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Chapter Three

Major Programme 3.2: Support to Investment

I. BACKGROUND

A. Problems and Issues

243. Investment in Agriculture: In the face of continuing population growth, substantial investment in agriculture and the rural sector is essential in order to meet the food needs particularly of developing countries and also to stimulate general economic and social development. Although the world as a whole has been generally successful in recent decades in meeting aggregate food demand, food insecurity persists for some 800 million people and poverty for an even larger number. Development strategies addressing these problems must be underpinned by carefully designed investments in agriculture and the rural sector, including investment support from external sources. Past years have seen an increased flow of private capital into developing countries (from US$ 45 billion in 1990 to US$ 266 billion in 1996), but this flow has been mostly directed to non-agricultural sectors, bypassing most Low-income Food-deficit Countries (LIFDCs). The recent economic crisis has also shown that such capital flows can be unstable, with adverse effects on economies of developing countries.

244. Multilateral development financing institutions have played a major role in mobilizing investment support for agricultural and rural development, but their lending for those sectors has generally declined over the last decade. Starting in the second half of the 1980s, World Bank (IBRD and IDA) lending for agricultural and rural development, for example, fell from almost 30 percent of total lending in 1986 to around 12 percent in fiscal years 1995/96 to approximately 10 percent in FY 1998. The general decline masks some striking regional differences - the Bank's agricultural lending for Africa fell steadily from an average of US$ 612.8 million in FYs 1989-93 to US$ 301.3 million in FY 1996, and to a low of US$ 176.9 million in FY 1998. A general downward trend in World Bank lending for agriculture is noticeable also in the Latin America and Caribbean and the Middle East and North Africa Regions, while the South Asia and East Asia and the Pacific Regions registered a general increase in agricultural lending. The World Bank does not stand alone; the agricultural lending of the African Development Bank (AfDB), the Asian Development Bank (AsDB) and the Inter-American Development Bank (IDB) all decreased from the mid-1980s and started showing a recovery only recently.

Chart 1 Agriculture as a Percentage of Total Lending by Principal Financing Institutions

AGRICULTURE AS A PERCENTAGE OF TOTAL LENDING BY PRINCIPAL FINANCING INSTITUTIONS

Fys 1986 - 1997 (1998 data mostly not available yet)

245. Against this backdrop, estimates by FAO in its study World Agriculture: Towards 2010 (WAT 2010) suggest that there are reasonable medium-term prospects for maintaining an overall balance between food supply and effective demand, although the elimination of chronic undernutrition remains a formidable challenge. The world community pledged at the World Food Summit in 1996 to reduce the number of malnourished and hungry by 50 percent by the year 2015 - an undertaking that requires very substantial external assistance to developing countries both in the form of grants and loans, as well as other contributions from the private and public sectors.

246. Rationale for FAO Involvement: FAO since its inception has been instrumental in catalyzing and supporting investment in agriculture, offering its services mainly in the identification and preparation of investment programmes, acting as an independent honest broker, and providing developing countries with impartial technical advice on investment projects and programmes. FAO, as the United Nations' specialized agency for food, agriculture, fisheries and forestry built up its investment support activities as a logical extension of its basic mandate, i.e. to bring the Organization's expertise into the service of national governments through assisting them to access funds from the international financing institutions (IFIs) for agricultural investment.

247. Over time, agricultural investment programmes and projects supported by IFIs have changed in substance and nature. When the World Bank's agricultural lending reached significant levels in the mid-1960s, emphasis was placed mainly on large-scale infrastructure projects, a pattern that was followed also by other IFIs which later began lending for agriculture. With experience, the lending philosophy and procedures of IFIs have changed and started to include, among others, targeted assistance to the poor, as well as considerations of the complex relationships between investment in agriculture and food security and environmental sustainability. Development agencies and IFIs alike now increasingly pay attention to the issue of ownership of agricultural investment programmes and projects by borrower governments and ultimate beneficiaries, a move which has led to a more diversified and consultative approach to project identification, preparation and execution.

B. History of the Investment Centre

248. FAO/WB Cooperative Programme: Support to Investment was institutionalized within FAO in 1964, when the World Bank (WB) began lending substantial amounts for agriculture and the FAO/WB Cooperative Programme (CP) was established 47. The 1964 World Bank/FAO Memorandum specified that a cooperative programme with a "team of specialized personnel of high calibre" would be established as "an integral part of the FAO Secretariat". For this purpose, the Investment Centre (IC) was created as a unit dedicated to collaboration initially with the World Bank; the IC mandate was eventually defined as working with governments primarily in developing countries and IFIs on mobilizing resources for agricultural and rural development from both domestic and multilateral sources of finance, through providing assistance primarily on investment project identification and preparation.

249. Progressively, the Investment Centre's collaboration partners expanded to include regional development banks, IFAD and other IFIs, and the Centre has become FAO's largest multidisciplinary division (between 80 and 100 professionals), with expertise ranging from economics (and other social sciences) to agriculture, forestry, fisheries and natural resources. The World Bank has remained by far the most important IFI, accounting for around 50 percent of the Investment Centre's total work (in staff delivery) during the period under review (1992-98).

250. Investment Support Programme (ISP): Collaboration agreements with the Inter-American Development Bank (IDB) in 1965 and with the African and Asian Development Banks (AfDB and AsDB) in 1967 led to the creation of the ISP in 1968-69 - similar arrangements have since been established with a number of additional IFIs (now a total of 20 institutions), including IFAD (1977) and the European Bank for Reconstruction and Development (EBRD, 1994 and 1997). From a relatively low base of less than 15 percent of the Investment Centre's work in the late 1960s, the ISP's share rose to around 33 percent in the mid-1970s and surpassed 50 percent for the first time in 1997. The three largest individual partners under the ISP during the review period have been IFAD, the African Development Bank and the Asian Development Bank; cooperation with the IDB started to recover since the signing of a new memorandum in 1998.

251. Present Structure: The Investment Centre (now TCI) currently comprises Director's Office and Project Advisory Unit (TCIU) and five Services, three of which are dedicated to the FAO/WB CP and organized along geographical lines (TCIE - Europe, Near East, North and East Africa; TCIP - Asia and Pacific; TCIL - Latin America, Caribbean and West Africa). The remaining two services 48 under the Investment Support Programme (ISP) are dedicated to the IFAD/UNDP/UNCDF/WFP Cooperative Programme (TCII) and to Regional/Sub-regional and National Development Banks (TCIR). A FAO/WFP Liaison Unit was integrated into the Investment Centre in 1994, and since 1997, it has been incorporated into TCII. In recent years, there has been an increasing trend for staff working across the CP and ISP programmes. Under FAO's recent re-organization, TCI's Management Support Unit has been disbanded and moved to the departmental level in line with the general consolidation of administrative support services in FAO. Similarly, a number of staff have been outposted to FAO Regional and Sub-regional Offices, major partner IFIs, and geographical areas where there is a consistently high demand for TCI's services. The outposting is intended to contribute to better country knowledge among TCI staff, improved understanding of the needs of the financing agencies in the countries, quicker response time, and more efficient support for visiting field teams49 .

252. Up to the 1980s, TCI tended to function in relative isolation from the rest of FAO. This was likely due to the special relationship the Centre enjoyed with IFIs under the cooperation arrangements, including substantially different work programmes and approaches, and also the near self-reliance of TCI in terms of technical expertise available within the division. Frequent travelling of TCI staff also reduced the contacts with other FAO staff. During the 1990s, there has been a significant increase in interaction with other FAO units through more joint activities (missions, staff seminars, reviews) and as the division has become involved in some aspects of FAO's technical assistance activities, including those under the Special Programme for Food Security (SPFS). At the same time, the Centre has facilitated practical links between the WB and FAO's technical divisions.

