IEG Report Number: ICRR14901 ICR Review Independent Evaluation Group 1. Project Data: Date Posted: 05/31/2016 Country: Kyrgyz Republic Project ID: P098949 Appraisal Actual Project Name: Second Village Project Costs (US$M): 35.7 54.10 Investment Project L/C Number: Loan/Credit (US$M): 15.00 27.20 Sector Board: Social Development Cofinancing (US$M): 13.20 15.80 Cofinanciers: DFID Board Approval Date : 08/03/2006 Closing Date: 06/30/2011 11/11/2014 Sector(s): General education sector (33%); Other social services (33%); Sub-national government administration (18%); Transmission and Distribution of Electricity (8%); Water supply (8%) Theme(s): Participation and civic engagement (25%); Rural services and infrastructure (25%); Rural non-farm income generation (24%); Other social protection and risk management (13%); Decentralization (13%) Prepared by: Reviewed by: ICR Review Group: Coordinator: Roberto C. Laver Robert Mark Lacey Christopher David IEGPS1 Nelson 2. Project Objectives and Components: a. Objectives: To (a) improve governance and capacity at the local level; (b) strengthen the provision of, and access to, essential infrastructure services; and (c) support private group-owned small-scale enterprise development (Schedule 1 of the Financing Agreement) The ICR notes that the Project Development Objective (PDO) in the PAD includes a higher order objective, namely to “alleviate rural poverty” (ICR, p. vii at footnote 8). The full description of the PDO reads: “Alleviation of rural poverty by empowering communities to improve access to social and economic infrastructure services.” (PAD, basic data). Further, the ICR also notes that a 2009 project restructuring clarified that the only PDO was the one in the Financing Agreement and not “as slightly differently formulated in the Project Appraisal Document” (ICR, ps. xii-xiii) The objectives stated in the Financing Agreement are the basis for this ICR review. b.Were the project objectives/key associated outcome targets revised during implementation? No c. Components: The project was a follow up to the Village Investment Project (VIP) approved in December 2003 and implemented from January 2004 until August 2008. The project expanded the coverage of the VIP to the country’s remaining 126 rural communities not yet participating, while providing continued support for the 347 rural communities that had already been participating. It had three components: I: Capacity Building and Empowerment (appraisal cost US$ 1.5 million, actual cost US$ 2 million: Support the government’s decentralization process through local capacity building and community empowerment. Provide technical support and training to (i) rural communities and rural community groups in social mobilization to assist in establishing sustainable structures and bodies to mobilize internal resources and participate in the design and implementation of rural community investments; (ii) rural communities and rural community groups in strategic planning, micro-project preparation and implementation, monitoring and micro-project supervision; (ii) local officials and rural community leaders for creating awareness and skills for good governance (including fiscal/financial resource management, and mechanisms to foster inclusion and ensure accountability, and for environmental screening, mitigation and monitoring) II: Village Investments (appraisal cost US$ 32.57 million, actual cost US$ 50 million): Support the implementation of approximately 3,000 micro-projects in two categories: economic and social infrastructure and small business ventures. Micro-projects would be demand-driven, reflecting the needs and priorities of the rural communities and would be part of rural community investment plans agreed through a participatory and transparent process. Economic and social infrastructure micro-projects would include rehabilitation or upgrading of village roads, repair of culverts and small bridges, flood protection works, conversion of community buildings into shop fronts for rental to local artisans and entrepreneurs, water supply points for animals; improvements in local drinking water supply, repair and rehabilitation of schools and of bath houses, and community facilities for the elderly and the young. Small business ventures would include agro-processing, livestock feed production, cooperative input and output marketing, artisanal enterprises, bread and pasta making, handicrafts such as carpet making, local nature and culture tourism and hostelry; agricultural diversification and natural resources management. III: Project Management (appraisal cost US$ 1.59 million, actual cost US$ 1.9 million): Support the project implementing entity (the Community Development and Investment Agency of the Kyrgyz Republic) through technical assistance, including audit and training for project management and monitoring and financing its operating costs under the project. d. