62 CHAPTER 6
cant impacts on group-owned productive assets reportedly available to the women and the poor. These results underscore the important role that initial conditions play in making CDD projects preferentially beneficial to the poor. Hence in addition to elite capture, initial conditions of wealth may also limit the impact of well-targeted CDD projects on female-headed households and the poor. Female-headed households and poor beneficiaries may not benefit as much as male-headed households and the well-off beneficiaries— at least in the short run. A follow-on study is required to assess the medium- and long-term impacts of Fadama II. Such a study will be able to capture the delayed effect of productive asset acquisition, infrastructure, and other benefits accrued from participation in Fadama II. This study was conducted at an early stage of the project and does not capture the delayed impacts of these investments.
The results also suggest the need to help the poor access affordable credit services. The supervision mission and the external medium-term evaluation recommended further reduction of the beneficiary contribution to 10 per- cent for women and the vulnerable (World Bank 2007a). Even though this recommendation addresses the short-term objective, it is not likely that the approach will be sustainable after the project ends. Affordable rural credit services are the long-term solution for the failure of the poor to be able to pay for productive assets. Fadama II did not involve credit service providers to help beneficiaries pay for their contributions. However, Fadama III, which started in late 2008, has addressed this problem and designed the Fadama Users’ Equity Fund, which will provide revolving funds managed by the farmer groups. Loans from this fund will be available for new and existing members. But there is still a need to strengthen the role of private microfinance institu- tions to provide rural finance services to beneficiaries. For example, credit guarantee and intermediary programs could help poor beneficiaries to borrow and pay for the 30 percent matching funds and other related costs, so that they can benefit both in the short and long terms.
The project had more limited impacts on income in the humid forest and moist savannah zones than in the dry savannah zone. That could be a result of investments in irrigation that beneficiaries in the dry savannah zone demanded over other types of productive assets to address the erratic rain- fall in the area. Irrigation investments have a larger impact on agricultural productivity in moisture-stressed areas than in more humid areas. Fadama II had significant spillover effects in LGAs where the program operated. Compared to households in LGAs that did not participate in the program, the incomes of nonbeneficiaries in Fadama II LGAs increased by 18 percent. However, the increase was not statistically significant. In the moist
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