Document of The World Bank IP FOR OFFICIAL USE ONLY R PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT THE AMOUNT OF SDR 40.3 MILLION (US$60 MILLION EQUIVALENT) TO THE REPUBLIC OF CAMEROON FOR AN AGRICULTURAL COMPETITIVENESS PROJECT May 22,2009 port N : 47920 - CM Agricultural and Rural Development Unit (AFTAR) Sustainable Development Department Country Department AFCC 1 Africa Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document o f The World Bank
IP
FOR OFFICIAL USE ONLY
R
PROJECT APPRAISAL DOCUMENT
O N A
PROPOSED CREDIT
THE AMOUNT OF SDR 40.3 MILLION (US$60 MILLION EQUIVALENT)
TO THE
REPUBLIC OF CAMEROON
FOR AN
AGRICULTURAL COMPETITIVENESS PROJECT
May 22,2009
port N : 47920 - CM
Agricultural and Rural Development Unit (AFTAR) Sustainable Development Department Country Department AFCC 1 Africa Region
This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective April 30, 2009)
ACEFA
AFD AfDB APL ARMP BAD C A A CAS CAVCA CDD CEMAC
CNOPCAM CPAR DA DDA
DPIA
DRR DEPC
DESC
DESV
dgMarket DGR DOPA
EC E C A M I11
CurrencyUnit = FCFA FCFA482.658 = US$1
US$ 1.4881 = SDR 1
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS Ame'lioration de la Compe'titivite' des Exploitations Familiales Agricoles (Improving the Competitiveness o f Family Farming) Agence Franqaise de De'veloppement (French Development Agency) African Development Bank Adaptable Program Loan Procurement Regulatory Agency Banque Africaine de De'veloppement (African Development Bank) Caisse Autonome d 'Amortissement (National Debt Management Agency) Country Assistance Strategy Cameroon Agricultural Value Chains Analysis Community Driven Development Communaute' Economique et Mone'taire de 1 'Afrique Centrale (Economic and Monetary Community o f Central Africa) Conseil National des OP du Cameroun (OP National Council) Country Procurement Assessment Review Disbursement Account Direction du De'veloppement de 1 'Agriculture (Agriculture Development Department) Direction de la Production et des Industries Animales (Department o f Animal Production and Industries) Direction des Routes Rurales (Rural Roads Department) Direction des Etudes, des programmes et de la Coope'ration-MINADER (Department o f Research, Programs and Cooperation) Direction des Etudes, du Suivi et de la Coope'ration-MINEPIA (Department of Studies, Monitoring, and Cooperation) Direction des Etudes et des Services Ve'te'rinaires-MINEPIA (Department of Veterinary Studies and Services) Development Gateway Market Direction du Ge'nie Rural-MINADER (Rural Engineering Department) Direction des Organisations Professionnelles Agricoles (Department o f Agricultural Organizations) European Commission TroisiBme Enqdte Camerounaise auprBs des Mdnages (Third Cameroonian
11
EMP EO1 EP ESMF ESW EU FCFA FM FMS GDP GPN GST IBRD ICB IDA IFAD IF C IFR IPPF IPSAS IRAD
I S N M&E MGF MINADER
MINEP
MINEPAT
MINEPIA
MINFI MINRESI
MINTP MIS NCB NGO OAL OED OP PACA
Household Survey) Environment Management Plan . Expression o f Interest Economic Partnerships Environment and Social Management Framework Cameroon Agriculture Value Chain Analysis
. European Union Franc de la Comrnunaute' FinanciBre d 'Afrique (CFA Franc, Local currency) Financial Management Financial Management Specialist Gross Domestic Product General Procurement Notice Groupe de Suivi Technique (Technical Monitoring Team) International Bank for Reconstruction and Development International Competitive Bidding International Development Association International Fund for Agricultural Development International Finance Corporation Interim Financial Reports Indigenous People Planning Framework International Public Sector Accounting Standards Institut de Recherche Agricole pour le De'veloppement (Agricultural Development Research Institute) Interim Strategy Note Monitoring and Evaluation Matching Grant Facility MinistBre de 1 'Agriculture e t du De'veloppernent Rural (Ministry o f Agriculture and Rural Development) MinistBre de I'Environnement et de la Protection de la Nature (Ministry o f Environment and Protection o f Nature) MinistBre de 1 'Economie, de la PlaniJication et de 1 'Arne'nagement du Territoire (Ministry o f Economy, Planning, and Regional Development) MinistBre de I'Elevage, la P&che et les Industries Animales (Ministry o f Livestock, Fisheries, and Animal Production) MinistBre des Finances (Ministry o f Finance) MinistBre de la Recherche ScientiJique et de 1 'Innovation (Ministry of Scientif ic Research and Innovation) MinistBre des Travaux Publics (Ministry o f Public Works) Project Management Information System National Competitive Bidding Non Governmental Organization Ope'rateurs d 'Appui Local (Local Support Operators) Operation Evaluation Department Operational Policy Projet d 'Appui Lr la Compe'titivite' Agricole (Agricultural Competitiveness Project)
... 111
PADMIR
PCU P I M PLANOPAC
PMP PNDP PNVRA PO POA PRSP PSAE
PSC RCU RPF RFm RSC SBD SEMRY
SOE SY SCOHADA
TTF UNDB mops UNVDA V A T
Projet d 'Appui au De'veloppement de la MicroJinance Rurale (Rural Microfinance Development project) Project Coordination Unit Project Implementation Manual Plateforme Nationale des Organisations de Producteurs Agricoles du Cameroun (Cameroon National Platform o f Agricultural POs) Pest Management Plan National Participatory Development Program National Agricultural Extension and Research Project Producer Organization Annual Operating Plan Poverty Reduction Strategies Paper Programme Sectoriel Agriculture-Elevage (Agricultural and Livestock Sector Program) Project Steering Committee Regional Coordination Unit Resettlement Policy Framework Rural Road Rehabilitation Regional Selecting Committee Standard Bidding Documents Socie'te' d'Expansion et Modernisation de la Riziculture de Yagoua (Society for the Expansion and Modernization o f Rice Cultivation in Yagoua) Statement o f Expenditures SystBme Comptable de 1 'Organisation pour l%larmonisation en Afrique du Droit des Affaires (Accounting System of Organization for the Harmonization o f Business Law in Africa) Transport Trade Facilitation United Nations Development Business United Nations Office for Project Services Upper Nou Valley Development Authority Value Added Tax
Vice President: Obiageli Katryn Ezekwesili Country Director: Mary Barton-Dock
STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 A . Country and sector issues .................................................................................................... 1
B . Rationale for Bank involvement ......................................................................................... 2
C . Higher level objectives to which the Project contributes .................................................... 2
Lending instrument. Financing Arrangements. and Other Approaches ............................. 2 Project development objective and key indicators .............................................................. 4
Critical risks and possible controversial aspects ............................................................... 13 Loan conditions and covenants ......................................................................................... 14
Date: May 22, 2009 Team Leader: Renato Nardello Country Director: Mary A. Barton-Dock Sector Manager: Karen Mcconnell Brooks
Sectors: General agriculture, fishing and forestry sector (50%); Irrigation and drainage (20%); Roads and highways (20%); Animal production (1 0%) Themes: Rural markets (P);Rural services and infrastructure (P);Other rural development ( S ) Environmental screening category: Partial Assessment
Expected effectiveness date: November 1,2009 Expected closing date: November 30,20 15 Does the project depart from the CAS in content or other significant respects? Ref: PAD I.C. Does the project require any exceptions from Bank policies? Ref: PAD I K G.
I s approval for any policy exception sought from the Board? Does the project include any critical risks rated “substantial” or “high”? Ref: PAD III. E. Does the project meet the Regional criteria for readiness for implementation? Ref: PAD I K G. Project development objective Ref: PAD IIJ, Technical Annex 3 To increase the competitiveness o f eligible producer organizations working on target value chains. Project description Ref: PAD II. C, Technical Annex 4 Component 1 : Rehabilitating Key Rural Infrastructure. Finance the rehabilitation of (i) rural roads to connect high-potential production areas to markets, and (ii) irrigated perimeters to support r ice production in targeted areas.
[ ]Yes [XINO
[ ]Yes [XINO
[ ]Yes [XINO
[XIYes [ ] N o
[XIYes [ ] N o
Have these been approved by Bank management? [ ]Yes IN0
Component 2: Economic Partnerships. Support Producer Organizations (POs) working in selected value chains in establishing Economic Partnerships as well as preparing and financing investment subprojects.
Component 3 : Institutional Support and Capacity Development. Develop the capacity o f actors at different levels by supporting: (i) apex producer organizations, (ii) core functions o f sectoral public services and (iii) the establishment o f sectoral legal and regulatory frameworks.
Component 4: Project Coordination, Monitoring and Evaluation. Support to Project implementation, including the establishment, equipment, and operations o f a lean project coordination team, and an M&E system.
