POLAND POLAND RURAL DEVELOPMENT PROJECT. Closing Project Management Report no. 19

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1 POLAND POLAND RURAL DEVELOPMENT PROJECT Closing Project Management Report no. 19 (April 1, 2005 August 31, 2005) Foundation of Assistance Programmes for Agriculture Address: ul. Wspólna Warszawa Phone: Fax: Warszawa, September 30, 2005

2 POLAND POLAND RURAL DEVELOPMENT PROJECT Closing Project Management Report no. 19 (April 1, 2005 August 31, 2005) Date of Loan Agreement: July 25, 2000 Loan no.: 7013 POL Amount provided by the World Bank: EURm 118,8 Expected closing date: June 30, 2005 Maturity period: September 15, 2005 March 15, 2015 Borrower: Government of Poland Foundation of Assistance Programmes for Agriculture Address: ul. Wspólna Warszawa Phone.: Fax:

3 Contents I. The Status of Project Implementation 4 1. General information 4 2. Component A Micro-credit 5 3. Subcomponent B1 Labor Redeployment 6 4. Subcomponent B2 Education 7 5. Subcomponent B3 Institution Building in Local and Regional Administrations 8 6. Component C Rural Infrastructure Component D Project Management 11 II. Project Management Reports Procurement Management Reports Project Progress Reports Financial Reports 13 Summary 17 Attachments: Attachment 1 Resolutions taken by the National Steering Committee Attachment 2 Special Account Statement as of August 31, 2005 Attachment 3 RDP Monitoring Table Attachment 4 Project Management Reports (CD ROM) List of the Project Management Reports: a Procurement Process Monitoring (Goods and Works) b Procurement Process Monitoring (Consultant Services) c Contract Expenditure Report (Goods and Works) d Contract Expenditure Report (Consultant Services) e Output Monitoring Report (Contract Management) f Output Monitoring Report (Activity Units) 10g RDP Special Purpose Reserve Statement 11g World Bank Special Account Statement i Consolidated Sources and Uses of Funds Statement j Project Uses of Funds by Project Activity Statement 3

4 I. The status of Project implementation 1. General information The implementation of the Rural Development Project was completed by June, The obiectives of the Rural Development Project have been achieved and the Project was implemented effectively and efficiently according to the data collected by Project Coordination Unit and included in this Report, the data presented in final reports submitted by line ministries and voivodships, the results of the RDP final evaluation study, performed by the external companies consortium, and the opinions of the World Bank, included, i.a., in the Aide Memoire. In the second quarter 2005, the last of the Project contracts were completed and the accounts settled (investment refurbishment tasks in subcomponent B2 Education as well as services in subcomponent B1 Labor Redeployment). If the 1% commission on the total amount of the Loan that was paid in 2000 is taken into account, as much as 99% of all the funds were utilized until the end of June, 2005, excluding reserve in the Project budget. On June 8, 2005, a conference was organized to complete the Project. It was attended by representatives of all the ministries, voivodships, the World Bank, the RDP contractors and invited quests. The conference presented the achievements of specific Project components as well as the Project evaluation results basing on the final evaluation study by a consortium led by Doradca Consultants Ltd. In June and July, 2005, the sessions of Regional Steering Committees were held to close the implementation of the Rural Development Project. Three such meetings have been going to take place in September and October, As set out in the agreements between the Minister of Agriculture and Rural Development and particular voivodships, Voivodship Project Implementation Units prepared and performed closing activities to summarize the results obtained in their respective voivodships and prepared voivodship closing reports. Ministries in charge of specific RDP components organized conferences and meetings to summarize their work and achievements. The last one, which concerned the implementation of component A and subcomponent B1, was held on May 24, 2005 in the Ministry of Economy and Labor. Voivodships have deposited the RDP documentation in archives and control visits the Project Coordination Unit performed in 4 Voivodship Project Implementation Units showed that the work to deposit the documentation in archives was carried properly and in line with the PCU guidelines. As arranged between the Ministry of Agriculture and Rural Development and the Foundation of Assistance Programmes for Agriculture (FAPA), the documents are going to be kept at the Foundation premises. In June 2005, Project Coordination Unit elaborated a publication in the Polish and English to summarize the RDP output and achievements. To end the Project, the World Bank has been preparing an internal Implementation Completion Report, which will include information that has been also provided by the Polish side. 4

