ASIAN DEVELOPMENT BANK

PPA: BAN 22121

PROJECT PERFORMANCE AUDIT REPORT

ON THE

RURAL TRAINING PROJECT (Loan 1066-BAN[SF])

IN THE

PEOPLES REPUBLIC OF BANGLADESH

November 2001

CURRENCY EQUIVALENTS Currency Unit Taka (Tk) At Appraisal (August 1990) $0.0275 Tk36.41 At Project Completion (June 1998) $0.0206 Tk48.50 At Operations Evaluation (January 2001) $0.0185 Tk54.01

Tk1.00 $1.00

= =

ABBREVIATIONS ADB DYD GA MFI MYS NGO O&M OEM PCR PIU PPAR RULSTECC SDR TA TRDEP ZRTC Asian Development Bank Department of Youth Development group animator microfinance institute Ministry of Youth and Sports nongovernment organization operation and maintenance Operations Evaluation Mission project completion report project implementation unit project performance audit report rural livelihood self-employment, technology, education, and communication center special drawing rights technical assistance Thana Resource Development and Employment Project zonal resource training center

NOTES (i) (ii) The fiscal year (FY) of the Government ends on 30 June. In this report, $ refers to US dollars.

Operations Evaluation Department, PE-580

CONTENTS BASIC DATA EXECUTIVE SUMMARY MAP I. BACKGROUND A. B. C. D. E. F. II. Rationale Formulation Purpose and Outputs Cost, Financing, and Executing Arrangements Completion and Self-Evaluation Operations Evaluation Page ii iii v 1 1 1 1 2 2 2 3 3 3 3 4 4 6 6 10 11 11 12 12 13 13 13 13 13 14 14 14 14 14 16 17 18

PLANNING AND IMPLEMENTATION PERFORMANCE A. B. C. D. E. Formulation and Design Achievement of Outputs Cost and Scheduling Procurement and Construction Organization and Management

III.

ACHIEVEMENT OF PROJECT PURPOSE A. B. Operational Performance Sustainability

IV.

ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS A. B. C. Socioeconomic Impact Environmental Impact Impact on Institutions and Policy

V.

OVERALL ASSESSMENT A. B. C. D. E. F. G. Relevance Efficacy Efficiency Sustainability Institutional Development and Other Impacts Overall Project Rating Assessment of ADB and Borrower Performance

VI.

ISSUES, LESSONS, AND FOLLOW-UP ACTIONS A. B. C. Key Issues for the Future Lessons Identified Follow-Up Actions

APPENDIXES

BASIC DATA Rural Training Project (Loan 1066-BAN[SF]) INSTITUTION BUILDING TA No. TA Name 1439 1440 Staff Development and Training Materials Research and Development

Type ADTA ADTA

Person-Months 28 36

Amount ($) 776,000 879,000

Approval Date 13 Dec 1990 13 Dec 1990

KEY PROJECT DATA ($ million) Total Project Cost Foreign Exchange Cost Local Currency Cost ADB Loan Amount/Utilization

As per ADB Loan Documents 19.35 0.87 18.48 16.25

Actual 16.94 0.72 16.22 10.43

KEY DATES Appraisal Loan Negotiations Board Approval Loan Agreement Loan Effectiveness First Disbursement Project Completion Loan Closing Months (effectiveness to completion)

Expected

23 Oct 1991 31 Dec 1995 30 Jun 1996 50

Actual 23 Jul9 Aug 1990 56 Nov 1990 13 Dec 1990 25 Jul 1991 28 Oct 1991 20 Jan 1992 31 Dec 1997 22 Jun 1998 74

BORROWER EXECUTING AGENCY MISSION DATA Type of Mission Fact-Finding Appraisal Project Administration Inception Review Project Completion Operations Evaluation1

Government of the Peoples Republic of Bangladesh Ministry of Youth and Sports

No. of Missions 1 1 1 7 1 1

No. of Person-Days 65 128 12 93 18 44

ADB = Asian Development Bank, ADTA = advisory technical assistance, TA = technical assistance. 1 The Operations Evaluation Mission comprised Ellen Qiaolun Ye (Mission Leader and Evaluation Specialist), Richard Meyer (International Consultant/Microfinance Specialist), and Mohammed Eusuf Ali (Local Consultant/Rural Survey Specialist).

EXECUTIVE SUMMARY The Project1 was designed to help address the widespread rural poverty in Bangladesh. Its objectives were to (i) provide livelihood skills training and microcredit to the landless rural poor, (ii) improve the socioeconomic status of the project beneficiaries, and (iii) strengthen the capacity of the Executing Agencythe Ministry of Youth and Sports (MYS)in providing training and supervising microcredit programs. The Project had three components: (i) beneficiary training, (ii) provision of microcredit, and (iii) institution building. Two technical assistance grants related to training2 and research3 were attached to the Project. The project cost was estimated at $19.35 million at appraisal, to be financed by an Asian Development Bank (ADB) loan of $16.25 million from its Special Funds resources, and the remainder by the Government of Bangladesh. The actual project cost was $16.94 million at project completion, with a total loan disbursement of $10.43 million. About 36 percent of the loan proceeds were canceled due to an overestimation of project cost at appraisal as well as depreciation of the local currency during project implementation. The Project was completed two years behind schedule, mainly because of a front-end delay in staff recruitment. By focusing on poverty reduction in rural areas, the Project was highly relevant to the development strategies of ADB and the Government. The credit component provided needed microcredit to many rural poor people who had no access to formal financial services at that time. The components of beneficiary training and institution building were less relevant as the classroom-based lecture-oriented training did not well match the needs of the uneducated poor and the demand for such training was overestimated. The Project achieved most of its targets. In particular, the credit component substantially exceeded its targets of beneficiary outreach and loan recovery. By contrast, the training centers and training facilities are largely unused. The sustainability of the Project is affected by the cessation of the livelihood skills training for beneficiaries after project completion due to budgetary constraints. The credit operations have continued but with a deterioration in quantity, quality, and efficiency, mainly due to an operating budget shortage and the lack of authority on the part of MYS to use the interest earnings to cover its operating costs. The Project has a positive impact on government policy, capacity of MYS staff, and beneficiaries. In summary, the Project reached a large number of beneficiaries; most of them were low-income families or the poor, but not the very poor. The credit component recorded a cumulative rate of loan recovery of 99 percent. The Project significantly contributed to increased household income and improved living standards of its beneficiaries. Overall, the Project ADBs first intervention in Bangladesh that focused on poverty reduction through microcredit and beneficiary trainingis rated successful. The performance of ADB and the Government was satisfactory. Three key issues arise in the evaluation. First, the livelihood skills training was ineffective for the uneducated and inexperienced poor due to (i) a focus on classroom lecturing, (ii) "one-off" training without follow-up assistance, and (iii) problems in trainee selection. Alternative training methods should have been considered, including model demonstration of recommended technology at the village level combined with extension services.

1 2 3

Loan 1066-BAN(SF): Rural Training Project, for $16.25 million, approved on 13 December 1990. TA 1439-BAN: Staff Development and Training Materials, for $776,000, approved on 13 December 1990. TA 1440-BAN: Research and Development, for $879,000, approved on 13 December 1990.

iv Second, the expensive training facilities provided by the Project have been largely unused, due to overestimation of investment needs and underestimation of the difficulties that the Government would have in financing the operation and maintenance (O&M) of these facilities. Although the Government's assurance of providing sufficient funding for O&M was obtained through loan covenants, poor O&M of project facilities has still occurred due to budgetary constraints. In fact, it may not be realistic to assume that the Government will have the ability to continuously increase its budgetary allocation to take care of the O&M of all agency-funded projects after their completion when the number of such projects is rising every year. When a developing member country government is continuously experiencing budgetary constraints, it may be necessary for each investment project to incorporate in its design longterm O&M of project facilities. Intensive consultations should be conducted at the design stage with stakeholders to ensure a reliable funding source for O&M after project completion. Otherwise, reduction in the investment scale should be considered to ensure that it will not exceed the governments capacity for the O&M of completed project facilities. Third, the future of the credit operations started under the Project is questionable. Although the credit component operated very well in the past, it may not be appropriate for a government agency to engage in direct credit delivery and compete with the private sector. Since there are still underserved areas in remote villages and an underserved population among the very poor, the alternative of serving these should be considered. For this purpose, major changes in credit operations would be required, including the conversion of the project implementation unit into an autonomous agency with the authority to use interest earnings to cover its operating costs. The Project has provided several valuable lessons: (i) a government agency, due to inherent constraints such as lack of authority to use interest earnings for operations, may not be the best mechanism for microfinance services; (ii) since the poor need permanent access to such services, microcredit should be provided by long-term institutions rather than short-term programs; (iii) standard loan products simplify credit operations but do not well match the needs of the very poor, whose irregular and uncertain income requires flexible repayment schedules that are appropriate to their cash flow (without such flexibility, group liability in loan repayment and a focus on loan recovery tend to exclude the very poor); (iv) innovative solutions are needed to design flexible savings and loans products that tailor financial services to the needs of the very poor; ADB should support the search for, and development of, such solutions; (v) microcredit alone is insufficient to reduce poverty among the very poor; flexible savings services and supplementary assistance are needed, including basic training on literacy and numerate skills, as well as extension services; (vi) the design of training programs for the poor needs to consider their absorptive capacity (for the uneducated and inexperienced poor, learning by following good examples in their neighborhood may be more effective than classroom lectures); (vii) the training allowance should be abolished to reduce training costs and remove distorted incentives; (viii) when a government is affected by persistent budgetary constraints, its assurance on providing O&M funds is insufficient; more effective measures should be included in project design to ensure a reliable funding source for O&M; this should become a standard requirement for project approval.

