Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004368 IMPLEMENTATION COMPLETION AND RESULTS REPORT ARTF Grant Number: TF015003 ON A GRANT IN THE AMOUNT OF US$ 74.75 MILLION TO ISLAMIC REPUBLIC OF AFGHANISTAN FOR THE AFGHANISTAN AGRICULTURAL INPUTS PROJECT (AAIP) November, 2019 Agriculture Global Practice Sustainable Development South Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective {Jun 30, 2019}) Currency Unit = AFGHANI (AFS) AFS 81.35 = US$1 US$ = SDR 1 FISCAL YEAR Jan 1 - Dec 31 Regional Vice President: Hartwig Schafer Country Director: Henry G Kerali Sustainable Dev. Regional Director: John Roome Practice Manager: Loraine Ronchi Task Team Leader(s): Amanullah Alamzai, Hazem Ibrahim Hanbal ICR Main Contributor: Abimbola Adubi ABBREVIATIONS AND ACRONYMS AAIP Afghanistan Agricultural Inputs Project AASR Afghanistan Agriculture Sector Review ARDS Agriculture and Rural Development Strategy ANDS Afghanistan National Development Strategy ANSCU Afghanistan National Seed Companies Union ANSOR Afghanistan National Seed Organization ARIA Agriculture Research Institute of Afghanistan ARTF Afghanistan Reconstruction Trust Fund BS Breeder seed BQS Border Quarantine Stations CABI Centre for Agriculture and Bioscience International C/B Cost-Benefit CIMMYT International Maize and Wheat Improvement Center CPF Country Partnership Framework CS Certified Seed DAIL Department of Agriculture, Irrigation and Livestock DUS Distinguish, Uniformity and Stability Test EFA Economic and Financial Analysis ESMF Environmental and Social Management Framework FAO Food and Agriculture Organization FCV Fragility, Conflict and Violence FFS Farmers Field School FOREX Foreign Exchange FS Foundation Seed GDP Gross Domestic Product GoIRA Government of the Islamic Republic of Afghanistan ICT Information and Communications Technology IPM Integrated Pest Management IPPC International Plant Protection Convention ISE Improved Seed Enterprises ISN Interim Strategy Note MAIL Ministry of Agriculture, Irrigation and Livestock MIS Management Information System MSI Management Systems International NADF National Agricultural Development Framework NHLP National Horticulture and Livestock Project NSB National Seed Board PAD Project Appraisal Document PCR Project Completion Report PDO Project Development Objectives PMP Pest Management Plan PPQD Plant Protection and Quarantine Department PSE Private Seed Enterprises PQS Plant Quarantine Station SCA Seed Certification Agency SPS Sanitary and Phytosanitary Measures TOC Theory of Change WTO World Trade Organization TABLE OF CONTENTS DATA SHEET ........................................................................................................................... I I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 1 A. CONTEXT AT APPRAISAL .........................................................................................................1 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION ................................................................5 II. OUTCOME ...................................................................................................................... 7 A. RELEVANCE OF PDOs ..............................................................................................................7 B. ACHIEVEMENT OF PDOs (EFFICACY) ........................................................................................7 C. EFFICIENCY ........................................................................................................................... 15 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 16 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 17 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 19 A. KEY FACTORS DURING PREPARATION ................................................................................ 19 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 19 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 20 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 20 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 22 C. BANK PERFORMANCE ........................................................................................................... 23 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 24 V. LESSONS AND RECOMMENDATIONS ............................................................................. 25 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 27 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 39 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 41 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 42 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 50 ANNEX 6. PROJECT PICTURES ............................................................................................... 54 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P120397 Afghanistan Agricultural Inputs Project (AAIP) Country Financing Instrument Afghanistan Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Islamic Republic of Afghanistan MAIL - Ministry of Agriculture, Irrigation and Livestock Project Development Objective (PDO) Original PDO Attain strengthened institutional capacity for safety and reliability of agricultural inputs and sustainable production of certified wheat seed. The development objective would be achieved through: (i) strengthening capacity in the value chain for producing certified wheat seed; (ii) preventing marketing of banned, hazardous, sub-standard, and unreliable pesticides and fertilizers; (iii) lowering the riskof introduction and spread of plant quarantine pests into the country; and (iv) improving farmers’ access to agricultural inputs ofreliable quality. i The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 74,750,000 67,250,000 38,301,559 TF-15003 Total 74,750,000 67,250,000 38,301,559 Non-World Bank Financing 0 0 0 Borrower/Recipient 0 0 0 Total 0 0 0 Total Project Cost 74,750,000 67,250,000 38,301,559 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 17-Jun-2013 30-Jun-2013 22-May-2016 30-Jun-2013 30-Jun-2019 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 02-Jun-2017 21.28 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Cancellation of Financing Reallocation between Disbursement Categories Change in Safeguard Policies Triggered Change in Legal Covenants Change in Procurement Change in Implementation Schedule KEY RATINGS Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Modest ii The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 05-Dec-2013 Satisfactory Satisfactory 7.10 02 27-Jan-2014 Satisfactory Moderately Satisfactory 7.31 Moderately 03 24-Jun-2014 Moderately Unsatisfactory 8.22 Unsatisfactory Moderately 04 03-Dec-2014 Moderately Unsatisfactory 8.65 Unsatisfactory Moderately 05 29-Jun-2015 Moderately Unsatisfactory 11.86 Unsatisfactory 06 21-Dec-2015 Moderately Satisfactory Moderately Satisfactory 14.32 07 20-Jun-2016 Moderately Satisfactory Moderately Satisfactory 17.10 Moderately 08 13-Dec-2016 Moderately Unsatisfactory 20.20 Unsatisfactory Moderately 09 16-Jun-2017 Moderately Unsatisfactory 23.24 Unsatisfactory Moderately 10 05-Jan-2018 Moderately Unsatisfactory 29.10 Unsatisfactory 11 06-Mar-2018 Moderately Satisfactory Moderately Satisfactory 32.13 12 04-Oct-2018 Moderately Satisfactory Moderately Satisfactory 35.20 13 10-Apr-2019 Moderately Satisfactory Moderately Satisfactory 38.70 SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 78 Crops 35 Public Administration - Agriculture, Fishing & Forestry 21 Other Agriculture, Fishing and Forestry 22 iii The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Industry, Trade and Services 22 Agricultural markets, commercialization and agri- 4 business Other Industry, Trade and Services 18 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Urban and Rural Development 69 Rural Development 69 Rural Markets 11 Rural Infrastructure and service delivery 42 Land Administration and Management 16 Environment and Natural Resource Management 32 Renewable Natural Resources Asset Management 32 Biodiversity 16 Landscape Management 16 ADM STAFF Role At Approval At ICR Regional Vice President: Philippe H. Le Houerou Hartwig Schafer Country Director: Robert J. Saum Henry G. R. Kerali Director: John Henry Stein John A. Roome Practice Manager: Simeon Kacou Ehui Loraine Ronchi Amanullah Alamzai, Hazem Task Team Leader(s): Alvaro Juan Soler Bavosi Ibrahim Hanbal ICR Contributing Author: Abimbola Adubi iv The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL 1. At Appraisal in 2012, the operating environment in landlocked Afghanistan remained extraordinarily challenging with un-institutionalized rule of law, weak governance and administrative capacity, worsening poverty and security issues. After decades of war and political instability, Afghanistan was one of the world’s poorest and least developed countries in the world. The national poverty rate stood at 36 percent, and more than half the population was considered vulnerable. Since over 70 percent of the Afghanistan population lived in rural areas, rural poverty accounted for almost 84 percent of national poverty. The country ranked 167th out of 183 countries in the World Bank’s Ease of Doing Business index1 and as such, business environment was opaque and bureaucratic. In addition, the withdrawal of international troops in 2012, worsening security situation and the associated decline in aid levels adversely affected consumer and investor confidence and resulted in a sharp decline in domestic demand. Net Foreign Direct Investment (FDI) inflows also decreased to 19% of its 2005 value with yearly percent change of -72.65% in 2011, 8.91% in 2012 and -14.98% in 20132. Generally, development needs were enormous. 2. Both economic development and poverty reduction in Afghanistan were highly dependent on the performance of the agricultural sector. The sector accounted for 31 percent of GDP but provided employment to 59 percent of the labor force3. About 36 percent of households relied on farming as their main source of income, while another 6 percent depended on farm wages as their main source of income. Wheat was the primary staple4 food of most households. The crop was grown on some 2.55 million hectares and more than 20 million rural people directly depended on it. On average, about 1.17 million hectares of irrigated wheat and as much as 1.38 million hectares of rain-fed wheat were grown yearly. The production was highly erratic, ranging from 2.0 to 5.2 million tons of grain per year, and Afghanistan depended on Iran, Kazakhstan and Pakistan to meet its domestic demand which was largely unmet due to reduced private sector activity, increasing criminal activities and deteriorating infrastructure resulting from increasing fragility. Despite donor-funded agriculture and rural development programs, the country lagged significantly behind its neighbors in agricultural productivity. 3. Limited access to quality inputs at affordable prices was a key constraint to higher agricultural productivity. Fertilizers and other agrochemicals (pesticides, fungicides, herbicides, etc.) were nearly entirely imported and often of unreliable quality. There were no legal and regulatory frameworks, as well as the infrastructure to exercise and enforce quality control. Furthermore, farmers’ access to the inputs was insufficient with weak knowledge regarding their safe transport, storage and use. This was an aftermath of many years of insecurity that took its toll on the country’s governance structure. Similar to other FCV countries, there was very limited institutional capacity, significant corruption risks, high levels of fragmentation and lack of coordination impeding implementation and follow-through on reforms. The country’s infrastructure and human capital base was very 1 https://data.worldbank.org/indicator/IC.BUS.EASE.XQ 2 https://knoema.com/atlas/Afghanistan/topics/Economy/Balance-of-Payments-Capital-and-financial-account/Net-FDI-inflows 3 Afghanistan Interim Strategy Note FY12-14. 4 [https://www.tandfonline.com/doi/abs/10.1080/15427528.2011.547751]. 1 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) low. During this period, Afghanistan had a National Seed Law (2005), an updated Seed Policy of 2012 and Official Seed Rules and Regulations which were in the process of legal review, and a National Seed Board (NSB). The NSB provided oversight to the seed sector and standardized the process of variety selection and improved seed production by Government of the Islamic Republic of Afghanistan (GoIRA) and private sector agencies. There was also a functioning (but not yet formalized) Seed Certification Agency (SCA). 4. Therefore, GoIRA, in collaboration with its development partners, prioritized the strengthening of the agricultural production base especially for wheat, under the 2008 National Agricultural Development Framework (NADF) through enhancing the capacity of the institutions involved in the inputs value chain system. Afghanistan Agricultural Inputs Project (AAIP) was designed to address the institutional challenges and strengthened the quarantine network system, the inputs production and the distribution system. The direct project beneficiaries were the Agriculture Research Institute of Afghanistan (ARIA), Improved Seed Enterprises (ISE), Afghanistan National Seed Companies Union (ANSCU), National Seed Board (NSB) and Plant Protection and Quarantine Department (PPQD). AAIP supported the above beneficiaries in 155 of the 34 provinces of the country (see map at the Annex). Theory of Change (Results Chain) 5. Boosting farmers’ income through a more productive agricultural sector, has long been a priority of the GOIRA. The key problem faced in achieving this much-needed structural transformation was the limited access to quality inputs due to limited infrastructure and weak capacity of institutions involved in the inputs value chain system. AAIP was designed to address this problem through (a)strengthening institutional capacity for safety and reliability of agricultural inputs; and (b) strengthening institutional capacity for sustainable production of certified wheat seed. Given the institutional set up in the country, safety and reliability of inputs are inextricable and therefore listed together as an outcome. Project activities, outputs and outcomes, as well as underlying assumptions for causality, are depicted in the Results Chain in Figure 1. Project Development Objectives (PDOs) 6. According to the Grant Agreement, the Project Development Objective (PDO) was “to strengthen institutional capacity for safety and reliability of agricultural inputs and sustainable production of certified wheat seed”. This was consistent with the PDO in the Project Paper or project appraisal document (PAD). This PDO remained consistent throughout project implementation till closing of the project. Key Expected Outcomes and Outcome Indicators 7. The five Key Project Indicators originally designed to measure the two major project outcomes as indicated in the Grant agreement were as follows: • Outcome 1: Strengthened institutional capacity for sustainable production of certified wheat seed KPI One: Wheat Seed multiplication factor (breeder to foundation and foundation to registered) KPI Two: Production of certified wheat seed (mt) 5Kabul, Nangrahar, Kandahar, Helmand, Herat, Bamyan, Baghlan, Kunduz, Takhar, Badakhshan, Balkh, Logar, Khost, Nimroz, and Parwan. 2 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) • Outcome 2: Strengthened institutional capacity for safety and reliability of agricultural inputs KPI Three: List of plant quarantine pests and diseases developed KPI Four: Number of product samples tested for pesticides residue KPI Five: Bad pesticide samples intercepted Figure 1: Theory of Change 3 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) 8. The split rating system will be used to assess the performance of the project since the scope of the components was changed during the restructuring of the project in 2017 and some of the indicators were modified in terms of wordings, measurements and targets. Components 9. Four main project components were detailed in the PAD and Schedule 1 of the Grant Agreement. 10. Component A. Improved Wheat Seed Production (Original estimate: US $26.4m and actual: $22.74m). The aim of the component was to (a) improve the efficiency of varietal selection and production of breeder seed in the Agricultural Research Institute of Afghanistan (ARIA); (b) improve the efficiency of multiplication of breeder seed into foundation and registered seed at the Improved Seed Enterprise (ISE); and (c) capacity building through workshops and training of staff of ARIA, ISE, the National Seed Board (NSB); and the Afghanistan National Seed Organization (ANSOR). 11. Component B. Plant Quarantine Networks and Quality Control of Agro-chemicals (Original estimate: US $29.9m and actual: $9.16m). This component comprised two sub-components to improve the safety and reliability of agricultural inputs through TA and physical infrastructure for quality control of agrochemicals and plant quarantines. The planned activities are the investments in physical infrastructure and TA to (i) implement the relevant laws including the Pesticides Act and (ii) enhance the capacity of MAIL for the implementation of the Plant Quarantine Act and Regulations. The aim was to prevent marketing of banned, hazardous, sub- standard, and unreliable pesticides and fertilizers and lower the risk of introduction and spread of quarantine pests into the country. 