5 2. Component A Micro-credit The implementation of the micro-credit and one time grants program was completed in On May 24, 2005, the Ministry of Economy and Labor arranged a conference to summarize the component and submitted a report on component implementation closing. Presented by the Rural Development Foundation (RDF) and the Foundation for the Development of Polish Agriculture (FDPA), their respective final reports were accepted by Bank Gospodarstwa Krajowego and the voivodships in question. The audits of both institutions were performed and relevant reports transferred to the World Bank. The component results were described in some of the earlier reports and have not been changed as a result of the verification work. Beneficiaries submitted as many as micro-credit applications, including micro-credits granted to the total of PLN that were financed with the Loan funds (the grand total amount was PLN , including the Service Providers contribution). The average micro-credit amount totaled PLN ,27. All the beneficiaries were provided with consulting or training services. Parallel with this, one time grants to the total of PLN were extended as well. Most of them were granted at the maximum amount of PLN The verification work done by RDF and FDPA confirmed that jobs had been created. Almost new businesses were established, however, some of them did not manage to keep their businesses operating on the market for more than 2 years. Both foundations as well as Bank Gospodarstwa Krajowego have provided the servicing of the micro-credits installments to be repaid, the cost of which is covered from the micro-loan interest. MARD, MEL and MF have agreed to have the micro-credit program continued, which will be handled by the Foundation of Assistance Programs for Agriculture. Given the utilization level of all the funds allocated for the Project implementation, the quantitative results specified above as well as some intangible effects that have been obtained, such as encouraging rural population to launch or extend non-farming bushiness activities and create new business entities, it can be concluded that the component implementation has been successful. 5

6 3. Subcomponent B1: Labor Redeployment The implementation of the Labor Redeployment/Retraining Project was completed in the first quarter, As many as contracts were signed, valued at PLN million. The contracts have been completed and the final payments totaled PLN million. Tables 1 and 2 present the data in a breakdown by voivodships and type of services. Table 1. Contracts in subcomponent B1 by voivodships Voivodship Number of contracts Amount of contracts (mln PLN) Kujawsko-pomorskie ,4 Lubelskie ,6 Małopolskie ,5 Podkarpackie ,3 Świętokrzyskie ,2 Warmińsko-mazurskie ,9 Zachodniopomorskie ,3 TOTAL ,2 Table 2. Contracts in subcomponent B1 by service type Nazwa usługi Number of contracts Amount of contracts (mln PLN) Small Business Assistance ,5 Incubators 6 2,4 Local development planning ,0 Temporary employment ,8 Professional training ,4 Employment service 99 6,1 TOTAL ,2 The services under the Labor Redeployment project were provided to beneficiaries. Training (22.696) and employment (22.115) services were the most popular ones. As for the highest employment rate over to that planned, most was achieved thanks to temporary employment services (31.67%) and business support centers (9.85%). Detailed numbers are presented in attachment 3. As for the completed contracts where effectiveness research was performed, employment was ensured to almost 15 thousand beneficiaries. On May 24, 2005, the Ministry of Economy and Labor in conjunction with the IMC Consulting Ltd. organized a conference to summarize to the component and submitted a report on component implementation completion. The implementation of subcomponent B1 has contributed to enhance active approach of rural population on the labor market by assisting beneficiaries to upgrade and utilize their vocational qualifications and helping them to seek jobs. 6