I. A. Rationale

BACKGROUND

1. The Project1 was designed to help address the widespread rural poverty in Bangladesh, which was and continues to be a major concern of the Government. At the time of appraisal, the primary causes of poverty were identified by the Asian Development Bank (ADB) as low growth of agriculture, rapid growth of population, and a high level of unemployment. The Government's Fourth Five-Year Plan for the period 1991-1995, therefore, aimed to accelerate economic growth and generate employment, thus reducing poverty. Inspired by the success of the Grameen (village) Bank, which emerged as an innovation in poverty reduction through microfinance services for the poor, the Ministry of Youth and Sports (MYS) initiated a Thana (subdistrict) Resource Development and Employment Project (TRDEP). With a particular focus on the unemployed youth in rural areas, TRDEP was pilot tested in two subdistricts in 1987, and expanded to another five subdistricts in 1989.2 The Project was the third phase of TRDEP, with the same design and an expanded coverage of 32 subdistricts (Map, page v),3 including the 7 subdistricts served under the first two TRDEP phases. At the time of appraisal, ADBs operational strategy in Bangladesh consisted of supporting economic recovery and accelerating economic growth, with the highest priority given to agriculture, which was seen as having the greatest potential for economic growth and poverty reduction. While promoting faster economic growth as a basic approach to poverty reduction, ADB also recognized the need for direct interventions to help the unemployed poor. The Project was ADBs first intervention in Bangladesh that focused on poverty reduction through microcredit and beneficiary training (report and recommendation of the President, para. 13).4 B. Formulation

2. In 1989, ADB approved a project preparatory technical assistance (TA).5 Following its completion, ADB fielded a fact-finding mission in May 1990 and an appraisal mission in JulyAugust 1990. At the end of the appraisal, a Round Table Conference on Poverty Reduction was held with senior officials from relevant government agencies and representatives from banks, academic institutes, nongovernment organizations (NGOs), and funding agencies. The Conference examined the project design and concluded that it was complex but innovative and promising; the approach was appropriate as demonstrated by TRDEP in seven subdistricts. ADBs Board approved the Project on 13 December 1990. C. Purpose and Outputs

3. The Projects primary objectives were to (i) provide effective livelihood skills training and microcredit to the landless rural poor, (ii) improve the socioeconomic status of the beneficiaries through self-employment and participation in community development, and (iii) strengthen MYS capacity in providing training and supervising microcredit programs. The Project had three components: (i) beneficiary training, (ii) provision of microcredit, and (iii) institution building for MYS by providing training facilities, equipment, vehicles, and additional staff. Two TAs were attached to

1 2

3 4

Loan 1066-BAN(SF): Rural Training Project, for $16.25 million, approved on 13 December 1990. Since TRDEP adopted a family-based group approach, its actual beneficiaries included also other age groups; youth (15-35 years old) accounted for about half of all beneficiaries. Out of the 492 subdistricts in the country at that time. The Project's name (Rural Training) was somewhat misleading as it did not fully reflect its focus on poverty reduction or its feature of microcredit provision. TA 1159-BAN: Rural Training Project, for $230,000, approved on 29 May 1989.

2 the Project: TA 1439-BAN: Staff Development and Training Materials6 and TA 1440-BAN: Research and Development.7 D. Cost, Financing, and Executing Arrangements

4. At appraisal, the Projects cost was estimated at $19.35 million (Appendix 1), to be financed by an ADB loan of SDR11.357 million ($16.25 million equivalent) from ADB's Special Funds resources, and the remainder by the Government. The cost of TA 1439 was estimated at $811,000, with $776,000 financed by an ADB grant and the remainder by the Government. The cost of TA 1440 was estimated at $914,000, with $879,000 financed by an ADB grant and the remainder by the Government. The Executing Agency was MYS, with its Department of Youth Development (DYD) as the implementing agency. E. Completion and Self-Evaluation

5. The Project was completed in December 1997, and a project completion report (PCR) prepared by ADB's Bangladesh Resident Mission was circulated to the Board in November 1999. The PCR rated the Project generally successful based on its assessment that most of the targets were largely met; the number of beneficiaries receiving microcredit substantially exceeded the appraisal target, with a recovery rate of subloans close to 100 percent. 6. Problems mentioned in the PCR included (i) significant delays in project implementation at all stages; (ii) nonfulfillment of enterprise training and nondisbursement of enterprise loans; (iii) noncompliance with some loan covenants; and (iv) inadequate operation and maintenance (O&M) for training facilities. Concern was expressed in the PCR about the underutilization of the expensive training equipment and the lack of funds for its O&M. The PCR rated TA 1439 successful because of the fulfillment of most targets while TA 1440 was rated partly successful. Although the latter produced a set of high quality reports, the Government did not adopt its recommendations. The Operations Evaluation Mission (OEM) found that the PCR focused heavily on the achievements of the Projects physical targets without sufficient discussion of the weaknesses of project design, such as the quality and relevance of the livelihood and skills training, and the inherent problems of using a government agency in credit delivery. F. Operations Evaluation

7. This project performance audit report (PPAR) assesses the design and implementation of the Project as well as its outputs and impacts, and draws on lessons learned that can contribute to future improvement. The PPAR presents the findings of the OEM that visited Bangladesh and conducted fieldwork in project areas in January-February 2001.8 In addition, the OEM conducted a household survey in the project areas in March-April 2001, including focus group discussions and interviews with project beneficiaries (para. 38). The OEMs initial findings were presented in a wrap-up meeting chaired by the Secretary of MYS and attended by relevant government agencies; comments received were incorporated in the PPAR. The PPAR draws its conclusions and recommendations from three sources: (i) a desk review of project files, (ii) the discussions with relevant governmental officials, NGOs, funding agencies, and project staff; and (iii) the focus group discussions and household interviews with project
6 7 8

For $776,000, approved on 13 December 1990. For $879,000, approved on 13 December 1990. The OEM visited 14 villages in 8 of the 32 project subdistricts, and held discussions with project staff at the field level as well as beneficiaries and nonbeneficiaries in the project areas. The OEM also inspected facilities in all training centers, and held meetings with MYS as well as other relevant government agencies, NGOs, and funding agencies.

3 beneficiaries. Copies of the draft PPAR were submitted for review to MYS and concerned ADB departments or divisions. Comments received from the reviewers were considered in finalizing the PPAR. II. A. PLANNING AND IMPLEMENTATION PERFORMANCE

Formulation and Design

8. The Projects design was based on a substantial amount of sector work, including the project preparatory TA and a set of evaluation studies on TRDEP. The former identified rural unemployment as a key cause of poverty and proposed using microcredit for employment generation. The evaluation studies, conducted by the World Bank, the Bangladesh Planning Commission, and the Bangladesh Institute of Development Studies, noted positive results of the pilot testing of TRDEP in achieving project targets, especially loan disbursement and recovery, group formation, and improvements in beneficiaries' income and living standards. The studies concluded that the pilot testing demonstrated the feasibility and benefits of TRDEP, which should be replicated on a phased basis. 9. While the Project's focus on poverty reduction was appropriate, its design had some weaknesses. First, the beneficiary training consisted of classroom lectures without giving sufficient attention to the educational background and experience of the trainees. In conjunction with problems in the selection of trainees, the impact of the one-off lectures was limited, especially for the uneducated and inexperienced poor. Second, the institution building focused on the construction of training centers and contributed to their oversupply (para. 32). As the design of this component did not ensure a reliable funding source for O&M, the training centers were largely unused due to a shortage of operating funds. Third, the design of the credit component bypassed many of the very poor (para. 26); the use of a government agency instead of a microfinance institute (MFI) had certain inherent weaknesses (para. 30). Fourth, the Project's lending modalities, such as a subsidized interest rate and a maximum of three loans per beneficiary, were inconsistent with the needs of the poor, who require permanent access to finance services rather than a subsidy.9 Lastly, the project cost was overestimated, resulting in a large amount of loan cancellation (para. 11). The OEM noted that the Project was designed at the early stage of microfinance development in Bangladesh with insufficient experience for both the Government and ADB. As a learning process, some mistakes were unavoidable. B. Achievement of Outputs

10. Appendix 2 provides a summary of the Projects major outputs achieved versus appraisal targets. Except for enterprise training, the targets for beneficiary training were met or exceeded. The number of beneficiaries who received microcredit was 164 percent above the target of 70,000. At 99 percent, loan recovery exceeded the target of 90 percent. Enterprise lending, accounting for 4 percent of the ADB loan, was implemented after project completion. The training centers were largely completed, though with delays. C. Cost and Scheduling

11. At appraisal, the project cost was estimated at $19.35 million and the loan amount was SDR11.357 ($16.25 million equivalent). At $16.94 million, the actual project cost was 12 percent lower, and only $10.43 million of the ADB loan was disbursed. The balance of $5.82 million was canceled at loan closing. The primary causes of the cost underrun included an overestimation of
9

ADB, Finance for the Poor: Microfinance Development Strategy, May 2000.

