Smallholder Plantations Entrepreneurship Development Programme

Transcription

1 Smallholder Plantations Entrepreneurship Development Programme Supervision report Main report and appendices Mission Dates: 1-17 June 2015 Document Date: 23 October 2015 Project No Report No: 3872-LK Asia and the Pacific Division Programme Management Department

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3 Table of Contents Abbreviations and acronyms iii A. Introduction 1 B. Overall assessment of Programme implementation 1 C. Outputs and outcomes 2 D. Programme implementation progress 11 E. Fiduciary aspects 14 F. Sustainability 16 G. Other 18 H. Conclusion 18 i

4 Appendices Appendix 1: Summary of project status and ratings 19 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs 23 Appendix 3: Summary of key actions to be taken within agreed timeframes 29 Appendix 4: Appendix 5: Physical progress measured against AWP&B, including RIMS indicators Mid Country (2014) 31 Financial: Actual financial performance by financier; by component and disbursements by category 35 Appendix 6: Compliance with legal covenants: Status of implementation 39 Appendix 7: Knowledge management: Learning and Innovation 45 ii

5 Currency Equivalents Currency Unit = Sri Lankan Rupees USD 1.00 = 125 Rs (April 2013) Weights and Measures Metric System FISCAL YEAR 1 January 31 December ABBREVIATIONS AND ACRONYMS AWPB BG BSSS CA CBO CBSL CC DEA DSD EG FD FENCO GND GoSL IFAD IDB IPHT ISB LRC MASL MC MPI MOU NAQDA NGO NPCU PLDF PSC RDD RDO RRI Rs S&CG SP SPEnDP SCG S-PMU TRI TSHDA VRDC WA WRC Annual Work Plan and the Budget Business Group Bingu Sampatha Surakeeme Sanvidanaya Chief Accountant Community Based Organisation Central Bank of Sri Lanka Cluster Coordinator Department of Export Agriculture Divisional Secretariats Division (Administrative Unit) Entrepreneur Groups (design document uses Farmers Groups in MC) Forest Department Foundation for Enterprise Concepts Grama Niladari Division Government of Sri Lanka International Fund for Agricultural Development Industrial Development Board Institute of Post-Harvest Technology Industrial Services Bureau Land Reform Commission Mahaweli Authority of Sri Lanka Mid Country Ministry of Plantation Industries Memorandum of Understanding National Aquaculture Development Authority of Sri Lanka Non-Governmental Organisation National Programme Coordinating Unit People s Livelihood Development Foundation Programme Steering Committee Rubber Development Department Rubber Development Officer Rubber Research Institute Sri Lankan Rupees Savings & Credit Group Sub-Programme Savings and Credit Group Sub-Programme Management Unit Tea Research Institute Tea Smallholding Development Authority Village Rubber Development Cluster (Moneragala) Withdrawal Application Wellassa Rubber Company iii

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7 A. Introduction 1 1. IFAD Supervision and implementation support (SS) Mission visited the Smallholder Plantation Entrepreneurship Development Programme (SPEnDP), IFAD Loan No. 712-LK during 1 st to 17 th June 2015 to conduct its 8 th supervision. The Loan became effective on 6 November 2007 and would complete as per the Loan Agreement on 31 December The total programme cost of USD million. Two co-financiers, USAID and Wellassa Rubber Company, did not finance the planned USD million. The 7 th SIS mission reallocated the budget to minimise the effect of that on the IFAD Loan. The Programme is thus funded by the IFAD loan of USD mn, the Government of Sri Lanka (GOSL) counterpart funds of USD mn, financial institutions with USD 1.9 million and the private sector and beneficiaries. The available budget without cofinancing is USD million. 2. The development objective is to improve the livelihoods of marginalized smallholder tea producers of HADABIMA and Mahaweli resettlements in the mid-country and poor upland farmers in the intermediate zone of Moneragala willing to take up rubber. The National Programme Coordinating Unit (NPCU) in Colombo, mid-country (MC) sub-programme management unit (S-PMU) in Gampola, and Moneragala S-PMU implement SPEnDP. The Ministry of Plantation Industries (MPI) is the lead agency. 3. The objectives of this Mission include (a) reviewing the progress and current status of the Programme; (b) identifying new issues and solutions taking into account the fact that the Programme is in its last two year; (c) assessing the quality of programme outputs and mainly outcomes; and (d) proposing implementation support. The Mission briefed the Minister of Plantation Industries, the Secretary, MPI and the ministry senior staff, and NPCU staff on the 1 st June. Subsequently, the full Mission started working in the MC on the 3 rd June with one-day progress review meeting, 3-day field visits till 6 th and institutional meetings with partners. The Mission divided into two three teams and covered all the programme activities therein and departed to Moneragala after an exit-meeting on the 6 th late evening. Starting with a day-long progress review meeting on the 7 th June, the Mission, with three teams, covered all programme activities with an acceptable sample till the 10 th. The Mission also met with all partners including the private sector. After a one-day and well attended pre-wrap-up workshop on the 15 th June in Kandy, the Mission finalized the aide memoire and presented at the wrap-up meeting on the 17 th June chaired by the Secretary of MPI and attended by the Programme Steering Committee (PSC) members. The Mission wishes to thank the Secretary and the staff of MPI, staff of other partner institutions, the programme staff and the beneficiaries for their facilitation and excellent arrangements that supported the Mission. B. Overall assessment of Programme implementation Overall implementation progress 4. The overall implementation performance is satisfactory (5) 2 for both sub-programme areas and thus for the overall programme implementation. The Programme has maintained the progress achieved over the last six years. However its progress in consolidation of some of the achievements, particularly those in the processing and marketing components needs to be enhanced. 5. The 10-year Programme has two more years to complete. The Mission therefore focused more on the outcome achievements, the sustainability issues and the exit strategies. The global 1 Mission composition: Mr Canute de Silva working as the Agriculturalist and Plantation Specialist; Mr Dayananda Ratnasekara as the Finance and Procurement Specialist; Mr Bodhi Wanniarachchi, Business Development Specialist; Mr Yolando Arban, IFAD Country Programme Officer, Philippines, Institutional Development and Knowledge management specialist; Ms Dammika Dasanayaka, Gender Analyst; and Mr Anura Herath, IFAD Country Programme Officer, Sri Lanka and the Maldives as the Mission Leader. Mr Ya Tian, CPM, stayed in Colombo from 15 th to 19 th June, 2015, reviewed the Aid Memo, provided advice, guidance and comments, and attended the wrap-up meeting. 2 In the IFAD supervision guidelines performance is rated as: (6) highly satisfactory (targets/requirements are met or exceeded and considered as best practice); (5) satisfactory (targets are met with only slight delays); (4) moderately satisfactory (most targets are met but delays or set-backs experienced); (3) moderately unsatisfactory (some targets / requirements met but issues / constraints have negatively affected implementation; (2) unsatisfactory (few targets/requirements met, but issues/constraints remain unresolved and delays have seriously undermined implementation; and (1) highly unsatisfactory (almost no targets/requirements met and consideration should be given to cancellation/suspension). 1

8 programme outputs up to December 2014 are presented in Appendix 4. The Programme cumulatively disbursed SDR 10,339,166, excluding the initial advance, which is 68% of the total loan financing of SDR 15,250,000 at the end of December 2014 at 80% laps. 6. The key outcomes of the MC S-PMU in 2014 include strengthening EGs for internal lending; improving the capacity of the savings and credit groups (SCG) by providing capital grants for internal lending; tea replanting in 202 ha, 81% of the revised target; continuing about 400 income generating activities with matching grants; and mobilising Rs 122 million worth of credits. The key sustainable features are that (i) the established tea lands having better productivity; (ii) well matured EGs and SCG with micro-lending; and (iii) IGA with increasing demand for their products with firm market linkages. With better achievements in group level processing and marketing, the performance rate would have been highly satisfactory (6) in the mid-country. 7. In Moneragala notable outcomes are supporting about 1200 ha of rubber out of 5000 ha into tapping stage with the active support of the Rubber Development Department (RDD); mobilising Rs 281 million worth of bank loans; establishing three milk collecting centres having daily collection of about 250 litters by MILCO; providing 205 marching grants; and intercropping rubber with 1243 ha of maize and 172 ha of passion fruits. The key results that are highly likely to sustain are the (i) mature rubber of about 5000; (ii) about 87 units of dairy cow units with well-established milk collection systems and 24 goat units; (iii) about 28 Village Rubber Development Clusters (VRDC) having internal lending; and (iv) 16 carpenters with good demand including few mobile service. The progress of few numbers of total beneficiaries with diversified income generating activities prevented Moneragala S-PMU getting highly satisfactory rating. Likelihood of achieving the development objectives 8. This is rated as moderately satisfactory (4) at the programme level. Although the main interventions of the Programme, tea and rubber development have been well achieved, there are still few bottlenecks to fully realise the development objective. Business mind-set of beneficiaries, sustainable market linkages, and enterprise development need improvements by way of its quality and also the number of beneficiaries who are involved in capturing income generation opportunities that could be facilitated by the Programme. Application of good agricultural practices in both tea and rubber needs to be facilitated and monitored with the help of the relevant state institutions. The experience sharing between the two sub-programmes could immensely facilitate the improvement in the quality of programme delivery. These interventions are possible during the next two years with better focus, quality training programmes, internal coordination and linkages with partner institutions. Agreed action Responsibility Agreed date 1. Provide training / awareness creation on business development and management including financial accounting to EG and VRDC leaders / capable members to promote more income generation activities SP-Units of both sub-programmes Start Aug Conduct experience sharing workshops with the participation of both sub-programme unit staff. Potential areas include (i) matching grant delivery and training; (ii) internal lending in EGs and VRDCs; (iii) provision of second matching grants for intervention worthy beneficiaries C. Outputs and outcomes Component 1: Community Development and Grassroots Institutions NPCU Start Aug The overall implementation progress is rated as satisfactory (5). The rate for both S-PMU is satisfactory (5). 10. In the Mid-Country, the Entrepreneur Groups (EGs) formation is now complete having 238 EGs with a total membership of 8352 (3089 women). All the members have received some form of programme benefits. About 27 EGs, three more than in 2013 are inactive. Almost all 20 Business Groups (BGs) which are sub-groups of EGs that were formed in 2013 have 2

9 discontinued doing business as groups. This effort has failed demonstrating that programme beneficiaries preference and intension is doing business on individual basis even linking with markets, unless the nature of the business or another common and / or strong business related factor is present. 11. Both EGs and SCG have become micro-financiers. EGs have lent Rs 6.94 million cumulatively as at the end of December 2014 for 796 loans. A total of Rs 2.7 million capital grants that was provided to 54 EGs, at a rate of Rs 50,000 each, have contributed to the revolving fund that was used for lending. On average about 15 members of each EG have received about Rs 8,700 per loan. In most cases the interest rate is 3% per month and the loan size varies from Rs 5,000 to Rs 25,000. Repeated lending about twice to the same member is often the case. The matching grant recipient, about 200, have received this EG loan indicating the complementary nature of the two sources of funding to finance increasing scale of the enterprise that is established with the matching grant. As recommended in the 2014 SIS mission, 180 EGs were audited and 95 (53%) received favourable audit opinions. The audit concerns of the others could be addressed by improving bookkeeping on the revolving fund, lending management, and community procurement. It is recommended that these training should be provided. Since there is a demand for the capital grant, the Mission maintains the recommendation of the 2014 mission that a single EG can receive maximum of two capital grants, with a one-year gap between the two. During the initial 3 to 5 years, EGs facilitated the delivery process of the programme inputs - tea plants, others planting materials, livestock, and training inputs are examples, and identifying beneficiaries. This maintained the cohesive nature of EGs. Since this is phased out at present, internal lending of EGs will be the instrument that supports their sustainability and as such it should be encouraged. 12. There are 237 Savings and Credit Group (SCG) and 72 of them are active and were audited in About 41 of them with regular internal lending and with favourable audit opinion have received the Rs 50,000 capital grant for micro-lending. About 50% of them have received the 2 nd grant with a one-year gap between the two. The total savings of active SCG is Rs million, which includes Rs million from the capital grant and it is used for micro-lending. SCGs were able to increase their revolving fund from Rs 4.27 million to the current level of their own funds amounting to Rs 8.6 million during 2014, which is an appreciable progress in the rural setting and a sign of sustainability of SCG. They lend mainly to own group members and the loan size varies from Rs 5,000 to Rs 25,000. Few cases were reported as Rs 50,000 per loan. On average each SCG has lent Rs 148,180 during last three years. Taking the number of members per SCG as 8, the average size of the loan has been Rs 18,500 per member. The monthly interest is 3%. On exceptional basis they lend to the members of the parental EGs, but outsiders of the SCG with monthly interest rate of 5%. On the basis of this progress the Mission recommends that the capital grants be provided to all active SCGs and if appropriate the second one, after one year of the 1 st one. Purposes of the micro-loans are maintaining tea lands, expanding IGAs and domestic use. As such these social institutions, having worked as programme delivery instruments and identifiers of programme beneficiaries, are currently working as financiers for maintaining the main programme output, which is an appreciable institutional innovation that created the synergy between community development and agricultural production. This would mostly likely ensure the rural institutional sustainability. 13. To test the capability of the EGs/SCGs, MC-SPMU conducted another round of maturity assessment to 238 EGs/SCGs in The results show that there is improvement in the maturity. Comparing with the result of the 2013 (same respondents), there is an increase of percentage in the A category (as the highest ranked), from 3% in 2013 to 14% in 2014, and a reduction in the E category (as the lowest ranked) from 18% in 2013 to 11% in As the Programme prioritizes awarding of sub-projects to category EGs/S&CGs in categories A&B, the percentage in these categories rose from 24% in 2013 to 30% in The maturity assessment tool used by MC-SPMU has 13 indicators giving equal importance to organizational (6 indicators) and financial (6 indicators) capabilities with 1 indicator on subproject management. The Mission finds that the current tool has served its purpose on assessing the readiness of the EGs/SCGs to receive and implement sub-projects. In the light that SPEnDP will complete in 2017, assessing the maturity should now focus on their capabilities beyond programme life. The Mission recommends to use the community institution maturity assessment tool (CIMAT) found in Attachment 1 developed during the Mission to 3

