world bank document · 2016. 7. 11. · rubber) and nursery management. indicator 4 : at least 3...

Document of The World Bank

Report No: ICR2612

IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-096865)

ON A

MULTI-DONOR TRUST FUND (MDF) FOR ACEH AND NIAS GRANT

IN THE AMOUNT OF US$8.2 MILLION

TO THE

REPUBLIC OF INDONESIA

FOR A

NIAS ISLANDS LIVELIHOODS AND ECONOMIC DEVELOPMENT PROGRAM

May 23, 2013

Sustainable Development Department Indonesia Country Management Unit East Asia and Pacific Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 31, 2012)

Currency Unit = Indonesian Rupiah IDR 1,000 = US$ 0.10376

US$ 1.00 = 9,638

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

Bappenas National Development Planning Agency BRR Bureau for Rehabilitation and Reconstruction for Aceh and Nias CDD Community Driven Development CPS Country Partnership Strategy DIPA FM

Budget allocation for a Ministry Financial Management

FMR Financial Management Report GoI GRDP

Government of Indonesia Gross Regional Domestic Product

IDA IFR ILO

International Development Association Interim Financial Report International Labour Organization

Kabupaten Kotamadya KPDT

Rural district with decentralized administrative responsibility Urban municipality with decentralized administrative responsibility Ministry of Development for Disadvantaged Areas

LEDP LSC

Livelihood and Economic Development Project Local Steering Committee

MDF

Multi-Donor Trust Fund for Aceh and North Sumatra (later simplified to Multi-Donor Trust Fund for Aceh and Nias)

MoF Ministry of Finance M&E Monitoring and Evaluation NGO Oxfam

Non-Governmental Organization Oxford Committee for Famine Relief

PMC Project Management Consultants PMU Project Management Unit PSC Project Steering Committee RACB Rural Access and Capacity Building Project (of the ILO) SPADA Support for Poor and Disadvantaged Areas in Aceh and Nias (FY07) Sumut Sumatera Utara (North Sumatera) UNDP United Nations Development Programme

http://en.wikipedia.org/wiki/Famine_relief

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Vice President: Axel Van Trotsenburg Country Director: Stephan Koeberle

Acting Sector Manager: George Soraya Project Team Leader: Khairy Al Jamal

ICR Team Leader: Khairy Al Jamal ICR Primary Author: Naresha Duraiswamy

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INDONESIA

Nias Islands Livelihoods and Economic Development Program

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design ................................................... 1 2. Key Factors Affecting Implementation and Outcomes .................................................. 6

3. Assessment of Outcomes .............................................................................................. 12 4. Assessment of Risk to Development Outcome ............................................................. 21 5. Assessment of Bank and Borrower Performance ......................................................... 23

6. Lessons Learned............................................................................................................ 26 7. Comments on Issues Raised by Grantee/Implementing Agencies/Donors................... 27

Annex 1. Project Costs and Financing .............................................................................. 29

Annex 2. Outputs by Component...................................................................................... 30

Annex 3. Economic and Financial Analysis ..................................................................... 38 Annex 4. Grant Preparation and Implementation Support/Supervision Processes ........... 40

Annex 5. Beneficiary Survey Results ............................................................................... 42 Annex 6. Stakeholder Workshop Report and Results ....................................................... 43 Annex 7. Summary of Grantee's ICR and/or Comments on Draft ICR ............................ 44 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ........................... 56

Annex 9. List of Supporting Documents .......................................................................... 58 MAP .................................................................................................................................. 59

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A. Basic Information

Country: Indonesia Project Name:

Aceh-Nias Livelihoods and Economic Development Program (LEDP)

Project ID: P110635 L/C/TF Number(s): TF-96865 ICR Date: 05/31/2013 ICR Type: Core ICR

Lending Instrument: ERL Grantee: REPUBLIC OF INDONESIA

Original Total Commitment:

USD 8.20M Disbursed Amount: USD 7.87M

Revised Amount: USD 7.87M Environmental Category: B Implementing Agencies: State Ministry for the Development of Disadvantaged Areas “Kementrian Negara Pembangunan Daerah T Cofinanciers and Other External Partners: Multi-Donor Trust Fund (MDTF) B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 12/12/2007 Effectiveness: 10/22/2010 Appraisal: 11/09/2009 Restructuring(s): 02/24/2012 Approval: 05/03/2010 Mid-term Review: 09/30/2011 09/16/2011 Closing: 06/30/2012 12/31/2012 C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Satisfactory Risk to Development Outcome: Substantial Bank Performance: Satisfactory Grantee Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory

Overall Bank

Performance: Satisfactory Overall Borrower

Performance: Satisfactory

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C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

No Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

No Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Moderately Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing) Agricultural extension and research 19 19 Animal production 9 6 Crops 16 22 General agriculture, fishing and forestry sector 16 13 Public administration- Agriculture, fishing and forestry 40 40

Theme Code (as % of total Bank financing) Gender 12 12 Rural markets 13 13 Rural policies and institutions 50 50 Rural services and infrastructure 25 25 E. Bank Staff

Positions At ICR At Approval

Vice President: Axel van Trotsenburg James W. Adams Country Director: Stefan G. Koeberle Shubham Chaudhuri Sector Manager: George Soraya Franz R. Drees-Gross Project Team Leader: Khairy Al-Jamal Khairy Al-Jamal ICR Team Leader: Khairy Al-Jamal ICR Primary Author: Naresha Duraiswamy

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F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The PDO is to facilitate post-disaster economic recovery by improving the ability of the Government to work with poor rural households in Nias to identify, develop and sustain livelihood opportunities. Revised Project Development Objectives (as approved by original approving authority) The development objectives and key indicators were not revised. (a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : Training of at least 5 Kabupaten/Kota staff (per district) in program management, and monitoring and evaluation skills to be able to assist communities.

Value quantitative or Qualitative)

N/A 5.00 N/A 5.00

Date achieved 07/29/2010 06/30/2012 12/31/2012 12/31/2012 Comments (incl. % achievement)

Achieved: 28 Field Extension workers & district agricultural staff covering the 4 district and Gunung Sitoli kota were trained on program management, farmers' groups management, monitoring and evaluation.

Indicator 2 : At least 25% of livelihood groups retain technical and group organizational skills, and are accessing information, finance, and markets resulting in improved livelihoods.


N/A 25% N/A 98%


Achieved: farmers from 98 out of 100 farmers groups were trained in various agricultural technical skills related to rubber, cacao and rice, organization skill, access to information and financial and market

Indicator 3 : At least 5 Kabupaten/Kota Dinas Pertanian staff (per district) have acquired specific technical skills in tree crops nursery management and fertilizer handling and distribution.


N/A 5.00 N/A At least 19.00 staff.


Achieved: 140 district staff and 13 Bappeda Sumut (planning) staff were trained in program management associated with technical skills in tree crops (cacao and rubber) and nursery management.

Indicator 4 : At least 3 Kabupaten/Kota seedling nurseries are established, introducing improved rubber and cocoa varieties, with sustainable operating models.

Value 0 3.00 N/A 5.00

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quantitative or Qualitative) Date achieved 07/29/2010 06/30/2012 12/31/2012 12/31/2012 Comments (incl. % achievement)

Achieved: Five nurseries were established and handed over to the local authorities. All nurseries have already planted cocoa and rubber seedlings and nursery operators were appointed.

Indicator 5 : Increased rice yields to 3.3 tons per hectare in targeted groups through introduction of improved seeds of high-yielding varieties and fertilizer use.


2.50 3.30 N/A up to 5.86 with an average of 4.44 tons per hectare.

Date achieved 07/29/2010 06/30/2012 12/31/2012 12/31/2012

Comments (incl. % achievement)

Achieved: 592 farmers belonging to 15 rice groups have planted their rice fields with improved seeds varieties, and 9 groups have harvested twice, with yields varies from 3.0 to 5.87 tons per hectare and the average was 4.44 tons per hectare.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : At least five Kabupaten/Kota staff (per district) trained in a diverse range of group livelihoods activities.

Value (quantitative or Qualitative)

0 5.00 N/A At least 5.00 staff.

Date achieved 07/29/2010 06/30/2012 12/31/2012 12/31/2012


Achieved:20 district staff and 6 Bappeda Sumut staff have been trained in "Agro pastoral Development Training for Food Security and Energy Self Sufficiency". 15 district staff and one Bappeda Sumut staff have been trained in agricultural marketing.

Indicator 2 : Methodologies for group selection, formation and strengthening available and documented.


N/A

All groups to be established and their formation and establishment would be assessed.

N/A

All groups were established. Assessment of groups' formation and establishment was completed.


Achieved: All groups were established. Assessment of groups' formation and establishment was completed, and the report was finalized.

Indicator 3 : 75% satisfaction with group and village selection process. Value (quantitative N/A 75.00 N/A 86.46

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or Qualitative) Date achieved 07/29/2010 06/30/2012 12/31/2012 12/31/2012 Comments (incl. % achievement)

Achieved: Selected was made through consultative process with the local authorities. Community satisfaction survey plan was implementation by M&E Team and found that 86.46% of the groups were satisfied with the process.

Indicator 4 : Improved diversity of livelihoods as indicated in monitoring surveys.


0 Wide range of livelihoods is identified

N/A

Wide range of livelihoods including the raising of pigs and hens; plantation of corn, chili and beans; and production of compost and organic pesticides.

Date achieved 07/29/2010 06/30/2012 12/31/2012 12/31/2012


Achieved: Wide range of livelihoods including the raising of pigs and hens; plantation of corn, chilli and beans; and production of compost and organic pesticides. Survey plan was conducted by M&E Team and results were presented in the final report.

Indicator 5 : At least 20% of livelihood groups are fully functional at mid-term and are being supported by functional nursery and other supply systems.


0 20.00 N/A 95.00


Achieved: All 100 groups have been established and 95 of them received training and applied the knowledge for planting rice, cocoa and rubber.

Indicator 6 : Project management team established, staff trained and using systems and procedures aligned with World Bank procurement and safeguards methodologies.


N/A Fully functioning PMU and PIU. N/A

All project management teams functioning, and all staff training, systems, and procedures delivered, aligned with Bank requirements, and incorporate into operational manual.


Achieved: Management teams were functioning, and all staff training, systems, and procedures delivered, aligned with Bank requirements, and incorporated into operational manual.

Indicator 7 : Baseline survey, benchmark monitoring surveys and evaluation in proposed

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project areas completed on time.


N/A

Surveys, monitoring, and evaluation completed on time

N/A Completed but with delay


Achieved with delay: Surveys, monitoring, and evaluation completed with delay. Baseline survey was conducted in October and November 2011 and the report was completed in March 2012.

Indicator 8 : Annual and final audit, procurement and financial management reports available on time.


N/A Timely completion and compliance. N/A

All due reports have been received in a timely manner.


Achieved: All due reports have been received in a timely manner and in compliance with the Bank guidelines.

Indicator 9 : At least 40% of livelihood groups adopt project recommendations by project conclusion.


0 40% N/A 69%

Date achieved 07/29/2010 06/30/2012 12/31/2012 12/31/2012


Achieved: All groups were enthusiastic and found to adhere to the recommendation of good practice of rice, cocoa and rubber farming and horticulture; as well as pigs and hens raising. But, 69% showed good behavior change.

Indicator 10 : Client days of training provided (number). Value (quantitative or Qualitative)

0 20,600 N/A 44,940 farmer.day


Achieved: Around 12 days training on rubber, cocoa and rice farming; machinery, horticulture; animal husbandry; book keeping; and composting were provided accounting for 44940 Farmer.day.

Indicator 11 : Client days of training provided - Female (number). Value (quantitative or Qualitative)

0 7665 N/A 16,704 woman.day


Achieved: Around 12 days training on rubber, cocoa and rice farming; machinery, horticulture; animal husbandry; book keeping; and composting were provided to Female farmers accounting for 16704 woman.day.

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G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual

Disbursements

(USD millions)

1 09/21/2011 Moderately Satisfactory Moderately Satisfactory 1.89 2 12/25/2011 Moderately Satisfactory Moderately Satisfactory 2.54 3 12/24/2012 Moderately Satisfactory Satisfactory 7.10

H. Restructuring (if any)

Restructuring

Date(s)

Board

Approved

PDO Change

ISR Ratings at

Restructuring

Amount

Disbursed at

Restructuring

in USD

millions

Reason for Restructuring &

Key Changes Made DO IP

02/24/2012 N MS MS 3.89 Extension of the closing date to 12/31/2012.

I. Disbursement Profile

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1. Project Context, Development Objectives and Design 1.1 Context at Appraisal

Nias Disaster Reconstruction: The tsunami of December 2004, followed quickly by the magnitude 8.7 earthquake in March 2005, caused severe damage to the island of Nias1. The island’s damage was estimated at US$392 million, equivalent to 108% of its gross regional domestic product (GRDP). Over 13,000 houses were destroyed, transportation infrastructure was badly damaged, and loss of life was estimated at around a thousand people. The Government of Indonesia (GoI) established the Agency for Reconstruction and Rehabilitation in Aceh and Nias (BRR), and together with the local and provincial governments, donors and NGOs, made significant progress toward rebuilding damaged assets and restoring the local economy. At appraisal, the transport network was in better condition than before the disasters -- a key element to building community support for continuing the island’s economic recovery. Low Capacity in Nias: The BRR’s mandate ended in April 2009, so local and provincial governments became responsible for continuing the reconstruction efforts. However the capacity of the district civil service in Nias was low by Indonesian standards. Unlike Aceh, Nias did not benefit from special autonomy funds and Nias was receiving the lowest per capita central government allocations in the province of North Sumatra. Given its severe capacity constraints, continued support to local governments was required to maintain reconstruction momentum. Economic and social indicators in Nias were among the lowest in North Sumatra and lagged behind the national average. Nias’ poverty rate at 32% was double the national average. Only 15% of households in Nias and 8% of households in South Nias had access to clean water. Grid connection rated stood at 33% in Nias and 25% in South Nias. Contributing factors were the island’s remote location, restricted markets and information access, weak local government capacity, and low levels of public investment. Nias was and remains a rural society dependent on subsistence farming, which accounted for 42% of the GRDP and employed some 87% of the workforce compared to 45% nationally. The major crops by planted area were rubber, coconut, rice and cocoa. Farming was carried out by smallholders largely due to the unavailability of large tracts of land needed for larger plantation style crops like oil palm. Average agricultural yields were low for all crops relative to comparable national benchmarks due to pests, low quality soils, little use of fertilizer, poor genetic stock and post-harvest grading practices. For rubber, farmers deliberately adulterated latex with rocks, soil, vegetation and water to increase market weight, but actually this practice resulted in price discounts of up to 30%. Livestock production was popular especially among women, but capital was a major

1 Nias is an island 160 kilometers to the west of Sumatra with an area of 5,120 square kilometers and a population of 757,000.It is vulnerable to natural disasters as it is located on a tectonic fault-line.

