Document of The World Bank Report No: ICR00003895 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-44940IDA-52930 IDA-58490) ON A CREDIT IN THE AMOUNT OF SDR 153.4 MILLION (US$ 250 MILLION EQUIVALENT) TO THE FEDERAL REPUBLIC OF NIGERIA FOR A THIRD NATIONAL FADAMA DEVELOPMENT (FADAMA III) PROJECT November 2nd, 2016 Agriculture Global Practice Western Africa Country Department 2 Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective 00000000) Currency Unit = Naira Naira155 = US$1 US$1.62976 = SDR1 FISCAL YEAR: March 29, 2009-December 31st, 2013 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank ADP Agricultural Development Program APS Agricultural Production Survey ATA Agricultural Transformation Agenda BMPIU Budget Monitoring and Price Intelligence Unit CAADP Comprehensive African Agricultural Development Program CDD Community Driven Development CPAR Country Procurement Assessment Report CPS Country Partnership Strategy CSDP Community and Social Development Project DA Designated Account EIA Environmental Impact Assessment EIG Economic Interest Group EMCAP Economic Management Capacity Building Project ERGP Economic Reform and Governance Project ERR Economic Rate of Return ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework FA Financing Agreement FCA Fadama Community Association FCT Federal Capital Territory FDF Fadama Development Facilitators FEM Finance and Expenditure Management FGN Federal Government of Nigeria FIKS Fadama Information and Knowledge Services FM Financial Management FMAP Financial Management Action Plan FMAWR Federal Ministry of Agriculture and Water Resources FMD Financial Management Department FMEnv Federal Ministry of Environment FMF Federal Ministry of Finance FMR Financial Monitoring Report FMS Financial Management System FPM Financial Procedures Manual FRR Financial Rate of Return ii FUEF Fadama Users’ Equity Fund FUG Fadama User Group GEF Global Environment Facility GDP Gross Domestic Product GES Growth Enhancement Scheme GPN General Procurement Notice IAR Institute of Agricultural Research IAR&T Institute for Agricultural Research and Training IAU Internal Audit Unit ICB International Competitive Bidding ICR Implementation Completion Report IDA International Development Association IFPRI International Food Policy Research Institute IFR Interim Financial Report IITA International Institute of Tropical Agriculture ILRI International Livestock Research Institute IPMP Integrated Pest Management Plan IP/DO Implementation Progress /Development Objective IRR Internal Rate of Return LCRI Lake Chad Research Institute LDP Local Development Plan LFD Local Fadama Desk LFDC Local Fadama Development Committee LG Local Government LGA Local Government Authority LGC Local Government Council M&E Monitoring and Evaluation MDG Millennium Development Goal MIS Management Information System MOU Memorandum of Understanding MTR Mid-Term Review NARIS National Research Institute NCAM National Centre for Agricultural Mechanization NCRI National Cereal Research Institute NEEDS National Economic Empowerment and Development Strategy NEPAD New Partnership for African Development NFCO National Fadama Coordination Office NFDO National Fadama Development Office NFDP National Fadama Development Project NFRA National Food Reserve Agency (previously Project Coordinating Unit under FMAWR) NFTC National Fadama Technical Committee NGO Non-governmental Organization NPV Net Present Value NRCRI National Root Crop Research Institute OP/BP Operational Policy/Bank Procedures (of the World Bank) PDO Project Development Objective PEMFAR Public Expenditure Management and Financial Accountability Review PFM Project Financial Management PFMU Project Financial Management Unit PHRD Policy and Human Resource Development Fund PIM Project Implementation Manual PMP Pest Management Plan PNA Participatory Needs Assessment PRA Participatory Rural Appraisal iii RPF Resettlement Policy Framework RRA Rapid Rural Appraisal RSS Rural Sector Strategy SA Special Account SACA State Action Committee on AIDS SEEDS State Economic Empowerment and Development Strategy SGCBP State Governance and Capacity Building Project SFCO State Fadama Coordination Office SFDC State Fadama Development Committee SFTC State Fadama Technical Committee SIP Strategic Investment Program SLM Sustainable Land Management SOE Statement of Expenditure SPA Subproject Agreement Senior Global Practice Director: Juergen Voegele Sector Manager: Simeon Ehui Project Team Leader: Adetunji Oredipe ICR Team Leaders: Vikas Choudhary, Abimbola A. Adubi iv NIGERIA THIRD NATIONAL FADAMA DEVELOPMENT (FADAMA III) PROJECT CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives, and Design .............................................. 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 7 3. Assessment of Outcomes .......................................................................................... 17 4. Assessment of Risk to Development Outcome......................................................... 30 5. Assessment of Bank and Borrower Performance ..................................................... 32 6. Lessons Learned ....................................................................................................... 34 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 37 Annex 1. Project Costs and Financing .......................................................................... 38 Annex 2. Outputs by Component ................................................................................. 39 Annex 3. Economic and Financial Analysis ................................................................. 42 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 57 Annex 5. Beneficiary Survey Results ........................................................................... 59 Annex 6. Stakeholder Workshop Report and Results................................................... 61 Annex 7. Summary of Borrower's ICR and Comments on Draft ICR ......................... 62 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 63 Annex 9. List of Supporting Documents ...................................................................... 64 Annex 10. Project Results Framework for FADAMA-III Additional Financing (Till June 2016) ……………………………………………………………………………….65 MAP …………………………………………………………………………………..73 v Data Sheet A. Basic Information THIRD NATIONAL FADAMA Country: Nigeria Project Name: DEVELOPMENT PROJECT (FADAMA III) IDA-44940, IDA- Project ID: P096572 L/C/TF Number(s): 52930, IDA-58490 ICR Date: 08/09/2016 ICR Type: Interim ICR FEDERAL REPUBLIC Lending Instrument: SIL Borrower: OF NIGERIA Original Total USD 250.00M Disbursed Amount: USD 235.00M Commitment: Revised Amount: Environmental Category: B Implementing Agencies: National Fadama Coordination Office, Fadama Coordination Offices of the 36 States of the Federal Republic of Nigeria and the Federal Capital Territory (FCT), Federal Ministry of Agriculture and Rural Development Cofinanciers and Other External Partners: Federal Government, State Government, Local Governments, Beneficiaries, IDA B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 06/27/2006 Effectiveness: 03/23/2009 03/23/2009 Appraisal: 02/25/2008 Restructuring(s): 03/19/2012 Approval: 07/01/2008 Mid-term Review: 11/07/2011 01/26/2012 Closing: 12/31/2013 12/31/2019 AF1 was approved on 06/28/2013 and AFII was approved on 06/07/2016. C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate vi Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Highly Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Quality at Entry Project at any time No None (QEA): (Yes/No): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Agricultural extension and research 14 14 Agro-industry, marketing, and trade 20 20 Crops 28 28 General agriculture, fishing and forestry sector 21 21 Other social services 17 17 Theme Code (as % of total Bank financing) Land administration and management 13 13 Other rural development 11 11 Participation and civic engagement 22 22 Rural services and infrastructure 43 43 Water resource management 11 11 vii E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli K. Ezekwesili Country Director: Rachid Benmessaoud Onno Ruhl Practice Simeon Ehui Karen Mcconnell Brooks Manager/Manager: Project Team Leader: Adetunji A. Oredipe Simeon Ehui Vikas Choudhary and Abimbola ICR Team Leader: Adubi Vikas Choudhary and Abimbola ICR Primary Author: Adubi F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The development objective of Fadama III Project is to increase the incomes of users of rural land and water resources on a sustainable basis. Revised Project Development Objectives (as approved by original approving authority) The development objective of Fadama III Project was not revised during Project implementation. The development objective of Additional Financing I was same as Fadama III. viii (a) PDO Indicator(s) Formally Original Target Actual Value Revised Values (from Achieved at Indicator Baseline Value Target approval Completion or Values* documents) Target Years (AF1) 75% of Fadama User households who benefit directly from Project supported activities Indicator 1 have increased their average real incomes by at least 40%. 30,000 beneficiary Value: N170,548.27 Value: 75% Value: 204,814.10 have increased their income to 151,902.46 Analysis of the administrative record and National database showed that the average Comments nominal income increased by 62.0% for direct project beneficiaries. However, by (Incl. % discounting with the prevailing CPI at project closure, the average real income of achievement) beneficiaries was 204,814.10 representing 20% increase in real income of beneficiaries. 20% increase in yield of primary agricultural products (disaggregated by crops / agro Indicator 2 forestry, livestock and fisheries) of participating households. Value: 0 The baseline value for crops: Rice: 2.24mt/ha Maize: 1.6mt/ha Sorghum: 1.26mt/ha Millet: 1.14mt/ha 20% 29.7% \|w 40% G/Nut: 1.16mt/ha Cowpea: 0.68mt/ha Soybean: 1.21mt/ha Yam: 11.53mt/ha Cassava 11.14mt/ha The productivity of nine (9) key enterprises indicated an overall average increase of 29.7% in the yields of major crops ranging from rice to cassava as listed above at the end Comments of the project. (Incl. % achievement) Additional financing 1 changed this indicator to “40% increase in yield of cassava, rice, sorghum and horticulture of participating households” 10% of the replacement value of the common assets used for income generating activities Indicator 3 of FUGs is saved annually (with effect from year 2). 0 10% 10% 7.32% As at project implementation completion, in December, 2013, a total of 39,715 FUGs had acquired 247,069 various assets valued at N11,499,789,040.85 with a total of Comments N842,047,315.41 saved in FUEF. Accounts across the 36 states representing 7.32% in (Incl. % savings. The 7.32% may not have been the true position of financial /savings, as the achievement) majority of the FUGs were at different status of implementation, and of which some of the savings had been given out as loan to group members for expansion of their business. Surveys at midterm and at Project closure to show that at least 75 percent of Fadama Indicator 4 users are satisfied with operations, maintenance & utilization of community-owned infrastructure & capital assets. 0 75% 75% 87.87% ix The PDO study on the contribution of SSCI and assets conducted at mid-term in 2011 Comments showed that 81.3% of the assets’ beneficiaries were satisfied with the operation, (Incl. % maintenance, and utilization of productive assets acquired by them. The RRA conducted achievement) at Project end reported that 87.87% of the assets’ beneficiaries were satisfied with the operation, maintenance, and utilization of productive assets acquired by them. Physical verification of operations, maintenance, and utilization of assets at mid-term and at Project closing by surveys of randomly selected sites shows that at least 50% of assets Indicator 5 & community0owned Infrastructure are operating satisfactorily and are maintained and utilized. 0 50% 50% 83% The PDO study on the contribution of SSCI and assets showed that 89% of the Comments infrastructure and assets acquired were in good condition and working satisfactorily. (Incl. % However, the RRA survey conducted at the end of the Project in December 2013 achievement) indicated that 83% of the infrastructure and assets acquired were in good condition and working satisfactorily. * The targets in this column represent those from AF1. The targets have since been adjusted further for AF2, approved in May 2016. (b) Intermediate Outcome Indicator(s)** Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years 1. By Mid-Term Review, 75% of At endline (December participating 2013) a total of 4,726 communities have (87.4%) out of 5,407 Local 0 75% registered FCAs Development Plans prepared LDPs through (LDPs) developed participatory processes. through a participatory process. 2. By end of At endline 3,438 out of Project, 75% of the 4,561 approved FUGs and FCAs LDPs representing 0 75% have fully (100%) 75.4% has been implemented implemented. approved LDPs. 3. By end of At endline a total of 685 Project, 20% of LGAs participated in participating Local the project, while 396 Government (57.8%) LGAs have Authorities 0 20% integrated LDPs in their integrate Local annual work plan and Development Plans budget (AWPB). into their annual plans. x 4. 40% of participating Out of 5,407 registered Fadama FCAs, 3,717 (68.7%) Communities have FCAs have at least one at least 1 productive productive rural infrastructure infrastructure 0 40% disaggregated by Feeder constructed / road rehabilitated constructed/rehabilitated (disaggregated by , culverts, and market feeder roads, stalls etc. culverts/small bridges). Small Bridges 0 67 Culverts 0 405 market stalls 0 1736 lock up shops 0 709 Cold Room 0 177 Feeder Roads 0 153 roads (531 KM in total) Rehabilitated Feeder Roads 0 137 roads (413 KM in total) Constructed 5. 30% increase in the number of Fadama users A total of 31,673 procuring rural (49.2%) out of 64,347 advisory services registered Fadama users 0 30 in the participating procured advisory communities (EIG services. disaggregated by gender and vulnerable groups). 6. 50% increase in the number of Fadama farmers with access to Fadama Farmers with agricultural inputs access to Agric inputs at (EIG disaggregated 0 50 endline was 373,211 by gender and out of 965,157(38.7%). vulnerable groups, age and farm size, land use, crop, classes of technology, etc.). 7. 20% increase in Available administrative income from sales records showed that of value-added beneficiaries realized ₦ agricultural 419,016,976.95 as products. against ₦ 0 20 215,925,522.25 income after value addition to products representing 94% increase in income. 8. 30% of FCAs 2,811 (52%) FCAs out have access to of 5,407 FCAs had market 0 30 access to market information. information at endline. xi 9. 30% increase in the number of 373,625(38.7%) out of Fadama farmers 965,157 Fadama receiving extension farmers had access to services from 0 30 extension services from ADPs the ADP at closing of (disaggregated by the project. gender, vulnerable groups, and land use). Disaggregation by 72,226 out of 373,625 vulnerable groups. (19.3%) of vulnerable groups had access to extension services. Disaggregation by Male Groups: 206,448 Gender (Male) (55.3%) had access to extension services at endline. (Female) Female Groups: 94,006 (25.2%) accessed extension services at endline. 10. 20% increase in 350 out of 5,407 (6.5%) new technology FCAs registered have adopted in Fadama adopted new technology communities e.g., Sawah Technology, (disaggregated by 0 20 floating fish feed, gender, vulnerable artificial insemination, groups, age, land Bio-gas production, and use and farm size). utilization. Livestock At endline 26 (7.4%) FCAs have adopted new technology in livestock production e.g., artificial insemination. Agro forestry At the close of the project, 187 (53%) FCAs have adopted new technology in agro forestry. Enhanced activities on Agro forestry due to Up scaling of SLM practices Crops 137 (39%) FCAs have adopted new technology in crop production e.g., Sawah rice production. ** Result framework of AF1 was revised significantly which is attached in Annex 10. xii G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 12/26/2008 Satisfactory Moderately Satisfactory 0.00 2 06/23/2009 Satisfactory Moderately Satisfactory 1.46 3 12/18/2009 Satisfactory Moderately Satisfactory 23.78 4 06/23/2010 Satisfactory Satisfactory 47.42 5 11/30/2010 Satisfactory Satisfactory 77.03 6 02/11/2011 Satisfactory Satisfactory 86.63 7 09/20/2011 Satisfactory Satisfactory 115.79 8 05/19/2012 Satisfactory Satisfactory 146.39 9 09/19/2012 Satisfactory Satisfactory 168.00 10 05/16/2013 Satisfactory Satisfactory 200.10 11 11/19/2013 Satisfactory Satisfactory 235.29 12 03/12/2014 Satisfactory Satisfactory 260.29 13 09/02/2014 Satisfactory Satisfactory 264.86 14 02/20/2015 Satisfactory Satisfactory 266.52 15 07/08/2015 Satisfactory Satisfactory 270.58 16 01/11/2016 Satisfactory Satisfactory 273.54 17 07/14/2016 Satisfactory Satisfactory 289.26 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring and Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in US$, Millions Reallocation of proceeds 03/19/2009 N S S 115.79 between project components Additional financing 1 of $200 million, revision to the results framework, focus on priority 06/28/2013 N S S 200.10 value chains of cassava, rice, sorghum, and horticulture; geographic focus on 6 priority states. Second Additional Financing of US$50 million, revision to the Results Framework, focus on 06/07/2016 Y S S six conflict affected states, AF1 closing date extended to December 31, 2019. xiii I. Disbursement Profile xiv 1. Project Context, Development Objectives and Design The Third National Fadama Development Project (P096572) was approved by the Board on June 1, 2008, for a total IDA Credit of US $250 million. It became effective on March 23, 2009, and the planned closing date was December 31, 2013. However, the project benefited from a first Additional Financing (AF) of US $200 million that was approved by the Board on June 28, 2013 and became effective on October 21, 2013. The revised closing date following the first AF was then shifted to December 31, 2017. Recently the Federal Government requested a second AF of US $50 million for the project under emergency processing procedure. This proposed AF2 (North East Food Security and Livelihood activities – P158535) seeks to respond to the urgent food and livelihood needs of households who have been affected by conflicts in the six North East states in Nigeria -- Borno, Yobe, Adamawa, Taraba, Bauchi, and Gombe. The request for the second Additional Financing was going to bring the age of the project to 11.5 years since the AF2 is now slated to close on December 31, 2019. Accordingly, a policy waiver was requested for the deferral of the first ICR. However, according to paragraph 58 of BP 10.00, if an Additional Financing will extend the closing date of the parent project by more than 10 years from the original approval date, an interim ICR is required to be prepared before Management’s decision on appraisal and negotiations of such additional financing, and a supplemental ICR is to be prepared upon the full Project completion. Given the emergency nature of the operation, a waiver was requested to allow the first ICR to be completed six months after approval of the waiver rather than before Management’s decision on appraisal and negotiations. This interim ICR is being prepared under that broader context. This ICR only deals with the implementation of FADAMA-III and covers the implementation period from 2009 to December 2013. This ICR does not deal with the implementation of FADAMA-III Additional Financing (AF1) which has disbursed 26.81% till June 2016. Nonetheless, this ICR does provide a brief summary of implementation progress of the additional financing. “Fadama” is a Hausa name for irrigable low land, usually low-lying plains that overlay shallow aquifers that straddle Nigeria’s major river system. The World Bank supported FADAMA -I project to help develop irrigable Fadama land. Since then, the World Bank have supported a series of successive projects under FADAMA Series. These projects are now working beyond Fadama lands, but the brand name of Fadama has stuck for these Community Driven Development (CDD) agricultural projects. The table 1below provides a summary and evolution of FADAMA series of projects. Table 1. Summary of FADAMA Series of Projects Duration IDA Loan Project approach Geographical Coverage FADAMA-I 1992- $67.5 Top-down, building on Seven core states (Bauchi, 1999 million Agriculture Development Gombe, Jigawa, Kano, Program and emphasis on Kebbi, Sokoto, and Zamfara). infrastructure investment. FADAMA-II 2003- $69.9 Bottom-up, CDD building on 11 states (Adamawa, Bauchi, 2009 million FADAMA-I with the Gombe, Imo, Kaduna, Kebbi, incorporation of local Lagos, Niger, Ogun, Oyo, development plans for a more and Tarana) and the Federal inclusive model. Capital Territory (FCT), with the African Development Bank covering six additional 1 states (Borno,Katsina, Kogi, Kwara, Pleateau, and Jigawa), bringing the total to 18. FADAMA-III 2008- $250 Bottom-up, CDD, building on 36 states and the Federal 2013 million FADAMA-II with the Capital Territory (FCT). incorporation of FADAMA User Equity Fund for a more sustainable model. FADAMA- 2013- $200 Bottom-up, CDD, and Value Six chosen states (Anambra, AF1 2019 million chain approach with focus on Enugu, Kano, Kogi, Lagos, cassava, rice, sorghum, and and Niger). horticulture with export potential. FADAMA- 2016 - $50 million Bottom-up, CDD approach for Six North East states affected AF2 2019 restoration of the livelihoods by conflict in Nigeria (Borno, of conflict affected Yobe, Adamawa, Taraba, households. Bauchi, and Gombe). 1.1 Context at Appraisal Nigeria is one of the largest economies in Africa and has a very large agricultural sector which, in 2005, accounted for almost 60 percent of the total labor force, generated one-third of GDP, and 5 percent of total exports. Until the early 1970s, Nigeria was self-sufficient in food production with a small surplus for export and agriculture was the main foreign exchange earner. However, the sector stagnated thereafter for a number of reasons, key among them was the discovery, exploitation, and exports of oil that resulted in a subsequent policy shift and resources allocations from agriculture to the oil-industry. Since agriculture employs an overwhelming share of the Nigerian labor force, stagnation of the sector resulted in increased poverty incidence. The National Economic Empowerment and Development Strategy (NEEDS) explicitly recognized the strategic importance of the agricultural sector and lists special initiatives that the federal government intends to pursue in increased food and agricultural production. The NEEDSs sets out a series of quantitative performance targets to be achieved, including 6 percent annual growth in agricultural GDP, US $3 billion per year in agricultural exports, and 95 percent national food self-sufficiency. The agricultural policy objectives outlined in the NEEDSs were complemented by those contained in the New Agricultural Policy. In addition to the special initiatives outlined in the NEEDSs, the government developed a seven- point agenda for economic development based on the recognition that achievement of substantial and sustainable growth can be realized only if productivity and competitiveness of Nigerian agriculture can be improved. Pursuant to these overarching strategic goals, the government professed to adopt the following key policy option: a) promote a fully integrated and coordinated agricultural revolution through a functional public-private sector collaborative approach; b) promote a private sector-led input supply and distribution system; c) provide the enabling policy environment; d) support all-season farming by promoting rainfed and irrigated farming with an emphasis on Fadama agriculture; e) develop markets and agribusiness with the provision of adequate infrastructure, such as, rural feeder roads, good rail network and water transportation, communication, power and water resources. The expected outcomes were: (a) diversified economy; (b) food security; (c) employment generation; (d) economic linkages; (e) increased exports; (f) poverty reduction; and (g) environmental sustainability. 