4 beneficiary demand for training, overprojection of the revolving funds required for credit operations, and depreciation of the local currency.10 By contrast, there were cost overruns in civil works, land acquisition, and procurement of vehicles and furniture, largely due to price escalation and increases in the costs of imported materials in civil works. 12. The Project was to be implemented in five years from 1991 to 1995, with loan closing scheduled on 30 June 1996. Significant delays occurred in the early stages in recruitment of core staff of the project implementation unit (PIU), as well as large number of field staff. There were also delays in the conduct of beneficiary training, procurement of vehicles and equipment, and construction of training centers. The Project was completed in December 1997, two years behind schedule, and the loan closed on 22 June 1998. 13. There were several causes for the delays. The performance of the PIU was weak. This being the first ADB-financed project of MYS, PIU staff were unfamiliar with ADB procedures and requirements. A more fundamental cause, however, was the PIU's lack of authority in decision making and frequent turnover of project directors.11 A court injunction over an issue relating to land payment disrupted the construction of the Rural Livelihood Self-employment, Technology, Education and Communication Center (RULSTECC) in Dhaka. The completion of four zonal resource training centers (ZRTCs) was also seriously delayed. This prevented timely conduct of beneficiary training. Except for the orientation training that was conducted during beneficiary group formation, most beneficiary training was implemented three to four years after the credit operations, making little contribution to the actual credit operations or the Projects objectives. Lastly, the Government's complex procedure for funds release was another major factor. D. Procurement and Construction

14. All goods and services under the Project were procured in accordance with ADBs Guidelines on Procurement. Due to their small quantities, procurement of training materials was subcontracted to prequalified local contractors. The mobile training van was procured through local competitive bidding. Tenders were invited several times but the bid prices were substantially higher than the available budget thereby requiring a reallocation of loan proceeds from the training category. As a result of the delays, the mobile van was not delivered until June 1997, about six months before project completion, making little contribution to implementation. No procurement problems were found in the implementation of the two associated TAs. 15. The Local Government Engineering Department was responsible for the construction of the training centers, including architectural design and construction supervision. Long delays were encountered due to unavailability of suitable sites and the lengthy process of land acquisition, as well as the court injunction that disrupted the completion of RULSTECC (para. 13). The OEM's field inspection confirmed the assessment of ADB's loan review missions that the quality of construction was generally satisfactory except for the ZRTC at Sylhet, which suffered from water damage and cracks in walls, largely due to poor construction supervision. E. Organization and Management

16. MYS was the Executing Agency with its Secretary responsible for overall project planning, organization, implementation, and supervision. DYD under MYS was the implementing agency with its Director General responsible for day-to-day project implementation. The PIU was established within DYD. It was headed by a Project Director and
10 11

The local currency depreciated from Tk36.4/$ at appraisal to Tk48.5/$ at project completion. There were 11 changes in project director during the seven years of project implementation.

5 comprised 30 staff members, with the responsibility of coordination, supervision, and control of field operations. An area office was established in each of the 32 project subdistricts, headed by an area manager. Two branches were established in each subdistrict, headed by a branch manager and comprising about five group animators (GAs) responsible for organizing beneficiary groups, conducting orientation training, disbursing subloans, and collecting payments. The beneficiaries were organized into five-member groups. About five to eight groups were then clustered into a center (kendra) headed by a center chief. At the central level, a national steering committee was to be established to set policy guidelines and directions, together with a project advisory committee to oversee technical and managerial aspects. At the subdistrict level, a thana advisory committee and a committee of center chiefs were to be established in each subdistrict to strengthen beneficiary participation and facilitate feedback. All committees, with the exception of the committee of center chiefs, were established. However, they did not operate as actively as anticipated at appraisal, partly because there was not much need for them. 17. In spite of weak supervision by the PIU, the project staff at the field level performed very well, including the GAs, branch managers, and area managers. All of them had university education at the bachelors or masters level; some had previous work experience with other MFIs. The field staff were hired on a temporary basis and their continued employment was linked to their fulfillment of the targets of (i) a quota of 500 beneficiaries per GA; and (ii) a loan recovery rate of 98 percent. They were also motivated by the expectation that, if the Project performed well, they would be transferred under the Government's budget after project completion as permanent civil servants. The strong incentives contributed to their high performance: most of them reported a cumulative loan recovery rate of 98-100 percent, and the credit component substantially exceeded its appraisal target in terms of subloan borrowers. 18. Overall, the Government demonstrated strong ownership of the Project. The OEM agrees with the PCR's assessment that the Borrower complied with most loan covenants with three important exceptions. First, the covenant requiring sufficient budget for O&M of project facilities was not complied with. Second, the covenant of transferring the project staff under the Government's budget has been under process since July 1999 but is not yet completed, due largely to the Government's desire to downsize the public sector, and a disagreement between MYS and the Ministry of Establishment over the number of staff to be transferred. Third, the covenant of converting the Project into an autonomous training and credit agency was not implemented, largely due to (i) MYS concern about administrative difficulty in managing an autonomous agency, (ii) project staff preference to be transferred under the Government's budget, and (iii) a delay in decision making by the Government. The OEM also found that the Government did not implement the recommendations of TA 1440, leading to weak sustainability of the credit component. 19. The Project was designed based on the Government's initiatives. However, the use of a government agency to deliver credit had certain built-in weaknesses (para. 30). ADB closely monitored project implementation, but the supervision focused on physical targets without the necessary flexibility to modify the project design when it became clear that the livelihood skills training and the construction of the training centers would contribute little to credit operations or to the Project's objectives. 20. Given its nature, there were no loan-financed consultants under the Project. The consultants under TA 1439 completed training for project staff and produced a set of operational manuals and training materials as planned. The consultants under TA 1440 produced a set of reports, including in particular a study on alternative credit delivery systems, which provided a very good analysis of the strengths and weaknesses of credit operations under the Project, and

6 proposed a set of policy recommendations. Overall, the OEM concurs with the PCR's assessment that the performance of the TA consultants was satisfactory. III. A. ACHIEVEMENT OF PROJECT PURPOSE

Operational Performance 1. Beneficiary Training

21. This component was designed to train beneficiaries in livelihood activities. The targets set up at appraisal included (i) orientation and livelihood skills training for 70,000 beneficiaries, (ii) special skills training for 1,500 selected young people, and (iii) enterprise training for 14,000 beneficiaries with high performance and entrepreneurial potential. By project completion, a total of 185,010 beneficiaries had received the orientation training. The livelihood skills training reached the target of 70,000 beneficiaries, but it was implemented with significant delays, mainly due to the late completion of the training centers. As a result, most of the livelihood skills training was conducted in the last two years of project implementation, making little contribution to credit operations. The enterprise training was not conducted because the enterprise loans were not disbursed during the project period (para. 24). At project completion, an amount of $2.4 million in loan proceeds allocated for training was canceled, largely due to overestimation of training needs at appraisal. 22. The OEMs household survey found a significant impact of the orientation training, which was rated by most beneficiaries as useful or very useful. Conducted by the GAs during the period of group formation, the orientation training was given in seven sections in seven days, each section lasting for one to two hours, in which new members learned how to effectively use loans and make repayments. The orientation training also covered certain social and environmental topics as well as basic literacy and numeracy skills development. In conjunction with the diligent efforts of the GAs in collecting repayments, the orientation training contributed to the high level of loan recovery under the Project. 23. Most of the livelihood skills training under the Project was based on classroom lectures. The OEMs discussions with beneficiaries revealed mixed impacts of such training: good for those with an educational background or relevant experience, and less effective for those without such a background. The selection of trainees by GAs or center chiefs further compounded this problem, as some beneficiaries were not interested in the training but had to participate as they were selected to attend the training on behalf of their groups. Some trainees interviewed by the OEM remembered only the amount of the training allowance received but not the subjects of the training courses.12 The lack of follow-up assistance after the one-off classroom lectures further limited impact. The OEMs discussions with field staff and beneficiaries found that, for the uneducated poor, model demonstration of recommended livelihood activities and technologies, study tours to visit model households and small businesses, group discussions on problems commonly encountered, and technical advice on a frequent and long-term basis might have been more cost effective than classroom lectures. Focus group discussions with beneficiaries also found that the provision of training allowances provided distorted incentives in the selection of trainees.

12

The training allowance was Tk70 per day for three days.

7 2. Microcredit Operations

24. This component was designed to provide microcredit to beneficiaries for investment in livelihood facilities. Each beneficiary was entitled to three loans of Tk3,000, Tk4,000, and Tk5,000. At project completion, a total of 185,010 beneficiaries received the first loan, 122,350 received the second loan, and 69,218 received the third loan (Appendix 3). The envisaged enterprise loans were not disbursed during the project period, as MYS did not believe that the beneficiaries had the ability to manage the large (Tk20,000) loans. After project completion, however, MYS continued the credit operations and provided 2,436 enterprise loans to selected beneficiaries. 25. The most impressive performance of the credit operations was a near-perfect (99 percent) cumulative recovery rate of subloans, exceeding the appraisal target of 90 percent.13 Many factors contributed to this good performance. First, the design of the credit operations followed the Grameen Bank model with strict requirements on weekly repayments, with the initial set of project staff trained by the Grameen Bank and some staff hired from major MFIs. Second, the Project employed temporary staff, whose continued employment depended on their performance in collecting loan repayments as well as the overall performance of the Project. The high quality of the field staff and their strong incentive and commitment contributed to the good performance of the credit operations in spite of weak supervision by the PIU. Third, the project staff were also motivated by pressure from NGO competition, as the major MFIs in Bangladesh all reported high recovery rates. Fourth, the Project selected borrowers who had existing microenterprises and regular income; their good repayment capacity contributed to the high recovery rates. 26. A weakness of the credit component was its targeting. The Project intended to target the "poorest of the poor" (report and recommendation of the President, para. 50) and required social surveys to select the beneficiaries. In implementation, however, no social survey was conducted, and most beneficiary groups were established in villages with relatively favorable conditions, such as proximity to the subdistrict towns or better access to transport and markets, and therefore better investment opportunities. The OEMs household survey found that most of the project beneficiaries were low-income families or the upper poor who had existing microenterprises and stable incomes; the very poor were largely bypassed by the Project.14 27. There were many reasons why the very poor were bypassed by the Project. The first cause was "product exclusion". The loan products under the Project were highly standardized, with the same loan amount, disbursement and repayment schedules, and interest rates. While standardization simplified the credit operations, the lack of flexibility in repayment schedules excluded the very poor who did not have a regular job or a stable income. Borrowers were required to repay the loans weekly after a two-week grace period. In reality, many investments could not generate a regular and stable income within such a short gestation period unless they related to existing microenterprises.

