alleviation and food security. The multi-disciplinary nature of the project made it more challenging. Higher complexity and associated risks were flagged from the early identification stages, and adequate Bank resources were mobilized to address the inter-linkages with several subsectors. The project built on the lessons learned from previous pilot activities financed through bilateral/ multilateral sources (mainly GTZ) and some technological packages that have already been developed in the area.

Project preparation and appraisal is, on balance, rated satisfactory. Through its involvement, the Bank was able to assist the GOE in securing Japanese grant funding for the preparatory phase, in addition to providing the needed technical support to the Government national task force in the form of regular follow-up missions. The Bank preparation team encouraged the use of participatory appraisal techniques to ensure the involvement of local communities throughout the process. The issue of credit consumed a disproportionately large portion of the internal reviews and discussions but, unfortunately, the ultimate design of this particular component proved to be difficult to implement. This was perhaps also at the expense of other components and aspects of design which could have used more in-depth preparation to ensure readiness for implementation. In particular, the participatory process and associated risks did not benefit from sufficient measures to address the lack in capacity and needed timeframe to build the trust relationship between the implementing agency and the Beduin communities. Also, the proposed institutional set-up was not fully assessed in terms of implementation capacity of the different local authorities through which the PCU was proposed to function.

7.2 Supervision:The overall Bank performance during implementation is rated satisfactory. A Quality of Supervision Assessment (QSA) conducted in 1997 had rated some of the supervision aspects as marginal, including focus on development impact, actions taken and follow up and relations with donors and other stakeholders during supervision. The Bank teams addressed these flagged issues in the context of subsequent supervisions, which were carried out in a timely manner and included in-depth assessment and clear follow-up actions that were raised adequately with Bank management and client counterpart. In addition, two detailed MTRs were conducted in 1997 and 2000, addressing at each stage key problems hindering implementation and suggesting changes to the design in a flexible manner to accommodate local conditions and community needs. There was a high degree of continuity in the team supervising the project during its long implementation period, as well as regular involvement of the country office. Supervision of fiduciary aspects of the project and realism of project performance ratings were rated satisfactory by the QSA and continued to be adequate throughout. Given that this was one of the first projects Bank-wide to tackle multi-disciplinary and participatory approaches, and the fact that limited tools were available to support those aspects within the institution, the Bank teams are commended for guiding the project towards its final achievements.

7.3 Overall Bank performance:Satisfactory

Borrower7.4 Preparation:The project was prepared by the Government with the assistance from HJP International Limited from the UK under a Japanese grant fund. A national task force was established to coordinate preparation efforts, and included three groups of expertise, the first on water and soil conservation, the second on

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agriculture/livestock development and production and the third on institutional and socio-economic aspects (including credit, marketing, organization and management). The preparation phase is commended for the utilization of participatory rapid rural appraisal techniques to secure the involvement of future project beneficiaries from the early stages of project design. Government performance during preparation is rated satisfactory.

7.5 Government implementation performance:There was a high degree of Government commitment to the project and it ensured that there was adequate financial and human resources to achieve program goals. The Government is commended for initiating what in many ways was a first pilot in participatory natural resource management in Egypt. The ability of the Ministry of Agriculture to support the implementation of the diverse project activities, many of which are outside the realm of its sectoral capacities is a demonstration model for integrated development. High level support was ensured by the role of the National Project Coordinator who was responsible for policy level coordination, as well as the establishment of the International Advisory Panel which provided valuable guidance on technical issues. Regular follow-up was also provided from the former Ministry of Planning and International Cooperation (currently Ministry of State for Foreign Affairs) to address implementation delays and ensure early preparation initiation of MRMP II so as to minimize the gap in implementation. Government implementation performance is rated satisfactory.

7.6 Implementing Agency:Overall, the performance of the PCU as an implementing agency is rated satisfactory. During the initial four years of the project, the implementation of all five major project components was very slow. There was almost no implementation of the watershed management activities, the rural finance component and the development of CAPs. Also little of the available technical assistance funding had been used. However, following the first MTR, the pace of implementation has improved markedly. Although the legacy of the initial years hurt overall project implementation, the implementing agency did a very good job of successfully carrying out project activities and achieving the target outputs from the MTR to the end of the project.

7.7 Overall Borrower performance:Overall, the Borrower’s performance is rated satisfactory.

8. Lessons Learned

Overall design and participatory approach

Moving towards multi-sectoral/multi-disciplinary approach in natural resource management and lpoverty alleviation projects is more likely to lead to achievement of objectives than the single-sector projects of the past and should be capitalized on as a first step towards decentralization and local level institutional integration. To be effective, the project design should include adequate emphasis on multi-disciplinary teams, and on outreach and capacity building on integrated resource planning and management approaches. Implementation through single sectoral ministries is inherently more challenging, and more emphasis should be placed on designing effective institutional set-ups to address multiple sectors and their successful interaction.

Participatory project implementation requires flexible budgeting that is not constrained by lpredetermined outputs, but relies on a truly demand-driven identification of activities, in order for the participatory planning and implementation approach to be fully responsive to beneficiary demands. This should also be coupled with a change in approach and mind-set to monitoring and evaluation, which traditionally measures achievements against preset targets to (i) be more flexible, defined with

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communities and regularly updated; and (ii) include indicators that measure responsiveness to community needs and extent of involvement by beneficiaries.

Adequate initial training and capacity building is a prerequisite to the start up of activities requiring lbeneficiary participation, particularly in cases where participatory methods are new to the implementing agency. In addition, given the time required for community-level discussion and negotiation to agree on beneficiary priorities, full-time dedicated and skilled staff should be assigned to interface with communities and support their process of organization.

Rural credit programs, particularly in remote areas, require innovative mechanisms that adapt to lconstraints on the side of both the financial institutions and the beneficiaries and identify a process that will bring the two parties, overtime, to a situation of mutual trust. Moving to a full scale commercial approach is often times not feasible or premature when the required market conditions are not conducive. The failure to address problems of collateral, religious views to interest rate payment and need for credit delivery at lowest levels will likely lead to failure and eventual cancellation of the component as was the case in this project.

Targeting the poorest segments of the society can be a challenging process where communities lhave strong traditional structures, and requires time, clear monitoring mechanisms and strong engagement with the tribal organization. It should be recognized that a certain amount of elite capture of benefits will be mostly unavoidable in the initial phases of implementation. Once a trust relationship has been successfully established, the communities' representatives should be the ones to define those most in need and agree on a criteria for distribution of project benefits based on income levels. The project should then monitor a posteriori whether or not they have been following the agreed upon principles for poverty targeting in their budget allocation.

Technical / Institutional

Accurate unit cost estimation of infrastructure sub-projects is a vital prerequisite to implementation lthrough beneficiaries to avert over or under-estimation of construction costs.

Soil conservation through watershed management can affect downstream runoff and water harvesting lcapabilities. Thus, the planning and implementation of water harvesting and watershed management must be integrated so as to optimize the benefits from both interventions.

Community rangeland management may be a more suitable approach than activities targeting lindividual farmers, particularly for communal range areas where degradation is more severe. It stands a higher chance of achieving long-term sustainability, through ownership. However, it does require more initial time to be invested in negotiation and conflict resolution.

The PCU as an add-on and temporary structure for service provision should be critically evaluated lcompared to available alternatives when embarking on new development initiatives in a given area. In view of the remoteness and dispersion of target communities and the resulting high comparative cost for GOE to provide full scale services at the local level, this set up is more appropriate to provide the initial deployment of necessary expertise, coupled with gradual phase-out plans to ensure that existing Government services, NGOs, and beneficiaries ultimately take over.

