The thesis necessity
In 2010, Vietnam's economy grew at an average rate of 6.7%, despite a slower global recovery, with public debt stabilized at a safe level of approximately 56.7% of GDP To enhance socio-economic development, Vietnam has expanded its international relationships, focusing on effectively attracting and managing Official Development Assistance (ODA) from various international financial organizations, including the World Bank, Asian Development Bank, and others The World Bank, as the earliest donor, has funded the largest and most impactful projects in Vietnam, significantly influencing the management of ODA initiatives in the country.
Recent government policies have fostered a growing economy with a steadily increasing GDP, attracting significant investment capital In addition to internally accumulated funds, there is a rising influx of official development assistance capital, further supporting this demand.
1,810 million and US$ 410 million of committed and disbursed amount respectively in 1993 to more than US$ 8,0 million and US$ 3,5 million in 2010) [19] (see the
International donors and non-governmental organizations have significantly invested in Vietnam's economy through Development Agreements with the government Notably, the Rural Finance Projects initiated under Development Credit Agreements in 2003 and 2009, with respective credits of US$ 200 million (Credit No 3648-VN) and US$ 200 million (Credit No 3884-VN), are among the largest initiatives aimed at enhancing living conditions in rural areas of the Socialist Republic of Vietnam.
The introduction of wholesale banking operations (WBO) in Vietnam through the implementation of two projects marks a significant milestone Effective monitoring and controlling (M&C) are crucial for the success of these projects, alongside various objective and subjective factors The Project Management Unit (PMU), designated by the Bank for Investment and Development of Vietnam (BIDV), known as Transaction Center III (TCIII), is tasked with overseeing both the Rural Finance Project II (RFPII) and Rural Finance Project III (RFPIII).
Monitoring and Controlling (M&C) is a critical yet often overlooked aspect of project management that is not executed effectively in many organizations This process is essential for analyzing the performance of completed tasks and assessing the progress of ongoing work by examining data over specific periods M&C offers continuous feedback to managers and stakeholders, highlighting successes and potential issues early on to enable timely adjustments However, common pitfalls in M&C include biases prior to monitoring, insufficient and outdated information, unreasonable evaluations, unclear objectives, and ineffective monitoring criteria Addressing these challenges is vital for improving project outcomes.
With the effectiveness of RFPIII, a key responsibility of the implementing agency is to successfully execute the project within the established timeline as part of its role as an apex bank.
The 18th Annual Consultative Group Meeting for Vietnam, held in December 2010, highlighted the need for significant improvements in project monitoring and evaluation (M&E) and project control across the country, particularly in the agricultural and rural sectors.
Recent studies on ODA project management and evaluation in Vietnam have emerged, yet there is a notable lack of specific research focused on monitoring and controlling World Bank loan projects, particularly those implemented through commercial banks to support agriculture and rural development.
Research on Monitoring and Evaluation (M&C) is crucial for the successful execution of Rural Finance projects funded by the World Bank, as well as similar initiatives that have been on the rise recently.
Objectives of the thesis
This study reviews and analyzes the monitoring and control (M&C) system of RFPII to identify problems that have negatively impacted project performance The findings aim to draw lessons for improving the system, ultimately contributing to enhanced performance in RFPIII.
These objectives will be achieved by performing the following tasks:
Making clear the concept and fundamentals of M&C
Analyzing M&C system of RFPII to find out its obstacles and problems in project implementation
Proposing suggestions for improving M&C system in RFPIII
To achieve objectives of the study, those tasks need to be done to answer the following questions:
What are the main tasks of project M&C?
How can M&C contribute to project performance?
How can a project be monitored and controlled?
What does the M&C system of the RFPII undertake as planned and what are its main obstacles and problems?
What should be done to improve M&C system to enhance project performance?
Scopes of the thesis
This study analyzes the Monitoring and Control (M&C) system of the RFPII project funded by the World Bank, specifically within the Project Management Unit (PMU) It aims to assess the components, processes, and functions of this system during the project implementation stage to identify existing challenges.
