Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9331 PROJECT COMPLETION REPORT REPUBLIC OF YEMEN AGRICULTURAL CREDIT PROJECT (CREDIT 1308-YAR) JANUARY 28, 1991 Agriculture Operations Division Country Department III Europe, Middle East and North Africa Region This document bas a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENT US$ 1 - YRs 1983 4.58 1984 5.35 1985 7.36 1986 9.64 1987 10.34 1988 9.77 1989 9.76 1990 11.75 Abbreviations and Aggonvms Used ACB - Agricultural Credit Bank CACB - Cooperative and Agricultural Credit Bank ERR - Economic Rate of Return, FRR - Financial Rate of Return NCDB - National Cooperative and Development Bank IDA - International Development Association PCR - Project Completion Report ROY - Republic of Yemen . RVP - Regional Vice President SSHARDA - Sana'a Saadah Hajjah Agricultural and Rural Development Authority Fiscal Year January 1 to December 31 Weights and Measures 1 millimeter (mm) - 0.039 inches 1 meter (m) - 3.28 feet 1 square meter (e2) - 10.76 square feet 1 kilometer (km) - 0.62 mile 1 hectare (ha) - 10,000 square meters (2.47 acres) 1 metric ton (ton) - 2,205 pounds 1 liter (1) - 0.264 gallon FOR OFFCIAL USE ONLY THE WORLD BANK Wash,gaion, D.C. 20433 U.S.A. Olk. eW OoinctqvGwal#u January 28, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECTS Project Completion Report - Republic of Yemen Agricultural Credit Project (Credit 1308-YAR) Attached, for information, is a copy of a report entitled "Project Completion Report: Republic of Yemen - Agricultural Credit Project (Credit 1308-YAR)" prepared by the Europe, Middle East and North Africa Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorizati FOR OFFICIAL USE ONLY PROJECT CONPLETION REPORT REPUBLIC OF YEMEN AGRICULTURAL CREDIT PROJECT (CREDIT 1308-YAR) Table of Contents Paae Noc. PREFACE .................. . . . . . . . . . . . . . . . EVALUAAIONSUMMARY ..................... . . PART I. PROJECT REVIEW FROM BANK'S PERSPECTIVE A. Project Identity . . . . . . . . . . . . . . . . . B. Background . . . . . . . . . . . . . . . . . . .1 C. Project Objectives and Description . . . . . . . . 2 D. Project Design and Organization . . . . . . . . . 2 E. Project Implementation . * . . . . . . . . . . . 3 - Loan Effectivenese and Implementation Schedule . 3 - Institution Building/Technical Assistance . . . 3 - On-lending Component . . . . . . . . . . . . . . 4 - Project Costs and Disbursements . . . . . . . . 4 - Procurement ..... . . . .5 - Compliance with Covenants . . . . . . . . . . 5 F. Project Results . ... ......... .. 5 G. Project Sustainability . . .. . .. 8 H. Consulting Services . . . . . . . . . . . . 9 I. Project Documentation and Data .... . 10 J. IDA Performance . . ....... . 11 K. Borrower Performance . . . . . . 0 . . . . . . 11 L. IDA-Borrower Relationship . . . . . . . . . . . 11 M. Lessons Learned . . . . . . . . .. . 11 PART II. BORROWER'S COMPLETION REPORT . . . . . . . . . . . . 13 PART III. SUMMARY STATISTICAL DATA . . . . 15 TABLES Table No. Title l Related Bank Loans and/or Credits . . . . . . . . . . 15 2 Project Timetable . .16 3 Key Performance Indicators . . . . . . . . . . . . . 17 4(a) Project Costs 8.. 4(b) Project Financing ..18 5 Disbursements . . . . . . . . . . . . . . . . . . . . 19 6 Compliance with Covenants . . . . . . . . . . . . . . 20 7 Loans Issued and Outstanding, 1982-1988 . .21 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclom,d without World Bank authorization. Table.of Contents (Continued) 8 CACB Loans issued by term and purpose, 1982-87 . . 22 9 Recovery of Due Loans by Term, Purpose and Year . . . 23 10(a) Target Achievements . . . . . . . . .. . . . . . . . 24 10(b) Studies Completed . . . . . . . . . . . . . . . a . . 25 11(a) Staff Inputs . . . . . . . . . . . . . . . . . . . . 26 11(b) Missions . . . . . . . a . . . . . a . . . . . . 27 12 CACB: Balance Sheets, 1984-1988 . . . . . . . . . . 28 MAP IBRT) 22775 PROJECT COMPLETION REPORT RETUBLIC OF YEMEN AGRICULTURAL CREDIT PROJECT (CREDIT 1308-YAR) PREFACE This is the Project Completion Report (PCR) for the Agricultural Credit Project in ROY, for which Credit 1308 - YAR in the amount of SDR 7.5 million (US$ 8.0 million at appraisal) was approved on December 12, 1982. The Credit was closed on December 31, 1989, two and one half years behind schedule. SDR 6,552,697.42 was disbursed, and the last disbursement was made on May 9, 1990. The balance, totaling SDR 947,302.58, was cancelled effective April 30, 1990. The PCR (Preface, Evaluation Summary, Parts I and III) has been prepared by the Agriculture Operations Division (EM3AG) of the Europe, Hiddle East, and North Africa Region. The Borrower was requested to prepare a PCR (Part II), but this has not been done. Preparation of this PCR started during IDA's final supervision mission of the project in October 1989, and is based on the Staff Appraisal Report, the Development Credit Agreement, the Project Agreement, the Subsidiary Financing Agreement between the Borrower and the implementing agency (Cooperative and Agricultural Credit Bank), supervision reports, progress reports provided by CACB, correspondence between IDA and CACB, and internal IDA memoranda. - iii- PROJECT COMPLETION FEPORT REPUBLIC OF YEMEN AGRICULTURAL CREDIT PROJECT (CREDIT 1308-YAR) EVALUATION SUMMARY OBJECTIVES The main objectives of the project were: (a) Institution building through: (i) training CACB staff, mainly in credit, comp-:.er operations, and financial controls;(ii) strengthening CACB's organizational structure and operational procedures through technical assistance and the establishment of a management information system; and (iii) construction of a branch office in Saadah and six extension centers in Saadah and Hajjah governorates; (b) carrying out of an agricultural credit survey to formulate a lending strategy and establish priorities; and (c) on-lending to farmers, mainly for on-farm investments. IMPLEMENTATIQN EXPERIENCE The project suffered from a very slow start. The four year implementation period was ultimately extended :hree times for a total of two and a half years. The project was closed with parts of some components uncompleted (construction of Saadah branch, installation of computer equipment in branches, and under utilization of technical assistance). The main implementation problems were the lack of strong commitment to the goal of institution building through technical assistance, the lack of adequate autonomy for the main financial institution, and failure to comply with some legal covenants, particularly review of interest rates leading to adjustment (lending rates were reviewed but Government was opposed to adjustment), and divestment of trading activities. The project objective of improving CACB's institutional performance was achieved to a very limited extent only, and the project did not have any significant impact on the financial performance of CACB. Funds allocated for on-lending operations were fully utilized; the main activities financed were irrigation equipment and tractors, and to a limited extent working capital. CACB had very high loan administration costs (about 13%), low and unsustainable loan repayment rates of about 40% (less than 5% in the Eastern Region where lending was motivated by social and political considerations in a tribal area undergoing transformation from tribal society to federal government), and failed to insulate it's lending activities from outside influences. CACB succeeded in generating limited deposits only. Some initiatives were taken by CACB to improve lending procedures, establish links with extension, strengthen internal audit procedures, evaluate branch performance, and formulate loan collection plans and targets. However, these efforts had limited success. The main achievement of the project is the - iv - installation of the management information system which is largely in place and operational at headquarters and the Sana'a branch; while completion of installation at branches is expected in 1990. The agricultural credit survey was finally carried out just before the closing