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PROJECT EVALUATION Republic of Ghana Rural Enterprises Project, Phase II International Fund for Interim Evaluation Agricultural Development Via Paolo di Dono, 44 00142 Rome, Italy Tel: +39 06 54591 Fax: +39 06 54593048 October 2011 E-mail: [email protected] www.ifad.org/evaluation Document of the International Fund for Agricultural Development Republic of Ghana Rural Enterprises Project, Phase II Interim Evaluation Report No. 2494-GH October 2011 Photo on cover page: Women‟s Gari Processing Association Source: Rural Enterprises Project, Phase II Project Coordination and Monitoring Unit Republic of Ghana Rural Enterprises Project – Phase II Loan No. 588-GH Interim Evaluation Table of Contents Currency Equivalents iii Weights and Measures iii Abbreviations and Acronyms iii Map of the Project Area v Acknowledgements vii Foreword ix Executive Summary xi Agreement at Completion Point xvii I. EVALUATION OBJECTIVES, METHODOLOGY AND PROCESS 1 II. COUNTRY AND SECTOR BACKGROUND 3 III. PROJECT BACKGROUND 6 IV. IMPLEMENTATION RESULTS 9 V. PROJECT PERFORMANCE 22 A. Relevance 22 B. Effectiveness 24 C. Efficiency 28 VI. RURAL POVERTY IMPACT 31 VII. SUSTAINABILITY, INNOVATIONS AND GENDER 37 A. Sustainability 37 B. Innovation 38 C. Gender 39 VIII. PERFORMANCE OF PARTNERS 40 IX. SUMMARY OF OVERALL PERFORMANCE 42 X. CONCLUSIONS AND RECOMMENDATIONS 43 APPENDICES 1. Bibliography 49 2. Evaluation Framework 51 3. Evaluation Main Mission Itinerary 57 4. List of Persons Met during the Evaluation Mission 59 5. Mean Annual Per Capita Income by Region 71 6. Case Studies: Businesses That Have Grown 73 7. Brief on Trade/Business Associations 79 8. Rural Enterprises Project Data 83 9. Evaluation Criteria Used by the Independent Office of Evaluation 91 BOXES 1. Multiple Income Streams Bring Prosperity 33 2. Case Study: Impact of REP II on Household Income 34 3. Case Study: Control Group 34 FIGURES 1. REP II Financial Performance 12 2. Performance of the Rural Enterprise Development Fund Disbursement 19 3. REP I and REP II Evolution 43 TABLES 1. Summary of Project Performance 11 2. Total Cost Allocation (Appraisal and Actual as of March 2010) 13 3. Participating Financial Institutions Loan Report - March 2010 18 4. Adoption Rates for Training by Business Type 25 5. Income Levels Before and After REP II Support 32 6. Evaluation Ratings Summary 42 ANNEX (*) Sociocultural, Gender and Institutional Assessment (*) The annex is available upon request from the Independent Office of Evaluation of IFAD. ii Currency Equivalents Monetary Unit = Ghanaian Cedi (GHC) US$ 1 – GHC 1.438 (June 2010) Weights and Measures 1 kilogram (kg) = 2.2 pounds 1,000 kg = 1 metric ton (mt) 1 kilometre (km) = 0.62 mile 1 meter = 1.09 yards 1 square meter (m2) = 10.76 square feet 1 acre = 0.405 ha Fiscal Year 1 January – 31 December Abbreviations and Acronyms AfDB African Development Bank AGI Association of Ghana Industries ARB Association of Rural Banks ASSI Association of Small-Scale Industries BAC Business Advisory Centre BDS Business Development Services CIBA Council for Indigenous Business Associations COSOP country strategic opportunities programme EMU Efficiency Monitoring Unit ERR Economic Rate of Return GHC Ghana Cedis GLSS Ghana Living Standards Survey GPRS (I) Ghana Poverty Reduction Strategy GPRS (II) Growth and Poverty Reduction Strategy GRATIS Ghana Regional Appropriate Technology and Industrial Services IFAD International Fund for Agricultural Development IOE Independent Office of Evaluation of IFAD IREGE Initiative for Rural Enterprises Growth and Employment Creation LTAs local trade associations MLGRD Ministry of Local Government and Rural Development MOFA Ministry of Food and Agriculture MOTI Ministry of Trade and Industry MSEs micro and small enterprises MTR Mid-Term Review NBSSI National Board for Small-Scale Industries NGOs non-governmental organizations NVTI National Vocational Training Institute PCMU Project Coordination and Monitoring Unit PFIs participating financial institutions RAFiP Rural and Agricultural Finance Programme RCC Regional Coordinating Councils REDF Rural Enterprises Development Fund iii REP I Rural Enterprises Project REP II Rural Enterprise Project, Phase II RFS Rural Financial Services RTF Rural Technology Facility (REP II) RTIMP Root and Tuber Improvement and Marketing Programme TPSAT Technology Promotion and Support to Apprenticeship Training UNOPS United Nations Office for Project Services WCA West and Central Africa Division (IFAD) iv v vi Acknowledgements This interim evaluation was led and prepared by Mark Keating, Evaluation Officer, with contributions by consultants Dorothy Lucks (lead consultant), Giulia Mezzi and Ana Serwaa Dapaah. Internal peer reviewers from the Independent Office of Evaluation