The Aga Khan Rural Support Program
A Third Evaluation
Report number: 15157
Publication date: 12/11/95
Document type: Sector Study
This summary highlights the main findings of an evaluation of the Aga Khan Rural Support Program conducted by the World Bank's Operations Evaluation Department (OED). Chapter 7 examines in detail the implications of these findings on the program's future.
AKRSP, in its thirteenth year of operation, continues to be an effective instrument to improve community productivity and family welfare in Pakistan's Northern Areas and Chitral. Improvements have resulted from the program's interventions in productive investments, in production-support investments, such as access roads, in training, and in financial and technical services. A key element has been institutional development at the village level—village organizations (VOs) and women's organizations (WOs)—which has provided the framework to organize the energies of community members to avail themselves of outside assistance, as well as to direct their own resources into more productive endeavors.
Not all of the positive changes that have accrued in the Northern Region are due to AKRSP. Many non-program [Note] investments and activities have contributed to development, a prime example of which is the Karakoram Highway. Other government and nongovernment investments and services have played a role in social and economic change. Nevertheless, AKRSP has demonstrated that an external agent can facilitate the organization of communities to develop their own self-help capability, provided that the agent has the appropriate strategy and the facilities and staff to implement it effectively.
AKRSP has reached a stage where it needs to take a hard look at where it stands vis-à-vis development in the north, and what its future role should be in attaining its objectives of sustainable and equitable development. The rural population's participation in VOs is already very high in the district of Gilgit, where nearly three-quarters of households are members, and in Chitral and Baltistan, where about two-thirds of households claim VO membership. In the remaining parts of these regions and in the district of Astore, which was only recently included in the program, there is still opportunity to continue and expand the traditional AKRSP activities. However, in districts where AKRSP has been active for longer periods, a different set of issues needs to be addressed, namely, how to:
These issues gave rise to the appointment of a Strategy Development Committee (SDC) in 1992 to assist the owners and board of AKRSP in defining the appropriate future direction and scope of the program. The OED evaluation mission examined these same issues and the committee's proposals, which were being finalized at the time of the mission. The evaluation also reviewed the program's impact to date, and the efficiency and effectiveness of its various development instruments.
Comprehensive household income surveys, undertaken for the first time in 1992, do not provide a basis for an overall quantitative assessment of the program's impact on the targeted population. However, AKRSP has intensively monitored the implementation of its development instruments and undertaken numerous studies to evaluate their effectiveness. This and secondary data provide a reasonable basis for program evaluation.
Average household income appears to have almost doubled in real terms during the program implementation period. The basic production system of most households, which is a mixture of agricultural/livestock production and off-farm, often nonagricultural, use of family labor, has not changed. However, agriculture is still usually the major source of household income, and improvements in agriculture have made a major contribution to income improvement. AKRSP has been a partner in this agricultural development.
The land area under cultivation has substantially increased due to productive physical infrastructure projects (PPIs), which have enhanced the supply of irrigation water. This has been important for the expansion of cash crops such as fruit trees and vegetables, and also for forestry, which has a longer-term benefit, and alfalfa as a fodder crop for livestock production. The enhanced ability to procure inputs and dispose of outputs through program services and improved village access has complemented the improvement in the resource base, resulting in greater productivity and lower unit costs of production.
Credit has been made easily accessible so that households have been able to purchase more production inputs and hold onto produce when prices are low. The women members of households have benefited from special programs through WOs, including vegetable and small-scale poultry production, and have realized a degree of independence by having their own personal savings accounts.
However, not all program activities have been equally successful, and major adjustments need to be made to improve the effectiveness of some development instruments. Also, the persistence of the typical household economy model, in which nearly half of the income is non-farm related, emphasizes the need to examine longer-term prospects and opportunities in designing support strategies.
The Gilgit region has more complete coverage than other areas, which is largely related to its longer period of program participation. It also has more economic development, but this can be linked to its location, which provides more opportunities than the other regions. However, overall, AKRSP appears to be substantially meeting its objective of distributing development opportunities equitably among regions, communities, and households. This does not mean that benefits have been distributed equally. Rather, it means that differences can be largely explained by variations in the level of resources available to, and in the initiative of the leadership within, a community or household.
