Document of The World Bank Report No: ICR00004147 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-50690 IDA-44760 TF-92100, TF016364) ON CREDITS AND GRANTS IN THE AMOUNT OF SDR 145.1 MILLION (US$215.7 MILLION EQUIVALENT) TO THE GOVERNMENT OF MALAWI FOR THE AGRICULTURE SECTOR WIDE APPROACH SUPPORT PROJECT June 21, 2017 Agriculture Global Practice Country Department- AFCE1 Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective May 30, 2017) Currency Unit = Malawi Kwacha MWK 1.00 = US$ 0.00137931 US$ 1.00 = MWK 725 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS ADD Agricultural Development Division ADP Agricultural Development Programme ADP SP Agricultural Development Programme Support Project AEDO Agricultural Extension Development Officer AF Additional Financing APES Agriculture Production Estimates ARC Africa Risk Capacity ASP Area Stakeholder Panel ASWAp SP Agriculture Sector Wide Approach Support Project BBTV Banana Bunchy Top Virus CAADP Comprehensive Africa Agriculture Development Programme CAS Country Assistance Strategy CBRLDP Community Based Rural Land Development Project CFA Core Function Analysis CGIAR Consultative Group on International Agricultural Research DAECC District Agricultural Extension Coordination Committee DAESS District Agricultural Extension Service System DAPS Department of Agricultural Planning Services DARS Department of Agricultural Research DfID Department for International Development (UK) DSP District Stakeholder Panel EFA Economic and Financial Analysis EMC Executive Management Committee ERR Economic Rate of Return EU European Union ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan EWS Early Warning System FISP Farm Input Subsidy Programme FOs Farmer Organizations FRR Financial Rate of Return GoM Government of Malawi GEF Global Environmental Facility 2 GEO Global Environmental Objective Ha Hectare JSR Joint Sector Review ICR Implementation Completion Report IDA International Development Association IEC Information Education Communication ISR Implementation Status and Results KPI Key Performance Indicator LIMS Land Information Management System LUANAR Lilongwe University of Agriculture and Natural Resources M&E Monitoring and Evaluation MAWTCO Malawi Agricultural Warehousing and Trade company MDTF Multi-Donor Trust Fund MFERP Malawi Floods Emergency Recovery Project MGDS Malawi Growth and Development Strategy MoAIWD Ministry of Agriculture, Irrigation and Water Development MoITT Ministry of Industry, Trade and Tourism MoLHUD Ministry of Lands, Housing and Urban Development MOU Memorandum of Understanding MPRS Malawi Poverty Reduction Strategy NPV Net Present Value MT Metric tons MTR Mid Term Review MVAC Malawi Vulnerability Assessment Committee NAP National Agriculture Policy NGO Non-Governmental Organization OPV Open Pollinated Variety PAD Project Appraisal Document PDO Project Development Objective PIU Project Implementation Unit PPP Public Private Partnerships SDR Special Drawing Rights SGR Strategic Grain Reserves SLM Sustainable Land Management SWAp Sector Wide Approach SWG Sector Working Group TFMC Trust Fund Management Committee TWG Technical Working Group USAID United States Aid for International Development Senior Global Practice Director: Juergen Voegele Global Practice Manager: Mark E. Cackler Project Team Leader: Valens Mwumvaneza ICR Team Leader: Blessings Nyanjagha Botha 3 MALAWI Agriculture Sector Wide Approach Support Project CONTENTS ABBREVIATIONS AND ACRONYMS ........................................................................... 2 A. Basic Information ........................................................................................................... 5 B. Key Dates ....................................................................................................................... 5 C. Ratings Summary ........................................................................................................... 5 D. Sector and Theme Codes................................................................................................ 6 E. Bank Staff ....................................................................................................................... 6 F. Results Framework Analysis .......................................................................................... 7 G. Ratings of Project Performance in ISRs ...................................................................... 10 H. Restructuring ................................................................................................................ 11 I. Disbursement Profile .................................................................................................... 12 1 Project Context, Development and Global Environment Objectives Design ........ 12 2 Key Factors Affecting Implementation Outcomes ................................................ 17 3 Assessment of Outcomes ....................................................................................... 23 4 Assessment of Risk to Development Objective ..................................................... 35 5 Assessment of Bank and Borrower Performance .................................................. 35 6 Lessons learnt......................................................................................................... 39 7 Comments on Issues Raised by Borrower/Implementing Agencies/Partners................ 40 Annex 1: Project Costs and Financing .............................................................................. 41 Annex 2: Outputs by Component ..................................................................................... 42 Annex 3: Economic and Financial Analysis ..................................................................... 50 Annex 4: Bank Lending and Implementation support/Supervision Processes ................. 55 Annex 5. Summary of Borrower’s ICR ............................................................................ 57 Annex 6: List of Supporting Documents .......................................................................... 75 4 A. Basic Information Agricultural Sector Wide Approach Country: Malawi Project Name: Support Project L/C/TF IDA-44760, IDA-50690, TF-92100, Project ID: P105256 Number(s): TF016364 ICR Date: 06/21/2017 ICR Type: Core ICR Lending Instrument: SIL Borrower: GOVERNMENT OF MALAWI Original Commitment: SDR 35.6 MILLION US$ 53.3 MILLION Disbursed SDR 88 MILLION, Revised Commitment US$215.7 MILLION Amount: US$ 131.1 MILLION Environmental Category: B Implementing Agencies: Ministry of Agriculture, Irrigation and Water Development Ministry of Industry, Trade and Tourism Ministry of Lands, Housing and Urban Development National Roads Authority Co-financiers and Other External Partners: European Union, Norway, Flanders, DFID, Irish Aid, USAID and Government of Malawi/Beneficiaries (in kind) B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/08/2007 Effectiveness: 07/30/2009 12/14/2009 02/27/2012; 02/27/2012; Appraisal: 03/10/2008 Restructuring(s): 03/21/2014 03/21/2014 Approval: 06/24/2008 Mid-term Review: 12/14/2011 04/26/2011 Closing: 09/15/2013 12/30/2016 C. Ratings Summary C.1 Performance Rating by ICR Outcomes Satisfactory Risk to Development Outcome Substantial Bank Performance Moderately Satisfactory Borrower Performance Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry Government: Moderately Satisfactory Satisfactory Implementing Quality of Supervision: Satisfactory Moderately Satisfactory Agency/Agencies: Moderately Overall Borrower Overall Bank Performance Moderately Satisfactory Satisfactory Performance C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating: Performance any) Potential Problem Project at No Quality at Entry (QEA) None any time (Yes/No): Problem Project at any time Quality of Supervision No None (Yes/No): (QSA) 5 DO rating before Satisfactory Closing/Inactive status D. Sector and Theme Codes Sector Code (as % of total Bank financing) Original Actual Agriculture, Fishing and Forestry Other Agriculture, Fishing and Forestry 10 10 Crops 48 48 Agricultural Extension, Research, and Other Support 10 10 Activities Public Administration Sub-National Government 4 4 Central Government (Central Agencies) 28 28 Theme Code (as % of total Bank financing) Environment and Natural Resource Management Renewable Natural Resources Asset Management 6 6 Biodiversity 6 6 Landscape Management 6 6 Finance Finance for Development 17 17 Agriculture Finance 17 17 Human Development and Gender Nutrition and Food Security 17 17 Food Security 17 17 Nutrition 17 17 Urban and Rural Development Rural Development 17 17 Land Administration and Management 6 6 Rural Infrastructure and service delivery 17 17 Rural Markets 17 17 E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Bella Deborah Mary Bird Michael Baxter Practice Manager: Mark E. Cackler Karen McConnell Brooks Project Team Leader: Valens Mwumvaneza David Rohrbach ICR Team Leader: Blessings Nyanjagha Botha Blessings Nyanjagha Botha, ICR Primary Authors: Time Hapana Fatch 6 F. Results Framework Analysis Project Development Objectives The development objective of the Agriculture Development Programme Support Project (ADP-SP), later renamed Agriculture Sector Wide Approach Support Project (ASWAp SP) was to improve the effectiveness of investments aimed at food security and sustainable agricultural growth. The global environmental objective (GEO) was to strengthen the natural resource base in agricultural lands through doubling the area under sustainable land management as a basis for securing ecosystem services and sustainable agricultural productivity. Revised Project Development Objectives No change. (a) PDO Indicator(s) Actual Value Original Target Values Formally Achieved at Indicator Baseline Value (from approval Revised Target Completion or documents) Values Target Years Indicator 1: Average national maize yields (metric tons/hectare) Value 1.4 1.7 2.1 1.9 (quantitative or Qualitative) Date achieved 05/30/2008 06/30/2013 03/21/2014 12/31/2016 Target substantially achieved (90%). The deviation is attributed to adverse weather Comments events (droughts and floods). The project has been promoting adoption of improved (incl. % maize seeds (composites and mainly hybrids) – whose current combined productivity achievement) stands at 2.2 mt/ha. The average falls down to 1.9 mt due to local maize seeds. 75% of farmers are using improved maize seeds across the country. Indicator 2: Percentage of food secure rural households Value - 84 95 77 (quantitative or Qualitative) Date achieved 06/30/2013 03/21/2014 12/31/2016 Comments Target substantially achieved (81%), not fully met due to subsequent dry spells and (incl. % floods in 2015 (2.8 million people were food insecure) and 2016 (6.7 million people food achievement) were insecure). Indicator 3: Percentage of MoAIWD investment budget execution Value 130 98 98-100 101.9 (quantitative or Qualitative) Date achieved 05/30/2008 06/30/2013 03/21/2014 12/31/2016 Comments Target has been reached. The slight overspend is within reasonable range, as opposed to (incl. % baseline when there were huge overspends, mostly from the FISP budget overruns. achievement) Indicator 4: Percentage change in motorized traffic volume on targeted rural roads Value - +10 +10 +219 (quantitative or 7 Qualitative) Date achieved 09/01/2012 03/21/2014 12/31/2016 Comments Target has been achieved and surpassed. There has been overwhelming increase in traffic (incl. % volume in completed roads facilitating access to markets and rural development. achievement) Indicator 5: Number of beneficiaries (of whom % females) Value 3 million (50% 3.1 million (48.2% - 1 million (50% females) (quantitative or females) females) Qualitative) Date achieved 05/30/2008 06/30/2013 03/21/2014 04/30/2017 Comments Target fully achieved. Gender target substantially achieved at 48.2% out of target of (incl. % 50%. achievement) (b) GEO Indicator Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years Indicator 1: Level of soil organic matter in conservation farming areas Value 1 1.5 1.5 3.2 (quantitative or Qualitative) Date achieved 05/30/2008 06/30/2013 06/30/2013 12/31/2016 Comments Target fully met, surpassed by 113%. Increased organic matter observed from integration (incl. % of conservation agriculture principles. achievement) (c) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years Original: Percentage of MoAIWD investment budget execution Indicator 1: Revised: Share of agriculture sector donor funding committed to ASWAp Value 0 40 40 72 (quantitative or Qualitative) Date achieved 05/30/2008 06/30/2013 03/21/2014 12/31/2016 Comments Target fully achieved. Support towards developing ASWAp and pooling of donor (incl. % resources through MDTF enhanced donor funding commitment to the ASWAp. achievement) Clear linkage of annual work plans, budgets and monitoring reports of MOAIWD Indicator 2: departments and districts with the ASWAp framework and format. Value - Yes Yes Yes (quantitative or Qualitative) Date achieved 05/30/2008 06/30/2013 03/21/2014 12/31/2016 Comments Target fully achieved. (incl. % 8 achievement) Indicator 3: Number of staff trained in land administration and management services Value - 150 200 368 (quantitative or Qualitative) Date achieved 06/30/2013 03/21/2014 12/31/2016 Comments Target fully achieved. The inclusion of the land activities created a lot of demand for (incl. % training within the Ministry of Lands, Housing and Urban Development. achievement) Indicator 4: Average level of Nitrogen use efficiency Value 16.4 18 18 16.9 (quantitative or Qualitative) Date achieved 05/30/2008 06/30/2013 03/21/2014 09/30/2015 Comments (incl. % Target substantially achieved (94%). achievement) Indicator 5: Total smallholder area under conservation farming Value 18587 105000 200000 210806 (quantitative or Qualitative) Date achieved 05/30/2008 06/30/2013 03/21/2014 12/31/2016 Comments (incl. % Target fully achieved. achievement) Indicator 6: Number of farmers getting advice and training from lead farmers Value - 610000 900000 557434 (quantitative or Qualitative) Date achieved 05/30/2008 06/30/2013 03/21/2014 12/31/2016 Comments Target substantially achieved (62%). Some underreporting at operational level were (incl. % observed. Project supported NGOs to deliver extension in addition to public extension achievement) delivery – these efforts complemented extension delivery beyond the lead farmers. Indicator 7: Additional tonnage of high quality legume seeds available to FISP Value - 3500 MT 1800 MT 4060 MT (quantitative or Qualitative) Date achieved 06/30/2013 03/21/2014 12/31/2016 Comments Target fully achieved. Project provided additional support in response to demand (incl. % from Government following food insecurity disaster declarations. achievement) Number of studies related to agribusiness environment and opportunities for private Indicator 8: investments in agriculture supported and results shared. Value - 8 8 7 (quantitative or Qualitative) Date achieved 06/30/2013 03/21/2014 04/31/2017 Comments (incl. % Target substantially achieved. achievement) Indicator 9: Project rated satisfactory during each supervision mission Value - Satisfactory Satisfactory Satisfactory 9 (quantitative or Qualitative) Date achieved 06/30/2013 03/21/2014 12/31/2016 Comments (incl. % Target fully achieved. achievement) Indicator 10: Kilometers of rural roads rehabilitated (km). Value - 260 185 143 (quantitative or Qualitative) Date achieved 06/30/2013 03/21/2014 12/31/2016 Target substantially achieved (77%). The project experienced some delays in the roads Comments rehabilitation works. Some roads under rehabilitation were removed and transferred to be (incl. % done under spot improvements. Target revised downwards due to DFID pull out of the achievement) Multi Donor Trust Fund Indicator 11: Kilometers of rural roads made transmittable through spot improvements (km) Value - 520 364 384 (quantitative or Qualitative) Date achieved 06/30/2013 03/21/2014 12/31/2016 Comments (incl. % Target fully achieved. achievement) Indicator 12: Percentage of road network in good and fair condition in each of the targeted districts Value - 67 67 63 (quantitative or Qualitative) Date achieved 06/30/2013 03/21/2014 12/31/2016 Comments (incl. % Target substantially achieved. achievement) G. Ratings of Project Performance in ISRs Actual Date ISR Development Global Environmental Implementation No. Disbursements Archived Objective (DO) Objective (GEO) Progress (IP) (US$ millions) 1 11/20/2008 MS MS MU 0.00 2 05/29/2009 MS MS MU 0.00 3 12/10/2009 MS MS MS 0.00 4 03/24/2010 MS MS MS 5.72 5 11/28/2010 MS MS MS 7.38 6 07/11/2011 S S S 15.1 7 03/13/2012 S S S 21.71 8 10/29/2012 S S S 26.91 9 06/07/2013 S S S 34.87 10 10 01/17/2014 S S MS 42.33 11 08/04/2014 S S MU 42.33 12 02/02/2015 S S MS 42.33 13 11/04/2015 S MS 51.58 14 06/30/2016 S MS 55.2 15 12/30/2016 MS MS 63.72 16 04/28/2017 MS S 71.10 H. Restructuring There were two main restructurings to the original project related to the additional financings. The first additional financing (AF1) on February 27, 2012 for US$30 million sought to: (i) scale-up ongoing activities to increase the number of farmers receiving support from the project; and (ii) include new interventions in the field of agricultural diversification and access to markets. During this restructuring, the project name was changed 1 and a new rural roads component, with the objective of enhancing project outcomes by increasing access to agricultural input and output markets was added. In addition to the above, the AF1 was to help improve the enabling environment for commercialization of the agriculture sector and two new activities were added: (i) strengthening land administration capacity; and (ii) improving agri-business environment and agribusiness partnerships. The closing date was also changed from September 15, 2013 to June 30, 2015. By this time, US$21.71 million had been disbursed. The second additional financing (AF2) on March 21, 2014 of US$120 million from a Multi- Donor Trust Fund (MDTF) 2 , sought to scale up the activities further based on the components agreed at the first restructuring. Ultimately, the closing date was extended to December 31, 2016. At the time of this restructuring, a total of US$42.33 million had been disbursed. 1 The name was changed from Agriculture Development Programme Support Project (ADP SP) to Agriculture Sector Wide Approach Support Project (ASWAp SP) to reflect tighter alignment as Government changed the name from ADP to ASWAp. 2 The MDTF was funded by Norway, European Union, Irish Aid, USAID, Flanders and DFID. 11 I. Disbursement Profile 12 1 Project Context, Development and Global Environment Objectives Design 1.1 Context at Appraisal 1. Malawi has been one of the poorest countries with low levels of per capita income in the world (US$170 in 2006). According to the Integrated Household Survey 2004/05, 52.4 percent of the population were living below the poverty line, and 22.4 percent were classified as ultra-poor, or unable to meet recommended daily food needs. Approximately 30 percent of the poor moved out of poverty between 1998 and 2004/05, while 30 percent of the non-poor moved into poverty. This suggests that a large portion of households lived at the margins of poverty. Malawi’s economy remained agro-based, contributing 30 percent to the Gross Domestic Product (GDP) and providing livelihoods to 85 percent of the population. Smallholders contributed about three quarters of agricultural production with cropping systems dominated by a maize-based rain fed cropping systems. Severe food shortages were recurrent, largely due to floods or drought. 2. In view of the widespread poverty, the Government launched the Malawi Poverty Reduction Strategy (MPRS) in May 2002 with the goal to achieve “sustainable poverty reduction through empowerment of the poor.” The implementation period for the MPRS was three years, and came to an end in the fiscal year 2004/05. The notable achievement of the MPRS was a modest decline in poverty levels from 54.1 percent (in 1998) to 52.4 percent (in 2004/05), though the economic performance of Malawi remained erratic and the real GDP growth averaged only 1.5 percent per annum. The MPRS was reviewed during the second half of 2005, and reformulated as the Malawi Growth and Development Strategy 2006-2011 (MGDS). The MGDS had a strong focus on agriculture as the driver of economic growth. However, the agriculture sector had a number of challenges such as low productivity, land degradation, poor coordination and limited financing. Government developed the Agriculture Development Program (ADP) to address the challenges in the sector and in an effort to improve coordination of Government and donor investments. This is the basis upon which the Government made a request for Bank assistance towards the Malawi Agriculture Development Programme Support Project (ADP SP), which was approved by the World Bank Board in 2008. 1.2 Original Project Development Objectives (PDO) and Key Indicators 3. The development objective of the project was to improve the effectiveness of investments aimed at food security and sustainable agricultural growth. The global environmental objective was to strengthen the natural resource base in agricultural lands through doubling the area under sustainable land management as a basis for securing ecosystem services and sustainable agricultural productivity. The Project Appraisal Document (PAD) states that the key original indicators at PDO were as follows: 13 Table 1: Original PDO Indicators, Baseline and Targets Name of PDO Indicator Baseline Target (2008) (2013) 1. Share of agricultural sector donor funding committed to ADP 0 70 (Percent) 2. Average national maize yields (mt/ha) 1.4 1.7 3. Levels of soil organic matter in conservation farming areas 1 1.5 (Percent) 4. Percent variation of intra-annual maize retail price in selected 120 60 markets 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 4. Both the PDO and GEO were not changed. However, there were changes to the PDO indicators, as summarized in Table 2 below: Table 2: PDO Indicators, Origin and Revised Original PDO PDO Indicators at PDO Indicators at Reasons for change Indicators 1st Additional 2nd Additional Financing Financing (restructuring) (restructuring) Share of agricultural - - At AF1 restructuring, this indicator was sector donor funding moved to intermediate outcome level. committed to ADP (%) Percentage of Percentage of This indicator was upgraded from MoAIWD MoAIWD investment intermediate to PDO as it demonstrated investment budget budget execution. outcomes from increased capacity of execution. the MoAIWD. Percentage of food Percentage of food Justified based on inclusion of food secure rural secure rural security and diversification activities. households households Average national maize Average national Average national Increased only targets to reflect scale of yields (mt/ha) maize yields (mt/ha) maize yields (mt/ha) activities. Levels of soil organic Levels of soil Levels of soil organic At AF1, the indicator was measured matter in conservation organic matter in matter in conservation based on sandy soils for practical farming area (%) conservation farming area (%) reasons than general soils. farming area (%) % variation of intra- Dropped, the indicator proved difficult annual maize retail price to measure and not fully attributable to in selected markets the project. Percentage change Percentage change in Indicator for new component 4 in motorized traffic motorized traffic (improvement and maintenance of volume on targeted volume on targeted unpaved rural roads). rural roads. rural roads. 