Which safeguard policies are triggered, if any? Ref: PAD I K F., Technical Annex 10 Environmental Assessment (OP/BP 4.0 l), Pest Management (OP 4.09), Involuntary Resettlement (OP/BP 4.12), Indigenous Peoples (OP/BP 4. lo), Projects on International Waterways (OP/BP 7.50).
Significant, non-standard conditions, if any, for: Ref: PAD III. F. Board presentation: NIA
... V l l l
Loadcredit effectiveness: 1.
2.
3.
The Recipient has legally established the P C U and the Steering Committee pursuant to the Project Implementation Arr&C, in a manner and with functions and resources satisfactory to the Association, and with the fol lowing qualified staff o f the PCU, recruited under terms o f reference and conditions acceptable to the Association: a national coordinator, seconded by: (i) a public works specialist, (ii) a specialist for animal value chains; (iii) a specialist for vegetal value chains; (iv) an administrative and financial management specialist, (v) a procurement specialist; (vi) a monitoring and evaluation specialist; and (vii) an accountant.
The Recipient has (i) established a fully functioning financial management for the Project, in form and substance satisfactory to the Association, with an integrated financial management software to be used by the Project, and (ii) trained the fiduciary staff o f the P C U in the use o f the integrated financial management software; and
The Recipient has adopted a Project Implementation Manual, and an Administrative and Financial Procedures Manual, al l in form and substance satisfactory to the Association.
Covenants applicable to project implementation: 1.
2.
3.
4.
5 .
Not later than 4 months after the Effective Date, the Recipient shall recruit the external auditors for the Project pursuant to terms o f reference and with qualifications acceptable to the Association.
N o t later than 2 months after the Effective Date, the Recipient shall legally establish the RCUs and RSCs, in a manner and with functions and resources satisfactory to the Association, and with the following qualified staff within each o f the RCUs, recruited under terms o f reference and conditions acceptable to the Association: a coordinator, a value chain specialist, a farm management specialist, an accountant.
N o t later than 2 months after the Effective Date, the Recipient shall have legally established the Field Focal Points, in a manner and with functions and resources satisfactory to the Association.
N o t later than 3 months after the Effective Date, the Recipient shall have nominated al l o f the members for the special Tender Board.
The Recipient shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project and shall for the purposes o f the Project:
a) open and maintain, until the completion o f the Project, an account in FCFA at a commercial bank acceptable to the Association (the Project Account), on terms and conditions satisfactory to the Association;
b) deposit into the Project Account (i) an initial amount o f FCFA 200,000,000 by December 30,2009; (ii) FCFA 1,300,000,000 by April 30,2010; and (iii) thereafter, on a quarterly basis, the amount identified in the Annual Work Plans
ix
and Budgets, in an aggregate amount o f FCFA 6,200,000,000 for the duration o f the Project; and
c) ensure that funds deposited into the Project Account in accordance with the provisions o f paragraph (b) o f this Section shall be used exclusively to finance expenditures under the Project other than those financed from the proceeds of the Financing.
6. The Recipient shall ensure that the proceeds o f the Financing wil l not be used to finance activities implemented in the Permanent Forests or Critical Natural Habitats.
7. The Recipient shall ensure that the staff o f the PCU and the members o f the Tender Board shall undergo procurement training throughout Project implementation.
8. The Recipient shall ensure that the staff o f the PCU and each o f the RCUs, and each member o f the RSC and other stakeholders undergo safeguards Training throughout Project implementation.
X
I. STRATEGIC CONTEXT AND RATIONALE
A. Country and sector issues
1. Agriculture in Cameroon is a key element for both growth and poverty reduction. Agriculture contributes more than hal f o f Cameroon non-oil export revenues and employs almost 60 percent o f the economically active population. Ninety percent o f al l rural households are to some extent engaged in agriculture and approximately one third o f them earn their living from export crops. The most recent household survey in Cameroon (ECAM 111, 2007l) revealed that over 55 percent o f rural households are poor, as compared to only about 12 percent o f urban households (up from 52 and 17 percent, respectively, in 2001). In 2007, 87 percent o f the poor were rural, up from 82 percent in 2001. Agricultural producers are the only socio-economic group for which poverty has increased recently, while the provinces o f North, Far-North, and Adamaoua have seen an overall increase in the prevalence o f poverty. Increasing growth in agriculture would play a pivotal role in reducing poverty, sustaining growth, and achieving food security, in a country that also needs to reduce its dependency on volatile o i l revenues, which now accounts for more than 50 percent o f the value o f exports.
2. Agricultural development features prominently in the Government's growth and poverty reduction strategy. Particularly, the second pillar o f the Poverty Reduction Strategy Paper (2003) highlights the importance o f economic diversification with a strong focus on agricultural development as the key income generating activity and the main source for future economic growth and poverty alleviation in rural areas. The national Rural Sector Development Strategy (2007) specifically targets four key challenges: (i) poverty reduction; (ii) food security and self-sufficiency; (iii) sustainable management o f natural resources; and (iv) increased regional and international trade. All major donors support the strategy, with particular emphasis on the driving role o f producer associations and the involvement o f private investors in agriculture.
3. The exploitation of the considerable agricultural potential faces important constraints. The Agricultural Value Chain Analysis ESW (Report AAA 25-CM, FY08) and other related studies conducted by development partners (EC, IFAD, and France) concluded that several value chains (palm oil, maize, plantain, cassava, rice, onions, f ru i ts and vegetables, dairy, poultry) can develop their considerable growth potential if structural constraints and weaknesses in market linkages are adequately addressed. These constraints include poor infrastructure (production, marketing, and transportation), l imited organization o f producers, weak linkages to markets, l imited financial resources, and poor coordination o f interventions. Efforts would be made to develop activities complementary to other initiatives, in the framework o f the national rural development sectoral program (PSAE - Programme Sectoriel Agriculture-Elevage).
' Third Camerounian Household Survey, TroisiBme Enquite Camerounaise A u p r b des Me'nages (ECAM3), Institut National de la Statistique, June 2008
1
B. Rationale for Bank involvement
4. The project i s a logical follow-up to the Agricultural Value Chain Analysis ESW realized in FY08 (Report AAA25-CM, see Text Box n.Al.1 in Annexl, page 22). Particularly, the analysis recommended actions aiming to increase the technical, managerial and logistic capacity o f producer organizations, increase access to agricultural inputs and high-yielding material, and improve the network o f feeder roads and wholesale markets.
5. Past involvement o f the Bank in the sector also includes the PNVRA (National Agricultural Extension and Research Project), closed in 2004, which i s s t i l l considered by the government and partners as a successful operation. The borrower considers the primary sector crucial for i t s growth and i s particularly interested in receiving financial and technical support from the Bank.
6. Strategic f i t with the CAS rationale. Making agriculture more productive and sustainable i s a priority objective o f the World Bank’s Interim Strategy Note (Report n. 37897-CM) discussed by the Executive Directors on December 7, 2006. Diversifications from the oi l sector and support to agriculture also feature prominently in the forthcoming CAS (FY10). A Bank- financed Competitive Value Chains Project would complement this Project by encouraging private investment in the economy. The two projects would work in synergy and in collaboration with the IFC, to support the development o f the agro-industrial sector.
C. Higher level objectives to which the Project contributes
7. The Project contributes to achieve the objective o f the Country’s PRSP and Bank’s CAS in terms o f sustaining economic growth and diversification as well as fighting poverty. In fact, Cameroon Rural Development Strategy i s a key element o f the PRSP and several o f the key areas o f the program (strengthening producer organizations, improving rural infrastructures, increasing producers’ access financing facilities, increase market linkages) are specifically mentioned in the PRSP.
8. The Project also reflects the objectives o f the Bank’s Africa Action Plan that supports country-led, results-driven national strategies focused on growth. The proposed Project i s .aligned with the Africa Action Plan and reflects, in Cameroon, the Bank’s commitment to scaling up investment in African agriculture.
11. PROJECT DESCRIPTION
A. Lending instrument, Financing Arrangements, and Other Approaches
9. I t i s proposed that the Project be a Specific Investment Loan. The Project would span six years, with an IDA allocation o f US$60 million. The Government would be required to commit US$12.50 million to contribute to the cost o f the project, including taxes. Considering the allocations from the Government and local beneficiaries (US$9.5 mill ion equivalent), the overall cost o f the Project would be the equivalent o f US$82 million. Table 1 below presents a summary o f Project costs (a more detailed presentation o f Project costs i s in Annex 5, pages 38-39).
2
Table 1: I I I I Summary o f costs by component TOTAL IDA Producers Government
USD USD USD USD
10. Target beneficiaries. The project would primarily target market-oriented smallholders and their organizations: around 20,000 rice producers in rehabilitated irrigation perimeters and 20,000 direct promoters o f economic partnershipshb-projects. However, the project would have a significant impact on a number o f other beneficiaries, not easily quantifiable a priori, such as: (i) population living in high potential production areas benefiting from the rehabilitation o f rural roads; (ii) other actors along the value chains (traders, transporters, agro-industries, etc.) who would benefit from increased quality and quantity o f products, as wel l as f rom reduced transport costs; and (iii) smallholders in targeted areas who would receive indirect benefits from the project activities.
