Small-Scale Irrigation & Conservation Report No: ; Type: Report/Evaluation Memorandum ; Country: Ethiopia; Region: Africa; Sector: Irrigation & Drainage; Major Sector: Agriculture; ProjectID: P000731 The Ethiopia Small-Scale Irrigation and Soil Conservation project, supported by Credit 1765-ET for US$7.0 million equivalent, was approved in FY87. The project was cofinanced by the International Fund for Agricultural Development (IFAD) (US$11.0 million equivalent), and the Organization of Petroleum Exporting Countries Fund (US$4.0 million equivalent). The Credit was closed in FY97, three years later than planned and US$2.4 million equivalent was canceled. The ICR was prepared by the FAO/World Bank Cooperative Program and finalized by the Africa Regional Office. A summary of the borrower’s comments is attached as an annex. Cofinanciers’ views were considered during preparation of the ICR. The project’s principal objectives were to increase food production in drought prone areas through the development of small-scale irrigation for 25,000 farm families and control land degradation in the highlands to benefit 300,000 families. There were five components: (i) institutional capacity building through technical assistance, staff training, and provision of equipment; (ii) construction of small-scale irrigation infrastructure; (iii) provision of agricultural support services; and (iv) soil conservation through biological bund stabilization. The irrigation component, covering 4,400 ha, was to be the first phase of a long-term development program focused on strengthening irrigation and agricultural institutions. The soil conservation component included stabilization of soils over 9,500 ha, conservation-based agricultural trials, extension services, and support for development of rural women’s vegetable plots and associated micro-credit. The project was implemented during a period of intense political, administrative and social turmoil that dramatically slowed implementation. Initiated within a socialist collective farming and marketing system, the physical implementation of the irrigation and soil conservation components made no progress for the first five years because 95 percent of farmers refused to work within the collective system. Conversely, throughout the project, the institutional capacity-building components were very successful in training a cadre of competent irrigation, agricultural extension and soil conservation professionals in the line agencies. These professionals were the foundation of the project’s later success following the overthrow of the Derge government in 1991, devolution of implementation to new regional agencies in 1991/92 and the return to a market economy. As a result of these problems, a mid-term review in 1992 extended the project by three years, reduced the irrigation and soil conservation target areas by 20 and 80 percent respectively, and started Water User Associations (WUAs), a concept introduced by the Bank in 1990. The revised irrigation target was substantially achieved, while that for soil conservation was exceeded. The number of women’s vegetable gardens and related micro-credit achieved more than 150 percent of the appraisal target. At project completion, all irrigation schemes had active WUAs competently managing and paying for operation and management. Farmers, aided by agronomic trials, demonstrations and training developed by the project, are very responsive to the free market economy, and in irrigated areas have switched from subsistence to high value crops. The ICR estimates the economic rate of return for the irrigation component (94 percent of total costs) at 25 percent, compared to 19 percent at appraisal. Recognizing the success of the project, IFAD has recently negotiated a nation-wide second phase targeted on smallholders. The Operations Evaluation Department (OED) agrees with the ratings in the ICR except for Bank performance. Project outcome is rated as satisfactory, sustainability as likely and institutional development impact as substantial. OED downgrades the ICR rating of Bank performance from satisfactory to unsatisfactory despite good supervision in the last three years, because the main project components (except training) as appraised were unworkable, since: (i) a large number of experimental subcomponents under different agencies required intense coordination for which capacity and ability were lacking, and (ii) it was unwisely assumed that farmers would accept being forced to work in the collective farming and marketing system. While the project was eventually successful, this was due more to pent-up demand released by the return to a market economy than the design of the project. The main lesson from this project is that while top-down collective farming and marketing offer strong disincentives for development and growth, farmers will voluntarily form associations, such as WUAs, if they are demand driven and provide clear benefits. The ICR is satisfactory and provides a candid account of this project. No audit is planned.