7 4. Subcomponent B2 Education This component focused on the upgrading of professional qualifications of rural schools graduates. The component aim was achieved mainly by the streamlining school education conditions and effectiveness. The improvement of teaching conditions has been ensured thanks to the co-financing of schools refurbishment-investment tasks, which included: (a) expansion, refurbishment and modernization of school buildings, including elementary (commencing the middle of 2003, special account was taken of the zero grade classrooms and their equipment), gymnasia and special schools and (b) refurbishment and equipment of school dayrooms. In the years , the gminas and poviats in the seven voivodships could apply for the supplementary cofinancing of the refurbishment and investment task, as follows: kujawsko-pomorskie, lubelskie, małopolskie, podkarpackie, świętokrzyskie, warmińsko-mazurskie and zachodniopomorskiego. Commencing the middle of 2003, also the other nine voivodships were eligible to participate in the project, which resulted in the originally planned indicators having been exceeded several times. The teaching efficiency has been improved thanks to the implementation of a number of training-didactic tasks, as follows: (a) didactic training for teachers and school masters, (b) IT training courses for teachers and education management specialists, (c) procurement of software, (d) procurement of education materials and equipment, and also thanks to the Internet Education Resources Center (IERC) that has been launched. Until the end of June 2005, the number of completed contracts for schools refurbishment totaled with as many as schools renovated, which is valued at PLN 254 million. As for school dayrooms refurbishment and equipment, projects were implemented and 287 dayrooms refurbished, valued at PLN 11,5 million. Furthermore, equipment was provided to 746 dayrooms, valued at PLN 9,5 million. Under 627 contracts, equipment was supplied to 628 zero grade classrooms, valued at PLN 5,2 million. As regards the training didactic tasks that have been implemented in seven voivodships, education materials worth PLN 23,2 million were supplied to gmina and poviat schools along with the IT software valued at PLN 4,6 million, and delivered by Young Digital Poland. The training tasks were completed in In the didactic training courses, co-financed under the RDP and conducted by Społeczne Towarzystwo Oświatowe (Civic Education Association CEA), benefited teachers (including 748 school masters). As for the IT training courses, they were attended by trainees, including: computer science teachers, network administrators and computer workshops tutors, school directors and education staff at the self-government authorities and teachers of subjects other computer science. According to the assessment surveys, the trainees evaluated their respective training courses very highly. Training materials are available at the of project contractors web site pages: Społeczne Towarzystwo Oświatowe and the Konsorcjum Polskich Firm Szkoleniowych Additionally, the training materials have been published at the Internet Education Resources Center portal which was established as part of the RDP activities and now operates under the the MNES supervision. The implementation of subcomponent B2 resulted in enhanced teaching effectiveness, which has led to the upgrading of professional skills of rural schools graduates, which, indirectly and in the long time, is going to contribute towards the attainment of the most important of the RDP goals, i.e. off-farming employment to be generated in rural areas. 7

8 5. Subcomponent B3 Institutional Capacity Building in Local and Regional Administrations The implementation of this subcomponent was completed in the mid It has been aimed at the improved efficiency and effectiveness of public administration services performed at local and regional levels. Given the ongoing EU integration process, the strengthening of institutional capacity has become urgent as it is bound to facilitate the entire process of applying and utilizing pre-accession aid to be followed by the EU structural funds. The subcomponent has been divided into three major tasks: 1. Training Project aimed at streamlining public services performance by the local and regional administrations and enhanced effectiveness of human resources management. Conducted by the Fundacja Rozwoju Demokracji Lokalnej (Foundation for the Development of Local Democracy), training courses were delivered to the local council members and government authorities staff, entrepreneurs and the NGO s representatives across the country. Thanks to the Project participation, 642 self-government units (4.555 trainees) have improved their capacities and skills to plan and prepare projects to be financed with national public funds as well as those of the EU. As many as 589 specific projects have been elaborated (some of them jointly by several local government units) and some of them are going to be financed under IROP and HRD SOP. 2. Pilot Institutional Development Program (IDP) covered 33 institutions, including local self government units and 3 voivodship offices (małopolski, podlaski and zachodniopomorski). The Project implementation was entrusted to a consortium comprising Małopolska Szkoła Administracji Publicznej (MSAP Małopolska School of Public Administration) ) and Canadian Urban Institute (CUI). As a result of IDP, all the units implemented in full their respective programs of institutional capacity building and administration streamlining. As a result, they are now prepared to improve their public services performance amongst local population and entrepreneurs. 3. Dissemination Program included the presentation of subcomponent B3 output and the RDP achievements in specific voivodships. All of the local self-government units were provided with the opportunity to participate in Dissemination Program. The implementation as well as ensuring the sustainability of the entire Dissemination Program has been the joint responsibility of the following organizations: Związek Miast Polskich (Union of Polish Towns), Związek Gmin Wiejskich RP (Union of Polish Rural Gminas), Unia Miasteczek Polskich (Union of Small Polish Towns) and Związek Miasteczek Polskich (Federation of the Small Polish Towns). Following their participation in conferences, self-government units have been prepared to perform the analysis of their own institutional capacities and management situation basing on the IDP method and the tools developed under the program, and then to implement their improved management practices. The other local government units, which did not participate in conferences, were provided with the printed conference materials and the software CDs by mail. The methods and tools description has been made available at the the MIAPA website page (www.mswia.gov.pl/pri). As a result of IDP and Dissemination Program implementation (National Competition Leader of self government management practices ), internet data base of Good management practices was launched (www.dobrepraktyki.pl). It will be updated by self-government organizations in the future. 8

