FINANCING AGREEMENT no.832-md 2011 ANNUAL REPORT

Transcription

1 MINISTERUL AGRICULTURII ŞI INDUSTRIEI ALIMENTARE AL REPUBLICII MOLDOVA MINISTRY OF AGRICULTURE AND FOOD INDUSTRY OF THE REPUBLIC OF MOLDOVA UNITATEA CONSOLIDATĂ PENTRU IMPLEMENTAREA PROGRAMELOR IFAD THE CONSOLIDATED UNIT FOR THE IMPLEMENTATION OF IFAD PROGRAMMES RURAL FINANCIAL SERVICES AND AGRIBUSINESS DEVELOPMENT PROJECT FINANCING AGREEMENT no.832-md 2011 ANNUAL REPORT Elaborated by: CONSOLIDATED UNIT FOR THE IMPLEMENTATION OF IFAD PROGRAMMES IN MOLDOVA CHISINAU,

2 TABLE OF CONTENTS: PAGE 1. INTRODUCTION 4 2. PROJECT PERFORMANCE EVOLUTION: PHYSICAL AND FINANCIAL PROGRESS Launch of the project and awareness complain Financial Progress Summary Physical/Technical Progress Summary Component 1: Pro-Poor Agribusiness Development Component 2: Rural Financial Services Component 3: Small-Scale Rural Infrastructure Component 4: Programme Management CONCLUSIONS AND LESSONS LEARNED 16 2

3 ABBREVIATIONS AND ACRONYMS AWPB BP CLD CPIU CPIU-IFAD DANIDA FAO FI FY GoM IFAD IPSC LLC MAFI MFI PB PFIs PIM PY RFSADP SAUM SLA SME SPs UNDP USAID YA Annual Work Plan and Budget Business Plan Credit Line Directorate The Consolidated Unit for the Implementation of IFAD Programmes The Consolidated Unit for the Implementation of IFAD Programmes Danish International Development Agency Food and Agriculture Organization Financial Institution Fiscal year Government of the Republic of Moldova International Fund for Agricultural Development Implementation Project Steering Committee Limited Liability Company Ministry of Agriculture and Food Industry Micro financing institutions Project beneficiaries Participating Financial Institutions Project implementation manual Project year Rural Financial Services and Agribusiness Development Project State Agrarian University of Moldova Subsidiary Loan Agreement Small and medium enterprises Service providers United Nations Development Program United State Agency for International Development Youth entrepreneurs 3

4 1. INTRODUCTION 1. The annual report has been developed by the CPIU IFAD in accordance with the General Conditions for Agricultural Development Financing, article VIII, section 8.03 (Progress Report and Mid-Term Reviews) of the Loan Agreement no.l-i-832-md, Grant No. G-I-C-832-MD and Financing Agreement Grant No.C-DE-832-MD. The progress report reflects the evolution of the programme s implementation performance achieved during 2011, the first PY, starting from July (when the Project has been launched) up to the end of December. The report reflects activities implemented and action taken by CPIU-IFAD in the first six month of the project implementation, compared to the planned activities from 2011 AWPB. The progress report address quantitative and qualitative progress made in implementation of the Project; problems and constrains encountered during the reporting period; steps taken by the CPIU-IFAD to eliminate the problems or barriers for successful implementation of the Project and it includes lessons learned and recommendations feed into, to inform and shape the IFAD. 2. Rural Financial Services and Agribusiness Development Project, the fifth IFAD programme in Moldova, became effective on 04 July 2011 and would be implemented during 60 months period. For the implementation of overall Project s activities, IFAD has allocated USD 19.8 million, including USD 19.3 million as loan and USD 0.5 million as grant. 3. The goal of RFSADP is to contribute to reduction of rural income poverty in Moldova. 4. The Project s objectives are: (i) To improve in a pro-poor manner the efficiency of agriculture-related value chains, particularly through support to the introduction and establishment of internationally-recognized quality and foodsafety standards and support to the development of contract farming; (ii) To increase the access of poor rural people to credit through support to appropriate, affordable, rural financial instruments; (iii) To alleviate or remove infrastructural bottlenecks to improving the assets and incomes of poor rural people. 5. The RFSADP s activities are implemented through four main components: (i) Pro-Poor Agribusiness Development will support and target rural people through linking them more profitably, either as producers, small or medium entrepreneurs or employees to agricultural high-value commodity chains; (ii) Rural Financial Services will contribute to alleviating the problems of lack of access to financing through: (i) longer term financing of SME investments in agricultural value chains supported by RFSADP; (ii) medium to longer term financing of young entrepreneurs investments in agricultural value chains; (iii) short to medium term financing of rural microenterprises investments in productive assets and working capital for such enterprises. (iii) Small-Scale Rural Infrastructure will contribute to removing infrastructure bottlenecks which inhibit the participation of poor commercially/market-oriented small farmers and economically active rural poor in Project-prioritized value chains and consequently their access to the corresponding benefits. (iv) Project Management will finance the operations of CPIU in performing it responsibilities concerning the RFSADP implementation. 6. Each component includes specific activities, which details actions and interventions taken to achieve the goal and objectives of the project. It is to mention that the progress report refers only to the events and achievements within components and sub-components which were in actions in reporting period. 4