Research methodology and approaches
This article explores the theoretical framework of Monitoring and Control (M&C) and applies it to assess the current state of the M&C system, highlighting issues encountered during the implementation of Rural Financial Projects The study utilizes both secondary and primary data to analyze these challenges and offers recommendations based on the findings.
Secondary data is collected from various external sources, including libraries, textbooks, and government documents, as well as internal sources like progress reports and project documents This data aids researchers in understanding the theoretical framework of Monitoring and Control (M&C) and assessing the current status of the M&C system within RFPII.
Primary data was gathered through qualitative research aimed at identifying the challenges of the Monitoring and Control (M&C) system of RFPII and the requirements for RFPIII This involved conducting in-depth, unstructured interviews with PMU staff, managers, and project officers from other PFIs The interviews focused on how PMU managers utilized information from the RFPII M&C system for decision-making in project implementation, the relevance of this information to their needs, and the obstacles affecting the system's effectiveness and efficiency Additionally, PMU and PFI staff were questioned about their data collection, analysis, and reporting processes, the challenges they faced with the M&C system, and their motivations for engaging with it, along with inquiries about potential improvements to enhance the system for better project performance in RFPIII.
In addition, general observation has been also conducted to examine aptitude of staff and officers involving in M&C system for their tasks and accompanying significance
The sample was chosen from various levels of the M&C system of RFPII, specifically including central, senior, middle, and operational levels, as well as from WB, PMU, PFIs' project management, and PIFs' branches.
At senior level, a manager from WB and an operation officer in charged of RFPII from WB were selected
At senior level, 05 staffs were selected from respective departments of PMU
At middle level, 02 relevant managers from Agribank and VIB that had biggest credit line proportion of 68.6% and 22% respectively [23] were selected out of 25 PFIs and
A total of 16 staff members were selected for participation, including 3 employees from 3 out of 39 branches of Agribank and 2 employees from 2 out of 24 branches of other participating financial institutions (PFIs) as detailed in Appendix No 9.
Qualitative data of interviewers‟ ideas and opinions are processed by using qualitative analysis method.
Data sources
The literature review and secondary data collection involved extensive research through books, reports, newspapers, and online sources, as well as collaboration with World Bank staff and key personnel from WBO and PMU in project PFIs Additionally, my personal experience with PMU (BIDV) and currently at Agribank has provided me with a deep understanding of specific issues in these areas.
Significance
This thesis analyzes project monitoring and control (M&C) issues through case study research, identifying common problems and offering actionable recommendations for implementing agencies and private financial institutions (PFIs) The findings aim to enhance the M&C systems of the RFPIII project and can be applied to similar cases across Vietnam.
The study holds special significance as it focuses on the RFPII case studies, where the author served as a project coordinator and actively participated in implementation The author is deeply committed to this research, believing it will contribute meaningfully to both academic literature and real-world applications By identifying weaknesses in the RFPII's performance, the author aims to propose practical solutions and recommendations to enhance the monitoring and control system of the RFPIII, which is currently in its initial implementation stage.
Expected results
This thesis aims to enhance project monitoring and control for the continued development of BIDV and PFIs involved in World Bank projects, with the expectation that the findings will be effectively applicable to case studies of other projects funded by various donors.
The thesis structure
The thesis started with the introduction part, following by three chapters and the conclusion part:
Chapter 1 provides a comprehensive theoretical framework for Monitoring and Control (M&C), discussing its definition, comparison, and significance within the context of this study Key components and tasks essential to the M&C system are explored, alongside fundamental principles of control and the processes involved in M&C Additionally, the chapter highlights the necessary conditions and capacities required to ensure the effective implementation of the M&C system.
Chapter 2 will examine M&C and its problems in case of Rural Finance Project II
The RFPII, funded by the World Bank, aims to outline its objectives, key dates, operational methods, and overall project performance evaluations This overview will serve as the foundation for applying the theoretical framework of Monitoring and Control (M&C) to assess the M&C system within RFPII, identifying the necessary conditions and capacities The analysis will focus on uncovering M&C challenges that negatively impact the project's performance.