10 assess the capability of the current 238 EGs/SCGs. Further, it is recommended to conduct the CIMAT in the last quarter of The CIMAT result will show the gaps for strengthening the capability of EGs/S&CGs in The MC S-PMU has resumed the community infrastructure activities in 2014 and 86 agricultural roads have been rehabilitated. About 6400 people are using these roads and about 200 ha of tea lands could be serviced by the roads. Although the MC S-PMU has officially informed all the Divisional Secretaries concerned to commence the process of handing over the rehabilitated roads, the process has not commenced, because the local authorities demand a maintenance fund from the Programme. The Mission also observed that a proper listing of the structures is required and also recommends that funds from the IFAD loan resources cannot be provided for the purpose. 16. The Moneragala S-PMU finally covers 175 Grame Niladhari divisions in eight Rubber Development Officer Ranges in promoting rubber. There are 164 VRDCs in this area with the membership of 9514 (about 2500 women). A total of 114 VRDCs have been registered with the respective Divisional Secretary s office, and 18 more are ready for registration. The balance 32 is idle with no maturity for registration. The total funds of all VRDCs are Rs million with an increase of Rs 3.1 million during On average each VRDC has about Rs 63,790 as the total funds. Out of total funds, Rs 1.07 million are in the hands of the members, Rs 1.61 million have been disbursed as loans and the balance Rs is in bank accounts. Only 28 VRDCs have lent with an average loan size of Rs 57,488 per VRDC. The Mission observed in the field that the number of members who received such loans is about 4 or 5, hence the average loan size is about Rs 11,500 with the monthly interest rate of 2%. The S-PMU has mobilised Rs 6,584,269 worth of matching grants to 74 in 2014 and 63 in the 1 st quarter of 2015 with an average amount of Rs 48,000 per grant. Among the diverse needs, rubber processing and dairy predominate. The Mission observed that more matching grant receivers than others demand the VRDC micro-loans indicating the synergy of the two micro-financing products and gradual expansion of the enterprises that were established with the matching grants. 17. In line with the recommendation of the last SIS mission, S-PMU has provided capital grants to 30 active VRDCs for purchasing rubber fertiliser and thereafter using the grant as a revolving fund. On relative terms more remote DS divisions have demanded this grant since retailing fertiliser is difficult in such areas. The amount of the grant per VRDC was determined by (i) the volume requirement of rubber fertiliser; and (ii) the amounts of funds owned by the receiving VRDC, the grant being equal to the funds. The total value of the grants provided were Rs million to 30 VRDCS with an average of Rs 68,300 per VRDC. The Mission however noted that the capital grant requirement for purchasing rubber fertiliser of a majority of VRDCs will have to be increased. As such the Mission recommends providing funds to procure fertiliser to satisfy the 100% or the requirement and once farmers pay for their share, that payment will be added onto the VRDC funds. This will be a one-time procurement and the S-PMU M&E system should monitor the payment from the farmers and crediting the revolving fund. The Moneragala S-PMU will procure fertiliser. In the meantime the S-PMU to encourage as many VRDCs as possible to mobilise their own funds for micro-lending. It is expected that those VRDCs who manage the fertiliser revolving fund, micro-lending with their own funds, and the rubber group processing arrangement (see below) will have a better chance of sustaining as a rural institution. 18. The Moneragala S-PMU conducted a maturity assessment to 100 VRDC, 88% of the registered ones. The S-PMU has developed a more elaborate VRDC maturity assessment tool with 29 indicators. The indicators can be broadly classified into the following capability areas: organizational 10 indicators, financial 8, governance 7, sub-project implementation 3, networking 1. Apparently, the maturity assessment tool has identified some indicators for the continuity of the VRDCs beyond project life. The result reveals that 1 VRDC being classified as best, 47 as better, 45 as good and 7 as bad. MC-SPMU prioritizes best and better VRDCs as priority for programme assistance. However, the results have not fully captured the indications of maturity when the Mission visited five VRDCs on the ground. Therefore it necessitates that the MC-SPMU revisit its maturity assessment tool to provide a better indication of the maturity of the VRDCs assessed. 19. Moneragala S-PMU has resumed infrastructure activities with 34 community roads, 5 community halls and 20 drinking water wells. Four wells are in different stages of completion 4

11 and the Mission recommends completing the balance including two in Mariarawa. The Mission visited one completed well and witnessed its usefulness, particularly for women. The expected community contribution for wells, as recommended by the 2014 mission, has been secured. As in the case of MC, no progress reported in handing over of roads to the divisional authorities. Agreed action Responsibility Agreed date 3. Non-audited EGs, SCG, and VRDCs should be audited and appropriate support should be provided to address the audit concern if there are any. S-PMU, Kandy & Moneragala Start in July Conduct another round of EG and VRDC maturity assessment, this time covering all registered and those on process for registration by the last quarter of 2015 using the CIMAT (Attachement 1). S-PMU, Kandy & Moneragala Start in July Infrastructure handing over should be facilitated by preparing a detailed list of roads with all required information. Since IFAD loan funds cannot be provided as a maintenance fund of roads, SPEnDP should explore the possibility of using the counterpart funds for the purpose. Case should be presented to the District Coordinating Committee. 6. Tea and rubber areas serviced by SPEnDP roads should be compiled by each road and include in the 2015 progress report. Component 2: Out Growers and Diversification Development S-PMU, Kandy & Moneragala S-PMU, Kandy & Moneragala Start in August 2015 Start in July The overall component performance remains at satisfactory (5). The mid country performance rate is satisfactory (5), while that of Moneragala is highly satisfactory (6). Although the target in tea replanting has been fully met, the incomplete progress in land regularization is the reason for the lower rating in the mid country. 21. Tea replanting: As of end 2014, of the revised tea replanting target of 250 ha MC S-PMU has completed 202 ha (81%) and another 24 ha are in final soil rehabilitation stage for replanting in Thus expected achievement by end 2015 would be 90.4%. Currently MC S-PMU and TSHDA are screening 176 eligible EG members for replanting of remaining 24 ha by 2016 to aim at 100% achievement. As outcomes, it was estimated that by end 2014, about 105 ha were in various ages of harvesting ha yielding for about 2 ½ years, 49.3 ha for 1 ½ years and 46.6 ha 6 months. As the Mission observed the monthly tea green leaf yield was about 235kg/0.25 acre, at the beginning of the yield curve, which is very satisfactory compared to around kg/0.25 acre from mature tea of vicinity non-beneficiaries. A complete enumeration of replanted tea through EGs is recommended to get an accurate profile of yields by end 2015 and end Tea Infilling: The MC S-PMU has already achieved the revised target of 438 ha of infilling of over seven year old tea lands. However there was a need to infill replanted tea of the programme if vacancies existed after one year. The TSHDA scheme of infilling is operative only after the seventh year of replanting. Thus 2014 mission recommended infilling of 40 ha of replanted tea in 2014 and 80 ha in 2015, and to discontinue infilling of old tea. The progress in 2014 was 200% as 80ha had been infilled with 205,000 VP tea plants. The MC S-PMU approach was more effective than TSHDA programme as: (i) good tea plants from registered nurseries were given to farmers, (ii) infilling was formalized for one year or older tea instead of seven years, (iii) infilling was requested and administered by EGs for its members. This early stage infilling will replenish the lost yields from the 4th year onward, reduce soil erosion, and preserve soil moisture. Two tea nurseries owned by the TSHDA (Thispane and Hingula) will be provided with a total of Rs 6 million for the improvements of the capacity, structures and accessories. The plants will be provided for infilling. 23. Revisiting tea target: The design target of 100 ha for tea replanting was revised in 2010 to 250 ha considering the progress, scope and MC S-PMU competence. MC S-PMU would achieve the scaled up target by There is still scope to replant 25 ha of tea in As new plantations need soil rehabilitation for 18 months, calling applications and screening the beneficiaries should be undertaken by end 2015 or early Knowledge gaps of beneficiaries: Replanted tea and intercrops are in early maturing stages prone to diseases and pests. Though the beneficiaries received training on many conservation and agronomic practices, skills to detect diseases in own fields is crucial. As such hands-on training, frequent visits by Tea Inspectors, exposure visits to beneficiaries and arranging a quick response hot-line advisory service would be essential to maintain developed tea lands. 5

12 25. Intercropping: The 2013 mission restricted the intercropping programme only to spices. Accordingly, 46 ha of tea were intercropped with 10,000 plants of pepper, 5000 plants of arecanut, 500 plants of coffee and 200 plants of cinnamon. The cumulative intercropping achievement is very extensive and around percent of crops have reached bearing stage, though extent (or plants) actually bearing and commercially disposing is unknown. Field observations however indicate that bearing is limited in Mandarin, probably due to more soil moisture retention after the establishment of replanted tea. Indirectly the intercrops provide needed shade to tea. S-PMU should draw up a plan to enumerate all EG members to obtain survival, yields and commercial incomes from intercropped plants towards end of 2015 and Rehabilitation of pepper in old tea lands, which provides a notable income, commenced for the first time in During 2013, of the target of 100 ha, 60 ha had been rehabilitated (pruned, fertilized and conserved soil) and another 51 ha had been achieved in The programme will continue in 2015 with a 100 ha target. 26. Data Base: S-PMU was requested to develop a data base of tea beneficiaries in collaboration with TSHDA. The data base at TSHDA on Oracle is complete and the Mission advised to customize it to suite the S-PMU recording needs which has been accepted by TSHDA. 27. The progress of the land regularization activities is presented in the WP 1 in details. An appreciable progress has been achieved in 2014 with the Programme financial support of Rs 15.4 million. The Programme facilitate funding the surveying cost, legal payments, and providing a loan to finance the land utilization fee that is levied by Land Reform Commission (LRC), Land surveying has progressed as per the LRC rules plots in Kandy, and 521 plots in Kegale have been completed. Once the utilization fee and the value fee are paid by the tenant, LRC will issue the ownership title to them. LRC has agreed to request the PFIs to assess the possibility of providing loans from the Programme credit line to finance the valuation fee. 28. Rubber cultivation in Moneragala has achieved the target of 5000 ha in The cumulative planted extent is 5087 ha. In 2014 there were two critical reports on plantation status by RDD and FD indicating subsidy ineligible extents and improperly reforested extents. As the S-PMU had rehabilitated some of the deficient extents, the 2014 SIS recommended rehabilitating 50 ha destroyed from fire and natural causes, and 138 ha of substandard forest buffer zone rubber. During 2014, 62 ha of the former and 117 ha the later had been rehabilitated. This rehabilitation restored 3.5% of the planted area and benefited 258 beneficiaries. 29. Need for change of focus in rubber cultivation: As the primary objective of establishing 5000 ha had been achieved, the Mission suggests that S-PMU devotes the balance programme period to consolidate the sustainability of planted rubber through VRDCs by: (i) continually identifying scattered extents needing infilling or patch filling, mortality due to drought, and infilling them; (ii) having regular surveillance of land for diseases, low girth, and undergrowth weeds, no fertilizer use, and provide training and judicious fertilizer use. The progress of component two may be assessed in the future on the performance of consolidating sustainability of the established rubber smallholdings. 30. Tapping of rubber: The previous mission observed farmers tapping under-girth trees mainly due to the eagerness of extracting income sooner than later, which was discouraged by the S- PMU through education. Currently the threat of early tapping is not noticeable. On the other hand, most of the beneficiaries are aware of recommended age and girth for tapping, but trees of tapping age have not reached the expected girth, primarily due to underuse of fertilizer. Majority of the beneficiaries have no tapping skills. The Mission recommends that S-PMU in consultation with RRI draws and accomplish a comprehensive plan to train all the beneficiaries on rubber tapping. RDD agreed to continue the training after the closure of the Programme, if total beneficiaries could not be trained. During 2014, seven training programmes had been conducted on rubber tapping for 700 beneficiaries. The plant science division of RRI had provided rubber tapping training to 500 farmers in the past. 31. Nursery plant requirement: The rubber plant requirement in 2014 was for the rehabilitation and annual infilling activities. A total of 27,940 plants had been distributed under the rehabilitation due to natural causes, and 58,450 under rehabilitation in forest land. The annual infilling requirement in 2014 was 159,200 plants, which was a 28% increase over 2013, due to 6