date; although th. findings and recommondations could not be made use of in the project, it is hoped that these would be used by CACB to formulate a future strategy for lending and deposit creution. Some components, namely, the management information system, limited acquired training skills, the extension centers and branch office would be useful beyond the project life. Also, benefits from on-lending operations would accrue over the economic life of the projects financed. However, the current rates of ground-water abstraction of the main aquifers, particularly in the Central Highlands, are not sustainable. The project had a limited impact on the financial position of C&CB due to very high loan administration costs, very low and falling loan repayment rates, and low lending rates; if left unchecked, these factors would endanger the viability of CACB as a financial institution. Also, the long term iipact of technical assistance and the very limited institutional reform that has taken place, are not assured. LESSQNS LEARNED The key lessons of the project were the following: (a) IDA should more clearly distinguish between the need for institutional reform, and the financial institution's commitment to such reform. Where commitment is lacking, the project should not be undertaken or be discontinued at an early stage. (b) Where the rural financial sector is still rudimentary and new institutions are being set up, the credit project should be preceded by a technical assistance program, possibly grant financed by a donor agency. (c) Another lesson is the difficulty of tackling sectoral or national policy issues, such as negative real interest rates, at the project level; these issues should be incorporated in sector or macroeconomic dialogue, and should be reflected in IDA's overall lending strategy. Therefore, future credit operations should not be viewed in isolation, but rather within the wider context of the financial sector and macroeconomic setting. (d) The four-year project implementation period was short in view of the institution-building nature of the project and the stage of development of the implementing financial institution. Similar future projects should e*l-ow for realistic implementation periods. (e) Project design of financial intermediation loans in the agricultural sector should assess the downstream impact of on-lending activities on ground water use and aquifer depletion where water is a scarce resource, and regulatory mechanisms do not exist. If conditions warrant, well drilling and equipment should be excluded from on-lending activities. PROJECT COMPLETIgN REPORT REPUBLIC OF YEMEN AGRICULTURAL CRV.T PROJECT (CREDIT 1308-YAR) PART I: PRQJECT REVIEW F3sO BANK'S PERSPECTIVE A. Proiect Identity Project Name: Agricultural Credit Project Credit Number: 1308-YAR RVP Unit: EMENA Region Country: Republic of Yemen Sector: Agriculture Subsect-r: Agricultural Credit B. Background 1. Due to limited water resources, a labor shortage resulting from migration to neighboring countries, and the shortage of foreign exchange to enable the import of fertilizer and other inputs, substantial food imports have recently become necessary because domestic food production has been insufficient to meet the demands of a growing and more affluent population. The gap was covered by food imports, which increased from US$ 80 million in 1974 to US$ 370 million in 1987. The ov-'rall objective if ROY's development plans, including the current Third Five-Year Plan (1987-91), has been to promote self-sufficiency in food production. 2. IDA's strategy for the agricultural sector has been to help raise agricultural productivity and improve farmers' incomes through projects which develop agricultural services (extension, research, irrigation, credit) and infrastructure in those areas of the country with the highest production potential. More recently, emphasis has shifted to the consolidation of institutions at the national level (extension, research, and planning) and natural resource management. IDA projects account for a large segment of total public sector investment, and IDA involvement has attracted substantial cofinancing resources. 3. In 1982, the Agricultural Credit Bank (ACB) and the National Cooperative and Development Bank (NCDB) were merged into the Cooperative and Agricultural Credit Bank (CACB). The Agricultural Credit Project was initiated at that time to support the institutional development of the new agricultural credit institution and assist in increasing agricultural production and farm income. Because most area development projects included an agricultural credit component, it was only logical that the only channel of agricultural credit in the country (CACB) be strengthened. This was the main reason IDA initiated the project. -2- C. PtroectObj.ectJves and Desirintion 4. The principal purpose of the project was to strengthen CACB as an institution and help develkp its capabilities over a period of four years. The components of the project were as follows: (a) InatiLation-Buildine. This included provisicns for (i) training of CACB staff, (ii) stringthening of CACB's organizational structure and operational procedures, and (iii) establishing a Management Information S'stem by employing consultants to design, implement and start up a computer network. Six internationally qualified consultants were to be recruited for periods of two to three years each (a total of 15 man-years) to ensure the proper iuplementation of these studies. Provisions for establishing a CACB branch office in Saadah and six agricultural extension centers of the Ministry of Agriculture in Saadah and Hajjah Governorates were included in the project. (b) Agricultural Credit Survey. Thls survey was to enable CACB to formulate a lending strategy and establish priorities for its branch expansion based on an assessment of the agricultural credit needs of different areas. (c) gredit. Funds were to be provided to assist CACB in financing its lending program. 5. Funds for on-lending were the largest cost item (US$ 6.0 million) amounting to almost half of ;otal project cost (US$ 12.7 million); and institution building of CACB constituted the second largest cost item amountlng to US$ 4.1 million, or over one-third of total project cost. D. Project Desian and Organization 6. Institutional strengthening was the key objective of the project, to solve problems croated by the merger of two financial institutions which formed CACB and to meet the rapidly growing demand for agricultural credit. CACB was responsible for the implementation of the project, with the exceptlon of the agricultural extension centers under the Ministry of Agrieulture. Unfortunately, the project suffered from some important weaknesses. One of the main objectives of the project, namely, making CACB's credit operations financially viable, was not fully supported by Government in practlce. Also CACB was reluctant to emplcy foreign consultants. This reflected bad experlences with previous consultants, and a general feeling that no major changes were necessary in the w-y CACB operated. CACB staff, after the merger of the two institutions, had not integrated well and feared job losses and loss of influence if organizational changes were implemented. Another weakness in the organizatlon of the technical assistance component of the project was that no one among 0-t individual consultants was responsible for coordination of group actlvities -3- 7 CACB's past financial performance revealed that losses on credit ope4ations were .vmpensated by profits on CACB's credit-related trading operations. These trading operations were an integral part of CACB's operations, and involved importation of fertilizers, tractors, irrigation pumps, etc. The importance of trading activities to CACB's financial position and the reluctance to divest trading activities, in light of a high wage bill and inadequate Interest rate spreads, was underestimated in project design. 