Document of The World Bank FOR OFFICIAL USE ONLY Report No: 22123 IMPLEMENTATION COMPLETION REPORT (IDA-25290) ONA CREDIT IN THE AMOUNT OF SDR 2.8 MILLION (US$ 3.8 MILLION EQUIVALENT) TO THE REPUBLIC OF BENIN FOR A RURAL CREDIT II PROJECT June 28, 2001 Rural Development 2 Country Department 13 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents mnay not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective *) Currency Unit = CFA Franc (CFAF) CFAF 1000 = US$ 1.74 US$ 1 = CFAF 575 WEIGHTS AND MESURES Metric System FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BCEAO Central Bank of West African States CFD French Development Agency, ex CCCE CCCE Caisse Centrale de Cooperation Economique CLCAM Local Savings and Loan Cooperative CNCA National Agricultural Credit Bank CPU Central Project Unit CRCAM Regional Savings and Loan Cooperative EEC European Economic Community FAC French Assistance and Cooperation Agency IDA International Development Association IFAD International Fund for Agricultural Development SDC Swiss Development Cooperation UMOA Monetary Union of West African States URCLCAM Regional Union of CLCAMs *Exchange rate as of February 1994. The parity of CFAF with French Franc, previously fixed at 50 to 1 was realigned to 100 to 1 on January 1, 1994. Vice President: Callisto Madavo Country Director: Antoinette Sayeh Sector Manager: Joseph Baah-Dwomoh Task Manager: Michel Aldamavo FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT REPUBLIC OF BENIN RURAL CREDIT II PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 9 6. Sustainability 11 7. Bank and Borrower Performance 12 8. Lessons Learned 14 9. Partner Comments 16 10. Additional Information 20 Annex 1. Key Performance Indicators/Log Frame Matrix 21 Annex 2. Project Costs and Financing 22 Annex 3. Economic Costs and Benefits 24 Annex 4. Bank Inputs 25 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 27 Annex 6. Ratings of Bank and Borrower Performance 28 Annex 7. List of Supporting Documents 29 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Project ID: P000 120 Project Name: RURAL CREDIT II Team Leader: Michel Y. D. Aklamavo TL Unit: AFMBJ ICR Type: Core ICR Report Date: June 28, 2001 1. Project Data Name: RURAL CREDIT II LIC/TF Number: IDA-25290 CountryIDepartment: BENIN Region: Africa Regional Office Sector/subsector: AY - Other Agriculture KEY DATES Original Revised/Actual PCD: 04/09/92 Effective. 12/20/94 12/20/94 Appraisal: 06/29/92 MTR: 06/23/98 Approval: 06/29/93 Closing: 06/30/99 12131/2000 Borrower/Implementing Agency: Republic of Benin/Ministry of Finance and Economy/CLCAM/CRCAM/FECECAM Other Partners: STAFF Current At Appraisal Vice President: Callisto Madavo Edward Kim Jaycox Country Manager: Antoinette Sayeh Olivier Lafourcade Sector Manager: Joseph Baah-Dwomoh Theodore Nkodo Team Leader at ICR: Michel Aklamavo Abdul Haji ICR Primary Author: Turto Turtiainen; Rural Development Specialist; (Consultant) 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability. L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The main goal of the Second Savings And Loan Cooperative Rehabilitation Project was to consolidate the achievements made during the first project, which aimed at rehabilitating rural cooperative credit and savings institutions. 'The ultimate objective was to create a private system of savings and credit cooperatives (hereafter referred to as the FECECAM network 2) that would be financially viable and sustainable without external subsidies. This goal was to be achieved soon after the end of the second project. The particular objectives of the second project were to support the establishment of an efficient institutional structure for the rural finance network through (a) the creation of a representative apex policymaking and advisory body with a strong Technical Secretariat that would provide policy guidance for, and overall control of, the network's operations; (b) the conversion of existing regional cooperative credit and savings societies (CRCAMs) into efficient service units (URCLCAMs) that would provide technical advice and support to local cooperative credit and savings societies (CLCAMs); and (c) the training of staff at all levels. The project was to finance investments (office equipment, vehicles, buildings), technical assistance, and part of the development services provided to CLCAMs by the Technical Secretariat and the URCLCAMs, to the extent that these costs were not to be covered by contributions from CLCAMs. It was necessary to set up a formal support and supervisory structure for a rapidly growing network of small rural finance institutions, and given the result achieved during the first rehabilitation project, the objectives were fully realizable during the project period. At appraisal, a number of projections were made, but no definite targets were set for the expansion of the network or its operations. Instead, the Government, the cooperative organizations, and the financing agencies agreed on the following policies (some were expressed as objectives): (a) Lending and loan recovery. Recovery of loans was to continue at the rate of about 98 percent throughout the project. The existing rigorous discipline in loan recovery, which is largely built into the "mutualistic" approach through group guarantees, was also to be maintained and reinforced. Total authorized outstanding loans were not to exceed 50 percent of savings deposits. I/The following measures were taken under the First Rural Savings and Loan Cooperative Rehabilitation Project (a) Institutional Rehabilitation: * A genuinely "mutualist" (cooperative) approach was developed. * The network was organized as planned. * Systems to improve management information and control were developed. * A program for human resource development was started. (b) Financial Rehabilitation: * Members' equity and savings depleted by accumulated losses were reconstituted by extemnal contributions. * Adequate administrative, budgeting, accounting, and financial control procedures were established. * Policies to improve profitability of the operations were undertaken. * Support for operational expenses was provided from external sources. (c) Revision of Credit Regulations: Credits from the members' savings and a small line of credit were cautiously provided. * Strict conditions for credit were enforced, but the right to grant loans was delegated to local cooperatives. * Security was improved by creating a separate find to cover credit losses. * A special action program to recover old debts was instituted. 2 / Strictly speaking, FECECAM means "La Federation des Caisses d'Epargne et de Credit Agricole Mutuel." The Federation did not exist when the project started. 3 / In Annexes 11 - 12 of SAR and in the Supplementary Credit Agreement. -2 - (b) Financial autonomy. The network's financial autonomy was to be pursued through (i) the maintenance of a growth rate of 15 percent per year for deposits and an increased effort to improve quality and delivery of services to clients; (ii) a search by the Technical Secretariat for the best possible placements for the network's excess liquidity; (iii) a limitation on the use of external lines of credit to a maximum of 30 percent of the CLCAMs' total deposits, and a requirement that the agreement of the "Comite de Concertation" be obtained before any new line of credit was accepted; (iv) a contribution by the CLCAMs to the financing of the network of up to 30 percent of the CLCAMs' profits; and (v) an annual evaluation of the network's costs in order to establish a base line that would permit comparison, with the objective of setting targets to be used to assess the cost of services and possibly to purchase these services more cheaply on the market; (c) Opening and closing of CLCAMs. Authorization of any new CLCAM by the Board of the National Federation would have to be preceded by a feasibility study, including a market study and an analysis of projected income statements. CLCAMs that proved unprofitable would be supported by the Central Support Fund for no more than two years. A CLCAM that generated losses for three consecutive years would be excluded from the network. (d) Socioeconomic investments. Article 62 of the statutes specifies the priorities for the distribution of profits. Most would have to be used to compensate for past losses and to increase the legal and statutory reserves; only an insignificant share could be available for possible socioeconomic investments. (e) Financial performance. The measures to improve financial performance included (i) a gradual reduction of losses by URCLCAMs, so that in Project Year 5, only 15 to 25 percent of such losses would have to be to covered from external sources; (ii) a substantial increase in the ratio of profit to administrative costs for all levels of the network (percentages of increases varying between 320 and 380 percent); and (iii) a review of the cost structure for regional and federal services during the midterm review of the project, with a view to streamlining such services and further reducing costs. A project such as this for developing and monitoring a demanding service sector might have benefited from more specific financial objectives and targets with respect to the structure and size of the organization (with an aim of a controlled expansion), human resource development, development of monitoring and control mechanisms, and definition of phases when adjustments in the policies and practices needed to be made. However, when the project was prepared and evaluated, no logical framework with quantitative and qualitative targets was required. But the detailed policies and development objectives described above and the series suggested at appraisal and continually adjusted afterwards have been fairly relevant for the category of the project. In the course of project implementation, and especially during the last two to three years, when undesirable trends were detected and the management information systems improved, a sophisticated structure of objectives, impact indicators, and financial ratio analysis was developed, building partially on the logical framework that was prepared for the project in 1997. 