Influence of lessons learned on design of MRMP II

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MRMP II has reflected many of the lessons distilled from implementing the first phase to build on the positive achievements and ensure sustainability of the outputs and outcomes. The key features which relate to the lessons mentioned above are:

(a) MRMP II continues the multi-sectoral approach to natural resources management initiated under Phase I with an added emphasis on biodiversity conservation and integrated ecosystem management, for which GEF grant resources were secured. The Ministry of Environment through the Egyptian Environmental Affairs Agency (EEAA) and the Governorate of Matruh for local level planning became new project partners, thereby providing additional opportunities for cross-sectoral integration.

(b) MRMP II will also deepen the Community Driven Development (CDD) approach. To ensure that the participatory approach is the foundation of all activities to be undertaken in a community, communities cannot benefit from activities under the project unless they have developed their CAP and Annual Work Program and Budget (AWPB). These become the main tool for planning and allocating resources to household and community-level investments and no activities will be funded outside. The project budget reflects the flexibility in planning based on identified community needs, and therefore does not predefine set numbers for the outputs under each component. The communities would be responsible for determining the criteria for defining poverty within their own environment in order to identify the eligible households. A dedicated unit Community Development Unit (CDU) has been created with full time staff concerned with planning of activities related to preparation and monitoring of CAPs and AWPBs, as well as development of local community organizational capacity. A special sub-unit for gender activities has been proposed, in addition to one woman facilitator at each SRSC level, to address more systematically women's concerns. Finally, the selection of mandoubeen will be revalidated to ensure their accountability to their constituency.

(c) MRMP II takes a micro-finance approach to rural lending as a pilot operation. In the design of the credit component, MRMP II project has proposed the mechanism of using local traders as intermediaries, which will hopefully bridge the collateral problem and gap in trust.

9. Partner Comments

(a) Borrower/implementing agency:Ministry of Agricultre and Land Reclamation (MALR): The project was designed to implement the Government’s strategy for natural resource management in the dry areas of the northwest coast of Egypt. This has helped to establish a common understanding and harmony between the project and other development agencies, and facilitated project implementation. The establishment of the project coordination committee has maintained close coordination between the project and the concerned development organizations operating at both national and project area levels and enabled the achievement of the project success and minimized duplication of development activities.

The project design, based on “bottom up” planning, reflected the real needs of the local communities, strengthened the self confidence of the beneficiaries and helped to build roots of trust between Government agencies, the project, and the local communities. The project has achieved remarkable success in areas of integrating different activities, providing new experience, building human resource capacity, training farmers, and formulating new packages for implementation ensured sustainability in the future. Linking adaptive research and extension to development ensured technology relevance to the development goals, and increased application of small and low cost technology. The establishment of Matrouh Adaptive Research Centre (MARC) for developing the local research capacity, expertise, and experience in rainfed agriculture which is lacking in Egypt in addition to the construction of the training center strengthened the technical

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base for sustainability. The establishment of a triangular operational approach, integrating adaptive research with extension and local communities will improved the potential spillover of research/extension/development and led to the evolution of a research center for the development of low rainfall areas not only in Egypt but also worldwide.

Throughout the implementation of the project, the Ministry of Agriculture and Land Reclamation continued to ensure the adequacy and timely allocation of resources to achieve project goals. The MALR also was in compliance with all management and audit covenants of the credit agreement. The project management was able to implement the project efficiently and effectively. The procurement process as well as all financial processes were in compliance with IDA/WB procedures and in consistency with Government procedures. The project has actually provided unique opportunities to build expertise and gain experiences in the management of natural resources in the low rainfed areas where poor and ultra-poor populations are living.

(b) Cofinanciers:

(c) Other partners (NGOs/private sector):International Center for Agricultural Research in Dry Areas (ICARDA): ICARDA provided

technical assistance (4000 person/day, delivered by 51 scientist from 18 nationality), and facilitated about 1500 person/day of overseas training in 12 countries, in addition to extensive in-house and on-job training of project staff and local communities. ICARDA technical assistance (ITA) was implemented by short (1-3 week) missions, a resident coordinator and a soil-water engineer. ITA supported the formulation and conduct of ‘adaptive research for development’ programs to promote technologies for sustainable resource management, diversified and more productive crop/range/livestock farming systems. MRMP was designed properly to achieve its objectives, which were well stated to tackle biophysical, socioeconomic, and institutional constraints to sustainable natural resource management, and poverty alleviation. However, due to overestimate of local capacity, the design neglected the need for international ITA for the project’s core developmental area of the soil and water interventions, such as water harvesting, soil conservation, and integrated watershed management. At the very early stage of ITA implementation, ICARDA's management responded positively to Project's request, shifting the assignments from local to international. The time and capacity building requirements for effective implementation of community participation was also under-estimated, and the reliance on short visits of the “non-ICARDA” consultant was unwise. Alternatively, a resident expert should have been appointed, at least for the first year or two.

ICARDA partnership has contributed to enhance project performance and achievements. The benefit was, however, mutual. MRMP provided a good environment for ICARDA to conduct multi-purpose, multi-disciplinary, multi-institutional ‘research for development’ programs under a wide range of biophysical and socio-economic diversity, and to assess the adoption and impact at a medium-term dimension. ICARDA considers MRMP a pioneer project, a unique World Bank's model that could be copied for the development of marginal, semi-desert drylands in Egypt and worldwide. A major factor in project success was the employment of decentralized, community-based managerial and operational model and participatory methodological approaches. It should, however, be emphasized that institutionalizing the model needs time and intensive human resource development, and this should be considered by the donors in the design, planning, and implementation of resource management/ rural development projects.

10. Additional Information

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

Water harvesting structures supporting poorest households.

42% of beneficiaries of water harvesting structures were from households with per capita income less than US$250.

Reduction in feed concentrate purchase due to improvement in range productivity.

67% of surveyed herders reported a reduction in their feed concentrate purchase by 25%.

Adoption of improved adaptive research/ management practices.

Adoption of technologies by 56% of crop producers & 63% of horticulturists surveyed.

Improvement in income due to on- and off-farm income-generating activities.

58% of sample surveyed reported an increase in their income by up to 25 % due to project interventions.

These indicators were obtained from the Adoption and Impact Study (2001) conducted by the PCU/ICARDA.Output Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

1. Water Harvesting

(a) Cistern construction - 800 cisterns to be constructed

6,365 cisterns (1.06 million m3) 6,954 cisterns (1.074 million m3)

(b) Concrete reservoir construction 130 reservoirs* 243 reservoirs (34,195m3)

(c) Roman cistern rehabilitation -- 231 Roman cisterns (89,522 m3)

(d) Earth dyke construction - 500 feddans 367 feddans* 509 feddans

(e) Stone dykes - 1200 feddans 2,652 feddans 2,707 feddans

(f) Cemented dykes- 500 feddans 167 feddans 167 feddans

2. Watershed Management

(a) Construction of earth/stone dykes - 6000 feddans

830 feddans of watershed structures 850 feddans

(b) Tree belt construction - 100 km 54 km 65 km

(c) Over-seeding range areas - 4000 feddans to be over-seeded

4000 feddans over-seeded* 2,260 feddans over-seeded

3. Rangeland and Grazing Management

(a) Shrub plantation on communal range - 12,000 feddans to be planted

12,000 feddans* 18,224 feddans

4. Adaptive Research

(a) Off-station/ on farm research - conduct on-farm adaptive research on 300 feddans

Adaptive research conducted on 300 feddans of rented land

Adaptive research conducted on 350 feddans of rented land

5. Extension and Training

(a) Implement Community Action Plans (CAP)

38 CAPs implemented 38 CAPs Implemented

1 End of project

* Indicators projected at second Mid-Term Review year 2000.