5 2. PROJECT PERFORMANCE EVOLUTION: PHYSICAL AND FINANCIAL PROGRESS 2.1. Launch of the project and awareness campaign. 7. The first PY cover period 04 July-31st December 2012 and in the reporting period most of the actions and activities were focused on project promotion, awareness campaign, selecting service providers, evaluating and approval of the PFI, preparation and signing of agreements with partners for further project implementation. 8. On 14th of July 2011 a Start-up workshop has been held in Chisinau, on which participated 124 persons, including representatives of GoM, USAID, UNDP, FAO, PFIs, service providers for technical assistance, representatives of SME s, representatives of producer groups and producer associations, research institutes and educational institutions, local authorities, beneficiaries of the early implemented IFAD programs in Moldova and representative of mass media. Fig.1 RFSADP Start-up workshop 9. The CPIU-IFAD has developed PIM for implementation of RFSADP which was presented for approval at the IPSC and got no-objection from IFAD. Suggestions for improvement and objections provided by IPSC member and IFAD were taken in consideration and have been included in the final version of the PIM. 10. In 2011 the CPIU-IFAD staff has participated and delivered Power Point presentations at 24 seminars and meetings with agriculture producers on conditions for the implementation of the new launched RFSADP. Were developed and printed 2000 leaflets and 500 brochures which were distributed with in the country for promotion of the new Project. 11.In 2011 CPIU twice has participated in national TV program Bastina (45 min each) for agriculture producers disseminating information on current IFAD programs in Moldova and financing opportunities for SMEs and agribusiness sector within RFSADP. Four news programs has provided information on launching of new IFAD Project in Moldova, four articles about new Project and financial opportunities for agricultural producers were published in Curierul Agricol and AGROmediainform newspapers. Fig.2. Project promoting through seminars in regions 5

6 12. Over 1500 consultations and assistance were provided by phone to the request of the potential RFSADP clients. Fig.3 National TV channel interviewing IFAD beneficiaries 13. In September CPIU has organized a round table meeting with representatives of all financial institutions which have been approved as partner institutions, for information and training on implementation of financial component of RFSADP. Similar meetings have been organized with technical assistance service providers. In October 2011 were signed SLA with all PFIs. 14. All above described actions would serve as a good platform for successful implementation of the RFSADP during the next years. 6