12. Component C. Input Delivery Systems (Original estimate: US $2.5m and actual: $0.43m). This component aimed at analyzing the agricultural input delivery systems and pilot improvements to enhance farmers’ access. The component was expected to (a) analyze the data from the two surveys carried out during preparation ((i) farm level production activities survey for wheat and other major crops, including farm budgets, input use, working capital requirements and sources, yields and post-harvest losses; and (ii) agricultural inputs value chain survey). (b) Based on information obtained from these surveys, this component was expected to develop a plan of action for investment activities in inputs delivery systems including piloting of such investment activities; piloting creation of alternative forms of input delivery systems; and piloting information and communications technology (ICT) applications in agricultural inputs delivery systems. 13. Component D. Project Management and Monitoring (Original estimate: US $15.9m and actual $5.97). This financed activities to enhance the capacity of the Project Management Unit (PMU) for Project implementation, coordination, management, financial management, procurement, and monitoring and evaluation, management of information systems. The component was also expected to support the implementation of ESMF and PMP while liaising with and facilitating project activities at ARIA, ISE, NSB, PPQD, etc. 4 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) B. SIGNIFICANT CHANGES DURING IMPLEMENTATION 14. All the changes listed below resulted from a level 2 restructuring of the project in June 2017. Changes included the revision of some of the indicators as well as component focus; however, these changes did not detract from the project’s ability to meet the PDO. Revised PDOs and Outcome Targets 15. The project had a level 2 Restructuring in June 2017. The PDO was not changed but the outcome targets were revised as shown in table 1. Revised PDO Indicators 16. Out of the five PDO indicators, three were revised and the other two indicators were clarified as summarized in table 1 below. Table 1: Overview of Revised PDO Indicators Original Revisions Rationale a. Part B indicator revised Registered seed was removed Wheat seed multiplication factors (2 Wheat seed multiplication factors (2 parts) from the certification parts) system and cannot be measured. Part A: Ratio of Foundation seed (FS) to The Registered seed (RS) was Part A: Ratio of Foundation seed (FS) to the Breeder seed (BS). replaced with Certified seed (CS) to the Breeder seed (BS). Part B: Ratio of Certified seed (CS) to the in the definition. Part B: Ratio of Registered seed (RS) to Foundation seed (FS) the Foundation seed (FS). (Target =26:1) (Target = 26:1) b. Indicator and Target revised, The original indicator was not within the control of the project. Production of Certified Wheat Production of Certified Wheat Seed as % of Total certified seed production Seed Annual National Seed Board Plan and target are determined by the National Seed Board (NSB). (Target =30,000mt) (Target = 95%) c. Listing of plant quarantine pests and No change to the Indicator diseases Indicator was maintained (Target = 1) (Target = 1) d. Product samples tested for pesticides Indicator wording modified for clarification “Product” in indicator description residues was clarified as “Agriculture/Food Agriculture Product samples tested for Product” to avoid confusion with pesticides residues) indicator 5 below which also (Target = 100) (Target = 100) indicated “samples”. e. Bad pesticide samples intercepted Indicator revised The Original Indicator was not Pesticide samples tested for compliance” under the control of the project. (Target = 75) (Target = 75) Source: PAD, Aide-Memoire, AAIP Mid-Term Review Mission, November 2016; Restructuring Paper June 2017. 5 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Revision to End target of PDO indicators: 17. The indicator 2 description of target was changed as shown in the table 1 above. Revision to intermediate indicators: 18. The intermediate indicator on “registered seed area rejected” was dropped because government was no longer producing registered seeds while four other indicators were modified for clarification and definition. A new indicator “Number of laboratories and quarantine stations refurbished/established and functioning” was introduced to better reflect the infrastructure development under Component B. Lastly, the indicator under Component C on “ICT applications piloted” was revised to “Pilot voucher scheme for wheat seed developed and implemented”. Revised Components 19. The four original components remained unchanged. However, there were a few design changes in the first three components. Under Component A, the production of “registered seed” was removed from the project description because GoIRA discontinued the production of registered seeds from 2013. The change did not negatively affect the production of certified seeds as there was an increase in production of other high-grade seeds to meet the national requirements of certified seeds. The project also developed new activities to support the Seed Certification Directorate including development of the seed database. Under Component B, the support to the three Border Quarantine Stations (BQS) was expanded to include provision of fumigation facilities in order to facilitate exports. The scope of Component C was reduced due to inadequate capacity. The Component was expected to conduct farm level surveys on seed value chains, develop and pilot investment plans, establish alternative forms of inputs delivery and pilot an ICT based application on input delivery system. Due to low capacity, all the activities were cancelled except for piloting an input voucher delivery system as an alternative form of input delivery. This was to address the inefficient input distribution system, support the establishment of a fully privatized seed market system and gradually encourage the phasing out of government intervention in the seed distribution system. Other Changes 20. Cancelation of USD 7.5m: During the restructuring of the project in 2017, there was a cancelation of USD 7.5 million of funds. This was carried out in order to reduce the allocation to component D that was unrealistically estimated at appraisal and a cancellation of US $500,000 for incentive payments to selected civil servants. 21. Budget re-allocation among components: Funds were re-allocated from components B and C to Component A. It was discovered during implementation that the cost for renovation and rehabilitation of research and seed production units was underestimated. The surveys and designs carried out for civil works indicated a need for more funds, so the budget for Component A was increased to US$ 36,500,000. (see Annex 3) 22. Extension of Grant Closing Dates: Due to delays in procurement and construction of infrastructure facilities, the closing date was extended by one year. The original closing date was June 30, 2018; the revised closing date was June 30, 2019. 6 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) 23. Procurement and Safeguard Changes: Procurement arrangements were amended to reflect adoption of the new procurement framework. Furthermore, OP 4.12 on involuntary resettlement was triggered. (See section IV Part B, on compliance with Safeguards) Rationale for Changes and Their Implication on the Original Theory of Change 24. The scope of some ambitious activities was reduced along with budget reallocations as indicated in section III B. These changes however did not affect the result chain. II. OUTCOME A. RELEVANCE OF PDOs Overall Rating: High Assessment of Relevance of PDOs and Rating 25. Throughout implementation, the project remained fully consistent with the Bank Group’s Afghanistan Interim Strategy Note (ISN) for FY 2012-14 which had three pillars: (a) institutions and capacity, (b) equitable service delivery, and (c) growth and jobs. The PDO reflected the country’s vision and strategy, starting with the Agriculture Master Plan prepared in 2005, the National Agriculture Development Framework (NADF) as well as the Agriculture and Rural Development Strategy (ARDS), which is a chapter of the Afghanistan National Development Strategy (ANDS) developed in 2008. At closing, the AAIP project remained fully in line with the country’s agriculture sector priorities; particularly the Strategic Priority 2: “Increased Wheat Production” outlined in the Government’s adopted National Comprehensive Agriculture Development Priority Program (2016-2020). It contributed to the Strategic Priority 3 “Horticulture Value-chain” by creating a functional phytosanitary system; which was one of the key obstacles for accessing higher end markets. In addition, the Project also fully aligned with recommended Pillar I: “Developing Prioritized Value Chains” of Afghanistan Agriculture Sector Review (AASR) completed by the World Bank in 2014 and the World Bank’s Country Partnership Framework (CPF) FY2017-20 objective 2.4: “Increased agricultural productivity” through its efforts to improve access to key inputs. Since there were no shortcomings in the relevance to the country’s vision and the CPF at closing, the relevance of PDO is rated High. B. ACHIEVEMENT OF PDOs (EFFICACY) Overall Rating: Substantial 26. The assessment of the Efficacy of the project outcomes is based on the analysis of the data reported in the Results Framework (RF) (Annex 1) and the impact evaluation of the project carried out at closing. The findings of the third-party monitoring supervisory agent, Management System International (MSI) were also utilized for complimentary assessment of some of the project variables. It should be noted that there was heightened insecurity throughout the implementation period which affected investors’ confidence, ability to secure the services of international experts, and receive qualified response to procurement bids. The project was approved in 2013, restructured in 2017 and the closing date was extended from 2018 to 2019. The split-rating system will be used for the assessment of the PDO indicators in order to capture the performance of the project with and without- restructuring. This is necessary because changes were made to the scope of the components as well as the indicators and end target during the restructuring. The end target and description of one PDO indicator were changed while the others were maintained with clarification. The PDO indicators in the table 2 below were 7 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) utilized to assess the two expected outcomes of the AAIP, which are; (1) strengthened institutional capacity for sustainable production of certified wheat seed; and (2) strengthened institutional capacity for safety and reliability of agricultural inputs. The major activities carried out were also discussed because the activities were significantly broader than those identified by the indicators for PDO achievement especially for the outcome 2. As such, some other capacity indicators were utilized to assess the achievement of outcome 2 in addition to the PDO indicators which have narrow definition. For example, the binary indicator from survey and the measure of product/pesticide tested for compliance did not fully capture the assessment of safety and reliability of agricultural inputs. The discussion of the outcomes was reversed for consistency with the result framework and the order of listing of the PDO indicators. The final achievement of the project is indicated in the table6 2 below: Table 2. Final Assessment of Project Achievements PDO Indicators Baseline End Target Achievement End Target Achievement June PAD without with at Project 2013 Restructuring Restructuring Closing Date June 2019 June 2019 KPI 1: Wheat seed multiplication factor 14.80 26.00 23.21 26.00 26.30 (Breeder to Foundation) (ratio) KPI 2: Production of Certified wheat seed as 0 30,000 9,149 95% 93% % of Annual National Seed Board plan KPI 3: Listing of plant quarantine pests and 0 1 0 1 1 diseases (Binary) KPI 4: Agriculture product samples tested 0 100 0 100 0 for pesticides residues (number) KPI 5: Pesticide samples tested for compliance 0 75 0 75 0 (number) *Please note that the words in italics under PDO indicator 2 were added to modify the indicator during restructuring of the project in 2017. The unit of measurement for KPI2 are MT (Metric tons) for end target PAD. 6 AFC India Ltd 2019: Final Project Review of Afghanistan Agricultural Inputs Project (AAIP) 8 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Assessment of Achievement of Each Objective/Outcome Assessment of Outcome 1: Strengthened institutional capacity for sustainable production of certified wheat seed 27. The outcome 1 was substantially achieved. The rating was modest without restructuring and substantial with restructuring of the project. The outcome was evaluated by the achievement of the first two indicators which measured the wheat seed multiplication factor and the production of certified seeds. There was slow progress towards the achievement of the indicators before the restructuring of the project but after the restructuring, the achievement was significant at closing. The target for PDO indicator 1 was 26 and the project achieved a ratio of 23.21 (89.2% of target) without restructuring and 26.3 (101% of target) with restructuring. Before restructuring, indicator 2 was described as the production of certified seeds and only 9,149mt of certified seeds were produced in 2017 which was 30.49 percent of the “arbitrarily set” target figure. However, it should be noted that NSB usually sets the production plan figure of the country and the set target for that year was 10,000mt which implied an achievement of 91.49% of the NSB target. At restructuring, the description of the indicator was adjusted to measure the production of the certified seeds relative to the production plan of the NSB. At closure, the project was able to produce 9,755.56mt of certified seeds which was an achievement of 93% of the planned production of 10,498.8mt by the NSB. Thus, the project almost achieved the target of 95% and the PDO was substantially met. 28. The activities proposed to be implemented for sustainable production of certified wheat seed were expected to strengthen the entire seed value chain with the following outcomes: utilization of advanced breeding lines for variety trials and agronomic experiments in ARIA; efficient production of breeder, foundation and registered seeds in ARIA and ISE; improved seed multiplication factors (from breeder to foundation seed); improved coordination of the seed industry by the NSB; and increased production of certified wheat seed to economically justifiable levels in line with sustainable seed replacement practice. These activities were implemented to strengthen the capacity of the major institutions involved with the seed value chains; ARIA, ISE, PSE and ANSCU. 29. The activities were as follows: (i). Building research capacity at ARIA: Prior to 1979, Afghanistan’s agriculture research system comprised many research stations with over 1,000 staff, 25 percent of which were technical research staff. The system suffered widespread degradation of infrastructure and human capital during the years of conflict. To re- establish a standard research system, there was a need for establishment/renovation and rehabilitation of research farms destroyed during the initial conflict. AAIP played vital role in building the institutional capacity of the ARIA and now 11 research stations are being used for production and release of certified wheat and various other crops seed. Land was rehabilitated, equipment supplied, and staff trained on breeder seed selection. AAIP focus was on wheat seed production which included the Breeder Seed (BS), Foundation Seed (FS) and Certified Seed (CS). In the formal seed production system, as specified in National Seed Policy, ARIA is responsible for developing and introducing new varieties and the production of Breeder Seeds. Breeder seeds are provided to Improved Seed Enterprise (ISE) for multiplication to Foundation Seeds on its regional farms or through contracted seed growers. The Foundation Seeds are then made available to the Private Seed 9 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Enterprises (PSEs) working under the umbrella of Afghanistan National Seed Companies Union (ANSCU) for Certified Seed production and final distribution to the farmers. 30. AAIP supported the collaboration of International Maize and Wheat Improvement Center (CIMMYT) and ARIA to produce 8,044 genotypes of wheat which were tested during 2014 to 2018 under variety selection trials. Capacity of a total of 642 staff members through short-term and longer-term trainings including Masters and PhD Programs was built in various areas of wheat research and development. AAIP also provided technical and financial support to conduct 139 agronomic wheat experimental trials at 11 research stations from 2013-18. These experiments included crop improvement; agronomy, disease screening and multi-location yield trials and have enabled ARIA to introduce four new wheat varieties in 20177 and three other varieties in 2018. These are rainfed and irrigated varieties that are adaptable to different agro-ecological regions of Afghanistan. In addition to the agricultural experiments, AAIP also provided technical and financial support for “Distinguish, Uniformity and Stability” (DUS) tests for the released wheat varieties in order to develop varieties catalogue which is used during field inspections. The DUS tests were undertaken for 24 wheat varieties at three locations in 2015-16 and 4 locations in 2016-17 based on 21 parameters for assessment of characters of the varieties. The results of the assessment were catalogued, published and printed for use in inspection of seed crops. AAIP also supported several seed production planning workshops. 