13

The OEMs household survey found that about 24 percent of the surveyed borrowers were late in payment on at least one of their loan installments (each loan had 50 installments). When this occurred, extra time was given to the defaulters without extra charges, but no one in a same borrower group had access to new loans until the defaulters repaid their loans. Eventually, the defaulters repaid their loans through various mechanisms, including borrowing from other group members, relatives, friends, NGOs, and money lenders. 14 In the project areas, the low-income families and the upper poor were those with regular jobs or existing microenterprises and therefore stable incomes, albeit a per capita income of one dollar equivalent per day or less. The very poor were casual laborers without a regular job or stable incomes. They were not necessarily the "poorest of the poor" who were living on welfare.

8 28. The second cause was "staff exclusion". As continued employment of the GAs was linked to their performance in collecting loan repayments, they had an incentive to exclude the very poor, whose lack of a regular income might affect their repayment performance. The third cause was "group exclusion". The beneficiaries were organized into five-member groups, which were obligated to ensure loan repayment of all group members: no one could receive the next loan until all members in the same group had repaid their previous loans. While the group liability contributed to the high performance of loan recovery, it also generated incentives for the groups to exclude the very poor who did not have a weekly income. The fourth cause was "selfexclusion". Some of the very poor were too risk averse to borrow for fear of not having the skills and complementary resources necessary for effective use of loans. They also feared losing their few assets if they failed to repay. Moreover, the Project did not offer savings services except for mandatory savings. While such a savings scheme disciplined borrowers in building up savings, it was not the most useful saving product as, under the scheme, borrowers had no access to their savings even in an emergency if they had not repaid all their loans. Experience of other MFIs shows that the poor need flexible savings services more than loans, for they need liquid savings during emergencies. 29. The use of a government agency to directly deliver credit services was questioned in ADB during project processing. It was argued that credit decisions should be made by banks rather than government officials who were not trained in credit risk analysis. During implementation, MYS was responsible not only for selecting and training beneficiaries, but also for approving loans and collecting repayments. The participating banks served merely as channels of funds. In spite of the lack of training on banking services, the project staff preformed well in credit delivery with high rates of loan recovery, mainly due to the highly standardized loan product that simplified credit decisions, and the appropriate incentive systems for field staff. 30. In spite of the high recovery rates, the use of a government agency in credit delivery had certain inherent weaknesses. First, as a government agency, MYS had no authority to use the interest earnings from credit operations to cover its operating costs. This resulted in a large accumulation of funds lying idle in the bank accounts of MYS on the one hand, and the inability of MYS to recruit new staff and procure needed equipment on the other.15 The complete reliance of MYS on government budgetary allocations was a major cause of the sharp deterioration in project performance after completion when hit by a severe budgetary cut (para. 35). Second, since the credit funds were provided without charges to MYS, and the budget from the Government covered all operating costs, MYS was able to offer an effective interest rate that was significantly below the rates offered by other MFIs in Bangladesh.16 Such subsidized interest rate does not cover the full cost of credit operations, and has a potential impact of undermining the operation of other MFIs that serve the same clients in the same area.17 Lastly, as a government agency, MYS did not have the authority and flexibility to design savings and loans products based on market demand; this has become a major constraint to credit operations as competition from MFIs has intensified. 3. Institution Building

31. This component was designed to strengthen MYS capacity for providing training and supervising microcredit programs. Its expected outputs included (i) construction of training centers, including RULSTECC and four ZRTCs; (ii) provision of training equipment, facilities,
15 16

The PIU reported Tk411 million ($7.6 million) of accumulated funds in its bank accounts as of 31 December 2000. The quoted or stated annual interest rate for loans under the Project was 16 percent on outstanding balance (i.e., on a declining basis) whereas the quoted interest rates charged by major MFIs in Bangladesh were 20-25 percent. 17 However, there were no major complaints against this Project during the OEMs discussions with major MFIs, probably due to its relatively small size as compared with the large operations of the major MFIs in the country.

9 and vehicles; and (iii) support for PIU and field staff operations. The construction of the training centers was seriously delayed. Three of the four ZRTCs were completed in the last two years of implementation, and the fourth after project completion. RULSTECC completed only one of its three buildings because the court injunction prevented construction of the other two buildings (para. 13). The procurement of training equipment and vehicles was also delayed, with the mobile training van delivered only about six months before project completion. Major causes of the delays included the late recruitment of project staff at the initial stage, protracted government procedures governing funds release and procurement, the PIU's lack of motivation and delegated authority, the frequent change of project directors, and the PIUs poor supervision of fieldwork. 32. Overall, this component contributed little to the Project's objectives due to the late completion of the training centers and their limited use after project completion. The OEM visited all training centers and found that only one ZRTC was used by an ongoing government project, another ZRTC used only two of its rooms, and the other two ZRTCs were not used. RULSTECC had just completed one of its three buildings, which had not yet started operating by the time of the OEM's visit. The OEM observed that the equipment and furniture for RULSTECC was kept in storage, and learned that the mobile training van had been used for only 32 days since its delivery due to a lack of funds to purchase fuel. The major constraints included (i) a shortage of budget to run the training programs, which were rather expensive (Tk1,000 or about $20 per beneficiary); (ii) a high cost of transport as the centers were located far from most project areas; and (iii) oversupply of training centers in the country.18 These factors reflected insufficient understanding of the training needs in project design (para. 56). In retrospect, a least-cost approach should have been adopted, such as model demonstration combined with extension services (para. 23). 4. Associated Technical Assistance a. TA 1439-BAN: Staff Development and Training Materials

33. This TA aimed at (i) updating the capacity of MYS in providing training and project management, and (ii) developing training materials. Implemented from March 1993 to March 1995, this TA provided (i) training for project staff including orientation training for all field staff as well as training for trainers from RULSTECC; (ii) overseas fellowship and study tours; (iii) development of various manuals, including a credit manual and branch operational manuals; and (iv) other training materials. In addition to the originally envisaged outputs, a social survey was conducted in the project areas, which provided useful information about the project beneficiaries. The OEM's discussions with project staff found that this TA was very useful; the training of field staff and the development of operational manuals directly contributed to the smooth implementation of the Project, especially the credit component. Participants in the overseas training programs appreciated the opportunity to expose themselves to microfinance experience in other countries, such as the Philippines. The OEM found that the Government used most of the outputs produced under the TA. Its positive impact on project staff and credit operations will likely be sustained. Overall, this TA is rated successful. b. TA 1440-BAN: Research and Development

34. This TA was designed to (i) strengthen the capacity of MYS in conducting research and evaluation, (ii) assist in research and evaluation of TRDEP, and (iii) establish a management information system. While the objectives of the TA were relevant to the Project, especially the
18

The OEM was told that the Government had over 300 training centers nationwide.

10 credit operations, its scope was overly ambitious vis--vis the available time and resources. As a result, many of the research activities envisaged at appraisal were not implemented (Appendix 2). Nevertheless, the TA produced a set of useful outputs. In particular, one of its reports, Alternative Credit Delivery Systems, provided a very good analysis of the experience of TRDEP and proposed a set of policy recommendations. However, none of the recommendations was implemented, as MYS did not have the necessary authority, and decision making in the Government was very slow, reflecting insufficient government ownership of the TA. The management information system was established, including a standard format for data reporting. However, the data analysis in the PIU was poor due to weak management and insufficient budget to hire the required technicians. The OEM's field inspection found that the PIU did not have timely information to effectively monitor the credit operations, such as the information of on-time (instead of cumulative) recovery of the subloans.19 The OEM also found that the TAs research reports had few readers in the Government in spite of their good quality. Overall, the TA is rated partly successful. B. Sustainability

35. The project performance has been deteriorating since completion, raising serious doubts about sustainability. When the loan was closed in June 1998, the Government provided funds to extend the Project for one year. Since July 1999, the Project has been under the process of being transferred to the Governments budget and is being financed by a temporary fund (block allocation) from the Government, which covers staff salaries but nothing else. Meanwhile, about 20 percent of the project staff have been transferred to a new credit program funded by the Government, which aims to replicate the Project in another 50 subdistricts. With fewer project staff, an absence of budget allocations for travel and training, and no funds to replace the broken bicycles, the field staff reduced the frequency of their visits to borrowers, especially those not located in nearby villages. Consequently, the performance has sharply deteriorated in terms of quantity (fewer new borrowers and new loans), quality (declining repayment rates), and efficiency (fewer beneficiaries per field staff).20 36. The OEM's fields visits and the household survey found that no livelihood skills training had been conducted since July 1999 due to the absence of a training budget, although orientation training for new borrowers continued as it was conducted by the GAs without additional cost. Most training centers had been idle since July 1999 as their budget covered only staff salaries and nothing else. The mobile training van was idle with flat tires. MYS explained to the OEM that these problems were temporary and should be resolved once the transfer of project staff was complete. Even if that happens, the deteriorated credit operations during this transition period may not be easily recovered. 37. The fundamental causes of the above problems originated from the project design, which did not provide sufficient arrangements to ensure the long-term operations of the project components. The approach of using a government agency to deliver credit services, the maximum of three loans per beneficiary, and the provision of subsidized interest rates were inconsistent with the beneficiaries' need for permanent access to financial services. The OEMs household survey found that most beneficiaries considered the three loans to be insufficient to make them financially independent. Experience from MFIs in Bangladesh also shows that
19

The on-time recovery rate reflects the current performance of loan recovery within the reporting period and is critical for credit management. The cumulative recovery rate is the ratio of the accumulated loan repayments over the accumulated loan disbursement starting from the Projects commencement, and can be used for the evaluation of the overall performance of the credit component. 20 The PIU reported that the number of new borrowers fell from 54,000 in 1997 to 51,000 in 1998, 31,000 in 1999, and 22,000 in 2000. The OEMs discussions with field staff revealed a sharp deterioration in loan recovery.