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionSoil and Water Resource Management 8.03 16.70 207Rangeland Management 1.82 1.85 102Adaptive Research 3.28 5.07 154Extension and Training 4.37 5.70 130Rural Finance 3.77 0.00 0Project Management & Coordination 1.81 2.86 158Monitoring and Evaluation 0.64 0.88 138

Total Baseline Cost 23.72 33.06 Physical Contingencies 2.36 Price Contingencies 3.45

Total Project Costs 29.53 33.06Total Financing Required 29.53 33.06

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 1.81 1.86 2.42 6.09(0.00) (1.60) (1.83) (0.00) (3.43)

2. Goods 4.38 0.63 0.50 0.00 5.51(4.38) (0.55) (0.50) (0.00) (5.43)

3. Services 5.86 0.00 0.00 0.00 5.86(5.86) (0.00) (0.00) (0.00) (5.86)

4. Rural Finance and Credit

0.00 0.00 3.62 0.00 3.62

(0.00) (0.00) (3.44) (0.00) (3.44)5. Range Development 0.00

(0.00)1.89

(1.65)0.35

(0.31)0.00

(0.00)2.24

(1.96)6. Operating Costs 0.00

(0.00)0.00

(0.00)6.21

(1.88)0.00

(0.00)6.21

(1.88) Total 10.24 4.33 12.54 2.42 29.53

(10.24) (3.80) (7.96) (0.00) (22.00)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 2.28 7.88 5.32 15.48(0.00) (1.90) (7.85) (0.00) (9.75)

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2. Goods 2.25 1.62 0.60 0.00 4.47(2.11) (1.47) (0.55) (0.00) (4.13)

3. Services 0.60 0.58 2.86 0.00 4.04(0.60) (0.58) (2.86) (0.00) (4.04)

4. Rural Finance and Credit

0.00 0.00 0.00 0.00 0.00

(0.00) (0.00) (0.00) (0.00) (0.00)5. Range Development 0.00

(0.00)0.00

(0.00)1.57

(1.28)0.00

(0.00)1.57

(1.28)6. Operating Costs 0.00

(0.00)0.00

(0.00)6.82

(2.23)0.00

(0.00)6.82

(2.23) Total 2.85 4.48 19.73 5.32 32.38

(2.71) (3.95) (14.77) (0.00) (21.43)

1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to: (i) managing the project; and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

IDA Govt. CoF. IDA Govt. CoF. IDA Govt. CoF.Soil and Water 6.82 0.76 2.42 10.62 0.78 5.30 155.7 102.6 219.0Rangelands 1.90 0.37 1.47 0.38 77.4 102.7Adaptive Research 3.97 0.10 3.87 1.20 97.5 1200.0Extension 3.53 1.90 3.74 1.96 105.9 103.2Rural Finance 3.77 0.92 0.00 0.00 0.0 0.0Project Management 1.30 0.96 1.49 1.37 114.6 142.7Monitoring and Evaluation 0.71 0.09 0.79 0.09 111.3 100.0

Appraisal estimates include contingencies.CoF refers to beneficiary contribution to the cost of cistern and dike construction.

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Annex 3. Economic Costs and Benefits

Introduction

The main quantifiable benefits associated with MRMP project costs emanate from: (i) an increase in barley production, (ii) an increase in olive and fig production; and (iii) an increase in rangeland fodder production and the resulting affect on livestock value added. Table 1 presents the “with” and “without” project barley, olive and fig yields. Table 2 presents the adoption of MRMP adaptive research interventions for barley, olives and figs.

Rangelands have been improved mainly through the planting of fodder shrubs (Acacia and Atriplex species) and re-seeding. On average, “without” project rangeland produces between 20 to 50 feed units (FU) per feddan/year compared to a “with” project average yield of 450 FU/fd/year. Table 3 presents the number of feddans of rangeland improved each year under the project.

The MRMP project has also improved the yield and production of other crops such as melon, tomatoes and kitchen garden production although on a smaller scale than barley and orchard crops. Lack of adoption and productivity data prevented including them in the economic analysis.

Table 1. With and Without Project Yield of Barley, Olives and Figs (kg/feddan)____________________________________________________________________________

With Project Yield by Type of Rainfall Year____________________________________

With Project Weighted Average a/

AverageWithout

Project Yields________________________________________________________________________

Poor Average GoodBarley b/ 260 320 380 306 265Olives c/ 550 1,600 2,200 1,286 865Figs c/ 700 2,200 3,400 1,823 1,200______________________________________________________________________________Source: With project yields from MARC research and extension staff, MRMP II Formulation Report, Table 1, page 2, Annex XV, Financial and Economic Analysis. Without project yields from Presidents Report, May 3, 1993.

a/ Weights: Poor year (41%), Average year (38%), Good year 21%. b/ Improved technology consists of new barley variety Giza-126, proper seed rate and two cross cultivations.c/ Improved technology consists of proper pruning, fertilizer, better harvesting techniques and biological pest control.

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Table 2. Adoption of MRMP Adaptive Research Interventions ________________________________________________________________________ Year Barleya Olivesb

_________________________________ Figsb

_____________________ New Area

Planted Rehabilitated

Areac Improving

Existing Orchards

New Area Planted

Improving Existing

Orchards ________________________________________________________________________

----------------------------------(feddans) --------------------------------- 1994-95 0 0 0 0 0 0 1995-96 0 0 0 0 0 0 1996-97 0 131 15 90 0 60 1997-98 4,740 536 200 672 0 1725 1998-99 14,220 1,007 365 1,254 0 3380 1999-00 33,180 1,390 530 1,836 75 5,035 2000-01 47,400 1,923 695 2,418 236 6,690 2001-02 56,880 2,106 860 3,000 242 8,345 2002-03 - - 1,000 - - 10,000

________________________________________________________________________ Source: MARC research and extension staff. aImproved technology consists of new variety Giza-126, proper seed rate and two cross cultivations. bImproved technology consists of proper pruning, fertilizer, better harvesting techniques and biological pest control. cRehabilitation of non-producing olive groves.

________________________________________________________________________

Table 3. Area of Rangeland Improved Under the MRMP Project by Year ________________________________________________________________________

Year Shrubs Planted to

Small Areas

Shrubs Planted to

Large Fenced Areas

Shrubs Interplanted

With Barley

Re-Seeded Rangeland

Total

________________________________________________________________________ ------------------------------------------Feddans-------------------------------------------------------

1994-95 0 0 0 0 0 1995-96 638 0 0 0 638 1996-97 3,107 0 0 150 3,257 1997-98 4,184 850 168 275 5,477 1998-99 5,725 2,913 1,380 900 10,918 1999-00 8,211 4,563 2,246 1,325 16,345 2000-01 9,047 5,601 2,951 1,825 19,424 2001-02 9,047 6,226 2,951 2,450 20,674

________________________________________________________________________ Source: MRMP Range Land Component.

Economic Benefits

Benefit streams from the MRMP quantifiable interventions are derived first by identifying the net economic benefits/feddan from crop and rangeland budgets. These are then applied to the number of feddans adopted to obtain an aggregate economic benefit for the project area. Output and input prices used in the analysis are presented in Table 4. The crop and livestock models are presented in Tables 5 through 13.

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Table 4 . Financial and Economic Prices for 2001________________________________________________________________________

Unit FinancialPrice

EconomicPrice

________________________________________________________________________Outputs:Agricultural OutputsBarley grain kg 0.6 0.51Barley straw kg 0.15 0.15Figs kg 0.85 0.85Olives kg 0.85 0.85Livestock ProductionLambs kg 10.0 10.0Inputs:Agricultural InputsSeed barley kg 1.0 0.9Machine ploughing hour 12 10.9Machine ploughing-orchards hour 10 9Machine threshing hour 20 18Manure for trees 7 kg bag 0.5 0.45LabourPruning (hired) Person-day 15 7.5Harvesting (hired) Person-day 15 7.5Family labour Person-day 0 5.0________________________________________________________________________Source: Adapted from MRMP II Formulation Report, Annex XV, Financial and Economic Analysis.