13 the prevailed extensive drought. Between 2012 and 2013 a notable 40% decline in infilling was recorded, but the trend could not be continued. Total plant requirement had been purchased on time for distribution. 32. Database on rubber plantation: After repetitive requests of previous missions, there is an acceptable database of SPEnDP supported rubber lands. RDD Moneragala has systematized an extensive data base needing few field verifications from S-PMU. The refined database will be used for all current and future activities of the 5087 ha of rubber among 9514 beneficiaries in 257 GN divisions in 8 rubber development zones. After careful evaluation of RDD involvement, the Mission recommends supporting the RDD with needy office equipment and support for office administration as listed in the agreed actions. The S-PMU should closely collaborate with RDD and use the verified database as the official source for monitoring purposes. 33. Consolidating rubber forest buffer zone needs boundary marking of all surveyed land Mission agreed to pay the cost of the activity, but excluding the cost of poles (FD has assumed the availability of a surplus stock of poles). Thus an amended estimate including the cost of fabricating poles as per government standards has been submitted which is acceptable to the Mission. It is encouraging to note that about 11% of these forest lands are in the names of the women. 34. Rubber Training: During , the beneficiaries were getting regular training arranged by S-PMU with RDA and RRI. In 2015 a group advisory approach, termed Vihidum Sathkara (VS) was introduced to few VRDCs by the Head, Advisory Department of RRI (HD/AD-RRI), where a group of officers (10-12) would visit farmer fields for 3 days to advice in-situ followed by group training. The Mission examined the modus operandi, had discussions with HD/AD-RRI and farmers of first VS training, and proposed some changes to the approach to motivate farmers to implement the advice through VRDCs (Working Paper 1). 35. Rubber intercropping with maize, passion fruit and cocoa were supported. In 2014, S-PMU procured and distributed 975 packs of 5kg maize seeds, enough for 394 ha, among 975 beneficiaries; 18,100 plants for 18.1 ha of passion fruit cultivation. Further support to maize and passion fruit cultivation in 2015 is approved. In 2014, 183 ha of rubber had been intercropped with cocoa (cocoa net 91ha) in collaboration with DEA. DEA additionally has intercropped 307 ha of rubber. The Mission supports the planned intercropping of 200 ha of rubber with cocoa in Pepper is a crop of choice for farmer income enhancement and certain areas in Moneragala have intensive pepper cultivations in homeland. There is a demand for pepper. The Mission had discussions with potential pepper growers, S-PMU field staff and DEA and recommends cultivation of 25 ha of pepper in 2015 and 45 ha in 2016 in collaboration with DEA. A working programme defining target areas, plant ceiling, sourcing of plants from DEA, technical assistance has to be drawn by S-PMU. Agreed actions Responsibility Agreed date 7. Conduct a complete enumeration of replanted tea through EGs for an MC S-PMU Nov accurate assesment of area, yields & incomes from tea and intercrops. 8. Develop a programme to address the knowledge gap of beneficiaries MC S-PMU August 2015 imparting skills to detect diseases in own field 9. Design and implement at field level a comprehensive consolidating sustainability programme with the focus of sustaining the achieved rubber extent. S-PMU, July 2015 onwards 10. Conduct a complete enumeration of 2008 and 2009 plantations with the S-PMU, Nov help of VRDC members and animators focusing on actual tapping and other bottlenecks. Issues should be notified to RDD to seek solutions. 11. Train all beneficiaries on rubber tapping during mid 2015-mid S-PMU Start July As an institutional support a sufficient number of wooden cupboards to S-PMU, NCS, August 2015 securely keep all 9514 beneficiary files, a laptop computer, a laser printer for RD/RDD Moneragala, and for eight rubber development zones, 8 desktop computers to the RDD office Moneragala and Rs 3 million annualy to cover incremental cost of administration for the office work. RDD 13. Cost support to boundry marking the forest buffer zone by FD FD, NCS July

14 Component 3: Processing and Marketing The overall component rating has retained as moderately unsatisfactory (3). The Programme has failed to initiate new business contracts and streamline previous production and marketing initiatives during the review period which is essential for the sustainability of the Programme. 37. The mid country performance rating of the component has come down to moderately unsatisfactory (3). MC s main thrust in this component during the review period has been a) formation of 20 Business Groups (BG) and the provision of BG-related business services, b) relocation of a spice processing centre, c) expansion of dairy development programme, d) progress monitoring and administration of the service provider contractors, and e) provision of skill and business training to new and existing entrepreneurs. 38. Nearly 300 micro-level entrepreneurs in nine different sectors were mobilized and formed 20 business groups (BGs). Registration of these BGs has been completed but the overall achievement thus far has been very poor. The Mission s field visits and SPMU records showed that BGs are practically non-operative but individual members run their own businesses as done in the past. There are three exceptions: the cut foliage BG in Nawadevita; Orwell mushroom BG; and a tea leaves collection BG. The latter has a severe liquidity problem which restricted the business. In the cut foliage BG, individual production has been limited due to small land space and individual market access is not possible. Hence the BG exists and supply to Tropiflora Ltd and Kandyan Flora Ltd. Kithul based two BGs which sold treacle under Mihirasa brand in various markets including Cargills and Arpico supermarket chains, and two bee honey BGs which sold honey under Hantane Bee Honey brand in late BGs discontinued selling under brand names, but some producers do on individual basis. Main reason for the failure was that the BGs could not face the market competitiveness. The previous mission recommended consolidating the members legal right to the business ownership through proper registration. The cut-foliage project followed this and they are in operation. The Mission views that formation of too many BGs for the same industry in a relatively close proximity has resulted in undue competition and limited the expansion capacity and finally failed. 39. The spice processing centre at Deiyannewela, established in 2013 with a dryer costing LKR 1.13 million, was idling for over a year, and finally got installed in an EG in Gurukale in February The Mission noted that it is run as a private business with no system to share the profits among the EG members. The Programme therefore should develop a business model ensuring profit generation and providing its fair share to the members with a premium price. The M&E system of MC S-PMU should collect all information regularly and assess the volume processed, number of suppliers and the price that is offered. The goat milk yoghurt production unit, established in Panwilatenna, is currently idling. The previous mission recommended relocating the machine to a suitable producer if not functioning by August 2014 which has not happened. The Mission strongly recommends that the MC S-PMU should take suitable actions to make it operational to the benefit of the EG members. 40. Expansion of dairy development programme in the MC takes high priority. The MC S-PMU in collaboration with the Department of Animal Production and Health (AP&H) provided 167 dairy cows of improved breeds, 57 were for women (34%), under the LKR 50,000 (maximum) matching grants (70:30) arrangement. To enrich the gene pool in the area, improved breeds (Frisian and Jersey) of 43 calves were brought from the National Livestock Development Board and distributed in areas where the dairy concentration is high. As of 31 May 2015, altogether 195 cattle sheds and 181 cows have been provided. The outcome study of the MC has revealed that the yield and the income have increased by an average of 56% during Four milk collecting companies are buying fresh milk with 59% stake with state-own MILCO. In recognition of the fact that dairy is important nationally and regionally, and also considering the inadequacy of the current ceiling of the matching grant which is Rs 50,000, the Mission recommends a new formula of matching grants for dairy. The matching grant ratio remains the same at 70:30 (30% from the beneficiary) and the ceiling is increased to Rs 100,000 per onecow-one-shed model. DAP&H structural design should be used for the shed. The current cost of the model is about Rs 150, See Working Paper 2 for details. 8

15 41. For other IGAs, the Mission recommends that a second matching grant with a ceiling of LKR 50,000 should be given to investment worthy IGAs. The eligibility criteria should include: a) after one year of the first grant; b) substantial incremental economic and social benefits such as employment generation; c) market potential for further expansion; and d) entrepreneurial and management skills of the beneficiary. Risky enterprises such as mushroom should not be supported. Those who have already used both matching grants and credit financing under Component 4 should not be included. This applies to the matching grants awarded under Programme components 1 and 3. S-PMU has provided 750 tea plucking baskets and 350 harvesting shears aiming at productivity and quality improvement. Both are beneficial and the Mission recommends this to be up-scaled. 42. The Moneragala performance is remained as moderately unsatisfactory (3). The progress of this component includes (a) designing and constructing small rubber processing units, (b) conducting eight entrepreneurship development training for 155 men and 84 women; (c) conducting 55 technical training on rubber tapping, processing, dairy and other IGAs for 1180 men and 426 women, (d) providing matching grants to a total of 146 beneficiaries, including 74 milking cows, 41 bee keepers, 21 goat farmers and 6 women footwear manufacturers. 43. In line with the recommendation of the 2014 mission, S-PMU started supporting 40 group rubber processing centres with kg/day capacity in December 2014, and 26 are in various stages of construction. The average cost of each is Rs 836,000 (Rs 644,000 from the IFAD loan and the balance from the beneficiaries). Three are ready to start processing of RSS rubber sheets. The Mission visited all three and had discussions with the RRI staff about their performance. The Mission found that (i) no technical and financial feasibility assessment of the processing centres was carried out; (ii) overall site plan and the design of the centres need improvements - lack water and electricity supply, no storage facilities, poor road access etc.; (iii) current management system has many weakness - account keeping is to be developed, no record keeping formats, labour needs for the centre and supply levels have not been assessed. The Mission, therefore, recommends (a) increasing the Programme investment up to LKR 1.0 million per centre to finance structural needs; and (b) undertaking a detailed technical and financial feasibility assessment of the completed three and the balance 23; and (c) designing a manual to spell-out technical and management specifications of the centre. Without the feasibility assessment including RRI approval and acceptable to IFAD, no centre should be financed with IFAD loan funds. 44. There is a drop in the number of matching grants given in 2014 from 247 in 2013 to 159, out of which 87 for dairy, 41 for bee keeping and 24 for goat farming. Failure to develop strong market linkages has affected sustainability of the previous enterprises (e.g. mushroom, backyard poultry, footwear, kithul products). Most of the dairy beneficiaries who started with matching grants have improved their income through increased herd size and milk productivity. Examples include one beneficiary with one cow in 2010 to 13 in 2015; and another with 2 in 2012 to 7 in The five programme supported milk collecting centres with 83 suppliers are in operation with increasing volume of collection - the current daily collection is 630 litres. The centres sell concentrates and medicine at a nominal price. In recognition of the demand, the Mission recommends increasing the matching grant from its current ceiling of Rs 50,000 on 70:30 basis to Rs 60,000, and a second grant also to be given to same farmer after two years of the first one. The provincial DAP&H has a range of both financial and technical services for dairy in Moneragala. The Mission recommends that arrangement to be made to get all such services to the programme beneficiaries. 45. The S-PMU has transferred the building constructed in 2013 for a road-side market which is idling at Maduruketiya to Horombuwa VRDC with an agreement. The Mission recommends that the agreement should be revised to make it more advantage for the VRDC and the member suppliers rather than using it as a rented building. 46. The Mission observed promising micro enterprise on the food and beverages industry in both S-PMU areas and they have captured the local market. The snack food products passed the local food safety accreditation. The products have also its own label indicating the source as well as other product information including the expiry dates. This is a good practice in micro enterprise development to penetrate a wider market. However, the Mission noted that the safety of the worker has been overlooked. The worker is inhaling the smoke from the firewood and 9