9 Additionally 823 self government units participated in workshops on ethics and corruption prevention. The other units have been mailed manuals and training materials including training videos, so now they also have a possibility to streamline their activities in this respect. MIAPA has obtained a study on the existing legal obstacles to hinder the process of upgrading management quality and effectiveness in self government administration. Prepared by experts, the study will provide a starting point for legislative effort to create conditions conducive for the upgrading of management quality and services performance by self-government units. The subcomponent implementation has led to improved performance in the units that participated in the IDP. Furthermore, the training courses beneficiaries have become better qualified to perform their tasks and manage both, public funds and human resources. 9

10 6. Component C Rural Infrastructure One of the RDP objectives was to create conditions conducive to private capital investments in rural areas, enhance entrepreneurships and create off-farming jobs. Another important challenge was to narrow down the economic development gap between urban and rural areas. The development of state-of the-art infrastructure in rural and poorly urbanized areas is one of the prerequisites necessary to achieve those aims. Relevant component activities included investment projects to develop infrastructure such as: construction of water supply network and water treatment plants, development of sewerage system and sewage treatment plants, solid waste management as well as the expansion of local roads (at gmina and poviat level). Furthermore, it comprised technical assistance as well as training courses for the local selfgovernment units in charge of technical infrastructure development in rural areas. Under this component, 722 infrastructure projects were implemented, which valued at over PLN 471 million. Final indicators for this component have been presented in the attached RDP Monitoring Table (attachment 3). The majority of projects (427) have been implemented in the road network part with 753 km roads either built or modernized, valued at almost PLN 207 million. As for the sewerage system and water treatment construction or modernization tasks, km of sewerage pipes were laid and 23 waste water treatment plants built (including 213 farm holding facilities), valued at PLN 212 million. The connections into sewerage network total over households and public facilities. Investment projects to expand water supply networks resulted in the construction of 12 water treatment plants. Furthermore, 879 km of water supply pipes were laid with over households and public facilities connected to the water supply network. As for the solid waste management part (completed in 2003), 4 contracts were implemented, valued at PLN 5,4 million. Under this part, modernization of solid waste dumping sites was completed. Having the total capacity of m 3, they will provide service to about users. Implemented parallely with investment projects, technical assistance program, provided valuable expertise and services to the local government units at the stage of preparing applications to obtain co-funding under RDP. Provided by the short term experts, the assistance turned to be particularly helpful at the stage of developing (economic and financial) feasibility and profitability studies for the projects in question. Having experts support, each local government unit was capable of preparing a correct and economically justified subsidy application. As many as applications were submitted to the Regional Offices of the Agency for the Restructuring and Modernization of Agriculture. Another output of the technical assistance and training program includes the materials concerning the preparation and implementation of investment projects to develop infrastructure in rural gminas, which the users evaluated very highly. The materials have been distributed to over representatives of local self-government units who participated in 97 training workshops of 3 days, that were conducted in all the voivodships nationwide. The web site page provides access to a training courses on the investment project preparation. They are available on-line to provide possibility of acquiring new expertise and practically verifying it. 10

