Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004892 IMPLEMENTATION COMPLETION AND RESULTS REPORT TF-A24643 ON A SMALL GRANT IN THE AMOUNT OF USD 2.857 MILLION TO THE Republic of Uganda FOR Northern Uganda Business Support Program (P147258) June 26, 2019 Social Protection & Jobs Global Practice Africa Region Regional Vice President: Hafez M. H. Ghanem Country Director: Carlos Felipe Jaramillo Senior Global Practice Director: Michal J. Rutkowski Practice Manager: Robert S. Chase Task Team Leader(s): Michael Mutemi Munavu ICR Main Contributor: Ashutosh Raina ABBREVIATIONS AND ACRONYMS CBAs Community Business Agents CBP Capacity Building Partner CIG Community Interest Groups DEC District Executive Committee HISP Household Income Support Program IHISP Improved Household Income Support Program JSDF Japan Social Development Fund LIS Livelihood Investment Support M&E Monitoring and Evaluation MIS Management Information System NDO NUSAF Desk Officer NUBSP Northern Uganda Business Support Project NUSAF Northern Uganda Social Action Fund OM Operational Manual OPM Office of the Prime Minister PDO Project Development Objective RF Results Framework SHGs Self Help Groups SLP Sustainable Livelihoods Pilot TST Technical Support Team UGX. Uganda Shillings US$ United States Dollars VLIC Village Livelihoods Improvement Committee VRF Village Revolving Fund TABLE OF CONTENTS DATA SHEET .................................................................................................................................................. 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ........................................................................10 A. CONTEXT AT APPRAISAL ................................................................................................................... 5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ............................................. 7 II. OUTCOME ........................................................................................................................................... 10 A. RELEVANCE OF PDOS ...................................................................................................................... 10 B. ACHIEVEMENT OF PDOS (EFFICACY) ............................................................................................... 10 C. EFFICIENCY ...................................................................................................................................... 13 D. JUSTIFICATION OF OVERALL OUTCOME RATING............................................................................ 15 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME................................................... 16 A. KEY FACTORS DURING PREPARATION ............................................................................................ 16 B. KEY FACTORS DURING IMPLEMENTATION ..................................................................................... 17 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME.................... 18 A. QUALITY OF MONITORING AND EVALUATION (M&E) .................................................................... 18 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ............................................................ 19 C. BANK PERFORMANCE ..................................................................................................................... 22 D. RISK TO DEVELOPMENT OUTCOME ................................................................................................ 22 V. LESSONS AND RECOMMENDATIONS .................................................................................................. 23 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ................................................................................ 25 ANNEX 2. PROJECT COST BY COMPONENT ................................................................................................. 33 ANNEX 3. RECEIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ...................... 34 ANNEX 4. EFFICIENCY ANALYSIS.................................................................................................................. 35 ANNEX 5. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ............................................ 40 ANNEX 6. PROJECT EVALUATION: PRELIMINARY ANALYSIS ....................................................................... 42 The World Bank Northern Uganda Business Support Program (P147258) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P147258 Northern Uganda Business Support Program Country Financing Instrument Uganda Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Republic of Uganda Office of the Prime Minister Project Development Objective (PDO) Original PDO The main development objective of this project is to improve and sustain household income of the vulnerable poor through provision of business management support services to the existing and new Community Interest Groups (CIGs) in the four pilot districts (Kitgum, Gulu, Nebbi, and Soroti). Revised PDO The main development objective of this project is to improve and sustain household income of the vulnerable poor through provision of business management support services to the existing and new Community Interest Groups (CIGs) in the four pilot districts (Kitgum, Gulu, Pakwach, and Soroti). Page 1 of 50 The World Bank Northern Uganda Business Support Program (P147258) FINANCING FINANCE_TBL Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) Donor Financing TF-A2643 2,857,000 2,857,000 2,857,000 Total 2,857,000 2,857,000 2,857,000 Total Project Cost 2,857,000 2,857,000 2,857,000 KEY DATES Approval Effectiveness Original Closing Actual Closing 31-Dec-2015 31-Oct-2016 31-Dec-2018 31-Dec-2018 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 26-Oct-2018 1.46 Change in Project Development Objectives Reallocation between Disbursement Categories KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 12-Apr-2017 Moderately Satisfactory Moderately Satisfactory 0.00 02 29-Nov-2017 Moderately Satisfactory Moderately Satisfactory 1.46 03 05-Dec-2018 Moderately Satisfactory Moderately Satisfactory 1.46 Page 2 of 50 The World Bank Northern Uganda Business Support Program (P147258) ADM STAFF Role At Approval At ICR Regional Vice President: Makhtar Diop Hafez M. H. Ghanem Country Director: Diarietou Gaye Carlos Felipe Jaramillo Senior Global Practice Director: Arup Banerji Michal J. Rutkowski Practice Manager: Dena Ringold Robert S. Chase Task Team Leader(s): Endashaw Tadesse Gossa Michael Mutemi Munavu ICR Contributing Author: Ashutosh Raina Page 3 of 50 The World Bank Northern Uganda Business Support Program (P147258) EXECUTIVE SUMMARY For a long time, northern Uganda has experienced fragility and conflict, resulting in higher levels of poverty and lower levels adminstrative capacity relative to other regions. The Northern Uganda Business Support Program (NUBSP)1 was designed in 2014 before the completion of the Second Northern Uganda Social Action Fund (NUSAF 2) Project, which it was intended to complement, in four districts. Following the NUBSP approval in 2015 , NUSAF 3 was approved and began implementation of a sustainable livelihood pilot (SLP), as part of NUSAF3 Livelihoods Invesment Support (LIS) component. In view of this, on the request of the Government of Uganda (GoU), the NUBSP project was restructured to align with NUSAF3 SLP and to improve further the impact of the project including increasing the number of beneficiaries almost three-fold and ensuring sustainable access to finance and stronger community institutions of poor. It disbursed fully and closed in December 2019. The project development objective (PDO) (from the Project Appraisal Document) was “ to increase and sustain the incomes of poor households belonging to existing and new community interest groups (CIGs) in the four pilot districts (Kitgum, Gulu, Pakwach, and Soroti) in northern Uganda�. Despite the complex and challenging implementation context, the project has performed very well, achieving its intended outcomes at a satisfactory level. All PDIs were met – some by a large margin. In addition to achieving the development outcomes the project also piloted the village revolving fund (VRF) approach and built strong institutional platforms of poor. It provided business management support to 11,875 poor beneficiaries, which included 75 percent women and 33 percent youth, across four districts, 16 clusters in 128 villages. Overall, the project has created a culture of systematic savings, not for consumption but for investment. It has promoted social community guarantee system and social cohesion, created affordable financing for business development of poor and strengthen sustainability and profitability of small businesses owned by the poor. The project demonstrated the money can multiply and rotate around many people and households. The evaluation report of the project highlighted significant impact in target communities. 99.3 percent Self Help Groups (SHGs) were running business enterprises, weekly savings had doubled, and average income increased by 43.8 percent. There was a significant increase in average spending on small businesses (26 percent), school fees (21percent), and food (10 percent). 28.4 percent respondents at mid-line reported a sick member in the household in the last seven days compared to 65.3 percent at baseline. There was an increase in the number of children attending school from about two to three, and 40 percent of beneficiary households were having three or more meals a day, almost double the proportion at baseline (28 percent). In addition, conflicts over money reduced from 33 percent to 26.5 percent, quarrels over other household resources reduced from 17.5 percent to 2.1 percent. This is a catalytic intervention - without it five years of providing just a grant plus training in NUSAF 3 wouldn’t have been nearly as impactful so this JSDF deserves a lot of credit for turning something around and making it very successful. The lesson from this trust fund activity has not only been useful for NUSAF3 but also for other operations providing microfinance for productive inclusion interventions. The relevance of PDOs is rated High. The achievement of project objectives/outcomes (efficacy) is rated High. The project’s efficiency is rated as High. Overall, outcome rating is Satisfactory due to minor factors affecting implementation. There were some minor shortcoming which just marginally affected what was otherwise a highly satisfactory project. The Office of the Prime Minister (OPM)/Technical Support Team (TST) is highly encouraged by the results of the project support by the JSDF and is allocating additional funds from the NUSAF 3 to scale up the project. During the Mid-Term Review (MTR) of NUSAF 3 in March 2019, all 62 NUSAF districts requested GoU to 1 A US$2.857 million grant from the Japan Social Development Fund (JSDF) Page 4 of 50 The World Bank Northern Uganda Business Support Program (P147258) replicate/scale up the VRF model in their districts, showing demand for the project is high. In addition to OPM/NUSAF TST, the President of Uganda’s team of Economic Advisors have appreciated the NUBSP project design and are planning to replicate the revolving fund approach in 7200 Parishes2 across the whole of Uganda. In addition, some development partners have expressed interest to partner with the GoU and the World Bank to strengthen and scale up the model nationally. I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL B 1. In 2013, at the time the NUBSP was being conceptualized and designed, Northern Uganda experienced economic stagnation arising from more than two decades of instability. The insurgency in the region had taken a tremendous toll on the population and the economy. In financial terms, the cost of the conflict to the national economy had been estimated at over US$1.3 billion (for 1986–2002), more than 3 percent of gross domestic product. 2. As a result, the North was the poorest region in Uganda with some of the lowest human development indicators in the country. The 2005/2006 National Household Survey showed that the North had the largest proportion of people living in poverty, estimated at 61 percent, almost twice the national poverty level of 31 percent. The gap between the northern and national poverty levels had widened from 17 percentage points in 1992 to 30 percentage points in 2005/2006, with poverty in the North falling less than any other region since the early 1990s. 3. The World Bank’s engagement with the Government of Uganda (GoU) in Northern Uganda dates back to the Northern Uganda Reconstruction Project 1992–1998. While a number of the project interventions were successful, follow-up recommendations stressed the need for more community involvement in the design and implementation of activities. The design of the first Northern Uganda Social Action Fund Project (NUSAF1) therefore focused on community demand-driven interventions that combined direct financing of public assets chosen by communities and support to disadvantaged groups. Also, the approach-built capacity of local authorities, civil society organizations, and the private sector to provide technical assistance to community initiatives as well as to lead public works subprojects. 4. In early 2002, in response to these challenges and as part of the GoU’s broader Northern Uganda Reconstruction Project, the GoU proposed the US$100 million NUSAF1. The project, supported by IDA, became effective on February 5, 2003, and closed on March 31, 2009. Its objective was to empower communities in the then 18 districts of Northern Uganda by enhancing their capacity to systematically identify, prioritize, and plan for their needs and, ultimately, to improve economic livelihoods and social cohesion. While the NUSAF1 contributed to addressing the challenges characteristic of Northern Uganda, widespread poverty, vulnerability, and service delivery challenges remained. 2 A Parish comprises of a cluster of villages. Page 5 of 50 The World Bank Northern Uganda Business Support Program (P147258) 5. Consequently, the NUSAF2 was designed to build on the gains made through the NUSAF1 and contribute to resolving some of these challenges. The NUSAF2 (2009–2016) was framed by the need for a simple design, with only three main components and mainstreaming. One of these NUSAF 2 components, the Household Income Support Program (HISP), was designed to train and provide grants to the Common Interest Groups (CIGs) comprising of representatives of poor households, to support income-generating activities. However, various consultations with HISP beneficiaries revealed that the NUSAF2 provided support to CIGs to start income generating activities, but there was no provision for the follow-up business development support to improve and sustain the income-generation activities of CIGs. To respond to this need, Northern Uganda Business Support Project (NUBSP) was designed to complement the NUSAF 2 HISP in four districts. The pilot districts were chosen based on poverty and the wide range of income-generating activities financed by NUSAF 2 project. 