16 does not wear a mask, which in the long run affect their health. Similarly there is much to be desired in the hygienic practice of milk collection and storage in the collection centres, which have to meet certain good manufacturing practice standards. To further promote the micro products, it is recommended that labelling of products be included in programme interventions. Labelled products can be promoted as well in the programme s website, newsletter, facebook, and other media of dissemination. Agreed action Responsibility Agreed date 14. Develop a suitable business model to run the spice processing centre as a MS and MC S- May 2015 profit making venture but protecting the member suppliers interests. PM 15. Spaced out implementation of 26 small rubber processing centers three in Badalkumbura first and then conduct a feasibility study in mid-august 2015 to assese the situation and continue thereafter. MCs and S- PMs Start from May Programme field officers including animators should be given training and exposure on dairy development, in particular about AP&H services and prevailing market conditions 17. Revised the agreement between the VRDC and the collector as to running the fruits and vegitable collection centre to make it more advantages for the VRDC and the member suppliers. 18. Include product labelling and good manufacturing practices (food safety, hygiene, health safety of workers) in the training of micro enterprises in the food and beverages industry CS/MS and Mon. S-PM Component 1 and 3 Heads May 2015 Immediately Component 4: Rural Financing and Credit 47. The overall performance rating is satisfactory (5). Small farmers and grassroots institutions (maximum of LKR 250,000 per loan), and tea factories (maximum of LKR 7.5 million per loan) are the beneficiaries. Out of 10 PFI signed, only seven are currently involved. The on-lending annual interest rate is 9% with a maximum of one year grace period out of 5-year repayment period. The loans exceeding LKR 100,000 need collaterals while group collateral is sufficient for lower amounts. In both sub-programme areas, the repayment rate was about 98% and loan utilization rate almost 100% according to the PFIs. The loan processing time varies from one week to 2 months, but on average it takes only 2 to 3 weeks, a significant reduction of processing time over the years. The second loan is given when the borrowers repay about 80% of the first loan. The government has amended the Subsidiary Loan Agreement to reduce the loan interest rate to 7% per annum from 9%. The Mission recommends that IFAD no-objection should be obtained for the amendment before the CBSL announce the changes to registered PFIs. 48. Mid country (MC) performance is rated as satisfactory (5).The cumulative disbursement of loans as of 31 December 2014 was Rs million for 1259 beneficiaries, that of 2014 was Rs 33.3 million for 324 recipients, and the first quarter 2015 was LKR 6.0 million for 62 recipients. The main PFIs include Regional Development Bank (RDB), LKR 19.6 million in 2014 and Commercial Bank and Bank of Ceylon each with LKR 3.8 million. The average loan size was LKR 102,860 per beneficiary, a significant jump from The loan portfolio in 2014 includes agriculture, animal husbandry, income-generating activities and processing & marketing in the order of magnitude. The outcome survey of the loan recipients showed 43% of them are women, and 29% are Samurdhi recipients. There is 40% income increase in IGAs due to loans. About 90% of them have not taken a bank loan before and 31% of loan recipients are youth below 35 years of age. About 19% of them have reinvested profits generated and 10% have gone for the second loan. 49. Under tea factory loans, six factories took loans with a total value of LKR 33.6 million by December Mahaweli Tea shakthi tea factory has not fully utilized the loan whereas others utilised it, and managed to increase the Net Sales Average and corresponding green leaf prices. The Mission recommends that Mahaweli factory loan should be reviewed by the S-PMU together with the bank. In general the tea factory loan scheme has been successful in bringing profits to the company, income to the smallholders and foreign exchange to the country. 50. The performance of Moneragala S-PMU is upgraded to satisfactory (5). The component s cumulative loan disbursement as of December 2014 was LKR 228 million and in 2014 it was LKR 59.0 million (448 borrowers 161 women). The major partners PFIs were in terms of 10

17 amount disbursed RDB (56%) followed by BOC (43%). The average loan amount in Moneragala was LKR 131,600 while HNB, SDB, and BOC maintained an average loan amount of more than LKR 150,000, which is notably higher than that of the MC. The portfolio includes 72% agriculture, and 28% IGAs. Loan disbursement in the first quarter 2015 had been 171 recipients with LKR 28.4 million, average loan size being LKR 165,800, a significant increase. The outcome survey showed that 35% (28 borrowers) have taken the second loan and 4 have taken the third. The average size in the first round was LKR 122,115 and LKR 96,000 in next two rounds. Among many reasons, profit being re-used could be the main one for the reduction. The survey also revealed that family income of the loan recipients has doubled. 51. A meeting with the branch managers of RDB, People s Bank and Commercial bank in Moneragala revealed that the repayment has been regular almost 99%. Among others, the Mission met 15 borrowers in Bibile, a majority of them have taken crop loans for maize cultivation and have lost the crop due to flood. At the meeting with bank representatives it was revealed that such loans, if in debts, could be re-scheduled or/and interest rebates could be given on case-by-case basis. D. Programme implementation progress Quality of programme management 52. Overall Programme management performance is rated as moderately satisfactory (4). It has improved in Moneragala S-PMUs since 2014 and hence the performance rate is satisfactory (5), but the mid-country shows a decline in management performance and thus rated as moderately satisfactory (4). 53. The overall cohesive management within the MC S-PMU and the coordination between the NPCU and the S-PMU need to be enhanced and mutually supported to arrest the observed decline. Further an effective management of service providers and obtaining their full service according to the terms of reference cannot be observed, except EML Consultants who provided the operation manuals for EGs and SCGs. No business cluster, supported by the Foundation for Enterprise, is functioning and no sustainable market linkages was established; Bingu Sampath Surakeema sanvidanaya has failed to provide marketing for bee honey or increased production; and same failure has been noted with People s Livelihood Development Foundation with kithul based production. Industrial Service Bureau completely failed to establish spice processing centres. The Mission thus discourages the use of service providers since the management of them was not effective, but resource persons if there is a need. The position of Agricultural Specialist (Diversification Development Officer) is currently vacant. The former officer s role was instrumental in getting the support from partners to develop tea and intercrops. He has been appointed to consolidate the achievements in rural institutions and he is covering the agricultural work. While this arrangement is acceptable in the short run, it is essential that the vacancy is filled so that the handing over activities of the tea cultivations would be effective. Until the vacancy is filled, the ToR of the said consultant should be expanded to explicitly cover the agricultural activities. 54. The management performance of Moneragala has improved. Almost all the recommendations of the 2014 mission such as conducting regular S-PMU staff progress monitoring meetings, record keeping, information management, and internal coordination have been complied with. The Sub-Programme Manager s interaction with all the partner organizations, namely RDD, RRI, Forest Department and DEA has been further improved. The M&E system has been systematised to capture the subsidy disbursement progress of all rubber lands and also to monitor outcomes. Further improvement is possible in the work of Community Animators by mobilising them to promote micro-financing of VRDCs, identifying investment worthy IGAs that have been established with matching grants, and monitoring the VRDC revolving fund for purchasing rubber fertiliser. 55. The role of the Animators in programme management and also in sustainability enhancement is highly important. They are active in both S-PMU areas, add value to the management, and are willing to take responsibilities. The Mission understood however that there are certain financial issues to be resolved (for example systematic contribution to their Employment Trust Fund etc.). It is essential that these issues, if they are related to labour regulations which IFAD uphold as best practices, to be urgently resolved applying appropriate government regulations. It is 11

18 also opportune to fully use the training budget of SPEnDP to provide foreign exposure to all possible staff members sooner before programme completion. The Mission recommends the MPI to take required steps to keep the existing senior staff, particularly the National Programme Coordinator and the two Sub-Programme Managers during the last two years of the Programme to facilitate its smooth completion. 56. Monitoring & Evaluation performance of this rating is rated as moderately satisfactory (4). The programme M&E structure is almost complete having an M&E officer in the NPCU and one in each S-PMU. The IFAD country office provided 4-day training on result based monitoring and evaluation and also RIMS assessment in January Following that, there has been a good effort in capturing and analysing programme outcomes in both S-PMU levels. An M&E plan to capture such data has been compiled, but the field level data collection and systematically organising them into a data base has to be developed in both S-PMUs. The Mission noted the distant involvement of the M&E officer of the NPCU and her lack of field exposure which would limit the quality of M&E and also KM presentations. The National Programme Coordinator has to organise a collaborative work programme for the three M&E officers to work together to get a collective M&E output while keeping the identity of the S- PMUs. The data base and the outcome analyses can be improved through: (i) reviewing the programme outcome indicators by all three M&E officers collectively and developing an action plan to collect information, analysis, and reporting; (ii) identifying roles and responsibilities of the S-PMU staff including the Animators in M&E data collection, data base preparation, analysis and reporting; (iii) hiring a resource person (example a university lecture) to orient the M&E staff on data analysis - for instance the current outcome analysis, while appreciated as a starter, lacks rigour in the analysis and can be improved by applying basic statistics such as variability analysis, a mean comparison etc which provide conclusive evidence of programme contribution in livelihood improvements; (iv) all three M&E staff together visiting the both S-PMU areas and developing few case studies to support empirical assessments; and (v) addressing gender disaggregation in the outcome assessment. 57. The 2014 Progress Report and RIMS reporting show a notable improvement. There are some inconsistencies in output data reporting. The outcome analyses that were presented to the Mission in both S-PMUs have to be included into the progress report. SPEnDP has a wealth of success cases and failures that are worth developing as simple case stories. These will also provide an opportunity for the beneficiaries to get connected with the M&E system. A photo gallery would be prepared to strengthen the case stories. The Mission therefore recommends that the 2014 progress report to be revised and presented as the biannual progress report of 2015 June according to these lines. Coherence between AWPB & implementation 58. The NPCU has achieved about 81% of the budget requested in 2014, and it is 75.8% of the IFAD loan. The overall coherence is therefore rated as moderately satisfactory (4), one rating lower than that of MC S-PMU has spent 84% of the 2014 AWPB budget of Rs 205 million, which was Rs 81.8 million higher than that of 2013 and also the highest during the last six years. The performance rating is moderately satisfactory (4). More than the overall progress, it was the imbalance among the component progress in the mid-country that brought the rating down: community development component has 110%, whilst processing and marketing has 32%. Credit mobilization under component 4 has recorded 109%. 59. Moneragala reported 71% expenditure against 2014 AWPB budget of Rs million, Rs 76.7 million higher than that of 2013 and also the highest during the last six years. The performance rating is moderately satisfactory (4). Almost all components reported expenditure in the range of 70% and processing and marketing reporting 30%. The M&E system in both S- PMUs collects AWBP progress but mid-course revisions and reallocation need to be improved. It is recommended that the absorptive capacity of both sub-programme units should be assessed in a participatory manner before preparing the AWPB so that better planning could be achieved. Gender focus 60. The performance rating is satisfactory (5). There is no deliberately designed gender strategy in the Programme and partly due to that, the Programme implementation has less attention on the 12

19 gender needs and interest, particularly training. However, a number of training secession was conducted in both sub program areas to strengthen the capacity of women in various ways. Gender balance is maintained in all activities to an acceptable level. However land tenure right is a limiting factor for getting direct benefits for women. Women participation in programme activities has increased even though they have no proper land tenure rights, because men and women are jointly managing their assets and income in equal basis. With the development of tea and rubber based agriculture, women s productive role has increased at the expense of their reproductive roles. The credit line and the matching grants facility provided effective way of undertaking livelihood activities of poor women. They earn a good income and expanded those activities with micro credit facilities. Earning capacity and decision making ability has developed with the livelihood development, and it has an impact on women's economic empowerment and maintain social position and condition. SCG of women ensures the access to financial resources to reduce their indebtedness. Poverty focus 61. The overall rating is satisfactory (5). In addition to the geographic targeting where both Hadabima and Mahaweli settles are by definition poor, MC S-PMU has selected poorer beneficiaries for matching grants for IGA activities and also the capital grant for the SCGs. The poverty has therefore been adequately addressed. The Moneragala S-PMU needs a deliberate poverty focus since a self-targeting system on demand basis for rubber has been the practice. The last mission observed unacceptable level of off-targeting in rubber and in the credit component. Taking the 2014 mission observations on this issue, the Mission noted in the field that the S-PMU has selected beneficiaries for IGAs with matching grants (example dairy) and VRDC for the capital grant for rubber fertiliser giving adequate attention to poverty. This efforts has reduced the imbalance that was observed in 2014 and thus the increase in the rating. Effectiveness of targeting approach 62. The overall rating is satisfactory (5). The approach of paying attention to poverty in delivering programme inputs through EGs and VRDC has ensured that the poor is more focused. Having completed the two main activities, namely tea in the MC and rubber in Moneragala, the programme is concerned about the poverty focus for overall output delivery. Since geographic targeting was the approach in the MC, and almost all settlers have nearly similar socioeconomic conditions, targeting was not a challenge for tea development. It was a challenge in Moneragala. However both sub-programme areas at present use EGs and VRDCs to reach the beneficiaries and in that special attention is given to cover poverty. For instance the EG and the VRDC leaders should assess the livelihood conditions and also the need to obtain programme inputs such as matching grants, loans and training etc. In that assessment, as the Mission verified in the field, poorer people have been selected. Innovation and learning 63. This is rated moderately satisfactory (4). Though there were no significant innovations which the Programme introduced aside from those reported in the previous mission, this Mission noted good practices that are worth capturing and sharing. These practices can be classified as (i) promotion of simple and practical technology/systems, (ii) better targeting approach, and (iii) ensuring community-based delivery mechanism. The MC S-PMU promoted the improved tea basket collector developed by the Tea Research Institute of Sri Lanka, which the leaf pickers appreciate and minimize post plucking damages. The Mission also observed that one matching grant recipient developed a simple and handy technology on coconut scraping. The cow-shed design introduced in the mid-country allowed two related families (usually a father and son) to keep and care their cows in one shed. This has lessened the cost of cow-shed construction and has also enhanced family-based livestock management. In Moneragala, intercropping at the different stages of the growth of rubbers (e.g. maize and bananas in the first three years and later cocoa) has provided the growers other sources of food and cash while waiting for rubber to mature. The Savings and Credit Groups (SCGs) in the mid-country proved very effective in targeting the women. Aside from empowering 2,309 women, the SCGs allowed women to directly benefit from credit funds and matching grants. In both sub-programmes, the EGs and the VDRCs were effective mechanisms in identifying programme beneficiaries, and in ensuring benefits reached the intended beneficiaries. 13