2 To support the Government of Nigeria in increasing rural income and reducing poverty in rural areas, the World Bank approved The Third National Fadama Development Project (Fadama III) as a Specific Investment Loan (SIL) in June 2008. Fadama III was a national project operating in all 36 Nigerian States and the Federal Capital Territory (FCT). The project became disbursement effective on March 23, 2009, launched on August 23, 2009, and was closed on December 2013. The total cost of $450 million was slated to be shared amongst the World Bank (55.6 percent) and the Federal, State, and Local Governments in the ratio of 5.1 percent, 17.1 percent and 8.9 percent respectively while the participating communities were expected to contribute about 13.3 percent. About 20 percent of beneficiary contributions were estimated to be in kind (materials and/or labor). The project builds upon two previous projects. The first National Fadama Development Project (NFDP- I), implemented from 1992-1999 emphasized exploiting the aquifers using simple drilling techniques to increase dry season crop production. Wash bores were also provided to crop farmers through simple credit arrangement aimed at boosting aggregate crop output. The lessons learnt in the NFDP-I informed the design of the Second National Fadama Development Project (NFDP II) to include as beneficiaries, non-crop farmers, marketers and other stakeholders who are directly or indirectly affected by the Fadama resource. NFDP-II adopted a community driven development (CDD) approach to provide productive assets to the poor and economically vulnerable groups and was implemented in 12 states. African Development Bank also supported the initiative in additional six states bringing the total participating states to eighteen. Encouraged by the positive results of NFDP-II, the Government of Nigeria decided to roll out the project to the entire country and sought World Bank assistance to finance the third phase of the project. Fadama III’s primary objective was to support the growth of non-oil sectors through the development of productive infrastructure that will enhance agricultural productivity and the diversification of livelihoods. It involves building participating communities’ social capital and their capacity to provide rural services to the poor. It also promotes the socially inclusive and environmentally sustainable management of natural resources. The project covered up to 20 Local Government Authorities (LGAs) in the States that did not benefit from Fadama II and up to 10 new LGAs in the Fadama II states. The project aligned with The National Economic Empowerment and Development Strategy (NEEDS), which aimed to empower the poor to escape poverty by creating a conducive environment for engaging in economic activities. The project was also aligned with the goals of the New Agricultural Policy (NAP) and the Rural Sector Strategy (RSS) as well as the Comprehensive African Agriculture Development Program (CAADP). Rationale for Bank Involvement The project was appraised in this context. It builds on the achievements of the two predecessor projects (NFDP I and II) which has yielded positive outcomes and helped introduced the concept of community-driven development in Nigeria. The proposed project supports the government’s strategic objective to enhance growth in sectors other than oil to achieve increased food security, reduce poverty, and create employment and improved opportunities in rural areas. The project focused on: (i) financing investments in productive community infrastructure to increase agricultural productivity and diversity source of livelihood; (ii) building the capacity of 3 community organizations to increase the stock of social capital; (iii) strengthening the capabilities of participating states and local governments to deliver services to the rural poor; and, (iv) promoting socially inclusive and environmentally sustainable management of natural resources. The project approach relied on facilitation for demand-driven investments and empowerment of local community groups to improve productivity and land quality. Fadama III aligned with Country Partnership Strategy 2005-2009 which supported the implementation of Nigeria’s economic growth and poverty alleviation strategy as outlined in the National Economic Empowerment and Development Strategy (NEEDS) and the state-level State Economic Empowerment and Development Strategy (SEEDS). The Bank’s continued support for the Fadama program and rolling it out nationwide was expected to facilitate implementation over a broad geographic area and innovation in the environmental and financial sustainability of interventions. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The development objective of Fadama III Project is to increase the incomes of users of rural land and water resources on a sustainable basis. The project had the following outcome indicators: 1. 75% of FADAMA user households who benefit directly from project supported activities, have increased their average real incomes by at least 40%. 2. 20% increase in yield of primary agricultural products (disaggregated by crops/agroforestry, livestock and fisheries, etc.) of participating households. 3. 10% replacement value of the common asset used for income-generating activities of FUGs is saved annually (with effect from year 2). 4. Surveys at mid-term and at project closing to show at least 75 percent of Fadama users are satisfied with operations, maintenance and utilization of community-owned infrastructure and capital assets acquired through the project. 5. Physical verification of operations, maintenance, and utilization of assets at mid-term and at project closing by surveys of randomly selected sites shows at least 50% of assets and community owned infrastructure are operating satisfactory and are maintained and utilized. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO was not revised during the course of project implementation. 1.4 Main Beneficiaries The Project had a national coverage and in each of the 36 States and the FCT, the Project fully covered up to 20 Local Government Authorities (LGAs) for the 19 states that did not benefit from Fadama II operation, while in the Fadama II states, up to ten LGAs were added to the ten LGAs that have already benefited. The Project’s target groups include: (a) the rural poor engaged in economic activities (farmers, pastoralists, fishermen, nomads, traders, processors, hunters and gatherers as well as other economic interest groups); (b) the disadvantaged groups (widows, the 4 handicapped, the sick and other vulnerable groups, including people living with HIV/AIDS and unemployed youths; and (c) service providers, including government agencies, private operators, and professional/semi-professional associations operating in the Project areas. The main beneficiaries of the project were:  A total of 965,157 households comprising of 383,058 (40 percent) female and 582,099 (60 percent) male, grouped into 64,347 FUGs and 5,407 FCAs benefited directly from the project.  Also, it was expected that the project would reach at least 2 million indirect beneficiaries households, as members of the Fadama communities not benefitting directly from subprojects, and non-Fadama communities who will gain from the investments in public infrastructure and additional income and employment effects. 1.5 Original Components The project had the following six components: Component 1. Capacity Building, Local Government, and Communications and Information Support (US$87.5million): This component includes: (a) capacity building support for community organizations; (b) capacity building support to local governments; and (c) communications and information support. The objective of this component is to support measures to build the capacity of Fadama Community Associations (FCAs) and their constituent Economic Interest Groups (EIGs), Fadama User Groups (FUGs), to access project advisory services and project funding and that of the project staff to successfully implement the project. Component 2. Small-Scale Community-owned Infrastructure (US $73.57 million) The objective of Component 2 is to support the creation of economic infrastructure and local public goods that would improve the productivity of Fadama user households. Under this component, beneficiaries are required to pay 10 percent of the costs of construction and rehabilitation. The sub- component was geared to finance community-owned infrastructure, such as surface and ground water irrigation facilities; farm land clearing and development; on farm storage facilities; farm internal roads; market infrastructure; access roads linking farm to markets/processing centers; and hydraulic structures to enhance production capacity of farmers in a sustainable manner. Component 3. Advisory Services and Input Support (US $39.5 million) Under this component the Project financed: (a) advisory services - the Project provided support to empower Fadama users -- farmers/pastoralists and other economic interest groups (EIGs) working within their organizations and through their LGAs--to purchase advisory services from both public and private sources; and (b) input support - this facility involves the adoption of new technology by the farmers to enhance their financial capacity to purchase farm inputs (mainly seeds, fertilizers and agrochemicals) and to build savings from incremental earnings to finance future purchases. The Project used matching grant arrangement to deliver advisory services and input support. 5 Component 4. Support to the Agricultural Development Programs (ADPs), Sponsored Research, and On-Farm Demonstration (US $37.43 million) The Project provided support to the ADPs to carry out the following specific and limited functions: (a) support to advisory service providers; (b) quality assurance of advisory services; (c) training of facilitators; (d) sponsored research and on-farm demonstrations; and (e) training of extension staff. Component 5. Asset Acquisition for Individual FUGs/EIGs (US $150 million) A matching grant was used as seed money to empower smallholder and poor farmers to acquire capital assets which they used to undertake a broad range of small-scale income generating activities as well as improve farmers' access to markets and complementary support that added value to farm produce. This approach to financing is adopted due to the low performance of rural financial markets in Nigeria, which are particularly deficient and limited in terms of outreach in the rural areas. Component 6. Project Management, Monitoring and Evaluation (US $59.30 million) This component was arranged to provide coordination and oversight function through: (a) technical assistance to national and state level implementation coordination; (b) project coordination; and (c) project monitoring and evaluation. 1.6 Revised Components N/A 1.7 Other significant changes At mid-term review on 19th March, 2012, the Project Management did a level II restructuring of the project by re-allocating the balance of Project (IDA) fund for Grants and Fund across subprojects components to carry out capacity building of stakeholders, provide support for farmers to procure necessary inputs, and acquire productive assets needed for effective operation of their farming activities. This reallocation of funds was considered necessary to align better with the Federal and State Governments agenda on the implementation of the Agricultural Transformation Agenda and achieve better harmonization of agricultural programs and enjoy political support. No major changes were made to the implementation arrangements, but emphasis was made on consolidating project gains and strengthening the M&E/MIS system. Resulting from the south – south learning exchange from India and Srilanka, the project introduced the concept of federation of FCA at local government and state levels. 1.8 Progress Report on the Fadama III Additional Financing Background: The Nigeria government launched an Agricultural Transformation Agenda (ATA), in 2011 specifically to improve value chains of prioritized agricultural commodities. The Bank responded to the request of the government for support by providing additional financing to the Fadama III project to meet the urgency of ATA and provide an existing well known and successful platform to transform agriculture in the country. As such, a sum of US $200 million was approved in June 2013, by the board of the World Bank as Additional Financing to Fadama III Project. 6 The Additional Financing (AF) is aimed at scaling up the impacts made under Fadama III and also support clusters of farmers in six selected states with comparative advantage and high potential to increase production and productivity of cassava, rice, sorghum and horticulture value chains. These farmers will be linked to organized markets including the planned Staple Crop Processing Zones (SCPZs) when established. The project also plans to facilitate linkages between the federation of producers and existing processors. The selected States under additional financing are Kogi, Anambra, Enugu, Niger, Kano, and Lagos. Provision was also made for other States to join, under a strict criterion to participate in Fadama III AF. The objective of the additional financing is the same as the parent Fadama III Project which is to sustainably increase the incomes of Fadama Users across the 36 States and the FCT. In addition, the Fadama III AF targets a narrower geographical focus on selected value chains with cluster farmers. On the average, the project is expected to reach about 317,000 direct beneficiaries households in clusters and 1.4 million indirect beneficiaries. Achievement: The project is on track for most activities, and significant progress has been recorded. The disbursement rate as at August, 2016 stood at 26.8 percent. The slow progress is attributable to the steep learning curve experienced by the project following the introduction of the Treasury Single Account system by the Federal Government of Nigeria. The performance of States in payment of counterpart fund is satisfactory as the governments of the six States paid their counterpart fund for 2015, while those of additional four States paid theirs for 2016. Others States have got approvals for the payment of their counterpart fund but are awaiting release of the fund. Out of a total of 2,224 business plans prepared, 1,551 have been approved for disbursement while 663 are being implemented across the States. These 663 business plans would support 6,234 hectares of farms across the four value chains in the core and production cluster States. The number of business plan implemented is expected to drastically rise now that the rains have been well established across the participating States. Harvesting of tomatoes cultivated during the dry season has been completed in Kano while sorghum, rice, and cassava have been planted during this year’s rainy season across all the participating States. The construction/rehabilitation of the Agricultural Equipment Hiring Enterprises (AEHE) centers has been completed in Anambra, Niger, and Kogi States, while those of other States are at varying stages of completion. In Niger, the AEHE has generated about N 2.5 million during this growing season. In addition, the construction/rehabilitation of roads and irrigation infrastructure around different value chains is on- going across the entire core States. Given that the project has just started full implementation, its achievement and factors affecting implementation and outcomes to date cannot be evaluated. However, to provide a progress update on the results so far, its current result framework, as of June 2016, is attached in Annex 10. 2 Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry The Fadama III project design built on the major lessons and experiences that emerged from the implementation of Fadama II. It was designed to scale up the intervention of the Fadama II project in additional states while deepening the approach and coverage of the existing states. Fadama II introduced an innovative local development planning (LDP) tool and built on the success of the community-driven development mechanisms. The Fadama I and II successfully refined approaches for improved utilization of the Fadama land. The cumulative positive impact of these earlier successful Bank-assisted projects provided a robust platform for the design of Fadama III as a 7 small-scale and community-based approach to Fadama development in an environmentally sensitive manner. The project was designed to cover 20 LGAs in each of the 36 states of the country and the FCT. The project was in line with the CPS for Nigeria -- Report No. 32412-NG; which was designed to support the implementation of Nigeria’s economic growth and poverty alleviation strategy as outlined in the NEEDS. The National Economic Empowerment and Development Strategy (NEEDS) explicitly recognized the strategic importance of the agricultural sector and lists some special initiatives that the federal government intended to pursue to promote increased production. The NEEDS sets out a series of quantitative targets to be achieved as from 2008, including 6 percent annual growth in agricultural GDP, US $3 billion per year in agricultural exports, and 95 percent national food self-sufficiency. The agricultural policy objectives outlined in the NEEDS were complemented by those contained in the New Agricultural Policy. In addition to the strategic objectives outlined in the NEEDS, the Government also unveiled a seven-point agenda for economic development. The Fadama program was explicitly recognized as part of the plan. The design of the project therefore built on the CDD approach which was successful in the implementation of the previous project and also introduced an innovative savings mechanism called FUEF. The latter provided for the setting aside of 10 pecent for depreciation of assets in order to serve as sustainability provision on the project and to facilitate the observed desire of participants to continue investment after completion of the matching grant. As part of the lessons from Fadama II project, the design also incorporated the strengthening of the extension system through support to the Agricultural Development Programs (ADPs), sponsored research and on adaptive farm research. Given the success of the past project, the design engendered partnerships. The Government of Japan financed over eight studies as part of the preparation of the Project through a Policy and Human Resources Development (PHRD) Fund grant. The TerrAfrica Partnership of NEPAD also provided technical support in design of the agenda for sustainable land and watershed management which was supported under the Project. Thus GEF was utilized as part of the Project design which fell under the umbrella of the GEF Strategic Investment Program for Sustainable Land Management in Sub-Saharan Africa. The Quality at Entry was assessed as satisfactory. Assessment of Project Design The Project design supported the government’s strategic objective to enhance growth in sectors other than oil to achieve increased food security, reduce poverty, and create employment and improved opportunities in rural areas. The Project aligned to achieve the goals of the New Agricultural Policy and the Rural Sector Strategy, as well as the Comprehensive African Agriculture Development Program’s (CAADP) target of 6 percent agricultural growth, objectives of TerrAfrica Partnership and its GEF Strategic Investment Program (SIP) for Sustainable Land Management (SLM) in Sub-Saharan Africa (SIP, led by the Bank and NEPAD). The PDO was also relevant, appropriate and consistent with the project’s planned activities and with the government’s long term rural development strategy. The indicators were both qualitative and quantitative and made adequate provision to support evidence of impact. As compared with the previous project, the PDO extended the coverage of the project to the “ users of rural land and water resources on a sustainable basis.” This allowed inclusiveness and a target that covered more vulnerable groups than the users of “Fadama land” alone. 8 The project components were properly aligned to the objectives and articulated properly to address the needs identified. The scope of a component under Fadama II; “Demand responsive advisory services” was expanded to include “Input support” based on lessons of Fadama II. An appropriate indicator was introduced for its measurement. This was very effective and it enhanced the achievement of the PDO and also accelerated the disbursement of the project. The design also introduced a new component IV on “Support to ADP” sponsored research and on-farm demonstration in order to strengthen the quality of extension systems and support for on-farm adaptive research. This was an important addition because of the weak adaptive research system, but the design made it be counterpart fund driven and this reduced its expected impact on the outcome, given the delays and non-payment of the counterpart funds in some participating states. Therefore, implementation of the component could not be coordinated appropriately. Moreover, there was a lack of cordial relationships between the Programme Manager of ADP and the Project Coordinator at the state level in some states, which also affected the implementation of the component. It was more of a struggle for control of resources and expected roles of the NFCO and ADP on the component implementation, which the design did not clearly spell out during project preparation. Assessment of Risks The major risks identified at appraisal were: (i) inadequate sustainability of subprojects after the project has closed and/or the grant in completed; (ii) faltering government commitment to the CDD approach; (iii) non-payment of Counterpart Contributions; (iv) gender biases curtail involvement of women and undermine principles of inclusion and equity; (v) collusion and/or intimidation at the community level to subvert procedures of transparency and accountability in management of funds; (vi) bureaucratic resistance to the initiative on the part of communities; (vii) potential elite capture and/or abuse of matching grant/grant programs; (viii) insecurity and violence in the Niger Delta zone may hinder community involvement and project implementation. The overall risk was assessed Moderate. These risks were correctly identified and appropriate mitigation measures provided. Given that Fadama III was building on a previous project, the experience under the Fadama II was expected to provide a guide for addressing any major issues during implementation. Adequacy of participatory process The project was prepared in a highly participatory manner. The government assembled a multi- sectoral team of stakeholders who played a critical role in the implementation of the project. The team, working under the NFRA (National Food Reserve Agency, previously Project Coordinating Unit under FMAWR), included key staff of the Federal Ministry of Agriculture and Rural Development (FMARD), Federal Ministry of Environment, Federal Ministry of Information, The Agricultural Development Programmes (ADPs) , State Ministries of Agriculture, National Fadama II Coordinating Office, Federal Ministry of Finance, and some notable NGOs. At design, extensive consultations were held with beneficiaries, local governments, local communities, NGOs, researchers, donors, and technical specialists to discuss the project ideas. Moreover, the government had written to express a strong interest in having the project implemented in all 36 states of the federation including the Federal Capital Territory (FCT). Therefore, the project design at appraisal was considered adequate and had high degree of relevance. There was high government commitment and the overall project design was satisfactory. 2.2 Implementation 9 The Board approved the IDA credit of USD 250 million on July 1, 2008, to assist the Federal Government of Nigeria to increase the income of users of rural lands and water resources in a sustainable manner throughout the country. Fadama III Project was implemented at the Federal level, and in all 36 States, including the Federal Capital Territory (FCT) as well as in 20 Local Government areas of each state, by the respective State Ministries of Agriculture. The project became effective on March 29, 2009, and the local development plans (LDPs) was used as an innovative instrument to aggregate the participatory investment plans of the communities and promote community-driven development (CDD) in implementation through disbursement to communities for project implementation. To scale up impacts and development effectiveness of the project, the Board of the Executive Directors also approved on June 28, 2013, an additional Credit amount of US $200 million in line with OP/BP 10.00 by aligning it more closely with the new Agricultural Transformation Agenda (ATA) of the Federal Republic of Nigeria. The project hit the ground running regarding implementation, given that it was a follow-on project to a very successful Fadama II. Implementation began well after effectiveness in 2009, and the project was well received and recognized by many at national and local levels. The project had offices at the national, state, and local government levels which facilitates interaction and dialogues with the government officials and project beneficiaries. There was no major restructuring of the project apart from the restructuring on Funds re-allocation that was carried out during the mid - term of the project in April 2012. Some of the key factors that affected the implementation of the project and its outcomes are the following: i. Partnership for Innovative activities: About thirty identified innovative activities were introduced into the project implementation across the States through partnerships. These activities increase the level of benefits to FCAs/FUGs, enhance the achievement of the PDO and also ensure sustainability of sub-projects. These innovative activities can be categorized as collaboration/partnership and sole initiatives. Such collaborations are with research institutes, donors, regional bodies, agro firms, and other units within the World Bank, etc. The sole efforts include bio-gas production, improved use of ICT services, Fadama village concept, etc. These innovative activities enhanced the outcome of the project and it won an Innovation Day Award based on its activities on “Conversion of Waste to Wealth” during the competitive selection of projects for Innovation in 2011, for the World Bank Innovation Day Celebration. The project also collaborated with AFTCS and TWICT units of the Bank through, a programme on “ICT for Social accountability” which was piloted for the project in two states in Nigeria. The programme primarily deployed the use of information and communication technologies (ICT) –primarily the mobile phone –to engage Fadama communities and enhance social accountability. Through a mobile reporting tool and a network of reporters, beneficiaries of the project were reporting on quality of service received. The citizen feedback was then integrated into the monitoring and evaluation (M&E) system of the project. The project won “ICT for Accountability” team award in 2012. Before the end of the project life, it was yielding positive results and almost achieving the set targets set for its PDO. It won the Africa Region VPU Award in 2013. The project also collaborated with National Center for Agricultural Mechanization (NCAM)/Kinki University, Japan in 2010, on Sawah Eco- technology for Rice Farming (SERIF) in five pilot States of Benue (North Central), Delta (South South), Ebonyi (South East), Kebbi (North West), Lagos (South West) as well as FCT. Results obtained from the demonstration sites was very positive and it indicated that it is possible to have paddy yield increase of 6.5t/ha and 7.2t/ha as witnessed in the demonstration sites in Ebonyi and Kebbi States respectively, against traditional paddy yield of 1.5-2.5t/ha. The adoption by farmers increased yield of rice in states. 