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Document ofThe World Bank
FOR OFFICIAL USE ONLY
Report No: 20647
IMPLEMENTATION COMPLETION REPORT(26800; 21558)
ONA
CREDIT
IN THE AMOUNT OF SDR 4.1 MILLION (US$6.0 MILLION EQUIVALENT)
TO
ALBANIA
FOR AN RURAL DEVELOPMENT PROJECT
JUNE 27, 2000
Albania Country UnitEnvironmentally and Socially Sustainable Development UnitEurope and Central Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of their|official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective 11/99)
Currency Unit = LekLek 100 = USS 0.75
US$ 1.00 = Lek 134
FISCAL YEARJanuary I December 31
ABBREVIATIONS AND ACRONYMS
ADF Albanian Development FundASAC Agriculture Sector Adjustment CreditCAS Countiy Assistance StrategyEU European UnionGDP Gross Domestic Productha hectareIDA International Development AssociationIFAD International Fund for Agricultural DevelopmentIMF International Monetary FundMOF Ministry of FinanceMOP Memorandum of the PresidentNGO Non-Govenmmental OrganizationOED Operations Evaluation DepartnentO&M Operations and maintenancePY Project YearQAG Quality Assurance GroupRCB Rural Commercial BankRDP Rural Development ProjectRDF Rural Development FundRFF Rural Finance FundRPAPP Rural Poverty Alleviation Pilot ProjectSAR Staff Appraisal ReportSCA Savings and Credit AssociationUNDP United Nations Development ProgramVCC Village Credit CommitteeVCF Village Credit Fund
Vice President: Johannes LinnCountry Manager/Director: Arntraud Hartmann
Sector Manager/Director: Kevin CleaverTask Team Leader/Task Manager: Kathryn Funk
FOR OFFICIAL USE ONLY
AlbaniaRural Development Project
CONTENTS
Page No.1. Project Data 1
2. Principal Performance Ratings I
3. Assessment of Development Objective and Design, and of Quality at Entry 3
4. Achievement of Objective and Outputs 5
5. Major Factors Affecting Implementation and Outcome 126. Sustainability 15
7. Bank and Borrower Performance 168. Lessons Leamed 179. Partner Comments 1910. Additional Infornation 19Annex 1. Key Performnance Indicators/Log Frame Matrix 26Annex 2. Project Costs and Financing 27
Annex 3. Economic Costs and Benefits 29Annex 4. Bank Inputs 30Annex 5. Ratings for Achievement of Objectives/Outputs of Components 32Annex 6. Ratings of Bank and Borrower Performance 33Annex 7. List of Supporting Documents 34.Annex 8. Beneficiary Survey Results 35
Annex 9. Stakeholder Workshop Results 42
This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not be otherwise disclosed withoutWorld Bank authorization.
Proj,ect ID: P008273 Project Name: ALBANIA RURALDEVELOPMENT PROJECT
Team Leader: Mark C. Woodward TL Unit: ECSSD
ICR Type: Intensive Learning Model (ILM) of ICR Report Date: June 22, 2000
1. Project Data
Name: ALBANIA RURAL DEVELOPMENT PROJECT L/C/TFNuimber: 26800; 21558CountrylDepartment: ALBANIA Region: Europe and Central
Asia Region
Sector/subsector: AC - Agricultural Credit; AG - Agency Reform; AM- Agro-Industry & Marketing; AY - OtherAgriculture
KEY DATESOriginal Revised/Actual
PCD: 01/21/94 Effective: 05/23/95 05/23/95
Appraisal: 06/16/95 MTR: 11/14/96 11/14/96
Approval: 02/14/95 Closing: 06/30/99 12/31/99
Borrower/lImplementing Agency: REPUBLIC OF ALBANIA/ALBANIAN DEVELOPMENT FUND
Other Partners:
STAFF Current At AppraisalVice President: Johannes Linn Wilfried Thalwitz
Country Manager: Arntraud Hartmann Kermal Dervis, Department Director
Sector Manager: Alexandre Marc Rory O'Sullivan, Divsion Chief
Team Leader at ICR: Mark Woodward Maria Nowak
ICR Primary Author: Gillian M. Perkins
2. Principal Performance Ratings
(HS:=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=HighlyUnlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)
Outcome: S
Sustainability: L
Institutional Development Impact: H
Bank Performance: S
Borrowver Performance: S
QAG (if available) ICRQuality at Entry: HS S
Project at Risk at Any Time: No
3. Assessment of Development Objective and Design, and of Quality at Entry
3.1 Original Objective:
Context. The objectives and the design of the Rural Development Project (RDP) need to be assessed in the
context of (i) the exceptional economic, political and institutional conditions prevailing in Albania and (ii)
the process of program development of which the RDP has formed part. When the government initiated itsRural Poverty Alleviation Program in 1992, the Albanian economy was in deep crisis-the centrallyplanned system had entirely collapsed and nothing yet existed to take its place. Rural infrastructure, alreadypoor, had seriously deteriorated through lack of maintenance, damage during the unrest in 1990, and byscavenging of materials for private use. Albania's newly created small farms, averaging only 0.7 ha perfamily in hilly and mountainous areas, lacked capital, credit, inputs, and basic tools, and there werepractically no rnarkets. The result was critical rural poverty and almost total dependence on food aid andother assistance. In response to these crisis conditions, the Rural Poverty Alleviation Pilot Project (Cr.2461 -ALB) was processed quickly under streamlined procedures, with pre-pilot activities largelysubstituting for traditional project preparation and appraisal. This pre-pilot phase was the first of a 4-phaseProgram:
Phase 1: Pre-pilot phase (August 1922-April 1993). Funding from the UNDP (US$200,000) and fromFreres d'Esperance ($20,000) was used to finance the first village and farm surveys and to testorganizational approaches for ten rural works projects and seven village credit funds.
Phase 2: Pilot phase (April 1993-June 1995). The Rural Poverty Alleviation Pilot Project was financedby IDA, EU-PEIARE, an Italian grant and a French grant, for a total of US$7.5 million. Adopting alearning-by-doing, participatory approach, the project set up an autonomous implementing agency, theRural Development Fund, which was remarkably effective in directly impacting rural areas, channelingfunds quickly to small projects, and delivering credit to small farmers and micro-entrepreneurs throughvillage credit funds.
Phase 3: Full-scale rural project andpilot urban project (May 1995-December 1999). The RuralDevelopment Project used IDA, EU, Italian, Swiss, and French funding, totaling US$ 12 million, to extendthe rural works and microcredit activities. At this stage, the implementing agency was trans.^ormed into theAlbanian Development Fund (ADF), and the works and micro-credit approaches were piloted in urbanareas, under the Urban Works and Microenterprise Pilot Project. During the last year of the RDP,implementation of the microcredit functions was separated from the ADF into specialized financialentities-the Rural Finance Fund for rural credit and the Besa Foundation for urban credit.
Phase 4: Follow-on projects (effective in mid- 1999). Based on the separation of the works and creditfunctions, two new projects are now being implemented, the Community Works Project and the MicrocreditProject, each covering both rural and urban areas.
This program approach made it possible to incorporate lessons from each phase in the next, and to continueadjusting operations to changing realities in Albania. The Rural Development Project-the subject of thisICR-covered the difficult phase of transition from an innovative, highly participatory pilot, drawing onexceptional capability and personal commitment of a few key individuals, to large scale implementationwith formalized institutions for sustained operation.
The original objectives of the Rural Development Project (RDP), as stated in the Staff Appraisal Report,were to:
* promote small farm and off-farm activities and help create a rural market economy;* repair basic rural infrastructure; and* create employment for the rural population and inject cash resources into rural households.
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These objectives were essentially the same as those of the preceding Rural Poverty Alleviation PilotProject. Sub-objectives were identified in the SAR for each of the two major components. For the ruralworks component, specific objectives were to:
* rehabilitate and improve small rural infrastructure that is indispensable foreconomic activity or for the well-being of village inhabitants;
* provide employment in rural areas; and* help local authorities develop the necessary skills to foster local development.
Specific objectives of the small-scale credit component were to:
* extend activities under the Village Credit Fund system that was started under the Rural PovertyAlleviation Project, using project resources and the revolving funds generated from the pilot phase;
* prepare for the creation of a sustainable financial institution based on a Raiffeisen-type[savings and credit] system with a special opening to poor farmers.
These objectives reflected essential priorities for rural development in Albania at that time, as identifiedboth by the governnent and by the Bank's Country Assistance Strategy. They were consistent withgovernment strategy for rebuilding the rural economy, through active poverty alleviation, restoring foodsecurity, and promoting the small private sector. They also reflected the priorities identified in the Bank'sCountry Assistance Strategy, which called for "a flexible strategy that responds quickly to new inforrnationwhile maintaining an overall framework that promotes (i) stability and (ii) new entrepreneurship andprivate initiative." Of particular importance in the circumstances, the objectives were realistic in terms of(i) demonstrated capacity of the implementing agency and (ii) the extreme political and institutionalconstraints and related project risks.
The objectives were necessarily quite general, to allow flexibility in response to changing constraints andopportunities. However, more clarification of the objectives could have highlighted from the outset thepotential trade-offs within limited implementing capacity, in particular between the outreach objectives forpoverty alleviation and the speed of changing and formalizing the institutional framework.
3.2 Revised Objective:No formal revision of objectives was required during the course of project implementation because theoriginal objectives were stated in quite general terns. Nevertheless, some shift in emphasis was apparent inimplementation of the microcredit component, from poverty outreach objectives to rapid institutionalchange for financial sustainability.
3.3 Original Components:To support the above objectives, the project would finance the following components:
A. Rural works (base costs US$5 million = 45%). Organize, finance, and help to carry outapproximately 190 rural works that rehabilitate small infrastructure.
B. Small-scale credit (base costs US$4.3 million = 38%). Establish and fund approximately 135village credit funds to extend the existing village credit fund network and provide small loans to more than9,000 farmers and rural microentrepreneurs for income-generating activity.
C. Promotion of rural activities (base costs US$0.4 million = 4%). In coordination with villagecredit funds, provide business and technical advice to approximately 600 rural microentrepreneurs, and
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promote and support the establishment of village animal health associations to improve prophylaxis.
D. Studies and local government training (base costs US$0.2 million = 2%). Finance beneficiaryassessment studies to evaluate project impact and help guide components. Organize training and studytours to equip local government with the skills necessary for promoting local development in rural areas.
E. Implementation support (base costs US$1.3 million = 11%). Finance related equipment andoperational costs of the Albanian Development Fund (ADF).
3.4 Revised Comnponents:There was no major revision of components but some adjustments were needed, primarily because of theextra work involved in protecting core activities through the 1997 civil crisis:
- The small component for promotion of rural activities was not fully implemented. The plannedmicro-business advisory service (provision of US$130,000) and the marketing and technical research(provision of US$83,000) were considered not to be urgent priorities as the majority of loans were tosubsistence farmers, most investments were not complex, and ADF's credit officers were able to providethe necessary advice. In addition, ADF lacked the capacity to handle significant supplementary activities,because of the efforts needed to sustain the performance of village credit funds through the build up andcollapse in 1997 of the pyramid schemes. Activities under this component were confined to veterinaryassistance to support livestock investments.
- Systematic training and study tours (for which US$50,000 was originally allocated) were notimplemented for local government staff, mainly because of high turnover of these staff following the 1996local elections, and the growing instability that culminated in the 1997 civil crisis. Nevertheless, as ADFprovided substantial hands-on training during sub-project implementation, the institutional developmentimpact did not depend on this small sub-component for formal training.
- The balance of funding between the works and microcredit components shifted in favor of works: fundingto the credit component amounted to just over 20% of total expenditure under the project, compared with38% originally envisaged. Project staff suggested this was due to the greater stress imposed on creditactivities by the pyramid schemes and the 1997 crisis; however, annual data suggest that the rural worksactivities were more strongly affected at this time than the credit It does seem, however, that the Kosovocrisis caused microcredit activities to be frozen in a few districts during the last year of the project. Afurther explanation for the slower disbursement under the credit component is that the capacity of creditstaff was stretched by the demands of institutional changes, including separating the credit function fromthe ADF, and preparing the basis for Savings and Credit Associations. However, since both componentssubstantially achieved their output objectives, the original costings may not have been realistic.