3.2 Revised Objective: The goals and objectives of the project were not revised during the project period. The only change affected the loans-to-savings ratio: the total authorized outstanding loans were not to - 3 - exceed 50 percent (annex 12 - staff appraisal report) of savings deposits. This ratio subsequently proved to be too conservative, given the relatively stable nature of savings deposits within the network and the need to improve profitability. Consequently, the ratio recommended by PARMEC (West African Economic Community), 85 percent, was adopted and implemented. During the last project year, a recovery plan was prepared for the network with the help of the Canada-based Desjardin organization. Although this plan has important implications for the survival of the network (see section 6-Sustainability), it did not affect the original project objectives. Resulting from changing policies in the financing agencies and FECECAM itself, a number of additional expectations were set for the network, although they were not formalized as project objectives: - The network was to be expanded to reach a larger percentage of rural households and to more remote areas (outreach to be extended); - Access for women to the savings and credit services was to improve; and - Various beneficiary groups were to be better represented in the democratic organs of the network. 3.3 Original Components: The project components and their costs were as follows: (a) Support of CLCAMs, US$3.9 million (for operating costs of new units, provision for past losses as a means to rehabilitate promising units, construction of offices, and office and accounting equipment); (b) Support to Regional Unions, US$3.2 million (for operating costs to cover a part of current expenses, vehicles); and (c) Support to the Central Project Unit and the Federation (to be established), US$8.0 million (for staff and operating costs, technical assistance, vehicles and training equipment, computerization, studies and research, training, and audits). Considering the status of activities in the network and the achievements at the end of the first project, the components were appropriate to meet the actual needs of the network. The elements institution and capacity-building--in human resources and in developing processing capacity for millions of transactions--were very important in all components, corresponding exactly to the needs of this network of rural finance institutions at that time. The components also corresponded well with the objectives of the project, especially because no one expected complete financial self-sufficiency to be attained during the project period. 3.4 Revised Components: The components were not revised during project implementation. 3.5 Quality at Entry: No formal Quality-at-Entry Review (QAE) was performed on the project, but the overall quality at entry can be rated as satisfactory. The Government policies were conducive for developing the sector, allowing the private sector to take full responsibility for implementing the project and even to use public-sector funds to attain the objectives that the Government found important. Although the task at hand--building a sustainable network of rural finance institutions with an extensive outreach--is very demanding, the project was designed to be relatively easy to -4- accomplish with the implementation capacity reserved for it, including the technical assistance agreed upon. The planners took into account the lessons learned during the previous project, such as a need to make the regional unions perform only service functions rather than allowing them to compete with the CLCAMs; the necessity to restrict the lending to members only; and a need to formalize the centralized operations and pooling of funds by establishing a federation for the network. As for the implementation organizations or arrangements, there was no alternative for implementing this project other than the one selected, because a firm decision had been made that the Government was not to be involved in. implementing the project. The objective was to develop the FECECAM network, by far largest in the rural or smallholder sectors, and a Technical Service Unit already existed as a predecessor for the Federation to be established. In addition, the planned Federation had to be given the assignment of implementing the project, because it was to be the apex unit for the network. Because the field units were cooperative credit and savings societies, participation of members and their empowering was a must, although such societies may not have been the most effective way to provide the financial services to rural people (because of the complex decision-making procedures that often include financially ignorant layman committee members and members). Most important, the project was preceded by a project in which the main hypotheses were tested and many of the operational procedures and selection criteria needed to implement the project had been developed. The project took an inordinately long time to process. The appraisal was concluded in July 1992, but the Board did not approve it until 11 months later, in June 1993. It then took 18 months, until December 1995, for the project became effective. One reason was that when this project was prepared and approved, the predecessor project was still in progress. A good deal of the delays was due to hesitation on both the Bank's and Government's part as to whether the proceeds of IDA credit should be given to FECECAM on a grant basis or on lent to the network. The forner was retained following lengthy negotiation over weeks. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: As already mentioned, the development objectives were only partially quantified when the project was appraised. However, some indicators for measuring the attainment of the development objectives were suggested, and more were proposed early in the project. A substantially more comprehensive set of indicators was defined in 1997 when a log frame for the project was prepared (it was updated during the midterm evaluation in 1998). Three years into the project life, it appeared that these targets were being achieved, but when the project ended, the situation with respect to each set of log-frame objectives was as follows: (a) Outreach. Objective: An increase in membership of at least 25 percent per year from the 1993 level of 53,000, with a goal of 500,000 in 2001, that is, about 30 percent of the active population. Achievement: An outreach level of about 17 percent, with 290,000 individual members, each representing a family. This level is clearly above the 14 percent projection made at appraisal. (b) Financial viability. Objective: Finamcially viable local societies to account for at least 90 - 5- percent of the total at all times and to be capable of financing an increasing share of the network's overhead costs, aiming at full financial autonomy of the network in 2001. Achievement: The number of CLCAMs making operational profit in 1999 was 26 out of the total number of 96 (27 percent), but a similar number of CLCAMs showed profit due to recovery of old loans written off. (c) Credit discipline. Objective: Loan recovery rate to be at least 97 percent at all times. Achievement: The average loan recovery rate in September 2000 was 70 percent, with only 6 CLCAMs reaching the target level of 97 percent. Another 18 percent of CLCAMs reached a 90 percent loan recovery level. (d) Prudential ratio. Objective: Loans-to-savings ratio not to exceed 85 percent. Achievement: This ratio has not been exceeded; it has actually declined to about 35 percent because of suspension of lending by many CLCAMs that exceeded the 10 percent overdue limit allowed for continuation of lending. (e) Ownership and autonomy. Objective: Establishment of an effective