10 In collaboration with JICA, the project also initiated the Fadama information and knowledge services (FIKS) project to complement and enhanced its objectives and activities through JSDF funding support. FIKS supported mobile based advisory services in four piloted states in order to enhance the farmers’ problem identification and response system. To assist this initiative, the Project undertook sponsored research through entering into a Performance-Based Contract with public and private research centers, including centers of excellence such as the International Institute of Tropical Agriculture (IITA), the West African Rice Development Center (WARDA) and the International Livestock Research Institute (ILRI) to develop technical propositions/recommendations/solutions to problems and agronomic issues on crop, livestock and other activities. The project also visited India in a south-south learning exchange visit to review various models on mobile- based agricultural advisory services and eventually collaborated for guidance support with IFFCO Kisan Sanchar Ltd. (IKSL) that operates the mobile-based agro advisory services. Both are headquartered in New Delhi, India. The FIKS platform eventually provided a valuable framework for the government’s growth enhancement scheme under the Agricultural Transformation Agenda. (ATA) in 2013. The project also collaborated with USAID-MARKETS to train the FCA members on business plans and farm management through its National Agricultural Enterprise Curriculum (NAEC) modules. ii. Effective Supervision system: The coverage of Fadama III in 36 states including FCT and operation in about 685 local councils as well as the formation and monitoring of over 200,000 FCAs was seen as a major challenge during the design stage. Therefore, the project put in place a rigorously thought-out and designed supervision strategy, that includes ad- hoc utilization of third-party monitoring, use of independent consultants, and ad-hoc state and zonal implementation support missions. The project also established six zonal offices which were well staffed to coordinate activities of a group of six to eight states and conduct zonal supervision missions. This enhanced data collection, competitive spirits, and achievement of project outcomes. The Zonal Coordinators reported to NFCO on regular basis and coordinate reports and activities at the regional level. This assistes an oversight function at the National level and also creates layers of a monitoring system for the Bank’s implementation team. The regular workshops, rendition of M&E reports, comparison of results across states, coupled with an effective communication system facilitates support and coordination on the project. iii. Federation of Fadama Community Associations (FFCAs): Under the South-South Cooperation, the Fadama project undertook a study tour of India and Sri Lanka for learning experiences on intensification of federation of community groups, use of agricultural technological innovations and ICT, as well as promoting rural savings-credit revolving scheme. This resulted in the organization and establishment of the Federation of Fadama Community Associations (FFCA) with a revolving funds scheme and a pilot of mobile- based agricultural advisory services on the project. Most of the states with strong FFCAs have diversified their earnings and also served as strong aggregating units for their members. This has helped the sustainability of project activities. Many FFCAs have accumulated their FUEF savings and are in the process of establishing microfinance banks on lines of the Plateau state that established “Fadama Farmers Microfinance Bank.” To 11 provide input to farmers, FFCA in Bauchi State, built and established a One-Stop-Shop- Centre for farmers. iv. Irregular payment of Counterpart Funds: One of the factors that delayed project implementation was the irregular payment of counterpart funds by the states and local governments. Irregular payments led to high staff turnover in some cases and delayed some aspects of the project specified for support through counterpart funding. This affected component IV implementation and the functioning of some local Fadama desk office operations at local government councils. However, given that the project was effective and functional in 37 states and 685 LGAs, the effects of default/delay in some states was not significant on the project outcome. v. Delayed payment /unwillingness to pay beneficiary contribution: At the inception of the project, implementation was sluggish and only few LDPs could be implemented because of lack of beneficiary contribution. This was because of high poverty rate and sometimes the lack of trust and unwillingness of the beneficiaries to commit their funds. As such, at the beginning of the implementation especially during the first year of implementation, the grant/ beneficiary contribution ratio started with 50:50 and later to 60:40 and then to 70:30 for Assets. The 10 percent contribution for community infrastructure was also not forthcoming initially until the project management carried out a rigorous awareness campaign for community participation in order to prevent elite hijack. vi. Communication support and establishment of Fadama Community Radio: The project funded extensive communication and electronic media materials in order to create awareness and prevent elite hijack. The communication strategy was well established and adequate. It supported the establishment of one pilot community radio (CR) station in Kutigi, in Niger state. The Community radio is owned, operated, and run by the Fadama community on a volunteer basis. The increased awareness and access to information enhanced the achievement of the project outcome. vii. Gender and Governance: The project took commendable steps to ensure inclusive and equitable Community participation at the FUG and FCA levels, thus addressing the issues of gender and governance. Steps were also taken to strengthen the feedback loop between beneficiaries, facilitators, and SFCOs. To enable this, hotlines were established to allow beneficiaries report to SFCOs on cases of concerns or complaints on sub-project implementation. The gender gap was substantially reduced and gender mainstreaming was largely complied with. The project made it mandatory to have a third of executive members of FCAs as women. It also established project support for the vulnerable population of which gender was well classified. The project data was well disaggregated on gender basis, and the evidence of many of the women groups were very successful. At closing, the targeting was very efficient and women participation was about 40 percent. According to the impact evaluation report, the targeting had significant impact on income increase. For example, impact across gender shows that FIII female beneficiaries income increased by 31% compared to 28% for male-headed beneficiaries. Comparison of impact across poverty tercile also indicated that FIII had significant impact among land poor beneficiaries. These results underscores Fadama success in targeting the poor and women. viii. Re-alignment of project implementation with ATA of the Federal Government of Nigeria: The project was able to re-align its implementation to the government’s Agricultural Transformation Agenda (ATA) in 2012/13. This was significant because the 12 presence of the project in all states provided the momentum to scale up of activities under selected value chains of the ATA and the federal government decided to utilize the project platform to ramp up the production system of selected value chains. This enhanced participation of the states prioritized by ATA. It led to increased resource inflow to Fadama by the state governments to support the project interventions. This was the case in Kogi, Niger, and Kano states. The renewed interest by states to participate on the ATA programme also made most states to pay counterpart contributions on Fadama. Other benefits that accrued to project implementation included seed multiplication across value chains, massive on-farm demonstration of new technologies, demand driven extension system, collaboration with research institutes on development of value chains, value addition through promoting women and youth in agribusiness, input support on mechanization and tractorization, supporting agricultural statistics, data bank, and ATA M&E system. ix. Insurgence of Boko Haram Militant group: Though the project identified potential insecurity and violence as one of the major risks during the preparatory stage, it was envisaged for the Niger Delta only and the project was ill prepared for the Boko Haram insurgency that erupted in the North Eastern states of Adamawa, Borno and Yobe States and Bauchi, Gombe and Taraba states. These were also major Fadama states and most of the project gains were eroded. Though the Bank and the government reacted, in form of additional financing for the affected states, it will take some time to reverse the adverse effects on the beneficiaries and the loss of social cohesion in some of the displaced communities. The project through the additional financing is now building up the asset base of the displaced beneficiaries that have returned back to their communities and have prepared a strategic plan of support for the next 3 years. x. Mid Term Review: At mid-term, the Project Management took steps to re-allocate the balance of Project (IDA) fund for Grants and Fund across subprojects components to carry out capacity building of stakeholders and provide support for farmers to procure necessary inputs and acquire productive assets needed for effective operation of their farming activities. This was considered necessary to achieve better harmonization of agricultural programs and enjoy political support. No major changes were made to the implementation arrangements but emphasis was made on consolidating project gains and strengthening the M&E/MIS system. 2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization M&E Design: The Fadama III project had well-developed results based Participatory Monitoring Evaluation and Learning (PME&L) system with a strong focus on project processes, results, impact, and outcome in addition to input and output monitoring. Based on the experience of Fadama II, the results-based M&E system was strengthened to support the quality and spread of implementation under Fadama III. This improved real-time monitoring of the entire project cycle with a renewed emphasis on results reporting. M&E capacity at all levels of implementation was strengthened with the recruitment of qualified and experienced professionals, who were fully equipped to work full time on M&E. The M&E activities were designed to accomplish the following: (i) generate Project specific information on progress, processes, and performance; (ii) analyze and aggregate data generated at various levels to track progress, process quality and project sustainability; and (iii) document and disseminate feedback and key lessons learnt to relevant users and stakeholders. The system consisted of self-monitoring at the community level, input-output monitoring through the MIS, process monitoring system, comprehensive impact evaluation, and the methodical incorporation of knowledge management. The comprehensive impact evaluation was incorporated 13 to measure income, welfare, environmental performance, and social capital gains. Taken together, this system strengthened implementation and the planned intensive supervision regimes, strengthened the technical quality of investments and upscaling by transferring knowledge across settings, and support adaptive management by the Project. Given the coverage, complexity and huge spread of the project across so many local governments with small scale community sub-projects across the country, the guiding principle of the project from the outset was to establish a robust and user friendly M&E system, including an operational MIS. The project also established a robust web-based management information (MIS) system, albeit which was not operationalized till the project completion, for regular monitoring of results at FUG, FCA levels and aggregate for states and federal level. This has become operational and is supporting the project through the second additional financing. This would allow implementing agencies to report project performance in quarterly and mid yearly reports thereby creating a database for performance indicators baseline and impact evaluation. The outcome indicators were both quantitative and qualitative and were easy to collect and measure. There were facilitators at project level, M&E system at the Local Fadama Desk (LFD), which collect data at local level while each PIU has a functional M&E Specialist which monitor and aggregate data at state and federal levels. Participatory M&E was undertaken and fed upwards into the national level Project MIS and Knowledge Base. M&E Implementation: The implementation of the system was thorough and forms the basis for the baseline survey, mid- term survey and the impact evaluation of the project carried out by IFPRI. The Mid-term review mission carried out an assessment of the M&E system, found it satisfactory and recommended measures designed to strengthen it. The Monitoring and Evaluation Unit prepared annual workplans, monitored project implementation particularly through the monthly progress review meetings (MPRMs), Facilitators’ forum, monthly progress reports, physical monitoring visits to subprojects sites and coordinated a number of studies to identify constraints as well as project impact. The Project financed the costs for carrying out and managing the M&E system, including data collection, aggregation, and analysis, training on M&E, impact evaluation, reporting, and supervision. Experts in information technology and M&E were funded by the Project to support the supervision system and ad-hoc studies were conducted to determine the impact/challenges of sub-projects as a feedback mechanism for project improvement. Data were collected on cost indicators and physical parameters of sub-projects and led to frequent changes in management capacity and adjustment of subproject eligibility criteria and positive lists of sub- projects. All stakeholders were trained to record and report their activities to facilitators and the PIUs periodically. Periodic surveys were also carried out in order to provide additional information needed by the project to populate the results framework of the project. Monthly and Quarterly reports were developed for the Ministry of Agriculture at the state levels and the FMARD at the Federal level and the Steering Committees of the project (SFTC and NFTC), The M&E Specialist also provide support for internal controls for the different departments within the SFCO and NFCO. There was a proposal to have software based automated M&E system, however, due to procurement issues, this was not finalized as at December 2013 and the system relied on excel spreadsheet based M&E system with its own limitations. Also, there were state wide variation in M&E data capture and some states did not collate the data on time which affected overall quality, consistency, and accuracy of M&E data for the project. The transition to software based automated M&E system in the additional Financing is expected to greatly improve the quality and consistency of M&E data. M&E Utilization The quarterly reports generated from data collection process were used for decision making and evaluation process. The required quarterly, bi-annual and annual reports of the project were generated using the data from the M&E system. These included the price data, mobile based 14 advisory data carried out in collaboration with the ADP system, and used to strengthen the extension system. Other reports were the beneficiary score cards, GRM mechanism baseline survey report, and the beneficiary assessment survey report. The yield and production figures were made specific to Fadama sites and were collected annually and form the basis for comparing efficacy of interventions across different states of the country. The robust data base provided the platform for carrying out the impact assessment of the project using Heckman’s Difference-In-Difference (DID) approach, which was used to determine the impact of the project. The evaluation was able to establish impact on production, yield income, and assets acquisition. The post completion Economic and Financial analysis was also carried out based on the robust data produced by the M&E system. Lastly, a knowledge base consolidated best practice report was prepared using data and studies on the project including experience from other parts of the world. This information was used by the CDD Global solution group of the World Bank as an IEG learning product. Overall, the performance of the Monitoring and Evaluation and Management Information System unit of the project was adequate and satisfactory. 2.4 Safeguard and Fiduciary Compliance Environmental and Social Safeguards: The overall environmental and social safeguards compliance of FADAMA III has been consistently satisfactory. This Project falls into Environmental category B as no adverse long-term, or cumulative impacts were anticipated. The project and the AF triggered 8 World Bank safeguards policies dealing with Environmental Assessment (OP/BP 4.01); Natural Habitats (OP/BP4.04); Pest Management (OP/BP 4.09); Physical and Cultural Property (OP/BP 4.11); Involuntary Resettlement (OP/BP 4.12); Forests (OP/BP 4.36); Safety of Dams (OP/BP 4.37); and Projects on International Waters (OP/BP 7.50). During the preparation of the project the exact location of the proposed project activities were not known in sufficient details. As a result, the client prepared and disclosed Environmental and Social Management Framework (ESMF); Resettlement Policy Framework (RPF); and Integrated Pest Management Plan (IPMP). The Environment and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF) provided guidance on managing the environmental and social impacts. The ESMF and RPF outlined the general principles, protocols process, and procedures that were followed when preparing site specific safeguard instruments under FADAMA III when any activity that will be financed by the Fadama-III and has the potential to trigger any of the World Bank safeguard policies and subsequent significant adverse environmental and social impacts. The ESMF, IPMP and RPF that were prepared during the original project were subsequently re- disclosed in-country and at the Info Shop for the purposes of the additional financing. During actual implementation, the borrower demonstrated satisfactory goodwill and capacity to address impacts of projects funded activities, with most states having a dedicated safeguards officer. A series of training for safeguards officers have been provided by the Bank and other specialists at different points over the life of the project. World Bank’s supervision missions to the project showed that the project's capacity to implement the ESMF, IPMP, and RPF properly is adequate. Specifically, the borrower demonstrated her commitment to mitigating adverse social and environmental impacts. Regarding Safeguards compliance under the parent project, nationally a total of 45,475 site specific ESMP were Prepared, 44,518 ESMP Screened, 44,275 ESMP Approved, 39,057 and ESMP Implemented. The level of compliance in the six states of the North East was also encouraging. The North East States had a total of 5,416 ESMP Prepared, 5246 ESMP Screened, 5,246 ESMP Approved, and 4,216 ESMP Implemented. These safeguards instruments have provided mechanisms to identify impacts beyond the generic ones for which standard 15 mitigation measures are built and to be applied during the implementation phase. In addition, Environmental protection clauses were included in the contract documents for small-scale infrastructure like rehabilitation and construction of feeder and Fadama access roads, culverts and bridges, aggregation storage facilities, and markets. In terms of resettlement compliance, the safeguards officers documented adequate processes of community consultation and decision making, where community land was required for infrastructure development. Beyond compliance, the project should be commended for its continual focus on genuine community consultation and ownership of sub-projects. Further, the project has focused on ensuring women and marginalized groups can effectively participate and has supported action research and impact evaluations to improve targeting and access pathways. The project has continually demonstrated a capacity to reach marginalized and disadvantaged groups in contexts where other projects have not. Financial Management: The overall FM risk exposure at project appraisal stage was rated high before mitigation and Substantial following implementation of agreed mitigation measures. Identified control risks at design were mitigated by the adoption of robust FM arrangements at the Federal and State levels; these included the use of Project Financial Management Units (PFMU), adoption of sound financial management procedures, and use of computerized accounting system and qualified staff trained in Bank FM procedures. During project implementation there was relative stability in the tenor of the project FM staff. There was a progressive improvement in the FM performance throughout the project implementation. The project’s internal controls were considered adequate. Annual project audit reports contained unqualified audit opinion on the annual financial statements throughout the project’s life, and the audit reports were consistently rendered timely to the Bank. The quarterly Interim Financial Reports were prepared and submitted generally on time to the Bank and were of acceptable quality. Issues of inadequate documentation for incurred expenditures and unretired advances were flagged during the FM implementation support missions conducted over the life of the project. The recommended action plans following these observations were adequately implemented by the NFCO and the SFCOs. Procurement Management: The project was implemented by the Federal, 36 States and the Federal Capital Territory making a total of 38 PIUs. The implementation arrangement was adequate, but the initial procurement capacity at the Federal (NFCO) and a few States were weak. Weak procurement capacity were observed following the conduct of Procurement Post Review (PPR) by the Bank where many procurement lapses were observed. Consequently, and to implement the Bank’s PPR recommendations, the PS of the NFCO and Procurement Officers of States with weak capacity were replaced with more qualified and experienced procurement staff. The engagement of a qualified and experienced PS by the NFCO brought positive changes in procurement implementation of the entire project. This was because they hit the ground running by embarking on a capacity training programme for all the POs of the States/FCT PIUs. To further strengthen the contract management skills of the POs, a qualified Procurement Consultant with Engineering background was engaged for one year. With the above arrangement and training, procurement capacity was satisfactory for the remaining years of the project implementation. 2.5 Post-completion Operation/Next Phase 16 During implementation, arrangements were made to ensure sustainability of project outcomes. The assets provided by the project were clearly “marked” out to show the entity that owns it and advisory services were provided to support operation and maintenance of the assets. In alignment with the design expectation, the FUGs and FCAs kept 10 percent of the income generated from the assets as depreciation allowance for future sets maintenance. At the local government level, the FCAs were linked with the planning and the agricultural department so that the Plans and Budgets of the local governments recognized the sub-projects of the FUGs and FCAs. The institutional set up for the project at the federal, state, and local government levels was strong, integrated, and had the necessary motivation to drive the project after closure. The community institutional set up was further strengthened through the Federation of the FCAs which was carried out across states. Building on the experience and learning from the implementation of the on-going Fadama III, the World Bank approved a loan of US $200 million for Additional Financing (AF) for the Third National Fadama Development Project in September 2013. The PDO of Additional Financing (AF) is to increase the incomes for users of rural lands and water resources within the Fadama areas in a sustainable manner throughout the recipient's territory. The additional financing will focus on improving farm productivity performance of clusters of farmers engaged in priority food staples namely rice, cassava, sorghum and horticulture in six selected states with high potential. Taking a value chain orientation, while retaining the CDD approach, the AF seeks to attract private investment in processing and milling, and other commercial aspects of agriculture around nucleus farms, with associated small-holder linkages such as out-grower schemes and contracting farming arrangements. To meet the need of conflict-affected Northern regions of Nigeria, in June 2016, the Board approved (US $50 million equivalent) for the Second Additional Financing (AFII) of the Third National Fadama Development Project. The additional financing seeks to respond to the urgent food and livelihood needs of farming households who have been affected by conflicts in the six North East states in Nigeria-- Borno, Yobe, Adamawa, Taraba, Bauchi, and Gombe. The objectives of the Project are to increase the incomes for users of rural lands and water resources in a sustainable manner and to contribute to restoration of the livelihoods of conflict-affected households in the selected area in the North East of the Recipient’s territory. Building on FADAMA III, the project will involve a community driven development approach to benefit producer organizations, women, youth, and vulnerable groups. The project will reduce vulnerability to food crisis among returning Internally Displaced Peoples (IDP) and host farmers through increased and revitalized production. It will also support rehabilitation of existing rural community agricultural related infrastructure and farm settlements. 