Audit of fertilizer distribution improvement projects in Bangladesh, project nos. 388-0024 and 388-0060

Performance audit covers the period 7/78-6/89. Despite resistance from the Government of Bangladesh"s implementing agency, the Fertilizer Distribution Improvement Projects were moving towards achieving their objectives. The first project helped increase the availability of fertilizer in Bangladesh by constructing warehouses and financing fertilizer imports. The project also succeeded in establishing a nationwide system of private wholesalers and retail dealers. Positive results were also being achieved under the second project. For example, according to TA contractor monitoring reports: (1) Fertilizer consumption increased significantly during the last two years, showing a 17% increase during the current government fiscal year over the 1986/87 fiscal year. (2) Private sector involvement in fertilizer distribution also increased significantly. During May 1989, private distributors accounted for over 50% of sales of the major type of fertilizer used in Bangladesh. Just three months previously, all fertilizer of this type was distributed by the government. The need for continued funding, however, of the project"s in-kind credit program should be reassessed. The project"s commercial credit program was in the initial stages of implementation and it was too soon to assess results. Also, the fertilizer warehouses constructed with A.I.D. funds were not adequately maintained, and many were not effectively used. USAID/B management of the projects, although generally adequate, could be improved. Therefore, the report recommends that USAID/B reassess the need for continued funding on the project"s in-kind credit program and consider possible alternative uses for the remaining $9.5 million in unspent funds. The report also includes recommendations to better ensure that the A.I.D.-funded warehouses are adequately maintained and used. (Author abstract, modified)