8. The shortage of qualified personnel at all levels in ACB was recognized as a major constraint, and this constraint became more acute after the establishment of CACB. Project design attempted to address this issue through the appointment of advisers and staff training. The organization study was aimed at assessing the need for organizational changes following the merger of the two institutions. While there was a need to improve operational procedures, the case for reorganization particularly adding an additional layer of management at the regional level where CACB had redundant staff, was weak. 9. Project preparation and appraisal were largely conducted before the merger of the institutions, when top officials of the former Agricultural Credit Bank were still in charge of the institution. In retrospect, it would have been more prudent to initiate a technical assistance program, possibly with bilateral grant financing, to precede the credit project, particularly when it became apparent that the institution was to merge with the National Cooperative Development Bank which lacked sound banking experience. 10. The project implementation period of four vears and six months envisaged by the SAR was short, in view of the fact that ;he main objective of the project was institutior building, and taking into consideration likel, delays in effectiveness based on past experience in ROY. 11. Considering the growing investments of farmers in irrigation K facilities and declining water tables in ROY, project design should have foreseen the impact of on-lending for irrigation development and ground water use, which, in the absence of regulations in ROY, led to high rates oi abstraction and the depletion of aquifers, particularly in the Central Highlands. E. rro2ect Implementatiogn 12. Loan effectiveness and implementation schedule. The Credit was signed in March 1983 and became effective in January 1984 (Table 2). Conditions of effectiveness required the: (i) signing of a subsidiary financing agreement between the Government and CACB; and (ii) ratification of the Credit by ROY authorities. The project suffered from a very slow start due to delays in ratification, recruitment and procurement. Ultimately the project closing date .as extended three times and implementation covered a period of nearly 3iX years; it was closed on December 31, 1989 with some components remaiaivg somewhat uncompleted (CACB's Saadah branch, installation of some computer equipment, and underutilization of technical assistaxice). The key implementation problem of the project was the lack of strong commitment needed for the effective utilization of technical assistance to address institutional problems. - 4 - 13. Institution Building/Technical Assistance. The project as designed provided for technical assistance as a major input to the institutional strengthening of CACB. Three independent studies were planned to be carried out through short-term consultanctes, namely an organization and procedures study, a mechanized accounting system, and a training program. Six internationally recruited consultants were to be employed by CACB for periods of two to three years each to ensure proper implementation of the recommendations of these studies: credit adviser; financial controlle.; management adviser; planning and research adviser; training adviser; and a livestock/poultry specialist. However, some consultants were not recruited and others served for shorter periods: available technical assistance resources were not utilized In an effective and efficient way, due to considerable delays in recruitment. Furthermore, consultants were used more for day-to-day activities than to train local counterparts. (a) Of 180 man/months of consultancy, only 78.5 man/months, or 44X were actually used. A Management Adviser (24 man/months) and the Livestock/Poultry Specialist (24 man/months) were not recruited at all. (b) During the first three years of the project, only one resident consultant (Planning and Research Adviser) was engaged. An agricultural credit survey was supposed to be conducted in 1984 at the inception of the project during this consultant's tenure but was not carried out at that time. Another consultant was hired to carry out the credit survey which was completed within the last six months of the project. (c) The report with recommendations concerning GACB's organization by a team of management consultants was submitted in May 1984, but CACB waited until 1988 to reach a decision as to whether or not to implement its recommendations which would require a restructuring of the organization. By that time, the recommendations were already outdated. CACB did not implement the report's recommendations, taking the position that the existing organizational structure was satisfactory and met the objectives of CACB. IDA's supervision missions also observed that the problems of over-staffing and the need to raise collection rates, reduce loan administration costs, and improve internal controls were more urgent than organizational chtxnge. (d) Installation of the computer system Ln the branches was near completion at the credit closing date, while available technical assistance to start up computer operations was not fully utilized by CACB. Furthermore, the position of Financial Controller (36 man/months) was split into tvo positions: Financial Adviser and Computer Expert. The Financial Adviser worked only for two weeks while the Computer Expert worked for three months over an 18-month period. 14. On-lending component. CACB succeeded in fully utilizing the project funds allocated to support its credit operations. The total disbursed from the credit proceeds reached US$ 4.1 million. Loan funds provided by the project were designed to meet about 51 of CACB's projected loan disbursements for medium and short term loans and working capital (farm inputs); these funds, however, were not linked to financing specific projects and, hence, indistinguishable from CACB's regular disbursements. On the whole, annual loans issued by CACB nominally expanded during the initial two years after credit effectiveness by 101 annually, but contracted thereafter. Loans funds became available at a time when CACB lacked adequate foreign exchange to meet its disbursement targets, and had a favorable impact; 15. Project costs and disbursements. Total project costs were estimated at US$ 12.7 million, of which IDA was to contribute lJS$ 8.0 million (SDR 7.5 million) or 631, and the ROY Government US$ 4.7 million, or 371. Actual costs incurred were estimated to be about US$ 13.3 million. Disbursements against IDA credit proceeds amounted to SDR 6.55 million (US$7.86 million) or 87.41 of credit amount. The amount of SDR 0.947 million was cancelled. (Tables 4 (a & b] & 5). 16. Procurement. Procurement procedures for goods and services were generally followed, although government processes were lengthy. 17. Compliance with Covenants. CACB did not comply with some legal covenants (see Table 6). The covenant to separate commercial operations of CACB from eredit functions was not seriously considered since it was a profit center for CACB. In spite of discussions during supervision, the trading operations of CACB expanded, but had to be scaled down due to the lack of foreign exchange, and increased again towards the end of the project period as foreign sources of financing became available to purchase tractors on a deferred payment basis. The covenant to carry out periodic reviews of interest rates applicable to CACB's lending operations at intervals not exceeding two years was initiated but soon became irrelevant. The Government was not inclined to discuss interest rate policies under the project. During macroeconomic dialogue, the Government did not agree to adjust the interest rate structure, despite a considerable worsening of inflation during the period under review (15-20X annually). Government justified the use of low interest rates (101 in most areas, and 71 in the Eastern Region) as a vehicle for the introduction of modern technology, particularly irrigation equipment, farm machinery, and inputs. This policy decision was, however, detrimental to CACB's financial position. F. Project Results 18. Physical targets envisaged at appraisal, namely, the establishment of an additional branch of the CACB, six MAF extension centers, installation of computer facilities at headquarters and main branches, and disbursement of US$4.1 million for on-lending were largely attained. However, financial performance and operational reforms to strengthen CACB as a financial institution were not encouraging. It should be mentioned, however, that some initiatives were taken by CACB to improve the procedures for loan processing, establish linkages with extension, strengthen internal audit, and evaluate the performance of branches. Unfortunately, and for personal reasons, the tenure of the Credit Adviser who - 6 - spearheaded most of these activities covered only 27 montns out of the 36 months appropriated. As a result, many recommendations were not properly followed- up. With regard to CACB staff training, only about 30X of 20 course weeks provided for in the project for various courses was achiev.