6. The NUBSP was aligned with the World Bank’s Country Assistance Strategy (CAS) and the government’s National Development Plan (NDP), and Peace Recovery, and Development Plan (PRDP). Providing business development support services meant the NUSAF 2 was able to offer comprehensive support to the CIGs to improve and sustain their business activities. a) Original Project Development Objectives (PDOs) and Key Indicators b 7. The original development objective of this project was “to increase and sustain the incomes of poor households belonging to existing and new community interest groups (CIGs) in the four pilot districts (Kitgum, Gulu, Nebbi, and Soroti) in northern Uganda�. At the project design, the PDO indicators were as follows: (a) Percentage of CIGs to complete business management training and produce business plans with a target of at least 80 percent of the 360 CIGs. (b) Percentage of CIGs implementing their business plans with a target of 70 percent of the 360 CIGs (about 252 CIGs). (c) Percentage of sales revenues achieved compared to forecasted sales revenues in the business plan after one year of follow-up advisory services with a target at least 50 percent of the forecasted annual sales revenues achieved. (d) Percentage increase in the household income of existing and new CIG members who completed business management skills training, produced business plans, and received one year of follow-up management advisory services with a target at least 80 percent of CIGs increasing their incomes by 20 percent after one year of follow-up advisory services. (e) Percentage of CIGs reinvesting their savings in new capital assets to expand their operations with a target of at least 25 percent of CIGs reinvesting 15 percent of their savings after one year of follow- up business advisory services. 8. The PDO was clearly articulated and the key performance indicators were appropriate to measure the PDO achievements. Page 6 of 50 The World Bank Northern Uganda Business Support Program (P147258) d) Main Beneficiary 9. With respect to geographical coverage, the NUBSP targeted beneficiaries in 4 districts in Northern Uganda. The principal target beneficiaries of the project were: (a) The existing and new CIGs formed by poor and vulnerable households. The existing CIGs were formed under the Household Income Support Program (HISP) of the NUSAF 2 Project, and the new CIGs were being formed under NUSBP. The members of the new CIGs belonged to poor and vulnerable groups such as female-headed households, people with disabilities, and vulnerable youths, among others. e) Original Components f 10. The original project had two components, which were appropriate to support the achievement of the intended PDO. 11. Component 1: Providing Business Training, Small Grants, and Follow-up Business Advisory Services to CIGs (US$2,271,000). This component comprised of five sub-components: (a) Subcomponent 1.1: Identification and Supporting the formation of New CIGs (US$91,000). This aimed formation of new CIGs and the identification of possible income–generating activities based on an assessment of the local market (b) Subcomponent 1.2: Providing Business Management Training to CIGs (US$540,000). This aimed the provision of business management training both to new and existing CIGs and help with the production of their business plans. (c) Subcomponent 1.3: Providing Small Grants to the New CIGs (US$960,000). This aimed the provision of small grants to new CIGs to enable them to start their income-generating activities. (d) Subcomponent 1.4: Providing Support to mentors and Facilitating Learning Workshops (US$140,000). This aimed at establishing a business mentor support system. (e) Subcomponent 1.5: Providing Follow-up Business Advisory Services to CIGs (US$540,000). This aimed to provide business advisory services. 12. Component 2: Program Management and Administration, Monitoring and Evaluation, and Knowledge Dissemination (US$586,000) (a) Subcomponent 2.1: Program Management and Administration (US$286,000). (b) Subcomponent 2.2: Monitoring and Evaluation (US$280,000). (c) Subcomponent 2.3: Knowledge Dissemination (US$20,000). Page 7 of 50 The World Bank Northern Uganda Business Support Program (P147258) B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) a) Background 13. The project development objective of the NUBSP was expected to be achieved by providing business training, small grants, and follow-up business advisory services to existing and new CIGs. The grant was designed to benefit 120 existing and 240 new CIGs. The members of these CIGs were to complete training in management and technical skills development and produce business plans. The existing CIGs to benefit from this pilot initiative were being selected from those supported by the NUSAF 2 Project, while the new CIGs were being formed through a participatory process that was previously used by NUSAF 2. The project was envisaged to support 4,680 beneficiaries within the 360 CIGs directly and to ensure that at least 50 percent of members of the new CIGs were women. Project Restructuring 14. The restructuring of the project was undertaken at the request of the GoU through a letter dated December 12, 2017. The rationale for the restructuring was that, although the design of the project started before the completion of the Uganda NUSAF 2, which it was intended to complement, its approval was delayed. Following the JSDF approval, NUSAF 3 was approved and began implementation of a sustainable livelihood pilot (SLP). In view of this, the GoU requested to restructure the project to align with SLP, specifically in the terminology change from CIGs to SHGs. The restructuring of project and its harmonization with SLP was expected to improve the impact of the JSDF, increase the number of beneficiaries almost three-fold, and ensure sustainability of access to finance and strong community-based institutions. Description of Revised Changes 15. The main changes were: (a) The target districts in the PDO were revised to include Pakwach as a pilot district instead of Nebbi. Pakwach district was actually not a new addition. It was part of Nebbi district at the time of the JSDF approval but, due to territorial changes made by Government to increase the number of districts in the country, Pakwach was carved out as a separate district out of Nebbi district. Since Pakwach was a new district with limited resources and required more support, the Nebbi district government chose Pakwach to be the pilot district. (b) Both CIGs and SHGs have the same meaning. At approval, the project used the term CIGs, but the NUSAF 3 has adopted SHGs. To be consistent, the terminology was changed but the term SHGs was used interchangeably with CIGs. The results framework was not revised as there was no change to the project. (c) Reallocation of funds from micro-grants to micro-credits. In the original design, micro-grants to CIGs were included however, to harmonize the project with the structure of the NUSAF 3 Sustainable livelihood pilot, funds were instead put through village revolving funds (VRF). CIGs/SHGs then received micro-credits from VRF. This way the project was able to support more beneficiaries with the same budget, thereby reducing the cost per beneficiary and creating a greater impact in target villages by covering more poor households. As a result, the direct beneficiaries of the projects increased from 4,680 to 11,875. No disbursements had been made at the time of restructuring under the micro-grants category, so the full amount was reallocated to the micro-credits Page 8 of 50 The World Bank Northern Uganda Business Support Program (P147258) category. In addition, US$272,000 was reallocated from Category (2) Training and Workshops to cover the overdraft of the same amount under Category (4) ii Micro Credits as the total disbursed was US$ 1.232 million and exceeded the initial allocation of US$960,000. There was a long gap in the project when no disbursements took place given the letter requesting revision from the GoU in December 2017 but the project didn’t get restructured until October 2018. REVISED PROJECT DEVELOPMENT OBJECTIVE 16. The revised PDO was “to improve and sustain household income of the vulnerable poor through provision of business management support services to the existing and new Community Interest Groups (CIGs) in the four pilot districts (Kitgum, Gulu, Pakwach, and Soroti)�. Theory of Change Activity Outputs Outcomes Objective Impact Identification and training of community business agents (mentors) 24 business mentors identified and trained to support t to CIGs/SHGs Strengthening existing savings groups and VLIC formation 360 CIG/SHGs/4680 poor beneficiaries, with 50% females identified Increased To improve household income of and sustain Creating easier access to household CIGs/SHGs finance for livelihoods Sustainable through savings, inter- 288 CIGs completed incomes of livelihoods business training and poor strengthen loaning, village revolving prepared business plans human funds and bank linkages Reinvestm through capital, ent of provision of progress out savings to business of poverty expand or 252 CIGs/SHGs diversify managemen Market assessment, implementing business the t support business training, plans business services to business plan activities CIGs /SHGs development, business mentoring and market linkages. MIS developed to track the performance of CIGs/SHGs Engagement of capacity building partners (CBPs), Business training by CBPs and commercial officers Page 9 of 50 The World Bank Northern Uganda Business Support Program (P147258) II. OUTCOME Relevance of PDOs 17. At the time of implementation completion, the project objective and outcomes were in line with the World Bank’s current FY 16-21 Country Partnership Framework (CPF), which focuses on boosting agricultural productivity and making non-farm sector growth more productive and pro-poor and responds to the GoU’s vision of a modern and prosperous country by 2040 and attainment of middle-income status by 2020. Table 1. Relevance of Project Objectives/Outcomes Focus/Emphasis Relevance of project objectives/outcomes FY16-21 Country Boosting agricultural productivity PDO focuses on business management support to Partnership and making non-farm sector improve livelihoods (both farm and non-farm) of poor Framework (CPF) growth more productive and pro- households. poor. Vision 2040 A modern and prosperous country PDO focuses on promoting business management by 2040 support to poor households to enhance agricultural commercialization, to increase rural incomes, and to strengthen backward and forward linkages with industry particularly agro-processing Second National Increasing household incomes and PDO focuses on increasing incomes of poor households Development promoting equity. Plan (NDP 2) Agriculture Move from subsistence to Project provides access to affordable credit for Sector Strategic commercial farming. business/investment through village revolving funds Plan MSME Policy Increase access to credit Project improves access to credit and financial services through village revolving fund and bank linkages The Sixth Pillar of To promote local economic Project follows cluster level local economic development Decentralization development in order to enhance and Community-driven development (CDD) approach to people’s income improve the livelihoods and incomes of poor households. 18. This was a niche intervention perfectly designed for small intervention but made NUSAF 3, a much bigger program successful. The project was adapted to a changing external environment: the changes made along the way were done in order to maintain the relevance of the program. 19. Overall, relevance is rated High. Page 10 of 50 The World Bank Northern Uganda Business Support Program (P147258) Achievement of the PDOs (Efficacy) 20. The PDO had two parts i.e. to improve and sustain household incomes. The first four PDO indicators focus on improvement of businesses and household incomes, and the fifth PDO indicators focuses on sustainability of businesses and household incomes. Overall, the project has shown High efficacy in achieving both parts of the PDO, by surpassing all outcome targets. 21. The project targeted existing saving groups with at least 90 percent ‘poor’ and ‘poorest of poor’ members, 50 percent female membership and those who have been saving for at least one year. The design, on moving from grant to revolving fund, anticipated the target group as working/active poor with at least 50 percent females. 22. Table below shows the details of the achievements, which confirm the project fully achieved – and largely exceeded - its target outcomes. Table 2. Achievement of PDO-level Indicators and Contribution to Outcomes PDO-level Results Indicator Baseline Target Achievement Contribution 1 Percentage of CIGs to complete 0 80% (288 CIGs) 128% (461 CIGs) 461 SHGs completed business management training business management and produce business plans with training and produced a target of at least 80 percent of business plans the 360 CIGs. 2 Percentage of CIGs 0 70% (252 CIGs) 126% (455 CIGs) 99.3 percent SHGs implementing their business running business plans with a target of 70 percent enterprises of the 360 CIGs (about 252 CIGs). 3 Percentage of sales revenues 0 50% 84% The average forecast achieved compared to was 8,075,869 and forecasted sales revenues in the achieved sales revenues business plan after one year of were 6,744,429 which follow-up advisory services with translates to 84 percent a target at least 50 percent of the forecasted annual sales revenues achieved. 