current situation, orientation, capital raising solution FOR ODA fund management for Agriculture and rural development

in Vietnam REPORT summary

Objective of the Study: (i) Synthesizing a current situation of capital mobilization, analyzing, evaluating a role and an effect of ODA fund on agriculture and rural development of Viet Nam in the period of 1993-2008; (ii) recommending solutions, mechanisms, and policies in order to implement the ongoing projects smoothly; and (iii) recommending the attractive orientation and action plan in order to attract, manage, and use effectively the ODA fund for agriculture and rural Sector in the renovation time. Methodologies: The report has conducted by analyzing and synthesizing all data and information that were collected from reports of the organizations related to the agriculture and rural sectors in the Central, locals, and donors. Based on specialists comments and conclusion from the workshops in order to modify and make better. Scale of report: Analyzing the situation of capital attraction and management of programs and projects that belong to the agriculture and rural sector managed by the Ministry of Agriculture and Rural Development in the period of 1993-2008. The report only mentions in the ODA financial source funded by the multilateral and bilateral donors. The ODA financial sources that funded by the foreign Non-Government donors, finalized in the other report. Structure of report: Except for report summary and synthesis, attached appendix. The report includes three parts: Part I: Introduction. Part II: The situation of capital attraction and implementation management of the ODA programs and projects for agriculture and rural development in the period of 1993-2008. Part III: The orientation and recommendation of capital attraction, management, and implementation of ODA fund for agriculture and rural sector. Some main contents of report: In the period of 1993-2008, the whole of country attracted 35.217 billion USD from the ODA fund, of which agriculture and rural sector got 5.5billion USD. The Ministry of Agriculture and Rural Development is a governor of all programs and projects with approximately 4.05 billion, other Government and provincial agencies managed about 1.45 billion. In 15 past years, the ODA financial source went abreast and gave a consideration contribution to an economic development in general, agriculture sector in popular, and hunger eradication, poverty alleviation of Vietnam. According to a forecast, the ODA financial source of Vietnam after 2010 will still be maintained; maybe an amount can be increased compared to that in the period of 2006-2010. However, aid structure and policy will have certain changes,
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of which the amount of Loan may be increased. To meet the new situation, the Ministry of Agriculture and Rural Development conducted the report on current situation, orientation, capital raising solution, and the ODA financial source management for Agriculture and rural development in Viet Nam. The report objective is to analyze, and give an initial evaluation on the role and effect of the ODA financial source on agriculture and rural development of Vietnam in the period of 1993-2008. To recommend solutions, mechanisms, and policies in order to attract, manage, and use the ODA financial source effectively for the agriculture and rural sector in the innovation time of country, especially after 2010. The report has conducted by analyzing and synthesizing all data and information that were collected from reports of the organizations related to the agriculture and rural sectors in the Central, locals, and donors. Except for introduction, the report divided into three parts as follows: (i) Introduction. (ii) The situation of capital attraction and implementation management of the ODA fund for agriculture and the period of 1993-2008. (iii): The orientation, capital attraction solutions, management, and implementation of the ODA financial source for agriculture and rural sector. The report was analyzed and showed: the situation of the ODA financial source attraction and disbursement for socio-economy of Vietnam in the period of 1993 -2008; the situation of the ODA financial source attraction and using for agriculture, rural, and hunger eradication, poverty alleviation in the period of 19932008. In this part, the report was analyzed very carefully: (i) Mode of the ODA financial source attraction for agriculture and rural including the multilateral and bilateral ODA financial source. The agriculture and rural sector has mobilized according to forms of project (investment project, technique support project), program (policy frame, access to program or sector, adjusted program).Till now, the agriculture sector borrow with priority interest rate, not borrow with common once (IBRD of World Bank, OCR of Asian Development Bank, OOF of JBIC, and PS3 of AFD); (ii) the situation of the ODA financial attraction and using for agriculture and rural sector combining with hunger eradication, poverty alleviation of Vietnam in the period of 1993-2008, has been analyzed according to each period (before 1993-1995, 1996-2000, 2001-2005, and 2005-2008); sectors (forestry, agriculture, irrigation, rural development, aquaculture), donors (ADB, WB, AFD, JBIC, KfW, KExim,..) eight ecological areas of the whole country (northeastern, Northwestern, Red River Delta, Central Northern Coast, Central Southern Coast, Central Highland, Southeastern, Mekong river Delta); loan and grant, capital scale of programs and projects (below 1 million, 1-5, 5-10, 10-30, 30-50, 50-70, 70-100 million and above 100 million USD); (iii) the ODA financial implementation and management for agriculture and rural sector include project preparation, implementation, and management. A common evaluation is as follows: (a) in the period 1993-2008, 41 bilateral and multilateral donors has provided Official Development Assistance (ODA) fund for agriculture and rural development. A