20 64. The culture of knowledge capturing and sharing is emerging. The M&E/KM orientation conducted by the IFAD SL country office attended by the programme M&E officers resulted in the conduct of outcome surveys and the writing of two case stories. Initial results of the outcome surveys, which needed further analysis, were shared during the Mission and the two case stories were already included in the draft IFAD-SL Country Programme Newsletter. There were also exchanges of experiences between the two sub-programmes (visit of MO-SPMU to MC-SPMU) and knowledge product (MC-SPMU community operation manual for EGs which was adopted by Moneragala for the VRDCs). This is a good indication of progress on knowledge management, and can be pursued further by systematizing the efforts into a KM action plan at the sub-programme and national levels led by KM champions, specifically the three project M&E officers. The Mission recommends that three M&E officers cum KM champions should act as a team and work closely in implementing the KM action plans. The action plans should contain four major areas: (i) capturing refer to the cases/ practices identified in the previous mission and in this Mission; (ii) developing deciding on the knowledge products: photos, videos, reports, newsletter, case stories, etc. In developing the KM products, the project may conduct a write shop with the assistance of an outside facilitator/editor or hire a service provider to package the project s learnings/good practices/innovations; (iii) sharing platform for sharing can be face to face exchange, e.g. project regular meetings/reviews, IFAD-SL country portfolio reviews; and virtual, eg. website (to negotiate with MPI to have a SPEnDP portal in the ministry s website and will be administered by NPCU), social media (open a programme FB to be administered by the M&E officers), IFAD Asia portal (orient the 3 M&E officers on how to administer the web); and (iv) using venues for utilising the KM products. It is suggested that the Programme shall have a joint face to face annual review and planning to share the lessons learned and other knowledge generated from project experiences to improve the 2016 and onward planning. Climate and environment focus 65. This is rated as satisfactory (5). There are no specific activities identified in the programme for climate change resilience or mitigation. The programme is mainly agricultural and by nature to some extent tea and rubber have climate change related vulnerability; susceptible to adverse effects of climate change, especially prolonged drought. Thus infilling of tea as well as rubber is a significant component of the SPEnDP. The Programme has built-in practices to minimise their effects. Incorporation of organic matter, mulching, soil and water conservation methods in tea and in rubber maintaining a thin layer of weeds during drought and intercropping with shade providing bananas are examples. The programme activities do not contribute to climate change. Agreed action Responsibility Agreed date 19. The 2014 programme progress report should be revised taking the mission observations highlighted above into account and the bi-annual progress report to be prepared accordingly NPCU with three M&E officers July M&E system and the outcome analyses should be improved in line with the suggestions in the text. Facilities for the photo galari should be provided. E. Fiduciary aspects Quality of financial management Three M&E officers Start in July Overall quality of financial management is rated as moderately satisfactory (4) from the last rating of moderately unsatisfactory (3). The Mission observed that the Programme has benefitted greatly from the implementation support that was extended by the 2014 mission and there is a significant improvement in the system of financial management. Appointment of a professionally qualified accountant to the post of Chief Accountant of the NPCU and provision of supporting staff for the sub-programme accounting unit at Moneragala as recommended by the previous mission has made a notable contribution to this improvement. 67. The Mission conducted a comprehensive review of the current system of financial management covering budgeting, flow of funds, accounting, internal controls, financial reporting and auditing arrangements. This was based on the Financial Management Assessment Questionnaire (FMAQ) and would assist the programme finance staff to meet IFAD standards and requirements. The NPCU, which is responsible for overall financial management and 14

21 procurement, maintains a Designated Loan Account in USD at Central Bank and two separate Bank accounts for programme funds and GoSL funds. A decentralized accounting system is in operation and two sub accounting units are established at S-PMUs. Payments are made from imprest advances, released by the NPCU regularly on request, and the accounting records are kept at the respective sub units. In addition to maintaining their own accounts, the NPCU prepares consolidated accounts and submits withdrawal applications to IFAD on the basis of monthly expenditure and the returns that received from the sub accounting units. The NPCU regularly submits semi-annual and annual programme financial statements (PFSs) to IFAD, and the PFS for the year 2014 was submitted for auditing on time. Reconciliation statements of the Designate Account and all bank accounts of the programme including the bank accounts of S- PMUs were examined by the Mission and found that they are accurate and up to date. 68. Programme activities are carried out in accordance with the approved AWPB, and adequate financial provisions are made to meet the programme s needs. There is no delay in forwarding WAs. The exception was WA No. 64 which was related to the expenditure of March and April, All other WAs so far submitted have been replenished. All fixed assets belong to the Programme have been appropriately coded and Fixed Asset Registers are maintained satisfactorily. A physical verification of some randomly selected fix assets at the NPCU and both S-PMUs was conducted and found no discrepancies between book balance and actual balance. Prevailing system of internal control needs to be strengthened by conducting regular internal audit, computerising the accounting system (installation of a software package), and conducting asset verifications regularly. The Mission reviewed five randomly selected WAs out of 09 WAs, submitted since 2014 mission, in detail and found that the expenditure claimed under SOE procedure are eligible under the Financing Agreement. Cumulative financial performance of the Programme as at 30 th April, 2015 is 71% of the total programme cost, and the loan disbursement alone accounts for 73% of the total loan of USD million. All recommendations of the previous mission except filling of vacancy of Moneragala S-PMU accountant, which was not possible due to unavailability of a suitable candidate for the position, have been implemented. Progress reports are sent regularly to the MPI and the latest report sent was in respect of the first quarter of The reports are informative and contain agreed contents. Acceptable disbursement rate 69. Overall rating of the disbursement is rated as satisfactory (5).The status of disbursement from the IFAD Loan 712 LK as at 31 st December 2014 was SDR 10,339,166 which is 68% of the total loan financing of SDR 15,250,000. The above amount excludes initial advance of SDR 948, The projected disbursement (taken actual disbursement up to end of April, 2015 and balance eight months forecast of 2015 AWPB as 100%) as at the end of 2015 would be about SDR 12.2 million, representing 80% of the total loan (Appendix 5 Table C).The actual overall achievement on expenditure by financer is 71%, the beneficiaries are the highest at 138% and the government is the lowest at 41% (Appendix 5 Table A).The loan disbursement against Programme Management is the highest at 89% and the disbursement against Processing and Marketing is the lowest at 45% (Appendix 5 Table B). IFAD funds have been reallocated to meet the demands of certain expenditure categories on the request of the PMU. The main items which have been up-ward allocated are civil works, agriculture inputs, and salaries and allowances. The funds came from subsidies (tailing down due to value of final subsidy instalments being low) and matching grants. The Details are attached to Appendix 5. Counterpart funds 70. This is rated as satisfactory (5). GOSL has released USD 1.55 million as against the total committed provision of USD 3.76 million, representing 41% as at the end of April, 2015 in relation to the disbursement of 73% of IFAD allocation. Although there was a delay in receiving funds in first two months of the current year, the Programme has not met with any difficulty in getting required CF thereafter. This delay prevented the rating from being highly satisfactory (6). 15

22 Compliance with loan covenants 71. This is rated as satisfactory (5). All major financial covenants have been complied with, except submitting the audit report (2013 Audit report was delayed by three months) and the Management letter on time. As the Auditor General issues a detail audit report for which the programme management is required to respond clarifying and taking action to rectify drawbacks on issues highlighted by him, issuing of a separate Management Letter is not practised in government audit. Compliance with procurement 72. Compliance with procurement is rated satisfactory (5). The Mission reviewed in detail a randomly selected sample of procurements made during 2014 and 2015 by the NPCU and both SPMUs. These include community procurements relating to matching grants and capital grants, direct procurements relating to civil works (mainly access roads), and all major procurement made under NCB. The procurement is carried out adhering to the prescribed procedure. Quality and timeliness of audits 73. This is rated moderately satisfactory (4). Quality of audit is mostly in lie with IFAD requirements, though there was a delay in receiving the final audit report before the due date audit report was delayed by three months and 2014 audit is in progress and the report is expected by end of June Response of the Programme management on issues raised in 2013 audit report has already been submitted to the Department of Public Finance of the Treasury on 29 th October, 2014 with a copy to IFAD. With regard to the issues highlighted in 2012 audit report, the Auditor General has stated in his 2013 report that the management had taken satisfactory measures to rectify them. A summary of Audit log is marked as Annex 1 F. Sustainability Institution building 74. This is still rated as moderately unsatisfactory (3). As earlier stated, the Programme has mixed measurement on institutional capability and unclear on the parameters that assessed their sustainability. Though the maturity assessment of EGs/SCGs showed an increase of categories A & B in 2014 comparing to 2013, the statistics show that categories A&B is still 30% of the 238 EGs/SCGs, while 70% are still in categories C,D,E. The VRDC maturity assessment also showed that 48% of the 100 VRDCs assessed are considered best and better while the remaining 52% are considered good or bad. This clearly indicates that there is a need to strengthen the capability/capacity of EGs/S&CGs and VRDCs in order that they will have good chances to continue beyond project life. 75. For the continuity of EGs/SCGs, the MC-SPMU is working on a concept called community resource centre (CRC) which will provide continuing technical assistance to EGs/SCGs through thematic community resource persons (CRP). While the concept looks interesting, the Mission recommends that this has to be reviewed as to the financing and management schemes of the CRC and CRPs after the Programme. Further, it is also recommended that MC-SPMU should look into the existing services provided by the government agencies (e.g. Industrial Development Board, National Enterprise Development Authority, Small Business Development Units of Divisional Secretariat for the development of micro enterprise) which can be tapped to provide continuing technical services to the EGs/SCGs after the Programme. Likewise, the Moneragala S-PMU made initial steps in organizing a VRDC confederation for economy of scale and better bargaining power. It is the opinion of the Mission to postpone the creation of a confederation and focus on strengthening of primary VRDCs and making their enterprises operational (e.g. rubber processing plants). Experience shows that once primary organizations are mature, the push for creating a federation or confederation will come from within. 16

23 Empowerment 76. Its performance rate is maintained at moderately satisfactory (4) in both S-PMU areas. There is a great deal in empowerment at individual level but at the institutional level it is weak. The Programme interventions helped beneficiaries gaining knowledge in many ways which helped them manage their resources effectively. Many women and men have changed their traditional role and started new business ventures with exposure and training received from the Programme. There is a significant improvement in women taking lead in family decision making. All these indicate that the programme manage to contribute to the empowerment at individual level. However, at the institutional level empowerment in both S-PMUs showed mix results. EGs and S&Gs in MC in terms of mobilization and group lending proved successful but not BGs. VRDSs in Moneragala S-PMU still to attain expected level of economic and social empowerment in comparison to MC. Quality of beneficiary participation 77. The performance in both S-PMU is rated as satisfactory (5). The Mission noted that the beneficiary groups in both MC and Moneragala are generally enthusiastic to collaborate with the Programme and wanted the Programme to continue until the end of the programme period. While the singular approach in income generation was successful in both S-PMUs, it has been a challenge in the entrepreneur grouping BGs and spice processing centre in MC and small rubber processing centres, fruits & vegetable collection centre (road-side market) in Moneragala. The beneficiaries still lack the confidence in grouping for economic advantages which negatively affect the sustainability of the Programme initiatives. Responsiveness of service providers (SP) 78. The performance is rated as moderately satisfactory (4). During 2014, the main SPs for the programme were TSHDA in mid country and RDD in Moneragala. Both have extended their full corporation to implement the annual programme and creation of an acceptable data base. In addition DEA and RRI had collaborated well to implement the intercropping and training programmes. Responsive of the service providers contracted under the Component 3 however has been weak and mentioned under programme management which brought the rating down. Most of the PFIs in both sub programme areas, particularly the RDB and BOC, have shown progress and high commitment in lending to the programme target group. Exit strategy 79. The performance rate is satisfactory (5). The Programme has prepared a matrix of exit activities with timing and the responsibility which is adequate if properly implemented. The Mission reviewed it and presented comments (see Attachment 2). The cost should be included into the matrix. Further, the implementation of some of the strategies needs service providers as it currently presented. Since the programme experience with service providers has been discouraging, the implementation responsibility in such activities should be revisited. Strong private sector partnerships with market linkages are required to exit from commercial business activities such as small scale enterprises such as dairy, rubber processing etc. The exit plan should ensure the private sector involvement. The rubber and tea growers could be linked up with the next IFAD project, Smallholder Tea and Rubber Revitalization Project, particularly for processing and marketing aspects. Potential for scaling-up and replication 80. This is rated as satisfactory (5). The Programmer offers both opportunities and challenges which are lessons for scaling up. Some of the value chain development that was observed in 2014 did not succeed. Examples are kithul products, bee honey and mushroom, mainly because of market competition and technical complexity of production. Good assessments therefore are needed before scaling-up. Dairy and cut-foliage has been successful and could be scaled-up. The approach adopted in land productivity development in degraded tea lands has the potential to be up-scaled. 17