II. PURPOSE, FUNCTIONS AND RESOURCES

A. Purpose and Partnerships

253. Purpose: Throughout its existence, the overall mandate of the IC has remained largely the same: working with the governments and IFIs on mobilizing resources for agricultural and rural development from both domestic and multilateral sources of finance, in particular through providing assistance in identifying projects suitable for IFI's funding support. A secondary aim has been to contribute to strengthening of the capacity of these countries so that they can eventually take over the formulation of projects themselves. As part of a UN agency, TCI's professed aim is to provide impartial, objective advice in the interests of the countries it serves.

254. Thus, key elements of TCI's work have been: identification of suitable investment opportunities - to assist countries with sector and sub-sector studies on investment needs for agricultural and rural development; formulation assistance - to assist the implementing agencies with detailed investigations, studies, and consultations needed to complete preparation of agricultural investment projects for external financing; and national capacity building - to help strengthen national expertise and experience in project identification and formulation, through on-the-job practical training to national counterpart teams.

255. However, over time different aspects of TCI's work have been emphasized and new thrusts added to the work programme. Prominent among the areas more recently added to TCI's work have been the following:

256. Partnership Arrangements: The Centre operates under collaborative arrangements with all major development financing institutions in the agricultural sector; at present, 20 cooperative programmes with such partner institutions are operational. As a rule, the IFI concerned and TCI spell out the business conditions governing the cooperation, and specify the areas of particular mutual interest. Some make reference to the development of joint work programmes (for example that with the AfDB); while others (e.g. with IFAD) are not specific on this point. TCI work programmes with the main IFI partners are negotiated by the respective TCI programme managers through semi-annual meetings.

257. Several Memoranda of Understanding (MOU) between FAO/TCI and IFIs have been amended, revised or newly formulated in line with the changing lending policies and orientations governing the institutions' specific development approaches. A recent example is the 1997 MOU with the WB, which calls for broadened cooperation between FAO and the WB in Africa following the 1996 World Food Summit, including cooperation on FAO's Special Programme for Food Security. Particularly cited are low-cost water control and land management, soil fertility enhancement, crop intensification and diversification and the analysis of policy constraints, together with capacity building. It also envisages cooperation between the two institutions on a number of other topics, such as statistics, fisheries, forestry, food safety and Integrated Pest Management (IPM). To strengthen coordination of cooperative activities, TCI has outposted staff to the World Bank and three other IFIs (Inter-American Development Bank, AfDB and AsDB).

258. While the MOUs with the IFI partners do not follow a standard formula, the main distinction between the WB and the other ISP partner institutions lies in the cost-sharing principle. Budgeting under the CP is on a programme basis - TCI and the WB decide on an annual work programme whereby the WB bears 75 percent of the cost and FAO 25 percent. The ISP cost-sharing formula is based on a project-by-project basis whereby the IFI covers roughly two thirds of the cost and FAO the remaining one third (in initial ISP reimbursement arrangements, FAO's share was as high as 50 percent). Thus, when ISP staff are not being employed for work with the IFIs, their staff time is covered by the FAO budget 50.

259. Collaboration with the World Bank during the period reviewed shows a fairly steady volume, with the total man/weeks (TCI staff and consultants) delivered annually ranging from 2 100 to 2 300 man/weeks. On the other hand, there have been significant variations in the annual volume of collaboration with ISP partners - AfDB from 240 to 520 man/weeks, AsDB from170 to 280 man/weeks, IFAD from 300 to 700 man/weeks. Some fluctuations in the annual level of collaboration may be explained by developments in TCI's partner IFIs, in addition to the generally reduced funds available for lending. Many IFIs have had successive budget cuts affecting resources available for project identification and preparation, including a reduced amount of untied funds for recruiting consultants. For TCI this has translated into reduced budgets for an increasing number of different tasks. Despite such annual fluctuations between various IFIs, the total delivery of TCI has remained fairly constant: 9 559 man/weeks for 1992-93, 8 974 man/weeks for 1994-95, 9 164 man/weeks for 1996-97 and 4 642 for 1998 alone.

260. Concomitantly, reorganization and restructuring in some of TCI's major partner organizations has had the tendency to cause temporary interruptions in work programmes. In the case of the World Bank, its internal re-organization has resulted in important changes in the programming process for TCI. In particular, decentralization of operations within the Bank, together with the devolution of responsibility to national authorities, has meant increasing involvement of the Bank as well as the countries in the organization and backstopping of a mission.

B. Functions

261. Range of Services: The Investment Centre provides the IFI partners and countries with a range of services primarily for identification and preparation of investment projects in which the former is expected to assist the latter in funding. Generally, project identification and preparation work is seen as the responsibility of the borrowing parties. The Centre's role is to advise and assist developing countries in formulating investment proposals that reflect the national needs and concerns, are soundly prepared, and can meet the lending criteria of the IFIs concerned. At the same time, the Centre assists the IFIs in expediting the process of formulating proposals that meet their criteria.

262. In terms of the classical project cycle, the first step is project identification, i.e. to identify promising investment projects and to assess their priority in the framework of national development strategies or plans, as well as their likely feasibility and benefits. This process is usually preceded by the preparation of a country lending strategy or programme (such as the World Bank's Country Assistance Strategy - CAS), often supported by in-depth sector/sub-sector studies - such studies examine the development potentials and constraints, as well as feasible options, based on comprehensive review, covering socio-economic conditions, production systems, policies and institutional capacity as well as the needs of the potential beneficiaries. Such "upstream" processes are normally prepared by the borrower country and the IFI, but sometimes the Centre has been requested to assist in these processes.

263. The second stage of project preparation starts only when the government, the potential funding agency or agencies and the Investment Centre management have agreed upon the project concept. It consists of guiding and assisting governments in the different procedures of project preparation. The aim is to produce a feasibility study for submission to the identified financing institution through joint work with the staff of the government departments, agencies and local banks, as well as with the intended beneficiaries.

264. The Centre's work is always undertaken in close collaboration with local agencies: the aim is to complement rather than substitute national expertise. Increasingly, in those countries that have the institutional and staff capacity, projects are prepared by national staff, with only guidance or specialist inputs from the Centre. Detailed studies, including social and environmental assessments, are carried out by local teams during the preparation process supported by successive TCI preparation missions. Increasingly, such missions are becoming short in duration, with more specialized inputs to guide and support the progress of work by the local team. Over the years, distinctions between the individual stages of the project development process have also tended to become blurred. For example, in the case of World Bank projects, preparation has tended to become shorter and more flexible, blending with pre-appraisal. In some cases, two or more preparation missions may be needed to complete project preparation. In other cases, especially where preparation capacities are less well developed, the Centre assumes lead responsibility, in a more traditional mode, for project identification and preparation, fielding a series of missions until the work is completed.

265. Preparation is followed by pre-appraisal and/or appraisal of the projects, which are the responsibility of the financing institutions. Appraisal involves a systematic review of the proposal in all its details, in which the Centre is sometimes asked to participate. The TCI staff may also help the lending agency in the project implementation stage, by participating in supervision missions to ensure that the project is carried out as planned or, if necessary, modified to achieve agreed aims. More recently, the TCI staff have been assisting countries and financing agencies in the preparation of evaluation reports for projects whose implementation work has been completed (Project Completion Reports - PCRs, or Project Implementation Completion Reports - ICRs).