AKRSP aims at (a) improving the welfare and income of the majority of households, (b) ensuring that its grant and any subsidized support are, indeed, equitably distributed, and (c) undertaking specific programs targeted to improve the conditions of those who appear unable to benefit from available opportunities without special assistance. Performance is satisfactory in all three functions, and the women's program is an example of the latter function. However, continued vigilance is required in monitoring this aspect of AKRSP support within communities.
The PPIs in communities are often land-based (for example, irrigation channels and new crop land) and are distributed equally to all landholders, with favorable effects on resource distribution. However, although the Northern Region is unique in Pakistan in that virtually all rural households who rely on income from agriculture actually own land, situations could arise in which poorer households do not own land and do not share in land-based PPI benefits. Such situations would require special interventions to realize AKRSP's equity objective. Similarly, the uptake of services also warrants careful monitoring to ensure that those with more resources do not capture an inappropriate share.
Within households, despite the creation of women's organizations and significant advances in a targeted program to assist members, it has been more difficult to effectively provide equal opportunities to all women. Illiteracy and religious and cultural factors inhibit change in the traditional role of women, more so in some locations than others, and the program has to be realistic in estimating the pace at which change can be achieved. Nevertheless, programs should be carefully designed and monitored to be responsive to these constraints wherever this is feasible. More targeted programs may be warranted to reach the less fortunate women in communities.
There is a growing realization of the value of the village organization concept. The government of Pakistan has agreed to use the village organizations as the instrument to channel its national Social Action Program in the Northern Areas; the chief secretary of the Northern Areas has instructed line departments to maximize use of village organizations in implementing government programs; and the government recently used the VOs and AKRSP to distribute rehabilitation funds following the disastrous rains of 1992. Many village organizations have been in existence since 1982 and 1983, and it could therefore be expected that they have matured into stable self-sustaining entities if the program's objective of developing self-help institutions is realistic. In practice, there are many that now exhibit these characteristics, especially in some areas of Gilgit region, but successful VOs are also found in the other two regions. However, the majority still need assistance if they are to realize their potential.
Improving the skills of individuals and the leadership in VOs will help, but the most important factor determining their future will be a perception in the community that the VO will continue to provide significant benefits that are not likely to be obtained by other means. The initial benefits have been very obvious, but the task is now to verify and demonstrate that the longer-term benefits of continuing with the institution are worthwhile. Advantages could be in the form of (a) more effective interaction with outside agencies to acquire benefits and services for the majority, (b) greater access to capital resources for productive or consumptive use through sustainable savings and lending arrangements, (c) organization of the use and maintenance of common and shared property, and (d) provision of a mechanism for resolving internal or inter-community disputes.
An important development has been the links encouraged by AKRSP between the village organizations and outside agencies to allow VOs to capture more development and social services. To fully realize this potential, however, AKRSP will have to be perceived as having no biases and as providing no preferential treatment to any particular area, sect, or type of community. Despite the potential advantages of these links, it should not be assumed that a government agency can simply substitute for a nongovernmental organization like AKRSP in implementing effective dialogues and action programs with communities through the VO. It is likely that AKRSP will have to provide training to relevant government agencies if this mechanism is to be used effectively.
To date, the program has not encouraged the formalization of the village organizations' status to maximize community perceptions that VOs are their own institutions. However, in view of the VOs' emerging role as partners in government investment programs, and as entities involved with the proposed Northern Region Development Bank, it appears necessary that consideration now be given to the adoption of some legal or quasi-legal structure.
The PPI program has had a substantial economic development impact and has been very effective in providing the basic incentive for communities to form village organizations and enter into development partnerships with AKRSP. However, the program has slowed down in recent years, especially in areas that have had longer exposure to AKRSP activities. Although many VOs have been able to avail themselves of additional investment support from AKRSP by being involved in multi-community "cluster" projects and by participating in such programs as forestry development contracts, the policy has been to limit the PPI grant to a single investment. This is consistent with the objective of fostering a self-help attitude and avoiding the dependency syndrome. However, there is obviously a big potential to accelerate development by more infrastructural investment. This is especially so for irrigation development, as this not only expands the productive resource base, but also allows the use of higher value crops, both of which have demonstrated their contribution to program benefits.