4 Percentage increase in the 0 20% 43.8% Weekly savings of SHG household income of existing members doubled, and new CIG members who average income completed business increased by 43.8 management skills training, percent produced business plans, and received one year of follow-up management advisory services with a target at least 80 percent of CIGs increasing their incomes by 20 percent after one year of follow-up advisory services. Page 11 of 50 The World Bank Northern Uganda Business Support Program (P147258) 5 Percentage of CIGs reinvesting 25% 26.1% CIG members’ savings their savings in new capital increased from 54 assets to expand their operations percent to 84 percent with a target of at least 25 out of which 26.1 percent of CIGs reinvesting 15 percent is re-invested in percent of their savings after one existing and diversified year of follow-up business businesses. advisory services Intermediate Results Indicators 6 Percentage of female 0 50% 75% 75 percent of SHG beneficiaries supported by the members are females pilot 7 Number of mentors selected 0 24 32 32 community business agents were selected and trained to provide business mentoring to SHGs 23. Overall, the project provided business management support to 11,875 poor beneficiaries, which included 75 percent women and 33 percent youth, across four districts, 16 clusters in 128 villages (see Table 3). Table 3: Project Beneficiary Details Target SHGs that Beneficiaries District SHGs graduated Males Females Total Youth Kitgum 118 103 695[23.1%] 1,956[74%] 2,651 1,079 Pakwach 106 91 846[28.12%] 1,755[68%] 2,601 620 Gulu 158 149 894[29.71%] 3,226[78.3%] 4,120 1,255 Soroti 146 118 574[19.08%] 1,929[77.1%] 2,503 908 461 (99.3% are Total 528 3,009[25%] 8,866[75%] 11,875 3,862 active) 24. The project evaluation report highlighted significant impact in target communities as outlined below: • Community Institutions: 661 SHGs and 128 VLICs formed and strengthened; • Beneficiaries: 11,875 SHG members (75 percent women, 33 percent youth) supported; • Savings: Weekly savings doubled among SHGs; • Incomes: Average income increased by 43.8 percent; • Business development: 99.3 percent SHGs running business enterprises; • Education: Significant increase in average spending on school fees (21 percent), increase in the number of children attending school from about 2 to 3; Page 12 of 50 The World Bank Northern Uganda Business Support Program (P147258) • Health: 28.4 percent respondents at mid-line reported a sick member in the household in the last 7 days compared to 65.3 percent at baseline; • Food security: 40 percent of beneficiary households have 3 or more meals a day, almost double the proportion at baseline (28 percent). Significant increase in average spending on food (10 percent); • Household conflicts: Conflicts over money reduced from 33 percent to 26.5 percent, quarrels over other HH resources reduced from 17.5 percent to 2.1 percent; and • Poverty reduction: Decline in the proportion of households that are likely to be poor from 23.9 percent to 20.1 percent. 25. A summary of project outputs by components can be found in annex 1. 26. Given the high level of achievement of objectives, efficacy is rated as High. Efficiency 27. Cost effectiveness. At appraisal, the project aimed to provide business management support to 360 CIGs comprising of 4680 beneficiaries. However, at the implementation completion, the project had supported 461 CIGs/SHGs comprising of 11875 beneficiaries, resulting in three-fold increase in the number of beneficiaries supported. Of the total project cost, 43 percent went directly to beneficiaries as credit/VRF. The project provided a lot of emphasis on capacity building and technical support to SHG/VLICs and saw this as an investment towards developing required skills and capacities of poor to use the credit efficiently for managing and improving their small business activities. Of the 20 percent administrative cost, 5.18 percent was used for operating cost. Table 4. below shows higher level of cost effectiveness meaning the cost involved in achieving the results (PDOs) were reasonable. Table 4. Cost effectiveness Planned Achieved Remarks No. of CIGs to be supported 360 461 More CIGs supported with same amount No. of beneficiaries 4,680 11,875 With same amount, 3-fold increase in the supported number of beneficiaries showing efficient use of project resources Cost per beneficiary $613 $241 Three times less costly 28. Economic and Financial Analysis. An economic and financial analysis was conducted after the project closure (annex 4). This analysis found that the project was economically and financially viable. 29. The main project benefits were derived from (a) diversified and increased incomes from a broad range of livelihood sources; (b) improved market integration; (c) sustainable businesses owned by the poor; and (d) increased opportunities for self-employment and skills transfer. Most of these direct benefits were generated Page 13 of 50 The World Bank Northern Uganda Business Support Program (P147258) from the village revolving funds. However, other benefits related to social processes, community reconciliation, institutional capacity building, and human capital development were expected in the long term and are not easily quantifiable. These have not been included in the economic and financial analysis. Table 5: SHG savings, VRF3 loans, Interest gained Total weekly VRF SHG 1st round loans Total loan disbursed savings (50% of VRF) amount repaid Total Interest District Clusters (USD) (USD) (USD) (USD) gained (USD) Kitgum 4 320000 239,791 192,000 160,444 8,533 Pakwach 4 320000 89,279 184,719 34,856 1,835 Gulu 4 320000 274,656 160,000 154,375 5,169 Soroti 4 320000 181,624 126,389 121,111 2,667 Total 21 1280000 785,349 663,108 470,786 18,203 30. The project supported and strengthened the institutions at all levels for efficient delivery of enhanced sustainable livelihood income opportunities for 11,875 beneficiaries. The project cost was $2.86 million. The direct investment to communities through VRF amounted to $1.28 million, which was 44.8 percent of the total project cost. Evaluation suggests that the weekly savings of SHGs doubled. At the time of implementation completion, 461 SHGs had saved/leveraged $785,349, which is expected to further grow after the project completion. Table 5 above shows the weekly savings of SHGs, loans received through VRF and total interest gained on VRF. 31. The evaluation results reveal that there was significant increase in average income by 43.8 percent (from $89.56 to $128.92). And the increased incomes were reflected in the accumulation of the household physical assets and the general improvements in the spending patterns of the beneficiaries. Based on the investments made by the project and estimates of household incomes, certain efficiency rations have been presented below: Table 6: Project Investments and Increase in Incomes Particulars Amount Efficiency Project Investment JSDF Grant $2.857 million Per HH Investment: $240.58 Village Revolving Fund (part of JSDF grant, $1.28 million Per HH Investment: $107.78 directly to communities) 1st round of VRF loans (50% funds) $0.663 million Per HH Investment: $55.84 Leveraging Investments Community’s Own Capital $0.785 million Per HH leverage: $66.13 Commercial Bank lending NA Total interest gained on VRF $0.0182 million Per HH leverage: $1.53 3VRF of $10,000 per village is established and managed by the VLICs. SHGs submit business plans to VLICs. Once the business plans are appraised and approved, the SHGs receive low interest loans from the VRF to implement their business plans. Page 14 of 50 The World Bank Northern Uganda Business Support Program (P147258) Total financial Investment at the $1.466 million Per HH leverage: $123.51 community level Total Investment $3.66 million Annual increase in Household Income $5.608 million Per HH Income: $472.32 32. The above table shows that the project has overall invested $240 per household, which has leveraged $66.13 per HH of savings as community’s own capital for investment and $1.53 per HHs as interest gained on VRF. This has resulted in in annual increase in incomes of HHs by $472.32. 33. Based on the project efficiency figures and estimated economic rate of return, the project is economically viable and had a significant impact on the targeted households. Other returns to project investments were in the form of enhanced social capital and sustainability of community assets a result of targeted interventions. The NUBSP similar to NUSAF 3 Livelihoods Investment Support Program pursued cost-effectiveness measures and simple screening procedures for sub-projects/business plans based on the experiences from the implementation of NUSAF 1 and 2. 34. Implementation efficiency. In terms of implementation, there were no delays, no staff turnovers, no procurement issues and delays, and no cost overruns. Although the project was restructured, there was no extension of duration of the project. The project was closed on time as planned and all the project funds were fully accounted for at the time of project completion. 35. Overall, Efficiency is rated as High. Justification of Overall Outcome Rating Rating: Satisfactory 36. This is a catalytic intervention - without it five years of providing just the grant plus training would have been far less impactful. The program been useful for NUSAF 3 but can also be a useful model for other microfinance interventions aiming to support productive inclusion. There was an alternative to work to outside of government, the project chose not to do that instead use the local government institutions to implement the project to demonstrate that the districts government with limited support can implement this model, and can later help other non-pilot districts to replicate and scale this approach. There wasn’t huge enthusiasm initially for the credit/VRF, but there was a process of testing, convincing and trying out with the credit/VRF which has proven successful, and now everybody wants to be part of it - government, foundations, development partners and others. 37. The relevance of PDOs is rated High. The achievement of project objectives/outcomes (efficacy) is rated High. The project’s efficiency is rated as High. Overall, outcome rating is Satisfactory due to minor factors affecting implementation. There were some minor shortcomings, including delays at approval and restructuring and delays with some disbursements to beneficiaries due to the new financial management system, which just marginally affected what was otherwise a highly satisfactory project. Page 15 of 50 The World Bank Northern Uganda Business Support Program (P147258) Relevance Efficacy Efficiency Overall outcome rating High High High Satisfactory Other Outcomes and Impacts (if any) 38. Gender. Targeting existing groups with at least 50 percent females increased women’s participation in business, motivated them to work harder and benefited the entire households. The evaluation showed the project has strong participation (75 percent) of women as members of SHGs, with equal representation in management and procurement committees, therefore greater participation in decision making process. The project led to an increase in women’s assets, income generating opportunities and participation in project activities. The project involved women working together with men in groups, accessing funds together, saving together and supporting one another. The two working together in harmony has helped to reduce household conflicts. Gender based violence was reported to have reduced in most communities. The evaluation report noted that quarrels over money reduced from 33.0 percent at baseline to 26.5 percent at midline, whereas quarrels over other household resources reduced from 17.5 percent at baseline to 2.1 percent at midline. This was attributed to life skills training provided to SHGs which included modules on gender/women’s empowerment and conflict resolution. 39. Institutional Strengthening. The project supported the formation and strengthening of self-managed institutions of the poor i.e. SHGs and VLICs. To a very large degree the project has been about institutional change, especially at the community level. Institutional platforms of poor in the form of an extensive network of community institutions, SHGs and VLICs with capacities and assets have been developed. This has been perhaps the most important achievement of the project, given these community platforms going forward can be leveraged to improve access to public services and strengthen last mile delivery of other social services. These community institutions were supported by the local government. The project was mainstreamed in the district government administration to avoid parallel structures and to strengthen the local government capacity to replicate and scale up the project after project closing. The project implementation mechanisms comprised of a Technical Support Team (TST) at the National level, District Implementation Support Team (DIST) at the district level, Sub-County Implementation Support team (SIST) at the Sub-County level, and Community Business agents (CBAs) at the cluster/village. The DISTs took the lead in coordinating the project. The DISTs were supported by the TST, CBAs and Capacity Building Partners (CBPs) in providing technical support to SHGs and VLICs for business planning and implementation of business plans. The Inspector General (IG) led Strengthening Transparency, Accountability and Anti-Corruption Component (STAAC) component of NUSAF 3 was introduced to ensure good governance and accountability for the NUBSP funds, but it was found that many community monitoring groups formed under TAAC component had not received training and were not active. The NUBSP institution strengthening model has been appreciated by the GoU and is expected to influence the institutional design of a future livelihood development programs in the Country. 40. Poverty Reduction and Shared Prosperity. Overall, the project had a positive effect on poverty reduction and shared prosperity as highlighted by the evaluation study. The progress out of poverty index (PPI) as proposed by Grameen Foundation (2015) assesses the poverty levels by looking at selected household factors such as Page 16 of 50 The World Bank Northern Uganda Business Support Program (P147258) household size, access to education, literacy levels, as well as ownership of common household assets like mobile phones, radio, pair of shoes, and nature of the dwelling. Overall, there was an increase in the PPI-score from 36 percent at the baseline to 40 percent at midline, implying a decline (from 23.9 percent to 20.1 percent) in the proportion of households that are likely to be poor. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME Key Factors during Preparation 41. The project was jointly prepared by teams from the GoU and the World Bank, which contributed to Government ownership of the project. The preparation and design of the project was informed by the experience of NUSAF 1 and 2 livelihood programs and similar programs globally. The majority of household income support projects in Uganda, including NUSAF 2, were designed to train poor youths to start their own income-generating activities and consisted of a one-time training session and a grant to support a start-up. Once these grants were distributed among CIG members, there was little further follow-up or support, and, in most cases, the CIGs disbanded. 