(1) Barley Production

Table 5 presents the rainfed barley production model. The economic analysis indicates an incremental “with” project economic benefit/fd of LE 36.1/fd over the “without” project economic benefit. _____________________________________________________________________

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Table 5. Rainfed Barley Budget _________________________________________________________________________

Unit/feddan Physical Units/feddan ________________________

Economic Analysis _________________________

Without Project

With Project

Without Project

With Project

________________________________________________________________________ Output/Revenue ----------------LE---------------- Grain kg 265 310a 135.2 158.1 Straw kg 500 750 75.0 112.5 Total Revenue LE - - 210.2 270.6 Inputs/Costs Seed kg 20.0 30 18.0 27.0 Ploughing Hours 1.5 2.0 16.2 21.6 Threshing Hours 1.45 2.0 26.1 36.0 Family labour Person-day 16.0 16.0 80.0 80.0 Total Costs - - 140.3 164.6

Economic Benefits - - 69.9 106.0

________________________________________________________________________ Source: Physical Units from MRMP/MARC aFor the analysis, the 306 kg/fd from Table 1 is rounded upward to 310 kg/fd to be consistent with MARC budgets.

(2) Olive Production

Olive production has been improved by the MRMP project through three separate activities: (i) improvement of existing producing orchards; (ii) rehabilitation of non-producing orchards; and (iii) establishment of new olive orchards. Each requires a separate budget because of the yield lags and input cost differences. Table 6 presents the budget for the improvement of producing olive orchards. The peak production in the third and following years results in a “with” project incremental economic benefit of LE 158.7/fd. Table 7 presents the budget for rehabilitation of non-producing olive orchards with peak production occurring in the fifth year. Tables 8 and Table 9 present the technical coefficients and economic analysis for the establishment of new olive orchards.

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Table 6. Budget for Improvement of Producing Olive Orchards ________________________________________________________________________ Unit/

Feddan Physical Units

________________________________ Economic Analysis

_______________________________ Without

Project With Project

_______________________ Without Project

With Project _______________________

Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 ________________________________________________________________________ Output/Revenue ----------------------LE-------------------- Yield kg 865 865 1,050 1,280a 735.3 735.3 892.5 1,088.0 Inputs/Costs Ploughing Hour 3 3 3 3 27 27 27 27 Manure 7 kg 0 20 20 20 0 9 9 9 Pest Control LE 0 100 100 100 0 100 100 100 Bagging/Transport LE 55 55 60 60 55 55 60 60 Labour Pruning (hired) P-day 0 2 2 2 0 15 15 15 Family Labour P-day 3 13 13 13 15 65 65 65 Harvesting (hired) P-day 5 5 6 7 37.5 37.5 45.0 52.5 Total Costs 134.5 308.5 321 328.5 Economic Benefits 600.8 426.8 571.5 759.5 ____________________________________________________________________________________________________________ Source: Physical Units from MRMP/MARC aFor the analysis, the 1,286 kg/fd from Table 1 is rounded downward to 1,280 kg/fd to be consistent with MARC budgets.

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Table 7. Budget for Rehabilitation of Non-Producing Olive Orchards ________________________________________________________________________ Unit/

Feddan Physical Units

________________________________ Economic Analysis

_______________________________ Years

1 & 2 Year 3 Year 4 Year 5

Onward Years 1 & 2

Year 3 Year 4 Year 5 Onward

________________________________________________________________________ Output/Revenue ----------------------LE----------------------

Yield kg 0 600 1,100 1,280a 0 510 935 1,088 Inputs/Costs Ploughing Hour 3 3 3 3 27 27 27 27 Manure 7 kg 20 20 20 20 9 9 9 9 Pest Control LE 50 100 100 100 50 100 100 100 Bagging/Transport LE 0 55 60 60 0 55 60 60 Labour Pruning (hired) P-day 4 2 2 2 30 15 15 15 Family Labour P-day 13 13 13 13 65 65 65 65 Harvesting (hired) P-day 0 5 6 7 0 37.5 45 53.5

Total Costs 181.0 308.5 321.0 328.5

Economic Benefits -181 201.5 614 759.5

______________________________________________________________________________________ Source: Physical Units from MRMP/MARC aFor the analysis, the 1,286 kg/fd from Table 1 is rounded downward to 1,280 kg/fd to be consistent with MARC budgets.

Table 8. Technical Coefficients for Establishment of New Olive Orchards ______________________________________________________________________________________ Unit/

feddan Year

1, 2 & 3 Year

4 Year

5 Year

6 Year

7 Year

8 Year 9

& Onward

________________________________________________________________________ Output Yield kg 0 100 200 500 800 1,000 1,280 Inputs Ploughing Hour 3 3 3 3 3 3 3 Manure 7 kg 20 20 20 20 20 20 20 Pest Control LE 0 50 75 100 100 100 100 Bagging/Transport LE 0 25 25 55 55 60 60 Labour Pruning (hired) P-day 0 2 2 2 2 2 2 Family Labour P-day 13 13 13 13 13 13 13 Harvesting (hired) P-day 0 1 2 4 5 6 7 ______________________________________________________________________________________ Source: Physical Units from MRMP/MARC aFor the analysis, the 1,286 kg/fd from Table 1 is rounded downward to 1,280 kg/fd to be consistent with MARC budgets.

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Table 9. Budget for Establishment of New Olive Orchards ______________________________________________________________________________ Year

1, 2 & 3 Year

4 Year

5 Year

6 Year

7 Year

8 Year 9

& Onward

____________________________________________________________________________________________________________ Gross Revenue (LE/fd) 0 85 170 425 680 850 1,088 Input Costsa (LE/fd) Ploughing 27 27 27 27 27 27 27 Manure 9 9 9 9 9 9 9 Pest Control 0 50 75 100 100 100 100 Bagging/Transport 0 25 25 55 55 60 60 Labour Costs (LE/fd) Pruning (hired) 0 0 15 15 15 15 15 Family Labour 65 65 65 65 65 65 65 Harvesting (hired) 0 7.5 15 30 37.5 45 52.5 Total Costs (LE/fd) 101 198.5 231 301 308 321 328.5 Economic Benefits (LE/fd) -101 -113.5 -61 124 371.5 529 759.5 ______________________________________________________________________________________ aEstablishment costs included in project costs

(3) Fig Production

Fig production has been improved by the MRMP project through two separate activities: (i) improvement of existing producing orchards, and (ii) establishment of new fig orchards. Each requires a separate budget because of the yield lags and input cost differences. Table 10 presents the budget for improvement of producing fig orchards. Tables 11 and 12 present the coefficients and economic analysis for the establishment of new fig orchards.

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Table 10. Budget for Improvement of Producing Fig Orchards ________________________________________________________________________ Unit/

Feddan Physical Units

________________________________ Economic Analysis

_______________________________ Without

Project With Project

_______________________ Without Project

With Project _______________________

Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 ________________________________________________________________________ Output/Revenue ----------------------LE-------------------- Revenue kg 1,200 1,200 1,500 1,840a 1,020 1,020 1,275 1,564 Inputs Ploughing Hour 3 3 3 3 27 27 27 27 Manure 7 kg 0 20 20 20 0 9 9 9 Pest Control LE 0 100 100 150 0 100 100 150 Bagging/Transport LE 100 150 190 190 100 150 190 190 Labour Pruning (hired) P-day 2 4 4 4 15 30 30 30 Family Labour P-day 6 10 12 14 30 50 60 70 Harvesting (hired) P-day 10 22 25 28 75 165 187.5 210 Total Costs 247 531 603.5 686 Economic Benefits 773 489 671.5 878 ________________________________________________________________________ Source: Physical Units from MRMP/MARC aFor the analysis, the 1,823 kg/fd from Table 1 is rounded upward to 1,840kg/fd to be consistent with MARC budgets.

