Sector Assistance Program Evaluation for the Agriculture and Natural Resources Sector in the Lao People's Democratic Republic

Date: December 2005
Type: Evaluation Reports
Country:
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Agriculture and natural resources; Economics; Evaluation; Finance; Governance and public sector management; Social development and protection
Series: Sector Assistance Program Evaluation

Description

ADB's Operations Evaluation Department rated the overall performance of the agriculture and natural resources (ANR) sector assistance as partly successful in an evaluation report issued in December 2005. The report covers two decades of assistance (from 1986 to 2005) to the Lao People's Democratic Republic (Lao PDR).

Summary of findings:

  • Policy-based operations supported by ADB were partly responsible for policy change in the country to promote investment and development. But these policy measures were not sufficient. The policy-based lending was rated as less effective. In hindsight, there was an underestimation of the efforts required to effect policy changes under the Lao political economy context, institutional preparedness for change and management of change, and the time needed to generate outcomes. Policy implementation has been affected by regulatory uncertainty, unpredictability, lack of transparency, and other governance issues.
  • The environment for investments needs to be improved for greater private sector involvement. Corruption adds to the complexity and costs of doing business. Difficult access to rural credit can partly be solved if the Government takes a more relaxed approach to registering and allowing local as well as international organizations to serve as microfinance partners.
  • Although individual ADB loans and TAs had their own merits and relevance, their combined objectives and scope lacked focus. Collectively, clear links have not been established to address overriding constraints facing agriculture, and to overcome the impediments to commercialization of agriculture. The dichotomy between subsistence and commercial agriculture has not been clearly addressed by the sector assistance. The sustainability of investment projects was generally assessed as less likely.
  • Technical assistance was affected by inadequate counterpart arrangements, weak absorptive capacity, and lack of institutional analysis. Although intended for capacity development, the result was often capacity substitution. TA often produced recommendations that could not be implemented because of deficient analysis of their implications on requirements for resources, institutional mandates, and organizational development and management.

Recommendations

  • Recognition of overriding factors and conditions that have significant bearing on sector's performance (e.g., the investment climate, governance, corruption, markets, and opportunities for economic integration and regional cooperation).
  • Intensifying aid coordination to share experience and knowledge, find solutions to binding constraints facing the sector, and develop replicable approaches that can provide greater benefits countrywide.
  • Increasing economic integration with the regional and global economy to bring opportunities.
  • Greater regional cooperation to narrow the gap between the Lao PDR and other regional economies, and to enable the country to strengthen its role as a land link at the center of the Greater Mekong Subregion. This includes improved physical infrastructure; greater migration and cross-border labor mobility; improved trading conditions (reductions in tariffs and in nontariff barriers); and increased foreign investment which can provide access to capital, technology, and market information.