Implementation Completion and Results Report (ICR) Document · 2019. 3. 13. · 02 26-May-2010 SatisfactorySatisfactory 1.28 03 28-Dec-2010 Satisfactory Satisfactory 1.58 04 09-Jun-2011

Document of

The World Bank FOR OFFICIAL USE ONLY

Report No: ICR00004552

IMPLEMENTATION COMPLETION AND RESULTS REPORT

ON A CREDIT (IDA – H4860)

IN THE AMOUNT OF SDR 6.3 MILLION

AND ON A GRANT (IDA – 46030)


AND FOR AN ADDITIONAL FINANCING

ON A CREDIT (IDA – H8130)


AND ON A GRANT (IDA – 51800)


TO THE

Ministry of Finance

FOR THE

Project for Agriculture Commercialization and Trade (PACT) February 26, 2019

Agriculture Global Practice

South Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 30, 2018)

Currency Unit = NPR

NPR109.64 = US$1

US$1.41 = SDR 1

FISCAL YEAR

July 1 - June 30

Regional Vice President: Hartwig Schafer

Country Director: Qimiao Fan

Senior Global Practice Director: Juergen Voegele

Practice Manager: Loraine Ronchi

Task Team Leader(s): Patrick Verissimo

ICR Main Contributor: Patrick Verissimo

ABBREVIATIONS AND ACRONYMS

APP Agriculture Perspective Plan

CAS Country Assistance Strategy

CFL Central Food Laboratory

CPS Country Partnership Strategy

CPF Country Partnership Framework

DADO District Agriculture Development Office

DFTQC Department of Food Technology and Quality

Control

DIME Development Impact Evaluation unit

DLSO District Livestock Services Office

DLS Department of Livestock Services

DOA Department of Agriculture

ECoP Environmental Code of Practice

EIA Environmental Impact Assessment

ENPV Economic Net Present Value

EIRR Economic Internal Rate of Return

FIRR Financial Internal Rate of Return

ESMF Environment and Social Management

Framework

FPP Full sub Project Proposal

GAP Good Agricultural Practice

GoN Government of Nepal

GMP Good Manufacturing Practice

HACCP Hazard Analysis and Critical Control Point

IA Implementation Audit

IE Impact Evaluation

IEE Initial Environmental Evaluation

IPM Integrated Pest Management

ISM Implementation Support Mission

ISN Interim Strategy Note

M&E Monitoring and Evaluation

MGS Matching Grant Scheme

MIS Management Information System

MOF Ministry of Finance

MOAD Ministry of Agricultural Development

MOALD Ministry of Agriculture and Livestock

Development

MTR Mid term Review

NABIC Nepal Agribusiness Innovation Centre

NARC National Agricultural Research Council

NGOs Non-Governmental Organizations

NPSC National Project Steering Committee

NPQP National Plant Quarantine Program

PACT Project for Agriculture Commercialization and

Trade

PDO Project Development Objective

PIM Project Implementation Manual

PMT Project Management Team

PPD Plant Protection Directorate

PPR Post Procurement Review

PRIST Project Regional Implementation Support Team

RBPR Rapid Bioassay Pesticide Residue

RF Results Framework

SMART Specific, Measurable, Achievable/Attributable,

Relevant/Realistic, Timebound/Trackable

SME Small and Medium Enterprises

SP Sub project

SPS Sanitary and Phytosanitary System

TA Technical Assistance

ToC Theory of Change

(r)TSG (Regional) Technical Support Team

VCDP Value Chain Development Plan

VSDAO Veterinary Standards and Drugs Administration

Office

WBG World Bank Group

WTO World Trade Organization

TABLE OF CONTENTS

DATA SHEET .......................................................................................................................... 2

I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 7

A. CONTEXT AT APPRAISAL .........................................................................................................7

B. SIGNIFICANT CHANGES DURING IMPLEMENTATION .............................................................. 10

II. OUTCOME .................................................................................................................... 14

A. RELEVANCE OF PDOs ............................................................................................................ 14

B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 15

C. EFFICIENCY ........................................................................................................................... 21

D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 23

E. OTHER OUTCOMES AND IMPACTS ......................................................................................... 23

III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 30

A. KEY FACTORS DURING PREPARATION ................................................................................... 30

B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 31

IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 34

A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 34

B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 36

C. BANK PERFORMANCE ........................................................................................................... 37

D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 39

V. LESSONS AND RECOMMENDATIONS ............................................................................. 40

ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 45

ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 63

ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 65

ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 66

ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 72

ANNEX 6. SUPPORTING DOCUMENTS .................................................................................. 76

ANNEX 7: PACT MATCHING GRANT SCHEME ........................................................................ 77

ANNEX 8: IMPACT EVALUATION RESULTS – MATCHING GRANT SCHEME, CALL 4 .................. 80

ANNEX 9: PACT TIMELINE AND KEY MILESTONES ................................................................. 82

ANNEX 10: VALUE CHAINS SUPPORTED THROUGH MATCHING GRANT SCHEME ................... 84

The World Bank Project for Agriculture Commercialization and Trade (PACT) (P087140)

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LIST OF TABLES

Table 1: Evolution of PDO Indicators and Targets ..................................................................................................... 10

Table 2: Main changes agreed to at key process milestones for PACT ..................................................................... 11

Table 3: Consistency between PDO and WBG Strategies for Nepal .......................................................................... 14

Table 4: Achievement of PACT Objective 1: Farm Productivity Increase .................................................................. 15

Table 5: Achievement of PACT Objective 2: Agribusiness Productivity Increase ...................................................... 18

Table 6: Type of Beneficiaries and distribution of co-financed Sub Projects ............................................................ 20

Table 7: Achievement of PACT PDO Outcome for Beneficiary Outreach .................................................................. 20

Table 8: Summary Results of the ex-post Efficiency Analysis ................................................................................... 22

Table 9.a: Women Participation in the PACT Matching Grant Scheme – by Call ...................................................... 24

Table 9.b: Women Participation in the PACT Matching Grant Scheme – by Grant Reciepient type…….……………….24

Table 10: Impact of PACT Matching Grant Scheme on Beneficiaries ........................................................................ 28

Table 11: PACT’s “unfinished business” and risk mitigation measures .................................................................... 39

Table 12:Nine years of PACT – Key Lessons Learned for GoN and the Bank* ........................................................... 44

LIST OF FIGURES

Figure 1: Results Chain and Critical Assumptions for the PACT ................................................................................... 8

LIST OF BOXES Box 1: The PACT Matching Grant Scheme (MGS) at a glance……………………………………….....……………………………………16

Box 2: The Nepal Agribusiness Innovation Center (NABIC) at a glance……………………………………………..………………….19

Box 3: Impact Evaluation of the PACT Matching Grant Scheme - Call 4………………………………………..………………………30

Box 4: PACT’s comprehensive Management Information System (MIS)………………………………………..…………………….34


Page 2 of 85

DATA SHEET

BASIC INFORMATION

Product Information

Project ID Project Name

P087140 Project for Agriculture Commercialization and Trade

(PACT)

Country Financing Instrument

Nepal Investment Project Financing

Original EA Category Revised EA Category

Partial Assessment (B) Partial Assessment (B)

Related Projects

Relationship Project Approval Product Line

Additional Financing P128304-Additional Financing for the Project for Agriculture Commercialization and Trade

15-Nov-2012 IBRD/IDA

Organizations

Borrower Implementing Agency

Government of Nepal - Ministry of Finance Ministry of Agriculture and Livestock Development

MOALD

Project Development Objective (PDO) Original PDO

To improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains in 25 districts supported by the project.


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Revised PDO

To improve the competitiveness of project supported smallholder farmers and agribusinesses within selected commodity value chains. PDO as stated in the legal agreement

To improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains in the Recipient's territory by: (i) helping farmer groups and cooperatives engage in profitable market-oriented production and improved access to markets through the provision of technology and information services and critical public infrastructure and linkages to agribusiness; (ii) creating and strengthening industry-wide partnerships along the value chain, thus forging linkages between producers, traders, processors, and other stakeholders; and (iii) reducing existing obstacles to agriculture and food trade thereby increasing the ability of farmers and agribusiness to respond to sanitary and phytosanitory (SPS) and food-quality standards to meet domestic and international market requirements.

FINANCING

Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$)

World Bank Financing IDA-H4860

9,290,000 9,290,000 9,648,926

IDA-46030

10,710,000 10,582,880 9,749,266

IDA-H8130

18,000,000 18,000,000 17,226,971

IDA-51800

22,000,000 13,794,566 9,209,783

Total 60,000,000 51,667,446 45,834,946

Non-World Bank Financing 0 0 0

Borrower/Recipient 4,500,000 0 0

Total 4,500,000 0 0

Total Project Cost 64,500,000 51,667,446 45,834,946

KEY DATES

Approval Effectiveness MTR Review Original Closing Actual Closing

04-Jun-2009 13-Nov-2009 23-Jul-2012 30-Jun-2015 30-Jun-2018


Page 4 of 85

RESTRUCTURING AND/OR ADDITIONAL FINANCING

Date(s) Amount Disbursed (US$M) Key Revisions

13-Feb-2013 6.16 Additional Financing

29-Jun-2015 23.62 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s)

06-Jun-2018 53.35 Reallocation between Disbursement Categories

KEY RATINGS

Outcome Bank Performance M&E Quality

Moderately Satisfactory Moderately Satisfactory High

RATINGS OF PROJECT PERFORMANCE IN ISRs

No. Date ISR Archived DO Rating IP Rating Actual

Disbursements (US$M)

01 30-Dec-2009 Satisfactory Satisfactory .28

02 26-May-2010 Satisfactory Satisfactory 1.28

03 28-Dec-2010 Satisfactory Satisfactory 1.58

04 09-Jun-2011 Satisfactory Satisfactory 2.30


06 29-May-2012 Satisfactory Satisfactory 4.99


08 20-Jun-2013 Satisfactory Satisfactory 7.32

09 29-Dec-2013 Satisfactory Moderately Satisfactory 8.98

10 14-Jun-2014 Satisfactory Moderately Satisfactory 8.98

11 12-Jan-2015 Satisfactory Satisfactory 23.90

12 05-Nov-2015 Moderately Satisfactory Moderately Satisfactory 23.90

13 14-Apr-2016 Moderately Satisfactory Moderately Unsatisfactory 29.40

14 05-Oct-2016 Moderately Satisfactory Moderately Unsatisfactory 29.40


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15 31-Mar-2017 Moderately Satisfactory Moderately Satisfactory 34.51


17 22-Feb-2018 Moderately Satisfactory Moderately Satisfactory 47.68


SECTORS AND THEMES

Sectors

Major Sector/Sector (%)

Agriculture, Fishing and Forestry 44

Public Administration - Agriculture, Fishing & Forestry 16

Other Agriculture, Fishing and Forestry 28

Industry, Trade and Services 56

Agricultural markets, commercialization and agri-business

56

Themes

Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Economic Policy 10

Trade 10

Trade Facilitation 10

Urban and Rural Development 90

Rural Development 90

Rural Markets 90

ADM STAFF

Role At Approval At ICR

Regional Vice President: Isabel M. Guerrero Hartwig Schafer

Country Director: Susan G. Goldmark Qimiao Fan

Senior Global Practice Director: John Henry Stein Juergen Voegele


Page 6 of 85

Practice Manager: Adolfo Brizzi Loraine Ronchi

Task Team Leader(s): Gayatri Acharya Patrick Verissimo

ICR Contributing Author: Patrick Verissimo


Page 7 of 85

I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES

A. CONTEXT AT APPRAISAL

Context

1. At the time of Appraisal (April-May 2009), Nepal had made significant progress since the end of the decade-long

conflict in maintaining the peace and moving towards political stability. Poverty headcount had fallen from 42 to 31

percent between 1996 and 2004 – despite long years of conflict that effectively ended in November 2006. Around 85

percent of the population lived in rural areas, most of them smallholder farmers, with 66 percent depending on

agriculture for their livelihood. Rural poverty was much more severe in rural areas (35 percent) than in urban centers

(10 percent), and particularly severe in mountain areas. Agriculture contributed to about 33 percent of GDP.

2. Nepal’s sector strategy for agriculture at Appraisal focused on the need to diversify agricultural production based

on geographical location, and on the commercialization of agri-products. The country’s Agriculture Perspective Plan

(APP) identified the following main challenges for commercialization: (i) a large share of cultivated land (82 percent)

planted with basic staple grains, while contributing only to 30 percent of agricultural GDP; (ii) the absence of marketing

channels and corresponding infrastructure; (iii) a lack of incentives to invest in improved/modern farm and water

management inputs. Studies conducted during project Preparation and Appraisal identified an extensive and viable

scope for agricultural commercialization, and pointed to the need for: (i) an expansion into high-value crops; (ii) fully

exploiting the country’s diversification potential and comparative advantage resulting from its various agro-ecological

zones; and (iii) seizing the opportunities of the country’s recent WTO accession, to integrate global markets for agri-

food products.

3. Against this background, the GoN sought the Bank’s financial and technical assistance for developing a network of

functional value chains inclusive of smallholder farmers. The appraised operation was expected to help overcome

challenges on the ground, including: (i) organizing smallholders to more effectively participate in the market; (ii)

supporting public infrastructure for market development; (iii) facilitating access to inputs, credit, information and

technology; (iv) strengthening backward/forward linkages among various value chain players; and (v) promoting

knowledge sharing about demand for high-value products and skills development for quality standards. At Appraisal,

the proposed operation was found to directly contribute to the country’s sector and higher-level objectives, as well as

to the Bank’s strategy objectives for Nepal (see Table 3 below).

Theory of Change (Results Chain)

4. Problem Statement. Boosting farmers’ income through a more commercially viable agriculture production and

value-addition, and by strengthening farmer’s linkages with local, regional and global markets, has long been a priority

of Nepalese governments for the agriculture sector. The key problem faced in achieving this much-needed structural

sector transformation is the low level of competitiveness of smallholder farmers and SME agribusinesses resulting

from: (i) the low quality and volume of agricultural output, (ii) the lack of smallholder farmer integration in many value

chains for higher-value agricultural commodities, (iii) the low level of institutional capacity required to provide the

services and infrastructure needed by smallholder farmers to support their market-led growth, and (iv) the absence

of a critical mass of growth-oriented agribusiness SMEs.

5. Results Chain. Addressing the key problem areas above will in the longer term, contribute to promoting

agriculture commercialization and enhancing agri-food trade. To that effect, the Project has been designed to support


Page 8 of 85

the GoN by providing financial and technical assistance for: (i) enhancing agricultural productivity and improving

agriculture production; (ii) creating markets for smallholder farmers; and (iii) increasing compliance with food quality

and food safety standards. To achieve these outcomes, the Project implemented a series of activities that included the

strengthening of institutional capacity to address SPS bottlenecks and to provide business development and incubation

services to emerging agribusiness SMEs, the development of market infrastructure to promote agricultural trade, and

the support to partnerships among various value chain actors based on viable business proposals. Project activities,

outputs and outcomes, as well as underlying assumptions for causality, are depicted in the Results Chain in Figure 1.

Figure 1: Results Chain and Critical Assumptions for the PACT

Project Development Objectives (PDOs)

6. The PDO remained consistent and valid throughout project implementation; it was adjusted only once to reflect

an increase in the geographic coverage of the Project, as a result of an Additional Financing. The full PDO in the original

Financing Agreement was: to improve the competitiveness of smallholder farmers and the agribusiness sector in

selected commodity Value Chains in selected districts in the Recipient’s territory by: (i) helping farmer groups and

cooperatives engage in profitable market-oriented production and improved access to markets through the provision

of technology and information services and critical public infrastructure and linkages to agribusiness; (ii) creating and

strengthening industry-wide partnerships along the Value Chain, thus forging linkages between producers, traders,

processors, and other stakeholders; and (iii) reducing existing obstacles to agriculture and food trade thereby

increasing the ability of farmers and agribusiness to respond to sanitary and phytosanitary (SPS) and food-quality

standards to meet domestic and international market requirements.


Page 9 of 85

7. The PDO in the Project Appraisal Document PAD (Report No. 48436-NP) was more concisely formulated and

specified the number of districts to be covered: to improve the competitiveness of smallholder farmers and the

agribusiness sector in selected commodity value chains in 25 districts supported by the project.

8. The core part of the PDO was further finetuned with the Additional Financing approved in February 2013 to

remove the restriction on the geographic scope of project activities. The PDO became: to improve the competitiveness

of smallholder farmers and the agribusiness sector in selected commodity Value Chains in the Recipient’s territory. The

rest of the PDO was unaltered and the PDO remained unchanged until project closing.

Key Expected Outcomes and Outcome Indicators

9. Productivity measures were used to assess achievements in agriculture and agribusiness competitiveness as

referred to in the PDO. The following key expected outcomes and indicators were monitored, and their progress

tracked through regular field surveys:

- Outcome 1: Farm productivity increased by at least 25 percent at project closing relative to baseline

Indicator: Annual yields of selected commodities: tomato (t/ha), cauliflower (t/ha), paddy rice (t/ha), wheat

(t/ha), raw milk (liter/lactation period and cow)

- Outcome 2: Agribusiness productivity increased by at least 40 percent at project closing relative to

baseline

Indicator: Annual volume of selected commodities sold for processing: parchment coffee (t), ginger (t),

honey (t), and milk (‘000 liter)

10. In addition, to comply with the Bank’s requirements for Outcome Indicators, the Project also reported annually

on the aggregate number of Project Direct Beneficiaries (end-project target: at least 150,000) and its share of women

beneficiaries (at least 45pct).

Components

11. Component 1: Agriculture and Rural Business Development (IDA costs in million US$ - original estimate: 14.04;

estimate with AF: 45.04; actual with AF: 27.65). The objective of this component was to enable farmer groups,

producer cooperatives, agro enterprises and commodity associations, to engage in profitable market-oriented

production and to promote partnerships and market linkages with other value chain participants and agribusinesses.

The expected increase in productivity and in their participation in emerging commodity value chains was to be

achieved by co-financing demand-driven investment proposals (“sub projects”), selected under a competitive

matching grant scheme (MGS).

12. Component 2: Support for Sanitary and Phytosanitary Facilities and Food Quality Management (IDA costs in million

US$ - original estimate: 2.19; estimate with AF: 5.39; actual with AF: 4.97). This component aimed to strengthen the

efficiency and effectiveness of sanitary and phyto-sanitary services in order to reduce existing obstacles to agricultural

and food trade, and to improve food quality management systems. It was expected to provide critical backing to the

value chain investments in the sub projects supported with a matching grant under Component 1. Component 2 was

designed to directly support three government agencies key to the SPS agenda, i.e. the Department of Food

Technology and Quality Control (DFTQC), the Department of Livestock Services (DLS), and the National Plant

Quarantine Program (NPQP) under the Department of Agriculture (DOA). This component financed mostly food quality

and food safety enhancing activities through: (i) improving laboratory facilities and certification capabilities, and (ii)

technical assistance and capacity building measures to meet relevant food quality standards.

13. Component 3: Project Management and Monitoring and Evaluation (IDA costs in million US$ - original estimate:


Page 10 of 85

3.77; estimate with AF: 9.57; actual with AF: 13.18). Under this component, a Project Management Team (PMT) was

established in Kathmandu and supported by a competitively recruited private consulting firm (the Technical Support

Group, TSG; later, TA Service Provider). The PMT was responsible for the coordination of project execution, for public

awareness and communication, and for ensuring appropriate activity planning and timely implementation. The PMT

also covered all aspects related to monitoring of project activities, evaluation of results, and reporting on

implementation progress. The PMT and TSG were supported by a competitively recruited firm that set up Regional

Technical Support Groups (R-TSG) in 4 locations. The R-TSG were primarily responsible for liaising with potential project

beneficiaries, helping with the development of sub-project proposals, and supervising their implementation.

B. SIGNIFICANT CHANGES DURING IMPLEMENTATION

Revised PDOs, PDO Indicators and Outcome Targets

Table 1: Evolution of PDO Indicators and Targets

14. The original PDO was revised with the Additional Financing (AF: US$40 million) approved in February 2013 to

Original Project 2009 Additional Financing 2013 Project Restructuring 2015

PDO Indicator

Target

for June 30,

2015

PDO Indicator

(1st revision)

Target

for June 30,

2018

PDO Indicator

(2nd revision)

Target

for June 30,

2018

#1. Productivity

(measured as value

added per unit of input) in

the production of selected

commodity value chains

+25pct

relative to

baseline

No change No change Renamed No change

#1. Productivity

(measured as value

added per unit of input) in

the production of selected

commodity value chains

+25pct

relative to

baseline

#1. Farm productivity:

yield of selected farm

commodities

+25pct

relative to

baseline

#2. Volume of marketable

agricultural products

passing through the value

chains

+30pct

relative to

baseline

No change Increased Renamed Reduced

#2. Volume of marketable

agricultural products

passing through the value

chains

+45pct for

75pct of the

agri supply

chains

supported

#2. Agribusiness

productivity: volume of

selected commodities

sold for processing

+40pct

relative to

baseline

#3. Sales of commodities

in the value chains

supported by the project

+25pct

relative to

baseline

No change Increased Dropped

#3. Sales of commodities

in the value chains

supported by the project

+40pct

relative to

baseline

New Not specified No change Specified

#4. Direct project

beneficiaries

#3. Direct project

beneficiaries

At least

150,000

New No change Increased

#5. Share of female

project beneficiaries

At least

33pct

#4. Share of female

project beneficiaries

At least

45pct


Page 11 of 85

remove the limitation on the number of districts covered by the project. This followed the outcomes of the first mid-

term review (MTR) in August 2012, during which the Borrower recommended that opportunities for commercialization

emerging across the whole country were given adequate support under this Project. The restriction to 25 districts (out

of 75) was removed and project activities were eventually implemented in 62 districts. With the AF, more realistic

targets for two PDO indicators were introduced (Indicator #2 and #3) since the original targets were already met, as

reported in the AF Project Paper (Report No.71532-NP, October 16, 2012). In addition, with the AF the core indicator

on Direct Beneficiaries (disaggregated by gender) was added (Indicator #4 and #5; see Table 1).

15. To enhance their SMART characteristics1, PDO indicators were reformulated and some targets were revised, as

formalized in a first Level 2 Restructuring (June 2015). These improvements (reported in Table 1) were part of a thorough

review of the Results Framework (RF) undertaken at the request of the Borrower with the aim to simplify and ensure

ease of measurability of all indicators. At the same time, some Output indicators were replaced by Outcome indicators.

Further, the original PDO Indicator #3 on Sales of Commodities was dropped due to potential problems of attribution.

Revised Components

16. To accommodate the changes introduced with the AF, Component 1 on Agriculture and Rural Business

Development was split into two sub-components as part of the first Level 2 Restructuring (June 2015). Component 1.a

“Commodity Value Chain Development” continued with the implementation of the MGS. Component 1.b (new)

“Institutional Development for Enhanced Competitiveness” was introduced to support the planned rehabilitation or

construction of initially 6 agricultural commodity markets requested by the Borrower. Additional works resulting from

the need for the rehabilitation or reconstruction of 10 Agriculture/Livestock Service Centers at district level damaged

during the 2015 earthquakes, were later also added to this new sub-component. Finally, it also supported the

establishment of an agribusiness innovation center (new activity) in close collaboration with the Bank’s infoDev team

agreed to at the first MTR. The new outputs financed under Component 1.b. contributed directly to the Intermediate

Outcomes spelled out in the ToC (see Figure 1 above).

Other Changes, Their Rationale and Their Implication on the Original Theory of Change

17. Table 2 provides an overview of the key operational milestones that were followed by changes during project

implementation. As explained further below, most of the changes financed outputs that contributed directly to

achieving Intermediate Outcomes defined and thus had no adverse implications on the ToC.