Table 11. Technical Coefficients for Establishment of New Fig Orchards ______________________________________________________________________________ Unit/

feddan Year

1, 2 & 3 Year

4 Year

5 Year

6 Year

7 Year

8 Year 9

& Onward

________________________________________________________________________ Output Yield kg 0 100 300 500 1200 1,500 1,840 Inputs Ploughing Hour 3 3 3 3 3 3 3 Manure 7 kg 20 20 20 20 20 20 20 Pest Control LE 0 50 75 100 100 100 150 Bagging/Transport LE 0 75 100 100 150 190 190 Labour Pruning (hired) P-day 0 4 4 4 4 4 4 Family Labour P-day 6 6 7 8 10 12 14 Harvesting (hired) P-day 0 2 6 10 22 25 28 ______________________________________________________________________________________ Source: Physical Units from MRMP/MARC aFor the analysis, the 1,823 kg/fd from Table 1 is rounded upward to 1,840 kg/fd to be consistent with MARC budgets.

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Table 12. Budget for Establishment of New Fig Orchards ______________________________________________________________________________ Year

1, 2 & 3 Year

4 Year

5 Year

6 Year

7 Year

8 Year 9

& Onward

________________________________________________________________________ Gross Revenue (LE/fd) 0 85 255 425 1,020 1,275 1,564 Input Costsa (LE/fd) Ploughing 27 27 27 27 27 27 27 Manure 9 9 9 9 9 9 9 Pest Control 0 50 75 100 100 100 150 Bagging/Transport 75 100 100 150 150 190 190 Labour Costs (LE/fd) Pruning (hired) 0 30 30 30 30 30 30 Family Labour 30 30 35 40 50 60 70 Harvesting (hired) 0 15 45 75 165 187.5 210 Total Costs (LE/fd) 141 261 321 431 531 603.5 686 Economic Benefits (LE/fd) -141 -176 -66 -6 489 671.5 878 ______________________________________________________________________________________ aEstablishment costs included in project costs

(4) Improved Rangeland Productivity

Improved rangeland, on average, yields approximately 400 to 450 FU/fd/year relative to unimproved rangeland yield of 20 to 50 FU/fd/year (1 FU = feed equivalent of 1 kg barley). Thus, the incremental value of fodder is approximately 400 FU/fd. The economic value of range fodder is about LE 0.6/FU thus an estimate of the yearly value of the improved rangeland by the end of the project would be LE 4.9 million (LE 240/fd x 20,674 fd). The improved rangeland fodder is fed to sheep and goats at a conversion rate of about 1 kg liveweight for each 5 FU range fodder. On this basis, the yearly incremental liveweight gain per feddan is 80 kg. This results in an incremental economic benefit of LE 400/fd (Table 13) or LE 8.2 million from improved rangeland at project end when the value added from livestock is included Information on adoption and use of incremental fodder from improved rangeland was unavailable to form livestock budget models and follow the methodology used in the ERR analysis carried out at appraisal. The value added LE 400/fd is used in the analysis and applied to the area of rangeland improved in Table 3 to obtain the benefit stream. In the calculation, there is zero rangeland fodder produced in the year planted, 50 FU/fd in year two, 300 FU/fd in year three and 400FU/fd, thereafter.

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Table 13. Value Added From Range Land Improvement________________________________________________________________________

Unit/Feddan WithoutProject

WithProject

Increment

________________________________________________________________________ProductionRangeland Fodder FU 50 450 400

b

Liveweight Gaina kg 10 90 80

Economic Benefits c LE 50 450 400________________________________________________________________________a/ Conversion ratio of 5 kg range fodder to 1 kg liveweight.b/ Zero production in year of planting, 50 FU in second year, 300 FU in third and 400 FU each year after.c/ Based on a net return of LE 5/kg liveweight. The economic market price is LE 10/kg liveweight and

economic costs are LE 5/kg liveweight. Costs include pricing of additional water used for livestock from project cisterns. Establishment cost of rangeland improvements and cisterns are included as MRMP project and beneficiary costs (costs adapted from MRMP II Formulation Repor, Annex XV, Financial and Economic Analysis).

Economic Costs

Economic costs include project investment and recurrent costs from 1993 to 2002 for the components of: (i) water harvesting and watershed management; (ii) rangeland and grazing management; (iii) adaptive research; (iv) extension and training; and (v) project management (PCU). Beneficiary costs are also included. Investment costs were adjusted by a SCF of 0.9. For the analysis, constant 2001 costs were used (for conversion, the Egyptian consumer price index from International Financial Statistics was used).

Estimation of Project ERR

The economic analysis indicated a ERR of 13.0% which is marginally higher than to the ERR at appraisal of 12.1% (Table 14). Table 15 presents the results from a sensitivity analysis of increasing and decreasing the benefit stream and the cost steam by 10% and 20% respectively.

Project benefits were projected beyond the project ending date of 2002 for a total of 30 years starting in 1993 as was done in the analysis undertaken at appraisal. It was assumed that adoption of barley interventions would increase from 60% in 2001-02 to 70% of total barley area in 2002-03 and remain at this figure to the end of the 30 year time period. Indications are that this had happened in 2002-03. It was also assumed that the adoption of olive, fig and rangeland interventions would remain the same as they were at the end of the project over the 30 year period.

The main differences between the ICR and appraisal ERR are:

• The appraisal economic analysis did not include the project costs for research activities or for watershed management.

• With and without project fig yields in the appraisal analysis were much higher than those used in the present study. The present study used the yields that were used in the MRMP-II appraisal formulation

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document.

• The benefit stream of the appraisal economic analysis included projected productivity increases from field vegetable interventions.

• The appraisal economic analysis employed a more robust budgeting model to identify the value added from using incremental rangeland fodder.

Table 14. Economic Analysis ________________________________________________________________________

Year Total Benefits Total Project Costs Benefits - Costs ________________________________________________________________________

-----------------------------------------------LE ----------------------------------------------- 1993-94 0 576,359 -576,359 1994-95 0 1,797,139 -1,797,139 1995-96 31,900 7,045,588 -7,013,688 1996-97 142,754 10,612,268 -10,469,514 1997-98 -4,686 12,727,099 -12,731,785 1998-99 1,587,787 13,898,317 -12,310,530 1999-00 4,484,932 19,338,662 -14,853,731 2000-01 7,540,904 19,844,089 -12,303,186 2001-02 9,941,435 7,899,886 2,041,548 2002-03 11,675,861 2,265,814 9,410,046 2003-04 13,458,263 13,458,263 2004-05 14,729,856 14,729,856 2005-06 15,640,271 15,640,271 2006-07 16,350,332 16,350,332 2007-08 16,785,375 16,785,375 2008-09 17,088,733 17,088,733 2009-10 17,173,096 17,173,096

to Year 30 17173096 17173,096

ERR = 13.0%

________________________________________________________________________

Table 15. Sensitivity Analysis ________________________________________________________________________ Percentage Change

________________________________________________________ +10% +20% -10% -20% ________________________________________________________________________ --------------------------------ERR------------------------------- Benefit Stream 14.2% 15.9% 11.7% 10.3% Cost Stream 11.8% 10.8% 14.4% 16.0% ________________________________________________________________________

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation02/05/199105/12/1992

Appraisal/Negotiation11/06/199204/19/1993

Supervision

06/09/1993 1 SR. NAT. RESOURCE SPEC (1) 1 112/10/1993 5 SR. NAT. RESOURCE SPEC

(1); SR. AGRICULTURIST (1); SR. IRRIGATION ENGR* (1); SOCIAL SCIENTIST (1); LIVESTOCK SPEC. (1)

1 1

07/04/1994 5 SR NAT RESOURCES SPEC (1); SR AGRICULTURIST (1); CREDIT SPECIALIST (1); SR IRRIGATION ENGINEER (1); SOCIAL SCIENTIST (1)

HS HS

11/04/1994 1 SR. NAT. RESOURCES SPE (1) S S04/15/1995 5 WID SPECIALIST (1); NAT.