- *he training design and operational plan were only partially completed and the training specialist was not able to function adequately. 19. A computerized accounting system was designed, hardware was purchased and the system was made partially operational. The systems for payroll and personnel, financial accounting and fixed assets were tested and are in use at head office. The computerized banking system was working in one branch. The loan system has been programmed but still remains to be converted into Arabic. Computer hardware for other branches was bought but not installed. Despite uncompleted work, computerization appears to be the most tangible accomplishment of the project. 20. The agricultural credit survey was initiated and completed during the last 6 months of the project. Despite the late completion, the survey provided useful insights into the rural financial system. Findings could be used for planning CACB's lending strategy, and for any future IDA lending operation if conditions warrant. 21. Construction of the six agricultural extension centers was completed, and savings accruing from construction of housing for extension agents were later diverted to SSHARDA for use in financing equipment, mobile audio visual units, and nursery requirements. The construction of the Saadah branch of CACB was nearly completed at closing date. 22. New loans issued initially increased from 1982 to 1985, but continuously declined thereafter (Table 7). By category, short term lending in nominal terms increased by 75X between 1982 and 1987, and its share in total lending remained relatively stable at 30-35X. Lending was heavily concentrated on medium term loans, which rose by nearly 501 during the same period, and represented about 63-70X of total lending; irrigation equipment and farm machinery (tractors) accounted for over 50Z of total lending during the 1982- 87 period. By far the largest beneficiary was irrigation equipment, which quadrupled in value between 1982 and 1985, when it represented about 451 of lending; even after falling in 1987, it still accounted for 45X. The lending trend also exhibited a decline in exceptionally large loans for poultry production, which were partly responsible for the deterioration of CACB's financial position. The agricultural credit survey (1989) conducted under the project concluded that the major contribution of CACB was in financing irrigation investment and farm machinery. The survey confirmed that credit demand for working capital was strong, and the increase in short term lending was in response to this demand. It may therefore be concluded that the project had a significant impact on augmenting CACB's resources, particularly foreign exchange, for lending operations. 23. The agricultural credit survey also showed that CACB made a significant contribution to financing farm activities. It supplied an estimated 461 of the total loans obtained by borrowers from all sources, which Is high by -7- any standard. Two out of ten survey farmers were borrowers during 1989, and 42X of these borrowers got their loans from CACB; informal sources of rural credit supplied the rest, while commercial banks played virtually no role in agricultural credit. However, this performance should be put in perspective: CACB is the only source of agricultural credit in ROY, and the former Agriculture Credit Bank had succeeded in developing agricultural credit operations based on the imnortation of and sale to farmers of equipment in the main agricultural areas in the country. On thfe other hand, the survey found borrowers' transaction costs high due to lengthy and time consuming procedures. A high potential for mobilizing rural savings was underscored by the study, but potential savers are inadequately served by deposit facilities. Neither commercial banks nor CACB aggressively pursued deposit taking in rural areas. For its long-term development strategy, the credit study recommended that CACB's role in rural savings mobilization should ba emphasized; its role as a financial institution should be reviewed for possible expansion to cover the full range of financial intermediation, along with serious upgrading of institutional capacity. 24. CACB's financial position can be summarized as follows. CACB's nominal capital remained at YR 198.8 million during the 1982-88 period. The capital/asset ratio is adequate and exceeded 24X in that period. This ratio, however, fell from a high of 451 in 1984, mainly due to a fixed capital base and increasing loan volume. The long term debt to eguitv ratio increased from a very low 1.0 in 1985 to 1.5 in 1988. The ratio of total liabilities to equity increased from 1.7 to 2.7 in the same period. This ratio, however, remains satisfactory and reflects a strong equity position. CACB should nevertheless guard against rising indebtedness and writing off non-performing debts, especially in the Eastern Region, which could dilute this ratio. The level of provisions for doubtful debts was raised significantly from 11% of the total loan portfolio in 1986 to 131 in 1988. Under normal conditions, this reflects a prudent policy. However, the collection rate plummeted during the project period (para 26). Also, there were some guarantees and receivables (YR 154 million in 1987) for which no provisions were made. Thus, although provisions appear adequate in the short run, they have to be raised significantly in the future if non-performing debts continue t-> increase at a rapid pace. It should be noted that CACB is insulated against exchange risks of foreign loans which are assumed by Government. CACB's revenues exceeded expenses in 4 out of the last 5 years. Net income reached a peak of YR 10 million in 1985 when trading volume and revenue were high. In 1988, CACB reported a loss of YR 5.2 million mainly because of rising administrative and other expenses and falling loan volume and revenue. Discounting an abnormally high revenue of YR 24 million in 1987 resulting mainly from foreign exchange valuations, CACB would have incurred a high loss in that year also. Income as a percentage of average assets was low and varied between 0.5Z and 2.0X during the period before turning negative in 1988. 25. High lending costs and inadequate spread on loans, along with low recovery rates, persisted throughout the project life and undermined CACB's financial structure. Detailed analysis performed during project supervision showed a very high cost of loan administration of about 13Z of outstanding loans during 1989. This high cost was due largely to the high ratio of wages and salaries to total cost, particularly at headquarters, and reduced lending volume. -8- While a high wage bill was the direct result of merging two credit institutions, reduced loan volume was caused by foreign exchange and import restrictions, which led to shortages and rising costs of imported agricultural production inputs, machinery and equipment. Recommendations were made by IDA supervision missions to reduce costs arising from overstaffing but necessary steps were not taken to resolve the problem. 