14 5. The changes made to the PDO indicators were justified on the basis of reflecting tighter alignment to the Government’s Agricultural Development Programme (later named ASWAp), ensure feasibility of data collection of indicators, ensuring close attribution and reflecting new indicators based on additional component and activities added during subsequent restructuring of the project. 1.4 Main Beneficiaries 6. Originally, the project targeted 1.5 million smallholder farmers (50 percent females) as direct beneficiaries. This target was increased to 2.5 million (50 percent females) in 2012 and further to 3 million (50 percent females) in 2014, with the subsequent additional resources. The project was expected to improve farmer livelihoods as a result of increased sustainable agriculture related production and incomes. The benefits from some interventions like support to roads, benefited beyond smallholder farmers, contributing to market access and rural development. Ministry of Agriculture, Irrigation and Water Development (MoAIWD) has also been a key beneficiary of the project through institutional capacity building efforts to implement the ASWAp. 1.5 Original Components (as approved) 7. Component 1: Institutional Development and Capacity Building in preparation of ASWAp (US$15.03 million). This component aimed to strengthen capacities essential to prepare for and implement the ADP, and its main objectives of food security and agricultural-led economic growth. Key activities included: (a) ADP management and coordination support to strengthen Ministry of Agriculture’s leadership and management needed for a SWAp; (b) planning, monitoring and evaluation support to strengthen department of planning, agricultural development divisions and district offices; (c) technical, systems and skills development; and (d) administrative systems development (fiduciary management, human resource management and administration). 8. Component 2: Sustainable Food Security (US$37.62 million). This component aimed at improving national and household food security through enhanced productivity and stability of maize based systems. Key activities included: (a) Support to sustainable productivity growth initiative – which included research (e.g. choosing right varieties, efficient fertilizer use), sustainable land and water management, extension service delivery and reducing post-harvest losses; and (b) strengthening market based agricultural risk management strategies - which included rainfall index based early warning models, macro and micro weather insurance, maize supply/price hedging strategies, warehouse receipt system and capacity building for integrated commodity risk management. 9. Component 3: Project Coordination (US$0.65 million). This component aimed at ensuring management of resources in accordance with the project’s objectives. Key activities included: (a) Project coordination with implementing entities, and (b) project reporting, management and supervision.    15 1.6 Revised Components During the restructuring of the project subsequent to additional financings, there were some changes to the project components, as summarized below: 10. Component 1: Institutional Development and Capacity Building in preparation of ASWAp (US$38.0 million). Activities added: new sub component on land administration capacity strengthening aimed at supporting policy decision making processes by providing up-to-date information and analysis on land management and land use planning. This involved development of land information system to help Ministry of Lands, Housing and Urban Development (MoLHUD) ensure secure recording of deeds, with specific objective of monitoring evolution of land use under estates management. 11. Component 2: Sustainable Food Security, Agricultural Growth and Diversification (US$111.8 million). The component name was reformulated to reflect additional activities to diversify maize based farming systems and strengthen support to Farm Inputs Subsidy Programme (FISP). Activities added were: (a) support to FISP and Seed Monitoring/Certification, (b) sub component on legume crop production and marketing, and (c) sub component on improving agribusiness environment and promote agribusiness partnerships. 12. Component 4 (New Component): Improvement and maintenance of unpaved rural roads (US$49.2 million). The inclusion of a rural roads was aimed at improving market access of inputs and outputs of agricultural produce. This component aimed to finance improvement works on unpaved rural roads and implementation support. 1.7 Other Significant Changes 13. The original project (US$53.3 million) was approved on May 30, 2008, with a closing date of September 15, 2013 with the following sources of funds: IDA (US$32 million), GEF Grant (US$5.8 million), Norway (US$10 million) and Government of Malawi/beneficiary contribution in kind (US$5.5 million). The project received AF1 of IDA credit (US$30 million), which led to restructuring and extension of the closing date to June 30, 2015. At this stage the project name was changed from Agricultural Development Programme Support Project (ADP SP) to Agriculture Sector Wide Approach Support Project (ASWAp SP). 14. The project AF2 (grants allocation of US$120 million) from European Union (EU), Government of Flanders, Irish Aid, Department for International Development (DfID), Norway and United States Agency for International Development (USAID) provided additional resources to scale up activities as per components restructured under the first additional financing (AF1). The pooling of resources from the donors created an MDTF, which was managed by the World Bank. 16 2 Key Factors Affecting Implementation Outcomes 2.1 Project Preparation, Design, and Quality at Entry (i) Project Background, Rationale and Lessons 15. Soundness of Background Analysis: The project preparation was informed by background analysis that was done by the Government of Malawi (GoM) and development partners including the World Bank. It included developing the Malawi Growth and Development Strategy (2006-2011), Country Assistance Strategy (CAS 2007-2001), ADP (Draft document October 2007), Evaluation of the Subsidy Programs and various value chain studies. The Government also held extensive consultations with major stakeholders as part of development of the ADP. All such consultations, lessons learnt locally and internationally were used for development of the project. The preparation of the project coincided with the implementation of the decentralization policy in the country. In that respect, a thorough analysis of the policy environment should have been carried out to ascertain the environment considering that the project was implemented using Government systems. In addition, a detailed capacity assessment of the Governments’ departments and Ministries involved in the implementation of the project was not in place, which should have informed the options for the project’s design. In the absence of the Core Function Analysis (CFA) of the Ministry of Agriculture (not finalized by the time the project started), it was not clear what capacity priorities the project can support. Lastly, a better understanding of the Central Governments and District Councils ability to implement fiduciary functions could have helped reduce the incidences of qualified audits experienced during the course of implementing the project. 16. Incorporation of Lessons Learnt: The project was informed by the lessons learned from a number of previous and ongoing operations such as: CAS (2003-2006); Irrigation Rural Livelihoods Agriculture Development Project (IRLADP); Community Based Rural Land Development Project (CBRLDP), emergency projects and other program-based and agricultural sector wide approaches in neighboring countries (e.g. Tanzania and Mozambique). The lessons that were reflected in the design included: (i) improving national ownership, institutional reforms and strengthening leadership; (ii) linking sector programmes and decentralization process; (iii) involvement of private sector and civil society constitutes; and (iv) fiduciary aspects and setting up systems. Extensive consultations with donors and various stakeholders were held to inform the project design. 17. Soundness of Rationale for Bank’s Intervention: The Bank is the major donor in the agriculture sector contributing over 26 percent of the financing in the sector. In collaboration with other development partners, World Bank has been supporting the GoM in reducing poverty especially in rural areas. The Bank’s convening power was widely perceived as providing critical support for the harmonization of what was fragmented and uncoordinated donor interventions in the agricultural sector. Additionally, the World Bank 17 was well placed to lead the donors due to its vast experience with SWAP design and implementation elsewhere in the region. (ii) Realism, Complexity of Design and Financing Mechanisms 18. Objectives and Components. The PDO was designed to mirror the high level SWAp for the agricultural sector, which included high level impacts and outcomes, which were complex and ambitious. The indicators were mainly aligned to the Government Agricultural SWAp which includes various interventions beyond the project. The restructuring of the PDO indicators also raised questions of attribution because a number of them were contributing to higher level objectives beyond the control of the project. The restructurings that were made did not reformulate the objectives, but only improved the PDO indicators (see Table 2). 19. Financing mechanisms. The project was developed to contribute to implementation of the sector wide approach (SWAp). The initial arrangement for a fully blended operation of International Development Association (IDA) and Global Environmental Facility (GEF) resources in addition to co-financing with other donors. Such mechanisms minimized transaction costs and also improved coordination and harmonization for effective ASWAp implementation. This financing mechanism encouraged other donors to enter into the pool funding arrangements during the second additional financing. (iii) Government Commitment and Stakeholder involvement 20. Government Commitment: The ADP is a GoM Programme that was hatched after the launch of the MGDS in 2006. The main aim was to harmonize and better coordinate donor interventions in the agriculture sector and avoid competition and duplications among the donors. The programme was also perceived as a vehicle for attaining the agriculture and food security objectives of the MGDS. 21. Other Stakeholders: Internal stakeholders of the project included smallholder farmers and farmer groups, research institutions (including CGIAR centers), academic institutions, and the private sector. External stakeholders included a number of development partners, most notably the USAID, EU, Norway, Irish Aid, DfID, Government of Flanders, UN Women and the World Bank. All these stakeholders were adequately consulted and actively participated in the project. (iv) Risks and Mitigation Measures 22. The PAD identified a number of specific risks which were mainly categorized into three thus operational (resistant to change and reform within MoAIWD; farmers unwilling or unable to test improved technologies, sustainable land management incentives to be captured by elites; severe drought disrupting technology transfer and Government may stop or reduce scope of FISP), policy (MoAIWD does not complete the CFA, delays in wider reform measures across Government, decentralization of agriculture sector may blur sector 18 responsibilities) and implementing entity (trained and qualified staff are transferred and trained/qualified staff lost due to HIV/AIDS). Most of these identified risks materialized during project implementation at varying degrees of severity where they materialized, the Government’s proposed measures were generally inadequate or took a long time to mitigate them. For instance: (a) severe droughts and floods disrupting technology transfer and ultimately affecting food security status, with limited adoption of sustainable land management technologies; (b) CFA was only completed in the last year of project implementation and affected implementation of the training plan; (c) wider reform measures across Government were delayed (lack of commitment); (d) the financial management started to improve based on efforts to control flow of funds through the Agricultural Development Division to districts, although some expenses were ineligible, as evidenced by qualification of the audit reports; and (e) high staff turnover through transfers/deaths and resignations despite the project providing trainings. 2.2 Implementation 23. The project experienced a slow start by almost 20 months. The project was originally scheduled to start in September 2008 and close in September 2013. The Executive Directors of the World Bank approved project on June 24, 2008 but the signing of the Financing (IDA and GEF) Agreements was done in September 2009, largely due to delays in Parliamentary approval. Additionally, the first disbursement of the World Bank and GEF funding was received in March 2010. Because of these setbacks, the implementation of the project was characterized by delayed progress at the start, then followed by rapid acceleration of project activities initially in selected four districts then in all the districts. The acceleration in implementation was largely attributed to a number of factors which included the establishment of Executive Management Committee to guide implementation at policy level, the establishment of the ASWAp Secretariat responsible for the day to day management of the project including following up on the implementation of the annual work plans and budgets, and formation of Technical Working Groups that were led by senior Government officials, with wide representation from various Government departments, donors, NGOs and Civil Society. 24. However, effective implementation of the project was affected by a number of factors including, high vacancy rates (for both technical and fiduciary staff) resulting from high staff turnover, delays in procurement at both national (headquarters) and district council levels; late submission of financial reports and liquidation that affected flow of funds to implementing departments and districts, and weak Monitoring and Evaluation (M&E) systems to collect and analyze the data to inform decision making. Despite the fact that a lot of activities were implemented and completed, at closing, there still remained a number of activities that were incomplete such as training of staff at both diploma and Masters levels, consultancies (development of Agriculture Extension Strategy, Land Information Management Systems, Estate performance Survey, and design and automate the business and work permit processing and issuing system), and civil works (rehabilitation of DAES HQ Building and roads). 19 25. Mid-Term Review (MTR): The MTR was carried out in May 2011. The assessments that were done at MTR were effective as it encouraged development partners to discuss options for better harmonization of funding in support of the ASWAp, through development of the MDTF which offered second additional financing (AF2) to the project. The MTR recommended strengthening of the Ministry of Agriculture’s M&E unit to ensure that it was able to collect more accurate data on a timely basis for measuring progress of SWAp and all associated investments in the sector. The MTR encouraged the Ministry to complete all outstanding studies such as the CFA, soil mapping just to mention a few. It further recommended the department of research should share the results/feedback of the demonstrations and trials on seed with seed companies to ensure that preferred seeds by farmers are made available on the market. The MTR generally provided recommendations for upscaling project activities for more impact and called for improvements in project implementation by all technical departments including financial management and procurement. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 26. Design. The PDO was stated at impact level results, to which the project can only claim contribution. The PDO indicators include a mix of impact, outcome and output indicators. The project general outcomes contributing to the higher level impacts included (i) strengthened institutional capacity to implement the Agricultural SWAp, (ii) improved productivity and diversification, and (iii) improved natural resource management and access to markets. 27. Implementation. The original plan of the project was that the Department of Planning in the MoAIWD would be responsible for coordinating and implementation of the M&E. The ADP results framework was deemed a critical document that defined specific indicators with baseline and targets and would determine data collection needs. With the upscaling and additional subcomponents to the project, the number of indicators were revised from the original 12 indicators to 17. The project did not have a baseline and adopted the national level ASWAp indicators (e.g. national crop estimates, food security national data). The project had weak M&E systems at all levels in the Ministry of Agriculture (Headquarters, Division and District) to enable collection of information to assesses returns to the project investments and capture beneficiary satisfaction. In view of such weaknesses, the project invested its efforts by providing technical assistance to the ASWAp secretariat as well as project coordination officer (2 M&E consultants), who worked closely with the M&E unit within the department of agricultural planning services. Coupled with capacity building of M&E officers at all levels, simplifying M&E tool kits, progress was observed on results reporting including disaggregation of data by gender. An M&E masterplan for the ASWAp was developed, providing guidance towards collection of intermediary and outcomes indicators. The agricultural performance report provided a good proof as presented during the annual JSR meetings (using indicators identified in the M&E Masterplan). As part of promoting ownership and mutual accountability, MoAIWD formed a JSR Committee, an active forum comprised of various stakeholders including non-state actors to plan for the JSRs. 20 28. Utilization. Overall, the M&E framework and data along with detailed annual and quarterly M&E reports were appropriately used and relied upon to inform decision making and resource allocation during planning and implementation. As stated above, the quality of the M&E reports gradually improved, based on capacity and technical assistance efforts through M&E consultants, working closely with M&E officers within the MoAIWD. As a result of this, there has been a shift from activity reporting which was to results reporting (in line with M&E Masterplan of ASWAp), with gender disaggregation on most of the indicators. The indicators for the project results framework were all collected, without any gaps (at outcome and intermediary levels) and reporting timely during the implementation supervision mission reports. The overall rating of M&E design, implementation and utilization is “Moderately Satisfactory”. 2.4 Safeguard and Fiduciary Compliance 29. Safeguards: The original project was classified as Category B and triggered two policies thus Environmental Assessment (OP/BP 4.01) and Pest Management (OP 4.09). The project prepared Environmental and Social Impact Assessment (ESIA) report which identified potential adverse environmental and social impacts of the project particularly as regards to Component 2 and proposed mitigation and monitoring measures in environmental social and management plan, and Pest Management and Monitoring Plan. At restructuring stage, which included a new component on rural roads, additional policy on Involuntary Resettlement (OP/BP 4.12) was triggered, while maintaining the Category B rating. Consequently, an Environmental and Social Management Framework (ESMF), Pest Management Plan and Resettlement Policy Framework were put in place. The safeguards documents were disclosed to the public, as per Bank requirements. 30. The mitigation measures were coordinated through the Ministry of Agriculture (led by the Land Resources and Conservation Department) which included focal points in all implementing departments. Key deliverables included orientation and sensitization of front line officers and farmers on safeguards, capacity building, supporting front line staff with protective kits, safeguard screening of various activities. Various information, education and communication (IEC) materials were developed in liaison with the department of agricultural extension services, and mainstreamed within various awareness and outreach programmes. Safeguards compliance was carried out under the project (mostly relating to Component 2 and 4). Gender and HIV/AIDS were appropriately integrated as part of implementation of the Environmental and Social Management Plans (ESMP). The Bank’s support through safeguards specialists in implementation support missions supported the delivery of social and environmental safeguards within the project. The rating is “Satisfactory” implying that all safeguard issues were complied with. 31. Financial Management. Overall, the project had put in place adequate budgeting systems and plans based on the agreed annual work program and annual procurement plan which were approved by World Bank before any implementation started. Although the financial accounting software (TOMPRO) was operational at national level, it took time for all financial records to be entered in the system. The project experienced delayed audit reports, late liquidation of funds from districts and lack of adherence to controls and 21 procedures that resulted in audit reports to be qualified. These were largely due to inadequate competent staff to manage project resources especially at all levels (Headquarters, Departments and district level). The previous external audit done was qualified with potential ineligible expenditures amounting to MK47.93 million 3 (approximately US$65,650). 32. In order to mitigate against the above gaps, among others, the project recruited Finance Management Specialist (and 2 assistants) who were trained in World Bank finance management procedures and worked closely to empower finance staff from Agriculture and other implementing Ministries. Such efforts improved the FM performance, as recently observed through (i) timely submission of interim financial reports, with improved quality, (ii) migration of all financial reporting to Tompro, (iii) improved bank reconciliations, and (iv) timely submission of audit reports. Towards the end of the year, the project recruited 8 justification officers at Agricultural Development Division (ADD) level to improve on financial control and oversight to the districts. A recent assessment revealed great strides by districts in addressing the previous FM challenges, with improved documentation to support all payment transactions. Although such measures came towards the end of the year, the project closed at good optimism towards addressing FM issues, that could be learnt in future projects of similar nature. The financial management rating is “Moderately Satisfactory”. 