31. With respect to infrastructure, a total area of 308 hectares (out of 350ha set target, thus achieving 88% of target) were fully developed at ARIA farms. The project also provided a total of 207 farm machineries including power tractors, threshers, combine harvesters, seed drills, seed cleaners, laser land levelers, various types of ploughs, sprayers and other equipment to 11 ARIA regional research stations. The development of farms, mechanization and enhanced knowledge of better crop management strengthened ARIA to produce 51.9mt and 96.26mt of breeder seeds for the production systems in 2017 and 2018 respectively. 32. (ii). Building institutional capacity at ISE: AAIP constructed or renovated four standard seed production farms in Balkh, Herat, Parwan and Nangarhar provinces to improve the production capacity of breeder and foundation seeds. The construction and land development mainly included construction of office building, equipment shelter, threshing floor, workshop, warehouses, water reservoirs, irrigation canals, grading and land leveling. With respect to the land development, 460 hectares were developed at ISE farms (51% of the original target and 81% of restructured target). These farms are currently fully in use by ISE for crop improvement and seed production activities. Similarly, 72 types of farm machineries were provided to ISE farms and training provided for 150 staff members. Due to this support, the yield of wheat increased from 3.92mt/ha to 4.27mt/ha from 2017 to 2018, and the production of foundation seeds by ISE increased from 406.3mt in 2014 to 867.13mt in 2018 or an increase of 113.4%. The rejected area during cultivation also reduced significantly from 12% to 3.8% which was an indication of increased operational efficiency and knowledge of the production quality selection criteria. 33. (iii). Strengthening seed distribution chain through support to ANSCU and PSE: The project provided technical and financial support to ANSCU for production/distribution of certified wheat seed and an assessment of technical capabilities of Private Seed Enterprises (PSEs) was also conducted. The seed database was developed 7 WB Feature story; August 2018: Improving Agriculture through advancing scientific research in Afghanistan 10 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) for the Directorate of Seed Certification, and its staff were trained and equipped in seed quality assessment. Based on the assessment, 102 PSEs were certified, profiled and registered. AAIP also established 285 wheat seed demonstration plots in 28 provinces through the PSEs to improve linkages between PSEs and farmers, ascertain seed qualities and provide a choice of seed providers to the farmers based on quality of seed produced. Workshops, training programs and seed demonstration plots were sponsored by AAIP in 28 provinces for 76 PSEs in collaboration with the major seed organizations including the Directorate of Seed Certification, and Extension. The project supported the government to produce 9,755.56mt of certified seeds. Given the target of 10,498.8mt set by the NSB in 2018, the project achieved 93% of expected target. The target set by NSB in 2017 was also 10,000mt and the project achieved 91.5% of the target. 34. (iv). Piloting an input voucher system: At project start-up, the input delivery system in Afghanistan was ineffective and concentrated on public sector subsidies delivered to farmers through bulk purchase of certified seeds from PSEs. The bulk purchase and distribution system compromised quality and lacked transparency with an average of 15,000 farmers targeted as beneficiaries. The AAIP developed and piloted a voucher-based system of input delivery which targeted farmers through their registered profiles8 and transferred the government subsidy directly to them through the vouchers. This was piloted in collaboration with FAO in 2017 in four provinces of Balkh, Kabul, Nangarhar and Herat for a total of 6,000 farmers. In participating districts, farmers were selected through a verification survey based on district data received from FAO. Each selected farmer received 50 Kg of certified seed through a voucher worth 1200 Afs or 60% of the total certified seed cost. This allowed farmers to negotiate the remaining cost (40 %) of the 50 Kg with PSEs. The scheme expanded in 2018 to cover additional seven provinces and 40 districts with a total number of 18,920 wheat growers as beneficiaries. This voucher scheme was conducted for 2 years (2017-18) and improved transparency, eliminated lengthy seed procurement and payment processes9 by providing real time reconciliation and settlement. In those piloted districts, the beneficiaries confirmed the benefits of the voucher system and the quality assurance of the certified seed. 35. The voucher system established a smart subsidy system, but its requirement of a central control system will present challenges when it is scaled up. The system requires a census of farmers to establish a list of eligible farmers to be provided with subsidy card, which would have to be verified annually. The preparation of voucher cards, their distribution, coordination, monitoring and timely delivery will be a challenge given the country’s size and terrain. These activities also need to be repeated every year and the resource requirements in terms of funds and manpower will be significant. Therefore, if the voucher scheme is implemented nationally, it may not be able to meet the aim of creating a self-supporting, market based, subsidy free system in the long run. 36. (v). Supporting institutions through human capacity building and technical strengthening: AAIP focused on human capacity building through long- and short-term trainings both nationally and internationally to develop technical and professional knowledge of the seed sector. International study tours were conducted for policy makers and management involved in the various programs supported by the project. Job training was also included through international consultants. A total of 49 staff members were sent to India for higher education courses (33 M.Sc. and 2 PhD from ARIA and ISE; and 14 staff members of PPQD also for M.Sc. training). The PhD courses were provided in the fields of plant breeding and agronomy while the M.Sc. courses covered the field 8 https://www.worldbank.org/en/news/feature/08/30/2019 9 MRRD. 2018: The establishment of Market Oriented Agricultural Input Delivery System in Afghanistan 11 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) of plant breeding, agronomy, seed science & technology, plant pathology, entomology, agrochemicals, agriculture economics, farm mechanization etc. Specialized training courses were also provided for 956 beneficiaries under component A and a total of 5,837 people under Component B, on various courses ranging from crop improvement, agronomic practices, seed production, plant protection and agro-chemicals. During the project life, ISE was supported with six agronomists to double its wheat foundation seed production and improve its product quality. AAIP trained 642 staff of ARIA (128% of target set with restructuring) and 150 staff of ISE (100% of target). Assessment of Outcome 2: Strengthened institutional capacity for safety and reliability of agricultural inputs. 37. The outcome 2 was partly achieved. The rating is modest for the outcome. Three set of indicators were listed as PDO indicators in the Results Framework (RF) to assess the outcome. These are; PDO indicator 3: Listing of plant quarantine pests and diseases; PDO indicator 4: Number of Agricultural products samples tested for compliance; and PDO indicator 5: “Bad pesticide samples intercepted” which was later changed to “Pesticides samples tested for compliance”. The focus was to establish standard plant protection and Quarantine networks that will help the country meet credible food safety and SPS measures for major international food markets. However, the activities leading to the outcome were significantly broader than represented by the indicators and though started early during project implementation had no significant effect on the final achievement of the indicators. There was also initial delay on implementation of most of the activities due to procurement problems, complexity of planned activities, and lack of capacity of the project implementers. The procurement of high value and high-end laboratory equipment was delayed for more than three years due to limited technical and procurement capacity, suspected governance issues resulting from frequent changes in technical specification and market failure issues emanating from insecurity and lack of international confidence. The government advertised the package two times, but no bid was found responsive in 2016 and there was no qualified bidder in 2017. This led to significant delays and the project could only disbursed $17.1m (22.8%) by June 2016, three years after commencement of implementation. An attempt was made in 2018 to change the bidding process from international Competitive bidding (ICB) to Direct Sourcing (DS), but the limited time period before closing of the project prevented actualization. The achievement was therefore basically zero for the PDO indicators, as defined, without restructuring and only the indicator on the “listing of plant quarantine pests and diseases” could be achieved fully by the end of project. The others were not achieved. 38. However, given that the achievement of this PDO 2 is a composite of a range of actions and the chosen PDO 2 indicators were just some of the attributes, an attempt was made in table 3 below to explore the use of additional variables to assess this PDO through a matrix of capacity functions carried out by the project. In addition, a cursory look at the intermediate indicators as highlighted in the B section of Annex 1 shows significant progress leading to the achievement of this outcome. Three major activities were carried out to achieve PDO 2. These were the quality control of pesticides, fertilizers and the conduct of PPQ services as detailed below. (i) Quality Control of Pesticides: Before the project, Afghanistan lacked an appropriate legal framework to establish safety/reliability of inputs. AAIP supported the preparation of policies, acts and regulations related to plants and quarantine. These Plant Protection & Quarantine; and the Agricultural Pesticides Acts were passed into law, published in official gazette on January 21, 2017 and are currently being implemented. The project 12 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) also initiated nationwide insect pest and plant diseases survey with the active role of PPQD/MAIL, and this was conducted under the technical supervision of the Centre for Agriculture and Bioscience International (CABI). In addition, AAIP conducted a pesticides market survey between 2016-18, jointly with PPQD/MAIL in 10 provinces with the aim of assisting PPQD and traders to identify and isolate banned pesticides. The survey identified 93 good pesticides while nine other expired/banned pesticides were isolated and collected into warehouses of PPQD for disposal. The project also introduced the Integrated Pest Management (IPM) approaches on cereals in 2016 through the conduct of farmer’s field school (FFS). A total of 49 FFSs were organized for 862 farmers in 10 provinces on wheat and vegetables. They were carried out to complement the efforts at ensuring limited use of chemicals and safe use of available ones. These were complimented with IPM training of trainer activities with PPQD, National Horticulture and Livestock Project (NHLP), 245 farmers and training of 61 women on kitchen/home gardening. In addition, bio-efficacy trials were also conducted on pesticide use at the research centers of ARIA. The above activities were carried out and almost all the intermediate indicators were fully achieved, but the end results of sample testing to ensure compliance with standards, determine composition of pesticides and downstream assessment of pesticide residue in food products were not realized within the timeframe of project implementation. However, MAIL noted that it has secured funding support from US government to purchase the laboratory equipment and the sample testing can be carried out in future. (ii) Quality Control of Fertilizers: Against a target of 20, AAIP conducted bio-efficacy trials on 37 different fertilizers in 12 locations from 2016 -2018, which assisted in building the capacity of PPQD staff. Training was also provided for over 5,000 staff of the Department of Agriculture, Irrigation and Livestock (DAIL), agrochemical traders and farmers in 29 provinces, on fertilizer formulation and quality analysis. In addition, training of 24 staff of ARIA, PPQD, Seed Certification and Animal Husbandry department of MAIL was carried out in the areas of gas chromatography and DNA Sequencing. Fertilizer Rapid Test Kits were also supplied to PPQD to assist in testing the quality of imported fertilizers. The project supported the preparation of policies, acts and regulations for development of the Fertilizer Act which is being processed for approval at the Parliament. (iii) Plant Protection and Quarantine Services: AAIP planned to rehabilitate, establish and equip the central and national border plant quarantine stations to provide such services as issuing of plant health certificates, testing consignees and plant products and prevention of entering microbial and epidemic pests and enforcing quarantine laws and by-laws. The project constructed four central laboratories for the Plant Protection and Quarantine Directorate so that the lab could be used for DNA level diagnosis of pests and diseases as well as ascertaining agro chemicals qualities. Nine border stations were also fully rehabilitated out of the 11 scheduled. Due to slow procurement, only the physical structures were built at project closing. Relevant training was provided, and some basic equipment was also purchased but the high-tech equipment for DNA level diagnosis of pest and diseases could not be procured. Furthermore, agricultural products quality testing for heavy metals, aflatoxins, microbes etc. could not be carried out. Some basic inspections were conducted and improved phytosanitary certificates for export markets issued, but without the high-tech equipment, the proposed plant products protection, issuance of plant health certificates, enforcement of quarantine measures and safety practices could not be fully carried out. The project did establish a Poisoning Management Center in the Central Ministry of Public Health with the aim of treating people/farmers affected by the spraying of pesticides on their crops. 13 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Given the above, PDO (2) is rated modest. Table 3: Additional Assessment Parameters of PDO 2 Strengthened Capacity Plant Protection and Pesticides Fertilizers Attribute for Safe Inputs Quarantine Services Legal and Regulatory The Agricultural Pesticides Act was The Fertilizers Act is in the The Plant Protection and Framework promulgated and is under Parliament awaiting approval Quarantine Act was implementation (100% achieved) promulgated and is under implementation Testing and Analysis • Four integrated Central Laboratories have been established. Except for some high-tech equipment required to Laboratory Infrastructure carry out high-tech analysis and testing, all other equipment has been installed. Laboratory staff has been appropriately trained too to operate the laboratory facilities • Due to delays in equipment procurement, the laboratories have only recently become fully operational, and have the capacity to carry out tests to ascertain the chemical composition of agri-inputs (including pesticides and fertilizers) • DNA level analysis of pests and diseases will not be possible due to non-procurement of the high-tech equipment Stakeholders Training and Done. Implementation of IPM approach Done. 5000 MAIL staff, Done. Staff of AIRA PPQD, and Awareness Building re Safe through 49 FFS demonstrations covering agrochemical traders and farmers MAIL were trained in areas of Inputs and Use 862 farmers in 10 provinces on wheat and in 29 provinces trained in fertilizer gas chromatography and DNA vegetables to disseminate info of limited formulation and quality sequencing use of safe pesticides only assessment Additional Actions Taken to • Survey across 10 provinces that helped Bio-efficacy tests for 37 different Nine border stations fully Support and Promote Safe identify 93 acceptable pesticides and 9 fertilizers were carried out in 12 rehabilitated to monitor and Inputs Use banned pesticides (the latter were locations to support use of safe mitigate any introduction of collected for disposal) fertilizers foreign insect pests and • National survey on insect pests and diseases requiring use of plant diseases completed to identify pesticides. This is in quarantine and non-quarantine pests compliance with WTO to develop a focused strategy on safe standards for food safety and levels of pesticide use SPS measures • Bio-efficacy tests for 33 different pesticides were carried out to support use of organic pesticides Laboratory-based Sample • Due to delayed laboratory • Due to delayed laboratory • Due to delayed laboratory Testing and Analysis commissioning, sampling and testing commissioning, the full range of commissioning, the full was delayed. Inspection without the sampling and testing would now range of sampling and capacity to analyze samples would commence. Inspection without testing has yet to have been of little use. the capacity to analyze samples commence. • Inspection, sampling, and testing of would have been of little use. • Based on the laboratory pesticides for registration and retail • As an interim measure, the facilities already built, some level quality is now imminent. government supplied Fertilizer 3900 quarantine inspections Rapid Test Kits to analyze the have been carried out and quality of fertilizers being >1000 phyto-sanitary imported. certificates issued. • Inspection of fertilizer lots, • Full range of Inspection, sampling, and testing for sampling, and testing is now fertilizer registration and retail imminent. level quality of fertilizers is now imminent. Actions to Mitigate Effects A Pesticides Poison Management Center from Potentially Unsafe Use has been established in the Central of Inputs Ministry of Public Health to treat farmers affected by spraying of (excessive or unsafe) pesticides on their crops. 