26. Loan recovery rates between 1982 and 1988 continuously declined to unsustainable levels, from around 55X-70X to less than 502 during 1988 and below 401 as at November 1989 (see Table 9). This was largely because of: (i) rapid expansion of lending in the Eastern Region for social and political considerations in an area that is undergoing transformation from tribal society to federal government; and (ii) three large loans which had been in arrears. More adequate and competent staff support at the field level, better loan screening process, better collection efforts and procedures could have improved the collection performance. IDA's proposal to establish a separate fund for the Eastern Region to insulate CACB's core credit operations from the financial impact of lending in the Eastern Region did not materialize; but lending was reduced in the Eastern Region. Analysis of the problem of loan repayment by IDA supervision missions resulted in the preparation of an action plan to improve collection. However, effective collection efforts were not pursued. 27. Improving the quality and adequacy of field staff for efficient credit delivery and recovery remained an issue by the credit closing date. The contributions of the planning and training components of the project were also quite limited. It appears that the project's objective of improving CACB's institutional performance was achieved to a very limited extent only. 28. The project, as designed, does not permit the measurement of benefits directly, and therefore, no attempt was made to measure the project's economic rate of return (ERR), or the financial rate of return (FRR). The on-lending component was primarily intended to augment CACB's foreign exchange resources in general and finance diverse types of projects. However, indicative FRRs and ERRs estimated for various farm models ranged between 19-32X. G. Prjqee Sustainabilitv 29. _ecause of limited achievements, the decision was made to close the project even if some components remained uncompleted. The project was initially viewed as the first of a series of credit projects to support CACB. However, it is not possible to consider a second credit project unless the following issues are resolved: collection rates increase significantly; administrative cost is reduced; and policy issues such as phasing out negative real interest rates, insulating CACB from social and political pressures, and the possible divestiture of trading act; 'ties, are addressed. It should be recognized, however, that some policy is,ues are not sector-specific, or lie outside the jurisdiction of CACB, such as the level of interest rates, spinning off trading activities, and the establishment o. the proposed special fund for the Eastern Region; these should be pursued through macroeconomic and sector dialogue. - 9 - 30. Benefits of certain components of the project, such as computerization, improvements in procedures, limited acquired training skills, and construction of the Saadah branch and extension centers, would accrue long after the closing date. Also, on-lending activities enabled the introduction of modern technology in irrigation, farm machinery, and poultry and dairy activities, and benefits would accrue over the economic lives of these projects. However, the current rate of abstraction of groundwater in the main aquifers is not sustainable in the long run. Other components, particularly institutional reforms of CACB, where very little progress has been achieved, are not sustainable. More important, very low and falling loan repayment rates endanger the survival of CACB as a financial institution. H. Consulting Services 31. The performanc'e of consultants and advisers was mixed. Unfortunately, their effectiveness in general was modest, and some performed poorly. The resident consultants had a very limited impact on key policy questions, like interest rates, the financial position of CACB, and limiting or segregating loans in the Eastern Region. 32. The recommendations of the consulting firm which prepared the organization study were not adopted. The report appears to have been made as an independent study rather than a joint undertaking of consultant and client. Since recommendations of the study did not receive the full concurrence of the client and the Civil Services Commission which reviewed it, it was easy to reject its findings, particularly the proposal of adding another administrative layer at the regional level to an already over staffed organization. Emphasis should have been placed on determining the staff requirements of individual units of CACB to attain greater efficiency and reduce costs rather than changing its organizational structure. 33. Design of the computer system appears to be adequate. Implementation was contracted out but the contractor was responsible for repeated delays. The performance of the consulting firm which carried out the agricultural credit survey was impressive in terms of speed and content but this was also due to the cooperation of CACB staff. 34. Among the resident consultants, some made significant contributions, notably the credit adviser, whose tenure was shorter than originally planned, after he was recalled to serve his Government. In general, CACB staff were most comfortable with technical advisers who directly participated in day to day work, and who were willing to work side by side with them, sharing their workload. The effectiveness of the credit adviser, and of a fishery credit adviser financed under Cr. 1025-YAR during the same period, were impressive at the working level. The planning and research adviser and the training specialist did not perform satisfactorily. I. Project Documentation and Data - 10 - 35. CACB provided 1DA regularly with audit and progress reports, albeit with delays. CACB also provided data requested by IDA for the preparation of the PCR, although it did not prepare Part II of the PCR as requested by IDA. Since the agricultural credit survey was completed at the end of the project period, results of the study gave some indications of the impact of the project. J. IDA Performance 36. Due to the lack of strong commitment to project objectives, IDA was unable to resolve issues vital to the financial viability of CACB such as lowering of administrative cost, improving loan repay'ent rates, raising of interest rates, and improvement in overall financial performance. IDA helped in preventing CACB from further exposure to extremely large loans to individual borrowers, but was unable to protect it from lending to the Eastern Region, or establishing a special fund for that region. IDA agreed to extensions of the project closing date because of the vital role of CACB in other IDA projects, particularly projects which had no credit components of their own, and to enable completion of the computer program. 37. To improve the effectiveness of the consultants, a special seminar was organized to enable staff to express their concerns and fears, and for the consultants to explain, and if necessary adjust, their role. But despite substantial efforts, IDA was not very effective in allaying CACB's skepticism about substantive institutional changes. 38. Supervision missions were fairly regular and adequately staffed. (Tables 11(a) and 11(b)). These missions addressed the main issues through dialogue. CACB's initial reluctance to hire consultants was overcome, lending in the Eastern Region and very large loans were reduced, and a major loan was liquidated. However, discussions regarding interest rate adjustment, divestiture of trading activities, and agreed plans to raise loan repayment rates and improve CACB's financial position, did not achieve the desired objectives. 