3.5 Quality at Entry:Quality at Entry is rated satisfactory, based on the strength of (i) consistency of objectives with thepriorities for rural development and poverty alleviation, (ii) successful experience and lessons learned underthe pilot project, (iii) demonstrated capacity of the implementing agency, and (iv) project design, whichaccounted for institutional constraints and risks by incorporating flexibility and by fostering ownership atthe community level. A QAG assessment carried out in September, 1996, rated Quality at Entry as BestPractice, citing the strength of government ownership, the capacity of the implementing agency, and theclear focus of benefits on the poor in rural areas. Project fornmulation was considered to be a model forpreparation of village-based development programs in country conditions of transition, crisis, or rapidsocial change. The SAR documented the project and its background particularly well while the MOP
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accurately assessed potential political developments which could contribute to project risks. However, withthe benefit of hindsight, one important shortcoming was the lack of agreed monitoring indicators: agreementon a formal set of performance indicators was not a Bank requirement at the time the project was prepared.Potential trade-offs between objectives were not explicitly identified. In addition, project design should haveincorporated more emphasis on financial transparency in management of the credit component.
The project was consistent with the Bank's Country Assistance Strategy for Albania, which was discussedby the Board in August 1993, and which called for "a flexible strategy that responds quickly to newinformation while maintaining an overall framework that promotes (i) stability and (ii) newentrepreneurship and private initiative." The rural works component aimed to assist private enterprisedevelopment and also to enhance stability by providing immediate and visible results. The small scale creditcomponent was designed to develop new entrepreneurship and private initiative. The project's bottom-upmethodology complemented other IDA-financed projects in Albania that supported structural change at thenational level or major infrastructural needs.
4. Achievement of Objective and Outputs
4.1 Outcome/achievement of objective:Achievement of objectives and outputs under the RDP was satisfactory. Considering the degree ofeconomic, political and civil instability during the first two years of project implementation (see 5.1), andthe challenges inherent in scaling up participatory operations and establishing formal institutions forsustained operation, the achievements of the project have been remarkable. Output targets for both ruralworks and microcredit were substantially met, although over a somewhat longer time frame (4.5 years)than the 3 years originally envisaged. In addition, the transition to a legally endorsed institutionalframework for continued operation was accomplished. The most significant shortcoming was weakness inensuring sustainability of the benefits of the rural works sub-projects, through community participation,and through systematic definition, monitoring and follow up of O&M arrangements.
Assessment is slightly hindered by the lack of clear prioritization of objectives or specification ofperformance indicators in the SAR. Priorities were influenced to some extent by changing constraints andopportunities during the course of project implementation-consistent with the essentially flexible characterof the project. The potential trade-offs were not always identified explicitly. In the case of rural works,there was an implicit trade-off for example between the objective of improving stability-throughimmediate and visible results from maximizing the number and geographical distribution of infrastructuresub-projects-and the longer term benefits of more intensive work at the village level to ensure sustainableoperation of the infrastructure. Building community ownership of sub-projects, and securing commitmentto workable plans for future operation and maintenance, would have taken significant staff resources and insome cases delayed sub-project implementation. Without key monitoring indicators to focus attention onthese processes, the pressure to meet physical output targets prevailed.
The impact and sustainability of works sub-projects might have been enhanced by coordination withvillage-level capacity building activities under the credit program. However, potential synergies between thetwo programs were not fully exploited, partly because communities themselves felt that the benefits fromthe project as a whole should be spread to as many villages as possible. The project did target Italian grantfunds to some of the poorest villages that had Village Credit Funds; and the success of these effortssuggested that, with more coordination between the two main components, project impact might have beeneven greater than it was.
A different emphasis prevailed within the microcredit component. The trade-off was apparent here between
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the poverty outreach objective, "injecting cash resources into rural households,"-through extending theproven mechanism of Village Credit Funds (VCFs) to as many villages as possible-and the demands ofinstitution4l change to achieve financial sustainability. This trade-off was highlighted in 1996 by the QAGQuality at Entry mission, when it was clear that the institutional changes were absorbing a large share ofstaff resources. The mission recommended putting the focus on expansion of the uniquely successfulexisting VCF program, which was still too small to make a significant nationwide impact on poverty, andcautioned against driving too hard for rapid institutional change. Nevertheless, the focus in implementationremained on the institutional transformation, and hence on strengthening existing VCFs in the mosteconomically viable villages, in preparation for their transformation to Savings and Credit Associations(SCAs). This was in large part a response to the demand (confirmed through beneficiary assessments) formore and larger loans from existing VCF clients, when the only altemative source of rural credit (thestate-owned Rural Commercial Bank) ceased operations. At the same time, it became clear that the relativelack of investment opportunities in remote mountainous villages constrained the potential impact of themicrocredit program and the demand for loans at market interest rates in the poorest communities.
A choice was presented between (i) focusing on the poverty alleviation objective, expanding the benefits ofthe VCFs to more districts, and accepting that continuing dependence on subsidies would deter efficiencyand long term sustainability, and (ii) intensifying activities in the economically strongest regions, in order totransform VCFs rapidly into private, financially sustainable institutions (SCAs). The latter course wasfavored, and has been endorsed in the follow-on Microcredit Project which does not include the creation ofany new VCFs. The point here is not to make a judgement on this decision. The proposed transfomnation ofVCFs to SCAs presents a unique opportunity to create a sustainable rural credit system in Albania, whenvirtually no altemative financial institutions exist in the country. It is not clear, however, that the costs-inforegoing the potential poverty alleviation (and village-level capacity-building) impact of further expansionof the VCF network-were fully examined. A possible middle course would have been to continueexpanding the VCF network, making any grant element explicit in loans to borrowers in the poorestvillages, while using a slower, bottom-up approach to piloting the savings function in a few strong VCFs.The basic problem that was identified-the need for financial transparency and efficiency incentives inmanaging the credit program-could have been addressed independently of the rate of transition to an SCAnetwork.
4.2 Outtputs by comnponents:A. Rural Works
Outputs
Under the project, the ADF financed a total of 173 sub-projects for rehabilitation of rural infrastructure,against an original target of 190; the target would have been exceeded but for the sharp decline inimplementation during the political crisis in 1997. Geographical distribution of sub-projects was moreextensive than originally envisaged, covering 30 (instead of 13) of the country's 36 Districts, and almosthalf the country's 318 Commnunes. The number of beneficiaries in communities with RDP sub-projects isestimated at 530,000 people. Total costs of the component amounted to over US$6 million, compared withthe initial base cost estimate of US$5 million.
Priorities for sub-projects were decided at the Commune level, in principle on the basis of proposalssubmitted by villages, through village meetings. (In practice, the amount of village consultation variedgreatly between Conmnunes.) The Communes submitted lists of priority projects for evaluation by ADFaccording to technical, environmental, economic and financial criteria. The ceiling value for eachsub-project was originally set at $40,000 and later increased to $50,000. Benefiting communities were
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commnitted to contribute 5% of the cost of the works as well as a fund to cover the first two years ofmaintenance. Sub-projects were to be simple and easily implementable, and to maximize labor-intensivetechniques. Once a sub-project was selected, ADF's role was to organize, finance, and help the Comnmunecarry out the work either through direct hire of labor (for 21 of the sub-projects implemented in 1995) orthough contractors selected through competitive bidding.
Selected sub-projects included repair to roads and bridges, irrigation, water supply, schools and healthcenters. Road repair proved to be a particularly high priority, accounting for 55% of projects, 66% ofcosts, and a total of 305 km. This was followed by water supply and irrigation.
Rural infrastructure rehabilitation sub-projects
Roads Water Irrigation School/ health Bridge/ Others Totalcent. Footbridge
1995 27 15 18 2 2 1 651996 30 11 2 3 2 1 491997 3 1 3 0 0 3 101998 27 4 1 1 1 0 341999 9 3 1 1 0 1 15Total 96 34 25 7 5 6 173% of no. 55.5 19.6 14.5 4.0 2.9 3.5 100% of costs 66.0 15.5 9.6 2.8 3.5 2.6 100Av. Cost/ sub-project('000 Lek) 5560 3707 3116 3171 5636 3575 4680
The ADF has been most effective in technical supervision of construction and in control of costs. Thequality of most of the construction work is judged to be high, and unit costs low, by current standards inthe country. Average project costs increased in real termns during the period due to increases in unit costsand also in the scale/scope of sub-projects. Implementation was less effective with respect to strictapplication of procedures/criteria for sub-project selection and for conmmunity participation. Payment of the5% community contribution has not been made for about one third of sub-projects. Maintenance fundswere set up for almost 90% of projects, but in many cases have not been operated effectively.
Impact
The direct employment impact of the construction work was estimated at a total of about 520,000 mandays (compared with the SAR estimate of 550,000). At the beginning of the RDP, most construction workused direct hire of labor by the Communes. With rapid increase in the number of private contractors in thecountry, it soon became possible to use competitively selected contractors. As a result, although laborintensity tended to decline somewhat during the project period, particularly for residents of the beneficiaryvillage concerned, construction standards and schedules improved and the project was able to have animportant impact in building the capacity and skills of private contractors-- in competitive bidding as wellas construction technology.
Assessments carried out in 1998 and 2000 indicate quite a high level of overall satisfaction of beneficiariesconcerning selection of projects and quality of work, and cite increases in trade, economic activity,agricultural production, and access to employment, as the most significant benefits. Other reported benefitsincluded improvements in the quality of rural life and restoring a sense of village community. The
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assessments also make clear, however, that the extent to which villagers were consulted, or even informed,about project priorities and design was small and varied greatly between Communes. When villagemeetings were held, women tended to be absent. In the minority of villages where the sub-project was seennot to have substantial benefits, this was related either to lack of local consultation on exactly what wasneeded, and/or to the failure of arrangements for operation and maintenance. Although there is someevidence of improvement during the last year of the project, the main issue is therefore for the sustainabilityof benefits (see 6.1).
This component had a significant capacity building impact at the Commune level, as well as in building thecapacity of private contractors (see 4.5).
B. Small Scale Credit
Outpults
For the microcredit program, the RDP built on the methodology that had already been tested and provenextraordinarily successful in the pilot phase. This was based on ownership and management at the villagelevel. Village Credit Funds (VCFs)--revolving fund accounts--were managed by elected Village CreditCommnittees (VCCs), of which an ADF representative was an ex-officio member. The VCCs themselvesdecided on credit allocations, defined collateral, and controlled the repayment of loans. ADF credit officersprovided intensive support to VCCs, and information and advice to clients.
Expenditure under this component amounted to about half the US$4.3 million base cost estimated at projectappraisal. Nevertheless, rapid growth was sustained in the volume of loans disbursed: during the course ofthe project, the annual volume tripled to reach almost US$2 million in 1999. The network of Village CreditFunds (VCFs) was extended to 116 more villages, just short of the SAR target of 135. The number of loansdisbursed reached the target of 12,000, despite an increase of in the average size of loans. The maximumindividual loan amount was increased in response to demand-from US$500 (or exceptionally up toUS$ 1,000) at the start of the project, to US$2,000 (exceptionally up to US$5,000) at project completion.The maximum loan duration was three years and many loans were repaid early. Most remarkably, thissteady expansion survived the pressures and then crisis of the pyramid schemes in Albania in 1996-97, andwith no significant impact on near-perfect loan repayment performance.
Growth of the credit program under the RDP was concentrated primarily in Districts where ADF (laterRFF) was already active and Village Credit Funds (VCFs) had already been established, the strategy beingto intensify the network within these Districts. At project completion, the RDP was supporting theoperation of 175 VCFs in seven of the country's 36 Districts. With the exception of Puke, these were thesame Districts as had been reached under the preceding Rural Poverty Alleviation Program. The RFF wasconcurrently supporting a further 60 VCFs under an IFAD funded project in two north-east Districts. Datain the following table are for the program as a whole. Portfolio quality was sustained at a high level, withrepayments rates exceeding 99 percent throughout the project (while the major state-owned banks hadcollection rates below 50 percent).
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Performance of Rural Microcredit Program
End 1996 End 1997 End 1998 End 1999No. of Village Credit Funds 170 192 221 238
Balance of Loans Outstanding (US$ equiv. $2.3 m. S2.1 m. S3.0 m. $3.8 m.
No. of active loans 6,859 8,634 9,255 8,269
Average loan outstanding (US$ equiv.) $338 $234 $322 $463
Effective interest rate 10% 10% or 20% 18% or 24% 18% or 24%
Inflation (during period) 17% 42% 0.9% -0.6%Real effective interest rate -6% -23% or -15% 17% or23% 18% or24%
Delinquency rate* 0% 0.3% 0.5% 0.3
Portfolio at risk** 0 0.4% 1.0% 0.5%
*Delinquency rate: amount of payments more than 30 days overdue / total outstanding balance of loan portfolio** Portfolio at risk: total outstanding balance of loans with payments more than 1 day overdue / total outstandingbalance of loan portfolio
Interest rates paid by borrowers under the RDP were positive in real terms, except for a period in 1996 and1997. Under the Rural Poverty Alleviation Pilot Project, from 1992, loans were indexed to the US dollarplus 6 percent. Villagers were comfortable with the dollar index because they considered it transparent andindisputable. However, unexpected stability of the lek during 1993 and 1994 resulted in farmers effectivelypaying very low interest (substantially negative if measured in constant lek). In early 1995, the RDP madea successful transition to a lek-based interest rate, set initially at 10 percent, with expectations that it wouldbe periodically adjusted. Rising inflation in 1996, as the macroeconomic situation deteriorated, resulted innegative interest rates. Given the participatory nature of the VCF system, and because there was noautomatic interest rate adjustment mechanism, ADF could not easily raise interest rates by taking unilateralaction. ADF was preparing an awareness raising campaign for all VCC members, in order to reachagreement on a market based rate and adjustment mechanisms, when civil crisis erupted in Albania early1997. In the circumstances, pursuing the campaign to raise interest rates could have jeopardized therepayment discipline that had been established, and ADF opted to focus on loan repayment during thecrisis. At the end of 1997, after an information campaign with the VCFs, the interest rate was increased to18 percent in mountain villages and 24 percent in hilly and plains villages, to allow for the lower rates ofreturn for economic activities in mountain districts and deteriorating rural termns of trade during times ofinflation. This dual interest rate policy is being eliminated under the new Microcredit Project, which willapply market interest rates for all loans.