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constraint, as were disease and parasite control and poor feeding strategies. Nevertheless, there was considerable scope to improve productivity and incomes for smallholder farmers. Average farm size (1.5ha) was adequate to achieve reasonable livelihoods assuming yields and quality could be improved. There were some 100,000 farms on Nias, and field observations revealed that large tracks of idle land that could be used to augment rubber and cocoa crops. With the Multi Donor Trust Fund for Aceh and Nias scheduled to close in December 2012, GoI approached the Bank for a project that could further facilitate economic recovery in Nias through a short but strategic project aimed at improving the livelihoods of smallholders. The project would scale up other smaller successful operations and would provide (a) technical assistance and training to both farmers and local government staff in best practice agricultural methods, and (b) good quality agricultural inputs to increase yield and investment capital to help diversify incomes. The project would build the stepping stones to alleviating food shortages and making smallholders more resilient to economic shocks and natural disasters. The tsunami struck in December 2004 while Nias Livelihood and Economic Development Project (Nias LEDP) was approved only in May 2010. The project was requested late. The BRR had initially focused on infrastructure reconstruction and not rural livelihoods. It subsequently sought a project that included in its scope agricultural livelihood and the construction of access roads to ensure market connectivity. BRR later realized that a simpler project solely devoted to rural livelihoods and another dedicated to rural access roads alone was preferred. These factors explained the late processing of LEDP. The Rural Access and Capacity Building (RACAB) project was processed separately and implemented by the International Labor Organization (ILO). However, the two projects maintained their integrity and complementarity where the activities of LEDP took place at locations served by the RACAB project. Rationale for Bank Involvement: The Bank was well suited to intervene given its experience in capacity strengthening and community-driven development especially with the then ongoing Support for Poor and Disadvantaged Areas (SPADA) for Aceh and Nias Project (FY07). The Bank was also active in the reconstruction of Aceh and in the agricultural sector with the ongoing Farmer Empowerment through Agricultural Technology and Information Project (FY07). The proposed project addressed the core theme of the Bank’s Country Partnership Strategy (CPS) to invest in institutions and reduce poverty. The Bank also had very ample donor coordination experience, which it would use to work closely with the ILO, the agency responsible for implementing (RACB) project, as a sister project which linked infrastructure reconstruction with recovery in livelihoods. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as

approved)

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The development objectives of the LEDP were to facilitate post-disaster economic recovery by improving the ability of the Government to work with poor rural households in Nias to identify, develop and sustain livelihood opportunities. The Key Performance Indicators were: (i) At least five Kabupaten/Kota staff per district 2 trained in program management,

monitoring and evaluation skills to be able to assist communities;

(ii) At least 25% of livelihood groups retain group technical and organizational skills, and are accessing information, finance and markets resulting in improved livelihoods;

(iii)At least five Kabupaten/Kota Dinas Pertanian3 staff per district have acquired specific

technical skills in tree crops nursery management and fertilizer handling and distribution;

(iv) At least three Kabupaten/Kota seedling nurseries are established, introducing

improved rubber and cocoa varieties with sustainable operating models; and (v) Increased rice yields to 3.3 tons per hectare in targeted producing groups through the

introduction of improved high yield varieties of seeds and fertilizer use.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators,

and reasons/justification

N/A 1.4 Main Beneficiaries

Project activities took place in the four districts and one municipality of Nias. Altogether, 100 farmer groups (82 mixed-gender, 18 female), each composed of about 40 households received training on improved farming practices, marketing strategies, livestock-raising, etc., under component 1. They also received agricultural inputs such as improved seed, seedlings, fertilizer, tools, equipment which helped increase their yields and productivity and diversify their incomes to build resilience to economic shocks and natural disasters. The project also provided demonstration effects for neighboring farmers not participating directly in farmers groups.

2 Nias had four Kabupaten i.e. Nias (Central), North Nias, South Nias, West Nias and one Kota i.e. Gunung Sitoli.

3 The Dinas Pertanian refers to the Department of Agricultural Services at the local-level.

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The project provided agricultural extension training for the five local government departments responsible for agricultural extension services and planning to help farmers improve their livelihoods. A total of 28 local government extension workers, with at least five staff from each local government, received training on improving food security, agricultural marketing, coordination of supply, correct fertilizer usage, etc., to build their capacity and to assist farmers after closing. Finally the project provided training to staff of the Ministry of Development of Disadvantaged Areas (KDPT) and other central and provincial line agencies on subjects such as group formation, social mapping, program management and livelihoods and food security. 1.5 Original Components (as approved) The LEDP had three components, focusing on empowerment, implementation, and program management and monitoring as described in greater detail below. Component 1: Livelihood Groups and Institutional Empowerment (US$ 1.95 million, 24% of the total). This component was to empower beneficiaries (livelihood groups and district government) to improve their capacity to acquire the social, management, financial and technical skills for livelihood activities, mostly involving technical training and group facilitation. The component financed: Training for mixed-gender farmer groups in social, technical, marketing, and

financial aspects of livelihood development for agricultural development. They would participate in farming systems development involving rubber, cocoa rehabilitation and livestock breeding activities for income improvement and manure supply;

Training for women’s farmer groups in social, technical, marketing and financial aspects of livelihood development. Women’s groups were specifically targeted because they offered an opportunity to develop a wider range of livelihood opportunities in addition to primary production. It was hoped a wider diversity of opportunities would enhance resilience of incomes against economic and disaster related stress; and

Training and equipment for local government agriculture services staff to facilitate further involvement in project activities beyond the project’s life. This included training on public expenditure planning, selection of target areas, balancing activities to improve gender equity, and coordination of supply of foundation and commercial rice seed and appropriate fertilizers. It also covered livestock vaccination. Training also covered pragmatic measures to educate and integrate disaster resilience interventions. Local governments also received training on coordinating project activities with other organizations operating in Nias such as the United Nations.

Component 2: Agriculture and Other Livelihoods Improvement (US$ 4.6 million, 56% of the total). This component supported implementation of program activities set up

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through component 1 utilizing small group community support grants and technical support services. This component was composed of three subcomponents: Subcomponent 2.1: Implementation of Mixed-Gender and Women’s Farmer Group

Activities. This would finance the implementation of activities to address the issues of low productivity and poor post-harvest processing and market prices for rubber, cocoa, rice and livestock. It also provided support for marketing agricultural products. Financing would be provided through the use of community support grants to be disbursed to farmer groups in two tranches. The aim was to promote ownership of the activities and use of farming systems to facilitate sustainable agriculture practice through mixed crop/livestock systems. Subcomponent 2.2: Support to Local Government Agricultural Services. This was designed to strengthen agricultural support services to develop improved rice food security, develop skills in nursery management for tree crops, improve agricultural diversification, and strengthen support service such as veterinary medicine supply, marketing linkages, etc. Major activities included (i) provision of foundation seed of high yield varieties and fertilizer inputs, livestock; (ii) support to develop livestock and crop activities where there was no private supplier to improve readiness of supply; and (iii) establishment of tree crops nurseries managed by the local governments, with the aim to introduce better yielding varieties of rubber and cocoa trees more appropriate for Nias’ conditions. Subcomponent 2.3 included a budget of US$150,000 for special studies, trainings, activities, to be chosen in ad-hoc basis for program needs arising during implementation. Component 3: Management, Monitoring and Evaluation (US$ 1.65 million, 20% of the total). The objective of this component was to develop management and technical capacity for implementation of the livelihoods programs in Nias within the local governments and KPDT. A consultant team would provide the necessary project and financial procurement, and M&E support. Specifically this component financed: Program management to support the Program Management Unit (PMU), and the

Program Steering Committees (PSCs) for monitoring and evaluation, financial management, safeguards, quality assurance, procurement, adherence to the governance and accountability framework and program reporting; and

Livelihoods support, to provide the necessary technical consultants at the district and village levels, with dual roles in group strengthening under components 1 and 2. A monitoring and evaluation team (M&E) would be supported for the elaboration of the baseline survey, monitoring surveys and impact evaluation prior to closure.

Project operational expenses were also covered under this component. 1.6 Revised Components

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N/A 1.7 Other significant changes

The project underwent a Level II Country Director-approved restructuring on February 24, 2012 to extend the closing date six months from June 30, 2012 to December 31, 2012. The extension was necessary to complete implementation of training, input delivery and farmer group activities to fully achieve the PDO.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

Background Analysis: Background analysis accurately identified the structural constraints to improving rural livelihoods in Nias as low local government capacity, poor farmer understanding of crop management, lack of quality inputs and poor market access. The analysis prioritized the rice, cocoa and rubber sectors for support given their importance to local household incomes. It highlighted the need to improve agricultural practices, increase yields, support intercropping, diversify activities into raising livestock, horticulture and market gardening, and better management of household incomes. The analysis was informed by pilot experiences conducted under an Oxfam livelihoods project that showed yield increases of 0.4t/ha were possible and that farmers were keen to adopt new knowledge to improve their crops. A UNDP pilot demonstrated that improved seed and fertilizer inputs could have a major impact on rice productivity. LEDP scaled up these experiences with an innovative post-disaster response program, combining multi-crop training and input delivery services targeted at both farmer groups and local government officials. Design: Project design was purposely kept simple due to the island’s remoteness and its low capacity. The project’s three components were tightly tailored to provide technical training, investments in agricultural activities to implement that training, and project management support. The project as initially conceived supported investments in roads to improve market access, but this component was wisely separated from the project to reduce complexity and was instead undertaken in parallel by the ILO’s RACB Project. In addition to learning from the Oxfam and UNDP pilots, project design also benefited from lessons learned from implementation of the Bank’s portfolio of CDD projects including the importance of (a) robust field-based supervision arrangements to overcome social constraints; (b) selection and training of facilitators with appropriate social, technical and financial skills before launching project investments; (c) retention of good facilitators through financial incentives; and (d) offering a simpler mix of activities that require less supervision, in light of the geographic isolation of the project area. Lessons learned from two agricultural sector projects were also incorporated including: (a) using group organizational methodologies to avoid elite capture, ensure women’s participation,

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and promote equity; and (b) allowing direct transfers to farmer group bank accounts and requiring female and male signatures and management by elected committee. Quality at Entry Rating: Moderately Satisfactory. Alignment with CPS: The project addressed the core themes of the Bank’s CPS to invest in institutions to improve effectiveness and accountability and was consistent with the CPS imperative for poverty reduction and sustainable resource management, particularly in rural areas. It was also aligned with GoI’s National Poverty Reduction Program The PDO of facilitating post disaster recovery and improving government capacity was well defined as the project was able to achieve this objective through building the capacity of 100 farmers groups. Though this represents 2.5% of the population of Nias, the knowledge gained by the Nias people and safeguarded by KPDT and local authorities will enable the project scaling up within Nias in particular and Indonesia in general. Example of know-how replication were witnessed in some villages where no farmer groups were selected under LEDP. In light of the project’s tight timeframe imposed by the mandatory closure of the Multi Donor Trust Fund for Aceh and Nias on December 31, 2012, and in view of the local governments’ low capacity, project design outsourced implementation to international consultants (individual consultants in the first 7 months, followed by a firm from February 2011 to closing) to ensure swift roll-out. LEDP design employed community support grants to implement livelihood activities and facilitate sustainable agricultural practices. However, the LEDP grant system departed from the community grant model used in other Bank CDD operations. It did not focus on group formation, community governance and administration and did not foster competition for funds among competing groups. Rather, LEDP community grants were rightly designed to increase knowledge, promote ownership and disseminate best practice using the “farmer-field school approach” already successfully implemented in Nias under the Oxfam livelihoods program. This approach was more appropriate for Nias given the social dynamics, limited capacity, and abbreviated implementation period. LEDP was designed to leverage social capital already available in Nias. It hired local community facilitators and relied on existing farmer groups. The farmer groups were the appropriate mechanism to impart improved agricultural technique and distribute tools, high yield seeds and fertilizer efficiently and effectively to individual cultivators in a village. Assessment of risks: The PAD correctly rated the overall risk level after mitigation as “substantial” and identified five risks: (i) the inadequate spread of benefits from group knowledge due to social traditions and conflict among villagers; (ii) delays in procurement due to limited experience of the Bank procurement guidelines and procedure; (iii) the unavailability of technical support at the village level; (iv) the misuse or sale of agricultural inputs by farmers; and (v) a high fiduciary risk environment. The mitigation measures i.e., procurement safeguards, recruitment of community facilitators,

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audits, phased disbursement of the Community Support Grants, were appropriately designed and largely effective. The PAD, however, failed to flag risks pertaining to lack of fiscal sustainability, the perception that KPDT was crowding out other line agencies (see Borrower performance Section 5.2 for details), and the risk of further natural disasters. Nevertheless, LEDP was a very short-term pilot emergency recovery project and addressing local government finance issues was beyond its scope. 2.2 Implementation