7 2.2 Financial Progress Summary. 15. According the AWPB, the total budget for six month of 2011 to support implementation of the activities in all four components of the project mounted to USD thousands. Out of it USD thousands have been allocated by IFAD as loan resources according to the Loan Agreement No.L-I-832-MD, Grant No.G-I-C-832- MD, and USD thousands have been allocated from DANIDA grant according to the Financing Agreement Grant No.C-DE-832-MD. 16. Estimated contribution of the Government of Republic of Moldova for reporting period was USD 18.2 thousands, the loan beneficiaries contribution mounted to USD thousands and USD thousands represents PFIs own sources for SMEs development. As per AWPB the loan share res[pecsented 94.5% from IFAD allocation for the reporting period and 5.6% IFAD grant. 17. During the first PY under the Project s components have been disbursed only 31.3% of IFAD budgeted resources planed for the given year (see table 1). Table 1: IFAD proceeds by component of the project (USD 000) Component I. Pro-Poor Agribusiness Development II. Rural Financial Services III. Small-Scale Rural Infrastructure Plan Actual Actual / Plan, % Loan Grant Total Loan Grant Total Loan Grant Total ,0 0,0 0, IV. Project Management Total Share 94.4% 5.6% 100% 100% 0% 100% 100% 0% 100% 18. All costs related to the reported period have been covered from IFAD loan, and mostly refers financing provided under Rural Financial Services component. No costs have been covered from IFAD grant. The biggest part of the grant allocation (USD 60.0 thousands) for 2011 was designated to initiate development of Agribusiness Equity Fund. In 2011 CPIU-IFAD have started actions for development of the Agribusiness Equity Fund, which included preparation of information note ref. Agribusiness Equity Fund concept addressed to the potential investors in the fund, preparation in invitation letters to the potential investors to participate in cofinancing the Agribusiness Equity Fund and assistance provided to the MAFI to launch call to potential investors to express interest in rising fund. MAFI has sent letters to 12 international organizations and agencies inviting to join IFAD in setting Agribusiness Equity Fund. ToRs for international expert in Agribusiness Equity Fund Development have been prepared, but due to the fact of short time left by the end of the year and leak of interest of international donors/investors to participate in co-financing fund, this activity was postpone for In 2011 USD 30.6 thousands has been disbursed from DANIDA grant, which represents 15% of the annual allocations (see table 2). Table 2: DANIDA grant realization in 2011 (USD 000) Component DANIDA Grant Plan Actual Actual/Plan II. Rural Financial Services ,6 15.0% 7

8 20. Local partners for project implementation have co-financed the undertaken activities with USD thousands, which match 1:1 with IFAD investments in 2011, and at the same time being estimated as 120% of AWPB figure. GoM s participation in co-financing project activities has mounted USD 1.5 thousands. Project beneficiaries have invested USD thousands, while PFIs USD 79.0 thousands as own contribution to the enterprises development (see table 3). Table 3: Co-financing proceeds by component of the project (USD 000) Component I. Pro-Poor Agribusiness Development Plan Actual Actual / Plan, % GRM PB PFIs GRM PB PFIs GRM PB PFIs II. Rural Financial Services , III. Small-Scale Rural Infrastructure IV. Project Management Total During the first PY, 97% of expenditure from the IFAD available resources have been disbursed under the category of expenditures Rural Finance (see table 4 and more details in annex 1). Table 4: IFAD proceeds by category of expenditures (USD 000) Category Plan Actual Actual / Plan, % Loan Grant Total Loan Grant Total Loan Grant Total I. Rural Finance II. Civil Works III. Goods IV. Technical assistance, training and studies V. Recurrent costs Total The disbursement of funds during the initiating of the project in the first PY 2011 was below the estimated plan and can be explained by the following: i. The RFSADP was announced effective on July 4 th 2011 and the AWPB included period July-Dec.2011, but the SLA s with PFI were signed in only in Oct Development and approval of procedures took rather long time, which did not make possible disbursement as it was plan. The CPIU-IFAD, when developing the AWPB it was too optimistic referring time for procedures of launching and starting implementation of project activities. ii. The SLAs were signed in Oct.2011, but PFI could not yet start disbursement, due to bank internal requirements for approval of conditions for financing in the new project by the Credit Board of the bank which took about one month more. Some branches of the banks even in December did not have conditions for disbursement of loans from RFSADP. 23. In the reporting period the CPIU has taken measures and interventions in order to eliminate constrains and to improve disbursement of loans. As a result in December 2011 and beginning of 2012 the RFSADP made significant progress, which insures coverage of the missed opportunities in initiation stage of the project. 8

