Project Number:	BGD/90/C01
Project Title:	Grameen Deep Tubewell Irrigation
UN Cooperating Agency:	UNOPS
Govt. Executing Agency:	Ministry of Finance, in collaboration with The Grameen Bank
Sector:	Natural Resources
Sub-Sector:	Irrigation
UNCDF Budget:	US$     6,507,000
RNG Budget:	7,692,300
Grameen Bank Budget:	7,000,000
Total Budget:	21,199,300
Actual Total Expenditures at Evaluation:	8,414,632
UNCDF Expenditures, Y/E 1995:	9,920,229
Date Project Approved:	November 1992
Date Project Began:	January 1993
Date Project Evaluated:	April 1995
Type of Evaluation:	Mid-term

II. Background

The majority of Bangladesh's workforce is engaged in agriculture, accounting for more than 40% of its GDP. Because of this emphasis, the country is at the threshold of food self-sufficiency. Irrigation and agricultural intensification have been central to this achievement. Deregulation of groundwater development, the end of government monopolies of irrigation equipment and large numbers of government-sunk deep tubewells (DTWs) being made available for private ownership have all led to a rapid expansion of land under irrigation.

Prior to this project, however, DTW investments were unprofitable and inefficient under management by the Bangladesh Water Development Board (BWDB) and the Bangladesh Agricultural Development Corporation (BADC). In 1988, the Government approached Grameen Bank with an offer to take over the management of 2500 DTWs which had been installed and poorly managed by BADC and BWDB in the northwestern Greater Rangpur and Dinajpur Districts, under Asian Development Bank (ADB) and Saudi Development Fund projects. Grameen Bank thereupon assumed ownership of a number of these wells. Grameen sought to utilize its managerial and organizational strengths to extend the benefits of irrigation to marginal farmers, and to create employment opportunities for landless groups. The project aimed to bring the DTWs into full operation on a national level. It was hoped that the project could also provide an alternative model for DTW management, which had such a poor track record.

In 1990, Grameen Bank approached UNCDF for funding. UNCDF realized Grameen's unique management approaches provided an opportunity to make DTW's operations more efficient, to maximize past investments, and to increase agricultural production through improved water use and crop diversification. The plan was to eventually provide landless groups with the ability to own and manage the deep tubewells, thereby creating employment and livelihood opportunities—particularly for women, who are Grameen Bank's main target group.

III. The Project

The project has five components:

• Establishment of GKF (Grameen Krishi Foundation)

• Support to GKF Management

• Financial Support to GKF

• DTW Selection and Improvement

• Support to Irrigated Agriculture

Grameen Bank was previously engaged in a number of non-banking activities. However, Grameen Krishi Foundation (GKF) was established as a separate entity from the Bank in order to concentrate exclusively on the selection, improvement and management of the tubewells, while limiting the Bank's potential risk exposure from the new activities. The project was to first review the performance and potential of each of the 650 wells already under GKF's control and to optimize the selection of an additional 200 wells. In addition, it sought to extend the command area and irrigation intensity of each well.

There were several strategic components that were intended to provide support to irrigated agriculture. These included on-site research and trial demonstrations to promote crop diversification, as well as improvements in water use, cropping patterns and techniques to maximize production benefits to farmers. A local consulting firm was hired to assist GKF staff with agricultural and water management issues, and GKF was to establish an Agricultural Advisory Board.

The financial support component was to enable GKF to achieve financial autonomy within four years. Donors would provide financing to Grameen Bank to resolve outstanding debts of the former Grameen Agricultural Project, the predecessor to GKF, and to meet incremental working capital requirements until GKF could reach a break-even position in its sales of water and inputs to client farmers.

Following an Inception Mission in June 1992, the project objectives were scaled down, its budget was modified, and its overall incremental working capital requirement was reduced. The Inception Mission also introduced a separate component for monitoring and evaluation. The Mission further incorporated a series of socio-economic impact assessments under the component, starting with a baseline survey to establish the current socio-economic status of beneficiaries and control groups in the project area. Follow-up assessments and a final project evaluation were planned to update these data in the course of the project's implementation.

IV. Purpose of the Evaluation

The mission undertook a Mid-term Evaluation of the project as stipulated by The Royal Netherlands Government (RNG) - UNCDF Trust Fund Agreement. The objective of the

evaluation was to enable the donors to determine whether they would continue financial support to the project. The evaluation reviewed and analyzed the available evidence and documents in the following fields: socio-economic impact issues, initial design & strategy (product and inception report), underlying analyses, project design & strategy, project activities, and financial viability & operational strategies.

