UZBEKISTAN Irrigation and Drainage Interventions to Support the Agriculture Sector Report No. 134622 MARCH 29, 2019 © 2019 International Bank for Reconstruction This work is a product of the staff of The World RIGHTS AND PERMISSIONS and Development / The World Bank Bank with external contributions. The findings, The material in this work is subject to copyright. 1818 H Street NW interpretations, and conclusions expressed in Because The World Bank encourages Washington DC 20433 this work do not necessarily reflect the views of dissemination of its knowledge, this work may be Telephone: 202-473-1000 The World Bank, its Board of Executive reproduced, in whole or in part, for Internet: www.worldbank.org Directors, or the governments they represent. noncommercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: The World Bank does not guarantee the World Bank. 2019. Uzbekistan—Irrigation and accuracy of the data included in this work. The Any queries on rights and licenses, including Drainage Interventions to Support the boundaries, colors, denominations, and other subsidiary rights, should be addressed to Agriculture Sector. Independent Evaluation information shown on any map in this work do World Bank Publications, The World Bank Group, Project Performance Assessment Report not imply any judgment on the part of The Group, 1818 H Street NW, Washington, DC 134622. Washington, DC: World Bank. World Bank concerning the legal status of any 20433, USA; fax: 202-522-2625; e-mail: territory or the endorsement or acceptance of pubrights@worldbank.org. such boundaries.     Report No.: 134622           PROJECT PERFORMANCE ASSESSMENT REPORT REPUBLIC OF UZBEKISTAN FERGHANA VALLEY WATER RESOURCES MANAGEMENT PROJECT PHASE I (IDA-46480) RURAL ENTERPRISE SUPPORT PROJECT PHASE II (IDA-44330, IDA-51520) March 29, 2019         Financial, Private Sector, and Sustainable Development   Independent Evaluation Group    Currency Equivalents (annual averages) Currency Unit = Uzbek Som  2008      $1.00    Som 1,321  2009      $1.00    Som 1,467  2010      $1.00    Som 1,588  2011      $1.00    Som 1,716  2012      $1.00    Som 1,890  2013      $1.00    Som 2,097  2014      $1.00    Som 2,315  2015      $1.00    Som 2,573  2016      $1.00    Som 2,969  Source: Central Bank of the Republic of Uzbekistan Abbreviations BISA   Basin Irrigation System Authority  BAIS  Basin Administration of Irrigation Systems  CAS   Country Assistance Strategy  CPF  Country Partnership Framework  DID  difference‐in‐differences  EFA  economic and financial analysis  EIRR  economic internal rate of return  FFS  farmer field school  FIRR  financial internal rate of return  FVWRMP‐I Ferghana Valley Water Resources Management Project Phase I  FY  fiscal year  HGAE  Hydrogeology and Ameliorative Expedition (department)  I&D  Irrigation and Drainage  ICB  international competitive bidding  ICR  Implementation Completion and Results Report  ICRR  Implementation Completion and Results Report Review  IDA  International Development Association  IEG  Independent Evaluation Group  ILO  International Labour Organization    ISA   Irrigation Systems Authority  ISF  irrigation service fee  LLC  limited liability company  M&E  monitoring and evaluation  MAWR  Ministry of Agriculture and Water Resources  MFERIT  Ministry of Foreign Economic Relations, Investment, and Trade  NPV  net present value  O&M  operation and maintenance  PAD  project appraisal document  ii PDO  project development objective  PPAR  Project Performance Assessment Report  RESP‐II  Rural Enterprise Support Project Phase II  RRA  Rural Restructuring Agency  SDC  Swiss Agency for Development and Cooperation  SDR  special drawing rights  Som  Uzbek Som  UNDP  United Nations Development Programme  WCA  water consumer association  WIS   Welfare Improvement Strategy    All dollar amounts are U.S. dollars unless otherwise indicated.  Fiscal Year Government:  January 1–December 31  Director-General, Independent Evaluation Ms. Alison Evans Director, Financial, Private Sector, and Sustainable Development Mr. José Carbajo Martinez Manager, Sustainable Development Ms. Midori Makino Task Manager Ms. Alexandra Horst Ms. Ebru Karamete iii Contents Principal Ratings ................................................................................................................................................... viii  Preface .......................................................................................................................................................................... x  Irrigation and Drainage in Uzbekistan..................................................................................................................... xi  Project Performance Assessment Report Objectives ......................................................................................... xii  FERGHANA VALLEY WATER RESOURCES MANAGEMENT PROJECT PHASE I.............................. xii  Project Performance and Ratings ............................................................................................................................ xii  Lessons ........................................................................................................................................................................... xiii  RURAL ENTERPRISE SUPPORT PROJECT PHASE II ................................................................................ xiv  Project Performance and Ratings ............................................................................................................... xiv  Lessons ...........................................................................................................................................................................xiv  1. Background and Context ..................................................................................................................................1  Agriculture Sector ........................................................................................................................................................... 1  Water Resources, Irrigation, and Drainage ............................................................................................................ 2  Role of the World Bank................................................................................................................................................ 4  2. Ferghana Valley Water Resources Management Project Phase I......................................................5  Relevance of the Objectives and Design .....................................................................................................5  Financial Management and Procurement ............................................................................................................. 11  Safeguards Compliance .............................................................................................................................................. 11  Achievement of the Objectives ..................................................................................................................... 12  Ratings ................................................................................................................................................................. 20  3. Rural Enterprise Support Project Phase II ............................................................................................... 25  Relevance of the Objectives and Design .................................................................................................. 26  Objectives ...................................................................................................................................................................... 26  Relevance of the Objectives ..................................................................................................................................... 26  Relevance of Design ................................................................................................................................................... 27  Monitoring and Evaluation ....................................................................................................................................... 29  Implementation Experience .......................................................................................................................................31  Financial Management and Procurement ............................................................................................................ 32  Safeguards Compliance ............................................................................................................................................. 33  Achievement of the Objectives .................................................................................................................... 33  v Efficiency.............................................................................................................................................................. 43  Ratings ................................................................................................................................................................. 46  Outcome ........................................................................................................................................................................ 46  Risk to the Development Outcome........................................................................................................................ 46  Bank Performance ....................................................................................................................................................... 48  Borrower Performance ............................................................................................................................................... 49  Lessons RESP-II ................................................................................................................................................. 50  4. Comparison of FVWRMP-I and RESP-II in WCA Capacity Building ............................................... 51  5. Common Lessons ............................................................................................................................................. 53  Bibliography ............................................................................................................................................................ 56  Box Box 2.1. Summary of the Efficacy of WCA Capacity-Building Activities by the Project’s Impact Evaluation ............................................................................................................................................. 14  Tables Table 2.1. Crop Productivity in Project Districts by Farm Type ................................................................. 16  Table 2.2. Total Annual Crop Production in Project Districts.................................................................... 17  Table 2.3. Average Groundwater Levels in Project Districts (2011-2017) ............................................... 18  Table 2.4. Average Mineralization Levels in Project Districts (2011–17) ................................................. 18  Table 2.5. Soil Salinity Levels in Project Districts ........................................................................................... 19  Table 3.1. RESP-II Efficiency Measures ............................................................................................................. 44 Appendixes Appendix A. Basic Data Sheet .......................................................................................................................... 59  Appendix B. Fieldwork Methodology ............................................................................................................ 64  Appendix C. List of Persons Met ..................................................................................................................... 72  Appendix D. Outputs ........................................................................................................................................... 76  Appendix E. Site Visits and Asset Verification ............................................................................................ 85  vi This report was prepared by Alexandra Horst and Ebru Karamete, who assessed the project  in November 2018 with assistance from Ahmad Hamidov and Bakhodir Kuziyev. The report  was peer reviewed by Bernhard Tischbein and panel reviewed by Jack W. van Holst  Pellekaan. Romayne Pereira provided administrative support.  vii Principal Ratings Ferghana Valley Water Resources Management Project Phase I Indicator ICR* ICR Review PPAR Outcome Moderately satisfactory  Moderately satisfactory  Moderately satisfactory  Risk to development Modest  Modest  Substantial  outcome Bank performance Moderately satisfactory  Moderately satisfactory  Moderately satisfactory  Borrower performance Moderately satisfactory  Moderately satisfactory  Moderately satisfactory  Note: The Implementation Completion and Results Report (ICR) is a self-evaluation by the responsible Global Practice. The ICR Review is an intermediate Independent Evaluation Group product that seeks to independently validate the findings of the ICR. PPAR = Project Performance Assessment Report. Rural Enterprise Support Project Phase II Indicator ICR ICR Review PPAR Outcome Moderately satisfactory  Moderately satisfactory  Moderately satisfactory  Risk to development Moderate  Moderate  Moderate  outcome Bank performance Moderately satisfactory  Moderately satisfactory  Moderately satisfactory  Borrower performance Moderately satisfactory  Moderately satisfactory  Moderately satisfactory  Note: ICR = Implementation Completion and Results Report; PPAR = Project Performance Assessment Report. Key Staff Responsible Ferghana Valley Water Resources Management Project Phase I Management Appraisal Completion Project team leader Mahwash Wasiq  IJsbrand Harko de Jong  Sector manager or practice manager Peter D. Thomson  Michael Haney  Sector director or senior Global Practice   Jennifer J. Sara  director Country Director Motoo Konishi  Lilia Burunciuc  Rural Enterprise Support Project Phase II Management Appraisal Completion Project Team Leader Dilshod Khidirov  Dilshod Khidirov  Sector Manager or Practice Manager Holger A. Kray  Julian A. Lampietti  Sector Director or Senior Global Practice   Juergen Voegele  Director Country Director Annette Dixon  Lilia Burunciuc  viii   IEG Mission: Improving World Bank Group development results through excellence in independent evaluation. About This Report The Independent Evaluation Group (IEG) assesses the programs and activities of the World Bank for two purposes: first, to ensure the integrity of the World Bank’s self-evaluation process and to verify that the World Bank’s work is producing the expected results, and second, to help develop improved directions, policies, and procedures through the dissemination of lessons drawn from experience. As part of this work, IEG annually assesses 20–25 percent of the World Bank’s lending operations through fieldwork. In selecting operations for assessment, preference is given to those that are innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which Executive Directors or World Bank management have requested assessments; and those that are likely to generate important lessons. To prepare a Project Performance Assessment Report (PPAR), IEG staff examine project files and other documents, visit the borrowing country to discuss the operation with the government, and other in-country stakeholders, interview World Bank staff and other donor agency staff both at headquarters and in local offices as appropriate, and apply other evaluative methods as needed. Each PPAR is subject to technical peer review, internal IEG panel review, and management approval. Once cleared internally, the PPAR is commented on by the responsible World Bank Country Management Unit. The PPAR is also sent to the borrower for review. IEG incorporates both World Bank and borrower comments as appropriate, and the borrowers’ comments are attached to the document that is sent to the World Bank’s Board of Executive Directors. After an assessment report has been sent to the Board, it is disclosed to the public. About the IEG Rating System for Public Sector Evaluations IEG’s use of multiple evaluation methods offers both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or sectoral approach. IEG evaluators all apply the same basic method to arrive at their project ratings. Following is the definition and rating scale used for each evaluation criterion (additional information is available on the IEG website: http://ieg.worldbankgroup.org). Outcome: The extent to which the operation’s major relevant objectives were achieved, or are expected to be achieved, efficiently. The rating has three dimensions: relevance, efficacy, and efficiency. Relevance includes relevance of objectives and relevance of design. Relevance of objectives is the extent to which the project’s objectives are consistent with the country’s current development priorities and with current World Bank country and sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, country assistance strategies, sector strategy papers, and operational policies). Relevance of design is the extent to which the project’s design is consistent with the stated objectives. Efficacy is the extent to which the project’s objectives were achieved, or are expected to be achieved, taking into account their relative importance. Efficiency is the extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of capital and benefits at least cost compared with alternatives. The efficiency dimension is not applied to development policy operations, which provide general budget support. Possible ratings for outcome: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, highly unsatisfactory. Risk to development outcome: The risk, at the time of evaluation, that development outcomes (or expected outcomes) will not be maintained (or realized). Possible ratings for risk to development outcome: high, significant, moderate, negligible to low, and not evaluable. Bank performance: The extent to which services provided by the World Bank ensured quality at entry of the operation and supported effective implementation through appropriate supervision (including ensuring adequate transition arrangements for regular operation of supported activities after loan or credit closing, toward the achievement of development outcomes). The rating has two dimensions: quality at entry and quality of supervision. Possible ratings for Bank performance: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, and highly unsatisfactory. Borrower performance: The extent to which the borrower (including the government and implementing agency or agencies) ensured quality of preparation and implementation, and complied with covenants and agreements, toward the achievement of development outcomes. The rating has two dimensions: government performance and implementing agency(ies) performance. Possible ratings for borrower performance: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, and highly unsatisfactory. ix   Preface This is a Project Performance Assessment Report (PPAR) by the Independent Evaluation Group  (IEG) of the World Bank Group on the Ferghana Valley Water Resources Management Project  Phase I (P110538) and the Uzbekistan Rural Enterprise Support Project Phase II (P109126) in the  Republic of Uzbekistan.   The Ferghana Valley Water Resources Management Project Phase I was approved on September  24, 2009 for a cost of $81.9 million supported by a World Bank credit of $65.6 million. The  project cost at completion was $49 million, of which the World Bank financed $48.8 million. The  project closed on December 31, 2016, six months later than the at‐appraisal closing date.   The Uzbekistan Rural Enterprise Support Project Phase II was approved on June 12, 2008 for a  cost of $75.03 million, supported by a World Bank credit of $67.9 million. Additional financing  of $40 million was approved in September 2012. The total project cost at completion was  $110.5 million, of which the World Bank financed $96.86 million. The project closed on  December 31, 2016, 21 months later than the at‐appraisal closing date because of the additional  financing extension.  This PPAR provides insights into how these two projects identified and addressed critical  irrigation sector needs to improve the country’s irrigation and drainage systems and  institutions, both at on‐farm and inter‐farm levels. The assessment pays special attention to the  effectiveness and sustainability of capacity‐building support provided to water consumer  associations in both projects. Based on such assessment, the PPAR draws common lessons  regarding the design and implementation of both projects, which were led by two separate  World Bank Global Practices: Water, and Agriculture. The lessons from this PPAR feed into  IEG’s forthcoming Evaluation on Strengthening Irrigation Management Models for Sustainable  Service Delivery.  The assessment is based on relevant documentation, interviews with World Bank staff at  headquarters and in the Tashkent Country Office, and the findings of an IEG mission that  visited Uzbekistan in October and November 2018. Project performance was discussed with  different stakeholders linked to both projects, including the project implementation unit staff,  government counterparts, financial institutions, project beneficiaries, World Bank staff, and  donors active in the sector. Appendix C lists the persons met during the IEG mission.   Following standard IEG procedures, a copy of the draft report was sent to the relevant  government officials and agencies for their review and feedback and no comments were  received. x   Summary Irrigation and Drainage in Uzbekistan Uzbekistan is one of the most water‐dependent countries in the world; more than 80 percent of  its water resources originate in neighboring countries. Agriculture depends on irrigation from  the Amu Darya and Syr Darya rivers and groundwater sources. In recent years, Uzbekistan has  experienced significant water shortages because of high conveyance losses, poor irrigation  planning and scheduling, and inefficient water resources management practices. Aging of the  large‐scale irrigation infrastructure amplifies existing weaknesses in irrigation management,  leading to low efficiency—as much as 70 percent of the irrigation water distributed does not  reach the crops. In addition, insufficient drainage in some areas leads to salinization of  croplands and major waterlogging problems, which lowers crop production yields and  deteriorates ecosystems.   After Uzbekistan’s independence after the disintegration of the Soviet Union in 1991, basin and  district‐level authorities became responsible for operating and maintaining irrigation and  drainage (I&D) canals. Water consumer associations (WCAs) were created as nongovernmental  and nonprofit organizations in the early 2000s to manage on‐farm irrigation canals.   Farmers in Uzbekistan face several disincentives to invest in water‐efficient production systems,  including (i) no adequate pricing of irrigation water or water quotas, which leads to inefficient  water use by farmers; (ii) state‐mandated crop production quotas for cotton and wheat, which  require large quantities of irrigation; (iii) limited access to rural credit for investments in water‐ efficient technologies or for switching to more water‐efficient and more profitable crops; (iv)  weak land tenure security, which reduces the capacity to borrow for more water‐efficient  technologies; and (v) the lack of an approved water code specifying water rights for water users  such as the WCAs.  The rehabilitation of I&D systems and the promotion of farm‐level adoption of water‐saving  technologies in Uzbekistan have been partly financed by the World Bank, including through the  two projects assessed in this report: the Ferghana Valley Water Resources Management Project  Phase I (FVWRMP‐I) and the Uzbekistan Rural Enterprise Support Project Phase II (RESP‐II).  Both projects identified and addressed critical irrigation sector needs to improve the country’s  I&D systems and institutions at both on‐farm and inter‐farm levels. Drainage rehabilitation was  a key focus of FVWRMP‐I, given that the Ferghana Valley had deteriorated drainage facilities  and experienced significant waterlogging and soil salinization. The RESP II expanded on the  experience of its predecessor project, RESP‐I, and continued to address the lack of rural credit  for farmers and agribusinesses in Uzbekistan to invest in agricultural production,  diversification, and processing. Both FVWRMP‐I and RESP‐II included I&D infrastructure  rehabilitations and strengthening WCAs’ operational capacities. They also included support for  xi   farmer field schools to train farmers on sustainable agriculture practices and water efficient  technologies in selected districts.  Project Performance Assessment Report Objectives The main objective of this Project Performance Assessment Report (PPAR) is to provide insights  into how FVWRMP‐I and RESP‐II identified and addressed critical irrigation and drainage  needs at both on‐farm and inter‐farm levels with a focus on the effectiveness and sustainability  of capacity‐building support provided to WCAs in both projects. Based on this assessment, the  PPAR draws common lessons regarding design and implementation of both projects, which  were led by two separate World Bank Global Practices: Water, and Agriculture. The lessons  from the PPAR feed into Independent Evaluation Group’s (IEG) forthcoming Evaluation on  Strengthening Irrigation Management Models for Sustainable Service Delivery.  FERGHANA VALLEY WATER RESOURCES MANAGEMENT PROJECT PHASE I Project Performance and Ratings The project development objective (PDO) for FVWRMP‐I was “To improve agricultural  production in areas affected by waterlogging, and to reduce damage to housing and  infrastructure from rising groundwater levels and salinity in project districts.” The project’s  overall outcome is assessed as moderately satisfactory. The project objectives were, and  continue to be, highly relevant to the country’s priorities and the World Bank Group’s strategy  for Uzbekistan. However, the project design weakly reflected a logical causal chain between  activities and outcomes, and it is rated modest. Efficacy of Objective 1 (to improve agricultural  production in areas affected by waterlogging) is rated modest given insufficient representative  evidence on crop yields and production. Also, some of the key planned irrigation rehabilitation  works could not be completed. The achievements resulting from project‐funded capacity‐ building works to improve the functioning of WCAs—and thereby increase the application of  sustainable agriculture and water management practices among farmers—were limited.  Efficacy of objective 2 (to reduce damage to housing and infrastructure from rising  groundwater levels and salinity in the project districts) is rated substantial. The project results  at completion and during the IEG mission showed substantial reductions in groundwater  levels, flooding, and soil salinity levels, but without a credible counterfactual. Nevertheless,  available evidence strongly suggests that the extensive and successful drainage rehabilitation  works were completed without major issues. Efficiency is substantial based on an economic  internal rate of return of 51.7 percent (significantly above appraisal estimates), though there  were some operational and administrative inefficiencies, particularly in procurement and  contract management.   xii   Risk to development outcome is substantial because of the continuation of policies and a  regulatory environment that do not provide incentives for efficient water usage, and the  uncertain availability of adequate funding for maintenance of I&D systems.   World Bank performance is rated moderately satisfactory because of weaknesses in the  project’s quality at entry, such as the lack of appropriate risk mitigation measures for better  contract management, a poorly designed results framework, and delays during project  implementation in the revision of the results framework.   Borrower performance is rated moderately satisfactory because of lengthy procedures for  contract clearance, insufficient contract supervision that led to the shortfall in the completion of  planned works, and understaffing of the project implementation unit at times, causing  deficiencies in the implementation of environmental and social safeguards.   Lessons  Establishing adequate institutional arrangements is critical for sustainable use of  improved agricultural technologies and practices such as land leveling and deep  ripping. For example, IEG found that the deep ripping, land leveling equipment and  tractors were not being used in for the benefit of the FVWRMP‐I project areas after the  project closed. The equipment was handed over to the Uzbekistan Mechanization  Institute, a public agency in charge of equipment and machinery, but because the agency  did not have a branch in Ferghana Valley, the equipment was not used in that area.  WCAs in Ferghana Valley could take care of the equipment and machinery, but the  government did not favor providing it to WCAs under the project.    Sound selection criteria for identifying beneficiaries and areas are crucial for the farmers’  uptake and use of water‐saving technologies. FVWRMP‐I promoted the implementation  of drip irrigation as a pilot activity. However, the criteria used to select pilot locations  and beneficiaries did not adequately consider the severity of water scarcity in the area,  which would entice more water‐scarce farmers to prefer using such systems. Other  selection criteria to consider in similar projects in the future, based on expert knowledge  of good practice, include the appropriateness of the technology in the agricultural  system in terms of crops and cropping patterns, water‐saving potential based on crop  and soil characteristics, water quality to avoid clogging of drip systems, and the option  to combine drip irrigation with water storage.    xiii   RURAL ENTERPRISE SUPPORT PROJECT PHASE II Project Performance and Ratings The PDO for RESP‐II was “To increase the productivity and financial and environmental  sustainability of agriculture and the profitability of agribusiness in the project area.” The  project’s overall outcome is assessed as moderately satisfactory. The basis for this assessment is  that the relevance of the PDO is rated modest because of the shortcomings in defining a  measurable project objective. The relevance of the project design is rated substantial based on  the components’ logical and the mutually reinforcing alignment of project components. Efficacy  of objective 1 on increased productivity is rated marginally modest, given insufficient  representative evidence on yield and increases in income. Efficacy of objective 2 on financial  sustainability is rated substantial based on demonstrated strengthened financial capacity of  WCAs and farmers. Efficacy of objective 3 on environmental sustainability is also rated  substantial because of the strong evidence on improvements in water efficiency, reductions in  water losses and consumption, and uptake of water‐saving practices. Efficacy of objective 4 on  agribusiness profitability is rated modest, given insufficient evidence on the profitability of  enterprises. Efficiency is rated substantial based on an ex post estimated economic rate of  return of 47 percent for component 1 and 32 percent for components 2 and 3.   Risk to the development outcome is rated moderate given the capacity built and equipment  provided to WCAs to operate and maintain on‐farm I&D investments, and the continued  adoption of water‐saving irrigation practices among farmers during a rapid transformation  process with continuous institutional change, causing uncertainly about the future institutional  and policy environment.   World Bank performance is rated moderately satisfactory given design shortcomings at entry  and during project implementation. The results framework lacked outcome indicators to  environmental sustainability and clear indicators on agribusiness profitability, which were not  revised appropriately during the project’s several restructurings.  Borrower performance is rated moderately satisfactory based on implementation delays caused  by lengthy internal review processes, despite being a second‐phase project, and the  government’s insufficient support for WCAs in defining their role and access to budgetary  support within the irrigation sector’s administrative system.   Lessons  Coordinated and mutually reinforcing capacity building of financial institutions and  farmers is crucial for establishing viable on‐farm investments. For example, RESP‐II  strengthened banks’ business plan appraisal and risk assessment capacities while  providing farmers with the ability to develop high‐quality business plans and adopt  xiv   improved production practices. This stimulated an increase in agricultural lending in  Uzbekistan.   Clear concept, measurement, and disclosure arrangements at project appraisal for  sensitive data can ensure the availability of results at project completion. For example,  the RESP‐II appraisal document did not provide clarity on which aspects of agribusiness  profitability the project was expected to increase as one of its objectives. Although the  participating banking financial institutions collected data on aspects of agribusiness  profitability, the project’s design provided no arrangements to access such confidential  information to assess the efficacy of the agribusiness development program.  Comparison of FVWRMP-I and RESP-II in WCA Capacity Building The capacity‐building and operational strengthening results of WCAs in FVWRMP‐I and RESP‐ II reveal several similarities and differences between the two projects. The type of support  provided to the WCAs in both projects had similarities. Differences emerged in the results,  which were strongly influenced by the availability of donor grant financing in RESP‐II that  provided structured support and financing for high‐quality trainings and equipment essential  for WCA operations and maintenance, empowering WCAs for better service delivery. Such  financing was not available in FVWRMP‐I. However, the RESP‐II beneficiary WCAs became  better equipped than the beneficiary WCAs under FVWRMP‐I, but this did not make a  difference in irrigation service fee collection rates, financial sustainability, or beneficiary  satisfaction rates. The main evaluation key messages are the following:   WCA operational and managerial capacity. Both projects provided consistent, practical  trainings for beneficiary WCAs in financial management plans, irrigation scheduling  plans, and operation and maintenance (O&M) plans for each WCA (25 for FVWRMP‐I  and 62 for RESP‐II). However, an important difference was that RESP‐II provided its  beneficiary WCAs with a computer (with accounting software) and a printer, given their  need for such equipment. WCAs in FVWRMP‐I were not provided with such crucial  equipment because credit sources were not considered for institutional capacity‐building  purposes.    WCA maintenance capacity. Only RESP‐II provided all of its beneficiary WCAs with  equipment for canal cleaning and other maintenance services based on their needs and  preferences. These included bicycles, motorcycles, tractors with a loading bucket or  excavator attachment, and bulldozers, among others. As a result, at RESP‐II completion,  all WCAs could undertake on average 87 percent of their O&M work compared with 34  percent at baseline. By contrast, none of the 25 WCAs of FVWRMP‐I could provide  adequate canal maintenance services. These WCAs noted that one of the main reasons for  the shortfall in maintenance was the lack of essential equipment to conduct maintenance.   WCA financial sustainability. The WCAs of RESP‐II faced similar challenges in service  fee collection rates (43 percent under FVWRMP‐I in 2015 and 45 percent for RESP‐II  xv   beneficiary WCAs on average in 2014), even though they were equipped to execute I&D  maintenance services, and hence were providing better service delivery to their members.   Farmer satisfaction rating on WCA services. Water user satisfaction with WCA services  between the two projects differs only slightly, with 82 percent of member farmers of  RESP‐II WCAs expressing satisfaction with their performance in 2016. In comparison, in  FVWRMP‐I districts, on average 70 percent of farmers expressed satisfaction in equitable  water distribution. This was a surprisingly high proportion given the inability to deliver  maintenance services.  Common Lessons from FVWRMP-I and RESP-II Assessments  Expanding the uptake of water‐efficient agricultural technologies requires policies that  provide a strong incentive to adopt those technologies. Both projects included activities  to promote farmers’ application of water‐saving technologies. However, such use was  limited in FVWRMP‐I. Despite generally better technology adoption in RESP‐II at  project completion, the sustainability of those practices is at risk given the current policy  environment. An improved incentive structure would include policies encouraging  adequate water pricing and/or quotas to avoid water overuse by farmers, promoting less  water‐intensive crop cultivation, and enhancing land tenure security and access to rural  finance.   