This suggests that AKRSP should become more proactive in identifying additional infrastructure investments that (a) provide substantial common good, (b) are beyond a community's capacity to initiate and fund by itself, (c) are of a type where the VO labor resource could make a significant contribution, and (d) would be amenable to VOs' taking responsibility for operation and maintenance subsequent to construction. This is consistent with the wider area planning function envisaged for AKRSP's engineering section. The latest Strategy Development Committee paper proposes an expanded program and assumes that funding would be largely provided by governmental, bilateral, and other nongovernmental programs complementing community contributions in cash, in kind, or as borrowed money. However, there are likely to be many situations in which a grant from AKRSP would make a funding package viable and would give the program greater leverage to ensure efficient implementation and the opportunity to influence any equity considerations that might be warranted. Such participation should not exacerbate dependency, as the communities would be active contributors and would be responsible for eventual operation and maintenance. Success in involving VOs with government agencies in this type of productive or social infrastructure would do much toward introducing a system that allows communities to become directly involved in the local and regional planning process.
Important new technologies have been introduced in fruit, vegetables, potatoes, and forestry, and significant advances have been made in animal health and poultry production. However, much less impact has been obtained in cereals and animal nutrition, the production and provision of which account for the majority of resources, in terms of time and money, in rural households. The evaluation considers that significant improvements can be made in the NRM program, and that greater emphasis should be placed on it in the next phase. This is also in accordance with the Strategy Development Committee's recommendations and with the thinking of AKRSP's senior staff and management. Improvements can be made in the techniques used to identify the needs of different types of farming households and to generate relevant technologies to meet these needs.
A greater understanding of the constraints and potentials of households in the major categories of production systems should not influence only technology development, but also the whole dialogue process through which AKRSP plans its interventions with communities. The relatively standard solutions to problems identified in dialogues suggest that the responsiveness of the process is less than it should be, especially when some of the "solutions" have achieved only low levels of adoption.
Recent initiatives have attempted to make the program more responsive to local needs by decentralizing it to the regions and ultimately to field management units. While this appears logical, the difficulty of attracting and retaining skilled staff has to be taken into account when locating personnel and formalizing links among the different levels of AKRSP's natural resource management program. Nor does the evaluation team believe that, on its own, this will be enough to instill the required farming system perspective in NRM staff and meet the requirements for more appropriate technology development.
Suggestions are made for an approach that involves key farmers in project design and in evaluation of the results of experimentation. This, however, would require more staff and funding than is currently envisaged. Nevertheless, this approach is sufficiently important to warrant its consideration as a specially funded project. It is also possible that international entities that specialize in this field may be interested in collaboration. A relatively high profile project with international collaboration may be able to overcome the problem of retaining natural resource management staff of quality. Links with the national research system would also be essential to ensure the long-term sustainability of the adaptive research investment. The possibility of contracting out parts of the adaptive research program to entities with comparative advantage should be considered.
AKRSP's training programs have made a major contribution to developing human resources. The concept of training villagers in specific fields so that these individuals will continue to provide services within their communities has been a key element in the AKRSP strategy.
However, results have not been uniformly good, particularly in the technical fields. Where the specialist provides a service that is generally appreciated as a specialized skill, such as budding/grafting fruit trees, or involves a skill and incurs a cash cost, such as administering vaccines or drugs, there is a greater willingness for other members of the community to pay the individual for services rendered. There is less willingness to pay for general agricultural advice. It has also been difficult for AKRSP staff to adequately support the specialists. AKRSP has responded to this situation by recently focusing a lot of attention on the development of "master trainers." This involves more intensive training of selected specialists to increase their skill level, but also assistance to carry on a business associated with the specialized skill area, such as the supply of inputs as vaccines or pesticides. This program promises to add a permanence to the technical service system, as these master trainers should consider it in their interests to continue to enhance their skills and to provide appropriate advice along with their provision of inputs. They are also likely to solicit the cooperation of the more numerous specialists who would be represented in most communities. However, after AKRSP terminates its intervention, it will still be necessary to have a technical support system for such experts. This emphasizes the need to increasingly promote links not only with private sector providers but also with government departments that can provide some relevant support in the future.