The exact rate of subsidy implied in the VCF program until now is not clear because management andadministration was not separately accounted until mid 1999, when the ADF's credit department wastransformed into the RFF. In addition, much of the time of credit officers was devoted to building villagelevel capacity - for social and civic development as well as credit management. More attention duringproject implementation to financial analysis -- including estimating financial rates of return to typicalinvestments in remote and in more accessible regions -- could have helped to clarify the potential forsustainability and expansion of the VCF network.
Design of the credit component was based on the perception that, so long as the VCF program wasdependent on subsidies and managed by a govenmment foundation with soft budget constraints, it wasvulnerable to increasing inefficiencies and political influence. A stated objective of the project was toprepare for the creation of a network of sustainable private financial institutions--village Savings and
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Credit Associations (SCAs). Against considerable difficulties, this has been achieved. The necessary legaland institutional framework was established under the RDP, including separation of the credit departmentfrom the ADF and its establishment as quasi-government foundation, the Rural Finance Fund (RFF). Underthe Microcredit Project now being implemented, the RFF will support the development of a network ofSCAs. It will continue to support existing VCFs, and their conversion to SCAs, but will not create any newVCFs.
Impact
The impact of this component was to intensify operations in Districts where the credit program was alreadyestablished, responding to the strong demand from existing clients for expansion of credit services. Theemphasis was on strengthening VCFs in these Districts, in preparation for their transition to SCAs, ratherthan extending the geographical outreach of the VCF network.
According to beneficiary assessments caried out in 1998 and 2000, the program has had an importantimpact on improving nutrition (in the poorest regions), developing farm and off-farm activity, andpromoting entrepreneurship and economic responsibility in the villages served. More than 80% ofrespondents believed that the VCF had had a positive impact on the village - on social solidarity and civicdevelopment as well as economic activity. Simple procedures and fast disbursement were cited assignificant advantages of VCF loans. Perceptions of VCCs and their role were highly positive. Mostrespondents did not want to change loan procedures, but a substantial minority wanted access to largerloans. This interest in larger loans matches the progressive diversification of investments since the programbegan; the share used for livestock investments has decreased from 97% in 1993 to just over 50% now.Demand has grown for larger loans to finance profit-making activities such as vegetable greenhouses,trade, handicrafts, and agricultural mechanics. Both assessments, in 1998 and 2000, also found a strongdemand for more information and advice on rural investment opportunities.
The credit allocation criteria used by VCCs appear to be fair and approved within the community.Applicants are liable to be disqualified if they are wealthy (considered not to be in need) or have a badcharacter reputation; otherwise, they are judged on the merit of the proposal. Although women borrowershave accounted for less than 10 percent of VCF clients to date, it is known that they play an important rolein household decisions on borrowing. Formal participation of women has been promoted by encouragingjoint husband-wife contracts, as well as credits to female heads of households, women whose husbands areabsent, and women who are setting up their own productive enterprises, independent of their husbands.VCCs have reportedly found women to be more reliable and conscientious borrowers and therefore tend tofavor them, especially for repeat loans.
It could be argued that the original objectives of the RDP might have been better served by less rapidprogress towards financial sustainability of the village credit institutions and a stronger focus on expandingthe network of VCFs to reach more of the rural population. It is possible that if a clear mechanism forinterest rate adjustment had been established from the beginning of the RDP, the negative real interest rateseffective in 1996 and 1997 could have been avoided and the subsidy dependence reduced. Financialtransparency could have been achieved by establishing the credit department as a separate cost center andaccounting explicitly for subsidy dependence and for any grant element in loans in remote mountainousvillages. In so far as continuing subsidies would have been required, there is currently substantial donorinterest in supporting effective programs for poverty alleviation in Albania. It might also have been more inkeeping with the flexible, learning-by-doing, bottom-up approach of the program to pilot the new SCAs ona small scale before connitting to this transition. (The recent beneficiary assessment found considerable
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skepticism among villagers on the proposed new savings function, and little understanding of how SCAswould work.) On the other hand, especially if the original VCF methodology can be replicated successfullyby other agencies in Albania-as is planned under an IFAD-funded project for the poorest districts in thenortheast of the country-then the RDP may indeed prove to have made a greater overall impact byapplying the capacity and reputation of the RFF to a new function with potentially great long term benefitsfor rural development in Albania.
This component had high institutional development impact, in building capacity at the village level, and inestablishing the legal basis for VCFs, SCAs and for the Rural Finance Fund itself (see 4.5).
C. Promotion of rural activities
This component, intended to support the microcredit programn, was not implemented as planned, partlybecause the majority of investments until recently were very small ones for purchase of livestock, andpartly because of constraints in ADF capacity. Studies and active promotion of altemative rural investmentopportunities might possibly have encouraged more rapid diversification. The beneficiary assessmentsrevealed strong demand by villagers for relevant informnation and advice, suggesting that these activitieswill need high priority under the follow on project.
The project did finance veterinary support in the amount of about US$400,000 (through Italian and Swissco-financing). The project supplied prophylactic services through 77 veterinarians in 129 villages. It wascarried out in collaboration with the Ministry of Agriculture's veterinary service and with Village CreditCommittees, with the purpose of minimizing the risk of livestock investmnents. Other benefits includedincreasing awareness of farmning families on the need for prophylactic treatmnent of animals, increases infertility and milk production, and building the country's professional veterinary capacity. These activitieswill be continued through an NGO newly created for the purpose.
D. Studies and local government training
Studies included two beneficiary assessments, carried out in 1998 and 2000, to obtain feedback fromn thevillages on the impact of activities under the infrastructure and credit components. No formal training orstudy tours for local govermment staff was provided, mainly because of the frequent turnover of staff.However, substantial informal training was provided through ADF officers under the rural workscomponent in the process of construction design, procurement and supervision and it is felt that theinstitutional development impact at the Commune level was not significantly dimninished by the lack offormnal training.
E.. Implementation support
The project financed the project related equipment and operational costs of the ADF, as well as trainingand technical assistance for ADF finance and administration. This support enabled ADF to expandactivities successfully, including implementation of large scale projects for other donors, despite a period ofextremely difficult civil and political conditions. In this context, the few reservations are relatively minor~
(i) Accounting System - ADF used a financial accounting software "BILAN" designed by BamyInformatique Logiciels from Switzerland. This software and the financial consultant who assisted inthe implementation was paid from a Swiss Grant in 1993. Due to lack of local support for thissoftware, ADF became dependent on foreign consultants who continued to assist in the implementationof the software including year-end closing. Because of the lack of accounting software capacity in the
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country at the time of preparation, the Bank team considered this to be the best option; however, thiscapacity increased greatly during the course of project implementation.
(ii) Management Information System - Due to the limitation of the automated accounting software,the details of transactions at the sub-project level were maintained in Excel spreadsheets. Usage ofExcel spreadsheets should have been limited and macro driven if possible to reduce the time and errorin compiling reports. Installation of a fully automated management information system, integrating thefinancial accounting with subprojects monitoring, was planned under the project but as neverimplemented. This deficiency would have been less detrimental if separate cost centers had beenestablished for the main project components, permitting clear accounting of the level of subsidy in themicrocredit component.
(iii) Financial Manual - ADF did not have a financial manual detailing accounting and financialpolicies, (e.g., write-off policy), accounting procedures (e.g., year-end closing procedures) nor a users'manual for the accounting software. These would have reduced the dependence on foreign consultantsand allowed for staff rotation to build capacity in financial management.
4.3 Net Present Value/Economic rate of return:It was not possible to identify a priori the sub-projects to be financed either through the rural works orthrough microcredit investments. Therefore no attempt was made to estimate overall economic andfinancial rates of return to the project. The project was designed to finance simple and cost-effectiverehabilitation of rural infrastructure, with priorities identified by village communities. Unit costs weremonitored throughout the project and have compared favorably with those for similar works carried out byother agencies. Under the rural credit program, repayment rates of 100% were achieved, and interest ratespaid by borrowers were positive in real terms with the exception of a period during the 1996-1997 crisis.Virtually no other source of credit has existed for the rural population since 1996.
4.4 Financial rate of return:See above
4.5 Institutional development impact:The institutional development impact of the project is high. The microcredit program has been highlyeffective in strengthening village level institutions and social cohesion (recognized in the CAS ProgressReport). Working through Village Credit Committees and Village Development Committees, it has builtcapacity for civic and economic development, as well as credit management, in 175 villages. Anappropriate legal status has been established for sustainable, private, village Savings and CreditAssociations, as well as the Village Credit Funds. The rural works component has had most impact at thelocal government (Commune) level. Inexperienced Commune officials have gained knowledge and skills indesign, procurement, supervision and maintenance of small rural works, by working closely with ADF staffto implement sub-projects. The ADF has also helped to build the capacity of the private contractingindustry. Capacity of the central implementing agency has been enhanced under the project, firmlyestablishing the ADF as a specialized agency with unique capacity and reputation in the country formeeting local infrastructure needs. Transformation of ADF's credit department to form the Rural FinanceFund has created a new financial institution with experienced staff and unique capacity in the delivery ofmicrocredit.
5. Major Factors Affecting Implementation and Outcome
5.1 Factors outside the control of gover-nment or implemnenting agency:1997 Civil Crisis. The project implementation period was marked by enormous turmoil in Albania. 1996,
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the first year of project implementation, saw macroeconomic backsliding, increased political instability, and
the mushrooming of fraudulent pyramid schemes. The collapse of these schemes in late 1996 and early
1997 triggered massive civil unrest: arms were looted from military barracks, government buildings were
destroyed, banks were robbed and burned, and the government-which defacto lost control of most of the
country-was forced to resign. All mission travel to Albania was banned for two months, although close
contact was maintained with ADF staff, who focused on protecting ADF property and maintaining the
integrity of the microcredit program. During the worst of the crisis, microlending activities (disbursement
and repayment of loans), infrastructure works, and Bank disbursements to the project, were necessarily
suspended. Ten new sub-projects were started in 1997, compared with 49 in 1996. The credit program
suffered a temporary increase in loan delinquency but proved extraordinarily resilient in the circumstances.
Security gradually improved, and a new govemnment, elected in June 1997, quickly focused on restoring
macroeconomic stability and putting the country back on track for economic growth. Overall the impact of
the 1997 crisis was a significant but temporary setback in implementation of the rural works and
microcredit components, with a sharp decline in project disbursements, and a major strain on the capacity
of the ADF which was forced to concentrate resources on protecting its core activities at the expense of
conmplementary capacity building initiatives.
1999 Kosovo Crisis. Although this crisis had an inevitable impact in straining Albanian institutions, the
massive influx of refugees was managed admirably by the Albanian population and the government, while
the overall economic impact on Albania was negligible owing to generous extemal assistance and Albania's
prudent policies. There was a small impact on the RDP in its last year of implementation, and on the new
follow-on projects. Because of ADF's recognized capacity to respond quickly in meeting rural
infrastructure needs, a special Supplemental Credit to the new Community Works Project was quickly
negotiated and approved in response to the refugee crisis. The chaotic situation in the northeastern districts
made all work in this region temporarily more difficult. Microcredit activities under the RDP were briefly
frozen and repayment performance suffered slightly in these districts.
Donor coordination. Because of its demonstrated effectiveness, the ADF has attracted many donors.
Most donors have provided funding to be compatible with the IDA-financed projects-using the same
Manual of Procedures. However, the European Union selected the ADF to implement a large (over 20
million ECU) Local Communities Development Program (LDCP) using a separate set of infrastructureworks procedures for mainly medium and large infrastructure subprojects in rural and urban areas.
Together, the LCDP, the IDA-financed projects, and the IFAD-financed Northeastem Districts Rural
Development Project have enabled the ADF to carry out an extensive works program throughout Albania.
