World Bank Documentdocuments.worldbank.org/curated/en/993811468914181206/pdf/multi0page.pdf · the...

Document of

The World Bank

FOR OMCIAL USE OnY

MI CjOFIDHE COPY

Report No. : 10970 CE Type: (PPAR) ReportNo. 10970

Title KURUNEGALA RUAL DEVELOPMENT PEAuthor: TAWHID NAWAZExt. :31680 Room:T9032 Dept. :OEDDI

PERFORMANCE AUDIT REPORT

SRI LANKA

KURUNEGALA RURAL DEVELOPMENT PROJECT(CREDIT 891-CE)

AUGUST 3, 1992

Operations Evaluation Department

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

ABBREVIATIONS

AEARP Agriculture Extension and Adaptive Research Project

AGA Assistant Government Agency

ARTI Agrarian Research and Training Institute

BOC Bank of CeylonCCB Coconut Cultivation Board

DOI Department of IrrigationDS Divisional Secretary

ERR Economic Rate of ReturnFINNIDA Finland International Development Authority

GDP Gross Domestic ProductGOSL Government of Sri Lanka

GTZ German Technical Aid Agency

ICB International Competitive Bidding

IDA International Development Agency

IFAD International Fund for Agriculture Development

IIMI International Irrigation Management Institute

IMF International Monetary Fund

JICA Japan International Cooperation Agency

MPCS Multi Purpose Cooperatives Societies

NORAD Norwegian Agency for International Development

OED Operations Evaluation Department

PB People's Bank

PCC Project Coordinating Committee

PCR Project Completion Report

PAR Performance Audit Report

PSC Project Steering Committee

RD Rural DevelopmentSAR Staff Appraisal Report

SIDA Swedish International Development Authority

SPN Supervision Report

FOR OFFICIAL USE ONLYTHE WORLD BANKWashington, D.C. 20433

U.S.A.

Office of Director-CeneralOpetatons EvaluAItMn

August 3, 1992

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Performance Audit Report on Sri Lanka - KurunegalaRural Development Proiect (Credit 891-CE)

Attached, for information, is a copy of a report entitled"Performance Audit Report on Sri Lanka - Kurunegala Rural Development Project(Credit 891-CE)" prepared by the Operations Evaluation Department.

Attachment

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

FOR OFFICIAL USE ONLY


SRI LANKA

KURUNEGALA RURAL DEVELOPMENT PROJECT(Credit 891-CE)

TABLE OF CONTENTS

Page No.

Preface . . . . . . . .. . . . . . . . . . . . . . . . . . . . ..Basic Data Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . .iiiEvaluation Summary . . . . . . . . . . . . . . ..... . . . . . . . v

I. INTRODUCTION . . . ... . . .. ...... ..... . . . . . . . 1

II. PROJECT EVOLUTION, OBJECTIVES AND DESIGN . . . . . . . . ... . . 2Project Evolution . . ..... .. . . . . . . . . . . . 2Objectives . . . . . . . . . . . . . . . .. ... . . . . 3Design . . . . . . . . . . . . . . . . . . . . . . . 4

III. IMPLEMENTATION . . . ......... . . . . . . . . . .. 5Implementation Experience....... . . . . . . . . . . . 5Irrigation and Water Management......... .... . . 7Coconut Development... . ......... . . . . . 9Agricultural Credit... . . . . . . . . . . . . . . . 10Other Agricultural Components . . . . . . . . . . . . . . 11Social Infrastructure Components . . . . . . . . . . 12Post Implementation Development . . . . . . . . . . 12

IV. PROJECT OUTCOME....... . . . . . . . . . . . . . . . . . . 13Agricultural Impact.............. . . . . . 13Institutional Impact . ............ . . ... 15Sustainability .......# * . . . . . . . . . . . 16

V. FINDINGS AND LESSONS .. ... 17

ANNEXES

Annex 1 Table 1: Project Implementation . . . . . . . . . . . . . . 21Table 2: Credit Disbursements by Participating Banks . . . 23

Annex 2 Table 1: Economic Rate of Return Analysis . . . . . . . . . 24

ATTACHMENT: Comments from the Borrover... . . . . . . . .... 27

MAP: IBRD 23815

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.


SRI LANKA


PREFACE

This is a Performance Audit Report (PAR) of the Kurunegala RuralDevelopment Project in Sri Lanka involving IDA credit in the amount of US$20.0million. The credit was approved on June 12, 1979 and signed on July 24, 1979.US$17.1 million was disbursed and the undisbursed balance of US$2.9 million wascancelled. The credit was closed on June 30, 1986 two years behind schedule.Final disbursement of the credit was on January 21, 1987.

The PAR is based on the Project Completion Report (PCR)I, the StaffAppraisal!' and President's Report!', the Credit Agreement-, the transcriptof the Executive Directors' meeting at which the project was considered, on astudy of project files and discussions with Bank staff who were associated withor knowledgeable about the project. An OED mission visited Sri Lanka in May-June1991 and discussed the effectiveness of the Bank's assistance with officials inthe Ministry of Policy Planning and Implementation and with staff of theKurunegala Rural Development Project. The mission met with farmers and fieldstaff and visited numerous project sites. The kind cooperation and the valuableassistance of the GOSL in the preperation of this report is gratefullyacknowledged.

The PCR provides a full account and assessment of the project'simplementation experience. The PAR elaborates on specific aspects such asproject design, agricultural and institutional aspects, project economics andsustainability, and post-implementation developments.

Following standard OED procedures, copies of the draft PAR were sentto the relevant GOSL officials for comments on March 25, 1992. The commentsreceived from the Ministry of Policy, Planning and Implementation are reproducedas Attachment to the PAR.

Project Completion Report: Sri Lanka Kurunegala Rural Development Project (Cr. 891-CE),Report No. 8273, December 31, 1989.

Staff Appraisal Report: Sri Lanka Kurunegala Rural Development Project, Report No. 2292a-CE,March 8, 1979.

President's Report: Sri Lanka Kurunegala Rural Development Project, Report No. P.2492-CE,March 19, 1979.

Development Credit Agreement: Sri Lanka Kurunegala Rural Development Project, Credit No. 891-CE, April 26, 1979.

-ift -


SRI LANKA


BASIC DATA

Key Proiect Data

Actual I ofAppraisal Estimate Actual Appraisal Estimates

Total Project Cost (US$ million) 30.00 33.73 112Total Project Cost (Re million) 465.00 726.98 156Credit Amount (US$ million) 20.00 ----Disbursed (US$ million) --- 17.10Cancelled (US$ million) ... 2.90Economic Rate of Return 322 23Y 61Institutional Performance Fair

Cumulative Estimated and Actual Disbursement(in US$ million)

FY80 FY81 FY82 FY83 FY84 FY85 FY86

Appraisal Estimates (US$ million) 3.00 8.00 12.00 16.00 20.00 ---- ----Actual (US$ million) 1-57 3.38 5.00 7.60 9.70 11.6 17.10Actual as 2 of Appraisal 52 42 42 48 49 58 86Date of Final Disbursement Jauuary 21, 1987

Project Dates

Original Actual

First Mention in Files ---- Sept. 3, 1976Negotiations ---- Feb. 21-23, 1979Board Approval ---- March, 1979Credit Signing ---- April, 1979Credit Effectiveness July, 1979 August, 1979Credit Closing June, 1984 June, 1986

Staff Input(In Staff Weeks)

FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 Total

Preappraisal 22.8 16.5 .3 -- -- -- -- -- -- -- -- -- 39.5Appraisal -- 34.2 49.0 -- -- -- -- -- -- -- -- -- 83.2Negotiation -- -- 8.4 -- -- -- -- -- -* -- -- -- 8.4Supervision *- -- 2.8 37.2 14.9 6.8 10.9 9.8 8.3 8.8 -- 1.1 100.8Other .2 .1 .4 1.2 -- -- -- .4 --- 2.3

TOTAL 22.9 50.7 61.0 38.4 14.9 6.8 10.9 10.2 8.3 8.8 .0 1.1 234.2

Audit estimate of ERR is about 232, while PCR estimate was 382.

- iv-

Mission Data

Date No. of Man Days Specializat pns Performa?e Type ofMo/Yr Personall in Field Represented-' Rating - Problemail

Through 12/76 6 25 E,M,C,A,I -- --

Appraisal 6/77 3 6 E,A -- --

3/78 6 27 E,A,C,Cr. -- --

9/78 2 14 E.C -- --

1/79 2 * 23 E,A -- --

Supervision I 9/7911 4 30 E,M,C 1 T

Supervision II 7/8011 3 * 95 A,E,C 2 F,M,TSupervision III 12/801' 1 10 E 2 F,M,TSupervision IV 6/81 1 * 10 E 2 F,T

Supervision V 11/81 1 7 A 2 T

Supervision VI 1/82 4 * 7 E,A,C 2 F,T

Supervision VII 9/82 3 5 E,A,C 2 T,MSupervision VIII 7/83 3 * 20 E,A,C 2 T,MSupervision IX 3/84 3 * 15 E,A,C 2 T,MSupervision X 12/84 2 * 11 A,C 2 T,HSupervision XI 3/85 1 * 19 E 2 T,MSupervision XII 12/85 2 * 18 E,C 2 --

Supervision XIII 3/86 3 * -- E,A,C, 2 --

Other Prolect Data

Borrower : Goverment of the Democratic Republic of Sri Lanka (GOSL)Fiscal Year : January 1 to December 31Name of Currency : Rupees (Re)Exchange Rate : Appraiiial Year : 1978 US$ 1 w 15.80

Intervening Years/Average : 1979 US$ - 15.571980 US$ * 16.581981 US$ w 19.251982 US$ - 20.801983 US$ a 23.531984 US$ - 25.441985 US$ - 27.16

Completion Year 1986 US$ - 27.95

Post Implementation Years 1987 US$ - 30.761988 US$ - 33.031989 US$ - 40.001990 US$ - 40.24

k' Multiple purpose missions marked (*).l E - Economist. M - Monitoring and Evaluation Specialist. C - Civil Engineer.

A - Agronomist. I - Rural Industries Specialist. Cs:.- Credit Specialist.I - Problem free; 2 - Satisfactory; 3 - Deteriorating.

