Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) Report Number : ICRR0020223 1. Project Data Project ID Project Name P124091 SL: WAREHOUSE RECEIPTS FINANCING PROJECT Country Practice Area(Lead) Sri Lanka Finance & Markets L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) TF-12186 31-May-2015 6,500,000.00 Bank Approval Date Closing Date (Actual) 23-May-2012 31-Jul-2015 IBRD/IDA (USD) Grants (USD) Original Commitment 0.00 6,500,000.00 Revised Commitment 0.00 4,618,089.11 Actual 0.00 4,618,089.11 Sector(s) General finance sector(50%):SME Finance(25%):Microfinance(25%) Theme(s) Micro, Small and Medium Enterprise support(50%):Other Financial Sector Development(30%):Global food crisis response(20%) Prepared by Reviewed by ICR Review Coordinator Group Nestor Ntungwanayo Fernando Manibog Christopher David Nelson IEGSD (Unit 4) 2. Project Objectives and Components a. Objectives The Project Development Objective (PDO) of the pilot Warehousing Receipts Financing Project is "to provide access to farmers in the territory of the Recipient to quality storage facilities for agricultural products and to facilitate the use of such products as collateral to access financial services by developing an electronic and negotiable warehouse receipt financing program." [Grant Agreement (GA)], p.5. Three months before the project closing date (April 2015), a restructuring drastically scaled down key project outputs and targeted outcomes and added another activity, casting doubt on the possibility of achieving the originally stated objective. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) b. Were the project objectives/key associated outcome targets revised during implementation? No c. Components The project had five components as delineated below: Component 1: Establishment of Warehouses (US$4.5 million at appraisal, actual costs of US$4.54 million): This component was to provide farmers access to storage for crops in select project areas with surplus grain or pulses. Access to storage facilities would empower farmers to be able to sell their products at better market prices after the immediate post-harvest period when markets are flooded and prices are depressed. The component would also finance the development of a warehouse receipts mechanism and the necessary IT equipment and software. That would allow warehouse operators to issue electronic receipts to farmers, which they could in turn use as collateral for loans from commercial banks, thereby allowing the farmers to access funds to cover their immediate debts and to buy inputs for the next season. At the April 2015 restructuring, the Government requested to have a new activity added to Component 1 to finance the construction of 350 big onion (B-onion) domestic household-level warehouses in farmers’ homesteads. The Government's request was granted and formally approved, and this activity was equally co-financed by the Grant and the beneficiary farmers. Component 2: Product Development (US$0.80 million at appraisal, but the component was later cancelled): This component was to support the development of insurance products to back the Agricultural Commodity Warehouse Receipts System (ACWRS) and to mitigate weather risks for high-value agricultural products and livestock for farmers. The implementation of this component was to involve liaising with International Finance Corporation (IFC), which was already involved in supporting the piloting of weather index-based insurance in other parts of the country, to expand to the locations where the warehouses were to be established. Component 3: Capacity Building, Technical Assistance, and Awareness Creation (US$0.45 million at appraisal, actual costs of US$0.01 million): This component was to support training, capacity building, TA, and knowledge dissemination among stakeholders about the warehouse receipts mechanism. The component was also to support the development of relevant laws to transform the negotiable financial instrument into one that was tradable. The component was also to develop a communications strategy including development of promotional materials and dissemination of information through electronic media and print media, including promotional workshops based on identification of stakeholder awareness needs. Component 4: Monitoring and Evaluation (US$0.25 million at appraisal, actual cost of US$0.02 million): This component was to support the carrying out of a baseline survey; annual field-based monitoring mechanisms; and impact assessments during implementation. Component 5: Project Management (US$0.50 million at appraisal, actual cost of US$0.05 million): This component was to support the project planning, monitoring and evaluation. It intended to finance (i) additional staff to support the PIU functioning, (ii) specialized support services for independent external M&E, external audit, financial accounting and procurement, and (iii) the training of staff involved in project implementation. d. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project cost: The original project cost was US$6.5 million. The actual cost of the project is in the amount of US$4.61 million, or 71 percent of the approved amount. Financing: The project was financed by a Learning and Innovation Grant provided under the Global Food Crisis response (GFCR) Trust Fund. 98.5 percent of the disbursed amount was used for the construction of two categories of warehouses. Borrower contribution: There was no planned Borrower contribution, but the Government committed in writing that it will provide the needed resources to operationalize a second warehouse, and to complete the construction of the third warehouse which was 70 percent finished at project closure. Dates: The project was approved on May 23, 2012 and became effective on July 12, 2012, with a closing date of May 31, 2015. A restructuring of the original grant was signed on April 3, 2015 to add to Component 1 (a new activity to finance the construction of 350 big onion domestic household-level warehouses), revise the end-project targets of the PDO indicators and intermediate results indicators, and extend the project closing date until July 31, 2015. The project was closed on the new schedule. 