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variety of ODA funds of US$ 5.5 billion has been provided, in which US$ 4.05 billion is managed by Ministry of Agriculture and Rural Development; (b) Programs and projects have been implemented in almost all regions in the country and are in accordance with the agriculture development strategy for the whole country and for each region; (c) Attraction rate of ODA fund for agriculture sector is lower (15.66%) in compared with some other sectors; (d) ODA funds are not equal in all regions in the country; (e) projects which have the investment fund above US$ 70 million make up 3% of total projects; (f) Although no loans are canceled but slow disbursement progress and reduction in disbursement percentage made many projects request for extension of implementation period. The report has pointed out (i) positive results and impacts of ODA funds on agriculture and rural development, forestry, irrigation and aquaculture. Some major impacts may include important investment resources makes up 40-50% of investment resources managed by MARD (excluding important irrigation works by government bond and grant). This contributes to increase agricultural yield and implement strategy of hunger elimination and poverty reduction, develop and adjust strategies and policies on agriculture development, build and strength capacity for staff at all levels, develop rural infrastructure for developing rural areas; prevent calamity damages and diseases; protect environment and ensure food security; develop agricultural technology, minority groups and some other matters such as HIV, anti-corruption. In each sector, pilot programs and projects financed by bilateral and multilateral donors are analyzed and attached in the appendix; (ii) Shortcomings and reasons include lack of overall orientation for attracting and utilizing ODA funds, (ii) ODA funds are not equal for all sectors and regions in the country; (iii) Legal investment frame is not comprehensive, there are some limitations in procurement, especially in the process of consultant recruitment and financial management which leads to low disbursement percentages in the first and second year. Slow disbursement caused extension in implementation period. Some lessons learned from past and ongoing projects include (i) full awareness of ODA fund which is essential for socio-economic development of our country; (ii) strong commitment and close guidance of authority agencies and participation of all local people in attracting, utilizing and monitoring ODA funds; (iii) develop close co-operation and partnership; (iv) renovate the preparation of projects according to the principles: pro-activeness, independence, good preparation of project paper and reduction of preparation stage; (v) compensation and site clearance; (vi) mobilization of counterpart fund; (vii) Capacity building for project staff; (viii) projects are managed by three project
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management units in each sector Forestry, Agriculture and Irrigation; (ix) Increase the quality of procurement, contract management and improve disbursement process. Based on analyzing achievements and limitations in ODA management and utilization in the past and recognizing challenges in agriculture and rural development in the next time, some recommendations to attract ODA funds in the near time are given as follows: (i) Integrated agriculture and rural development to ensure increase of income and living standarts for rural people especially rural poors; (ii) Strengthen the sustainable and effective management and utilization of forestry and other natural resources; maintaning rural environment for sustainable development; Construction of essential infrastructure works, adapted to climate change and helped control natural disasters; Development rural infrastructures for agriculture production and improving livelihood for rural people, with priority given to those construcions that are vital to production and ensuring life for the poors (rural transportation, water supply, school, etc) Improve productivity, quality and competitiveness of agri-products and economic integration; Training and technology transfer for farmers and capacity building for management staff at all levels, particularly at district, commune and village levels.

(iii) (iv)

(v) (vi)

The report mentions some recommendations to solve potential problems and situations, in which approaches to attract and mobilize ODA funds are considered to be prerequisited. Some following advance actions may include (1) Keep on mobilizing and well maganing project loans; (2) access to funds of Climate Change Investment Fund; (3) Establish and strengthen the operation of ODA Group under MARD; (4) Decentralize to CPO and provinces based on each stage and capacity of each province; (5) Develop a professional unit specialized in procurement in CPOs and speed up disbursement process. The report also mentioned schedule and proposals to the Government as well as concerned ministries and agencies, participating provinces and donors so that
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mobilization, management and utilization of ODA funds in agricultural sector will be implemented better in the future.