Closed Compact Report: Cabo Verde Compact | July 2017

Watershed Management and Agricultural Support Project

  • $10,848,630Original Compact Project Amount
  • $11,602,406Total Disbursed

Estimated Benefits

Estimated benefits correspond to $11.6 million of project funds, where cost-benefit analysis was conducted.

Estimated Benefits for the Watershed Management and Agriculture Support Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
At the time of signing 9.7 percent 900 $-200,000

The Watershed Management, Agribusiness Development and Credit Activities were conceived as a tightly integrated project at the time of compact signing. The original ERR at the time of investment was 9.7 percent, and MCC has not updated the ERR for this project due to a lack of data.

Project Description

Cabo Verde has an extremely arid climate with fragile ecosystems and scarce natural resources. The lack of water is the dominant factor limiting productivity and growth in agriculture and the rural economy, although limited land, limited availability of inputs like fertilizer and credits, poor infrastructure, and constraints in inter-island exports all contribute as well. The Watershed Management and Agriculture Support Project was designed to address these constraints and increase agricultural productivity in three specific watershed areas on the islands of Santo Antão, Fogo, and São Nicolau. Activities included:

  • Water Management and Soil Conservation Activity: The Water Management Activity was designed to increase agricultural productivity by supporting the conversion of farm land from traditional dry land production to higher-value horticultural production. This involved improving natural resource management, including sustainable use of soil and water resources, and building capacity to support the development and implementation of community-based watershed management plans. The activity sought to slow surface runoff through the construction of walls, terraces, dikes and check dams and the capture of water in reservoirs to replenish water tables. It also included the provision of water from the reservoirs to individual plots of land through well-drilling and the construction of a series of dikes, culverts and tubes. Farmers were then responsible for obtaining and installing irrigation equipment on their own farms.
  • Agribusiness Development Services Activity: As farmers gained improved access to water and diversified production toward higher-valued crops, the Agribusiness Development Services Activity was intended to provide them with the training and support necessary to convert to new drip irrigation technology and increase productive capacity and marketing of their agricultural products. The activity included establishing demonstration farms, training for both farmers and Ministry of Environment, Agriculture and Fisheries employees, development and distribution of improved varieties of fruits and vegetables, quality control centers to enforce standards for agricultural products, construction and operation of packing sheds, and an inspection and certification center on Santo Antão.
  • Access to Credit Activity: At the time of investment, few, if any, financial institutions in the watershed areas had the resources to meet the anticipated demands for financing drip irrigation, working capital and agri-business development. The Access to Credit Activity was designed to address that gap in financing by providing loans to farmers, post-harvest facilities and other agribusinesses in the watershed areas through local banks and micro-finance institutions. It also funded technical assistance to micro-finance and local financial institutions participating in the program to support better management of loans, promote the loan programs, and strengthen credit analysis techniques.

At the end of the compact, 28 reservoirs were constructed to service 101.2 hectares of drip-irrigated arable land, and 48 capitation, retention and control dikes were built to capture water, recharge water tables and decrease soil erosion. Additionally, a 25-year embargo on inter-island agricultural exports from Santo Antão was lifted because, along with pest-control research, the compact funded training for 31 phyto- and zoo-sanitary inspectors. The project also built and equipped a post-harvest center on the island of Santo Antão, providing agricultural training, packaging, cooling, and inspection services; and constructed three rural extension centers that offer farmers Internet access and technical training materials with market information and guidance on improved agricultural practices. Ultimately, 225 farmers and/or agribusinesses received in total $617,000 in rural agricultural loans at competitive market rates, and when the compact ended, approximately 100 farmers were already installing drip irrigation systems.

Evaluation Findings

Watershed Management and Agricultural Support Project

This evaluation will investigate how adoption of MCC-funded drip irrigation technology, access to credit, and conversion from traditional crop subsistence-level farming to high-value horticultural and fruit crops has impacted agribusiness of participating farmers. It will ask whether the increased investment in drip irrigation technology, access to credit, and conversion from traditional crop subsistence-level farming to high-value horticultural and fruit crops increase annual agricultural production and productivity for participating farmer households.

Status of the evaluation
Component Status
Endline Final results expected in 2018

Key performance indicators and outputs at compact end date

Key performance indicators and outputs at compact end date
Activity/Outcome Key Performance Indicator Baseline End of Compact Target Quarter 1 through Quarter 20 Actuals (as of Jun 2012) Percent Compact Target Satisfied (as of Jun 2012)
Agribusiness Development Services Activity Construct and equip packing and conservation post-harvest center in Paul watershed Not constructed Competed by December 2009 Completed in September 2010 Complete
Hectares under improved or new irrigation (All Watersheds Paul, Faja, and Mosteiros) 0 111.2 13 11.5%
Number of crop cycles: all watersheds (Paul, Faja, and Mosteiros) 1.33 2 1.33 0
Number of farmers adopting drip irrigation; All Watersheds (Paul, Faja, and Mosteiros) 0 337 106 31.45%
Number of farmers that have applied improved techniques 0 480 106 22.08%
Number of farmers trained 0 800 553 69.13%
Credit Activity Number of new loans disbursed—agriculture: all Watersheds (Paul, Faja, and Mosteiros) 0 240 225 94%
Portfolio risk above 90 days (%) N/A PAR<5% 4.03% Satisfied
USD Value of agricultural and rural loans $0 $600,000 $617,000 103%
Water Management and Soil Conservation Activity Reservoirs constructed: All Watersheds (Paul, Faja, and Mosteiros) 0 28 28 100%
Tons of solid material retained through soil conservation infrastructure: all watersheds (Paul, Faja, Mosteiros) 0 25,552 46,763 183.01%
Volume (Cubic Meters) of available water: all watersheds (Paul, Faja, and Mosteiros) 0 465,800 352,978 76%

As shown above, the Agribusiness Development Services Activity trained a smaller number of farmers than originally planned. This was because of underperformance of the individuals hired to plan and organize the trainings.  These challenges then likely affected the farmers’ ability to adopt new practices including irrigation, as seen in the low percentage of targets met for the Agribusiness Development Services Activity.  Other challenges that may have affected performance on irrigation-related indicators included late completion of irrigation infrastructure, which left insufficient time for promotion of irrigation among farmers, the high cost of irrigation systems and difficulty accessing credit for farmers, and insufficient water in the systems to cover the intended 111.2 hectares.  More information will be available following completion of the project evaluation.