At the same time, the large scale of EU funding and the pressure for fast disbursement have strained the
ADF's institutional capacity, with some impact on the progress of the rural works component. Despite
efforts by ADF staff and consultants to harmonize-to the extent possible-IDA and EUJ procedures, the
slightly differing philosophies and procedures may be confusing for contractors, local govemment partners,
andl ADF's infrastructure engineers. The pressure on ADF to expand physical output targets under
sornewhat varying criteria and procedures has probably been an important factor in the relative weakness
of efforts to secure community participation in and ownership of RDP sub-projects, jeopardizing the
sustainability of sub-project benefits.
5.2 Factors generally suibject to government control:Sub-project selection. Some political interference in targeting of rural works sub-projects contributed to
ADF's lack of strict adherence to established selection criteria and appraisal procedures (see 7.5). The
imlpact on outcomes appears to have been small, however, in the context of the project as a whole.
5.3 Factors generally suibject to implementing agency control:
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Response to external crises. The flexibility, initiative, determination and extremely hard work of ADFstaff were instrumental in enabling the project to survive the political and civil crisis of 1996/1997, and torespond to the Kosovo crisis, with no long-term detriment to either of the main RDP components.
Information management. The ADF focused strongly on results on the ground, but gave insufficientpriority to managing information. Continuing delays in implementing an adequate management informationsystem, as provided in the project, led to inefficient use of staff time in managing information and weakenedthe quality of monitoring, evaluation and reporting. Inconsistent recording of sub-project information, andthe lack of linkage between data on sub-projects and the financial accounting system, has made reportingmore time-consuming than it needs to be and limited the scope for effective monitoring or analysis of costsand benefits.
Beneficiary participation. Failure to enforce consistently the requirements for beneficiary participationstipulated in the Manual of Procedures had some negative impact on selection and sustainability ofsub-projects. It is evident from the beneficiary assessments, nevertheless, that project selection closelymatched villagers' priorities in the great majority of cases.
5.4 Costs andfinancing:Costs. The project costs estimated at appraisal did not correspond to pre-identified investments, but ratherto programs that could be expanded or contracted according to demand and implementing capacity as wellas available finance. Actual total costs of the project are very close to those estimated at appraisal. Thebreakdown of costs between components and between disbursement categories was substantially revisedduring implementation, in response to the more rapid rate of expenditure under the rural works component.A shortfall of about US$2 million on the microcredit component was reallocated to rural works and to ADFoperating expenses.
Funding. Due to changes in the exchange rate between the SDR and the US dollar, IDA Credit fundsavailable to the project amounted to US$5.86 million, instead of the projected US$6 million. The impact ofthe project was greatly increased by co-financing, totaling US$5.2 million. This included: a grant ofUS$2.3 million from the Italian government, a large part of which was allocated to infrastructure worksand credit in the poorest villages; a grant of US$1.8 million from the Swiss government, focused on ruralworks and credit in the Puke District; a French grant of US$0.3 million for rural works and TA; and an EUgrant of US$0.8 million for rural works and TA. The agreed government contribution of US$1.2 millionwas not fully implemented and was not allocated to the originally agreed components (rnicrocredit and thepromotion of rural activities). Government funding to the RDP amounted to a total of US$0.5 millionequivalent for seven rural works subprojects. Community contributions were fulfilled in 60 percent ofcompleted works projects and amounted to US$0. 15 million equivalent.
Central Bank transfers. The government of Albania requires all Special Accounts to be established in theBank of Albania, which transfers project funds to a project-specific commercial bank account. However,throughout the project implementation period, there were substantial delays (of ten days or more) intransferring funds from the Bank of Albania to the ADF's account in the National Conimercial Bank,contributing to ADF's cash flow difficulties and slowing project implementation.
Taxes. Since the introduction of VAT in Albania in 1997, VAT has been paid under the project and hasnot been fully reimbursed by the government. The total amount owed to the RDP is estimated at more thanUS$400,000; an exact figure cannot be given because ADF's accounting system does not distinguishbetween donors for 1997. The recent practice is unacceptable on several counts: unpermitted use of Bankand trust funding to pay taxes in the first place; inadequacy of ADF's accounting and financial
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management system; and distortion of the funding allocation between disbursement categories when anygovernnent reimbursement to the ADF account for the RDP is allocated exclusively to fund additionalrural works sub-projects.
6. Sustainability
6.1 Rationalefor sustainabilitl rating:The emphasis placed on sustainability is a very strong feature of the project, and it is likely that the majorachievements generated by the project will be maintained. The distinction needs to be made, however,between (i) sustainability of the whole program, through securing the necessary institutional framework andcapacity for future operation and expansion of both works and microcredit delivery and (ii) sustainabilityof the benefits of rural works sub-projects, through their continuing operation and effective maintenance. Inthe former case, sustainability is highly likely. The legal basis of the ADF as an autonomous governmentfoundation, its unique capacity in Albania, and its reputation with the central and local government,beneficiary commnunities and donors, are all firmly established. For the microcredit program, high prioritywas given throughout project implementation to achieving separate status of the microcredit programthrough establishing the Rural Finance Fund (RFF) as a legal entity, and moving rapidly to financialsustainability of village-level credit institutions. Extremely effective relationships have been establishedbetween staff of the RFF and the village credit conmmittees, with ownership clearly at the village-level.Ownership and sustainability of the village level institutions for credit management was demonstratedbeyond any plausible expectations when they survived through the growth and collapse of the pyramidschemes with relatively little impact on their outstanding repayment performance. The decision to convertVillage Credit Funds (VCFs) to private Savings and Credit Associations (SCAs) was taken in order topromote long termn sustainability of the network by enabling the village-level institutions to becomeindependent of subsidies and political support. However, there may also be an element of risk in thetransition: since SCAs have not been piloted, it is not yet known how the transformation will affect factorsthat have been essential in the success of VCFs--including village solidarity, village-level decisions on loanallocations, and effectiveness of the supportive, relatively informal relations between RFF staff and VillageCredit Comnnittees.
A significant shortcoming concerns the sustainability of sub-projects financed under the RDP. It isestimated from project supervision reports that as many as half are already experiencing difficulties inoperations and maintenance, because of technical, institutional and/or financial constraints. Progressivedeterioration has been noted in the condition of most of the roads that were repaired under the project.Maintenance of water supply and irrigation works has presented particular problems because of lack of thenecessary social organization. Where operation is the responsibility of the line ministry - as for schools andhealth centers -- coordination has been lacking. Overall conditions in the country make this a very difficultchallenge. One of the aspects of rejection of the commnunist system in Albania has been a general reluctanceof the population to support collective projects or take active interest in the condition of public orcommunal property. At the same time, the new systems of private land ownership and of decentralization tolocal govemment are not yet fully established, so that ownership of property and responsibility formaintenance are legally uncertain in some cases. For these reasons, combined with low incomes and severegovernment budget constraints, the standard of infrastructure maintenance is very poor throughout thecountry. Some steps have been taken in the follow-on Community Works Project to address these issuesmore effectively in new sub-projects, and potentially also for projects completed under the RDP.Agreement between all concerned parties is proposed at the stage of sub-project appraisal, establishingdetailed plans for O&M, and ADF will carry out regular inspection and monitoring after projectcompletion, potentially including projects implemented under the RDP. Measures to strengthen communityparticipation, through social inspectors hired by ADF, are also expected to improve the sustainability of
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infrastructure works.
6.2 Transition arrange/71ent to regular operations.Under the follow-up Microcredit and Community Works Projects, the necessary arrangements are in placeto ensure the future operation of the rural works and micro-credit programs. The ICR StakeholderWorkshop revealed strong support from all levels of government, from donors, and from villagerepresentatives for continuation of both the programs.
The Rural Finance Fund has been established with separate legal status as a quasi-government foundation.The Microcredit Project focuses on achieving financial sustainability of village level credit institutions,making them ultimately independent of subsidy and the RFF. The separation of the microcredit programsfrom the ADF is enabling the ADF to focus on its mandate of local infrastructure improvement.
Under the Community Works Project new procedures are being implemented to increase the level ofstakeholder participation. Installation of a computerized management information system will increase theADF's capacity to manage a growing number of sub-projects and to ensure adequate monitoring andevaluation. Beneficiary assessments will be undertaken annually to obtain stakeholder feedback and assessproject impact.
7. Bank and Borrower Performance
Bank7.1 Lending:Sat. ifactory
7.2 Supervision:The Bank's intensive and high quality supervision effort, continuing the same hands-on approach as for thePoverty Alleviation Project, is rated as satisfactory.
Supervision would have benefited from stronger input for financial management, higher priority toenforcement of agreed procedures for sub-project selection and beneficiary participation, and to earlyimplementation of a good management information system. The ADF's weaknesses in these areas wereidentified as lessons from the pilot Rural Poverty Alleviation Project-and were accounted for in projectdesign-but not enough priority was given in supervision to ensure they were addressed. This is explained inlarge part by the pressures on Bank and ADF staff in (i) dealing with the impact of political and civil crisisin 1996-97, and (ii) the drive to accomplish the institutional changes needed for financial transparency andefficiency of the microcredit program.
7.3 Overall Bank performance:The overall satisfactory Bank performance owed a great deal to continuity of staff from the pre-pilot phasethrough almost the completion of the RDP, to the quality and personal motivation of these staff, theirproactive and non-bureaucratic approach, and strong relationships with Albanian counterparts. Now thatthe implementing agencies are experienced and fornalized, less intensive supervision may be appropriate.
Borrower7.4 Preparation:Satisfactory.
7.5 Government implementation performance:The direct role of the govermment during implementation was limited to counterpart funding, which was notfully implemented, and general support to the ADF. Although some level of political influence was
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arguably inevitable, political interference from government and members of parliament (e.g., ADF staffrecruitment without using competitive selection procedures, use of cars during elections, selection ofinfrastructure investments) has had a negative impact on ADF's institutional efficiency and performance inmeeting project objectives. Perfomnance is rated as marginally satisfactory.
7.6 Implementing Agency:Although the ADF suffered some management and administrative weaknesses (see 4.2 E), it hasnevertheless proved itself to be one of the most successful project institutions in the country. ADF eamedthe respect of IDA, cofinanciers and government for its effectiveness in delivering microcredit andimplementing infrastructure projects. From stakeholder assessments, it is clear that it has also established astrong reputation with local government (in the case of rural works) and at the village level (through themicrocredit program). Overall, the ADF's performance in implementing the RDP, under some very difficultcircumstances, was satisfactory.
7.7 Overall Borroiver performance:Satisfactory.
8. Lessons Learned
The success of the Rural Development Project in extremely difficult circumstances can be attributedprimarily to:
- The quality and personal commitment of staff, on both the Bank and Albanian sides, and the continuity ofmany of these staff from the early piloting stage;
- The strong drive for results, with hands-on involvement of the Bank team, and an intensive supervisioneffort;
- Flexibility in project design, ensuring that adjustments in implementation could be made quickly inresponse to new constraints or opportunities;
- The emphasis placed on creating the necessary institutional framework for sustainable operation.
In the context of the project's achievements, the shortcomings identified in this report are minor, and reflectthe difficulties inherent in scaling up and institutionalizing an innovative and participatory pilot program:
- The drive for rapid institutional change may tend to divert attention from other opportunities andobjectives, unless key performance indicators have been defined and are monitored closely. More attentioncould have been given in the RDP to potential synergies within the existing program and to addressingexplicitly the trade-offs in objectives:
(i) The trade-offs involved in the shift of objectives under the credit component-from rural povertyreduction (channeling resources to poor rural households) to rapid institutional development(developing sustainable financial institutions in the economically most viable villages)-could have beenaddressed more explicitly at project preparation and during implementation.
(ii) While emphasis was put on the process of separating the credit function from the ADF, potentialsynergies between the rural works and microcredit components may not have been fully exploited.Implementation of rural works, e.g., roads or irrigation, opens up new opportunities for private
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investment. At the same time, it was found that community participation in and support formaintenance of rural works sub-projects was greater in those villages which also had a Village CreditFund. ADF had exceptionally effective relationships at the villag leel, through the credit department,and at the Commune level, through the rural works staff. With more coordination within ADF, agreater impact might have been achieved in the relationship between villages and Communes.
- Adherence to consistent procedures, with efficient and transparent systems and practices for managinginformation and accounting, are not obvious priorities for an innovative project at the pilot stage. However,if these are not introduced before working habits become entrenched, this is liable to constrain the potentialof the implementing agency to expand activities and to reduce dependence on individuals and externaladvice. Higher priority should have been given at the start of the RDP, to strict adherence to theOperational Manual, and to strengthening record-keeping, financial and .r.magernrent intbrmafion systems,and intemal auditing.