Chapter 3 will address some recommendations for M&C improvement aiming at better project performance of RFPIII in particular and for other similar financial projects.
LITERATURE REVIEW AND THEORETICAL
Literature review
Recent studies on project monitoring and controlling (M&C) have been conducted, but they often lack depth as they address broader project management issues, spanning various stages of the project life cycle or concentrating solely on the implementation phase A review of relevant literature from both Vietnamese and foreign authors, primarily focusing on development and ODA projects, reveals that M&C is a critical topic influencing project performance This underscores the necessity for dedicated research on M&C to bridge the gaps in existing studies and enhance understanding in this vital area.
Trần Thiện Dũng (2000) examined project management across the entire project life cycle, which encompasses three key phases: formulation, implementation, and closure The study developed a theoretical framework, findings, and recommendations for each phase It also introduced the theory of project monitoring and control, along with challenges faced during the implementation phase, specifically in a Danish context However, the thesis primarily focuses on a business management perspective, addressing project monitoring and evaluation generally, with limited details on definitions, purposes, steps, organization, common issues, and existing systems Notably, specific tools and techniques for monitoring and controlling systems have yet to be explored in depth.
Trần Quang Tiến (2000) identified controlling as a process comprising four key steps: establishing a baseline, measuring progress and performance, comparing planned versus actual outcomes, and taking corrective action Similarly, Derek P (1997) emphasized the importance of performance monitoring, measurement, and management for result-oriented management This approach closely aligns with project monitoring and controlling, highlighting that systematic performance measures enable management to respond effectively to gathered information Consequently, performance management emerges as a framework focused on setting targets, evaluating achievements against those targets, and implementing necessary corrective actions.
Thus, M&C was discussed, theoretically, on definition, purpose, steps, organization, and some common accompanied problems Tools and their uses have not been applied in these studies
Nguyễn Minh Phương (2000) highlighted the importance of monitoring and controlling (M&C) in foreign-invested financial projects, emphasizing that both donors and receivers play crucial roles during project implementation Receivers are required to maintain separate accounts, manage documentation, and archive records to facilitate donor oversight Additionally, independent audits of the receivers' financial status and adherence to project regulations are mandated by donors To optimize the use of borrowed funds, receivers must strengthen their monitoring and controlling activities, particularly by enhancing their internal auditing systems at project sites The study also identified deficiencies in the reporting and information systems at branches, noting that the existing report formats are excessive, repetitive, and overlap, leading to delays and unclear responsibilities in report generation.
This study is closely related to financial project cases, highlighting the current state of project monitoring and control for foreign-invested projects at the operational level Its findings are valuable for conducting more in-depth research on the issues surrounding project monitoring and control.
Trần Quang Tiến (2000) observed that monitoring and controlling in the specific case study was conducted at a minimal level and with a limited scope, failing to adhere strictly to the established plan The study identified key factors contributing to this issue, including a lack of resources and a tendency towards reporting that favors achievements.
The World Bank's Implementation Completion Report No 24926 highlights that issues within the Monitoring and Control (M&C) system contribute significantly to delays in project initiation and challenges in implementation, among other identified problems within the IDA Credit Portfolio.
- Lack of readiness for implementation before credit approval
- Inadequate and untimely provision of counterpart funds
- Centralization of decision making authority
- Incompetent and inefficient M&C (and/or M&E) system [20] and [29]
Therefore, it is necessary to have a study on problems and shortcoming relating M&C system to improve project performance
Derek P (1997) provided a comprehensive overview of performance measurement within the Member States of the Organization for Economic Cooperation and Development (OECD), highlighting valuable lessons learned that can be applied by donors and aid agencies.
Performance measurement is a fundamental management practice widely adopted in the private sector, but it was only introduced in the public sector by the OECD in the early 1980s This shift was driven by growing pressure from stakeholders and taxpayers for governments to demonstrate value for money in public services, addressing issues like poorly defined objectives and responsibilities, as well as an excessive focus on spending rather than achieving results While OECD countries have extensively documented their experiences with performance management, development assistance organizations and aid agencies have been exploring performance measurement techniques since the 1970s, highlighting a gap in comprehensive documentation in this area.