11 F * Financial; M - Managerial; T * Technical; D - Others.Date of return to headquarters.

- v -


SRI LANKA


EVALUATION SUMMARY

Introduction Obiectives

1. The Kurunegala RD project, the 3. The objectives of the projectsubject of this audit, was the first which was the first attempt toof three RD projects approved by the develop an entire district in anBank in Sri Lanka. In addition to integrated manner, was to evolve athese three, the Bank to-date has replicable model of regional develop-approved credits for 24 projects ment for raising productivity, em-amounting to US$549 million for the ployment, incomes and livingagriculture sector. These include standards through strengthening ofMahaweli Ganga development, irriga- development-oriented institutionaltion, treecrop, area development, services, accompanied by criticaldairy development, forestry, input complementary investments in physicalsupply and agricultural research infrastructure. The project speci-projects. Following the Kurunegala fically consisted of: a) rehabili-RD project, 11 other RD projects were tating existing irrigation schemesfinanced by other donors. These are and improving water management; b)either completed or currently under rehabilitating coconut plantations;implementation. c) strengthening agricultural ex-

tension services; d) improving agri-2. In 1990 agriculture accounted cultural input supply services; e)for 24 percent of GDP, 43 percent of strengthening agri-cultural creditemployment and 32 percent of exports. facilities; f) improving utilizationIn recent years agriculture's im- and effec-tiveness of transportation,portance to the economy has declined health, education, drinking water anddue to its relatively poor per- rural electrification facilities.formance, partly caused by the ethnicconflict in the North and East, civil ImRlementation Experiencedisturbances in the South andunfavorable weather conditions. Tea 4. Overall, the limited capacityis the important export crop followed of the line agencies, the shortage ofby rubber and coconut products. staff, and budgetary problems wereAbout 73 percent of agri-cultural the main reasons for the two-yearland is under smallholdings; 50 implementation delay. US$17.1 mil-percent of the smallholders operate lion of the original credit amount of85 percent of the cultivable land, 39 US$20.0 million was eventually dis-percent have home gardens, and about bursed and the balance of US$2.911 percent are landless. Treecrops million was canceled. Actual costs(40 percent) and paddy (33 percent) were 12 percent higher than appraisalaccount for major areas of permanent- estimates in US dollar terms and 56ly cultivated land. percent higher in local currency

- vi -

terms due to an 80 percent devalu- Finally, with regard to increasingation of the Rupee relative to the US te production of existing plants,dollar during the period of project which comprised 70 percent of allimplementation. In local currency plantations, nothing was done and noterms the agricultural components subsidy was provided.cost 58 percent more than planned,especially irrigation and credit, the 7. The People's Bank (PB) and Banktwo largest components; cost overrun of Ceylon (BOC) were the two mainfor the social infrastructure compo- lending institutions providing agri-nent was 27 percent. cultural credit. Disbursements for

paddy cultivation and for coconut5. Irrieation and water manage- fertilizer were slow. However, thement, the largest component, achieved main variation with what was plannedmuch of its physical targets after a in the SAR was with regard to equip-two year project extenston. All 9 ment and vehicle loans for landmajor schemes and 453 minor schemes preparation. Only 100 four-wheelwere rehabilitated. However, despite tractors (200 targeted in the SAR)these physical achievements, improved were financed, in part because theywater management has been largely were much too expensive for mostineffective due to lack of accounting farmers. The large residual fundsfor the risk of crop failure, short- were used for the purchase of 2,383age of water in the Yala (southwest two-wheel tractors compared to 500monsoon) season, nonexistence of targeted in the SAR. Recovery ratesoperational plans to guide and in- for paddy loans were about 80 per-volve farmer groups and lack of con- cent, for farm machinery loans 60sideration of the different agroeco- percent and for high value crop loanslogical zones in the district. As a over 90 percent.result, cropping intensity has beenlower than expected. Minor irriga- 8. With regard to iLiut suPEly,tion schemes have only been able to despite construction of 57 storesstabilize the Maha (northeast (SAR target of 80) farmers continuedmonsoon) season crop, but have not to purchase a large quantity ofproduced the expected Yala season fertilizer from private traders dueincreases. to more convenient credit arrange-

ments. A seed processing center was6. For the coconut development built (2 tons/hour capacity). How-component, physical rehabilitation ever, farmers continued to obtaintargets were achieved; so were large quantities of seed from outsidereplanting/underplanting targets, sources.despite delays caused by insufficientsupply of seedlings, difficulty in 9. The reorganization andidentifying smallholdings, land strengthening of agricultural exten-disputes, and reduction in the real sion in the district subse-quentlysubsidy rate due to inflation. came under the responsibility of theHowever, the intercropping sub- Agricultural Extension and Adaptivecomponent achieved less than 50 Research project .(AEARP), which waspercent of its SAR target due to concurrently implemented.farmers' lack of familiarity with theproduction technology, unsuitability 10. The iroundwater comi3onent, costof some of the soils, inadequate more than planned but deservedrainfall, lower subsidy for fertil- greater emphasis. The audit is veryizer and declining coconut prices. impressed with the real opportunities

- vii -

to farmers where groundwater is productivity should be accepted asavailable in the district. Other valid? To evaluate this question, aGovernment programs and donor as- number of secular changes in Srisistance are currently trying to Lanka between 1979-85 have to beexploit this resource. considered. These changes make the

case that all of the increase in11. The social infrastructure sup- production and yields are not at-ported by the project, such as rural tributable to the project alone.roads, improvements to health care Paddy yields nationally increaseddelivery systems, provision of educa- significantly after 1975, particu-tional facilities and equipment, larly after 1979, and continued upelectrification of rural areas and until 1985 when yields began toconstruction of dug wells for drink- stagnate. There are clear idi-ing water (mostly in line with SAR cations that the nationwide increasetargets) were beneficial for the in yields at the time was attribut-receiving communities, although small able to the availability of highby way of needs. A large number of yielding varieties, provision ofthe dug wells were, however, contami- subsidized fertilizer, improvednated with iron and became non-opera- quality seeds and supportivetional within a short period of time. Government policies such as guaran-The audit was rather impressed by the teed price and market. Thus therecent efforts of a donor (GTZ) which yield increases reported in the PCRhas operationalized all of these iron are not all due to the project inter-contaminated wells by not only find- ventions.ing a technical solution but also bydeveloping a system of social respon- 14. Coconut: The PCR analysis issibility among the villagers in re- based on the assumption that thesolving this problem. project resulted in an incremental

yield of 880 nuts/acre annuallyResults compared with the SAR estimate of 400

nuts/acre. The PCR assumes that12. Aericultural Impact: Quanti- without the project interventionsfiable project benefits in the SAR conditions on the field would haveand PCR are attributable to increased deteriorated much faster and yieldspaddy and coconut productioL. Incre- would have declined from a base ofmental paddy production, which would 1,700 nuts/acre to 1,420 nuts/acrereach full development in 1986, was rather than increase to 2,000to be about 49,000 tons (SAR) but auts/acre without the project asreached 56,000 tons (PCR); and incre- stated in the SAX! This change inmental coconut production at full the without project situation is whatdevelopment in 1991 was to amount to has increased the PCR's incremental144 million nuts (SAX) but was re- yields and production gains.vised to reach only 107.1 millionnuts in the year 2003.

15. Economic Analysis: With the13. Paddy: The incremental average above two caveats on paddy andpaddy yield in the SAR is 0.12 coconut yields and production, theton/acre and in the PCR is 0.08 audit reestimated the ERR of thetons/acre. The main issue concerning project on the basis of the latestthe agricultural impact is whether price forecasts. The SAX's ERR forincremental yields cited in the PCR the project was 32 percent while theare realistic i.e., what increased PCR reestimated the ERR at completion

- viii -

to be 38 percent. On the basis of 18. However, despite these positivearguments presented above incremental contributions, the next level ofpaddy and coconut benefits are much institutional transformation waslower than those reported in the PCR. neither aimed at nor achieved. TheThus, the audit reestimated the ERR project did not involve participationof the project on the basis of 75 of beneficiaries in identification,percent and 60 percent incremental planning or implementation. A goodbenefits, the latter perhaps being example of the neglect of beneficiarythe best guess estimate at best. At involvement is illustrated by the75 percent of projected benefits for sub-par performance of the minorpaddy and coconut, the ERR is about irrigation schemes.28 percent and at 60 percent ofprojected benefits, the ERR is about Sustainability23 percent (Annex 2, Table 1). Theaudit believes the ERR real4 stically 19. Sustainability of assetswould be 23 percent or less. created under the project poses a

real problem. Assets created under16. Institutional Impact: On the the project were expected to bewhole, the project had a positive maintained by the respective lineimpact on the evolving institutional agencies. However, decreased reve-framework for RD. The project util- nues and the government's budgetaryized and strengthened the existing problems in recent years have meantline agencies to implement the lower level of funds for line agen-various activities. It did not cies. Adequate and timely funds tocreate a new institution that might undertake maintenance and upkeep arehave undermined the traditional not available. Staffing levels de-government departments. A signifi- creased after project completion andcant institutional achievement has a number of staff who gained valuablebeen considerable administrative, experience left the country with thetechnical and financial decentral- deterioration in the securitv situ-ization as well as the valuable ation. On the agri-culturai side,experience gained by staff at the the poor quality of work on the down-Project Office in trying to coordi- stream component of the minor irriga-nate different project activities and tion schemes meant that higher levelsagencies. of maintenance expenditure are re-

quired sooner than expected. Also,17. The project set up a Project the ramoval of the fertilizer subsidyCoordinating Committee (PCC) at the has resulted in a sharp decline indistrict level and a'Project Steering fertilizer use on coconut within theCommittee (PSC) at the national past year and a half. Unless therelevel. The main achievement of the is some way to 'ncrease the financialPCC has been in resolving outstanding profitability oi coconut for small-inter-departmental coordinating holders, yields will continue to de-problems; and of the PSC has been cine even further.that of playing the role of finalarbitrator in solving policy issuesand coordinating unresolved problems Findings and Lessonsat the district level. Both com-mittees have facilitated harmonious 20. Overall, the project is con-coordination of government line sidered satisfactory despite a two-departments with the Project Office, year delay in implementation anda comendable achievement. subpar performance of some of the

- ix -

components. The strong commitment of use of rainfall, switching to higherthe Government to RD and its active value crops in some cases and en-role in conceptualization, identi- couraging greater community partici-fication and preparation of the pation for water users.project has been an essential in-gredient of the project's success. 22. A design problem of the projectThe experience gained in implementing was that it did not address the needsthis first multisectoral RD project of the upland farmers in the dry zonehas been a valuable learning process, areas in the north of the district.especially in view of the large num- Thus the project missed out on anber of RD projects that followed. At important segment of the district'sworst, the Kurunegala RD project poor farmers who grow upland cropsprovided little or no integration; at such as maize, finger millet, pulses,best, it provided funds to the line etc.agencies to undertake a whole rangeof activities at a much faster rate. 23. Another design problem relatesIt is no surprise that during imple- to the inadequate treatment of organ-mentation the project provided 50 ization and management aspects in thepercent of the District's annual SAR, particularly problematic givenc-pital budget. In that sense, the the complex, multisectoral nature offocus of the District Administra- the project. Project design ought totion's task, from largely administra- have addressed more clearly the spe-tive to greater emphasis on cific functions of individual agen-development-oriented activities, has cies and the inter-relationshipsbeen a positive development. between them. Also, the experience

with this project, in which the SAR21. The concentration of the is used exclusively as a referenceagricultural components on paddy and point for supervision and monitoringto a lesser extent on coconut makes processes, has raised the issue that

the project economically viable since a greater level of management flexi-Sri Lanka has been traditionally bility is desirable in the design ofcompetitive in both crops. However, RD projects in Sri Lanka.the means of achieving the benefits,in particular the rehabilitation of 24. Other external donors havethe minor irrigation schemes, are in been involved in the design andmany cases questionable, in large implementation of RD projects in thepart because of the lack of bene- country. Although these donor-ficiary involvement in identifi- assisted projects had the commoncation, planning and implementation. purpose of increasing incomes and

The essential achievement of the improving quality of rural lifeminor irrigation schemes has been to through investments in core activi-stabilize the Maha season paddy crop; ties, a number of differences inbut the expected Yala season pro- style and substance emerged duringduction has not been achieved due to implementation between those sup-unavailability of water for irriga- ported by the Bank and those sup-tion. However, the situation can be ported by the bilateral donors. Theimproved if greater efficiency of Kurunegala RD project thus brought towater use can be achieved, perhaps by the Lore and sharpened the debateusing field pumps where possible within Sri Lanka about the size,rather than relying totally on scope, composition and complexity ofgravity-based systems, making maximum RD projects.