Water consumer associations can deliver efficient irrigation services when backed by a  legal framework that clearly specifies their responsibility and accountability within the  entire irrigation service delivery institutional system. The assessment of WCAs in the  FVWRMP‐I and RESP‐II projects revealed deficiencies because of the lack of specific  regulation and accountability measures for WCAs in Uzbekistan. Such regulations are  crucial to warrant the effective execution of contractual relationships between WCAs  and local irrigation and drainage system authorities, and between WCAs and member  farmers.   Water consumer associations can deliver efficient irrigation services when they have  access to continuous and sufficient financial resources. WCAs under FVWRMP‐I and  RESP‐II suffered from persistently low service fees and insufficient collection rates. One  reason for this was their inability to provide the services in delivering irrigation water  and maintaining irrigation canals under their responsibilities, as in FVWRMP‐I  (disincentivizing farmers to pay for services not received). However, WCAs that execute  their services often face challenges in collecting service fees owed by all of their member  farmers. The lack of sufficient financial resources has led WCAs to accumulate  significant debt and develop an inability to pay and retain staff, as evidenced under both  projects.  xvi    Coordination and consistent approaches across World Bank projects in the same sector  are crucial to ensure broad and harmonized institutional capacity building. Both  FVWRMP‐I and RESP‐II aimed at improving the capacity of WCAs and farmers, but  they differed in their design and approach partially because of the availability of parallel  donor grant financing and engagement under RESP II. Although training issues were  similar in both projects, RESP‐II also provided WCAs with small‐scale equipment to  enable them to execute their operational and maintenance needs. Field demonstrations  and farmer field schools under RESP‐II were designed better than those under  FVWRMP‐I because they were based on regular needs assessments of farmers and close  monitoring, leading to a higher uptake of improved and sustainable practices.       José Carbajo Martínez  Director, Financial, Private Sector, and  Sustainable Development  Independent Evaluation Group  xvii   1. Background and Context 1.1 Uzbekistan is a landlocked country with a surface area of 448,900 square kilometers and  comprised largely of desert or semi‐desert (Sutton et al. 2013). The population is about  33 million (the largest among the five countries of Central Asia), more than 60 percent of whom  live in densely populated rural communities. Administratively, the country is divided into 12  regions and one autonomous Republic of Karakalpakstan. Uzbekistan’s climate is continental,  with hot, dry summers and short, extremely cold winters. The annual evaporation rate is about  1,600 millimeters, which greatly exceeds the annual rainfall of about 100–200 millimeters (World  Bank Institute 2007). Thus, large‐scale irrigation for cultivated crops is essential for agriculture.  Agriculture Sector 1.2 After Uzbekistan’s independence in 1991, a slow transformation took place from Soviet‐ formed kolkhoz and sovkhoz (i.e. collective or state owned farms ) to family‐oriented cooperative  farms (shirkat). The establishment of individual leasehold farms within each shirkat started in  the beginning of the 2000s. Individual farms are long‐term leaseholdings of 30 to 50 years,  leased by the state and held by a farmer, with each farm employing 10–15 permanent workers.  Currently, about 89,700 leasehold farmers exist in Uzbekistan’s agriculture sector. The average  farm size is about 75 hectares, and individual leasehold farms use most of Uzbekistan’s arable  land. The state has retained the system of state planning for its main agricultural products,  cotton, and wheat. Local authorities regulate the production outputs, and at the beginning of  each growing period (April to September), they calculate a minimum amount that farmers need  to produce. The state is the main buyer of the cotton production, and farmers must deliver a  quota of wheat to the state but are free to sell the rest in the market (MWR 2018).   1.3 In addition, large portions of land were redistributed from collective production to  household production. Each rural household received about 0.13 hectares as an additional plot  as a long‐term lease close to their 0.12 hectares of household plots. Each rural household  obtained about 0.25 hectares of plot to use mainly for subsistence agriculture. The household  plots were reclassified in 1998 as dehkan farms (also known as smallholders), and they grow  vegetables and raise livestock. Presently, about 4.7 million smallholder farmers (with small land  plots of less than 0.5 hectares) produce on less than 15 percent of arable land, and their  production is less state‐controlled. Their production has experienced a significant increase in  output compared with that of the early 2000s (Veldwisch and Bock 2011).  1.4 Agriculture remains an important sector for the economy of Uzbekistan, contributing to  19 percent of gross domestic product in 2016 and creating jobs for 3.6 million people,  representing 27 percent of the country’s labor force. In addition, 4.7 million dehkan farm  households sustain their livelihoods from producing and selling horticulture and livestock  products. This makes primary agriculture the largest employer in the country. In the last 20  1   years, the value of agricultural production almost tripled in nominal terms (State Statistical  Committee of Uzbekistan). The growth in agricultural value added (average annual growth rate  of 6.3 percent since 2000) was about three times higher than the global average growth of  2.8 percent, according to the World Bank’s World Development Indicators. Diversification  started as more land began to shift gradually from cotton to alternative crops. In 2000, cotton  accounted for 40 percent of the total sown area, and this share dropped to 36 percent in 2017.  Between 2000 and 2017, the production of wheat doubled because of the increase in both area  and yields; the production of fruits, berries, grapes, vegetables, potatoes, and gourds increased  fourfold; and the production of major livestock products tripled (State Statistical Committee of  Uzbekistan). Recently, horticulture products (fruits, vegetables, berries, and gourds) have  overtaken cotton as the major agricultural export commodity group. The recent liberalization of  exports and the devaluation of the exchange rate helped horticulture export revenues grow by  more than four times between 2007 and 2011 (State Statistical Committee of Uzbekistan and  World Development Indicators of the World Bank).  Water Resources, Irrigation, and Drainage 1.5 Uzbekistan is one of the most water‐dependent countries in the world, and more than 80  percent of the country’s renewable water resources originate in neighboring countries. Annual  water availability is nearly 1,700 cubic meters per person and approaches stress levels. Almost  all agriculture depends on irrigation because of the country’s arid climate. About 97 percent of  crop production is on irrigated land, and the country has an estimated 4.3 million hectares of  land suitable for irrigation, a figure significantly larger than that in the other four Central Asian  republics. The total annual water use is 51 cubic kilometers, of which about 46.8 cubic  kilometers (more than 90 percent) is used in agriculture. The Amu Darya and Syr Darya Rivers  supply 80 percent of water to Uzbekistan’s irrigated fields. The rest is supplied by groundwater  or originates in the country’s mountainous areas. The two rivers discharge into the Aral Sea,  formerly the fourth largest lake in the world with a booming fishing industry (World Bank  2017a).  1.6 Water resource availability in Central Asia has important seasonal, geographic, and  economic dimensions, and downstream countries (including Uzbekistan) depend highly on  upstream countries for essential irrigation water. Uzbekistan has been experiencing significant  water shortages because of high conveyance losses, poor irrigation planning and scheduling,  and inefficient application in the fields because water is free of charge. Water shortages could  worsen with increasing aridity caused by anticipated climate change and continued use of  conventional irrigation techniques, along with heavy reliance on irrigated agriculture. The  World Resources Institute projects that Uzbekistan will be among the world’s 33 most water‐ stressed countries by 2040. According to a national communication to the United Nations  Framework Convention on Climate Change (UNFCCC), by 2050, cotton and wheat yields are  projected to decrease by 11–13 percent and 5–7 percent in the Syrdarya basin, respectively, and  2   by 13–23 percent and 10–14 percent in the Amu‐Darya basin, respectively (UNFCCC, 2008).  Such declines will have major implications for both food security and the balance of payments,  further underscoring the need to shift to more sustainable water and crop‐management  practices.   1.7 However, the absence of water pricing or water quotas and the government policy to  cover operational and maintenance expenses of the irrigation systems constrains the adoption  of water‐saving technologies. In addition, weak land tenure security has been reducing farmers’  incentives to invest in land and soil fertility improvements. The extensive irrigation and  drainage networks that were built since the 1950s have been aging. During the past 25 years,  operation and maintenance (O&M) has suffered from substantial underfunding, with only  about 15–25 percent of requirements covered by the Ministry of Agriculture and Water  Resources (MAWR). Aging infrastructure amplifies existing weaknesses in irrigation  management, leading to low efficiency, with as much as 70 percent of the irrigation water  distributed not reaching the crops (World Bank 2017a). In addition, insufficient drainage led to  secondary salinization of croplands and major waterlogging problems. Soil salinization now  affects more than 50 percent of the irrigated lands and is a major threat that is leading to  declining crop production and deteriorating ecosystems (MWR 2018).   1.8 In 2003, a Basin Irrigation System Authority (BISA) and Irrigation System Authority  (ISA) were established in place of regional and district‐level irrigation system agencies and  Hydrogeological Meliorative Expeditions in charge of drainage. To fill the large vacuum for  managing on‐farm irrigation canals that were previously managed and maintained by kolkhoz  and sovkhoz, water consumer associations (WCAs) were created as nongovernment, nonprofit  organizations to (i) ensure reliable distribution of water among water consumers; (ii) determine  and collect irrigation service fees; (iii) resolve disputes on water use and management of the  irrigation system in an appropriate, transparent, and democratic manner; and (iv) maintain,  refurbish, and improve the irrigation system in the WCA operational area. By 2018, 1,503 WCAs  were in operation (MWR 2018). However, many issues remain that affect WCAs’ operations  (Swinkels, Romanova, and Kochkin 2016):   Water code and regulation for WCAs to regulate financial and operational sustainability  of WCAs and to provide a stronger governance and accountability mechanism still need  to be enacted. WCAs were generally created based on former shirkats’ borders of, that is,  on administrative, not hydrographic boundaries. A strong legal basis for the supervisory  board of farmer representatives to oversee the WCA directors is lacking.    Water allocation policy needs to be in line with land use liberalization policy. Although  the government has indicated an interest in allowing farmers to grow the crops they  prefer to grow, the water allocation policy prevents allocation of adequate irrigation  water for crops that could generate higher returns per volume of water used.   3    WCAs function without binding contractual relationships between the ISA and WCA  and between WCA and the consumers, making it difficult to sanction violations. For  example, an ISA cannot be held accountable for how much water it has agreed to  deliver, and farmers cannot be held accountable for unpaid irrigation service fees.   The irrigation service fee (ISF) is charged on a per hectare basis, and thus does not  encourage water saving for farmers. The ISF rate and payment rate by farmers are low.  WCAs are in debt because of low irrigation fees, high salaries, and substantial  operational costs.    WCAs lack the financial means and equipment to maintain the on‐farm canals under  their responsibility. WCAs also lack adequate water‐measuring structures and the  organization for water accounting. These factors may undermine the role and viability of  WCAs over time.   The needs of dehkan and household farmers are not always included in management of  irrigation water because they are not members of WCAs. This complicates the delivery  of irrigation water supply equitably for all users.   Role of the World Bank 1.9 The World Bank has been actively providing support to the government to address these  issues. The following is the list of the closed and active projects relevant to the two projects  considered in this Project Performance Assessment Report (PPAR): (i) Rural Enterprise Support  Project (P046043, $35 million, closed in 2008); (ii) Drainage, Irrigation, and Wetlands  Improvement Project in South Karakalpakstan (P009127, $62 million, closed in 2013); (iii)  Ferghana Valley Water Resources Management Project Phase I (FVWRMP‐I; P1100538, $66  million, closed in 2016); (iv) Rural Enterprise Support Project Phase II (RESP‐II; P109126, $105  million, closed in 2016); (v) Horticulture Support Project (P133703, $150 million, active); and (vi)  Livestock Development Project (P153613, $150 million, active).  1.10 The two projects assessed in this report, FVWRMP‐I and RESP‐II, were prepared amid  the changes resulting from the agricultural sector reform process. They identified and  addressed critical irrigation sector needs at the time to improve the country’s irrigation and  drainage (I&D) systems and institutions both at on‐farm and inter‐farm levels, and to increase  access to rural finance for agricultural production and processing. FVWRMP‐I was conceived  on the basis that although the Ferghana Valley lacked effective drainage facilities, the area  suffered from waterlogging and soil salinization. Soil degradation, low water‐use efficiency,  overirrigation, weak infrastructure and institutions, and a lack of farmers’ incentives were the  main factors impeding the improvement of productivity and sustainability of irrigated  agriculture in the area. RESP‐II built on the experience of the pilot RESP‐I (2002–08) and  similarly aimed to address the serious deterioration of existing on‐farm and inter‐farm I&D  systems and tackled persistent constraints to rural finance for private farmers and  4   agribusinesses. Responding to the demand of the government of Uzbekistan, RESP‐II scaled up  the RESP interventions from five pilot districts to seven regions (with 88 districts) and made  project design modifications based on lessons from the RESP experience.  1.11 The main objective of this PPAR is to obtain insights into how both projects identified  and addressed critical irrigation sector needs at the time to improve the country’s irrigation and  drainage systems and institutions, with specific attention to the effectiveness and sustainability  of capacity‐building support provided to WCAs in the two projects. The lessons drawn from  this PPAR will also contribute to the Independent Evaluation Group’s (IEG) forthcoming  Evaluation on Strengthening Irrigation Management Models for Sustainable Service Delivery.  2. Ferghana Valley Water Resources Management Project Phase I 2.1 Project dates, cost, and financing. FVWRMP‐I was financed through an International  Development Association (IDA) specific investment loan credit of special drawing rights (SDR)  42.2 million, equivalent to $65.54 million at the time of appraisal (World Bank 2009). The actual  IDA financial contribution was $48.82 million (74.5 percent of the appraisal amount). The  borrower planned to contribute $16.31 million, but instead provided $0.21 million (1.29 percent  of the appraised amount). The project was approved on September 24, 2009 and was expected  to be closed on July 31, 2016, but closed on December 31, 2016 to allow completion of activities  under the international competitive bidding (ICB‐3) until the end of the construction season,  which helped to expand project benefits for farmers.   2.2 Restructuring. The project had three level 2 restructurings during its life that did not  involve revising the project development objectives (PDOs) or making substantial changes to  the components and project scope. The first restructuring was in April 2015 to formalize an  agreement made during the midterm review to address inconsistencies and discrepancies in the  project’s results framework (see the monitoring and evaluation [M&E] section for details). The  second restructuring was in December 2015 to allow reallocation of funds from the unallocated  category to the cash compensation and other assistance category. The third restructuring was in  July 2016 to allow a five‐month extension of the closing date.   Relevance of the Objectives and Design Objectives 2.3 The same PDOs were stated in the project appraisal document (PAD) of August 31, 2009  for the FVWRMP‐I and the financing agreement dated February 9, 2010: “To improve  agricultural production in areas affected by waterlogging, and to reduce damage to housing  5   and infrastructure from rising groundwater levels and salinity in project districts” (World Bank  2009a).  Relevance of the Objectives 2.4 The relevance of PDO is rated high.   2.5 The PDO remained highly relevant to Uzbekistan’s country strategies. The PDO  supported key areas of Uzbekistan’s Welfare Improvement Strategy (WIS) that the World Bank  developed jointly with the government in 2008. The strategy’s priority areas included poverty  reduction and improvement of the population’s living standards, environmental protection, and  provision of irrigation and drainage services. Specifically, the WIS objectives included  “improving the irrigation system and increasing the efficiency of water resource management,  including investment in land improvement” and “development of an integrated, sustainable  water management system for supply of irrigation water” (World Bank 2008c). The project  aimed to contribute to achieving the broader outcome of poverty reduction through increased  productivity and incomes of small‐scale and marginal landholders. The government’s Program  of Action for 2015 and subsequent years included the goals of increasing agricultural  productivity, land restoration, and modernization of irrigation and drainage systems to achieve  its strategic objectives for economic development. Uzbekistan’s Development Strategy for 2017– 21 prioritizes modernization and intensive development of agriculture through (i) further  improvement of irrigated lands, (ii) development of the I&D facilities, and (iii) widespread  introduction of intensive methods in agricultural production, especially modern water‐ and  resource‐saving agricultural technologies.   2.6 The PDO remained highly relevant to three World Bank strategies over fiscal years (FY)  08–20. The Country Assistance Strategy (CAS) for FY08–11 supported the government’s WIS  and comprised Pillar 2 on “increasing economic opportunities in rural areas” that included  supporting projects on water resource management, irrigation, and drainage. In line with the  objectives of the WIS, the World Bank assistance aimed at rehabilitating and modernizing  irrigation systems, supporting more cost‐effective supply and use of irrigation water, improving  farmland management, and introducing modern technology and institutional development for  improved irrigation (World Bank 2008c). The Country Partnership Framework (CPF) for FY16– 20 includes focus area 2 (agricultural competitiveness and cotton sector modernization) and  focus area 3 (public service delivery) that are aligned with the project PDO. Under results area  1, the CPF also emphasizes improving water resources management and climate change  preparedness (World Bank 2016).  Relevance of Design 2.7 Project components: The project had three components.   6   2.8 Component 1: Improvement of irrigation and drainage network (appraisal cost: $71.6  million; actual cost $42.05 million). This component aimed to address the problem of high  groundwater levels by financing improvements in the surface I&D network and installation of  subsurface horizontal drainage wells and vertical drainage wells. The component financed  consultancy services for engineering designs, construction supervision, and contract  management of works, and cash compensation and other assistance to individual leasehold  farmers affected by the construction of new, open interceptor drains and loss of crops and trees,  in accordance with the resettlement policy framework and specific resettlement action plan. The  following revisions were made to scope during implementation through various restructurings:  (i) cancelation of rehabilitation of earth irrigation canals because they were deemed unnecessary  during implementation, and (ii) cancellation of rehabilitation of some collector structures  because they were unsuitable, according to the selection criteria.   2.9 Component 2: Institutional strengthening and agricultural development support  (appraisal cost: $6.09 million; actual cost: $3.35 million). This component supported institutional  strengthening of public institutions through financing of supply of O&M, laboratory,  information technology, and office equipment, and training and study tours. The component  also supported private farmers’ organizations involved in water management and utilization  through dissemination of modern agricultural and water management practices to members of  WCAs and small dehkan farmers through provision of training and establishment and  operation of field demonstration plots, including pilot drip irrigation, on‐farm water  management. The technical assistance on drafting a new water code and the legislation and  regulations for WCAs were dropped in 2010 because the United Nations Development  Programme (UNDP) provided technical assistance to support the government in improving the  national water legislation and the WCA regulation. An interagency group comprising 16  ministries and agencies developed the draft water code from 2010 to 2013.  2.10 Component 3: Project management and monitoring and evaluation of project impact  (appraisal cost: $4.35 million; actual cost: $3.63 million), This component aimed to finance the  strengthening the capacity of MAWR and the project implementation unit (PIU) for project  management (one in Tashkent and the other in Rishtan) and M&E by providing goods,  consultant services, project audit, and training, and financing of operating costs.   2.11 Implementation arrangements. MAWR had the overall responsibility for project  implementation. Through branches at the province and district levels, MAWR was responsible  for water planning, O&M of I&D systems up to the boundary of leasehold farm boundaries, and  administration of international river systems regarding water sharing and quality control. The  deputy minister for water was the project coordinator, with the overall project management and  coordination with other ministries and agencies. A project steering committee established in  August 2009 provided overall guidance and helped to coordinate project implementation and  7   resolve issues across government agencies. The PIU conducted day‐to‐day project  implementation.   Relevance of the Design 2.12 Relevance of design is rated modest. The project had a complex objective comprising  different outcomes of improving agricultural production in areas affected by waterlogging, and  reducing damage to housing and infrastructure from rising groundwater levels and soil salinity.  The intrinsic theory of change in the PAD suggested that the objective of improving agricultural  production in areas affected by waterlogging would be achieved through (i) higher crop yields  and increased cropping intensity resulting from better drainage, reduced waterlogging, an  enhanced supply of irrigation water achieved through activities under component 1, and  adoption of improved agronomic techniques and crop rotation achieved mainly through  institutional strengthening activities under component 2; and (ii) avoidance of a gradual loss of  production resulting from the increased waterlogging and soil salinity. The objective of  reducing damage to housing and infrastructure from rising groundwater levels and soil salinity  was planned to be achieved through drainage activities under component 1 that would lead to  reduced flooding and waterlogging.   2.13 However, the causal chains linking the project’s inputs and outputs to the outcomes that  the project sought to achieve were not adequately developed in the results framework.  Particularly, outcomes from component 2 (changes in the institutional capacity, including  WCAs) and how they were contributing to increasing water use efficiency and achievement of  the PDO were not measured. Although the results framework was weak, some outcome and  intermediate outcome indicators were missing, and some indicators proposed were not  measurable.  2.14 Because of the shortcomings in the M&E framework, many of the intermediate outcome  indicators were modified or dropped during implementation, but weaknesses were not  completely resolved (see the M&E section).  Monitoring and Evaluation 2.15 The project’s M&E is rated modest.  Design 2.16 The project’s original outcome indicators included decreased groundwater level,  increased crop yields for major crops, and reduced flooded areas. Output indicators included  length of irrigation and drainage canals rehabilitated, increased use and discharge in quantity of  drainage water in cubic meters per second, decreased groundwater table and gradual  reclamation of 1,180 hectares of waterlogged area, and number of people trained in sustainable  agriculture and improved water resources management practice. During the restructuring in  July 2015, the M&E framework was substantially revised—new indicators were introduced, and  8   some key indicators were dropped or revised to clarify the definitions, and to improve baseline  and target values and mode of measurement. For example:   “Decreased area with high groundwater mineralization” was introduced to measure the  improvement in the level of water mineralization.   “Land users adopting sustainable land management practices as a result of the project”  was included to measure the impact of project training better.   “Increased use and discharge in quantity of drainage water in cubic meters per second”  was dropped because the quantity of water discharged varied throughout the year and  could not indicate drainage system efficiency.   “Length of irrigation canals and drains rehabilitated and functional (kilometers)” (the  end target for the indicator) was reduced from 3,400 kilometers to 1,349 kilometers  because it was found that the original volume of inter‐farm and on‐farm earth canals  (about 2,000 kilometers) that were proposed in the feasibility study were not needed.   2.17 Still, the following shortcomings remained:   There was no PDO indicator to assess the actual reduction in flood damage to housing  and infrastructure.   Intermediate outcomes under component 2 for the institutional capacity building  targeting WCAs and public institutions were not monitored. For example, no indicators  measured if and how much the capacity of public institutions increased implementation  of investments in I&D systems. Additionally, no indicators measured whether capacity‐ building activities for WCAs made a difference—that is, whether WCAs improved  planning and prioritizing of water delivery service to their members or if service fee  collection rates improved.    There were no indicators measuring irrigation and drainage canal efficiency and  operability of the rehabilitated sections funded under the project (changes in water loss  were not assessed). The M&E framework did not monitor whether water availability  increased, particularly in summer months.    There were no indicators measuring water use efficiency (amount of water used per  amount supplied) and water productivity (yield per amount of water consumed).  Implementation 2.18 The M&E responsibility for data collection and analysis was outsourced to a consortium  of consulting companies that had local and international experience. This arrangement brought  in additional expertise in data collection and analysis. A comprehensive baseline survey was  conducted on project launch, and continuous efforts were made to keep monitoring results up  9   to date. The M&E consultants provided suggestions to improve the results framework, which  resulted in clarifying the definition of some indicators and improving the methodology for the  monitoring of others. However, the Implementation Completion and Results Report (ICR)  noted in paragraph 33 that data related to wheat and cotton productivity, both from official  statistics and from farmers’ surveys, were questionable because, according to the ICR’s  argument, respondents had an incentive to understate productivity because of the mandated  area quota arrangements on these crops (World Bank 2017b).   2.19 An effective counterfactual was not established. The control area selected for the impact  evaluation (Kushtepe district) was deficient, even though selection was based on similar  characteristics, such as altitude, crop profile, and type of irrigation system. The control group  presented similar outcomes on several dimensions, including the yield outcomes for several of  the crops, groundwater and soil salinity levels, and improvements in WCAs, for example. IEG  was informed that the district drainage collectors also went through a similar rehabilitation  exercise funded by state funds, which led to parallel results. A more systematic analysis was  needed to select a more representative control group.   Use 2.20 The M&E data were used mainly during the midterm review to inform proposals for  restructuring the project and to improve the M&E framework. The project’s M&E system  contributed to improving data collection and analysis of water quality. Additionally,  information gathered showed that the demand for drip irrigation equipment proved lower than  forecasted, but it was not clear how this information was used in the project’s management. The  IEG mission found that project results were used to draw lessons that fed into the design of the  follow‐up, FVWRMP Phase II.   Implementation Experience 2.21 ICB contracts. The project had three large ICBs instead of numerous smaller contracts.  Although this made the project outcome dependent on a few major contractors, less time was  spent on procurement procedures, which made managing the contracts easier. At project  closing, the ICB‐1 contract that constituted 65 percent of project funds was completely  implemented even though there were delays regarding customs procedures for the heavy  equipment. The ICB‐2 contract that covered rehabilitation of on‐farm networks was partly  executed because of financial difficulties faced by the contractor, and eventually only about 50  percent of the originally planned facilities were rehabilitated. Regarding the ICB‐3 contract, the  contractor showed low responsiveness on contract signing, reflected in delayed contract  execution until the last year of the project for reasons not clearly explained to the IEG mission.  The contractor eventually mobilized and completed part of the contract (see the Achievement of  Objectives section).   10   2.22 Midterm review. A midterm review of the project held in November 2013 (about 3.5  years after effectiveness) identified actions needed to resolve various deficiencies in the  implementation of contracts and safeguards measures. Revision of the results framework was  achieved during the midterm review, including revision of the methodology for monitoring  certain indicators, clarification of the definition of indicators, and adjustment of the baseline and  target values.  Financial Management and Procurement 2.23 Financial management: A financial management manual was developed describing  internal control procedures, accounting, budgeting and planning, reporting, internal controls,  external audits, funds flow, and organization. The financial management staff had experience  with World Bank procedures. The implementation of the system was acceptable to the World  Bank in general. The project financial management system provided timely information and  reporting for the project. Audit reports were reportedly received as planned with unqualified  opinions on the project financial statements.   2.24 Procurement. The PIU’s procurement capacity was adequate, but processing of  procurement packages experienced delays caused by external factors, such as long registration  by Ministry of Foreign Economic Relations and Trade (MFERIT). The World Bank considered  the project’s procurement performance as moderately satisfactory. The filing system was  acceptable, and no major issues were noted.  Safeguards Compliance 2.25 The project was a category B on environmental safeguards, considering rehabilitation  and modernization of the I&D systems were not expected to involve any significant or  irreversible adverse environmental impacts. Three safeguard policies were triggered: (i)  Environmental Assessment (OP/BP 4.01), (ii) Projects in International Waterways (OP/BP 7.50),  and (iii) Involuntary Resettlement (OP/BP 4.12). The project’s location in Syr Darya River Basin  (which Uzbekistan shares with its riparian neighbors) triggered the second safeguard. The  involuntary resettlement safeguard was triggered because rehabilitation of drainage  infrastructure required acquisition of agriculture land used by several farmers, and because of  removal of trees planted along roadways, canals, and collector drains. As part of the  environmental assessment, an environmental mitigation and management plan was prepared in  2009 to identify areas for environmental monitoring, and institutional strengthening and impact  mitigation.   2.26 Overall, the project complied with the implementation of safeguards. Previous reviews  of the safeguards confirmed full compliance.   11   Achievement of the Objectives 2.27 For this assessment, the PDO was divided into two parts, referred to as objectives: (i) to  improve agricultural production in areas affected by waterlogging, and (ii) to reduce damage to  housing and infrastructure from rising groundwater levels and soil salinity.   2.28 IEG used four sources of evidence to assess the achievement of the PDO: (i) the ICR  assessment (World Bank 2017b), (ii) the ICR Review (World Bank 2017c), (iii) the project impact  evaluation (baseline and end of project), and (iv) the IEG PPAR fieldwork conducted in October  and November 2018 covering all three project districts (Altiarik, Baghdat, and Rishtan). The IEG  PPAR fieldwork applied several validation tools, including site visits, interviews with a sample  of direct beneficiaries, and interviews with implementers and other stakeholders (described in  appendix B). The IEG fieldwork was based on a small number of interviews that were not  representative of the FVWRMP‐I project beneficiary population.  Objective 1 2.29 The achievement of the project’s development objective (to improve agricultural  production in areas affected by waterlogging) is rated modest because the project had only a  modest impact on crop yields and production. FVWRMP‐I aimed to increase agricultural  productivity through rehabilitation of I&D works, and provision of technical assistance and  advisory services to public institutions, WCAs, and farmers on improved agricultural and water  management practices. Appendix D provides a detailed list of most relevant outputs. The  results of institutional capacity building for WCAs and farmers on sustainable agricultural and  water management practices are discussed in the next section.   Intermediate Outcomes 2.30 Sustainable agriculture and water management practices: Approximately 64 percent of  all farmers in the project districts visited demonstration pilots to familiarize themselves with  innovations. According to the farmer survey, of the 1,953 farmers who were trained through  farmer field school demonstration pilots, 796 (about 40 percent) confirmed that they started to  apply improved cotton and wheat production techniques, which were simple and did not  require costly investment (the intermediate outcome indicator target of 1,000 farmers was  achieved by 79 percent). However, the number of farmers who applied main demonstration  pilot technologies, such as drip irrigation or deep ripping, was much smaller because of their  high costs (World Bank 2017b, para. 49).   