Realization of the intended role of village organizations as full partners in development will be enhanced if there is a greater depth of management training in VOs. In addition, the future program is likely to imply cooperation by a number of VOs in larger projects in many instances, and a cadre of managers with special skills will be needed to assume leadership roles in a multi-community setting. The proposed new developments in village banking will require substantially expanded training of selected individuals in accounting and management. This program will also need more intensive follow-up support in the field if it is to realize its full potential.
Another important aspect of human resource development relates to the training of AKRSP staff. It has always been the program's policy to recruit local staff to the maximum extent possible. However, in the case of senior staff positions it has often been necessary to recruit non-northerners because of the scarcity of suitably trained local candidates. This approach has been legitimate, but AKRSP has probably not placed sufficient emphasis on ensuring that local staff receive preferential advanced training opportunities to enable them to assume senior posts in their local area. Had this been done in a concerted program, some of the recent staffing difficulties referred to below might have been avoided. This matter, however, has recently received management's attention, and appropriate scholarship arrangements are in place.
The marketing program has evolved considerably. The earlier emphasis on cooperative marketing has decreased, and the focus is now more appropriately on improving the skills of producers in handling, processing, and presenting their produce and on providing links with established markets and/or traders. The two cooperative marketing ventures that have been established have been beneficial in achieving higher prices for their members, as both involved products that were particularly suited to this type of intervention. However, both ventures—the Baltistan and Gilgit apricot marketing associations—still need nurturing to ensure that business acumen is adequately instilled in management. The marketing section has also expanded its horizons into promoting the establishment of nonagricultural business enterprises, such as village guest houses to capitalize on the potential tourist market, and in 1992 changed its title to Enterprise Development Division (EDD).
The proposed creation of the Enterprise Support Company (ESC) will necessitate a clear definition of its and the EDD's responsibilities.
The savings and credit program has contributed to the establishment of VOs as useful community institutions and has facilitated economic development by making credit accessible to the majority of the population in the program area. It has been a flexible and responsive instrument that has evolved as it learned from experience. The village and women's credit programs introduced in the 1990s have been particularly effective in involving communities and households in the credit process. However, there is a trend of deteriorating repayment performance in AKRSP's credit portfolio that must be monitored closely.
The proposal to formalize the savings and credit program in a bank specifically for the Northern Region (NRDB) is appropriate. It provides the opportunity to build on the relatively good performance this instrument has enjoyed to date and to create a permanence needed to provide continued financial support for local development. Successful establishment of this institution, however, will require increased professionalism in financial intermediation. This will include a shift in strategic focus from meeting credit needs to creating debt capacity, building financial information systems, introducing other measures to control and manage risk, improving operations support and training at the VO/WO level, and increasing controls and other internal prudential oversight.
The Northern Region Development Bank's unique financial structure—in having grant equity that does not have to yield dividends for shareholders—provides it with several options to increase its outreach to clients. First, it could undertake more lending by offering longer-term loans. This would increase the risk in its portfolio, as risk is created by longer-term commitments. It would require a high level of market and client information. Second, it could take advantage of the low cost of NRDB's funding by subsidizing lending for particular types of investment. Subsidized lending was suggested by the program's consultants for social infrastructure projects with a large "common good" element. This, however, can create expectations that are hard to contain and incentives to deal with losses in a nontransparent way. The inclusion of a transparent grant element in an investment package to make a loan on regular terms more viable may be more appropriate. Finally, NRDB could choose to subsidize savings through attractive interest rates and staff costs required for an aggressive savings program. Since all VO/WO members save, and because others in the area also save, a subsidy for savings would benefit the greatest number of people.
The Enterprise Support Company is intended to finance investments that potentially have high social and catalytic benefits, but carry excessive risk for a regular lender. The company's business projections show that it is unlikely to be profitable. Some of NRDB's annual profits will be transferred to ESC's equity. It also has a number of features that allow it to interact effectively with local markets and entrepreneurs. This is a challenging role that will require very skillful management. If failure to repay, for any reason, is widely witnessed and not effectively dealt with, some of those who are in a position to repay may decide to attempt to evade repayment. One way to avoid formation of this culture is to try to ensure that borrowers stand to lose more than lenders when loans are not repaid.