11 7. Component D Project Management On May 12 13, 2005, the last coordination meeting of the RDP implementing units was held in pomorskie voivodship. It was attended by all the representatives of the Project implementing units. The outputs and achievements were summarized and the voivodship delegates informed on the project teams engagement in the work of Marshaleks Offices under the IROP and SOP HRD programs. National Steering Committee did not convene after March 30, 2005, but three resolutions were adopted by circulating relevant letter (attachment no 1): (1) No 3/2005 on the accreditation of membership changes in the RSC in śląskie voivodship, (2) No 4/2005 on the adoption of a ranking list for projects submitted by the RSC in the łódzkie voivodship and (3) No 5/2005 on the approval of a financial plan for component D for the year 2005 on May 23, PCU prepared, and signed with MARD on May 12, 2005, a subsequent agreement on the coordination of RDP management No IWK/2/2005, which concerns the PCU financing until the end of June, On June 30, another agreement was signed to cover the period until the end of Project closing on September 30, At the end of the RDP implementation, the PCU prepared a brochure outlining the Project achievements and transferred it to all the voivodships and units concerned. In May, 2005, Doradca Consultants Ltd. Prepared final report, which was approved by the Steering Group for the Final Evaluation Study of the RDP. The evaluation results were discussed at the conference held in Warsaw on June 2, Doradca Consultants Ltd. submitted 130 copies of the final report version in the Polish and 20 copies in English language. The issue regarding the transfer of equipment purchased under the RDP was finally settled as the MARD took a decision that is should remain in FAPA to be used in the course of some other projects implementation. Following relevant decisions, computer and office equipment now at the RDP implementing units was officially transferred to those units. PCU performed the Project close-out activities according to the completion plan that was developed in the unit. PCU continued work to prepare and to store documentation in archives. As arranged between the MARD and FAPA, the documents are going to be kept at the Foundation premises. Voivodship offices also deposited the RDP documents in their respective archive facilities. The site visits performed by PCU revealed that the process to put the documents in archive storage was carried out correctly basing on the PCU guidelines. Project Coordination Unit cooperated with the company KPMG Audyt Sp. z o.o., the Project auditor, to develop financial reports that constituted the main part of the audit report. It also clarified with the World Bank the accounts to settle the Loan funds that had been drawn and put documentation in archive storage and prepared the document for the post review by the World Bank. The RDP web site at is going to be kept at FAPA servers for a year to come. 11

12 II. Project Management Reports PCU prepared the Quarterly Project Management Report No 18 to cover the first quarter, It was forwarded to the World Bank on May 13, All the voivodships and line ministries sent their respective MIS data bases to PCU until May 10, 2005, which PCU checked in terms of data completeness until June 30, Basing on the finally supplemented data, PCU prepared aggregate Project Management Report for the entire RDP (attachment 4 on a CD ROM). Therefore, some data in that report can diverge slightly from those presented in earlier reports. In the previous reporting periods, the reports on bidding procedures (a,b,c,d) and Project progress (e) were grouped into those including contracts underway (a1-e1) and completed (a2 e2). As the RDP has been completed now, this report includes only the data on closed contracts. The reports on output and financial indicators (f, g10, g11, i, j) have presented the data for the contracts underway and those completed, so no changes have been made in this respect. Project implementation status has been presented in a j reports in an incremental manner until August 31, Procurement Management Reports During the reporting period in question, work was underway to finalize contracts in subcomponents B2 and B1 and to complete the contract for the RDP Final Evaluation Study as well as to publish the brochure to summarize the Project results. Throughout the RDP implementation, the Public Procurement Plan was a document to monitor the progress of biddings and tenders (last changes were agreed with the World Bank on October 5, 2004). Until August 31, 2005, all the contracts under the Rural Development Project were completed and the one concerning audit, was closed in September, Project Progress Reports Report type e - Output Monitoring Report (Contract Management) presents the contracts completed since beginning of April, As indicated in the Report, the date of contract execution completion means that the investment in question has been accepted as finalized or the very last payments made, depending on the task type, whereas the contract is deemed closed completely once all the financial accounts have been settled. Presented in a report type f - Output Monitoring Report by Activity Units, basic output indicators indicate the status as of the end of RDP implementation. The data were verified by the PCU as well as confirmed by the implementing units until the end of June, Therefore, some values can differ slightly from the data presented in some of the earlier developed materials. Some discrepancies may also follow from different calculation methods adopted in difference reports and materials. Planned and actual values in the type f report were introduced in an incremental way, so they present the implementation status as of the end of the RDP implementation period. 12