2.31 IEG Assessment of Sustainable Agriculture and Water Management Practices    Drip irrigation. The IEG mission visited three leaseholder farmers chosen to implement  pilot drip irrigation. During the visit, two of the farmers had taken away the drip  irrigation pipes and kept them in storage. These farmers stated that they were  12   continuing to use the pipes in the summer only and removing them in the winter  because of concerns that they would freeze in subzero temperatures. By contrast, the  third farmer visited still had the pipes laid in his orchard and stated that concerns about  freezing were unwarranted, and that winter storage of pipes is unreasonable because of  the considerable effort needed to lay the pipes and remove them each time. IEG’s  conclusion from these interviews is that even though the farmers received the drip  irrigation equipment under this pilot activity, two of the farmers (of the three IEG  visited) were not using it. This is contrary to the ICR’s argument that high costs are the  only reason for the low demand for drip irrigation.    IEG concludes that the project considered only certain aspects under its selection criteria  that partly explain the low interest from farmers. According to the literature, criteria for  introducing drip irrigation should consider the following: (i) degree or severity of water  scarcity favoring introduction of drip irrigation; (ii) appropriateness of drip irrigation in  the agricultural system (crops and cropping pattern); (iii) water‐saving potential (crop  water demand)—soil influences on water losses in surface irrigation, for example: higher  potential for water saving on sandy soils that are difficult to irrigate with conventional  furrow or basin methods; (iv) water quality (clogging of drip systems); and (v) option to  combine drip irrigation with water storage (to ensure temporal availability of water).  IEG obtained information on the criteria used for selecting farmers for drip irrigation,  which were water scarce area, water availability for a minimum of 5–10 hectares of  orchards close by, interest from the farmer, and young orchard trees. IEG was also  informed that some farmers grow fodder crops around the orchards, and with drip  irrigation, they cannot continue this practice, which may be another reason for the low  demand for drip irrigation. However, criteria including water‐saving potential, water  quality, and particularly severity of water scarcity were not considered comprehensively  during piloting of this technology.    Deep ripping and other techniques. The IEG mission also visited three demonstration  plot farmers (one in each district), two leaseholder farmers, and one dehkan farmer. All  of the farmers stated that they benefited from the project’s trainings and support.  Regarding application of project‐taught methodologies, two of the demonstration  farmers mentioned that they still use the crop rotation technique, though one famer  mentioned that he could not rotate crops because of the state‐mandated quotas. One  farmer mentioned that he continues to apply local fertilizers. All of the farmers visited  mentioned increased yields (see the Outcomes section for details).   2.32 Results of capacity‐building activities for WCAs. The project did not monitor any  indicators to measure the results of WCA capacity‐building activities. According to a 2016  survey of all 25 WCAs in project districts, all 25 found the project‐financed trainings highly  useful (MAWR, 2016)  . Additionally, the project impact assessment measured farmers’ opinions  on the effectiveness of WCAs in water distribution, water supply reliability, governance, and  13   irrigation service fee collection rates. However, the results were inconclusive—there was no  credible counterfactual because the control group was poorly specified.1   Box 2.1. Summary of the Efficacy of WCA Capacity-Building Activities by the Project’s Impact Evaluation  Seventy-eight percent of farmers in project districts stated that there was equitable distribution in 2015. Regarding quantity of irrigation water in the summer, 60 percent of famers in project districts said the water supply was adequate, and only 53 percent of farmers said it was delivered on time (no control group data were presented on these aspects).  WCA members’ satisfaction with WCA services increased from 38 percent to 70 percent between 2011 and 2015: 68.8 percent of farmers considered that WCAs’ performance in making fair decisions had improved substantially, and 25.8 percent stated that this performance had “somewhat” improved.  WCA records show that the average irrigation service fee collection rates increased from 33.5 percent in 2011 to 42.9 percent in 2015 for three WCAs in the project district. In Baghdat and Rishtan district WCAs, the irrigation service fee collection rates increased during this period, though the collection rate of WCAs in Altiarik district declined by 10.7 percent.  Cumulative WCA debts continue to be high, even though the government compensated the WCA electricity bills in 2014 and 2015. Debts mainly included staff salaries, taxes, and electricity expenditures.  The impact evaluation report noted that the effect of project training for the WCAs could not be sustained because of high turnover in the WCA staff. Source:: Project Impact Evaluation Report 2016 (pages 175–206). 2.33 IEG assessment of the project’s WCA capacity‐building activities. IEG interviewed  nine WCAs of 25 project‐supported WCAs (three in Altiarik, five in Bagdat, and one in Rishtan).  Interviewees noted that the project provided several seminars to WCA staff and its members on  water scheduling, accounting, preparing business plans, water rights, and so on. They were  generally pleased with the trainings’ quality. All of the WCAs that met with IEG stated that  they continue preparing annual budgets and apply a water‐scheduling regime. ISF collection  rates ranged from 25 percent to 80 percent depending on the WCA. The WCAs interviewed  mentioned the following issues:    The project did not provide computers or other office equipment for the WCAs, which  made the application of the skills they learned challenging. Some WCAs used ISA  computers while others used the WCA chairperson’s personal computer.    The project did not provide equipment or machinery to conduct canal maintenance. On‐ farm canal cleaning is organized based on khashar (mobilization of community action),  14   and the farmers are mainly responsible for it. If a farmer’s territory needs to be cleaned,  the farmer pays for diesel and the driver’s cost because the farmer receives a diesel  subsidy from the state. WCAs do not receive subsidized diesel. Several WCAs  mentioned that if WCAs could lease machinery, they could provide services to farmers,  which could positively affect their ISF collection rates.    WCAs prepared budgets by including staff salaries and taxes, but they did not include a  maintenance budget as the project training programs taught because WCAs don’t  handle maintenance service.    Planned concrete irrigation canals and hydro posts were not rehabilitated or constructed  because of the failure of the ICB‐2 contract. One WCA in Altiarik district mentioned that  because of this, the farmers do not receive water in requested amounts in this district  and thus do not contribute to the ISF payment.    ISF collection amounts were not sufficient to cover all the WCAs’ costs. Several WCAs  mentioned that they could not pay adequate staff salaries and repay debts, and thus  they cannot retain staff.   Outcomes 2.34 The achievement of objective 1 (to improve agricultural production in areas affected by  waterlogging) is rated modest. Based on the analysis of data in the ICR and additional data  obtained by the PPAR mission, the project had only a modest impact on crop yields and  production. Although project‐funded drainage works were mostly accomplished, some of the  planned irrigation rehabilitation works could not be completed because ICB‐2 was only  partially implemented. There were also limited achievements regarding project‐funded  capacity‐building works to improve functioning of WCAs and to widen application of  sustainable agriculture and water‐management practices among farmers.   2.35 The project results framework measured the objective in relation to changes in yield per  hectare. According to the ICR (page 30), project M&E data showed increased yields for wheat,  maize, potatoes, and orchards for both leaseholder and dehkan farms. Yields declined for  cotton, rice, and vineyards in leaseholder farms and melons in dehkan farms (World Bank  2017b). IEG’s Implementation Completion and Results Report Review (ICRR) used a difference‐ in‐differences (DID) calculation by comparing results against control group results (Ferghana  Valley region districts as a whole) between the baseline and project completion years. (The DID  estimate is defined as the difference in average outcome in the treatment group before and after  treatment minus the difference in average outcome in the control group before and after  treatment.) Accordingly, wheat, melons, and vineyards for leaseholder farms, and wheat,  maize, and melons for dehkan farms showed negative net yield increases, and cotton showed a  zero increase for leaseholder farms at project closing (World Bank 2017c). IEG obtained data on  2017 yields for the same crops in the three project districts and observed yield reductions for  15   cotton, maize, and vegetables on leaseholder farms and for maize, vegetables, and melons on  dehkan farms compared with the baseline (table 2.1).  Table 2.1. Crop Productivity in Project Districts by Farm Type Crops Leasehold Farms Dehkan Farms 2011 2015 Yield Change 2017 Yield 2011 2015 Change 2017 Yield (tons/ha) DID (tons/ ha) Yield Yield DID Yield (tons/ha) Effect (tons/ha) (tons/ha) Effect (tons/ha) 2015 2015 (percent) (percent) Cotton 2.9 2.7 0 2.2 n.a. n.a n.a n.a Wheat 5.6 5.8 −1.8 5.9 7.3 7.5 −2.7 7.5 Maize 5.5 6.7 7.3 4.8 7 8 −2.9 5.1 Rice 2.9 2.8 41.4 3.2 3.8 3.9 10.5 6.04 Potatoes 15.3 33.4 9.2 21.9 25.7 27.8 7.4 25.7 Vegetables 28.0 35.4 −2.9 24.2 29.2 32.6 −3.8 28 Melons 13.8 24.4 −24.6 18.7 28.3 19.2 −7.4 18.1 Perennials Orchards 5.5 7.9 14.5 8.2 14.6 24.2 9.6 29.1 Vineyards 11.8 10.1 −9.3 8.1 14.1 23.5 4.3 37.9 Source: Implementation Completion and Results Report, Implementation Completion and Results Report Review, and 2017 yield data based on data from the Ministry of Agriculture Water Resources. The DID analysis for 2017 was not updated because baselines had been amended, making subsequent DID analysis incomparable with the earlier DID analysis. DID = difference-in-differences; ha = hectare. 2.36 The objective of an increase in production is a function of yields and area expansion. The  ICR noted an increase in cropping intensity (ratio of total cropped area to net cultivated area)  because more farmers are diversifying their production with high‐value crops and through  inclusion of secondary crops (ICR page 29). Changes in production figures in tons are presented  in table 2.2. Accordingly, an increase in total production in the project districts (as of project  closing and at the end of 2017) is observed. The increase is 179,192 tons—a 46 percent increase  relative to the baseline in 2015 and an increase of 273,925 tons, or 70 percent increase relative to  the baseline in 2011 (World Bank 2017b). Considering what would have happened without the  project, although aggregate production has increased relative to the baseline, production has  increased faster under the without‐project situation in 2015 (DID calculations for the aggregate  production in 2015 showed 0.4 percent less production relative to what would have happened  under the situation without the project).   16   Table 2.2. Total Annual Crop Production in Project Districts Crops 2011 2015 Change 2017 Production (tons) Production Production DID (tons) (tons) Effect 2015 (percent) Cotton 46,777 42,719 15.4 44,373 Wheat 110,735 112,771 9.9 153,241 Maize 2,025 5,197 −37.3 6,207 Rice 184 263 −189.7 2,265 Potatoes 15,266 40,289 -45.9 47,130 Vegetables 134,471 208,741 42.9 253,156 Melons 4,688 10,157 −66.8 11,286 Fodder 26,607 67,737 −273.6 - Oil seed - 360 - 723 Legumes 36 432 −219.4 2,174 Orchards 34,535 55,252 −6.1 87,066 Vineyards 14,568 25,175 57.7 56,196 Total 389,892 569,093 −0.4 663,817 Source: ICR, ICRR, and 2017 production data based on data from Ministry of Agriculture and Water Resources. The DID analysis for 2017 was not updated because baselines had been amended making subsequent DID analysis incomparable with the earlier DID analysis. DID = difference-in-differences. Objective 2 2.37 The achievement of the project’s development objective (to reduce damage to housing  and infrastructure from rising groundwater levels and salinity in the project districts) is rated  substantial. The same outputs explained under objective 1 also contributed to  the achievement  of objective 2.   Outcomes 2.38 To measure the objective, the project PDO indicators in the results framework were as  follows: (i) decreased groundwater levels, (ii) reduced flooding in settlement areas, (iii)  decreased area with high groundwater mineralization, and (iv) decreased area with soil salinity.  Reduced groundwater mineralization and reduced soil salinity also affect yields and were  therefore linked to the achievement of the first objective.   2.39 Based on the results, the achievement of objective 2 is rated substantial, but with two  caveats. Several factors that influenced soil salinity need to be considered in addition to the  representativeness of the years that assessments were made. Furthermore, the ICR did not  include a counterfactual analysis; the project impact evaluation compared project district data  with the control district and showed that nonproject areas also had similar improvements in  17   groundwater and salinity level reductions. However, IEG mission interviews with the key  stakeholders and selected project beneficiaries supported the substantial achievements of  reduced flooding and waterlogging in project areas. The efficacy of this objective is rated  substantial considering the substantial achievements regarding the rehabilitation of drainage  works, including rehabilitation of on‐farm and inter‐farm drainage canals, collector structures,  construction of pressure wells, and vertical drainage wells, which would contribute to the  achievement of this objective.   2.40 Groundwater levels. Groundwater levels were measured using piezometers.2 The  targets for reduced groundwater levels were significantly met. At the end of the project, there  were almost no areas with less than one meter of groundwater level—7.7 percent of areas had  between 1 and 1.5 meters of groundwater level, and 33 percent of the areas had between 1.5 to 2  meters. The IEG mission confirmed the sustained results on groundwater levels as of 2017 (table  2.3).  Table 2.3. Average Groundwater Levels in Project Districts (2011-2017) Groundwater Level Baseline Target 2015 Result 2017 Result (% of area) (% of area) (% of area) (% of area) Less than 1.0 meter 1.5 0.1 0 0 Between 1.0 to 1.5 meters 18 7 7.7 6.4 Between 1.5 to 2 meters 43.5 52.5 33.1 46.7 Source: ICR and Ministry of Agriculture and Water Resources. 2.41 Flooding in settlement areas. According to the project impact evaluation, the  percentage of settlement areas affected by flooding was reduced from 67.4 percent (baseline in  2011) to 13.1 percent in 2016 (against the revised target of 0 percent and the original target of 6  percent). The revised target was almost 80 percent achieved.  2.42 Area with groundwater mineralization and soil salinity. The targets for reduced  groundwater mineralization levels were also met. The target areas with non‐, low‐, and mid‐ mineralization levels were met. The IEG mission also confirmed the sustained results on salinity  levels (table 2.4).   Table 2.4. Average Mineralization Levels in Project Districts (2011–17) Mineralization Level Baseline Target 2015 Result 2017 Result (% of area) (% of area) (% of area) (% of area) Non-mineralized (0–1 grams/liter) 38.2 42 41.7 51.1 Low mineralized (1–3 grams/liter) 51.4 57 57.7 48.7 Medium mineralized (3–5 grams/liter) 10.3 0.99 0.7 0.2 High mineralized (5–10 grams/liter) 0.1 0.01 0 0 Source: ICR,updated by IEG based on data from the Ministry of Agriculture and Water Resources. 2.43 Soil salinity levels also showed similar improvement (table 2.5).  18   Table 2.5. Soil Salinity Levels in Project Districts Soil Salinity Level Baseline 2015 Result 2017 Result (% of (% of area) (% of area) area) Low salinity (0-0.3 g/l) 51.55 61.19 67.2 Low salinity (0.3-1 g/l) 39.04 30.3 31.9 Medium salinity (1-2 g/l) 8.94 8.43 0.8 High salinity (less than 2 g/l ) 0.46 0.08 0.1 Source: ICR,updated by IEG based on data from the Ministry of Agriculture and Water Resources 2.44 Regarding incidence and cost of damage from flooding for the households, the project  impact evaluation showed that the number of households suffering damage declined by 40  percent, and the cost of repairs per affected household declined by 8 percent during the project  duration (World Bank 2017b, 32).   Efficiency 2.45 Economic efficiency. The project prepared ex ante and ex post economic analyses, and  the following main economic benefits were considered: (i) improved crop productivity and  increased cropping intensity, (ii) avoidance of a gradual loss of production caused by an  increase in waterlogging and salinization that was anticipated in the without‐project situation,  and (iii) mitigation of the damage to housing and civil infrastructure resulting from inundation  and flooding, particularly in the urban areas. For calculation of crop productivity and increased  cropping intensity, crop budgets were prepared for nine crops: cotton, fodder, maize, orchards,  potatoes, rice, vegetables, vineyards, and wheat. Because of significant discrepancies between  leaseholder farms and dehkan farms, crop budgets were prepared for both farm types. For  wheat and cotton, the State Statistics Department provided yields, production data and input  and labor requirements, machinery utilization, and output and input prices. For the remaining  crops, feasibility study figures were used to calculate costs.   2.46 At appraisal (ex ante), the project economic and financial analysis (EFA) estimated an  overall economic internal rate of return (EIRR) of 29.3 percent with a net present value (NPV) of  Som 127.8 billion (PAD, paragraph 17). Ex post EFA calculations estimated the project’s  financial internal rate of return (FIRR) at 48.5 percent and the EIRR at 51.7 percent. Compared  with 12 percent as the opportunity cost of capital, the project is reported to have produced high  returns. However, sensitivity analysis ex post showed that the EIRR was reduced to about 28  percent if all project benefits decreased by 10 percent to 90 percent of the estimated values  (indicating significant sensitivity to the estimated benefits). The economic NPV in the ex post  EFA was estimated at Som 444 billion, which was almost four times the appraisal value (World  Bank 2017b, paragraph 56).  2.47 The higher EIRR ex post compared with ex ante was mainly due to (i) the lower total  cost of the project, which was estimated at Som 144 billion ($82 million at the exchange rate  19   adopted in the ICR) at appraisal, but actual was about Som 94.7 billion ($49 million at the  exchange rate adopted in the ICR); and (ii) higher prices for agricultural commodities using  inflation adjustment (using the gross domestic product deflator) and significantly increased  gross margins on most crops (especially those to which the producers have increasingly shifted,  like vegetables and orchards). The EFA indicates that the combination of lower costs and higher  returns on crops led to an increase in the EIRR.  2.48 Operational and administrative efficiency. The project closing date was extended for  five months. Lengthy procedures of different agencies were an issue, particularly contract  clearance by MFERIT that delayed decision making. Additionally, considerable time was lost  because of the government’s unwillingness to accept failure in the ICB‐2 and ICB‐3 contracts,  which reduced the project output results.   2.49 Despite these operational and administrative inefficiencies, the efficiency of the objective  is rated substantial because of the significant economic rates of return.  Ratings Outcome 2.50 Overall outcome is assessed as moderately satisfactory. The project objectives were and  continue to be highly relevant to the country’s priorities and the World Bank Group’s strategy  for Uzbekistan. The project design weakly reflects a logical causal chain between activities and  outcomes and is rated modest. The efficacy of objective 1 (to improve agricultural production in  areas affected by waterlogging) is rated modest. The project had only a modest impact on crop  yields and production. Additionally, some of the planned irrigation rehabilitation works could  not be completed, and there were limited achievements regarding project‐funded capacity‐ building works to improve WCAs’ functioning and to widen application of sustainable  agriculture and water management practices among farmers. The efficacy of objective 2 (to  reduce damage to housing and infrastructure from rising groundwater levels and salinity in the  project districts) is rated substantial. The project results at completion and as assessed during  IEG’s mission showed substantial reductions in groundwater levels, flooding, and soil salinity  levels, but without a credible counterfactual. Project results were strongly supported by the  extensive drainage rehabilitation works that were completed without major issues. Efficiency is  substantial with an EIRR significantly above appraisal estimates, though with some operational  and administrative inefficiencies.   Risk to Development Outcome 2.51 The risks to development outcome are rated substantial.       20   Policy and Institutional Risks  2.52  One of the key risks is the continuation of current policies and regulatory environment  regarding water resources management that do not adequately incentivize efficient water  usage. The value of irrigation water is not considered in water allocation decisions, leading to  abundant usage of water resources and creating further waterlogging and drainage problems.  The state‐mandated quota on high water‐consuming cotton crop advances this vicious cycle,  though the government has recently started implementing different approaches to tackle cotton  production. However, a water code that was drafted during the project is yet to be enacted.  WCAs do not have a regulatory framework or financial means that would significantly improve  irrigation water distribution and operation and maintenance of on‐farm irrigation canals.   2.53 Several stakeholders informed IEG’s mission that some of the sustainable water and  land management practices are not utilized because of a lack of a dedicated service provider to  deliver these services. For example, regarding the project‐financed deep rippers and land  levelers, the plan was to establish the branch of Uzbekistan Mechanization Institute in the  Ferghana and give the equipment to the branch, and then farmers would use or rent the  equipment. This had not happened at the time of the IEG mission.  2.54 Another issue on institutional capacity building that many stakeholders mentioned  during the IEG mission was the high staff turnover within local public water institutions and  the WCAs, resulting in a loss of institutional memory on the acquired skills. IEG was informed  that the project trained the Hydrogeology and Ameliorative Expedition Department (HGAE)  and provided a database, but nobody was in charge of the database.  Financial Risks  2.55  Another risk to continuity of this project’s development outcome is the availability of  funds to allow proper maintenance of the I&D systems and a power supply for the vertical  drainage wells (ICR, paragraph 69). However, this risk is partly mitigated by the strong  commitment of the central and local authorities to ensure smooth operations of water drainage  and prevent waterlogging from happening again, and ensuring additional power supply  facilities that are already under construction in the project districts. The IEG mission was also  informed that the government is continuing to provide maintenance of drainage canals through  its own budget (World Bank 2017b). The IEG mission was informed that the power supply issue  was resolved in the region after completing the construction of additional power generation  facilities.   Bank Performance 2.56 Bank performance is rated as moderately satisfactory.  21   Quality at Entry 2.57 According to the PAD, the project’s design considered important lessons learned from  the World Bank’s experience in the I&D sector in Uzbekistan and other countries, including  India, Kazakhstan, the Kyrgyz Republic, Mexico, and Turkey, and from models used by other  donors, including the European Union–UNDP Enhancement of Living Standards Program. A  key lesson from the program is that improving agricultural productivity and ensuring the  sustainability of irrigation water management systems require participatory approaches;  therefore, capacity building for WCAs should be included in the project design. A second key  lesson is that successful project implementation requires a PIU and field‐based PIUs that  develop links with the MAWR and responsible oversight institutions, local authorities, local  people, and beneficiaries in supporting project implementation and the transfer of knowledge  and training.   2.58 The risk assessment adequately captured the critical risks but fell short of designing  appropriate mitigation measures. For example, the risk of failing to recruit capable consulting  firms and construction companies was assessed as moderate and to be mitigated through ICB  contracts. These contracts would have prequalification for works contracts and encouraging  local contractors to collaborate with international contractors as subcontractors. The project still  ended up with two low‐capacity local contractors that led to the cancelation of some of the  works because adequate assessment of bidding companies could not be made. Another risk that  was identified and rated as high was the delay in contract registration. This was planned to be  mitigated through involvement of high‐level stakeholders through the project steering  committee. However, this measure did not resolve the MFERIT’s lengthy contract review  process (World Bank 2009a, 10).   2.59 Project preparation from concept review to appraisal was lengthy (3.5 years). A  feasibility assessment identified the amount of works to be included in the results framework,  but the data were not assessed and discussed with the government thoroughly when preparing  the project results framework because a substantial amount of rehabilitation works of on‐farm  earth  irrigation canals had to be reduced later.   2.60 The design of project monitoring arrangements and data collection instruments in the  PAD were not adequately planned, which caused deficiencies in the collection and evaluation of  data during implementation. For example, some indicators could not be measured, and baseline  and targets for others established in the PAD as part of the feasibility study were not discussed  and finalized with the government. Additional effort during preparation and baseline studies  could have improved the M&E framework.   2.61 Based on these issues, the quality at entry is rated as moderately unsatisfactory.   22   Quality of Supervision 2.62 Regular supervision missions were conducted, and 14 ISRs were filed during 2009–16  (approximately every six months). The missions comprised relevant technical, fiduciary, and  environment specialists. Project ratings were generally candid, and Aide Memoirs had sufficient  details guiding the implementing agency and the government on the project’s technical and  administrative issues. The project had two World Bank task team leaders, both of whom had  extensive experience of the sector and the region. During IEG’s mission, the PIU staff at the  Tashkent office and at the local level expressed their appreciation for the available technical and  fiduciary support from the World Bank team and its proactive approach to solving problems.  2.63 A midterm review was conducted in November 2013 to help facilitate implementation.  The midterm review mission discussed the weaknesses in the project results monitoring  framework extensively and agreed on the action plan to rectify the problems. However, the  World Bank team did not follow up adequately on the recommendations made during the  midterm review regarding revision of the results framework, though these materialized with  some delay. The project team’s recommendations to terminate the failing ICB contracts were not  considered fully during subsequent meetings, and therefore, the issue persisted for an extensive  period.   2.64 Based on this assessment, quality of supervision is rated as satisfactory.   2.65 The overall Bank performance is rated as moderately satisfactory.   Borrower Performance 2.66 Borrower performance is rated moderately satisfactory.   Government Performance 2.67 The government was committed to project activities, and the project is the result of  government’s willingness to address irrigation and drainage issues in the region. The  government agencies and local authorities supported the project and were motivated to achieve  desired results. This is evidenced by the eventual resolution of the customs clearance issues that  delayed operations of some critical equipment under the project’s ICB‐1 contract.   2.68 However, lengthy procedures for contract clearance (particularly by MFERIT) delayed  project implementation and affected project performance negatively. MFERIT contract  registrations were completed only after the Ministry of Economy intervened directly. In  addition, despite major delays in implementation of the ICB‐2 and ICB‐3 contracts, the  government took a long time to terminate them, even though the World Bank team strongly  advised it to do so (World Bank 2017b, 8). This was partly explained by the government’s belief  that issues with the local contractors would be resolved eventually. However, because of the  23   time lost, these contracts could not be included in a new contract bidding process, and thus  some of the planned project works were not accomplished.   2.69 Because of these weaknesses, government performance is rated as moderately  unsatisfactory.   Implementing Agency Performance 2.70 The MAWR and the PIU showed high commitment toward achievement of the project  results. According to the ICR, they met regularly with the World Bank’s project team, openly  discussed project issues, and followed up on the agreed actions in line with their responsibility.  In addition, the PIU handled fiduciary aspects well, and the only issues related to MFERIT’s  long clearances, which was beyond the PIU’s control. The performance of other agencies  involved in project management, including consulting companies for technical supervision and  M&E, was also adequate.   2.71 The PIU was understaffed to carry out environmental and social safeguards, which  partly led to noncompliance with both. Although environmental performance was rectified  eventually, issues related to approval of the resettlement action plan and delays in  compensation payments to the project‐affected people persisted for some time, causing the  downgrade in safeguards performance ratings.   2.72 Based on this assessment, implementing agency performance is rated as moderately  satisfactory.   2.73 The overall borrower performance is rated as moderately satisfactory.   Lessons on FVWRMP-I Project 2.74 Establishing adequate institutional arrangements is critical for sustainable use of  improved agricultural technologies and practices such as land leveling and deep ripping. For  example, IEG found that the deep ripping, land leveling equipment and tractors were not being  used in for the benefit of the FVWRMP‐I project areas after the project closed. The equipment  was handed over to the Uzbekistan Mechanization Institute, a public agency in charge of  equipment and machinery, but because the agency did not have a branch in Ferghana Valley,  the equipment was not used in that area. WCAs in Ferghana Valley could take care of the  equipment and machinery, but the government did not favor providing it to WCAs under the  project.   2.75 Sound selection criteria for identifying beneficiaries and areas are crucial for the  farmers’ uptake and use of water‐saving technologies. FVWRMP‐I promoted the  implementation of drip irrigation as a pilot activity. However, the criteria used to select pilot  locations and beneficiaries did not adequately consider the severity of water scarcity in the area,  which would entice more water‐scarce farmers to prefer using such systems. Other selection  24   criteria to consider in similar projects in the future, based on expert knowledge of good practice,  include the appropriateness of the technology in the agricultural system in terms of crops and  cropping patterns, water‐saving potential based on crop and soil characteristics, water quality  to avoid clogging of drip systems, and the option to combine drip irrigation with water storage.  3. Rural Enterprise Support Project Phase II 3.1 Project dates, cost, and financing. The World Bank approved the Uzbekistan RESP‐II on  June 12, 2008 with an IDA credit of SDR 41.3 million ($67.96 million equivalent). The  government made a commitment of $6.58 million, and beneficiaries were anticipated to  contribute $0.487million (World Bank 2008b, iii). As a result, the total project cost at appraisal  was $75.03 million. Early in this project’s implementation (March 2009), the Swiss Agency for  Development and Cooperation (SDC) approved parallel grant financing of $7.7 million to  strengthen the capacity of WCAs and finance farmer field schools (FFSs) on improved I&D  technologies under component 2. Moreover, the World Bank approved an additional financing  of SDR 26.40 million ($40.00 million equivalent) in September 2012 to provide additional funds  for component 1 horticulture‐related investments in both the original seven regions and a newly  added Jizzakh region. The original closing date was March 31, 2015. An extension of the closing  date was approved at the time of the additional financing, and the project closed on December  31, 2016. At project completion, the actual total project cost was $110.5 million, including $96.86  million IDA, $5.97 million borrower contribution, and $7.7 SDC parallel financing (World Bank  2017d, 28).  3.2 Restructurings. RESP‐II underwent one level 1 and three level 2 restructurings during  implementation. The level 1 restructuring in September 2012 involved the additional financing,  the project closing date extension, and the amendment of the results framework through the  elimination and addition of indicators and the adjustment of indicator targets. The first level 2  restructuring in January 2011 entailed reallocating unallocated funds of $227,549 toward  consultants’ services because the costs for the I&D rehabilitation engineering design were  higher than estimated. The second restructuring in March 2012 reallocated $5 million for micro  subloans toward investment and working capital subloans because in late 2012, the government  abolished credit unions, which had been envisioned as the main financial intermediaries for  RESP‐II micro subloans. This restructuring also led to the removal of results indicators related  to micro subloans. The final restructuring in July 2014 involved the reallocation of original  credit across disbursement categories, the revision of component costs because of exchange rate  fluctuations, and additional costs for project management.  25   Relevance of the Objectives and Design Objectives 3.3 The PDO of RESP‐II was “To increase the productivity and financial and environmental  sustainability of agriculture and the profitability of agribusiness in the project area” (World  Bank 2008a, 5; 2008b, iv). The PDO was not revised during implementation.  Relevance of the Objectives 3.4 Relevance of the PDO is rated modest. At appraisal, the PDO was aligned with the  World Bank’s development approach for the agricultural sector in Uzbekistan. The FY08–11  CAS pillar II (increasing economic opportunities in rural areas) focused on (i) increasing  agricultural productivity and farm incomes through improved incentive structures and access  to credit, inputs, and skills; and (ii) improving the I&D system and increasing the efficiency and  environmental sustainability of water resource management. The CAS emphasized the need for  medium‐term finance and advisory services for newly independent leasehold farmers, and for  higher cost effectiveness and productivity, especially in the state procurement system for cotton  and wheat (World Bank 2008c, 32). Moreover, the PDO was consistent with the government’s  2008–10 WIS (its poverty reduction strategy) that highlighted the importance of agricultural  growth, farmers’ access to the credit and financial services market, sustainable irrigation and  water management, soil improvement, and drainage (Uzbekistan 2008, 37).  