RESOURCE MGT. SPE (1); AGRICULTURIST (1); SOCIAL SCIENTIST (1); CIVIL ENGINEER (1)

S S

01/26/1996 6 NAT. RESOURCE MGT. SPEC (1); AGRICULTURIST (1); AGRICULTURAL ECONOMIST (1); SOCIAL SCIENTIST (1); CIVIL ENGINEER (1); ENVIRONMENTAL SPEC. (1)

S S

07/25/1996 4 AGRIC. ECON. (CONS. ) (1); SR. IRRIG. ENGINEER (1); ENVIRONMENTAL SPEC. (1); AGRICULTURIST/RANGE (1)

S S

10/24/1997 3 SR.IRRIG.ENGINEER (1), SOCIAL SCIENTIST (1), AGRICULTURIST (1), AG. ECONOMIST (1)

S S

05/13/1998 4 TEAM LEAD/SR. AGRICULT. (1); PR. IRRIGATION ENGINEER (1); SR. AGRICULTURIST (1); SR. SOC. SCIENTIST (1)

S S

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11/23/1998 4 PR. IRRIGATION ENGINEER (1); SR. AGRICULTURIST (1); SR. SOC. SCIENTIST (1); SR. NATURAL RES. SP. (1)

S S

06/07/1999 5 PRIN. IRRIG. ENGINEER (1); SENIOR AGRICULTURIST (1); NATURAL RESOURCE SPEC. (1); SR. SOCIAL SCIENTIST (1); SOCIAL SCIENTIST (1)

S S

11/07/1999 5 PRINCIPAL IRRIG.ENGINEER (1); SENIOR SOCIAL SCIENTIST (1); SENIOR AGRICULTURIST (1); SOCIAL SCIENTIST (1); SR NATURAL RESOURCES S (1)

S S

05/31/2000 3 IRRIGATION ENGINEER (1); SOCIAL SCIENTIST (1); AGRICULTURIST (1)

S S

11/15/2000 5 SR. IRRIGATION ENGINEER (1), AGRICULTURIST (1), AGR. ECONOMIST (1), SNR. SOCIAL SCIENTIST (1), FINANCIAL MGMT SPECIALIST (1),

S S

06/15/2001 5 AGR. SERVICES SPEC. (1); NATURAL RESOURCE SPEC. (1); FARMER ORG. SPEC. (1); WATER/SOIL RES.MNGMT. (1); SOCIAL SIENTIST (1)

ICR02/07/2003 2 AGR. ECONOMIST (1),

NATURAL RESOURCE SPEC. (1)

S S

*Senior Irrigation Engineer/TTL also acted as Procurement Specialist/ PAS.

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 34.0 115.3Appraisal/Negotiation 62.1 230.6Supervision 147.4 534.5ICR 9 19.4Total 252.5 899.8

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Community participationPrivate sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

1. Memorandum and Recommendation of the President (Report No. P-6012-EGT), May, 3, 1993.

2. Implementation Project File, MRMP, Arab Republic of Egypt, May 4, 1993.

3. MRMP Supervision Reports, Aide Memoires, and Mid-Term Review Reports, 1993-2002.

4. Impact Assessment of Rangeland Improvement Activities in MRMP, Andrea Pape-Christiansen, Consultants Report, May, 2000.

5. Adoption and Impact of MRMP Interventions on Project Beneficiaries, PCU/ICARDA, July 2001.

6. International Advisory Panel. End of Mission Reports. Matrouh Resources Management Project. Various years.

7. MRMP Phase II Formulation Report, November, 2001.

8. MRMP Phase II Project Appraisal Document, February 6, 2003.

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Additional Annex 8. Summary of Borrower Completion Report

MINISTRY OF AGRICULTURE AND LAND RECLAMATION

MATRUH RESOURCE MANAGEMENT PROJECT(1994 – 2002)

Implementation Completion Report

1. Introduction

The sustainable management and development of the natural resources in the northwest coast of Egypt will remain very important goals in the near future and the long term because of its importance for livelihood of local communities and economics. The project was designed to provide adequate support to local communities for implementing approaches and improved measures to tackle the resource degradation problems and achieve sustainable natural resource management and socio-economic development. The project was financed by WB/IDA with a Government and beneficiary contributions. This “Implementation Completion Report” is prepared for evaluating the project implementation during the project life from 1994 to 2002 in terms of performance, outputs and impact on the livelihood of local people and the resource base.

2. Project Objectives and Components

The objective of the Matruh Resource Management Project was to break the cycle of degradation in the natural resources and alleviate poverty in the northwest coast of Egypt. The project included seven components; water harvesting and watershed management; rangeland management; adaptive research; extension; rural credit; project management and monitoring and evaluation.

Two Mid-term assessments were carried out in 1997 and 2000 for evaluating the project implementation. The key change which took place in the first mission in October 1997 was the cancellation of the rural credit component because of impossibility of reaching a workable mechanism with any banking institutions operating in the project area. The rural credit fund was reallocated to support water harvesting and watershed management component and for demonstrating small-scale income generating activities proposed by the local communities. The rest of the project components remained the same through out project implementation. Some minor changes were made in the magnitude of some activities within components.

3. Quality at Entry

The project objectives were consistent with the government strategy to conserve and manage the natural resources of the dryland areas in Egypt for alleviating poverty of the local population. The project also targeted generation, testing and dissemination of the new technologies for arresting the specific problems for which the project was established to solve. The project design was consistent with project objectives and reflected all the lessons learnt from all previous projects implemented in the region. The utilization of the existing tribal structure and the emphasis on participation of local communities in project design and implementation was particular importance for ensuring sustainability. Implementation of project activities through five sub-regional support centers established in the project area has greatly enhanced the interaction with the local communities and decentralization process and brought together adaptive research

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and extension closer to the local communities. The establishment of the training center has contributed effectively to the dissemination of information and test proven technologies. The women in development officers and specialists also helped in reaching more women beneficiaries. The establishment of Matruh Adaptive Research Centre, fully staffed and equipped, has helped to overcome deficiencies of research and development endeavors in addressing farmers' problems in addition to solving problem scattered, ad hoc and piecemeal based centrally-managed research activities implemented during the last decades. All other covenants related to management and audit and counterpart funding requirements were also satisfactory.

The implementation of the project has faced some delays during the first four years, but starting from the beginning of 1998 the processing was timely and satisfactory. Risk identification and solutions proposed were appropriate. The significant risks identified were linked to low uptake of participatory approach, low uptake of credit and weak coordination. However, the project emphasis on participation and coordination has largely alleviated the risks related to participation and coordination processes.

4. Project Achievements and Outputs

The following are the achievements of the project which are highly likely to be sustained:

(i) The project has developed and adopted its innovative managerial and operational model based on bottom-up planning and community based participatory approaches. Although, the model is still developing and needs augmentation and institutionalization, but it has ensured efficient collaboration of all project components and programs and guaranteed the effective participation, acceptance and adoption of targeted beneficiaries and would lead certainly to the sustainability of project impacts.

(ii) For implementing project activities, 38 community action plans (CAP’s) were prepared and implemented with technical support of the project by using the 38 small socially coherent planning units (local communities) to analyze the resource base and assess the sustainable development possibilities. The CAP’s including activities, priorities implementation responsibilities and monitoring and evaluation and were contracted for implementation in three years with community responsibilities. The model still needs augmentation and institutionalization. The preparation of the CAP’s was lengthy process and consumed time because of the complexity of the tribal society and lack of experience of project staff and needs continued efforts in capacity building.

(iii) Because scarcity of water is definitely the first critical constraint to development in the project area, water security has been given the first priority by the local communities. The project has constructed 6,954 cisterns and 243 concrete reservoirs and rehabilitated 231 ancient Roman cisterns with a total storage capacity of 1,223,707 m3. The construction of these 7,428 water facilities is representing 480% increase of that envisaged at appraisal.