33. Procurement: The assessment of procurement at MTR was that it was adequate to carry out the procurement functions of the project although the Ministry was under staffed (Procurement Unit). In view of this, the project recruited 2 procurement specialists (consultants) to support the implementing Ministries on procurement matters. Based on this, there were some improvements as noted through the timely submission of procurement plans, and initiating necessary procurement processing using World Bank procedures. Towards the end, additional support was provided to the MoAIWD to improve record keeping through the recruitment of Documentation officer (consultant). In view of these actions, some progress was observed as opposed to the past when the project experience procurement delays emanating from lack of capacity, which ultimately delayed implementation especially where huge procurement processes were required. Some delays on procurement were as a result of government bureaucratic delays as well as poor coordination with technical staff when initiating some procurement aspects. In view of the above, the rating for procurement is “Moderately Satisfactory”. 3 Comprised of unsupported payments MK26.616 million, payment of activities with no reports MK11.625 million, value of unrecorded stocks MK4.624 million, and inadequate procurement procedures MK5.062 million. 22 2.5 Post Completion Operation/Next Phase 34. The project activities remain sustainable based on implementation arrangements through Government systems coupled with strong capacity development and institutional building elements. Project activities were integrated in the Government systems, with priority focus on: (i) capacity building at various levels targeting staff, farmers and institutions; (ii) strengthening use of Government systems and local governance structures to implement activities; (iii) wide acceptance of some reforms supported by the project (e.g. FISP and SGR); (iv) development of new policies and strategies to shape the agricultural sector; and (v) institutionalized ASWAp institutional framework and coordination mechanisms (which are still operational even after project closure). Based on the support towards roads improvements, the maintenance plan has been agreed where Government committed to support maintenance of the improvements made by the project. At community level, the existence of community clubs will support similar efforts towards maintenance of roads after project exit. All such efforts will ensure sustainability of project activities. 35. Following the Government’s request for continued support of the project, the trust fund donors have expressed interest to develop a follow up project. These donors included EU, Government of Flanders, Norway, Irish Aid, and USAID who have ultimately signed the amendments to their Administrative Agreements for follow up support through the existing MDTF. The MDTF has created confidence among donors and Government as a good funding instrument to advance policy reforms, enhance donor coordination as well as respond quickly to emerging issues. In view of this, plans are underway to develop a new project based on lessons from the ASWAp SP. 36. World Bank has recently approved a new Agriculture Commercialization Project (P158434), and has drawn key lessons from ASWAp SP, notably capacity building of producer organizations, strengthening public private sector dialogue, land administration capacity and support to enabling business environment. Key lessons from the project has informed the Agricultural Support and Fiscal Management Development Policy Financing (P153753) which has also been approved. The latter include FISP reforms and agribusiness environment which were key interventions under the ASWAp SP. 3 Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Overall Rating: Substantial 37. Relevance of Objectives: This is rated High. The PDO of the project remained relevant at the time of project closure. This is reflected in the GoM’s current priorities as well as the Bank’s CAS (2013-2016). At the time of project design, the project objectives aligned to the Malawi Growth and Development Strategy (2006-2011). Following the successor medium term development strategy from 2011 to 2016, agriculture and food 23 security remained a priority area. The project has been a precursor towards the development of the first ever Comprehensive Africa Agriculture Development Programme (CAADP) investment plan called ASWAp, building the capacity of Government towards implementation and ultimately supporting the investments to translate this investment plan into action. 38. The first theme of the Bank’s CAS (2013–2016) focuses on promoting sustainable, diversified and inclusive growth, with main outcome 3 through increased productivity and commercialization of agriculture and sustainable management of water resources. Specific focus has been to diversify the economy and increase productivity, particularly for crops and exports, and build land and water resource management and institutional capacity. The project made a direct contribution through improving food security, diversification, institutional capacity development, market access and business environment. The project also responds to the objectives of the Bank’s Africa Strategy, under pillar 1 (competitiveness and employment), which aims to contributing to public investments in particular agricultural productivity and employment. 39. Relevance of Design: This is rated “Substantial”. The project had good design features such as (i) use of Government systems to implement the project, including decentralized local Government at implementation level, (ii) pooling of donor resources together (through MDTF) to support the project, (iii) capacity building and institutional development at national and local level, (iv) multi sectoral implementation and coordination among MoAIWD, MoITT, MoLHUD and other stakeholders, and (v) strong research and extension. Additional design towards improving effectiveness and efficiency of FISP has been a good feature, as it linked directly to outcome indicators of improving maize yields and food security. 40. The project had some design shortcomings which included (i) complexity of the project amidst weak capacity of the client and decentralized structures, (ii) poor formulation of indicators e.g. lack of baseline study and using some national level indicators (from ASWAp) to measure the project performance, making it difficult to attest attribution e.g. relying on national level indicators like crop estimates, food security status, affected by other external interventions, and (iii) complexity of the project with many activities (with numerous implementing departments involved) and covering all 28 districts, making it difficult to monitor and achieve depth of interventions. 41. While essentially logical, the causal link from component activities and outputs to outcomes cannot be considered totally unambiguous. Factors extraneous to the project could reasonably affect project outcomes. In particular, the PDO indicators on maize yields, food security, investment budget execution could be attributed to other external factors and interventions beyond the project. The restructurings did not substantially change the PDO indicators (see Table 2) but assisted to tighten the link with intermediary indicators to refine attribution of project outcomes to the project activities. 42. Relevance of Implementation: This is rated “Substantial”. The project improved coordination, harmonization and dialogue within the agriculture sector. The project was 24 implemented in line with the Malawi decentralization policy, where implementation at district level and community level was coordinated through respective district councils. The involvement of various implementing departments (within MoAIWD, MoLHUD and MoITT) increased intra and multi-sectoral collaboration e.g. through Joint Sector Reviews, Sector working Groups, Technical Working Groups and Executive Management Committee. The project has been responsive to emerging needs in the sector, as it contributed to the project objectives e.g. use of NGOs for cassava, sweet potato and extension delivery, use of CGIARs for basic legume seed production, production of maize for humanitarian support, banana bunchy top virus disease, fall armyworm outbreak etc. 43. On the funding side, the pooling of resources through the MDTF provided an opportunity to: (i) quickly respond to emerging issues as demanded by client, and (ii) ensure that donors mutually speak with one voice in advancing various policies, reforms and project activities (see Box 1 and 2). In view of this, donors expressed high commitment to continue the support through the MDTF after project closure. The same demand was expressed by Government. 44. The other major challenge has been the national spread of the project with numerous activities, amidst weak capacity of Government at various levels. The project scale up should have been well informed by lessons from implementation of first few districts before rolling out to all the districts of the country. 3.2 Achievement of Project Development Objectives Overall Rating: Substantial 45. The PDO includes effective investments leading to sustainable agricultural growth and food security, and strengthening natural resource base. As can be seen, the PDO reflect the agricultural SWAp nature that the project directly contributes to but not directly attributable. In view of this, the PDO was developed in a complex and broad manner covering high level impacts, outcomes and outputs. The project generated important outcomes contributing to the high level impacts, summarized as (i) institutional capacity to implement ASWAp, (ii) improved productivity, diversification and natural resource management, and (iii) access to physical markets. On this basic, the project made significant achievements which directly contributed to high level impacts. Table 3 below illustrates the cumulative progress as per PDO indicators:     25 Table 3: PDO Indicators, Baseline, Targets and Final Achievements PDO Indicator Baseline Target Achievement Average national maize yields (mt/ha) 1.4 2.1 1.9 Percentage of food secure rural households 84 95 77 Percentage of MoAIWD investment 98 98-100 101.9 budget execution Levels of soil organic matter in conservation 1 1.5 3.2 farming areas (%) Percentage change in motorized traffic volume - +10 219 on targeted rural roads Number of project beneficiaries (million) (of 0 3 (50%) 3.1 (48.2%) whom % females) (i) Institutional Capacity to support and implement the ASWAp 46. The institutional development and capacity building supported the MoAIWD in the areas of ASWAp coordination, planning, monitoring and evaluation, technical skills, administrative systems and land administrative capacity. Such efforts have been measured through the PDO indicator “Percentage of MoAIWD investment budget execution” which has been reached at 101.9 percent against a target of 98-100 percent. The budget execution is within acceptable ranges as compared to baseline when there were huge budget overruns. For the first time, the annual work plans and budgets are fully aligned to the ASWAp framework, making it easy to report achievements as per ASWAp result areas. 47. The project put in place the ASWAp Secretariat which has been institutionalized within the Ministry of Agriculture’s Planning Department. The secretariat has been instrumental towards coordinating ASWAp implementation and dialogue mechanisms which included: (i) Executive Management Committee, (ii) Joint Sector Review, (iii) Agriculture Sector Working Group, and (iv) 7 Technical Working Groups (TWG). These mechanisms were not there before the project, and have fostered ownership, openness and inclusivity among stakeholders in the agriculture sector. Creation of such structures and ensuring that they remain functional even after project closure has been a remarkable milestone of the project. Coordination (within the Ministry’s departments and across other Ministries and sectors) has greatly improved as reflected through joint planning and implementation of various activities. These ASWAp institutional structures (see Diagram 1 below) have been the best practice within the region, as part of promoting stakeholder dialogue and reinforcing the CAADP mutual accountability framework. The institutionalization of Executive Management Committee has provided a good opportunity for merging various project steering committees, and ensured close alignment towards the ASWAp framework. Similarly, the discussions at TWG feeds into the agriculture sector working groups which in turn feeds into the Joint Sector Review. 26 Diagram 1: ASWAp Institutional Framework 48. The project supported in training staff as well as putting in place necessary policies, systems and reforms as preliquisite for effective implementation of ASWAp. The key ones included National Agricultural Policy, Revised Strategic Grain Reserves Guidelines, Contract Farming Strategy, Core Function Analysis, Agriculture Risk Management Strategy, 10 New Land Bills (enacted), Agricultural Statistics Strategic Masterplan, Review of Agricultural Extension Policy, National Seed Policy and ultimately the ASWAp (including a successor programme, commonly called National Agriculture Investment Programme). 49. The funding mechanism through the MDTF, managed by the World Bank strengthened coordination and harmonization of donor support to the ASWAp. This was achieved through common agreement of annual work plans and budgets, as well as key policies and reforms. A case in point has been on FISP reforms where all positions were harmonized through a FISP Policy Note and successfully negotiated with Government (see Box 1). This funding mechanism through the MDTF attracted high interest from Government and donors who demanded the project to continue after its closing date. This, in addition to increased institutional capacity development of the Ministry of Agriculture increased donors’ confidence to commit to ASWAp, as achieved at 72 percent, above the target of 40 percent. The key notable achievement under institutional capacity has been the development of ASWAp, a result oriented prioritized plan to guide investments in the agricultural sector. This plan, as aligned to CAADP was widely consulted and accepted by stakeholders. 27 (ii) Improved productivity, diversification and natural resource management 50. The project directly contributed to PDO indicators of “average maize yields”, percent of food secure rural households” and “levels of soil organic matter in conservation farming areas”. The national maize yields increased from 1.4 to 1.94 mt per ha (substantial achievement based on target of 2.1 mt per ha, with actual maize production increasing from 2.78 million to 3.22 million mt respectively). The deviation is mainly attributed to drought induced by El Nino and subsequent floods, which led to maize production decline of 30 percent and 14 percent in 2015 and 2016 respectively. In particular, the project had been promoting improved maize hybrids and composites seeds through various demonstrations and farmer try outs mounted across all the districts in the country. Coupled with strong agricultural extension, the project contributed to 75 percent of farmers at national level adopting improved maize seeds against 25 percent before the project. The direct support through the seed component of the FISP reached approximately 2.5 million, greatly contributed to such maize productivity increase as well. 51. The project promoted crop diversification particularly legumes/pulses, sorghum, millet, bananas, rice, cassava and sweet potatoes, with good eventual success on production. For instance, pulses increased from 396,868 mt to 892,23 mt, cassava from 3.5 million to 4.8 million mt, sweet potatoes from 2.4 million to 5.7 million mt, ground nuts from 260,576 mt to 335,972 mt. The project greatly contributed to this through seed production systems, trials and demonstration, and responding to emergencies. The project further promoted nutrition through training as part of integration within crop diversification efforts, which ultimately contributed towards food security at higher impact level. 52. The project promoted sustainable land management practices, aimed at increasing soil organic matter in conservation farming areas in order to improve crop productivity. The soil organic matter status was substantially achieved, at 3.2 percent against a target of 1.5 percent, measured in sandy soils in conservation farming areas. Cumulatively a total of 210, 806 ha had been put under the conservation agriculture practices, exceeding project target of 200,000 ha. Additionally, 129,156 ha have been put under complimentary soil and conservation practices across the country. The project supported in developing the National Conservation Agriculture Guidelines as well as supporting a training of trainers’ team to deliver capacity building targeting staff and farmers. 53. Percentage of food secure households: Food security status was substantially achieved at 77 percent5 against the project target of 95 percent. The deviation was due to adverse climate change risks, particularly drought induced by El Nino and floods which increased households’ vulnerability to food insecurity. This indicator measures national food security, which could be effected by other interventions and external factors. The 4 Yield is measured as four-year average, baseline established in 2008 and final figure achieved in 2016. Similar comparison made in following paragraph. 5 Estimated food insecure households based on the national crop estimates 28 situation could have been worse without the project interventions. The key project interventions directly contributing to this included support to FISP (seed component), response to emergency dry spell (cassava, sweet potatoes, maize), legume production and risk management. The project supported approximately 2.5 million farmers to access 4,060 mt of certified seeds (maize and legumes) under the FISP, representing approximately 63 percent of total smallholder farming households. The project also distributed clean cassava and sweet potatoes planting materials covering 37,581 farmers in 14 districts, supported 5,602 farmers to receive clean banana planting materials in response to banana bunchy top virus attack. The project further supported private sector winter production of 3,973 mt of maize which was distributed for humanitarian response to food insecure households. As part of risk management capacity building, the project supported the customization of Africa Risk Capacity (ARC) initiative for macro weather insurance. On the latter, a pay out of US$8 million was triggered which supported humanitarian response interventions. Without such project efforts, the percentage of food secure households would have been much worse than the attained level of 77 percent. (iii) Access to physical markets 54. The PDO indicator “percentage change in motorized on targeted rural roads” measures the impact of project interventions on improvement and maintenance of unpaved rural roads. This was aimed to enhance unpaved rural roads connectivity and accessibility to input and output markets. Based on the Project Impact Study, an average increase in motorized traffic of 219 percent was achieved, against the target of 10 percent. This demonstrated a tremendous usage of the rural roads improved under the project, leading to increased connectivity and access to various markets for agricultural commodities. The completed roads have opened up to areas of agricultural potential and facilitated input and output markets, which needs to be quantified further by the project to have solid attribution. For instance, the completed roads can facilitate private sector to preposition and sell the inputs (seeds and fertilizers) under the FISP, hence ensuring timely access of inputs to the farmers in order to increase productivity and food security. The times to transport commodities to the markets have been reduced to more than 70 percent. Cumulatively, the project substantially achieved 527 km road rehabilitated and transmittable (against a target of 549 km). 55. As part of execution of roads component, 28 contractors were mobilized to support the road works. The contractors were empowered through several training activities including Cold Mix Asphalt training, a new technology on low volume sealing of roads. The Cold Mix Asphalt training was enthusiastically received and the trial section attracted considerable interest from various stakeholders mostly due to its ease of construction and the labor intensive approach.     (iv) Number of beneficiaries 56. The project substantially reached 3.1 million beneficiaries of which 48.2 percent were females (exceeding the target of 3 million, 50 percent of whom were to be females). The significant achievement has been due to wide reach of beneficiaries through lead farmers, extension workers and NGOs as well as support through the FISP. On the latter, 29 the project provided more than planned resources, in response to Government request following emergency responses. The engendering of M&E tools further assisted to disaggregate the beneficiaries by gender, and ensuring increased beneficiary reporting by gender. The project supported the development of gender and HIV/AIDS strategy, which was implemented and operationalized through the project. All such efforts contributed to substantial gender achievement. (v) The overall achievement of the project based on the PDO and its indicators provides support for a rating of “Substantial”. The project substantially achieved its PDO indicators, despite some attribution gaps. The project made significant achievements on: (i) improving institutionalization of ASWAp – among implementing departments, projects, donor funding aligned to the ASWAp, coupled with functional dialogue mechanisms in the sector, (ii) improving intra and multi-sectoral coordination e.g. transport, trade, roads, lands, (iii) supporting policies and reforms to improve the functionality of the agricultural sector, and (iv) supporting the development of the prioritized agricultural investments (ASWAp) and ensuring implementation take off. Box 1 and 2 provides some examples of reforms and policies that the project supported. 