3. Relevance of Objectives & Design Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) a. Relevance of Objectives The Government's vision for economic development was laid out in the national development strategy (Mahinda Chintana), which calls, among other things, for integrated rural development by improving the efficiency of the agriculture supply chain and searching new business models. Farmers in Sri Lanka have an urgent need to develop mechanisms to reduce food price shocks and ensure mid-term and long-term food security, and to have improved access to finance. The project aimed to achieve that double objective of improving storage facilities in rural areas, and introducing the warehouse receipt financing as a loan collateral. The project was consistent with outcome 1.1 of the Bank's 2009- 12 CAS, which aimed to support integrated rural development by improving the efficiency of the agriculture supply chain and marketing channels, and promoting partnerships with the private sector. The project objective is substantially relevant at it addresses some of the priorities of the Government vision, and was part of the Bank's country strategy. The March 2015 restructuring did not intend to change the project objective, but to scale down the scope of the project in response to implementation shortcomings. At restructuring, the original objectives were still substantially relevant, as the Government's vision was still ongoing, and that the 2012-16 Bank's CPS had two pillars aimed at (i) supporting the internal integration of the economy, and (ii) expanding social inclusion and equitable access. Rating Substantial b. Relevance of Design The project objective was clearly stated, as it targeted the construction of warehouses to address storage difficulties in rural areas, and thereafter devise an innovative financial instrument allowing increased access to finance by rural business promoters. The project design had weaknesses since its approval. While most identified activities were appropriate to generate the needed outputs and outcomes, there were no specific activities aimed at developing the warehouse receipts financing mechanism, and to convert it into a tradable financial tool. Moreover, there was a lack of realism in scoping the project components, stemming from Bank's team unfounded belief in the borrower's promise regarding the land availability. The difficulties encountered in securing the land needed to build the warehouses jeopardized the project's prospects of generating the needed outputs and outcomes that were defined at appraisal. Following the inability of the Bank's team to move ahead with the construction of warehouses as initially planned, project restructuring was used to scale down the original levels of outputs and outcomes. While the project objective was not changed, the drastic change in one key component and expected outputs (one warehouse instead of seven initially-planned, 200 beneficiaries instead of 30,000 initially-targeted, and additional 350 B-onion warehouses), aimed to totally revamp the project, to the extent that the original theory of change underpinning the project was no longer valid for the following reasons: (i) the restructuring did not address the absence of activities supporting the development of a tradable financial instrument, and (ii) the downsizing of the number of warehouses (from 7 to 1), and the number of beneficiaries from 40,000 to 250 farmers) demonstrated that new activities and outputs will not suffice to achieve the project objective. Based on the shortcomings identified before and after restructuring, the relevance of design is rated negligible. Rating Negligible 4. Achievement of Objectives (Efficacy) PHREVISEDTBL Objective 1 Objective The Project Development Objective (PDO) of the Warehousing Receipts Financing Project is to provide access to farmers in the territory of the Recipient to quality storage facilities for agricultural products and to facilitate the use of such products as collateral to access financial Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) services by developing an electronic and negotiable warehouse receipt financing program. Rationale Project implementation stretched from May 2012 through March 2015, but little was achieved in terms of outputs and outcomes, mainly due to land unavailability. Three months (April-July 2015) before the project closure, there was a restructuring to downsize the level of project outputs and outcomes, and to accommodate a Government's request to build 350 big onion (B-onion) domestic household-level warehouses in farmers’ homesteads. Below is a summary of the project performance against both the original and the revised targets: Outputs: • The original target to have seven signed warehouse lease agreements between the Government and the private sector was only 14% achieved (one warehouse instead of 7). The revised target (one warehouse) for this indicator was 100% achieved. Furthermore, two other warehouses were constructed, one fully completed but not operational at closure, and a third one only 70 percent complete. • The original target of 40.000 farmers accessing to quality storage was not met. The revised target (250 farmers) for this indicator was only 1.6 percent achieved. • The original target of average annual incremental income per farmers (Percentage) was 67 percent achieved. The revised target for this indicator was