Federation of savings and loan cooperatives operating under independent management. Achievement: The Federation has been established, its administration and management information system work satisfactorily, and it is managed outside the Government's day-to-day control by elected officials and staff recruited on the open markets. Other impacts. Other major impacts that promote development and can be viewed as indirect benefits for the FECECAM system are several: (a) increased economic activity in rural areas and the alleviation of poverty among the project target groups, small farmers, and other small-scale operators in the rural areas and small towns, often far from the main commercial centers (see sections 4.1 and 4.2); (b) institution building and development of human capacity (section 4.5); and (c) greater participation by women in income-generating activities. Especially under the IFAD-financed part of the project, some 10,000 women got annually small credits to improve their incomes. (To see the great emphasis that the Government places on FECECAM's impact, see the Borrower's report, summarized in Section 9.) Certain important administrative and financial activities--in particular, accounting, financial control, and management information systems-caused frequent concern among the financing agencies during the supervision missions and led to calls for improvement throughout the project life (see Section 8 - Lessons Learned). However, at the end of the project, the FECECAM network was able to produce the necessary information about all these activities without substantial delays. 4.2 Outputs by components: Support to the Local Cooperative Credit and Savings Societies Component has been implemented satisfactorily, except for the gradually increasing number of overdue loans (that has been considered in rating the achievement of the development objectives). During the project period, the number of local CLCAMs doubled and 48 new CLCAMs were established, bringing the total number of these units to 96. In addition, the CLCAMs were supervising 56 Caisse Villageoises, which are new, provisional local cooperative credit and savings societies. The total - 6 - membership in these units has multiplied several times over, from the 51,000 in 1993 to about 300,000 in September 2000, and it is still growing. The outreach among the agricultural population is 18 percent (compared with 6 percent in 1993), and among the total population, about 10 percent; both of these figures exceed the results of any other financial institution in the country. There are 375,750 savings accounts (including those of nonmembers), and the total amount of savings in 2000 has risen to FCFA 21.2 billion (FCFA in 1993). Loans to members amount to about FCFA 9 billion, compared with FCFA 2 billion in 1993. (Loans amounted to FCFA 16.5 billion in 1998, when they had to be curbed because of excessive overdues). Project assistance for operating costs and payment of past losses, construction of premises, and purchase of office equipment has been essentially exhausted, except for a small part that the French ACF canceled. Financial assistance for this component (Support to CLCAMs) was paid for by co-financiers. However, CLCAMs also benefited from IDA assistance, because the funds reserved for training under the other components and partially paid by IDA funds also benefited the staff and members of CLCAMs. The Regional Unions Component was rated as satisfactory, again with the reservation that the financial situation of the regional unions has been evaluated under section 4.1, Output/Achievement of Development Objectives. Project assistance, purchase of vehicles, and payment of development costs have been carried out as projected at appraisal. These unions, which earlier were providing credit and savings services in competition with their local member cooperatives, have been restructured as planned at appraisal. They are now service organizations, which provide assistance in. accounting and financial management, help train staff, monitor the activities in their regions, and promote the movement to increase the membership. They also provide a base and manage the group of inspectors, who regularly visit the local CLCAMs and the Caisse Villageoises, to verify that these units are operating properly. It is unclear to what extent the problem-CLCAMs can be blamed on the performance or management inadequacies of the regional unions. The financial situation of the regional unions is generally better than that of the CLCAMs, because the Federation gives the unions budget envelopes before the year begins and they schedule their operations accordingly, ending up with a small surplus or deficit. During the past two years the unions have started to collect significant fees for the services they provide for the CLCAMs, but it is external assistance received under the project (and other projects) that enables them to carry out their duties as service organizations. The need for external assistance has not declined adequately to ensure an early financial independence. The National Federation Component has been rated as satisfactory, although the results expected from this agency did not meet all expectations. The apex organization for the Local Cooperative Credit and Savings Societies envisaged at appraisal has been established and has been fully operational since 1994. It oversees the observance of the operational policies by the regional and local units and enforces the control mechanism established. Project assistance was planned to be used for (a) selected investments (design and installation of a computerized accounting and purchase of office equipment and - 7 - vehicles); (b) technical assistance, training, and audits; and (c) development support (general, not specified assistance to the regional unions and CLCAMs), including payments that the field units should make for the services they get from the regional and apex organizations. All these financing plans have implemented as required, although often with delays. Delays in the computerization of the accounting and management information system (which had to be redone, because the original system was not powerful enough), were worrisome. Systematic training in operations and the cooperative (mutualist) concept have been institutionalized in the whole network. The Federation still depends on subsidies, but has started to collect subscription fees and other payments from its member units. To improve the overall financial situation and the rate of overdues and overdue situation in the network, prudential ratios and cost reduction measures have been introduced. Numerous studies have been carried out in various problem areas (a list is available in Project Files), and a new recuperation program, worked out in collaboration with the Canadian Desjardin movement, was introduced in the fall 2000. The performance of the Federation management (or the Central Management Unit, as it was called before the Federation was fully established) has been uneven. As mentioned earlier, it has implemented the project activities essentially as planned, but with substantial delays in some aspects, such as building a reliable management information system. One problem from which the Federation suffers is common in all cooperative structures: the ultimate decision makers are the lay representatives of the membership, at least in theory. Although the professional managers have been well aware of the problems and solutions needed, they have not been able to make the administrative bodies approve their recommendations in a timely fashion, before substantial damage was already done. Several supervision missions of IDA and other donors have pointed out this problem, but it has been difficult for the professional managers and the lay administration to agree on a clear delegation of tasks and responsibilities. 4.3 Net Present Value/Economic rate of return: The project was designed to be a tool for institution building that, at the operational level, would address the problems caused by near lack of formal or semiformal rural finance agencies, especially those that would deal with small-farmers and other operators like small-scale traders and women groups. The project interventions in revenue-creating activities of the final beneficiaries could not be evaluated, and no economic analysis was prepared at appraisal. Correspondingly, no economic analysis was attempted at the completion of the project. 4.4 Financial rate of return: No overall financial rate of return was calculated at appraisal or for the ICR. However, if examples of other projects intended to finance numerous small investments in micro-projects are used as proxies, they indicate that such micro-financing can be financially profitable. The computations under the recently completed food security project in Benin (PILSA)--including subprojects from one-hectare bottom-land development to cassava processing plants, fish ponds, and feeding of small ruminants--showed positive annual returns. 