266. Another important function in the past was to act as a link between FAO's own Field Programme of technical assistance and the financing agencies. The Investment Centre used to screen FAO technical assistance (TA) operations, particularly UNDP-financed projects, for their investment potential. In the course of the decline of UNDP-financed projects, this systematic follow-up to FAO/UNDP TA projects was discontinued in 1993. However, the increasing involvement (through secondments and joint missions) of technical units in TCI's work has led to some collaboration between FAO technical units and IFIs (e.g. development of national statistics in West Africa, Soil Fertility Initiative, and small-scale water management).

267. The formal training of national staff from developing countries in the techniques of investment project formulation is a minor, but increasingly significant, function of the Investment Centre, but hands-on training is a major element of its work in the field. Such training is carried out during mission work when counterpart staff in member countries are guided and advised during project preparation. They may also participate in report writing and peer review in Rome.

268. With the launching of the SPFS, TCI has become more closely involved in FAO's own operational activities, usually for formulation, but also follow-up activities. Although formulation of the Special Programme is a national responsibility, in most cases an exploratory mission is fielded by the Investment Centre using either Headquarters or outposted staff. Such exploratory missions brief government staff and other interested parties on the SPFS, agree on the general scope of activities for inclusion in the programme, and help to put arrangements for national formulation in place. As noted above, apart from the SPFS, collaboration with other FAO technical units has intensified in certain fields (e.g. statistics, soil and water, forestry).

269. The Investment Centre also produces guidelines for the preparation of investment projects and it issues technical papers on key aspects of agricultural investment, which it shares with development practitioners (see also para. 285 below).

C. Resources

270. Staff: The Investment Centre maintains a strong multilingual, multidisciplinary technical staff of close to 100 professional officers. During the period under review, the number of staff in the professional and above category in the Investment Centre fluctuated between 94 filled positions in 1992 and 79 in 1998 (see Table 1). The staff resources are complemented by a substantial number of international consultants (between 1 864 man/weeks and 2 377 man/weeks per year) as well as a number of national consultants. In addition to regular staff, TCI has employed an increasing number of APOs, WB staff on a secondment basis, and four Young Professional Officers from developing countries.

271. The majority of TCI staff are economists, financial analysts, agriculturists and engineers, with fewer experts in forestry, fisheries, livestock, rural sociology and environmental assessment. The Centre has its own staffing and career development plans, and its staffing pattern has continually been adjusted in response to changing concerns, which has, for example, led to a reduced number of agronomists and a higher representation of environmental experts 51. The percentage of female professional staff increased from 7.8 percent in 1992 to 11.3 percent in 1998, still substantially below the FAO average of 21 percent (in 1998).

Table 1: Investment Centre Staff (actually filled positions)
  1992 1993 1994 1995 1996 1997 1998
Prof-CP 53 49 46 54 54 49 50
Prof-ISP 41 39 27 32 36 28 29
APOs 4 3 3 5 7 8 7
Total Prof & APOS 98 91 76 91 97 85 86
GS 93 86 71 70 68 69 71
Total 191 177 147 161 165 154 157
% professional vacancies 19.15% 18.48% 18.42% 29.63% 20.25% 21.33% 24.36%

Note: % professional vacancies counted by comparing actually filled positions against established posts

272. The TCI professional staff also includes a higher proportion of senior staff (21 D-1 and 42 P-5 posts) than other technical divisions in FAO. This is mainly because TCI, as a major collaborator of IFIs, tends to compete for the same group of professionals. As salaries and fringe benefits of IFIs are often considered more attractive than UN salaries, a somewhat higher grade structure compared to the FAO average offers a degree of compensation, which also appears justified in view of the financial magnitude of projects handled by TCI staff and their frequent travel commitments. Moreover, due to the nature of its work centred on missions, TCI needs to have experienced staff able to perform well on their own, working with IFI officers and consultants. In particular, it is important for TCI to have a group of experienced staff capable of leading multidisciplinary missions - presently, such staff numbers some 60.

273. Table 1 shows some increases in the professional vacancy rate since 1996. This seems to reflect three main factors: one is the desire of TCI management to retain the staff funds so as to be able to hire consultants for specific expertise not available within TCI (becoming more common with the increasing diversity and complexity of projects); the second is the use of parallel, 6-11 month posts, in order to try out promising candidates while the normal selection procedures are in process 52, and time required for the recruitment process.

274. TCI also continues to use substantial services of internationally and nationally-recruited consultants as well as FAO staff and FAO retirees (see Table 2). The use of consultants has been increasing over years (accounting for 45 percent during 1992-93 to 54 percent of the total man/weeks delivered in the last three years). Similarly, there has been a sharp increase in the use of FAO staff seconded from technical units. Both increases indicate the flexible approach adopted by TCI where its staff (actually in place) is kept at about 80-90 professionals, to be supplemented by consultants and FAO technical staff.

Table 2: Use of Consultants, Retirees and FAO Staff by TCI
  1992 1993 1994 1995 1996 1997 1998
International Consultants             *
No. 237 250 268 255 273 329 352
Man/weeks 1 864.0 1 914.8 2 074.0 2 197.0 1 981.0 2 376.5 2 350.8
FAO staff seconded             *
No. 17 15 18 17 26 36 46
Man/weeks 70.7 72.6 80.4 81.0 117.2 129.0 203.6
FAO retirees             **
No. 6 8 6 8 6 7 10
Man/weeks 62.7 82.6 49.8 46.4 42.6 69.4 56.4
* as of 10/98              
** as of 7/98              

275. Regular Programme and Extra-budgetary Resources: Throughout its existence, the Investment Centre has been financed on a cost-sharing basis. It differs from the rest of FAO accounting procedures in that it operates on a cost-sharing basis under its two Programmes 3.2.1 (FAO/WB Cooperative Programme) and 3.2.2 (Investment Support Programme). Budgetary resources are therefore expressed in terms of FAO RP appropriations as well as reimbursements received under the cost-sharing formula. With the addition of the FAO/WFP Liaison unit to the Investment Centre, WFP contributions are also included. Table 3 presents the picture for the period under review. The Centre also benefits from Trust Fund contributions by donors 53 for partial funding of consultants from the donor country used in connection with the Centre's investment preparation work (these are not included in Table 3).

Table 3: Investment Centre Appropriations, Reimbursements and Expenditure (1992/93-1998/99 in US$'000)
Biennium/Sub-programme Appropriations Expenditure
(against RP)
IFI Reimbursements WFP
Income*
Total
Expenditure
1992-93          
- FAO/WB CP 6 752 6 596 19 788   26 384
- ISP 16 654 12 263 8 405   20 668
- Prog.Mgt. 2 553 2 546     2 546
Total 25 959 21 405 28 193   49 598
1994-95          
- FAO/WB CP 5 856 5 969 19 403   25 372
- ISP 9 894 9 247 8 620   17 867
- Prog.Mgt 3 917 4 136     4 136
Total 19 667 19 352 28 023   47 375
1996-97          
- FAO/WB CP 5 504 6 110 19 265   25 375
- ISP 12 290 10 395 7 867 2 539 20 801
- Prog.Mgt. 3 341 3 149     3 149
Total 21 135 19 654 27 132 2 539 49 325
1998-99          
- FAO/WB CP 4 433   18 558    
- ISP 11 898   9 242    
- Prog.Mgt. 4 974        
Total 21 305   27 800** 2 681** 51 786**

Note: * included only after its transfer to TCI in 1997; **estimated

276. Table 3 indicates that while RP expenditures decreased by 8 percent between 1992-93 and 1996-97 (from US$ 21.4 million to US$ 19.7 million), extra-budgetary income (IFI reimbursements and WFP income) increased by 5 percent from US$ 28.2 million to US$ 29.7 million during the review period. The total expenditures remained about the same. During the previous three biennia, the share of RP resources declined from 43 percent in 1992-93 to 41 percent in 1994-95 and to 40 percent in 1996-97 - the projection for 1998-99 indicates this share will remain steady (41 percent).