11. Target value chains. Further to a specific request f rom the Government, the Project would primarily target six value chains considered strategic both for food security and for their comparative advantage on the regional markets, with due consideration to interventions already ongoing or planned. The target value chains are: (i) rice; (ii) maize, (iii) plantain, (iv) palm oil, (v) pig farming, and (vi) poultry. The choice o f the value chains i s based o n the results o f the Value Chain Analysis (see Text Box l), which strongly supported maize, plantain, palm o i l and village-level poultry. In addition to these value chains, the Project would also target (i) pork, because o f i t s strong complementarity with the maize and poultry value chains, and (ii) rice, because o f i t s strategic relevance and important underused potential. However, up to 10% o f funds under Component 2 can be used to support innovative initiatives targeting other value chains.
12. Target areas. Selection o f target areas i s based on the potential o f the selected value chains and on the need to harmonize interventions with other projects to avoid duplications and overlapping. The Project would intervene in six o f the ten regions o f Cameroon: (i) Center2, (ii) North-West, (iii) Far North, (iv) North, (v) East, (vi) West, and (vii) Littoral (see Map in Annex 15). Within these regions, the Project would operate in about 30 departments where the selected value chains have the greatest potential. Table 4.1 in Annex 4 presents the preliminary l i s t o f targeted departments.
The Regional Coordination o f the Center Region would also cover two departments o f the South Region. 2
3
B. Project development objective and key indicators
13. The Project Development Objective i s to increase the competitiveness o f eligible producer organizations working on Target value chains. I t i s expected that the Project would lead to increased value o f marketed production through increased productivity, quality, and marketing of productions. W h i l e smallholder producers would be the main P roject beneficiaries, i t i s expected that the Project would also benefit different stakeholders along the target value chains. The Project would concentrate i t s activities in target areas with high growth potential.
14. Key outcome indicators would be:
0
0
0
0
Increase in the value o f selected marketedkraded products in target areas (percent) Reduction in the quantity o f post-harvest losses f rom the supported producer organizations with access to the new transport infrastructures (percent) Increase in average rice yields in the rehabilitated irrigated areas (tondha) Increase in yields o f other targeted value chains (percent).
15. Key intermediate outcomes include:
0
0
0
0
0
Reduction in transportation time to closest market (percent) Increase in rice production (tons o f paddy per year) Sub-projects profitable (positive Gross Profit) one year after completion (percent) POs in targeted areas satisfied with support services received from apex organizations (percent) Participating POs managed effectively (hold regular meeting, record their decision, open and manage a bank account and have regularly elected officials) (percent)
C. Project components
16. Component 1: Rehabilitating Key Rural Infrastructure (US$21.5 million IDA). The component would finance the rehabilitation o f key rural infrastructure. The component would include two sub-components, the f i rs t for the rehabilitation o f rural roads, the second for the rehabilitation o f irrigated perimeters.
17. Sub-component I.1: Rural Roads (US$12.8 million IDA). The Project would finance the rehabilitation o f about 500 km o f rural roads (100-150 km o f heavy rehabilitation, 350-400 km o f light rehabilitation), and related studies, with the main purpose o f connecting high-potential production areas to markets. Investments under this sub-component would be identified in order to support and strengthen investments under Component 2. However the first batch o f rural roads o f immediate and evident concern in the targeted areas would be identified and implemented as soon as possible, without waiting for materialization o f subprojects under Component 2. Rehabilitation o f rural roads would: (i) be realized in the Project target areas; (ii) respond to local priorities; (iii) connect to an operational road network; and (iv) encompass Recipient’s commitment for long-term maintenance. Investments under this sub-component would be supervised by the Ministry o f Public Works (MINTP) with the nomination o f a full-time road
4
engineer at the Rural Road Directorate. The sub-component would also support the development o f a GIs-based system at M I N T P to monitor the maintenance status o f the rural roads network.
18. Sub-component 1.2: Irrigated perimeters (US$8.7 million IDA). The project would finance the rehabilitation o f about 11,500 hectares o f existing irrigated schemes with the purpose o f supporting national rice production. Target areas would include about 10,500 hectares at Maga and Yagoua (Far North Region), and possibly about 1,000 hectares on the sites o f the Upper N o u Valley Development Authority in the North- West Region. Rehabilitation o f irrigated perimeters would be accompanied by capacity building and investment activities, (as per Components 2 and 3) specifically targeted to the rice Producer Organizations. Sub-component 1.2 would be implemented by the irrigation development authorities (Socie'te's d 'Ame'nagement) o f the irrigated schemes concerned.
19. Costs supported by Component 1 would include: (i) Goods and Equipments; (ii) Works, such as rehabilitation or construction o f infrastructures such as dykes, bridges, roads, warehouses, etc.; (iii) Consulting Services, such as undertaking or updating o f the engineering, social, and environmental studies; technical assistance; and (iv) Training and study tours.
20. Component 2: Economic Partnerships (US$22.7 million IDA). This component would support Producer Organizations (POs) working on target value chains and areas in establishing and implementing investment sub-projects linked to Economic Partnerships (EPs). The component would finance economic projects intended to address production, marketing and/or processing bottlenecks in the target value chains. The Project Implementation Manual (PIM) would specify the conditions o f access to assistance under this component, based on clear eligibility criteria and anchored on a transparent, competitive process (see Annex 6). I t i s expected that up to 90 percent o f the funds o f this component would be allocated to support pre- selected value chains (rice, maize, plantain, palm oil, pork, and poultry), while the remaining 10 percent would be available to support innovative initiatives in other value chains. Up to 25 percent o f the funds available for sub-projects would be earmarked to support activities managed by vulnerable groups (women and youths) and indigenous people (in the region were pygmies are present).
2 1. The component would support the establishment o f partnerships, technical assistance, and investment funding. The EPs are intended to create solid and mutually advantageous relationships between producer organizations and other value chain actors. While EPs would generally be based on an agreement between POs and an agro-industrial complex or market agent to provide a certain quantity o f produce at a certain price over a defined period, they could also encompass agreements between different stakeholders (between different POs, between POs and service providers, etc.).
22. Economic partnerships and (ii) co-financing o f investment sub-projects.
Component 2 would have two sub-components: (i) support to the establishment o f ,
(a) Sub-component 2.1: Support to the establishment of Economic Partnerships (US$2.1 million IDA). This sub-component would support the development o f linkages and coordination between different stakeholders and help them analyze, and propose solutions to, specific bottlenecks to the development o f competitive value chains. This
5
would include technical assistance, training, and operational support for market and value-chain studies, information and communication campaigns, and coordination between different stakeholders. The establishment o f the EPs would be entrusted to the RCUs.
(b) Sub-component 2.2: Co-financing of PO investment projects (US$20.6 million IDA). This sub-component would co-finance (on a matching-grant basis) POs’ investments concerning production, collection, marketing, processing, and/or other services along a value chain. Co-financing from the Project can reach 70 percent o f the total cost o f the subproject and a maximum o f FCFA30 mi l l ion (about $60,000 equivalent). Selection o f sub-proj ects would be entrusted to Regional Selection Committees (RSCs) comprising representatives o f the sectoral ministries and o f the apex POs. Sub-projects would be previously screened by the RCUs to ensure the quality o f their formulation. POs would be supported in the preparation o f subproject proposals and would be able to select and hire Local Support Operators (OALs, in French: Ope‘rateurs d’Appui Local) to support the implementation o f approved sub-projects.
23. Costs supported by Component 2 would include: (i) Goods and Equipment; (ii) Consulting Services, such as assessment o f financing proposals, studies; information and communication; (iii) Training and study tours; and (iv) Subproject Grants.
24. Component 3: Institutional support and capacity development (USSS.0 million IDA). This component would develop the capacity o f actors at different levels and would include three sub-components, targeting: (i) apex producer organizations, (ii) core functions o f sectoral public services and (iii) legal and regulatory framework.
(a) Sub-component 3.1: Developing the capacity of apex producer organizations (US$2.5 million IDA), in order to improve their functions in terms o f advocacy, organization, negotiation, management, strategy formulation, pol icy dialogue, operations, and support services to member POs. Support would include capacity building o f PO leaders and officers, preparation o f institutional and organizational audits, preparation o f strategic plans, elaboration o f procedural and organizational guidelines, as wel l as l imited support in terms o f logistical and office equipment. This sub-component would also provide support to multi-stakeholders value-chain associations (“interprofession”) for the targeted value chains, particularly in terms o f facilitating the exchange o f information and the collaboration between the different actors involved in a given value chain (POs, private and public sectors, NGOs) at different geographical levels (departmental, regional and national).
(b) Sub-component 3.2 (US$2.1 million IDA): Strengthening core functions of sectoral public services, insofar as they are instrumental to support smallholders’ productivity and access to the markets (seeds certification and control, formulation and analysis o f sectoral policies, food safety standards, veterinary services, monitoring o f sectoral resources).