42. Under NUSAF 2, US$40 million was provided for livelihood income support so there was no shortage of funds for providing grants. The focus was mainly on encouraging beneficiaries to choose income-generating activities at the village level and providing them with support right up to the point at which they started their activities, but with no support after the start-up. During the implementation of the NUSAF 2 project it became clear that CIGs faced various challenges to improve and sustain their small businesses. Therefore, the lesson learned from NUSAF 2 was that, in order to improve and sustain the economic activities of households or groups who have already received basic training and start-up grants, continuous business mentoring and advisory support is required so that the beneficiaries can make the best of the training and grants that they received. Therefore, at the preparation stage, the project was designed to complement NUSAF 2 Household Income Support Program (HISP). 43. The project objectives set at the preparation stage were to improve and sustain household income of the vulnerable poor through provision of business management support services to CIGs. These were realistic based on the experience of NUSAF 1 & 2 and given the country context. Although, the results framework aligned with operational objectives that had baselines and appropriate targets, some of the indicators were difficult to measure and simpler indicators could also have been added. For example, the project was designed to encourage savings among group members, this was one of the pre-conditions for graduating a saving group into a SHG, therefore, having a results indicator on SHG savings would have been useful. Although, there wasn’t a direct indicator on savings but there was an proxy indicator for savings indicator 5 on reinvestment of savings in new capital assets to expand businesses. 44. NUSAF had an existing and functional M&E system and its M&E team’s capacities had built over the years. At the preparation stage, the project had prepared an appropriate plan for monitoring and put in place realistic measures to collect information and data, including a MIS to capture key beneficiary information and project Page 17 of 50 The World Bank Northern Uganda Business Support Program (P147258) inputs and outputs and to track implementation, as well as a project evaluation to assess the outcomes and impact of the project. 45. At the time of appraisal and preparation, the overall project risk was rated as Moderate. Several risks were analyzed, at the time, including capacities of local government, governance of CIGs/SHGs, and need for capacity building support to CIGs. For all these risks, respective mitigation measures were identified during preparation and articulated in the Project Paper. Key Factors during Implementation 46. The NUSAF3 TST and the World Bank task team worked together to provide close supervision during project implementation. The teams demonstrated responsiveness to emerging issues. For example, many capacity building workshops were organized to train the DIST, SIST and CBAs to ensure the project was implemented as planned. TST and Bank team conducted regular technical missions and consultations with district teams to review implementation to identify challenges and opportunities and accordingly prepared six-month action plans to improve the implementation of the project. The strong achievement of the indicators in the project is reflective of the implementation support provided during the life of the project. 47. The following challenges faced by the project during its implementation are worth noting: 48. Integrated Financial Management System: Some of the project districts faced problems with the financial management software, which delayed the release of VRF funds to communities. 49. Management, coordination and communication gaps at the district level: The capacity and management styles of NDOs varied, in terms of coordination and engagement with DIST and CBAs, which adversely affected the implementation in some districts. 50. Low profit margins in some seasons: Most of the SHG activities were agricultural/agribusiness related that were prone to seasonal changes. In seasons where several SHGs were producing the same product in abundance, as in Matooke, the prices of such produce went down and led to low profit margins. 51. Limited and/or poor storage facilities: Not all that was produced or taken to the market could be sold off. The produce that did not get sold-off or bought needed to be stored for market later on. Unfortunately, the storage facilities were lacking. The few stores available at group members’ homes or shops were limited and this affected the amount of output as had been planned. 52. Impassable feeder roads during the rainy season: Most SHG beneficiaries were based in rural and peri-urban areas. These areas had poor feeder road connectivity and were totally impassable during the rainy season, which sometimes caused delays in delivery of produce to the market. 53. While the IFMS delays and perhaps the management and coordination gaps were within the project’s control, it was not feasible to expect the project to mitigate fully some of the other challenges, including quality of roads or Page 18 of 50 The World Bank Northern Uganda Business Support Program (P147258) quantity of storage facilities. At best project could have anticipated over production of some crops and suggested diversification, but it was not really possible to influence SHG’s choices and certainly not to fix the roads or provide storage within this project. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME Quality of Monitoring and Evaluation 54. M&E design. The project Results Framework was designed to capture a number of indicators that, at appraisal, were seen as directly related to the project activities. Overall, these indicators were relevant and created a good logical frame for following the project progress. However, in hindsight, some indicators were not easy to track (for example, percentage of sales revenues achieved compared to forecasted sales revenues in the business plan after one year of follow-up advisory services with a target at least 50 percent of the forecasted annual sales revenues achieved, or some important indicators were missing (for example, amount of savings per group). Overall, the results indicators could have been made simpler and better to reflect many outcomes of the project. The project team at the design stage appropriately determined that a project management information system (MIS) would be needed, which was included as one of the intermediate results indicators. A ToR for MIS was developed accordingly. In addition, at the design stage, the need for generating body of evidence through a robust project evaluation was decided and accordingly a draft term of reference for an independent third-party evaluation was prepared. As there was no control group of CIGS/SHGs to conduct a full impact evaluation, a Panel Analysis approach was taken. 55. M&E Implementation. For M&E implementation, the project relied on a community-based M&E system. The weekly, monthly and quarterly reporting templates were prepared by TST with the support of the Bank team at the start of the implementation. The DIST and CBAs were provided M&E training including preparation of weekly, monthly and quarterly progress reports. The NUSAF 3 MIS, which was to be used for NUBSP took time to get up and running. Therefore, in addition to MIS, the NUSAF M&E team developed a Kobo Collect tool for weekly, monthly and quarterly reporting, which helped the CBAs to collect and report data, which was verified by NDOs. Overall, there were limitations and issues in collection and reporting of project data. The project did capture the basic input level data well, but some process and output level data were not collected systematically at the CIG/SHG level, however some of these issues were addressed as the project implementation progressed. MIS was established and functional and helped in basic reporting, but it wasn’t very effective in analyzing and informing strategic decisions. In addition, Makerere University was engaged to conduct the evaluation of the project, which involved baseline and end line surveys in target districts. The evaluation report was finalized in April 2019, which showed the project has made considerable impact in the target communities. An executive Page 19 of 50 The World Bank Northern Uganda Business Support Program (P147258) summary of the project evaluation report is added as annex 4. 56. M&E Utilization. Based on the progress reports, the TST were able to identify implementation gaps and accordingly prepared quarterly technical support plans to provide need-based support to implementing districts. Therefore, the project was able to use M&E data collected through the Kobo collect tool to inform project management and decision making. However, at the initial phase of implementation, when neither the MIS nor the Kobo Collect tool were functional, it was difficult to collect, analyze and use the data to inform project management. The IE report was useful for assessing the impact of project activities on target communities. 57. Given the moderate shortcomings in the M&E system’s design, implementation, or utilization, the rating is Substantial. Environmental, Social, and Fiduciary Compliance 58. Environmental Safeguards. The project followed the NUSAF 3 safeguard model that adopted a decentralization approach, ensuring that safeguards considerations were reflected at all levels of implementation, from the OPM to the districts, sub-counties and communities. At the district level, environmental compliance was overseen by district CDOs, DEOs, and environmental focal persons in all the implementing sub-counties. The project also organized several training workshops to orient and build the capacities of DIST, SIST, and CBAs about environmental and social safeguards. Under the project, the SHGs prepared and submitted business plans. To appraise and approve business plans, the project developed a screening checklist to check whether the business/enterprise could create negative impact on the environment. All business plans were screened, and Environmental and Social Management Plans (ESMPs) were accordingly developed. The project implemented all the mitigation measures identified in the ESMPs among others included the planting of a minimum of 50 trees by every household. The cost for the implementation of environmental and social safeguards mitigation measures were included in the business plans. Without ESMPs, the SHGs were not allowed to implement their business plans. All SHG provided upto two percent of their businesses for environment and social safeguards trainings and actual mitigations. 59. In addition, the project supports activities to address negative environment impacts, e.g. tree planting. To be eligible for support under the project, each SHG household had to follow project co-responsibilities, which included the availability of rubbish pit for proper disposal of waste, which also contributed to environmental safeguards. 60. Social Safeguards. The project followed the same arrangements for social safeguards as in NUSAF 3. The project targeted those community members who, for one reason or another, have not benefitted from any project support before, including previous NUSAF projects. The project followed systematic and transparent community mobilization and targeting process at village level to ensure the project beneficiaries/groups are inclusive of vulnerable people who were usually marginalized, including 50 percent women, youth, and persons with disability. At the time of implementation completion, 75 percent of beneficiaries were women, 33 percent were youth. The SHGs management committees and VLICs comprised of at least 50 percent female members. The project followed a CDD approach to ensure communities have a choice in selecting business activities and develop Page 20 of 50 The World Bank Northern Uganda Business Support Program (P147258) their business plans. In addition, community sensitization and awareness were raised around key social issues including HIV/AIDS and gender-based violence. 61. Procurement. Procurement was implemented at three levels: the Central Government level - OPM; the local government level - districts; and community level through the SHG management committee. At the Central Government level, all procurements, mainly for consulting services and computer hardware and software, were done in accordance with the Public Procurement & Disposal of Public Assets Authority Act, 2003 and the IDA Guidelines for the Procurement of Goods, Works, and Services under IDA Loans 2009. Procurement procedures were generally of good quality, timely, and transparent. The TST supported the districts’ stakeholders and communities through training on community procurement procedures and records management. Under the project, procurement at the community took place through community procurement process. The SHGs received loans from VRF based on their business plans, and the procurement was undertaken by the SHG through their community procurement committee. The TST provided training on community procurement to DISTs and CBAs, and each district provided community procurement training to SHGs. The TST provided close follow-up and showed commitment and collaboration with districts to ensure business plans were properly implemented. 62. Financial Management. At the time of project closure, there was no outstanding amount and the funds were fully accounted for. During implementation, the project team worked to develop and implement measures to strengthen financial management practices and to put in place systems to manage risks especially at the village level, where the VRF were managed by the communities themselves. VRF, a village investment capital/loan fund that SHGs can access to invest in their businesses was an integral part of the project design. Each project village received $10,000 as VRF. Overall, $ 1.28 million, which is about 44.8 percent of total project cost was spent on VRF. 63. At the community level, additional measures contributed to fiduciary control: 64. To be eligible to access VRF, the SHGs were expected to meet following conditions – a) should have been graduated from savings groups to SHGs and met all the five core principles4 and co-responsibilities, b) have an SHG Management committee consisting of five members- Chair, Secretary, Treasurer and two committee members at least 3 females and 2 in executive, have a CPC of five members, two from committee members of SHG Management Committee and comprising of Chair, Vice, Secretary and two committee members at least 3 females and two in executive positions, c) have democratically elected two members from their management structure to represent them in the VLIC (at least one of whom should have been female), d) all members signed SHG commitment form, e) have constitution to govern themselves and their businesses, f) have registered as a CBO at the sub-county and district level, g) have an account with any of the three banks agreed upon by each respective village to host the VRF. 65. The VRF was managed by the VLIC consisting of two members democratically selected from the management committees of each SHG. Each VLIC was required to develop a bye-law to regulate its activities with the SHGs, which was signed by all SHG representatives in VLICs. The VLICs also signed an MoU with each SHG clearly stipulating roles and responsibilities as well as obligations that do not contradict the bye-law. In addition, the VLIC executive had to sign a financing agreement with the Government of Uganda represented by the Chief Administrative Officer of the respective district. The VLIC executive had to open a VRF account with the following documents: account name, signatories of VLIC executive i.e chair, secretary and treasurer at least two females, 4 Five core principles refer to weekly meetings, weekly savings, inter-loaning, timely repayment and proper book keeping. Page 21 of 50 The World Bank Northern Uganda Business Support Program (P147258) letter of introduction by District Chief Administrative Officer, VRF Bye-Law, passport size photos (taken by the Bank) and IDs of executive members. Interest rates for borrowing from the VRF were determined through consultative meetings with SHG members. 