Table 2: Main changes agreed to at key process milestones for PACT

Month/Year Process Milestones Main changes agreed to

August 2012 1st mid-term review

completed

Geographic expansion from 25 districts to the country’s territory (75 districts)

Increase grant ceiling for sub projects under MGS to US$50,000

Construction/rehabilitation of agricultural markets

Development of an agribusiness incubator

March 2013 Additional Financing

effective (US$ 40M)

January 2015 2nd mid-term review

completed

Allocation to Micro grants (Call 5) under MGS limited to US$5 million in total

Support to the 3 associated Departments to be performance-based (reminder)

Extension of original Project closing date to align with AF

1 SMART indicators are: Specific – Measurable – Achievable/Attributable – Relevant/Realistic – Timebound/Trackable


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June 2015 1st L2 Restructuring

processed

Extension of closing date for original Project by 18 months (to December 31, 2016)

Improvements to the RF (no changes to PDO)

June 2018 2nd L2 Restructuring

processed

Reallocation of IDA proceeds to replenish depleted Cat.4 on Operating Costs and

increase allocation for Cat.2 (Works, Goods, Consultant Services) to cover all works

June 2018 Request for 1st fund

cancellation

XDR2.557 million cancelled from AF Credit 5180-NP

July 2018 Request for 2nd fund

cancellation

XDR3.251 million cancelled from AF Credit 5180-NP

18. Other important changes that contributed towards project outcomes were introduced during implementation;

they include:

a. Streamlining and simplifying the Results Framework (RF): In addition to the changes to the PDO and

Outcome Indicators depicted in Table 1, several Intermediate Outcome Indicators were reformulated

and/or dropped (at the request of the Borrower) to address the need for a common understanding and

ease of measurability of all project indicators. Following the 7th ISM (June 2013), the RF was then gradually

revamped, a glossary of indicators added, and the revised RF was validated during the second MTR (January

2015). As part of this process, the PMT developed a high-performing, online, real-time M&E system based

on the revised RF. The revised RF (see Annex 1) has been used successfully over the last 5 years of the

project lifetime and is fully aligned with the ToC (see Fig. 1).

b. Setting up Project Regional Implementation Support Teams (PRIST): to address the implementation

challenges posed by the geographic expansion of the Project, it was agreed during the June 2013 ISM to

set up a PRIST office in each of the 5 regions. PRISTs were to be staffed with civil servants and technical

specialists from the R-TSG. To facilitate their operations, PRISTs were established as cost centers for the

Project. The introduction of PRISTs significantly increased the PACT’s capacity to coordinate and monitor

project activities; PRISTs played a key role in facilitating the MGS implementation on the ground.

c. Reviewing Matching Grant Scheme modalities: to mitigate the observed risk of grants being used by

beneficiaries for purposes other than those stated in the Grant Agreement signed between the Recipient

and the Project, the grant disbursement modality with upfront installment for a portion of the grant, as

applied under Call-1 and Call-2 of the MGS, was discontinued following recommendations from the June

2013 ISM. Under the new modalities, the grant was disbursed to the Recipient in up to three installments,

only after satisfactory completion of agreed milestones. While the new modalities may have somewhat

affected the pace of MGS disbursements, the number of sub-projects reported to have made inappropriate

use of the grant received declined to almost zero.

d. Introducing Micro Grants: in response to the Borrower’s concern that the Project would be perceived as

benefitting primarily larger farmers and other private entrepreneurs, a Micro Grant window was

introduced under the MGS (“Call 5”), as recommended at the November 2013 ISM. Micro Grants were

targeted at smallholder farmers and micro entrepreneurs. They featured a simplified selection process,

quicker disbursement modalities, and were capped at US$10,000 each (against an average of US$31,500

for all other Grant Agreements signed at that time). The PMT had requested an allocation of US$10 million

for Call 5 but after it failed to convincingly demonstrate how Call 5 sub projects would be coordinated and


Page 13 of 85

monitored in addition to all other on-going sub projects, the Bank recommended to allocate only US$5

million for a total of no more than 500 Call 5 sub projects. Micro Grants were explicitly targeted at the

primary project beneficiaries and thus, contributed directly towards the PDO achievement and several

Intermediate Outcome Indicators.

e. Promoting Value Chain Integration: to address some of the shortcomings identified with the MGS,

particularly with respect to value chain selectivity and the need for stronger forward/backward linkages, it

was agreed at the November 2013 ISM that a Call 4 would be designed and rolled out for smallholder

farmers and other emerging agribusiness entrepreneurs. To that effect, matching grants under Call 4 were

awarded based on (a maximum of 100) joint proposals to selected beneficiaries carrying out different

economic activities within the same agricultural commodity value chain (e.g. milk producer – milk

transporter – dairy processing plant). As a result, the grant ceiling was raised from US$50,000 to 100,000

for Call 4 sub projects. For better alignment with the PDO and increased efficiency in coordination, the

number of value chains supported under Call 4 was limited to eight2.

f. Supporting Integrated Pest Management (IPM): following a request from MOAD for support to its IPM

agenda, it was agreed during the December 2014 ISM that: (i) 6 Rapid Bioassay Pest Residue (RBPR)

laboratories would be established and equipped under Component 2 and operate with trained staff; and

(ii) a dedicated MGS Call 6 would be launched in 3 districts to support the implementation of no more than

100 IPM-related sub-projects. These new activities proved highly successful, with Call 6 showing the

highest sub project completion rate (with 98 percent). Moreover, the RBPR laboratories have significantly

contributed to raising awareness along the supply chain for fresh produce on the need for producers and

traders to comply with national food quality and safety standards.

g. Strengthening the linkages between Component 1 and Component 2: In early years, the Project was

implemented with little to no operational linkages between its two main components. Typically, the three

Departments associated with the Project (DFTQC DOA, DLS) would annually submit their list of goods and

training needed to the PMT who would usually provide the funding. After the November 2013 ISM

highlighted this disconnect between design and implementation, it was agreed that project support to the

Departments would be performance-based. The PMT subsequently required the Departments to include

annual targets for MGS sub projects from priority value chains in their respective list of entities to be

physically inspected and sampled for laboratory analyses. In turn, the support from the Project would focus

on increasing the institutional capacity of the Departments to carry out their mandate. In addition, DFTQC

was mandated to support 40 sub projects towards meeting the requirements for obtaining the mandatory

food license and operating in full compliance with the Food Law. While this took a couple of years to fully

implement, this change directly aimed to contribute to improving the competitiveness of agribusinesses.

2 Vegetables (tomato, cauliflower and cabbage); dairy and dairy products; meat and meat products; ginger; coffee; fish; flowers;

cardamom


Page 14 of 85

II. OUTCOME

A. RELEVANCE OF PDOs

Assessment of Relevance of PDOs and Rating

19. Throughout implementation, the Project remained fully consistent with the Bank’s overall strategy for Nepal, as

outlined in the two Interim Strategy Notes (ISN 2009-11; ISN FY2012-13) and the Country Partnership Strategy (CPS

FY2014-18). Moreover, PACT’s longer-term impact (see Figure 1 above) is likely to contribute to the new Country

Partnership Framework (CPF FY2019-23), Objective 2.5 Improved income opportunities, through agribusiness

investments for jobs and natural resources management, increased economic competitiveness of the agriculture

sector. The project outcomes are also fully aligned with the WBG’s Maximizing Finance for Development agenda, a new

corporate priority central to the new CPF.

20. PACT closing date coincided with the end of the CPS FY2014-18. Under this WBG strategy, the Project contributed

directly to Pillar 2: the data for CPS Indicator 1 (Productivity of priority high value commodities) and Indicator 4 (Annual

smallholder production marketed) assessed to monitor progress on CPS Outcome 2.1 (Increased agricultural

productivity and commercialization) was sourced directly from PACT. Table 3 below highlights how the PDO has

remained highly relevant with the WBG’s strategy for support to Nepal over the 9-year period of project

implementation.

21. Since there were no shortcomings in the relevance to the WBG CPF in place at project closing, Relevance of PDO

is rated HIGH.

Table 3: Consistency between PDO and WBG Strategies for Nepal

PDO and longer-term impact WBG Strategy Strategic WBG Objective(s) to which

the Project outcomes contributed to

Original Financing:

To improve the competitiveness of smallholder

farmers and the agribusiness sector in selected

commodity Value Chains in selected districts in

the Recipient’s territory

Interim Strategy Note

ISN 2009-11

Pillar 2: Laying the Foundation for Sustainable and

Inclusive Economic Growth

Additional Financing:

To improve the competitiveness of smallholder

farmers and the agribusiness sector in selected

commodity Value Chains in the Recipient’s

territory

Interim Strategy Note

ISN FY2012-13

Pillar 1: Enhancing Connectivity & Productivity for

Growth

Outcome 3: Increased agriculture productivity

Country Partnership

Strategy

CPS FY2014-18

Pillar 2: Increasing inclusive growth and opportunities

for prosperity

Outcome 2.1 Increased agricultural productivity and

commercialization

Country Partnership

Framework

CPF FY2019-23

Focus Area 2: Private Sector-Led Jobs and Growth

Objective 2.5. Improved income opportunities


Page 15 of 85

B. ACHIEVEMENT OF PDOs (EFFICACY)

22. The assessment of the Efficacy of the PDO and project outcomes is based on the analysis of the data reported in

the Results Framework (RF) (Annex 1). 3 PACT has generated a rich body of empirical data collected through several field

surveys carried out during project implementation. This has provided the analytical underpinnings for various empirical

studies (listed Annex 5). While those studies each have their specific strengths and limitations, they greatly converge

with respect to the data and findings presented. For this ICRR, the RF and its underlying database was used in the

analysis of Efficacy and project outcomes. The RF was regularly updated with data collected by the PRISTs and the PMT

(with panel data for PDO Indicators #1 and #2). The Bank carried out the due diligence on the data reported in the RF

during 18 Implementation Support Missions and various other technical missions; this validation was further

strengthened by the findings of the Independent Assessment of the Matching Grant Scheme (Annex 5, ref. #10). The

findings of the DIME Impact Evaluation were used for a complementary assessment of parameters not covered by the

indicators in the RF.

Assessment of Achievement of Objective 1

23. Overall, PACT Development Objective 1 (Farm productivity increased by at least 25 percent) has been achieved.

Achievement of Objective 1 has been assessed by monitoring the increase in agricultural output per unit of production

for horticulture crops (fresh produce), cereal crops (seeds), and dairy cows (milk). These commodities had been selected

for their existing or emerging growth potential in market-oriented value chains and as part of the production

diversification agenda towards higher-value agriculture. To that effect, the project’s Monitoring and Information

System (MIS) reported the annual production data from project beneficiaries with a sub-project supported under the

Matching Grant Scheme (MGS). Thus, in line with the project’s ToC, this Objective 1 results directly from the

Intermediate Outcomes achieved under Component 1 (Agriculture and Rural Business Development), in particular with

matching grants provided to smallholder farmers. As expected, the number of sub projects supported by the MGS

(Indicator # 5 in the RF) and the share of sub projects still operating as intended at least 6 months after their completion

(Indicator # 6) had a direct impact on the achievement of Objective 1.

24. The level of achievement at project closing for Objective 1: Farm productivity increased by at least 25 percent is

reported in Table 4 below. This assessment is based on the project indicators and values in the Results Framework (see

Annex 1) and cements the causal relationships between PDO Outcomes and Intermediate Outcomes depicted in the

Results Chain (Figure 1).

Table 4: Achievement of PACT Objective 1: Farm Productivity Increase

PDO Indicator Baseline End-project

Target

Value

at Closing

Level of

Achievement

RF #1: Yield increase for selected horticulture

crops (average for tomato and cauliflower; n=88) 0% +25% +74.1% Exceeded

RF #1: Yield increase for selected cereal crops

(average for wheat and rice; n=30) 0% +25% +22.6% Almost met

RF #1: Production increase for milk

(average per cow and lactation; n=36) 0% +25% +35.9% Exceeded

3 All tables in this section are based on data reported for PDO indicators in the Results Framework (RF); in some cases, they have

been aggregated for ease of reporting. Original, disaggregated, raw data can be found in the RF in Annex 1.


Page 16 of 85

25. Out of a total of 1,223 sub projects completed under the MGS, around 64 percent promoted the production of

horticulture produce, cereal seeds or milk, and thus contributed directly to the achievement of Objective 1. Farm

productivity increase was achieved primarily through a combination of:

a. productive assets (e.g. farm machinery and equipment) purchased by beneficiaries and financed through

their own contribution and the grant received from the Project (and in some instances, coupled with a loan

from a commercial bank);

b. improved agricultural production technologies (e.g. greenhouses) acquired through the grant from the

Project and the beneficiary contribution; and

c. technical assistance acquired (e.g. technical expertise, at times from overseas) by the beneficiaries to

strengthen their skills and knowledge on good agricultural practices and improved production methods.

Box 1: The PACT Matching Grant Scheme (MGS) at a glance

The MGS was the backbone of the PACT. It was designed as the primary instrument for achieving the PDO and was the main

contributor to the Project Objective 1 (Increase in farm productivity) and Objective 2 (Increase in agribusiness productivity).

Covering 62 of the 75 districts in Nepal, the MGS supported 1,223 sub projects (SP) designed, implemented, and co-financed by over

100,000 Project Direct Beneficiaries, of which over 45 percent were women.

The MGS was rolled out through 6 different Calls for Proposals, with several implemented concomitantly. Call 1 (49 SP), Call 2 (193

SP) and Call 3 (201 SP) supported a broad range of commodities, with no specific focus; grants averaged around US$30,000 each.

Call 4-Value chains (208 SP) was intended to strengthen backward/forward linkages in 8 priority value chains and included medium

size grants up to US$100,000. Call 5-Micro grants (472 SP) was specifically introduced to support smallholder farmers integrate

commodity value chains, with grants up to US$10,000. Call 6-IPM (100 SP) financed exclusively IPM-related SP in only 3 districts with

grants below US$50,000.

The bulk of sub projects co-financed under the MGS supported the Vegetables, Meat and Dairy value chains (see Annex 10).

As depicted in Table 5, Beneficiaries of the MGS included Cooperatives and Farmers Associations (32.4 percent), Farmers Groups

(31.9 percent), Individual Farmers (29.1 percent), and Agribusiness SMEs (6.6 percent).

Beneficiary’s contribution to the matching grant ranged from at least 25 percent of sub project costs (for smallholder farmers in Call 5)

to at least 75 percent (for SMEs in Call 4). This helped the project with leveraging NPR2.59 billion (around US$25 million) in private

capital, thereby significantly contributing to the Bank’s Maximizing Finance for Development agenda.

While the eligibility criteria remained largely unchanged across Calls, the procedures for proposal selection and validation, as well as

the modalities for grant disbursement (in 2 to 3 installments), were reviewed and improved overtime. In particular, the 1st installment

upon signing of the Grant Agreement was replaced in Call 3 by performance-based installments, i.e. disbursed against agreed sub

project milestones which Beneficiaries had to complete first, in a manner satisfactory to the Project.

MGS grants have been predominantly used by Beneficiaries for the procurement of infrastructure and equipment to help boost

agricultural yields and market-oriented production (including of processed commodities) in 43 different value chains, as well to

strengthen post-harvest management and improve primary processing. Assets acquired in sub projects included 3,685 tunnel houses,

1,432 animal sheds, 436 fish ponds, 257 storehouses, 175 collection centers, 109 tractors, 98 urine/manure/compost pits, 86 farm

vehicles, 31 biogas plants, and more than 400 other machineries (e.g. generators, milking machines, chilling vats, sprayers, and

more).

The WB/DIME Impact Evaluation of Call 4 and the PACT Impact Assessment of Call 1, Call 2 and Call 3, have provided robust

empirical evidence in support of the significant outcomes achieved by the MGS and its direct contributions to the objectives of the

Project. In particular, the MGS has led to: an increase in the profit of grant recipients, improved market opportunities for smallholder

farmers, a growth in production output and product diversification at farm and agri-processing level, the development of

backward/forward linkages in agricultural commodity value chains, a growth in job creation by agribusiness SMEs, and an increase in

women participation.

A comprehensive overview of the MGS is provided in Annex 7.


Page 17 of 85

26. While the farm productivity outcomes for cereal crops remained slightly below target, these results were largely

offset by the significant gains in productivity for horticulture products as well as for milk. Smallholder farmers under PACT

achieved significant increases in the yields due to their access to technologies that had now become more affordable

with the project matching grant. Many grant recipients switched from cultivating vegetables in open field to growing

hybrid varieties under protective cultivation (e.g. tunnel tomato) where farmers can achieve much higher yields.

Similarly, the grant enabled farmers to free up enough own resources and purchase cross-bred dairy cows who produce

significantly more milk than the local breed4. While sub projects also included seed improvement/seed multiplication

activities that enhanced the local supply of higher yielding varieties, such technology packages for cereals were not

implemented at a scale that would have allowed similar overall yield improvements as those achieved in horticulture

or in the dairy sector.

27. The choice of indicators to assess the progress towards the project Objective 1 (Increase in farm productivity) was

adequate and the end-targets realistic – although project implementation focused primarily on post-farm gate segments

of the agricultural commodity value chains. As highlighted in the project’s Theory of Change, a holistic “from farm to

market” approach was adopted to achieve the expected outcomes of this agricultural commercialization and trade

project. This was well reflected in the design of PACT with investments intended to improve the marketability of

agricultural production (quantity, quality, market demand) through, among others, scaling up the production of higher

value commodities (e.g. cut flowers, fish, meat, fruits), and diffusing modern production technologies to increase farm

output (e.g. tunnel for vegetable production). However, such farm-level activities were mostly confined to the sub

projects implemented under the earlier Call 1 and Call 2, as well as Call 5 (micro grants) of the demand-driven MGS,

with little to no follow-up in terms of agricultural advisory services for smallholder producers.

Assessment of Achievement of Objective 2

28. Overall, PACT Development Objective 2 (Agribusiness productivity increased by at least 40 percent) has been fully

achieved. Achievement of Objective 2 has been assessed by monitoring the increase in the volume of commodity sold

for processing. To that effect, the project monitored a mix of commodities processed for the local market (milk) as well

as others with a significant share for export markets (coffee, ginger, honey). The data was compiled annually from MGS

co-funded sub projects whose primary economic activity consisted in processing and marketing one of the commodities

selected.

29. Table 5 below shows that at project closing, the targeted 40 percent increase was largely exceeded as the volume

of farm products sold for processing had more than doubled for both sets of commodities. Agribusiness productivity

increase was achieved primarily through:

a. productive assets (e.g. cold storage facilities, equipment for processing and value addition) purchased by

beneficiaries and financed through their own contribution and the grant received from the Project (and in

a few instances, coupled with a loan from a commercial bank);

b. enhanced trade and commercialization practices (e.g. marketing strategies, stronger backward/forward

linkages) resulting from training on value chains and targeted advisory services delivered through PACT;

and

c. technical assistance purchased (e.g. technical expertise, at times from overseas) by grant recipients to

4 The use of the PACT grant to purchase agricultural inputs and animals was not permitted under the MGS (except for seed

production and livestock breeding sub projects). Instead, MGS would finance fixed assets (e.g. cow shed) while the grant recipients would need to purchase the cows through their own contribution.


Page 18 of 85

strengthen their skills and knowledge on market-led product transformation and improved processing

technologies.

Table 5: Achievement of PACT Objective 2: Agribusiness Productivity Increase


Target

Value

at Closing

Level of

Achievement

RF #2: Volume increase of agriculture commodities sold

for processing (average for coffee, ginger, honey; n=29) 0% +40% +155% Exceeded

RF #2: Volume increase of fresh milk sold for dairy

processing (average; n=44) 0% +40% +123% Exceeded

30. The achievement of Objective 2 reflects PACT’s focus on supporting the downstream (i.e. post-farm gate) segments

of the agricultural value chains, rather than on boosting farm production. The MGS contribution to the PDO was primarily

driven by the outcomes achieved around Agribusiness productivity (Objective 2) – rather than around Farm productivity

(Objective 1). Most of the PACT sub projects dealt with primary/secondary processing and value addition through

product transformation and the majority of the grant recipients were entities formed to engage in post-farm production

activities.

31. The PACT’s MGS remained the key determinant in the achievement of the PACT Objective 2, as other drivers for

enhancing further competitiveness of the agribusiness sector fell short, due to late implementation. The Nepal

Agribusiness Innovation Center (NABIC) established as a private company under PACT had been operational for little

over a year before PACT closed. Similarly, the setup of Rapid Bioassay Pesticides Residue (RBPR) labs in 6 different fresh

produce markets across Nepal was only completed in the final year of project implementation, with uncertainties

remaining at project closing regarding staffing, training of staff, and coverage of operation and maintenance costs.

Regarding compliance of agri-food enterprises with the Food Law, only 27 agri-food sub projects supported by the PACT

(out of a selected 40) had either received or submitted a formal request for the required Food License, following the

stronger collaboration with the Departments in the final years of PACT. Regarding the promotion of international trade,

the construction of the fumigation chamber was not operational by PACT closing date. All these important activities

would have required a longer period in operation to adequately measure their full contribution to the competitiveness

of the agribusiness sector.

32. Consequently, with the GoN’s commitment to complete and self-finance all PACT activities outstanding after closing

date, some impact on the competitiveness of the agribusiness sector can be expected in the medium to long-term. While

the outcome-level indicators selected for assessing agribusiness productivity increase were met and exceeded, several

investments intended to help “reduce obstacles to agricultural and food trade” (as stated in the PAD) are expected to

have a positive impact on agribusiness productivity only after PACT closing, as the GoN has committed to ensure the

sustainability of these investments and pursue the agenda unfinished under PACT (completion of construction of

agricultural commodity markets, operationalization of the fumigation chamber and quarantine facilities, support to

NABIC, staffing of RBPR labs).


Page 19 of 85

Assessment of Achievement of Project Outreach

33. The reported number of Direct Project Beneficiaries remained below target, with the rate of achievement for this

PDO Outcome at only of 67 percent. This Core Indicator on project beneficiaries was added with the AF (Project Paper,

Report No.71532-NP, October 16, 2012) to comply with the Bank corporate requirements. However, no end-project

target was set when this indicator was introduced; the target of 150,000 was only introduced at the second MTR. As

per the Glossary of Indicators developed during the July 2013 ISM, Direct Beneficiaries are “… those members of a grant

recipient organization (GR) who directly participate in PACT’s sub-project by providing part of contribution in cash, kind

or both as agreed by GR with the PACT.” It is likely that the shortfall with this PDO Outcome Indicator results from

shortcomings in the assumptions made in setting an unrealistically high end-project target. Over 90 percent of Direct

Project Beneficiaries are smallholder farmers, organized in Cooperatives, Producer Associations or Farmers Groups, or

Individual Farmers (primarily under Call 5, Micro Grants) (see Table 6).

34. In contrast, the targeted share of women among direct project beneficiaries was met. Introduced with the AF, the

end-project target for this Core Indicator was initially set at the standard level for public programs and institutions in

Box 2: The Nepal Agribusiness Innovation Center (NABIC) at a glance

The Nepal Agribusiness Innovation Center is one of the most significant achievements under PACT. NABIC is Nepal’s first agri-

focused business incubator and innovation platform. It was established under PACT to provide holistic services to support and

enhance innovation, growth and competitiveness of agribusinesses. NABIC is incorporated as a “company not distributing profits”

under the Nepal Companies Act, 2006.

NABIC’s corporate mandate is to: (i) nurture start-ups, SMEs and innovators in the agribusiness sector through business

incubation from conceptualization, implementation and scaling up; (ii) contribute to commercialization and industrialization of the

agribusiness sector in Nepal; and (iii) foster collaboration among ecosystem actors to promote agribusinesses in Nepal. NABIC’s

services are built around: intensive business counselling, business incubation and eco-system building.

NABIC was established under PACT with Technical Assistance from the Bank’s InfoDev team which supported the design,

planning and early operations phase. Setting up NABIC was a considerable challenge and the process faced major delays under

PACT (including with the procurement of a management entity). NABIC eventually started its operations in April 2017; it has

already made a considerable impact on the country’s agribusiness landscape and has helped PACT achieve several results

described below.

NABIC has directly contributed to the PACT Development Objective by playing a key role in building entrepreneurial capacity of

agribusiness SMEs supported under PACT and, ultimately, by contributing to an increase in the productivity of PACT agribusiness

enterprises and laying the foundations for an increase in competitiveness of the agribusiness sector.

NABIC has so far reached to over 1,000 agribusiness SMEs through orientation events, counseling programs, and intensive

business incubation programs. In addition, NABIC has provided skill development training to 42 agribusinesses to help with their

goal of obtaining/renewing the Food License required under Nepal’s Food Law. These agribusinesses are PACT sub projects that

have been supported under the Matching Grant Scheme.

In the first 12 months of NABIC operations, enterprises that had signed up on NABIC’s incubation program were able to increase

their sales volume by an average of 26 percent and hired an average of 5.3 additional employees per SME.

GoN is committed to remaining engaged with NABIC and has earmarked NPR10 million under its FY2018-19 budget for the

sustainability of NABIC. The Bank’s InfoDev’s group has also successfully been exploring opportunities for further funding to

support NABIC. Meanwhile, NABIC has been holding discussions with other development projects on potential collaboration as

agribusiness service provider (including with the newly launched IDA-funded Livestock Innovation project).

Looking ahead, NABIC will continue to develop and grow in order to achieve financial sustainability; plans are being developed

to align NABIC’s operations with the new decentralized structure of Nepal by establishing branch offices in the provinces to

increase the efficiency of its services delivery to agribusiness clients in the field.

NABIC is a promising success story of PACT that, if managed well, will remain operational long after PACT has closed. It can

serve as a reference for other development projects, including outside of Nepal, that aim to improve the competitiveness of the

agribusiness sector.


Page 20 of 85

Nepal (30 percent). At the second MTR, it was agreed that the PACT should be at the forefront of implementing the

Bank/GoN’s gender agenda in rural areas and the end-project target was revised upwards and set at 45 percent (see

Table 7).

Table 6: Type of Beneficiaries and distribution of co-financed Sub Projects

Beneficiary Type Number of

sub projects

Share of

sub projects

Cooperatives and Producer Associations 396 32.4%

Farmers Groups 390 31.9%

Individual Farmers 356 29.1%

Agribusiness SMEs 81 6.6%

TOTAL 1,223 100%

Table 7: Achievement of PACT PDO Outcome for Beneficiary Outreach

Justification of Overall Efficacy Rating

35. Only 1 in 7 parameters used to assess the achievement of the Objectives of the Project could not be met; as a

result, since the operation almost fully achieved its intended outcomes as defined by the PDO, Overall Efficacy is rated

SUBSTANTIAL.