SRI LANKA

RURUNEGALA RURAL DEVELOPMENT PROJECT(CREDIT 891-CE)

I. INTRODUCTION

1.1 This is the audit of the Kurunegala Rural Development (RD) Projectin Sri L4nka, the first RD project in the country. Since the Kurunegala RDproject was the first attempt to develop an entire district in an integratedmanner, it is viewed as an evolving replicable model of regional development.!,The audit evaluates the Kurunegala RD project in terms of its stated objectivesof raising productivity, employment, incomes and living standards of the ruralpopulation through strengthening of development-oriented institutional servicesand complementary physical infrastructure investments.

1.2 The Bank to date has approved credits for projects amounting toUS$549 million for the agriculture sector. These include five Mahaweli GangaDevelopment projects (including a Technical Assistant project), five irrigationprojects, five treecrop projects (tea and rubber), three rural developmentprojects (including this Kurunegala RD project), two dairy development projectsand one project each in the forestry, agricultural development (providing foreignexchange for purchase of imports) and agricultural research subsectors.

1.3 Sri Lanka is an island country east of the southern tip of India.Its land area is *6.5 million ha and its population was 17 million in 1991.Cultivated land per rural family is quite small in some parts of the countrysince only a third of the land area is under cultivation. Agriculture plays animportant role in the country's economy -- in 1990 it accounted for 24 percentof GDP, 43 percent of employment and 32 percent of exports. Tea is the importantexport crop, followed by rubber and coconut products. In recent years,agriculture's importance to the economy has declined due to its relative poorperformance. At the same time the urban-based sectors of the economy haveregistered higher growth rates.

1.4 The country is divided into three agro-ecological zones -- the dryzone, where annual rainfall averages between 600-900 mm; the intermediate zone,where annual rainfall averages between 1,200-1,500 mm; and the wet zone, whereannual rainfall averages over 2,000 mm. The wet zone covers about 30 percent ofthe cultivated area and 70 percent of the rural population live there. Rainfallover the island follows a bimodal pattern, the north-east monsoon prevails fromNovember through February (the main season, called the "Maha" season) and the

.11 Following Kurunegala RD, the Bank approved two other RD projects in the country. The SecondRD project in Matale and Puttalam districts, approved in December 1980, was almost fullyimplemented. The Third RD project in Mannar and Vavuniya districts, approved in May 1983, wassuspended (with only 111 of the credit disbursed) in March 1986 due to ethnic conflict in thenorth and east. Apart from the three RD projects financed by the Bank, 11 other RD projectsare either completed or under implementation in the country. IFAD has financed two and ninehave been financed by bilateral donors including SIDA, NORAD, FINNIDA, Dutch Aid, JICA andGTZ.

- 2 -

south-west monsoon prevails from May through September (the off-season, calledthe "Yala" season). Variety of soils and vegetation, and temperature changeswith elevation and topography add to the varied ecological conditions.

1.5 About 73 percent of agricultural land is under smallholdings, butthere are also a large number of plantations of tea, rubber and coconut. Theaverage size of smallholdings is about 0.8 ha; 50 percent of the smallholdersoperate 85 percent of the cultivable land; 39 percent have home gardens; andabout 11 percent are landless. Many of the smallholders have lowland plots whererice is usually grown and upland plots where subsidiary food crops and treecropsare grown. Treecrops (40 percent) and paddy (33 percent) account for majorareas of permanently cultivated land. Other crops include minor export cropssuch as cinnamon, cocoa, coffee, cardamon, cloves, ginger, pepper etc. and alsosubsidiary food crops such as maize, groundnuts, pulses, chillies, onions etc.

1.6 Before 1977, Government intervention in the economy was extensive andSri Lanka pursued inward looking economic policies. Despite considerableachievements in the social sectors in the 1960s and 70s, overall economic growthwas slow. This led the elected Government in 1978 to liberalize the economy andundertake major new investment programs. In particular, the agriculturalstrategy after 1978 favored greater liberalization and strengthening of essentialservices. Agricultural growth rate picked up between 1978 and 1986. However,between 1987 and 1991, agriculture performed poorly. The negative growth rateof agricultural GDP in the past four years is explained by the disruptions causedby ethnic conflict in the North and East, civil disturbances in the South andunfavorable weather conditions.

1.7 The new Government which came to office in early 1989 was faced witha serious financial crisis. The Government, with assistance from IDA and theIMF, initiated an adjustment program in September 1989. The aim was to stabilizethe economy and address key constraints to growth by reducing the fiscal deficitand by strengthening the balance of payments. In the agricultural sector, thismeant eliminating major subsidies on wheat, flour, rice and fertilizer,rationalizing welfare programs, freezing public sector hiring and reducingrecurrent budgetary expenditures. The Government also sought to emphasize adiversification away from only rice to increasing production of higher-valueexport crops.

II. PROJECT EVOLUTION, OBJECTIVES AND DESIGN

Proiect Evolution

2.1 From the very beginning, when discussions on a RD project wereinitiated in Sri Lanka, the Government expressed the view that the project tobe identified/prepared ought to be based on an "integrated" concept of ruraldevelopment that would include agriculture, industry and social and economicinfrastructure. Senior officials in the Ministry of Planning and EconomicAffairs at the time were very impressed with the "Comilla model" in Bangladeshand GOSL had earlier adopted the Integrated Rural Development concept as astrategy for improving the quality of life in the rural areas of Sri Lanka. Thus

- 3 -

when Bank staff identified a project in which the components were physicalinfrastructure (irrigation improvement, water management improvement in the tankcommand areas, feeder roads), improvement oE coconut production and intercroppingunder coconut, strengthening extension services for paddy and other crops, creditfor the beneficiary farmers, the Government expressed dismay "that the projectcomponents do not include any economic and social overheads". It was theGovernment's view that "for an overall development of a rural area, economic andsocial infrastructure is as important as agricultural development". TheGovernment wanted other components such as education, health services, watersupply, electricity, social services and even small scale rural industries to beincluded.

2.2 Bank staff expressed some reluctance in including such a wide arrayof project components, particularly those activities that did not affectagricultural production directly. The initial deadlock was resolved by the Bankproposing to prepare the main components listed above, but continuing to explorethe possibility of whether a small scale rural industrial component was suitablefor financing and suggesting that GOSL continue preparation of the remainingcomponents such as education, health, water supply, electricity etc. Oncepreparation oecame fairly advanced and as an approach to possible financing andimplementation began to be formulated, the Bank sent additional experts toconsider which components would be included in the project. In the end, the Bankagreed to include most of the components proposed and prepared by the Government.Although investments for such individual components were relatively small theyadded up to about 22 percent of project costs. The only important componentproposed by GOSL that was eventually left out was the small scale ruralindustries component.

2.3 The reason for selecting the Kurunegala district as the site of thefirst RD project was that its fairly large area and population made it a suitableadministrative enclave to test out whether an integrated approach would worksuccessfully and be replicated in other parts of the country. Also, thedistrict's overwhelming rural character, a diversity of agroecological zones, andcropping patterns and large paddy and coconut areas gave it a large potential forintegrating high priority economic activities. The fact that Kurunegala districtdid not benefit from the expensive Mahaweli schemes made the siting of a RDproject in the district partially address intra-regional disparity issues.

Objectives

2.4 The objective of the project was to evolve a replicable model ofregional development for raising productivity, employment, incomes and livingstandards through strengthening of development-oriented institutional services,accompanied by critical complementary investments in physical infrastructure.

2.5 The project specifically included:

a) rehabilitation of existing irrigation schemes accompanied byimproved water management practices to fully exploit theirrigation potential;

-4-

b) stepped-up program of replanting/underplanting, interoroppingand fertilizing of smallholder coconut plantation to overcomepast neglect;

c) reorganization and strengthening of agricultural extensionservices to improve their effectiveness;

d) improvements in input supply services such as fertilizerdistribution, seed supplies, planting materials and farmequipment;

e) strengthening of agricultural credit facilities for cropproduction loans as well as for investment in farm equipmentand machinery; and

f) limited investments in transportation, health, education,drinking water and rural electrification to improveutilization and effectiveness of the existing facilities.

Desian

2.6 The project was meant to emphasize: i) directly productiveinvestments; ii) local level political participation in identification of projectinvestments; iii) reduction of intra-regional disparities; and iv) financial,technical and institutional replicability and v) labor-intensive quick-yieldingrehabilitation works rather than new construction. GOSL, thus saw this first RDproject as a complementary, and in a sense, alternative approach to the moreexpensive Mahaveli Ganga irrigation and power schemes for improving the qualityof rural life. In contrast to the Mahaweli schemes, the Kurunegala RD projectwas a quick-yielding, smaller scale, relatively low-cost per beneficiaryinvestment. From GOSL's viewpoint, it was an attempt to decentralize thedevelopment process and benefit the low and middle-income rural farmers. Theproject complemented the on-going administrative measures taken at the time toempower district administration, decentralize the capital budget and promotevillage-level development initiatives.