(c) Sub-component 3.3 (US$O. 1 million IDA: Supporting the establishment of sectoral legal and regulatory framework) conducive to the sustainable development o f agricultural value chains (fertilizers act, seed legislation, regulation o f the veterinary
6
profession, agricultural tax code, duties on agricultural inputs). The sub-component would support, in particular, technical assistance, studies, workshops, and training aimed at supporting the development and/or the implementation o f specific regulatory instruments.
25. Costs supported by Component 3 would include: (i) Goods and Equipment; (ii) Consulting Services, (iii) Training and study tours; and (iv) Operating Costs.
26. Component 4: Project coordination, monitoring and evaluation (US$7.4 million IDA). This component would support the establishment, equipment and operations o f the Project coordination team, at both national and regional levels, responsible for project implementation, procurement, financial management and overall monitoring and evaluation (M&E). The component would also support the establishment and operations o f an M&E system, including a baseline study and an impact evaluation study, as wel l as the operational costs o f the national Project Steering Committee.
27. The M&E system will be linked to a Geographic Information System (GIS) software in order to spatially report and display the results, with linkages to the GIS developed for the rural roads (see sub-component 1.1).
28. Costs supported by Component 4 would include: (i) Goods and Equipment; (ii) Consulting Services; (iii) Training and study tours; and (iv) Operating Costs.
D. Lessons learned and reflected in the Project design
29. The proposed Project design draws on the past and on-going Bank and other donor operations in the agriculture and rural development sectors in Cameroon and other countries and regions. The most relevant applicable lessons reflected in the proposed project design are:
(a) Support based on opportunities rather than needs. Based on the success o f Productive Alliances projects in Lat in America, activities financed under Component 2 would be based on Economic Partnerships that confirm the existence o f a pre-defined concrete market opportunity.
(b) Sustainability based on cost sharing and participation. Direct participation o f POs in the design and implementation o f subprojects, as well as their tangible contribution, i s an important component o f ownership and hence sustainability.
(c) Need to complement capacity-building with investments. Experience shows that capacity development i s a necessary but insufficient component o f increased competitiveness. Increased organizational and technical capacity must be combined with improved access to financial mechanisms that would empower producers to reach a superior level o f productivity.
(d) Clearly defined rules of the game. In a context characterized by governance problems, the importance o f designing and implementing clear mechanisms and transparent processes in order to reduce the possibility o f discretionary spending cannot be overemphasized.
7
(e) Random audits. The experience o f the PNDP in Cameroon shows that, despite attempts to develop local procurement capacity, agreed procedures are not consistently applied or are insufficiently documented to justify the awards made by local tender boards or approval committees. The substantial risk o f embezzlement at the subproject level should be mitigated by periodic, detailed technical and financial audits. The threat o f audits has proven effective in other C D D projects.
E. Alternatives considered and reasons for rejection
30. The option o f an Adaptable Program Loan was considered and discarded in view o f i t s lack o f financial commitment and relative complexity compared to a possible follow-up SIL. The team briefly considered the possibility o f implementing a partial guarantee scheme to encourage the involvement o f the financial sector in supporting rural development. The option was discarded in view o f the reluctance o f financial intermediaries to engage with Producer Organizations and because o f the presence o f other projects (AFD, IFAD) supporting POs through a matching-grant financing.
111. IMPLEMENTATION
A. Partnership arrangements
31. The project was prepared in close coordination with other projects supported by the World Bank and other donors. IFAD is preparing a project on agricultural value chains focused on rice and onions value chains. During preparation, IFAD expressed interest in possible co- financing o f i t s rice/onions project with the proposed Project. However, given the differences in target groups, areas, value chains, as well as in preparation timeline it was decided that the two projects would proceed in close coordination but without any direct co-financing. IFAD is also supporting two projects currently under implementation; a project supporting roots and tubers (PNDRT) and one supporting the development o f rural micro-finance (PADMIR). The project would also complement two projects financed by France: (i) the Agricultural Profession and Institutional Strengthening (PARI - Professionnalisation Agricole et Renforcement Institutionnel) and (ii) the Supporting Family Farming Competitiveness (ACEFA - Appui ir la Compe‘titivite‘ des Exploitations Familiales Agricoles).
32. Regular consultations would be held with other projects financed by the Bank. The Project would collaborate closely with the forthcoming “Growth value chains” project (FY lo), which intends to increase the involvement o f the private financial sector in the economy by improving the business climate and introducing adequate incentives. The Project would seek I F C assistance to develop sector-specific financial instruments to increase the involvement of financial institutions in the rural sector. Coordination would also be sought with the National Participatory Development Program (PNDP), in particular concerning modalities for the selection and maintenance o f rural roads.
B. Institutional and implementation arrangements
33. The Borrower i s represented by i t s Ministry o f Economy and Planning (MINEPAT). The Caisse Autonome d ’Amortissement, would manage the Designated Account (DA) and would submit withdrawal applications to IDA on behalf o f the Project.
Project Oversight:
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Overall responsibility for Project implementation would be delegated to the Ministries in charge o f Rural Development (MINADER) and o f Animal Productions (MINEPIA).
34. Implementation. The project implementation mechanism (see also Figure 1) would comprise (i) a Project Steering Committee; (ii) a Project Coordination Team deployed, at the national level, in a Project Coordination Unit, and at regional levels, in Regional Coordination Units; (iii) Regional Selection Committees for the approval o f subprojects and partnership agreements. Focal points selected among the field staff o f the sectoral ministries and Local Support Operators would support the implementation at the field level. Specific implementation ,arrangements would also be in place for specific (sub)components, under the overall oversight o f the PCU.
35. The Project Steering Committee (PSC) would ensure overall performance oversight and policy guidance. I t would comprise representatives o f inter alia (as set forth in the Project Implementation Manual): (i) ministries in charge of: Agriculture, Livestock, Finance, Trade, Public Works, Scientific Research; Women; (ii) Apex Producer Organizations; (iii) Sectoral projects; and (iv) the Private sector. The PSC would meet twice per year and would be co- chaired by the Secretary-Generals o f MINADER and o f MINEPIA, with PLANOPAC acting as vice-chair, and the Project Coordinator as Secretary.
36. The PSC would be responsible for: (a) approving the Project’s Annual Work Plan and Budget (AWPB) prepared by the Project coordination team; (b) overseeing overall performance o f the Project and providing policy guidance; (c) suggesting necessary project adjustments based on M&E results.
37. The PSC would be supported by a Technical Monitoring Team (Groupe de Suivi Technique, GST) comprising the directors (or presidents, when specified) o f the main entities involved: DDA, DGR, DEPC (president) et DOPA for MINADER ; DESC (president), DDPIA, DSV for MINEPIA; DDR for MINTP ; two representatives o f national apex producer organizations, and MINEPAT. On behalf o f the PSC, GST would monitor project activities through quarterly meeting with the Project Coordination Unit.
38. Project Coordination Team. After a competitive selection agreeable to IDA and validated by the PSC, the MINADER and the MINEPIA, on behalf o f the Steering Committee, would contract technical staff for the Project Coordination Team, deployed as follows:
(a) At the central (national) level, one Project Coordination Unit (PCU) comprising: (i) a National Coordinator, (ii) a Public Works Specialist, (iii) a Specialist for Animal Value Chains; (iv) a Specialist For Vegetal Value Chains; (v) an Administrative and Financial Management Specialist, (vi) a Procurement Specialist; (vii) an M&E Specialist; (viii) an Accountant, and Support staff.
(b) At the regional level, Regional Coordination Units (RCUs) comprising for each region o f intervention: (i) a regional Coordinator; (ii) a value chain specialist; (iii) a farm management specialist; and (iv) an accountant. The profiles o f the regional technical specialists would be targeted on the selected value chains dominant in their specific region (for instance livestock in the North-West; rice in the Far north, plantain in the
9
Center, etc.). But attention would be given to make the selected staff complementary to that o f other sectoral projects (AFD’s ACEFA, IFAD’s P A D F A etc.) in order to avoid duplications. The deployment o f regional staff would be done progressively, to accompany the establishment and development o f the Project in the regions.
39. At the departmental level, the Project would rely on Focal Points selected among the staff o f the decentralized sectoral ministries (MINADER and MINEPIA). The Focal Points would report to the Regional Coordinator. They would monitor project implementation in their department, ensure the transmission o f subproject proposal v ia their local delegation, and facilitate the communication between the producers and the regional coordination.
40. Contract o f PCU/RCU staff would initially be for the duration o f one year, renewable based on positive performance evaluation. The duration o f positions would be based on the Project work-plans. I t i s expected that the c iv i l works specialist would be recruited for three years and the capacity building specialist for four.