30 Box 1: FISP Reforms The Farm Input Subsidy Program (FISP) is implemented by the GoM to enhance agricultural productivity and food security. The program has come to dominate the overall agricultural budget, absorbing 75 percent of the total value of the agriculture budget in 2014/15, crowding out other potentially valuable investments in the sector. Inefficiencies in the implementation of FISP have led to high costs. The system has been characterized by an inefficient tonnage allocation formula that increases average purchase costs; an inefficient fertilizer delivery mechanism that increases logistical costs and cost overruns and delivering inputs late to farmers. To address these issues, the project supported FISP reforms aimed at improving efficiency of the programme. The major reform areas adopted included: (i) the direct retailing of fertilizer by the private sector to FISP beneficiaries; (ii) reductions in the subsidy level from 97 percent of the retail price to 80 percent, with the Government issuing fixed value coupons to beneficiaries; and (iii) piloting of productive farmers in 2 districts. Implementation of these major reforms had a positive impact, resulting in reduced costs and improved efficiency. Private sector firms were granted contracts and delivered 79% of the fertilizer (increase from 23% in 2016/17). The fertilizer was fully delivered within six weeks, a much shorter time period than through the traditional public sector model. The pilot private sector retailing model resulted in cost savings of approximately US$5.1 million in 2016/17. The reduced subsidy levels and increased farmer contributions resulted in cost savings to the Government to a value of about MWK 12.8 billion (approximately US$16.7 million) in 2016/17. For the first time, Government expenditure was within the budget of MK35 billion. This translated to approximately 3.5% of the national budget, from around 10% in 2014/15 before the reforms. The project initiated to have a common donor position in negotiating various reforms with Government. Scaling up the reforms will create opportunities to further reduce the cost of FISP, providing Government with much needed fiscal space at a time of pressing expenditure needs on food. Increasing the involvement of the private sector in retailing the subsidized items to cover the majority of the FISP would result in further efficiency gains, leaving the public sector responsible for serving only those areas that private sector farm inputs suppliers are unable to reach (such as in remote areas). Already as per plan for 2017/18 FISP, Government has indicated strong interest to maintain and scale up the reforms. Further upscaling of reforms is observed in: (i) maintaining fixed coupon value, (ii) introducing cereal coupon to enhance diversification and ensure wide choice of beneficiaries, (iii) scaling up private sector retailing to target 100%, (iv) maintaining 900,000 beneficiaries, and (v) expanding the pilot of productive beneficiaries to more districts. 31 Box 2: Policies, Strategies and Reforms The project supported the development of the prioritized investment framework to support the agriculture sector, called ASWAp. The project was developed to boost the implementation of the ASWAp through basket financing modality called MDTF to specifically support specific areas of the investment plan. The project was implemented from 2010 to 2016, and further support is provided to develop a successor plan (draft submitted). The project supported the development of the National Agriculture Policy (NAP) (2016-2020) which was approved in November 2016 to guide the agriculture sector, aiming at transformation to stir agricultural growth and poverty reduction. The project supported the development of new Strategic Grain Reserves (SGR) Guidelines– aimed to improve management of SGRs for humanitarian and commercial functions. A Contract Farming Strategy was supported to guide contractual arrangements between various players within the value chains. The project also supported the development of New Seed Policy (at cabinet level), following the use of the old legislation in 1983. In response to the agricultural risk assessment, the project supported the development of the Agricultural Risk Management Strategy. Alongside this, a communication strategy for micro and macro insurance and regulatory framework to guide micro insurance has been developed, and being implemented. The project further supported the development of risk management unit, technical working group on risk management which is functional and integrated within the Ministry of Agriculture’s structures. Additional capacity building support was provided to customize the model under Africa Risk Capacity (ARC) initiative. The project supported processes to review the land bills, and eventually 10 new land bills have been enacted, and currently being gazzeted. A Core Function Analysis (CFA) has been finalized, a key reform to guide the role and structures of the Ministry within the agriculture sector. Review of National Agricultural Extension Policy was supported, which is feeding into the current development of National Agricultural Extension Advisory Strategy. The project supported various studies under fisheries, trade, lands and agriculture. Such studies have been very critical to shape policy dialogue. For instance, the interventions under review of export bans provided a good scope to review the control of goods act which is at advanced stage. Various reviews of regulatory frameworks under trade led to improvement in the World Bank Doing Business index, which currently stands at 133, from 143 in the previous year, as well as good ratings under World Bank 2017 Enabling Business of Agriculture – particularly on finance and markets. The project facilitated policy dialogue through public private dialogue forum, joint sector reviews, agriculture sector working groups, technical working groups and various task forces. 3.3 Efficiency Overall Rating: Substantial 57. Despite the delay in project effectiveness and implementation, the project has registered high economic returns. The economic rate of return (ERR) calculated for the project at 35 percent is still high enough to conclude that the returns to investments were justified despite the fact that the figure was slightly below the expected return calculated at appraisal of 37 percent as detailed further in Annex 3. The ERR observed is still within acceptable range, despite the project experienced challenges as regards data availability (poor) and quality (low) that could not allow a more robust analysis. Some critical 32 information required to undertake such an analysis were not systematically monitored and documented during project implementation. It should further be noted that the lowered net benefits resulting from the project activities were largely a result of the weather shocks (droughts and floods) that affected the country during the project implementation period. At the time of appraisal, sensitivity analysis was undertaken to account for eventualities associated with implementation capacity, specifically in ‘an increase and decrease in costs’ and also ‘an increase and decrease in benefits’ associated with the project. Both an increase in costs and reduction in benefits resulting from weather shocks were more realistic projections in line with the ERR calculated at project closure. With regard to resource utilization under component 2 (particularly on sustainable productivity growth initiative), the cumulative expenditure for the subcomponent totaled US$82.3 million compared to US$93.7 million calculated at appraisal, AF1 and MDTF resulting in savings, although some activities were added to the project during the restructurings. With regard to the timeline, project implementation was extended following the restructurings during AF1 and AF2 (MDTF), and was implemented within specified periods. However, it should be noted that during the restructuring of the project there were no major disruptions in implementation as retroactive financing arrangements were included in the legal agreements. The funds allocated towards support for FISP, which accounted for more than a third of the budget, were implemented more efficiently (front loading the expenditures) than initially envisaged, resulting in re-allocation of more resources towards FISP implementation. Therefore, the cost on FISP exceeded both the initially envisaged budget at appraisal and the budgets calculated during the project’s two restructurings (by over US$12 million). The rating for efficiency of the PDO and associated outcome targets is rated as “Substantial”. 3.4 Justification of Overall Outcome Rating: Satisfactory 58. The Satisfactory rating against the PDO is justified by a Substantial rating for relevance, Substantial efficacy and Substantial efficiency. Even though the project design was robust and complex, with weak attribution to high level impacts, the project registered significant progress towards meeting its outcomes. Particular merit has been observed towards institutional development towards ASWAp, laying foundations for future implementation of SWAp, as well as reducing food insecurity which would have been worse if the project was not implemented. Putting in place the ASWAp and its structures has created good foundation for Ministry of Agriculture to manage similar SWAps and other complex investments in the agriculture sector. 3.5 Overarching Themes, Other Outcomes and Impacts 59. Gender: The project supported the development (and implementation) of Gender and HIV/AIDS strategy for the agricultural sector, trainings and awareness activities targeting staff and farmers. A household approach has been used which improved gender mainstreaming within the project, leading to realization of gender equality at household level. UN Women worked closely with the MoAIWD to integrate household approach and other activities aimed at closing the gender gaps in the agricultural sector. The project has 33 reached cumulatively reached 48.2 percent females. This has been a substantial achievement in meeting the gender targets. 60. Social Development: The project had been flexible to respond to natural disasters and emergencies. Key examples include response to El Nino induced drought through distribution of cassava and sweet potato planting materials in all districts and winter production of 3,973 mt of maize for humanitarian response by private sector. The project also responded to emergency outbreak of banana bunchy top virus disease which devastated banana industry in Malawi by supporting a pilot in 2 districts. A total of 65,000 clean banana plantlets were imported for micro propagation and ensure that farmers access good quality planting materials. 61. Institutional Strengthening: Capacity building and institutional strengthening for ASWAp has been a core feature of the project. The project supported various short term and long term training, studies, training in land administrative capacity, training roads contractors on financial management and low volume sealed roads, training on business environment, infrastructure support for commercial courts, system development, e-permits at immigration, land information systems etc. As part of institutional strengthening, the project also supported the following: 1. Setting up ASWAp Secretariat in the Department of Agricultural Planning Services of the Ministry of Agriculture. This unit has been institutionalized and coordinates all projects and implementing departments towards the ASWAp framework. Additional technical assistance was provided by the project to support the secretariat to effectively perform this role. 2. Supporting Institutions: The project accommodated non state actors to deliver project activities e.g. 2 NGOs delivered extension services, 8 NGOs distributed cassava and sweet potato planting materials to farmers, CGIARs produced basic legume seeds and private sector undertaking roads works (28 contractors) in 10 districts. This contributed to strengthening capacity of institutions to delivery ASWAp activities. Support to Lilongwe University of Agriculture and Natural Resources (LUANAR) for banana micro propagation also contributed to institutional strengthening of academia in order deliver clean planting materials to farmers. 3. Multi sector collaboration: The project brought together various Ministries (Agriculture, Trade, Lands, Transport) to implement various activities. Before the project, this has not been a common feature. A functional Executive Management Committee of the ASWAp which brings high level representatives from Agriculture, Lands, Trade and Local Government is place and functional. 4. Policy analysis, systems and reforms: The project supported FISP reforms, development of National Agriculture Policy, ASWAp, Contract Farming Strategy, New Guidelines for SGR (following review), Core Function Analysis, Agriculture Risk Management Strategy, Review of Agriculture Extension Policy and Strategy 34 development, ARC Risk Management Customization (and risk management structures developed); Fleet Management system; Tompro accounting system; and numerous other studies, policies and systems. 5. Equipment support - supporting Ministries of Lands, Agriculture, Trade (Annex 2). 6. Staff capacity building: delivered in all Ministries in order to acquire staff members with right skills to enable them discharge their duties effectively. 3.6 Other Unintended impacts and outcomes (positive or negative) 62. There have been minor instances on the effect of road works affecting some farms of households through road works, particularly diversions. The project followed up the issue, while ensuring adherence to the Environmental and Social Management Plan. There is need for continued follow up to ensure that if compensations apply, the Government should pay the affected households accordingly.     3.7 Summary of Beneficiary Survey/Stakeholder Workshops 63. There was no beneficiary satisfactory survey and stakeholder workshops. The implementation completion report did not solicit impacts and beneficiary feedback on satisfaction on the project. 4 Assessment of Risk to Development Objective Rating: Substantial 64. Given the context of the agriculture sector, the adverse weather effects negatively affected maize yields and ultimate food security. The project made good progress on institutional capacity and increasing traffic volumes, as well as soil fertility improvement in conservation farming areas. The risks to the GEF objective was related to high population growth which has led to further land degradation, unsustainable agricultural practices which pose a threat to sustain soil fertility and organic matter in the soils. 65. The project had a stronger focus on capacity building at all levels. At grass root level, the increased its focus on demonstrations, farmer try outs, training, which led to increased adoption of improved varieties and improved agricultural technologies. The project introduced pass on arrangements e.g. cassava and sweet potato planting materials, banana planting materials and livestock. Such arrangements will ensure project sustainability. The institutional arrangement of ASWAp has been put in place with active ASWAp secretariat steering coordination and leadership. Such dialogue mechanisms are still functional, supported by the Ministry of Agriculture’s budget, and sometimes by other donors. Under the roads component, maintenance strategy and community maintenance clubs are expected to ensure sustainability of project interventions. However, even though such 35 mechanisms are in place, the resource constraints at national level and inadequate capacity of community road maintenance clubs remain a risk to achieve sustainability. Sustainable land management has been a core feature to ensure sustainable productivity and soil fertility, promoted through conservation agriculture, manure, catchment management and other nutrient management practices. 66. Some of the potential exogenous and endogenous factors that could affect the sustainability of the development outcomes include: (a) the need to fully institutionalize ASWAp secretariat within the mainstream Ministry of Agriculture’s operations in order to sustain the gains; (b) politicization of the FISP might disturb good momentum to the FISP reforms (as Government resists to exist strategy); and (c) lack of adequate capacity in the decentralized structures, particularly on financial management. The weak financial management emanated from control in use of funds for intended purposes. Even though some finance management improvements were noted, the existence of qualified audits remained a risk that resources might have been used for unintended purposes, leading to inefficiencies. In view of the latter, the project supported the recruitment of justification officers in all the 8 Agricultural Development Divisions in order to improve financial control and oversight to districts but this needs to be institutionalized than rely on the project budget. In view of the above, the risk rating is “Substantial”. 5 Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 67. The quality at entry of the operation was based on sound technical analysis during preparation and wide consultations with stakeholders. The project was developed in response to the GoM’s request for the proposed interventions to build capacity of the Ministry towards putting in place a prioritized investment plan for the agricultural sector. The project was also aligned to the Bank’s CAS. The key strengths in the design included full consultations within the Bank (across the sectors), donors, non-state actors and Government in designing the project. The project incorporated lessons from previous Bank projects and other similar interventions. The background analysis assisted to identify key strategic entry points that the project should focus. However, much as the project design was good, the project’s complexity increased in relation to the limited capacity of the implementing institutions. 68. Capacity gaps on the client side to effectively implement the project were visible, and somehow mitigated through institutional capacity building. A more thorough assessment of the Government’s implementation capacity, including monitoring and evaluation would have been done prior to implementation. Further assessments ought to have been done on the project scaling up approaches as the wide spreading of the project in all districts posed monitoring challenges as well as spreading interventions thinly. The 36 project was ambitious as regards influencing national food security in all districts based on the allocated resources at entry, amidst weak monitoring and evaluation system. This, notwithstanding, the project was conceptualized with good design, with high technical support from the Bank, while putting in place needed technical assistance in order to address capacity shortfalls from the implementing institutions. The project further strengthened non state actors (e.g. NGOs, CGIARs, private sector) to be involved in order to effectively deliver the project. In view of this, the rating at quality of entry is rated as “Moderately Satisfactory”. (b) Quality of Supervision Rating: Satisfactory 69. Bank supervision missions were undertaken every six months and included all key technical specialists, consultants, fiduciary specialists and safeguards. A total of 16 supervision missions were completed with Aide Memoires on file. The bank supervision capacity was beefed up from 2014 when full staffing was in place at the Bank country office to manage the MDTF, which led to improved follow up of project issues. World Bank as the trust fund administrator had also been hosting the Trust Fund Management Committee (TFMC) meetings every six months (after implementation support mission) to brief the committee on progress and outstanding issues. The bank strictly adhered to presenting annual work plans and budgets for approval to the trust fund management committee each year. The presence of full time project task team leaders and technical staff on the ground assisted to effectively backstop the project and engage on policy issues and reforms as it affected the project. The good performance on the trust fund management gave trust and confidence to the donors who wanted to continue the trust fund through a follow up project. The same sentiments were echoed by the client, who requested for follow up project through the same multi donor trust fund facility.    70. On a monthly basis, the World Bank had meetings with the client to discuss progress on actions agreed in the implementation support missions. The Bank had put up measures to address challenges observed during project implementation. An example being putting in place 8 Justification Officers in the Agricultural Development Division to improve financial management and control. The Bank also supported the client with necessary capacity building to respond to various skills gaps observed. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 71. Overall Bank performance is assessed to be Moderately Satisfactory based on the ratings for quality at entry, quality of supervision and the overall outcome rating. Despite some shortfalls on having a good design, robust, and complex project amidst weak capacity of the implementing institutions, the Bank team supported in beefing up the capacity through good supervision and provision of technical assistance/consultants to support to 37 project delivery. The Bank team was so proactive to address any agreed actions in supervision missions and walked with the client to ensure effective implementation. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 72. Government demonstrated commitment and ownership to the project, as it remained Government’s main flagship project implemented following Government systems and structures. Government departments have been leading in implementing and coordinating various activities. The Executive Management Committee (EMC) under the Ministry of Agriculture (with participation of other implementing Ministries)6 has been in place and meeting bi-annually to provide strategic oversight of the project work plans and budgets, in line with ASWAp framework. The ASWAp secretariat was formed and institutionalized within the Planning Department of the Ministry of Agriculture led by a senior staff. Government provided personnel to coordinate the project, including desk officers at all implementing levels, as well as office space. Government complied to the Bank’s safeguards policies, with last supervision rated as Satisfactory. Due to successful implementation of the project, it requested the Bank to extend the scope of the project in order to fully achieve the project development objective and develop a follow up new project. The ownership, leadership and traction by implementing departments was a problem in first years. Overtime, this improved due to capacity building efforts, strong leadership and close supervision of the project. (b) Implementing Agencies Performance Rating: Moderately Satisfactory 73. In the initial years, the project had limited traction due to lack of clarity on leadership when it was led by a senior management officer (called Controller of Agricultural Extension and Technical Services). Eventually, leadership improved when Government appointed a dedicated Project Coordinator to oversee the implementation and coordination of the project. This was also beefed up by providing of additional Government officers and consultants to support the project coordination, as well as the ASWAp Secretariat. The ASWAp secretariat was formed, fully functional led by senior officer from the Ministry. It supports the EMC in its overall role for strategic direction of ASWAp. The main challenge observed has been poor financial management, delays in implementation and filling of 6 EMC comprises of Ministry of Agriculture, Irrigation and Water Development (chair), Ministry of Local Government and Rural Development, Ministry of Finance, Ministry of Industry, Trade and Tourism, Ministry of Lands, Housing and Urban Development, and Ministry of Transport and Public Works. The EMC (acts as Steering Committee for the project) is supported by the ASWAp Secretariat in providing the overall strategic direction for the ASWAp. 