66. The NUSAF TST developed a financial management module which included a module on VRF to train DISTs and CBAs, who then provided financial management training to SHGs. SHGs were expected to maintain their financial records, which was also one of the five core principles, without which they couldn’t graduate to SHGs. The VLICs held the monthly meetings, where all SHGs were asked to share their financial status including weekly savings, VRF loan utilization, and loan repayment status. As part of the control measures, VLICs were guided to disburse only 50 percent of VRF in the first three months and upon payment of at least 80 percent and interest by all SHGs, they would be cleared to utilize 100 percent of the loan. The VRF was also used to fund only group level business enterprises for the first six months and thereafter loans could be provided to sub-group and individual levels. The VRF was considered 100 percent accounted for upon acknowledgment of funds by the VLIC executives. At the community level, additional measures like 50 percent disbursement of VRF in the first round, clearance of loan requests by the VLIC with the support of the district Commercial officer, use of cheques for all transactions among others contributed to fiduciary control. 67. District internal audit department carried out quarterly audits of all the VLICs and SHGs. With respect to the budgeting procedures, the project process was mainstreamed into the GoU budgeting procedures under the OPM. The project, through the TST, prepared quarterly interim financial reports on time. The internal audit function was provided through the OPM and focused on pre-audits of transactions and verification of accountability. Final monitoring of the project was supported through an external audit function. 68. An Integrated Financial Management System (IFMS) was used at the district level for more transparency and accountability. However, districts faced difficulties with IFMS, which resulted in delay in release of funds to the communities as well as for the operations. This was a major challenge and affected the project implementation. A. Bank Performance (a) Bank Performance in Ensuring Quality at Entry. Rating: Satisfactory 69. The project was prepared with frequent and systematic consultation with the Government’s project preparation team. Experience from previous operations (NUSAF 1 and 2) and global experience were extensively used. The project design had a clear relevance to the intended objectives and led to their achievement. The readiness for implementation was also good. As noted in the preceding sections, however, the design of the results framework in some cases some indicators could have been made simpler. The project was designed to complement NUSAF 2 HISP, but project preparation and approval took a lot of time, and by the time project was approved, the NUSAF 2 had ended. As a result, the project on the request of the government had to be restructured to complement Page 22 of 50 The World Bank Northern Uganda Business Support Program (P147258) the NUSAF3 Sustainable Livelihoods Pilot, which required some changes in the design of the project, which proved very useful during implementation. (b) Quality of Supervision Rating: Satisfactory 70. The World Bank supervision was intensive and proactive in providing needed support to the client in a timely manner. The task team changed leadership once during the life of the project. The Bank team had fortnightly calls with the TST to discuss technical issues. In addition, the Bank team carried out several technical missions to assess the field level implementation and provide need based technical support. The objectives of the technical as well as implementation support mission were shared in good time to enable the TST to make adequate preparations. These technical missions proved very useful in understanding the implementation challenges, discuss solutions and according course correct and improve the project implementation. The World Bank guided the TST in all aspects of project implementation, with emphasis on documenting evidence. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 71. The World Bank’s overall performance rating is Satisfactory. Quality at entry included intensive and collaborative preparation and use of lessons learned from previous operations, as well as international experiences. Supervision was proactive and provided realistic feedback to management, as well as stable guidance to counterparts. Minor shortcomings were seen at design, mainly related to some indicators. Furthermore, the preparation and approval of project and the restructuring were delayed. (d) Risk to Development Outcome Rating: Low 72. The project achieved very good progress towards the development outcomes. It helped the government to pilot and test the village revolving fund (VRF) model, which is new and innovative approach of financing the small businesses of belonging to poor households. The OPM/TST highly encouraged by the results of the project and have decided to allocate additional funds from the NUSAF 3 to scale up the project. During the MTR of NUSAF 3 in March 2019, all 62 NUSAF districts have requested GoU to replicate/scale up the VRF model in their districts. OPM/NUSAF TST is preparing a plan for scaling up the project by allocating additional funds from the NUSAF 3. In addition to OPM/NUSAF TST, the President of Uganda’s team of Economic Advisors have appreciated the NUBSP project design and are planning to strengthen and replicate this model in whole of Uganda across 7200 Parishes. In addition, some development partners have expressed interest to partner with the GoU to scale up the model nationally. Page 23 of 50 The World Bank Northern Uganda Business Support Program (P147258) V. LESSONS LEARNED AND RECOMMENDATIONS Lessons Learned The project successfully supported the social and economic empowerment of its beneficiaries, particularly women. This is notable achievement given Northern Uganda’s difficult poverty, community and institutional context. The project provides important lessons, not only for livelihoods projects but for program design and implementation more broadly. 73. Access to credit through VRF and regular follow up support is more effective and game-changing than just grant plus training a. This is a catalytic intervention without it five years of the just grant plus training wouldn’t have been nearly as impactful so this JSDF deserves a lot of credit for turning something around and making it very successful. It made interventions under the NUSAF much more efficient than it used to be. b. The use of VRF approach helped to support a bigger number of beneficiaries in the target communities. With $2.857 million the project supported 11,875 beneficiaries with possibility of supporting more eligible new groups and beneficiaries in future. c. The project demonstrated the money can multiply and rotate around many people and households, and this same money can grow without further additional income. It is projected that in next one to two years the amount of money that SHGs will save will be twice the amount of money they have received through VRF. The SHGs savings leveraged more funds through revolving funds and going forward the banks are planning to provide more funds, three times the savings of SHGs. 74. Targeting existing groups of poor with at least 50 percent females was more effective than forming new groups of poor a. The project targeted existing saving groups with at least 90 percent poor and poorest of poor members, 50 percent female membership and those who have been saving for at least one year. b. Targeting existing groups of poor with at least 50 percent females increased women’s participation in business, motivated them to work harder and benefited the entire household 75. Building strong institutions of the poor is critical for ownership and sustainability of project investments a. The formation of community institutions of SHGs and VLICs helps in promoting project ownership due to community’s active participation in all processes. This is a good sustainability pillar. 76. Disbursing funds to only those groups that abided by the five-core principles for at least 3-6 months was essential for weeding out non-serious groups initially a. The time period taken to prepare the groups (3-6 months) before funds disbursement helped to weed out the unserious groups and individuals as well as encourage group Page 24 of 50 The World Bank Northern Uganda Business Support Program (P147258) savings for accumulation of investment capital. 77. Adherence to five core principles helped to build a culture of systematic savings, not for consumption but for investment a. The five Core principles were well embraced and have inculcated a culture of productive savings, improved record keeping and address social issues in the groups b. Culture for systematic savings for investments has created a big boost to the income generating dimensions of the community which didn’t exist before the project. 78. Move from grant to credit/VRF requires unlearning dependency behavior and promoting business mindset development a. The initial 3-6 months of regular capacity building of groups strengthen cohesion, business mindset development and prepared communities to effectively utilize the credit. This is attributed to the support from the Community Business Agents (CBAs) and entrepreneurship training by capacity building partner. b. The provision of affordable credit at low interest rates (not exceeding five percent) and longer repayment period (three months) triggered a lot of business at the village level. The evaluation report revealed there is increase in businesses in the target community. c. Investing in group businesses in the first round of business loans with a control of 50 percent VRF funding promoted hard work, group cohesion and repayment compliance as profits were shared among all the members 79. Process of convincing, testing and trying out credit and unlearning different behavior was critical for the success of the program a. There wasn’t huge enthusiasm initially for the credit/VRF, and there was a process of testing, convincing and trying out with the credit/VRF which has proven successful, and now everybody wants to be part of it – district governments, Foundations, development partners and others. 80. Capacity building of staff, CBAs and community institutions SHGs and VLICs is critical a. Providing Capacity building for at least three months before funds disbursement to groups and regularly thereafter helps to inculcate entrepreneurship skills, build technical expertise, encourages group savings, ownership and cohesion. The handholding support to SHGs by DIST, SIST, CBPs & TST has proven fruitful. Recommendations 81. Strengthening the model. This model has a lot of potential and the GoU is interested to mainstream this approach in the Parish Development Model nationally. Before mainstreaming/scaling up, this model needs to be further strengthened in the next two years in the four NUBSP and five SLP districts, where it is currently being implemented. To do so, it is recommended: a) strengthening the linkages with the commercial banks to increase the access to finances Page 25 of 50 The World Bank Northern Uganda Business Support Program (P147258) for SHGs/collectives b) making Parishes a unit of implementation instead of villages and focus on building the capacity of Parishes to act as an aggregator of CIGs/SHGs for layering / linking other services, such as health, education, agriculture, gender consciousness, access to market services c) organize innovation forums to enable innovations by the public, private and social enterprise sectors across many livelihood areas to be systematically identified and scaled up through the project d) promote digitalization and link people/community platform to the digital platforms e) Focus on HR - build a strong pool of development professions as well as community resource persons to scale up the program with quality f) strengthen the quality of M&E and improve our evidence base. 82. Scaling up the model The GoU is interested to scale up this model nationally. The scaling up is centered on a process driven and ecosystem approach to develop strong community institutions, strengthening bank linkages, develop solutions and alliances to meet the government demand for high-quality technical assistance, adoption of high impact innovations, and quality capacity building, which needs time initially. In addition, the efficient expansion of the project will require adaptive management and strong M&E. If these processes or ecosystem development is rushed or ill- informed, the process can be flawed with impacts for a considerable time. So, it is recommended that after strengthening the model, the nine districts should be engaged as a resource districts to help scale up the model across whole of Uganda in a gradual and systematic manner. . Page 26 of 50 The World Bank Northern Uganda Business Support Program (P147258) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: The main development objective of this project is to improve and sustain household income of the vulnerable poor through provision of business management support services to the existing and new Commu Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Percentage of Community Percentage 0.00 80.00 80.00 128.00 Interest Groups (CIGs) to complete business 31-Oct-2016 31-Dec-2015 26-Oct-2018 31-Dec-2018 management training and produce business plans. Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Percentage of CIGs Percentage 0.00 70.00 70.00 126.00 implementing their business plan 31-Oct-2016 31-Dec-2015 26-Oct-2018 31-Dec-2018 Comments (achievements against targets): Page 27 of 50 The World Bank Northern Uganda Business Support Program (P147258) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Percentage of sales revenues Percentage 0.00 50.00 50.00 84.00 accomplishment compared to forecasted sales revenues in 31-Oct-2016 31-Dec-2015 26-Oct-2018 31-Dec-2018 the business plan after one year of follow-up advisory services Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Percentage increase in Percentage 0.00 20.00 20.00 43.80 household income of existing and new CIG members who 31-Oct-2016 31-Dec-2015 26-Oct-2018 31-Dec-2018 completed business management skills training and produced business plans and received one year of follow-up business adviso Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Page 28 of 50 The World Bank Northern Uganda Business Support Program (P147258) Percentage of CIGs reinvests Amount(USD) 0.00 25.00 25.00 26.10 their savings in new capital assets to expand their 31-Oct-2016 31-Dec-2015 26-Oct-2018 31-Dec-2018 operations Comments (achievements against targets): A.2 Intermediate Results Indicators Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Percentage of female Percentage 0.00 50.00 50.00 75.00 beneficiaries supported by the pilot 31-Oct-2016 31-Dec-2015 26-Oct-2018 31-Dec-2018 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of mentors selected Number 0.00 24.00 24.00 32.00 31-Oct-2016 31-Dec-2015 26-Oct-2018 31-Dec-2018 Page 29 of 50 The World Bank Northern Uganda Business Support Program (P147258) Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion An MIS system for pilot Yes/No N Y Y Y developed and functional (Yes/No) 31-Oct-2016 31-Dec-2015 26-Oct-2018 31-Dec-2018 Comments (achievements against targets): Page 30 of 50 The World Bank Northern Uganda Business Support Program (P147258) A. KEY OUTPUT BY COMPONENTS Component Objective/Outcome 1 - The main development objective of this project is to improve and sustain household income of the vulnerable poor through provision of business management support services to the existing and new Community Interest Groups (CIGs) in the four pilot districts (Kitgum, Gulu, Pakwach, and Soroti). PDO Result indicators Output • A total of 461 CIGs received business development and management training • Percentage of Community Interest Groups (CIGs) to complete business management • Four different trainings were carried out by training and produce business plans. Capacity Building Partner, CBAs, Commercial officers Out of the 80 percent planned target, 100 percent of the total groups were trained on • 461 Business plans developed. business plan development and management • 11,800 Beneficiaries trained The trainings were conducted by the District commercial officers with the support of the Community Business Agents (CBAs). The capacity building partner carried out business management trainings and also carried out follow up on the CIGs in all the four pilot districts. Percentage of CIGs implementing their business plan • 461 business plans developed • 11,800 beneficiaries supported The project had planned 70 percent of the targeted 360 CIGs to have implemented their • 461 CIGs implemented their group business plans. By the time of the ICR, a total of 461 CIGs were benefiting for the VRF and businesses based on the approved implementing their business plans. This represents 128 percent of the CIGs implementing business plans their business plans of the planned target. The CIGs were implementing group business • 461 Environment and Social enterprises and had received two rounds of VRF business loans with the exception of Gulu Management plans developed and and Soroti that had received 3 rounds of loans. implemented Page 31 of 50 The World Bank Northern Uganda Business Support Program (P147258) • 43.8 percent increase in income Percentage increase in household income of existing and new CIG members who completed • 461 SHGs trained on business plan business management skills training and produced business plans and received one year of development and follow-up follow-up business advise. Generally, the evaluation report provides that the average income of SHG members derived from main sources of livelihood increased by 43.8 percent (from 322,435 to 464,142). The SLP has cultivated a culture of savings in the beneficiaries that provides additional capital for investment. The savings increased from 54 percent at baseline to 84 percent at MTR. This is largely attributed to the skills and knowledge imparted to the beneficiaries by TST, DIST, CBAs and Capacity building partner Enterprise Uganda. The trainings of self-help groups in skills such as enterprise selection, financial management and group dynamics yielded greatly. Self-help groups used these skills for the intended objective of engaging in viable and profitable business enterprises. Percentage of CIGs reinvests their savings in new capital assets to expand their operations • 400 CIGs reinvesting their savings (Amount (USD), • Household assets acquired The project had targeted 25 percent of the 360 CIGs reinvest their savings to expand their operations. By the time of the ICR, the 400 CIGs out of 461 implementing their business plans had reinvested their savings. This represents 111 percent of the planned targets of the project. The CIGs from their savings have acquired household assets including mattresses, radios, mobile phones, bicycles, Land among others. The MTR report by the consultant indicates that there is increase in the number of people having 3 or more meals a day from 28.4 to 40.0 signaling improvement in health of the SLP Beneficiaries, reduction in debts at household level from 53.8 percent to 30.8 percent, ownership and effective demand for essential Household assets improved for example Telephones, from74.3 to 79.4, Radios from 59 percent to 64.1 percent mattresses from 86.4 to 88.3, livestock from 38.4 to 42.8 among others signaling Intermediate Results Indicators. Page 32 of 50 The World Bank Northern Uganda Business Support Program (P147258) Percentage of female beneficiaries supported by the pilot • 11,875 total beneficiaries supported • 8,866 females The project had targeted 50 percent of the beneficiaries supported to be women. By the • 3,862 youth supported time of the ICR, 75 percent of the total beneficiaries were female (8,866) out of the 11,875. The women participate in all the committees including VLIC and SHG executive management. The MTR report indicates that there is reduction in the level of gender-based violence at house hold level • 32 CBAs recruited • 16 clusters Number of mentors selected. • 128 villages The project was implemented in a total of 128 villages in 16 clusters. A total of 32 • 256 Community resource persons Community Business Agents were anticipatorily identified (50 percent female) and engaged by the project with each managing 4 villages. Identification of community resource persons (CRP) is ongoing two per village to support the SHGs in implementation of the project activities and also sustainability after closure of funding. The use of resident community business agents makes it very easy to support the SHGs due to the short distance covered, high trust level and local population dynamics understanding. An MIS system for pilot developed and functional • Operational MIS A robust management information system has been set up with clear work flows for clusters, villages, SHGs, business enterprises and beneficiaries. The system recognizes the multiplier effect of the village revolving fund for newly recruited Self-help groups. The M&E forms provided for activity and output monitoring at VRF and SHG levels are user friendly and facilitate collection of relevant data for decision making. Page 33 of 50 The World Bank Northern Uganda Business Support Program (P147258) . ANNEX 2. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) Providing Business Training, Small grants, and Follow-up 2.271 2.271 100 Business Advisory Services to CIGs Project Management and Administration, Monitoring 0.586 0.586 100 and Evaluation, and Knowledge Dissemination Total 2.857 2.857 100 Page 34 of 50 The World Bank Northern Uganda Business Support Program (P147258) ANNEX 3. RECIPIENT, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS OFFICE OF THE PRIME MINISTER COMMENTS ON JSDF ICR The Northern Uganda Business Development Support (NUBDS) funded by the JSDF was undertaken as a pilot alongside the NUSAF3 project. The JSDF ICR report is highlights comprehensively the rich elements, experiences and results from the interventions undertaken. The project design was cognizant of the local situation. The re-structure of the project undertaken harmonized the modality with that of Sustainable Livelihood Pilot (SLP) implementation arrangements and that contributed to the achievement of results which generally surpassed the planned targets. The Revolving Fund approach in specific proved very effective to monetize the local economy and provide effective motivation for business opportunities. The inherent mandatory savings is also a proved local capital accumulation mechanism. The most outstanding strength is in the capacity building support that enhanced abilities of all stakeholders including beneficiary communities through training and practices of core principles; facilitation of the Community Business Agents as support staff in the communities; and provision of tools and requirements. Page 35 of 50 The World Bank Northern Uganda Business Support Program (P147258) ANNEX 4. ECONOMIC AND FINANCIAL ANALYSIS The economic analysis of the project was conducted at the time of the project closing to stimulate project viability by valuing benefits based on the outputs attained for the different business plans against the costs based on the actual project disbursements. The project output assumptions and assumptions that informed shadow pricing are indicated in this annex. The main project benefits were derived from (a) diversified and increased incomes from a broad range of livelihood sources; (b) improved market integration; (c) sustainable businesses owned by the poor; and (d) increased opportunities for self-employment and skills transfer. Most of these direct benefits are generated from the village revolving funds. However, other benefits related to social processes, community reconciliation, institutional capacity building, and human capital development are expected in the long term and are not easily quantifiable. These have not been included in the economic and financial analysis. The project supported and strengthened the institutions at all levels for efficient delivery of enhanced sustainable livelihood income opportunities for 11,875 beneficiaries. The project cost is $ 2.86 million. The direct investment to communities through VRF amounted to 44.8 percent of the total project cost. Evaluation suggests that the weekly savings of SHGs doubled. At the time of implementation completion, 570 SHGs had saved/leveraged US$ 785,349, which is expected to further grow after the project completion, building sustainability in the project design. Table below shows the weekly savings of SHGs, loans received through VRF and total interest gained on VRF. Total weekly VRF SHG 1st round loans Total loan disbursed savings (50% of VRF) amount Total Interest District Clusters (USD) (USD) (USD) repaid (USD) gained (USD) Kitgum 4 320000 239,791 192,000 160,444 8,533 Pakwach 4 320000 89,279 184,719 34,856 1,835 Gulu 4 320000 274,656 160,000 154,375 5,169 Soroti 4 320000 181,624 126,389 121,111 2,667 Total 21 1280000 785,349 663,108 470,786 18,203 The evaluation results reveal that there was significant (at 5 percent) increase in average income by 43.8 percent (from UGX 322,435 ($89.56) to UGX 464,142 ($128.92)) between the baseline and midline5 time periods, respectively. And the increased incomes are reflected in the accumulation of the household physical assets and the general improvements in the spending patterns of the beneficiaries. Below is the average income of the SHGs members derived from main sources of livelihood. 5 Mid-line here refers to the mid-line of NUSAF 3. Page 36 of 50 The World Bank Northern Uganda Business Support Program (P147258) Based on the investments made by the project and estimates of household incomes, certain efficiency rations have been presented below: Particulars Amount Efficiency (planned) Project Investment JSDF Grant US$2.857 million Per HH Investment: $240.58 Village Revolving Fund (part of JSDF US$1.28 million Per HH Investment: $107.78 grant, directly to communities) 1st round of VRF loans (50% funds) $ 0.663 million Per HH Investment: $55.84 Leveraging Investments Community’s Own Capital $ 0.785 million Per HH leverage: $66.13 Commercial Bank lending NA Total interest gained on VRF $0.0182 million Per HH leverage: $1.53 Total financial Investment at the $1.466 million Per HH leverage: $ 123.51 community level Total Investment $3.66 million Annual increase in Household Income $5.608 million Per HH Income: $ 472.32 The above table shows that the project has overall invested $240 per household, which has leveraged $66.13 per HH of savings as community’s own capital for investment and $1.53 per HHs as interest gained on VRF. This has resulted in in annual increase in incomes of HHs by $472.32. Economic analysis: The analysis of the economic rate of return uses the data on food and cash crop production, value-addition/agribusiness and non-agricultural/vocational enterprises. Crop enterprises include the main smallholder crops such as maize, sorghum, beans, cassava, Irish potatoes, field peas, plantain/banana, sim-sim, sunflower, onions, groundnuts and trees. The non-crop enterprises included: poultry (meat and eggs), small ruminants, unprocessed honey, piggery and dairy. The non-agricultural enterprises include beauty salons, metal fabrication and welding, carpentry and joinery, tailoring and Page 37 of 50 The World Bank Northern Uganda Business Support Program (P147258) motor vehicle mechanics, milling, arts and crafts. All the enterprise data used for estimating the rates of return are from the Northern Uganda. Livelihood Portfolio: With comprehensive institutional and capacity development at all levels, almost all SHGs were involved in a business enterprise. 