4 1. The PCU would be in charge o f day-to-day overall project coordination and supervision, with specific implementation responsibilities by components delegated as shown in Table 6.1 in Annex 6 (page 45). More specifically, the P C U would: (i) prepare annual work plans and budgets (AWPB) and consolidated project reports; (ii) develop a communication and outreach strategy; (iii) establish and maintain the Project Management Information System (MIS); (iv) prequalify technical service providers for use under components 2 and 3; (v) conduct overall project financial management in collaboration with the CAA; (vi) undertake M&E o f the Project; (vii) ensure smooth delegation o f activities delegated to other entities (for instance the Rural Road rehabilitation). At the regional level, the R C U would also be responsible for screening sub- projects submitted by prospective POs and acting as secretariat o f the Regional Selection Committee.
42. observers selected as follows:
Each Regional Selection Committee (RSC) would comprise 4 voting members and 2
(a) For the c iv i l society: (i) one representative from each o f the two apex POs (PLANOPAC and CNOPCAM) who would not be involved by any means in the sub- project; and (ii) 1 representative from the OAL acting as an observer.
(b) For the administration: (i) one representative f rom each o f the technical services of MINADER and MINEPIA; and (ii) 1 representative o f the corresponding R C U who would act as an observer and as the secretary o f the session.
43. RSCs would be responsible for the selection o f subprojects presented by producer organizations. They would avail themselves o f a panel o f technical specialists pre-selected and recruited by the Project for the technical and financial analysis o f sub-projects.
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Figure 1: Description of the Project's institutional structure
1 National Level
, I
I I
for the Proiect
Regional Coordination 9 I Dept n I
Local support
~ ; POS I I
Prducer Organizations ; I I
~
Fn. ~~~~a~~~ 1 , Operators 1~ I Operators
, 1. --I I - I I . - I I - 2 I ............................... I
Departmental Level
44. Project Implementation Manual (PIM); The PIM would detail the organizational and technical procedures that govern the Project, including for financial management, procurement. A separate administrative and financial management manual would be prepared. The P I M would also spell out in detail the provisions governing specific aspects o f the Project, in particular: &r sub-component 1.1 : a) mechanisms and criteria for identifying and selecting the rural roads to rehabilitate and for transferring funds to the Cellule BAD/BM using procedures already established for the C E M A C Transit transport project, Cameroon Component. For sub-component - 1.2: conditions and criteria to be met for the signature o f agreements with the irrigation authorities; a) For sub-component 2: a) Detailed fiduciary and technical procedures regarding co-financing o f sub-projects, including control mechanisms and remedies for subproject implementation; clear eligibility criteria for projects and for beneficiaries, processing cycle and timing, as wel l as complaint-handling mechanisms for subprojects; c) Remedies for non- compliance and abuse o f funds in subprojects; e) Training o f POs and other stakeholders prior to subproject implementation; and e) templates for subproject agreements incorporating good governance and transparency clauses as well as complaint-handling mechanisms.
C. Monitoring and evaluation of outcomedresults
45. The results framework in Annex 3 defines performance indicators for each components and sub-components. The P C U would be responsible for overall monitoring and evaluation (M&E) and for meeting the agreed reporting requirements. The Project M&E system would be designed to link technical and financial data on project progress and impact. It would work as
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both a mechanism for assessing project results and as a day-to-day management tool, and would support project supervision by ensuring that baseline and follow-up surveys and data collection for the key performance indicators are available regularly.
46. At the departmental level, the “Focal points” (staff of the sectoral ministries) and Local Support Operators (OAL) would monitor the implementation of subprojects, collect and transmit data to the regional coordination unit. POs responsible for the implementation o f subprojects would be responsible for providing periodic monitoring data (the requirement would be part o f the subproject financing agreement) and would receive feedback based on data from other comparable subprojects. The data collected at the departmental level would be consolidated and analyzed at the R C U and transmitted to the M&E specialist at the PCU.
47. M&E reports, including environmental monitoring results, would be produced quarterly at the regional and departmental levels, and every six months at the central level. Semiannual reports would be circulated to sectoral ministries and to the concerned development partners. The Project would also carry out specific results studies, as well as a baseline study before the beginning o f field implementation and an independent impact assessment not later than at midterm, and six months before project completion.
48. The Management Information System (MIS) o f the Project would be established, hosted and maintained by the PCU. The PCU’s M&E specialist would also be responsible for providing training courses to RCU’s regional Coordinators, Focal Point and O A L staff and MINTP’s M&E staff, to ensure that the required information would be made available and prescribed in a uniform reporting process.
49. Environmental and Gender monitoring. The M&E System would include environmental monitoring indicators to determine (a) the use o f the environmental screening for subprojects and investments; (b) the effectiveness o f environmental mitigation measures implemented; and (c) the extent to which sub-projects are maintained in an environmentally and socially sustainable manner. The M&E system would allow to gender-disaggregate al l indicators.
50. Semi-annual jo int supervision missions with Bank, Government and Apex POs staff would assess the status o f key project outcomes and update legal covenant compliance. The Mid- Term Review would be conducted no later than three years after the f i rs t disbursement. A final independent evaluation would be conducted in the last semester o f project execution to assess overall achievement o f expected project results.
D. Sustainability
5 1. Project sustainability i s anchored o n several considerations. First, the Project would work to remove structural bottlenecks and would include sustainable mechanisms for the operation and maintenance o f infrastructure. For instance, rural roads rehabilitated by the Project would be inscribed in the national “priority l i s t ” for the allocation of budget resources for road maintenance. Second, the Project aims to increase the overall sustainability o f agricultural value chains by strengthening market linkages and supporting technically and financially solid proposals, which should in turn enable to increase sales and incomes, the main gauge of sustainability. Third, the Project would encourage -but not request- the participation o f formal
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financial institutions in co-financing subprojects with the aim o f ensuring their long-term commitment to the sector.
52. Sub-projects would specify mechanisms in place for the continued and sustainable operation and maintenance o f investments, which should further enhance the technical, institutional and financial sustainability o f project outcomes.
E. Critical risks and possible controversial aspects
risk mitigation. The project would strengthen veterinary surveillance to reduce the risk to animal production. Although this risk i s global (and therefore
agricultural inputs may put many producers out of business.
Moderate
Sectoral coordination The project would involve several technical ministries (Agriculture, Livestock, Public Works) and there i s the risk of poor communication, turf battles,
advanced as in other countries; there i s a risk of patronizing from sectoral ministries. Elite capture. Low capacity at local levels to select beneficiaries and possible leakage of funddactivities to unintended beneficiaries, including the risk o f elite capture. This can include abuses in the distribution of rehabilitated irrigated land
beyond the control o f the Project), promotion o f high value crops would help reduce i t s impact. Matching-grants could provide direct or indirect support for inputs. The project would stimulate inputs from the sectoral ministries by creating a multi- sectoral steering committee and defining clear mechanisms and decision making processes.
POs already are an integral part o f the
Moderate
Moderate
land-tenure situation and transparency o f land-distribution policy would be contractual conditions for the irrigation component. The project would develop national capacities at different levels and for different stakeholders (public, private, POs). A solid technical team would be competitively recruited to coordinate project implementation
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Moderate Low implementation capacity. Implementation capacity i s limited, and public entities have limited experience in dealing with private sector and access to market issues.
Substantial
Risks
Financial management The PCU and Producers Organizations are not familiar with F M guidelines. Procurement The PCU and Producers Organizations are not familiar with procurement guidelines.
Safeguards Compliance with safeguard policy i s not always observed and can be hard to monitor.
Risk rating
Substantial
Substantial
Substantial
Substantial
Risk Mitigation Measures
The project would hire a qualified F M specialist and an accountant at the PCU, an accountant in each region o f intervention. The project would hire a qualified procurement specialist. The project would implement procurement capacity-building activities, an operations manual incorporating detailed procurement procedures, and other mitigation measures, in addition to appropriate procurement monitoring. Verification o f safeguard compliance by independent parties would be undertaken in conjunction with the technical performance audits (on 30 percent o f randomly selected subprojects per year)
Rating after
Mitigation Moderate
Moderate
Moderate
Moderate
F. Loan conditions and covenants
53. The effectiveness conditions are the following:
1. The Recipient has established the PCU and the Steering Committee pursuant to the Project Implementation Arrgte', in a manner and with functions and resources satisfactory to the Association, and with the following qualified staff o f the PCU, recruited under terms o f reference and conditions acceptable to the Association: a national coordinator, seconded by: (i) a public works specialist, (ii) a specialist for animal value chains; (iii) a specialist for vegetal value chains; (iv) an administrative and financial management specialist, (v) a procurement specialist; (vi) a monitoring and evaluation specialist; and (vii) an accountant.
2. The Recipient has (i) established a fully functioning financial management for the Project, in form and substance satisfactory to the Association, with an integrated financial management software to be used by the Project, and (ii) trained the fiduciary staff o f the PCU in the use o f the integrated financial management software; and
3. The Recipient has adopted a Project Implementation Manual, and an Administrative and Financial Procedures Manual, al l in form and substance satisfactory to the Association.