14 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Justification of Overall Efficacy Rating 39. The overall efficacy rating is rated Substantial. Given the application of split rating, the assessment of the two outcomes without restructuring is modest. With restructuring however, there was substantial progress on the achievement of the outcomes and efficacy is rated Substantial. From 2013 to 2017, the project succeeded in ensuring production of new varieties and breeder seeds of wheat and consistent support of the seed supply chain system. Though there were some shortcomings on strengthening institutional capacity for safety and reliability of agricultural inputs mostly due to the fragility context of the country, AAIP was able to strengthen capacity for legal and regulatory framework, safety inputs usage, bio-efficacy tests, strengthen laboratory infrastructure, inspect and issued Phyto-sanitary certificates and build a pesticides poison management center among others. Evidence from table 3 and the achievement of intermediate indicators show significant progress towards achieving this outcome. The project was able to put in place a sustainable seed production system and was also successful in testing a voucher system for seed distribution which proved to be very effective in targeting farmers and providing quality assurance while linking farmers with certified seed producers. The delay and eventual non-purchase of the laboratory equipment could be linked to the fragility of the country with limited capable experts, lack of international confidence and governance issues. C. EFFICIENCY Assessment of Efficiency and Rating Rating: Modest 40. At appraisal, the Project Paper included a sound cost-benefit (C/B) analysis estimating the returns on the improved wheat seed production (Component A) and plant quarantine networks and quality control of agro chemicals (Component B). The overall project ERR was estimated at 19 percent and the expected values of NPV was estimated at US$34.7 million in 2012 prices over a project horizon of 25 years. 41. The ICRR follows the appraisal structure of the C/B. The benefits of Component A were estimated two fold; (i) efficiency gains in wheat seed production; and (ii) productivity gains in wheat grain production. The benefits attributed to Component B were the partial value of exports of foods items mainly the export of resins. Moreover, at appraisal the productivity gains were estimated considering the benefits starting from fourth year of the project and reaching full development by 10th year in the project horizon of 25 years. Since the major activities of the project lagged one year, conservatively the ICRR assumed that the project benefits would start in year 5 reaching at full potential by year 11, defraying the benefits in line with the development of infrastructure and human capacity due to project interventions. 42. The ex-post economic analysis extensively used data from the Mid-line Survey of the AAIP and from the Final Project Review Report of AAIP, both prepared by the Independent Project Consultants with support from the PMU. Similar to the C/B analysis done at appraisal, the project benefits for the CB analysis at ICRR have been derived from Components A and B. No benefits of other two components have been quantified. However, full project cost has been accounted for completing the analysis. 15 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) 43. The AAIP’s interventions enabled Afghanistan to make significant progress towards the status of "Self Sufficient" in production of certified seed of wheat. Estimation of requirement versus production capacity developed through the project indicated that Afghanistan will be able to produce 49,743 tons of Certified Seed (CS) of wheat in year 2021 against a demand for 50,750 tons, a significant achievement of the project. However, GOIRA needs to support the three institutions (i.e. ARIA, ISE, and PSE) after the project is closed in order to achieve this, otherwise its sustainability is highly at risk. 44. The comparison of results of the ex-post economic evaluation with the appraisal (Annex 4) is as follows: (i) NPV was US$ 34.7 million at appraisal; and at the Project’s closing it is expected to be US$24.0 million; and (ii) Internal rate of return was 19.0 percent at appraisal, at the closure of the Project it is expected to be 21.8 percent mainly due to the gains in currency exchange rate during the project period. The project activities were implemented with an actual expenditure of just US$38.30 million when the original commitment was US$75 million. Afghanistan currency (AFS) depreciated dramatically versus the US$, from AFS 55 at appraisal to AFS 78 at closing. Almost 65% of the disbursement occurred between Jan 2016 and June 2019, and during this period, the AFS was between 66 and 81 to a US$, an average of about AFS 74. This is a nearly 30% depreciation in the local currency and suggests that the project spent about AFS2.5 billion compared to the original allocation of about AFS4 billion. Furthermore, the project was delivered with limited cost, i.e. $5.97m instead of the estimated $15.9m at appraisal. The results of the overall project economic analysis undertaken confirmed that at completion the project was financially robust. Results are summarized below: Table 4: Summary of Economic and Financial Analysis ERR % NPV (US$ M) Results of Evaluation Change Comp A Comp B Overall Comp A Comp B Overall Base Case 23.5 15.9 21.8 22.0 1.9 24.0 Sensitivity Scenarios Case 1 - Increase in O&M Costs +10% 22.0 14.4 20.3 20.3 1.3 21.6 Case 2 - Decrease in Overall -10% 21.6 13.5 19.9 17.8 0.7 18.6 Benefit Case 3 - Benefit Delay by 2 years -2 yrs 17.6 10.7 16.1 12.0 -0.8 11.2 EIRR = economic internal rate of return; ENPV = economic net present value. 45. Efficiency rating. The project experienced operational and implementation challenges and there were also delays due to procurement challenges for the first 4 years of operation. At restructuring, the project was scaled down with 10 percent budget reduction, and at closing, only 52.89 percent of the original budget could be utilized. It is worth noting however, that the project was delivered with limited cost, i.e. $5.97m instead of the estimated $15.9m at appraisal. There were productivity improvements, cost reduction and foreign exchange (FOREX)gains from AFS 55 at appraisal to AFS 81.35 at closing. The project activities were implemented with an actual expenditure of $38.30m instead of the original commitment of $75m. There were other administrative issues that impacted on efficiency such as the poor inter-ministerial coordination, high staff turnover, one-year extension and land disputes. Efficiency is therefore rated as modest. D. JUSTIFICATION OF OVERALL OUTCOME RATING 46. The overall outcome rating is Moderately Satisfactory which is consistent with the discussion of the achievement of the outcomes. The wrong formulation of the PDO indicators and the fragility environment of the country played a significant part in the overall achievement of the end PDO indicators of the project. 16 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Though the application of split rating (see table 5 below) with a figure of 3.44, leads to a “cusp” overall final rating, it is highly considered, based on the evidence presented from project data and the impact of fragility on implementation, to rate the overall outcome as Moderately Satisfactory. Most of the institutional strengthening towards the achievement of outcome 2 were carried out successfully (see table 3 and the intermediate indicators) and the procurement delays were largely due to lack of response to bids resulting from declining international confidence on the country, suspected integrity issues and insecurity. The relevance is rated high while the efficiency is modest. Also, the efficacy is rated substantial for the project. Table 5: Application of Split Rating Without-Restructuring With-Restructuring Relevance of PDO High Efficacy (PDO Outcome) Modest Substantial Efficiency Modest 1 Outcome Ratings Moderately Moderately Satisfactory Unsatisfactory 2 Numerical Value of the Outcome Ratings* 3 4 3 Disbursement 21.28 17.02 4 Share of Disbursement 0.56 (or 55.56%) 0.44 (or 44.43%) 5 Weighted Value of the Outcome Rating (Row 2 x 1.68 1.76 Row 4) 6 Final Outcome Rating Moderately Satisfactory (with combined assessment detailed above) 1.62+1.84=3.44 *Note: Highly Unsatisfactory (1); Unsatisfactory (2); Moderately Unsatisfactory (3); Moderately Satisfactory (4); Satisfactory (5); Highly Satisfactory (6) E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 47. The project achieved some gender related results despite having interventions in traditionally male dominated activities. Initially, the project was not gender focused; however, after the restructuring of the project and because of constant follow-up on gender issues during ISMs, gender-related interventions increased. These included consultations with both men and women at the design stage of each infrastructure sub-project as well as in the preparation of ESMPs, inclusion of female staff in the various trainings and degree programs, raising awareness of female community members on the GRM and improving their access to it, developing gender strategy and implementation plan, gender affirmative action in recruitments, and collecting gender- disaggregated data to analyze the impact of the project on women. Despite paucity of female employees, 33 females were trained at ARIA, one at ISE and five at PPQD (see Intermediate indicators in Annex 1). 48. The significant gender achievement was that the project developed its own gender strategy toward the end of 2018. By August 2018, 282 female farmers, fertilizer dealers, and MAIL staff were trained in topics such as pesticide, fertilizer, IPM, and plant quarantine in 14 provinces. Six agricultural companies, four of which were run 17 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) by women and two others with women in lead-roles were supported by the project. Another good intervention was hiring of women laborers under the project and by August 2018, 20 female laborers in Bamyan, and 51 female laborers in Balkh were hired, each receiving an average daily wage of 300 to 350 AFS. The gender unit of the project organized various trainings related to gender and anti-harassment to the AAIP and MAIL staff in Kabul, Balkh, and Kandahar where they discussed the duties of the gender committee established in February 2018, gender in the workplace, and GRM. Observed shortcomings in the achievement were due to some structural problems (e.g. in terms of training of female staff, very low number of female staff in the department, or lack of female staff’s interest in these trainings) On the staffing, although each ISM of the project emphasized a 30-40% quota for women hiring especially through internship programs as an entry path, the data in November 2018 showed that only four women out of the total 159 staff which was disappointingly low. The project and the ministry could have hired more female staff for labs and quarantine stations given females tend to be more detail oriented, and socially, these jobs are acceptable for them Institutional Strengthening 49. AAIP provided training and capacity building needs for all the beneficiary institutions including ARIA, ISE, PSE and PPQD. It included PhD (2 staff at ARIA and Seed Certification Directorate) and MSc (26 at ARIA, 7 at ISE and 14 at PPQD) training for research staff, specialized and advertised short courses abroad, and in-country trainings and on job trainings. Study tours were also organized to India and Turkey for officers from ARIA, ISE and ANSCU. Furthermore, 9 farms at ARIA, with a total area of 308ha were rehabilitated and equipped with appropriate machineries while the breeding programs and varietal establishment were funded with introduction of new wheat germplasms. The project also rehabilitated 4 central and 9 border plant quarantine stations. Mobilizing Private Sector Financing 50. The intervention of AAIP in seed development and the use of the voucher system created opportunities for new PSES to start production due to increasing demand of seeds by the farmers. The number of PSEs increased from 97 to 102 with capital investment rising from about US$ 6.35 million to US$11.57 million from 2014 to 2019. Although not fully attributable to the project, this is indicative of additional resource mobilization at private level and improvement in linkages between the farmers and the PSEs. Poverty Reduction and Shared Prosperity 51. AAIP was designed to ultimately help enhance food production especially from wheat crop production. The project intervened to produce eight new varieties of wheat that are early maturing with enhanced productivity. The project therefore assisted to arrest declining productivity. There was an increase in the average productivity level from the pre-project level of 2.20 mt/ha to 3-3.5 mt/ha and more farmers were attracted into wheat cultivation. In 2018, it was confirmed by the Minister of Agriculture that the country was able to produce 5 million m/t of wheat which reduced importation of the crop significantly by 15%. With further cultivation of wheat in an area of 2 million Ha., there could be more job creation in the field and for agro-allied industries. The independent final evaluation10 of the project indicated that about 96,000 working days were generated in ARIA. Similarly, the ISE generated employment for about 21,000 working days. Direct employment created by the project was mostly through construction. About 385,000 working days of employment were generated that accounted for about 99 10 AFC India Ltd (2019): Final Project Review of Afghanistan Agricultural Inputs Project (AAIP) 18 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) percent of total working days generated. Construction and developmental activities undertaken through AAIP created about 1500 full time equivalent jobs. Other Unintended Outcomes and Impacts 52. IPM implementation approaches within AAIP also addressed some cereals and vegetables such as maize, barley, onions, potatoes etc. These approaches were disseminated through the conduct of 49 farmer’s field school (FFS) which are best practice for pest management. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 53. The design of the project relied much on engagement of international and national consultants. Most of the activities also relied on procurement of complex equipment and contracting for civil works. Procurement was identified as a major risk and the weak capacity of MAIL was identified as a constraint. However, adequate and specific mitigation measures were not specified/taken during implementation. 54. Land issues and social conflicts were not identified as constraints during preparation because public institutions were involved as beneficiaries. Unfortunately, there were disputes on use of land resources and ownership during implementation and these delayed implementations significantly. 55. The weak implementation capacity of MAIL was recognized, and the preparation team noted the need for higher than normal supervision by the Bank task team with heavy emphasis on capacity building. Therefore, the design sequenced support to public agencies relative to support to users and consumers. 56. The preparation of the project failed to initiate and complete the design of civil works and laboratories. Therefore, before the procurement process begun, the complex designs took almost two years to complete. B. KEY FACTORS DURING IMPLEMENTATION 57. Procurement delays: Afghanistan is a fragile country that witnessed constant conflicts throughout the project implementation period. This resulted in less attraction and retention of national staff, international consultants and firms for project activities. The project became effective soon after Board approval, but procurement delays affected implementation significantly for over three years. Most of the procurement assignments were not processed timely and for large assignments, there was lack of qualified bidders. There were frequent changes in proposed procurement methods; from open competition to direct contracting; huge variations in estimated price for same items between rounds of procurement; and governance issues due to suspected interests of various stakeholders. Efforts to recruit international procurement consultants did not yield much fruits as most experts refused to stay in the country due to security issues. The procurement assignments also did not attract qualified bidders due to declining international confidence on the fragile economy. 