36. The Overall Efficacy Rating is further supported by the achievement of most PACT intermediate outcomes – which,

as laid out in the project’s Theory of Change, directly contributed to the achievement of the PDO. Four out of 8

Intermediate Outcomes were fully achieved, with their indicators exceeding end-targets at project closing (see RF in

Annex 1). These are for Component 1: (i) Indicator #5 Sub-projects supported by PACT matching grant scheme which

gives an indication of the scale at which the PDO was achieved (1,223 sub projects implemented by Beneficiaries against

an end-target of 700); and (ii) Indicator #6 Sub-projects still fully operational 6 months after submission of their

completion report which provides valuable information on the sustainability of the PDO (81 percent of the sub projects

against an end-target of 70 percent). For Component 2, these are: (i) Indicator #9 DFTQC, DLS, and DAO staff trained

annually in laboratory analysis (a total of 172 staff were trained against the 68 planned); and (ii) Indicator #10 Samples

analyzed annually by DFTQC, DLS and DOA (16,172 samples were analyzed against an end-target of 13,577 samples);

both Intermediate Outcome Indicators highlight the institutions’ capacity (improved through PACT support) to assess

agri-entrepreneurs’ compliance with the food quality and safety standards spelled out in the Nepal National Food Law

– ultimately informing about the competitiveness of agribusinesses and indeed, basic access to the world’s most


Target

Value

at Closing

Level of

Achievement

#3: Direct Project Beneficiaries

(Core Indicator) 0 150,000 100,592 Not met

#4: Share of women who are direct beneficiaries

(Core Indicator) 0% 45% 45.6% Met


Page 21 of 85

lucrative markets.

37. Only two Intermediate Outcomes could not be achieved at project closing and thus, could not fully contribute to

the PDO. For Component A: Indicator #8 (Additional stalls available at the markets built or rehabilitated by PACT) did

not meet its end-target due to the significant delays incurred in the construction of agricultural markets (see also

Section III below). However, since the GoN had committed to complete all the works initiated under PACT and had

allocated the corresponding funding in its 2018-2019 budget, this outcome is expected to be achieved in the near

future. For Component B: Indicator #12 (Inspection services provided annually by DFTQC, DLS and DOA to grant

recipients) did not meet its end-target due to DLS and DFTQC inspecting less PACT sub projects in 2015 and 2017 than

they had agreed to.

C. EFFICIENCY

Assessment of Efficiency and Rating

38. The ex-post efficiency analysis of the PACT was carried out to assess the financial and economic impact of the

Project and focused on the Matching Grant Scheme (MGS). Direct economic benefits of the PACT were expected to

result from several interventions across commodity value chains, namely: (i) increased operating efficiency at farm level

through improvements to production and marketing process, logistics, and market institutions; (ii) extended value

addition at farm and/or post-farm level with greater integration between smallholder farmers and other agri-

entrepreneurs along the value chains; and (iii) increased market access and reduction in economic losses due to

improvement in capacity of the national system for SPS and food quality facilities. These benefits accrued indeed

throughout project implementation and were largely driven by the project’s MGS capacity strengthening (and to some

extent, skills development activities for grant recipients implemented in the latter parts of the project). Therefore, the

ex-post analysis summarized here and detailed in Annex 4 focuses on the MGS.

39. The PAD did not report any ex-ante overall Economic Net Present Value (ENPV) and Economic Internal Rate of

Return (EIRR) for the Project. The demand-driven nature of the MGS, the competitive nature of the process to select

sub project proposals for MGS co-funding, and the nature of some of the PACT activities with considerable non-

quantifying benefits, added to the difficulty of carrying out a meaningful traditional ex-ante efficiency analysis. Thus, at

Appraisal, assessing the overall project ENPV and EIRR was deemed infeasible. Instead, an economic analysis was

undertaken for what were expected to become three typical PACT sub projects with a strong public good element: a

small road-to-market connection, a collection center for fresh produce aggregation and marketing, and a smallholder

irrigation system for enhanced farm productivity. In actual fact, these three did not resemble most of the sub projects

types implemented under PACT, in response to beneficiary demand. As such, the ex-post efficiency analysis assesses

the economic and financial viability of the Project based on the economic and financial returns derived from the actual

data sourced from the comprehensive MGS endline surveys. The efficiency analysis was carried out on the basis of sub

project analyses in value chains for which reliable and sufficient data was available to measure benefits (see Table 8).

Returns to investments in selected commodity value chains were estimated using their respective production models.

40. The efficiency analysis is based on conservative estimates of returns from project investment, as investments whose

returns are highly complex to quantify were not included. The main direct project benefits are generated from the

financial support provided through the MGS. While in the efficiency analysis, the economic returns from the sub

projects were proportionately attributed to the share of investments made by the PACT, the economic returns from

the economies of scale could not be captured due to the lack of detailed input and output costs, for both grant recipient

and non-grant recipient. Moreover, returns to investments for the development of the sanitary and phytosanitary as


Page 22 of 85

well as food quality management infrastructures, are excluded from this analysis due to the comprehensive datasets

required to quantify their returns. Thus, the financial and economic returns estimated in this efficiency analysis reflect

a conservative estimation of the benefits generated by the project investments. Details on the methodology, data and

assumptions can be found in Annex 4.

41. The outcomes of the analyses carried out for the agricultural commodity value chains that received the largest

support demonstrate that the costs involved in achieving the PACT objectives were reasonable and economically viable.

For the economic and financial analysis, eleven sub sectors were selected for which project investments supported a

range of interventions expected to contribute to the project objectives, by improving, among others, productive

efficiency, logistics processes, and marketing strategy. The returns estimated from the investment models utilizing the

information and data from the project endline surveys show that the investment in most commodity value chains were

reasonable and economically viable, in terms of both financial and economic returns. The financial returns are found to

be the highest for dairy processing (22 percent) and animal feed (20 percent). On the other hand, they are the lowest

for meat processing and poultry layer (14 percent) (see Table 8 below).

Table 8: Summary Results of the ex-post Efficiency Analysis

Investments in sub sectors

Actual

Investments

(in '000 NPR)

Economic Analysis Financial Analysis

NPV

(in '000 NRS) IRR

NPV

(in '000 NRS) IRR

Vegetables 397,000 145,000 18% 166,000 18%

Meat Processing 309,000 78,000 15% 57,000 14%

Milk Production 243,000 49,000 21% 116,000 19%

Dairy Processing 239,000 143,000 22% 160,000 22%

Fishery 143,000 95,000 23% 66,000 19%

Goats 109,000 35,000 16% 44,000 17%

Cereal Seeds 95,000 2,000 17% 41,000 18%

Poultry Broiler 65,000 49,000 21% 44,000 19%

Poultry Layer 44,000 28,000 16% 23,000 14%

Potato Seeds 42,000 1,000 19% 17,000 18%

Animal Feed 18,000 11,000 21% 10,000 20%

Overall Project - Scenario 1 1,700,000 725,000 19% 739,000 18%

Overall Project - Scenario 2 2,114,000 401,000 14% 414,000 14%

42. The results of the overall project efficiency undertaken for two different scenarios confirm that at completion the

project was financially robust. The analysis shows that even when taking into account costs of investments in value

chains for which benefits could not be quantified or for which benefits would have been difficult to assess (e.g. some

Component 2 expenditures), both the financial and economic IRR remain in excess of 12 percent. In other words, the

Project can be already considered robust and viable, even though the analysis accounted for the total project costs


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while not all project benefits could be included. Results are summarized below:

a. Efficiency analysis under Scenario 1 – without costs of investments with non-quantifiable benefits. In a

scenario that does not take into account the costs of those investments for which benefits could not be

accurately estimated (Scenario 1), the financial analysis confirms the project’s overall financial viability by

yielding a NPV of around NPR739 million (or some USD6.5 million) and a FIRR of around 18 percent. Under

the same scenario, the economic analysis results in a NPV of NPR725 million (or some USD6.4 million) and

an EIRR of around 19 percent.

b. Efficiency analysis under Scenario 2 – with costs of investments with non-quantifiable benefits. The efficiency

analysis was also carried out with a more conservative approach that accounted for the costs of all

investments in the selected value chains, even those for which the benefits could not be easily quantified.

In this Scenario 2, the financial returns to the project are more modest, as expected, with NPV of some

NPR414 million (or around USD3.7 million) and a FIRR of 14 percent. Similarly, the economic analysis under

Scenario 2 results in a lower than Scenario 1 NPV of NPR401 million and an EIRR of 14 percent.

43. The positive results highlighted in the economic analysis are mitigated by shortcomings in the implementation

efficiency of the Project – specifically the considerable timeframe that was required to achieve (in some cases only

partially) the intended project outcomes. PACT’s “value-for-money” is affected by those objectives that could not be

achieved at project closing, despite the long project implementation period and the resources allocated to the

activities and outputs that were expected to generate the results prior to project closing. Annex 9 provides an

overview of the occurrence of key milestones throughout PACT implementation. It shows that few core project

activities (outputs) were completed during the original 6-year project implementation period while others started

late; this is confirmed by annual project disbursements which were the highest by far in the final two years of the

project. Moreover, Annex 9 shows some inefficiencies that have impacted project performance, e.g. long overlapping

period of several MGS Calls, long gap in with the technical assistance from TSG/rTSG to TA service provider. PACT’s

“value-for-money” is also mitigated by a lower than expected outreach, as only 67 percent of the targeted number

of direct beneficiaries was attained at project closing (PDO Indicator #3: Cumulative Number of Direct Project

Beneficiaries; end-target: 150,000).

44. The project Efficiency is rated MODEST, given the underwhelming “value for money” generated from the Project,

the relatively high costs accrued per direct beneficiary, and the extra time needed to achieve some of the project

outcomes (some intermediate outcomes were only partially, while others were not achieved; see RF, Annex 1).

D. JUSTIFICATION OF OVERALL OUTCOME RATING

45. The overall Outcome rating for PACT is MODERATELY SATISFACTORY. This takes into account the HIGH rating for

Relevance of the PDO, the SUBSTANTIAL rating for the extent to which the project’s objectives were achieved, and

the MODEST rating for the project’s economic and implementation efficiency.

E. OTHER OUTCOMES AND IMPACTS

Gender

46. PACT has been successful at implementing the social inclusion agenda developed during project design, resulting in

the achievement of gender targets. However, there was only one indicator in the Results Framework that explicitly

reported against women (PDO Indicator #4: Share of women who are direct beneficiaries) and more indicators could


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have been gender-disaggregated to better demonstrate PACT’s actual commitment to the gender agenda (e.g.

Indicator #5: Sub-projects supported by the MGS; Indicator #7: Clients receiving services from NABIC; Indicator #9:

DFTQC, DLS, and DAO staff trained annually in laboratory analysis). Nonetheless, several other sources of information,

in particular the project endline survey of MGS Call 1 to Call 3 and the Bank/DIME Impact Evaluation of Call 4 provided

the empirical evidence for successful gender outcomes in the Project. To encourage PACT to further contribute to

gender promotion in the rural economy, the end-project target for PDO Indicator #4 was raised from 33 to 45 percent,

as part of the 2015 project restructuring.

47. Although the total number of project beneficiaries could not be achieved, the share of women among the Direct

Project Beneficiaries slightly exceeded the target of 45 percent (against a baseline value of 34.7 percent). PACT was

successful in pro-actively promoting a high participation of women in project activities – without having to rely on

quotas. Specific measures introduced by the project to address the gender dimension included, among others: (i)

encouraging grant recipients to select women as sub project managers, (ii) encouraging PRISTs to organize training and

meetings in a way that would allow women to participate without substantially affecting their household

responsibilities or overburdening them, and (iii) providing training and orientation targeted to women. As depicted in

Table 9.a and Table 9.b below, PACT was also relatively successful in securing strong participation of women in the MGS

- including as direct grant recipients.

Table 9.a: Women Participation in the PACT Matching Grant Scheme – by Call

Matching Grant Scheme Call 1 Call 2 Call 3

Call 4

Value chain

integration

Call 5

Micro

grants

Call 6

Integrated

Pest Mgt.

Total

Average

Sub projects completed 47 182 187 174 467 100 1,223

Share of women

beneficiaries 37.9% 44.2% 46.6% 45.3% 50.1% 45.1% 45.6%

Table 9.b: Women Participation in the PACT Matching Grant Scheme – by Grant Recipient type

Grant Recipients

Cooperatives

and Producer

Associations

Farmer

Groups

Individual

Farmers

Agribusiness

SMEs

Total

Average

Sub projects completed,

by grant recipient type 396 390 356 81 1.223

Share of sub projects with female

ownership or management 16.4% 23.6% 14.9% 9.0% 16.0%

Institutional Strengthening

48. To improve the competitiveness of Nepal’s agribusiness sector, PACT Component 2 focused on strengthening the

capacity of key Departments (DFTQC, DOA, DLS) on SPS and food quality management; in contrast, institutional support

to improve the delivery of services to the agri-food value chains (in particular to smallholder farmers) was not designed

for. Overall, it can be expected that the bulk of the impact of this institutional strengthening would be significantly


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higher in the longer term, i.e. after project closing, provided adequate follow up from the GoN. Strategic and meaningful

support to the Departments only materialized in the final 3 years of project implementation, when more significant

efforts were made to exploit synergies between both project components. This was achieved by tying PACT support to

the Departments to an annual schedule of on-site technical inspections and lab analyses of selected sub projects to be

carried out by the Departments.

49. These inspections and lab analysis have provided a clear indication of the scale of the shortcomings prevailing with

food quality and food safety in Nepal’s agri-food system – in itself, a significant contribution by PACT. The institutional

strengthening of the Departments also highlighted the need for a renewed focus by GoN to achieve lasting

improvements in the competitiveness of Nepal’s agri-food system – and in particular, to achieve full compliance with

the Nepali Food Law and seize opportunities emerging for Nepali agri-food products on the global market.

50. PACT support to DFTQC aimed at strengthening the Central Food Laboratory (CFL) chemical analytical capacity and

developing related skills of its staff. To improve CFL capacity for detecting and analyzing herbicide and pesticide residues,

heavy metals, microbiological contamination and determining nutrient composition, PACT procured and supplied

critical high-tech analytical laboratory equipment. Some equipment was, after considerable delay in the dispatching,

supplied to DFTQC’s Regional Offices.

51. The increased analytical and technical capacity was instrumental in successfully expanding DFTQC’s scope of

accreditation for reliable food safety testing5. This is a significant project achievement and a necessary condition to

GoN current aspirations for the sector, supported under the WBG’s most recent CPF for the country: without valid

accreditation frameworks, market access will always be hampered. More is needed, however, as the retention and

need for continuous training of skilled technicians operating the sophisticated analysis equipment remains a challenge

for the Department. PACT also helped increase DFTQC’s mobility through the procurement and supply of vehicles,

substantially augmenting the Department’s outreach, rapid response capacity and public awareness campaigns.

52. PACT support to DLS focused on enhancing the analytical capacity of the Veterinary Standards and Drugs

Administration Office (VSDAO) laboratory. To that effect, PACT procured and supplied high-tech equipment to improve

the detection of veterinary drugs, hormones, aflatoxins, and others. The Project also supported training of laboratory

staff, as well as of veterinary drug entrepreneurs and drug quality inspectors. However, as with DFTQC, in the absence

of a medium term human resources strategy, the retention of trained staff skilled to operate sophisticated equipment

and the frequent transfer of skills within the Department will continue to pose a challenge and affect the sustainability

of the investment in institutional capacity.

53. The Project also provided support to DLS for the preparation of various veterinary standards, protocols and

manuals and assisted with the review of the Slaughterhouse and Meat Inspection Act and the Animal Health and

Livestock Services Act. PACT also assisted DLS with the assessment of three laboratories against compliance with the

ISO/IEC 17025 Standard, resulting in the development of a Road Map to Accreditation for the Central Veterinary

Laboratory, the National Avian Disease Investigation Laboratory, and the Veterinary Standards and Drug Administration

Office Laboratory. The implementation of this Roadmap has been picked up by the IDA-funded Nepal Livestock Sector

Innovation Project.

54. PACT support to DOA was originally focused on strengthening the National Plant Quarantine Program (NPQP) SPS

capacity and later extended to support the Plant Protection Directorate (PPD) with its IPM and RBPR programs. PACT

5 Accreditation against ISO/IEC 17025 Standard covers the general requirements for the competence of testing and calibration of laboratories, which in turn is a pre-condition for reliable testing of parameters relevant to food safety.


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original intention to build bulk consignment fumigation chambers at four check points along the border with India and

China to increase NPQP’s SPS capacity did not materialize. Instead, DOA prioritized the establishment of two facilities,

one at Kathmandu’s international airport (to meet the fumigation standard of air cargo), and one at the Dry Port Birgunj

(to meet the standards of inland cargo). In the end, after much delay due to procurement processes and difficulties in

finding a suitable location, one fumigation chamber and post-quarantine facility were developed on the premises of

the Horticulture Development Center in Kirtipur, Kathmandu – but were not completed on time before project closing.

The GoN has committed to ensure full completion and operationalization of these facilities.

55. PACT successfully supported PPD with the set-up of Rapid Bioassay Pesticides Residue (RBPR) laboratories across

the country. Building on the experience of the FAO-supported pilot lab at Kalimati Fruit and Vegetable Market

(Kathmandu), the Project financed the establishment of 6 additional labs (plus waste water soak pits) in fresh produce

wholesale markets across Nepal (one in each Province). These RBPR labs and the training provided to staff on the use

of the equipment significantly increased the capacity of PPD to carry out on-site pest residue analyses in fresh produce

delivered to the markets. RBPR labs have received extensive coverage in local media and helped raise awareness among

farmers, traders, and consumers on the issue of pesticide overuse and food safety, thus reinforcing PPD’s agenda on

IPM. Upon PACT closing, RBPR labs oversight has been transferred to MoALD’s Plant Quarantine and Pesticide

Management Center – which now faces the challenge with the sustainability of the labs, particularly with respect to

staffing, training and operation & maintenance.

56. PACT also helped build institutional capacity for central and local level government agencies, albeit in a more ad hoc

manner, through staff training, support with mobility and office construction; but the contribution of this institutional

support to project outcomes remains unclear. PACT covered the costs for a dozen overseas trainings and exposure visits

for civil servants (primarily from MOAD, PACT PMT and PRIST offices) in procurement, agricultural marketing and

commercialization, as well as agribusiness incubation; it also financed the training of district-level Junior Technicians/

Junior Technical Assistants in agricultural growth and rural development. Local government agencies, in particular the

District Agricultural Development Offices (DADO) and District Livestock Services Offices (DLSO) had long advocated for

their stronger participation in project implementation at local level and more strategic support from PACT in terms of

institutional strengthening (e.g. for agricultural extension and other advisory services). This materialized when

DADOs/DLSOs were subsequently given monitoring responsibility of Call 5 sub projects and received support from the

Project in terms of mobility (i.e. motorbikes); in addition, PACT financed the construction of the offices for 10

Agriculture or Livestock Services Centers that had been destroyed in the districts most affected by the 2015

earthquakes.

57. Similar to the low-level of interaction with agricultural extension or marketing services, PACT’s engagement with the

Nepal Agricultural Research Council and associated agencies remained insignificant. Given that the PDO Objective 1 on

improved competitiveness of smallholder farmers was primarily measured through crop productivity (i.e. yields) and

considering the significant yield gaps prevailing for most crops in Nepal, PACT support to capacity strengthening of

agriculture research institutions could have been considered as a further element contributing to the achievement of

project outcomes.

58. PACT’s support to the establishment of a National Agribusiness Innovation Centre (NABIC) is a significant

achievement for improving the competitiveness of the agribusiness sector in Nepal. The importance of NABIC and its

contributions to the Project have been captured in the Section Assessment of Achievement of Objective 2 above and in

Box 2 (including NABIC’s contribution to the MFD and Jobs agenda). PACT helped build NABIC’s institutional capacity

throughout its 15 months of operations (before PACT closing) with TA provided by the Bank’s InfoDev group and by


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funding the Centre set-up and operating costs. In turn, NABIC assisted with building the capacity of PACT sub projects

through entrepreneurial skills development activities and training on Food Law compliance. At PACT closing, to ensure

the sustainability of NABIC, the GoN had earmarked NPR10 million under the FY2018-19 budget.

Mobilizing Private Sector Financing

59. The Project had an outstanding success in raising private sector funding through its MGS, therefore directly

contributing to the Bank’s Maximizing Finance for Development (MFD) agenda. On average, grant recipients raised 54

percent of the total sub-project costs. Each dollar spent by the Project under the MGS was matched with an average

contribution of around US$1.19 from grant recipients, leveraging NPR2.59 billion (around US$25 million) of private

sector funding in cash and kind for the implementation of sub projects. The largest private sector co-funding was

achieved in the meat, vegetable, dairy and fish value chains, with some additional large investments in goats, poultry

and cereal seeds. These value chains also had the largest number of sub-projects. PACT’s success with mobilizing private

sector financing can be traced back to the improved grant disbursement modalities introduced at Call 3, whereby

prospective grant recipients were required to first complete agreed milestones using their own capital, prior to the

PACT releasing a grant installment.

60. Private sector financing was also achieved in PACT through value chain financing from commercial banks as well as

fees paid by agribusiness SMEs enrolled in NABIC’s incubation program. To cover the financing gap in their sub project

and match the contribution from the MGS, grant recipients (in particular agribusiness SMEs and Cooperatives) turned

to commercial banks for a loan. As per the enterprise survey carried out for the Bank/DIME impact evaluation, some

35 percent of Call 4 beneficiaries took up a loan from commercial banks. To a lesser extent, NABIC was also able to

generate revenue from its clients through the provision of fee-based services under its agribusiness SME incubation

program.

Poverty Reduction and Shared Prosperity

61. Although the original project design did not explicitly link PACT to poverty reduction, the Project made important

contributions to the rural poverty reduction agenda. While there were no references to poverty reduction goals in the

core sections of the PAD, whether in the PDO, or in the description of Higher-level Objectives or Project Beneficiaries,

it is important to recognize that PACT was developed and implemented in parallel to the Poverty Alleviation Fund

project (P105860); PAF was explicitly designed to address poverty issues in rural areas, with the understanding that

PACT would focus on competitiveness. It is clear from the PAD that the PACT was not targeted to subsistence farmers:

the selection criteria for the 25 districts originally targeted specifies that: “The project targets districts with a higher

potential for agriculture commercialization, better economic infrastructure and with relatively better organized farmer

groups that are already engaged in the production of high value commodities and are accessing markets.” (PAD, section

B.3 Project Area, p.5).

62. During PACT implementation, specific measures were introduced to specifically reach out to the poorer segments

of the rural population. To ensure a better targeting of the poorer segments of the rural economy, MOAD requested

PACT to design and implement a Call 5 with micro grants (up to USD10,000 each) aimed at co-financing sub projects

developed and implemented by smallholder farmers and other micro entrepreneurs. As a result, over 40 percent of all

matching grants awarded under the PACT MGS were Micro Grants, thus contributing to rural poverty reduction (see

also Box 1 and Annex 7). An additional measure was introduced under Call 4 (value chain integration) which required

the submission of a joint proposal by at least three entities carrying out complementary activities along priority value

chains (e.g. milk production by smallholder farmers; milk collection and delivery to the consolidation point by a


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transport agent; and dairy processing by a local entrepreneur). This further encouraged backward linkages with poorer

smallholder farmers in the selected value chains, thereby potentially increasing the project impact on poverty

reduction.

63. PACT data from various studies undertaken report that agri-business SMEs supported by the Project benefitted the

poor by creating employment opportunities and increasing profits. SMEs that had signed up on NABIC’s incubation

program hired an average of 5.3 additional employees per SME. The Independent Assessment of the MGS reported that

more than 86 percent of the beneficiaries perceived an increase in employment opportunities and most of them

attributed the change to their participation in the MGS. The Independent Assessment also finds a statistically positive

correlation between acquired skills and increase in employment opportunities among the beneficiaries which indicates

that an increase in skills may have translated into a long-term positive impact in the form of enhanced employability.

DIME Impact Evaluation of Call 4 shows a statistically significant causal linkage between the PACT grant received by

agribusiness SMEs and an increase in profits (see Box 3 below), which is further corroborated by the Independent

Assessment’s findings on the significant increase in agriculture income reported by grant recipients (see Table 10

below).

64. The Project also did make a concerted effort to ensure shared prosperity by enhancing the participation of women

and other disadvantaged groups in project activities, in particular in the MGS (see sections on Gender above, and Other

Unintended Outcomes below)

Other Unintended Outcomes and Impacts

Table 10: Impact of PACT Matching Grant Scheme on Beneficiaries

Parameter Call 1 Call 2 Call 3 Call 4 Call 5 Call 6

Mean of Contribution Scores*

Food production 4.0 4.6 4.7 4.4 4.4 4.1

Food variety 3.6 4.5 4.5 4.6 4.4 4.3

Nutrition 4.1 4.5 4.2 4.5 4.3 4.3

Family health 4.3 4.0 4.5 4.4 4.4 4.1

Farm/business income 4.4 4.7 5.2 4.7 4.9 4.1

Agricultural sales 5.0 5.4 5.8 5.4 5.2 4.5

Agricultural income 5.4 5.2 5.7 5.2 5.1 4.4

Employment opportunities 4.9 4.9 4.8 5.1 4.6 4.7

Access to credit 5.3 4.6 4.9 4.7 4.7 4.8

* Contribution scores were determined by the answers provided to the question: “How much did PACT influence or change…” using the

following key: No influence and no change: 0; Slight influence and slight change: 4; Slight influence and significant change, or significant

influence and slight change: 6; Significant influence and significant change: 9.