54. The disbursement conditions are the following:
1. For Component 2 o f the Project, the Recipient has legally established the R C U and the RSC for such Participating Region, in a manner and with functions and resources satisfactory to the Association, and with the fol lowing qualified staff for such RCU, recruited under terms o f reference and conditions acceptable to the Association: (i) a coordinator and (ii) a qualified accountant trained in the computerized accounting system o f the Project; and
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2. For a Subproject Grant, a Subproject Grant Agreement has been signed,
55. Dated Covenants
1. Not later than 4 months after the Effective Date, the Recipient shall recruit the external auditors for the Project pursuant to terms o f reference and with qualifications acceptable to the Association.
2. Not later than 2 months after the Effective Date, the Recipient shall legally establish the RCUs and RSCs, in a manner and with functions and resources satisfactory to the Association, and with the following qualified staff within each o f the RCUs, recruited under terms o f reference and conditions acceptable to the Association: a coordinator, a value chain specialist, a farm management specialist, an accountant.
3. Not later than 2 months after the Effective Date, the Recipient shall have legally established the Field Focal Points, in a manner and with functions and resources satisfactory to the Association.
4. Not later than 3 months after the Effective Date, the Recipient shall have nominated all of the members for the special Tender Board.
5. The Recipient shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project and shall for the purposes o f the Project:
(a) open and maintain, until the completion o f the Project, an account in FCFA at a commercial bank acceptable to the Association (the Project Account), on terms and conditions satisfactory to the Association;
(b) deposit into the Project Account (i) an initial amount o f FCFA 200,000,000 by December 30,2009; (ii) FCFA 1,300,000,000 by April 30,2010; and (iii) thereafter, on a quarterly basis, the amount identified in the Annual Work Plans and Budgets, in an aggregate amount o f FCFA 6,200,000,000 for the duration o f the Project; and
(c) ensure that funds deposited into the Project Account in accordance with the provisions o f paragraph (b) o f this Section shall be used exclusively to finance expenditures under the Project other than those financed from the proceeds o f the Financing.
6. The Recipient shall ensure that the proceeds o f the Financing will not be used to finance activities implemented in the Permanent Forests or Critical Natural Habitats.
7. The Recipient shall ensure that the staff o f the PCU and the members o f the Tender Board shall undergo procurement training throughout Project implementation.
8. The Recipient shall ensure that the staff o f the PCU and each o f the RCUs, and each member o f the RSC and other stakeholders undergo safeguards Training throughout Project implementation.
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IV. APPRAISAL SUMMARY
A. Economic and financial analyses
56. Financial analysis. The financial analysis shows net profitability for project beneficiaries, which confirms the soundness o f activities identified for project support along the selected supply chains. Additional gross margins on rice production range from: (i) US$48 to 98 per ha on already cultivated areas; (ii) US$620 to 970 per ha on extended cropped areas thanks to the rehabilitation o f perimeters which would al low to water currently unexploited land. Financial internal rate o f returns (FRR) o f livestock activity models -given as examples o f sub-projects- range from 13 to 339 percent. However, results o f the economic and financial analysis o f the subprojects must be taken with caution as they are based on assumptions that need to be verified by the actual demand o f producers. For this reason, rigorous criteria for the selection o f profitable subprojects must be adopted (FRR, years with negative cash f low after financing, return on investments, profitability as measured by the ratio gross margin sales, yearly gross margin by beneficiary, investment and financing per beneficiary, etc.) as well as accurate monitoring o f results f rom activities sub-projects would be essential to ensure that the project delivers the intended results.
57. Economic analysis. A cost-benefit analysis was carried-out to assess the economic viability o f the proposed project. The analysis was conducted over a 25-year period. Financial prices and costs were transformed into economic values eliminating taxes and calculating import parity price for rice and fertilizers. Quantified economic benefits are mainly derived from: (i) the increased value added o f rice production through the rehabilitation o f irrigated schemes (which represents 57 percent o f total benefits); (ii) economic cash-flows from sub-projects (29 percent); and (iii) benefits from rural roads rehabilitation (14 percent). Taking into account al l costs, the project would yield an Economic internal rate o f return (ERR) o f 26 percent and a Ne t present value (NPV) o f US$52 mi l l ion (at a 12 percent discount rate). The ERR and N P V are estimated at respectively 31 percent and US$61 mi l l ion if only the costs o f components 1 (infrastructure) and 2 (economic partnerships) were considered. The sensitivity analysis indicates a good resilience to important changes in costs or reduction in benefits, with the project maintaining an ERR o f 20 percent in case o f a diminution o f benefits by 30 percent.
58. The risk o f having large supply responses with negative effects o n producer prices, and hence incomes, has been assessed as small for the commodities targeted by the project. In fact, the project’s interventions are expected to more than offset any potential negative effects that reduced retail prices may have on producer prices. This would be due to: a reduction in transaction costs; and increased value added as a result o f productivity gains, increased level of output (increased yields and/or reduced losses), improved quality and economies o f scale (the latter also has a direct impact on transaction costs). Detailed results and the approach o f the economic and financial analyses are presented in Annex 9.
B. Technical
59. The project design is based on one major piece o f analytical works carried out in 2008 with the Bank’s support: the Cameroon Agricultural Value-Chain Analysis (CAVCA) (Report n. AAA25- CM) undertaken with the objective o f identifying products and farm systems that are
16
competitive or have the potential o f becoming competitive in domestic, regional, or global markets. The first conclusion o f the analysis was that Cameroon has good potential to become a major food supplier to the region because o f i t s competitiveness in cassava, maize, plantain, and palm oil.
60. The graduation o f family farmers from low-input production to more intensive systems is important for the competitiveness o f commercial agriculture in Cameroon. The C A V C A shows that the increased use o f inputs, high-yielding planting material, and better on-farm management could have a direct positive impact o n rural incomes and trade competitiveness. Smallholders rarely have access to inputs and high yielding planting material because they are not affordable or locally not available.
6 1. The Project proposed combination o f infrastructure activity, demand-driven support to productive investment, emphasis o n economic partnership, and capacity building has the capacity to unlock the production potential o f organized family farmers. With the exception o f the rehabilitation o f pre-identified irrigated perimeters, investments -and notably economic partnerships and productive sub-projects- would be demand driven.
C. Fiduciary
Financial management
62. A financial management assessment was carried out to determine whether Financial Management arrangements are adequate. The decentralized nature o f the Project and the large number o f possible transactions are factors that contribute to increasing financial management risks, which are mainly related to: (a) inexperience o f staff with regard to FM procedures; (b) possible slow transmission o f supporting documents from regional units to national units; (c) weak financial management capacity o f producer organizations; (d) poor linkage between physical progress and financial outcomes, (e) poor governance in the selection o f beneficiaries; and (f) delays in accounting and reporting.
63. The mitigating measures include the following requirements: (a) adequate selection and training o f newly recruited staff in Bank procedures; (b) communicate and disseminate the Project’s objectives and involve the stakeholders at early stage to facilitate the mobilization o f counterpart funds and contribution o f the beneficiaries; (c) organize appropriate allocation o f duties and develop internal control in both the national and regional units; (d) increase the number o f supervision missions; (e) organize periodic audits and foster citizen control on the management o f the Project’s resources; (f) strong collaboration between MINADER, MINEPIA, M I N T P and different ministries and other implementing agencies; (g) regular supervision and appropriate monitoring o f activities.
Disbursement arrangements
64. Two Designated Accounts and one Project Account would be opened by the C A A in commercial banks acceptable to the association. Disbursements from IDA would be initially made on the basis o f incurred eligible expenditures (transaction- based disbursements) until such time when the project FM arrangements meet the requirements for report-based disbursement.
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The IDA advance to the Designated Accounts would also be used by the Borrower to finance project’s eligible expenditures under the proposed Credit.
65. The financial management arrangements would be strengthened with the implementation o f the action plan provided in Annex 7. The overall residual FM risk i s moderate, if the mitigating measures are implemented satisfactorily and in a timely manner.
Procurement
66. Procurement activities would be carried out by the Project Coordination Unit (comprising one national and six regional teams), the “Cellule BAD/BM” o f M I N T P for component 1.1 , and Producers Organizations, who would be responsible for managing their own sub-projects. Procurement activities above CFA Francs 5 mil l ion (equivalent o f US$lO,OOO) would be conducted with the technical support o f a special tender board reporting to the PCU and created by a Prime Ministerial Decree. Pending creation o f such special tender board, within three months o f effectiveness (dated covenant), procurement would be performed using the tender board o f either MINADER or MINEPIA. The assessment o f the tenders boards o f ministries implementing World Bank Projects have so far revealed unfamiliarity or weakness in the interpretation o f Bank’s procurement guidelines. Annex 8 on Procurement includes an action plan with corrective measure to compensate for procurement weaknesses.
