Project Completion Report
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Republic of Armenia Farmer Market Access Programme Project completion report Main report and appendices Mission date: 10 to 21 March 2014 Document Date: 25-Aug 2014 Project No. 1100001141 Report No: 3546-AM Near East, North Africa and Europe Division Programme Management Department Republic of Armenia Farmer Market Access Programme Project completion report Contents Currency equivalents iii Weights and measures iii Abbreviations and acronyms iv Map of the programme area v Programme at a glance vi Executive Summary vii A. Introduction 1 B. Program description and implementation arrangements 2 C. Programme strategy and approaches 5 D. Assessment of programme relevance 7 E. Programme costs and financing 8 F. Assessment of programme efficiency 9 G. Review of programme outputs 11 H. Assessment of programme effectiveness 13 I. Assessment of impact 13 J. Assessment of sustainability 16 K. Innovation, replication and up-scaling 18 L. Performance for the partners 19 M. Lessons learned 20 List of Tables Table 1: Total Loan Disbursement to PFIs by RFF by Year of Disbursement 3 Table 2: Total Cumulative FMAP Expenditures, by Year 8 Table 3: Total Actual FMAP Expenditures, by Year 8 Table 4: FMAP-RFF Benefit Stream and EIRR 10 Table 5: FMAP-FREDA Benefit Stream and EIRR 10 Table 6: FMAP-RII Benefit Streams and EIRR – Main Scenario 10 Table 7: Updated Logical Framework: Progress against Objectives, Outcomes and Outputs 12 Table 8: Cost Structure and Net Results of RFF in Terms of Loan Portfolio 17 i Republic of Armenia Farmer Market Access Programme Project completion report Appendices Appendix 1: Programme logical framework 23 Appendix 2: Record of supervision and follow-up missions 25 Appendix 3: Summary of the amendments to the loan agreement 27 Appendix 4: Actual programme costs 29 Appendix 5: Actual physical progress of the programme 31 Appendix 6: Financial and economic analysis 33 Appendix 7: Impact on the environment 71 Appendix 8: Stakeholder workshop findings 73 Appendix 9: Rural Infrastructure Investment 75 Appendix 10: Financial management 97 ii Republic of Armenia Farmer Market Access Programme Project completion report Currency equivalents Currency Unit = Armenian Dram (AMD) US$1.0 = AMD 405 End of year exchange rates Date 31.12.2013 31.12.2012 31.12.2011 31.12.2010 31.12.2009 31.12.2008 USD 1.00 ► AMD 404.900 403.530 385.720 363.440 377.890 306.730 Weights and measures 1 kilogram = 1000 g 1 000 kg = 2.204 lb. 1 kilometre (km) = 0.62 mile 1 metre = 1.09 yards 1 square metre = 10.76 square feet 1 acre = 0.405 hectare 1 hectare = 2.47 acres iii Republic of Armenia Farmer Market Access Programme Project completion report Abbreviations and acronyms ACBA Agricultural Cooperative Bank of Armenia AMD Armenian Dram C1 FMAP Component 1 C2 FMAP Component 2 CARD Centre for Agribusiness and Rural Development CDI Commercially-derived Infrastructure E-IRR Economic Internal Rate of Return FAO Food and Agriculture Organization of the United Nations FEA Financial and Economic Analysis FMAP Farmer Market Access Programme FREDA Fund for Rural Economic Development in Armenia GDP Gross Domestic Product GOA Government of Armenia IDI Investment Derived Infrastructure IFAD International Fund for Agricultural Development IMF International Monetary Fund IRFSP Infrastructure and Rural Finance Support Programme IRR Internal Rate of Return M&E Monitoring and Evaluation MCA Millennium Challenge Account MOA Ministry of Agriculture MOFE Ministry of Finance and Economy MSME Micro, Small and Medium Enterprise MTR Mid-Term Review MUV World Bank Manufactures Unit Value Index O&M Operations and Maintenance OFID OPEC Fund for International Development PAAU Programme Analysis and Administration Unit PAU Programme Administration Unit PCR Project Completion Report PDR Project Design Report PFI Participating Financial Institution PIRP Productive Infrastructure Rehabilitation Project PIU Programme Implementation Unit RAEDP Rural Areas Economic Development Programme RESCAD Rural Enterprise and Small-Scale Agricultural Development RFF Rural Finance Facility RII Rural Infrastructure Investment RIMS Results and Impact Management System SME Small and Medium Enterprise TA Technical Assistance UCO Universal Credit Organization UNDAF United Nations Development Assistance Framework UNDP United Nations Development Programme USD United States Dollar VCMI Value Chain Multiplier Index WOP Without Project Scenario WP With Project Scenario WUA Water User Association iv Republic of Armenia Farmer Market Access Programme Project completion report Map of the programme area v Republic of Armenia Farmer Market Access Programme Project completion report Programme at a glance Country Armenia Project Name Farmer Market Access Programme (FMAP) Key Dates IFAD Approval Signing Effectiveness Mid-Term Original Actual Review Completion Completion 12-SEP-2007 08-JAN-2008 05-May-2008 not conducted 30-Jun-2013 31-DEC-2013 Mid-term Review Interim Original Loan Actual Loan Evaluation Closing Closing not conducted not conducted 31-DEC-2013 30-Jun-2014 IFAD Financing Loan SDR million 7,900,000 % disbursed Grant SDR million 330,00 % disbursed Actual Costs and Financing (USD ‘000) Component IFAD Cofinancing PFIs GOVT Total 1.1: FREDA 6,306,082 1,260,537 280,662 7,847,281 1.2: RFF 1,989,055 397,800 2,386,855 2: Rural Infrastruct. 