11 beneficiaries need permanent access to financial services and it is better to use a long-term finance institution (MFI or NGO) than a short-term government program for credit services. While the project design included a loan covenant to convert the PIU into an autonomous agency, its implementation was undermined by another loan covenant that aimed to transfer all project staff under the Government's budget (para. 18). The lack of authority of MYS to use interest earnings to cover operating costs resulted in the PIU's dependence on government budget allocations and an inability to sustain credit operations when facing budgetary cuts. Finally, except for a standard government assurance on the provision of an O&M budget, the project design did not include effective measures to ensure a reliable funding source for O&M after project completion. IV. A. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS

Socioeconomic Impact

38. A summary of the OEMs household survey results is given in Appendix 4, including a profile of the surveyed beneficiaries as well as changes in their income and living standards before and after the Project.21 The survey data show that about a third of the project beneficiaries had no schooling, and another third had only elementary education (Appendix 4, Table A4.1). About 47 percent of the beneficiaries had their own microenterprises, another 13 percent were engaged in agriculture, 21 percent were housewives with small businesses, and only 2 percent were casual laborers (Appendix 4, Table A4.1). These results are consistent with the OEMs observation that the Project mainly selected the upper poor with regular jobs and bypassed the very poor such as casual laborers. The survey results also show that before the Project, about 81 percent of the beneficiaries had an annual income of less than Tk25,000 (or $463), including 53 percent poor with an annual income of less than Tk18,000 (or $333) (Appendix 4, Table A4.2). About 70 percent of the beneficiaries had less than 0.5 acre of land, including 20 percent who were landless (Appendix 4, Table A4.3). 39. The survey results demonstrate a significant impact of the Project on the borrowers. About 57 percent of the surveyed beneficiaries reported increased turnover of their businesses, and 37 percent, increased household income (Appendix 4, Table A4.4). The survey also found reduced rural poverty in the project areas as the percentage of beneficiaries with an annual income of less than Tk18,000 ($333) was reduced from 53 percent before the Project to 46 percent after the Project, implying that about 7 percent of the poor were lifted above the poverty line (Appendix 4, Table A4.2).22 40. The Projects most impressive impact was on housing conditions. The survey results show that the percentage of households with tin-roofed houses increased from 24 percent before the Project to 44 percent after the Project, and that with thatched houses decreased from 28 percent to 10 percent (Appendix 4, Table A4.5). The OEM also observed that many beneficiaries used increased income to improve their houses; their first priority was to replace the straw roof with a tin roof. 41. Employment also increased in the project areas. About 47 percent of borrowers reported increased employment of 20-50 percent; another 46 percent of borrowers reported 51100 percent increases in employment (Appendix 4, Table A4.6).
21

The survey covered 606 households randomly selected from 18 beneficiary centers located in 6 branches of 3 subdistricts in the project areas. 22 By comparison, about 21 percent of the borrowers of the Grameen Bank managed to lift their families out of poverty within about four years of participation (ADB, Finance for the Poor: Microfinance Development Strategy, May 2000).

12 42. Food consumption improved significantly. Before the Project, about 15 percent of the surveyed households could not afford three meals a day for their adult members; the percentage was reduced to only 2 percent after the Project. The number of meals for old family members and for children also increased, as did the consumption of meat and fish (Appendix 4, Table A4.7).23 Furthermore, vulnerability to food shortages was mitigated. Before the Project, about 46 percent of the surveyed borrowers had three or more months when they had difficulties in buying enough food for their families. This figure was reduced to 16 percent after the Project (Appendix 4, Table A4.7). The beneficiaries were able to reduce their monthly expenditure on food and increase that on clothing (Appendix 4, Tables A4.8 and A4.9). The percentage of the beneficiaries with more than two changes of clothing increased from 37 percent before the Project to 80 percent (Appendix 4, Table A4.10). It is interesting to note that women benefited more than men in terms of more clothing. Other changes observed in the household survey were increased cattle and poultry (Appendix 4, Tables A4.11 and A4.12), and greater numbers of shops and other assets such as furniture, radios, televisions, and bicycles (Appendix 4, Table A4.13). 43. The above improvements cannot be attributed solely to the Project. Due to insufficient information, the OEM was unable to construct with and without project scenarios and therefore adopted the alternative approach of comparing before and after project cases. While such methodology cannot separate the Projects impact from that of other developments, the results suggest that the Project, together with other efforts of the Government, NGOs, other funding agencies, and the beneficiaries themselves, significantly contributed to the improved living standards of borrowers. 44. The household survey showed that 37.5 percent of all borrowers were women, which is similar to the PIU's data that women accounted for 38.3 percent of total borrowers (Appendix 3). In contrast to the major MFIs in Bangladesh that target women, the Project had only about 7 percent women-only groups (Appendix 3). Interviews with female beneficiaries revealed the Projects significant impact on them, such as increased employment through microenterprises, enhanced household income, and increased power in family decisions. These observations were consistent with other studies on microfinance projects, which found that microfinance services had a larger impact on women than on men as women tended to use the increased income for family welfare including improved nutrition and education for children. B. Environmental Impact

45. The Project had no adverse environmental impact as the small loans were used for small income generation activities, which did not cause environmental issues. In fact, the Project contributed positively to the environment. The orientation training for new borrowers helped raise awareness of environmental issues. Beneficiaries were also organized by GAs to plant trees; the household survey found a significant increase in such tree planting (Appendix 4, Table A4.14). C. Impact on Institutions and Policy

46. The Project's impact on government policy was mixed. On the one hand, the good performance of the credit operations, especially the high loan recovery rate, encouraged the Government to expand the Project to another 50 subdistricts under a new credit program financed by the Government. However, there was little improvement in the design of the new
23

The standard practice in rural Bangladesh was four meals a day, including two major meals (lunch and dinner) and two snacks (breakfast and a snack in the afternoon).

13 credit program. In particular, the lessons identified by TA 1440 and its recommendations, such as the need for flexible loan products and repayment schedules, for delegating authority to branch offices, and for authority to use interest earnings, were not incorporated. 47. The Project had a positive impact on MYS, especially on field staff, who gained experience in organizing beneficiary groups, conducting orientation training, delivering microcredit, and collecting repayments. Most of the project staff have stayed with MYS. However, the Project's impact on the institutional structure and management systems in MYS was limited. While the information systems were established at the field level, they were less effective in the PIU (para. 34). The Project established an institutional network with borrowers in 32 subdistricts, which can be used by other government programs in the future. The Project also built up a client base for NGOs and MFIs, as the borrowers, after three loans and with good repayment records, have accumulated experience in handling loans. NGOs and MFIs can take them as ready clients. V. A. Relevance OVERALL ASSESSMENT

48. By focusing on poverty reduction in rural areas, the Project was highly relevant to the development strategies of ADB and the Government. The credit component was particularly relevant as many rural poor people had no access to formal financial services at that time and the emerging MFIs lacked funding for rapid expansion. The components of beneficiary training and institution building were less relevant as the classroom lecture-oriented training did not match well the needs of the uneducated poor, and the demand for such training was overestimated. On balance, the Project is rated relevant. B. Efficacy

49. The credit component substantially exceeded its targets of beneficiary outreach and loan recovery, and contributed to the achievement of the Projects objectives. The major targets of beneficiary training and institution building were largely met, albeit with serious delays. Overall, the Project is rated highly efficacious. C. Efficiency

50. There were significant delays at all stages of project implementation, resulting in late delivery of the livelihood skills training and late completion of the training centers. The credit component achieved a high ratio of borrowers per field staff, but accumulated a large amount of interest earnings lying idle in the bank accounts of MYS. Furthermore, the training centers and training facilities were largely unused, representing a waste of public resources. The project cost was overestimated at appraisal; this led to a large amount of loan cancellation. Overall, the Project is rated less efficient. D. Sustainability

51. The livelihood skills training for beneficiaries has ceased since project completion due to a lack of funding for training. The operation of the credit component has continued, but its quantity, quality, and efficiency have deteriorated sharply since July 1999 due to a reduced number of project staff, a severe shortage of operating funds, and the lack of authority of MYS to use the interest earnings. Overall, the Project's sustainability is rated less likely.