exceeded, reaching 10 percent against a revised target of 5 percent. • The original target of banks engaged in lending with farmer-friendly innovative instruments was only 25 percent achieved. The revised target (2 banks) for this indicator was 50 percent achieved. The Regional Development Bank was the only participating bank. • The original target of active loan accounts (30,000) from innovative instruments held by farmers in targeted areas was not met. The revised target (200) for this indicator was only 2 percent achieved. • The original target of active loan accounts (2,000) held by female farmers in targeted areas was not achieved. The revised target for this indicator was not achieved, as none was recorded against a target of 10. • The original target of trained local bank staff (260) in warehouse mechanism and electronic instrument was only 18% achieved. The revised target (10) for this indicator was exceeded, as 46 were trained. • The original target of institutional development and capacity building, with participation of commercial operators, banks and insurance operators (10) was 30% achieved. The revised target for this indicator was 75 percent achieved, with 3 institutions participating against a target of 4. • The original target of institutional development and capacity building, with trained male farmers reaching 41,000; female farmers reaching 4,000; and warehouse managers reaching 15; was only 2% achieved. The revised target for this indicator was exceeded, with 901 trained against a revised target of 601. • The original target related to public awareness about using the warehouse system was partially achieved. Public awareness carried out included communication campaigns to villagers through printed press as well as workshops. However, the planned annual field surveys and impact assessments did not take place. • The regulatory mechanism review of current legal framework to determine gaps in the use of the warehouse receipt instrument was concluded by a legal consultant in June 2015. • The target for B-onion domestic warehouses constructed was exceeded, as 352 were constructed against a target of 350. Outcomes: • The original target of warehouses established and operational with the required IT equipment and software systems to manage a warehouse receipt financing mechanism was only 14 percent achieved. The scope of the project was revised in early 2015 to the expected achievement of only one fully operational national warehouse down from the original target of seven. The revised target for the number of warehouses (1) operational with the required IT equipment and software systems to manage a warehouse receipt financing mechanism was achieved. • The original target of farmers accessing credit from the system using warehouse receipts as collateral was not met as only two farmers were accessing credit using warehouse receipts by the closing of the project, against an original target of 35,000. The revised target for this indicator was reduced to 250 farmers from the original 35,000. Only two farmers were accessing credit using warehouse receipts by the closing of the project (less than on percent achievement of revised target) • The original target of total amount of loans (US$10 million) accessed through the warehouse receipts mechanism was not met. The revised target of total amount of loans (US$30,000) accessed through the mechanism was less than one percent achieved. • The original target of total number of project beneficiaries was not met, as the number was 364 against a target of 45,000. The revised target was reduced to 850 and was only 43% achieved. • The original target of female project beneficiaries (in percentage) was less than 1% achieved. The revised target for this indicator was scaled Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) down from 4,000 female beneficiaries to 50 women and was more than achieved, with total female beneficiaries reaching 67. • The target of the number of farmers benefiting from B-onion storage was exceeded, as 352 were benefitted against a target of 350. Overall, the original project could not be implemented as the Government failed to deliver on its promise to make the land available for warehouse construction. Out of the 10 original output and 5 outcome indicators of the project, none were achieved at restructuring and at closure. Similarly, the large majority of the revised outputs and outcome indicators were missed. The only noticeable achievements included (i) three warehouses built at project closure, of which one was complete and operational, another one complete but not operational, and a 70 percent completed warehouse, and (ii) the construction of 352 B-onion warehouses. All other targets well not met, or met to a negligeable extent. Project achievements fell below the initial and revised outputs and outcome targets. In fact, as the project objective was not changed, the restructuring that occurred three months before the project closure intended to reflect what was expected to be completed at the project closing. Rating Modest 5. Efficiency There was no economic or financial analysis at project appraisal, but the ICR undertook one, based on the government-owned warehouse built for the purpose of warehouse receipt financing completed at project closure, and on the 352 individual B-onion warehouses co-financed by the project (50 percent co-financing by the Grant and 50 percent by the beneficiary farmers). While some of them are not quantifiable, key benefits expected from the project achievements identified by the ICR over a period of 10 years were the following: (i) security and record keeping, (ii) certified quality, (iii) storage techniques, (iv) full service from storage to sales, (v) higher selling prices, and (vi) warehouse receipt financing and availability