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost. Actual project costs (US$54.10 million) considerably exceeded the appraisal estimate (US$35.71 million) due to two factors: a financing gap for completing micro-projects caused by significant inflation and increases in construction costs; and the retrofitting of deficient structures of completed micro-projects. Financing. The originally approved IDA grant was US$15 million. This was subsequently increased by two Additional Financings, the first (November, 2009) in an amount of US$ 8.0 million equivalent, and the second (December, 2012) of US$ 4.2 million equivalent. Approximately US$6.8 million of the first Additional Financing was used to allow all the participating communities and villages to complete the four-year village investments cycle. The remaining US$1.2 million was used for reviewing the structural soundness of already completed civil works and for retrofitting 22 structures, comprising 11 that had been constructed by the VIP, 3 by a pilot phase financed by a Japanese Social Development Fund, and 8 by the project. The second Additional Financing was used to fund the technical design and retrofitting of 18 additional structures, comprising 14 that had been constructed by VIP, two by KfW, and two by the project, including two that could not be funded as intended by the first Additional Financing. Cofinancing was provided by the United Kingdom DFID in the form of a Grant, which was originally estimated at US$13.62 equivalent and was later increased by US$2.18 million to US$15.80 million at the time of the first Additional Financing. There were no other external sources of financing. Borrower contribution. The Recipient’s contribution was estimated at appraisal at US$7.5 million. Of this, the local communities would provide the largest share of US$ 6.5 million and the national government would provide US$1 million. At project closure, the actual Borrower’s contribution was US$11.10 million. Dates. There were three extensions of the closing date, totaling three years and four months. The first, at the time of the first Additional Financing (November, 2009), was from the original June 30 2011 to December 31, 2011. The second, in June 2011, was for 12 months to December 31, 2012, and was to complete the retrofitting of structurally defective infrastructure. The third, in December 2012, was for one year and 10 months, to enable the completion of needed works in light of seasonal limitations in the construction schedule. 3. Relevance of Objectives & Design: a. Relevance of Objectives: High The development objectives were relevant at appraisal and remained so at closure, both to the country’s development priorities and the World Bank Group’s Country Partnership Strategy (CPS). The government’s commitment to improve local governance is reflected in its National Sustainable Development Strategy (NSDS), 2013-2017, as well as in its request for Bank support in implementing a third village investment project. In addition, the 2014-2017 CPS is aligned to these priorities and focuses on reducing extreme poverty and promoting shared prosperity through support for improved governance. With regard to country conditions, despite improvements supported by the project, critical infrastructure gaps and weak governance remained significant barriers to the country’s social and economic development. b. Relevance of Design: Substantial Project design was relevant to each of the development objectives (though the original project indicators were inadequate). The causal chain between project activities and the achievement of objectives was clear. The training and other technical support to the communities, community groups and local officials was logically linked to intended improvements in governance and capacity at the local level. Project outputs (the number of trained officials and community members; the number of local councils publicizing community budgets and other transparency measures; and the number of local councils conducting open public budgeting and planning meetings and community hearings) were logically linked to intended improvements in local government consultation, citizen participation in investment decisions, transparency in community investment decisions, as well as increased community capacity for planning and implementing local investments. The investments in viable micro-projects, as planned and approved through the community participatory process, were also linked to the strengthening of the provision of, and access to, essential infrastructure services as well as the support of private group-owned small-scale enterprise development. Two observations may, however, be made: (i) The fact that significant Additional Financing was needed to allow all the participating communities and villages to complete the full four-year village investments cycle, may suggest that the project was under-funded. According to the project team, the project had been designed in such a way that the project objectives, as reflected in the target values in the results framework, would be achievable without completing all four investment cycles in all villages and without Additional Financing. Nonetheless, "as the project rolled out more successfully than initially expected (all villages performed well in the first year and prepared micro