Participatory credit delivery:
- Albania's rural microcredit program provides a model for credit delivery in conditions of extremeinstitutional weakness and civil instability. It has demonstrated that such programs can sustainextraordinary repayment perforrnance, even in very poor and remote villages, if ownership is rooted at thevillage level:
(i) borrowers have been involved in the design of the delivery mechanism,
(ii) delivery is piloted and adjusted to adapt to local conditions and traditions,
(iii) loan decisions are made at the village level, and
(iv) peer pressure substitutes for traditional collateral.
- A further important factor in the success of this program was the high quality and motivation of creditofficers and other staff of the credit department. Competitive recruitment criteria emphasized personalmotivation and initiative as well as professional background. The program could not have survived thecollapse of the pyramid schemes and the civil crisis in Albania without sheer deternination and extremelyhard work on the part of ADF staff.
- Focus is needed from the outset on financial transparency. If poverty alleviation or other objectivesjustify a grant element in the credit, this subsidy should be made explicit and efficiency incentivesprotected. Experience of the RDP demonstrated that these elements are much more difficult to- introducewhen a program is already established and, in other respects, very successful. Many difficulties could havebeen avoided if (i) a transparent mechanism had been introduced from the beginning for interest rateadjustment, and (ii) the credit department had been established from the start as a separate cost center withits own financial statements.
Demand-driven rural works:
Two particular factors are identified in the success of the project in establishing the ADF as a uniquelyeffective agency for meeting local infrastructure needs:
- Competitive selection of staff, based on personal commitment and willingness to work hard and take on
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responsibility, as well as professional qualifications--backed by long term intemational TA, in particular aconsultant engineer who worked with ADF from the beginning and made a substantial impact on technicalskills and work organization.
- Highly effective relations between ADF and local government, based on keeping ownership and hands-onmanagement of sub-projects with the Comrnunes, and building local govemment capacity for procurementand supervision of infrastructure works.
In an otherwise strong rural works program, ADF has been weak in promoting (i) community participationand (ii) operation and maintenance of completed sub-projects. These problems were highlighted from theexperience of the pilot phase and addressed in design of the RDP, but with not much impact. Theconstraints included the tendency for political influence in sub-project selection, and the natural focus ofengineers on the technical construction process rather than community participation. In addition, the naturalpartners of ADF for works sub-projects have been Communes rather than villages. Further measures havebeen taken under the follow-up project, including recruitment by ADF of social inspectors to work withvillage communities, and improved adherence to targeting methodology and Operational Guidelines. Moreconcerted efforts may be needed, including focus on relevant monitoring indicators (of the participatoryprocess in project selection and design, and agreement of all concerned on detailed O&M plans) to balancephysical output indicators.
9. Partner Comments
(a) Borrower/implementing agency:This ICR was prepared with substantial assistance of the ADF and RFF, which have provided data andworked closely with IDA's ICR mission. Representatives of the borrower and the implementing agencyparticipated in the ICR stakeholder workshop to discuss lessons leamed from the project. They expressedthe view that the RDP had been a successful project with significant lessons, both positive and negative, forthe future. The Borrower's Report on the project (May 2000), prepared by the ADF/RFF, provides detailedinformation on the progress of the project and identifies implications of the experience for futureoperations. The draft of this ICR was sent to the borrower for comments on May 5th, 2000. No commentswere received.
(b) Cofinanciers:Representatives of the Swiss and Italian financiers have expressed overall satisfaction both with theachievements of the project and with donor coordination under the project.
(c) Other partners (NGOs/private sector):None.
10. Additional Information
A. Rural Works Component
[Source: ADF Database]
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Table 10.A.1Number and Types of Rural Works Subprojects Started Each Year
Type of Subproject 1995 1996 1997 1998 1999 Total no.
Road 27 30 3 27 9 96
Water supply 15 11 1 4 3 34
Irrigation 18 2 3 1 1 25
Health Center/School 2 3 - I 1 7
Bridge/Footbridge 2 2 - 1 - 5
Others I 1 3 - 1 6
Total 65 49 10 34 15 173
Table 10.A.2Unit costs and Average Contract Value by Type of Subproject ('000 Lek)
Type Unit 95 96 97 98 99 Average
Road [km 1,073.1 1,228.2 2,138.2 2,426.2 3,032.4 1,750
Water supply /km 882.9 627.3 750.0 2,752.0 2,223.0 1,033
Irrigation /km 462.5 769.7 1,546.0 1,199.0 12,788 660
H.Center/School /m2 4.2 5.9 -- 18.0 27.0 7.6
Bridge/Footbridge /ml 67.0 122.4 -- 132.6 -- 80.C
Aver. subproject value '000 lek 3,044.0 3,688.0 3,116.0 7,624 9,377.0 4,68(
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Table 10.A.3Engagement by Type of Subprofect (I= rek)
Year Road W.supply Irrigation Heal.Center/School Bridge/Footbri. Others Total
1995 90,140 37,964 45,328 2,432 18,185 3,790 197,839
1996 115,447 35,754 5,388 11,877 7,343 4,883 180,692
1997 12,829 1,500 13,297 -- - 3,535 31,161
1998 218,361 33,025 4,S58 623 7,652 -- 259,219
1999 97,035 17,787 9,335 7,263 0 9,239 140,659
Total value 533,812 126,030 77,906 22,195 28,180 21,447 809,570
Share of total 66.0% 15.5% 9.6% 2.8% 3.5% 2.6% 100.0%
Total No. 96 34 25 7 5 6 173
Share of total 55.5% 19.6% 14.5% 4.0% 2.9% 3.5% 100.0%
Aver. cost/subproject 5,560 3,707 3,116 3,171 5,636 3,575 4,680('000 lek) .
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Table 1O.A.4Engagement by District and Beneficiary Population
District Rural Population Subproject Number of Projects Cost per Beneficiary(est. 1995) Beneficiaries
Berat 91,660 3,500 1 660Bulgize 37,830 3,930 3 1,400Delvine 20,140 11,300 2 1,680Diber 94,200 3,030 2 4,220Durres 59,840 33,800 14 1,516Elbedsan 118,850 48,360 14 1,719Fier 131,830 54,000 14 1,100Gjirokaster 40,430 2,600 1 3,673Gramsh 33,960 6,900 6 3,002Kolonje 16,000 5,700 2 2,355Korce 102,090 23,000 13 1,816Kruje 35,750 1,250 1 2,004Kukes 62,560 4,100 I 1,112Kurbin 18,080 2,000 1 2,385Lezhe 53,120 14,300 10 1,290Librazhd 82,460 8,600 4 1,852Lusbnje 89,240 4,000 1 1,215Malesi e Madhe 48,650 1,700 2 1,986Mallakaster 34,870 4,600 3 5,296Mat 60,400 14,200 7 2,426Mirdite 39,290 6,500 5 2,238Permet 30,000 300 1 23,283Pogradee 49,510 11,000 3 580Puke 39,770 45,400 17 1,940Sarande 25,750 300 1 27,000Shkoder 120,430 43,600 11 1,143Skrapar 21,930 4,000 2 1,724Tepelene 35,820 30,000 11 1,576Tirane 137,050 21,100 8 2,837Vlore 86,670 18,900 12 4,728
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B. Small Scale Credit
[Source: Rural Finance Fund. Figures include IFAD-fimded project, as well as RDIMI
Table 1O.B.l: General Indicators
_________________________ 1997 1998 1999I Number of districts 11 11 11
2 Number of village 192 221 238
3 Number of staff 28 34 37
4 Number of credit officers 19 22 21
5 Number of clients (from the 11,202 13,623 15,619beginning)
6 Number of credits (from the 13,092 16,557 20,034beginning)
7 Number of clients who has paid 4,458 7,287 11,761off
8 Number of active clients (6-7) 8,634 9,273 8,269
9 Outstanding (lek) 313,060,611 416,861,657 505,099,486
Table 1O.B.2: Indicators of Portfolio Quality
________________________ 1997 1998 199910 Repayment rate 99.70 99.54 99.82
11 Average of the unpaid loans (lek) 36,259 44,954 61,084
12 Reserve rate* 0.23 0.54 0.32
13 Portfolio in arrears (installment)* 0.26 0.49 0.25
14 Portfolio in risk* 0.35 1.02 0.49
15 Loan Loss Rate* 0.00 0.07 0.19
16 Average of disbursed loans (lek) 44,389 51,620 59,701
12: = loan reserve (calculated for loans with payments past due)/portfoblo outstanding13: = payments past due/portfolio outstanding14: = outstanding balance with payments past due/portfolio outstanding15: = write-offs (cumulative)/portfolio outstanding
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Table 10.B.3: Indicators of Efficiency
1997 1998 199917 Administrative Efficiency* 10.2 11.1 12.1
18 Operative Efficiency* 10,.4 12.5 15,9
19 Staff distribution /Total distribution 57.3 45.3 31,5
20 Active Clients / No. of staff 308. 272 223
21 Active Clients / No. of loan officers 454 421 394
22 Active Clients /Branch 863 927 827
23 Unpaid Loans /No. of loan officers 16,476 ,416 18,948,257 24,052 ,356(lek)
24 No. of Villages/No. of loan officers 10.1 10.0 11.2
25 No. of loan officers/No. of Staff 51 59 57
* 17: = administrative expenses/average net portfolio18: financial income/adjusted operating expenses
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Table 10.B.4: Profitability Indicators
1997 1998 1999
26 Retum on Assets (adjusted)* -60.89 -12.06 -7.9327 Return on Capital (adjusted) * -61.16 -12.12 -7.9628 Portfolio Productivity* 7.40 7.79 14.4229l Operating self- sufficiency* 71.02 62.29 90.8930 Financial self- sufficiency* 8.69 32.65 56.74
*26: = adjusted operating profit/average total assets (adjusted for inflation but not for subsidized costs offunds)27: = adjusted operating net profit (financial incomes less adjusted operating expenses)/average equity28: = financial income/average net portfolio outstanding29: = financial income/operating expenses:30: = financial income (credit income plus income from investment)/adjusted operating expenses(inflation adjusted)
Table 1O.B.5: Number and Value of Loans Disbursed by Economic Activity(cumulative to December 1999)
1_ ==______ Number Value ('000 Lek) *Handicrafts 552 2.67 42,815 3.58Livestock 13,471 67.24 717,135 59.96Agriculture 2,432 12.14 179268 14.99Micro-enterrises 263 1.31 21,449 1.79Draft animals 1,106 5.52 47,773 3.99Agric. mechanics 667 3.33 54,768 4.58Services 83 0.41 5,030 0.42Trade 1,460 7.29 127,803 10.69Total 20,034 100.00 1,196,043 100.00
Table 10.B.6: Geographical Distribution of VCF Network Expansion under RDP(number of villages)
District 1995 1996 1997 1998 1999Tirane 6 10 5 _ 6Kruje 2 5 0 0 0Vlore 7 8 2 2 3Elbasan 6 10 4 4 2Gramsh 7 12 0 0 0Puke 3 5 4 4 1Total 31 50 15 15 12
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Annex 1. Key Performance Indicators/Log Frame Matrix
Outcome I Impact Indicators:
IndicatorlMatrix Projected in last PSR ActuallLatest EstimateOutcome indicators were not defined atproject appraisal. The development objectivewas reformulated in August 1998, to be morecondse and measurable: To develop therural market economy and increase ruralincomes, as defined by:
improved small infrastructure, The quality and expected number of rural 173 sub-projects carried out forworks sub-projects is satisfactory; however, infrastructure repair, primarily of mads, waterthe number of sub-projects is not likely to supply, and irrigation systems, althoughmeet initial expectations due to some of these improvements are not fullyimplementation delays during the crisis of maintained.1997.
improved access to credit, Satisfactory Access to credit through VCFs wasextended to 116 more villages. Clientsexpress strong satisfaction with services.
an increase in small farm and off-farm Satisfactory Beneficiary assessments indicate substantialenterprises impact.