58. Capacity weakness: Staff attrition was another major issue during implementation. The capacity of project staff was weak and there was also significant turnover of key staff. The project had to recruit Project Director four 19 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) times throughout its lifecycle. Given the learning curve and the fragility environment, each new Project Director took time to understand the project before making substantial progress on implementation. The procurement officer was also changed twice while financial management system went through many changes. Many of these problems also coincided with the political transition period of 2014 when staff recruitment was frozen. 59. Cancelation of fund: The cancelation of $7.5m reduced the scope of activities under the project. This denied the opportunity of piloting some ICT related activities especially in component C of the project. Also, the cancelation of $500,000 meant for incentive payments affected the morale of staff. This was cancelled because GOIRA disallow extra payments for civil servants on the project. 60. Land Disputes: Land disputes also affected and delayed implementation especially at farms like Bolan, Kohkaran Farm, Urdokhan Farm. More serious were the problems in ISE farms where delays due to land disputes created challenges in three out of four farms namely; Khasa Paz Farm, Falahat Farm and Nangarhar Farm. Communities prevented project from implementing activities on land originally listed as public land during appraisal, claiming ownership. 61. Inter-ministerial coordination: The activities of the project involve collaboration of many ministries and agencies including land borders, quarantines, customs, ministry of justice on regulations and MAIL. Coordination among the agencies was a major issue and led to significant delays during implementation. 62. Political issues: As soon as implementation started, there was a prolonged election and political transition that affected most activities of the project. This was compounded by frequent changes in the leadership of the line ministry. MAIL had three ministers of agriculture during the project life period. 63. FOREX gains: There were significant foreign exchange gains during project implementation. At appraisal, the exchange rate of US $1 to the local currency was AFS 55 but this increased to AFS 81.35 at project closing. This affected disbursement because there was almost nearly 30% depreciation of the local currency between 2016 and 2019. As such, the project spent about AFS2.5 billion compared to the original allocation of about AFS4 billion. This is cost savings but also led to low dollar disbursement for the project. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) Overall Rating: Modest M&E Design 64. The M&E system was designed to serve as a management tool to support decision making, learning and accountability and had the following broad components: (i) concurrent monitoring of physical and financial progress in MAIL Directorates using formats developed by the Implementation Management Support Team (IMST); and (ii) M&E support agency to assist in monitoring PDO and intermediate outcome indicators through surveys. The IMST was also expected to engage various consultancies to undertake three surveys; MIS software development; decentralization of various MIS modules to MAIL Directorates; operation and maintenance of the MIS; and capacity building. A survey firm was engaged in the preparation phase of AAIP to conduct two 20 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) baseline surveys for component C– a technical farm survey and a supply chain survey for agricultural input distribution networks (importers – wholesalers – retailers). The design expected a repeat of the survey at mid- term and closing using the same sample as the baseline. The M&E system was expected to provide feedback to project management, to support self-learning by participating MAIL Directorates, and to measure the project’s performance. This was to be guided by the following reports: (i) six-monthly consolidated reports by IMST covering all project activities by all involved Directorates; (ii) survey reports (baseline, mid-term and end- of-project) by the M&E agency; (iii) consolidated mid-term implementation report by IMST covering all project activities by the involved Directorates, and which will also draw on the mid-term survey report prepared by the external M&E agency; and (iv) MIS data. 65. In addition, the web-based online MIS, was expected to (a) ensure a high level of transparency and accountability; (b) ensure effective results-based management and to keep the focus on outcomes and impacts; (c) capture and communicate lessons learned to improve this and other ongoing and future projects. 66. The M&E has two design shortcomings: (a) It did not specify regular thematic studies to conduct to aid improvement of project performance and (b), the definition of some of the PDO indicators were ambiguous and had to be corrected during the restructuring. Moreover, the scope of the indicators was too narrow and did not fully capture the full range of actions involved in the achievement of the PDO. In fact, a PDO indicator had binary measurement for a combination of activities which brought the challenge of interpretation. M&E Implementation 67. M&E collected data systematically throughout the life of the project. All stakeholders were charged with reporting their activities to the IMST periodically (quarterly). At the community level where civil works were carried out for ARIA and ISE, the community members were recruited as workers and also collect project data for the M&E Specialist on regular basis. Periodic surveys were also carried out to provide additional information needed by the project to populate the Results Framework or report to donors. Monthly, quarterly and annual project reports were developed for the MAIL and the Bank. The M&E specialist also provided support for internal controls for the different directorates of MAIL. These different reports were submitted to the M&E specialist who collated and passed them on to the IMST. The M&E specialist also guided all surveys within the project and carried out initial analysis of the data. The data collected was the basis of the MIS which was feeding the RF, GRM monitoring, baseline survey report, annual report and mid-term report. The project developed an M&E system that collected data regularly for process monitoring and was adequate to support record keeping and subsequent analysis. However, the planned survey to decentralize various MIS modules to MAIL Directorates was not carried out. Also, the thematic studies were not conducted based on the data collected. M&E Utilization 68. The collected data was utilized to prepare periodic reports and compute project achievements. During the impact evaluation carried out on the project, the M&E produced the data utilized to evaluate the performance of the project. The post-completion Economic and financial analysis was also carried out based on the data produced by the M&E system. The greatest challenge that faced the M&E unit was the high turnover of M&E 21 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) specialists. Over the span of the project, three M&E specialists and four Directors were employed but the established M&E system at all levels of the project functioned as designed. Justification of Overall Rating of Quality of M&E 69. The M&E of the project was well designed but there were challenges in its implementation which limited the use of the results especially in flagging the delays and remedial measures for implementation of component B of the project. However, the M&E for component A was very effective and produced reliable data for the project. The overall rating of M&E was modest. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 70. Safeguards: AAIP was a category B project and prepared good Pest Management Plan (PMP), ESMF and ESMPs for all civil works. The project hired an Environmental Specialist to prepare Site specific ESMPs for the subprojects, the project team and its IPM specialist also provided capacity development sessions and practical IPM approach learning and application trainings to relevant project staff. The project also built some infrastructure for Agrochemical testing laboratories and facilities to support the screening of the quality of agrochemicals imported from other countries. A Consultant was also hired a consultant to audit the implementation of the Environmental and Social management including Pest Management and application of IPM approach. The consultant’s report highlighted and found shortcomings, achievements, lessons learnt etc. that will be useful for the MAIL and similar future projects. 71. However, the AAIP project was not able to achieve aspects of the objectives of the PMP that required: (i) finalization and approval of the pending Pesticide Regulation to operationalize the country Pesticide Law that is already approved by Parliament and signed into law by the country president, (ii) Prepare and implement a Pesticide Policy, (iii) Establish Steering Committee for Pest Management, (iv) the project due to structural constraints did not properly contributed to the capacity of PPQD Department, (v) prepare a Management Information System (MIS) in the country and utilize it for curtailing pest and diseases, and (vi) establish the needed laboratories to check, verify, approve or disapprove the quality of the pesticides coming into the country. The land disputes issues were not envisaged at appraisal because all the land areas identified were categorized as public land. However, during implementation, conflicts from land ownership delayed activities and OP 4.12 was triggered by the task team. 72. Procurement: Procurement for the AAIP project was an issue throughout the project life with challenges such as huge delays, re-bidding, integrity, inability to hire qualified procurement staff etc. In the last two years of the project when procurement was centralized to the procurement directorate, the procurement process accelerated, and AAIP/MAIL was able to award most of the work contracts. However, AAIP was not able to procure Lab Equipment which was high priority item for the AAIP and MAIL due to prolonged delays and suspected governance issues resulting from frequent changes in the technical specification, estimated cost and possible vested interests. The contract of two Senior Procurement Specialists hired in the recent years were also terminated from the project for different reasons. Procurement performance rating for the project was also not very encouraging throughout the project. 73. Financial Management: The FM performance rating of the project remained moderately satisfactory 22 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) throughout the project life. The project’s budget execution was low. A cumulative expenditure of USD 38,301,479 has been reported as on October 31, 2019 that makes it 51% of the approved grant. The project received unqualified audit reports for the FY 2011 to FY 2017; the audit report for the FY 2018 is to be received by December 31, 2019 and the audit report for FY 2019 is scheduled to be received by June 30, 2020. The project’s responsiveness to audit and supervision observations improved significantly in the last two years and currently there is no pending unaddressed audit observations with the project. The quarterly IUFRs (Interim Unaudited Financial Reports) have been received on time and currently there is no ineligible expenditures on the project. 74. FM Issues identified during implementation of the project: (i) Fixed assets management of the project remained weak till end of 2018. This was identified in the supervision missions of the Bank’s FM team and by the external audit reports for FY 2012, FY 2014, FY 2017. During the period, the project had no proper asset verification and the fixed asset register was not updated regularly. However, there was significant improvement in 2018 when the fixed asset records were transformed from MS spread sheet to a management information system, (MIS) developed by the project. The MIS generated readable barcode numbers that were pasted on the physical assets and produced individual custodian wise reports with software control on editing rights. A fixed asset verification was completed for all project offices in the first quarter of 2019 and the report was shared with the Bank. (ii) Though the current MIS system have different modules including the ones for contract management, asset management and M&E, the FM modules could not be fully developed and made functional over the project life despite considerable investment of resources on the activity. The project continued to use MS spread sheet for book-keeping and reporting purposes. But a portfolio-wide accounting and document management system will be developed in FY 2020 by the WB team that will integrate the project reporting requirement of the Bank and government agencies. (iii) Finally, the project used extensive amount of operational advance which were retired and acquitted with significant delays specially from the provincial offices. Although an advance register was kept throughout the project life to systematically trace the advances and their acquittals, the advance amount was not reported on regular basis until 2017. The cumulative advance also fluctuated between USD 150, 000 to 300,000 without ceiling until 2017 when the advances were reported in each IUFR and reconciled with bank statement on regular basis. C. BANK PERFORMANCE Overall Rating: Moderately Satisfactory Quality at Entry 75. The project was well designed with financial assistance of the Afghanistan Reconstruction Trust Fund (ARTF) for the systematic study of the institutions involved in seed production and handling of agrochemicals. A comprehensive institutional needs assessment was carried out for all the institutions such as ARIA, ISE, and the PSEs. Based on the assessment, component A was designed to address the identified shortcomings. In addition, assessments of investment requirements were made for the (a) establishment of Plant Quarantine and Agrochemical Quality control and testing system in the country, (b) support in preparation of the legal framework related to (i) Plant Protection and Quarantine Act, (ii) Agricultural Pesticide Act, (iii) Fertilizer Act, (c) need for Afghanistan to become a member of the International Plant Protection Convention (IPPC) and the World Trade Organization (WTO) and (d) Pest Management Plan (PMP) and Environmental and Social Management Framework (ESMF) which formed the basis for Component B. The Quality Enhancement Review (QER) was promptly conducted which also enriched the design and contributed to the high quality of the 23 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) appraisal team. Thus, preparation was a robust for the project which took almost two years to complete. Procurement issues were also identified as high risk and mitigation measures provided. 