Development workers have traditionally utilized key indicators, reports, and impact studies for monitoring and evaluation; however, these systems often fall short of expectations There exists a notable gap between the intended functionality of these systems and their practical implementation Despite the widespread use of log frames, internal reports frequently highlight poorly structured project objectives and challenges faced by staff in selecting and applying appropriate indicators In light of recent public sector reforms, aid agencies are reassessing their monitoring and evaluation frameworks to create effective learning systems that better support their client countries.
- One basis dilemma is that aid agencies are dependent on results from client countries Systemic performance management would need to be introduced by the client administrations
OECD Member States consistently apply core elements such as setting objectives, selecting indicators, and reporting; however, the degree of authority devolvement, manager accountability, and transparency varies significantly across countries According to the Public Management Service, performance measurement systems are influenced by each country's change philosophy and cultural context For instance, New Zealand focuses on output measures, while Australia and the US prioritize outcomes Denmark emphasizes client satisfaction through surveys, whereas the UK concentrates on financial results.
An analysis of World Bank documents highlights three key features of aid agency experience, notably the supply-driven nature of advice and procedures The monitoring and evaluation handbooks primarily concentrate on the technical aspects of defining indicators and data collection, with minimal emphasis on the application of data or the capacity of borrowers However, this approach evolved with the introduction of the logical framework, which shifted the focus towards aligning indicators with objectives.
Third, the focus was primarily on the needs of the Bank for supervision and portfolio management rather than on the management interests of the borrower
Some striking similarities and interesting differences in the approaches taken by donors are also found out:
Both approaches share a commitment to a unified agency mission, utilize the log frame's analytical structure to align programs with objectives, and emphasize the significance of indicators along with the necessity for consistent reporting.
Agencies vary in their approaches to managing reporting, evaluation, performance assessment, and publication For instance, the United Kingdom Overseas Development Administration (ODA) evaluates project and program performance based on objectives outlined in its mission statement.
WB looks at internally derived assessment of "quality at entry" (the soundness of analysis and design of a new project judged by rating systems during implementation and after project completion)
Eight techniques as good lessons have been selected from aid agency examples:
- The logical framework in order to structure objectives;
- Analysis of risks, especially between outputs and outcomes, help to manage accountability;
- Work on the specification of indicators by the USAID and the WB;
- Perfoffi1ance analysis through (a) structured supervision-monitoring by the WB and (b) assessment against policy aim, undertaken by ODA;
- Introduction by ODA of output-to purpose reviews;
- Departmental portfolio evaluation plans, adopted by the Australian Public Service; surveys of customer satisfaction, exemplified by the United Kingdom's Citizen's Charter; and
- Linking performance to resource allocation, as in the USAID Results Report and Resource Request
Seven years post-research, significant changes may have occurred, yet the study provides valuable insights into performance measurement and management techniques within selected OECD member and development agencies, particularly the World Bank (WB) It emphasizes that the WB's use of indicators primarily serves its own supervisory and portfolio management needs, rather than addressing the management interests of borrowers Additionally, it underscores the reliance of aid agencies on results from client countries, suggesting that systemic performance management should be implemented by client administrations.
This knowledge is very helpful for a study, which is beyond scope of this research, on the issue at micro level in client countries/borrowers
Nguyễn Hữu Bình (2002) and Nguyễn Văn Phú (2002) are also reviewed but not much relevant information are drawn from [3] and [4]
Theoretical framework
Chapter 1 lays the groundwork for Chapters 2 and 3 by introducing the M&C concept and discussing the M&C system process These foundational elements are then utilized to evaluate the reports and M&C system of RFPII To ensure the M&C system functions effectively, it is essential to establish the necessary conditions and capacities, as outlined in section 1.2.3.