projects in time), it became evident that it would be necessary to fund the full 4 cycles of grants in all 473 villages [by the project and sooner than expected]” (interview with the project team). Since the anticipated parallel financing from external donors was not forthcoming in a sufficiently timely manner, Additional Financing was necessary. (ii) The project objectives were not clearly specified in project documents. The PAD included a higher level objective, “Alleviation of rural poverty” (PAD 25) which was not reflected in the Financing Agreement. This prompted a clarification that the only PDO was the one in the Financing Agreement and not as formulated in the Project Appraisal Document (ICR, at vii and 4) 4. Achievement of Objectives (Efficacy): 1. To improve governance and capacity at the local level-rating: substantial Outputs:  By November 2011, the target of 70,000 aiyl okmotu (local administration) officials and community members were trained in budgeting and planning principles and procedures.  By November 2011, the number of aiyl okmotus publicizing community budgets and adopting other mechanisms for financial transparency increased from 35 (baseline) to 350 (target value).  By December 2012, the target of 460 LICs (local investment committees) publicizing community budgets and adopting other mechanisms for financial transparency was met.  By November 2011, the target value of 300 aiyl keneshs , 460 VICs and 1700 LICs conducting open public budgeting and planning meetings and community hearings was met. Outcomes: An impact assessment was conducted in 2011 by a consortium of independent, third party companies, which examined impact indicators, with data collected through mixed, quantitative and qualitative methods from 28 sample communities (see more details in Section 10 b.). According to this assessment, the project outputs led to increased community capacity for planning and implementing local investments, increased transparency in community investment decisions and increased local government consultation and citizen participation in investment decisions as follows:  The share of villagers that believe they have the skills to identify and prioritize social and economic issues in their communities increased from 45% in 2007 to 70%.  44% of all villagers (46% among men and 37% among women) use the skills and knowledge they gained from the project training in daily life.  64% of rural residents reported increased transparency in decision making at village level.  59% reported increased information about activities of local authorities.  57% reported greater accountability by local authorities.  The share of villagers participating in local planning and decision making has increased by almost 20 percent-points from 47% to 66%.  The share of those who do not participate at all has declined from 7% to 2%.  59% of villagers reported reduced social tension between villagers and aiyl okmotu administration.  63% reported improved relations between villagers and aiyl okmotu management.  68% of villagers also think the trainings helped them to access funds from other organizations for new projects.  The participation of villagers in micro-projects exceeded 40% of the rural population, regardless of their age and gender, except for those aged 18-25 years. Only 29% of the villagers aged 18-25 years participated. This group, however, showed one of the largest increases in participation, as only 6% of the group was participating in project activities in 2007. Villagers aged over 60 years experienced the greatest increase in participation between 2007 and 2011, from 8% to 46%.  In terms of decision making, approximately half of the surveyed households thought pensioners and low income villagers notably influenced the decision making at village meetings.  About two-thirds of rural residents surveyed for the impact assessment thought women notably influenced the decision making. The ICR notes that the Bank’s supervision mission teams also noted women’s active participation in the communities visited. Approximately a quarter (26%) of MPG leaders was women, while 20% of VIC chairs and 16% of LIC chairs were women. According to the impact assessment survey, 46% of women participated in VIP2 activities  The ICR notes that “people’s perception might not necessarily provide a robust, technical evidence of improved governance. Nonetheless, people’s increased sense of transparency, improved relationships, and satisfaction with local authorities is unlikely without notable changes in the performance of local self governments (LSGs), and is a strong indication of improved governance.” (ICR, 16) 2. To strengthen the provision of, and access to, essential infrastructure services-Rating: Substantial Outputs:  By December 2012, the target of 6,000 financially viable micro-projects consistent with local development priorities was met.  442 community water points constructed or rehabilitated (exceeding the target of 259).  93,324 new piped household water connections (exceeding the target of 13,000).  684 rehabilitated piped household water connections (equaling the target).  