76. But a major shortcoming was the failure to envisage possible land disputes during the project life. Though the project design was based on land utilization, little consideration was given to possible land disputes because public institutions were involved as direct beneficiaries and thus the resettlement policy framework (RPF), OP 4.12 was not triggered. The Bank team also did not complete the assessment and design of the project with support for civil works particularly the laboratories during the preparation phase. The design of the civil works was carried out during implementation and took over two years to complete (with realistic cost estimation) leading to re-allocation of budget between components and partial cancelation of the grant proceed. Quality of Supervision 77. The project was adequately supervised, and the Bank team provided the needed oversights and raised red flags on procurement appropriately during the first 4 years when procurement issues delayed project implementation. The first two years of implementation focused on the designs of the complex civil works and with low capacity of client, the response rate was slow. Eventually, when the team was ready for procurement, the response to the bids was poor. Mid-term review (MTR) was held appropriately and major problem areas including procurement delays were correctly flagged. Steps were also taken by the team through consultation, training, handholding and recruitment of consultants to address the identified procurement delays. However, the restructuring of the project was carried out too late its life cycle. This partly due to the consistent low capacity of the client, frequent changes in leadership of the implementation agency, slow and indecisive response coupled with staff attrition and bureaucracy. It took almost four years before the project could be restructured despite candid project ratings in the ISR during this period as Moderately Unsatisfactory. But after the restructuring, project implementation picked up significantly and apart from the inability of the project to procure the complex laboratory equipment, it was able to complete other activities satisfactorily. A second request for an extension of the project closing by one more year was made by GOIRA to complete the delayed procurement process, but this was declined by the Bank due to prolonged delays and suspected governance issues resulting from frequent changes in the technical specification, estimated cost and possible vested interests. Justification of Overall Rating of Bank Performance 78. Given the fragility context of Afghanistan and some of the political and security issues that affected the progress of the project, the Bank team was able to provide adequate guidance to implementation and flagged procurement issues with mitigation measures. But the late restructuring and of the decision to not extend project closing for the second time hampered the ability of the project to achieve the PDO on safety/reliability of agricultural inputs. The overall Bank performance is rated Moderately Satisfactory. D. RISK TO DEVELOPMENT OUTCOME Rating: High 79. The rating is high and the AAIP has three main areas where the sustainability of project outcomes is most at risk. i. Seed development: Under component A, seed production, operation and maintenance (O&M) and farm expansion threaten project outcomes as follows: 24 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) a. research on variety development: AAIP supported research on seed variety development program at ARIA and ISE main farms. AAIP supported ARIA and ISE in 17 farms at a total estimated annual cost of US$170,000. The amount covers the costs associated with seed production from harvesting to processing. Due to fragility and on-going conflicts, the country has severe fiscal constraints and it is doubtful if government can allocate sufficient budget for these activities on annual basis to sustain the seed production chain unless the current donors (USAID, CGIAR, EU) support is sustained. The sustainability of the seed production is much dependent on the continuous support of the three institutions (i.e. ARIA, ISE, and PSE), otherwise, it is highly at risk. b. farm development: Rehabilitation and equipping of eight ARIA farms and three ISE farms was completed by AAIP. But there are two other farms (Kariz farm in ARIA and Kunduz farm in ISE) that will require around US$1.24 million for activity completion. It is not clear where the budget for this activity will come from at project closing. c. O&M: There was no provision for Operation and maintenance of the facilities established by AAIP. At closing, all farms rehabilitated, and new farms established require support of both workers and maintenance of the canals and research plots. ii. Operation of PQS, BQS and Laboratory Complex: The establishment of PQS and BQS and their operation are required in Afghanistan to meet WTO standards for food safety and SPS measures. The construction work in eight BQS and the lab complex has been completed but the equipping, operationalization and technical capacity enhancement of these laboratories remained to be carried out. This might require up to US$ 5 million for the equipment. The GOIRA is actively seeking alternate source of funding to complete the remaining work. iii. Inputs Delivery System: A pilot Voucher System was designed and operated successfully which was transparent and ensured delivery of seed at the time of sowing. Though, the department of extension started an ICT system to continue with this scheme, it is highly dependent on availability of subsidies. The MAIL may have to consider the design of an alternative distribution system without subsidy. Another major challenge of sustainability with the voucher system is the extensive administrative cost when it is scaled up nationally. iv. Security and Fragility: Security is a continued risk in Afghanistan and with deteriorating peace situation, the fragility indices are becoming significant. Therefore, stable prices, qualified experts and investors’ confidence will continue to be major concerns. V. LESSONS AND RECOMMENDATIONS 80. The design and implementation of AAIP pointed out some lessons for future project preparation and implementation in Afghanistan. i. Most activities of AAIP were dependent on complex procurement of goods/civil works and the engagement of international or national consultants which brought implementation delays. In an FCV country, it is appropriate to tie-up such complex procurement to pre-selected institutions/firms at preparation stage. The design of complex civil works should also be initiated and completed at preparation. ii. Frequent changes in the leadership of AAIP and Implementing Agency had adverse effect on the project. Inadequate staffing of the departments responsible for execution of the projects and lack of competent manpower in contracting and contract management, delayed award of many contracts. Adequate arrangements and backup teams could be provisioned to address situations as the need arises. Continuity of leadership is also a must for smooth implementation of projects. 25 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) iii. The involvement of the local people in data collection for M&E was a best practice of the project which can be replicated in FCV countries. Local people recruited to implement project infrastructure could also serve as data collection points projects. iv. There were land disputes on the project which were not envisaged at the project preparation stage because of the involvement of public institutions. Selection of sites free from disputes and consultation with communities by the project authority should be the prime consideration for expeditious project implementation. Furthermore, improving land tenure governance by providing guidance and information on internationally accepted practices for systems that deal with the rights to use, manage and control land is critical. Also, re-settlement policy should be triggered in all projects relating to land and in-depth assessment/analysis carried out during preparation. v. Inter-ministerial coordination was a major issue on the project. There were delays because of lack of agreement among directorates. The bureaucracy did not allow any authority below the level of Minister to have a coordinating role. The issue of coordination should be taken seriously in future projects. vi. The Bank should be more flexible in support of extension of project life and embracing projects with more than five years of implementation, particularly in an FCV context. vii. The use of an MFD approach and Cascade framework ensure sustainability of activities carried out by public agencies. For example, sustainability of ISE activities could be enhanced through this process. viii. The major physical BQS / PQS and laboratories infrastructure was completed. But, equipment for the laboratories is yet to be procured for the central laboratory at Kabul and also at BQSs. The procurement of this equipment is very important for safety and reliability of system of quality production of export and safety use of agro-chemicals. The completion of these laboratories and quarantine stations should be prioritized by government for the development of the agricultural sector in the country. ix. The pilot of the voucher system was very successful and as indicated in this report, was very beneficial to the farmers and eliminates corruption and ensures transparency. However, the scale-up of the process must be strategic to help develop market value chain capable of functioning on self-sustaining basis. The use of disruptive technology and ensuring maximum private sector participation is critical for the scaling up of the voucher system. x. Gender activities should be incorporated earlier during project implementation. This allows project team to . identify gaps early and consolidate on achievements. 26 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Improved Seed Production and Certification System Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Production of Certified Percentage 0.00 93.00 95.00 Wheat Seed as % of Annual National Seed Board Plan 01-Jul-2013 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Wheat Seed multiplication Percentage 14.80 26.00 26.00 26.30 factors/Foundation seed (FS) to Breeder seed (BS) 01-Jan-2013 30-Jun-2018 30-Jun-2019 30-Jun-2019 27 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Comments (achievements against targets): Objective/Outcome: Quarantine Networks and Quality Control for Agro-chemicals: Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Food product samples tested Number 0.00 100.00 0.00 for pesticides residues 01-Jul-2013 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Pesticide samples tested for Number 0.00 75.00 0.00 compliance 01-Jul-2013 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Listing of plant quarantine Number 1.00 1.00 1.00 28 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) pests and diseases 01-Jul-2013 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): A.2 Intermediate Results Indicators Component: A. Improved Wheat Seed Production Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion New wheat varieties Number 3.00 5.00 7.00 submitted for release 01-Jul-2013 30-Jun-2018 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Developed farm land area in Hectare(Ha) 60.00 447.00 350.00 308.00 ARIA 01-Jul-2013 30-Jun-2018 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): 29 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Staff trained in ARIA Number 0.00 248.00 500.00 642.00 01-Jul-2013 30-Jun-2018 30-Jun-2019 30-Jun-2019 Staff trained in ARIA- Male Number 0.00 0.00 470.00 609.00 01-Jul-2013 30-Jun-2019 30-Jun-2019 30-Jun-2019 Staff trained in ARIA- Number 0.00 0.00 30.00 33.00 female 01-Jul-2013 30-Jun-2019 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Developed farm land area in Hectare(Ha) 80.00 904.00 566.00 460.50 ISE 01-Jul-2013 30-Jun-2019 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): 30 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Staff trained in ISE-Total Number 150.00 150.00 150.00 01-Jul-2013 30-Jun-2019 30-Jun-2019 Staff trained in ISE- Male Number 0.00 0.00 140.00 149.00 01-Jul-2013 30-Jun-2019 30-Jun-2019 30-Jun-2019 Staff trained in ISE- Female Number 0.00 10.00 1.00 01-Jul-2013 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Foundation seed area Percentage 12.00 5.00 3.80 rejected 01-Jul-2013 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at 31 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Target Completion Percentage of certified seed Percentage 0.00 5.00 5.06 production purchased by farmers (instead of donors 01-Jul-2013 30-Jun-2019 30-Jun-2019 and/or government) Comments (achievements against targets): Component: B. Plant Quarantine Networks and Quality Control of Agro-chemicals Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Pesticide samples chemically Number 0.00 25.00 0.00 analyzed for registration 01-Jul-2013 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Pesticide samples subjected Number 0.00 20.00 33.00 to-bio-efficacy trials 01-Jul-2013 30-Jun-2019 30-Jun-2019 32 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Phytosanitary certificates Number 0.00 1005.00 1005.00 issued 01-Jul-2013 18-Mar-2019 18-Mar-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Quarantine inspections Number 0.00 1100.00 1000.00 3933.00 carried out 01-Jul-2013 30-Jun-2018 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Fertilizer samples tested for Number 0.00 150.00 0.00 chemical purity 01-Jul-2013 30-Jun-2019 30-Jun-2019 33 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Fertilizer lots inspected Number 0.00 1500.00 0.00 01-Jul-2013 30-Jun-2019 30-Jun-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Staff trained in PPQD-total Number 0.00 119.00 104.00 01-Jul-2013 30-Jun-2019 30-Jun-2019 Staff trained in PPQD- Male Number 0.00 99.00 99.00 01-Jul-2013 30-Jun-2019 30-Jun-2019 Staff trained in PPQD- Number 0.00 19.00 5.00 Female 01-Jul-2013 30-Jun-2019 30-Jun-2019 34 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Field surveys completed Text 0 1 1 01-Jul-2013 18-Mar-2019 18-Mar-2019 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of Laboratory and Number 0.00 14.00 12.00 Quarantine stations refurbished/established and 24-Apr-2017 30-Jun-2019 30-Jun-2019 functioning Comments (achievements against targets): Component: C. Input Delivery Systems Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 35 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Pilot voucher scheme for Number 0.00 1.00 1.00 wheat seed developed and implemented. 01-Jul-2013 30-Jun-2019 30-Jun-2018 Comments (achievements against targets): 36 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Sustainable production of certified wheat seed 1. Seed multiplication factor (breeder to foundation and foundation to certified) Outcome Indicators 2. Production of Certified Wheat Seed as % of Annual National Seed Board Plan 1. New wheat varieties submitted for release---- (140% achieved) 2. Developed farm land area in ARIA---------------(88% achieved) 3. Staff trained in ARIA---------------------------------(128.4% achieved) 4. Developed farm land area in ISE------------------(81.3% achieved) Intermediate Results Indicators 5. Staff trained in ISE-Total----------------------------(100% achieved) 6. Foundation seed area rejected due to quality reduced—(Exceeded) 7. Percentage of certified seed production purchased by farmers (instead of donors and/or government)--------------(101.2% achieved) 1. Farm land developed at AREA and ISE Key Outputs by Component 2. Staff trained at AREA, ISE and PSE (linked to the achievement of the Objective/Outcome 1) 3. New wheat varieties developed and released Objective/Outcome 2: Strengthened institutional capacity for safety and reliability of agricultural inputs 1. List of plant quarantine pests and diseases developed-(100% ach.) Outcome Indicators 2. Number of product samples tested for pesticides residue-(0% ach.) 3. Pesticide samples tested for compliance----------------------( 0% ach.) 37 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) 1. Pesticide samples chemically analyzed for registration---(0%) 2. Pesticide samples subjected to-bio-efficacy trials----------(165% ach.) 3. Phytosanitary certificates issued--------------------------------(100% ach.) 4. Quarantine inspections carried out--------------------------(393.3% ach.) 5. Fertilizer samples tested for chemical purity-------------(0% ach.) 6. Fertilizer lots inspected----------------------------------------(0% ach.) Intermediate Results Indicators 7. Staff trained in PPQD-total------------------------------------(87.4% ach.) 8. Field surveys completed---------------------------------------(100% ach.) 9. Number of Laboratory and Quarantine stations---------(85.7% ach.) refurbished/established and functioning 10. Pilot voucher scheme for wheat seed developed and implemented. ---------------------------------------------------------(100% ach.) 1. Laws, regulations and procedures developed and enacted 2. Pesticides registration office established, and database of pesticides imported is developed 3. Laboratory and Quarantine stations refurbished/established and Key Outputs by Component furnished. (linked to the achievement of the Objective/Outcome 2) 4. Survey conducted, and nation-wide insect pests and diseases and pests risk analysis implemented. 5. Published list of registered bio-pesticides. 6. Samples of pesticides analyzed for registration through bio efficacy trials. 38 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation NAME TITLE / FUNCTION Johannes (Hans) G.P. Jansen Task Team Leader and Sr. Agricultural Economist, SASDA William Magrath Lead Natural Resources Specialist, SASDA Najla Sabri Operations Analyst, SASDA Samuel Kugbei Seed Specialist, FAO Mahbubar Rahman Agrochemicals Specialist, FAO Consultant Selvarajan Sundaramurthy Senior Economist/Cost-Benefit Specialist, FAO Siddharta Raja ICT Policy Specialist, TWICT Rajiv Sharma Wheat Spec. Country Rep. CIMMYT Mohammad Arif Rasuli Senior Environmental Specialist, SASDI Abdul Durani Social Development Specialist, SASDS Zohra Farooq Financial Management Specialist, SARFM Nargis Yousuf Financial Management Specialist, SARFM Chau-Ching Shen Senior Finance Officer, CTRFC Aimal Sherzad Procurement Specialist, SARPS Marjorie Mpundu Senior Counsel, LEGES Abdul Raouf Zia Senior Communications Officer, SAREX Zabiullah Ahrary Team Assistant, SASDO Venkat Ramachandran Program Assistant, SASDO Supervision/ICR Amanullah Alamzai, Hazem Ibrahim Hanbal Task Team Leader(s) Aimal Sherzad, Rahimullah Wardak Procurement Specialist(s) Syed Waseem Abbas Kazmi Financial Management Specialist Rohan G. Selvaratnam Team Member Ama Esson Team Member Shankar Narayanan Social Safeguards Specialist Zabiullah Ahrary Team Member Mohammad Arif Rasuli Environmental Safeguards Specialist 39 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Najla Sabri Team Member Mohammad Asif Qurishi Team Member Nilofar Amini Team Member Qais Agah Team Member Zakir Hussain Gulzari Team Member B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY10 4.550 30,264.47 FY11 26.872 99,388.86 FY12 19.840 70,994.84 FY13 56.683 266,463.12 Total 107.95 467,111.29 Supervision/ICR FY12 1.213 19,039.68 FY14 36.465 118,365.06 FY15 47.015 164,579.35 FY16 51.427 161,608.40 FY17 37.850 117,061.05 FY18 43.925 130,641.58 FY19 39.315 153,278.94 FY20 21.708 100,943.12 Total 278.92 965,517.18 40 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Revised Actual at Project Actual as Percentage of Components (US$M) (US$M) Closing (US$M) Approval (US$M) A. Improved Wheat Seed 26.40 36.50 22.74 86.14 Production B. Plant Quarantine Networks and Quality Control of Agro- 29.90 21.9 9.16 30.60 chemicals C. Input Delivery Systems 2.50 1.39 0.43 17.20 D. Project Management and 15.90 7.46 5.97 37.61 Monitoring Total 74.75 67.25 38.30 51.23 41 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) ANNEX 4. EFFICIENCY ANALYSIS A. Overview 1. At appraisal, the Project Paper included a sound cost-benefit (CB) analysis estimating the returns on the improved wheat seed production (Component A) and plant quarantine networks and quality control of agro chemicals (Component B). The project level analysis was done by aggregating these two components and accounted for entire project costs. The appraisal’s economic analysis assessed the economic soundness of the project based on the ERR and NPV, both of which had been calculated from projected incremental costs and benefits to society as a whole, using the “with- and without-project” approach. The analysis estimated economic rates of return (ERR) of 20.5 percent on the investments for seed system development (wheat seed production) and 19.5 percent for the quarantine networks and agrochemicals. The overall project ERR was estimated at 19 percent and the expected values of NPV was estimated at US$34.7 million in 2012 prices over a project cycle period of 25 years. 