24 G. Other Physical/financial assets 81. The performance is rated as satisfactory (5). The main physical asset base of the programme beneficiaries is the tea (250 ha) and rubber smallholdings (5000 ha). Almost all of these areas are well established and some of them are yielding. Additionally many other IGAs have been supported, which have increased the physical asset base in the two sub-programme areas. Examples are dairy cattle, goats, and equipment for various industries such as rubber processing, mushroom, cut-foliage, carpentry, cement blocks, concrete work, tailoring, etc. There are programme supported rural infrastructure including roads, community buildings, rehabilitated village tank, milk collecting centres, and tea collecting centres. In numbers, these assets are owned by about 25% of the beneficiaries. Further, those beneficiaries who are plucking tea have accumulated various domestic assets which is also notable. The bank loans from the programme credit line, capital grants given to selected EGs, SCGs and VRDCs and the enhanced income have created the financial assets. There is a notable contribution from the beneficiaries to meet their share of the matching grants which has enhanced the financial assets base. Food security 82. The performance is rated as moderately satisfactory (4). Early planted tea and rubber are coming to harvesting stages and some beneficiaries are already getting incomes. The intercropping in Moneragala was with food and fruit crops while intercropping in mid-country was with fruit and spice crops. The dairy enterprises are providing milk to EG members and domestic fresh milk consumption has increased, particularly when the women is managing dairy. All these and other income generating activities discussed have contributed to incremental food and incomes contributing to food security. The full benefits would be reached at the completion of the Programme. Quality of natural asset improvement and climate resilience 83. This is rated as satisfactory (5). The main activities of the Programme; cultivation of tea, rubber and intercrops together with soil and water conservation practices are nature friendly, safeguarding and improving the natural resources (land, water, soil, plants) for present and future. The dairy industry while checking the invasiveness of wild grass provides organic manure for crops. Other promoted enterprises do not have ill effects on environment. On the whole programme activities are climate-smart, resilient to climate change. H. Conclusion 84. The Programme has completed seven years out of its 10-year life. Two main targets, tea rehabilitation and rubber new planting, have been fully achieved. The rural institutions have been established and they are showing signs of sustainability. The rest of the period could be used to consolidate the crop development activities including their systematic transfer to the relevant state institutions, and further strengthening the rural institutions. Establishing tea and rubber, and initiating the rural institutions alone would not be sufficient to achieve the development objective of the Programme. The main challenge in reaching the development objective is the transformation of the poor and mainly agrarian beneficiaries of the Programme to commercial entrepreneurs. EGs and VRDCs could be used effectively in this effort. They were effective as programme input delivery institutions at the beginning. Many of them are micro-financiers at present. With appropriate interventions, these institutions could function as middlemen between the beneficiaries and the markets for two main products namely tea and rubber, and for all the other products. Such interventions would be (i) improving business mindset of beneficiaries; (ii) initiating sustainable market linkages; (iii) strengthening the enterprises in terms of their quality, consistent supply and also the number of beneficiaries who are involved in such enterprises; (iv) facilitating and monitoring the usage of good agricultural practices in both tea and rubber with the help of the relevant state institutions; and (v) sharing the experience between the two sub-programmes in improving the quality of programme delivery. These interventions are possible during the next two years with the remaining IFAD loan resources with better focus, quality training programmes, internal coordination, and linkages with partner institutions. 18

25 Appendix 1: Summary of project status and ratings Appendix 1: Summary of project status and ratings A. Basic Facts Rating Country Sri Lanka Project ID 1316 Loan/Grant No. 712-LK Project Supp. Loan/Grant Date of Update: June, 2015 Last Supervision 9-May-2014 Financing terms HC Supervising Inst. IFAD No. of Supervisions 8 USD million Disb.rate% Approval 14-Dec-06 Quality at entry rating Total costs % Agreement 08-May-07 Effectiveness lag IFAD loan % Effectiveness 06-Nov-07 Problem project DSF grant MTR 9 May 2014 IFAD grant Current completion 31-Dec-17 Last Amendment Beneficiary/Domesti c % Current closing 30-Jun-18 Last Audit Cofinancing No. of extensions Co-financiers No more United States/USAID WRC GOSL % Financial Insti % B. Project Performance Ratings *Excluding the initial deposit B.1 Fiduciary Aspects Last Current B.2 Project implementation progress Last Current 1. Quality of financial management Quality of project management Acceptable disbursement rate Performance of M&E Counterpart funds Coherence between AWPB & implementation Compliance with loan covenants Gender focus Compliance with procurement* Poverty focus Quality and timeliness of audits Effectiveness of targeting approach Innovation and learning Climate and Environment Focus 4 5 B.3 Outputs and outcomes Last Current B.4 Sustainability Last Current 1. Community Development and Grassroots Institutions 2. Out growers and Diversification Development Institution building (organizations, etc.) Empowerment Processing and Marketing Quality of beneficiary participation Rural Finance and Credit Responsiveness of service providers Exit strategy (readiness and quality) Potential for scaling up and replication 5 5 C.1 Physical/financial assets 5 5 C.2 Food security 4 4 C.3 Quality of natural asset improvement and climate resilience 5 5 C.4 Overall <b>implementation progress</b> (Sections B1 and B2) 4 5 Rationale for implementation progress rating The Programme has maintained the progress achieved over the last six years, mainly in the establishment of 5000 ha of rubber smallholdings and 200 ha of tea smallholdings. These were the main agricultural targets of SPEnDP. However its progress in consolidation of some of the achievements, particularly those in the processing and marketing components need to be enhanced, and lands tenure ownership of the mid-country beneficiaries will have to be transferred. Creating private sector and market linkages, processing and value additions, and establishing diversified business enterprises 19

26 Appendix 1: Summary of project status and ratings Fiduciary aspects were expected in the design to develop the smallholder entrepreneurship. With the momentum that is already there, the Programme would be able to resolve these issues within the balance two-years with the remaining IFAD loan resources. C.5 Likelihood of achieving the development objectives (section B3 and B4) 4 4 Rationale for development objectives rating Although the main interventions of the Programme, tea and rubber development have been well achieved, there are still few bottlenecks to fully realise the development objective. Business mind-set of beneficiaries, sustainable market linkages, and enterprise development need improvements by way of its quality and also the number of beneficiaries who are involved in capturing income generation opportunities that could be facilitated by the Programme. Application of good agricultural practices in both tea and rubber needs to be facilitated and monitored with the help of the relevant state institutions. Unless there is improvement to address these concerns, the achievement of the DO will remain as a challenge. C.6 Risks Project implementation progress Although the manual system of accounting now in operation is fairly reliable, it is of paramount important to introduce an accounting package to increase the efficiency of the accounting staff and reliability of information that is being generated by the system. This may be more relevant when the work load of the accounting section is increased due winding-up of the project in In component 2, crop planting activities have progressed well and achieved the full targets. The targets have been exceeded in the mid country and Moneragala. Others including social preparations, which provide greater chances for the beneficiaries to become entrepreneurial, self-sustaining and contribute to the programme development objectives, still have room to improve. It is however interesting to note that rural institutions have become micro-financiers providing micro-loans to rural poor for their domestic as well as productive activities. It is highlighted again that SPEnDP emphasises on those during the next 2 years. Although the M&E system has improved notably, further development is needed in the areas of outcome assessment. Land regularization, one of the identified programme risks at appraisal, has seen substantial progress and notable number of beneficiaries have got land deeds, and the Land Reform Commission has taken a very positive step to work closely with the Banks (programme PFIs) to facilitate loans to those who need these. Service providers have failed to deliver their TOR, except one, and were terminated. This is seen as a management deficiency, since there was previous mission recommendation to use a delivery based payment system and close monitoring. The records do not show such management efficiency. Since it has been a risky investment, the Programme was requested to discourage using service providers. Outputs and outcomes Sustainability Initial activities in the community development, including establishment and capacity development, and two main targets in agriculture production component have been fully achieved. Marketing components in both sub-programme areas have poorly been coordinated and thus have a slow progress, which will affect the entrepreneurship development aspect of the programme. The formed business groups, except one in cutflowers, who had some partnership with the private sector partners have discontinued operating in both Mid country and Moneragala. The close monitoring and on-site problem census and providing solution from the programme side were not effective to the need and that has also contributed to the current situation. Many members of the BG are now operating on individual basis, but the advantages of the collectivism have not been realised. About one third of the entrepreneur groups and about two thirds of the VRDC leadership need further and urgent capacity improvement in areas of business development, accounting, community organization, and economic mobilization. About one third of both EGs and VRDCs, and almost all SCD have become strong micro-financing Newly started group rubber processing centres needs several improvements - lack of technical feasibility and financial evaluation shows that if proceed with the same situation, the outcome would be less than optimal. The main improvements would be to establish fully fledge processing centre with processing, smoking, water, electricity, storage, labour, management input and market linkages. Credit disbursement has shown a very good progress, and a slight reduction in the elite capture has been observed. The risk therein is the quality of some loan proposals which has improved notably but still needs more interventions - for example the recovery of the loans that were given for annual crops in Bibile. Design of all the programme activities expected at least 50% women beneficiaries but no strategies still ensured this. The WOCAN trained staff member has contributed to some extent to enhance women targeting. In addition, the natural selection has maintained a fair representation of women in all activities. As outcome of assets creation is notably visible. Both tea and mature rubber beneficiaries spend a part of their additional income in purchasing household items, some of which are helping to reduce the drudgery of women. The Rubber Development Department and Tea Small Holding Authority have fully internalised the maintenance and sustainability monitoring activities of rubber and tea respectively. These include training, taping skill development, pest and disease management and fertiliser application. Rubber Development Department and the Rubber Research Institute and the TSHDA regional officers have internalised these activities. From the growers side, both crops are either in production stage or will reach that in the next 2-3 years. Yielding plants are giving a higher production than their counterpart non-beneficiaries. As such these two crop development activities will have a good chance of sustaining. However the programme goal of achieving entrepreneurship will not be realised unless the market / business oriented work is expedited with developed market linkages and business capacity development. The market linkages are so important for the sustainability since all crop production is targeted towards marketing. Many of the EGs and VRDC are immature to take that role right now. As such the EGs and VRDCs should be mobilised and linked to markets with strong agreements to maintain the sustainability of the production activities. Both EGs and VRDCs have started acting as strong micro-financing lenders. The original role of a programme input delivery function has now being replaced with micro-financing and the institutions that are at least vibrant in that have strong signal of sustainability. 20

27 Appendix 1: Summary of project status and ratings Proposed Follow-up Issue / Problem Recommended Action Timing Status Project Implementation Service Provider Monitoring and Evaluation Knowledge Management Fiduciary Aspects Entrepreneurship development, capacity improvement of the rural institutions, July, 2015 to entrepreneurship development, market linkages, skill development of the start beneficiaries to reap production (mainly rubber) and strengthening M&E are required. Failed. Thus no further service provider procurement is encouraged. If need the Programme would use the resource persons to meet technical needs. Main issue is with the adequate capturing of outcomes of the programme while it is having diverse type of outcomes. The recommended action include: (i) reviewing the programme outcome indicators and developing an action plan to collect information, analysis, and reporting; (ii) identifying roles and responsibilities of the S-PMU staff including the Animators in M&E data collection, data base preparation, analysis and reporting; (iii) hiring a resource Start in July person (example a university lecture) to orient the M&E staff on data analysis 2015 with improved rigour to provide conclusive evidence of programme contribution in livelihood improvements; (iv) all three M&E staff together visiting the both S-PMU areas and developing few case studies to support empirical assessments; and (v) addressing gender disaggregation in the outcome assessment. SPEnDP has initiated work on collecting information that is needed to Start in July developed KM products. The improvement is needed in the quality and the 2015 completeness of these information to put good KM products together. Conducting internal audit on quarterly basis is necessary. Annual Asset verification should be conducted on time. Start in July Introduction of an accounting package to minimize human errors in 2015 accounting records and make available accounting information on time. Programmes have been planned - Urgent Already terminated the contracts Discussion have started - underway Initiated - underway Underway Procurement Strengthening system of contract management. Urgent Audit Auditors should meet the time target prescribed in Financing Agreement. Urgent Additional observations: a Cabinet Note needs to be submitted to extend the programme period up to December

28

29 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary A.Strategic Goal The livelihoods and social conditions of out growers and smallholder hoseholds are improved on a sustanable basis B. Programme Development Objectives Sustanable smallholder entreprenure system developed leading to economic and social development Performance Indicators Key Performance Indicators and Targets Indicator Targets 2009 Baseline Number of households that improved household assets ownership index, based on 2009 Socio-economic survey 2. No of HHs with real income above annual poverty threshold level, based on 2009 Impact assessments 3. Percentage decrease of indebtedness Impact assessments 4. Percentage improvement of nutritional status, particularly of children, based on Impact assessments weight for age ; %m, %F Height for age ; %m, %F weight for weight ; %m, %F 5. Number of HHs improving housing conditions Impact assessments 6. Number of persons receving project sevices; Male and Female Gender disaggregated data for target groups; 1. Household members saving on regular basis 2. No HHs having more than one stable income sources 3. Number of HHs with secure tenure over their land 4. Improved Incremental extent of tea (Ha) 5. No of enterprises having traditional and non-traditional processing facilities for smallhlder producers 6. Number of effective groups or associations/ federations are sustained 7. No of peoples adapting technology for quality improvement of product 8. Youth have retained employement opportunities on smallholder lands Indicator Targets M - 12,377 F - 5,578 M F Progress Means of Verifications M&E reports Egs & S&CGs reports Impact assessments Institutional Records/LRC records Sector wise reports/ THSDA reports M&E Reports survey Impact Assessments Critical Assumptions/ Risks No major market disruption in smallholder and export crops (spicec, horticulture, timber) No external economic shocks No change in the programe life Favorable policy framework ffor land regulation No major drop in international commodity prices for estate produce 23