of cash advance. Assumptions related to the costs and benefits of the completed and operational warehouse included: (i) the expenditures incurred to design, construct and operationalize the warehouse, (ii) the operational costs, including part of the PIU and M&E costs and amortization cost of the warehouses, (iii) the number of warehouse users, (iv) the non-materialized losses reaching 5 percent of gross production that could have been lost by farmers, and (v) the price gains by selling several weeks or months after the harvesting season for sesame seed and paddy. Assumptions for the B-onion warehouses were the following: (i) the average storage usage per B-onion warehouse will increase proportionately with the increased level of produce by each farmer, and (ii) the sale price of B-onions will increase between harvest and post glut, and the producer price for the farmer may be lower than the wholesale price. Moreover, although B-onion farmers know that they can achieve much higher prices, the need to have immediate cash meant that a portion of the production would be sold at a relatively low price. Incorporating the above assumptions, the economic analysis calculations in the ICR generate an EIRR of 8.1 percent, and led to the conclusion that the investment was worth undertaking, as conservative estimates were used, notably the number of farmers using the warehouse. The ICR also indicates that the project’s EIRR would have been substantially higher if the construction of the warehouses had been initiated and completed on time. Two weaknesses of the above economic analysis are identified: (i) it doesn't incorporate the cost and benefits of the two warehouses, one operationalized in January 2016, and another one completed at about 70 percent by the project closure, although the analysis relies on ten- year projections since the project's launch in 2013, and (ii) it doesn't incorporate the cost and benefits of the warehouse receipt financing and the availability of cash advance, although the set up of the above financial instrument was the goal of this project. Inclusion of these elements in the analysis would have provided a more realistic and thorough account of the project's achievements. In terms of project's cost-effectiveness, the ICR lays out efficiency gains linked to competitive bidding in recruiting the warehouse managers, and to the construction of the B-onion warehouses, but there was no discussion related to the delay linked to the land unavailability, and its impact on the project integrity and implementation. Because of the abovementioned shortcomings, the land unavailability and its consequences, and the lower level of the EIRR (8.1 percent) compared to the 12 percent hurdle rate, the project efficiency is rated as modest. Efficiency Rating Modest Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) a. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) *Coverage/Scope (%) 0 Appraisal  0 Not Applicable 98.50 ICR Estimate  8.10 Not Applicable * Refers to percent of total project cost for which ERR/FRR was calculated. 6. Outcome The relevance of objectives was substantial, but the relevance of design was negligible, because of the lack of realism in scoping the project components, and the much-weakened validity of the results framework at restructuring. Efficacy was modest, as the project could not be launched on time because of appraisal shortcomings, and as key output and outcome indicators of the original and restructured project were missed. The only noticeable achievements included (i) three warehouses built at project closure, of which one was complete and operational, another one complete but not operational, and a 70 percent complete warehouse, and (ii) the construction of 352 B-onion warehouses. Efficiency was also modest because of low EIRR, and excessive delays in project implementation. Overall, the project outcome is rated as unsatisfactory. a. Outcome Rating Unsatisfactory 7. Rationale for Risk to Development Outcome Rating There was one operational warehouse in June 2015, and by the end of December 2015, a total of 49 farmers had about 43 tons of produce stored in the warehouse, and 19 farmers had accessed loans worth US$6,535 from a local bank. This achievement served as a demonstration effect on the use of warehouse receipts as a financing instrument. The benefits of safe storage and higher prices for B-onions after the post- harvest glut, have also had a positive effect on the use of warehouses. Furthermore, the Government launched the operations of a second warehouse in January 2016, and has committed to complete the construction of the warehouse which was 70 percent achieved when the project closed. Finally, a Government Advisory Committee composed of senior-level representatives and farmer organizations was set up to oversee policy and operational matters in the implementation of the Warehouse Receipts Financing System agenda, including promoting the financial instrument, and conducting awareness programs. While the Government has shown commitment to build on achieved progress to move forward with strengthening the Warehouse Receipts Financing System, it has not set a good track record to be trusted, because it could not deliver on securing the land for contruction and on the original and revised project indicators. a. Risk to Development Outcome Rating Substantial 8. Assessment of Bank Performance a. Quality-at-Entry At project appraisal, key areas of concern in the project design were identified, but were not correctly addressed. First, the option of upgrading existing warehouses was put forward, but was abandoned to favor the building of new ones, based on Government's assurance that land was Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) readily available. When it turned out that acquisition