3. Assessment of Outcomes As indicated earlier, this interim ICR assesses the outcome of the FADAMA-III as at the first proposed closing date and provides a synopsis of the progress of FADAMA-III Additional Financing till June 2016 (because of insignificant disbursement and implementation delays).The final ICR will assess the impact of the Fadama III as a whole incorporating the AF1 and AF2. 3.1 Relevance of Objectives, Design and Implementation of FADAMA-III Promoting sustained economic growth, reducing poverty, inequality, and unemployment is at the core of development challenge for Nigeria. Improving income, especially of the rural population considering the high poverty rates in the rural areas, is fundamental for meeting the Government 17 of Nigeria’s development agenda and the World Bank’s twin goals. The project remains fully consistent with the objectives of the Bank’s CPS for FY 2014-2017 which focuses on promoting diversified growth and job creation by enhancing agricultural productivity as one of the strategic clusters. The PDOs of increasing the incomes of users of rural land and water resources on a sustainable basis were, and continue to be, highly relevant to the poverty alleviation goals. The Community Driven Development (CDD) approach of prioritizing investments; group mechanisms for providing productive investments; beneficiary contributions for investments; and contributions from federal, state and local government, are some of the design features of FADAMA-III that are highly relevant and appropriate for meeting Nigeria’s development challenges. Project design and implementation were directly relevant to the above objectives. Additional Financing: The additional funding of US $200 million was under the context of the launch of the Agricultural Transformation Agenda (ATA) and leveraging the existing FADAMA platform to support clusters of farmers in six selected states in priority value chains of cassava, rice, sorghum, and horticulture. The objective of the additional financing was to increase the incomes of farmers in the prioritized Staple Crops on a sustainable basis. This is consistent with the development objective of the Fadama III Project which is to sustainably increase the incomes of Fadama beneficiaries. The objective and the design (community driven development, group mechanism, value chain approach, beneficiary contribution, etc.) are highly relevant and appropriate for meeting Nigeria’s development challenges and consistent with World Bank country partnership strategy for Nigeria. In order to meet the need of conflict-affected Northern regions of Nigeria, the board of the Bank also approved a sum of US $50million in June 2016, for the Second Additional Financing (AFII) of the Third National Fadama Development Project. Based on the description above, relevance of objectives, design and implementation is rated Substantial. 3.2 Achievement of Project Development Objectives PDO: To increase the incomes of users of rural land and water resources on a sustainable basis. The project was expected to increase the incomes of Fadama beneficiaries by organizing individuals into Fadama user groups and associations and helping them acquire assets for pursuing agricultural livelihood opportunities, making investments in community infrastructure, providing advisory services and inputs, building the capacity of beneficiaries, and improved access to markets. The Financing agreement (FA) of Fadama-III states, “the Objective of the project is to increase the incomes for users of rural lands and water resources within the Fadama Areas in a sustainable manner throughout the Recipient Territory”. As per the PAD and other project documents, however, the PDO of the project was “o increase the incomes of users of rural land and water resources on a sustainable basis.” The incontinency between the two PDOs is in terms of their geographical scope. While the FA limits the geographical scope of the project “within the Fadama areas”, the PAD on the other hand does not put any such restriction. Considering the project was not restricted to work only in the irrigable low-land area, technically termed as Fadama lands, and was meant to work beyond Fadama lands, the ICR team choose to use the PDO as defined in the PAD for the purpose of ICR review.” 18 From a baseline of ₦170,548.00, the average income, in nominal terms, of Fadama beneficiaries increased to ₦276,294 indicating average nominal income increase of 62 percent. The project achieved its development objectives as measured by the set of monitoring indicators presented in the data sheet. The project has resulted in the following benefits regarding achieving the development objectives. Increase in Income: To help improve income of the project beneficiaries, the project envisaged the following two impact pathways: (i) provide productive assets to beneficiary groups to scale-up their existing farm or on-farm livelihoods or undertake new livelihood activities, and (ii) provide support for increasing the yield of their agricultural enterprises. Component 5 of the project provided seed money, through matching grants, to help project beneficiaries acquire capital assets which they used to undertake a wide range of small-scale income generating activities, improve their access to market, and higher value-additions to their farm produce. Component 3 financed advisory service delivery to improve the performance of their on-farm and off-farm activities and input support (mainly seeds, fertilizes, and agrochemicals) while component 4 supported research, on-farm demonstrations, and training of extension staff, all of which contributed to yield improvements. To track this development outcome, the project tracked the following two indicators: (a) income of participating households, and (b) yield of primary agricultural products of participating households which were both influenced by the activities financed by the project. The following sections highlights the project achievements against these two indicators. Achievement of this objective is rated Substantial, based on the following Indicator 1: Income of participating households. The target of this indicator was that 75 percent of beneficiaries would increase their average real income by at least 40 percent. The project lead to a big increase in average household income, but technically using the M&E data, it is difficult to estimate whether 75 percent of the beneficiaries increased their real income by 40 percent or not. All the states provided baseline income data and then towards the end of the project, conducted household income surveys on the beneficiaries. But the report captured income increase for all beneficiaries which is an indication that states with income increase up to 40% had more than 75% of the beneficiaries achieving the PDO target. However, seven states, namely Lagos (97 percent), Ogun (75 percent), Ondo (75 percent), Osun (85 percent), Abia (70.1 percent), Anambra (75 pecent), and Kwara (75 percent) provided data on what proportion of household increased income against the set target. End term impact evaluation by International Food and Policy Research Institute (IFPRI) in May 2016, indicate that in comparison to the control group, the household income of 36 percent of Fadama III beneficiaries increased by at least 40 percent. However, 46 percent of female beneficiaries reached the target, illustrating that Fadama III better targeted female beneficiaries. The impact assessment indicate that average income increase of Fadama beneficiaries, in comparison to the control group, was 28.4 percent, however, the increase was much higher for female-headed households (31.3 percent) as compared to male-headed households (27.8 pecent). The external evaluation’s comparison of impact across poverty tercile shows that the project had a significant impact among land poor beneficiaries and non-significant impact among beneficiaries with medium and high land endowment. These results underscores Fadama success in targeting the poor and women. 19 Data received from the project indicate that at the national level, average nominal income increase had increased from ₦170,548.00 to ₦276,294), a 62 percent increase at project completion. However, during the project implementation period, Nigeria experienced high inflation rate of 10-14 percent annual inflation (see graph below), which eroded the income gains in real terms. After factoring in the inflation, the real income increase for project beneficiary was 20 percent, much below the target of 40 percent. If there was no unprecedented inflation during this period, and the cost of living was normal like the previous years, the real income of the farmers would have reach up to the target of the PDO based on the significant nominal increase. Graph 1: Nigeria Inflation Rate (2006-2016) The above-description indicate that at the overall project level, while the in nominal terms the average income increased by 62 percent, however, the high inflation eroded the gains and in real terms, the average beneficiary income was 20 percent. The project was unable to meet the target for this indicator. Indicator 2: Yields of primary agricultural products of participating households. The target for this indicator was to achieve a 20 percent increase in yield of primary agricultural products (disaggregated by crops/agroforestry, livestock, and fisheries etc.) of participating households. To measure against this indicator, yields of primary production were to be obtained through the annual survey called the Agricultural Production Survey (APS). These APS were conducted by the Agricultural Development Projects (ADPs) of each of the participating states which has the state mandate for production surveys. The project contracted the ADPs in each state to carry out annual yield surveys on fadama intervention sites. The baseline survey was also carried out by the Fadama project on the intervention communities and the average yield data formed the baseline of the project which was set at 2008 as 100, index. The yield obtained from 20 the enterprises was computed from APS and tracked over time on the project. At project closing, the project reported an average yield increase of 29.7 percent. The project was initially supposed to create a commodity basket index to capture the yield increase over the project period. However, the commodity index was not created because the project did not have a focus on any specific commodities and the demand-driven nature of the project meant the beneficiaries were free to choose any commodity or enterprise. This made it quite difficult to create a commodity basket index. Nonetheless, the project did capture baseline information of many crops from the baseline study and captured the yield increase of beneficiaries. At the end of the project, the bulk of the intervention in the crops focused on these nine commodities: Maize, rice, sorghum, millet, groundnut, cowpea, soybean, yam, and cassava. The project resulted in significant yield increase in these commodities. It is important to note that livestock assets (33.93 percent) constituted the largest number of productive assets acquired during the project because it is capital intensive. As such the coverage is not as widespread as crops. Thus only seven states, out of total of 36, provide data on yield increase for small ruminant, poultry, and fisheries indicating 8.38 percent yield increase for small ruminants; 2.35 percent increase for poultry, and 6.53 percent increase for fisheries. The lack of yield data for livestock assets can be explained by a number of factors: (a) not many states collected baseline data on livestock yields, unlike for crops, because of methodological challenges and not knowing (owing to demand-driven CDD approach) whether livestock will be the preferred assets for beneficiaries in their states or not; and (b) livestock investments are capital intensive and requires more capital than investment in crops. Therefore, it is no surprise that it accounts for 1/3 of total productive investments and not widespread like crops. (c) It is also important to understand that for many beneficiaries, this was a relatively new enterprise activity with steeper learning curve, than that of staple crops, and may require many years before reaching the productivity peaks. As a result, the available data on livestock stock yields does not fully capture the yield improvement benefit of project interventions in providing livestock assets to beneficiary groups. IFPRI end evaluation study did not measure the yield improvement; however, it measured adoption of good agricultural practices. The evaluation demonstrates that Fadama II and FIII had positive impact on adoption of soil fertility management practices reported. Fadama II showed a significantly higher impact on adoption of integrated soil fertility management than Fadama III (FIII) or Fadama II & III combined. This means that over a long period of time, FII has had a much bigger impact on sustainable land management practices. Impact of both FII & FIII on adoption of crop production technologies shows that both phases of Fadama projects increased adoption of improved varieties by at least 30 percent, and as high as 46 percent for FIII. FIII impact on adoption is significant and largest for improved seed, inorganic fertilizer, and irrigation. Participation in FIII alone significantly increased area receiving inorganic fertilizer by 48 percent and irrigated area by 32 percent. Adoption of soil fertility management practices, improved seed varieties, inorganic fertilizer, and irrigation, have strong causal links with improving yields of agricultural production. Based on the available data, the project resulted in significant yield improvement and achieved its targets. Sustainability: The project had a big emphasis on sustainability as reflected in the PDO “To increase the incomes of users of rural land and water resources on a sustainable basis.” To ensure 21 sustainability, the project focused on FCA; FUGs; established FUEFs; and focused to operations, maintenance, and replacement of group and community assets. Small-scale community-owned infrastructure was financed under component 2 for creation of economic infrastructure and local public goods (irrigation facility, farm land clearing and development, storage infrastructure, farm internal roads, marketing infrastructure, access roads, hydraulic structure, etc.) which helped improve productivity of Fadama user households but also contributed to longer term sustainability of their enterprises. Component 1 of the project was primarily focused on ensuring sustainability of project outcomes by supporting community organizations and building capacity of FCAs, FUGs, FUEFs, and Economic Interest Groups, and building capacity of local governments and strengthening local development plans. To help report on the sustainability aspect of the project, the following three indicators were tracked. Achievement of this objective is rated Substantial, based on the following Indicator 3: Savings of participating groups. The project promoted the creation of Fadama User Group (FUG), Economic Interest Groups (EIGs) and Fadama Community Associations (FCA) and promoted the setting aside of funds, called Fadama User’s Equity Fund (FUEFs), as a capitalization/revolving fund. These funds were promoted to ensure sustainability of project interventions by providing resources for asset replacement and business expansion. The project targeted is to have a 10 percent replacement value of the common asset used for income-generating activities of FUGs saved annually (with effect from year two). By the end of the project, a total of 39,715 FUGs benefitted and owned 245,756 assets valued at ₦11,449,789,040.85. Of them, a total of 21,126 FUGs (representing 53.2 percent of FUGs with assets) saved the sum of ₦842,047,315.41, which is 7.32 percent of the replacement value of the assets acquired. Furthermore, the project was able to federate many FCA into a statewide Fadama Farmers Community Association (FFCA). A total of 37 FFCA were created, one for each state and FCT, with the objective of transforming some of the vibrant FFCA into self-sustaining institutions. At the time of ICR mission in June 2016, a total of 15 FFCA were still functional and providing services to their members. Of them, seven institutions have generated enough capital and expertise to have applied for license to operate as a Microfinance Bank. They are waiting for the Central bank’s approval before commencing operations as microfinance Bank. In the state of Plateau, the Central Bank of Nigeria awarded their banking license in 2015, and the Plateau State Fadama Farmers Microfinance Bank has been operational since January 2016. It is expected that the other seven FFCA will also get banking licenses and will contribute to providing requisite financing. Indicator 4: Satisfaction with operation, maintenance and utilization of assets. Surveys at mid-term and at project closing show at least 75 percent of Fadama users are satisfied with operations, maintenance, and utilization of community-owned infrastructure and capital asset acquired through the project. Monitoring Data as of December 2013 showed that 30,179 out of 64, 347 FUGs participating in the project own Productive assets. Out of these, 27,528 (91.4 percent), 26,485 (87.76 percent) and 26,129 (86.58 percent) claimed to be satisfied with the operation, maintenance, and utilization of assets, respectively. This gives an 88.58 percent satisfaction rate on the average. Indicator 5: Physical verification of operations, maintenance, and utilization of assets. 22 Physical verification of operations, maintenance and utilization of assets at mid-term and at project closing by surveys of randomly selected sites shows at least 50 percent of assets and community-owned infrastructure are operating satisfactorily and are maintained and utilized. Monitoring data at the end of the project indicated that Infrastructure and asset acquired by communities are in good condition and functional. Physical verification of operations, maintenance and utilization of assets at project closing by surveys of randomly selected sites shows that out of 150,187 productive assets acquired, 125,582 (84 percent) are in good condition and 116,894 (78 percent) of users are satisfy with the condition of assets. FADAMA III Additional Financing I Outcome Achievements: The Additional Financing I end date has been extended till December 2019, and the disbursement rate for AF I till June 2016 stood at 26.81 percent. The yield data collected for initial few seasons is showing good yield increase (rice (31 percent), Sorghum (84.21 percent), Horticulture (128 percent) and Cassava (32.21 percent). No data is yet available on the other four PDO indicators (Income, savings of replacement value, satisfaction, and operations, maintenance and utilization). Till June 2016, a total of 2920 BPs has been developed across the value chain through participatory process, of which 676 business plans has been fully funded. A total of 9593 beneficiaries have procured advisory services across the value chain, which represents 24 pecent of the targeted total beneficiaries of the project. 5994 (18.74 percent) of the targeted 31977 beneficiaries have received extension services from public service providers and of them 4864 (81 percent) beneficiaries who received extension services from public service providers are satisfied. 2,863 (7 percent) of targeted 24,000 beneficiaries have access to market information, and they have negotiated contracts for inputs purchase -- Agro dealers and output sales. It appears from the Annex 10 that the progress of intermediate indicator is on track and might meet its targets, but due to lack of data on PDO indicators and small disbursement till now, the team is unable to comment on the potential achievement of project development outcomes. Based on the sub-ratings above, efficacy is rated Substantial 3.3 Efficiency: Substantial The economic analysis adopted the methodologies, patterns, and assumptions employed during the design and preparation of the FADAMA-III project. As carried out during the preparation stage, representative enterprise models were used as the analytical units, or subprojects, supported by the intervention in order to estimate the project’s benefits and costs. The economic life of the project was also taken as 15 years, consequently, cropping patterns, inputs applications, costs and benefits were projected for 15 years and the computation of performance indicators and decision criteria namely rates of return and net present values were based on the values of net aggregate incremental benefits for 15 years (see details in Annex 3). High inflation rate and macroeconomic effects were considered while conducting the economic and financial analysis. As more money pursues limited goods prices rise. The Effect of inflation is escalation of the nominal prices of goods but ‘price relatives’ are assumed to be unaffected. In the economic and financial analysis, the team used constant prices as at mid-June 2007. This is to obviate the effect of inflation on the calculation. Note that in the calculation of “value = quantity x price” the team allowed for changes in the quantities between 2008 and 2014, while the prices were held constant. This provided us the basis to compare the estimates obtained during the ICR with the ones made during appraisal because between the time of APPRAISAL and ICR the prices were held constant while only the Achieved Quantities changed. The same mid-June 2007 set of prices 23 were used during the appraisal and ICR. This consequently eliminated the effect of rising prices over time (due to inflation). Economic Rate of Return (ERR) The estimated overall Economic Rate of Return (ERR) for the project is 35 percent; an NPV of N 47,468.2 million or USD 365.1million; the BCR is 1.29, and Annual Incremental Net Benefit (AINB) of N 21,611.6 million or USD 166.2 million, assuming an opportunity cost of capital of 12 percent. The estimated ERR of 35 percent implies that if the incremental benefits due to the project are discounted at the rate of 35 percent, then benefits will equate the costs, and the NPV will be equal to zero. The decision rule is that once the ERR is greater than the opportunity cost of capital (hurdle rate) the project is passed as successful. The estimated NPV of N 21,611.6 million or USD 166.2 million is the amount or net worth of the project when all costs have been accounted for including family labor, and the benefits which the resources committed to the project would have generated without the project. The decision rule is to pass or regard the project as successful once the NPV is greater than zero. The estimated BCR of 1.29 implies that for every one Naira spent on the project there is a corresponding profit of 29 Kobo only. The decision rule is to accept the project as successful once the BCR is greater one. The estimated Annual Incremental Net Benefit (AINB) of the project was N 21,611.6 million or USD 166.2 million. This is the amount left to the disposition of the equity contributors when all costs have been duly paid including, family labor and the benefits which the resources committed to the project would have generated without the project. The decision rule is to pass or regard the project as successful once the (AINB) is greater than zero. The details of estimating the decision indicators for the project are presented in Table 2. Table 2: Estimation of the Project ERR and NPV Aggregate Net Aggregate Project year Incremental Benefit Overhead Costs Incremental Benefit 0 0 -128416262 -128416262 1 -8060618885 -2454259561 -10514878446 2 -3263781176 -4557854084 -7821635260 3 88838678.62 -4944688288 -4855849609 4 3469554671 -2407945609 1061609062 5 7827471941 -841722948.3 6985748993 6 19379238407 19379238407 7 20606250299 20606250299 8 21611547714 21611547714 9 22588748992 22588748992 10 21237727348 21237727348 11 21237727348 21237727348 12 21237727348 21237727348 13 21237727348 21237727348 14 21237727348 21237727348 15 22514060451 22514060451 ERR = 35 percent NPV = NGN 47,468,196,960; NPV = USD 365,139,980 BCR = 1.29 24 In the preparation report the estimated overall ERR for the project was 29 percent; an NPV of N 57,073.9 million or USD 439.1 million; and incremental net benefit of N 32,513.3 million or USD 250.1 million, assuming an opportunity cost of capital of 12 percent. From Table 3 below it is apparent that at the completion of the project relative to the appraisal, the Economic internal rate of return increased by 6 percent, the Net Present Value decreased by about 17 percent, and the annual incremental net benefit decreased by 33 percent. Table 3: Estimated Values of Economic Indicators at Preparation and Completion of the Project (in ‘000) Percentage Indicators ICR (2016) Preparation (2007) Difference