47046-002: Gansu Featured Agriculture and Financial Services System Development Project | Asian Development Bank

China, People's Republic of: Gansu Featured Agriculture and Financial Services System Development Project

Sovereign (Public) Project | 47046-002 Status: Active

The Asian Development Bank is working with People’s Republic of China in Gansu province to help small-scale agricultural producers boost output and incomes. The project is providing financial and technical support to upgrade farm infrastructure and to help farmers build links to new markets. It is also partnering with local banks to expand rural financial services support for small enterprises.

Project Details

Project Officer
Hinrichs, Jan F. East Asia Department Request for information
  • China, People's Republic of
  • Loan
  • Agriculture, natural resources and rural development
Project Name Gansu Featured Agriculture and Financial Services System Development Project
Project Number 47046-002
Country China, People's Republic of
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3312-PRC: Gansu Featured Agriculture and Financial Services System Development Project
Ordinary capital resources US$ 100.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Private sector development
Sector / Subsector

Agriculture, natural resources and rural development / Agricultural production - Agro-industry, marketing, and trade

Finance / Inclusive finance

Gender Equity and Mainstreaming Effective gender mainstreaming
Description ADB's country partnership strategy for PRC (2011 2015) identifies inclusive growth as one of the three pillars in the partnership which will be supported by boosting rural livelihoods and improving access to microfinance and small and medium enterprise finance. The partnership also recognizes private sector development, knowledge solutions, capacity development, and gender equity as major drivers of change to maximize development impacts in the PRC. The proposed project will promote inclusive growth in the project area through improving rural livelihood. Agricultural productivity will be enhanced through providing financial and technical support to private agricultural enterprises and farmer cooperatives for the construction of standard production and/or processing bases and strengthening of governance and management capacity. Further development of rural financial services will expand access to finance among rural residents and agricultural enterprises. The project has significant potential for innovation and knowledge generation in agricultural and rural finance, sustainable use of water resources, poverty targeting and reduction, and scientific evaluation of development interventions. Finally, the project will promote gender equity in access to finance and management of farmer cooperatives and agricultural enterprises.
Project Rationale and Linkage to Country/Regional Strategy

Gansu Province, located in the northwest of the PRC, is the seventh largest province with a population of 25.6 million, of which 64% is rural population. In 2012, Gansu's total gross domestic product (GDP) was CNY565 billion, of which agriculture accounted for 13.8%. Gansu's GDP per capita of CNY22,037 (equivalent to about $3,500) is the second lowest in the PRC. As most of the low-income population live in the rural area, agricultural development is directly associated with rural livelihood improvement.

Although Gansu provincial government aims to modernize the agricultural sector to improve the sector's productivity and value addition, it has been facing several constraints and challenges. The natural conditions are formidable and the land resources are limited. The annual average precipitation in Gansu is 302 mm with highly uneven spatial and temporal distribution. Natural disasters, especially drought, occur frequently, particularly in central and eastern Gansu. The arable land per capita is only 2.65 mu (or 0.18 ha) province wide. In the past decade, local people practiced featured agriculture, which is a term used to describe farming of crops and livestock that are specialized and compatible to local climatic and soil conditions. For instance, production of potato, plateau vegetables, Chinese medicinal herbs, fruit trees, and herbivorous livestock, as well as dryland farming, have been developed in central and eastern Gansu. However, there are plenty of opportunities for featured agriculture system to achieve higher agricultural productivity, resource utilization efficiency, and farmer income. On-farm infrastructure and facilities need to be built or upgraded, new varieties and breeds of crops can be introduced, and best farming practices and water conservation technology may be promoted. These call for a significant increase in the investment in the sector.

Agricultural enterprises and farmer cooperatives can develop and extend agricultural value chains to link smallholder farmers to the market. It is recognized that they could complement the government and play a crucial role in helping individual farmers to achieve better livelihood. Agricultural enterprises and farmer cooperatives remain underdeveloped in Gansu due to lack of capacity to organize and serve farmers. Improvements can be made in governance, information access and dissemination, provision of extension services, branding and marketing, among others.

Another major constraint to the agricultural sector is the underdevelopment of rural financial services system in Gansu. Because of the government's strong commitment and policy support, the rural financial sector has experienced improvements in recent years. New players like village and township banks (VTB) and microcredit companies (MCC) are joining the rural financial market; deposits and loans outstanding to agriculture and rural households have been growing; and basic financial services have reached unserved villages. Nevertheless, these achievements are to a large extent results of intensive government interventions and direct support. Overall, the rural financial services system of Gansu remains unfledged and its sustainability is unclear. The emerging rural lending institutions, including VTBs and MCCs grow slowly mainly due to difficulty of accessing capital or deposits, and the financial products and services available in the rural area are quite limited in variety and quantity. Skilled personnel in financial operation and management are largely insufficient; and the uncertainty associated with agricultural production results in a gap between financing demand and supply.