13 3. Financial Reports As of April 1, 2005, the opening balance of the Special Account totaled EUR 2,605, As of August 31, 2005, the Special Account balance totaled EUR 50, (attachment 2). This amount is going to be refunded to the Worlds Bank when the Special Account is closed down. Special Account balance throughout the Project implementation period is presented in the diagram below: Diagram 1: Balance at the Special Account the in the years (in EUR million) Saldo Rachunek Specjalny (mln EUR) In the period between the beginning of April and end of August, 2005, Special Account was replenished only once with a funds transfer of EUR 1,550, on April 4, Given the fact that the funds utilization by voivodships under subcomponent B2 was lower than planned (some of the investment tasks were given up), the funds totaling EUR 1,250, were transferred back from the Special account to the World Bank on June 20, The total funds transferred from the World Bank onto the Special Account throughout the entire Project duration period totaled almost EUR 116,236,000. Within the current reporting period, the funds were drawn from the Special Account three times to be transferred onto the Special Purpose Reserve Account of the state budget and allocated for the financing of tasks performed by the units involved in the Project implementation. The dates of reducing the funds amounts on Special Account and the amounts transferred onto Special Purpose Reserve Account are presented in report type 11g - World Bank Special Account Statement. As of April 1, 2005, the funds on Special Purpose Reserve Account totaled PLN 207, In the second quarter 2005, the total amount paid onto the Special Purpose Reserve Account of the State budget amounted to EUR 2,855,075.58, i.e. PLN 11,749,519. During the current reporting quarter, the transfers for the beneficiaries implementing the Project amounted to PLN 11,957,896, including PLN 9,807,350 transferred to all voivodships. In the current reporting 13

14 period, refunds were transferred back onto the Special Reserve Account. They were the funds received by voivodships, which totaled PLN 943, the refunds from PCU totaled PLN 36,751.24, and FAPA PLN 25, Funds transfers at the Special Purpose Reserve Account in a breakdown by components is as follows: component A (MEL) PLN 101, subcomponent B1 (MEL) PLN 48, subcomponent B1 (voivodships) PLN 89, subcomponent B2 (MNES) PLN 0.00 subcomponent B2 (voivodships) PLN 9,717, component B3 (MIAPA) PLN 0.00 component C (voivodships) PLN 0.00 component C (PCU) technical assistance/training courses PLN 0.00 subcomponent D (PCU) PLN 1,937, As of August 31, 2005, the balance of funds on the Special Purpose Reserve Account totaled PLN 61, It includes the refund of PLN 36, that PCU made on July 6, The refund compromises savings made thanks to the lower than expected cost of Project servicing in the first semi-annual period in 2005 as well as PLN 25, returned by FAPA on August 31, 2005, which were the funds allocated for the cost of RDP audit. Detailed data on financial transactions turnover are presented in report 10g - RDP Special Purpose Reserve Statement. The use of funds in a breakdown by categories stipulated in the Loan Agreement is presented in report type i - Consolidated Sources and Uses of Funds Statement. The funds presented in the opening balance total EUR 2,926.4 thousand (PLN 12,364.7 thousand). This amount is affected by (1) positive amount of EUR thousand (PLN thousand), i.e. the value of invoices paid in full by the local self-government units being Project beneficiaries, which means including also some funds provided as the World Bank loan, (2) positive amounts indicated in the opening balance of the PCU funds: EUR 31.2 thousand (PLN thousand), (3) funds at the Special Purpose Reserve Account: EUR 46.6 thousand (PLN thousand), and (4) funds on the Special Account: EUR 2,605.2 thousand (PLN 11,202.5 thousand). The value of discrepancy item follows from the fact that the Special Account is run only in euro and, for reporting purposes, the amounts are converted into Polish currency according to the average exchange rate. In the quarter in question, the loan funds utilized to meet the liabilities totaled EUR 3,161.3 thousand (PLN 12,850.0 thousand), whereas the share of own funds put up by beneficiaries for that purpose is valued at EUR 4,181.1 thousand (PLN 16,923.6 thousand). The funds shown as the closing balance total EUR 65.2 thousand (PLN thousand), including EUR 15.1 thousand (PLN 61.8 thousand) on the Special Purpose Reserve Account, and EUR 50.1 thousand (PLN thousand) on the Special Account. Engagement of funds (basing on the invoices paid in full) against the expenditure planned until the end of the Project duration is as follows: Total loan funds 98.79% including by categories: o Goods 96.30% o Works 98.62% o Consulting and trainings services 99.85% o Redeployment/Retraining 99.19% o Micro-credits 99.79% o Operating expenses 97.28% o Audit 96.12% o Loan commission 100.0% - Co-financing with Polish funds % 14