30 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Performance Indicators Key Performance Indicators and Targets Indicator Targets Indicator Targets Progress 2009 Baseline Means of Verifications Critical Assumptions/ Risks C. Component Outcomes Component 1 : Community Development & Grassroot Institutions 1. Smallholders are strengthened to engage in and develop fair and equitable smallholder production mechanism (1. Smallholders are able to develop & implement fair and equitable production mechanism) 1.1 Increased no of smallholder groups sustained (No of sustanable smallholder groups (Egs/VRDCs)) 1.2 Likelihood of sustainability of associations/ Federations (2. No of established homogenous production groups with sustanable livelihood operations.) 1.3 Percentage of women in leadership of village organizations (Egs & S & CGs) No of families used improved infrastructure facilities Impact Assessments Impact Assessments % Egs & S& CGs reports Impact Assessments 2. Smallholders are facilated for Social Infrastructure development 2.1 No of community projects implemented (% of cost/ time saved ( Smallholder production system supported with improved with improved infrastructure facilities ( Rural road/ Community drinking water facilities/ community hall) infrastructure development) 2.2 (No of families incresed drinking water facilities) Impact Assesments Capacity of key officers of community organizations Participatory decision making at the group level experienced Adequate capacity of the key officers of community organizations Expected community participation in community works will be realized Component 2 : Agriculture Development 2.1 Smallholders are able to develop sustainable land use systems in 8,000 ha ( 3,000 has MC, 5,000 MO) 2.2 Smallholders land tenure status secured Component 3: Marketing & Processing 3.1 Smallholder are able to involve processing, value addition, marketing and IGAs. Component 4: Rural Finance and Credit 4.1 Smallholders are able to use loan funds for establishing sustanable income generation activities 4.2 Improve credit wortinesss and better access to appropriate financial institutions and their resources Extent of cultivated lands (ha) with soil conservation practices implemented Impact Assessments % of Yield Incresed in intervened lands (ha) (Tea+ Rubber) Institutional records No political interference in land alienation on implementation level % of Yield Incresed in intervened lands (ha) Mize + Rubber Impact Assessments No change in the programme life % of Yield Incresed in intervened lands (ha) Passion + Rubber Impact Assessments Number of SHs with land title in their name (man/woman) Institutional records Soil erosion structures maintained by farmers Recommended crop management practicies adapted by farmers No of active processing centres controlled by smallholders Benificiary assessments Condition for private sector invesments remain favourable No of Favourable market linkages sustained Benificiary assessments Stable macro-economic policies % income increased due to value addition activities % Case stuides/ Surveys Conditions prevail for fair completions in the private sector % of IGAs sustained % Impact Assessments Efficent delivery of govt/ private service providers Surveys No of income generation activities sustained 80% Impact Assessments Adequate staff available in the PFIs No of employment generated under IGAs 27% S&CGs positive attitudes of benificiaries towerds credit culture M&E Reports PFIs reports PFIs reports PFIs reports % of loan recovery rates PFIs reports Stable macro-economic conditions 24

31 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Performance Indicators Component Outputs Key Performance Indicators and Targets Indicator Targets Indicator Targets Progress 2009 Baseline Means of Verifications Critical Assumptions/ Risks Component 1 ; Community Development & Grassroots Institutions 1.1 Communnity mobilized & Grassroots level Egs operate successfully 1.2 Savings & credit schemes introduced & implemented 1.3 Societies/ Associations/ Federations converted to companies 1.3 Homogeneous production groups are formed by Egs/S&CGs/VRDCs 1.4 Social harmony established in the community 1.6 Target village Infrastructure Developed 1.7 Community groups made aware of community credit scheme 1. No of Egs formed 1 no of Egs/VRDCs formed M&E Reports 2. Percentage participation at meetings % Egs & S & CGs Reports 3. No of matching grant distribution 3. No of matching grants disbursed M&E Reports 4. Male & female % in groups (F) % Egs Reports No of S&CGs formed M&E Reports No of savings accounts opened and maintaining M&E Reports No of matching grant disburse Male & female % in groups (F) % Egs Reports % of women in leadership level % Egs Reports Total amount of savings of Egs/ S & CGs/VRDCs (Rs.Mil) Egs Reports No of loans issued (M/F) Egs Reports Percentage of loan recovery (M/F) Egs Reports Egs/S&CGs have functioning financial management system in place 60% M&E Reports 1. No of associations/ federations formed M&E Reports 2. No of Groups engaged in group base economic activities No of programmes focusing on enhancing social harmony conducted 1. no of programmes/ activities focusing on enhansing social harmony conducted 2. No of participation on collective activities (M/F) No of infrastructure constructed/rehabilitated (1) No. of KMs rehabilitated Formed Egs S &CGs/ associations/federations report M&E Reports Groups/associations/feder ations report 2. No of families using rehabilitated/improved structures Impact evaluation study 3. Perception of the community on utility/quality Impact evaluation study 1. No of exposure programmes conducted M&E Reports 2. No of participants in programmes (M/F) M&E Reports 333Nos. 42KMs M&E Reports 25

32 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Performance Indicators Key Performance Indicators and Targets Indicator Targets Indicator Targets Progress 2009 Baseline Means of Verifications Critical Assumptions/ Risks Component 2: Crop Diversification and Development Extent of land (ha) under improved management practices Project records 2.1 Crop models and farm plans developed & utilities 2.2 Farm inputs are available at farmer level 2.3 Extention services are strengthened to facilitate the agricultural programme. 2.4 Smallholders land owenership regularized in the agricultural programme No farmers per each model at FG level 1973(M/F) Project records Tea monocrop/ Rubber monocrop (Ha) Maize Extent (Ha) Tea/Rubber + Fruit plants (Ha) Tea + Spice crop Tea + coconut No of plants distributed to farmers Tea/Rubber Spice crop Fruit crop Coconut Quantity (Mt) (1) of fertilizer distributed to no of farmers(2) Tea fertilizer 225 Coconut Fertilizer 300 Fertilizer for fruit plants Amount of subsidy (Rs. Mln) (1) distributed to no of farmers (2) No of groups (1)benificiaries (2) receiced farm implements and othe inputs MT for 1799 farmers 15MT for 3100 farmers 33MT for 3064 farmers Subsidy Mn Farmers Groups - 43 Beneficia ries Project records/ institutional records Project records/ institutional records Project records/ institutional records Project records No of participants for the farmer training programmes coducted on crop management practices (M/F) Project records/ institutional records Project records No of capacity building programs 6 2 Project records Number of SHs with land titles in their name (M/F) - (MC) No of land holdings on which user-right established (M/F) (Mona) Institutional records Motivation plan available for project and line agancies staffs 26

33 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Performance Indicators Key Performance Indicators and Targets Indicator Targets Indicator Targets Progress 2009 Baseline Means of Verifications Critical Assumptions/ Risks Component 3 :Processing & Marketing 3.1 Potential value addition systems established 3.2 Favourble market linkages established 3.3 Market related services are provided (Mona) 3.4 Potential business groups and benificiaries identified & strenghened Component 4: Rural Financing and Credit 4.1 Loan proposals formulated & activated 4.2 PFIs / benificiaries aware and willing to implement loan schemes 4.3 Loan Monitoring scheme established & implemented No of primary processing centres established M&E Reports Project staff available No of persons trined in processing & marketing (M/F) M&E Reports Sufficient capacity of line agancy available % P&M centres lead by women Centres Reports No of value added products introduced M&E Reports No of marketing linkages established M&E Reports/ study reports No of tea smallholders linked up with tea factories Project records No of rubber / Agro based producer smallholders linked with the collecting centres No of potential benificiaries trained (M/F) Total M-1173 F Project records No of enterprises supported in establishment or improvement Project records No of people engaged in enterprises Impact evaluation study Percentage of enterprices lead by women % Impact evaluation study No of proposals forwarded to PFIs No of active borrowers PFIs Reports Total amount disbursed on loans (Rs. Mn.) PFIs Reports No of proposals forwarded for PFIs for tea factory improvement Institutional reports No of joint awareness programmes conducted M&E reports No of PFIs participating Project records No of loan monitoring sessions conducted with PFIs Project records % of Loan recovery % PFIs Reports 27

34 Appendix 2: Updated logical framework: Progress against objectives, outcomes and outputs Narrative Summary Performance Indicators Key Performance Indicators and Targets Indicator Targets Indicator Targets Progress Means of Verifications Critical Assumptions/ Risks 2009 Baseline Component 5: Programme Management 5.1 Required staff recruited & employed 5.2 Necessary facilities procured and operational 1. Percentage of staff in position filled % Project Records 1. Percentage of staff on adequacy of facilities % Project Records Leadership motivation and incentives are favourble 1. Perception on programme effectiveness by stakeholders 100% 100% 100% 100% 100% 100% 98% Impact assessment Programme management is satisfactory 5.3 Internal & External linkages established & operational 2. Level of job satisfaction of programme staff 90% 90% 90% 90% 93% Impact assessment 3. No of review meetings/ discussions held (SIS Mission + PSC) Project Records 5.4 Programme staff's knowledge & skills updated 5.5 Operational & financial giullines prepared & institutionalized 5.6 AWPB & Procurement Plan prepared & activated 5.7 Monitoring & Evaluation System established & operationzed 1. No of training programmes/workshops attended by staff M&E Reports 1. Manuals & guidelines available Project Records 1. Percentage of funds received on requisition % Project Records All staff positions are recruited 2. Percentage of funds disdursed as per AWPB % M&E Reports 1. M&E plan available Project Records 2. No of progress review meeting held as scheduled Project Records 3. No of progress reports submitted in time Project Records 28

35 Appendix 3: Summary of key actions to be taken within agreed timeframes Appendix 3: Summary of key actions to be taken within agreed timeframes Action Area Action Agreed Date Whom Progress Project Implementation 1. Provide training / awareness creation on business development and management including financial accounting to EG and VRDC leaders / capable members to promote more income generation activities 2. Conduct experience sharing workshops with the participation of both sub-programme unit staff. Potential areas include (i) matching grant delivery and training; (ii) internal lending in EGs and VRDCs; (iii) provision of second matching grants for intervention worthy beneficiaries Outputs: Component 1 3. Non-audited EGs, SCG, and VRDCs should be audited and appropriate support should be provided to address the audit concern if there are any. 4. Conduct another round of EG and VRDC maturity assessment, this time covering all registered and those on process for registration by the last quarter of 2015 using the CIMAT (Attachement 1). 5. Infrastructure handing over should be facilitated by preparing a detailed list of roads with all required information. Since IFAD loan funds cannot be provided as a maintenance fund of roads, SPEnDP should explore the possibility of using the counterpart funds for the purpose. Case should be presented to the District Coordinating Committee. 6. Tea and rubber areas serviced by SPEnDP roads should be compiled by each road and include in the 2015 progress report. Outputs: Component 2 7. Conduct a complete enumeration of replanted tea through EGs for an accurate assesment of area, yields & incomes from tea and intercrops. 8. Develop a programme to address the knowledge gap of beneficiaries imparting skills to detect diseases in own field 9. Design and implement at field level a comprehensive consolidating sustainability programme with the focus of sustaining the achieved rubber extent. 10. Conduct a complete enumeration of 2008 and 2009 plantations with the help of VRDC members and animators focusing on actual tapping and other bottlenecks. Issues Start Aug 2015 Start Aug 2015 Start in July 2015 Start in July 2015 Start in August 2015 Start in July 2015 Nov August 2015 July 2015 onwards Nov SP-Units of both subprogrammes NPCU S-PMU, Kandy & Moneragala S-PMU, Kandy & Moneragala S-PMU, Kandy & Moneragala S-PMU, Kandy & Moneragala MC S-PMU MC S-PMU S-PMU, S-PMU, There is experience in undertaking the same and the programme will continue 29