D. Social
67. Under the Project, Producer Organizations are the principal channel through which the producers can directly access the resources o f the Project. Therefore, PO effectiveness and inclusiveness are critical to enabling the poorer and more marginalized sections o f the rural population to benefit f rom the Project. As a crosscutting concern in al l its activities, Component 2 (Support to Economic Partnerships and co-financing o f sub-projects) would pay attention to social inclusion, by reserving quotas o f funds to projects presented by women POs and youth POs (youth defined as people younger than 30) on condition that they respond to the other criteria o f eligibility. T o this end, specific indicators and activities have been included in Component 3 to strengthen the capacity o f POs to represent the interests-and respond to the n e e d s - o f the poorer segments o f the rural population.
68. It i s anticipated that implementation o f the Project would achieve social development outcomes and positive social impacts, including activities related to social capital building with producer organizations (collective actions, social networks, conflict management at the community level relating to land tenure issues); stakeholders’ participation (social inclusion, social accountability, gender), and social risk mitigation (development o f capacity-building and investment subprojects for women’s and youth groups). O n social aspects, the Project would monitor the participation o f women and youth in the investment activities (gender dimension).
69. During project preparation, relevant social risk issues (access to cofinancing, special needs o f women and youth groups, equitable access to opportunities and benefits created by the Project) have been taken into consideration with the effective participation o f PO leaders throughout the decision-making process. During implementation, the Project would address these issues by systematically mainstreaming participatory methodologies in al l Project activities so
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that the program responds to the needs o f beneficiaries and reduces gender disparities. In order to monitor participation in project implementation, monitoring indicators would be disaggregated by gender.
70. A Resettlement Policy Framework (RPF) was prepared to minimize and mitigate any potential adverse social impacts resulting from the Project investments. Given the demand-driven nature o f project activities, it would be difficult to estimate the number o f people who would be impacted by the Project investments ex ante. The only activity that could have significant adverse social impacts i s the rehabilitation o f rural roads, which in the rare instances could involve involuntary displacement, loss o f assets, or impact livelihoods. However, experience shows that the social impact o f rehabilitation activities i s considerably lower than that o f new road construction. The RPF provides the overarching framework by which potential resettlement issues would be addressed. The RPF also establishes that any investment requiring acquisition o f land from individual land owners or occupiers would not be financed by the project. In order to avoid the risk or arbitrary allocation or appropriation o f irrigated parcels to/from land users in the irrigated areas rehabilitated by the Project, contractual conditions with the Irrigation Authorities would include the definition o f criteria and conditions for the allocation o f land, established in close consultation with the Apex producer organizations (Federations and Unions o f water users associations) and other local stakeholders.
E. Environment
7 1. The Project would support the increase o f agricultural production and productivity through a combination o f infrastructure rehabilitation (irrigated schemes, rural roads), productive investments (Economic Partnerships Sub-projects) and capacity building activities. Attention would be paid to limit the environmental impact o f the project. For this reason, infrastructure activities have been limited to rehabilitation o f existing infrastructures. Furthermore, some activities or investments would be specifically excluded from Project financing, such as: (i) category A sub-projects, (ii) acquisition or use o f Genetically Modif ied Organisms; (iii) acquisition or use o f pesticides that are not approved by the World Health Organization; (iii) activities in Permanent Forest or Critical natural habitats; and (iv) activities that would require land acquisition from individual owners or occupiers.
F. Safeguard policies
72. The Project has been assigned the environmental screening category By and the safeguard screening category i s S2. The project has triggered OP 4.01 Environmental Assessment, OP 4.09 Pest Management, OP 4.10 Indigenous People, OP 4.12 Involuntary Resettlement, and OP 7.50 Projects on International Waterways. Potential negative environmental impacts o f project activities are likely to include: (i) water and soil pollution due to construction activities, increased use o f pesticides and herbicides, and agro-processing activities such as milling and processing o f palm oil; (ii) loss o f trees and water pollution due to land clearing and fruit processing for palm o i l production; (iii) soil erosion and silting due to the rehabilitation o f water management structures for irrigated schemes, as well as to poor agricultural practices; and (iv) loss o f flora and fauna due to the use o f quarries as sources o f construction materials. Additional impacts related to an increase in standing water bodies such as reservoirs, water retention pools, irrigation canals, and quarries would include (v) a loss o f vegetation as agricultural lands are
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inundated; (vii) a reduction in land available for livestock development; and (viii) pressures on natural resources as the population increases in those weas that have access to water.
73. In order to address these issues effectively, and because o f the demand-driven nature o f the Project, the Borrower has prepared an Environmental Management Framework and a Social Management Framework (together ESMF), both dated March 16,2009; a Pest Management Plan dated March 11, 2009; an Indigenous People Planning Framework dated March 3 1, 2009; a Resettlement Policy Framework (RPF) dated April 1,2009. All o f the five documents have been approved and disclosed in Cameroon and at the Bank's Infoshop on April 9, 2009 and April 10, 2009 respectively. Consistent with OP 7.50, the riparian states were notified on February 27, 2009, and no objection has been raised by the deadline o f March 3 1 , 2009.
Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP 4.0 1) [XI [ I Natural Habitats (OP/BP 4.04) [ I [XI Pest Management (OP 4.09) [XI [ I Physical Cultural Resources (OP/BP 4.1 1) [ I [XI Involuntary Resettlement (OP/BP 4.12) [XI [ I Indigenous Peoples (OP/BP 4.10) [XI [ I Forests (OP/BP 4.36) ' [ I [XI Safety o f Dams (OP/BP 4.37) [ I [XI Projects in Disputed Areas (OP/BP 7.60); [ I [XI Projects on International Waterways (OP/BP 7.50) [XI [ I
G. Policy Exceptions and Readiness
74. The Project complies with all Bank policies and no policy exceptions are sought. A procurement plan for the first 18 months has been approved at negotiations. The substance o f the project implementation manual, under preparation, has been discussed during appraisal and negotiations and i s partially incorporated in the PAD, under Appendix 1 o f Annex 6. Conditions o f effectiveness have been kept to a minimum.
* By supporting the proposedproject, the Bank does not intend to prejudice the final determination ofthe parties' claims on the disputed areas
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Annex 1: Country and Sector or Program Background CAMEROON: Agricultural Competitiveness Project
1. Agriculture in Cameroon is a key element for both growth and poverty reduction. Agriculture contributes more than hal f o f Cameroon non-oil export revenues and employs almost 60 percent o f the economically active population. Ninety percent o f a l l rural households are to some extent engaged in agriculture and approximately one third o f them earn their living from export crops. The most recent household survey in Cameroon ( E C A M 111, 20073) revealed that over 55 percent o f rural households are poor, as compared to only about 12 percent o f urban households (up from 52 and 17 percent, respectively, in 2001). In 2007, 87 percent o f the poor were rural, up from 82 percent in 2001. Agricultural producers are the only socio-economic group for which poverty has increased recently, while the provinces o f North, Far-North, and Adamaoua have seen an overall increase in the prevalence o f poverty. Increasing growth in agriculture would play a pivotal role in reducing poverty, sustaining growth, and achieving food security, in a country that also needs to reduce its dependency o n volatile o i l revenues, which now accounts for more than 50 percent o f the value o f exports.
2. Agricultural development features prominently in the Government's growth and poverty reduction strategy. Particularly, the second pillar o f the Poverty Reduction Strategy Paper (2003) highlights the importance o f economic diversification with a strong focus on agricultural development as the key income generating activity and the main source for future economic growth and poverty alleviation in rural areas. The national Rural Sector Development Strategy (2005) i s based on five policy objectives: (i) ensure food security and self-sufficiency; (ii) contribute to economic growth, including external exchanges and employment; (iii) increase the income o f producers; (iv) improve livelihoods o f rural populations, and (v) improve the use o f natural resources and ensure the sustainable development o f rural productions.
3. The sustainable development o f animal and vegetable production would be supported by increasing the growth rate o f the sector in order to double the agricultural output by 20 15, which would entice: (i) increase o f rural incomes by about 4.5 percent per year with the aim o f halving rural poverty; (ii) ensure food security by reaching an energetic consumption o f 3000 Kcal/person/year in 2015, f rom a level o f 2600 Kcal/person/year in 2006; (iii) doubling the export towards sub-regional market for food crops such as plantain, maize, palm oil; and (v) reduction in the import o f cereals such as rice and wheat. In order to reach the objective o f doubling the agricultural output, the sectoral strategy is largely anchored on family farmers, who represent more than 80 percent o f Cameroon agricultural production system.
4. The considerable potential for agricultural faces important constraints. Several value chains (palm oil, maize, plantain, cassava, rice, onions, f ru i ts and vegetables, dairy, poultry) can develop their considerable growth potential if structural constraints and weaknesses in market linkages are adequately addressed. These constraints include poor infrastructure (production, marketing, transportation); limited control o f improved production techniques and poor economic management skil ls; weak investment capacity, coupled with small dimensions o f landholdings and limited availability o f equipment; limited use o f improved inputs (including
Third Cameroonian Household Survey, Troisikme Enquite Camerounaise Aupres des Me'nages (ECAM3), Institut National de la Statistique, June 2008
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high yielding vegetable and animal varieties); limited organization o f producers, weak linkages to markets and limited development o f value-adding activities such as processing and warehousing.