1.2.1 The concept of project monitoring and controlling
This section will explore the definitions of project monitoring and controlling, comparing various interpretations to identify the most relevant definition for this study While many definitions exist, they often share similar content but differ in phrasing Some sources focus solely on project control, omitting a definition for monitoring, while others consistently pair monitoring with evaluation Additionally, certain texts treat monitoring, control, and evaluation as distinct concepts.
Monitoring is defined as the process of collecting, recording, and reporting information about all aspects of project performance, as outlined by Jack R M and Samuel J.M., JR They emphasize that monitoring should be distinguished from controlling and evaluation, with controlling using monitoring data to align actual performance with planned performance, and evaluation assessing the quality and effectiveness of the project However, this definition does not include the essential input for monitoring, which is the agreed schedule or plan.
Monitoring is the ongoing evaluation of project execution against established timelines and the utilization of resources by beneficiaries It offers managers and stakeholders consistent feedback, enabling the early identification of successes and challenges, which allows for prompt adjustments to project operations.
Jack R M and Samuel J M., JR emphasize that reporting performance involves comparing desired and actual performance levels and understanding the reasons for any discrepancies, which are essential components of the control process Essentially, control aims to minimize the gap between planned objectives and actual outcomes This highlights a significant overlap between their definitions of controlling and monitoring performance.
Project control is a complex interplay of emotions and facts, blending human factors with mechanistic processes, and influenced by both causation and chance It involves the project manager assessing how well the project plan is being followed and taking necessary actions to ensure successful completion Additionally, project control is achieved through continuous monitoring and evaluation of ongoing results, highlighting the importance of regular review in the management process.
In this study, we align with William R.D.'s definition of monitoring, which involves capturing, analyzing, and reporting project performance against the initial plan Additionally, control is described as the process of comparing actual performance to planned performance, analyzing variances, evaluating alternatives, and implementing necessary corrective actions.
Table 1.1 will help distinguishing the two concepts and understanding the inter- reaction between monitoring and controlling
Project monitoring and controlling should be viewed as an integrated system of reflection and communication that supports project implementation throughout its entire life cycle This process is essential from conceptualization to termination, serving different purposes at each stage and forming a critical component of the planning-monitoring-controlling cycle The monitoring system acts as a direct link between planning and control, where both planning and monitoring provide essential input for effective controlling Additionally, the controlling process can be understood as a closed-loop system that incorporates revised plans and schedules following necessary corrective actions.
Tab 1.1 Monitoring and Controlling comparison
Focus of attention - Individual tasks; resources
Periodicity - Daily, weekly, monthly, yearly
Level of Aggregation - Task; Individual Resource
Point of view - Work Breakdown Structure
Purpose - To gather and report data
To describe what has occurred and what the situation is
- To act on the data
- To analyze the situation, decide what to do and do it
- Work results of on-going activities
- Information distribution tools and techniques
(Communication skills, Information retrieval systems, Information distribution systems)
- Project management nforn1ation system
Inter-reaction All reporting is in vain unless project management have the ability to make decision based on the reports they receive
- Control presupposes that a certain amount of paperwork (reporting) be done
Source: Generated from Erling, S A., Kirstoffer V G and Tor H.(2004) Goal Directed Project Management Second Edition Coopers & Lybrand, p 151 and William, R D (1996) A guide to project management body of knowledge Project Management Institute, pp 43-46; pp 104-110
Effective project management hinges on meticulous planning that encompasses technological, budgetary, scheduling, organizational, and risk-related elements to ensure participant coordination However, even the most comprehensive plans cannot guarantee success due to uncertainties and fluctuating environmental conditions that can impact outcomes both positively and negatively Variability in labor efficiency, availability, and costs, along with evolving needs and goals, necessitates the continuous monitoring and updating of original plans Factors such as advancements in technology, shifts in corporate strategy, changes in key personnel, and new market or legal scenarios can render initial plans outdated Therefore, ongoing assessment and adaptation are crucial for achieving project objectives.
To gain insight into the project implementation process, a descriptive approach is commonly employed This method typically involves a general overview of the project while providing detailed descriptions of key issues that highlight significant discrepancies between the planned objectives and actual outcomes To accurately represent the current status of the project, various visual tools such as diagrams, graphs, and charts are utilized, illustrating individual aspects of the project or showcasing interrelated factors collectively.