Source: Independent Assessment of Matching Grant Scheme (2018): Athena Infonomics

65. The achievement of PACT’s development objectives is further cemented by the multi-faceted impacts it had on the

rural economy in the project area, as supported by a significant body of empirical evidence resulting from comprehensive

field surveys undertaken. Various farming household and agribusiness SME surveys (including baseline surveys) have


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been carried out in the context of: (i) the Independent Assessment of the MGS; (ii) the PACT baseline and endline

surveys for MGS Call 1, Call 2 and Call 3; and (iii) the Bank/DIME Call 4 impact evaluation. There is a clear convergence

of results in the analyses carried out and Table 10 above provides a good overview of the main other impacts the MGS

had on grant recipients. A significant positive impact of the MGS has been in terms of an increase in agricultural output

sales and farm income – in line with the project’s objective of increasing agricultural commercialization. Positive impact

was also observed for agro-enterprises (employment, access to credit) and smallholder households (e.g. nutrition

intake, diversified diet). The Impact Evaluation (IE) for Call 4 indicates that the MGS can be credited with achieving an

average increase in profits for agro-enterpreneurs of around NPR0.9 million per year (around US$8,000). The IE reports

also a 33 percent higher likelihood that agro-enterprises take out a formal loan. In addition, Call 4 grant recipients

outperformed non-grant recipients across several important parameters including employment creation, accounting

practices, revenues, investment and land tenure status, further highlighting the comprehensive impact of the Project

(see also Annex 8 and Box 3 below).

66. PACT did contribute greatly to the GoN agenda on Integrated Pest Management (IPM) and residue control, as well

as to the promotion of organic agriculture. While not originally part of PACT design, the Project demonstrated a strong

degree of flexibility in accommodating a request from MOAD to support its priority IPM program. Since this could easily

be aligned with the project strategic objective of supporting the production and supply of safer food, PACT developed

a dedicated MGS Call 6 for IPM, in close coordination with the MOAD Plant Protection Directorate (PPD). Call 6 was

subsequently implemented extremely efficiently and successfully (see details of Call 6 in Annex 7): Call 6 coverage was

limited to 3 districts, completion rate of IPM sub projects was 98 percent, with high sustainability (all 100 sub projects

were fully operational 6 months or more after their completion). This initiative was complemented with the

investments in the 6 RBPR labs PACT installed with PPD in fresh produce wholesale markets for on-location residue

testing.

67. On the policy front, PACT commissioned the production of a comprehensive report on Organic Agriculture in Nepal

that was accompanied by a roadmap providing practitioners a step-by-step guide to organic certification by the

corresponding agencies in Nepal. The report was shared with the GoN as a guiding tool for the formulation of policies

on organic farming, to further increase the competitiveness of agriculture in Nepal. In addition, one of the Value Chain

Roundtables organized by the Project was dedicated to organic agriculture (August 2016), bringing together a broad

range of stakeholders (including private sector) to discuss how to expand organic agriculture.

68. PACT made some significant achievements in social inclusion, resulting from a proactive outreach to ethnic groups,

as well as in public awareness, about environmental aspects and their importance for the production of safer food. PACT’s

outreach efforts to all project stakeholders, including ethnic minorities, yielded important outcomes. In addition to

meeting the women end-project target of 45 percent of direct beneficiaries, the Project was able to cater for the Dalits

and other ethnic minority groups who represent some 12 percent of the MGS grant recipients, largely representative

of their overall share in the country’s population. Other related aspects are covered in more detail in Section IV.B below

(Environmental, Social and Fiduciary Compliance).


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III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME

A. KEY FACTORS DURING PREPARATION

69. Project objectives and design were guided by the prevailing sector strategy which, at the time of project

Preparation, already recognized agricultural commercialization as a key driver for rural economic growth. The

Agricultural Perspective Plan (the country sector strategy) and the Three Year Interim Plan (the overall strategy of the

GoN) advocated the need for agricultural diversification and commercialization of agri-food products, gradually

transforming subsistence farms in agri-enterprises. A period of six years for implementation had been proposed for

PACT, recognizing the weak institutional capacity prevailing and the need to ensure adequate time for quality level sub

projects to be prepared and implemented. Project alternatives considered and eventually rejected during preparation

included operations with a different focus, e.g. enhancing agricultural production and productivity, improving

agricultural marketing for smallholders or strengthening the regulatory framework, particularly on SPS and food safety

management. Participation with IFC through support from the Small Enterprise Development (SEDF) to scale up

successful value chain initiatives, or its SME Ventures Fund to provide risk capital to agri-business companies with large

investment needs, was also considered, but never materialized.

70. Critical risks were adequately assessed during project preparation and most risk mitigation measures that could be

addressed by the PACT were efficiently implemented. However, consultations with private sector to help with the

creation of viable partnerships (to address the lack of understanding across government departments on how to foster

public-private partnerships), were limited to the few value chain-specific roundtables organized by PACT. Also, a

Box 3: Impact Evaluation of the PACT Matching Grant Scheme - Call 4

The Impact Evaluation (IE) highlights key insights from a year-long study, tracking enterprises participating in PACT’s MGS Call 4. This

4th round of call for proposals aspired to bring together clusters of enterprises working in 8 selected value chains (vegetable, dairy and

dairy products, meat and meat products, ginger, coffee, fish, flowers, and cardamom).

The key goal of the IE was to unearth the causal impact of the PACT grant on profits and business outcomes among the clusters of

enterprises covered by Call 4. The IE is the result of a close collaboration between PACT and the World Bank Group’s Development

Impact Evaluation (DIME) Unit. More information on the IE is provided in Annex 8.

This IE employed a regression discontinuity design that relied on the scoring mechanism PACT used to establish eligibility. The validity

of this strategy to plausibly capture causal impacts is based on the idea that: (i) the ranking of proposals was based on an unbiased

review of the information; and (ii) that enterprises just above the cutoff score are comparable to those just below the cutoff score.

The analysis focused on 5 key outcomes: loans, employment, revenues, profits and accounting methods. The key takeaway is that the

PACT grants can be credited with achieving (i) a 33% higher likelihood that enterprises take out a formal loan and (ii) an average

increase in profits of NPR0.9 million per enterprise – representing a near doubling in profits. Given the environment within which these

enterprises were operating, these impacts should be viewed as transformative changes.

In addition to these key outcomes, the IE presents descriptive comparisons between all Grant Recipients and Non-Grant Recipients. On

average, Grant Recipients outperformed Non-Grant Recipients across several important dimensions including employment creation,

accounting practices, revenues, investment and land tenure status. However, interpreting these comparisons as unbiased estimates of

program impact would require very strong assumptions.

One important caveat that surrounds the IE is that the timing of the endline survey was entirely based on the closing date of the PACT.

A substantial proportion of grant recipients only received their second/final installments a few weeks before or after they were surveyed.

One could make the case that enterprises require more time to be able to put their capital infusion to work and that the time horizon

before full grant effects could be seen is longer than the period covered by the IE survey. Follow up data collection with the 600 surveyed

enterprises later in 2019 could reveal these medium-run effects, and potentially address questions surrounding long-term sustainability.

Source: Project for Agriculture Commercialization and Trade (PACT) - Nepal Impact Evaluation Report Matching Grant Scheme - Call 4.

DIME, The World Bank, 2019.


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disbursement of the matching grant in tranches against agreed milestones (as stated in the PAD) was not implemented

until after the second MTR; sub projects from Call 1 and Call 2 received a first payment upon signing the Grant

Agreement, and subsequent installments as an advance, which in some cases led to the inappropriate use of parts of

the money or to excess payments – prompting the PACT to initiate lengthy procedures with the grant recipients to

recover the corresponding amounts.

B. KEY FACTORS DURING IMPLEMENTATION

Factors subject to Bank control

71. The most significant factor that has affected project implementation and performance was the IDA Additional

Financing: the AF proved to be well in excess of PACT’s absorption capacity and was therefore premature. The Bank

agreed to an AF at the first MTR in August 2012. The AM for this same mission reported that: “Overall disbursement is

slow. Three years into implementation, the project has only been able to disburse around 24% (USD4.7 million)”. The

Bank officially approved the AF in November 2012 and awarded PACT an additional USD40 million, i.e. twice the

original IDA amount. The AF was primarily designed to increase the geographic coverage of project activities, and in

particular the MGS, from originally 25 selected districts to the country’s 75 districts. The problem was that at that time,

no measures had been taken to accommodate a country-wide project implementation and the sharp increase in MGS-

funded sub projects. Existing implementation arrangements proved inappropriate to effectively support a rapid project

expansion and became disbursement bottlenecks, affecting overall project performance: by the end of project

implementation, despite an extension of the closing date by 1.5 years, more than USD11 million from the AF remained

undisbursed and had to be cancelled, and over 250 sub projects (18 percent of all grant agreements signed) were

never completed as originally planned (i.e. had to be settled or cancelled) (see Annex 7).

Factors subject to government and/or implementing entities control

72. Significant delays with the institutional arrangements needed for the implementation of the AF had a detrimental

impact on project performance. To fully capitalize on the outcomes of the first MTR, it was later recognized that PACT

would need to have a much stronger presence in the regions. To that effect, it was agreed that PACT would set up five

Regional Project Implementation Support Teams (one PRIST office in each Region), staffed with civil servants for the

key positions (including Office Chief). PRISTs and rTSG staff would eventually be housed together and both teams

would operate as one field unit. However, the full operationality of the PRISTs was affected by massive delays, as it

took well over a year to set up the regional offices as PACT cost centers; moreover, the rotation cycle of civil servants

affected the PRISTs due to frequent personnel changes, and some positions remained vacant for an extended duration

(e.g. PRIST Accountants).

73. Project implementation performance was marred by poor contract management and lengthy internal approval

processes. Many delays in completing key activities in timely fashion as well as most of the elements of PACT’s

“unfinished business”, can be traced back to systemic inefficiencies ; this has affected the timeline for completion of

key activities, e.g. works for all agricultural markets; fumigation chamber and quarantine facilities; Roadmap to Food

License; establishing NABIC; hiring of TA service provider; independent MGS assessment; and others. Procurement

milestones for larger contracts were subject to lengthy internal processes to obtain all clearances from the relevant

authorities (SPAC, NTSC, MOAD, etc.); delays also often occurred in securing the participation of MOAD appointees to

the Project Evaluation Committee sessions. In addition, once contracts were eventually signed, there was not sufficient

due diligence carried out by PACT PMT to monitor and enforce agreed annual progress plans. For works, this resulted

in PACT PMT frequently requesting the Bank no objection for extending contracts to ensure completion of the


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assignment, although some contracts had already expired. Throughout the project implementation period, PACT did

not once trigger the penalty clause included in all its works contracts to compensate for delays in completion,

effectively letting contractors dictate the pace of the physical progress and completion time for most constructions.

Annex 9 provides a timeline of the major milestones during PACT implementation, highlighting operational delays, as

well as the disconnect between MGS Calls underway and the PACT response capacity.

74. Technical assistance (TA) to the PACT PMT was designed as a key element for a successful project implementation;

a more performance-based and results-driven approach on the TA arrangements may have yielded greater impact on

project outcomes. Delays in establishing and operationalizing the project’s implementation structure negatively

affected the start of the project. Technical Support Group (TSG) and Regional Technical Support Groups (rTSG) did not

start their assignment until one and two years, respectively, after PACT’s start of implementation. Accordingly, the first

two Calls for proposals under the MGS, including the review process and final selection of eligible sub projects, were

managed by the PMT without any technical assistance. Once on board, the coordination between TSG and rTSG was

poor; consequently, after their respective contract with PACT expired, PACT PMT agreed that the follow-up TA would

be delivered under a single contract with one service provider deploying technical specialists at the PMT and at the

PRISTs level. However, after the TSG/rTSG contracts closed, it took PACT another year before completing the recruiting

of the new TA Service Provider, greatly affecting the project’s capacity to effectively implement activities (in particular,

the coordination of several on-going MGS Calls, see Annex 9). Once finally in place, the efficacy of the TA was greatly

affected by frequent changes in the TA Service Provider staff, both at PMT and PRIST-level, and by the sub-par quality

of some of the specialists hired by the Service Provider (in particular the value chain specialists).

75. MGS implementation often appeared to be driven by quantity and disbursement, particularly in the earlier Calls,

frequently resulting in insufficient attention to quality and outcomes of the sub projects. PACT faced a large demand for

matching grants and the pressure to co-finance as many sub projects as possible often took precedent over outcome-

related considerations. The Bank’s repeated request for an independent review of the MGS to better capture lessons

learned from Call 1 and Call 2 into the design of subsequent Calls was not given the necessary attention by the PMT or

MOAD; five years after the Bank’s initial request, the report was eventually completed in the final year of project

implementation. Further, the delays in securing the TA led to a disconnect between the MGS and the pre-investment

activities originally planned: the first PACT Value Chain Development Plans were completed in August 2012 (for dairy,

ginger, cereal seeds, and organic coffee), well after the first 3 Calls had been launched; similarly, most of the grant

recipient training on business planning and entrepreneurship took place only in the final year of PACT (see also Annex

9).

76. To avoid further delays, PACT PMT opted to implement several MGS Calls concomitantly, which coincided with the

period without TA, resulting in the project being overwhelmed with the number of new proposals to process while sub

projects under implementation could not properly be attended to. It took over two years between the public

announcement of Call 4 and the disclosure of the list of selected sub projects. The prolonged absence of TA coupled

with the sharp increase in sub projects from various Calls and the limited capacities of the DADOs/DLSOs to fully

support MGS implementation, resulted in an acute shortage of human resources around the MGS. This prevented

PACT from adequately monitoring the implementation of sub projects and the completion of their milestones, leading

to considerable delays in processing grant installments for the beneficiaries. The Bank eventually had to request that

the total IDA funding allocated for the hugely popular Call 5 (micro-grants) be limited to USD5 million for a maximum

of 500 sub projects. Across all Calls, PACT ended up providing grants to twice as many sub projects as originally planned

to (the end-target planned for the MGS was 700 sub projects but PACT signed grant agreements for 1,440 sub


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projects).

77. PACT was not authorized by GoN to hire global technical experts for additional support not available in-country –

this is likely to have affected the Project’s contribution to improving the competitiveness of smallholder farmers and

agribusiness SMEs. As expected, a considerable number of sub projects implemented under the MGS involved value-

addition through processing and product transformation. The grant recipients’ need for specific technical skills as well

as agricultural marketing knowledge grew fast and it became apparent that the required expertise was not available

within PACT. The TA simply lacked technical experts with global exposure to cutting edge technologies and

international knowledge on product marketing, including in the core value chains the PACT later focused on

(vegetables, dairy, meat, fish). The Bank recommended that PACT/MOAD initiate discussions with FAO Nepal office for

the services of a team of commodity/value chain global technical experts and develop training-of-trainers program for

the development of in-country expertise on production and processing technology, product diversification, standards

and marketing. However, PACT/MOAD did not receive authorization from Ministry of Finance to use IDA proceeds

towards the hiring of international consultants

78. Project performance was further affected by the disconnect between Component 1 and Component 2 during a

large part of project implementation. The Bank had long been advocating that the Departments supported by the

Project (DoA, DLS and DFTQC) should also extend their services, in particular site inspections and lab analyses, to the

PACT co-funded sub projects. Only in the final couple of years of project implementation did the PACT PMT and the

Departments implement a schedule of sub project inspections and lab analyses. In the end, this arrangement proved

extremely useful to all parties, and provided a unique opportunity for the Departments to advise the PACT grant

recipients on necessary improvements to their sub projects in order to comply with legal requirements and standards.

In the absence of advisory services to sub projects in the design of the PACT, the Departments inspection visits turned

out to be PACT’s only conduit for conveying some good agriculture practices to beneficiaries in terms of farming,

processing, as well as livestock and veterinary practices.

Factors outside the control of government and/or implementing entities

79. The earthquakes from April and May 2015 had a devastating effect on the economy of the country and on the

livelihoods of the people, impacting project activities in the affected districts. The Project contributed to the

reconstruction process by replacing the assets from a limited number of grant recipients who had been originally

funded under a PACT matching grant. Further, PACT financed the new construction of 10 district-level

Agriculture/Livestock Services Offices destroyed in the earthquakes. PACT also covered the damages incurred to one

agriculture market under construction during the 2017 floods. However, the late signing of the works contracts (2016)

for the regional agricultural markets means that the 2015 earthquakes works did not have a negative impact on the

timeline for completion of these works (see also Annex 9)

80. Extended disruptions at the border with India over a 6-month period starting in September 2015 further added to

the burden, as the supply of fuel, construction material and other essential goods to Nepal, was severely affected –

considerably slowing down the bulk of the PACT activities (including sub project implementation). Finally, the various

elections held across Nepal in the last couple of years of PACT implementation had a disruptive effect on the ability of

the PRISTs and TA Service Provider to monitor MGS sub-projects in-site, as safety had become an issue in certain parts

of the project area.


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IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME

A. QUALITY OF MONITORING AND EVALUATION (M&E)

M&E Design

81. The Results Framework was the central tool of the PACT’s MIS and contained a series of indicators that were mostly

adequate for monitoring the progress towards project objectives (see Results Framework in Annex 1). Since no Theory of

Change had been developed at Appraisal, the Results Chain depicted in Fig.1 was developed retroactively for the purpose

of this ICRR; it is based on the project description in the PAD and the AF Project Paper. The causal linkages between the

activities/outputs and the intermediate/PDO outcomes depicted in the ToC were found to be robust and plausible.

82. The design of the M&E system proved sufficiently flexible to accommodate the review of some indicators selected

during early implementation. While maintaining the integrity of the PACT M&E system, indicators have gone through a

couple of iterations (particularly with the AF) to further strengthen the Results Framework. During the second MTR, a

couple of intermediate indicators have been replaced (or their definition in the RF Glossary further improved) with

indicators with more SMART features and to further strengthen the causal relationship between Intermediate and PDO

indicators (see also Section B Significant Changes During Implementation). A detailed Glossary of Indicators that

continued to be improved over time was also introduced during the second MTR. The Glossary proved to be very useful

in facilitating the technical discussions on indicators and helped M&E teams at PMT level and in the field to quickly

develop a common understanding on the RF indicators and how to measure them.

83. Achieving an increase in farm productivity (Indicator #1 on yields) could have benefitted from complementary

advisory services to smallholder farmers, in addition to the matching grant. Under PACT, the MGS successfully helped

improving the financial capacity of smallholder farmers, which in turn helped them access higher yielding seed varieties

Box 4: PACT’s comprehensive Management Information System (MIS)

PACT has relied on a comprehensive and innovative M&E system that evolved over the years to become a

comprehensive MIS, one of the major achievements of the Project. During project implementation, MOAD invited the PACT

PMT on several occasions to discuss the replicability of the project’s MIS to other programs and projects in the sector.

PACT has done an outstanding job at developing an MIS that was systematically used (in particular after the second

MTR) as a management tool to track progress with project implementation and inform various stakeholders about results on

the ground. Feedback mechanisms were included in the MIS design, and improvement introduced to the grant disbursement

modalities reflect largely the feedback received from MGS grant recipients. Moreover, PACT’s MIS served as a platform for

“evidence-based learning” and was at times used during implementation for “course-correction” and to improve the likelihood

of the Project achieving the expected results.

PACT’s MIS was adequately staffed: at PMT-level, it included the Senior Evaluation Officer (civil servant, MOAD), the

Technical Advisor (individual consultant) and the team leader of the TA Service Provider (consultant firm). In the field, each

PRIST included an M&E cell which consisted of the PRIST Chief (civil servant), two M&E Specialists (1 civil servant, 1

consultant from the TA) and a Data Analyst (TA Service Provider). In addition to various MIS support staff, a media firm hired

by the Project accompanied the PMT and recorded most project activities in the field.

The comprehensive M&E system of the project was key in providing – through a series of comprehensive household and

enterprise surveys (e.g. baseline and endline surveys for each Call under MGS) – the empirical foundation for some of the

key project outputs and reports, including: the Project’s dynamic Results Framework, the PACT MGS assessment, the

independent MGS review, the DIME Impact Evaluation of Call 4, the compendium of 16 case studies/success stories of PACT,

the documentary video on 9 years of project implementation, the quarterly implementation progress reports, the semi-annual

joint implementation support reviews (with the Bank), the Borrower’s ICR – and this Implementation Completion Results and

Review report.


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and more productive cross-bred cows – leading to increased yields. The project design did not include activities to

strengthen agricultural extension services or research and PACT’s follow up with grant recipients consisted primarily of

on-site visits to verify milestone completion. In the absence of PACT activities specifically designed to boost agricultural

productivity, the rationale for including crop/livestock productivity indicators at PDO level is unclear, particularly in an

environment where the likelihood that a pull-effect on farm output occurs, induced by investments at market-level, is

uncertain. However, in the final couple of years before project closing, sub project inspections were carried out by DoA

and DLS and served also to promote Good Agricultural Practices among selected PACT beneficiaries. PACT also delivered

some farm productivity-related training to producers through its TA Service Provider.

M&E Implementation

84. M&E implementation strongly benefitted from the Technical Assistance from the TSG and later the TA Service

Provider, who developed a well-performing MIS. M&E significantly gained in quality and robustness when the TSG/rTSG

started its operations almost two years after PACT launch. The Bank team consistently rated M&E as Satisfactory in the

ISRs throughout the final years of PACT implementation. Nonetheless, M&E performance was affected during the poorly

managed transition (i.e. over one-year gap) between the Technical Assistance from the TSG/rTSG and from the TA Service

Provider.

85. PACT’s MIS evolved into a comprehensive, well-performing IT-based planning and management tool that also served

as a model for other projects and programs at MoALD. As project implementation progressed and the number of project

activities (in particular, the number of sub projects, scattered across much of the country) increased, the robustness of

the monitoring instruments also advanced, supporting the monitoring of actual outcomes. Starting with Call 3, sub

projects had to report more comprehensively on results relevant to the PDO. For that purpose, reporting templates were

developed and the PRISTs consistently followed up on reporting requirements. To further improve the efficiency of its

M&E system and the management of huge datasets, PACT developed (through its TA Service Provider) a live web-based

Monitoring and Information System (MIS) that was launched in 2016. It enabled field-level data entry with a smartphone,

allowing, among others, for real-time, user-developed reporting at PRIST and PMT-levels. The high convergence observed

between the data reported in the MIS and those collected in support of the independent MGS review, the Call 1 to Call 3

MGS base/endline surveys, and the Call 4 impact evaluation, confirmed the robustness of the PACT’s MIS.

M&E Utilization

86. PACT’s MIS was widely utilized within the project (by PRISTs and PMT-alike) and, after the second MTR, quickly

became a central feature of the Project. Clearly, PACT has accumulated a wealth of data that allowed the PMT to rapidly

produce wide-ranging progress reports on a quarterly basis, in addition to other data-based reports in response to ad-

hoc requests from various stakeholders (including MOAD and the Bank). The data was mostly adequately filed and

managed, and the rich database accumulated overtime has provided a comprehensive insight in the last 6 years of project

implementation. Designed with a certain element of flexibility, the RF was regularly updated and the Glossary of Indicators

frequently fine-tuned to reflect the reality on the ground. The use of a common IT-based platform significantly improved

the efficiency of the MIS and further strengthened the integration and information flow between the TA at central level

and the PRIST teams, helping to overcome the constraints faced under the previous TSG/rTSG TA model. Finally, PACT

experimented with direct entry of data at field level with smartphones, yielding promising results, though this particular

feature of the MIS was not fully scaled-up.

87. With its innovative design and robust performance, PACT’s MIS had a strong potential for triggering evidence-based,

just-in-time adjustments during implementation. Adjustments made to the MGS implementation (e.g. on grant

disbursement modalities) were often based on anecdotal feedback from the field, rather than on in-depth assessments


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of adequate data. The Independent Assessment to review the efficiency and efficacy of the MGS was only completed

after all 6 Calls had already been launched (or closed), undermining the opportunity to make just-in-time evidence-based

improvements to the MGS. Call 5 (Micro Grants) was developed and rolled out at a time when project’s coordination and

supervision capacity for sub projects was already overstretched – on MOAD’s assumption that smallholder farmers were

not sufficiently included under the MGS. Similarly, the large body of information from stakeholders collected during years

of project implementation through interviews carried out in the field by the media consultant firm, were primarily used

for the end-project reports.

Justification of Overall Rating of Quality of M&E

88. Based on the strong design and implementation of the project MIS and few moderate shortcomings in its utilization,

the Overall Quality of M&E in PACT is rated SUBSTANTIAL.