5. Selectivity based on World Bank-supported Analytical Work. The Agricultural Value Chain Analysis realized in FY08 (Report AAA25-CM, see Text Box A1 .1 below) recommended actions aiming to increase the technical, managerial and logistic capacity o f producer organizations, increase access to agricultural inputs and high-yielding material, and improve the network o f feeder roads and wholesale markets.
Text Box Al.1: Cameroon Agricultural Value Chain Analysis
This study, conducted between 2007 and 2008, explored the development constraints and potential for the competitiveness o f six agricultural value chains (cassava, cotton, maize, palm, plantain, and poultry) in different regions o f Cameroon. The study intended to identify products and farm systems that are or can become competitive and was expected to inform the preparation o f a new lending operation for the agricultural sector in Cameroon.
The first conclusion o f the study i s that Cameroon has good potential to become a major food supplier to the region because o f i t s competitiveness in cassava, maize, and plantain. Significant growth in income and trade competitiveness could also be achieved in the palm oil sector. For poultry, the study supported the rational o f expanding the production o f village chicken by family farmers with important benefits for food security and poverty reduction in rural areas. However, the study noted that the future o f the commercial poultry sector was judged dependent on continued trade protection and therefore more uncertain. Cotton sustainability, on the other hand, was considered threatened by the low global market prices.
Interventions to increase access and use o f inputs and high-yielding material by family farmers were deemed a priority need in order to allow the graduation o f family farmers from low-input production to more intensive systems, deemed important for Cameroon agricultural competitiveness. In nearly every case, the analyses showed that increased use o f inputs and improved agricultural practices could have a direct positive impact on rural incomes and trade competitiveness.
Recommended support options also included: (i) technical assistance to producer organizations to coordinate their demand and purchase o f inputs and planting material; (ii) promotion o f safe and reliable rural transport system by investing in the rural roads network; (iii) provide organizational and management training for farmers.
6. Among the five value chains that the Value Chain Analysis considered as having a good potential in Cameroon (cassava, maize, palm oil, plantain, poultry) cassava has not been considered in the proposed project because it is already targeted by an IFAD-financed project. In addition to these value chains, the Project would also support (i) pork, because o f its strong complementarity with the maize and poultry value chains, and (ii) rice, because o f its strategic relevance and important underused potential.
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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies CAMEROON: Agricultural Competitiveness Project
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Project
PO45348 - National Agricultural Extension and Research
P104456 - CM-Energy Sector Development S I L (FY08) -
PO73629 - CM-Community Development Program Support
Program Support Project - CLOSED (06/2004) (IEG Project Outcome: S)
ACTIVE (approved 0612008)
Bank-Financed Rural Development
Local development
Last Supervision Ratings
IP DO S S
S S
S S
Other Dev. Agencies r I EU AFD
Government
Project (PAPNDP) - ACTIVE (approved 03/2004)
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Annex 3: Results Framework and Monitoring
CAMEROON: Agricultural Competitiveness Project
1-Results Framework
PDO
To increase the competitiveness o f eligible Producer Organizations working on target value chains.
Intermediate Outcomes4
Component I : Rehabilitating Key Ru Sub-component 1.1: Rural Roads Improved access to markets.
Sub-component 1.2: Irrigated perimeters Improved rice production capacity.
Component 2: Economic partnershii Economic partnerships established and operating in an economic, financial, social and environmental sustainable way.
Project Outcome Indicators
0 Increase in value o f selected marketedtraded products in targeted areas (percent)
0 Reduction in quantity o f post- harvest losses f rom the supported POs with access to the new transport infrastructures (percent)
rehabilitated irrigated areas (tonsha)
0 Increase in yields for other targeted value chains(percent)
0 Increase in average rice y ie ld in
Intermediate Outcome Indicators
11 Infrastructure 0 Reduction in transportation time to
0 Sub-projects profitable (positive Gross Profit) one year after completion (percent)
0 Unquali f ied technical and safeguards audits (percent)
0 POs adopting business plans (percent)
Project Outputs:
Use o f Project Outcome Information
0 Whereas in Component 1 only the increase o f production o f the irrigated fields is measured, the crop y ie ld indicator takes into account the impact o f Components 2 and 3 o n the newly rehabilitated fields.
0 The post-harvest losses indicator monitors effectiveness o f road improvements, technology adoption, and increased capacity. If reduction targets are no t met, components 1,2 and 3 may need adjustments
U s e of Intermediate Outcome Monitoring
0 If the transportation t ime does not meet targets, consultations with the POs wou ld be held to determine possibly unaddressed bottlenecks If the production o f targeted areas does no t meet targets, corrective measures wou ld b e improve productivity
0 If output targets are no t met in time, the Project wou ld engage discussions with the responsible implementing units (see Annex 6).
0 If POs’ Gross Profi t does not increase as expected, the criteria for selecting sub-projects would be revised to become more selective
complying with ESMF i s not met, the criteria for selecting sub- projects wou ld be revised to become more selective
0 If the percentage o f sub-projects
Component 4 in not included in the results framework because it i s a support component.
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0 POs engaged in economic partnerships (number) Sub-projects presented (number)
0 Sub-projects approved (number)
capacity of apex producer organizations Improved apex POs capacity in organizational and strategic skil ls required to support agricultural commercialization.
0 If the number o f POs submitting sub-projects or engaging in EPs
efforts would be intensified remains too low, communication
Sub-component 3.2 : Strengthening core functions of sectoral public services Improved public sector capacity in providing core public services to POS.
Sub-component 3.3. : Supporting the establishment of sectoral legal and regulatory framework. Strengthened value chains operating in a sustainable framework
d capacity development 0 POs in targeted areas satisfied
with support services received from apex organizations (percent)
0 POs receiving support services through apex organizations (number) POs managed effectively (hold regular meeting, record their decision, open and manage a bank account and have regularly elected officials) (percent)
Project OutDuts: Incremental volume o f annual certified seeds produced (tons)
0 If percentage o f satisfied POs i s not met, consultations would be held to match services o f Apex POs to grass-root POs’ needs
If management o f POs i s not satisfactory, more attention would be given to capacity building
0 If the volume o f certified seeds i s not met, capacity building would be Drovided
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3-Monitoring and evaluation arrangements
1. The results framework defines performance indicators for each components and sub- components. The P C U would be responsible for overall monitoring and evaluation (M&E) and for meeting the agreed reporting requirements. The Project M&E system would be designed to link technical and financial data on project progress and impact. It would work as both a mechanism for assessing project results and as a day-to-day management tool, and would support project supervision by ensuring that baseline and follow-up surveys and data collection for the key performance indicators are available regularly.
2. At the departmental level, the “Focal points” (staff o f the sectoral ministries) and Local Support Operators (OAL) would monitor the implementation o f subprojects, collect data and transmit them to the regional coordination unit. POs responsible for the implementation o f subprojects would be responsible for providing periodic monitoring data (the requirement would be part o f the subproject financing agreement) and would receive feedback and comparable data from other projects. The data collected at the departmental leve l would be consolidated and analyzed at the R C U and transmitted to the M&E specialist at the PCU.
3. Monitoring and evaluation reports, including environmental monitoring results, would be produced quarterly at the regional and departmental levels, and every six months at the central level. Semiannual reports would be circulated to sectoral ministries and to the concerned development partners. The Project would also carry out specific results studies, as well as a baseline study before effectiveness and an independent impact assessment not later than at midterm, and six months before project completion.
4. The GST (Groupe de Suivi Technique, or Technical Monitoring Team) would be responsible for monitoring the Project activities o n behalf o f the PSC through quarterly meetings with the PCU. The GST would review the M&E reports issued by the P C U and report i t s findings and recommendations to the PSC.
5. M I N T P (the Ministry o f Public Works) would be responsible for preparing al l the technical aspects o f the Rural Road rehabilitation, supervising and contracting for the implementation, securing funds for the maintenance o f the rehabilitated roads and managing fiduciary operations. I t would therefore also be responsible for the overall M&E o f the Project’s Rural Roads sub-component, and would report directly to the PCU.
6. The Management Information System (MIS) o f the Project would be established, hosted and maintained by the PCU. The PCUS’s M&E specialist would also be responsible for providing training courses to RCU’s regional Coordinators, Focal Point and OAL staff and MINTP’s M&E staff, to ensure that the required information would be made available and prescribed in a uniform reporting process. The MIS would be modular and integrate al l information needs (across ministries, research centers and sub-proj ects) and would include accounting data. The P C U would o w n a server for hosting the data while the R C U and Focal Points would have access to workstations, desktops and laptop computers (with Internet connections whenever possible) to al low the data collected to be transmitted to the central level through the Internet or hardware devices (USB keys, CD-ROMs, etc). When the Project starts, the MIS would be piloted and go through troubleshooting to avoid heavy losses o f information.
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This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries.
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