3.5 At closing, the project objectives remained aligned with both focus areas of the World  Bank’s FY16–20 CPF. Specifically, focus area 1 continues to emphasize the need for access to  finance and financial services for the private sector, including agriculture and highlights for job  creation potential in agribusiness (World Bank 2016, 16f). In addition, the CPF focus area 2 calls  for the modernization of the state‐procured cotton sector, increased agricultural productivity  and competitiveness, and in particular, “diversification toward higher‐value, more job‐ and less  water‐intensive crops” (World Bank 2016, 19). Similarly, the government’s 2013–15 WIS with  respect to agriculture and rural development focused on diversification of agricultural  production, modernization (including irrigation and water‐saving technologies), enhancing  productivity, and profitability (Uzbekistan 2013, 50f). These focus areas and needs identified in  the CPF and WIS remained valid and were confirmed by different stakeholders during IEG’s  PPAR mission.  3.6 Despite the alignment of RESP‐II with World Bank and government priorities, IEG  considers the formulation of the PDO unclear and unmeasurable based on the results  framework indicators. The PAD did not clearly define the scope of expected achievements for  the different PDO aspects (agricultural productivity, financial sustainability, environmental  sustainability, and agribusiness profitability). Additionally, it does not lay out potential  variations in the expected achievements across the different beneficiary types targeted through  26   RESP‐II (such as farmers, agribusinesses, financial institutions, WCAs, and so on). Furthermore,  the results framework lacks an indicator for agribusiness profitability and includes an indicator  for financial sustainability focused on the banks’ perspective only, and the PDO indicators for  environmental sustainability measure outputs instead of outcomes. These shortcomings are  discussed in more detail in the M&E and the Efficacy sections.   Relevance of Design 3.7 Project components. RESP‐II comprised four components: (i) rural enterprise finance,  (ii) irrigation and drainage, (iii) rural training and advisory services, and (iv) project  management. During project implementation, the components were not formally revised, but  the World Bank approved reallocation of funds and additional financing for component 1.  3.8 Component 1: Rural enterprise finance (appraisal cost: $36.7 million; revised cost: $76.7  million; actual cost: $72.13 million). This component expanded activities of the RESP from five  districts to seven regions (covering 88 districts) focusing on the following: (i) to enhance access  to commercial financial services for private farmers (mostly newly independent leasehold  farmers) and small to medium‐size rural enterprises (agribusinesses) through the provision of a  credit line, (ii) to improve the banking sector’s capacity to provide agriculture financing by  training the participating financial institutions’ staff in sector‐specific lending skills and risk  assessments, and (iii) to provide assistance to potential loan recipients on business planning to  reduce associated lending risks. Additional financing of $40 million approved in September  2012 led to scaled‐up support for horticulture investments and expansion to the Jizzakh region.  3.9 Component 2: Irrigation and drainage (appraisal cost: $33.2 million; actual cost: $26.4  million). This component aimed to improve water management of irrigated areas in seven  specific districts within the seven project regions through (i) the rehabilitation of critical on‐farm  and inter‐farm I&D systems, to be selected by the main stakeholders in the districts, including  the BAIS and its branch organizations (the AIS), MAWR district authorities, and WCAs, with  technical assistance from a consulting firm; (ii) the strengthening of 84 WCAs and capacity  building of relevant institutions to train and support WCAs to rehabilitate, operate, and  maintain on‐farm I&D systems; and (iii) the piloting and demonstration of applied modern  irrigation techniques in the districts.  3.10 Component 3: Rural training and advisory services (appraisal cost: $2.6 million; actual  cost: $1.60 million). This component financed (i) the provision of training and advisory services  to farmers in various farm management skills (such as business, accounting, and legal) and  production management skills (such as agronomy, water management, and pest management),  and (ii) the dissemination of technical information and advisory services through mass media  campaigns to generate demand for training and publicize the project services and information,  targeting primarily nonbeneficiary farmers.  27   3.11 Component 4: Project management (appraisal cost: $2.5 million; actual cost: $4.45  million). This component covered the overall project implementation management, studies on  relevant sector and subsector issues to inform policy debate, and M&E activities. The cost  increase was mainly due to the additional financing and related closing date extension.  3.12 Implementation arrangements. The RRA was the designated implementation agency  for RESP‐II and maintained the PIU that had also implemented RESP‐I. At appraisal, RRA was  part of MAWR and was responsible for the implementation of several rural donor‐funded  projects. For RESP‐II, the RRA had a central PIU in Tashkent and established regional offices in  the project’s seven regions for day‐to‐day management, coordinating with regional and district  governments, monitoring field implementation, and progress reporting.3  3.13 Relevance of design is rated substantial. The RESP‐II components were logically aligned  with the project objectives. The results chain was clear and consistent, though the results  framework had some weaknesses, described in the M&E section. The component design was  mutually reinforcing to address gaps in Uzbekistan’s agricultural sector at the time of project  preparation.  3.14 The objective of increasing agricultural productivity was supported by (i) the I&D  infrastructure investments and capacity‐building activities of component 2 to improve water  management and soil structure, (ii) the training activities of component 3 that aimed to increase  yields and product quality through improved practices, and (iii) the provision of credit to  farmers and agribusinesses through component 1 to make investments and foster  diversification. Regarding the objective of fostering financial sustainability in agriculture, (i) the  infrastructure and training activities of component 2 for WCAs increased their capacity in  operation and maintenance, and (ii) the loan investments in farm and postharvest infrastructure  of component 1 and related farm management skills‐building activities of component 3  promoted increased farmers’ access to financial resources, yields, reduced losses, and market  expansion. The objective of enhancing of environmental sustainability was strongly related to  both the on‐ and inter‐farm I&D infrastructure improvements and provision of maintenance  equipment, and capacity‐building activities in water management and water‐saving practices of  WCAs and farmers supported by components 2 and 3. The objective of increasing profitability  of agribusinesses was interrelated to the former objectives. The combination of component 1  (which supported the training of financial institutions in agricultural risk assessment for  different production systems and the increased financial support for viable sector‐specific  business plans) and component 3 (which supported farmers to enhance agricultural  productivity of their current production through modern farming, storage, and processing  techniques or switch to higher‐value crops) was of great importance to complement hard  finance with soft skills.   3.15 Overall, the RESP‐II approach of combining physical on‐farm equipment acquisition and  off‐farm irrigation infrastructure rehabilitation (components 1 and 2) with capacity building of  28   different agents in the sector (component 1 for direct beneficiary farmers and financial  institutions; component 2 for I&D agencies, WCAs, and direct beneficiary farmers; and  component 3 for direct and indirect beneficiary farmers) was substantially relevant in the  country and agricultural sector context. Based on the RESP experience, the RESP‐II design  continued and expanded to support the sector’s changing needs and the government’s shifting  priorities away from predominantly inefficient, distorted cotton and wheat production toward a  more market‐led, diversified, and high‐value agricultural production system (World Bank  2008b, 3). However, the funding of component 2 limited I&D investments to on‐farm and some  inter‐farm works, leading to only a partial rehabilitation of canals or other infrastructure in  several cases. This limitation was already highlighted as a lesson in the RESP ICR (World Bank  2009b), upon which the average investment amount per hectare was increased from $85 to $255  in RESP‐II (World Bank 2017d, 6). Despite this substantial increase, partial rehabilitation  continued to be an issue for some of the RESP‐II component 2 activities. However, based on ICR  reporting and IEG interviews, the executed investments prioritized the most urgent sections  identified by project engineers, local authorities, WCAs, and farmers.  Monitoring and Evaluation 3.16 Overall M&E quality rating is modest.  3.17 M&E design. The PAD for RESP‐II described the project results framework, data  collection instruments, and responsibilities for M&E among the different agencies involved in  project implementation (the RRA, the BISA/ISA, WCAs, financial institutions, and consultant  companies providing training activities). The results framework design at appraisal was  partially adequate, but it had several weaknesses, some of which were acknowledged in the ICR  and ICRR (World Bank 2017d, 2017e). Specifically, the indicators tracking progress toward the  achievement of the PDO were inadequate. For example, the results framework did not contain a  PDO indicator to assess changes in agribusiness profitability or an intermediate outcome  indicator to capture changes in agribusinesses’ market access or expansion resulting from RESP‐ II interventions. Similarly, the results framework did not include an indicator to measure  changes in water use or the adoption of the project‐promoted, water‐saving technologies among  farmers, and it did not have an indicator to assess the reduction in waterlogging or other  effectiveness measures for the project drainage works (only “areas with adequate water supply  and drainage”).  3.18 More important, the formulation of some indicators in the results framework did not  measure outcomes. For example, the PDO indicators for environmental sustainability measured  only outputs (“Farmer access to information about and demonstrations of environmentally  sustainable practices improved“) instead of intermediate outcomes, such as behavior change  among beneficiaries (for example, “Percentage of farmers regularly applying environmentally  friendly practices taught in project‐supported trainings and demonstrations,” with specifics on  the regularity and type of applied practices). Similarly, the PDO indicator “Growth in overall  29   agricultural portfolio of the commercial banks at least 10 percent per year during the project  period” was not comprehensive because it focused on the perspective of the financial  institutions and only indirectly measured the change in farmers or agribusinesses’ access to  finance. The IEG mission learned that the financial institutions collected additional data on the  characteristics of loan recipients and repayment rates, but these indicators were outside the  results framework and not disclosed because of data privacy issues. Furthermore, the PDO  indicator on agricultural productivity included measuring changes in farmer incomes (“Overall  farmer productivity and income in project regions have increased”). Including income‐level  objectives in the results framework is considered ambitious because the project lacked  knowledge ex ante on which subprojects would be financed under the different components  (the expected orchard‐related investments, for example, have high sunk costs such as seeds and  drip irrigation equipment, and long gestation periods delaying profitability), confounding  factors affecting farm income and thereby weakening RESP‐II claims on attribution, and  beneficiaries’ general unwillingness to share accurate information on incomes, as highlighted in  the ICR (World Bank 2017d, iv).  3.19 M&E implementation. The PIU was staffed with one M&E specialist, who provided  quarterly progress reports on the results framework indicators. During implementation, some  of the weaknesses in the results framework were recognized and addressed during  restructurings. However, these restructurings addressed its weaknesses only partially,  including the continued lack of an indicator on agribusiness profitability and the missed  opportunity to either remove or modify the PDO indicator on farmer incomes based on the  difficulty in collecting reliable information during implementation (World Bank 2017d, iv).  Furthermore, no RESP‐II‐specific information was provided at project completion or during the  PPAR mission regarding loan repayment rates or arrears in the commercial banks to assess  financial sustainability and profitability of the RESP‐II loan investments (World Bank 2017f).4  3.20 Progress monitoring and reporting during implementation differed by project  component. For component 1, the financial institutions submitted regular progress reports to  the RRA on loan applications, effectiveness, and repayment, among others. In addition, the  RRA credit line coordinator and World Bank missions regularly visited financed subprojects to  verify progress after loan disbursement, and met with all financial institutions to assess  documents and data. Furthermore, for the preparation of the additional financing, RRA  conducted a rapid midterm assessment of component 1, surveying 70 farmers (10 per region  based on random stratified sampling, according to the ICR Review) and agribusinesses on the  purpose and details of the loan, and changes in processing volume, yields, sales, profits, and  household income, among others (World Bank 2011, annex 1). For component 2, the consulting  firm responsible for the works reported progress on the I&D rehabilitation monthly. The  regional RRA engineers and the central RRA I&D coordinator visited all rehabilitation sites  during project implementations. Regarding the capacity‐building activities for WCAs and  farmers under component 2, SDC’s involvement in the execution of the activities led to strong  30   results monitoring and reporting. Specifically, SDC submitted regular progress reports to RRA  and conducted surveys and focus group discussions to evaluate achievements with WCAs and  with MAWR system specialists, farmers, local self‐administration bodies, and (socially  vulnerable) households in 2010 (baseline), 2012 (endline SDC first phase), and 2015 (endline  SDC second phase). The SDC sample always included all project‐supported WCAs, and part of  the sample (especially farmers) was based on stratified random sampling (SDC 2015, 28). For  component 3, monitoring took place based on the respective indicators in the results  framework.  3.21 To complement results framework results monitoring, an independent consulting firm  conducted and end‐of‐project assessment in 2016. IEG confirmed with the consulting firm that  the assessment had applied a stratified random sampling method for the 957 interviews  conducted. IEG’s review of the assessment identified several weaknesses. Foremost, the  assessment did not capture data from control groups that would have allowed a rigorous  assessment of project impact. Although the assessment provided some important  complementary information to the results framework (such as information on new market  access, water loss, and soil salinity), much of the reported data in the assessment is descriptive,  and not much detail is provided on the survey‐based results presented. Moreover, the  assessment relies on district‐level data (for yields) and not primary data collection, which  should be interpreted cautiously given varying data quality and reliability of district‐level data,  as noted during the IEG mission.  3.22 M&E use. Data from the RESP‐II monitoring system of the results framework and  additional project‐related data collected by RRA were used for ISRs. The data also supported  the restructuring of the results framework and was important input to the ICR. Based on IEG  interviews with the central PIU and the local PIUs visited, RRA staff confirmed that they relied  on the data collected for M&E purposes for day‐to‐day project management activities and  decision making. Moreover, the project database specifying the beneficiaries, type of  investments, production systems, and location was used for the sample selection for the IEG  PPAR mission field visits.  Implementation Experience 3.23 The preparation and implementation of RESP‐II benefited from the capacity built under  the RESP implementation in terms of the experience, incorporated lessons, and existing central  PIU structure within RRA. However, there were several delays early in the project and later  during implementation mainly caused by different internal government processes. Specifically,  with RESP‐II scaling up from five RESP districts to seven regions (88 districts), there were initial  delays in setting up the seven regional offices because of slow governmental approval  procedures. Similarly, lengthy review and approval processes significantly slowed the signing  of subsidiary agreements between the Ministry of Finance and the participating financial  institutions by nine months, and the later approval of the additional financing that took 20  31   months to start implementation after World Bank Board approval. These delays and the  approval of the additional financing led to the extension of the project closing date by 21  months.  3.24 Despite the different implementation delays related mostly to component 1,  disbursement of the credit line was rapid because of the farmers and agribusinesses’ high  demand for loans. Specifically, at the midterm review in December 2011, 83 percent the total  credit line allocation of component 1 had been disbursed (World Bank 2011, 2). Farmers and  agribusinesses’ demand was much higher than anticipated for longer‐term, lower‐interest loans,  and the option to borrow in either Uzbek Som or foreign exchange credit, which enabled  importing of high‐productivity crops or livestock and quality equipment. These terms were  unique to the RESP‐II–supported credit lines because market rates were less favorable and  borrowing in foreign exchange strongly limited. The rapid disbursement of component 1 led to  the government’s request for additional financing of $40 million and the expansion to an eighth  region. With the government’s focus shifting away from state‐controlled cotton and wheat  production, the additional financing targeted horticulture production, storage, and value‐added  processing, and allowed for larger loan sizes per credit recipient compared with the original  project.  3.25 Early in the project implementation, RESP‐II and SDC established a memorandum of  understanding for the parallel grant financing of $7.7 million resulting from the project’s  engagement with other donors active in the sector and the Swiss’ leading role in irrigation and  water resource management issues in Uzbekistan. The implementation of the capacity‐building  activities of component 2 was strongly shaped by the SDC engagement because of reallocation  of funds that allowed for the implementation of four more rehabilitation works, and because of  a structured and focused approach on strengthening WCAs and training farmers in water‐ saving technologies and other practices through FFS and demonstrations.  Financial Management and Procurement 3.26 The RRA retained the RESP fiduciary staff for the RESP‐II implementation, allowing a  smooth transition and continuous familiarity with World Bank fiduciary guidelines and  procedures. The World Bank assessed financial management and procurement performance in  this project as satisfactory throughout implementation.  3.27 Regarding financial management, one of the two World Bank financial management  specialists responsible for this project was stationed in the nearby Almaty country office (and  the other one was at headquarters), allowing for easy communication. The project had  unqualified and timely financial audit reports and no notable concerns during implementation.  The final audit for RESP‐II was available at the time of the PPAR. The independent auditing  company identified no significant shortcomings or weaknesses in accordance with International  Public Sector Accounting Standards.5 Regarding procurement, the World Bank procurement  32   specialist was in the Tashkent country office, which facilitated constant communication with  RRA staff. This local presence was crucial, given the high risks associated with procurement  implementation identified at preparation based on the assessment that Uzbekistan “does not  have a public procurement environment conducive to transparent and economic procurement”  (World Bank 2008b, 16). Based on its experience with RESP‐I, RRA procurement staff diligently  followed the World Bank’s Procurement and Consultant Guidelines, and conducted and  adequately filed the procurement processes as planned. RRA built procurement‐related  capacity among the participating financial institutions in areas like competitive procurement  and other areas relevant to RESP‐II implementation, as planned during project preparation.  Safeguards Compliance 3.28 Environmental safeguards. RESP‐II was classified as environmental category B (partial  assessment). It triggered safeguards Environmental Assessment (OP 4.01) and International  Waterways (OP 7.50). Because the specific works and investments to be implemented by RESP‐ II were not known during preparation because of its demand‐driven nature, the anticipated  environmental impact was not known. However, it was expected to be insignificant given their  small scope and scale. RRA had the capacity for adequate environmental management based on  its RESP implementation experience, and it had a full‐time environmental specialist who  conducted regular site visits, submitted semiannual environmental reports for I&D contractors,  and ISRs. No environmental safeguards issues or deficiencies were reported during project  implementation in the ICR or during the PPAR mission. Therefore, RESP‐II is assessed to have  complied with its environmental safeguards commitments.  3.29 Social safeguards, Inspection Panel Case. In September 2013, the World Bank’s  Inspection Panel received a complaint from three local and one international nongovernmental  organizations alleging that RESP‐II contributed to the use of child and forced labor in cotton  production.6 According to Inspection Panel documents, World Bank Management responded  swiftly and satisfactorily to these claims, and the Inspection Panel mission to Uzbekistan in  November 2013 found no evidence that RESP‐II caused or aggravated any possible related  harm. In response to the claims, RESP‐II adopted mitigation measures, including third party  social monitoring through the International Labour Organization (ILO). Based on these actions,  the Inspection Panel decided not to conduct a full inspection. IEG reviewed related documents  and interviewed the responsible ILO representatives, and assesses RESP‐II as have complied  with the social safeguards.  Achievement of the Objectives 3.30 The RESP‐II PDO as stated in the financial agreement was “To increase the productivity  and financial and environmental sustainability of agriculture and the profitability of  agribusiness in the project area” (World Bank 2008a, 5). This assessment divides the PDO into  four parts (referred to as objectives): (i) To increase productivity of agriculture in the project  33   area, (ii) to increase financial sustainability of agriculture in the project area, (iii) to increase  environmental sustainability of agriculture in the project area, and (iv) to increase profitability  of agribusiness in the project area. IEG uses four sources of evidence to assess and rate the  achievement of the PDO: the ICR (World Bank 2017a), the ICR Review (World Bank 2017e), the  reports and studies on RESP‐II (particularly the end‐of‐project assessment and the SDC final  report), and the IEG assessment based on the PPAR fieldwork in November 2018. The latter  applied validation tools described in appendix B, including site visits, farm‐level asset  verification, interviews with a sample of direct beneficiaries, and interviews with implementers  and other stakeholders. The IEG fieldwork included a small number of interviews with direct  beneficiaries, which are not representative of the RESP‐II beneficiary population.  Objective 1: Increase Productivity of Agriculture in the Project Area  3.31 IEG rates the efficacy of objective 1 as modest given insufficient evidence on yield and  income increases. RESP‐II aimed to increase agricultural productivity in the project area  through three types of activities: (i) rehabilitation of I&D works and improvement of on‐farm  irrigation water supply and drainage services, (ii) provision of technical assistance and advisory  services on production practices, crop diversification, and water resource management  technologies, and (iii) access to credit for farmers and agribusinesses to purchase production,  processing, and storage equipment. A detailed list of the most relevant outputs and  intermediate outcomes disaggregated by type of activity is provided in appendix D.  Intermediate Outcomes 3.32 At project completion, all 62 WCAs operated based on project‐promoted O&M plans,  manuals, procedures, and irrigation schedules. They undertook 87 percent of the maintenance  work for their I&D infrastructure compared with the baseline of 34 percent. Water user  satisfaction with WCA performance was high at 82 percent. More important, according to the  SDC final report, water loss during transportation decreased by 37 percent (from 24 percent in  2010 to 15 percent in 2016) because of the rehabilitated I&D infrastructure and canal lining. IEG  interviews revealed that this led to reductions in waterlogging and salinity and to improved soil  quality.  3.33 A shortcoming of the RESP‐II results framework and the end‐of‐project assessment is the  lack of information on adoption rates of practices taught in the workshops of component 3  (adoption rates of FFS trainings are discussed under objective 3). IEG interviews with farmers  confirmed that project trainings on farm accounting and tax fundamentals were crucial for their  farm management. Additionally, all farmers interviewed confirmed that they continued to  apply at least one of the farming practices regularly (especially pest and disease verification and  control, ameliorative land improvements, or practices related to horticulture, viticulture, or  livestock farming). However, no representative data on adoption rates are available. Similarly,  there is no information on repayment rates or arrears of the RESP‐II loan investments.  34   Outcomes 3.34 The RESP‐II results framework included the PDO indicator “Overall farmer productivity  and income in project regions have increased.” Productivity was measured by changes in yield  per hectare. According to the ICR, project M&E data showed a 33 percent average increase in  yields per hectare for the nine most common crops (wheat, corn, rice, cotton, potatoes,  vegetables, melons, fruits and berries, and vineyards) across all eight project regions. This  exceeded the indicator target of 20 percent, but is based on irrigated lands only (World Bank  2017d). For the seven project districts with RESP‐II I&D interventions, the end‐of‐project  assessment estimated a weighted average yield increase of 12 percent between 2008 and 2015 on  the district‐level for the same nine primary crops and based on a stratified random sample  (Expert Info 2016, 76). This average increase did not meet the appraisal expectations,  particularly for the predominant cotton and wheat production, reflecting an overall national  trend of declining cotton yield increases since 1980. However, the end‐of‐project yield increases  exceeded those assumptions for melon, fruits and berries, rice and vineyards—crops promoted  for diversification purposes under the RESP‐II (World Bank 2017d, annex 3).   3.35 Complementing the yields data presented in the ICR, the midterm review prepared for  the additional financing in November 2011 showed a 32 percent increase in yields per hectare  based on 70 surveyed beneficiary farmers (10 per region based on random stratified sampling,  according to the ICRR). The majority of the sampled farmers (64 percent) produced field crops  (most commonly cotton and wheat), 17 percent produced livestock, and 11 percent produced  poultry.  3.36 The PDO indicator for objective 1 also includes income. However, farm household  income data were not collected consistently during implementation. A reference point for this  measure is the midterm review based on 70 loan recipients selected based on stratified  sampling, stating an average increase in household income of 151 percent compared with  income before the loan (World Bank 2017d, vi). Other proxies for income collected during the  same survey were an 86 percent average increase in sales, 306 percent average increase in  agricultural enterprise profits, 230 percent average increase in animal heads for livestock farms,  and a 33 percent average increase in land area under cultivation for crop farmers (World Bank  2011, annex 1). However, the sample size is small and the baseline is unclear, and there are no  counterfactual data that attribute these increases to the project.  IEG Assessment of Yields and Farm Income  3.37 IEG interviews with eight farmers and agribusinesses and six WCAs during the  fieldwork supported ICR conclusions that the uptake of improved agricultural practices and  water‐saving technologies, the I&D rehabilitation works, and enhanced irrigation scheduling  led to improvements in soil quality and increases in yields for cotton and wheat. The average  increase in yields found in the small, nonrandom IEG sample was 22 percent for cotton and 61  35   percent of for wheat. Orchard farmers interviewed by IEG stated they had earned significantly  higher income (about 33 percent) compared with cotton from their respective product (mostly  apples). Similarly, livestock producers highlighted increases in yields and presumably income  from the project‐financed imported breeds compared with their former local breeds. The two  interviewed farmers who used the RESP‐II loan to invest in cold storage rent part of their  storage space to other farmers based on high demand, which provided them with additional  income throughout the year. However, this information is not representative of all RESP‐II  beneficiaries, and IEG did not collect counterfactual data.   3.38 Although the other activities promoted under RESP‐II—access to rural credit for farmers  for the acquisition of inputs or equipment, conversion to high‐value crops, and the adoption of  project‐promoted improved farming practices—could potentially increase yields, the project did  not provide sufficient evidence to support this causal chain or the yield outcome. Moreover,  IEG was concerned that the outcome data on yields provided in the ICR and project‐related  assessments were at the district level and not specific to project beneficiaries or project areas.  Furthermore, these results were not compared against a counterfactual and thus have limited  value for a rigorous assessment of the extent to which objectives were achieved. Additionally,  including income at the PDO level is considered overambitious given the project duration and  design. The project team missed the opportunity to remove the income formulation from the  results framework during restructuring or to enhance impact measurement efforts for this  measure.  Objective 2: Increase Financial Sustainability of Agriculture in the Project Area  3.39 IEG rates the efficacy of objective 2 as substantial based on demonstrated strengthened  financial capacity of WCAs and farmers. RESP‐II efforts to increase financial sustainability in  the project area are categorized in two main activities: (i) provision of irrigation infrastructure  rehabilitation, equipment, and training to WCAs, and (ii) loan investments in production and  processing complemented with capacity building in farm and agribusiness management and  business plan development. A detailed list of the most relevant outputs and intermediate  outcomes are provided in appendix D.  Intermediate Outcomes 3.40 Regarding WCAs’ financial sustainability, WCAs increased their service fees from what  they were before the project and increasingly apply legal procedures to enforce compliance with  contracts on service fee payments and conflict resolution with nonpaying farmers, based on the  project training (SDC 2015, 15). IEG corroborated an increased legal support to WCAs, which  has increased the fee collection rates for some WCAs.  3.41 Regarding farmers’ financial sustainability, despite the weak evidence on yield  increases, there are indications that a proportion of RESP‐II beneficiary farmers achieved yield  increases and therefore possible improvements in financial sustainability, particularly the high‐ 36   value horticulture farmers. A financial assessment of 14 RESP‐II loan recipients for the ex post  economic analysis in the ICR estimated the average incremental net profit for the four most  common types of investments (88 percent of all investments). The results were an average  incremental net profit of $3,500 for agricultural machinery, $218,000 for cold storage, $250,000  for greenhouses, and $178,000 for orchards for the period of 25 years. Moreover, the end‐of‐ project assessment found a reduction in agricultural production losses, especially for fruit,  vegetable, milk, and dairy farmers because of loan investments in postharvest infrastructure.  However, it does not quantify the reduction of production losses. Similarly, farmers and  agribusinesses who invested in greenhouses (12 percent of RESP‐II loans)—typically combined  with drip irrigation investments—were able to extend their growing season and reach domestic  or international markets earlier than they could before the project. The ICR does not provide  data that are more detailed, but IEG interviews supported the conclusion that investments in  greenhouses and storage facilities allowed for market expansion and reduced farmers’ necessity  to engage in ad hoc low‐price sales during harvest time. It also allowed them to rent out part of  their storage infrastructure for extra income, strengthening their financial sustainability.  Outcomes 3.42 The RESP‐II results framework includes the PDO indicator “Growth in overall  agricultural portfolio of the commercial banks of at least 10 percent per year during the project  period.” This is an incomplete measure for objective 2 because it captures only farmers’ and  agribusiness’ access to financing, which can but does not automatically aid their financial  sustainability. At project completion, 57 percent of participating banks increased their  agricultural portfolio by at least 10 percent compared with the baseline (before the RESP‐II). The  results framework did not include a specific PDO‐level indicator for WCA financial  sustainability, but it included intermediary indicators measuring WCA maintenance  performance and user satisfaction, both of which exceeded their targets.  3.43 The project I&D rehabilitation investments, provision of operating equipment, and  capacity‐building activities for WCAs helped to increase their operational and financial  strength. The SDC final report highlights that at project completion, 100 percent of WCAs  operated based on operational and financial management plans, O&M plans, and demand‐ based irrigation schedules approved by the annual WCA general assembly meetings (which in  2015 were attended on average by 87 percent of member farmers compared with only 11  percent in 2011). The development of such plans (formerly uncommon), together with the  provision of small equipment, software, and water measurement tools, contributed to WCAs’  structured financial planning and eased the identification of risks to financial sustainability.  