B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE

Environmental and Social Safeguards

89. By and large, compliance with Environmental and Social Safeguards was adequately covered during project

implementation and in most cases, shortcomings were quickly identified with support from the Bank and efficiently

addressed. PACT was classified as a category “B” project under OP/BP 4.01 on Environmental Assessment and triggered

the following safeguards policies: (i) OP/BP 4.10 on Indigenous People, (ii) OP/BP 4.09 on Pest Management, and (iii)

OP/BP 4.12 on Involuntary Resettlement. Consequently, the counterpart team prepared an Environmental and Social

Safeguards Management Framework (ESMF) which fulfilled the requirements of the GoN’s policies and the Bank

safeguard policies. A Resettlement and Rehabilitation Policy Framework and Framework for Indigenous People

Development was also prepared, along with several guidelines and operation manuals for managing environmental

and social risks. These instruments helped the Project and stakeholders in identifying, anticipating, evaluating and

mitigating the environmental and social risks and impacts from project activities, in particular during implementation

of sub projects. PACT also commissioned an Environmental Audit of sub projects for Call 1 to Call 3, and carried out an

Environment and Social Safeguards assessment of Call 4 sub projects through its TA Service Provider.

90. Project performance with safeguards compliance improved significantly throughout implementation with timely

resource allocation and continuous training on environment and social issues. Safeguards compliance in PACT was

coordinated and monitored by staff from the TA Service Provider, i.e. one Safeguards Specialist and, later on, a Social

Development Specialist at the PMT level, plus one Environment Specialist in each PRIST. This team delivered various

training sessions in the field and was instrumental in building the awareness of PACT beneficiaries on safeguards issues

and increasing their knowledge on mitigation measures. A Grievance and Redressal Mechanism (GRM) was developed

late during project implementation and launched in 2017. However, its efficacy was rather limited, as awareness

among stakeholders of the existence and the processes with the GRM remained low.

91. Compliance with environmental and social safeguards in the sub projects co-funded under the MGS remained a

priority throughout PACT implementation. PACT grant recipients were required to develop and adhere to an

Environment and Social Code of Conduct for their sub project. As per ESMF requirements, all sub projects were subject

to an environmental and social screening. The original design of Call 1 and Call 2 had omitted the inclusion of impact

mitigation costs in the Full sub Project Proposal (FPP); thus, the Project supported the appropriate mitigation measures

in sub projects where shortcomings had been identified (e.g. wastewater treatment system in dairy and meat sub

projects). Mitigation costs were internalized in all following Calls. To further address potential risks during sub project

implementation, PACT introduced a classification of the sub projects by level of environmental risk and closely


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monitored all the high-risk sub projects. Subsequently, most high-risk dairy and meat sub projects made appropriate

investments for waste treatment. In addition, PACT introduced environmental planning as a selection criterion in Call

4. In this Call, all FPP were scrutinized for environmental and social risks. FPPs with the highest risks (i.e. those sub

projects with activities on the negative list) were rejected during the FPP screening phase. Labor related issues,

including Occupational and Health and Safety Standards, were adequately covered by PACT in the civil works activities.

Procurement and Contract Management

92. PACT performed reasonably well on most Procurement aspects but incurred significant delays in processing

several larger contracts and revealed some shortcomings in its capacity to adequately manage contracts. PACT

adequately implemented the procurement plan (and its subsequent amendments) developed and agreed to with the

Bank throughout the project lifetime. Recommendations from various post-procurement reviews (PPR) carried out by

the Bank were adequately followed up with and – save for one single significant irregularity – did not reveal any major

shortcomings. In this particular case, MOAD had instructed PACT, against the sound recommendation of the Project

Evaluation Committee, to award the contract to the third-ranked candidate (while the negotiations with the top-

ranked candidate were still on-going). Consequently, the Bank declared mis-procurement. Many of the larger contracts

were affected by slow procurement processing and/or lack of technical understanding (NABIC, fumigation chambers,

independent MGS assessment, regional commodity markets, and others) and delays in obtaining internal clearances

required for contracts above a certain threshold. These delays, coupled with PACT’s poor monitoring of contract

implementation, have affected procurement performance and the ability of PACT to complete important activities

within the project lifetime.

Financial Management and Disbursement

93. PACT’s performance with Financial Management (FM) throughout project implementation was good, but the

timing of the Additional Financing had a lasting negative impact on Disbursement. FM performance was rated

Satisfactory in most ISRs throughout implementation. Project was adequately staffed to cover FM at central level, but

the full time Accountant staff positions agreed to at PRIST-level remained vacant in some PRISTs for extended times,

with part-time support provided by qualified staff from the Region or District-level administration. Audited project

accounts were mostly submitted within the grace period and the auditors regularly provided unqualified audit

opinions. Annual budget allocation from GoN and IDA was adequate and budget release, generally done on timely

basis; but the delays in fund availability at PACT PMT and PRIST level during the first quarter of fiscal years further

exacerbated the schedule of grant installment in MGS sub projects. Annual budget execution reflected the delays the

project faced with the implementation of some activities and the processing of larger contracts and, save for the final

two years of before project closing date, the annual execution rate remained below 70 percent. Disbursement

performance dropped significantly with the 2013 Additional Financing due to limited absorption capacity of the project

and structural delays in activity implementation. While the original IDA funding was fully spent, almost USD11 million

from the Additional Financing (USD40 million) had to be cancelled in the project final year.

C. BANK PERFORMANCE

Quality at Entry

94. The Bank identified, facilitated preparation of, and appraised the original operation such that it was most likely to

achieve planned development outcomes, in a manner consistent with the Bank’s fiduciary role. The Bank team successfully

ensured that the project outcomes were fully consistent with the Bank strategy for Nepal prevailing at that time, as well


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as with the sector strategy from the GoN (see Table 3). However, project design and some outcomes around Objective 1

(Agricultural productivity) were based on the hypothesis that an existing critical mass of market-ready smallholder

farmers prevailed in the project area; therefore, Project support to (public and private) agricultural services for

smallholder farmers was not included in the design of PACT. Given the political turbulences and fragile environment in

the country at the time of project concept and preparation phase, it took more than four years from the Project Concept

Note approval (April 23, 2005) to Board approval (June 4, 2009).

95. However, the Appraisal for the Additional Financing did not flag the risks associated with the timing of the AF and the

amount awarded, and did not take into account the lack in readiness and low absorption capacity of the PACT. Subsequent

challenges with the implementation of the AF and impact on outcomes are addressed in Section III above (Key Factors

that affected Implementation and Outcome).

Quality of Supervision

96. Through appropriate technical and fiduciary supervision, the Bank was effective in providing, to the extent possible,

the support needed to address factors that affected project implementation. To that effect, the Bank team and the PMT

frequently conducted joint Implementation Support Reviews every 6 months, i.e. 18 reviews in total. In addition, the Bank

provided extensive targeted support to PACT PMT and MOAD through various technical missions. The Bank also carried

out two MTRs (July 2012 and January 2015), with the second being added to specifically look back on the overall

achievement towards project outcomes and strategically prepare for the final 3-year implementation period of the

project. Joint reviews and technical missions were effectively used to discuss, identify and propose solutions to emerging

problems or shortfalls during implementation. During those comprehensive reviews, the Bank team systematically

travelled to project implementation sites and interacted with direct beneficiaries and other stakeholders. In Kathmandu,

the team systematically briefed MOAD leadership, MoF, development partners and Bank CMU on the main findings and

recommendations after each joint review. Agreed upon actions were captured in detailed Aide Memoires and their

corresponding Action Plans were monitored and actions assessed at the next review.

97. Through pro-active collaboration with the PACT PMT and regular interaction with MOAD and MOF on specific project

issues, the Bank was able to identify and help resolve threats to the achievement of the project outcomes. Important

findings resulting from the Bank’s supervision were addressed to ensure that the Project stays on course; this resulted in,

among others: regular improvement to the Results Framework; stronger operational linkages between sub projects and

the support provided to DFTQC, DOA and DLS; entrepreneurship training for matching grant recipients; awareness on

environmental and social safeguards and their compliance in sub projects; enhanced project and DADO/DLSO capacity

for monitoring sub project implementation; enhanced management of Call 5 with micro grants limited to a total of around

500 micro projects; introduction of Call 4 with required value chain backward/forward linkages. Bank supervision was

also instrumental in flagging areas that needed the attention from PACT PMT and/or MOAD, such as, ensuring that: the

construction of agricultural commodity markets was initiated only after completing all consultations, environment

studies and construction permits required; the funds provided to matching grant beneficiaries in excess of milestones

accomplished were fully recovered; or, the need for compliance in agri-food sub projects with the requirements of the

Food Law, i.e. obtaining a food license.

Justification of Overall Rating of Bank Performance

98. Based on the success in ensuring the quality at entry for the original project, the shortcomings with the AF, and the

quality of supervision, Bank performance is rated MODERATELY SATISFACTORY.


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D. RISK TO DEVELOPMENT OUTCOME

99. The key risk to development outcome in PACT relates to the concerns over the sustainability of some of the results

achieved; in addition, activities that were not completed prior to project closing must be pursued and completed (with

GoN own resources) in order to contribute to expected project outcomes. Several key activities were launched with

significant delays and, as a result, did not have enough time to sufficiently mature – or even be completed – under

PACT, and could not fully contribute to the project development outcomes prior to PACT closing. In some cases (NABIC,

fumigation chamber, commodity markets), the GoN had made a financial commitment to continue the support and/or

ensure the completion of the outputs, thus mitigating the risks to the project development outcome.

100. However, in other cases, further institutional capacity and skills development is needed (e.g. for Call 4 recipients,

for the SPS agenda) to ensure the sustainability of the investments made under PACT. In those cases, the risk to the

development outcome is further exacerbated by the institutional and administrative reorganization under the new

federal system that came into effect at the end of PACT’s time: sub projects, particularly in Call 4 which started late

and did not allow for sufficient time to fully unfold, require agricultural and business advisory services to continue

growing. However, the local level institutions now in charge of service delivery were not yet fully operational when

PACT closed. Table 11 below provides an overview of the project’s “unfinished business”, the corresponding

opportunities missed to contribute to project outcomes and the additional measures, where applicable, adopted by

GoN to address those shortcomings. Table 11 also highlights how opportunities have emerged for further Bank

engagement in support of improving the performance of Nepal’s agri-food system.

Table 11: PACT’s “unfinished business” and risk mitigation measures

Activity unfinished

at PACT closing date

Contribution to

Development Outcomes (ToC)

Incremental mitigation measures

adopted by GoN and

Opportunities for further WB engagement

Construction of 1 central and

4 regional commodity markets; modalities for

management and operations

Creating market opportunities for smallholder

farmers and accelerating their integration in

commercial agri-food value chains

GoN has earmarked funds in its FY2018-2019

Budget for completion and operationalization of

all markets

Construction of fumigation chamber; modalities

for management and operations; staffing and

training; O&M arrangements; international

accreditation

Increasing agricultural value chain

performance; enhancing agribusiness and

export competitiveness


Budget for completion and operationalization of

the fumigation chamber.

Support to achieve international accreditation

Contribution to NABIC operating costs for at

least 2 additional years as per the original

feasibility study

Strengthening the capacity of agribusiness

SMEs (including PACT sub projects);

enhancing agribusiness competitiveness


Budget to support NABIC (though accessibility

by NABIC is unclear)

NABIC as service provider in IDA-funded

operations

RBPR labs: permanent staffing arrangements;

skills development; O&M arrangements

Strengthening SPS agenda; raising stakeholder

awareness on food safety and food quality;

improving fresh produce value chain

performance and competitiveness

Institutional accountability now with MoALD

Plant Quarantine and Pesticide Management

Center

Expansion of RBPR labs to other public

markets and introduction of mobile RBPR lab

International, higher level accreditation of labs

pertaining to the livestock sector

Strengthening meat and meat products value

chain competitiveness (including smallholders)

Roadmap to accreditation developed under

PACT now internalized in the IDA-funded

Livestock Innovation project

Compliance with Nepal Food Law: food license Strengthening SPS agenda; enhancing Mitigation measure by GoN not defined.


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required for all eligible agri-food sub projects

co-financed by PACT

agribusiness competitiveness Support to SPS agenda and food quality

management

Continuous capacity development in PACT sub

projects (GAPs, product diversification,

environmental and social impact, agribusiness

entrepreneurship, …)

Enhancing smallholder and agribusiness

productivity and competitiveness

Mitigation measures by GoN not defined.

For farming activities, institutional oversight for

sub projects has been transferred to

Agriculture Knowledge Centers and Veterinary

Hospital and Livestock Expert Centers; these

Centers were not yet operational at project

closing.

Support to decentralized agencies and private

service providers.

Organic farming certification for smallholder

farmers (fresh produce)

Enhancing smallholder competitiveness Not defined.

Support for the development of organic agri-

food value chains

V. LESSONS AND RECOMMENDATIONS

101. PACT has left an important footprint on Nepal’s smallholder agriculture and agribusiness SME landscape: GoN

and the Bank should pursue these initial efforts and continue to build on the achievements of PACT in their

partnership towards reaching Nepal’s Agriculture Development Strategy goals. Table 12 below provides an overview

of the key successes achieved and main challenges faced during the nine-year implementation of PACT.

Recommendations:

(i) NABIC remains one of the most important achievements of PACT, with the potential for transformative impact

on the performance and productivity of agribusiness SMEs in Nepal. NABIC needs to continue to grow to achieve

financial autonomy. NABIC’s original financial sustainability model based primarily around fee-based services

should be closely reviewed for viability and updated, as needed. Going forward, NABIC will require the

institutional autonomy to adapt to and thrive in an evolving environment – while remaining true to its core

mission, i.e. providing business development and incubation services to agribusiness SMEs.

(ii) PACT has developed an innovative, comprehensive, IT-based MIS that can be adapted to other programs and

projects at MoALD. A large amount of data has been collected in the field at various points during

implementation and it is important that the datasets are preserved and further analyzed. PACT has accumulated

an impressive body of knowledge (e.g. various reports, studies, documentaries) that should be made widely

available (including to academia) and used in the design of other programs and projects. The last joint

implementation support review of PACT already recommended to carry out a follow up survey of grant

beneficiaries and agribusiness SMEs. This is particularly important to further strengthen DIME’s Impact

Evaluation for Call 4 where the statistical significance for a number of causal linkages could not be established.

(iii) PACT injected some significant impetus in the GoN IPM program. This program should be further pursued and

the potential for expanding it to a national program for certified organic farming should be thoroughly assessed.

This should build on the important work undertaken by PACT with the development of a comprehensive

roadmap towards organic farming certification and a national roundtable on organic farming. Lessons learned

from organic value chains in Nepal established by private sector (e.g. coffee, honey) should be reviewed and

incorporated in the development of a pilot for organic fresh produce. There is already a critical mass of organized


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farmer groups (some supported by PACT) in the Katmandu Valley that have adopted some organic farming

practices - but they are not certified and the current marketing channels to the nearby large urban consumer

market are not differentiated, i.e. most farmers do not enjoy a price premium for their organically grown fresh

produce.

(iv) Based on a representative randomized sample, more than 80 percent of the sub projects co-financed by PACT

prove to be sustainable (see RF Ind. #6). These sub projects are expected to grow and strive independently, like

any other private enterprise. Nonetheless, PACT sub projects should be mapped to the relevant authority under

the new federal system to ensure that they have access to the agricultural and SME services whose delivery has

been transferred to the local/municipal governments. Many of these successful sub projects can serve as a

model for replication by other agricultural entrepreneurs; local peer-learning and knowledge sharing through

organized visits to these successful sub projects can be organized by the local authorities to further scale up the

results achieved under PACT.

102. In designing future projects that focus on creating agricultural markets, it is essential to carefully assess whether

the environment is favorable for the pull-effect on productivity at farm-level that is expected to be triggered by

investments at market-level. With the implicit assumption that agricultural systems in Nepal were performing

sufficiently well and that a critical mass of market-ready smallholder farmers prevails, PACT was designed to focus

primarily on the downstream segments (i.e. post-farm gate) of agricultural value chains. However, while having

“farm productivity increase” as one of its Project Objectives (PDO Indicator #1), project activities were not designed

to explicitly address low farm production output and productivity (or diversification into higher value commodities),

even though Nepal ranked (and still does today) among the countries in South Asia with the lowest use of fertilizer

inputs, lowest level of agricultural mechanization, and largest yield gaps across major crops.

Recommendation: While addressing the need for a more private sector-led agriculture growth that enables

smallholder farmers to seize opportunities on domestic and international markets, future programs seeking to

improve agri-food systems in Nepal should continue to strengthen the foundations for a modern, high-performing

agriculture by ensure that investments in on-farm development (including farm mechanization, climate resilient

agriculture) and in better services for farmers (in particular, agricultural extension and other advisory services,

agricultural research, rural finances) are covered as well.

103. Increasing the competitiveness of smallholder farmers (as stated in the PDO) is unlikely to be achieved in a

sustainable manner with a matching grant program alone and requires the full involvement of local institutions, private

sector, and where required, international expertise. As evidenced by global best practices with the Rural Alliances

initiatives supported by the Bank, the provision of matching grants should have been coupled with technical

assistance to smallholder farmers and agribusiness SMEs. Furthermore, recognizing that agribusiness

competitiveness and value chain development (particularly for creating opportunities for smallholder farmers to

access international markets) require a level of technical expertise, private sector experience and cutting-edge

knowledge that is only available in very limited supply in Nepal, PACT should have been authorized to hire

international experts to build in-country capacity and address the needs raised by PACT beneficiaries in the priority

value chains (vegetables, dairy, meat, fish).

Recommendation: Future projects should build on lessons learned from successful Rural Alliances initiatives and

incorporate TA for value chain actors, in particular for matching grant recipients, into the project design. For such

agriculture projects with a strong element of agricultural value chains development, market creation for smallholder


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farmers, and private sector participation, the required TA should be opened to international service providers where

in-country expertise is not available. Moreover, it is important to recognize that such expertise is limited in most

project executing agencies in Nepal (and local consultancy firms with core staff built around retirees from such

agencies). Therefore, medium to longer term investments should also be considered, such as building the capacity

at MoALD with targeted staff development programs, including through overseas internships with international agri-

food companies; supporting institutional twinning arrangements (e.g. for DFTQC) with international lead agencies

on SPS; and updating the curricula of corresponding academic courses at local universities.

104. The Additional Financing for PACT was premature, and had a detrimental impact on project implementation and

disbursement performance for several years. The Bank awarded an AF to PACT for twice the amount of the original

project size – at a time when over 75 percent of the original IDA had yet to be disbursed. While the desire of the

GoN to scale up the project to the entire country maybe justified, it is unclear on what basis the AF amount had been

determined or what readiness assessment had been carried out. The operationalization of the AF proved to be

difficult, as provisions for scaling up project activities to the whole of Nepal’s territory had not been made in a timely

manner, and no human resources strategy had been adopted to account for additional staff required. As a result,

the project fell into Problem Project status, over USD11 million of the additional financing had to be cancelled in the

final year of implementation, and Incremental Operations Costs soared.

Recommendation: For future projects, the decision on the amount and timing of an AF that primarily seeks to scale

up existing project activities (i.e. that requires no substantial changes to the PDO) should be primarily guided by an

objective assessment of the project’s readiness for AF. This should take into account the outcomes of: (i) a rigorous

and detailed costing exercise; (ii) an assessment of the absorption capacity of the project and associated institutions,

taking into account current disbursement performance; and (iii) a thorough ex-ante analysis of implementation

timeframe for all additional activities proposed.

105. A stronger oversight of the project by GoN could have helped with reducing structural delays, improving project

performance and ensuring a more strategic, less matching grants-centric project implementation – eventually

minimizing PACT’s “unfinished business”. With a narrow focus on increasing the number of MGS Calls and matching

grants, the strategic sequencing designed to maximize MGS efficacy, i.e. Value Chain Roundtable – Value Chain

Development Plan – Grant Recipients training – Sub projects, was never really implemented, in turn affecting the

performance and sustainability of many sub projects. Poor contract management has plagued the Project

throughout implementation; the extension of contracts became almost a default procedure, while some works were

initiated without the full permits and/or consultations, and had to be suspended until full alignment with existing

laws. Delays at MOAD-level in obtaining the required clearances for procurement processes or securing the

participation of designated ministry staff in Procurement Evaluation Committees further undermined the ability of

PACT to deliver within agreed timelines. The independent review of MGS requested by the Bank after Call 2 was only

completed in the final year of PACT, preventing the project from undertaking just-in-time, evidence-based

improvements to the MGS implementation and processes as initially planned.

Recommendation: For a project like PACT that seeks to be innovative, institutional arrangements were rather

conventional, with a Sub Project Assessment Committee (SPAC) and a multi-agency National Project Steering

Committee (NPSC). In future operations, a small expert panel involving limited number of senior staff from MoALD,

MoF and the private sector agribusiness community, that acts like a Consultative Board and reports to the relevant

senior authority in the GoN, that meets frequently and operates on the basis of very clear terms of reference, should


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be considered to ensure close monitoring of project implementation progress by GoN and help address institutional

bottlenecks in the administration that affect the pace of implementation and disbursement of the project.

106. Through PACT activities, the magnitude of Nepal’s problem with food safety and food quality has become even

more apparent; there is an urgent need for GoN to follow up, in partnership with key players in the agri-food system.

One of its most important outcomes of Component 2 has been the increase in awareness among various

stakeholders about SPS, safety and quality issues in the country’s agri-food system. Much of the problem with food

safety and food quality is due to the lack of enforcement of existing policies and standards (often due to a lack of

capacity in the relevant institutions). Under PACT, field inspections and laboratory tests conducted by DFTQC, DOA

and DLS with farms, agrifood processors and fresh produce markets, have revealed the scale of the problem with

food safety and food quality in smallholder farms and agribusiness. There continues to be an urgent need for a

change in mindset among GoN, the agrifood industry and consumers to induce a much-needed change in agricultural

and agro-processing practices in order to significantly improve food safety and food quality, thus enhancing the

competitiveness of smallholder farmers and agribusiness SMEs.

Recommendation: The GoN needs to put food safety and food quality high on its agenda. This goes beyond meeting

standards of international markets to enable local smallholder farmers to integrate global agri-food value chains.

Indeed, there is an urgent need to ensure that GoN, agribusinesses and the agri-food system each contribute to

producing and supplying safer and better food for consumers on the domestic market. Much of it requires GoN to

enforce existing policies and ensure that the capacity for laboratory analysis and field inspections of the mandated

agencies remains adequate over time. At the same time, GoN and other stakeholders in the agri-food system need

to ensure that existing standards, as defined under the Food Law, are being enforced. A good starting point is for

GoN to verify that all agrifood handling and processing SMEs are registered, and where required, undergo the

process of acquiring/renewing their Food License, as per the provisions in the country’s Food Law.

107. Despite its challenges, PACT’s Matching Grant Scheme has been largely successful and GoN should remain open

to considering matching grants as one of the instruments in projects seeking to achieve growth of smallholder farmers

and agribusiness SMEs. The MGS has been at the core of the PACT and much of the success and challenges of the

Project are linked to the matching grants. The success of the MGS is a confirmation of the failure of the commercial

banking system to develop financing tools that cater to the needs of smallholder farmers and agribusiness SMEs in

Nepal. Based on the feedback from MGS grant recipients, the various GoN programs with subsidized loans for

farmers have also had limited success. During PACT implementation, MOAD often expressed its concern about the

practicability of matching grants, citing farmers and SME managers’ apparent preference for subsidized loans, and

pointing to the challenges with the management of grants. Nonetheless, more than 80 percent of the sub projects

co-financed through the MGS were deemed sustainable, and PACT was able to leverage around US$25 million in

private finance, through the matching requirement in the MGS – making private sector the second largest source of

funding under PACT after IDA.

Recommendation: Matching grants should continue to be considered for future development projects for the

agriculture sector in Nepal. It is important for the GoN to analyze field-based evidence (e.g. as gathered for the

Independent Assessment of PACT MGS) and to continue building an evidence-based understanding of the

constraints faced to an expansion of commercial financial services for agriculture and agribusiness SMEs in rural

Nepal (rural finances assessment). Based on the results from the Impact Evaluation of Call 4, matching grants played

an important role in facilitating access to commercial loans by increasing the loan applicants’ own capital. There is


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also anecdotal evidence that under PACT, matching grants have enabled smallholder farmers and micro-enterprises

to acquire assets and technology that helped them embark on a path of accelerated growth. When planning new

operations, GoN and the Bank should continue looking into the best possible mix of financing instruments in the

specific context of Nepal to achieve development outcomes in agriculture and agribusiness, and include matching

grants that have proven to work in PACT and elsewhere.

Table 12:Nine years of PACT – Key Lessons Learned for GoN and the Bank*

PACT successes and achievements PACT challenges and shortcomings

RBPR labs impact on public awareness on food safety and

food quality

Timing and amount of Additional Financing (insufficient

readiness and absorption capacity)

Skills development and technical know-how of Grant

Recipients (farming, agribusiness, …)

Continuous implementation delays with most project

activities

Positive impact on Grant Recipient (household and

institutional level)

Weak contract management (works) and slow procurement

process (Ministry-level clearances)

Setting up NABIC as a service provider for agribusiness

SMEs (with TA from WB/infoDev) Sub project monitoring (insufficient capacity)

Adaptability of the Matching Grant Scheme (modalities

adjusted after each Call)

Inadequate planning of activity implementation (e.g. multiple

MGS Calls at the same time)

Awareness on environmental and social issues; corrective

measures financed by PACT in the SP Environmental/social safeguards compliance

Rigorous evidence-based impact evaluations by PACT and

the Bank

Borrower’s reluctance to reach out to global expertise (on

commodity and value chain)

Rich documentation on various project activities and studies Food safety and food quality (weak compliance and

enforcement of Food Law)

Partnership with Departments (improved institutional

capacity; SP inspection and testing)

Partnership with Departments (diverging expectations, no

follow up on SP inspections, …)

Support to reconstruction after natural disasters

(subprojects, markets, DADOs/DLSOs)

No provision for reaching out to NGOs;

PACT TA (long term Service Provider, “fix-all” arrangement)

* From the WB Aide Memoire, 18th and final Implementation Support Review, June 2018

.