14 E. Institutional Development and Other Impacts

52. The Project influenced government policy. Encouraged by the high recovery rates of the credit operations, the Government decided to replicate the credit operations in 50 subdistricts using its own funding. The Project also enhanced the capacity of MYS staff in credit operations, although its impact on MYS management systems was limited. The Project had positive impacts on its beneficiaries, such as increased employment, enhanced household income, reduced poverty, and improved living standards. Overall, the Project's institutional and socioeconomic impact is significant. F. Overall Project Rating

53. The design of the Project was based on a substantial amount of sector work as well as the Government's initiatives in TRDEP. The focus on poverty reduction and employment generation was appropriate. The Project reached a large number of beneficiaries, most of whom were low-income families or the poor, although not the very poor. The credit component recorded a cumulative rate of loan recovery of 99 percent. Due to the inherent weaknesses of using a government agency to deliver credit services, especially its complete reliance on budgetary allocation, the sustainability of the Project is weak. The Project had a significant impact on its beneficiaries, such as increased household income and improved living standards. Overall, the Project is rated successful. G. Assessment of ADB and Borrower Performance

54. The Project was designed based on the Government's initiatives as well as on the development strategies of ADB and the Government. The design had certain weaknesses, which are understandable in a learning process. ADB closely monitored project implementation. However, the supervision focused on physical targets instead of efficiency and development impact. The Government demonstrated strong ownership of the Project; most field staff showed high commitment and contributed to the good performance of loan recovery. With three exceptions (para. 18), the Government complied with the loan covenants. Overall, the performance of ADB and the Government is rated satisfactory. VI. A. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

Key Issues for the Future 1. Effectiveness of Beneficiary Training

55. The livelihood skills training for beneficiaries under the Project was ineffective for the uneducated and inexperienced poor. Several factors contributed to this. The selection of trainees by project staff or center chiefs and the provision of training allowances distorted the selection. The training courses were classroom lectures, which were not easily understood by the uneducated poor. The "one-off" lecturing, without follow-up assistance, had only limited impact. Other alternatives should have been considered, including model demonstrations at village level, followed by extension services. 2. Underutilization of Training Facilities

56. The OEM observed significant underutilization of the expensive training facilities provided by the Project, such as buildings, vehicles, equipment, and furniture. The root cause of the problem was a design issue: overestimating investment needs and underestimating the

15 difficulties that the Government would have in financing the operation of these facilities after project completion. Although the Government's assurance of providing sufficient funding for O&M was obtained through loan covenants, poor O&M of the project facilities still occurred due to budgetary constraints. 57. In fact, it may not be realistic to assume that the Government would have the ability to constantly increase its budgetary allocation to take care of the O&M of all agency-funded projects after their completion when the number of such projects is rising every year. This seems to be a crucial issue with no easy solutions. An analysis of government budgetary implications from the viewpoint of a single investment project is inappropriate as the Government may have many competing uses for its budgetary resources. At the same time, an overall analysis of the Governments public investment program and public expenditure management is beyond the scope of an investment project. When a government is continuously experiencing budgetary constraints, its assurance on providing O&M funding is insufficient. Under such circumstances, it may be necessary to incorporate in the design of each investment project the long-term O&M of the project facilities. Intensive consultations should be conducted with concerned government authorities, operating agencies, and beneficiaries at the design stage to ensure a reliable funding source for O&M after project completion, including, when appropriate, the use of loan proceeds to establish such a source. Otherwise, reduction in the scale of the investment should be considered to ensure that it will not exceed the capacity of the government in financing O&M of the project facilities after completion. 3. Future Direction of Credit Operations

58. The future of the credit operations started under the Project is questionable. On the one hand, the credit component operated well in the past with high recovery rates and a positive impact on many beneficiaries. MYS has developed a client network and functional operating system, with many capable staff and a large amount of accumulated funds. On the other hand, microcredit has increasingly become an industry in Bangladesh and attracted a large number of NGOs to serve as MFIs. It may not be appropriate for a government agency to engage in direct credit delivery and compete with the private sector by offering subsidized interest rates. 59. Studies of microfinance find that the majority of the very poor have so far been bypassed by microfinance projects/programs. Government agencies do not have the authority and flexibility to design innovative finance products that are tailored to the needs of the very poor. NGOs are concerned about the high administrative costs associated with the innovation needed to reach the very poor.24 Since there are still underserved areas in remote villages in Bangladesh and underserved populations among the very poor, the alternative of serving distant areas and the very poor under this Project should be considered. Reaching these people will likely be expensive and public subsidies may be justified.25 MYS could enter the remote areas not yet served by MFIs, select and train clients, grant an initial round of loans, then transfer the clients to the MFIs that would be invited to partner with MYS. MYS may also use its staff and resources to contract with and supervise NGOs to provide microfinance and other supplementary services to the very poor. In either case, major reforms in the credit operations
24

Many MFIs have not considered the very poor as creditworthy as they lack the ability to meet the weekly repayments required by most credit programs. Some people also argue that the very poor need jobs instead of microfinance. Given the shortage of employment opportunities in the project areas, self-employment through microenterprises financed by microfinance will continue to be an important mechanism for poverty reduction in the near future. It is also likely that many of the very poor could be served if savings and loans products could be flexible enough to meet their needs. 25 The OEM found that the very poor need a combination of microfinance and other supporting services including basic training on literacy, numeracy skills, and record keeping, together with continued extension services.

16 will be required, including the conversion of the PIU into an autonomous agency with the authority to use interest earnings to cover its operating costs and the authority to design flexible financial products based on market demand, and the adoption of commercial management systems. B. Lessons Identified

60. The Project has provided valuable lessons, especially relating to the design and implementation of microfinance operations. The major lessons include the following: (i) Under certain conditions, a government agency can deliver microcredit services with high rates of loan recovery even without formal training on credit risk analysis. These conditions include (a) highly standardized loan products making credit decisions simple; (b) appropriate incentives for project staff such as linking their continued employment with performance targets; (c) sufficient budgetary support on a continued basis; and (d) no competition from NGOs and other MFIs. However, a government agency is severely restricted in its capacity to manage a complicated and market-oriented microfinance program, mainly due to its lack of commercial management systems. In particular, the agency may lack the authority to use interest earnings to cover operating costs, which may lead to its dependence on government funds. The risks of budgetary cuts and delays in fund release may threaten the sustainability of credit operations. The government agency may also face political challenges in charging interest rates high enough to cover costs. Finally, the agency may lack the authority to design flexible savings and loans products and is therefore less competitive in a market. Due to these constraints, it is preferable to use NGOs or MFIs for microfinance services. Since the poor need permanent access to financial services, microfinance should be provided by a long-term institution rather than a short-term program. If a government agency has to be engaged, measures need to be developed to convert it to an autonomous agency to enable its long-term operations on a commercial basis. The standard loan products do not well match the needs of the very poor, especially their cash flow, which is irregular and uncertain. Group liability and the focus on loan recovery may provide incentives for beneficiary groups and field staff to exclude the very poor who do not have a stable income to meet the rigid requirement of weekly repayments. Innovative solutions are therefore needed to design flexible savings and loans products that tailor financial services to the needs of the very poor. ADB should support the search for and development of innovative solutions to expand microfinance services to the very poor. One approach is to let a government agency enter into a partnership with MFIs; the government agency would develop a client basis and transfer it to the MFIs for long-term finance services. Another approach is to provide grants to cover the initial start-up costs of MFIs that are willing to target the very poor. Microcredit alone is not sufficient to reduce poverty among the very poor. Flexible savings services are needed to accumulate the small savings of the poor and help them cope with financial shocks. Furthermore, supplementary assistance, such as basic training in literacy and numeracy skills as well as extension services, is needed to build up the capacity of the very poor to gain access to, and effectively use, credit services.

(ii)

(iii)

(iv)

(v)

(vi)

17 (vii) The design of training programs for the poor should consider the absorptive capacity of the trainees as well as their needs. For the uneducated and inexperienced poor, learning by following good examples in their neighborhood may be more effective than classroom lectures. A training program may focus on the establishment of demonstration models of recommended livelihood skills and technologies; study tours to visit model households and small businesses to exchange experiences; and extension services on a continued basis. Training allowances should be abolished to reduce training costs and remove distorted incentives. Trainees should be selected based on demonstrated demand for the training, such as a token fee from applicants for their selected training programs. The impact of one-off training without continued assistance is limited. Efforts are needed to develop long-term institutions in a project area that can provide training and extension services after project completion. When a government is restricted by budgetary constraints, its assurance on providing O&M funds is insufficient. More effective measures should be included in a project design to ensure a reliable funding source for O&M of the project facilities after project completion. This should become a standard requirement for project approval. Most delays occurred in the early stages of implementation due partly to the project staffs inexperience and unfamiliarity with ADB guidelines and procedures. Thus, a sufficient amount of preservice training should be given to project staff prior to project commencement. ADBs project supervision should be intensified in the initial years, especially with new executing agencies. Follow-Up Actions

(viii)

(ix)

(x)

(xi)

C.

61. The Government should grant MYS the authority to use all accumulated interest earnings to cover the operating costs of credit operations, with a target date of June 2002. The Bangladesh Resident Mission should monitor implementation of this action. 62. MYS should evaluate its role in microcredit services and consider the two options discussed in para. 59. In either case, MYS should convert the PIU into a business-oriented entity with the authority to use interest earnings to cover its operations as well as the flexibility to design financial products based on market demand. A target date of December 2002 is proposed for the completion of the evaluation. The Bangladesh Resident Mission should monitor implementation of this action.

