Scaling Up the Fight Against Rural Poverty - FIDAfrique

of implementation yet and are limited in scale. It is thus premature to assess their pathway of scaling
up.
b) Scaling up pathways – drivers and spaces:
Unmet demand by rural producers and rural enterprises for medium and long-term credit was the most
important driver for scaling-up in Moldova. The second driver was continued demand by successive
governments for IFAD to focus on these activities. The engagement of the banks, NGOs, government
and IFAD in support of rural producers produced a mutual trust and discipline with high repayment
rates that made the approach scalable.
The development of a capable PIU, which strongly supported the directed credit operations, created
the institutional space for the credit operations in Moldova. The good management performance of the
PIU, headed by an effective leader who believed strongly in the utility of the rural finance component,
helped mobilize political support for this program.
IFAD’s pragmatism in permitting project implementation de facto to adjust to the realities of market
and government demand was a key factor allowing the program to scale up into a sustained directed
rural credit operation. Projects were adjusted during implementation as needed: Resources were
reallocated to medium-term and long-term credit where funds disbursed quickly and as components
that did not move were dropped. In that sense, IFAD’s institutional flexibility also provided the space
for the rural finance program to grow.
c) Scaling up pathways – intentions and outcomes:
The Moldova rural finance program has achieved substantial scale in terms of loans extended. But as
mentioned, this was less the outcome of a deliberate approach; it was rather the result of a pragmatic
implementation process supported by an effective PIU. Bringing the rural finance component to
substantial scale is not a declared objective of IFAD’s country program paper (COSOP). Project
documents convey the intention of gradually focusing IFAD interventions away from support for
investment lending, presumably so as to align IFAD operations in Moldova more closely with IFAD
corporate priorities. But implementation practices supported rural finance credit as the overriding
priority. The result is a strong role of IFAD as a provider of medium-and long-term credit to rural.
Evaluations of the specific projects supported by the IFAD directed credit lines have been positive.
Repayment rates are very good, as noted earlier. Direct employment and income effects are favorable.
But poverty impacts have not been estimated. Much of the justification of the rural finance programs
rests on the assumption of important linkage effects in the rural economy. To assess these effects, clear
ex-ante baselines and goals would need to be set and progress against these subsequently evaluated.
This is not presently the case.
One of the important original objectives of IFAD engagement was to jump-start a lending program that
Moldovan banks would subsequently continue with their own resources. This stage appears not yet to
have been reached as commercial banks continue to be reluctant to extend medium- and long-term
loans to rural enterprises and producers from their own funds. The absence of medium-and long-term
deposits in banks and a lack of access by banks to international financial markets are among the
reasons given why Moldovan commercial banks do not extend medium- and long-term investment
funds. There also appear to be systemic impediments in the Moldovan banking system that prevent the
stated objective to be achieved. These obstacles need to be identified and addressed so that commercial
banks themselves take on a stronger engagement in investment lending. As long as IFAD and other
donor funded credit lines remain the principal source of investment funding to rural areas, the
programs are not sustainable. In this sense the sustainability of the model without IFAD’s continued
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