of land was difficult, the Bank's team took very long to initiate an alternative action. Second, the project intended to support the construction of a warehouse to be used in the development of the warehouse receipt financing concept, and to scale it up to the rest of the country afterwards. Instead, the Bank team opted for the construction and operationalization of seven new warehouses, which proved to be an overambitious target and had to be revised downward. Third, the Bank team planned to partner with the IFC to add an insurance component to the project in an effort to reach more beneficiaries, but this idea was abandoned, although a closer collaboration with the IFC could have been beneficial. Finally, there were no specific activities planned to meet the PDO objective of developing a negotiable warehouse receipt financing mechanism. Regarding implementation arrangements, the project was to be overseen by the PIU of an existing project, but there were doubts about the adequacy of the capacity of this PIU to manage both projects. Expected support from the private sector warehousing managing companies, participating banks, insurance companies, and the central bank did not materialize, leaving the PIU oversterched in overseeing two projects. Quality-at-Entry Rating Unsatisfactory b. Quality of supervision Implementation constraints were not resolved in a timely manner and led to delays in launching the main activities: (i) when the land acquisition became a major issue, the Bank team did not request the Government to recommit to providing land as promised or cancel the grant, (ii) the development of suitable insurance products remained unresolved between the Bank team and the stakeholders, and the team did not explore alternative ways of developing the appropriate insurance product, and finally (iii) when the Government asked for inclusion of the B-onion warehouses into the project, the team did not take advantage of this opportunity for a formal project restructuring. The team’s reporting on implementation progress in aide memoires and ISRs was not exhaustive. In particular, the delay in the land acquisition was not reported for management attention. The reporting tended to give detailed accounts of implementation progress of Component 1, while giving only scanty information on the other components. During project implementation, collaboration with IFC in the development of insurance products was not attempted when it became clear that the product that IFC was developing was not suitable for irrigation-fed agriculture. Because of the delays in the construction of the warehouses, the planned annual field-based monitoring mechanisms and impact assessments never took place, and the team also did not address the issue of the capacity of the PIU on time, when support by other organizations did not work out. The restructuring of the project was delayed and could not have a meaningful impact on the expected outcomes. Quality of Supervision Rating Unsatisfactory Overall Bank Performance Rating Unsatisfactory 9. Assessment of Borrower Performance a. Government Performance The Government showed commitment to the project during the design phase, but did not fulfil its promise of providing land. Despite Bank team's repeated reminders, the Government took too long to address the issue effectively. The Project Steering Committee, which had to resolve any roadblock on the path of project implementation, was not active. Toward the end of the project, the Government reasserted its interest for the support of a sustainable warehouses agenda by committing in writing that it will provide the necessary funds to complete ongoing construction and operationalization of two warehouses when the project closed. Government Performance Rating Unsatisfactory Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) b. Implementing Agency Performance The PIU, which concomitantly oversaw another Bank project, was not effective in acting upon plans agreed with the Bank team during implementation support missions. Major delays occurred in procurement transactions, as illustrated by two major procurements which were outstanding at closure, in connection with the selection of the warehouse operator and the installation of the IT system to issue electronic receipts. Implementing Agency Performance Rating Unsatisfactory Overall Borrower Performance Rating Unsatisfactory 10. M&E Design, Implementation, & Utilization a. M&E Design The design of the project's M&E specified (i) the information requirements, and the tools and methodologies needed for data collection, analysis, and reporting, (ii) a comprehensive M&E plan with clear roles and responsibilities in data gathering and reporting; and (iii) required internal and external assessments, including baseline surveys, baseline studies, mid-term evaluation, and impact evaluations. However, all performance indicators were premised on the construction of seven warehouses. As the targets turned out to be overambitious, the designed M&E was not effective. b. M&E Implementation Delays in project implementation led to delays in the generation of inputs and the use of the M&E framework. The PDO indicators were revised to reflect that there would be only one operational warehouse at project closing, triggering the change in the intermediate results indicators associated with only one warehouse being operational. Two additional intermediate results indicators were also added to measure results from the new activity of constructing B-onion domestic warehouses for farmers. Annual field-based monitoring mechanisms and impact assessments planned at appraisal did not take place. c. M&E Utilization The M&E system was inappropriately used. When the project failed to take off, the information was not communicated to Bank management so that