(iv) Stone dykes were constructed on 2,720 feddans (with total structural works of 122,415.5 m3). This actually because the construction of this type of dykes is maintaining the water distribution rights in the project area and keeping balance between the development of the upstream and downstream areas. The earthen dykes were constructed on 500 feddans (22,908 m3) and cemented dykes were also constructed on 160 feddans.

These achievements show clearly that implementation of water harvesting sub-component was highly satisfactory and increased the water supply by more than 50% of the supply that was available before

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project initiation. The demand remained very high until the end of the project.Moreover, improvements of structure designs were implemented for cost saving and more water storage and use efficiency (hand pumps, gasoline pumps, plastic houses and drip irrigation). In addition, many new techniques were introduced such as the contour ridges, semi-circles, roller compacted concretes and gabions. Extensive program of workshops and field days on maintenance of structures, water use efficiency and water purification techniques were carried out for improving the awareness and skill of the local communities and for the sustainability.

Integrated watershed management approach has been also introduced and implemented as a planning tool for sustainable resource development and conservation. A total of 42,455.74 m3 of structural works have been implemented to control erosion in the project area. Also, many soil conservation measures were introduced to protect soil surface from wind and water erosion such as the reseeding of 2,259 feddans of deteriorated rangelands in the communal rangelands of the watersheds by perennial plant species and the planting of 64 km of shelterbelts in addition to different options including linking with range development, diversification of farming systems and providing extra protection measures to stabilize sand movement along farm borders and roads. Although implementation was initially slow but demand increased significantly until the end of the project and has led to protect soil surfaces from erosion in about 10,000 feddans and increased directly the cultivated areas by 1,000 feddans. The installation of weather stations and automatic recording and non-recording rain gauges will certainly help in fulfilling the gap of information and support sustainable development.

For improving rangelands and grazing management, the project has supported beneficiaries to collect about 12 tons of indigenous seeds and multiplicate them in 16 privately-owned small nurseries for the production of 6.4 million seedlings planted in the project area. 3,666 beneficiaries have benefited from the planting of fodder trees and shrubs in small non-fenced areas (9,000 feddans), larger fenced areas (6,250 feddans) and interplanting shrubs on barley fields (2,951 feddans). In addition, a total of 2,450 feddans of deteriorated rangelands were reseeded. A newly-fodder species such as spineless cactus were introduced. These achievements are representing 122% of that planned and implementation was high and the impact is very high as it has improved economic returns from livestock production by contributing to feed gap recovery, increasing cheap forage availability, reducing concentrate use and availing green forage materials in the summer time, and for recovering the vegetative cover and enhance resource use sustainability and biodiversity. Efficient extension system, well staffed, equipped and integrated in its activities with other components of the project, was established by the project. The system provided effective extension services to 38 local communities.

A variety of extension methodologies, technologies and approaches were used, focusing on field demonstrations and field days, training farmers and utilizing Multi-media audiovisual techniques and outputs. These were prepared and employed in close collaboration with other components. More than 406 extension workshops and field demonstrations of 993 training days were carried out in the project area and attended by almost 8,000 project beneficiaries. The establishment of the project effective Multi-media Unit has contributed effectively to the production of written and audiovisuals materials that enhanced technology transfer and improved communication with dispersed targeted population of the project. Extensive services were provided to local women, with emphasis on literacy education (6,697 girls), improving nutritional and health conditions, environmental awareness, enhancing the contribution of women to family income (in kind credit), and encouraging and supporting the establishment of women NGOs for facilitating marketing. Farmers demand for these activities were very high and their benefits were significant.

Concerning crop improvement activities, the project has introduced new barley varieties (26,055 feddans),

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farming practices and system improvement, introducing legume in crop rotation (218 feddans) and fodder shrub interplanting (50 feddans). Crop improvement program helped the farmers to increase their horticulture by transferring the new technologies and improved management practices (pruning, manuring, supplemental irrigation and IPM) for figs, olives and other fruit trees. The project has supported the enhancement of orchard establishment by the planting of 159,403 fruit trees of different species on 2,280 feddans in the project area and the production of vegetables for household consumption by availing more water storage to increase the areas and by improved management practices to increase productivity. Implementation has a higher impact on the beneficiaries’ income.Animal production is a major source of income in the project area. The project activities focused on animal feeding and how to reduce concentrate use and cover part of the feed gap by demonstrating the new technologies of animal feeding, rotating rams and supporting the availability of veterinary services. Implementation has a direct impact on the farmers’ income. The project also introduced new economic activities on a small scale as demonstrations for testing such as beekeeping, jojoba planting, date palms plantation and fishery.

The applied research component was designed to respond to the crucial and immediate needs of the development in the region. The Matruh Adaptive Research Centre and its training facility was constructed, fully staffed and equipped to support sustainable development in the region. Major farming systems were characterized for problem identification and 10 research themes on improved technologies were satisfactory implemented in the three agro-ecological zones of the project area. Test proven recommendations on 40 topics/problems were developed and disseminated in collaboration with extension and technical units and with participation of the local communities. Results were documented and publicized. Implementation will contribute significantly to sustainable development.

The rural infrastructure works such as the construction of 33 social development centers and 291 one-class schools were designed to provide isolated target communities with access to basic services to improve their living conditions. Sustainability of these rural infrastructures may pose some problems in the future. The relevant governmental development organizations will be consulted for ensuring adequate staffing and maintenance after the project closure.

The project has developed its effective monitoring and evaluation system fully staffed and equipped envisaging the critical role of the system as a management toll for M&E project performance and its impact on the resource base and the socio-economic status of its beneficiaries. The system including both database and GIS and conducted many surveys and studies such as Beneficiary Contact Monitoring and case studies for adoption and Impact Assessment of project outputs.

Institutional strengthening was one of the distinguished achievements of the project, technical assistance and training were used to strengthen the planning, technical and implementation capacity of the project and the planning and implementation of capabilities of the local communities and staff. Local and overseas training was conducted at two levels, for the local communities members and the project staff. Technical assistance and extensive on the job training was also efficiently provided by 179 national and international consultants with a total of 3,000 m/d. The implementation had its strong impact on staff capabilities and sustainable development.

Project management has realized distinguished achievements reflected by enhanced implementation of other components, and by the satisfaction of local communities. Fund disbursement (including commitments) reached 100% by December 2002. Needed staff members were recruited and vehicles and equipment procured. Infrastructure required for efficient project implementation was established and effective M&E system was developed.

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5. Project Benefits

Project economic impact has been evaluated and it is found that it has improved the socioeconomic conditions of 10,440 households in the project area (almost 174% of the targeted at appraisal). The project increased the perennially cropped areas by implementing water harvesting, watershed and rangeland management activities. The results of the case studies on the impact of project interventions on productivity showed that introducing water harvesting structures have more than doubled the productivity of the horticulture, availing more reliable water for plants, trapping fertile soils, building deep soil profiles, enlarging soil/water storage, and developing farming systems of much higher productivity and economic impact. On average, the physical productivity of FS (mainly fig and olive production) was increased by 137% of the productivity before water harvesting. The results also indicate that introducing new high yielding varieties, supported by improved management practices has increased barley grain productivity in barley fields by over 70% on about 419,600 feddans (45% of the total barley area). While in barley fields intercropped with fodder shrubs the yield increased by 81%. Vegetable production was increased by 25% for rainfed vegetables (mainly melons and onion) and by 35% for supplementary irrigated vegetables. The project interventions have also increased the fodder production from rangeland improvement activity by FU 9.08 million. The calculation showed that shrub planting has provided FU 3.29 million from 8,212 feddans planted as small areas; FU 5.14 million from 6,250 feddans planted as large fenced areas; FU 0.22 million from 2,246 feddans interplanted in barley fields; while reseeding of 2,450 feddans of deteriorated rangelands has provided FU 0.43 million. The calculations also showed that these project interventions have increased the feed supply by FU 30.95 million which represents almost 31.1% of the feed gap. Of these FU 9.08 million from rangeland improvement and FU 21.87 million from barley production.