III. IMPLEMENTATION ACHIEVEMENTS

A. Volume of Operations

277. TCI's work is first and foremost reflected in its missions in support of investment activities in member countries. Table 4 shows the number of missions undertaken during the period, divided into those for the IFIs and WFP, and for various FAO programmes (TCP, SPFS, etc.). The number of missions has increased very sharply, that for 1998 being about the same as the number for the 1992-93 biennium. The increase has been particularly notable for TCI missions to support FAO programmes, which in 1996-97 peaked at 19 percent of the number of missions and 15 percent of the total man/weeks delivered, falling back to just over 10 percent in 1998. In terms of the total man/weeks (staff and consultants) delivered, however, there was a slightly decreasing trend during the three biennia, indicating a trend for smaller and/or shorter missions. The average man/weeks per mission in 1998 was half of those in 1992-93. The data for 1998 indicate a sign of reversing the trend during the previous two biennia, especially possible recovery of man/weeks delivered during the 1998-99 biennium to the level of 1992-93.

Table 4: Investment Centre Missions during 1992-98 (no. of missions and man/weeks delivered)
  1992-93 1994-95 1996-97 1998*
  No. of Missions No. of Man/weeks No of Missions No of Man/weeks No of Missions No. of Man/weeks No. of Missions No. of Man/weeks
IFIs/WFP 535 9 111 627 8 271 734 7 755 478 4 172
FAO programmes 13 448 51 703 169 1 409 56 470
Total 548 9 559 678 8 974 903 9 164 534 4 642
Average man/weeks per mission 17.4 13.2 10.2 8.7
* One year only                

278. Table 5 presents similar data concerning TCI missions conducted for IFIs and WFP, in terms of the main categories of work. Within the overall rise in the number of missions, the increase has been sharp for non-traditional TCI work, i.e. assessment of project results (PCRs/ICRs) and other categories (mainly appraisal/supervision), which accounted for 45 percent and 51 percent of the number of missions in 1996-97 and 1998, respectively. Nevertheless, in terms of man/weeks, these missions accounted for less than 20 percent, except for 1996-97 (29 percent). The missions for project identification and preparation work, in particular, continue to occupy about two-thirds of the total man/weeks delivered. Thus, while TCI continues to participate in appraisal/supervision missions, these represent a relatively minor use of TCI manpower resources. During the past three biennia, the share of missions (in number) between the FAO/WB Cooperation Programme and the ISP has remained steady, about 65 percent and 35 percent, respectively.

Table 5: Investment Centre Missions - Types of Work
  1992-93 1994-95 1996-97 1998*
  No.
miss.
% miss. % man/ weeks No. miss. % miss. % man/ weeks No. miss. %
miss.
% man/ weeks No. miss. % miss. % man/ weeks
IFIs and WFP:                        
Sector/sub-sector studies 39 7 8 39 6 5 59 8 8 39 8 20
Identification 99 19 16 78 12 12 71 10 11 40 8 10
Preparation 262 49 62 308 49 64 276 38 52 156 33 51
Project completion review 58 11 9 71 11 10 60 8 9 38 8 7
Other (appraisal/ supervision) 77 14 8 131 21 8 286 37 20 205 43 12
Total 535 100 103 627 100 100 752 100 100 478 100 100
* One year only

279. The distribution of work according to various tasks in Table 6 shows a continuing predominance in recent years for the traditional work, i.e. sector and sub-sector studies and project identification/preparation. In the non-traditional areas of work, the table shows a substantial increase in supervision (responsibility of IFIs), and a stable trend for Project Completion Reviews (borrowers' responsibility). Not captured in the table is the TCI involvement in FAO's SPFS Programme, which increased from 13 projects in 1994-95 to 74 in 1996-97.

Table 6: Investment Centre Projects * and Studies (No. of assignments)
Year 1992 1993 1994 1995 1996 1997 1998
Sub-sector studies 17 8 18 16 17 27 35
Project formulation 118 120 130 111 137 147 145
Project formulation completed 43 53 48 47 32 32 40
Project completion reviews 41 40 42 38 45 33 38
Supervision 17 21 32 35 46 63 92

* Project formulation includes identification/preparation; "Project formulation completed" relates to project preparations completed in TCI and thus generally does not include preparations completed outside TCI. Up to 1992-93, TCI used to follow up on UNDP/FAO Technical Assistance projects (35 or 21 in 1992 and 1993 respectively), but this was discontinued due to the sharp decline in UNDP projects in FAO's Field Programme, and the drop in investment funds for follow-up.

280. The decline in the number of projects for which TCI completed formulation under its sole responsibility (project formulation completed) in 1996-97 reflects the recent changes in the role of TCI in supporting the national efforts in the formulation process. Such changes relate to both the types of services offered, the mode in which these are delivered and the nature of the products generated. Under some of its programmes, particularly those with the Regional Banks, the Centre continues to be responsible for completing the full preparation of feasibility studies on behalf of governments. Much of its work, especially in its programmes with the World Bank and IFAD, however, is in support of national teams engaged in a diverse range of activities related to funds' mobilization for agricultural and rural development, and using existing resources more effectively. TCI missions for such work are becoming shorter in duration, with fewer members and with more specialized expertise. The output of such work is much less frequently a formal TCI report, published in Rome, but is more likely to take the form of a series of working papers prepared for internal use in a Ministry of Agriculture, a socio-economic survey aimed at securing beneficiary participation in project design or the proceedings of a national workshop convened to develop stakeholder consensus on a sector, sub-sector or project strategy. Such work plays a major catalytic role in mobilizing funds for agricultural and rural development and in improving the quality of incremental investments and existing public expenditure. It also contributes to national ownership of programmes and projects and enhances local skills and institutional capacities.

281. In terms of the regional distribution of TCI's work efforts, Sub-Saharan Africa has remained throughout the review period the priority area for TCI (see Table 7). The decline in agricultural lending for Africa by the World Bank in the 1990s is thus not reflected in TCI's work, given the increased collaboration with the AfDB in recent years, as well as a high level of TCI involvement in WB agricultural lending to Africa. Work in Europe (mainly with the transition countries) has been developing steadily since 1993 when a substantial part of financial aid started to be directed to Eastern Europe. Work in Asia has declined overall since 1992-93 when collaboration with AsDB has consisted mainly of several large-scale project preparation tasks each year. A significant growth in TCI's work has occurred in the Latin America and Caribbean Region, largely due to growing work with the WB in the region (TCI has outposted staff in Chile and Costa Rica).

Table 7: Investment Centre Work by Region 1991-98 (% of man/weeks - both staff and consultants)
Region 1992 1993 1994 1995 1996 1997 1998
Sub-Saharan Africa 46 37 38 39 37 40 40
Asia 28 32 29 22 24 23 26
Latin America 13 13 14 22 20 21 18
Near East/North Africa 9 10 9 8 9 9 7
Europe 4 8 10 9 11 7 9
Total 100 100 100 100 100 100 100

B. Other Key Outputs and Services

282. Support to SPFS has become a significant element of TCI's activities: its primary role has been to initiate the Special Programme in interested countries through an exploratory mission to assist in the formulation of the general scope of activities and to make arrangements for national formulation: in some cases, TCI staff have been playing a major role in providing technical support to the programme implementation. The division started its involvement in 1994 with six missions (Eritrea, Ethiopia, Kenya, Mauritania, Senegal and Zambia) for a total of 34 staff weeks. By 1997, the number of SPFS projects worked on had reached 55, with 249 man/weeks (staff and consultants), or 6 percent of the total man/weeks delivered by TCI. The recorded staff weeks in 1998 dropped to approximately half that amount.