15 The use of Project funds by components is presented in report type j - Use of Funds by Activity Statement. In the second quarter, 2005, the highest ratio of Project funds engaged over to the total funds disbursed, can be noted in subcomponent B2 and amounts to 87,1%. In subcomponent B1 the ratio amounts to 3.1%, in component A - 0.3% and in component D 9.% respectively. No Project funds were engaged in subcomponent B3 and C in the quarter in question. Along with the supplementary financing with the Polish side funds, the total utilization of Project funds exceeded 100% over to the plan covering the whole Project duration period, and, in a breakdown by components, it was as follows: - component A % - subcomponent B % - subcomponent B % - subcomponent B % - component C % - component D % The value in excess of 100% results from or a larger share of domestic funds and, to some extent, from the exchange rate differences. Table 3 Utilization of loan and, both state and beneficiaries cofinancing (in mln EUR) Component Total funds A Micro-credit 16,449 B1 Labor Redeployment 31,061 B2 Education 79,010 B3 Local/Regional Administration 9,706 C Rural Infrastructure 118,905 D Project Management 4,862 Provision 1,188 Sub-total 261,182 RDP reserve 1,371 Total 262,553 The table 4 below presents the utilization of loan funds basing on the decisions issued, including the loan amounts specified in decisions over to the RDP funds limits after the reallocation within the Loan Agreement categories. The values have been corrected to take account of the refunds made in previous periods. Given the commission of 1% of the Loan Total Amount, 98.98% of total funds were utilized until August 31, 2005, excluding the reserve envisaged in the Project budget. Spending includes the actual funds disbursement in the years , including the refunds. 15

16 Table 4. Disbursement of RDP funds (in EUR) as of August 31, 2005 Component Cummulative as of 31/08/05 Limits after reallocation of funds* % of disbursement in comparison to the limit A Microcredits ,83% B1 Labor Redeployment ,30% B2 Education ,93% B3 Local/Regional ,98% Administration C Infrastructure ,00% D Project Management ,23% Provision ,00% Sub-total ,98 RDP reserve Total * according to the World Bank letter dated March 4,