36 Appendix 3: Summary of key actions to be taken within agreed timeframes Outputs: Component 3: should be notified to RDD to seek solutions. 11. Train all beneficiaries on rubber tapping during mid 2015-mid As an institutional support a sufficient number of wooden cupboards to securely keep all 9514 beneficiary files, a laptop computer, a laser printer for RD/RDD Moneragala, and for eight rubber development zones, 8 desktop computers to the RDD office Moneragala and Rs 3 million annualy to cover incremental cost of administration for the office work. 13. Cost support to boundry marking the forest buffer zone by FD 14. Develop a suitable business model to run the spice processing centre as a profit making venture but protecting the member suppliers interests. 15. Spaced out implementation of 26 small rubber processing centers three in Badalkumbura first and then conduct a feasibility study in mid-august 2015 to assese the situation and continue thereafter. 16. Programme field officers including animators should be given training and exposure on dairy development, in particular about AP&H services and prevailing market conditions 17. Revised the agreement between the VRDC and the collector as to running the fruits and vegitable collection centre to make it more advantages for the VRDC and the member suppliers. 18. Include product labelling and good manufacturing practices (food safety, hygiene, health safety of workers) in the training of micro enterprises in the food and beverages industry Start July 15 August 2015 July 2015 May 2015 Start from May 2015 May 2015 S-PMU S-PMU, NCS, RDD FD, NCS MS and MC S-PM MCs and S-PMs CS/MS and Mon. S-PM Immediately Component 1 and 3 Heads 30

37 Appendix 4: Physical Progress Measured against AWP&B Appendix 4: Physical progress measured against AWP&B, including RIMS indicators - Mid Country (2014) Sub Component/ Output Project Indicator RIMS Indicator AWPB Actual % Unit Component-1: Community Development and Strengthening of Grassroots Institutions Period: to Cumulative Actual ( ) Appraisal/ Revised/ Target % Community groups formed Number People in community groups formed (Gender disaggregated) Number (M/F) Male & Female in EG M 56/F 25 M 5327/F 3118 Output 1.1 Communities mobilized & EGs & S&Cs operate successfully Community groups with women leadership Positions Number Matching grants Disbursed Number (of IGAs) People train in Income Generating Activities (IGAs) (Gender disaggregated) Number 800 M259/F M 721/F585 Output 1.2 Saving & credit schemes introduced & implemented People trained in Community mgt topics (Gender disaggregated) Number 750 M360/F M 1390/F S&C groups registered No of Voluntary savers (Gender desegregated basis) Number (M/F) M 10/F2344 M 10/F Value of savings accounts opened and maintained Value of voluntary savings Rs.Mn Male & female in groups % M 0/F100 M 0/F100 M 0/F100 0/ Community groups with women leadership Positions Number No of Producers (M/F) Number activity under output 1.3 not yet done Output 1.4 Social harmony established in the community 1.Programmes focusing on enhancing social harmony conducted Number( M/F) 10 9(M249/F406) 90 56(M948/F1422) 2. Collective activities by the community and participation on such programmers (M/F) Number (M/F) 363(M935/F1404) Roads constructed/ rehabilitated number/km 80/8 km 86/8.6 km /38.5 km km Output 1.5 Targeted village infrastructure developed Other infrastructure facilities constructed or rehabilitated (priority Investments) Number 10 water projects, 2 com Halls Component 2 - Out growers & Diversification Development Output 2.1 Output 2.2 Crop combinations are identified and established Land user rights are established to facilitate cultivation 2. Perception of the community on utility (quality) (M/F) Group managing infrastructure formed & or strengthened Number No of farmers & extent seedling tea replanted with VP tea Number/Ha 330/33 400/ / HA Land under Improved management practices Number/Ha 1500/ No of farmers & extent tea intercropped with other crops farmers/ha 1 600/ / HA Nb of farmers & extent vegetable/fruits cultivated Ha Ha Land plots surveyed for regularization 2. Extent of land holdings on which ownership is regularized/ No of deeds prepared Number (of Plots) Ha/ deeds (M/F) deeds

38 Appendix 4: Physical Progress Measured against AWP&B Component 3 - Processing value addition and marketing Output 3.1 Output 3.2 Output 3.3 Output 4.1 Sub Component/ Output Project Indicator RIMS Indicator AWPB Actual % Unit Period: to Value addition systems established 1. Value addition systems established Number 4 3 Favorable market linkages established Group members acquire adequate technical & management skills PFI s/beneficiaries aware and willing to implement loan schemes Cumulative Actual ( ) People trained in production, processing & marketing (M/F) Number 400 M 97 /F M250/F / Marketing groups formed and /or strengthened Number Market channels formed Number People trained in business & entrepreneurship (M/F) Number 360 M133/F146 M490/F Staff of financial institutions trained (M/F) Number M150/F5 M320/F Financial institutions participating in the project Number Active borrowers (M/F) Number M192/F132 M692/F375 Appraisal/ Revised/ Target % Output 4.2 Loan monitoring scheme established & implemented 1. Stipulated reports received from PFI s in time Number Reports received from Animators in time Number Component 5: Programme Management Output 5.1 Output 5.2 Output 5.3 Output 5.4 Output 5.5 Required staff recruited & employed 1. Staff in position filled Number Programmers staff knowledge & skill updated Operational and Financial guide lines prepared and institutionalized AWPB & Procurement Plan prepared & activated timely Monitoring & evaluation system established & operational 2. training programmes/workshops attended by staff Number Manuals Guide lines available Number 3 1. Funds received on requisition Rs.Mil Funds disbursed as per AWPB Rs.Mil M & E plan available available Progress review meeting held as scheduled Meetings Progress reports submitted in time reports

39 Appendix 4: Physical Progress Measured against AWP&B Physical progress measured against AWP&B, including RIMS indicators - Moneragala (2014) Sub - component / output Project Indicators RIMS Indicators Unit AWPB (2014) Actual (2014) % Cumulative Actual Appraisal Revised Target % Component 1: Community Development and Sytengthening of Grassroots Institutions Period: to Community groups formed Number % % Output 1.1 Communities mobilized & grassroots level CBOs operate successfully People in community groups formed (Gender disagregated) Number (M/F) T,159 M,99 F 86% T, 61.6% M,38.4 % F 9514 T, 7064 M, 2450 F Community groups with women leadership positions Number % People trained in Community mgt topics (Gender disaggregated) Number T,336- M,172-F 51% 843-T,578- M,265-F %T, 74 % M, 26 % F People train in Income Generating Activities Number T,531- M,255-F 87% 1176-T,767- M,409-F Output 1.5 Output 1.6 Output 1.7 Social Harmony established in the community Targeted Village Infrastructure developed Community groups made aware of successfully oparation 1. Programmes / Activities conducted Number % 2. Total No of Participation on such Programmes Component 2: Out growers & Diversification Development Number % Roads costructed/ rehabilitated Km % Exposure Visits Number % 8 2. Participant in exposure visits Number % Farmers practiced the improved crop models Land under improved management practices(only Rehabilitation& infilling lands in 2014) Number % % Ha % % Output 2.1 Crop models and farm plans developed and utilized Rubber monocrop Ha % % Rubber with Cocoa Ha % Rubber + Fruits Ha % 131 Rubber + Maize (cash crops) Ha % 1285 Rubber + Medicinal Plants ( Thippili and Bin Kohomba) Ha % 9.5 Output 2.2 Supplied Planting materials are well Managed 1. Rubber plants survived after one year of planting (monocrop) 2. Intercropping plants survived after one year Number % % Number % Output 2.3 Extension Services of the Line agencies are strengthened 1. Subcidy instatment visits by RDD Number % No of training programmes conducted by line agencies 1.2 People trained in crop production practies and technologies Number % Number %

40 Appendix 4: Physical Progress Measured against AWP&B Sub - component / output Project Indicators RIMS Indicators Unit AWPB (2014) Actual (2014) % Cumulative Actual Appraisal Revised Target % Period: to Component 3 - Processing Value Addition and Marketing 1.4 Market, storage, Processing facilities constructed/ rehabilitation Number % % Output 3.1 Potencial Value addition systems established 1. Benificiries benefitted through sustainable marketing linkages 2. Persons (M/F) out of total traineses engaged in Processing & markrerting Number % Number T, M,121- F 98 % T, 75 %M, 25 %F 1395 T,1014 M, 381 F Output 3.2 Small are able to commence/ established livestock/ agro based & non agro based product 1. Livestock/ agro based & non agro based units established though matching grants Number % 994 Output 3.3 Favorable market linkages established People trained in post- production, processing and marketing Number % Marketig linkages established Number % Marketing groups formed and /or strenthened Number % 30 Output 3.4 Potencial beneficiries groups are identified and trained for group acquired business activities Protencial beneficiries trained (M/F) Number People trained in livestock production practices and technologies Number T, 266 M, 178 F 430 -T,308- M,122-F 98% % 873-T,704 - M,169-F 1000 Component 4 - Rural Financing & Credit Output 4.1 PFIs/ Beneficiaries aware and willing to implement loan schemes 1. Proposal accepted by PFIs Number % % Financial Institution participated in the Project Number % 2. Burrowers (M/F) Number % % Total amount of loan disbursed Rs.Mn % % Component 5 - Programme Management Output 5.1 Output 5.2 Output 5.3 Output 5.4 Output 5.5 Required staff recruited & employed Programme staff knowledge & skill updated Operational and Financial guode lines prepared and institutionalezed AWPB & Procurement Plan prepared & activated timely Monitoring & evaluation system established & operational 1. Staff in possition filled Number % % 1. Training programmes/ workshops atended by staff Number % % 1. Manuals Guide lines available Number % 3 1. Funds received on requisition Rs.Mn % % 1. Funds disbursed as per AWPB(project office) Rs.Mn % % 1.M&E plan available Available % 2. Progress riview meetings held as schedule Number % Progress report submitted in time Number % 97 34

41 Appendix 5: Financial Performance Appendix 5: Financial: Actual financial performance by financier; by component and disbursements by category. Table 5A: Financial performance by financier as at Approval Disbursements Per cent disbursed Financier (USD 000) (USD 000) IFAD loan 22, , % Government 3, , % Financial Institutions * % Beneficiary 1, , % Total 28, , % Note: USD 1 = LKR is actual average exchange rate of IFAD Loan disbursement, this rate is taken to convert equivalent USD of other financing sources. USD1 = 131taken for 2015 expenditure. * Financial Institution s original contribution of USD 1905 has now been revised to USD 961 proportionate to the revised credit component of SDR 2,600 wef. Sept, Ratio is IFAD 80 and PFI 20. SDR 1 = Table 5B: Financial performance by financier by component (USD 000) as at IFAD loan Government Financial Institutions (PFIs) Domestic 1 (Beneficiary) Total Component Approval Actual % Approval Actual % Approval Actual % Approv al Actual % Approv al Actual % 1. Community Dev.& 1, , ,750.0 Grassroots Institutions 4, , % % % 7 4, % 2. Out Growers and Diversification Development 11, , % % - 12, , % 3. Processing and Marketing 1, % % - 1, % Rural Financing & Credit 3, , % % , % 5. Programme Management 1, , % 2, , % - - 4, , % Total 22, , % 3, , % % 1, , % 28, , % Note: USD 1 = LKR is actual average exchange rate of IFAD Loan disbursement, this rate is taken to convert equivalent USD of other financing sources. SDR 1 =

42 Appendix 5: Financial Performance Table 5 C: IFAD loan disbursement (SDR) as at and projected disbursements as at the end of 2015 Category Category description Original Allocation Revised Allocation Disbursement up to Available Balance (3-4) % Disburs ed Disburs ements 2015 Pending disburse ment of 2015 Disbursem ents up to end of April,2015i ncluding Pending Projected expenditures of 2015(Balance 8 months of AWPB) Projected disburseme nt as at Projected Balance as at (3-11) Projected % disbursem ent as at I Civil Works 1,650, ,780, ,335, ,809 75% 6,134 19,779 1,361, ,594 1,682,698 97,302 95% II Vehicles 141, , ,695 (1695) 101% 11, , ,754 (13,754) 111% III Equipment and Goods 106, , , ,883 35% 1,933 4, ,097 87, , ,671 63% IV Training & Workshop 873, , , ,248 61% 5,924 10, ,215 77, , ,256 78% V VI Technical Assistance and Studies Service Provider Contracts 224, , ,653 94,347 53% ,653 35, ,095 58,905 71% 135, , , ,940 38% 1,632 10, ,978 82, , ,287 54% VII Agricultural Inputs 230, , ,103, ,711 84% 7,148 4,612 2,115, ,683 2,251, ,268 90% VIII Subsidies and Matching Grants 7,421, ,600, ,289,646 2,310,354 59% 41,268 54,160 3,385, ,997 3,876,071 1,723,929 69% IX Credit 1,750, ,600, ,904, ,390 73% 63, ,842 2,091, ,954 2,248, ,020 86% X Salaries & Allowances 880, , , ,338 85% 16,933 16, ,388 66, ,385 4,615 99% XI Operation & Maintenance Unallocated 1,500, , , ,491 58,509 77% 2,082 1, ,254 49, ,368 5,632 98% Sub Total 15,250, ,250, ,339,166 4,910,834 68% 158, ,739 10,742,384 1,506,515 12,248,869 3,001,131 80% Initial deposit (1,306,779.57) 948, (948,946.68) % 948, (948,946.68) 100% Total 15,250, ,250, Note: Exchange rate for: USD 1= LKR 131 and 1 SDR=USD Excluding initial advance of SDR 948,

43 Appendix 5: Financial Performance Figure 1 Projected loan disbursement as at the end of 2015 against revised allocation Revised Allocation Projected disbursement