383 health facilities constructed, renovated, and/or equipped (exceeding the target of 246).  676 kilometers of rural roads rehabilitated (exceeding the target of 70 kilometers).  The above targets include the project financing (both IDA and DFID) as well as other parallel financing for micro-projects (ICR, 34). The actual number of micro-projects supported by the project was 4,619 (ICR, 36). Outcomes:  1,698 villages achieved access to improved social and economic infrastructure as a result of the project, exceeding the target of 1,500 villages from a baseline of 1,000.  A total of 2,294,788 people, as opposed to the target of 1,850,000 people, directly benefitted from improved communal infrastructure.  Full accessibility of clean drinking water increased from 40% to 57%, irrigation water from 47% to 62%, electricity from 66% to 79%, schools from 65% to 75%, kindergartens from 38% to 53%, and local health clinics/first aid posts (FAPs) from 55% to 69% during the period, according to household survey results.  More than 70% of rural residents believe that the project contributed to the improvement of local social infrastructure. The increase in the accessibility of economic and social infrastructure was more notable among low-income population. According to the impact assessment, the low-income population, compared with middle income and high income populations, experienced the greatest decline in the share of population that had no access to clean drinking water, irrigation water, electricity, roads, public transportation, schools, or kindergartens between 2007 and 2011. Over 80% of the surveyed household respondents perceived that men and women equally benefitted from the project. 3. To support private group-owned small-scale enterprise development (Schedule 1 of the Financing Agreement)-Rating: Modest There was no specific indicator or target value to monitor this objective in the results framework. At the time of the First Additional Financing, an indicator; --the number of jobs created in beneficiary communities-- was included, but without a target value. According to the data provided by the project’s management information system, the project supported a total of 898 income-generating micro-projects that directly created 2,319 permanent jobs. These include 146 sewing shops (539 jobs), 115 auto repair shops (257 jobs), 94 carpenter shops (230 jobs), 65 veterinary stations (125 jobs), 39 beauty salons (91 jobs), and 439 other small businesses (1,077 jobs). A large majority of jobs created by sewing shops and beauty salons are held by women. 5. Efficiency: The project had satisfactory economic rates of return (ERRs) generated by the micro-projects. The PAD estimates an ex ante average ERR on infrastructure micro-projects of 54.5% and on income-generating micro-projects of 44.1%. The analysis is based on a sample of 97 micro-projects completed in 2004 (PAD, 53). The ICR (17-18) estimates the ex post ERR a sample of micro-projects; the ICR describes the sample as "small [but] randomly selected and the data could be extrapolated for five types of infrastructure and for income-generating activities:"  For infrastructure micro-projects: 19% for school repair, 30% for water supply, 19% for irrigation canals, 28% for gas pipelines, and 68% for power supply infrastructure (transformers).  Income-generating activities on average yielded positive results, although some small businesses had negative returns. Internal rates of return were 59% for carpentry/furniture shops, 20% for confectionary shops, 128% for mini-bakeries, 74% for veterinary service stations, and 193% for mini-shops. Implementation delays mainly resulted from the need to mobilize Additional Financing on two occasions. The first (November, 2009) was mainly to meet shortfalls that had already been anticipated in large measure at appraisal, when it was estimated that, there would be a shortfall of about US$8.55 million to complete the full four year cycle of investments for all villages, unless donor contributions above and above those of IDA, DFID and the Government materialized. They were not, however, forthcoming in a timely manner. The financing gap was further widened by significant currency fluctuations and increases in the cost of construction materials. The Additional Financing also supported a comprehensive independent technical review of micro-projects completed under both the previous project (VIP-1) and this one. The second Additional Financing (December 2012) funded the technical design and retrofitting of those subprojects identified as deficient. However, it should be noted that nearly 80% of these structures dated from VIP-1, and that only 30 out of 4,619 (0.6%) of subprojects funded by the operation under review were found to be deficient. Of these, only ten required retrofitting. Efficiency is rated substantial. a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated. 6. Outcome: Relevance of objectives is high and that of design substantial. Efficacy of two out of three objectives – to improve governance and capacity at the local level and to strengthen the provision of, and access