4.5 Institutional development impact: Although financial self-sufficiency has not reached the levels expected at appraisal, many other institutional development impacts can be reported. As mentioned in Section 4.2, the Federation and regional unions benefited from the project by developing their organization and capacities to - 8 - plan, monitor, and lead the cooperative credit and savings societies in Benin. They provide, within the limited resources available, at least a part the services typical for the secondary and apex organizations in the cooperative finance sector. A major institutional benefit of the project can be seen in the small towns and villages and the agencies that deal directly with cooperative members who need financial services. Local cooperative credit and savings societies and their branches, Caisses Villageoises, are now permanent features-albeit many of them financial shaky--in the rural areas, ensuring continuity of basic financial services to their members. In addition, during the past six years the entire FECECAM structure has been fully managed by national staff. Although many trained staff have left the organization for better conditions elsewhere, their improved capacity still serves the nations' development. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: Three factors temporarily impeded project implementation: (a) Adverse weather reduced the production of cotton in at least two of the project years. In addition, highly volatile world market prices severally impaired cotton farmers' ability to repay loans; (b) Local politicians interfered with the repayment commitments of the borrowers, especially those with larger credits, coupled with the fact that the management boards of the CLCAMs were unable or unwilling to adequately resist their influence; and (c) Salary levels in the Beninese economy were too attractive for the trained FECECAM staff to resist, leaving FECECAM with constant shortage of qualified staff. 5.2 Factors generally subject to government control: The project benefited from the Government's sector strategy and rural development policies. The Government had agreed that the project would be implemented by the private sector (FECECAM) and that Government funds and those borrowed from IDA or received as grants from co-financiers could be used to finance institution-building efforts and operations in the sector. Because one of the main tenets of the project was that it would be implemented without Government involvement, the Government did not, neither was it asked for, to intervene in the operations of the FECECAM network. Toward the end of the implementation period of the project, when the Ministry of Economy became aware of the network's repayment difficulties, the Government became concerned about the situation but did not interfere other than by organizing meetings to discuss the problems. Given the Government's noninvolvement principle, it is debatable whether the Government should have done more to assure the success of the project. It has the overall responsibility for overseeing that the FECECAM program and assuring that the network follows the agreed-upon prudential ratios or PARMEC guidelines, but there was no major infringement of the ratios or PARMEC guidelines. Two factors subject to Government control impeded project implementation: (a) The DCA was ratified by the parliament with substantial delays (see Section 4.3); -9- (b) Allowing or encouraging donor agencies to use the FECECAM network for intermediation of external loans exceeded the capacity of the network and reduced the psychological responsibility for repaying the loans (the earlier argument among the members that "the money that we borrow is saved by ourselves; we have to repay it, because it is our money" became partially invalid). 5.3 Factors generally subject to implementing agency control: Project implementation was impeded by the following factors relating to the Federation and regional unions, which were the principal implementation agencies: (a) Although there were ample opportunities to detect the warning signs of future problems, including the aide-memoir by IDA and donor supervision missions, FECECAM management was unable to persuade the administrative bodies (Board of Administration, Annual General Meetings) to take the steps necessary to halt the trends toward increasing overdues, especially by big borrowers, or to close down the CLCAMs whose capital base had eroded; (b) The external auditors and special teams financed by the co-financiers prepared thorough reports on the various activities and the overall situation of the network. The Federation organized several extensive meetings and seminars for senior staff and administrations to review these reports and various policy statements, but little changed as a result of these meetings; (c) When the progress was highly satisfactory in the early years of the project, the Federation prepared even more accelerated expansion plans, not taking into account the full implications on the resulting costs and requirements placed on the human capacity; and (d) The need to develop competence of the manpower through training and experience was partially ignored; the first comprehensive training plan was prepared only during the fourth year of the project. 5.4 Costs andfinancing: At appraisal, the project costs were estimated at US$15.1 million equivalent. One-third of the project costs were to be paid by the benefiting organizations themselves. The rest was divided among IDA (US$3.8 million equivalent), CFD, SDC, FAC, IFAD and EU (US$6.2 million). However, the European Union infonned project administration already before project effectiveness that it would be unable to provide the part allocated to it, US$200,000 equivalent. At completion, the total project costs were estimated at US$13.5 million, but the estimation may not be accurate because information was not available from all the partners. IDA credit was fully disbursed: only about SDR 7,000 remained in the credit account, amounting to US$ 10,000 on the basis of the SDR-dollar exchange rate, which varied during the project period. Other agencies' contributions, except that by the French ADF, were also essentially exhausted before the end of the project. The World Bank's disbursement record indicates that the amounts withdrawn for the different components were within the limits reserved for them. - 10 - 6. Sustainability 6.1 Rationale for sustainability rating: The movement has to be, and it is, aware of the necessity to improve the financial position of most of its units. The "Subsidy Dependence Index," if calculated for the entire network at the level of lending as it was at the end of 1999, is 79 percent, that is, more than 20 percent of the expenses need to be covered by outside resources to make the network profitable. While the liquidity is good and all CLCAM lending can be financed from internal resources, the repayment rates have declined to an overall level of 84 percent. Along the declining repayment rates and because of stopping the lending activity in all CLCAMs where the repayment rate is less than 90 percent the profitability of most of the CLCAMs has become negative. (Many of the CLCAMs still show surpluses, but only because they can include in their income the recovered amounts of overdue loans, against which they have earlier made provisions in the income and expenditure statements). Following the February 2000 supervision mission of the World Bank, the elected officials were relieved of control in 52 CLCAMs (54 percent), of which 44 were placed under FECECAM's direct supervision. At the completion of the project, no donor agency participating in its financing has committed itself to give further assistance. A new entrant is the Canadian Desjardin movement, which helped FECECAM to prepare a Plan de Redressment. It will probably provide some technical assistance to help implement the plan. FECECAM has already started to take the actions that the Desjardin plan recommends (and those spelled out by its own recovery plan in January 2000), but the survival of the local CLCAMs in difficulties will depend on how well they can recover their overdue loans and return to active lending at a level that provides enough income to cover expenses. The FECECAM/Desjardin plan responds to the problems identified. However, the amount of effort, imagination and flexibility required, as itemized in the report, are very demanding in relation to the quantity and quality of resources that are likely to be mobilized. Likewise, more time than anticipated by planners may be required to obtain sufficient consensus in the cooperative manner to permit the plan to move ahead smoothly. Even with reasonable success in implementing the plan, it not likely that the reorganized system will be functioning effectively by May 2003, the target date, but rather two years later. 