Project implementation was completed with only a six month extension and within budget. The following were factors affecting the project’s implementation. Performance of the Project Management Consultants (PMC): Bappenas was GoI’s executing agency responsible for project planning and evaluation; KPDT was responsible for implementation and budget execution including making annual budget applications to MoF and managing the annual budget. Realizing its own limited capacity, KPDT outsourced day-to-day activities to the PMC, including safeguards implementation and monitoring and evaluation as well as assisting KPDT in procurement and financial management. PMC’s international, national and community experts were based in Nias which facilitated hands-on interface with farmer groups, effectively disseminated agricultural best practices, and completed project implementation in slightly over two years. The PMC successfully trained farmer groups, helped participating households diversify their livelihoods, distributed farm inputs and trained district planning and agriculture officers and met key performance indicator targets for such training. Unfortunately collected baseline data was compiled and completed only in March 2012 – too late to be utilized for decision-making at the Mid-Term Review held in September 2011. Abbreviated project implementation period: The project’s two-year life span , was too tight despite the simple design. This had been determined by the closing date of the MDF in December 2012. While the training provided under component 1 commenced in early 2011, the learning-by-doing modules under component 2 had to be postponed due to delays in delivering rice seeds (completed only in October 2011), cocoa seedlings (January 2012), fertilizer and agricultural tools (distributed in April 2012) and rubber seedlings (delivery started in April 2012 and completed in December 2012.) These delays further shortened the already brief period available for farmers to learn by doing and resulted in insufficient time to implement and capture the full benefits of the improved seed, fertilizers, tools, and best practice advice. This, in turn, further resulted in inadequate time for monitoring and evaluation, and feeding learning back into subsequent cropping seasons. The needs on the ground justify a successor intervention to capture results, disseminate lessons, and allow for a longer M&E period. A larger infusion of funds could also expand the number of participating farmer groups. Budget delays: Internal processes to allocate Government budget caused implementation bottlenecks. There were delays in authorizing the KPDT Ministry budget (DIPA), and

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further delays in DIPA revisions. Delayed budget allocation, in turn, delayed project activities, including the release of the second tranche of the Community Support Grant to farmer groups. The Bank helped the PMU coordinate with MOF to accelerate DIPA releases and authorize revisions to ensure project activities were completed by closing but the schedule was very tight. Slow implementation of community support grants: The community support grants were to be disbursed directly to farmer groups who were known to have low financial management (FM) capacity. As a condition of disbursement of the block grants, the client was to submit a draft sub-project operational manual, giving farmers clear guidance on block grant eligibility of expenditures, disbursement mechanisms, cash management, filing, internal controls, bookkeeping and reporting procedures. However, the final clearance on the operational manuals was given only in mid-2011 and distribution of the manuals and farmer training did not occur until September 2011. These delays ultimately slowed the pace of implementation of the livelihood activities financed by the community grants. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

The M&E for design, implementation and utilization are each rated moderately satisfactory given late start-up. No provision was made for M&E activities after project closure. Design: The project design had verifiable outcome indicators linked to the development objectives and attributable to project interventions. The LEDP design had the PMC supporting the M&E function due to capacity shortfalls in KPDT. Implementation: The collection of baseline data for M&E purposes was delayed. The Bank team had repeatedly reminded the PMU to initiate data collection. The M&E exercise was begun only in March 2012. The PMC and the PMU subsequently produced regular M&E reports using primary field data. The M&E team consisted of 3 staff and one manager. It produced a Baseline Report in March 2012, a Cocoa Seedlings Distribution Report in April 2012, a Group Formation Report in August 2012, a Report on Gender Checklist in September 2012 and a Report on Beneficiary Satisfaction in October 2012. The reports were integrated into the Semi-Annual Progress Reports. The reports provided monitoring and evaluation data that included the status of distribution of the production inputs by district, the implementation status of the first cycle of the community support grant covering the amount of money transferred, the number of participants, types of learning activities and demonstration plot activities. Utilization: KPDT hired a consultant to conduct a M&E and impact assessment exercise between July 2012 and October 2012. Two sub-districts were identified for survey purposes in each of the five kabupaten/kota. A sample of four villages was identified in

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each of the sub-districts. A total of 35 villages were picked for the survey, 28 of which focused on rubber, 4 on cocoa and 3 on rice. 231 male farmers and 198 female farmers were interviewed. The study reported on the impact of LEDP on household income and expenditure. It reviewed levels of satisfaction with the project. It derived data through questionnaires. Trained enumerators interviewed beneficiaries and collected gender-disaggregated primary data through surveys and focus group discussions. The final report tabulated the results of the impact assessment survey in Bahasa Indonesia. The PMC compiled and submitted the data gathered to KPDT. KPDT in turn developed a project website that utilized the M&E data in its project progress reports, training modules and leaflets. 2.4 Safeguard and Fiduciary Compliance

Safeguards Compliance

Rating: Satisfactory. LEDP triggered three safeguard policies: Environmental Assessment, Involuntary Resettlement and Indigenous Peoples. The Environment and Social Safeguards Management Framework, the Resettlement Policy Framework and the Indigenous People’s Planning Framework were accordingly produced and disclosed on April 22, 2010. The Grant Agreement mandated the incorporation of these frameworks as did the project operational manual. All three policies were fully complied with satisfactorily.

Environment: LEDP was rated as a Category B project, with no major environmental risks. It did not introduce species that were inconsistent with local flora and fauna. The project did not provide chemical pesticides, nor did it include environmental conservation areas. All project activities took place in a limited area where the environmental impact was not significant. Generic environment issues pertaining to the rearing of livestock and poultry, the use of fertilizer and organic pesticides were managed in a suitable manner. Further, LEDP supported several activities that had a positive impact on the environment such as the manufacture of organic farm products, natural fertilizer, bio-pesticides and compost by farmer groups. Safeguard instruments developed during project preparation included the Environment and Social Safeguards Management Framework referred to above, the recruitment of an Environmental Safeguards Specialist and the Environmental and Social Safeguards Technical Guidelines. These instruments reduced or eliminated any potential negative impact on project activities. The appointment of an environmental specialist who developed the Technical Guidelines and provided safeguard advice had its advantages in terms of early identification of potential environment impact and its mitigation. The Technical Implementation Guidelines initially lacked directions on how to handle fertilizer, manage waste and handle manure. The Bank team helped incorporate standard operating procedures and a list of negative items into the Technical Guidelines. These included the correct uses of fertilizer for cocoa, rice and rubber, and measures to prevent

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the pollution of drinking water sources from livestock manure. The 2011 Technical Guidelines were revised in October 2012 and remained satisfactory to the Bank. LEDP trained farmer groups in implementing the environmental and social safeguards technical guidelines. The guidelines can now be used elsewhere in Nias given that the awareness of managing environment and social safeguards issues is in place at the local government and community levels. Involuntary Resettlement and Land Acquisition: The only land acquisition undertake was for the five nurseries and no major social issues related to land acquisition arose. The project reasonably handled a case were farmers were using public land allocated for one nursery for seasonal cultivation. While all of them had major revenue sources from other farm activities, the project permitted them to harvest their produce on this public land prior to nursery construction. Furthermore these farmers were employed in the construction of the new nursery. Showing a great deal of community support, private land owners collectively leased and donated land for the other four nurseries, about 0.1 hectares each. LEDP increased the awareness and practice of the five local governments and land owners to document the land title status of the nurseries. All nurseries now possess documented land title status. This provides a basis for sustainable operations and future investment under the local budget. Indigenous People: Satisfactory. The majority of the participated farmers groups were classified as indigenous peoples. No case of discrimination against the farmers was reported thanks to the full engagement of local authorities and the farmers groups.

Fiduciary Compliance

Rating: Moderately Satisfactory. Financial Management: This is rated Moderately Satisfactory. In general, FM complied with Bank procedures although there were some difficulties as already discussed in Section 2.2 above. The PMU submitted the Interim Financial Reports (IFRs) on time. It submitted the Audit Report on time, and it provided an unqualified (clean) opinion on LEDP’s financial statement. The PMU maintained adequate supporting documents for project expenditure. It followed up on audit findings and Bank mission recommendations. FM capacity within the PMU, supplemented with consultant support, was largely sufficient. There were no significant disbursement issues. Although the latest audit report had an unqualified opinion on LEDP’s financial statement, it noted some weaknesses. The report highlighted the uncollected penalty on account of delays in the delivery of farm equipment and seedlings to beneficiaries. It

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flagged insufficient supporting documentation on consultant expenditure. The PMU followed up on the audit findings and reported to the Bank all follow up actions including the penalty fine and consultant payment deductions. The PMU audited and verified the distribution of rice seed, cocoa/rubber seedlings, fertilizer and farm equipment. It audited and verified the use of the Community Support Grant released to the group accounts of farmers. Procurement: This is rated Moderately Satisfactory. The procurement plan was fully implemented and all services were acquired in accordance with Bank guidelines. However, the procurement of rubber and cocoa seedlings, agricultural tools and fertilizer was delayed, which impacted project implementation given the tight timeline. The main delay was encountered in the procurement of rubber seedlings as some bidders provided incorrect and/or incomplete information on previous contracts. This required seeking clarification from the bidders’ previous clients during tender evaluation. All contracts were eventually awarded. The bidding process for LEDP stretched from February 2011 to December 2011, a time-line that was longer than expected. During contract implementation, the Bank debarred a joint venture partner on account of irregularity, but this did not impact implementation. The Bank had requested the PMU to submit documentation for a sample of contracts in order to undertake an ex-post review in 2011. The PMU did not provide the documentation and the Bank did not complete the procurement post-review. However, the Bank did undertake a physical inspection of deliverables under selected contracts otherwise subject to a post review. There were no adverse findings during that exercise. The Bank received a complaint with regards to a prior review contract related to the procurement of rubber seedling root stock. This included allegations of unethical practice by one KPDT staff. KPDT responded to the complaint and the General Inspector concluded that the allegations were false. 2.5 Post-completion Operation/Next Phase

The Bank requested the KDPT to develop and exit strategy in the Mid-Term Review mission of September 2011. KPDT is currently assessing its future plans for Nias that may include elements of LEDP. The local authorities will be responsible for the operation and maintenance of the nurseries; this provides a basis for sustainable operations and future investment under the local budget.

3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation

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Relevance of the project’s objectives and design was satisfactory from conception through closing in 2012. Farm incomes, which were already below national average, fell further in the aftermath of the December 2004 tsunami and March 2005 earthquake and had not recovered at appraisal in 2009 due to the island’s extreme isolation and low capacity. LEDP, introduced five years afterwards, responded to continuing rural poverty and unmet livelihood needs by empowering beneficiaries – livelihood groups and district civil service staff – to improve their capacity to acquire the skills necessary to improve farmer livelihoods and by supporting implementation of livelihood building activities learned under the project sponsored training. There was strong demand for farmer training throughout the project period, signaling the fact that the training offered was well conceived. The objectives of LEDP were towel aligned with the development priorities of Indonesia. The livelihood and economic development of the disadvantaged outer islands retains a political salience to national integration. This was also a pillar of the Bank’s engagement (Core Engagement 2) outlined in the 2008-2012 Country Partnership Strategy (CPS). The Bank strategy emphasized the need to strengthen the capacity of Indonesian institutions to deliver improved infrastructure outcomes. The LEDP objectives were also relevant to the Bank’s emphasis on strengthening disaster risk management in Indonesia. The intent was to help Indonesia reduce its vulnerability to natural disasters as outlined in the CPS (Core Engagement 5). Indonesia is situated on the Pacific Ring of Fire, extends across three tectonic plates and is prone to natural disasters. Any attempt at sustainable poverty alleviation needs to include disaster preparedness. The CPS stressed that the Bank would deepen its relationship with the local governments of Aceh and Nias in support of Government efforts to build natural disaster resiliency. 3.2 Achievement of Project Development Objectives

Rating: Satisfactory. The project’s main PDO of facilitating post disaster economic recovery was very ambitious given the project’s small financing envelope and its two-year implementation period, which in turn, limited its geographical scope of engagement to only 2.5% of the population of Nias. However, the key indicators point to the heart of LEDP’s objective of building local government capacity to assist Nias farmers to develop and sustain livelihood opportunities. Indeed, LEDP’s design inherently presented a strategy for Nias to move from post-disaster response to more sustained economic recovery by assisting participating farmers to improve crop yields, market their produce more effectively, and diversity their incomes. These steps in turn would help alleviate chronic food insecurity and build resilience to future shocks. The project was successful in building local

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government capacity, raising yields for rice, cocoa and rubber, and diversifying incomes as discussed below. Strengthened Government Capacity: LEDP improved the ability of local and provincial KPDT staff to work with poor rural households by teaching staff the skills necessary to transfer knowledge to farmers on topics such as group formation, social mapping, rice plantation training, cocoa plantation training, rubber plantation training, post-harvest handling and marketing, livelihood and food security, nursery management and fertilizer handling and application. They also received pragmatic training on how to integrate disaster resilience measures. The associated key indicators were greatly exceeded for crop management and marketing and met for tree crops and fertilizer handling and distribution; however there was a small shortfall in training on program management and M&E as shown below:

Table 1: KPDT staff training outcomes Government PAD Target for

each training

(at right)

Crop

management

& marketing

Tree crops nursery

management, fertilizer

handling and distribution

Program

management

and M&E

North Nias 5 25 6 3 Nias 5 27 6 3 South Nias 5 24 6 2 West Nias 5 15 4 5 Gunung Sitoli 5 21 6 4 Provincial level staff

0 10 0 0

Total 25 122 28 17 Building Farmer Groups’ Capacity: In order to improve farmers’ capacity to acquire skills and know-how from KPDT staff, in the early phases of the project, LEDP provided agricultural extension experts to train farmers on improved agricultural practices on their respective crops. Rice farmers were trained in transplanting techniques, use of fertilizer, care of paddy plants and post-harvest processing. Cocoa farmers were trained in the care of cocoa pods, pest management, grafting techniques, appropriate pruning and use of fertilizer. Rubber farmers were trained in appropriate tapping techniques, handling of latex, use of fertilizer and care of seedlings. Farmers were also trained in group organization, administration, bookkeeping, basic household financial management, household economics and the operation of farm machinery. Separate training was provided on tree crop smallholding improvement, poultry, horticulture, organic composting and simple irrigation techniques. In all, the project provided about 12 days of training in these areas to some 3745 farmers, amounting to 44,940 farmer days, more than double the target of 20,600. Among female farmers, the PAD target of 7665 was also more than doubled at 16,704 by closing. The increase in participating farmers was the result of farmers from outside the farmers groups wishing to participate in LEDP training, thus demonstrating the high demand for and relevance of the training. Fully 100% of farmers expressed