The environmental impact of the project is strongly positive and would contribute significantly to the sustainability of resource management, environmental improvement and biodiversity. By reducing runoff velocity and improving vegetative cover, the project has restored the productivity of degraded soils. Promotion of water management/conservation and planting fruit trees in promising areas have supported the transition to more ecologically and agriculturally appropriate systems and reduced erosion. The fencing of shrub plantation in 250 sites have protected 6,250 feddans of rangelands where the plants are evidently much more identified and diversified than in the non-fenced vicinity. This will have significant impact on biodiversity and the environment and would provide sustainable seed supply and protect endangered species. The implementation of WID activities such as using gas for fuel (gas ovens), the planting of trees and the establishment of home gardens will contribute significantly to control desertification and enhance biodiversity.

The project benefits were assessed on the quantifiable benefits from the resource development and plant and animal production. The results of the Beneficiary Contact Monitoring (BCM) revealed that about 58% of the total population has benefited (directly or indirectly) from project interventions in terms of increasing their income; 46% of the poor; 69% of the medium and 77% of the large households. The net income was increased by 25% for 44% of the population, by 50% or more for about 4%, some 10% benefited but could not estimate the benefits, and 42% claimed no benefit. The economic impact of resource development and conservation activities indicate clearly the satisfactory economic performance of the project. The results of the case studies showed that the 10-year weighted average of net benefits increased by 88% on average basis due to water harvesting, while, the increase of net benefit per capita was LE 2,290.00 on average. The introduction of the crop improvement technology has led to significant increase in barley grain and straw yields (70% and 131% respectively) and this has increased the net income by 177% from 90 LE/fd to 250 LE/fd. The livestock improvement programs have also increased the net returns for lamb fattening by almost 64 LE/lamb and women small-scale income

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generating activities for poultry production by LE 367 per production cycles of 20 chickens.

The implementation of the project has also an evident social impact. Communications within local communities (LC’s) and with project management and staff, as well as participation of men and women in project interventions (including the development of the CAP’s) have progressed very well and helped in building the local capacity, promoted self confidence of beneficiaries and built strong trust, not only with the project but also with other government officials. As a result, beneficiary pool was enlarged from about 6,000 households at appraisal to more than 10,440 households at the end of the project. Extensive training and human resource development were implemented, including overseas training, contributing to positively changing the attitudes of beneficiaries towards economic and social changes. Over 6,071 illiterate girls were educated. Many thousands of women benefited from extension workshops in improved environmental, nutritional, and healthy awareness. New income sources and employment opportunities were opened for men and women.

6. Institutional Development Impact

The project has its impact in strengthening the capacity of MRMP as a development agency as well as the development of local institutions that are capable of contributing to local development such as General Directories of Agricultural, Veterinary Services, Irrigation and Water Resources, Housing and Reconstruction, and Information and Communication and maintained close linkages with local, national, regional and international development and research institutions. The project built a unique set up of physical outputs and expertise in the region. Benefits have occurred to local communities, and other agencies which have cooperated directly or indirectly with MRMP. The coordination process and dialogue between development organizations have encouraged the decentralized planning and implementation and prevented the duplication of development programs and activities. The project promoted and implemented technologies of proven physical, economic, and social impact, emphasizing effective participation of local communities and considering the important role of rural women in resource use and contributed to women’s development and to family income. The project also contributed to capacity building for decentralized planning, implementation and monitoring and evaluation through its emphasis on training and the integration of the research/training/extension/farmer system with development works has contributed to overcoming skill gaps of the project staff and local people.

7. Factors Affecting the Implementation and Outcome

A few factors have negatively affected project implementation, and many more factors have had a positive effect. Most of the negative factors are beyond the control of project and the Government and has led to delays in project implementation such as the harsh environment especially the low and erratic rainfall, the indigenous traditions and culture of the dispersed Bedouin communities which restricted communication channels especially of the Bedouin women required long times to prepare CAP’s in addition to lack of experience in some critical areas of work.

On the other hand, the solid IDA/WB supervision missions conducted during project life has effectively supported implementation process. The open channels of communication between the project management and the project Task Managers at IDA’s HQ in Washington and the Resident Mission in Cairo have particularly helped in tackling urgent issues and taking necessary actions.

The continuous support of the Ministry of Agriculture and Land Reclamation has ensured the time and adequate availability of funds for implementing the project successfully and supported the project management to efficiently utilize and mobilize the project human and physical resources to achieve its

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objectives. The technical assistance and training have played a very important role in improving the technical design for efficient implementation and contributed to building the technical capacity and self confidence of the project staff and to the orientation and adoption of their technical capabilities.

8. Sustainability

All development activities funded by the project are likely to be sustained. The consistency of the project design and implementation with the government strategy and plans for developing the dryland areas of the northwest coast of Egypt would ensure sustainability. Joint planning and implementation of activities and project design contributed significantly to increasing the likelihood of sustainability. The full involvement of the self-motivated beneficiaries in project design, implementation and project monitoring and evaluation and the high level of beneficiaries ownership of project works will contribute significantly to sustainability. Building the capacity of the local communities and the project staff with support from MARC and its training centre will ensure sustainability. The high quality of project outputs will encourage the gradual shifting of maintenance responsibilities to relevant organizations and the continued adoption of the improved technology will be increased and be sustained. No major risks to sustainability are foreseen and the Government commitment for implementing the follow-up project which is already prepared will contribute significantly to increased sustainability.

9. Transition Arrangements to Regular Operations

The project has established its model of coordination process and dialogue in the region which has encouraged decentralized planning and implementation, prevented duplication of activities, promoted self-confidence and built trust between all development agencies. Building the capacity of the project staff who are seconded from the development agencies operating in the region will facilitate and ensure the transition to regular operations in the future. The high quality of project outputs will guarantee the gradual shifting of operations and maintenance responsibilities to relevant organizations in the region especially that activities were implemented in consistency with the Government strategy for developing the northwest coast of Egypt.

10. Lessons Learned

The successful implementation of MRMP has provided many important lessons which can contribute to the attainment of the project goal and guarantee sustainability. Capacity building is crucially needed for local communities and project staff from the early stages of project preparation and design to ensure that they all understand their respective roles in achieving the goal and will save time and efforts. Encouraging the beneficiaries to play effective role in resource allocation and the participation of the Bedouin women and remaining methodology of planning and implementation flexible to allow field lessons to contribute to adjustments in project activities and beneficiary needs. The availability of accurate data on the resources of the local communities and the selection of energetic and progressive local community representatives with good reputation and in a transparent way will improve implementation of activities and performance of the community groups. It is very essential to build trusts with the local communities and encourage them to play effective role in the maintenance and sustainability of the activities. The sustainability of the production systems requires an integrated approach between the three agro-ecological zones and development activities and proven successful techniques should be offered spatially based on site characteristics as a package for achieving a balanced development. Emphasizing the wider and more intensive dissemination and promotion of the techniques that require least cost and cause least disruption to current farming practices will ensure wide replicability and sustainability. Introducing new market-driven on-farm and off-farm income-generating activities building upon Bedouin available resources, skills and organizations and taking into account women socio-economic environment and their life style priorities will

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guarantee the continuation of these activities. Adequate capacity is needed to support vertical and horizontal communication and information systems that permit for coherent data capture, analysis and monitoring and evaluation between all project units and the headquarter and at the local, regional and national levels. Adequate government support and institutional coordination to implement the rural credit program is required to overcome impediments in credit delivery mechanisms. The issue of operation and maintenance of assets such as education classes, social development centres and roads must be agreed prior to project implementation, therefore, the relevant agencies can take over this responsibility easily once the project is complete.

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