6.2 Transition arrangement to regular operations: Operationally, the FECECAM network is already carrying out regular functions of providing financial services, and the project has supported these to facilitate controlled expansion and improvement of activities. The policies, manuals, procedures, practices, and monitoring systems in use provide a good basis for operating the network efficiently, provided that the financial position of most of the units can be improved. - 11 - 7. Bank and Borrower Performance Bank 7.1 Lending: The Bank's performance in project identification is rated as satisfactory. The Bank's staff was convinced that the Government was committed to carrying on with its enabling policies in the subsector and to allowing the network to develop as a private sector activity. The project was clearly an important part of the Government's strategy to revive the financial sector, after its collapse three years previously, and to restructure the rural financial intermediaries. The project also coincided with the Bank's strategy to support financial intermediation in the rural sector through private local initiatives based on mutualist principles. The Bank believed that the Benin example could be used to benefit several other countries in the region. In practice, numerous African countries have sent and continue to send their rural finance staff to learn about the FECECAM experience. The project was designed to meet the needs that still remained after the first project (and a short pilot program before that). Although the first project was not fully completed, enough experience was gained to plan a follow-on project. During the preparation phase, the planners were careful not to rush into a large-scale expansion, but tried to keep the project, and the network that it supported, as simple as possible, partly because of fears that implementation capacity would be inadequate. The Bank staff supervising the first project participated in the preparation of the second project. IDA had less input in the appraisal than usually: the only Bank employee was the team leader, a financial analyst. However, the appraisal was carried out with substantial representation of the potential co-financiers. The skill mix among the consultants paid for by the co-financiers, which included agricultural credit specialists, was appropriate to meet the requirements of the project. The preparation and appraisal teams failed to foresee the tremendous potential and need for fmancial services that existed in the country, and their original projections were soon surpassed. More specific project implementation indicators might have better prepared the network to meet the future requirements, for instance, by reserving more funds for training, or by recognizing the need for internal surplus formation to cover the network's expansion. It should be noted, however, that the Bank's requirement for detailed logical frameworks had not been issued at the time of the appraisal of this project. 7.2 Supervision: Supervision of the project is rated as satisfactory. The bank carried out one or two supervision missions (implementation support missions) per year; this number was adequate, considering that the bilateral agencies sent their own auditors and special teams separately to review the accounts and activities of the network. The Bank may be faulted to some degree for its selection of the task managers for the first two years (during the period of supervision, the first one was an agricultural economist, with some experience in agricultural credit), and the skill mix of the supervision missions (the financial specialization was provided by others than Bank-employed staff). The second task manager had direct banking background and the last task manager, an Agricultural Economist, had also banking education and experience in rural credit schemes. In - 12 - addition to his experience, he was supported by staff and consultants with financial analysis and accounting experience. The reports of the supervision missions reflected their thorough work, and the aide-memoires provided detailed advice for improving the performance and correcting the shortcomings. In retrospect, however, most of the early reports were inconsistent in one aspect. They issued early warnings about the need to advance in a prudent and well-planned manner, but at the same time they largely concentrated on evaluating the FECECAM performance on the basis of development indicators and praised the network's great achievements in increasing its size, deposits, loans, and customers. In the atmosphere of great expectations, FECECAM staff and administration may have thought that meeting the outreach and other social targets, introduced later in the project life following the new trends at the Bank, was more important than improving the financial viability of the network perhaps encouraging them to prepare their very ambitious 5-year expansion plan in 1997. A year later, the midterm review emphasized the need to work out a consolidation plan, but it took more than a year for FECECAM to realize that its 5-year plan had to be shelved. Separate teams of co-financiers, particularly the auditors paid by Swiss assistance, were ahead of the Bank teams in presenting their "doomsday warnings." The co-financiers joined the Bank in taking initiative to arranging a common approach to tackle the problems and even to involve the Ministry of Finance in the discussions. More clearly than earlier, the last two supervision missions by Bank staff alerted very clearly the FECECAM and the Government to the worsening situation. 7.3 Overall Bank-performance: The overall Bank perfornance is rated as satisfactory. The project (and its predecessor) were among the first attempts by the Bank to rehabilitate a rural finance institution, and thus it provided much valuable information for the rural finance sector even outside the country, because several studies were published on the FECECAM network. The project was well prepared, and it met the Government's and the Bank's policy objectives. During the supervision phase, the Bank provided appropriate advice, but was perhaps a little too slow to rein in local euphoria about the prospects and warn against too fast an expansion. Had the operational budgets for the project been larger, the skill-mix shortcomings mentioned earlier would probably have been avoided. Borrower 7.4 Preparation: The Government's performance in project preparation is rated as satisfactory. The Government began the preparation process early in the predecessor project, and it succeeded in engaging several assistance agencies to finance the necessary studies and plans for the follow-on project, as well as commit funds for financing the project. Satisfied with the preliminary results drawn from the first project, the Government followed the same policies that had been established originally for the rehabilitation exercise, showing its commnitment especially to the policy of noninterference and allowing it to be a private sector activity, although Government-borrowed funds were used to pay for a part of the project costs. 7.5 Government implementation performance: The Government's implementation performance is rated as satisfactory, although at the closing of the project, it is unclear whether the FECECAM network is approaching the financial near self-sufficient that was expected at appraisal. The Government kept its conmmitment to remain at - 13 - a distance from the rural finance sector, monitoring its activities through reports. Only during the last year of the project, when alerted by the financiers, did the Government express concern about the state of affairs. There were delays in project effectiveness, but the Government eventually complied with all the project covenants. A problem during project implementation was the Government's failure to organize meetings of the Coordination Committee as often as agreed. In the near future, the Government may need to use its legal powers to take firm action in the cases of CLCAMs whose capital base has eroded. 