V. Findings of the Evaluation Mission

A. Assessment of Results Achieved

During the project's implementation there was an evolution of GKF goals and operations which diverged from the initial project design. GKF had grown into a multi-activity organization, and this led to occasional tension with UNCDF and Dutch (RNG) funding sources, which were concerned about the financial implications of this diversification.

The project's major achievements to date have been:

• Success in the pioneering of crop diversification with a reduced dominant reliance on rice;

• An excellent repair and maintenance record for DTWs;

• Efficient maintenance of water and input supply service relationships with 40,000 farmers;

• Tight and effective management of a large organization with high entrepreneurial spirit;

Financial viability, however, has been much slower to achieve than expected, for the following main reasons:

• The development of irrigation has been compromised by increased sector competition from shallow tubewells, which has constrained area expansion;

• The collapse of rice prices in 1993;

• Continued irrigation subsidies in neighboring areas which have undermined the project's cost-recovery approach;.

• There has been inadequate attention to investment in irrigation by GKF; inadequate consultation by GKF with farmers on command area development issues; and the initial targets were found to have been too optimistic;

• Despite successes with crop diversification, the activities were not always well planned and major crop failures have hit some areas;

• GKF initially found it difficult to bring technical staff into the organization, and to involve them in management decisions; • Socioeconomic impact survey results have been inconclusive due to flaws in the sampling methodology. There was an inadequate attention to construct a "without project" control, although it is recognized that there were serious inherent methodological problems in identifying suitable control groups.
B. Assessment of Project Design

• The goal to turn over profitable DTWs to landless groups was inconsistent with GKF's goals to achieve financial viability;

• Technical analysis was inadequate, including, among the major problems, over-optimistic targets for command area expansion at DTW sites and insufficient attention to the tendency of variable costs per acre to increase with expanded irrigation areas;

• Inadequate attention was paid to involving farmers in the operation and maintenance of irrigation works;

• There was a failure to fully reconcile changed budgets and operations between the Inception Report and Project Documents.

VI. Recommendations

GKF should concentrate on its core activities, focusing on those which: i) can have an impact on food self-sufficiency and poverty reduction; ii) demonstrate an organizational comparative advantage by GKF; and iii) have prospects for short- or medium-term financial viability. Broadly, these activities are:

• Continuation of irrigation command area development, but within tighter planning guide lines and directly linked to improved consultation with the local farmers;

• Farm input supply;.

• Seed production;

• Marketing of new crops (soya, maize, sunflower, etc.);

• Expansion of group-based credit, with a focus on women. It is recommended that GKF's Women's Support Program establish a unit concentrating on approaches to integrate women into activities of GKF and gain a better comprehension of activity impacts on men and women.

It also is advised that further funding be focused on the recommended activities, and that the funding should be made contingent on GKF's preparation of a business plan outlining the strategy for attaining financial viability.

VII. Policy Implications and Lessons Learned

The project has proven to be too large for adequate backstopping by UNCDF. Also, it is problematic for a banking concern (Grameen Bank) to transfer its management skills to an agricultural institution without solid technical knowledge in irrigation matters. Other policy implications that arose from this project include the following:

• The project demonstrated the need to carefully develop and ensure a shared vision when entering into a collaborating relationship with NGOs that have a clear, independent policy agenda.

• The project revealed that although deep tubewell irrigation is more efficient in most circumstances, the farmers do not automatically prefer it in an environment where there is competition from privately owned shallow tubewells and where water is supplied at subsidized prices from government facilities. To solve this problem, the evaluation recommends improving the delivery of water from deep tubewells through investment in distribution systems, rather than combining a reduction in water charges with a large expansion of the command area.

• It was determined that a cost-recovery system based on in-kind contributions has financial implications (e.g. transport costs, storage costs, etc.) that should be taken into account in designing such a system.

• A needs assessment survey carried out in the context of the Women's Support Programme (WSP) found that female farmers were much more involved in actual irrigation activities (including construction and maintenance of the canals) than had previously been believed by GKF. The results of the WSP thus far indicate that the involvement of women in the project has had an impact on their social status, as well as increasing their income.

• It was determined that a detailed farm-based monitoring of the project performance is of limited use without a monitoring system that allows for collection of comparative data at regular intervals.

VIII. Mid-term Evaluation Team

The mid-term evaluation mission team consisted of Mr. Barry Deren, Team Leader and Financial Analyst; Mr. Ian Smout, Irrigation Specialist; Ms. Anne-Marie Stanneveld, Agricultural Economist; Ms. Uraivan Tan-Kim-Yong, Sociologist & Anthropologist; and Mr. Roger Shotton, UNCDF Technical Advisor.