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satisfaction with group and village selection processes, compared to the target of 75% in the PAD, and this bodes well the sustained use of the methods introduced under LEDP. The related key performance indicator was that at least 40% of livelihood groups would adopt the technical knowledge, finance training and market access information provided under LEDP to improve their livelihoods. In the end, 98 out of 100 livelihood groups employed their knowledge. However, it must be noted that this data was consolidated from community facilitator reports and incorporated in the final M&E report, and that the methodology used to derive this statistic is unclear. Increasing Rice, Cocoa and Rubber Production: LEDP provided 13,250 kilograms of higher yield rice seed to the members of 15 farmer groups. It provided 241,000 cocoa seedlings to 222 cocoa farmers organized into six farmer groups. It provided 705,139 rubber seedlings to 2,940 rubber farmers organized into 79 farmer groups. The project provided 299,242 kilograms of Urea, 232,175 kilograms of SP-36 fertilizer, 158,867 kilograms of KC1 fertilizer and 87,500 kilograms of ZA fertilizer to all 100 farmer groups to expose cultivators to its benefits. LEDP in addition provided agricultural tools and implements to improve agricultural technology and returns. Farming equipment, such as chain saws, tapping bowls, tapping knives, grass cutters, farming scissors, graft knives, hand tractors and power threshers, was provided to all 100 farmer groups according to their needs. Rice: Only two cropping season could be undertaken in the life of the project. It is worth noting that, during the first season, rice yields increased from an average of 2.5 tons per hectare to 3.84 tons per hectare in the land cultivated by the 15 rice farmer groups. Then, for the second season, the yield reached an average of 5.34 tons per hectare. This compares very favorably to the PAD target of increasing rice yields to 3.3 tons per hectare. This was achieved by using higher yield genetic strains, improving methods of transplanting rice, using fertilizers, and by mechanizing threshing and winnowing. Thus farmers achieved self-sufficiency and, in some cases, were able to generate some revenues by selling their surpluses. Rice yields increased among the five local governments as shown in the table below:

Table 2: Rice Production Increase by Local Government

Local Government

Baseline (from PAD) t/ha

1st season t/ha

% increase over

baseline

2nd season t/ha

% increase over

baseline North Nias 2.5 4.71 88.4% N/A

Nias 2.5 N/A 4.8 92% South Nias 2.5 3.08 23.2% N/A West Nias N/A N/A Gunung

Sitoli 2.5 3.74 49.6% 5.87 134%

Combined Average

2.5 3.84 53.6% 5.34 113.4%

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Example case: The experience of one rice farmer group (15 farmers, of which 13 women and five men) in Nias (Central) demonstrates LEDP’s impact. Previous yields were already a respectable 3.5 tons per hectare in contrast to the 2.5 tons per hectare average in Nias. Their yields increased further to 5.78 tons per hectare thanks to improved inputs and training. Furthermore, the use of the hand tractor and thresher supplied by the project saved time, enabling farmers to diversify into pig-rearing, sweet potato cultivation and river sand mining. The Community Support Grant was used to purchase a water pump to irrigate land for cultivation in the dry season. Diversifying into pig-rearing and sweet potato cultivation increased food security and engaging in river sand-mining further increased incomes. Cocoa: The LEDP interventions led to an increase in cocoa yields among the six participating cocoa farmer groups. The use of fertilizer, the grafting of higher yield strains, regular pruning to ensure vigorous regrowth and more sun light, the protection of the cocoa pod with plastic covering, improved sanitation and removal of fallen leaves to prevent pests led to increased output (productivity increased from 10 to 13 grams per tree per week). However, the full yield can only be assessed in two to four years when the new cocoa seedlings reach maturity. A further increase in output is anticipated at that point provided the appropriate farm techniques are retained. Example case: One cocoa farmer group interviewed in South Nias indicated they had harvested five kilograms of wet bean per week before LEDP whereas now they harvest approximately 50 kilograms of wet bean. While this was not a rigorous measurement validated by outside evaluators, it reflected the increase in output before the new higher yield seedlings had even begun to bear fruit. The farmers had also diversified their agricultural base to include chilies, corn and eggplant, the latter two being new ventures, while LEDP introduced higher yield chilies. The cocoa farmers had also expanded ongoing livestock-rearing and were exploring the possibility of venturing into soya bean cultivation. Rubber: A similar increase was witnessed in rubber productivity among the 79 participating rubber farmer groups (increased from 3.5 to 6.25 kg per 100 tree per week). There had been no replanting since the 1950s until the post-disaster recovery effort. The rubber was viewed locally as “jungle rubber” with low yields compared to neighboring Sumatra. LEDP introduced improved tapping techniques, the grafting of new strains and use of fertilizer, and eventually supplied 705,139 seedlings to sustain and improve production after project closing. Example case: A rubber farmer group in North Nias interviewed revealed that their weekly latex collection had increased from 15 kilograms to 25 kilograms per 400 rubber trees on account of the new tapping techniques. An increase in rubber output is anticipated in five to seven years once the higher yield seedlings mature. Initial farmer reports envisioned robust yields given the swift growth of seedlings. FAO had provided them with seeds and fertilizer in 2006 but without hands-on training. While the yield from the old rubber trees was one kilogram of latex from 25 trees, yields had risen to one kilogram of latex from 10 to 15 of the newer FAO stock. Similar increases in yields are

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anticipated once the LEDP provided seedlings mature. The new tapping techniques moreover should prolong the lives of their rubber trees. LEDP encouraged rubber farmers to intercrop in order to diversify their income base by training them to manufacture compost and organic pesticides, and to cultivate chilies, corn and bananas, until then not undertaken by this particular farmer group. Nurseries: The PAD included the establishment of 3 nurseries. This target was exceeded and 5 nurseries were established (one in each of the 4 districts and the fifth in Gunung Sitoli) to facilitate the local production of new high-yield seeds and good quality seedlings. The intent was to make available such seeds and seedlings to local farmers. The nurseries run by the district administration would ensure a continued post-project partnership between the district administration and individual farmers. The nurseries doubled as demonstration plots and seed centers. The nurseries would be financially self-sustaining as the income from the sale of seeds would likely cover management costs Promoting further livelihood diversification: Several examples of how LEDP encouraged diversification are incorporated in the paragraphs above. These activities were carried out with support provided by the project’s Community Support Grant which was an innovative fund to help farmers pilot other revenue-generating farm activities and broaden their livelihood base. Implementation of the grants in two tranches helped farmers expand their outlook and invest in other productive activities like livestock raising and vegetables production for market purposes. In addition, use of cocoa side products such as the husk led to a new focus on the commercial manufacture of organic fertilizer, biological pesticides and compost. This was an enduring legacy of LEDP that linked the cash grant to knowledge transfer, provided capital for new economic activity and was yet demand-driven. The farmer groups prioritized what activity they wanted to engage in and received specific training accordingly. In this way, the project employed a farmer field-school approach with “just-in-time” training. Annex 2 provides more information about the various uses of the community support grants and their role in sustaining livelihood diversification. Other Achievements: In facilitating post disaster economic recovery, the project had two other important contributions: (a) increasing food security; and (b) mitigating against future disasters and increasing resilience as discussed below. Disaster mitigation and resilience: The project contributed to enhancing food security, increasing natural disaster mitigation and controlling pests, which together have had a very beneficial impact on the project areas. To protect against landslides – an important measure on a hilly island prone to earthquakes -- the project introduced terracing and steps to ensure proper drainage. It also introduced the cultivation of bananas on the slopes and hillsides to stabilize them. To mitigate potential flooding in irrigated rice fields, the project demonstrated the importance of cleaning and maintaining irrigation channels by removing soil and debris to facilitate the regular outflow of water. The growing of vegetables on high ground ensured food security in the event of a tsunami. The planting of cassava, yams and sweet potatoes guaranteed food security in the context

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of a future earthquake. Food diversification was a key disaster-preparedness response. Timely removal of fallen leaves and pruning to ensure that sun light reaches the ground were appropriate pest control mechanisms. LEDP published leaflets in an easy to understand format to help farmers understand and remember these important mitigation steps. 3.3 Efficiency

Rating: Satisfactory. Investment in training on good farm practices and the supply of high quality rice seeds, cocoa and rubber seedlings, harvesting and composting tools, and farm machinery has increased or is anticipated to increase farm productivity. Based on a preliminary analysis, the financial rate of return of the project is about 43.7%. This is mainly attributed to the high improvement in rubber and rice productivity. While this return is based on the direct returns and improvement, targeting 100 farmer groups, it is expected that the benefit would be much higher as a result of the anticipated scaling up in Nias and other parts of Indonesia. Please see Annex 3 for a fuller analysis. 3.4 Justification of Overall Outcome Rating

Rating: Satisfactory The overall outcome rating is based on the combined assessment of the (i) strong relevance of the PDO and design to the specific post-disaster ground context in rural Nias; (ii) satisfactory achievement of the PDO; and (iii) the satisfactory financial rate of return. The PDO of improving rural livelihood was appropriate given the still unmet post-disaster needs in Nias, even if the goal of facilitating post-disaster recovery in Nias and strengthening Government capacity was overly ambitious in context of the limited envelop. The achievement of the PDO was significant in terms of the training delivered, the increased rice yields, the improved outputs in cocoa and rubber, despite the fact that the new crop is yet to mature, and the investment in agricultural diversification and livestock rearing. Further, LEDP resulted in a 43.7% Financial Rate of Return. 3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development Gender: LEDP design envisioned support for 50 mixed-gender farmer groups and 50 female-only farmer groups, with the objective of empowering women in an otherwise fractured patriarchal society. However, the project ended up supporting 82 mixed gender groups and just 18 women farmer groups. It largely relied on farmer groups established under earlier NGO-financed pilots--there were only 20 women’s groups in existence.

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LEDP did not create new women’s groups, a shortcoming. However, women's participation in the mixed gender groups was significant, not just as members but as wives who represented their farmer husbands in training. The rice farmer groups in particular had active women's participation. Many women improved their economic profile as cultivators of rice. With mechanization, the time spent on winnowing and threshing, activities traditionally delegated to women, was reduced. This freed them to expand their economic base to include livestock rearing, vegetable gardening and the manufacture of local fertilizer. Women led several of the farmer groups, albeit at times in their capacity as the wives of locally influential men. The project created a platform for improved women’s participation in decision-making and economic activity. Women were in fact more active than men in attending training and in implementing the knowledge they had obtained such as initiating seasonal/cash crops and small food-based manufacture that generated income for the family4. The M&E data collected was gender disaggregated. Inclusion: LEDP had spin-off effects on farmers who were not members of the farmer groups. While only 3,744 farmers were formally enrolled in LEDP, 7,675 benefited from training in the rubber and cocoa sectors alone, and received seedlings. This said, there were reports of resentment from agricultural households not included in LEDP. (One village had 100 farmer households but only 19 were members of the farmer group.) This led to resentment by others, some of whom were subsequently included to informally join the training modules and receive seeds. Many farmer groups requested a Government financed continuation of LEDP to reach more cultivators. Social Development: LEDP enhanced social cohesion within the farmer groups. Farmers shared new agricultural knowledge and equipment. Some farmers not part of the project benefitted from the information on new farming practices and technology that they had gained from neighboring farmers who participated in LEDP Farmer households faced a temporary loss of income as they cleared the land awaiting the arrival of seedlings and the plants maturing. Farmers were cognizant that they would forgo income while awaiting the eventual rubber and cocoa harvest. They anticipated that the returns of the new plants would be higher. LEDP provided community support block-grants to farmer groups to initiate other agriculture-related activities such as the manufacture of compost, organic fertilizer, edible products, etc., and cultivation of cash crops to generate revenue.

(b) Institutional Change/Strengthening

As discussed in Section 3.2, LEDP provided on-the-job training to KPDT staff, provincial and local governments and members of the farmer groups. The project trained

4 PMC Final Report, November, 2012

20

district agriculture and planning officials. KPDT built up its procurement and planning capacity and its interface with other line agencies. KPDT gained valuable experience running the project be it the preparation of bid documents, undertaking a monitoring exercise or implementing the audit observations. These experiences would serve it in good stead if it replicates similar programs elsewhere. It published the training modules in an easy to understand format in the local language with illustrations in order to target a semi-literate segment of society. These training manuals can now be used elsewhere in Indonesia once translated. Fourty of the 42 community facilitators recruited and trained were Nias residents and will therefore be able to provide institutional memory. It would be ideal if they were absorbed into the district administration. The LEDP institutional memory likewise remains embedded in the 100 farmer groups and 42 community facilitators. The implementation mechanism was intended to obtain the engagement of various stakeholders and the buy-in of provincial and local authorities, even if not always successful. The project, for instance, had less success in strengthening district institutions. Despite increases in agricultural outputs, the diversification of livelihoods and the training of KPDT and district officials, the local government machinery continued to face human resource and financial constraints that were beyond the scope of an US$ 8.2 million project. Several district staff lacked fuel for their motorcycles to follow up with farmer groups. Such constraints will likely impede the ability of the participating local governments to sustain the agricultural extension services initiated under LEDP. Further, KPDT assumed the lead role in project implementation, crowding out the district administration and line agencies such as the Ministry of Agriculture and the Ministry of Public Works. While KPDT and its PMC delivered project outputs, the buy-in of the districts was not uniform. The District Regent or Bupati at times criticized LEDP on this score. While LEDP may have helped address rural income poverty on a pilot basis, its sustainability is at risk given the departure of the PMC and the lack of financial means by the districts to continue its activities unless KPDT were to remain engaged. On a positive note, LEDP established nurseries to facilitate the local production of new high-yield seeds. The intent was to make available such seeds and seedlings to local farmers. The nurseries now run by the district administration would ensure a continued post-project partnership between the district administration and individual farmers. The nurseries doubled as demonstration plots and seed centers. The nurseries would be financially self-sustaining as the income from the sale of seeds would likely cover management costs. If managed as envisaged in the project design and the training provided under LEDP is leveraged appropriately, the nurseries would demonstrate a sustainable operating model in the years to come.

(c) Other Unintended Outcomes and Impacts (positive or negative)

The new cocoa seedlings have not begun to yield outputs. However, the improved productivity of the existent stock and the grafted crops has encouraged some farmers to

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strategize how to secure start-up capital for the purchase of cocoa beans from neighboring farmers and scale-up marketing. They have begun to think in terms of value addition in order to obtain improved returns. While these are incipient steps, they reflect a new confidence to plan ahead given initial gains under LEDP5. The increase in income was then invested in the primary, secondary and tertiary education of their children, in home improvement and in household expenses. Funds were also saved in local church credit societies. One women’s group used its revenue as collateral to secure a loan for investment in farming productive activities. The most significant impact however was an incipient green revolution and a pilot introduction of a more scientific agriculture in an otherwise isolated, fragile and low capacity island context. LEDP helped introduce the concept of crop husbandry and a small holder plantation to a remote island hitherto characterized by very weak extension services. There was a 27.85% mortality rate for new rubber seedlings because of poor maintenance6. About 4% of the cocoa seedlings died before planting due to improper handling. The supplier replaced the seedlings at its expense. It attributed the relatively higher mortality rate for rubber and cocoa seedlings to the excessive use of fertilizer. This led to more emphasis being placed on training in the area of fertilizer application and seedling handling. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

N/A

4. Assessment of Risk to Development Outcome Rating: Substantial The overall risk to sustained development outcome is rated substantial given the absence of a follow-on project, local budget shortfalls and inadequate local capacity. LEDP was designed to help Government work with poor rural households in Nias to develop their livelihood opportunities. This two year operation was extended by six months which remained a tight time-line given the two years it took for preparation. The project closing date was determined by the Multi-Donor Fund's end date.