Difference In millions ERR 35 29 6 20.7 NPV(NGN) 47468.2 57073.9 -9605.7 -16.8 NPV(USD) 365.2 439.1 -73.9 -16.8 BCR 1.29 N/A N/A N/A AINB 21,611.50 32,513.30 -10901.8 -33.5 Sensitivity Analysis Sensitivity tests indicated that the project remains viable under a variety of assumptions. In general, all the enterprise models were sensitive to changes in the output prices and operating costs. A 10 percent drop in the output prices reduces the project ERR to 23 percent, which is a decrease of 34 percent. A 10 percent increase in operating costs reduces the project ERR to 27 percent, which is a decrease of 22 percent. The analysis of the switching value shows that the ERR is sensitive to changes in project costs and benefits. A reduction in benefits by 18 percent or an increase in the total cost of 23 percent reduces the ERR to 12 percent (the hurdle rate). Similarly, a reduction of benefits by 10 percent coupled with a simultaneous increase of cost of 10 percent, reduces the ERR to 12 percent, which is the hurdle rate. Sensitivity tests indicated that the project remains viable under a variety of assumptions. In general, all the enterprise models were sensitive to changes in the output prices and operating costs. A 10 percent drop in the output prices reduces the project ERR to 27 percent, that is a decrease of 34 percent; and a 10 percent increase in operating costs reduces the project ERR to 31 percent, that is a decline of 24 percent. Annex 3, Table 6, presents the estimated economic indicators (ERR, NPV, AINB, and BCR) for the enterprise models. From the Table it was apparent that the ERR ranged from a minimum of 18 percent in borehole to a maximum of 92 percent in rural roads. The NPV ranged from a minimum of NGN 85,280 in Tomato processing to a maximum of NGN 177.1 million in borehole. The BCR ranged from a minimum of 1.07 in borehole to a maximum of 2.57 in rural roads. Financial Rate of Return The estimated overall financial rate of return (FIRR) for the project is 24 percent; an NPV of N 26,234.1 million or USD 201.8 million; the BCR is 1.02 and annual incremental net benefit of N 17,755.4 million or USD 136.6 million, assuming an opportunity cost of capital of 12 percent. The 25 details of estimated financial indicators for the project are presented in Table 8. The estimated Financial Rate of Return for the representative enterprise models in the project presented in Table 8 ranged from a minimum of 21 percent in groundnut processing to a maximum of 82 percent in rural road infrastructure model. The estimated Net Present Value (NPV) for the representative enterprise models ranged from a minimum of NGN 38,220 or USD 290.0 in Tomato/Pepper processing to NGN 6898,380 or USD 53,060 in rural roads model. The estimated incremental benefits per annum for the models ranged from a minimum of NGN 14,360 or USD 110 per annum in tomato/pepper processing to NGN 1,427,586.00 or USD 10,980 per annum in rural roads model. However, rural roads are community sub-projects consequently their benefits do not accrue to any particular individual. The estimated BCR ranged from a minimum of 1.02 in borehole to a maximum of 2.57 in rural roads model. The estimated benefits per annum for a production unit ranged from NGN 23,256.00 in Tomato/Pepper processing to 3917112.00 in rural roads. The estimated benefits per unit of labor employed in production ranged from NGN 197.93 in honey production to NGN 97,927.80 in rural roads model. The details are in Table 8 of Annex 3. The Internal Rate of Return at Project Completion Compared to Preparation Estimates The estimated financial Internal Rates of Return were compared to the estimates made at the preparation of Fadama III project, and the results are presented in Table 9 of annex 3. From Table 9 it is apparent that Sheep/Goat upgrading decreased by 2 percent; North Irrigation module decreased by 9 percent; Earth pond aquaculture decreased by 3 percent; palm fruit processing decreased by 1 percent; and rice milling decreased by 1 percent. The FIRR for other enterprise models increased at the completion of the project relative to the preparation. The increases ranged from a minimum of 1 percent in groundnut processing and honey production, to a maximum of 142 percent in southern Rain fed Yam/Maize/Cassava model. It, therefore, follows from above that Efficiency is rated Substantial given the positive rate of return, significant positive change from project inception and a cost effective ratio which is comparable with other similar projects in the region. 3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory FADAMA III was an ambitious project which aimed to replicate the success of the FADAMA-II. The ambitious nature of the project is reflected by the following factors: a. Nationwide coverage: While FADAMA-II was operating in 12 states of Nigeria, the new project aimed to cover 36 states and FCT, providing nationwide coverage. b. Doubling of PDO targets: FADAMA-II project had a quantitative target of “increasing the average real income of 50 percent of the targeted project beneficiaries by twenty percent.” The quantitative target of FADAMA-III was to increase the average real income of 75 percent of targeted project beneficiary by 40 percent. 26 c. Introduction of new elements: The new project introduced new elements such Fadama User Equity Fund, increased contribution from state and local government, federating farmers users into apex organizations, beneficiaries contribution towards payment of advisory services and inputs, which all increases the complexity of the project. The project’s target achievement needs to be viewed in light of its ambitious targets and challenges of taking a successful pilot to scale. Furthermore, rather than full US $450 million being available for financing, only US $290.44 million was finally made available (due to much lower counterpart financing provided by local governments, states, federal government) to implement the project. The project’s approach and PDO are highly relevant to the Nigeria’s development agenda and the World Bank’s strategy. The project overachieved three of the PDOs targets on yield improvement, beneficiary satisfaction, and operations of assets and almost achieved the target on saving mobilization, but fell short of meeting targets on real income improvement. With ERR of 41 percent the projects use of resources was highly efficient. Based on the exiting information and considering all these factors, the overall outcome rating of moderately satisfactory is well justified. 3.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above) (a) Poverty Impacts, Gender Aspects, and Social Development Poverty Impact: IFPRI study highlights that Fadama III beneficiaries as a percent of total households were highest in the northern GPZs, where severity of poverty is highest. This suggests that targeting of Fadama III placement in areas with severe poverty was relatively successful. The Northeastern GPZ had the highest share of people under extreme poverty and reported the highest beneficiaries as a share of total number of households. However, the number of beneficiaries as percent of people in extreme poverty is highest in SE, the third GPZ with lowest share of people in extreme poverty. This indicates that even though Fadama III poverty targeting was successful, the large number of people living in extreme poverty is so high in some GPZs that proportionate targeting could have heavily skewed – thus denying other GPZs with lower poverty incidence the opportunity to benefit from Fadama III. IFPRI’s study highlights that impact of crop income for the land-poor beneficiaries was much greater than the case of land-rich beneficiaries. This illustrates successful targeting of Fadama project on women and the poor. Gender Aspects: Targeting of women was successfully enforced as the number of Fadama III women beneficiaries was 41 percent. As was the case for the midline results (Nkonya et al. 2012), female beneficiaries in SE GPZ accounted for the highest share (53 percent) of all beneficiaries while those in the NW accounted for the lowest share (24 percent). IFPRI’s impact evaluation study highlights that the impact is much larger for female-headed households whose crop income increased by 43 percent - - about double the 23 percent impact level of the male-headed households. Impact across gender shows that FIII female beneficiaries income increased by 31 percent compared to 28 percent for male-headed beneficiaries. Comparison of impact across poverty tercile shows that FIII and FII had significant impact among land poor beneficiaries and non- 27 significant impact among beneficiaries with medium and high land endowment. These results underscore Fadama success in targeting the poor and women. Social Development: The project had a specific focus on vulnerable population and created FUGs as vulnerable groups. Vulnerable groups were identified as elderly, youth, widows, and people living with HIV or with disabilities. 11 percent of the total amount allocated for productive assets was disbursed among vulnerable groups. IFPRI’s evaluation concluded that the Results of Fadama III project impact has further shown that the community-driven development (CDD) approach is successfully targeting women and the poor in increasing household income from all sources. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development) The project has proliferated the concept of FUG as a community institution as established under Fadama I and II. It has strengthened and resourced the FUGs and FCAs by providing capacity building, training, and constant advisory services for value addition. It contributed significantly to enhancing the capability and leadership skills of youth and women and provided a linkage with many other government initiatives and donors support. Capacity of local government staff was also strengthened in land use planning and community CDD. The utilization of the instrument of LDPs and local facilitators brought a paradigm shift and a new dimension into community planning and social inclusion. Based on experience from South-South exchange, the project was also able to federate the FCAs across local governments and at state level into FFCAs that further strengthen and provide stability for the community institution. As part of its sustainability agenda, the project initiated the utilization of FUEF, which had significantly aggregated in each state into establishing the Fadama Microfinance Banks. A total of 15 FFCAs applied to Central Bank of Nigeria for license and as at the time of ICR, the Plateau state FFCA had been granted license and had started a microfinance bank that has so far accumulated a sum of N100 million Naira capital base within 6 months and has given credit worth more than 30 million to its members. The Fadama project was able to attract GEF funding which also assisted with building the capacity of local government on Land Use Planning. Cartographic equipment as well as structural and departmental strengthening were carried out for the local governments to further strengthen their service delivery mechanism. Furthermore, the project incorporated a JSDF funding support for information and knowledge management. Through this process, Fadama Information and Knowledge management Centres (FIKS) were established in four states to provide real time mobile-based advisory services for farmers. It also provided a platform for marketing of farmers’ products. Finally, given the broad farmer base and national coverage of the project, the Growth Enhancement Scheme (GES) of the government in its agricultural transformation agenda relied heavily on Fadama farmers’ platform for smart subsidy on targeting of input support and de- risking of agricultural lending activities. (c) Other Unintended Outcomes and Impacts (positive or negative) One major occurrence that had significant impact on the project was the Boko Haram insurgency that affected the Northeastern parts of the country during the implementation period. There were also agitations in the Niger Delta region. These significantly draw back some of the benefits of the project and negatively affected implementation of field activities. This was contributory to the draw-down on the PDO indicators nationally as it brought down the average significantly. 28 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops S/N STUDIES CONDUCTED PERIOD MAJOR FINDINGS 1. Baseline survey 2009 Baseline information on key performance indicators such as income, socio- economic characteristics, production, etc. was captured. Average household income was N170,548.27. 2. Agricultural Production Survey (APS) 2010, 2011 & The 2010 and 2011 APS published result indicated considerable increases in 2012. the yield of major crops supported by the Fadama Project. Overall, there was an average increase of 13.6% increase in yields of major crops in the midline and a 29.7% in yield of major crop through RRA at the project completion. 3. Household income generation, progression 2011 Average nominal household income at mid-term was N237, 118.11 over the and sustainability to the achievement of baseline of N170,548.27. This indicates 39% increase over the baseline average Fadama III PDOs. nominal household income of N170,548.27. 4. Social capital formation and implication for 2011 - The FUEF had about 7.32% of the value of the productive assets in the the achievement of Fadama III PDOs. FUEF account for maintenance of assets. - The Project has created social capital as evidenced by formation of additional FUGs, increased participation in decision making, enhanced subprojects ownership and management by members of FUGs, social inclusion and democratic election of membership of standing committees. 5. Contribution of Advisory Services and 2011 - About 50% Fadama users use advisory services. Inputs Support, Support to ADP Adaptive Research to the attainment of Fadama III PDOs. 6. Midline Impact Assessment 2012 Completed and final report of the study submitted. 7. Adoption study 2012 / 2013 The study is concluded and final report submitted. Encouraging level of adoption of improved technologies was reported. Please see summary of findings in Annex 2 of this report 8 Pest survey 2012 / 2013 The survey had been conducted. 9. Rapid Rural Appraisal (RRA) 2013 / 2014 - At least (81% (29/36 *100)7 of Fadama users have increased their average incomes by at least 40%. - Average nominal income increased by 62.0% over the baseline income. Yield of agricultural products increased by 29.7%. - 88% of the assets’ beneficiaries were satisfied with the operation, maintenance, and utilization of their assets. - 83.1% of the infrastructure and assets acquired were in good condition and working satisfactorily. 29 4. Assessment of Risk to Development Outcome Rating: Moderate The project had built-in sustainability mechanisms at part of the design, which has contributed to low risk to development outcomes for project beneficiaries. Some of those mechanisms include: a. FUEFs: Establishment of FUEFs to ensure enough savings to facilitate replacement and maintenance of the assets created by the project. Considering the wear and tear and natural attribution of assets, access to capital for replacement and maintenance is critical to ensure benefits from the assets for a long time. b. Federating beneficiaries into FFCA and FCA: The project strived to build strong local institutions in the form of FFCA and FCA which could contribute to providing support to the beneficiaries after the project closures. c. Focus on capacity building: The project provided extensive support for capacity building in terms of training on group formation, financial management, advisory services and extension, which is much needed to ensure optimum utilization and benefit from the hard assets being provided by the project. d. Provision of the integrated package: The project also provided an integrated package comprising of assets to the group, community infrastructure, advisory services, and capacity building, to ensure that all the relevant aspects to provide gains from the project investments are in place to ensure longer term sustainability of the project outcomes. e. Demand-driven: Rather than providing pre-selected menus of assets, the project followed a bottom-up demand-driven approach wherein beneficiaries themselves identified assets and procured relevant advisory services to help them in their selected livelihood. IFPRI evaluation study also analyzed the Fadama II beneficiaries who did not benefit from Fadama III and concluded that those beneficiaries were able to sustainably increase their incomes from high paying activities including non-farm activities, horticultural crops, and agro- processing. This further shows that the Fadama beneficiaries have successfully and sustainably operated profitable businesses even after Fadama support stopped seven years ago. Fadama II beneficiaries’ value of household-owned productive assets increased significantly -- further illustrating the prolonged and sustainable impact on key outcomes. The ICR team visited eight FUGs in two states and all the projects assets and groups were functioning after three years of project completion. In most of the cases, assets were replaced by the FUGs using their own resources and saving, new assets were acquired by the groups, and the group expanded their enterprises. This sharing of the results from a very small sample is illustrative of the sustainability of development outcome of Fadama III. However, there are a number of external factors, which could potentially erode the sustainability gains of the project and increase the risk to development outcome, some of them being: a. Continued Government commitment to the CDD approach: There is a commitment to the approach as Federal and State government ensured effective needs assessment, enhanced ownership, and maintenance of Project benefits. At the local government levels, the Local Development Plans were integrated in Annual Work Plans of the participating local governments. 30 b. Payment of counterpart contributions: On the whole, States attained only 64.9 percent (3,079,515,192.17 out of 5,367,916,271.72) of the counterpart contribution required. On the other hand, the participating local governments fulfilled only 47.8 percent, with the highest fulfillment coming from local government areas in the Northeastern zone. The Government is using the project as one of the platforms to implement its agricultural transformation agenda and therefore the possibility of continuous support to the project is high. However, the case of irregular and inconsistent payment of counterpart funding is a real issue. c. The sustainability of the project outcomes: The future of the CDD approach is likely to be threatened by potential social risk of resistance from stakeholders, who are yet to be divulged from the culture of business-as-usual, and are associated with the tradition bound top-down approach. However, the CDD Project has developed a sense of ownership in the beneficiaries and this probably will be a sufficient deterrent against such a risk. d. Diversion of funds: Another possible risk has to do with potential diversion of funds, elite capture and outright corruption, both at the state and local levels. Improvements in project governance and enforcement of strict procurement guidelines and funds management would go a long way in minimizing this risk. e. Risks to program infrastructure: There is also the added risk of inappropriate maintenance of the existing infrastructure and equipment, absence of agricultural credit for future development, and inadequate production support services for training, extension, or counseling. f. Gender biases: Gender biases curtail involvement of women and undermine principles of inclusion and equity. Collusion and/or intimidation at the community level may be used to subvert procedures of transparency and accountability in the management of funds. This will be mitigated through continuous capacity building. g. Insecurity and violence: Insecurity and violence in some part of the country may hinder the continuity of the arrangement for community development. This is especially of importance the Northeast zone, where the incidence of Boko Haram Insurgency has displaced people and thus the social arrangement in place. Improvement in security arrangements and better governance would also help in the Niger Delta zone where conflicts that occurred in the oil producing communities may hinder community involvement and Project implementation. h. Macro-economic risks: The macro-economic situation and inflationary pressure can be another serious risk factor, which can significantly impact the risk of development outcomes. Considering all these risk factors, the overall risk to development outcome is rated moderate. 31 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Highly Satisfactory The Bank’s performance in the identification, preparation, and appraisal of the project was Highly Satisfactory. The design of the project was well conceived and responded to the development agenda of government as well as the CPS. During preparation, and appraisal, the Bank took into account the adequacy of project design and all the major relevant aspects, such as technical, financial, economic, and institutional including procurement and financial management. The project was a follow-on to the previous award winning Fadama II and there was a high demand by the government for scale up and expansion to cover all the states of the country. The design, therefore, incorporated the lessons from Fadama II and addressed the constraints of rural infrastructure observed in the previous project as well as enhanced the sustainability status of the project through the introduction of Fadama User Equity Fund (FUEF). Under the scheme, the FUGs set aside 10 percent of income from assets as depreciation and constitutes capitalization/revolving fund called the FUEF. The design also paid special attention to the technical quality assurance by ensuring that the Fadama development facilitators received adequate training before deployment to the various communities. This enhanced their capacity in supervising the technical aspects of community subprojects and assisting communities to prepare and implement their local development plans (LDPs) and subprojects. During the design, the team also envisaged the enormous challenge that the spread and coverage of the project would present during implementation and prepared a supervision plan. The Supervision plan presented an effective and functional template for adequate monitoring of project activities and providing oversight. The project preparation was carried out with an adequate number of specialists who provided technical skill mix necessary to address sector concerns and a good project design. The Bank also provided sufficient resources concerning staff weeks and funds to ensure quality preparation and appraisal work. The Bank had a consistently good working relationship with the borrower during preparation and appraisal. Given the experience from Fadama II, the PDO and related indicators at design stage were specific and the M&E system was made functional. (b) Quality of Supervision (including of fiduciary and safeguards policies) Rating: Satisfactory The Bank’s performance during project implementation was Satisfactory. The Bank allocated sufficient budget and staff resources, and the project was adequately supervised and closely monitored. There was only two Task Team Leaders (TTLs) throughout the life of the project and there was consistency in project monitoring approach. The task team carried our regular implementation support and was responsive to the needs of the borrower, maintaining a consistent team of local and international staff and consultants to provide fresh perspectives and specific expertise as required. The team regularly prepared aide memoirs and alerted the government on required innovative changes. The team maintain good dialogues with all implementation states and was very active to engage government in policy dialogues to resolve project issues. Fiduciary and 32 environmental compliance was maintained on the project and despite implementation with 37 PIUs including the national project office, the project was never flagged during its implementation period. The team introduced several innovations that further enhanced the achievement of the PDOs. It initiated the South-Ssouth learning exchanges that eventually led to the Federation of FCAs. It brought JSDF funding into the implementation to facilitate mobile based advisory services and incorporated the GEF project for sustainable land management. It also encouraged collaboration with partners on activities that further enhanced the implementation of the project. The project won several implementation awards, some of which are; the Innovation Award in 2011; ICT for Accountability Team Award in 2012, Peoples Award in 2010, and the Africa VPU Award in 2013. During implementation, different aspects of the project were competitively selected several times as feature stories on the Bank’s intranet. One of the stories, “Culture of feedback: Key to boosting community participation and building rural livelihoods” was selected as one of IDA Results stories for IDA16. The team also collaborated with many units within the Bank in order to bring multi sectoral dimensions into its implementation. When the federal government started its economic diversification agenda, the team was able to align the implementation of the project to the demands of Agricultural Transformation Agenda (ATA). This facilitated the inflow of more resources into project implementation and the project became a major national platform for mobilization of farmers’ production for targeted Staple Crop Processing Zones (SCPZ) identified under the ATA. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory The project was relevant and appropriate and adequate attention was paid at the design stage to all critical areas that eventually enhanced the achievement of the PDOs. During implementation, the task team also introduced several collaborations, exchanges, and innovations that further enhanced the implementation of the project. Supervision of the project from the field contributed to a hands- on approach and rapid problem solving. The Project team was proactive and prepared ISR regularly, highlighting implementation issues, and preparing action plans to address them which were well monitored. With a highly satisfactory rating for quality at entry and satisfactory rating for quality of supervision, overall Bank performance is rated Satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory The government commitment and support for the project was one of the major success factor for the project implementation. There was a high level of ownership and the government laid a solid policy and political platform for the project by recognizing the project in its seven-point agenda for rural transformation in 2008. It was a major rural agricultural project with a paradigm shift and covering all the 36 states of the federation including the FCT. The government was responsive to many of the issues that could not be resolved at the project level and gave priority to the rural mobilization and CDD mechanism of the project. All the necessary institutional arrangements for implementation including NFTC, SFTC, LFDC, NFCO, SFCO and LFD were appropriately set up and made functional. Most of the participating states paid their counterpart contributions regularly and participated at national level coordinating meetings. Significantly, however, the delay and non- payment of counterpart funds affected implementation negatively and was responsible for the different results presented from implementation across states. Though, most of the counterpart contributions were later paid. When the government started its ATA and Fadama was selected as a major project for production intervention, it affected the commitment of some state governments 33 and delayed implementation of component iv activities. Towards the end of the project, most state governments responded to the success and good results of the project, either by setting up a rural developments structure to operate similar to Fadama using CDD approach, or transforming Fadama state PIU into rural development agency, or by making extra budget allocation to Fadama PIU to cover additional areas/LGAs/communities and continuing its implementation. Most LGAs, in fact, adopted the Fadama approach in delivering services at the local level. The government also fulfilled all its obligations towards the project and complied with all legal covenants. (b) Implementing Agency or Agencies Performance Rating: Satisfactory Overall, the NFCO and its state counterparts had dedicated staff who were well trained and collaborated with the Bank team and carried out most aspects of project management in compliance with Bank procedures and guidelines. Fiduciary ratings were satisfactory despite the complex nature of the project and the level of risk exposure involving multiple transactions and layers of agencies. There were initial challenges and the complexity of providing guidance and monitoring compliance in 37 PIUs, but the NFCO adopted the supervision plan prepared by the Bank during the design stage and made it functional. The zonal offices were well established, and several studies were carried out to support and fine-tune project implementation. It also introduced an award scheme that engendered healthy competition among states in terms of achieving results towards achieving the PDO in an innovative way. All the PIUs maintain and replaced retired staff, and all had a full complement of staff at closing. There was strong coordination between the federal, state and local governments on the implementation of the project with clear delineated roles and responsibilities. Systems, procedures, and processes were not new to the implementing agencies as most of them transited from the previous project and the learning curve was not steep. The project team demonstrated a strong commitment to the implementation and utilized much of the capacity support provided to be effective in delivering results. Annual work plans and budgets were regularly prepared and the social inclusiveness of the CDD approach was adhered to, at the community level which assisted in fostering participation and commitment of beneficiaries. But the non-performance of some states and not being able to meet the key PDO indicator prevented a highly satisfactory rating for the implementing agency. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory Given that Government performance is rated as Satisfactory and the Implementing Agency is rated Satisfactory, the overall Borrower’s performance is rated as Satisfactory. 6. Lessons Learned a. Agile Bank Operation: Fadama series of operation have demonstrated the agility of this bank operation to evolving and dynamic contexts and using proven platforms and mechanisms to deliver results on the ground. Responding to client needs, Fadama III was scaled up at national level, while AF I layered a value chain approach, on top of CDD, to sync with ATA, and AF II is now delivering results in a conflict zone to rehabilitate livelihoods of conflict affected households. There are significant lessons learned from the 34 Fadama series of operations that can inform design and delivery of agile bank operations elsewhere. b. Convergence of Federal and State government on the same result agenda and approach: Fadama III introduced elements of financial contribution from all government level (local, state, and federal) and beneficiaries; aligned with government development priorities (local development plans and national and state priorities); provided implementation autonomy and flexibility; and involved beneficiaries in determining and sharing development priorities. This brought governments at different level (local, state, and national) on the same platform and the core approaches of the project have been replicated and scaled up in other development programs being implemented by the federal and state governments. c. Mainstreaming Gender in a large development program: The gender mainstreaming of the project was highly effective and number of Fadama III women beneficiaries was over 40 percent. IFPRI’s impact evaluation study highlight that Fadama III female beneficiaries income increased by 31 percent compared to 28 percent for male-headed beneficiaries. The project took commendable steps to ensure inclusive and equitable Community participation at the FUG and FCA levels, thus addressing the issues of gender and governance. The gender gap was substantially reduced and gender mainstreaming was largely complied with. The project made it mandatory to have a third of executive members of FCAs as women. It also established project support for the vulnerable population of which gender was well classified. The project data was well disaggregated on gender basis. Fadama’s experience and approaches can help inform other agricultural development programs in mainstreaming gender. d. South-South Collaboration: Fadama is a good example of facilitating south-south collaboration. The exposure trip to CDD projects in South Asia and elsewhere help inform the design of this operation and incorporation of new elements, such as Fadama User Equity Funds. At the same time, Fadama help inform a series of new bottom-up operations in other parts of the World on agile operations, mainstreaming gender, and adaptive learnings. e. Tailor Best Practices to Local Conditions: The Fadama series of projects is a clear example of how country-level projects can benefit from international experience. The broad acceptance of the emerging CDD model within Nigeria resulting in part from the information gathered on how similar projects had succeeded in other environments, together with careful tailoring to the Nigerian context and use of existing institutional arrangements. f. Adaptive Learning: Design of the FADAMA project has embraced a model of trial, errors, and adaptation. From piloting targeted small-scale community investments to introducing fundamentally new mechanisms for community participations in agriculture development, the project has been a laboratory of experiments. The process of adaptive learning has encouraged innovation at every stage, enhancing project results and sustainability. g. Divergent state capacity: The capacity to implement, monitor, and co-finance interventions at sub-national level can be quite different which can have tremendous bearing on the project outcomes at individual states level and aggregate project level. 35 The project should keep in mind the various resource endowments, governance structures, technical and management capabilities, and political commitments of individual states during project design and resource allocation decisions, rather than allocating all the states the same resources and timeline for implementation. h. Setting up Realistic targets: The success of Fadama II slightly crowded the judgement in setting up the result framework during preparation. Many of the targets were doubled without understanding of the fact that 19 new states will just be joining the Fadama project which will require steep learning curve and might face implementation challenges to meet the project targets. i. Responsive to geopolitical realities and dynamics: Some of the states went through significant geopolitical turmoil, especially due to Boko Haram and Niger Delta insurgencies, which adversely impacted the project implementation. Having some mechanism to in place to adjust the implementation of the project considering the unique needs of each states and responding to their geopolitical realities could improve the performance of lagging states. j. Community institution building: Presence of good local institutions is very important to translate local demands and often a core element of good community-driven development project. The project was able to create a number of local institutions (FUGs and FCAs) and were able to federate them into state level FFCA. Most of these local institutions are currently sustaining and operating, albeit at different capacities, providing vital services to the project beneficiaries. This local institution development through CDD approach has been relatively successful with far reaching implications and can have wider application within and beyond Nigeria. k. Integrated approach: The project combined hard investments (FUG asset creation and community infrastructure) with soft support (capacity building and advisory support) to provide an integrated package of interventions to ensure optimum utilization of assets created by the project and their sustenance beyond the project life. l. Demand-orientation: Rather than pre-determining the asset to be supported by the project, the menu of options for investment support was rather broad, to ensure the project meets the actual demands of the project beneficiaries. This approach was relatively successful as demonstrated by the utilization and satisfaction surveys and could be a good approach to be emulated in other projects. m. Decentralization of decision-making: The adoption of CDD and the use of LDP as a planning tool for investment enhanced the decentralization of fiscal and investment decision making process at the community level. The mechanism devolved management decision making and coordination to Management Committees of FCAs, Desk Officers, and Facilitators in addition to the State Project Implementation Unit. The CDD–LDP approach enhanced empowerment, social inclusion, participation, ownership, and sustainability. This is a major success lesson of Fadama III Project. n. Harmonization of Local Development Plans. The experience of Bank assisted CDD projects shows greater impact, synergy and complementary from harmonization of tools and approaches. This lesson was employed in project implementation through collaboration with CSDP and SACA by ensuring good working relationships between the relevant project teams and removal of project overlap and duplication in communities. 36 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies (b) Co-financiers (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) 37 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) Capacity building 74.59 42.34 56.76 Small scale community owned 73.40 41.74 56.86 infrastructure Advisory services/input support 39.56 38.21 98.81 Support to ADPs, sponsored research and on-farm 31.96 10.42 32.35 demonstration Asset acquisition for individual 150 68.21 46.08 FUGs/EIGs Project management 50.6 88.50 174.90 Total 289.44 Total Baseline Cost 420.17 Physical Contingencies 3.20 0.00 Price Contingencies 23.86 0.00 Total Project Costs 447.23 0.00 Front-end fee PPF 2.77.00 0.98 Front-end fee IBRD 0.00 0.00 Total Financing Required 450.00 290.42 64.54 (b) Financing Appraisal Actual/Latest Type of Co- Estimate Estimate Percentage of Source of Funds financing (USD (USD Appraisal millions) millions) Borrower (Federal Government) 23.00 7.953 34.58 Borrower (State Governments) 77.00 14.448 18.76 Local Communities 60.00 16.633 27.72 International Development 250.00 235.924* 94.37 Association (IDA) Local Governments 40.00 15.481 38.70 Total 450.00 290.442 64.54 *PCU indicates that the USD15 million shortfall was due to SDR-USD rate fluctuations. 38 Annex 2. Outputs by Component The project had the following six components: Component 1. Capacity Building, Local Government, and Communications and Information Support (US$87.5million): This component includes: (a) capacity building support for community organizations; (b) capacity building support to local governments; and (c) communications and information support. The objective of this component is to support measures to build the capacity of Fadama Community Associations (FCAs) and their constituent Economic Interest Groups (EIGs), Fadama User Groups (FUGs), to access project advisory services and project funding and that of the project staff to successfully implement the project. Under this component, the project formed 685 LGAs, 64,347 FUGs and 5,407 FCAs. At ICR a total of 4,726, 4561 and 3,438 LDPs were prepared, approved, and fully implemented. The project resulted in 48,791 (43.96%) FUGs having benefited from various kinds of trainings on book keeping & financial records, marketing strategy, group dynamics, cost effective environmental plan, conflict resolution etc., and 4,462 FCAs have benefited from training on Community Based procurement, Financial Management, Environmental safeguards, group dynamics, cost effective environmental plan, conflict resolution etc., while 2,713 LGA staffs against the project target of 3000 staff have been trained on project management, financial analysis, participatory M&E, environmental safeguards, group dynamics, cost effective environmental plan, and conflict resolution, etc., in the course of the implementation of the Project. The Project financed technical assistance, training, equipment, and other institutional support to the participating 685 local governments of which 387 LGAs integrated LDPs in their annual work plan and budget (AWPB) against the target of 148 LGAs. To strengthen the capacity of participating Local Government Authorities for participatory planning, a total of 810 training on capacity building were attended by staff of LGAs. Component 2. Small-Scale Community-owned Infrastructure (US $73.57 million) The objective of Component 2 is to support the creation of economic infrastructure and local public goods that would improve the productivity of Fadama user households. Under this component, beneficiaries are required to pay 10 percent of the costs of construction and rehabilitation of surface and ground water irrigation facilities, farm land clearing and development, on farm storage facilities, farm internal roads, market infrastructure, access roads linking farm to markets/processing centres, and hydraulic structures to enhance the production capacity of farmers in a sustainable manner. This component supported a total of 15,596 small scale community owned infrastructure comprising of 137 constructed feeder roads, covering 413 km in addition to 165 feeder roads covering 563 km that were rehabilitated. Others include: 49 drainages, 405 culverts, 67 small bridges, 709 lockup shops, 1,493 market stalls, 125 cooling shed constructed, 11 drying slabs, 21 water harvesting infrastructure, 612 boreholes, 465 VIP toilets, 177 cold room housing, 125 storage facilities, 2,591 poultry houses, 1,416 concrete fish ponds, 2,765 housing for processing machine, 61 watering points constructed, 13 Abattoirs, and 16 small earth dams. Also 3,438 of 5,407 FCAs registered representing 64 percent of beneficiaries benefited under the component. Component 3. Advisory Services and Input Support (US $39.5 million) 39 Under this component the Project financed: (a) advisory services - the Project provided support to empower Fadama users--farmers/pastoralists and other Economic Interest Groups (EIGs) working within their organizations and through their LGAs--to purchase advisory services from both public and private sources; and (b) input support - this facility involves the adoption of new technology by the farmers to enhance their financial capacity to purchase farm inputs (mainly seeds, fertilizers and agrochemicals) and to build savings from incremental earnings to finance future purchases. The Project used matching grant arrangement to deliver advisory services and input support. Across the states, 6,650 service providers were certified and 4,587 service providers (3,460 private and 1,127 public) were engaged in various project interventions. A total of 31,672 FUGs out of total 64,347 FUGs procured advisory services. The Project leveraged on the matching grant arrangement which was successfully tested under Fadama II. Matching grant of 50 percent of the purchase price of the input per FUG, was given while the remaining 50 percent was the FUG beneficiary counterpart contribution. A total number of 493,805 Farmers had access to agricultural inputs comprising of 120,593,679 Farmers in 4760 FUGs procured Improved Seedlings; 87,596 Farmers in 9,324 FUGs procured Improved Seeds; 110,706 Farmers in 9,137 FUGs procured Inorganic Fertilizer; 80,354 Farmers in 7,442 FUGs procured Agrochemicals; and 94,556 Farmers in 3,602 FUGs procured Organic Manure. Component 4. Support to the Agricultural Development Programs (ADPs), Sponsored Research, and On-Farm Demonstration (US $37.43 million) The Project provided support to the ADPs to carry out the following specific and limited functions: (a) support to advisory service providers; (b) quality assurance of advisory services; (c) training of facilitators; (d) sponsored research and on-farm demonstrations; and (e) training of extension staff. The project undertook sensitization workshops for the PMs/Managing Director ZPCs, SPCs, and NPFS Regional Heads; organized meetings with PMs/MDs and Directors of Technical Services of the ADPs, organized Zonal collaboration workshops for all the Director Technical Services (DTS), Director Program Monitoring and Evaluation (DPME), Director Extension Services and a representative of Women In Agriculture (WIA) of all ADPs, as well as the Fadama III SPCs and research institutes in the zone; organized sensitization workshops of facilitators, SMSs and EAs; organized orientation workshops of Service Providers; set up ICT resource center in each state; conduced 481 training and trained 1855 ADP staff. A collaborative workshop on sponsored Research was carried out with International and National Research Centers in September 2009. Subsequently, MOUs with the International Institute for Tropical Agriculture (IITA) and the National Research Institutes (NARIS) Institute for Agricultural Research and Training (IAR&T), NCRI, National Institute for Freshwater Fisheries (NIFFR), IAR, Lake Chad Research Institute (LCRI) and NRCRI were successfully concluded and signed. However, the Project could not implement the sponsored research activity considering the gestation period of a sponsored research programme. Meanwhile, effort was later centered on pushing proven on-shelf technologies that are capable of increasing farmers’ yields. A comprehensive needs assessment was conducted in all zones to ascertain farmer’s priorities. The needs were matched with available (on-shelf) technologies, and interventions were packaged by the research institutes coordinated by IITA. IITA organized four trainings in seed production 40 training for cereals, legumes, and tubers and six trainings in floating fish feed formulation. IITA also organized seed multiplication trainings in two states and in collaboration with the National Institute for Fresh Water Fishes Research (NIFFR), conducted floating fish production trainings in two states. In collaboration with NCAM/Kinki University, demonstration of Sawah Rice Technology was organized in 5 states. These activities resulted in strengthened capacity of ADPs to provide extension services to Fadama farmers and strengthened links between Fadama users and the research institute. A total of 195,503 (crop), 163,991 (livestock), and 17,685 (fisheries) beneficiaries received extension services from ADPs. The major outcome of this component includes a 38.7 percent increase in the number of Fadama farmers that received extension services from ADPs. Component 5. Asset Acquisition for Individual FUGs/EIGs (US $150 million) A matching grant was used as seed money to empower smallholder and poor farmers to acquire capital assets which they used to undertake a wide range of small-scale income generating activities as well as improve farmers' access to markets and complementary support that added value to farm produce. This approach to financing is adopted due to the low performance of rural financial markets in Nigeria, which are particularly deficient and limited in terms of outreach in the rural areas. M&E data show that Fadama III beneficiaries acquired mainly agricultural productive assets worth N11.6 billion equivalents to about US$72 million. Livestock assets (33.93%) and crop assets (33.33%) constituted the largest number of productive assets. A total of 245,756 various productive Assets were procured by the groups, against the target of 100,000. The biggest category of asset acquired includes Poultry production (53,348); Animal traction (41,984); water pumps (20,395); sprayers (14,842); Fisheries (13,089); goat production (11,296); sheep production (10,695); and distribution of assets to vulnerable population (47,643). Component 6. Project Management, Monitoring and Evaluation (US $59.30 million) This component was arranged to provide coordination and oversight function through: (a) Technical assistance to national and state level implementation coordination; and (b) Project coordination; and (c) Project monitoring and evaluation. 41 Annex 3. Economic and Financial Analysis NIGERIA: THIRD NATIONAL FADAMA DEVELOPMENT PROJECT Implementation Completion Report: Economic and Financial Analysis Dr. Molokwu C. Christopher1 Introduction Project Development Objective and Components The project development objectives (PDOs) of Fadama III were to increase the incomes of users of rural land and water resources on a sustainable basis by directly delivering resources to the beneficiary rural communities, efficiently and effectively, and empowering them to collectively decide on how resources are allocated and managed for their livelihood activities and to participate in the design and execution of their subprojects. By increasing their incomes, the Project will help reduce rural poverty, increase food security and contribute to the achievement of a key Millennium Development Goal (MDG). The PDOs were achieved through an integrated approach including provision of matching grants for small-scale economic infrastructure and asset acquisition subprojects, as well as the associated training and skills development for the fadama user groups and Community Associations. The Project was anchored on a Community-Driven Development approach. It had six components namely: (i) Capacity Building, Communication and Information Support Capacity building support for community organizations; (b) Capacity building support to local governments; and (c) Communications and information support. The objective of this component is to support measures to build the capacity of Fadama Community Associations (FCAs) and their constituent Economic Interest Groups (EIGs), Fadama User Groups (FUGs), to access project advisory services and project funding and that of the project staff to successfully implement the project. (ii) Small-Scale Community-Owned Infrastructure Is to support the creation of economic infrastructure and local public goods that would improve the productivity of Fadama user households. Under this component, beneficiaries are required to pay 10% of the costs of construction and rehabilitation of surface and ground water irrigation facilities, farm land clearing and development, on farm storage facilities, farm internal roads, market infrastructure, access roads linking farm to markets/processing centres and hydraulic structures to enhance production capacity of farmers in a sustainable manner. (iii) Advisory Services and Input Support The project finance: (a) Advisory services - the Project will provide support to empower Fadama users--farmers/pastoralists and other economic interest groups (EIGs) working within their organizations and through their LGAs--to purchase advisory services from both public and private sources; and (b) Input support - this facility involves the adoption of new technology by the farmers 1 Molokwu C. Christopher, Economics Programme, Salem University, Lokoja, c2molokwu@gmail.com; molokwuchristopher@yahoo.com; 0806 349 7859. 