Output Indicators:
IndicatorlMatrix Projected in last PSR ActuallLatest EstimateRehabilitate about 190 social and economic 173 sub-projects implementedinfrastructure subprojectsCreate 135 new village credit funds. 9,000 116 new VCFs established. 12,000 loansmicro loans for intensification of agriculture disbursedand non-farm activitiesAssistance to 600 rural microenterprises Sub-component for assistance to
microenterprises was not implemented.Establishment of and support to 75 viglage Veterinary prophylactic services provided toanimal health associations livestock owners in 129 villages
End of project
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Annex 2. Project Costs and Financing
Project Cost by Component (in US$ million equivalent)Appraisal Actual/Latest Percentage ofEstimate Estimate Appraisal
Project Cost By Component US$ million US$ millionRural works 5.00 7.00 140Small-scale credit 4.30 2.60 60Promotion of rural activities 0.40 0.50 125Studies/local government training 0,20 0.30 150Implementation support 1.30 1.70 131
Total Baseline Cost 11.20 12.10Physical Contingencies 0.40Price Contingencies 0.40
Total Project Costs 12.00 12.10Total Financing Required 12.00 12.10
Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)Procurement Method
Expenditure Category ICB NCB Mthod2 N.B.F. Total CostNCB Other'
1. Works 0.00 0.00 5.09 0.00 5.09(0.00) (0.00) (2.30) (0.00) (2.30)
2. Goods 0.00 0.00 0.30 0.00 0.30(0.00) (0.00) (0.20) (0.00) (0.20)
3. Services 0.00 0.00 1.09 0.00 1.09(0.00) (0.00) (0.38) (0.00) (0.38)
4. Credit 0.00 0.00 4.25 0.00 4.25(0.00) (0.00) (2.62) (0.00) (2.62)
5. Recurrent costs 0.00 0.00 1.28 0.00 1.28(0.00) (0.00) (0.50) (0.00) (0.50)
6. Miscellaneous 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.0o) (0.00) (0.00)
Total 0.00 0.00 1i2.u1 0.00 12.01(0.00) (0.00) (6.00) (0.00) (6.00)
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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)Procurement Method
Expenditure Category ICB NCB Other N.B.F. Total Cost
1. Works 0.00 0.00 6.80 0.00 6.80(0.00) (0.00) (2.30) (0.00) (2.30)
2. Goods 0.00 0.00 0.50 0.00 0.50(0.00) (0.00) (0.30) (0.00) (0.30)
3. Services 0.00 0.00 0.80 0.00 0.80(0.00) (0.00) (0.40) (0.00) (0.40)
4. Credit 0.00 0.00 2.40 0.00 2.40(0.00) (0.00) (1.60) (0.00) (1.60)
5. Recurrent costs 0.00 0.00 1.60 0.00 1.60(0.00) (0.00) (1.20) (0.00) (1.20)
6. Miscellaneous 0.00 0.00 0.00 0.00 0.00(0.0(0.00.00) (0.00) (0.00) (0.00)
Total 0.00 0.00 12.10 0.00 12.10(0.00) (0.00) (5.80) (0.00) (5.80)
Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.
2' Includes civil works and goods to be procured through national shopping, consulting services, services of contractedstaff of the project management office, training, technical assistance services, and incremental operating costs related to(i) managing the project, and (ii) re-lending project funds to local government units.
Proj'ct Financing by Component (in US$ million equivalent)Percentage of Appraisal
Appraisal Estimate ActualLatest EstimateIDA Govt CoF. IDA Govt. CoF. IDA Govt. CoF.
Rural works 2.32 0.00 2.88 2.40 0.80 3.30 103.4 0.0 114.6Small scale credit 2.73 0.70 1.14 1.70 0.00 0.80 62.3 0.0 70.2Promotion of rural 0.11 0.10 0.21 0.20 0.00 0.40 181.8 0.0 190.5activitiesStudies/local government 0.09 0.00 0.17 0.10 0.00 0.30 111.1 0.0 176.5trainingImplementation support 0.74 0.40 0.17 1.30 0.00 0.40 175.7 0.0 235.3
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Annex 3: Economic Costs and Benefits
It was not possible to identify a priori the sub-projects to be financed either through the rural works orthrough microcredit investments. Therefore no attempt was made to estimate overall economic andfinancial rates of return to the project. The rural works component of the project was designed to financesimple and cost-effective rehabilitation of rural infrastructure, with priorities identified by villagecommunities. Unit costs were monitored throughout the project and have compared favorably with those forsimilar works carried out by other agencies. Under the rural credit program, repayment rates of 100% wereachieved, and interest rates paid by borrowers were positive in real terms with the exception of a periodduring the 1996-1997 crisis. Virtually no other source of credit has existed for the rural population since1996.
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Annex 4. Bank Inputs
(a) Missions:Stage of Project Cycle No. of Persons and Specialty Performa ce Rating
(e.g. 2 Economists, 1 FMS, etc.) Implementation DevelopmentMonth/Year Count Specialty Progress Objective
Identification/PreparationSept. 16- Oct. 1, 1993 4 Task Manager, Operations
Officer, MicroenterpriseConsultant, Rural CreditConsultant
Nov. 25 - Dec. 1, 1993 1 Task ManagerJan 24 - Feb. 11, 1994 6 Task Manager peratiew
Officer, Monitoring andEvaluation Consultant,Sociologist, Finance Consultant
Appraisal/NegotiationJune 13 - 30, 1994 6 Task Manager, Operations
Officer, EngineeringConsultant, CooperativeBanking Consultant,Monitoring and EvaluationConsultant
Nov. 17, 1994 4 Task Manager, Operations, HS HS(Negotiations) FMS, Procurement
SupervisionJuly 14 - 26, 1995 5 Task Manager, Operations S S
Officer, MicroenterpriseConsultant, Rural CreditConsultant, FinanceConsultant
Oct. 13 - 26, 1995 4 Task Manager, Operations S SOfficer, Credit Mutuel, RuralCredit Consultant
Jan. 7 - 20, 1996 3 Task Manager, Operations S SOfficer, Rural Credit Consultant
April 9 - 25, 1996 4 Task Manager, Operations S SOfficer, Rural Credit Consultant,Veterinary Consultant
July 15 - 30, 1996 3 Task Manager, Operations S SOfficer, Rural Credit Consultant
Oct. 21 - Nov. 2, 1996 4 Task Manager, Operations S SOfficer, Rural Credit Consultant,Engineering Consultant
Feb. 16 - March 1, 1997 3 Task Manager, Operations S SOfficer, Rural Credit Consultant
May 18 - 31, 1997 2 Task Manager, Operations S SOfficer
Sept. 18 - Oct. 6, 1997 3 Task Manager, Operations S SOfficer, Engineer
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Nov. 18 - 27, 1997 3 Task Manager, Operations S SOfficer, Engineer
Feb. 17 - March 6, 1998 4 Task Manager, Operations S SOfficer, Social Scientist,Engineer
April 20 - 26, 1998 3 Task Manager, Operations S SOfficer, Credit Mutuel
July 13 -28, 1998 3 Task Manager, Operations S SOfficer, Credit Mutuel
Nov. 9 - 21, 1998 4 Task Manager, Operations S SOfficer, Procurement Consultant,Civil and EnvironmentalEngineer
Feb. I - 12, 1999 6 Task Manager, Operations S SOfficer, Procurement Officer,Civil and EnvironmentalEngineer, Economist, Engineer
Feb. 7 - 23, 1999 3 Task Manager, Private Sector S SDevelopment Spec., OperationsOfficer
Aug. 16 - 26, 1999 2 Engineer and Consultant S S
ICRApril 20 - May 3, 2000 4 Task Manager, Operations S S
Officer, Social Scientist,Procurement Specialist,Consultant Engineer,Consultant MicrocreditSpecialist
(b) Staff:
Stage of Project Cycle Actual/Latest Estimatel__________ _ _____ __ | L_No. Staff weeks US$ (,000)Identification/Preparation 9.8 27.4Appraisal/Negotiation 24.3 75.1Supervision 50.6 144.9ICR 11.5 60.0Total 96.2 307.4
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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)
RatingOMacro policies OH O SU OM O N * NAZSector Policies O H O SU O M O N * NAS Physical O H * SU O M O N O NAS Financial O H * SU O M O N O NAZ Instittitional Development O H O SU O M 0 N 0 NAM Environmental O H O SU O M O N * NA
SocialZ Poverty Reduction 0 H * SU 0 M 0 N 0 NAZG Gender OH OSUOM O N O NA0 Other (Please specify)
Z Private sector development 0 H * SU 0 M 0 N 0 NAZ Public sector management 0 H * SU 0 M 0 N 0 NAO Other (Please specify)
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Annex 6. Ratings of Bank and Borrower Performance
(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)
6.1 Bank performance Rating
ZJ Lending OHS*S OU OHUSzupervision OHS@*S OU OHU
2 Overall OHS OS O u O HU
6.2 Borrower performance Rating
E Preparation OHS *S O U O HURI Government implementation performance O HS * S 0 U 0 HUZ Implementation agency performance O HS O S 0 U 0 HUZK Overall OHS OS 0 u O HU
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Annex 7. List of Supporting Documents
Borrower's Report on the Albania Rural Development Project, ADF, May 2000
Beneficiary Survey Results on Infrastructure and Credit Components of the RDP, Institute forContemporary Studies & CoPLAN, May 2000
Evaluation of the Infrastructure Component, Albania Rural Development Project, Paul Dean, March 2000
Evaluation of the Rural Finance Fund Component, Albania Rural Development Project, Michel Voyer,March 2000
Beneficiary Assessment, Albania Rural Development Project, Infrastructure Works Component, April1998
Beneficiary Assessment, Albania Rural Development Project, Rural Credit Program, Co-Plan Center forHabitat Development, July 1998
Back-to-Office Report of QAG Quality at Entry Mission, ECA Agriculture, September 1996
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Annex 8. Beneficiary Survey Results
Beneficiary Assessment at Completion ofAlbania Rural Development Project
Summary of Findings
1 Introduction. As part of the ICR exercise, two beneficiary assessments were carried outin early 2000, in order to assess the degree to which the Rural Development Project (RDP)achieved beneficiary satisfaction and had a positive and sustainable impact on rural livelihoods.Both the rural infrastructure component and the micro-finance component were evaluated withsimilar methodologies including semi-structured questionnaires, in-depth interviews and focusgroups with the project beneficiaries. From each of these two RDP components, two newstand-alone projects with separate management structures are now under implementation. For theinfrastructure component, the survey included some villages with sub-projects being implementedunder the new Community Works Project (CWP). This summary highlights the main findings andrecommendations of both the assessment reports, and compares these findings where relevantwith those of the earlier beneficiary assessment carried out under the project in 1998.
2. Overall project rating. In general, the assessments found a high level of beneficiarysatisfaction for both the infrastructure and the micro-finance programs, especially taking intoaccount i) the novel approach of the RDP in a period of extreme social and political instability; ii)the degree of isolation and seclusion of many of the targeted rural communities and their harshsocio-economic conditions and iii) the low level of autonomy of local governments. However,suggestions for change and improvement are highlighted throughout the reports and summarizedbelow for each of the RDP components.
3. Methodology and sampling. The study combined qualitative and quantitative methods,including standard questionnaires, in-depth interviews, and focus group discussions. In addition,sub-project reports were prepared by each interviewer on their findings, conclusions andcomments while providing qualitative information on the social and economic conditions of eachvillage. Interviews with officials of the Albanian Development Fund (ADF) and the Rural FinanceFund (RFF) were also carried out in order to collect the necessary information and data on eachsub-project.
4. Sample design responded to the need for fair representation of (i) geographic coverage ofthe project; (ii) typology of implemented sub-projects and (iii) evolution during the project lifeperiod -- from the beginning of the RDP in 1995, through establishment of separate managementstructures for the two follow-on projects in 1999.
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Infrastructure Component
5. Methodology and sampling. The report is based on the results of: (i) 625 standardquestionnaires, 462 for the RDP and 153 from CWP, with random selection of respondents; (ii)128 in-depth interviews with the best informed 4-5 people per village, of which 96 for RDP and32 for CWP; (iii) 16 focus group discussions, of which 12 for RDP and 4 for CWP. The standardquestionnaire was designed to obtain feedback from the project beneficiaries and allowcomparison of the two projects (RDP and CWP) on: (i) socio-economic impact of the projects,(ii) beneficiary satisfaction, (iii) level of beneficiary participation, (iv) community contribution, (v)project awareness and information and (vi) sustainability of the projects. Focus groups gatheredapproximately 8-10 people to clarify and discuss some of the main issues emerging from thequestionnaires, put together people with different opinions and evaluate group interactions in thecommunity. In addition, sub-project reports were prepared by each interviewer on their findings,conclusions and comments while providing qualitative information regarding social-economicconditions of each village. Interviews with ADF officials were also carried out in order to collectthe necessary information and data on each sub-project.
6. The study was carried out in four large areas composed of eight districts: (i) Puke-Mat;(ii) Elbasan-Librazhd-Korce; (iii) Fier-Vlore; (iv) Tirane. The overall level of poverty decreasesfrom the first category to the last one while the opportunities for development and access tomarkets increase. Within each large area, 32 villages were selected with different poverty status,development opportunities, access to markets and urban areas, tradition, and village size.
7. Twenty-four subprojects were selected from the RDP, covering about 10% of the value ofthe total ADF portfolio and consisting of 16 road repair projects, three water supply projects,three irrigation works, one school and one health center (proportionate to the overall share ofeach type of subproject under the RDP). Eight subprojects belonged to the CWP, consisting offive for road repair and three for water supply. For the standard interviews, respondents wereselected randomly. For the in depth interviews and focus group discussion, selection was based ontargeting according to sub-categories of respondents/participants.