2.7 Specifically, project design emphasized rehabilitating the productionbase for paddy and coconut and improving the supporting services essential forthis increased production. Thus a large part of project investments (39 percentof base costs) was directed at the irrigation and water management component forpaddy and coconut. If, in addition, credit, extension and input supply programcomponents were added to this, 78 percent of the project's base costs isaccounted for by paddy and coconut improvement investments.

2.8 Organizationally, the project was complex, comprising 13 differentcomponents and involving 12 different ministries and 20 agencies. As such, itwas totally unrealistic to expect that the project would be implemented in 5years. The roles of the various agencies were not clearly defined andcoordination threatened to be a problem from the start. However, unlike otherRD projects the Bank has supported in many countries, the essential institutionalcomponents existed prior to the project. Kurunegala RD project was expected to

-5-

work through existing line agencies rather than through the creation of aseparate implementing agency that often undermine the government's line agencies.The project was expected to be coordinated by a Project Steering Committee at thenational level and a Project Coordinating Committee at the district level. TheProject Director was the head of the latter committee and was entrusted with theresponsibility of monitoring, supervising and coordinating the project works ofthe various agencies involved in the project. Also, as a result of theorganizational structure, administrative decision making and financial matterswere left with the institutions and persons at the district level rather thanwith a central agency.

III. IMPLEMENTATION

Implementation Experience

3.1 The project's physical implementation is adequately described in thePCR.' The achievements and shortfalls of the physical implementation targetsare shown in Annex 1, Table 1. This implementation section summarizes theproject's physical implementation, discusses selective issues and updates somerecent developments that have affected the project investments.

3.2 The Credit Agreement was signed in April 1979 and it became effectivein August 1979. The credit was closed in December 1985, two years after theoriginal closing date because implementation did not progress as planned duringthe initial phase. The main reason for the initial delay was slow procurementof equipment and vehicles due to the implementing agencies' lack of familiaritywith International Competitive Bidding (ICB) procedures. Also, shortage ofstaff, especially in the Department of Irrigation (DOI), slowed down the tankidentification and rehabilitation works. The social infrastructure componentswere completed more or less according to schedule. Overall, however, the limitedcapacity of the line agencies and budgetary problems were the main reason forimplementation delays. US$17.1 million of the original credit amount of US$20.0million was eventually disbursed and the balance of US$2.9 million was cancelled.

11 Report No. 8273, December 31, 1989 (parse. 5.10-5.36).

-6-

TABLE 1: Comparison of Appraisal and Actual Proiect Cost and Financing

A. PROJECT COSTS ACTUAL AS 2 ACTUAL AS 2APPRAISAL ACTUAL OF APPRAISAL APPRAISAL ACTUAL OF APPRAISAL

----------- (US$ million)-------- ----------- (Re million)---------

I. Agricultural Components

Irrig. & water management 8.03 8.70 108 124.50 194.79 156

Coconut development 5.27 4.82 91 81.75 105.75 129

Agricultural extension 1.29 1.00 59 20.00 20.04 100

Agricultural inputs 1.35 1.07 79 20.90 21.38 102

Agricultural credit 7.62 9.93 130 118.05 220.25 187

Livestock 0.20 0.20 100 3.10 3.70 119

Groundwater exploration 0.62 1.44 232 9.65 31.00 321

Sub-total 24.38 27.16 111 377.97 596.91 158

II. Social Infrastructure

Rural Roads 1.10 1.39 126 17.00 26.91 158

Rural water supply 0.86 0.41 48 13.35 8.45 63

Rural electrification 1.01 1.06 105 15.60 17.36 111

Health 0.41 0.71 173 6.40 14.81 231

Education 0.94 0.91 97 14.50 17.13 118

Sub-total 4.31 4.48 104 66.85 84.66 127

III. Project Coordination 1.30 2.09 161 20.20 45.41 225and Investigation

Total 30.00 33.73 112 465.00 726.98 156

B. FINANCING

APPRAISAL ACTUAL

(US$ million) (M) (US$ million) (2)

IDA 20.0 66.7 17.1 51

GOSL 5.2 17.3 11.2 33

People's Bank/Bank of Ceylon 0.8 2.7 1.7 5

Beneficiaries 4.0 13.3 3.7 11

TOTAL 30.0 100 33.7 100

-7-

3.3 Project cost comparisons at appraisal and completion are shown inTable 1. Actual costs were 12 percent higher than appraisal estimates in USdollar terms and 56 percent higher in local currency terms due to an 80 percentdevaluation of the Rupee relative to the US dollar between the time of projectapproval and completion. For the agricultural components (81 percent of actualcost), overall cost overrun was about 11 percent higher in US dollar terms and58 percent higher in local currency terms. In local currency terms all theagricultural components cost more than planned. Expenditures for irrigation andwater management and credit, the two largest project components, weresignificantly more than planned. Groundwater component, which comprised arelatively small investment (4 percent of actual cost) had the highest costoverrun. Cost overrun for the social infrastructure component (13 percent ofactual cost) was 4 percent higher in US dollar terms and 27 percent higher inlocal currency. Expenditure on the rural roads component was significantlyhigher than planned. Also, expenditures on project coordination activities (6percent of actual cost) were also higher than expected.

3.4 The SAR stipulated that IDA would finance two-thirds of the projectexpenditures, while GOSL would finance about 17 percent, People's Bank (PB) andBank of Ceylon (BOC) about 3 percent and beneficiaries about 13 percent. Atcompletion, GOSL contribution increased to 33 percent and the Bank contributiondropped to 51 percent of total expenditures; PB/BOC financed 5 percent andbeneficiaries financed the remaining 11 percent of project expenditures.

Irrigation and Water Management

3.5 Irrigation and water management, the largest component in terms ofcost, targeted to rehabilitate 9 major and 500 minor irrigation schemes atappraisal. The rehabilitation work on the minor irrigation schemes includedrepairs to bunds, installation of lockable sluices, repairs to the spillways andconstruction of field channels. The rehabilitation work on the 9 majorirrigation schemes were more extensive and included desilting and enlarging themain channels, repairing, enlarging and graveling embankments such as farm roads,selected lining of conveyance system to reduce water seepage, construction ofdrainage outlets and regulators, and installation of distributor gates. Althoughthe rehabilitation works got off to a slow start, the two year extension of theproject made it possible to complete all 9 major schemes and 453 minor schemeswere also rehabilitated (Annex 1, Table 1). However, despite these physicalachievements, the improved water management of irrigation schemes proposed in theproject has been largely ineffective or has not worked.21

3.6 Once the physical rehabilitation work was completed, the SARemphasized adopting a system of controlled use of water. The SAR favored the

adoption of the "Walagambahuwa" model developed over a few years prior to the

project at the Maha Illupalama Research Station to increase efficiency of rain

Also, a number of supervision reports raised the issue that the quality of work downbtreamon the minor irrigation schemes were unacceptable in many cases (e.g. SPN Report, April 24,1985).

-8-

water use, decrease wastage of stored water and improve equitable waterdistribution within the irrigation schemes. This approacb is based on advancingthe paddy planting date to mid-October with the onset of the Maha season rainsand by using a rapidly maturing paddy variety (90-105 day variety) in order tomature the Maha season paddy with minimum water from the tank as supplementaryirrigation. One of the important premise of "Walagambahuwa" approach is that byadopting this system water would be saved during the Maha season when there wasplentiful rainfall and would be used to grow a second crop of paddy or short termfood crop in the Yala season when the need for water was greater. The mainimplication is that the Maha rice would be dry seeded, water would be suppliedon a rotational basis to the farmers and crop diversification would be promotedin the Yala season.

3.7 An evaluation of the irrigation and water management component of theproject was undertaken by the Agrarian Research and Training Institute (ARTI)based on the rehabilitation work of the minor and major irrigation schemes at thefirst stage of the project.- The study found that water availability was themajor factor affecting farmers' decision regarding date of planting, input useand whether to cultivate paddy or chena.1i Chena cultivation is very importantin the dry zone areas of the district and estimates by ARTI shows that as muchas 50 percent of the net income of farmers in the dry zone areas come from chenacultivation. In the dry zone areas most farmers cultivate chena as a hedgeagainst partial or total failure of the paddy crop. The SAR noted for thisreason that only when the chena crops are secured do the farmers transferattention to paddy land, resulting in delayed Maha planting and consequent wasteof rainfall. The ARTI evaluation takes exception to this point of view andsuggests that farmers do not delay paddy cultivation because of preoccupation (interms of labor allocation) with the chena crop and that chena crop does notimpede paddy cultivation. The reason they cite is thit in tank-based paddycultivation, farmers delay paddy sawing until tanks receive sufficient water forfarmers to feel secure that there will be enough water to see them through theend of cultivation. Tanks in the dry zone usually take between October to mid-December to fill up, meanwhile farmers plant chena on the basis of rain water,which is enough for chena crop germination. By the time farmers decide whetherto undertake paddy operations (i.e., there is enough water in the tanks), theheavy work in chena is already over.

3.8 The ARTI study also found that the cropping calendar was neitheradvanced in the district no- did dry seeding, where practiced, show anysignificant impact on water savings for the Yals season. Survey undertaken bythe evaluation study revealed that most farmers were unaware of how the"Walagambahuwa" model operated and how it saved water for the Yala season. AnInternational Irrigation Management Institute (IIMI) study notes that improvingirrigation management in Sri Lanka requires not only an organizational structurebut also an operational plan which gives a clear role to farmer groups and which

Kurunegala Integrated Rural Development Project: Ex-poet Evaluation; Research Study No. 84,January 1988; and Evaluation of the Irrigation and Water Management Component (Phase II),Research Study No. 74, September 1986, ARTI.

The main chena crops are manioc and tubers, kurakkan and other coarse grains, and vegetablesand pulses.

-9-

makes clear sense to the farmers.Yi Thus, it is the farmers' perception of theeffectiveness of any irrigation system and their comprehension of the plan thatbear importantly on their willingness to comply. Information feedback from theirrigation system to farmers and officials and information exchange betweenfarmers and officials are critical to making the system work.

3.9 Farmers' main concern is coping with the risk of crop failure. Forinstance, where rainfall is erratic farmers tended to minimize the risk of cropfailure by delaying sawing until tanks have sufficient storage. In the dry zoneareas, total rejection of dry seeding was reported. Thus the "Walagambahuwa"approach was inappropriate for the dry zone areas of the district because ofwater scarcity and risks associated with crop failure.zl The improved watermanagement system proposed by the project failed to consider the differentagroecological conditions existing in the district.

Coconut Development

3.10 The coconut development component included rehabilitation,replanting/underplanting, intercropping and increasing the productivity ofmatured plantation. The physical implementation achievements are shown in Annex1, Table 1.

3.11 The project achieved rehabilitation of 79,800 acres of coconutrehabilitation compared to appraisal target of 60,000 acres. This includedconstruction of contour drains and removal of excess palms.