of IFAD (Ashwani Muthoo, Katrin Aidnel and Luigi Cuna) reviewed the approach paper and the draft final report. Melba E. Alvarez, Evaluation Communication Assistant, provided administrative support. The Independent Office of Evaluation is grateful to IFAD‟s West and Central Africa Division for their insightful inputs and comments at various stages of the evaluation process. Appreciation is due to the Government of Ghana for the valuable comments and support provided throughout the evaluation process and for organizing the final learning workshop held in March 2011. __________________________________________________________ Director, Independent Office of Evaluation of IFAD: Luciano Lavizzari vii viii FOREWORD The overall goal of the Ghana Rural Enterprise Project, Phase II (REP II) is to alleviate poverty and improve living conditions in the rural areas and especially increase the incomes of women and vulnerable groups through increased self- and wage employment. The project was implemented in 53 districts across the ten administrative regions in Ghana. Project interventions targeted the entrepreneurial poor through a demand-driven approach. Overall, the evaluation found that REP II was relevant to the Ghana context and has performed well. It has achieved a satisfactory level of effectiveness as well as of efficiency, particularly with regard to business service provision. The evaluation has also determined that the project has made a substantial contribution to poverty reduction within each district of operation. Such impact may not be as widespread in terms of the numbers of businesses and employees originally envisaged, but it has established a sustainable foundation for current and future poverty reduction approaches in the micro and small enterprises (MSE) sector. While the core focus of REP II is MSE sector development, through rural technology and rural finance, yet it has also played an important role in governance, as it related to local economic development and private sector institutional building and private sector value chain development. Moreover, REP II has led to the emergence of a range of innovations, for instance, the creation of MSE sub-committee of the District Assemblies to mainstream MSE development in the local government system, rotational trade shows, development of industrial estates and appointment of capable clients as local service providers. Gender was a major consideration in the project targeting strategy in accordance with the project design, with a specific focus on poor/disadvantaged women. The evaluation noted that the project’s approach has been effective, bringing about changes and improvements in culture and practices in relation to gender. On a less positive note, the level of adoption from training activities has not been as high as expected, mainly due to lack of financing. More could have been done to assist businesses to move from survival level to more proactive growth, which required intensive and continued support for those clients interested in and capable of growth. In addition, project results in rural finance have been mixed, less positive in some respects and more inspiring in others. Also, the sustainability of project interventions is mixed. While the sustainability of the Business Advisory Centers model, as well as of individual MSEs, is highly likely, the sustainability of Rural Technology Facilities and of some participating financial institutions still remains a challenge. The evaluation concluded that, overall, the project was successful. REP II was implemented with the participation of a large number of institutions at different levels of operation, which required a strong coordinating mechanism to ensure its effectiveness. In this respect, impact has been exemplary at the national and district levels. Notably, the project has led to significant policy change in support to the MSE sector and implementation of major national policies related to MSEs in the rural areas. The present completion evaluation report includes an agreement at completion point summarizing the main evaluation findings. It also presents the recommendations that were discussed and agreed to by IFAD and the Government of Ghana, together with proposals as to how and by whom they should be implemented. Luciano Lavizzari Director, Independent Office of Evaluation of IFAD ix x Republic of Ghana Rural Enterprises Project – Phase II Interim Evaluation Executive Summary 1. Introduction. The interim evaluation of the Ghana Rural Enterprises Project, Phase II (REP II) was conducted by the Independent Office of Evaluation of IFAD (IOE) in line with the provisions set out in the IFAD Evaluation Policy and IFAD Evaluation Manual.1 The main objectives of the evaluation were to: (i) assess the performance and impact of