38 CHAPTER 5
and how they benefit from productive assets. Our study was conducted at the household level and did not capture these aspects for jointly owned pro- ductive assets. However, we did investigate the impacts of participation in Fadama II on household incomes, which reflects the effects of acquisition and use of both group and private productive assets, as well as other components of the project (such as the effects of rural infrastructure investments and agricultural advisory services).
Another interesting question to explore is the sustainability of the Fadama II success story beyond the project period and how it can be replicated in communities that did not benefit from the project. The major constraint faced by poor households is their ability to finance the acquisition of high- value assets without some form of support from projects or credit services. Fadama II did not involve credit service providers because of the high inter- est they charge and their limited availability. Thus alternative sources of credit were used by the 14 percent of beneficiaries who had access to credit services (Table 5.5). Relatives, social clubs, and friends were reported to be the major sources of credit for Fadama beneficiaries as well as for non- beneficiaries in and outside Fadama II communities. This finding underscores the limited options of poor beneficiaries to pay their 30 percent contribution to productive assets.
It is not clear how the poor were able to pay their contributions and if they were able to manage assets efficiently.3 Those who could not otherwise secure the necessary funds may have used financing through wealthier friends or relatives (see Table 5.5). For example, an eligible but poor beneficiary could have entered into a rental agreement whereby an ineligible rich person paid the beneficiary’s contribution and then asked the beneficiary to pay a premium for a specified period, or to share use of the productive asset or part of the returns. In some cases, an ineligible person could own the produc- tive asset after paying the contribution of all beneficiaries and then rent the productive asset back to the beneficiaries. For example, a woman in one FUG reported that she entered into a rental agreement with a wealthy man who paid her beneficiary contribution for a milling machine. Such arrangements could affect the targeting of the poorest.
The World Bank supervision mission of February 2007 noted that most of the subprojects for women and the vulnerable had not been implemented, because these groups could not pay their contributions (World Bank 2007a,
3 It is still too early to tell how FUGs managed and benefited from their productive assets. How- ever, the MTR concluded that the capacity to manage some productive assets was low and there was still need for building the capacity of FUGs to manage their assets efficiently (World Bank 2007a).
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