The State Council issued the Opinions on Further Support for the Economic and Social Development of Gansu in 2010, and approved the 12th Five-year Plan for Grand Development of the Western Region in 2012. Both national policy documents state the importance of developing featured industries, improving livelihood, and conserving resources for the region. The Gansu Province 12th Five-year Plan for Agricultural Development released in 2011 sets modern agriculture as the primary goal of the sector and proposes a path towards localization, specialization, standardization, and market-orientation. Identifying the financial sector as a key driver for _economic prosperity_, the Gansu Provincial Government (GPG) issued the Opinions of the Gansu Provincial Government on Further Promoting Financial Sector Development in December 2008 to broaden the financial sector in five priority areas, including improved financial services for agriculture, rural areas and farmers and reduced constraints on access to finance by small and medium enterprises.

In line with these guiding documents, the Gansu Provincial Agricultural and Animal Husbandry Department (GPAAHD) proposed the project, to address the main constraints to agricultural modernization in 12 counties of six cities/prefectures in central and eastern Gansu. The proposed project will support the construction of standard featured agricultural production and/or processing bases, provide technical and financial assistance to the small and medium agricultural enterprises, as well as farmer cooperatives, and further develop the rural financial services system through a market-oriented approach.

Impact Income of rural residents in Gansu Province increased (The upcoming 13th Five Year Plan of Gansu Province 2016-2020)
Project Outcome
Description of Outcome Participation of farmers in more productive, market-oriented agricultural activities enhanced
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

Farmer cooperatives and agricultural enterprises financed and strengthened

Rural financial service system developed and enhanced

Capacity for project implementation and management strengthened

Inclusive and environmentally-friendly featured agricultural production bases developed

Status of Implementation Progress (Outputs, Activities, and Issues)

Outputs 1 and 2:

Financial Intermediary Headquarter (FI-HQ), FI county branches, country project management offices (CPMOs) have made slow progress with preparation and approval of sub-loans following the first batch of sub-loans.

A total of CNY 33.29 million ($5.0 million) have been disbursed by FIs by end of 2017.

Slow implementation is caused by the following:

- lack of collateral by sub-loan borrower candidates (SBC)

- ineffective longlist mechanism between FI county branches and county PMO

- ineffective communication between staff of FI-HQ and FI county branches due to insufficient staff provision by FIs

Output 3:

ADB approved the template for environmental and social management system for rural financial service provider (RFSP) on 1 Sep 2017.

The EA conducted capacity building related activities for staff of branches of FIs, RFSPs including potential project RFSPs, and grassroots financial service units in project counties.

Output 4:

The EA conducted various capacity building training of relevant officers of PPMO, CPMO, FI-HQ and FI county branches.

The semi-annual progress report and safeguard monitoring report were received on time.

The audit reports of the project and 3 financial intermediaries were received on time.

Consulting services (counterpart financing) and procurements are ongoing.

Geographical Location Nation-wide, Gansu Sheng
Safeguard Categories
Environment FI
Involuntary Resettlement FI-C
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services Project implementation consultants will be hired using government counterpart funds following PRC public bidding procedure.
Procurement Procurement will be undertaken in accordance with ADB's Procurement Guidelines (2015, as amended from time to time). For subprojects funded with sub-loans made by financial intermediaries and rural financial service providers, the procurement will be undertaken by the respective sub-borrowers in accordance with established private sector or commercial practices which are acceptable to ADB.
Responsible ADB Officer Hinrichs, Jan F.
Responsible ADB Department East Asia Department
Responsible ADB Division Environment, Natural Resources & Agriculture Division, EARD
Executing Agencies
Gansu Provincial Government
No. 136 Jinning Road
Lanzhou City, Gansu Province
People's Republic of China
Concept Clearance 05 Aug 2013
Fact Finding 08 Dec 2014 to 16 Dec 2014
MRM 30 Jun 2015
Approval 12 Nov 2015
Last Review Mission -
Last PDS Update 09 Mar 2018

Loan 3312-PRC

Approval Signing Date Effectivity Date Closing
Original Revised Actual
12 Nov 2015 08 Dec 2015 29 Mar 2016 30 Jun 2021 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 200.00 Cumulative Contract Awards
ADB 100.00 12 Nov 2015 0.87 0.00 5%
Counterpart 100.00 Cumulative Disbursements
Cofinancing 0.00 12 Nov 2015 2.20 0.00 12%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - Satisfactory - Partly satisfactory

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Evaluation Documents See also: Independent Evaluation

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