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Independent Office of Evaluation Nepal Country Programme Evaluation

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Independent Office of Evaluation Nepal Country Programme Evaluation Independent Office of Evaluation Nepal Country Programme Evaluation December 2012 Report No. [Report number is inserted by ECU/IOE] Document of the International Fund for Agricultural Development Photos Front cover: [Click here and type photo caption] Back cover: [Click here and type photo caption] ©IFAD/[Click here and type name of photographer/source] This report is a product of staff of the Independent Office of Evaluation of IFAD and the findings and conclusions expressed herein do not necessarily reflect the views of its Member States or their representatives to its Executive Board. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of IFAD concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The designations “developed” and “developing” countries are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process. All rights reserved ©2012 by the International Fund for Agricultural Development (IFAD) Foreword This country programme evaluation (CPE) covers over a decade of IFAD’s cooperation with Nepal (1999-2012). During this period, and in spite of moderate economic growth, Nepal has achieved visible gains in poverty reduction, mainly driven by increased remittances, greater connectivity and urbanization, and a decline in the dependency ratio. Despite these improvements, poverty remains severe, with problems of food security and malnutrition. IFAD’s support during the evaluated period has concentrated on rural poverty alleviation through integrated agricultural and rural development programmes; leasehold forestry; and agricultural value-chain development. The total amount of loans and grants provided by IFAD since engagement in 1978 is US$146 million. Overall, the IFAD/Nepal partnership for the period reviewed is assessed to be moderately satisfactory, considering improvements in the later part of the period. The IFAD-supported programme portfolio is rated moderately satisfactory mainly owing to recent improvements in support to leasehold forestry and the satisfactory performance of the IFAD-cofinanced Poverty Alleviation Fund. While the overall portfolio is relevant and many quantitative targets were achieved, sustainability and innovation were less successful, and IFAD-supported programmes had a very wide geographical and thematic spread. Rural finance was the least successful part of the overall portfolio. The two country strategic opportunities programmes (COSOPs – 2000 and 2006) were relevant overall, although they somewhat underestimated the challenges of building responsive local governments in conflict and post-conflict situations. The COSOPs lacked sufficient resources to maintain an appropriate level of knowledge management, policy dialogue and partnership-building. Looking forward, this CPE offers recommendations in three broad areas: (i) overall country strategy, including a paradigm shift to a two-pronged strategy combining a focus on developing profitable enterprises of economic scale along road corridors with poverty alleviation and addressing basic needs in remote areas – as well as factoring in the role of remittances and the overall fragility of the country context; (ii) policy dialogue, including early identification of important policy issues; and (iii) operations and programme management, including finding alternative means (such as partnerships and project financing) to address common problem areas in IFAD-supported programmes, and aligning COSOP and performance-based allocation system cycles. Ashwani Muthoo Acting Director Independent Office of Evaluation of IFAD Acknowledgements This country programme evaluation was prepared under the responsibility of Konstantin Atanesyan, Senior Evaluation Officer, Independent Office of Evaluation of IFAD (IOE) with contributions from consultants Jakob Grosen (consultants’ team leader), Marlene Buchy (gender equality and social inclusion), Binoy Sharma (rural enterprises and income generation), George Polenakis (rural finance), Netra Prasad Timsina (agriculture and natural resource management) and Kumar Upadhyaya (rural infrastructure). Nigel Roberts provided advice on issues related to development and aid cooperation in the conflict and post-conflict situation of Nepal. Linda Danielsson, Evaluation Assistant, provided research and administrative support and inputs to the assessment of non-lending activities. Peer reviewers (Ashwani Muthoo, Acting Director, IOE; Fabrizio Felloni, Senior Evaluation Officer, IOE; and Ali Khadr, Senior Manager, Country and Corporate Evaluation, Independent Evaluation Group of