SDC reported that in 2014, 78 percent of the supported WCAs were able to implement 75  percent of their planned O&M irrigation canal cleaning targets (SDC 2015, page 14), cleaning 19  percent more canal kilometers than they did in 2010. By project completion, WCAs conducted  87 percent of maintenance work (World Bank 2017d). WCAs increased their revenues from  37   service fees and collection rates because of better I&D infrastructure and O&M services (for  example, the fee for cotton and wheat farmers increased 32 percent between 2011 and 2014  (from Som 7,193 per hectare to Som 9,483). In line with this, IEG interviews confirmed  continuous increases in service fees after the project closed as agreed in the WCA assembly, and  improvements in collection rates, particularly from horticulture producers. However, average  collection rates are low (45 percent in 2014 for the 62 project WCAs and 53 percent for WCAs  that IEG interviewed), and increasing taxes and salary costs have led to debt accumulation  among WCAs (SDC 2015, page 15), negatively affecting their financial status. RESP‐II took  measures to address these risks to financial sustainability by analyzing the financial status and  loan‐carrying capacity of beneficiary WCAs, supporting them in legal actions that have led to  increased revenues, and increasing operational efficiency through trainings and software for  financial planning and accounting, among others. The ex post EFA estimated general financial  sustainability of I&D rehabilitation works and training investments and calculated a positive  financial NPV of $9.9 million (World Bank 2017d, annex 3).  IEG Assessment on Rural Finance   3.44 IEG interviews with three participating banks covering 56 percent of RESP‐II loans  provided during project implementation, six loan recipient farmers and agribusinesses, and  other stakeholders, including local authorities and WCAs, revealed the importance of the  availability of credit for growing business in the rural space for both banks and farmers. In line  with the verbal statements of all bank representatives, a large portion of RESP‐II beneficiary  farmers (such as 83 percent of the interviewed loan recipients) were first‐time loan takers who  were attracted by the RESP‐II loan conditions. All interviewees reiterated that the project  activities helped farmers overcome risk aversion toward taking a loan, and several have taken  subsequent loans. For example, half of the interviewed farmers had already taken loans, and 17  percent plan to take additional loans to invest in their business further, stating that the RESP‐II  experience significantly eased the process of applying for another loan. Moreover, according to  bank representatives and loan recipients, the ability to borrow in foreign exchange and  purchase high‐quality inputs or machinery increased agricultural production and the financial  strength of farms and agribusinesses. In addition, component 1 built capacity within banks for a  rigorous loan application review process, and farmers’ capacity to develop viable business  plans. IEG asked banks and farmers about their compliance with repayments and was informed  that repayments were according to schedule for the vast majority of loan recipients, given the  project’s focus on rigorous businesses plan development and risk assessments conducted by the  banks. However, no specific information was provided regarding loan repayment rates or  arrears to assess the financial sustainability of the RESP‐II loan investments.  Objective 3: Increase Environmental Sustainability of Agriculture in the Project Area  3.45 IEG rates the efficacy of objective 3 as substantial because of the strong evidenced  improvements regarding water efficiency, reductions in water losses and consumption, and  38   uptake of water‐saving practices. RESP‐II intended to increase environmental sustainability in  the project area through two activities: (i) I&D infrastructure improvements and provision of  O&M equipment to WCAs, and (ii) capacity‐building activities in water management and  water‐saving practices of WCAs and farmers. A detailed list of the most relevant outputs and  intermediate outcomes are provided in appendix D.  Outcomes 3.46 The results framework included the PDO indicator “Irrigated areas with adequate water  supply and drainage in the project districts,” which is a proxy measure for environmental  improvements in terms of fostering efficiency in irrigation water supply and agricultural  production, water loss reduction, and improved drainage decreasing waterlogging—all of  which improve the quality of arable land. The PDO indicator target was exceeded by  229 percent, and 204,345 hectares received I&D infrastructure rehabilitation works through  RESP‐II. The other PDO indicator related to objective 3 is “Farmer access to information about  and demonstrations of environmentally sustainable practices improved.” This indicator is  output‐based instead of outcome‐based, as noted in the M&E design. At project completion, it  exceeded its target by 18 percent, with 61,246 farmers participating in the different RESP‐II  trainings, including on environmentally sustainable production and water use practices.  3.47 Several results attest to the achievements toward objective 3 derived from the  combination of the rehabilitation of I&D infrastructure and capacity building in improved on‐ farm irrigation management. Specifically, the SDC 2015 survey of 20 percent of randomly  selected farmers from each WCA found high adoption rates of improved water‐saving  technologies demonstrated in FFS, including 97 percent of respondent farmers applying  irrigation with organic fertilizers, 66 percent applying every‐other furrow irrigation, 63 percent  applying short‐cut furrow irrigation, and 60 percent applying level furrow irrigation. Most  commonly mentioned technologies that interviewed farmers plan to apply are water accounting  (45 percent), water record keeping (38 percent), polyethylene pipes applied irrigation, and  application of perforated black polyethylene film (35 percent). Moreover, 30 percent of  neighboring nonbeneficiary farmers across the seven districts (who field staff monitored  regularly) implemented water‐saving technologies in 2015 “after learning of their benefits and  subsequently receiving training” from WCA (World Bank 2017d, 18).  3.48 In addition, according to the end‐of‐project assessment, saline lands served by the  participating WCAs decreased by 28 percent between 2010 and 2016 (from 18 percent of land to  13 percent) given the reduction in waterlogging and improved water resource management by  WCAs and farmers. SDC found water productivity increases (measured in yield in kilograms  per cubic meter of water) of 70 percent for wheat and 69 percent for cotton between 2010 and  2014 at the 62 FFS plots (SDC 2015, annex 16). The SDC report also showed that the widely  promoted use of black perforated film for furrow irrigation for cotton production led to an  average decrease of 20 to 25 percent for on‐farm water consumption and 25 to 30 percent for  39   fuel consumption for pumps per hectare, along with yield increases. Moreover, water loss  during transportation was reduced by 37 percent between 2010 and 2016 (from 23.7 percent to  15 percent).  IEG Assessment of Sustainable Agriculture and Water Management Practices  3.49 IEG interviews with six WCAs, eight farmers, and eight local representatives (including  from BISA, ISA, the regional department of agriculture, and local governments) consistently  confirmed improvements in water efficiency and consumption, increased adoption of water‐ saving technologies, and where previously prevalent, a reduction in waterlogging. Specifically,  interviewed farmers reported a 43 percent average reduction in water consumed for  agricultural production of wheat and cotton. Without prompting, 57 percent of interviewed  farmers volunteered enhanced water delivery as a key benefit derived from the installation of  gates and valves, which led to a reduction in waterlogging, and thus enhanced soil quality and  yields. Similarly, 67 percent of interviewed WCA chairpersons mentioned improved water flow,  and enhanced accuracy in irrigation water delivery in terms of requested volume and timing for  their member farmers. They also mentioned quicker delivery—one WCA experienced water  delivery time savings of 60 percent, and another decreased water lost during transportation by  85 percent.  3.50 However, IEG interviews also revealed obstacles to the uptake of some of the water‐ saving technologies promoted by RESP‐II, in line with the SDC final report statement,  “Technologies that do not involve significant up‐front expenditures have gained the widest  distribution” (SDC 2015, 31). The most common reasons SDC found for low uptake were (i)  unfavorable farm conditions, (ii) lack of funds, (iii) lack of information about the technology,  and (iv) unavailability of materials to introduce technology. One example is farmers’ mixed  interest in drip irrigation. Given that it is not considered the best technology for the still‐ predominant cotton production (pipes would need to be repositioned every season) along with  its high cost, it was of greatest interest and importance to horticulture and viticulture farmers.  However, IEG interviewee farmers perceived the low‐cost technologies that RESP‐II promoted  as substantially useful, and they used them regularly, particularly black, perforated film or  flexible hoses for furrow irrigation and adhering to an irrigation schedule, confirming the  findings of the final SDC report based on a representative farmer sample.  IEG Assessment on WCA Capacity‐Building Activities  3.51 IEG interviewed six WCAs (two in Andijan’s Ulugnor district, two in Ferghana’s  Yazyavan district, and two in Samarkhand’s Pasdargom district). All interviewed WCAs highly  appreciated the value RESP‐II created for their operational capacity through the SDC‐led  provision of equipment, including tractors and excavators, motorbikes, bicycles, weather‐ resistant uniforms, and office equipment (such as a computers, printers, and financial planning  software). The equipment provided improved WCA management and the ability to provide  40   services to members. Specifically, WCA chairpersons and WCA member farmers interviewed  expressed their satisfaction with the more accurate and regular canal maintenance, including  after project closure. The installation of intake gates with water measurement at the  demonstration sites led to more efficient and timely water delivery and more accurate fee  calculations, benefiting farmers’ irrigation planning, soil quality, and yields, and reducing  conflicts between WCA and farmers. Moreover, the interviewed WCAs and members  highlighted the value of RESP‐II’s participatory approach to identifying and rehabilitating the  most deteriorated parts of on‐ and inter‐farm irrigation canals. Several WCA chairpersons  confirmed that neighboring WCAs that IEG did not interview also appreciated the support  received. One WCA mentioned that some WCA members invested their own capital to replicate  the RESP‐II demonstrations through the installation of gates and valves in irrigation canals to  benefit from better control and distribution of water supply.   3.52 Furthermore, all WCAs highlighted the usefulness of and their satisfaction with the  project‐supported trainings on efficient irrigation water distribution and the development of  financial, O&M, and irrigation scheduling plans. Only one of the interviewed WCAs already  had similar plans before RESP‐II, but for the rest, these plans were new. All of the WCAs  interviewed stated that they continue using these plans based on the RESP‐II templates and  trainings. Given the enhanced capacity and services the WCAs provide, all of them reported  that member farmers are generally more willing to pay for improved services. IEG interviews  revealed a considerable increase in WCA service fees from what they were before RESP‐II. The  average WCA service fee for the IEG sample was Som 32,000 per hectare for cotton and wheat  (Som 37,000 in Andijan, Som 35,000 in Ferghana, and Som 21,000 in Samarkhand) and Som  48,000 per hectare for horticulture (Som 45,000 in Andijan, Som 65,000 in Ferghana, and Som  33,000 in Samarkhand).   3.53 However, WCA service collection rates were low, with a three‐year average of  53 percent across the IEG sample for the years 2015 to 2017 (ranging from a minimum of  30 percent to a maximum 90 percent). This leads to WCAs not being able to pay their staff and  debt accumulation fully. Moreover, contributions vary considerably across years and types of  farmers (horticulture farmers typically pay higher fees), making WCA financial planning highly  challenging. During IEG’s visit to the Pasdorgham district, it witnessed an innovative approach  to ensure reciprocal accountability—since mid‐2018, the Agricultural Inspection under the  District Prosecutor’s Office enforces the contractual obligation between WCAs and their  members more strictly, leading to a significantly higher collection rate. Moreover, WCAs there  collect farmers’ signatures for the fee bank transfer directly on the field after water delivery.   Objective 4: Increase Profitability of Agribusiness in the Project Area  3.54 IEG rates the efficacy of objective 4 as modest given lack of profitability measurements  and insufficient related evidence. RESP‐II efforts to increase the profitability of agribusiness in  the project area were categorized in two activity types: (i) capacity building of financial  41   institutions in agricultural risk assessment to incentivize the development and expansion of  loan provisions, and (ii) capacity building of farmers and agribusinesses to enhance on‐farm  and off‐farm productivity through modern production, storage, and processing techniques, and  switch to higher‐value products and markets to generate higher profits. A detailed list of the  most relevant outputs and intermediate outcomes is provided in appendix D.   Intermediate Outcomes 3.55 All participating financial institutions expanded their agricultural loan portfolio  significantly, particularly for horticulture and livestock, as evidenced by the PDO indicator, IEG  interviews with banks managing 56 percent of all RESP‐II loans, and the continued provision of  agricultural credit lines in the ongoing Horticulture Support and Livestock Development  Projects. Loans were given for higher revenue‐generating investments such as greenhouses  (typically together with drip irrigation and seedlings), orchards, postharvest processing, and  storage (categories of investments were listed under objective 1) that can be expected to increase  profitability. The midterm review survey of 70 RESP‐II loan recipients reports some findings on  profitability, such as average increases of 86 percent for sales and 306 percent for agricultural  enterprise profits among those interviewed (World Bank 2011, annex 1). However, the survey  sample size is small, there is no detail on baseline information and collection method for  enterprise profits presented, and no counterfactual data were available. Another source of  information is the financial profitability analysis in the RESP‐II ex post EFA, reporting positive  incremental profits for investments in greenhouses, cold storage, orchards, and agricultural  machinery (World Bank 2017d). Moreover, the end‐of‐project assessment reports reductions in  agricultural production losses because of improved practices and storage facilities, and  greenhouse and cold storage owners’ ability to extend the growing season and reach new  domestic and international markets. Cold storage owners also typically rent part of their space  to nearby farmers, providing them with additional income. In addition, farm profitability is  positively affected by the 25 to 30 percent reduction in fuel consumption per hectare for cotton  and wheat farmers, as evidenced by the SDC reporting (SDC 2015, 14).  Outcomes 3.56 The results framework did not include a PDO indicator for agribusiness profitability,  which was a considerable weakness of the project and M&E design. The PAD principally  related profitability to “access to new financial products,” diversification, and “entering into  new profitable activities” (World Bank 2008b, 9), but it did not provide specific measurable  indicators or expected achievements. The ICR provided outcomes related to the profitability  concept associated with objectives 1 and 2, measured in yield and incomes (with insufficient  evidence for RESP‐II overall), farmers’ and agribusinesses’ capacity in management and  accounting, access and uptake of credit for higher‐revenue loan investments, reduction in  production losses, and financial institutions’ capacity in risk assessment, agricultural portfolio,  and financial services. However, no direct evidence of increased agribusiness profitability was  42   provided (such as higher gross sales margins and sales values, profit margins, debt structure  and serviceability, or other financial measures).   IEG Assessment of Agribusiness Profitability  3.57 Regarding financial institutions, the three banks interviewed during the IEG mission  emphasized the importance and uniqueness of the RESP‐II agricultural finance for agro‐ machinery, greenhouses, higher‐value crops or breeds, postharvest storage and processing  equipment, or off‐farm agribusinesses. All interviewed financial institutions significantly  increased their sectoral risk assessment capacity and agricultural loan portfolio (from doubled  to a maximum tenfold increase), and expanded the number of related staff because of RESP‐II at  project completion and continued to do so at the time of the PPAR mission. They all expressed  the expansion of their loan portfolio to the growing agricultural sector (particularly horticulture  and livestock) and the accompanying increase in their client base and related revenues from  higher daily transactions (details are provided in annex F).  3.58 Regarding farmers or agribusinesses’ profitability, the IEG mission received only  anecdotal evidence about increased sales volumes and margins, higher profits from loan  investments, and crop diversification based on a small, unrepresentative sample. Despite the  importance of the project’s investments addressing the businesses needs and shifts toward  higher revenue production of private farmers and agribusinesses, IEG did not obtain sufficient  evidence on RESP‐II’s contribution to agribusiness profitability.7  Efficiency 3.59 Efficiency of RESP‐II is rated substantial. This assessment is based on the traditional  measures of efficiency assessed by the PAD and ICR. Table 3.1 provides an overview of these  measures from the ex ante, interim, and ex post financial and economic analyses.    43   Table 3.1. RESP-II Efficiency Measures Component Analysis Type Ex Ante EFA Additional Ex Post EFA Finance EFA Component 1 Economic NPV 3.8 million 18 million $343 million Financial NPV 107.8 20 million $389 million million EIRR 20 percent 19 percent 47 percent FIRR n.a. 21 percent 73 percent Components 2 and 3 Economic NPV $23.4 n.a. $11 million million Financial NPV $43 million n.a. $9.9 million EIRR 24 percent n.a. 32 percent FIRR n.a. 25 percent Note: EFA = economic and financial analysis; EIRR = economic internal rate of return; FIRR = financial internal rate of return; NPV = net present value. a. For the additional financing, the economic and financial analysis (EFA) was reestimated for component 1 and maintained the appraisal estimates for components 2 and 3. This made sense because the additional financing funds were targeted to component 1 investments. IEG commends that the EFA for the additional financing broadened its assumption of the model farm from investments in a harvester to other “farm machinery, processing and irrigation equipment and storage facilities, crop and livestock production and services and non-agricultural activities” (World Bank 2017d, annex 3). This assumption included a more holistic picture of the actual investments made by loan recipients of component 1. The resulting analysis estimated a financial net present value of $20 million and financial internal rate of return of 21 percent. The economic net present value was $18 million and an economic internal rate of return of 19 percent. 3.60 Economic efficiency. At appraisal, RESP‐II conducted an ex ante EFA to assess standard  efficiency measures separately for component 1 and components 2 and 3: (i) the financial  viability in terms of incremental gross margin, net margin, and financial NPV; (ii) the economic  viability in terms of economic NPV; (iii) the overall cost recovery ability of WCAs to finance  incremental recurrent costs, and (iv) the fiscal impact of the project on the government. The EFA  engaged in a with‐project versus without‐project scenario, assuming a 25‐year period and  12 percent discount rate (World Bank 2008b, annex 9).  3.61 The ex ante EFA estimates for component 1 were based on the farm example acquiring a  harvester. The RESP‐II PAD does not explain why this example is used, but IEG’s review of the  RESP ICR reveals that 96 percent of the RESP loans had been used for “purchasing farm  machinery and spare parts, out of which 77 percent were for purchasing a combine harvester  and different kinds of tractors” (World Bank 2009b, 46). Hence, the farm model used in the  RESP‐II ex ante EFA adequately reflected the majority portion of typical investments expected  for component 1. The total project net incremental benefits were estimated to be $107.8 million in  terms of financial NPV, or $5 per $1 invested. The economic NPV was estimated at $3.8 million,  or $0.18 per $1 invested, with an EIRR of 20 percent. For the fiscal impact analysis, the EFA  assumed that RESP‐II financial institutions lent at an interest rate of LIBOR +0.5 to +1 percent in  U.S. dollars and of 12 to 14 percent in Uzbek som. Based on these assumptions, funds were  estimated to be repaid in 15 installments after a five‐year grace period. Sensitivity analysis  44   concluded that the RESP‐II had a high sensitivity to credit disbursement delays by the financial  institutions and a moderate sensitivity to delays in loan recipients’ repayment of the principal  (World Bank 2008b, annex 9).   3.62 The ex ante EFA combines its estimates for components 2 and 3 because the training and  advisory activities were assumed to complement the I&D component (World Bank 2008b, annex  9). It is unclear how the training and advisory services provided to farmers were considered in  the analysis because the PAD does not provide details and focused on the expected effects of the  I&D infrastructure works. The EFA was based on a model farm (assuming 9.6 hectares of wheat,  12.9 hectares of cotton, and 1.6 hectares of other crops) and assumed that the cropping patterns  would remain constant and the yield increase was 20 percent for major crops. Based on the  assumptions, the financial NPV estimated was $43 million, the economic NPV was $23.4 million,  and the EIRR was 24 percent. Sensitivity analysis concluded that the RESP‐II had a high  sensitivity to decreases in crop prices. Regarding WCAs, the EFA estimated that they would  need to increase their fees by 212 percent to Som 25,300 per hectare to cover their maintenance  and operating costs. During the IEG mission, interviews with WCAs and farmers revealed that  the average WCA fees for the IEG sample were Som 32,000 per hectare for cotton and wheat  (Som 37,000 in Andijan, Som 35,000 in Ferghana, and Som 21,000 in Samarkhand) and Som  48,000 per hectare for horticulture (Som 45,000 in Andijan, Som 65,000 in Ferghana, and Som  33,000 in Samarkhand). This demonstrates an increase as deemed necessary by the ex ante EFA.  However, collection rates are low, with a two to three‐year average of 53 percent across the IEG  sample. Moreover, rates strongly vary across years and types of farmers, depending on their  yield in a given year.  3.63 At project closure, the ex post EFA estimates for component 1 were based on a sample of  agricultural enterprises that received loans through the participating financial institutions. The  resulting EFA estimates demonstrate high net incremental benefits. The financial NPV estimates  were $389 million and the FIRR was 73 percent, and the economic NPV at $343 million and the  EIRR at 47 percent were similarly high. IEG questions the representativeness of the sample given  that it is based on 14 enterprises (2 percent of the 570 loans), and their average loan amount at  $557,243 was significantly higher than the average amount of $126,000 for all 570 RESP‐II– supported loans. The sample selection method is not described, further undermining the  representativeness of the results. These shortcomings are acknowledged in the ICR (World Bank  2017d, annex 3) and sensitivity analysis applied. The ex post EFA estimates for components 2  and 3 considered the rehabilitation area, changed cropping patterns, and yield increases. The  result estimates a financial NPV of $9.9 million and FIRR of 25 percent, and an economic NPV of  $11 million and EIRR of 32 percent. The EFA estimates for the total project were subject to  sensitivity analysis and were found to be robust in changes to adoption rates and net profits,  justifying the RESP‐II investments (World Bank 2017d, annex 3). 45   3.64 Operational and administrative efficiency. RESP‐II implementation was generally as  planned (including the additional financing) despite delays caused by the government’s lengthy  review processes. The closing date was extended by 21 months to execute the additional  financing. Moreover, the project’s demand‐driven design contributed to allocative efficiency of  investments. Specifically, for component 1, loans were based on the investment demand by  farmers and agricultural enterprises. For component 2, the participatory approach ensured that  the most needed rehabilitation sites for on‐ and inter‐farm I&D infrastructure were selected. This  alignment of supported investments with beneficiaries’ needs was consistent with IEG  observations during site visits. For component 3, the ICR and IEG interviews with different  stakeholders confirmed that trainings and advisory services were based on annual farmer  preference surveys. Ratings Outcome 3.65 The RESP‐II outcome is rated moderately satisfactory. The relevance of the PDO is rated  modest because of the shortcomings in defining a measurable project objective. The relevance of  the project design is rated substantial based on the components’ logical and mutually  reinforcing alignment. Efficacy of objective 1 on increased productivity is rated marginally  modest, given insufficient representative evidence on yield and income increases. Efficacy of  objective 2 on financial sustainability is rated substantial based on demonstrated strengthened  financial capacity of WCAs and farmers. Efficacy of objective 3 on environmental sustainability  is rated substantial because of the strong evidenced improvements regarding water efficiency,  reductions in water losses and consumption, and uptake of water‐saving practices. Efficacy of  objective 4 on agribusiness profitability is rated modest, given the lack of robust profitability  measurements and insufficient related evidence. Efficiency is rated substantial based on  adequate ex ante and ex post estimates for standard efficiency measures for all components.  Risk to the Development Outcome 3.66 The risk to the development outcome is rated moderate. This assessment identified three  main risks: (i) rapid institutional change, (ii) sustainability of on‐farm I&D microproject  investments and capacity built, and (iii) adoption of water‐saving practices.  3.67 Rapid institutional change. Uzbekistan is going through a rapid transformation process  toward a market economy, which has accelerated since the current president took office in  December 2016. Several institutional restructurings have taken place, including the split of the  MAWR into two separate ministries (Ministry of Agriculture and Ministry of Water Resources).  At the time of the PPAR mission, the RESP‐II implementation agency RRA was placed directly  under the cabinet of ministers (above the ministry level), which has provided it with more  decision‐making and financial weight. Additionally, the key staff involved with RESP‐II within  46   the RRA and the Ministry of Agriculture was retained, which is considered important for  institutional capacity and memory. However, although transformations typically go along with  institutional modifications, such in‐flux and continuously changing environments witnessed  during the IEG mission has created uncertainty among donors, beneficiaries, and local  authorities.8 In this transition process, it is crucial to ensure that the results achieved under  RESP‐II are not jeopardized. The government is committed to this aspect, as demonstrated by  several World Bankthat supported strengthening the sector projects since the RESP‐II closing.  The Horticulture Support Project and the Livestock Sector Development Project under  implementation directly build on and expand the experience of RESP‐II and include similar  activities, like the provision of credit and training to farmers and agrobusinesses. In addition, the  World Bank is preparing the Agriculture Modernization Project in line with Uzbekistan’s 2017– 21 Development Strategy to promote diversification to more competitive value chains and  increase farmer and agribusiness productivity and profitability.  3.68 Sustainability of on‐farm I&D investments and capacity building. Regarding I&D  infrastructure, IEG considers the sustainability of most of the RESP‐II–supported investments as  likely, given that local authorities, WCAs, and farmers have strong incentives to maintain the  infrastructure (on the one hand driven by the state procurement quotas for cotton and wheat,  and on the other by the higher profitability investments like horticulture). The government  budget covers maintenance for main and large inter‐farm I&D infrastructure, and IEG found no  issues with budget for those activities based on interviews with various stakeholders at the  central and local levels. However, on‐farm I&D infrastructure is the responsibility of the farmers  or the WCAs, who were found to be constrained by chronic underfunding (low WCA service fee  collection of only about 50 percent) and weak support for WCAs within the national irrigation  institutional structure. Pilot activities by WCAs to collect water service fees and receive the  farmer’s signature for bank transfers on the spot when water is delivered have the potential to  improve WCA self‐funding to execute their maintenance role. Regarding the sustainability of the  capacity built under RESP‐II, IEG found that since project closure, farmers have not had access to  similar trainings to learn about improved irrigation and sustainable production practices. There  are no structured, widespread training opportunities for farmers available, though the majority  expressed the need for continued training.   3.69 Adoption of water‐saving practices. When considering the RESP‐II activities of  incentivizing farmers to adopt water‐saving practices and technologies like improved water  management practices, the current institutional and funding priorities do not align. Promoting  such practices and behavior change in farmers is not a priority of the sector agencies, which  instead allocate funding toward physical I&D infrastructure investments. The current policy  environment provides weak incentives for farmers to adopt water‐saving technologies because  the supply of irrigation water is free, not efficiently distributed by a deteriorating infrastructure,  and prone to distortions by local authorities. Furthermore, some of the technologies promoted  through RESP‐II and other government activities, such as drip irrigation for horticulture  47   production, are expensive considering farmers’ financial constraints, and require assured  temporal water availability.9 Farmers have little incentive or the funding capacity to invest in the  continued environment of state procurement for cotton and wheat and the lack of land right  security. RESP‐II partially addressed some of these constraints by increasing farmers’ access to  credit through improved availability of credit services in rural areas and farmers’ trust in banks,  and facilitating farmers’ capacity to apply for credit. RESP‐II also promoted low‐cost water‐ saving practices that experienced high uptake among farmers.10  Bank Performance 3.70 World Bank performance is rated moderately satisfactory.  Quality at Entry 3.71 World Bank performance in ensuring quality at entry is rated moderately satisfactory.  The task team was largely made up of the same staff that supported RESP (whose outcome and  Bank performance were rated satisfactory by IEG). The local presence of the task team leader and  several team members was crucial to maintaining the established relationship with the  government and implementing agency. It also facilitated timely preparation of the initial  procurement plan, credit line manual, and terms of reference for the I&D works, and the project  implementation plan at appraisal. Furthermore, the World Bank team ensured that project  components were in line with government priorities and World Bank strategies for the rural  sector in Uzbekistan. Moreover, it made the design modifications to RESP‐II based on the  implementation experience of RESP and the changing sector needs. Examples include (i) a larger  allocation of funds to I&D works per hectare, (ii) stronger participation of the communities and  farmers in selecting I&D work sites, and (iii) the reassessment of eligible financial institutions  based on due diligence conditions. However, although the project’s overall results chain was  consistent and logical, the results framework was weak—several important indicators were  missing or not measured at the outcome level. Regarding critical risks and possible controversial  aspects, the PAD insufficiently estimated the child and forced labor issues, which were  successfully addressed during implementation.  Quality of Supervision 3.72 Bank performance in ensuring quality of supervision is rated moderately satisfactory.  IEG interviews with implementing agencies and stakeholders revealed a positive and productive  working relationship with World Bank staff during project implementation. This was reinforced  through the continuity and local presence of the task team leader and much of the task team  throughout the entire project cycle. It was also crucial to respond to challenges swiftly, such as  the delays by government internal reviews or the Inspection Panel case on child labor. The  World Bank task team proactively interacted with the various stakeholders and beneficiaries  involved in RESP‐II and was professional in navigating through a changing institutional  environment (such as the government’s decision to eliminate credit unions, which had been part  48   of the project design implementation for microloans under component 1). It also did not shy  away from restructuring based on changing circumstances, as shown by the four restructurings  (one level 1 and three level 2 restructurings). Furthermore, the World Bank RESP‐II was crucial  in strengthening the capacity and structure of WCAs, an aspect that the donor community in the  sector emphasized as crucial. Through the RESP‐II, the World Bank played a key role in  restructuring WCAs in all seven project districts from administrative boundaries to  hydrographic boundaries in accordance with international best practice, a practice that was  subsequently applied to all WCAs in the country.  3.73 However, quality of supervision could have been improved if the World Bank team had  paid more attention to effectively modifying the results framework, especially by removing  income and adding adequate profitability indicators. Another shortcoming is that the World  Bank could have advocated more strongly for the inclusion of poorer farmers’ access to finance  and created an alternative channel for RESP‐II microloans. With the provision for microloans  reallocated to the main credit line after the elimination of credit unions, the inclusion of such  farmers was based entirely on the financial institutions’ assessment criteria. Neither the ICR nor  the end‐of‐project assessments reported separately on microloans. Based on interviews with  participating financial institutions, the IEG mission found that after the second project  restructuring, only a very small proportion of the RESP‐II loans were microloans (see paragraph  3.2).   Borrower Performance 3.74 Based on the assessment of government and implementing agency performance, overall  borrower performance is rated moderately satisfactory.  Government Performance 3.75 Government performance is rated moderately satisfactory. The IEG assessment  distinguishes between the central government in Tashkent and regional government institutions,  particularly in Andijan, Ferghana, and Samarkhand, which the PPAR mission visited.  3.76 The central government strongly supported RESP‐II based on the experience of its  predecessor RESP. The government retained the responsible PIU staff within the MAWR, which  smoothed the transition between the projects and maintained adequate fiduciary management.  According to the ICR, counterpart financing was complete and timely. Additionally, the state  funds for regular I&D system maintenance in the project regions were provided, which IEG  confirmed during the PPAR mission with the regional representatives. However, as noted in the  ICR and ICRR, the central government’s lengthy internal review processes caused several delays  in project implementation. Furthermore, the government’s support for strengthening the  capacity and role of WCAs aspired during project preparation did not materialize and was still  insufficient at the time of the PPAR mission. At project closure, significant changes occurred in  the central government, accompanied by institutional changes and ministry restructurings that  49   followed and continued and observed at the time of the PPAR mission. Although these changes  did not have significant impact on RESP‐II implementation, they are important to the  sustainability of results as described under Risk to Development Outcome.  