38 vacant positions. Much as the project’s coordination was integrated within the Ministry’s structures, the lack of specific Project Implementation Unit (PIU) set up remained a challenge based on institutional rigidities that at times delayed implementation of activities. An action plan was developed to address the shortcomings. Key among such problems included poor financial management (rated moderately unsatisfactory). Towards the end of the project, the project recruited justification officers to improve financial control for the districts. Such efforts have been commendable in improving financial control although they were put towards the end of the project. The improvement of submission of audit reports, and reduction on financial control gaps relatively attest to positive forward looking on financial management. 74. The Ministry participated actively in the implementation support missions, which were carried out timely, and provided reports to inform discussions. The M&E function which has been weak from entry gradually improved as additional consultants were employed to beef up the capacity in the project coordination office and ASWAp secretariat. (c) Justification of rating for Overall Borrower Performance Rating: Moderately Satisfactory 75. Overall borrower performance is assessed as “Moderately Satisfactory”, based on the combination of ratings for Government performance and implementing agency performance. Despite high commitment, ownership, leadership and fulfillment of Government commitment (staffing, office space, time), the project suffered from some lapses in financial management. An action plan and implemented to address the financial management challenges, although towards the end of the project, with positive optimism in going forward. 6 Lessons Learned 76. Involvement of multiple implementing partners in SWAp improves multi sectoral collaboration and ownership, but best achieved with a strong champion. The involvement of other implementing players other than Ministry of Agriculture e.g. Ministry of Lands, Transport, Roads Authority, Trade provided a unique opportunity to strengthen multi sectoral coordination. The weak leadership of the champion (Ministry of Agriculture) reduced anticipated gains realized from such collaboration and investment. In view of this, capacity building of the champion is key to sustain this leadership for such multi sectoral projects. 77. Basket funding modalities (like MDTF) promotes coherence among donors in advancing reforms, policy positions as well as flexibility and fast decision making. The set- up of the multi donor trust fund ensured that all donor mutually agreed to reforms and policy positions advanced with Government unlike in the past when there was discrete fragmented implementation. A case in point has been the advancement of reforms under FISP and other policy positions (see Box 1 and 2). The multi donor trust fund offered room for flexibility of interventions to respond to emergency issues by allowing quick decisions 39 to be made. This reduces transaction costs towards decision making, and increases ownership and accountability in decisions made. 78. Use of Government systems and structures is good towards promoting ownership, but delays implementation, in a context of limited capacity. Much as the project was implemented using Government systems it was evident that implementation delays due Government bureaucracies. The complexity of the project warrants the establishment of dedicated PIU with key qualified staff. Further, for projects that has national coverage, the regional offices need to be considered for proper project backstopping including on fiduciary matters. 79. Task teams can explore to have blanket Parliament approval of projects once they have been agreed in the Bank’s CAS. This comes against the project experience when the original project was approved on June 24, 2008 and only became effective on September 15, 2009 as Parliament delayed in approving the bill as it prioritized other agenda items. 80. Capacity and institutional development support towards SWAp is preliquisite for implementation of future bigger and complex investments. The massive investment towards capacity building and institutional development for the ASWAp improved skills and confidence for clients to handle similar SWAp and other complex programmes. This has ensured increased capacity, an environment where it is possible implement bigger World Bank complex projects like Agriculture Commercialization Project (P158434), Shire Valley Irrigation Transformation Project (P158805), and Agriculture Management and Fiscal Management Development Policy Financing (P153753).   7 Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Recipient/Implementing Agencies - See Summary of Borrower’s ICR in Annex 5 (b) Other Partners and Stakeholders – None 40 Annex 1: Project Costs and Financing MALAWI: Agriculture Sector Wide Approach Support Project (a) Table 4: Project Cost by Component (US$ equivalent)  Overall Programme Cost (US$ MILLION) Programme Cost at Appraisal (US$ MILLION) Funding Program Programme Amount % of Programme Amount Amount % of Source Allocated Allocation Disbursed Total Allocation disbursed Disbursed Appraisal to Client to Client Counterpart 10.4 10.4 10.4 100 5.5 5.5 5.5 100 contribution IDA 62.0 62.0 53.88 87 32.0 32.0 26.14 82 Norway 10.0 10.0 10.0 100 10.0 10.0 10.0 100 GEF 5.8 5.8 4.7 100 5.8 4.7 4.7 100 MDTF 127.5 96.20 76 79 Total 215.7 184.4 154.98 85 53.3 52.2 46.34 89 (b) Table 5: Project Financing  Sources of funds Type of co- Program Program Actual % of financing Approved (US$ million) Approved Estimate (US$ million) Irish Aid Grant 18.9 18.9 100.0 USAID Grant 2.5 2.5 100.0 European Union Grant 39.1 39.1 100.0 100.0 World Bank Credit 62.0 62.0 100.0 GEF Grant 5.8 5.8 Flanders Grant 7.2 7.2 100.0 DFID Grant 22.7 6.7 29.5 Norway Grant 47.1 37.1 78.8 Sub-Total DPs Borrower (Government) counterpart 8.1 3.2 39.5 Beneficiaries counterpart 2.3 2.3 100.0 Grand Total 215.7 184.8 85.7% Note: The difference between total program actuals and total program allocation arises from exchange rate fluctuations against the dollar 41 Annex 2: Outputs by Component MALAWI: Agriculture Sector Wide Approach Support Project Overview of Project Outputs Table 6: Project Results Chain Activities/Components Key Outputs Outcomes 1. Institutional development and capacity 1. Harmonization, alignment of 1. Increase in building in preparation of ASWAp donor support maize yields (ASWAp management, coordination; 2. Improved planning, M&E of 2. Increase in support to planning, M&E; support to agricultural public investments food security technical skills; administrative system 3. Strengthened land administration status support; strengthening land capacity 3. Increase administrative capacity). 4. Increased availability of improved investment 2. Sustainable Food Security, maize and other diversified budget Agricultural Growth and varieties execution by Diversification –research, extension; 5. Improved implementation of FISP Ministry of FISP design and implementation; (reforms) Agriculture strengthening market based agriculture 6. Increased hectarage under 4. Increase in risk management strategies; legume sustainable land management level of crop/seed production and marketing; practices organic strengthening agribusiness 7. Increased legume seed availability, matter in environment. legume production conservation 3. Project Coordination – Project 8. Increased coverage of farmers farming areas management, coordination and receiving technical extension 5. Increase in execution of studies advice motorized 4. Improvement and maintenance of 9. Strengthened market based traffic unpaved rural road –roads agricultural risk management volume on rehabilitation, spot improvements, strategy targeted upgrading and capacity strengthening. 10. Business environment conducive roads to private investment in agriculture 11. Improved market access Component 1: Institutional Development and Capacity Building in preparation of ASWAp Table 7: Intermediate Results Indicators for Component 1 Intermediate Result Indicator Baseline Target Actual Status Indicator 1: Share of agriculture sector donor 23% 40% 72% Achieved funding committed to ASWAp Indicator 2: Clear linkage of annual work Partial Yes Yes Achieved plans Indicator 3: Number of staff trained in land - 200 368 Achieved administration and management services 42 Table 8: List of Outputs for Component 1 Planned Actual Completed Improved alignment of ‐ ASWAp secretariat formed instituted within MoAIWD organization and the Department of Planning of the Ministry of budget with ASWAp investment Agriculture framework ‐ Ministry of Agriculture plan and budget and reporting fully aligned to ASWAp framework. ‐ ASWAp dialogue platforms in place and operational. These are Executive Management Committees (meets bi-annual), Joint Sector Reviews (bi-annual), Agriculture Sector Working Group (quarterly), 7 Technical Working Groups (each meeting monthly). These structures have brought together various stakeholders to discuss and review sector performance, promote mutual accountability. Improved delivery of core ‐ M&E Master Plan for ASWAp developed. agriculture public services with ‐ Supported development of policies and studies: respect to ASWAp Review of SGR and eventual development of new SGR guidelines; National Agriculture policy, Contract Farming Strategy, Agricultural Risk Management Strategy, Post-Harvest Loss Study, National Agriculture Investment Programme (successor to ASWAp). Timely production of reliable ‐ 2 pilots (Airbus/EFTAS) done to improve agricultural statistics agricultural production estimates based on satellite imagery (some recommendations integrated into current APES, though limited) – including equipment support ‐ Equipment support and execution of APES Strengthened capacity on land ‐ Review of Titles and deeds registration system administration/management and resulting into its abandonment based on gaps to assessment of land availability capture all land processes, a new Land Information Management System (LIMS) being developed. ‐ Review and consolidation of equipment requirements for LIMS ‐ 368 staff trained in land administration and management. ‐ 58733 land piece files digitized. Analysis shows that– 500,000 ha land idle, underutilization of estates, 74% expired lease. ‐ Functional 7 Land Governance TWG meetings (from earlier Land Governance Assessment Framework Task Force). TA support to land component in Ministry of Lands. 43 ‐ 10 new land bills7 enacted and assented: these will promote access to land for commercial agriculture and strengthen land tenure security. ‐ Estate performance survey is underway ‐ Equipment support – Arc-GIS software (1), digital cameras (2), total station (1), vehicles (4), computers (35), printers (10), scanners (3), photocopier (1), LCD projectors (4), storage boxes (48), furniture (132), invertors (3) and air conditioners (10) Improved alignment of ‐ ASWAp developed through wide consultation, agriculture portfolio guiding sector investments and dialogue. This was implemented from 2010 to 2016. Project supported review and eventual development of follow up programme (draft being reviewed). ‐ Annual work plans and budgets from Ministry of Agriculture aligned to ASWAp framework, indicators in M&E Masterplan of ASWAp used as basic for progress reporting during Joint Sector Reviews. ‐ Successor to ASWAp developed – commonly called National Agriculture Investment Programme (NAIP) Capacity building of staff in ‐ Trainings in budgeting, M&E, communication planning, budgeting, internal (staff and farmers). M&E focal points trained communication, M&E on results M&E, revised tools developed and used (engendered). ‐ Agriculture Statistics Strategic Master plan developed, operational to improve coordination, harmonization of agricultural statistics. Under this, two pilot estimates to improve crop estimates implemented – some recommendations being incorporated in current crop estimates methodology. Core Function Analysis ‐ Core Function Analysis finalized (though late) undertaken – being endorsed by OPC to feed into public sector reforms. Execute Training Plan ‐ Supported staff training at PhD level (4), Masters level (45), Bachelors level (34), diploma level (238), senior management short 7 Land Bill; Physical Planning Bill; Forestry (Amendment) Bill; Malawi Housing (Amendment) Bill; Land Survey Bill; Registered Land (Amendment) Bill; Public Roads (Amendment) Bill; Customary Land Bill; Land Acquisition (Amendment) Bill; and Local Government (Amendment) Bill 44 courses (9) middle managers’ short courses (12) and technical short courses (62) ‐ Training curriculum developed, MOU signed between MoAIWD and LUANAR to train 200 field assistants. Technical Assistance MoAIWD ‐ ASWAp Secretariat in place, mainstreamed senior management and within DAPS – dedicated head in place. Department of Agricultural ‐ Consultants supported under ASWAp Planning Services (DAPS) Secretariat (M&E, TWG Assistant, Coordination Assistant). Also TA under Lands, Transport and Trade ‐ Training supported to engendering M&E and reporting tools. Support admin system ‐ Fleet Management System/Policy installed, in development (FM, procurement, use (not fully); Tompro accounting software human resources, admin) installed and used as basis for financial reporting. ‐ Fiduciary staff consultants in place - 3 FM Specialists, 2 Procurement Specialists, 1 Documentation Officer), 8 Justification Officers recruited to support FM at ADDs Component 2: Sustainable Food Security, Agricultural Growth and Diversification Table 9: Intermediate Results Indicators for Component 2 Intermediate Result Indicator Baseline Target Actual Status Indicator 1: Average level of Nitrogen 23% 40% 72% Achieved use efficiency Indicator 2: Total smallholder area - 200,000 210,806 Achieved under conservation agriculture (ha) Indicator 3: Number of farmers getting - 900,000 557,437 Substantially advice and training from lead farmers achieved Indicator 4: Additional tonnage of high 2,800 3,500 4,060 Achieved quality legume seeds available to the FISP Indicator 5: Number of studies related to 0 8 7 Substantially agribusiness environment and achieved opportunities for private investment in agriculture supported and results shared 45 Table 10: List of Outputs for Component 2 Planned Actual Completed Trials, demonstrations and ‐ Maize seed research trials - 71 maize varieties farmer try outs (varieties, identified for research led trials; 10,943 on-farm fertilizer use, sustainable land research trials; 114,686 farmer tryout plots; Crop management and nutrient use) nutrient management trials – 5,991 on-farm research trials (115,590 participating farmers), 57,977 farmer try out plots (57,977 farmers); Sustainable land and water trials – 8,163 on farm research trials (8,171 farmers participating), 99,297 farmer try out plots ‐ 23 soil maps produced showing soil health, with recommendations for area specific fertilizers ‐ post-harvest loss study ‐ 75% farmers using composite and hybrid maize varieties (1.2 million ha). Extension strategy revised to ‐ Agricultural Extension Policy Review finalized promote pluralistic provision (informing development of agricultural extension (NGOs, FOs etc) advisory strategy – underway). ‐ 423 DAESS structures formed, operational – 28 DAC, 18 DSP, 349 ASP, 28 DAECC ‐ Supported 15,646 demonstrations, 723 field days, 7,66 clusters). ‐ Publications and communication – Za A Chikumbi publications (17,173), radio programs (468), IEC materials (319,683), documentaries (30). ‐ Cooperative development trainings – 493 staff trained, 2,714 farmers trained, 157 cooperatives supported. ‐ Farm Business Schools – 329 formed, 3,3326 farmers trained. ‐ Nutrition and dietary diversification – 147 staff trained, 19,460 farmers trained, 896 integrated homestead farming gardens in place. ‐ Gender and HIV/AIDS mainstreaming – 646 staff trained, 40,946 farmers trained, gender and HIV/AIDS strategy for agriculture sector developed. Extension services contracted ‐ 2 NGOs (DAPP and Find Your Feet) contracted to NGOs and FOs to deliver extension services. Increased number of lead ‐ 23000 lead farmers trained and relaying farmers to relay extension extension services to farmers. services ‐ 557,437 farmers getting advice from lead farmers. 46 FISP support, reforms and ‐ Approximately 4,060 MT of certified seeds critical features, monitoring and (legumes) supported through the FISP evaluation ‐ Supported Technical Assistance for Logistics Unit; Support Seed Monitoring/certification by SSU and external; FISP Reforms (see Box 1). Improved seed certification and ‐ New National Seed Policy developed (pending monitoring procedures review at cabinet level) ‐ Seed Services Unit supported – over 15,555 ha inspected per year; Socotec contracted for external seed testing in 2014 season. Legume seed multiplication ‐ Legume seed revolving fund in place (for early (availability) generation seeds, fund order managed by DARS) ‐ 204.3 MT breeder seeds produced by DARS and CGIARs – g/nuts, pigeon peas, soybeans and common beans Legume seed production and ‐ 2,088 MT of legumes produced (from 1,272 ha. marketing planted at smallholder farmer level) Strengthened market based risk ‐ Agriculture Risk Management Strategy; Contract management strategy (weather Farming Strategy; Communication Strategy for derivatives, micro weather micro and macro insurance; regulatory insurance, warehouse receipt framework for micro insurance; Assessment of system) Micro Weather Insurance; Development of Warehouse Receipt Bill (at cabinet level) ‐ TWG on ARC formed, Capacity building on customization of ARC (20 members trained); Support dissemination of weather reports and equipment for EWS ‐ Purchased and installed 34 automated weather stations Smallholder area under ‐ 210,806 ha under Conservation Agriculture; conservation agriculture, National Conservation Agriculture Guidelines sustainable management developed; 45-member core team of trainers in place for the guidelines. ‐ 129,156 ha put under complimentary soil and water conservation practices. Public private investment plans ‐ 57 FOs trained on business management developed for diversification advisory services. 37 proposals developed for and value addition matching PPP grants arrangements Legal and regulatory reforms to ‐ Refurbishment of commercial court in Lilongwe business environment Registry. ‐ Reviewed – civil procedure rules, Insolvency act, companies act, warehouse receipt bill, developed commodity exchange regulatory framework, exports bans study; aflatoxins awareness strategy and skills development plan 47 ‐ 185 magistrates trained in commercial courts; National Trade facilitation; Public Private Dialogue Forums; 40 SMEs trained in meeting standards for exports; Communication of doing business reforms and setting up task forces to tackle specific issues; market intelligence (1); 3 trade fairs. Improved collaboration ‐ Joint work plan and budgeting (and review) between MoAIWD and MITT between Ministry of Agriculture and other through SWG ministries; JSR, SWG, TWG active, involving other ministries and stakeholders. Other Outputs delivered: ‐ 65,000 banana plantlets imported; 52,058 clean (1) Bananas BBTV pilot to banana plants distributed to 5,602 farmers in response to emergency Thyolo and Mulanje pilot districts for BBTV outbreak of bbtv to banana ‐ 23 NGOs contracted to distribute planning industry, (2) Cassava/sweet materials for cassava and sweet potatoes under potatoes in response to emergency response; 203,734 farmers supported, emergency response to dry over 3877 ha cassava and 7,450 ha planted with spell; (3) winter maize sweet potatoes production for humanitarian ‐ 3,973 metric tons produced by private sector response under winter production for 2016 humanitarian support Component 3: Project Coordination Table 11: Intermediate Results Indicators for Component 3 Intermediate Result Indicator Baseline Target Actual Status Project rated satisfactory during each S S S Achieved supervision mission Table 12: List of Outputs for Component 3 Planned Actual Completed Timely reporting of project 14 progress reports submitted (bi-annual, annual), implementation annual work plans and budgets (8) Improved implementation EMC established and operational (includes Ministries coordination demonstrates of Lands, Trade, Transport, Agriculture, Local by joint implementation by Government and Finance). JSR, ASWG (includes other Min of Agriculture and other ministries), joint TWGs under agriculture and trade. Ministries Procurements – goods and services. Accelerated procurement and Audit reports (2), Annual Procurement Plans, Annual financial management Work plan and Budget Equipment support Procured 33 vehicles, 4024 bicycles (for extension workers), desk top computers (266), printers (259), laptops, photocopier (10) digital cameras (140), fax machines (17), paper shredders 3), binding machine (1) 48 Component 4: Improvement and maintenance of unpaved rural roads Table 13: Intermediate Results Indicators for Component 4 Intermediate Result Indicator Baseline Target Actual Status Km of rural roads rehabilitated - 185 143 Substantially achieved Km of rural roads made transmittable - 364 384 Achieved through spot improvement Percent of road network in good and fair 63 67 63 Substantially condition in each of the targeted districts achieved Table 14: List of Outputs for Component 4 Planned Actual Completed Upgraded and rehabilitated 143 km roads rehabilitated; 384 km made feeder roads transmittable through spot improvements and upgrading road works, 10 districts supported on roads component; 28 contractors mobilized/engaged for roads rehabilitation, spot improvements and upgrading works Strengthened capacity for road ESMP for roads developed; Road maintenance maintenance strategy developed; 28 contractors (35 people) trained on new technology for low volume sealed roads, 67 people/contractors trained in financial management, 25 people supported in study tour on rural roads, Technical Assistance (TA) under Roads Authority supported 49 Annex 3: Economic and Financial Analysis MALAWI: Agriculture Sector Wide Approach Support Project Introduction 1. The economic and financial feasibility assessed the viability of the ADP SP (later referred to as ASWAP SP). The assessment involved updating the initial economic and financial analysis (EFA) of the project carried out during appraisal by validating and making necessary assumptions. The financial analysis was conducted to assess whether the targeted smallholders (direct beneficiaries) derived financial benefits by adhering to and participating in the implementation of project activities. On the other hand, the economic analysis was also carried out to ascertain the cost effectiveness or contribution of the project as a whole from the perspective of the country’s economy. The original EFA adopted a discount rate of 12percent per year, reflecting the cost of capital opportunity in Malawi. 