5 Interview with cocoa farmer group in Gunung Sitoli

6 Aide Memoire September 2012

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Continued Fiscal Constraints: This risk is rated Substantial. A fragile low capacity environment and tight time-line necessitated the outsourcing of project implementation to the PMC. However, the PMC’s role ended with project closure. LEDP’s mandate did not cover the budgetary constraints at the district level. The Dinas Pertanian staff lack resources to sustain the extension services. The fiscal constraints means that support to farmers may end with the departure of the PMC. This poses a risk to the sustainability of the development outcomes achieved. Fiscal decentralization was beyond the scope of LEDP whose goals were more immediate and modest i.e. a post-disaster improvement in rural livelihoods. Improved livelihood, not local government finance, was the end. This said, the Bank team did push for an increased Government budgetary allocation for Nias to equal the rest of North Sumatra in its discussions with the Governor of the province. The risk to operational sustainability is substantial. KPDT will need to continue LEDP activities with Government funds until such time that local government is able to assume responsibilities. In fact, KPDT, in its plans, has adopted the scaling up of LEDP but the realization of such plan will face many challenges given the limitations in the resources (human and financial) Fiduciary Risks: This risk is rated Moderate. The mitigation measures incorporated in project design helped address much of the procurement, fiduciary and social risks. An international procurement consultant experienced in Bank procedure was recruited. A procurement firm financed with bilateral donor funds supported KPDT. There were regular audits. FM training was provided to community facilitators and project staff. Project implementation itself was outsourced. Nevertheless, procurement bottlenecks delayed the distribution of seedlings and equipment. Similar delays were witnessed in the finalization of a training plan, the seed distribution plan and the cash grant operational manual. While such delays were to be expected in a fragile ground context, the impact on LEDP necessitated a project extension. The initial time-line was unrealistic. However, as appropriate mitigation measures had been introduced, the fiduciary risk to development outcome is rated moderate. Natural disasters and climate change: This risk is rated Substantial. Nias is prone to tsunamis, earthquakes and floods. Future natural disasters pose a substantial risk to development outcome. However, the training on agricultural best practice provided and the social capital created under LEDP will stand the beneficiaries in good stead in any future post-disaster recovery. Unknown climate change impacts, such as drought can also pose risks to crops and trees. The risk is therefore rated substantial Sustainability of Farmer Groups: The risk is rated Moderate. The farmer groups were created under an earlier Oxfam pilot. LEDP availed of this already tested mechanism. The farmer groups were a mean to reach the individual cultivator, not an end in themselves. Nonetheless, these groups are likely to remain a vehicle for a community-level development partnership.

23

Turn-over among local government staff: The risk is rated Moderate. Administration in Indonesia is now decentralized and staff turn-over to other provinces is less likely as the staff is mapped to the province. Moreover, the training received is likely to stand Indonesia in good stead any way even if the officials were to move elsewhere.

5. Assessment of Bank and Borrower Performance 5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory The PAD captured the livelihood constraints and low yield agriculture in Nias. The project design was kept simple and implementation outsourced to management consultants. Space was provided to the provincial and district administration in the steering committee. The emphasis on small holder agriculture was appropriate given the lack of economies of scale, environment constraints and transport bottlenecks for large scale plantations. The task team had done its due diligence. Project preparation took two years. The initial plan was to combine support for rural roads, bridges and agricultural livelihoods in a single operation, but that complex project design led to delays. The Bank recommended that the project be split into an ILO-supported RACB and a Bank-supported LEDP. This decision helped simplify the latter and jump-started preparation momentum. Both projects continued to have the same steering committee at the center and province, and operated in the same geographic areas. This reinforced a mutual synergy and complementarity without over burdening either project. The team had appropriately reviewed the safeguards and fiduciary aspects of the project and had clearly enumerated the potential risks that the project was likely to face. The project legal covenants were also kept simple and met without burdening the startup of the project. In accounting for the delays that might be encountered in the selection of the PMC, the project team assisted KPDT to start the selection process six months before negotiations of the grant agreement. Moreover, the task team followed closely with the KPDT and Bappenas the development of the project operation manual and the formation of the Project Steering Committee in an attempt to expedite project launch. During Appraisal, the project benefitted from the existing community groups that were established under previous community development projects. These farmer groups worked with international NGOs before which made them easy to socialize under LEDP. Moreover, the readily established groups (majority) enabled quick start of the project.

24

The Groups were also mapped to communities within RACAB project area which ensures easy access and mobilization of goods to and from the targeted LEDP groups. .

Around US$ 420,000 from the MDF budget was spent on the project preparation

(b) Quality of Supervision Rating: Satisfactory The Bank fielded four supervision missions during project implementation i.e. May 2011, September 2011, May 2012 and September 2012. The mid-term review was in September 2011. The team undertook due diligence to ensure that LEDP implementation complied with the Bank’s fiduciary, procurement and safeguard policies. The Aide Memoires provided an informative account of progress every six months, what needed to be addressed and implementation advice. It flagged delays in procurement and the need to finalize the training plan, the seed distribution plan, the CSG operational manual and collection of baseline data for monitoring purposes. It noted the delays in the acquisition of land for the five nurseries and the initial communication bottlenecks between the PMU and PMC, the PMU and local government, the PMU and farmers. It recorded the irregular attendance at the provincial level steering committee. The pro-activeness of Bank supervision despite implementation difficulties is noted. The Bank worked with the PMU to address weaknesses in reporting and financial management. It helped the PMU liaise with the MoF to accelerate budget effectiveness. It helped the PMC develop basic book keeping practices for Farmer Groups. The Bank undertook a physical inspection of deliverables under selected contracts. It helped the PMU improve guidelines on how to handle fertilizer, manage waste and handle manure. In short, it provided increased attention to implementation quality. The PMU meanwhile followed-up on Bank guidance on financial management and environment. It initiated the M&E activity albeit late given Bank follow-up.

The team undertook supervision missions in a constructive manner. Mission teams included the financial management, procurement, environment, social development, agriculture and other experts needed to discuss relevant supervision topics. The supervision missions took place twice a year. This was supplemented by frequent meetings with KPDT in Jakarta. Comments received from PMU, KPDT, MoF and Bappenas reflected a respectful work relationship and a flexible approach by Bank staff. Aide Memoires, Management Letters, ISRs and other project communication were completed in a timely manner with clear references to needed actions covering all project components, safeguards and fiduciary issues. US$ 315,000 from the MDF supervision budget was spent on supervision over the project implementation period.

25

(c) Justification of Rating for Overall Bank Performance Rating: Satisfactory The Bank's overall performance rating is based on satisfactory ratings for both quality at entry and supervision. 5.2 Borrower Performance

(a) Government Performance Rating: Satisfactory Performance of GoI was satisfactory given the sustained commitment to the project development objective. The agencies (KPDT, Bappenas, MoF and North Sumatra Provincial Government) were effective in taking decisive action with regard to the Bank recommendations on implementation activities, including allocating ministry budget resources (DIPA) and preparing sufficient annual budget allocations. This was despite the initial delay in start-up. There were delays in procurement and the delivery of seeds and agricultural tools. KPDT eventually treated LEDP with urgency and priority due to the tight implementation time-line. KPDT played an important role in keeping all players represented in the PSC and the LSC engaged in the project. KPDT management participated in all supervision missions and facilitated the implementation of all recommendations. More could have been done however to ensure greater participation of the Ministry of Agriculture and the Ministry of Public Works in routine project implementation. The project was steered by KPDT. It set the policy and worked with the MoF to allocate the budget. While the budgetary allocations were sufficient, delays in its authorization contributed to delays discussed in Section 2.4.

During project preparation, Government had designed and established the implementation mechanisms and fiduciary safeguards related to procurement, disbursement and financial management. The PSC, the Local Steering Committee (LSC), the PMU, and the PSC were established and staffed by grant negotiations. The FM specialist was on board before project effectiveness. The PMU oversaw project implementation with the support of the PMC. In anticipation of the lengthy process of consultant selection, KPDT initiated the tender process during project preparation. This led to the selection of the PMC consultant firm within four months of project approval.

BRR was closed in 2009. KPDT assumed responsibilities for continued post-disaster activity at that point given its mandate for disadvantaged areas. As the local government reforms of 1999 had decentralized policy implementation, KPDT was expected to work closely with the districts.

(b) Implementing Agency or Agencies Performance Rating: Satisfactory

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Performance of the implementing agency was satisfactory. The PMU at KPDT coordinated all activities and supported the PMC in communicating with farmer groups and the local authorities of Nias. The PMU factored in the initial delay in procurement of goods and appointed a specialist with suitable procurement experience to expedite the process. The PMC performance was exemplary although more could have been done to ensure greater buy-in from the district authorities. The legal covenants and fiduciary and safeguards policies were ,significantly, in compliance. The PMU failed to submit documentation for a sample of contracts for an ex-post procurement review in 2011. The Community Facilitators had earned the trust of Farmer Groups, including women farmers, and linked-up with the local government agricultural extension officers. The role of the Community Facilitators was crucial to the roll out of implementation. Almost all were from Nias itself. They facilitated the training modules in a timely manner. While the release of funds for the Community Support Grant was delayed, once received it helped support livelihood diversification activities. The Community Facilitators helped Farmer Groups prioritize and define their training needs.

(c) Justification of Rating for Overall Borrower Performance

Rating: Satisfactory Project implementation by the Government of Indonesia and the Implementing Agency KPDT is rated satisfactory.

6. Lessons Learned

The lessons from this project are many but the ICR will focus on the main three. Project life and impact assessment: Two-year duration is too tight to assess the project outcomes. The project implementation duration was too short to assess the outcomes and sustainability of the LEDP intervention. A continuous monitoring of the impact and outcome is needed to be in place for many years to assess the success of the new rubber and cocoa crop, the proper management of the nurseries and the sustainability of the enhanced agricultural practice. Likewise the continuation of good practice vis-à-vis environment and social safeguards at the farmer group and local government level remains to be seen. The LEDP implementation time line had been determined by the closing date of the MDF. It would be useful in future to provide space at the mid-term review for a provisional IDA envelops to co-finance any innovative pilot. The IDA mechanism is

27

better suited for project extension when the needs on the ground justify that and an additional financing to support successful initiatives, flexibility that trust funds lack. Implementation arrangements in a low capacity environment: KPDT had outsourced project implementation to the PMC. Nias had a fragile post-disaster environment and inadequate local capacity. Implementation by outside consultants ensured the swift roll-out of the project in the 22 months that the LEDP was operational. LEDP activities should have, under ideal circumstances, been implemented by the districts as part of their mandate of providing agricultural extension services. However, the districts could not have addressed the post-disaster needs in the tight time-line given their capacity and resource constraints Outsourcing implementation was inevitable in such a low capacity environment. Community Support Grants: Despite the low capacity of the farmer groups, the block grants proved to be successful as they responded to the community needs and could finance capacity building activities besides the learning by doing. Proposals like composting, biological pesticides, pigs and hens’ raising and vegetable planting were genuine and proved to be economically successful. They resulted in diversifying the livelihoods options and improved Nias resilience in facing disasters and capacity to achieve food security.

7. Comments on Issues Raised by Grantee/Implementing Agencies/Donors

(a) Grantee/Implementing agencies

The government of Indonesia was very satisfied with the project’s outcomes. The ICR report prepared by the implementing agency (KPDT) reflects great deal of satisfaction and pride with the project outcomes, (Annex 7). The Bank appreciates the inputs and support of the MDF in preparing the ICR. KPDT is also very satisfied with the level of support they received from the Bank during the project preparation, implementation and in particular facilitation of procurement. The Bank concurs with the KPDT future plans for further development of Nias economy and livelihoods through (i) building the farmers capacity in producing local vegetables and fruits to the self-sufficiency level; (ii) allocation of budget to the local authorities to pursue the project successes; (iii) maintaining and management of the nurseries. KPDT also highlighted very important lessons learned including the use of local expertise and the strong engagement of the local community and local authorities in priority identification and close cooperation with all players including funding agencies and governmental agencies., and does not have any comments about issues raised by the MDF.

(b) Cofinanciers/Donors

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The Multi-Donor Fund (MDF) was also generally positive about the outcomes of the project (see Annex 8 for comments provided by the MDF Secretariat). The Bank appreciates the inputs and support of the MDF in preparing the ICR, and concurs with the MDF about the sustainability risk for the LEDP, especially in terms of local governments’ capacity to continue providing support to Nias’ farmers beyond the project’s end.

(c) Other partners and stakeholders N/A

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Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate

(USD millions)

Actual/Latest

Estimate (USD

millions)

Percentage of

Appraisal

Total Baseline Cost 8.20 7.87 95.98

Livelihood Groups and

Institutional Empowerment 1.95 1.95 100

Agricultural and Other Livelihoods

Improvement 4.60 4.27 92.83

Management, Monitoring and

Evaluation 1.65 1.65 100

Physical Contingencies 0.00

0.00

0.00

Price Contingencies 0.00

0.00

0.00

Total Project Costs 8.20 7.87 Project Preparation Costs 0.00 0.00 - 0.00 0.00 -

Total Financing Required 8.20 7.87 95.98

(b) Financing

Source of Funds Type of

Cofinancing

Appraisal

Estimate

(USD

millions)

Actual/Latest

Estimate

(USD

millions)

Percentage of

Appraisal

Trust Funds Grant 8.20 7.87 95.98

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Annex 2. Outputs by Component SUMMARY OF OUTPUTS

The project was designed with three components and several sub components to respond to the most needs of livelihood improvement of people in Nias Islands as summarized below together with the respective outputs.