283. Capacity-building of national institutions and staff in the techniques of investment project formulation has been receiving an increasing emphasis during the period under review. Together with this growing role as source of technical advice and guidance to the national teams, TCI missions are devoting more time and energy to hands-on training of their national counterparts. While there is no systematic information kept on this, TCI estimates that at least 50 percent of the projects it works on (in some services as much as 90 percent) are prepared in this way - very different from the past when project preparation was done by TCI and its consultants. Occasionally, national counterparts are also invited to accompany a TCI mission to Rome in order to contribute to the finalization of a report, and also to become more familiar with TCI's operations.

284. In recent years, TCI staff have been providing increasingly such on-the-job training in more structured ways as part of their assistance to project formulation. In a number of cases under collaboration programmes with the World Bank, IFAD and to a lesser extent AsDB and IDB, TCI staff have been heavily involved in assistance over a period of time in training the local formulation/implementation teams and other stakeholders, typically including the development of training manuals and guidelines (e.g. Vietnam, Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala and Panama). However, the scope of such assistance depends very much on local capacity and the environment in individual countries as well as the emphasis given (with resources) by IFIs under the cooperative arrangements with TCI.

285. Another area of important TCI outputs has been technical studies and guidelines. Apart from several major guidelines for the preparation of investment projects, technical papers on key aspects of agricultural investments have been prepared, as well as a new series of Occasional Papers launched as a means of giving broader circulation to examples of innovative work and interesting results achieved by the Centre's staff. The Centre has also developed dedicated computer software and manuals, linked with training courses, for agricultural investment project analysis and presentation. The Centre's UPDATE newsletter (published three times a year) was launched in 1994 and is widely distributed - to cooperating financing institutions, member countries, and individual subscribers 54.

C. Some Notable Trends

286. Clearly, during the period under review, the Investment Centre's work has been undergoing some significant changes, mostly in conjunction with the changes in the way its IFI partners conduct their business, resulting in a greater diversity in its work as well as important changes in the methods of carrying out the work. The traditional concentration on the early stages of the project cycle (identification and preparation) remains, but there have been increases in more downstream work (supervision, PCRs/ICRs). Above all, most significant changes have taken place in the nature and mode of TCI support to project formulation, with more numerous missions, for shorter duration with fewer staff and more and more outputs delivered directly in the field (see Box 1). This has had several ramifications: increased demands on management for optimum staff deployment and on the Management Support Unit (MSU) for travel and administration arrangements; increased overhead and operational costs for more numerous and smaller assignments; above all, increased responsibility of individual staff, and reduced opportunities to apply the TCI internal review process.

Box 1. TCI's Diverse Services for Investment Promotion - Example of Zambia in 1998

The following TCI activities have been important in shaping Zambia's investment programmes and improving their focus and quality, and they have also played a significant role in developing national skills and institutional capacities. They included:

  • joint work with the SPFS National Coordinator leading to the preparation of government proposal for financing the incorporation of the SPFS in the national Agricultural Sector Investment Programme (ASIP), through which its extension would be funded by the World Bank;
  • formation of a national team for the Soil Fertility Initiative (SFI) and joint preparation of a strategy and initial work programme for financing within the ASIP framework;
  • guidance and assistance to a University of Zambia team which had been retained by the Ministry of Agriculture, Food and Fisheries (MAFF) to conduct a mid-term review of the ASIP; facilitation services during the national workshop; and assistance to MAFF in subsequent revision of work programmes;
  • preparation of terms of reference for nationally-conducted studies and for a series of workshops aimed at drawing lessons from the ASIP experience and at developing a consensus of the future scope of the programme prior to commencing Phase II formulation; and
  • supervision of a team of national consultants, retained with TCP financing, to carry out technical and socio-economic surveys which provided the base for the design of a community forestry project for financing by African Development Bank; subsequent assistance in formulating the US$ 6 million project.

287. With the increasing diversity of TCI's work, training has gained added importance in keeping staff abreast of latest developments in relevant fields. Apart from training in language proficiency, computer literacy and management skills, this has included numerous internal seminars and workshops with outside experts, visiting senior IFI staff and also TCI staff to familiarize and update TCI (as well as other invited FAO units) on new approaches, topics and procedures in development 55 (see Table 8). TCI also taps on the expertise of selected retired former senior staff members and other professionals who have been associated with the division's work in the past, to assist with report reviews and provide guidance and comments on technical papers and reports.

Table 8: Time spent on Training by TCI Staff
  1992 1993 1994 1995 1996 1997 1998
No. of staff 50 41 48 59 59 54 72
Man/weeks 49.9 33.1 32.6 93.4 109.5 83.7 88.6

288. Other Rome-based UN agencies are systematically invited and come to major TCI training events. For example, staff from other FAO divisions, WFP and IFAD participated in the two TCI/World Bank Workshops on the Bank's new Requirements for Project Preparation (October 1997 and October 1998). Similarly, TCI staff have participated actively in seminars, workshops and conferences organized externally (25 during 1997 and 1998). The Centre has also financed, together with the World Bank and FAO's Personnel Division, production by the World Bank of four self-paced video training courses on Strategies and Policies for Rural Development and Growth, which are being taken up by HQ (not only TCI) and outposted staff.

289. The recent changes in TCI operations have underlined the particular importance of country knowledge and specialized expertise, such as institutional analysts and sociologists, for which TCI has limited expertise among its staff. For greater economy of staff utilization, there has been a growing tendency to deploy staff across the CP and ISP service structure to take advantage of staff specialization and their country knowledge. This appears to be welcomed by IFI partners, while TCI enjoys a greater flexibility in staff use.

290. During recent years, TCI has become a more integrated part of FAO, with significantly increased collaboration between TCI and FAO technical units: FAO staff seconded to TCI in 1992 stood at 70.7 man/weeks and by 1998, this figure was 203.6 (see Table 2 above). Over the review period, TCI's main collaborator has been AGL, followed by SDR and FOD (see Table 9). The recent past shows an increased collaboration regarding legal matters, research and extension as well as remote sensing, and statistical development. Collaboration with Regional and Sub-regional Offices has also become more evident, while agronomy as covered by AGP has become less prominent. This trend of greater cooperation between TCI and other FAO units has been accompanied by growing inter-agency collaboration between some FAO units and the WB and other IFIs, which are seeking greater access to a range of FAO's capabilities and experience. For TCI, better integration widens its potential work programmes and exploits its privileged access to FAO technical units. For FAO as a whole, it broadens its relevance to developing countries through the various cooperative programmes.

Table 9: Secondments from selected* FAO divisions (staff weeks) 1992-98
AGL SDR FOD LEG AGA AGP TCO AGS ESS ESC RAP SAF SDA ESN FIR FII
154.55 83.75 56.00 49.15 36.40 34.68 34.05 29.90 26.26 24.80 23.20 23.00 22.20 21.40 14.18 13.20

* ranked on basis of highest secondments provided over the period

291. However, the internal collaboration within FAO also poses a problem for TCI as it is often difficult for FAO units to second staff working on normative programmes for relatively long assignments (3-6 weeks). Similarly, the reimbursement charges from other FAO divisions to TCI are often higher than the cost of hiring an individual consultant. TCI's limited RP resources are not sufficient to absorb fully the cost difference, particularly as some of the joint work with other FAO units does not provide for full reimbursement. At the same time, TCI has made good use of APOs and Trust Funds to reduce its costs.