the World Bank) provided comments on the approach paper and draft report. IOE is grateful to IFAD’s Asia and the Pacific Division for close cooperation and useful inputs at various stages of the evaluation process. Appreciation is also due to the Government of Nepal for its continuous and constructive collaboration and for co- organizing the national round-table workshop in Kathmandu in January 2013. Contents Currency equivalent, weights and measures iii Abbreviations and acronyms iii Map of IFAD-supported operations v Executive summary vi Extract of the agreement at completion point xi I. Background 1 A. Introduction 1 B. Objectives, methodology and process 3 II. Country context 5 A. Overview 5 B. Agricultural and rural development 11 C. Public policies and programmes for rural poverty reduction and donor assistance 13 III. IFAD country strategies and operations 16 A. Country strategies 16 B. IFAD-supported operations 19 C. The conflict dimension 21 IV. Portfolio performance 23 A. Core performance 24 B. Rural poverty impact 34 C. Other evaluation criteria 38 D. Overall achievement 41 V. Performance of partners 44 A. IFAD 44 B. Government 45 VI. Assessment of non-lending activities 46 A. Policy dialogue 47 B. Knowledge management 48 C. Partnership-building 49 D. Grants 51 E. Overall assessment 57 VII. COSOP performance and overall assessment 58 A. Relevance 58 B. Effectiveness 64 C. Overall assessment 68 VIII. Conclusions and recommendations 69 A. Conclusions 69 B. Recommendations 75 Annexes 1. Ratings of IFAD-funded project portfolio in Nepal 79 2. IFAD-financed projects in Nepal 80 3. IFAD-funded grants in Nepal 81 4. Methodological note on IOE’s country programme evaluations 87 5. Definition of the evaluation criteria used by IOE 90 6. List of key persons met 91 7. Main bibliography 99 8. Portfolio covered by the CPE - features and evaluation approach 101 9. Portfolio assessment by the 2011 COSOP Review 104 10. Assessment of the effectiveness LFLP’s components - based on FAO outcome study, 2011 105 11. WUPAP’s reporting to the trigger workshop 7-8 April 2012 on achievement of triggers for moving to phase III 106 12. Nepal on international indices 108 13. Achievement of the MDGs 111 14. Poverty rates in rural western hills and rural eastern hills 112 15. Time use and budget of country programme management 113 16. Social characteristics of beneficiaries 115 Appendices 1. Rural finance (George Polenakis) 2. Forests, crops, livestock and natural resource management (Netra Prasad Timsina) 3. Rural enterprise and agricultural value chain development (Binoy Sharma) 4. Rural infrastructure (Kumar Upadhyaya) 5. Gender and social inclusion (Marlene Buchy) 6. Nepal: Conflict and fragility (Nigel Roberts) The appendices are available upon request from the Independent Office of Evaluation of IFAD ([email protected]). ii Currency equivalent, weights and measures Currency equivalent Nepali Rupee (NR) January 1999: 1 US$ = 67 NR January 2008: 1 US$ = 63 NR May 2012: 1 US$ = 82 NR Weights and measures Metric measure Fiscal Year 16 July – 15 July (Nepal’s calendar year 2069 starts in April 2012 and ends in April 2013) Abbreviations and acronyms AsDB Asian Development Bank ADBN Agricultural Development Bank (of Nepal) ADS agricultural development strategy APP agricultural perspective plan APR IFAD’s division for the Asia and Pacific Region ARRI Annual Report on Results and Impact (issued by IOE/IFAD) CPA Comprehensive Peace Agreement CBO Community-based organization CEAPRED Centre for Environmental and Agricultural Policy Research, Extension and Development CFUG community forest user group CIFOR Centre for International Forestry Research COCIS Centre for Integrated Agriculture and Cooperative System COSOP Country Strategic Opportunities Programme CPC country programme coordinator (IFAD, Kathmandu) CPE country programme evaluation CPM country programme manager DFID Department for International Development (United Kingdom) DDC district development committee DSF debt sustainability framework FLM flexible lending mechanism GBR Grameen Bank replicator GESI gender equality and social inclusion GIZ German Agency for International Cooperation (formerly GTZ – German Agency for Technical Cooperation) GSTW group shallow tube well HLFFDP Hill Leasehold Forestry and Forage Development Project HVAP High Value Agriculture Project in Hills and Mountain Areas ICIMOD International Centre for Integrated Mountain Development ICRISAT International Centre for Crop Research in the Semi-Arid Tropics ILO International Labour Organization IOE Independent Office of Evaluation of IFAD ISFP Improved Seeds for Farmers Programme LFUG leasehold forest user group LFLP Leasehold Forestry and Livestock Programme
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