7.6 Implementing Agency: The overall performance of the implementing agency, FECECAM, in implementing the project is rated as satisfactory. The assessment is based on the following considerations: Most of the project funds have been disbursed, and they have been used for the intended purposes. All components are functional, and the units that have been established or strengthened are providing the planned services, despite financial problems. Procurement under the project has taken place according to the Bank guidelines, and audits, annual work plans, and periodic reports have been delivered generally according to the agreements. Legal covenants have been respected, except for some of the financial agreements presented in the minutes of Negotiations. Implementation of the different components has exceeded the outputs projected at appraisaL There are three main shortcomings attributable to the Federation: the unrealistic enthusiasm for expanding the outreach of the network, the inability to make difficult decisions quickly enough to avoid major problems, and the inability to countermand the negative influence of the local politicians in the cases of loan defaults. None of these problems are really related to the project, although the project has facilitated the growth of the network. They all stem from the nature of the cooperative organizations. Each field unit, in the case of Benin, the CLCAMs, is legally independent from the regional unions or the national federation (in practice, CLCAMs depend to some extent on higher-level organs because of the vertical services established and related agreements made). The highest decision makers are members and their representatives, and the executives and staff are expected to follow their directives, even when they conflict with their better judgment. The decision making process is slow and encumbered by political and social considerations. Appropriate delegation of some powers to executives, or mutually agreed transfer of some decision making to higher organs in the vertical structure, which is now being attempted by the Federation, would speed up decisions and make them more professional. 7.7 Overall Borrower performance: In view of the achievements of the network and the substantial impact it is estimated to have had (to be confirmed after a couple of years), the overall performance of the Borrower is rated as satisfactory. This rating is accompanied by a caution that the plans to irnprove the financial performance of the weaker units in the network will be implemented as planned. 8. Lessons Learned The major lessons that have emerged from the implementation of the project are as follows: (a) A follow-on project benefits from the experience gained and policies and practices developed during the predecessor project (which in this case could be considered as an extended - 14 - pilot phase). However, because a pilot prciject will not provide all the lessons needed and because circumstances change, the design of the follow-on project must be flexible enough to allow for corrective actions (such as the change in lending rules - see below). It should also be noted that crisis situations must be expected, and an organization is mature only after it has survived a major crisis, and done so largely through its own actions; (b) External pressure should not be allowed to influence the intemal decisions, or even the best plans fail. The project was well planned and the policies and practices designed by the planners and approved by decision makers were of state-of-the-art quality at the time of appraisal. The problems that arose came essentially from outside of the project. First, local politicians denigrated the need to repay loans promptly, thereby encouraging some people up in the line of authority ("bigger" people) to ignore their commitment to repay and creating a bad example for others--who followed the example in increasing numbers. Then, because of its early success, the FECECAM network was pressured to take extemal loans in order to finance members' needs and to expand lending to new client groups.; in both cases, the social "pressure" to repay rapidly declined. (c) Early success in project implementation can foster unrealistic expectations and expansion of objectives, especially if there is political pressure for quickly delivering the services or output expected from the project. This was the case in Benin, where all the projections with regard to membership, savings, and loans of the organization supported by the project--the cooperative credit and savings societies network--were exceeded in the early years of project implementation. Accelerating implementation requires a relatively strong coordination unit whose staff must be increased as the number of implementation agencies and field operations expand. Good communications and computerization of the monitoring system help, but they will not fully eliminate the need to recruit more staff to provide guidance and training to new staff and units. If the need for these resources is not carefully analyzed, new units and services may be started at a pace that exceeds that capacity of the human and financial resources available for the organization; (d) When building up a logical frame and key monitoring indicators, emphasis should be on choosing performance criteria that deal with risk in a more holistic manner than what the case has often been in the past. Useful quantitative objectives should focus on annual profit or surplus and on the capital required to ensure liquidity throughout periods of difficulty that may reasonably be expected to occur. Focus on achieving an annual profit means that pricing has to be adjusted, and costs have to be controlled, to overcome setbacks. For example, lower repayment rates probably require higher interest rates on loans. Attention to own capital (fonds propres) is a logical extension of concern for profits, which allow capital to be augmented. Capital, to the extent it is represented by reasonably liquid assets, provides protection for deposits. (On a positive note, the FECECAM network as a whole still reported a positive capital ratio in 1999. (e) Careful consideration must be accorded to the short and long-term implications of each rule and regulation given to the participating units. A condition given to the local credit and savings cooperatives for their participation in the program in Benin was that any society that fails to recover 90 percent of loans more than 90 days overdue, is not allowed to provide new loans - 15 - before it again reaches this recovery level. This rule was meant to provide discipline to the customers, but it can also have the salutary effect of creating more liquidity when recoveries lag. However, when loans with interest rates are replaced by cash with no interest rate or bank deposits with low rates, the interest income of the cooperative declines, often dramatically. (For instance, during 1999 FECECAM liquidity increased from CFA 4.5 billion to CFA 11.8 billion, while loans declined from CFA 16.8 billion to CFA 9.9 billion. This decline was accompanied by a decline in interest and commnission income from CFA 3.08 billion to CFA 2.88 billion. Deposits remained virtually constant at approximately CFA 18.9 billion.) As a result, the necessary recoveries will be made over time, but meanwhile, the cooperative has lost plenty of dearly needed income. The fatal flaw of the 90 percent rule is that it fails to distinguish between good payers and the poor ones, at the same time as it undermines the financial viability of the lending agency. The key to success of a lending agency is responding to the legitimate wishes of members who repay on time and to those whose good intentions are made clear, possibly by making frequent partial payments. Their patronage is the lifeblood of the cooperative and has to be encouraged and preserved. The good payers are tempted to become poor payers as their prospects of getting new loans diminish with decline in recoveries toward and beyond the 90 percent level. Thus, while the rule may be defended at an early stage of rehabilitating a rural finance network because it offers an easy way of monitoring the credit discipline, it should be abolished or substantially lowered when more experience is gained about the creditworthiness of borrowing individuals and groups. 9. Partner Comments (a) Borrower/implementing agency: Summary of Borrower's ICR The report by the Government of Benin (prepared by FECECAM) highlights the achievements of the project and draws important lessons. The report is summarized in the following (the full report in French, along with a more extensive English summary, is in the project files). The objectives of the project were met as follows: Objective 1: Founding of a Federation and transforming the earlier project management unit into a Technical Secretariat that will provide leadership, orientation, consolidations, and financial inspection for the network of CLCAMs. Achievement: The Federation, FECECAM-BENIN, was created in July 1993 and it has assumed the tasks that were assigned to it. Objective 2: Converting the URCLCAMs to service and supervision units as well as reinforcing their service capacities toward the CLCAMs in accounting and financial management. Achievement: URCLCAMs have been converted and they provide the services expected from them. Objective 3: Training the staff and promoting a mutualist (cooperative) network at all levels. Achievements: Staff and committee members have been trained at all levels and the expansion of the network has exceeded original plans. - 16 - Through the new organizational setup that had been developed, the FECECAM undertook to carry out important activities to manage the progress of the network, including: - Cleansing" and reorganizing the accounting function so that it will ensure a reliable system of accounting and management information, using computers; - Consolidating the operations of local CLCAMs and adding services such as lending to women groups, involving