2,347,675 13,615,207 5,547,755 21,510,637 3. Project Mgmt. 2,171,410 384,643 416,887 2,972,940 Total 12,814,221 15,260,387 397,800 6,245,304 34,717,712 Remarks Indicate cofinancing partners, actual amounts, and amount committed for each as at appraisal. IFAD financing included the loan with spending of USD 12,313,843 and a grant with spending of USD 500,378. Co-financing came from OFID (USD 14,999,850 and a Danish Govt. grant with spending of USD 1,260,537. Number of Beneficiaries Total Direct Indirect Women Other Other 98,804 98,804 51,331 Project Objective The goal of the FMAP was to improve the economic and social status of poor rural people in Armenia. Specific objectives were: (1) To stimulate rapid growth of rural enterprises with a comparative economic advantage and strong linkages to poor primary producers and rural people seeking improved employment opportunities; (2) To provide an investment instrument and associated funding which would respond to the need for rural equity finance; and (3) To further develop the capacity of the financial sector in Armenia to respond to needs for small and medium credit products. Country Partners Executing Agency Ministry of Agriculture, Programme Analysis and Administration Unit, later changed into Programme Implementation Unit (PIU) NGOs/civil society NGO “Shen” engaged in the rehabilitation of irrigation supply networks Other Participating Financial Institutions, including banks and microfinance institutions (UCOs) USAID/CHF parallel financing of infrastructure projects vi Republic of Armenia Farmer Market Access Programme Project completion report Executive Summary1 1510998096. The goal of the Farmer Market Access Programme (FMAP) was to improve the economic and social status of poor rural people in Armenia. Specific objectives were: (i) to stimulate rapid growth of rural enterprises with a comparative economic advantage and strong linkages to poor primary producers and rural people seeking improved employment opportunities; (ii) to provide an investment instrument and associated funding which would respond to the need for rural equity finance; and (iii) to further develop the capacity of the financial sector in Armenia to respond to needs for small and medium credit products. Programme target groups were the actually or potentially economically active among the following primary target groups, identified as the rural socio-economic categories with the highest incidence of poverty: (i) subsistence and semi-subsistence farmers, in particular those willing to move to more commercial farming; (ii) the rural unemployed, underemployed and self-employed, including those in rural urban centres; (iii) the landless; and (iv) poor rural women, especially those who are household heads. 1510998097. The Programme was implemented from between 2008 and 2013, with a total cost of US 34.8 million allocated along two technical components that aimed respectively at (i) improved access to financial services, in turn composed of the support to the Rural Finance Facility (RFF) and to the Fund for Rural Economic Development in Armenia (FREDA); and (ii) improved rural infrastructures (RII). 1510998098. Programme design started in 2006; the final Project Design Report (PDR) dated November 2007, shortly after the approval by the Executive Board. The Financing Agreement (FA) was signed in January 2008, and the FMAP became effective in May 2008. Original completion was projected for 30 June 2013, but was extended to 31 December 2013, and closure thus to 30 June 2014. The Project Completion Mission was conducted in February and March 2014. 1510998099. Under component 1.1, FREDA was established as venture capital institution investing in rural agribusiness companies through which support could be provided to small companies and their rural suppliers that are crucial for the development of strategic rural investment chains. This approach was highly innovative for Armenia, new for IFAD (at least in the sub-region), and risky. This should be seen as a very laudable effort of the GOA and IFAD to diversify the range of products and services made available to the target groups. 1510998100. By the end of 2013, FREDA had invested USD 3.15 million (AMD 1 275 million) in nine such companies and had granted five loans worth USD 0.93 million (AMD 376) to investee companies. Companies into which FREDA invested showed generally good performance and improved their procurement from raw material suppliers (farmers) on average by more than 200%, their exports by more than 100%, their sales by about 50%, and their employment by about 40%. Most companies changed their market orientation since FREDA invested: on average, the ratio between exports and domestic sales changed from 1:2 to 2:1 with and through the FREDA participation.