3.12 The replanting/underplanting subcomponent got off to a slow start,due to insufficient supply of seedlings, difficulty of identifying smallholdingsand land disputes. Also, the reduction in the real subsidy rate due toinflation, despite nominal subsidy increases slowed down replanting activities.However, at the end of the two year project extension period, 24,000 acres werereplanted/underplanted compared to SAR target of 25,000 acres.

3.13 The intercropping subcomponent achieved less than 50 percent of itsSAR target of 10,000 acres and its overall performance is consideredunsatisfactory. Intercropping of coffee, cocoa, and pineapple were notsuccessful, but black pepper was successful. The reason for unsatisfactoryperformance was the farmers lack of familiarity with production technology andtheir reluctance to accept the recommendations. Also, unsuitability of some ofthe soils and inadequate rainfall adversely affected some inter-crops. Finally,as output prices declined and the real subsidy rate decreased, farmers did notfind intercropping profitable. In other words, what project wanted farmers todo made no financial or technical sense. As a result, the project introduced

Ekanayoke and Groenfeldtt Organizational Aspects of Improved Irrigation Management: Anexperiment in Devahuva Tank, Sri Lanka: IIMI, Working paper no. 17, May 1990.

11 The PCR also notes "that the model is best suited for adoption in the intermediate zone asrainfall is more plentiful, whilst for the dry areas of the district the model is lesssuitable*.

- 10 -

home gardens (1,422 set up by project ccmpletion) and horticulture program in

1983.

3.14 Lastly, the project did not make adequate provision for increasing

the productivity of existing crops which comprised 70 percent of all plantations.There was no manuring or fertilizer use for existing crops since no subsidy was

provided for existing crops unlike the replanting/underplanting component.

3.15 Extension for this component was provided by the Coconut CultivationBoard (CCB). Under the project, staff increased by 100 percent and 25 percent

additional office space was created. However, sustainability of this componentnow appears to be a serious problem due to a number of reasons. First, theoperating budget of CCB which was Re 500,000 during the period of projectimplementation, has been reduced to only Rs 200,000 while maintaining the same

number of staff. Second, the subsidy on fertilizer has been removed with the

result that it now costs Re 8,800 per ton of fertilizer -p from Rs 3,500 per ton.The result has been a sharp decline in fertilizer use on coconut within the pastyear and a half. Calculation by CCB shows that in 1991 operational cost per nutproduction went up to about Rs 1.5 from Rs 0.85. And the price per nut sold toestates is between Re 1.25-1.40. Farmer profitability for coconut production hasgone down, and with the decrease in fertilizer use, future yields can be expectedto fall.

Agricultural Credit

3.16 At appraisal it was expected that 25 percent of project expenditures(US$7.62 million) would be directed towards agricultural credit for the purpose

of enhancing farmers' ability to purchase necessary inputs. However, at projectcompletion, 29 percent of actual project expenditures (US$9.93 million) was spenton this component. (Annex 1, Table 2)

3.17 Credit facilities were expected to finance: a) short-term productionloans for paddy and other field crops; b) medium-term production loans forcoconut fertilizer; c) medium-term loans for purchase of about 200 four-wheel

tractors, 500 two-wheel tractors and 1,000 hand sprayers; and d) medium-termloans for purchase of 20 five-ton trucks by Multi-Purpose Cooperative Societies

(MPCS). To foster credit discipline and to impress upon the farmers a break frompast default habits, the credit component also aimed at recovering Re 16 millionin overdue debt prior to initiating lending operations. BOC was able to obtainedover 90 percent of its overdue debt, while ?B recovered less than 40 percent.

3.18 The People's Bank (PB) and Bank of Ceylon (BOC) were the two main

lending institutions through which most of the credit was channelled.

Disbursements for paddy cultivation and coconut fertilizer were slow. The mainvariation from what was planned in the SAR was with regard to equipment andvehicle loans for land preparation. Only about 100 of the 200 four wheel-

tractors planned for financing were purchased through the PB and BOC in the first

year (1980). Subsequently, four-wheel tractors were no longer financed, in partbecause they were much too expensive (Rs 200,000 for each in 1991) for mostfarmers and were not the most appropriate machinery for land preparation.

- 11 -

Therefore, the remaining funds were used for the purchase of additional two-wheeltractors (Re. 60,000 for each in 1991). In the end, 2,383 two-wheel tractorswere financed compared to 500 estimated in the SAR.

3.19 The two-wheel tractors are currently very popular. The audit isunable to comment on how extensively they are used for land preparation which wasthe original purpose of providing the funds, but observed that two-wheel tractorswere extensively used for transporting people and farm goods from village tomarket as well as for other purposes. Question arises as to whether such a largenumber (4 times the appraisal estimate) of two-wheel tractors ought to have beenprovided in an RD project which was designed to benefit poor farmers. The auditis not surprised that the two-wheel tractors are used for purposes other thanland preparation since those uses are more lucrative for the entrepreneurialfarmer. But because interest rate subsidies were provided, some questions ariseas to whether the project should have been providing credit to the better-offfarmers.

3.20 BOC officials interviewed suggested that recovery rate for paddyloans were about 80 percent, of which 50 percent paid were in time and theremaining 30 percent were eventually paid up. Recovery rates were only about 60percent for farm machinery loans, Credit for high value crops such as chillies,onions and vegetables had the highest recovery rates (only 10 percent defaultrates).

Other Azricultural Components

3.21 Input Suplv for paddy production was facilitated under the project.57 stores were constructed by project completion compared to an tppraisal targetof 80. In spite of this farmers continued to purchase a large volume offertilizer from private traders due to more convenient credit arrangements. Aseed processing center was built (2 tons/hour capacity) in 1983. The PCR and asurvey by ARTI in 1985/86 reported that farmers obtained two-thirds of theircertified seed requirements outside of Government cbAnnels. At the time ofmission visit the plant appeared to be functioning well and storing good qualityseed. It appeared to be suitably located and easily accessible for large numberof farmers. The seed processing center now appears to be supplying a widervariety of seeds to a larger number of tarmers than a few years ago.

3.22 The reorganization and strengthening of Agricultural extension in thedistrict under the project was to complement the extension effort that was beingconcurrently undertaken on a national scale under the Agricultural Extension andAdaptive Research project (AEARP), which was approved by the Bank three monthafter approval of this project. The achievements and shortcomings of theextension program under this project was at par with the efforts at the Nationallevel and have been discussed in detail in OED's recent audit of AEARP. Overall,the performance of the extension system under AEARP was considered onlymarginally satisfactory and provided a valuable experience for redesigning a newsystem currently being contemplated via an Agricultural Support Services projectwhich was approved in July 1991. The extension system set-up earlier played animportant role between 1979-84 in exploiting the gains of improved technology and

- 12 -

is likely to have speeded up the rate of adoption of improved rice technology.However, the extension system did not adapt to new challenges after 1984 -- inparticular its high fixed personnel costs led it to be perceived as cost-ineffective in its existing form.

3.23 The other agricultural components livestock development andgroundwater exploration provided a very useful experience. In particular, thegroundwater component, although costing more than planned in developing 88 testwells and 200 tube wells, deserved greater emphasis in the project. The auditis very impressed with the real opportunities to farmers where groundwater isavailable in the district. The audit mission saw extensive groundwaterutilization in some dry zones areas of the district and the production of highvalue crops and vegetables. The incomes generated by these high value crops haveconsiderably changed the lives of those benefitting from groundwater. OtherGovernment programs and donor assistance are currently trying to exploit theavailable groundwater through agro-well programs. The audit notes thisdevelopment with satisfaction.

Social Infrastructure Components

3.24 Although small by way of project cost (13 percent of actual costs),the social infrastructure supported by the project, such as 130 miles of ruralroads, improvements of 15 health care delivery centers, provision of educationalfacilities and equipment, electrification of 17 rural areas and construction of400 dug wells for drinking water (in line with SAR targets) were beneficial forthe receiving communities. However, these were rather small compared to thetotal social infrastructural need in the district. In retrospect, the projectprovided some additional funds to the existing line departments in intensifyingsome of their routine activities. A large number of the dug wells werecontaminated with iron and became non-operational within a short period of time.The audit was impressed by the recent efforts of a donor (GTZ) which hasoperationalized all of these iron contaminated well3 by not only finding atechnical solution but also by developing a system of social responsibility amongthe villagers in solving this problem.

Post Implementation Development

3.25 Since the PCR was written in early 1989, some changes have takenplace at the macroeconomic and national administrative levels that have affectedthe project.

3.26 First, was the Government's worsening fiscal crunch already felt atthe time of writing the PCR. A financial crisis confronted the new Governmentsoon after it was formed in early 1989. Among other problems, the fiscal deficitbecame so large that the Government was prompted to embark on a major economicrestructuring in mid-1989. One of the important goals of the stabilizationprogram that followed was to cut the fiscal deficit. This translated foragriculture into eliminating some important subsidies including those on wheat,

- 13 -

rice and fertilizer; also undertaken was structural reform with emphasis onpublic enterprise and public expenditure reform which translated into plans forcutting the civil service by 20 percent during the next 4-5 years withproportional effects on agriculture expenditures, especially currentexpenditures. Implication for Kurunegala RD has been fewer funds for operationsand maintenance activities.

3.27 Second, as a result of the 13th Amendment of the Constitution in late1988 which involved devolution of administrative authority to the Provinces, thestructure of administrative responsibility has shifted from the district to theProvinces for agriculture and agrarian services as well as most other componentsof the Kurunegala RD. The devolution involved a move away from the old conceptof the district as the administrative focal point. In addition to theresponsibilities of the Center, two levels were created at the Provincial andDivisional levels. At the Provincial level, the essential responsibilities areformulating policies, strategies, coordination and monitoring for the Province.At the Divisional level, the emphasis is on implementing developmentalactivities. The Divisional Secretary (DS) is also the Assistant Government Agent(AGA) and performs two functions. When dealing with devolved functions he actsas the DS, under the Chief Secretary of the Province; and when dealing with non-devolved activities he acts as the AGA. Agricultural is a devolved functionunder the office of the Provincial Director of Agriculture in most of theProvinces. However, given that maintenance works were already being undertakenby the respective line agencies, disruptions have been minimal except foragriculture extension where the extension workers were transferred to theGovernment's Poverty Alleviation program.

IV. PROJECT OUTCOME

Aaricultural Impact

4.1 The main source of project benefits in the SAR was paddy and coconutproduction. Irrigated paddy land was expected to increase by 10,000 acres; and60,000 acres of coconut land would be rehabilitated, 15,000 acres replanted and10,000 acres intercropped. Incremental paddy production which would reach fulldevelopment in 1986 would be about 49,000 tons; and incremental coconutproduction at full development in 1991 would amount to 144 million nuts.