to, essential infrastructure services – is rated substantial. Efficacy of the third objective – to support private group-owned small-scale enterprise development – is rated modest due to the absence of quantitative indicators. However, there is some indirect evidence of enterprise development in the form of the number of jobs created. .Efficiency is rated substantial – economic rates of return on subprojects were satisfactory, and implementation delays did not reflect significant operational or administrative inefficiencies. a. Outcome Rating: Satisfactory 7. Rationale for Risk to Development Outcome Rating: The following factors help lower the risk:  Future projects, including a third IDA operation, are expected to further strengthen governance and local capacity and also facilitate the transition of the planning processes and roles of community committees into the normal programming procedures of local self-governments.  Rural community groups in rural communities remain active: the ICR notes that two-thirds of the Local Investment Committees are still operating regularly and about a third of them and Village Investment Committees have been able to mobilize resources from other sources of financing (ICR, 21).  The infrastructure financed by the project is in operation and, according to independent technical reviews, is of satisfactory quality.  All infrastructure has been transferred to local governments, and is managed on the basis of micro-project sustainability plans which contain detailed budgets, fee schedules and institutional arrangements for operation and maintenance.  Communities have demonstrated commitments throughout project implementation, as evidenced by the contribution of communities to micro-projects of an average 26.7% of project costs, exceeding the required 25%.  Small business ventures supported by the project in general yielded positive net-present values, and are expected to continue generating profits  The business planning and management skills the micro-project group members received are expected to remain as an acquired knowledge. While these factors contribute to increasing it:  There is a lack of strong evidence of compliance with post-micro-project arrangements for operation and maintenance and collection of user fees.  Future performance of business ventures will be greatly affected by economic and market factors beyond the scope of the project. Also, they will face challenges of small scale of market in remote villages and insufficient resources to make additional investments. a. Risk to Development Outcome Rating : Moderate 8. Assessment of Bank Performance: a. Quality at entry: Project design benefited from the earlier operation (VIP), in particular its community mobilization process, functioning implementation arrangements and institutional capacity. This allowed for a running start, disbursing 44% of the IDA grant within the first year of the project. The design introduced some improvements to strengthen project implementation, including simplification in procurement documentation and physical audits to reduce the risk of corruption. It also reinforced mechanisms to promote social inclusion. Risk mitigation measures were included in financial management processes. However, there were two moderate shortcomings in Quality at Entry, which had a negative impact on project implementation:  There was insufficient attention given to the financial viability and technical quality of construction works funded by micro-projects (ICR, 8). As a result of the lack of an adequate mechanism, there were some constructions with insufficient budgets, others with inadequate technical design and supervision and a few (10 structures) that posed public safety risks and required retrofitting. It should be noted that these shortcomings were identified during project supervision in 2008 and corrective and successful measures were taken to ensure that new micro-projects were structurally sound.  M&E design was weak (see section 10 below). Quality-at-Entry Rating: Moderately Satisfactory b. Quality of supervision: Project supervision included regular bi-annual missions. While supervision teams failed to adequately attend the financial viability and technical quality of construction works in the early phase of the project, they did identify these problems at mid-term and took corrective action immediately. After the project mid-term, a local operations office in the country provided day-to-day supervision and a civil engineer was retained to provide regular inspections of civil works. It should, however, be noted that the project had four team leaders over the implementation phase, which adversely affected continuity. Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9. Assessment of Borrower Performance: a. Government Performance: The Government showed strong commitment to the project. Counterpart contribution was fully made though there were initial delays in budgetary submission and approval without adversely affecting project implementation. There were also some delays in the required parliamentary approvals for the Bank-managed DFID trust fund and the second Additional Financing but such delays had no significant adverse implications for project implementation. Government Performance Rating Satisfactory b. Implementing Agency Performance: The implementing agency (the Community Investment and Development Agency-ARIS) demonstrated strong commitment to achieving development objectives, adequate beneficiary consultations, high readiness for implementation and adequate financial and procurement processes without any significant fiduciary issues. The ICR notes (without providing a source) that beneficiary communities expressed high satisfaction with the support and services of ARIS and that it enjoyed high reputation and trust among the rural population (ICR, 24). According to supervision mission reports, ARIS was was proactive and effective in addressing implementation challenges and its social mobilization process was of high quality. The ICR also reports that the project’s MIS was adequately designed to enable monitoring and processing of high volume of information (ICR 26). Supervision missions found the project fiduciary processes to be satisfactory. ARIS' procurement capacity was adequate and satisfactory according to the Country Fiduciary Portfolio Review conducted in 2008 (ICR, 25). There were, however, some minor shortcomings:  ARIS was unable to prepare cost estimates and technical documentation for the structurally deficient micro-projects that required retrofitting through the Additional Financing. This delayed the processing of the Additional Financing.  ARIS did not submit applications of supplemental grants for a small number of technically demanding micro-projects in an early phase of project implementation. This resulted in the structural deficiency of 30 civil works;  ARIS did not fully track income-generating micro-projects, particularly in terms of the project benefits and employment creation. Implementing Agency Performance Rating : Satisfactory Overall Borrower Performance Rating : Satisfactory 10. M&E Design, Implementation, & Utilization: a. M&E Design: M& E design was weak, and indicators in the results framework did not adequately capture the achievement of project development objectives:  While participation and community empowerment were intended to be the most significant project outcomes (“essence of the project”, PAD, 76), there were no indicators for measuring progress in achieving such outcomes. Progress could only be tracked at the output level (number of community members trained). There were no outcome indicators measuring improvement of accountability of local governments beyond transparency measures, despite indications that low levels of trust in government and corruption were main factors causing civil unrest in the country (ICR, 2).  There was no outcome indicator regarding effective inclusion though this was central to the community empowerment (PAD, 68).  The original results framework did not include indicators measuring access to specific infrastructure services such as health and education.  There was no outcome indicator for measuring the objective of supporting group-owned small enterprise development. b. M&E Implementation: The ICR notes that the implementing agency had fully equipped offices with a data entry module and constantly updated it with data collected by the communities (ICR, 26). The Bank’s supervision missions found that the implementing agency’s MIS operated satisfactorily. Information was generally up-to-date and adequate for day-to-day management purposes. The ICR notes that the monitoring of income generating micro-projects, however, could have been strengthened further as recommended by the Bank’s supervision mission, particularly in terms of tracking the benefits and employment creation. This would have allowed the earlier identification of financially unsustainable income-generating micro-projects, and the development of procedures to provide business advice to them (ICR, 26). The weaknesses in M&E design were addressed during implementation. The project conducted an impact assessment that measured the results of the project against the project development objectives. A different set of indicators, which were more squarely aligned to the PDOs, were included in the design of the assessment. Data were collected in two phases, through a baseline survey conducted in 2007, and a completion survey at the end of the original phase of the project in 2011, by which time almost all of capacity building, empowerment, and village investment activities had been completed. The assessment was conducted by a consortium of independent, third-party companies, which examined seven impact indicators, with data collected through mixed, quantitative and qualitative methods from 28 sample communities in all seven oblasts across the country. Randomized impact evaluation was not an option, since every rural community in the country benefitted from the project. No additional impact assessment was conducted at the completion of the project in 2014, since the project focused on retrofitting deficient infrastructure after 2011. Also, the 2009 project restructuring