2. The CB analysis was repeated again at restructuring of the project, adapting the similar approach and methodology considered at appraisal. The Project Restructuring Paper did not propose revision of the PDOs and only proposed changes in some activities and for re-appropriation/ reduction in the budget with extension in timeline for one year. The analysis used the data of technical parameters as was available in the original project paper and evaluated economic rate of return considering the elements of project restructuring, i.e. increase in the cost of Component A and decrease in cost of all other components. The CB analysis at restructuring discounted the cash flows over a 21-year period considering the project had already been in operation and last for 4 years. The analysis produced an economic rate of return at 13.8 percent and net present value of US$6.9 million for the Component A. While for the Component-B, the value of EIRR was estimated at 15.4 percent and the NPV at US$8.4 million. At restructuring, the CB analysis concluded that the project holds a positive net present value and an acceptable economic rate of return and considered the project economically viable. B. Methodology of Economic Analysis for ICRR 3. The project design and objective set at appraisal remained unchanged till the project completion, except onetime restructuring that extended the closing date by one year. To enable a comparison with the appraisal estimates under the original project, the post-completion analysis has been carried out following the appraisal stage methodological approach. The ex-post analysis has been carried out using the actual expenditures made during the project implementation and the updated economic and financial analyses at project completion according to relevant World Bank Guidelines. The CB analysis assesses the stream of benefits and costs over the project horizon of 25 years under the “with project” and “without project” scenarios. 42 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) C. Data collection at ICRR 4. The analysis mainly builds on the data collected during the implementation by the project implementing agencies including the PMU and the Consultants. A number of surveys were conducted, during implementation, and demonstration and experimental research plots were developed to witness the benefits of project interventions. All this data provided basis to develop the BC analysis at project completion. In addition to the regularly collected data by the project teams, the ex-post economic analysis extensively used data from the Mid-line Survey of the AAIP (Afghanistan Agricultural Inputs Project) and from the Final Project Review of Afghanistan Agricultural Inputs Project (AAIP), both prepared by the Project Consultants with support from the PMU. Supplementing to this, the efficiency analysis at ICRR also used information from various secondary sources which include the Central Bureau of Statistics and the Afghanistan On-Farm Water Management Project. D. Project Development Impact and Derivation of Benefits 5. Similar to the CB analysis done at appraisal, the project benefits have been derived from Component A and from Component B, whereas no benefits of other two components have been quantified and full project cost has been accounted for. 6. Component A. Key assumptions related to the main sources of benefits, under this component, are limited to the quantifiable benefits only–i.e. efficiency and productivity gains. The benefits has been estimated in two folds; (i) efficiency gains in wheat seed production; and (ii) productivity gains in wheat grain production. At completion, this component accounts for 71 percent of project costs, including contingencies and apportioned management costs as compared to 45 percent estimated in budget at appraisal and 61 percent at restricting the project. 7. Efficiency gains. For evaluating the efficiency gains, demand of Certified Seed (CS) was assessed at appraisal as 30,000 MT for all Afghanistan. No change in demand of CS seeds was assumed at full development under the “with project scenario”. These estimates were based on certain assumptions, which included: (i) the existing seed production system may collapse as a result of lack of demand due to high price; (ii) price premium would continue to be high and donors and Government would no longer buy; (iii) current supply levels may only be maintained if donors and/or Government continue to buy; (iv) the existing seed production system may become more efficient and responsive to market demand by farmers which can develop as prices would come down and supply of improved seed varieties adapted to specific agro-ecological conditions would improve. No change was considered in these assumptions while doing the analysis at restructuring the project. However, during implementation, these assumptions could not demonstrate their validity to full extent. The main assumptions considered at appraisal and at completion are presented in the Table below. 43 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Annex 4 Table 1. Main Assumptions – Estimates at Appraisal and at ICRR Appraisal ICRR Efficiency gains Unit WOP WP Change WOP WP Change Production of Wheat CS MT 30,000 30,000 0 21,428 50,000 133 Raw Seed Procured MT 41,656 36,765 -12 69,427 60,000 -14 Registered Seed Used MT 2,325 1,547 -33 3,875 2,000 -48 Wheat Seed Productivity MT/ha 2.7 3.3 22 2.7 3.2 20 Procurement cost for RS $ m/year 1.8 1.2 -33 3.0 1.5 -48 Total Cost of raw seed $ m/year 18.8 14.9 -21 31.3 23.8 -24 Processing/cleaning cost $ m/year 3.1 2.8 -10 5.3 4.5 -15 Source: Office of AAIP, Kabul; Key – WOP =Without Project; WP = With Project; 8. At appraisal the overall annual incremental economic benefits due to efficiency gains from the improved seed system were assessed resulting from savings in scarce irrigated land resources and from reduced unit cost of certified wheat seed production. It was estimated that about 7,728 ha of irrigated lands will be released from seed production and that would be used for producing other crops. The benefits of the released land were estimated using wheat as a proxy. The ICRR followed the same approach, the irrigated land released/ saved under with project is estimated as 2703 ha. Using wheat as a proxy, the incremental value of saved irrigated land resources is estimated at US$ 1.14 million per year after reaching at full development. 9. Impacts of efficient seed production system were also measured at appraisal and the annual incremental economic benefits were explained as the decrease in costs for procuring registered seed and raw wheat seed (for CS production) and processing/cleaning of the latter to produce final product of CS. Following the same approach, ICRR estimated: (i) the quantity of raw wheat seed required for producing of clean certified seeds will decrease by 14 percent as compared to 12 percent estimated at appraisal; (ii) registered seed requirements would decline by 48 percent against appraisal estimates at 33 percent; (iii) increase in wheat seed productivity by 20 percent against 22 percent estimated at appraisal; and (iv) seed production losses will be 20 percent against appraisal estimates at 26 percent. All the values of these parameters have been excerpted from the reports prepared by the project implementation agencies. The analysis reveals that the net annual incremental benefits due to a more efficient seed production system will be at US$ 7.41 million per year at full development. 10. As such at ICRR, the annual incremental economic benefits due to efficiency gains from the improved seed system are assessed at US$ 8.55 million, resulting from savings in scarce irrigated land resources and reduced unit cost of certified wheat seed production. 11. The analysis at appraisal assumed that these gains would be starting from year 4 onwards to reach full benefits by year 10, matching with the gradual development of infrastructure and human capacity. The analysis used a time lag of three years to account for the production cycle of breeder seed to certified seed. Since the project development has been sufficiently successful and is on course to achieve results anticipated at appraisal. Hence, no changes are made to these parameters for the current analysis except 44 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) the starting of benefits from year 5 considering the one-year delay in taking off implementing the physical interventions of the project. 12. Productivity gain: The appraisal estimates assumed possible yield gains between 13 and 29 percent considering the project interventions at four locations out of seven potential sites. The project made good progress and extended its services at all the seven potential sites due to enhanced and better management capacity. It was also assumed that by strengthening national institutions in collaboration with international organizations, supported by human capacity and infrastructure development interventions will help to capture these yield advantages through the development of agroecology- specific technologies and production packages. Using crop budgets, incremental economic benefits due to location-specific technologies and production packages were estimated at US$ 85 per ha, weighted across rainfed and irrigated varieties based on their respective overall area shares (55:45). The ICRR considered the approach still valid and updated the crop budgets for the “without” and “with project” scenario and estimated the net incremental economic benefits at US$ 88.9 per ha. The ICRR estimated that 50,000 MT of quality CS would allow seed replacement on wheat area of approximately 400,000 ha of land each year (rainfed and irrigated in the ratio of 55:45). The assumption made at appraisal about 25 percent increase in wheat productivity due to the use of agroecology-specific varieties and agronomic technologies introduced as part of project intervention is considered valid. Accordingly, the incremental economic benefits due to productivity gains are estimated at US$ 6.593 million per year at full development. 13. At appraisal the productivity gains were estimated considering the benefits starting from 4 th year of the project and reaching at full development by 10th year in the project cycle of 25 years. Since the major activities of the project started with a lag of one year, conservatively ICRR assumed the productivity benefits would start in year 5 reaching at full potential by year 11, defraying the benefits in line with the development of infrastructure and human capacity befell due to project interventions. 14. “Self Sufficiency” in production of CS: Further the AAIP’s interventions enabled Afghanistan achieving the status of "Self Sufficient" in production of certified seed of wheat. Estimation of requirement versus production capacity developed through the project intervention is shown in the Table below. Annex 4 Table 2. Demand and Production of CS of Wheat Sr. Description Unit Value 1 Total area under wheat cultivation Mha 2.45 - Irrigated area Mha 1.40 - Rainfed area Mha 1.05 2 CS of wheat for irrigated area @ 125 kg/ha ton 175,000 3 CS of wheat for irrigated area @ 75 kg/ha ton 78,750 Total ton 253,750 4 Replacement Ratio (every 5 years) percent 20 5 Annual Requirement of CS of Wheat ton 50,750 11 6 Production of Breeder Seed during year 2019 ton 86.36 11 Produced by ARIA With the technical and financial support of AAIP 45 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) 7 Production of Foundation Seed (24 times)-year 2021 ton 2,073 8 Production of Certified Seed (24 times)-Year 2021 ton 49,743 Source: Office of AAIP, Kabul 15. It is evident from the above Table that Afghanistan will be producing 49,743 tons of CS of wheat in year 2021 against demand for 50,750 tons, which is the big achievement of the project. It is noteworthy that to keep it up, the GOIRA needs to encourage, follow-up, monitor and support ARIA/ISE/PSE after the project is closed, otherwise its sustainability is highly at risk. 16. Component B. This component was designed to establish the physical infrastructure and enhance the institutional capacity to implement relevant laws including the Pesticides Act and various regulations for quality control of agro-chemicals. It also involved the establishment of physical infrastructure and capacity to prevent the introduction of exotic quarantine insect pests and diseases, in addition to facilitating the export of fresh and dried fruits, and nuts by issuing internationally recognized quarantine/ phytosanitary certificates. 17. The progress under this component remained slow by abinitio and at restructuring of the project it was concluded that the targets fixed for this component would not be achievable within the life of the project. Whereas it was considered essential to provide on-the-job training and systems development once the laboratories and Border Quarantine Stations (BQs) are working, for the sustainability of the interventions proposed under this component. Moreover, the value of contracts awarded in the last four years for the activities proposed under this component amounts to only 5 percent of the total allocation. Considering all this at reconstructing the project, the allocated budget of this component was reduced from 50 percent to 36 percent (including contingencies and apportioned management costs), whereas in actual it was utilized only about 27 percent. 18. Exports, Situational Analysis at ICRR. Analysis of available information regarding the export of different items shows that growing agricultural production is playing an important role in country’s potential. In Afghanistan, as of year 2019, exports account for around 20 percent of GDP. Afghanistan main exports are: carpets and rugs (45 percent of total exports); dried fruits (31 percent) and medicinal plants (12 percent). Main export partners are: Pakistan (48 percent of total exports), India (19 percent) and Russia (9 percent). Others include: Iran, Iraq and Turkey12. During the period 2012-17, the exports of Afghanistan13 have increased at an annualized rate of 14.7 percent, from $467M in 2012 to US$878M in 2017. The most recent exports are led by Grapes which represent 16.3 percent of the total exports of Afghanistan, followed by Resins, which accounted for 11.6 percent. 19. Overall in exports, the average share of agricultural products amounts to 44 percent, amongst the food items constituted the share as about 35 percent. The share of other items including textile, manufacturing, fuels and mining products amounts to 22 percent. Major agricultural exports include fresh and dry fruits with a large share in exports in value terms, wherein raisin and almond are dominating commodities in Afghanistan’s export basket. The share of manufacturing and textile in total exports is 10 12 tradingeconomics.com/afghanistan/exports 13 https://oec.world/en/profile/country/afg/ 46 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) percent and 9 percent respectively. The share of fuel & mining industry is only 2 percent in country’s total export. Year-wise data shows sharp expansion in export of agricultural products and food items during 2013-17. The results of analysis show an expansion in export by seven times for agricultural products five times for food products. Whereas, the export volume of manufacturing and textile was reduced over this period. A pie-diagram is shown below for the country’s export of different sectors. Chart-1: Sector-Wise Share in Country’s Exports (Percentage) 20. Benefits Attributable to Component-B. At appraisal, the main source of benefits were considered higher price realization for exports and expansion in the volume of exports of agricultural commodities. The benefits of this component were assessed by assuming that the share of Afghan raisin exports will increase from 20% (WOP) to 30% (WP) while export unit values were supposed to increase by 10% (WP), at full development. The increase in exports was anticipated due to improved phytosanitary network that would enable Afghan horticultural products to access higher value markets and would obtain higher prices resulting from improved product quality. At restructuring, though the cost of this component was reduced, yet the economic analysis considered the same benefits as estimated at appraisal and recalculated the value of ERR revising the cash flow moving the benefits ahead by two years and starting from 6th year of the project. 