39. The major cause of weakness in implementation was the lack of commitment to allow CACB to fun.ction as an autonomous financial institution, and to enhance its institutional and financial performance. Although this issue was raised repeatedly during implementation; IDA should have made this a fundamental issue for project continuation or suspension at an early stage. Also, IDA should have taken a firm stand regarding compliance with covenants. K. Borrower Performance 40. CACB was constrained in part by Government from adopting specific policies necessary for its financial health. As a Government-controlled organization, CACB was unable to convince Government to consider raising interest rates. Also, CACB served as a vehicle to finance Government-owned and initiated enterprises, which partially gave rise to its financial problems. Utilizing CACB as a channel for lending for social or political considerations in the Eastern Region, which accounted for about one fourth of its loan portfolio, had a negative impact on the financial position of CACB. Repayment in the Eastern Region plunged to 1.5X towards the end of the project period. 41. CACB was unable to complete some project activlties by the closing date, including full utilization of technical assistance resources made available by the project. CACB prepared specific plans and programs as agreed with IDA missions, but performance fell short of agreements. CACB should be given credit for complying with reporting requirements. Its staff also provided strong logistical support and data to IDA staff during supervision missions. Satisfactory completion of the agricultural credit survey in a short period of time is an indication that given the proper incentives and guidance, the staff of CACB can respond to challenges. 42. In general, Government did not review the interest rate issue to permit CACB to operate with adequate margins, nor did it allow CACB to develop as an independent financial institution and separate trading from banking activities. Furthermore, lending at Government behest to the Eastern Region adversely affected CACB's financial condition. L. IDA-Borrower RelationshiR 43. On the whole, the relationship between IDA and the Borrower was satisfactory and cordial, although in the beginning IDA's supervision activities were viewed with some suspicion. However, relations improved considerably as project implementation proceeded, and sensitive issues were raised and discussed in a frank atmosphere. M. Lessons Learned 44. The key lessons of the project were the following: (a) IDA should more clearly distinguish between the need for institutional reform, and the financial institution's commitment to such reform. Where commitment is lacking, the project should not be undertaken or be discontinued at an early stage. (b) Where the rural financial sector is still rudimentary, and new institutions are being set up, the credit project should be preceded by a technical assistance program, possibly grant financed by a donor agency. - 12 - (c) Another lesson is the difficulty of tackling sectoral or national policy issues, such as negative real interest rates, at the project level; tuomse issues should be incorporated in sector or macroeconomic dialogue, and shoild be reflected in IDA's overall lending strategy. Therefore, future credit operations should not be viewed in isolation, but rather within the wider context of the financial sector and macroeconomic setting. (d) The four-year project implementation period was short in view of the institution-building nature of the project and the stage of development of the implementing financial institution. Similar future projects should allow for realistic implementation periods. (e) Project design of financial intermediation loans should assess the downstream impact of on-lending activities on ground water use and aquifer depletion where water is a scarce resource, and regulatory mechanisms do not exist. If conditions warrant, well drilling and equipment should be excluded from on-lending activities. - 13 - PROJECT COMPLETION REPORT REPUBLIC OP YEMEN AGRICULTURAL CREDIT PROJECT (CREDIT 1308-YAR) PART IIt BORROhER'S CO?M4LETION REPORT No PCR has been received from the Borrower. The implementing agency, especially after the departure of the consultants hired under the project, is not in a position to prepare a meaningful completion report. Given the lapse of time since project completion, it was decided to proceed without the Borrower's PCR. CACB staff, however, were very cooperative in providing the data requested by IDA in a timely manner. - 15 - PROJEcT COMPLETION REPORT REPUBLIC OF YEMEN AGRICULTURAL CREDIT PROJECT (CREDIT 1308-YAR) PART IIIt SUMMARY STATISTICAL DATA Table 1 Related Bank Loans ard/or Credits ~~~~~~~~~~~~~~~~..................... ............................................. ..................... Lo n/Credit Title IDA Cr./Ln. Amt. Approval Year Status (USS in million) 1. CR 1067 $ROP It 17 1984 Closed 2. CR 14S3 Central Highland Agriculture Development 8 1984 On-going 3. CR 1584 Wadi Al Jauf Agriculture Development 10 1984 On-going 4. CR 1667 Tiham V 10 1986 On-going 5. CRl 1m SRADP 12 1987 On-going 6. CR 186 Agriculture Development (Northern Region) 18 1988 On-going 7. CR 1983 Agriculture Development (Eastern Region) Is 19&9 On-going 1/ ..................................................... .............. ......................................................................... .............. ... SURDP: Southern Uplauid Rural Development Project. SRADP: Southern Rural Agriculture Development Project. 1/ Not Yet Effective (as of 7/15/90). - 16 - Table a PROJECT TIETA3LE * a.. a~~ ~ ~ ~ ~~.. a..... ..aa. ..................... ............................... .......... ol .................................... Iti Dato Plawd cate teised Date Actul .............. .. ..................... ........................................................... a................... Identiffcatfon februa, 1961 Polltow CIExsativ Project SUNrvY) Jue, 1981 Ju.W, 1981 - PrepWatin June, 1981 Jure 10-17, 1961 e Preappisal Early Sap. 1961 Sept 07-2, 16 - Appraisal Nision JanFeb. 1982 Jamry 20, 19# Jan 27-Feb 22 1982 t/ - Credit Naotiatiae October, 1962 Octoboe 26, 1962 Wovmber 01, 19 - Board Approval Oec. 21, 1982 Dec. 14, 1962 Dacmber 14, 1982 - Credit Sigwutue March, 1983 March 31, 19 - Credit Effectfvwns June 30. 198 March 02, 198 Jawary 27. 1984 - ProJect Cowtotfon Decwber, 1986, DOceebr, 1989 Decadtr, 1989 * Credit Closing Jurn 30. 197 ODeeber 31. 1989 Decenr, 1989 , .. .... .............................................................................................................................................. 1/ Appraisal Nieson Nebeu Taat M. ladder * IOA (Tea Leader) Marto Bleetero*s -IDA fconomist Tamer Tetik - AgricuLturat Credit Consultnt Maurice V. Sorenon - Agricultural Credit ConuLtant - 17 - Table 3 PROJECT IMPLEMENTATION Key Performance indicators ........ ww................................................... ... Appralsel Actual (Or PCR Indicators Unit Estimates Estimates ............................................................................... .. Activity Advisors m¶M 180 79 Consultants m-m 27 21 Construction ............ CACS Completion Expected Saadah Branch No. I June 1990. MAP's Extension Centers No. 6 Completed Training CAC8 Staff Course About 30X attained: som (various fields) Weeks in-service training, Offered 20 mainly computer operation and short-term foreign training. Studies Credit Survey 1984 Completed December 1989. Organization Recomfen.dtions not implemented - CACS considers present structure adequate; IDA concurs. Accounting & Completed; Partially Information Study implemented. On-Lending ....*..... Loan disbursed S 4.0 million 4.1 million. Management Information Center (MIC) ................ .......................................... .. .. HO Main Branch - Terminal Completed; Operational. Branch - Work Station Partially completed; Completion expected June9 1990. CACBSs Financiul Position ................. ......................... Debt Equity Ratio 9/89 Adequate 2.6:1 Lending Cost 9/89 10X Very high (22%) Loan Recovery Rate 11/89 80% Very Low (381) - 18 - 'able 4 (a) PROJECT COSTS AND FINANCING A. Project Costs (USS million) ,,,.. ....................,......... ,"......................................... ........................................................... Appraisal Estimates Actual Estimates .... ......