18

APPENDIXES
Number Title Page Cited on (page, para.) 2, 4 3, 10 7, 24 11, 38

1 2 3 4

Project Cost: Appraisal Estimated vs. Actual Achievement of Project Targets Performance of Microcredit Operations Results of Household Survey

19 20 23 24

19 Appendix 1
PROJECT COST: APPRAISAL ESTIMATE VS. ACTUAL ($'000) At Appraisal (As per AR) Foreign Local Total Actual (As per PCR) Foreign Local Total Actual as % of Appraisal Estimate Foreign Local Total

Project Components A. Training 1. Training and Workshops 2. Training Materials Subtotal B. Credit Component Loans to Beneficiaries C. Institution Building 1. Facilities Civil Works Land Cost Vehicles Equipments Furniture 2. Proj. Implementation & Recurrent Costs Incremental Staff Salaries - PIU - Field Staff Operation & Maintenance Subtotal Physical Contingencies Price Contingencies Total Costs Service Charge Taxes and Duties GRAND TOTAL

194 0 194 0

3,360 686 4,046 9,722

3,554 686 4,240 9,722

68 0 68 0

1,066 126 1,192 7,393

1,134 126 1,260 7,393

35.1 35.1

31.7 18.4 29.5 76.0

31.9 18.4 29.7 76.0

169 0 150 53 0

506 500 54 39 86

675 500 204 92 86

260 0 179 29 0

780 727 66 23 252

1,040 727 245 52 252

153.8 119.3 54.7

154.2 145.4 122.2 59.0 293.0

154.1 145.4 120.1 56.5 293.0

0 0 54 426 37 33 690 178 0 868

160 2,076 18 3,439 118 760 18,085 0 402 18,487

160 2,076 72 3,865 155 793 18,775 178 402 19,355

0 0 0 468 536 183 719

78 4,267 1,442 7,635 16,220 0 16,220

78 4,267 1,442 8,103 16,756 183 16,939

0.0 109.9 77.7 102.8 82.8

48.8 205.5 8,011.1 222.0 89.7 87.7

48.8 205.5 2,002.8 209.7 89.2 102.8 87.5

= not available, AR = appraisal report, PCR = project completion report, PIU = project implementation unit. Source: PCR and AR.

20 Appendix 2, page 1 ACHIEVEMENT OF PROJECT TARGETS

Activity A. Training 1. Targets Set at Appraisal (as per RRP/Appraisal Report) Orientation and livelihood skills training for 70,000 beneficiaries. Actual Achievement (as per PCR and OEM Inspection) Orientation training for 185,010 beneficiaries; livelihood skills training for 70,000 beneficiaries. About 1,600 youth were trained.

2.

Special skills training for 1,500 selected youth. Enterprises training for 14,000 beneficiaries with entrepreneurial potential. Training equipment and materials for RULSTECC and ZRTC Library. Number of beneficiary groups 38,400 Number of beneficiary centers 4,800 Number of borrowers 70,000

3.

Not conducted.

4.

Procured and stored in ZRTC.

B. Credit Operation

1.

42,202

2.

5,028

3.

185,010

4.

Loans (maximum 3 loans per beneficiary).

First loans totaling Tk451.9 million to 185,010 beneficiaries. Second loans totaling Tk427.8 million to 122,350 beneficiaries. Third loans totaling Tk285.8 million to 69,218 beneficiaries.

5.

Large enterprise loans (4 percent of total loan amount).

Not disbursed. However, the Government disbursed 2,436 enterprise loans after project completion. 99 percent accumulated loan recovery. Conducted as planned, with a large amount of accumulated fund unused. All costs relating to the credit operation were covered by government budget allocation instead of project earnings, which have been accumulated in MYS bank accounts.

6.

Growing revolving fund with 90 percent loan recovery. Group savings, weekly individual savings, contribution to risk fund.

7.

8.

Self-reliance of credit operation achieved within five years.

21 Appendix 2, page 2 ACHIEVEMENT OF PROJECT TARGETS

Activity C. Institutional Building for MYS 1. Targets Set at Appraisal (as per RRP/Appraisal Report) Construct RULSTECC and four ZRTCs. Actual Achievement (as per PCR and OEM Inspection) Three ZRTCs completed during project period; one ZRTC completed after project completion; RULSTECC was not completed as of February 2001. Procured with delays. In particular, the mobile training van was delivered in year six. Conducted.

2.

Provide training facilities, furniture, training equipment, and vehicles.

3.

Support project implementation unit and field staff. Upgrade the training capacity in MYS/DYD, RULSTECC, and ZRTC. (i) (ii) orientate and train 655 project staff, provide 15 international fellowships (1-3 months duration each), and

D. TA 1439-BAN: Staff Development and Training Materials

1.

Conducted for 486 staff. 19 fellowships.

(iii) provide 15 international study tours (2-3 weeks each). 2. Design and develop training materials. Prototype training materials include Training manuals audio-cassettes multimedia packages handbooks training kits for field staff documentation relevant to training E. TA 1440-BAN: Research and Development 1. Strengthen MYS capacity in research and evaluation. (i) Studies and research on (a) rural livelihood trades and other related topics, (b) role of youths and women in poverty reduction program, and (c) assessment of the social components of TRDEP. (ii) Management information system (MIS) activities (a) evaluate innovative activities under the Project, and (b) computerize the MIS.

11 study tours.

Prepared or procured.

Partly conducted.

Conducted. Not conducted. Not conducted.

Partly conducted. MIS established.

22 Appendix 2, page 3 ACHIEVEMENT OF PROJECT TARGETS

Activity Targets Set at Appraisal (as per RRP/Appraisal Report) Actual Achievement (as per PCR and OEM Inspection)

2. Research and evaluation of TRDEP. (i) Monitor/evaluate credit management and delivery system. Conducted at field level but not at project implementation unit level.

(ii) Eight research studies. (a) Development of poverty alleviation program year 2000. Alternative credit delivery systems for the poor. Not conducted.

(b)

Conducted with good reports. However, recommendations were not implemented. Conducted.

(c)

Reorganization and restructuring of MYS. MIS study toward more efficient management. Impact of literacy on the project beneficiaries. Livelihood technologies: appropriateness of different livelihood, trades, and skills for poverty alleviation. Role and impact of government agencies and nongovernment organizations in poverty alleviation, rural employment, and women in development. Media profile, utilization of media packages, and poverty alleviation among rural poor.

(d)

Conducted.

(e)

Not conducted.

(f)

Not conducted.

(g)

Not conducted.

(h)

Not conducted.

DYD = Department of Youth Development; MIS = management information system; MYS = Ministry of Youth and Sports; OEM = operations evaluation mission; PCR = project completion report; RRP = report and recommendation of the President; RULSTECC = rural livelihood self-employment, technology, education, and communication center; TRDEP = Thana Resource Development and Employment Project; ZRTC = zonal resource training center. Source: OEM, PCR, and RRP/AR.

23 Appendix 3 PERFORMANCE OF MICROCREDIT OPERATIONS Table A3.1: Clients and Subloans

First Loan Year No. of Clients 1993 1994 1995 1996 1997 Total 22,611 31,093 54,393 38,772 38,141 185,010 Loan Disb. (Tk m) 40.7 73.4 142.3 92.3 103.2 451.9 Ave. Loan Size (Tk) 1,800 2,361 2,616 2,380 2,706 2,443 Second Loan Loan Disb. (Tk m) 7.4 90.7 44.7 181.8 103.2 427.8 Ave. Loan Size (Tk) 2,178 3,435 2,757 3,950 3,406 3,497 Third Loan Loan Disb. (Tk m) 9.0 40.6 17.1 66.2 152.9 285.8 Ave. Loan Size (Tk) 3,456 3,010 2,923 4,648 4,629 4,129 Total Loan Amount (Tk m) 57.1 204.7 204.1 340.3 359.3 1,165.5

No. of Clients 3,398 26,408 16,216 46,028 30,300 122,350

No. of Clients 2,604 13,488 5,851 14,244 33,031 69,218

Disb. = disbursement, m = million Source: Project completion report.

Table A3.2: Recovery Rate of Subloans (percent) Yearly Recovery Rate 100.0 99.9 99.9 99.7 97.8 Cumulative Recovery Rate 100.0 99.9 99.9 99.9 99.0

Year 1993 1994 1995 1996 1997

Source: Project implementation unit.

Table A3.3: Participation of Women No. of All Cumulative Membersa No. of Cumulative Women Members Percentage of Women in Total Borrowers No. of Beneficiary Groups No. of Women-Only Groups Percentage of Women-Only Groups in Total Groups
a

317,747 121,563 38.3 63,590 4,284 6.7

Including current borrowers as well as borrowers graduated or dropped out.

Source: Project implementation unit.

24 Appendix 4, page 1 RESULTS OF HOUSEHOLD SURVEYa Table A4.1: Beneficiary Profile Classification 1. By Gender Male Female By Age 15 - 25 26 - 30 31 - 35 36 - 40 41 - 45 46 - 50 51 - 55 56 - 60 60 + By Education No schooling Class I-V Class VI-VIII Class IX-X Class XI-XII Graduate Master By Main Profession Business or Services Housewife with Small Business Agriculture Daily Labor Fishing Livestock Government Service Others Average Size of the Borrower's Households Number of Members per Household Income Earning Member per Household Percent 62.5 37.5 29.3 18.3 14.5 12.3 8.2 7.5 3.6 3.4 2.9 34.4 37.4 13.0 10.8 2.2 1.7 0.5 46.6 21.3 12.8 2.3 0.9 6.8 0.5 8.8 Number 5.05 1.87

2.

3.

4.

5.

The household survey was conducted by the Operations Evaluation Mission in March-April 2001 on 606 borrowers from 18 beneficiary centers located in 6 branches in 3 subdistricts.