292. TCI has long-established practices of quality control of its mission work, especially through a peer review process, whereby mission (and other) reports are reviewed by TCI staff and colleagues from other FAO units, as appropriate. Traditionally, the review process has been a major requirement before a report could be released. In recent years, however, as an increasingly larger proportion of TCI's work has taken the form of contributions to, rather than the entire preparation of, a product (e.g. an identification or preparation report), TCI mission members' contributions are prepared and often finalized on the spot, allowing little chance for an internal TCI review. The situation varies according to the partners depending on the scope of responsibility given to TCI. This trend seems most prominent for collaboration with the WB, while most missions for AfDB and IFAD are still subject to the internal review process.

IV. EFFECTS AND IMPACT

293. Assessing the effectiveness and impact of the Investment Centre work poses some conceptual problems as well as problems of not having relevant data. Essentially, TCI's task is to provide services, mostly assistance in project formulation - the achievement of the end-result is left to the implementing partners, and the actual project performance is not usually monitored by TCI. For practical purposes, analysis in this section will focus on two key "success criteria", i.e. contribution to investment mobilization (the core aim of TCI) and contribution to upstream work of the IFI partners (which reflects confidence of borrower countries and IFIs in the technical capacity of TCI/FAO).

A. Investment Mobilization

294. For investment mobilization, the effect can be assessed in terms of the volume of IFIs' investment commitments to agricultural and rural development through projects assisted by TCI. During 1992-98, approximately one-third of the total such investment commitments from multilateral financing institutions have been prepared with substantial TCI assistance. This amounted to a total of 260 projects with US$ 11,569.1 million of external investment funding (see Table 10). In relation to FAO's RP funding of some US$ 70.7 million during the period, this is an impressive catalytic result. Over the period from the launching of the CP in 1964 to 1998, a total of 1 176 investment projects prepared with assistance of TCI were funded by the IFIs, involving total investments of US$ 62.7 billion, of which over 50 percent have come from external funds (mostly on concessional terms) and the rest from domestic sources.

Table 10: Project Prepared with Major TCI Input and Approved by IFIs (amounts of total investment and external loans in US$ million)
  1992-93 1994-95 1996-97 1998*
Region Proj No. Total Invest Ext Loans Proj No. Total Invest Ext Loans Proj No. Total Invest Ext Loans Proj No. Total Invest Ext Loans
Sub-saharan Africa 37 699.18 599.37 24 613.95 449.58 31 714.94 524.27 16 319.39 271.76
Latin America 18 1 440.95 919.34 12 2 281.57 1 319.9 16 1 644.29 1 115.49 10 1 183.78 842.20
Asia 8 819.06 452.09 11 1 417.73 781.55 21 2 145.3 1 340.65 6 1 034.57 728.50
Near East/North Africa 9 977.53 641 5 1 036.95 468.9 5 399.64 137.17 5 360.83 232.58
Europe 2 413 243.9 3 125.6 103.1 13 410.62 278 8 168.03 119.15
Total 74 4 349.72 2 855.7 55 5 475.8 3 123.03 86 5 314.79 3 395.58 45 3 066.60 2 194.19

*one year only

295. During the period under review, the TCI's "share" in WB's annual lending for agricultural and rural development has ranged between 30-47 percent in the amount of lending (30-45 percent in the number of projects). For other main IFI partners, TCI-assisted projects also accounted for a substantial portion of their annual lending for agricultural and rural development: 30-50 percent for IFAD, and 20-100 percent for AfDB. TCI's contribution has been especially prominent in the IFIs' lending to the Sub-saharan Africa, Europe and Latin America.

296. One of the original aims of the Investment Centre is to accelerate and improve investment into agriculture, not only to increase it. TCI assistance does facilitate and speed up the identification and preparation work by the national teams, and thus their appraisal and loan approval by IFIs. Also TCI has made consistent efforts to improve the quality of projects for financing, and is frequently invited to participate in project supervision and project completion assessment, in which 'lessons learnt' are an important feature. While it has not been feasible to address the technical quality of TCI's work in this review, there are many comments from IFI partners testifying to TCI's role in generating and improving investment in agriculture (some TCI Services keep files with IFI comments on TCI work performed). The essence of most of these comments is probably best captured by one example: "...TCI has brought independent advice when the situation required external opinion on the best way to proceed..." and (referring to TCI): "The credibility of advice to the Bank's clients and other stakeholders is enhanced when it comes from outside experts."

B. Other Key Contributions (Capacity-building, Upstream Work)

297. TCI's role in on-the-job training of national teams has been presented above. Although a large number of national counterpart persons have received such training, it is difficult to quantify the precise number nor is it feasible to assess direct development effects of such training in national capacity development, due to the lack of systematic data. One notable example of successful support to national capacity-building at institutional level is in China, where FAO/TCI collaborated with UNDP and IFAD in creating a nucleus of trained officers who have, since 1996, taken the main responsibility for formulating investment proposals for IFAD. However, although as training support has become an important element of its work, TCI has not yet systematically monitored its activities in this area. In particular, information is lacking on such aspects as the nature of training, mission leadership, whether TCI recommendations are accepted or not, and degree of national involvement.

298. While it is not the main part of its mandate, TCI's role as a source of independent advice in upstream work in support of investment represents a good indicator of confidence of TCI partners. TCI has in recent years become an institutional partner to IFIs as well as countries in the planning and preparation of policies and studies for agricultural rural development. In the case of the WB, whereas TCI usually becomes involved after the Bank has set the broad parameters of an agricultural policy or programme (i.e. mostly to contribute expertise to the project preparation process), it has recently been invited to participate in the preparation of WB Country Assistance Strategies (CAS) for several countries, especially in the Latin America Region. For IFAD, TCI participated in the preparation of country assistance strategy (four countries in 1996-98); similar contributions have been made to the AsDB (e.g. Laos and Vietnam) and WFP (three country strategic studies).

299. Perhaps equally important, TCI has also contributed to agricultural policy discussion within the Bank. TCI - together with other FAO units - has been invited to contribute to its strategy papers; e.g. the World Bank's Vision to Action (strategy for agricultural and rural development lending) and its Forestry Strategy as well as the joint Bank/FAO development of guidelines for environmental work. In the extension field, work is ongoing with the aim to develop a common FAO-WB strategic approach to the reinvigoration of agricultural extension, research and education services: on the Bank side the leadership is coming from the Agricultural Knowledge and Information Systems thematic team, while, within FAO, SDRD has taken the lead with TCI support, with a joint WB-FAO writing workshop held in October 1998 in Rome. Together with ESA, the Centre also contributed to the preparation of the African Development Bank's new Rural Development Strategy (in 1998). TCI staff have also been participating in some of the 13 Thematic Teams established under the aegis of the Bank's Rural Sector Board. Following the last 1997 WB reorganization, partly with TCI facilitation, FAO units have established direct links with WB staff in the respective WB teams (e.g. Sustainable Land and Crop Management, Animal Resources).