9 2.3. Physical Progress Summary. 24. During the reporting period in 2011, under each of the Project s components have been implemented a range of activities as further described Component 1: Pro-Poor Agribusiness Development. 25. The component aims at support of the integrated development of Moldovan horticulture value chain for reduction of rural poverty. Its main objective is to increase participation and employment of the rural poor in income increasing activities arising directly and indirectly from an improved horticulture value chain. 26. There is no cost in 2011 for activities planned in the component: Pro-Poor Agribusiness Development and Small-Scale Rural Infrastructure. Activities in these components started in 2011 and will be completed in 2012 and respectively costs will be covered in Component 2: Rural Financial Services. 27. Selection of partners for project implementation. Given the fact that 2011 is the first Project Year, for the implementation of loan activity under sub-component 2(a) and 2(b), CPIU-IFAD has called the local financial institutions to apply for participation as PFIs in the implementation of Project activities. In order to be selected and approved as Participating Financial Institution (PFI) an intermediary for IFAD loan proceeds (Rural Financial Services and Agribusiness Development Project -IFAD V), a local commercial bank shall continuously comply with the eligibility criteria established under the Project and approved by the IPSC. 28. According to the criteria the bank must have a significant geographic coverage throughout Moldova, and operations in rural areas and is interested and committed to serving the target groups who may become beneficiaries of the Project in rural areas small and medium enterprises and young entrepreneurs. A total number of nine commercial banks and two Microfinance institutions had submitted their intention to participate on implementation of the Project (see table 4). Table 4: Evaluation of FIs geographic coverage and financing of activities rural agribusiness Commercial banks Serving the target groups - rural agribusiness SMEs, YEs Loans granted to agri-sector to total loan portfolio, % IFAD loans to total agri-sector loan portfolio, % Number of branches in rural area 1 Moldova Agroindbank 14,5 2, Moldindconbank 5, Energbank 20,1 4, Victoriabank 3,9 1, Mobias Banca 2,5 0, Unibank 5,6-6 7 Banca Sociala 10,9 1, FinComBank 3,6 17, BCR 0 10 CFR 214 AEÎ 11 Microinvest 61 AEÎ 29. When evaluating the financial institutions it has been taken in consideration other important criteria as: financial statements of the last 3 FYs and return of equity for the previous year of activity ( see table 5). Three commercial banks FinComBank, Unibank and Banka Comerciala Romana had negative financial statements for 9

10 the last three FY: -14.5, and respectively. One MFI Microinvest also showed negative financial statements for the same period. Financial institutions Table 5: PFIs financial indicators compliance with eligibility criteria Satisfactory financial statements Average, , quarter II Positive return on equity, 2010 Moldova Agroindbank 285,9 104,6 259, ,4 17,23 Moldindconbank 87,2 20,5 51,4 + 55,6 8,64 Energbank 45,1 7,8 15,7 + 13,8 6,28 Victoriabank 255,7 65,5 191,7 + 77,9 23,14 Mobias Banca 73,4 13,9 29,0 + 31,3 4,43 Banca Sociala 60,5 31,8 56,2 + 15,6 12,2 FinComBank 60,7 5,8-83,8-14,5 19,3-24,94 Unibank 20,8-45,3 19,0-5,4 9,0 11,2 Banca Comerciala Romana 18,7-326,3-190,9-498,5 0,1-120,92 Rural Finance Corporation 18,5 10,5 5,7 + 3,3 6,64 Microinvest 3,7-13,6-15,8-25,6-1,4 q.i -14,7 30. The following Financial Institutions who comply with the overall eligibility criteria were approved by IPSC for participation in the RFSADP implementation: CB Moldova Agroindbank SA; CB Moldindconbank SA; CB Energbank SA; CB Victoriabank SA; CB Mobias Banca SA, CB Banca Sociala SA; CB Unibank SA. Rural Financial Corporation was not approved by the IPSC, unless it had shown positive financial statements. Member of the IPSC has suggested applying additional eligible criteria for MFI when evaluating next time. 31. To note that any time any FI can apply for participation and can be approved if the eligibility criteria are met. 32. Applied methodology and Interest Rates for loans disbursement. In July, 2011 at IPSC meeting it was approved the (PFIs), established the methodology for calculation of both Reference and Interest Rates for loans to be disbursed under the Project to PFIs and PFIs margin to be added to reference rate and applied for Project beneficiaries. The approved formula for calculation is the following: i) The Reference Rates for loans denominated in MDL (floating rate) it is calculated based on the Basic Rate of the National Bank of Moldova BR (NBM) for long-term loans (over 5 years). ii) iii) The Reference Rates for loans denominated in USD (floating rate) equal to LIBOR for loans in USD within 6 months, but not less than 0,75%, The Reference Rates for loans denominated in EUR (floating rate) equal to LIBOR for loans in EURO within 6 months, but not less than 0,75%. 33. In the process of negotiation of Subsidiary Loan Agreement and establishment of costs of funds CPIU ask the Financial Institutions that submitted their intention to participate in the Project to bid on the costs for loans administration. Based on the offers submitted by the PFIs and demand for loans on the local financial market, it was proposed to establish the PFIs margin that shall not exceed 4% for loans in MDL, USD and Euro 10