3.77 Regarding regional government institutions, the IEG mission found that the  municipalities and regional offices of the MAWR were strongly engaged and enthusiastic about  the RESP‐II. This was rooted in their concern about agricultural productivity in their respective  regions and the potential they saw in the different project components to benefit their local  farmers and agribusinesses. Regional government institutions showed continuous ownership  and engagement in project activities during implementation. For example, municipalities were  forthcoming in finding sites for the farm field schools and demonstration sites to ensure their  easy access for a large number of farmers (project beneficiaries and nonbeneficiaries). Moreover,  in various interviews with different regional representatives, IEG witnessed the support for  RESP‐II and continued interest in credit support for farmers and I&D infrastructure  improvements. However, expressed support for WCAs in general was mixed because their  mandate was not defined clearly within the administrative irrigation system, and their capacities  differed considerably among each other.  Implementing Agency Performance 3.78 Implementing agency performance is rated satisfactory. The RESP‐II implementing  agency was the MAWR, and the PIU was established within the Ministry’s RRA. Capacity of the  PIU was adequate and strongly benefited from the implementation of RESP, which ensured  fiduciary knowledge and familiarity with World Bank project implementation and progress  reporting. The engagement of PIU staff with the project objectives and beneficiaries was strong  and continuous throughout implementation. For example, the PIU visited all 570 subloan  recipients and all I&D rehabilitation works. IEG interviews with various stakeholders revealed  that PIU staff conducted their activities with dedication and professionalism, and were  responsive to any implementation challenges at both the central and regional levels.  Furthermore, staff was also proactive in coordinating with SDC regarding the component 2  implementation and coordination with component 3 training activities.  Lessons RESP-II 3.79 The IEG performance assessment of RESP‐II suggests the following lessons:  3.80 Coordinated and mutually reinforcing capacity building of financial institutions and  farmers is crucial for establishing viable on‐farm investments. For example, RESP‐II  strengthened banks’ business plan appraisal and risk assessment capacities while providing  farmers with the ability to develop high‐quality business plans and adopt improved production  practices. This stimulated an increase in agricultural lending in Uzbekistan.  50   3.81 Clear concept, measurement, and disclosure arrangements at project appraisal for  sensitive data can ensure the availability of results at project completion. For example, the  RESP‐II appraisal document did not provide clarity on which aspects of agribusiness  profitability the project was expected to increase as one of its objectives. Although the  participating banking financial institutions collected data on aspects of agribusiness profitability,  the project’s design provided no arrangements to access such confidential information to assess  the efficacy of the agribusiness development program.    4. Comparison of FVWRMP-I and RESP-II in WCA Capacity Building 4.1 The results of capacity‐building and operational strengthening of WCAs in FVWRMP‐I  and RESP‐II reveal several similarities and differences between the two projects. There were  similarities in the type of support provided to the WCAs in the two projects. Differences  emerged in the results that were strongly influenced by the availability of donor grant financing  in RESP‐II, which provided structured support and financing for high‐quality trainings and  equipment essential for WCA operations and maintenance, empowering WCAs for better service  delivery. However, such financing was not available in FVWRMP‐I. The principal outcomes in  WCA capacity building in the two projects are summarized as follows along the following  categories (more details are provided in appendix D):  4.2 WCA operational and managerial capacity. Both projects provided consistent, practical  trainings for beneficiary WCAs in participatory development of financial management plans,  irrigation scheduling plans, and O&M plans for each WCA (25 for FVWRMP‐I and 62 for RESP‐ II). The WCAs’ satisfaction rates with these trainings were high in both projects. Given the  project implementation time overlap, IEG was informed that there was some coordination  between the World Bank project task teams (one in the Water Global Practice and one in the  Agriculture Global Practice) regarding exchanging information on training content. However, an  important difference was that RESP‐II provided each of its 62 beneficiary WCAs with a computer  (with accounting software) and a printer, given their need for such equipment. WCAs in  FVWRMP‐I were not provided with such crucial equipment because credit sources were not  considered for institutional capacity‐building purposes. The IEG mission found that all WCAs  interviewed continued preparing annual financial management and regular irrigation  scheduling plans based on the project trainings. However, only the RESP‐II WCAs also prepared  annual O&M plans given their actual capacity to execute them. This finding highlighted a higher  utilization of the taught skills when trainings are coupled with equipment provision and clear  usage arrangements after project closure.  51   4.3 WCA maintenance capacity. Only RESP‐II provided all of its beneficiary WCAs with  equipment for canal cleaning and other maintenance services based on their needs and  preferences. These included bicycles, motorcycles, tractors with a loading bucket or excavator  attachment, and bulldozers, among others. As a result, at RESP‐II completion, all 62 WCAs could  undertake on average 87 percent of their O&M work compared with 34 percent at baseline. By  contrast, none of the 25 WCAs of FVWRMP‐I could provide adequate canal maintenance  services. These WCAs noted that the main reason for the shortfall was the lack of essential  equipment to conduct maintenance.  4.4 WCA water delivery capacity. Both projects included rehabilitation works on inter‐farm  (and RESP‐II also on‐farm) irrigation canals managed by WCAs. Both FVWRMP‐I and RESP‐II  irrigation rehabilitation works were limited to small sections in urgent need of rehabilitation,  and these were identified through participatory selection processes that included local  authorities, WCAs, and farmers. For RESP‐II, in which completed rehabilitation works enabled  WCAs to provide better irrigation water service delivery improving water flow, there was  decreased water loss during transportation and enhanced accuracy in requested volume and  timing for their member farmers. For example, RESP‐II data from WCAs monitoring show that  water loss during its distribution through inter‐farm canals decreased by 36 percent between  2010 and 2016. By contrast, FVWRMP‐I did not finish 32 percent of the planned inter‐farm  irrigation works and did not complete about half of the on‐farm water regulators, outlets, and  hydro post, and 77 percent of inter‐farm regulators and outlets. Two of the WCAs that IEG  interviewed (of nine in FVWRMP‐I) stated that they were unable to deliver the required  irrigation water to their members because of the incompletion of these works.   4.5 WCA financial sustainability. The WCAs of RESP‐II faced similar challenges in service  fee collection rates and financial sustainability as the WCAs of FVWRMP‐I, even though they  were equipped to execute I&D maintenance services, and hence were providing better service  delivery to their members. The average service fee collection rate for the 62 WCAs of RESP‐II  was 45 percent in 2014, like the low average collection rate of 43 percent for the 25 WCAs of  FVWRMP‐I in 2015. However, these rates vary according to factors such as yield levels and  commodity prices. Furthermore, WCAs of both projects reported challenges with debt  accumulation derived mostly from staff salaries, taxes, and electricity expenditures because the  revenues from the service fees did not cover these costs fully, and no other funding sources were  provided to WCAs.  4.6 Farmer satisfaction rating on WCA services. Water user satisfaction with WCA services  between the two projects differs slightly, with 82 percent of member farmers of RESP‐II WCAs  expressing satisfaction with their performance in 2016. In comparison, in FVWRMP‐I districts, on  average 70 percent of farmers expressed satisfaction with equitable water distribution, and only  60 percent state that water distribution was adequate in the summer in 2015. This was a  surprisingly high proportion given the inability to deliver maintenance services.  52   5. Common Lessons 5.1 IEG’s assessment of FVWRMP‐I and RESP‐II generates the following common lessons:  5.2 Expanding the uptake of water‐efficient agricultural technologies requires policies  that provide a strong incentive to adopt those technologies. Both projects included activities to  promote farmers’ application of water‐saving technologies. However, such use was limited in  FVWRMP‐I. Despite generally better technology adoption in RESP‐II at project completion, the  sustainability of those practices is at risk given the current policy environment. An improved  incentive structure would include policies encouraging adequate water pricing and/or quotas to  avoid water overuse by farmers, promoting less water‐intensive crop cultivation, and enhancing  land tenure security and access to rural finance.  5.3 Water consumer associations can deliver efficient irrigation services when backed by  a legal framework that clearly specifies their responsibility and accountability within the  entire irrigation service delivery institutional system. The assessment of WCAs in the  FVWRMP‐I and RESP‐II projects revealed deficiencies because of the lack of specific regulation  and accountability measures for WCAs in Uzbekistan. Such regulations are crucial to warrant  the effective execution of contractual relationships between WCAs and local irrigation and  drainage system authorities, and between WCAs and member farmers.  5.4 Water consumer associations can deliver efficient irrigation services when they have  access to continuous and sufficient financial resources. WCAs under FVWRMP‐I and RESP‐II  suffered from persistently low service fees and insufficient collection rates. One reason for  this was their inability to provide the services in delivering irrigation water and maintaining  irrigation canals under their responsibilities, as in FVWRMP‐I (disincentivizing farmers to pay  for services not received). However, WCAs that execute their services often face challenges in  collecting service fees owed by all of their member farmers. The lack of sufficient financial  resources has led WCAs to accumulate significant debt and develop an inability to pay and  retain staff, as evidenced under both projects.  5.5 Coordination and consistent approaches across World Bank projects in the same  sector are crucial to ensure broad and harmonized institutional capacity building. Both  FVWRMP‐I and RESP‐II aimed at improving the capacity of WCAs and farmers, but they  differed in their design and approach partially because of the availability of parallel donor grant  financing and engagement under RESP II. Although training issues were similar in both projects,  RESP‐II also provided WCAs with small‐scale equipment to enable them to execute their  operational and maintenance needs. Field demonstrations and farmer field schools under RESP‐ II were designed better than those under FVWRMP‐I because they were based on regular needs  assessments of farmers and close monitoring, leading to a higher uptake of improved and  sustainable practices.   53                                                          1 The Project Impact Evaluation Report included the caveat that the Kushtepe district was not an  adequate control group for comparing WCA services because farmers in that district have a unique  arrangement for water delivery that depends highly on the ISAs to carry out many WCA functions.   The project area has a network of 600 piezometers distributed uniformly, monitored by the  2 Hydrogeology and Ameliorative Expedition Department. Eleven piezometer records for April, July, and  October were used for the analysis (MAWR,2016, page 86–87).   3 For component 1, the project was designed to establish a strong relationship with potential financial  institutions to encourage their participation in offering financial services to private farmers and small and  medium‐size agribusiness across the seven project regions. The regional project implementation units  were responsible for informing local banks of the RESP‐II credit line details and due diligence  requirements, gauging their interest, and, if selected, regularly checking on any issues during  implementation (according to IEG interviews). The central project implementation unit and the World  Bank task team were responsible for preparing a credit line manual by appraisal, selecting eligible banks,  and confirming their fulfilment of due diligence conditions by an international bank assessment  consultant (World Bank 2008d, 153). Although the assessment of subprojects and selection of credit line  recipients was the participating financial institutions’ responsibility, both the Rural Restructuring  Agency’s (RRA) credit line coordinator and the World Bank team’s finance specialist reviewed each of the  570 loans provided during RESP‐II (World Bank 2017a, 10). For the training activities for the financial  institutions, RRA hired international and local consultants. For component 2, a strong collaboration  between RRA’s central and local irrigation specialists with the Basin Irrigation System Authority  (BISAthe Irrigation Systems Administration (ISA), and the Ministry of Agriculture and Water Resources  district authorities was envisioned at design and fostered during implementation. This collaboration was  crucial to identify and select the most urgently needed on‐ and inter‐farm irrigation and drainage (I&D)  works and coordinate and supervise I&D activities in the seven districts (according to IEG interviews).  For the capacity‐building and strengthening of WCAs, the project closely worked with the Swiss Agency  for Development and Cooperation (SDC), which provided parallel grant financing for this purpose in two  phases (between March 2009 to February 2012 and March 2012 to June 2015). SDC implemented the  related activities of setting up farmer field schools and demonstration plots, and provided equipment to  the WCAs (SDC 2015). For component 3, the RRA contracted private consulting companies and experts  on a competitive basis to provide training in farm management, such as accounting, taxes, legal matters,  and business management, and advisory services in agronomy, pest, and water management. According  to the PAD, these trainings were designed to address the lack of such skills by the newly independent  farmers, given the recent sector reform. For example, before the reform farmers never had to file their  own taxes or handle legal matters themselves. For the trainings on farming practices and water‐saving  techniques, the project conducted an annual survey among beneficiary farmers to respond to their  preference and needs for training topics. Furthermore, the RRA coordinated closely with capacity‐ building activities of component 2 led by SDC and occasionally used the facilities of the farm field schools   4 The task team shared with the PPAR mission the report on the appraisal of participating national  financial institutions for the follow‐on Livestock Sector Development Project, which found no problems  related to repayments and nonperforming loans. However, the report does not include all financial  institutions active in RESP‐II and does not specifically assess RESP‐II loans, but rather the financial  institutions’ overall compliance with due diligence criteria The assessment was primarily based on the  audited financial statements for the year ended December 31, 2016 (World Bank 2017f).    54                                                                                                                                                                                 5 The final audit management letter for the period January 1, 2016 to April 30, 2017 stated that the RRA  addressed minor shortcoming and inaccuracies promptly and accordingly.  6 Child and forced labor was a widespread practice during cotton harvests for decades in Uzbekistan.  However, in recent years the government took measures to eliminate the practice. A December 2017  International Labour Organization (ILO) report based on 3,000 unaccompanied interviews with cotton  pickers and 1,000 random phone interviews found, “The systematic use of child labour in Uzbekistan’s  cotton harvest has come to an end over the past few years and that concrete measures to completely end  the use of forced labour are being implemented.” For more information, visit  http://www.ilo.org/global/about‐the‐ilo/newsroom/news/WCMS_613562/lang‐‐en/index.htm.  7  An  issue  related  to  profitability  that  the  IEG  fieldwork  raised  concerns  about  is  the  shared  prosperity  aspect of RESP‐II loans. Specifically, the selection process for providing credit to farmers and agribusinesses  was  led  by  the  financial  institutions’  criteria,  with  close  supervision  by  RRA.  Although  this  makes  sense  from  a  financial  standpoint,  from  a  social  inclusion  perspective,  the  design  lacked  an  ensured  (partial)  participation  of  disadvantaged  farmers  who  do  not  possess  assets  accepted  as  collateral.  This  is  critical,  especially in the Uzbek context, where land is leased and cannot be used as collateral for loans. At project  design,  RESP‐II  included  a  $5  million  provision  for  microloans  to  be  allocated  through  credit  unions  to  allow  smaller  loan  investments  (maximum  of  $10,000).  However,  during  project  implementation,  the  government eliminated credit unions, which were expected to be the main financial intermediaries for this  project.  The  allocated  funds  were  redistributed  among  participating  financial  institutions,  and  based  on  project evidence and IEG interviews with banks, very few microloans near the top amount of $10,000 were  provided, and no effective, alternative channel for microcredit loans developed.  8 For example, in the irrigation sector, the role of the BISA was altered just before the IEG mission, ISA  was eliminated, and new district‐level irrigation departments were created instead (IEG was informed  that much of the ISA staff was integrated there), and the role of WCAs was not strengthened (in relation  to budget allocation or development of the water code). This change in the sector caused (at least  temporary) confusion and inefficiencies.  9 For example, farmers who adopt drip irrigation receive a property tax release for three years, which is  only a fraction of the investment cost, and most farmers still face credit constraints in access, loan size,  and loan length.  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———. 2009b. “Uzbekistan—Rural Enterprise Support Project.” Implementation Completion and  Results Report ICR711, World Bank, Washington, DC.  ———. 2009c. “Uzbekistan—Rural Enterprise Support Project.” Independent Evaluation Group,  Implementation Completion and Results Report Review, ICRR13112, World Bank,  Washington, DC.   ———. 2010. Uzbekistan—IDA Credit 4648‐UZ Financing Agreement. Washington, DC: World  Bank.  ———. 2011. “Uzbekistan—Rural Enterprise Support Project Phase II.” Midterm Review Mission  and Aide Memoire, World Bank, Washington, DC.  ———. 2012. Uzbekistan—Rural Enterprise Support Project Phase II: Additional Financing.”  Project Paper Report 67598‐UZ, World Bank, Washington, DC.  ———. 2016. Uzbekistan—Country Partnership Framework FY16–20. Washington, DC: World Bank.  ———. 2017a. “Uzbekistan—Ferghana Valley Water Resources Management Project Phase II.”  Project Appraisal Document PAD1054, World Bank, Washington, DC.  ———. 2017b. “Uzbekistan—Ferghana Valley Water Resources Management Project Phase II.”  Implementation Completion and Results Report ICR3584, World Bank, Washington, DC.  ———. 2017c. “Uzbekistan—Ferghana Valley Water Resources Management Project Phase II.”  Independent Evaluation Group, Implementation Completion and Results Report Review  ICRR0020791, World Bank, Washington, DC.  ———. 2017d. “Uzbekistan—Rural Enterprise Support Project Phase II.” Implementation  Completion and Results Report ICR4167, World Bank, Washington, DC.  ———. 2017e. “Uzbekistan—Rural Enterprise Support Project Phase II.” Independent Evaluation  Group, Implementation Completion Report Review, ICRR0020843, World Bank,  Washington, DC.  ———. 2017f. “Uzbekistan—Livestock Sector Development Project.” Project Appraisal Document  PAD2275, World Bank, Washington, DC.  ———. 2018. Concept Note ‐ Strengthening irrigation management models for sustainable service   ———. 2009‐2016. Implementation Status Reports for Uzbekistan Rural Enterprise Support  Project Phase II. Washington, DC: World Bank.  57   World Bank Institute. 2007. Water Users Associations in Uzbekistan: Review of Conditions for  Sustainable Development.  58   Appendix A. Basic Data Sheet Ferghana Valley Water Resources Management (IDA-46480, P110538) Table A.1. Key Project Data Actual or Current Actual as Percent Appraisal Estimate Estimate of Appraisal Financing ($, millions) ($, millions) Estimate Total project costs 65.54 48.82 74.49 Credit amount Cofinancing Cancellation Table A.2. Cumulative Estimated and Actual Disbursements Disbursements FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Appraisal estimate ($, 2.36 10.97 28.02 43.76 55.93 63.31 65.54 65.54 millions) Actual ($, millions) 0.4 2.7 13.5 24.82 34.08 45.57 49.71 48.82 Actual as percent of 16.94 24.61 48.17 5671 60.89 71.93 75.8 74.49 appraisal Table A.3. Project Dates Event Original Actual Concept review – 01/24/2006 Board approval – 09/24/2009 Signing – 02/09/2010 Effectiveness 03/03/2010 03/03/2010 Closing date 07/31/2016 12/31/2016 Table A.4. Staff Time and Cost World Bank Budget Only Staff time Costa Stage of Project Cycle (no. weeks) ($, thousands) Lending FY08 9.59 55.96 Supervision or ICR FY09 31.95 187.18 FY10 8.26 41.50 FY11 31.78 117.69 59   FY12 32.22 109.43 FY13 21.17 76.91 FY14 25.00 106.51 FY15 38.25 189.80 FY16 29.25 150.53 FY17 28.35 104.03 Total 1,083.22 Note: ICR = Implementation Completion and Results Report. a. Including travel and consultant costs. Table A.5. Task Team Members Responsibility Name Titlea Unit or Specialty Lending Mahwash Wasiq Senior Water Resources and ECSSD Task Team Leader Agricultural Economist Janis Bernstein Senior Social and Environment ECSSD Specialist Ohn Mynt Irrigation and Drainage Engineer Consultant Yuling Zhou Senior Procurement Specialist ECSPS David Colbert Senior Environment Officer FAO John Ogallo Senior Financial Management ECSPS Specialist Wolfhart Pohl Senior Environment Specialist ECSSD Walter Klemm Senior Water Resources Engineer FAO Thomas Muenzel Senior Economist FAO Kseniia Malenko Financial Analyst LOADM Liudmila Mazai Program Assistant ECSSD Supervision/ICR IJsbrand de Jong Lead Irrigation Specialist GWA06 Task Team Leader Jeren Kabayeva Agriculture Specialist GFA03 60   Blaga Djourdjin Procurement Specialist GGOGI Procurement Financial Djamshid Iriskulov Consultant GG021 Management Antonia Cristian D’Amelj Senior Counsel LEGLE Dilshod Khidirov Senior Agricultural Specialist GFA03 Ekaterina Romanova Social Development Specialist GSU03 Safeguards Gulana Enar Hajiyeva Senior Environmental Specialist GEN03 Safeguards Javaid Afzal Senior Environmental Specialist GEN03 Safeguards Jasna Mestnik Finance Officer WFALN Disbursement Ma Dessirie Kalinski Finance Analyst WFALN Disbursement Nikolai Soubbotin Lead Counsel LEGLE Olivier Durand Senior Agriculture Economist GFA03 Giovanni Munoz Land and Water Development FAO Engineer Oydin Dyusebaeva Program Assistance ECCUZ Valencia Copeland Program Assistance GFA03 Talimjan Urazov Senior Agricultural Specialist GFA03 ICR Note: ICR = Implementation Completion and Results Report. a. At time of appraisal and closure, respectively. Rural Enterprise Support Project Phase II (IDA-44330 and 51520; P109126) Table A.6. Key Project Data Actual or Current Actual as Percent Appraisal Estimate Estimate of Appraisal Financing ($, millions) ($, millions) Estimate Total project costs – – Loan amount (IDA) 67.96 96.84 142 Cofinancing Cancellation Table A.7. Cumulative Estimated and Actual Disbursements Disbursements FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Appraisal estimate 3.095 13.23 30.21 46.71 59.57 67.96 67.96 67.96 67.96 ($, millions) Actual ($, millions) 2.00 10.365 24.729 33.299 41.773 50.491 74.026 96.646 96.848 Actual as percent of 51 78 81 71 70 74 108 142 142 appraisal Date of final June disbursement 2017 61   Table A.8. Project Dates Event Original Actual Concept review 12/30/2008 12/12/2007 Board approval 12/05/2011 06/12/2008 Signing Effectiveness 12/30/2008 Closing date 03/31/2015 12/31/2016 Table A.9. Staff Time and Cost World Bank Budget Only Staff time Costa Stage of Project Cycle (no. weeks) ($, thousands) Lending FY08 48.88 129,199.97 FY09 1.04 3,042.88 Total 49.92 132242.9 Supervision or ICR FY09 27.12 36,635.83 FY10 43.32 65,103.30 FY11 35.87 56,328.87 FY12 23.24 51,867.37 FY13 21.48 46,451.57 FY14 14.27 30,590.94 FY15 17.56 47,646.45 FY16 19.65 61,589.08 FY17 13.71 47,005.91 Total 216.22 443219.30 Note: ICR = Implementation Completion and Results Report. a. Including travel and consultant costs.   62   Table A.10. Task Team Members Name Titlea Unit Responsibility or Specialty Lending/Supervision Dilshod Khidirov Sr. Agricultural Spec. GFA03 Task Team Leader Pieter David Meerbach Sr. Water Resources Spec. GWA09 Sandra Broka Senior Agriculture Economist GFA03 Maurizio Guadagni Sr. Agriculture Spec. GFA04 Naushad A. Khan Consultant GGO03 John Otieno Ogallo Sr. Financial Management Specialist OPSPF Fasliddin Rakhimov Procurement Specialist GGO03 Janna Ryssakova Social Development Specialist ECSSO Galina Alagardova Sr. Financial Management Specialist GG021 Oydin Dyusebaeva Program Assistant ECCUZ Ama Esson Program Assistant GFA03 Pieter David Meerback Sr. water Resources Specialist GWA09 John Otieno Ogallo Sr. Financial Management Specialist OPSPF Fasliddin Rakhimov Procurement Specialist GG03 Sari K. Soderstrom Director GSURR Nikolai Soubbotin Lead Counsel LEGLE Ijsbrand Harko de Jong Lead Irrigation Specialist GWA06 Table A.11. Other Project Data Borrower or Executing Agency Follow-on Operations Amount Operation . ($, millions) Board Date Horticulture Support Project (P133703) 150 June 12, 2014 Livestock Development Project (P153613) 150 June 23, 2017 63   Appendix B. Fieldwork Methodology The Project Performance Assessment Report of FVWRMP‐I and RESP‐II employed a mix of  different methods to address the evaluation questions, comprised of pre‐mission desk‐based  document reviews, field‐based semistructured group and individual interviews, and  infrastructure verification site visits.  The Independent Evaluation Group (IEG) conducted a field mission to Uzbekistan for two  weeks during October and November 2018, which included five days at local sites per project  assessed. The objective of the field mission was to directly obtain stakeholder and beneficiary  perceptions about the design and execution of the respective project activities, selectivity  criteria, and sustainability of results. It also included visits to project infrastructure to assess  condition and use. IEG applied the following validation tools at each field visit site for both  FVWRMP‐I and RESP‐II:   Semistructured group interviews with water consumer associations (WCAs)  representatives and at least two members or farmers, and local irrigation agency officials  (for FVWRMP‐I) were conducted at all site visits.    Semistructured individual interviews with project beneficiaries (mostly farmers) were  held at farm and farm field school site visits to allow for face‐to‐face conversations using  a semistructured questionnaire and inspection of project‐supported equipment and  infrastructure. Similarly, IEG interviewed former project implementation unit (PIU) staff  and other stakeholders from the government, financial institutions, research institutes,  and donors separately from project beneficiaries during the mission. Appendix C  provides information on the people interviewed for FVWRMP‐I and RESP‐II.   Asset inspections were done at all site visits to physically verify the existence, condition,  and use of project‐supported equipment and infrastructure (mostly on‐farm, inter‐farm  and main irrigation and drainage canals). IEG used visual verification in most cases  (taking photographs where possible), or verbal confirmation by the beneficiary if the  equipment was not on‐site during the visit. Appendix E contains an asset verification  summary table for all sites visited.   Sampling of site visits FVWRMP-I IEG selected a sample of farms (leaseholder farmers, dehkan farms, demonstration plots, and  drip irrigation pilots), WCAs, and irrigation and drainage works based on the following criteria.   Geographic coverage: IEG visited all of the three districts included in the project, namely  Rishtan, Bagdat and Altiarik. Figure B.1 shows a map with the FVWRMP‐I sample sites visited  by IEG during the mission.  64       Investment type: IEG divided activities and beneficiaries in each district into five categories: (i)  works, at least one of each type (main irrigation and main drainage canals, collectors, inter‐farm  irrigation canals, inter‐farm drainage canals, pressure relief wells, vertical drainage wells, and  collectors); (ii) demonstration plots, at least one in each district; (iii) drip irrigation pilots, at  least one in each district; (iv) other leaseholder or dehkan farms benefited from the project, at  least one in each district; and (v) WCAs, at least one in each district. IEG’s sample selection for  district (Rishtan, Bagdad, Altiarik) was based on a random selection from a list of all  beneficiaries by under component 2, stratified by type of training (to cover demonstration plots,  drip irrigation pilots, and farmer field schools) and type of farm (to cover leaseholder and  dehkan farms). All WCAs were invited by the local PIU, and IEG interviewed those who  attended. Regarding works, IEG randomly selected from the list of works completed under the  project. Based on these criteria, and depending on the availability of the selected beneficiaries,  and the proximity of selections, IEG visited and interviewed a total of 26 direct project  beneficiaries and assets (of which two leasehold farmers, one dehkan farm, three drip irrigation  farms, two demonstration plots, nine WCSs, and nine irrigation and drainage (I&D) works of  various kinds). Table B.1 summarizes the IEG sample composition.  Table B.1. IEG Sample Composition FVWRMP-I Rishtan Works Component 1 1 Inter-farm drainage canal 2 Vertical drainage well 3 Collector 4 Pressure relief well Farmer beneficiaries Component 1 and 2 5 Leasehold farm Imkoniyat 6 Demonstration plot farm Fazilatkhon Bakhodirjon Zamini 7 Drip irrigation pilot farm Kholinso 2002 WCAs Component 2 8 Tuda Zilol Sharsharasi Bagdad Works Component 1 9 Pressure relief well 10 Inter-farm irrigation system 11 Main drainage canal 12 Main irrigation canal Farmer beneficiaries Component 1 and 2 13 Leasehold farm Ganiota 65       14 Demonstration plot Nurmuhammad Bogi 15 Drip irrigation pilot: Khursand WCAs Component 2 16 Sabibullo Hoji Muhiddinov 17 Irrigator Bagdad 18 Mirzaomon Ismoilov 19 Kushtegirmon Gidrotekhnigi 20 Dustlik Ravon Yuli Altiarik Farmer beneficiaries Component 1 and 2 21 Demonstration plot Ergashboy Hujamov 22 Dehkan farm Adhamjon Askarov 23 Drip irrigation Ahadjon Ismatov Orzusi WCAs Component 2 24 Povulgon Abdusalom 25 Burbonlik Suv Yullari 26 Katput Zilol Suvi   Figure B.1. Map of IEG Field Visit Sites FVWRMP-I     Figure B.2. Ferghana Region 66         Sampling of Site Visits RESP-II IEG selected a sample of farms, both private and limited liability companies (LLC),11 water  consumer associations (WCAs), and financial institutions that directly benefited from subproject  investments of components 1, 2 and 3 based on the following criteria:  Geographic coverage. IEG visited four project regions in Uzbekistan, including the capital city  of Tashkent, two regions in the east (Andijan and Ferghana) and one in the southwest  (Samarkhand). RESP‐II was active in seven of the country’s thirteen regions, in which seven  districts received activities from both component 1 (rural enterprise finance) and component 2  (irrigation and drainage) in addition to activities of component 3 (rural training and advisory  services). Andijan Region, Ferghana Region, and Samarkhand Region had the largest number of  approved subloans of component 1, and Ulugnor district (in Andijan Region), Yazyavan district  (in Ferghana Region) and Pasdargom district (in Samarkhand Region) had significant I&D  rehabilitation works, which were the main reasons for IEG to select them for the RESP‐II field  mission. Beneficiaries in two additional adjacent districts were visited (Oltinkol in Andijan and  Toshloq in Ferghana) to cover more beneficiaries of component 1 and based on logistical  considerations. The diverse geographical coverage of the IEG sample allowed IEG to detect any  major differences in project implementation between regions. In addition, visiting the Ferghana  Region was of key interest for a comparative analysis of the RESP‐II with the Ferghana Valley  Water Resource Management Project‐I, as site conditions and beneficiary types were similar.  Figure B.2 shows a map with the RESP‐II sample sites visited by IEG during the mission.  Investment type. IEG divided activities and beneficiaries in each district into four categories: (i)  farms that received a credit line through component 1, (ii) banks that received financing and  training through component 1, (iii) WCAs and farmers who received irrigation infrastructure  (on‐farm or inter‐farm) through component 2, and (iv) WCAs and farmers who received farmer  field school (FFS), demonstrations, and trainings through components 2 and 3. To capture these  67       different types of activities and beneficiaries, IEG aimed to meet with at least one beneficiary  per investment type category for each of the regions visited (except for Tashkent, where  meetings focused on government implementing agencies, contractors of project feasibility and  impact studies, bank representatives, donors, and research institutes).   IEG’s sample selection for each region (Andijan, Ferghana and Samarkhand) was based on a  random selection from a list of all beneficiaries and sites by component 1 and 2, stratified by  type of supported farm production (to cover cotton and wheat, orchard, and livestock farmers)  and type of farm or agribusiness (to cover private farms and limited liability companies). Based  on these criteria, IEG visited and interviewed a total of 19 direct project beneficiaries and assets  (of which six were farms or LLCs that received a credit line, three were banks that received  training and financing, six were WCAs or farmers who received irrigation infrastructure and  FFS/demonstrations, eight farmers who received training and advisory services, and one inter‐ farm irrigation canal). Table B.2 summarizes the IEG sample composition.  Table B.2. IEG Sample Composition RESP-II Region/District Beneficiary/Site Investment Type Production/Activity Andijan/Andijan City 1 Hamkorbank Component 1 Financial services Andijan/Ulugnor 2 Farm Begijon Component 1: Cotton/Wheat  seedlings orchard Apples  drip irrigation Component 2: Farmer field school Component 3: Trainings 3 WCA Ulugnor Component 2: WCA services  I&D rehabilitation  WCA capacity  Farmer Field School/demo 4 WCA Andijon Component 2: WCA services  I&D rehabilitation  WCA capacity 5 Canal 35-X Component 2: Inter-farm irrigation I&D rehabilitation Andijan/Oltinkol 6 Farm Argumon Component 1: Apples Oltikol Orchard  seedlings orchard Storage services  cold storage Component 3: Trainings 68       7 LLC FarmBaht Component 1: Livestock Imkon Rivoj 93 livestock heads Chorvasi Component 3: Trainings Ferghana/Yazyavan 8 WCA Khonobod Component 2: WCA services  I&D rehabilitation  WCA capacity  Farmer Field School/demo 9 WCA Qoratepa Component 2: WCA services  I&D rehabilitation  WCA capacity  Farmer Field School/demo 10 Farm Gar Galaba Component 2: Cotton/Wheat 2002 Farmer Field School Apples Component 3: Trainings Ferghana/Toshloq 11 LLC Sarvinoz Component 1: Bakery Mashkhura Shod Bakery equipment Dil Samarkhand/ 12 Turon Bank Component 1 Financial services Pasdargom 13 LLC Farm Kriral Component 1: Apples Biznes  seedlings orchard Storage services  cold storage Component 3: Trainings 14 Farm Rasul Ota Component 1: Cotton/Wheat Tractor/agro-machinery Component 3: Trainings 15 Farm Nigina Component 2: Cotton/Wheat Farmer Field School Component 3: Trainings 16 Farm Zamin Kurki Component 2: Cotton/Wheat Farmer Field School Component 3: Trainings 17 WCA Pastdargom Component 2: WCA services  I&D rehabilitation  WCA capacity 69       18 WCA Pastdargom Component 2: WCA services Anhor Suvchilari  I&D rehabilitation  WCA capacity  Demonstrations Tashkent/Tashkent 19 Agro Bank Component 1 Financial services   Figure B.3. Map of IEG Field Visit Sites RESP-II     Figure B.4. Andijan and Ferghana Region   Figure B.5. Samarkand Region 70                                                                11  Limited liability companies (LLCs) are a flexible company type. According to Deloitte (2016), “The  minimum capital requirement for an LLC is 40 times the minimal wage (~$ 2,000). In general, owners’  equity participation is determined based on their capital contribution, unless otherwise agreed by them.  