300. In the early 1990s, ISP pioneered methodologies for participatory diagnostic studies, prior to project preparation, which have been taken up by IFAD, WB and AfDB in particular, to help assure local ownership of projects and project sustainability. More recently, the Centre has collaborated extensively with the World Bank in developing approaches to Agricultural Sector Investment Programmes (ASIPs) in Africa, which are at various stages of conception and implementation in some 15 countries. In addition to providing inputs to the formulation of ASIPs in a number of countries, this also included TCI facilitating a 3-day EU-funded workshop in Malawi, to review and consolidate the work being carried out on ASIP formulation in various countries (attended by representatives from 9 countries and 10 donor agencies) as well as TCI's substantial contribution to the preparation of an ASIP (changed to "ASP") Sourcebook by the World Bank (published in September 1998).

301. Finally, such TCI collaboration with IFIs in these upstream activities has served to strengthen collaboration with technical units as well as FAO's institutional cooperation with the IFIs. Work on thematic topics (e.g. Soil Fertility Initiative, PRA methods, statistics) is internally shared with technical units to evolve as inter-agency cooperation, and the involvement of FAO technical staff in IFI missions has led to TA projects for the units concerned.

V. ISSUES AND RECOMMENDATIONS

302. During the period under review the work of TCI has been undergoing many significant changes. Many of its IFI partners have been reorienting and modifying their business practices with direct impact on the nature of its operations and its modus operandi. Within FAO, the corporate reform has resulted in a greater involvement of TCI in the Organization's operational activities not directly related to its traditional work in investment. For FAO/TCI and IFI partners alike, the resources have been getting tighter, bringing a need for greater economy and cost-consciousness. TCI's work is, thus, one of the areas of FAO that has been most directly exposed to international competition and scrutiny. This review indicates that TCI has generally been adapting well to this situation, adjusting its traditional pattern of work to new ways to meet the emerging needs. Looking into the future, however, there are some issues for attention, especially because of the special nature of TCI work.

303. Special Nature of TCI's Role: TCI's role as a neutral interlocutor between member countries (borrowers) and the IFIs (the lenders) is inherently complex. While the IFI partners possess the financial resources, including access to external consultants, and maintain their own policies and criteria for supporting investment proposals in agriculture and rural development, this can be valuably complemented by FAO's technical expertise and experience in advising and guiding common member countries in the identification and preparation of sound proposals. Moreover, through the partnership arrangements between IFIs and TCI, borrowing countries are assisted in elaborating proposals in line with the procedures and criteria of the IFI concerned, leading to a more efficient appraisal/approval process. TCI can thus serve both the borrowing countries and IFIs by advising and assisting countries in identifying and formulating specific investment proposals for funding by the IFIs. In such situations, this assistance can have a significant multiplier, and even catalytic effects if it can be linked with other related FAO programmes and TA projects, instead of being self-standing. This longer-term commitment to the activities in question, in addition to helping build up the capacity of associated national and local teams, constitutes a special role, usually undertaken in combination with national experts, outside specialist consultants, and the technical staff of the concerned funding institution.

304. The main incentives for the IFI partners to cooperate with TCI would basically be the added value they perceive in such cooperation through the technical and professional quality that TCI bring to bear as well as its credibility as a neutral adviser, buttressed by the institutional capacity of FAO. These are precisely the advantages that appear to have been generally recognized by the management and staff of the IFI partners, and this is therefore the basis for future development of FAO/TCI collaboration with them. The Investment Centre has demonstrated its capacity to adapt to the challenges of this special role, including through the forging of closer linkage with the FAO technical units. Nevertheless, it would be essential that apart from maintaining its professional capacity, TCI continues to enjoy the enabling institutional environment to provide value-added services. In fact, ensuring such an enabling environment between the cooperating institutions for the continued effectiveness of TCI is a matter that would continue to require strong support at the policy level in FAO and IFIs.

305. Focus on Thematic Areas: TCI has well-recognized competence in assisting countries and IFIs in the identification (including sector/sub-sector studies) and preparation of investment proposals through increasingly diversified modes of assistance. Some of recent TCI experience contains elements that raise concern, however. This particularly relates to the relative increase in TCI missions for supervision or appraisal or preparing implementation completion reports. While some diversity would be useful for TCI staff to gain an overall perspective of the project cycle, it would need to be balanced with the imperative of keeping TCI's strength in project identification and formulation, including upstream work and training aspects. Further, for these missions IFI partners often ask for one or two individual staff to supplement missions under their responsibility, thus reducing TCI's ability to provide TCI/FAO's institutional services, an important element for TCI's value-added function. Often this arises because of inadequate appreciation of the intent behind the cooperative arrangements on the part of some IFI task managers. This would need to be addressed, as appears to have been done with greater success recently, through more pro-active measures like briefing the key partner staff concerned on FAO's capability as well as negotiating with the IFI task managers on the annual work programme based on the mutually recognized TCI strengths. It is recommended that this effort be continued, in particular, for: (a) developing further "thematic" areas within TCI or jointly with FAO units, and getting them recognized as such by IFI staff concerned; and (b) ensuring to the practical extent possible that the cooperative work programmes focus on these "thematic" areas, especially in upstream work.

306. Maintaining Best Standards and Practices: TCI has always been conscious of the need for the highest standard practical in its work, maintaining vigilance over its internal quality assurance mechanisms as well as staff recruitment, training and career development. In terms of quality assurance, normal supervision by service chiefs (including review of key issues both in mission briefing and debriefing) has been supplemented by rigorous, internal peer reviews of mission reports, especially for identification and preparation work. Such review mechanisms have also provided a useful means for involving other FAO technical officers in TCI work. However, the increasing trend for advisory and other support roles in TCI work, with shorter missions and involving less of traditional types of reports, is making it more and more difficult to adhere to the established practices for quality assurance.

307. It is recommended that TCI continue to apply its internal quality assurance measures to the extent that these remain relevant. At the same time, it should consider developing alternative practical mechanisms for quality assurance of such mission work, for which the conventional measures are no longer appropriate. Such measures could include more systematic preparation of, and monitoring the performance of, missions in consultation with the country and IFI officials concerned, including assessment of training. More use could be made of electronic communication in the clearance of reports being finalized in the field. Monitoring could provide a basis for workshops within TCI, or preferably jointly with other partners, for drawing lessons for improvement.

308. TCI has also been giving considerable attention to ensuring the quality of its staff: for this purpose it has its own standards and procedures for identifying and screening qualified candidates, and it has maintained emphasis on staff training in new methodologies and development approaches, including more recently, training workshops on the revised operational procedures of the main IFIs and related work methods. This concern with staff quality is of increasing validity in the changing work context of recent years. Thus, together with training efforts, it would be important: (a) to maintain the rigorous recruitment standards; (b) to ensure competitive service conditions in order to retain its core staff, especially experienced staff with mission leader capacity at sufficiently senior levels; and (c) to maintain a balanced coverage of expertise reflecting the skill requirements for its priority work.

309. Secondment of FAO Technical Staff: The increasing participation of staff from other technical units in TCI work, especially in missions, has been beneficial to TCI as well as to these units. This is also very much welcomed by TCI partner institutions, leading to direct collaboration in some cases between FAO and IFI units concerned. The key constraints appear to lie in the difficulty for technical units to release their staff for a relatively long period (often 3-6 weeks) and relatively high secondment costs to TCI in comparison with hiring individual consultants. The former is a matter for TCI to establish arrangements more mutually acceptable to the unit concerned while the latter represents an FAO-wide issue, on which a new regime of reimbursement rates has recently been introduced by the management. It is recommended that TCI monitor the implementation of the new regime with a view to ascertaining its effectiveness in securing staff secondment from technical units.