Because of the importance of containing any expectation of debt forgiveness, it may be more appropriate to include in ESC the social infrastructure lending currently proposed for NRDB, as this appears to be the most problematic activity proposed for the bank.
The women's organization has proved to be an accepted and viable forum for village women's participation in the Northern Region's development process. The WO should be strengthened in the next phase of AKRSP's work. While requests from new communities should be met, the program should now focus on the quality of interaction with existing WOs, along with encouraging more household coverage in each community.
Improved staff monitoring and follow-up of the women's organizations is called for, and more flexible implementation of various packages is also necessary. AKRSP's activities in the area of appropriate technology should be carefully reviewed. The introduction of viable labor-saving technology that is accepted by the local populace is crucial—especially for women—but has not been very successful to date.
In introducing program activities of a more sophisticated financial nature, it will be important that women are not left out of the process. This calls for intensive training of selected women from WOs in entrepreneurial skills. At the other end of the continuum of women's organization membership are the vulnerable women of poor households. These women, who are most in need of assistance, are often left out of WO activities, and this problem needs special attention.
The links AKRSP has been encouraging among VOs/WOs and governmental and nongovernmental agencies in health, water supply, and education are especially beneficial to women. AKRSP, through the women's organization vegetable and poultry packages, has directly enhanced household nutrition and provided a source of cash income for many women.
Integration of gender-related staff and activities into the mainstream program should be continued, but not without careful planning and constant evaluation of this complex process. The role of each region's women-in-development monitors will be especially important in monitoring the effects of the integration process. Additional gender-related workshops should be organized to encourage open discussion of difficulties that will inevitably occur.
AKRSP's new management has already demonstrated a capacity to address management, personnel, and operational issues effectively. However, a number of significant morale problems are affecting productivity. These will have to be addressed quickly if AKRSP is to return to its former levels of efficiency. In the process of implementing AKRSP's emerging strategy, open communication among all levels of staff and management will be essential.
An expanded role for AKRSP as a facilitator or catalyst is appropriate and should enable increased and more effective development investment in the Northern Region. To maximize the potential benefits of this role, however, AKRSP will have to maintain a reputation as an unbiased, nonsectarian, development support institution. A completely transparent structure and relationship among the owners, board, and management of AKRSP will support its position. The emergence of the two new institutions—Northern Region Development Bank and Enterprise Support Company—make this transparency even more essential, as these will involve control over considerable financial resources in the region.
The program's monitoring, evaluation, and research section has accumulated extensive evaluation data, especially over the last five years, which has the potential to allow management to make more informed decisions on program strategy and content. However, this wealth of information is not being used properly. Of particular importance is the household income and village and women's organization performance data. This data can make a very useful contribution to developing greater understanding of the circumstances of different types of households in the various parts of the program area, which is necessary to develop a total household perspective when considering project interventions. Categorization and description of the population should feed into most types of training and into the formulation of AKRSP's longer-term and annual programs.
Debate continues on the extent to which the AKRSP model is replicable. However, while it is unlikely that the experience can be, or even should be, transferable in every component, there is little doubt that its principles are widely applicable. This is proven by the fact that they are being actively used in other programs in, and beyond, Pakistan.
AKRSP must be considered a successful program. It has made a substantial development impact in a very difficult environment. It has not attempted to maintain an enclave development approach, but has progressively integrated into the overall development process, with government and other investors. This, and the principle of insisting on developing a self-help capability with cooperating communities, augur well for sustainability of its impact.
The program has imperfections. However, these can be addressed through adjustments in policy and in resource allocations. It is hoped that this evaluation will make a contribution to these adjustments. The next phase of the program will give birth to a new series of problems and challenges. However, with a clear strategy and the appropriate relationships among staff, management, the board of AKRSP's institutions and their owners, and the donor community, the program's successes should continue.
The evaluation team's recommendations and suggestions for the program's future direction are further elaborated in Chapter 7.
"Program" is synonymous with the Aga Khan Rural Support Program.