8. Main findings and conclusions. During 1998, a beneficiary assessment was carried outfor the first time on the infrastructure component of RDP. Among the major implications of thefindings of the previous beneficiary assessment for the infrastructure works component were theneed to (i) promote greater public involvement in project selection and maintenance and (ii)increase trust in local government. The same concerns prevailed in the April 2000 assessment,although there were some signs of improvements under the CWP in promoting beneficiaryparticipation at the sub-project identification stage.
9. Socio-Economic Impact. The high level of beneficiary satisfaction for the infrastructurecomponent derives mainly from its positive socio-economic impact at the village level and itsimpact on meeting priority needs, especially of women and children. The specific benefits citedmost often by respondents included: (i) better access to different social services, especiallyschools; (ii) better communication and cohesion between family, local community members, and
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local government; (iii) better communication with surrounding areas; (iv) improved access forfarners to local and surrounding markets for purchase of inputs and sale of products directly toconsumers; (v) increased number of traders coming to villages to purchase agricultural outputs;(vi) increased level of agricultural production; (vii) facilitated access to employment opportunities;and (viii) direct employment creation in subproject implementation (even if short term). From thelocal government perspective, major improvements were (a) increased decision-making capacityand (b) responsibility of the community in project design, priority selection and improvedinteraction with the village community.
10. The strong positive effects are explained by the extremely poor condition of existinginfrastructure throughout Albania. Severe and widespread deterioration in roads, water supply,health centers and school buildings has meant that these services often function in unsafeconditions, if they function at all. Rehabilitation therefore leads quickly to major improvements inliving conditions, child health and safety and communication. People feel safer when children havea smaller distance to cover to go to school and when the nearest functioning medical center iscloser. And a relatively small investment in road rehabilitation can immediately irnprove access toservices and markets in neighboring villages. For example, a woman in the village of Plet in Pukasaid that villagers requested the rehabilitation of the school as it was in dangerous condition andmany parents were afraid to send their children to school for fear of exposure to hazards. Nowthat works at the school are finished everybody is satisfied, especially parents who are nowcounting on a safe place for their children to go to school. Another example is that of a group offarmers of Celez in Puka, expressing their satisfaction for the construction of the road. Before therepair of this road, there was no bus in the village and communication and transport of farmproducts with neighboring villages were extremely difficult. Now the commune has four busesworking daily and the transport of goods is much easier.
The road subprojects in Qenam-Zall Herr. Selite e Vogel and Farke e Vogel (district of Tirana) have improvedthe commutnication between surrounding villages and people's access to markets. The road subproject in Qelezand the school subproject in Plet (Ptuka) have largely improved people's access to social services with particiularregard to the access of children to education. The irrigation system subproject in Frakull (Fier) has had largepositive effects in women's daily life through the improvement of cropping practices and by freeing up time forhousework In the same way, the road subproject in Ruzhdie (Fier) has directly improved access to socialservices for about 2/3 of the village population and indirectly to the remaining 1/3 of the population. The roadsuibprojects in Selite e Vogel and Farke e Vogel have similarly improved villagers' access to different socialservices in their own village or in surrounding ones.
11. Community participation. Community participation, especially during sub-projectselection, was closely related to beneficiary satisfaction with sub-projects. It appears sub-projectselection under the RDP was often approached in a top-down way. Decisions between alternativesub-projects were made by the Communes and approved by ADF, often with little or noparticipation of beneficiary comnmunities in project selection or design. There were cases,however, where the decision was taken after discussion with the whole community. Overall, thelevel of satisfaction of the RDP beneficiaries on project selection has not been very high. Whensubprojects had been selected without consultation and agreement on priorities at the communitylevel, and where villagers were not well informed on the procedures, beneficiaries were less likelyto be satisfied with or interested in the project and were more likely to complain of corruption onthe part of the local government/Commune. There was only one village (4% of the sample),
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however, where the respondents said that the project was not at all a priority and it would havebeen better if the money would have been spent for something else: this was the case of the bridgesubproject in Flet-Puka, where the priority for the villagers was the school.
Many villagers reported that they did not have an opportunity to express their views on priorities at the time ofproject selection and did not consider the selected project to be the highest priority for the village. A villager inSelita - Vogel considers that the road was not a highest priorityfor the area, becauise the greatest need was theestablishment of a sewerage and drainage system. He was also concerned that the new road presented a dangerbecause suiddenly cars go fast and threaten children's lives. In another example, two teachers in Celez (Putka)claimed that the chief of the village took the decision to submit a proposalfor road repair in a meeting with thelocal government representatives. They contend that, even if it was a good choice, this was the only projectdiscuissed and people still think that the rehabilitation of the health center, supplied with all necessaryequipment, was the most tirgent priorityfor the village.
12. Maintenance and sustainability issues. Maintenance still remains an unsolved issue,although measures under the new project (CWP), supported by social inspectors -- enforcing thecondition of up-front 10% community contribution for sub-projects and creating Users'Committees at the design stage - appear to be having some impact on community awareness ofoperations and maintenance issues. An important factor in sustainability is the value placed bybeneficiaries on the project concerned. Where communities had been fully involved and inforrmedat each stage of the subproject, the sense of ownership and of trust between all the actors(ADF-Commune-community) was greater and the prospects for sustainability better.
13. Information and public awareness. Comparing beneficiaries' responses on informationand public awareness under the RDP and the new CWP, some progress is apparent. The activitiesof both regional engineers and social inspectors under the new CWP seem to be responding to theexpressed need of villagers under the RDP for more information on all project activities and forregular meetings with people from the villages to explain in general terms how construction workswill evolve, what will be the output of the project, what kind of material will be used, what typeof maintenance should be expected.
14. Relationship with government. ADF has a good reputation and working relations withrepresentatives of local governments, municipalities and Communes, resulting in a goodopportunity for capacity building at the local level. The impact of the RDP in improving theefficiency of the local government (administration of communes and municipalitiesadministration), inducing ownership of initiatives as well as a certain degree of responsibilitytowards village problems and the need to mobilize local resources for project sustainability shouldbe considered as a very important result. This is particularly significant considering that localgovernments and local public administrations are relatively new entities, slowly moving towards adecentralization process and with very little experience or financial means.
15. However, the coordination between ADF and the line ministries could be strengthened tobetter monitor that agreements signed for the provision of equipment and staff and maintenance ofthe rehabilitated infrastructure are respected. Beneficiaries' suggestion is that ADF carefullysupervise and follow-up on the conditions set and agreed upon before starting works for suchinvestments as rehabilitation of schools, nurseries and health centers to ensure the good andefficient functioning of those structures.
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16. Cooperation with local organization. ADF has established no relationship with localorganizations. Partnership and consistent cooperation with local organizations and CBOs (NGOs,consumer groups if existent, or other non-governmental organizations or groups) would help theagency carry out all activities (information, training, etc.) at the grassroots level even where socialinspectors cannot be regularly present in all sub-project sites. The Users Committees could playan important role as subproject information centers where villagers can get more detailedinformation and address their concerns. The practice of putting posters and pamphlets as inQender (Fier) should be encouraged in other villages.
Micro-credit Component
17. Findings and conclusions. As for the infrastructure component of the RDP, an earlierbeneficiary assessment had already been carried out for the microcredit component in 1998. Ingeneral, the major findings and conclusions at that time seem still to be valid and shared by themost recent assessment conducted in April 2000.
18. Methodology and sampling. Both qualitative and quantitative methodologies wereadopted, including a semi-structured questionnaire on a purposive sample of borrowers (151questionnaires), in-depth interviews (36) and focus groups (12) with villagers, village chiefs,credit officers and local authorities. Criteria such as the geographic distribution in the country,proximity to urban sites, and gender, helped design the sample. The assessment aimed to gatherbeneficiaries' opinions on (i) targeting of project beneficiaries, including women and youngsters;(ii) the output of the program and its contribution to improving people's living conditions; (iii)outreach activities, support of designated local staff for information on the program and assistancein the application process and repayment procedures; (iv) opinions on the planned new Savingsand Credit Associations.
19. The total number of interviews for each district was agreed upon with the implementingagency (the Rural Finance Fund, or RFF) and was calculated according to data on the profiles ofmicro-credit program borrowers. The sample was selected according to the following criteria: (i)geographic (mountainous and remote areas versus peri-urban); (ii) economic (areas withproductive and economic potentials versus areas where the local economy is based onsubsistence); and (iii) micro-credit program life-span (areas where the program was established inthe first years of the project and areas where the micro-credit program was recently introduced).The study was done in four districts (Tirane, Elbasan, Gramsh and Vlore) and in 12 villages withVillage Credit Funds (VCFs), of which 4 in Tirana, 3 in Elbasan, 2 in Gramsh and 3 in Vlore.
20. Main Findings. A high level of satisfaction was found on the main characteristics of thecredit program: procedures, fast disbursement, loan distribution criteria among borrowers and theconstitution of Village Credit Committees (VCCs). However, 75% of respondents felt that themaximum size of individual loans was too low. The positive impacts most frequently cited were:(i) improved living conditions, (ii) increased food production, (iii) higher food consumption, (iv)better nutrition (especially for self-consumption in mountainous and remote areas), (v) increased
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opportunities for agro-processing, (vi) better access to markets (60% of the respondents),especially in Elbasan and Gramsh, (vii) increased employment opportunities (67% ofrespondents), mainly in the agricultural domain and (viii) increase in incorme (4$Wo ofrespondents), positively linked to the increase of agricultural and livestock product sales.
21. The expansion of loans granted throughout the village has generally helped beneficiaries tocontinue their existing activities and/or to open new ones, increasing economic activity andcreating new employment opportunities. These positive effects have been most clearly felt invillages with relatively easy access to markets (Tirana and Vlore) and a good agriculturalconditions. In these cases, there is also a higher use of agricultural inputs, and a higher degree ofcommercialization. In the village of Vajze in Vlora district, a borrower de6ared that access tocredit had concretely improved his family's living conditions and prospects. He was able toborrow twice and this enabled him and his wife to work in the shop they own and afford to sendtheir child to school. Another beneficiary reported that he had used the credit to buy equipmentand furniture for a bar resulting in an increase in income and family employment as the wife isworking also in the bar as a barkeeper. With profits from the bar, he was able to repay the creditand to invest in bar furnishings. On the other hand, in the most remote villages with subsistencelivelihoods, such as Grebllesh and Petrele in Tirana and Llakatund in Vlore, the positive effects ofthe project were still mainly derived from purchase of livestock.
22. Gender relations. Credit is generally given for the entire household since the assumptionis that men and women work the land together or are involved in other common family activities.A beneficiary reported that she had the impression that RFF had the wish to support womenwhereas the VCC had fixed a criterion whereby credits are to be given only to the heads of thefamily. Another woman in Berzite (Tirana) said that she was very much imz need of a credit, butdid not dare to apply knowing that her request would not have been taken into consideration andthat nobody would supported her.
23. Emigration trends. The effects of the project in helping reduce the emigration trends ofthese regions appear still to be limited. The average credit amount is usually considered too low(average $500 to a maximum of $2,000 equivalent), especially by young people in search ofemployment. Loans do not seem to represent a major incentive for investments and employmentcreation for youngsters and for those not having a business already set up.
24. Poverty reduction. More than 80% of respondents agreed that the credit program hadhad a positive effect in reducing poverty and promoting the development of villages, especially inthose villages where micro-credit interventions were associated with other rural developmentinterventions, such as rehabilitation of roads, irrigation systems, markets, agricultural extension,etc.
25. Village Credit Committees. Relationships between the borrowers and the Village CreditCommittees (VCC), are largely governed by a good level of trust, sharing of information, even ifinformal, and generally there is a consensus among borrowers on the opinion that VCC membersare properly representing the village. In fact, for each neighborhood of the village there is arepresentative in the VCC and one of the VCC members is always a guarantor for the credit
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borrower. VCCs are elected through a fairly open and transparent process where there is highparticipation of the village. Conflicts and discussions between potential borrowers and VCCmembers are rare but still do exist, especially when there is no consensus between the VCC orbetween the VCC and the credit officers on given applications.
26. In the 1998 beneficiary assessment, ADF clients represented on average 84% of the totalpopulation in sample villages with VCFs, showing the large extent of the credit program. Thenumber of applications rejected by VCCs was on average only two or three per village, accordingto the information given by the ADF credit officers or members of the VCC. The 2000assessment indicated a similar pattern, including the widespread opinion of respondents thatVCCs have a good sense of priority for the neediest people in selecting borrowers requests,resulting in a widely felt sense of transparency of the credit program.