To effectively address discrepancies between the project's implementation and the initial plan, it is essential to identify the causes of these deviations and assess their overall impact on the project's success and associated risks Additionally, understanding how these variations affect stakeholders is crucial Notably, even when a project exceeds its planned objectives, a thorough analysis is necessary to evaluate the implications on the project's execution process.
Identifying and emphasizing the strengths and weaknesses revealed during project implementation is crucial for effective evaluation and future corrective actions It is essential to clearly depict these aspects, as well as the sources of both strengths and weaknesses, to assess the performance of individuals involved in the project.
Re-evaluating assessments during the project development stage is crucial for project development agencies, as it enables them to identify new opportunities and adapt their plans to align with changing environmental conditions This process is essential, given that projects are often based on assumptions that can only be predicted during the initial formulation phase.
To effectively implement a project, it is essential to develop recommendations for changes based on deviations from the initial project plan These recommendations arise when discrepancies are identified and serve as valuable initial information, fostering the generation of innovative ideas for future improvements.
Collecting information and documenting project files is a crucial final activity that is often overlooked or poorly executed Although it is typically viewed as an administrative task, it plays an essential role in project control and monitoring Proper documentation establishes specific requirements for the design, planning schedule, and evaluation processes, ensuring that projects are effectively managed and assessed.
The followings will be principles considered to be fundamental for monitoring and controlling [13]
CASE STUDY AND FINDINGS
Case study
2.1.1 Overview of "Rural Finance Project" funded by WB and its performance
2.1.1.1 Brief of ideas and objective of RFPII and RFPIII
Aiming at supporting key components of the IDA's Country Assistance Strategy
In 1995, efforts were initiated to assist Vietnam's transition to a market economy by strengthening the rural finance system, targeting agriculture and small to medium enterprises, and reducing poverty through growth opportunities Recognizing the underdeveloped financial sector and imperfect market conditions hindering credit flow to rural areas, the Rural Finance Project II (RFPII) was established in 2002, following the RFPI from 1997 It introduced two wholesale funds: the Rural Development Fund (RDF) and the Micro-finance Loan Fund (MLF) These funds aimed to enhance living conditions in rural areas by encouraging private sector investments, particularly among farm households and rural entrepreneurs, strengthening the banking system's capacity to finance these investments, and increasing access to financial services for the rural poor.
In 2009, the Rural Finance Project II (RFPII) was evaluated, revealing significant advancements in the rural finance sector's ability to enhance financial services for clients and expand outreach to farm households and rural entrepreneurs However, challenges remained in providing term lending for medium and long-term rural investments and increasing access to formal financial services for countryside investors and the rural poor To address these needs, the Rural Finance Project III (RFPIII) was negotiated on September 9, 2007, with a credit of US$200 million from the International Development Association (IDA) Effective February 14, 2009, RFPIII aimed to support the Vietnamese Government in fostering rural economic development and improving living conditions in rural areas, building on the objectives of RFPII over a planned five-year implementation period.
The objectives aim to enhance rural development by providing additional medium and long-term financial resources through the banking system to support viable private investments in rural areas This includes bolstering government efforts to reduce rural poverty by extending financial and institutional support to the Micro-finance Loan Fund (MLF) and its implementing agencies, as well as strengthening the BIDV as a wholesale financial institution dedicated to rural areas Additionally, the initiative seeks to enforce financial discipline among the project's Participating Financial Institutions (PFIs).
The project aims to support private sector enterprises, particularly farm households and rural entrepreneurs, in implementing their expansion and modernization plans through the RDF By facilitating new sub-projects and financing working capital, these enterprises can enhance production capacity, create jobs, and foster rural economic growth while alleviating poverty Additionally, the MLF will offer extra lending resources and technical assistance to microfinance institutions (MFIs) that serve low-income populations, enabling them to better meet the savings needs of the poor and provide credit for viable economic activities of rural households and micro-enterprises that employ at least three individuals outside their families.