women in the activities of the network, diversifying credit services with new types of products, and extending the network services to new clientele besides farmers; and - Strengthening the competence of the staff, committee members, and ordinary members in banking activities through extensive training. These efforts were supported by operational research aimed at creating new financial savings and credit products that would answer better to the needs of the people. The achievements that have been reached have been substantial, and have far exceeded expectations that were established at appraisal. The main indicators of the progress for the 7-year period from September 30, 1993 to September 30, 2000 are as follows: The membership served by CLCAMs has increased from 50,891 to 298,461. This growth represents an overall increase of 486 percent, or an annual average increase of 69 percent, against 11.5 percent foreseen at appraisal: - The total number of savings accounts in 2000 is 375,752 (including accounts by non-members). This indicates that the network has a penetration rate of approximately 10 percent of the active population of the country. For the agricultural population alone, the penetration rate is around 18 percent in 2000, against 6 percent in 1993. Other financial enterprises do not come even close to FECECAM's penetration level; - The amount of deposits collected by the network has increased from FCFA 4.19 billion in 1993 to FCFA 21.17 billion in 2000. This is an increase of 405 percent in seven years. The average annual rate of increase was 58 percent, against 10 to 15 percent projected at appraisal; - Lending has risen from FCFA 1.53 billion in 1993 to FCFA 8.97 billions in 2000. This is an increase of 486 percent in seven years. The average annual rate of increase equals to 69 percent, against 20 percent foreseen at appraisal. The amount of total lending reached FCFA 16.58 billion in December 1998, before lending had to be curbed due to increasing overdues; and - The project has been managed by a local team, comprising salaried staff and elected officials (members of the CLCAMs). The limited expatriate support provided under the project ended in 1996. - 17 - Problems and recovery plans. During the last two years, the network has experienced gradually increasing problems of delinquencies in repayment of credits (rising from 5 percent in 1997 to 30 percent in 2000), and along with it, a weakening economy for most of the units in the network. That deterioration of the portfolio's quality is the result of many factors, among which the most important are the failure of the CLCAM managements to control the increasing credit volume, the raising of the individual credit limit from FCFA 500,000 to FCFA 1,000,000 in 1997, and the downswing in farm production (especially cotton production and pig industry), which has made it difficult for some farmers to pay their debts on time. Some corrective actions have already been implemented, including a revision of management mles and conditions for access to credit, as well as suspending the granting loans by the CLCAMs that have high overdues. The results of these initial actions have been a stabilization of the level of unpaid loans and improved collection of old loans. An extensive set of other activities aimed at improving the operations and financial situation of the network have been designed with the help of Desjardin, a large Canadian association for savings and credit cooperatives. However, the dependency on outside funding of the activities is prevalent, and the network will not be able to achieve financial autonomy soon after the project period as was projected at appraisal. Despite the losses made during the past 2 to 3 years, the capital owned by the network is still positive due to the reservations made for bad debts during earlier years. Performance by the Bank and Borrower. The financial contribution of the World Bank and other donor agencies has permitted the network to have necessaries resources for procuring equipment and services to facilitate development of the different units in the network. Moreover, the supervision missions have helped the network identify its weaknesses and risks and orient the management toward decisions to improve the situation. The State bodies, primarily the Ministry of Finances and the Ministry of Rural Development, have brought permanent support when necessary. More importantly, the State has given management autonomy to the network. This has permitted the development of new initiatives. A special mention goes to the local administrative authorities, security forces, and rural development agents for helping the network mobilize actions to inform the population and collect overdue loans. Main lessons learned by project authorities are the following: (a) An unsatisfied need for saving and credit services exists in the rural environment, but also the peri-urban areas have a big need for these services. However, financial services in these areas were a new environment for the FECECAM network, offering opportunities but also risks, and the network did not have sufficient prior experience to be able to control the credit operations in the peri-urban areas; (b) Application of the mutualist (cooperative) philosophy, with members and their representatives being in charge and the employees working for them, can create difficulties in situations when profitability of operations should be given a high priority; - 18 - (c) Concentration of the portfolio in one or a few activities carries a big risk of destabilization when things go wrong (an example was the financing cotton farmers at the times when a crisis was developing in this industry), and it would be important to diversify the risks; (d) The financial situation of a microfinance institution, although originally satisfactory, can deteriorate very quickly, endangering the sustainability of the institution; (e) Credit lines (funds from outside agencies) must be managed carefully and with strictness. If a finance institution deals with them leniently or uses concessional terms, they present a large element of risk; (f) High level of control, including regular inspections and determined action in situations when the rules have been ignored, must be maintained to ensure the soundness of the activities of a financial institution; (g) If problems appear, they must be detected early and corrective measures started with vigor; (h) Even in cooperative organizations, profitability must be one of the objectives; and (i) Professionalization" of management (through training, experience, authorization, and delegation) must be accepted when the activities are developing fast and are on a large scale. (b) Cofinanciers: Comments by the financing partners: Funding of the project by AFD (Agence Francaise de Developpement) and the French Assistance and Cooperating Agency (FAC)--two major co-financing partners for IDA--ended in December 1999. The funds for the project reserved by FAC were essentially exhausted, but nearly half of the funds of AFD were canceled. Although AFD and the Federation differed about how to use of the rest of the funds, the chief reason for the cancellation was the delays in beginning the project; AFD's policies simply did not allow any more extensions. Both agencies have been well informed about the highlights and problems of the project. Besides participating in IDA supervision missions, they have financed their own teams, essentially auditors, to carry out regular reviews. The project was originally designed within the framework of the policy and strategy in regard to the assistance by these institutions in Benin, and it remained so throughout its implementation. In general, both agencies appreciate the role that the FECECAM network plays in rural development, and they are satisfied that the investments they have financed have been well placed in the sector. In monitoring the project, these agencies made several observations similar to those summarized in this report under the heading Lessons Learned. In addition, they blamed some of the difficulties of the network on its departure from providing services only to smallholder farmers, and it expansion to towns and occupations outside the agricultural sector, where the network found unexpected competition for good clients (leaving the network with clients who lacked creditworthiness). Also, both agencies emphasized that it was very unwise for FECECAM to continue its expansion policy at the time when the operations - 19 - needed to be consolidated. The Swiss development agency, SDC, was a keen contributor to the project, primarily for the development of human resources, but also to help build office premises in selected places. Despite SDC's appreciation of the role of the FECECAM structure in the rural milieu, SDC had joined the other financiers in 1998 in expressing its concern about the future of the network and in urging consolidation rather than expansion. The SDC believed that the problems of the network had four causes: (a) a salary policy that prevented the network from retaining good and well-trained staff (however, reduction of the financially unbearable salaries had been one of the pillars of the rehabilitation plan and had been approved by SDC at the start of the project); (b) inadequate respect for the first secretary general of the Federation and his views by the administrative bodies (which induced him to leave the organization during the third project year); (c) external lines of credit "pushed" into the network; and (d) excessive optimism on the part of the FECECAM network about the financial future of the setup (the network ignored the viewpoints presented by the Swiss auditors). None of the three agencies will consider further assistance to the FECECAM network, because all believe that the period of their assistance has been long enough to pernit FECECAM become self-sustaining. IFAD's program, essentially assistance for women's groups, was a separate program loosely included under the concept of this project. IFAD itself is expected to evaluate it. (c) Other partners (NGOs/private sector): NIA 10. Additional Information (None) - 20 - Annex 1. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: lndlcatoriMatrix Projected in last PSR Actual/Latest Estimate Units in the Cooperative Savings and Credit structure: Federation 1 1 Regional Unions 6 7 CLCAMs 48 96 CLVEVs 0 59 Membership growth annually (%) 15 69 Membership (51,000 in 1993) 125,000 298,000 Output Indicators: lndlcatorfMatrix Projected in last PSR Actual/Latest Estinate Performance Indicators: Savings growth (%) 15 58 Savings (FCFA 8) 7.7 21.2 Average savings/deposits per client 55 70 (FCFA1000) Loans Growth annually (%) 15 - 25 69 Loans (FCFA B) 3.5 8.9 Loans/savings rato (%) 50 42 Extemal loans (max. %) 30 Loan Recovery ratio (%) / 96 70 Interest rate loans/savings (%) 300 Annual reduction of Regional Union losses 15 - 20 (%) Adm. Costs/Network's profits (%) 80 End of project Calculated as 100 % minus overdue percentage of total loans. The amount was FCFA 16.5 billion in 1999, but has been reduced due to recovery problems (loans/savings ratio was about 80%). Note: NA = Not available 1/ Collected from text and Annexes of SAR, and frorn the Subsidiary Credit Agreement. The original amounts were for 1998; here the projections are extrapolated to the year 2000. - 21 - Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) ProjectCoistBy Component : US$million US million Support to CLCAMs 3.90 3.60 92.3 Support to URCLCAMs 3.10 2.80 90.3 Support to CPU/Federation 8.10 7.60 93.82 Total Baseline Cost 15.10 14.00 Total Project Costs 15.10 14.00 Total Financing Required 15.10 14.00 Project Costs by Procuremen Arrangements (Appraisal Estimate) (US$ million equivalent) Expendlture Category 1GB NCB Total Cost 1. Works 0.00 0.00 0.00 0.40 0.40 (0.00) (0.00) (0.00) (0.00) (0.00) 2. Goods 0.00 0.00 0.00 1.20 1.20 (0.00) (0.00) (0.00) (0.00) (0.00) 3. Services 0.00 0.00 0.00 3.30 3.30 (0.00) (0.00) (0.00) (0.00) (0.00) 4. Miscellaneous 0.20 0.20 6.30 0.00 6.70 (0.20) (0.20) (3.40) (0.00) (3.80) 5. Miscellaneous 0.00 0.00 0.00 3.20 3.20 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.30 0.30 (0.00) (0.00) (0.00) (0.00) (0.00) Total 0.20 0.20 6.30 8.40 15.10 (0.20) (0.20) (3.40) (0.00) (3.80) - 22 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million eauivalent) Procurement Method? Expenditure Category ICa NCB Other N.B.F. Total Cost 1. Works 0.00 0.00 0.00 0.40 0.40 (0.00) 0(0.00 (0.00) 2. Goods 0.00 1.00 0.00 0.00 1.00 (0.00) (0.20) (0.00) (0.00) (0.20) 3. Services 0.00 0.10 0.00 3.10 3.20 (0.00) (0.00) (0.00) (0.00) (0.00) 4. Miscellaneous 0.00 0.60 3.70 1.90 6.20 (0.00) (0.20) (3.40) (0.00) (3.60) 5. Miscellaneous 0.00 0.00 0.20 2.70 2.90 (0.00) (0.00) (0.00) (0.00) (0.00) 6. Miscellaneous 0.00 0.00 0.00 0.30 0.30 (0.00) (0.00) (0.00) (0.00) (0.00 Total 0.00 1.70 3.90 8.40 14.00 (0.00) (0.40) 3.40) ( )0.00 (3.80) 'S Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 21Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local govemment units. Project Financing by Component (in USS million equivalent) Percentage of Appraisal Component Appraisal Estimate ActualiLatest Estimate l -~~~~~~~Bank Govt. Co F. Bank Govt. Co F. IDnA Govt._ COF. CLCAM 0.00 0.00 1.30 0.00 0 76 Compenent URCLCAM 0.70 0.00 . 0 .60 0.70 0.30 100.0 0.0 50.0 Component Federation 3.10 0.00 .4.30 3.10 0.00 3.80 100.0 ... 0.0 88.4 Component Total 3.80 0.00 6.20 3.80 0.00 5.10 100.0 0.0 82.3. Note: Figures in parenthesis are the amounts to be financed by an IDA credit. All costs include contingencies. - 23 - Annex 3. Economic Costs and Benefits The project was designed to be a tool for institution building and the project interventions in revenue-creating activities of the final beneficiaries could not be evaluated, and no economic analysis was prepared at appraisal. Correspondingly, no economic analysis was attempted at the completion of the project. Similarly, no overall financial rate of return was calculated at appraisal or for the ICR. However, examples of other projects intended to finance numerous small investments in agriculture indicate that such small projects can be financially profitable in Benin. The computations under the recently completed Community-Base Food Security Project in Benin (PILSA) showed positive annual returns from 20 percent to more than 50 percent on the investments made. (Because the investment period was less than a year in each case, and the incomes exceeded the investments during the first year, no financial rate of return could be computed-see Annex 3 in the ICR of PILSA) - 24- Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, I FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 5/92 Appraisal/Negotiation 5/92 6 FA, RFS (2), EC, AG (representing IDA, IFAD, and Swiss and French agencies) 6-7/1992 1 FA Supervision 12/20/94 1 AE S HS 11/24/95 2 EA, FA (and representatives of HS HS Swiss, French and CFD) 05/15/96 3 FA, 00, AG (and representatives HS HS of French and MICAC) 03/23/97 5 TEM, AG, FA, 00, AE HS HS (04/28/97) 2 (French CFD mission: AC, RFS) 02/20/98 4 FA, AE, 00, AG HS HS Mid-term Review: 05/29/98 5 FA, RFS, AE, ASS, 00, (with HS HS participation of co-financiers) Supervision: 06/09/99 2 FA, AG HS S 02/21/00 5 ASS, RDS, MFS, FA, DS HS U (and Swiss representative) ICR 12/00 3 ASS, FA, RDS S S / In addition, numerous representatives of the co-financing agencies have participated part-time or in the meetings in Cotonou. AG = Agriculturist; AE = Agricultural Economist; ASS = Agricultural Services Specialist; CDS = Community Development Specialist; CF = Co-financier representative; DS = Disbursement Specialist; EC = Economist; FSS Food Security Specialist; IS = Implementation Specialist; MCS = Micro-credit Specialist; MES = Monitoring and Evaluation Specialist; ML = Mission Leader; OA = Operations Analyst; PS =Procurement Specialist; RE = Rural Engineer; RDS = Rural Development Specialist; TEM Technical Manager; TTA = Task Team Assistant; WIAS = Gender Specialist -25 - (b) Staff Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 5.9 18.8 Appraisal/Negotiation 30.9 90.8 Supervision 111.1 258.9 ICR 10.5 30 Total 158.4 425.5 * Includes actual and planned staff weeks. - 26- Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating El Macro policies O H OSUOM O N * NA LI Sector Policies O H OSUOM O N * NA 0 Physical O H O SU O M O N * NA O Financial O H OSUOM O N O NA O Institutional Development 0 H * SU 0 M 0 N 0 NA LII Environmental O H OSUOM O N * NA Social El Poverty Reduction O H OSU*M O N O NA El Gender O H * SU O M O N O NA 1 Other (Please specify) OH OSUOM ON * NA El Private sector development 0 H O SU O M 0 N 0 NA O Public sector management 0 H O SU O M 0 N * NA O Other (Please specify) 0 H 0 SU O M 0 N 0 NA Capacity building - 27 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance Rating E Lending OHS OS OU OHU O Supervision OHS OS OU OHU El Overall OHS OS O U O HU 6.2 Borrowerperformance Rating E Preparation OHS OS O u O HU El Government implementation performance O HS O S 0 U 0 HU O Implementation agency performance OHS OS OU O HU El Overall OHS OS O U O HU - 28 - Annex 7. List of Supporting Documents 1. Development Credit Agreement 1993 2. Staff Appraisal Report 1993 3. Midterm Evaluation Report 1998 4. ICR Mission Report, December 2000 5. Borrower's Project Completion Report - 29 - MA L, NIGUR ALI Ni I G E R I BURKINA FA NIGERIA Coll HAN.' D'IVOIRE r -lRAL CA.EROON 12- NIGERIA BURKINA FASO K- CL A T AA 0 R A ,7 __B 0 R G I -K. IA NAI -Go k-'k W KOU BENIN SECOND RURAL SAVINGS AND LOAN COOPERATIVE REHABILITATION PROJECT Locatioti of URCECAM and CLCAMs Tch_ URCECAM (Unim of RNian.l S-ing and Laan CLCAMs Rocal Smings and Law Cwpemfi) T 0 G 0 K.I.1- P-.d Raa& G-.1 R..d E.,th Rwds R.il-d K.- lnt.,n.ti ... I Ai,p.,f u R-gi ... I AiI,p.rt Ri- SI N.fi-I Capital, P-inm C pitals (i Ditfi.t C. it.1s 10-ti.n.1 Bo..d-i. KILOMETERS .0. N G E R I A 7' Ki- 6 A, 7' tomt w GHANA-!-*--. ght o f Benin e