42 to enhance their financial capacity to purchase farm inputs (mainly seeds, fertilizers and agrochemicals) and to build savings from incremental earnings to finance future purchases. The project provided matching grant arrangement successfully tested under the Fadama II Project. (iv) Support to the Agricultural Development Programs (ADPs), Sponsored Research, and On-Farm Demonstration The Project provided support to the ADPs to carry out the following specific and limited functions: (a) Support to advisory service providers; (b) Quality assurance of advisory services; (c) Training of facilitators; (d) Sponsored research and on-farm demonstrations; and (e) Training of extension staff. (v) Asset Acquisition for Individual FUGs/EIGs A matching grant was used as seed money to empower smallholder and poor farmers to acquire capital assets which they used to undertake a wide range of small-scale income generating activities as well as improve farmers' access to markets and complementary support that added value to farm produce. This approach to financing is adopted due to the low performance of rural financial markets in Nigeria, which are particularly deficient and limited in terms of outreach in the rural areas. (vi) Project Management, Monitoring and Evaluation This component was arranged to provide coordination and oversight function through: (a) Technical assistance to national and state level implementation coordination; and (b) Project coordination; and (c) Project monitoring and evaluation. Data Collection and Subproject Models Analysis was based on data extracted from implementation database, administrative, monitoring and evaluation records kept by the project. The notable documents consulted included the following: i. Aide memoires of various supervision missions, ii. Reports of the supervision missions from 1st to the 8th mission, iii. Midterm review reports, iv. Management information system (MIS) reports, and v. Borrowers Implementation Completion Report (ICR). The actual achievements in various representative enterprise models; significant demands of various assets were extracted and used in preparing this report. In situations where implementation data did not exist, the scenario that obtained during project preparation was assumed. Estimation of Benefit Capacity building for communities The benefits of this component were largely indirect; difficult to disentangle and quantify; the equity provider derived no direct benefit from the component but the component greatly improved the effectiveness and efficiency of project implementation and indirectly improved productivities and income of beneficiaries. The benefits of the capacity building were entangled and embodied in the utilization of infrastructure or assets applied in the representative enterprises. For the purpose of this analysis the budget for capacity building was regarded as an overhead cost incurred in implementing the major components of the project. Consequently, no enterprise model was constructed to represent capacity building. 43 Rural Infrastructure This component was concerned with rehabilitation and/or construction of feeder and fadama access roads, culverts and small bridges; and infrastructure for sustainable natural resources management, including improved conservation of soils and agronomic practices, and water harvesting techniques. In addition the project financed cross-FCA infrastructure—infrastructure that cuts across FCAs and/or LG boundaries, including stock routes, pastures and watering points. Following the project’s preparation report procedures; the enterprise models formulated to represent this component were: (i) construction/rehabilitation of rural roads; (ii) markets and (iii) construction of boreholes. Rural roads Rural roads were used for evacuating produce from farms to markets. Higher prices of commodities accrue to producers when they transport their commodities from the farms to markets (where the commodities command higher prices). The benefits from rural roads were determined from the difference between farm gate and market prices of commodities. Rural markets The benefit from the market model was the timely disposal of perishable fadama crops at competitive prices. Farmers obtained more reasonable prices as they sold produce at competitive prices due to increased demand and influx of traders to buy their produce. This led to increased income. On market days fees were charged for the use of stalls, packing for lorries, cars, wheel barrows and for the use of conveniences (toilet facilities) in the market. Boreholes The expected benefits from the boreholes were firstly pure drinking water for people and processing activities then for livestock and other domestic purposes. Secondly it minimized the incidence of water borne diseases in the communities and improved rural health. These also led to increased production. Productive activities The models formulated for the productive activities included: Cattle/ram fattening, Sheep/goat upgrading, Layer production, Northern Rain fed Module (Sorghum/cowpea/maize/millet), Southern Rain fed Module (Yam/maize/Cassava), Northern Irrigation module, Southern Irrigation module, Earth pond aquaculture, Palm fruit processing, Rice milling, Tomato/pepper processing, Ground-nut Processing, Garri processing, and Honey Production. The economic benefits of this component were derived from the incremental net income they generated; the increased employment; improved quality of processed food; minimization of malnutrition and elimination of hunger in the society. Advisory services and input support Advisory services component was concerned with mainly diversified problem-solving research and extension services that are responsive to production, processing, marketing and supply chain management needs of fadama users. The benefits of advisory services were indirect while the benefits of the inputs were directly in form of improved production. No enterprise model was therefore formulated for the component. Main Assumption The economic analysis was carried out for the project as a whole. Financial analysis was carried out for the various representative enterprises to assess the incentives for farmers, managers, and owners (including governments) who participated in the project. The financial analysis was based on constant market prices, direct costs and benefits. Financial flows were calculated for both the “with” and “without” project cases. 44 Period of Analysis The period of analysis was 15 years. The cash flows for investment, operating inputs, labour; costs and benefits streams were estimated and projected for 15 years. An incremental cost-benefit analysis was used to estimate benefits from investments in the enterprises. Full cost-benefit analysis was used to estimate returns from new business enterprises to capture the effects of diversification. Methodology of economic analysis The economic analysis for the Implementation Completion Report (ICR) adopted the methodologies, patterns, and assumptions employed in the project’s preparation report. As in the preparation report representative enterprise models were used as the analytical units or subprojects supported by the intervention in order to estimate the project’s benefits and costs. As in the project’s preparation report, the economic life of the project was taken to be 15 years consequently, cropping patterns, inputs applications, costs and benefits were projected for 15 years and the computation of performance indicators and decision criteria namely rates of return and net present values were based on the values of net aggregate incremental benefits for 15 years. Considering the fact that the project was demand driven: some subprojects were actually demanded and implemented namely: Small Ruminant upgrading (sheep and goat production); Poultry Production; Earth pond aquaculture (fisheries production); Palm fruit processing; Rice milling; Tomato/pepper processing; Groundnut processing; Garri (cassava) processing; Fadama Roads (road rehabilitation and construction); Fadama Markets including lockup shops and go-downs; Boreholes and Honey Production. Some subprojects were not explicitly directly demanded rather beneficiaries demanded the major pilot assets that were employed in these enterprises. In those cases the same approach used in the project’s preparation in determining enterprise models and their coverage based on the assets the beneficiaries demanded were followed to determine the enterprises, and estimate the area covered by the enterprises. These subprojects are: Northern (Savannah) rain fed agriculture; Southern (Rain forest) rain fed agriculture; Northern Irrigation agriculture and Southern Irrigation agriculture. The notable departures from the projects preparation models are:  The preparation report did not include Fadama Roads (road rehabilitation and construction) and Tomato/pepper processing but these enterprises are included in the ICR because of the highly significant achievements made by the project in these areas.  The preparation report included Tailoring but this enterprise was not included in the ICR because the project did not support this enterprise it is in the negative list  In the preparation report expected values of project achievement were based on the pattern of demand for rural infrastructure, pilot assets and advisory services by the beneficiaries of Fadama II project.  In this ICR, the actual achievements recorded from implementation monitoring reports, MIS and technical review missions were used as project achievements. The details are presented in table 1. Quantities/numbers of subprojects achieved during implementation The number or quantities of the representative subprojects/enterprises achieved during implementation and their estimates applied during project’s preparation are presented in table 1. Evident from table 1, the project’s implementation achieved 134 percent in small ruminant upgrading; 475 percent in poultry production; 96 percent in savannah (northern) rain fed agriculture; 2 percent in rain forest (southern) rain fed agriculture; 165 percent in earth pond aquaculture; 313 percent in palm fruit processing; and 193 percent in cassava (garri) processing. On the other hand the project’s implementation was associated with decrease of 48 percent decrease in northern irrigation agriculture; 65 percent decrease in southern irrigation agriculture; 75 percent 45 decrease in rice milling; 67 percent decrease in ground nut processing; 53 percent decrease in fadama markets; 94 percent decrease in boreholes and 73 percent decrease in honey production. Table 1: Quantities of Enterprise Models During Project’s Preparation and Implementation Periods S/ Percent No ENTERPRISES IMPLEMENTATION age TOTA APPR YR 1 YR 2 YR 3 YR 4 YR 5 L AISAL increase 1 Cattle/Ram Fattening 2139 2139 2139 2139 2139 10695 3650 193 2 Small Ruminant Upgrading 2259 2259 2259 2259 2259 11296 4825 134 3 Poultry Production 10670 10670 10670 10670 10670 53348 9283 475 4 Savannah rain fed agric 4283 4283 4283 4283 4283 21416 10948 96 5 Rain forest rain fed agric 1484 1484 1484 1484 1484 7421 7299 2 6 North Irrigation agric 4079 4079 4079 4079 4079 20395 39362 -48 7 South Irrigation agric 2483 2483 2483 2483 2483 12413 35712 -65 8 Earth pond aquaculture 2011 2011 2011 2011 2011 10053 3798 165 9 Palm fruit processing 319 319 319 319 319 1593 386 313 10 Rice milling 181 181 181 181 181 904 3631 -75 11 Tomato/pepper processing 486 486 486 486 486 2432 N/A 12 Groundnut processing 106 106 106 106 106 529 1587 -67 13 Garri processing 749 749 749 749 749 3743 1277 193 14 Fadama Roads 189 189 189 189 189 944 N/A 15 Fadama Market 347 347 347 347 347 1736 3717 -53 16 Borehole 122 122 122 122 122 612 9425 -94 17 Honey Production 413 413 413 413 413 2067 7762 -73 Crop Yields For crop production, at project preparation the yield rates applied were generic data derived from Cropped Area and Yield Surveys (CAYS) conducted by the Ministry of Agriculture. In the ICR the yield rates applied are the actually achieved yield rates recorded by implementation monitoring unit. The actual yield rates were however not available for all crops. The available data are presented in table 2. In table 2 it is apparent that the project’s implementation yield rates for sorghum, millet, yam, cassava, tomato, pepper, amaranthus (vegetables) and onion were higher than their values at the project’s preparation stage. The percentage increase ranged from 1 percent in yam to 188 percent in pepper. The details are in table 2. 46 On the other hand, the project’s implementation yield rates for rice, maize, cowpea, and okro were lower than their values at the project’s preparation stage. The percentage decrease ranged from -26 percent in okro to -5 percent in rice. On processing (palm fruit processing, rice milling, tomato/pepper processing, groundnut processing, and garri processing); earth pond aquaculture and infrastructure models (roads, boreholes, markets) there were no monitoring data about their transformation coefficients (processing conversion factors) consequently, the same transformation coefficients applied during the project’s preparation stage were also applied at the project’s ICR stage. Table 2: Crops’ Yields (kg/Ha) During Project’s Preparation and Implementation Stages Crops Implementation (kg/Ha) Preparation (kg/Ha) Percentage change Rice 3170 3334 -5 Maize 2340 2883 -19 Sorghum 1600 1300 23 Millet 1400 1300 8 Cowpea 950 1200 -21 Yam 14300 14175 1 Cassava 15980 14700 9 Okro 3860 5186 -26 Tomato 4260 3112 37 Pepper 5830 2023 188 Amaranthus 3750 2644 42 Onion 5830 4630 26 Inputs During projects preparation it was assumed that the project’s implementation will provide farmers with fertilizers, herbicides, insecticides and other inputs. There was no quantitative data on the application of other inputs during project’s implementation. It was therefore assumed that the same situation that applied during preparation also occurred during implementation. Consequently, there was no change in the application of the other inputs during project’s preparation and implementation. For fertilizers, herbicides and insecticides it was assumed that beneficiaries will on the average, on per hectare basis apply 8 bags of fertilizers; 3 liters of herbicides and 3 liters of insecticides. From implementation reports it was evident that on the average the farmers applied 5 bags of fertilizers; 2 liters of herbicides and 2 liters of insecticides per hectare (a decrease of 38, 33 and 33 percents respectively). The details are in table 3. The ICR report reduced the application rates of these inputs accordingly. 47 Table 3: Farm Input Application Per Hectare During Project’s Preparation And Implementation Inputs Implementation Preparation Percentage Change Fertilizers (50Kg bag) 5 8 -38 Herbicide (Lt) 2 3 -33 Insecticide(Lt) 2 3 -33 Prices of inputs and outputs In the economic analysis for the ICR, constant prices as at mid June 2006 were used. These were the same prices used in the project’s preparation on the assumption that all inputs and outputs will be equally affected by changes in the price level over time. The use of constant prices obviates the need for adjusting for the effects of inter-temporal price movements and inflation. In moving from financial to economic analysis the following variables were eliminated namely: all taxes, subsidies (included), loans, grants repayment of loans and interest charges. The Nigerian economy was visualized to have no ownership rights to resources; no resources’ underutilization was permitted; all constraints to free trade of resources and outputs were assumed away; no monopoly effects exist in the economy and government interference was limited to ensuring free competitive economy tending to perfect market situation. Consequently, all possible institutional constraints were removed. Shadow Exchange Rate was not calculated because it was considered that the premium on foreign exchange was small and even if large would not alter the analyses because the costs of the imported components of Fadama III project were not critical to the outcome of the project (Pedro et al 1998)2. As was assumed in the preparation report, the NGN was not over valued consequently no overvaluation adjustment (standard conversion factor) was applied to non traded goods. The exchange rate used is NGN 130.00 = USD 1.00. This was the exchange rate used in the project’s preparation. Aggregation The achievements in the representative enterprise models on year-wise basis for the five years of the project’s funding life were used as aggregation weights to sum the incremental benefits of the representative enterprise models and obtain a single valued Aggregate Incremental Benefit (AIB) for each of the 15 projected years of the project life. It is noted that the expenditures made on Capacity Building, Support to the Agricultural Projects (ADPs) and Project Management, Monitoring and Evaluation were not directly ascribed to any of the representative enterprise models. They were regarded as overhead costs. For each of the funding project years from year zero to year five, the associated overhead costs were deducted from the aggregated Incremental Benefit (AIB) for that year to obtain the Net Aggregate Incremental Benefit (NAIB). The Net Aggregate Incremental Benefit was the basis for computing the Internal Rate of Return (IRR) and the Net Present Value (NPV) of the whole project. The achievements in the representative enterprise models on year-wise basis for the five years of the project’s fundi ng life were also used as aggregation weights to sum the project’s benefits and costs for each of the representative enterprise models and obtain single valued aggregated benefits and costs for each of the 15 projected years of the project life. The net present values of the streams of the aggregated benefits and costs were used 2 Pedro Belli, Jack Anderson, Howard Barnum, John Dixon and Jee-Peng Tan (1998), Handbook on Economic Analysis of Investment Operations: Operational Core Services Network Learning and Leadership Center. 48 to compute the projects Benefit-Cost Ratio (BCR). The opportunity cost of capital used in computing the NPV and BCR remained 12 percent as in the appraisal period. Economic Analysis Economic Rate of Return (ERR) The estimated overall ERR for the project is 35%; an NPV of N 47,468.2 million or USD 365.1million; the BCR is 1.29 and Annual Incremental Net Benefit (AINB) of N 21,611.6 million or USD 166.2 million, assuming an opportunity cost of capital of 12%. The estimated ERR of 35% implies that if the incremental benefits due to the project are discounted at the rate of 35 percent, the benefits will equate the costs and the NPV will be equal to zero. The decision rule is that once the ERR is greater than the opportunity cost of capital (hurdle rate) the project is passed as successful. The estimated NPV of N 21,611.6 million or USD 166.2 million is the amount or net worth of the project when all costs have been accounted for including family labour and the benefits which the resources committed to the project would have generated without the project. The decision rule is to pass or regard the project as successful once the NPV is greater than zero. The estimated BCR of 1.29 implies that for every one Naira spent on the project there is a corresponding profit of 29 kobo only. The decision rule is to accept the project as successful once the BCR is greater one. The estimated Annual Incremental Net Benefit (AINB) of the project was N 21,611.6 million or USD 166.2 million. This is the amount left to the disposition of the equity contributors when all costs have been duly paid including family labour and the benefits which the resources committed to the project would have generated without the project. The decision rule is to pass or regard the project as successful once the (AINB) is greater than zero. The details of estimating the decision indicators for the project are presented in table 4. Table 4: Estimation of the Project ERR and NPV Aggregate Net Aggregate Project year Incremental Benefit Overhead Costs Incremental Benefit 0 0 -128416262 -128416262 1 -8060618885 -2454259561 -10514878446 2 -3263781176 -4557854084 -7821635260 3 88838678.62 -4944688288 -4855849609 4 3469554671 -2407945609 1061609062 5 7827471941 -841722948.3 6985748993 6 19379238407 19379238407 7 20606250299 20606250299 8 21611547714 21611547714 9 22588748992 22588748992 10 21237727348 21237727348 11 21237727348 21237727348 12 21237727348 21237727348 13 21237727348 21237727348 14 21237727348 21237727348 15 22514060451 22514060451 ERR = 35% NPV = NGN 47,468,196,960; NPV = USD 365,139,980 49 BCR = 1.29 In the preparation report the estimated overall ERR for the project was 29%; an NPV of N 57,073.9 million or USD 439.1 million; and incremental net benefit of N 32,513.3 million or USD 250.1 million, assuming an opportunity cost of capital of 12%. Table 5: Estimated Values of Economic Indicators at Preparation and Completion of The Project (in ‘000) Percentage Indicators ICR (2016) Preparation (2007) Difference Difference In millions ERR 35 29 6 20.7 NPV(NGN) 47468.2 57073.9 -9605.7 -16.8 NPV(USD) 365.2 439.1 -73.9 -16.8 BCR 1.29 N/A N/A N/A AINB 21,611.50 32,513.30 -10901.8 -33.5 From table 5 it is apparent that at the completion of the project relative to the appraisal, the Economic internal rate of return increased by 6 percent, the Net Present Value decreased by about 17 percent and the annual incremental net benefit decreased by 33 percent. Sensitivity Analysis Sensitivity tests indicated that the project remains viable under a variety of assumptions. In general, all the enterprise models were sensitive to changes in the output prices and operating costs. A 10 percent drop in the output prices reduces the project ERR to 23 percent, that is a decrease of 34 percent; and a 10 percent increase in operating costs reduces the project ERR to 27 percent, that is a decrease of 22 percent. The analysis of the switching value shows that the ERR is sensitive to changes in project costs and benefits. A reduction in benefits by 18 percent or an increase in the total cost by 23 percent reduces the ERR to 12 percent (the hurdle rate). Similarly, a reduction of benefits by 10% coupled to a simultaneous increase of cost by 10% reduces the ERR to 12 percent which is the hurdle rate. Table 6 presents the estimated economic indicators (ERR, NPV, AINB and BCR) for the enterprise models. From the table it was apparent that the ERR ranged from a minimum of 18 percent in borehole to a maximum of 92 percent in rural roads. The NPV ranged from a minimum of NGN 85,280 in Tomato processing to a maximum of NGN 177.1million in borehole. The BCR ranged from a minimum of 1.07 in borehole to a maximum of 2.57 in rural roads. 