other options could be envisaged. Because of inappropriate use of M&E, project restructuring was delayed, and when it happened, it was too late to catch up with the lost opportunities. M&E Quality Rating Modest 11. Other Issues a. Safeguards The project was identified as a category B project. The only safeguard triggered was the operational policy (OP) 4.01, which requires environmental assessment. The Government developed an Environmental Management Framework to ensure environmental sustainability of the project interventions. As such, environmental management plans were put in place for all the three sites where the warehouses were constructed. The main implementing partner agency had prepared an operations manual that included social development measures, one of them being Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) a grievance redress mechanism. Additional measures were taken during project implementation to deal with issues as they arose. For instance, the Bank team noted that there were elephants in the vicinity of one site and recommended that an electric fence be constructed around the site and this was subsequently implemented. Moreover, the PIU was also requested to take corrective measures in order to be more gender-sensitive as sanitary facilities catered only for male employees, and more gender-inclusive so as to reach out to women to fill the skilled jobs in the offices and laboratory facilities. b. Fiduciary Compliance Financial Management: The PIU relied on a professionally qualified chartered accountant supported by two government accountants for project budgeting, disbursement, and the submission of quarterly project financial reports to the Bank, preparation of annual project financial statements, and interacting with project auditors. The financial management performance of the project was rated satisfactory throughout the life of the project as the PIU submitted accurate and timely interim unaudited financial reports and acceptable annual audit reports. Finally the external audit reports did not identify serious qualifications and accountability issues. Procurement: Overall, good procurement performance allowed one warehouse to be completed and operationalized, a second one was completed and ready for installing the machinery and equipment, and the third one was about 70 percent complete. All procurement consultancy contracts under the project were satisfactorily closed. c. Unintended impacts (Positive or Negative) --- d. Other --- 12. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Unsatisfactory Unsatisfactory --- The Government has had a track Risk to Development Outcome Modest Substantial record of not delivering on its commitments to the project. Bank Performance Unsatisfactory Unsatisfactory --- Borrower Performance Unsatisfactory Unsatisfactory --- Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate. 13. Lessons IEG concurs with the findings, recommendations and lessons identified in the ICR. In particular, IEG concurs with the three lessons rephrased below: Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review SL: WAREHOUSE RECEIPTS FINANCING PROJECT (P124091) (i) The statement of the PDO needs to set the expected goals appropriately at a higher level instead of too narrowly, in order to reflect project achievements more broadly and comprehensively. The PDO statement could have been written in a way that targets the provision of innovative financial services to farmers, instead of too narrowly in terms of developing an electronic and negotiable warehouse receipts financing program. As the progress made by the project was short of a negotiable instrument, the outcome fell far below the attainment of the PDO as stated. (ii) The limited project outcome confirms that warehouse receipts can be a viable financial instrument for rural farmers in areas with surplus production. While only one warehouse was operational by the closing of the project, the project had a positive demonstration effect from the single operational warehouse. Benefits were evident by December 2015, as 49 farmers were making use of the storage facility, and 19 farmers, including women, had obtained loans. (iii) Design simplicity and proactivity in the timing and depth of the project restructuring can contribute to better project performance. Setting up a Warehouse Receipt Financing System, with an electronic tradable instrument requires a great deal of time and preparation, and involves a number of legal and regulatory actions that can take time. The Bank team could have reached better results if it had restructured the project when it became clear that original targets were unachievable. With long delays, the Bank team accessed to a Government 's request to include domestic household-level storage facilities for B-onions, and this resulted in substantial benefit to the farmers. In the hindsight, a swift restructuring would have benefitted to the country than keeping the original targets that could not be achieved. 14. Assessment Recommended? No 15. Comments on Quality of ICR The ICR is overall well written, and provides a fair assessment of the context of the project appraisal, design and implementation, and the results achieved. All ratings are consistent with the evidence provided in the ICR, and the lessons formulated are derived from the project's implementation experience. Areas of the ICR that could have been improved are the following: (i) the assessment of the relevance of project objectives and design needed to be more consistent with the Bank's definitions and methodology, and (ii) the efficiency assessment could have been improved by a more streamlined account of the economic and financial analysis, including the coverage of the cost-effectiveness of project implementation. a. Quality of ICR Rating Substantial