Dera Ghazi Khan rural development project completed: ADB
FAISALABAD (October 27 2007): The Dera Ghazi (DG) Khan rural development project was completed at 93 percent of the estimated cost and was able to achieve more than the appraised targets for all components (except the surface irrigation subcomponent), said Asian Development Bank (ADB) project completion report.
ADB project report observed that the delay of more than 23 months in implementation did not reduce the overall economic internal rate of return (EIRR), which was estimated at 33.5 percent, compared with 23.6 percent estimated at appraisal.
This project was effective in achieving its outcomes. At completion, the total value of production (net of production cost) from the additional hectares brought under cultivation in Kaha was estimated at $183,200, for an increase of $37.7 per ha in the yearly gross margin.
According to report, the low gross margin was due mainly to seasonal variations in flow in the Kaha hill torrent and the related low cropping intensity in the area. The total annual value of production (net of production cost) from the 137 DTWs of about $5.1 million meant a yearly gross margin of $932 per ha in the irrigated plains, compared with the $300 per ha envisaged at appraisal.
This significant increase in the estimated gross margin was due to the higher-than-expected cropping intensities achieved by farmers; and the cultivation of high-value crops such as onions. The availability of loans through the lines of credit supported by the project; and the government's deregulation policy, which gave farmers higher compatible values for their outputs, and thus an incentive to grow high-value crops.
During the Project Completion Review (PCR) Mission, road users indicated that passenger fares had gone down by almost 50 percent, as envisaged at appraisal. The average passenger fare is equal to that charged to transport a 40-kilogram (kg) load. The PCR mission estimated that, on the average, each household now saves $20 in passenger fares and $40 in cartage yearly (Appendix 9, para. 15), for a total of $60-almost three times the appraised estimate. The increase in savings is attributed to various factors including the transfer of a larger share of the vehicle operating cost to consumers, competition in the transport sector made possible by liberal bank leasing facilities, a surge in economic activity from greater-than-expected development, and widespread demand for CD infrastructure.
The average increase in household income for all CD schemes was $21 per household, with the highest increase reported from soil conservation structures, which contributed an annual increase of $327 per household, against $25 estimated at appraisal for soil conservation measures alone.
In addition, ADB report mentioned that the project's investment in nonfarm community schemes and social services such as drinking water, street paving, sanitation, and community facilities has helped improve living standards. The provision of doorstep credit facilities has made it economically possible for farmers to grow high-value crops, buy better-quality inputs, and sell outputs on their own terms.
The project proved efficient in achieving its planned outcomes and outputs. It was completed at 93 percent of the estimated cost and was able to achieve more than the appraised targets for all components (except the surface irrigation subcomponent). The delay of more than 23 months in implementation did not reduce the overall economic internal rate of return (EIRR), which was estimated at 33.5 percent, compared with 23.6 percent estimated at appraisal. The methodology adopted during appraisal was also used in evaluating the project interventions at completion. At appraisal, EIRRs were estimated for the irrigation improvement and rural roads components but not for the community development, FS, and institutional support components.
The EIRR for the surface irrigation subcomponent was evaluated at 23.0 percent against an appraisal estimate of 43.2 percent, despite the reduction in scope and the decision not to rehabilitate the head reach, where the additional area allocated for high-value crops (the main contributor to the high EIRR at appraisal) was located. The EIRR for the installation of DTWs was estimated at 39.0 percent at the design stage, and 57.8 percent at the end of the project, when higher yields were assumed.
The EIRR for the rural roads component was evaluated at 36.9%-3 percentage points higher than estimated at appraisal. The estimated combined EIRR for the above components, together with the cost of institutional strengthening, was estimated at 23.6 percent at appraisal, and a significantly higher 33.5 percent at completion. This suggests that the expenditure on institutional strengthening was cost-effective.
At the appraisal stage, ADB report mentioned, no financial analysis, indicative or otherwise, was done for the interventions that were to be identified and managed by communities, such as income-generating physical infrastructure (cattle and poultry sheds, warehouses, small irrigation schemes, small wheat-flour mills and sawmills, and soil conservation structures).
These were to be funded after their viability was assessed, during implementation. Similarly, the project also supported the development of community-managed social infrastructure such as community halls, dispensaries, non-formal school buildings, small drinking water supply structures and ponds, link roads and street soling, and culverts and bridges.
Most of these interventions have proved beneficial. However, some interventions for which there was inconspicuous demand might take a longer time than anticipated to yield the desired returns. Cattle sheds, for instance, will require support services, including a network for milk collection and financial support for building herds, before they are fully used.
Similarly, warehouses are currently underused because of the lack of marketable surpluses of grain, and of holding capacity for cash crops. Moreover, community organisations need to be strengthened further to manage collective inputs and market outputs.
Business Recorder [Pakistan's First Financial Daily]