11 for loans provided to SME and MFI. The PFIs margin for loans provided to youth entrepreneurs shall not exceed 3.5% for loans in MDL. 34. Technical Assistance and Training. Based a national competitive bidding process CPIU has selected and approved nine Service Providers, who will provide necessary assistance to potential Project beneficiaries in business plan development, and namely: i) Avensa Consulting LTD ii) National Agency for Rural Development ACSA iii) Moldova Microfinantare Aliance iv) Bis Group LTD, v) Pro Consulting LTD vi) Business Advisiory Center (CCA), vii) National Federation AGROinform, viii) DumitGrup LTD ix) Moldauditing LTD x) IFC Grup LTD 35. During 2011 SPs received a total number of 60 applications for Business Plan development. As the Subsidiary Loan Agreement between the PFIs and Ministry of Finance was signed in October 2011, the collaboration of SPs and PFIs branches started in the second half of October, when most of the PFIs branches have received the Project conditions. By the end of the year 23 Business Plans for SME and other 41 BP for YA were in process of elaboration. Only one BP was approved and finance in 2011, other will be financed in early 2012 (see table 6). Beneficiaries Table 6: Supported beneficiaries for business plan development as 2011 end plan Number of BP developed actual In process of developm ent IFAD cost for BP development PB cost for BP development Total cost SMEs business plan support Young entrepreneurs business plan support Micro entrepreneurs business plan support plan actual Total In order to increase the skills for running a small rural based enterprise, it has been planned to initiate training for prospective young entrepreneurs in the first PY. For the implementation of this activity during 2011 it has been estimated to use an amount of USD 1.5 thousand from IFAD grant and USD 3.5 thousand from Danish grant for organizing 10 days courses in business management, accounting, planning and related aspects for about 35 youth entrepreneurs. 37. CPIU has developed the TORs for selection of interested companies to participate in implementation of training activity for youth entrepreneurs. In December 2011 the Selection Committee has approved the State Agrarian University of Moldova to conduct this activity. Training activity for youth entrepreneurs starts in January 2012 and will run through the year. plan actual plan actual 11

12 38. Rural financial services provided. In 2011 CPIU has provided 7 loans for rural agriculture development, including 4 loans for SMEs and 3 loans for YA for a total value of USD thousands, out of which USD 30.6 thousands have been provided from DANIDA fund. 39. Four loans were provided for launching new business and three for expending of existing business, which is about 75% of total loans amount disbursed (see table 7). Destination of the investment Table 7: Financed investment project by scope and sources of funds Number of loans SMEs YA IFAD loan Loan amount, (USD 000) DANIDA grant Total, IFAD investment, ( 000) % of total loan amount 1 Launching of new business ,2 30,6 102, Diversification of activities ,0 0, Expanding of existing business ,7 0,0 304, Total ,9 30,6 407, Over 73% of the investment loans were provided for new and acting enterprises which were registered from 1 to 5 years ago. That indicates on still big demands on investments for developing businesses and of new launched agriculture entities in rural area (see table 8). Table 8: Classification of financed enterprises, by period of activity PY Period of activity, years Number Loan amount, % of loan amount enterprises ( 000 USD) new enterprises 4 102,8 25,2% > than 1 year to 5 year 2 221,7 58,8% > than 5 year to 10 year 1 83,0 22,0% > than 10 year 0 0,0 0,0% Total 7 407,5 100,0% 41. There was not a significant difference between enterprises which got IFAD loans based on legal form of entity: 2 loans - Peasant Farm, 2 loans - Individual Enterprises, and 3 loans LLCs. Peasant Farm and Individual Enterprises have used about 25% of the investment loans provided in The biggest part of the loan amounts were provided to LLCs (see table 9). Table 9: Classification of financed enterprises, by legal organizational form Legal form of entity PY 1 / 2011 Number of Loan amount ( 000 % of loan enterprises USD) amount SCA member 0 0,0 0,0% Peasant Farm 2 62,0 15,2% Individual Enterprise 2 40,9 10,0% Limited Liability Company 3 304,7 74,8% Cooperatives 0 0,0 0,0% Joint Stock Company 0 0,0 0,0% Total 7 407,6 100% 12