*............................. ............ .................... . Local Foreign Total Local Foreign Total A. Institution Building 1. CACS 1.60 2.50 4.10 2.00 2.30 4.30 2. NAF 1.50 1.00 2.50 1.90 0.60 2.50 S. Credit Survey 0.10 0.00 0.10 0.10 0.00 0.10 C. Agricultural Credit 1.60 4.20 6.00 2.30 4.10 6.40 ................ ..... :;...... .................................... :i.............. TOTAL 5.00 7.70 12.70 6.30 7.00 13.30 Table 4 (b) B. Project Financing ................... ........................... ........ (USS million) .... ........... ...................................................... Ptaned Source Loan/Credit Actual Agreement Estimated X ......... ... ............................. ................. - IDA 8.00 7.90 98 Goverment 4.70 5.40 115 TOTAL - 12.70 13.30 105 Tablo 5 DI SWRSENENTS . .. .. ... (USS million) (Original mount: SDR 7.5 million at appraisal] ........ ............... .". ... ........---.............--.. .. ...... Fiscal Appraisal Actual Disbursments Year Estimtes ........................ . - Historical Percent Actual X USS mitllon SOR USS mitlion Disbursed of (in miLlion) Equivalent SDR Appraistl ......................... ....................................................... ......... ......... ... ..... ............................. ..... 1983 0.3 1984 3.7 0.01 0.01 1.00 0.00 1985 6.5 1.73 186 23.10 26.60 1986 7.7 3.65 4.12 48.70 53.50 1967 8.0 5.00 5.83 66.60 72.90 1988 5.60 6.62 74.70 82.80 1969 6.07 7.23 81.00 90.40 1990 6.55 7.86 87.40 92.00 .......................................................................................... Dato of Final Disbursement: May 9, 1990 C512,314.80) ....................................................................................... - 20- Table 6 COMPLIANCE WITH COVENATTS ............ 1(.................., Description DeadlIne Status Covenant of Covenant or Coaptionce Doc.: CA Credit Survey 1984 Launched In July 1989 Section: Sched. 2 after cnsiderale d ley. CoMpleted in December 1989. Doc.: CA Review Intere"t Rates Jun 1964 & there- Interest rates Section: 4.03 and recommond adjustments after at regular reviewed, but Gvt. as naybe required. intervals not was not willing to exceeding two years. raise interest rates in ogrIculture In order not to discourag farmers from adapting modern inputs. Doc.: PA Progress Report At leoast every three Generatly late compliance. Section: 2.06(b) months. Doo.: PA Recruit Experts and Consultants as per Schedule 2. 1. orgnization & Procedure Consultant June 1983 Complied, with delay. 2. Training Consultant Junm 1983 Co fpied: with delay. 3. Accounting Systom Cons. Ju, 1983 CoplI ed with delay. 4. Credit Advisor Jur, 198 CoWtiedd with delay. (Shorter duration) S. Finanial Controller JUno, 1983 Complied, _tt delay? (Part-time) 6. Ploaming & Res. Advisor Jue, 1983 Compiled, with delay. T. Management Advisor Sep., 198 Complied, with delay. (Part-tim) 8. Livestock/Poultry Spec. Dec. 198 Not CoMplied Doc.: PA Section: 3.02(a) Accounts to be audited by Indkpendent Auditor Compliad. 3.02(b) Furnish Audit Report Not later than six months after end of Generally complied year. with late submittal. Doc.: PA Divest activities relating Did not comply because to procurement nd supply this was a profit of faon machinery and center for CACB. equipment. CA: Credit Agreement PA: Project Agreement - 21 - Table 7 COOH3ATSV ND AGICULTURAL CREDIT Si= Loas Issued and Outacand1ng, 1982-1988 (in Rs million - nouLial) ----- Loan Issued----- Loma OutstandLng, End Year IslE Amott groyth (I)AMwi Grothl (1) 1982 93.7 234.6 1963 148.1 56 213.5 (9 . 0) 1984 164.3 11 277.$ 30.0 1985 194.0 19 352.1 27.0 1986 186.0 (5) 392.0 11.0 1907 144.9 (22) 389.0 (1.0) 19g8 141.0 (3) 395.0 1.5 6us CACI CAC: LOU IS6WO TESO AI FI tIRIs '006) ........................................... .......................................................................................... ,_,........................... _............................ 1962-t96 1967 196 195 1964 1963 192 ........................................ ............................................ .............. ...................... .. _....__. .... _.. ._. ._.. Dacription Aat o. Am,t . Amt go. MRt le. Amut lo. MAiNS lb. Anb t so. ........... ...................... .......................................................................................................... _............................................................................ ...........__ 1. Sbort-tter Loans 232.081 25.733 50,501 MS515 46,149 5.279 39,43 5,117 33.9 4,309 33 076 2,931 25,724 2.Sf2 A. gicutlrurat Lowns 199 052 25,5J0 4S.3S9 S.496 43 229 5.261 3S.110 S,106 26,309 4,34 27.4SS 28 21,So9 2,45 1. iqaoved em 7.7 1,45 3.223 866 1,382 113 717 115 3 4 896 III 1.222 157 2. fertilizers 129 356 - 4 5 248 3U 174 r 1,43 27 3. Pesticides tud Spisyers 8394 le - - 2 1 - - 92 11t 4. Pokins Expi ~s 139.067 16,45 31,756 3,757 29,616 5.973 26.243 3.74S 19.952 2.69 1?7U. 2,532 13,7 1741 S. Fruit Plantation Deveicpent 9s644 1.437 2.441 432 2,542 30 2.40 248 1U S1 191 839 lSS 45 m 6. Cotton Plantation Develogpent 11.633 3.336 1.251 351 2.242 764 3,25S 936 2.295 1.26 2.790 I 7. Repair of Agricultural Equipment 2,196 194 ll SS 3D4 37 306 30 29 31 210 25 19 16 S. chicks nd Pead Stuff 21.054 I6 5.n77 38 7,063 71 2.103 27 1.499 14 .S86 1S 2,926 13 9. Dairy Loom 49 a 4 S 10. Land Oralep Int 196 23 49 a 147 1S _ 11. Cooperative Societies Loans 4,202 S - 206 1 2,983 1 1.019 3 b. Copeprative Ln and Facilities 33,029 174 5.142 17 2.920 18 4.533 11 7.590 45 5.621 34 7.21S 46 1I. Nsdieterm L ,m 1S.426 92.U0 2.051 127,724 2,S53 156,316 3.096 130.3W 2.966 11S,011 2.781 t.934 t.ga1 a. Aicuturat Leans 164 15.365 AS,270 2,00 121.23 2,S22 1S,9 3.,5 126,365 2.972 112.322 2.m 62,164 1.97 1. ricultural machlnery & Equip.nt 171.053 1,428 4.2 23 3S.64 229 3S,35 26 531 294 41.401 3 S2 23.1S6 214 2. rigation Units Accoris 322,61 S .0 S9,6 1.1 546 1.23 W," 2.1 ,376 1.921 35.,0S 1.3 23,926 101 S. lnd lo ep-nt 48103 3,001 4.593 579 6162 522 4,922 2 333 15.579 ,s* 5, - 4. Orcbaads Establishmont 2629 153 2.758 III 6.553 116 5 ~ 140 7,19 174 2,612 1" 1,964 III 5. oulttry Projects 383 340 4 614 24 7 605 5 ,' " 1.S 0 U 18,133 42 7. _ 50 6. shep d Co fattening 10322 78 1.:S6 7 2.303 3 3m 13 1 71 n 276 3 T. t f _rles OEYIIOP nt 9.254 739 1.299 121 2.511 196 1,05 1t 1nU25 1n 1.10 104 604 6 S. Beekeeping is 5 I 016S 9. gicAtural Store 896 3n 1O 5 139 7 3 1t 1 8 - 5 2 IS. OriIIiai of Mydroulic Walls 6.o52 104 2.106 29 3,63 23 324 5 * . _ , - b. Coprative Len 22,S69 61 7.17t 21 6.40? 15 3s 1 3.943 8 2,619 0 1.956 a III. Long-taneans 14,0OS 1 1,993 12.01U 1 * - . ~~~~~~~~~~~~~~~~~~~~~~~~. .................. ........... .................. ,,,.._ ..m. - 23 - Tabl 9 Recovery of Due Loans IL, by Term, Purpose *and Year 1962 - 1986 (in Percent) 1982 1983 1984 1985 1986 1987 "i 1986 Short Term 62 67 66 72 80 72 65 Medlum Tars 59 60 71 67 65 53 43 AgrIculture machinery 63 61 76 74 66 55 42 Irrigation 60 61 70 71 69 52 43 LAnd development 56 56 65 52 55 54 57 Orchard projects 70 66 78 56 66 52 29 Poultry projects S0 53 45 61 58 53 38 LIvestock Projects 50 69 45 64 58 56 28 FLsherLes 59 51 45 43 45 47 40 Others 25 44 40 31 46 37 74 Total 60 62 70 66 69 56 47c/ A/ Principal only. h/ Drought year. c/ For 1989, recovery rate was down to 38X (as at 11/89). Source: CACB -24 - PtOJECT NESUTS Table 10 (a) A. Target Achivwmnts ............................ .......................................................................................................... pprofsla Est. at Full Indicators Estimete ODevoop nt ................... .........>........................I.................. ........... ....................... CAU Additional Branches I I Subtmos USS4.1 million US54.1 mill1an Cowputerization Ho & Dranches HO & rsnches MAF Extene1on Conters Sadah 3 3 * HajJah 3 3 On-Lendirg: Credit intended to aument CACdSs foreign exchang resources in general; therefore, no pecific projects wre financed wnder the credit. - 25 - Tablt 10 (b) STUDIES COMPLETED .................. Purpose a: Dofinwd Impact Studies at Appro1rat Status of Study .............................................................. ....................................................................................................