The main features of an LLC are as follows: it may engage in any activity not prohibited by domestic  law and, accordingly, may obtain a license to do so when required; participants’ liability is limited to  their contribution to the company; it does not issue shares; instead participants contribute to charter  capital. Participants may contribute by providing assets; it is managed through meetings of participants;  participants elect an executive body (sole or collective); participants are entitled to leave the company  and receive their share of net assets without the consent of other participants; participants enjoy pre‐ emptive rights to acquire fellow participants’ contributions; an LLC with one participant may not act as  the sole participant of another LLC; the number of participants may not exceed 50.” Deloitte. 2016.  Doing Business in Uzbekistan. Tashkent, Uzbekistan: Deloitte Uzbekistan.    71 Appendix C. List of Persons Met Institution/Name Title World Bank Hideki Mori Country Manager IJsbrand Harko de Jong Lead Water Resource Management Specialist (TTL FVWRMP-I) Mr. Dilshod Khidirov Sr. Agricultural Specialist (TTL RESP-II) Mr. Sergiy Zorya Lead Agriculture Economist (Sector Coordinator for Central Asia) Mr. Shavkat Rakhmatullaev Water Resources Management Specialist Ms. Jeren Kabayeva Agricultural Specialist Agency for the Implementation of the Projects in the Field of Agro Industry and Food Security (former Rural Restructuring Agency) Mr. Kamalov Bakhtiyor Deputy to General Director Mr. Lee Oleg Deputy Project Manager Mr. Utaev Nasriddin Irrigation Engineer Central PIU RESP-II Mr. Usmanov Rawshan Monitoring and Evaluation Coordinator GEF Project Ministry of Water Resources Mr. Khamraev Shavkat Minister Mr. Botirov Shavkat Head of Department for Investments Mr. Toshmatov Bakhodir Head of Department for foreign economic relations Mr. Azgarov Dilshod Manager of PIU Ferghana WRMP Phase II Mr. Bakhodir Yusupov Manager of PIU Ferghana WRMP Phase II Ms. Sablina Valentina Specialist on finance, Ferghana WRMP Phase I PIU office Ms. Irina Zubareva Chief accountant, Ferghana WRMP Phase I PIU office Maratbek Narbaev Irrigation and drainage engineer, Ferghana WRMP Phase I PIU office Ministry of Agriculture Mr. Abdumalik Namozov Head of Department for Investments Fund for Amelioration and Irrigation Improvement Mr. Babayev Maksud Deputy Director Mr. Fayziev Zafar Head of Department Mr. Shoniyzov Nuriddin Head of Department Council of Farmers for Dehkan Farms and Owners of Household Lands Mr. Kushanov Fakhriddin Deputy Chairman in charge of Innovation, Investments and Export Support Swiss Agency for Development and Cooperation Mr. Akramov Sohib Regional Water Sector Program Officer Ms. Islamova Amina Consultant International Water Management Institute Mr. Djumaboev Kahramon Water Management Researcher Mr. Akramov Bekzod Monitoring, Evaluation and Socioeconomic Assessment Specialist Mr. Yuldashev Tulkun Consultant on Irrigation and Water Management 72     Mr. Gafurov Zafar Remote Sensing and GIS Research Officer International Labour Organization Jonas Astrup Chief Technical Adviser Oxana Kipcanu Technical Officer Consulting Companies RESP II Mr. Ruziev Makhmudbek Head of Agriculture and Water Resources IKS Group of Companies ((Feasibility studies RESP-II) Mr. Ibraimov Ilkom Director, Expert Info LLC (Impact assessment RESP-II) United Nations Development Program Uzbekistan (UNDP) Ulugbek Islamov Project manager, UNDP Malika Ikramova Project national adviser, UNDP Gaukhar Kudaybergenova Project associate on environment, sustainable development cluster, UNDP UzNature -State Committee on Ecology and Environmental Protection Nomanjon Shakirov Head of department on water, land resources and soil protection, UzNature Saidolim Sahipov Head of international relations department, UzNature Consulting Companies FVWRMP-I Ms. Madina Khalmirzayeva NBT Director, Monitoring and Evaluation Consulting Company Mr. Bahadir Boz Team Leader Temelsu Company, Supervision Consultant Field Visits FVWRMP-I Jurabek Saymatov First deputy head of Syrdarya-Soh BISA Deputy head of HGAE under Syrdarya-Soh BISA, former PIU for World Bank– Komiljon Urinbaev financed Ferghana WRM Phase I Project Rahmonali Yakubov Specialist, UNS under Syrdarya-Soh BISA Feruzbek Tuhtasinov Head of WCA control department, Syrdarya-Soh BISA Chief specialist, Introduction of new innovative technologies department Elyorbek Hakimov under Syrdarya-Soh BISA Toyirjon Kasymov Head of irrigation system department, Rishtan district Ulugbek Khaydarov Head of irrigation system department, Bagdad district Nuriddin Khaydarov Chief hydro-technician under irrigation system department, Bagdad district Bakhrom Kholmatov Head of HGAE, Rishtan district Usmon Abdurahim Head of HGAE, Bagdad district Akmaljon Hamrokulov Head of HGAE, Altyarik district Khusniddin Kayumov Head of UNS, Rishtan district Ulmas Akhmadaliyev Head of UNS, Bagdad district Soyibjon Mirzayev Chairman of WCA Tuda Zilol Sharsharasi, Rishtan district Davlatjon Mirzaev Chairman of WCA Sabibullo Hoji Muhiddinov, Bagdad district Maksudali Yuldashev Chairman of WCA Irrigator Bagdad, Bagdad district Khizrali Ergashev Chairman of WCA Mirzaomon Ismoilov, Bagdad district Akromjon Yuldashev Chairman of WCA Kushtegirmon Gidrotekhnigi, Bagdad district Adhamjon Sotvoldiyev Chairman of WCA Dustlik Ravon Yuli, Bagdad district Abdusalom Abdurahmanov Chairman of WCA Povulgon Abdusalom, Altyarik district 73     Dadayodgor Yodgorov Chairman of WCA Burbonlik Suv Yullari, Altyarik district Bokijon Sheraliyev Chairman of WCA Katput Zilol Suvi, Altyarik district Aktamjon Kadyrov Head of leasehold farm Imkoniyat, Rishtan district Rustamjon Madaminov Head of leasehold farm Fazilatkhon Bakhodirjon Zamini, Rishtan district Khoshimjon Azimov Head of leasehold farm Kholinso 2002, Rishtan district Khoshimjon Sarimsakov Head of leasehold farm Ganiota, Bagdad district Odiljon Yangiboyev Head of leasehold farm Khursand, Bagdad district Shavkatjon Yunusov Head of leasehold farm Nurmuhammad Bogi, Bagdad district Ismatjon Hujamov Head of leasehold farm Ergashboy Hujamov, Altyarik district Samandar Ismatov Head of leasehold farm Ahadjon Ismatov Orzusi, Altyarik district Adhamjon Askarov Head of dehkan farm Adhamjon Askarov, Altyarik district Field Visits RESP-II Tashkent Region Agro Bank Headquarters, Tashkent City Mr. Uchkun Namozov Director of the Department for Project Financing, Agro Bank Mr. Inomjon Juraboev Deputy Director of the Department on Coordination and Monitoring Investment Activities, Agro Bank Mr. Inomkhuja Yunuskhodjaev Director of the Department for Foreign Economic Activities and Currency Operations, Agro Bank Andijan Region Mr. Nodir Askarov RESP-II PIU Coordinator Andijan Region Mr. Niyazov Abdulkhamid Andijan Regional Department of Agriculture Mr. Ahmedov Bakhodir Head of Ulugnor District Irrigation Department Mr. Kholdarov Sh Head of Ulugnor District Agricultural Department Mr. Egamberdiev Iqboljon Lead Specialist Basin Administration of Irrigation System Norin Qoradaryo Mr. Abdumalikov Shukhratbek Chief Hydro-technician Mr. Muzaffar Kalandarov Deputy governor of Oltinkol district Mr. Azizbek Umarov Deputy governor of Ulugnor district Hamkor Bank Headquarters Andijan City Mr. Gofurjon Ahmedov, Head of Department for Micro and Agro Crediting Mr. Qosimov Shukhratbek Loan Officer at Credit Department Mr. Turobov Anvar Deputy Head of the Department for Micro and Agro Crediting Baht Imkon Rivoj Chorvasi diversified livestock farm, Oltinkol District, Andijan Region Mr. Bektashev Jahongir Farm Manager Argumon Oltikol orchard farm, Oltinkol District Mr. Ahmadali Hamraqulov Farmer, Argumon Oltikol farm WCA Ulugnor, Ulugnor District, Andijan Region Mr. Boltaboev Yoqubjon Chairman WCA Ulugnor Mr. Rakhmonov V. Farmer, Beginov farm Mr. Sheraliev Abdurakhim Farmer, Ulugnorda Muniskhon farm 74     Farm Field School/Demonstration site Begijon Farm, Ulugnor District Mr. Rahmonov Umidjon Farmer, Begijon farm Ferghana Region Mr. Kamoliddin Karimov RESP-II PIU Coordinator Ferghana Region Mr. Fozilov Arabboy Head of Yazyavon District Irrigation Department LLC Bakery Sarvinoz Mashkhura Shod Dil, Toshloq District Ms. Gaffarova Mashkhura Co-owner bakery Sarvinoz Mashkhura Shod Dil Ms. Gaffarova Sarvinoz Co-owner bakery Sarvinoz Mashkhura Shod Dil WCA Khonobod, Yazyavon District Mr. Holmatov Nasibjon Chairman of WCA Khonobod WCA Qoratepa, Yazyavon District Mr. Chairman of WCA Chairman of WCA Qoratepa Farm Field School/Demo site Far Galaba 2002 farm, Yazyavon District Mr. Ergashev Ynusali Farmer, Far Galaba 2002 farm Samarkhand Region Mr. Ulugbek Pulatov RESP-II PIU Coordinator Samarkhand Region Turon Bank Samarkhand Regional Office Mr. Ochilov Khasan Deputy Chairman of Turon Bank Regional Office Mr. Dusmatov Alisher Credit Officer LLC Agribusiness Krisral Biznes, Pasdargom District Mr. Habib Tashtemirov Owner, Krisral Biznes Rasul Ota Farm, Pasdargom District Mr. Erkinov Avaz Farmer, Rasul Ota Farm WCA Pasdargom, Pasdargom District Mr. Raimov Sherali Chairman of WCA Pasdargom Farm Field School/Demonstration site Nigina farm Mr. Olim Mirzaev Farmer, Nigina farm WCA Pastdargomlik Anhor Suvchilari, Pasdargom District Mr. Khalilov Qilich Chairman of WCA Pastdargomlik Anhor Suvchilari Farmer Field School/Demonstration site Zamin Kurki farm Mr. Sharipov Pardaboy Farmer, Zamin Kurki farm   75   Appendix D. Outputs FVWRMP-I The project completed the planned works on improvement of drainage works. However, works  on improvement of irrigation network including rehabilitation of inter‐farm irrigation canals,  regulators, outlets, and hydro‐posts were partially completed. Additionally, the planned laser  leveling works for 3,200 hectares were not conducted because of the problem with the  contractor for international competitive bidding (ICB) 3 (See Implementation Experience) In  addition, the planned activity (on‐farm irrigation canal rehabilitation work) that was identified  by the feasibility study as 2,065 kilometers) was reduced to 38.8 kilometers during the  restructuring. The Implementation Completion and Results Report (ICR) reported (para 14) that  that these works were reduced because a substantial number of the canals that were proposed  in the feasibility study were in satisfactory condition (World Bank 2017b). See appendix D for  detailed outputs.   Regarding the quality of vertical pump works, some beneficiaries that the Independent  Evaluation Group (IEG) interviewed mentioned that polyethylene plastic material used for the  pipes of vertical pumps were broken frequently on their connection points, causing water  leakage. The project replaced the old metal pipes with polyethylene pipes, but according to IEG  interviews, the old pipes did not have these problems. These pipes need to be connected using a  welding machine.   Under the institutional strengthening component, the project accomplished the following:    Various drainage, farm and office equipment (office equipment, conductometer, leveling  equipment, drain flushing equipment, laboratory equipment, laser leveler (8),  agriculture tractors (8), deep ripping ploughs (6), and software purchased for the public  water and drainage institutions (Irrigation System Authority, Basin Irrigation System  Authority, and Hydrogeology and Amelioration Expedition)    Trainings in organizational, legal, and technical issues delivered to public water and  drainage institutions and WCAs (total participants 1,141—90.1 percent participation)   Dissemination of modern agricultural and water management practices to members of  the WCA and small‐scale dehkan farms through provision of training and establishment  and operation of field DPs:  o Nine demonstration plots were established (fields prepared for cropping with  surface layout and deep ripping), local fertilizer was provided, and phenological  observations conducted.   76   o Two‐hundred farmer field school trainings were offered, and 723 people were  trained through farmer field schools on soil structure, crop rotation and application  of fertilizers, plant protection, drip irrigation and production of intensive orchards,  efficient water usage, child and forced labor, and gender issues.    The technical assistance on drafting a new water code and the legislation and  regulations for WCAs were dropped in 2010, as the United Nations Development  Program (UNDP) provided technical assistance to support the government in improving  the national water legislation and the WCA regulation.    Table D.1. Planned versus Actual Outputs on Irrigation and Drainage Works Activities Feasibility Contracted Completed Completed Study (percent) (a) Improvement of irrigation network: Rehabilitation of on-farm, inter-farm irrigation canals, and pilot drip irrigation On-farm irrigation canal rehabilitation (earth 2,065 38.8 38.2 95.8a and concrete canals) (km) On-farm regulators and outlets (number) 995 487 48.9 On-farm hydro posts (number) 1,159 545 303 56 Inter-farm irrigation canal rehabilitation (km) 140 25.4 17.3 68.1 Inter-farm regulators and outlets (Number) 192 178 41 23 Inter-farm hydro posts 535 0 0 Laser Leveling (hectares) 3,200 3,200 0 0 Drip Irrigation (hectares) 301.4 301.4 301.4 100 Improvement of drainage network Rehabilitation of open on-farm drainages 870 778.1 778.1 100 (kilometers) On-farm collector structures (number) 169 266 266 100 Closed horizontal drainage (kilometers) 100 101.5 101.9 100 Inter-farm collectors (kilometers) 170 170 170 100 Inter-farm collector structures (number) 107 66 66 100 Intercepted drainages (kilometers) 25 25 25.2 100 Structures on intercepted drainages (number) 46 30 30 100 Observation wells (piezometers; number) 34 34 34 100 Vertical drainage wells (number) 242 242 242 100 Pressure relief wells (number) 1,411 1,411 1,414 100 Conjugation structures 760 760 100 Deep ripping (hectares) 6,000 6,000 6,000 100 Source: ICR and Project Impact Evaluation Report. 77   a. Based on revised plan and contracted amount. RESP-II Objective 1: Increase Productivity of Agriculture in the Project Area  Outputs Rehabilitation of I&D Works and Improvement of On‐Farm Irrigation Water Supply  Services   204,345 hectares with rehabilitated I&D infrastructure selected through a participatory  process for inter‐farm systems and a WCA and farmer‐driven process for on‐farm  systems (103,730 hectares International Development Association–financed, 26,351  hectares Swiss Agency for Development and Cooperation (SDC)‐financed, and 74,264  hectares government contribution).   62 WCAs in the seven project districts were reorganized based on hydrographic  boundaries and reregistered as nongovernmental or noncommercial entities, in line with  international best practice. WCAs were provided with small equipment for operation  and maintenance based on needs, including 62 computers and printers, 130 bicycles, 18  cargo motorbikes, 41 scooter‐type trucks, 39 tractors with loading bucket, bulldozer,  excavator attachments, and 8 laser‐leveling equipment.   288 trainings on institutional, legal, financial, and technical issues for WCA operations  were conducted for WCAs under component 2. In addition, 1,184 trainings on farm  productivity improvement practices and water‐saving technologies were conducted for  farmers under component 2. Ninety‐five percent of farmers rated the training and  materials provided as high quality, and 77 percent confirmed that the training contents  could be applied successfully in practice.   Provision of technical assistance and advisory services:   2,938 workshops were held for farmers and agro‐processors under component 3 across  all seven project regions (88 districts) on soil fertility improvement, pest management,  organic farming, and water management. These workshops were additional and  designed as complementary to the farmer field school training contents under  component 2.   61,426 farmers were trained in total (of which 9,185 are women), and a satisfactory  survey showed that 87 percent of farmers rated the training as good or very good.  Access to Credit  78   Under the project, 570 loans were provided to farmers and agribusinesses (the total amount was  $72 million and average loan amount was $126,000). Loan investments included agricultural  machinery like tractors and harvesters (31 percent); storage, processing, and packaging  equipment (36 percent); greenhouse facility construction (12 percent); development or  expansion of horticulture and viticulture farms through the purchase of seedlings, irrigation  equipment, and others (9 percent); development or expansion of livestock farming through the  purchase of cattle, milking equipment, and others (6 percent); and development or expansion of  poultry farming (5 percent), among others.   Intermediate Outcomes Rehabilitation of I&D Works and Improvement of On‐Farm Irrigation Water Supply  Services   All 62 WCAs operate based on project‐promoted operation and maintenance plans,  manuals, procedures, and irrigation schedules, and undertook 87 percent of the  maintenance work for their I&D infrastructure at project completion compared with the  baseline of 34 percent. Eighty‐two percent of water users expressed satisfaction with  WCA performance at project completion.   Water loss during transportation decreased by 37 percent, from 24 percent in 2010 to 15  percent in 2016, because of the rehabilitated I&D infrastructure. This also reduced  waterlogging, groundwater levels, soil salinity, and hence the quality of arable land.   Adoption rates of water‐saving technologies promoted listed under objective 3.  Provision of Technical Assistance and Advisory Services  The end‐of‐project assessment does not provide information on adoption rates of practices  taught in the workshops of component 3. IEG interviews with farmers confirmed that trainings  were generally beneficial and practical. All farmers particularly emphasized the usefulness of  the farm accounting and tax fundamentals training for their farm management. Also, all  confirmed that they continued to regularly apply at least one of the practices taught in the  workshops (especially pest and disease verification and control, ameliorative land  improvements, or practices related to horticulture, viticulture, or livestock farming).  Access to Credit  The different types of farm and postharvest investments by farmers and agribusinesses can be  assumed to have contributed to yield increases described above at varying degrees. A financial  profitability analysis of 14 RESP‐II loan recipients for the ex post economic and financial  analysis estimated the average incremental net profit for the four most common (88 percent of  all) types of investments. The results were an average incremental net profit of $3,500 for  agricultural machinery, $218,000 for cold storage, $250,000 for greenhouses, and $178,000 for  orchards for the assumed time period of 25 years.  79   Objective 2: Increase Financial Sustainability of Agriculture in the Project Area  Outputs Outputs for objective 2 are the same as for objective 1. As part of the capacity‐building activities  under components 2 and 3, specific trainings were held on accounting, financial planning, farm  management, WCA operations and related software, business plan development, financial  sustainability, and linked topics for WCAs and farmers, respectively.  Intermediate Outcomes Agricultural Loan Investments and Capacity‐Building Activities   Yield increases described under objective 1, improving financial sustainability of farmers   Loss reduction in agricultural production, especially for fruits, vegetables, milk, and  dairy products as a result of loan investments, particularly in postharvest infrastructure  and modern technologies. The ICR does not quantify the reduction of production losses.   Farmers and agribusinesses who invested in greenhouses (12 percent of loans) were  enabled to extend their growing season and reach domestic and international markets  earlier than they could before the project. The ICR does not provide more detailed data,  but interviews with IEG revealed that investments in greenhouses and storage facilities  allowed for market expansion and reduced farmers’ necessity to engage in ad hoc low‐ price sales during harvest time.  Provision of I&D Infrastructure, Equipment, and Training to WCAs   Water productivity, measured by yields per cubic meter of water used, went up from  0.68 kilograms to 1.15 kilograms for wheat and from 0.51 kilograms to 0.86 kilograms for  cotton between 2010 and 2014.   WCAs partially apply legal procedures to enforce compliance with contracts on water  use and service fee payments as well as conflict resolution with nonpaying farmers,  based on the training provided by the project. IEG corroborated an increased legal  support to WCAs which has increased the fee collection rates for some WCAs.  Objective 3: Increase Environmental Sustainability of Agriculture in the Project Area  Outputs All outputs and intermediate outcomes listed under the achievements of objective 1 through the  rehabilitation of I&D works and improvement of on‐farm irrigation water supply services are  also relevant to the achievement of objective 3, but not repeated below.  I&D Infrastructure Rehabilitation and Maintenance Services  80    113,471 hectares of rehabilitated irrigation infrastructure and 90,874 hectares with  rehabilitated drainage infrastructure was completed. Infrastructure was handed over to  respective institutions responsible for O&M services.   62 WCAs received O&M equipment and water measurement and control structures,  including portable weirs, metal gates, and piezometers for groundwater level  monitoring to improve irrigation water use and transport efficiency, as described under  objective 1.  Capacity‐Building in Water Resource Management and Water‐Savings Technologies  Sixty‐two farmer field schools provided trainings and demonstrations to more than 20,000  farmers on water‐saving technologies as listed under objective 1 in a total area of more than 751  hectares. Farmers demonstrated interest and commitment to the topic by bearing 35 percent of  training. Ninety‐six percent of participating farmers rate training quality as high, and 77 percent  confirm that training content could be applied successfully in practice.  Intermediate Outcomes I&D Infrastructure Rehabilitation and Maintenance Services  Reduction in saline lands and increases in water productivity as described above and under  Objectives 1 and 2.  Capacity‐Building in Water Resource Management and Water‐Savings Technologies  High adoption rates of water‐saving technologies and spillovers described above.  Objective 4: Increase Profitability of Agribusiness in the Project Area  Outputs Capacity‐Building of Financial Institutions to Support Viable Agricultural Business Plans   573 staff of participating financial institutions received training on agriculture‐specific  project appraisal, risk assessment, and monitoring, exceeding the target by 186 percent.   570 loan investments listed under objective 1.  Capacity‐Building of Farmers to Foster Productivity and Diversification   Trainings for farmers on high‐quality business plan development to improve credit  access and sustainability of loan investments   Finance and accounting‐related trainings for farmers and agribusinesses under objective  2  Intermediate Outcomes Capacity‐Building of Financial Institutions to Support Viable Agricultural Business Plans  81   Fifty‐seven percent of participating banks increased their agricultural portfolio by at least 10  percent, exceeding the end‐of‐project target by 43 percent. Capacity‐Building of Farmers to Foster Productivity and Diversification    Yield and income increases described under objective 1   Loss reduction in agricultural production and ability of farmers and agribusinesses to  extend growing season and reach markets earlier, as described under objective 2      82   Table D.2. Comparison of FVWRMP-I and RESP-II in WCA Capacity Building Outputs  Activity Types FVWRMP-I (n=25, 3 districts) RESP-II (n=62, 7 districts) Trainings - Consistent hands-on training for each - Consistent hands-on training for each individual WCA to develop i) financial individual WCA to develop i) financial management plan, ii) irrigation scheduling management plan, ii) irrigation plan, and iii) O&M plan scheduling plan, and iii) O&M plan Operational - No computers or printers - Computer, printer, generators for each management WCA - Software for operational plans - Software on financial planning and accounting Maintenance - No provision of equipment for - Provision of bicycles, motorbikes, capacity maintenance scooter type trucks, tractors with loading bucker, bulldozer, excavator attachments Water delivery - Only about 50 percent of planned on-farm - Planned regulators, outlets, and capacity and 23 percent of the inter-farm regulators, hydro-posts to control water flow were outlets, and hydro-posts to control water provided flow were provided - Significant reduction in planned inter-/on- - Completion of planned inter-/on-farm farm irrigation rehabilitation works (32 irrigation rehabilitation works percent of inter-farm irrigation works not finished) On-farm land -Laser levelling contract works was cancelled - Provision of laser levelling equipment improvement works to 8 WCAs       83   Intermediate Outcomes  Outcome Types FVWRMP-I (n=25, 3 districts, 9 RESP-II (n=62, 7 districts, 6 interviewed interviewed by IEG) by IEG) Training satisfaction - All 25 satisfied - IEG interviews with 6 WCA revealed satisfaction by all 6 Use of operational - All 9 interviewed prepare annual - All 6 interviewed prepare annual financial management plans financial management, irrigation management, irrigation scheduling, and scheduling, but do not develop O&M plans and SDC reports corroborates maintenance plan (as they don’t provide continued use of plans maintenance services) Execution of - None of the 9 interviewed WCA - All of the 6 interviewed WCA provide maintenance provide maintenance services (due to maintenance services (using maintenance services lack of maintenance equipment) equipment provided by project) -2015 Swiss Agency for Development and Cooperation assessment found that all 62 WCAs undertook 87 percent of the maintenance work for their I&D infrastructure compared to the baseline of 34 percent. Execution of water - Two of the WCAs interviewed by IEG - Swiss Agency for Development and delivery service (out of nine) stated that they are not Cooperation report finds that water loss able to deliver the required water to during transportation decreased by 36 their members due to incompletion of percent (from 24 percent in 2010 to 15 these works. percent in 2016) due rehabilitated I&D infrastructure (esp. lining of canals). IEG interviews revealed that this led to reductions in water logging, groundwater levels, salinity and improved soil quality. - IEG interviews showed significant reduction in time to deliver water Financial Irrigation service fee collection rate of The average irrigation service fee collection sustainability 43 percent on average for the 25 WCAs rate for the 62 WCAs of RESP-II 45 percent I in 2015. in 2014. Water user According to the beneficiary survey on According to the results of the Farmer satisfaction with average 70 percent of farmers state Satisfaction Survey in 2014, farmers’ WCA services satisfaction in terms of equitable water satisfaction is 75.5 percent, an increase of distribution and only 60 percent of 9.7 percent from the Year 2011 baseline. farmers state that water distribution was Water user satisfaction in 2016 was high, as adequate in summer time in 2015. 82 percent expressed satisfaction with WCA performance at project completion.     84   Appendix E. Site Visits and Asset Verification FVWRMP-I Table E.1. Summary of Interviews and Site Visits with Farmers and Water Consumer Associations District Rishtan Date visited November 2, 2018 Total Number of Leasehold (807), Household (196,400) and Dehkan (240) Farmers in the District Main Crops Produced in Cotton: 7,295 ha the District Wheat: 7,902 ha Orchards: 3,133 ha Vegetables: 478 ha Melons: 131 ha Maize: 58 ha Other: 1,107 ha Total Number of Leasehold (807), Household (196,400) and Dehkan (240) Farmers Benefited from the Project in the District Total Crop Area Cotton: 7,295 Ha Benefited from the Wheat: 7,902 Ha Project Orchards: 3,133 Ha Etc.: 1,654 Ha Types of Project Rehabilitation of inter-farm collectors – 80.81 km; Inter-farm collector structures Infrastructure – 217 pieces Investments Rehabilitation of on-farm drainages – 330.79 km; On-farm collector structures – 123 pieces On-farm irrigation canal rehabilitation – 19.3 km; Regulators and outlets – 173 pieces; Hydroposts – 93 pieces Intercepted drainages – 3.34 km; Structures on intercepted drainages – 8 pieces Deep ripping – 1,826.9 ha Vertical drainage wells – 150 pieces Closed horizontal drainage – 21.03 km Pressure relief wells – 592 pieces Artesian wells – 10 pieces Observation wells (piezometers) – 17 pieces Number of Farmers who Leasehold: 807 Benefited from the Household: 196,400 Project Dehkan: 240 Training/Demonstrations Summary of Interviews ISA, Amelioration Unit, As part of the World Bank financed Ferghana Valley Water Resources Pump Station Management Phase I Project, 146 drainage wells were rehabilitated, irrigation 85   canals were rehabilitated, and modern water gates were built in the Rishtan district. The project provided the Rayvodhoz with current meter and land leveling equipment. Moreover, the project organized trainings for WCA and Village Citizens’ Assembly (VCA) members (VCA is a self-governance organization to represent the interests of its inhabitants. The resident citizens over the age of 18 are entitled to participate in the assembly. VCAs have a legal status and are registered in the local governor’s office) and distributed brochures about water management, infrastructure use, water limits, drip irrigation use, and fertilizer application limits. As a result, productivity has increased by 250-300 kg/ha in the district. As for the relationship between the Rayvodhoz and the WCAs, the former provides water to the latter on the basis of contracts, provides service on water measurement and supports preparing business plans. According to the respondents, unfortunately, the ICB-2 was not completed since the contractor selected could not deliver the tasks. Under ICB-2, the project had planned to rehabilitate 38.8 km of irrigation canals. About 37.6 km were done (98 percent). 995 on-farm regulators and outlets were planned for rehabilitation; 600 were done but only 487 were accepted by the expert commission. Furthermore, under ICB 3-1-1 inter-farm irrigation canals were not rehabilitated properly. Only 35 percent of works were completed. Finally, under ICB 3-1-2 a laser leveling system was supposed to be installed for 3,200 ha. Contractor levelled only 110 ha but it did not fulfill the criteria and thus, the experts did not accept any work. It was unsuccessful. Presently, about two km of non-project irrigation canals need to be rehabilitated and made in concrete. As a result, nine additional farmers would receive water in due time. There are also three villages in non-project sites, which have uncleaned and earthen on-farm irrigation canals. As a result, 20-30 percent of water is lost in those areas. WCA (Name) and WCA Tuda Zilol Sharsharasi Member Size The WCA has 43 members oriented to cotton-wheat production, 16 orchards, two vegetable and one livestock farmer, as well as 12 dehkan farms with an average 0.35 ha farm size. The WCA has 7 staff: a chairman (man), an accountant (woman), 4 irrigators (all men), 1 guard (man), and 1 cleaner (woman). In the WCA territory, “Tuda 1” irrigation canal was cleaned, hydroposts were installed, waterlogging was improved, and groundwater level was reduced. As a result, crop yields have risen. The project organized seminars organized on canal cleaning, how to use water demand and supply notebooks, apply request to WCA five days prior to irrigation, make a business plan (no O&M included, only salary and tax), plan water schedule, and identify water limits. This WCA has no water scarcity problem because they receive from the Ferghana canal directly. They are at the head of watercourse. Still, about 60 percent water is received from drainage canals. The WCA has no agricultural machinery for cleaning on-farm irrigation canals and accordingly, farmers do not contribute for irrigation service fees (ISFs). A farmer cleans canals in his territories on his own and thus, doesn’t contribute for ISFs. When needed, WCA can ask local Rayvodhoz for machinery support. The Rayvodhoz normally contacts local State Unitary Enterprises for carrying out machinery cleaning. Farmers provide diesel and pay driver’s cost. Nevertheless, after introducing cotton cluster system in 2018, the ISF collection rate has 86   increased to 65 percent. The previous years the rate would not exceed 50 percent. Farmer 1 Leasehold farm Fazilatkhon Bakhodirjon Zamini (Demonstration pilot) This farmer has 43 ha land of irrigated land, of which 23 ha is devoted to wheat production and 20 ha to cultivating cotton. Of these, 5 ha of land were under wheat plantation as a demonstration pilot (DP). The project team came and selected the site. The project applied local fertilizers, conducted deep ripping and different agro-technical measures. During the implementation, the farmer learned that the field soils had limited humus and phosphorous contents. Thus, the farmer now applies more contents than before. As a result, crop productivity has increased by 1,500-2,000 kg/ha. According to the farmer, crop rotation should be done every three years. At the moment, it is not possible to introduce the rotation system due to the state’s cotton-wheat production quota policy. Farmer 2 (Drip Irrigation Leasehold farm Kholinso 2002 Pilot) The total land of this farmer is 20 ha, of these 10 ha for orchards (persimmon, apricot, cherry, and peach) and 10 ha for livestock production. The project installed drip irrigation for 4 ha land. The farmer is a member of local WCA and pays about 50,000 Uzbek om per hectare per year (the exchange rate is approximately Som 8,000 to 1 USD). The project provided drip irrigation pipes to the farmer for free and organized several seminars on the use of this technique, where neighboring farmers attended as well. The Rayvodhoz approached the farmer to include his field for drip irrigation because of water shortage in the area. The Rayvodhoz installed a well to lift water. The well also provides water to other neighboring seven orchard farmers, located downstream of this farmer. Additional 40 households benefit from the well. However, there was an alternative water flow from an irrigation canal to this farmer, which puts in doubt of the necessity of drip irrigation. The farmer claimed that water from the canal flows in June only and thus, drip irrigation is useful. The IEG field visit observed that drip irrigation pipes were removed from the field to a warehouse. According to the farmer, the pipes are normally used during March-September and in winter the pipes freeze. However, the pipes looked dusty and not used for an extended period. Farmer 3 (Leasehold Leasehold farm Imkoniyat Farm) The farmer has 20 ha of irrigated land and cultivates wheat, maize and soybeans. The farmer is a member of Rishtansoy Shalolasi WCA and pays ISF based on contracts on a quarterly basis through local banks. He was aware of the project because drainage canals were rehabilitated around his farm. The project carried out deep ripping at his farm with depths of up to 80 cm. As a result, soil compaction was minimized, and the productivity was increased by 1,000 kg/ha. The farmer participated in several trainings on identifying water limits, planning water scheduling, carrying out proper agro-technical measures, applying local fertilizers (manures), and saving water. During summer, farmers use drainage water for irrigation. In the past, pumps in drainage canals were under the control of a farmer/WCA, including electricity cost of using them. Now, the state covers all costs. 