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ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS

Item Baseline

Value Value Type

2014 2015 2016 2017 2018 Data

collection Data

source Comments

PDO Level Indicators

1. Farm Productivity: Increase in the yield of selected commodity value chains Crops and horticultural products: mt/ha. Dairy (milk): liter/lactation and cow

+5% +10% +15% +20% +25%

Tomato 52.856 Target 55.49 58.13 60.77 63.42 66.06

Annual

PRIST survey

Targeted end-project increase: at least 25%

TARGET EXCEEDED

Actual 51.8 102.3 79.2 91.56 89.6

Cauliflower 13.4 Target 14.1 14.8 15.5 16.1 16.8

Actual 21.3 22.7 18.3 22.34 23.93

Rice (paddy) 3.2 Target 3.4 3.5 3.7 3.8 4.0

Actual 4.5 3.8 3.9 3.79 3.97

Wheat 2.4 Target 2.5 2.7 2.8 2.9 3.0

Actual 3.2 2.9 2.7 2.88 2.95

Dairy (milk) 2,381 Target 2,500 2,619 2,738 2,857 2,976

Actual 3,310 3,643 3,935 3,113 3,237.8

2. Agribusiness productivity: Increase in the volume of selected agricultural commodities sold

Non-dairy products: t/year (% increase). Processed milk: ,000 liter/year (% increase)

+20% +25% +30% +35% +40%

Ginger

9307 Target 1,116 1,163 1,209 1,256 1,302

Annual PRIST survey

Actual 970 1,815 2,285 2,231 2,364

6 The baselines for tomato, cauliflower, paddy, wheat and milk are reflecting the average productivity as measured by three successive baseline studies for Call 1, 2 and 3. 7 Volumes transacted under Call 1 sub-projects are used as baseline for ginger, parchment coffee and milk


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Item Baseline

Value Value Type

2014 2015 2016 2017 2018 Data

collection Data

source Comments

Parchment coffee 126 Target 151 158 164 170 176 Targeted end-project

increase: at least +40%

TARGET EXCEEDED

Actual 153 174 209 246 180

Honey

1038 Target 124 129 134 139 144

Actual 103 232 359 181 380

Milk

9,598 Target 11,518 11,998 12,477 12,957 13,437

Actual 16,993 32,565 36,796 14,288 21,423

3. Direct project beneficiaries (Core indicator)

Cumulative number

Beneficiaries 0

2013: 36,2939

Target 77,000 125,000 140,000 150,000 150,000

Half yearly PRIST survey

TARGET NOT MET

Actual 62,957 70,885 93,392 97,759 100,592

4. Share of women who are direct beneficiaries (Core Indicator)

Percentage

Women n.a.

2013: 34.7%

Target 45% 45% 45% 45% 45% Half yearly

PRIST survey

TARGET MET

Actual 43.8% 44.6% 43.0% 46.3% 45.6%

Component 1: Agriculture and Rural Business Development

5. Sub-projects supported by PACT matching grant scheme

Cumulative Number (includes SP completed and settled)

Cumulative number of sub-projects

0 (2010)

Target 455 700 700 700 700 Half yearly

PMT review

TARGET EXCEEDED Actual 249 875 1,332 1,219 1,223

8 Volumes transacted by Call 2 subprojects are used as a baseline for honey (there were no honey sub-projects under Call 1) 9 2013 figures are beneficiaries of Call 1 and Call 2 implemented before 2014


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Item Baseline

Value Value Type

2014 2015 2016 2017 2018 Data

collection Data

source Comments

6. Sub-projects still fully operational 6 months after submission of their completion report

Percentage relative to sub-projects funded

% of operational sub-projects

0 (2010)

Target 60% 65% 65% 70% 70% End of project

TA survey

Based on sample survey of 115 SP.10

TARGET EXCEEDED Actual -- -- -- -- 81%

7. Clients receiving services from the Agri Business Innovation Centre (ABIC), of which n% are PACT grant recipients

Cumulative number of total clients / Percentage of PACT grant recipients relative to ABIC clients

Cumulative number of ABIC clients and % of GRs

0 (2010)

Target -- -- 300 27%

600 25%

1,000 20%

Annual ABIC

annual report

TARGET PARTIALLY MET

Actual -- -- -- 115 33%

1,079 6 %

8. Additional stalls available at the markets built or rehabilitated by PACT

Cumulative number

Cumulative number of new and repaired market stalls

0 (2010)

Target

Kalimati: -- Market 2: -- Market 3: -- Market 4: --

Kalimati: 265 Market 2: -- Market 3: -- Market 4: --

Kalimati: 265 Chovar: 112 Butwal: 14 Katahari: 19



Annual PMT

review

target / actual: 410 / 301

TARGET NOT MET

Actual






10 Diverging interpretations with this indicator emerged during the final ISM. This had led to figures being reported, that were not comparable across years. It was thus agreed to only report an end-project value for this indicator. This value is based on directly collecting data on-site from a randomly generated sample of 115 SPs across all Calls that have completed their activities listed in the Grant Agreement by December 31, 2017.


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Item Baseline

Value Value Type

2014 2015 2016 2017 2018 Data

collection Data

source Comments

Component 2: Support for Sanitary and Phytosanitary Facilities and Food Quality Management

9. DFTQC, DLS, and DAO staff trained annually in laboratory analysis

Number

Annual number of trainees

DFTQC: 0 DLS: 0 DOA: 0 (2012)

Target DFTQC: 8 DLS: 2 DOA: 2

DFTQC: 8 DLS: 2 DOA: 4




Annual Agency reports

target / actual: DFTQC: 40 / 41 DLS: 10 / 56 DOA: 16 / 75 Total: 68 / 172

TARGET EXCEEDED

Actual DFTQC: 0 DLS: 10 DOA: 0


DFTQC: 3211 DLS: 3612 DOA: 2913



10. Samples analyzed annually by DFTQC, DLS and DOA

Number (DFTQC: milk/meat; DLS: milk/meat; DOA: RBPR tests)

Annual number of samples analyzed

DFT: 918/0 DLS: 90/30 (2014) DOA: 1039 (2016)

Target

DFTQC: 918/015 DLS: 90/30 DOA: Na

DFTQC: 1200/150 DLS: 100/40 DOA: na

DFTQC: 1500/200 DLS: 120/50 DOA: 1039

DFTQC: 1600/300 DLS: 140/60 DOA: 2000

DFTQC: 800/150 DLS: 60/30 DOA: 3000


target vs. actual: DFT: 6018/800 vs 7099/1157 DLS: 510/210 vs 646/487 DOA: 6039 vs 6783 Total: 13,577 vs. 16,172

TARGET EXCEEDED Actual

DFTQC: 918/na DLS: 100/150 DOA: na

DFTQC: 1647/515 DLS: 84/80 DOA: na

DFTQC: 1540/271 DLS: 131/45 DOA: 1039

DFTQC: 2259/216 DLS: 251/180 DOA: 3824

DFTQC: 735/155 DLS: 80/32 DOA: 1920

11 Training at Biratnagar and DFTQC (Microbiological training and use of Spectrophotometer for lab staff; HACAP training for PACT grantees) 12 Veterinary quality control training: 10 participants; Veterinary inspection training: 26 participants 13 RBPR Training organized from PPD´s own resources 14For 2018 no permission for training was given by the Ministry of Finance; DOA trained 16 RBPR technicians by using its own resource persons and PACT logistic support. 15 In 2013/14 no testing of meat samples was done by DFTQC


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Item Baseline

Value Value Type

2014 2015 2016 2017 2018 Data

collection Data

source Comments

11. Share of samples analyzed annually by DFTQC, DLS, and DOA that meet minimum quality requirements

Percentage (DFTQC: milk/meat; DLS: milk/meat; DOA: RBPR tests)

Annual percentage of samples meeting quality requirements

DFT: 92/n.a. DLS: 76/47 (2014) DOA: 98.5 (2016)

Target DFT: 92/n.a. DLS: 76/47 DOA: n.a.

DFT: 95/95 DLS: 85/85 DOA: na

DFT: 95/95 DLS: 85/85 DOA: 98.5

DFT: 95/95 DLS: 90/90 DOA: 99

DFT: 95/95 DLS: 90/90 DOA: 99


TARGET PARTIALLY MET

Actual DFT: 92/n.a. DLS: 76/47 DOA: na

DFT: 96/100 DLS: 79/77 DOA: na

DFT: 94/99 DLS: 83/71 DOA: 98.5

DFTQC: 94/89 DLS: 94/36 DOA: 98.0

DFTQC: 95/94 DLS:100/10016 DOA: 97.3

12. Inspection services provided annually by DFTQC, DLS and DOA to PACT grant recipients

Total number of inspection reports of PACT-grantees submitted to PACT and share of these reports that comply with minimum official standards

Annual number of inspection reports / % compliance with

standards

0 (2014)

Target -- DFT: 20/75% DLS: 40/75% DOA: 5/60%

DFT: 50/80% DLS: 50/80% DOA: 15/65%

DFT: 60/85% DLS: 60/85% DOA: 30/70%

DFT: 30/90% DLS: 30/90% DOA: 15/70%


# of insp.: target / actual DFT: 160 / 151 DLS: 180 / 161 DOA: 65 / 74

Total: 405 / 386

TARGET NOT MET Actual --

DFT: 21/62% DLS: 24/56% DOA: 5/50 %

DFT: 50/47% DLS: 50/26% DOA: 31/45%

DFT: 47/25 % DLS: 56/27% DOA: 23/35%

DFT: 33/6%17 DLS: 31/19%

DOA: 15/53%

16The 100% compliance is due to (a) since January 2018 per law livestock feed is not allowed to contain antibiotics, (b) samples were taken in a poorer area with less use of agrochemicals, and (c) a smaller sample size since regular testing was transferred from VSDAO to the Veterinary Public Health Office.

17 The drop in the compliance rate over the years for DFTQC and DLS inspections is due to a stricter inclusion of the GR’s adherence to environmental safeguard measures in the overall rating. Accordingly, even if the minimum standards as per food law or as per good agricultural practices are followed, but environmental standards are not followed, the GR is rated as non-compliant. So in fact, the drop in compliance rate may reflect improved inspection procedures.


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GLOSSARY OF INDICATORS

PDO LEVEL

1. Farm productivity; increase in the yield of selected commodity value chains: this indicator measures productivity in terms of increased yields as reported by direct beneficiary/ farm level of PACT sub-projects in agricultural commodities supported by the project. The following commodity value chains are considered for this indicator: vegetables (tomato, hybrid variety produced in tunnels, and cauliflower), cereal seeds (rice and wheat), and milk. The productivity for vegetable and cereal seeds are measured in terms of metric tons per hectare (mt/ha) whereas that of dairy is measured in terms of liter/milking cow (improved breeds only) per lactation period (which will be 280 days and data to be collected at the interval of every three month during the lactation period).

For all commodities (tomato, cauliflower, rice, wheat, dairy) PACT M&E will monitor production (yield) data by collecting data annually from all the sub-projects (including those that have been completed) at the harvest time. In case of multiple harvests, an average of all the harvests within a year is calculated and recorded. Cumulative yield data collected will be divided by cumulative area (mt/ha). All the sub-projects supported by PACT should be visited every year, and PACT M&E will monitor and record yield data of the grantees (sub-projects) on individual basis to enable more detailed analysis in case of need and final impact analysis. 2. Agribusiness Productivity; increase in the volume of selected agricultural commodities sold: this indicator measures how many PACT sub-projects (=grantees) were able to increase their sales of selected commodities due to improved market linkages. It is measured in terms of agricultural produce being sold through the selected commodity value chain as reported by the individual PACT sub-projects and reported as the aggregate volume being transacted by grantees within the given year. The following commodity value chains are considered for this indicator: ginger, coffee, honey and milk. Depending on the grantee’s nature (farmers group, cooperative, producer association or private firm) and business (pure production, own production and processing, own production and additional outside purchase and processing, or only processing) the nature of the produce in terms of value added may differ

18A GR cooperative or a farmer group may have 500 general members, but only 100 members may have been

from sub-project to subproject (e.g. raw ginger, graded ginger, washed ginger, etc.). For the selected commodities the following measurement applies:

Ginger: for pure producers the amount of total sales of semi-processed or processed per PACT sub-project to any market-outlet is measured in metric tons (mt). For processors the amount of ginger entering the factory gate is measured in mt. If the grantee is involved in both production and processing, the amount produced from his/her farm prepared to be fed to the processor (to be sold later) should be included.

Coffee: for producers or semi-processors (up to the stage of parchment coffee) only the amount of sales of parchment coffee per PACT sub-project to any market-outlet is measured in mt. For PACT sub-projects who are advanced coffee processors the amount of parchment coffee entering the factory gate is measured. If the grantee is involved in both production and processing, the amount of parchment coffee prepared to be fed to the processor (to be sold later) should be included.

Milk: for milk producers and other such grantees, the amount of sales of chilled milk per PACT sub-project to any market-outlet is measured in “thousands” (.000) of liters. In case of sub-projects like dairy plants or those involved in only processing, the amount of milk in “thousands” (.000) of liters collected at the factory gate ready to be processed is to be measured. If the grantee is involved in both production and processing of milk, only the amount milk in “thousands” (.000) prepared to be fed to the processor (to be sold later) should be included.

Honey: for honey only the processed amount of honey of PACT sub-projects is measured in mt.

For all commodities (ginger, coffee, milk and honey) PACT M&E will monitor and record sales data as per individual grantee (sub-project) to enable more detailed analysis in case of need and final impact analysis. IDA CORE INDICATOR

3. Direct Beneficiaries: Direct beneficiaries are those members of a grant recipient organization (GR) who directly participate in PACT’s sub-project by providing part of share/contribution in cash, kind or both as agreed by GR with the PACT and also contributing to PDO as well. This implies that all direct beneficiaries are members of a GR but all members may not necessarily be direct beneficiaries18.

participating in PACT's sub-project. In this instance, these 100 HHs are the direct beneficiaries and remaining 400


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When GR is a private firm engaged in the production of a primary product like raw milk and vegetables, its shareholders or partners are direct beneficiaries in addition to those HHs who also participate in sub-project activity and contribute to PDO as depicted above. However, people working in full time or part-time employment will not be considered as direct beneficiaries. Rather, they could be considered as indirect beneficiaries. Similarly, direct beneficiaries of a market committee are those traders who either rent stall/space developed by the committee through PACT’s matching grant, or provide part of the cost incurred in the stall/market development.

COMPONENT 1

5. Sub-projects supported with a PACT matching grant agreement signed: This indicator reflects the cumulative number of all sub-projects from Call 1 -6 to date (Call 5 refers to Micro-Grants, Call 6 refers to IPM-Grants) that have a signed agreement with PACT that has not been cancelled.

6. Proportion of sub-projects that are fully operational 6 months after submission of their completion reports: This indicator captures the sustainability aspect of the PACT supported sub-projects. It is expected that most of the grant receiving enterprises would continue to be operational and running even after the end of the project. The sub-projects would be regularly monitored by PACT and the line agencies of the Ministry of Agriculture Development located in the district.

7. Cumulative number of clients receiving services from the Agribusiness Innovation Centre (ABIC) and percentage of these clients who are PACT grantees: This indicator records the total number of clients receiving services from the ABIC (former AIC) as well as the percentage of clients who are PACT-grantees. Services may include workshops, training, and events organized by ABIC, as well as intensive incubation and individual business counseling. At the beginning of ABIC’s operation priority will be given to PACT grantees but over time it is expected that the number of other enterprises will grow and exceed the number of PACT supported enterprises.

HHs could be considered as indirect beneficiaries since they could eventually share part of the profit earned by their respective organization, if earned and distributed or

8. Number of additional market stalls available at the markets built or rehabilitated by PACT: This indicator includes Kalimati Wholesale Fruits and Vegetables Market, as well as other agriculture markets that are proposed to be rehabilitated/built in different parts of the country. By the end of the project, it is envisaged that 7 such markets will be supported.

COMPONENT 2

9. DFTQC, DLSO, and DOA staff trained in laboratory analysis: This indicator lists the number of people trained at three departments (DFTQC, DLSO and DOA), under the Ministry of Agriculture Development (MOAD), through PACT support. It is meant to capture the enhanced capacity of the relevant staff to carry out quality analysis of the food and allied samples.

10. Number of samples analyzed by DFTQC, DLS, and DOA: This indicator measures the outcome of the support provided by PACT to the DFTQC, DLSO and DOA, in the form of equipment, mobility and laboratory support. It is measured on an annual basis.

For DFTQC the indicator refers to samples of processed “milk and milk products” and processed “meat and meat products”, whereby the first number relates to milk products, the second number to meat products (Source: DFTQC Annual Bulletins: “Summary of Laboratory Analysis according to Commodity Groups”). The products are being tested for various contaminants (mainly chemical, microbiological), but not yet for antibiotic residues. The data refer to the respective financial year.

For DLS the indicator refers to samples of unprocessed milk and unprocessed meat (poultry meat), whereby the first number relates to milk, the second to meat (Source: DLS or VSDAO Annual Bulletins). Milk and meat are being tested only for antibiotic residues by using rapid test kits. The data refer to the respective financial year.

In the case of DOA/DPP the indicator refers to samples taken by DOA/DPP at market places and being analyzed for pesticide residues by the RBPR methodology in the 6 PACT funded laboratories (to be set up in 6 different market locations).

11. Share of samples analyzed annually by DFTQC, DLS, and DOA that meet minimum quality requirements For DFTQC and DLS the first number represents the percentage of milk products (DFTQC) or raw milk (DLS)

benefit through demonstration effect.


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complying with standards, the second number represents the percentage of meat products (DFTQC) or raw meat (DLS) complying with minimum standards. In the case of DOA/DPP the indicator refers to the percentage of negative RBPR tests (no pesticide residues detected).

12. Public inspection services provided to PACT grant beneficiaries by DFTQC, DLS and DOA: This indicator shows the total number of inspection reports submitted to PACT by DFTQC, DLS and DOA as well as the percentage of these reports that show compliance to minimum legal licensing and quality requirements.


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A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: The competitiveness of smallholder farmers has improved

Indicator Name Unit of Measure Baseline Original Target Formally Revised

Target

Actual Achieved at Completion

Farm Productivity: Increase in the yield of the selected commodity value chains

Percentage 0.00 25.00 25.00

30-Jun-2010 30-Jun-2018 30-Jun-2018

Dairy Liter 2381.00 2976.00 3237.80

30-Jun-2010 30-Jun-2018 30-Jun-2018

Wheat Metric ton 2.40 3.00 2.95

30-Jun-2010 30-Jun-2018 30-Jun-2018

Rice Metric ton 3.20 4.00 3.97

30-Jun-2010 30-Jun-2018 30-Jun-2018

Cauliflower Metric ton 13.40 16.80 23.93


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30-Jun-2010 30-Jun-2018 30-Jun-2018

Tomato Metric ton 51.80 66.00 89.60

30-Jun-2010 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): Farm productivity significantly increased for all major commodities. The productivity target of 25% increase was exceeded for cauliflower (78.6%), tomato (69.5%) and milk (36.0%); and almost met for rice (24.0%) and wheat (22.9%). Objective/Outcome: The competitiveness of agribusinesses has improved


Target


Agribusiness Productivity: Increase in the volume of selected agricultural commodities sold

Percentage 0.00 40.00 40.00

30-Jun-2010 30-Jun-2018 30-Jun-2018

Milk Liter 9598.00 13437.00 21423.00

30-Jun-2010 30-Jun-2018 30-Jun-2018

Parchment Coffee Tones/year 126.00 176.00 180.00

30-Jun-2010 30-Jun-2018 30-Jun-2018

Ginger Tones/year 930.00 1302.00 2364.00


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30-Jun-2010 30-Jun-2018 30-Jun-2018

Honey Tones/year 103.00 144.00 380.00

30-Jun-2010 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): Agribusiness productivity significantly increased for all major processed commodities. The productivity target of 40% increase was exceeded for ginger (154%), milk (123.9%), honey (68.9%) and parchment coffee (42.9%). Unlinked Indicators


Target


Direct project beneficiaries Number 36293.00 150000.00 100592.00

24-Aug-2012 30-Jun-2018 30-Jun-2018

Female beneficiaries Percentage 34.70 45.00 45.60

24-Aug-2012 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): Only one-third of the estimated number of direct project beneficiaries could effectively be reached (just over 100,000 people). The number of direct project beneficiaries estimated at appraisal was over estimated. However, the share of women among the direct project beneficiaries is significant (over 45%) and this target was reached.


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A.2 Intermediate Results Indicators

Component: Component A: Agriculture and Rural Business Development


Target


Additional stalls available at the markets built or rehabilitated by PACT

Number 0.00 410.00 301.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): This target has not been achieved. Market construction was still on-going at project closing. GoN committed to use own funding to complete construction and operationalization.


Target


Clients receiving services from the Agri Business Innovation Centre and percentage of those clients who are PACT grantees

Number 0.00 1000.00 1079.00

04-Jun-2010 30-Jun-2018 31-Jan-2018

Percentage of ABIC clients who are PACT grantees

Percentage 0.00 20.00 6.00

04-Jun-2010 31-Jan-2018

Comments (achievements against targets): The target was partially met. While the number of clients receiving services from NABIC was attained (over 1,000), the share of those clients that are PACT grantees remained well below target (only 6% instead of 20% PACT grantees).


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Target


Share of sub-projects still fully operational 6 months after submission of their completion report

Percentage 0.00 70.00 81.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): This target was exceeded: of the 115 sub projects (random sample) surveyed that were completed prior to December 31, 2017, 81% were still fully operational at PACT closing.


Target


Sub-projects supported by a project matching grant

Number 0.00 700.00 1223.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): This target was exceeded as many more sub projects than originally planned, received financing under PACT matching grant scheme.

Component: Component B: Support for Sanitory and Phytosanitory Facilities and Food Quality Management


Target


DFTQC, DLSO and DOA staff trained annually in laboratory analysis

Number 0.00 68.00 172.00

04-Jun-2010 30-Jun-2018 30-Jun-2018


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DOA Number 0.00 16.00 75.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

DLS Number 0.00 10.00 56.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

DFTQC Number 0.00 40.00 41.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): This target was exceeded. Over the course of the project implementation, the 3 Departments combined trained 172 staff in laboratory analysis. While the figures varied considerably from one year to another, the 3 Departments exceeded their respective institutional targets. Give this inter annual variability, the numbers reported here are cumulative.


Target


Samples analyzed annually by DFTQC, DLS and DOA

Number 207.00 13577.00 16172.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

DOA Number 1039.00 6039.00 6783.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

DLS (milk) Number 90.00 510.00 140.00 646.00


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04-Jun-2010 30-Jun-2018 30-Jun-2018

DFTQC (milk) Number 918.00 6018.00 7099.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): This target was exceeded. Over the course of the project implementation, the 3 Departments combined analyzed well over 16,000 samples (including milk, meat and fresh produce) and all exceeded their respective institutional targets.


Target


Share of samples analyzed by DFTQC, DLS, DOA that meet minimum quality requirements

Percentage 78.00 94.00 97.30

31-Jan-2014 30-Jun-2018 30-Jun-2018

DOA Percentage 98.50 99.00 97.30

31-Jan-2014 30-Jun-2018 30-Jun-2018

DLS (milk) Percentage 76.00 90.00 100.00

31-Jan-2014 30-Jun-2018 30-Jun-2018

DFTQC (milk) Percentage 92.00 95.00 95.00

31-Jan-2014 30-Jun-2018 30-Jun-2018


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Comments (achievements against targets): This indicator has been partially met. The numbers provided above are averages across all 3 Departments. The disaggregated numbers reveal that the institutional target for samples analyzed that meet minimum standards was largely met for DFTQC and DLS (both for milk and meat), but remained unmet for DOA (fresh produce).


Target


Inspection services provided annually by DFTQC, DLS and DOA to PACT grant recipients

Number 0.00 405.00 386.00

04-Jun-2010 30-Jun-2018 30-Jun-2018

DFTQC Number 0.00 160.00 151.00

01-Jan-2014 30-Jun-2018 30-Jun-2018

DLS Number 0.00 180.00 161.00

01-Jan-2014 30-Jun-2018 30-Jun-2018

DOA Number 0.00 65.00 74.00

01-Jan-2014 30-Jun-2018 30-Jun-2018

Comments (achievements against targets): This target was not met (on aggregate) as the DFTQC and DLS) did not carry out as many on-site inspections as planned. In contrast, DOA did carry out more on-site inspections of PACT sub projects than planned.