4.2 Paddy The PCR analysis assumed that paddy yields were very muchunderestimated in the SAR for both the with and without project situations.Average paddy yields in the SAR for without and with project situations were 1.0ton/acre and 1.12 ton/acre respectively; in the PCR these average yields arereported as 1.36 tons/acre and 1.44 tons/acre!i respectively. The incrementalaverage paddy yield in the SAR is 0.12 ton/acre and in the PCR is 0.08 tonsiacre.However, despite this smaller incremental average paddy yield in the PCR the

Average paddy yield is based on average of paddy yields from major irrigation schemes, minorirrigation schemes and rainfed conditions.

- 14 -

incremental production at full development in the PCR (56,000 tons) is greaterthan in the SAR (49,000 tons). The question is how is this possible when noincrease in area cultivated is reported.

4.3 Consider instead not the average paddy yields, but yields from thetwo types of irrigation schemes and rainfed conditions.

Incremental Yields (tons/acre)

PCR SAR

- Major Irrigation Schemes 0.20 0.17- Minor Irrigation Schemes 0.09 0.12- Rainfed 0.00 0.12

4.4 The greater incremental production in the PCR is due to a largeproportion of production resulting from the irrigation schemes, especially themajor irrigation schemes.

4.5 The main issue concerning the agricultural impact of the project iswhether incremental yields (difference between with and without situations) fromthe irrigation schemes based on water availability and fertilizer application arerealistic i.e., what increased productivity should be accepted as valid? Toevaluate this question it should be pointed out that a number of secular changeswere taking place in Sri Lanka between 1979 and 1985. These changes make thecase that all of the increase in production and yields are not attributable tothe project alone. As pointed out in a number of reports (including the Auditof AEARP) paddy yields nationally increased significantly after 1975,particularly aftqr 1979 and continued up until 1985 when yields began tostagnate. There are clear indications that the reasons for the increase inyields at the time in Sri Lanka are attributable to the availability of highyielding varieties of paddy, provision of subsidized fertilizer, improved qualityseeds and supportive Government policies such as guaranteed price and market.Thus the yield increases reported in the PCR are not all due to the projectinterventions. The other factor that lends support to the argument thatincremental production at full development is below the 56,000 tons of paddyreported in the PCR is the low cropping intensity, particularly of the minorirrigation schemes. As discussed in paragraphs 3.5-3.9 improved water managementwas largely ineffective with the result that Yala season cultivated area was muchbelow expectations.

4.6 Coconut: The PCR analysis is based on the assumption that the projectresulted in an incremental yield of 880 nuts/acre annually compared with the SARestimate of 400 ruts/acre. This is so because the PCR assumes that, without theproject interventions, conditions on the field would have deteriorated muchfaster and yields would have declined from a base of 1,700 nuts/acre to 1,420nuts/acre rather than increase to 2,000 nuts/acre without the project as statedin the SARI This change in the without project situation is what has increasedthe PCR's incremental yields and production gains.

- 15 -

4.7 However, expected incremental production of 144 million nuts at fulldevelopment in 1991 was far from attained. Full production would only be reachedin the year 2003 and at only 74 percent (107.1 million nuts) of the SAR targetwith a 10-year delay. Also, it was planned that 200,000 acres of coconut landwould be suitable for intercropping, but not even 5 percent of the land wasintercropped.

4.8 Thus, with these two caveats on paddy and coconut yields andproduction, the audit reestimated the ERR of the project. (Annex 2, Table 1).The SAR's ERR for the project was 32 percent while the PCR reestimated the ERRat completion to be 38 percent. First of all, using the same assumptions as inthe PCR reestimation, but updating the price forecasts to November 1991 (PCR usedOctober 1988 prices) alone lowers the ERR to 33 percent. On the basis ofarguments presented in paragraphs 4.1-4.7 that incremental paddy and coconutbenefits are much lower than those reported in the PCR, the audit reestimated theERR of the project on the basis of 75 percent and 60 percent incrementalbenefits, the latter perhaps being the best guess estimate at best. At 75percent of projected benefits for paddy and coconut the ERR is about 28 percentand at 60 percent of projected benefits the ERR is about 23 percent (Annex 2,Table 1). The audit believes the ERR for the project realistically would be 23percent or less.

Institutional Impact

4.9 On the whole, the project had a positive impact on the evolvinginstitutional framework for rural development in the cotntry. The projectutilized and strengthened the existing line agencies to implement the differentactivities supported by the project. It did not create a new institution thatmight have undermined the traditional government departmenats, as has been thecase in many RD projects supported by the Bank in a number of countriesespecially in Africa.Y

4.10 The Project Office was the focal point of the '-.anization and washeaded by the Project Director, who was the Deputy Director in the DistrictPlanning Unit. During implementation the Project Office remained strictly aplanning, coordination and monitoring body without specific r sponsibility forimplementing project components. At the time of project clrsig, the ProjectOffice and the District Planning Unit wore merged to provid. a broader basedplanning and monitoring function for the district under a District PlanningOffice. With the recent devolution of authority to the Provinces, the DistrictPlanning Office at Kurunegala has come under the Northwestern ProvincialAuthority and is still in a position to carry out its development functions.

4.11 A positive aspect of this multi-sector project has been a stronggovernment commitment to RD at various levels. The project set up a ProjectCoordinating Committee (PCC) at the district level and a Project SteeringCommittee (PSC) at the national level. The above committees were first set up

1l World Bank Experience with Rural Development, 1965-86, OED Evaluation Study, 1988.

- 16 -

under the project and their experience have been duplicated on a nationwide scalein implementing other RD projects as well as other district specific developmentprojects. The main achievement of the PCC has been in resolving outstandinginter-departmental coordinating problems; and of the PSC has been that of playingthe role of final arbitrator in solving policy issues and coordinating unresolvedproblems at the district level. Both committees have facilitated harmoniouscoordination of government line departments with the Project Office, acommendable achievement.

4.12 Another significant institutional achievement has been theperformance of decentralized functions and the important role played by thedistrict level institutions in this regard. Decision making - administrative,technical and financial aspects - were delegated to district level agencies andresponsible government personnel with the Ministry of Policy Planning andImplementation in Colombo playing a promoting and coordinating role.

4.13 One of the more important institutional achievements of the project,being the first of its kind in the country, has been the valuable experiencegained by staff at the Project Office in trying to coordinate the 13 differentproject activities under 20 different agencies within the context of a multi-sectoral RD project. Although ineffectual supervision and lack of maintenanceof the facilities are partly attributable to the inexperience of staff, theproject nevertheless exposed staff to a new approach. The coordination role wascomplex and it exposed the responsible institutions to see, first hand, what cango wrong and how to go about resolving difficult budgetary and administrativeissues. In the end, lessons gained from this project have provided a valuableexample in dealing with similar problems in other RD and other agriculturalprojects and also how to avoid such problems altogether during implementation.

4.14 However, despite these positive contributions, includingdecentralization of administrative and financial decision making and theevolution of development-oriented institutions at the district level, the nextlevel of institutional transformation was neither aimed at or achieved. Theproject did not involve participation of beneficiaries in planning orimplementation. A good example of the neglect of beneficiary involvement isillustrated by the sub-par performance of the minor irrigation schemes.Beneficiaries from such schemes were selected on the basis of certain physicaland technical criteria laid down by the government. However, critical questionswith regard to planning and implementation were never asked of the beneficiaries,nor were they encouraged to participate more fully in matters that werecritically important to their livelihood. The GTZ village drinking water programin the district, which was taken over from the village water supply component ofthe Kurunevala RD project, is in sharp contrast to the minor irrigation schemesand illustrates what can really be achieved by beneficiary involvement andparticipation.

Sustainability

4.15 Sustainability of assets created under the project poses a realproblem. Assets created under the project were expected to be maintained by the

- 17 -

respective line agencies. However, decreased revenues and the government'sbudgetary problems in recent years have also meant a lower level of funds forline agencies to undertake maintenance related activities.

4.16 During the project period, funds for the project accounted for up to50 percent of the Annual District Capital Budget, so that the project helped theDistrict Administration to undertake its annual developmert program at a muchfaster rate. It did not really change the structure of expenditures towards anyparticular sector or subsector. For instance, more funds for the Department ofIrrigation meant that the normal activities that were to be undertaken over alonger period of time could now be undertaken within 3-4 years. Therefore, afterproject completion, the sheer quantity of maintenance work increased without aproportional increase in staffing or operational budget. Adequate and timelyfunds to undertake maintenance and upkeep were not available. Staffing levelsdecreased after project completion and a number of staff who gained valuableexperience left the country with the deterioration in the security situation.

4.17 On the agricultural side, the poor quality of work on the downstreamcomponent of the minor irrigation schemes has caused higher maintenanceexpenditures sooner than expected. Also, the removal of the fertilizer subsidyhas resulted in a sharp decline in fertilizer use on coconut within the past yearand a half. Unless there is some way to increase the financial profitability ofcoconut to smallholders, yieldswill continue to decline even further due to lackof fertilizer applications.

V. FINDINGS AND LESSONS

5.1 Overall, the project is considered satisfactory despite a two yeardelay in implementation and sub-par performance of some of the components. Thestrong comitment of various levels of Government to RD and the active role ofthe central Government in the conceptualization, identification and preparationphases of the project has been an essential ingredient of the project's success.The experience gained in implementing this first multisectoral RD project in thecountry has been a valuable learning process, especially in view of the largenumber of RD projects (financed by the Bank and other donors) that followed.

5.2 The concentration of the agricultural components of the project onpaddy and to a lesser extent on coconut makes it economically viable since SriLanka has been competitive in both crops. However, the means of achieving thebenefits, in particular the rehabilitation works on the minor irrigation schemesfor paddy are, in many cases, questionable due to unavailability of water forirrigation in the Yala season. The essential achievement of the minor irrigationschemes has been to stabilize the Maha season crop; but the expected Yala seasonproduction has not been achieved, i.e., the cropping intensity has been muchlower than expected, and with the difficulty of attributing yield increases toproject activities potential benefits have been tempered. However, thissituation can be improved if greater efficiency of water use can be achievedperhaps by using field pumps where possible rather than relying totally ongravity-based systems, making maximum use of rainfall, switching to higher value

- 18 -

crops in some cases and involving greater community participation for allocatingwater to farmers.

5.3 A design problem of the project was that it did not address the needsof the poorer upland farmers of the district. In the dry zone areas in the northof the district, the project did not address the needs of the farmers who aregrowing maize, finger millet, pulses, green gram, cowpeas etc. Thus the projectmissed out on an important segment of the district's poor farmers who aregenerally on the lower end of the income distribution curve.