50 Table 6: Estimated Economic Indicators (ERR, NPV, AINB and BCR) for the Enterprise Models PROJECT ENTERPRISES PERCENT 000 NAIRA 000 USD INCR INCR BCR IRR NPV BENEFIT NPV BENEFIT 1 Cattle/Ram fattening 0.56 445.01 109.39 3.42 0.84 1.74 2 Sheep/Goat upgrading 0.80 577.04 127.97 4.44 0.98 1.26 3 Layer production 0.45 685.97 193.46 5.28 1.49 1.17 4 Sorghum/cowpea/maize/millet 0.47 237.32 58.73 1.83 0.45 1.50 5 Rain fed Yam/maize/Cassava 0.55 326.47 77.64 2.51 0.60 1.51 6 North Irrigation module 0.53 364.70 97.13 2.81 0.75 1.20 7 South Irrigation module 0.49 449.95 109.74 3.46 0.84 1.37 8 Earth pond aquaculture 0.58 342.66 85.98 2.64 0.66 1.54 9 Palm fruit processing 0.29 264.32 95.61 2.03 0.74 1.23 10 Rice milling 0.74 1274.36 287.33 9.80 2.21 1.42 11 Tomato/pepper processing 0.68 85.28 20.20 0.66 0.16 1.15 12 Groundnut Processing 0.73 674.01 155.69 5.18 1.20 1.27 13 Garri processing 0.41 252.46 76.33 1.94 0.59 1.12 14 Rural Roads 0.92 7066.00 1427.59 54.35 10.98 2.57 15 Rural Market 0.20 388.65 219.21 2.99 1.69 1.16 16 Borehole 0.18 177078.16 133.91 1362.14 1.03 1.07 17 Honey Production 0.52 308.38 83.45 2.37 0.64 1.24 Project 0.35 47,468,196.96 21,611,547.71 365,139.98 166,242.67 1.29 Min 0.18 85.28 20.20 0.66 0.16 1.07 Max 0.92 177078.16 1427.59 1362.14 10.98 2.57 51 The Economic Rate of Return at Project Completion Compared to Preparation Estimates The estimated economic Internal Rates of Return (ERR) were compared to the estimates made at the preparation of Fadama III project and the result is presented in table 7. From table 7 it is apparent that the economic rates of return for the following 7 enterprises decreased namely: South Irrigation model decreased by 46 percent; aquaculture by 3%; palm fruit processing by 28%; garri processing by7%; Rural Market by 49%; Borehole by 67%; and Honey Production by 12% while that of the ERR for other 10 enterprises increased at the completion of the project relative to the preparation. The increases ranged from a minimum of 31 percent in Sorghum/cowpea/maize/millet model to a maximum of 196 percent in Sheep/Goat upgrading. Details are in table 7. Table 7: The ERR at Project Completion Compared to Preparation Estimates PROJECT ENTERPRISES ICR(2016) Preparation(2007) Percentage ERR ERR Increase Cattle/Ram fattening 0.56 0.28 100 Sheep/Goat upgrading 0.8 0.27 196 Layer production 0.45 0.34 32 Sorghum/cowpea/maize/millet 0.47 0.36 31 Rain fed module 0.38 Yam/maize/Cassava 0.55 45 North Irrigation module 0.53 0.35 51 South Irrigation module 0.49 0.9 -46 Earth pond aquaculture 0.58 0.6 -3 Palm fruit processing 0.29 0.4 -28 Rice milling 0.74 0.38 95 Tomato/pepper processing 0.68 N/A N/A Groundnut Processing 0.73 0.3 143 Garri processing 0.41 0.44 -7 Rural Roads 0.92 N/A N/A Rural Market 0.2 0.39 -49 Borehole 0.18 0.54 -67 Honey Production 0.52 0.59 -12 Project 0.35 0.29 21 Min 0.18 0.27 -67 Max 0.92 0.9 196 Financial Analysis The Financial analysis focused on the profitability of the agricultural project to the providers of equity capital in the Fadama III project. It determined the financial impact of the project on equity contributors (farmers and implementing agencies). In the analysis constant (June 2006) market prices were used to determine values of inputs and outputs. Taxes and interests on loans were regarded as costs while grants and subsidies were regarded as benefits. In the farm models the source of benefits were the revenues from crops, livestock, fish and other farm outputs while costs were made up of investment, operating expenses and taxes. In the processing models, the benefits were derived from the values of the product and bye-products while costs were made up of 52 investment, operating expenses and taxes. Market values were imputed for commodities used at home or given out as gifts or payment in cash. Under infrastructure (community subprojects), there were externalities: the benefits were diffused and may not be fully estimated. The road being a public good, the ownership right was not defined; consequently claims to the benefits were also not defined. The readily evident benefit to the community is the margin of higher prices they gained as the road assisted the community to evacuate produce to markets where they obtained higher prices and as it opened the community to traders and middlemen and their farm produce attracted competitive prices which were not possible without the roads. The costs were made up of investment and maintenance expenses. In the market model the benefits were mainly market charges for users of market facility including stalls, stores, sheds, parking lots, toilets etc. The costs were made up of investment and maintenance expenses. In the borehole model the benefits were mainly water charges paid by users of the delivered water while the costs were made up of investment and maintenance expenses. The benefits of Advisory services were indirect. Since training enables the recipient to improve productivity, the benefit were determined as a fraction of the incremental benefit arising from the primary occupations while the costs were the consultancy fees and expenses incurred in organizing the trainings. Financial Rate of Return The estimated overall financial rate of return (FIRR) for the project is 24%; an NPV of N 26,234.1 million or USD 201.8 million; the BCR is 1.02 and annual incremental net benefit of N 17,755.4 million or USD 136.6 million, assuming an opportunity cost of capital of 12%. The details of estimated financial indicators for the project are presented in table 8. The estimated Financial Rate of Return for the representative enterprise models in the project presented in table 8 ranged from a minimum of 21 percent in groundnut processing to a maximum of 82 percent in rural road infrastructure model. The details are in table 8. The estimated Net Present Value (NPV) for the representative enterprise models ranged from a minimum of NGN 38,220 or USD 290.0 in Tomato/pepper processing to NGN 6898,380 or USD 53,060 in rural roads model. The estimated incremental benefits per annum for the models ranged from a minimum of 53 NGN 14,360 or USD 110 per annum in Tomato/pepper processing to NGN 1,427,586.00 or USD 10,980 per annum in rural roads model. However, rural roads are community sub-projects consequently their benefits do not accrue to any particular individual. The estimated BCR ranged from a minimum of 1.02 in borehole to a maximum of 2.57in rural roads model. The estimated benefits per annum for a production unit ranged from NGN 23,256.00 in tomato/pepper processing to 3917112.00 in rural roads. The estimated benefits per unit of labour employed in production ranged from NGN 197.93 in honey production to NGN 97,927.80 in rural roads model. The details are in table 8. Table 8: Summary of the Decision Statistics for the Representative Enterprise Models. PER PROJECT CEN ENTERPRISES T 000 NAIRA 000 USD Benefits in Naira INCR INCR Per Unit BENEFI BENEFI Per Prodn of BCR IRR NPV T NPV T Unit Labour Cattle/Ram 1 fattening 0.32 263.85 91.25 2.03 0.70 256,638 1642 1.60 Sheep/Goat 2 upgrading 0.24 244.15 115.93 1.88 0.89 139,334 1810 1.22 3 Layer production 0.31 464.19 165.62 3.57 1.27 171,647 376 1.11 Sorghum/cowpea/ 4 maize/millet 0.62 235.00 52.55 1.81 0.40 89,192 918 1.42 Rain fed Yam/maize/Cassav 5 a 0.48 270.28 71.81 2.08 0.55 113,532 985 1.44 North Irrigation 6 module 0.27 186.90 81.25 1.44 0.62 97,886 746 1.14 South Irrigation 7 module 0.30 276.23 96.42 2.12 0.74 117,495 849 1.29 Earth pond 8 aquaculture 0.41 214.48 69.24 1.65 0.53 111,358 917 1.43 Palm fruit 9 processing 0.27 178.08 73.34 1.37 0.56 273,625 912 1.17 10 Rice milling 0.29 602.71 237.43 4.64 1.83 796,185 839 1.33 Tomato/pepper 11 processing 0.27 38.22 14.36 0.29 0.11 23,256 323 1.10 Groundnut 12 Processing 0.21 212.35 123.19 1.63 0.95 233,444 1086 1.20 13 Garri processing 0.34 206.64 64.08 1.59 0.49 116,813 201 1.06 14 Rural Roads 0.82 6898.38 1427.59 53.06 10.98 3,917,112 97928 2.57 15 Rural Market 0.42 700.73 187.96 5.39 1.45 209,514 600 1.09 16 Borehole 0.80 474.20 112.92 3.65 0.87 112,923 941 1.02 17 Honey Production 0.45 241.10 71.26 1.85 0.55 71,255 198 1.17 2623408 1775543 201800. Project 0.24 3.3 4.2 6 136580.3 1.22 Min 0.21 38.22 14.36 0.29 0.11 23256.0 197.93 1.02 Max 0.82 6898.38 1427.59 53.06 10.98 3917112.0 97927.8 2.57 55 The Internal Rate of Return at Project Completion Compared to Preparation Estimates The estimated financial Internal Rates of Return were compared to the estimates made at the preparation of Fadama III project and the result is presented in table 9. From table 9 it is apparent that Sheep/Goat upgrading decreased by 2 percent; North Irrigation module decreased by 9 percent; Earth pond aquaculture decreased by 3 percent; palm fruit processing decreased by 1 percent; and rice milling decreased by 1 percent. The FIRR for other enterprise models increased at the completion of the project relative to the preparation. The increases ranged from a minimum of 1 percent in groundnut processing and honey production, to a maximum of 142 percent in southern Rain fed Yam/maize/Cassava model. Table 9: The IRR at Project Completion Compared to Preparation Estimates PREPARATION Percentage S/No PROJECT ENTERPRISES ICR IRR (2016) IRR (2007) Increase 1 Cattle/Ram fattening 0.32 0.19 68 2 Sheep/Goat upgrading 0.24 0.24 -2 3 Layer production 0.31 0.27 16 4 Sorghum/cowpea/maize/millet 0.62 0.34 81 5 Rain fed Yam/maize/Cassava 0.48 0.2 142 6 North Irrigation module 0.27 0.3 -9 7 South Irrigation module 0.30 0.26 15 8 Earth pond aquaculture 0.41 0.42 -3 9 Palm fruit processing 0.27 0.27 -1 10 Rice milling 0.29 0.29 -1 11 Tomato/pepper processing 0.27 N/A N/A 12 Groundnut Processing 0.21 0.21 1 13 Garri processing 0.34 0.34 0 14 Rural Roads 0.82 N/A N/A 15 Rural Market 0.42 0.29 46 16 Borehole 0.80 0.34 136 17 Honey Productio 0.45 0.45 1 Project 0.24 0.2 20 Min 0.21 0.19 12 Max 0.82 0.45 83 56 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Lucas Kolawole Akapa Consultant GSU01 Macmillan Ikemefule Anyanwu Senior Country Officer SACAA Bayo Awosemusi Lead Procurement Specialist GGO01 Simeon Kacou Ehui Practice Manager GFA01 John Amedu Eimuhi Paralegal AFCW2 AFTA1 - Issa Faye Economist HIS Abigael Bunmi Ipinlaiye E T Temporary AFCW2 SASDA - Sidi C. Jammeh Consultant HIS AFTA1 - Azra Sultana Lodi Senior Program Assistant HIS Chukwudi H. Okafor Senior Social Development Spec GSU07 Africa Eshogba Olojoba Lead Environmental Specialist GEN05 Adenike Sherifat Oyeyiola Sr Financial Management Specialist GGO24 Jeanette M. Sutherland Consultant GTC07 Obadiah Tohomdet Senior Communications Officer AFREC Wendy A. Wiltshire Consultant GFA13 Supervision/ICR Adetunji Oredipe Senior Agriculture Economist GFA01 Amos Abu Senior Environmental Specialist GEN07 Abimbola Adubi Sr Agricultural Spec. GFA01 Lucas Kolawole Akapa Consultant GSU01 Akinrinmola Oyenuga Sr Financial Management Specialist GGO25 Akinyele Mary Asanato-Adiwu Senior Procurement Specialist GGO01 Bayo Awosemusi Lead Procurement Specialist GGO01 Sr Natural Resources Mgmt. Stephen Danyo GEN01 Specialist AFTA1 - Azra Sultana Lodi Senior Program Assistant HIS Ngozi Blessing Obi Malife Program Assistant GEN02 Chita Azuanuka Obinwa Program Assistant GEE01 Senior Social Development Chukwudi H. Okafor GSU07 Specialist Africa Eshogba Olojoba Lead Environmental Specialist GEN05 Modupe Dayo Olorunfemi Investigative Assistant INTOP Adenike Sherifat Oyeyiola Sr Financial Management Specialist GGO24 Wendy A. Wiltshire Consultant GFA13 57 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY06 158.56 FY07 184.00 FY08 298.63 Total: 641.19 Supervision/ICR Total: 0.00 58 Annex 5. Beneficiary Survey Results The State had conducted ten studies since the inception of Fadama III in 2009 todate as highlighted below: S/N STUDIES CONDUCTED PERIOD MAJOR FINDINGS 1. Baseline survey 2009 Baseline information on key performance indicators such as income, socio0economic characteristics, production etc. was captured. Average real household income was N170,548.27 2. Agricultural Production Survey (APS) 2010, 2011 & The 2012 APS is at data collation/analysis stage. However, the result of 2010 and 2012. 2011 APS had been published with result indicating considerable increases in the yield of major crops. Overall, there was an average increase of 13.6% increase in yields of major crops in the midline APS, and a 29.7% in yield of major crop at the RRA. 3. Household income generation, progression 2011 Average real household income at mid-term was N237, 2118.11. This indicates 39% and sustainability to the achievement of increase over the baseline average household income of N170,548.27. Fadama III PDOs. 4. Social capital formation and implication for 2011 - The FUEF had about 7.32% of the value of the productive assets. in the FUEF the achievement of Fadama III PDOs. account for maintenance of assets. - The Project has created social capital as evidenced by formation of additional FUGs, increased participation in decision making, enhanced subprojects ownership and management by members of FUGs, social inclusion and democratic election of membership of standing committees 5. Contribution of Advisory Services and Inputs 2011 - About 50% Fadama users use advisory services Support, Support to ADP Adaptive Research to the attainment of Fadama III PDOs. 6. Midline Impact Assessment 2012 Completed & final report of the study submitted. 7. Adoption study 2012 / 2013 The study is concluded and final report submitted. Encouraging level of adoption of improved technologies was reported. Please see summary of findings in Annex 2 of this report 8 Pest survey 2012 / 2013 The survey had been conducted. 9. Rapid Rural Appraisal (RRA) 2013 / 2014 - At least 81% of Fadama users have increased their average incomes by at least 40%. - Average income increased by 62.0% over the baseline income. Yield of agricultural products increased by 29.7% - 88% of the assets’ beneficiaries were satisfied with the operation, maintenance and utilization of their assets. - 83.1% of the infrastructure and assets acquired were in good condition and working satisfactorily. Summary of Midline impact assessment report conducted at mid-term: The midline impact assessment report conducted at mid-term revealed the following: 1. Fadama III Project has positive impact on beneficiaries in terms of Agricultural productivity, small-scale community owned infrastructure, household income and productive assets of Fadama users. Factors such as level of educational attainment seem to contribute positively to the positive impact observed. 59 2. Majority of the beneficiaries have complied and adopted the guidelines of saving 10 percent of net earnings per annum from income generating activities of the Fadama Users Groups. 3. Also, the value of non-productive assets was significantly increased. 4. Fadama III Project has positively impacted on Crop Production, with about 30% increase in yield of major crop production when compared to the baseline. 5. On Gender, Fadama III Project has significant impact on income of men as at midterm suggesting the need to target women in the remaining period of the Project. The report showed that the major outcomes show bias against women in multiple folds. This result could be due to the inability of the women groups to pay the counterpart funds. The result is however contrary to the overall national report which revealed that the greatest impact was on the income of women and the poorest among the beneficiaries 6. Fadama III Project has significant impact on the poor category, but not on the middle rich and the very rich categories. This is in line with the Project targeting of the poor and vulnerable. 7. Fadama III Project has statistically insignificant effect on non-farm income of the project beneficiaries in the State. 8. It was evident that Fadama III Project has supported agro-processing activities to create value addition of agricultural products. These agro-processing activities include Gari processing, palm oil processing and feed milling. This implies that women who are the vulnerable benefited more from these activities than in farming activity. 9. The findings revealed that the rural communities participating in Fadama III Project had benefited from the provision of advisory services, capacity building, provision of input support, and Small Scale Community owned infrastructure. 60 Annex 6. Stakeholder Workshop Report and Results NA 61 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 62 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders NA 63 Annex 9. List of Supporting Documents Updated National Report for FADAMA III ICR, August 2016, National FADAMA Coordination Office, Government of Nigeria. Updated National Database for FADAMA III, August 2016, National FADAMA Coordination Office, Government of Nigeria. End-Term Impact of FADAMA III in Nigeria, May 2016, International Food Policy Research Institute (IFPRI), Washington DC. Medium-Term Impact of FADAMA III Project, 2012, International Food Policy Research Institute (IFPRI), Washington DC. Project Performance Assessment Report Nigeria Second FADAMA Development Project June, 2014, Independent Evaluation Group, World Bank, Washington DC The Third Fadama National Development Series: How to Build a Pilot into a National Program Through Learning and Adaptation, March 2016, Global Delivery Initiative, Washington DC Third National Fadama Development Project Joint FGN/World Bank Mission Aide Memoires (2010, 2011, 2012, 2013) Nigeria State Fadama Coordinating Office. Third Fadama Development Project Baseline Study Report; Independent Assessment on Third National Fadama Development Project State Fadama Coordinating Office. Third Fadama Development Project Mid Term Review; Independent Assessment on Third National Fadama Development Project, State Fadama Coordinating Office, Nigeria PDO Studies Reports; Independent Assessment on Third National Fadama Development Project, State Fadama Coordinating Office, Nigeria Report of Rapid Appraisal Study of Fadama III Implementation Report of Assessment of Technology Adoption Studies; Independent Assessment on Third National Fadama Development Project World Bank. 2008. Project Appraisal Document for the Third Fadama Development Project. Implementation Status and Results Reports (2009, 2010, 2011, 2012, 2013 and 2014), World Bank Washington DC. 64 Annex 10: Project Results Framework for FADAMA III Additional Financing (Till June 2016) Project Development Objective (PDO): The objective of the Project is to increase the incomes for users of rural lands and water resources within the Fadama Areas in a sustainable manner throughout the Recipient’s territory. Original End Indicator Baseline Value Current Achievement Target Values Indicator 1: 75% of beneficiaries, who benefit directly from Project supported activities, have increased their average real incomes by at least 40%. 30,000 beneficiaries Value (Quantitative or 108,501.76 have increased their Study ongoing qualitative) income to 151,902.46 Date achieved 2014 2017 June 2016 Comments (incl. % Study ongoing achievement) The change in yield from 4.8mt/ha for rice to 3.7mt/ha Indicator 2 : could be attributed to more 40% increase in yield of cassava, production cycle recorded rice, sorghum and horticulture of (dry and wet seasons). participating households. However a study is being Rice 40% conducted to validate these Sorghum results. Cassava In the case of cassava more Horticultural crops harvest data were recorded from more production groups resulting in a lower average Rice---------------- Rice----------------2.84 3.98 Rice------- 3.72(31%) Sorghum-----------1.14 Sorghum----------- Sorghum--------2.1(84.21%) Value (Quantitative or Cassava------------ 1.60 Cassava----------- 11.92 Cassava------------ Qualitative) 15.76(32.21%) Horticultural crops--- 16.69 Horticulture------ 12.56 Horticultural crops 28.60(128%) 17.58 Date achieved 2014 2017 February 2016 Original End Target Values (from Actual Value Achieved at Indicator Baseline Value Completion or Target approval Years documents) Comments (incl. % achievement) 65 Indicator 3: 10% of replacement value of the common asset used by the beneficiaries for income generating activities is saved annually (with effect from year 2). Value (Quantitative or 0 10% NA qualitative) Date achieved 2014 2017 June 2016 Comments (incl. % Savings yet to commence. achievement) Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Indicator 4 : Surveys at Project closing to show that at least 75 percent of beneficiaries are satisfied with operations, maintenance and utilization of community-owned infrastructure and capital assets acquired through the Project. Value (Quantitative or 0 30,000(75%) NA qualitative) Date achieved 2014 2017 June 2016 Comments (incl. % Assets are being procure across States and value chain. achievement) Indicator 5 : Physical verification of operations, maintenance and utilization of assets at Project closing by surveys of randomly selected sites shows that at least 50% of assets and community- owned infrastructure are operating satisfactorily and are maintained and utilized. Value (Quantitative or 0 50% NA qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % achievement) 66 Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Component 1: Capacity Building, Communications and Information Support Intermediate result indicator 1. By Mid-Term Review, 75 % of participating beneficiaries have Business Plans developed through a participatory process. Value (Quantitative or 2920(9.7%) 0 30,000(75%) qualitative) Date achieved 2014 2017 June 2016 Comments , (incl. % As at date, a total of 2920 BPs have been developed across the value chain through participatory process, giving a percentage of 9.7 out of the achievement) target of 75. Intermediate result indicator 2. By end of Project, 75% beneficiaries have fully (100%) implemented approved business plans. Value (Quantitative or 676(2.3%) 0 30,000 (75%) qualitative) Date achieved June 2016 2014 2017 As at date, 676 Business plans has been fully funded, representing 2.3% of Comments, (incl. % the developed Business plan. achievement) Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Intermediate result indicator 3 By the end of the 1.5 years of implementing AF, at least 75 percent of the beneficiaries would have successfully negotiated contracts (disaggregated for inputs purchase and output sales) 67 Value (Quantitative or 676 (2.3%) 0 30,000 (75%) qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % 676 Production Groups have successfully negotiated contracts. achievement) Component 2: Small-scale Community-owned Infrastructure (SCI) Intermediate result indicator 1 100% of selected project intervention areas have at least one of their irrigation systems / access roads constructed/rehabilitated. Value (Quantitative or 0 0 71 (100%) qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % There are 71 intervention sites currently, these constitutes 20 irrigation achievement) sites and 51 access roads at various implementation stages. Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Component 3: Advisory Services and Input Support (ASIS) Intermediate result indicator 1 30% increase in the number of beneficiaries procuring advisory services in the selected project intervention areas (EIG disaggregated by gender and age).). Value (Quantitative or 9593(24%) 57% 12000(30%) qualitative) Date achieved 2014 2017 June 2016 A total of 9593 beneficiaries have procured advisory services across the Comments, (incl. % value chain. This represents 24% of the estimated total beneficiaries. This was disaggregated by; achievement) Male-------7133(74.4%) Female------2460(25.6%) Intermediate result indicator 9413 (29.4%) of the 31977 2.60% increase in the number of beneficiaries procured agric beneficiaries with access to input. improved seed, fertilizer and mechanization (EIG disaggregated by gender, age and farm size, land use, crop, etc).Improved Seeds Organic manure Agro-Chemicals Mechanization Value (Quantitative or 52% (Average) 2.6% qualitative) 31% (Male) 68 21%(Female) 30%(Youth) Date achieved 2014 2017 June 2016 Comments, (incl. % achievement) Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Component 4: Support to ADPs, Sponsored Research, and On-Farm Demonstration 5994 (18.74%) of 31977 Intermediate result indicator 1 Beneficiaries received 30% increase in the number of extension services from beneficiaries receiving extension public service providers. services from both public and Female ------1338 (22.3%) of private providers (disaggregated 5994 by gender, age, and land use and Male ----4656 (77.7%) of public/private service provider). 5994 Value (Quantitative or (57%) 79.5% qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % achievement) Intermediate result indicator 2 At least 75% of beneficiaries are satisfied with the extension services from both public and private providers. 4864 (81%) of 5994 beneficiaries who received Value (Quantitative or 0 75% extension services from qualitative) public service providers are satisfied. Date achieved 2014 2017 June 2016 Comments, (incl. % No formal study has been undertaken achievement) Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Intermediate result indicator 3 At least, 75% of beneficiaries have adopted 20% of new technology (disaggregated by gender, age, land use and farm size). Value (Quantitative or NA 0 30,000 qualitative) 69 Date achieved 2014 2017 June 2016 Comments, (incl. % A survey will soon be conducted to determine the adoption rate. achievement) Intermediate result indicator 4 By the end of the project, at least 50% of beneficiaries will be receiving e-extension services Value (Quantitative or 1052(2.63%) 0 20,000(50%) qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % The project has rolled out e-extension messages to 982 in Kogi and 70 in achievement) Niger States for AF and Non AF farmers. Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Intermediate result indicator 5 At least 50% of all on-farm demonstrations are conducted on a yearly basis for all of the value chains in selected project intervention areas Value (Quantitative or 20 (33.3%) 0 30 (50%) qualitative) Date achieved 2014 2017 June 2016 On-farm demonstrations on rice value chain was carried out in Kano (3Nos), Comments, (incl. % Anambra (3Nos), Niger (4Nos) for tomatoes in Kano state (4 Nos) while 6 achievement) Nos demonstrations were established in Kogi for cassava. Intermediate result indicator 6 By the end of the project, at least 50% of beneficiaries would have increased nutrition awareness (disaggregated by gender). Value (Quantitative or NA 0 20,000(50%) qualitative) Date achieved 2014 2017 June 2016 A TOT workshop on nutrition sensitive Agriculture has been scheduled to Comments, (incl. % hold on 24th of October,2016, where 40 front line extension officers achievement) would be trained for subsequent step down. Intermediate result indicator 7 By the end of the project, at least 20% of beneficiaries will be using inputs rich in micro – nutrients Value (Quantitative or NA 0 8000(20%) qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % A study will soon be conducted to determine the percentage of achievement) beneficiaries using inputs rich in micro nutrients. 70 Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Component 5: Acquisition for Individual FUGs/EIGs ( especially women and youths) Intermediate result indicator 1 At least 30% of Production Clusters have access to market information . Value (Quantitative or 2,863 (7%) 0 24,000 (60%) qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % 2,863 beneficiaries have access to market information, they have negotiated achievement) contracts for inputs purchase – Agro dealers and output sales Intermediate result indicator 2 10% annual increase in beneficiaries adopting improved techniques in investment areas (EIG disaggregated by gender, land use, crop, classes of technology, etc.). Value (Quantitative or 7% 0 4000 (10%) qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % achievement) Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Intermediate result indicator 3. By the end of the project, at least 1,800 number youth-graduates would serve as Agri – preneurs Value (Quantitative or 200 0 1,800 qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % The 1800 is the project target for the 6 Core States with 300 as each core achievement) State 71 Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Component 6: Project Management, Monitoring and Evaluation Intermediate result indicator 1. NFCO and SFCOs conduct satisfactory project management as evidenced by effective supervision, M&E, impact evaluation, financial management, and financial auditing arrangements. Value (Quantitative or qualitative) Date achieved 2014 June 2016 2017 Comments, (incl. % achievement) Original End Target Values Actual Value Achieved at Indicator Baseline Value (from approval Completion or Target Years documents) Intermediate result indicator 2 Quarterly reports rendered Document and disseminate and the Project has received five (5) Joint WB/FGN specific information on project Supervision Mission to date performance to users and stakeholders. Value (Quantitative or qualitative) Date achieved 2014 2017 June 2016 Comments, (incl. % achievement) 72 MAP 73