The project aims to enhance the capacity of BIDV and participating financial institutions (PFIs) and microfinance institutions (MFIs) to deliver effective financial services to rural areas and the rural poor To achieve this, BIDV and the PFIs/MFIs will adopt higher financial standards focusing on solvency, liquidity, profitability, and best management practices Additionally, both BIDV and the PFIs/MFIs will develop and implement an agreed-upon institutional development plan throughout the project's duration.
Tab 2.1 Some main information and elements of RFPII and RFPIII
(which performs a wholesale banking function in disbursing the funds to the PFIs):
SDR mil 160.2 (USS mil 200) IDA
5 years SBV TCIII of BIDV
SDR mil 127.7 (USS mil 200) IDA
5 years SBV TCIII of BIDV
Credit components: (a) RDFII: US$ mil 167.4 on- lent by BIDV to PFIs to re- lend to end- borrowers whose
(a) RDFIII: US$ mil 175 on- lent by BIDV to PFIs to re- lend to end- borrowers sub-projects are eligible as stipulated whose sub-projects are eligible as stipulated
(b) MLF: US$ mil 28 on- lending to MFIs to re-lend to end-borrowers whose sub- projects are eligible as stipulated under this fund
(b) MLF: US$ mil 10 on- lending to MFIs to re-lend to end-borrowers whose sub-projects are eligible as stipulated under this fund
Institution Building: (c) Institution Building for BIDV and PFIs/MFIs: US$ mil 4.6
(c) Institution Building for BIDV and PFIs/MFIs: US$ mil 15
Project scopes: The project would finance eligible sub-project all over Vietnam except in the urban areas of Hanoi, HCMC, Hai Phong and Da Nang
The project would finance eligible sub-project all over Vietnam except in the urban areas of Hanoi (include Hatay), HCMC, Hai Phong and Da Nang
All Key Performance Indicators (KPIs) of RFPIII
(Mid-term and completion KPIs of RFPIII can be found at Appendix No 6)
(i) Supporting rural development through financing of viable investments (number of sub-loans, total sub-project investments, and estimated incremental jobs created);
BIDV is enhancing its ability to manage wholesale banking operations and finance private sector investments by focusing on increasing equity, mobilizing private deposits, improving lending quality, and upgrading its information and control systems.
Enhancing the operational capabilities of Microfinance Institutions (MFIs) and Partner Financial Institutions (PFIs) is essential for delivering financial services to the rural poor This includes tracking the number of participating MFIs and PFIs, the total amount lent to rural communities, and the cumulative number of rural borrowers served Additionally, it is important to highlight the achievements of Internally Displaced Persons (IDPs) supported by these institutions.
Source: Generated from World Bank (2002) Staff Appraisal Report (SAR) Socialist
Republic of Vietnam Rural Finance Project Report No 15088VN and World Bank
(2010) Project Appraisal Report (PAD) Report No 23817-VN
2.1.1.2 Some main information and elements of RFPII and RFPIII:
The two projects share significant similarities, with the second project representing the next phase of the first Key information and elements of RFPII and RFPIII are summarized in Table 2.1.
2.1.1.3 Modus operand of RDF under RFPII and RFPIII:
Fig 2.1: Participating partners under Rural Finance Project
Project activities coordinators and influencers (Professional associations, sociopolitical unions: Women Union, Farmer Union)
Local project result influencers (Local authorities, Natural Resource and Environment Departments)
The RDF/MLF operates as a Wholesale Banking Operation (WBO) involving three key participants: TCIII (BIDV), the wholesaler and Apex bank managing RDFII and RDFIII under agreements with the IDA and the Vietnamese Government; Participating Financial Institutions (PFIs) that have entered into Subsidiary Loan Agreements with BIDV, enabling them to engage in retail activities; and the end-borrowers, who are clients of the PFIs and have signed sub-contracts to secure loans.