310. TCI Support to SPFS: Over the recent years TCI has been closely involved in the building up of the SPFS in the field, which in many cases has been effective in establishing the necessary linkage between SPFS and related programmes and projects supported by the IFIs in the LIFDCs. While TCI is normally reimbursed for staff time spent on SPFS, there appear to have been cases where it has not been fully reimbursed, especially where its work went beyond the scope of the original plans. It is recommended that TCI continue its proactive support to the implementation of the SPFS, but that in view of the special nature of its funding arrangements, TCI should be fully reimbursed for its work in this area: at the same time, within TCI its workload for the SPFS may need to be more rigorously forecast, budgeted and recorded.

311. Monitoring and Record-keeping: TCI has maintained a generally good management information system on its operational activities. However, the recent changes in the nature and modes of operations require modifications and improvements in the system so as to facilitate monitoring more adequately emerging types of work, such as training and advisory work through shorter missions. Here it would be important to focus on selected aspects, such as the main mode of operation, key outputs and role of the TCI inputs. Given TCI's cost-sharing arrangements, such improvements should also address aspects relating to accounting. Furthermore, the system should cater to the information needed for assessing the expected benefits and effectiveness of various TCI activities vis-à-vis its programme aims. For example, how many projects TCI supported and in what ways, which support has been most useful and effective both in investment generation and in training support, and how many of the projects have eventually been appraised and approved for IFI funding? To be useful for more analytical purposes, such information would need to be supported by qualitative information regarding the degree of acceptance of TCI's substantive advice in the final design of investments approved. The TCI management is aware of the need to improve its information system. It is recommended, however, that TCI review in depth the adequacy of the existing information system and consider the aspects noted above in designing a modified or new system.


Annex 1

SUMMARY OF COMMENTS BY STAFF OF INTERNATIONAL FINANCIAL INSTITUTIONS 56

312. The draft of this report was reviewed by some of the Investment Centre's counterpart officers of IFAD and the World Bank. The reviewers found the report well-written and factual in general, albeit tending to be more descriptive than analytical. Their critique included, in particular: (a) that the review could have surveyed systematically views of Investment Centre's partners; and (b) that the recommendations for the future could have addressed such aspects as how to enhance TCI support to capacity building in the developing countries for preparation of project proposals as well as the possibility of TCI providing a wider spectrum of advice beyond project preparation, for example by supporting countries in studying potential future growth sources with a view to identifying "bankable" project proposals for funding by various development agencies.

313. The reviewers agreed that TCI's primary function is to link donors and borrowers, while putting at the disposal of its partners the large pool of varied technical resources available in FAO. They generally appreciated TCI's unique contributions in this respect, and they emphasized in particular the importance of honest broker role of TCI. They all welcomed the trend for the greater collaboration between TCI and other FAO technical units as well as more direct interactions between the IFIs and FAO technical units.

314. Apart from the points mentioned above in connection with recommendations, they raised additional points as potentially important issues for the future of TCI. These included: (a) the importance for TCI to continue to retool itself, including the internal mode of its operations, so as to be able to meet fully with changing demands for its services from IFIs and borrower countries, especially in enhancing local level participation in investment projects; and (b) the concern with potential conflict between TCI's honest broker role on one hand and on the other the cost-sharing arrangements with the IFI partners, which may sometimes compromise TCI's ability to play the honest broker role.


Annex 2

INVESTMENT CENTRE COMMENTS, ENDORSED BY THE ASSISTANT DIRECTOR-GENERAL OF THE TC DEPARTMENT

315. The Investment Centre considers that this report provides an accurate, fair and constructive assessment of its performance. It subscribes to all the principal recommendations and will proceed with implementing those which lie within its competence. In particular, TCI management will seek, in programming activities with cooperating financing institutions, to increase the focus on upstream activities and on thematic areas of high priority to FAO. Measures will be taken internally to adjust quality enhancement systems to respond to the new modes of work which have been highlighted in the report. Steps will also be taken to develop improved indicators which will enable the division's Management Information System to better capture and report on the increasingly broad range of activity types in which Investment Centre staff are now engaged.

316. The Investment Centre fully supports the report's recommendations regarding the charge-out rates for staff seconded from other divisions and improvements in management support arrangements.

47 The Bank has other collaborative arrangements with IFAD, GEF and the OPEC FUND, which may look similar, but are different in nature. For all three of these institutions the Bank carries out preparation, appraisal and supervision missions and handles procurement and disbursement. The three institutions mainly provide the funding (solely or through co-financing) for the projects concerned and pay all costs of the Bank's involvement in their area of responsibility.

48 In PWB 1992-93, the number of ISP services was reduced from three to two "... in the interest of seeking economies ... and of achieving greater flexibility in staff deployment".

49 Staff are currently outposted to: ·Washington DC, USA (World Bank, Inter-American Development Bank) ·Santiago, Chile (FAO Regional Office for Latin America - 2 persons) ·Bangkok, Thailand (FAO Regional Office for Asia - 2 persons) · New Delhi (World Bank office) ·Harare, Zimbabwe (FAO Sub-Regional Office for East Africa) ·San José, Costa Rica (Regional Unit for Technical Assistance) ·Abidjan, Côte d'Ivoire (African Development Bank) ·Manila, Philippines (Asian Development Bank)

50 This implies that collaboration with the non-WB IFIs is less predictable, making programming of staff more difficult, and also more complex to administer, as accounts have to be kept for a variety of IFIs with somewhat different procedures.

51 Mix of expertise in TCI in selected years (excludes Director)

  Econ./ Finance Agronomy Engineering Livestock Environment Fisheries Forestry Credit Sociology Institutions Information Computers
1993 45 17 8 2 1 2 4 2 3 1 1 1
1994 37 16 8 2 1 1 3 3 3 1 1 1
1996 46 14 8 2 2 1 3 3 4 1 1 1
1998 51 9 10 2 3 1 4 1 4 1 1 1

52 The division takes considerable care to identify and recruit promising applicants, through staff members' contacts and referrals, consultants roster (the division has a special try-on-mission category) as well as use of roster vacancies to build up lists of applicants (particularly agronomists, economists and engineers).

53 Sweden, Belgium, France (overall amount spent during 1996-1998: US$ 667,000)

54 Technical Papers series currently in print: No.6: The Design of Agricultural Investment Projects: Lessons from Experience; No.7: Guidelines for the Design of Agricultural Investment Projects; No.8: Financial Analysis in Agricultural Project Preparation; No.9: Sociological Analysis in Agricultural Investment Project Design; No.10: Agricultural Investment to Promote Improved Capture and Use of Rainfall and Dryland Farming; No.11: Guidelines for Planning Irrigation and Drainage Investment Projects. Occasional Papers series currently in print: No.1: Financial analysis of banking institutions; No.2: Improving rural financial markets for developing micro-enterprises; No.3: Irrigation water management briefs - 100 collected papers; No.4: Irrigation investment briefs - 14 collected papers; No.5: Recapitalization of soil productivity in Sub-Saharan Africa; No.6: Assessing the adoptability of improved crop production technologies by small farmers: the case of Lesotho; No.7: Lesotho: A note on the Machobane system; No.8: Formulation of an agricultural sector investment program (ASIP) for the mountain areas of Lesotho; No.9: Paraguay: Financial and economic implications of no-tillage and crop rotations compared to conventional cropping systems.

55 These internal training seminars are systematically prepared and analysed (available participants' evaluations indicate high satisfaction with the seminars); a TCI training needs assessment plan was completed in December 1998. In the case of IFI staff, the training is normally organized in connection with regular duty travel to FAO HQ on other assignments, thereby saving on travel costs.

56 The summary reflects comments of Messrs. Y. Bouarfa (IFAD), G. Howe (IFAD) and A. Seth (World Bank).

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