* Organiation & To define the rules, Completed In 1964. Not Implewnted. In 198 Procedure Study practices and procedure by The study was CACS didn t pprov Mhich CACS staff are to carried out by the organizational recoamendations. operate. The consultant Cooper and would exmine the orgni- Lybrand (CML) zational structure of Associates. CACS. establish controls, Credit Menus and assist In preparation was c pletcH of a new procedure nmnuel. Accounting & To prepr rond assist in Coapleted. Partially Implmonted. Infornotion the implementation of a The study Was CoMuter system Study new acconting system and carried out by installed and is In computor syston suitable Publoc operation. for CACD's operation. Administration Services (PAO). Training To plan & develop suitable Parti0lly Partially Implemented. Program curriculum and syllabi Completed. and proparation of train- ing _torerls for courses required for continued training of staff. Credit Survey Define lending strategy Completed. Carried Anolyzed rural fitn nial for CACB out by AgricuLtural soetor. Will assist CACB in Cooperativ Developm nt ft-ailuating future International (ACWI) strategy. ........ ...... ........................ ............................................. - 26 - USE OF BANK RESOURCES Table 11 (A) A. Staff Inputs (Staff Weeks Stage of Planred Revised Ffnal Project Cyclo Total Total Total Comments ..............................................................._................. Through Aoalsal JanF*b. 1982- _ Appraisal through Board Approval Decoer 14, 1962 J70.7 Board Approval through Effectiveness Janry 27, 1964 Supervision Starting FY19U4 4.80 FY1985 - 5.40 FY1966 9.60 FY1967 - 9.50 FY1985 9.00 9.20 FY199 - 14.00 14.40 FMl990 8.00 7.00 7.00 =.......................... .. ...... ......... ........................................................ Table 11 (b) Missio Stog of Nonth/ No. of Days in Speciali- Perforance Type of Project cycle Year Persons Field zaticn Statu Ratirg Problm ... .. ................................................................................................................................. ..................................................................................._ Throuah Anoraisl Jan./Feb. 1982 1/81 IDA 1 30 FA Recarissamnce 2/81 FAD-CP 4 22 FN, Ag., ISp., FA Identification 3/81 1 13 L0 6/81 1 5 Sr. rA Identification Follou up 6/81 t 7 Sr. rA Pre-prapartion *6/81 1 11 Div. Chief 9/81 5 21 Sr FA, Ag., E. ISp., rA Prnepration 9/81 1 9 L0 *9/81 1 14 Div. Chief 1/82 4 21 E., FA, ISp.. Ag. Appraisal 2/82 1 10 L0 5/82 1 25 Sr. FA Post Appraisal 10/82 1 14 Sr. FA *11/82 1 9 LO December 14, 1982 1/83 1 9 L0O 1/83 1 14 Sr. FA 3/83 1 16 L0O 4/83 1 12 Sr. FA 8/83 1 20 Cr. Sp. 8/83 1 14 Ag. sueervislon 11/84 4 21 Ag.. I Eng.. Cr. Sp., S 1 Delay in recruitment 12/84 2 21 Ag., Cr. Sp. 2 of cosultant and 5/85 1 7 Cr. Sp../FA 2 exprts. Lagging 2/86 2 14 A, As. Ec. 3 Disbursements. 12/86 1 9 Sr. FA 3 Deley In credit K4/87 3 S Ag. Ec., FA. Ag. 3 survey nd interest 10/87 1 11 Ag. Ec. 3 rate review. Lou 4/88 2 9 Ag. Ec., Cr. Sp. 3 collection rates & 9/88 2 7 Ag. Ec., Cr. Sp. 3 high costs of loan 3/89 2 6 Ag. Ec., Cr. Sp. 3 adninistration & 10/89 1 S Cr. Sp. 3 divesting trading actifities. List of Abbreviations: A a Agriculturist Ag. gronomist E a Economist Ope a Operations Officer Eng * Engineer Cr. Sp.* Credit Specielist FA * Fin ncial Analyst IS. * Institution Specialist LO * Loan Officer Sr. * Senior S * Sociologist Ag.Ec. a Agriculture Economist I Eng a Irrigption Engineer FM * Farm Mechanization Specialist Status Rating: 1 - Problem Free or Minor Problem 2 a Moderate Problem 3 = Major Problems * Nission to evaluate several projects. - 28 - Page 1/2 Tab12 12 (a). CO0PERTIVe AND ARGR TE CREDIT ha\. (Balance Sheet as at 31 December 1988 and 1987) 1988 1987 ASSETS YR YR Cash in Hand and at Banks 244,820,198 255,676,642 Loans and Advances 323,644,276 325,480,243 Other Debtors 121,641,308 101,819,379 Inventory 66,547,608 3,672,888 Investment 24,506,792 24,506,792 Fixed Assets 26,153,307 27,796,430 Projects Under Implementation 3,405,901 1,534,335 Deferred Expenses _ 689.467 1.378.934 TOTAL - 811,408,857 741,865,643 LIABIITIES Current Accounts & Deposits 183,368,387 144,244,500 Creditors 50,681,096 44,623,309 Bills Payable 18,240,343 -- Personnel Indemnities and Dues 2,409,770 1,450,661 Other Provisions 5.218.746 -- TOTAL - 259.918.342 190.318.47Q NET ASSETS 551.490.515 551.Z. FINANCED BY: Share Capital - Government 168,802,000 168,802,000 - Cooperative Societies 30,000,000 30,000,000 Reserves 9,865,635 9,865,635 Accumulated Net Profits - 10,060,342 Government Financial Support 47,58,,097 20,873,842 Medium & Long Term Loans 300.393 .,M 308,564,934 556,648,726 Current year Net (Loss) Profit (5.1582.fl) 3.380.420 551.490.515 551.547.173 CONTRA ACCOUNTS 8.763.430 5.249.542 YPUWNh/JIO .ctwAE\#R1WT&2Aw 8. IMI - 29 - Pt*a 2/2 Table _12 W(8. COOPERATIVE AND AGRICULTURE CREDIT BANK (Balance Shoot an at 31 Decemer) 196 1065 1is4 Cash in Hend end at banks 254,201,959 120,149,828 54.650,421 Loans and Advances 348.545,212 318,635,437 259,270,015 Other Debtors 87,073,251 88,285,785 71,007,980 Inventory 5.162,o04 25,350,407 13,285,460 Invstment 24.506,792 24,523,459 25,814,164 Fixed Assets 25,180,438 9,691,794 9,890,849 Projects Under IMplemntetion 2,403,401 2,446,471 570,077 Preliminary Epenses not yet written off 353.736 707.471 747.073.667 598435.9L5 43P.396.420 CONTRA ACCOUNTS 25.7A9.GS8 7.8f29 . 7 2.927.757 Current Accounts & Deposits 173,891,802 111,987,300 94,382,883 MHdium & Long Term Loans 314,123,232 217,485,924 88,403,710 Creditors 34,497.416 41,071,639 28,917,618 Indemities s38.303 7.044.835 7.18s..L eos AV.Aoso 753 377.559.98 21838907099 CONTRA ACCOUN S 26.749.684 72 29. 97 .927.757 IET Ml.b2aOa, 217 216.506.404 Goverrnmnt Contribution 168,802,000 168,802,000 168,802,000 Local Cooperative Societies Contribution 30,000,000 30.000,000 30.000,000 Reserves & Provisions 25.220.914 22 .oes.17 17.704.404 224,022.914 g20.867.017 216-506.404 . - 30 - Page 1/2 Table 12 GOtZ= AoewRXOunnn ANU LTUE= MREDIT BANK (Income and Expenditure Account) 1988 1987 INCOME YR _ YR Trading Income 8,668,684 654,422 Operation Income 72.320.715 88.830.99Q 80.989.399 82,485.412 Trading Expenses 6,992,384 268,768 Operation Expenses 67,031,232 61,192,067 Provisions 12.123.994 24.268.555 66L147 i1Q ,85729.390 Excess of Income over Expenditure (5,158,211) 3,756,022 Appropriations --75.02 (Deficit) Surplus Transferred to Balance Sheet (5.158.21) 3.380.420 - 31 - Page 2/2 Table 12 Cb\. COOPERATIVE AU AgRICUU RI NK (Income and Expenditure Account) 1986 1985 1984 . YR TR TR Trading Income 7,530,363 17,540,165 7,906,446 Operation Income 63.046.738 54.755.942 44,832,612 Provisions written back --_722.929 -- 7,0577.101 73.019.06 522.739.058 ITE Trading Expenses 175,458 2,291,548 1,626,304 Operation Expenses 52,669,113 40,724,033 34,767,851 Provisions 14 7?7.688 19.9Q7.649 13.1Q7.5Z7 L7.622-259 62.923.230 49.411.730 Excess of Income Over Expenditure 2,954,842 10,095,806 3,327,328 Appropriations . 295.48 4.Q00.00- (Deficit) Surplus Transferred to Balance Sheet 25 9357 6095.806 3.327.328. IORD 22775 .5 -&* , ; C9QPRRATIV! ND ANACULTURAL CREDIT 9ANK; REPUBLIC OF YEMEN 1 aNHeRUCHSNCAOD AGRICULTURAL CREDIT PROJECT 0.- EWT CAPIeS ft A I A M A WV f +. ' t ORTtf .. PORTS ~AUW ARA,, - M ROAM ',AUDI ARABIAE MCOND4 m ROAO TUCKS - OOVRRWI0 AlT IOUNDOdES T. ih ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~HTM~AYK)NAOM ORDAME5 a~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I, "'nk 3 ,' ._h *tr .:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~iiA°'?' - MA MM T',* ,,A' S '-f A Li tI ,rjlti8.?''Sl)~ ~~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~Oh 00 th pedo eat tUMpI it.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~n00kottn 43- 100 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~54* 1 L lyyl~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~AU~I~