2. The ADP-SP development objective is to improve the effectiveness aimed at food security and sustainable agricultural growth. Besides improving the overall governance of the agricultural sector by building targeted MoAIWD technical, managerial and administrative capacities to implement a SWAP, the project also concentrated on sustainable productivity growth in smallholder maize-based farming systems, considered as key to improve food security and reduce rural poverty. The project aimed to improve the responsiveness of the smallholder maize production system to the subsidized inputs delivered by FISP (seeds and fertilizer). This was done by linking improved seed with better crop and fertilizer management. In addition to achieving sustainable increases in productivity, the project promoted widespread adoption of sustainable land and rainwater management (SLM) practices as a way of mitigating against climatic shocks. Assumptions used in the Economic and Financial Analysis 3. The project had a national scope and reached 3.1 million rural smallholders, or about 78 percent of the total farming households of the country, that benefitted directly at least from one of project activities. Beneficiary smallholders have, on average, about 1 ha farms, of which they are cropping annually 0.5 ha under rain fed maize-based cropping systems’, while using exclusively family labor at a basic technology level. Direct beneficiaries constituted a base area of improved farming practices within their communities. The base area gradually expanded within those communities (considered as indirect benefits) over time. 4. The analysis assumed that beneficiary smallholders had three levels of benefits: (i) capacity building of the groups and organizations to which they belong; (ii) more intensive and efficient agricultural extension and research services; and (iii) on-farm productive agricultural investments. The combination of these elements led to farmers’ experimenting with improved cropping technologies on significant parts of their farm (initially on 0.2 ha, or about one quarter of their farmland), while extending gradually their preferred improved practices. 50 5. Further, the analysis was based on agricultural production increases realized by beneficiary smallholders, based on conservative estimates of: (i) actual productivity increases (yield) as compared to potential increases; (ii) the time taken for the project to effectively reach the targeted smallholders; (iii) the time taken for these smallholders to realize production increases first by on-farm tryouts, and gradually extending these technologies to the rest of their farms; and (iv) time taken for farmer-to-farmer technology uptake (indirect benefits). 6. The project supported institutional development and capacity strengthening (component 1) to allow for the implementation of a SWAP and further supported sustainable productivity growth in maize based production systems in line with the ADP priorities. The analysis concentrated mainly on Component 2, Sustainable Agricultural Growth and Food Security, specifically Sustainable Productivity Growth Initiative (sub- component 2.1) and Promotion of Legume Production and Marketing (sub-component 2.3) - excluded Strengthening Market Based Agriculture Risk Management (sub-component 2.2) and Promotion of Agribusiness through PPPs (sub-component 2.4), that generated direct financial benefits by productivity and production increases as a result of: (i) increased cropping intensity for smallholders with project as compared to the situation without project; and (ii) sustainable productivity increases per unit of labour, land and inputs (i.e. fertilizers, seeds). Crop and farm models were generated representing smallholder cropping with project as compared to without project scenarios. Given the generally low production levels, and the increasingly open and responsive market for maize and complementary crop products, agricultural smallholder production improved substantially despite the climatic shocks experienced during the period of project implementation. Eventual benefits derived from risk management (component 2.2) were not included, since the project only strengthen Government capacities and did not pay the linked insurance premiums. Financial Analysis 7. Financial Prices. The financial analysis used 2016 market prices. The prices of the agricultural products sold by smallholders represent “farm gate” prices and reflect the average values obtained over the last twelve months (January to December 2016)’. The prices of variable inputs, services and labor, reflect the 2016/17 agricultural season market values, determined by the ICR team, based on information provided by the Ministry of Agriculture. All prices used are based on an assumed exchange rate of US$ 1 = Kwachas 725. The average prices of products, inputs and services were estimated as follows: 51 Table 15: Average Costs and Prices (2017) Average Prices (in MK) Market Subsidized Products (kg) Maize 1,214.00 Pigeon Pea 577.12 Groundnuts 705.10 Maize Seeds (kg) Local 250 OPV 1,108.33 500.00 Hybrid 1,680.00 500.00 Pigeon Pea Seeds (kg) 1,800.00 500.00 Groundnut Seeds (kg) 2,150.00 500.00 Fertilizer (50 kg) 23:21:0+4S 23,100.00 7,100.00 Urea 22,100.00 6,100.00 Insecticides Actelic + (kg) 5,000.00 Labour Pers. day 600.00 Computed by the ICR Team, 2017 8. Crop production models. The project targeted productivity increases in traditional maize based cropping systems, which form 75 percent of the area cultivated under Malawian farming systems. For an average rainfall year, maize yields in traditional cropping (and related rotations) were at 700, 1700 and 26008 kg/ha for local cultivars, open pollinated (OPV) and hybrid varieties respectively. Different models were developed for maize based cropping systems to calculate the agronomic and financial benefits of: (i) non- fertilized and fertilized practices for local, OPV and hybrid varieties; (ii) the effect of improved fertilization practices, including i.e. adapted fertilizer mix, optimal time of application and precision application; and (iii) the effect of different approaches to conservation farming, including leguminous intercropping and rotations. Crop models used present farm gate prices, inputs at 2017 subsidized prices (farmer contribution), and included labour at opportunity cost estimated at 600 MKW per person/day. Net benefits (in $US/ha) and net supplementary return on labour (in MKW/person/day) were also derived. 9. Project benefits. On the basis of proposed crop models, average increases of net benefits subsequent to the use of project promoted technologies (improved varieties, fertilization practices, conservation farming) were derived by calculating the difference in net returns. The evolution of incremental net returns (in US$/ha) for corresponding without project and with project situations were also estimated. Nets benefits induced by project activities were determined by comparing the average without project situations to a series of with project situations. Considering that current practices of benefiting farmers vary with the technologies adopted, benefit calculations were based’ on group averages, primarily derived from on-farm trials and a large scale farmer tryout network, using ‘preferred’ improved technologies on a significant area of their own farm. Subsequent extension of improved practices on farmer tryout plots and farmer-to-farmer technology 8 These figures are based on a 4-year average calculated from the Agricultural Production Estimates (APES) Figures, MoAIWD. 52 transfers were estimated at a conservative average level of about 10 percent annual increase (losses included). 10. The Financial Rate of Return (FRR) for sub-component 2.1 and 2.3 activities of the project was 39 percent which is higher than the base rate of 18 percent. The FRR is the interest rate at which the sub-components 2.1 and 2.3 activities would break-even or the net present value (NPV) of the activities would equal to zero. Overall, financial returns to the project showed an increasing trend between project-start and project end. Table 16 shows that returns to the project were increasing with implementation of project activities. The increasing trend is attributed to increment in the number of beneficiaries, total area (hectarage) under new improved technologies and crop productivity resulting from introduction of new varieties and agronomic practices such as conservation agriculture, crop nutrition management and capacity building for both staff and farmers. The findings of this analysis confirms that ASWAp SP was a worthwhile project. Table 16: Estimated Financial and Economic Rate of Returns (2017) Scenarios Financial Rate of Return Economic Rate of Return (FRR) (ERR) PAD ICR PAD ICR Overall Project 18 39 37 35 Sensitivity Analysis Cost Increase (10%) 16 36 34 31 Benefit Increase (10%) 21 43 40 39 Benefit Decrease (10%) 15 35 34 31 Computed by the ICR Team, 2017 11. The project appeared to have low sensitivity to the adverse circumstances hypothesized in the analysis. A 10 percent increase in the incremental costs would reduce the financial rate of return to 36 percent; a 10 percent reduction in the incremental benefits reduces the FRR to 35 percent; and if a 10 percent incremental benefit is achieved, then the FRR increases to 43 percent. It should be noted that although the project encountered frequent weather related shocks, the impact of the project on productivity and growth has been relatively better mainly due to introduction of technologies that mitigated against the shocks. Economic Analysis 12. The economic analysis used the import parity price because maize, the staple crop of the country is a restricted commodity and it was most likely that that the country would import maize rather than export. This was also true especially in the last two years of project implementation where the country experienced national food deficits and imported the commodity for humanitarian aid. In addition, the country imports almost all the fertilizers (23:21:0+4S/NPK and Urea) used for maize production. 53 13. Comparison of the import parity prices (economic prices) and the actual market prices (financial prices) shows that the economic prices for maize and groundnuts were higher than the financial prices implying that farmers in Malawi are receiving less than they should under normal circumstances. The conversion factors for maize and groundnuts were more than 1.0. On the contrary, the economic prices for pigeon peas, 23:21:0+4S and Urea were less than 1.0, indicating that farmers were receiving more than they should for pigeon peas and were paying more than they should have paid for both fertilizers. However, it should be noted that the conversion factor for NPK was almost equal to 1.0 implying that the farmers are paying the actual price (refer to Table 17 for details). Note that in calculating the ERR, all economic prices were converted to local currency at the official exchange rate prevailing at the time of ICR of US$1= MK725. Table 17: Comparison of Economic and Financial Prices, 2017 Commodity Item Unit Economic Actual Conversion Price market Price Factor (Import (Financial Parity Price) Price) Crops Maize grain Mk/kg 249.25 214.00 1.16 Groundnuts Mk/kg 1296.01 705.10 1.84 Pigeon Peas Mk/kg 369.16 577.12 0.64 Fertilizers 23:21:0+4S Mk/50kg 21,194.64 23,100 0.92 Urea Mk/50kg 12,712.88 22,100 0.56 Computed by the ICR Team, 2017 14. Using the assumptions described under Financial analysis and applying the economic prices, the economic rate of return (ERR) was calculated to be 35 percent at 12% discount rate. The calculated ERR at ICR was less than the base rate of 37 percent at appraisal. Further, the re-calculated ERR was less than the FRR mainly due to distortions in the market prices. The ERR at ICR is lower than ERR at appraisal and this can be explained in two ways. Firstly, data availability (poor) and quality (low) could not allow a more robust analysis. Some critical information required to undertake such an analysis were not systematically monitored and documented during project implementation. The lowered net benefits resulting from the project activities were largely a result of the weather shocks (droughts and floods) that affected the country during the project implementation period. In addition, with additional financings, the project cost also increased thereby increasing average spending on activities. At the time of appraisal, sensitivity analysis was undertaken to account for eventualities associated with implementation capacity, specifically in ‘an increase and decrease in costs’ and also ‘an increase and decrease in benefits costs’ associated with the project. Both an increase in costs and reduction in benefits resulting from weather shocks were more realistic projections in line with the ERR calculated at project closure. Secondly, the appraisal ERR might have been exaggerated/overstated the benefits to accrue from the investments as most of the figures were estimates. Sensitivity analysis were carried which confirmed that the ERR and FRR were relatively robust with respect to cost increases, benefit reductions and benefit increases refer to Table 16).   54 Annex 4: Bank Lending and Implementation support/Supervision Processes MALAWI: Agriculture Sector Wide Approach Support Project (a) Task Team Members Responsibility/ Names Title Unit Specialty Lending David Rohrbach Senior Agriculture Economist GTC06 Olivier Durand Senior Agriculture Economist GFA03 James Markland Senior Transport Specialist GT101 Animesh Shrivastava Program Leader ECCCA Arati Belle Consultant GSU18 David J. Nielson Lead Agriculture Economist GFA05 Edeltraut Gilgan-Hunt Environmental Specialist AFTN1 - HIS Fenwick M. Chitalu Financial Management Specialist AFTME - HIS Gert Johannes Alwyn Lead Financial Management GGO25 Van Der Linde Specialist Hardwick Tchale Senior Agriculture Economist GFA01 Herbert Acquay Manager GEFPO Senior Social Development Kristine Schwebach GSU07 Specialist Martien Van Nieuwkoop Practice Manager GFA12 Meseret Kebede Senior Program Assistant LEGES Muthoni W. Kaniaru Senior Counsel LEGFI Robert Townsend Adviser GFADR Simon B. Chenjerani Senior Procurement Specialist GGO08 Chirwa Supervision/ICR Valens Mwumvaneza Senior Agriculture Specialist GFA13 Time Hapana Fatch Senior Agriculture Economist GFA13 Blessings Nyanjagha GFA13 Agric. Economist Botha Mercy Chimpokosera- GFA13 Environmental Specialist Mseu Chikondi Chilipa- Nsusa Transport Specialist GFA13 Senior Private Sector Development Efrem Zephnat Chilima GTC01 Specialist Francis Samson Nkoka Senior DRM Specialist GSU13 Trust Chamukuwa Finance Management Specialist GG031 Chimaliro Tamara Mwafongo Team Assistant AFMMW Gloria Pamela Chinguo Team Assistant AFMMW Edeltraut Gilgan-Hunt Environmental Specialist AFTN1 - HIS 55 Esther Angellah Lozo Operations Assistant AFMMW Francis Kanyerere Financial Management Specialist AFTME - HIS Mkandawire Grace Ingrid Chilambo Program Assistant IEGDG Joanna Syroka Consultant AES - HIS Julie Dana Lead Financial Sector Specialist GFM01 Kristine Schwebach Senior Social Development Spec GSU07 Lynette Doreen Procurement Assistant AFMMW MacAdam Marc Peter Sadler Adviser GFAGE Marjorie Mpundu Senior Counsel LEGAM Sameena Dost Senior Counsel LEGES Simon B. Chenjerani Senior Procurement Specialist GGO08 Chirwa Steven Maclean Mhone Senior Procurement Specialist GGO01 Suzanne F. Morris Senior Finance Officer CTRFC 56 Annex 5. Summary of Borrower’s ICR MALAWI: Agriculture Sector Wide Approach Support Project CHAPTER ONE: INTRODUCTION 1.1 Program Background, Context and Rationale 1. At Appraisal in 2008, Malawi was a poor country with a population of 13.5 million people with approximately 84% living in rural areas. During period prior to 2006, Malawi had been implementing a 3-year poverty Reduction strategy MPRSP) whose achievement was an average of 1.5% growth in real GDP. In 2006 the Government of Malawi replaced the MPRSP with the Malawi Growth and Development Strategy (MGDS) whose planned target was an average growth in real GDP of 6 percent per annum. The Agricultural sector employed more than 80% of the total work force contributed more than 75% of foreign exchange earnings and 30% to the GDP. Yet the sector was characterized by low agricultural productivity, worsening environment conditions for agricultural development and weak institutional capacity to implement programs that would support the attainment of the annual growth target set in the MGDS. The Agricultural Development Program (ADP) was formulated to address these issues. During the course of its implementation the Government of Malawi (GoM) changed to adopt a sector wide approach in implementing the programmes in the sector and consequently also changed the name of the ADP to Agricultural Sector Wide Approach (ASWAP). 1.2 Project Development Objectives and Key Performance Indicators 2. The project has two main objectives: (a) the PDO is to improve the effectiveness of investments aimed at food security and sustainable agricultural growth, and; (b) the Global Environment Objective (GEO), is to strengthen the natural resource base in agricultural lands through doubling the area under sustainable land management as a basis for security ecosystem service and sustainable agricultural productivity. The following PDO-level performance indicators and their targets were agreed at appraisal with the baseline year being 2007/2008 growing season: i. Average annual national maize yields (four-year moving average) (mt/ha): this indicator captures the PDO dimension of agricultural growth (baseline=1.4, by 2012/13=1.7). However, with Additional Financing (AF1) and (MDTF) support the target was revised to 2.1 mt/ha by 2016/17. ii. Percentage of food secure rural households (baseline = 61%; by 2016/17 = 95%) This indicator measures the PDO dimension of food security. The use of an alternative indicator: average net rural incomes compared to food purchase requirements was extensively discussed but had to be rejected because GoM indicated that it would not be readily measurable. iii. Share of agricultural sector donor funding committed to ADP: this indicator was designed to measure donors’ efforts to increase harmonization and alignment in the agricultural sector in line with the Paris Declaration on Aid Effectiveness (baseline = 0%; by 2012/13 = 70%). To capture the impact 57 of capacity strengthening in MoAIWD’s ability to plan, implement and monitor public investments, a new indicator was formulated and upgraded to replace the above at the PDO level: percentage of MoAIWD investment budget execution (baseline-unknown; by 2012/13=100%). However, during the course of implementation, the target was changed to cover a range between 98% and 102%. iv. Levels of organic matter in conversation farming application areas This is a GEF indicator measuring the GEO objective sustainability dimension (baseline = 1.0%; by 2012/13=1.5%). During implementation and considering practical reasons, this indicator was changed to target sandy soils only not including loamy soils whereas the target level at project end was maintained). v. Percent of variation of intra-annual maize price in selected markets (baseline= 120%; by 2012/13=Maximum of 50%). This was changed with AF/MDTF to (indicator 6) below vi. Percentage change in motorized and non-motorized traffic volume on target rural roads (baseline = 0%; by 2016/17 = 10%). A new intermediate result indicator was introduced: percentage of road network in good and fair conditions in target districts. vii. Number of project beneficiaries, of which female (baseline=unknown, by 2012/13= 3,000,000, of which female = 50%) 1.3 Program Costing and Financing 3. The ASWAp–SP was financed at three points in time. The original financing was estimated at US$53.3 million with a breakdown as follows: GoM local contribution (US$ 3.2 million), beneficiaries (US$2.3 million) and three Development Partners (DPs), namely the World Bank (US$ 32 million IDA loan), Government of Norway (US$10 million grant) and the Global Environmental Facility (GEF) (US$ 5.8 million grant). 4. The First Additional Financing (AF1) was at the request of the GOM in November 2011 and approved by the Bank in 2012 for an amount of US$75 million comprising of an additional IDA credit (US$30 million) and initial contributions to a Multi-Donor Trust Fund (MTDF) whose initial contributions were expected to be from the European Union (28,890,000 Euros or US$39.7 million) and from the Flanders International Cooperation Agency (5,300,000 Euros or US$7.9 million). However, these latter contributions were realized in the second additional financing since the MDTF was only established in 2013 and the grant agreement was signed on 1st April, 2014 and is expected to be closed by 30th June 2017. 5. The Second Additional Financing (AF2) was an MDTF grant amounting to US$120 million. According to the Receipts and Payments Report, as at 30th June, 2016 a total of US$104.8 million had actually been received through the fund as follows: European Union (US$39.1 million); and from the Flanders International Cooperation Agency (US$7.2 58 million); Royal Norwegian Ministry of Foreign Affairs (US$37.1 million); Department of Foreign Affairs and Trade of the Republic of Ireland (US$18.9 million); and United States Agency for International Development (US$2.5million). The United Kingdom’s Department for International Development had also pledged to contribute to the MTDF a grant amounting to approximately US$22.7 million but only disbursed US$6.7 million. 6. Thus, a total of US$203.3 million was planned to be made available from various sources for the ASWAp–SP as follows: original estimate (US$53.3 million), AF1 (US$30 million), and; AF2 (US$120 million). Of these, the majority would be from the MDTF (59 percent) compared to IDA (30.5 percent) and other sources, including GEF and GOM (10.5 percent). According to the November, 2016 implementation support mission report, cumulatively, a total of US$ 70,549,478 had been spent by September 2016 as follows: (a) Institutional development and Capacity-building (US$ 5,551,409) (8.0 percent); (b) Sustainable Food Security and Agricultural growth (US$ 43,617,958) (62.0 percent); (c) Project Coordination (US$ 4,369,171) (6.0 percent); (d) Rural roads improvement (US$ 12,712,462) (18.0 percent); (e) Land administration (US$ 2,367,501) (3.0 percent), and; (f) Promotion of PPPs (US$1,930,962) (3.0 percent). 