13 42. As result of the implementation of RFSC activities in 2011 Project has obtained the following indicators: Indicators plan/actual SME financed with loans 7 / 4 Yung entrepreneurs financed with loans 25 / 3 SMEs supported with business plan 10 / 1 Young entrepreneurs supported with business plan 30 / 0 Youth entrepreneurs trained 35 / 0 IFAD loan amount to be disbursed, '000 USD / IFAD grant amount to be disbursed, '000 USD 10.0 / 0.2 Danish grant amount to be disbursed, '000 USD / 30.6 PFIs own resources attracted, '000 USD / Component 3: Small-Scale Rural Infrastructure. 43. The SSRI component aims at elimination of infrastructure bottlenecks which inhibit increasing participation of commercially oriented small farmers and SME. This component implies adjustment of competitive contributory grants for investment in public infrastructure to enable and enhance private sector investment and activities in rural areas. Being the first year of the project s implementation, the activities under SSRI had a starting nature, and included: I. Organization of information campaign CPIU has provided an information campaign through the mass media, meetings and seminars with agriculture producers as one of the most effective tools to raise awareness within the country about the opportunities for development of public infrastructure with CPIU-IFAD financial investments. A new Application Form for submission to the Pre-qualification stage of the infrastructure projects has been developed. It includes detailed information about the Group of Beneficiaries, justification of needs, confirmation of Local Administration on cooperation for construction of infrastructure in the community, declaration of contribution to the matching grant, etc. To facilitate large participation of agriculture producers to this component and to ensure an easier access to the application process, CPIU has placed on its web page: the Application Form, models of all the documents required for submission, eligible criteria and steps for submission and evaluation of applications ( 1. Call for applications - the announcement of the competitive grant awarding process was published in Curierul Agricol newspaper twice on 23 and 30 September 2011 and on webpage UCIP-IFAD ( 2. Collection of applications to be financed during 2012 the CPIU received 31 applications from interested potential group of agriculture beneficiaries. At the pre-qualification stage 20 applications have been rejected (13 after office evaluation and 7 after field visits), because the qualification criteria have not been met. Other 11 application were approved for qualification stage (see table 11). 13

14 Table 11: Evaluation results of the submitted application Evaluation stage Number of applications 1 Applications received for evaluation 31 2 Rejected at the pre-qualification stage - after office evaluation 13 3 Rejected at the pre-qualification stage after field visits 7 4 Approved for the qualification stage Provide necessary support in elaboration and preparation of investments proposals For 11 applications approved for admission to the qualification stage, the CPIU-IFAD has contracted technical experts who have developed preliminary budget cost, economic and technical justification of the projects. Fig.4 Field evaluation of infrastructure project, village Gurgulesti, Cahul 44. CPIU-IFAD sent to all early approved service providers for business plan development invitations to bid for elaboration of investment plans for infrastructure projects, deadline for bids submissions being CPIU-IFAD has received 5 bids: IFC Grup SRL, Agroinform, Centrul de Consultanta in Afaceri, SC Dumit Grup SRL and Avensa Consulting SRL. The winner company was selected Agroinform Component 4: Programme Management 45. In accordance to the Loan Agreement no.l-i-832-md, Grant No. G-I-C-832-MD and Financing Agreement Grant No.C-DE-832-MD the full management, coordination and responsibility for the project lies within the following institutions: The Ministry of Agriculture and Food Industry; The IFAD Programs Steering Committee; The Consolidated Unit for the Implementation of IFAD Programs in Moldova (CPIU-IFAD); The Credit Line Directorate for the administration of the revolving Village Agricultural Revitalization Fund 46. The Ministry of Agriculture and Food Industry has the overall responsibility for the project implementation. 14