25 Appendix 4, page 2

Table A4.2: Annual Income

Annual Income (Tk) ($) Percentage of Borrowers Surveyed Before After Changes

< 10,000 10,000 - 15,000 15,001 - 18,000 18,001 - 22,000 22,001 - 25,000 25,001 - 30,000 30,001 - 40,000 40,001 - 60,000 60,001 - 80,000 80,001 - 100,000 100,000 +

<185 186 - 278 279 - 333 334 - 407 408 - 463 464 - 556 557 - 741 742 - 1,111 1,112 - 1,481 1,482 - 1,852 1,853+

7.5 16.8 28.9 16.1 12.0 7.1 5.0 5.0 1.1 0.5 0.0 53.2 81.3

2.5 11.2 32.5 18.8 16.2 7.1 5.0 5.0 1.2 0.5 0.0 46.2 81.2

(5.0) (5.6) 3.6 2.7 4.2 0.0 0.0 0.0 0.1 0.0 0.0 (7.0) (0.1)

Poor [ <= Tk18,000 or $333] Low income [<= Tk25,000 or $463]

Table A4.3: Land Ownership

Percentage of Borrowers Surveyed Before After Changes

Area of Land (ha)

0.00 < 0.20 0.210.40 0.410.60 0.610.80 0.811.20 More than 1.20 ha
ha = hectare

19.6 50.4 12.5 6.9 2.5 3.8 4.3

17.7 47.9 13.2 8.0 3.8 4.0 5.4

(1.9) (2.5) 0.7 1.1 1.3 0.2 1.1

26 Appendix 4, page 3

Table A4.4: Borrowers' Views

1. What were the major benefits from the Project? Households with the following views: Volume of business/activities increased Household income increased Skills increased No change Negatively affected 2. What were the other benefits of the Project? Households with the following views: Benefited in some ways Benefited financially Benefited through increasing assets Benefited through employment Benefited through increased awareness Benefited through education of children Not benefited at all

Percent

56.5 36.8 5.4 0.8 0.5 Percent

97.4 94.3 91.3 31.6 13.4 2.6 2.6

27 Appendix 4, page 4

Table A4.5: Quality of Houses Percentage of Borrowers Surveyed Before After Changes

Item 1. Type of House Structures Building Tin-Roofed Thatched Brick + Tin Tin + Thatched Low Hut Building + Tin + Thatched Building + Low Hut Tin shet + Low Hut Tin + Thatched + Low Hut Brick + Tin + Low Hut 2. No. of Tin-Roofed Room 0 1 2 3 4 5 6 8 3. No. of Straw-Roofed Room 0 1 2 3 4 6 7

0.8 23.8 27.5 3.4 17.6 23.1 0.4 0.2 1.3 1.7 0.2

0.5 44.1 10.4 9.0 27.5 5.0 1.0 0.2 1.2 0.9 0.2

-0.3 20.3 -17.1 5.6 9.9 -18.1 0.6 0.0 -0.1 -0.8 0.0

57.4 35.0 5.9 1.2 0.5 0.0 0.0 0.0

26.0 48.4 19.0 5.0 1.0 0.2 0.2 0.2

-31.4 13.4 13.1 3.8 0.5 0.2 0.2 0.2

41.3 47.7 9.6 1.0 0.0 0.2 0.2

66.4 24.8 7.8 0.8 0.2 0.0 0.0

25.1 -22.9 -1.8 -0.2 0.2 -0.2 -0.2

28 Appendix 4, page 5

Table A4.6: Enhancement of Employment Opportunity Due to the Project

Increase in Employment Opportunity 1 - 10 11 - 20 21 - 30 31 - 40 41 - 50 51 - 60 61 - 70 71 - 80 81 - 90 91 - 100

Percent 4.5 2.9 16.7 10.8 19.3 4.9 4.5 11.1 5.9 19.4

29 Appendix 4, page 6

Table A4.7: Improvements in Food Consumption

Food Consumption 1. No. of meals per day taken by all family members 2 3 4 2. No. of meals per day taken by old family members 2 3 4 Household without old member 3. No. of meals per day taken by adult family members 2 3 4 4. No. of meals per day taken by children 2 3 4 5 6 Not applicable 5. No. of days when meat was consumed per month 0 1-5 6 - 10 11 - 15 6. No. of days when fish was consumed per month 0 1-5 6 - 10 11 - 15 16 - 20 21 - 25 26 - 30 7. No. of months in a year when the households had difficulty in buying enough food 0 1 2 Households with difficulties for more than three months Of which, number of difficult months 3 4 5 6 7 8 9 10 Percentage of Borrowers Surveyed Before After Changes

10.0 80.7 9.3

2.2 78.4 19.4

(7.8) (2.3) 10.1

4.8 45.4 0.0 49.8

3.1 47.0 0.4 49.5

(1.7) 1.6 0.4 (0.3)

14.8 85.2 0.0

2.0 97.2 0.8

(12.8) 12.0 0.8

2.5 45.9 12.5 5.3 0.5 33.3

0.0 30.7 22.3 14.4 2.3 30.3

(2.5) (15.2) 9.8 9.1 1.8 (3.0)

9.7 89.3 1.0 0.0

1.3 93.7 4.5 0.5

(8.4) 4.4 3.5 0.5

0.7 36.9 15.7 13.5 22.6 8.3 2.3

0.7 16.0 25.5 12.1 18.3 17.3 10.4

0.0 (20.9) 9.8 (1.4) (4.3) 9.0 8.1

38.5 3.9 11.7 45.9 20.5 7.9 4.3 4.3 0.7 5.0 0.8 2.4

53.7 14.8 15.7 15.8 2.3 3.1 3.7 3.2 1.4 0.4 0.7 1.0

15.2 10.9 4.0 (30.1) (18.2) (4.8) (0.6) (1.1) 0.7 (4.6) (0.1) (1.4)

30 Appendix 4, page 7

Table A4.8: Monthly Expenditure on Food as Percent of Total Expenditure

Percentage of Borrowers Surveyed Before After Changes 3.1 0.7 3.8 12.0 12.8 35.7 26.9 5.0 3.1 9.3 12.0 22.1 27.6 21.4 4.5 0.0 0.0 8.6 8.2 10.1 14.8 (14.3) (22.4) (5.0)

Percentage of Food Expenditure 1 - 30 31 - 40 41 - 50 51 - 60 61 - 70 71 - 80 81 - 90 More than 90

Table A4.9: Annual Expenditure on Clothes as Percent of Total Expenditure

Percentage of Clothing Expenditure 1 - 10 11 - 20 21 - 30 41 - 50 61 - 70 71 - 80 Percentage of Borrowers Surveyed Before After Changes 92.9 6.3 0.1 0.2 0.3 0.2 49.8 49.4 0.5 0.2 0.0 0.1 (43.1) 43.1 0.4 0.0 (0.3) (0.1)

31 Appendix 4, page 8 Table A4.10: Number of Sets of Clothes Per Family Member Percentage of Borrowers Surveyed Before After Changes

Number of Clothes 1. Per family member 1 2 3 4 2. Per male member 1 2 3 4 3. Per female member 1 2 3 4 4. Per child 1 2 3 4 5

14.1 48.5 25.0 12.4

1.5 18.4 37.1 43.1

(12.6) (30.1) 12.1 30.7

23.3 56.1 15.2 3.9

2.0 28.5 39.5 18.6

(21.3) (27.6) 24.3 14.7

14.7 51.0 26.4 7.9

2.3 15.5 39.6 42.6

(12.4) (35.5) 13.2 34.7

30.5 23.6 25.8 13.8 6.3

25.1 3.6 17.2 24.2 29.9

-5.4 -20.0 -8.6 10.4 23.6

Table A4.11: Changes in Stock of Cattle Percentage of Borrowers Surveyed Before After Changes 52.0 17.2 19.3 6.1 1.7 1.0 2.7 26.0 15.0 15.2 16.8 14.5 8.3 4.2 (26.0) (2.2) (4.1) 10.7 12.8 7.3 1.5

Number of Cattle per Family 0 1 2 3 4 5 More than 5

32 Appendix 4, page 9

Table A4.12: Changes in Stock of Poultry

Number of Domestic Fowls per Household 0 1-5 6 - 10 11 - 15 16 - 30 31 - 50 More than 50 Percentage of Borrowers Surveyed Before After Changes 31.8 23.6 23.6 6.4 3.9 0.7 1.0 25.2 14.6 20.3 18.6 17.2 3.1 1.0 (6.6) (9.0) (3.3) 12.2 13.3 2.4 0.0

Table A4.13: Changes in Ownership of Business Enterprises and Other Assets

Item 1. Households with shops or other business establishments 0 1 2 More than 2 2. Households with Furniture Radio Television Bicycle Agricultural Equipment Other Household Assets Percentage of Borrowers Surveyed Before After Changes

70.8 25.6 2.0 1.6 44.4 15.8 4.5 16.2 42.4 50.7

53.0 42.6 2.1 2.3 84.4 44.4 13.7 35.5 46.0 53.0

(17.8) 17.0 0.1 0.7 40.4 28.6 9.2 19.3 3.6 2.3

Table A4.14: Trees Planted by Beneficiaries

Number of Trees per Family 1 2 3 4 5 610 1120 More than 20 Percentage of Borrowers Surveyed Before After Changes 8.3 9.4 6.9 6.3 18.9 27.9 11.6 10.7 6.6 5.3 4.3 2.8 7.4 25.9 26.1 21.6 (1.7) (4.1) (2.6) (3.5) (11.5) (2.0) 14.5 10.9