5.4 Another design problem relates to the inadequate treatment oforganization and management aspects in the SAR, particularly problematic giventhe complex, multisectoral nature of the project. Project design ought to haveaddressed more clearly the specific functions of individual agencies and theinterrelationships between them. Also neglected was the participation ofbeneficiaries in planning and implementation of the project. The latteradversely affected the minor irrigation schemes and water management practices.

5.5 The Government was obviously thinking in terms of an integrated RDproject, not as it turned out to be -- disparate project components with littleintegration where most activities were carried out in independent fashion. Itwas the Government's view at the time of preparing this project in the late1970's that "for an overall development of a rural area, economic and socialinfrastructure is as important as agricultural development"; while it was theBank staff's view that such a wide array of project components, particularlythose activities that did not affect agriculture production directly ought to beleft out. In retrospect, Bank staff's fears at the time were well-founded as

experience of integrated RD projects worldwide has shown the difficulty ofimplementing such projects (OED's Rural Development Study of 1987). At worst,the Kurunegala RD project provided little or no integration; at best, it prcvidedfunds to the line agencies via the District Administration to undertake a wholerange of activities at a much faster rate. It is no surprise that during theperiod of implementation the project provided 50 percent of the District's annualcapital budget. In that sense, the focus of the District Administration's task,from largely administrative to greater emphasis on development-orientedactivities, has been a positive development.

5.6 The project also brought to the fore and sharpened the debate withinSri Lanka about the size, scope, composition and complexity of RD projects.Apart from the Bank and IFAD, whose project the Bank supervised, other externaldonors -- Netherlands, Norway, Sweden, Finland, Germany, Japan -- have all beeninvolved in the design and implementation of RD projects in the country.Although all these donor-assisted projects had the common purpose of increasingincomes and improving quality of rural life through investments in such coreactivities as minor irrigation, rural roads, field and tree crops development,village water supply, primary health care and education, and all projects aimedat transforming the district offices from administrative to development-orientedinstitutions, a number of differences existed between those projects supported

- 19 -

by the Bank and those supported by the bilateral donors.!i Also, theexperience with this project in which the SAR is used exclusively as a referencepoint for supervision and monitoring processes, has raised the issue that agreater level of management flexibility is desirable in the design of RDprojects.

.L These differences are: i) the greater emphasis given by Bank-assisted projects onagricultural productive activities and economic infrastructure while bilateral donor-assistedare more oriented towards social infrastructure; ii) Bank-assisted projects relied ontechnically proven Improvements while bilateral donor-assisted projects tended to be moreinnovative and experimental since implementation and planning in their projects allowsgreater flexibility; iii) direct beneficiaries in Bank-assisted projects are mostly farmerswith smallholdings while bilateral donor-assisted projects attempted to assist the moredisadvantaged groups such as landless households; and iv) Bank-assisted projects relied onlocal staff and institutions while bilateral donor-assisted projects employed severalexpatriates to manage the programs at least in the early stages.

Differences between Bank-assisted and bilateral donor-assisted projects in RD projects in SriLanka have been reported in two documents: The World Bank and Sri Lanka: A Review of aRelationship. OED Report no 6074, February 24, 1986; and Sri Lanka Review of RuralDevelopment Program, South Asia Projects Department, January 1986.

- 21 -Annex 1. Table 1

(Page 1 of 2)


SRI LANKA


PROJECT IMPLEMENTATION

ProjectComonent Unit SAR TarAet Achievement Remarks

1. Irrigation and water management:- Major echemes no. 9 9 ----- Minor schemes no. 500 453 ----- Pumps no. 22 2 Discontinued due to lack of

demand2. Coconut development:

- Rehabilitation acres 60,000 79,800 Digging of contour drains andremoval of excess palms

- Replanting/underplanting acres 25,000 24COO ----- Inter-cropping acres 10,000 4,415 Mostly cocoa- Intercrop. demonstration plots no. 50 30 Discontinued due to failure,

partly due to varietalselection problems.

- Home garden program no. -- 1,422 Started in 1983 to compensatefor low success of inter-cropping programme.

- Coconut nurseries no. 10 10 ----- Office building for CCB no. 1 1 ----- Staff CCB no. 98 98 Consisting of 20 officers and

78 support staff and laborers.- Staff NEC no. 149 67 Consisting of 33 officers and

116 support staff and laborersat appraisal & 6 officers and67 support staff and laborersat completion.

3. Agricultural Extensiont- ACe no. 3 2 ----- SMSO no. 9 4 ----- Als no. 4 6 ----- KYSs no. 140 147 ----- Staff quarters no. 53 48 ----- Office extension no. 2 2 ----- Horticultural program acres -- 1,433 In support of dry zone

activities.- Horticultural nurseries no. -- 2 ----

4. Agriculture Input Supply:- Seed processing centre no. 1 1 Tvo tons capacity.- Fertilizer stores no. 80 57 ----- Mammoties (imported) no. 50,000 --- No imports due to local

availability.5. Agricultural credit:

- Short-term: Paddy production acres 20,000 13,000 ----

- Medium-termt Coconut fertilizer acres 50,000 30,000 ----a 4-wheel tractors no. 200 103 Discontinued due to

overlapping with other agencyprogranme.

- 22 -Annex 1. Table 1

(Page 2 of 2)

ProjectComponent Unit SAR Target Achievement Remarks

2-wheel tractors no. 500 2,383 Upward revisions includingreallocation of 4-wheel funds.

: Sprayers no. 1,000 198 Targets not achieved due tolow demand.

Lorries no. 20 2 Discontinued in 1981 due tolack of demand by MPCS.

i Water pumps no. --- 140 ----: Open dug wells no. --- 24 ----

6. Livestock Development:- Veterinary ranges no. 5 5 ----- Clinics no. 3 3 ----

7. Groundwater exploration:- Test wells no. 180 88 Downward revision due to suf-

ficient data and 54 convertedin production wells.

- Tube wells no. -- 200 Ten percent defunct.

8. Rural roads:- Village access roads miles 120 120 ----- School access roads miles 8 8 ----- Tank access roads miles -- 46 Revision approved in 1983 to

provide access to majorirrigation schemes.

9. Rural water supply:- Dug wells no. 400 400 About 25% non-operational.

10. Rural electrification:- Areas no. 16 17 Additional scheme at wilgodal

Buela approved end 1983.11. Health:

- Staff quarters no. 6 6 ----- Offices no. 5 5- Electrification no. 4 4 Including standby generator

for Kurunegala Hospital.- Hospital expansion no. -- 10 Utilization of savings due to

currency devaluation againstdollar.

12. Educational Component:- Science equipment for

secondary schools no. 203 203 ----- Crafts training equipment forschool leaver program no. 45 61 ----

- Technical education equipmentfor institutes no. 2 2 ----

- Teachers quarters no. 40 41 ----- Construction of science rooms no. 140 137 ----- Upgrading of secondary schools no. 7 20 Upward revision agreed in

1982.- School roofing no. -- 26 The provision of permanent

roofing was included in 1982.13. Prolect Coordination:

- Project office no. 1 1 Not funded under project.- Senior staff quarters no. 2 2 ----

Source: PCR, Part IlI. - Table 4.


SRI LANKA

KURUNEGALA RURAL DEVELOPMENT PROJECTfCREDIT 891-CE)

Credit Disbursement by Participating Banks(Re *000)

Category of Loan iko 1980 1981 1982 1983 1984 1983 1986 TotalNo. Asount No. Amount Lo. Amount No. Amount Do. Amount Do. Amount So. Amount o. Amount

Cultivation People's Sank 1,074 2,322 1,773 4,317 1,079 3.166 1.201 3.794 1,275 4.764 1,104 3,899 418 1,828 7,924 24.110Losny Bank of Ceylon 2,309 3,169 2,031 4,132 2,355 4,734 2,861 6,157 4.194 9,533 2,807 9,532 474 2,175 17,031 59,432

Cocomt. People's Bank 601 1,874 251 1,239 134 1,107 83 825 408 3,374 178 1,308 41 249 1,696 9,976Pertiltser Bank of Ceylon 65 1,779 733 1.737 176 1,111 105 1,016 329 2,546 418 2,315 32 314 2,478 10,818

4-.obool2 People's Bank 59 7,049 2 263 *** .. -. * --- --- --- --- --- --- --- 61 7,312tractore Bank of Ceylon 42 2,361 -- -- *. .* - -- *. -- --- - --- -- 42 2,361

2.wbe*l People's Bank 194 4.389 23 570 31 860 123 3.318 268 9,113 281 9,962 101 3,994 1,021 32,214tractor* Bank of Ceylon 131 4,333 94 2,447 93 2.190 232 6.183 422 14.206 241 8,309 149 5,986 1,362 43,636

Sprayer@ People'* Bak 6 6 5 4 1 0 32 101 38 38 42 69 1 0 145 230Bank of Ceylon 42 57 7 4 16 19 29 53 22 35 is 24 17 29 148 221

Lorrie for People's Bank 2 443 .-- --- ... ... . .. --- ... ... --- --- -- --ICS. Bank of Ceylon --- -. ... --- --- . ... - ... --- ... - -. -

Wat*' People' Dank ... ... ... ... ... 12 61 9 54 6 36 27 131Pmp Bank of Ceylon .. --- --- --- ... ... 26 137 29 193 s8 383 113 713

opendus People' Bank --- ... --- --- ... 9 130 3 28 2 33 14 191walls. Bank of Ceylon .. -- --- 5 90 3 75 2 25 10 190

Source: PCR, Table 2

(3Can include repeater loans by sam farmers.Discontimed due to duplication with other prograe and inappropriate use of tractor@. Balance allocated to 2-wheel tractors.

Y Initially not Included in project. World Bank approval in early 1980.Y Discontinued due to inappropriate use of lorries.Y1 Approved In late 1983. Pumps mainly used for vegetable irrigation.Y Approved In late 1983. Wells mostly for vegetable Irrigation In dry sowe.