7. It is worth noting that of the total US$203.3 million pledged to be made available to the project from various sources only US$100 million was the MDTF actual figure disbursed by September 2016 and nearly 72 percent of it had been expended –from the original amount and A1. Compared to planned pledges the amount actually spent is at slightly above one-third (34.7 percent). 1.4 Significant Changes to Programme Implementation 1.4.1 Programme Indicators 8. The original design of the programme had four PDO/GEO indicators. Three years into implementation, the PDO and GEO had remained the same but the original indicators were deemed not to adequately capture the dimensions of (a) effectiveness, (b) food security, (c) improved access to markets, (d) sustainability, and; (e) a mandatory PDO level core indicator on the number of project beneficiaries, of which female (percent). The ICR team based its assessment on both the original and Revised Framework since much of the project outcomes were implemented between 2008 and 2013 whereas progress was slow in implementing activities between 2014 and 2016. 1.4.2 Program Restructuring 9. The programme received additional financing twice: AF1 from MDTF and AF2 from IDA (US$ 120 million grant). MDTF made US$ 100 million was made available compared to AF1 (US$ 30 million). New components were added to the project by 2012 to cover gaps observed during implementation but which were seen to be important to deepen the impact of the programme. These changes were new: (a) sub-component (1.5) to strengthen land administration capacity in the Ministry of Lands, Housing and Urban Development, (b) sub-component (2.4) to address promotion of agribusiness through PPPs to be implemented through Ministry of Trade and Industry as well as Department of Agriculture Extension Services (DAES), and; (c) component on improvement to rural 59 roads to improve market access for farmers. Due to difficulties in collecting data to some indicators, changes were also made as noted above. 1.4.3 Description of Original and Revised Component 10. While three original components remained the same throughout implementation, two new subcomponents were added to Component 1 (1.5) on land capacity administration and to Component 2 (2.4) on promotion of agribusiness. A fourth component was added on improving rural roads. The Project components are: i. Institutional Strengthening and Capacity Building in support of ASWAp which aims at strengthening capacities essential to prepare for and implement the Agricultural Development Programme, and its main objectives of food security and agricultural-led economic growth; The component focuses on ASWAp management and coordination support; planning, monitoring and evaluation support; technical systems and skills development; administrative systems development and land administration capacity strengthening. ii. Sustainable Food Security; the objective of the component was to sustainably increase the national and household food security. The project will contribute to three priority targets of the Agricultural Development Programme, namely; maize productivity growth, sustainable land management, and improved resilience in maize supply systems. The component has interventions on sustainable productivity growth initiative including some additional activities on Farm Input Subsidy and Seed monitoring and certification; strengthening market based agricultural risk management strategies; improving legume crop production and marketing; and improving the agricultural business environment and promotion of agribusiness partnerships. iii. Project Coordination; the objective of this component was to manage the use of resources in accordance with the project’s objectives and procedures. iv. Improvement and maintenance of unpaved rural roads; the objective of this component was to improve smallholder farmers’ access to input supplies and markets. This was an entirely new component which was introduced with the AF1 and has been maintained with AF2. Its focus is on improvement works on rural roads; implementation support; and maintenance of rural roads. 60 CHAPTER TWO: ASSESSMENT 2.1 Programme Design, Preparation and Risk 2.1.1 Design 11. The programme was designed as a sector-wide approach which sought to bring several development partners to support GoM’s agricultural development agenda as espoused in the MGDS and implemented through Annual Work Plans and Budget which were themselves part of a Midterm Expenditure Framework (MTEF) approach adopted by Government. Furthermore, it was designed to use existing structures of the MOAIWD at national, divisional and district levels in line with the decentralization policy being followed across all sectors. 12. At the national level, ASWAP Secretariat mainly managed by senior civil servant would coordinate the project to assure Government ownership while encouraging development partners to increasingly align their programs with Paris Declaration on Aid Effectiveness. The ASWAP SP would also have a Secretariat to run day-to-day project management activities, including coordinating with other Ministries with components in the project. The Secretariat would further be supported by a senior officer of MOAIWD as follows: i. Capacity Strengthening Team (CST) for capacity and institution building (Project Component 1) whose lead responsibility to implement the programme was placed on the Controller of Human Resources, ii. Sustainable Productivity Growth Team for sub-component 2.1 led by the Controller of Agricultural Extension and Technical Services (CAETS), and; iii. Risk Management team for sub-component 2.2 under the leadership of the Director of Agricultural Planning Services (DAPS). 13. At the Agricultural Development Division (ADD) level, an ASWAP Coordinator would also be appointed just at the district level. Financing at ADD level would be based on consolidated District Agricultural Development Plans of all the districts under its jurisdiction. At district level, financing would be based on its development plans. Similarly, for other Ministries and Departments, their funding would depend on plans in line with their sub-component which had to be submitted to the MAWID annually. 14. The project was to be rolled–out in three phases with Phase 1 covering four districts during first year; Phase 2 covered twelve more districts in year 2 and; Phase 3 taking in last 12 districts in third year reaching a nationwide coverage by 2010/11 growing season. 2.1.2 Preparation 15. The ASWAP – SP was prepared with active involvement of GoM officials (EMC) and other stakeholders, including Civil Society Organizations (CSO) and the private sector. The DPs were also actively involved through Community on Agriculture and Food Security (DCAFS). By November 2011, GoM had requested for additional financing and establishment of a MTDF with the following participants: the Flanders, EU, DFID, USAID 61 and Irish AID who all went on to contribute funds. However, during implementation the DFID decided to pull out its interest. 2.1.3 Relevance of the Programme to Objectives 16. The relevance of the programme to objectives is Highly Satisfactory. The objectives of the programme are relevant and have continued to be in line with GoM’s, MGDS I and MGDS II. The programme’s design was also relevant as its PDO and GEO remained unchanged throughout the life of the project yet through lessons from implementation experience helped in crafting indicators that better captured the outcomes of the project. The Results Framework had clear objectives with clear linkages to intermediate results. In fact, upon understanding these linkages better, two indicators swapped their positions in the RF to better reflect the PDO as follows: i. Percentage of MoAIWD investment budget execution was upgraded to PDO level from intermediate result indicator to better capture the impact of Capacity Strengthening on MoAIWD ability to plan, implement and monitor public investments in agriculture. This was swapped with the indicator on: share of agriculture Sector donor funding committed to ASWAP. ii. Secondly, a new indicator was introduced on: “percentage of food secure rural households”. It was also reported that GoM rejected to use an alternative indicator to measure food security because it would not be readily measurable given its capacity. This indicator was on “average net rural incomes compared to food purchase requirements”. This discussion reflects the clarity of objectives as well as understanding of linkages between PDO; intermediate results as well as process for data collection and analysis to feed into the indicators. iii. For similar reasons, the GEF indicator on “level of organic matter in conservation farming areas” was reformulated to only consider sand soils. In addition, the one on PDO level: “percentage of intra- annual maize real price variation in selected markets” was dropped because it proved to be difficult to measure and to fully attribute to the project. 2.1.4 Programme Risk 17. The programme risk at appraisal was rated as moderate for both the original and additional finances. The key risks which were identified and whose mitigation measures were satisfactory mainly related to implementation risk because of MoAIWD’s willingness to closely collaborate with stakeholders, private operators, farmers and donors project coordination during the implementations of the original project had been rated Highly satisfactory. 18. The key mitigation measure for all implementation risk identified is regular consultation between GOM and donors, regular meetings of different ASWAP Management Committees to improve inter- and intra- agency coordination of project 62 activities, contradicting – out to NGO’s or Specialized firms of on-farm trials, demonstrations as well as M & E studies to address issues of lack of staff or weak capacities for implementing activities, dealing with safeguards as outlined in the ESMF, PMP and RFP. Finally, improving FISP targeting, voucher security and traceability, as well as its monitoring and impact evaluation have been agreed between GoM and its donors. 19. Project coordination had been rated satisfactory until June 2016 missions except for one when it rated at moderately satisfactory. This is expected to improve this project in the other Ministries. 2.2 Programme Outcome Achievement of PDO and GEO 20. The capacity building interventions conducted at both national and local levels, improved the beneficiaries’ ability to implement their activities. The urgently needed agricultural infrastructure, irrigation, extension facilities and market facilities supported by the programme had significant impact on the productivity, profitability and incomes of the beneficiaries as well as enhanced national capacity to increase agricultural production and productivity that had positive bearings on poverty reduction, food security and self- sufficiency at household and national levels. Notable achievements under the programme for this ICR are as follows: 1. Average national maize yields: achievement of this result was highly satisfactory in the early years of the project. The baseline was 1.4 mt/ha while the original target was1.7 mt/ha by 2012/13. However, this target had been surpassed by 2010/11 (to 1.9 mt/ha) with the achievement largely being attributed to FISP. The AF1 appraisal revised this indicator to a baseline of 1.9 mt/ha for the period 2008 – 2012. Attributed to poor rainfall, 1.88 MT/ha has been achieved for the period 2012/13 – 2015/16 growing season against a revised target of 2.1 mt/ha. To achieve this target the 2016/17 growing season should have reached 3.1 mt/ha yet only 1.9 mt/ha has been reported. Based on these issues, this is rated moderately satisfactory. 2. Percentage of food secure rural households: this indicator is rated moderately satisfactory based on the MVAC Survey, 2016 which reported that 61% of the country’s households were food secure compared to the project target (95%). The survey attributed this to floods and droughts that had affected the country in the previous three years. The recent crop estimates estimated that 77% of people will be food secure in the 2016/17 season. 3. Percentage of MoAWID investment budget execution: this indicator measures the capacity of the Ministry to plan, implement and monitor its public investments. On the basis of definition as it currently stands, this indicator is rated highly satisfactory. The 2015/16 financial year recorded 101% achievement compared to 98% - 102% as per target levels. However, the October 2016 ASWAp SP mission report, this indicator is calculated by 63 subtracting FISP expenditure from total MoAIWD ORT expenditure and dividing the result by total MoAIWD allocation for the same financial year. This appears to over-estimate the capacity strengthening indicator because it is much too easy to expend on other recurrent transactions compared to investment. Secondly, the evidence provided through the expenditure performance record on ASWAp-SP shows very little improvement in capacity to absorb availed resources on public investment. Of the potential US$203.3 million that ASWAp-SP was indicatively allocated from various sources, only US$100 million was disbursed and US$70 million expended over an 8-year period. Unless there are other compelling reasons, but failure to strategically plan/budget for the entire potential amount as well as failure to budget and spend the full amount disbursed are concealed by such an indicator. 4. Percentage change in motorized and non-motorized traffic volumes on targeted rural roads: Achievement on this indicator is rated highly satisfactory. The baseline was zero percent while achievement of 219% (2016) compared to the target which was that by 2017 it should be at more than 10% and above. 5. Number of project beneficiaries, of which female (percent): achievement on this indicator is rated satisfactory. ASWAp-SP targeted 3 million beneficiaries of which 2.86 million (of which female=48.2%) has been achieved by 2016/17 growing season. However, female beneficiaries continue to be less than should be targeted for no apparent reason. Efficiency 21. There ICR team noted efficiencies in the procurement and distribution of planting material under the cassava and sweet potatoes programme using Non-Governmental Organization than using Government staff. There were however also a lot of operational and administrative inefficiencies, especially in procurement of various goods and services for the project. On average, procurement of goods, consulting and non-consulting services took longer than planned. This is attributed to the fact that the project had to fulfill both World Bank and Government procurement procedures which were in conflict in certain areas, delaying the whole process. More in-depth analysis however is required to establish efficiency rates on various implementation aspects of the project. Overall Rating of Programme Outcome 22. Taking all of the issues covered above including relevance, achievement of PDO and its efficiency as well as that of the nine ISMs, the overall programme outcome is rated moderately satisfactory. The programme has contributed significantly to increasing agricultural productivity, strengthening Government institutions, especially Ministries of Lands, Trade and Agriculture. However, implementation challenges weigh high down the gains made in the project. Delays in procurement, submission of IFRs and recruitment of TAs for the project secretariat as well as the significant delay in completing the core 64 functional analysis (CFA) compromised the implementation of the expected huge training program to fill the technical gaps existing in the MoAIWD specifically and the agricultural Sector in general. The technical skills development subcomponent suffered excessively from these delays. 23. It is noted, however, that towards the end of the project, several measures had been put in place to facilitate smooth implementation. TAs had been recruited for the Secretariat, as well as Ministries of Trade & Industry and Lands, Housing & Urban Development which move had improved overall coordination between Ministries and had also been noted to have improved the quality of reporting. Even if there were still issues in procurement, there was a general recognition that these were on average well–noted and within manageable limits. 2.2.1 Assessment of Project Institutional Development Impact, Sustainability, Post– Completion Operations and Next Phase. 24. The institutional development impact is rated satisfactory. At the national level, the Executive Management Committee (EMC) regularly, where among other things they discussed progress of this project. The EMC was composed of Principal Secretaries from the key Ministries involved which are: Agriculture, Trade and Industry, Transport and Public Infrastructure, Lands and Urban Housing as well as Local Government and Rural Development. This institution helped in key decisions-making. 25. Though not fully, the project funded various training activities at different levels in the sector which have improved the institutional capacity of the various implementing structures. All the seven Technical Working Groups were oriented and re-oriented in their specific roles, responsibilities and regulatory frameworks in the sector. The Secretariat has also been strengthened with TA who have facilitated development and implementation of key project results such as the CFA and the Strategic Grain Reserve (SGR) Management Study. Further, all ASWAp governance institutions such as the Sector Working Group, the Technical Working Groups and Component Management Teams (CMT) are functional. 26. At the Ministry of Lands, 472 staff have undergone training in land records keeping, digitization of piece files, policy and others. At Ministry of Trade, PPPs have been facilitated whereas within MOAIWD the number of staff trained to different levels has been achieved as follows: Bachelor’s (15), Masters (40) and PhD (3) in line with the Ministry’s technical areas. The project also supported the training of M & E staff on results–based monitoring at the national and district levels. A total of 28 district staffs have undergone such training. Some AEDOs are being trained at LUANAR while plans to train up to 200 AEDOs are at an advanced stage with the training curriculum being developed for the Ministry by LUANAR. Furthermore, the project also achieved 19 months of international TA and 43 months of national TA covering the technical areas of the MoAIWD. 65 2.2.2 Sustainable food security, agricultural growth and diversification impact 27. The ICR team’s review indicates that the design of component two was relevant to Malawi’s need for improved and increased agricultural productivity. The interventions of component two went beyond food security in that it did not only support the existing and generalized maize-based subsistence farming system, but also encouraged diversification and marketing (in particular through legume crops) and promoting public-private partnerships in agricultural investments. In all its various interventions the project targeted to reach out to a total of 3,000,000 of which 50% should be women. At the end of April 2017 the actual number reached by the project was registered at 2,915,000 of which 48.2% were women. 28. Sub-component 2.1 is rated moderately satisfactory. While it is acknowledged that maize productivity growth has been boosted, it is also noted above that intended target by 2016/17 has not been attained and is unlikely to do so for the next two growing seasons on a four-year moving average due to the following attained levels in the last three growing seasons as recorded in the October 2016 ISM report and the ICR findings: 2014/15 =1.6 mt/ha; 2015/16=1.42mt/ha and 2016/17=1.9mt/ha. In total, the project supported the mounting of 568 trials and demonstrations and field days across the country to test the performance of 14 maize varieties covering open pollinated (OPVs) and hybrids and these were tested in 16 districts using mother-baby trials. Following the choice seed purchase initiatives implemented in the project, more than three-quarters of the farmers in Malawi use hybrid and composite maize seed compared to local varieties and 77% of the total land area of 1,712,798 grown to maize was covered by these varieties. 29. Sub-component 2.2 is rated moderately satisfactory. ASWAp-SP has been supporting the seed component of the FISP program, especially legumes, which are achieving successful outcomes. Secondary data sources show that additional tonnage of high quality legume seeds available to the FISP fell from 2,800 mt baseline in 2012 to 1,800 mt in 2016. The project distributed a cumulative total of 4,060 mt of legume seed nationwide against the target of 3,500 mt. 30. While some activities were undertaken were highly satisfactorily such as reaching out to more follower-farmers than planned (the target was exceeded by nearly 11 percent), others performed either poorly or just average as discussed here. The ICR team noted that the ASWAp-SP has championed increased smallholder adoption of environmentally sustainable technologies for maize based cropping practices through introduction and adoption of the following technologies: crop residue management, minimum tillage, pit/basin planting, maize inter-planting with legumes and improved crop rotation with legumes, organic manure production and application, agroforestry technology, vetiver grass hedgerows management and mulching. Secondary data shows that through its interventions ASWAp-SP achieved a national coverage of 22,599 hectares by 42,890 farmers (16,277 males and 26,613 females) in its sustainable land and water management use component. At the end of April 2017 there were a total of 20,104 lead farmers across the country reaching out to a total of 999,226 follower farmers. This number slightly exceeds the project target of 900,000 farmers. The overachievement is attributed to new programmes such as the cassava and sweet potato and the rehabilitation of the banana 66 industry which were not included in the project design. To improve food and nutrition security cassava and sweet potatoes were promoted as complementary crops to maize. It was expected that 1,686 ha of cassava and 2, 172 ha of sweet potato would have been established by the end of the 2016/17 growing season. However, due to scarcity of clean cassava planting materials in 2016/17 agricultural year, only 18,997 bundles of cassava and 367,575 bundles of sweet potato were procured and distributed translating to 190 ha of cassava and 3,676 ha of sweet potato established and the crop stand in all districts was rated excellent due to favorable rains. 31. In addition to conservation agriculture, the project promoted livestock production like small ruminants, poultry and aquaculture management. Animal waste is used by farmers as manure to improve soil texture and fertility in maize crop fields thus contributing towards improved maize production. The Department of Animal Health and Livestock Development has: (i) developed improved pasture at Mbawa, Lunyangwa, Chitala, Chitedze and Bvumbwe Research Stations; (ii) procure starter up inputs for cattle breeding; (iii) procured Boer Goats for breeding; (iv) promoted value addition in beef cattle and mobilise farmers to establish livestock market platforms; (v) produce and distribute training materials for goats, rabbits, pigs and chicken production; (v) procure protective clothing (safeguards) and staff and farmer training. Specific results include: has procured the 300 gumboots, 15 dorper goats as well as 15 boer sheep, refreshed 22 farm managers in breeding procedures and conducted staff training where a total 30 staff were trained in data management. Procurement of other planned items such as water pumps and solar panels, 300 rain coats, 300 work suits are in progress. 