17 Summary The objectives of the Rural Development Project were defined in 1999 to reflect the real needs of rural population. Designed in a comprehensive way, the Project was to provide versatile support to the sustainable development of rural areas and create new living and working opportunities. The RDP comprised a number of intertwined and permeated tasks with regard to micro-credits, redeployment and retraining, upgraded teaching conditions and performance level, support to the capacity building in the local and regional administrations to absorb of preaccession and structural funds of the EU as well as the rural infrastructure development. The tasks implementation was completed in 2004, whereas the clearing of financial accounts, submission of final reports, summary of outputs as well as Project completion took place on June 30, As for funds utilization, it totaled EUR million, i.e. 99% of the loan amount provided by the World Bank. The involvement of the local and regional administrations was a key element of Project implementation, so the self-government authorities representation was present in all of the Project activities. The establishment of a management structure to enable and enhance the cooperation of various units and institutions was one of the fundamental elements of the Project success. The representatives of self-government authorities, public administration, civic associations and economic bodies were included in the Regional Steering Committees that took decisions on the Project implementation in a given voivodship. Thanks to the flexibility of RDP rules, RSC s could choose priorities depending on regional development strategies as well as voivodship needs. Furthermore, the RSC members had the possibility of reviewing the ongoing tasks in a clear way. The multi-component RDP structure enabled the use of Project elements to a varied extent depending on the nature and specific features of a given voivodship. At central level, the whole Project was managed by the National Steering Committee. Its membership comprised the following ministers: of internal affairs and public administration, economy and labor, national education and sports, agriculture and rural development as well as the Chancellery of the Prime Minister. This ensured the synchronization of various activities in ministries and development of a joint approach towards rural areas activation and development. The Rural Development Project has contributed towards the generation of employment for about beneficiaries, whose jobs were created mostly in small and medium enterprises in rural areas. Off-farming jobs were created thanks to direct activities under the components comprising micro-credits, labor retraining and investment projects. About small and medium size enterprises have been established thanks to the micro-credits and one-time grants. In the long term perspective, the investment projects to develop infrastructure, and indirectly, the educational and training activities are going to affect the process of generating employment and continued vocational activation of rural population. As for the results of Project implementation concerning the generation of employment off-farming, increasing income in the gminas covered in the Project as well as number of new businesses launched, they all have been attained under conditions that were not particularly conducive because of the social economic situation across the country, including reduced foreign investment and persistently high unemployment rate. Given the above, the Project has been successful not only because new jobs are now created, but also because the process of laying off workers has been brought to a halt, mainly in small businesses. It was partially possible thanks to the new investment projects, which provided employment and created more favorable conditions for entrepreneurship to develop in the rural areas. 17

18 Another important objective under the RDP was to provide support for public administrations so that they could build up institutional capacities indispensable for the acquisition and effective use of pre-accession aid and structural funds of the EU. It is thanks to the RDP activities that the quality of many currently prepared documents has increased considerably to reflect the practically improved skills, including the clear presentation of needs and expectations. Undoubtedly the important effect of the work done under RDP is the enhanced human and institutional capacity that has been put in place, especially at the Marshaleks Offices and at gmina level. As for tangible outputs of the RDP implementation, they include investment projects to develop rural infrastructure such as the construction and modernization of: rural roads network, water supply and sewerage systems, or solid waste dumping sites. Specific investment projects have resulted in the upgraded quality of living in villages, but, first of all, their created conditions conducive to entrepreneurship growth in rural areas. Accompanying the infrastructure development projects, the program of technical assistance and training activities under the RDP have certainly helped the self-government authorities to utilize the funds under SAPARD. Established by Marshaleks, the Regional Steering Committees, that were to decide about the selection of projects to be co-financed under RDP, later played a similar role in the SAPARD. The application of economic and financial analysis model at the stage of applying for subsidies, which was based on the cost-benefit study for the entire life cycle of a facility in a given investment project, has introduced a completely new quality into the existing practice. Training courses for teachers along with investment projects under the education component, constituted a significant element of the Rural Development Project. Investments have resulted in the upgraded state of school buildings and dayrooms. Now they are better equipped with didactic aids as well. Effects of these activities are bound to be notable in the long term as the level of teaching performance will generally improve in rural schools. The Project has also contributed into enhanced use of the internet in rural gminas, which is now the most important tool to communicate and search for information. Communication between the Project implementing units and beneficiaries was mostly by s and information was published on web sites. RDP was one of the first Projects where applications could be submitted by . There are many more, hardly tangible effects of the Project that could not be possibly presented as figures, such as the system of good practices transferred into practice or recommended for use to some other programs basing on the RDP experience. The summary of all the benefits following from the multi-sectoral approach and nature of the RDP is elaborated in many materials prepared to complete the Project. However, one of the general effects of the RDP should be underlined, which is the new quality now in place in the cooperation between local and regional self-government authorities, and public administration to effectively manage and use the funds for social and vocational activation of rural population. Andrzej Hałasiewicz Deputy Director Foundation of Assistance Programmes for Agriculture 18

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