Ethiopia SOCODEP CE - main report - IFAD

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The condition of many of the SCs (described above) is testimony to the limited impact of the training provided. 78. By 2002, a few months away from closure of the project loans, it was noted that “…the state of some cooperatives restructured under the project appear to be weak, and in the worst cases on the verge of bankruptcy. If this is allowed to continue, such cooperatives may not survive as viable entities. Moreover, most restructured cooperatives critically need the support of the project, including training, follow-ups and technical assistance …”. 40 79. In the present evaluation, these concerns about the quality of the cooperatives restructuring process, and the business viability of the cooperatives were magnified. Restructuring of the service cooperatives in SOCODEP has contributed little to their transformation from the mentality of a command economy to that of the free market. Out of seven SCs visited in the eastern part of the project area, none were functioning before the establishment of a cooperative union in Wolayta Zone in 2005. Most 41 of the cooperatives in Konso, Arba Minch Zuria and Chencha Woredas are not functioning. Almost all suffer from high levels of outstanding debt. In the western project Zones, cooperative performance is better, with lower levels of debt, and continued functioning of some services. Table 3 illustrates the situation for 5 SCs in Arba Minch Zuria, Chencha, Boreda, and Soddo Zuria Woredas (Gamo Gofa and Wolayta Zones). Table 6. Changes in Service Cooperative Performance between 1993 and 2006 Service Cooperative Members Cash balance Birr Outstanding loan Birr Misappropriation Birr 1993 2006 1993 2006 1993 2006 1993 2006 Kolana Shara Dega 600 614 11361 22391 2736 63705 3597 0 Eazo 3561 1535 9725 461 0 51603 65113 70380 Gaga Gocho 1004 617 28000 17000 3155 20828 0 14444 Kokate 1552 613 1650 3587 25573 340893 0 40000 Wachiga 1760 1554 940 39235 329363 314161 16420 20000 * Source: The Evaluation 80. In relation to Cooperatives, overall two conclusions may be drawn: (a) SOCODEP, like many projects, placed too great an emphasis on numerical outputs, and too little on the quality of those outputs; and (b) the general preference in SOCODEP for working through cooperatives rather than considering other groups having greater social capital (such as the indigenous Community Based Organizations (CBO) which were well established at the time), that would have been a more viable alternative. 81. Specific objective 2. Increased capital and income among the rural poor in the project area through off-farm income-generating activities particularly for women and families in densely populated areas with limited land for farm expansion. 82. The project provided credit to individuals, including women, for a limited period. This has undoubtedly increased capital and incomes for some individuals through income-generating activities and small-scale enterprises, although some have failed for lack of markets for their products. 83. Although many individuals benefited from loans provided through SOCODEP (Box 2), the extent of achievement of this objective has been limited because of the under-performance of the cooperatives re-structuring and credit disbursement aspects of the project. 40 2002 Supervision Report, para 39. 41 Out of 17 in total, 11 are completely non-functional, 4 partly functioning, and 2 functioning satisfactorily, according to the Woreda Cooperatives Desks. 22
Box 2. Three Case Studies of Women Loan Beneficiaries Belaynesh Keyito received a loan of EB 240 from a cooperative around Derashe town, Derashe special woreda. She started selling vegetables and bought one sheep for EB 55 and sold the sheep for EB 175. With the money obtained, she managed to send her three children to school and feed the family. She owns farmland in her compound and grows potatoes, maize and onions. Keito Taya has 3 children (one son, two daughters) and her children do not go to school. Her husband died some years ago due to fight with a villager. Keito belongs to Mermere Cooperative, Derashe zone of SNNPR. With a loan of EB 150 she bought one female sheep. The female sheep had 10 offspring. Two of the offspring had 7 lambs. The eight sheep were exchanged for one ox. She fattened the ox and sold it for EB 350. With the cash she bought an immature bull for EB 190. The rest of the money was used for buying food for the household. She bought an ox for EB 400 but the ox died when being trekked to her home. Later she sold some sheep and bought another ox. Now she owns 8 female sheep and one donkey. The donkey is used as a beast of burden. Lomitu Abebe belongs to Baha Cooperative, Decha woreda of Keffa zone. She is 25 years of age and married and has three children (two sons, one daughter). Two of her children go to school. She received EB 400 as a loan and bought four sheep for fattening. After repaying the loan she bought two female sheep. One of the sheep had 6 offspring and the offspring were sold to buy a heifer. The other had three offspring and the dam was sold. Now she has a heifer and one sheep. Some of the money from the sheep sales were used for house construction, buying clothes for the family and running a tej bet. She also sells beer and soft drinks. The family owns a plot of 2000-meter square of land on which enset, taro, coffee, avocado and banana are grown Source: The Evaluation 84. OMFI and continued access to credit. The credit repaid to OMFI as a consequence of Project lending appears not to have been used as a revolving source of credit to the project cooperatives, but to have been absorbed more generally into OMFI’s funds, and lent onwards through OMFI’s branch offices. Although this has diluted the impact of SOCODEP on its target cooperatives and population, it has allowed OMFI to extend its operations more widely in the Region. OMFI tends to work, not with cooperatives, but with small informal groups established by its own branch officials – a better option than the SOCODEP model. 85. The slow rate and low total amount of disbursement of credit would be less of an issue were there the prospect of further rounds of credit being available to SCs and their members in the future. However, the financial status of many of the cooperatives rightly disqualifies them from further lending. This illustrates the fundamental importance of the quality of cooperative restructuring – this is the foundation on which the rest of the project depended, and it has demonstrably failed. 86. Overall, the credit component of SOCODEP has been significantly under-spent, and it has provided one-off loans with little or no continuity of access to credit. It has consequently been of limited effectiveness. In retrospect, the channeling of credit through cooperatives (especially those with the particular political history of those in Ethiopia) was probably not the best strategy. The experience of SOCODEP has demonstrated that individuals can make good use of small amounts of credit and (women especially) repay loans in a timely manner. However, it has also shown that commercial banks are not necessarily the most appropriate lending organisations for rural credit and cooperatives are not necessarily the most appropriate channels for lending. The effectiveness and efficiency with which loans can be disbursed to and recovered from individuals depends to a very high degree on the competence and professionalism of the intermediary organisations. 87. Specific objective 3. Strengthen the Southern Region Agricultural Bureau to carry out its mandate with respect to cooperative development. 88. Staff development programmes through well planned practical trainings were anticipated to be central to the whole SOCODEP implementation, with the aim of making the implementing staff capable of delivering effective support to the SCs. Targeted training of participating cooperatives was anticipated to lead to their emergence as independent viable business entities operating in a free market economy by the time the project phased out. This objective has been partly achieved, through 23
Page 1: PROJECT EVALUATION Federal Democrat
Page 4 and 5: Overall Responsibility Lead Evaluat
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Page 12 and 13: into farmer-owned viable business e
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Ethiopia SOCODEP CE - main report - IFAD

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