Components/ sub

components Planned Outputs Actual Outputs

Component 1:

Livelihood Groups

and Institutional

Empowerment

up to 50 mixed gender groups trained on various livelihood opportunities

83 mixed gender groups trained on various livelihood opportunities

Up to 50 Women’s Livelihoods Groups trained on a wider livelihood opportunities

17 Women’s Livelihoods Groups trained

At least 5 district Government Agriculture Services staff in each district are trained

140 district staff trained and 13 Provincial staff trained on various agricultural technology and nursery management; 28 Field extension workers trained on farmer organization

Component 2:

Agricultural and

Other Livelihoods

Improvement

Sub-component 1. Implementation of Agriculture and Women’s Livelihoods Group Activities

Provision of Community Block Grant to 100 Community groups @ USD 2500

100 community groups received one cycle grant amounting USD 2500 each, and 35 good performing groups received the second cycle of grant amounting USD 2500 each.

Provision of agricultural inputs to 100 community groups including rice seeds; rubber and cocoa seedlings; fertilizers; agricultural tools and hand tractors

Distribution of all agricultural inputs to all 100 groups was completed by December 2012

Sub-component 2. Support to Local Government Agriculture Services

Establishment of nursery in 3 districts 5 nurseries established- each nursery in each district.

Sub-component 3. Special studies, training activities, etc.

Not specify Baseline survey, benchmark monitoring surveys and evaluation, gender in proposed project areas completed on time

Component 3:

Management,

Monitoring and

Evaluation

Program Management Unit (PMU) and Program Steering Committees (PSCs) established.

PSC established , Local Steering Committee established, Project management team established, staff trained and using systems and procedures aligned with World Bank procurement and safeguards methodologies

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Components/ sub

components Planned Outputs Actual Outputs

Project Management Consultant (PMC) recruited with core expertise supporting i) monitoring and evaluation; ii) financial management; iii) safeguards; iv) quality assurance; v) procurement; vi) adherence to the governance and accountability framework; and vii) program reporting

Mobilization of core consultants was completed as indicated in the contract; 42 field facilitators recruited by PMC; PMC assisted PMU on preparing Annual and final audit, procurement and financial management reports to be available on time

I. DETAILS OF COMPONENT AND SUB COMPONENT OUTPUTS

Component 1: Livelihood Groups and Institutional Empowerment:

This component aims to empower beneficiaries and improve their capacity to acquire the technical, social, organizational, financial, management and marketing skills for livelihood development activities. The scope of this component includes technical training and group facilitation, including : (i) Training for Agriculture Livelihoods Groups: in social, technical, marketing, and financial aspects of livelihood development ; (ii) Training for Women’s Livelihoods Groups: to develop a wider range of livelihood opportunities in addition to primary production (retail, processing, marketing, business skills transfer) to enhance their incomes; (iii) Training and Equipment for Local Government Agriculture Services staff will be provided to facilitate further involvement for activities beyond the project life. This component was completed with unexpected outputs which are more than the planned outputs : (i) 100 community groups established and each district has released a Bupati Decree to acknowledge of the groups; (ii) all groups trained on good agricultural practices of planting and maintaining cocoa, rubber, rice and on other livelihood activities; (iii) 140 district staff and 13 provincial staff of North Sumatera (planning staff) trained in program management associated with technical skills in tree crops (cacao and rubber) and nursery management; (iv) 28 Field Extension workers and district agricultural staff trained on farmer organization; (v) 20 district staff and 6 Bappeda staff of North Sumatera Province trained in Agro-pastoral Development Training for Food Security and Energy self-sufficiency; (vi) 15 district staff and 1 Bappeda Sumut staff trained in agricultural marketing; (vii) 28 district staff trained in Nursery management Component 2: Agricultural and Other Livelihoods Improvement: This component aims to support the implementation of program activities under Component 1 by utilizing the Community Support Grant, technical support services and agriculture production inputs. Sub-component 1: Implementation of Agriculture and Women’s Livelihoods Group

Activities

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This sub-component will implement activities identified and proposed by (i.) around 50 agriculture livelihoods groups and (ii.) around 50 women’s livelihoods groups – each group is composed of roughly 40 households by providing Community Support Grants. The outputs of this sub component are adjusted to the local conditions in which only 17 women groups and 83 mixed groups participating in the project. The low number of participating women groups is due to the fact that many women prefer to join mix groups. Among 100 groups as community grant recipients, 35 of which is categorized as good performing groups using a set of criteria, and eligible for the second round of community grants, USD 2500 / group. Using the community grants, the groups have demonstrated good capacity building in good practices to produce compost, organic pesticides, vegetables and breeding hens and pigs (Attachment 1 illustrates activities and training sponsored by the grants). Sub-component 2: Support to Local Government Agriculture Services

This sub-component will strengthen agricultural support services from the District Government to: (i) develop improved rice food security by providing support to farmer groups with foundation seed of high-yield varieties and fertilizer inputs; (ii) develop skills in nursery management for tree crops. The project will establish tree crops nurseries managed by District government. The nurseries will introduce better yielding varieties of rubber and cocoa trees, more appropriate for Nias; and (iii) improve agriculture diversification to develop opportunities to support livestock and crop activities. Support would also be provided to Dinas staff to provide information on sources of advice and services outside government. The output of this sub component has been achieved as follows : (i) 79 rubber groups have received rubber producer seedlings, fertilizers and agricultural tools; 6 cocoa producer groups have received cocoa seedlings fertilizers and agricultural tools; and 15 rice producer groups have received rice seeds, fertilizers and agricultural tools. With this technology and proper farm management as well as production inputs, rice farmers are able to improve their yields to reach 3.3 ton/ ha in average, compared to 2.2 ton/ha prior to the project implementation. Five nurseries each in Nias, South Nias, North Nias, West Nias districts and one municipality have been constructed. All nurseries had rubber and cocoa seedlings planted. Sub-component 3: Special studies, training activities, etc.

The sub component will address as-hoc program needs for activities supporting livelihoods and not addressed through other components arising during program implementation. This sub component has provided training to rubber producer groups on pest management (Thricoderma). The training was conducted in Rubber Research Center in North Sumatera.

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Component 3: Management, Monitoring and Evaluation: This component aims to develop management and technical capacity for the implementation of livelihoods programs in Nias. A consultant team will provide the necessary project implementation and management as well as livelihood supports. The output of this component includes:

Establishment of a PMU, recruitment of individual consultants comprising Project Management Specialist, Financial Management Specialist, and Procurement Specialist, and contracting a multidisciplinary PMC comprising various management specialist and technical experts. 42 field facilitators were also recruited.

Establishment of the Local Steering Committee through a Governor Decree of

North Sumatera Province in November 2010 comprising of the Head of Bappeda of North Sumatera Province as the chair person; and members consist of representatives from Bappeda, Agriculture Agency of North Sumatera and of the five participating district and municipality in Nias.

Collection and compilation of monitoring and evaluation data in the progress

report including the status of distribution of the production inputs by districts and city, the implementation status of the first cycle of the community support grant covering the amount of money transferred, the number of participants, types of learning activities and demonstration plot activities.

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Attachment 1: Summary of Training sponsored by the Community Support Grants

Training sponsored by the Community Support Grants Funding for the Farmer's Groups

Community Support Grant Activity

First Grant Reward Grant

Tranche 1 Tranche 2 TOTAL Tranche 1 Tranche 2 TOTAL Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Tree Crop Small holdings 17 14.17 12 9.09 29 11.51 3 8.11 3 8.57 6 8.33 (Rubber and Cocoa)

Livestock Rearing 21 17.5 20 15.15 41 16.27 11 29.73 11 31.43 22 30.56 Farming and Horticulture Activities

42 35 44 33.33 86 34.13 6 16.22 5 14.29 11 15.28 Organic Composting Activities 39 32.5 55 41.67 94 37.3 17 45.95 16 45.71 33 45.83 Simple Irrigation Activities 1 0.83 1 0.76 2 0.79 0 - 0 - 0 -

Total 120 100 132 100 252 100 37 100 35 100 72 100 Training sponsored by Community Support Grants Funding for the Mixed Groups




Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Tree Crop Small holdings 17 16.83 11 10.68 28 13.73 3 10.71 1 3.57 4 7.14 (Rubber and Cocoa)


36 35.64 40 38.83 76 37.25 6 21.43 5 17.86 11 19.64 Organic Composting Activities 39 38.61 43 41.75 82 40.2 13 46.43 16 57.14 29 51.79 Simple Irrigation Activities 1 0.99 1 0.97 2 0.98 0 - 0 - 0 -

Total 101 100 103 100 204 100 28 100 28 100 56 100

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Training sponsored by Community Support Grants Funding for the Women Groups




Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Total No. of

Farmers' Groups

%

Tree Crop Small holdings 1 5.26 1 3.45 2 4.17 0 - 0 - 0 - (Rubber and Cocoa)


4 21.05 4 13.79 8 16.67 0 - 0 - 0 - Organic Composting Activities 1 5.26 12 41.38 13 27.08 2 28.57 4 57.14 6 42.86 Simple Irrigation Activities 0 - 0 - 0 - 0 - 0 - 0 -

Total 19 100 29 100 48 100 7 100 7 100 14 100

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Attachment 2: Selected pictures illustrating the Activities of LEDP

First Rice season Harvesting Rice milling

Women Farmer group harvesting the first season rice and are given hand-on training using the rice mill financed under the LEDP.

Rubber seedlings being planted by one of the farmer groups.

Cocoa Seedlings received by one of the farmer groups

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Women were empowered and most cases represented their community groups.

One of the five newly established Nurseries with new rubber seedlings already planted to maintain good quality clones

High quality rubber seedlings provided under the LEDP. The project provided around 705,000 grafted good quality seedlings.

Compost produced by a farmer group and financed from the community support grants.

Biological pesticide produced by a farmer group and financed from the community support grants.

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Annex 3. Economic and Financial Analysis The project is focusing on the capacity building, training and program management. However, the knowledge gained and the application of proper techniques in farming the three major strategic crops, namely- rice, cocoa and rubber seems to well justify the investment (around US$ 8.0 million). The financial analysis was conducted to demonstrate the potential viability of the project. The following assumptions were considered:

1. The analysis is based on 20 years projection. For presentation, only data for the first ten years are illustrated in Table 1. However, the calculations are based on 20 years projections. Respective data is repeated for the year 11 to 20.

2. The productivity is assumed to be linked to the existing impacted farming areas and the new cocoa and rubber seedlings. This is a very conservative assumption as it is expected that the know-how acquired would be applied elsewhere and by other farmers not part of the 100 farmer groups.

3. Productivity improvement for rice, rubber and cocoa are those averaged from the involved groups but not related to the groups with best practice (to be in the conservative side)

4. Productivity of the new cocoa and rubber seedlings are assumed to be in full at the age of 5 and 7 years respectively.

5. Costs of fertilizers and machinery are assumed as the costs associated with the procurement of these inputs for the entire project.

6. The labor cost was assumed at the high side of $5/day and a 2 full time workers serves each farmer.

Based on the assumptions and as illustrated in Table 1 below, the project showed an internal rate of return of 43.7%. This is a very conservative rate of return that includes only the direct financial benefits from rice, cocoa and rubber for the participated farmers groups. The gains from increasing the scope of the application of knowledge acquired would lead to a much higher rate of return. This entails that the project is highly feasible and the GoI should pursue its scaling up and sustaining the project outcomes.

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Table 1. Financial analysis and cash flows related to LEDP project. The projection is for 20 years. Data is presented for years 1 to 10 but repeated for years 11 to 20. Analysis shows that IRR is 43.73%Financial Analysis of Nias LEDP Project

1 2 3 4 5 6 7 8 9 10

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Rice Crop

Average rice output in 2010 in Nias (study base line) ton/ha 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50

Improved Rrice output per hectare for participant LEDP farmer groups in 2012 December ton/Ha 4.31 4.31 4.31 4.31 4.31 4.31 4.31 4.31 4.31 4.31 4.31

Area Planted Ha 436 436 436 436 436 436 436 436 436 436 436

Number of seasons Seasons/yr 3 3 3 3 3 3 3 3 3 3 3

Price of rice. IDR/kg 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000

Annual Production Increase kg/yr 2,367,480 2,367,480 2,367,480 2,367,480 2,367,480 2,367,480 2,367,480 2,367,480 2,367,480 2,367,480 2,367,480

Annual Extra Returns as a result of the project $/yr 3,077,724 3,077,724 3,077,724 3,077,724 3,077,724 3,077,724 3,077,724 3,077,724 3,077,724 3,077,724 3,077,724

Cocoa Crop

Average cocoa output in 2010 in Nias g/tree/week 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00

Improved cocoa output per tree for participant LEDP farmer groups in 2012 December g/tree/week 13.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00

New cocoa trees output g/tree/week 13.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00 13.00

Numberof affected Cocoa trees Number 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000

Number of new Cocoa trees Number 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000

Price for cocoa IDR/kg 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000

Annual Production Increase from existing trees kg/yr 37,440 37,440 37,440 37,440 37,440 37,440 37,440 37,440 37,440 37,440 37,440

Annual Production Increase from new trees kg/yr 162,240 0 0 0 81,120 81,120 162,240 162,240 162,240 162,240 162,240

Annual Extra Returns as a result of the project from existing trees $/yr 93,600 93,600 93,600 93,600 93,600 93,600 93,600 93,600 93,600 93,600 93,600

Annual Extra Returns as a result of the project from new trees $/yr 405,600 0 0 0 202,800 202,800 405,600 405,600 405,600 405,600 405,600

Rubber Crop

Average rubber output in 2010 in Nias kg/100 trees/day 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50

Improved rubber output per tree for participant LEDP farmer groups in 2012 December kg/100 trees/day 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.25

New Rubber tree output kg/100 trees/day 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00

Number of affected Rubber trees Number 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000

Number of new Rubber trees Number 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000 700,000

Price of rubber latex IDR/kg 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000

Annual Production Increase from existing trees kg/yr 7,026,250 7,026,250 7,026,250 7,026,250 7,026,250 7,026,250 7,026,250 7,026,250 7,026,250 7,026,250 7,026,250

Annual Production Increase from new trees kg/yr 17,885,000 0 0 0 0 0 8,942,500 17,885,000 17,885,000 17,885,000 17,885,000

Annual Extra Returns as a result of the project $/yr 8,431,500 8,431,500 8,431,500 8,431,500 8,431,500 8,431,500 8,431,500 8,431,500 8,431,500 8,431,500 8,431,500

Annual Extra Returns as a result of the project from new trees $/yr 21,462,000 0 0 0 0 0 10,731,000 21,462,000 21,462,000 21,462,000 21,462,000

Total Annual Revenues $/yr 33,470,424 11,602,824 11,602,824 11,602,824 11,805,624 11,805,624 22,739,424 33,470,424 33,470,424 33,470,424 33,470,424

Annual cost of fertil izers $/yr 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000

Annual cost of machinery $/yr 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Labor Cost $/yr 10,932,480 10,932,480 10,932,480 10,932,480 10,932,480 10,932,480 10,932,480 10,932,480 10,932,480 10,932,480 10,932,480

Total Annual Operation costs $/yr 11,157,480 11,157,480 11,157,480 11,157,480 11,157,480 11,157,480 11,157,480 11,157,480 11,157,480 11,157,480 11,157,480

Net Revenue (at year Zero it is the project cost) $/yr -8,000,000 445,344 445,344 445,344 648,144 648,144 11,581,944 22,312,944 22,312,944 22,312,944 22,312,944

Internal Rate of Return % 43.73%

Exchange Rate IDR/1$ 10000

Labor cost is based on 2 worker fro farmer with daily wage ofUS$ 4.0. The number of farmers is 3744.