21. During implementation, legal framework and capacity of the concerned departments has been developed for quality control of fertilizer and agrochemical. Construction/establishment of BQs, Plant 47 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Quarantine Stations (PQs) and quality control laboratories at 13 Laboratories complexes will facilitate the promotion of agriculture-based export. Provisions of such facilities is the mandatory to qualify regulatory conditions of International Plant Protection Convention (IPPC) and World Trade Organization (WTO). Afghanistan became member of IPPC in year 2013 and of WTO in year 2015. During the recent past, country’s export of farm products has increased considerably which is encouraging and indicating the prospects of future development and investment in the farm sector in Afghanistan due to these interventions of the project. However, it will take further a year or two to make these laboratories/infrastructures fully functional. 22. Since the size of Component-B was reduced at reconstructing the project, the full benefits envisioned as part of the incremental exports might not be achieved. Moreover, the flinch of benefits will also delay due to late completion of the infrastructure and the project interventions under this component. Though the increase in exports and mainly the food items is evident from the data, yet this increase may not be attributed to the project. The data shows total volume of exports at US$ 878 million in year 2017, of which 35 percent were the food items. About 11.6 percent was the resins in the food items and amounts to US$ 35.65 million. At appraisal, total benefits of US$ 10.5 million were estimated as achievable at full development of the project. The current analysis considered that these benefits are unlikely to achieve due to a number of factors already explained. The analysis conservatively assumed that yearly increase in exports of resins attributable to project amounts to US$ 3.01 million achievable in year 12th of the project horizon of 25 years, starting from year 6th with US$ 2.0 million. These estimates are based upon the export data for the year 2017 and the amount invested for the Component-B comparing with the targets fixed and the budget proposed at appraisal. 23. Component C. This component focused on the establishment of an effective and efficient inputs delivery system through distribution of vouchers allover in Afghanistan. The primary objective of this inputs delivery system was to develop an effective and efficient voucher-based inputs delivery system to deliver critical inputs to farming communities with concentration on certified wheat seed. The voucher- based system has been designed and developed to support the various thespians engaged in the seed sector development and distribution mechanism to farmers, demonstrating it with limpidity. This is an innovate approach that AAIP has developed for inputs distribution and achieved in successful manners. However, even less than 2 percent of the total project costs was allocated and spent under this component. The interventions under this component was not considered for the economic analysis at appraisal as well as at ICRR. E. Key assumptions 24. Project Costs. The actual project cost (latest estimates), inclusive of all contingencies, is estimated at US$ 40.35 million which was distributed among components in following shares: (a) 54 percent for the Wheat Seed Production; (b) 32 percent for Agrochemicals an PPQD Network; (c) 2 percent for Inputs Delivery System; and (d) 11 percent for Management and Monitoring component. The economic cost of the Project is estimated by removing price contingencies and all taxes and duties from the financial cost. 25. The project impact is estimated by aggregating benefits and conservatively, the total costs of the project at completion. The Project benefits and costs are assessed for 25 years at 2019 financial prices 48 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) and using opportunity cost of capital at 12 percent. All prices are brought to the level of year 2019 using the World Bank data of GDP deflator for Afghanistan. F. Results of Economic Analysis 26. The ex-post economic analysis at project completion found the overall value of ERR at 21.8 percent as compared to 19 percent estimated at appraisal. The increase in ERR at completion is due to the lower completion cost of the project as compared to the appraisal estimate as well as the increase in exchange rate of AFN versus US dollar. The analysis also confirms the component-wise economic viability as measured by the ERR at 23.5 percent for component-A and 15.9 percent for the Component-B. 27. Sensitivity Analysis. The sensitivity analysis also proves the value of ERR robust as all the scenarios yield the value of EIRR above 12 percent and positive value of NPV (discounted at 12 percent). A summary of the results is shown in the Table below. Annex 4 Table 3. Summary of Results ERR % NPV (US$ M) Results of Evaluation Change Comp Comp Comp Comp Overall Overall A B A B Base Case 23.5 15.9 21.8 22.0 1.9 24.0 Sensitivity Scenarios Case 1 - Increase in O&M Costs +10% 22.0 14.4 20.3 20.3 1.3 21.6 Case 2 - Decrease in Overall -10% 21.6 13.5 19.9 17.8 0.7 18.6 Benefit Case 3 - Benefit Delay by 2 years -2 yrs 17.6 10.7 16.1 12.0 -0.8 11.2 EIRR = economic internal rate of return; ENPV = economic net present value; 28. The sustainability of the status gained as “self-sufficient” in producing the certified seed depends upon support of the government to the three institutions (i.e. ARIA, ISE, and PSE) after the project is closed, if not, its sustainability is highly at risk. 29. At appraisal, it was predicted that all the infrastructure particularly under component B will be completed within the project lifetime and the staff will be trained to operate the laboratories as part of project interventions, though a one-year extension was allowed, yet the laboratories established under the project are not fully institutionalized. At close of the project, these laboratories are not functional because of the non-testing due to uncompleted laboratory equipment purchase and lack of all deployment of necessary staff. 30. Thus, the economic efficiency based on the quantified and monetized benefits is rated as Modest. 49 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Please find below comments from the Ministry of Agriculture, Irrigation and Livestock (MAIL) on behalf of GOIRA: 1. MAIL would like the status of the report to be retained as “Moderately Satisfactory” because: a. The project had five PDO indicators. Out of the five indicators three were achieved by the project. Also, the project achieved almost all of the Intermediate Results Indicators (see table at the end of this document). Some indicators, for example, the size of the Darulaman research farm, originally 24 ha, when shifted to the new location of Kariz-mir area reduced to 6.5 ha. Therefore, overall 18 ha has been reduced from the end total target indicated in Intermediate Results Indicators (350 ha). b. The cost-benefits analysis has been conducted only for two components, A&B of the project. Component C, the voucher system for seed distribution, has been forgotten in the report. This was a good achievement of the project and this is the system that will make the seed distribution system very efficient. This system gets the seed to the hands of farmers without any interference by the government, except for monitoring to make sure the seed produced and distributed to farmers is of quality. We believe that seed can increase yield by 25-30% so if this system help in getting the seed to the hands of farmers this means the yield will be increased which contributes to the economy of this country. So, we are expecting that the report will conduct the economic analysis for the voucher system too. c. As part of sustainability, MAIL has already transferred the Voucher system to the CLAP project and is currently delivering the voucher system services in seven provinces of the country. d. If we look at the table at the end of this document, most of the Intermediate Results Indicators have been achieved by the project indicating that the project deserves the status of moderately satisfactory and the value on table five of the report shall be changed from 2 to 3. Some more achievements made by AAIP are provided in Annex 1 of this document. 2. On page 13, the report raised the issue of pest and disease list publication, particularly the publication of lists of quarantine and non-quarantine pest and diseases. A very valuable report has been prepared by the contractor (CABI) which includes a general list of pests and diseases, lists of quarantine and non-quarantines pests and diseases. MAIL is working on the publication lists of quarantine and non-quarantines pests and diseases. 3. MAIL is very thankful to World Bank for its financial support in building the institutional capacity of MAIL in Certified Seed Production Chain System, the establishment of the physical infrastructure of the Quarantine Network, and the voucher system through AAIP. MAIL accepts that AAIP was unable to implement planned activities during the year 2014-2015. Therefore, some very important activities of the project did not get completed during the project implementation period. However, MAIL has been actively seeking alternate sources of funding 50 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) to complete and sustain these critical missing links. 4. One of such activities was the Lab complex of Badam Bagh, consisting of 13 laboratories which were constructed and equipping them was left incomplete because of shortage of time and serious complications in the specifications of the technical equipment, given it was a first-time experience for Afghanistan. In spite of numerous requests for extension, WB was unable to extend the project life by a few months to accommodate the procurement of the lab equipment which was in its finale stage. However, MAIL is pleased to report that we have sought funding for the equipment of the lab complex and confident that during the year 2020, this Lab complex will be fully up and operational. With the completion of this Lab Complex the following crucial services will be provided: • Pesticides and Fertilizers Testing Laboratories - It consist of (5) main laboratories for formulation and identification of pesticides, fertilizers and analysis of pesticides residues on agricultural products. • Agricultural Products Quality Testing Laboratories - It includes (3) laboratories for testing microbes, heavy elements and aflatoxin. • Plant Pests and Diseases Diagnosis laboratories - 5 laboratories are functioning under this section and involved with plant diseases such as bacteria, viruses, fungi and nematodes are diagnosed, and laboratories includes are bacteriology, virology, mycology and nematology. Moreover; entomology laboratory that recognizes and diagnosis plant insects and pests adverse effect on plant is also included in also included in this section. Results from the Intermediate indicators support our comments above. Annex 1. Project indicators progress details Developed farm land area in ARIA (Indicator) 1) Total ARIA 10 research farms that were consider for land development - out of 10 farms 9 farms has been totally developed. It is worth mentioning that the size of Darulaman research farm, originally 24 ha, when shifted to new location of Kariz-mir area reduced to 6.5 ha. Therefore, over all 18 ha has been reduced from end total target indicated in Results framework (350 ha). Developed farm land area in ISE (Indicator) 2) Total ISE 5 farms were taken into consideration for land development – out of 5 farms 4 farms were completed. Listing of plant quarantine pests and diseases (Indicator) 3) List of the Quarantine Pest and Diseases has been completed as planned by contracted organization (CABI)/AAIP/PPQD MAIL through conducting the Nationwide Insect pest and Plant Diseases survey. The survey started in 2016 and finished in March 2019 with the support of AAIP and PPQD/MAIL. Pesticides samples subjected to bio-efficacy trails (Indicator) 4) The bio-efficacy trails target has been achieved and even more then the results framework indicator. The aim of the bio-efficacy trials is to confirm the label information of pesticides against the major targeted pest in the selected regions in field condition. The pesticides put in the bio- efficacy trails included 6 botanicals and 27 chemicals in which 21 proved label information. Phytosanitary certificates issued (Indicator) 51 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) 5) AAIP supported PPQD/MAIL staff in issuing 200 Phytosanitary certificates based on fumigation which were the requirement of importing countries. AAIP support PPQD in conduction of Fumigation process for the products exporting to country which requires fumigated products, specifically in recently opened ‘Air Trade Corridor’. AAIP provided them tents, thermometer, phosphine tablets and our staff even visited the store houses of the traders and fumigated the products in their own place and issued Phytosanitary certificate for them in which detail declaration were given to the importer country on the dose of fumigation, duration of fumigation, temperature of fumigation which are needed to be consider in the fumigation process. The pine nuts which are exporting to China and other countries were fumigated with the active role of newly hired staff by AAIP. The total number of the certificate issued with the fumigation were 200 and mostly were pine nut and mostly dried fruits. As per rules of IPPC the exporting countries are obliged to the give pest free products to their contracting parties under the ISPM-1. Fumigation of Agri. Comdt. Kabul Airport (BQS) Quarantine Inspection Carried out (Indicator) 6) AAIP newly recruited staff started Quarantine inspection in their respective duty station and more than the target inspection were carried out and also supported them in preparation of Pest Risk Analysis (PRA) report. AAIP has supported PPQD in carrying out Quarantine inspection and every agriculture product exporting and importing from Afghanistan are examined by the newly hired staff of AAIP. The detail of the inspection is below: a. Documents check b. Physical check c. Lab examination d. Carrying of Quarantine Treatment (Fumigation) e. Preservation of samples Staff recently hired by AAIP are professional in their field of study and they are aware of the rules and regulation of the IPPC and consider these rules and regulations while doing inspection. These staff are 52 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) able to conduct inspection in a way that could help the country prevent introduction of new exotic pests and disease. The staff are professional enough to use the available equipment in conducting successful inspection. More than 1000 Quarantine inspection are carried out by our staff. Besides playing active role in the inspection, AAIP staff also helped PPQD staff in preparation of Pest Risk Analysis report under the ISPM-2 which were asked by the Turkey and Pakistan Governments for onion and cotton, respectively. The detail report of the PRA will be shared with the WB of needed. Physical check of Agri. Comdt. Kabul custom (BQS) Lab examination of Agri. Comdt. Torghondi (BQS), Herat Quarantine stations refurbished/ established and functioning (Indicator) 7) The Quarantine Stations established by AAIP are functional now includes Kabul Airport, Kabul Custom, Ghulam Khan, Spin Boldak, Hiratan, Torghandi and Islam Qala Quarantine stations. Stations are supported by: a) Furniture and office tools purchased for Quarantine stations: Furniture and office tools totally 19 items were purchased and delivered to the above mentioned quarantine stations. These items were meeting table, cupboards, chairs, office desk, file cabinet and some necessary goods etc. b) The equipment purchased for Quarantine stations and labs are reflected below: Autoclave, PH meter, conductivity meter, Density meter, moisture meter, fume hood, Laminar Flow cabinet, Hot plate with magnetic stirrer, Wearing blender, Iso-thermal heating mental, vacuum filtration, Air oven, vortex mixer, generator, refrigerator. The delivery of these equipment to 3 Quarantine stations are completed and other quarantine station in the process. c) Chemical Purchased for Quarantine Stations are reflected below: Alcohol, Napthaline, Cholroform, Sodium Cynide, Glycerine, Crystal Violet, Almonium paper, Formalin, Triethanol amine, Methle blue, Spirit, Sodium hypochlorite, Sterile sampling bags, Agar, Yeast and mold agar, PDA, Tartaric acid, Tryptone, Potassium cyanide broth (base) are procured. All these chemicals will be delivered to the Quarantine stations after the delivery of available equipment. d) IT equipment purchased for Quarantine stations are reflected below: Currently, scanners, printers, computers, GSM telephones are purchased for Quarantine stations and will be soon delivered to aforementioned Quarantine stations. Fertilizer lots inspection with rapid test kit (Indicator) AAIP provided rapid test kits to PPQD and several trainings were conducted to their relevant staff. Two of the essential elements (nitrogen & phosphorous) tests conducted while potassium will be tested soon. The delay was due to reagents which were procured now. 53 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) ANNEX 6. PROJECT PICTURES Field Day in Field Demonstration Plots Focus Group Discussion with Trainees at ARIA Office building, Irrigation channel, tank and equipment shed at Khomi Kalan 54 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Central Laboratory building complex at Badam bagh with Basic Equipment & Chemicals. 55 The World Bank Afghanistan Agricultural Inputs Project (AAIP) (P120397) Kabul custom Border Quarantine station ANNEX 7. COUNTRY MAP SHOWING PRIVINCES OF PROJECT INTERVENTION 56