32. The project also supported implementation of a program aimed at controlling a banana virus (BBTVD) which had over the years devastated bananas in the country especially in the banana growing areas of Thyolo, Mulanje, Nkhotakota and Nkhata Bay. Overall 48,615 out of 65,000 banana plantlets bought from France and South Africa were distributed to 5,602 compared to planned 11,732 farmers representing less than half of the target (48 percent). Damages experienced during transportation represented a huge cost as 25 percent of the plantlets bought were not in a good condition. To avoid re-infestation of the virus by the vector, the project also procured and distributed 980 liters of dimethoate to aid aphid control in bananas. It further procured and distributed 634 liters of Glyphosphate (Roundup) to help in destruction of infected mats. To ensure continued availability of clean banana plantlets, the project planned to propagate 300,000 plantlets in 2016-17 through tissue culturing at Bvumbwe and Lunyangwa Research Stations as well as LUANAR. Due to delays in the commencement of the activity as a result of delayed procurement of reagents for the micro propagation, it is expected that the targeted 300,000 clean plantlets might not be achieved by the end of the 2016-17 planning period. 33. Subcomponent 2.3 on enhanced capacity in market based risk management is rated satisfactory. The ICR team noted that the ASWAp-SP supported the following initiatives related to managing weather related risks in the agriculture sector as follows: (a) upgraded weather stations to full automatic weather stations (4) and automated rainfall stations (14); (b) Meteorological Department and MOAIWD staff trained in crop models use, climate data systems and phonological reporting; (c) regarding micro-weather insurance, the 67 project supported establishment of weather index task force that developed a business plan and supported in conducting training in weather index insurance product design for insurers, bankers, agricultural staff and farmers like seed companies and NASFAM; (d) supported consultant in development of the communication strategy related to micro- weather insurance, and; (e) reviewed and approved proposals related to micro-weather insurance. 34. Sub-component 2.4 on promotion of agribusiness through PPP is rated moderately satisfactory. The project supported various training of lead farmers, subject matter specialists and front line staff in group dynamics, leadership, cooperative development, farm enterprise planning and financial management (costing, budgeting and gross margin analyses). The project also supported the Ministry of Industry and Trade to conduct eight studies (from the same level of target) related to agribusiness environment and opportunities for private investment into agriculture sector. 2.2.3 Impact on smallholder farmers’ access to input supplies and markets 35. Overall, Component 4 on improvements to rural roads is rated satisfactory. This component was aimed at facilitating farmers’ access to agricultural markets through improvements to unpaved rural roads in 10 selected districts based on their agricultural potential to create networks of rural access roads which would allow transportation of inputs and produce between the fields and the main roads throughout the year. Main activities included a combination of spot-improvement, rehabilitation and surfacing of unpaved roads using low-volume sealed road techniques, with solutions being selected to provide the requisite levels of access for individual roads. 36. As at April 2017, a total of 21 roads covering 490.8 Kilometers had either been rehabilitated or spot improvements made of roads will be improved through the Roads Authority. These roads were distributed as follows: Chitipa (81.1 km), Ntcheu (80.0km), Mwanza (53.0 km), Machinga (49.0km), Salima (42.0km), Chikwawa (28.7km), Phalombe (9.0km), Karonga (7.0km) and Kasungu (4.0km). 37. In addition, twelve roads covering 121.2 kilometers under the responsibility of district maintenance teams through Community Maintenance Clubs (CMC) had been completed in Karonga (29 km), Salima (26 km), Phalombe (14 km), Chikwawa (12 km) and Mwanza (8.2 km). The 20.8 km road originally designated to be maintained through CMC in Nsanje was given to a contractor due to a low population density and highly diverse nature of interventions required. 38. The training sub-component is rated satisfactory. The project provided some individuals with the opportunity to attend specific professional development activities as follows: (a) Study Tours (Ethiopia and Zambia); (b) NCIC Financial Management course organised in three regions; (c) AFCAP DCP Design Approach (for project staff followed by other consultants and sector employees); (d) The Application of Cold Mix Asphalt and Slurry Bound Macadam; (e) Technical Briefing provided for Contractors and Supervision Staff at the start of Phase 2 works; and, (f) NCIC–6 Courses covering Drainage Design, 68 Drainage Construction, Gabions, Laboratory Materials Testing, Works Planning and Further DCP Design Introduction. 39. Technical Assistance was procured for several tasks on the project, including for bridge design. A baseline survey, an impact assessment and two traffic counts have been undertaken through the project. The impact study showed improved use of the roads of up to 74 percent compared to the target of 10 percent and more set for the project. 40. Significant impacts have been achieved through this project. According to one report from the RA: (a) reliable access to many areas has been secured for the concerned rural populations, (b) the impact of a paved road in transforming some areas is clearly visible with new private investments in such structures as shops, canteens among others, (c) private contractors built their capacities in a number of technical areas which they can apply to other projects such as the DCP Design Approach, (d) durable Infrastructure particularly the drainage structures and the sections of paved road which transform local environments and economies have been created, and; (e) sustainability is expected to be ensured through effectively supporting the maintenance strategy being implemented by RA and at local level the use of Community Maintenance Clubs for undesignated roads. 2.3 Programme Sustainability 41. The project instituted sustainability strategies of the interventions during the implementation including DAESS structures, training of staff, lead farmers on various improved technologies as well as establishment of pass on programmes. This will ensure that provision of extension services will continue and technologies shared. With the pass on programme, availability of improved seed and planting materials will be sustained. 2.4 Post Completion Operations/Next Phase 42. The Government of Malawi is preparing a second Multi Donor Trust Fund project to consolidate the gains registered by the ASWAp-SP. Together with stakeholders, the Government launched the National Agricultural Policy (NAP) and is also finalizing the preparation of the National Agriculture Investment Plan (NAIP) and the new MDTF project will partly implement some of the focus areas in these sector policy documents. 2.5 Programme Development Impacts (Poverty, Gender, and Social Development) 43. The ICR team noted significant changes in the areas of gender, poverty levels and social development recorded by a rural road impact study report. The rehabilitation of rural roads has greatly improved access to socio economic facilities such as health centres, input and output markets as well as schools. The road improvements also created greater demand for agricultural commodities which resulted in increased business interventions and opportunities amongst communities along the roads. The project also led to adoption of improved technologies which has led to increased yields of different crops, increased incomes and improved well-being. The ICR Team also noted increased female lead farmers who are providing extensions services to their follower which has improved gender dimension as a result of the project. 69 2.6 Assessment of Government, Agency and Bank Performance 2.6.1 Government performance 44. Government performance is rated Satisfactory. The Government showed a high level of commitment during programme design, preparation and implementation. It fully supported the sector-wide approach and stood by its decision to effectively apply the Paris Declaration on Aid Effectiveness to the extent that it requested the Bank to administer the MDTF for development partners to pool resources into the ASWAp rather than promoting stand-alone projects. This has harnessed the gains made on implementing the ASWAp. At preparation of the project, it committed its senior staff to lead teams that prepared different interventions according to their professional areas by component. Furthermore, GOM was very good at compliance with covenants, agreements and recommendations made during the Bank’s Implementation Supervision Missions (ISM) implying that it was genuinely committed to ensuring that the intended development outcomes for which the project was designed should be achieved. 2.6.2 Implementing agency performance 45. The implementing agency performance is rated moderately satisfactory. The Secretariat played its coordination role to ensure smooth preparation of the programme. However, during programme implementation, emerging issues of delayed payments and financial management as revealed by audits affected the rating of the implementing agency. 2.6.3 Bank Performance 46. The Bank’s performance in ensuring quality at entry is rated highly satisfactory. The Bank was in the forefront in facilitating the process of developing ASWAp process and the support project. It ensured that the project is not only aligned to its own country strategy, but also the NEPAD’s CAADP pillars. To support the GOMs policy decision to do away with Project Implementation Units (PIUs) in favour of strengthening existing Government structures in order to ensure local ownership and leadership, the Bank encouraged other development partners in the sector to establish the MDTF and actively participated in the DCAFS. The establishment of the MDTF was a key milestone in moving the ASWAp process and strengthening the capacity of the Ministry to implement it. Furthermore, quality at entry is seen through the fact that both the PDO and GEO remained unchanged throughout the 8-year life of the project since it was considered wide ranging and reflecting the nature of the project well despite changes to some components, indicators and name. Finally, the Bank’s appraisal teams for all the three phases of the project, namely, original, AF1 and AF2 had been appropriately supplied with relevant technical expertise that ensured that the original development outcomes should be realized at the end of the project. 47. Bank’s quality of supervision is rated satisfactory. It worked closely with the Government team to address key implementation issues through at least ten (10) joint ISMs. During each mission, it made no fewer than 10 recommendations covering all components. However, supervision could have been strengthened through regular follow- up of progress on action points agreed during such missions. The period 2010 to 2013 70 showed the supervision missions continuously rating the implementation performance lowly for such a long period without much concrete actions to improve the situation. Between 2014 and 2016, things appear to have improved much more so because it appears the ASWAp SP Secretariat has been better manned and some of its basic functions decentralized to the MDAs with specific lead responsibilities on the project. The delays in coming with solutions for problems that were repeatedly identified, such as in financial management, is a symptom of an area requiring to be addressed in Bank supervision. 48. MDAs however noted delays in the Bank to providing feedback on the status of “No Objections” on issues where the next step really needed them. These are usually related to approvals of TOR and procurement. For example, the Ministry of Industry and Trade waited for a whole quarter to receive feedback on TORs on various studies in 2016 which has affected their completion dates before the project closes. CHAPTER THREE: PROGRAMME CHALLENGES 3.0 Fiduciary-related challenges 3.1.1 Procurement 49. Procurement is rated moderately satisfactory. Key factors that accounted for delays in carrying out procurement activities are, among others: (i) at the national level– weaknesses in procurement capacity at the Secretariat, MoAIWD, MITT and MLHUD; (ii) belated approval of bidding documents by the ministerial IPCs and ODPP; (iii) impact of late disbursement of funds on procurement processes; (iv) weaknesses in procurement capacity at the local level; and (vi) frequent transfers of procurement officers within the Central Government. Procurement was of concern in all ISM, except one of 2009. In addition, procurement of the CFA consultant was critical to implementation of the technical skills subcomponent, but this took too long to complete and adversely affected its implementation. Coordination between the procurement unit and technical departments has been identified as a key source in procurement delays. The procurement unit of the Ministry has ever been grossly understaffed, but has been expected to support the other implementing agencies, particularly MITT and MLHUD. 3.1.2 Financial management 50. Financial management performance is rated moderately unsatisfactory. The indicator on budget execution in MOAIWD shows that there is improved capacity for planning and budgeting, adequate and appropriate number of accounting staff at both national and local level, improved internal controls and financial reporting. However, there were some challenges, notably: (i) late release of funds due to delays in submission of quarterly reports from the MDAs; (ii) late release of funds to implementing agencies even when reports have already been submitted to the secretariat; and (iii) poor quality of reports which also impacted on timely consolidation and submission of the same by the Secretariat to Ministry of Finance. The delays had been largely attributed limited capacity to utilize 71 IFMIS which was deemed difficult to easily identify program transactions in the Ministry’s section of the Government cash book resulting in the project failing to produce reconciliations for outstanding advances in a number of cost centres. 51. As noted elsewhere above, between 2010 and 2014, FM was continuously rated as unsatisfactory. However, it appears this situation is improving with the decentralization of the budget to the MDAs, recruitment of FM specialist as well as Justification Assistants. 4.0 Environmental and Social Safeguards Compliance 52. This function is rated satisfactory. The programme was classified as category B in accordance with the World Bank Group’s environmental safeguard policy classification. Against this backdrop, the Government and Development Partners prepared an Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF) at appraisal, which provided guidance on how to address environmental and social issues triggered by programme investments. 53. Government has been proactive in dealing with environment safeguard issues, including: (i) integrating safeguards issues in the planning of sub-projects and implementation of associated mitigation measures; (ii) conducting various capacity building activities and providing technical support both at national and local level to enhance understanding and application of safeguard principles and procedures; (iii) incorporating ESMF principles into the training modules; (iv) distributing ESMF and RPF documents to all districts; and (v) strengthening the coordination and monitoring of the implementation of safeguard issues at national and local levels. In 2013, it was noted that implementation of the environmental management plan has been noted to progress satisfactorily and environmental safeguards measures are part of the trainings delivered to farmers. All pesticides (insecticides and herbicides) being tested under the project have been registered for sale by the Pesticide Control Board. While farmers have been noted to be well versed in the need for careful pesticide management, it is unclear whether they apply the knowledge on their own farms. A study to understand this has been undertaken but the results are yet to be accessed for this report. 54. HIV and AIDS affected households are expected to encompass 30% of the farmers targeted for any ASWAp-SP interventions. The project has been noted to fall short of the target of 50% female farmers involved in various activities such as identified and empowered to be Lead Farmers. One mission noted that there is no reporting of the involvement of people living with HIV or affected farm households although during the field visits clubs did report the number of people living with HIV involved. All roads underwent an environmental screening. 5.0 Gender Mainstreaming 55. Gender mainstreaming is rated satisfactory. In 2013, the Ministry developed and published a new gender and HIV/AIDS strategy whose objectives are to promote gender equality, to prevent the spread of HIV and to mitigate the impacts of aids in the agriculture sector. This strategy provides guidance to agricultural projects to mainstream activities 72 related to gender and HIV/AIDS in investments. The Ministry conducted an assessment of current approaches to Gender and HIV/AIDS mainstreaming in agricultural projects to provide further operational recommendations. The Gender and HIV/AIDS technical working group is functional, but it is unclear whether it is implementing its mandate to actively promote incorporation its issues in all ASWAp investments, with specific reference to eight (8) actions identified by DAESS in 2012. Over the years, notable progress has been made in disaggregating data to properly monitor gender participation in ASWAp-SP activities, even though it is difficult to gauge its quality judging from how simple interventions such as the FISP fails to reach 50% of beneficiaries to be females. 6.0 Monitoring and Evaluation 56. The monitoring and evaluation framework was based on the result framework of the project which consisted of thirteen (13) indicators. The indicators chosen for the project were (i) taken from the ADP/ASWAP results framework; and, (ii) were also selected for their contribution to the MGDS M&E system. This was to ensure that project alignment to Government initiatives, and that Government reporting, monitoring and evaluation systems is used to monitor project indicators. 6.1 M&E Design 57. The design of the M&E was fragile. Key Project Development Objective indicators i.e. the four-year maize average yield and the percentage of food secure households were too ambitious as it is so difficult to attribute their performance to the ASWAp-SP. While other indicators were added after the mid-term review, two PDO indicators (Levels of soil organic matter in conservation farming application areas and % of variation of intra-annual maize retail price in selected markets) and two intermediate result indicators (Average level of nitrogen use efficiency (kg maize/kg N applied) and Number of farmers receiving micro weather insurance linked with agricultural credit) were dropped because data was difficult to measure and collect. The design was also weak on specific assessments/studies that would have measured project impacts of the various interventions under the ASWAp-SP. 6.2 M&E Implementation 58. The project did not conduct a baseline survey to come up with baseline information of indicators in the result frame. This might be the reason why some indicators did not have baseline data which made those indicators lose their relevance. There was however an effort to adopt baselines of the Agricultural Development Programme which were based on the (NACAL). 59. Annual implementation reports were to be compiled by the ADP Secretariat on the basis of quarterly monitoring reports from the ADDs, themselves based on quarterly district reports. The format for these reports would be based on outputs and targets foreseen in the AWPB and the results framework. This were to ensure that there is a link between the planning document (AWPB) and the monitoring reports. The data collection tools and reporting formats were however developed and circulated to cost centres late in the implementation of the project making it difficult to consolidate achievement under each 73 project component over the years (time series). Nevertheless, improvements in reporting with regard to content, consistency and alignment of the information were observed after cost centres were trained on the result based reporting. CHAPTER FOUR: LESSONS LEARNT i. Prior capacity building interventions are essential for smooth implementation of activities ii. A basket fund is better option for supporting agricultural sector due to its flexibility in dealing with shocks and disasters iii. Strengthening and empowering the project secretariat to maintain data base for the project at least at the outset, is essential for effective and efficient project results monitoring and evaluation 74 Annex 6: List of Supporting Documents MALAWI: Agriculture Sector Wide Approach Support Project 1. European Union (2016): Project Mid Term Review of the Agricultural Sector Wide Approach Support Project. 2. Government of Malawi, Audit reports of the Agricultural Sector Wide Approach Support Project, Graham Carr/Auditor General, 2013-2016. 3. Government of Malawi, Project Progress Reports from Ministry of Agriculture, Ministry of Lands, Ministry of Trade, 2008-2017. 4. Ministry of Agriculture, Irrigation and Water Development, Agricultural Production Estimates, 2008-2016. 5. Ministry of Agriculture, Irrigation and Water Development (2014). Technology adoption study of the Agricultural Sector Wide Approach Support Project. 6. Ministry of Finance, Economic Planning and Development, Malawi Vulnerability Assessment Report, 2008-2016. 7. World Bank, Aide-Memoires for the Implementation Support Missions, 2008- 2017. 8. World Bank, Implementation Results Reports, 2008-2017. 9. World Bank, Project Appraisal Document, Agricultural Sector Wide Approach Support Project, 2008. 10. World Bank, Project Paper on Agricultural Sector Wide Approach Support Project (Additional Financing 1 and Restructuring), 2012. 11. World Bank, Project Paper on Agricultural Sector Wide Approach Support Project (Additional Grant – Multi Donor Trust Fund), 2014. 75