End Borrowers project funds which has no allocation made by crop or type of investment to finance their own sub-project investments
Under the BIDV scheme, the proceeds from IDA credit are allocated to accredited PFIs for approved sub-loans, with PFIs and MFIs contributing a minimum of 10% of the total sub-project cost Additionally, final borrowers are required to contribute at least 15% of the total sub-project cost in cash or in-kind (excluding land) The remaining funding is provided by IDA, capped at 75% of the cost for any RDFI and MLF sub-project.
BIDV managed the credit risk associated with PFIs/MFIs, while these institutions took on the credit risk of their sub-loans, and the government covered the foreign exchange risk linked to SDR/dollar disbursements PFIs/MFIs have the autonomy to choose their eligible end-borrowers and determine their lending rates in accordance with Government/SBV regulations Additionally, the maturity of loans from PFIs/MFIs aligns with the composite maturity of the corresponding sub-loans.
IDA funds were provided to PFIs and MFIs by BIDV at a variable interest rate, which is adjusted quarterly This rate reflects the latest quarterly weighted average cost of loanable funds in the banking system, aligning with the market price that PFIs and MFIs would incur when sourcing funds.
Proceeds from the repayment of principal on subsidiary loans by PFIs and MFIs will be utilized to create and sustain a revolving fund for on-lending, adhering to the same terms and conditions as the IDA credit The combined total of the IDA credit proceeds and the revolving fund will be referred to as RDFII, RDFIII, and MLF.
Refer Fig 2.2 for the implementation structure and stakeholders of RFPII
Fig 2.2 for the implementation structure and stakeholders of RFPII
Foreign currency risk (SDR US$)
Implementation, manage responsibility PFIs' credit risk due to force of majeure
Foreign currency risk (US$ other) End-borrowers' Credit risk
(Household, enterprises, individual at rural areas)
Fund t rans fe r m ec h ani sm C redi t p rof it af ter reduc ti on o f WBO f ee s Pri nc ip le p aym ent (V N D , U S$) 20 years of which
A subsidiary loan agreement outlines the specific terms and conditions for each loan selected, including the accreditation payment in VND or USD These agreements facilitate revolving loans in both currencies, ensuring flexibility in financing options.
S elec t, a cc re d it ati o n
S u b Lo an (VN D/US$ ) P ay m en t (US$ ) 40 years of which
Disb u rse n m en t (i n it iala n d ad d it io n al fu n d ) S u b si d iary (A d v an ce , re imb u rse m en ts)
2.1.1.4 General results and overall evaluation of RFPII's performance:
RFPII (Credit No 3648-VN valued US$ mil 200) came into effect on 14 th Apr.,
The project, which commenced in 2003 and concluded on April 14, 2009, successfully utilized 100% of the credit amount withdrawn from the International Development Association (IDA) to achieve all its objectives Despite this success, the project experienced several shortcomings that need to be addressed.
Limitations
Understanding the limitations of the research process is essential for grasping its contributions to enhancing the M&C system of RFP The transition in implementing agencies, including TCIII, PMU, and PFIs, has posed challenges for researchers in accessing the appropriate officials, project reports, and necessary documentation for accurate information and data.
The operating levels of PFIs, particularly Agribank, are situated in suburban areas across the nation; however, depth interviews conducted with officers and staff at this level may not fully represent the entire population of PFIs under RFPII.
- Researcher's short time working with the project may prevent researcher from sound understanding of project concept and its related systems and organizations
Due to time and framework constraints, this study does not provide a comparative overview of the Monitoring and Control (M&C) systems of other projects in Vietnam alongside the RFP case Future research should focus on establishing, updating, and utilizing the information generated from the M&C system of RFPIII to enhance both M&C management and overall project management Specifically, detailed integration of the M&C system with financial information systems and Management Information Systems (MIS) is essential for conducting mid-term and final socioeconomic impact assessments Despite these limitations, this study successfully meets its objectives by clarifying the concepts and fundamentals of M&C, analyzing the M&C framework under RFPII to identify obstacles in project implementation, and proposing recommendations to improve the M&C processes for RFPIII, ultimately aiming to enhance project performance.