included a new results indicator to capture increased employment in beneficiary communities and a set of new IDA core sector indicators to help capture results. c. M&E Utilization: The ICR notes that the MIS contained adequate documentation on micro-projects which provided valuable information for improving the quality of micro-projects and tracking the status of the project implementation agreements (ICR, 13, 47). M&E Quality Rating: Substantial 11. Other Issues a. Safeguards: The project triggered two safeguards: Environmental Assessment (OP 4.01) The project was classified under the category FI (investment of Bank funds through a financial intermediary, in subprojects that may result in adverse environmental impacts). The environmental assessment and guidelines of the precursor project (VIP) were updated. According to the ICR, such guidelines were complied with and no adverse environmental impact was observed (ICR, 13-14). Involuntary Resettlement (OP 4.12) No land acquisition was anticipated and therefore OP 4.12 on involuntary resettlement was not triggered during project preparation. However, supervision missions noted a few instances of land acquisition and it was decided to trigger OP 4.12. The ICR reports that an appropriate policy framework was included in the project operational manual (ICR, 14). In the event, only one micro-project triggered the involuntary settlement policy. A land acquisition plan was prepared in line with the operational manual, and the affected person was duly compensated. b. Fiduciary Compliance: Financial Management: The ICR reports that financial arrangements and compliance with audit obligations were satisfactory. Audit reports were timely and the auditors gave unqualified opinions on the project financial statements with no serious internal control issues mentioned in the management letters (ICR, 14). Procurement: A key issue during project preparation was that some micro-project groups would not have adequate capacity to prepare the technical specifications for technically more demanding micro-projects. To address this issue, the project included, among other measures, the provision of small supplemental grants to the concerned communities, up to an amount equivalent to 10% of the estimated cost of the micro-project to contract an appropriately qualified engineer/architect for technically demanding micro-projects. During project supervision, however, Bank missions found inconsistent application of engineering procedures to micro-project design and implementation as well as the absence of detailed technical specifications and adequate records on acceptance or rejection of works and equipment. The supplemental grants were not used in all warranted cases. To improve the quality of micro-projects, changes were introduced in the project operational manual including enhanced quality assurance process. After the enhancement of the technical supervision process, no further structural deficiencies were identified for micro-projects. c. Unintended Impacts (positive or negative): As a positive unintended impact, the ICR notes that benefits to consumers of the small business ventures, such as lower prices, greater accessibility, were often greater than to the enterprises themselves. These benefits were not measured by the project (ICR, 21). d. Other: 12. Ratings: ICR IEG Review Reason for Disagreement/Comments Outcome: Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome: Bank Performance: Moderately Moderately Satisfactory Satisfactory Borrower Performance : Satisfactory Satisfactory Quality of ICR: Satisfactory NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate. 13. Lessons: The following four lessons are taken from the ICR with some adaptation of language:  Strong quality assurance processes are critical to the technical quality of civil works, especially when these are implemented by rural communities with low capacity to manage them.  The even targeting of all beneficiary communities with small community investments, rather than concentrating larger investments in fewer communities, may serve as a positive approach for building confidence of the population, particularly in a context of high distrust of government and related civil unrest.  Solid communication channels are important to mobilizing villagers, facilitating social inclusion, and increasing transparency.  Detailed profiles of beneficiary communities and group-specific statements of needs and priorities are useful mechanisms in facilitating the inclusion of different social groups in community investments. 14. Assessment Recommended? Yes No 15. Comments on Quality of ICR: This is a concise and results-based ICR. It candidly reports the project’s achievements and shortcomings during implementation, and provides insightful explanations for important elements of the implementation experience. It would have been useful, however, if the ICR had offered more clarity and analysis on the rationale for the Additional Financing and the relationship to project objectives and targets and responsibilities of the implementation agency . a.Quality of ICR Rating : Satisfactory