87   Works or Assets Visited Work or asset type Pressure Relief Well, Drip Irrigation Pipes, Vertical Drainage Well, Inter-farm Irrigation Canal Location Rishtan district Year built or 2011-2015 purchased Functionality of Functioning and in use assets Main benefits Improved drainage, reduced water logging, better water availability, according to more efficient water use, improved water management, etc. beneficiaries Maintenance Regular maintenance in place, or will be maintained in 2019 according to the budget program Issues Mentioned by Through the project 160 vertical drainage wells were Beneficiaries rehabilitated/newly installed. Unfortunately, these pipes were installed with polyethylene plastic material. They operate using pumps. When pumps function, pipe connection-points break and water leakage starts. These need to be connected using a welding machine. Chinese contractors did not leave this machine. The machine is in the customs of Uzbekistan requiring customs clearance. The machine costs around 15,000 USD and it was not foreseen to leave the machine under the project. In 2019, the government plans to buy the new ones. Pictures Taken during the IEG Field Visit 88                                    Work or asset type, from Pressure Relief Well, Drip Irrigation Pipes, Vertical Drainage Well, Inter-farm left to right Irrigation Canal 89   Pictures Provided by the Project Team in Ferghana           90            91         RESP-II Table E.2. Summary of Interviews and Site Visits with Farmers and Water Consumer Associations Region Andijan District Ulugnor Date visited November 1 and 2, 2018 Total Number of Farmers in Leasehold: 673 District Leasehold production types Cotton and Wheat 332 Fish farming 125 Orchard 117 Livestock 34 Mulberry 26 Vegetable 14 Bee farming 6 Poultry 5 92   Other 14 Household: 10,865 Dehkan: 26 Total number of farmers Component 1: 10 leasehold farms: 8 tractor and machinery (800 hectares), 1 benefited from project in district livestock farm (60 hectares), 1 orchard farm (1 hectare); Components 2 and 3: 279 farms, 8 WCAs, and 8 Farmer Field Schools Total crop area benefited from Component 1: Cotton 400 hectares cotton/wheat, 60 hectares fodder crops, 20 the project in district hectares orchard; Components 2 and 3,:626 hectares Types of project irrigation and Inter-farm irrigation canal rehabilitation drainage infrastructure Works Total investments in district Rehabilitation of inter-farm irrigation network 1 5.55 (kilometers) Rehabilitation of structures on the inter-farm 2 93 irrigation network (units) 3 Improvement of irrigation in the fields (0 hectares) 1.,6 On-farm irrigation canal rehabilitation Works Total 1 Rehabilitation of inter-farm irrigation network (km) 10 Rehabilitation of structures on the inter-farm 2 94 irrigation network (units) 3 Improvement of irrigation in the fields (000 ha) 3,1 Demonstration sites for irrigation gates/valves 1 Spillways 7 Polyethylene pipes of diameter 40 and 50 mm 2 240 (meters) 3 Piezometers 7 4 Irrigation kits for 4 hectares 1 5 Black polyethylene films in kg 455 6 Soil drill 1 7 Water metering and regulating structures 4 8 Smartphones 1 Demonstration sites for drip irrigation for orchards, Farmer Field School 1 Demonstration fields (ha) 11,60 2 Drip irrigation system (ha) 5,23 3 Farrow irrigation (ha) 6,37 Summary of Interviews and Works or Assets Visited Work or asset Component 1: Som 2,121,370 loan ($1,336 equivalent) for local seedlings for 11 ha orchards and drip irrigation equipment for 5 ha; Component 2: Farm Field School; Component 3: Trainings Location Farm Begijon, Ulugnor District 93   Year built or purchased 2010 Functionality or maintenance Functioning. Drip/furrow irrigation used by farmer Main issues beneficiaries Basic facts farm (hectares) mentioned Total Cotton Apples, Drip Furrow Farm Size Demo Irrigation Irrigation field 55 43.5 11.5 5 6.5 Change in production and yields: Yields for cotton production have increased between 1015 percent because of a reduction in waterlogging based on the piped irrigation and farming practices taught by RESP-II. Moreover, the diversification to apple production has increased profits per hectare by about 33 percent compared with cotton production (2018 was the first apple harvest). Main benefits: The farmer expects future apple production and profit margins to increase and hopes to expand his orchard. He has experienced an improved soil structure due to reduced water logging, which was a considerable problem before. The farm was selected as demonstration site and for Farmer Field School, so the farmer participated in all trainings and highlights their usefulness. He continues to use practices taught, particularly drip/furrow irrigation, pest management. Main challenges: Since RESP-II ended, there are no capacity trainings or extension service provided. The demonstration site/drip irrigation equipment is visited by interested farmers, but he is not aware of uptake by the farmers due to high investment costs.       Work/Asset Component 1: $297,135 loan in U.S. dollars used to import 93 heifers (cows ready to deliver calves); Component 3: Trainings Location Farm Diversified Livestock LLC Baht Imkon Rivoj Chorvasi, Oltinkol District Year built or purchased 2011 Functionality/Maintenance Functioning. Milk cows increased from 32 heads (2010) to 125 (2011 through RESP-II) to 3000 heads (2018). Main issues mentioned by Basic facts farm: beneficiaries Total Farm Milk cows Goats Walnuts size (ha) (heads) (heads) (ha) >2000 3000 2000 400 Change in production/yields: Before the foreign cattle breed acquired through RESP-II, average milk production per cow per day was 7 liters. With the new cattle it increased to 20-25 liters (185 percent to 257 percent increase). At time 94   of IEG mission, the farm has become a major supplier of milk in the region to Nestlé. Main benefits: Key benefits were the experience gained in loan applications and business plan development, the loan conditions provided, and the learned practices in improved feeding for animal and mechanization in feed delivery/milking to meet buyers’ quality standards. RESP-II was the first loan of the farm, and at time of IEG mission the farm had taken several other loans. The farmer describes the experience with RESP-II as transformative. To strengthen and diversify its businesses, after RESP-II the farmer bought 2000 heads of foreign breed goats, a modern milking machine, and is planning to buy milk-processing equipment for cheese production. Since 2018 it produces walnuts on 400 ha of land using drip irrigation. Moreover, the farm obtained GEF-support for a biogas system currently under the installation on the farm to generate 150 kW per day, out of which 100 kW is planned for farm use and 50 kW for neighboring households. Main challenges: Initial hesitation to take up loan and knowledge on importing foreign cattle.     Work/Asset Component 1: $499,768 loan in U.S. dollars for cold storage with capacity for 1200 tons and seedlings for 20 ha orchards; Component 3: Trainings Location Farm Argumon Oltikol Orchard, Oltinkol District Year built or purchased 2012 Functionality/maintenance Functioning: orchards in good condition, cold storage working and well maintained. Main issues mentioned by Basic facts farm: beneficiaries Total Farm Apples Cherries Table size (ha) (ha) (ha) grapes (ha) 30 20 5 5 Change in production/yields: Diversification to initially 20 ha apples, and later additional 5 ha of cherries and 5 hectare of table grapes. Income from these products is higher than the former cotton/wheat production. The project- supported cold storage helps farmer to sell the perishable throughout the year (not only at harvest) and allows to gain income from providing cooling services to neighboring farmers. Main benefits: RESP-II was the first loan of the farm and helped overcome risk aversion towards applying for credit. Access to loan to diversify production. RESP-II training taught farmer about benefits of drip irrigation for orchard production. Farmer enjoys continuous demand for his produce from buyers, who come to his farm for pick-up. 95   Main challenges: Since RESP-II ended, farmer receives no capacity training or extension service on farm skills, and marketing of produce.         Work/Asset Component 2: I&D Investments, WCA Capacity Building, Farmer Field School/Demonstrations Location WCA Ulugnor, Ulugnor District Year built or purchased 2014 Functionality/maintenance Functioning and maintained by WCA. Main issues mentioned by Basic facts WCA: beneficiaries Year of WCA establishment: 2010 Member Size: 98 Farmers (70 percent cotton/wheat farmers, 30 percent horticulture farmers) Staff number: 13 (1 woman) Service area: 4045 ha Manager 1 Cotton 2 483 Accountant 1 Wheat 1 024 Hydro Technician 1 Vegetables and 35 Machine operator 1 Melon Orchards and Cleaner 1 86 Grapes Chief Mirob 1 Household plots 215 Security 1 Change in WCA service fee collection: Before RESP-II IEG mission 2018 WCA service fee/ha: WCA service fee/ha: Som 12,000 for cotton Som 42,000 for cotton no horticulture production Som 38,000 for wheat Som 45,000 for horticulture Fee collection rate: ~35 Fee collection rate: 62 percent percent (was 42 percent in 2016 and 54 percent in 2017) The WCA mentioned that the RESP-II works and capacity-building activities have supported a shortening in time of water delivery to the farms. Both WCA staff and farmers confirm that the rehabilitation works and installation of gates for water distribution has led to improvements in soil conditions and achieving higher yields per hectare both in cotton and wheat production. 96   Main benefits: The WCA values the provision of equipment including a tractor, motorbike, PC and bicycle, which has improved operational management and ability to fulfil services to its members. Farmers appreciate the improved and more regular maintenance of canals, including after the closure of the project, and hence are more willing to pay for these services. The WCA and its members highlight the value of the participatory approach of RESP-II to identify and rehabilitate the most need parts of the irrigation canal. The installment of intake gates with water measuring has led to more accurate delivery and fee calculating, benefiting both farmers and the WCA. Main challenges: Disputes between farmers and WCA dispatchers continue regarding actual and/or timely payment of service fees, putting the financial situation of the WCA at risk.     Work/Asset Component 2: I&D Investments, WCA Capacity-Building Location WCA Andijon, Ulugnor District Year built or purchased 2014 Functionality/maintenance Functioning and maintained by WCA (verbal confirmation by WCA chairman, not visited by IEG). Main issues mentioned by Basic facts WCA: beneficiaries Year of Establishment: 2002 Member Size: 34 Farmers (91 percent cotton/wheat farmers, 9 percent horticulture farmers) Staff number: 13 (1 woman) Service area: 1870 ha Change in WCA service fee collection: Before RESP-II IEG mission 2018 WCA service fee/ha: WCA service fee/ha: ~ Som 12,000 for cotton Som 30,000 for cotton Fee collection rate: ~30 Fee collection rate: 90 percent percent (due to good yields, in 2017 was 50 percent) Main benefits: The WCA benefited from trainings and development of financial, O&M, and water scheduling plans. The provision of a PC, printer, a bicycle and uniforms has improved service delivery capacity. Also, valves were installed by the project, increasing the efficiency in managing irrigation water. The latter have led to more even and timely distribution of water and hence improved the soil quality. Main challenges: WCA has high fluctuation in service fee collection rates, making it difficult to plan. 97   WCA I&D investments not visited by IEG mission (based on interview with WCA chairman) Work/Asset Component 2: I&D Rehabilitation Location Inter-Farm Irrigation Canal 35-X, Ulugnor District Year built or purchased 2012 Functionality/maintenance Maintained by BISA Main issues mentioned by Basic facts canal: beneficiaries Year of Reconstruction: 2012 Length of reconstruction: 4,3 km of canal and 11km of feeder channel Investments: rehabilitation of canal, installment of 15 intake gates to farms, acquisition of tractor for canal excavation and cleaning. Change in water flow and irrigated area: Before RESP-II IEG mission 2018 Water flow: 1m3/sec Water flow: 4m3/sec Farm area reached: 1000 ha Farm area reached: 2392 ha Main benefits: Reconstruction of inter-farm and feeder canal, leading to increased water flow and more efficient water supply. Farm-level intake gates improved more even and better timed distribution of water to a larger area. Provision of excavator tractor has facilitated maintenance work. Main challenges: Part of the canal is not rehabilitated, leading to sub-optimal water flow.             Region Ferghana District Yazyavan Date visited November 1 and 2, 2018 Total Number of Farmers in the Leasehold: 594 District Leasehold production types 98   Cotton and Wheat 316 Fish farming 31 Orchard 135 Livestock 36 Mulberry 15 Vegetable 47 Bee farming 5 Poultry 6 Other 3 Household: 20, 777 Dehkan: 67 Total Number of Farmers Component 1: 2 Leasehold Farms: 2 Livestock farms (30 ha each); Components Benefited from the Project in the 2 and 3: 414 Farms, 7 WCAs, 7 FFS. District Total Crop Area Benefited from Component 1: 60 ha; Component 2/3: 21, 689 ha the Project in the District Inter-farm irrigation canal rehabilitation Types of Project I&D Works Total Infrastructure Investments in the District Rehabilitation of inter-farm irrigation network 1 11,72 (km) Rehabilitation of structures on the inter-farm 52 2 irrigation network, units 3 Improvement of irrigation in the fields, (000 ha) 2,39 4 Rehabilitation of drainage system, km 1,00 5 Rehabilitation of structures of drainage system 11 6 Amelioration improvement of the soil, (000 ha) 0,16 On-farm irrigation canal rehabilitation, Works Total 1 Rehabilitation of inter-farm irrigation network (km) 10,26 Rehabilitation of structures on the inter-farm irrigation 2 61 network, units 3 Improvement of irrigation in the fields, (000 ha) 1,21 Demonstration sites for irrigation gates/valves 1 Spillways 8 Polyethylene pipes 2 720 (diameter 40 and 50 mm) meters 3 Piezometers 8 4 Irrigation kits for 4 hectares 1 5 Black polyethylene films in kg 520 99   6 Soil drill 1 7 Water metering and regulating 9 structures 8 Smartphones 1 Demonstration sites for drip irrigation for orchards, Farmer Field School 1 Demonstration field (ha) 11,62 2 Drip irrigation system (ha) 3,00 3 Farrow irrigation (ha) 8,62 Summary of Interviews and Works/Assets Visited Work/Asset Component 2: I&D Investments, WCA Capacity-Building, Farmer Field School/Demonstrations Location WCA Khonobod, Yazyavan District Functionality/maintenance Functioning and maintained by WCA Main issues mentioned by Basic facts WCA: beneficiaries Year of WCA establishment: 2010 Member Size: 49 Farmers and 2 Rural Citizens Councils (48 percent cotton/wheat farmers, 52 percent horticulture farmers) Staff number: 11 (1 woman) Service area: 2113 ha Manager 1 Cotton 691 Accountant 1 Wheat 554 Hydro Technician 1 Vegetables and Melon 31 Machine operator 1 Orchards and Grapes 135 Computer operator 1 Household plots 702 Security 1 Supervisors 5 Change in water efficiency and WCA fee collection: Before RESP-II IEG mission 2018 WCA service fee/ha: WCA service fee/ha: Som 12,000 for cotton Som 35,000 for cotton no horticulture production Som 65,000 for horticulture Fee collection rate: ~20 Fee collection rate: 35 percent percent Water efficiency: 35 percent Water efficiency: 90 percent Main benefits: RESP-II rehabilitation works of cementing earth canal and installing gates reduced time of water delivery. Rehabilitation was done in the most needed parts based on consultation with the WCA and local authorities to address the infiltration and in some places blockage by sediment. Gates with water measuring/leveling were installed facilitating the work of the WCA and resolved conflicts existing between ditch riders and water consumers. Water logging problems have reduced, and farmers ceased poor practices to block 100   water current in canals. Fee collection has increased since RESP-II investments but remains low at 35 percent. WCA now works with water distribution plans for more efficient and even delivery, and develops an annual business plan, unlike before RESP-II. WCA benefited from the capacity trainings and procurement of a tractor, motorbike, PC, bicycle, electric power generator and uniforms. WCA staff and members highlight improvements in soil and achieving higher yields per hectare both for cotton and wheat. Also, machinery and materials obtained has been useful to improve WCA services to members. Main challenges: WCA continues to face challenges in service fee collection, especially from cotton farmers.       Work/Asset Component 2: I&D Investments, WCA Capacity-Building, Farmer Field School/Demonstrations Location WCA Qoratepa, Yazyavan District Year built or purchased 2010 Functionality/maintenance Functioning and maintained by WCA (verbal confirmation by WCA chairman, not visited by IEG). Main issues mentioned by Basic facts WCA: beneficiaries Year of Establishment: 2002 Member Size: 65 Farmers (70 percent cotton/wheat farmers, 30 percent horticulture farmers) Staff number: 10 (1 woman) Service area: 5211 ha Change in WCA service fee collection: Before RESP-II IEG mission 2018 WCA service fee/ha: WCA service fee/ha: Som 12,000 for cotton Som 35,000 for cotton n/a Som 65,000 for horticulture Fee collection rate: ~30 percent Fee collection rate: 65 percent (80 percent from horticulture farmers) Main benefits: RESP-II rehabilitation works irrigation canal and installing hydropost was key benefit to reduce time and increase accuracy of water delivery. Fee collection has increased significantly to 65 percent but is mostly paid by horticulture farmers. Before RESP-II, the WCA had no O&M, financial or water scheduling plan, all mentioned to be of continued high advantage to the WCA. WCA obtained an excavator, motorbike, and PC, improving service efficiency and thereby willingness to members to pay for services. Member farmers report an average increase in cotton yields of about 10 percent 101   compared to before RESP-II works. WCA staff and their members consider trainings on techniques for efficient irrigation water distribution as crucial, as the area experienced three water shortages since 2009. Main challenges: WCA continues to face challenges in financing their operations and low service fee collection, especially from cotton farmers. WCA I&D investments not visited by IEG mission (based on interview with WCA chairman) Work/Asset Component 2: Farm Field School; Component 3: Trainings Location Farm Far Galaba 2002, Yazyavan District Year built or purchased 2010 Functionality/maintenance Functioning. Drip irrigation still used by farmer. Main issues mentioned by Basic facts farm: beneficiaries Total Cotton Apples, Drip Furrow Farm size (ha) demo Irrigation Irrigation (ha) field (ha) (ha) (ha) 146 134 12 3 9 Change in production/yields: RESP-II taught improved irrigation and efficient fertilizer use have led to an average increase from 2.8t/ha to 3.2t/ha (14 percent increase) for cotton. Main benefits: The farmer mentioned water savings and more efficient application of fertilizers as main benefit from RESP-II technical assistance and Farm Field School trainings. Also, the orchards and drip and furrow irrigation were introduced with RESP-II and have led to higher incomes/ha for farmer than cotton production. The Farmer Field School is still occasionally used by farmers to exchange knowledge. Main challenges: Since RESP-II ended, farmer receives no capacity training or extension service on farm skills or marketing of produce. The demonstration site/drip irrigation equipment is still used for farmers in the interested technology. Although farmers are interested in drip irrigation, there is little uptake in neighboring areas by the farmers due to is high costs.       Region Ferghana District Toshloq Date visited November 2, 2018 Work/Asset Component 1: $14,970 loan in U.S. dollars used to import bakery equipment (bread ovens and dough mixer). Location Bakery LLC Sarvinoz Mashkhura Shod Dil, Toshloq District Year built or purchased 2012 102   Functionality/maintenance Functioning. Below capacity as bought to expand production volume in the future. Main issues mentioned by Basic facts agribusiness: beneficiaries Loaf production Number of per day employees 3000-4000 12 Change in production/yields: Before the RESP-II, the two women beneficiaries ran a small grocery store with six employees. With the loan obtained through the project they built a bakery that runs a profit higher than the previous grocery store and employs 12 staff (10 women for production, 2 men for delivery services). The bakery produces 3000-4000 loaves bread per day. Main benefits: The RESP-II loan was the first loan for the beneficiaries, who states they had previously been hesitant to apply for loans. The RESP-II loan offered the advantage of being able to borrow in foreign exchange and was of longer term (4 years). They also received technical assistance for the loan application and business plan development. The choice of the bakery location was strategic given the significant number of nearby factories demanding bread for their employee cafeterias. At the time of the IEG mission, the beneficiaries planned to apply for another loan to buy the production line for pastry and confectionary for higher value products and exports to Kirgizstan (the bakers already obtained an international pastry certificate). Main challenges: At time of the loan, not all works of connecting to utilities and power supply had been finished, posing a challenge given the loan repayment requirements.       Region Samarkhand District Pasdargom Date visited November 5, 2018 Total Number of Farmers Benefited Component 1: X; Components 2 and 3: 1,221 Farms, 7 WCAs, 7 FFS. from the Project in the District Total Crop Area Benefited from the Component 1: 2 and 3: 53,992 Project in the District Work/Asset Component 1: $ 218,100 loan in U.S. dollars used to purchase seedling for 26 ha apple orchard and cold storage; Component 3: Trainings Location Farm LLC Krisral Biznes, Pasdarom District Year built or purchased 2014 Functionality/Maintenance: Functioning 103   Main issues mentioned by Basic facts farm beneficiaries Total Farm Tomatoes/ Apples size (ha) cucumbers (ha) (ha) 28 26 2 Change in production/yields: RESP-II was the first loan of the farm. The farmer used the RESP-II loan to diversify his businesses to agriculture with the purchase of seedlings for a 26ha apple orchard and a cold storage of 1200 tons capacity. He states to have increased his net income, also from renting out cold storage space to neighboring farmers. He later took an additional non-project loan for a 2ha greenhouse to grow tomatoes and cucumbers. Agricultural production makes up about 20 percent of his business in 2018 (compared to no agricultural activity in 2014). Main benefits: The RESP-II financed cold storage helps farmer to sell the perishable throughout the year (not only at harvest), and also allows to gain income from providing cooling services to neighboring farmers. The project training taught farmer about benefits of drip irrigation for orchard production and greenhouses, in which he subsequently invested through RESP-II loan. He states that he would not have been able to develop the business plan for the greenhouse expansion without the knowledge he received from the project trainings. Main challenges: Increasing seasonal shortages in water supply, as area is not irrigated.   Work/Asset Component 1: $ 40,633 loan in U.S. dollars used to purchase high-capacity tractor; Component 3: Trainings Location Farm Rasul Ota, Pasdarom District Year built or purchased 2011 Functionality/maintenance Functioning (tractor viewed on field by IEG, as harvesting) Main issues mentioned by Basic facts farm: beneficiaries Total Farm Cotton/Wheat Apples (ha) Livestock size (ha) (ha) (heads) 55 52 3 15 milk cows, 25 beef cows Change in production/yields: The farmer states that cotton yields increased from 2.2tons/ha to 2.8tons/ha (27 percent) and wheat yields from 2.3tons/ha to 4tons/ha (131 percent) in 2018 compared to before he applied the RESP-II financed tractor for proper plowing, land leveling, and farming practices. 104   Main benefits: RESP-II provided the first loan to the farmer, who was previously hesitant and did not know how to develop a business plan. At time of IEG mission, he had taken an additional loan to purchase livestock and more machinery. The farmer highlights the usefulness of RESP-II trainings in farm management practices and piped irrigation techniques, which he continues to apply given the positive results. These practices have reduced his consumption of water (from 100m3/10ha to 50m3/10ha) and helped with a more evenly distributed water supply. He was able to eliminate water logging and improve soil conditions. To his knowledge, the other nearby farmers who participated in RESP-II training also continue to apply the practices. Main challenges: Lack of training or extension services for farmers.   Work/Asset Component 2: Farm Field School; Component 3: Trainings Location Farm Nigina, Pasdarom District Year built or purchased 2010 Functionality/maintenance Functioning Main issues mentioned by Basic facts farm: beneficiaries Total Farm Cotton/Wheat Mulberry size (ha) (ha) (ha) 30 28 2 Change in production/yields: Farmer reports yield increases for cotton from 2.5 ton/ha to 3.3 ton/ha (32 percent) and for wheat from 4.5 ton/ha to 5.8 tons/ha (28 percent) due to improved irrigation water supply and practices like flexible pipes. Main benefits: The farmer highlights the increased knowledge from RESP-II trainings in farming practices, like proper plowing and timely input application. He has reduced his water consumption by about 1/3, which has improved soil quality. Another benefit is that with the measurement of water, WCA service fees are more accurate and hence less disputes. He knows that other farmers who participated in trainings continue to apply practices and had a “change in attitude” towards water consumption, also because of increasing water supply challenges the last three years. Non- beneficiaries of RESP-II came to demonstration site on his farm and have themselves invested in valves. Main challenges: The farmer mentions an increase in water shortages over the last three years in the area, affecting the ability for timely irrigation. 105       Work/Asset Component 2: Farm Field School; Component 3: Trainings Location Farm Zamin Kurki, Pasdarom District Year built or purchased 2010 Functionality/maintenance Functioning. Main issues mentioned by Basic facts farm: beneficiaries Total Cotton, Drip Furrow Laser Farm size demo Irrigation Irrigation Levelling (ha) field (ha) (ha) (ha) (ha) 29 28 2.9 25.1 25.1 Change in production/yields: Farmer reports yield increases for cotton from 2.3 ton/ha to 3 ton/ha (30 percent) and for wheat from 3.5 ton/ha to 5 tons/ha (43 percent) based on the laser levelling and improved soil resulting from project-taught practices. He estimates a 12 percent net increase in his farm income. Main benefits: The main benefit to the farmer is that water, which is increasingly scarce, is used more purposefully through the I&D works, installment of gates/valves, and promotion of water-saving practices. His water consumption has about halved from 50 to 23 liters/second, as he applies technologies taught by RESP-II such as perforated cover. Previously prevalent waterlogging issues have disappeared in the area. He also continues to apply pest management and deep furrowing practices he acquired from project trainings. He is aware that most RESP-II beneficiary farmers still use practices taught by the project to avoid water logging, and that non-beneficiaries also adopted those practices. Main challenges: Farmers in the areas are increasingly dealing with water shortages, affecting their irrigation practices and yields. Another challenge is the lack of trainings for farmers since RESP-II ended despite the need for continuous training given increased resistance of pests.     106   Work/Asset Component 2: I&D Investments, WCA Capacity-Building Location WCA Pastdargom, Pasdargam District Year built or purchased 2010 Functionality/maintenance Functioning and maintained by WCA Main issues mentioned by Basic facts WCA: beneficiaries Year of WCA establishment: 2002 Member Size: 283 Farmers (88 percent cotton/wheat farmers, 2 percent horticulture and vegetable farmers) Staff number: 8 (no women) Service area: 10 648 ha Manager 1 Cotton/Wheat 10468 Accountant 1 Vegetables and 100 Melons Hydro Technician 1 Orchards and Grapes 80 Supervisors 5 Change in water efficiency and WCA fee collection: Before RESP-II IEG mission 2018 WCA service fee/ha: WCA service fee/ha: Som 12,000 for cotton Som 21,000 for cotton no horticulture production Som 35,000 for horticulture Fee collection rate: ~20 Fee collection rate: 60 percent percent (30 percent in 2017) Time water delivery: >2hrs Time water delivery: ~45mins Main benefits: The WCA is highly satisfied with the I&D rehabilitation works and states that water delivery time and accuracy has increased significantly. They also reduced water consumption, because of the valve/control gates given by the project (water use declined from 10m3 to 6m3 -40 percent). Water distribution is more even as well. Member farmers report yield increases from 3.8 to 5.5 ton/ha (45 percent) for cotton and 2.4 to 2.7 ton/ha (12 percent) for wheat. This WCA also benefited from the capacity trainings and procurement of tractor, motorbike, PC, bicycle that have enhanced its service capacity. Main challenges: The WCA fee collection rate has been a continuous problem. The higher rate for 2018 is based on the closer monitoring of the contractual obligation by the Agricultural Inspection under the District Prosecutor’s Office, which was established in the summer of 2018.     107   Work/Asset Component 2: I&D Investments, WCA Capacity-Building, Demonstrations Location WCA Pastdargomlik Anhor Suvchilari, Pasdargam District Year built or purchased 2014 Functionality/maintenance Functioning and maintained by WCA (verbal confirmation by WCA chairman, not visited by IEG) Main issues mentioned by Basic facts WCA: beneficiaries Year of WCA establishment: 2002 Member Size: 178 Farmers (48 percent cotton/wheat farmers, 52 percent horticulture farmers) Staff number: 9 (1 woman) Service area: ~8200 ha Manager 1 Cotton/Wheat 6500 Accountant 1 Vegetables and Melon 60 Hydro Technician 1 Orchards and Grapes 200 Machine operator 1 Livestock 600 Computer operator 1 Household plots 840 Supervisors 4 Change in water efficiency and WCA fee collection: Before RESP-II IEG mission 2018 WCA service fee/ha: WCA service fee/ha: Som 12,000 for cotton Som 21,000 for cotton no horticulture production Som 31,000 for horticulture Fee collection rate: ~20 Fee collection rate: 50 percent percent (45 percent in 2017) Main benefits: The WCA highlights the importance of Farmer Field School and demonstrations, as it not only created capacity and increased uptake of water-saving practices among direct beneficiaries but also neighboring farmers. Some invested themselves to replicate the installation of gates and valves in irrigation canals to benefit from better control and distribution of water supply. WCA services improved due to equipment provided by RESP-II. Main challenges: Since RESP-II ended, farmers have no access to relevant trainings despite demand. Similar to the other WCAs in the district, improvement in WCA service fee collection rates in 2018 was achieved given the obligation by the Agricultural Inspection under the District Prosecutor’s Office. WCA I&D investments not visited by IEG mission (based on interview with WCA chairman) Summary of Interviews with Financial Institutions Region: Tashkent District: Tashkent City Date visited: November 3 Agro Bank Headquarters in Tashkent Loans provided: Agro Bank provided in total 218 loans (38 percent of all 570 RESP-II loans). It had already been part of RESP, as it was the designated bank to serve farmers - Agro Bank was established on the basis 108   of two former state commercial banks (Galla Bank for wheat and Pakhta Bank for cotton). In 2009, by government decree, all farmers became Agro Bank clients. Currently its clients base is about 60,000 farmers. Change in loan portfolio: RESP-II enabled Agrobank to provide more loans for horticulture and livestock investments. Overall, the agricultural loan portfolio about doubled since 2009, partially driven by RESP-II loans. Main benefits: For Agro Bank, the key benefit of RESP-IIs was the increased confidence and knowledge of their clients to take the initiative for credit applications and business plan development, including the importing of machinery, equipment and inputs. RESP-II increased farmers’ access to hard currency/foreign exchange, low interest rates, and longer loan durations. It also increased the bank’s client base and their number of transactions. Overall, RESP-II created a competitive environment among banks to attract farmer and agribusiness clients. Moreover, the RESP-II regional trainings to loan officers enhanced their capacity and accelerated disbursements in the agricultural loan portfolio. Most loan officers trained through RESP-II have remained with Agro Bank. Compared to RESP, RESP-II expanded to more diversified types of loans from mostly machinery to horticulture (seedlings, drip irrigation, cold storage), poultry and livestock (import of breeds, milking machines, processing equipment). Main challenges: As RRA reviewed applications for larger loans, there were delays in the approval process, creating inefficiencies and problems to compete with other banks. Region: Andijan District: Andijan City Date visited: November 1 JSC Hamkor Bank Headquarters in Loans provided: Hamkor Bank provided in total 59 loans (11 percent of all Andijan City 570 RESP-II loans), of which 27 loans in Andijan (about 23 percent of all RESP-II loans in the region). In 2009 before its participation in RESP-II, it provided agricultural loans only to livestock, fisheries and poultry production. Its agricultural loan portfolio was small and there was one loan officer in charge of the agricultural credit portfolio. Change in loan portfolio: The credit and training support provided by RESP-II capacitated the agricultural loan officer to also assess risk of horticulture applications and allowed Hamkor Bank to expand their portfolio to the horticulture sector. By 2013 it had a continuously growing and diversifying agricultural portfolio (especially loans for horticulture investments, cold storage, beekeeping, green houses). As a result, Hamkor Bank created a credit department for agricultural financing, which includes a sector expert agronomist. Between 2013 and 2018 the agricultural loan portfolio of the bank has grown about 10-fold. Also, between 2012 and 2018 the number of branch locations increased from 32 in to 42 and the number of agricultural loan approvers from 15 to 80. Main benefits: For Hamkor Bank, the biggest benefit of RESP-II was its clients’ access to loans in foreign exchange (enabling importing of high quality equipment/inputs, not possible with other loans), the low interest rates (5.5 percent versus about 12 percent market rate) and the long loan duration (up to 10 compared to 3 years of non-RESP-II loans). Especially the latter two conditions allowed Hamkor Bank to reach new clients and smaller farmers to access credit compared to usual market conditions. Also, the image and exposure of the bank improved, increasing its capacity through RESP-II supported seminars and conferences, including with IFC. 109   Moreover, Hamkor Bank states to have benefited strongly from RESP-II capacity-building of a total of 68 staff. At the time of the IEG mission, the majority of these staff continued to work in Hamkor Bank, and several have been promoted or become branch managers. Also, the RESP-II training material is used today in the recently established internal training program on agricultural loan risk assessment. Main challenges: There were no major challenges except the initial hesitance and reluctance of farmers to apply for loans. Region: Samarkhand   District: Samarkhand City   Date visited: November 5 Turon Bank Samarkhand Regional Loans provided: Turon Bank provided in total 38 loans (7 percent of all 570 Office RESP-II loans). 33 percent of all RESP-II loans in Samarkhand region were from Turon Bank. Change in loan portfolio: Before participating in RESP-II, Turon Bank had no agricultural loan portfolio, as it focused on the trade and construction sectors. With RESP-II, the bank started the sector and agricultural loans in its total portfolio have grown from 1-2 percent in 2014, to 8 percent in 2015, and 20 percent in 2018. Compared to the first year with RESP-II, loan applications have increased by about 70 percent. The most common type of investments have been in cool storage, processing equipment’s for tomatoes and dried fruits, as well as orchard investments in seedlings and drip irrigation. Main benefits: For Turon Bank, the biggest benefit of RESP-II was the expansion of the loan portfolio to the growing agricultural sector (particularly horticulture and livestock) and thereby increase its client base. Both the financial and training support by RESP-II was crucial for this. About 70 percent of the agricultural loan clients are limited liability companies, providing the bank with significant daily transitions. Given the strong increase in its agricultural loan portfolio, the regional office now employs two full-time agricultural loan officers and plans to hire one more. Main challenges: No major issues mentioned.   110