Item Units

Year

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Annex 4. Grant Preparation and Implementation Support/Supervision

Processes

(a) Task Team members

Names Title Unit Responsibility/

Specialty

Lending/Grant Preparation Khairy Al-Jamal Project Team Leader EASIS Overall Andre Bald Project Team Leader EASVS Overall Shobha Shetty Sr. Rural Economist EASRD Economist Lilik Hidayat Operations Specialist Consultant Operations Melinda Good Sr. Counsel LEGES Legal Richard Chisholm Sr. Agriculture Economist EASRD Economist Indira Dharmapatni Sr. Operations Officer EASIS Social safeguard Andrew Sembel Environmental Specialist EASIS Environmental

Safeguard Yogana Prasta Operations Advisor EACIF Operations Rajat Narula Sr. Financial Management Specialist EAPFM Financial Unggul Suprayitno Sr. Financial Management Specialist EAPFM Financial Christina I. Donna Financial Management Analyst EAPFM Financial Bisma Husen Sr. Procurement Specialist EAPPR Procurement Amien Sunaryadi Sr. Operations Officer EACIF Governance Dayu N. Amurwanti Operations Analyst EACIF Operations Rebekka Hutabarat Team Assistant EACIF Assistance Ira Marina Team Assistant EACIF Assistance

Supervision/ICR Khairy Al-Jamal Project Team Leader EASIS Overall

Mariam Rikhana Operation Officer – Agriculture Specialist EASIS Agriculture

Indira Dharmapatni Sr. Operations Officer EASIS Social Safeguard Purwanto Financial Management Specialist EAPFM FMS Krisnan Environmental Safeguards Specialist EASIS Environmental

Safeguard Fandi Nasution Governance specialist EACIF Governance Rebekka Hutabarat Team Assistant) EASIS Assistance Naresha Duraiswamy EASIS ICR Primary Author

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including

travel and consultant costs)

Lending(1)

FY08 0.00 0.00 FY09 0.00 0.00 FY010 0.00 0.00

Total: 0.00 0.00 Supervision/ICR

(2)

41

FY10 0.00 0.00 FY11 0.00 0.00 FY12 0.00 0.00 FY13 0.00 0.00

Total: 0.00 0.00 (1) All preparation costs were covered from the MDF (US$421,645.28)

(2) Almost all supervision costs were covered from MDF supervision budget totaling

US$ 315,398.93 over 3 years and were consistent with the normal supervision cost for

Indonesia.

42

Annex 5. Beneficiary Survey Results N/A

43

Annex 6. Stakeholder Workshop Report and Results

No workshop, per say, took place. However, on November 19, 2012 in Jakarta; KPDT organized a seminar to share the results of LEDP with the stakeholders (including the MDF, BAPPENAS, MoF, Local Steering Committee members, Provincial Government of Aceh, local governments, local NGOs, community individuals and farmers groups) and discuss lessons learned. The seminar highlighted that the project represented a good model of partnership between GoI, MDF and the Bank. It emphasized that the project objective had been achieved and all remaining works would be completed by the project closing date on December 31, 2012. This included the provision of rice seeds; cocoa and rubber seedlings; farming equipment, tools and machinery; establishment of the five nurseries; Utilization of community support grants; and training offered to KPDT, local authorities and farmer groups. The seminar also highlighted that the scope of the project was developed by in close cooperation with Bappenas, KPDT, local authorities and communities and farmer groups were selected in a balanced way to represent the various communities of Nias in consultation with the project SC and the Local Steering Committee. A number of farmer groups (mixed and women groups) presented their success in the use of the community support grants in composting, growing vegetables, producing organic pesticides and raising pigs. The groups were among the good performing ones which received the award grants. They urged KPDT to keep their engagement and build on the success on LEDP. Finally the seminar highlighted on the importance of developing exit strategy for scaling up the project and sustaining its outcomes through supporting Nias farmers, monitoring the cocoa and rubber seedlings progress, maintenance and management of the five nurseries and facilitation of access to farming inputs including fertilizers, good quality seeds and seedling at reasonable price. The nurseries are expected to play an important role to secure the availability of such inputs.

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Annex 7. Summary of Grantee's ICR and/or Comments on Draft ICR

A. Operational Experience

1. KPDT/Project Management Unit (PMU). KPDT/PMU has gained a wealth of experience on project management involving aspects on planning, budgeting, execution of project activities, resolving of problems and issues, project reporting. Likewise, coordination with the PSC at the central level and with the LSC at the local level was enhanced. The capacity of the Procurement Committee at KPDT level involved in the procurement of required project inputs was also strengthened.

2. FG/Farmer Level. With the implementation of the technical training programs for the rubber, cacao and rice commodities, the participating farmers have gained valuable experiences particularly on technical aspects involving land clearing and preparation, planting, fertilizing, maintenance, pruning and sanitation for cacao, proper tapping techniques for rubber, harvesting and collection for cocoa and rice, latex processing, cocoa beans fermentation, etc. Likewise, with the implementation of the BLM support grant, the participating farmers have also gained experience on the production of organic fertilizers (composting) and production of bio-pesticides, diversification of food crops (corn production) and vegetable production (chili and eggplant) and chicken and pig raising.

3. The participating farmers have applied the technical knowledge and skills they obtained from the training programs in the cultivation of rice, rubber and cacao commodities. The impact could be seen significantly in the case of the rice farmers, as reflected by the remarkably good performance of their rice harvest during the first season wherein the "weighted average production of “Ciherang variety” high-yielding rice

for the whole Project was 4.25 tons/ha or 0.95 tons/ha over the Target Key Indicator

of 3.3 tons/ha.

4. In the case of rubber farmers, the benefits from the development of rubber could only be seen when the new plantings start to produce from the 5th to 6th year. With the application of the proper technology for the maintenance, tapping and processing of rubber produce, the farmers were able to increase their income from their old rubber stand. One farmer from FG Karamodoi (North Nias district) informed the ICR mission that he was able to produce latex from 10 kg-15 kg to about 25 kg per week for his 400 trees after joining Nias LEDP with the employment of proper maintenance, tapping techniques and better quality rubber produce with the use of processing and harvesting techniques.

5. For cacao farmers, the benefits derived from the development of cacao plantings could not be seen yet as the production from the plantings will start within three to four years from planting. With the application of the proper technology for the maintenance (sanitation and use of plastic cover on cacao pods) and processing of cacao produce, the farmers were able to increase their income from their old cacao plantings. The ICR mission was informed by one farmer from FG Fahasaradodo (South Nias district) and another farmer from FG Fandrou’u ((Nias district) that they were able to produce wet cacao beans from 5 kg to about 50 kg per week (ten fold increase) after joining Nias

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LEDP with the use of proper maintenance (pruning and sanitation techniques which eliminated/greatly reduced the effect of cocoa pod borers and use of use of plastic cover on cocoa pods) and also better quality of cocoa beans produce through the use of fermentation.

6. It is worthwhile to note that non-project farmers also joined in the training

programs and farmer field schools conducted for the Project, and in some farmer

groups, non-project farmer relatives of project beneficiaries were also supplied with

rubber and cacao plantings materials by the project beneficiaries.

7. Local Government Staff. 207 LG staff (Bappeda and Dinas Pertanian/Peternakan/ Kelautan/Kehutanan)

were trained on aspects involving farmer groups organization, program management and monitoring, program management associated with technical skills in tree crops (cacao and rubber), nursery management, agro pastoral development training for food security and energy self sufficiency, and agricultural marketing involving livelihoods activities. These training programs were designed to improve the knowledge and skills of LG staff for purposes of post-project sustainability.

I. Assessment of the outcome of the operations against the agreed objectives 8. The following presents the outcome of the operations against the target key indicators.

Project Development

Objective Outcome Indicators Status as of 31 December 2012

46

To facilitate post-disaster economic recovery by improving the ability of the Government to work with poor rural households in Nias to identify, develop and sustain livelihood opportunities.

At least 5 Kabupaten staff (per district) trained in with program management and monitoring and evaluation skills to be able to assist communities

Fulfilled

- 28 field extension officers (PPL) were trained in farmer groups’ organization.

- 16 LG government staff were trained in Program Management and Monitoring by the project.

At least 25% of livelihood groups retain group technical and organizational skills, and are accessing information, finance, and markets resulting in improved livelihoods

Fulfilled

- 98 FGs of the 100 FGs supported by the project retain group technical and organizational skills.

- The project trained a total of 11,451 farmers (6,020 men and 5,431 women) on agricultural technical skills for rubber, cacao and rice plantation management. The trainings included sessions on organizational skill, access to information, financial and market understanding and a special training for 17 women groups on household financial management. Note: The total

number of farmers is

actually 3,744 but most

farmers have attended 3-4

training programs, thus

adding it up to a total of

11,451 farmers.

At least 5 Kabupaten Dinas Pertanian staff (per district) have acquired specific technical skills in tree crops nursery management and fertilizer handling and distribution

Fulfilled

- 121 staff from Nias Kabupaten and 7 Bappeda Sumut staff were trained in program management associated with technical skills in tree crops (cacao and rubber) and also on nursery management

- Each Kabupaten has appointed

47

a counterpart nursery staff to work with the project staff in charge of nursery establishment.

-

At least 3 Kabupaten seedling nurseries are established, introducing improved rubber and cacao varieties, with sustainable operating models

Fulfilled

All nursery sites established and functional at project conclusion (December 2012)

Increased rice yields to 3.3 tons per hectare in targeted producing groups through introduction of improved seeds of high-yielding varieties seeds and fertilizer use.

Fulfilled

- Weighted average production of “Ciherang variety” high-yield rice for the whole Project was 4.25 tons/ha or

0.95 tons/ha over the Target Key Indicator of 3.3 tons/ha.

- Farmers with harvest yields of 3.3 and over tons/ha totaled

372 (72.80%) of the 511

farmers who planted the high-yield “Ciherang variety”.

- Farmers with harvest yields

of over 2.5 tons/ha (reported

yield before Nias LEDP)

totaled 457 (89.43%) of the

511 farmers who planted the high-yield “Ciherang variety”.

Intermediate Results

Component 1

Community and

Institutional

Empowerment Outcome

Intermediate Outcome

Indicators Status as of 31 December 2012

Livelihood Improvement Groups in selected villages are supported by local governments with technical, administrative, and financial skills, and able access to relevant information and prioritize

At least five Kabupaten staff (per district) trained in a diverse range of group livelihoods activities

Fulfilled

- 20 staff from all Nias kabupaten and Kota and 6 Bappeda Sumut staff trained in “Agro pastoral Development Training for Food Security and Energy self sufficiency”

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opportunities. - 15 staff from all Nias kabupaten and 1 Bappeda Sumut staff trained in agricultural marketing associated with livelihoods activities in Nias.

Methodologies for group selection, formation and strengthening available and documented

Fulfilled

PMC M&E team completed the following reports associated with this topic: (i) Report on group formation (ii) Report on beneficiaries’ satisfaction (iii) Project Gender checklist.

- 75% satisfaction with group and village selection process

Fulfilled

The M&E PMC assessed the group formation process and evaluated the groups and local stakeholders’ satisfaction with the village and group selection process. The assessment resulted as follows: (i) 67.71% of the respondents had a level of satisfaction >75-100%, (ii) 18.75% of the respondents had a level of satisfaction >50-75% and (iii) 13.54 % of the respondents had a level of satisfaction> 0-25%. The combined level of satisfaction in the selection of the groups of the two first quartiles (level of satisfaction >50) is 86.46%. As a result, it can be concluded that more than 75% of the respondents were satisfied with the process.

Improved diversity of livelihoods as indicated in monitoring surveys

Fulfilled

The project has promoted: (i) the diversification of livelihoods

49

activities the implementation of community support grants; activities introduced among others are: cultivation of corn, chili, vegetables; chicken and pig raising; and (ii) Supported diversification of livelihood via local gov't training on food security and sustainability of agro pastoral activities.


Component 2

Agricultural and Other

Livelihoods

Improvement


Indicators

Status as of 31 December 2012

Outcome: Livelihood groups in adopting an agreed package of technical, social, and marketing skills for improvement of cacao, rubber, rice, vegetable, livestock and other livelihood activities.

- At least 20% of livelihood groups are fully functional at midterm and are being supported by functional nursery and other supply systems

Fulfilled

- 98 of the 100 FGs (98%) are functional as learning, discussion and communication

- Five Nurseries were established and is expected to be taken over by the relevant government agencies at project conclusion.

- Nursery support to the farmers will be the responsibility of the concerned LG after turnover to the LGs.

At least 40% of livelihood groups adopt project recommendations by project conclusion relative to baseline

Fulfilled

The result of Nias LEDP training activities indicated that 69% of the supported groups, at project end, have adopted key farming and livelihood project recommendations.