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B. KEY OUTPUTS BY COMPONENT

Objective/Outcome 1. Farm productivity increased

Outcome Indicators 1. Increase in yield of tomato (mt/ha), cauliflower (mt/ha), rice (paddy) (mt/ha), wheat (mt/ha), and raw milk (liter/lactation period per cow); 2. % change in yields for tomato, cauliflower, rice, wheat and raw milk

Intermediate Results Indicators 1. Number of Sub-projects supported by PACT matching grant scheme - Primary production 2. Number of Sub-projects still fully operational 6 months after submission of their completion report

Key Outputs by Component (linked to the achievement of the Objective/Outcome 1)

1. Infrastructure and equipment: 3,685 tunnel houses, 1,432 animal sheds, 436 Fish Ponds, 109 tractors, 86 farm vehicles, 98 urine/manure/compost pits 2. Producers trained: business planning, food standard compliance and environmental safeguards.

Objective/Outcome 2 Agribusiness productivity increased

Outcome Indicators 1. Increase in the volume of parchment coffee (t/year), ginger (t/year), honey (t/year), and milk (Tsd liter/year) sold 2. % change in production of processed parchment coffee, ginger, honey, and milk

Intermediate Results Indicators

1. Number of Sub-projects supported by PACT matching grant scheme - processing 2. Number of Sub-projects still fully operational 6 months after submission of their completion report 3. Number of DFTQC, DLS, and DAO staff trained annually in laboratory analysis 4. Number of samples analyzed annually by DFTQC, DLS and DOA 5. % share of samples analyzed annually by DFTQC, DLS, and DOA that meet minimum quality requirements 6. Annual total number of inspection reports of PACT-grantees submitted to PACT 7. % of inspection reports that comply (that indicate compliance with minimum official standards)


1. Agribusiness infrastructure/equipment installed: 175 Collection Centers, 257 Store Houses, 31 Biogas plants and more than 400 other machineries (e.g. generators, milking machines, chilling vats) installed; 2. Human Capacity in doing agribusiness developed: 10 Value Chain workshops (2-3 day) held on dairy, vegetable and meat/meat product VCs with 190 participants in total; exposure visits to eight different sites (including RBPRs, DDCs); on-site technical advice for 112 SPs; NABIC Orientation to 742 potential and existing agribusinesses; extensive business counseling to 261 agribusinesses; and intensive services to 25 out of which 4 are PACT grantees


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3. SPS infrastructure constructed: Fumigation Chamber and post-quarantine facility constructed in Kirtipur; high pressure liquid chromatography (HPLC) machine and chemical reagents; bio-safety cabinet; six Rapid Bioassay of Pesticide Residues (RBPR) laboratories 4. SPS management capacity developed: Five persons trained for 60 days on post-quarantine entry procedures, Fumigation Chamber personnel trained 6 days on operating the facility; technical training to analyze and interpret residues of veterinary drugs/chemicals/pesticides (i.e., use of equipment above) 5. Improved SPS regulation and guidelines in place: standard laboratory protocol for testing veterinary drugs, quality testing standards and procedures for different veterinary drugs and vaccines, standards for transportation of poultry, standards for risk analysis of vaccines/biological substances for veterinary use, national microbial standards for meat, milk and eggs; Standard Operating Guidelines for RBPR 6. Issuance of Food Quality Licenses: 27 SPs have received food quality licenses

Objective/Outcome 3 Targeted Beneficiaries actually reached

Outcome Indicators 1. Total number of Direct Project Beneficiaries reached, 2. % share of women among direct project beneficiaries reached

Intermediate Results Indicators 1. Number of smallholder producers benefitting from grant


1. Grant beneficiaries by type of organization: 396 Cooperatives and Producers Associations, 390 Farmer's Groups, 356 Individual Farmers and 81 Agribusiness SMEs 2. Geographical coverage of SPs completed: 1223 SPs in 62 districts out of 75 total


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ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION

A. TASK TEAM MEMBERS

Name Role

Preparation

Supervision/ICR

Patrick Verissimo Task Team Leader(s)

Shambhu Prasad Uprety Procurement Specialist(s)

Yogesh Bom Malla Financial Management Specialist

Kiran Gautam Team Member

Neena Shrestha Team Member

Anupa Aryal Pant Team Member

Satish Kumar Shivakumar Team Member

Srivathsan Sridharan Team Member

Giovanni Bo Counsel

Hari Prasad Bhattarai Social Specialist

Rupa Shrestha Team Member

Paul J. Christian Team Member

Ramesh Raj Bista Team Member

Annu Rajbhandari Environmental Specialist

Karishma Wasti Team Member

Saahil Ninad Karpe Team Member

Prakash Awasthi Team Member

Odbayar Batmunkh Team Member


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B. STAFF TIME AND COST

Stage of Project Cycle Staff Time and Cost

No. of staff weeks US$ (including travel and consultant costs)

Preparation

FY05 13.218 46,669.18

FY06 7.941 58,600.17

FY07 26.109 127,937.76

FY08 22.708 111,473.94

FY09 24.528 144,249.30

FY10 .350 - 893.69

FY11 0 0.00

Total 94.85 488,036.66

Supervision/ICR

FY10 15.761 100,035.05

FY11 17.145 84,234.60

FY12 29.914 75,117.82

FY13 38.362 124,674.74

FY14 37.486 70,638.10

FY15 44.831 125,822.61

FY16 34.187 107,607.13

FY17 32.754 147,815.80

FY18 22.147 163,125.78

FY19 12.551 97,521.60

Total 285.14 1,096,593.23


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ANNEX 3. PROJECT COST BY COMPONENT

Components Amount at Approval

(US$M) Actual at Project

Closing (US$M) Percentage of Approval

(US$M)

Agriculture and Rural Business Development

0 45.04 0

Support for Sanitary and Phytosanitary Facilities and Food Quality

0 5.39 0

Project Management and Monitoring and Evaluation

0 9.57 0

Total 0.00 60.00 0.00


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ANNEX 4. EFFICIENCY ANALYSIS

Overview

1. The project development objective (PDO) was to increase aggregate value added in selected commodity

value chains in selected districts supported by the project. The project aimed at improving aggregate value

added through: (i) assisting farmers to engage in profitable market-oriented production so as to improve

incomes from agriculture (crop and livestock); (ii) creating and strengthening industry-wide partnerships along

the value chain, thus forging linkages between producers, traders, processors, and other stakeholders; and (iii)

strengthening the national system of SPS and food-quality management in order to reduce existing obstacles to

agriculture and food trade. The project had three components: (i) Agriculture and Rural Business Development,

(ii) Sanitary and Phytosanitary and Food Quality Management, and (iv) Project Management and Monitoring and

Evaluation. This project was implemented between 2009 and 2018 under the International Development

Association (IDA) financing facility. The original financing (OF) of the project was designed for a period of six

years (from 2009-2015) and focused in 25 districts out of 75 districts in the country, essentially on the Western

and Central Terai and Hill districts. An additional financing (AF) was made available for the project which

extended the project period by another three years, but also it removed earlier restriction of 25 districts. The AF

had become effective on 18 March 2013. This ex-post economic and financial analysis covers both original

financing (OF) and additional financing (AF) of the project.

2. The direct economic benefits of the project have come from several interventions across the selected

value chains, namely: (i) increased operating efficiency at farm level (through improvements in production and

marketing process, logistics, and market institutions); (ii) extended value addition at farm and/or post-farm

level with greater integration between producers, traders, and processors along the value chains; and (iii)

increased market access and reduction in economic losses due to improvement in capacity of the national

system for SPS management. The main quantifiable benefit from this sub-component is the aggregate value

added in the production and processing of commodities in the value chains supported under the project. In

addition, the project’s activities will also produce non-quantifiable benefits in the form of (i) strengthened

farmers organizations (FO) and service providers in rural areas (a result of TA and training activities); and (ii)

improved links between FOs, traders, processors, and other agents in the value chains (a result of the synergies

between project components). However, due to the unavailability of reliable data as well as the

unpredictability of investment choices, benefits from investments in Sanitary and Phytosanitary and Food

Quality Management are excluded from the efficiency analysis.

3. Some aspects of the project implementation mechanism made it difficult to perform a traditional ex-ante

economic analysis of the project investments during the appraisal. It was considered not to be relevant to

provide an estimate of a full economic rate of return for the project, but rather to provide examples of benefits

from typical subprojects that will be supported under the project. As such, the ex-ante economic analysis

considered three illustrative subprojects; namely, rural road connection, small collection center, and small

irrigation scheme; for the economic analysis. However, as of the project completion, no such subprojects were

implemented and thus, the results from the ex-post economic analysis are not directly comparable with the

results from the ex-ante economic analysis.


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Data collection

4. In addition to the regularly collected MIS data by the Monitoring and Evaluation team of the project, the

ex-post economic analysis extensively used data from the endline survey of competitive matching grants

scheme (CMGS) conducted by Full Bright Consultancy (Pvt.) Ltd. and CMS Engineering Consult (Pvt.) Ltd. with

support from the PMU. The analysis also used data from the impact evaluation report of Call-4 conducted by

the World Bank’s Development Impact Evaluation (DIME) Unit. The efficiency analysis also used information

from various secondary sources which include the Central Bureau of Statistics, the Ministry of Agriculture and

Cooperative (MOAC), and the Nepal Rastra Bank (NRB). The information used in the economic analysis were

cross-checked and verified during the field visits of the ICRR mission.

5. Development Impact Evaluation (DIME) Report. The Impact Evaluation report by the DIME highlights key

insights from a year-long study, tracking enterprises participating in the 4th of 6 calls for applications to the

Matching Grant Scheme under Component 1 of the project. The key goal of this Impact Evaluation was to

unearth the causal impact of the grant on profits and business outcomes among the clusters of enterprises

covered by the 4th call for proposals. The evaluation focused on 5 key outcomes: loans, employment, revenues,

profits and accounting methods. The key takeaway from the DIME report is that the PACT grants can be

credited with achieving (1) a 33% higher likelihood that enterprises take out a formal loan and (2) an average

increase in profits of Rs. 1.1 million per enterprise – representing a near doubling in profits. One important

caveat that surrounds the Impact Evaluation is that the timing of the endline survey was entirely based on the

closing date of PACT. A substantial proportion of grant recipients only received their second/final installments

a few weeks before or after they were surveyed. For this reason, the positive results in this report could be an

underestimation of the impacts of Call 4 – since the cash inflow was likely not fully internalized and put to

productive use in this short time-period.

6. Endline Survey of the Competitive Matching Grant Scheme. The Endline Survey of the matching grant

subprojects and their allied beneficiaries for call 1, 2, 3 and 4 schemes were conducted with the aim of assessing

the project’s major outcome and its impacts on the key selected indicators based on the projects’ result

framework. Comparison of survey outcome on key indicators of Grant Receiving (GR) and Non-Grant Receiving

(NGR) subprojects as well as between endline and baseline were considered as the main approach to analyze

the survey outcomes. Altogether 461 subprojects under GR and NGR categories and their allied 2,300 direct

beneficiaries under 22 value chain commodities were interviewed within Call-1, Call-2 and Call-3 endline

survey. The assessment observed considerable positive changes in key indicators (e.g. productivity,

employment, profits, and incomes) among the grant recipients compared to both the baseline and the non-

grant recipients. For example, the grant beneficiary involved in meat and milk value chains were found

generating 43 percent and 44 percent higher incomes from meat and milk respectively, compared to the non-

grant recipients involved in the value chains.

Methodology

7. An ex-post efficiency analysis is undertaken to assess the financial and economic impact of the project on

the value-chain participants (grant recipients) and to assess the project’s ex-post economic viability. At

appraisal, the total project’s economic net present value (ENPV) and economic internal rate of return (EIRR)

were not presented in the PAD. However, the PAD presented the ENPV and EIRR of three illustrative individual

activities (rural road connection, small collection center, and small irrigation scheme), but none of these


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activities were implemented by the project. Given the lack of comparable financial and economic returns from

the ex-ante economic efficiency analysis at appraisal, this efficiency analysis assesses the economic and

financial viability of the project based on the economic and financial returns coming out from these analysis

through the use of actual data from the endline survey of competitive matching grant schemes. The efficiency

analysis is carried out on the basis of individual analysis of matching grants scheme in different value-chains

for which reliable and sufficient data is available to measure the project benefits. Returns to investments in

selected value-chains are estimated using their respective production models. The main project benefits are

sourced from the scaling up of the sub projects (SP) with the support from the project. While the economic

returns from the SPs are proportionately attributed to the share of investments made by the PACT, the

economic returns from the economies of scale could not be captured due to the lack of detail inputs and output

costs for both the beneficiary SPs and the non-beneficiary SPs. Moreover, returns to investments in the

development of the sanitary and phytosanitary and food quality management infrastructures are excluded

from the analysis due to the lack of reliable data. Thus, the financial and economic returns estimated in this

efficiency analysis are conservative estimation of the benefits generated by the project investment.

Key assumptions

8. The final financial cost of the Project in 2018 prices is estimated at NRS 2123 million (including physical

contingencies). Costs of the Project components are distributed in the following shares: the agriculture and

rural business development (75%), support for sanitary and phytosanitary facilities and food quality standards

(9%), and the project management and monitoring and evaluation (16%). The economic cost of the Project is

estimated by removing price contingencies and all taxes and duties from the financial cost.

9. Main source of benefits from the project, accounted in this analysis, is returns from the scaling up of SPs

supported by the project in different value-chains. the economic returns from the SPs are proportionately

attributed to the share of investments made by the PACT. The project impact is estimated by aggregating

benefits to and costs of those selected investments for which benefits streams are estimated. The Project

benefits are assessed for 15 years at 2018 financial prices and using opportunity cost of capital at 10 percent.

10. Financial prices of locally traded outputs and inputs are converted into economic prices by deducting

direct agricultural subsidies and taxes. Economic import parity prices were calculated for the cereals and

fertilizers using international reference prices, transport, marketing, and other costs of importing through

Kolkata, India. Moreover, for non-tradables a standard conversion factor of 0.9 was applied to the local price

component. The opportunity cost of labor was valued at NRs 13450 per month (around US$120) based on the

current minimum wage for Nepal. The exchange rate used in the analysis is NRS 113.0 per USD 1.0.

11. Investment models were prepared for producers/farmers in selected value-chains of poultry, dairy, milk

processing, fish, vegetables, cereal seeds, potato seeds, animal feed, and goat. The selection of value-chains

was based on availability of quantifiable benefits and costs in the sources mentioned above. However, the

project’s investments in the selected value-chains accounts more than 80 percent of total investments in all

value-chains.

Financial and economic analysis of selected subprojects

12. Based on the range of interventions along specific value chains at farm level—namely in improving

productive efficiency, logistics processes, and marketing strategy—11 different indicative subprojects were


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assessed in financial and economic terms: (i) a poultry (layer), (ii) a poultry (broiler), (iii) a meat processing, (iv)

a fishery, (v) a dairy production, (vi) a milk processing, (vii) a vegetable cooperative, (viii) a goat producing

cooperative, (ix) an animal feed firm, (x) a cereal seeds producing farmers group, and (xi) a farmers group of

potato producers. Because of lack of sufficient data that can be used for quantifying benefits from the

investments made in the development of sanitary and phytosanitary and food quality management, the

analysis has not tried to develop investment model for this activity. However, the investment made in this

activity along with expenses for project management are included in one scenario of the economic analysis to

assess the overall viability of the project.

13. Poultry. The first two models present commercial farms for broilers and layers with the capacity of 3000

birds per production cycle. The PACT supported 37 sub projects (SPs) in the poultry value-chains with an

average investment size of NRS 2.9 million. Average total investment per SP is estimated to be NRS 4.8 million

in the poultry value-chains. The majority of the PACT supported SPs in the poultry value-chain are involved in

broiler production. The endline survey observed about two-third of the grant recipients were engaged in broiler

production and remaining one-third were engaged in egg production. The mortality rate at the different stages

is observed to be 10 percent and the productivity rate for egg production is found to be 90 percent. The final

life weight of a broiler poultry is about 2.6 KG per bird and the average price of per KG of live bird is NRS 200.

With the investment of NRS 179 million (USD 1.6 million) in the poultry value-chains, the financial net present

value (FNPV) is estimated around NRS 63 million (USD 0.6 million) with the FIRR and EIRR of 16 percent and 19

percent respectively. The FIRR and the NPV are found higher for the broiler poultry farms than the layer poultry

farms. The FIRRs for layer poultry and broiler poultry are 14 percent and 19 percent respectively; while the

EIRRs for layer and broiler investments are 16 percent and 21 percent respectively.

14. Meat Processing. The project supported 104 SPs in meat processing value-chains such as production,

processing and marketing of meat and meat products. Meat and meat products included broiler chicken, goat

meat, and pork. Processed meat products comprised of chicken sausages and salami. The average amount of

the PACT support per SP was NRS 3.0 million and total investment per SP was found to be NRS 7.7 million. The

remaining investments were sourced mainly from beneficiary’s own contribution or loan from formal

commercial banks. The average capacity of a meat processing firm is observed 21.7 metric tons per annum

with an average annual revenue and gross profit of NRS 6.6 million and NRS 1.2 million respectively. With the

total investment of NRS 309 million (USD 2.7 million), the FIRR is 14 percent and FNPV is NRS 56.2 million (USD

0.6 million). The EIRR for the investment in meat processing value-chain is 15 percent and the ENPV is NRS 77.5

million USD 0.7 million).

15. Fish. The PACT has made substantial investment in the fish value-chain. In fishery sector of the value chain

activities, rainbow trout, carp fish, fingerling/fry/hatchling were the key functions being carried out by the

beneficiaries. Total 57 SPs, including 3 rainbow trout fish farms, are supported by the project. The total amount

of investment made from the project in the fish value-chain is NRS 142.5 million (USD 1.3 million) with average

investment size of NRS 2.5 million per SP. In addition to the PACT’s contribution, the grant recipients have

contributed on average NRS 3.1 million either from their own savings or through loans from commercial banks.

The average capacity of farms in the fish value chain is found 6.5 metric ton per year and the average annual

revenue of the SPs is found to be NRS 6.6 million, of which NRS 1.1 million is gross profit. The efficiency analysis

has found that the financial returns to investments made in the fish value-chain is 19 percent with FNPV of NRS

65.3 million (USD 0.6 million). The EIRR is estimated to be 21 percent with the ENPV of NRS 95 million (USD 0.8


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million).

16. Dairy Production. Total of 108 SPs in the dairy production value-chain were supported by the project.

Average investment size of SPs in dairy production value-chain is found to be NRS 5 million, of which NRS 2.2

million is contributed by the project. The grant recipients contributed the remaining share of the investment.

The average capacity of SPs is found to be 93 thousand liters per annum from 30 milking cows and the average

revenue of PACT supported dairy SPs is NRS 5.3 million. The average gross profit per SP is found to be NRS 1.2

million. With the total investment of NRS 238 million (USD 2.1 million) from the project to the SPs in the dairy

value-chain, the FNPV is estimated to be NRS 159 million (USD 1.4 million) with the FIRR of 22 percent. The

EIRR for the PACT investment in dairy producing SPs is also found to be 22 percent with the ENPV of NRS 142

million (USD 1.3 million).

17. Milk Processing. This model presents a representative milk processing firm from the milk processing

value-chain. The project has made substantial investment in the milk processing value-chain. Total 90 SPs were

supported by the project with an average investment of NRS 2.7 million. On average, the grant recipients

contributed NRS 3.3 million. The average capacity of the SPs in the milk-processing is found to be 149 metric

tons per annum with annual revenue of NRS 10.7 million and annual gross profit of NRS 2.6 million. With total

investment of NRS 242.4 million (USD 2.1 million) from the PACT, the FNPV of the investment is NRS 115.9

million (USD 1.0 million) and the FIRR to the investment is 19 percent. The EIRR and the ENPV to the investment

are 22 percent and NRS 143 million (USD 1.3 million), respectively.

18. Vegetables. Vegetables producing farmers groups and the cooperatives were also prioritized in receiving

grants from the PACT. Total 301 sub-projects received supports from the project and the average contribution

of the project for the SPs was NRS 1.3 million, while the total investment per SP was found to be NRS 2.7 million.

Majority of the farmers group members are smallholders. The capacity of the model investment, featured here

to estimate economic and financial returns, is 525 metric tons per annum with an annual revenue of NRS 19.4

million. The gross profit of the SP is NRS 15.4 million. On average, each sub project represents a farmers’

organization with 30-member farmers. With the total investment of NRS 396.8 million (USD 3.5 million), the

FIRR and the FNPV are estimated to be 18 percent and NRS 165.6 million (USD 1.5 million) respectively. The

EIRR and the ENPV for the investment are 18 percent and NRS 144 million (USD 1.3 million) respectively.

19. Goat. The project has supported 161 SPs in goat value-chain and the average size of the project’s

contribution was NRS 0.7 million. With total investment of NRS 108 million (USD 1.0 million), the financial and

economic returns from the investment are 17 percent and 16 percent respectively. The FNPV and the ENPV of

the investment are found to be NRS 43.3 million (USD 0.4 million) and NRS 34.7 million (USD 0.3 million)

respectively.

20. Animal Feed. One of the key agri-businesses supported by the project was animal feed production. The

project has supported six animal feed production firms with an average investment of NRS 3.0 million. The total

investment to establish a firm for animal feed production requires, on average, NRS 11.6 million and thus, the

project contributed on average 26 percent of total investment required to set up an animal feed producing

firm. This model represents an animal feed producing firm with the capacity of 1608 metric tons annually. With

the total investment of NRS 18 million (USD 0.2 million) in the animal feed producing SPs, the project incurred

FNPV of 9.7 million (USD 0.1 million) with FIRR of 20 percent. The economic returns from the investment is

even higher as the EIRR is 21 percent and the ENPV is NRS 10 million (USD 0.1 million).


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21. Cereal Seeds and Potato Seeds. The project also made significant investment in SPs, especially farmers’

organizations, for cereal seed production and potato seed production. The project invested in total of NRS 128

million (USD 1.1 million) in these two types of SPs. The average size of PACT investment in cereal seeds SPs and

potato seeds SPs are NRS 2.4 million and NRS 1.2 million respectively. The financial internal rate of returns

from both the cereal seeds SPs and the potato seeds SPs is 18 percent. However, the economic returns from

investment made in the SPs involved in the production of cereal seeds and the potato seeds are found to be

17 percent and 19 percent respectively. The total PACT investment of NRS 94 million (USD 0.8 million) in the

SPs involved in cereal seeds production has generated the FNPV of NRS 40 million (USD 0.4 million). Similarly,

the total project investment of NRS 41.4 million (USD 0.4 million) in the SPs engaged in potato seed production

has generated the FNPV of NRS 20 million (USD 0.2 million).

22. Other investments. The project has also made investment in SPs from many other value-chains and in

improving the development of sanitary and phytosanitary and food quality management. Due to lack of

sufficient data to quantify the benefits from these investments, the efficiency analysis has not developed

investment model for these activities. The endline survey of the competitive matching grants scheme,

however, highlighted benefits form investments in some of the value-chains that are not included in this

economic analysis.

Financial and Economic Analysis of Overall Project

23. The ex-post economic analysis at project completion found the financial and economic returns to the

overall project were 18 percent and 19 percent respectively when the analysis excluded costs of investments

for which benefits are not estimated (scenario 1). The FNPV and the ENPV under the scenario one has come

out about NRS 739 million (USD 6.5 million) and NRS 725 million (USD 6.4 million) respectively. The analysis

confirms the project's overall financial viability as measured by the FIRR at 18 percent; ERR at 19 percent, with

a positive Net Present Value (NPV) estimated at USD 6.5 million. Under another conservative scenario, the ex-

post analysis also accounted costs for the investments for which benefits are not accounted. Under the

conservative scenario 2, the financial and economic returns to the project at completion are modest with FIRR

of 14 percent and FNPV of NRS 414 million (USD 3.7 million). The EIRR and the ENPV under the scenario 2 are

14 percent and NRS 401 million (USD 3.5 million) respectively. The project is robust at completion as the IRRs

under this scenario; which accounted the total project costs but excluded benefits to investments made in SPs

of other value-chains such as coffee, ginger, banana, honey, and in the development of sanitary and

phytosanitary and food quality management; are greater than 10 percent. The project is considered robust

because the analysis accounted for the total project costs but not the whole potential benefits. The overall

cost-effectiveness of the project is high, and it is largely based on the estimated NPVs of SPs in different value-

chains.


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ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS

Project summary

Project for Agriculture Commercialization and Trade (PACT) was initiated by the Ministry of

Agriculture and Livestock Development (MoALD) with the objective of improving the

competitiveness of smallholder farmers and agribusiness sector in selected commodity value

chains (CVCs) in the selected districts. The project was implemented by MoALD Initially in the

25 districts following a Grant Agreement between the World Bank (WB) and the Government of

Nepal (GoN) on 06 August 2009 for a period of 6 years with cost estimate of US$26.55 million

(IDA financing: US$ 20.0, GoN: US$ 5.82 & beneficiaries: US$ 0.73 million). The project was

later extended until 30 June 2018 throughout Nepal with an IDA additional financing of US$40

million (credit US$22 million & grant US$18 million) totaling estimated cost US$81.85 million

including GoN (US$ 2.23 million) and beneficiaries (US$ 19.62 million) contribution. The

project had 3 major components viz (1) Agriculture and Rural Business Development through

demand driven financing of sub/projects through farmer groups, cooperatives, producers

associations, and agribusinesses and also improved access to markets through the provision of

technology, information services, public infrastructure and linkages to agribusiness, (2) Support

for Sanitary and Phyto-sanitary Facilities and Food Quality Management to help reducing existing

obstacles to agriculture and food trade by increasing the ability of farmers and agribusiness and;

(3) Project Management, Monitoring and Evaluation to ensure better outcome.