15 47. The IFAD Programs Steering Committee, established by the Government Decree and chaired by the Minister of Agriculture and Food Industry, represents the body of approval of the overall IFAD-funded operations in the country. The main responsibilities thereof are as follows: approval of policies and strategies ; approval of the financial institutions participating (PFIs) under the project; review of methodology of calculation of the reference rate and approval of the PFIs margin; review and approval of the annual work plans and budgets, and review and approval of the progress reports. 48. In the reporting period July-Dec. 2011, the IFAD Programs Steering Committee has met twice. The first meeting was held on July 25 th 2011 with the following agenda: 1. Approval of the RFSADP 2011 AWPB (IFAD V). 2. Approval of the Participating Financial Institutions (PFIs) involved in the implementation of the RFSADP. 3. Establishment of methodology for calculation of both Reference and Interest Rates for loans to be disbursed under the RFSADP (IFAD V). 4. Approval of PFIs margin under the RFSADP (IFAD V). 5. Presentation of the RFSADP Project Implementation Manual (PIM), reporter Victor Roșca, director, CPIU-IFAD; 6. Miscellaneous. 49. The second meeting was held on Dec 06 th 2011 on which CPIU has presented for evaluation, discussion and approval of the AWPB for 2012, in the agenda this point was formulated as: Approval of the Rural Financial Services and Agribusiness Development Project 2012 AWPB (IFAD V). 50. The overall management of the project lies within the responsibility of the CPIU-IFAD, established by the Government Decree and specifications of the PIM, entrusted with responsibility for implementation activities coordination, including financial management (table 13). As of December 31 st, 2011 the CPIU-IFAD comprises 12 employees, including the CPIU director, 10 specialists in charge of on-going IFAD-funded projects implementation; and one driver. In the first PY salaries and allowances were paid from RFSADP budget only for two specialists: Procurement Specialist and M&E Assistant. Table 13: Expenditures for project management in 2011 ( 000USD) Expenditures Plan Actual % to plan Office Equipment and Furniture 5,0 6,2 124,0 Rural Women's Development Needs Assessment 2,5 0,0 0,0 Database Training Specialist 5,1 0,0 0,0 Base line study & Ad hoc national technical assistance on a need basis 15,0 0,0 0,0 Utilities 1,0 0,28 28,0 Communication 1,0 0,09 9,0 Banking Charges 3,0 0,0 0,0 Allowances for travel to project sites 2,7 0,0 0,0 Office maintenance, Office suppliers, other operational costs 20,5 0,0 0,0 CPIU: Salaries and Allowances 14,0 5,45 38,9 O&M of Vehicle 3,0 0,03 1,0 Total: 72,8 12,0 16,5 15

16 3. CONCLUSIONS AND LESSONS LEARNED 50. The reporting period includes period since the RFSADP was announce effective (4 July 2011) till the end of the FY (31 December 2011), but effective implementation of project activities started only on Oct.2011, thus the realization of the first PY budget it is only 33,2% from the plan. 51. In 2011 main actions of CPIU was focused on launching procedures and developing and approval working documentation, selecting implementation partners, promoting and providing awareness complain within the country, which will serve as a good platform for project implementation in the next years. 52. There is no cost in 2011 for activities planned in the component: Pro-Poor Agribusiness Development and Small-Scale Rural Infrastructure. Activities in these components started in 2011 and will be completed in 2012 and respectively costs will be covered in CPIU will take in consideration this lesson learned and in the future will be more realistic when planning activities and budgeting. 54. Activities which have not be implemented, due to the above mentioned reasons, and unspent amounts in 2011 will be redistributed and implemented in the next years. 16