Component 3

Management,

Monitoring and

Evaluation


Indicators Status as of 31 December 2012

Outcome - A system of management, monitoring

Project management team established, staff trained and using systems and

Fulfilled

(i) Project management team established under Minister

50

and evaluation established within the PMU for project implementation and longer term support to livelihood development

procedures aligned with World Bank procurement and safeguards methodologies

Decree No.034.1/KEP/M-PDT/II/ 2009 dated 3 February 2009. (ii) Project Operational Manual delivered as condition of Grant Effectiveness. Bahasa Indonesia version finalized by PMU and PMC consultants. Revised English and Bahasa Indonesia versions finalized by PMU and PMC consultants (iii) Supported PMU in planning and managing procurement activities. (iv) PMU staff trained in procurement using WB methodologies, involving quality assurance, good governance and anti-corruption practices.

Baseline survey, benchmark monitoring surveys and evaluation in proposed project areas completed on time

Fulfilled

Baseline survey Final Report completed in March 2012.

II. Evaluation of the borrower's own performance during the preparation

and implementation of the operation, with special emphasis on lessons

learned that may be helpful in the future 9. During project preparation and implementation, the Government of Indonesia (Bappenas, KPDT and Ministry of Finance) had worked closely with the World Bank and MDF which provided very valuable support and cooperation to the Project and Project stakeholders,

10. During project preparation, the Project stakeholders worked closely with World Bank staff in preparing the Project Operations Manual, which was one of the administrative requirements for the negotiations of the project grant. Likewise, the Project worked closely with World Bank staff in the preparation of the draft Request for Expression of Interest (EOI), Project Procurement Plan, draft Request For Proposal (RFP) for consulting firm, Terms Of Reference (TOR) of three (3) Individual Consultants, consisting of Project Management Specialist (PM), Financial Management Specialist (FM) and Procurement Specialist, and TOR for the Safeguards Framework. The Project also worked closely with World Bank staff in the recruitment of the project consultants through the hiring of an international procurement consulting firm, Crown Agent Consultant, with funding from the UK Department for International

51

Development (DFID). Crown provided assistance to KPDT in the procurement process from preparing required tender documents up to its announcement in Dg Market or international newspaper ((Jakarta Post) and local newspaper (harian Media Indonesia).

Lesson Learned. The criteria for the evaluation of consultants used in the evaluation

of project consultants for Nias LEDP required changes so that more relevant

information are highlighted to have better qualified consultants for the relevant

positions. For future projects, the project has prepared revised criteria for the

evaluation of consultants when there was a change in the position of Team Leader for

Nias LEDP. A copy of the revised criteria for the evaluation of the Team Leader is

attached as Annex 1. The criteria can also be applied to evaluate other key consultants. 11. Selection of the 100 farmer groups that participated in the Project was conducted by the local governments through Bappeda and Dinas Pertanian/Peternakan/Kelautan/Kehutanan. The selected 100 FGs came from 92 villages, wherein seven (7) villages had two FGs each and one village with three FGs. [Note: The 7 villages with two FGs each were from South Nias district (3 villages), Nias Kabupaten (3 villages) and in Kota Gunungsitoli (1 village), whereas the village with three FGs was from Nias district. Six FGs had good implementation performance as evidenced by their selection to implement the Community Support Grant (BLM reward).

Lesson Learned. For future projects, criteria for inclusion of farmer groups should

still be done by the local government concerned but with an additional requirement

that should follow “one FG per 1 desa concept” to be consistent with the Government’s

policy of “Equitable Development and Poverty Alleviation”. 12. At the start of project implementation, criteria for the selection of the PMC field facilitators required experience in field facilitation and willingness to work in Nias for non-Nias applicants, with preference being given for experienced Nias field facilitators. The established criteria were very difficult to achieve because the recruitment of field facilitators experienced in field facilitation and willing to work in Nias were very few. As a result, 29 (69%) of 42 field facilitators recruited for the Project are from Nias. The other 13 field facilitators from other provinces in Indonesia who were mostly experienced in field facilitation and willing to work in Nias. The 29 facilitators from Nias were less experienced in field facilitation but field experience indicated that field facilitation requires knowledge of the Nias dialect in order to be effective in dealing with Nias farmers. Note that a significant number of the project farmers are not fluent in Bahasa Indonesia. By the end of project implementation, there were 21 of the 23 facilitators are from Nias.

Lesson Learned. For future projects in Nias or other similar areas, field facilitators

who have the facility of the local dialect will be more effective in field facilitation

provided they have the related educational background/experience and provided

training is provided for them. 13. The PMC Consultants established the Regional Office Coordinators’ offices in different locations, which situation has resulted in less coordination with the Agricultural offices (Dinas Pertanian/Perkebunan). The ROCs hold their regular meetings with the facilitators at the Regional Office Coordinators’ offices.

52

Lesson Learned. The performance of the ROCs/facilitators would have been more

effective if the ROCs were holding their offices at the Dinas Pertanian/Perkebunan

offices of the concerned Kabupaten/Kota. Coordination with Dinas

Pertanian/Perkebunan would have been easier and the feeling of “Ownership of the

Project” would have been enhanced from the side of the LGs.

14. KPDT worked in close consultation with the Ministry of Agriculture (MOA) in determining the required technical specifications of the rubber and cacao planting materials and rice seeds required for the Project. These technical specifications were used in the procurement of the required Project inputs.

Lesson Learned. Consultations with the Ministry of Agriculture or other relevant

stakeholders are very helpful for KPDT since the technical specifications of the project

inputs are required for the procurement activities of the Project and also to avoid

possible problems in the future about the authenticity of the technical specifications.

15. The contracts for the provision of rubber and cacao planting materials do not provide the timeframe to replace dead planting materials delivered by the suppliers. .

Lesson Learned. Contracts for the provision of rubber and cacao planting materials

usually contain a provision stating that replacements have to be made for the mortality

on the planting materials delivered. The replacements however, is a certain percentage

of the quantity delivered to cover the normal mortality rate for live planting materials. 16. During project implementation, the Project worked hand in hand with the World Bank which provided very useful and timely advices in resolving Project issues and problems, particularly those involving preparation of required project technical guidelines, procurement of required Project inputs, (rubber and cacao planting materials, rice seeds, fertilizers, and agricultural tools and equipment), distribution of the project inputs to the farmer participants, and in the issuance of required no-objection letters involving the technical guidelines prepared and procurement of project inputs in a timely manner. The World Bank also assisted the project in providing on-the-spot recommendations during field implementation supervision missions. The Multi Donor Fund also joined the World Bank during the field implementation supervision missions and also provided the necessary conduit with the implementation of the lLO Rural Access and Capacity Building Project (RACBP).

Lesson Learned. Close coordination between the GOI stakeholders and Donor

organizations (MDF and World Bank) is very effective in resolving problems or issues

requiring immediate action by either party.

III. Evaluation of the performance of the Bank, any co-financiers, or of other

partners during the preparation and implementation of the operation,

including the effectiveness of their relationships, with special emphasis on

lessons learned 17. The World Bank has provided very valuable support and cooperation to the Project and to Project stakeholders,

18. During the start-up of the project, the World Bank assisted the project in preparing the Project Operations Manual, which was one of the administrative

53

requirements for the negotiations of the project grant. Likewise, the World Bank assisted in the recruitment of the project consultants which was made through the hiring of an international procurement consulting firm, Crown Agent Consultant with funding from the UK Department for International Development (DFID), which provided assistance to KPDT in preparing required tender documents up to its announcement in Dg Market or international newspaper ((Jakarta Post) and local newspaper (harian Media Indonesia).

19. During project implementation, the World Bank assisted the Project by providing very useful and timely advices in resolving problems, particularly those involving preparation of required project technical guidelines, procurement of required Project inputs, (rubber and cacao planting materials, rice seeds, fertilizers, and agricultural tools and equipment), distribution of the project inputs to the farmer participants, and in the issuance of required no-objection letters involving the technical guidelines prepared and procurement of project inputs in a timely manner. The World Bank also assisted the project in providing on-the-spot recommendations during field implementation supervision missions. The Multi Donor Fund also joined the World Bank during the field implementation supervision missions and also provided the necessary conduit with the implementation of the lLO Rural Access and Capacity Building Project (RACBP).

Lesson Learned. Close coordination between the GOI stakeholders and Donor

organizations (MDF and World Bank) is very effective in resolving problems or issues

requiring immediate action by either party.

IV. Description of the proposed arrangements for future operation of the

project 20. Since the Project will close on December 31, 2012, there is a need to have an overall program to sustain the activities undertaken during the implementation of Nias LEDP. This will involve post-project activities for the development of rubber and cacao planted under the Project, as well as continuity of paddy development. There is a need to integrate agricultural plans and opportunities in the concerned kabupaten RPJMD plans. Such integration would support project sustainability and will have a significant and sustainable impact on the livelihoods of the greatest number of poor households. In this regard, the local government should identify the needed activities to support Nias kabupaten/ kota rubber, cacao and rice agricultural processing and marketing plan that

54

would be incorporated and integrated into the existing strategic plan interventions and targets for the next 5 years. The funding requirements of the post-project activities should be included in the overall budget of the concerned kabupaten/ kota

21. The nurseries established at the kabupaten/kota level by the Project should be maintained and the cost of maintenance be funded by concerned kabupaten/ kota. The nurseries established at the kabupaten/kota level will be the source of high-yielding rubber and cacao varieties to be provided to the farmers. As part of the post-project sustainability plan, the development of nurseries in small-scale at the desa level can also be planned so that high-yielding rubber and cacao varieties are also available at the desa level.

22. While capacity building for the rubber, cacao and rice farmers was very effective during the Project implementation, similar training programs given under Nias LEDP, including training on processing and post processing should be included in the overall program of agricultural development of the concerned kabupaten/kota.

23. Another area which should be included is the preparation of an overall strategy to achieve “swasembada sayur mayur” and production of fruits at optimal productions levels during the post-project period, which should be part of the overall exit strategy of the project and to be included in the overall RPJMD plans of the concerned kabupaten and kota.

55

24. The post-project sustainability program and overall exit strategy plan are activities on horticulture (vegetables and fruits), such as:

vegetables “imported” from Sumatra mainland but could potentially be grown in Nias;

fruits sold to the mainland (already part of existing farmers’ livelihoods activities) will be identified and be grown in Nias and increase production volume to optimal quantities that would be able to provide additional income to both farmers and local governments;

production of vegetables as one of the BLM activities implemented by some farmer groups should be included in the local governments’ strategic plan for possible interventions to undertake for its market potential.

56

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders MDF Secretariat comments are provided below

These comments were prepared by the Secretariat of the Multi Donor Fund for Aceh and Nias (MDF) and do not necessarily represent the views of the MDF Steering Committee or donors. The MDF provided a grant of US$ 8.2 million for Nias LEDP, one of the MDF’s 23 projects for post-disaster recovery in Aceh and Nias.

The Multi Donor Fund for Aceh and Nias (MDF) was established to support the implementation of the Government of Indonesia’s ( GoI ’s) rehabilitation and reconstruction program after the December 2004 tsunami and subsequent March 2005 earthquake. At the request of the government, the World Bank serves as the trustee to administer the MDF which is in turn governed by a Steering Committee comprised of donors, GoI , and civil society representatives, with the United Nations and international non-governmental organizations participating as observers. The donors contributing to the MDF are: the European Union, the Netherlands, the United Kingdom, the World Bank, Sweden, Canada, Denmark, Norway, Germany, the Asian Development Bank, the United States of America, Belgium, Finland, New Zealand and Ireland. The MDF pools about US$655 million in grant resources provided by these 15 donors, an amount equivalent to about 10% of the overall reconstruction efforts. The MDF provided grants for implementation of 23 projects in five outcome areas: recovery of communities, recovery of large infrastructure and transport, strengthening governance and capacity building, supporting sustainable management of the environment, economic development and livelihoods, and providing support to enhance the overall reconstruction process. The LEDP project contributes to the MDF’s outcome area of supporting economic development and livelihoods.

In addition to the devastation brought about by the tsunami, in Nias the post-disaster reconstruction challenges were compounded by the islands’ extreme isolation and long time neglect by national and provincial authorities. The MDF Steering Committee made the reconstruction an opportunity to address these long-term development challenges and help put Nias on a stronger path towards recovery and sustainable economic development through providing support for the agricultural sector.

The LEDP was part of a strategic package of support for Nias which combined the LEDP’s targeted focus on increasing productivity in the production of three key commodities with another project focused on improving rural access through the construction of roads, trails and bridges under the International Labour Organisation’s (ILO) Rural Access and Capacity Building Project (RACBP). Pairing these projects was intended to enhance their combined impact by linking productivity increases with improved access to markets and services. The preparation phase of the two projects took a long time, and both projects faced delays in startup and implementation due to the challenges of working in Nias. In this period, the Bank’s implementation support could have been much stronger, and management attention enhanced, to speed up the preparation and implementation. Project implementation periods were extended to the maximum time possible given the closing of the MDF program in December 2012.

57

Notwithstanding the delayed start up and reduced implementation period, both projects were ultimately able to achieve their objectives.

Despite the time constraints on implementation, the LEDP has achieved good results in terms of increased productivity and incomes, the creation of farmers groups, and improving local skills and knowledge on appropriate agricultural practices. This was particularly true for rice farmers under the project. The project was creating multiplier effects as groups reported that the targeted beneficiary groups were actively sharing their new skills and technologies with non-project groups in their communities.

Nevertheless, sustainability remains a risk for the LEDP, especially in terms of local governments’ capacity to continue providing support to Nias’ farmers beyond the project’s end. One of the lessons learned by the MDF has been that capacity building takes time and is often in conflict with the need for urgency in a post-disaster context. Nevertheless, given the long preparation time and truncated period available for implementation before the end of the MDF’s mandate, the LEDP completed its activities and has made an important contribution in helping Nias transition from the post-disaster context to a longer-term sustainable development. The role of the Bank’s implementation support was critical to success, as was the focus and attention of the national executing agency for the project.

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Annex 9. List of Supporting Documents

1. Project Appraisal Document 2. Grant Agreement 3. Mission Aide Memoires 4. Implementation Status Reports 5. MDF Midterm review 6. M&E Report 7. NIAS-LEDP Initiative: Scaling-Up of Nias LEDP Activities Integrated into

RPJMD Strategic Plans 2013-2018 8. Nias LEDP: PMC: Final Report

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MAP

Source: ILO office, Nias Island, Indonesia