Project contribution

PACT has contributed in the landscape of Nepalese agriculture by making an achievement in

project objectives. The project contributed to increased production and productivity in the

selected CVC by providing counterpart funds through matching grant schemes (MGS. The project

helped by cofinancing 1223 demand driven sub-projects (SPs) through call 1 to 6. Establishment

of public infrastructure is another remarkable contribution of project. The project supported

construction of 10 agriculture and livestock service centers in five Earthquake affected hill

districts of Province 3 which are already in use after their handover to concerned authority.

Another contribution is on market infrastructure development particularly the rehabilitation of

fire damaged Kalimati Fruit and Vegetable Wholesale Market, completion of vegetable and fruit

wholesale market infrastructure at Biratnagar, upgrading of vegetable and fruit wholesale market

at Butwal, establishment regional livestock markets at Janakpur and Damak, construction of

central floriculture and fruit wholesale market (under construction) at Chovar. Yet, another

remarkable contribution of PACT in component 1 was on establishment of Nepal Agribusiness

Innovation Center (NABIC), a one-stop service providing entity for agribusiness promotion.

PACT contribution for supporting sanitary and phytosantiary and food quality management

(component 2) are witnessed through direct support to three departments of MoALD, i.e. the

Department of Food Technology and Quality Control (DFTQC), the Department of Livestock

Services (DLS), and the Department of Agriculture (DoA). The contribution on component 2 was

primarily obtained through: (i) improving and upgrading laboratory facilities and certification

capabilities particularly by providing equipment and human capacity building, (ii) construction

of fumigation chamber and post entry quarantine facilities at Kirtipur, (iii) the establishment of


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Rapid Bioassay Pesticide Residue (RBPR) laboratories in six province, and (ii) technical

assistance and capacity building measures to meet relevant food quality standards.

PACT has also been instrumental in achieving project outcome through project management,

monitoring and evaluation. Key contributions on this regard were capacity building of project and

associated government staff, vehicle and equipment support for effective project monitoring and

evaluation, establishment of project management information system, the enhanced transparency

through public awareness company, policy based studies (baseline and endline surveys, impact

assessment, value chain studies, independent studies, road map for organic certification, lab

accreditation) grievance redress mechanism and the like. The provision of technical assistance

(TA) team contributed on successful management of project implementation.

Project achievement

The above mentioned contribution were influential in achieving increased production and

productivity (20-70% increase) of project supported CVC and agribusiness entiry. Altogether

100,592 people benefitted directly which is slightly lower than targeted. The productivity of major

crops as indicated in the PDO level indicators i.e. tunnel tomato, cauliflower, and milk were

increased by 69.54 %, 78.58 % and 35.98 % percent respectively compared to base line numbers,

and reached up to 89.6 t/ha, 23.93 t/ha and 3,238 lt/lactation respectively. Similarly paddy seed

and wheat seed almost maintained the target. The project intervention also helped to increase in

the farm sales (milk, meat, vegetables and others), increase in the export of commodities

(particularly coffee, honey and ginger), greater social inclusion in agriculture, farmers' capacity

enhancement, greater market opportunities for producers, promotion of good agricultural

practices through IPM farmers field schools, enhanced public awareness on safe consumption of

vegetables and fruits through monitoring and analysis of RBPR laboratories. The outstanding

achievement can be attributed to increased investment to agricultural commercialization as

project contributed to limited cofinancing to selected CVC. The detailed achievement witnessed

in commercialization of Nepalese agriculture landscape are outlined in implementation

completion result report of both GoN and WB. The periodic project joint review and technical

mission reports, the end line survey and impact evaluation study as well as independent

assessment of matching grant scheme also reflect the achievement of the project.

Challenges during implementation.

PACT experienced ups and down in its lifecycle. The project was initially operating at satisfactory

level, moved down to moderately unsatisfactory with problematic status and finally ended happily

with moderately satisfactory status. Even though project started after comprehensive peace

agreement after ending of long political insurgency, some intermittent political unrests still

existed. The major challenges to the project were the natural disasters mainly 2015 Earthquake

and the massive floods in the central and eastern Terai resulting in the loss and demolition of

some project supported infrastructures of the grant recipients. Another challenge was the Indian

border and economic blockade for six months. Further, two rounds of election (local as well as

provincial and federal election) were held at final year of project. All these incidents retarded

project momentum resulting in uncertainties and sudden shortage of construction materials and

labor supply followed by increment in cost thereby directly influencing the timely completion of

major infrastructures as well as call 4 SPs. Yet another challenges remained among grant

recipients on timely completion and sustainability of SPs, understanding about subsidy and the

low quality compliance for farm/agribusiness products. The challenges also remained within


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project on inability to utilize committed funds due to various reasons leading to partial

cancellation of substantial amount, the timely decision by GoN side on resource allocation for

completion of some unfurnished task. Another challenges appeared on the delayed tendency of

contractors on infrastructure project. However, project was not suffered in terms of its leadership.

The project managed to achieve milestones set out through joint meeting of MoALD and technical

mission through coordination, effective mobilization of available resources and team, enhanced

transparency, developing Grievances Redress Mechanisms and deploying project management

information system.

Lessons learned

PACT itself and MoALD has learned a lot from the implementation of project. A thorough and

deep preparation is fundamental requirement before project set targets and allocate substantial

resources to carry out activities. A major problem appeared in selecting real SPs and took

substantial time until final agreement and eventually to its completion. The MoALD realized a

real and practical approach to select right implementable projects and simplify the governance

process to make them successful. Care should also be given on preliminary preparations such as

land allocation, getting construction approval particularly for infrastructure projects, counterpart

fund assurance, collateral requirement for loan, preaudit of social and environmental issues during

project design and implementation to minimize potential conflicts. The project realized need of

key technical staff particularly commodity experts and engineers rather than generalists as the

member of technical team on commodity specific subproject to make it more successful. A strong

voice has been raised to support grant recipients through soft loan instead of grant. The

sustainability issues need to be addressed in terms of investment, returns and the longevity of the

subprojects. Yet, important point particularly in infrastructure project was that these types of

activities should be planned well in advance at the life cycle of project so that project has enough

completion time and do not suffer from potential risks of uncertainties for completion in absence

of resource. Finally, capacity enhancement and deputation of dedicated team members is a must

for success of the project

Overall observation

In conclusion, If we look back the progress of the PACT over the 9 years of implementation

period, it is quite evident that final couple of years of the project had been most productive and

meaningful in term of; (i) disbursement rate being around 46.89 million US$ per year compared

to 6-7 US$M per year before, (ii) completion of all 208 SPs under call 4 within one and half years

after signing the grant agreement, (iii) settlement of unresolved 66 SPs from different calls, (iv)

building strong coordination with three Departments in terms of assisting PACT funded SPs for

the quality compliance as per the law of the national government and also building their own

capacity to deal with the international trade applying SPS measures and (v) establishing RBPR

Laboratories in 6 different market location bringing awareness for reducing the use of chemical

fertilizer and harmful pesticide which were growing concern of the public of that time.

The rating of the project could have been satisfactory at the time of project closure (June 30,

2018). If we look back the table presented in the report (Rating of the project performance in

ISRs) and consider only the disbursement then it is quite clear that in last two ISRs the

disbursement had been recorded as being 47.68 and 46.11 respectively which were around seven


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times higher than in 8th Mission (7.32 US$M) yet the performance was recorded satisfactory at

that time.

The project would have done much better at closure had it been extended with no cost for the

period of 6-12 months. This would have prevented us from cancelling the 11 US$M and would

have given more time to complete the call 4 SPs such that we would have full result of the Impact

Evaluation. Also some of the unfinished market infrastructure at project closure (June 30, 2018)

would have been successfully completed with no traces of incomplete activities at the time of

project closure.

Some of the successful interventions that project carried out, are now completely owned by the

government and will be used to get the maximum advantage for the people and country such as

Fumigation Chamber and Post entry Quarantine Facilities, RBPR laboratories established in 6

market locations of the country, Institution like NABIC for which 10 million NRs is already ear

marked for this F/Y, Quality compliances of the SPs supported by the PACT fund and use of

road map developed for Laboratory accreditation of DLS laboratories and, many other knowledge

products studied and developed by the project during its life time.

Way forward

Based on the learning, experiences and priority of GoN and WB, MoALD expresses its interest

to work in future in agriculture sector. The MoALD is sincerely holding discussion with donors

in a Joint Sector Review team to explore the potential sub-sector for WB engagement in the

development of agriculture sector in Nepal. MoALD expresses it interest to work on climate smart

agriculture for broader impact, rural economic and enterprises development, horticulture sector

development and the fisheries sector development learning from success of PACT and other

similar projects.

Last but not the least, MoALD sincerely thanks the World Bank team, TTLs Ms Gayatri Acharya

and Mr Patrick Verissimo and associated team members for their continued support and guidance

in the successful implementation of PACT.

Govinda Prasad Sharma, PhD

Project Director, PACT & Joint Secretary, MoALD


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ANNEX 6. SUPPORTING DOCUMENTS

1. Project Implementation Completion and Results Report (ICRR): Government of Nepal; PACT (October 2018)

2. Endline Survey of Competitive Matching Grants Scheme (Call 1 to 4): Full Bright Consultancy (Pvt) Ltd., CMS Engineering Consult Pvt. Ltd; PACT/MOALMC (June 2018)

3. Success Stories: PACT/MOALD (August 2018)

4. Policy Notes: PACT Final Evaluation of Results of Matching Grant Scheme, Call 1-3; PACT/GoN (June 2018)

5. Policy Note: PACT Final Evaluation of Results for Value Chain Commodities; PACT/GoN (June 2018)

6. Policy Note: PACT Impact Evaluation Initial Results - Matching Grant Scheme, Call 4; World Bank/DIME (May 2018)

7. Nepal Impact Evaluation Report: Matching Grant Scheme, Call 4; PACT; World Bank/DIME (June 2018)

8. A Roadmap of Organic Agricultural Development for Nepal: with Specific focus on PACT Grant Recipients; PACT/MAD (October 2017)

9. Program Completion Report of IPM Grant Scheme: PACT/MAD (November 2016)

10. Independent Assessment of Matching Grant Scheme (MGS): Institute for Integrated Development Studies, Athena Infonomics, and Wageningen University (March 2018)

11. Assessment and Promotion of Organic Farming and Certification in Nepal: Earth Consult Pvt. Ltd.; PAT, MAD; (January 2015)

12. A training Manual on Organic Farming: PACT/MAD (October 2017)

13. Promoting Agribusiness Innovation in Nepal: Feasibility Assessment for an Agribusiness Innovation Center; InfoDev, The World Bank/IFC (July 2013)


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ANNEX 7: PACT MATCHING GRANT SCHEME

Feb. 2018 June 2018 Far Western Mid-Western Western Central Eastern

CALL 1

PCN received 388 388 12 66 189 121

Project Agreements signed 50 50 2 5 20 23 --

Project Agreements cancelled 1 1 0 0 0 1 --

Projects settled 2 2 0 0 1 1 --

Projects completed 47 47 2 5 19 21 --

Completion reports submitted 49 49 2 5 20 22 --

Projects operational after >6 mth 44 44 2 5 15 22 --

Grant amount committed in Rs M (excluding cancelled)

120.36 120.36 3.52 9.13 49.35 58.36 --

Grant amount disbursed in Rs M 108.54 110.04 3.48 7.5 45.53 53.53

Disbursement rate % 90.2 91.4 98.9 82.1 92.5 91.7 --

Comments: Call 1 closed on June 30, 2015. Projects “settled” are projects that have been partially completed (i.e. projects that have completed a portion of the activities in their Grant Agreement).

The grant amount initially disbursed to the 1 project cancelled and disbursed in excess to the 2 projects settled has been fully recovered and accounted for with IDA.

CALL 2

PCN received 1,500 1,500 84 154 553 709 --



Projects settled 11 11 0 1 4 6 --



Projects operational after >6 mth 177 182 10 15 63 94 --

Grant amount committed in Rs.M (excluding cancelled)

495.73 513.46 26.42 41.6 178.04 267.4 --

Grant amount disbursed in Rs.M 442.98 444.6 26.38 40.5 160.54 217.15 --


Comments: Call 2 closed on June 30, 2015. Projects “settled” are projects that have been partially completed (i.e. projects that have completed a portion of the activities in their Grant Agreement).

The grant amount initially disbursed to the 11 projects cancelled and the grant amount initially disbursed in excess to the 11 projects settled has been fully recovered and accounted for with IDA.


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MGS status (PACT; by Region): Feb. 2018 June 2018 Far Western Mid-Western Western Central Eastern

CALL 3

PCN received 1,446 1,446 86 155 367 838 --

Total FPP submitted 297 297 26 35 61 175

Number of FPP approved 291 291 20 19 77 175



Projects settled 17 14 3 1 3 7



Projects operational after >6 months 107 162 3 12 47 45 --

Grant amount committed in Rs.M (excluding cancelled)

637.07 634.07 49.33 44.07 185.77 354.9 --

Disbursement Rs. M 489.48 513.77 42.33 43.07 162.27 266.1 --


Comments: Call 3 closed June 30, 2017 and subsequently extended to March 31, 2018. Projects “settled” are projects that have been partially completed (i.e. projects that have completed a portion

of the activities in their Grant Agreement). “Projects settled” includes 7 projects from CR that will be settled upon approval of the Steering Committee.

CALL 4 - VALUE CHAINS [ABOUT 300 PROJECTS (100 JPS) TO BE FUNDED]

PCN received 2,157 2,157 79 101 392 1,104 481

Field verifications completed 2,042 2,042 55 81 321 1,104 481

Full project proposals reviewed 1,594 1,594 49 63 206 897 379

Ind. agreements negotiated& signed 290 290 3 12 54 177 44

Project Agreements cancelled 75 82 2 1 15 61 3

Projects settled 0 34 0 3 3 27 1

Projects completed 21 174 1 8 36 89 40

Completion reports submitted 21 208 1 11 39 116 41

Projects operational after >6 months 0 21 0 0 1 0 20

Grant amount committed in RsM (excluding cancelled)

917.58 917.63 2.73 40.01 182.47 523.52 168.9

Disbursement Rs.M 458.4 707.8 2.69 33.45 136.33 371.45 163.9

Disbursement rate % 50.0 77.1 98.5 83.6 73.7 71.0 97.1

Comments: Call 4 closed on March 31, 2018. Projects “settled” are projects that have been partially completed (i.e. projects that have completed a portion of the activities in their Grant Agreement).

“Projects settled” includes 19 projects (CR: 17; WR: 2) whose settlement is pending approval by the Steering Committee. “Project cancelled” include 7 projects from CR whose cancellation

confirmation is pending outcome of the GRM review by the relevant instances (CGHC).


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MGS status (PACT; by Region): Feb. 2018 Jun. 2018 Far Western Mid-Western Western Central Eastern

CALL 5 - MICRO GRANTS [ABOUT 500 PROJECTS TO BE FUNDED]

PCN received 3,214 3.214 232 741 642 933 666

Field Verifications completed 2,395 2,395 170 - - - 245

Project Proposals reviewed 2,395 2,395 170 - - - 245

Project Agreements signed 495 495 50 75 75 50 245

Project Agreements Cancelled 23 23 1 2 2 4 14

Projects settled 0 5 5 0 0 0 0

Projects completed 448 467 44 73 73 46 231

Projects operational after >6 mth 410 448 25 73 73 46 231

Grant amount committed Rs. 339.7 338.68 48.71 68.22 73.00 42.13 106.62

Disbursement, Rs. 323.22 326.43 42.3 66.72 71.96 41.15 104.3

Disbursement rate % 95.2 96.3 86.8 97.8 98.6 97.7 97.8

Comments: Call 5 closed June 30, 2017 and subsequently extended for FW to March 31, 2018. Projects “settled” are projects that have been partially completed (i.e. projects that have completed

a portion of the activities in their Grant Agreement).

CALL 6 - IPM

PCN received 144 144 - - - 144 -

Field Verifications completed 144 144 - - - 144 -

Project Proposals reviewed 144 144 - - - 144 -

Project Agreements signed 102 102 - - - 102 -

Projects Agreements Cancelled 2 2 - - - 2 -

Projects with 2nd installment 100 100 100

Projects completed 100 100 - - - 100 -

Projects operational after >6 mth 100 100 - - - 100 -

Grant amount committed 9.99 9.99 - - - 9.99 -

Disbursement rate 94.6 94.6 - - - 94.6 -

Note: The total amount reported in this MGS table does not include the GoN contribution of NPR63.54 million under Call 5.


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ANNEX 8: IMPACT EVALUATION RESULTS – MATCHING GRANT SCHEME, CALL 4

Overall Context

The Project for Agriculture Commercialization and Trade (PACT) – Nepal aimed to improve the competitiveness of the

agribusiness sector in selected commodity value chains as well as smallholder farmers linked to this sector. This Impact

Evaluation report highlights key insights from a year-long study, tracking enterprises participating in the 4th of 6 calls

for applications to the Matching Grant Scheme under Component 1 of the project. PACT’s Call 4 aspired to bring

together clusters of enterprises working in 8 selected value chains. To ensure sustainability, enterprise applicants

were required to have “skin in the game” by raising a share of investment capital to unlock the matching grant. The

key goal of this Impact Evaluation is to unearth the causal impact of the grant on profits and business outcomes among

the clusters of enterprises covered by the 4th call for proposals. The impact evaluation is the result of close

collaboration between the PACT team and the World Bank Group’s Development Impact Evaluation (DIME) Unit.

Methodology and Analysis

In general, comparing outcomes among all enterprises that received the grant to all enterprises that did not receive

the grant is challenging, because of the inherent and observable pre-program differences between these two groups.

Instead, this evaluation employs a regression discontinuity design that relies on the scoring mechanism PACT used to

establish eligibility. The validity of this strategy to plausibly capture causal impacts is based on the idea that (1) the

ranking of proposals was based on an unbiased review of the information and (2) that enterprises just above the cutoff

score are comparable to those just below the cutoff score.

The analysis focused on 5 key outcomes: loans, employment, revenues, profits and accounting methods. The key

takeaway is that the PACT grants can be credited with achieving (1) a 33% higher likelihood that enterprises take out

a formal loan and (2) an average increase in profits of Rs. 1.1 million per enterprise – representing a near doubling in

profits. The first of these two is a mechanical result of the project – because it was a requirement in order to receive

the grant. Given the environment within which these enterprises are operating, these impacts should be viewed as

transformative changes. Access to credit and linkages with the formal lending system can have long-term effects on

an enterprise’s ability to continue growing, and the effect on profits represents nearly doubling the level of this

outcome relative to its baseline value. In addition to these key outcomes, the report presents descriptive (i.e. less

plausibly causal) comparisons between all Grant Recipients and Non-Grant Recipients. On average, Grant Recipients

outperformed Non-Grant Recipients across several important dimensions including employment creation, accounting

practices, revenues, investment and land tenure status. Interpreting these comparisons as unbiased estimates of

program impact however would require very strong assumptions.

Employment gains can be attributed to the 3 types of changes:

1. Grant Recipients have added 1 employee on average.

2. Not getting the grant was associated with a reduction in 2 employees, for enterprises whose PACT grant was

cancelled.

3. Grant Recipient enterprises were able to convert more employees from part-time to full-time employment.

One important caveat that surrounds the Impact Evaluation is that the timing of the endline survey was entirely based


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on the closing date of PACT. A substantial proportion of grant recipients only received their second/final installments

a few weeks before or after they were surveyed. For this reason, the positive results in this report could be an

underestimation of the impacts of Call 4 – since the cash inflow was likely not fully internalized and put to productive

use in this short time-period. Alternatively, if enterprises falter after the initial infusion of capital from the matching

grants are exhausted, the results in this report could represent an overstatement of the longer-term impacts of the

grants. This report cannot speak to the medium-run effects of the program, let alone its long-term sustainability. Only

follow up with these very same enterprises after several months or years would reveal how PACT has affected and

transformed long-term outcomes.

Conclusion and Next Steps

Overall, there are a range of indicators across which PACT’s Grant Recipients outperform Non-Grant Recipients on

average. However, these comparisons need to be interpreted carefully. In order to understand the causal impact of

PACT’s Call 4 matching grants, the Impact Evaluation team employed a regression discontinuity – leveraging

enterprises rankings to compare Grant Recipients that were just above the passing score and Non-Grant Recipients

that were just below the score. This analysis concludes large and positive effects on enterprises’ likelihood of taking a

loan and increased annual profits can be attributed to receiving matching grants from PACT.

There are several further avenues for investigation – some that would require more data, and others that can be

carried out with the existing baseline and endline data; combined with existing (but not yet digitized) administrative

and project data.

One clear limitation of this analysis is that endline data was collected only a few weeks before or after second/final

installments had been given to Grant Recipients. One could make the case that enterprises require more time to be

able to put their capital infusion to work and that the time horizon before full program effects could be seen is longer

than the period covered by the survey. Follow up data collection with the 600 enterprises in March 2019 or later could

reveal these medium-run effects, and potentially address questions surrounding long-term sustainability


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ANNEX 9: PACT TIMELINE AND KEY MILESTONES

Project Year 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Project Effectiveness / Project Closure Nov.2009 June 2018

Technical Support Group at Project Office TSG: Dec 2010 - June 2015 Individual Consultants

TA-Service Provider: Sept 2016 - June 2018 Technical Support Groups in the Regions R-TSG: July 2011 - June 2015

Call for Proposals (Matching Grants)

Call 1 (launch – closing) Jan 2010 June 2015

Call 2 (launch – closing) July 2010 June 2015

Call 3 (launch – closing) Oct 2011 Mar 2018

Call 4 (Value chain integration) (launch – closing) Sept 2013 Mar 2018

Call 5 (Micro grants) (launch – closing) June 2014 June 2017

Call 6 (IPM grants) (launch – closing) June 2015 June 2016

Value Chain Studies & Development Plans

Dairy Value Chain Status FWR Aug 2012

Ginger Value Chain Status MWR Aug 2012

VCDP Cereal seeds Aug 2012

VCDP Organic coffee Aug 2012

VCDP Rainbow trout fish Nov 2013

VCDP Tomato Oct 2014

VCDP Floriculture Oct 2014

Value Chain Study Red Meat CR May 2016

Other Publications

Roadmap of Organic Agricultural Development 2017

Training Manual on Organic Farming 2017

Value Chain Roundtables

VCRT Coffee Jan 2015

VCRT Organic Aug 2016

VCRT Ginger Jan 2017

VCRT Meat and meat products April 2017


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VCRT Cardamom May 2017

VCRT Vegetable June 2017

VCRT Cut-flower Feb 2016

VCRT Dairy Sept 2015 July 2017

Intensive Training for PACT Grantees

Cluster Level Interaction Workshops 2018

Business & Financial Mgmt. Training 2018

On-site coaching 2018

Exposure visits 2018

Nepal Agribusiness Centre

International Agribusiness Workshop KTM April 2012

NABIC Feasibility study 2012/13

NABIC Contract signing Dec 2016

NABIC Contract period Jan 2017 June 2018

External Factors Influencing Implementation

Earthquake Apr 2015

Economic embargo at Indian border (9 mth from) Sept 2015

Signing of Major Construction Contracts

Kalimati Fruit and Vegetable Market, Kalimati, Kathmandu (rehabilitation)

Dec 2013 Finished

Fruit & Flower Wholesale Market, Chovar, Kathmandu

Sep 2016 Not

finished

Vegetable & Fruit Wholesale Market, Katahari, Morang

Aug 2016 Not

finished

Vegetable & Fruit Wholesale Market, Butwal, Rupendehi

Aug 2016 Not

finished

Livestock & Poultry Market, Damak, Jhapa

Aug 2016 Not

finished

Livestock & Poultry Market, Mahendranagar-5, Dhanusha

Aug 2016 Not

finished

Fumigation Chamber & Post Quarantine Facility, Kirtipur

Feb 2016 Not

finished


Page 84 of 85

ANNEX 10: VALUE CHAINS SUPPORTED THROUGH MATCHING GRANT SCHEME

* Source: Monitoring and Information System, PACT

VALUE_CHAIN No of SPs

Vegetable 320

Meat Animal Promotion 216

Milk Processing 74

Meat & Meat Products 65

Milk Animal Promotion 65

Dairy 58

Fish 48

Cardamom 46

Cereal Seeds 40

Poultry 38

Potato 28

Kiwi 27

Ginger 25

Coffee 22

Honey 20

Floriculture 16

Meat Processing 14

Akabare 13

Onion 9

Potato Seed 8

Banana 7

Citrus 7

Animal Feeds 6

Lentil 6

Fish-Fingerlings 5

Fruits 5

Mushroom 5

Apple 4

Forage & Fodder 4

Orange 4

Rainbow Trout Fish 3

Underutilized Indigenous Food 3

Herbs 2

Papaya 2

Rape Seed 2

Turmeric 2

Beans 1

Garlic 1

Hides and skins 1

Sunflower 1

Total 1223

Documents

Implementation Completion and Results Report (ICR) Document · 2019. 3. 13. · 02 26-May-2010 SatisfactorySatisfactory 1.28 03 28-Dec-2010 Satisfactory Satisfactory 1.58 04 09-Jun-2011