- 24 -

Sri Lanka Rurunagals Rural Developsent Project

Sconomic Rate of Return Analyste .........(Page I of 2)

ammesaweasemasse.sememememammem..ms.mem..ss.e..a..emeame.essne.s.meaemmes.eaweasseem.cemem..wee.assessmewm....s.emaemmememem.sseemasse1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

Coconut Prices

IBRD projections 1 10188 (1985US) 646 543 449 725 1167 590 251 340 412 400 414

ISRD MUV Ratio 1989/1965 6 9188 1.809 1.809 1.809 1.809 1.809 1.609 1.809 1.609 1.809 1.809 1.809

tBRD projections (1989$US) 0 10188 454.1 615.1 745.4 723.7 749.0 749.0

Original World 1989$USlat 454.1 615.1 745.4 723.7 749.0 749.0

Original on farm 1989$Relat 1.610 2.174 2.631 2.555 2.643 2.643

Projected World 1989$US/at 346 469 562 517 319 375

Projected on farm 1989$Rs/at 1.230 1.662 1.988 1.830 1.136 1.332

Paddy Prices

Original World 19898st 293 293 293 293 293 293

Original on farm 1989$Relat 6139.4 6139.4 6139.4 6139.4 6139.4 6139.4

Projected World 1989$US/at 245.6 244.2 299 320 271.8 295.3

Projected on farm 1989$Relat 5300.1 5275.3 6245.6 6617.5 5764.0 6180.1

Production 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

Coconut Production (mill anuts)

Imputed from Original 89.28 79.90 75.76 84.86 86.17 88.78

Paddy Production ('000at)

Imputed from Original 56.00 56.00 56.00 56.00 56.00 56.00

Value of production 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

Coconut value of production (mill Re)

Original 5.0 23.6 51.6 82.8 112.4 143.7 173.7 199.3 216.8 227.8 234.7

Projected 5.0 23.6 51.6 82.8 112.4 68.9 93.1 111.3 102.5 63.6 74.6

Paddy value of production (mill Re)

Original 55.1 102.4 38.9 189.8 286.5 339.1 343.8 343.8 343.8 343.8 343.8 343.8

Projected 55.1 102.4 38.9 189.8 286.5 339.1 296.8 295.4 349.7 370.6 322.8 346.1

Incremental Costs (mil Re)

Original 67.9 184.8 197.3 162.4 132.6 176.1 192.9 202.4 146 146.3 147.8 152.4 153.3

Total value of production (sill Rs)

Original Coconut 6 Paddy 0.0 55.1 107.4 62.5 241.4 369.3 451.5 467.5 517.5 543.1 560.6 371.6 578.5

Projected Coconut & Paddy 0.0 55.1 107.4 62.5 241.4 369.3 451.5 365.7 338.5 461.1 473.1 386.4 420.7

(Projected Coconut 6 Paddy) * 752 0.0 55.1 107.4 62.5 241.4 369.3 451.5 274.3 291.4 345.8 354.8 289.8 315.5

tProjected Coconut & Paddy) * 602 0.0 55.1 107.4 62.5 241.4 369.3 451.5 219.4 233.1 276.6 283.8 231.8 252.4

Net Inc. Bene & EBR (1) 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

ER Not Incremental Benefits (aill Re)

A. 38.042 Original (Coconut & Paddy) -67.9 -129.7 *89.9 *99.9 108.8 193.2 258.6 285.1 371.5 396.8 412.8 419.2 423.2B. 33.082 Projected (Coconut 6 Paddy) -67.9 -129.7 -89.9 .99.9 108.8 193.2 258.6 163.3 242.5 314.8 325.3 234.0 267.4C. 27.83 (Projected Coconut & Paddy) * 752 -67.9 .129.7 -89.9 .99.9 108.8 193.2 258.6 71.9 145.4 199.5 207.0 137.4 162.2D. 23.422 (Projected Coconut & Paddy) * 602 -67.9 -129.7 -69.9 *99.9 108.8 193.2 258.6 17.0 87.1 130.3 136.0 79.4 99.1

- 25 - am.. Tabau 1- (Pag. 2.et2)

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Comout Prie.

3RD projection e 10/88 (198508) 42 374

3RD ffU gatto 1989/1985 I 9/88 1.809 1.809

U33D projectionu (1989$99> I 10/88 749.0 749.0 749.0 768.9 768.9 768.9 768.9 768.9 676.6 676.6 676.6 676.6

Original World 1989$Ua/t 749.0 749.0 749.0 791.0 791.0 791.0 791.0 791.0 791.0 791.0 791.0 791.0

Original on farL 19891iat 2.643 3.643 2.643 2.791 2.791 2.791 2.791 2.791 2.791 2.791 2.791 2.791

Proj*ote4 World 19890/ut 4$1 454 482 504 506 506 504 506 534 534 534 534

Project* on am 1989$1819t 1.599 1.609 1.707 1.791 1.791 1.791 1.791 1.791 1.890 1.890 1.490 1.890

Paddy frie*

original world 1989*08/st 293 293 293 293 293 293 293 293 293 293 293 293

Original On Gagu 1989f1armt 6139.4 6139.4 6139.4 6139.4 6139.4 6139.4 6139.4 4139.4 6139.4 6139.4 6139.4 6139.4

Projecte World 1989$0sat 270.4 242.8 241.5 245.6 245.6 245.6 245.6 245.6 271.8 271.8 271.8 271.8

Projected on Lar 1989$Ralut 5739.2 5230.5 5227.5 5300.1 5300.1 5300.1 5300.1 5300.1 5764.0 5764.0 5764.0 5744.0

Production 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Cocomt Production (ai.( mit*)

Zaputed frm Oritginal 91.81 94.99 97.22 94.52 97.00 99.58 101.38 103.34 104.39 105.74 106.71 107.10

Paddy Production (000t)

£aputed fra original 56.00 56.00 56.00 56.00 56.00 56.00 56.00 56.00 56.00 56.00 56.00 56.00

valu* of production 1993 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Cooomt value of production (Cill Ua>

Original 242.7 251.1 257.0 263.8 270.7 277.9 283.5 288.4 291.9 295.1 297.8 298.9

Projected 89.5 90.1 95.6 100.3 100.3 100.3 100.3 100.3 105.8 105.8 105.8 105.8

Paddy valu. of prodution (mi &e)

Original 343.8 343.8 34.8 343.8 343.8 343.8 343.8 343.8 343.8 343.8 343.8 343.8

Projected 321.4 294.0 292.7 296.8 296.8 296.8 296.8 296.8 322.8 322.8 322.8 322.8

Incremental Co*ta (mill Sa)

øriginal 156.5 357.8 159.1 159.7 160 159.4 160.6 160.8 161 161.2 161.3 161.4

Total value of production (Sti1 Wa>

Original Cocomt 6 Paddy 586.5 594.9 600.8 607.6 614.5 621.7 627.3 632.2 635.7 638.9 641.6 642.7

Projeted Coconut 6 Paddy 410.9 384.1 388.3 397.1 397.1 397.1 397.1 397.1 428.6 428.6 428.6 428.6

(Projacted Coconut 6 Paddy> * 751 308.2 288.1 291.3 297.8 297.8 297.8 297.8 297.8 321.4 321.4 321.4 321.4

(Projeeted Cocout & Paddy) * 60Z 246.5 230.5 233.0 238.3 238.3 238.3 238.3 238.3 237.2 257.2 257.2 257.2

sec In*. Bens & EIL (1) 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

EI uet Inerem~ntal Benefit* (mill Ra)

A. 38.04% Original (Coc~nt & Paddy) 430.0 437.1 441.7 447.9 454.5 462.3 466.7 471.4 474.7 477.7 480.3 481.3

8. 33.08U Projected (Coeomt 6 Paddy) 254.4 226.3 229.2 237.4 237.1 237.7 236.5 236.3 267.6 267.4 267.3 267.2

C. 27.85 (Projected Coccmt Paddy> * 75Z 151.7 130.3 132.2 138.1 137.8 138.4 137.2 137.0 160.4 160.2 140.1 160.0

0. 23.48% (Projetad C~ant 6 Paddy) * 60& 90.0 72.7 73.9, 78.6 78.3 78.9. 77.7 77.5 96.2 94.0 95.9 95.8

(1) A. EM 38.04. Cr restito based *a Sank* Codity rice Forea.s Octobr 1988 (sa ~CR Table 12.14)

8. CM 33.082. Audit reemtimat., ba*d on Sanke C~Ly Pric Foreaata. November 1991. but all othr aMption h e~ as in A.

C. EIL 27.853%. Audit reestiste a* oc 5. but foly 751 af benefite attributable to project interVntiom.

D. EM 23.42Z. Audit reestimto as in B. but only 60 of benafits ttributable to projeet intaervntions.

- 27 - Attachment

gde'IGadG./A-06TeleptIones - @ad gno

ogoesgoe=ner 2530 My No.

Director S 4.MC3

564770mtiss0 565290

4"Ls S63101 g cotsa esewle ae 563192 w Q. 1532t ow~~gadso GSg oD53me a.0.BAn

'J%f.w Q(GJaTA, j..I-S4), 4J&(V&&iA6t 4agU&Onqftokerelegroms PopISec MINISTRY OF POLICY PLANNING& "Sethiripayd'

IMPLEMENTATION

wrtrAJ4d4av dMaRegional Development Division

May 20, 1992.

A.. Grahan Donaldson,iiuef,

Agriculture & HumRan Develonaent Division,Operations Evaluation Department,The World Bank,1818 H Street, N.W.,Washington, D.C. 20433,U.S.A.

Dear Mr.Donaldson,

Kurunegala Rural Development Project (Cr. 891-CE)Draft Project Performance Audit Report

I wish to thank you for furnishing a copy of the draft projectperformance and audit report with your letter dated March 25,1992, and regret the delay in replying.

I wish to inform you that this Division agrees with the find-ings in the report and an pleased that most of the short-comings identified in the first ever rural develonant projectinplenented in Sri Lanka were later rectified in other projects.We have made continuous efforts to incorporate beneficiaryparticipation in the rural development programne.

Please be good enough to send a copy of the report once it isfinalized.

With kind regards,

Yours sincerely,

C. Mallyadde,Director,Regional Developnent.

1ØRD 23815

SRI LANKAJAFFNA KURUNEGALA RURAL DEVELOPMENT* PROJECT LOAN (Cr. 891 -CE)

KUUNtrA RuRA OfVfLOPMFNT

0 osRImcAPws

POVANCE CAPIfAIS

NORTHERN - oNasous

MiLESVoýven 0 110 20 3',0

00

0 10 Ki0 M 0 40 50

CKILOMETE0

Sov

010

Trincmole

NNORTH

WESTERN •ufic°o

EASTERNArabian KURUPNEGALA

SeaKANDY

p,a

0 CENTRALKogallo

7-N-wro UVA r

RATNAPURA

WESTERN SABARAGAMULWA

INDIA owy SOUTHERNHmbno

B. WIld B-k The .d ndt.SRI LE 0 ondon sh~ ,o on ~..nn do i.n* -n th. pcrt i The.

hWI' 1992

World Bank Documentdocuments.worldbank.org/curated/en/993811468914181206/pdf/multi0page.pdf · the...

Documents

Transcript of World Bank Documentdocuments.worldbank.org/curated/en/993811468914181206/pdf/multi0page.pdf · the...