The World Bank Second Agriculture Sector Wide Approach Support Project (P164445) REPORT NO.: RES37837 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SECOND AGRICULTURE SECTOR WIDE APPROACH SUPPORT PROJECT APPROVED ON APRIL 7, 2018 TO REPUBLIC OF MALAWI AGRICULTURE AND FOOD AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Bella Bird Regional Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Mark E. Cackler Task Team Leader(s): Francisco Javier Obreque Arqueros, Asa Margareta G. Hoglund Giertz, Time Hapana Fatch The World Bank Second Agriculture Sector Wide Approach Support Project (P164445) I. BASIC DATA Product Information Project ID Financing Instrument P164445 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 07-Apr-2018 31-Dec-2019 Organizations Borrower Responsible Agency Ministry of Agriculture, Irrigation and Water Republic of Malawi Development,Malawi Roads Authority Project Development Objective (PDO) Original PDO To improve the productivity of small-holder farmers and market access of selected commodities for small-holder farmers in Selected Districts of the Recipient's territory Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-A7166 13-Apr-2018 13-Apr-2018 25-Apr-2018 31-Dec-2019 35.00 17.01 17.99 TF-A7167 13-Apr-2018 13-Apr-2018 25-Apr-2018 31-Dec-2019 20.00 20.00 0 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The World Bank Second Agriculture Sector Wide Approach Support Project (P164445) 1. The Second Agriculture Sector Wide Approach Support Project (ASWAp SP II) has made good progress. It has been rated moderately satisfactory in achieving its development objective. The recent project's progress report has recorded initial estimates of productivity increase (9 percent out of 20 percent target), and this will be confirmed with field data collected at the end of the next growing season. The project has reached slightly over 103,000 farmers with assets and services and this represents a third of the targeted beneficiaries. The third project development objective (PDO) indicator (number of agricultural marketing centers connected by rehabilitated roads) will be reported once the construction works under component 2 (Improvement of Rural Road Infrastructure for Market Access) are completed. 2. Since the previous mission, components 1 (Sustainable Agricultural Productivity and Diversification) and 3 (Institutional Capacity Development for the Implementation of the National Agricultural Investment Plan) have maintained tremendous progress. Activities include legume multiplication and related studies, training of staff and farmers on bio-ecology, and production of soil maps. The model villages supported by the project have also showed high level of ownership and commitment of the beneficiaries, especially women and youth, and rapid dissemination of climate smart agricultural practices. Implementation of component 2 started slowly due to delays in contracting the works but has consistently gained momentum over the past months. The project has hired contractors in all 12 districts and some of them have already started operating. 1,116 Kms of the roads will be rehabilitated and 84 km of roads will be upgraded using an innovative and sustainable technique adopted from the ASWAp SP I (Low Volume Sealed Roads -LVSR). The project has selected existing roads that connect villages that have high production potential and are adopting improved technologies (under component 1) with markets and ensuring accessibility throughout the year. 3. Grievance redress mechanism (GRM) for the project is in place and 179 GRM committees have been established in all 12 districts involving 2,317 committee members of which 1,231 (53%) committee members are women. During the previous mission, it was noted that the project had prepared safeguard instruments for the project (Environmental and Social Management Plans -ESMPs) and cleared by the Department of Environmental Affairs. However, these were not cleared by the Bank (Regional Safeguards Adviser - RSA). As a result, the Bank suspended all the upgrading works until the ESMPs and Resettlement Action Plans (RAPs)/Abbreviated Resettlement Action Plans (A-RAPs) are cleared. The government has re-submitted much improved revised safeguards instruments to RSA for review and clearance and the first ESMP has been cleared by RSA. The Task Team and Client have committed to resolve all issues related to safeguards by January 2020. The financial management of the project is rated moderately satisfactory, and quarterly interim unaudited financial reports are current. The project has disbursed about US$ 20.0 million which represents a disbursement rate of 36.4 percent of the project’s total cost. Further, the overall project rating of procurement management performance is Moderately Satisfactory. There has been improvements in the use of Systematic Tracking of Exchanges in Procurement (STEP) and most contracts are indicating real time status. 4. The proposed changes are to extend the Multi-Donor Trust Fund (MDTF - TF0A7167 and TF0A7166) and the project closing date from December 31, 2019 to December 31, 2021 to allow the project to complete implementation of activities and fully achieve its development objective. ASWAp SP II is a follow-on operation to the ASWAp SP I which was implemented between 2008 and 2016. During the closing of ASWAp SP I, there was a balance of US$20 million and instead of extending the project, a new operation was developed. However, the current project was designed under the constraint of the closing date of the administration agreements signed between the donors of the MDTF and the Bank, which was December 2019. In particular, the European Union (EU) was not in the position to extend the financial support for the MDTF. The ASWAp SP II was appraised and negotiated in December 2017 and was declared effective April 25, 2018. Although the original design was the project to be implemented in 36 months, only 20 months were available for project implementation. In 2018, EU revisited its position and extended its agreement with The World Bank Second Agriculture Sector Wide Approach Support Project (P164445) government for financial support by 24 months. Following the extension, the Government requested the Bank to extend the MDTF and the project to December 31, 2021. It is worth noting that the extension of the project closing date was only possible after the Bank approved the extension of the MDTF End Disbursement Date on October 4, 2019. Subsequently, all the Trust Fund donors namely; EU, United States Agency for International Development (USAID), Norway, Irish Aid and Government of Flanders have signed the amended Supplemental Administrative Agreement. The last supplemental agreement was signed with Norway on November 13, 2019. The project is expected to achieve its targets if the extension of the closing date is granted. II. DETAILED CHANGES LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications TF-A7166 Effective 31-Dec-2019 31-Dec-2021 29-Apr-2022 TF-A7167 Effective 31-Dec-2019 31-Dec-2021 29-Apr-2022