34 percent increase (from 3 percent to 37 percent) in households with crop farming as main income generating activity. Average income of SHG members increased by 43.8 percent. Crop and livestock farming are main sources of household livelihood among SHG members. There was increased diversification in the income-generating enterprises (i.e. Crop produce sellers, shop, agricultural input stores, clothing/shoe stores, crafts (basket making and weaving) & charcoal dealers – was attributed to preparatory activities such as training & mobilization, and follow- up activities. The table below shows household engagement in business enterprises. Baseline Midline Livelihood collectives Difference (N=610) (N=957) Value addition and Processing (Honey, cassava, g/nuts, Simsim etc.) - 6% - Produce buying and selling/Lending 59% 57% -2% Catering and events services 2% 4% 2% Trading (Hardware, Second hand clothes, bicycle spares, general merchandise, fish, Farm equipment) - 8% - Livestock trade (Cattle buying and selling, goats buying , poultry buying and selling) 2% 8% 6% Bakery and Confectioneries - 1% - Butchery - 2% - Crop farming (Maize, Rice, beans, Irish, Soya etc.) 8% 14% 6% Horticulture (Cabbages, Tomatoes, Onions, etc. 2% 1% -1% Others 8% - - None 20% - - The overall estimated economic rate for the project is 21.4 percent with a Net Present Value (NPV) estimated at US$41.6 million. If we only consider crop enterprises, the estimated NPV drops to US$9.5 million with an economic rate of return of about 19.4 percent. Cash crop production and agribusiness/value-addition have the highest rate of return ranging from 24 – 28 percent. Non-agricultural or vocational enterprises have the lowest rate of return estimated at 14 percent. See Table below for the summary. Enterprises Net Present Value Internal Rate of Return (%) (US$ million) Food cropsa 9.5 19.4% Cash cropsb 13.5 28% Value-addition/agribusiness 11.8 24% enterprisesc Non-agricultural/vocational 6.8 14% enterprisesd Page 38 of 50 The World Bank Northern Uganda Business Support Program (P147258) Total 41.6 21.4% a. Food crops include: maize, sorghum, beans, cassava, Irish potatoes, field peas, plantain/banana and sim-sim, b. Cash crops include: coffee, groundnuts, sunflower and trees c. Other agricultural enterprises include: poultry (meat and eggs), small ruminants, unprocessed honey, piggery and dairy d. Non-agricultural enterprises include: beauty salons, metal fabrication and welding, carpentry and joinery, tailoring, motor vehicle mechanics, milling, arts and crafts. See table below for the sub-projects/business estimated returns Category of sub project IRR range across Average districts (%) IRR (%) 1 Crop production 16 - 37 23 2 Dairy 12-31 19 3 Poultry (broilers/eggs) 14-26 21 5 Piggery 12-28 17 6 Bee-keeping 14-24 16 7 Saloons 8-17 11 8 Metal fabrication and welding 11-24 15 9 Carpentry and joinery 7-18 12 10 Tailoring 9-21 13 TOTAL 7-37 21.4 13. Other returns to project investments were in the form of enhanced social capital and sustainability of community assets a result of a combination of peace building efforts and targeted interventions. The project like NUSAF 3 Livelihoods Investment Support Program pursued cost- effectiveness measures and simple screening procedures for sub-projects based on the experiences from the implementation of NUSAF 1 and 2. Progress out of poverty: The project had a positive impact in poverty reduction in the project districts in the Northern Uganda, where poverty rates have been quite high compared to other parts of the country. The progress out of poverty index (PPI) as proposed by Grameen Foundation (2015) assesses the poverty levels by looking at selected household factors such as household size, access to education, literacy levels, as well as ownership of common household assets like mobile phones, radio, pair of shoes, and nature of the dwelling. The index uses the scores based on responses on each of the 10 questions measuring a number of key elements as outlined above (see questionnaire for details). In order to interpret the scores, The PPI results by district are presented in figure below. Page 39 of 50 The World Bank Northern Uganda Business Support Program (P147258) PPI Indices 60 53 50 42 43 41 44 PPI-score 40 40 39 53 40 40 47 32 30 40 40 35 37 36 36 36 20 27 10 0 Baseline Midline Table above indicates that the majority of the households across all the project districts were improving their welfare. Overall, there was an increase in the PPI-score from 36 percent at the baseline to 40 percent at midline, implying a decline (from 23.9 percent to 20.1 percent) in the proportion of households that are likely to be poor. Assumptions 1. A 15 year time horizon is considered for the full project build-up of costs and benefits based on individual activity or activity groups assuming a 10 year horizon. 2. A discount rate of 15 percent is used, in line with the current interest rates as published by the Bank of Uganda. 3. The non-farm multiplier from the linkage effect of a change in farm production and cash on the local economy is assumed to be 1.5. 4. Some benefits have not been included in the analysis because they are either difficult to value, or reliable data is not available (value of community assets, expected human capital improvements and institutional capacity building and strengthening Transparency, Accountability and Anti-Corruption interventions. Conclusion: On the basis of the project efficiency figures and estimated economic rate of return, the project economically viable and had a significant impact on the targeted households. Page 40 of 50 The World Bank Northern Uganda Business Support Program (P147258) ANNEX 5. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. Team Team Members Name Role Preparation Endeshaw Tadesse Team Leader Grace Nakuya Musoke Munanura Procurement Specialist Paul Kato Kamuchwezi Financial Management Specialist Constance Nekessa-Ouma Social Specialist Antonia T. Koleva Team Member Ashutosh Raina Team Member Herbert Oule Environmental Specialist Joe Kanengere Nuwamanya Team Member Supervision/ICR Michael Mutemi Munavu Team Leader Grace Nakuya Musoke Munanura Procurement Specialist Paul Kato Kamuchwezi Financial Management Specialist Constance Nekessa-Ouma Social Specialist Antonia T. Koleva Team Member Ashutosh Raina Team Member Herbert Oule Environmental Specialist Joe Kanengere Nuwamanya Team Member Sammy Ratemo Kinara Environmental Specialist Page 41 of 50 The World Bank Northern Uganda Business Support Program (P147258) ANNEX 6. PROJECT EVALUATION: PRELIMINARY ANALYSIS Introduction: The Third Northern Uganda Social Action Fund (NUSAF 3) Project is administered by the Office of the Prime Minister (OPM) in Uganda and is being implemented from 2016 to 2021 in 56 districts of Uganda. The sustainable livelihood sub-component (SLP) of the NUSAF 3 project was piloted in 9 districts of Kitgum, Gulu, Nebbi, Lira, Masindi, Kotido, Soroti, Butaleja and Kapchorwa. The SLP was designed and implemented to enable the poor and the vulnerable persons to access gainful employment, resulting in improvement in their livelihoods on a sustainable basis. The key design elements of the SLP can be summarized as:- i) regular trainings and capacity-building of the poor, ii) promoting pathways to money through savings, village revolving funds, SACCOs and bank linkages, iii) promoting pathways to livelihoods as well as convergence of government’s anti-poverty programs, iv) strengthening safety nets particularly with linkage to other NUSAF 3 programs such as labour intensive public works (LIPW). The purpose of the midterm review of the SLP was to establish whether the project is successful and effective in promoting sustainable livelihoods to the target poor households and to inform subsequent implementation phases of the livelihood component of NUSAF-3. Specifically, the midterm review study: a) examined how well the project is delivering the planned activities and outputs; b) measured the change in beneficiary outcomes before and after the program; c) generated evidence and lessons for the livelihood component for scale up or down; d) documented lessons, best practices and recommendations from the project to stakeholders for remedial actions. Methodological Approach: Cohort tracking approach with no valid comparison group was employed and triangulated the analysis with other secondary sources from household surveys, and to provide a descriptive understanding of contribution of SLP to the poor. The survey followed similar sampling design as for the baseline. A two- stage cluster stratified random sampling design was employed with districts and sub-counties as clusters (PSUs), rural and urban village communities as strata. The evaluation team surveyed the 9 SLP districts at both the baseline and midline. 78 percent response rate was recorded at Midline. This response rate was statistically sufficient to yield reliable and robust results. Key Findings: Involvement in business enterprises: 99.3 percent of the 570 self-help groups (SHGs) in the 9 pilot districts were running a business enterprise. 74 percent of these SHGs were involved in produce buying and selling. Inclusiveness: 75 percent of SLP beneficiaries are female and 33 percent are youth. Adherence to the SLP 5 core principles: Weekly savings averagely increased by 2-fold among SHGs, 74 percent of first round of revolving fund disbursement repaid by SHGs, all SHGs having records of their transactions and meeting minutes, all SHGs having weekly meetings and increased inter-lending to all members boosted by introduction of the welfare fund in every SHG. Page 42 of 50 The World Bank Northern Uganda Business Support Program (P147258) SLP Impact on household livelihood: 34 percent increase (from 3 percent to 37 percent) in households with crop farming as main income generating activity. Average income of SHG members increased by 43.8 percent. Crop and livestock farming are main sources of household livelihood among SHG members. There was increased diversification in the income-generating enterprises (i.e. Crop produce sellers, shop, agricultural input stores, clothing/shoe stores, crafts (basket making and weaving) & charcoal dealers – this is attributed to preparatory activities such as training & mobilization, and follow-up activities. Expenditure: Capital for starting business (26.1 percent), school fees (21.0 percent), food (10.2 percent) are the common items HHs mostly spend on; Significant increase in average spending was noted on food, clothing, purchase of HH items, paying back loans & start-up capital for business at midline compared to baseline. There was diversification on the items HHs spent on at the midline compared to baseline. Opinion on interest rate on the borrowed loans and how the debts are managed: 71.1 percent of SLP beneficiaries expressed content on the 5 percent interest rate charged on the revolving fund loan. Debts at household level reduced by 23 percent (from 53.8 percent at baseline to 30.8 percent at midline) due to acquired skills in financial management. There was also noted diversification in the modes of debt repayment/management. There is less borrowing and better repayment. Saving: There was increase in participation in savings, particularly among those saving below 50,000= per month. This was attributed to the skilling and spill-over from SHGs investment. Possession of household items: Additional 5.2 percent of households owned radios, more 4.4 percent had livestock, another additional 4.1 percent had mobile phones, more 3.7 percent had poultry, 1.9 percent more households had mattresses and an additional 1.5 percent of the households had bicycles. These possessions further signal improvements in household welfare attributed to the SLP project design. Progress out of Poverty: The overall total index showed percentage increase in out-of-poverty progress of 40 percent at midline from 36 percent at baseline. This is attributed to the interventions of SLP that has enabled households to take children to school and led to improved literacy levels. The skills possessed by the SLP beneficiaries: SHGs members received skills mostly in Business planning and recording keeping as demonstrated by 48 percent of the members. Health care: At Midline, only 28.4 percent of respondents reported a sick member of the household in the last 7 days as compared to 65.3 percent at baseline. This result shows a reduced diseases’ burden on respondents translating into more time to work and more money saved at household level. However, the unexpected is that a less percentage of 62 percent sought medical attention at midline compared to 98 percent at baseline. Access to education services: There was an increase in the number of children attending school (from about 2 to 3). This is as a result of increased awareness by SLP with emphasis on core responsibilities of education. Food availability and coping mechanisms: 40 percent of beneficiary households were having 3 or more meals a day, almost double the proportion at baseline (28 percent). SLP targeted the active poor whose Page 43 of 50 The World Bank Northern Uganda Business Support Program (P147258) lifestyles were immediately impacted by the project interventions hence an improvement in the feeding behaviour. Conflict Resolution: Quarrels over money reduced from 33.0 percent at baseline to 26.5 percent at midline, Quarrels over other HH resources reduced from 17.5 percent at baseline to 2.1 percent at midline. This reduction is attributed to training and awareness created through sharing information on group dynamics, cooperation and unity. Monitoring: This aspect of monitoring has strengthened teamwork and enhanced communication among the beneficiaries and other stakeholders hence strengthened SHG activities in terms of accountability and transparency. Project Appropriateness: SLP has proved to be consistent with the target priorities of the government by reaching majority of the target groups. Key Lessons Learned: i. The Sustainable Livelihood Pilot has been a springboard for new and practical approaches for improving the livelihoods of poor households across all the nine intervention districts of Kitgum, Gulu, Kapchorwa, Masindi, Lira, Soroti, Kotido, Butaleja and Nebbi. ii. In comparison with other NUSAF components of Household Improvement Support Program and the Labor-Intensive Public Works where beneficiaries are given grants and need not pay back, it is noted that the SLP approach of the revolving loan fund yields greater returns with regard to improvement of livelihoods of the beneficiary members iii. Involving various stakeholders by participating in the pilot paves way for a sense of ownership, transparency and accountability all of which have made the pilot the best program. iv. Comparing the SLP approach with the HISP, LIPW approaches reveals that the SLP approach of the revolving fund is more effective and results-driven than the grants approach Conclusions: The SLP approach is valid and successful. This has been enabled by: ➢ Working with existing groups ➢ Adopting the 5 core principles (Regular meetings, Savings, inter lending, timely repayment and record keeping has