27. Promotion of rural activities. As in the previous beneficiary assessment, a large numberof respondents (75%) said they would like to have some assistance and support in setting up newbusinesses and new ideas and advice on innovative uses of their loans. To take just one example, aborrower from Shirgjan in Elbasan was suggesting that RFF should give advice and give largercredits for non-livestock investments: since the area of Elbasan has very good climate for wineproduction, he felt this should be encouraged further through technical support on how to bettercrop grapes and larger credit to expand existing production. The component Promotion of RuralActivities was never implemented under the RDP, on the grounds that this was not a prioritywhen most of the investments were in livestock. Nevertheless, project management shouldconsider that borrowers have been requesting advice and ideas for some years now.
28. Saving and Credit Associations (SCAs). From the interviews, fewer than 20% of thesample had knowledge about the SCAs. VCC members had been formally informed throughworkshops organized by RFF officers but the interviews suggested that understanding was limitedon the meaning and implications of this transition in the credit program. Nevertheless, even ifpeople were not well informed on how the SCAs would be created, their precise functions andtheir management, most of the interviewed VCC members had high expectations that the newassociations would be able to increase the loan amount and the number of credits in the villages.
29. The opinions of villagers on the role of the savings associations and their willingness toparticipate in savings programs varied, partly because of weak understanding of the proposedfunction. Most of the respondents felt that (i) savings were minimal for each household and thuspeople's concern was to keep at home some ready-to-use cash in case of emergency; (ii) there wasstill not enough positive experience in joint and associative activities and people were not used tousing banks or setting aside their savings, especially after the experience with the pyramidschemes; (iii) little information had been reported by the RFF personnel to promote the newSCAs; (iv) the Village Development Associations were not able to prepare the ground for theestablishment of the SCAs and help promote a strong collective feeling and incentive amongvillagers. On the other hand, some respondents felt that SCAs could succeed because they wouldbe owned by the village, and because of the high level of confidence in the RFF. No less than 82%of respondents expressed a high opinion of the RFF.
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Annex 9. Stakeholder Workshop Results
Report on the Stakeholder Workshop
Introduction
In the framework of the World Bank, Rural Development Project (RDP) a Stakeholder Workshop tookplace in Durres (29th of March 2000). This report on the workshop is prepared by the workshopfacilitators and contains some more conmuents and remarks from the moderators / facilitators point of view(facilitators: Elda CERIBASH[, Sokol CELO). During the preparation work the facilitators were assistedby Ms. Elena GALLIANO (World Bank), Ms. Silvia MAURI (World Bank), Mr. Ibrahim HACKAJ(World Bank) and Mr. Sef SLOOTWEG (SNV - Fier).
ObNectives of the workshop
01. To discuss the activities of the infrastructure and microcredit projects.02. To estimate the Beneficiaries Satisfaction and Project Impact03. To have especially the representatives of the beneficiaries making their comments04. To use participatory methodologies, which will continue to play an important role for the project in thefuture
Workshop Proeramme
1. Session: History of ADF, History of RFF
2. Session: Working groups: Infrastructure and Micro-Credit Projects
3. Session. Continuation in Working Groups / Presentation of the findings
4. Session: Presentation of the Beneficiary Assessment preliminary data; Lessons learned ADF / RFF;Plenary discussion
Methodologv
In accordance with the workshop organizers it was decided to use the SWOT - Analysis (Strengths,Weaknesses, Opportunities, Threats) as a dialectic approach, which best suites for environments with highdynamic and relatively homogenous groups (in our case only two different points of view). The workshopwas characterized by:
participants comning from two different backgrounds (ADF / RFF staff and representatives of the localgovemment and villagers) but being given equal opportunity to express their opinions
the presence of a moderator facilitating the work of each working group
permnanent visualization of the discussion process
The basic tools used were brainstorming and clustering of participants' statements. Both working groups
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(Infrastructure and Rural Credit) proceeded in the same way. The method was applied to each of the threebeforehand selected topics (Identification Phase, Implementation Phase and Follow up), which first wereintroduced by the facilitators. The participants wrote their statements on coloured cards, which were thendiscussed and form the most important part of this report.
Findines of the workshop
While the participants' contributions in their original form can be found in the Annex 1, we would like hereto mention some of the most important findings and to add some more conmments.
Group I: Infrastructure01. The participation of the community in the phase of identification has to be considered as one of thestrongest points of the project02. The selection and evaluation approach of the subprojects has proven an effective method for developinga demand - driven project. The subjective and political influence on the selection approach has decreased03. The project has contributed to creating employment and improving the living conditions04. The project has improved the quality of the design and supervision system05. Infrastructure rehabilitation had an important social impact on the community both for the newevolutionary change of the mentality and for the establishment of the concept of the own contribution06. The major part of the formulated weaknesses concerning the phase of Identification regards theso-called RDP - Period. In this respect they have to be considered as not of current interest (those cardshave been marked RDP)07. The analysis indicated, that the poverty level of the villages has not been considered as far as thecontribution of the community is concemed08. Difficulties have been encountered regarding the community contribution09. The disbursement approach didn't always respected the time limits10. The supervision has been one-sided: quality supervised, time schedule not11. Maintenance is not secure. This seems to be one of the most crucial problems. A better control andmaintenance mechanism has to be elaborated. On the other hand it remains the duty of the community tocare for the maintenance.12. Regarding the risks it has to be stressed, that the identification approach could lead to social problems.Delays in disbursing the funds to contractors have also to be considered as a risk
Micro Credit01. The identification approach on all three levels (identification of the village, election of the village creditcommittee (VCC) and selection of the borrowers) has been successfully so far02. The project has had a positive impact on the income generation03. The project demonstrated strong repayment rate (99,9 %).04. The project performance has created the preconditions for a sustainable development in the future05. Security remains a serious problem and will be a risk even for the future06. There is a tendency of the borrowers (especially in remote rural areas) to leave the village and tochange the destination of the loan07. The participants saw the following opportunities for the future: selection of villages able to absorbfunds; activities with the participation of several borrowers; consideration was given to combining theactivities of both components (Infrastructure and Microcredit Project)08. The high interest rate has to be considered as a risk for the future09. There can be political pressure over the existing structures due to political changes
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Remarks on the group dynamic
01. The working groups worked effectively due to a good selection and the fact that they were properlybriefed and knew what and why they were supposed to do.02. There were no disturbances, so it was no need for the moderators to intervene03. Both working groups had ADF respectively RFF staff and representatives of Local Government andCommunities. It has to be stressed that as long as the participants wrote their statements on cards, they hadequal opportunity to express their ideas. But during the discussion (especially for the Infrastructure WorksGroup) the commnunity part was somehow dorninated by the rest of the group.04. Observing the group feeling, no conflicts, even latent ones, could be verified.
Workshoi, I
Identification Phase Implementation Phase Follow up-Proposals come from village, communes, -Increased employment -The presence of ADF still necessary.
municipality or citizens. -Increased quality of works and supervision. -Better living conditions of the-Intervention in all communes. -Positive impact communities.-The concept of co-financing from the side of -Quick disbursement of the contractors. -Improvement of the professional skills of
local community. -High level in design and supervision. the ADF staff.S -Decrease of political interference -Wage increase for the designer and supervisor.
Strength -Priorities are set with the community. -Timely elaboration and assignment of the contracts.-Decrease of personal interference.-The farmers welcome the projects.
I -Expansion of project over whole country
-Delays in the announcement of the community -Difficulties in getting the contribution of the local -Lack of a supervision mechanism for theidentification results (RDP) government and community. maintenance.
W -The poverty level has not been taken into -Beneficiaries' contribution is too high -Sustainability not ensured.Weaknesses consideration. -Quality of supervision not good enough. -Coordination between the investor and
-No total inclusion (RDP). -Disbursement from the donor is slow local govemment-Some times contradictions emerge between the -Simplification of the project design due to financial
farmers. limit-Regional preferences. -Contractors are not always paid on due time.-Lack of complete infonnation. -One - sided supervision (only for the quality, not for-Not with required depth (RDP). the time limits)-Not carried out with support of social experts(RDP).
-Lack of experience at all levels (RDP).
-Self-development, growing response.0 -Request fro more than one intervention or -Increase cooperation between ADF and local -Who contributes, get subprojects
Opportun. sub-project: willingness from commune to give authorities in each project phase financing.further support. -Increase the project ceiling -Good performers, get new subprojects.
-Improve quality -Fund raising for the future.-Maintenance made by communes.
TThreatens -Stagnant approach for identification. -Delays in implementation due to bad weather -Maintenance of the finished work.
-Negative sensitivity of some farmers. -Low participation communities.-Timely disbursement of the contractors
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Workshop 2
Selection of the village Implementation Phase Follow up-Economic capacity (able to pay back the - Suitable election of the credit committees - Correct behaviour towards both sides
credit), - Repayment rate of 100% - Concept of credit consolidated.-Good selection of the villages according to - Social peer pressure over the village. - Credit sustainability, repayment rate 99.9%o
real needs - Achievement rate of the objective over 135% - Sustainability of the activity.-Good working tradition of the village. -The impact of the credit to avoid the pyramid - Strengthening of VCC role in managing the-Village with suitable conditions for viable effects. credit.
plans. - Establishment of new market economy concepts. - Qualification of VCC.S -Cohesive environment in the village without - Compact VCC - Good information of local community.
strength social problems. - Good choice of the clients (borrowers) - Increase of the incomes of the village.-Inhabitants don't leave the villages - Establishment of the credit concept. - The gained experience helps for the future.-Participation of the local cormmunity in the - Increase of farmers' incomes
selection approach - New employment opportunities-8ased on the traditional structures - Services offered in the villages- Tendency of the inhabitants of themountains villages to leave. - Tendency to change the destination. - Credit doesn't cover the whole Republic
- Villages without market and transport roads. - Lack of the security for money transfer. - Legal framework incompleteW - Villages with not autochthon inhabitants - Delays in money transfers due to weak bank - Weak economic situation.
Weakness service. - Farmers leave the village- Farmers leave the village- Strengthening the concept of working in-groups.
-Villages with possibilities to develop - Better control over the repayment procedure. - Qualification for bigger activities (technology,infrastructure. - Better qualification of the implementing staff. management).- Villages able to absorb more funds. - Disseminating the experience at-good clients. - Transformation of the associations into CSA
0 - Inclusion of village, which posses information - Join activities with participation of several - Preconditions for further investments.Opportun about credit. farmers. - Better wages for the VCC
- Villages with marketing possibilities. - Improvement of the financial balance- Possibilities to expand the infrastructure- More priority and competence to the VCC.- Co-ordination of the credit with the
_ ____________________________________ ______________________________________________ infrastructure.-Tendency of the farmers to leave. - Inflation - Incapability to make use of all credits.- Selection of the village - Failure of the activity. - Security problems.
T - High interest rate of the credit. - Wrong identification of the activity. High interest rates.Threatens - Election of the associations heads. - Weakening of the VCC activity - Clients leave the village
- Pyramidal systems. - Existence of -doubtful- credit projects- No support from the customs tax-system for theinland products.- Political changes cause pressure on the existingteams.- Interest rate changes- Lack of security for the money transfer.
Workshop Participants
Artur Galanxhi Ministry of AgricultureShqipe Rrumbullaku Ministry of Economic CoordinationVeronika Rusi Ministry of Economic CoordinationSimona Rigoni Italian CooperationLuijeta Shtino Italian CooperationIrma Beci ADFRobert Lukaj ADFAltim Doda ADFVlash Kacimari ADFBujar Xhafa ADFMerita Toramani ADFYlli Dervishi ADFMahmud Xhani ADF/ElbasanShefik Gjata ADF
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Lame Bejo VloraAlain Muzet ADF - EU PhareMichel Pochard ADF - EU PhareShkelzen Marku ISBKlaud Manehasa ISB - Co-planHaki Furriku Municipality of PukaStavri Collaku ADF - KorceLeonard Prifti ADFMahmud Xhani ADF - ElbasanElena Galiano World BankMark Woodward World BankGillian Perkins World BankIbrahim Hackaj World BankSilvia Mauri World bankMichel Voyer ConsultantPaul Dean ConsultantLeonard Miloti ADFShkelpim Sulce RFF - VloraAhmet Demaj RFF - VioraShefki Nexha RFF - PeshkopiZenel Shehu RFF - Kastriot, PeshkopiRuzhdi Simoni RFF - ElbasanHaziz Hoxha RFF - GramshPetrit Simoni RFF - ElbasanSadush Ibrahimi RFF - GramshBehar Gjoni RFFRustem Bani RFF - KrujaAfrim Azumi RFF - TiranaFadil Meta RFFElda Ceribashi RFFSokol Celo RFFEngjell Frokues RFFBenet Beci RFFZana Konini RFFEdmond Fishta ADFMilika Jaho Municipality of BeratArtur Kurti Municipality of KucovaIlmi Gjeci Maminas-DurresSherif Halili Preze - TiranaKujtim Mema Municipality of VloraSofi Noti RFFMimoza Koroshi ADFSef Slootweg SNV - Fier
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