Learning in Development. Olivier Serrat

decentralization of social services management; and strengthening the efficiency, transparency, and accountability of management of funds in schools and health centers. The project loan aimed to maintain school enrollment and educational quality at precrisis levels through the provision of scholarships and school grants; protect the health and nutritional status of the poor, especially infants, mothers, and children; and provide scholarships and supplementary feeding to street children. Overall, the program succeeded in achieving its objectives. Achievements in education surpassed expected outputs. The nutrition component, due to its complexity, was less successful. Enrollment ratios were either maintained or rose. The block grants to primary schools prevented them from refusing children who could not pay. Life expectancy rose and infant mortality declined during the period of loan activity. The program was highly relevant in mitigating the impact of the crisis on the most vulnerable members of Indonesian society in terms of their access to basic social services in education, health, family planning, and nutrition. The education components generated additional funding from the World Bank and the Government, which enhanced the success of the program. The policy actions supported numerous novel interventions, including (i) allocating central government funding to local government based on the poverty index, (ii) decentralizing decision making, (iii) providing block grants to education and health service providers, (iv) making direct transfers to final beneficiaries through the post office to increase efficiency and reduce leakage, and (v) establishing independent monitoring of effectiveness of the program and accuracy of funds transfer. Although the central monitoring unit demonstrated the value of independent monitoring, this component was not sustainable after donor funding ceased.

      ^a Available: www.adb.org/documents/ppers/ino/32516-ino-pper.pdf and www.adb.org/documents/ppers/ino/32255-ino-pper.pdf

       Box 6: Pakistan Livestock Development Project^a

       Unsuccessful

      Millions of rural poor in Pakistan depend on livestock for their livelihood. The project sought to address problems related to weak extension services, animal health and breeding, and limited feed sources during the summer. It aimed to establish a policy and institutional framework to encourage private investment in livestock, increase production and by-product utilization, and increase rural employment and incomes. Components were (i) strengthening the Federal Livestock Division and provincial livestock departments, (ii) stablishing extension services, (iii) breed improvement, (iv) improving animal health services, (v) slaughterhouse improvement, and (vi) capacity building through local and overseas training and consultancies.

      Considerable resistance was encountered in reorienting the traditional extension services to a more bottom-up, production-based system. Rivalry among provincial agencies had a negative impact on project coordination. While the appointment and training of extension staff were partly effective, benefits were limited. Breeding activities were partly successful. A major accomplishment was the privatization of veterinary services, but slaughterhouse initiatives were a failure. The training component was extensive and successful, but consultants’ inputs were often poorly coordinated. At the time of evaluation, the only project-supported initiatives still operating were those that involved the private sector or where beneficiaries were charged for services. Economic reevaluation resulted in an almost negative economic internal rate of return, an unsatisfactory project outcome. Extension activities were unsustainable.

      ^a Available: www.adb.org/documents/ppars/pak/ppar-pak-21131.pdf

Project performance varied more significantly by sector than by country category. The likelihood of project success by sector is depicted in Table 2. The findings indicate that both OCR- and ADF-funded projects generally perform similarly in the same sectors, with certain important exceptions. The ratings of ADF-funded projects eventually converged with those of OCR-funded projects across sectors from 1970 to 1997.

Table 2: Project Performance by Sector and Source of Financing (% of Projects Rated as Successful)

      ADF = Asian Development Fund, DFI = development finance institution, OCR = ordinary capital resources.

      Source: OED.

      ADB’s experience has been best in the transport/communications and energy sectors, with project success rates reaching 87% for both in the 1990s; the success rates are high for both ADF- and OCR-funded projects. In the transport sector, road projects have dominated the portfolio for both sources of funding. Project success has also been high for port, airport, and telecommunication projects, again regardless of the source of funding. The performance of the relatively small railway portfolio has been considerably weaker than that of the other transport modes. The characteristics of successful road projects are listed in the box.

      Evaluations of ADB’s energy portfolio have found generally good project outcomes regardless of funding source. Power projects dominate the portfolio. Difficulties are sometimes experienced in complying with financial covenants and with ADB’s environmental and resettlement safeguard policies, particularly for hydropower projects. Nongovernment organizations (NGOs) and civil society organizations have raised concerns about the latter. Successful power projects exhibit the characteristics listed in the box.

      The agriculture and natural resources sector has had poor outcomes relative to other sectors for both ADF- and OCR-funded projects. By the 1990s, project success rates were only 52% across funding sources. For ADF-funded projects, the success rate slightly exceeded the average for irrigation and rural development projects and for a small number of fertilizer plant projects. The difficulties faced in the sector were examined in 2005 in an evaluation of partly satisfactory operations in the Lao People’s Democratic Republic. Problems experienced included (i) inadequate project design, including insufficient understanding of the problems and opportunities viewed from the perspective of beneficiaries; (ii) no clear distinction between addressing the needs of subsistence farmers and options for commercialization of agriculture; (iii) project complexity; (iv) weak institutions; (v) shortfalls in operation and maintenance; (vi) marketing impediments confronting farmers and agribusinesses; and (vii) adverse impact of external factors (e.g., declining farmgate prices through much of the 1980s and 1990s). These problems are pervasive throughout the agriculture sector in both OCR- and ADF-funded projects. Nevertheless, since the livelihoods of about 80% of the population in the region depend directly or indirectly on agriculture, the sector remains important for virtually all countries. Some ADB irrigation and drainage projects have achieved good results. When successful, such projects bring significant gains to the beneficiaries. For irrigation projects, the key success factors were (i) an enabling policy environment; (ii) involvement of stakeholders and beneficiaries during all project phases, particularly operation and maintenance; (iii) participatory techniques to develop a sound understanding of the roles and responsibilities of farmers and water user associations and to create a climate in which participants are willing to pay irrigation fees; and (iv) adequate water supply reaching tail-end users, who are usually small farmers. The characteristics of successful irrigation and drainage projects are outlined in the box.

       Box 7: Characteristics of Successful Road Projects

      • Adequate levels of traffic use the completed roads; traffic growth is associated with economic growth.

      • Vehicle operating costs and journey times were reduced and transport services improved.

      • Continuity of ADB’s engagement in a country’s road sector and of ADB staff involvement had a positive influence on ADB’s contribution to project success. Reform initiatives were often pursued through a dialogue spanning several lending and TA operations, sometimes covering a decade.

      • Good quality at entry covered the quality