worked. ➢ Using an effective SLP implementation structure TIST, DIST, SIST, VLICs and CBAs; ➢ Ensuring that there is capacity building/skilling before fund disbursement to the groups; ➢ Instituting the role of support supervision and mentoring by the Community Business Agents; Page 44 of 50 The World Bank Northern Uganda Business Support Program (P147258) Recommendations: ➢ There is need to increase operational funds to enable the VLICs and CBAs to provide technical support and supervision to communities more frequently ➢ Implementation of the SLP project ought to continue and be scaled up so that the achievements so far realized are extended to non-intervention districts. ➢ It is important to observe the experience of individual investments as opposed to group investments to assess whether the resulting benefits are comparable to those derived from the group investments. This requires a follow-up evaluation to the disbursement of funds for individual investment. ➢ There is need to engage the NGO fraternity and foster co-existence. This will allow for the sustainability of the SLP project impact. ➢ There is need for a government policy governing the interest rate on the money that savings groups borrow for livelihood improvement. The interest rate should have a ceiling to avoid institutions from taking advantage of the poor. Provision of loans should be done at village level in the form of revolving funds. Interest rates for self-help groups should be regulated by government. ➢ Promote capacity building of local institutions for sustainable support and linkage improvement. This can be done through a stakeholder needs analysis. Page 45 of 50 The World Bank Northern Uganda Business Support Program (P147258) ANNEX 7: SUMMARY OF GOVERNMENT’S IMPLEMENTATION COMPLETION AND RESULTS REPORT Republic of Uganda OFFICE OF THE PRIME MINISTER THE THIRD NORTHERN UGANDA SOCIAL ACTION FUND (NUSAF 3) ICR FOR THE BUSINESS SUPPORT PROJECT FOR NORTHERN UGANDA (JSDF) Introduction. The Government of Uganda and the Japanese Government jointly formulated the Northern Uganda Business Support Development Project for funding with a Grant of US$ 2.857 from the Japanese Social Development Fund (JSDF). The initiative was developed during the implementation of the Second Northern Uganda Social Action Fund (NUSAF2) with the aim of enhancing the sustainability of support to household investments through creating sustainable community institutions, focusing on provision of grants, and micro-credits to new and existing groups respectively. The financing agreement was signed on 31 October 2016 and actual implementation started under NUSAF3 in June 2017. NUSAF3 is a 5-year Government of Uganda project, successor to NUSAF2 funded by a SIL from the World Bank. The Project Development Objective is to provide effective income support to and build resilience of poor and vulnerable households in Northern Uganda. -. The JSDF was restructured to align with the Sustainable Livelihoods Pilot Sub-component of the NUSAF3 Livelihoods Investment Support Component. Learnings that informed the design of the pilot: The JSDF was informed by lessons from NUSAF (1,2 and 3), as well as implementation of large-scale community driven sustainable livelihood programs in South Asia. The pilot was based on the core belief that the poor have a strong desire and innate capabilities to come out of poverty. They are entrepreneurial. The challenge is to unleash their innate capabilities to generate meaningful livelihoods by forming/strengthening pro poor community institutions, continuous capacity building and handholding support, business capital & business development support. Some of the learnings include; a) Most of the livelihood programs are largely dependent on grants, and due to limited resources: ▪ they can only support a limited number of poor households ▪ they are normally a one-off support ▪ in most cases not sustainable b) Livelihood activities which start on the basis of grants do not always survive for long because; they normally lack strong community -owned institutions with capacity to support implementation of their investment activities beyond the implementation phase. c) The tendency for many beneficiaries of grants to think its free money and therefore often do not use them productively and profitably Page 46 of 50 The World Bank Northern Uganda Business Support Program (P147258) d) Groups supported under grants often lack bonding (affinity) and disintegrate easily after a short time. e) Many of the livelihood programs provide short term capacity building and inadequate hand holding support to groups that have limited affinity hence low sustainability of investments Key features of JSDF. The Pilot was implemented through a guided Community Driven Development (CDD) approach focusing on (i) social mobilization of poor in target villages; (ii) building strong grassroots community institutions of poor which act as platform to support household livelihood investment in the longer term on sustainable basis; (iii) focus on self-help and the use of revolving village funds as opposed to grants; (iv) continuous capacity building, imparting requisite skills and creating linkages with livelihoods opportunities for the poor, (v) promoting specialized community managed livelihoods federations/collectives for aggregating produce, achieving economies of scale, support backward and forward linkages, access to market, collective procurement, value-addition and marketing; and (vi) convergence with anti-poverty programs at village level Pilot implementation: The pilot worked with existing and new savings and self-help groups through the provision of a package of support comprising of group strengthening, livelihoods and business development training, and access to a village revolving fund. The program began by working with the already existing extensive number of savings groups that were supported to follow the NUSAF3 5 core principles and co-responsibilities for a period of 3 months. A participatory assessment was carried out with the support of the technical staff and the CBAs and compliant groups were graduated into Self Help Groups that qualified to borrow the VRF. Key Risks A range of risks were identified that are largely related to governance challenges and other risks associated with the policy and institutional context and the delivery of the proposed operation through the Systemic Operations Risk-Rating Tool (SORT). The government planned well for these risks and controls were instituted including. • Using the existing government structures • Identification and engagement of full time resident community business agents • Use of cheques for all project transactions • Assessment and graduation of savings groups to Self-help groups through set criteria • Continuous technical support by TST, DIST, SIST, CBAs and Capacity Building Partner. • Financing of only business enterprises with viable business plans. • Identification of short maturing business enterprises among others Other Pilot results: The project conducted an end line evaluation through an independent consultant and the findings are indicated as below: Adherence to the SLP 5 core principles: Weekly savings averagely increased by 2-fold among CIGs, 74% of first round of revolving fund disbursement repaid by CIGs, improved records of transactions and Page 47 of 50 The World Bank Northern Uganda Business Support Program (P147258) meeting minutes, improved group cohesion and increased inter-lending to all members boosted household businesses. SLP Impact on household livelihood: 34% increase (from 3% to 37%) in households with crop farming as main income generating activity. There was increased diversification in the income-generating enterprises (i.e. Crop produce sellers, shop, agricultural input stores, clothing/shoe stores, crafts (basket making and weaving). Expenditure: Significant Increase in households’ expenditure on: school fees (21.0%), food (10.2%); clothing, purchase of HH items, paying back loans & start-up capital for business at midline compared to baseline. There was diversification on the items HHs spent on at the midline compared to baseline. Saving: There was increase in participation in savings, particularly among those saving below 50,000= per month. Increase in household items: Additional 5.2% of households owned radios, more 4.4% had livestock, 4.1% had mobile phones, 3.7% had poultry, 1.9% more households had mattresses and an additional 1.5% of the households had bicycles. Progress out of Poverty: The overall total index showed percentage increase in out-of-poverty progress of 40% at midline from 36% at baseline. The skills possessed by the SLP beneficiaries: CIGs members received skills mostly in Business planning and recording keeping as demonstrated by 48% of the members. Health care: At Midline, only 28.4% of respondents reported a sick member of the household in the last 7 days as compared to 65.3% at baseline. This result shows a reduced diseases’ burden on respondents translating into more time to work and more money saved at household level. This was corroborated well with the report that 62% sought medical attention at midline compared to 98% at baseline. Access to education services: There was an increase in the number of children attending school (from about 2 to 3). Food availability and coping mechanisms: 40% of beneficiary households were having 3 or more meals a day, almost double the proportion at baseline (28%). SLP targeted the active poor whose lifestyles were immediately impacted by the project interventions hence an improvement in the feeding behavior. Conflict Resolution: Quarrels over money reduced from 33.0% at baseline to 26.5% at midline, Quarrels over other HH resources reduced from 17.5% at baseline to 2.1% at midline. Cost of borrowing and debts management: 71.1% of SLP beneficiaries expressed satisfaction on the 5% interest rate charged on the revolving fund loan, shared between the village fund and CIGs at the ratio of 3/2 respectively. CIGs reported 86% repayment rate for Village Revolving funds. Debts at household level reduced by 23% (from 53.8% at baseline to 30.8% at midline). There was also noted diversification in the modes of debt repayment/management. Page 48 of 50 The World Bank Northern Uganda Business Support Program (P147258) Inclusiveness: 75% of SLP beneficiaries are female and 33% are youth. Key Lessons learnt during Pilot implementation. ▪ The use of Revolving fund approach helps to support a bigger number of beneficiaries in the community and promotes hard work. With 2.857US$ the project has supported a total of 11,875 beneficiaries with additional space to absorb eligible new groups and beneficiaries ▪ The time period taken to prepare the groups (3 months) before funds disbursement helps to strengthen cohesion, business mindset development and prepare communities to effectively utilize the funds, weed out the unserious groups and individuals as well as encourage group savings for accumulation of investment capital. ▪ The Pilot 5 Core principles (weekly meetings, savings, inter loaning, timely repayment & record keeping) practiced by all CIGs from the moment of targeting have led to increase in savings making capital available for group members to borrow from and also solve household needs, improved record keeping and business management. Similarly, the Co-responsibilities have contributed to improved hygiene and sanitation in the SLP implementing villages. SHG records ▪ The provision of cheap capital in form of reduced interest rates (not exceeding 5%) and longer repayment period (3months) has triggered a lot of Business at village level. The evaluation report reveals that there is increase in businesses at community. ▪ The capacity building and consistent hand holding of the CIGs helps greatly in positive mindset development of the beneficiaries. Communities now believe in themselves, with less conflicts and focused on production for business as opposed to subsistence surplus. This is attributed to the support from the Community Business Agents (CBAs) who are resident in the villages and entrepreneurship training by Enterprise Uganda. ▪ Investing in group businesses in the first round of business loans with a control of 50% VRF funding promotes hard work, group cohesion and repayment compliance as profits are shared amongst all the members. ▪ Targeting existing groups with at least 50% females has increased women’s participation in business, motivated them to work harder and benefited the entire HHs; strengthened cohesion ▪ The formation of community institutions of CIGs and VLICs helps in promoting project ownership due to the communities active participation in all processes. This is a good sustainability pillar. Key Issues. Scale up & Funding Adjustment. The JSDF was piloted outside the watersheds with specific funding that has ended. Based on the evaluation results, the pilot was extremely successful and therefore there is need to scale up to other villages with continued technical support provided up to the end of NUSAF3. Page 49 of 50 The World Bank Northern Uganda Business Support Program (P147258) Post Pilot Name. The Sustainable Livelihood Pilot (SLP) shall cease being a pilot with the end of the JSDF project. We propose to retain the new SLP as a sub component under the LIS component but rename the sub component to be Sustainable Livelihood Program (SLP). Community business agents’ allowances. The community business agents were the major factor to the achievements registered. The Village Livelihood Management Committees have to be guided on how to sustain the CBAs to the end of NUSAF3 by the 4 VLICs supported by a CBA contributing towards his/her facilitation. Exit and Sustainability strategy The project sustainability was built on project implementation being mainstreamed into existing government structures at both the national and local government levels. Furthermore, the project put in place, strengthened and built the capacity of community institutions including, CIGs/SHGs, VLICs among others that are able to support and manage their affairs with less need of technical staff. The project invested heavily in capacity building of communities and their institutions as well as instigated linkages with private sector including financial institutions, business community and input suppliers. The contribution of the CBAs engaged by the community cannot be emphasized enough and they have built very strong links with the communities who are willing to maintain them. Conclusion. The JSDF funding and approach of using Revolving funds as opposed to grants achieved its purpose. The empowerment of women and communities to manage their business affairs, cohesion created in the pilot villages will help a lot in the scale up since social capital of experienced villages has been created Page 50 of 50